Financial Words You Should Know by Michele Cagan

Author:Michele Cagan
Language: eng
Format: epub, pdf
Tags: ebook, book
Publisher: F+W Media
Published: 2009-02-21T16:00:00+00:00

INVESTING

2% stop

A preset limit on the dollar amount an investor is willing to lose on an investment. Usually refers to a percentage of his entire portfolio, converted into dollars. For example, a 2% stop on a $200,000 portfolio means the investor would sell any security whose price declined by $4,000. Sometimes called a “money stop.”

See also: Stop order, Trailing stop

In order to help control losses, Zach made sure his broker always knew where his 2% stop was set.

52-week high

The top price for which a security has traded over the past year.

See also: Record high

Eric was lucky to have sold his stocks at their 52-week high.

52-week low

The lowest price for which a security has traded over the past year.

See also: Record low

Sandra assured her clients that the 52-week low was still more than they had paid for the securities. In spite of the drop, they were still making money.

Above the market

An order to buy or sell a security at a price that’s higher than the prevailing trade price. Often used when a trader expects a stock to break through resistance and go on an uptrend, in order to get in at the start of that uptrend.

See also: Resistance, Uptrend

The speculator told his broker to buy above the market because he expected prices to rise in the next few months.

Absolute Breadth Index (ABI)

A measure of the movement and volatility of the New York Stock Exchange (though it can be used to measure any exchange), regardless of which direction the market is moving. It is the difference between the number of advancing and declining issues. The larger the difference, the higher the market volatility, which may indicate a rollercoaster ride in the upcoming weeks.

See also: Advance/decline line, Breadth indicator

Investors held their breath as the ABI started increasing because they knew the market was going to start fluctuating rapidly.

Absolute return

The actual earnings on an investment.

See also: Relative return

Even after fees and taxes, Todd was pleased with the absolute return on his mutual fund.

Accredited Investor

A person or entity (such as a bank or corporation) that is allowed, under securities laws, to invest in extremely high-risk investments. Defined under the Securities Act of 1933; to qualify as an accredited investor a person must either have a net worth (either on her own or combined with her spouse) of more than $1 million at the time she invests or have more than $200,000 income ($300,000 if it’s joint income with a spouse) in each of the past two years and reasonably expect to continue earning at the same income level.

See also: Institutional investor

Since Gina earned $225,000 per year for the past two years, she qualified as an accredited investor.

“Across the board”

A phenomenon where most market activity moves in the same direction, a market-wide movement.

See also: Big board, Stock market

Since the crash of 1929, there have been safeguards to avoid an “across the board” drop from causing another depression.

Actuals

Physical goods that are interchangeable with other goods of the same type, such as sugar, corn, precious metals, and oil. Also called “commodities.

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