An asteroid event is a sudden, unexpected incident that has serious consequences for a business.

An asteroid event is a sudden, unexpected incident that has serious consequences for a business. The risk factors section lists current and potential risks the company faces, listed in order of importance and may provide clues to areas vulnerable to event risk or asteroid risk. Investors would buy or sell shares of the target company depending on their outlook on the transaction and the stock price
Companies are required to publish fundamental information so investors are better able to make informed investment decisions, in documents such as the annual 10-k report. For example, when an asteroid event such as a hostile takeover occurs, the stock price of the company is likely to fall. For example, if a public company relies on a particular executive or board member, or the sales of one or a few products, then a sudden departure or market disruption could reduce sales and the stock price.

Asteroid Event

Bag holder is an informal investment term used to describe an investor who holds a position in a stock that decreases in value until it is worthless. 

A bag holder is an informal term used to describe an investor who holds a position in a security that decreases in value until it descends into worthlessness. There are psychological motivations behind bag-holding behavior: namely, investors tend to fixate on remedying losses, more than they focus on realizing gains.
Bag holders tend to lose money by being the last owners of a failing investment.
According to the website Urban Dictionary, the term “bag holder” hails from the Great Depression, where people on soup lines held potato bags filled with their only possessions. A bag holder refers to an investor who symbolically holds a “bag of stock” that has become worthless over time. Although the share price preliminarily rises during the initial public offering (IPO), it quickly starts dropping after analysts begin questioning the veracity of the business model.
Subsequent poor earnings reports signal that the company is struggling, and the stock price consequently plummets further. A bag holder is an informal term used to describe an investor who holds a position in a security that decreases in value until it descends into worthlessness.

Bag Holder

A balanced investment strategy combines asset classes in a portfolio in an attempt to balance risk and return.

A balanced investment strategy combines asset classes in a portfolio in an attempt to balance risk and return. For example, a balanced portfolio might consist of 25% dividend\-paying blue-chip stocks, 25% small-capitalization stocks, 25% AAA-rated government bonds, and 25% investment-grade corporate bonds. More conservative investors can opt for capital preservation strategies, whereas more aggressive investors can opt for growth strategies. Using an online investment platform, Trishia decides on a balanced investment strategy featuring a 50/50 split between fixed-income and equity securities. These generally consist of safe but low-yielding investments, such as certificates of deposit, investment-grade bonds, money market instruments, and some blue-chip stocks that pay dividends.

Balanced Investment Strategy

A bear position is a term representing a short position taken on a financial security with the expectation of a drop in price.

A bear position is a short position applied to a financial security with the belief that the price or value of the security will decrease, resulting in a profit from the short position. A bear position is a short position applied to a financial security with the belief that the price or value of the security will decrease, resulting in a profit from the short position. A bear position is in contrast to a bull position, or long position, in which the value of the security can move against the investor or trader’s position only by a specific amount, to zero. A bear position is in contrast to a bull position, or long position, which expects that the price of a security will rise. A bear position is a short position taken on a financial security with the expectation that the price or value of the security will decrease.

Bear Position

During a dawn raid, an investor buys a substantial number of shares in a company first thing in the morning just as the stock market is opening.

During a dawn raid, an investor acquires a substantial number of shares in a company first thing in the morning, just as the stock market is opening for business. Like the dawn raid in war, the corporate dawn raid is done early in the morning, so by the time the target realizes it's being attacked, it's too late—the investor has already scooped up a meaningful controlling interest position. The goal of a dawn raid is to amass a large number of shares in a target company by one company to influence a potential takeover of the target. Because the bidding company builds a substantial stake in its target at the prevailing stock market price, any takeover costs are likely to be significantly lower than they would have been had the acquiring company made an announcement of intention prior to acquiring a position in a target. In theory, a dawn raid should allow a target entity to be purchased at a discount before news breaks of an acquirer's interest in a takeover target.

Dawn Raid

The Efficient Market Hypothesis (EMH) is an investment theory stating that share prices reflect all information and consistent alpha generation is impossible.

The efficient market hypothesis (EMH), alternatively known as the efficient market theory, is a hypothesis that states that share prices reflect all information and consistent alpha generation is impossible. The efficient market hypothesis (EMH), alternatively known as the efficient market theory, is a hypothesis that states that share prices reflect all information and consistent alpha generation is impossible. However, modifications of EMH exist to reflect the degree to which it can be applied to markets:
Semi-strong efficiency - This form of EMH implies all public (but not non-public) information is calculated into a stock's current share price. EMH proponents, however, argue that those who outperform the market do so not out of skill but out of luck, due to the laws of probability: at any given time in a market with a large number of actors, some will outperform the mean, while others will underperform. Detractors of the EMH also point to events such as the 1987 stock market crash, when the Dow Jones Industrial Average (DJIA) fell by over 20 percent in a single day, and asset bubbles as evidence that stock prices can seriously deviate from their fair values.

