The World’s Simplest Guide to the Stock Market: A beginner's guide to stocks, and the stock market by Edward W. Ryan

The World’s Simplest Guide to the Stock Market: A beginner's guide to stocks, and the stock market by Edward W. Ryan

PART ONE: COMPANIES
Any exploration of stocks and the stock market should begin with a
basic understanding of companies.
While day-to-day fluctuations in stock prices are exciting and get a lot of
attention, underneath all the activity there are real companies.
Companies are businesses. They operate in different industries and promote
different causes, but they all have the same aim: to generate a profit.
Their ability to do so is what ultimately determines their value.
In thinking about any company or business, there are a few things you’ll
want to know.
Who are the people managing the company?
How is the company’s performance evaluated?
And where does the capital come from to fund the company?
These three topics—people, performance, and capital—comprise the three
chapters in this part of the book.

CHAPTER 1: PEOPLE
Companies can seem like complex behemoths, but at the end of the day,
they are only as functional as the people running them.
In this chapter we look at the common corporate structure in the U.S. This
structure is usually formed of two tiers: the executives and the board.
The executives manage the day-to-day operations of the business, while the
board ensures that the executives are doing what’s in the best interest of the
company’s owners.
EXECUTIVES
My brother, Joey, owns and operates a food truck in Austin, Texas.
As a small business owner, he’s responsible for the company’s strategic
decision-making, the accounting, the operations, the marketing, the human
resources, and so on.
At a big company, the types of work remain the same, but it’s too much for
a single person to handle.
The managerial positions that are common across most big companies are
not arbitrary titles. The roles reflect a logical delegation of responsibility
that helps a big company function and operate efficiently.
The most common senior executive positions found at big companies are:
The Chief Executive Officer (CEO), who is the highest-ranking executive
in the company. He or she is the face of the company. They typically deal
with high-level strategic decisions and direct the company’s overall growth
strategy.
The Chief Operating Officer (COO), who oversees the day-to-day
administrative and operational functions of the company. He or she

The World’s Simplest Guide to the Stock Market: A beginner's guide to stocks, and the stock market by Edward W. Ryan