Safe Harbor:
A provision to reduce liability as long as good faith is demonstrated.
Our take:
Management can be protected from the liability stemmed from making projected
financial statement and other forecasts.
Salad Oil Scandal
:
One of the biggest scandal where they cover up their tankers with
salad oil on top while filling the rest with water.
Our take: The biggest
victim of this oil is American Express Corp. (AXP) where the loss totaled $
58 Million.
Salary
Freeze:
Aimed at reducing expense, it will suspend salary increase for a period of
time.
Our take:
While nobody like a salary freeze, it is a better alternative than mass
lay-off.
Sales Charge :
A fee paid by investors for purchasing a mutual
fund shares.
Our take: This acts
similar to stock broker's trade comission.
Sales per Share:
Total revenue for the 12 month period divided by the number of shares
outstanding.
Our take: Lower sales per
share may indicate that the company trades at a lower valuation to its
peers. However, standard sales per share varies from one industry to
another.
Sales Tax:
Tax incurred by buyers for purchasing retail goods and services..
Our take: The tax is
determined on a percentage basis depending on the local government.
Sales To Cash Flow Ratio:
The ratio of total sales divided by cash flow figure.
Our take: The higher this
ratio is, the better since this implies that the company is having a robust
sales.
Salvage Value:
The market value of a depreciable assets by the time
it has lost its uses or functions.
Our take:
For example, a furniture's salvage value may be the
value of its wooden structure when it no longer can be used.
Same Store Sales:
This is the total sales for stores that has been opened a year or more.
Our take: This determines
the health of retailers. If retailers have a higher same store sales, this
means that it can generate more sales for a given number of stores. Since
opening new stores cost a lot of money, increasing same store sales will
increase profitability markedly.
Savings
: The amount of money left after subtracting expenses with total
income.
Our take: To retire
comfortably, people need to save certain portion of their salary and then
invest it wisely.
Scalpers:
Traders that trade equities or options who take very little profits per
trade.
Our take: Traders with
10,000 shares will sell shares $ 0.05 higher than his purchase price. This
will net him $ 500. While this sounds ideal, please consider the fact that
share price can go down 15 cents or more in a hurry. Therefore, aiming a $
0.05 return for a $ 0.15 potential loss is very disheartening.
Scripophily:
The act of purchasing old stocks and bonds certificates.
Our take: Similar to
collecting stamps or coins, scripophily attempts to collect stock and bond
certificates that has some historical significance.
Secondary market:
Capital market where investors purchase equities from other investors, not
corporations.
Our take: An example of
secondary market is the NASDAQ market where investors buy securities from
other investors.
Sector Rotation
: The act of
institutional managers of shifting asset away from one industry to another.
Our take: Not all sectors
move and fall together. Sector rotation is an attempt by money manager to
make the best return of its assets. When one sector is performing well, it
will move his asset to that sector.
Secured Bond
: Bond issued by
corporations that is secured by its physical assets.
Our take: When the
company cannot pay its debt obligation, the secured bond holder has the
right to claim certain assets of the company. Secured bond is deemed to be
safer than unsecured bond.
Secured Card
: A type of credit card
secured by savings accounts.
Our take: Secured card is
used by individuals who has no credit or bad credit.
Security Analyst
: A professional
providing research, valuation report and making buy & sell recommandations
regarding specific securities .
Our take: The best way to
not lose money is to do the research yourself and not let security analyst
dictate what stocks you should buy and/or sell.
Self-Employment tax: Tax
imposed on self-employed individual.
Our take: The tax can be
reduced if the individual works at another company and pays social security
and Medicare taxes through that employer.
Sell to Close: A trade
order used by stock brokers to represent the closing of a long position.
Our take: To make it
easier to remember, sell to close is to sell equities to close long
position.
Sell to Open
: A trade order used by
stock brokers to open a short position.
Our take: This means that
you are selling short to open your position.
Sell Off
: The act of selling
securities due to oversupply and low demand.
Our take: As a result,
securities decline in value. The sell-off can be based on various reasons
such as disappointing earning guidance or certain patent withdrawals.
Sellers' Market: A market
characterized by having so few goods to sell.
