Even a word you've never seen takes just one line.

The ability to protect profit by raising selling prices when costs rise. Companies with strong brand loyalty or few competitors tend to have it.

Related lessons: Economics Lesson 11 · Which assets hold up when prices rise? · Economics Lesson 9 · PCE and PPI: the inflation gauges the Fed prefers · Financial Statements Lesson 13 · Revenue and cost of sales

The room exporters have, when the won is weak, to lower overseas selling prices (dollar prices) while still receiving the same won. The company chooses whether to keep this room as profit or use it to expand sales volume.

Related lessons: Economics Lesson 25 · Who benefits from a weak won?

A pattern in which supply reacts slowly to changes in demand, so prices rise too far and then fall too far, repeatedly. It is especially pronounced in memory semiconductors, chemicals and shipping.

Related lessons: Economics Lesson 3 · Supply and demand set prices · Economics Lesson 31 · Copper and chip prices: the economy's thermometer · Economics Lesson 26 · Exports are the heart of the Korean stock market · Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year

A company adding its higher costs to its selling prices and passing them on to consumers. Companies good at pass-through find it easier to protect their margins when costs rise.

Related lessons: Economics Lesson 9 · PCE and PPI: the inflation gauges the Fed prefers · Economics Lesson 29 · Oil is the economy's lifeblood

The ratio of actual output to production capacity. When utilization is low, added sales leave a lot of profit; when it is too high, expansion investment becomes necessary.

Related lessons: Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

The premium added on top of the underlying rate in a lending rate. It is larger the greater the risk of loss, the longer the term, and the less collateral there is.

Related lessons: Economics Lesson 12 · An interest rate is the price of borrowing money

The principle that business capital expenditure reacts to changes in demand, not the level of demand, so even a small move in demand can make investment rise or fall sharply. It is why investment swings more than consumption.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine

The average number of ordinary shares outstanding during the year, weighted by the length of time. It is calculated excluding treasury stock and is the denominator of EPS.

Related lessons: Financial Statements Lesson 16 · EPS and PER: what one share earns

A case where P/E and P/B look cheap, but earnings are going to fall or profitability is low, so the low multiple is justified. It often appears at the earnings peak of cyclical industries.

Related lessons: Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 24 · PBR and BPS: price relative to assets · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

A stock of an established company that earns steadily and whose price is low relative to earnings or assets (low P/E and P/B). Its earnings are concentrated in the near future, so it tends to be less sensitive to interest rates than a growth stock.

Related lessons: Economics Lesson 17 · Why do growth stocks hurt more when rates rise?

This refers to the US regular session, which runs from night into early morning Korea time. Because it ends before the Korean market opens, its result becomes the starting point for the KOSPI the next day.

Related lessons: Economics Lesson 32 · When the US coughs, Korea catches a cold

Two ways to report cash flow from operating activities. The direct method lists cash inflows and outflows by item, while the indirect method starts from net income, adds back non-cash expenses and reflects changes in working capital. The accounting standard encourages the direct method, but the indirect method is common in actual reports.

Related lessons: Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes

Spreading the purchase price of equipment over its years of use and expensing it each year. It is an expense for which no cash goes out that year.

Related lessons: Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Financial Statements Lesson 13 · Revenue and cost of sales · Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left

A procedure in which an outside accounting firm checks the books and supporting evidence and gives an opinion (unqualified, qualified, adverse or disclaimer) on whether the financial statements were prepared in accordance with accounting standards. The annual financial statements undergo it.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign

A report in which the external auditor sets out the audit results and opinion. It is submitted to the company at least one week before the annual general meeting and is attached to the annual report.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign

When the accounting firm that performs the company's external audit changes. You can see recent auditor history in Section V of the annual report, and frequent changes are read as a signal to check whether the company is looking for an auditor who will give an opinion more easily.

Related lessons: Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign · Financial Statements Lesson 34 · A checklist of 10 red flags · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

Reducing share capital. A free capital reduction (without returning money) cuts share capital to wipe out accumulated deficits, and shareholders' share counts fall.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment

Disclosures that a listed company files whenever a triggering event occurs, under the Korea Exchange's disclosure rules. Examples include single sales/supply contracts, preliminary earnings, and replies to disclosure inquiries.

Related lessons: Financial Statements Lesson 2 · DART is the companies' official bulletin board

A term that comes from the investing saying 'stocks climb a wall of worry.' It means that stock prices often start recovering just when bad news and worry are at their greatest.

Related lessons: Economics Lesson 34 · Stock prices move before the economy

A lighter verification procedure than an audit, mainly using inquiry and analysis to give limited assurance that "no material errors were found." Semi-annual financial statements and similar receive it.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

A term describing whether economic activity is lively or subdued. When business conditions are good, company revenue and earnings tend to grow.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 5 · The economy has four seasons too

The flow in which the economy repeats recovery → expansion → slowdown → recession.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 35 · Strong sectors differ by stage of the business cycle

Sectors generally strong in the recovery phase, when the economy passes its bottom (financials, consumer discretionary, etc.), are called early-cycle sectors, and sectors strong in the slowdown phase near the economic peak (energy, materials, etc.) are called late-cycle sectors. This is only a textbook tendency and often fails in practice.

Related lessons: Economics Lesson 35 · Strong sectors differ by stage of the business cycle

A state in which economic activity such as output, income and jobs visibly shrinks for a considerable period. It is often described as 'two consecutive quarters of falling real GDP', but the official declaration takes multiple indicators into account.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 16 · Yield curve spread: the economy's traffic light · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 34 · Stock prices move before the economy · Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

An industry or stock whose earnings swing widely with the business cycle. Semiconductors, chemicals, steel, autos and shipbuilding are typical examples.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 22 · Consumption and corporate investment: the economy's engine · Economics Lesson 31 · Copper and chip prices: the economy's thermometer · Economics Lesson 33 · China's economy and Korean companies · Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Financial Statements Lesson 26 · Compare within the same sector · Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year · Seasonality Investing Lesson 5 · Every industry has its own seasons

An industry or stock whose earnings stay relatively steady even when the economy worsens. Food and beverages, telecommunications, electricity and gas, and pharmaceuticals are typical examples.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 11 · Which assets hold up when prices rise? · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 22 · Consumption and corporate investment: the economy's engine · Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Financial Statements Lesson 26 · Compare within the same sector · Seasonality Investing Lesson 5 · Every industry has its own seasons

Sectors tied to consumption that can be cut back or put off when times get tough, such as autos, appliances, apparel, travel, leisure and retail. Earnings swing widely with the economy.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine · Economics Lesson 35 · Strong sectors differ by stage of the business cycle

A scorecard of money exchanged with the rest of the world: goods trade plus services (travel, transport) and income such as dividends and interest. It is published by the Bank of Korea.

Related lessons: Economics Lesson 24 · Why do exchange rates move?

The continuous flow in which economic agents exchange money, goods, services and labor in opposite directions. Someone's spending becomes someone else's income.

Related lessons: Economics Lesson 2 · The economy is one big circular flow of money

People or organizations that engage in economic activity. They are usually divided into four: households, businesses, government and the rest of the world.

Related lessons: Economics Lesson 2 · The economy is one big circular flow of money

The percentage by which real GDP has grown compared with the reference period. Korea mainly reports quarterly growth quarter over quarter, and the US reports it annualized.

Related lessons: Economics Lesson 4 · GDP is a country's report card · Economics Lesson 5 · The economy has four seasons too · Economics Lesson 33 · China's economy and Korean companies

The share of the working-age population (16 and older in the US) that is working or looking for a job (the labor force). If more people give up looking for work, this rate falls even when the unemployment rate goes down.

Related lessons: Economics Lesson 19 · Jobs data: nonfarm payrolls and the unemployment rate

A separate paragraph included in the audit report when there is material doubt about the assumption that the company can continue operating. It can be attached even when the audit opinion is unqualified, and in the FSS analysis, 32.1% of listed companies with an unqualified opinion that had this paragraph in fiscal year 2024 were delisted or received a non-clean opinion the next year.

Related lessons: Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign · Financial Statements Lesson 34 · A checklist of 10 red flags

A method of holding stocks in strong periods and bonds or cash in weak periods. It involves trading costs and taxes, and in years when stocks rise even during the weak period, you miss those gains.

Related lessons: Seasonality Investing Lesson 2 · Sell in May was real. And then it cooled off · Seasonality Investing Lesson 8 · People who made money from the calendar

The tendency for results to rise or fall repeatedly at the same time each year. For a company with seasonality, look at year-over-year changes that compare the same quarter.

Related lessons: Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

A historical tendency for stock returns to lean one way in the same stretch of the calendar, such as a particular month, weekday, or the turn of the year. It does not mean the pattern repeats every year; it is a statistical tendency in which the average return and the share of up periods have been tilted.

Related lessons: Seasonality Investing Lesson 1 · Why is September so disliked? · Seasonality Investing Lesson 8 · People who made money from the calendar

A special provision, for payments from January 1, 2026 through income attributable to 2028, that lets dividends from qualifying high-dividend listed companies be taxed separately at 14–30% instead of being added to comprehensive income (Restriction of Special Taxation Act, amended December 2025). It covers companies that did not cut their dividend from the previous year and have a payout ratio of at least 40%, or at least 25% with a dividend increase of 10% or more.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

Earnings in the year when profit is at the top in an industry that rides a cycle. Calculating PER on these earnings tends to make it look low, so look at it together with several years' average earnings.

Related lessons: Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year

A fixed rate stays the same for the contract period, while a floating rate is reset every few months to follow the underlying rate.

Related lessons: Economics Lesson 12 · An interest rate is the price of borrowing money

A cost that barely changes for a given period even as revenue rises or falls. Rent, salaried staff pay, and equipment depreciation are typical examples.

Related lessons: Financial Statements Lesson 14 · Operating profit: the real strength of the core business

This is the share of total loans in the 'substandard, doubtful or estimated loss' grades, where repayment is in doubt. It shows how bad a bank's loans are, and lower is healthier.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

A fairy-tale metaphor for an economy that is neither too hot nor too cold: stable inflation and moderate growth. It is the combination the stock market likes most.

Related lessons: Economics Lesson 21 · When bad news becomes good news

The quantity that sellers are willing to sell at a given price. Normally, as the price rises, the quantity supplied increases (the law of supply).

Related lessons: Economics Lesson 3 · Supply and demand set prices · Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 29 · Oil is the economy's lifeblood

A company informing all investors at the same time, under laws and regulations, of information that could affect investment decisions.

Related lessons: Financial Statements Lesson 2 · DART is the companies' official bulletin board

The 10 categories DART uses to sort disclosures: periodic disclosure, material event reports, issuance disclosure, ownership disclosure, other disclosure, external audit-related, fund disclosure, asset-backed securitization, exchange disclosure, and Fair Trade Commission disclosure. Annual, half-year and quarterly reports, which contain the financial statements, belong to periodic disclosure.

Related lessons: Financial Statements Lesson 3 · How to find a company on DART and open a report

A system that requires a company to disclose important information, such as earnings guidance or preliminary results, to the exchange for all investors at the same time before giving it first to particular parties such as analysts or institutions.

Related lessons: Financial Statements Lesson 33 · Preliminary results and corrected filings

Where market participants' sentiment sits between excessive pessimism (fear) and excessive optimism (greed). It is gauged with indicators such as the VIX, the margin loan balance and investor flows.

Related lessons: Economics Lesson 39 · Reading investor sentiment: VIX and margin loans

A stock designated by the exchange because it meets a listing-rule condition such as capital impairment, failure to file a periodic report, or an audit opinion shortfall. Trading is restricted, for example margin trading is prohibited, and if the cause isn't resolved it can lead to delisting.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign · Financial Statements Lesson 34 · A checklist of 10 red flags

The amount of goods and services the same money can buy. When prices rise, purchasing power shrinks in a compounding way.

Related lessons: Economics Lesson 7 · Inflation: the same money buys less · Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means · Economics Lesson 27 · Foreign investors and the exchange rate

The yield on the 3-year Korea Treasury Bond (KTB) issued by the Korean government. It reflects Bank of Korea policy rate expectations well and is used as Korea's benchmark market rate.

Related lessons: Economics Lesson 14 · The policy rate and market rates are different

The price at which the quantity buyers want (demand) equals the quantity sellers want (supply). It rises when demand increases or supply decreases, and falls in the opposite case.

Related lessons: Economics Lesson 3 · Supply and demand set prices

A value that is far larger or smaller than the others. The average is pulled hard by a single outlier, so when the average and median differ widely, first check whether an outlier is mixed in. Example: KOSDAQ, January 2001, +60.4%.

Related lessons: Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

Inflation excluding food and energy, whose prices swing widely. It is used to look at the underlying trend in prices.

Related lessons: Economics Lesson 8 · How to read CPI: headline vs. core · Economics Lesson 29 · Oil is the economy's lifeblood

The price of borrowing money. When rates rise, the present value of future earnings falls, which tends to lower stock multiples.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 12 · An interest rate is the price of borrowing money · Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging · Economics Lesson 36 · Reading the sector map through rates, FX and oil · Economics Lesson 38 · Liquidity: when money is released, assets rise · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio

A state where short-term rates are higher than long-term rates. It means the market expects rates to fall ahead, and it has often appeared before past recessions, but it has not always been right.

Related lessons: Economics Lesson 16 · Yield curve spread: the economy's traffic light · Economics Lesson 42 · Respond, don't predict: using economics in investing

The degree to which the market expects the central bank to cut rates ahead. It grows when a weak economic indicator comes out, and shows up first in market rates such as the 2-year yield.

Related lessons: Economics Lesson 21 · When bad news becomes good news

Costs that arise from borrowing money, such as interest on borrowings and bonds. As long as debt doesn't shrink they recur every year, and they get larger when interest rates rise.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit

The Bank of Korea's decision-making body that sets Korea's policy rate.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

The part added to long-term rates as compensation for the risk of having money tied up for a long time. It grows when inflation outlooks are uncertain or government debt rises quickly.

