GENERAL
FUN
STUFF
Extract from Your Sharemarket Jargon
A pocketguide jam-packed with all my
favourite tricks, traps, shortcuts and definitions for
investing in ordinary shares on the Aussie
sharemarket...
Extract from the
intro for the skeptical...
I hope you’ll soon realise that investing in ordinary shares is a
truckload less complicated than many investment advisors would prefer you
to believe. In fact, it can be exciting, fun and profitable. So quit
putting the topic into your too-hard basket. Join the investors who are
making great returns with very little effort — in my case taking as little
as 20 hours a year to manage my portfolio.
Work it out for
yourself:
Would investment advisors who earn their livelihoods
from your wallet prefer to:
a)
point
you in the direction of free knowledge to help you do things for
yourself
b)
mystify
the industry so you need to pay them to take care of your portfolio for
you
c) sell you complicated and expensive software/subscriptions up to $22,000 each?
It’s not betting. As a conservative investor, I’ve stuck mainly to the safest tips for ordinary shares, rather than going too deeply into the riskier and more complicated lingo behind futures, warrants and options etc, which shouldn’t be the domain of the L-Plate investor anyway.... aiming for 10% to 15% return per year but usually doing much much better...
May knowledge, not greed, become the cornerstone to future wealth.
Sample definitions:
At Discretion: Your stockbroker calls this the instruction you give them when you tell them to buy/sell shares at the best price they think they can get for you (within a week, usually). You don't have to use the term specifically when you speak to your broker, but if you did, you might say something like: 'Hi, Fred. Can you buy a thousand shares of XYZ for me this week. No rush. At discretion will be fine...'
Beta Factor: An indicator of an individual stock's volatility, based on how much the price fluctuates on a regular basis. The market is assumed to have a beta of 1, therefore a share price with a beta of 3 would move 3 times as far in either direction as the rest of the market. Beta factors are therefore used by some professional portfolio managers in limiting the risk levels of the shares in which they choose to invest. Beta factors are not widely available to the general public however, nor are they really needed in making your final trading decisions (unless you enjoy getting analytical). You can see how volatile a stock is by simply looking up the chart of sale prices for it on the ASX website at www.asx.com.au by entering the company's ASX code and clicking on 'charts', when the individual statistics appear in a separate window.
Green Chip Shares:
Shares in a growing company which has begun to make good
profits and is returning high dividend yields to shareholders. Green chip
shares are usually priced lower than blue chip shares and can be either
cyclical or experience greater annual price fluctuations. Many green chips
that have fit my 10 Step Checklist from Your Money:Starting Out &
Starting Over have gone on to become blue chip shares (market
leaders) even though they still experience larger cycles in their share
price – compared to established blue chips - throughout the year. (Eg.
Flight Centre, Qantas,
To
help remember the difference between Blue and Green Chip Shares, try
thinking that:
Green
Chip Shares are Green like trees:
They start small, have cyclical seasons of growth, bear the sweetest fruit
in good times, die back a little at least once every season, and while
some may die completely in sudden climate changes, most will thrive with
proper long term management and care.
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Special thanks to Ben Cooper
for designing the anitabell.com logo used on this website,
as well as
taking the time to teach me how to make those really
cool book covers spin! Thanks Ben!