Stock Market Frequently Asked Questions

What is an ADR stock?

Are international stocks riskier than domestic stocks?

What's the easiest way to invest internationally?

What is currency risk?

Do U.S. investors need international stocks if they already own large multinational companies?

Do treasury shares count toward outstanding shares?

Can a company sell its treasury shares later?

Why do stock buybacks increase earnings per share?

Is a stock buyback the same as a dividend?

What is considered a large-cap stock?

What is a mega-cap stock?

Are large-cap stocks safer than small-cap stocks?

Do large-cap stocks pay dividends?

Why do index funds hold so much in large-cap stocks?

What does a beta of 1.5 mean?

Is a low-beta stock always safer?

Can beta be negative?

How is beta different from standard deviation as a risk measure?

What does high trading volume mean for a stock?

Is a low-volume breakout reliable?

What is on-balance volume?

Why did volume spike with no major price change?

Should I trade based on volume alone?

Have market-wide circuit breakers ever actually triggered?

Do circuit breakers apply to rising prices too?

Can circuit breakers stop a stock from eventually falling further?

Are circuit breaker rules the same on every exchange?

Do circuit breakers exist outside the United States?

What is considered a mid-cap stock?

Are mid-cap stocks safer than small-cap stocks?

What index tracks mid-cap stocks?

Why are mid-cap stocks sometimes called a sweet spot?

Do mid-cap companies eventually become large-cap?

What is considered a 'low float' stock?

Does a low float make a stock a bad investment?

Why does float change after an IPO?

Do buybacks increase or decrease a stock's float?

Is a higher dividend yield always better?

What is the dividend yield trap?

What's the difference between dividend yield and the payout ratio?

Why do some profitable companies pay no dividend at all?

Can I buy stocks 24 hours a day?

Is it riskier to trade in pre-market or after-hours sessions?

What time zone are stock market hours based on?

Do all exchanges close on the same holidays?

Why do some stocks move overnight even when U.S. markets are closed?

What is considered a small-cap stock?

Are small-cap stocks riskier than large-cap stocks?

What index tracks small-cap stocks?

How is a small-cap stock different from a penny stock?

Do small-cap stocks pay dividends?

What is considered a good ROA?

Why is ROA usually lower than ROE for the same company?

Is ROA better than ROE?

Can ROA be used to compare companies in different industries?

What is the biggest risk management mistake new investors make?

Should I use stop-loss orders to manage risk?

How much of my portfolio should be in one stock?

Is it possible to eliminate investment risk entirely?

What's the difference between issued shares and outstanding shares?

How does a stock buyback affect outstanding shares?

Why do companies report both basic and diluted shares outstanding?

Where can I find a company's current outstanding share count?

Is contrarian investing the same as value investing?

How do you know when a stock is a genuine contrarian opportunity versus a value trap?

Why is contrarian investing psychologically difficult?

Can contrarian investing be applied to entire sectors, not just individual stocks?

What does it mean when a stock touches the upper Bollinger Band?

What is a Bollinger Band squeeze?

What settings do Bollinger Bands use by default?

Can Bollinger Bands be used alone to trade stocks?

Can regular investors see a stock's order book?

Why does my market order sometimes execute at a worse price than expected?

What happens to an order that never gets matched?

Is the order book the same on every exchange?

Do I need a minimum number of shares to be considered a shareholder?

What's the difference between a shareholder and a stakeholder?

Can a shareholder lose more money than they invested?

What is a majority shareholder?

What is considered a good ROE?

Why can ROE be misleading for heavily indebted companies?

What's the difference between ROE and ROA?

Can ROE be negative?

What is a good portfolio allocation for a beginner?

How often should I rebalance my portfolio?

Should 100% of my portfolio be in stocks?

What's the difference between allocation and diversification?

What does a MACD crossover mean?

What is the MACD histogram?

Is MACD a leading or lagging indicator?

How is MACD different from RSI?

Does MACD work well on all stocks?

What are examples of defensive stocks?

Are defensive stocks recession-proof?

Do defensive stocks pay dividends?

What's the opposite of a defensive stock?

Should a portfolio hold only defensive stocks?

Can individual investors realistically beat the market through active investing?

Are actively managed mutual funds worth the higher fees?

What skills does active investing actually require?

