Investors love a good acronym, almost as much as techies. So when you blend investing and technology, it is no surprise that you get a slew of acronyms, which can be as confusing as alphabet soup for novices.

In this Insights, we’re going to focus on two acronyms that represent the largest and most important tech stocks in the world – FAANG and MAMAA.

FAANG is a term coined in 2013 by the host of CNBC’s Mad Money, Jim Cramer, to describe Facebook, Amazon (Tii:AMZN), Apple (Tii:AAPL), Netflix (Tii:NFLX) and Google, the most dominant tech companies in their markets. Of course, Facebook isn’t known as Facebook anymore and Google’s parent company is now known as Alphabet, so in 2021, soon after Facebook became Meta Platforms, Cramer redubbed (and slightly changed) the group.

The new acronym is MAMAA and stands for Microsoft (Tii:MSFT), Apple, Meta Platform (Tii:FB), Amazon and Alphabet (Tii:GOOG). Under the new acronym, Microsoft is in and Netflix is out, which reflects the renewed strength of Microsoft and the investment community’s dimming views of Netflix.

Regardless of the acronym, this group of stocks represents the biggest and most important technology companies and might be a good place to start for individual investors looking for stocks in the sector. The group of stocks has a five-year return of 134%. As a group, these stocks have a total market capitalization of a whopping $10 trillion and carry an earning weight of about 21% in the S&P 500.

ETF fans can invest in the Goldman Sachs Future Tech Leaders Equity ETF (Tii:GTEK) or Cathie Wood’s ARK Innovation ETF (Tii:ARKK), both of which hold shares of emerging and established tech and “disruptive innovation” companies.

The financial world is full of acronyms and we’ve touched on just two so far, but there are a few more worth knowing. They include:

CAGR – Compound annual growth rate: The average annual amount an investment grows over a period of years assuming profits are reinvested during the period.

EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization: EBITDA is a way to measure a company’s overall financial performance.

ESG – Environmental, Social, Governance: A set of screening standards for a company’s behavior used by socially conscious investors. Environmental criteria considers how a company safeguards the environment, social criteria weigh how the company works with employees, suppliers, customers, and the communities where it operates. Governance focuses on a company’s leadership, executive pay, audits, internal operations, and shareholder rights.

GAAP – Generally Accepted Accounting Principles: The accounting principles, standards and procedures companies use to compile financial statements.

PE10 – Price/earnings ratio, averaged over the past 10 years and adjusted for inflation. Also known as CAPE.

PERKS – What shareholders who connect their brokerage accounts to TiiCKER can receive simply for owning their favorite stocks.

REIT – Real Estate Investment Trust: An asset class based on real estate or real estate services.

TIPS – Treasury Inflation Protected Securities: Bonds issued by the U.S. Treasury whose interest and principal changes along with inflation.

Luckily, investing terminology is fairly simple and straightforward. Retail investors that are unsure about any investing term should reach out to their brokerage for clarification.