Definition Momentum investing is an investment strategy that capitalizes on the continuance of existing trends in the market. It is based on the idea that stocks that have performed well in the past will continue to do so in the future and conversely, those that have underperformed will continue to lag. The strategy hinges on the behavioral finance principle that investors tend to follow trends rather than counter them.
Definition A Money Purchase Pension Plan (MPPP) is a type of employer-sponsored retirement plan that requires fixed contributions to be made by the employer, usually expressed as a percentage of an employee’s salary. Unlike other pension plans that may have benefits tied to the employer’s financial performance, MPPPs offer a more predictable savings approach for retirement, as the contributions are predetermined. Components of a Money Purchase Pension Plan Employer Contributions: Employers are required to make annual contributions to the plan, which is usually a fixed percentage of each participating employee’s salary.
Definition Mortgage-Backed Securities (MBS) are financial instruments that represent a claim on the cash flows generated by a pool of mortgage loans. Essentially, when homeowners pay their mortgage, those payments are passed through to MBS investors. It’s like a party where everyone shares the cake, but the cake in this case is the money from mortgage payments! Components of MBS When diving into MBS, there are a few key components to understand:
Definition Moving Averages (MA) are fundamental tools used in financial analysis to smooth out price data over a specific time period. By calculating the average price of an asset, moving averages provide insights into price trends, making them an essential part of technical analysis for traders and investors alike. Types of Moving Averages Moving averages can be categorized into several types, each with its unique calculation method and application:
Definition The MSCI World Index is a pivotal benchmark in the world of finance, representing the performance of large and mid-cap stocks across 23 developed markets globally. It is designed to reflect the overall health of the stock market in these regions, making it a go-to reference for investors, analysts and financial professionals. Components The MSCI World Index comprises over 1,500 stocks from various sectors, including technology, healthcare, financials and consumer goods.
Definition Multinational Corporations (MNCs) are entities that manage production or deliver services in more than one country. They typically have a centralized head office where they coordinate global management. MNCs are often characterized by their extensive resources, capabilities and the ability to leverage opportunities in diverse markets. The unique aspect of MNCs is their ability to adapt to local cultures while maintaining a cohesive global strategy. This duality allows them to thrive in various economic environments and navigate the complexities of international trade.
Definition Municipal bonds, also known as munis are debt securities issued by local government entities such as states, cities or counties to finance various public projects. These projects can range from building schools and highways to funding public utilities and hospitals. When you purchase a municipal bond, you’re essentially lending money to the issuing municipality in exchange for regular interest payments and the return of the principal amount upon maturity.
Definition A Mutual Fund is an investment vehicle made up of a pool of funds collected from many investors to invest in securities like stocks, bonds, money market instruments and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s investments and attempt to produce capital gains or income for the fund’s investors. Importance of Mutual Funds Mutual funds provide individual investors access to professionally managed portfolios of equities, bonds and other securities.
Definition The Nasdaq Composite Index is a stock market index that includes more than 3,000 stocks listed on the Nasdaq stock exchange. It is widely recognized as a benchmark for the performance of technology and growth-oriented companies. The Nasdaq Index is heavily weighted towards sectors like technology, consumer services and healthcare, making it a vital indicator of the overall health of the tech market. Components The Nasdaq Composite Index comprises a diverse range of companies, including:
Definition Net Asset Value (NAV) is a vital financial metric primarily used to assess the value of an investment company, mutual fund or exchange-traded fund (ETF). It is calculated by subtracting total liabilities from total assets, providing investors with a clear view of the entity’s overall financial health. NAV is expressed on a per-share basis, making it an essential metric for investors for determining the value of their investments.