A publicly traded company is a company that is available for people to buy through the stock market. A "share" is a fractional piece of one of these companies, when you buy a share, you are buying a piece of the company. If a company has one million shares in total, and you buy one of them, you become the owner of one millionth of the company, and hence the owner of one millionth of the profits, assets and liabilities of the company.

The stock market is a glorified auction house where buyers and sellers bid to buy and offer to sell these "shares" in the public companies.

The reason why a company will "go public" in the first place and sell pieces of itself on the stock market are many, but the general idea is that when a company needs money in order to funds its operations, it has two options. The first option is obvious, you borrow the money. If the company needs a huge amount of money and profits may be a long time in coming, borrowing may not be a viable option as the interest payments would be too high and the company would go broke. When a company does wish to borrow money, it does so by selling bonds, read the bonds FAQ to find out what this involves.

The second option is to sell something for cash. If the company doesn't have any assets it can sell, the directors and private owners may instead decide that they need an investor or investors to come in and give them money without expecting an interest payment, but instead owning a portion of the company itself, becoming a financial partner and part owner.

If the company needs an investor it can go through the business community looking for a wealthy person to become their new partner, or a consortium of wealthy people, remaining in this case as a private company, or they could go through the stock market and become a "public" company.

If they decide to go through the stock market, the company approaches a stock broker, who guides them through the process of selling shares in the company to investors and traders on the stock exchange. The broker consults the company, helping them prepare a prospectus (a document that describes the company, designed to inform a potential investor about what sort of business this is), and helping them go through the legal processes required in order to be able to sell to the stock market.

When the company is first offered to investors this is called a "float" or Initial Public Offering (IPO). Later on the company can offer more shares of itself to the market for sale, and it will go through the broker to bring these shares to the investors.

The investors end up partial owners of the company, the company gets the cash it requires to proceed with whatever it had in mind and goes on its way building its new business empire. As the shareholders partly own the company, they share in its fortunes, and are entitled to cash payment of a portion of the profits (a "dividend") and/or their share gets more valuable as the business becomes more prosperous, so they can sell their share later at a profit if they want to.

The broker is paid a fee for his services and may end up with a share in the business themselves as part of the deal, if investors aren't too enthusiastic about the IPO the broker may end up having to buy all the shares himself, part of the fee charged by the broker reflects this risk that the broker faces, if the company is of poor quality the broker may charge a very high "underwriting" fee to reflect the risk they are taking in facilitating the IPO, knowing that there is a higher chance that the broker will be stuck with having to buy a really poor quality company. (Brokers that underwrite really poor quality companies may then end up dumping the shares on their clients giving inflated buy recommendations - this is mentioned in the ripoffs FAQ in the bit about telemarketed shares and "pump and dump" operations, so watch out if your broker seems particularly keen to get you to participate in an IPO they are underwriting).

There are hundreds of stock exchanges around the world, in Australia the main one is the Australian Stock Exchange (ASX) but there are many more. There are also futures exchanges, like the Sydney Futures Exchange (SFE) where contracts to buy and sell commodities and financial derivatives are traded and options exchanges. Some exchanges are bedlams of screaming traders shouting out buy and sell orders with a phone stuck in each ear, others are quiet sterile environments with nothing but a bunch of flickering computer screens and a few workers running around keeping it all humming. The ASX is one of the quiet exchanges, there is nothing spectacular about the exchange itself, it is just the hub of a computer network. In America the main exchange is the New York Stock Exchange (NYSE), and this is the place where those televisions images of frantic traders waving their arms about come from.

In order to buy and sell shares, members of the public usually have to go through a stock broker as well. You can go through a "full service" broker who will tell you what to buy, typically charging 1% or more of the order size as his commission (hopefully the recommendation won't be the latest dodgy issue he got stuck with in the last unsuccessful IPO), or a "discount" broker, that will charge a low fee but won't give advice.

Discount brokers may provide a certain amount of data for investors to look at, and might have newsletters that publish their research, but in general they don't usually tell you what to buy, taking orders and only performing their duty in facilitating transactions. You can call a discount broker by phone and have some guy enter your order into his computer, but increasingly people are using Internet connections to buy and sell, their orders processed online without any human hand being involved. Usually brokerage rates are a lot cheaper for Internet trades.

Both the ASX and SFE sites have links to stock and futures brokers and you can contact them to get plenty of free information sent out to you. Since they want your business, you can call numerous free numbers and have various people send you literally a mountain of free literature, often of very high quality. After sifting through all that lot there should be very few things you don't know about the practicalities of investing and trading, and from there it should just be a matter of choosing your investment style and a broker, then going for it.