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Learn are a few of the important terms you need to know as an investor. 1. What is a stock? Shares in a company. A way to raise capital. It creates wealth. Increases in value if growing earnings. Risk is limited to amount invested. Example of Tory Burch - wants to open boutiques worldwide and sells stock in an IPO - Initial Public Offering - to do it and raise capital for boutiques, inventory, etc. 2. What is a bond? An IOU; debt from a corporation, government or municipality. Supposed to be less risky than stocks. Considered more conservative investments. Moves inversely to interest rates. Cycles in interest rates run about 30 years. 3. What is asset allocation? The percentage allocated to stocks and bonds, a virtual pie chart. The most important factor in Modern Portfolio Theory; a finding by Henry Markowitz, Nobel Prize Winner. Asset allocation is where the majority of returns come from. A rising tide lifts all boats. It’s not from stock picking or timing the market. It’s from the choices you make about wh