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Investment Style
Investment style refers to different style characteristics of equities, bonds or financial derivatives within a given investment philosophy. Theory would favor a combination of big capitalization, passive and value. Of course one could almost get that when investing in an important Index like S&P 500, EURO STOXX or the like. Also the degree of financial leverage and diversification are also factors Investor traits The style is determined by * the temper and the beliefs of the investor. * some personal or social traits (investor profile) such as age, gender, income, wealth, family, tax situation... * generally, its financial return / risk objectives, assuming they are precisely set and fully rational. Some styles Active vs. Passive Active investors believe in their ability to outperform the overall market by picking stocks they believe may perform well. Passive investors, on the other hand, feel that simply investing in a market index fund may produce potentially higher l ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company is divided, or these shares considered together" "When a company issues shares or stocks ''especially AmE'', it makes them available for people to buy for the first time." (Especially in American English, the word "stocks" is also used to refer to shares.) A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the shareholder (stockholder) to that fraction of the company's earnings, proceeds from liquidation of assets (after discharge of all senior claims such as secured and unsecured debt), or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classe ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bond (finance)
In finance, a bond is a type of security under which the issuer ( debtor) owes the holder ( creditor) a debt, and is obliged – depending on the terms – to repay the principal (i.e. amount borrowed) of the bond at the maturity date as well as interest (called the coupon) over a specified amount of time. The interest is usually payable at fixed intervals: semiannual, annual, and less often at other periods. Thus, a bond is a form of loan or IOU. Bonds provide the borrower with external funds to finance long-term investments or, in the case of government bonds, to finance current expenditure. Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in a company (i.e. they are owners), whereas bondholders have a creditor stake in a company (i.e. they are lenders). As creditors, bondholders have priority over stockholders. This means they will be repaid in advance of stockholders, but will rank behind s ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Derivative
In finance, a derivative is a contract that ''derives'' its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the "underlying". Derivatives can be used for a number of purposes, including insuring against price movements ( hedging), increasing exposure to price movements for speculation, or getting access to otherwise hard-to-trade assets or markets. Some of the more common derivatives include forwards, futures, options, swaps, and variations of these such as synthetic collateralized debt obligations and credit default swaps. Most derivatives are traded over-the-counter (off-exchange) or on an exchange such as the Chicago Mercantile Exchange, while most insurance contracts have developed into a separate industry. In the United States, after the financial crisis of 2007–2009, there has been increased pressure to move derivatives to trade on exchanges. Derivatives are one of the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leverage (finance)
In finance, leverage (or gearing in the United Kingdom and Australia) is any technique involving borrowing funds to buy things, hoping that future profits will be many times more than the cost of borrowing. This technique is named after a lever in physics, which amplifies a small input force into a greater output force, because successful leverage amplifies the comparatively small amount of money needed for borrowing into large amounts of profit. However, the technique also involves the high risk of not being able to pay back a large loan. Normally, a lender will set a limit on how much risk it is prepared to take and will set a limit on how much leverage it will permit, and would require the acquired asset to be provided as collateral security for the loan. Leveraging enables gains to be multiplied.Brigham, Eugene F., ''Fundamentals of Financial Management'' (1995). On the other hand, losses are also multiplied, and there is a risk that leveraging will result in a loss if financi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Diversification (finance)
In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets. If asset prices do not change in perfect synchrony, a diversified portfolio will have less variance than the weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents. Diversification is one of two general techniques for reducing investment risk. The other is hedging. Examples The simplest example of diversification is provided by the proverb "Don't put all your eggs in one basket". Dropping the basket will break all the eggs. Placing each egg in a different basket is more diversified. There is more risk of losing one egg, but less risk of losing all of them. On the other hand, having a lot of baskets may increase costs. In finance, an example of an undiversified portfoli ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Investor Profile
An investor profile or style defines an individual's preferences in investment decisions, for example: * Short-term trading (active management) or long term holding (buy and hold) * Risk-averse or risk tolerant / seeker * All classes of assets or just one (stocks for example) * Value stock, growth stocks, quality stocks, defensive or cyclical stocks... * Big cap or small cap (Market capitalization) stocks, * Use or not of derivatives * Home turf or international diversification * Hands on, or via investment funds What determines an investor profile The style / profile is determined by Objective traits * Objective personal or social traits such as age, gender, income, wealth, family, tax situation, opportunities. Subjective attitudes * Subjective attitudes, linked to the temper (emotions) and the beliefs (cognition) of the investor. Balance between risk and return An investor's style is shaped by his or her sense of balance between risk and return. Some investors can tole ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mutual Fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in Europe ('investment company with variable capital') and open-ended investment company (OEIC) in the UK. Mutual funds are often classified by their principal investments: money market funds, bond or fixed income funds, stock or equity funds, or hybrid funds. Funds may also be categorized as index funds, which are passively managed funds that track the performance of an index, such as a stock market index or bond market index, or actively managed funds, which seek to outperform stock market indices but generally charge higher fees. Primary structures of mutual funds are open-end funds, closed-end funds, unit investment trusts. Open-end funds are purchased from or sold to the issuer at the net asset value of each share as of the close ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Growth Investing
Growth investing is a style of investment strategy focused on capital appreciation. Those who follow this style, known as ''growth investors'', invest in companies that exhibit signs of above-average growth, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios. In typical usage, the term "growth investing" contrasts with the strategy known as value investing. However, some notable investors such as Warren Buffett have stated that there is no theoretical difference between the concepts of value and growth ("''Growth and Value Investing are joined at the hip''"), as growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive. Buffett has recognized the influence of his business partner Charlie Munger on this view, which is best expressed by the famous Buffett saying ''"It's far better to buy a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Liquidation Value
Liquidation value is the likely price of an asset when it is allowed insufficient time to sell on the open market, thereby reducing its exposure to potential buyers. Liquidation value is typically lower than fair market value. Unlike cash or securities, certain illiquid assets, like real estate, often require a period of several months in order to obtain their fair market value in a sale, and will generally sell for a significantly lower price if a sale is forced to occur in a shorter time period. The liquidation value may be either the result of a ''forced liquidation'' or an ''orderly liquidation''. Either value assumes that the sale is consummated by a seller who is compelled to sell and assumes an exposure period which is less than market normal. The most common definition used by real estate appraisers is as followsDictionary of Real Estate Appraisal, 4th ed., Appraisal Institute, 2002 The most probable price that a specified interest in real property is likely to bring under a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders. Market capitalization is equal to the market price per common share multiplied by the number of common shares outstanding. Since outstanding stock is bought and sold in public markets, capitalization could be used as an indicator of public opinion of a company's net worth and is a determining factor in some forms of stock valuation. Description Market capitalization is sometimes used to rank the size of companies. It measures only the equity component of a company's capital structure, and does not reflect management's decision as to how much debt (or leverage) is used to finance the firm. A more comprehensive measure of a firm's size is enterprise value (EV), which gives effect to outstanding debt, preferred stock, and other factors. For insurance firms, a value called the embedded value (EV) has been used. It is also ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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