132 investing terms, explained.
Every term in plain English first, with the formal definition and a real-world example when it helps. Tap any letter to jump.
1
10-K
A company's annual report filed with the SEC. Long, dense, but the most important document on a public company.
10-Q
A company's quarterly report filed with the SEC. Shorter than a 10-K but covers the most recent three months.
13F
A quarterly filing where investors managing $100M+ disclose what stocks they hold.
2
4
5
8
A
B
Backwardation
The opposite of contango — when futures trade below the spot price. Rolling positions in backwardation produces a positive yield.
Basis points
One basis point = 0.01%. A change from 4% to 4.25% is a 25-basis-point move.
Bear / bearish
Pessimistic — the bear is swatting down. A "bear market" is typically a 20%+ drop.
Bear market
A drop of 20% or more from a recent peak.
Beat / miss
Wall Street shorthand. A company "beat" if it earned more than analysts predicted; "missed" if it earned less.
Beta
How much a stock moves compared to the overall market. Beta 1 = moves with the market. Beta 2 = swings twice as much.
Bond
A loan you make to a company or government in exchange for regular interest payments.
Bull / bullish
Optimistic — the bull is charging up. A "bull market" is one that's rising.
Bull market
A long stretch where prices generally rise.
Buyback
When a company uses its own cash to buy back its own shares, reducing the count.
C
CAGR
Compound Annual Growth Rate — a smoothed-out average yearly return.
Call option
A contract that gives the buyer the right to buy a stock at a fixed price by a fixed date. Used to gain upside exposure with limited downside, or to write "covered calls" against an existing position.
Call option
A contract to buy at a fixed price by a date. Profits if the stock rises.
Capital gain
Profit you make when you sell something for more than you paid. Taxed differently if held over one year.
Compounding
Earnings on your earnings. Money grows faster over time because the growth itself starts earning more growth.
Contango
When a futures contract trades at a higher price than the spot price (or higher than near-month contracts). Rolling a position from contract to contract in contango costs money.
Correction
A drop of 10% or more (but less than 20%) from a recent peak. Less severe than a bear market.
Correlation
How closely two assets move together, on a scale from -1 (opposite) to +1 (identical). Low correlation is what makes diversification work.
Cost basis
The total amount you paid for an investment. Used to calculate gains or losses when you sell.
CPI
Consumer Price Index — a measure of inflation based on the average prices households pay for goods.
CUSIP
A nine-character ID used in U.S. securities filings. SEC reports use these instead of tickers.
D
DCA
Dollar-cost averaging — investing a fixed amount on a regular schedule regardless of price.
Debt-to-equity
A ratio comparing what a company owes to what it owns. Lower is generally safer.
Diversification
Spreading money across many different investments so one bad apple doesn't ruin the basket.
Dividend
Cash the company pays out to shareholders, usually quarterly. Like a small thank-you check for owning the stock.
Dividend yield
Annual dividend per share divided by share price, expressed as a percentage. Tells you the cash return on owning a share.
Dovish
Inclined to keep interest rates low to support growth and jobs. The opposite of hawkish.
Dow
The Dow Jones Industrial Average — an old index of 30 big U.S. companies. Still widely quoted on the news.
Drawdown
How far an investment fell from its highest point. A $100 stock that drops to $60 has a 40% drawdown.
E
Earnings
Profit. Revenue minus expenses minus taxes. Companies report this every three months.
Earnings call
A quarterly conference call where company management discusses financial results with analysts.
Earnings date
The day a public company publishes its quarterly financial results. Earnings days often see exaggerated price moves.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. A rough measure of operating profitability.
EPS
Earnings Per Share — yearly profit divided by total shares. The "earnings" half of the P/E ratio.
ETF
Exchange-Traded Fund. A bundle of many stocks (or bonds) you can buy in a single trade — like buying a fruit basket instead of one apple at a time.
EV/EBITDA
Enterprise value divided by earnings before interest, taxes, depreciation, and amortization.
