Brief Summary
This video provides a comprehensive glossary of essential financial and investment terms. It covers everything from basic concepts like assets and liabilities to more complex strategies such as hedging and shorting. It also explains different types of investment analysis, including fundamental and technical analysis, and various order types used in trading.
- Key Concepts: Assets, Liabilities, Capital, Equity, Dividends
- Trading Strategies: Hedging, Shorting, Swing Trading, Day Trading, Value Investing, Growth Investing
- Market Analysis: Fundamental Analysis, Technical Analysis
- Order Types: Market Order, Limit Order, Stop-Loss Order
An asset is anything of value that you own, such as stocks, land, cash, or gold, that can be used to build wealth. A liability, on the other hand, is anything you owe, including loans, salaries, rent, or any other financial obligation. Capital is what you use to purchase items, construct things, or engage in trade, essentially another term for money.
Amortization involves spreading out payments over time, such as when repaying a loan monthly with both interest and principal components. Profit margin indicates the amount of money a company retains after covering all expenses; for instance, a company selling an item for $100 and keeping $20 after costs has a 20% profit margin. Net worth is the difference between total assets and total liabilities.
Income refers to money earned from work or investments, while expenses are the funds spent on goods or services. Equity represents the ownership interest in an asset or company. An index is a tracked group of stocks, such as the S&P 500, providing an overview of the market's overall performance.
Liquidity refers to how quickly an asset can be converted into cash without losing value; stocks are generally liquid due to their ease of sale. Forex involves trading currencies, such as dollars, euros, and yen, based on the expectation that one currency will increase in value relative to another.
Purchasing a stock means buying a small portion of a company. A bond is essentially a loan to a company or government, with a promise of repayment plus interest. A shareholder is someone who owns stock in a company. Volume indicates the number of shares being traded; high volume suggests significant buying or selling activity, while low volume indicates less activity.
Underwriting is the process where banks manage a company's initial public offering (IPO) or new stock offering by setting the price, purchasing shares, and reselling them to investors. FOMO (fear of missing out) buying occurs when individuals purchase a stock simply because others are doing so. A stock exchange is where the buying and selling of stocks takes place.
For a company to be listed on the stock exchange, it must become a public company, allowing the general public to purchase its shares. An index fund is a low-cost investment option that tracks a market index like the S&P 500, providing exposure to a wide range of companies without the need to select individual stocks. Dividends are a portion of a company's profits distributed to shareholders as a reward for holding their stock.
A ticker symbol is a short code used to identify a company on the stock market, such as AAPL for Apple or TSLA for Tesla, facilitating quick identification during trading or chart analysis. "To the moon" is a phrase used when people anticipate a stock's price will increase dramatically. A broker is an individual, platform, or app that facilitates the buying and selling of stocks.
A bull market signifies rising prices, while a bear market indicates declining prices. Hedging involves protecting investments from risk, such as investing in oil stocks to offset potential losses from airline stocks if oil prices rise. Foreign exchange reserves are foreign currencies, like US dollars or euros, held by countries as a backup to stabilise their economy, control inflation, or support their own currency.
A trade deficit occurs when a country imports more goods than it exports. A bubble is when prices increase rapidly without relation to real value, driven by speculative buying. The bid is the price buyers are willing to pay for a stock, while the ask is the price sellers are seeking. The bid-ask spread is the difference between these two prices.
Tanking refers to a significant drop in a stock or the overall market. Panic selling is when investors sell their holdings simultaneously due to fear, causing further price declines. Volatility measures how much stock prices fluctuate; high volatility indicates greater risk but also greater potential for profit or loss. A portfolio is the collection of all an investor's investments, including stocks, bonds, and real estate.
Blue chip stocks are those of well-established companies like Coca-Cola or Microsoft, generally considered safer and more stable investments. A mutual fund pools money from multiple investors to invest in stocks, bonds, or other assets. Earnings per share (EPS) indicates a company's profit per share of stock, with higher EPS typically indicating better profitability.
Return on investment (ROI) measures the profit earned relative to the initial investment; for example, a $2,000 profit on a $10,000 investment yields a 20% ROI. Interest is the additional money earned when lending money, such as through savings accounts or bonds. Compound interest is when interest earned also earns interest, leading to exponential growth.
Dollar-cost averaging involves investing a fixed amount regularly to mitigate the risk of timing the market, as it involves buying at both high and low price points. A day order expires at the end of the trading day, suitable for trades intended for that day only. A good-till-cancelled order remains active until it is fulfilled or manually cancelled.
