Monthly Archives: November 2017

      A correction is a reversal in a stock, bond, commodity or index of 10% or more. This reversal usually takes the form of a negative movement preceded by an upward trend. The correction occurs because stocks are overvalued, and eventually investors cash in and sell stock until the price returns to a realistic […]

In investments, fading refers to a strategy than runs counter to the current prevailing trend or wisdom. As such, it comes with a high amount of risk, and is only appropriate for investors with high risk tolerance. When the majority is selling, the fade investor will be buying; and when everyone else is buying, the fade investor […]

Earnings per share (EPS) refers to amount of a company’s profit associated tied to each outstanding share in the stock market. It is calculated by taking a company’s net income, subtracting preferred dividends, and dividing the difference by the number of shares, or: EPS =  (Net Income  –  Preferred Dividends) / Average number of shares […]

  Market efficiency is the degree to which the market reflects all available, relevant information. The concept of market efficiency was popularized in the 1970s by economist Eugene Fama. According to Fama’s efficient market hypothesis (EMH), stock prices and prices of other securities have a close relationship to all available information relevant to the market […]

  A bid-ask spread for a stock is the difference between the ask price offered by the seller and the bid price offered by the buyer. It is also called simply the “bid-ask” or the “sell spread.” To give an example, a seller might ask $5 for a stock, while the buyer bids only $4. The […]