Glossary: terms starting with N
12 terms from NAV financing to Nowcasting, briefly explained and with a source where possible. All terms from A to Z
- Negative bubble (Anti-bubble, Negative bubble (LPPLS))
The mirror image of a speculative bubble: the price falls faster and faster, driven by panic and herding. In the LPPLS model the trend parameter B is then positive; the end can be a powerful upward reversal.
Source: Demirer et al. (2019)
More: Speculative bubbles: what they are and how the LPPLS model detects them · Methodology: Bubble indicator (LPPLS): methodology
- Nelson-Siegel model (Svensson model, Nelson-Siegel-Svensson)
Describes the entire yield curve with a few parameters for level, slope and curvature. The Svensson extension with a second hump is used by many central banks, including Germany's Bundesbank.
Source: Nelson and Siegel (1987); Svensson (1994)
- Net asset value (NAV, NAV per share)
The value of all of a fund's assets minus its liabilities, per unit. It is determined once a day; an ETF's market price fluctuates around it.
- Net liquidity (Fed net liquidity)
An approximation of liquidity in the US financial system: the Fed's total assets minus the Treasury's account at the Fed minus reverse repos. When it rises, more money tends to flow into markets.
Methodology: Sentiment: methodology for the fear and greed index, put/call ratio and COT
- Net return index (Net total return, NTR index, Net index)
An index variant in which dividends are reinvested after deducting a withholding tax assumed at a flat rate. Many indices use the rate for investors without treaty benefits; an ETF with a more favorable domicile can therefore beat its index.
- Net short position (Net short, Short position disclosure, Short selling disclosure)
A person's short positions in a company's shares minus their long positions in them, as a percentage of the issued share capital. In the EU it must be reported to the regulator from 0.1% and published from 0.5%, and then at every further 0.1 percentage points, including when it falls below a threshold.
Example: 650,000 shares short and 120,000 long with 100 million shares in issue: 0.53%, so it must be reported and published.
Source: Short Selling Regulation (2012)
More: Short selling, hedge funds and hedging: types and how they work
- Newey-West standard errors (HAC standard errors)
Standard errors that take autocorrelation and changing dispersion into account. Indispensable for regressions with overlapping periods, e.g. 10-year returns in monthly steps.
Source: Newey and West (1987)
- Night lights data (Night lights, Nighttime lights)
The brightness of the earth at night from satellite images, used as a measure of economic output. It mainly supplements official statistics where these are weak, and allows estimates for regions and cities.
Source: Henderson et al. (2012)
More: Alternative data: job ads, Reddit, X, satellites and card payments
- Normal distribution (Gaussian distribution, Bell curve)
A bell-shaped distribution determined solely by its mean and standard deviation. About 68% of values lie within one standard deviation and about 95% within two. In reality, returns have fat tails.
More: Skewness and kurtosis: why market crashes are more frequent than the normal distribution says
- Notice period (Redemption notice period, Notice requirement)
The time between the redemption request and the redemption date. The longer it is, the more a semi-liquid ELTIF may pay out per date under the EU standards, because it has more time to sell assets.
Example: Quarterly redemption: without notice, at most 25.0% of the liquid base per date; with three months' notice, 33.3%; with six months, 50.0%.
- Nowcasting (Nowcast, Real-time estimation)
Estimating the present or the very recent past before official figures are published, using quickly available data such as ship movements, surveys or payments. AIS data are suitable, for example, for nowcasting seaborne trade.
Source: Arslanalp et al. (2019); Cerdeiro et al. (2020)
More: Ship tracking data and satellite images: what they reveal about commodities
Brief, simplified explanations; not investment or tax advice.