What an IPO is — initial public offering, a company's first sale of stock to the public

What the efficient market hypothesis claims — prices reflect all available information

Efficient Market Hypothesis: Prices incorporate all publicly available information

What anchoring does in investing — the purchase price biases your sell decision

Anchoring bias causes investors to base sell decisions on initial purchase price rather than current market value

What a limit order vs market order does — limit sets a price, market executes immediately

Limit orders set a price, market orders execute at current market price instantly

What the three forms of market efficiency are — weak, semi-strong, strong

Weak: Prices reflect all publicly available information; Semi-strong: Prices reflect all public and private information; Strong: Prices reflect all information, including private

What Buffett's annual letters consistently emphasize — focus on return on equity, not earnings per share

Buffett's letters stress long-term value creation via high return on equity

What the disposition effect causes — investors sell winners too early and hold losers too long

The disposition effect leads to premature selling of profitable investments and delayed selling of underperforming ones