how's it going today guys welcome back
to the channel hope you're having a
great day so far so in this video today
we're putting together a stock market
related video for somebody who is a
complete beginner or novice to investing
i can remember way back in like 2015
2016 when i began investing one of the
most frustrating things was coming
across all of this different lingo and
not knowing what half of it meant now
obviously guys there's hundreds and
probably thousands of words out there
related to the stock market but what
we're going to be covering in this video
here is the most common stock market
terminology or lingo so that way you
know what you're talking about if you're
having a discussion or you at least you
know know what these terms mean if
somebody is discussing them with you now
that being said guys i do have to make a
few quick disclaimers here first of all
i am not a financial advisor this is not
any sort of financial advice and you
should always do your own due diligence
above and beyond this video before
investing in the stock market also guys
i have been getting an elevated number
of spam and scam comments down below
quite an unfortunate problem here guys
and i've actually had to turn it where
all comments are moderated by uh one of
my employees who looks over there after
those for me so yes comments are allowed
if you don't see yours show up it will
show up when he approves or denies them
it's nothing to do with whether it's a
positive or negative comment it's simply
whether or not this is a scam that
somebody could be taken advantage of
hopefully at some point youtube you know
comes up with an actual solution because
i hate having to do that but i just
wanted to be as transparent as possible
with you guys so that being said guys
let's start off with the first piece of
terminology here probably one that
you've heard a lot over the last decade
a bull market well i'll give you the
definition right here in a second but
i'll tell you what one of my favorite
definitions i've ever heard is a bull
market is when prices are bull as in
bull s h blank blank you know what i'm
talking about but the actual definition
here guys a bull market means that an
overall trend of increasing prices
exists so basically that is a time
period when prices are going up and
people are you know generally happy with
their returns in the market now saying
that the market is bullish that could be
referring to the market overall which
would be all the stocks or you can say
this about an individual stock or sector
which is just an area of business where
you could say okay i am bullish so for
example i could say i am bullish on
genius brands that's one of the stocks
in my portfolio and then i could say
maybe i'm bullish on a particular
industry um there's not really much of
that i mean you're bullish on right now
to be fully transparent but that is how
you would use that particular lingo now
on the other hand i'm sure you've heard
of the other side of the fence here
which is the bear market and a bear
market is basically when there's an
overall trend of decreasing prices so
that's a time when people are putting
money into the market and then maybe six
months later seven months later they've
lost 20 25 30 40
it's a time when
the average individual entering that
market is in fact losing money
not to mention as well here guys in the
same way that you can be bullish on a
particular stock you can also be bearish
and that would apply to stocks as well
as different sectors or the entire
market as a whole so if for example you
were looking at a particular stock and
you said i don't understand why the
price is so high i am going to be
bearish on that stock now there's two
different ways that you could be bullish
or bearish on a particular um you know
asset you could be bullish with just
your dialogue or bearish just by talking
about it and that's something called
your sentiment or feelings towards the
stock but then you can also put your
money where your mouth is and either be
bullish which means that you're long a
stock or you're bearish which would mean
that you are short so it's kind of the
situation here where verbally you could
be bullish or bearish and then you can
put your money where your mouth is and
do a bullish or a bearish bet most
investors retail investors stick to
bullish bets because short selling is
quite complicated but obviously as we've
heard about in the financial market news
lately short selling is quite a popular
activity among the larger investors so
moving on here guys another term that
used to just confuse me wildly is
securities a security is a tradable
financial asset so here's examples of
securities stocks bonds cds which is a
certificate of deposit and options so if
you ever hear somebody saying okay i'm
trading securities they're usually
talking about stocks but it's oftentimes
one of those things listed here as well
and also guys not just to mention here
as well public sales of securities are
regulated by the s e c which is the
securities and exchange commission
the next one to cover here guys is
exchange another word you hear about
quite often and often times what they're
talking about is a stock exchange this
is simply a market where securities are
bought and sold
similar to way back in the day where
people would go to a market to you know
swap their beans for corn and different
you know goods that people had it's just
a market where there's an exchange of
items
in this example here it's going to be
those securities that we just talked
about so examples of exchanges include
the new york stock exchange the nasdaq
and the hong kong stock exchange there's
also different smaller exchanges out
there where penny stocks trade however
those are oftentimes viewed as less
desirable markets moving on here guys
now we'll talk more about the sec just
because it's good to know who was out
