Glossary
Portfolio
Everything you own across your accounts, considered as one collection rather than as separate holdings.
A portfolio is not a product you sign up for. It is simply the word for the whole of what somebody holds, and the reason it has a name is that the collection behaves differently from its parts. Two holdings that each move sharply can offset each other, or amplify each other, depending on what drives them.
That is why questions about concentration are asked at the portfolio level rather than the holding level. A single company being a large share of everything you own is a fact about the collection; the same company held alongside many others is a different situation entirely, and nothing about the company itself has changed between the two.
Portfolios drift on their own. Anything that rises becomes a larger share of the total without anyone doing anything, so a collection assembled in equal parts will not stay in equal parts. Noticing that requires looking at proportions rather than at individual gains and losses.
Learn this properly
Lesson 13: After You Buy: What to Actually DoWrite down your reasoning, check the business quarterly, ignore the price daily, and re-read your own words before reacting.
Related terms
- DiversificationSpreading money across different investments so that no single one determines the whole result.
- Brokerage AccountThe account that holds your investments and places your orders on an exchange, opened with a licensed broker.
- DividendA cash payment a company makes to its shareholders out of profits, most often once a quarter.
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