Stocks
The building blocks of investing. Understand what you're buying before you buy it.
What is a stock?
A stock (or share) is a tiny piece of ownership in a company. When you buy one share of Apple, you literally own a fraction of everything Apple has — its cash, buildings, patents, and future profits.
What is a stock market?
A stock market is a marketplace where buyers and sellers trade shares. The NASDAQ, the New York Stock Exchange (NYSE), and Euronext are examples. Think of it like an auction house that runs every weekday.
How are prices set?
Prices move with supply and demand. If more people want to buy a stock than sell it, the price rises. If more want to sell, it drops. Company earnings, news, and market sentiment all influence demand.
Key terms
- Ticker — the short code for a stock (e.g. AAPL for Apple).
- Market cap — total value of all shares (price × number of shares).
- Volume — how many shares are traded in a day.
- Adj Close — closing price adjusted for splits and dividends, essential for long-term comparison.
ETFs
Diversification in a single trade. The easiest way to start investing.
What is an ETF?
An Exchange-Traded Fund bundles many stocks into one tradable product. Instead of buying 100 companies individually, you buy one ETF that holds all of them. It trades on the stock market just like a regular share.
Why do beginners love ETFs?
Instant diversification. If one company in the bundle crashes, the others cushion the blow. The QQQ ETF, for example, tracks the 100 largest NASDAQ companies — so you get Apple, Microsoft, NVIDIA, and 97 others in a single purchase.
ETFs vs. individual stocks
ETFs
- Lower risk (diversified)
- Smoother returns
- Less research needed
- Lower potential upside
Stocks
- Higher risk (concentrated)
- More volatile
- Requires research
- Higher potential upside
Popular NASDAQ ETFs
- QQQ — tracks the NASDAQ-100 (top 100 non-financial companies).
- VGT — Vanguard Information Technology ETF.
- ARKK — ARK Innovation, focused on disruptive tech.
Risks
Every return comes with a price. Learn to measure and manage risk.
Why do prices go down?
Markets react to uncertainty. Bad earnings, interest rate hikes, geopolitical crises, or simple panic can trigger sell-offs. In March 2020, the NASDAQ dropped 30% in three weeks due to COVID-19 fears — then recovered within five months.
Volatility
Volatility measures how much a price swings up and down. NVIDIA moved ±5% in a single day dozens of times in 2023. A savings account has near-zero volatility. Higher volatility = higher potential reward, but also higher potential loss.
Key risk metrics
- Max drawdown — the worst peak-to-trough drop. Tesla lost 73% from Nov 2021 to Jan 2023.
- Sharpe ratio — return per unit of risk. Higher is better. Above 1.0 is considered good.
- VIX — the "fear index." When VIX spikes, markets are panicking.
The golden rule
"Never invest money you can't afford to lose." Diversification, long time horizons, and emotional discipline are your best defenses. Historically, the NASDAQ has returned ~10% annually over 20+ year periods — but short-term swings can be brutal.
Our Simulation
Travel back in time and see what your money could have done.
What if you had invested?
Our simulator lets you travel back in time. Pick a company, choose a date, enter an amount, and watch how your investment would have grown (or shrunk) using real historical data.
- Compare stocks vs. ETFs side-by-side.
- See how strategies like Dollar-Cost Averaging perform against lump-sum investing.
- Explore the impact of major events: the 2008 crash, COVID, the AI boom.
Quiz
Test what you've learned and discover your investor profile.
Test your knowledge
Answer these quick questions to see what you've learned — and discover your investor profile.