Episode 124: 4 Terms from the Financial Dictionary

Today’s Prep:

Ready to learn some financial terms? David unpacks four financial terms and how they may relate to your financial plan.

(Click the featured times below to jump forward in the episode)

Equipping Points:

On today’s episode of Cover Your Assets KC we’re going to cover four different topics from the financial dictionary: what overbought in the stock market means, P/E ratios, quitclaim deed, and regressive taxes. Have you heard of all of these terms? Even co-host Walter is learning a few new financial terms today!

Is this a good time to invest money? To determine whether or not it’s a good time, David looks to the relative strength index to evaluate and see if the stock market is overbought. Is this a good time to dump all your money at the same time or is it better to do so over time?

To find out if something is overpriced or underpriced, look to the P/E ratio. This ratio shows the price in relation to its price the past 12 months. David shares examples of different companies and their share prices. What do you see if you look back to the company’s stock prices historically? What about compared to the market? It’s important to understand the context. 

What is a quitclaim deed? David talks through what this means and an example of how it might be handled. This is a super quick and inexpensive way to relinquish your claim on a piece of real property.

Taxes are either progressive or regressive. Progressive tax is when you pay more money the more you make. Regressive tax is where regardless of your income, you pay the same dollar amount. For instance, in Kansas, your groceries are taxable. The less you have, the more expensive the tax is. David thinks we are going to hear more about progressive and regressive taxes as the Biden tax plan comes out.

Listen to the entire episode or use the timestamps below to skip to a particular financial term.

[1:59] – What is overbought in the stock market?

[6:16] – What is P/E ratio?

[12:11] – What is a quitclaim deed?

[14:33] – What is regressive tax? 

Today’s Takeaway:

P/E Ratio: Is it currently priced attractively, either to the market itself or to its own history?

– David Dickens

Additional Resources:

PODCAST: How Much Should You Invest in One Stock?

PODCAST: What’s Changed with Inherited IRAs?

PODCAST: Do Retirees Really Need Life Insurance?

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More From David:

The host: David Dickens

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