A stock is a share of ownership in a company, giving the investor a stake in that company and an opportunity to partake in its success or failures over time. Choosing a stock to invest in requires research into the company, its industry and general trends in the stock market; it also requires assessing the investor’s own financial circumstances. It is advisable to consult professional advisers and familiarize oneself with well-established methods of valuing a stock. However, even without formal training in these areas, investors can make informed choices by getting answers to key questions and applying common sense.

Companies raise money through the sale of their stocks to the investing public, enabling them to expand and grow. When a company first makes its shares available on the stock market, it is said to have gone public.

Besides providing potential wealth-building opportunities, stocks offer investors the advantage of potentially higher average return rates than other types of investments such as bonds. This is due in part to the fact that stocks are essentially assets that are potentially capable of growing, while bond income typically decreases over time because the asset is actually lending money to a company or government in exchange for an interest payment.

Most investors choose to buy and hold shares in a variety of different companies, as this can help reduce the risk of losing money by holding only a single stock. This strategy is called diversification.

When deciding which stock to purchase, investors are usually looking for two things: profit growth and dividend payments. Profit growth is typically achieved through increased stock price appreciation, which can be driven by a company’s success in the marketplace or by favorable economic conditions. In contrast, dividend payments are generally the result of a company’s ability to generate sufficient profits to pay out a percentage of its earnings to its shareholders.

A stock’s value may increase or decrease for a number of reasons, including the strength of competing businesses, management changes and overall economic trends. A stock’s price may also fluctuate as a result of the company being involved in a scandal, natural disaster or other major news event that affects its reputation.

In addition, a stock’s price can be impacted by a company’s debt and its perceived future profitability. The latter is a measure of how much a company’s revenue is likely to grow over the long term, taking into account its existing and planned projects.

Finally, a stock’s value can be affected by supply and demand in the market for that particular security, with the higher demand pushing up prices. This is often referred to as technical analysis. As a final note, stock certificates that are no longer in use by the company for which they were originally issued can have some value as collectibles. Local libraries often have print and online resources to assist with finding out whether a company still exists, in what form, and if their stock is still outstanding.