Stock Market Terminology
A key part of succeeding in any area is learning. Investing is no different. Just like other fields, investors, financial experts, and the media use certain terms that come up often. One of the best ways to become a more confident investor is to understand the language they speak.
Investing Point created this page to help individual investors become familiar with common investing terms. Terms are listed in alphabetical order to make the list easy to use.
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12B-1 Fees
A 12b-1 fee is a fee charged by a mutual fund that covers the marketing and distribution costs of the fund as well as some service fees.
52-Week Highs
A 52 week high is the highest price that a stock has traded at in the last year. Many investors use 52 week highs as a factor in determining a stock's current value and as a predictor of future price movements.
52-Week Highs And Lows
The highest and lowest prices at which a stock has traded during the previous 52 weeks. Investors use this range to assess a stock's current value and volatility.
A
Accumulation Distribution Indicator
A cumulative indicator using volume and price to assess stock accumulation or distribution. Helps identify whether a stock is being accumulated or sold off by institutional investors.
After-Hours Trading
Buying and selling of stocks that takes place after normal trading hours. Trading occurs through an electronic market between 4:05 p.m. and 8:00 p.m. ET.
Analyst Ratings
Analyst ratings like "buy," "sell" and "hold" allow investors to study a company's financials to assess the financial health of the company.
Analyst Ratings Trading
Analysts evaluate companies and deliver reports, and investors can trade based on their recommendations. Learn how to trade using analyst ratings.
Arbitrage
A trading strategy that takes advantage of a momentary price difference between an asset's price on two different exchanges. Traders profit from market inefficiencies.
Asset Allocation
The process of dividing investments among different asset classes (stocks, bonds, real estate, etc.) and keeping it there to balance risk and reward based on goals.
B
Backdoor Roth IRA 2023
A method for high-income earners to contribute to a Roth IRA by first contributing to a traditional IRA and then converting it, bypassing income restrictions.
Back-End Load
A sales charge or commission that an investor pays when they sell shares in a mutual fund. Also known as a deferred sales charge.
Balance Sheet
A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time. Essential for assessing financial health.
Balanced Fund
A mutual fund that combines stocks and bonds to provide both growth and income while reducing risk through diversification.
Bar Chart
A chart showing stock price movements with vertical bars representing the high, low, opening, and closing prices for each time period.
Basic Economics
Fundamental economic principles including supply and demand, market forces, and how they affect stock prices and investment decisions.
Bear Market
A market condition where prices are falling, typically by 20% or more from recent highs. Often accompanied by widespread pessimism and negative sentiment.
Bear Trap
A false signal indicating a rising trend has reversed into a downtrend. Occurs when prices briefly decline then resume upward movement, trapping bearish traders.
Beige Book
A Federal Reserve report summarizing current economic conditions across the 12 Fed districts. Published eight times per year and used to guide monetary policy.
Beta
A measure of a stock's volatility relative to the overall market. A beta above 1 indicates higher volatility than the market; below 1 indicates lower volatility.
Bid-Ask Spread
The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Narrower spreads indicate better liquidity.
Black Swan
An unpredictable event with extreme consequences. In investing, refers to rare, high-impact market events that are difficult to forecast.
Blockchain
A decentralized digital ledger technology that records transactions across multiple computers. The underlying technology for cryptocurrencies.
Blue Chip
Shares of large, well-established companies with a history of reliable performance and stable earnings. Considered high-quality, lower-risk investments.
Bollinger Bands
A technical analysis tool consisting of a moving average with upper and lower bands. Used to identify overbought or oversold conditions.
Bond
A fixed-income security representing a loan made by an investor to a borrower (typically corporate or governmental). Bonds pay interest and return principal at maturity.
Breakout Stocks
Stocks that move above a resistance level or below a support level with increased volume. Often signals the start of a new trend.
Bull Market
A market condition where prices are rising or expected to rise. Characterized by investor optimism and confidence that strong performance will continue.
Bull Trap
A false signal indicating a declining trend has reversed into an uptrend. Occurs when prices briefly rise then resume downward movement.
