For some reason I get the feeling that people have no idea what “stocks” are, with some who hold particularly strong views on them being included. To hold stock in a company is to have some portion of ownership in that company (equity). Simple as that. If you hold 100 shares and there are 1,000,000 shares total, you hold 0.01% of the company. At some point, the original investors owned the company in full, but they either wanted to or had to (to raise money for the company) sell some of it.
So what is the purpose of owning a piece of a company? To make money, of course (a simplified analogy can be found in another post). Companies presumably have an opportunity to make a profit over time, and that profit belongs to the owners. That profit is often reinvested back into the company if it is appropriate, but then the owners have stock in a larger company that has a chance of making an even bigger profit. That is what you are paying for when you buy shares in a company: the future earnings of the company.
Now, that is the fundamental reason… a secondary reason exists in that it is possible to make the quick buck. Since the ’90s in particular there has been an increasing segment of society that looks at the market as something to “game.” Enter the rise of the day-trader, high frequency trading, etc. The fundamentals take a back seat to gauging emotion and behavioral patterns.
So we have two completely different visions on the market, but neither can be ignored. We get huge spikes based on the behavior-based trades, but it always pulls back to the fundamentals. In the ’90s we saw the internet boom. Investors rode a wave of positive sentiment until suddenly people collectively remembered the fundamental question: “aren’t these companies supposed to make money?”
Anyways, getting back to the point, stock in companies exists for one reason but is often used for another reason. Keeping both in mind is always critical.