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 General Electric 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 Charles Schwab or Fidelity owns X number of shares. The stock brokers, in turn, track who owns what internally by adjusting accounting records.
There Are Some Dangers If You Hold Stock In a Street Name
Holding stock in a street name is an accepted practice but you shouldn't keep a huge portion of your net worth in a brokerage account using this method, especially if your account value exceeds the SIPC insurance limits (for more information read, What Happens If My Broker Goes Bankrupt?).
