The more you know, the more your company can grow.  Investing is a way to grow a business, but the terminology, alone, can be a bit intimidating.  As a future or current investor, it is important that you understand some of the terms.  They can help you understand the financial news and make educated financial decisions.

Bear Market

A bear market is a period of time where security prices are falling.  This type of market usually occurs during an economic recession and when unemployment is high.

Bond

A bond is a loan taken out by the government, municipalities and corporations, but the loan is so large that the money needs to be borrowed from multiple persons or banks and a fixed interest rate is paid to the investor when the bond comes due.  Most investors are more attracted to bonds when the stocks are not doing well.

Bull Market

A bull market is a period of time in which security prices are rising faster than normal.  This type of market usually occurs as a result of economic recovery or a boom.

Commodity

A commodity is a product or resource that is tradeable in both an exchange and a cash market. Commodities that are traded include oil, gold and agricultural products.  

DJIA

This stands for Dow Jones Industrial Average. The DIJA is an indicator of the overall condition of the stock market.  It is made up of 30 actively traded industrial stocks picked by the Wall Street Journal. 

Exchange

An organization that provides a marketplace for trading of commodities, futures, options and securities.

Financial Market

A financial market is a mechanism that allows for people to easily make financial transactions.  A financial transaction can be the purchase or sale of stocks or commodities.

Mutual Fund

A mutual fund is a collection of securities owned by a pool of investors who share a common goal. Mutual funds are professionally managed.  

NASDAQ

This stands for National Association of Securities Dealers Automated Quotation system.  The NASDAQ is a computerized system used by brokers/dealers. It provides brokers with price quotations on actively traded over-the-counter stocks.

Portfolio

A portfolio is a collection of investments owned by a single individual or organization.  A portfolio often includes a mix of stocks, bonds and mutual funds.

S&P 500

This stands for Standard & Poor’s 500 Index.  The S&P 500 is a collection of 500 widely-held stocks.  It provides a broad picture of the United States stock market since 70% of all publicly traded companies in the US are tracked in the S&P 500.

Security

A security is a written document indicating ownership of a business entity or its assets.  Stocks, notes, bonds and mutual funds are securities.

Stocks

A stock is ownership of a company that is sold in shares.  When a company issues shares of stock to sell, it is a way to gain additional funds to assist the growth of the company.  An investor makes money when the value of the stock goes up.

Stock Symbol

A stock symbol is a unique series of letters that is assigned to a security to assist in trading.  The length of a symbol indicates which exchange the security trades on.  Symbols with three or fewer characters trade on the NYSE or AMEX.  NASDAQ securities have four or five characters.

Trade

A trade is the successful selling or purchasing of a stock or commodity.