Definition/Explanation...

This is another way of saying: professional buying. A stock is under accumulation when volume expands on days when price moves up.

Agriculture Stocks

This is Jim's famous mantra, that Accounting irregularities equals 'sell'...   In other words, if a stock is doing well and then announces that it has found, or is restating its earnings, due to accounting irregularities, then you should sell that stock.

Growing in size by the external addition of a second company that is being acquired by the first company. Often used to refer to an acquisition which is expected to increase earnings per share.  Does not dilute the value of the stock of the first company or reduce its earnings per share.   Note:  The opposite of an accretive deal is a dilutive deal.

Back to top

A company that supplies other companies as a vendor of equipment or services that support multiple companies in a growing industry or sector.   Usage:  ADC Telecommunications Inc. (ADCT) is an arms dealer, okay?... between telecom and cable... they supply both sides. So, as long as the big boys are fighting over share, ADCT wins...

Alpha measures a stock's average monthly move over the past 12 months if the S&P 500 index is unchanged during this 12-month period. For example, a stock with a high alpha of 7 would be expected to rise 7% in a month given an unchanged S&P 500 index.

Known as ADRs, these securities are created by a U.S. bank and represent foreign securities that trade in the U.S. financial markets.

Companies send their shareholders an annual report at the end of a fiscal year. The magazine or brochure sizes up company operations and displays earnings, sales, balance sheets and financial footnotes.

Arbitrageurs make their living by seizing on price differences for a security traded on a different market or in a different form, such as an option or a futures contract. Someone who buys, say, a soybean contract on one market and sells a soybean contract on another exchange is practicing arbitrage by locking in a profit.

The practice of taking advantage of a price differential between two or more markets (or between the current share price of a stock, and the proposed buyout or acquisition price per share of a stock): a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between those market prices.   When one company buys another, the arbitragers short the acquirer, and go long the company that's being bought.  That puts pressure on the acquirer - the buyer - and sends its stock lower.

This is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this is the quoted offer at which an investor can buy shares of stock.

Average daily volume of trading of that particular security. This is a helpful indicator when comparing volume levels for that day to its average. It could indicate that very few shares are being traded due to a holiday or other reason, and why there might be more volatility in a stock price that day.

Back to top

Definition/Explanation...

This originates in the Louisiana bayou area.  It is an expression of excitement and positive greeting from natives from that southern area.  Jim Cramer adopted this expression when a caller from New Orleans, Louisiana yelled out, "Boo-yah Cramer!"  Jim liked it so much, he adopted it into the Mad Money program.  (and, yes, Jim does give full credit to this caller)

To do a 'mon-back - indicated by Jim, when he says the stock is so good, that he would do a 'mon-back' on the stock... In other words, this is the sound someone would say to a truck driver, "Come on back... " as he is "backing up the truck" to load up on his cargo. Translation for buying stocks: This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point. 

Back to top

That bad news has already been taken into consideration, and the share price is down already because of it.   Usage:  The stock got more attractive, because the decline in earnings became what we call "baked in" to the share price.

Original investment, or the average share price of several stock purchases, sometimes referred to the "average basis."   Usage:  My cost basis in that stock is $42,000, but I am up $10,000 as of today, because the quoted value is $52,000 at current prices.

This is a common phrase used by Jim Cramer on his Mad Money show, referring to the investing state of mind that you must maintain...  After you do your own homework, you can be a bull on a stock and make money, a bear on a stock and make money or, if you blindly hold onto a stock that has increased significantly, and created a lot of profit for you, you can "get slaughtered" from being too greedy.   If you make money in a stock, Jim Cramer recommends that you reduce your position either entirely, or partially, by taking some off the table.    Usage:  Here's my take on Mastercard (MA)... If you own it, you can continue to own it, but you should have sold some... you should have locked in the gain. We first started recommending it from $60, down to $40... If you haven't taken any off the table, bulls make money, bears make money, and hogs get slaughtered... (from the 2/8/08 Mad Money show)

Back to top

 
This is a fund that buys common stock, preferred stock and bonds.

A simple calculation that takes net income divided by shares outstanding to get per-share earnings.

In the bond market, the smallest measure used for quoting yields is a basis point. One basis point is 0.01 percent of a bond's yield. Basis points also are used for interest rates. An interest rate of 5 percent is 50 basis points greater than an interest rate of 4.5 percent.

The aggressive shorting of a stock, or group of stocks, usually by hedge funds, driving stocks down in share price, in a strategic fashion, thus causing them to fluctuate dramatically; usually at the expense of the individual investor who does not know that it is an orchestrated activity, with implied forces that go beyond the normal market forces of supply and demand and typical market events.  [See Jim Cramer's comments on Bear Raids, from his 3/20/08 show here.]

The stock of a company recognized as a leader in its industry. For example, IBM is considered a bellwether stock in the computer field. Often, the fortunes of an industry are reflected in the behavior of its bellwether stocks.

This measures the volatility of a share of stock. A high beta stock, for example, will rise more in value than the stock market average on a day when shares in general are rising. And it will fall more sharply than the average on a day when shares are falling. The Standard & Poor's 500 Index of stocks, an index that represents large-company stocks, has a beta of 1.

This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically speaking, this is the available price at which an investor can sell shares of stock.

Back to top

Bonds are debt and are issued for a period of more than one year. The U.S. government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.

Book to bill is the semiconductor book to bill ratio. It reports on the amount of semiconductor chips that are booked for delivery as compared with those that companies already have billed for.

A company's book value is total assets minus intangible assets and liabilities such as debt. Book value might be more or less than the market value of the company.

This is one of those technical terms you hear in a trading room. It simply demonstrates how broadly a market is moving. When three-quarters of the stocks on the New York Stock Exchange, for example, rise during a given day, an observer might say the stock market had good breadth. Often, observers will measure the number of stocks advancing against the number declining as one way of monitoring breadth.

Enter here the price you paid for a security. If, for example, you paid 8 1/4 a share for a security, enter 8 1/4.

As in bombed with bombshells....   Usage:  We are seeing a major selloff in retail. We're seeing a major selloff in the banks. We've got a bunch of downgrades there... I don't know if I want to buy the banks, until we get the Ambac (ABK) plan hammered out, or something like that, although I think the banks are going to bounce back. But retail shouldn't be shelled nearly as hard as it's being shelled right now... (2/4/08)Growing in size by external addition. Often used to refer to an acquisition which is expected to increase earnings per share.

Incoming revenues that are expected at a company, based on signed contracts and/or orders.  Usage:   They have a great book of business that provides great future visibility, all of which make it a great stock where we should not see any earnings disappointments.

Back to top

Definition/Explanation...

This security gives investors the right to buy a security at a fixed price within a given time frame. An investor, for example, might wish to have the right to buy shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.

CDs, as they are called, pay interest to investors for as long as five years.

This shows the change in price of a security from the previous day's closing price. For instance, -1 1/8 means the security has fallen $1.12.

