Stocks
What is an Investment?
An investment is an asset bought in the hope of generating income or profits over time. Sometimes an investment may carry risks of missing expectations.
What is a Stock?
A stock is a type of security that represents a portion of ownership in a company. There are two main types: common stock and preferred stock.
What is the Stock Market?
Stock trading is like an auction. A stock market is a place for sellers and buyers to trade in stocks.
What are Bull and Bear Markets
Bull and bear markets are common terms among investors. A bull market indicates optimism and growth while a bear market reflects pessimism and decline.
What is Return on Investment (ROI)
ROI is a common metric for investors to evaluate profitability. It's expressed as a ratio, namely the result of investment gain relative to its cost.
What is the Nasdaq Composite?
The Nasdaq Composite tracks nearly all of the companies that are listed on the Nasdaq stock exchange. The index comprises nearly 50% of tech stocks.
What is the S&P 500?
The S&P 500 is a stock market index that includes 500 of the largest U.S. companies, which has returned over 12% annually on average as of Aug. 2020.
What is the Dow Jones Industrial Average
The DJIA is a stock index that tracks the performance of 30 large U.S. companies, which has returned more than 7% annually on average (1896-2020).
What is a Dividend?
A dividend is a distribution of some company's profits to its shareholders. Matured companies are more likely to pay dividends.
What is a Share Repurchase？
Can share repurchase elevate the share price?
What is an Investment Portfolio
An investment portfolio is about diversified investment strategies. Diversified portfolios can better weather ups and downs in the markets.
What is Capital?
Capital refers to assets used by a company to create goods and services. Capital is important for company growth and wealth creation.
What is a SPAC?
A SPAC is similar to a mystery box, becoming a popular way to list a company. It's essential to evaluate the founding team and the target sector.
What is an Initial Public Offering (IPO)?
IPO is a way of raising funds without a loan. An IPO is a company's transition to a publicly-traded stock.
What is Equity?
Imagine a company as a big pie, and equity is a slice of it.
What is a Delisting?
Delisting means the removal of a listed stock from a stock exchange, and it can be voluntary or involuntary. Delisting does not affect your ownership.
What is Margin Trading?
Margin trading refers to the practice of using borrowed money from a broker to invest
What is Short Selling？
Sell high and buy low
What is the Short Squeeze?
GameStop in 2021 is an example
What is a Stock Split?
A listed company divides a share into several share
What is Circuit Breakers?
Introduced in 1988 to stabilize the stock market
What is ADR?
An American Depositary Receipt
What Is the Current Ratio?
A liquidity ratio that measures a company's ability to pay its current liabilities with its current assets.
What are the Safe-haven Assets?
A type of financial instrument likely to retain or increase value during market turbulence
What Is a Sunk Cost?
A type of financial instrument likely to retain or increase value during market turbulence
What is Opportunity Cost？
Often exist when making the decision
What is a Security?
Can a security have low risk, high profitability, and good liquidity?
What is Level 2 Market Data?
The Level 2 market data contains detailed information about the price, the volume, the bids and offers of a stock.
What is Over-the-Counter (OTC)?
Trading securities not in the centralized market but directly between two parties
What is a Block Trade?
A block trade is a bulk-sized, privately negotiated securities transaction.
What is after-hour trading?
After-hour trading is that traders can trade outside of the traditional market hours.
What are Support and Resistance
Support is a price level where potential support may stop a downtrend
What is Price-Volume Relationship
Price-Volume Relationship refers to the relationship between price and volume, which is a rather important indicator in the stock market.
Funds
What is a Mutual Fund?
A mutual fund is a collective investment that pools money from many investors. A mutual fund is a smart and easy way to diversify your investment.
Different Types of Mutual Funds
Mutual funds offer an easy and smart way to diversify your investment, usually in stocks, bonds, debts, and so on.
What is an ETF (exchange traded fund)?
