The capital stock (or simply stock) of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors. Stock is different from the property and the assets of a business which may fluctuate in quantity and value.

Shares

The stock of a business is divided into multiple shares, the total of which must be stated at the time of business formation. Given the total amount of money invested in the business, a share has a certain declared face value, commonly known as the par value of a share. The par value is the ''de minimis'' (minimum) amount of money that a business may issue and sell shares for in many jurisdictions and it is the value represented as capital in the accounting of the business. In other jurisdictions, however, shares may not have an associated par value at all. Such stock is often called non-par stock. Shares represent a fraction of ownership in a business. A business may declare different types (''classes'') of shares, each having distinctive ownership rules, privileges, or share values.

Ownership of shares is documented by issuance of a stock certificate. A stock certificate is a legal document that specifies the amount of shares owned by the shareholder, and other specifics of the shares, such as the par value, if any, or the class of the shares.

Usage

Used in the plural, ''stocks'' is often used as a synonym for ''shares''. Traditionalist demands for the plural ''stocks'' to be used only when referring to stocks of more than one company are rarely heard nowadays.

In the United Kingdom, Republic of Ireland, South Africa, and Australia, ''stock'' can also refer to completely different financial instruments such as government bonds or, less commonly, to all kinds of marketable securities.

Types of stock

Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Shares of such stock are called "convertible preferred shares" (or "convertible preference shares" in the UK)

New equity issues may have specific legal clauses attached that differentiate them from previous issues of the issuer. Some shares of common stock may be issued without the typical voting rights, for instance, or some shares may have special rights unique to them and issued only to certain parties. Often, new issues that have not been registered with a securities governing body may be restricted from resale for certain periods of time.

Preferred stock may be hybrid by having the qualities of bonds of fixed returns and common stock voting rights. They also have preference in the payment of dividends over common stock and also have been given preference at the time of liquidation over common stock. They have other features of accumulation in dividend.

Stock derivatives

A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock. Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm's stock, e.g. single-stock futures.

Stock futures are contracts where the buyer is long, i.e., takes on the obligation to buy on the contract maturity date, and the seller is short, i.e., takes on the obligation to sell. Stock index futures are generally not delivered in the usual manner, but by cash settlement.

A stock option is a class of option. Specifically, a call option is the right (''not'' obligation) to buy stock in the future at a fixed price and a put option is the right (''not'' obligation) to sell stock in the future at a fixed price. Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. The most popular method of valuing stock options is the Black Scholes model. Apart from call options granted to employees, most stock options are transferable.

History

During Roman times, the empire contracted out many of its services to private groups called publicani. Shares in publicani were called "socii" (for large cooperatives) and "particulae" which were analogous to today's Over-The-Counter shares of small companies. Though the records available for this time are incomplete, Edward Chancellor states in his book ''Devil Take the Hindmost'' that there is some evidence that a speculation in these shares became increasingly widespread and that perhaps the first ever speculative bubble in "stocks" occurred.

Around 1250 in France at Toulouse, 96 shares of the ''Société des Moulins du Bazacle'', or Bazacle Milling Company were traded at a value that depended on the profitability of the mills the society owned. The Swedish company Stora has documented a stock transfer for 1/8 of the company (or more specifically, the mountain in which the copper resource was available) as early as 1288.

The earliest recognized joint-stock company in modern times was the English (later British) East India Company, one of the most famous joint-stock companies. It was granted an English Royal Charter by Elizabeth I on December 31, 1600, with the intention of favouring trade privileges in India. The Royal Charter effectively gave the newly created ''Honourable East India Company'' (HEIC) a 15-year monopoly on all trade in the East Indies. The Company transformed from a commercial trading venture to one that virtually ruled India as it acquired auxiliary governmental and military functions, until its dissolution. 250px|right|thumb|The East India Company's flag initially had the flag of England, St. George's Cross, in the corner. Soon afterwards, in 1602 the Dutch East India Company issued shares that were made tradeable on the Amsterdam Stock Exchange, an invention that enhanced the ability of joint-stock companies to attract capital from investors as they now easily could dispose of their shares.

The Dutch East India Company was not far behind, established in 1602. The innovation of joint ownership made a great deal of Europe's economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could be undertaken only by governments or by very wealthy individuals or families.

Economic historians find the Dutch stock market of the 17th century particularly interesting: there is clear documentation of the use of stock futures, stock options, short selling, the use of credit to purchase shares, a speculative bubble that crashed in 1695, and a change in fashion that unfolded and reverted in time with the market (in this case it was headdresses instead of hemlines). Dr. Edward Stringham also noted that the uses of practices such as short selling continued to occur during this time despite the government passing laws against it. This is unusual because it shows individual parties fulfilling contracts that were not legally enforceable and where the parties involved could incur a loss. Stringham argues that this shows that contracts can be created and enforced without state sanction or, in this case, in spite of laws to the contrary.

