Did you come across some financial terms you do not understand? Want to make sense of what seems to be random acronyms thrown around all over the place?
Arm yourself with the finance know-how on how an industry analyst uses his DCF prowess to break down those Chinese Walls to arrive at his FV for those NAV-accretive IPOs!
Here are some financial terms to make you sound smarter!
Or if you are ready to start learning about value investing, click here now.
Accretive – Positive change in earnings or value -OR- This should make your earnings and value better (at least look better)
Analyst – Professionals providing research inputs and data analysis -OR- Grunts of the financial world
Arbitrage – Taking advantage of information dislocations in financial markets -OR- I can buy something cheap here to sell it at a higher price somewhere else
Buy-side – Institutional investors acting as a fiduciary. Directly faces sell-side firms -OR- People with the cash
Bid – Price at which a buyer is willing pay for a security -OR- Price that you are willing to pay
Carry (positive) – Return generated from holding an asset
Carry (negative) – Cost of holding an asset
Chinese Wall – Physical and regulatory separation between various front offices in a bank -OR- Imaginary wall that is supposed to prevent information from leaking but well sometimes people still talk, hence its imaginery
DCF – Discounted Cash Flow -OR- Valuations based on pretty projection numbers, useful in certain companies but not so in others (hint: not for complicated companies)
FFR – Federal Funds Rate
FV – Future Value -OR- What something is worth to YOU X years in the future
FOB – Free on Board
KLCI – Kuala Lumpur Composite Index (Malaysia Index)
Hedgies – Hedge Funds -OR- Investment funds that use/do almost anything (nothing illegal, just that they can use any type of method/instrument they want) to make $
HSI – Hang Seng Index (Hong Kong Index)
IPO – Initial Public Offering -OR- “Its probably overpriced”, I am kidding…or am I?
NAV – Net Asset Value -OR- What’s you are left with after deducting all your liabilities away
Offer – Price at which a seller is willing to sell a security -OR- The price you are willing to sell at
PV – Present Value – What something is worth to YOU today
PE – Private Equity
Sell-side – Banks and brokerages which provide financial products and services to Buy-side clients -OR- The people that help those with $ to decide what to buy
STI – Straits Times Index (Singapore Index) -OR- 30 stocks “representing” the Singapore market
S&P500 – Standard & Poor’s 500 (One of USA main Index)
Syndicate – Banks group with another to underwrite financial securities
Did we miss out something? Let us know.