Stock Trading To Go » Term of the Day

How to Interpret a Stock Split

Blain Reinkensmeyer — Tue, 16 Sep 2008 02:00:14 +0000

When a company’s existing shares are automatically divided into multiple shares it is known as a stock split. Splits are typically bullish in nature and are commonly used to both identify the health of a company and lower the overall stock price.

Done by management to lower the price per share, stock splits are typically performed when the stock has consistently appreciated over a long duration of time.

While a stock split does affect the stock price, it does not affect the overall value of the position itself. For example, If a stock splits 2 for 1 at $100 a share then each share is split into two separate shares worth $50 individually. Thus, the value remains $100 and is not changed.

Read more about stock splits and hundreds of other terms in the stock terms area of the site (View a full list of all terms).

Understanding Ticker Symbols

Blain Reinkensmeyer — Thu, 11 Sep 2008 16:00:36 +0000

A stock symbol, also known as a ticker symbol, is a string of letters that identify every publicly traded company. Investors use ticker symbols all day every day to identify stocks quickly, with each symbol being completely unique from the other.

Examples include Microsoft (MSFT), Google (GOOG), and Apple (AAPL). When writing out a stock symbol it is proper to list the company first followed by the ticker in parenthesis as seen here.

Read more about Stock Symbols and hundreds of others in the stock terms area of the site (View a full list of all terms).

Executive Treatment, The Golden Parachute

Blain Reinkensmeyer — Mon, 08 Sep 2008 12:00:54 +0000

A golden parachute is a term used to describe what benefits top executives receive when their company gets taken over (bought out, etc.) by another company, and they lose their jobs as a result.

What benefits do golden parachutes come with? Golden parachutes are littered with everything from huge bonuses to stock options to severance pay, and yes probably a free dinner or two on the way out.

In the end these top executives are essentially walking away in a nicer suit than what they wore when they came in, and one would have to imagine finding a new job can’t be too difficult.

Golden Parachutes will have execs floating for a long time before they have to worry about much. And, the next job they get as the exec of another company will have them rewarded with yet another golden parachute. Being fired couldn’t be more tough .

Stock Lingo, All or None!

Blain Reinkensmeyer — Fri, 05 Sep 2008 16:30:12 +0000

When placing an order to buy shares of stock investors have sub-options such as “fill or kill” and in this case “all or none”. These expressions are actually types or orders and have specific meaning to how the order is filled / completed.

All or none means that when the investor places the stock order whether it be a buy or a sell, unless the order is filled in its entirety then the broker shouldn’t fill it at all. So, let’s say an investor is looking to buy a 1,000 share lot of Apple (AAPL), by checking All or None they are saying that unless they can get all 1,000 shares filled together as one order than don’t fill it at all.

Find the term All or None and hundreds of others in the stock terms area of the site (View a full list of all terms).

Outstanding Shares Broken Down

Blain Reinkensmeyer — Thu, 04 Sep 2008 13:00:21 +0000

Outstanding shares by definition is the total number of shares held by all investors.

This includes restricted shares which are shares owned by company’s officers and insiders, and shares of stock held by the general public. Outstanding shares are an important part of fundamental analysis.

Read the full definition of Outstanding shares in the stock terms area of the site (View a full list of all terms).

Professional Stock Lingo, Block Orders

Blain Reinkensmeyer — Thu, 28 Aug 2008 23:17:56 +0000

When trading large amounts of stock the lingo changes from simply, “I bought 15 shares of Apple today Bob.” Institutions such as mutual funds and hedge funds are typically trading so many shares at once that they tend to stick to whole amount standards, one of which is called a “block” of shares.

So how many shares is a block order? A standard block is 10,000 shares total which for the average investor should make heads spin because 10,000 shares of a stock trading at $50 is $500,000 worth of stock. So, instead of a fund manager saying, “I bought 100,000 shares of XYZ today” they will say instead, “I bought 10 blocks of XYZ today.” Try it sometime .

You can find the term Block Order in the stock terms area of the site (View a full list of all terms).

Invest in a All Weather Fund

Blain Reinkensmeyer — Wed, 27 Aug 2008 20:39:40 +0000

Conservative investors looking to invest in a mutual fund that is more consistent in performance regardless of the overall market trend should consider a All Weather Fund.

These funds have a lower overall Beta and as a result are a lower risk alternative to hedge funds or other high growth large cap funds. The “All Weather” analogy refers to the tendency for these funds to be consistent performers regardless of the market.

Read more about All Weather Funds in the stock terms area of the site (View a full list of all terms).

What it Means to Buck the Trend

Blain Reinkensmeyer — Tue, 26 Aug 2008 16:00:19 +0000

When a stock investment performs better than its sector or the overall market it is known to be bucking the trend.

These stocks typically stand out especially when the sector or market is in a current price slump.

Read more about Bucking the Trend in the stock terms area of the site (View a full list of all terms).