Our take: This means that
seller has the upper hand in determining securities value. It implies that
future price will rise.
Selling Into Strength:
A selling strategy where securities are sold when price is high and before
the turndown occurs.
Our take: The opposite of
selling into strength is buying into dips or weaknesses.
Selling, General & Administrative
Expense (SG & A)
: the sum of all indirect
expense and administrative expense.
Our take: This is
commonly referred as fixed cost.
Semi-variable cost
: Cost that is a mixed of
variable and fixed cost.
Our take: For example,
machine capacity is a fixed cost until all the capacity is used up. Above
that, the cost of producing one goods will be a variable cost.
Semiconductor
: A material which has a
half property of a conductor and half as an insulator.
Our take: semiconductor
is now referred to as chip company. Many products such as DVD, personal
computer, celullar phones and household appliances have chips embedded in
them.
Senior Debt
: Debt
that received higher payment priority compared to other types of debts.
Our take: Due to its
priority, senior debt normally gets lower interest rate.
Share Repurchase
: A program on which a
company decides to buy back its own shares.
Our take: Share
repurchase is normally beneficial to current owners as there will be less
shares available, causing the remaining shares to be more valuable.
Shareholder
: Any individuals or
organizations that own at least one share of a company.
Our take: Shareholder
will be rewarded in tandem to the company's performance. When performance is
good, share price can rise two times over or more.
Short Interest
: The number of shares in
securities that have been sold short by market participants.
Our take: Shares that are
sold short are borrowed shares. To close their position, short needs to buy
the stock sometime in the future.
Short Interest Theory
: The theory that states
that high short interest is an indication of a higher stock price in the
future.
Our take: The belief is
that the shares that are sold short needs to be bought later, which will
bring in extra buyer to the market.
Short Squeeze: A situation where low supply and excess
short covering forces the price upward.
Our take: This occurs when a security has a thin float
and high short interest ratio.
Short Term Investment: Investment of assets that might
be sold within the one year time frame.
Our take: Examples of short term investment are one
year treasury bill, certificate of deposit maturing in one year or less and
stock investment.
Shrinkage: The loss of inventory due to manufacturing
and distribution process.
Our take: For example, when transporting gasoline,
trace amount of gasoline will vaporize into the air and causes the amount of
gasoline transported to be less than the amount of gasoline stated on the
invoice.
Sideways market: A circumstance where the market is
experiencing little movement in price.
Our take: Traders that exploit market movement
generally do poorly in a sideways market.
Silent partner: Investor that do not manage daily
operations of a company.
Our take: Silent partner merely provides capital and
he is liable for any losses incurred to his investment.
Silicon Valley: an area in California (San Jose to be
exact) where a lot of computer and internet companies are born.
Our take: Silicon is one component found in a chip,
which is the foundation of the birth of computing and internet industries.
Silver Parachute: executives who get severance package
should the company get acquired.
Our take: This enables company to be taken over by
another company without the objection from company's executives.
Sinful Stock: Stock of companies who do business that
are considered unethical or immoral.
Our take: Examples include companies that do business
in the gambling, sex-related and weapon industries.
Sluggish Economy: Term used for economy that is
growing slowly or not at all.
Our take: Prolonged sluggish economy growth may cause
recession since businesses will be less willing to invest to expand its
business.
Small Cap: A firm with market capitalization of
between $ 300 Million to $ 2 Billion.
Our take: Small Cap stocks are generally more volatile
due to the liquidity of the company and the small size of the float
available.
Social Responsibility: the thought that company should
help the society's welfare and not just making money.
Our take: Companies can help by donating a portion of
its profit, giving up scholarship to talented students, supporting community
building activities and so on.
Social Security Number: A number assigned to Americans
for tax purposes and other things.
Our take: You also need your social security number to
get work, apply for unemployment benefit and build up your credit history.
Soft Commodity: Renewable commodity that can be grown,
instead of mined.
Our take: As with other commodities, soft commodity
can also be traded at the futures market.
Soft Currency: Currency that does not have ample
liquidity.
Our take: As a result, soft currency is always more
volatile.
Soft Landing: Refers to the economy that slows down
without causing a recession.
Our take: Hard landing is when the economy slows down
causing recession.
