Economics stock terms

Initial Public Offering (“IPO”)

The first time a stock is sold to the public.

Stock exchange

Where stocks are bought and sold.

Index (DJIA, S&P500, NASDAQ)

Indicator of how the overall stock market is performing. The Dow Jones industrial average (DJIA) is 30 major blue chip stocks. S&P 500 is the 500 largest companies in America. NASDAQ is tech companies.

Ticker

Abbreviation for a stock. EX: Apple

SEC

Security and exchange commission. Police of the stock market.

Insider trading

People inside the company who trade on information that is not yet public.

Capital Gains

Buying a stock at a low price and selling at a high price. Capital Gains is the profit earned.

Dividend

Share of the company's profits that goes to investors.

Dividend Yield

Percentage that you will earn each year as a dividend. Dividend presented as a percentage.

Market Capitalization (“market cap”)

Market cap = stock x(times) number of shares outstanding (value of the entire company.)

Large Cap/Mid Cap/Small Cap

Largest caps are companies with the largest market cap. Same with mid and small caps.

Volume

Number of shares that are traded in a day.

Earnings Per Share (“EPS”)

A company’s earnings divided by the number of shares.

Stock Split (2 for 1)

Number of shares doubles and halves the price of a share, but market cap stays the same

Selling Short (“shorting a stock”)

When you sell a stock first and buy it separately. In order to profit from the price going down.

P/E Ratio

P= stock price, E= earning per share. AVG P/E is about 20. High P/E means that you have high expectations for the growth of the company.

Growth Stocks

High P/E ratio stocks.

Value Stocks

Low P/E ratio stocks.

Exchange Traded Fund (“ETF”)

Where you can buy an entire index that is treated like a stock.

Diversification

Spreading your money over many different investments.

Volatility

A measure of High much a stock fluctuates. High volatility is unpredictable stocks. Low volatility is more stable stocks. If one is described as volitile then it is unpredictable.

Technical Analysis

Just looking at the charts.

Fundamental Analysis

Looking at the company itself.

Contrarian

does the opposite of most other people.

Mutual Fund

A basket of companies to invest in. You can buy all in one go. Instant diversification. Ex: mutual fund for AI, or fast food, or rare ores.

Net Asset Value (“NAV”)

Price of a share in a mutual fund.

Load

A load is a percentage paid by an investor when buying a mutual fund.

Expense Ratio

The percentage investors pay yearly to remain in a mutual fund.

Round lot

Refers to the standard unit of trading, typically 100 shares of a stock.