Shareholder

A shareholder (or ''stockholder'') is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Both private and public traded companies have shareholders. Companies listed at the stock market are expected to strive to enhance shareholder value.

Shareholders are granted special privileges depending on the class of stock, including the right to vote on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors.

Shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders.

Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other.

However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, USA, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders.

The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and, especially, passively managed exchange-traded funds.

Application

The owners of a company may want additional capital to invest in new projects within the company. They may also simply wish to reduce their holding, freeing up capital for their own private use.

By selling shares they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally share in the ownership of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends.

In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company.

In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted – effective control rests with the majority shareholder (or shareholders acting in concert). In this way the original owners of the company often still have control of the company.

Shareholder rights

Although ownership of 50% of shares does result in 50% ownership of a company, it does not give the shareholder the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder.

In most countries, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes: :''...it can safely be stated that there does not exist any publicly traded company where management works exclusively in the best interests of OPMI [Outside Passive Minority Investor] stockholders. Instead, there are both "communities of interest" and "conflicts of interest" between stockholders (principal) and management (agent). This conflict is referred to as the principal/agent problem. It would be naive to think that any management would forego management compensation, and management entrenchment, just because some of these management privileges might be perceived as giving rise to a conflict of interest with OPMIs.''

Even though the board of directors runs the company, the shareholder has some impact on the company's policy, as the shareholders elect the board of directors. Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management (agent) are performing poorly they can elect a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held or voted by insiders.

Owning shares does not mean responsibility for liabilities. If a company goes broke and has to default on loans, the shareholders are not liable in any way. However, all money obtained by converting assets into cash will be used to repay loans and other debts first, so that shareholders cannot receive any money unless and until creditors have been paid (often the shareholders end up with nothing).

Means of financing

Financing a company through the sale of stock in a company is known as equity financing. Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of ownership of the company. Unofficial financing known as trade financing usually provides the major part of a company's working capital (day-to-day operational needs).

Trading

In general, the shares of a company may be transferred from shareholders to other parties by sale or other mechanisms, unless prohibited. Most jurisdictions have established laws and regulations governing such transfers, particularly if the issuer is a publicly-traded entity.

The desire of stockholders to trade their shares has led to the establishment of stock exchanges, organizations which provide marketplaces for trading shares and other derivatives and financial products. Today, stock traders are usually represented by a stock broker who buys and sells shares of a wide range of companies on such exchanges. A company may list its shares on an exchange by meeting and maintaining the listing requirements of a particular stock exchange. In the United States, through the intermarket trading system, stocks listed on one exchange can often also be traded on other participating exchanges, including electronic communication networks (ECNs), such as Archipelago or Instinet.

Many large non-U.S companies choose to list on a U.S. exchange as well as an exchange in their home country in order to broaden their investor base. These companies must maintain a block of shares at a bank in the US, typically a certain percentage of their capital. On this basis, the holding bank establishes American depositary shares and issues an American depositary receipt (ADR) for each share a trader acquires. Likewise, many large U.S. companies list their shares at foreign exchanges to raise capital abroad.

Small companies that do not qualify and cannot meet the listing requirements of the major exchanges may be traded over-the-counter (OTC) by an off-exchange mechanism in which trading occurs directly between parties. The major OTC markets in the United States are the electronic quotation systems OTC Bulletin Board (OTCBB) and OTC Markets Group where individual retail investors are also represented by a brokerage firm and the quotation service's requirements for a company to be listed are minimal. Shares of companies in bankruptcy proceeding are usually listed by these quotation services after the stock is delisted from an exchange.

Buying

There are various methods of buying and financing stocks, the most common being through a stock broker. Whether they are a full service or discount broker, they arrange the transfer of stock from a seller to a buyer. Most trades are actually done through brokers listed with a stock exchange.

There are many different stock brokers from which to choose, such as full service brokers or discount brokers. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or credit union that may have a deal set up with either a full service or discount broker.

There are other ways of buying stock besides through a broker. One way is directly from the company itself. If at least one share is owned, most companies will allow the purchase of shares directly from the company through their investor relations departments. However, the initial share of stock in the company will have to be obtained through a regular stock broker. Another way to buy stock in companies is through Direct Public Offerings which are usually sold by the company itself. A direct public offering is an initial public offering in which the stock is purchased directly from the company, usually without the aid of brokers.

