There are now a large number of brokers who don't charge commissions for stock trades and allow clients to buy fractional shares of stocks. Investors can buy and sell public stocks by opening an account with a stock broker. Once the IPO has been issued and the stock begins trading, supply and demand dynamics will move its price up or down. They do this through initial public offerings (IPOs), where companies are required to meet SEC financial transparency requirements and share price is typically decided by an investment bank. Private companies "go public" to raise money for business initiatives such as launching new products or services expanding its reach. While private shares are typically only available to accredited investors, accreditation isn't required to invest in stocks that are traded on public exchanges such as the New York Stock Exchange or Nasdaq. How do stocks work?Ĭompanies can issue their stock shares either privately or publicly. And in the worst-case scenario, a stock owner's shares could become worthless if the company was to go bankrupt. When the company does well, its stock owners share in those profits.Ĭonversely, shareholders can also expect their returns to be diminished if the company underperforms or declines. Investors buy and own stocks in hopes that the company will succeed.
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