Many Exchange Traded Funds (ETFs ) are designed to passively track a particlar market index. These ETFs aim to achieve the same return as the index that they track, by investing in all or a representative sample of the stocks included in the index.
What is a REIT？
Real Estate Investment Trust
What is an Index Fund?
The opposite of an active fund
What is ESG investing?
ESG stands for environmental, social and governance, which are the three criteria for evaluating a company's sustainability performance.
Fundamental
What is the PE Ratio?
The PE ratio is the most commonly used valuation metric of listed companies
What is Return on Assets (ROA)?
A company's Return on Assets (ROA) is a financial ratio calculated by dividing a firm's net income by its average total assets
What is the Quick Ratio?
A more conservative liquidity ratio than the current ratio
What Is the Current Ratio?
A liquidity ratio that measures a company's ability to pay its current liabilities with its current assets.
What is Book Value per Share (BVPS)?
Book value per share (BVPS) is the ratio of equity available to common shareholders divided by the average number of outstanding shares during a specific period
What is Free Cash Flow to Firm(FCFF)?
Free cash flow to firm (FCFF) is a portion of a company's cash that could be distributed without affecting its operations. FCFF provides important insights into the value and health of a company.
What is Net Margin?
● The net margin ratio shows the percentage of net sales a company retains after it pays all of its business's expenses
What is Gross Margin?
Used to measure a company's efficiency
What is EPS？
EPS is a useful tool
What is Return on Equity (ROE)?
A financial ratio calculated by dividing its net income by its average shareholders' equity
What is the Federal Open Market Committee (FOMC)?
A branch of the Federal Reserve System that sets the course of monetary policy specifically by carrying out open market operations.
Technical
What is the Relative Strength Index (RSI)?
A momentum indicator that measures the speed and magnitude of price movements
What is Swing Trading?
A short- or medium-term trading strategy
What Is the Rate of Change?
A momentum indicator that measures the percentage change in a security’s price
What is Technical Analysis?
Predict future market behavior by examining historical market data
What is Momentum Trading?
Based on the idea of "buying high and selling higher"
What is a Golden Cross?
A well-known bullish signal
What is a Candlestick?
Widely used in various financial markets because it is visually appealing and easy to interpret
What are Bollinger Bands?
Bollinger Bands measure the relative high or low of a security's price in relation to previous trades
What is Moving Average Convergence Divergence(MACD)?
A simple and effective momentum indicator that shows the relationship between two moving price averages.
What is the Dead Cat Bounce？
Price pattern is usually difficult to be forecasted
What is the KDJ?
A technical indicator widely used in the futures and stock markets for short-term trend analysis.
Macro
What is GDP?
The value of all the final goods and services produced within a country during a specific time
What is Tapering?
Tapering is the theoretical reversal of Quantitative Easing (QE) policies
What are the Russell Indexes?
The most extensive index in capital markets
What is Merrill Lynch's Investment Clock?
A simple yet helpful framework for understanding the economic cycle
What is Inflation?
A general increase in the prices of goods and services over a given period
What is Nonfarm Payroll？
Nonfarm payrolls (NFP) measures the number of US workers excluding farm workers, private household employees, unincorporated business owners, etc. It represents the vast majority of the US workforce.
Others
What is the ACATS?
A system can be used to transfer stocks, bonds, cash, unit trusts, mutual funds, options, and other investment products
What is the SEC Form 13F?
A quarterly reporting form required to be filed by all institutional investment managers with at least $100 million in assets under management
5 Behavioral biases affecting investors
The study of psychological impacts on investors' behaviors
What is a Hostile Takeover?
A tender offer and a proxy fight are two methods in accomplishing hostile takeover
What are Futures？
Futures have two roles in investing: to hedge or speculate
What is Capitulation?
In finance, capitulation refers to when a large number of investors decide to sell stock during a phase of extended decline, giving up on the asset and the hope of regaining their losses.