Related lessons: Economics Lesson 14 · The policy rate and market rates are different · Economics Lesson 16 · Yield curve spread: the economy's traffic light

Net income attributable to the parent's ordinary shareholders divided by the weighted average ordinary shares outstanding. It is shown on the 'earnings per share' line at the bottom of the income statement.

Related lessons: Financial Statements Lesson 16 · EPS and PER: what one share earns

A government plan announced in February 2024 to support improving corporate value. It encourages listed companies to disclose plans to improve P/B and ROE, and publishes comparisons of P/B, P/E and ROE by market.

Related lessons: Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 24 · PBR and BPS: price relative to assets · Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

The money a company has left after subtracting cost of sales, expenses, interest and taxes from revenue (net income). It is the most basic factor that determines the stock price.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 5 · Annual report table-of-contents map: where to start?

A phenomenon in which the number at the comparison base date is unusually high or low, so the current rate of change looks lower or higher than the actual trend. It often appears when reading year-over-year indicators.

Related lessons: Economics Lesson 8 · How to read CPI: headline vs. core · Economics Lesson 26 · Exports are the heart of the Korean stock market · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality · Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year

The policy interest rate set by a central bank (the Bank of Korea, the US Fed). It is the starting point for all other interest rates.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates? · Economics Lesson 14 · The policy rate and market rates are different · Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 38 · Liquidity: when money is released, assets rise

The performance of "any random time," against which you compare a particular period. For example, only by comparing with the average of all months for the S&P 500 (+0.75%) and its share of up months (about 60%) can you tell whether a particular month was really strong.

Related lessons: Seasonality Investing Lesson 1 · Why is September so disliked? · Seasonality Investing Lesson 2 · Sell in May was real. And then it cooled off · Seasonality Investing Lesson 3 · Santa comes, and January speaks

The official point in time when the economy hit a peak or a trough. In Korea, the statistics office (formerly Statistics Korea) determines and announces it a few years late, after the data has built up.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 34 · Stock prices move before the economy

The value of the other choice you gave up by making a particular choice. Holding gold means giving up the real interest you could have received from deposits and bonds, so the higher the real rate, the greater gold's opportunity cost.

Related lessons: Economics Lesson 30 · Why does gold rise when people are anxious?

A method of laying out two companies' balance sheets, income statements, cash flow statements, ratios and disclosures in the same order and comparing them line by line. It uncovers the differences between companies that look similar on a single line (net income).

Related lessons: Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

Goods used for three years or more, such as cars, appliances and furniture. Purchases can be postponed and are often financed in installments, making this the consumption category most sensitive to the economy and interest rates.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine

When consolidating, erasing sales and purchases, receivables and payables, and investment shares and subsidiary equity that moved within the group. It prevents the same money from being counted twice.

Related lessons: Financial Statements Lesson 11 · Consolidated vs. separate financial statements

A system in effect since July 24, 2024, under which executives and major shareholders who want to trade 1% or more of total issued shares, or KRW 5 billion or more, on a combined basis over the past 6 months must disclose the purpose, amount and period at least 30 days before trading begins.

Related lessons: Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

Results summed from the start of the fiscal year to the end of the quarter in question. Quarterly and semi-annual report income statements show "3 months" and "cumulative" side by side.

Related lessons: Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

A nickname for the copper price. Copper is used across industry, in wiring, construction, cars, appliances and power grids, so its demand moves with the economy, meaning the copper price acts like a doctor diagnosing the economy. It also moves with supply disruptions, the dollar and investment money, so it is not a perfect signal.

Related lessons: Economics Lesson 31 · Copper and chip prices: the economy's thermometer

(1 + stock return in won) × (1 + change in won value) − 1. This is the return foreign investors actually earn on Korean stocks; when the won weakens, the same stock gain becomes smaller.

Related lessons: Economics Lesson 27 · Foreign investors and the exchange rate · Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging

The average value of the dollar against several currencies such as the euro and yen. There is the DXY, based on six major currencies, and the Fed's broad dollar index, which covers a wider group of trading-partner currencies.

Related lessons: Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 30 · Why does gold rise when people are anxious? · Economics Lesson 31 · Copper and chip prices: the economy's thermometer · Economics Lesson 32 · When the US coughs, Korea catches a cold

Factories, land, deposits and so on given as collateral when taking on debt. They are company assets on the books, but they cannot be freely sold or used.

Related lessons: Financial Statements Lesson 29 · Notes: the inside story of the financial statements

The profit left after everything, including corporate income tax, is deducted. What remains after dividends builds up as retained earnings on the balance sheet, and dividing the parent's share by the number of shares gives EPS.

Related lessons: Financial Statements Lesson 12 · The income statement is a year's report card of business

(Current assets − inventories) ÷ current liabilities. A more conservative look at whether short-term debt can be paid even if inventory doesn't sell.

Related lessons: Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio

This is the ratio of accumulated loan loss allowances to non-performing loans. Above 100% means the bank has set aside more than the amount of its bad loans in advance.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

Unless you are a large shareholder, there is no capital gains tax on profits from trading domestically listed stocks, but a large shareholder holding more than a set amount in a single stock pays capital gains tax when selling. The per-stock holding threshold was lowered from KRW 5 billion in 2013 to KRW 1 billion in 2020, raised back to KRW 5 billion in December 2023, and in September 2025 it was decided to keep it at KRW 5 billion.

Related lessons: Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

The proportion of Korea's total exports that goes to China. It was highest at 26.8% in 2018 and came down to 18.4% in 2025, but China is still Korea's number one export market.

Related lessons: Economics Lesson 33 · China's economy and Korean companies

The rate of interest paid when borrowing money from a bank. It is set by adding a credit spread, reflecting the borrower's risk, to a benchmark rate.

Related lessons: Economics Lesson 12 · An interest rate is the price of borrowing money · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds

Loans receivable is money a bank has lent out and not yet been repaid. It makes up most of a bank's assets and is its core asset that 'sells and earns revenue', much like a manufacturer's inventories.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

A pattern that splits the four-year US presidential term into year 1 (inauguration year), year 2 (midterm year), year 3 (pre-election year) and year 4 (election year) and compares stock returns across them. From 1951 to 2025, the S&P 500's average was highest in year 3 and lowest in year 2, but each year of the cycle has only 18–19 observations.

Related lessons: Seasonality Investing Lesson 4 · On days when money flows in, stocks were strong

The crude oil prices the market uses as references. The main ones are US WTI, North Sea Brent, and Middle Eastern Dubai crude, quoted in dollars per barrel (about 159 liters). The crude Korea imports is closest to Dubai.

Related lessons: Economics Lesson 29 · Oil is the economy's lifeblood

The phenomenon where, if you search through many periods and indices, a plausible-looking pattern appears purely by chance. It is filtered out with a causal explanation, out-of-sample periods, and data from other countries.

Related lessons: Seasonality Investing Lesson 1 · Why is September so disliked? · Seasonality Investing Lesson 7 · Why do patterns die? So how should we use them

The coincident composite index, which bundles indicators that move with the economy such as production, consumption and employment, with its long-term trend removed. Above 100 means the economy is hotter than trend; below 100 means it is cooler.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 34 · Stock prices move before the economy

An indicator that moves at almost the same time as the economy. Industrial production, retail sales and the number of employed persons are typical examples, and they show 'the economy right now.'

Related lessons: Economics Lesson 6 · Some indicators tell you the economy's direction in advance · Economics Lesson 34 · Stock prices move before the economy

The sensitivity of a bond's price to rate changes. With a duration of 10, the price falls about 10% when rates rise 1 percentage point. It is larger the longer the maturity and the lower the coupon rate. Applying the same concept to stocks gives 'equity duration'.

Related lessons: Economics Lesson 15 · Bond prices and interest rates are a seesaw

A method of splitting ROE into net margin × asset turnover × financial leverage. It lets you tell whether the same ROE was produced by margin, sales speed or debt.

Related lessons: Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money?

A phenomenon in which prices still rise but the pace of increase (the inflation rate) slows. It differs from deflation, in which prices themselves fall.

Related lessons: Economics Lesson 10 · Deflation and stagflation · Economics Lesson 8 · How to read CPI: headline vs. core

A phenomenon in which prices keep falling across the board. It can create a vicious cycle in which spending is delayed and company profits shrink.

Related lessons: Economics Lesson 10 · Deflation and stagflation

Returning asset weights that have drifted over time to the originally set proportions. You trim assets that rose a lot and top up those that rose less.

Related lessons: Economics Lesson 42 · Respond, don't predict: using economics in investing

A liability recorded for future lease payments on stores, equipment and the like that the company rents, calculated at present value. Since K-IFRS No. 1116 (effective 2019), most leases are recorded on the balance sheet.

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 29 · Notes: the inside story of the financial statements

A company or fund that pools money from many investors, invests in real estate such as buildings and logistics centers, and distributes the rental income as dividends. Its dividend yield is compared with government bond yields, so its price tends to weaken when rates rise.

Related lessons: Economics Lesson 18 · Rates and sectors: why do banks and insurers differ?

A condition under which a convertible bond's conversion price is lowered when the stock price falls. In principle, the floor for adjustments due to market price declines is 70% of the initial conversion price, and since December 2024, going below that requires a special resolution of the shareholders' meeting for each issuance.

Related lessons: Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

The event on April 20, 2020 when the May-delivery WTI futures contract closed at −$37.63 per barrel. When COVID-19 caused demand to collapse and storage space ran out, sellers piled in trying to get rid of contracts obliging them to take delivery of oil, even if they had to pay to do so.

Related lessons: Economics Lesson 29 · Oil is the economy's lifeblood

The date on which the bond issuer has promised to return the principal (par value). The longer the maturity, the more the price moves with rate changes.

Related lessons: Economics Lesson 15 · Bond prices and interest rates are a seesaw · Economics Lesson 16 · Yield curve spread: the economy's traffic light

The amount owed for raw materials or goods bought on credit and not yet paid. It is normally an operating liability that carries no interest.

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes

The shares showing which products, segments and regions the total sales come from. It appears as a table in annual report II-2 Major products and services.

Related lessons: Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview' · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

An exchange timely disclosure filed when any one of revenue, operating profit or loss, or net profit or loss for the latest fiscal year changes by 30% or more from the prior year (15% for large corporations with total assets of KRW 2 trillion or more). It comes out before the annual report, once internal accounts are finalized.

Related lessons: Financial Statements Lesson 33 · Preliminary results and corrected filings

The total amount a company earns by selling goods and services. It is the amount before deducting costs.

Related lessons: Financial Statements Lesson 13 · Revenue and cost of sales · Economics Lesson 25 · Who benefits from a weak won? · Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 3 · How to find a company on DART and open a report · Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Financial Statements Lesson 12 · The income statement is a year's report card of business · Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

The costs directly incurred to make the products that were sold. They include raw material costs, manufacturing labor and equipment depreciation. The cost of unsold products stays in inventories and becomes cost of goods sold when sold.

Related lessons: Financial Statements Lesson 12 · The income statement is a year's report card of business · Financial Statements Lesson 13 · Revenue and cost of sales · Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

Cost of sales divided by revenue. Added to the gross margin, it equals 100%.

Related lessons: Financial Statements Lesson 13 · Revenue and cost of sales

Money owed for goods or services already sold but not yet received. If it grows much faster than sales, it can be a sign the company isn't getting paid.

Related lessons: Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 22 · Checking earnings quality · Financial Statements Lesson 34 · A checklist of 10 red flags · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

Trade receivables ÷ sales × 365. It shows the average number of days it takes to receive cash after a sale.

Related lessons: Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 22 · Checking earnings quality · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

Sales minus cost of sales. It's the first step of the income statement and shows how profitable the product itself is.

Related lessons: Financial Statements Lesson 12 · The income statement is a year's report card of business · Financial Statements Lesson 13 · Revenue and cost of sales

Gross profit divided by revenue. It shows the result of the tug-of-war between raw material prices and selling prices. Compare it across several years of the same company, or within the same industry.

Related lessons: Financial Statements Lesson 13 · Revenue and cost of sales

Those who worry more about prices and are eager to raise rates are called hawks; those who worry more about the economy and jobs and are eager to cut rates are called doves.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

GDP calculated at that year's market prices. It gets bigger when prices rise even if output stays the same, so to check whether the economy has actually grown, use real GDP.

Related lessons: Economics Lesson 4 · GDP is a country's report card

Goods exports minus imports. A surplus brings more dollars into the market and pushes toward a stronger won, while a deficit pushes toward a weaker won. It is released by the Ministry of Trade, Industry and Energy on the 1st of each month.

Related lessons: Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 26 · Exports are the heart of the Korean stock market

Assets with no physical form that still earn money, such as trademarks, patents, software and goodwill.

Related lessons: Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 24 · PBR and BPS: price relative to assets

A condition, set in advance, for situations in which a trading rule is not applied. For example: "Even in a strong period, don't use the seasonality rule if the index is below its 200-day moving average."

Related lessons: Seasonality Investing Lesson 7 · Why do patterns die? So how should we use them

The tree-shaped table of contents that unfolds on the left side of a DART report window. The financial statements in an annual report are under 'III. Financial Matters'.

Related lessons: Financial Statements Lesson 3 · How to find a company on DART and open a report

The inflation rate a central bank aims for. The Bank of Korea targets 2% consumer price (CPI) inflation (since 2019), and the US Fed targets 2% PCE price inflation.

Related lessons: Economics Lesson 7 · Inflation: the same money buys less

A bond whose principal grows with the price index. It keeps up with rising prices, but its price can fall when real interest rates rise. The US version is called TIPS.

Related lessons: Economics Lesson 11 · Which assets hold up when prices rise? · Economics Lesson 30 · Why does gold rise when people are anxious?

The interest rate when the US government borrows for two years. It moves most sensitively to expectations for the Fed's policy rate over the next one to two years.

