Stock Market Terms for Kids: how to Speak Stock Market

When it comes to investing, budding Buffetts need to understand market lingo to build their financial literacy skills and make the most of their financial know-all. By getting down with money talk, kids can also better digest financial news to help them become more market-savvy by the day. Team BT picked the top market terms for parents and their money-smart kids to know as they grow.

Stock Market Terms: Defined for Kids

STOCK MARKET: A place where parties (individuals and institutions) buy and sell stocks.

IPO: The process by which a privately-held company goes public by listing shares on an exchange, making it possible for investors to purchase shares and become stakeholders.

TICKER: A unique series of four or fewer letters that represent a stock. (For example, the Under Armour ticker symbol is UAA, the Tesla ticker is TSLA and the Disney ticker is DIS.)

SHARE: A fraction of ownership in a company, also called a stock.

MARKET CAPITALIZATION: Total value of all a company’s stock.

EARNINGS PER SHARE (EPS): Typically reported quarterly, EPS is determined by a company’s profit divided by the number of its shares. Generally speaking, EPS is often used to measure a company’s profitability.

DIVIDEND: Cash or extra shares given to shareholders as compensation.

SECTOR: A group of companies that offer similar products or services (i.e. retail, technology, etc).

BLUE CHIP: Stocks that are household names, more predictable businesses, and typically considered less volatile.

FAANG: Abbreviation for Facebook, Amazon, Apple, NetFlix and Google…usually used together as a barometer for the overall tech sector.

GROWTH STOCK: Stocks that are predicted to beat the market due to their potential for growth.

VALUE STOCK: Stocks of well-known companies that are thought to be undervalued.

BULL MARKET: When financial markets (such as the stock market) bump 20% or more, and investors expect a continued rise. Bull markets can last months or even years at a time.

BEAR MARKET: When a market or index (like the S&P 500) falls 20% or more from recent highs, and investors are generally pessimistic about the immediate investment future.

RECESSION: When a country’s economy has a decline of economic activity over a period of time marked by decreased GDP (Gross Domestic Product), higher unemployment, and lower manufacturing, retail sales and income.

VOLATILITY: When the price of a share, group of shares, or asset changes quickly and unpredictably in either direction.

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If kids can talk the money talk, they will walk the money walk. By helping kids understand stock market terminology, the next generation will have a leg up on investing for the future.

Want more? Here are more guides on financial literacy terms for your kids to know.

What sector are you most interested in? Are there any terms you’ve heard that aren’t listed above and we can research together?

Want the BT definition? Shoot us a DM @benjamintalks.