What Is A Share Of Stock?

A slice of pizza is like a share of stock

When you invest in stocks, you actually buy shares of stock.  So what is a share of stock anyway?

Let’s think about a pizza pie.  And let’s say you and your friends all chip in and buy a pie together.  So you will all share slices of the pizza pie.  I just said the word “share,” didn’t I?

So you cut the pie into slices.  And you share the slices with your friends.  They each got their shares of slices and you get your share.

Now let’s say you and your friends want to buy a business together.  Maybe a nice wine shop to go with the pizza.  So you will all share the business.

You cut (divide) the ownership of the business into slices (shares).  And you share the ownership (slices, shares) with your friends.  They each get their share and you get your share.

That’s all a share of stock is.  It’s your slice (share) of the business.  It’s your share of the ownership.  It’s your share of the profits.  It’s your share.

Corporations slice their ownership up into shares also.  Anyone can buy a share.  Or you can buy more than one share.

Just like our pizza example — let’s say it cost you $10 and you cut it into 10 slices. That’s $1.00 a slice. If you were really hungry, you could have chipped in $2.00 so you would get two slices.  So you bought two shares.

Of course corporations are a lot bigger than a $10 pizza pie.  So they cut the ownership into millions of shares.

You can buy more than one share.  You can buy 12 shares, or 100 shares, or 1000 shares.  You can buy as many shares as you want and can afford.

But it is exactly the same idea as your 10 shares of pizza pie.  You are buying your slice(s) of the corporate pie.  You are buying your share(s).

Now that was easy enough, yes?

To your health and prosperity – John

FINAL THOUGHT:  Pizza Hut is one of the largest pizza companies in the world.  They are owned by YUM Brands Corporation.

Do you know how many slices (shares) they have divided their corporation into? (I don’t really expect you to know this).

Answer:  466,000,000 shares.  Each share costs about $50.  If you bought all of the shares it would cost over 23 billion dollars ($23,000,000,000) to buy the whole corporation.

Isn’t it nice they slice the company up into many little shares so we can afford to buy part of it?

P.S. If you enjoy these simple explanations about the stock market and investing, you may be interested in my latest book Stock Market For Beginners It teaches you about the stock market and how to invest in simple terms just like this post.  And by the end of the book, you will have started an investment account and put on your first trade.

And know what you’re doing, too.

So if that sounds interesting, just click here for more information  Yes-Tell Me More About Stock Market For Investors.

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