The money, the passion, the battles … Ah, watching Showtime’s Billions is such a joy! But before you binge watch, here are some important terms you should understand:
Hedge fund — Hedge funds are a type of private investment fund that pools money from a bunch of different folks, and then invest it. (Think: making moves as an aggregate.) They goal of these are to take advantage of market opportunities. So, staying within legal limits, a Bobby Axelrod is who you’d want managing your millions and billions.
Short — You might traditionally think of investing as buying stock at a low price with hopes that price will increase and that you’ll make money. But, when you short a stock, it’s the opposite because you’re taking a position against it. You’re essentially saying that the stock is not going to do well and that the stock price will decrease.
Terminology note: You can say you’ll short something (as a verb), talk about a short as the actual position (as a noun).
Opening bell/Closing bell — This is an easy one. The trading day starts and ends with a bell. The day goes from 9:30 a.m. until 4 p.m. EST. The market is closed after that, and no other trading can be done outside of that window. Any news that happens “after the bell” is rolled into the next day and taken into account after the opening bell.
Analyst — Analysts look at what’s going on in markets and/or the economy. They basically take that information and make recommendations to buy, sell, or hold (recommend to not do either).
Portfolio manager — Portfolio managers, or PMs, are the experts who make the actual investments.
Block trade — A block trade is trading a bunch of securities at the same time. Quantities are super large in this kind of trade, also known as a block order, so it’s a really rare thing to do.
SEC — This is a big one. The Securities and Exchange Commission is the government entity that monitors markets to make sure that financial services firms are following the rules and regulations, which are meant to protect investors.
Insider information — It’s illegal to use non-public facts about public companies before it’s released to make financial trades or investments. When firms do get information that will affect prices ahead of time, they can make a profit off of that knowledge, which isn’t fair to people who don’t have the info yet. If the SEC believes that a firm may be making that kind of deal, it’ll likely be knocking on its door soon after. Sorry, Bobby.