Buy Rating
An analyst recommendation indicating a stock is expected to perform well. Suggests the stock price will likely increase and outperform the market.
Buyback
When a company repurchases its own shares from the marketplace. Reduces the number of outstanding shares and often increases stock price.
Buy-Side Analyst
Financial analysts who work for investment firms and make recommendations for their firm's portfolio. Focused on finding investment opportunities.
C
CAC 40 Index
A market-cap weighted index of 40 of the 100 companies with the highest market cap on the Euronext, similar to the Dow Jones Industrial Average.
Calculating Retirement Income
When planning for retirement, calculating how much income you'll need is essential. Use financial calculators and projections to estimate retirement needs.
Call Option
The owner of a call option has the right to purchase a specific number of shares of a company's stock at an agreed upon price.
Call Option Volume
The amount of buying and selling of call options. High volume indicates strong investor interest in the right to buy the underlying stock.
Candlestick Chart
Charts that represent stock price moves. Traders use candlesticks to make decisions based on patterns showing price trends and momentum.
Capital Gains
An increase in value between an asset's purchase price and selling price. The profit realized when an investment is sold at a higher price than purchased.
Capital Gains Distribution
A payment to shareholders from profits earned by selling securities in a mutual fund. Typically occurs when the fund realizes gains from portfolio sales.
Cash Asset Ratio
A fundamental measurement tool representing the amount of highly liquid assets versus short-term liabilities. Indicates a company's ability to pay immediate debts.
Catch-Up Contributions
Deposits made above and beyond what is allowed in an employer-sponsored retirement plan. Available to investors age 50 and older.
CBOE Russell 2000® Volatility Index
An indicator of short-term expectations of volatility in the stock market. Measures expected volatility for the Russell 2000 Index.
CD Ladder
An investment strategy dividing money equally among multiple certificates of deposit purchased at varying maturity dates to balance liquidity and returns.
Certificate Of Deposit (CD)
A financial product allowing depositors to hold funds until a fixed maturity date. Offers higher interest rates than savings accounts in exchange for locking funds.
Channel Trading
A trading strategy based on identifying stock price channels between support and resistance levels. Traders buy at support and sell at resistance.
Circuit Breakers
Trading halts triggered when market indexes decline by specific thresholds. Designed to prevent panic selling and give markets time to stabilize.
Closed-End Mutual Funds
Investment funds with a fixed number of shares that trade on exchanges like stocks. Unlike open-end funds, they don't issue new shares on demand.
Commodities
Basic goods and raw materials that can be bought and sold, such as gold, oil, agricultural products, and natural gas.
Compound Annual Growth Rate (CAGR)
The mean annual growth rate of an investment over a specified period longer than one year. Smooths out volatility to show consistent growth.
Compound Interest
Interest calculated on both the initial principal and accumulated interest from previous periods. The power of earning interest on interest over time.
Conference Calls
Quarterly earnings calls where company management discusses financial results, strategy, and outlook with analysts and investors.
Cost Basis
The original purchase price of an asset, used to calculate capital gains or losses when sold. Important for tax reporting purposes.
Cost Of Capital
The cost a company incurs to finance its operations through debt or equity. Used to evaluate investment projects and business decisions.
Cost Of Debt
The effective interest rate a company pays on its borrowed funds. A key component in calculating the weighted average cost of capital.
Cost Of Equity
The return required by equity investors to compensate for the risk of investing in a company. Higher risk companies must offer higher returns.
Cost Of Goods Sold (COGS)
The direct costs attributable to producing goods sold by a company. Includes materials and labor but excludes indirect expenses.
Coverage Ratio
A financial metric measuring a company's ability to service its debt and meet financial obligations. Higher ratios indicate better financial health.
CPI
Consumer Price Index measures the average change in prices paid by consumers for goods and services. A key inflation indicator watched by investors.
Cryptocurrencies
Digital or virtual currencies secured by cryptography. Bitcoin and Ethereum are examples of cryptocurrencies that trade on digital exchanges.
Current Ratio
A liquidity ratio measuring a company's ability to pay short-term obligations. Calculated by dividing current assets by current liabilities.
