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What are asset classes?
Asset classes are types of appreciable investments that can be grouped and distinguished from one another based on the correlation of their price movements and the structure of their cash flows.
Some of the most common asset classes are stocks, bonds, cash (and cash equivalents), commodities, and real estate. Many individual securities and sub-classes will fall into each of these.
Asset classes are a large consideration when creating a well-diversified portfolio.
Constructing and maintaining an asset allocation that suits an individual investor’s risk tolerance, time horizon, and goals has been found to be the single most influential mode of control that an investor can use to keep the results of a portfolio reasonably predictable.
The idea is that if you would expect returns within a certain range out of an asset class, and several asset classes only have a moderate degree of correlation to one another, that the dips and turns of the individual asset classes will not affect the entire portfolio, and that they will, as a whole, generate returns within the desired range while avoiding some of the risks inherent in each asset class.
This is known as modern portfolio theory. Asset types that deviate from these more traditional asset classes are known as alternatives.
What is the Role of Asset Allocation in My Investments?
What is an Asset Mix?
How Do I Measure My Risk Tolerance?
When should I sell my IPO shares?
If there is a lot of hype surrounding the IPO, it may be a good strategy to immediately sell them while the frenzy is on
Who are venture capitalists?
Venture capitalists are now helping newer companies achieve success in return for large equity positions in the business
What is the Ascending Triangle (Bearish) Pattern?
The Ascending Triangle pattern has a horizontal top line representing a resistance level, and an upward-sloping bottom
What is the Triple Tops (Bearish) Pattern?
The Triple Tops pattern appears when there are three distinct minor Highs at about the same price level
What is foreign exchange intervention?
If a central bank takes actions that intentionally affect the value of a currency it is Foreign Exchange Intervention
What is a market-on-open order?
Market-on-open orders are looking to buy or sell immediately after the market opens, at the opening price
What is market neutral?
Market neutral is a term used to describe strategies of investing that are poised to benefit whether the market goes...
What is the security market line?
The Security Market Line (SML) is a visualization of the Capital Asset Pricing Model (CAPM) and shows thee relationship between risk and return in trading
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What is a Limit Order?
A Limit Order is a type of order to buy or sell a security, where the trader wants to set a specific price for the trade