Stock Market Glossary letter S

S&P 500 – The S&P 500 is a stock index composed of 500 US companies, mainly larger businesses with large market capitalization (Large Caps). Most people, even those with no real interest in the stock market, are familiar with the S&P 500 as the level of the index is regularly quoted on media news reports. The S&P 500 index is often looked to as a measure of the health of the US economy.

SEC – SEC stands for the US Securities and Exchange Commission, a governmental agency that oversees the American securities industry and is responsible for applying and enforcing the laws enacted to govern and regulate said industry. The SEC was established through the passing of the Securities Exchange Act of 1934, which sought to address some of the perceived causes of the 1929 Stock Market Crash and ensuing Great Depression.

Spiders – “Spiders” is a popular nickname for Standard & Poor’s 500 Depositary Receipts, an exchange traded fund that has the trading abbreviation SPDR (or SPY on the American Stock Exchange). Spiders were the first of many ETFs to be established and today they are the most popular.

Speculation – Speculation in stock, bond and other financial investing is typically looked down upon as being irresponsible and the opposite of so-called “Good Financial Planning”. With that said, there is always a certain amount of speculation involved in making investments, since the future itself is not certain.

Stock Broker – A Stock Broker acts as a middleman between buyers and sellers of financial instruments, arranging trades and often acting as an advisor on financial matters. An individual who seeks to trade stocks at a stock exchange must act through a stock broker.

Stock Exchange – A Stock Exchange is an organized forum where trading of stocks, securities and often commodities contracts are traded. Stock Exchanges offer traders a measure of security as companies who seek to be listed at the exchange usually must meet a set of financial qualifications. The New York Stock Exchange (NYSE) is one of the oldest and most well known stock exchanges.

Stock Options – Stock Options are financial derivatives that are traded at exchanges much the same way as actual shares of stock. Stock options are contractual instruments that allow the purchaser to purchase shares of a company’s stock at a set price before an expiry date.

Stocks – Stocks are shares in the ownership and assets of a company, issued by a company chiefly as a way to raise working capital. Although there are many types of stock, Preferred Stock being one, most often the term refers to so-called Common Stock or Common Shares. Stocks fluctuate in value based on the performance of the issuing company, and therefore they are frequently bought, sold and traded, usually at a Stock Exchange.

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