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Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Ballast stock: A ballast stock lends stability to a portfolio when market conditions are volatile or bearish. Ballast stocks are not affected by economic downturns and are often viewed as "recession-proof." Stocks in this category include energy and water companies, as well as real estate investment trusts, or REITs.

Bluetooth: A globally available, short-range radio technology standard that allows enabled devices to exchange or sync information automatically without user intervention. When two Bluetooth-enabled devices get within about 30 feet of each other, they form a radio link and exchange data at 400 to 700 kilobits per second (or at least seven times the speed of a 56K modem.)

Book-to-bill ratio: The book-to-bill ratio is the ratio of business booked, which means the number of orders taken from customers, to business billed. Business billed is the number of products shipped and bills sent.

This ratio is generally used to forecast market trends in a particular sector. A ratio over 1 indicates that the sector is expanding while a ratio below 1 means that the sector is contracting.

For example, if the ratio were .42, that means that $42 worth of new orders were received for every $100 of product shipped for the month. Such a ratio would signal that growth in a given industry contracted in the previous month.

CAGR: Cumulative Annual Growth Rate.

Capitulation: The market's equivalent of waving the white flag of surrender, capitulation refers to the act of giving up. In the stock market, capitulation occurs during times of very high volumes and panic selling. With stocks, capitulation is seen as the true bottom of the stock price, as any investors who were interested in a particular stock have given up and sold out, sometimes due to margin calls. On the bright side, the event is seen as a turning point -- theoretically, there's nowhere to go but up after hitting rock bottom.

Carry trade: The speculative practice of borrowing currencies with low interest rates and using the funds to purchase a different currency yielding a higher interest rate. This strategy aims to collect on the difference between the rates, which can be substantial -- but only guarantees profits if the exchange rate between the currencies remains favorable to the trader. The Japanese yen is a popular candidate for carry trading because the Japanese central bank has kept its prime lending rate at essentially zero in an effort to jump-start its economy.

Cash Generator: A stock that represents the best of both worlds for investors by providing a 7%-10% dividend yield plus (usually) moderate capital appreciation. Such stocks are ideal for more conservative investors and retirees -- or anyone else -- seeking a steady income.

ChangeQuake: The eruption of new, potentially transformational technological, regulatory, economic or strategic capability within an economy, industry or individual company. ChangeQuakes trigger the formation of ChangeWaves, and can also spawn Killer Value Propositions (KVPs), or massive shifts in consumer demand upon radical improvements to the status quo.

ChangeWave: Shorthand for a rapidly growing, highly investable secular economic or strategic transitions in a sector, industry or individual company. Economic ChangeWaves encompass industrial spaces and companies that facilitate the given secular transition. Strategic ChangeWaves occur at the company level when a shift in leadership or business strategy redefines the value proposition for the business and/or increases the target market by an order of magnitude. ChangeWaves are the basis for "no-brainer" secular growth assumptions.

ChangeWave Alliance: A worldwide network of 10,000 highly qualified business, technology and medical professionals in leading companies of select industries. All members are credentialed professionals who spend their everyday lives working on the frontline of technological change, comprising a first-class "distributed-knowledge" community. The Alliance helps generate superior investment intelligence for ChangeWave Research via regular surveys of its members.

ChangeWave.com: The Web site that supports individual ChangeWave investors and ChangeWave Alliance members.

ChangeWave Investing: Our proprietary research and analysis model for stock analysis and selection, based on spotting upcoming secular transformations in a company or industry and purchasing the stocks most likely to benefit going forward.

Collins Bollinger Reversal (CBR) System: The Collins Bollinger Reversal System was developed by ChangeWave's Chief Technical Analyst Sam Collins. It is designed to trigger buy/sell signals at extremes in the market. This is unlike most technical signals in that it ignores momentum and attempts to identify the "most oversold" stocks that reverse up, giving a buy signal, or "most overbought" stocks that reverse down, giving a sell signal.

Corporate Turnaround/Transformation (type of stock): A company that is either in the process of returning to profitability after a difficult period or is emerging from a transformation that has left it undervalued. These types of stocks usually offer great entry prices and nice longer-term profit potential in the case of a takeover or a successful makeover that propels the company into a winning position.

