As long as there have been companies and money to be made there have been stocks. What are they? Well, they are something that represents ownership in a company, if you have stock in lets say, a major beverage company then you own a little bit (or a lot, depending on the number of them you have) of that company. This means that you can help elect members of the board and vote on corporate policy because you are an owner.
Companies that can offer stocks have to be public companies, that means that anyone with the money and the know how can purchase the stock, but not just any company can instantly arrive on the world markets as there is a process and of course many listing requirements that have to be met. That being said, there are ways of smaller companies trading stock and that is trading ‘over-the-counter’ which is what happens when unlisted (companies not on the official stock exchange) have stocks to buy, sell and trade.
The first ever stock for sale was established by the Dutch East India Company back in 1602. Today there are thousands of them exchanged, with the largest of them all being part of the New York Stock Exchange or the NASDAQ. There are of course other major trading centers around the world, most notably the London Stock Exchange and the Japan Stock Exchange.
Stocks generally outperform bonds and although they are both considered securities they do have their own strengths and weaknesses. A bond is something you buy for the long term, maybe up to fifty years, but stocks exchange hands all the time, sometimes many times a day. The idea is to buy when the price of them is low and then sell them when the price is high. This can change throughout a day, so you may make money and lose money several times during the hours the Exchange is open.
A downside to them is that if the company that issued them goes bankrupt, you’ll have to wait in line for any reimbursement. The company creditors get first crack at any money and as a stockholder you are far down the line.
Like with any investment, there are ups and downs, pros and cons associated with being a stockholder in a company. Some will keep shares for hours while others will sit on them for years, it’s all in what you hope to achieve in the long run.