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Introduction to Stock

what is Malaysia stock market? KLSE


Basically, when you purchase a stock, it means that you are now one of the owners of a company. A stock simply means a share in the ownership of a company. For example, now after buying in the stock of Company XYZ, you are entitled to share the company earnings as well as voting right. The more stock you are holding for Company XYZ, the larger the influence you would have. To a certain extent, you can even call for an annual general meeting if your share % is large enough.

However, in our case, an individual investor like me and you, will not have so much share to influence a company's direction. Even if we have, making a decision that steer the company's direction is not easy.

Hence, what we are actually doing is that we look for a good company with profitable operation, and then we put money to buy a part of company's ownership, hoping it to grow larger and larger. If the company does perform well, its earning will increase and this investment is considered as successful!
What if we pick the wrong stock? Well, as a shareholder, you also lay claim on the assets of the company. In case of bankruptcy, the company will be liquidated and you will receive the remaining assets after all creditors of the company have been paid. Why so?

Read more on “Why the company have to pay creditor before a shareholder in the case of liquidation?”

Conclusion: Remember. When you purchase stock, you are buying in an ownership. If you know that the company’s business is already down the slope, will you still buy it in? Of course not. Therefore, before you buy a stock, ask yourself if this business is going to work? Do you really want to be his partner?

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