Reference
Glossary
Plain-language definitions of every concept used across this site — written for a reader who isn't a finance major, not to impress one who is. Each term links to where it's actually put to work, not just defined.
Alpha
The return a portfolio produces above (or below) its benchmark. If the book returns 12% in a year and SPY returns 9%, the alpha is roughly +3 points. Alpha is only meaningful once it's time-weighted — see below.
Basis point (bp)
One-hundredth of a percentage point. 25 basis points = 0.25%. Used because it's less ambiguous than saying "a quarter of a percent," especially when comparing small differences.
Benchmark
The index a portfolio is measured against to answer "was this worth doing?" This site's benchmark is SPY, an S&P 500 index fund.
Beta
A measure of how much a position or portfolio has historically moved relative to a benchmark. A beta of 1.79 means the book has historically moved roughly 79% further than SPY, in both directions — more upside in rallies, more downside in drawdowns. Computed here as a population-covariance regression of weekly returns, not a forward-looking prediction.
Bucket
A category of the portfolio with its own sizing rules — Core, Emerging Growth, Speculative Sleeve, Leveraged/Derivative, or Index Hedge. Every position belongs to exactly one. Full definitions are on the Policy page.
Bull case / Base case / Bear case
Three scenarios written for every position: what has to go right for the optimistic outcome (bull), the most likely outcome if nothing surprising happens (base), and what could go wrong (bear). Writing all three before buying forces an honest look at the downside, not just the upside.
Capex (Capital Expenditure)
Money a company spends building or buying long-lived physical assets — data centers, factories, equipment — rather than day-to-day operating costs. A useful lens on how aggressively a company is investing in future capacity, and whether that spend is funded by its own cash flow or by debt.
Correlation (pairwise)
A number from −1 to +1 describing how closely two positions' returns move together. +1 means they move in lockstep; 0 means no relationship; negative means they tend to move opposite each other. Two positions can look diversified by sector or bucket and still have high correlation if they're both really the same underlying bet.
Dividend yield
Annual dividend payments divided by share price, shown as a percentage. A stock paying $2/year at a $100 share price has a 2% dividend yield. Growth companies reinvesting profits instead of paying dividends often show 0.00% — that's not automatically a bad sign.
EPS (Earnings Per Share)
A company's profit divided by its number of shares outstanding. "TTM" (trailing twelve months) EPS uses the last four reported quarters. Negative EPS means the company lost money over that period — reported honestly on this site rather than hidden.
EV/EBITDA
Enterprise Value divided by EBITDA (earnings before interest, taxes, depreciation, and amortization) — a valuation multiple that, unlike P/E, accounts for a company's debt load, so it's more useful for comparing companies with different capital structures.
HHI (Herfindahl-Hirschman Index)
A concentration score computed by summing the square of every position's weight. A lower number means the book is spread across more, more-evenly-sized positions; a higher number means it's concentrated in a few large ones. This site's HHI is 493 — but a low HHI only measures position size, not whether positions move together, which is exactly what it can miss.
Investment Thesis (Catalyst / Fundamental Case / Risk Factor)
A three-field summary at the top of every position page: the Catalyst (why this matters right now), the Fundamental Case (an objective read of the business), and the Risk Factor (a frank downside assessment). Short enough to actually re-read before adding to a position.
IPS (Investment Policy Statement)
The written rulebook governing this portfolio — position caps, bucket definitions, sell discipline, and accountability commitments, all set before the fact.
Leveraged ETF (daily-reset)
A fund designed to return a multiple (e.g. 2x) of an underlying stock or index's daily move — but only for a single day. Held longer than a day, its return can drift meaningfully from "2x the underlying's return" because gains and losses compound daily. This is why leveraged ETFs are treated as a separate, capped bucket on this site rather than folded into Core.
Market capitalization ("market cap")
A company's total value in the stock market: share price multiplied by shares outstanding. Used to compare company size (large-cap, mid-cap, small-cap) independent of share price alone.
P/E ratio (Price-to-Earnings)
Share price divided by earnings per share. A rough shorthand for "how many years of current profit would it take to earn back the price paid," and a common (imperfect) way to compare how richly two companies are valued. Not meaningful for a company with negative earnings — this site says so explicitly rather than showing a nonsensical negative P/E.
PEG ratio
P/E ratio divided by expected earnings growth. Below 1.0 is often read as cheap relative to growth; above suggests the market is already pricing in a lot of future growth. Different providers assume different growth rates, so PEG figures for the same stock can vary meaningfully by source — a real limitation of the metric, not unique to any name on this site.
Position sizing
How much of the portfolio is allocated to a single holding. This site's Policy caps any single position at 10% of the book at cost — sizing discipline, not stock-picking skill, is the risk control this site leans on most.
Sharpe ratio
Excess return (return above a risk-free rate) divided by total volatility — the standard measure of return earned per unit of risk taken, name by name. A higher Sharpe ratio means more return for the same volatility, or the same return for less.
Sortino ratio
Like the Sharpe ratio, but the denominator counts only downside volatility (negative-return days), so a name with sharp up-days isn't penalized for volatility that was actually good news. A name with a much higher Sortino than Sharpe has lopsided, favorable-shaped returns.
Time-weighted return
A way of measuring performance that removes the effect of when money was deposited or withdrawn — so a return isn't inflated just because a large deposit happened to land right before a good month. The Performance Tracker logs real daily cumulative return indexed to 100 for exactly this reason.
Volatility (daily)
The standard deviation of a position's daily returns — a measure of how much it typically swings day to day, independent of direction. A "quiet" name and a "wild" name with the same average return get sized very differently once real volatility is accounted for.
52-week range
The lowest and highest price a stock has traded at over the past year — shown on every position page as a visual bar with the current price marked, for a quick sense of where today's price sits within its recent history.
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