| It seems that every time the stock market enters a | | | | company, and a voting right for each share |
| downward cycle, there is a chorus of voices raised in | | | | purchased. Due to capital growth, common stocks |
| condemnation of the system. Most of those who | | | | yield the highest returns over time, but at a greater |
| criticize the markets constitute the small investor | | | | risk. That risk is most pronounced in situations where |
| class or advocates for that group, and the most | | | | a company goes bankrupt - an event that places |
| common complaint is that the market is too difficult | | | | common stock owners at the end of the line of |
| for those individuals to understand. Companies go | | | | those eligible to receive money in the bankruptcy |
| bankrupt, and small investors often lose their | | | | proceedings (after the creditors, bondholders, and |
| investment wholesale, all because they lack the basic | | | | preferred stock owners). |
| knowledge necessary to ensure that their investment | | | | For those who wish a smaller but safer return on |
| is as protected as it can be. One key to this | | | | their investment, preferred stocks are the way to |
| protection is for anyone buying stocks to educate | | | | go. Anyone buying stocks that are preferred is |
| themselves on the different types of stock available. | | | | guaranteed a fixed dividend of return, as well as |
| The two primary types of stock available for | | | | preference over common stock holders in the event |
| investors are common stock and preferred stock. | | | | that the company is dissolved. Preferred stock, |
| They each have their advantages and disadvantages, | | | | however, can be repurchased by the company at |
| and each represent a different level of investment | | | | any time, without warning or reason. |
| and ownership of the company in question. Before | | | | Within these two types of stock, companies are free |
| you begin buying stocks, it is important for you to | | | | to develop customized options in many forms - |
| understand these two types of stocks so that you | | | | including limiting the voting rights of shareholders. |
| can assess the risk of each and make your | | | | These divisions of stock within the same company |
| purchasing decision accordingly. | | | | are generally designated Class A stock, Class B stock, |
| Common stock is the type of stock with which most | | | | etc. Before buying stocks, you should always |
| people are familiar. When you are buying stocks | | | | research exactly what you are buying, so that you |
| labeled common, you are purchasing shares in the | | | | know what your rights and obligations will be. |