> ## Documentation Index
> Fetch the complete documentation index at: https://tendrill.ai/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Glossary

> Financial terms explained in plain English

## Financial Terms Explained

New to investing? This glossary explains common financial terms in plain, jargon-free language.

<Note>
  **Tip:** When Tendrill uses a term you don't know, just ask! "What does P/E ratio mean?" works great.
</Note>

***

## A

<AccordionGroup>
  <Accordion title="After-hours trading">
    Trading that occurs after the regular stock market closes (4:00 PM - 8:00 PM ET). Prices can move significantly on after-hours news like earnings reports. After-hours volume is lower, so prices can be more volatile.
  </Accordion>

  <Accordion title="Allocation">
    How your money is distributed across different investments. For example, "60% stocks, 40% bonds" or "30% tech, 20% healthcare." Good allocation helps manage risk.
  </Accordion>

  <Accordion title="Analyst">
    A professional who researches companies and makes recommendations (buy, hold, sell). Analyst reports include price targets and ratings that can influence stock prices.
  </Accordion>
</AccordionGroup>

## B

<AccordionGroup>
  <Accordion title="Bear market">
    When the stock market drops 20% or more from its recent high. Called a "bear" market because bears swipe downward. The opposite of a bull market.
  </Accordion>

  <Accordion title="Blue chip">
    Large, well-established, financially stable companies with a history of reliable performance. Examples: Apple, Microsoft, Johnson & Johnson. Generally considered lower risk.
  </Accordion>

  <Accordion title="Bull market">
    When the stock market rises 20% or more from its recent low, or a sustained period of rising prices. Called a "bull" market because bulls thrust upward.
  </Accordion>

  <Accordion title="Buyback">
    When a company uses its cash to buy back its own shares from the market. This reduces shares outstanding, which typically boosts earnings per share. Generally seen as positive for shareholders.
  </Accordion>
</AccordionGroup>

## C

<AccordionGroup>
  <Accordion title="Capital gains">
    Profit from selling an investment for more than you paid. If you bought a stock at $100 and sold at $150, your capital gain is \$50. Subject to taxes.
  </Accordion>

  <Accordion title="Compounding">
    When your investment returns generate their own returns. Like a snowball rolling downhill - it gets bigger over time. The earlier you start investing, the more time compounding has to work.
  </Accordion>

  <Accordion title="Cost basis">
    What you originally paid for an investment, including any fees. Used to calculate capital gains when you sell. If you bought at different prices, it's the average cost per share.
  </Accordion>
</AccordionGroup>

## D

<AccordionGroup>
  <Accordion title="Diversification">
    Spreading your investments across different stocks, sectors, and asset types to reduce risk. "Don't put all your eggs in one basket." If one investment drops, others may hold steady or rise.
  </Accordion>

  <Accordion title="Dividend">
    A cash payment that some companies distribute to shareholders, typically quarterly. If you own 100 shares and the dividend is $0.50/share, you receive $50. Not all companies pay dividends.
  </Accordion>

  <Accordion title="Dividend yield">
    Annual dividend divided by stock price, expressed as a percentage. If a $100 stock pays $3/year in dividends, the yield is 3%. Higher yield = more income relative to price.
  </Accordion>

  <Accordion title="Downgrade">
    When an analyst changes their rating on a stock from more positive to less positive (e.g., from "Buy" to "Hold"). Can cause the stock price to drop.
  </Accordion>
</AccordionGroup>

## E

<AccordionGroup>
  <Accordion title="Earnings">
    A company's profits, usually reported quarterly. "Earnings per share" (EPS) is total profit divided by shares outstanding. Earnings reports are major events that can move stock prices significantly.
  </Accordion>

  <Accordion title="Earnings per share (EPS)">
    Company's total profit divided by the number of shares. If a company earned $1 billion and has 500 million shares, EPS is $2.00. Higher is generally better.
  </Accordion>

  <Accordion title="ETF (Exchange-Traded Fund)">
    A basket of stocks that trades like a single stock. VOO holds all 500 S\&P 500 companies. ETFs offer instant diversification - own hundreds of companies in one purchase.
  </Accordion>

  <Accordion title="Ex-dividend date">
    The date that determines who receives the next dividend. Buy before this date = you get the dividend. Buy on or after = the seller gets it. Stocks often drop by the dividend amount on this date.
  </Accordion>
</AccordionGroup>

## F

<AccordionGroup>
  <Accordion title="Federal Reserve (Fed)">
    The U.S. central bank that controls interest rates and monetary policy. Fed decisions affect all markets - rate hikes often hurt stocks, rate cuts often help them.
  </Accordion>

  <Accordion title="Free cash flow">
    Money a company generates after paying all expenses and investments. Companies with strong free cash flow can pay dividends, buy back stock, or invest in growth. Generally a sign of financial health.
  </Accordion>
</AccordionGroup>

## G

<AccordionGroup>
  <Accordion title="Growth stock">
    A stock expected to grow faster than average. Often doesn't pay dividends because it reinvests profits. Examples: tech companies, younger companies. Higher potential return but also higher risk.
  </Accordion>

