Translating Stock Market Jargon
July 5, 2021
Have you ever been confused by the jargon used on Wall Street? Allow me to translate some esoteric stock market terms into plain English.
Blue chips: Stocks with a history of consistently strong dividend payments, issued by huge corporations with solid management. In addition, a nickname for the Dow Jones Industrial Average, which includes 30 companies that usually deserve such a label.
Hedge: A position you take with your money or investments to try and counteract or control your losses. An investor who owns a lot of bank stocks, for example, might hedge by also investing significantly in utility shares. The two industries have little, if any, relationship, so if stocks suffer in one industry, the other may not be hurt.
Moving average: This is simply the average per-share price of a stock within a set period – it could be 50 days, 100 days, or 200 days. Stock market indices like the Dow and Nasdaq have moving averages, too, measured in the same way.
Thin trading: A period when the market has relatively few buyers and sellers. The months of August and December commonly see thin trading, as summer vacations and holidays impact the volume of buy and sell orders that traders process. The phenomenon can also apply to certain stocks or stock market sectors.
Volatility: The price movement of a stock (or a stock index). Some stocks are not very volatile; others are. Thinly traded stocks may see greater price swings than others.
Yield: This is often confused with the return of a stock, but it is not the same. Yield is a measure of dividend from a dividend-paying stock, and you figure it out by dividing the yearly dividend payment by the initial price you paid for the shares. Say you buy shares of a firm for $10, and they yield $0.45 annually. Your yield is 4.5%.
Hopefully, this clears up a little of that jargon. We are happy to clarify more, and I am ready to use our insight to help you establish a clear path toward pursuing your financial goals. Call or email us for knowledge that may help you today and tomorrow.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
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