• Best Managed Accounts
  • Best IRA Accounts
  • Best Forex Brokers
  • Best Forex Robots
  • Best Saving Accounts
  • Best Stock Brokers
  • Best Crypto Platforms
  • Best Crowdsourced Review Sites
No Result
View All Result
MFA
  • Top
  • Investing
    • Forex Trading
    • Stock Trading
    • Crypto Trading
    • Mutual Funds
    • ETFs Investing
    • Bonds Investing
    • Real Estate Investing
    • Investment Apps
  • Passive Income
    • Automated Trading
    • Managed Accounts
    • Passive Income Apps
  • Money Management
    • Banking
    • Savings Accounts
    • Money Market Accounts
    • Financial Advisors
    • Financial Independence
    • Saving Money
    • Paying Off Debt
    • Make More Money
  • Retirement
    • 401(k)
    • IRA
    • Retirement Planning
    • Retirement Calculator
  • Reviews
    • Online Brokers
    • Robo Advisors
    • Signal Providers
  • News
  • Top
  • Investing
    • Forex Trading
    • Stock Trading
    • Crypto Trading
    • Mutual Funds
    • ETFs Investing
    • Bonds Investing
    • Real Estate Investing
    • Investment Apps
  • Passive Income
    • Automated Trading
    • Managed Accounts
    • Passive Income Apps
  • Money Management
    • Banking
    • Savings Accounts
    • Money Market Accounts
    • Financial Advisors
    • Financial Independence
    • Saving Money
    • Paying Off Debt
    • Make More Money
  • Retirement
    • 401(k)
    • IRA
    • Retirement Planning
    • Retirement Calculator
  • Reviews
    • Online Brokers
    • Robo Advisors
    • Signal Providers
  • News
No Result
View All Result
MyFinAssets
No Result
View All Result
Home Investing

Every Trader Should Know These Types of Stocks

August 17, 2020
in Investing, Stock Trading
0
A A
0

Every Trader Should Know These Types of Stocks

Stocks are arguably the most interesting and profitable, albeit risky investment form. Investors purchase stocks hoping to obtain lucrative returns. If you are an aspiring investor and keep up with the vast stock market, you will be aware of Warren Buffet and other similar personalities. They made millions, if not billions of dollars by trading stocks. There are hundreds of other notable names who tried their hand at stock investing and gained sizeable returns in short periods.

Trade like pro, no experience needed
Best Managed Accounts 2022

That said, many people encountered massive losses while trading and investing. In most cases, these individuals failed because they did not have adequate knowledge about how the stock market worked. So, thorough knowledge is mandatory for anyone who wants to make it big in this landscape. If not, you can face tremendous financial losses and may not be able to recover them. 

Learning about the different stock types is potentially the most important thing for aspiring and experienced investors. For those who do not know, each type of stock possesses different qualities, advantages, and disadvantages. Knowing what these pros and cons are will provide you a clear idea of the steps you should take to get the upper hand when trading or investing. Please continue reading to learn about some of the essential stock types and the aspects that make them special.

Income Stocks

Income stocks are an equity security offering incredibly high yield capable of generating most of the security’s returns. These stocks are quite popular among investors because of their low volatility, especially compared to other options. Furthermore, income stocks offer remarkably high profits, making them a go-to option for anyone entering the stock market. 

Unlike other variants, people can only receive income stocks from well-recognized organizations possessing a blemish-free track record of handling their finances and business operations. Moreover, when these organizations generate profits, they go to investors rather than being reinvested. It is a significant reason why experts use the term ‘blue-chip’ to describe this stock as it provides a reliable and fairly consistent dividend to its investors. 

You can find income stocks in almost every industry. However, they are mostly available in stable sectors such as food, natural resources, financial institutions, utilities, energy sector, real state, and several others. People without regular a regular income source often choose income stocks to earn money. Why? Because of its low risk and high returns. 

Retired or older people, in particular, heavily invest in these stocks. The most favorable income stock offers low volatility with a modest growth of annual profits. 

Growth Stocks

Unlike income stocks, companies reinvest the profit they generate through growth stocks to expand their business and boost their innovation. Investors do not receive any dividends for this stock type. Instead, they get capital gains.

What’s more, the shares’ prices increase side by side with the company’s growth, providing investors with higher capital gains. However, when the opposite happens, customers face terrible losses. In growth stocks, long-time customers who trust the company, its management, and products, invest their cash in the long run. Whether the enterprise is large or small, both of them issue these stocks.

Penny Stocks

Smaller companies mostly issue penny stocks. Start-ups, in particular, raise funds by obtaining money from various investors. Penny stocks are vastly different from the growth and income stocks because converting them into cash is quite complicated. Experts also use the term “illiquid” to describe this phenomenon. Because of penny stocks’ illiquidity, you can only trade them at low prices. Furthermore, you will usually find this stock type issued by companies with incredibly low market capitalization.

You will find penny stocks being traded below one dollar in western markets. However, people also consider stocks priced below five dollars as penny stocks. One of the best benefits of investing in this stock is its low price and potential to provide you with a massive fortune. For instance, if you buy fifty thousand penny stock shares for one dollar each, you could gain fifty thousand dollars or more after some wait. 

Nevertheless, there are some risks involved too. It would even be fair to say that penny stocks are one of the most unsafe options in the market as most of them come from organizations with limited shareholders. Most of them steer clear from disclosing information concerning their business. 

The lack of transparency can be troubling, especially for inexperienced investors. It is a significant reason some organizations manipulate these stocks’ prices and scam investors out of their hard-earned money. It would be best to remain vigilant when investing in penny stocks as a tiny misstep could lead to losses. 

Speculative Stocks

Speculative stocks are unique in the sense that companies that issue them are usually making new products, trying to explore foreign markets and other untapped territories, or went through massive financial and managerial changes. 

