This glossary is fairly extensive and I have done my best to be comprehensive in terms of the strategy which we employ. If you find that it would be useful to add a term not currently listed please advise us.
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| Accounts Receivable |
| Money owed by customers for goods or services received. Owed company must have invoiced customers on order for items to be included in receivables. |
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| Accumulation/Distribution |
Accumulation refers to instances when big-money investors are buying shares. When a stocks price rises on volume that is higher than the previous days it is assumed that mutual funds and other institutional investors are buying.
Distribution occurs when when a stocks price falls on greater volume than the pevious day.
When repeated bouts of distribution occur over several days, or in the case of broad market indexes several weeks investors should anticipate a significant correction. |
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| After Hours Trading |
| Activity happening after normal trading hours on the major exchanges. After hours trading is sometimes less liquid than normal because participation by market makers, specialists and electronic communications networks is voluntary. Trading in pre or after hour's markets should only be done using limit orders. |
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| After-hours Close |
The closing price of the last transaction of a stock in the after-hours close. The percentage change is calculated as the after-hours close vs. the stock's closing price during the regular session. |
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| All or None |
| A condition added to a buy or sell order that requires the broker to fill the order in its entirety or not at all. |
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| Alpha |
| A statistical formula used to measure an abnormal rate of return on a security in excess of what would be the performance expected for its Beta or predicted by en equilibrium model like the Capital Asset Pricing Model (CAPM). The higher the better. |
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| American Depository Receipt |
| A negotiable certificate issued by a U.S. Bank representing a certain number of shares of a foreign company that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars and the underlying shares are held overseas. ADRs help reduce the administrative and duty costs that would otherwise be levied but do not mitigate the risks of currency valuation changes or holding equities in a foreign country. |
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| Arbitrage |
| The act of profiting from a difference in price of a security or currency on two different markets. |
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| Ask |
| The price a seller is willing to accept for a security. The ask quote will typically include the number of shares the seller is willing to sell at the ask price. |
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| Asset Allocation |
| The process of dividing investments in ones portfolio between different classes such as stocks, bonds, real estate, artwork, precious metals, cash, etc. in order to accomplish a specific objective. |
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| Average Daily Volume |
| The average number of shares traded per day over a specified period of time. |
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| Average Down |
Purchasing more shares at successively lower prices thereby lowering the average price of your shares. A very risky maneuver as you don't know how far the share price will fall. |
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| Average Up |
Buying more shares as the price moves up. Consider adding shares as the price bounces off of a support level such as the 50 day moving average or as the stock breaks out of a consolidation. Always buy fewer shares as the price moves up. This strategy is also known as pyramiding. |
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| Balance Sheet |
| A financial statement listing a company's assets (what it owns) and liabilities (what it owes) as of a specific date, usually the end of a fiscal quarter. |
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| Barriers to entry |
Barriers to entry exist when it's hard for competitors to enter a specific industry or sell similar products. Those barriers can come in the form of high startup costs or the burdens imposed by government, such as taxes or regulation.