Is active investing the same as day trading?

Do I have to vote my shares?

How many votes does one share of stock get?

Can I vote if I own stock through a mutual fund or ETF?

What happens if a shareholder vote is close?

What does RSI above 70 mean?

What is RSI divergence?

What's the best RSI period to use?

Can RSI be used alone to trade stocks?

Is RSI the same as MACD?

Is passive investing the same as index investing?

Does passive investing mean I never check my portfolio?

Can passive investing lose money?

Why has passive investing grown so popular?

Why do investors prefer free cash flow over net income?

Can a profitable company have negative free cash flow?

What is free cash flow used for?

How does free cash flow relate to enterprise value?

What are examples of cyclical stocks?

Are cyclical stocks riskier than defensive stocks?

When do cyclical stocks perform best?

Why can cyclical stocks look cheap right before a downturn?

What's the opposite of a cyclical stock?

Why did I pay more than the last traded price when I bought a stock?

Does a wide spread mean a stock is risky?

Can I avoid paying the spread?

Is the spread the same as a broker commission?

Does the spread matter for long-term investors?

Do share buybacks always increase the stock price?

What is a stock's float?

Why do stock prices drop after an IPO lockup expires?

Is demand the same as trading volume?

What is the main difference between a public and private company?

Why would a company choose to stay private?

How do employees at private companies get paid in equity?

What happens to outstanding shares when a company goes public?

What's the difference between net income and revenue?

Why do companies sometimes report positive net income but negative cash flow?

What is net profit margin and why does it matter?

Can net income be manipulated?

Is a 50-day or 200-day moving average better?

What's the difference between SMA and EMA?

Is a golden cross a reliable buy signal?

Why do moving averages fail in sideways markets?

Which moving average period should beginners start with?

What was the GameStop meme stock event?

Is it possible to profit from meme stocks?

What is a short squeeze?

How are meme stocks different from penny stocks?

Should beginners trade meme stocks?

Is index investing the same as passive investing?

Which index should a beginner choose?

Do index funds ever underperform actively managed funds?

Can I lose money with an index fund?

How many points do I need to draw a valid trend line?

Should I connect candle wicks or bodies for a trend line?

What happens when a trend line breaks?

Are trend lines more reliable on longer timeframes?

Are stock certificates still legally valid proof of ownership?

Can I still request a paper stock certificate today?

How do I find out if an old stock certificate is worth anything?

Is it risky to hold a physical stock certificate instead of an electronic record?

Is revenue the same as profit?

Why do investors care about revenue growth specifically?

What's the difference between revenue and cash flow?

Can a company have revenue but no profit?

Are penny stocks illegal?

Can you actually make money on penny stocks?

What's the difference between penny stocks and small-cap stocks?

Why do penny stocks get hyped on social media?

How is a penny stock different from a meme stock?

Is momentum investing the same as day trading?

Why does momentum work if markets are supposed to be efficient?

What's the biggest risk in momentum investing?

Can momentum investing be combined with value investing?

How long counts as long-term investing?

Is long-term investing safer than short-term trading?

What should I do during a market crash if I'm a long-term investor?

Does long-term investing mean I should never check my portfolio?

Why does a stock price change even when there's no news?

Why do stocks drop after good earnings sometimes?

Does trading volume affect how much a price moves?

Who actually sets a stock's price?

How exact should a support or resistance level be?

What confirms a real breakout versus a false one?

Do support and resistance levels work on all timeframes?

Why do stocks bounce off round numbers like $100?

Is Nasdaq only for technology stocks?

Which is bigger, the NYSE or Nasdaq?

Does Nasdaq have market makers like a designated specialist?

Can a company move from Nasdaq to the NYSE or vice versa?

What is the Nasdaq Composite?

Do fractional shares pay dividends?

Can I vote with a fractional share?

What happens to fractional shares if I transfer brokerages?

Are fractional shares riskier than whole shares?

What is the best first stock to buy?

How many shares should I buy my first time?

What order type should a beginner use?

Is it normal to feel nervous about your first stock purchase?

What's the difference between basic and diluted EPS?

Can a company increase EPS without improving its business?

Is a higher EPS always better than a lower one?

How does EPS relate to the P/E ratio?

What's a good dividend yield to look for?

