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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Active Management
A term used to describe money managers that seek to out perform market indices by actively managing their portfolio holdings rather than constructing a portfolio that mirrors a market index that will remain unchanged until the index changes which is infrequent.
ActionAlertsâ„¢
360Portfolios' notice to subscribers of changes to be made to their portfolios. Generally these are asset allocation changes related to economic and market dynamics that have or are developing which necessitate change. ActionAlertsâ„¢ are powered by the 360Portfolios algorithm.
Advance/Decline
Line A line plotting the ratio of advancing stock to declining stocks to indicate the trend of the market. A measure of market strength and direction.
Algorithm
A mathematical formula that automates the selection, asset allocation and/or trading of securities in a portfolio. Algorithms are back-tested on historical market data to prove their efficacy or measure of performance.
Alpha
A measure of a manager's contribution to portfolio return. In general Alpha is sought after and the greater the Alpha the greater the manger's skill.
Annualized Return
The mathematical conversion of a period return into a yearly rate of return. For example a quarterly return is annualized disregarding the effects of inflation and compounding by dividing twelve months by the period and multiplying that result by the period return (12/3 x 5% = 20% annualized return).
AMT
Alternative Minimum Tax. An alternative tax calculation to recapture a minimum payment of tax if specified "preference" items are added back into the tax liability calculation. Common preference items include: rents, royalties, certain municipal bond interest, social security payments, and itemized deductions.
Asset Allocation
The process of dividing a portfolio among major asset classes such as stocks, bonds, and cash. Asset allocation is an accepted principle of investing used to reduce portfolio risk by diversifying holdings in the portfolio so that the individual holdings are not correlated together in their price movement.
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B
Back-tested
A historical "proof of outcome" using a defined investment strategy. Back-tested results may have inherent limitations and produce marked differences than actual results achieved by a portfolio following the same defined strategy. For example, back-tested results are prepared with the benefit of hindsight and do not involve financial risk. Also the timing of trades and the ability to withstand losses, or to adhere to a particular investment strategy in spite of those losses are factors which affect actual performance. Moreover, there are other factors related to the markets in general which can not be fully accounted for in the preparation of back-tested performance results. All of these can adversely or materially impact actual portfolio performance results.
Balanced Portfolio
A portfolio that typically has a mix of stocks, bonds and cash that strives to generate current income, growth and preservation of principal. A balanced portfolio will normally be less volatile than a portfolio invested in 100% stocks.
Bear Market
An extended sell off in the financial markets normally defined as when the sell off is 20% or more in multiple indices. On average a Bear Market last for 70 months.
Beta
A measure of security or portfolio volatility as compared to the S&P500 market index which has a Beta of 1.00. The greater the Beta the greater the security or portfolio volatility of return.
Blue Chip
A term commonly associated with large, well established companies whose track record of earnings and or dividend payments are stable or routine.
Beneficiary
A person designated to receive the financial proceeds or benefits of a financial contract upon the death of the owner, annuitant, or insured. For example, the beneficiary of an IRA or Annuity will receive the proceeds of the IRA upon the death of the owner. The beneficiary of a life insurance policy receives the death benefit at the passing of the insured. Only the owner can change the beneficiary, though on retirement accounts the consent of a spouse is required.
Bond
A debt security commonly issued by company. A loan made with a promise of repayment over a defined term, with or without collateral and paying a specified periodic interest payment until maturity.
Bond Rating
The credit score of an issuer of debt securities. An evaluation of the risk factors affecting the financial condition of a company or governmental agency purporting to rank the probability or risk of re-payment and payment of principal and interest.
BRIC
An acronym for Brazil, Russia, India and China as emerging market counties offering investors hyper-growth opportunities.
Business Cycle
The changing level of economic activity associated with the economy of a country. Five stages are generally recognized: Expansion, Peak, Recession or Contraction, Trough, and Recovery.
Bull Market
An extended increase in prices of multiple indices in the financial markets generally accompanying a rebound in economic growth. A Bull Market generally has duration of 3.5 years.
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C
Capital Gain/Loss
The net profit or loss on investment that equals the difference between the purchase price and the sales price of an asset. A gain or loss is realized only after a sale(or exchange) transaction occurs otherwise it is an un-realized gain or loss. Capital Gains/Losses may long term or short term depending on the time period owned. Typically short term gains/losses are taxed as ordinary income instead of a lower, more favorable rate for assets bought and sold before 12 months has elapsed.
