A stock split occurs when a company issues additional shares to shareholders, increasing the total number of shares while reducing the price per share proportionally. For example, in a 2-for-1 stock split, you would receive an additional share for each share you already own, and the stock price would be halved. The value of your investment remains the same immediately after the split. Stock splits are typically seen as a sign of a company’s growth and confidence, as they are often implemented when the stock price becomes too high for individual investors to afford. However, stock splits don’t change the underlying value of the company—they are purely cosmetic in nature. Investors should not be concerned about stock splits unless they have specific strategic reasons, such as a desire to trade more shares or enter/exit positions at different price points.

Dividends are payments made by a company to its shareholders, typically from profits. They are often paid on a regular basis (e.g., quarterly or annually) and can be an important source of income for long-term investors, particularly in income-focused strategies. For investors, dividends are important because they: - Provide a regular income stream, which is particularly attractive for retirees or conservative investors seeking stable returns. - Indicate financial health and stability: Companies that pay consistent or increasing dividends are often financially sound. - Can be reinvested: Dividend payments can be reinvested to purchase more shares, leading to compounding returns over time. It’s important to note that not all companies pay dividends. Growth companies, for example, may choose to reinvest profits back into the business rather than paying dividends to shareholders.

The price-to-earnings (P/E) ratio is a common financial metric used to assess the relative value of a stock. It is calculated by dividing the stock’s current price by its earnings per share (EPS). The formula is: P/E Ratio = Stock Price / Earnings Per Share (EPS) The P/E ratio tells investors how much they are paying for each dollar of a company’s earnings. A high P/E ratio may indicate that the stock is overvalued or that investors expect high future growth, while a low P/E ratio may suggest the stock is undervalued or that the company is struggling. However, the P/E ratio should be used with caution: - Growth vs. Value: Growth stocks often have higher P/E ratios due to expected future earnings growth, while value stocks tend to have lower P/E ratios. - Industry Comparison: It’s useful to compare a company’s P/E ratio to that of similar companies in the same industry, as some sectors naturally have higher or lower P/E ratios.

Stock prices are influenced by a variety of market conditions, including both macroeconomic factors and company-specific events. Key factors that impact stock prices include: - Economic Data: Economic indicators such as GDP growth, unemployment rates, and inflation can influence investor sentiment and stock prices. Strong economic performance generally leads to rising stock prices, while economic downturns can cause declines. - Interest Rates: When central banks raise interest rates, borrowing becomes more expensive, which can reduce consumer spending and corporate investment, leading to lower stock prices. Conversely, lower interest rates can stimulate economic growth and increase stock prices. - Corporate Earnings Reports: Companies report quarterly earnings, and their results (or forecasts) can cause significant stock price fluctuations. Strong earnings reports typically lead to price increases, while disappointing results can lead to price drops. - Geopolitical Events: Political instability, trade tensions, or other geopolitical events can cause uncertainty and volatility in the stock market. - Market Sentiment: Investors' collective perception of the market—whether optimistic or pessimistic—can drive stock prices up or down, sometimes irrespective of a company’s fundamentals. Investors should monitor these factors regularly and consider diversifying their portfolios to mitigate risks associated with market fluctuations.