The difference between large cap, mid cap, and small cap stocks comes down to one calculation: market capitalization, or the total market value of a company’s outstanding shares. Large cap companies — those with a market cap generally above $10 billion — are established industry leaders with long earnings histories. Mid cap companies, typically valued…
Sector rotation in stock market is the movement of investment capital from one industry group to another as economic conditions change. Investors — from large institutions to individual portfolio managers — shift money between sectors such as technology, energy, healthcare, and financials in response to shifts in the business cycle, interest rates, and earnings expectations….
How to read the price to earnings ratio? The price-to-earnings (P/E) ratio is one of the most widely studied valuation metrics in equity markets. It divides a company’s share price by its earnings per share (EPS), producing a single number that tells analysts how much the market is paying for each dollar of profit a…
How does stock market index work? A stock market index is a statistical measurement that tracks the price performance of a defined group of stocks, representing a segment of the broader market. Indices aggregate the price movements of their constituent stocks into a single number, giving investors, analysts, and researchers a reference point for gauging…
How does a stock split work? A stock split is a corporate action in which a company divides its existing shares into a greater number of shares, reducing the price per share proportionally while leaving the total market value of the company unchanged. If you hold 10 shares priced at $100 each before a 2-for-1…
What is short selling in stock market? Short selling is a trading strategy in which an investor borrows shares of a stock they do not own, sells those borrowed shares on the open market at the current price, and later buys the same shares back — ideally at a lower price — to return them…
The Russell 2000 index is a stock market benchmark that measures the performance of 2,000 small-capitalization companies listed on US exchanges. It forms the lower two-thirds of the Russell 3000 index — specifically the companies ranked 1,001 through 3,000 by float-adjusted market capitalization — making it the most widely referenced small-cap benchmark in the United…
Dollar cost averaging (DCA) is an investment strategy where a fixed amount of money is invested into a specific asset at regular intervals, regardless of its current price. Applied to stock investing, this means purchasing shares weekly, monthly, or at any consistent schedule, buying more shares when prices are low and fewer when prices are…
How to read earnings per share? Earnings per share (EPS) is one of the most widely referenced figures in equity analysis, yet its meaning is frequently misread. EPS measures the portion of a company’s net profit attributable to each outstanding share of common stock. It tells an investor how much profit the business generated per…
What is dividend yield and how is it calculated? Dividend yield measures how much income a stock pays out relative to its share price. Expressed as a percentage, it tells investors what return they receive in dividends alone — before any price appreciation. The formula is straightforward: divide the annual dividend per share by the…