Owning a share makes you a fractional owner of a business. Long-term, share prices tend to reflect the earning power and growth of that business — short-term, they reflect the shifting mood of everyone else who owns or wants to.
For most investors, holding stocks via low-cost diversified funds captures the long-term growth of the economy while smoothing out single-company risk.
See also
Practice this in Aurora
See a plain-English bull/bear/bias breakdown on any stock — no signup needed.
Open Decision Lab →Frequently asked questions
Do all stocks pay dividends?
No. Many growing companies reinvest all profits back into the business instead of paying dividends.
Related terms
ETF (exchange-traded fund)
A fund holding many stocks or bonds that trades like a single share.
Index fund
A fund that mirrors an index rather than trying to beat it.
Market capitalization
Share price multiplied by the number of shares outstanding.
Portfolio
The full collection of investments you hold across all your accounts.