February 23, 2018

Fifteen Investing Terms You Should Know By Joshua Kennon

Ask: The lowest price a seller is willing to accept when selling a security (stock).

Bear: An investor who believes the market as a whole or a particular stock will decline. A bear is the opposite of a Bull.

Bid: The highest price a buyer is willing to accept when purchasing a security.

Blue Chip: A company that has a history of solid earnings, regular and increasing dividends, and an impeccable balance sheet. Examples: Coca-Cola, Berkshire Hathaway, & Gillette. We have an entire subject area dedicated to Blue Chip stocks! Go Here.

Book Value: The value of the company if all liabilities were subtracted from assets and common stockequity. The book value has very little relation to the market value. In industries in the technology sector, this number is almost always miniscule compared to market capitalization.

Broker: A person that buys or sells an investment vehicle for you (securities, bonds, commodities, etc.,) in exchange for a fee which is called a commission.

Bull: An investor who believes the general market or a particular stock is going to increase in price.

Dividend: A portion of a company’s income that is paid out to shareholders on a quarterly or annual basis. Dividends are declared by the Board of Directors.

Dow Jones Industrial Average: The Dow Jones Industrial Average (or DJIA for short) is by far the most popular and widely used gauge of the U.S. Stock Market. It consists of a price-weighted list of 30 highly-traded Blue Chip companies.

Market Capitalization: A company’s market capitalization (or “market cap” as it s frequently called) is calculated by taking the number of outstanding shares of stock multiplied by the current price-per-share.


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