Finance Glossary

Much like in foreign policy, the terms dove and hawk have counterparts in the world of economics. Rather than aggression against a country, these terms in the economic world refer to attitudes on countering inflation. A dove refers to an economist or policy maker, usually tied to the Fed, that supports low interest rates with […]

The gig economy refers to the prevalence of temporary, often short-term jobs performed by freelancers as opposed to stable, long-term positions filled by full-time employees. The gig economy is seen as an alternative, or even a potential threat, to traditional economic notions of a life-time career. When large numbers of people are willing to work as […]

Working capital, or net working capital, is a metric used to evaluate a company’s operational efficiency and short-term financial health. It is calculated by subtracting a company’s liabilities, such as accounts payable, from a company’s current assets, like so: Current Assets  – Current Liabilities  =   Working Capital Current assets can include cash and customers’ […]

Big uglies are established companies with a history of steady growth and small, regular returns. Traditionally, big uglies have been companies in hard industries such as coal, oil, steel and mining as well as utilities. Today, however, many stocks with similar behaviors and history might be considered big uglies, including large banks, hardware makers, and […]

Yo-yo  is investor slang for an extremely volatile market. Like the namesake toy, prices in a yo-yo market can move up and down in quick succession repeatedly, often reaching extreme highs and extreme lows.  Yo-yos take on features of both up and down markets, making them hard for investors employing a buy and hold strategy. […]

A trustee is an individual or firm that holds and administers property or benefits on behalf of a third party. Trustees are often used for charities, trust funds, cases of bankruptcy, and some types of retirement plans. In all cases, a trustees has the fiduciary responsibility to make decisions in the beneficiary’s best interests, putting aside […]

A leveraged buyout (LBO) is a tactic used by a company to acquire another company through the use of large amounts of borrowed money. Often in an LBO the assets of the target company make up a large portion of the collateral put forward for the loans needed to buy it. In this way, LBOs allow […]

Market Cannibalization (or corporate cannibalism) refers to the negative impact a company’s new product can have on the sales of its related products. Market cannibalization comes from within the company rather than external competition. Rather than grabbing a growing share of the market, the company simply takes market share from itself, potentially leading to a decline […]

Short interest refers to the amount of shares that have been sold short but have not been covered or closed. It can be expressed as a number, percentage or ratio, and can apply to individual companies or markets as a whole. Short interest is an important indicator of market sentiment; the higher the value, the more […]

A Pac-Man defense refers to a strategy for preventing hostile takeovers in which the target company attempts to acquire the company attempting the takeover, usually by purchasing a controlling amount of shares in the company. The term derives from the arcade game Pac-Man in which the main character can turn against his pursuers after consuming […]