They Can Go Up...or Down

• All investors have aspirations of building wealth and generating profits when buying stocks. As stocks go up, the value of your investment increases and allows you to sell for a profit. However, the value of your investment can also go down. This can put you in a situation where you may lose money--perhaps all of it--on your investment.
  
  

They Move Fast

• We live in a world where information exchanges hands rapidly and almost instantaneously. Stock prices react rapidly to news developments and can have aggressive price movements in a matter of seconds. If you are investing for the long haul, it is tough to watch a stock second by second to determine the perfect time to sell. Instead, focus on the actual merits of the company. It makes these quick swings easier to stomach.
  
  

They Are Pieces of Ownership of a Company

• When you buy a share of stock, you are buying more than an item with a price tag. You now are an actual owner of the company and are entitled to your respective share of the company's profits, assets and dividends. As you buy more shares, you are increasing your ownership stake in the company. As a share owner, you may not necessarily be able to hire yourself as CEO, but you do have a say in the company's activities by voting at annual meetings, and you have the right to submit proposals to the board of directors for consideration.
  
  

They Reflect Publicly Available Information

• Lots of factors play into the stock price of a company. Things like how many shares are outstanding, the company's revenues and profits, new product lines coming out, law suits and buyouts all play a role in pricing the stock on the exchange. Generally speaking, price of a share of stock is a reflection of what the entire marketplace thinks the share is worth based on publicly available information that the company has disclosed.
  
  

The Price Means Less Than You Think

• Many investors think if a stock trades for hundreds of dollars per share, the stock is expensive. Similarly, investors may think a stock is cheap if it is listed at a few cents a share. The stock price has nothing to with how expensive or cheap the company is in relation to its valuation. Would you rather own one share of $1,000 stock in a company that makes lots of money and has been around for 100 years or 100,000 one cent shares of a company that is bankrupt and going out of business? Avoid using the price per share as criteria to determine an affordable or wise investment.