Related lessons: Economics Lesson 14 · The policy rate and market rates are different · Economics Lesson 16 · Yield curve spread: the economy's traffic light · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 40 · Practice interpreting economic news headlines

Money spent by households (and nonprofit institutions serving households) on goods and services. It makes up about 48% of Korea's GDP and about 68% of US GDP in 2025.

Related lessons: Economics Lesson 4 · GDP is a country's report card · Economics Lesson 22 · Consumption and corporate investment: the economy's engine

The phenomenon in which, as the economy climbs out of a recession, things generally pass their bottom in the order stock prices → leading index → coincident index (the official business-cycle trough) → employment. This order also appeared in Korea in 2008 and 2020.

Related lessons: Economics Lesson 34 · Stock prices move before the economy

A periodic report covering the first six months of the fiscal year, filed within 45 days after that period ends. Its financial statements receive an auditor's review.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

When the collateral value of stocks bought on margin or with unsettled-payment trades (misu) falls below the threshold and additional collateral can't be supplied, the brokerage sells the shares by force. Because it is selling regardless of price, it can deepen declines.

Related lessons: Economics Lesson 39 · Reading investor sentiment: VIX and margin loans

Net income minus operating cash flow. It means the part of profit that has not yet come in as cash, and if it is large and keeps growing over several years, it is a signal to question earnings quality.

Related lessons: Financial Statements Lesson 22 · Checking earnings quality · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

The principle of recording revenue and expenses when a transaction occurs rather than when money actually changes hands. The income statement uses this approach, so even a credit sale is booked as revenue the moment the goods are delivered.

Related lessons: Financial Statements Lesson 18 · The cash flow statement is the real bank record

Free cash flow divided by dividends, as a multiple. Above 1x means the dividend is covered by cash left over from the core business; below 1x means the shortfall is being made up from somewhere else.

Related lessons: Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left

The day that determines which shareholders receive the dividend. After the 2023 dividend procedure improvement, year-end dividends can set the record date after the dividend amount is decided, depending on the company's articles, and quarterly dividends became possible in the same way through the 2024 amendment of the Financial Investment Services and Capital Markets Act.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

Total cash dividends ÷ net income attributable to owners of the parent. It shows what percentage of net income was paid out as dividends. Even if the dividend stays the same, it rises when earnings fall.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield · Financial Statements Lesson 36 · Practice: reading a real annual report together · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

The tax withheld on dividends from Korean stocks: 14% income tax plus 1.4% local income tax, totaling 15.4%. If financial income such as interest and dividends exceeds KRW 20 million a year, the excess is taxed comprehensively.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

Dividend per share ÷ stock price. It shows what percentage of your investment the year's dividend is if you buy at today's price. It also rises when the stock price falls, so separate out the reasons.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

A section of 'III. Financial Matters' in the annual report that states the dividend policy, how the record date is handled (predictability), the key dividend indicators for three years (payout ratio, dividend yield, dividend per share), and the dividend history.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

The work of assessing a company's value, or the degree to which a stock price is expensive or cheap relative to earnings and assets. P/E and P/B are the main indicators.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap

A phenomenon in which fear spreads that a bank is in danger and depositors rush to withdraw their money all at once. In March 2023, about $42 billion of deposits left US bank SVB in a single day before it was shut down.

Related lessons: Economics Lesson 18 · Rates and sectors: why do banks and insurers differ? · Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

The tax subtracted from income before income taxes. Because of tax brackets, tax credits and so on, the actual burden relative to pre-tax profit (the effective tax rate) differs by company and by year.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit

Operating profit plus or minus non-operating items such as interest, exchange rates, and financial gains and losses. It is the profit just before tax is paid.

Related lessons: Financial Statements Lesson 12 · The income statement is a year's report card of business

A cost that rises and falls with sales or output. Raw material costs are the typical example.

Related lessons: Financial Statements Lesson 14 · Operating profit: the real strength of the core business

The financial statements of the parent alone. Subsidiaries appear only as a single line of investment shares. '4. Financial statements' in Section III of the annual report is the separate set.

Related lessons: Financial Statements Lesson 11 · Consolidated vs. separate financial statements

A note describing important events (rights offerings, large losses, mergers and so on) that occur after the closing date and before the financial statements are finalized.

Related lessons: Financial Statements Lesson 29 · Notes: the inside story of the financial statements

The purpose of holding shares, declared in a 5% report, divided into influence on management control, general investment and passive investment. For influence on management control, the report is filed on the general form and a cooling-off period applies. Change reports for passive investment are due by the 10th of the following month, and those for general investment within 10 business days.

Related lessons: Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

The new value added at each stage of the production process. It is sales minus the cost of raw materials and parts bought from other companies, and adding up the value added at every stage gives GDP.

Related lessons: Economics Lesson 4 · GDP is a country's report card

A note to the financial statements that shows sales, operating profit and assets by business segment. It tells you which business actually makes the money.

Related lessons: Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview' · Financial Statements Lesson 29 · Notes: the inside story of the financial statements

What a company is obligated to repay in the future, in other words other people's money. It is split into current liabilities, due within a year, and non-current liabilities, due after that.

Related lessons: Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio

Liabilities ÷ equity. It shows how much must be repaid per KRW 100 of shareholders' equity. Averages differ greatly by industry, so compare within the same industry.

Related lessons: Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio · Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money? · Financial Statements Lesson 26 · Compare within the same sector · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company · Financial Statements Lesson 36 · Practice: reading a real annual report together · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

A dividend a listed company pays each quarter by board resolution, in addition to the year-end dividend. To see the full year's total dividends, add the quarterly and year-end dividends together.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

A periodic report filed within 45 days covering the first 3 months of the fiscal year (Q1) and the first 9 months (Q3 cumulative). There is no separate report covering only Q4.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

A method of splitting your investments across several assets that move for different reasons, to reduce the impact of one asset's loss on the whole. It does not eliminate losses.

Related lessons: Economics Lesson 42 · Respond, don't predict: using economics in investing

A designation by the exchange for a listed company that fails to disclose by the deadline (failure to disclose), reverses what it already disclosed (reversal of disclosure), or significantly changes important content (change of disclosure). Penalty points and fines follow. Designations in 2024 numbered 147, a record high.

Related lessons: Financial Statements Lesson 33 · Preliminary results and corrected filings

A group of companies with a similar industry and business mix, chosen to compare financial ratios or valuation. Narrow down by industry classification first, then filter once more by the revenue mix in 'Business Overview' of the annual report.

Related lessons: Financial Statements Lesson 26 · Compare within the same sector

The number of paid jobs excluding agriculture, counted in the establishment survey of the US jobs report. A news line such as 'jobs rose by X thousand' is the month-over-month change in this number.

Related lessons: Economics Lesson 19 · Jobs data: nonfarm payrolls and the unemployment rate · Economics Lesson 20 · The market reacts to the gap from 'expectations' · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 40 · Practice interpreting economic news headlines

A breakdown of expenses by 'what the money was spent on', such as raw materials, labor and depreciation. It pairs with the functional classification (cost of sales, SG&A), which splits expenses by 'where the money was spent'. Companies that present their statements by function show the by-nature breakdown in the notes.

Related lessons: Financial Statements Lesson 12 · The income statement is a year's report card of business · Financial Statements Lesson 13 · Revenue and cost of sales

Assets that stay with the company for more than a year. They include property, plant and equipment, intangible assets and long-term investments.

Related lessons: Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 7 · Assets: cash, inventory, and the factory

A collective term for the audit opinions other than unqualified: qualified, adverse and disclaimer. Adverse, disclaimer and qualified due to a scope limitation are grounds for delisting by the exchange.

Related lessons: Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign · Financial Statements Lesson 34 · A checklist of 10 red flags

The part of equity in a subsidiary that is not attributable to the parent (K-IFRS No. 1110). It is shown separately in consolidated equity and consolidated net income.

Related lessons: Financial Statements Lesson 11 · Consolidated vs. separate financial statements · Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 24 · PBR and BPS: price relative to assets

An expense that is deducted when calculating profit but does not use cash in that year. Depreciation is the classic example, so under the indirect method it is added back to net income.

Related lessons: Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes

A statutory report covering one year that listed companies and others file within 90 days after the fiscal year ends. It contains audited financial statements, the business description, and shareholder and officer information in 12 chapters.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 6 · The balance sheet is a company's list of assets

A method that decides large-shareholder status by the amount held at the end of the prior fiscal year (usually the end of December). Because that single day's holding is the benchmark, the explanation goes that selling piles up just before year-end as holders sell part of their stake to drop below the threshold.

Related lessons: Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

Chapter II of the annual report. It holds how the company makes money: the business summary, main products, raw materials, sales and order status, and more.

Related lessons: Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

Money a company has borrowed from investors by issuing bonds (corporate bonds). It pays set interest and repays the principal at maturity.

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds

An indicator that expresses as an index the output produced by industries such as mining, manufacturing and utilities. It is released monthly by the Federal Reserve in the US and Statistics Korea in Korea, and is used as a coincident indicator of the economy.

Related lessons: Economics Lesson 31 · Copper and chip prices: the economy's thermometer

The tendency of the US stock market to rise over seven trading days: the last five trading days of December and the first two of January. The S&P 500 rose in 76% of the 76 instances from 1950 to 2025, but the share of up periods for any seven trading days (the baseline) was also 58%.

Related lessons: Seasonality Investing Lesson 3 · Santa comes, and January speaks · Seasonality Investing Lesson 7 · Why do patterns die? So how should we use them

A rule of thumb that says a recession has likely begun when the 3-month average of the unemployment rate rises 0.5 percentage points or more above its lowest 3-month average over the past 12 months. It was created by Claudia Sahm, a former Fed economist. It was triggered by the July 2024 US data, but no official recession was declared afterward.

Related lessons: Economics Lesson 21 · When bad news becomes good news

A value between −1 and +1 showing how much two numbers moved together. Close to +1 means the same direction, 0 means almost no relationship, and close to −1 means they moved in opposite directions. It reflects only a past relationship and does not imply cause and effect.

Related lessons: Economics Lesson 32 · When the US coughs, Korea catches a cold · Economics Lesson 31 · Copper and chip prices: the economy's thermometer · Economics Lesson 36 · Reading the sector map through rates, FX and oil · Economics Lesson 26 · Exports are the heart of the Korean stock market

The share of the whole sample in which the return was positive. Look at it together with the average to check whether the average is being pulled by a few large numbers.

Related lessons: Seasonality Investing Lesson 1 · Why is September so disliked? · Seasonality Investing Lesson 2 · Sell in May was real. And then it cooled off · Seasonality Investing Lesson 3 · Santa comes, and January speaks · Seasonality Investing Lesson 5 · Every industry has its own seasons · Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

A review in which the exchange comprehensively weighs a company's continuity and management transparency when there is doubt about whether it should stay listed, because of embezzlement/breach of trust, audit opinion problems and the like. Trading is suspended during the review, and depending on the result the company can be delisted.

Related lessons: Financial Statements Lesson 34 · A checklist of 10 red flags

US home loans made to borrowers with weak credit. When home prices fell in 2007–2008, many of them went bad, which became the starting point of the global financial crisis.

Related lessons: Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

The difference between the actual announced figure and the market's expectation (the consensus). The market reacts to the direction and size of this gap rather than to the number itself.

Related lessons: Economics Lesson 20 · The market reacts to the gap from 'expectations' · Economics Lesson 32 · When the US coughs, Korea catches a cold · Economics Lesson 40 · Practice interpreting economic news headlines · Economics Lesson 43 · Graduation: your own weekly economics checklist · Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out?

A contract in which you agree today to exchange currencies at a set exchange rate on a set future date. 1-year forward rate ≈ spot rate × (1 + KRW rate) ÷ (1 + USD rate).

Related lessons: Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging

A state in which something expected to happen is already reflected in prices such as stock prices or interest rates. If things happen as expected, prices do not move much.

Related lessons: Economics Lesson 20 · The market reacts to the gap from 'expectations' · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 26 · Exports are the heart of the Korean stock market · Economics Lesson 31 · Copper and chip prices: the economy's thermometer · Economics Lesson 32 · When the US coughs, Korea catches a cold · Economics Lesson 33 · China's economy and Korean companies · Economics Lesson 34 · Stock prices move before the economy · Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Economics Lesson 36 · Reading the sector map through rates, FX and oil · Economics Lesson 39 · Reading investor sentiment: VIX and margin loans · Economics Lesson 40 · Practice interpreting economic news headlines · Economics Lesson 42 · Respond, don't predict: using economics in investing · Economics Lesson 43 · Graduation: your own weekly economics checklist

Money received in advance before delivering goods or services. It is recorded as a liability because it is an obligation to deliver, and turns into revenue when delivered. In order-based industries, it is read as a signal of future sales.

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes

A method by which a central bank tells the market the likely future direction of rates in advance, in words, to influence market rates. Changes in wording in the statement or press conference fall under this.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates? · Economics Lesson 14 · The policy rate and market rates are different

The current share price divided by expected EPS for the next 12 months. It is the multiple the market puts on future profit.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 16 · EPS and PER: what one share earns

An indicator that moves ahead of the actual economy. Stock prices, the PMI and the term spread are typical examples.

Related lessons: Economics Lesson 6 · Some indicators tell you the economy's direction in advance · Economics Lesson 34 · Stock prices move before the economy · Economics Lesson 31 · Copper and chip prices: the economy's thermometer

Money a company spends to buy production assets such as factories, machinery and equipment. It becomes revenue for equipment and construction companies and increases future production capacity.

Related lessons: Economics Lesson 2 · The economy is one big circular flow of money · Economics Lesson 22 · Consumption and corporate investment: the economy's engine · Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left

A stock with a high P/E because earnings, though small now, are expected to grow a lot. A large part of its earnings is in the distant future, so it is sensitive to changes in interest rates (the discount rate).

Related lessons: Economics Lesson 17 · Why do growth stocks hurt more when rates rise? · Economics Lesson 18 · Rates and sectors: why do banks and insurers differ?

