America has the world’s largest economy*, and it’s the largest equity market in the world. This market includes all the stocks of publicly traded companies in the US.
But what, exactly, is an equity? An equity or a ‘stock’ represents an ownership interest in a company.
Think about it like this: most of the things that make companies valuable (technology, employees, ideas, audiences, and relationships) cannot be physically held in your hand. You own a piece of something greater, and because of that, ownership or partial ownership looks different. That’s why it’s called ownership interest.
It’s like you’re at the state fair and you win one of those bears from the top shelf that’s bigger than your body. The moment you won that bear you claim ownership over it. But it’s kind of impractical to walk around holding it all night long. So they give you a ticket stub that represents your ownership interest on the bear.
Similarly, shares represent ownership interest in a company. Your shares are your ticket stub, which is your ownership interest in the company.
1. Blue Chips: Some companies start as an idea but never make it out of the basement. Still others, start in a garage or a college dorm room and join the ranks of the largest companies in the world. Think Microsoft, Apple, and Facebook! These mega companies, called Blue Chip companies, are in a way like the Beyonces of the investing world.
2. Slow & Steady: The prices of investments go up and down on a second-by-second basis. Sort of like a rollercoaster – except, not all roller coasters are created equal. This investment seeks to avoid dramatic ups and downs, and it does so by investing in low volatility stocks.
3. Small But Mighty: Everyone loves the underdog – in life, love and even in business. All of the companies in this investment are small cap stocks, which means they’re the little guys. These small companies are striving for a serious growth spurt, which can make this investment more volatile than investing in more well-established companies.