10
Feb
Stock video 8
in
Comments
Lesson Learning Objectives:
Introduction:
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This section will help you understand that not all stocks are the same. By looking at stocks as “characters” with different statistics, you will learn how to identify their unique strengths and weaknesses to build a balanced and powerful investment team.
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- Value and Growth stocks represent the two main investment styles you can use to build your portfolio. You will learn to spot “hidden gems” that are trading for less than they are worth and “high flyers” that have the potential for rapid price increases.
- Market Capitalization is the “stat” used to measure a company’s size and stability. Understanding the difference between large-cap, mid-cap, and small-cap stocks will help you choose companies that fit your personal balance of safety and growth potential.
- Corporate Actions like stock splits and buybacks are special moves companies use to change their share price or value. Knowing how these work will allow you to understand why your number of shares might change or why the remaining shares have become more valuable.
- Strategic Moves such as mergers, acquisitions, and spinoffs can dramatically shift a stock’s value. You will learn how companies combine to become more powerful or split apart to focus on what they do best, helping you anticipate major changes in your investments.
- Penny Stocks carry extremely high risks that every beginner should be aware of. You will learn why these low-priced stocks are often hard to sell and easy to manipulate, helping you avoid common traps that could hurt your portfolio.
Key Lesson Information:
Closing Statement:
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Understanding the “stats” and special moves of different stocks allows you to look beyond a company’s name and see its true character. Use this knowledge to build a resilient, well-rounded team of investments while avoiding high-risk traps like penny stocks.
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- Value stocks are “hidden gems” in the market—solid, established companies that are currently trading for less than they are truly worth. Investors buy them expecting the market to eventually recognize their value, leading to steady growth over time.
- Growth stocks are the “high flyers,” often found in innovative industries like tech. These companies grow faster than average and reinvest their profits instead of paying dividends, offering investors the chance for rapid capital appreciation.
- Market capitalization (or market cap) tells you the size of a company. Large-cap stocks are the “skyscrapers”—big, stable, and safer—while small-cap stocks are like “startups”—younger companies with explosive growth potential but much higher risk.
- Corporate actions like stock splits make shares more accessible by dividing them into more pieces without changing the total value. Buybacks happen when a company buys its own shares to reduce the supply, which can help increase the price of the shares you still hold.
- Mergers and acquisitions happen when companies join together to become one, while a spinoff is when a big corporation creates a new, independent company from one of its divisions. Both moves are strategic ways to unlock value or increase power.
- Penny stocks are stocks that trade for very low prices, usually under five dollars, and belong to unproven companies. They are extremely volatile and easily manipulated, so they are generally not recommended for beginners due to the high risk of losing money.