Back to top

A person who has full operational responsibilities for the day-to-day activities of an organization.

A closed-end fund sells a fixed number of shares to investors. Those shares sell on an exchange and vary in price, depending on demand for the fund. A fund's shares, for example, can trade below their net asset value or above their net asset value - depending on investors' demand for the shares. Country funds that represent shares in a specific country or region, such as Italy or France, are often closed-end funds.

This is a fee an investor pays a broker for buying or selling securities.

A commodity is food, a metal or another physical substance that investors buy or sell, usually via futures contracts.

 
These are securities that represent equity ownership in a company. Common shares let an investor vote on such matters as the election of directors. They also give the holder a share in a company's profits via dividend payments or the capital appreciation of the security.

When you evaluate a stock or a sector or industry by comparing it to similar stocks in similar industries.   Usage:  (from the 3/3/08 Opening Segment recommending Agnico-Eagle Mines Ltd. (AEM)...

The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CPI every month.

The stock of a company that produces consumer-oriented products like food, beverages, tobacco, pharmaceuticals.

Back to top

Original investment, or the average share price of several stock purchases, sometimes referred to the "average basis."   Usage:  My cost basis in that stock is $42,000, but I am up $10,000 as of today, because the quoted value is $52,000 at current prices.

This shows the currency that a security trades in, such as USD for U.S. dollar.

If a security has a dividend, the yield is the price of a stock dividend. A $10 stock that pays a 50 cent dividend for the year has a 5% yield.

The stock of a company whose fortunes are closely tied to the cyclical ups and downs of the economy in general. For example, General Motors is a cyclical stock since its business of selling autos is highly dependent on a robust economy with its attendant high levels of employment, rising personal incomes, etc.

Raised in Queens, New York City, Icahn developed a reputation as a great corporate raider after his hostile takeover of TWA in 1985.[2]

Speaking before the Senate Judiciary Committee on Airline Consolidation on February 7, 2001, Representative Gregory W. Meeks spoke of, “… an [airline] industry that once-upon-a-time, not too long ago, was represented by two individuals whom I believe have the lowest of character and no integrity. Two individuals who intentionally bankrupted successful companies for their own personal gain. As many of you know, I am speaking of Carl Icahn and Frank Lorenzo.”

Icahn was educated at Princeton University (A.B., Philosophy, 1957) and New York University School of Medicine, where he dropped out before graduation.

Icahn began his career on Wall Street in 1961. In 1968, he formed Icahn & Co., a securities firm that focused on risk arbitrage and options trading. In 1978, he began taking control positions in individual companies. He has taken substantial or controlling positions in various corporations including: RJR Nabisco, TWA, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Uniroyal, Dan River, Marshall Field, E-II (Culligan and Samsonite), American Can, USX, Marvel Comics, Revlon, Imclone, Federal-Mogul, Fairmont Hotels, Kerr-McGee, and Time Warner... and most-recently, Motorola and Blockbuster.

Icahn made extensive use of financier Michael Milken's junk bonds. After the junk bond and overall market bust in the early 1990s, Icahn played a lower-profile role in the business world, preferring to be less public in his dealings.

In recent years, he has become much more of a public shareholder advocate, pushing boards of trustees to improve the value of their stocks, by buying large quantities of a stock, such that he would have a significant enough stake in the company to be able to force action by the management and boards of several companies.

 Read more about Carl Icahn >>

Certificate of Deposit.  Where a bank promises to pay you a set percentage amount of interest, over a specific period.  The downside is that you cannot cash in the CD prior to the end of that period (i.e., without a significant penalty), and with the additional risk (in earnings potential) is that the overall interest rates and earnings potential possible through other investment vehicles may change during that same period.   Example:  Banks commonly offer certificates of deposit for optional periods of 3-month, 6-month, 1-year, and 5-year CDs, where the interest rate is significantly different for each period, based on the assumed risk (from the bank's perspective) that the interest rate trend is either going up or down.

Back to top

The same or similar type of industry or business or stock type.   Usage:  That stock (i.e., Deere (DE) is in the same cohort as other agricultural giants.

Compound Annual Growth Rate (see it in annual reports)...

Comparisons.   When comparing this year's overall numbers or, as used in retail, a company's "comp store numbers", it refers to the comparison to this year's performance versus the same period, one year ago.

What Jim Cramer refers to as "Chinese Communists"... as the government that Chinese-based companies cannot completely operate autonomously from...

A stock that has pent up pressure to go up - or spring up, as if a spring that is compressed - due to pending positive news, or given that it has been unfairly sold down and, therefore, has significant upward pressure to go higher soon.

Go down.   Letting a stock come in, refers to the prediction that a stock will decline, so you should be patient and let a stock come down before buying it.    Usage:  It's interesting, Nordstrom Inc. (JWN) got upgraded... I don't want to buy that. You've got to let that come in...
(from the 2/4/08 Mad Money show)

Try to guess what to say, or recommend, with comments off the cuff...  

Used in the oil and oil refining investment sectors, the crack spread represents the theoretical refining margin. If a crack spread is a positive number then the price of the refined products is higher than that of crude oil, the raw material, and the spread is profitable. If the spread is a negative number, the products are priced at less than the cost of crude and are not profitable.
The 3-2-1 crack spread is a commonly used formula in the oil industry, expresses the theoretical margin in dollars per barrel.

A stock that depends heavily on the economy.   Usage:   Some of you are probably interested in a great, steady story...  that seems to have very little cyclicality... although, at times, there was some cyclicality... meaning, it's depending on the economy...

Back to top

Definition/Explanation...

When a company is paying down debt, or making efforts to pay off its debt.

Established by a public company, this is a special quarterly distribution of cash back to shareholders for each share of stock that they own.  A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock selling for $20 a share with an annual dividend of $1 a share yields the investor 5 percent.    This can also be announced and distributed to shareholders as a special one-time "special dividend" set at a usually higher flat amount per share.   Usage:   Although it had a quarterly dividend set at less than 10 cents per share, TD AMERITRADE (AMTD) announced that it would award a special dividend of $6.00 per share owned, on 1/25/06.

This is the highest price that a security has traded at during the day.

This is the lowest price that a security has traded at during the day.

A lowering of a country's currency relative to gold and/or currencies of other nations. The opposite is revaluation.

 
The common type of bond issued by large, well-established organizations. Holders of debentures representing corporate indebtedness are creditors of the corporation and entitled to payment before shareholders upon dissolution of the corporation.

Back to top

Corporate securities (preferred shares or bonds) that are exchangeable for a set number of another form at a prestated price.

A debt that is junior in claim on assets to other debt, repayable only after other debts with a higher claim have been satisfied.

 
A calculation that includes stock options, warrants and convertible securities to get per-share earnings.

This is the interest rate charged by the U.S. Federal Reserve, the nation's central bank, for loans to member banks. The Fed, as it is called, alters rates to increase or decrease the growth of the nation's economic output.

This is another way of saying: professional selling. A stock is under distribution when volume expands on days when price moves down.

