Buying and Selling Stocks

Stocks are all the stocks in which ownership of an organization is divided ownership. In simple terms, the stocks are referred to as ‘stock’. Each share of this stock represents a fractional ownership in proportion to its number of outstanding shares. In general, a shareholder is a person who owns the right to vote for the outcomes of any matter pertaining to the business or organization and such people have the power to ‘purchase’ a certain number of shares of stocks or more or less. The price at which these stocks are sold also depends on the demand and supply of such stocks.

As a general rule, the stocks are sold when there is a need to offload the accumulated amount of stocks to meet the immediate financial needs of an organization or business. This is known as ‘first in first out’ (IFO). The stocks are normally purchased from a dealer or a broker by a person who has the ownership stake and the authority to purchase such stocks. An investor can also invest in mutual funds, but a person will need to have a very good investment portfolio to make a substantial sum money from these investments.

Usually, stocks are bought in large quantities because they represent a low risk to the organization. However, when owning stocks, one should consider their earnings potential and the potentiality for dividends. Usually, when the dividends are substantial then the stocks will become very costly. It is essential to check how many shares the corporation has issued and how much control is exercised by the Board of Directors or the management in regards to selling off portions of such stock.