Stocks
TLDR Stocks are simply the ownership shares in a company. This represents a percentage the stockholder owns of a company and how much they share in the company's profit/loss. IMAGE:Drew Angerer/Getty Images What are they and what is their purpose? Stocks are a type of tradeable security that provides stockholders with a share of ownership in their chosen company. Stocks should be viewed as actual ownership of a business. All of the business' gains and losses are reflected in the stock price. The stock market is where these assets predominantly change hands. Owning these types of assets is unique to other investments because the public can readily access them and the market provides a reasonably high level of liquidity. How are profits distributed? The two major ways a company redistributes profits to shareholders are through dividends and stock buybacks. Dividends are cash handed back to the shareholders based on their ownership of the company, not requiring them to sell any o...