Cyclical Stocks
Stocks whose performance closely follows the economic cycle. Tend to rise during economic expansion and fall during recessions.
D
Day Trading
The practice of buying and selling securities within the same trading day. Day traders close all positions before market close to avoid overnight risk.
Dead Cat Bounce
A temporary recovery in stock price during a prolonged decline. The bounce is brief before the downward trend resumes.
Death Cross
A bearish technical pattern where a short-term moving average crosses below a long-term moving average. Often signals continued downward momentum.
Debt-To-Equity Ratio
A measure of a company's financial leverage calculated by dividing total debt by shareholders' equity. Indicates how much debt is used to finance assets.
Depreciation
The allocation of the cost of a tangible asset over its useful life. An accounting method that reduces reported income and taxes.
Derivative
A financial contract whose value is derived from an underlying asset. Options and futures are common types of derivatives.
Diluted Earnings Per Share
Earnings per share calculated assuming all convertible securities were exercised. Provides a conservative view of per-share earnings.
Discount Rate
The interest rate used to determine the present value of future cash flows. Also refers to the rate the Federal Reserve charges banks for short-term loans.
Disruptive Technology
Innovation that significantly alters how industries or markets function. Can create new markets while displacing established competitors.
Diversification
The practice of spreading investments across various assets to reduce risk. A fundamental principle: don't put all your eggs in one basket.
Dividend Achievers
Companies that have increased their dividend payments for at least 10 consecutive years. Demonstrates consistent financial performance.
Dividend Aristocrat Index
S&P 500 companies that have increased dividends for at least 25 consecutive years. Elite group of reliable dividend-paying stocks.
Dividend Increases
When a company raises its dividend payment to shareholders. Signals management confidence in future earnings and cash flow.
Dividend Kings
Companies that have increased dividends for 50 or more consecutive years. The most elite group of dividend-paying stocks.
Dividend Reinvestment Plan (DRIP)
A program allowing shareholders to automatically reinvest cash dividends into additional shares of the company, often without fees.
Dividend Stocks
Stocks that regularly pay dividends to shareholders. Popular among income-focused investors seeking regular cash flow.
Dividend Yield
Annual dividend payment divided by stock price, expressed as a percentage. Shows the cash flow received per dollar invested.
Dividend Yield Calculator
A tool for calculating the annual dividend income as a percentage of the stock price. Helps investors compare dividend-paying investments.
Dogs Of The Dow Strategy
An investment strategy focusing on the 10 highest dividend-yielding Dow stocks. Rebalanced annually to capture value and income.
Dollar Cost Averaging
Investing a fixed amount regularly regardless of market conditions. Reduces the impact of volatility and eliminates timing decisions.
Dow Jones Industrial Average
A stock market index tracking 30 large publicly-owned companies trading on the NYSE and NASDAQ. One of the oldest and most-watched indices.
Dual Listing
When a company lists its shares on multiple stock exchanges. Provides broader access to capital and increased liquidity.
E
Earnings Reports
Quarterly financial statements released by public companies showing revenue, expenses, and profit. Critical events that often move stock prices.
Earnings Surprise
When a company's reported earnings differ significantly from analyst expectations. Can cause substantial stock price movements.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of company profitability that excludes certain expenses.
Exchange-Traded Fund
An investment fund traded on stock exchanges, holding assets like stocks, bonds, or commodities. Combines diversification of mutual funds with stock-like trading.
Economic Bubble
When asset prices rise far above their fundamental value, driven by exuberant market behavior. Eventually bursts when prices correct sharply.
Economic Reports
Government and private sector releases of economic data including employment, GDP, inflation, and consumer spending. Move markets significantly.
Elliott Wave Theory
A technical analysis approach claiming markets move in predictable wave patterns. Used to forecast future price movements based on psychology.
Equal Weight Rating
An analyst rating suggesting a stock will perform in line with the average return of the analyst's coverage universe. Neutral recommendation.
Equity Income
Income generated from stock dividends. A strategy focusing on stocks with above-average dividend yields for regular cash flow.
