{"concepts":[{"type":"concept","slug":"active-management","term":"Active management","excerpt":"A fund management style in which a management team makes ongoing decisions about which assets to buy and sell, trying to beat a benchmark index."},{"type":"concept","slug":"annual-report","term":"Annual report","excerpt":"The document where a listed company publishes its real financial statements, along with the management report and the audit report -- the primary source, versus third-party summaries."},{"type":"concept","slug":"asset-allocation","term":"Asset allocation","excerpt":"The decision of what percentage of a portfolio goes to each asset class -- the central decision in building a portfolio, distinct from choosing which specific asset to buy within each class."},{"type":"concept","slug":"asset-turnover","term":"Asset turnover","excerpt":"How much revenue a company generates per euro of assets -- a measure of efficiency, the second factor in the DuPont decomposition."},{"type":"concept","slug":"assets","term":"Assets","excerpt":"Everything a company owns and controls at a given instant -- from cash and inventory to machinery and buildings."},{"type":"concept","slug":"balance-sheet","term":"Balance sheet","excerpt":"Financial statement that shows what a company owns and owes at a specific instant, organized into assets, liabilities, and equity."},{"type":"concept","slug":"bond","term":"Bond","excerpt":"A debt instrument: the buyer lends money to the issuer (a company or a government) in exchange for periodic interest payments and repayment of the principal on a future maturity date."},{"type":"concept","slug":"broker","term":"Broker","excerpt":"An authorized financial intermediary that transmits your buy or sell orders to the market -- it isn't the counterparty to your trade, nor the market itself."},{"type":"concept","slug":"brokerage-commission","term":"Brokerage commission","excerpt":"The explicit fee a broker charges for executing an order -- the most visible cost, but not the only real cost of trading."},{"type":"concept","slug":"capital-gain","term":"Capital gain","excerpt":"A gain subject to tax when an asset is sold for a higher price than was paid for it -- it materializes on sale, not before, and shouldn't be confused with any valuation method."},{"type":"concept","slug":"cognitive-bias","term":"Cognitive bias","excerpt":"A systematic pattern of thinking that deviates from objective or rational judgment -- it also affects experienced investors, not only beginners."},{"type":"concept","slug":"commodity","term":"Commodity","excerpt":"A basic physical good, generally interchangeable between different producers -- oil, gold, wheat, copper. Its return depends solely on the change in its own price."},{"type":"concept","slug":"competitive-advantage","term":"Competitive advantage (moat)","excerpt":"A structural barrier that lets a company defend its position and profitability against competition over time."},{"type":"concept","slug":"concentration-risk","term":"Concentration risk","excerpt":"The risk that arises from having too much capital in too few positions, sectors, or geographic regions, such that a single event can affect a disproportionate part of the portfolio -- reduced by diversification."},{"type":"concept","slug":"confirmation-bias","term":"Confirmation bias","excerpt":"The tendency to seek out, interpret, and remember information that confirms what you already believe, while ignoring information that contradicts it."},{"type":"concept","slug":"consistency-of-results","term":"Consistency of results","excerpt":"The stability and predictability of a company's results over several periods -- the observable evidence that a competitive advantage is real, not just luck in a given moment."},{"type":"concept","slug":"correlation","term":"Correlation","excerpt":"The tendency of two assets to move in the same direction, in opposite directions, or independently in response to the same events -- the real mechanism through which diversifying reduces a portfolio's risk."},{"type":"concept","slug":"cost-of-capital","term":"Cost of capital","excerpt":"The minimum return a company should generate to justify the capital it has invested -- the benchmark ROIC is compared against."},{"type":"concept","slug":"cost-of-debt","term":"Cost of debt","excerpt":"The effective interest rate a company pays on its financial debt, adjusted for the tax benefit of interest."},{"type":"concept","slug":"cost-of-equity","term":"Cost of equity","excerpt":"The minimum return a company's shareholders demand for taking on the risk of investing in it -- not a book figure on the balance sheet."},{"type":"concept","slug":"currency","term":"Currency","excerpt":"A country's or economic region's money -- the dollar, the euro, the yen. Its value against other currencies depends on macroeconomic factors, not on any company's profits."},{"type":"concept","slug":"dcf","term":"DCF","excerpt":"A valuation method that estimates a company's value by projecting its future cash flows and bringing them to present value."