Common Stock

Common stock is what people usually mean by shares. It represents ownership in a company, carries a vote at shareholder meetings, and receives dividends when profits allow.

It ranks behind preferred stock. Dividends come from what is left after preferred holders are paid, and in a wind-up, common shareholders divide whatever remains once creditors and preferred holders are satisfied — usually nothing.

In exchange, the upside is unlimited. If the company grows substantially, that gain flows to common shareholders. It is the position that carries the most risk and collects the largest reward.

It is also the most liquid. Many buyers and sellers keep spreads narrow and make it easy to trade the size you want, and index inclusion generally applies to common shares.

Buying a share means owning a piece of a business. It is an ownership certificate with a price tag that changes daily — the price is not itself the company's value. Lose that distinction and you end up watching only the quote.