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What is the Efficient Markets Theory? The Efficient Markets Theory says that stocks trade at their fair value all of the time, assuming all informa...

What is a Fund of Funds? A fund of funds is a mutual fund strategy that invests in other funds rather than investing in stocks or bonds. The underl...

What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...

What is Alpha? Alpha is an investing term that describes the success of an investment. It looks at the investment’s ability to beat beta (or mark...

What is short interest theory? Watch this not-so-short video to find out.

What does “Away from the Market” mean? Away from the market just means that a stock is moving away from its benchmark. This happens when the bu...

Selling away is the practice of selling securities that aren't under the seller's auspices to sell.

What is a thin market, and has it been on Jenny Craig recently?

What is a High Alpha Investor? A high alpha investor invests in securities with alpha values of 1 or higher. This means that the mutual fund or sto...

Maturity is, quite simply, the date when a debt becomes due. As for our maturity, well... we're still giggling about the word "due."

When a bond is secured, it means it's protected, i.e. there are assets that would be forfeited if repayment is not made. When it's unsecured... it'...

The Sharpe Ratio is a calculation used by investors to measure the dynamics between risk and reward. TL;DR: lottery tickets=bad.

A takedown is a commission or spread that investment bankers take from the proceeds raised on a securities offering.

What is the Alternative Minimum Tax? Alternative minimum tax is a different way of calculating tax liability. It’s only available to some individ...

The Russell Index is a series of indices that tracks the progress of stocks in a given basket. Aw. We were hoping it tracked adorable Jack Russell...

The Investment Company Act of 1940 regulated and ensured fair dealings in the mutual fund industry.

What do you need to retire? Retirement - think: 401k, pension fund, IRA, roth IRA, etc. All of these savings socked away while you worked hard are...

There’s an old saying on Wall Street: People who want to make a lot of money buy stocks. People who have a lot of money buy bonds. The amount of...

What is suspended trading? It has nothing to do with suspenders, which is a bummer...we love suspenders. They're so jaunty.

What is Good Delivery? Good delivery just means that nothing gets in the way of a security transfer after a transaction is made. It’s kind of a d...

What is a Commingled Fund? Commingled funds are similar to mutual funds but contain different assets and possible asset classes. They are blended together under a single umbrella to realize greater economies of scale and to reduce management redundancies. They are mostly used by institutional retirement plans and are not publicly listed for individual investors.

What are T-Notes, T-Bonds, and TIPS? T-Notes are debt securities (like bonds) that are issued by the government and mature within one to 10 years. T-Bonds are exactly the same but their maturity is longer...more than 10 years. TIPS stands for treasury inflation protected securities. The government also issues TIPS; these securities are extremely safe, because not only are they backed but the government, but they also account for inflation and protect the investor in that way.

What is Good ‘Til Cancelled (GTC)? GTC orders are trade orders that may be filled at any time unless the investor cancels it. Good til cancelled orders are different from day orders that must be filled by market close otherwise they are cancelled; these are only cancelled if the investor decides to do so.

What is After Tax Yield? After tax yield is simply how much an investment makes (or yields) after taxes have been paid. This term refers to bond yield; bonds are taxable as federal income, so after tax yield varies due to differences in tax brackets.

Investment objectives and styles vary from investor to investor. Some are in it for the long haul. Others, um... don't look at "Ponzi" as a dirty word.

What is the S&P 500? It's Standard & Poor's 500 generally largest companies, with a U.S. domestic bias. The S&P 500 is usually what investors think of when they think "the market." This entity is used as an index indicator of stock performance in most calculations, and ticker SPY is the most famous index fund in this group.

What is the Bid-to-Cover Ratio? The Bid-to-Cover ratio compares the amount of bids made for Treasury securities to the amount that is actually sold. This ratio shows the demand for Treasury securities.

What is liquidity? Think: water. It's liquid. It can be squeezed into little, tiny spaces and infused into large spaces. A defining trait of liquid is that it can be subdivided into tiny pieces. those pieces move anywhere they want in the same way a liquid market trades actively.

A liquid market is a market featuring high trading volumes, i.e. investors actually want to put their cash to work.

What's a yankee bond, and does it stick a feather in its cap and call it macaroni?

What is a Country Basket (Index Fund)? Investing internationally can be a challenge, as foreign exchange, different accounting rules, time zones and a panoply of other hurdles can often accompany such an endeavor. ETFs and mutual funds that are professionally managed to make international investing easier are designed to address those issues. A country basket is an ETF that might be for a specific region, such as The 4 Asian `Tigers’: (Hong Kong, Taiwan, South Korea and Singapore), or other criteria, such as G7 countries not including the US.

What is a Back End Load? A back end load is a sales fee that is paid on a mutual fund after it’s sold (on the back end). Sometimes it’s a set amount and other times it’s an amount that continually decreases, so if the fund is held long enough, the fee drops away.

What is a Contingent Deferred Sales Charge? A Contingent Deferred Sales Charge is a fancy name for a back load fee for mutual fund B shares. Basically, A shares pay a fee at the front when purchased, while with B shares, there is no front load, but a fee when you sell. Either way, they get you coming or going.

Cannibalization in the market refers to when a company has a new service or product that competes with its own previous offerings more than with its competitors, and unless introduced by design, it is usually a negatively impacting event to the company’s revenues and market share.

What are the differences in S&P’s and Moody’s ratings? Both S&P and Moody’s give ratings that help investors determine if they are making smart investments, but they do look at the investments a bit differently to determine ratings. S&P considers how likely the debt issuer is to default on payments to investors, while Moody’s looks at how much will be lost upon a default. They also look a little different; Moody’s uses a combination of letters and numbers, while S&P uses letters and symbols (report card style); in both cases, A is good, D is bad.

What are bond ratings and what do they mean? Bond ratings are just credit ratings used on bonds. Just like a credit rating, they give the investor an idea of the issuer’s ability to pay the bond’s principal and interest payments. It’s common to see higher rated bonds with lower interest rates and lower rated bonds with higher interest rates because of the risk/reward factor.

What is a Family of Funds? A family of funds refers to all of the funds managed by an investment firm. These firms offer investors the ability to invest in the family of funds and the investor enjoys the benefits of the diversification that results from this.

Over the counter refers to a trade transacted within a network of other dealers who are all trading stocks.

Who is Warren Buffett, and how do we get him to give us a loan...?

What is Crowding out? Crowding out is a phenomenon that occurs when the government enters into a sector in an economic fashion and its size creates a domino effect of other consequences that create disincentives for comparable or related actions in the private sector. For example, when the government enacts a stimulus package, an accompanying rise in interest rates may make financing projects in the private sector too costly.