ESG Score
Environmental, Social, and Governance rating measuring a company's sustainability and ethical practices. Increasingly important to investors.
Euro STOXX 50 Index
A stock index of 50 large companies in the Eurozone. Provides a blue-chip representation of Eurozone market performance.
EV Stocks
Electric vehicle company stocks. A growing sector as the automotive industry transitions from combustion engines to electric power.
Ex Dividend Date
The date on which a stock trades without its dividend. Buyers purchasing on or after this date won't receive the upcoming dividend.
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F
FAANG Stocks
An acronym for five major tech stocks: Facebook (Meta), Apple, Amazon, Netflix, and Google (Alphabet). Represents dominant tech companies.
Federal Reserve
The central banking system of the United States. Sets monetary policy, regulates banks, and manages interest rates.
Fibonacci Retracement
A technical analysis tool using horizontal lines at key Fibonacci levels to identify potential support and resistance levels.
Fiduciary
A person or organization legally required to act in the best interest of another party. Financial advisors can be fiduciaries.
Fixed Income
Investments providing regular, fixed payments. Bonds and CDs are examples of fixed income securities.
Float
The number of shares available for public trading. Excludes shares held by insiders and restricted stock.
Forex
Foreign exchange market where currencies are traded. The largest and most liquid financial market in the world.
Front-End Load
A sales charge paid when purchasing mutual fund shares. Reduces the amount of your investment that actually goes into the fund.
FTSE 100 Index
A share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization.
Fundamental Analysis
Evaluating securities by examining financial statements, management quality, competitive advantages, and economic factors.
Futures Contract
An agreement to buy or sell an asset at a predetermined price at a specified time in the future. Used for hedging and speculation.
G
G-20
Group of 20 major economies meeting regularly to discuss global economic and financial stability. Represents 85% of global GDP.
Gap Down Stocks
Stocks that open significantly lower than the previous close. Often occurs after negative news or poor earnings.
Gap Up Stocks
Stocks that open significantly higher than the previous close. Typically follows positive news or strong earnings reports.
Golden Cross Stocks
A bullish signal when a short-term moving average crosses above a long-term moving average. Suggests upward momentum.
Google Finance
A website providing business news, financial information, and real-time stock quotes. Offers portfolio tracking and market data.
Google Finance Portfolio
A free tool for tracking investment portfolios. Allows users to monitor stocks, create watchlists, and view performance.
Green Investing
Investment strategy focused on environmentally responsible companies. Also known as sustainable or ESG investing.
Gross Domestic Product (GDP)
The total monetary value of all goods and services produced in a country. A key indicator of economic health and growth.
Growth And Income Funds
Mutual funds seeking both capital appreciation and current income through dividends. Balanced approach to investing.
H
Hang Seng Index (HSI)
A market-capitalization weighted index of the largest companies on the Hong Kong Stock Exchange. Key indicator of Hong Kong market performance.
Head And Shoulders Pattern
A chart pattern indicating a potential trend reversal. Consists of three peaks with the middle peak being the highest.
Hedge Funds
Investment funds using advanced strategies including leverage, derivatives, and short selling. Typically available only to accredited investors.
Hold Rating
An analyst recommendation to maintain current position in a stock. Neither buying more nor selling existing shares is recommended.
Holder Of Record
The registered owner of shares on a specific date. Entitled to receive dividends and other shareholder benefits.
Hostile Takeover
An acquisition attempt resisted by the target company's management. The acquirer bypasses management and appeals directly to shareholders.
Housing Bubble
A period when real estate prices rise rapidly beyond sustainable levels. Eventually bursts when demand declines and prices correct.
I
Index Funds
Mutual funds or ETFs designed to track a specific market index. Provides broad market exposure at low cost with passive management.
Inflation
The rate at which the general level of prices for goods and services rises. Erodes purchasing power over time.
Initial Coin Offering (ICO)
A fundraising method where new cryptocurrency projects sell tokens to investors. Similar to an IPO but for digital assets.
Initial Public Offering (IPO)
When a private company first offers shares to the public. Allows companies to raise capital by selling equity.
