Glossary

Indicator for borrowing costs in the economy. Higher yields mean higher mortgage rates, loan rates and other borrowing costs for both businesses and consumers. A 10-year yield of 3% equals $30 per year return on every $1k invested in treasury bonds. If the yield is low companies can afford to borrow money to stay afloat.

The highest price of any given security within the last year (52 weeks from the time of reporting, not a calendar year)

Analysts’ prediction on where a stock’s price per share will be in the future. Ranging from “Low” to “High”, we want to look for a less extreme “Average”. If the current price is predicted to go up, we have an “Upside”, else a “Downside”. Currently: $3.63, in 12 months: ø $20.40 = +462.21% Upside

A term for the current price per share of a security that you have an option for, if the Strike Price is on a similar level.

Strike Price = Share Price

At-the-Market offering: a publicly traded company sells news shares directly into the market at the current price, gradually. The stock price usually doesn’t drop as much as with a more common ‘secondary offering’, which is a one-time event. ATM is revealed in S-3/ 8-K filings first and later in press releases

Buying more of a stock as it’s price decreases.

When a broad market index (S&P 500, Dow Jones, etc.) drops 20% or more for a sustained amount of time. Statistically, happens every 6-10 years with a median decline of 30-35%

A term derived from Poker describing a stock that is said to perform profitable in good and bad times.

A company’s total assets – it’s total liabilities. Compared to market value, it can indicate under- or overpricing. A share price can be higher than book value, since it doesn’t reflect intangible assets like patents, intellectual property, future profits etc.

A metric that compares the total market capitalization of a country’s stock market to its gross domestic product (GDP), used to assess whether the stock market is overvalued or undervalued relative to the size of the economy.

When a stock falls strongly for some time and appears to suddenly recover by a little bump. Retail investors think it hit the bottom and they can buy at a discount, expecting an upcoming rally, when in reality institutionales are offloading their shares to them.

Buybacks are so simple: it’s a way of distributing cash to shareholders. Think 3 people buying a franchise, the business grows and 1 wants to spend his shares of the earnings. The others wouldn’t establish a 100% dividend, instead they would buy a portion of the shares of the third. He could thus spend that money and the shares of the others would go up (Warren Buffet, Source)

Stocks within the index are weighted by the total market value of their outstanding shares. When ever stock prices change, the value of the index also changes.

Determines how long a company can survive (in months) given their current Net Burn Rate. Cash Runway = Cash (and Cash Equivalents) – Net Burn Rate. For Startups, it can also be calculated as Cash Runway = Cash (and Cash Equivalents) / (Negative Free Cash Flow / 12)

The opposite of a Golden Cross when a short-term moving average (e.g., 50-day MA) crosses below a long-term moving average (e.g., 200-day MA).

If a stock falls below $1 per share for longer than 6 months, it risks being delisted from the stock exchange. Possible solutions: 1) Improving business performance 2) Buybacks of own shares (needs high cash reserves) 3) Secure additional funding 4) M&A with a stronger company 5) Reverse Stock Split (only 40% survive longer than 5 years after that).

Used to discount future returns to their present value. If the future return is $700 and I apply a 5% hurdle rate, it would be discounted to $578 in present money.

A teleconference (or webcast) by a public company discussing their financial results of a certain period, often accompanied by a press release. Earnings Calls are usually done quarterly and vary in their exact date.

Exponential Moving Average is a technical indicator that gives more weight to recent prices, thus making it react faster to changes than using the “Simple Moving Average” (all past prices).

A term for the number of shares of a company that aren’t restricted but available to the public.

Money left over after expenses and capital expenditure that a company can return to its shareholders.

A bullish technical indicator when the short-term moving average (50 days) of a stock crosses the long-term moving average (200 days), indicating a stronger upwards trend.Example: short-term MA: 105, while long-term MA: 101

Funds invested in government securities, such as U.S. Treasury bills, which are backed by the government and carry minimal risk.

Slang for „Dollar“ back when paper has been printed in green paint

The GDP is the total value of good and services a country or region produces in a certain time period.

Trying to find securities whose value will increase rapidly in the future. The upside potential is more dramatic, while in Value Investing it is more consistent.

A term for the current price per share of a security that you have an option for, if the Strike Price is below it.

Strike Price < Share Price

There are currently about 69 industries in the U.S. stock market (2025). 69 industries grouped in 11 sectors

Moving Average Convergence Divergence: this technical indicator helps identify trends and reversals in price movement. It consists of 3 components: MACD Line (12-day EMA – 26-day EMA), Signal Line (9-day EMA of MACD Line) and MACD Histogram. When MACD line crosses above Signal Line = bullish momentum confirmed, if it crosses below = bearish momentum confirmed.