Sole Proprietorship: A business entity that is owned
by one person.
Our take: Sole proprietorship has unlimited
liabilities due to the loss caused by the business.
Solvency ratio: Ratio used to gauge the company's
solvency to satisfy its obligation.
Our take: Current ratio is one metric for solvency
ratio.
Sour Crude: Crude oil with higher acid and sulphur
content.
Our take: Sour crude will be sold at a lower price
than regular crude because it is more expensive to process to usable
products.
Special Dividend: Dividend that is given out due to
specific circumstances.
Our take: Special dividend can be declared after a
strong earnings or high non-operating income.
Speculative Bubble: market condition that raise price
through the roof due to excessive buying.
Our take: Investors investing in speculative bubble
are normally short-term investors; going in and out of an investment before
the bubble bursts.
Speculative Company: company that has a high rate of
uncertainty to its future.
Our take: company that depends its survival on court
judgment is a speculative company since nobody knows the decision of the
court beforehand.
Speculator: Short-term investors that buy an
investment with expectation of short term price move.
Our take: Speculator helps provide liquidity to the
market and helps reduce risk to other market participants. While this may be
hard to understand, it is a true fact.
Spinoff: The creation of a new stand-alone company
from an existing company.
Our take: businesses that wish to divest its holding
can spin off the portion into a stand-alone business.
Spot Commodity: Commodity that is traded on the spot
market, with the expectation of a delivery.
Our take: Meanwhile futures contract do not normally
require the delivery of the actual commodity itself.
Stagflation: A period of low economic growth with
high inflation and high unemployment.
Our take: This is the worst kind of economic stage.
Stagnation: A period where economic growth is low or
even not growing.
Our take: One example of stagnation is the US economy
in the 1970s.
Stakeholder: Individual or organization who has
interest in the enterprise.
Our take: Examples include: shareholders, employees,
suppliers, bondholders and government.
Sterile Investment: Investment that do not provide
dividends to shareholders.
Our take: Shareholders get their return purely by
capital gains. Examples include: high-tech growing companies, gold and so
forth.
Stock: An investment that signifies a piece of
ownership of a company
Our take: a stockholder has a claim to the company's
assets and profits. However, it is shielded from liabilities stemmed from
owning the company.
Stock Certificate: the physical ownership of a
company, represented by a piece of certificate.
Our take: Most investors will keep their stock
certificates to their brokers and therefore, it is easier when they try to
sell the stocks.
Stock Compensation: the method of payment using stocks
instead of cash.
Our take: Individuals that receive stock compensation
are normally employees and company's management. This is common because
shareholders believe that employees will work harder if their compensation
is tied up to the stock price.
Stock Dividend: Dividend distributed in the form of
stock instead of cash.
Our take: Stock dividend does not matter to
shareholders since after the payments, shareholders will own the same
percentage of ownership.
Stock Market: the market in which a specific security
is issued and traded through the stock exchanges.
Our take: The stock market allows companies to get
capital to operate its businesses. Other than that, companies can go to the
bond market or to financial institutions to get access to capital.
Stock Option: A financial instrument giving the holder
the right but not the obligation to buy or sell a stock at specific price.
Our take: The right to buy a stock at a specific
strike price is called call option, while the right to sell is called put
option. Call buyer profits when the underlying stock rises in value.
Meanwhile, put buyer makes it profit when the underlying stock drops in
value.
Stock Screener: A tools used to filter a stock which
satisfies certain criteria.
Our take: This helps investors to find stocks that
they tend to forgot or not familiar about.
Stock split: The process of dividing the stock price
by certain multiples while increasing the number of shares available by the
same multiple.
Our take: After a stock split, the market value of the
underlying company does not change since they now has a higher share count
while stock price plummets.
Stock symbol: A unique symbol assigned to a specific
company trading at a particular exchange. Stock symbol acts like an identity
code for the specific company in question.
Our take: For example, the stock symbol INTU is
reserved for a company called Intuit Corp. trading on NASDAQ market. No
other company can trade under the same symbol INTU.
Stockbroker: An individual that charges a commission
fee to meet buyers with sellers to conduct a stock trade.
Our take: The commission fee for stock trade has
decreased significantly in the advent of the internet.