When it comes to financing a purchase of stocks there are two ways: purchasing stock with money that is currently in the buyer's ownership, or by buying stock on margin. Buying stock on margin means buying stock with money borrowed against the value of stocks in the same account. These stocks, or collateral, guarantee that the buyer can repay the loan; otherwise, the stockbroker has the right to sell the stock (collateral) to repay the borrowed money. He can sell if the share price drops below the margin requirement, at least 50% of the value of the stocks in the account. Buying on margin works the same way as borrowing money to buy a car or a house, using a car or house as collateral. Moreover, borrowing is not free; the broker usually charges 8–10% interest.

Selling

Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low and sell high, if not in that order (short selling); although a number of reasons may induce an investor to sell at a loss, e.g., to avoid further loss.

As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on which type of brokerage, full service or discount, handles the transaction.

After the transaction has been made, the seller is then entitled to all of the money. An important part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that are in excess of the cost basis.

Stock price fluctuations

The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is sensitive to demand. However, there are many factors that influence the demand for a particular stock. The fields of fundamental analysis and technical analysis attempt to understand market conditions that lead to price changes, or even predict future price levels. A recent study shows that customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), is significantly correlated to the market value of a stock. Stock price may be influenced by analyst's business forecast for the company and outlooks for the company's general market segment. Stocks can also fluctuate greatly due to pump and dump scams.

Share price determination

At any given moment, an equity's price is strictly a result of supply and demand. The supply, commonly referred to as the ''float'', is the number of shares offered for sale at any one moment. The demand is the number of shares investors wish to buy at exactly that same time. The price of the stock moves in order to achieve and maintain equilibrium. The product of this instantaneous price and the float at any one time is the market capitalization of the entity offering the equity at that point in time.

When prospective buyers outnumber sellers, the price rises. Eventually, sellers attracted to the high selling price enter the market and/or buyers leave, achieving equilibrium between buyers and sellers. When sellers outnumber buyers, the price falls. Eventually buyers enter and/or sellers leave, again achieving equilibrium.

Thus, the value of a share of a company at any given moment is determined by all investors voting with their money. If more investors want a stock and are willing to pay more, the price will go up. If more investors are selling a stock and there aren't enough buyers, the price will go down.

Note: "For Nasdaq-listed stocks, the price quote includes information on the bid and ask prices for the stock."

Of course, that does not explain how people decide the maximum price at which they are willing to buy or the minimum at which they are willing to sell. In professional investment circles the efficient market hypothesis (EMH) continues to be popular, although this theory is widely discredited in academic and professional circles. Briefly, EMH says that investing is overall (weighted by the standard deviation) rational; that the price of a stock at any given moment represents a rational evaluation of the known information that might bear on the future value of the company; and that share prices of equities are priced ''efficiently'', which is to say that they represent accurately the expected value of the stock, as best it can be known at a given moment. In other words, prices are the result of discounting expected future cash flows.

The EMH model, if true, has at least two interesting consequences. First, because financial risk is presumed to require at least a small premium on expected value, the return on equity can be expected to be slightly greater than that available from non-equity investments: if not, the same rational calculations would lead equity investors to shift to these safer non-equity investments that could be expected to give the same or better return at lower risk. Second, because the price of a share at every given moment is an "efficient" reflection of expected value, then—relative to the curve of expected return—prices will tend to follow a random walk, determined by the emergence of information (randomly) over time. Professional equity investors therefore immerse themselves in the flow of fundamental information, seeking to gain an advantage over their competitors (mainly other professional investors) by more intelligently interpreting the emerging flow of information (news).

The EMH model does not seem to give a complete description of the process of equity price determination. For example, stock markets are more volatile than EMH would imply. In recent years it has come to be accepted that the share markets are not perfectly efficient, perhaps especially in emerging markets or other markets that are not dominated by well-informed professional investors.

Another theory of share price determination comes from the field of Behavioral Finance. According to Behavioral Finance, humans often make irrational decisions—particularly, related to the buying and selling of securities—based upon fears and misperceptions of outcomes. The irrational trading of securities can often create securities prices which vary from rational, fundamental price valuations. For instance, during the technology bubble of the late 1990s (which was followed by the dot-com bust of 2000–2002), technology companies were often bid beyond any rational fundamental value because of what is commonly known as the "greater fool theory". The "greater fool theory" holds that, because the predominant method of realizing returns in equity is from the sale to another investor, one should select securities that they believe that someone else will value at a higher level at some point in the future, without regard to the basis for that other party's willingness to pay a higher price. Thus, even a rational investor may bank on others' irrationality.

