1031 Exchange – Under Section 1031 of the U.S. Internal Revenue Code, the exchange of certain like-kind properties may allow for deferred recognition of capital gains or losses that are realized at the time of the exchange or sale. The deferral of gain recognition results in a deferral of any capital gains taxes that would otherwise be due. To qualify for a 1031 exchange, the properties exchanged must be held for investment or for productive use in a business or trade. Real property, whether improved or unimproved, generally qualifies under section 1031, whereas stocks and bonds are expressly excluded.

Adjustable Rate Mortgage (ARM)- A mortgage that typically has a short-term fixed interest rate for a specified period of time, after which the interest rate changes to bring the rate the mortgage holder pays in line with market rates. The interest rate is generally based on the prime rate, Treasury bill rate or LIBOR. ARMs typically have a “ceiling” on the interest rate to protect the mortgage holder. Additionally, due to the interest rate risk to the mortgage holder, ARMs generally start with lower initial interest rates than fixed rate mortgages.

Big Uglies – Old industrial companies in gritty industries such as mining, steel and oil. These stocks provide solid long term earnings, growth and dividends and are  sought by value investors who want bargain priced stocks with a low P/E ratio.

Cash Dividend – A dividend declared and paid by a company in the form of cash. Cash dividends generally are sent by check or are directly deposited into your investment account with your stock broker.

Daily High – The highest price that a security, commodity or index reaches during any given day.

Daily Low – The lowest price that a security, commodity or index reaches during any given day.

EAFE Index – A market-value weighted stock market index created by Morgan Stanley to track the markets in Europe, Australasia and the Far East. The EAFE Index is designed to give a measure of overseas stock markets.

Factoring – A financial service provided by a financier, or factor, where a business sells its accounts receivable at a discount in exchange for immediate payment. The factor collects his fee upon collecting from the debtor. Factoring transactions are entered into under either a recourse or non-recourse arrangement. Factoring with recourse leaves the credit and collection risk with the business selling the receivable, whereas factoring without recourse transfers the credit and collection risk entirely to the factor. Factoring is used by businesses as a tool to speed up cash flow to help reduce the need for debt or equity financing.

Fair Market Value – An agreeable open-market price paid by a willing but not desperate buyer to an interested but not desperate seller, assuming there is sufficient time for an agreement to be reached.

GAAP- GAAP, or Generally Accepted Accounting Principles, is the accepted set of accounting standards adopted by the Financial Accounting Standards Board (FASB) that outlines the standards, procedures, rules and conventions for reporting financial information. Most publicly traded companies are required to follow GAAP when reporting their quarterly results and in preparing their annual report and CPAs perform audits on these companies to ensure compliance with GAAP.

Hang Seng Index – The Hang Seng Index is a free floating or market-value weighted stock market index based in Hong Kong, China. The Hang Seng Index tracks the performance and stock price of 45 companies on the Hong Kong stock exchange. The Hang Seng Index is similar to the Dow Jones Industrial Average in the U.S.

IMF -  The IMF, or International Monetary Fund, is an organization that was created in 1944 to assist developing countries with financing and monetary policy by making loans directly to developing nations. The IMF also monitors foreign exchange systems for fairness and works with countries to lower trade barriers.