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Never count your stocks before they've hatched
Here are the eight most important words you will ever read about stocks. Memorize them: Past performance is no guarantee of future results. Yes, the stock market is exciting. And, over time stock returns may outpace cash and bonds. But it's never a lock. You are not guaranteed any profits.
Stocks can be classified by the size of the issuing company -- small-cap (companies capitalized under $1 billion) to mid-cap ($1 billion to $5 billion) to large-cap (over $5 billion). Large-cap stocks tend to be less volatile because they represent older, more stable companies.
Stocks can be classified by investment style -- Investors looking for more stability might choose value or income stocks; middle-of-the-roaders might like blend stocks; while more aggressive investors might like growth stocks (smaller companies or start-ups expected to grow).
You may make money on stock when it appreciates (and the stock value goes up), when it pays dividends (in cash or more stock), or when it splits (in this case, you get more shares but the price per share goes down).
You may sell stock any time. However, many investors believe that stock investing is a long-term commitment. Trying to predict the exact right time to buy or sell a stock rarely pays off.
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