A blog about stock portfolio management

Glossary of stock portfolio terminology

Basis

Purchase price including commissions and fees

Capital gain

Net amount realized from a closing trade, calculated for a long position as the difference between the proceeds of the sale and the basis of the stock sold

Diversification

Combination within a portfolio of a number of different securities so as to minimize the risk from any single security

Financial capital

Purchasing power in the form of money available for consumption or investment; created by earning more income than the corresponding amount of consumption during a period of time

Interest rate

Price paid to a lender by a borrower of money, expressed as a percentage rate over a period of time; compensation to the lender for delaying present consumption to the future

Investment portfolio

Group of investments held by an investor

Principal

Beginning amount of an investment

Return

Income received by an investor, expressed as a percentage relative to the principal invested

Risk

Probability that expected return exceeds actual return

Tax lot

Shares of a security held in a portfolio that have the same cost basis and trade date

Turnover rate

Degree to which a mutual fund trades securities, expressed as the ratio of security sales to average assets over a year

Valuation

Economic value of a financial product, based upon its underlying assets