Customer Relationship Management (CRM): This term that describes techniques, software and Internet capabilities used by businesses to manage customer relationships in a unified fashion. CRM packages help companies integrate information from the entire enterprise to provide detailed profiles of its customers. That allows all the links in the chain to have the information needed to provide services such as:

• Matching customer needs with products;
  
• Reminding customers of service requirements;
  
• Keeping track of previous purchases and sending reminders for continuing orders;
• Giving customers direct access to information.

This, in turn, gives the enterprises the opportunity to improve and target marketing efforts, optimize information flow, and build better relationships between the company and its customers and distributors.

Dark zone: The panic attack investors get during market meltdown periods that drives them to sell their biggest winners to relieve themselves of the "pain" of losing gained profits.

Dead cat bounce: A "dead cat bounce," which refers to a temporary upswing, can impact the overall stock market or an individual stock. In the market, a dead cat bounce occurs when there is a short-term, sometimes very sharp, rise during a prolonged bear market, followed by a subsequent downturn. With an individual stock, a dead cat bounce refers to a mild rebound, or bounce, in a depressed stock price, followed by the stock drifting south again. The event can be dangerous for novice investors, who are often led to believe that bullish trends are returning.

Death cross: A death cross is a trading tool that indicates when a selling trend is under way. This technical indicator is formed when the 50-day moving average of a stock falls below (crosses) the 200-day moving average, indicating that currently more people are selling than buying the stock. Technical analysts believe a death cross is a clear warning to sell.

Digital Subscriber Lines (DSL): These types of connections allow an always-on, high-bandwidth Internet connection (at transfer rates up to 6.1 megabits per second downstream, but usually limited to 1.5 megabits for individual connections) over regular copper telephone lines. Most DSL connections allow you to use your telephone for conversations while maintaining that high-speed computer connection.

EBITDA: Earnings before interest, taxes, depreciation and amortization.

Emerging Game-Over Dominator: A company that is rising and expected to become a market leader in a rapidly evolving sector.

Entry point: A stock's "entry point" refers to the price point at which an investor takes an initial position in a stock. Defining an optimal entry point depends on the approach taken when analyzing stock prices, i.e., whether an investor is using technical or fundamental analysis. A good entry point for a growth stock is near a bottom of its price range or at a breakout price from a higher high.

Fiber optics: Fiber-optic technology, made possible by photonic science, uses glass, plastic or fused silica threads to transmit data. A fiber-optic cable consists of a bundle of super-thin glass threads that are capable of transmitting data via pulses of light. Key advantages of these laser-powered cables include vastly higher-speed data transmission over longer distances and with less data loss. On the downside, the fiber-optic cables are more expensive to install, more fragile and must be installed underground.

Float: The percentage of a company's shares that are publicly traded and not restricted to company insiders. A limited supply of publicly traded stock means more buyers than sellers, and this supply-demand imbalance is what often rockets newly traded companies to their first wave of appreciation.

FUD: Fear, uncertainty and doubt -- what most people feel when a new technology or industry threatens their existing world.

Game-Over Dominator: A dominant company that is either the market leader or among the market leaders in a rapidly evolving sector.

Golden cross: A golden cross is a trading tool that indicates a buying trend is in place. A golden cross occurs when the 50-day moving average of a stock breaks above (crosses) the 200-day moving average. This technical indicator tells you that there are currently more people buying than selling the stock. Technical analysts believe a golden cross usually means it is safe to buy a stock and it will continue to rise.

Gross profit margin: The money left after a company pays for the cost of its sold goods or services. We use this screen to eliminate companies that don't have a scalable business. "Scalable" means that the costs to actually produce the service or product of a company are relatively fixed so that when unit volume hits critical mass, gross profit margins (sales price minus cost of goods sold) stay high or go higher.

Human Genome Project: The Human Genome Project began in 1990 as an international scientific mission to map all the genetic material (i.e. genes) in human chromosomes and ultimately succeeded in sequencing the 3 billion DNA base pairs that make up these genes. The project aimed to vastly improve the methods used to prevent and cure diseases, because the keys to many of the most insidious illnesses of our time -- like cancer and diabetes --can be found in tiny DNA variations called single nucleotide polymorphisms or SNPs (pronounced "snips").

