Guide to Analysing Companies

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Stockmarket
An organised market in securities, whether on an official
stock exchange or over the counter. In recent decades,
there has been a huge growth in the volume of securities traded
on exchanges around the world. Volumes generally rise most
strongly during bull markets (periods when share prices are
rising strongly).
Emotions are your worst enemy in the stockmarket.
Don Hays
Stockmarket sector
A particular group of stocks usually found in one industry
(such as airlines, chemicals, media or support services). ana-
lysts generally cover industries or stockmarket sectors, so
investors interested in the shares of a certain type of company
can usually find information that will help them decide what to
buy. Some unit trusts (mutual funds) also specialise in
sectors of the market. By investing in exchange traded
funds, investors are able to buy the equivalent of a diversified
portfolio of companies in a particular sector.
Investing is simple, but not easy.
Warren Buffett
Stock split
The issuing of free extra shares to existing shareholders ac-
cording to some fixed proportion; two for three, for example.
This does nothing to add to the value of the existing equity; it
merely makes a greater number of shares represent the same
stake in the company. What was represented by three shares is,
after the split, represented by five. (See also scrip issue.)
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Stop order
An order to a stockbroker to sell (or buy) shares in the
future when they reach a particular specified price, called the
stop price. Such an order is given by a client either to protect a
profit or to limit a loss. Suppose an investor buys shares at
$1 each and they rise to $5. Everybody says sell, but the owner
thinks they might rise higher. The owner hangs on to them but
gives a stop order to the broker to sell should they fall to $4,
so protecting a profit of $3 a share. A snag with stop orders is
that, in volatile markets, they can sometimes trigger a sale too
early.
Straddle
The purchase by a speculator of an equal number of put
options and call options on the same underlying stock,
stock index or commodity future. Although each con-
tract may be taken out separately, in theory they should all have
the same maturity date. If speculators can get a perfect (or
near perfect) match, then they cancel out their risk (and in the
process cease to be speculators).
Street name
The registration of shares in the name of a broker without
the real owner taking delivery of them. The use of a street name
makes it easier subsequently to sell the shares if the real owner
intends to sell them quickly. Another advantage is that the
shares (or proof of their ownership) do not have to be shipped
back and forth after each deal.