A stock is a partial ownership stake in a company. You can buy shares in publicly-traded companies through a stock market exchange, like the New York Stock Exchange or Nasdaq. If you own shares of a company, you can earn dividends when the company distributes earnings to shareholders, vote at shareholder meetings, and sell your shares to someone else if you decide you don’t want them anymore. Stocks are generally considered to be a safe way to grow your investment, because they’re unlikely to decline in value as fast as cash or other forms of debt.

However, the value of stocks can fluctuate for many reasons, including overall market volatility and company-specific events. When a company is struggling, it may announce earnings warnings, which cause share prices to drop. Investors also get nervous when a company is undergoing major changes, such as a merger or acquisition.

When investors are confident in the value of a stock, they will tend to invest more. This can drive share prices up, which can reverse any “paper losses” that people who stayed invested in the market during a bear market experienced. This is a common pattern that recurs, though it’s not predictable.

Investors are looking for returns that will outpace inflation and allow them to achieve their financial goals, such as retirement. Stocks can be a good way to achieve those goals, but there’s no guarantee that you’ll make money investing in them. That’s why it’s important to use all of the data available, including these stock metrics, to help you make smart decisions about your investments.

There are a lot of different ways to analyze a stock, but one of the most basic is supply and demand. This process determines a stock’s price by the amount of people who want to buy it and how scarce it is. If there’s more demand than supply, the share price will rise. If there are more sellers than buyers, the share price will fall.

In addition to analyzing a company’s fundamentals, you can also use technical analysis to try to predict the direction of a stock’s price. This method is often used by speculators, and it’s based on the assumption that trends in the market can be predicted using charts and other visual tools.

Another way to classify stocks is by the size of the company, as shown by its market capitalization. There are large-cap, mid-cap, and small-cap stocks, as well as micro-cap and penny stocks (the lowest priced shares). Stocks are also classified by their type, such as common or preferred shares. In general, common shares are more volatile than preferred shares, but both can provide high returns over the long term. However, it’s important to diversify your portfolio by buying a variety of stocks from a wide range of industries. That’s the only way to reduce your risk and increase your chances of a positive return. A great way to diversify is by investing in Exchange-Traded Funds, or ETFs, which are pre-arranged baskets of stocks that can be traded at low fees.