Common stock – What is it , How to trade and Why should we buy it
As its name already says, the common stock is the most common type of stock you will find being traded in the marketplace. When anyone is talking about stock in general and about the stock market as well as prices going up and down, they are most probably referring to the common stock. All stocks are of course traded through a middle person, a company some times that charges some kind of commission every time someone wishes to trade a stock, be it buying or selling.
The goal of buying a stock is to basically make a long-term investment through it and through the benefits that come along with it. The benefits are of course the fact that you are able to vote for people running for the board council of the company the stock belongs to. Other than that, as a stock owner you have the right to earn a portion of the company’s earnings on a regular basis. It is of course all dependent on the performance of the company throughout the year, since if a company goes bankrupt then the stock will be worth nothing in the end.
This risk can and can’t be avoided by doing the right amount of research and actually picking a company that you believe will do well in the future. If a stock is on the rise then it’s not that bad of an idea to pick it up since it might just go even higher, or at least rise a bit more and then stop there. You could also pick a stock because the company that is selling has shown that it can be relied on actually growing or there have been rumors of potential growth in the near future, as well as something like a big contract the company is working on for example.