Capitalization
The sum of a company's debt and equity outstanding is commonly referred to a company's market cap. Companies are generally classified as Large Cap if they have a market cap of $5 billion or greater; Mid Cap if they have a market cap of $2-5 billion; Small cap if their market cap is $100 million - $1 billion; and Micro cap if their market cap is less than $100 million.
Common stock
An equity ownership interest in a corporation, LLC or trust. Common stock holders exercise control by electing a board of directors and voting on corporate policy. Common stockholders are last in priority of repayment in the case of bankruptcy.
Concentrated
Concentrated portfolios lack diversification and expose investors to greater event risk-the risk that a debilitating decline in one holding may adversely impact the entire portfolio. Concentrated portfolios rely on active management and correct asset allocation decision for superior performance.
Core Portfolio Types
The pre-constructed, basic building blocks from which 360Portfolios.com subscribers may build customized portfolios for their needs.
CPI
CPI stands for the consumer price index. It is the price of a basket of goods and services purporting to show the trend, but not actual, price changes.
Compound Return
The rate of return on an investment in which the dividends and interest are reinvested the same annual rate of return. Returns can be computed or compound on a daily, monthly, quarterly, semi-annual or annual basis. The greater frequency the higher the return.
Commodities
The metals and agricultural raw materials used to produce goods and food. Commonly includes: Gold or Metals, Oil, Coffee, Corn, Orange Juice, Rubber, Soy, Cattle, Hog Bellies, etc.
Correlation
The degree of likeness or similarity in price movement among portfolio holdings and asset classes. A statistical measurement of diversification. Having a portion of your portfolio allocated to low correlated assets reduces portfolio volatility.
Currencies
The authorized money of nations. The $ Dollar is the US currency
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D
Depreciation
The decline in value of an asset.
Discretion
The authority to act for another as in Trading Authority Discretion.
Diversification
A risk management methodology recognized as a basic principle of portfolio management that eliminates Event Risk or the risk that one security may singularly, adversely devastate overall portfolio performance. That is, by diversifying holdings in a portfolio money managers can minimize the risk of one security sharply impacting portfolio performance in a negative way.
Dividend
The distribution of earnings to stock holders. Dividends are voted on by the board of directors of a corporation to be payable to all shareholders of record on the declared date after which the stock trades ex dividend or without entitlement for that declared dividend. Dividends can be declared monthly, quarterly or on special dates.
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E
Economic Indicator
A variable or factor that purports to forecast the direction of the economy. Examples include: interest rates, unemployment, inflation (CPI) and consumer sentiment.
ECN An electronic market exchange where security trades are routed for execution.
Efficient Frontier
A term in Modern Portfolio Theory (MPT) that hypothesizes that portfolios can be constructed optimizing their return per unit of risk. Those portfolios found to have the highest return and lowest risk form the 'Efficient Frontier.'
Emerging Market
Markets around the world that are rising in attractiveness as places to invest. Today, China, India, Russia, and Vietnam are emerging market countries.
Equity
Stock in a corporation representing ownership in the business. The value of the equity is subject to investor assessment.
ETF
ETF is the abbreviation for Exchange Traded Funds and are a collection of securities that trade like stocks but are designed to track a defined market index, basket of stocks, or even a defined stock strategy. ETFs can directly or inversely mirror the index or basket they track. ETFs are generally favored by investors because they have a lower internal operating cost than many mutual funds.
Exchange
A legally authorized marketplace forum to trade securities. For example common exchanges are the NYSE, the NASDAQ, the AMEX, and the CME.
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F
Fixed Securities
Debt instruments representing a promise to repay issued by companies. Examples include Government & corporate bonds, CDs and fixed annuities.
Fundamental
A term used to describe money manager analyses to select securities centered on historical financial performance data in security selection. Also used to describe data measurement techniques as contrasted with technical or trend analysis.
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G
Growth
An investment objective describing an investor who seeks capital appreciation from rising prices of securities held in their portfolio. Generally, this investment objective must be realized over a long term period.
Growth Manager
A money manager that specializes in managing portfolios of companies with high appreciation potential. Growth companies have greater than average growth of revenues and earnings, but generally do not pay dividends and usually carry high P/E (price to earnings) ratios.
GTC
Good Till Cancelled is a term referring to a market or limit order that is open or not yet executed. It will remain open until cancelled or executed because the price specified has been obtained.
GuardRail Tecnologyâ„¢
The proprietary technology built into the 360Portfolios algorithm that adds the ProActive component which strives to manage and limit portfolio risk.
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H
Holding
An asset held in a portfolio. Also referred to as a portfolio position.
