ShmoopTube

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Finance, a la Shmoop. What rights do you have as a common [intro screen]

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stock public shareholder? All right, so you've saved your newspaper delivery money now [question on chalk board]

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for a year, saved over two grand, and you've had your

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eye on a hundred shares of whatever.com, which conveniently hit exactly 20 bucks [person buys shares]

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a share today, including commissions, if you want to sell it. So you buy a hundred

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shares for two grand. Now what? What rights do you have? Well, you always have

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your right to party... old song, ask your parents. All right, but that won't help you [people party]

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here. The company does wonderfully over the next few years and hits 40 bucks a

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share. Well, you have a right to sell the stock, book your profit, pay your taxes... [share price graph]

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yeah. And the same would be true if the company did horribly. Yeah, you could sell

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it at 12 bucks, book your losses, come back to fight another day after crying. [sad words]

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But as a minority shareholder in whatever.com where you own a hundred

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shares out of the total 20 million they have outstanding, you own 100/20 million, [tiny person with lots of shares]

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or 0.000005% of the company. So what rights should you

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have? You're not exactly the control shareholder. Well, as a common shareholder, [person realizes his own insignificance in this cruel world]

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American law gives you only a few rights, the biggest of which is to be able to

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vote for the board of directors. You know, who then hires the CEO. So that's it. [person votes for board]

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That's your big right that you have as a public shareholder. You can vote for

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the board. And yes, you will cast a fraction 100/20 million of the [really tiny pie sliver]

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votes, a very small percentage. About like voting for your local congressman, you'll

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have some impact but not much. The key take away? Well, you don't have many [person talks to congressman]

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rights. If they pay a dividend, you'll get that, and there are some other little

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legal things, but don't hold your breath without a big oxygen bottle. So before [person with oxygen mask]

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you hop into bed with a given stock investment, be pretty comfy that you have

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confidence in the lunatics running the asylum. Yeah, or it could end up [people in asylum]

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being a very bad investment.

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