Glossary

Term Definition
Episode Occurs when asset prices move for non-fundamental reasons, or in the context of behavioural finance, when market prices may be driven by emotion more than rational analysis and an investment opportunity can therefore arise.
Macro Refers to the performance and behaviour of an economy at the regional or national level. Macroeconomic factors such as economic output, unemployment, inflation and investment are key indicators of economic performance.
Return The gain or loss earned on an asset in a particular period, often quoted as a percentage.
Risk The chance that an investment's  return will be different to what is expected. Risk includes the possibility of losing some or all of the original investment.
Risk premium The difference between the return from a risk-free asset, such as a high-quality government bond or cash, and the return from an investment in any other asset. The risk premium can be considered the 'price' or 'pay-off' for taking on increased risk. A higher risk premium implies higher risk.
Valuation metrics
Measures used for determining the current worth of an asset or company.
Volatility The degree to which a given security, fund, or index rapidly change. It is calculated as the degree of deviation from the norm for that type of investment over a given time period. The higher the volatility, the riskier the security tends to be.