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  • Difference Between Share and Stock

    Share vs Stock

    In common parlance, share means a portion or part of something. It is often a share of one’s earning, profit or it can be a share of sorrows, depending on the context. Once can also share physical or fiscal burden in a task.

    Likewise, stock refers to accumulated or stored substance. conventionally victuals or grains. It can be stock of any commodity. A nation may talk of buffer stocks. It refers to the nation’s granary and means how much food grains a country has in reserve to tide over a crisis, or to meet the demand in a shortage situation.

    But in the modern world, specially after the Industrial Revolution, stocks have come to mean company shares sold on the stock market. Just a reminder, NYSE, the New York Stock Exchange (NYSE) came into vogue over 200 years ago.

    After generic meanings, let us look at these two words as they operate in a market situation.

    In today’s financial markets, the distinction between stocks and shares has been somewhat blurred. Generally, these words are used interchangeably to refer to the pieces of paper that denote ownership in a particular company, called stock certificates. However, the difference between the two words comes from the context in which they are used.

    For example, ‘stock’ is a general term used to describe the ownership certificates of any company, in general, and ‘share’ refers to a the ownership certificates of a particular company. So, if investors say they own stocks, they are generally referring to their overall ownership in one or more companies. Technically, if someone says that they own shares – the question then becomes – shares in whichcompany?
    Bottom line, stocks and shares are the same thing. The minor distinction between stocks and shares is usually overlooked, and it has more to do with syntax than financial or legal accuracy.
    We’re talking about owning stocks. This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth. Stocks are a part, if not the cornerstone, of nearly any investment portfolio. When you start on your road to financial freedom, you need to have a solid understanding of stocks and how they trade on the stock market.
    The Definition of a Stock: Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.

    Holding a company’s stock means that you are one of the many owners (shareholders) of a company and, as such, you have a claim (albeit usually very small) to everything the company owns. Yes, this means that technically you own a tiny sliver of every piece of furniture, every trademark, and every contract of the company. As an owner, you are entitled to your share of the company’s earnings as well as any voting rights attached to the stock.

    Some people consider preferred stock to be more like debt than equity. A good way to think of these kinds of shares is to see them as being in between bonds and common shares

    Hope you were able to learn the Difference Between Share and Stock.

    Posted under: Finance
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