Magic Formula Investing

• Defensive stocks are stocks that provide stable dividends and stable earnings regardless of the overall state of the stock market.

• The Piotrosky scale is a scale from zero to nine, which includes nine factors that indicate the financial stability of the company.

• Relative value evaluates the value of an asset by comparing it with the value of similar assets.

• Value investing is an investment strategy that involves selecting stocks that trade at a price below their intrinsic or book value.

• Value stocks trade at levels that are perceived to be below fundamentals.

• Active management includes making decisions to buy and sell assets in a portfolio.

• The adjusted closing price changes the closing price of a share to reflect the value of that share after accounting for any corporate action.

• Aggressive investing takes more risk in pursuit of greater returns.

Allocation is the systematic distribution of business resources between different entities and over time.#

• Alphabet shares are shares of a publicly traded company that have different classes of shares, commonly referred to as “.A shares” or “.B shares”.

• Annual or yearly return is a measure of how much an investment has increased on average each year over a period of time.

• Anti-dilution clauses are clauses built into convertible preferred shares to help protect investors from their investments that could lose value.

• The goal of asset management is to maximize the value of an investment portfolio over time while maintaining an acceptable level of risk.

• Assets Under Management (AUM) is the total market value of investments that an individual or entity manages on behalf of investors.

• Par value is the price at which the bond was issued, also known as its face value.

• Attribution analysis is an evaluation tool used to explain and analyze the performance of a portfolio (or portfolio manager), especially when compared to a certain benchmark.

• BAT stock is an acronym used to refer to China’s top three technology companies: Baidu Inc., Alibaba Holding Group Ltd. and Tencent Holdings Ltd.

• A backstop is the act of providing extreme assistance or security in an offering of securities to an unsubscribed portion of the shares.

• The basic materials sector consists of companies involved in the exploration, development and processing of raw materials.

• Basket trading is a portfolio management strategy used by institutional investors to buy or sell a large number of securities at the same time.

• Bearer shares are unregistered equity securities owned by the owner of the physical shares documents. The issuing company pays dividends to holders of physical coupons.

• Benchmark is a standard criterion for measuring performance.

• Bioremediation is a branch of biotechnology that uses living organisms such as microbes and bacteria to decontaminate affected areas.

• The “tit in hand” theory says that investors prefer stock dividends over potential capital gains due to the uncertainty of capital gains.

• Investing from the bottom up is an investment approach that focuses on the analysis of individual stocks and downplays the importance of macroeconomic and market cycles.