I started to realize that many people enter the stock market focusing only on the company's name and completely ignore a detail that changes everything: what type of stock they are buying. In Brazil, we have this unique characteristic of choosing between common shares, preferred shares, or units. And this choice affects voting rights, how you receive dividends, protection as a minority shareholder, and even how easy it is to sell the stock later.

I'll be straightforward: common shares (ON) give you voting rights in the company's decisions. When you buy ON, you become a partner with decision-making power, even if for small investors this is practically limited. The code always ends in 3 - PETR3, VALE3, ITUB3, these are ON. The big difference is the tag along, a mechanism that protects holders of common shares: if someone takes control of the company, you are guaranteed to receive at least 80% of what the controller received. This makes a big difference in acquisitions; common shares tend to appreciate more.

Preferred shares (PN) work differently. You don't vote, but in compensation, you receive priority in dividends and in reimbursement if the company goes bankrupt. The code ends in 4 or higher numbers - ITUB4, PETR4, BBDC4. There's an interesting detail: if the company goes 3 years without paying dividends, those holding PN gain voting rights until it is regularized. Preferred shares usually have higher liquidity on the stock exchange, which is why they attract those seeking passive income.

The real choice between common and preferred shares depends on what you want to do with your money. If you think long-term and care about governance, ON makes more sense. If you want recurring income and ease of trading, PN is better. In the banking and energy sectors, you see a lot of PN precisely because these companies pay hefty dividends. In retail and agribusiness, common shares dominate because they prioritize transparency and growth.

There are also units, which are packages combining ON and PN together. The code ends in 11 - SANB11, TAEE11. It’s like a middle ground that balances political rights and income.

The point is that there is no better or worse. It all depends on your investment horizon, how many dividends the company pays, and how its governance is structured. But one thing is certain: those who consciously choose between common and preferred shares make much better decisions than those who just buy randomly.