Investing glossary

Why it matters. VEXA’s scores, charts and simulations use daily closes so every number has a clear date.

Example. A score calculated on Saturday uses Friday’s closing prices. (hypothetical numbers)

Watch out. Nothing on VEXA is a live quote. Always check the date shown next to a price.

Why it matters. One purchase spreads money across many holdings, usually at low cost.

Example. An S&P 500 ETF holds roughly 500 large US companies. (hypothetical numbers)

Watch out. An ETF can still be concentrated: a technology ETF is diversified across companies but not across industries. Broad ETFs can also overlap with stocks you hold directly.

Why it matters. It is the starting point for every return, valuation and chart on the page.

Example. If a stock closed at $210.96 on Friday, VEXA shows $210.96 dated Friday until the next session closes. (hypothetical numbers)

Watch out. VEXA uses end-of-day prices, not live quotes. During market hours the real price can differ, and after news it can open far from the last close.

Why it matters. It tells you how big the company is in the market’s eyes, which affects how volatile and widely followed it tends to be.

Example. Hypothetically, 2 billion shares at $50 each gives a market cap of $100 billion. (hypothetical numbers)

Watch out. It is the market’s current opinion, not the value of the company’s assets or its cash. It moves every day with the share price.

In more depth. How it is calculated: Share price × number of shares outstanding. In VEXA: Displayed and used in the Stock Screener filters. Not part of the score.

Why it matters. It is the most common yardstick for judging whether a stock, strategy or portfolio did better than simply owning the market.

Example. If your portfolio rose 6% while SPY rose 8% over the same dates, you trailed the benchmark by 2 points. (hypothetical numbers)

Watch out. It is a fair comparison only over the same dates, with dividends treated the same way, and for portfolios with similar risk. A mostly-cash portfolio should not be judged against an all-stock index.

Why it matters. You need it to look anything up, and some companies have more than one share class with different tickers.

Example. SPY is a fund that tracks the S&P 500; it is not a company. (hypothetical numbers)

Watch out. Similar tickers can belong to unrelated companies. Check the company name.

Why it matters. It summarises what other professionals expect.

Example. A consensus of ‘buy’ with a target 10% above the price means covering analysts are, on average, optimistic. (hypothetical numbers)

Watch out. These are other people’s opinions, not VEXA’s, and they are often slow to change and skewed toward ‘buy’.

In more depth. How it is calculated: Collected by Yahoo Finance from analyst reports. VEXA shows the recommendation key and the mean target price. In VEXA: Scored on the rating: Buy or Strong Buy adds 20 points; Sell, Underperform or Strong Sell subtracts 20. The target is displayed only.

Why it matters. It shows how much a company relies on borrowing, which matters most when profits fall or rates rise.

Example. $4 billion of debt and $2 billion of equity is a ratio of 2 (often shown as 200). (hypothetical numbers)

Watch out. Normal levels vary by industry; utilities often carry much more debt than software companies. Data providers report it in different units.

In more depth. How it is calculated: Total debt ÷ shareholders' equity. Yahoo reports it as a percentage; VEXA displays it as a ratio (divided by 100). In VEXA: Scored. Above 2.0 subtracts 6; below 0.5 adds 4.

Why it matters. Over long periods, share prices tend to follow profits.

Example. EPS rising from $2.00 to $2.40 is 20% earnings growth. (hypothetical numbers)

Watch out. It can swing wildly when profits are small, and one-off items can distort it. Compare with revenue growth.

In more depth. How it is calculated: The year-over-year percentage change reported by the data provider (Yahoo Finance). In VEXA: Scored. Growth above 10% adds 10 points each for revenue and earnings; negative growth subtracts 10 each.

Why it matters. It shows profit on a per-share basis, so you can track it over time and compare it with the share price.

Example. Hypothetically, $1 billion of profit and 500 million shares gives EPS of $2. (hypothetical numbers)

Watch out. Share buybacks raise EPS even when total profit is flat, and one-off gains can inflate a single year.

