Glossary

Learn & be a stock guru...

The financial world has developed a special investment-oriented language to help describe the stock market, investments, securities for the stock market, stock market analysis, and its conditions. At times you may be confronted with a term which is totally alien or has a completely different meaning from what you thought. Misunderstanding these terms can sometimes lead to the wrong conclusion, and that can cost you money!

What you don't know can hurt you.

Head and Shoulders

For technicians, a chart pattern indicating a peak, a decline, a second even higher peak, a decline, a rebound to the level of the first peak, and yet another decline. A head and shoulders pattern is supposed to be bad news, indicating the stock is headed downward.

Health Sector

A category of companies that includes pharmaceutical, health-care services, medical devices, and drug wholesale companies.

Hedge Fund

A risky investment pool, generally open only to well-heeled investors, that seeks very high returns by taking very great risks. Hedge funds typically are free to engage in all sorts of investment gymnastics in pursuit of returns that should (but don't always) dwarf those available simply by investing in stocks. Hedge funds will short stock, use leverage, options, futures, etc. Hedge funds are usually partnerships whose general partner, sometimes a famous money-manager or wheeler-dealer, gets a bigger cut of the profits as incentive and reward.

Hedge/Hedging

A method, often sophisticated, employed to minimize investment risk. Holders of a given stock might reduce risk on a relatively basic level, for instance, by buying a put option or selling a call option on that same stock; if the stock goes down, the option will rise in value, providing a ""hedge"" against losses.

High Estimate

The highest of the given earnings estimates by any analyst.

High Yield Bond

A Morningstar category for taxable bond funds with at least 70% of their portfolio invested in high-yield corporate bonds. These are risky bonds with poor credit ratings, typically rated by Standard & Poor's and Moody's below BBB. Also known as junk bond funds.

Housing Sector

A category that includes single and multifamily housing companies.