Why investing is difficult.

The most difficult part of investing, is understanding the behaviour of the stock markets. Markets fluctuations are based on the varied opinions expressed by its participants, which in turn are subject to change commensurate with the changing sentiments of people. It’s the crowd behaviour that dominates the decision making and is responsible for the sudden changes in sentiments. If you are emotionally strong and you stock when the others are panicking, you end up making a huge fortune; but this seems easy only in hindsight. At this point of time, to go against the crowd is the most difficult but the most sensible thing to do. Investing in the stock market has historically been one of the most important pathways to financial success. As you dive into researching stocks, you’ll often hear them discussed with reference to different categories of stocks and different classifications. Here are the major types of stocks you should know.

•Common stock
•Preferred Stock
•Large-cap stock
•Mid-cap stock
•Small-cap stock
Common stock

Most stock that people invest in is the common stock. It represents partial ownership in a company, with shareholders getting the right to receive a proportional share of the value of any remaining assets if the company gets dissolved Common stock gives shareholders theoretically unlimited upside potential, but they losing also rick everything if the company fails without having any assets left over.

Preferred stock

Preferred stock works differently, as it gives shareholders a preference over common shareholders to get back a certain amount of money if the company dissolves. Preferred shareholders also have the right to receive divided payments before common shareholders do. The net result is that preferred stock as an investment often more closely resembles fixed-income bond investments than regular common stock. Often, a company will offer only common stock. This makes sense, as that is to what shareholders most often seek to buy. Understanding behavioural sciences is the key to success in the financial markets. It’s application not only helps you control your emotions but also helps you to understand others emotion’s and benefit from their mistakes.