Investment Analysts — Amy Loftis

Price-to-Earnings Ratio (P/E)

Stock price ÷ earnings per share

Sharpe Ratio

Risk-adjusted return.

Formula:
(Return – risk-free rate) ÷ standard deviation

You don’t need to calculate it manually, but know:
Higher Sharpe = better return per unit of risk.

Alpha

Investment performance above benchmark after adjusting for risk.

Positive alpha = outperforming benchmark.

Beta

Measures volatility relative to market.

• Beta = 1 → market-like

1 → more volatile

• <1 → less volatile

Standard Deviation

Measures volatility/risk.

Higher standard deviation = more variable returns.

Required Minimum Distribution (RMD)

Mandatory retirement account withdrawals.

General formula:
Retirement account balance ÷ IRS life expectancy factor

You don’t need the table memorized.

Just know:
Traditional retirement accounts eventually require taxable withdrawal

Wallet Share

% of client assets/business held at the firm.

Asset Allocation

How a portfolio is divided among:

• equities

• fixed income

• cash

• alternatives

This is foundational.

Strategic vs Tactical Allocation

Strategic

Long-term target mix.

Example:
70% stocks / 30% bonds

Tactical

Short-term adjustments based on market outlook.

Example:
Temporarily overweight tech.

Duration

Measures sensitivity to interest rate changes.

Higher duration:

• more interest rate risk

Rule:
Rates up → bond prices down.

Yield Curve

Relationship between short-term and long-term interest rates.

Normal:
long-term yields > short-term yields

Inverted curve:
often signals recession concerns.

Credit Spread

Difference between Treasury yields and riskier bond yields.

Wider spreads =
markets nervous about risk.

Basis Points (bps)

Finance people constantly use this.

1 basis point = 0.01%

100 bps = 1%

Example:
“The Fed raised rates 25 bps.”

Relative Performance

How investments perform versus benchmark.

Correlation

How investments move relative to one another.

Lower correlation =
better diversification potential.

Hawkish

Fed focused on inflation.
Usually means:
higher rates.

Dovish

Fed focused on economic growth/employment.
Usually means:
lower rates.

Risk-On

Investors buying stocks/high-risk assets.

Risk-Off

Investors moving defensive.

Magnificent 7

Big tech leaders:

• Apple

• Microsoft

• Nvidia

• Amazon

• Meta

• Alphabet

• Tesla

This term comes up constantly right now.

Tax-Loss Harvesting

Selling investments at losses to offset taxable gains.

Very common wealth-management strategy.

Monte Carlo Analysis

Probability-based retirement projection modeling.

Large Cap Stocks

Usually:
$10B+ market cap

Examples:

• Apple

• Microsoft

• JPMorgan Chase

Traits:

• more stable

• slower growth than smaller firms

• widely followed

Think:
“Blue-chip household names.”

Mid Cap

Medium-sized companies.

Usually:
$2B–$10B market cap

Traits:

• balance of growth + stability

• often still expanding aggressively

Kind of the “teenager stage” between startup and giant corporation.

Small Cap

Smaller public companies.

Usually:
under ~$2B market cap

Traits:

• higher growth potential

• higher risk/volatility

• less analyst coverage

These can explode upward…
or implode spectacularly.

Growth Stocks

Companies expected to grow earnings quickly.

Examples often include:

• tech

• AI

• innovative industries

Traits:

• higher valuations

• investors pay for future expectations

• often reinvest profits instead of paying dividends

Example vibe:
Nvidia before everyone’s dad started talking about AI at dinner.

Value Stocks

Companies viewed as undervalued or more established.

Traits:

• lower valuations

• often pay dividends

• steadier/slower growth

Examples:

• banks

• industrials

• mature companies

Think:
“Reliable cash-flow businesses.”

International

Outside the U.S.

Can include:

• developed markets (Europe, Japan)

• emerging markets (India, Brazil, etc.)

Why invest internationally?
Diversification and exposure to global growth.

FIXED INCOME (Bonds)

You are lending money instead of owning part of a company.

Bondholder = lender
Stockholder = owner

Generally:

• lower risk

• lower expected return

• income-focused

Treasury Bonds

Issued by the U.S. government.

Examples:

• T-bills

• Treasury notes

• Treasury bonds

Considered:
among the safest investments in the world.

Why?
Backed by U.S. government.

Municipal Bonds (“Munis”)

Issued by:

• states

• cities

• local governments

Used to fund:

• schools

• roads

• infrastructure

Major feature:
interest is often tax-advantaged.

Wealth management people LOVE munis for high-income clients.

Corporate Bonds

Issued by companies.

Examples:

• Apple bond

• Disney bond

Usually pay:
higher yields than Treasuries because there’s more risk.

Investment-Grade Bonds

Higher-quality borrowers.

Lower default risk.

Ratings typically:
BBB- or higher.

Think:
“Safer corporate debt.”

High Yield Bonds (“Junk Bonds”)

Lower-quality borrowers.

Higher default risk.

BUT:
higher interest payments.

Why?
Investors demand more compensation for risk.

ALTERNATIVES (“Alts”)

Basically:
investments outside traditional stocks and bonds.

Usually:

• less liquid

• more complex

• potentially higher-return or diversification-focused

Private Equity (PE)

Investing in private companies.

Often:
buying companies, improving them, then selling later.

Examples:

• Blackstone

• KKR

• Apollo

Traits:

• long lock-up periods

• higher fees

• illiquid

• potentially high returns

Hedge Funds

Privately managed investment funds using advanced strategies.

Can:

• short stocks

• use leverage

• trade derivatives

• pursue niche strategies

Goal:
often “absolute return” rather than just tracking the market.

Not literally “hedging” all the time despite the name.

Private Credit

Non-bank lending.

Instead of banks lending money,
private investment firms lend directly to businesses.

Huge growth area right now.

Why?
Banks tightened regulations after 2008.

Commodities

Raw materials/resources.

Examples:

• oil

• gold

• wheat

• natural gas

Often used as:

• inflation hedge

• diversification tool

Very macroeconomics-driven.

Questions for Amy Loftis

• “How does Truist balance active and passive strategies in portfolios?”

• “What factors matter most when evaluating outside managers?”

• “How has client demand changed over the last few years?”

• “How much of the role is market analysis versus advisor support?”

• “What skills make analysts stand out long term?”

Those sound mature and genuinely interested without trying to cosplay as a hedge fund PM after sophomore year finance classes.