A market order executes a trade immediately at the current market price. A limit order allows setting a specific price at which to buy or sell, executing only if the market reaches that price. A stop-loss order is a safety measure that automatically sells a stock if it falls to a specified price.
Averaging down involves buying more shares of a stock at a lower price to reduce the average cost per share. Control stock provides the holder with significant influence over a company's decisions, often held by founders or major investors. A holding company owns other companies but does not produce goods or services itself, such as Berkshire Hathaway.
Holdings are the specific investments within a portfolio, such as stocks of Apple, Amazon, and Google. An ETF (exchange-traded fund) is a basket of various investments bundled into one, offering diversification. An IRA (individual retirement account) is a retirement account with tax benefits.
A security is a general term for tradable investments like stocks, bonds, or mutual funds. A commodity is a basic good like oil, gold, or wheat that can be traded. Inflation is the increase in prices over time, reducing purchasing power. Penny stocks are low-priced stocks, often associated with hype trading and weaker fundamentals.
Market capitalization is a company's total value in the stock market, calculated by multiplying the stock price by the number of shares. Book value is a company's assets minus its liabilities. The price-to-book ratio compares a company's market price to its book value, potentially indicating undervaluation or problems.
An IPO (initial public offering) is when a private company first offers shares to the public. Shorting involves betting that a stock's price will decline by borrowing shares and selling them, hoping to buy them back at a lower price. A short squeeze occurs when a stock's price rises unexpectedly, forcing short sellers to buy back shares to cover their positions, driving the price even higher.
A long squeeze is the opposite of a short squeeze, occurring when investors betting on a stock's rise are forced to sell due to falling prices, pushing the price further down. Leverage involves using borrowed money to invest, increasing potential gains but also potential losses. Hedge funds are private funds for wealthy investors that use riskier strategies to seek high returns.
Swing trading involves holding investments for a few days or weeks to profit from short-term price movements. Day trading involves buying and selling within the same day. A pump and dump scheme involves hyping up a cheap stock to increase its price, then selling off the shares for a profit, leaving other investors with losses.
A rug pull, common in crypto, involves a project's creators disappearing with investors' money. Unicorns are startups valued at over $1 billion. Whales are large investors who can influence market prices with their substantial trades. A dead cat bounce is a brief price increase after a stock crash before it continues to fall.
"Jigged out" describes a market that is moving randomly or acting strangely. Yield is the return on an investment, expressed as a percentage. Value investing focuses on finding undervalued stocks with the expectation of selling them at a higher price later. Growth investing involves investing in companies expected to grow rapidly.
Fundamental analysis involves studying a company's earnings, leadership, and financial health. Technical analysis involves looking at stock charts and patterns to make trading decisions. Intrinsic value is the perceived value of a company based on its fundamentals. A balance sheet shows a company's assets, liabilities, and equity.
A black swan is a rare, unexpected event that can crash the market. Fading is a strategy of betting against the current market trend. Options give the holder the right, but not the obligation, to buy or sell a stock at a certain price within a certain time. The P/E ratio (price-to-earnings ratio) can indicate if a stock is over- or undervalued.
The efficient market hypothesis (EMH) suggests that stock prices reflect all available information, making it impossible to consistently beat the market. Insider trading involves using non-public information to trade stocks, which is illegal. Supply and demand dictates that if more people want to buy a stock, the price increases, and if more people want to sell, the price decreases.
Transcript
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0:00 Asset. Anything valuable that you own, stocks, land, cash, even gold. If it has value and can help build wealth, it's considered an asset. Liability. A liability is anything you owe. For companies, this could be loans, salaries, rent, or any financial obligation. Capital. Capital is what you use to buy stuff, build things, or trade. This is the second name for money. Amortization. This is just spreading out payments over time, like when you take a loan and repay it monthly. Part interest, part principal, profit margin. This shows how much money a company keeps after paying all its costs. For example, if a company sells something for $100 and keeps $20 after costs, their profit margin is 20%. Net worth, the difference between total assets and total liabilities. Income, money earned from work or investments.