EV/Revenue
Enterprise value divided by revenue. Used to compare valuation across companies with different debt levels.
Ex-dividend date
The first day a stock trades without rights to the upcoming dividend. The stock price typically drops by the dividend amount on this date.
Exchange
A marketplace where stocks trade — for example, the NYSE or Nasdaq.
Expense ratio
The yearly fee an ETF or mutual fund charges, as a percentage of your investment.
F
FAANG
Old acronym for Facebook (Meta), Apple, Amazon, Netflix, Google (Alphabet). Largely replaced by Magnificent 7.
Fiduciary review
The work a financial advisor, accountant, or fund manager does to assess a portfolio on behalf of someone else. Fiduciaries are legally required to act in the client's interest, not their own.
Filing lag
The number of days between when a stock trade actually happened and when it was disclosed in a public filing. A short lag means the public saw the trade quickly; a long lag means the trader's positioning was private for longer.
FOMC
Federal Open Market Committee — the body inside the Fed that sets US short-term interest rates. Eight scheduled meetings per year.
Form 4
An SEC filing that company insiders (executives, directors) must submit within two days of trading their company's stock.
Free cash flow
Cash a company has left over after running the business and reinvesting. Often called the truest measure of profit.
Fund
A pool of money managed on behalf of many investors. Examples: ETFs, mutual funds, hedge funds.
Futures contract
An agreement to buy or sell an asset at a fixed price on a fixed future date. Built-in leverage; settled daily; commonly used for commodities, indexes, and currencies.
G
GDP
Gross Domestic Product — the total dollar value of everything a country produces in a year.
Gross margin
Percentage of revenue left after the direct cost of goods sold. Higher = more pricing power.
Guidance
A company's own forecast for future revenue or earnings, usually given alongside quarterly results.
H
Hawkish
Inclined to raise interest rates to fight inflation. The opposite of dovish.
Hedge fund
A private investment fund, usually for wealthy or institutional investors, that uses a wider range of strategies.
Holding period
The time between purchase and sale of an investment. Determines whether a gain is short-term (taxed as ordinary income) or long-term (lower rates).
I
Index
A list of companies used to measure how a part of the market is doing. The S&P 500 is the most famous one.
Index fund
A fund that simply owns everything in a given list (an index), instead of trying to pick winners. Usually cheap and boring on purpose.
Inflation
When prices rise across the economy over time, meaning each dollar buys less.
Interest rate
The cost of borrowing money, set by the Federal Reserve at the wholesale level. Big driver of stock and bond prices.
IPO
Initial Public Offering — when a private company first sells shares to the public on a stock exchange.
IRA
Individual Retirement Account — a personal retirement account with tax advantages.
J
L
Leverage
Using borrowed money to make a bigger bet than your own capital allows. Magnifies both gains and losses.
Limit order
An order with a worst-acceptable price. Buys fill only at or below the limit; sells fill only at or above. Trades fill certainty for price certainty.
Liquidity
How easily you can buy or sell something without moving the price much.
Long-term
In investing, "long-term" usually means held for more than a year, sometimes for many years.
M
Magnificent 7
Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, Tesla. The 7 biggest U.S. tech stocks by market cap.
Margin
Borrowed money used to buy investments, with the investment itself acting as collateral. Magnifies both gains and losses.
Margin call
A demand from your broker that you add cash to a leveraged account whose equity has fallen below the maintenance threshold. If you don't, they liquidate your positions.
Market cap
The total value of all of a company's shares added up. Price per share × number of shares.
Market order
An order to buy or sell immediately at the best available price. Fast, but can fill far from expected on illiquid stocks or volatile moments.
Moving average
The average price over the last N days, used to smooth out daily noise.
Mutual fund
A pooled investment that trades once a day at the closing price (unlike an ETF, which trades all day).
N
O
P
P/E ratio
Price-to-earnings ratio: stock price divided by the company's yearly profit per share. A rough measure of how expensive a stock is.
Peer clustering
When several investors trade the same stock around the same time, that's a 'peer cluster.' On its own it doesn't tell you why — but it's a pattern worth noticing.