},{"type":"concept","slug":"debt-to-equity-ratio","term":"Debt-to-equity ratio","excerpt":"A ratio that measures how a company is financed -- what proportion of its resources comes from debt (liabilities) versus its own capital (equity)."},{"type":"concept","slug":"diversification","term":"Diversification","excerpt":"Combining assets in a portfolio that don't all behave the same way in response to the same events, to reduce risk without proportionally reducing expected return -- it reduces risk, it doesn't eliminate it."},{"type":"concept","slug":"dividend","term":"Dividend","excerpt":"The part of a company's profit it distributes to its shareholders -- a periodic income taxed when received, distinct from a bond's coupon."},{"type":"concept","slug":"dupont-decomposition","term":"DuPont decomposition","excerpt":"A method that splits ROE into three factors -- margin, asset turnover, and leverage -- to understand where a company's profitability really comes from."},{"type":"concept","slug":"etf","term":"ETF","excerpt":"An exchange-traded fund that pools many assets into a single product, usually tracking an index -- bought and sold like a stock."},{"type":"concept","slug":"ev-ebitda","term":"EV/EBITDA","excerpt":"A multiple that compares a company's full value -- market cap plus net debt -- with its EBITDA, neutralizing the effect of its financing structure."},{"type":"concept","slug":"equity","term":"Equity","excerpt":"The part of a company that belongs to its shareholders -- what's left of assets after subtracting all liabilities."},{"type":"concept","slug":"financial-leverage","term":"Financial leverage","excerpt":"How much total assets a company finances relative to its equity -- the more debt it uses to finance itself, the higher its leverage; the third factor in the DuPont decomposition."},{"type":"concept","slug":"financial-market","term":"Financial market","excerpt":"A mechanism that connects those with savings available to those who need financing, through the exchange of financial assets (stocks, bonds, currencies, among others)."},{"type":"concept","slug":"financial-ratio","term":"Financial ratio","excerpt":"A comparison between two magnitudes from the financial statements that answers a specific question about a company -- not an isolated number, but a relationship with its own meaning."},{"type":"concept","slug":"financial-statements","term":"Financial statements","excerpt":"The three accounting documents (income statement, balance sheet, and cash flow statement) a company publishes periodically to show its economic and financial position."},{"type":"concept","slug":"financing-cash-flow","term":"Financing cash flow","excerpt":"Cash coming in or going out of a company through debt and capital operations -- loans, share issuance, share buybacks, dividends."},{"type":"concept","slug":"free-cash-flow","term":"Free Cash Flow","excerpt":"The cash left over for a company after covering the investments needed to maintain and grow its business -- what it can really distribute or reinvest freely."},{"type":"concept","slug":"fund-prospectus","term":"Fund prospectus","excerpt":"A document that summarizes a fund's essential information -- objective, investment policy, risk profile, costs, and historical performance -- before investing."},{"type":"concept","slug":"gross-margin","term":"Gross margin","excerpt":"The percentage of revenue left after subtracting the direct cost of what was sold -- measures the direct profitability of the product or service, before overhead costs."},{"type":"concept","slug":"income-statement","term":"Income statement","excerpt":"Financial statement that shows whether a company made or lost money during a period, from revenue down to net income."},{"type":"concept","slug":"index-fund","term":"Index fund","excerpt":"An investment fund that tracks an index, just like an ETF, but is bought and sold once a day at its net asset value, not in real time like an ETF."},{"type":"concept","slug":"intrinsic-value","term":"Intrinsic value","excerpt":"The estimate of how much a company is really worth, obtained by applying the DCF, the multiples, or both -- a reasoned estimate, not an exact figure."},{"type":"concept","slug":"invested-capital","term":"Invested capital","excerpt":"Financial debt plus equity -- all the capital financing a company's business, regardless of whether it comes from third parties or its shareholders."},{"type":"concept","slug":"investing-cash-flow","term":"Investing cash flow","excerpt":"Cash spent on buying or divesting long-term assets -- machinery, buildings, acquisitions of other companies."},{"type":"concept","slug":"investment-fund","term":"Investment fund","excerpt":"A vehicle that pools money from many investors to invest jointly in a portfolio of assets, managed by a professional management company."},{"type":"concept","slug":"investment-plan","term":"Investment plan","excerpt":"A set of criteria and rules defined in advance -- before the market moves and emotions get involved -- that guide decisions to buy, hold, or sell."