Equities – sometimes referred to as shares or stocks – are securities which entitle the holder to a share in the profits of the company which issued them. Publically quoted shares are traded on exchanges around the world and their values fluctuate depending on the sentiment of the market to the specific company and or the market sector in which the issuing company operates.
Many equities will pay a dividend which is effectively a reward the company pays the shareholder for holding its shares and represent a share in the company’s profits. These dividends can be increased, reduced or suspended altogether and are made at the discretion of the board of directors.
Although equities suffered acutely during the course of the great financial crisis of 2008, in Monex Financial view, they still represented the most popular means by which many investors achieved growth in the years following due to their ability to outstrip inflation.
The global financial crisis presented investors with a once-in-a-lifetime opportunity to acquire equities in some of the most respected, financially-sound and profitable companies in the world.
The collapse of the investment bank, Lehman Brothers Holdings Inc, prompted many institutional investors to deleverage – that is, sell equities they had bought with borrowed money in order to meet obligations elsewhere in other markets. This phenomenon drove down the price of stocks in companies which had little, if anything, to do with the financial system and the banks therein.
Many of Monex Financial clients acquired stocks in some of the world’s top 100 corporations at discounts to their highest prices of up to 60%.