Big Biz Show » Big Biz Term of the Day

“SHUT THE FRONT DOOR!”

Sully — Mon, 12 Mar 2012 00:54:43 +0000

Def. – What Sully yelled as he realized that the market just dropped like a tummy-tuck on a plus-sized model. Giddy up.

WHITE CANDLESTICK

Sully — Mon, 01 Mar 2010 15:31:06 +0000

What Does White Candlestick Mean?
A point on a candle stick chart representing a day in which the underlying price has moved up. Candlesticks will have a body and usually two wicks on each end. The bottom of the white body represents the opening price and the top of the body represents the closing price. The top and bottom tips of each wick are the day’s highest and lowest price respectively.

Also known as an “open candlestick.”

Candlestick charts are primarily used by technical traders because of how quick a day’s price movement is conveyed. There are many formations which can be used as a buy, sell or hold indicator.

GDP – GROSS DOMESTIC PRODUCT

Sully — Mon, 22 Feb 2010 03:55:46 +0000

What Does Gross Domestic Product – GDP Mean?

The monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

GDP = C + G + I + NX

where:

“C” is equal to all private consumption, or consumer spending, in a nation’s economy
“G” is the sum of government spending
“I” is the sum of all the country’s businesses spending on capital
“NX” is the nation’s total net exports, calculated as total exports minus total imports. (NX = Exports – Imports)

GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country’s standard of living. Critics of using GDP as an economic measure say the statistic does not take into account the underground economy – transactions that, for whatever reason, are not reported to the government. Others say that GDP is not intended to gauge material well-being, but serves as a measure of a nation’s productivity, which is unrelated.

McMANSION

Sully — Fri, 22 Jan 2010 14:50:41 +0000

What Does McMansion Mean?

A slang term that describes a large, opulent house that may be generic in style and represents a good value for a homebuyer in terms of its size. This type of home is built to provide middle and/or upper middle class homeowners with the luxurious housing experience that was previously only available to high-net-worth individuals.

The McMansion term is as a play on McDonald’s fast food restaurants, as these homes also represent the pervasiveness and excessive consumption that critics often associate with Mcdonald’s.

McMansions are often considered a status symbol because their size (often in excess of 3,000 square feet) may exceed the amount of space that shrinking modern families actually need or can afford to maintain.

Many McMansion homeowners live beyond their means as mortgages on these monstrous properties may be 100% mortgages, interest-only mortgages

Cookie Jar Accounting

Sully — Mon, 21 Dec 2009 17:40:24 +0000

What Does Cookie Jar Accounting Mean?
An accounting practice in which a company uses generous reserves from good years against losses that might be incurred in bad years. Cookie jar accounting is a sign of misleading accounting practices.

This gives the sense of “income smoothing”, because earnings are understated in good years and overstated in bad years. You may have heard of companies taking special charges or write-downs – that’s just another flavor of cookie jar accounting.

Consumer Price Index – CPI

Sully — Tue, 15 Dec 2009 15:22:37 +0000

**What Does Consumer Price Index – CPI Mean?**

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.

Sometimes referred to as “headline inflation”.
The U.S. Bureau of Labor Statistics measures two kinds of CPI statistics: CPI for urban wage earners and clerical workers (CPI-W), and the chained CPI for all urban consumers (C-CPI-U). Of the two types of CPI, the C-CPI-U is a better representation of the general public, because it accounts for about 87% of the population.

CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation.

VIX

Sully — Mon, 07 Dec 2009 15:27:58 +0000

What Does VIX – Volatility Index Mean?
The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge”.

There are three variations of volatility indexes: the VIX tracks the S&P 500, the VXN tracks the Nasdaq 100 and the VXD tracks the Dow Jones Industrial Average.

The first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options. Ten years later, it expanded to use options based on a broader index, the S&P 500, which allows for a more accurate view of investors’ expectations on future market volatility. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.

TURKEY

Sully — Thu, 26 Nov 2009 16:14:18 +0000

What Does Turkey Mean? Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities that realize significant losses and unsuccessful initial public offerings (IPOs) could all be called “turkeys”.

Turkey For an individual investor, a turkey could be a speculative equity investment in a startup technology company that subsequently goes bankrupt. For a corporation, a turkey could be the purchase of a smaller company that ends up producing much less revenue than anticipated, making it an investment that gobbles up the company’s profits.

HTG!!

HINDENBURG OMEN

Sully — Wed, 04 Nov 2009 14:27:35 +0000

A technical indicator named after the famous crash of the German airship of the late 1930s. The Hindenburg omen was developed to predict the potential for a financial market crash. It is created by monitoring the number of securities that form new 52-week highs relative to the number of securities that form new 52-week lows – the number of securities must be abnormally large. This criteria is deemed to be met when both numbers are greater than 2.2% of the total number of issues that trade on the NYSE (for that specific day).

Traders use an abnormally high number of 52-week highs/lows because it suggests that market participants are starting to become unsure of the market’s future direction and therefore could be due for a major correction. Proponents of this indicator argue that it has been very accurate in predicting sharp sell-offs in the past and that there are few indicators that can predict a market crash as accurately.

REPACKAGING

Sully — Fri, 23 Oct 2009 12:20:10 +0000

What Does Repackaging Mean?
When a private equity firm takes a public firm private by purchasing all of its common stock with leverage loans. The private equity firm then makes changes to the company, in effect “dressing up” the company, with an eye toward bringing it public again via an initial public offering

Repackaging is a very common and popular route taken by private equity firms. For instance, there were 77 IPOs brought to the market by private equity buyout firms in 2006. The goal is to improve the company that is taken over enough so that the funds received for the IPO of the newly packaged company will exceed the amount of funds sunk into the company. The risk is that changes made to the company will not actually improve it. In those cases, the company may not be able to be sold or must be sold for less than the original purchase price.