| Alternately known as "stocks" or "equities," the term | | | | own; it's in their nature to grow and evolve. |
| "shares" most accurately describes what you acquire | | | | Conservative long-term investors will risk their money |
| when you invest in a company: When you buy | | | | only on "mature" companies which have fulfilled their |
| "shares," you gain ownership in your | | | | potential and remained at the top of their industries. |
| company-of-choice. Therefore, you have influence | | | | Moderate risk-takers will look for companies just |
| over its growth and direction-at least to the extent | | | | beginning to flourish, seeing that their shares steadily |
| that you vote at company meetings; and, to some | | | | have risen in value as the company has grown its |
| extent, you affect the company's day-to-day | | | | market share and increased its profits. All share prices |
| operation. "Share," of course, is not just a noun; it's | | | | will fluctuate over the short term. A minor dip in |
| also a verb, which here means that you share in the | | | | share prices means very little. When share prices |
| company's fortunes. When your business turns a | | | | steadily decline, however, prudent investors |
| profit, you receive dividends and the value of your | | | | acknowledge they should sell. |
| equity rises. When your business falls a little short of | | | | Not every stock market axiom applies in the real |
| its forecasts or loses a little of its market share, you | | | | world. Just about everybody can explain the |
| may forfeit your dividend, watching the value of | | | | "risk-reward ratio": the greater the risk, the greater |
| your stock decline. | | | | the reward, the saying goes. It goes far better for |
| Prudent investors steadfastly follow one cardinal | | | | poker hands than for stocks, though. In the late |
| principle: Buy and hold! Stock traders who buy and sell | | | | 1990's, all internet start-up companies seemed both |
| as frequently as schoolgirls change outfits have far | | | | promising and risky. In 99% of cases, the risk far |
| more in common with gamblers than with | | | | outweighed the promise, because the "dot-coms" |
| businessmen. And experience shows that stock | | | | produced no useful, durable goods. Although a |
| market gamblers typically fare about as well as | | | | company's production of desirable products |
| mediocre players at an all-pro poker table. If all of a | | | | dramatically reduces the risk you take when you |
| company's leading indicators do not support your | | | | invest in that company, it typically increases your |
| decision to risk your money on the enterprise's | | | | reward. Even a cursory examination of today's NYSE |
| continued growth, you should look for a more | | | | or FTSE share prices will show that British Petroleum |
| promising investment. All share dealers will remind you | | | | and other energy producers, the companies with |
| that past performance is not an assurance of future | | | | today's most desirable products, still have the highest |
| performance. But if a company's share price steadily | | | | values. Similarly, even in the throes of worldwide |
| has risen over several decades, you reasonably may | | | | economic despair, shares of Rolls-Royce have held |
| infer that it will continue to rise. | | | | their value, while shares of promising solar energy |
| Business ventures "quicken," taking on lives of their | | | | companies have tumbled. |