},{"type":"concept","slug":"investor-compensation-fund","term":"Investor compensation fund","excerpt":"A mechanism that protects part of a client's money or securities if their broker goes bankrupt -- it does not cover market losses, only the intermediary's own insolvency."},{"type":"concept","slug":"investor-return-gap","term":"Investor return gap","excerpt":"The difference between the return a market offers over a period and the return the average investor in that market actually achieves."},{"type":"concept","slug":"liabilities","term":"Liabilities","excerpt":"Everything a company owes to third parties at a given instant -- bank debt, unpaid suppliers, tax obligations."},{"type":"concept","slug":"limit-order","term":"Limit order","excerpt":"An instruction to buy or sell only at a specified price or better -- it guarantees the price, not execution."},{"type":"concept","slug":"liquidity","term":"Liquidity","excerpt":"How easily an asset can be converted into available cash, quickly and without losing significant value in the process."},{"type":"concept","slug":"liquidity-ratio","term":"Liquidity ratio","excerpt":"A ratio that answers whether a company can cover its short-term obligations with its short-term resources -- the same question as working capital, expressed as a ratio instead of a difference."},{"type":"concept","slug":"listing","term":"Listing","excerpt":"The situation in which a company's shares are publicly traded on a stock exchange, at a price that updates according to supply and demand."},{"type":"concept","slug":"loss-aversion","term":"Loss aversion","excerpt":"The tendency to feel the pain of losing a given amount of money far more intensely than the pleasure of gaining that same amount."},{"type":"concept","slug":"loss-offsetting","term":"Loss offsetting","excerpt":"A tax mechanism that lets investment losses be offset against capital gains, reducing the taxable base -- a neutral tax mechanism, not a psychological bias."},{"type":"concept","slug":"management-fee","term":"Management fee","excerpt":"The fee a fund's management company charges for administering it -- the main component of its TER, especially under active management."},{"type":"concept","slug":"margin","term":"Margin","excerpt":"A result expressed as a percentage of revenue, not as an absolute figure -- lets you compare the profitability of companies of very different sizes."},{"type":"concept","slug":"margin-of-safety","term":"Margin of safety","excerpt":"The difference between a company's estimated intrinsic value and its market price, expressed as a percentage of intrinsic value -- the cushion that protects against an error in the estimate itself."},{"type":"concept","slug":"market-capitalization","term":"Market capitalization","excerpt":"The total market value of all of a company's shares -- the result of multiplying a share's price by the total number of shares outstanding."},{"type":"concept","slug":"market-order","term":"Market order","excerpt":"An instruction to buy or sell immediately at the best price currently available -- it guarantees execution, not the exact price."},{"type":"concept","slug":"net-margin","term":"Net margin","excerpt":"The percentage of revenue that finally remains for shareholders -- adds, on top of operating margin, the effect of financing, taxes, and non-recurring items."},{"type":"concept","slug":"non-recurring-item","term":"Non-recurring item","excerpt":"An element that appears in a specific period's income statement but isn't part of the company's normal activity -- distorts the comparison between periods if not identified."},{"type":"concept","slug":"operating-cash-flow","term":"Operating cash flow","excerpt":"Cash generated or consumed by the business's main activity -- starts from accounting profit and adjusts it for items that aren't real cash movements."},{"type":"concept","slug":"operating-margin","term":"Operating margin","excerpt":"The percentage of revenue left after also subtracting operating overhead expenses -- measures the efficiency of the business as a whole, before interest and taxes."},{"type":"concept","slug":"pe-ratio","term":"P/E ratio","excerpt":"A multiple that compares a share's price with the net income attributable to it -- how many years of current earnings the market is paying for the company."},{"type":"concept","slug":"passive-management","term":"Passive management","excerpt":"A fund management style that tracks a benchmark index without a manager actively deciding which assets to pick."},{"type":"concept","slug":"position-sizing","term":"Position sizing","excerpt":"The criterion for deciding how much weight a position should have in a portfolio based on how much concentration risk it introduces and how correlated it is with the rest -- a tool for controlling its contribution to risk, not a universal formula."