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| Boilerpipe Text | Advantages of Long-Term Stock Investment
Frequently Asked Questions
The most expensive publicly-traded share of stock of all time were the Class A shares of Berkshire Hathaway (BRK.A), Warren Buffet’s conglomerate and holding company as of January 2022. They hit $487,675 per share on Jan 18, 2022.
It’s important to remember that this does not mean it is the most valuable company by stock value. The value of a company’s stock, or “
market capitalization
,” is determined by multiplying the price of its shares by the number of its shares.
As of early 2022
, the all-time closing high of the Dow Jones is 36,799.65 points, which it reached on January 4, 2022. The index’s all-time intraday high was 36,952.65, reached on Jan 5, 2022.
Unrealized gains or losses represent the amount you would gain or lose if you sold your investment, often a stock, at its current value. You “realize” these gains or losses when you actually sell the investment.
When people talk about stocks, they are usually referring to common stock, which is stock that usually gives voting rights in shareholder votes. Preferred stock almost never confers voting rights, but if a company only has enough money to pay some of its dividends, it has to pay preferred stock dividends first. In addition, in the event of a bankruptcy, preferred stockholders have priority over common stockholders on company assets.
Cyclical stocks are those that tend to rise and fall with the broader economy, falling when the economy is doing poorly and rising when the economy is doing well. Non-cyclical, often also called defensive stocks, tend have steadier performance that do better when the economy is down are down but peak less high during boom years.
Key Terms
Stock
Stock is a type of investment representing ownership of a business. A unit of stock is called a share.
Standard & Poor's (S&P) 500 Index
The S&P 500 is an index of the stocks of 500 large U.S. companies that make up about 80% of the U.S. stock by market capitalization. It is a benchmark for large-cap U.S. stocks and is often used as a proxy for the U.S. stock market as a whole.
Cyclical Stock
Cyclical stocks are stocks that tend to rise and fall in line with the broader economy. Cyclical stocks include those of technology, finance, and energy companies. This contrasts with defensive stocks which tense to have steadier returns, drop less when the economy falls, and rise less when it grows.
Common Stock
Common stock is a security that represents partial ownership of a company. When people colloquially refer to “stock” this is what they mean. It contrasts with preferred stock, a type of security that has aspects of both bonds and stocks.
Preferred Stock
Preferred stock is company stock that is issued at a fixed par value, similar to a bond, and that does not confer voting rights, but has priority over company earnings when allocating dividends and priority over common stock in bankruptcy proceedings. Preferred stock has characteristics of both common stock and bonds. It occupies an intermediate space between the two in terms of its risk and returns.
Floating Stock
Floating stock, is the number of shares of stock a company has that are actively being traded by the public. It is generally referred to as “float.”
Secondary Offering
A secondary offering can refer to when a major investor sells their stock on the public market or when a company issues additional stock after its IPO. The former just puts more shares onto the market, while the latter creates more overall shares to raise additional funds for the company.
Fractional Share
A fractional share is ownership of a portion of a single share of stock. This allows investors to buy stocks even if the price of their individual shares is extremely high, such as is the case with companies like Berkshire Hathaway.
Equity Compensation
Equity compensation is when employees of a company are paid stock, stock options, or a similar type of investment. By tying the employee’s compensation to the stock price, they are meant to encourage the employee to work to maximize shareholder value.
Meme Stock
A meme stock is broadly any stock that has gained substantial popularity and investment online through social media. The term was popularized after investment in retailer Gamestop was driven through popularity on the r/wallstreetbets subreddit.
Initial Public Offering (IPO) Lock-Up
An IPO lock-up is a contractually specified period prohibiting large shareholders from selling their shares for a specified period of time after a company has its IPO. Lock-up periods are meant to stop major shareholders from selling large numbers of shares early on and pushing down the stock price early on.
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Page Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our
editorial policy.
New York Stock Exchange (NYSE). "Berkshire Hathaway, Inc. BRK.A." Accessed Jan. 22, 2022
Yahoo! Finance. "Dow Jones Industrial Average (^DJI). Historical Data." Accessed Jan. 14, 2022.
U.S. Securities and Exchange Commission. "Stocks." Accessed June 28, 2021. |
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# Stocks
Stocks represent ownership of a company. Stocks owned either directly or through a mutual fund or ETF, will likely form the majority of most investors’ portfolios.
## Stock Investing Essentials
[![Benefits of holding stock for the long term.]() :max_bytes\(150000\):strip_icc\(\)/FinanceYourFuture-Benefitsofholdingstocksforthelongterm-v12-a77eed8e1f5744cdaf6da1a211f68956.png) Advantages of Long-Term Stock Investment](https://www.investopedia.com/articles/investing/052216/4-benefits-holding-stocks-long-term.asp)
[![Woman leaning on a desk with her back to a computer monitor, talking on the phone. ]() :max_bytes\(150000\):strip_icc\(\)/GettyImages-2192192226-f185a4a8cb6148c78f692bb73a9bf6b2.jpg) Investing in Index Funds: Key Benefits and Drawbacks Revealed](https://www.investopedia.com/investing-in-index-funds-4771002)
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[![Stock trader reacting to stock market declines]() :max_bytes\(150000\):strip_icc\(\)/GettyImages-519813184-3e05f7ad7758413c98072951651f0f59.jpg) Where Does the Money Go When Stock Prices Fall?](https://www.investopedia.com/articles/basics/03/060603.asp)
[![Stock exchange traders working at their desks with computer screens]() :max_bytes\(150000\):strip_icc\(\)/GettyImages-2212545851-5fa748db57a44922b713eb4f1a76b974.jpg) S\&P 500 Average Returns and Historical Performance](https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp)
## Frequently Asked Questions
- What’s the most expensive stock of all time?
The most expensive publicly-traded share of stock of all time were the Class A shares of Berkshire Hathaway (BRK.A), Warren Buffet’s conglomerate and holding company as of January 2022. They hit \$487,675 per share on Jan 18, 2022. It’s important to remember that this does not mean it is the most valuable company by stock value. The value of a company’s stock, or “[market capitalization](https://www.investopedia.com/investing/market-capitalization-defined/),” is determined by multiplying the price of its shares by the number of its shares.
Learn More: [What's the Most Expensive Stock of All Time?](https://www.investopedia.com/ask/answers/081314/whats-most-expensive-stock-all-time.asp)
- What is the all time high of the Dow Jones Industrial Average (DJIA)?
As of early 2022, the all-time closing high of the Dow Jones is 36,799.65 points, which it reached on January 4, 2022. The index’s all-time intraday high was 36,952.65, reached on Jan 5, 2022.
Learn More: [What Is the Dow Jones Industrial Average (DJIA) All-Time High?](https://www.investopedia.com/ask/answers/100214/what-dow-jones-industrial-average-djia-alltime-high.asp)
- What are unrealized gains and losses?
Unrealized gains or losses represent the amount you would gain or lose if you sold your investment, often a stock, at its current value. You “realize” these gains or losses when you actually sell the investment.
Learn More: [What Are Unrealized Gains and Losses?](https://www.investopedia.com/ask/answers/04/021204.asp)
- What is the difference between preferred stock and common stock?
When people talk about stocks, they are usually referring to common stock, which is stock that usually gives voting rights in shareholder votes. Preferred stock almost never confers voting rights, but if a company only has enough money to pay some of its dividends, it has to pay preferred stock dividends first. In addition, in the event of a bankruptcy, preferred stockholders have priority over common stockholders on company assets.
Learn More: [Preferred vs. Common Stock: What's the Difference?](https://www.investopedia.com/ask/answers/difference-between-preferred-stock-and-common-stock/)
- What’s the difference between cyclical and non-cyclical stocks?
Cyclical stocks are those that tend to rise and fall with the broader economy, falling when the economy is doing poorly and rising when the economy is doing well. Non-cyclical, often also called defensive stocks, tend have steadier performance that do better when the economy is down are down but peak less high during boom years.
Learn More: [Understanding Cyclical vs. Non-Cyclical Stocks: What's the Difference?](https://www.investopedia.com/articles/00/082800.asp)
### Key Terms
Stock
Standard & Poor's (S\&P) 500 Index
Cyclical Stock
Common Stock
Preferred Stock
Floating Stock
Secondary Offering
Fractional Share
Equity Compensation
Meme Stock
Initial Public Offering (IPO) Lock-Up
- Stock
Stock is a type of investment representing ownership of a business. A unit of stock is called a share.
[Learn More](https://www.investopedia.com/terms/s/stock.asp)
- Standard & Poor's (S\&P) 500 Index
The S\&P 500 is an index of the stocks of 500 large U.S. companies that make up about 80% of the U.S. stock by market capitalization. It is a benchmark for large-cap U.S. stocks and is often used as a proxy for the U.S. stock market as a whole.
[Learn More](https://www.investopedia.com/terms/s/sp500.asp)
- Cyclical Stock
Cyclical stocks are stocks that tend to rise and fall in line with the broader economy. Cyclical stocks include those of technology, finance, and energy companies. This contrasts with defensive stocks which tense to have steadier returns, drop less when the economy falls, and rise less when it grows.
[Learn More](https://www.investopedia.com/terms/c/cyclicalstock.asp)
- Common Stock
Common stock is a security that represents partial ownership of a company. When people colloquially refer to “stock” this is what they mean. It contrasts with preferred stock, a type of security that has aspects of both bonds and stocks.
[Learn More](https://www.investopedia.com/terms/c/commonstock.asp)
- Preferred Stock
Preferred stock is company stock that is issued at a fixed par value, similar to a bond, and that does not confer voting rights, but has priority over company earnings when allocating dividends and priority over common stock in bankruptcy proceedings. Preferred stock has characteristics of both common stock and bonds. It occupies an intermediate space between the two in terms of its risk and returns.
[Learn More](https://www.investopedia.com/terms/p/preferredstock.asp)
- Floating Stock
Floating stock, is the number of shares of stock a company has that are actively being traded by the public. It is generally referred to as “float.”
[Learn More](https://www.investopedia.com/terms/f/floating-stock.asp)
- Secondary Offering
A secondary offering can refer to when a major investor sells their stock on the public market or when a company issues additional stock after its IPO. The former just puts more shares onto the market, while the latter creates more overall shares to raise additional funds for the company.
[Learn More](https://www.investopedia.com/terms/s/secondaryoffering.asp)
- Fractional Share
A fractional share is ownership of a portion of a single share of stock. This allows investors to buy stocks even if the price of their individual shares is extremely high, such as is the case with companies like Berkshire Hathaway.
[Learn More](https://www.investopedia.com/terms/f/fractionalshare.asp)
- Equity Compensation
Equity compensation is when employees of a company are paid stock, stock options, or a similar type of investment. By tying the employee’s compensation to the stock price, they are meant to encourage the employee to work to maximize shareholder value.
[Learn More](https://www.investopedia.com/terms/e/equity-compensation.asp)
- Meme Stock
A meme stock is broadly any stock that has gained substantial popularity and investment online through social media. The term was popularized after investment in retailer Gamestop was driven through popularity on the r/wallstreetbets subreddit.
[Learn More](https://www.investopedia.com/meme-stock-5206762)
- Initial Public Offering (IPO) Lock-Up
An IPO lock-up is a contractually specified period prohibiting large shareholders from selling their shares for a specified period of time after a company has its IPO. Lock-up periods are meant to stop major shareholders from selling large numbers of shares early on and pushing down the stock price early on.
[Learn More](https://www.investopedia.com/terms/i/ipolockup.asp)
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[![Cyclical Stock: A company whose performance mirrors the state of the economy.]() :max_bytes\(150000\):strip_icc\(\)/Cyclicalstock_final-02439ac641e2400488c2a0caa41f2798.png) Understanding Cyclical Stocks: Examples, Risks, and Growth Opportunities](https://www.investopedia.com/terms/c/cyclicalstock.asp)
Page Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https://www.investopedia.com/legal-4768893#EditorialPolicy)
1. New York Stock Exchange (NYSE). "Berkshire Hathaway, Inc. BRK.A." Accessed Jan. 22, 2022
2. Yahoo! Finance. "Dow Jones Industrial Average (^DJI). Historical Data." Accessed Jan. 14, 2022.
3. U.S. Securities and Exchange Commission. "Stocks." Accessed June 28, 2021.
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| Readable Markdown | [Advantages of Long-Term Stock Investment](https://www.investopedia.com/articles/investing/052216/4-benefits-holding-stocks-long-term.asp)
## Frequently Asked Questions
- The most expensive publicly-traded share of stock of all time were the Class A shares of Berkshire Hathaway (BRK.A), Warren Buffet’s conglomerate and holding company as of January 2022. They hit \$487,675 per share on Jan 18, 2022. It’s important to remember that this does not mean it is the most valuable company by stock value. The value of a company’s stock, or “[market capitalization](https://www.investopedia.com/investing/market-capitalization-defined/),” is determined by multiplying the price of its shares by the number of its shares.
- As of early 2022, the all-time closing high of the Dow Jones is 36,799.65 points, which it reached on January 4, 2022. The index’s all-time intraday high was 36,952.65, reached on Jan 5, 2022.
- Unrealized gains or losses represent the amount you would gain or lose if you sold your investment, often a stock, at its current value. You “realize” these gains or losses when you actually sell the investment.
- When people talk about stocks, they are usually referring to common stock, which is stock that usually gives voting rights in shareholder votes. Preferred stock almost never confers voting rights, but if a company only has enough money to pay some of its dividends, it has to pay preferred stock dividends first. In addition, in the event of a bankruptcy, preferred stockholders have priority over common stockholders on company assets.
- Cyclical stocks are those that tend to rise and fall with the broader economy, falling when the economy is doing poorly and rising when the economy is doing well. Non-cyclical, often also called defensive stocks, tend have steadier performance that do better when the economy is down are down but peak less high during boom years.
### Key Terms
- Stock
Stock is a type of investment representing ownership of a business. A unit of stock is called a share.
- Standard & Poor's (S\&P) 500 Index
The S\&P 500 is an index of the stocks of 500 large U.S. companies that make up about 80% of the U.S. stock by market capitalization. It is a benchmark for large-cap U.S. stocks and is often used as a proxy for the U.S. stock market as a whole.
- Cyclical Stock
Cyclical stocks are stocks that tend to rise and fall in line with the broader economy. Cyclical stocks include those of technology, finance, and energy companies. This contrasts with defensive stocks which tense to have steadier returns, drop less when the economy falls, and rise less when it grows.
- Common Stock
Common stock is a security that represents partial ownership of a company. When people colloquially refer to “stock” this is what they mean. It contrasts with preferred stock, a type of security that has aspects of both bonds and stocks.
- Preferred Stock
Preferred stock is company stock that is issued at a fixed par value, similar to a bond, and that does not confer voting rights, but has priority over company earnings when allocating dividends and priority over common stock in bankruptcy proceedings. Preferred stock has characteristics of both common stock and bonds. It occupies an intermediate space between the two in terms of its risk and returns.
- Floating Stock
Floating stock, is the number of shares of stock a company has that are actively being traded by the public. It is generally referred to as “float.”
- Secondary Offering
A secondary offering can refer to when a major investor sells their stock on the public market or when a company issues additional stock after its IPO. The former just puts more shares onto the market, while the latter creates more overall shares to raise additional funds for the company.
- Fractional Share
A fractional share is ownership of a portion of a single share of stock. This allows investors to buy stocks even if the price of their individual shares is extremely high, such as is the case with companies like Berkshire Hathaway.
- Equity Compensation
Equity compensation is when employees of a company are paid stock, stock options, or a similar type of investment. By tying the employee’s compensation to the stock price, they are meant to encourage the employee to work to maximize shareholder value.
- Meme Stock
A meme stock is broadly any stock that has gained substantial popularity and investment online through social media. The term was popularized after investment in retailer Gamestop was driven through popularity on the r/wallstreetbets subreddit.
- Initial Public Offering (IPO) Lock-Up
An IPO lock-up is a contractually specified period prohibiting large shareholders from selling their shares for a specified period of time after a company has its IPO. Lock-up periods are meant to stop major shareholders from selling large numbers of shares early on and pushing down the stock price early on.
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Page Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https://www.investopedia.com/legal-4768893#EditorialPolicy)
1. New York Stock Exchange (NYSE). "Berkshire Hathaway, Inc. BRK.A." Accessed Jan. 22, 2022
2. Yahoo! Finance. "Dow Jones Industrial Average (^DJI). Historical Data." Accessed Jan. 14, 2022.
3. U.S. Securities and Exchange Commission. "Stocks." Accessed June 28, 2021. |
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