Basics of the basics: stocks
In fact, this is all, without exception, every word from the first to the last - about the action. Promotions, promotions, promotions - a person who has passed the “merry nineties”, MMMs and other pleasures of our “then” life with you, this word causes not quite a positive reaction and a clear desire “to never do anything to anyone else”. But in actual fact there is nothing terrible in this word, and moreover, in the overwhelming majority of cases, shares are what allows the company to grow and develop. It is the shares that underlie - the very foundation of the world stock market.
In order for this foundation to become clear and strong, you need to give a bit of theory - quite a bit, at a minimum - but absolutely without it all the same is impossible. It is this theory minimum that I will try to give in this and the next article. So…
Immediately introduce some explanations. In the world of finance, the situation is partly similar to the IT market - everything develops too fast, and often develops with a strong bias towards the markets of the US, so the terminology is used mostly in English. And here, as luck would have it, some words have reasonable Russian equivalents, and some have to be content with Anglicisms; therefore, introducing the concept, I will try to define it in Russian, if it is possible, and immediately give the corresponding English equivalents (because if you want to continue studying the subject, you will almost certainly have to deal with English-language sources).
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So, a share (English: share , but more often - stock or equity ) - possession of a part of the company. What is it physically? Recently, more and more - nothing. That is, somewhere in a large computer (and sometimes in many) a record is kept stating that Mr V. Pupkin is a holder of N shares of ZAO “Horns and Hooves Plc”. The more N, the, respectively, for the most part Mr. Pupkin owns. Yes, you understood me correctly - the presence of a stock or shares of a company in your company means that you own some part of all the offices, computers, furniture and even the intellectual property of the company.
Similarly, you own and a certain part of the company's profits - this profit, divided into all shareholders, is called dividends . And finally, you have the right to manage the company - again, in proportion to the number of shares that you own (in practice, of course, you will not take part in the management of the company every day, but will elect the Board of Directors in your vote, it is assumed that the latter is doing everything to increase the value of the company and, accordingly, personally yours - as the shareholder - profits).
In addition to all the good that comes with the possession of the company's shares, there is also a fly in the ointment. Namely - the risk. Yes, yes, exactly that scary word is a risk. Together with the profits and opportunities to "steer" the company, you "get" and part of the risk of doing business. Fortunately, your risk is limited ( limited liability ) - you risk exactly within the limits of the value of your shares (which, however, does not sweeten the pill much if the company goes bankrupt). Roughly speaking, if a company goes bankrupt and becomes bankrupt , you will most likely not get anything.
Generally speaking, it would not be superfluous to stress that in the case of owning shares, no one ever gives you guarantees that it will bring you some profit: some companies pay dividends to shareholders, some prefer to invest everything in development, believing that the growth of the company's shares will compensate the holders for the lack of dividends, but you will never have any guarantees of either the first or the second. Moreover, if a company becomes bankrupt, you are by definition not getting anything , since you are a co-owner of the company and your share (the share of ownership is proportional to the number of shares) will go to pay off the company's debts to third parties.
Then a reasonable question arises - why, in fact, companies issue shares, and share management rights, and give part of the profits? Well, the answer is, again, no different - companies need money for development (if this is, of course, not a financial pyramid - then they need money for completely different purposes). In order to receive this money, companies can either borrow it from someone - either by taking a loan (take a loan), or by issuing a bond (bond), or place shares .
The second option, generally speaking, is preferable for the company, if only because this money will most likely never have to be returned, and all that the buyer of the shares hopes for is that sometime these shares will cost more (if you're lucky - it is much more expensive) compared to how much they cost at the time of purchase. In the first case, the company guarantees that sooner or later it will return this debt (pay off the bond), possibly (under the terms of the contract) by paying some interest ( coupon ) on the amount of the bond (however, if the company goes bankrupt, the chances of getting the money back, in general speaking, they are small - you will be in the queue of creditors second from the end, right before the stockholders who receive nothing by definition).
However, focus on the issue of shares. The time of the initial public offering is called Initial Public Offering , or more often - just an IPO . This procedure is usually performed through an intermediary who guarantees ( underwrites ) the receipt of shares by the buyer (the subtle point - the underwriter guarantees only the receipt of shares, all that happens to them after that is not his sadness). Depending on the conditions for issuing shares, they can either enter the market entirely - and from that moment on everyone can buy a piece of the company, or be partially (or completely) redeemed by potential investors who are interested in investing money in the company.
Based on:
If you are friends with English, I highly recommend at least viewing at least the first source - for a newbie this resource is simply invaluable.
It makes sense to put a logical semicolon in the story about the shares. In the following topics we will discuss issues such as stock types, stock trading, reasons for changes in stock value, and some others. I strongly welcome questions on the topic, and in particular I ask for support from real experts in this field.
Update: in the comments habrachelovek nayjest suggested links to the Russian Wikipedia:
It is somewhat less detailed there, but it is possible and necessary to begin with these articles.
Update 2: Gentlemen, here is the jammed poll. If you have read this far, you are probably interested - and this survey asks what to talk about next. If it is not difficult for you, vote, please - since I will rely on the results of this survey when choosing topics for further articles.