Margin debt is the amount of money borrowed by investors to purchase securities, using a margin account, which amplifies both potential gains and losses.
It’s gambling with borrowed money.

Financial metrics comparing a company’s financial performance to similar companies in the same industry/ sector. Examples: P/E Ratio, EV/EBITDA, Price-To-Sales, Price-To-Book. Their goal is to analyze if a company is currently trading below or above the industry’s average ratio.

Having the assumption to being able to tell that something that has been rising will continue to rise. You can be successful in a bull market but this approach won’t help you know when to sell.

Treasury bills, commercial papers, certificates of deposit, and other short-term debt securities that provide liquidity and preserve capital while earning a modest return. Less risk, less reward as compared to stocks.

Technical indicator that makes price changes easier to identify over a time period. You sum the price of each day within 50 days and divide that number by 50. The Moving Average is usually compared to another longer or shorter Moving Average, like last 50 days to last 200 days.

A collective term for all kinds of ratios that compare a stock’s price to some fundamental number. <em>Example is P/E ratio</em>. Generally speaking the higher the multiple, the more expensive the stock. <em>Multiples are always highly dependent on context!</em>

The amount of money a (starting up) company spends each year to fund its growth. It can be used to calculate Cash Runway.

Amount of cash a company spends each month on operating expenses, minus any cash inflows: Net Burn Rate = Operating Expenses – Operating Income (or Cash Inflows)

A form of value investing where you buy when the total market of a company’s stock is less than it’s current assets (like cash receivables and inventories) exceed its total liabilities. In theory you could buy all the stock, liquidate the current assets, pay off the debt and end up with the business and some cash! It focuses totally on hard assets

About 50 large-cap stocks 1960s to 1970s, that were regarded super solid. They had a bull run in the 70s before dropping up to -90% in the early 80s after their popularity outshined their fundamentals.

Cash generated by a company’s normal business operations. Investing and financing excluded. Pretty much Net Income + Depreciation – Accounts Receivable – Accounts Payable

Give you the right (without any obligation) to buy a certain security at a specific price within a given timeframe.

Market Order: immediately at the next available price (Speed > Price)
Limit Order: you specify a price first, and it will be fulfilled once that condition is met (Price > Speed)
Stop Order: 1) Stop Market (next available price) | 2) Stop Limit (limit price or better) | 3) Trailing Stop (where ever it rises, amount x below that)
Source

A term for the current price per share of a security that you have an option for, if the Strike Price is above it.

Strike Price > Share Price

The Price-To-Earnings Ratio is a stock’s Price divided by Earnings-Per-Share. Share Price $30 / Net Income $2M = 15x. Trailing P/E is looking at historical data, while Forward P/E at sales predictions (new market, product, etc.?). A P/E of 10 means we are paying 10x the price of our share of the company’s profit. A rise in P/E ratio indicates that stock prices are rising faster than company earnings!

An Upside of +300% means that the current price per share will increase x4

PMs (…silver, gold, platinum, palladium, etc.) usually rise when the interest rates of “risk free” instruments such as Savings Accounts and Bonds drop. This particularly happens when the Fed lowers interest rates. Many investors will then move towards more risky instruments like stocks or PMs. Global bonds are ~ $200T while precious metals are only ~ $80B, so a small % of investors translates to a huge increase in a market 2,500x smaller.

The price you pay for an option. Usually only a tiny fraction of the actual security. You don’t buy the stock itself, you buy the right to buy the stock for a fixed price.

A rally is a short-term surge in stock prices. You could say that <em>if a stock jumps 5% in a week, that’s a rally. If it rises steadily for a year, that’s a bull market.</em>

If GDP declines for at least two consecutive quarters. Companies earn less and thus cut jobs, so unemployment rises. Consumers spend less. Stock Market falls due to uncertainty. Causes: high inflation (high prices), rising interest rates (borrowing becomes expensive), financial crises (bank failures, etc.), global events (wars, pandemics, etc.). The FED always cuts rates when there is recession.

When a company divides it’s current shares, resulting in fewer (and more expensive) shares. A 1-for-5 would be the case if you had 5 shares of a company, but now are left with only one. Companies use this strategy to prevent getting delisted if their share prices will become < $1. The higher share price could be interesting for institutional, but is often suspicious to retail investors. The main problems are that reverse splits don’t fix the fundamental issues and declining stocks often keep falling even after a split.

