Portfolio risk versus returns: the statistics

This will help explain the statistics terminology used in the forum. Open to all wiki editors. From this thread: Understanding all the talk about "tails"

Caveat: This is an advanced investing topic. Past performance does not predict future performance.

Those with an investing background may use statistical distributions to characterize a portfolio's past performance. The terminology and context of these distributions is described below.

Tails

 * Long tail
 * Left, right tail
 * Fat tail

Barbell
Bonds: An investment strategy that concentrates holdings in both very short-term and extremely long-term maturities. When plotted on a timeline, the shape appears as a barbell. The reasoning behind this strategy is that it allows one portion of the portfolio to achieve high yields while the other portion minimizes risk.

Stocks: An investment strategy that concentrates holdings in both large-cap and small-cap funds, which minimizing mid-cap funds. When plotted against market capitalization (market "cap"), the shape appears as a barbell.

Swans

 * The Black Swan (Taleb book)


 * White swan
 * Gray swan
 * Black swan