An ETF that holds all the companies in one sector. It is widely used to compare performance by sector, such as the US XLK (technology), XLE (energy) and XLP (consumer staples).

Related lessons: Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Seasonality Investing Lesson 5 · Every industry has its own seasons

The flow in which the relatively strong sectors in the market change one after another as the phase of the economy changes. There is a textbook order, but in practice it often diverges.

Related lessons: Economics Lesson 5 · The economy has four seasons too · Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Seasonality Investing Lesson 8 · People who made money from the calendar

A sector-switching rule laid out by Sam Stovall of CFRA: hold cyclical sectors such as consumer discretionary, industrials, materials and IT from November to April, and defensive sectors such as consumer staples and health care from May to October. It differs from six-month switching in that the equity weight stays the same and only the industries change.

Related lessons: Seasonality Investing Lesson 5 · Every industry has its own seasons

An indicator that adds up the amounts sold at stores, online, gas stations, restaurants and so on. In the US it is released in the middle of each month, and in Korea in the Industrial Activity Trends report. It is mostly a nominal amount, so it should be read together with the inflation rate.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine

Money households spend to buy goods and services. From a company's point of view, it becomes revenue.

Related lessons: Economics Lesson 2 · The economy is one big circular flow of money · Economics Lesson 22 · Consumption and corporate investment: the economy's engine

A survey index asking how households feel about their current and future economic situation. In the US it is published by the University of Michigan and the Conference Board, and in Korea by the Bank of Korea (CCSI, where 100 is the long-term average). It can diverge from actual spending.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine

Selling stocks that have lost money near year-end to lock in the loss and reduce that year's taxable gains. It is often cited as a cause of year-end weakness and the rebound at the start of the year.

Related lessons: Seasonality Investing Lesson 3 · Santa comes, and January speaks · Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

A table showing revenue and expenses over a period and the resulting profit. Under K-IFRS, it also includes other comprehensive income and is called the statement of comprehensive income.

Related lessons: Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 12 · The income statement is a year's report card of business · Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

The quantity that people want to buy at a given price. Normally, as the price rises, the quantity demanded falls (the law of demand).

Related lessons: Economics Lesson 3 · Supply and demand set prices · Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 29 · Oil is the economy's lifeblood

The curve connecting government bond yields by maturity is called the yield curve, and the long-term rate minus the short-term rate is called the term spread. When the spread turns negative (inverted), it is often read as a sign of an economic slowdown.

Related lessons: Economics Lesson 16 · Yield curve spread: the economy's traffic light

A first-reported economic indicator that is later corrected through late-arriving data or an annual review. US nonfarm payrolls are revised twice over the next two months, and once a year in a big way (the benchmark).

Related lessons: Economics Lesson 19 · Jobs data: nonfarm payrolls and the unemployment rate

The amount of orders already under contract but not yet recognized as sales. It is used to gauge future sales in industries with long build times, such as shipbuilding, defense and construction.

Related lessons: Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

Selling goods and services made at home to other countries. Money from abroad comes in as sales for domestic companies. Korea is a country with a large export share, about 41% of GDP (2023).

Related lessons: Economics Lesson 2 · The economy is one big circular flow of money · Economics Lesson 26 · Exports are the heart of the Korean stock market · Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means · Economics Lesson 25 · Who benefits from a weak won? · Economics Lesson 33 · China's economy and Korean companies

Export value is price × volume. Exports that grew thanks to price raise margins a lot but can reverse quickly when the price cycle turns.

Related lessons: Economics Lesson 26 · Exports are the heart of the Korean stock market

The foreign exchange market's term for exporters selling the dollars they received to banks and converting them into won. The better exports do, the more dollar supply there is, holding the exchange rate down.

Related lessons: Economics Lesson 24 · Why do exchange rates move?

The degree to which exports are concentrated in one or two items. The semiconductor share was about 21% in 2024 and 24.4% in 2025, and grew to about 50% by September 2026. The greater the concentration, the more that item's cycle shakes exports and the whole stock market.

Related lessons: Economics Lesson 26 · Exports are the heart of the Korean stock market · Economics Lesson 33 · China's economy and Korean companies

The previous month's export, import and trade balance results, which the Ministry of Trade and Industry releases on the 1st of every month from Korea Customs Service clearance data. It is the fastest big economic indicator, coming out as soon as the month turns, so the market pays attention.

Related lessons: Economics Lesson 26 · Exports are the heart of the Korean stock market

The amount bought minus the amount sold over a given period. Positive means net buying and negative means net selling. It is tallied daily by foreign investors, institutions, and individuals.

Related lessons: Economics Lesson 27 · Foreign investors and the exchange rate · Economics Lesson 39 · Reading investor sentiment: VIX and margin loans · Economics Lesson 43 · Graduation: your own weekly economics checklist

Exports minus imports. What overseas buyers take of our output is added to GDP, and what we buy from abroad is subtracted.

Related lessons: Economics Lesson 4 · GDP is a country's report card · Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means · Economics Lesson 26 · Exports are the heart of the Korean stock market

The amount left after subtracting money going out (import costs, foreign currency liabilities) from money coming in in dollars or other foreign currencies (export revenue, foreign currency assets). If positive, it benefits from a weak won; if negative (for example, an airline with large net foreign currency liabilities), it is hurt.

Related lessons: Economics Lesson 25 · Who benefits from a weak won?

(Interest income − interest expense) ÷ interest-earning assets. It is the representative indicator of how much a bank earns from its interest business. The NIM of Korean banks was 1.45% in 2021 and 1.62% in 2022.

Related lessons: Economics Lesson 18 · Rates and sectors: why do banks and insurers differ? · Financial Statements Lesson 36 · Practice: reading a real annual report together

A situation in which economic stagnation and rising prices (inflation) occur together.

Related lessons: Economics Lesson 10 · Deflation and stagflation · Economics Lesson 29 · Oil is the economy's lifeblood · Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

Stock price × number of shares issued. The price the market puts on the whole company.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 3 · How to find a company on DART and open a report · Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 24 · PBR and BPS: price relative to assets

The average hourly pay of private-sector workers, released together with the jobs report. A high growth rate can lead to pressure on service inflation, which affects the interest-rate outlook.

Related lessons: Economics Lesson 19 · Jobs data: nonfarm payrolls and the unemployment rate

A plan table that splits the future into a few branches such as base, optimistic and pessimistic, and lists for each branch the signals to check and the actions decided in advance.

Related lessons: Economics Lesson 42 · Respond, don't predict: using economics in investing

A method of recalculating the result under the assumption that some factors move differently (e.g. falling rates, economic slowdown). It is used to check which assumptions today's conclusion leans on.

Related lessons: Economics Lesson 36 · Reading the sector map through rates, FX and oil

A sector's or stock's return minus the return of the whole market. If the market was −10% and the sector was −4%, that is +6 pp relative to the market, and it is considered relatively strong.

Related lessons: Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Seasonality Investing Lesson 5 · Every industry has its own seasons

The rate set daily as government bonds, corporate bonds, bank bonds and others trade in the bond market. It prices in expectations for future policy rates and the term premium.

Related lessons: Economics Lesson 14 · The policy rate and market rates are different

A method that shifts one of two time series by a few months at a time and calculates the correlation coefficient to measure which one moved earlier and by how much. The lag at which the correlation coefficient is highest indicates the approximate lead time.

Related lessons: Economics Lesson 34 · Stock prices move before the economy

The total of the amounts not yet repaid on stocks that investors bought with money borrowed from brokerages. It is commonly viewed as the size of 'debt-fueled investing', and KOFIA publishes it with a one-day lag.

Related lessons: Economics Lesson 39 · Reading investor sentiment: VIX and margin loans

This is the amount newly set aside as an expense for the year to cover loans that may not be repaid. It is a core expense in a bank's income statement, and a big increase is read as a sign that the bank is preparing for bad loans.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

A calendar pattern left in industries or commodity prices by physical demand that returns at the same time every year, such as the heating and driving seasons, early-year capital spending, year-end shopping, and holiday gold demand. Because it has an explainable cause, it may last longer than a pure price pattern, but it changes along with the demand structure.

Related lessons: Seasonality Investing Lesson 5 · Every industry has its own seasons

Tangible assets such as crude oil, grain, metals and real estate. They are the very 'goods' that make up prices, so they follow inflation relatively directly.

Related lessons: Economics Lesson 11 · Which assets hold up when prices rise?

The share of people who are willing and able to work (the labor force) but cannot find a job. It rises when the economy worsens.

Related lessons: Economics Lesson 10 · Deflation and stagflation · Economics Lesson 19 · Jobs data: nonfarm payrolls and the unemployment rate · Economics Lesson 21 · When bad news becomes good news · Economics Lesson 34 · Stock prices move before the economy

GDP with the effect of rising prices removed. It is used to see how much the economy has actually grown.

Related lessons: Economics Lesson 4 · GDP is a country's report card

The nominal interest rate minus the inflation rate (approximately). If it is negative, the power of your money shrinks even though you earn interest.

Related lessons: Economics Lesson 7 · Inflation: the same money buys less · Economics Lesson 12 · An interest rate is the price of borrowing money · Economics Lesson 11 · Which assets hold up when prices rise? · Economics Lesson 30 · Why does gold rise when people are anxious?

An asset people flock to when crisis or anxiety grows. Gold, the dollar, and US Treasuries are typical examples. It does not mean 'the price is stable'; it is closer to meaning that the risk of a counterparty failing is small.

Related lessons: Economics Lesson 30 · Why does gold rise when people are anxious?

The bookkeeping amount set for one share. It has nothing to do with the share price; par value × shares issued becomes share capital.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment

A falling market in which stock prices drop 20% or more from their peak is commonly called this.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022 · Economics Lesson 42 · Respond, don't predict: using economics in investing

A policy in which the central bank does not reinvest its bonds after they mature, or sells them, to draw money out of the market. The central bank's total assets shrink.

Related lessons: Economics Lesson 38 · Liquidity: when money is released, assets rise

A policy in which the central bank buys large amounts of government bonds and the like to supply money to the market. It is mainly used when it is hard to cut the policy rate any further.

Related lessons: Economics Lesson 38 · Liquidity: when money is released, assets rise

When company earnings come in well above the analyst forecast (consensus). When they come in well below, it is called an earnings shock.

Related lessons: Economics Lesson 20 · The market reacts to the gap from 'expectations' · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality · Financial Statements Lesson 33 · Preliminary results and corrected filings

The standard for dividing which industry a company belongs to. In Korea, Statistics Korea's Korean Standard Industrial Classification (KSIC) is used in filings and statistics, while overseas indices and brokerage materials use classifications such as GICS.

Related lessons: Financial Statements Lesson 26 · Compare within the same sector

The average value compiled from the financial ratios of companies in the same industry. The Bank of Korea's "Financial Statement Analysis" publishes debt-to-equity ratios, operating margins and more for externally audited companies by industry every year. It is a baseline for comparison, not the answer.

Related lessons: Financial Statements Lesson 26 · Compare within the same sector

A group of companies in similar businesses, divided into categories such as semiconductors, banks and autos.

Related lessons: Economics Lesson 35 · Strong sectors differ by stage of the business cycle · Economics Lesson 18 · Rates and sectors: why do banks and insurers differ? · Economics Lesson 36 · Reading the sector map through rates, FX and oil

An investment attitude of considering the opposite direction when the majority is crowded to one side. It is only meaningful when you have a plan set in advance and spare funds.

Related lessons: Economics Lesson 39 · Reading investor sentiment: VIX and margin loans

A price series stitched together from the front-month prices of futures contracts with different maturities. Price gaps at the rollover points where contracts change get mixed into returns and can make the series differ from the spot price, so care is needed when calculating seasonality for commodities with high storage costs, such as crude oil and natural gas.

Related lessons: Seasonality Investing Lesson 5 · Every industry has its own seasons

The financial statements of the whole group, combining the parent and its subsidiaries as if they were one company. Transactions that moved within the group are erased. They are the primary financial statements of listed companies.

Related lessons: Financial Statements Lesson 11 · Consolidated vs. separate financial statements

A state in which operating or net losses continue for two years or more. Check it with three years of operating profit and net income in the summary financial information. KOSDAQ's rule designating companies with four consecutive fiscal years of operating losses as administrative issues was deleted at the end of 2022, so it has become more important for investors to check this themselves.

Related lessons: Financial Statements Lesson 34 · A checklist of 10 red flags

The central bank of the United States. It sets the policy rate with the goals of price stability and maximum employment.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates? · Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 38 · Liquidity: when money is released, assets rise

A situation in which growth slows gently without a recession while the central bank raises rates to bring down inflation. If it leads to a recession instead, it is called a hard landing.

Related lessons: Economics Lesson 21 · When bad news becomes good news

This is the share of loans on which principal and interest payments are overdue by a set period (usually one month) or more. It is a number that shows whether lent money is coming back on time.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

A value that reduces growth over several years to 'what percent would it be if it grew at the same rate every year.' It is calculated as (ending value ÷ beginning value)^(1 ÷ number of years) − 1 and does not show swings in between.

Related lessons: Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

The phenomenon in which, because of fixed costs, operating profit changes several times more than sales do. It is amplified by roughly (sales − variable costs) ÷ operating profit. It is larger in industries with heavy equipment.

Related lessons: Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

The premium paid over the net assets of an acquired company, recorded as an asset. It is a kind of intangible asset, and if the acquired business does not earn as expected, it is reduced through an impairment loss.

Related lessons: Financial Statements Lesson 24 · PBR and BPS: price relative to assets

Revenues and expenses that arise outside the core business. In the income statement they appear as lines such as finance income and finance costs, other income and other expenses, and share of profit of associates. Adding and subtracting them from operating profit gives income before income taxes.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit

Profit from the core business: revenue minus cost of sales and selling, general and administrative expenses.

Related lessons: Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Economics Lesson 25 · Who benefits from a weak won? · Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio · Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 12 · The income statement is a year's report card of business

Operating profit divided by revenue. It shows how many won are left from the core business per 100 won of revenue. Normal ranges differ greatly by industry.

