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Stock Market Terms

Although this is not a complete stock market dictionary or glossary, these are very important terms beginning stock market investors should understand completely to get the most out of Symbol Surfing.

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General

0.01 Symbol (Ticker)

A ticker symbol or stock symbol is an abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market. A stock symbol may consist of letters, numbers or a combination of both. Wikipedia


Symbols can be 1 letter like F for Ford, 2 letters like GM for General Motors, 3 letters like HMC for Honda or 4 letters like TSLA for Tesla.

Symbols are added when there is an IPO, removed when there is bankruptcy, and may be changed when there is a merger.

0.02 Price (Bid & Ask)

A share price is the price of a single share of a number of saleable stocks of a company, derivative or other financial asset. In layman's terms, the stock price is the highest amount someone is willing to pay for the stock, or the lowest amount that it can be bought for. Wikipedia


A $100 stock is not necessarily expensive and a $10 stock is not necessarily cheap.

Price is not the same as value.

0.03 Stock Exchange (NYSE & NASDAQ)

A stock exchange, securities exchange or bourse is a facility where stockbrokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments. Wikipedia


How many stock exchanges are there in the world? 20

Wikipedia.org List of stock exchanges

What if you could actually be an investor in 1 or even 2 of these stock exchanges? You can and that's not a bad idea either.

0.04 Stock Market Index (Dow, Nasdaq, S&P 500)

A stock index or stock market index is a measurement of a section of the stock market. It is computed from the prices of selected stocks. It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. Wikipedia


When you are investing, it is important to compare your results with the market index.

0.05 Markets (Bull, Bear, Correction, Recession & Depression)

A bull market is a market that is on the rise and is economically sound, while a bear market is a market that is receding, where most stocks are declining in value. Although some investors are "bearish," the majority of investors are "bullish." The stock market, as a whole, has always posted returns. Investopedia

In the world of investments, a correction is generally defined as a decline of 10% or greater in the price of a security from its most recent peak. Investopedia

In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. Wikipedia

The Wall Street Crash of 1929, also known as the Great Crash, was a major stock market crash that occurred in 1929. It started in September and ended late in October, when share prices on the New York Stock Exchange collapsed. Wikipedia

0.06 Stock

Stock (also capital stock) of a corporation, is all of the shares into which ownership of the corporation is divided. In American English, the shares are collectively known as "stock". A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. Wikipedia

0.07 Exchange Traded Fund (ETF)

An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur. Wikipedia

0.08 Fundamental Analysis

Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements; health; and competitors and markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. Wikipedia

0.09 Technical Analysis

In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Wikipedia

0.10 Volatility

In finance, volatility is the degree of variation of a trading price series over time as measured by the standard deviation of logarithmic returns. Historic volatility measures a time series of past market prices. Wikipedia

0.11 Average Down

Averaging down is an investing strategy in which a stock owner purchases additional shares of a previously initiated investment after the price has dropped further. The result of this second purchase is a decrease in the average price at which the investor purchased the stock. Investopedia

Profile

1.01 Index Membership Requirements

To be eligible for the S&P 500 Dividend Aristocrat index, a stock must have increased their dividend payouts for a minimum of 25 consecutive years, must currently be part of the S&P 500 index, and must have a minimum market capitalization of $3 billion. Wikipedia


A stock selected to be a member of a major US Index has met a variety of strict requirements related to financial strength and performance.

 

1.02 Stock Market Sectors

The term market sector is used in economics and finance to describe a part of the economy. Analysts divide the stock market itself into market sectors so that shares of companies that are in direct competition are listed alongside each other. Wikipedia


There are 11 stock market sectors.

  1. Communications
  2. Consumer Discretionary
  3. Consumer Staples
  4. Energy
  5. Financials
  6. Health Care
  7. Industrials
  8. Materials
  9. Real Estate
  10. Technology
  11. Utilities

1.03 Stock Market Industries

An industry is a sector that produces goods or related services within an economy. The major source of revenue of a group or company is an indicator of what industry it should be classified in. Wikipedia


Before buying stock, compare and contrast the symbol to the industry competitors within this sector.

You may find a better opportunity like a stronger dividend or simply confirm your choice.

1.04 Market Capitalization (Market Cap)

Market capitalization, commonly called market cap, is the market value of a publicly-traded company's outstanding shares. Market capitalization is equal to the share price multiplied by the number of shares outstanding. Wikipedia


The financial size of a company. Large Cap $10 Billion+, Mid Cap $2 Billion to $10 Billion, Small Cap $2 Billion or less.

Dividends

2.01 Dividend Yield

The dividend yield or dividend-price ratio of a share is the dividend per share, divided by the price per share. It is also a company's total annual dividend payments divided by its market capitalization, assuming the number of shares is constant. It is often expressed as a percentage. Wikipedia


The annual dividend yield is the dividend rate divided by the share price.

An investor owns 1,000 shares of stock with a price of $10 per share and a 4% dividend.

1,000 x $10 = $10,000 x 4% = $400

The dividend payment is $400 per year or if paid quarterly, 4 payments of $100.

Be cautious of companies offering dividend yields higher than 5%.

2.02 Dividend Rate

The dividend rate is the total expected dividend payments from an investment, fund or portfolio expressed on an annualized basis. Companies who generate a healthy profit often pay out dividends. The dividend payout ratio is one way to assess the sustainability of a company's dividends. Investopedia


The annual dividend rate is the dollar amount per share an investor receives when the dividend is paid.

An investor owns 1,000 shares of stock with a price of $10 per share and a $0.50 dividend.

