Dow Theory Forecasts

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Balance Sheet

One of several major financial reports that a company is required to publish annually. A balance sheet shows the financial condition at a given date (typically, the last day of the firm's year). The balance sheet is often described as a "snapshot" of a firm's financial condition. The balance sheet lists all of the assets owned by the firm as well as the claims against those assets (called liabilities).

Basic Balance Sheet Equation

An equation that describes the basic relationship between assets, liabilities, and shareholders' equity.

Basis Point

Typically used regarding fixed income securities (bonds), a basis point represents one hundredth of a percent. For example, 100 basis points equals 1%.

Bear Market

Typically used when discussing the overall trend of the stock market, a bear market is a market that exhibits a downward price trend. A "bear" believes the market will trend downward.

Bearer Bond

A type of bond that is issued by a firm without the owner's name registered on the books of the issuer. Interest and principal are paid to the holder or bearer.

Beta

A statistical measure of the volatility of a particular stock's price relative to the price level of the overall market. A stock with a beta of 1.00 is considered to be as volatile, or risky, as the general market. A stock with a beta of less than 1.00 represents a security with a lower level of price volatility than the market. A stock with a beta of more than 1.00 is more volatile than the overall market.

Bid

The highest price that anyone is offering to pay for a particular security at a given time.

Block Trade

A large single transaction of stock, generally 10,000 shares or more.

Blue Chip

A term which denotes a "quality" firm, one that is well known for its sound financial structure and good earnings performance.

Board of Directors

The group of people, elected by the shareholders, who in turn elect the company officers and manage the overall direction of the company.

Bond

A long-term debt security (promissory note) issued by a corporation of government which typically promises the repayment of a fixed amount (the principal amount) by a set date (the maturity date) plus interest. Bonds are listed in the liabilities section of a balance sheet.

Book Value Per Share

The per-share value of a stock based on the figures shown on a firm's balance sheet. This value is typically less than a stock's market price. Some analysts view book value per share as a "price floor" for a stock.

Bottom Line

This proverbial expression refers to the net income line of an income statement, which is the bottom line of the income statement.

Broker

A person or entity registered with the SEC who handles orders to buy and sell securities or commodities for a commission.

A Full Service broker is one that provides a full complement of investment services — such as research on companies and specific advice and is compensated for such added service with higher commissions.

A Discount broker is one that only handles buy and sell orders — no other investment services are offered. Accordingly, a discount broker generally receives a lower commission that a full-service broker.

Bull Market

Typically used when discussing the overall trend of the stock market, a bull market is a market that exhibits an upward price trend. A "bull" believes that securities will increase in price.

Buy Side

A term that is used to describe the institutional investor segment of the securities business (for example, a buy-side securities analyst or buy-side portfolio manager). The term "buy side" contrasts with the term "sell side," an expression that is used to describe the brokerage side of the securities business. For example, a stockbroker is said to work "on the sell side." Neither of these terms should be confused with "buyer" or "seller."