Investing Terms

What Is A Short Squeeze? A short squeeze is what happens when many investors with a short position in the same security—meaning they are betting that the price will drop—are forced to cover their positions and buy the security back when the price rises unexpectedly. The resulting demand usually forces the price to rise even higher, exacerbating the situation and the potential losses for short sellers. Investors who believe a…

Like commodity, income and pink sheet equity offerings, cyclical stocks are a very specific type of corporate listing. Featuring unique tendencies in price action, cyclical stocks are frequently targeted for active speculation as well as portfolio diversification. What Is A Cyclical Stock? A cyclical stock is an equity product that experiences pricing fluctuations in concert with the prevailing macro economic trends of the day. Accordingly, stock prices typically exhibit bullish…

"FANG" is an acronym for four U.S. technology stocks—Facebook, Amazon, Netflix and Google—that have been among the best performers in the stock market since the bull market began in 2009. James Cramer, host of CNBC's Mad Money program and the founder of TheStreet.com, is credited with coining the term to describe these tech stocks in 2013. For some, the list also includes Apple, making it "FAANG." Here are the market…

What Is Floating Stock? Floating stock represents a company's shares that are currently available for trading. Simply put, it is the number of shares that investors can trade in an open market. Investors can calculate floating stock (also known as share float) by taking shares outstanding and then subtracting both restricted shares and closely held shares. By determining a figure for floating shares, investors can establish how many shares are…

Fiat money has value because the government has declared that it does. This kind of money has no intrinsic value, but since a government supports it, fiat currency can be exchanged for goods and services. Let's now look at exactly what fiat money is, how it can be used, and its benefits and downfalls. Money Basics Money comes in many different forms. However, anything that is used as money needs…

Stocks come in two varieties. "Common stocks" are indeed the most common, hence the name. For most people, the words "stocks" and "common stocks" are nearly synonymous terms. However, there is another type of stock, known as "preferred." While both common and preferred offer ownership shares in a company, there are big differences between the two. In a nutshell, common stocks offer the greatest reward but at the greatest risk.…

What Is A Balance Sheet? The balance sheet is one of the three most important documents—the other two are income statement and the statement of cash flow—that companies produce that enable their investors to examine and assess their financial health. Publicly traded companies are required to produce and publish these documents regularly, usually once per quarter, to shareholders as well as to tax and regulatory authorities. The balance sheet shows…

What Is A Warrant? A warrant is a security that gives the holder the right to purchase a company's stock or bond at a specific price by a certain date. Warrants are similar to options, but warrants are issued directly by a company, usually as an incentive to get investors to buy the company's stock or bonds. Options, by contrast, are a contract between two parties in which the holder…

What Is A Convertible Bond? Convertible bonds are a hybrid security that act mainly as a bond but also give the holder the right to convert the security into common shares of the issuing company at certain times and usually at the investor's option. Unlike traditional corporate bonds, convertibles offer investors a limited opportunity to participate if the stock of the issuing company rises. If the company's stock falters, investors…

What Is Cost Accounting? Cost accounting is a process companies go through to determine how much it costs to manufacture a product or provide a service in order to decide: how much they should make, the price they should charge and how profitable the product or service is. The main goal of cost accounting is to determine the breakeven point, above which sales revenue exceeds costs and the company makes…

What Is An Income Statement? The income statement is one of the main financial statements that companies prepare regularly to measure their financial health. The income statement—also known as a profit and loss statement (P&L)—shows the company's profitability over a given period of time. Most public companies prepare income statements quarterly, and private companies may do it more frequently, such as monthly. Investors use income statements to discern the basic…