What Kind of Stocks For Your Stock Pot?

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Just about the time you get a handle on what it takes to be a real stock investor, there comes new knowledge. So what kinds of stocks are there out there?

First, there are the two groups of stocks, ergo, common and preferred. Preferred stocks are a lot like bonds because their rate of return is fixed. If you are lucky enough to be a preferred shareholder, you get the first dip into the money well if the company goes bustola. Preferred shareholders are mostly concerned with dividends. Unfortunately, not many companies issue this kind of stock.

Common stocks, on the other hand are what most investors have. They are more risky than preferred stocks, but, this is the majority of what you have to work with, just like everyone else. The stocks below are all common stocks...

GROWTH STOCKS: Are stocks with great potentials for growth, they grow faster than the economy and sometimes than the stock market itself more often than not. The risk level is minimal; investors are attracted to it because they have good earning growth over the long run. Investors in this stock know that over the long term their portfolio is secured.

INCOME STOCKS: Investors who buy into this kind of stocks do so because it doles out a large portion of its profits. Income stocks pay as much as 60% to 80% to investors as dividends compared to other stocks. Income stocks are almost immune to changes in the market because investors are confident that they will receive dividends.

BLUE CHIP STOCKS: Derives its name from the poker game, the blue chips usually have the highest value. They are sector or industry leaders. They are big companies that have been around for a long time, they have strong fundamentals. They pay steady dividends and most times bonus scrip. Though their prices don't grow very much, they are good options for retirement portfolios; they are best suited for the long term.

VALUE STOCKS: Are under priced stocks that has great potential for growth; look at it this way, value stocks sell below their real value which make them very attractive. If you compare the low price of value stocks to its earnings, you will understand why stock traders are attracted to it. They are good options for investors interested in growing their portfolio.

RECURRING STOCKS: These are stocks whose performances are affected by the swings of the economy. When the economy goes up or down a recurring stock responds likewise. Their performance depends on the dictates of the economy; therefore, the best time to invest in recurring stocks is when the economy is performing well.

Thoroughly understanding the kinds of stocks you have to choose from sets the foundation for the rest of your stock market activities and speculations. It's akin to knowing whether you need a standard or metric wrench to work on the engine that powers your success in successful stock market trading.

Of course, there are two ways you can do your part to do your utmost to insure stock happiness and that is to invest in The Prudent Speculator, a Forbes Publication, and the Forbes Special Situation Survey. As investments go, this is pretty much a no brainer. Buy at a low cost, and reap HIGH rewards!