Investing can feel more complicated than it needs to be. Financial news is full of technical terms, forecasts and confident opinions about what markets might do next, and it is easy to feel you should be keeping across all of it.
We take a different view. A clear grasp of what a share actually is, how the stock market works, and why broad diversification matters, tends to serve investors far better than trying to interpret every headline.
What a share actually is
Most investors are trying to grow their wealth over time. One way to do this is to buy a share (also called a stock or an equity) in a company, in the hope that its value rises and that the company shares some of its profits with shareholders as dividends. Another is to lend money, through bonds, to a company or a government, receiving interest along the way and your capital back at the end.
Shares tend to move about more in the short term, but they have historically offered the prospect of higher long-term growth than bonds.
A brief history
Buying and selling stocks in the late 1700s meant visiting a bench under a buttonwood tree outside 68 Wall Street, where the New York Stock Exchange began. Today, buying a share is a straightforward process. In the US in 2024, close to 60% of households held stocks, and on average around 12 billion shares changed hands every single day (SIFMA Research, Capital Markets Fact Book, 2025).
What owning a share really means
Buying a share makes you a part-owner of a business. As a shareholder, you have a claim on a share of the company’s future profits and, often, a vote on important company matters. If a company is wound up, shareholders sit behind lenders and other creditors in the queue. That is one reason shares carry more risk than bonds, and why investors expect the possibility of higher long-term returns in exchange for taking it on.
Why companies issue shares
For a company, issuing shares is a way to raise money to invest in the business, fund expansion or strengthen its finances. This is most visible when a company first lists on a stock exchange, or when it later sells new shares. Once shares are in circulation, though, most trading happens between investors, not between investors and the company. In 2024, an average of over $600 billion of shares changed hands between investors every day, yet across the whole year only around $200 billion of new shares were issued.
So when a share price moves, the company itself is not usually gaining or losing that money directly. Buyers and sellers are simply agreeing a new price for the same ownership claim, one that reflects the market’s collective view of the company’s future: expected profits, risks, interest rates, competition and much more. In this sense, the stock market is always looking forward, not backward.
Why we believe in owning the whole basket
For most investors, a sensible route to ownership is not trying to guess which handful of companies will dominate the future. It is owning a diversified basket of companies, with the comfort that tomorrow’s winners will very likely be somewhere inside it. Evidence shows that just 46 firms accounted for half of the $91 trillion in net wealth created by the US stock market over the century to 2025 (Bessembinder, One Hundred Years in the U.S. Stock Markets, 2026).
Source: Albion Strategic Consulting. Data: Vanguard Total World Stock Index Fund. For illustrative purposes only.
The make-up of the market changes constantly, as some businesses grow, others shrink, and new ones appear. A broadly diversified portfolio lets us own a small slice of many companies at once, with weightings that adjust automatically as values change. It is a simple, efficient way to take part in the growth of listed businesses around the world.
Funds also make the practical side of share ownership far easier. Rather than buying, selling and monitoring individual shares yourself, a fund manager can take on that work, including voting on shareholders’ behalf on matters such as board appointments, executive pay and wider environmental, social and governance issues.
This is exactly why we build portfolios around evidence, not opinion. We are not trying to predict which shares will win. We are making sure our clients own a share of the outcome, whoever the winners turn out to be.
Key takeaways
A share gives its owner a claim on part of a business and its future profits.
Most stock market trading happens between investors, not between investors and companies.
Share prices move as the market updates its view of a company’s future prospects.
A globally diversified portfolio gives larger companies larger weightings, while still holding many thousands of businesses.
Diversified funds let investors access global markets efficiently, while a fund manager handles the administration and stewardship
Risk warnings
This is an educational document intended to discuss general investment matters. It does not constitute investment advice or arrange investments and is for information purposes only. Any views expressed are those of the authors and may change without notice. Past performance is not a guide to future returns. Where specific products are mentioned, this is solely to provide educational insight and should not be read as due diligence or a recommendation.
Wells Gibson Limited is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 731027).
