12 terms every investor should know by Lou Carlozo on Nov 28, 2015, 2:30 PM 
Are you dreaming of an investment portfolio that would be the envy of the financial hot-shots on Wall Street, but don't know where to start? Granted, no one should discourage your investment dreams – but you can't settle for mere daydreams, either. The power to launch financial fortunes begins with knowledge, and for every acronym and bit of jargon, there's an easy explanation to boost your confidence. Here are 12 terms from the world of finance and investing explained in simple, clear language. SEE ALSO: Here's where Jim Cramer says young people should invest their first $10,000 Spinoff. This is when a parent company takes one of its divisions or owned properties and turns it into an independent entity. For example, eBay (ticker: EBAY) spun off its PayPal online financial services business last year, creating PayPal Holdings (PYPL). From an investment standpoint, spinoffs have a strategic value: Both the parents and spinoffs stand a strong chance of becoming more valuable after the split.
 The Fed. This is short for the Federal Reserve Bank (or Federal Reserve System). Investors watch this body closely because its board of governors sets short-term interest rates that affect how much banks charge consumers and businesses to borrow money. When interest rates rise, stocks may dip or plummet in price (often temporarily) as investors worry about how this will affect businesses in their attempts to grow by borrowing funds, or consumers trying to finance mortgages.
Market timing. This is an investment strategy where one attempts to profit by predicting stock movements as a way to buy and sell shares. Though popular with some investors, market timing gets low grades from many experts, who maintain that it's extremely difficult to do because so many unpredictable economic and financial factors affect a stock's price.
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