What is a stock?

A stock (or "share") is a unit of ownership in a company. Buy one share of a company and you own a tiny fraction of that business — its assets, its future profits, and a vote at shareholder meetings (usually a negligible one, unless you own a lot of shares).

Why companies issue stock

Companies sell shares to raise money — for expansion, research, paying down debt — without taking on a loan they have to repay. In exchange, they give up a slice of ownership and, often, a share of future profits (as dividends).

Why it can go up or down

A share's price is what the market is currently willing to pay for that slice of ownership. It moves on changes in expectations: better or worse-than-expected profits, new information about the business or its industry, interest rate changes, broad market sentiment — a huge number of small updates, priced in continuously.

The core risk

Unlike a bank deposit, a stock has no guaranteed return and no guarantee of getting your money back. If the company does badly enough, a share's value can fall toward zero. This is the fundamental trade-off of equity investing: higher potential return, in exchange for genuinely bearing the company's risk.