Arbitrage trading

When companies raise capital by offering stock on more than one exchange, the potential exists for discrepancies in the valuation of shares on different exchanges. A keen investor with access to information about such discrepancies may invest in expectation of their eventual convergence, known as arbitrage trading. Electronic trading has resulted in extensive price transparency (efficient-market hypothesis) and these discrepancies, if they exist, are short-lived and quickly equilibrated.

See also

Arrangements between railroads

Boiler room

Bucket shop

Buying in (securities)

Concentrated stock

Equity investment

Exchange-traded fund

GICS

Golden share

House stock

Insider trading

Money managers

Naked short selling

Penny stock

Scripophily

Stock and flow

Stock dilution

Stock valuation

Stub (stock)

Tracking stock

Voting interest

References

External links

Stock Market Terminology

Stock Market Trivia: History of Stocks

The oldest share in the world, issued by the Dutch East India Company (Vereenigde Oost-Indische Compagnie or VOC), 1606.

Category:Stock market Category:Equity securities Category:Corporate finance Category:Economics terminology

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Paul Brandon Gilbert (born November 6, 1966 in Illinois, USA) is an American guitarist. He is well known for his technical guitar work with Racer X and Mr. Big, as well as many solo albums and numerous collaborations and guest appearances with other musicians.

He has been voted number 4 on a list in GuitarOne magazine of the "Top 10 Greatest Guitar Shredders of All Time", as well as a spot in ''Guitar World's'' 50 Fastest Guitarists of All Time list.

Shrapnel Records

Gilbert was raised in Greensburg, Pennsylvania. Around 1981-82, he first contacted Mike Varney, founder of Shrapnel Records, asking for a gig with Ozzy Osbourne. At the time, Varney couldn't think why Osbourne would want a 15 year old guitarist, but after listening to his demo he changed his mind. Gilbert was featured in ''Guitar Player'' magazine at the age of fifteen. They talked for the next 3 years, until Paul went to L.A. for the GIT (Guitar Institute of Technology), and then was ready to record Racer X's debut album Street Lethal.

Racer X

Formed in Los Angeles in 1985, Racer X originally comprised Paul Gilbert (guitar), Juan Alderete (bass), Harry Gschoesser (drums) and Jeff Martin (vocals). They were heavily influenced by Judas Priest and Gilbert's playing was reminiscent of Yngwie Malmsteen, displaying fast-driven solos with extreme-level technique. Gschoesser was replaced by Scott Travis (later known for being the drummer for Judas Priest) in 1986, and Bruce Bouillet was added as a second guitar player. Bouillet was a very skilled player, as he had to play over Gilbert's always difficult and challenging phrases. Paul Gilbert gained recognition as one of the fastest guitar players in the world due to incredibly technical pieces like "Technical Difficulties" "Frenzy", "Scarified", "Y.R.O." and "Scit Scat Wah". Gilbert left Racer X in 1988. Racer X carried on for a short time with guitarist (and fellow GIT alum) Chris Arvin and vocalist Oni Logan (later of George Lynch's Lynch Mob) when singer Jeff Martin departed to play drums in Jake E. Lee's Badlands, in which he replaced Eric Singer who left to join Alice Cooper. Shortly thereafter, the members of the re-invented Racer X went their separate ways. The original band would eventually reform (although without Bruce Bouillet, who in-turn did produce the first reunion record).

Paul contacted the members of Racer X, and all agreed to return, with the exception of Bruce Bouillet. In mid-1999 the band recorded the album Technical Difficulties. Technical Difficulties went gold in Japan, and Racer X's new record label requested a follow-up. In late 2000, the band released another album, Superheroes. The record was mixed by former Racer X guitarist, Bruce Bouillet.

In order to further capitalize on their new-found success in Japan, Universal Japan requested that the band record a live show for another live CD and DVD. On May 25, 2001, the band played their first live performance in thirteen years to a sold-out crowd at the famed Whisky a Go Go in Los Angeles. The show was recorded for both audio and video, and in 2002, both the CD and DVD were released under the name Snowball of Doom.

In January 2002, in support of Superheroes and Snowball of Doom, Racer X toured Japan and Taiwan. The band performed these shows in their Superheroes costumes, and the final show, in Yokohama, was hastily recorded in two tracks on the sound board and was to be later released as Snowball of Doom 2. Later that year, Universal Japan pushed for another Racer X release. In October 2002, all four members of Racer X gathered at Gilbert's house in Las Vegas to record ''Getting Heavier'', which was sold alongside ''Snowball of Doom 2'' in a package deal. Although the album was a successful release in Japan, some fans were disappointed with the lighter tracks, which resembled a Paul Gilbert solo album more so than a traditional Racer X album.

