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DIEHARDS GLOSSARY - 2001 Other Related References: Diehards.org www.diehards.org Try here Financial Master Glossary. Campbell Harvey's master glossary of financial terms. www.capital.com/help/glossary.cfm Try the link Master Glossary Abbreviations in Diehard's post #10534 M* Search - At the bottom of the conversation pages you will see M* search window.Typing a word in the window will bring up conversations in which your search word appears. You can also use Keyword, User/Author and Ticker/Name search on the upper middle left hand side of the page. ============================================================ GLOSSARY START THROUGH D 3 Factor Model - Proposed by Eugene Fama and Ken French. General principle is that the returns of a portfolio can best be explained by the portfolio's exposure to three factors: beta, cap size, and value. For more, search M* for Fama/French or 3 Factor Model. 4x25 - A slice and dice portfolio composed of equal weightings of large cap, large value, small cap, and small value 5x20 - same as 4x25 except REIT is added. 5%/25% rule - formula used to determine when to rebalance a portfolio. Rebalance when asset value moves more than 5% or when % of asset moves more than 25% Abbreviations (some others) - See post 10534 Active Management - Mutual fund managed by someone who selects individual stocks or other assets in an attempt to meet specified performance goals. AMT - Alternative Minimum Tax Asset Allocation - Percent of money put into major asset classes of stocks, bond, cash Asset Classes - A group of assets with similar risk and reward characteristics. Cash, debt instruments, real estate, and equities are examples of asset classes. Within a general asset class, such as equities, there are more specific classes such as large and small companies and domestic and international companies. Large growth, Small value, Emerging markets, foreign value, etc. are different classes of assets. Used in diversifying a portfolio Beta - Indicator of a fund's movement sensitivity in relation to an index such as the S&P500. See M* definition in Ratings and Risk section Quicktake Reports. Look at bottom of page for "show data definitions." btm - Book value to market value The ratio of the book value per share to the market price per share, or book value divided by market capitalization. Indicator of a fund's exposure to value. Higher number indicates more exposure to value. CAPM - Capital Asset Pricing Model. Developed by Wm. Sharpe. Model describes relationship between risk and expected return. (See Campbell Harvey's Master Glossary) CMA - Cash management account CRSP - Center for Research in Security Pricing. Located at University of Chicago. CRSP divides market capitalization into deciles. 1-2=large cap, 3-5=mid cap, 6-8=small cap, 9-10= micro cap. Also divides deciles into style. 1-3= growth, 4-7=core, 8-10=value Also see post #12986 Note: Other organizations may use different definitions. Couch potato portfolio - #1 - 50% Total Stock Market (TSM)(VTSMX), 50% Total Bond Market (TBM) (VBMFX). #2 - 75% TSM, 25% TBM Coward's Portfolio - Larry Swedroe and other Diehards usually refer to cowards portfolio as a portfolio of equally weighed asset classes. Takes no "bet" on overweighting any one asset class. Several other "cowards portfolios" have been proposed by Wm. J. Bernstein. www.efficientfrontier.com Try this link DCA - Dollar Cost Averaging - Method of investing in the market by making regular periodic investments. DFA - Dimensional Fund Advisors. Investment management company that applies academic research teachings to asset management. DI - Debt instrument Dunn's Law - States that if an asset class does well, an index fund in that class will outperform non-indexed funds of the same class. Originally posted in thread: 13536

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