Update 3: Next article in the series
In order for this foundation to become clear and strong, you need to give a bit of theory - quite a bit, at a minimum - but absolutely without it all the same is impossible. It is this theory minimum that I will try to give in this and the next article. So…
Glossary
Immediately introduce some explanations. In the world of finance, the situation is partly similar to the IT market - everything develops too fast, and often develops with a strong bias towards the markets of the US, so the terminology is used mostly in English. And here, as luck would have it, some words have reasonable Russian equivalents, and some have to be content with Anglicisms; therefore, introducing the concept, I will try to define it in Russian, if it is possible, and immediately give the corresponding English equivalents (because if you want to continue studying the subject, you will almost certainly have to deal with English-language sources).
')
Stock
So, a share (English: share , but more often - stock or equity ) - possession of a part of the company. What is it physically? Recently, more and more - nothing. That is, somewhere in a large computer (and sometimes in many) a record is kept stating that Mr V. Pupkin is a holder of N shares of ZAO “Horns and Hooves Plc”. The more N, the, respectively, for the most part Mr. Pupkin owns. Yes, you understood me correctly - the presence of a stock or shares of a company in your company means that you own some part of all the offices, computers, furniture and even the intellectual property of the company.
Similarly, you own and a certain part of the company's profits - this profit, divided into all shareholders, is called dividends . And finally, you have the right to manage the company - again, in proportion to the number of shares that you own (in practice, of course, you will not take part in the management of the company every day, but will elect the Board of Directors in your vote, it is assumed that the latter is doing everything to increase the value of the company and, accordingly, personally yours - as the shareholder - profits).
Risk
In addition to all the good that comes with the possession of the company's shares, there is also a fly in the ointment. Namely - the risk. Yes, yes, exactly that scary word is a risk. Together with the profits and opportunities to "steer" the company, you "get" and part of the risk of doing business. Fortunately, your risk is limited ( limited liability ) - you risk exactly within the limits of the value of your shares (which, however, does not sweeten the pill much if the company goes bankrupt). Roughly speaking, if a company goes bankrupt and becomes bankrupt , you will most likely not get anything.
Generally speaking, it would not be superfluous to stress that in the case of owning shares, no one ever gives you guarantees that it will bring you some profit: some companies pay dividends to shareholders, some prefer to invest everything in development, believing that the growth of the company's shares will compensate the holders for the lack of dividends, but you will never have any guarantees of either the first or the second. Moreover, if a company becomes bankrupt, you are by definition not getting anything , since you are a co-owner of the company and your share (the share of ownership is proportional to the number of shares) will go to pay off the company's debts to third parties.
Issue of shares
Then a reasonable question arises - why, in fact, companies issue shares, and share management rights, and give part of the profits? Well, the answer is, again, no different - companies need money for development (if this is, of course, not a financial pyramid - then they need money for completely different purposes). In order to receive this money, companies can either borrow it from someone - either by taking a loan (take a loan), or by issuing a bond (bond), or place shares .
The second option, generally speaking, is preferable for the company, if only because this money will most likely never have to be returned, and all that the buyer of the shares hopes for is that sometime these shares will cost more (if you're lucky - it is much more expensive) compared to how much they cost at the time of purchase. In the first case, the company guarantees that sooner or later it will return this debt (pay off the bond), possibly (under the terms of the contract) by paying some interest ( coupon ) on the amount of the bond (however, if the company goes bankrupt, the chances of getting the money back, in general speaking, they are small - you will be in the queue of creditors second from the end, right before the stockholders who receive nothing by definition).
However, focus on the issue of shares. The time of the initial public offering is called Initial Public Offering , or more often - just an IPO . This procedure is usually performed through an intermediary who guarantees ( underwrites ) the receipt of shares by the buyer (the subtle point - the underwriter guarantees only the receipt of shares, all that happens to them after that is not his sadness). Depending on the conditions for issuing shares, they can either enter the market entirely - and from that moment on everyone can buy a piece of the company, or be partially (or completely) redeemed by potential investors who are interested in investing money in the company.
Based on:
- www.investopedia.com/university/stocks
- en.wikipedia.com/Stock
- en.wikipedia.com/Initial_public_offering
- en.wikipedia.org/wiki/Underwriter
If you are friends with English, I highly recommend at least viewing at least the first source - for a newbie this resource is simply invaluable.
It makes sense to put a logical semicolon in the story about the shares. In the following topics we will discuss issues such as stock types, stock trading, reasons for changes in stock value, and some others. I strongly welcome questions on the topic, and in particular I ask for support from real experts in this field.
Update: in the comments habrachelovek nayjest suggested links to the Russian Wikipedia:
- ru.wikipedia.org/wiki/Action_(finance)
- ru.wikipedia.org/wiki/ Underwriter_ (on market) valuable documents
It is somewhat less detailed there, but it is possible and necessary to begin with these articles.
Update 2: Gentlemen, here is the jammed poll. If you have read this far, you are probably interested - and this survey asks what to talk about next. If it is not difficult for you, vote, please - since I will rely on the results of this survey when choosing topics for further articles.
Update 3: Next article in the series
Source: https://habr.com/ru/post/43377/
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