What skills do business shareholders need?

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A shareholder is anyone who has complete or partial ownership of a company. Someone who owns one share of a multi-billion dollar company as part of a modest investment portfolio is a shareholder, as is someone with a controlling interest in a technology startup. Perhaps the easiest way to think...

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A shareholder is anyone who has complete or partial ownership of a company. Someone who owns one share of a multi-billion dollar company as part of a modest investment portfolio is a shareholder, as is someone with a controlling interest in a technology startup. Perhaps the easiest way to think through the question of skills is to look separately at passive versus active shareholders.

A passive shareholder buys shares in a company as an investment but takes no part in actively running the company. This sort of shareholder needs a solid understanding of what makes a good investment but does not need detailed internal knowledge of how the company works. Often choice of shares is as much about balancing a portfolio or mirroring an index as about looking at individual businesses in detail. The basic skills required are some understanding of the nature of investing and finance, basic economic knowledge, patience, some mathematical skills, and discipline (avoiding emotional buying and selling). 

An active shareholder needs more detailed knowledge of the specific industry and a strong background in accounting and finance to understand what measures will increase the company's profitability.

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