What a share actually is

A share is a fraction of ownership in a company. If a company has issued one crore shares and you hold one hundred of them, you own one hundred-lakh-th of that business — its buildings, its loan book, its profits and its problems.

That sounds obvious written down. It stops being obvious the moment you open a price screen, because the screen shows you a number that moves every few seconds, and a moving number invites you to treat it as the thing itself. It is not. The price is what the last buyer and seller agreed on. The business is what you actually own.

Why does this distinction decide everything later?

Almost every mistake a new investor makes traces back to forgetting it. Buying a company you cannot describe. Selling because the price fell, without checking whether the business changed. Holding something worthless because the price might come back.

What does owning a share entitle you to?

• A share of profits, when the company chooses to pay them out as a cash dividend.
• A share of new shares, when the company issues bonus shares or offers you right shares.
• A vote at the annual general meeting, proportional to your holding.
• A claim on what is left if the company is wound up — after every lender and creditor is paid, which in practice usually means nothing.

Notice what is not on that list: any promise about the price. No company owes you a gain. A share can be a perfectly healthy business and still fall for a year because more people wanted to sell it than buy it.

How do shares work in Nepal specifically?

Nepal's listed market is unusually concentrated. Commercial banks, development banks, finance companies, microfinance, life and non-life insurance, and hydropower make up most of what trades on NEPSE. If you understand how a bank earns and how a hydropower project earns, you already understand a large part of the market.

That concentration cuts both ways. It makes the market learnable in a way a broader market is not. It also means "diversifying" across ten Nepali stocks may leave you holding ten variations of the same bet on interest rates. Chapter 8 comes back to this.