Stockholders' Equity: A specific section in the
balance sheet that indicates the amount of money shareholders will receive
in the event of liquidation.
Our take: It is also called the book value of a
company. It is calculated by adding all assets and subtracting it with all
of the company's liabilities.
Stop Order: A trade order at a specific price,
therefore allowing investors to buy or sell at certain point.
Our take: Losses can be limited and investment can be
sold without investors have to watch the price realtime.
Stop Loss Order: A trade order specified to sell an
investment when it drops to a certain level.
Our take: This is designated to minimize the loss of
an investment.
Strategic Alliance: A joint venture at two companies
aimed at sharing resource for a specific task.
Our take: For example, when two companies are
headquartered at the same building, it can share resource such as gardening,
security, company's transportation or in some cases, electricity expense.
Strike price: The stated price on which a stock can be
sold or bought, depending on the option buyer's right.
Our take: The strike price varies depending on the
price of the option itself.
Subprime loan: A loan that has interests rate higher
than that of prime loan.
Our take: This might be because the borrowers do not
have a good credit rating. As a result, they do not qualify for prime loan,
which generally has a lower interest rate.
Subsidiary: A company who is owned more than 50% by
the parent company.
Our take: Ownership here can mean stock ownership or
voting ownership.
Subsidy: A benefit given by government to help local
companies to compete better against foreigners.
Our take: For example, government can give low or no
interest loan package to rescue a specific industry from overseas
competitors.
Suicide Pill: A strategy used to discourage other
companies to launch a hostile takeover bid. However, the result may cripple
the company instead of discouraging potential bidders.
Our take: An extreme case of poison pill may cause
this circumstances.
Sums-of-part Valuation: The method of determining the
fair value of a company if they are broken up into individual pieces.
Our take: This applies to companies which has several
divisions that do not overlap with each other.
Sunk Cost: A cost that
has already been incurred, no matter what our next course action would be.
Our take: Decision makers
do not consider sunk cost when making decisions about something. The reason
is that the sunk cost will not have any effects on their current decisions
in determining the outcome.
Super Bowl Indicator: The
direction of the stock market based on what team wins the super bowl during
that particular year.
Our take: Historically,
the super bowl indicator has been 85% reliable. A super bowl win from the
AFC divisions suggest a decline in the stock market for the year and vice
versa. Even so, it is not advisable to bet your ranch just from this
indicator alone.
Supply: The amount of
good or service available for use to consumers.
Our take: The higher the
supply number is, the lower the price per unit of that particular goods or
services is.
Supply Chain: The network
created amongst different companies divisions producing, distributing and
handling specific company products.
Our take: Supply chain
involves every aspect of a particular products or services. For example:
assembling, delivering and selling are all parts of supply chain.
Supply Chain Management:
The management of a supply chain in an effort to make it more efficient and
productive.
Our take: Examples of
supply chain management include tighter internal inventories, distribution,
sales and internal productions.
Suspense Account: account
that is created to fill the void of short-term funds or securities.
Our take: This acts as a
temporary account until a permanent account has been set up.
Sustainable Growth Rate:
The maximum allowable growth rate that a company can sustain without
leveraging its financial condition.
Our take: Sometimes
referred to as organic growth. Growth is created within the business itself
without having the need to borrow additional funding. Pass this point, a
firm needs to borrow money to fund its expansion. Within its sustainable
growth rate, a firm normally uses its cash-flow from operations to generate
growth and not by borrowing.
Swing Trading: A
short-term stock trading that tries to exploit price inefficiency in the one
to four days period.
Our take: In this
situation, a lot of technical analysis tools are employed as traders often
must act quickly to capture the price inefficiency.
SWOT Analysis: Strength
Weaknesses Opportunity and Threat Analysis
Our take: A marketing
tools used to identify a firm's position and then act accordingly. In
general, a firm is trying to display its strength and opportunity while
keeping an eye on its weakness and threat.
Syndicated Loan: A loan
provided by a group of banks instead of one bank providing the entire loan.
Our take: This is done to
cover the huge risk of default should the borrower fails to satisfy its
obligations.
Systematic Risk: Risks
borne to the entire market segment. Also known as market risk.
