Subscribe to this topicForums > General Investment Discussion > Topic: General questions about owning stock
| Sep 18th 2007, 16:29 Isegrim Nikolaidis |
General questions about owning stock | |
| 1: If I buy shares from a company do they become my private property ? 2: Does owning a percentage of shares mean that I own a equal percentage of that company ? 3: Would the profits on this percentage not also belong to me ? 4: If so, how is it possible that someone else can decide where it must be spended it on ? two examples to clarify: 1: If you buy a car, would you allow the person who sold it to you to dictate when and where you could drive it ? 2: It would be like Inverstor Allen dictating Arbitage Wise where and when to spend CapEx profits after he sold Avix to him. Sounds redicilous, or does it not ? So why is it different with the shares that I own ? How come that there is no choice for me to decide if I want it payed out or reinvested in the company ? |
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| Sep 18th 2007, 17:40 Dezmond Martinek |
Re: General questions about owning stock | |
| When you buy stock your buying part of the car. You are in this Limo (or in some cases a YUGO) with a whole bunch of other people. The driver is the CEO. If you want a new driver for whatever reason, like you think his driving sucks or he likes to tailgate large construction vehicles or whatever then you and all the shareholders get to vote. Since the driver in this case has a controlling stake of 51 percent or more, he or she is the majority and its up to him or her to listen or not. Usually there is information about how this guy drives available before you decide to get in the car. Once you get in you can get out any time you want. Sure a lot of times there is a big ass puddle right next to the door but this is the risk you take and sometimes a pair or wet shoes is way better than a head on collision. For some reason corperations seldom install airbags. This was fun... I hope that helps. | ||
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| Sep 18th 2007, 18:14 Ima Janitor |
Re: General questions about owning stock | |
| (these are all imho) 1)yes 2)usually (depends on company and should be posted up front) 3)yes - BUT - most companies state ahead of time they only pay out a set % of profits as dividends, and re-invest the rest in teh company or save it for rainy day. So you should get an equal % of the profits / dividends that are paid out, btu not always a equal % of gross profit 4) majority %. in RL corps stockholders vote on most major things like takeovers. some decisions that are confidential or everyday decisions are voted on by a board. the board can be chosen by the CEOs or can be voted on by stockholders depending on a companies individual policy. So if (in most sl companies) one person owns over 51%, technically they dont have to ask you anything. Now some. YEP, and myself, will let some of or all of shareholders vote on things to keep things more balanceed and make it more fun. But technically if they own 51% like the above post said your along for the ride. |
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| Sep 18th 2007, 20:06 Isegrim Nikolaidis |
Re: General questions about owning stock | |
| First of all thanks for the awnsers. I understand the concept of majority stockholder and that he/she has the final dicission about the company policy. but even if he/she owns 99.9%, he/she does not own the 0.1% that I bought. Now what he/she does with the 99.9% of the profit is up to him/her, but the 0.1% of the profit belongs to me and I dont remember giving them control over that. So if a COMPANY makes a PROFIT should it not FIRST be divided among those who have a rightfull claim to it. After that I will decide MYSELF where and how use MY 0.1% profit. |
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| Sep 18th 2007, 20:28 Kailen Juran |
Re: General questions about owning stock | |
| Allow me to answer in terms of how it works in RL. First of all, a corporation is its own legal entity, independent of the shareholders and even the CEO. This means that if you own 0.1% of a company's shares, that does not give you 0.1% of the assets. Instead, you have a 0.1% interest in the company in terms of deciding policy. It is the corporation that decides what to do with any profits. It can retain profits in order to build value to the company, pay it out to shareholders in the form of dividends, or a mixture of the two. Just because a corporation does not declare dividends does not mean that it is a faulty stock. Consider Berkshire Hathaway, run by Warren Buffett. They have never paid dividends and have no intention of doing so. However, the real value of the company has grown to the point where a single share trades in the six-figure range. Part of the rationale for not paying dividends involves taxation issues as withholding and building real value is tax-free to the investor. |
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| Sep 18th 2007, 20:57 Isegrim Nikolaidis |
Re: General questions about owning stock | |
| It was not about the driver or about which direction the car goes. But more about why I do not have any control over the earings that are due to me. | ||
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| Sep 18th 2007, 21:35 Isegrim Nikolaidis |
Re: General questions about owning stock | |
| Thanks Kailen that clears it up for me. I had the wrong impression about owning stock. I thought that buying a share meant, a riskbearing particepation in the capital of a company. Is capital not the total of all assets ? I need to reconsidder why I am buying stock. As savings account that gets a 0.1% compounded daily sounds better at the moment. |
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| Sep 19th 2007, 04:26 Kailen Juran |
Re: General questions about owning stock | |
| Owning stock does technically come with more control than a deposit in a financial institution, but as most companies have majority ownership vested in one person, it turns out to be the same result. And for now you may be correct in terms of savings accounts yielding better returns, especially in a bear market, which SL has been in over the summer. As seen with Ginko and to a certain extent with Allenvest, even that is not without risk, but it does tend to be more consistent. Well wishes. |
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| Sep 19th 2007, 04:48 Hellge Schnyder |
Re: General questions about owning stock | |
| I dont think that owning Stocks come with more control. The way is so easy. A CEO goes to IPO, makes fine Business Plans and Announcements and when the shares are sold he has the whole money at his Avatar and noone can guarantee that he not will escape with all the money. In RL we have Law and Order so its not really easy for companies or CEOs to make any Kind of fraud. But here is nothing. Everyone with a bit finance background can list a company here and noone can make any kind of guarantee that he will make his job good. You can see it at Jasper Tizzy. First one of the biggest CEO in SL. Since his Investitions and Companies get Problems he dicides to sell all out and leave SL. The shares were halted and now without any worth. And noone can do anything against such a actions... I have enough money lost with Ginko, Avc, CGI, KFM and now maybe SLMS so i can really tell that it isnt worth to invest in SL because there arent enough Control possibilities to save shareholders. Everyone who tells anything other is a dreamer... |
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| Sep 19th 2007, 05:21 Hellge Schnyder |
Re: General questions about owning stock | |
| The best way is to check the price history of the companies at WSE, Capex, ISE etc... Nearly 70 or 80% of all listed companies has a decreasing price history since they are in IPO. So why should anyone think they are a good investment? This is a virtual World where are nearly 80%Sellers, maybe 10%real customers and a lot of newbies without any money. And that all in a time when residents leave Sl, Companies became bankrupt every faster, RL companies leave because they had realized that Sl is only a game, the real medias like TV, Internet and Newspapers are publishing even worse News etc... I think SL is in a real recession so it would be the best for all to cash out and wait till the problems are fixed or LL crashed... |
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