Insider Trading
Trading based on material, non-public information. Illegal when done by corporate insiders or those receiving tips from them.
Institutional Investors
Organizations that invest on behalf of others, including pension funds, insurance companies, and mutual funds. Control significant market capital.
Intrinsic Value
The perceived or calculated true value of an asset based on fundamental analysis. May differ from current market price.
Inverted Yield Curve
When short-term interest rates exceed long-term rates. Historically a reliable predictor of economic recession.
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L
Large-Cap Stocks
Stocks of companies with market capitalizations typically above $10 billion. Generally more stable than smaller companies.
Learn Technical Analysis
The study of price charts and patterns to forecast future stock movements. Uses historical data to identify trading opportunities.
Leveraged Buyout (LBO)
Acquisition of a company using significant amounts of borrowed money. The acquired company's assets often serve as collateral.
LIBOR
London Interbank Offered Rate, the benchmark interest rate at which banks lend to each other. Being phased out in favor of alternative rates.
Limit Order
An order to buy or sell at a specific price or better. Provides price certainty but execution is not guaranteed.
Low P/E Ratio
Stocks trading at low price-to-earnings multiples. May indicate undervaluation or reflect concerns about future growth.
M
Management Fee
A charge levied by investment managers for managing a portfolio or fund. Typically a percentage of assets under management.
Margin
Borrowing money from a broker to purchase securities. Amplifies both potential gains and losses.
Marijuana Stocks
Stocks of companies in the cannabis industry. Includes growers, retailers, and companies producing cannabis-related products.
Market Perform
An analyst rating indicating a stock is expected to return approximately the same as the overall market or sector average.
Market Capitalization
Total market value of a company's outstanding shares. Calculated by multiplying stock price by total shares outstanding.
Market Correction
A decline of 10% or more in stock prices from recent highs. Considered a normal part of market cycles.
Market Liquidity
The degree to which assets can be quickly bought or sold without affecting price. High liquidity means easy trading.
Market Timing
Strategy of buying and selling based on predictions of future price movements. Difficult to execute successfully consistently.
Momentum Indicators
Technical analysis tools measuring the speed of price changes. Include RSI, MACD, and other oscillators.
Momentum Investing
Strategy of buying stocks showing strong recent performance. Based on belief that trends persist in the short to medium term.
Monthly Dividend Stocks
Stocks that pay dividends every month rather than quarterly. Provides more frequent income for investors.
Most Active Stocks
Stocks with the highest trading volume during a period. High activity often indicates significant news or investor interest.
Moving Average Convergence Divergence
A momentum indicator showing the relationship between two moving averages. Used to identify trend changes and momentum.
Municipal Bond
Debt securities issued by states, cities, or counties to finance public projects. Interest is often tax-free for residents.
Mutual Fund
An investment vehicle pooling money from many investors to purchase a diversified portfolio of securities managed by professionals.
N
NASDAQ Composite Index
A market-cap weighted index of all stocks listed on the NASDAQ exchange. Heavy weighting toward technology companies.
Net Income
A company's total earnings or profit. Calculated as revenue minus all expenses, taxes, and costs.
Net Profit Margin
The percentage of revenue remaining after all expenses are deducted. Indicates how efficiently a company converts sales into profit.
New York Stock Exchange (NYSE)
The largest stock exchange in the world by market capitalization. Located on Wall Street in New York City.
No-Load Mutual Funds
Mutual funds sold without commission or sales charges. Investors pay only operating expenses, not distribution fees.
Non-Cyclical Stocks
Stocks of companies selling essential goods and services. Performance remains relatively stable regardless of economic conditions.
O
OPEC
Organization of Petroleum Exporting Countries coordinates oil production policies. Decisions significantly impact global oil prices and energy stocks.
Option
A contract giving the buyer the right, but not obligation, to buy or sell an asset at a specified price within a timeframe.
Over-The-Counter (OTC)
Securities traded directly between parties without a centralized exchange. Typically smaller companies not meeting exchange listing requirements.
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P
Par Value
The face value of a bond or stock as stated in the corporate charter. For bonds, the amount repaid at maturity.
