An Investing Glossary
Ask: The price at which selling investors are willing to sell their shares to buyers
Averaging Down: Buying more shares of a stock you already own, and getting the new shares at a lower price because the stock has been dropping.
Bear Market: Market where prices are falling and expected to fall further in the short to medium term.
Blue Chip Stocks: Companies that are considered safe and conservative investments, with low downside risk.
Bid: The price that buying investors are willing to pay for shares.
Bull Market: Market where prices are on the rise and expected to continue this trend in the short to medium term.
Delistings: When a stock ceases to be traded by a stock exchange it is considered delisted. This may be due to a failure to meet the parent exchanges listing requirements, movement to another exchange, or begin taken over by another company.
Dividend: The cash distribution to shareholders out of company profits, usually paid twice yearly. Not all companies pay dividends.
Dividend Yield: dividends per share paid over the most recent year expressed as a percentage of the current share price.
Dividend Cover: earnings per share divided by dividends per share indicating how much of the profit is being paid out to shareholders or how little profit is being reinvested in the company. Cover of less than one indicates that the company is dipping into reserves to keep up dividends
Earnings per Share: Company profits over the most recent year divided by the number of shares the issued.
EBIT: Earnings before interest and tax.
EGM - Extroadinary General Meeting: any meeting other than the annual general meeting of a company called during the year.
ESOP: Employee Share Ownership Scheme.
Flotation: The issuing of shares in a company to the public for the first time on a stockmarket.
Fundamental Analysis: A method of researching a stock that looks at fundamental factors, which include; financial results, financial ratios, industry conditions, press releases, and more.
Hedging: Diversifying exposure or managing risk through opposing investments.
Holding Company: A company that controls one or more other companies.
IPO: Initial Public Offering. See Flotation.
Limit Orders: the exact price you are willing to accept per share.
Liquidity: The degree of ease with which an asset can be turned into cash. A 'liquid market' is one with many buyers and sellers where dealing is usually easier and shares have a narrow 'Bid- Offer Spread'.
Market Capitalisation: A method of calculating a companies’ worth - the number of shares of a company times the price per share.
Market Maker: a middleman who is prepared to buy and sell shares at prices determined by them. The market makers also determine the 'Market Size' and 'Bid- Offer spread'.
Market Orders: buying or selling shares of a stock without providing a price per share that you are willing to accept. You will get the best available price at the time your order reaches the market.
Market Size: an indicated number of shares in which a 'Market Maker' is willing to make a transaction at the 'Bid' and 'Offer' prices they are quoting.
Mid Price: The mid point between the 'Bid' and 'Offer' prices.
Net asset value: the company’s total assets minus its total liabilities.
Nominal Value: the 'value' of a security as printed on a share certificate, e.g. 'Ordinary 10p Shares'.
Offer Price: The price shown by a 'Market Maker' at which an investor may buy shares, so long as the number of shares does not exceed the indicated 'Market Size'.
OTC (Over The Counter): Over-The-Counter stocks refers to any issue that is not traded on a regulated exchange.
Partial Fill: When you trade only a portion of the shares you had intended.
PBT: Profit before tax.
Penny Shares: For the purposes of this website we treat panny shares as those with a price of less than £1 OR a market cap. of less than £100 million.
Portfolio: A collection of investments held by an individual, which may consist of a mixture of shares, bonds, property and cash.
Pink Sheets: stocks that trade without any reporting requirements or regulation, and have no responsibility to the investor.
Price earnings (P/E) ratio: The current share price divided by earnings per share.
Registrar: the person responsible for keeping a register of shareholders and issuing certificates.
Rights Issue: a company offers new shares, on a pro rata basis, to its shareholders at a set price.
Risk Tolerance: The amount of uncertainty/speculation you are willing to accept with your investments. If you are prepared to lose your money but want to try and reap some massive returns, you have a high risk tolerance.
Scrip Dividend: a dividend that is automatically paid as an issue of new shares instead of cash.
Scrip Issue: an issue of free shares to the existing shareholders of a company by capitalising the company's reserves.
Share Split: if the share price of a company's shares has become large, due to the growth of its value, companies will often issue additional shares for a lower value so that they become a more reasonable size. There is in effect no 'real' difference in the value of the new shares to the old shares.
Shell Company: a company that is incorporated but has no significant assets or operations.
Short-Selling: selling in the hope of buying them back at a later date for a profit.
Small Cap Stocks: companies who’s market capitalisation is less than a certain value, usually £100 million.
Spread: The difference between the bid price and the ask price of a share.
Stag: and investor who applies for a new issue in the expectation of realising a profit as soon as dealing in shares begins.
Stamp Duty: a government tax on the purchase of shares.
Standard Deviation: a measure of the extent to which the share price has varied around its average level during a past period and used as a measure of capital risk. A high standard deviation shows relatively high risk. A low standard deviation shows relatively low risk.
Takeover: When one company buys out the shares of another, with the purpose being to aquire and run the other.
Technical Analysis: A method of stock research that looks at patterns on the trading chart in an attempt to predict future prices.
Ticker Symbol: The letter combination that represent a paticular stock. For instance VOD.L refers to Vodafone.