Essential US Stock Terms for Korean Investors: 50 Key Concepts

Terms Covered
50개
5 categories

Audience
Beginner–Intermediate
Korean investors

Most Critical Term

EPS · PER

Every earnings season

Date to Watch

Options Expiry

3rd Friday of each month

How to use this guide
Each term is structured as: Definition → Key takeaway → Practical tip for investors. Bookmark this and open it before earnings releases or FOMC days.

① Basic Financial Metrics

Term	Definition	Key Takeaway
EPS Earnings Per Share	Net Income ÷ Shares Outstanding	"Beat" consensus = stock pops; "Miss" = drops. The gap vs. expectations matters more than the absolute number.
PER (P/E) Price-to-Earnings	Price ÷ EPS	Growth stocks can justify 50–100x; value stocks typically 10–20x. Always compare to sector peers.
PBR (P/B) Price-to-Book	Price ÷ Book Value Per Share	Below 1x = trading below liquidation value — commonly used to screen financial stocks.
EV/EBITDA	Enterprise Value ÷ EBITDA	Includes debt in the valuation — better than P/E for M&A and cross-industry comparisons.
ROE Return on Equity	Net Income ÷ Equity × 100	Warren Buffett's favourite metric — above 15% signals a high-quality business.
ROA Return on Assets	Net Income ÷ Total Assets × 100	Asset efficiency — most useful in asset-heavy sectors like banks and heavy industry.
Free Cash Flow	Operating Cash Flow − CapEx	"Earnings is accounting; FCF is real money" — funds dividends and share buybacks.
Revenue	Total sales of products & services	The "top line" — for growth stocks, revenue growth rate often matters more than net income.
Gross Margin	(Revenue − COGS) ÷ Revenue	Above 70% signals structural competitive advantage — typical for software and platform companies.
Guidance	Company's official next-quarter forecast	More important than actual results — a beat with disappointing guidance still sends stocks lower.

② Market & Trading Terms

Term	Definition	Key Takeaway
Market Cap	Price × Shares Outstanding	Large Cap (>$10B), Mid Cap ($2–10B), Small Cap (<$2B).
Float	Shares actually available to trade in the market	Small float = one headline can trigger a massive spike — why small caps surge so sharply.
Short Interest	Shorted shares ÷ Float	Above 20% = squeeze potential — the structure behind the GameStop saga.
Short Squeeze	Forced short-covering when the price surges	Made famous by GME/AMC in 2021 — explosive short-term spike followed by a crash.
Call / Put	Call = right to buy; Put = right to sell	Surge in calls = bullish sentiment; surge in puts = rising hedge demand.
Strike Price	The contracted buy/sell price in an options contract	Determines ITM (in-the-money) vs OTM (out-of-the-money) status.
Options Expiry Expiration Friday	3rd Friday of each month	Volatility spikes near expiry — especially in quarterly months (Mar/Jun/Sep/Dec).
IV Implied Volatility	Market's expected future volatility priced into options	Jumps before earnings, collapses after (IV Crush) — a trap for options buyers.
Short Selling	Borrow shares, sell them, buy back cheaper later	Theoretically unlimited loss if the stock keeps rising — high risk strategy.
After-Hours	Trading after market close (4–8pm ET)	Most earnings come after-hours — AH moves tend to set the next-day open direction.

