Stocks
What are they?
Stocks are ownership securities issued by a company that represent a fraction of its share capital. By acquiring shares, investors become shareholders and gain specific rights, such as receiving dividends, which are a portion of the profits generated, and participating in corporate decisions through voting in general meetings.
There are mainly two types of shares:
Common shares: Grant voting rights and participation in the company’s profits. Preferred shares: Offer priority in the distribution of dividends, but typically do not grant voting rights.
Companies issue stocks as a mechanism to raise funds and finance their operations, expansion projects, or consolidation. Unlike borrowing, issuing shares allows companies to obtain capital without generating debt.
The price of shares fluctuates in financial markets depending on various factors, such as the company’s financial results, investor expectations, and general economic conditions. These changes in value make shares a potentially profitable investment, but also exposed to risks.
Key aspects to consider
Stocks are a central tool in the investment strategy of many individuals and institutions. Some key aspects to consider when investing in shares include:
- Diversification: Reducing risks by investing in different sectors and companies.
- Volatility: Fluctuations in price can lead to both profits and losses.
- Returns: Investors can earn through the appreciation of the share’s value or through dividends.
To evaluate a share, concepts like market capitalization, the P/E ratio (Price/Earnings), and the company’s financial statements are crucial. Additionally, it is important to consider the investment’s time horizon and personal financial goals.