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I
Income
An investment objective describing an investor who desires to receive cash distributions on investments held in a portfolio. Generally, this investment objective is realized on a monthly, quarterly, semi-annual or annual basis.
Index
A formulated mix of assets that serves as a guide or benchmark of reference to compare or tell results. For example the Dow Jones, Nasdaq, and S&P500 market indexes serve as benchmarks to tell the direction of the stock markets.
Inflation
The gradual increase in prices of goods and services over time. The CPI and PPI are the US Governments main measures of inflation in prices for consumer goods and producer goods.
Investment Advisor
A Money Manager who takes discretion and responsibility acting as a fiduciary to oversee and supervise the security selection, income distribution, and tax consequences of a portfolio for a client.
Investment Principle
A rule or basic tenant accepted as a truth. Basic principles of investing include Asset Allocation, Compounding and Diversification.
Investment Strategy
The formal, disciplined blueprint for how a portfolio will be managed.
Investment Style
The characteristic approach and manner in which a money manager selects securities for portfolios they manage. For example, a money manager may be a Growth, Value, Large Cap Value, Large Cap Growth, Mid Cap, Small Cap, International, Growth, Value or Blendedd manager or Commodity, etc. manager meaning they specialize in that kind of security. Thus, a manager's investment style is determined by the 'style' characteristics of the securities they manage.
IRA
Individual Retirement Accounts are individual retirement plans for individuals that permit tax deferred contributions and tax deferred accumulation. There are 2 basic IRA accounts approved by Congress for tax deferred savings, the Traditional IRA and ROTH IRA. The difference is that the ROTH IRA does not offer tax deferred contributions but permits tax deferred accumulation and tax free withdrawal of savings at retirement.
Investment Objective
The defined and stated goal of an investment portfolio or strategy. Generally investment objectives are not measurable or quantified.
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J
Junk Bond
The slang term for corporate bonds issued by companies whose bond rating is below investment grade. These bonds are also referred to as High Yield Bonds.
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K,L
Large Cap
A mature, high market value stock as measured by the value of the stocks and bonds issued and outstanding (see 'capitalization"). For example GE, is a Large Cap stock whereas Google is not, even though Google's total company valuation (shares x price) would qualify it on the measure of valuation alone. Generally Large Cap companies have a capitalization greater than $5 billion.
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Leverage
The use of borrowed money to purchase or short sell securitites. Leverage is typically used in an attempt to increase investment return. It can work because the return on investment is greater if the full purchase amount has not been put up or tendered.
Liquidity
A term used to describe the ease with which a security may be converted or exchanged into cash. Stocks that are infrequently traded are said to lack liquidity and are generally considered to have greater risk to investors because of it.
Long
Buying a security, owning, and holding it for gain on the expectation the price will rise. May be partially paid for by use of margin or borrowing. (see also 'Short Sell').
Loss
The realized or unrealized penalty of bad investment decision. Only realized losses have tax consequences.
Lump Sum
The payment or receipt of the entire amount. A term often used in connection with payouts from company retirement plans and annuities. Lump Sum distributions are generally taxable. Taxes can be deferred by rolling over the distribution into an IRA or other qualified retirement plan.
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M
Margin
The use of leverage to borrow to purchase, or short sell, securities. (see also leverage and short sell).
Market Maker
A licensed broker dealer who makes a market in a security. A market maker is charged with stabilizing the price of securities they trade by inventorying shares to make them more readily available. The market maker must place "bid and ask" prices and guarantee a quantity quotation (eg 100-2500 shares) that they will honor.
Market Timing
An investment strategy whereby an attempt to make timely purchases and sales of securities is made using technical analysis. Not recommended for good investment results and typically leads to high turnover and high costs.
Market Value
The value of a portfolio, holding, or account based on the sum of the current prices as quoted on the market exchanges.
Mid Cap
A measure of company size based on its capitalization or value of its outstanding stocks and bonds issued.(see 'capitalization") and its comparative maturity. For example Starbucks, is a Mid Cap stock whereas GE is a Large Cap. Typically the capitalization of Mid Cap stocks is between 2-5 billion dollars.
Modern Portfolio Theory (MPT)
The theory associated with Markowitz and Sharpe that hypothesizes that portfolios can be constructed to optimize investment return and minimize risk by statistical and operations method.
Money Manager
A term generally referencing a licensed investment advisor who acts as a fiduciary to supervise the security selection, income distribution, and tax consequences of a portfolio for a client. Also referred to as an Investment Advisor.
Money Market
A mutual fund holding cash equivalents and other short maturity securities that are readily converted to cash. Normally money market accounts strive to maintain a $1.00 net asset value per share. Money Market mutual funds are Not FDIC insured even if bought through a bank.