Related lessons: Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 26 · Compare within the same sector · Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year · Financial Statements Lesson 36 · Practice: reading a real annual report together · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

Operating cash flow divided by net income. If it is 1x or more over several years, profit is coming in well as cash; if it stays below 1x or is negative, check whether money is tied up in receivables and inventory.

Related lessons: Financial Statements Lesson 22 · Checking earnings quality

The cash that actually came in and went out from the core business, such as selling products and paying for materials, wages and taxes. Whether it is consistently positive is the basic check on a company's strength.

Related lessons: Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year · Financial Statements Lesson 34 · A checklist of 10 red flags · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

A part of the Macro Map: a table of 6 factors × 30 sectors and assets, where each cell holds both the theoretical favorable, unfavorable or neutral and the correlation coefficient from real data.

Related lessons: Economics Lesson 36 · Reading the sector map through rates, FX and oil

The rate of interest a bank pays when you deposit money with it. You can see it as the price at which the bank borrows the depositor's money.

Related lessons: Economics Lesson 12 · An interest rate is the price of borrowing money

The difference between a bank's loan rate and its deposit rate. When the loan rate rises faster than the deposit rate during a rate-hiking period, it widens, and if the deposit rate follows upward, it narrows again.

Related lessons: Economics Lesson 18 · Rates and sectors: why do banks and insurers differ?

Deposits are money a bank holds for its customers. Because the money must eventually be returned, it is booked as a liability on the balance sheet. Deposits make up most of a bank's liabilities, which is why banks show very high debt-to-equity ratios.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

The share of market capitalization held by foreign investors. At the end of 2025 it was about 30.8% across all Korean listed stocks. The higher the ratio, the more a stock is affected by foreign trading.

Related lessons: Economics Lesson 27 · Foreign investors and the exchange rate · Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

A collective term for overseas pension funds, asset managers, sovereign wealth funds, hedge funds, and others that register with the Financial Supervisory Service as foreign investors and trade Korean stocks. They calculate returns in their own currency, such as dollars, so they are sensitive to the exchange rate.

Related lessons: Economics Lesson 27 · Foreign investors and the exchange rate · Economics Lesson 32 · When the US coughs, Korea catches a cold · Economics Lesson 39 · Reading investor sentiment: VIX and margin loans

A bookkeeping gain or loss that arises from remeasuring a company's dollar deposits, receivables and dollar debt at the closing-date exchange rate. Even without cash changing hands, it is reflected in net income as non-operating gain or loss. A company with a lot of dollar debt books a loss when the exchange rate rises and a gain when it falls.

Related lessons: Economics Lesson 25 · Who benefits from a weak won? · Financial Statements Lesson 15 · Why net income differs from operating profit

Foreign-currency assets such as dollars that the Bank of Korea and the government stockpile to prepare for crises. They act as an emergency fund when the foreign exchange market is shaken too violently.

Related lessons: Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means · Economics Lesson 24 · Why do exchange rates move?

When the exchange rate moves too fast in one direction, the government and the Bank of Korea smooth the pace with words (verbal intervention) or dollar trading. It is used to ease one-sidedness rather than to change the direction for long.

Related lessons: Economics Lesson 24 · Why do exchange rates move?

The minimum return an investor expects when putting money into an asset. For stocks it is roughly the Treasury yield plus a risk premium, and is used as the discount rate that converts future earnings to present value.

Related lessons: Economics Lesson 17 · Why do growth stocks hurt more when rates rise? · Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 24 · PBR and BPS: price relative to assets

A table at the very front of Chapter III of the annual report that shows assets, liabilities, equity, revenue and profit for the last several fiscal years at a glance.

Related lessons: Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year

A value, from −1 to +1, showing the recent direction and strength of the six factors on the Robin Invest Macro Map: interest rates, exchange rate, oil, inflation, jobs and exports. Factor names are based on the "rising direction," so a negative value means the opposite flow (e.g. weak won −0.6 = a strong-won trend).

Related lessons: Economics Lesson 36 · Reading the sector map through rates, FX and oil

A calendar effect in which returns on certain weekdays differ from other days. Monday weakness was the classic case, but no cause was ever confirmed, and in the S&P 500 it has virtually disappeared since 2006.

Related lessons: Seasonality Investing Lesson 4 · On days when money flows in, stocks were strong

An obligation, such as a lawsuit or payment guarantee, that is not yet confirmed but could require payment in the future. Check it in Chapter XI of the annual report and in the notes.

Related lessons: Financial Statements Lesson 5 · Annual report table-of-contents map: where to start? · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 29 · Notes: the inside story of the financial statements

Money tied up in running the business. When receivables and inventory rise, cash gets tied up; when trade payables and advances received rise, cash is freed. In the cash flow statement, it appears as "changes in operating assets and liabilities."

Related lessons: Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left

Basic materials used in production, such as crude oil, natural gas, metals and grains. When their prices rise, they push up inflation and boost the profits of companies that produce and sell them.

Related lessons: Economics Lesson 11 · Which assets hold up when prices rise? · Economics Lesson 29 · Oil is the economy's lifeblood · Economics Lesson 30 · Why does gold rise when people are anxious? · Economics Lesson 31 · Copper and chip prices: the economy's thermometer · Financial Statements Lesson 13 · Revenue and cost of sales

A fall in the won's value is called depreciation (the exchange rate rises), and a rise is called appreciation (the exchange rate falls). It means the same as a weak or strong won.

Related lessons: Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means

A fall in USD/KRW, meaning the won's value rises so the same won can buy more dollars. Also called won appreciation.

Related lessons: Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means · Economics Lesson 24 · Why do exchange rates move?

A rise in USD/KRW, that is, a fall in the value of the won. It is generally favorable for exporters.

Related lessons: Economics Lesson 25 · Who benefits from a weak won? · Economics Lesson 23 · What is an exchange rate? What KRW 1,400 per dollar means · Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 27 · Foreign investors and the exchange rate · Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging · Economics Lesson 29 · Oil is the economy's lifeblood · Economics Lesson 36 · Reading the sector map through rates, FX and oil

A calendar effect in which stock gains cluster on the last trading day of each month and the first few trading days of the next. It is explained by inflows of salaries and pension contributions, and it has weakened sharply in the S&P 500 since 2006.

Related lessons: Seasonality Investing Lesson 4 · On days when money flows in, stocks were strong · Seasonality Investing Lesson 7 · Why do patterns die? So how should we use them · Seasonality Investing Lesson 8 · People who made money from the calendar

A table for checking ten items: consecutive losses, capital impairment, negative operating cash flow, a surge in receivables, frequent CBs and paid-in capital increases, a change of largest shareholder, auditor change or modified opinion, repeated corrected filings, administrative issue and embezzlement/breach of trust. You look at both whether several signals overlap and whether there is a heavy signal.

Related lessons: Financial Statements Lesson 34 · A checklist of 10 red flags · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

A phenomenon in which, when anxiety grows from events like war, financial crises, or sharp stock market drops, investors sell stocks and emerging-market currencies and flock to safe-haven assets such as the dollar, government bonds, and gold. The won generally weakens at such times.

Related lessons: Economics Lesson 24 · Why do exchange rates move? · Economics Lesson 30 · Why does gold rise when people are anxious? · Economics Lesson 32 · When the US coughs, Korea catches a cold · Economics Lesson 39 · Reading investor sentiment: VIX and margin loans · Economics Lesson 40 · Practice interpreting economic news headlines

When funds, ahead of quarter-end or year-end reports, buy stocks that have performed well or dump poor performers to make their portfolios look better. It is cited as a cause of supply-and-demand clustering at quarter-end.

Current assets ÷ current liabilities. It shows how many assets that turn into cash within a year there are relative to debt due within a year.

Related lessons: Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company · Financial Statements Lesson 36 · Practice: reading a real annual report together

The amount of money released into the market, or how easily an asset can be converted into cash. When there is plenty of liquidity, asset prices tend to rise.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 38 · Liquidity: when money is released, assets rise

A period in which abundant money and low rates, rather than improving earnings, drive stock prices up. 2020–2021 is the typical example, and when the money drains away, the market can be shaken just as sharply in the other direction.

Related lessons: Economics Lesson 38 · Liquidity: when money is released, assets rise

Assets expected to turn into cash within about a year (or the normal operating cycle). They include cash, trade receivables and inventories.

Related lessons: Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 7 · Assets: cash, inventory, and the factory

A company issues new shares and sells them for cash. Equity rises, but the share count also rises, so existing shareholders' ownership and earnings per share can be diluted. Methods include shareholder allotment, public offering and third-party allotment.

Related lessons: Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures · Financial Statements Lesson 34 · A checklist of 10 red flags

Tangible assets used for many years, such as factories, machinery and store fixtures. Through depreciation they become an expense each year.

Related lessons: Financial Statements Lesson 7 · Assets: cash, inventory, and the factory

Chapter IV of the annual report. Management itself explains the reasons for changes in results and financial position, liquidity, fundraising and more.

Related lessons: Financial Statements Lesson 5 · Annual report table-of-contents map: where to start?

EPS divided by the share price, i.e. 1 ÷ P/E. A P/E of 20x means an earnings yield of 5%, used for comparison with Treasury and deposit rates.

Related lessons: Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left

The degree to which profit comes in from the core business, repeatedly, and as cash. If there are many one-off gains, or little cash comes in relative to profit, earnings quality is considered low.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 22 · Checking earnings quality · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

The portion of the net income a company has earned that has been kept rather than paid out as dividends and the like. It is shown within equity on the balance sheet.

Related lessons: Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 11 · Consolidated vs. separate financial statements · Financial Statements Lesson 12 · The income statement is a year's report card of business · Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

Operating profit ÷ interest expense. It shows how many times the core business can pay the interest. Below 1x means it can't even pay all the interest.

Related lessons: Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

Liabilities that must pay interest. They include short- and long-term borrowings, bonds payable (corporate bonds), and the current portion of long-term debt, and interest expense grows when rates rise.

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds

This is the interest income a bank receives from loans, bonds and so on, minus the interest expense it pays on deposits and the like. It accounts for the largest share of total earnings at Korean banks.

Related lessons: Economics Lesson 18 · Rates and sectors: why do banks and insurers differ? · Financial Statements Lesson 36 · Practice: reading a real annual report together

The collective name for the US Fed's two goals, “maximum employment” and “price stability.” It gives more weight to the employment situation than a central bank that looks only at prices.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

A phenomenon in which prices keep rising across the board. What the same money can buy shrinks.

Related lessons: Economics Lesson 7 · Inflation: the same money buys less

A method of investing a large sum all at once. Because the money stays in the market longer, it was favorable on average, but investing just before a peak can lead to bigger losses.

Related lessons: Economics Lesson 42 · Respond, don't predict: using economics in investing

Total monthly exports divided by the number of working days (days worked). It removes the illusion caused by different numbers of working days due to holidays and the like, showing the real momentum of exports.

Related lessons: Economics Lesson 26 · Exports are the heart of the Korean stock market

Gains and losses that don't repeat every year, such as gains on asset disposals, litigation payouts and impairment losses. When projecting next year's profit or calculating P/E, it is best to filter them out.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 22 · Checking earnings quality

A filing in which executives and major shareholders of a listed company report their holdings of their own company's shares and changes in them. The 5% report is meant to watch changes in control, while this report is meant to watch insider trading.

Related lessons: Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

Operating cash flow minus capital expenditure (acquisition of tangible assets). It's the cash left after making the investments needed to keep the business running, and it is the source of dividends, buybacks, and debt repayment.

Related lessons: Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left · Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company · Financial Statements Lesson 36 · Practice: reading a real annual report together · Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

The company's own shares that it has bought and holds. It is recorded as a deduction from equity.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left · Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield · Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

The shareholders' share, assets minus liabilities, in other words your own money. It consists of share capital, capital surplus, retained earnings and so on.

Related lessons: Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio · Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money? · Financial Statements Lesson 24 · PBR and BPS: price relative to assets

The par value of a share × the number of shares outstanding. If total equity falls below share capital, it is capital impairment.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

A table showing how equity, the shareholders' stake, changed over a period through net income, dividends, capital increases, treasury stock transactions and so on.

Related lessons: Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment

Surplus arising from transactions with shareholders, such as the extra money received by issuing shares above par value (share premium).

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

A state in which accumulated losses have made total equity smaller than share capital. If total equity is zero or below, it is full capital impairment.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 34 · A checklist of 10 red flags

(Share capital − total equity) ÷ share capital × 100. The Korea Exchange calculates it on a consolidated basis, and in the KOSPI market 50% or more at fiscal year-end is a ground for administrative issue designation.

Related lessons: Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment

The company eliminates the shares it bought back, reducing the number of shares outstanding. Even with the same net income, the share count falls and EPS rises.

Related lessons: Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield · Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

Everything a company owns (cash, receivables, inventory, equipment and so on). It is always true that assets = liabilities + equity.

Related lessons: Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 7 · Assets: cash, inventory, and the factory

Deciding in what proportions to split your money among asset classes such as stocks, bonds, gold and cash. It is considered the decision with the biggest influence on long-term performance and the size of drawdowns.

Related lessons: Economics Lesson 42 · Respond, don't predict: using economics in investing

Revenue divided by total assets. It shows how many times over the company generates revenue from its assets in a year.

Related lessons: Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money?

Aligning the business structure so that a company earns and spends in the same currency, so the exchange rate effects offset each other. Examples include buying raw materials in dollars and selling products in dollars, or producing and selling locally overseas.

Related lessons: Economics Lesson 25 · Who benefits from a weak won?

Right after closing the books, the company announces provisional revenue, operating profit and net income first through an exchange disclosure. These are pre-audit numbers, so they may change in the periodic report.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality · Financial Statements Lesson 33 · Preliminary results and corrected filings

The difference between long-term and short-term rates. Usually the 2-year (or 3-month) yield is subtracted from the 10-year Treasury yield. If negative, it is an inversion.