Natural barriers to entry occur when a company holds a patent on a product or technology or has strong customer loyalty or brand identity. |
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| Base pattern |
A term used in technical analysis that refers to a level consolidation in price on a stock chart. Different methodologies ascribe significance to bases of different lengths. To some seven weeks constitutes a base. To others a base isn't evident until it has been in place for at least eighteen months. In general, the longer the base the more likely a significant price movement becomes. |
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| Basis point |
One-hundreth of one percentage point. Basis points are typically used to describe bond yields and interest rates. For example the rate on a mortgage loan might increase 50 basis points from 7.0% to 7.5% |
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| Bear Market |
| A market condition in which the price of most securities fall. In general a retracement of 15% to 20% in two or more of the major indexes signals the start of a bear market. |
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| Beta |
| A statistical formula used to compare securities volatility to a particular benchmark such as the Russell 2000. A beta of 1 is equal to the benchmark index. A beta of 1.5 shows the security is 50% more volatile than the benchmark. |
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| Bid |
| An offer made to buy a security. The bid will stipulate both the price and number of shares that the buyer is willing to purchase. |
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| Big Board |
| The New York Stock Exchange. |
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| Block Trade |
| A single purchase or sale of stock equaling 10,000 or more shares. |
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| Block trade |
The buying or selling of 10,000 shares of stock. Block trades are usually initiated by institutional investors. |
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| Blow-off |
| A term of technical analysis that refers to a sharp price increase that comes at the end of a strong lengthy period of appreciation with the volume contracting as the price tops. An exceedingly bearish sign that almost always resulting in a fast decline in price. |
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| Blue Chip |
| A large financially sound well established company that has institutional status in the economy. The term derives from poker in which the “blue chips” are the most valuable. The stock price of blue chip stocks frequently parallels the S&P 500, a blue chip laden index. |
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| Bond |
| A long-term promissory note issued by a corporation or government agency, repayable with interest. |
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| Book to Bill Ratio |
| The ratio of a company's new orders to orders shipped in the accounting period. A ratio of 1 or greater indicates sales growth while a ratio of less than 1 indicates declining sales. |
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| Book Value |
| Total shareholders equity from the balance sheet divided by the number of outstanding shares. |
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| Breadth |
| Breadth relates to the number of issues participating in a broad market move. A rally is considered suspect if the number of advancing issues is declining as the rally extends itself. This is a bearish sign. Conversely a declining market in which fewer and fewer issues are falling is considered bullish. |
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| Breakdown |
| A term of technical analysis meaning a stock has fallen through a major level of support. |
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| Breakout |
| A term of technical analysis meaning that a stock has moved above a major level of resistance. |
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| Bubble |
| A surge in equity prices far above any reasonable fundamental valuation followed by a drastic decline in prices as massive redirection of resources occurs and the “bubble” bursts. |
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| Bull Market |
| A period when most stocks are increasing in value. |
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| Business Cycle |
| The variations of the economy as it expands and contracts, leading to prosperity, rcession or depression. |
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| Buy and Hold |
| A “strategy” in which an investor buys a stock and holds it for a long period of time without regard for fluctuations in the market on the presumption the stock will be worth more at the end. |
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| Buy point |
A technical point of support and resistance that determines when success from taking a position in a stock changes from possibility to probability. |
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| Buyback |
| The repurchase of outstanding shares by a company in order to increase their value by decreasing the number available on the market. Companies will also buy back shares in order to eliminate a threat by outsiders who are attempting to acquire a controlling stake in he company. |
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| Buyout |
| The purchase of a company or the controlling interest in a corporations shares. A leveraged buyout is conducted with borrowed money. |
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| Capital Gain or Loss |
| The profit or loss on the sale of a. stock. |
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| Cash Account |
| A regular Brokerage account from which the customer is required by regulation to pay for a stock purchase within two days. |
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| Cash Dividend |
| Money paid to shareholders, normally from the company's current earnings. |
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| Cash Flow |
| Money coming into the company. Technically cash flow is after tax income minus preferred dividends, distributions to general partners, depreciation, depletion, and amortization. |
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| Channel Lines |
| Lines drawn on a stock chart to delineate the space between the stock's resistance levels and support levels. Plot channel lines by drawing a straight line that connects three of the stocks highest prices and another line connecting three price lows during the same period. These lines usually cover a period of several months, since those drawn over a shorter period can be premature and thereby incorrect. |
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| Charting |
| The practice of incorporating the interpretation of stock charts in buy and sell decisions. |
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| Close |
| The end of a trading session. The closing price is reported in the newspapers. |
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| Commissions |
| Fees paid to a broker to execute a transaction. |
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| Common Stock |
| Common stock confers an ownership position in a company, usually with voting rights. |
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| Conference Call |
| A call hosted by the company, primarily for analysts, shortly after releasing quarterly results. |
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| Confirmation |
| Notice from a broker providing details of a purchase or sale. |
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| Consensus Estimate |
| The average of analyst's individual earnings forecasts or buy/sell ratings. |
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| Consolidation |
| A technical term meaning that a stock is trading in a narrow sideways range. |
