There are generally two types of stocks: preferred and common stocks.
Preferred stocks: is an equity security that typically offers a fixed or floating dividend rate, but little, if any, potential for growth of capital. An investor generally buys shares of a preferred stock with the investment goal of a relatively stable income yield rather than for the potential capital growth goal of a common stock investor.
Common Stocks: is a security representing a share of ownership in a corporation.

Share prices will vary as a function of interest rates, credit quality, supply and demand and other market factors.

Why should I own stocks?
To make your money grow! Over the very long-term, stocks have proven a better investment than anything else.

How many stocks should I own?
The typical investor needs no more than 5 to 10 stocks. Of course, just one stock can be enough if it goes up. But all stocks do not go up. And you'll find that success is generally achieved by quickly getting rid of your losers while holding, and even buying more of, your winners. When you have a portfolio of 5 to 10 stocks, you should always be on the lookout for those that are failing to perform, thinking about where that money could be better utilized.

How do I buy a stock?
First you must open an account at a brokerage firm, usually by mailing them a check. Click her for a listing of Stocks Brokers in Dhaka, Chittagong, and USA.  From there, it's simply a matter of communicating your buy and sell orders. Though it's not necessary, it's a good idea to know the stock's trading symbol (example: Microsoft's is MSFT) when you place your order. You should also know the current price of the stock so that you can calculate the number of shares you want to buy.
At most brokerage firms, you'll pay a lower percentage as a commission if you buy larger amounts of stock. And you'll get more favorable rates if you buy round lots (100 shares, for example, instead of 97).

What is a stock broker?
A stock broker is the middle man who takes your buy or sell order and relays it to the market. A discount broker can perform this same basic service for a relatively small commission.  In the best cases, this professional is able to help you by suggesting specific investment moves tailored to your personal situation. His goal is to keep you as a long-term successful client. But remember, the broker only gets paid when you trade.

What is a dividend?
A dividend is an amount of money, paid by a company to its shareholders, usually on a regular basis. Why does it do this? One, to keep shareholders happy by passing on profits to them. And two, because the company can't find a better use for the money! Management doesn't know how to use the money to make the company grow. Usually, the bigger the dividend, the poorer the company's growth prospects.

How to identify a great growth company?
In short, we want to see a company that appears capable of multiplying its earnings rapidly. Characteristics we like to see include a revolutionary product or service, mass markets, high barriers to competition, little or no debt, substantial ownership by management, and large recurring income from products or services. We prefer small companies because they can grow faster, and we prefer companies that are profitable now.

How do I know when to sell?
The most important rule in investing. . . . .and the hardest to learn is, "Cut your losses short." That means if your loss exceeds 15% or 20% at the end of any trading day, you sell. Period. On the other hand, you will have many winners, and knowing when to sell them is more difficult. In general, though, we believe it is wise to sell when a stock has underperformed the market for thirteen weeks. The stock's relative performance line is a good indicator of this.

Why are earnings so important?
Companies are in business to make money. Thus, earnings are the ultimate score card. Companies that can grow their earnings rapidly and do it repeatedly see their stock prices rise to reflect their success. Conversely, companies that stumble on their growth path see the price of their stock fall. Investors are always looking ahead to what they believe the company's earnings will be in the future. Thus investors' perceptions of the company's prospects can be as important as the reality. . . . .in the short term. But in the long run, earnings and earnings per share are most important.

What are options?
An option gives you the right to buy or sell shares of a stock if it reaches a specified price by a set date. On the
surface, it seems a relatively inexpensive way to invest, with the promise of a big payoff if you're right. Trouble is, you'll seldom be right. Most times, your "investment" will disappear, leaving you with absolutely nothing. And even if you do have profits, they'll be short-term. As with short-selling, the argument is that not only must you be
right about the direction the stock will move, you also must be right about the time. It's far simpler and more rewarding to simply invest on the long side, patiently letting time work for you.

Is it risky to invest when public sentiment is negative?
To the contrary, that's the best time of all! The public, in general, tends to react to what has already happened and assumes that the past will continue. To become a truly successful investor, therefore, you should

* Work to identify truly great growth companies.
* Cut your losses short.
* Let your winners run.
* Hold stocks of good companies long term.
* Avoid buying on margin, avoid short-selling and avoid options.
* Use market timing to reduce risk in bear markets.
* Understand the effect that public sentiment has on the price of stocks.
* Read The Cabot Market Letter regularly.