Related lessons: Economics Lesson 16 · Yield curve spread: the economy's traffic light

Raw materials, work in progress and finished goods held for sale. They become cash only once they are sold and collected.

Related lessons: Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 22 · Checking earnings quality

A paper gain or loss that arises when the value of crude and product inventories held changes with prices. When oil prices rise, refiners tend to book inventory valuation gains, and when they fall, losses.

Related lessons: Economics Lesson 29 · Oil is the economy's lifeblood

Cost of sales (or sales in the simplified formula) divided by inventories. It shows how many times the goods in the warehouse sell through in a year. A falling figure may signal unsold inventory piling up.

Related lessons: Financial Statements Lesson 22 · Checking earnings quality

Assets divided by equity, showing how much debt is stacked on top of the company's own money. Subtract 1 from financial leverage and you get the debt-to-equity ratio. It is a different concept from operating leverage (the effect of fixed costs).

Related lessons: Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money?

A table showing what a company owns on a particular day (usually the end of the fiscal year) and the sources of the money that paid for those assets, liabilities and equity. Assets = liabilities + equity always holds.

Related lessons: Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 7 · Assets: cash, inventory, and the factory · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio · Financial Statements Lesson 11 · Consolidated vs. separate financial statements

A bundle of tables in which a company records its performance over a period and its financial position at a point in time, in a prescribed format. K-IFRS No. 1001 defines the complete financial statements as the balance sheet, statement of comprehensive income, statement of changes in equity, cash flow statement and notes.

Related lessons: Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 2 · DART is the companies' official bulletin board

Cash from activities that change equity and borrowings, such as borrowing and repaying money, issuing shares and paying dividends.

Related lessons: Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes

A method of steadily buying a set amount at a set interval. Splitting your purchase dates reduces the risk of buying everything at a peak, but in a rising market the average performance can be lower than lump-sum investing.

Related lessons: Economics Lesson 42 · Respond, don't predict: using economics in investing

The rate of change compared with the same month (or quarter) a year earlier. It removes seasonal effects and shows the change accumulated over a year, so it is the basic number for inflation releases.

Related lessons: Economics Lesson 8 · How to read CPI: headline vs. core · Economics Lesson 26 · Exports are the heart of the Korean stock market · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

The rate of change of this quarter's results compared with the immediately preceding quarter. For seasonal companies, the seasonal effect gets mixed in and causes big swings.

Related lessons: Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

The rate of change compared with the immediately preceding month. It shows the pace right now and is usually published as a seasonally adjusted value.

Related lessons: Economics Lesson 8 · How to read CPI: headline vs. core

A corporate bond with the right to convert into the company's shares at a set price. The company can borrow at a low interest rate, but when it converts into shares, existing shareholders' stakes are diluted. Repeated issuance can be a sign of cash shortage.

Related lessons: Financial Statements Lesson 21 · Why do profitable companies go bust? Profitable bankruptcy · Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures · Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures · Financial Statements Lesson 34 · A checklist of 10 red flags · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

A chart published by US FOMC members in which each marks a dot for where they expect the policy rate to be in the future. It comes out four times a year (March, June, September, December) along with the economic projections.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

Disclosures filed at set times, including annual, semi-annual and quarterly reports. Financial statements are contained in these reports.

Related lessons: Financial Statements Lesson 2 · DART is the companies' official bulletin board · Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out?

These are the deadlines set by Articles 159 and 160 of the Capital Markets Act. The annual report is due 90 days after the fiscal year ends, and the semi-annual and quarterly reports within 45 days after the period ends; for a December year-end, that is end of March, mid-May, mid-August and mid-November.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out?

A shareholders' meeting held once a year to decide matters such as approving the financial statements, electing directors and dividends. Most listed companies with a December fiscal year-end hold it in March.

Related lessons: Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield · Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign

A filing that corrects and resubmits content already filed. You can recognize it on the DART list by a correction marker or a prefix such as [Correction of Entries], and you should check the reason for the correction and the before-and-after comparison.

Related lessons: Financial Statements Lesson 2 · DART is the companies' official bulletin board · Financial Statements Lesson 33 · Preliminary results and corrected filings · Financial Statements Lesson 34 · A checklist of 10 red flags

The difference a refiner earns when it turns crude into gasoline, diesel and other products and sells them. It is the product price minus the crude price and operating costs, and it is the core of a refiner's profit.

Related lessons: Economics Lesson 29 · Oil is the economy's lifeblood

The time it takes for the effect of a rate change to show up in spending, investment and prices. It is commonly put at around a year or more, which is why central banks act on future prices.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

The market's belief that when markets are shaken badly, the central bank or government will step in with rate cuts and liquidity. The name comes from a put option that protects against losses; it is hard to rely on when inflation is high.

Related lessons: Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

A paid-in capital increase method that allocates new shares only to a specific party chosen by the company. Existing shareholders are diluted without a chance to participate, so you must check whether the recipients and the issue price are fair.

Related lessons: Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

Book value per share recalculated after removing or discounting assets whose value can swing, such as goodwill, intangible assets and old inventory. It is used to look at the books conservatively (there is no set formula).

Related lessons: Financial Statements Lesson 24 · PBR and BPS: price relative to assets

A company that is substantially controlled by another company (the parent). Its assets and liabilities are combined at 100% in the consolidated financial statements.

Related lessons: Financial Statements Lesson 11 · Consolidated vs. separate financial statements

The price at which one share of a stock trades in the market. Over the long run it is set by the earnings the company makes and the multiple (P/E) the market puts on those earnings.

Related lessons: Economics Lesson 1 · Know the economy and you'll see stock prices · Economics Lesson 34 · Stock prices move before the economy · Economics Lesson 43 · Graduation: your own weekly economics checklist

A checklist for reviewing seven items in the same order every week: market results, interest rates, exchange rate and foreign investors, commodities, this week's calendar, investor sentiment and the sector map. It is a tool for not missing important signals, not for forecasting.

Related lessons: Economics Lesson 43 · Graduation: your own weekly economics checklist

Total dividends divided by the number of shares (excluding treasury stock): the dividend one share receives. Common and preferred shares may be set separately.

Related lessons: Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

The instruction manual for the financial statement numbers. It describes accounting methods, collateral and payment guarantees, contingent liabilities such as lawsuits, related-party transactions and more.

Related lessons: Financial Statements Lesson 1 · Financial statements are a company's health checkup · Financial Statements Lesson 29 · Notes: the inside story of the financial statements · Financial Statements Lesson 6 · The balance sheet is a company's list of assets · Financial Statements Lesson 8 · Liabilities: debt comes in different kinds

A concept that expresses the average timing at which a company earns its profits, like a bond's duration. The more a stock's earnings are concentrated in the distant future, the longer its duration and the more it swings with changes in interest rates.

Related lessons: Economics Lesson 17 · Why do growth stocks hurt more when rates rise?

A system under which you must in principle report within 5 business days when you come to hold 5% or more of a listed company's shares together with related parties, when your holding later changes by 1% or more, or when your holding purpose or similar details change (Financial Investment Services and Capital Markets Act, Article 147).

Related lessons: Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

An item in 'I. Company Overview' of the annual report that lists the total number of shares authorized, issued shares, treasury shares and shares outstanding, by common and preferred shares. It is where you check the denominator of BPS and EPS.

Related lessons: Financial Statements Lesson 24 · PBR and BPS: price relative to assets

The core materials that go into making products, with their suppliers and prices. It is written in annual report II-3 Raw materials and production facilities, and when prices rise, the gross margin gets shaken.

Related lessons: Financial Statements Lesson 28 · Finding how the company makes money in 'Business Overview'

A report filed when something that greatly affects the company's management or assets happens, such as a paid-in capital increase, convertible bond issuance, treasury stock acquisition, a significant asset transfer, or a merger. It is filed by the day after the event occurs (within 3 days for mergers and the like).

Related lessons: Financial Statements Lesson 2 · DART is the companies' official bulletin board · Financial Statements Lesson 31 · Rights offerings, convertible bonds (CB) and treasury share disclosures

The second year of a US presidential term, when the entire House and one-third of the Senate are elected. From 1951 to 2025, the S&P 500's average return in midterm years was +3.7% (18 instances), the lowest of the four years of the cycle, and the average for Q4 of that year was +6.72%.

Related lessons: Seasonality Investing Lesson 4 · On days when money flows in, stocks were strong

Parts and materials used to make other products. Semiconductors, petrochemical products and displays are typical, and most of Korea's exports to China are intermediate goods used in Chinese factories.

Related lessons: Economics Lesson 33 · China's economy and Korean companies

A bundle of policies the Chinese government and the People's Bank of China introduce to revive the economy, such as cuts in interest rates and the reserve requirement ratio, easing of property rules and larger fiscal spending. Related sectors move on hopes right after the announcement, but the effect lasts only if actual economic numbers follow.

Related lessons: Economics Lesson 33 · China's economy and Korean companies · Economics Lesson 40 · Practice interpreting economic news headlines

A collective term for stocks and sectors whose results depend heavily on Chinese sales or the Chinese economy. Depending on whether they rely on China's factories, property or consumption, they react differently to the same news.

Related lessons: Economics Lesson 33 · China's economy and Korean companies

The flow of apartment and commercial building development and sales in China. It connects to demand for steel, construction equipment and chemicals, and China's real estate development investment fell 10.6% in 2024 and 17.2% in 2025.

Related lessons: Economics Lesson 33 · China's economy and Korean companies

The interest rate level that neither warms nor cools the economy. When the policy rate is above it, policy is called tight; below it, accommodative. It is an estimate that cannot be observed directly.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

The value that falls in the middle when values are lined up by size. It is less affected by one or two outliers, so it is used to check whether the average has been inflated.

Related lessons: Seasonality Investing Lesson 1 · Why is September so disliked? · Seasonality Investing Lesson 2 · Sell in May was real. And then it cooled off · Seasonality Investing Lesson 5 · Every industry has its own seasons · Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

Central banks around the world buying gold with part of their foreign exchange reserves. According to the World Gold Council it exceeded 1,000 tonnes for three years in a row, 2022–2024, and is regarded as a major force supporting the gold price since 2022.

Related lessons: Economics Lesson 30 · Why does gold rise when people are anxious?

The size of the assets the central bank holds, such as government bonds and securities. It grows during quantitative easing and shrinks during quantitative tightening, showing the direction of liquidity. For the US, check FRED WALCL.

Related lessons: Economics Lesson 38 · Liquidity: when money is released, assets rise

A promise to repay on another company's behalf if that company cannot repay its debt. Because it is not a confirmed debt, it is mainly written in the contingent liabilities and commitments in the notes, and the risk is judged by its size relative to equity.

Related lessons: Financial Statements Lesson 29 · Notes: the inside story of the financial statements · Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

Money that banks keep deposited with the central bank. When the central bank buys bonds, the payment piles up as reserves, increasing the bank's capacity to lend.

Related lessons: Economics Lesson 38 · Liquidity: when money is released, assets rise

The part of consolidated equity on the balance sheet that goes to shareholders of the parent company. It is the value with non-controlling interests removed, and is used when calculating BPS and ROE.

Related lessons: Financial Statements Lesson 24 · PBR and BPS: price relative to assets

The share of consolidated net income that goes to the parent company's shareholders. It is the figure after subtracting other shareholders' share of subsidiaries (non-controlling interest), and it is used to calculate EPS.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit · Financial Statements Lesson 16 · EPS and PER: what one share earns · Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money? · Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

Filings that tell you who holds how many shares and who has bought or sold them, such as large holdings of 5% or more and the share ownership of executives and major shareholders.

Related lessons: Financial Statements Lesson 2 · DART is the companies' official bulletin board · Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

Gain or loss that reflects your proportional share of the net income of a company (an associate) in which you hold roughly 20–50% and have significant influence over management. It is not cash received.

Related lessons: Financial Statements Lesson 15 · Why net income differs from operating profit

A company whose main business is owning subsidiaries' shares and controlling the group. Its separate income is mostly dividends and royalties, so consolidated and separate should be viewed together.

Related lessons: Financial Statements Lesson 11 · Consolidated vs. separate financial statements · Financial Statements Lesson 36 · Practice: reading a real annual report together

Money borrowed from financial institutions such as banks. What is due within one year is recorded as short-term borrowings (current liabilities), and what is due later as long-term borrowings (non-current liabilities).

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes · Financial Statements Lesson 29 · Notes: the inside story of the financial statements

Interest-bearing borrowings and bonds ÷ total assets. The share of debt whose burden rises directly when interest rates go up.

Related lessons: Financial Statements Lesson 10 · Gauging safety with debt ratio and current ratio

An IOU issued by a government or company when it borrows money. It pays set interest and returns the principal at maturity. When interest rates rise, the price of bonds already issued falls.

Related lessons: Economics Lesson 15 · Bond prices and interest rates are a seesaw · Economics Lesson 18 · Rates and sectors: why do banks and insurers differ? · Economics Lesson 38 · Liquidity: when money is released, assets rise

A product that holds multiple bonds and trades like a stock. It swaps bonds nearing maturity for new ones to maintain a maturity range, so the ETF itself has no maturity and its price moves with market rates.

Related lessons: Economics Lesson 15 · Bond prices and interest rates are a seesaw

The annual return you earn when you buy a bond at today's market price and hold it to maturity. The '10-year yield' in the news is this. When the price falls, the yield rises.

Related lessons: Economics Lesson 15 · Bond prices and interest rates are a seesaw · Economics Lesson 16 · Yield curve spread: the economy's traffic light

The money left for shareholders if the company were wound up now, assets sold and debts repaid. In practice, a hurried asset sale makes it hard to receive full book value, so it tends to be less than book equity.

Related lessons: Financial Statements Lesson 24 · PBR and BPS: price relative to assets

An asset's return minus the return of a benchmark. For example, if the Russell 2000 returned +3% in January and the S&P 500 returned +2%, the January excess return is +1 percentage point.