Similar to penny stocks, speculative stocks also carry risk. Why? Because the management, product, company, and new territories haven’t been through the tests, trials, and tribulations of experienced organizations. Most of them do not experience success, in the long run, meaning the returns, if things don’t work out, are quite low.  

On the other hand, organizations can get an excellent return on investment if their changes are favorable. It would be fair to say that speculative stocks are a high risk, high return investment. 

Value Stocks

Companies with assets worth higher that their stock prices are known as value stocks. Investors believe these stocks as undervalued, thinking their shares will drastically improve as the company grows. However, investors can face losses if the company does not perform well, making value stocks a risky option for up and comers in the stock market.

Cyclical Stocks

Cyclical stocks are the ones issued by companies providing discretionary and luxury services and goods. Clothing businesses, restaurant and hotel chains, vehicle manufacturers, airlines, and other similar operations fall into this grouping. Financial experts believe that performances of cyclical and other similar stocks are strong indicators of healthy economies. The value of these stocks mostly remains high when the economy is performing well, but it also loses its worth when things aren’t going well.

For instance, people invest in travel, shop, homes, cars, and other luxury items when the economy is flourishing. It positively impacts cyclical stocks and improves their value. However, the opposite happens when people cut their expenses on luxury goods and services. What’s most impressive about cyclical stocks is that they recover quickly and surpass their pre-recession value in some cases.  More and more investors are choosing this stock due to its low volatility and superb returns. 

Defensive Stocks

Defensive stocks provide stable dividends and consistent earnings despite their overall state in the stock market. There is never a shortage of demand for some essential products, which is why these stocks are possibly the most stable among the other options mentioned in this article.  

Why would people want to buy a stock when things are becoming shaky and times are getting rough? Wouldn’t a treasury bull be safer because of its low risk? Sadly, greed and fear often dictate the markets. Defensive stocks provide a remarkably higher return than what you can make in environments with low-interest rates. Furthermore, these stocks also minimize fear and doubt as they are not as tricks as ordinary stocks. 

Final Thoughts

Regardless of your experience, it would be best to consult with an experienced and reliable stockbroker when investing or trading any of the stock types mentioned above. It could save you from substantial losses and quite possibly provide high yields.

Trade like pro, no experience needed
Best Managed Accounts 2022
TweetShareShare
Previous Post

ETFs Investing in Consumer Staples

Next Post

Beyond Forex – Trading Skills off the Market

Related Posts

Using a Trend Filter To Befriend the Trend in Forex

October 10, 2022

Guide on How to Trade Forex Using a Smartphone

October 10, 2022
WolfBot Crypto Bot Review: Key Aspects to Consider

WolfBot Crypto Bot Review: Key Aspects to Consider

Next Post
Beyond Forex – Trading Skills off the Market

Beyond Forex – Trading Skills off the Market

Improve Trading Psychology by Creating a Framework

Improve Trading Psychology by Creating a Framework

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Top Performing Trading Systems

TechBerry 95%
Forex Cyborg 80%
Automic Trader 75%
DynaScalp 70%
Happy Forex 65%

Follow our Twitter

Popular

  • Filing Forex Trading Taxes IRC 988 vs. IRC 1256: Step-by-Step Guide

    Filing Forex Trading Taxes IRC 988 vs. IRC 1256: Step-by-Step Guide

    0 shares
    Share 0 Tweet 0
  • How To Trade And Invest During The Earnings Season

    0 shares
    Share 0 Tweet 0
  • How to Invest With Grayscale Bitcoin Trust Indicator

    0 shares
    Share 0 Tweet 0
  • Happy News Review

    0 shares
    Share 0 Tweet 0
  • Understanding Wash Trading: Why Is It Banned?

    0 shares
    Share 0 Tweet 0

INVESTING

  • Bonds Investing
  • Crypto Trading
  • Forex Trading
  • Mutual Funds
  • ETFs Investing
  • Real Estate Investing
  • Stock Trading

RETIREMENT

  • 401(k)
  • IRA
  • Retirement Planning
  • Retirement Calculator

REVIEWS

  • Online Brokers
  • Robo Advisors
  • Signal Providers

MONEY MANAGEMENT

  • Banking
  • Financial Advisors
  • Money Market Accounts
  • Savings Accounts

PASSIVE INCOME

  • Automated Trading
  • Managed Accounts
  • Passive Income Apps

Are you looking for the best investment plan?

Let our financial advisors help you

Contact Us

PERSONAL FINANCE

  • Financial Independence
  • Saving Money
  • Paying Off Debt
  • Make More Money
  • Best Managed Accounts
  • Best IRA Accounts
  • Best Forex Brokers
  • Best Forex Robots
  • Best Saving Accounts
  • Best Stock Brokers
  • Best Crypto Platforms
  • Best Crowdsourced Review Sites
  • Home
  • Blog
  • Privacy Policy
  • Disclaimer
  • Contact Us

© 2023, Myfinassets

No Result
View All Result
  • Top
  • Investing
    • Forex Trading
    • Stock Trading
    • Crypto Trading
    • Mutual Funds
    • ETFs Investing
    • Bonds Investing
    • Real Estate Investing
    • Investment Apps
  • Passive Income
    • Automated Trading
    • Managed Accounts
    • Passive Income Apps
  • Money Management
    • Banking
    • Savings Accounts
    • Money Market Accounts
    • Financial Advisors
    • Financial Independence
    • Saving Money
    • Paying Off Debt
    • Make More Money
  • Retirement
    • 401(k)
    • IRA
    • Retirement Planning
    • Retirement Calculator
  • Reviews
    • Online Brokers
    • Robo Advisors
    • Signal Providers
  • News

© 2023, Myfinassets

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In