Every industry has seemingly ridiculous jargon. Words that have no place outside of the industry. I was introduces to jargon at a young age because my family was in the plumbing business. Do you know what a ballcock is? Of course you don’t, unless you are in the plumbing industry yourself. Same goes for the financial industry. Some terms you may hear on the news or read in an article, but likely the true definitions are just beyond your grasp. That ends today. Here is a list of jargony words for you to know and understand, once and for all.
“An extended period of time in which the stock market rises or is expected to rise. We happen to be in a bull market right now, which began in March of 2009. ” (courtesy of Indy Star)
When on the attack, a bear swipes down. As is the motion of a bear market.
“The stock market will always come into balance, which means if it’s too high because people are overvaluing stocks, it will correct. Correct as in go down. Yes, a correction is a crash of sorts. For what it’s worth, a recession is a form of a correction as well.” (courtesy of Indy Star)
When people are selling more than they are buying, prices fall. Oversold can be a positive thing though since it generally means the market will soon turn around and go up.
When people are buying more than they are selling, prices rise. When this happens the market will likely head down.
Dead cat bounce:
A gross metaphor, but if you drop a dead cat from a high enough perch it will bounce, even though it’s still dead. Same things happens occasionally in a bear market. A spike in the market seems like a sign the market as rebalanced and is ready to rise, but it was just a fake-out death bounce.
Keep dry powder:
Dry powder = cash. “If you believe the market is going to fall or a specific investment opportunity is going to show itself, then you need cash in order to take advantage of that opportunity. If all your money is tied up in investments during a bear market, then you won’t be able to buy quality investments at low prices without locking in losses by selling your other investments to free-up cash.” (courtesy of Indy Star)
And now you know. Also, pictured above is ballcock. It’s a valve.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.