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Mega Cap

The biggest companies in the investment universe, as measured by market capitalization. While there is no exact definition of the term, mega cap generally refers to companies with a market cap exceeding $100 billion. Mega caps are usually household names with strong brand recognition and global operations, such as Exxon Mobil, Apple, Microsoft, Nestle and IBM. The ranks of the mega caps were traditionally dominated by companies from the...

Merger Arbitrage

A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless profit. A merger arbitrageur looks at the risk that the merger deal will not close on time, or at all. Because of this slight uncertainty, the target company’s stock will typically sell at a discount to the price that the combined company will have when the merger is...

Micro Cap

A publicly traded company in the United States that has a market capitalization between approximately $50 million and $300 million. Micro-cap companies have greater market capitalization than nano caps, and less than small, mid, large and mega-cap corporations. Companies with larger market capitalization do not automatically have stock prices that are higher than those companies with smaller market capitalizations. Generally, the larger the market capitalization, the less risky the...

Mid Cap

A company with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company’s shares outstanding by its stock price. Mid cap is an abbreviation for the term “middle capitalization”. As the name implies, a mid cap company is in the middle of the pack between large cap and small cap companies. Keep in mind that classifications such as large cap, mid...

MLPs (see Master Limited Partnerships)

Model Portfolio

Model portfolios are a diversified group of ETFs, mutual funds, closed end funds, or even stocks and bonds that are grouped together and seek to achieve an investor’s goal or to provide an expected return with a corresponding amount of risk. Model portfolios can be active or passively managed. Model portfolios assist advisers and investment managers provide consistent investment allocations to various clients. Client accounts invested in model portfolios...

Momentum

The rate of acceleration of a security’s price or volume. The idea of momentum in securities is that their price is more likely to keep moving in the same direction than to change directions. In technical analysis, momentum is considered an oscillator and is used to help identify trendlines. Once a momentum trader sees acceleration in a stock’s price, earnings or revenues, the trader will often take a long...

Momentum Investing

A momentum investor focuses on stocks that are rising in value on increasing daily volume, and avoids stocks that are falling in price or that are perceived to be undervalued. The logic is that when a pattern of growth has been established, it will continue to gain momentum and the growth will continue. Momentum investing is essentially the opposite of contrarian investing. (Source: Yahoo! Finance)

Morgan Stanley Capital International Indexes

These indexes are computed by the investment firm Morgan Stanley’s Capital International group (MSCI).They track stocks traded in international stock markets, and are considered the benchmarks for international stock investments and mutual fund portfolios. The strong performance of the Europe and Australasia Far East Equity Index (EAFE) between 1982 and 1996 is often credited with generating increased US interest in investing overseas. The index was considered especially strong compared...

Mortgage Backed Security

Mortgage-backed securities are created when the sponsor buys up mortgages from lenders, pools them, and packages them for sale to the public, a process known as securitization. The securities are available through publicly held corporations such as Fannie Mae and Freddie Mac or other financial institutions. Some of the securities are guaranteed by the Government National Mortgage Association, or Ginnie Mae. The money raised by selling the bonds is...