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| Correction |
| A reverse movement, usually negative, of at least 10% in a stock or market index. |
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| Cost of Sales |
| The cost of materials and labor necessary to produce products or services. |
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| Current Market Value |
| The resale valuation attached to a security held in an investors margin account. The current market value is determined by the closing price for the security. |
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| Current Ratio |
| Current assets divided by liabilities due within one year. |
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| Current Yield |
| Annual income (dividends) divided by the current price of the stock. This measure is not an accurate reflection of what an investor will actually receive as market conditions are constantly changing. |
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| Cyclical Stock |
| A stock in a sector that is particularly sensitive to swings in economic conditions. |
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| Day Order |
| A stock order that is good for one day. |
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| Debt to Equity (Long Term) |
| Total of long-term debt divided by total shareholder equity. |
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| Debt to Equity (Short-term) |
| Total (short-term and long-term) debt divided by shareholder equity. |
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| Defensive Stock |
| A stock of a company that has maintained a record of stable earnings and continuous dividend payments through periods of economic instability. |
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| Deferred Revenue |
| A balance sheet liability reflecting payment received for work not yet performed. |
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| Delisting |
| The removal of a listed security from the exchange on which it trades. A company's stock is removed from an exchange because the company is not in compliance with the listing requirements of the exchange. |
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| Derivatives |
| Options and other instruments whose price depends on an underlying asset such as a stock or currency. |
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| Discount Broker |
| A stockbroker charging lower commissions than full-service brokers. |
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| Distribution |
| A company's payment of cash, stock or products to its' shareholders. |
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| Distribution Day |
| A day on which the trading volume is, without any price appreciation, higher than the previous day. |
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| Diversification |
| Limiting investment risk by spreading ones assets among several classes, or purchasing the securities of companies representing different sectors of the economy. |
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| Dividend Yield |
| The annual dividend expressed as a percentage of the current market price of the stock. |
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| Dividends |
| Cash or stock paid to shareholders, usually on a quarterly basis. |
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| Dollar Cost Averaging (DCA) |
| Buying a set amount of stock at regular intervals regardless of price or market conditions. This is probably the most preposterous commission generating scheme ever foisted on the unsuspecting public. It is suitable only for those who have managed to accumulate money to invest despite an inability to think. |
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| Dow Jones Industrial Average |
| An index that follows the returns of 30 well-established American companies. The most often quoted measure of U.S. stock market performance. |
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| Downgrade |
| A negative change in the rating of a security. This occurs when analysts believe that the future prospects for the stock have deteriorated due to material fundamental changes in the company's operations or the future outlook for its' industry. |
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| Downtrend |
| The price of a stock, commodity or index is heading down. |
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| Earnings per Share |
| An indicator of the financial health of a company. EPS is determined by dividing the last 12 months earnings by the number of shares outstanding. Earnings per Share is generally considered to be the single most important element in determining a stocks intrinsic value. EPS is also a major component in determining the Price to Earnings valuation ratio. |
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| Earnings Season |
| The months in which a majority of quarterly corporate reports are released to the public. |
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| Earnings stability |
A secondary (or sometimes tertiary) measure indicating the percentage of deviation from an earnings trend line that represents three to five years of a company's history. The scale ranges from 1 to 99 with 1 being the most stable and 99 the least. |
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| Earnings Surprise |
| When the earnings reported are either above or below analysts estimates. |
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| Earnings/sales acceleration. |
Acceleration occurs when a company's year-over-year earnings or sales growth is larger than its year-over-year earnings or sales growth in the prior quarter.
For example, a company with year-over-year earnings growth of 10% in the first quarter,15% in the second quarter and 20% in the third quarter has accelerating earnings growth. |
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| EBITDA |
| Earnings before interest, taxes, depreciation, and amortization. Another measure of corporate health, EBITDA adds these items back to reported earnings to more accurately reflect the real cash earnings of a company. |
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| ECN |
| Electronic Trading Network. |
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| EDGAR |
| Database maintained by the Securities and Exchange Commission (SEC) containing government required reports filed by companies. |
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| Emerging Markets |
| Developing countries. |
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| Equities |
| Shareholders ownership interest in corporations- also known as stocks. |
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| Exchange |
| A market in which securities, commodities, options or futures are traded. |
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| Exchange traded fund (ETF) |
Traded like stocks, ETFs track industries and sectors, offering investors a chance to buy a basket of stocks in a particular area without having to pay the fees charged by middlemen as is the case with mutual funds. |
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| Execution |
| A trade completion. |
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| Exhaustion Gap |
| A technical term describing when a stock's price opens with a big gap up from the previous day's high close, after a significant run-up. This usually occurs after a stock has advanced strongly for many weeks and is well extended from its most recent consolidation. An exhaustion gap often indicates that a stock is in the last stage of its run. |
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| Extended (in price) |
When a stock is trading more than 5% above the proper buy point. In general it is considered riskier to buy when a stock has climbed that much.
