Financial Jargon is designed to confuse.

Yes it’s true, a lot of the Wall Street Jargon and Financial Terminology was created to speak a language that many cannot understand. So I  will be breaking down the top financial Jargon I see thrown around and what it actually means. 

Bull vs Bear Market

A Bull market is one where the market is growing and the value of stock prices are going up. A bear market is where the market is going down. But the next question is….What market? When people say “the market” they are usually referring to the S&P 500 which is a collection of 500 of the largest public companies in the US. 

Equity 

Equity is a broad term for ownership in an asset. You can have equity in your home you can have equity in Microsoft (if you own their stock) or you can have private equity in a private company. This leads me to my next point - the difference between public companies and private companies. Public companies trade their equity shares on the public exchanges - New York Stock Exchange, Nasdaq, etc. Public companies also need to disclose company financial health, revenue, projections etc to the public. On the other hand private companies do not need to share their companies financial statements to the public and if you want to buy private shares its usually through the company - not an exchange. 

Venture Capital vs Private Equity 

The two are similar both are forms of private market investing yet the key difference is the stage of the companies being invested in. Venture capital is investing in early stage private equity companies that may not have significant revenue but are growing quickly. Private Equity is investing in mature private companies with steady revenue. 

Growth vs Value

Many of us have seen these terms thrown around especially if you are selecting your investment options in your corporate retirement plans. Growth companies are ones that are anticipated that the share prices will go up whereas value companies pay higher dividends but the share prices does not grow as much year over year. And a quick sidenote dividends are essentially cash that companies pay you for owning their stock.