Why it matters. It is the cash available for dividends, buybacks, paying down debt or reinvesting.

Example. $400 million of operating cash flow minus $150 million of capital spending is $250 million of free cash flow. (hypothetical numbers)

Watch out. It is lumpy: one year of heavy investment can make it negative for a healthy, growing company.

In more depth. How it is calculated: Operating cash flow − capital expenditures. In VEXA: Scored. Positive adds 6; negative subtracts 6.

Why it matters. It shows how much of each dollar of sales the company keeps, which reflects pricing power and efficiency.

Example. Keeping $15 of operating profit from $100 of sales is a 15% operating margin. (hypothetical numbers)

Watch out. Normal margins differ hugely by industry; compare companies in the same business and watch the trend.

Why it matters. Consistently high ROE can indicate a strong business.

Example. $300 million of profit on $2 billion of equity is 15% ROE. (hypothetical numbers)

Watch out. Heavy borrowing shrinks equity and inflates ROE, so check debt alongside it.

In more depth. How it is calculated: Net income ÷ shareholders' equity. In VEXA: Scored. Above 15% adds 8; below 0% subtracts 8.

Why it matters. Growing sales are usually needed for profits to keep growing.

Example. Sales rising from $200 million to $230 million is 15% growth. (hypothetical numbers)

Watch out. Growth from buying other companies is different from organic growth. Fast growth is often already reflected in a high share price.

In more depth. How it is calculated: The year-over-year percentage change reported by the data provider (Yahoo Finance). In VEXA: Scored. Growth above 10% adds 10 points each for revenue and earnings; negative growth subtracts 10 each.

Why it matters. It shows the cash income a stock pays relative to its price.

Example. A $50 stock paying $2 a year yields 4%. (hypothetical numbers)

Watch out. A very high yield often means the price has fallen because investors expect the dividend to be cut.

Why it matters. It reflects expected growth.

Example. A $60 stock with expected EPS of $4 has a forward P/E of 15. (hypothetical numbers)

Watch out. Estimates are often wrong, especially for fast-changing companies.

Why it matters. It is a quick way to see how expensive a stock is relative to its current profits.

Example. A $60 stock with EPS of $3 has a P/E of 20. Investors pay $20 for each $1 of profit. (hypothetical numbers)

Watch out. A high P/E is not automatically ‘overvalued’ (fast growers often have high P/Es) and a low one is not automatically ‘cheap’ (it can signal shrinking profits). Comparisons across industries are often misleading. It is meaningless when earnings are negative.

In more depth. How it is calculated: Share price ÷ earnings per share over the last 12 months (trailing). Forward P/E uses analysts' estimated next-12-month earnings. In VEXA: Scored on trailing P/E in the full analysis: below 15 adds 10; above 50 subtracts 5. Forward P/E is displayed only.

Why it matters. They show how stretched the price is compared with its recent range.

Example. A close above the upper band means the price is unusually high compared with the last 20 days. (hypothetical numbers)

Watch out. Touching a band is not a reversal signal; strong trends can ride along a band for weeks.

In more depth. How it is calculated: Middle band = 20-day SMA. Upper and lower bands = middle ± 2 × the 20-day standard deviation of closing prices. Band width % = (upper − lower) ÷ middle. In VEXA: Scored. Close below the lower band adds 6; above the upper band subtracts 6. A band width under 6% is flagged as a squeeze.

Why it matters. Crossings of its signal line are read as momentum turning up or down.

Example. MACD rising above its signal line is read as improving momentum. (hypothetical numbers)

Watch out. It lags and gives false signals in choppy markets. Values are in dollars, so they cannot be compared between stocks.

In more depth. How it is calculated: MACD line = EMA 12 − EMA 26. The signal line is a 9-day EMA of the MACD line. The histogram is MACD line − signal line. In VEXA: Scored on the histogram: positive and rising +10, positive but shrinking +5, negative and falling −10, negative but improving −5.

