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News headlines constantly blare out the latest movements in the stock market. A lot of people listen to those headlines but don't really know what they mean. Most have some vague idea of what a stock is, but would like to know a lot more about what it really means. Here we look at what some of the different types of stocks are.

Blue Chip Stocks

Companies that we all interact with regularly may be listed as blue chip stocks. These are companies such as McDonalds, Boeing, Wal-Mart, etc. These are huge companies that are staples of the economy. Economic Times defines blue chip stocks as large companies that are well recognized and have a long history.

This is a type of stock that may be great to start out as a novice investor. The reason to start with these is because you are already familiar with the companies, and that may be helpful to you in terms of tracking the progress of those companies. You can keep an eye on how business seems to be doing at your local branches of these types of companies and maybe have some idea of how they are doing. As a side bonus, many of these companies also pay dividends to their loyal shareholders. This means that you can get paid quarterly just for holding the stock.

Small Cap Stocks

On the opposite end of the spectrum from blue chip stocks you will find what are known as small cap stocks. This stands for small capitalization. It refers to companies that are not very large in size. They are still new to the market and are attempting to make their way in the world of business. If you buy a top stocks under 5 early on, you can profit from them handsomely.

The risk with small cap stocks is that they are not known quantities. Wall Street Survivor talks about how these stocks are risky in a sense. There is every possibility that a small cap stock will collapse into bankruptcy. You could lose all of the money that you put into a stock like this, but you might also gain more than you would with bigger companies if you take the risk.

Small cap stocks often do not pay dividends. They tend to put most of their revenues back into growth within the company. Bear this in mind when consider an investment in a small cap stock.

Technology Stocks

Finally, another type of stock that you may be familiar with are the technology stocks. This is because they are the companies that produce the technologies that so many of us use on a regular basis. They consist of everything from the companies that build the computers that we use to the companies that make social networking websites that we all like to use.

Investor Words makes it real simple in terms of providing a definition for tech stocks. They say that these are companies involved in the development of technology.

These companies can also be a gamble potentially as well. There are plenty of them that are very small and still growing. Then again, there are some well established technology companies that one might invest in which are not nearly as risky. They cover the spectrum, and that is part of what makes people so interested in investing in them. If you are someone who likes to use technology a lot you might find these stocks to be of interest to you.

These are just three of the many categories of stocks that you might run into. You should carefully examine all investment options before making a decision. You may also want to consult with an investment professional before investing. You should also understand that you can lose money with investing, but it is a great way to get your money to work for you.
Posted on Friday, September 18, 2020 7:06 PM | Back to top

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