Racer X performed at the 2009 NAMM show at the Anaheim Convention Center in Anaheim, California. Andy Timmons and his band opened the show, followed by a solo set from Paul Gilbert, and finally Racer X. The Racer X lineup consists of Paul Gilbert, Scott Travis, Jeff Martin and John Alderete.

Mr. Big

When Billy Sheehan left David Lee Roth's band in 1988, he joined with Paul Gilbert, who had left his former band, Racer X. They founded Mr. Big, with Pat Torpey on drums and singer Eric Martin. The band was initially a huge success in Japan, and became famous internationally in 1991, with the release of their second album, ''Lean Into It''. This album featured the ballad "To Be With You", which received strong media play and reached #1 on the Billboard Hot 100.

Gilbert continued playing in Mr. Big until the late 1990s. He left the band in 1997 to pursue a solo career, and was replaced by Richie Kotzen. Mr. Big disbanded in 2002.

In June 2009, Paul Gilbert reunited with original Mr. Big members; Eric Martin (vocals), Billy Sheehan (bass), and Pat Torpey, for a world wide reunion tour. They recorded a new album with producer Kevin Shirley. titled ''What If...''. The album was released in Japan on Dec. 15th, 2010, in Europe on Jan. 21st, 2011 and in the USA in Feb. 2011. A tour to support the album kicked off at The House of Blues, in Hollywood, CA on April 2, 2011, followed by several dates in Japan in the same month. In May and June 2011, the tour continues in China, Korea, The Philippines and Europe.

Projects

In May 2003 he played in an only twice-performing project called Yellow Matter Custard, a Beatles cover band consisting also of Mike Portnoy (ex-Dream Theater), Neal Morse (ex-Spock's Beard), and Matt Bissonette. In February 2011 Yellow Matter Custard re-formed for 3 Nights Across America. Kasim Sulton replaced Matt Bissonette in the 2011 shows due to other commitments. They took their name from a Beatles lyric in "I Am the Walrus": "Yellow matter custard, dripping from a dead dog's eye".

He rejoined Portnoy along with Dave LaRue and Daniel Gildenlöw for a Led Zeppelin tribute band called Hammer of the Gods in November 2003. The same year, he toured Japan with Linus Of Hollywood, TJ Helmerich, and Scot Coogan in support of his solo albums Burning Organ, Paul the Young Dude/The Best of Paul Gilbert, and Gilbert Hotel. In September 2005, he joined Portnoy, Sean Malone, and Jason McMaster in the Rush tribute band Cygnus and the Sea Monsters. In May 2006, he joined Portnoy, Gary Cherone, and Billy Sheehan to form Amazing Journey: A Tribute to The Who, playing three shows. The band (excluding Sheehan) destroyed their equipment after the show in homage.

He was also revealed to be the guest guitarist on the Neal Morse solo album, ''Sola Scriptura''. In 2007, Paul Gilbert toured with Bruce Bouillet for promotion of his first instrumental album, ''Get Out of My Yard'', which was released in 2006. Also joining him was his wife, Emi Gilbert, on keyboards. Paul Gilbert also joined Joe Satriani and John Petrucci in the 2007 G3 tour. This was the 5th North American G3 run and the 12th tour worldwide since its inception.

On January 23, 2008, Paul released an instrumental CD titled ''Silence Followed By A Deafening Roar''. It was released in Europe on March 31, 2008, and in America on April 8, 2008. This is Paul's second instrumental album.

On October 22, 2008, Paul released an album with vocalist Freddie Nelson entitled United States. The collaboration has been described as a cross of Queen and Mr. Big.

Paul with Racer X performed at the 2009 NAMM show at the Anaheim Convention Center in Anaheim, California. Andy Timmons and his band opened the show, followed by a solo set from Gilbert, and finally Racer X. This Racer X lineup consisted of Gilbert, Scott Travis, Jeff Martin and John Alderete.

Gilbert also joined George Lynch and Richie Kotzen on the Guitar Generation tour.

On June 30, 2010, Gilbert's new album ''Fuzz Universe'' was released in Japan, with a release in America and Europe soon after. It is Paul's 3rd solo album being entirely instrumental. A cover of Johnny Cash's "Leave That Junk Alone" is featured as a Japanese bonus track.

