There are two principal benefits to owning stock. One is the fact that by exercising the purchase of a piece of a particular company, the investor is a part of the overall funneling of investment and operating capital to that company. In that sense, being a stockholder is one of the great benefits of a capitalistic society. It is a vote of confidence, expressed not at the ballot box for a political candidate but rather via a stockbroker or online stock purchase service, for a corporation.
The other main benefit of owning and selling stock is of course the incredible financial gains that can be made by savvy and, yes, sometimes lucky investors. Profitable stocks can accrue in value at an annual percentage value that greatly exceeds any other financial investment, such as government securities and aggregate mutual funds. For example, on the NASDAQ exchange, which often has more vertiginous increases in stock prices, investors who bought Food Technology Service stock at the beginning of 2009 had made a 52.9% profit by the beginning of 2010.
Apex of Stock Value
But the apex of stock value occurred a few years earlier, when a single Class A share of Berkshire Hathaway stock was briefly market valued at over $100,000. This was a bit of an optical illusion, because Warren Buffett, the company’s chairman, long ago decided to never split into larger amounts of shares his top-tier stock units, though he did launch a B class in1996. By comparison, if General Electric had never split its stock, the price would have also long ago risen to over $100,000.
Still, there’s no doubt that in the fall of 2006, when the Berkshire Hathaway Class A stock price made stock market history by being the first to hit six figures, it was the essential representation of the paper’s ultimate benefit. If you pick the right one, you too can become rich through, essentially, the capital labor of others.
NASD100.com – “Most Profitable U.S. Consumer Stocks as of 1/30/2010”, February 1, 2010, Retrieved November 16, 2010 from http://www.nasd100.com/2010/02/most-profitable-us-consumer-stocks-as-of-1312010.html
USA Today – “Berkshire Hathaway: Almost a Screaming Buy at More Than $100,000 Per Share”, November 17, 2006, Retrieved November 16, 2010 from http://www.usatoday.com/money/perfi/columnist/krantz/2006-11-17-berkshire_x.htm
USA Today – “Berkshire Hathaway Stock Hits $100,000 a Share”, October 24, 2010, Retrieved November 16, 2010 from http://www.usatoday.com/money/markets/us/2006-10-24-berkshire-usat_x.htm