Stock Investing for Dummies

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What is stock?

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A type of security that indicates ownership in a corporation and represents a defined portion of that corporation's future success.

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What are the two primary types of stocks?

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Common stock and preferred stock.

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What is common stock?

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Entitles the owner to vote at shareholders' meetings and receive dividends.

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What is preferred stock?

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Doesn't usually confer voting rights, but has preferential treatment in certain conditions.

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What is market capitalization?

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The value of a company calculated by multiplying all outstanding shares of stock by the price of a single share.

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What are the categories of market capitalization?

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Micro cap (<$300M), Small cap ($300M-$2B), Mid cap ($2B-$10B), Large cap ($10B-$200B), Ultra cap/Mega cap (>$200B)

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What is volatility?

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A condition in which there is rapid movement in the price of a particular stock or security.

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What is a bear market?

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A down market, which can be a great time to buy stocks because they're cheaper.

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What is an exchange-traded fund (ETF)?

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A fund that can be traded like stocks and offers a diversified portfolio.

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What is technical analysis?

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Analyzing securities through their market activity (past prices and volume) to find patterns that suggest where those investments may be headed.