Influences and Style

Talking about his influences, Paul mentions many different artists, including: Randy Rhoads, Kim Mitchell, Eddie Van Halen, Yngwie Malmsteen, John J Kirby, Tony Iommi, Alex Lifeson, Jimmy Page, Robin Trower, Ritchie Blackmore, Pat Travers, Gary Moore, Michael Schenker, Judas Priest, Akira Takasaki, Steve Clark, Jimi Hendrix, Kiss, and The Ramones. Paul has stated many times that he was heavily influenced by his uncle Jimi Kidd who was instrumental in getting Paul interested in playing the guitar. He is also a great fan of The Beach Boys and The Beatles. He states on the Space Ship Live DVD that George Harrison is one of his favorite guitar players. ''Guitar World'' magazine declared him one of 50 of the world's fastest guitarists of all time, along with Buckethead, Eddie Van Halen, and Yngwie Malmsteen.

Gilbert composes music in a wide variety of styles including pop, rock, metal, blues, funk and european classical music, but is perhaps best known for his versatility and speed. He is noted in particular for his efficient picking and his tendency to pick many notes rather than relying on legato for fast passages.

Instructor

Paul Gilbert wrote his own section of the British guitar magazine, ''Total Guitar'', where he normally demonstrated guitar techniques in the magazine and accompanying CD. Even before that, he contributed instructional articles to Guitar Player Magazine in a late 1980s/early 1990s series entitled "Terrifying Guitar 101". His period of working with ''Total Guitar'' spanned thirty-one issues until the November 2006 issue. Paul also teaches at the Guitar Institute of Technology (GIT) regularly, and is also an "honorary dean" of the GIT division in Japan. Paul visits Japan, enjoying the lifestyle like his Shrapnel labelmate Marty Friedman, who still lives in Japan and speaks Japanese fluently. Gilbert is known for his instructional videos, which are often comical in nature. One of his instructional videos includes him pulling a rabbit out of his guitar, putting his guitar in a straightjacket and having presents thrown at him by members of the film crew. Paul also was, for a short time, the guitar teacher of Buckethead, Russ Parrish (A.K.A. Satchell from Steel Panther), Michelle Meldrum (The late wife of Europe guitarist John Norum) and Nicole Couch of Phantom Blue. Gilbert now writes a column for ''Premier Guitar'' entitled "Shred Your Enthusiasm".

Gear

Paul Gilbert primarily uses his Ibanez PGM signature series guitars, identified by the unique painted on "F-holes". Although earlier PGM models featured the Ibanez Lo-Pro/Edge double locking tremolo system, many of his guitars (such as his main PGM300) were modified to accommodate a fixed bridge after he stopped using whammy bars in the early 90s, hence the Ibanez PGM301 guitar. Along with his signature guitars, Gilbert often uses his sticker-covered "Dino" Ibanez RG750, in addition to a wide variety of Ibanez solidbody and semi-hollow electric guitars. Recently, Gilbert has been using Ibanez "Fireman" (a reversed-body Ibanez Iceman with single-coil pickups and an extra cutaway) guitars, which he designed himself. A red version The Ibanez Fireman is to be mass-produced for consumers at a more affordable price than the Ibanez PGMFRM1 (current Paul Gilbert signature Fireman) in Fall 2011.

Regarding amplifiers, Gilbert used A/DA preamps (A/DA MP-1) and rack effects units early in his career prior to switching to Laney amplifiers. He praised the Laney amps as having ''"the best natural distorted sound of any tube amp ever heard"'' Since the G3 2007 tour however, Gilbert stated that playing with Joe Satriani and John Petrucci inspired him to take a closer look at his own guitar sound. As a result of his search he found the Marshall Vintage Modern series. He currently uses the Marshall Vintage Modern 2266c combo amps. Paul now uses the Marshall JMD:1 (specifically JMD501) amplifier along with his Vintage Modern amplifier. Paul uses Jim Dunlop Tortex picks, of which he prefers the orange (.60mm) picks. As far as cables Paul uses Bullet Cable 30' Coiled Cables, Bullet Cable SLUG DIY solderless patch cables for his pedalboard and effects.

Paul has been known to use the following effects:

Home Brew Electronics Bajo Mos

Home Brew Electronics Detox EQ

TC Electronic Nova Delay

Home Brew Electronics Compressor Retro

MXR Phase 100

MXR Phase 90

BOSS DD-3 Digital Delay

Ibanez AF2 Airplane Flanger

MXR Blue Box

Home Brew Electronics THC Chorus

Robert Keeley Nova Wah LE

Electro-Harmonix Deluxe Electric Mistress

Korg Pitchblack tuner or Boss Chromatic Tuner (depending which is more visible in stage lighting)

Majik Box Fuzz Universe (as of 2010)

X-otic AC Booster

Jim Dunlop 535Q Crybaby (as of 2010)

