Stock Investing Basics

Stock Investing vs. Saving
Whereas investing represents a proactive activity the opposite is true for saving. Saving incorporates compounding, in which it is similar to investing.

Mutual Funds vs Individual Stocks
Many investors face the dilemma of whether to select mutual funds or stocks as their investment tool. In order to decide which tactic best fits your needs, you should be well grounded in the pros and cons of each of them.

Classes of Assets - Asset Class Definition
Basically there are four major classes of assets. When constructing your investment portfolio you may select any of them and make combinations out of them.

Investment Goals Planning
The first step before you embark on any investment activities is the setting of investment goals. You may find it difficult to harmonize your goals since some of them may conflict each other or may not coincide with your way of life.

Stock Investing Basics
Before you start investing on the stock market you should be well familiar with the general stock market terms and definitions like stocks, types of stocks, class A and class B stocks, investment risk, etc.

Bond Definition and Concepts
Many financial experts recommend the combination of stocks and bonds in investment portfolios. Bondholders are classified as creditors, whereas stockholders are referred to as company owners.

Zero Coupon Bonds Basics
Zero coupon bonds (also known as zeros) don’t give their holders interest rate payments on regular basis. However, the interest rate is accumulated and paid at maturity.

Convertible Bonds Basics
In order to decide whether you should own convertible bonds or not you should make a careful consideration of both the negative and positive sides and see whether they represent the tool that coincides with your financial goals.

US Treasury I Bonds Basics
If you want your principal to be guaranteed and to exempt yourself from taxes on the generated income, I Bonds may be the investment solution you need.

Discount Stock Brokers vs Full Service Brokers
In the past it was easy to divide stock brokers into either full service or discount ones. Now it is difficult to categorize brokers into separate classes, but still, you should be able to distinguish them according to the types of services they provide.

Financial Advisor Job Description
Many investors lack the time and sometimes the knowledge encompassing the stock picking activities or the setting of a successful investment portfolio. In such a case the services of a financial advisor can be extremely valuable.

Certified Financial Planner Designations
You may find it difficult to qualify a certain individual as a financial advisor or a financial planner, since most states don’t have specific regulations directed toward such identification. Nevertheless, there are several criteria in order to designate someone as a certified financial planner.

Stock Broker Categories
Internet provides vast amounts of information to which most individual investors have a free access. As a result not only the amount of information available to investors has increased, but also the range of brokers from which investors can choose.

Types of Brokerage Accounts
Now that you have decided to use the services of a broker, it is time to make your mind about the type of brokerage account you will open.

Stock Buyback Reasons
Companies issue stock in order to obtain resources for the financing of particular projects and they have the right to buy them back under specific conditions. This action is known as stock buyback.

Stock Basics
In order to get a clear view of how the stock market operates you should become familiar with the essence of stocks themselves.

Stock Dividends Basics
Dividends represent the profits that a company distributes to its owners. Many investors consider stock dividends as a good way to meet their financial goals.

Stock Market Cycles
Many investors get panicked when they hear that the market has dropped significantly. However, experienced stock investors are well aware that such falls are absolutely normal being part of the stock market cycle.

Federal Reserve Board (Fed) Functions and Importance
The Fed can be defined as the driver of the markets since it regulates its speeds. So, keep a close eye on the meetings of the Fed and the announcements they make after the meetings, since a view on the interest rate direction can be made.

Stock Market Sectors Classification
There are many ways in which stocks can be classified. One of the most preferred ones is by the sector in which the particular business that issues the stocks falls.

Stock Split Basics
There are times when a company may decide to split its stocks. However stock split is not an enough indicator that the company is worth of investing in and further research should be done to see whether it is really reasonable to invest there.

Stock Market Indexes and Fair Value Indications
Stock market indexes and their relationship to “fair value” give investors a hint on how the market will open.

Stock Share Types
Stock investing includes many terms with which every investor should become familiar in order to make educated decisions. Additionally, the different shares, such as authorized, treasury, outstanding and etc. have different characteristics.

Bid and Ask Prices
As an educated investor you should be acquainted with the meaning of bid and ask prices and the difference between ask and bid prices, referred to as the spread.

Stock Trading Basics and Order Types
Trading is facilitated by many additional tools that minimize the possibility of disparities. There are different types of orders through which you can avoid losses due to too much time between your intentions of selling and the actual execution of the sale.

Market Makers Role and Responsibilities
The role of the market maker is clearly identified in the NASDAQ. Market makers at NASDAQ are responsible for the provision of a market for the listed securities and the provided prices (both ask and bid prices).

NYSE and Market Specialists
The New York Stock Exchange (NYSE) is the oldest stock exchange in the US. The key role in NASDAQ is played by a market maker, whereas in the NYSE it is allocated for a specialist, who is a market professional part of a specialist firm.

Company Market Capitalization
When you decide on the investment in a particular stock you should consider the size of the company that issues it. This is required since companies of different sizes react in a different way to market conditions and changes.

Stock Order Types
Using the services on online brokers includes familiarization with the different types of orders that are in use for the execution of the various trades by investors.

Setting Stock Prices
The setting of stock prices depends on many factors. It is not a simple process, but instead a complex one which, however, is easy to understand.

Newspaper and Online Stock Quotes
Your successful participation on the stock market depends on many factors one of which is the clear understanding of the numbers that are daily quoted by the different sources.

