When you buy a share of stock, you are taking a share of ownership in a company. Collectively, the company is owned by all the shareholders, and each share represents a claim on assets and earnings.

The most common ways to divide the market are by company size, sector, and types of growth patterns. Investors may talk about large-cap vs. small-cap stocks, energy vs. textile stocks, or growth vs. value stocks, for example.

Over the short term, the behavior of the market is based on enthusiasm, fear, rumors, and news. Over the long term, though, it is mainly company earnings that determine whether a stock's price will go up, down, or sideways.

Stocks are the best way to save money for long-term goals like retirement.

A good stock may go up even when the market is going down, while a stinker can go down even when the market is booming.

Stock prices are based on projections of future earnings. A strong track record bodes well, but even the best companies can slip.

Because a stock's value is depends on earnings, a Rs.100 stock can be cheap if the company's earnings are high enough, while a Rs.2 stock can be expensive if earnings prospects are dim.

To get a sense of whether a stock is over- or undervalued, investors compare its price to revenue, earnings, cash flow, and other fundamental criteria.

As a general rule, it's best to hold stocks from several different industries. That way, if one area of the economy goes into the dumps, you have something to fall back on.

The cost of trading has dropped dramatically -- But there are other costs to trading -- including mark-ups by brokers and higher taxes for short-term trades -- that stack the odds against traders.