How do you categorize stocks?

Another way to categorize stocks is by the size of the company, as shown in its market capitalization. There are large-cap, mid-cap, and small-cap stocks. Shares in very small companies are sometimes called “microcap” stocks. The very lowest priced stocks are known as “penny stocks.” These companies may have little or no earnings.

What do you need to know about the stock market?

While investing might seem daunting at first, once you understand the stock market basics, it becomes much easier. There are three core concepts that all beginning investors need to grasp: 1. How the stock market works. 2. The difference between long-term investing and stock trading. 3. The importance of diversifying your portfolio.

What is the basis for a share of stock?

The basis for this share of stock is the amount of money that the stock was worth on the date Joe received it as a gift from his dad. In this case, the stock was worth $100 on the date of the gift, so Joe's starting basis is $100. When he goes to sell the stock, his broker will charge a $5 commission, and that can be added to the basis too.

What is a stock IPO?

Stocks are a type of security that gives stockholders a share of ownership in a company. Companies sell shares typically to gain additional money to grow the company. This is called the initial public offering (IPO). After the IPO, stockholders can resell shares on the stock market.