3 Facts You Need to Know About the Stock Market

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Investing in stocks is a big key to long-term wealth and prosperity. But you need to know the basics of the stock market to be a good investor.

In the following video, Dan Caplinger, the Motley Fool's director of investment planning, discusses three key facts about the stock market. Dan examines three different ways to categorize stocks and points out some of the advantages and disadvantages of each group of stocks. Specifically, in discussing the historical edge that small-cap stocks have over large caps, he looks at the example of the energy industry and the struggles that oil giants ExxonMobil and Chevron have in keeping their production levels up, even as small up-and-coming exploration and production companies produce huge growth.

Dan goes on to examine the value-versus-growth debate, using the recent struggles of Intuitive Surgical as a way to highlight the challenges high-growth stocks face when their growth inevitably falters. Finally, Dan talks about international stocks, noting that the long-term performance of the iShares MSCI EAFE ETF is very close to the domestic SPDR S&P 500 , but that the two often produce different returns year-to-year, providing some diversification.

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Now that you know these key facts about the stock market, it's time to think about your financial future and get started with an investing plan of your own. Our brand-new special report, "Your Essential Guide to Start Investing Today," tells you the steps you need to follow to get started, as The Motley Fool's personal finance experts show you why investing is so important and why you shouldn't wait another minute before moving forward. Click here to get your copy today -- it's absolutely free.

The article 3 Facts You Need to Know About the Stock Market originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Chevron and Intuitive Surgical and owns shares of Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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