Market Timing
Asset allocation in which investment in the equity market is increased if one forecasts that the equity market will outperform Treasury bills and is decreased when the market is anticipated to underperform.
Market Value
(1) The price at which a security is trading and could presumably be purchased or sold. (2) What investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares. Also known as market capitalization.
A stock with $1 billion to $5 billion in market value. NAIC guideline: $500 million to $5 billion in revenues.
Nasdaq Stock Market
The first electronic stock market, listing more than 4,000 companies; it is an acronym for National Association of Securities Dealers Automated Quotation System. The Nasdaq stock market comprises two separate markets: the Nasdaq National Market, which trades large, active securities, and the Nasdaq Bulletin Board, which lists young companies or those whose shares are trading for less than $1.
Net Income
A company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Investors want to see a company's net income rise year to year.
New York Stock Exchange (NYSE)
Also known as the Big Board or The Exchange, it is the nation's oldest stock exchange, founded in 1792. The Exchange is also a self-regulatory organization that oversees its members and ensures that they abide by its rules. The exchange has stringent requirements that companies must meet before their shares can be traded there: They must have 2,000 shareholders or more, average monthly trading volume of 100,000 shares and stock market value of $100 million or more. More than 3,000 companies are currently listed on the exchange. The Big Board is located at Broad and Wall Streets in New York City.
Acronym for 'Not meaningful'. This is typically used where data cannot be calculated or is not meaningful. For example, calculating a P/E ratio when the stock has zero or negative earnings is not meaningful.
Operating Profit (or Loss)
Revenue from a firm's regular activities less costs and expenses and before such deductions as taxes or depreciation.
Acronym for 'Over The Counter'. In the context of investing, OTC stocks are unlisted stocks which are traded by brokers/dealers who negotiate directly with each other.
Over the Counter (OTC)
With respect to equities, OTC refers to Nasdaq, a decentralized electronic market, not an exchange market, through which geographically dispersed dealers are linked by telephones and computer screens. The market is for securities not listed on a stock or bond exchange and usually consists of newer or smaller companies than those on an exchange. The Nasdaq is also known as a dealer market rather than an auction market as the NYSE or AMEX are. In general, OTC trading takes place in many assets, such as bonds and options. OTC usually means not traded on an exchange. See also NYSE; AMEX.