Paul also used a modified vintage A/DA Flanger from the 1980s (source: Berlin VIP session interview). You can hear it on tracks like 'Bucket of Rocks', and he also uses it on the 'Snowball of Doom' DVD. Paul stated the flanger had been modified. He would set the flanger to self oscillate, which would make the pitch of the resulting signal alternate up and down to create a sound similar to a dive bomb or a pull up on a whammy bar. Unfortunately, during Paul's 2008 European tour, his trusty A/DA Flanger broke. Thankfully, before the pedal broke, he and Ibanez collaborated to make a similar pedal, with both a regular flanger mode and a mode which can be set to create a close approximation of the A/DA pedal's sound, and the pedal has been released as the Ibanez Paul Gilbert AF-2 Airplane Flanger. He also uses the Psilocybe phaser and THC chorus pedals from Home Brew Electronics.

In the intro to "Get Out Of My Yard" Paul uses a Boss DD-3 Delay pedal to achieve the altered pitch looped effect at the beginning of the track. This was also demonstrated by Paul on the instructional DVD of the same name.

He is also famous for using a Makita cordless drill with three picks mounted on the end of it, which he used most famously on the Mr. Big track "Daddy, Brother, Lover, Little Boy".

In 2009, Ibanez released a new PGM model, the Ibanez PGM401, which is rather different from most of Paul's previous models, with an ash body (most of his previous models were made of basswood, although his PGM800 guitar was made of lightweight ash, a similar but different wood than that used in the PGM401), Trifade Burst finish, Cosmo Black hardware and a regular headstock replacing the reversed one of the previous models. Also, rather than the DiMarzio PAF Pro, Tone Zone and Super Distortion pickups used in his previous models, the PGM401 comes with Paul's favorite humbucker model for the past five years, the DiMarzio Air Classic, arranged in a dual humbucker arrangement. Paul has stated that he had the bridge pickup moved 1mm closer to the neck, which he said results in a warmer and thicker sound, particularly for the high notes he often uses in soloing. The F-holes are 3% smaller, to make the look more balanced with the pickup mounting rings. But perhaps the biggest difference from other current Ibanez guitar models, is that the PGM401 uses the old late-1980s neckjoint, which is thicker than the current neckjoints on other Ibanez guitars.

In 2011, Ibanez released a new model for Gilbert the FRM100. The design of the FRM100 was inspired by many hours of playing and performance by Paul Gilbert with the original Ibanez Fireman model featuring a distinctive reverse Iceman body outline

Discography

Racer X

''Street Lethal'' (1986)

''Second Heat'' (1987)

''Extreme Volume Live'' (1988)

''Extreme Volume II Live'' (1992)

''Technical Difficulties'' (1999)

''Superheroes'' (2000)

''Snowball of Doom'' (2002)

''Getting Heavier'' (2002)

''Snowball of Doom 2'' (2002)

Mr. Big

''Mr. Big'' (1989)

''Raw Like Sushi'' (1990)

''Lean Into It'' (1991)

''Raw Like Sushi II'' (1992)

''Bump Ahead'' (1993)

''Japandemonium: Raw Like Sushi 3'' (1994)

''Channel V at the Hard Rock Live'' (1996)

''Hey Man'' (1996)

''Big Bigger Biggest: Greatest Hits'' (1996)

''Next Time Around'' Best Of (2009)

''Back To Budokan'' Live (2009)

''What If...'' (2011)

Solo Albums

''Tribute to Jimi Hendrix'' (EP) (1991) (Japan Oricon Album Chart #59)

''King of Clubs'' (1998) (Japan Oricon Album Chart #28)

''Flying Dog'' (1998) (Japan Oricon Album Chart #23)

''Beehive Live'' (1999) (Japan Oricon Album Chart #72)

''Alligator Farm'' (2000) (Japan Oricon Album Chart #24)

''Raw Blues Power With Jimi Kidd'' (2002) (Japan Oricon Album Chart #94)

''Burning Organ'' (2002) (Japan Oricon Album Chart #27)

''Paul the Young Dude/The Best of Paul Gilbert'' (2003) (Japan Oricon Album Chart #31)

''Gilbert Hotel'' (2003)

''Acoustic Samurai'' (2003) (Japan Oricon Album Chart #94)

''Space Ship One'' (2005) (Japan Oricon Album Chart #53)

''Get Out of My Yard'' (2006) (Japan Oricon Album Chart #52)

''Tough Eskimo'' (limited edition EP) (2007)

''Silence Followed By A Deafening Roar'' (2008) (Japan Oricon Album Chart #39)

''United States'' With Freddie Nelson (2009)

''Fuzz Universe'' (2010) (Japan Oricon Album Chart #57)

