By Sanjana Vig

Wealth of Geeks

2022 brought us meme stocks, trending NFTs, inflation, increased interest rates, and now talks of a recession, with the stock market currently doing a yo-yo. Before you can begin to comprehend the market, you must first understand the industry jargon.

You may run into terms like ‘bull market’ and ‘dividend,’ which may be familiar, but what about ‘dead cat bounce’? What does that mean?

Let’s start with the two commonly used terms to describe the market during periods of gains and losses.

Bear Market

Bear Market is defined by a prolonged drop in asset prices, typically by 20% or more.

Bull Market

Opposite of this is a Bull market, which refers to a period when prices rise by more than 20%. We all want a bull market all the time. However, market dynamics and the economy often dictate otherwise.

ETF

With 103,000 monthly searches, ‘ETF’ is the most baffling stock-market term in the world. So, if you’re keen to find out what an ETF is, you’re in luck. ETF stands for exchange-traded fund. That didn’t clear it up? Think of an ETF as a basket with a bunch of different investments. Instead of stock in various companies, ETF’s are tied to a specific index.

While stocks usually represent shares of one company, an ETF can consist of hundreds or thousands of diversified investments such as stocks, commodities, bonds, and other securities, known as holdings. When you purchase one share of an ETF, you get a small percentage of each asset within the fund.

The advantage of investing in ETFs is that they are often less volatile than individual stocks, and you benefit from diversifying your investments.

IPO

In second place with 95,000 searches comes another abbreviation: IPO. IPO stands for initial public offering, or when a private company becomes public by selling its shares on a stock exchange. Companies often issue an IPO to raise capital to fund growth initiatives, raise their public profile, or pay off debts.

Arbitrage

Another term that’s baffling internet users is ‘arbitrage .’The Cambridge dictionary defines this as ‘the method on the stock exchange of buying something in one place and selling it in another place at the same time, in order to make a profit from the difference in price in the two places.’ For example, you find a DVD for sale at an online retailer that’s cheaper than it sells at Amazon. You buy it there, and resell it on Amazon, pocketing the profit.