Portfolio
The collection of all the investments someone owns.
PPI
Producer Price Index — measures price changes paid by producers, often a leading indicator of CPI.
Proxy statement
A document sent to shareholders before annual meetings. Discloses executive pay and matters up for vote.
PTR (Periodic Transaction Report)
The form a Member of Congress files to disclose a stock trade under the STOCK Act. Every PTR is public — anyone can read them on the House Clerk or Senate eFD portal.
Put option
A contract that gives the buyer the right to sell a stock at a fixed price by a fixed date. Used to bet against a stock or protect a position you own (a "protective put").
Put option
A contract to sell at a fixed price by a date. Profits if the stock falls.
Q
R
Real interest rate
Interest rate minus inflation. The true return on your money after prices rise.
Recession
A sustained period when the economy is shrinking instead of growing. Often two consecutive quarters of negative GDP.
Return
How much an investment gained (or lost) over time, usually expressed as a percentage.
Revenue
Total money a company brings in from sales, before expenses. Also called "the top line."
Risk
The chance that an investment could lose money or not perform as expected.
ROA
Return on Assets — profit divided by total assets.
ROE
Return on Equity — profit divided by shareholders' equity. Measures how efficiently a company uses its capital.
Roth IRA
An IRA where you pay tax now but withdrawals in retirement are tax-free.
RSI
Relative Strength Index — a technical indicator from 0 to 100. Over 70 is "overbought," under 30 is "oversold."
RSU
Restricted Stock Unit — a stock grant given to employees that vests over time.
S
S&P 500
500 of the largest U.S. companies. People use its number as shorthand for "how the market did today."
Safe haven
An investment that tends to hold value (or rise) when riskier assets fall. Examples: gold, U.S. Treasuries.
SEC
Securities and Exchange Commission — the U.S. government agency that regulates the stock market.
Sector concentration
The portion of a portfolio invested in a single GICS sector. High concentration amplifies sector-specific risk.
Sector rotation
When investors move money out of one industry and into another. Sector rotation can be small (one investor rebalancing) or large (market-wide shifts between, say, tech and energy).
Settlement date
The day on which a financial contract finalizes — money and ownership change hands. For futures, this is also the date by which the position must be closed or rolled.
Share
One unit of stock. The words "share" and "stock" are used almost interchangeably in everyday talk.
Short interest
The percentage of a company's shares that have been sold short. High short interest can signal pessimism.
Short selling
Borrowing a stock, selling it, hoping the price falls, then buying it back cheaper. Risky.
Stock
A small slice of ownership in a company. Owning one share means you own a tiny piece of that business.
STOCK Act
The Stop Trading on Congressional Knowledge Act of 2012. It requires Members of Congress to publicly disclose stock trades within 45 days, so the public can see who bought or sold what — and roughly when.
Stock split
When a company divides each existing share into more shares. A 2-for-1 split doubles your share count and halves the price.
Stop order
An order that becomes a market order when the price crosses a trigger. Typically used to cap losses on existing positions.
T
Tax-loss harvesting
Selling investments at a loss specifically to realize the loss for tax purposes, while continuing to maintain similar market exposure via a substitute security.
The Fed
The Federal Reserve — the U.S. central bank. Sets interest rates and influences the money supply.
Theta decay
The loss in an option's value as time passes, even if the underlying stock doesn't move. Theta accelerates as expiration approaches.
Ticker
A short symbol used to identify a stock. AAPL = Apple, NVDA = Nvidia.
Top-N weight
The percentage of a portfolio held in its largest N positions. A common diversification check.
Trailing stop
A stop order whose trigger adjusts with the stock's highest price since the order was placed. Lets winners run while protecting against reversals.
Treasury
A bond issued by the U.S. government. Considered the safest interest-bearing investment in the world.
U
V
W
Y
Educational only. TrustFirst is not a registered investment adviser and does not provide personalized investment advice. Definitions are written to teach concepts in plain English, not to recommend any specific action.