## Understanding the Main Investment Tools: Stocks and Ownership Shares

### Stocks in English and Defining Ownership

When discussing investments in the capital markets, two terms that often appear and cause confusion for beginners are "Stock" and "Shares." Although these words are often used interchangeably, their meanings differ slightly. "Stock" is a broader term that refers to an ownership stake in one or more companies, while "Shares" is more specific, referring to units of ownership in a single security or mutual fund.

### The Process and Motivation Behind Issuing Stocks

When a company decides to issue stocks to the public, it is selling a portion of ownership to investors. Buyers of stocks become shareholders with rights to receive a share of the company's profits and assets. Companies generally issue stocks to raise funds for various purposes, including paying off existing debt, developing and launching new products, expanding into new markets or regions, and building or improving facilities and infrastructure.

### Reasons Why Investors Choose to Be Shareholders

Investors are not only seeking profits from trading but also looking for income and value in various forms. Shareholders can claim dividends, which are a portion of the profits distributed by the company to owners. Additionally, if the company operates efficiently and stock prices increase, shareholders can sell their shares for a profit. Beyond financial returns, common shareholders in most companies also have voting rights on important organizational decisions, giving them influence over management and operations.

### Classification of Stocks by Characteristics

Stocks traded in the capital markets can be divided into two main types: common stocks and preferred stocks.

**Common Stock** represents basic ownership in a company. Common shareholders have voting rights and receive dividends based on the company's performance. This means dividend values can fluctuate, and there is no guarantee.

**Preferred Stock** holds a special position. Preferred shareholders receive priority in receiving fixed dividends before common shareholders. In the event of liquidation, they also have priority in debt repayment. However, preferred shareholders usually do not have voting rights.

### Classification of Stocks by Growth Potential

Beyond classification by fundamental characteristics, stocks can also be categorized based on growth potential and investment strategies.

**Growth Stocks** (Growth Stock) are shares of companies expected to grow at a rate higher than the market average. Investors bet that these companies will expand their customer base, increase market share, and compete effectively in the coming years. Growth stocks often do not pay high dividends because they reinvest most profits into expanding their business.

**Value Stocks** (Value Stock) are the opposite. They come from stable companies with a consistent profit history. The prices of value stocks are often undervalued relative to their intrinsic worth, offering low price-to-earnings and price-to-book ratios. Value investors expect steady dividends and slow, less risky growth. These companies tend to feel more stable compared to the high volatility of growth stocks.