 
This is the best known U.S. index of stocks. It contains 30 stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing. There are thousands of investment indexes around the world for stocks, bonds, currencies and commodities.

A measure of a bond price's sensitivity to a 100-basis point change in interest rates. A duration of 8 would mean that, given a 100-basis point change up/down in rates, a bond's price would move up/down by 8%.

If the debt-to-capitalization ratio is 15%, this means that the company's total debt is 15% of its total market capitalization.

Yield is commonly used to describe the dividend yield of a stock.  This is calculated by determining a stock's stated dividend amount per share, and then taking the current share price, and dividing that price by the stated dividend, therefore determining the resulting percentage amount that the dividend represents - as a percentage of the current share price - or, the current "dividend yield."   As the share price fluctuates, so does the calculated dividend yield, because it is always in direct relation (i.e., relative to) that share price.    Therefore, there is an inverse relationship of share price to dividend yield.  As the share price goes up, the dividend yield (i.e., percentage) will always go down, and vice-versa.    Example:   If the stock,  Weyerhaeuser Co. (WY) has a current dividend of $2.40 per share, and its current share price is $62.43, then its resulting dividend yield is 3.84%.  If the share price were to shoot up to $100, and the dividend amount of $2.40 stayed the same, then that dividend yield would go down to just 2.40%.

Back to top

Definition/Explanation...

Earnings before interest, taxes, depreciation and amortization.

Earnings per share, known as a stock's EPS for short, as it is reported by the company.  This is used to determine a stock's P/E.

EPS, as it is called, is a company's profit divided by its number of shares. If a company earned $2 million in one year had 2 million shares of stock outstanding, its EPS would be $1 per share.

This is an American dollar that has been deposited in a European bank. It got there as a result of payments made to overseas companies for merchandise.

This literally means "without dividend." The buyer of shares when they are quoted ex-dividend is not entitled to receive a declared dividend.

The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit company documents to investors. Those documents, which are available via DBC's Smart Edgar service, include 10-Qs (quarterly reports), 8-Ks (significant developments such as the sale of a company unit) and 13-Ds (disclosures by parties who own 5% or more of a company's shares).

Market capitalization minus cash, plus debt.

 
There are three main U.S. stock exchanges on which securities are traded. AMEX is the American Stock Exchange. NASDAQ is the National Association of Securities Dealers. NYSE is the New York Stock Exchange.

Back to top

Definition/Explanation...

Five stocks related to agriculture... We call them the Fab Five on this show... Mosaic (MOS), Potash (POT), and Agrium (AGU) on fertilizer...  Monsanto (MON) on the seed side...   And I think, best of all, Deere (DE), which I have to say may be the single best manufacturer in America... not of farm equipment, but of all equipment, selling into the single best market in the world... agriculture.

This is the highest price that a security has traded at during the last 52 weeks.

This is the lowest price that a security has traded at during the last 52 weeks.

This is the range of prices - the lowest to the highest price - that a security has traded at during the last 52 weeks.

As in,   Usage:  Buying that stock would be like trying to catch a falling knife.   It would cut you if you try to catch it, as it's going down...

Literal translation from Spanish, meaning "on fire"... indicates that a stock is really doing well, really hot right now.   Usage:  That stock has been en fuego!  It's been up 8 straight points in the last two weeks.

Shares outstanding.   Usage:  And, now that the bad news seems to be in the past for Black & Decker (BDK*), it's stock is benefiting from the huge reduction in shares that BDK's mammoth buyback has made, and made happen over the last four years...  They've basically almost cut the float by a third!... There's just not that much supply out there. So, when everyone's trying to buy this one, it just shoots up!... (From the 2/1/08 Mad Money show)

This is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. The Fed Funds rate, as it is called, often points to the direction of U.S. interest rates.

The so-called float is the number of shares of a security that are outstanding and available for trading by the public.

An estimated bottom point for a company's share price.   Usage:    I think the guidance was sandbagged... I think the stock has got a floor here. I want to buy Riverbed Technology, Inc. (RVBD). I like their technology... (from the 2/7/08 Mad Money show).  The opposite is a projected "ceiling" for a stock - the estimated "top" point for a company's share price.

This is an agreement that allows an investor to buy or sell a commodity, like gold or wheat, or a financial instrument, like a currency, at some time in future. A future is part of a class of securities called derivatives, so named because such securities derive their value from the worth of an underlying investment.

Back to top

Conventions, rules and procedures that define general accounting practice, including broad guidelines as well as detailed procedures.

The stock of a company whose business is considered recession-resistant and also possesses an above-average growth rate.

Back to top

Definition/Explanation...

This is Jim's assessment that, given the market conditions surrounding/circa March 2008, that these four stocks cannot be allowed to fail, as they are perilously similar in problems to Bear Stearns (BSC), before it was bailed out - albeit via a fire sale at $2 a share (initially) - by JPMorgan Chase & Co (JPM).   They include:  UBS (UBS), Merrill Lynch (MER), Citigroup (C), and Washington Mutual (WM).

Negative implications or take-aways which can be applied to a company's quarterly earnings report.   When a company reports a quarter that's full of great looking numbers, but
the quarter isn't clean... it's full of one-time gains, or it's not sustainable...   Usage:    That company's earnings report had way too much hair on it.    I am telling you that Exxon Mobil (XOM) had hair on it, meaning not everything was perfect... XOM is a great example of what a quarter with too much hair looks like... (from the 2/4/08 Mad Money show)

In the "House of Pain" with a stock... Very simply, your stock is doing poorly, causing you pain.   Usage:  "I am really in the house of pain in that stock."

In the "House of Pleasure" with a stock... Very simply, your stock is doing poorly, causing you pleasure.   Usage:  "I am really in the house of pleasure in that stock."

Individual stock traders/investors who watch Mad Money, and need to know stock symbols and other more basic information about a stock, to be able to do your own homework; beyond what the pros may take for granted.   Usage:  "For all you homegamers, that stock symbol is G-O-O-G for Google (GOOG)"

Taken from a sailing term... The form hand over fist, instead of the original hand over hand, is an obvious and natural variant (close your hand around a rope and you do, indeed, make a fist), to 'speedily; increasingly', the sense in "making money hand over fist"...   Usage:  That company is making money hand over fist...

This is the day's highest price of a security that has changed hands between a buyer and seller.

Taken from a casino term, this is the money remaining over and above your initial investment (or bet), or your base.   

Back to top

Definition/Explanation...

A passively-managed mutual fund that is structured - with its individual stock holdings - to mirror the performance of a specific index, such as the Dow Jones Industrial Average (i.e., the Dow), the S&P 500, or the Nasdaq.

The initial public offering (i.e., IPO) of stock is the set number of shares of stock and the price that is fixed as the IPO price for that initial offering, on their IPO date.   For example - especially incredible given its performance to date -  Google (GOOG)'s IPO was set at $85 per share in April of 2004.   Google now trades at this price.

