WinningStocks.com® Investor Glossary A

At Winningstocks.com we pride ourselves on the fact that when we present our investment ideas to our subscribers we are not trying impress them with our knowledge of market terminology. What we are trying to do is to enrich our subscribers and we can do that without throwing big words around. However we realize that many of our subscribers are new to the market and it is unavoidable that when we prepare our writes-ups on our investment ideas we sometimes use terminology which may be unfamiliar.

This glossary is not intended to be a complete listing of all the terms in the investment universe. If that is something you want we highly recommend the Dictionary of Finance and Investment Terms published by Barron's Financial Guides. This glossary is presented to our subscribers to ensure that if we use a term in our write-up that some may not fully understand there is a quick way to get a definition.

10K All publicly traded companies must present an annual report to the Securities & Exchange Commission. The 10K is a useful tool for the investor as it sometimes contains more information that the annual report that is mailed to shareholders.

10Q A quarterly report that each publicly traded company must submit to the Securities & Exchange Commission. A review the current and Prior 10 Q's is highly recommended before buying a company'sstock. The information within gives a full summary ofwhat transpired during the prior quarter.

ADR American Depository Receipts. ADR's enable US investors to buy shares in foreign companies. In its simplest form a foreign company will deposit a large amount of its own stock with a US Trust Bank. The bank will hold the stock in custody and issue receipts that are traded on the exchange. For example you can buy shares in theFrench biotechcompany, Genset. Each ADR represents1/3 share. Three ADR's get you 1 full share. ADR's are the best way to invest overseas however there is risk that currency movements could adversely affect your portfolio.

AVERAGING UP (DOWN) Method of reducing the average cost per share of stock. For example, if on Monday you buy 10 shares ofstock for $100 per share and on Friday it has declined to $50.00 per share. If you buy another 10 shares your average cost is $75.00 per share. This appeals to many people however if a stock declines by more than 10% from its purchase price it should be sold and losses cut.

BETA This is a measurement which gives some idea how volatile a stock may be when compared with the overall market (usually the S&P 500). If a stock has a beta of 1 than it has returned (or lost) the exact percentage that the market has over the past year. For example, if the S&P 500 was up 10% for the year than your stock with a Beta of 1 would have returned exactly 10%. If the Beta was 2 than your return (or loss) would have been double that of the overall market or 20%.

BID/ASK When Stocks trade there is almost always a bid and an ask price. The bid is always lower and the ask is always higher. For most investors who purchase stocks at "Market" they would always pay the ask price and when they sell they always receive the bid price. Some stocks trade at wide bid ask spreads and should generally be avoided. For example, a quote on a stock may read like this - Bid $9.00 Ask $10.00. If you buy you would pay $10.00 per share however if you realized that you did not want the stock 15 minutes later than you would get the bid price when you sold or $9.00 per share for a 10% loss. Wide bid ask spreads reflect a stock that has low liquidity.

BOOK VALUE An accounting term used to valuate a company. Simply stated it~Rs a company assets minus its liabilities. For example, A company has $100 million in total assets and $75 million in liabilities then its net worth or book value is $25 Million. To get the Book Value per share simply divides the number of shares outstanding into the book value.

BOOK VALUE PER SHARE Book value divided by the total shares outstanding.

CAPITAL MARKETS Term used to describe bond markets such as treasury bonds, corporate bonds and municipal bonds, both international and domestic.

CAPITALIZATION See Market Cap

CHINESE WALL Policy of a brokerage firm which prohibits confidential information from being passed to one area of the firm to another. For example, the firms merger and acquisition department may know of an upcoming takeover however that information may not be shared with the trading department, which would benefit.

CIRCUIT BREAKERS The practice of a stock exchange to impose trading restrictions when prices go up or down by a specified amount. These were imposed in the wake of the 1987 stock market crash. There are various forms such as trading halts, suspension of automated trading and limits on indexes.

CONTRARIAN An investor who believes that the opposite will happen when virtually all others believe something to be true. For example when a stock is beaten down because of a perception of a future event the contrarian will buy.

CYCLICAL STOCKS Stocks that tend to move with health of the overall economy. These are usually homebuilders, autos and leisure goods. Non-cyclical stocks would be food companies, pharmaceuticals and insurance companies because there is always demand regardless of the economy.

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