  <Accordion title="Guidance">
    A company's prediction of its future performance. "Raising guidance" means they expect to do better than previously thought - usually positive for the stock. "Lowering guidance" is negative.
  </Accordion>
</AccordionGroup>

## I

<AccordionGroup>
  <Accordion title="Index">
    A benchmark that tracks a group of stocks. The S\&P 500 index tracks 500 large U.S. companies. The Nasdaq tracks tech-heavy stocks. Investors compare their performance to indexes.
  </Accordion>

  <Accordion title="Index fund">
    A mutual fund or ETF that tracks an index. Instead of a manager picking stocks, it simply holds everything in the index. Usually low-cost and popular for passive investing.
  </Accordion>

  <Accordion title="Inflation">
    When prices rise over time, reducing purchasing power. The Fed targets 2% annual inflation. Higher inflation often leads to higher interest rates, which can hurt stock prices.
  </Accordion>
</AccordionGroup>

## M

<AccordionGroup>
  <Accordion title="Market capitalization (Market cap)">
    Total value of a company's stock. Stock price × shares outstanding. Apple at $3 trillion market cap is worth more than most countries' GDP. Large-cap (>$10B), mid-cap ($2-10B), small-cap (<$2B).
  </Accordion>

  <Accordion title="Mutual fund">
    A pool of money from many investors, managed by professionals who pick stocks. Unlike ETFs, mutual funds trade once per day at closing price. Often have higher fees than index ETFs.
  </Accordion>
</AccordionGroup>

## P

<AccordionGroup>
  <Accordion title="Portfolio">
    All your investments combined. Your stocks, bonds, ETFs, and other assets together form your portfolio. Portfolio management involves choosing what to own and in what proportions.
  </Accordion>

  <Accordion title="P/E ratio (Price-to-Earnings)">
    Stock price divided by earnings per share. If a stock is $100 with $5 EPS, P/E is 20. Indicates how much investors pay per dollar of earnings. Higher P/E = higher expectations for growth. Average is roughly 15-20.
  </Accordion>

  <Accordion title="Price target">
    An analyst's estimate of where a stock should trade in the future (usually 12 months). Not a prediction, but an opinion on fair value. Stocks often move when price targets are raised or lowered.
  </Accordion>

  <Accordion title="Pre-market trading">
    Trading that occurs before the regular market opens (4:00 AM - 9:30 AM ET). Like after-hours, volume is lower and prices can be volatile. News released overnight affects pre-market prices.
  </Accordion>
</AccordionGroup>

## R

<AccordionGroup>
  <Accordion title="Rebalancing">
    Adjusting your portfolio back to target allocations. If stocks outperformed and you're now 80% stocks instead of your target 60%, you'd sell stocks and buy bonds to rebalance. Usually done quarterly or annually.
  </Accordion>

  <Accordion title="Revenue">
    Total money a company brings in before expenses. Also called "sales" or "top line." Different from profit (earnings), which is revenue minus costs.
  </Accordion>

  <Accordion title="Risk tolerance">
    How much uncertainty you can handle. High risk tolerance = comfortable with big swings for potentially bigger returns. Low risk tolerance = prefer stability over maximum growth.
  </Accordion>
</AccordionGroup>

## S

<AccordionGroup>
  <Accordion title="Share">
    One unit of ownership in a company. If you own 100 shares of Apple and there are 16 billion shares total, you own a tiny fraction - but you're still a part owner.
  </Accordion>

  <Accordion title="Stock split">
    When a company divides existing shares into more shares. A 4-for-1 split turns 1 share at $400 into 4 shares at $100 each. Total value stays the same. Makes shares more accessible.
  </Accordion>

  <Accordion title="S&P 500">
    An index of 500 large U.S. companies. The most common benchmark for U.S. stock market performance. "The market was up 1%" usually refers to the S\&P 500.
  </Accordion>
</AccordionGroup>

## U

<AccordionGroup>
  <Accordion title="Upgrade">
    When an analyst changes their rating from less positive to more positive (e.g., from "Hold" to "Buy"). Often causes the stock price to rise.
  </Accordion>
</AccordionGroup>

## V

<AccordionGroup>
  <Accordion title="Value stock">
    A stock trading below what the company appears to be worth based on fundamentals. Often mature companies with stable earnings and dividends. Opposite of growth stocks in investing style.
  </Accordion>

  <Accordion title="Volatility">
    How much a stock's price bounces around. High volatility = big swings up and down. Low volatility = relatively stable. Tech stocks tend to be more volatile than utilities.
  </Accordion>
</AccordionGroup>

## Y

<AccordionGroup>
  <Accordion title="YTD (Year-to-Date)">
    Performance since January 1st of the current year. "Apple is up 15% YTD" means it's gained 15% since the year began.
  </Accordion>

  <Accordion title="Yield">
    Return on an investment, usually expressed as a percentage. Dividend yield is annual dividends / stock price. Bond yield is interest payments / bond price.
  </Accordion>
</AccordionGroup>

***

## Still confused?

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