(Pig Latin usage)...Nix...   Usage:   "I like (one stock), but ix-nay on (that stock)..."

An IPO is stock in a company that is being traded on an exchange for the first time. Investors first read a prospectus that describes the potential of the company and the risks of investing in it.

 
These are directors and senior officers of a corporation -- in effect those who have access to inside information about a company. An insider also is someone who owns more than 10 percent of the voting shares of a company.

A bond with a speculative credit rating of BB or lower is a junk bond. Such bonds offer investors higher yields than bonds of financially sound companies. Two agencies, Standard & Poor's and Moody's Investor Services, provide the rating systems for companies' credit.

Back to top

Definition/Explanation...

This indicates the most recent trade of a security.  Also indicated as the "Last Trade" or last price paid for the stock that is trading between 9:30am and 4:00pm on normal trading days, Monday through Friday.  If outside of those normal business hours, this Last Trade price is also the closing price from the most recent trading session.

A LEAP is a long-term option contract for a company's stock. They usually run for one year or more and are available on several U.S. exchanges.

Jim Cramer uses this phrase frequently on his Mad Money show, when he refers to "taking profits off the table, and letting the rest run."  This indicates that, after selling stock to lock in your profits, you then hold onto the remaining stock, and let it work for you. 

Investors can place an order to buy or sell securities at a set price. The trade can take place only at that price or a lower one.

Investors who go "long" simply own stock or another security. It is a term that means the opposite of "short," in which investors are short a stock or security because they have borrowed it and sold it to someone else.

This is the day's lowest price of a security that has changed hands between a buyer and a seller.

Buy a stock in steps, or legs, where you do not buy your total position all at once, but buy the stock incrementally, over a period of time.   An example would be to have the goal of buying 100 shares, and buying the stock 20 shares at a time, for a total of five transactions, or legs, of buying that stock.    An example, taken from the 3/20/08 Lightning Round, which refers to AGU, where Jim Cramer said:  Agrium (AGU)...  you buy a little...  That's my advice... buy some at $62, and then wait until $57... use a 5-point scale...  to be able to buy some AGU... not more aggressive than that...   In this example, Jim is recommending that, for AGU, he suggests buying that stock by legging into it, at $5 increments in its share price... at $62, near the current price, and then waiting to see if it goes back down $5, to $57, and then buying the next leg of your goal amount for your total position...  

Back to top

Holding a stock as a longer-term investment, or have already held a stock and continue to hold it.

See sandbagged.

When a company borrows money.

Back to top

Definition/Explanation...

To Back up the truck - indicated by Jim, when he says the stock is so good, that he would do a 'mon-back' on the stock... In other words, this is the sound someone would say to a truck driver, "Come on back... " as he is "backing up the truck" to load up on his cargo. Translation for buying stocks: This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.

This allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes.

Also called, "market capitalization"...  Refers to the total stock value, derived by multiplying the number of shares outstanding by the price per share.   Usage:  That stock has 3 million shares outstanding, and its current price per share is $10.  Therefore its "market cap" is currently $30 million.

Mergers and Acquisitions.

Multiple contraction means the market will start paying a lot less for a stock, for the same amount of earnings. In other words, the market has decided that, even though the earnings estimates aren’t coming down, they are just going to pay less for them.  Usage:  On Jim Cramer's 3/6/08 Mad Money show, he gave an example of multiple contraction, among defense stocks, where their prices actually went up since July of 2007 to March of 2008, because their stock prices had actually gone down, but had not kept pace with the relative rise in their earnings... "here's a great situation, where the multiples have gotten undeservedly smaller, while their earnings are going up..." 

(M)ultiple = (P)rice divided by (E)arnings or the price-to-earnings ratio that is shown on so many stock reports as their P/E's.   Usage:  The multiple, or P/E, of Google (GOOG) is roughly half that of its biggest competitor, Yahoo! Inc. (YHOO)...  therefore, it could be considered a much greater value as an investment.  

Back to top

This is an order to buy or sell a security at the current trading price.

A slimy practice done by some mutual fund money managers, where they actually pay more for a stock to bid it up - or mark it up - in price at the end of a quarter or year-end, so that they can report the final (higher) stock price in their portfolio, which will then reflect better overall performance in that particular stock.  This is one of those slimy practices that a lot of people like to pretend doesn't exist... but it's not technically... Well, the SEC (i.e., U.S. Securities and
Exchange Commission) will prosecute for it... It moves stocks, and a lot of fund managers do it...  See a complete reference to this practice - and how Jim Cramer said you may be able to make money off of it - in this segment of MadMoneyRecap.com from 12/21/07, here...

Back to top

Refers to Microsoft (MSFT)

The rate of acceleration of an economic, price or volume movement. An economy with strong growth that is likely to continue is said to have momentum.

Money markets are for borrowing and lending money for three years or less. The securities in a money market can be U.S. government bonds, Treasury Bills and commercial paper from banks and companies.

The stock of money in the economy, consisting of currency in circulation and deposits in checking and savings accounts.

 
Using this term, such as "it doesn't move the needle" indicates that the event or the theme is not a big enough (or will not be a big enough) part of that overlal company's buinsess to make a difference in its stock price.  For example, on his 10/19/09 Mad Money TV show, Jim Cramer used this expression to indicate that the move to a "smart grid" technology to make energy transmission more efficient is not a large enough part of General Electric's business to "move the needle" (or have a significant enough impact to its earnings) to be a play on the stock price of GE going up, but that it would be a serious play to "move the needle" in the stock of Itron, Inc., symbol ITRI.

 
A moving average is an average of a security's price over a specific time period. The average changes, for example, on a 30-day moving average, so that it includes the most current 30 trading days. Moving averages often indicate levels of support or resistance for a security.

State or local government offer muni bonds, as they are called, to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.

Mutual funds are pools of money that are managed by an investment company. They offer investors a variety of goals, depending on the fund and its investment charter. Some funds, for example, seek to generate income on a regular basis. Others seek to preserve an investor's money. Still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares. Many funds these days are no load and impose no sales charge.

Back to top

Definition/Explanation...

Listed as NAV in mutual fund listings, net asset value is the market value of a fund's shares. It is calculated at the close of trading.

This is the difference between a day's last trade and the previous day's last trade.

This is the difference between the total price you paid for a security, with the brokerage commission you paid, and the current value. It will show either a profit or a loss.

Back to top

Actually derived from the term, "Nine ways from Sunday" (also used in several other ways, "Seven ways from Sunday", "Five ways from Sunday", etc. which simply means "completely."  So, to sell a stock "nine ways to Sunday" is to sell it completely.   Usage:  I want you to sell that stock nine ways to Sunday!

This is the number of stock shares that a company has outstanding.

Normalized Earnings Power is the true measure of the sustainable operating profit potential of a business model giving effect to successful strategy implementation in a steady-state economy.  However, current profits are usually dampened by transitory events disguising the true economic potential and earnings power of the company, as indicated by its current stock price multiple.

