Basic knowledge of Stocks

this is the current compilation of what i have learnt so far about stocks and some of the important technical terms that you need to know.

P/E Price/Earnings Price per share:Net earnings per share
When P/E is low, stock is undervalued & vice versa. Traditionally, P/E lies between 18-20.
If P/E<10, must do further analysis of the company before buying the stocks are it is likely to go lower.
Stocks accumulate Wealth. Bonds Preserve Wealth.
Stocks offer compounding of returns free of most taxes until you sell the stocks.
FACT:There are no ten-year periods in which stocks didn't do better than anything else.
Stocks reflect the dynamic growth & change of a country.
LONG TERM: Price Appreciation & Dividends.
Company's intrinsic value: company's worth when its ASSETS, EARNINGS, DEVIDENDS, OUTLOOK & MANAGEMENT are all taken into account.
Intrinsic value a reflection of Stock price.
If intrinsic value far above stock price, buy it, or vice versa.

Market Capitalization is the product of PRICE OF STOCK AT GIVEN TIME and AMOUNT OF SHARES OUTSTANDING.

• Large Cap: $10Billion and above-Low risk
• Mid Cap: $2Billion to $10Billion-Intermediate risk
• Small Cap: $500million to $2Billion-High risk