Are dividend stocks safer than growth stocks?

Should I reinvest dividends automatically?

How is dividend investing taxed?

What makes a stock a blue chip?

Are blue-chip stocks a safe investment?

Do blue-chip stocks pay dividends?

Can a blue-chip stock stop being a blue chip?

Are blue-chip stocks good for beginners?

Is a P/B ratio below 1 always a good buying opportunity?

Why do tech companies usually have high P/B ratios?

How is P/B different from P/E?

Does P/B work well for every industry?

Is preferred stock safer than common stock?

Why don't preferred shares have voting rights?

What does 'callable' mean for preferred stock?

Can preferred stock lose value like common stock?

What is the difference between cumulative and non-cumulative preferred stock?

Is the NYSE floor still used for real trading?

What's the difference between the NYSE and Nasdaq?

How old is the NYSE?

Can smaller companies list on the NYSE?

What does a designated market maker actually do all day?

Can I really start investing with just $1?

Is $1,000 enough to start investing in stocks?

Should I pay off debt before investing?

How much should a beginner invest per month?

Is growth investing riskier than value investing?

What metrics matter most in growth investing?

Can a stock be both a growth stock and a value stock?

Do growth stocks pay dividends?

What is a good dividend yield?

Can a company cut its dividend?

What are Dividend Aristocrats?

Should beginners focus on dividend stocks?

What is the most reliable candlestick pattern?

What does a doji candle mean?

How many candles should I look at to judge a trend?

Are candlestick charts better than line charts?

Is a value stock always a good buy just because it's cheap?

Do value stocks pay dividends?

How do you find value stocks?

Are value stocks safer than growth stocks?

What's the difference between value stocks and blue-chip stocks?

What's the difference between value investing and just buying cheap stocks?

How do you calculate a stock's intrinsic value?

Is value investing still relevant given how much markets have changed?

How do I avoid falling into a value trap?

Does technical analysis actually work?

What's the difference between technical and fundamental analysis?

Do I need technical analysis to invest successfully?

What's the best technical indicator for beginners?

Can technical analysis predict a crash?

What is considered a 'good' P/E ratio?

Why do some profitable companies have no P/E ratio listed?

Is a low P/E always a sign of a cheap, undervalued stock?

How does P/E relate to EPS?

How much money do I need to open a brokerage account?

Is it safe to open a brokerage account online?

Can I have more than one brokerage account?

How long does it take to open a brokerage account?

Do stock exchanges own the companies listed on them?

How many stock exchanges are there in the U.S.?

What happens if a company gets delisted?

Are all trades matched instantly?

Is common stock riskier than preferred stock?

Do all common shares come with voting rights?

How do I know if a stock I'm buying is common or preferred?

Can a company have only common stock and no preferred?

What happens to my common stock during a stock split?

Is the stock market the same as the New York Stock Exchange?

Who decides stock prices?

Can anyone buy stocks?

What's the difference between the stock market and the economy?

Is a stock the same thing as a share?

Can a stock's price go to zero?

Do I need a lot of money to buy stock?

What's the difference between stocks and bonds?

Can I sell a stock the same day I bought it?

How long does it take to get money after selling a stock?

Is there a fee to sell stocks?

Should I sell a stock that's losing money?

Are growth stocks riskier than the average stock?

What's a good example of a growth stock?

How is a growth stock different from a meme stock?

Should beginners buy individual growth stocks?

Is fundamental analysis better than technical analysis?

How long does a basic fundamental analysis take?

Can fundamental analysis predict short-term price moves?

What's the single most important fundamental metric?

Do I need accounting knowledge to do fundamental analysis?

Why not just use market cap to compare companies?

Can enterprise value be negative?

Is enterprise value more useful for some industries than others?

How is enterprise value different from market capitalization?

Is buy and hold the same as passive investing?

How long do you need to hold a stock for this to count as buy and hold?

Does buy and hold mean never selling?

What's the biggest mistake buy-and-hold investors make?

How many stocks do I need to be diversified?

Can you be too diversified?

Does diversification protect against a market crash?

Is an index fund automatically diversified?

Is dollar-cost averaging better than investing a lump sum?

How often should I dollar-cost average?

Can dollar-cost averaging lose money?

Do I need a lot of money to dollar-cost average?