Mutual Fund
A publicly traded, pooled investment account comprising a portfolio of securities offered for sale to the general public. Mutual funds are managed by an investment companies who define specific objectives they strive to achieve. Mutual funds may hold stocks, bonds, cash, derivative securities, and real estate.
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N
Net Asset Value
The price per share of a mutual fund after all expenses have been subtracted for the day. NAV is calculated by dividing the total market value of the funds assets by the number of shares held or outstanding.
Net Worth
Assets minus liabilities equal net worth. It is the measure of an individual's or family's value after debt has been deducted.
No Load
The absence of commission paid to a broker on the purchase of a mutual fund through a broker dealer.
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O
Open Ended
A reference to mutual funds that sell an unlimited number of shares without limit.
Open Orders
A reference to a market or limit order that has not yet been executed because the terms of purchase or sale have not been triggered or met. Open or GTC orders are used by investors who want to wait for a specific price to buy or sell.
OTC
Over the Counter. Securities that trade off an exchange. Nasdaq securities.
Over-Concentration
Non Diversification or too great a weighting in one security, industry group, or market sector. Over-concentration is a risk that can be eliminate by diversification.
Overweight
A decision by a portfolio manager to hold a greater than market index allocation to a particular industry group, sector or asset class.
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P
Passive Management
A term used to describe money managers who construct portfolios to track a market index or mirror a portfolio strategy with the expectation of delivering performance like the benchmark index.
P/E Ratio
A ratio of a companies price to earnings. Money managers use historical P/Es to estimate future prices of stocks. Additionally money managers may use the P/E ratio to determine if a stock price should be higher or lower based upon their forecast of next quarter's earnings. For example, if a stock is trading at $30. Has a current P/E of 15, and is expected to earn $3.00 next year its real price should be: 15 * $3.00 = $45.00.
Portfolio
A mix of holdings designed and constructed for a specific investment objective.
Portfolio Turnover
The frequency with which securities held in a portfolio are bought and sold. High portfolio turnover is costly and can adversely affect portfolio return and after tax investment results.
Preferred Stock
A class of stock representing ownership in a corporation, LLC or trust whose owners have a preferred claim to earnings of the company. In case of liquidation due to bankruptcy, preferred shareholders receive payment before common stockholders.
Principal
The corpus capital amount invested. A sum of money on which interest is calculated and paid.
ProActive
A term to describe active money managers who monitor portfolio results and take preventative and pro active action to improve results. Distinguised from Active money management because Pro Active managers additionally take tactical action in response to changing economic conditions.
Probability
Certainty of outcome. A mathematical measure of the chance for outcome in statistical method which can be detailed as to degree of confidence.
Prospectus
A disclosure document outlining the basic objective, risks, costs, and management details governing mutual funds and certain other investments available for purchase by the public. Investors should read them before they invest.
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Q
Qualified Plan
A retirement plan that has been approved by the US Congress as qualifying for special tax treatment on contributions, accumulation and distributions. Generally qualified plans are one of two types: Defined Contribution Plans and Defined Benefit Plans. Qualified retirement plans include: IRAs, Roth IRAs, Simple Plans, SEPs, Profit Sharing Plans, 403bs, 457 Plans, 401Ks, Cash Balance Plans and Pension Plans.
Quantitative
A term used to describe money managers who gather and measure data as tools in their management methodology.
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R
ReadyMadeâ„¢ Portfolios
The proprietary name for the 'core portfolio types' that provides the portfolio core to customize a suitable personalized portfolio for subscribers to the 360Portfolios.com website.
Rebalancing
A dollar cost averaging investment strategy to force the partial sale of appreciated portfolio holdings so that depreciated holdings may be purchased. Usually done on a regular, periodic basis in an effort to keep the portfolio asset mix at a predefined, set asset allocation in order to control risk. Rebalancing is widely used by brokers who automate the management of portfolio risk. Not a desired investment strategy as it will generally only produce average returns.
REIT
A real estate investment trust that holds real estate as its investment holdings. REITs must pay out 95% of their earned income to qualify for special waiver of excise taxes.
RIA
Registered Investment Advisor. An Advisor or money manager regulated by state and federal security agencies. Every RIA is a fiduciary to their clients. This imposes a duty of loyalty, honesty and prudence in their actions toward clients and their money.
Risk
The chance of loss. Portfolio Risk is measured by standard deviation of return. Generally the greater period over period deviation from the mean or average return the greater the portfolio risk.