Why it matters. Price above a rising average is a common sign of an uptrend.

Example. A 50-day moving average of $180 means the stock averaged $180 over the last 50 closes. (hypothetical numbers)

Watch out. It lags: it only turns after the price has already moved, and in sideways markets the price crosses it again and again.

In more depth. How it is calculated: Add up the last N closing prices and divide by N. VEXA shows the 20-day and 50-day SMA. In VEXA: Scored. Price above SMA 20 adds 10 points and below subtracts 10. The same applies to SMA 50.

Why it matters. Traders use it to see whether a stock has moved unusually far in one direction recently.

Example. An RSI of 27 means recent losses have heavily outweighed gains. Some traders call readings below 30 ‘oversold’. (hypothetical numbers)

Watch out. ‘Oversold’ does not mean a rebound is due: in a strong downtrend RSI can stay low while the price keeps falling, and stay above 70 in a strong uptrend.

In more depth. How it is calculated: RSI = 100 − 100 ÷ (1 + RS), where RS is the average gain divided by the average loss over 14 days (Wilder smoothing). In VEXA: Scored. Below 30 adds 12 points; above 70 subtracts 12; in between adds 3.

Why it matters. Many strategies, including some VEXA rules, behave differently in trends than in sideways markets.

Example. A stock above its rising 50-day average has been in an uptrend recently. (hypothetical numbers)

Watch out. A trend describes the past. It can end at any time, often on news.

Why it matters. Big moves on heavy volume involve more investors than the same move on light volume.

Example. A 6% jump on three times normal volume suggests broad participation. (hypothetical numbers)

Watch out. High volume shows activity, not direction or whether the move will last.

In more depth. How it is calculated: Average volume of the last 5 days ÷ average volume of the last 60 days. In VEXA: Scored when above 1.5: +6 if the latest day was up, −6 if down.

Why it matters. It hints at how sensitive the stock has been to market swings.

Example. A beta of 1.5 means the stock has historically moved about 1.5% for each 1% market move. (hypothetical numbers)

Watch out. It is backward-looking and can change; it says nothing about company-specific risk.

In more depth. How it is calculated: Statistical sensitivity of the stock's returns to the market's returns (from Yahoo Finance). In VEXA: A beta above 2 or below 0.5 appears as a note in the factor list. It does not change the score.

Why it matters. Cash cushions falls but does not take part in rises.

Example. With 35% in cash, a 10% market rise lifts the portfolio by only about 6.5% (if the rest tracks the market). (hypothetical numbers)

Watch out. Whether cash is ‘too much’ depends on why it is held: emergencies and near-term spending are good reasons.

Why it matters. Concentration magnifies both gains and losses from those few bets.

Example. A holding at 25% of a portfolio that falls 40% costs the whole portfolio 10%. (hypothetical numbers)

Watch out. Concentration is not automatically wrong; whether it suits someone depends on their goals, horizon and tolerance for losses.

Why it matters. Holdings with low correlation diversify each other better.

Example. Two bank stocks often have a correlation near +0.8; stocks and short-term bonds are usually much lower. (hypothetical numbers)

Watch out. Correlations change, and in crises many assets fall together.

Why it matters. It reduces the damage any single company or industry can do to your portfolio.

Example. If one of 25 equal holdings falls 60%, the portfolio falls 2.4%; with 5 holdings it falls 12%. (hypothetical numbers)

Watch out. The number of holdings alone is not enough: ten tech stocks often move together, and diversification never removes market-wide risk.

Why it matters. It shows the worst loss someone who bought at the top would have felt.

Example. A portfolio that peaks at $12,000 and falls to $9,000 has a 25% drawdown. (hypothetical numbers)

Watch out. A small historical drawdown does not mean future losses will be small, especially over short histories.

Why it matters. It shows whether your choices added anything compared with simply owning the market.

Example. 24% against the benchmark’s 16% is 8 percentage points of excess return. (hypothetical numbers)

Watch out. One period proves little; check the dates, the risk taken and whether the asset mix is comparable.

