Stocks are pieces of ownership of a company. Stocks, also called Shares, represent a claim on the company’s earnings and assets. Which technically means you have a claim to a small fraction of every thing the company owns.
Profits are paid out to shareholders in the form of dividends. If the company goes bankrupt, your claim on assets kicks into action as all the things the company owns are sold off. The portion you get is whats left over after all creditors are paid.
Owning shares makes you a shareholder and gives you a small say, based on how much many shares you own, on who runs the company. While owning stocks does carry some risk, the potential for profit attracts lots of trading.
To watch more videos head over to the videos page.