We will touch on stocks first because they are the primary piece of many other investments. Stocks are, in essence, ownership in a company. When a company becomes publicly traded they release stock which represents a portion of the company.
Stocks will go up or down based on the demand for the stock. It is conceivable that a stock price could go up as a company does bad. However, this is not likely as many stocks produce income based on company profits. That being said, it is demand that creates a stocks price.
When looking at a stock we have to look at its overall features.
- Risk – The first thing to be aware of with a stock is risk. Stocks have 100 percent risk, meaning you can lose all of your money. There are no inherit features that make a stock less risky, unless you buy other stocks