Prof G Markets: What is a Stock?

Ownership Basics

Understanding stock ownership involves recognizing the tangible and intangible aspects of holding shares. Jason Stavis explains that owning stock means having a real stake in a company's assets and profits, proportionate to the number of shares owned. This ownership extends to receiving dividends, which are regular payments distributed from a company's excess profits 1.

Being a stock owner means you are an actual owner of the corporation and all of its assets, including the profits.

--- Jason Stavis

Ed Yardeni adds that many perceive stock ownership as an abstract concept, akin to owning crypto tokens, but it actually grants real ownership rights and decision-making power 2.

   

Influence

Shareholders wield significant influence over corporate governance, primarily through voting rights. Scott Galloway highlights the role of activist investors, who use their stakes to push for changes in company strategy, such as cost-cutting or profit distribution 3.

Shareholders do have an impact and can have influence, but it's situational.

--- Scott Galloway

Jason Stavis notes that while individual shareholders may have limited direct influence, collectively they control the company, especially during major events like acquisitions or sales 4.