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.

Gain/Loss

The profit or loss on a given security or portfolio expressed in ruppees. This is calculated as market value minus cost basis.

Gain/Loss %

The profit or loss on a given security or portfolio expressed as a percentage. This is calculated as market value minus cost basis divided by cost basis.

General Obligation Sector

A category that includes general obligation bonds, which are repaid from general revenue and borrowings rather than from the revenue of a specific project or facility.

Good-Till-Cancelled Order

A good-till-cancelled (GTC) order is a limit order that stays on the books of the exchange-trading floor until executed or until cancelled by the investor.

Gross Domestic Product (GDP)

The total value of goods and services produced by a nation within that nation.

Gross Margin

Gross operating profit divided by sales. Gross margin is a good way to assess the profitability of the company's core operations, aside from depreciation and other machinations and contingencies. To get an idea how the company's current gross margin stacks up, compare it to the five-year average, also given.

Gross National Product (GNP)

The ruppee value of all goods and services produced in a nation's economy, including goods and services produced abroad.

Gross Operating Profit

Operating revenue minus cost of goods sold. What's left is the profit earned on selling whatever it is that the firm sells.

Gross Profit

Revenue minus cost of goods sold.

Gross Sales

Total sales without making allowance for returns, discounts and shipping expenses. This can differ substantially from net sales. In book publishing, for instance, booksellers return an enormous proportion of the books shipped to them.

Growth And Income Funds

Growth and income mutual funds invest in both equity and debt securities, mainly for the purpose of producing current income. These funds typically invest no more than half their assets in stocks. Income can come from a variety of sources, with widely differing risks, and so to achieve their goal of providing current income, funds use a wide variety of investment styles and asset mixes. The volatility of individual funds will vary depending on the source of their income. For example, Oppenheimer Strategic Fund has at times had almost 90 percent of its assets in bonds, while Value Line Income Fund has held as much as 75 percent of its assets in stocks. If you are looking for income, think twice before simply choosing the highest payer. Consider whether a given fund will not only add income to your portfolio, but will also have the potential for growth. Within the income funds group are funds to suit almost every investor. Look for the fund with the asset mix, return and risk level that meets your particular needs.

Growth Persistence

A measure of how consistently a mutual fund has outperformed its equity or fixed-income peers. Value Line's calculation of growth persistence rewards a fund only for its consistency of outperformance; the measure does not take into account the degree of outperformance. The calculation produces a raw number; this number is then ranked against those of the fund's peers in order to derive a comparative ranking that is useful in measuring a fund's historical record of relative performance. The growth persistence figures are also a component of Value Line's Overall ranks.

Growth Rate

The rate at which a company's stock price, earnings, revenue, and/or sales has changed or is expected to change in the future. In looking at a stock, one tends to look at earnings growth and revenue growth. Earnings growth usually is the paramount consideration, and investors often look not just at a stock's P/E ratio, but at the ratio of price to anticipated growth. This is one reason companies that report slower-than-expected earnings growth are so often pummeled on the Stock Exchange. Staying in the realm of what is known, many investors like to see a company that has achieved consistent earnings growth; earnings growth from increased revenue rather than cost-cutting (although of course they like cutting costs); earnings growth that exceeds population growth and inflation; and earnings growth even in hard times. As for revenue growth, many of the same ideas apply, with the caveat that if revenue is growing much faster than earnings it could be a sign of aggressive discounting, out-of-control costs, unmanageably fast growth or other problems.

Growth Stock

The stock of a company that maintains consistently faster-than-average growth.