A stock represents a share of ownership in a company. When you buy a share of Apple stock, you literally own a tiny piece of Apple Inc. — its products, its cash, its intellectual property, everything. Millions of people own stocks, and collectively, they are the owners of that company. The board of directors works for them. The CEO reports to them. That's the fundamental idea: stocks are ownership.

Companies sell stock to raise money. Instead of borrowing from a bank (which they'd have to pay back with interest), they can sell pieces of themselves to investors. This is what happens during an IPO (Initial Public Offering) — the first time a company sells stock to the public. Once those shares are out there, people buy and sell them on the stock exchange. The price goes up and down based on what people think the company is worth.

There are two ways to make money from stocks. First is capital appreciation — buying at a lower price and selling at a higher price. If you buy a stock at $50 and sell it at $75, you made $25 per share. Second is dividends — some companies pay out a portion of their profits to shareholders on a regular basis. Not all companies pay dividends (many growth companies reinvest profits instead), but those that do provide a steady income stream.

The stock market can seem intimidating, but at its core it's just a marketplace. Like a farmer's market where people buy and sell produce, the stock market is where people buy and sell ownership in companies. The New York Stock Exchange (NYSE) and NASDAQ are the two biggest stock exchanges in the US. Most trading now happens electronically — no more shouting on the trading floor (well, mostly). Understanding that a stock is simply ownership is the first building block for everything else you'll learn.