Concept

Asset allocation

How a portfolio is split among kinds of investments, such as stocks, bonds and cash. Rebalancing brings the mix back to its target after markets move it.

Why we track it

The mix, more than any single pick, decides how much a portfolio swings and how deep its losses go in a bad year.

BacktestingTesting an investing rule on historical data to see how it would have performed before putting money behind it.
Basis pointOne hundredth of a percentage point (0.01%), often written bp.
Bear marketA fall of roughly 20% or more from a recent peak, usually over several months.
Bull marketA long stretch of rising prices across a market, often dated from a 20% rise off a low.
Business cycle stagesThe economy’s long rise and fall: years of growth, a slowdown, sometimes a recession, then recovery.
Cap-weighted indexAn index that weights each company by its total market value, so the biggest companies move it the most.

Why we track it

Related terms