there you know as the watchdog for our
financial markets the sec or the
securities and exchange commission is an
agency of the us federal government now
this was founded after the great wall
street crash of 1929 and the primary
purpose of the sec is to enforce the law
against market manipulation now i i'll
tell you what there's a there's a good
handful of people that would probably
disagree with uh that definition there
at the bottom in terms of what the sec
is actually doing but i'm just coming at
you guys with the definitions here of
what they are in fact supposed to be
doing on your behalf now the next term
we're gonna come across here is a broker
and then there's something else called a
brokerage a lot of people still are just
unaware of the fact that there is a
difference between these two and what
the difference is so we're going to
cover it well first of all starting with
a broker this is an individual or a firm
that acts as an intermediary for
investors and exchanges so at the end of
the day if you want to go out there and
trade stocks you yourself can't go
running into you know the new york stock
exchange office and buy shares yourself
you do have to go through a broker
they're basically your stock dealer now
an exchange accepts orders from members
only so a broker works on behalf of
individual investors so common examples
today of brokers would be robin hood
weeble fidelity m1 finance etc all names
that i'm sure many of you have heard of
next up let's cover the term shares well
shares represent units of stock when you
actually purchase a stock so through the
ipo process companies decide to issue
stock in order to raise capital and i
just did a full video talking about ipo
investing if you're curious about how
that actually works i'll throw a card up
in the corner so individual investors
can purchase shares of a stock in
exchange for fractional ownership of a
company so basically shares are units of
the stock if you have 10 shares you have
10 units of that company and that
ownership is proportional to however
many units or shares of that company
exist out there in the world
next up we have another term you'll come
across called outstanding shares and no
these are not the shares that have done
a really good job at being units of a
company that's not quite the case here
this refers to all of the shares
currently authorized by a company and
held by investors so what we were just
talking about earlier how your number of
shares you own gives you proportional
ownership based on the total number out
there while this outstanding shares
figure is going to tell you how many
shares authorized shares of the company
are out there and then another term that
you'll come across in this neighborhood
is float and that refers to the number
of shares actually available for trading
because a lot of shares are owned by
insiders so you can't always look at
outstanding shares you got to look at
the float to see okay this is the actual
pool of shares currently available for
trading now as mentioned earlier talking
about bull and bear markets we talked
about being long and short that's where
you actually say hey i believe this
company is going to go up or down and
i'm putting my money where my mouth is
and i'm hoping to make a profit in the
process so long refers to a situation
when an investor believes they will
profit on a stocks increase whereas
short refers to a situation where an
investor believes they will profit on a
stocks decrease so i'm sure we've heard
about short sellers out there those are
people who are betting against
individual companies they're looking to
make money as that share price falls so
another term that you're going to hear
oftentimes is something called blue chip
stocks and these are going to be shares
of companies that are well established
possess a strong reputation and
generally pay dividends now that's not
always the case and a perfect example
being amazon a lot of people refer to
that as a blue chip stock but they do
not in fact as of this video pay a
dividend so right there you have a
couple of examples that would be nike
apple amazon and walmart they're large
durable well respected and they tend to
be viewed as a lower risk investment
into the stock market on the other hand
we also hear about penny stocks which
are from smaller companies typically and
a definition of a penny stock is
actually any stock that trades under
five dollars per share so if you ever
hear someone talking about a penny stock
and it's like three dollars and 55 cents
a share and you're confused because
you're like that's more than a dollar
well there you go now you know the
answer that that's what that is right
there guys so penny stocks typically do
not trade on major exchanges and they
often end up on the over-the-counter
markets they're less regulated and just
a less desirable place to be putting
your money overall and the reason being
is because many of these large exchanges
have listing requirements one of them
being that you have to maintain a price
of five dollars or more per share so if
a company has a low share price for a
long period of time they can risk
something called de-listing which is
where they get the boot from the
exchange and they have to go to the otc
markets which is just a crappier place
to be not going to be nearly as many
people participating and looking to buy
shares over there so the next piece of
information here guys is called the
ticker symbol or the stock symbol this
is a unique abbreviation that identifies
a company listed on a particular
exchange so just for example here guys
the company apple is symbol aapl
netflix is going to be
nflx and facebook is ticker symbol fb
it's literally just an identifying
marker whereas in the past if you were
calling up your broker on the phone
you'd say hello i'd like to buy you know
10 shares of aap or yeah appl actually