Related lessons: Seasonality Investing Lesson 3 · Santa comes, and January speaks · Seasonality Investing Lesson 6 · Korea's market calendar was made by taxes

The percentage a price falls from its previous peak to its lowest point. Calculated as (bottom ÷ peak − 1). In the 2008 crisis, KOSPI fell 54.5% and the S&P 500 fell 56.8%.

Related lessons: Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022 · Economics Lesson 42 · Respond, don't predict: using economics in investing · Seasonality Investing Lesson 7 · Why do patterns die? So how should we use them

The shareholder who owns the most shares of a company. In filings, the stakes of related parties such as family, affiliates and executives are combined and shown as the stake of the 'largest shareholder and related parties,' which appears in the annual report under VII. Shareholders.

Related lessons: Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

A check option in DART search that hides older pre-correction versions and shows only the last corrected report. It is checked by default.

Related lessons: Financial Statements Lesson 3 · How to find a company on DART and open a report

A method of stacking numbers such as revenue, operating profit, ROE and operating cash flow side by side over 3–5 years to see direction and volatility. It reduces the illusions that come from looking at a single year because of the base effect, one-offs and cycles.

Related lessons: Financial Statements Lesson 27 · Look at a 3–5 year trend, not a single year

A liability recorded in advance by estimating an obligation that is likely to be paid, even though the amount or timing is uncertain. Product warranties and lawsuit damages are examples.

Related lessons: Financial Statements Lesson 8 · Liabilities: debt comes in different kinds · Financial Statements Lesson 29 · Notes: the inside story of the financial statements

The average forecast of market experts for an economic indicator or company earnings. The gap between the actual release and this figure moves the market.

Related lessons: Economics Lesson 20 · The market reacts to the gap from 'expectations' · Economics Lesson 40 · Practice interpreting economic news headlines · Economics Lesson 43 · Graduation: your own weekly economics checklist · Financial Statements Lesson 4 · When do annual, half-year and quarterly reports come out? · Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality · Financial Statements Lesson 33 · Preliminary results and corrected filings

The phenomenon of Korean listed companies receiving lower P/E and P/B than overseas companies with similar earnings and assets. Low shareholder returns, governance and geopolitical risk are cited as reasons.

Related lessons: Economics Lesson 37 · PER and PBR: rulers for measuring expensive vs. cheap · Financial Statements Lesson 24 · PBR and BPS: price relative to assets

An agreement under which two central banks swap each other's currencies on set terms when needed. Korea signed swap lines with the US Fed worth $30 billion in October 2008 and $60 billion on Mar 19, 2020 to deal with dollar shortages.

Related lessons: Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

A one- or two-sentence note on which company you are looking at and on what premise. For example, if you set the premise that "the company can raise prices even when costs rise," you also decide which number (the tracking metric) will confirm whether that premise holds.

Related lessons: Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

A short record of the assumptions and numbers your judgment rests on. You use it as a review notebook by checking next week whether the assumptions held.

Related lessons: Economics Lesson 43 · Graduation: your own weekly economics checklist

Whether investors are optimistic or pessimistic. With the same earnings, better sentiment gives a higher multiple.

Related lessons: Learn (Economics) Lesson 1 · Understand the economy and you can see stock prices · Learn (Economics) Lesson 39 · Reading investor sentiment: VIX and margin loan balance

One of the components of GDP: the money companies and the government spend for future production on equipment, buildings, software, R&D, and so on, plus changes in inventories. It is a different meaning from investing in stocks.

Related lessons: Economics Lesson 4 · GDP is a country's report card

Cash from buying and selling assets held for the long term or invested in, such as equipment, intangible assets, stakes in other companies and financial instruments. Equipment purchases are checked separately on the 'acquisition of property, plant and equipment' line.

Related lessons: Financial Statements Lesson 18 · The cash flow statement is the real bank record · Financial Statements Lesson 19 · Operating, investing and financing activities: read in three boxes

A unit of weight for precious metals such as gold and silver, about 31.1 grams. The international gold price is usually quoted in dollars per troy ounce.

Related lessons: Economics Lesson 30 · Why does gold rise when people are anxious?

Sales, purchases and fund transactions with major shareholders, affiliates, associates and the like. If the share is excessively large or the terms differ from the market, profit or company money can be distorted.

Related lessons: Reading Financial Statements Lesson 29 · Footnotes: the inside story of financial statements · Reading Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures

The phenomenon in which a shock in one country or market spreads to other countries' markets through channels such as trade, interest rates, exchange rates and investment flows.

Related lessons: Economics Lesson 32 · When the US coughs, Korea catches a cold

Costs not of making goods but of selling them and running the company. They include sales staff labor, rent, advertising, and depreciation on sales equipment. They are abbreviated as SG&A.

Related lessons: Reading Financial Statements Lesson 14 · Operating profit: the real strength of the core business · Reading Financial Statements Lesson 12 · The income statement is a year's report card

This is the phenomenon where a past return pattern weakens or disappears as it becomes widely known or as market structure changes. Patterns with short cycles that are easy to trade, such as the turn-of-the-month effect and the Monday effect, faded first.

Related lessons: Seasonality Investing Lesson 4 · On days when money comes in, stocks were strong · Seasonality Investing Lesson 7 · Why do patterns die? So how should you use them?

A loss on the books that arises when you haven't yet sold an asset you hold, but its current market price is lower than the price you paid. When rates rise, held bonds show unrealized losses.

Related lessons: Economics Lesson 18 · Rates and sectors: why do banks and insurers differ?

A statement that adds other comprehensive income, such as valuation gains and losses on financial assets held, to net income. Under K-IFRS it can be combined with the income statement into one statement or filed as two.

Related lessons: Financial Statements Lesson 12 · The income statement is a year's report card of business

The interest rate set when a bond is issued. With a par value of KRW 1 million and a coupon rate of 3%, you receive KRW 30,000 every year, unchanged until maturity.

Related lessons: Economics Lesson 15 · Bond prices and interest rates are a seesaw

This means checking whether the same pattern also shows up in a period other than the one where it was found (especially a recent period) or in another market. It is the basic way to filter out data-mining bias.

Related lessons: Seasonality Investing Lesson 2 · Sell in May was real. Then it cooled off · Seasonality Investing Lesson 3 · Santa comes, and January speaks · Seasonality Investing Lesson 7 · Why do patterns die? So how should you use them? · Seasonality Investing Lesson 8 · People who made money with the calendar

The number of observations used to calculate a statistic. In monthly seasonality it means how many times that month has occurred; the smaller the number, the more likely the result is due to chance.

Related lessons: Seasonality Investing Lesson 1 · Why is September so disliked? · Seasonality Investing Lesson 2 · Sell in May was real. Then it cooled off · Seasonality Investing Lesson 3 · Santa comes, and January speaks · Seasonality Investing Lesson 4 · On days when money comes in, stocks were strong · Seasonality Investing Lesson 6 · Korea's market calendar was shaped by taxes · Seasonality Investing Lesson 7 · Why do patterns die? So how should you use them?

An index built from the share prices of major US-listed semiconductor companies. It is often used to gauge the morning mood of semiconductor, equipment and materials sectors on the KOSPI, where chips carry a large weight.

Related lessons: Economics Lesson 32 · When the US coughs, Korea catches a cold

Sectors tied to goods bought steadily regardless of the economy, such as food and beverages, household goods and tobacco. A classic defensive sector.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine · Economics Lesson 35 · Strong sectors differ by stage of the business cycle

A note that organizes one company on a single sheet of paper in six sections: business structure, growth, profitability, safety, cash, and shareholders and disclosures. Only two or three numbers and a one-line memo are written per section so that it can be refilled every quarter.

Related lessons: Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

Korea's policy rate minus the US policy rate. The deeper it goes negative (the higher US rates are), the more pressure there generally is for a weak won. It inverted in July 2022.

Related lessons: Economics Lesson 24 · Why do exchange rates move?

The rate used to convert future money into today's value. It is usually set as an interest rate plus a risk premium. The higher the discount rate, the smaller the present value of future earnings.

Related lessons: Learn (Economics) Lesson 1 · Understand the economy and you can see stock prices · Learn (Economics) Lesson 17 · Why do rising rates hurt growth stocks more? · Learn (Economics) Lesson 15 · Bond prices and interest rates are a seesaw · Learn (Economics) Lesson 30 · Why does gold rise when people are anxious?

Orders for nondefense capital goods within US durable goods orders, excluding aircraft. Used as a leading signal for business capital expenditure.

Related lessons: Economics Lesson 22 · Consumption and corporate investment: the economy's engine

Items the auditor judged most important and paid the most attention to in this audit, described in the audit report. Items that involve a lot of judgment, such as revenue recognition, inventory valuation and goodwill impairment, are the ones that usually appear.

Related lessons: Reading Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign · Reading Financial Statements Lesson 36 · Practice: reading a real business report together

A method of reading an economic news headline by splitting it into three boxes: cause (what happened) → reaction (rates, dollar, stock prices) → impact (sectors, my stocks).

Related lessons: Learn (Economics) Lesson 40 · Practice interpreting economic news headlines

An interpretation sequence that asks, in order: how it differs from expectations, whether it affects earnings or the valuation (multiple), the direction of rates and the dollar, which sectors benefit or lose, and whether it is a one-off.

Related lessons: Learn (Economics) Lesson 40 · Practice interpreting economic news headlines

Cash and deposits that can be turned into cash right away. It equals the ending cash on the cash flow statement.

Related lessons: Reading Financial Statements Lesson 7 · Assets: cash, inventory and factories · Reading Financial Statements Lesson 18 · The cash flow statement is the real bank-account record

The combination of whether each of the three boxes (operating, investing, financing) is positive or negative. +/−/− is commonly read as the strong type, and −/−/+ as an early-investment type or a warning sign, but these are general interpretations that must be combined with the industry and period.

Related lessons: Reading Financial Statements Lesson 19 · Operating, investing and financing activities: read them in three boxes

A table showing the cash that actually came in and went out through operating, investing and financing activities over a period. Closing cash equals cash and cash equivalents on the balance sheet.

Related lessons: Reading Financial Statements Lesson 1 · Financial statements are a company's health checkup · Reading Financial Statements Lesson 18 · The cash flow statement is the real bank-account record · Reading Financial Statements Lesson 19 · Operating, investing and financing activities: read them in three boxes · Reading Financial Statements Lesson 20 · Free cash flow (FCF): the money that is really left · Reading Financial Statements Lesson 21 · Profitable but bankrupt? Insolvency despite profits · Reading Financial Statements Lesson 22 · Checking earnings quality

The value of money to be received in the future, converted to today's terms by dividing by the discount rate.

Related lessons: Learn (Economics) Lesson 17 · Why do rising rates hurt growth stocks more? · Learn (Economics) Lesson 15 · Bond prices and interest rates are a seesaw

An index calculated as the share saying 'improved' + the share saying 'same' × 0.5. Above 50 means more respondents improved, and the PMI is made this way.

Related lessons: Learn (Economics) Lesson 6 · Some indicators signal the economy in advance

A condition set in advance, such as "if this number appears, take another look at this." Example: "if the 10-year yield goes above 5.3%, review the weight of growth stocks." It is a way of fixing the order of your responses rather than making a forecast.

Related lessons: Learn (Economics) Lesson 43 · Graduation: your own weekly economy checklist · Reading Financial Statements Lesson 37 · Graduation: your own one-page company note

The number you will check in the next report to see whether your investment logic holds. Instead of verdicts like "good" or "bad," write it as a number and a condition, such as "if the operating margin falls below 12%, revisit the cost pass-through."

Related lessons: Financial Statements Lesson 37 · Graduation: your own one-page company analysis note

A reference indicator on the Macro Map that sums factor weight × factor state × effect (65% theory + 35% actual correlation) and organizes whether the current macro environment is a tailwind or headwind for a sector in five levels (favorable to unfavorable). It does not reflect earnings, price level or supply and demand flows.

Related lessons: Learn (Economics) Lesson 36 · Reading the sector map through rates, FX and oil · Learn (Economics) Lesson 43 · Graduation: your own weekly economy checklist

A state in which the return on a foreign asset takes exchange rate changes as they come. Return in won = (1 + stock return) × (1 + exchange rate change) − 1. Buying overseas stocks directly is basically unhedged.

Related lessons: Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging

The rate at which the currencies of two countries are exchanged. USD/KRW 1,400 means it costs 1,400 won to buy 1 dollar.

Related lessons: Learn (Economics) Lesson 23 · What is an exchange rate? What USD/KRW at 1,400 means · Learn (Economics) Lesson 24 · Why do exchange rates move? · Learn (Economics) Lesson 25 · Who benefits from a weak won? · Learn (Economics) Lesson 27 · Foreign investors and the exchange rate · Learn (Economics) Lesson 28 · Overseas stocks and FX: exposure and hedging · Learn (Economics) Lesson 36 · Reading the sector map through rates, FX and oil

Fixing in advance the exchange rate at which you will convert in the future, using forwards and similar tools, to strip out exchange rate changes. A (H) in the name of an overseas ETF listed in Korea means it is the hedged type. It reduces only exchange rate risk; stock price risk stays the same.

Related lessons: Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging

The cost incurred when hedging currency, roughly the gap between the two countries' short-term interest rates. When the dollar rate is higher than the won rate, a Korean investor hedging dollars is disadvantaged by that gap each year; in the opposite case, a bonus arises.

Related lessons: Economics Lesson 28 · Overseas stocks and FX: currency exposure and hedging

Assets = liabilities + equity. The left side shows what form the money is in and the right side shows who owns it, so the two sides are always equal.

Related lessons: Reading Financial Statements Lesson 6 · The balance sheet is a company's asset list

Accounting rules such as when revenue is recognized and over how many years depreciation is spread. If policies or estimates change, profit can differ for the same business, so check them in the notes.

Related lessons: Financial Statements Lesson 29 · Notes: the inside story of the financial statements

This is how long it took for stock prices to climb back above their previous peak after hitting bottom. After the 2008 crisis the S&P 500 took about 4 years; in 2020 it took about 5 months.

