MORE INVESTING TERMS: All Doctors Should Know

Posted on June 25, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Here is a list of the most common and helpful investment terms you’ll come across and should know.

  • Ask. The price that someone looking to sell stock wants to receive.
  • Bid. The price that someone is willing to pay for stock.
  • Buy. To acquire shares and thereby take a position in a company.
  • Sell. To get rid of shares whether because you’ve reached your goal or to prevent losses.
  • Bull market. Market conditions in which investors expect prices to rise.
  • Bear market. Market conditions in which investors expect prices to fall.
  • Dividend. A portion of a company’s earnings paid to shareholders.
  • Blue chip stocks. Shares of large and well-recognized companies that have a long history of solid financial performance.
  • Earning per share. A company’s net profit divided by the number of outstanding common shares.
  • Mutual fund. A collection of investments — stocks, bonds, commodities, and more — bundled together and held in common by a group of investors.
  • Asset. Something you own that could generate a return in the form of more assets.
  • Asset allocation. Your investment strategy, essentially — the mix of assets you choose to put your money into, whether that be cash, bonds, stocks, commodities, real estate or something else.
  • Broker. A person or firm — or robot — that arranges transactions between buyers and sellers in exchange for a commission (that is, a fee).
  • Capital gain (or capital loss). The money you make (or lose) on the sale of an asset.
  • Diversification. Investing in a variety of sectors, such as health care, energy and IT as well as across different geographic locations.
  • Dow Jones Industrial Average. A price-weighted list of 30 blue-chip stocks. It’s often used to help get a sense of the overall health of the stock market, even though it only reflects a small portion of the players.
  • Exchange-traded fund (ETF). A collection of investments that is traded like a stock.
  • Index fund. A type of mutual fund or exchange-traded fund that allows you to invest in a portfolio that mimics a market index, which is basically a list that tracks the performance of a group of investments either for a specific sector or the overall market.
  • Hedge fund. A type of investment partnership. Partners pool money from investors and try out a few different investing strategies. Generally, hedge funds will make riskier investments than your typical investor. They’ll also often use leverage (that is, borrowed money) or place bets against the market to get bigger returns. They make their money by charging their investors management fees based on a percentage of their profits.
  • Expense ratio. The percentage-based fee that mutual fund managers charge you to manage your investments.
  • Market price. How much it would cost right now to buy or sell an asset or service.
  • Securities and Exchange Commission (SEC). An independent government body that was created to protect investors and the national banking system. The SEC enforces laws that maintain orderly, fair and efficient markets.
  • Short selling. A tactic available to investors who predict a stock’s price is about to drop. An investor borrows a quantity of shares through a broker and then sells them, intending to repurchase them later, at a lower price, and return them to the lender.
  • Stock exchange. A place buyers and sellers come together to buy, sell and trade stock during set business hours. The New York Stock Exchange (NYSE) is the most important stock exchange in the world, but there are a total of 16 exchanges around the world.
  • Stock market. Refers in general to the collection of markets and exchanges where the buying, selling and trading of investment vehicles takes place.
  • Price per share. A simple way of calculating a company’s market value at a given moment. To find the price per share, you take a company’s most recent share price and multiply it by its total number of outstanding shares.
  • Prospectus. A legal document that contains in-depth information about anything you might be planning to invest in: stocks, bonds or mutual funds.

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MUTUAL FUNDS: Terms and Definitions for Physicians

Posted on June 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

A “Need-to-Know” Glossary for all Medical Professionals

http://www.HealthDictionarySeries.org

HDS

[ME-P Staff Writers] 

ADV: A two-part form filed by investment advisors who register with the Securities and Exchange Commission (SEC), as required under the Investment Advisers Act. ADV Part II information must be provided to potential investors and made available to current investors.

Alpha: A measure of the amount of a portfolio’s expected return that is not related to the portfolio’s sensitivity to market volatility. A benchmark that uses beta as a measure of risk, a benchmark and a risk free rate of return (usually T-bills) to compare actual performance with expected performance.

For example, a fund with a beta of .80 in a market that rises 10% is expected to rise 8%.

If the risk-free return is 3%, the alpha would be –.6%, calculated as follows: (Fund return – Risk-free return) – (Beta x Excess return) = Alpha   (8% – 3%) – [.8 × (10% – 3%)] = (–) .6%   

Note: A positive alpha indicates out-performance while a negative alpha means underperformance. 

Asset allocation: Strategic asset allocation refers to the long-term targets for allocation of a percentage of a portfolio among different asset classes. In contrast, tactical asset allocation refers to short-term targets.

Average maturity: The average weighted maturity of the bonds in a portfolio providing an indication of interest rate risk.

Benchmark: An index, managed portfolio, or fund used to compare performance characteristics with the targeted portfolio or fund.

Beta: A statistically computed measure of the portfolio’s relationship to changes in market value. If, compared to the S&P 500, a fund has a beta of .80; it is expected to under perform a rising market by 20% and outperform a falling market by 20%. 

Bond: Publicly traded debt instruments that are issued by governments and corporations. The issuer agrees to pay a fixed amount of interest over a specified time period and to repay the principal at maturity.

Closed-end mutual fund: An investment company that registers shares in accordance with SEC regulations and is traded in securities markets at prices determined by investments. 

Diversification: Buying a number of different investment vehicles to protect against default of a single vehicle, thereby reducing the risk of the portfolio.

Duration: A more technical calculation of interest rate risk exposure that uses the present value of expected cash flows to be returned to the bond holder over the term of the bond. 

Fundamental analysis: An analysis of a company’s stock that focuses on the economic environment, the industry the company is in, and the company’s financial situation and operating results.

Mutual fund: A regulated investment company that manages a portfolio of securities for its shareholders.

Net asset value (NAV): The value of fund assets fewer liabilities divided by outstanding shares. 

Open-end mutual fund: An investment company that invests money in accordance with specific objectives on behalf of investors. Fund assets expand or contract based on investment performance, new investments and redemptions.

Portfolio manager: The person(s) who is/are responsible for managing the portfolio in accordance with the objectives dictated by an investor or a fund’s prospectus.

Prospectus: A disclosure document filed with the SEC and made available to prospective and current investors. The prospectus covers sales charges, expenses, investment objectives and restrictions, management fees, financial highlights, and other information. 

R-squared (R2): Relationship of a fund or portfolio’s performance to a benchmark index.

For example, a fund R-squared of .5 means only 50% of its return is explained by the index. Other factors are responsible for the balance of performance. 

SEC yield: A standardized calculation of yield over a 30-day period, sometimes quoted as the “30-day yield.” It takes into account yield-to-maturity rather than current dividends. 

Standard deviation: A statistic that looks at a series of returns and expresses the average deviation from the mean return.

Statement of additional information: A disclosure document filed with the SEC that supplements the prospectus. It is made available to investors upon request. 

Technical analysis: An analysis that focuses on trends in financial markets generally.

For example, a technical analyst may view an entire industry’s group of stocks to be declining. Although the analyst may be correct about the group of stocks as a whole, there may be exceptions represented by specific, individual companies.

Total return: The combination of investment return from income, such as dividends and interest, and appreciation or depreciation in the value of the investment (Income returns plus capital return.) 

Turnover: Under SEC rules, a figure computed that indicates how often securities in the portfolio are bought and sold. For example, if turnover is 100% over a one-year period, the securities (on average) were replaced once. 

12b-1 fee: The maximum annual fee payable from fund assets for distribution and sales costs as allowed by the SEC. 

CITE: https://www.r2library.com/Resource

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