Incremental Change: Synonymous with linear change, or change that improves the status quo. Incremental change or transitions are not monster investable opportunities.

Internet: Originally created to facilitate "nuke-proof" communications in the midst of the Cold War, the Internet has grown from these noble origins to become the world's first common conduit for all communications. Today, the decentralized worldwide network of computers that makes up this system allows millions to take part in commerce and share information.

Internet protocol: The common set of instructions by which data is sent from one computer to another on the Internet. As any type of data is sent, it is divided into small chunks or packets that contain the addresses of the sender and receiver. Since there are a number of packets to be delivered, they may take different routes as they make their way to their destination. Even if they arrive out of order, the transmission control protocol (TCP), which keeps track of the packets' sequence, will reassemble them back in the right order.

Infrastructure: The enabling hardware, software, and services package required in the delivery of a technological solution.

Java: An object-oriented programming language designed for the Internet environment created by Sun Microsystems. Java programs can be designed to run on a single machine or in a client/server environment.

Killer Value Proposition (KVP): A new, radical improvement in the status quo, or what is known as the "existing value proposition." Massive shifts in customer demand result when entrepreneurs sell and customers adopt new Killer Value Propositions. ChangeQuakes are Killer Value Proposition enablers -- the catalyst for irreversible secular shifts or conversions in customer demand.

Local loop: The communications line that runs between the home and the local central office.

Monster ChangeWave: Shorthand for a macroeconomic or economy-wide secular transition. In the United States economy, we consider a secular macroeconomic transition "monsterish" if its revenue is projected to exceed $1 trillion.

Moore's Law: The thesis proffered by the co-founder of Intel, Gordon Moore, that the computing power of semiconductor chips would double every 18 months without additional cost. This increasing-return phenomenon is one of the key drivers of high-tech unit growth at lower unit prices.

Moving average: The average closing price for a stock over a 50-day or 200-day period. The moving average smoothes out day-to-day swings in prices and creates a context in which to judge price trends. It is calculated by dividing the number of days (either 50 or 200) into the average price of a stock for the last 50 or 200 days (determined by adding the closing prices for the last 50 or 200 days).

Network-attached storage(NAS): Network-attached storage uses a single server connected to an Ethernet LAN (Local Area Network) with its own Internet protocol address to handle data storage and access on the network and relieve the pressure on the application or enterprise (business) server. NAS is easier and less expensive to implement than the alternatives, and uses proven technology to do the job. Better yet, network-attached storage solutions allow faster data access and can be deployed rapidly.

Open-source investing: A cooperative network of securities research whereby industry professionals adopt a common investment research logic and analysis protocol. The network shares their collective observations and peer-reviewed investable intelligence. Improvements to the model are incorporated and updated to all users.

Price-to-earnings Ratio (P/E): Price divided by earnings per share. Literally, this means the ratio of a company's stock price to the trailing twelve months' earnings per share. The P/E is the standard prism by which stock pickers attempt to value or "discount" the future earnings of a company. The higher the P/E ratio a company commands, the higher the expectations for future rates of growth.

Pure play: A company for which the percentage of its revenues within a favored industrial space exceeds a certain amount. Typically more than 50% qualifies, but 75% or more is better.

Secular change: A long-term sustainable or non-cyclical transition or trend.

Sell stop: A sell stop is a protective measure that will automatically trigger the sale of a stock once its price dips below a certain pre-determined level. A sell stop is also called a stop-loss order. More specifically, a sell-stop limit order means that when a stock falls to the level you have indicated as the point to sell, the stock will be sold at the exact price you have specified. (However, a falling stock may not always hit the exact price you specified. It may jump down and miss the sell-stop level altogether.) On the other hand, a sell-stop market order means that once the stock falls to that price, the stock will sell at whatever the going market price of the stock is at the time.

Also see: Trailing sell stop

SNP (Single nucleotide polymorphism): An SNP (pronounced "snip") is a place in the genetic code where DNA differs from one person to the next by a single letter. These slight genetic variations between human beings may predispose some people to certain diseases and explain why some respond better to certain drugs than others.

