Trading Stocks
Access insights and education for more informed stock trading and investing decisions.
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Whether you're new to stock trading or have years of experience, PM Investmens offers the education, tools, and insights to support you at every stage.
What are stocks and how do they work?
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Owning and trading shares of a company
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A stock represents partial ownership in a company, offering a claim on its earnings and assets. As the company's value rises or falls, so does the value of its stock.
Stocks are generally bought and sold electronically through stock exchanges, the two primary ones in the United States being the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). While some companies sell stock directly to investors, most only sell stock through a brokerage such as Metlife Investments Limited.
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Stocks use cases
Investors buy and sell stocks for a number of reasons, including the potential to grow the value of their investment over time, to potentially profit from shorter-term stock price moves, or even to earn an income by investing in dividend-paying stocks. Stocks often play a role in a comprehensive financial plan that reflects your investment horizon and the level of risk you're willing to accept in exchange for the potential upside stocks can offer.
A historical performance example of stocks in a portfolio:
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Investing in stocks, particularly large-cap equity U.S. stocks, has historically provided higher returns over time in comparison to asset classes in the chart, though with increased volatility. This potential for growth is why many investors choose to include stocks as part of a long-term strategy, while also managing risk through diversification.
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This chart shows how a mix of asset classes arge-cap equity U.S. stocks, moderate allocation, fixed income, and cash equivalent have historically performed over a 20-year period. If you had invested $100,000 in large-cap U.S. stocks in 2004, for example, your investment could have grown to approximately $700,000 by 2024, despite market ups and downs.
A more diversified investment portfolio would likely have had a lower return, but reduced volatility.
Understanding different types of stocks
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Learn about three main types of stocks, as well as some potential advantages and considerations.
Common Stock
Definition- A share of ownership in a company, investors can buy and sell whole shares and fractional shares.
Benefits - Potential for higher long-term return compared to other corporate securities.
Voting rights (does not apply to owners of fractional shares).
Liquidity depending on trading volume.
Drawbacks - Dividends, if available, are often lower, variable, and not guaranteed.
Stock price and dividend may experience more volatility than preferred stock.
Most likely to lose investment if company goes bankrupt.
Preferred stock
Definition - Preferred stocks (or preferred securities) combine features of stocks and bonds, potentially offering higher yields than traditional fixed income but with distinct risks.
Benefits - Dividends are typically higher and fixed compared to common stock.
Share price experiences less volatility compared to common stock.
Preferred shareholders are more likely than common shareholders to recover at least part of their investment if company goes bankrupt.
Drawbacks - Lower long-term growth potential, if any.
No voting rights in most cases.
Generally less liquid than common stock.
American Depositary Receipts (ADRs)
Definition - Many non-U.S. companies trade on U.S. markets through ADRs, which are receipts for foreign shares issued by U.S. banks. ADRs are denominated in U.S. dollars.
Benefits - Local U.S.-based trading tends to be more liquid than local foreign markets.
Investors may be able to access financial information more easily for ADRs than for direct investments overseas.
Drawbacks - Exposure to fluctuations in a foreign company's local currency could affect the value of investments.
Political or economic events in a foreign company's home country could potentially harm your investment.
Trade stocks around the clock at PM Investments
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Opportunities don't always wait for market hours, and neither should you. With extended trading sessions before, after, and overnight PMI gives you the flexibility to act on market moves.
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You can count on our robust platforms and 24/7 access to PM Investments trading specialists whenever you trade.