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What is Unsystematic Risk?
Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through appropriate diversification.
Also known as “”specific risk””, “”diversifiable risk”” or “”residual risk””. Read more for examples and further explanation including related video clips and also comments
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What is Rate Of Return?
The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains. Read more for examples and further explanation including related video clips and also comments
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What is Energy ETF?
A broad class of ETFs that includes funds focused on oil and gas exploration, the generation, distribution and retail sale of gas and other refined products, electric utilities and alternative energy production. Energy ETFs may invest in only United States-based companies, globally based energy companies, or a blend of the two.
The offerings within the energy ETF class include replications of the energy-sector stocks found in the S&P 500, U.S. energy producers, global energy producers and funds of a particular sub-sector designation, such as nuclear, coal, gas, etc. The weighting of stocks within these ETFs can be market-cap based, equally-weighted or fundamentally weighted, based on financial metrics like net earnings and dividend yield. Read more for examples and further explanation including related video clips and also comments
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What is Atlas Options?
A type of equity-based exotic option from the family of mountain range options. Atlas options have a payout that is based on the performance of the underlying securities, which comprise stocks. At maturity, some of the best- and worst-performing stocks are removed from this group of underlying securities, at which point the payout is calculated on the remainder of the securities. Read more for examples and further explanation including related video clips and also comments
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What is Efficient Market Hypothesis – EMH?
An investment theory that states it is impossible to “”beat the market”” because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to the EMH, this means that stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments. Read more for examples and further explanation including related video clips and also comments
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What is Water ETF?
An exchange-traded fund that invests in companies operating in industries such as water treatment and purification, water utilities, water monitoring, and broader distribution and retail companies. Water ETFs invest the majority of their assets into publicly traded equities based on an underlying index, which may be created in house or by a third-party market service. Read more for examples and further explanation including related video clips and also comments
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What is Pump And Dump?
A scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme, who already have an established position in the company’s stock, sell their positions after the hype has led to a higher share price. This practice is illegal based on securities law and can lead to heavy fines.
The victims of this scheme will often lose a considerable amount of their investment as the stock often falls back down after the process is complete. Read more for examples and further explanation including related video clips and also comments
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What is Greenspan Put?
A description of the perceived attempt of then-chairman of the Federal Reserve Board, Alan Greenspan, of propping up the securities markets by lowering interest rates and thereby helping money flow into the markets.
Investors assumed that they would be able to liquidate their stocks at a set price at or before a future date as if there was a built-in put option. They believed that Greenspan would manipulate monetary policy and continue to maintain market stability. While the former Fed chair’s actions did have an effect on the markets, it was not necessarily his objective. Read more for examples and further explanation including related video clips and also comments
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What is Cats And Dogs?
A slang term referring to speculative stocks that have short or suspicious histories for sales, earnings, dividends, etc. The origin for this term may have stemmed from the use of “”dog”” to refer to an underperforming stock. Read more for examples and further explanation including related video clips and also comments
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What is Trade Through?
A stock market order that is not executed at the best possible price according to quoted prices at other exchanges. Regulations to protect against trade-throughs were first passed in the 1970s and were later upgraded via Rule 611 of Regulation NMS, which passed in 2007.
Rule 611, otherwise known as the Order Protection Rule, aims to ensure that both institutional and retail investors get the best possible price for a given trade by comparing quotes on multiple exchanges. If a better price is quoted elsewhere, the trade must be routed there for execution, and not “”traded through”” at its current exchange. Read more for examples and further explanation including related video clips and also comments
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