A market downturn marked by a 20%+ drop in prices and pessimistic sentiment. Typically tied to economic slowdowns or uncertainty.
Shares in large, stable, well-established companies with a track record of strong performance – think Apple or Coca-Cola.
A person or platform that facilitates stock trading. Examples include Robinhood, Fidelity, or traditional advisors.
A market phase when prices are rising and investor optimism is high – often fueled by strong economic indicators.
Spreading investments across different assets to reduce risk. A diversified portfolio is more resilient to market swings.
A portion of a company’s profits paid to shareholders, typically quarterly. Not all companies pay dividends, but those that do offer a steady income stream.
A company’s net profit divided by its outstanding shares. It’s a snapshot of profitability and financial health.
A fund holding a basket of assets (stocks, bonds, etc.) that trades like a single stock – offering easy diversification at lower cost.
A benchmark tracking a group of stocks, like the S&P 500 or Dow Jones. It helps gauge overall market performance.
The first time a private company sells shares to the public, becoming publicly traded and raising capital for growth.
An instruction to buy or sell a stock at a specific price or better. Great for price control, but not always guaranteed to execute.
How easily a stock can be bought or sold without affecting its price. High liquidity = smoother trades.
Borrowing money from a broker to invest. Amplifies gains and losses, so use with caution.
The total value of a company’s outstanding shares:
Market Cap = Share Price × Number of Shares Outstanding
Used to categorize companies as small-cap, mid-cap, or large-cap.
A request to buy or sell a stock immediately at the current market price. Fast, but less precise.
A stock’s price relative to its earnings per share (EPS):
P/E Ratio = Stock Price ÷ EPS
A higher ratio may indicate investor confidence (or overvaluation), while a lower ratio could signal undervaluation.
A collection of investments – stocks, bonds, ETFs, etc. – owned by an individual or entity.
A strategy where you sell a stock you don’t own, betting its price will fall. High risk, high reward – if timed right.
A share of ownership in a company. When you buy a stock, you own a small piece of that company and may benefit from its profits or growth.
How much a stock’s price swings. High volatility = bigger risk, but also bigger potential reward.
This glossary covers the basics – but investing is an ongoing learning process. Stay curious, stay informed, and always do your research. When in doubt, consult with a licensed advisor.