Penny Stocks
Low-priced stocks typically trading under $5 per share. Often highly speculative with limited liquidity and higher risk.
P/E Ratio
Price-to-Earnings ratio calculated by dividing stock price by earnings per share. Used to determine if a stock is over or undervalued.
Portfolio
A collection of investments held by an individual or institution. Includes stocks, bonds, cash, and other assets.
Preferred Stock
A class of stock with priority over common stock for dividends and assets in liquidation. Typically pays fixed dividends.
Pre-Market Trading
Trading that occurs before the regular market session opens. Takes place from 4:00 a.m. to 9:30 a.m. ET.
Price-To-Book Ratio
A valuation ratio comparing stock price to book value per share. Indicates how much investors pay for net assets.
Price-To-Earnings Ratio
See P/E Ratio. A fundamental valuation metric showing how much investors pay per dollar of company earnings.
Price-To-Sales Ratio
A valuation ratio comparing stock price to revenue per share. Useful for valuing companies with low or negative earnings.
Private Equity
Investment in private companies not listed on public exchanges. Often involves buying, improving, and selling companies.
Profit Margin
The percentage of revenue that becomes profit. Higher margins indicate more efficient operations and pricing power.
Prospectus
A formal legal document required for securities offerings. Details the investment, risks, fees, and objectives.
Pump And Dump Scheme
An illegal practice of artificially inflating stock price through false statements, then selling shares at inflated prices.
Put Option
A contract giving the owner the right to sell a specific number of shares at an agreed price. Used for hedging or speculation.
Q
QQQ
The ticker symbol for the Invesco QQQ Trust, an ETF tracking the NASDAQ-100 Index. Popular vehicle for tech stock exposure.
Quick Ratio
A liquidity measure showing ability to pay short-term obligations with most liquid assets. Excludes inventory from current assets.
R
Rally
A period of sustained increases in stock prices. Can occur in individual stocks, sectors, or the overall market.
Real Estate Investment Trust (REIT)
A company owning, operating, or financing income-producing real estate. Must distribute 90% of taxable income as dividends.
Recession
A significant decline in economic activity lasting more than a few months. Typically defined as two consecutive quarters of negative GDP growth.
Record Date
The date by which shareholders must own stock to receive an upcoming dividend. Set by the company's board of directors.
Redemption
The return of an investor's principal in a security. For bonds, repayment at maturity; for mutual funds, selling shares back to the fund.
Resistance Level
A price level where selling pressure prevents further price increases. Technical analysts watch for breakouts above resistance.
Return On Assets
A profitability ratio showing how efficiently a company uses assets to generate profit. Calculated as net income divided by total assets.
Return On Equity
A measure of profitability showing how much profit a company generates with shareholders' equity. Higher ROE indicates efficient use of capital.
Return On Investment
The gain or loss on an investment relative to its cost, expressed as a percentage. Used to evaluate investment performance.
Reverse Stock Split
When a company reduces outstanding shares by consolidating them. A 1-for-10 split means 10 old shares become 1 new share at 10x the price.
Risk Tolerance
An investor's ability and willingness to lose some or all of an investment in exchange for potential returns. Varies by individual circumstances.
Roth IRA
A retirement account allowing tax-free growth and tax-free withdrawals in retirement. Contributions are made with after-tax dollars.
Russell 2000 Index
A stock market index measuring the performance of 2,000 small-cap U.S. companies. A benchmark for small-cap stock performance.
S
S&P 500 Index
A market-cap weighted index of 500 leading U.S. companies. Widely regarded as the best gauge of large-cap U.S. stock performance.
S&P Global Ratings
A credit rating agency assessing the creditworthiness of companies and government entities. Provides investment-grade ratings.
Safe Harbor
Legal provisions protecting companies from liability under certain conditions. In investing, refers to protections for forward-looking statements.
Secondary Offering
Sale of new or closely held shares after a company has already gone public. Can dilute existing shareholders' ownership.
Sector
A group of stocks in the same industry. Major sectors include technology, healthcare, financials, energy, and consumer goods.
Securities And Exchange Commission (SEC)
The U.S. government agency regulating securities markets. Protects investors and maintains fair, orderly markets.