Risk Adverse
The propensity of investors for safety. Risk avoidance.
Risk Tolerance
The degree of acceptance of risk. Risk tolerant investors are more willing to accept price swings in expectation of greater return.
Russell 2000
A market index consisting of 2000 small cap US stocks constructed by the Frank Russell company.
Russell 3000
A broad market index consisting of 3000 large company stocks constructed by the Frank Russell company.
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S
S&P500
A market index consisting of 500 large companies constructed by Standard & Poors corporation.
SEC
Securities & Exchange Commission. The federal government agency charged with oversight of RIAs and broker dealers.
Sector
A term in money management used to describe a group of businesses that are producing similar goods and services. Stocks and bonds are categorized by analysts into 'sectors' to evaluate their comparative performance.
Security
A marketable or non-marketable investment. Stocks, bonds, Mutual Funds, Money Markets, REITS, Limited Partnerships, ETFs, etc are examples.
Sequence of Return Risk
The risk associated that investment returns in a portfolio adversely affect a financial goal because time is against the investor recovering their money. For example, consecutive, big early losses accompanied by income withdrawals can deplete a portfolio before it has time to recover.
Short Sell
The practice of selling a security not owned on the expectation that its price will decline and produce a gain. Shorts are later covered with a Buy back to close the short position. Also a hedging or portfolio risk management strategy.
Small Cap
An early stage company as measured by the value of the stocks and bonds issued and outstanding (see 'capitalization"). For example Google and Starbucks are Mid Cap Companies, GE and IBM are Large Cap companies and Jones Soda is a small cap company.
Standard Deviation
The statistical measure of variance in return from the mean or average return. Used as a generally accepted measure of portfolio risk.
Stocks
Equity securities usually denoted in common or preferred shares representing ownership in a corporation or trust.
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T
Tax Advantages
A feature of certain investments. A tax savings benefit of lower, deferred, or waived taxes associated with certain investments.
Total Return
The return on investment calculated by adding investment price appreciation, dividends and interest together, subtracting your original investment amount, and dividing by that net amount by your original investment. This method is commonly used in determining appropriate income withdrawals from portfolios particularly in low interest rate environments.
Time Horizon
An investor's intended time to stay invested before making withdrawals or having a need for liquidity.
TIPS
Treasury Inflation Protection securities or an indexed ETF constructed by Lehman Brothers (broker dealer) to mirror the performance of inflation as reflected in the economy. TIPS do not pay coupon interest payments. Instead they provide adjusted principal payments that reflect changes in the Consumer Price Index (CPI).
Transfer Agent
The registered agent for providing accounting and bookkeeping services to a corporation, trust, or mutual fund that offers their registered shares for sale to the general public. TAs are subject to SEC audit and review.
Trustee
An elected or appointed fiduciary responsible for oversight of a trust portfolio under penalty of law.
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U,V
Value
A term used to classify stocks that pay comparatively higher dividend payouts, which have high book values, and more consistent earnings. Money Managers may additionally call themselves "Value Managers" because they specialize in following these more mature companies.
Value Manager
A money manager who specializes in portfolios of 'Value' stocks as an 'Investment Style.'
Velocity Score
The 360Portfolios proprietary measure of portfolio volatility. This measure summarizes Beta, P/E, Liquidity, and Standard Deviation in one measure or number ranking.
Volatility
A term to describe price swings in a security or portfolio of securities. Generally price volatility is associated with risk of loss because of the investor's need for liquidity. However, volatility may be market related and/or temporary or event driven. Long term volatility may create opportunity for superior return. Investors should analyze volatility before regarding it as unwanted risk.
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W,X,Y,Z
Wilshire 5000
A broad total US market index also called the Dow Jones Wilshire 5000.
Yield
The current income payment provided by an investment holding or portfolio. Portfolio yield is comprised the sum of all dividends and interest generated by a portfolio.
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Use any brokerage firm of your choice. You place your trades or grant us trading authority to place trades on your behalf.1
Either way, you pay us only the annual subscription fee, never any fees or commissions.
Alternatively, if you want your account(s) professionally managed with someone directly supervising it and assisting you with oversight to handle the myriad tax, income withdrawal, final security selection and rebalancing matters, we will do so for .50% per year billed monthly so long as your account value meets our minimum of $500,000.2
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1
2In this capacity ProActive Portfolio Strategies, LLC will manage your account(s) under an investment advisory agreement separately provided. At that time you will receive our Part II of our ADV. Unless you have received an executed Investment Advisory Agreement we have not accepted nor is your account under our management.