Enter here important notes, such as your reason for buying or selling a security.

The opposite of baked in.   News or an upcoming event that the current share price of a company does not yet reflect.    Usage:    The strong flu season is what I call, "not in the
numbers"... meaning no one's estimating it - from Wall Street - no one's estimating it will be this good... or bad, depending on your perspective... The phrase that's important here about Quidel Corp. (QDEL) is that the flu season is "not in the numbers"... That's the power of "not in the numbers" information...  (from the 2/8/08 Mad Money show)

The New York Stock Exchange.

The beta is the covariance of the stock in relation to the rest of the stock market. The Standard & Poor's stock index has a beta coefficient of 1. Any stock with a higher beta is more volatile than the market. Any with a lower beta does the reverse.

Estimated earnings per share.   Usage:  They will find it very difficult to make their numbers for the fourth quarter.

Back to top

Definition/Explanation...

Relating to the United States government, and relates to how the Bush administration would do almost anything to be pro-business, and support the corporation, such as approving the merger of two very similar companies, such as Exxon and Mobil, without anti-trust objections.

Back to top

The price at which a security opens the trading day. Generally, the opening price reflects the previous day's close -- unless extraordinary news or demand to buy or sell have occurred before the market opens.

A fund that sells its shares at net asset value is an open-end fund. It creates shares as investors demand them. Investors buy the shares at their market price. Most mutual funds are open-end funds. Those that aren't are closed-end funds that sell a fixed number of shares to investors.

An open order is any order to buy or sell securities that has yet to be executed.

Back to top

These contracts give the holder the right to buy or sell securities at a set price or a set period of time. Investors often use them to protect, or hedge, an existing investment. An option is part of a class of securities called derivatives, so named because these securities derive their value from the worth of an underlying investment.

The O-T-C market is for securities not listed on a stock exchange.

Options expiration week, also known as simply, "expiration week," is the week, the end of which expirations occur for the period of options contracts that have been purchased.  This is the point when those options can be exercised, with puts or calls, or allowed to expire, given they are not to the financial advantage of the put or call option contract holder.  Usually, during options expiration week, stocks tend to go higher as the end of the week nears, providing upward price pressure for stocks (and market indices) as a whole.

See Par.    Usage:  That stock is headed for one-hundo.

A stock rally, where stocks go up generally, because the market has been oversold in many sectors, therefore, causing a "bounce" effect, because the stocks are thought to have sold off much more than they should have, and are bouncing back up in the form of a rally, given that they were oversold to much lower prices than were justified by the bad news either in the economy or marketplace in general, or for that stock specifically.

To sell part or all of a stock position.   Usage:   After making that much profit, you have to take some off the table.   Jim Cramer's specific recommendation is to follow the practice of taking all or most of your profit off the table, and letting the rest run, thereby playing with the house's money...

Back to top

Definition/Explanation...

$100 a share.    Usage:  That stock is headed for par.

Buy some stock.      Usage:   Before the conference call, and before the earnings report comes out, I think you want to put some on.

The date on which a declared stock dividend or a bond interest payment is scheduled to be paid.

This calculates the percentage change in the price of a security from the previous trading day's closing price.

This is your profit or loss expressed as a percentage of your original investment and including the cost of your brokerage commission. If you bought 1,000 shares of a stock at $10, paid a $100 commission and saw the shares rise to $14, your percentage would be 39.6 percent.

Back to top

Preferred shares give investors a fixed dividend from the company's earnings. And more importantly: preferred shareholders get paid before common shareholders.

This generally refers to extra money an investor is willing to pay to buy or sell something. For a bond, a premium is the amount for which the security sells above its par value. For a stock, a premium is the amount that a security's price exceeds those of its peer group, or comparable stocks.

This is the closing price of a security from the previous trading day.

The interest rate banks charge, determined by market forces affecting a bank's cost of funds and the rates the borrowers will accept. This rate tends to become standard for the banking industry when a major bank raises or lowers its rate.

This security gives investors the right to sell fixed number of shares at a fixed price within a given time frame. An investor, for example, might wish to have the right to sell shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.

Price-to-earnings ratio.   A stock has a price-to-earnings ratio: the share price divided by earnings per share for the company's most recent four quarters. A projected P/E divides the share price by estimated earnings per share for the coming four quarters.   For example, if the stock price is $100 per share, and the earnings per share (EPS) is $7 per share, then the calculation to get the stock's P/E is $100/$7, resulting in P/E of 14.29.   Comparing the P/E's of similar stocks is helpful to try to determine the relative strength of a stock, as compared to its reported earnings.  Comparing recent P/E's of similar agriculture sector stocks, Mosaic (MOS) - with a 46.72 P/E, Potash (POT) - with a 46.03 P/E, and Agrium (AGU) - with a 20.33 P/E... May indicate that AGU is in a better position for its stock to rise, given its lower P/E. 

The PEG ratio is the P/E ratio divided by the earnings-per-share growth (EPS).  Thus, the formula is P/E divided by EPS growth.

Determine the growth rate, and then look at the price-to-earnings (P/E) multiple... We're willing to pay twice the growth rate...   Usage:  UBS says First Solar, Inc. (FSLR) can earn $10 a share in 2010... Now that's okay... At this point in the year, when we're about to switch the calendar to 2008, it's okay to look two years out... Do you know, in 2010, this company's trailing only 24x earnings?... with a 56% long-term growth rate... The multiple is chump change... Remember how we look at it on Mad Money... We look at the growth rate, and then we look at the price-to-earnings (P/E) multiple... We're willing to pay twice the growth rate... We should be willing to pay over 110 times earnings for FSLR...

When you hit one pin, you find out what other pins are going to do, or you can predict that other stocks in the same industry or sector might benefit (or suffer) from the news that affected that original stock.   Usage:  "Let's look at the possible pin action there might be in other internet stocks from the potential takeover of Yahoo! Inc. (YHOO) by Microsoft (MSFT)"...  or...  Since Verizon (VZ*) is an enormous behemoth of a company, there's got to be some pin action!  There's got to be some pin action here. If VZ's doing well, then so are a lot of other ancillary companies that supply VZ.

Definition/Explanation...

Usage:  We recommended that stock 50 points ago (i.e., when it was $50 lower in price)

Closing price from the previous, or last, trading session.  Indicates the final trading transaction price from that session.  Usually, unless there is an active extended-hours trading session, this closing price is typically the opening price the next market day.

Prior to an Initial Public Offering occurring, the word on the Street regarding what the initial price range for the IPO may be.   Usage:  The Price Talk is that the new Visa Inc. (V) IPO pricing will be from $37 to $42...

Referring to a bull's horns, pulling in my horns is a reference to hearing news or events that cause one to become less bullish about a particular stock or sector.

See Puts and Calls.

Dollars.  This is a bit of an outdated stock market term, which is how stock performance was measured by going up or down a certain amount of points.   Usage:  That stock has been up 8 straight points the last two weeks.  (i.e., the stock has gone up $8 a share in the last two weeks).