it is aapl i believe that might be a
typo there but double check before you
actually purchase but irregardless that
would be the process you call them up
you give them the symbol and then that
is how they would process that
transaction for you moving on this gets
a little bit more complicated but it is
good to know and it's called the bid
versus the ask as well as the spread so
the bid is something related to the
price and this refers to the highest
price a buyer will pay for a security if
you think about an auction this is
somebody bidding on that auction the ask
price refers to the lowest price a
seller will accept for the security so
the person bidding is looking to buy the
person um asking is looking to sell
something that they already have in a
marketplace via this exchange the
difference between these two prices is
known as the spread and the smaller the
spread the greater the liquidity of the
given security so basically if there's a
ton of people trading a particular asset
the spread might be half a cent where
someone's looking to sell for a dollar
seventy and someone's looking to buy for
a dollar seventy and half a cent but in
a thinly traded market you could have a
really wide spread because no one's
really selling the asset
where someone's looking to bid a dollar
twenty but the the lowest ask is a
dollar eighty the issue being if you
were to place an order you could your
order could be filled in any range there
meaning you don't know what price you're
actually going to pay the next term to
know here is called margin or buying on
margin and this is simply when you have
a loan from a broker in order to
increase your buying power generally not
a good idea not something that i use
myself i do take advantage of portfolio
line of credit but i do not use it for
buying additional
assets in the markets but just be aware
that this does exist and this is what
it's called every brokerage out there
has their own terms and agreements uh
with as far as it goes to margin for
example two to one margin would mean
that you could invest double what you
have in your account so if you had a
hundred grand they would loan you
another 100 000 at a set interest rate
to basically give you more exposure to
those stocks or securities another term
to be familiar with here guys is called
a dividend and this is simply
distributions that are made by some
companies to their investors now it's
important to note here that companies
are not obligated to pay dividends and
they can stop paying them at any point
in time however it's not often desirable
for them to do that because a lot of
these companies don't have too much
going for them in terms of growth
because they've already become so large
so issuing a dividend oftentimes is the
main thing keeping people sticking
around so it's basically money being
handed to you typically on a quarterly
basis to reward you for owning the stock
and they're sharing a portion of their
earnings so um there's a lot more
information in this guys uh in my video
on dividend investing for beginners i'll
throw that up in the corner if you guys
want to check that out after and then
the dividend yield is the annual
dividends per share divided by the
current share price that tells you at a
specific point in time what percentage
of your investment you would earn back
in the form of dividends over the next
year another key term to understand here
guys is something called an index fund
and this is simply a portfolio of stocks
or bonds so basically instead of going
out there and picking individual stocks
many people choose to invest in a
pre-made basket known as an index fund
and these typically feature low expenses
and lower volatility due to the fact
that you are diversified and investing
in a passive manner i also did another
video recently talking about how to
research an index fund or etf if you
guys want to check that out there's
going to be a card up in the corner uh
if you want to check it out at the end
of this video the next term to cover is
something called earnings or this is
often called eps which is the earnings
per share this is calculated by taking
profits divided by the outstanding
shares and profits is going to be where
you have revenue that comes in minus
expenses gives you the profit eps is
taking all of those earnings and
dividing it by the number of shares
telling you per shareholder this is how
much that company earned and positive or
higher eps typically is a sign of
strength as it denotes higher
profitability which can oftentimes lead
to an increase in the share price so eps
is a very important indicator that a lot
of people follow when they are investing
in stocks the last term we're going to
cover here guys is called the p e ratio
or the price to earnings ratio which is
one of the ways that people try to
evaluate stocks in the market now
there's no end-all be-all out there guys
in terms of one indicator that you can
look at that's going to tell you
everything about the markets but the p e
ratio is a decent indicator in your
portfolio of tools basically what it
looks at is the ratio between the price
or the share price relative to the
earnings that company has and it gives
you an idea of if that company is
expensive or cheap relative to their
earnings so typically speaking a higher
p e ratio could indicate that a price is
a little bit expensive for a stock and a
lower pe could indicate that it is cheap
however every industry out there or
different segment of business has their
own normal level for a p e ratio that is
why you can't simply just look at a p e
ratio and say oh that's cheap or oh
that's expensive but it is a good
indicator to know and definitely one for
further research so anyways guys that is
going to wrap up this video i hope you
enjoyed it if you made it to the very
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always guys i hope to see you in the
next video