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| Fed (THE) |
| Federal Reserve Board. |
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| Financials |
| Financial statements including the operating statement, balance sheet, and statement of cash flows. |
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| Fiscal Year |
| Any twelve month period designated by the company as a reporting period. |
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| Float |
| Shares outstanding less shares held by insiders. |
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| Fundamental Analysis |
| Dissecting the Income Statement, Balance Sheet, and Cash Flow statement to uncover problems and prospects that may not be factored into a stocks price. |
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| Generally Accepted Accounting Principles (GAAP) |
| Accounting rules and procedures established by the Financial Accounting Standards Board, an independent self-regulation organization. |
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| Good for the Day |
| A limit order that will expire at the close of trading if not executed. |
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| Good til Canceled |
| A limit order that remains active until filled or cancelled. |
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| Good til Date |
| A limit order that will remain active until it is filled or until the specified date at which time it expires and is cancelled. |
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| Gross Margin |
| Gross profit divided by sales. |
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| Gross Profit |
| The profit a company makes before factoring overhead expenses. Gross Profit is sales minus cost of sales. |
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| Growth Companies |
| Companies that have enjoyed better than average growth in recent years and are expected to continue to post annual earnings and sales growth of 15% or better. |
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| Hedging |
The use of insturments like futures or options to protect one's portfolio without actually selling the holdings. |
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| Income Statement |
| The financial statement showing profit and loss. A record of a company's sales and expenses over a particular quarter or year. |
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| Income Stock |
| A stock with dividend payments that constitute the largest portion of a securities over-all return. |
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| Index |
| A composite statistical measure representing the change in value of a group of stocks. The S&P 500 is one of the best known indexes. Each index uses its' own calculation methodology and is expressed in terms of change from a base value. Knowing that an index is at a set value is not particularly useful. Knowing that the set value represents a 20% increase over a period of time is useful. |
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| Industry Group |
| Companies in a related business. |
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| Initial Public Offering (IPO) |
| The first sale of stock to the public by a corporation. |
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| Insider |
| Any person who controls or owns more than 10% of any voting shares of stock, or is a director or senior officer of a company, or has access to non-public information concerning the company. |
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| Insider Ownership |
| The number of shares owned or controlled by insiders. |
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| Insider Trading |
| The buying or selling of a security by someone who has material non-public information. Insider trading is legal as long as SEC regulations are followed. |
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| Institutional Investor |
| A non-bank entity that trades shares in large enough quantities that they qualify for preferential treatment and lower commissions. Institutional investors are typically life insurance companies, pension funds and mutual funds. |
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| Institutional Ownership |
| Shares owned by institutional investors. |
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| Intrinsic Value |
| A term of fundamental analysis used to determine the “actual” value of a company as distinct from its current market value. Intrinsic value is impossible to calculate without the use of numerous assumptions which may or may not be accurate. |
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| Inventory |
| Raw materials, work in progress and finished goods not yet shipped. |
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| Investment Bank |
| An entity, usually a brokerage firm, engaged in handling corporate borrowing, mergers and acquisitions, and taking new companies public through the IPO process. |
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| January Effect |
| A general increase in stock prices, particularly small-caps, in the month of January. This rally is generally attributed to investors buying stocks that dropped in price in December due to year-end tax selling. The January effect has lessened in recent years due to widespread recognition and the increased use of qualified retirement accounts which have reduced the need to make year-end tax loss sales. |
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| Laggard |
A stock that is under-performing its industry or the general market. |
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| Large Cap |
| A company with a market capitalization of greater than $10 billion dollars. |
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| Lead Underwriter |
| The brokerage house primarily in charge of an IPO. |
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| Leader |
Refers to a company that is outperforming its industry or the general market. |
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| Leverage |
| The principle of using borrowed funds to increase the possibility of percentage gains. Also increases the possibility of percentage losses. |
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| Leveraged Buyout |
| The take over of a public corporation using borrowed funds. |
