Orca is an investing app, but how do you decide what to invest in? We’ll get to that, but first, you need to know what there is to invest in. What comes to mind when you think of investing? That’s right: stocks… or shares. But what’s the difference? Technically, nothing other than semantics. So, as a “linguistic courtesy” to you, here’s our explanation of the distinction.
Semantics 101: share
What can you have a share of? Anything, as long as you can divide it up. For example, if you have a piece of cake, you can say that’s your share. In the same way, if you own a portion of a business, you can say you own a share of that business. But you have to have a share of something. You don’t simply say “I have a share”. You say “I have a share of Amazon”. Whether it’s pie or business, once you can say what it is you have a share of, you’ll have it right.
Semantics 102: stock
The original meaning of “stock” is “everything a company owns” (okay, that’s not exactly what the dictionary would tell you, but who checks dictionaries nowadays?). So, by this definition, if you have a stock, you have a company or a part of it; when you have stocks, you have multiple companies or parts of them. Now, of course, there are many things you can invest in: property, art, or ancient coins, for instance. But when you say “I have stocks” – even if you don’t specify where you have stocks – you’re letting people know that you made the choice to invest in public businesses (following the wise advice of Orca, of course).
Semantics 201: “shares of stock”
To clear up any remaining confusion, here are some easy question-and-answer cases to show you what and where you may say – normally.
- Q: If a business is divided into 350 parts, which are then offered to the public, then each of these 350 parts is what – a stock or a share?
A: You divide a business (or a pie – remember Semantics, 101?) into shares, not stocks. So that business was divided into 350 shares that were offered to people.
- Q: Mr. Smith is a shareholder of Company Z. Mrs. Smith is a stockholder of Company Z. What is the difference in their status?
A: Nothing. “Shareholder” and “stockholder” mean the same, so they are equal (hooray for gender equality 😉 ).
- Q: You can invest in (say the word: stocks or shares) from different market sectors”.
A: Stocks, as there are many companies to invest in.
- Now, a real brain-teaser.
Q: What if someone tells you, “I have 50 shares of this stock”?
A: You’re probably thinking, “What the heck? Shares of stock? Aren’t they almost the same?” But really, it’s just another way to say what you already know. The stock is the collection of the shares.
But what if they say, “I have 50 stocks”? Your first thought might be “Since when is “stocks” plural? And you’d be right. Technically, it’s not. Stock – like coffee or sugar – is uncountable. It doesn’t have a plural form. So if you want to be grammatically correct (Grammar 101 is in another classroom), you’d correct them and say, “No, you have 50 shares of that stock”. But let’s face it, people are lazy with language sometimes, so instead of saying they have 50 shares of Z stock, they might simply say “I have 50 stocks of Z”.
Semantics 202: common vs. preferred stock
When you buy stock in a company, you can be either a common or a preferred stockholder.
- If you are a preferred stockholder, you don’t get to vote on the destiny of the company. However, you are first in line to get dividends, as well as a share of whatever is left if the company goes broke.
- If you are a common stockholder, on the other hand, you will probably be the last priority forgetting dividends and bankruptcy leftovers. But you can vote and have your say in what the company will do.
We hope you got the gist of how to differentiate between stocks and shares. If you didn’t, don’t worry. In the end, it doesn’t matter how you say it. Get busy learning how to get and own them. At least, in case something is unclear, you can always contact our support.