Relative Strength Index measures how “overbought” a stock is on a scale from 0 – 100. > 70 = possible sell signal, < 30 = possible buy signal. Learn more.

The 2.000 smallest U.S. companies. Kind of the opposite of the S&P 500. Therefor often used as an indicator of the U.S. economy. Market Cap per company (ø): $3.65 B (31.12.24)

The 3.000 largest U.S. companies by market capitalization. Avg. market cap ~ $966 B (31.12.24). Represents ~ 98% of the American public equity market.

The 500 biggest US companies as tracked by “Standard & Poor”. Weighted according to the total market value of their outstanding shares.

A market change that is fundamental, significant and probably long lasting. 1978: before investors were only buying HQ assets, then they settled for LQ assets if they were cheap enough
According to Howard Mark there were a total of 3 Sea Changes in a period of 54 years.

A company offers more shares to the market at a fixed price (usually discounted) in a one-time event, to raise capital. This can cause a sharp drop in current share price due to dilution concerns.

It’s not always the whole stock market that crashes, sometimes it’s only a particular sector. E.g. Biotech in 2022: The biotech sector was overvalued in 2021 because of Covid (vaccine research), and when interest rates rose (from almost 0% to > 4%), funding dried up, and risk appetite of investors shrank, biotech stocks collapsed. While some high-quality companies survived, many smaller biotech firms struggled or shut down due to lack of funding.

There are currently 11 sectors in the U.S. stock market (2025). These 11 sectors include about 96 industries and 158 sub-industries.

Securities are financial instruments that represent an ownership position in a company (stocks, ETFs, etc.), a creditor relationship with a government or corporation (bonds), or rights to ownership as represented by an option.

It’s basically the collective term for anything you can invest in in the stock market.

Indicator that can tell us how institutional investors feel about the future movements of a stock. The higher, the more they think the share price will go down, but the bigger the chance of a short squeeze if unexpected bullish catalysts appear. 5-15% = moderate, 15-25% = high, 25%+ = extremely high. In comparison: GME was 140%+ in Jan 2021

Borrowing a stock for $5, selling it to the market for $10, buying it back as soon as it falls to $5 again. You return it to the owner, who’s position is the same as before, while you made $5 in the process. Can only be done by institutional investors.

Special Purpose Acquisition Companies (also “blank check companies”), are shell corporations listed on a stock exchange. Their purpose is to M&A a private company to take it public without a regular IPO. Retail investors can buy these before any M&A took place, which is why they get referred to as “poor man’s private equity funds”. SPACS are closely related to bubbles.

Stagnant economic growth, high unemployment and high inflation all at the same time.

A free order (pre) placed with a broker to sell (or buy) a specific security, once it reaches a certain price.If you buy a share for $10, you immediately set a Stop-Loss-Order to automatically sell if it drops to $8

The price at which you can exercise an option (buy or sell the underlying asset).

Reduces export demand and thus US companies‘ earnings in foreign countries

Two consecutive quarters of negative GFP growth.

Non-fundamental factors, that is things unrelated to value that still affect supply and demand of securities. E.g. Forced sales on margin calls, or portfolio managers that need to buy because they get an inflow of money from their clients. In both cases there isn’t much regard for price.

Abbreviation of Federal Reserve, the central banking system of the USA. It was founded to deal with banking panics. The Fed in- or decreases the interest base rate

“The magnificent 7” are the seven biggest companies in the U.S. Accounted for ~ 33% of the entire S&P500 index (2024). They appear “range bound” for certain time periods, while occasionaly breaking out.

Coming up with a security‘s current intrinsic value and buying when the price is lower than that. The focus lays on tangible factors like hard assets and cashflows. Intangibles like talents, fashions ans long term growth potential are given less weight.

How often a stock has been traded within a certain time period (like 1 day). If it’s the same day it’s an estimation, since final numbers can only be certain the next day. Tends to be higher on opening-/ closing-times and on Monday and Friday.

Volume means liquidity and the more volume in any price move, the more strength it has

High volume stocks trade in the tens to hundreds of millions per day (example: SPY).

A technical analysis method in 4 market cycles: accumulation, markup, distribution, markdown (more here)

An historically reliable market indicator. When inverted, it signals an economic downturn. Usually 10-year treasury yields have a higher interest rate than 2-year yields, because of the risk associated with time. When investors grow pessimistic they buy more long-term, driving those yields lower than short-terms.