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| Liability |
| Something owed. |
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| Limit Order |
| An order with a broker to purchase a security for a specific price or less, or to sell a security for a specific price or more. |
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| Liquidity |
| The degree to which it is easy to buy or sell a stock in the market. |
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| Long Position |
| The buying of a security with the expectation that the asset will rise in value. |
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| Long-term Capital Gains |
| Net gains on assets sold 12 months or more after purchase. |
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| Macaroni defense |
When a firm doesn't want to be taken over issues a large number of bonds. It does so on the condition t6hat the bonds get redeemed at a high price if the company gets acquired. The bonds redemption value "puffs up" like pasta after it is cooked, making takeover prohibitively costly to suiters. |
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| Margin |
| Borrowing funds from your broker to buy stock. |
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| Margin Account |
| A brokerage account with approved credit to allow for the purchase of stock on “margin” using the investments as collateral. |
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| Margin Call |
| A broker's demand that additional money or securities be deposited in the margin account in order to bring the balance up to the minimum maintenance margin. You would receive a margin call if one or more of the securities you purchased on margin decreased in value past a certain point. You would be forced to either deposit additional funds or sell some stock. |
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| Market Capitalization |
| A term of fundamental analysis measuring the value of a company, calculated by multiplying the number of shares outstanding by the current market price. |
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| Market Maker |
| An intermediary between buyers and sellers on the NASDAQ stock exchange and the after-hours market of the NYSE. Market makers guarantee liquidity. When you sell you sell to a market maker, when you buy you buy from a market maker. The difference between the bid and ask prices is the market makers profit. |
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| Market Order |
| An order to buy or sell at the current price. |
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| Market Risk |
| The likelihood that the value of a security will move in tandem with the market. |
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| Market Timing |
| A technique whereby an attempt is made to buy and sell stocks in conjunction with the cyclical undulations of the market. Usually this involves being more heavily invested during the upswings and lightly invested during the downswings. |
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| Micro-Cap |
| Companies that typically have a market capitalization of less than $45 million dollars. |
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| Mid-Cap |
| company with a market capitalization of between $2 billion and $10 billion dollars. |
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| Momentum |
| The underlying power behind an upward or downward price movement. |
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| Money Supply |
| The amount of money in circulation. The Federal Reserve attempts to control the economy by regulating the money supply. Until recently the money supply figures (M3) were regularly published, but no longer. |
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| Money-Center Bank |
| The largest banks such as Bank of America and Citi-Group. |
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| Moving average. |
The average of a stocks price over time, usually plotted as a line on a stock chart. Derived by adding the closing price each day over a certain period, (common periods are 20, 50 and 200 days) then dividing that figure by 20,50 or 200. |
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| NASDAQ |
| A national market for trading stocks. The NASDAQ was the world's first electronic stock market and is home to primarily technology stocks. |
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| NASDAQ 100 |
| An index of the 100 largest and most actively traded issues on the NASDAQ stock exchange. The NASDAQ 100 index trades like a stock under the symbol QQQQ. |
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| NASDAQ Composite Index |
| A market capitalization weighted index of the more than 4000 issues listed on the NASDAQ exchange. |
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| Net Profit |
| Profit after all charges have been deducted. |
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| Nifty-fifty |
A group of highly profitable companies very much in favor by institutional investors in the 1960s and early 1970s. They crashed in the bear market of 1973-1974. |
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| Odd Lot |
| A stock transaction outside of the standard trading unit of 100 shares. |
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| Open |
| The start of trading on a securities exchange. |
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| Open Order |
| An order that is unfilled and still valid. |
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| Operating Cash Flow |
| “Surplus” cash generated from a company's basic operations without factoring in income tax entries such as depreciation and amortization. |
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| Operating Income |
| Sales minus all expenses except items not directly related to the basic business and income taxes. |
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| Operating Margin |
| Operating income divided by sales. |
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| Over the Counter Market |
| A market maintained by securities dealers for stocks not listed on the major markets. |
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| Overbought |
| A situation in which the demand for a stock pushes the price beyond a level that is justified by the underlying fundamentals. |
