QuestionI received from a reader: What does it mean to own shares in a “street name”
Some investors hold physical stock certificates; pieces of paper with their name on them that represent their ownership in a corporation. Other investors are invested in a DRIP, or dividend reinvestment program, and their shares are noted by the company’s registrar in an electronic journal; this is known as “book entry”. In both cases, the company can quickly and easily access the total number of shares you own and / or contact you directly.
The most popular holding form for most investors, however, is through a brokerage account or asset management account. When you buy shares of Coca-Cola or The Washington Post through your broker, they aren’t physically sitting in a vault with your name on them. Instead, the broker has them registered in its name; that is, Coke won’t know that you own the shares, it only sees that Schwab or Fidelity owns X number of shares. The brokers, in turn, track who owns what internally.
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That’s the simplest most no-nonsense explanation i’ve heard. Investment terms are so complicated that sometimes the person who is explaining it makes it even worse. I’m glad you know how to speak in layman’s terms.