0:46 Expense, money spent on goods or services. Equity, the ownership interest in an asset or company. Index. An index is just a group of stocks tracked together, like the S&P 500 in the US. It gives you an overview of how the market is doing overall. Liquidity. Liquidity means how quickly you can turn something into cash without losing value. Stocks are usually liquid because you can sell them fast. Forex. This is about trading currencies like dollars, euros, yen. You're basically betting on one currency going up while another goes down. Stock. When you buy a stock, you're buying a small piece of a company. Bond. A bond is like a loan you give to a company or the government. They promise to pay you back later with some extra money, which is basically the interest. Shareholder. If you own a stock, you're called a shareholder. Volume. This tells you how
1:33 many shares are being traded. If a stock has high volume, lots of people are buying or selling it. Low volume means it's kind of quiet. Underwriting. When a company goes public or offers new stock, banks help in managing the process. They set the price, buy the shares, and resell them to investors. FOMO buying. F O stands for fear of missing out. It's when people start buying a stock just because everyone else is. Stock exchange. This is the place where all that buying and selling happens. Public company. For a company to be on the stock exchange, it has to go public. That means regular people can buy its shares. Index fund. An index fund follows a market index like the S&P 500. It's a simple, lowcost way to invest in a broad range of companies without picking individual stocks. Dividends. Some companies give you a cut of their
2:18 profits. That's called a dividend. It's like a thank you for holding their stock. Ticker symbol. Every company on the stock market has a short code. Apple is a AA pl. Tesla is TSL AA. These are ticker symbols. Just an easy way to identify the stock quickly when trading or looking at charts. To the moon. A phrase people use when they think a stock's price is about to explode upwards. Broker. A broker is the person, platform, or app that helps you buy and sell stocks. Bull market/bear market. You'll hear these terms a lot. A bull market means prices are going up. A bare market means they're going down. Hedging. This means protecting your money from risk. For example, if you own airline stocks, but oil prices are rising, you might invest in oil stocks, too. If one goes down, the other might go up. Foreign exchange reserve.
3:04 Countries keep foreign currencies like US dollars, euros, gold as a backup. This reserve helps them stabilize their economy during crisis, control inflation, or support their own currency when needed. Trade deficit. This happens when a country imports more than it exports. Basically, it's buying more stuff from other countries than it's selling. Bubble. A bubble happens when prices rise way too fast and have nothing to do with real value. People buy in just because everyone else is buying. Bid. This is the price buyers are willing to pay for a stock. Ask. This is the price sellers want for it. Bid ask spread. The gap between the bid and ask price. Tanking. When a stock or the whole market is dropping in a bad way. Panic selling. When investors all start selling at once because of fear. Prices drop even more because everyone's trying to get out. Volatility. This is
3:50 how much the stock prices jump around. If something's extremely volatile, the price can change fast. High volatility means more risk, but also more chances to make or lose money. Portfolio. Your portfolio is all your investments grouped together. Stocks, bonds, real estate, whatever you've put money into. Blue chip stocks. These are well-known companies like Coca-Cola, Microsoft, or Johnson and Johnson. They're usually safer, more stable, and less likely to surprise you in a bad way. Mutual fund. A mutual fund collects money from you and invests it in stocks, bonds, or other assets. Earnings per share, EPS. This is how much profit a company makes per share of stock. Higher EPS usually means better profitability. Return on investment. ROI. ROI tells you how much you earned compared to what you put in. So, if you invested $10,000 and made
4:36 $2,000 profit, your ROI is 20%. Interest. This is the extra money you earn when someone borrows your money. Like when you put money in a savings account or lend through bonds, you're paid interest in return. Compound interest. This is interest earning interest. You invest money, it grows, and then that growth also earns more money. Dollar cost averaging. Instead of investing a big amount, you invest a fixed amount regularly like every month. This helps you avoid trying to time the market and reduces risk because you're buying both highs and lows over time. Day order. This order expires at the end of the trading day. You'd use this if you only want to trade today and not worry about it tomorrow. Good till canceled order. This order stays active until it's either filled or you manually cancel it. So, if you set a buy order for a stock at $80 and it never drops
5:21 that low, your order just stays open until you decide to close it. Market order. You're buying or selling right now at whatever the current price is. It's fast, but the price might change slightly by the time your order is filled, especially in a fast-moving market. Limit order. This is when you set a price and say only buy or sell if it hits this number. So if a stock is $100 and you set a limit buy order at $95, your order will be placed only if it drops to $95. Stoploss order. This is your safety net. You set a price where you're like, if the stock falls to this point, sell it automatically. Averaging down. Let's say you bought a stock at $100 and now it's at $80. If you still believe in it, you might buy more shares at a lower price. This brings your average cost down, hence averaging down. Control stock. This is a stock that gives someone the power to influence or