Short Interest
The total number of shares sold short but not yet covered. High short interest can lead to short squeezes.
Short Selling
Selling borrowed shares with the intention of buying them back at a lower price. Profits from declining stock prices.
Small-Cap Stocks
Stocks of companies with market capitalizations typically between $300 million and $2 billion. Higher growth potential but greater risk.
SPAC
Special Purpose Acquisition Company. A shell company that raises capital through an IPO to acquire an existing private company.
Spread
The difference between bid and ask prices. Narrower spreads indicate better liquidity and lower trading costs.
Standard Deviation
A statistical measure of volatility. Shows how much an investment's returns vary from its average return.
Stock Certificate
A physical document representing ownership in a company. Mostly replaced by electronic record-keeping.
Stock Dividend
A dividend payment made in shares rather than cash. Increases shares owned without changing total value.
Stock Exchange
A marketplace where securities are bought and sold. Major exchanges include NYSE, NASDAQ, and London Stock Exchange.
Stock Market Index
A statistical measure of changes in a portfolio of stocks representing a market portion. Examples include S&P 500 and Dow Jones.
Stock Split
When a company divides existing shares into multiple shares. A 2-for-1 split doubles shares while halving the price per share.
Stop-Loss Order
An order to sell a security when it reaches a specific price. Designed to limit losses on a position.
Support Level
A price level where buying pressure prevents further price declines. Technical analysts watch for support breaks.
Supply And Demand
Economic principle determining prices. When demand exceeds supply, prices rise; when supply exceeds demand, prices fall.
Swing Trading
A trading style attempting to capture gains over several days to weeks. Focuses on short to medium-term price movements.
Systematic Risk
Market risk that cannot be eliminated through diversification. Affects the entire market, such as recessions or interest rate changes.
T
Technical Analysis
The study of past market data, primarily price and volume, to forecast future price movements. Uses charts and patterns.
Ticker Symbol
A unique series of letters identifying a publicly traded company. For example, AAPL for Apple, TSLA for Tesla.
Tracking Stock
A special type of stock issued by a parent company to track the performance of a specific division or subsidiary.
Treasury Bill (T-Bill)
Short-term U.S. government debt security with maturities of one year or less. Considered one of the safest investments.
Treasury Bond
Long-term U.S. government debt security with maturities of 10 to 30 years. Pays interest semi-annually.
Treasury Note
Medium-term U.S. government debt security with maturities of 2 to 10 years. Pays interest every six months.
Trend
The general direction of a market or stock price. Trends can be upward (bullish), downward (bearish), or sideways.
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U
Underweight Rating
An analyst recommendation to reduce holdings in a stock. Suggests the stock will underperform the market or sector.
Unsecured Loan
A loan not backed by collateral. Interest rates are typically higher than secured loans due to increased lender risk.
Upside
The potential for an investment to increase in value. Often expressed as a percentage or price target above current levels.
V
Valuation
The process of determining the worth of a company or asset. Uses various methods including discounted cash flow and comparable analysis.
Value Investing
An investment strategy focused on buying undervalued stocks trading below their intrinsic value. Popularized by Benjamin Graham and Warren Buffett.
Volatility Index (VIX)
A measure of market expectations of near-term volatility. Often called the "fear index" as it rises when investors are anxious.
Volume
The number of shares traded during a given period. Higher volume indicates greater investor interest and better liquidity.
W
Wash Sale Rule
An IRS rule preventing investors from claiming a tax deduction on a security sold at a loss if a substantially identical security is purchased within 30 days.
Weighted Average Cost Of Capital (WACC)
The average rate a company expects to pay to finance its assets. Considers the relative weights of debt and equity in capital structure.
Wirehouse
A full-service brokerage firm offering research, investment advice, and trading services. Examples include Merrill Lynch and Morgan Stanley.
Y
Yield
The income return on an investment, expressed as a percentage. For stocks, typically refers to dividend yield.
Yield Curve
A line plotting interest rates of bonds with equal credit quality but different maturity dates. Shape indicates economic expectations.