Enough
Risk & psychologyA deliberately chosen point beyond which more money does not change your decisions.
In plain terms
Almost nobody calculates it, and the number moves with income for everyone who has not written down what it was for.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 21 terms
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Absorption
Technical analysisHeavy selling met by a buyer large enough to prevent the price falling.
In plain terms
High volume, narrow range, close near the high after a decline. The candle looks boring, which is why it is missed.
Circle of competence
Risk & psychologyThe set of businesses you understand well enough to judge.
In plain terms
Its boundary is not a weakness. “I could not find out” is a complete reason to pass.
Communication
Risk & psychologyTalking about money openly enough that both people can act.
In plain terms
One shared page a year removes the single-point-of-failure risk entirely.
Comparable companies
Fundamental analysisAlso called: Comps
Businesses similar enough in customers, economics and stage that their valuation multiples can be meaningfully compared.
In plain terms
A five-star restaurant and a highway dhaba are both "restaurants". Only one of them is a peer of the other.
Financial independence
Risk & psychologyHolding enough capital that work becomes optional.
In plain terms
Annual spending divided by a safe withdrawal rate. A number you can check, not a feeling.
Growth investing
Fundamental analysisA style that buys companies whose earnings are expected to grow fast enough to justify a high multiple.
In plain terms
The bet is that the market's forecast is too low. It fails when growth disappoints, or when rates rise and the multiple de-rates violently while earnings are still fine.
Pricing power
Fundamental analysisThe ability to raise prices without losing enough volume to matter.
In plain terms
About the buyer’s position at the moment of paying, not product quality. Salt has it; a thali does not.
Process review
Risk & psychologyA periodic check of whether your approach is actually working, measured against a broad index over a sample long enough to mean something.
In plain terms
The failure is not underperforming; it is continuing for years without ever measuring. Ten hours a week for 1% of outperformance on a small portfolio is a poor hourly rate.
Dunning-Kruger effect
Risk & psychologyThe tendency for confidence to be highest at low levels of competence, before the scope of the subject becomes visible.
In plain terms
Why the people most at risk in a new sector are those who have just learned enough to find it interesting.
Dynamic support
Technical analysisA moving average acting as support, so the level rises or falls with price rather than sitting at a fixed price.
In plain terms
Partly self-fulfilling — enough traders place orders at the 20 or 50-day average that the orders themselves create the support. Self-fulfilling is still real.
Elliott Wave
Technical analysisA framework claiming markets move in five waves with the trend and three against, repeating at every scale.
In plain terms
The observations underneath are sound; the counting is not testable. The rules allow enough extensions and truncations that two competent analysts routinely produce opposite counts on the same chart.
Fibonacci retracement
Technical analysisHorizontal levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a prior swing.
In plain terms
Works mainly because enough traders place orders there. That is a real reason, not a mystical one.
Index behaviour
Technical analysisThe statistical properties an index has by virtue of being a weighted average of many stocks rather than a single one.
In plain terms
Lower volatility, milder gaps, stronger mean reversion, almost no company-specific risk. Different enough to justify genuinely different rules.
Investment mandate
Risk & psychologyA short written statement of what a pool of money is for, over what horizon, what it may hold and what the worst year it must survive looks like.
In plain terms
Without one there is no definition of managing somebody’s money well, because there is nothing any outcome can be measured against. A few sentences is enough; the absence is what causes the arguments.
Market wide position limit
DerivativesAlso called: MWPL
A cap set by the exchange on the aggregate derivatives open interest permitted in a single stock, expressed as a number of shares.
In plain terms
It stops the derivatives tail growing large enough to wag the cash market. The basis on which it is computed has been revised, so read the current circular for the formula — what has not changed is that the names reaching the ceiling are overwhelmingly midcaps with concentrated promoter holdings and thin deliverable float.
Material subsidiary
Regulation & taxA subsidiary whose income or net worth exceeds a defined share of the listed group’s consolidated figures, attracting extra governance obligations under the listing regulations.
In plain terms
A subsidiary large enough that it cannot be governed entirely out of sight. The threshold has been tightened over the years, so read the current definition rather than a remembered one.
Staggered entry
Risk & psychologyDeploying a large sum in tranches on fixed dates rather than all at once.
In plain terms
Six to twelve months on fixed dates gives up a little expected return and buys a much lower chance of a first experience bad enough to end your investing.
Statistical significance
Risk & psychologyWhether an observed result is unlikely to have arisen by chance alone.
In plain terms
Three good years is roughly a hundred decisions — nowhere near enough to mean anything.
Steelmanning
Risk & psychologyConstructing the strongest possible version of an opposing argument before responding to it.
In plain terms
If you cannot build the case against your own position, you do not understand it well enough to hold it or to leave it.
Story stock
Risk & psychologyA stock whose valuation rests mainly on a narrative rather than on current financials.
In plain terms
Not automatically a bad investment. It is a specific bet that the story survives long enough to become numbers.