Stock Market Jargons

Bear vs Bull market. Photo from pixabay.com

People nowadays are getting more curious in rising popularity of personal investments.  People from younger generations started to ask about mutual funds, UITF, and direct stock market investments.  Others are contented on what their financial advisors advised, invest in VUL (Variable Universal Life), a mixture of life insurance and investment in various equities.  Not only people are living longer, but also getting more concern about their retirement.

Investing unknowingly

Due to wide popularity of personal financing, people who invest without proper education.  Other financial advisors from reputable financial institution are not disclosing enough risks involve in to their clients.  Practitioners of financial products should profile first their prospective clients more than to their sales quotas.

As one of many practitioners of financial products, I do profile first the risk appetite of my prospective clients more, than the need of getting my referral points.  It’s my responsibility to keep my client’s money in disclosed agreement which really acceptable to his/her risk options.

“You can define a good salesman by asking him first about other competing products, and answering the cons and pros.  Then he will promote his own products unbiased. “

These Jargons

Some investors still not very familiar in stock market terminologies.  These are many effects of over confident to their fund managing companies.  Investing directly in the stock market gives different knowledge about the essential of proper investments.  Here are some jargons that might still confused others:

  • Bear Market – it means the stock market prices are falling due to negative sentiments in the whole market.
  • Bull Market – contrary to bear market, stock market prices are skyrocketing due to positive outlook in the whole market.
  • Black Swan – a totally unseen and unfortunate turn-of-events. It will lead to stock market prices fall.
  • Broker – the middle man between the investor and the company.
  • Blue Chips – a good quality stock or shares.  Also define as stocks from strong and very reputable companies (e.g. Ayala Land, Jollibee Food Corp., SM Prime Holdings, etc)
  • Penny Stocks – a very cheap stock that also comes in a very low price.  Regular price is PhP.10 to PhP1.00.  Also define as stocks from unreputable and not popular companies.
  • Common  Stocks – the default type of shares that you will buy in the stock market. Like preferred stocks, common shareholders are eligible in dividends.
  • Preferred Stocks – a type of stock or shares that receives regular and quality dividends first than common shareholders.
  • Peso Cost Averaging – an investment method that invest regularly in a particular blue chip company, repeating until 10 or more years, in order to maximize growth and minimize losses.
  • Unrealized Loss – a literal loss in investment due to decrease in price on particular shares of stock.  More popular for “paper loss” term.  It will be actual loss if the shareholder sell the stocks when the market price is lower than purchased price.
  • Unrealized Gain – a literal gain in investment due to increase in price on particular shares of stock.  It will be actual gain if the shareholder sell the stocks when the market price is higher than purchased price.

We already discussed some terminologies of stock market investments.  It’s feel great when someone read this article now fully informed about some jargons.

“Study first before investing.” – Pesos and Sense

 

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Eleison Cruz

Financial Consultant. Personal Finance and Investment advocate. Author of The Good Asset, a blog that educates people in investments, financial literacy, and life insurance. Visit www.thegoodasset.ph

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