Stock Exchange is a critical aspect of a financial market. Shares are purchased and sold on stock exchanges. Common stock is security which represents ownership of an organization. Holders of Common stock choose the Directors and have the right to vote on company policies. Investing stock requires a close review of the financial reports to assess the true valuation of the product. Generally, this is done by examining the profit and loss account, balance sheet, and cash flow statement of the company. A simpler method to identify out about the performance of the company is to look at its financial ratios, most of which are available in this report. Although speculating is equivalent to gambling, it is not quite the same when speculators seek to make an appropriate decision regarding the future of their companies. These traders are purchasing shares with the expectation that they will only be owned for a limited amount of time before selling. Ratio analysis is important for investment decisions. It not only helps to learn how the business performed. Also, makes it easier for investors to compare the right investing option with firms in the same sector. The philosophy of diversification is one of the main principles of fund management which basically involves avoiding placing all the eggs in one basket. Investors should never have fewer than 25% or more than 75% of the assets in common stocks. A key part of value investing is making sure the assets have a margin of protection. How large a margin of safety is considered depends on a variety of variables, including market conditions, risk tolerance, and also the company's fundamental prospects. The thinner margin of safety might be accepted in special situations. Decide what you intend to do with your portfolio, and stick to it. Choose an area you're involved in, and discover the news and events that drive it every day. Identify the number of businesses or firms that dominate the market. Keywords: Investment, Speculation, Stock Market, Common Stock