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| Oversold |
| A condition in which the price of a stock has fallen sharply, and to a level below that at which its' intrinsic value lies. This condition as well as an overbought condition is the result of an emotional market over-reaction. |
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| Paper trading |
Tracking pretend trades to test one's investing approach withiut risking real money.It lacks the emotional impact of trading with real money. |
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| Partial Fill |
| An order that executes part of the desired transaction. |
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| Payout Ratio |
| The percentage of earnings paid out as dividends. |
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| Peg Ratio |
| Price to earnings ratio divided by the forecast annual growth rate. |
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| Phase1, 2, &3 |
| The series of FDA required tests before a new drug can be placed on the market. |
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| Poison Pill |
| Measures put in place to thwart a potential take over attempt. |
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| Portfolio |
| A group of securities. |
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| Pre-market |
Trading done before the regular market opens. It's similar to the after-hours market. |
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| Preferred Stock |
| Preferred shareholders are paid ahead of common shareholders in the event the corporation is liquidated. Preferred shares normally have a dividend associated with them but no voting rights. |
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| Price to Book Ratio |
| The current share price divided by the book value stated in the most recent report. |
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| Price to Earnings Ratio |
| The current share price divided by the 12 month earnings per share. |
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| Price to Sales Ratio |
| The current share price divided by the 12 months sales to share. |
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| Product Life Cycle |
| The duration of time over which a product is introduced into a marketplace and experiences a growth in sales, before the sales volume matures and begins to decline possibly leading to the demise of the product. |
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| Profit Margin |
| After tax bottom line earnings divided by sales. |
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| Property, Plant, and Equipment (PPE) |
| All hard assets such as buildings, machinery, equipment, automobiles etc. |
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| Prospectus |
| A legal document distributed to potential investors, typically prior to an IPO outlining the company's business plan. |
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| Pullback |
| The falling off of price from a peak. This price movement frequently occurs during a run-up as a brief reversal of the prevailing trend, providing a brief pause in the upward momentum. |
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| Quote |
| Information concerning a stocks price. A quote customarily will include the most recent sale price as well as the current ask and bid. |
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| Rally |
| A brisk rise following a consolidation or decline in price. |
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| Range |
| The high to low trade prices for a set period of time. |
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| Ratio Analysis |
| A method of analyzing a business by looking at its' income statement and balance sheet. |
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| Reaction |
| A temporary price weakness following an upswing. |
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| Real-Time Quote |
| A price quote that has not been delayed. The usual delay is twenty minutes. |
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| Record Date |
| The date at which a shareholder must own shares to receive a dividend or right. |
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| Relative Strength (RS) |
| A measure of price performance for a stock calculated by dividing one price by another. Usually the divisor is a measure of the market, most typically the S&P 500. |
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| Research and Development (R&D) |
| Costs of developing new products or services. |
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| Return on Assets (ROA) |
| After tax income divided by total assets. |
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| Return on Equity (ROE) |
| Latest 12 months after tax income divided by shareholders equity. |
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| Return on Investment (ROI) |
| Latest 12 months after tax income divided by total shareholders equity, plus long term debt, plus all other long term liabilities. |
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| Revenues |
| A company's sales. |
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| Reverse Split |
| A consolidation of outstanding shares of stock to a smaller number of shares in order to boost the per share price. Reverse splits are frequently engineered to keep a company from being delisted by a major exchange. |
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| Right |
| A benefit given to stockholders to buy additional stock in a company in proportion to existing holdings for a specified period of time. |
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| Risk-reward Ratio |
| The balance between the safety of an investment and the payoff it generates. |
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| Russell 2000 Index |
| The Russell 2000 is a capitalization weighted index of the 2000 smallest companies of the Russell 3000. |
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| Russell 3000 Index |
| An index of the 3000 largest U.S. publicly traded corporations. |
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| S&P 500 |
| A capitalization weighted index of 500 of the largest U.S. companies. |
