Exposure to the elements can kill you over time... underexposure can do the same. It's dangerous to go alone. Take this with you.
That's all it is... a game.
Key Terminology To Help You Navigate the Game.
Term
Definition
Example
Stock
A stock represents a fractional ownership in a corporation. When you buy stock in a company, you become a shareholder, meaning you own a portion of that company.
I go to my broker and purchase 1 share of Coca-Cola (KO) @ $72 and now own part of Coca-Cola.
Bond
A bond is a debt instrument, essentially an IOU, where the issuer (like a company or government) borrows money from an investor for a set period, promising to repay the principal amount plus interest.
I go to treasury direct to buy bonds from the government and loan the government money for a set period of time. At the end of that period of time, they pay me interest (2.7%) for the loan.
ETF
An ETF is a basket of different securities, like stocks, bonds, and commodities, that trades on a stock exchange.
I go buy SPDR S&P 500 ETF Trust online and own a small amount of each company in the S&P 500.
Company Communications:
Term
Definition
Takeaway
Earnings Report
An earnings report, also known as an income statement, is a financial document that summarizes a company's profitability over a specific period, typically a quarter or year.
Companies have meetings with shareholders to discuss the profitability and obstacles of a business. This happens in a timely manner and can be seen on the company website.
In Regards to Stocks:
Terms
Definition
Takeaway
EPS (Earnings Per Share)
EPS, or Earnings Per Share, is a financial metric that indicates how much profit a company generates for each outstanding share of its common stock. It's a key measure of a company's profitability and is widely used by investors to assess a company's financial health
A good EPS (Earnings Per Share) for a stock is generally considered to be one that is increasing over time, especially when compared to the same period in the previous year.
P/E (Price to Earnings Ratio
The Price-to-Earnings (P/E) ratio is a valuation metric that compares a company's stock price to its earnings per share (EPS).
A good P/E (Price-to-Earnings) ratio is relative and depends on various factors, but generally, a lower P/E ratio is considered better, as it suggests a stock may be undervalued thus has potential to grow.
Dividend
A dividend is a portion of a company's profits that are distributed to its shareholders, typically in the form of cash or additional shares of stock
A stock that starts the year at 10 dollars and finishes at 12 dollars with a 20 cent quarterly dividend ends up with 12.80 at the end of the year. The buyer gains both the 2 dollar increase in market value and also the 20 cent distribution.
