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What is chart reading? Chart reading is a form of analysis seeking patterns in security price movements. The relevant charts display price levels over time. Sometimes these charts will include moving averages. For example, today’s 50-day moving average for stock X would…
What is market timing? Market timing is the attempt to be fully invested when the market rises and not exposed when it falls. A more subdued strategy would avoid the all-or-nothing approach and revolve around a central asset allocation percentage; stocks would…
What is socially responsible investing? Socially responsible investing is the attempt to limit portfolio holdings to firms whose operations are consistent with your sense of social propriety. You may want to deny money to the tobacco industry, utilities with nuclear power plants,…
What is selling short Selling short means selling something you do not yet own. If you have a margin account at a brokerage, you have this capability. For instance, if you felt the stock of company X was likely to drop, and…
What is gold (really)? You’ve probably seen or heard commercials hawking gold as if it is better or safer than money. It is not. In the distant past, gold had special importance when it was a universal medium of exchange and later…
What is meant by “chasing winners”? Chasing winners means buying securities with good recent performance. If a company’s stock price rose of late, you might believe demand for its products will continue to rise. If a mutual fund has outperformed its peers,…
What is back-testing? Back-testing is an analytical process in which historical data is used to determine the success or failure of a strategy. If a tested strategy generated good past results, one assumes it will do well in the future. For example,…
What is age-based asset allocation? Age-based asset allocation is an investment strategy in which your age determines your mix of stocks and bonds. When approaching and then entering retirement, you will supposedly need more income to offset lost wages and less future…