Equities – often called shares or stocks – are securities that entitle the "holder" to a "share" of a private or public company – hence the term "shareholder". Publicly-traded shares are traded on markets around the world, their values rising and falling depending on various factors including sentiment towards the sector in which the company's business operates, dynamics specific to the company itself and the overall economic outlook for the country or indeed, the global economy as a whole.
Many equities will pay holders something called a "dividend". A dividend is a slice of the profits the company has made paid out each year on each share and for those holding a large number of shares; the dividend can be quite substantial. Dividends are paid entirely at the discretion of the company's directors and they can be cut, raised or halted altogether depending on the trading conditions for the company.
There are two main types of equity; common stock or preferred stock. Preferred stock entitles the holder to a greater claim on the assets and earnings of the issuing company. If, for example, a dividend is suspended altogether then, should the company decide to restore it at a future date, a preferred stock may entitle its holder to receive missed dividend payments before the dividend can be reinstated for those holding common stock.
Equities have made a spectacular recovery since the great financial crisis of 2008 and, in our view, they are still one of the best ways to generate growth in an investment portfolio and preserve wealth thanks to their ability to outstrip inflation over the longer term.
Wainwright Marks Management invests in stocks traded in the advanced markets like the US, the UK, Hong Kong, Japan and the European Union. We also trade equities on stock markets in the world's emerging and frontier markets including SE Asia and Latin America.
Difficult as it may be for some to agree on what represents the best approach to investing, ultimately, the overarching aim is to emerge from a venture with more than that with which one enters having exposed one's capital to as little risk as possible.