Welcome to another episode of Jargon, the show from Digital Trends that deciphers the complex jargon of various industries into words and concepts the rest of us understand. We’re live each week on Tuesdays with a set of jargon from a specific industry.
On this episode, host Myq Kaplan and guest Anthony Denier, chief executive officer of Webull, trade stock market jargon for layman’s terms. From bears to bulls, and from alphas to betas, we tackle the long and short of the confusing terms of this vital part of the American economy, and how you can make better choices for your own money in the stock market.
Terms discussed on this episode:
- Bull versus bear market – “When speaking of long-term trends in the stock market, there are two terms we often hear: Bull market and bear market. A bull market is when the market continues an upward swing over a period of time,” explains Denier. “Right now, we’ve been in a bull market for almost a decade, which is very long,” he notes. “A bear market is the opposite,” where the market is on a continual downswing over a period of time.
- Long versus short – “Going ‘long,’ simply put, is buying shares,” explains Denier. “Shorting” a stock means selling a stock you don’t own, and gets a little more confusing. “Everyone can short a stock, but you have to meet a certain criteria,” he notes. However, there can be a much deeper impact of short selling: “The upside of shorting a stock is limited, but the downside is unlimited.”
- Market index – Market indexes such as the Dow Jones Industrial Average, the S&P 500, or the Russell 2000 Index “are easy ways to track the overall movement of the stock market,” notes Denier. They are quick looks at a metric to get the overall picture. While they often correlate with one another, each uses a different set of benchmarks to measure the market.
- Alpha versus beta – When discussing stock movements up or down, the terms “alpha” and “beta” are often used. “Alpha is the movement of the [individual] stock versus the market benchmark” as a whole, says Denier. “Beta is how the stock moves as a part of the market, and is measured in multiples of how a stock performs as a ratio of the market as a whole.”
- Bid versus ask – As Kaplan describes, “bid” and “ask” can be thought about in the same way eBay uses “Buy It Now” and “Bid.” Basically, says Denier, “a bid is the highest price that someone is willing to pay” for a stock. “Ask” is the lowest price that it sells for.” If one absolutely needs a stock right away, they’ll usually pay the bid price.
On next week’s episode, we’re button-mashing our way through the jargon of esports.
For past episodes of Jargon, go to http://www.digitaltrends.com/jargon/
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