Speculative play: High-risk, high-potential-return "Vegas"-type stock picks. These are stocks you only put money into that you can afford to lose. These are the types of plays that could be 300%-500% home runs or could end up being worth nothing. Definitely not for the faint of heart.

Storage Area Network (SAN): SANs allow users to store large amounts of data off their super-crowded corporate networks at ten-times lower cost. SANs make use of the same type of fiber-optics that revolutionized long-distance telecom/data communications. Essentially, SANs combine data management with physical connections and optical infrastructure enabling data to be housed off-site and still be easily accessible to users within a corporate network via servers. SANs will soon provide any-to-any connections, which means they allow any kind of client computing device (PDAs, notebooks, wireless phones) to connect to information on any type of storage computer.

Sweet-spot stocks: Sweet-spot stocks are those in industries that currently sell non-discretionary -- in other words, business-critical -- products and services to businesses in search of higher profits, higher productivity and lower operating costs. These firms are considered to be in "sweet spots" because they are so well-positioned in the present market environment -- even in times when corporate budgets are shrinking on account of lower returns on investment, or as economic growth bottoms out.

Techonomy: An economy where a majority of its gross domestic product comes from industries primarily addressing the creation, transportation, computing, viewing or utilization of bits of data instead of physical products. The foundation of this world starts with natural gas being piped into an electric generator that sends power to a data center, plug or computing device that turns electrons into bits of data. This data is stored, transported on photons, computed, displayed and added to products and services in the pursuit of commerce, entertainment and communication.

Third-generation (3G): The broadband revolution is already making its mark on the wired world -- now its time for wireless to follow suit. Third-generation, or 3G, technology promises much faster transmission speeds than current wireless networks -- up to two megabytes per second.

What does this mean for the wireless world? Well, these faster connections will allow cell phones and PDAs (personal digital assistants like the Palm Pilot) to access multimedia content or even allow videoconferencing from wireless devices developed for 3G.

This goes beyond text access to e-mail and news currently offered through these devices, and will open up rich Web content to more non-PC devices. And today's standard calls for go-anywhere, system-independent connections.

Tracking stock: A tracking stock is a separate stock created by a parent company to "track" the financial progress of a particular piece of its business. Despite being part of a publicly traded entity, tracking stocks trade under their own unique ticker symbols. Tracking stocks are meant to create opportunities for investors to buy into a fast-growing unit without investing in the whole company. However, tracking stocks do not lend shareholders ownership in the parent company, nor do they include voting rights.

Trailing sell stop: A trailing sell stop is designed to protect an investor's profits. A standard sell stop is a price below a stock's current price that an investor sets as the sell point for the stock, identifying a bail-out point if the price drops too low. However, with a trailing sell stop, the sell-stop price is manually adjusted upward as the stock price increases to guarantee that profits are retained if and when the stock price declines.

Understructure: The raw components used within the enabling hardware, software and services required in the delivery of a technological solution.

Value chain: An enabling subset of components and service spaces that connect ChangeWaves to rapidly emerging sectors to fast-expanding market spaces to WaveRider companies to customers.

Virtual private network (VPN): A private network of computers that's partially connected over public phone lines. Encryption and secure protocols permit VPN users to transmit information with the confidence that the information will be difficult, if not impossible, to intercept by unauthorized third parties. Such technology allows VPN users to communicate with the assurance of total data privacy and safety while cutting the cost of traditionally leased telephone lines by 90%-95%.

Voice-Over-Internet Protocol (VOIP): The delivery of voice information in the language of the Internet, i.e., as digital packets instead of the current circuit protocols of the copper-based phone networks. In VOIP systems, analog voice messages are digitized and transmitted as a stream of data (not sound) packets that are reassembled and converted back into a voice signal at their destination. The killer idea is that VOIP allows telephony users to bypass long-distance carrier charges by transporting those data packets just like other Internet information. With VOIP, your PC becomes your phone and you can call anywhere in the world for the cost of a local call.

WaveRider: A stock within a favored market sector that best capitalizes on an investment thesis or unique investment idea. Can also refer to proponents and followers of the ChangeWave Investing philosophy.