Investment Glossary

If you're new to the Investing world or have never immersed yourself within the financial world before, you may find yourself lost when reading articles or financial statements. This list was pooled from the knowledge of our writers and is designed help you increase your financial literacy as well as a reference for future articles. 

• Stock(Equity): A share of ownership in a company

• Stock Exchange: A marketplace where securities are bought and sold, such as the New York Stock Exchange(NYSE) or NASDAQ

• Ticker Symbol: A unique set of letters assigned to a publicly  traded company’s stock to identify it on the stock exchange, such as AAPL for Apple.

• Shareholders: Those that own one or more shares in a company, granting them voting rights and dividends

• Dividends: A portion of the company’s profits regularly distributed to shareholders, typically paid quarterly or annually

• Bull/Bear Market: The overall trend of the market. A bull market is marked by rising stock prices(can be thought of a bull headbutting something upwards/positively), while a Bear market is a condition where stock prices are falling/expected to fall(as a bear would slash down/in the negative direction).

• Volatility: The overall variation in the price of a stock/market over time.

• Blue-Chip Stocks: Shares of large, reputable, and financially stable companies.

• IPO(Initial Public Offering): The first sale of a company’s stock to the public, marking the transition from a private to public company. Often, IPO’s will cause a large increase in the price of a company’s stock due to initial optimism, and a mellowing out of the prices after a period of time.

• P/E Ratio(Price-to-Earnings Ratio): A valuation ratio calculated by dividing the current stock price by its Earnings per Share(EPS). Indicates how much investors are willing to pay for each dollar of earnings.

• Earnings Per Share(EPS): A company’s profit divided by its outstanding shares of common stock. How much profit is being allocated to each share of stock

• Limit Orders: Orders to buy or sell a stock at a specific price, hedging against losses or establishing gains. These can be overridden if a stock price drops extremely rapidly, giving your broker no time to execute the trade.

• Hedge: Attempts to offset potential losses in one investment.

• Brokers: a person/app/company that acts as an intermediary between investors and securities allowing common people to access the stock market. Examples are  Robinhood, Fidelity, Charles Schwab, or Vanguard.

• Short Selling(Shorting): The practice of borrowing shares and selling them immediately. Later on you would buy the stocks(hopefully at a lower price) and return the stocks to whoever you borrower them from, and pocket the difference between the price of the stock you borrowed and the price of the stock at the time of returning.

• Margin: Borrowed money used to buy stocks, typically from a brokerage.