“Hey, how’s your port? Just got the latest annual report from my blue-chip stock, and their annual report looks atrocious. I think the same is true for a lot of stocks, so the bear is probably taking over for a bit. I did like what I see from the new IPO!”
If you don’t understand what some of the words above mean, then you are at the right blog post! Welcome to our article that explains some of the common stock market terms. Let’s begin.
#1 Bull and Bear
Both are used to describe the stock market and also the investors.
“Bull markets” are when the market is rising, and the economy is generally doing well. “Bullish investors” are investors that have positive outlook on the markets, and thus believes that the market will continue to rise.
“Bear markets” are the opposite, where the value of the stocks on the market are declining, and the economy is doing poorly. “Bearish investors” are those who believe that the market will drop, and continue to decline.
Nobody is sure why we use the terms bull and bear. The theories are that bulls are generally seen to be energetic and aggressive, while bears are generally sluggish. Also, bulls tend to attack with their horns going upward, while bears attack with their claws going downwards.
#2 Averaging Down
Averaging down is an investing strategy where you purchase even more shares after the investment’s price has gone down. This technique is extremely good if you know that the business is doing well, but for some reason the stock price is going down.
Basically, if you like and believe in the business, then buy their stock even if the price is going down, that way, your average price for that stock will decrease.
There is more that we can talk about this topic but that would need a separate article by itself. Make sure to like us on Facebook to get the latest update when we post new articles.
#3 Annual Report/ Quarterly Report
These reports are important in learning more about the company before you make a decision to buy or sell their stocks.
Annual reports are released by the company yearly (hence the name) and it contains a lot of information.
Usually, there is information on how the company did for that year, what assets and liabilities the company has, and also the plans for the company in the future and its possible financial effects.
There is also other information like what the company sells or what services they offer. There is also the list of company officers and the board of directors.
A quarterly report is like an annual report for the most part, but it contains information mostly about the related quarter. Usually, there is less information on quarterly reports than in annual reports.
You can visit the company’s website and look for their annual/quarterly reports under the investor menu.
We plan to do reviews and some short analysis on companies and their annual reports in future articles so make sure to like us on Facebook to get updated (if you haven’t already).
#4 Blue-Chip Stocks
Simply put, a blue-chip stock is a huge company that does well, and is known by you and most people (usually).
Companies like Coca-Cola, Samsung, Intel, LG and many others are very well known in most countries. That said, they are considered to be blue-chip stocks.
In the Philippines, companies like Jollibee, BPI, BDO, SM and, San Miguel Food and Beverage are considered to be blue chips.
Usually, these are the stocks that you will want to invest in. That’s the general advice, and also what we would recommend.
Take note though that not all blue-chips are good investments. This is a usual beginner mistake.
In other words, being a blue-chip doesn’t make the company a sure good investment. You will still need to do your research.
If you don’t know how to research stocks for investments, you can start by clicking here to go to an article we made.
#5 Penny stocks
Penny stocks are called that because they usually cost less than a dollar. (Though these days they can cost a little over a dollar or a few dollars.) In the Philippines, these are usually stocks that cost only a few pesos and those that costs less than a peso.
Essentially, these are stocks of small companies that you are most likely unfamiliar with.
In a way, they are kind of the opposite of blue-chip stocks.
Normally, we suggest you stick to blue-chips and AVOID penny stocks.
When companies earn profits, they will do 2 things with the money they earned:
- Use the earnings to expand by researching new products and/or opening new branches, and/or just generally make the company better and bigger somehow.
- If there is money left after spending for the above, they can give that to their investors.
That payment to the investors is called the dividends.
Dividends are great, but usually though, we are okay with dividends being low as long as the company is growing. We’re even okay if there are no dividends as long as the company is doing well and expanding every year.
#7 Highs and lows
“High” is simply the highest price that stock has reached over a time period. A 30-day high for example is the highest that stock has reached on the last 30 days. 365-day high is the highest price that stock has reached over the last year.
That said, “Low”, 30-day low and 365-day low should be self-explanatory.
#8 IPO (Initial Public Offering)
An IPO is the first time that a company releases some of their shares to be purchased by the general public (meaning you and me).
After an IPO, the shares of the company can now be bought and sold in the stock market.
Medium and large businesses usually IPO so they can sell their shares to have more money to expand their business, pay off their liabilities, or some other reason.
There is a lot that we can talk about when it comes to an IPO. Like, should you buy the shares of a business going IPO?
That merits another article, which we will publish soon! Make sure to follow us in Facebook to get updated when we upload new articles.
A portfolio, often shortened to port, refers to your collection of investments (or your collection of stock investments specifically).
When people say “my entire port is down” they simply mean their investment’s value is going down or at a loss at the moment.
#10 Stock Symbol/Ticker
These are just the shorthand that refers to a certain stock. You can think of it as a nickname for a company’s stock.
You often use these symbols when you are buying stocks or researching about them.
There are the super obvious ones like BPI for Bank of the Philippine Islands and PAL for Philippine Airlines.
There are also those that aren’t so obvious like TEL for PLDT and PIZZA for Shakey’s (though it is rather creative).
And That’s It!
Hopefully, when you read news or talk to other investors, you will remember what these terms mean and will help you understand.
There are still a couple of other terms we could talk about, but perhaps we’ll cover those on a future article. Keep a lookout!
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