Other appearances

''Trouble In The Streets''- Black Sheep(1985)

''Atomic Basement Tapes'' - Missing Lynx (1985)

''Revelation'' - Darrell Mansfield Band (1985)

''Pump It!' - Jeff Berlin (1986)

''Out of the Sun'' - Joey Tafolla (1990)

''Humanary Stew'' - A Tribute to Alice Cooper

''Guitars That Rule the World'' (1992)

''Smoke On The Water: A Tribute'' (1994)

''Samad: Samad'' Lead Guitar on "Joget" and "Animo" (1994)

''Jeffology: A Guitar Chronicle'' (1996)

''Carmine Appice's Guitar Zeus'' (track "Dislocated") (1996)

''Akira Takasaki - Wa'' (1996)

''Merry Axemas - A Guitar Christmas'' (1997)

''Mikazuki "In Rock" Sound Track, Guitar on tracks "Crescent Moon" & "Theme for Kazeo" (2000)

''Becker 2001, Warmth in the Wilderness -A Tribute to Jason Becker''(Guitar and vocals for ''Hawkin'')

Hughes Turner Project'' - HTP (2002)

''Battle Gear III: The Edge'' (played on "Charge and Discharge," "Morning View," and "The Machine of Rage" bonus tracks) (2003)

''Kim Fox'' Return to Planet Earth (2003) Guitar on track 4

''Guitar Wars'' (2003)

''Return to the Planet Earth'' - Kim Fox (2003)

''One Night in New York City'' - Yellow Matter Custard (2003) Available @ MikePortnoy.com

''Mieze'' - Marco Minnemann (2004)

''Five Feet...No Inches'' - Pintsize (2005)

''Contraire de la chanson'' - Marco Minnemann (2006)

''Parador'' (track "Joke") - Wisely (2006)

''Light at the End of the Tunnel'' - War and Peace (2006) (with Richie Kotzen, John Norum, Jeff Pilson)

''Two Nights In North America'' - Hammer of the Gods (2006) Available @ MikePortnoy.com

''One Night in Chicago'' - Cygnus and the Sea Monsters (2006) Available @ MikePortnoy.com

''Live with Sex Machineguns - Tokyo (2005)

''One Night in New York City'' - Amazing Journey (2007) Available @ MikePortnoy.com

''Spin The Bottle'' - An All Star Tribute To Kiss (guitars on "I Want You") (2004)

''Numbers from the Beast'' - An All Star Tribute to Iron Maiden (guitars on "The Evil That Men Do") (2005)

''Evil Lives: A True Metal Tribute to Black Sabbath'' (with Racer X on Track 4: "Children of the Grave") (2006)

''The Fool'' - Jeff Martin solo album (2006)

''Sola Scriptura'' - Neal Morse (2007)

''G3 Tour'' (2007)

''Lifeline'' - Neal Morse (2008)

''Guitar Hero Hero (Beating Guitar Hero Doesn't Make You Slash)'' - MC Lars (2008)

''Bowling for Soup - Merry Flippin' Christmas Volume 1 (I Saw Mommy Kissing Santa Clause) (2009)

Videography

''Intense Rock Jams - Sequences & Techniques'' VHS version

''Intense Rock II featuring Paul Gilbert'' VHS version

''Guitars from Mars'' Japanese DVD release

''Guitars from Mars II'' Japanese DVD release

''Terrifying Guitar Trip'' VHS version

''Eleven Thousand Notes'' DVD

''Guitar Wars'' DVD

''Space Ship Live DVD (2005)

''Complete Intense Rock DVD (2006)

''Terrifying Guitar Trip DVD (2006)

''Get Out Of My Yard Guitar Instructional (string skipping) DVD (2007)

''Get Out Of My City Guitar Instructional DVD/VCD (2007)

''One Night In New York City'' - Yellow Matter Custard (2003)

''Two Nights In North America'' - Hammer Of The Gods (2006)

''One Night In Chicago'' - Cygnus And The Sea Monsters (2006)

''One Night In New York City - Amazing Journey (2007)

''Silence Followed By A Deafening Roar Guitar Instructional DVD And Shred Annex (2008)

''The Last Note of Freedom

References

External links

The official Paul Gilbert site

The official Racer X site

Paul Gilbert - Rock Squad Interview

Gilbert's solo on Mr Big site

Paul Gilbert on Last.fm

Paul Gilbert artist page at Guitar Video Channel

Category:1966 births Category:Living people Category:American rock guitarists Category:Lead guitarists Category:Racer X members Category:Mr. Big members Category:G3 (tour) Category:Musicians from Pittsburgh, Pennsylvania Category:People from Carbondale, Illinois

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