},{"type":"concept","slug":"pb-ratio","term":"Price-to-Book (P/B)","excerpt":"A multiple that compares a share's price with the equity attributable to it -- especially informative for asset-intensive or financial companies."},{"type":"concept","slug":"roe","term":"ROE","excerpt":"The return a company generates on the capital its own shareholders have invested -- net income divided by equity."},{"type":"concept","slug":"roic","term":"ROIC","excerpt":"The after-tax return a company generates on all the capital invested in its business -- debt and equity together -- regardless of how it's financed."},{"type":"concept","slug":"rebalancing","term":"Rebalancing","excerpt":"Bringing a portfolio's actual weights back toward its target allocation when they've drifted from it -- not deciding a new allocation, but readjusting the portfolio relative to the one already decided."},{"type":"concept","slug":"red-flag","term":"Red flag","excerpt":"A pattern in a company's financial statements that suggests its quality might be lower than the surface figures indicate -- a synthesis of patterns already taught, not a new diagnosis."},{"type":"concept","slug":"return","term":"Return","excerpt":"The gain or loss an investment produces, usually expressed as a percentage of the amount invested."},{"type":"concept","slug":"revenue","term":"Revenue","excerpt":"Everything a company bills for its main activity during a period, before subtracting any cost -- the first figure in the income statement."},{"type":"concept","slug":"risk","term":"Risk","excerpt":"Uncertainty about an investment's future outcome: the possibility that the actual result will differ from the expected one -- not merely the possibility of losing money."},{"type":"concept","slug":"risk-profile","term":"Risk profile","excerpt":"An investor's willingness and ability to take on the uncertainty of an investment -- a characteristic of the person, not the investment, distinct from a specific asset's risk."},{"type":"concept","slug":"share","term":"Share","excerpt":"A security that represents a proportional part of a company's ownership -- whoever holds it is a part-owner of that company, in the proportion that share represents of the total."},{"type":"concept","slug":"statement-of-cash-flows","term":"Statement of cash flows","excerpt":"Financial statement that shows how much real cash has come in and gone out of a company during a period, unlike the accounting profit in the income statement."},{"type":"concept","slug":"stock-exchange","term":"Stock exchange","excerpt":"An organized, regulated financial market where shares of listed companies are bought and sold."},{"type":"concept","slug":"stock-market-index","term":"Stock market index","excerpt":"An indicator that summarizes, in a single number, the combined performance of a specific group of stocks -- usually the most representative ones on an exchange, in a country, or in a sector."},{"type":"concept","slug":"stop-order","term":"Stop order","excerpt":"An instruction that activates only once the price reaches a level you define, at which point it becomes a market order."},{"type":"concept","slug":"ter","term":"TER (Total Expense Ratio)","excerpt":"The total annual cost of maintaining an ETF or index fund, expressed as a percentage of the amount invested -- distinct from the broker's trading commission."},{"type":"concept","slug":"terminal-value","term":"Terminal value","excerpt":"The part of a DCF's value that captures all the cash flows a company will generate beyond the explicit forecast period."},{"type":"concept","slug":"time-horizon","term":"Time horizon","excerpt":"The period of time during which an investor plans to hold an investment before needing to get the money back."},{"type":"concept","slug":"trade-settlement","term":"Trade settlement","excerpt":"The process, after an order executes, in which ownership of the securities and the corresponding money is formally transferred between buyer and seller."},{"type":"concept","slug":"valuation","term":"Valuation","excerpt":"The process of estimating how much a company is really worth, beyond what its market price indicates at a given moment."},{"type":"concept","slug":"valuation-multiple","term":"Valuation multiple","excerpt":"A ratio that compares a company's price with one of its financial figures -- earnings, EBITDA, or book value -- to value it by comparison with other companies."},{"type":"concept","slug":"volatility","term":"Volatility","excerpt":"A measure of how much an asset's price varies over a period of time -- one of the most common ways of measuring risk, though not the only one."},{"type":"concept","slug":"wacc","term":"WACC","excerpt":"The precise calculation of the cost of capital: the weighted average of the cost of debt and the cost of equity, according to each one's weight in the company's financing."},{"type":"concept","slug":"working-capital","term":"Working capital","excerpt":"The difference between current assets and current liabilities -- measures whether a company can cover its short-term obligations with its short-term resources."}]}