Financial glossary
for new-age investors

Discover financial terms and learn new concepts.

Safe Haven

An investment expected to retain or increase its value in times of market turbulence. Safe havens allow investors to limit their losses in the event of market downturns. Gold has traditionally been considered a safe haven, as the metal has held its value for centuries. Government bonds of major economies (that are expected to pay back their debts even in turbulent times) have also been seen as safe havens, such as the United States. In the currency market, the Swiss franc and Japanese Yen have also been considered safe havens. It is important to note however, that what investments are considered safe havens alter over time as market conditions change, and what appears to be a safe investment at one point in time can be much riskier at another point in time.

Sales

The money that a company makes from selling goods/services to its customers not including the cost to the company of producing those goods/services. If Apple sells one iPhone for $750 then that counts as $750 in “sales.”

Sales Growth

Sales growth is the increase in a company's revenue over a specified period, typically measured year-over-year (YoY) or quarter-over-quarter (QoQ). It’s expressed as a percentage change that illustrates how much a company's revenue has grown (or declined) compared to a previous period. Sales growth is a key indicator of a company's health and ability to expand its footprint, attract more customers, and can be a lead indicator for enhanced profitability.

Scalp Trading

Scalp trading, or scalping, is a popular, fast-paced strategy focused on making numerous small profits by capitalizing on small price changes within very short periods. The high-frequency approach involves making several trades throughout trading sessions and is predominantly used in forex and stock markets. Scalping demands a high degree of focus on short-term market trends and the ability to act quickly under pressure.

Service Sector

It’s perhaps best defined as what it’s not: it’s not manufacturing, construction nor agriculture. Most every other industry – from accounting to law to restaurants to leisure activities – is part of the “service sector.” In big, developed economies, it tends to make up the bulk of economic activity (e.g. it’s about 80% of the economy in the US).

Shale Oil

An unconventional type of oil found in shale formations. Increasing production of this type of oil in the US has significantly affected the global supply of crude oil and has reduced the US’ dependence on oil imports.

Sharpe Ratio

The Sharpe ratio, named after Nobel laureate William F. Sharpe, is a fundamental metric in investment analysis, revered for its ability to measure investment performance relative to its risk. Introduced in 1966, this ratio provides a simple yet powerful way to quantify how much excess return an investor receives for the extra volatility endured when holding a riskier asset instead of a risk-free asset. A Sharpe ratio of 2 and above is considered excellent, a ratio between 1 and 2 is good, and below 1 is typically poor.

Short Or "To Go Short"

When an investment is setup such that it will profit if the price of something goes down. It can be a profitable strategy (i.e. “shorting” the oil price in 2014 would have yielded a big profit), but the potential loss is infinite. That’s because in order to close out a short position, an investor must buy back the investment. Since the price of oil or a stock or any other investment can go up an infinite amount, it can be extremely costly to be wrong when shorting something (as opposed to going long something, which has a maximum loss of 100% of your investment). Think: if you short oil at $50, but buy it back at $150 then you will have lost $100 (150-50 = 100) – and that’s a 200% loss. So, the big potential loss often leads to “short covering” (see below).

Short Squeeze

When traders initially bet on something, like oil, declining in price, but then realize the price is actually going up and frantically buy oil in order to minimize their losses.

Socially Responsible Investing

It’s a style of investing that typically considers environmental, social and corporate governance (ESG) factors when deciding which investments to buy. The aim is usually, but not always, two-fold: to promote causes which are seen to be in the interests of wider society and to make money while doing so.