Common Stock

Common stock represent fractional ownership in a business. For more, also see “common shareholder”

Common stocks are believed to outperform bonds and cash in the long run, but this may be debatable, as not all stocks perform and the most widely used benchmark index for these calculations is the S&P 500 which is an aggregate of the 500 best publicly traded companies in the US.

Common stocks are generally preferred over bonds when interest rates are low and/or a bull market has been in place for a long time. In a prolonged down market, bonds are more favored, as expectations for stocks become more pessimistic, or as some would say, realistic.

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