When you own a share of stock, you are a part owner in the company with a claim -- however small it may be -- on every asset and every penny in earnings. As a company's earnings improve, investors are willing to pay more for the stock. You can easily open a low-cost brokerage account online, at sites like Fidelity, Charles Schwab, TDAmeritrade or Scotrade.

You can move money electronically into your account and start trading. There are thousands of stocks to choose from, so investors usually put stocks into different categories: A company's size refers to its market capitalization, which is the current share price times the total number of shares outstanding. It's how much investors think the whole company is worth. Companies with large market capitalizations, or "large-cap" companies tend to be established and stable, but because of their size, they have lower growth potential than small caps.

Over the long run, small-cap stocks have tended to rise at a faster pace. With less developed management structures, small caps are more likely to run into trouble as they grow. A "growth" company is one that is expanding at an above-average rate, much as tech companies did in the s. Catch a successful growth stock early on, and the ride can be spectacular.

Investing in stocks - May. 28,

But again, the greater the potential, the bigger the risk. Growth stocks race higher when times are good, but as soon as growth slows, those stocks tank. The opposite of growth is "value. Maybe the company has messed up, causing the stock to plummet -- a value investor might think the underlying business is still sound and its true worth not reflected in the depressed stock price. A "cyclical" company makes something that isn't in constant demand throughout the business cycle.

For example, steel makers see sales rise when the economy heats up, spurring builders to put up new skyscrapers and consumers to buy new cars. But when the economy slows, their sales lag too. Cyclical stocks bounce around a lot as investors try to guess when the next upturn and downturn will come. Generally speaking, different sectors are affected by different things.

So at any given time, some are doing well while others are not. In most cases, finance, health care and technology tend to be the fastest growing sectors, while consumer staples and utilities offer stability with moderate growth.

The other sectors tend to be cyclical, expanding quickly in good times and contracting during recessions. Although there are more than 6, publicly traded companies, the core of your stock portfolio should consist tips on stock market investing financially strong companies with above-average earnings growth.

There are only about stocks that fit that description. A well-balanced stock portfolio should consist of 15 to 20 stocks, across seven or more different industries. As a general rule, stocks with moderately above-average growth rates and reasonable valuations are the best buys.

Statistically, high-growth stocks are usually overpriced and tips on stock market investing a harder time meeting inflated investor expectations.

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