6:08 control a company like voting rights on major decisions. Usually held by founders, CEOs or big investors. Holding company. This is a company that doesn't make or sell anything itself. It just owns other companies. For example, Berkshire Hathaway owns a bunch of businesses. It's a holding company. Holdings. These are the specific things inside your portfolio. So, if your portfolio has Apple, Amazon, and Google stocks, those are your holdings. ETF, that's short for exchangeraded funds. Think of them like a basket of different investments bundled into one. You can buy an ETF like you'd buy a stock, but inside it might hold dozens or hundreds of different companies. IRA. These are retirement accounts. You put money in, let it grow, and take it out later when you retire, usually with tax benefits. Security. This is a general term for anything you can invest in and trade
6:55 like stocks, bonds or mutual funds. Commodity. These are basic goods you can trade like oil, gold, silver, or wheat. Instead of investing in a company, you're investing in raw materials. Inflation. Inflation means prices are rising. Over time, your money buys less. It affects your investments, too. Because if your return doesn't beat inflation, you're technically losing buying power. Penny stocks. These are cheap stocks, usually under $50 or $5. They're popular in hype trading, but not always backed by strong fundamentals. Market capitalization. Market capitalization is what a company is worth in the stock market. You get it by multiplying the stock price by the total number of shares. Companies are usually called small cap, midcap, or large cap based on this number. Book value, the value of a company's assets minus its liabilities. It's what the company would
7:41 be worth if it sold everything and paid off all its debts. Pricetobook ratio. This compares a company's market price to its book value. A low PB ratio might mean the stock is undervalued or that the company has problems. IPO that stands for initial public offering. It's when a private company decides to go public and sell shares to everyday investors for the first time. Shorting. This is when you bet a stock will go down. You borrow shares, sell them, and hope to buy them back later at a lower price. Short squeeze happens when too many people are shorting a stock and the price starts going up instead. Now they're all forced to buy it back quickly, which pushes the price up even more. Long squeeze. This is like the opposite of a short squeeze. It happens when people who were betting that a stock would keep rising suddenly get hit by falling prices. Now they're forced to sell to cut losses, which pushes the
8:28 price even lower. Leverage. Leverage means using borrowed money to invest. You can make more if things go right, but also lose more if things go wrong. Hedge fund. These are private funds for very rich investors. They use risky strategies like shorting or leverage to chase high returns. Swing trading. This is a bit slower than day trading. You hold for a few days or weeks trying to catch short-term price moves. Day trading. Buying and selling within the same day. Pump and dump. A group hypes up a cheap stock. The price goes up and then they sell it all, leaving others stuck when the price crashes. Rugpull. This happens mostly in crypto. A project gets a lot of attention. People invest their money. Then the creators suddenly disappear with the money. Unicorns. Startups worth more than $1 billion. They're rare and extremely popular. Whales. These are big investors or
9:13 institutions that buy or sell in huge amounts. When whales move, they can shift prices just by the size of their trades. Dead cat bounce. When a stock crashes then briefly goes up before falling again. It looks like a recovery, but it's not. It's just a pause in a downward trend. Jigged out. When the market is moving randomly or acting strange. Yield. Yield is how much you're earning from an investment, usually shown as a percentage. So, if you invested $1,000 and earned $100, your yield is 10%. Value investing. This style focuses on finding stocks that are undervalued. The idea is to buy low, be patient, and sell high later when the market catches up. Growth investing. This is about betting on companies that are expected to grow fast. These stocks might be expensive now, but investors believe they'll be worth more later.
9:59 Fundamental analysis. The opposite of technical analysis. This is about studying the company itself, its earnings, leadership, and financial health. Technical analysis looking at stock charts, trends, and patterns to make trading decisions. Intrinsic value. This is based on its fundamentals like cash flow, assets, and business model. If the market price is lower than the intrinsic value, investors might see it as a good deal. Balance sheet. This is a financial statement that shows what a company owns, what it owes, and what it's worth. Black swan. This is a rare unexpected event that crashes the market like COVID or a sudden war. Fading. Fading is a strategy where you go against the trend. If a stock is rising fast, a fader might bet it'll fall soon. Options. Options give you the option to buy or sell a stock at a certain price within a certain time. You're not buying
10:45 the stock directly. You're buying the right to buy or sell it later. PE ratio, that stands for price toearnings ratio. A high PE ratio could mean the stock is overpriced or that investors expect big growth. A low PE ratio could mean it's undervalued or that something's wrong. Efficient market hypothesis, EMH. This theory says stock prices already reflect all available information. If that's true, you can't really beat the market because it's always fairly priced. Insider trading. It's when someone uses secret non-public info to buy or sell a stock before the rest of the world knows what's going on. Like if a CEO knows their company is about to crash and sell their shares in advance, that's insider trading. And yep, people go to jail for it. Supply and demand. If more people want to buy a stock, the price goes up. If more people want to sell, the price
11:31 drops. It applies to everything in the