Why it matters. Higher volatility means a wider range of outcomes and bigger temporary losses along the way.

Example. A yearly volatility of 40% means moves of that size within a year are not unusual for this stock. (hypothetical numbers)

Watch out. Volatility is not the same as the chance of losing money, and it measures past swings, not future ones. Calm periods can end abruptly.

In more depth. How it is calculated: True range = the largest of (high − low), |high − previous close| and |low − previous close|. ATR is the 14-day Wilder average. In VEXA: Displayed only. It is not part of the score.

Why it matters. It feeds Alpha Finder’s historical estimate of how stocks ranked similarly did against the S&P 500.

Example. A percentile of 90 means the stock ranked above 90% of the stocks analysed. (hypothetical numbers)

Watch out. It is relative to other stocks today and uses price factors only. A high rank has historically helped only modestly and often failed.

In more depth. How it is calculated: On each date every eligible stock gets a percentile rank on six price-based factors: 12-1 month momentum, 6-month momentum, 3-month strength versus the S&P 500, trend versus the 200-day average, low volatility and closeness to the 52-week high. The ranks are averaged and re-ranked into a 1–100 score. In VEXA: Used only on the Alpha Finder page and the Alpha Finder backtest. It is separate from the VEXA prediction score.

Why it matters. Ideas that failed in the past deserve suspicion.

Example. A rule tested on 2019–2024 data shows its simulated return, drawdown and trade count over those years. (hypothetical numbers)

Watch out. It is not proof: results depend on the dates, costs and how many variations were tried, and overfitting makes the best test look better than reality.

Why it matters. It is a simple first check on whether signals carry any information.

Example. 57 correct out of 100 recorded forecasts is 57% directional accuracy. (hypothetical numbers)

Watch out. It ignores the size of gains and losses, costs and the benchmark; compare it with how often prices rose anyway (the baseline).

Why it matters. It gives a quick first impression of how a batch of headlines is worded.

Example. “Acme beats estimates but cuts outlook” contains both positive and negative words, so it reads as mixed. (hypothetical numbers)

Watch out. It does not read the article and misses context, negation and sarcasm. Expected news is usually already in the price, and market-wide stories affect everything at once. It cannot tell you why a price moved.

In more depth. How it is calculated: VEXA counts words from a positive list (such as beat, surge, upgrade) and a negative list (such as miss, lawsuit, downgrade) in the headline and any summary the publisher provides. Score = (positive − negative) ÷ (positive + negative) × 100. Above +20 is labeled Positive, below −20 Negative, otherwise Mixed or Neutral. In VEXA: Counts for 20% of the combined prediction in the full analysis. Not used in Alpha Finder.

Why it matters. It shows the balance of positive and negative signals in a familiar format.

Example. 68% up means positive signals outweighed negative ones in the rules. (hypothetical numbers)

Watch out. Despite the percent sign, it is not a calibrated probability that the price will rise. Use the historical check to see how similar signals actually behaved.

Why it matters. It condenses many indicators into one number and lists every rule that moved it.

Example. A score of 70 means the rules found more positive than negative signals; the breakdown shows which. (hypothetical numbers)

Watch out. It is rules-based with weights chosen by people (50% technical, 30% fundamental, 20% news), not a trained model and not a probability. A high score does not mean the stock will rise or suits you.

In more depth. How it is calculated: Combined = 50% technical score + 30% fundamental score + 20% news score. This is limited to ±80, then Up % = 50 + 0.4 × combined, so it can only range from about 18% to 82%. Up % of 65 or more is labeled Bullish, 35 or less Bearish, otherwise Neutral. The VEXA Score (1 to 100) is the same limited score rescaled: 50 + combined × 0.625, so 50 is neutral, 100 is the strongest and 1 the weakest. In VEXA: This is the score shown on AI Predictions and Stock Analysis. It is a general stock score, not a forecast of beating the S&P 500.