Managing my investments glossary
Active investorAn investor who makes selections of specific shares (or portfolios of shares) rather than investing in the market as a whole, with the aim of outperforming the return achieved by the market. |
AlphaA strategy where an investor believes they can estimate specific risk better than the market and can therefore obtain better returns than the market by their share selections. |
Bear marketA share market where the underlying direction of share prices is downwards. The term applies to the markets in other financial assets too. |
BetaThe relative sensitivity of the return from a share (or a portfolio of shares) to that of the overall stock market: e.g. shares that are twice as sensitive or volatile relative to the market as a whole have a beta of 2. |
BondsCertificates of debt issues by government, companies and other institutions in order to borrow money. |
Bounded rationalityWhere rational decision-making can be undermined by limited cognitive ability, time constraints and imperfect information. |
Bull marketA share market where the underlying direction of share prices is upwards. The term applies to the markets in other financial assets too. |
Consumer Prices Index (CPI)The leading measure of the prices of (a basket of) consumer goods in the UK. |
DiversificationThe spreading of the money invested across a range of assets (e.g. shares). |
Dividend payout ratioThe proportion of a company's earnings after tax ('net income') that is paid out to shareholders in dividends. |