Basics
The Basics
The Basics covers what a newcomer needs to understand stocks mechanically, before any question of buying them comes up. What a share actually is (a slice of ownership in a business, with real rights and real limits), how exchanges match buyers and sellers, how a price is set from one trade to the next, how companies list through an IPO, how dividends, splits and buybacks work, and what an index like the S&P 500 or the S&P/TSX Composite really measures. Read in order, the articles build a working mental model of the market. Most people who own stocks through a retirement plan skipped this part. The aim is to make that a choice rather than an accident.
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What Is a Stock?
A stock is a slice of ownership in a company: a claim on its future profits and leftover assets, with limited liability. Here is what that means in practice, with real arithmetic.
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How the Stock Market Works
The stock market is a network of exchanges and trading venues where shares change hands. How the NYSE, Nasdaq, and TSX work, who trades, and what happens to your order.
Read the explainer →How Stock Prices Are Set
A stock's price is set by the last trade between a buyer and a seller in the order book. How bids, asks, auctions, and news move prices, with a worked order-book example.
Read the explainer →How IPOs Work
An IPO is a company's first sale of shares to the public. How underwriters, book building, lock-ups, direct listings, and SPACs work in the US and Canada, with the arithmetic.
Read the explainer →How Dividends Work
A dividend is a cash payment from a company to its shareholders. How the declaration, ex-dividend, record, and payment dates work under T+1, why the price drops, yield, and DRIPs.
Read the explainer →Stock Splits and Buybacks
Why a stock split changes the number of shares but not the value of the company, how reverse splits work, and how share buybacks compare with dividends, with the EPS arithmetic.
Read the explainer →What Is a Stock Index?
A stock index tracks a basket of stocks with one number. How the S&P 500, Dow, Nasdaq, and S&P/TSX Composite are built, and why cap-weighted and price-weighted indexes differ.
Read the explainer →Common vs Preferred Shares
Common shares carry votes and the residual claim on profits; preferred shares trade upside for a fixed dividend and priority. Dual-class shares, rate resets, and liquidation order explained.
Read the explainer →Bull and Bear Markets
A bear market is a fall of 20% or more from a peak; a bull market is a rise of 20% or more from a low. Every S&P 500 bear since 1929, how deep it went, and how long recovery took.
Read the explainer →Stocks vs Bonds
Stocks are ownership; bonds are loans. How equity and debt differ in payments, priority, risk, and long-run returns, with US data from 1928 to 2025 and why most portfolios hold both.
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