YOU OWN STOCK DIRECTLY

Remember your dog that got under the fence? Let’s say that he has formed a corporation called Puppy, Inc. It has four product lines: dog apparel, dog treats, dog flea collars, and dog toys. You trust him, and he seems to have a good management team, so a year ago you purchased $2,000 worth of their stock, and over the past year it has gone up in value. The importance of the amount of this investment, the fact that it has not lost value, and the period of time you have held it will become apparent later.

The company seems to understand its customer base. It has a diverse board made up not only of pure-bred shepherds, terriers, and sporting dogs, but also a good portion of mutts. Its products are selling well. So far, this seems like a great investment.

Figure 5: Puppy, Inc. looked like a great investment. Used with permission of As You Sow, the author, and iStock Photos.