Back to top

Where the price of a stock is currently at a level where perfection is expected.  Therefore, if an upcoming earnings report shows any surprises, or disappointments of any kind, it would then be expected to react sharply, by going down.   Usage:   I had been worried that it was priced to perfection... If Benioff didn't deliver a blowout of blowouts, Salesforce.com (CRM) would crater... as momentum investors, and weak hands, desperately sold the stock down... (from the 3/7/08 Mad Money show)

To get to the stock price, you have to figure out what the earnings will be... and then multiply them by something... the multiple...  Price (P) = Earnings per share (E) x Multiple (M)    So the stock price should be = Earnings x Multiple.... (M)ultiple x (E)arnings = (P)rice of the stock that you pay... So, if the earnings go higher, then the stock price goes higher...   Example:    So, the issue is solving for M, right... and the M is a subjective blend of consistency, execution, visibility and, ultimately, the growth of both the company and the business. That's how you arrive at a price. And what I'm saying is that the M, the multiple, for Dominos Pizza Inc. (DPZ) can't be as good as the multiple for Papa John's International Inc. (PZZA), because DPZ is a complainer about the environment and didn't deliver, with the exact same ingredients, and PZZA executed and delivered.

Buy a stock.   Either to just decide to do it and "shoot" - to buy a stock.

A Jim Cramer original verb... implying that one company is pants-ing another, similar to beating them so badly, that they beat the pants off their competition...

An article appeared today in The Wall Street Journal about (stock)...  Or, if a analyst firm, like Merrill Lynch or Sanford Bernstein "puts out a piece" about a stock, this indicates that they have done extensive research about a stock, and have published their summary findings in a research report or article about that stock.

A call is a contract that gives the holder the right to purchase a given stock at a specific price within a designated period of time. It is the opposite of a put, which is a contract that allows the holder to sell a given stock at a specific price within a designated period of time. Puts and calls are both types of privileges, or options, that add flexibility to the securities market. In return for a put or call, the investor pays a fee to the potential buyer or seller of the stock (the maker), who, in turn, pays a commission to the broker who brought the two parties together. Calls are generally used by investors who want to profit from a rise in stock prices but, at the same time, want to avoid sharp losses. Thus, an investor holding a call chooses one of two options. If the market advances he can buy the designated security at the lower price quoted in the call, and then sell the stock at a profit. If the market declines, he can simply exercise his option not to buy the stock, thereby avoiding a major loss, the only expense being the cost of the option. A put is used by investors seeking to profit from a fall in stock prices. For example, an investor holding a put for a stock that declines in price is able to sell the stock at the higher price quoted in the put, thereby profiting by the amount the stock declines from the put price; if the stock price rises the investor can lose only the money used to purchase the put option. Puts and calls are generally written for 1, 2, 3, or 6 months, although any period over 21 days is accepted by the New York Stock Exchange. A straddle and a spread are combinations of puts and calls occasionally used by sophisticated investors. In a more generalized sense, the term call may refer to any demand for payment.

Of the same type of stock or in the same industry or sector

Back to top

Definition/Explanation...

Real Estate Investment Trust.  In the form of a stock, a REIT allows you to trade on the increasing (buying it long) or decreasing (selling it short) value of specific types of real estate.   Example:  Pennsylvania Real Estate Investment Trust (PEI), where PEI is a stock traded that is a publicly owned equity real estate investment trust. The firm manages owns, manages, develops, acquires, and leases mall and power and strip centers primarily in the Eastern United States.

Return On Investment.

This is a snapshot assessment of a stock, evaluating what the estimated risk of a stock going down, versus the possible reward of a stock going up, given the current environment for that stock.   Usage:  I believe that stock has a risk/reward of 3 down, and 10 up... indicating that it may have a risk of going down $3 per share, but a reward of potentially going up $10 per share.  Therefore, the risk/reward level for that stock is quite good. 

Back to top

This term has been around as long as the stock market itself and is used to describe a short-term drop in prices.

 A real-time stock, bond, option or futures quote is one that reports the most current price available when a security changes hands. A delayed quote shows a security's price 15 minutes and sometimes 20 minutes after a trade takes place.

The date on which a shareholder must officially own shares in order to be entitled to a dividend. After the date of record the stock is said to be ex-dividend.

Stocks which have been strong relative to all other stocks should continue to be relatively stronger in the future and securities which have been relatively weak tend to continue to be weaker.

Return on equity measures the return, expressed as a percentage, earned on a company's common stock investment for a specific period. It is calculated by common stock equity, or a company's net worth, into net income. The calculation is performed after preferred stock dividends and before common stock dividends. The figure shows investors how well -- how effectively -- their money is being used by managers.

Sell your stock.     Usage:   I think you should ring the register (sell), and take some of that off. You have a nice gain. Don't give it back!...

This is Jim's term for all economies and markets in the rest of the world, other than the United States which, therefore, makes them less vulnerable and sensitive to a weaker U.S. economy.

When a company acquires another company with its own common stock and, therefore, issues more stock in a secondary offering, and does it over and over again, as it makes more acquisitions.

Back to top

Definition/Explanation...

Depending on the context, this means to either buy a little, or sell a little of your stock position.  In other words, if you have 100 shares of Baidu.com (BIDU), you may want to "lock up your profits by schnitzelling a little" and selling 25 shares...

This is said by Jim Cramer before starting the Sudden Death stock picking round. Refers to the nickname given to the rabbit that lures greyhound dogs to race around the track,
named, "Swifty"... The announcer for dog races would say at the start of a dog race, "There goes Swifty!"...

When a company provides guidance that is likely much lower than what they can achieve.  Therefore, if their guidance is that the company will make 14 cents a share, and they can actually make 22 cents a share, they are "sandbagging" their numbers, so that it will be easy to exceed the next quarter's number, and then make the stock price go up.  Usage:   I think the guidance was sandbagged... I think the stock has got a floor here. I want to buy Riverbed Technology, Inc. (RVBD). I like their technology... (from the 2/7/08 Mad Money show)

Securities and Exchange Commission.  The branch of the U.S. government that oversees the development and administration of rules, and the enforcement of those rules, that govern the U.S. equities (e.g., stocks and bonds, etc.) and commodities markets.

After the initial public offering of stock to investors.   Also called just a "secondary." 

Back to top

When stocks go up, usually along with the market as a whole, causing "shorts" - or those holding stocks that have sold them short - to panic and buy stocks to cover their short position, thereby being "squeezed" into buying stocks, resulting in a short squeeze which causes stocks to rise in price even higher.  Also see shorting a stock.

The SEC is a federal agency that regulates the U.S. financial markets.

The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit company documents to investors. Those documents, which are available via DBC's Smart Edgar service, include 10-Qs (quarterly reports), 8-Ks (significant developments such as the sale of a company unit) and 13-Ds (disclosures by parties who own 5% or more of a company's shares).

This piece of paper proves ownership of stocks, bonds and other investments.

