Bear: An investor who believes that a security, a sector, or the overall market is about to fall.

Bear market: A prolonged period in which investment prices fall, accompanied by widespread pessimism. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly.

Bull: An investor who believes that a particular security, a sector, or the overall market is about to rise.

Bull market: A prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology.

Capital: (1) The money you pay for an investment. (2) The amount of available cash a company has to work with. If a company runs out of capital, it is essentially bankrupt.

Dividend: A taxable payment declared by a company's board of directors and given to its shareholders, usually quarterly. Dividends provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends.

EPS: Earnings per Share. Total earnings divided by the number of shares outstanding.

Green listing: Certain stocks are listed in green. These represent the best buys of the current month based on upside potential and current momentum.

Green zone: Our goal as value investors is to pay a fair price, but never too much. We calculate an intrinsic value for each stock, which is a target for the long-term holder. The Green Zone value is 70% of that intrinsic value. We set that as our limit to give us a wide margin of safety and room for growth. As long as the share price is below that value, prospects for profits are realistic. We recalculate intrinsic values and reset Green Zone prices as new financial information or news that could affect each company's performance becomes available.

Illiquid: (1) That which cannot quickly and easily be converted into cash, such as real estate, collectibles, and thinly traded securities.(2) A company which does not have sufficient cash flow to meet its operational needs and its debt obligations.

Liquid: Easily convertible to cash.

Mutual fund: An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public.

Option: The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time.

Penny stock: A stock which sells for less than one dollar per share (or in some cases, less than five dollars per share).

Pink sheets: A daily listing of prices of some over-the-counter stocks.

REIT: Real Estate Investment Trust. A corporation or trust that uses the pooled capital of many investors to purchase and manage income property (equity REIT) and/or mortgage loans (mortgage REIT). REITs are traded on major exchanges just like stocks.

Spread: (1) The difference between the current bid and the current ask (in over-the-counter trading) or offered (in exchange trading) of a given security; also called bid/ask spread. (2) More generally, the difference between any two prices.

Stock: Signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation's assets and profits.

Stop-loss: A limit order placed with your broker to automatically sell your investments if it reaches a certain price. Doing so will lock in profits.

Volatility: A measure of the fluctuation in the market price of an investment. Volatility can offer quick gains in penny stocks and can be a key factor in an option's premium.

Yield: The annual rate of return on an investment, expressed as a percentage.

Comments: On occasion, we will note a "Hold" rating on a stock. This happens for one of two reasons. Usually, the stock has advanced so strongly that it is reaching its intrinsic value based on our calculations and current financial data. If the company is especially good, we may hold for a short time until new financial reports are released to see if there is a reason to increase the Green Zone price. We will rarely place a hold on a stock if we are waiting for news or resolution of some question. But we often will sell such a stock rather than placing it on hold.