1,000 x $0.50 = $500

The dividend payment is $500 per year or if paid quarterly, 4 payments of $125.

2.03 Dividend Declaration Date


The declaration date is the day that the corporation's Board of Directors announces its approval of a dividend payment. The Board will also announce the record date and the payment date of the dividend.

2.04 Dividend Ex-Date

The ex-dividend date or "ex-date" is the day the stock starts trading without the value of its next dividend payment. Investopedia


To capture the dividend, the shares must be purchased before the Ex-Date.

If the ex-date is Thursday, you must buy it before the close on Wednesday.

You will receive the payment in your account on the Dividend Pay Date.

2.05 Dividend Record Date

The record date is the cut-off date used to determine which shareholders are entitled to a corporate dividend. The record date will usually be the day following the ex-dividend date, which is the trading date on (and after) which the dividend is not owed to a new buyer of the stock. Investopedia


The record date is usually a couple of days after the ex-date because stocks settle three days after the trade date.

2.06 Dividend Pay-Date

A payment date, also known as the pay date or payable date, is the date on which a declared stock dividend is scheduled to be paid to eligible investors. This date can be up to a month after the ex-dividend date. However, the stock price may fall on the payment date to reflect the dividend payment. Investopedia


This is the date the dividend payment amount will be credited to your account. In some cases, it may be the following trading day.

Dividend investors who own many dividend stocks may receive several dividend payments per month.

2.07 Dividend History

Dividend history is the total number of dividend payments paid to shareholders since the IPO.


A company with a long history of dividend payments signals to investors that the company has strong financial stability.

Dividend Aristocrats have a track record of increasing dividends for at least 25 consecutive years.

2.08 Dividend Frequency

Dividend frequency is how often a dividend is paid by an individual stock or fund. Dividend frequency can vary from monthly to annually. The managers of an investment will determine its dividend frequency, which can be based on numerous factors, including interest rates. Investopedia


Most dividend stocks and ETFs have a quarterly dividend frequency.

There are monthly dividend stocks and monthly dividend ETFs for those investors looking for monthly income.

Earnings

3.01 Earnings Per Share (EPS)

Earnings per share is the monetary value of earnings per outstanding share of common stock for a company. Wikipedia


Earnings are the same as profits. Profits are revenues minus expenses.

EPS tells investors if the company is profitable or not.

If a company reports quarterly earnings of $10 billion and the company has 5 billion shares outstanding, earnings per share or EPS is $2 per share. 

EPS tells investors whether the company is profitable or not.

When the EPS is positive, it means the company was profitable for the most recent quarter.

3.02 Price To Earnings Ratio (P/E Ratio)

The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share price to the company's earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or undervalued. Wikipedia


This is the current price per share divided by the annual earnings per share which is the total of the previous 4 quarterly EPS.

It may be useful to compare a stock's P/E Ratio to the average P/E Ratio of all S&P 500 stocks.

3.03 Earnings Date (Earnings Announcement)

An earnings announcement is an official public statement of a company's profitability for a specific time period, typically a quarter or a year. An earnings announcement typically occurs on a specific date during earnings season and is preceded by earnings estimates that equity analysts issue. Investopedia

Charts

4.01 Return (ROI)

In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows which the investor receives from the investment, such as interest payments or dividends. It may be measured either in absolute terms or as a percentage of the amount invested. Wikipedia


A green chart has a positive return and a red chart has a negative return. The percentage return for the time period is on the chart image.

4.02 52 Week Low

A 52-week high/low is the highest and lowest price at which a stock has traded during the previous year. It is a technical indicator used by some traders and investors who view the 52-week high or low as an important factor in determining a stock's current value and predicting future price movement. Investopedia


The price and date of the 52 week low in relation to today's price and date is a valuable indicator on Symbol Surfing.

If the 52 week low is near today's price and/or today's date, it is a bearish or negative signal.

If the 52 week low is far from today's price and/or today's date, it is a bullish or positive signal.

4.03 52 Week High

A 52-week high/low is the highest and lowest price at which a stock has traded during the previous year. It is a technical indicator used by some traders and investors who view the 52-week high or low as an important factor in determining a stock's current value and predicting future price movement. Investopedia


The price and date of the 52 week high in relation to today's price and date is a valuable indicator on Symbol Surfing.

If the 52 week high is near today's price and/or today's date, it is a bullish or positive signal.

If the 52 week high is far from today's price and/or today's date, it is a bearish or negative signal.

4.04 All Time High

An all-time high is the highest price at which a stock has traded.


The price and date of the all-time high in relation to today's price and date is a valuable indicator on Symbol Surfing.

If the all-time high is near today's price and/or today's date, it is a bullish or positive signal.

If the all-time high is far from today's price and/or today's date, it is a bearish or negative signal.

4.05 Moving Average

A moving average is a technique often used in technical analysis that smooths price histories by averaging daily prices over some period of time. Simple moving averages (SMA) takes the arithmetic mean of a given set of prices over the past number of days, for example over the previous 15, 30, 100, or 200 days. Investopedia


In general, there are only 3 possible scenarios related to the 50-day and 200-day moving averages.

  1. Price above 50-day & 200-day moving averages.
  2. Price above 50-day & 200-day moving averages.
  3. Price in between 50-day & 200-day moving averages.

4.06 Trend Lines (Support & Resistance)

In finance, a trend line is a bounding line for the price movement of a security. It is formed when a diagonal line can be drawn between a minimum of three or more price pivot points. A line can be drawn between any two points, but it does not qualify as a trend line until tested. Wikipedia


Trendlines.

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