Momentum stock – A stock that tends to go up when it’s going up and down when it’s going down. Sounds a lot like Newton’s first law of motion: An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force. Since this applies to everything, it applies to every stock.
Cult stock – Charles Manson was incarcerated before he was able to secure an underwriter for an IPO. Too bad, because the world might have seen an actual cult stock.
Trader stock – A stock that is traded.
Valuation – The price of a company’s stock and/or the company’s market cap. Companies are either overvalued or undervalued based on the George Carlin principle of relativity, which holds that anyone driving slower than you is an idiot and anyone driving faster than you is a maniac. Accordingly, every company is undervalued when you buy it and overvalued when you sell it. If it continues to go higher after you sell, that doesn’t mean you were wrong about the valuation. It means it’s a momentum stock, cult stock or trader stock and should be deleted from your watchlist.