Efficient Market Hypothesis (EMH)

In and out is a trading strategy whereby shares of a single security are bought and sold over a short period of time. 

In and out is a trading strategy whereby a single security or currency is bought and sold multiple times over a short period. In and out trading can last for a single trading session, or it can last longer but less than the period associated with a buy and hold trading strategy. The exception to this is hedge funds, whose day trading profits are taxed at the long-term capital gains rate. A day trader buys and sells within the same day and seeks to profit from short-term price moves. In the United States, day traders are often subject to higher tax rates because of the disadvantageous treatment of short-term capital gains.

In And Out

The ISM manufacturing index, also known as the purchasing managers' index (PMI), is a monthly indicator of economic activity based on a survey.

The ISM manufacturing index, also known as the purchasing managers' index (PMI), is a monthly indicator of U.S. economic activity based on a survey of purchasing managers at more than 300 manufacturing firms. The ISM manufacturing index, also known as the purchasing managers' index (PMI), is a monthly indicator of U.S. economic activity based on a survey of purchasing managers at more than 300 manufacturing firms. The ISM manufacturing index is a composite index that gives equal weighting to new orders, production, employment, supplier deliveries, and inventories. An index of more than 50 indicates an expansion in the manufacturing segment of the economy in comparison with the previous month while a reading of 50 indicates no change and a reading below 50 suggests a contraction of the manufacturing sector. The ISM manufacturing index or purchasing managers' index is considered a key indicator of the state of the U.S. economy.

ISM Manufacturing Index

The Nash Equilibrium is a game theory concept where the optimal outcome is when there is no incentive for players to deviate from their initial strategy.

Table of Contents
Expand The Nash equilibrium states that the optimal strategy for an actor is to stay the course of their initial strategy while knowing the opponent's strategy and that all players maintain the same strategy, as long as all other players do not change their strategy. Dominant strategy can be included in Nash equilibrium whereas a Nash equilibrium may not be the best strategy in a game. The Nash equilibrium is often discussed in conjunction with dominant strategy, which states that the chosen strategy of an actor will lead to better results out of all the possible strategies that can be used, regardless of the strategy that the opponent uses. The Nash equilibrium is a component of game theory that asserts that a player will continue with their chosen strategy while knowing their opponent's strategy as they have no incentive to change course.

Nash Equilibrium

A pairoff is a purchase and sale of open short and long positions, typically between brokerage firms, that offset with the difference settled in cash.

A pairoff is a purchase and sale of open short and long positions, typically between brokerage firms, that offset with the difference settled in cash. Gains realized from a short position are classified as short-term; gains realized from a long position will be short-term or long-term, depending on the periods defined in the country/tax matrix of the investment's issue country. A pairoff is a purchase and sale of open short and long positions, typically between brokerage firms, that offset with the difference settled in cash. A pairoff is a purchase and sale of open short and long positions, typically between brokerage firms, that offset with the difference settled in cash. Another, more colloquial, meaning for the term is a transaction in securities markets where offsetting buy and sell trades are settled in cash, based on the difference in the prices between the offsetting trades.

Pairoff

Portfolio turnover refers to the rate at which securities are replaced within a fund. 

Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by the managers. Index funds should not have a turnover rate higher than 20% to 30% since securities should only be added or removed from the fund when the underlying index makes a change in its holdings; a rate higher than 30% suggests the fund is poorly managed. The rate of turnover is important for potential investors to consider, as funds that have a high rate will also have higher fees to reflect the turnover costs. In addition, cost-conscious fund investors should take note that the transactional brokerage fee costs are not included in the calculation of a fund's operating expense ratio and thus represent what can be, in high-turnover portfolios, a significant additional expense that reduces investment return. That's because a fund with a high turnover rate will incur more transaction costs than a fund with a lower rate.

Portfolio Turnover

A pure play is a company that focuses on a specific industry segment. The opposite of a pure play is a conglomerate, which operates in numerous industries.

A pure play is a company that focuses solely on one type of product or service. A list of the following stocks is compiled for analysis:
BB&T Corporation: PB of 1.28 and PE of 12.98
KeyCorp: PB of 1.06 and PE of 10.58
SunTrust Banks: PB of 1.16 and PE of 11.88
Citizens Financial Group: PB of 0.75 and PE of 9.59 Relative valuations make use of metrics such as the price-to-book (P/B) ratio, the price-to-earnings (P/E) ratio, the price-to-sales (P/S) ratio, and the price-to-cash flow (P/CF) ratio. An investor who wants exposure to U.S. banking stocks, for example, might prefer buying shares of Bank of America (BAC) as compared to Berkshire Hathaway (BRK.B), because the latter is involved not only in banking but also in many other industries and sectors. For analysts, pure plays represent an opportunity to obtain more accurate data for a comparable company analysis or peer analysis.