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| Screening |
| Searching the entire market in order to filter out stocks meeting specific criteria. |
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| SEC (U.S. Security and Exchange Commission) |
| The government body that regulates the market, protects investors from market manipulation, and oversees corporate takeovers. |
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| Sector |
| An area of the economy in which businesses share the same or related products or services. |
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| Secular Trend |
| A very long-term trend. |
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| Security |
| An instrument representing ownership (stocks), a debt agreement (bonds), or the rights to ownership (derivatives). Essentially a contract that can be assigned a value and traded. |
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| SEDAR (System for Electronic Document Retrieval) |
| An electronic filing system in which companies file prospectuses and continuous disclosure documents. |
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| Settlement |
| The process of paying for stocks that you purchase, or receiving credit from your broker for stocks that you sell. |
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| Settlement Date |
| The three day deadline after a transaction by the end of which a buyer must have provided funds or a seller received funds. |
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| Shareholders Equity |
| The difference between the total of assets and liabilities shown on a company's balance sheet. |
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| Shares held by management |
The number of shares held by the companies officers and directors, usually expressed as a percentage of the stocks total float. |
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| Shares Outstanding |
| The total number of shares issued by a corporation. |
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| Short Interest |
| The number of shares borrowed by short-sellers. |
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| Short Interest Ratio |
| The ratio of the short positions to the average daily trading volume of the month in question. A high short interest ratio (above 1.8) is considered bullish, and a low one (below 1.15) is considered bearish. |
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| Short Sale |
| A security borrowed from a broker and sold with the intention of making a pofit by buying the security back at a lower price in the future. |
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| Short Squeeze |
| A sharp move up in price, forcing short sellers to liquidate their positions. |
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| Short-term Capital Gains |
| Net gains on assets sold less than 12 months after their purchase date. |
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| Short-Term Debt |
| Borrowings that must be repaid in one year. |
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| Small Cap |
| A company with a market capitalization of less than $1 billion. |
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| Specialist |
| The counterpart of a market-maker, the specialist is an intermediary on the floor of the AMEX and NYSE Exchanges. There is usually one specialist per stock who posts the bid and ask prices, manages limit orders and executes trades. Specialists are also responsible for managing large movements by trading out of their own inventory when necessary to maintain an orderly market insofar as is reasonably practical, in that security. |
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| Split |
| A division of the outstanding shares of a company into a larger number of shares, whereby every outstanding share entitles its' owner to a predetermined, larger number of new shares. |
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| Sponsor |
| An influential investor who creates demand for a stock due to their positive outlook on it. |
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| Spread |
| The difference between the bid and ask price of a security. |
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| Stock Symbol (ticker symbol) |
| A series of “call” letters that represent a company. |
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| Stop Limit Order |
| A limit order that becomes effective when the stock hits the “stop” price. |
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| Stop-loss Order |
| An order to sell a stock “at the market” if it drops to a particular price. |
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| Support |
| The price level at which buyers tend to step in and “support” a stock thereby halting its decline. The price level that technically a stock has difficulty falling below. |
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| Swing |
| A significant fluctuation in the value of a stock or currency occurring over a short period of time. |
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| Tangible Book Value |
| Book value minus goodwill and intangible assets. |
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| Technical Analysis |
| The study of the market by its' own action. |
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| Thin Market |
| A stock that normally has few buyers and sellers. |
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| Time Value of Money |
| The concept that a unit of currency today is worth more than it will be tomorrow; this is particularly important during high inflationary times. |
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| Top |
| A term of technical analysis denoting the end of an uptrend. |
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| Top-Line |
| Revenues or sales. |
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| Total Liabilities |
| All monies owed regardless of hoe they are classified on the balance sheet. |
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| Trailing stop. |
A trailing stop triggers the sale of a stock at a level determined by the investor. Unlike a standard stop-loss, it is set at a percentage below the current price and "trails" that price as the stock rises. Because the sell point is not an absolute dollar amount it serves to automatically lock in gains. Like other types of stop loss orders it is more trouble than it is worth. |
