Home| Course Catalog| Career Planning

Free Online Course on Personal Finance

Site Search


Of all the major asset classes, stocks have consistently delivered the highest return over the longest period of time. It is critical for you to understand basic information about stocks if you want to achieve better returns than those yielded by long-term bonds and cash. This section will give you a basic understanding of how and why stocks perform the way they do. This section will also help you understand why you should consider stocks or stock mutual funds when building your portfolio.

Before I begin the discussion of stocks, I reiterate three important principles of successful investing discussed earlier which have implications for investing in stocks. First, Principle 3: Stay Diversified. Diversification is your best defense against risk. When investing in stocks, do not invest in individual stocks but in portfolios’ of stocks. Investing is risky and uncertain: minimize risk by diversifying your stock holdings by investing in index funds, ETFs, or diversified mutual funds. 

Second, Principle 6: use caution if you are investing in individual assets. The fastest way to get rich and poor, depending on your luck, is investing in individual stocks. If you must invest in individual assets (and this is not a given), know what you are investing in. Do your homework. Spend time learning about the company, its financial statements, its management, its short- and long-term strategy, its domestic and global industry, and its competition. Note that I emphasize that this section on Stock Basics is not sufficient background information to enable you to invest wisely in individual assets. I strongly recommend that you invest in index or mutual funds that have many hundreds of individual assets instead of investing in individual stocks.

Finally, Principle 8: Do Not Waste Too Much Time and Energy Trying to Beat the Market. It is very difficult, expensive, and time-consuming to beat the market (to gain returns in excess of the returns on the major asset classes). While it may be possible to beat the market on a short-term basis, it is very difficult to consistently beat the market on a long-term basis. This section on Stock Basics advocates education and learning by investing in index and mutual funds, rather than investing in individual stocks.

When you have completed this section, you should be able to do the following:

  1. Review risk and return for stocks.
  2. Understand stock terminology.
  3. Understand how stocks are valued.
  4. Know why stocks fluctuate in value.
  5. Know stock-investing strategies.
  6. Calculate the costs of investing in stocks.


Our Network Of Sites:
Apply 4 Admissions.com              | A2ZColleges.com  | OpenLearningWorld.com  | Totaram.com
Anatomy Colleges.com                | Anesthesiology Schools.com  | Architecture Colleges.com | Audiology Schools.com
Cardiology Colleges.com            | Computer Science Colleges.com| Computer Science Schools.com| Dermatology Schools.com
Epidemiology Schools.com         | Gastroenterology Schools.com  | Hematology Schools.com     | Immunology Schools.com
IT Colleges.com                | Kinesiology Schools.com  | Language Colleges.com  | Music Colleges.com
Nephrology Schools.com             | Neurology Schools.com  | Neurosurgery Schools.com | Obstetrics Schools.com
Oncology Schools.com    | Ophthalmology Schools.com | Orthopedics Schools.com       | Osteopathy Schools.com
Otolaryngology Schools.com| Pathology Schools.com  | Pediatrics Schools.com  | Physical Therapy Colleges.com
Plastic Surgery Schools.com| Podiatry Schools.com  | Psychiatry Schools.com   | Pulmonary Schools.com 
Radiology Schools.com| Sports Medicine Schools.com| Surgery Schools.com | Toxicology Schools.com
US Law Colleges.com| US Med Schools.com | US Dental Schools.com

About Us Terms of Use | Contact Us | Partner with Us | Press Release | Sitemap | Disclaimer | Privacy Policy

©1999-2011 OpenLearningWorld . com - All Rights Reserved