A share is a small piece of ownership in a company. When you buy one share of a company, you own a tiny sliver of its profits, assets, and future. The stock market is just a giant, constantly-running auction where buyers and sellers agree on a price for that ownership, second by second.

Prices move because expectations move. If a company's future profits look brighter than people expected, more buyers show up and the price rises. If expectations sour, sellers outnumber buyers and the price falls. In the short term, this can look like noise — a stock can swing 5% on a rumor. Over years and decades, though, prices tend to track real earnings growth.

Two ways people approach stocks

• Trading — buying and selling frequently to profit from short-term price moves. It's closer to a skilled, high-effort job than passive investing, and most retail traders underperform simply holding the market.
• Investing — buying broad, diversified holdings (like an index fund tracking hundreds of companies) and holding for years, letting compounding and the overall growth of the economy do the work.

Key terms

• Dividend — a portion of profit some companies pay out to shareholders, often quarterly.
• Index fund / ETF — a single fund that holds many companies at once, instantly diversifying you.
• Volatility — how much a price swings up and down; higher potential return usually comes with higher volatility.
• Diversification — spreading money across many investments so one bad outcome doesn't sink you.