Tuesday, February 18, 2014

Important Stock Market Definitions

If you are considering a career in the financial services industry, you may have to successfully complete the Canadian Securities Course (CSC). If you are currently working in the industry, the CSC will enhance your skills and ensure that you are able to provide the most complete services for your clients and help you excel in your career.

Private investors can also benefit from the course study because it will enhance your understanding of investment principles and allow you to become a more knowledgeable investor.

To busy to take the course? Relax, as a post grad I now offer you a glossary of terms that covers the important stuff. Study the following and you’re on your way to being a successful advisor / investor.

Important Stock Market Definitions

Bull Market: What the markets do after you sell because of a recession, corporate scandal, political unrest, war jitters and soaring oil & gold prices.

Bear Market: What the markets do after you buy because of bright economic conditions, corporate earnings growth, peace in the middle east, and low oil & gold prices.  

Bond: A magical piece of paper that is worth more when the economy is bad and then worth less when the economy is really bad.

Call Option: The opportunity to lose small amounts of money over short time periods.

Cash Flow: The movement of money from a mutual fund to the fund manager. Sometimes called management fees or MER’s.

Commission: Question; How can I prevent commissions and fees from eating up my trading profits? Answer; Trade less.

Covered Call Writing: The strategy of losing a stock if it goes up and retaining if it goes down.

Dollar Cost Averaging: The strategy of averaging down on a losing mutual fund investment.

Day Trader: The opportunity to loss large amounts of money over short time periods.

Long Term Investor: A day trader who has refused to sell a losing trade.

Good Investor: Will agonise for weeks over a buy decision and sell on impulse.
Bad Investor: Will buy on impulse and agonise for weeks over a sell decision.

Investor Advocate: A bad investor looking for someone else to blame.

Fundamental Analyst: Analysts who think they are right.

Financial Planner: Jack of all trades and master of none.

Financial Columnist: Legend in their own mind.

Institutional Investors: A special group of investors who are good at passing exams.

Margin Debit: The unique opportunity to have your original investment go to zero and lose 200 percent of your capital.

Market Correction: What the markets do the day after you buy stocks.

P/E Ratio: Better known as the panic/exit ratio. Fund managers use this number to calculate the time required for all of the unit holders to bail out of a fund.

Seasonal Books: They are published once a year and say the same thing they said last year.

Seasonal Investing: In an uptrend you buy low, sell high and then buy back even higher. In a downtrend you sell high, buy low and then sell even lower.

Short Position: A type of trade where a person sells stocks they don't actually own. You can also be short on rent payments, car payments and alimony.

Stock: A magical piece of paper that is worth more when the economy is good and then worth less when the economy is really good.

Stock Broker: The guy who disappears when your stock goes down, only to reappear if the stock subsequently rallies.

Stock split: When your ex-wife and her lawyer split your equity portfolio equally between themselves.

Trailer Fees: The money you pay to your financial planner to buy and never sell.

Technical Analyst: Analysts who think the market is right.

Momentum Investing: The art of buying high and selling lower.

Value Investing: The art of buying low and selling even lower.

So there you have it. You have to know the rules to play the game.

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