Common Stocks
As the name might suggest, common stocks are the more common type of stock that you can purchase in the stock market.
By purchasing a share of common stock in a corporation you establish yourself as a part owner of that business. You and
all the shareholders of that company are, technically speaking, the owners. And each of you has a claim to the assets
and earnings of that company. If the company does well you earn money, and if they do poorly you likely lose money. The
company may allow you to share in the profits of the company by distributing dividends to each shareholder, or you may
make money if the price of the stock goes up (capital appreciation).
But aside from that, being a holder of common stock allows you to do one other thing...vote.
That's right. When major changes to the structure of the company occur, be it new management, election of board of
directors, etc., the company must let you, the shareholder, vote (common stock is also referred to as voting shares).
Typically, one share of stock equals one vote. So simple math suggests that the more shares you own the more votes you
get. Naturally, someone with many shares has more influence over someone with fewer shares.
As a side note, some companies may issue different classes of shares which may carry with it different voting privileges.
For example, in a class A share of stock, the shareholder my get 10 votes for each share, while class B shares get one
vote for each share. It's a way for the company to still maintain some control over which population of shareholders have
a larger say (and class A shares will certainly cost more than class B). Berkshire Hathaway, the Omaha-based company run
by the investing great Warren Buffet, offers class A shares of his company (which trade at phenomenally high prices), and
also offers class B shares called "Baby Berks" which trade at much lower levels (but still much higher than most other
stocks of any kind). The class A shares also give the investor multiple votes per share while class B is only one.
If you own common stock shares and have the opportunity to vote, do it! Read up on the proposed changes and let your
voice be heard. You do own part of the company, after all.
