Ever wonder about shares in a company? With the stock market fluctuating so unpredictably throughout 2007 and into 2008, let us pose a simple question and maybe even dive back in time:
Photograph of the New York Stock Exchange by Helico
Q: Why are shares in a company called “stock”?
A: The modern concept of sharing capital ownership was initiated by the Dutch East India Company in 1612, which raised money by selling pieces of the business to the public. This process gave the Dutch East India Company the ability to grow and share its profits with its “shareholders.” The original meaning of the word “stock” was the trunk of a tree. Like that trunk, stock in a corporation supplies the necessities of life to the branches. This nourishment to any size company is cash.
Stocks and shares are the same thing. Stock refers to an overall ownership in one or more companies within a portfolio. Shares signify ownership of one specific individual company.
Today a “stock market” is a place where securities are bought and sold, but the first one in London, England, was a fourteenth-century fish-and-meat market and was so called because it was built on a site formerly occupied by the stocks used for corporal punishment.
