Reference
Investing glossary
13 terms — valuation, risk, quality and technical concepts defined in plain English, with the tickers and pillar posts that best illustrate them.
A
- Altman Z-Score
A 5-factor model that estimates the probability of bankruptcy within two years.
B
- Beta
A stock's sensitivity to moves in a benchmark index — typically the S&P 500.
D
- Discounted Cash Flow (DCF)
An intrinsic-value model that discounts a company's projected free cash flows back to today at a required rate of return.
- Drawdown
The peak-to-trough decline in portfolio value, stated as a percentage of the prior peak.
E
- Earnings Power Value (EPV)
A valuation method that uses current sustainable earnings and zero growth to estimate a conservative fair value.
- Economic Moat
A structural advantage that protects a firm's long-run economic profit from competition.
F
- Free Cash Flow (FCF)
Cash generated by operations after funding the capex needed to maintain or grow the business.
M
- Margin of Safety
The discount between a stock's market price and an analyst's estimate of intrinsic value.
- Moving Average
A rolling average of price over a lookback window, used to smooth noise and identify trend.
P
- Piotroski F-Score
A 9-point checklist of profitability, leverage and operating-efficiency signals that flags financially improving companies.
- Price-to-Earnings (P/E) Ratio
The price an investor pays per dollar of company earnings — the single most-quoted valuation metric.
R
- Return on Equity (ROE)
Net income divided by shareholders' equity — how productively a business uses its own capital.
S
- Sharpe Ratio
Excess return per unit of total volatility — the canonical risk-adjusted return metric.