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| Trailing Twelve Months (TTM) |
| The last four reported quarters. |
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| Treasury bill |
| A government note with a specific interest rate. |
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| Trendline |
| An imaginary line that is used as a tool in technical analysis to help us recognize trends that otherwise would not be as obvious. |
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| Triple Witching Day |
| The third Friday of March, June, September and December is the day when index futures, index options, and some stock options expire. These days are known for high volatility. |
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| Undervalued |
| A stock trading below its' intrinsic value. |
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| Underwriter |
| A firm, normally a brokerage that agrees to buy the new issue of a company at a fixed discount price, which they will then sell to the public at retail value. |
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| Unrealized Gain |
| A profit that has accrued in an asset that has not yet been cashed in for currency. |
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| Unrealized Loss |
| A loss that has accrued in an asset that has not yet been cashed in for currency. |
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| Upgrade |
| A positive change in the rating of a security. |
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| Uptick |
| A transaction coming at a price higher than the last transaction. |
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| Uptrend |
| A stocks price is trending higher. |
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| Value Investing |
| The practice of buying shares that sell for less than the company's intrinsic value per share. |
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| Volatility |
| The fluctuations in the movement of a stock or market. |
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| Volume |
| The number of shares traded over a set period of time, usually one day. |
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| Voting Rights |
| The right of stockholders vote on matters of corporate policy as well as on who is to compose the board of directors. |
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| Wall of Worry |
| A phrase used to describe a bullish market trend coming in the face of negative uncertainties. |
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| Wall Street |
| A street in lower Manhattan that is the original home of the New York Stock Exchange. “The Street” is also the historic home of most of the largest U.S. brokerages and investment banks. Wall Street was named after the wooden wall Dutch settlers built in this area in 1653 to defend themselves from the British and Native Americans. |
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| Warrant |
| An opportunity to purchase shares of stock at a fixed price, usually within a specific period of time. Warrants are often attached to the initial sale of shares to make them more attractive. |
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| Wash Sale |
| An illegal transaction in which an investor simultaneously buys and sells a security through two different brokers, thereby creating an illusion of activity. This would be done to create a tax loss without actually changing the position. |
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| Watch List |
| Most commonly meant to be a group of stocks that one is tracking but does not currently own. |
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| Wedging |
A technical term for an upward price pattern in the handle of a cup or saucer shaped base. The pattern last for at least a week. It is a bearish pattern. Handles should show a minor price downtrend before the breakout. Handles that wedge upward are prone to fail. |
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| White Elephant |
| An investment that nobody wants because it is unprofitable. The term derives from Thailand where an Albino (white) elephant was given to unfavored people by the ruler. Because these elephants were sacred and not permitted to work, it was a burden to the owner as it would eat up all the owners' money until he was destitute. |
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| White Knight |
| A company that makes a friendly takeover offer to a target company that is being faced with a hostile takeover from a separate party. |
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| Wholly Owned Subsidiary |
| A subsidiary whose parent company owns 100% of the common stock. |
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| Widow and Orphan Stocks |
| Relatively low risk stocks from well known firms that pay regular high dividends. |
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| Wilshire 5000 Total Market Index |
A market capitalization weighted index comprised of more than 6700 publicly traded companies that meet the following criteria.
- The company's are headquartered in the United States.
- The stocks are actively traded on an American stock exchange.
- The stocks have pricing information that is widely available to the public.
The Wilshire 5000 was originally composed of 5000 stocks but today is made up of over 6700. It is one of the broadest indexes and is designed to track the overall performance of the American stock markets. Its' ticker symbol is TMWX. |
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| Working Capital |
| Money to be used in the daily operations of the business; calculated by subtracting liabilities from current assets. |
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| Working Ratio |
| A ratio used to measure a company's ability to recover operating costs from annual revenues. This ratio is calculated by taking the company's total annual expenses (excluding depreciation and debt-related expenses) and dividing it by the annual gross income. |
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| Yield |
| The rate of return on a security paid in the form of dividends. |
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