Enter here the price you received when you sold a security. If you received $10 for a share that you sold at 10, then enter 10.

In U.S. financial markets, an investor must pay for the purchase of shares by the third business day after he or she buys securities. And an investor must deliver an investment that he or she has sold by the third business day after the transaction.

This is a company's total assets minus total liabilities. A company's net worth is the same thing.

Enter here the number of shares you own. If you bought shares of a specific security at different times and various prices, enter the total number of shares here and enter the average price for the purchases under Buy Price.

Definition/Explanation...

To sell a stock that you do not yet own, as some brokerages will allow you to do, once you have been credit approved. Betting against a stock, hoping that it will go down in price.  Actually "selling" a stock you don't own, by borrowing the stock (usually from your brokerage, who owns it), and then buying it once it goes down, for a gain of the difference in price.  This is done by both individual investors and large money managers, predicting that a stock will go down from the price that you shorted it.   If a stock is "sold short" at a higher price, and then bought after it has fallen, the difference in price is the profit gained from that shorting activity.    Usage:  I shorted stock in Mattel Inc. (MAT) last month, at $26.50, when I heard that their Chinese toy supplier was cited for lead paint usage, causing them to recall many toys.  I then bought it yesterday at $20.50 to cover my short position, making $6 a share in profit.

Investors who borrow stock and sell it to someone else are betting the shares go down in price. Then, they can buy back the stock at a lower price and pocket the difference as profit. Going "short" is the opposite of going "long," or owning shares for the long haul.

This is the total number of shares of a security that investors have sold short -- borrowed, then sold in the hope that the security will fall in value. An investor then buys back the shares and pockets the difference as profit.

A company can create an independent company from an existing part of the company by selling or distributing new shares in the so-called spinoff.

Sometimes, companies split their outstanding shares into larger number of shares. If a company with one million shares did a two-for-one split, the company would have two million shares. An investor, for example, with 100 shares before the split would hold 200 shares after the split. The investor's percentage of equity in the company remains the same.

In finance, the yield spread is the difference between the quoted rates of return on two different investments, usually of different credit quality.   The "yield spread of X over Y" is simply the percentage return on investment from financial instrument X minus the percentage ROI from financial instrument Y (per year). The yield spread is a way of comparing any two financial products. In simple terms, it is an indication of the risk premium for investing in one investment product over another.   Usage:   I recommended NLY*, even though that's exactly what it does... it borrows from banks and brokers at a low rate. It was 4% the last time the company reported... and then takes that money and buys bonds issued by Fannie Mae (FNM) that pay about 5%... It's called "spread"... not much of a spread, a 1% difference... (from the 3/7/08 Mad Money show) 

This is the gap between bid and ask prices of a stock or other security.

To get to the stock price, you have to figure out what the earnings will be... and then multiply them by something... the multiple...  Price (P) = Earnings per share (E) x Multiple (M)    So the stock price should be = Earnings x Multiple.... (M)ultiple x (E)arnings = (P)rice of the stock that you pay... So, if the earnings go higher, then the stock price goes higher...   Example:    So, the issue is solving for M, right... and the M is a subjective blend of consistency, execution, visibility and, ultimately, the growth of both the company and the business. That's how you arrive at a price. And what I'm saying is that the M, the multiple, for Dominos Pizza Inc. (DPZ) can't be as good as the multiple for Papa John's International Inc. (PZZA), because DPZ is a complainer about the environment and didn't deliver, with the exact same ingredients, and PZZA executed and delivered.

Your position in a stock is how many shares you own, or are shorting of a stock... or how many shares of stock you would like to own, in total, of a given stock.    Usage:   I would not be in a short position in that stock, because I expect it to go up with this news.

This is a lettered symbol assigned to securities and mutual funds that trade on U.S. financial exchanges.

This is the ticker symbol of the security. New York Stock Exchange and American Stock Exchange tickers, for example, are three or fewer letters. Example:  Kellogg is the symbol, K. Nasdaq tickers are four and sometimes five letters. Example:   Google is the symbol, GOOG. Mutual Fund tickers end with the letter "X."   For example, Ken Heebner's CGM Focus Fund is the symbol, CGMFX.  Options tickers have their own help tables.

Back to top

Definition/Explanation...

10K = Annually.
AA comprehensive summary report of a company's performance that must be submitted annually to the Securities and Exchange Commission. Typically, the 10-K contains much more detail than the annual report. It includes information such as company history, organizational structure, equity, holdings, earnings per share, subsidiaries, etc.   The 10-K must be filed within 60 days (it used to be 90 days) after the end of the fiscal year.

10Q = Quarterly.
A company's quarterly report...  A comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. The form must be submitted on time, and the information should be available to all interested parties.   The 10-Q is due 35 days (it used to be 45 days) after each of the first three fiscal quarters. There is no filing after the fourth quarter because that is when the 10-K is filed.

The number of recommendations that Jim Cramer provides to a single caller, into his Lightning Round segment on his Mad Money show.  Two-fer, three-fer, and sometimes he mentions a four-fer and a five-fer... depending on how many combined recommendations he might make to buy or sell.

The performance of the major indices that day.   The performance of the market, referring to the old-fashioned ticker tape coming out of the machine, a "bad tape" refers to stocks coming
out of the machine, all or most, showing prices which are down...

This description is best made by taking an excerpt out of Jim Cramer's show on 3/11/08 (opening segment)...

In this market, you want to trade around a core position... I talk about this in every single one of my books...  It's not that complicated...

Pay attention.  Very important... Say you own 100 shares of Potash (POT)... a Cramer fave.  It's up big today, so you sell 25 shares here, up huge...  Up $10...  It should be up more in about 5 trading days... and you say, why don't I hold it all... because I don't know... I'm no seer...  but that's how oversold rallies have worked.  That's the pattern.  They tend to be higher a week from the day they start.  So, in 5 days, you sell another 25 shares of POT... And then, if it comes down, because of some miserable selloff, caused by some Fed governor who says that I don't believe that the real problem is recession, it's inflation...  Then, if the price drops below where you sell it today, you buy back 25 shares.  It's just buying low, and selling high...  Only you never buy or sell more than a small fraction of your core position (i.e., trading around your core position)...   That's my recommendation for how you stay ahead in the market.

Indicated on stock quotes, the Trade Time indicates the corresponding time of the Last Trade, that is shown.

Back to top

A takeover of one company by another, but for lower than the last closing price of the company that is being acquired.  Where usually a takeover of a company will result in its stock price going up - because the takeover bid is higher than the recent stock share trading price - a takeover that is for less than the going share trading price is known as a "takeunder."   Example:   The 3/17/08 announcement that JPMorgan Chase & Co (JPM) was going to acquire Bear Stearns (BSC) for the negotiated deal of just $2 per share of stock outstanding.  Whereas, the previous trading day's closing share price for Bear Stearns was significantly higher, at $30.00 per share (i.e., on 3/14/08). 

