The Different Types of Stock

Many first time investors are a bit confused about the fact that there are different types of stock. Before you get into stock trading or learn much about it, you may think that a stock is a stock is a stock. Well, they are all similar, but there are different types of stock with very important differences. You must know what types of stock are available if you are going to play the stock market.

Common Stock

Common Stock is the most common type of stock, as you may have guessed from the name. Common stock is a term you will hear often. Anyone can purchase common stock. Common stock in essence gives you part ownership in the company that you are investing in. Generally, as the business grows and earns more money, the value of your stock rises and if the company starts doing poorly or goes bankrupt, the value of your stock falls. Common stock holders have no real say over the day to day operations of a business, however they do have the power to elect the board of directors.

Classes of Stock

Companies can customize the types of stock they want to sell, and so offering different classes of stock gives a company more control over what benefits a certain class of stock transfers to the owner of the stock. Common classes of stock are called class A and class B. Class A stock generally gives the stock owner more votes per share of stock than the owners of class B stock. The ability for companies to divide their stock up into different classes has existed since 1987.

Preferred Stock

Preferred stock is sort of like a mix between a stock and a bond. There is less risk involved because the owner’s of this type of stock are able to lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. This means if something goes bad, like a bankruptcy, the preferred stock holders get payed first. Preferred stock is also often callable, which means the company issuing it has the right to buy it back at anytime.

admin on August 19, 2009 | Filed Under Uncategorized | Leave a Comment 

Basics of online stock trading

Many things about our lives have changed since the advent of the internet. Now we can pay our shop online, pay our bills online, do our banking online, and even find a husband/wife/mate!

We can even have the option of buying and selling stocks online.

Traders love the convenience and flexibility of looking at their account whenever they want to and, and brokers also enjoy an increased amount of convenience, flexibility and efficiency by being able to take orders online rather than by phone.

Online trading is offered by most brokerage houses and brokers these days. Another great thing about trading online is that fees and commissions are often lower. There are many advantages to online trading, such as fees often being much lower than they were in the pre-online-trading days, but there are still some drawbacks to online trading.

Having the ability to actually talk with a broker can be a big advantage if you are new to investing. Online trading can be a dangerous thing for the unsavvy stock market trader. If you are new to the stock market, make sure that you before you start trading online that you learn as much as you can about trading stocks before you start trading stocks for yourself online.

You may not always have access to a computer or the internet, because of this you should try to pick an online company which will allow you to call and talk to a broker if you ever need to.

It is also a pretty good idea to choose an online brokerage company that has been in the industry for a while.

Online trading is a great thing and one of the benefits of the technological revolution, but it’s not for everyone. You need to think about the decision to trade online very thoroughly and you have to be confident that you know what you’re doing before you jump in, which can take quite and while.

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admin on July 20, 2009 | Filed Under Uncategorized | Leave a Comment