Every stock market term you'll encounter, defined in plain English — with sports analogies where they help.
Annual Report
A yearly document public companies must file with the SEC (10-K filing) summarising financial performance, management discussion, and risk factors. The primary source for fundamental analysis.
Ask Price
The price a seller is willing to accept for a stock. The counterpart to the bid price. The spread between bid and ask is the market maker's profit.
Asset Allocation
The division of investments across different asset classes — stocks, bonds, cash, real estate. The primary driver of long-term portfolio returns, more important than individual stock selection.
Bear Market
A sustained market decline of 20% or more from recent highs. Bear markets average 9 months in duration and a 36% decline historically. Every bear market in history has been followed by recovery.
Beta
A measure of a stock's volatility relative to the market. Beta of 1.0 = moves with the market. Beta of 2.0 = moves twice as much. MarketMVP calls this the Injury Risk Rating.
Bid Price
The price a buyer is willing to pay for a stock. The spread between bid and ask is the transaction cost for immediate execution.
Blue Chip Stock
A large, financially stable company with a long track record of reliable performance. The term comes from poker, where blue chips have the highest value. Examples: AAPL, MSFT, V, JNJ, KO.
Bond
A debt instrument where investors lend money to a company or government in exchange for regular interest payments. Bonds compete with stocks for capital — when bond yields rise, stocks often fall.
Bull Market
A sustained market rise of 20% or more from a recent low. Bull markets average 4.4 years and +150% returns historically. Markets spend approximately 75% of time in bull conditions.
Buyback (Share Repurchase)
When a company uses its own cash to buy its own shares from the market, reducing the total share count. This increases earnings per share for remaining shareholders. A sign of management confidence.
Capital Gains
The profit made from selling an investment for more than you paid. Short-term capital gains (held under 1 year) are taxed as ordinary income. Long-term (held over 1 year) receive preferential tax rates.
Compound Interest
Earning returns on your returns, not just your original investment. Over decades, compounding creates exponential growth. Albert Einstein reportedly called it the eighth wonder of the world.
Cyclical Stock
A company whose performance tracks the economic cycle — strong in expansions, weak in recessions. Examples: airlines, hotels, luxury goods, automotive manufacturers.
Day Trading
Buying and selling stocks within a single trading day to profit from short-term price movements. Studies consistently show most day traders underperform buy-and-hold investors over time.
Defensive Stock
A company with stable earnings regardless of economic conditions. Consumer staples (food, household goods, healthcare) are classic defensive sectors. Examples: KO, PG, JNJ.
Diversification
Spreading investments across multiple stocks, sectors, and asset classes to reduce the impact of any single investment failing. 'Don't put all your eggs in one basket.'
Dividend
A cash payment companies make to shareholders from profits. Usually paid quarterly. The dividend yield = annual dividend ÷ share price. MarketMVP calls this the Guaranteed Salary.
Dividend Aristocrat
A company that has raised its dividend for 25+ consecutive years. Examples include Procter & Gamble (67 years), Coca-Cola (62 years), and Johnson & Johnson (62 years).
Dollar Cost Averaging (DCA)
Investing a fixed amount on a regular schedule regardless of market conditions. Automatically buys more shares when prices are low, fewer when high. Removes the need to time the market.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortisation. A proxy for operating cash flow used to compare profitability across companies with different capital structures and accounting methods.
EPS (Earnings Per Share)
A company's total net profit divided by shares outstanding. The most common measure of profitability per share. Analysts set EPS estimates; stocks react to beats and misses versus expectations.
ETF (Exchange-Traded Fund)
A fund that holds many securities and trades on an exchange like a stock. An S&P 500 ETF (like VOO) gives exposure to all 500 companies in the index with one purchase.
Ex-Dividend Date
The date by which you must own a stock to receive the upcoming dividend. Buy before this date = receive the dividend. Buy after = previous owner receives it.
Free Cash Flow (FCF)
Cash generated by the business after capital expenditure — the actual money available to return to shareholders, pay debt, or reinvest. Often more reliable than reported earnings.
Fundamental Analysis
Evaluating a stock based on company financials — revenue, earnings, assets, growth rate, competitive position. The basis of value investing. Contrasts with technical analysis.
Index Fund
A fund designed to track a market index (like the S&P 500) by holding all or most of its components. Offers broad diversification with minimal fees. Warren Buffett recommends for most investors.
Inflation
The general rise in prices over time. High inflation reduces purchasing power and typically pressures stock valuations — particularly growth stocks — because future earnings are worth less in real terms.
Initial Public Offering (IPO)
A company's first sale of shares to the public. Transitions from private to public ownership. IPO investors receive shares before the stock begins trading on an exchange.
Interest Rate
The cost of borrowing money. Set by central banks (Federal Reserve in the US). Rising rates typically hurt growth stock valuations and boost financial sector earnings.
Large Cap
Companies with a market capitalisation above $10 billion. Generally more stable and liquid than smaller companies. The S&P 500 is a large-cap index.