Related lessons: Economics Lesson 41 · Learning from crisis history: 2008, 2020, 2022

An exchange disclosure made when suspected embezzlement or breach of trust by officers or employees is confirmed. For executives it is disclosed regardless of the amount; for employees, when the amount is at least a set percentage of equity (5%, lower for large corporations). It appears in the order 'occurrence of suspicion', 'progress' and 'fact confirmation'.

Related lessons: Financial Statements Lesson 34 · A checklist of 10 red flags

Checking whether the first reaction on the day of the news continues in the same direction days or weeks later. First reactions often reverse.

Related lessons: Learn (Economics) Lesson 40 · Practice interpreting economic news headlines

The current share price divided by the actual EPS of the past year (the last four quarters). Distinguish it from forward P/E, which uses expected EPS.

Related lessons: Financial Statements Lesson 16 · EPS and PER: what one share earns

An indicator that moves later than the economy and confirms the economy that has already passed. Korea's lagging composite index includes the number of employed persons, producer finished goods inventories, the change in service prices, and the CP yield.

Related lessons: Economics Lesson 6 · Some indicators tell you the economy's direction in advance · Economics Lesson 34 · Stock prices move before the economy

When a company that shows profit on its books goes under because it lacks cash on the day debts or payments are due. It tends to happen when trade receivables and inventories pile up and operating cash flow stays negative.

Related lessons: Reading Financial Statements Lesson 21 · Profitable but bankrupt? Insolvency despite profits · Reading Financial Statements Lesson 30 · Audit opinion: anything other than unqualified is a warning sign · Reading Financial Statements Lesson 34 · Checklist of 10 red flags · Reading Financial Statements Lesson 35 · Practice: sturdy company vs. risky company

When new shares are created, existing shareholders' ownership % and per-share figures (EPS, BPS, etc.) become smaller. Ownership after dilution = my shares ÷ (existing shares + new shares).

Related lessons: Reading Financial Statements Lesson 31 · Rights offering, convertible bond (CB) and treasury share disclosures · Reading Financial Statements Lesson 16 · EPS and PER: what one share earns · Reading Financial Statements Lesson 32 · Largest shareholder and 5% stake disclosures · Reading Financial Statements Lesson 37 · Graduation: your own one-page company note

EPS calculated on the assumption that all potential ordinary shares, such as convertible bonds, warrants and stock options, which could later become ordinary shares, have become shares. It is equal to or lower than basic EPS.

Related lessons: Reading Financial Statements Lesson 16 · EPS and PER: what one share earns · Reading Financial Statements Lesson 31 · Rights offering, convertible bond (CB) and treasury share disclosures

The interest rate when a government borrows for a 10-year term. The US 10-year yield is used as a benchmark rate for asset prices worldwide.

Related lessons: Learn (Economics) Lesson 14 · The policy rate and market rates are different · Learn (Economics) Lesson 15 · Bond prices and interest rates are a seesaw · Learn (Economics) Lesson 16 · Term spread: the economy's traffic light · Learn (Economics) Lesson 32 · When the US coughs, Korea catches a cold · Learn (Economics) Lesson 40 · Practice interpreting economic news headlines · Learn (Economics) Lesson 43 · Graduation: your own weekly economy checklist

A rule of thumb that in years when the index rose in January, the average return for the remaining 11 months was also higher. For the S&P 500, the remaining 11 months averaged +12.07% in the 45 years from 1951 to 2025 when January was up and +2.07% in the 30 years when it was down, but for 2006–2025 it was +10.91% vs. +8.98%, so the gap shrank to a little over 2 percentage points.

Related lessons: Seasonality Investing Lesson 3 · Santa comes, and January speaks

A pattern in which small caps returned more than large caps in January. It was first documented by Sidney Wachtel in 1942. The Russell 2000's January excess return over the S&P 500 was +0.09 percentage points in 1988–2005 and +0.02 percentage points since 2006, so at the index level it has virtually disappeared.

Related lessons: Seasonality Investing Lesson 3 · Santa comes, and January speaks

A line connecting the average closing price over the most recent 200 trading days. It is a standard trend gauge: when an index is above this line, the long-term trend is read as up; when below, as down.

Related lessons: Seasonality Investing Lesson 7 · Why do patterns die? So how should we use them

A phenomenon in which a price shock such as an oil shock spreads through wages, transport costs and inflation expectations to other prices and lifts core inflation as well. Central banks are especially wary of it when setting interest rates.

Related lessons: Economics Lesson 29 · Oil is the economy's lifeblood

There is no separate report for Q4 alone, so it is found by subtracting Q3 cumulative results from the annual results in the annual report.

Related lessons: Financial Statements Lesson 17 · Reading quarterly results: year-over-year and seasonality

72 ÷ annual rate ≈ the time it takes to double (or halve). At 3% inflation, purchasing power halves in about 24 years.

Related lessons: Economics Lesson 7 · Inflation: the same money buys less

The name the Stock Trader's Almanac gives to November through April. Since 1950, the S&P 500's average return in November–April has been higher than in May–October, but May–October has also averaged positive.

Related lessons: Seasonality Investing Lesson 2 · Sell in May was real. Then it cooled off

This is the ratio of equity to risk-weighted assets. It is a safety indicator showing how thick a bank's capital cushion is for absorbing losses, and for banks it is used instead of the debt-to-equity ratio. It appears under 'Financial soundness' in Chapter II of a bank's annual report.

Related lessons: Financial Statements Lesson 36 · Practice: reading a real annual report together

The company's net assets (assets − liabilities) divided by the number of shares outstanding. Dividing the share price by BPS gives PBR.

Related lessons: Learn (Economics) Lesson 37 · PER and PBR: the ruler for expensive vs. cheap · Reading Financial Statements Lesson 6 · The balance sheet is a company's asset list · Reading Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Reading Financial Statements Lesson 24 · PBR and BPS: stock price vs. assets · Reading Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

A weekly report published by the US Commodity Futures Trading Commission (CFTC) showing futures market positions by type of participant. Larry Williams used commercial traders' positions as a confirmation filter for seasonal signals.

Related lessons: Seasonality Investing Lesson 8 · People who made money with the calendar

The main price indicator showing changes in the prices of goods and services households buy. It is usually released as the rate of increase versus the same month a year earlier.

Related lessons: Learn (Economics) Lesson 8 · How to read CPI: headline vs. core · Learn (Economics) Lesson 29 · Oil is the economy's lifeblood · Learn (Economics) Lesson 40 · Practice interpreting economic news headlines

The electronic disclosure system run by the Financial Supervisory Service. When listed companies and others submit disclosure documents online, investors can look them up immediately. Its internet service started in April 1999.

Related lessons: Reading Financial Statements Lesson 2 · DART is the official bulletin board for companies · Reading Financial Statements Lesson 3 · How to find a company and open reports on DART

The DRAM supply price that memory chip companies set with large customers such as PC, server and smartphone makers on a monthly or quarterly basis. It moves later than the spot price traded daily, but it connects directly to chip company earnings.

Related lessons: Economics Lesson 31 · Copper and chip prices: the economy's thermometer

Net income ÷ number of shares outstanding. The profit one share earned in a year.

Related lessons: Learn (Economics) Lesson 1 · Understand the economy and you can see stock prices · Reading Financial Statements Lesson 16 · EPS and PER: what one share earns · Learn (Economics) Lesson 37 · PER and PBR: the ruler for expensive vs. cheap · Reading Financial Statements Lesson 1 · Financial statements are a company's health checkup · Reading Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Reading Financial Statements Lesson 11 · Consolidated vs. separate financial statements · Reading Financial Statements Lesson 25 · Dividend metrics: payout ratio and dividend yield

Free cash flow divided by market cap. It shows how much cash is left for shareholders in a year relative to the share price, and is compared side by side with the earnings yield calculated from net income.

Related lessons: Financial Statements Lesson 20 · Free cash flow (FCF): the money that's really left

The Fed's meeting that sets the US policy rate. It holds 8 regular meetings a year.

Related lessons: Economics Lesson 13 · Why do central banks raise and cut rates?

The total value of the goods and services newly produced within a country over a given period.

Related lessons: Economics Lesson 4 · GDP is a country's report card

Nominal GDP divided by real GDP, showing the price level of the whole national economy. It covers a broader range of prices than consumer prices (CPI).

Related lessons: Economics Lesson 4 · GDP is a country's report card

The listing disclosure system operated by Korea Exchange. Timely exchange disclosures such as supply contracts and preliminary earnings are posted there, and they can also be seen on DART under the exchange disclosure type.

Related lessons: Reading Financial Statements Lesson 2 · DART is the official bulletin board for companies · Reading Financial Statements Lesson 34 · Checklist of 10 red flags

The money supply obtained by adding to cash and demand deposits the money that can easily be turned into cash, such as savings deposits and small money market funds. It is mainly viewed as a year-over-year growth rate.

Related lessons: Economics Lesson 38 · Liquidity: when money is released, assets rise

An indicator that spots trend reversals using the difference between the short-term (12-day) and long-term (26-day) exponential moving averages, along with its 9-day moving average (the signal line). A MACD crossing above the signal line is read as a buy signal, and crossing below as a sell signal.

Related lessons: Seasonality Investing Lesson 2 · Sell in May was real. And then it cooled off · Seasonality Investing Lesson 8 · People who made money from the calendar

A composite leading indicator calculated by the OECD for each country. 100 is the long-term trend, and what is mainly watched is whether the direction has turned rather than the level.

Related lessons: Learn (Economics) Lesson 6 · Some indicators signal the economy in advance

A grouping in which other oil-producing countries such as Russia are added to the members of the Organization of the Petroleum Exporting Countries (OPEC), such as Saudi Arabia. By cutting output together (production cuts) or raising it (production increases), it has a large influence on oil prices.

Related lessons: Economics Lesson 29 · Oil is the economy's lifeblood

The open API service for DART disclosure information (opendart.fss.or.kr), operated by the Financial Supervisory Service. If you apply for an authentication key, you can get original filings, key annual report items, key financial accounts and more as data.

Related lessons: Financial Statements Lesson 3 · How to find a company on DART and open a report

Share price ÷ book value per share (BPS). It shows how many times the company's book net assets the stock trades at.

Related lessons: Learn (Economics) Lesson 37 · PER and PBR: the ruler for expensive vs. cheap · Reading Financial Statements Lesson 24 · PBR and BPS: stock price vs. assets · Reading Financial Statements Lesson 9 · Equity: shareholders' share and capital impairment · Reading Financial Statements Lesson 23 · ROE: how much does a company earn on shareholders' money?

The US personal consumption expenditures price index. The Fed's 2% inflation target is based on this gauge.

Related lessons: Learn (Economics) Lesson 9 · PCE and PPI: the inflation gauges the Fed prefers

Share price ÷ EPS. A multiple showing how many times one year's earnings the market pays for a share. It varies greatly with interest rates and investor sentiment.

Related lessons: Learn (Economics) Lesson 1 · Understand the economy and you can see stock prices · Learn (Economics) Lesson 37 · PER and PBR: the ruler for expensive vs. cheap · Reading Financial Statements Lesson 16 · EPS and PER: what one share earns · Learn (Economics) Lesson 38 · Liquidity: when money floods in, assets rise · Reading Financial Statements Lesson 1 · Financial statements are a company's health checkup · Reading Financial Statements Lesson 11 · Consolidated vs. separate financial statements · Reading Financial Statements Lesson 24 · PBR and BPS: stock price vs. assets · Reading Financial Statements Lesson 26 · Compare companies in the same sector

A survey index that asks corporate purchasing managers about the economy. Above 50 is read as expansion and below 50 as contraction.

Related lessons: Learn (Economics) Lesson 6 · Some indicators signal the economy in advance · Learn (Economics) Lesson 31 · Copper and chip prices: the economy's thermometer · Learn (Economics) Lesson 33 · China's economy and Korean companies

An inflation gauge showing changes in the prices of raw materials and intermediate goods that companies buy and sell.

Related lessons: Learn (Economics) Lesson 9 · PCE and PPI: the inflation gauges the Fed prefers

Net income divided by total assets. It shows how much the company earns on all of its assets, including those financed by debt; multiplying ROA by financial leverage gives ROE.

Related lessons: Financial Statements Lesson 23 · ROE: how much does it earn on shareholders' money?

Net income divided by net assets (equity), showing how much shareholders' money earns in a year. The relationship PBR = PER × ROE links the two multiples.

Related lessons: Learn (Economics) Lesson 37 · PER and PBR: the ruler for expensive vs. cheap · Reading Financial Statements Lesson 23 · ROE: how much does a company earn on shareholders' money? · Reading Financial Statements Lesson 24 · PBR and BPS: stock price vs. assets · Reading Financial Statements Lesson 26 · Compare companies in the same sector · Reading Financial Statements Lesson 27 · Look at 3–5 year trends, not a single year · Reading Financial Statements Lesson 35 · Practice: sturdy company vs. risky company · Reading Financial Statements Lesson 36 · Practice: reading a real business report together · Reading Financial Statements Lesson 37 · Graduation: your own one-page company note

A six-month seasonal pattern in which returns in November–April were higher than in May–October. It has been observed in many countries, but its cause has not been established.

Related lessons: Seasonality Investing Lesson 2 · Sell in May was real. Then it cooled off · Seasonality Investing Lesson 5 · Every industry has its own season · Seasonality Investing Lesson 7 · Why do patterns die? So how should you use them? · Seasonality Investing Lesson 8 · People who made money with the calendar

The expected volatility over the next 30 days, calculated from S&P 500 option prices. It rises as investors become more anxious.

Related lessons: Learn (Economics) Lesson 39 · Reading investor sentiment: VIX and margin loan balance · Learn (Economics) Lesson 41 · Learning from crisis history: 2008, 2020, 2022 · Learn (Economics) Lesson 43 · Graduation: your own weekly economy checklist