Learn How To Read The Stock Market

Have you ever opened up to the Business Section of the newspaper with complete awe? Do you find the stock market daunting? If you have ever thought about investing, but felt intimidated, read on. Here are some definitions to basic stock market jargon.

AMEX: The American Stock Exchange is the third largest stock exchange by trading volume.

Baby Bond: Issued bonds holding par values less than $1,000.

Bull Market: A period during which the stock market prices are rising.

Common Stock: A security that stands for ownership in a company. Common stock holders elect a board of directors and vote on corporate policy.

Day Trading: Buying and selling a security within the period of one day.

Dividend: Payout of a portion of a company's earnings. May be quoted in terms of dollars or percent of the current market price.

Dow Jones Industrial Average: Price-weighted average of 30 of the most significant stocks traded on NYSE and NASDAQ.

Hedge Funds: Private investment funds that are only made available to select investors.

January Effect: General stock price increases during the month of January.

Mutual Fund: Money pooled from investors is then invested collectively in stocks, bonds or other securities. Managed by a fund manager.

NYSE: The New York Stock Exchange, or the "Big Board" is a New York City-based stock exchange. The largest in the world in terms of dollar volume, the NYSE lists nearly 3,000 securities.

NASDAQ: The National Association of Securities Dealers Automated Quotations. The world's first electronic stock market.

Outstanding Shares: Stock shares held by investors.

Par Value: A bond's face value.

Preferred Stock: A security that stands for ownership in a company, however, holders have a higher claim than common stock holders on assets and earnings. Preferred stock dividends are paid out before dividends to common stock holders.

Reverse Stock Split: Reduction in the quantity of a corporation's outstanding shares that increases the earnings per share.

Santa Claus Effect: Sudden increase in stock prices during the week between Christmas and New Year's Day.

Stock Market: A system of trading company shares. A company that trades is also known as a public company. Selling shares allows a company to raise money.

Stock Market Index: Listing of stocks and statistics.

Stock Split: A company's existing shares are divided into multiple shares.

Treasury Stock: Stock that has been repurchased by the company.

These basic stock market definitions will help you understand basic stock investment procedures.