③ Macro Indicators

Term	Definition	Key Takeaway
CPI Consumer Price Index	Consumer-level inflation rate	The Fed's #1 target — above expectations → rate-hike bets → growth stocks fall.
PPI Producer Price Index	Producer-level input/output price changes	Leads CPI by 1–2 months — falling PPI signals future CPI easing.
PCE Personal Consumption Expenditures	The Fed's actual preferred inflation measure	Lags CPI but the Fed trusts it more — Core PCE 2% is the official target.
NFP Non-Farm Payrolls	New jobs added; released first Friday each month	"Strong jobs = Fed can't cut" — hot NFP is a headwind for growth stocks.
FOMC	Fed's rate-setting body; meets 8 times per year	One word in the statement can move markets — "patient" vs "data-dependent".
Dot Plot	Fed officials' rate projections plotted as dots	Released quarterly — dots moving up = more hikes; dots moving down = cuts expected.
Fed Funds Rate	The overnight bank-to-bank lending rate set by the Fed	The anchor for all asset prices — rates up → bonds more attractive → stock valuations fall.
Yield Curve	A line connecting short- to long-term Treasury yields	Inverted (short > long) = recession warning — persisted throughout 2022–2023.
DXY Dollar Index	Dollar strength vs. 6 major currencies	Strong DXY = weak KRW = currency loss risk for Korean investors holding US stocks.
VIX Fear Index	30-day S&P 500 volatility expectation	Below 20 = calm; above 30 = fear; above 40 = panic — VIX spikes are often contrarian buy signals.

④ ETF & Fund Terms

Term	Definition	Key Takeaway
NAV Net Asset Value	The actual value of an ETF's underlying holdings	A large gap between market price and NAV signals over/undervaluation.
Expense Ratio	Annual ETF management cost as a % of assets	QQQ 0.20% vs TQQQ 0.88% — fee difference compounds significantly over long holding periods.
Leveraged ETF	Tracks 2–3× daily return of the underlying index	TQQQ (Nasdaq 3×), SOXL (Semiconductor 3×) — volatility decay erodes principal in long-term holdings.
Inverse ETF	Profits when the underlying index falls	SQQQ (Nasdaq −3×) — short-term hedge only; never hold long-term.
AUM Assets Under Management	Total assets the ETF manages	Small AUM = delisting risk — stick to ETFs with AUM above $100M.
Rebalancing	Periodic buy/sell to maintain target allocation	Quarter-end rebalancing can create selling pressure on large-cap names.
Distribution	ETF passes dividend income from holdings to investors	Unlike Korean ETFs, US ETF distributions are paid after 15% withholding tax.
Currency-Hedged ETF	Removes USD/KRW exchange rate fluctuation	Beneficial when KRW strengthens; hurt when KRW weakens — note hedging cost (~1–2%/yr).
Tracking Error	Difference between ETF return and benchmark return	Lower is better — below 0.1% is considered excellent.
Sector ETF	ETF focused on a single sector (XLK, XLF, XLE…)	SPDR Sector ETF series is the standard — widely used for sector rotation strategies.

⑤ Practical Investing Terms

Term	Definition	Key Takeaway
Buy / Hold / Sell	Analyst rating categories	"Sell" ratings are rare — zero of 525 stocks carry one (see the data).
Price Target	Analyst's 12-month price target	Arithmetic on estimate × multiple — median spread between firms is 20.5% (how to read one).
Beat / Miss	Results beat or miss analyst consensus	"Beat and raise" (earnings beat + raised guidance) is the ideal scenario.
52-Week High / Low	Highest/lowest price over the past 52 weeks	Breaking 52W high = strong upward momentum; near 52W low = psychological support.
DCA Dollar-Cost Averaging	Invest a fixed amount at regular intervals	Eliminates timing risk — the standard approach for long-term growth stock investing.
Stop Loss	Pre-set price at which to automatically sell	−7–10% stop rule — set in advance to remove emotional decision-making.
Margin of Safety	How cheaply you're buying vs. intrinsic value	Benjamin Graham's principle — target buying below 70% of intrinsic value.
Margin	Buying stock with borrowed funds from your broker	Amplifies gains but triggers margin calls on declines — not for beginners.
Risk/Reward	Ratio of expected gain to expected loss	Maintain at least 1:3 R/R ratio — a core principle for disciplined traders.
Catalyst	An event that drives a large price move	Earnings, FDA approval, new product, M&A, etc. — beware rallies with no clear catalyst.

Quick reference — must-know terms by investor type
· Beginners: EPS, PER, Guidance, Beat/Miss, DCA, VIX
· Intermediate: FCF, EV/EBITDA, IV, Short Interest, Yield Curve, Dot Plot
· ETF investors: NAV, Expense Ratio, Tracking Error, Currency-Hedged ETF, Leveraged ETF risks

References

※ This report is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any security.

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