What are the differences between listed and over-the-counter stocks? What are the methods for buying and selling stocks? What is the emerging stock market?

Basic Concepts of Listed and Over-the-Counter Stocks

◾ What is a listed stock?

Listed stocks refer to the shares of companies that are traded on the stock exchange. When you buy them, you own a small part of that company.

The company wants to go public, and the threshold is not low. The regulations are very strict! The stock exchange has set a bunch of standards, and not just any company can enter. After going public, they also have to regularly disclose financial reports. Poor performance? They might get kicked out.

◾ What is over-the-counter stocks?

Over-the-Counter (OTC) refers to stocks traded on the OTC market. In Taiwan, it is called the Taiwan OTC Exchange (TPEx). Unlike listed stocks, OTC trading mainly relies on broker-dealers holding inventory to facilitate transactions.

The over-the-counter market includes not only stocks but also bonds, foreign exchange, and even cryptocurrencies and other financial products.

The companies here? They are usually a bit smaller. Many of them are still unable to meet the listing requirements.

Where is the trading location?

◾ Listed Stocks:

Buy and sell on formal exchanges. Both online and offline are available. It's that simple.

◾ OTC stocks:

Taiwan stocks are traded on the over-the-counter market. The US stock market is divided into several types, including OTCQX, OTCQB, and the pink market (PINK). There are plenty of options to choose from.

What are the differences in application requirements?

◾ Listing Threshold for Taiwan Stock Exchange

1. The company must be registered for more than 3 years.
2. The capital amount must be at least 600 million TWD.
3. To make money! The pre-tax net profit meets one of several criteria:
   • In the past two years, it has reached more than 6% of the capital.
   • An average of 6% over two years and better than the previous year in the most recent year.
   • Achieving over 3% for five consecutive years
4. The number of shareholders exceeds 1,000, and the number of external shareholders exceeds 500, holding 20% or more of the shares or more than 10 million shares.

◾ Taiwan Stock Over-the-Counter Threshold

It seems to be a bit more lenient. Just need to register for more than 2 years, with a capital of 50 million. The profit requirement is also lower, reaching 4% in the last year, or 3% for both years, or even an average of 3% over two years with the last year being better. However, at least 4 million TWD must be earned.

In terms of shareholder structure, external shareholders only need 300 people, holding 20% or more of the shares or 10 million shares or more.

How to buy and sell these stocks?

◾ Stock Trading

Taiwan Stock Market: You just need to open an account with a securities firm. It's simple.

U.S. Stocks: You can find overseas brokers or use a sub-brokerage. But be mindful of the time difference! U.S. stock trading hours are from 9:30 AM to 4:00 PM Eastern Time, so people in Taiwan have to stay up late.

◾ OTC stock trading

It's similar to stocks. For Taiwan stocks, you need to place orders through a securities broker, and for U.S. stocks, you can also use overseas brokers. Most brokers support both.

Analysis of Investment Pros and Cons

◾ Benefits of Listed Stocks

1. High potential for returns: These companies usually have better growth opportunities.
2. Stable Dividend Earnings: Regular payouts, earn money while you sleep
3. Against inflation: Stocks can preserve value better than deposits.

There are also quite a few risks. Market fluctuations can be significant, and you have to spend time researching. It's not that simple.

◾ Advantages of OTC Stocks

1. Diverse choices: There are all types of companies.
2. Low entry fee: Stock prices are usually not that high.
3. Growth Potential: Many are emerging stars in development.

But the risks are higher. Regulations are not as strict, trading volume is low, and stock price fluctuations can be dizzying. It's a bit exciting.

Tips for Beginners

First, take a look at the depth of your own pockets. Study the target company; just because others say it's good doesn't mean it's suitable for you. Do you want to make quick money or accumulate slowly? This determines how you should play.

The stock market seems like a game, but losing money really hurts. Better to be cautious.