When considering investing in the stock market, buying shares is often the first idea that comes to mind. This is because the stock market is considered the heart of stock market investing. But do you know everything there is to know about stocks?
What is a stock? What are the different types of shares? Why does a company issue shares? Which markets allow you to buy a company’s securities? Who can buy and sell shares? What are the differences between a stock and a bond? How do stocks perform? How do you choose your stocks when you want to invest in the stock market? What are the taxes on stocks? Discover all our explanations on the stock market and stocks in video and in our 2025 guide to stocks on the stock market.
What is a stock?
It is a kind of title of ownership of a share of the company that issued it. The share that a partner holds in the company is proportional to the number of shares of that company that he holds.
To better understand this mechanism, imagine a large house. This house represents the capital of a company. It contains a certain number of square meters. Each share is one square meter. The more square meters (shares) you own, the larger your share of the house (total capital). If the company issues new shares through a capital increase, it expands the house by creating new rooms. These rooms can be purchased either by existing shareholders or by new investors wishing to become shareholders of the company.
When you buy a stock, you become a shareholder in the company. You then own a portion of the company’s equity. As a result, the shareholder has a right to the company’s assets and profits.
Why does a company issue shares?
Issuing shares is one way for a company to raise funds. Traditionally, a company can raise funds in three different ways:
bBorrowmoney from a bank
borrowing money directly from investors in the financial markets (issuing bonds);
sell shares of its capital to investors (issue of shares).
There are many reasons why a company might issue shares. A company needs money to expand internationally, launch a research and development (R&D) project, hire new employees, and, of course, for many other reasons.
What are the primary market and the secondary market?
When a company sells shares to investors to finance itself, it issues shares. There are two scenarios.
First possibility: the company introduces its capital on the stock market, on the so-called “primary” market, that is to say the market for new shares. This is called an initial public offering or IPO . Remember this term, which means “Initial Public Offering”, the English equivalent of “introduction en Bourse” and is widely used by the specialist press.
Second possibility: a company already listed on the stock exchange, which needs money, chooses to issue new shares. It will sell them, as in its initial public offering, on the primary market. This is called a capital increase. This decision is made at an extraordinary general meeting.
The primary market is not the only one. It’s perfectly possible to buy shares from someone other than the issuing company. Once a company has gone public, its shares can be resold on the “secondary” market. This is, simply put, the market for used shares.
What is the Stock Exchange? Discover this marketplace where shares are bought and sold.
The stock market is the intangible place where shares are bought and sold. It can therefore be said that it is a marketplace where company shares are exchanged for money.
In France, shares are listed continuously, during five sessions per week, from Monday to Friday, from 9 a.m. to 5:30 p.m.
The same company’s stock can be listed on multiple stock exchanges. Tesla shares are listed on the NYSE (New York Stock Exchange), as well as on the Milan Stock Exchange and the Frankfurt Stock Exchange.
Total Energies has recently been much talked about its possible listing on the American stock exchanges . In this case, it would be a so-called “cross listing”, with Total Energies shares being available on the Paris Stock Exchange and the New York Stock Exchange.
Stocks vs. Bonds What are the differences between these securities?
Bonds and stocks are two types of financial products used by investors to increase their capital. But they are two very different products.
Stocks are securities of ownership in a company, while bonds are debt securities of a company.
A shareholder holds a share of the company’s capital and becomes a partner. Their share gives them the right to receive a portion of future profits and voting rights at general meetings. A bondholder holds a share of the company’s debt and becomes a creditor of the company or government that issued it.
It is generally much more profitable to hold a stock than a bond. However, the creditor takes less risk. Note that they enjoy a significant advantage over the shareholder: in the event of the company’s bankruptcy, the bondholder will be repaid before the shareholder. However, remember that the bondholder has no rights to the profits generated by the company.
There are also convertible bonds, which allow you to convert your bonds into shares under certain conditions.
In conclusion, it is interesting to note that the price mechanics of bonds and stocks vary greatly depending on central banks’ interest rate monetary policies drop in interest rates is generally considered beneficial for equity markets, while it will penalize bond yields. To learn more, we invite you to read our guide to bonds.
What are fractional shares?
It is also possible to purchase fractional shares, a solution increasingly offered by neo-brokers to make stock investing more accessible. Rather than acquiring a full share, the investor can purchase only a portion, which is particularly attractive for stock market securities with a high unit price. In practice, the broker consolidates several orders and holds the shares onits behalf, while distributing proportional rights among investors based on their shares.
In some cases, these may also be derivative products that replicate the performance of the stock and distribute dividends.
Unlike directly held shares, fractional shares do not always allow for voting at general meetings, but they generally entitle you to pro rata dividends. This approach thus allows you to diversify a stock portfolio with a smaller capital, without waiting to have the necessary amount to buy a full share.
Who can buy and sell shares on the stock market?
The stock market is open to everyone, and anyone can buy or sell shares there: individuals, of course, but also banks, insurance companies, pension funds, and companies that can buy or sell shares of other companies.
In some cases, companies may conduct share buybacks.. In this way, the company reduces the number of shares outstanding. This process aims to give more value to the holders of shares still outstanding after the share buyback.
How to buy a stock?
To buy a share, the investor must first open an account with a stockbroker such as Degir,o, eToro, Trade Republic, Freedom,24 or X, TB or contact their bank (online bank or traditional bank) and choose one or more envelopes ( securities account, PEA, PEA P, PEA Jeunes ) to house their shares.
Once you have set up your securities account or PEA, you will need to place an order. In concrete terms, this involves placing a buy (or sell) order on a given security, specifying the number of shares you want to buy (or sell), at what price, whether you want to pay cash or use the deferred settlement service or SRD (this option is only available on a securities account and for certain shares only).
Please note that it is also possible to hold a share in a registered form. In this case, the securities are directly registered and managed by the issuing company. The shareholder is then obliged to open an account with each listed company in which he holds shares, whereas holding “bearer” shares allows him to consolidate all his investments in one or a few vehicles (securities account, PEA, etc.).
Please note: the listed company that employs you may also pay you shares as a reward for your work or as a welcome gift, for example, when you sign your employment contract. A company granting its shares to its employees or managers is called a free share grant. The company may also offer its employees stock options, whichallowwyoutoo acquire company shares at advantageous conditions.
