Basics: stocks

    In fact, this is all, without exception, every word from the first to the last - about promotions. Stocks, stocks, stocks - for a person who has passed the “funny nineties”, MMMs and other pleasures of our “then” life, this word does not provoke a completely positive reaction and an understandable desire that “nobody will ever do anything else”. But in fact, there is nothing wrong with this word, and moreover, in the vast majority of cases, stocks are what allow the company to grow and develop. It is stocks that underlie the very foundation of the global stock market.

    In order to make this foundation understandable and strong, you need to give a little theory - just a little bit, at a minimum - but still it is impossible without it. It is this minimum of theory that I will try to give in this and the next article. So…


    Immediately introduce some explanation. In the world of finance, the situation is partly similar to the IT market - everything is developing too fast, and often develops with a strong bias towards the American markets, so the terminology is used mostly in English. And here it’s already how lucky - some words have reasonable Russian equivalents, and some have to be content with Englishisms; therefore, introducing the concept, I will try to give its definition in Russian, if possible, and immediately give the corresponding English equivalents (because if you want to continue studying the subject, you will almost certainly have to come across English sources).


    So, the stock (eng: share , but more often - stock or equity ) - ownership of part of the company. What is it physically? Recently, more and more often - nothing. That is, somewhere in some large computer (and sometimes many) a record is kept stating that Mr V. Pupkin is the holder of N shares of ZAO Horns and Hooves Plc. The larger N, the correspondingly, for the most part, Mr. Pupkin owns. Yes, you understood me correctly - the presence of a share or shares of a company in you means that you own some part of all the offices, computers, furniture and even the intellectual property of the company.

    In the same way, you own a certain part of the profitcompanies - this profit divided by all shareholders is called dividends . And finally, you have the right to manage the company - again, in proportion to the number of shares that you own (in practice, of course, you will not take part in the daily management of the company, but you will vote on the Board of Directors - The Board of Directors , it is assumed that the latter is doing everything to increase the value of the company and, accordingly, personally yours - as a shareholder - profit).


    In addition to all the good things that owning a company’s share brings, there is also a fly in the ointment. Namely, the risk. Yes, yes, exactly that scary word is risk. Together with the profits and opportunities to “steer” the company, you “get” a part of the risk of doing business. Fortunately, your risk is limited ( limited liability ) - you risk exactly within the value of your shares (which, however, does not greatly sweeten the pill if the company goes broke). Roughly speaking, if a company goes bankrupt and becomes bankrupt , you will most likely not get anything.

    Generally speaking, it will not be out of place to emphasize that in the case of ownership of shares, no one ever gives you guaranteesthat it will bring you some profit: some companies pay dividends to shareholders, some - they prefer to invest everything in development, believing that the growth of the company's shares compensates the holders for the absence of dividends, but there are no guarantees, neither the first nor the second you will never be. Moreover, if a company goes bankrupt, you by definition do not get anything , because you are a co-owner of the company and your share (the proportion of ownership is proportional to the number of shares) will go to pay off the company's debts to third parties.

    Issue of shares

    This raises the reasonable question - why, in fact, do companies issue shares and share the right to manage, and even give part of the profit? Well, the answer, again, is not new - companies need money for development (if this, of course, is not a financial pyramid - then they need money for completely different purposes). In order to get this money, companies can either borrow it from someone - either by taking a loan (take a loan), or by issuing a bond (bond, bond) - or by placing shares .

    The second option, generally speaking, is preferable for the company, if only because you probably never have to return this money, and all that the buyer of shares hopes for is that someday these shares will cost more (if you are lucky - then much more expensive) compared to how much they cost at the time of purchase. In the first case, the company guarantees that sooner or later it will return this debt ( repay bond) may (under the contract) to pay some of the interest ( coupon ) for the amount of the bond (however, if the company goes bankrupt, the chances of getting the money back at all speaking small - you will be in the line of second creditors from the end, immediately in front of the holders of shares who receive nothing by definition).

    However, we will focus on the issue of shares. The time of the initial public offering is called Initial Public Offering , or more often - just an IPO . This procedure is usually carried out through an intermediary who guarantees ( underwrites ) the receipt of shares by the buyer (the subtle point is that the underwriter only guarantees the receipt of shares, everything that happens to them after that is not his sadness). Depending on the conditions for the issue of shares, they can either go entirely to the market - and from that moment everyone can buy a piece of the company for themselves, or partially (or completely) be bought out by potential investors who are interested in investing in this company.

    According to the materials:

    If you are friends with English, I highly recommend at least viewing at least the first source - for a beginner this resource is simply invaluable.

    It makes sense to put a logical semicolon in the stock story. In the following topics we will discuss issues such as types of stocks, stock trading, reasons for changes in the value of stocks, and some others. I strongly welcome questions on the topic, and in particular I ask for support from real experts in this field.

    Update: in the comments of the haberman, nayjest suggested links to Russian Wikipedia:
    • Underwriter_(on_price_price_market)

    There is somewhat less detailed, but you can and should start with these articles.

    Update 2: Gentlemen, here lies a minus poll. If you read up to this place, you are probably wondering - and this poll asks what to talk about next. If it’s not difficult for you, please vote - as I will rely on the results of this survey when choosing the topics for further articles.

    Update 3: Next article in the series

    Also popular now: