Going Public What happens when a privately held company has an Initial Public Offering (IPO), where it sells shares to outside investors for the first time. Stock Market Stock Market: This represents all companies investors can buy into, sell or trade. To actually place a trade, investors use different stock exchanges, like the NYSE or NASDAQ. So when you hear on the news, “The stock market crashed after the President’s speech,” it’s referring generally to all stock trading. (See also: New York Stock Exchange, NASDAQ) Stock Stock: A share, or stake, in a company. As a shareholder, you own part of the corporation’s assets and earnings—so you’re (technically) a part-owner! Your stake in the company depends on the number of shares you own relative to the number of total number of shares (so, sadly, your one hundred shares of Apple probably won’t get you into the next shareholders’ meeting . . .). Stocks are also the “meat and potatoes” of most investment portfolios and have outperformed most other investments historically. Publicly traded stocks have a ticker symbol to identify them and trade on—you guessed it— the stock exchange. (See also: Equity, Security, Stock Exchange) Short Short: “Going short” basically means you’re trying to make money off of something that you think won’t do well. It’s the opposite of “going long” or just buying a stock outright which is a vote of confidence in that company. It’s a more advanced trade because there is way more risk. If you buy the company outright, the most you can lose is 100% of the value. If you short it and it goes up more than 100% you can lose an unlimited amount of money—so be careful, and make sure that you think it’s going to go way down because you make the difference if you are right. You lose the difference if you are wrong. (See also: Long) Initial Public Offering Initial Public Offering: An “IPO” occurs when a company sells stock to the public for the first time. It’s essentially the debutante ball for a private company announcing that it will let anyone buy into it. The buzzy ones tend to be well-known consumer platforms (“B-to-C,” which is business to consumer) like Facebook, but all sorts of companies go public that you haven’t heard of (“B-to-B,” where businesses sell to other businesses). It’s also a time when founders make actual bank and not “paper money” or equity that hasn’t been liquidated.