Finance Glossary

A limited partnership (LP) (also known as a limited liability partnership or silent partnership) is a business partnership in which one or more of the partners is only liable for their investment in the company. This allows an individual to invest in a company without being responsible for its debts, litigation or day-to-day managerial practices. The limited […]

Defensive stocks, also known as non-cyclical stocks, are any stocks that tend to provide constant dividends and stable earnings regardless of the state of the market. They tend to be companies whose products have consistent demand, allowing them to stay relatively stable during cyclical change. A defensive stock will likely perform better than the overall market […]

Generally speaking, a golden hammer is a singular tool or strategy used by an entity to perform many functions, to the point of excessive dependence. The concept of a golden hammer is related to psychologist Abraham Maslow’s law of the instrument. Maslow observed that as we become more familiar with a particular tool or technology, we tend […]

In the stock market, a wallflower is a stock in which the wider investment community has generally lost interest, leading to low trade volumes. Wallflowers may be in an unpopular industry sector, or in a sector that has had a recent economic bubble. For instance, dotcom stocks went from hot properties to wallflowers during the […]

A bear hug (not to be confused with a bear market) is when a company offers to buy the shares of another company at a price far in excess of their market value. Though this may seem generous, a bear hug often comes unsolicited, and may be offered at a time when the company’s management is reluctant […]

Market disruption occurs when markets stop functioning in a regular manner, often leading to large and rapid market declines. Market disruptions usually issue from physical threats to an industry or unusual trading, and are typically characterized by widespread panic and disorderly market conditions. There are many potential causes for a market disruption. Severe weather or armed […]

A black swan is an unexpected, unpredictable event with serious economic repercussions. The term was coined by finance professor and former trader Nassim Nicholas Taleb in a 2007 book and subsequently became popular during and after the 2008 financial crisis. In his book, Taleb lists World War I, the rise of the Internet and the September […]

The sharing economy is loosely defined as decentralized, peer-to-peer (P2P) activity in which goods and services are bought, sold, or shared through a community-based online platform. Rather than sell something from a business or through a third party, these platforms connect individuals directly to each other. Rideshare services such as Lyft or Uber as well […]

A blue chip stock is a large, well-established company that has performed consistently well for many years. These tend to be highly influential companies, generally market leaders or among the top 3 companies in their sector. While there is no official qualification for blue chip status, they are generally stocks with market capitalization with at least […]

The Consumer Price Index (CPI) is a weighted average of prices of a typical “basket” of goods and services that a consumer is likely to need on a regular basis. This not only includes common grocery items, but also transportation, medicine, education, housing and other goods and services associated with cost of living. Altogether, about […]