Hi kids, in my introductory discussion with you on the stock market, I did state a few reasons why I am of the opinion that you, being yet a kid should invest in stocks. I have also, in the last few weeks, taken the time to bring to you, notable global citizens who became great by picking interest in stock market early in life. Let us get back to the very foundation by responding to a simple question of, what are stocks? I mean, what is the buying and selling of shares all about? That is where we shall be discussing this week. Guess what? I was discussing with a mature man just last week about the essence of investing in shares. By my assessment, the man in question cannot be less than age sixty but you know what? He simply smiled and said, ‘chair ko, table ni’ meaning that ‘it is not chair- referring to shares, and that it is table’. Unfortunately, most adults in Nigeria are like him. They understand nothing about stocks. If you therefore will be patient enough to read this piece, though you are still young, you might just be more knowledgeable than most dads and mums across our nation, Nigeria.
What Are Shares or Stocks?
‘Share’ is just an English word that means, joint ownership. In other words, whatever is shared is distributed among and owned by the parties within which a said object is shared.
A ‘Stock’ on the other hand has different meanings but to me and within the context of our discussion, it could be defined as a quantity of something accumulated. It could also be taken as a supply of goods kept on hand for sale. In that wise, a stock could simply be said to be a unit of whatever is owned by an individual.
The next question on your mind should be, what is it that is being owned? You might also be bothered about the stock of what? If you are this inquisitive, then read on.
Look around you, what bank building can you readily see? I’m sure First bank, Union, Wema, Guaranty, Zenith, Access and UBA will be among not leaving behind some others. Stock market investment is all about helping you to become a co-owner of these banks. Let’s leave the banks and move to another set of companies. Has dad or mum ever driven into any filling station to refuel while you are in the car? Can you recall the name of the filling station? I’m sure Oando, Mobil, Total, Conoil and Texaco will most likely be. Of course it could be some other filling stations that are not very popular as these ones. Stock market investment is all about making you a co-owner of these big petroleum marketing companies.
Hello kids, who is the current richest man in Africa? I’m sure you sure know him by name. Alhaji Aliko Dangote you said? You are right. Do you know that about the best way you even at your age to benefit from his wealth is not to go cap in hand begging? It is by just saving some of the monies you do get and become a co-owner of his Dangote Cement plc, Dangote Sugar Plc, Dangote Flour Plc and National Salt Plc. By this, as Alhaji Dangote is getting richer, you also become richer at your own level. This is the wisdom of investing in the stock market.
I can tell you more but let’s fast forward as we conclude the discussion for this week. ‘Share’, in the stock market context, is being an owner of a portion of a big company, of companies older than you and of companies you might even like to work for after school. When you buy the shares of these companies, you become a shareholder. But how are the shares come about?
The ownership and worth or value of every company, being a legal entity must of necessity be represented on paper otherwise referred to as certificate or shares. In a nutshell, the quantity of that each of the owners of the company who had contributed money for the establishment or running of the company will be represented on the paper referred to as certificate o shares.
Dear kids, take your time to read this over and over, let me know your thoughts at obastocks@gmail.com. When we meet on this column next week, we shall be discussing further on shares. Good luck