Limit Order
An order to buy or sell a stock at a specific price or better. Offers price control but risks non-execution if the market doesn't reach your price.
Liquidity
How easily an investment can be converted to cash. Stocks of large companies are highly liquid — millions of shares trade daily. Illiquid investments are harder to sell at fair prices.
Market Capitalisation (Market Cap)
Total value of all shares: share price × shares outstanding. The size of a company. Categories: mega-cap ($200B+), large-cap ($10-200B), mid-cap ($2-10B), small-cap (below $2B).
Market Order
An order to buy or sell a stock immediately at the current market price. Guarantees execution but not the exact price.
Moat (Competitive Advantage)
A sustainable business advantage that protects profitability from competitors. Types: network effects (Visa), switching costs (Salesforce), brand (Apple), cost advantages (Walmart).
Momentum
A stock's recent price and fundamental trend. High momentum means the stock is moving in a positive direction with accelerating revenue. MarketMVP measures momentum as 40% of the OVR score.
Mutual Fund
A pooled investment vehicle managed by professional fund managers. Unlike ETFs, mutual funds price once per day at close and often carry higher fees.
OVR Rating
MarketMVP's proprietary 0-100 stock rating combining Momentum (40%), Stability (35%), and Value (25%). Inspired by FIFA and NBA 2K player ratings. S-Tier is 88+; C-Tier is below 65.
Options
Financial derivatives giving the right (but not obligation) to buy or sell a stock at a set price by a set date. Call options profit from price rises; put options from price falls. Complex instruments not recommended for beginners.
P/E Ratio (Price-to-Earnings)
How many years of current earnings you're paying. P/E of 25 = paying 25x annual earnings. MarketMVP calls this the Transfer Fee. High P/E = growth premium. Low P/E = value or concern.
PEG Ratio
P/E ratio divided by earnings growth rate. A PEG below 1.0 suggests potential undervaluation; above 2.0 suggests overvaluation. More useful than P/E alone for comparing growth companies.
Portfolio
Your complete collection of investments. Portfolio construction — choosing which assets and how much of each — is the primary driver of long-term investment returns.
Position Sizing
How much of your portfolio you allocate to each investment. Typically: anchor stocks 5-8%, growth stocks 3-5%, speculative positions 1-3%. No single stock should dominate.
Rebalancing
The process of adjusting portfolio weightings back to target allocations. A stock that has grown to 20% of your portfolio is trimmed back to target weight. Forces systematic selling high and buying low.
Return on Equity (ROE)
Net income divided by shareholders' equity. Measures how efficiently a company generates profits from shareholders' investment. High ROE (25%+) is a sign of a quality business.
Revenue
Total money a company receives from selling products and services. Also called 'the top line.' Different from profit — revenue is before subtracting any costs.
Risk Tolerance
An investor's capacity and willingness to endure portfolio losses. High risk tolerance = can hold through 40% drawdowns without selling. Low risk tolerance = needs stable, lower-return investments.
S&P 500
Index of 500 largest US-listed companies by market cap. The definitive US stock market benchmark. Historical average annual return approximately 10% with dividends reinvested.
Sector
An industry classification grouping companies with similar business models. Major sectors: Technology, Healthcare, Financials, Consumer Discretionary, Consumer Staples, Energy, Industrials, Materials, Utilities.
Short Selling
Borrowing shares, selling them at current prices, then buying back cheaper later to profit from a price decline. Unlimited theoretical loss potential if the stock rises instead.
Short Squeeze
When heavily-shorted stocks rise rapidly, forcing short sellers to buy back shares at higher prices, driving the price even higher. GameStop (GME) experienced a famous short squeeze in 2021.
Stability (MarketMVP)
One of three OVR dimensions. Measures earnings predictability, beta (volatility), and business model durability. Contributes 35% to the OVR score. High stability stocks include V (92), KO (94), JNJ (92).
Stock Split
When a company divides existing shares into multiple new shares. A 2-for-1 split doubles share count and halves price. Total value is unchanged. Often signals management confidence.
Technical Analysis
Evaluating stocks using price charts, volume, and mathematical indicators to predict future price movements. Contrasts with fundamental analysis (company financials).
Ticker Symbol
The abbreviation used to identify a stock on exchanges. AAPL = Apple, NVDA = NVIDIA, TSLA = Tesla. US stocks are typically 1-4 letters.
Total Return
The complete investment return including both price appreciation and dividends reinvested. The most accurate measure of long-term investment performance.
Value (MarketMVP)
One of three OVR dimensions. Measures whether the current price represents fair value. Uses a PEG-adjusted approach comparing P/E to growth rate. Contributes 25% to the OVR score.
Value Stock
A company trading below its apparent intrinsic value — low P/E relative to earnings quality. The premise: the market has mispriced it, and patience will be rewarded.
Volatility
The degree of price variation over time. High volatility = large price swings in both directions. Measured by beta (relative to market) or standard deviation (absolute). MarketMVP calls it Injury Risk.
Volume
The number of shares traded in a given period. High volume confirms price moves. Low volume on a big move is often less reliable. Used in technical analysis.