Pure Play

Random walk theory suggests that changes in stock prices have the same distribution and are independent of each other.

Journal's Dartboard Retires After 14 Years of Stock Picks

Random walk theory suggests that changes in stock prices have the same distribution and are independent of each other. The most well-known practical example of random walk theory occurred in 1988 when the Wall Street Journal sought to test Malkiel's theory by creating the annual Wall Street Journal Dartboard Contest, pitting professional investors against darts for stock-picking supremacy. Random walk theory infers that the past movement or trend of a stock price or market cannot be used to predict its future movement. In short, random walk theory proclaims that stocks take a random and unpredictable path that makes all methods of predicting stock prices futile in the long run. Random walk theory considers technical analysis undependable because it results in chartists only buying or selling a security after a move has occurred.

Random Walk Theory  and Example

A rolling settlement is the process of settling security trades on successive dates based upon the specific date when the original trade was made.

SEC Adopts T+2 Settlement Cycle for Securities Transactions

A rolling settlement is the process of settling security trades on successive dates based upon the specific date when the original trade was made so that trades executed today will have a settlement date one business day later than trades executed yesterday. The idea is to allow trades to hit an investor's or trader's account soon after they occur, rather than waiting for a specific day of each month (i.e. account settlement).
Most stocks settle on a rolling basis based on the second business day after they were executed (T+2).
Securities that are sold on the secondary market usually settle two business days after the initial trade date. A rolling settlement is the process of settling security trades on successive dates based upon the specific date when the original trade was made so that trades executed today will have a settlement date one business day later than trades executed yesterday. Originally, the settlement period gave both buyer and seller the time to do what was necessary—which used to mean hand-delivering stock certificates or money to the respective broker—to fulfill their part of the trade.
Today, money is transferred instantly, but the settlement period remains in place—both as a rule and as a convenience for traders, brokers, and investors.
Now, most online brokers require traders to have sufficient funds in their accounts before buying stock. This contrasts with account settlement, in which all trades are settled once in a set period of days, regardless of when the trade took place.

Rolling Settlement

"Swing for the fences" is an attempt to earn substantial returns in the stock market with bold bets.

"Swing for the fences" is an attempt to earn substantial returns in the stock market with bold bets. This generally means cultivating a diverse mix of investments across asset classes and balancing debt versus equity, domestic versus international, growth versus safety, and many other tradeoffs in an attempt to maximize return at a given appetite for risk without placing too much emphasis on high-reward bets.
A swing for the fences could be investing a significant portion of an individual portfolio in a hot new initial public offering (IPO). Portfolio managers rarely swing for the fences, since they have a legal and ethical obligation to act in their clients’ best interests.
Portfolio management is the art and science of balancing an investment mix to adhere to specific objectives and policies for asset allocation for individuals and institutions. Similarly, investors who swing for the fences attempt to obtain large returns, often in exchange for significant risk. Had Alex taken a more diversified approach and purchased the SPDR S&P 500 ETF (SPY)—an exchange-traded fund (ETF) that tracks the performance of the S&P 500 Index—Alex's investment over the same period would have increased by 3%.

Swing for the Fences

A white paper is an informational document usually issued by a company or not-for-profit organization for promotional purposes.

A white paper, also written as "whitepaper", is an informational document usually issued by a company or not-for-profit organization to promote or highlight the features of a solution, product, or service that it offers or plans to offer. Within B2B marketing, there are three main types of white papers: backgrounders, which explain the technical features of a particular offering; numbered lists, which highlight tips or points regarding an offering; and problem/solution white papers, which introduce an improved solution to a common business or technical challenge. The following titles are all white papers for Microsoft Azure:
_Azure Onboarding Guide for IT Organizations_
_Mesh and hub-and-spoke networks on Azure_
_Backup and recovery overview for Azure users_
_Backup and recovery overview for users new to Azure_
_Cloud Skills and Organization Influence_
All of these documents, publicly available on Microsoft’s website, focus on aspects of the Microsoft Azure suite of cloud services. While brochures and other marketing materials might be flashy and include obvious sales pitches, a white paper is intended to provide persuasive and factual/technical evidence that a particular offering is a superior method of solving a problem or challenge. While brochures and other materials might be flashy and include obvious sales pitches, a white paper is intended to provide persuasive and factual evidence that a particular offering is a superior method of approaching or solving a problem or challenge.

Trading Strategies

More in Trading

Terms in Trading Strategies