Glossary, aka the De-Jargonizer
People who write reports on publicly traded companies. (check buy and sell-side)
Annual Report (10k)
Typically 100 pages that details a lot about a company including a summary of the business, risk factors, and financial data.
Something owned (i.e. a car, a house, but not a loan)
The category an asset falls under. Stocks, gold, real estate, commodities are all asset classes.
Any time the market is down more than 20% from the latest high
Board of Directors
A group that has control over the management of a company
Any time the market has not dropped lower than that magical 20% threshold of the bear market. Bull = up, bear = down.
When a company buys back its own stock either because it is cheap or it doesn’t know what else to do with the money. This is the opposite of diluting your stock ownership, so it is good.
The analysts who aid in the decision making process for companies who invest in stocks. These can be mutual funds, investment funds, of asset management firms.
Make extra money when a stock goes up, you can lock in a buy price. For instance, you buy a call option at $100 per share and it goes to $150. You can buy it at $100 and immediately sell at $150.
Investments a company makes into equipment or for the expansion of its business
Usually called operating cash flow which is the net income adjusted for non-cash expenses
CEO (Chief Executive Officer)
The head honcho
Goods like soybeans, coffee and corn that people can buy and sell in the markets.
Cost of goods sold (COGS)
How much money it takes to produce the good you are selling.
All assets that will turn into cash in less than one year
All debts that must be paid in less than one year
Current assets divided by current liabilities
Money owed, the opposite of an asset
Debt to Equity Ratio
Debt divided by shareholder’s equity
Cash that corporations can pay to shareholders
Also known as net income: Revenue – cogs – operating expenses – interest - taxes
The call where analysts ask questions to a company's management team.
Earnings before interest and taxes. Another name for it is operating income.
Earnings before interest, taxes, depreciation, and amortization (
Market cap + debt - cash
The amount of assets not funded by debt
The government body that decides where interest rates will be based on economic data
Free Cash Flow
Operating cash flow minus capital expenditures
Generally accepted accounting principles, these are how publicly traded companies have to report earnings. Basically a general account standard.
(Revenue - COGS)/ Revenue
Revenue - COGS
Baskets of stocks that serve as a general indicator for the market. Example, the S&P 500 holds 500 stocks that give investors broad diversification.
Initial Public Offering
Also known as IPO, the event where a private company becomes publicly traded.
When your money becomes less valuable because the economy grows and therefore wages grow and so prices must be raised in order to pay employees.
The rate that is passed through to consumers that dictate how much it costs to borrow money.
The amount of goods that you have stored that have not be sold yet
Deals with debt and equity offerings for companies. For example, if you wanted to buy another company, you'd need to hire some of these guys (or gals that is.)
The market value of a company (shares outstanding * price of stock)
Sales of a company divided by the total addressable market.
Net Income Margin
Net income divided by revenue
Items like sales & marketing, research & development, and general & administrative on the income statement.
A guarantee that you can buy or sell a stock at a certain price (check put and call option for more.)
The collection of stocks that you own.
Price to Earnings Ratio
Price of stock divided by earnings per share
Price to Free Cash Flow
Price of stock divided by free cash flow
A company that buys and sells other companies in order to make a profit.
The document a company must file to become a public company. It is essentially a more detailed version of an annual report.
You can lock in a price to sell a stock at and make money from the price going down. For example, buy a put option at $40 a share and it goes to $30. You can buy it at $30 and immediately sell it at $40.
(Current assets - inventories)/current liabilities
R&D (Research and Development)
Operating expenses that pertain to the creation of new products and services in a business
Return on Equity
Net income divided by stockholder’s equity
Return on Investment
Sometimes considered the same as ROA (return on assets) as it is net income divided by net assets.
Also known as sales, (quantity of good/service * price of good/service)
S&M (Sales and Marketing)
Operating expenses associated with getting the word out about a good or service.
The analysts that cover stocks for banks and other institutions to sell research to the buy-side.
SG&A (Sales, General, and Administrative)
Operating expenses associated with the general operations of a business like legal costs, building rents, wages, insurance, and office supplies
Making money when a stock goes down.
Represents ownership in a corporation.
Stock Based Compensation
The expense a company has to record for promising employees stock for payment
The price you lock in when buying an option.
Total Addressable Market
The sum of the sales for a particular industry or sub-industry.
How cheap or expensive an asset class is.
A company that makes investments in smaller companies in order to make a lot of money, typically dealing with fast-growing businesses in industries like technology.
When stocks go up and down a lot.
Current assets minus current liabilities
The return based on a price. For instance a dividend yield of 2% at a stock price of $100 would change if the stock dropped to $50. Then the yield would be 4%.