Would You Survive Wall Street? Take This Stock Market Quiz

“Buy low, sell high” means purchasing an asset when its price is low and selling it once the price increases, which is the core strategy for profiting in the stock market. This principle is easy to say but difficult to execute in real-time because it requires accurate timing, emotional control, and understanding of market trends. Most successful investors stick to long-term strategies where this principle plays out over years—not days.

A dividend is a portion of a company’s profits that it returns to its shareholders, typically on a quarterly basis. Not all companies pay dividends—many fast-growing firms reinvest earnings instead. Dividends are a key factor for income investors and are seen as signs of financial health and stability. Receiving dividends also gives passive income while holding the stock, which can be reinvested to grow long-term returns.

The S&P 500 is an index that tracks the performance of 500 of the largest publicly traded companies in the U.S. across various industries. It’s considered one of the best indicators of U.S. stock market performance and is commonly used as a benchmark for fund managers. Its diversity makes it a popular tool for gauging general market sentiment and economic trends.

A bull market is defined by sustained price increases across a broad range of assets, typically stocks. It reflects investor optimism, strong economic fundamentals, and growing consumer confidence. Bull markets can last months or years and often correlate with GDP growth and corporate earnings expansion. Recognizing a bull market helps shape long-term investment strategies and manage expectations.

A stop-loss order is a tool investors use to minimize potential losses by automatically selling a stock when it falls to a pre-set price. This allows traders to enforce discipline and avoid emotional decision-making during market drops. It’s especially useful in volatile environments where quick price movements could otherwise result in major losses.

Investing without research puts you at risk of losing money due to poor decisions, market hype, or misunderstood risks. Blindly buying stocks based on trends or influencers can lead to volatile investments, lack of diversification, and ignored fundamentals. Even basic research—like reading financials or analyst reports—can drastically improve your odds of making smart, informed investments.

Diversification involves spreading your investments across different asset types—stocks, bonds, ETFs, real estate—to reduce risk. Instead of putting all your eggs in one basket, diversification helps cushion losses in one area with gains in another. It’s a basic principle in portfolio management and is especially important for newer investors looking to build resilience against market volatility.

IPO stands for Initial Public Offering, which is when a private company offers shares to the public for the first time. This marks the transition from private ownership to public trading, usually on stock exchanges like the NYSE or NASDAQ. IPOs can generate massive interest due to media buzz, but they’re often volatile. Investors must weigh excitement against financials and future projections before investing.

When a company’s stock splits, it divides each share into multiple shares, lowering the price per share without changing the company’s value. For example, in a 2-for-1 split, someone holding one share at $100 will now hold two at $50 each. Stock splits are often a sign of company growth and can make shares more accessible to smaller investors, boosting liquidity.

Blue chip stocks refer to large, reputable companies with a history of reliable performance, strong financials, and stable returns. Think of companies like Apple, Johnson & Johnson, or Coca-Cola. These stocks are less volatile than newer companies and are often included in long-term portfolios for their steady dividends and resilience during downturns.