Trading refers to buying (or selling short) a stock for anticipated short-term profits.   Investing is a term used to refer to the longer term hold of a stock position, anticipating consistent growth (and increase in share price) of a stock, because of strength in fundamentals and/or because of a supportive dividend in that stock.  

Back to top

Treasury bonds.  U.S. government-backed bonds - usually purchased as a 10-year bond, or a 30-year bond.  Also called a long bond. 

U.S. government debt with a maturity that is less than a year is a bill.

U.S. government debt with a maturity of more than 10 years is a bond.

U.S. government debt with a maturity of one to 10 years is a note.

This refers to a change in the price of a security. An uptick occurs when the last trade in a security takes place at a higher price than the prior trade. A downtick occurs when the last trade in a security takes place at a lower price than the prior trade. An indicator may be fashioned from the difference between the number of NYSE issues showing upticks on the last trade and the number of NYSE issues showing downticks on the last trade. This indicator is known as the TICK, and is found on many quote screens. A TICK of -277 means 277 fewer NYSE issues were last traded on upticks than those trading on downticks.

On most trading screens, investors can see the amount of stock available for buyers and sellers. In a stock with a bid price of 18 and an ask price of 18 1/2, for example, a trade size of 10x5 indicates that investors have bids in to buy 10 blocks of 100 shares at the price of 18. Sellers, on the other hand, are willing to sell five blocks of 100 shares at 18 1/2.

Trading of a stock, bond, option or future contract can be halted by an exchange while news is being broadcast about the security.

This occurs on the third Friday of March, June, September and December when futures and stock options, based on the S&P 500 index, all expire on the same day.

The volume of shares traded as a percentage of total shares listed on an exchange during a period, usually a day or a year. The same ratio is applied to individual securities and the portfolio of individual or institutional investors.

Conclusions that you can come to, or take away from, a report from or about a company.  Usage:  The take-aways from that quarterly report is that they have poor visibility, and that we shouldn't trust that they can make their future numbers.

Back to top

Definition/Explanation...

When a stock has little or no coverage by the analyst community.  For example, no analysts cover the stock, and there are no buy, sell, or hold ratings on it.

Rule put in place in the 1930s to prevent short sellers from acting strategically to knock down specific stocks, creating a decline in share price to their own advantage.   It said you couldn't bang down a stock - you couldn't short a stock - unless there were buyers out there, willing to pay more than the last price... It was known as an "uptick"... If the last price was an uptick from the previous one, you could then sell it short.   This rule was in place for almost 70 years, until it was repealed on July 6, 2007, in a passage of what is known as Rule 201.  [See Jim Cramer's comments on the Uptick Rule, from his 3/20/08 show here.]

U.S. government debt with a maturity that is less than a year is a bill.

U.S. government debt with a maturity of more than 10 years is a bond.

U.S. government debt with a maturity of one to 10 years is a note.

Back to top

This is the current price of the security multiplied by the number of shares you own. If you own 1000 shares of Apple Computer, and the shares are selling for $25, the value should be $25,000.

A stock perceived by the marketplace to be undervalued based on criteria such as its price-to-earnings ratio, price-to-book ratio, dividend yield, etc.

This describes the fluctuations in the price of a stock or other type of security. If the price of a stock is capable of large swings, the stock has a high volatility. The pricing of options contracts depends in part on volatility. A stock with high volatility, for example, commands higher prices in the options market than one with low volatility. Volatility may be gauged by several measures, one of which involves calculating a security's standard deviation. Stock investors sometimes prefer to measure a stock's volatility versus that of an index, such as the Standard & Poor's 500 Index. This is known as a stock's beta. A beta of 1.2 implies a stock that is 20% more volatile than the S&P 500. When the S&P rises 10%, the stock is expected to rise 12%.

This is the daily number of shares of a security that changes hands between a buyer and a seller.     This is usually a helpful indicator, when compared to the average daily volume amount which is usually shown next to it.

It means that, in 2009, 2010, 2011, 2012... you're very confident that the numbers are going to get better than they are now, because a company may already have contracts signed that exceed its manufacturing capacity, taking them into the out years and, therefore, allowing you to have great confidence that they can meet/exceed their earnings estimates in the future.  Usage:  "That company has great visibility."

The Virtuous Circle of debt reduction, where companies use the cash they get in to pay down debt, especially as interest rates go down, which gives them more cash in the future, because there's less interest to pay, which they use to pay down even more debt, and so on...    Usage:  As the stock goes higher, they will print more stock, and pay debt holders - that's right, bond people - the stock, fixing their balance sheet, which then drives the stock higher, which then allows them to issue more stock and reduce their debt even further.  That's the virtuous circle.

Back to top

Definition/Explanation...

The CEO Wall of Shame, where Jim Cramer has identified what he believes are the most worst, most incompetent, most clueless CEOs, who actually hurt their stock share price, simply by remaining as their company's CEO.  See the latest Wall of Shame list of CEOs here.

This is Jim Cramer's description of fancy terms that are mostly used only on Wall Street, among the brokers' community, which are stock and financial terms that are commonly used to describe the current condition of a stock, but are not used or easily understood by the general public, outside of the Wall Street environment.   Jim commonly refers to these terms as "genuine Wall Street jibberish."

This piece of paper gives an investor the right to purchase securities at a fixed price within a fixed time span. Warrants are like call options, but with much longer time spans -- sometimes years.

Back to top

Yield is commonly used to describe the dividend yield of a stock.  This is calculated by determining a stock's stated dividend amount per share, and then taking the current share price, and dividing that price by the stated dividend, therefore determining the resulting percentage amount that the dividend represents - as a percentage of the current share price - or, the current "dividend yield."   As the share price fluctuates, so does the calculated dividend yield, because it is always in direct relation (i.e., relative to) that share price.    Therefore, there is an inverse relationship of share price to dividend yield.  As the share price goes up, the dividend yield (i.e., percentage) will always go down, and vice-versa.    Example:   If the stock,  Weyerhaeuser Co. (WY) has a current dividend of $2.40 per share, and its current share price is $62.43, then its resulting dividend yield is 3.84%.  If the share price were to shoot up to $100, and the dividend amount of $2.40 stayed the same, then that dividend yield would go down to just 2.40%.

Back to top

In finance, the yield spread is the difference between the quoted rates of return on two different investments, usually of different credit quality.   The "yield spread of X over Y" is simply the percentage return on investment from financial instrument X minus the percentage ROI from financial instrument Y (per year). The yield spread is a way of comparing any two financial products. In simple terms, it is an indication of the risk premium for investing in one investment product over another.   Usage:   I recommended NLY*, even though that's exactly what it does... it borrows from banks and brokers at a low rate. It was 4% the last time the company reported... and then takes that money and buys bonds issued by Fannie Mae (FNM) that pay about 5%... It's called "spread"... not much of a spread, a 1% difference... (from the 3/7/08 Mad Money show) 

Back to top

Such a debt security pays an investor no interest. It is sold at a discount to its face price and matures in one year or longer.

Back to top