Stop Loss Order Fundamentals
Stop loss orders are used to alleviate the losses that may be incurred if the price of your stocks falls under the desired level. Under this type of order the broker is required to sell the stock when a certain level is hit.

Trailing Stop Order Basics
Trailing stop orders are a form of stop loss orders. Their major purpose is to protect the profit from a stock. If used appropriately, trailing stops can follow an increasing price of a stock.

Book Value Explanation
When deciding on the investment in a particular company through the purchase of stocks of the company, many investors refer to its book value as one of the components that guide their decision regarding the investment.

Dividend Yield Explanation
Dividend investors, searching for a stock that will return them stable current income, should use Dividend Yield in their comparison of the different stocks available on the market, which fall under the investor’s consideration.

Stock Price Influences
Stock prices are vulnerable to many market changes. You should become familiar with these influences in order to be able to identify whether the change in the price gives you a signal to sell, buy or do nothing with a particular stock.

Advance Decline Ratio Basics
One of the indicators that give you an idea on what has happened during the trading day is advance/decline ratio. Use advance/decline numbers whenever you need to make a judgment on the performance of the market.

Value Investing Basics
Value investing refers to the purchase of stocks that have been overlooked by the market and as a result their price is below their real value.

Rising Interest Rates and their Effects
Changes in interest rates may have influence over the performance of companies. This in turn may reflect on the movement of your stocks.

Foreign Stocks Basics
As part of your investment portfolio you should not overlook foreign stocks. Depending on your conservativeness regarding investing include the appropriate percentage of foreign stocks in your portfolio.

Asset Allocation Basics
In order to protect your assets from sustaining losses when a sector suffers a decline you should practice asset allocation, meaning you spread your resources among different categories of investments.

Stock Market Movements
The stock market is characterized by its volatility. What exactly causes its rises and falls has several explanations. Some of them are obvious whereas others are not so easily determined.

Earnings Season Basics
Earnings season represents the time when many companies give a report on their quarterly profits or losses. Thus, this term is often mentioned during the year.

CPI Basics
The most well known and widely quoted economic indicator is the CPI (Consumer Price Index). It represents an estimation of the change in prices of consumer goods and services.

Inverted Yield Curve Implications
An inverted yield curve results when short-term interest rates are higher than long-term interest rates.

IPO Basics and Strategies
Initial Public Offerings (IPOs) represent the transition point of companies from a private status to a publicly held status. Thus, IPOs represent a new trading opportunity.

Option Basics and Types
Some investors tend to sign option contracts, which include the right to buy or sell securities when a certain price is reached. There are two major types of options.

Consumer Price Index Basics
CPI stands for Consumer Price Index. It is commonly referred to as a measure of the rate of inflation.

Stock Market Investing Basics
Learn the basics in investing in the stock market in order to understand how the stock market works.

Why Do Companies Go Public
To go public means that you have to list the company on a stock exchange and offer stock to the public. The money you get from the stock sale is known as initial public offering.

Introduction to Stocks
Stock represents a piece of ownership of a particular company. Though stock investing carries a certain degree of risk, it can be very profitable for an educated investor.

Stock Price Volatility
Stock prices are characterized by volatility. When significant changes occur, investors tend to panic.

Large Cap Stock Characteristics
The biggest players in the stock market are companies that have large market capitalization. Due to their large market capitalizations, such companies tend to have a major influence over the economic activities.

Small Cap Stocks Characteristics
In order to classify a stock as of small cap character its market value should be below $1 billion. Small cap stocks are generally considered to be highly volatile and if market conditions are not stable, they can carry a high level of risk.

Foreign Stock Characteristics
In today’s global economy investors are given the opportunity to purchase stocks of foreign companies. Foreign stocks provide an additional piece of diversification to your portfolio.

Technology Stock Characteristics
Technology stocks represent one of the most attractive investment solutions. However, technology stocks are not deprived of their drawbacks.

Fundamental Analysis Technique Basics
In order to make an analysis of target stocks, you can choose from a number of tools. One of them is the fundamental analysis technique.

Technical Analysis Basics
Technical analysts tend to use different mathematical techniques in order to predict future trends in the prices of a target stock.

Importance of Current Assets and Current Liabilities
When you study the figures of a target company it is worth examining its current assets and current liabilities.

Price/Book Value Advantages and Disadvantages
Price/book value is best applicable to companies that have many tangible assets, banks and insurance companies.

Understanding Return on Equity and Return on Assets
Two ratios that are usually used in order to measure management efficiency are return on equity (ROE) and return on assets (ROA).

Understanding Inventory Turnover Ratio
You should compare the turnover ratios of companies in order to determine their efficiency of inventory management.

Price to Earnings Growth Ratio (PEG) Explanation
High growth rates are one of the factors that greatly attract investors to a particular stock. As a result of the increased attention, the price of the stock may hit the skies. A ratio that manages to explain this attention is the price/earnings growth ratio (PEG).

Price to Earnings (P/E) Ratio Basics
One of the most widely used ratios is the P/E ratio (price/earnings). Despite some of its disadvantages, it is favored by most investors for its easy of understanding and calculating.

Price to Sales Ratio (PSR) Explanation
There are many tools you can use in order to valuate a stock. One of them is the price/sales ratio (PSR).


source: http://www.stock-market-investors.com/