Guide to Analysing Companies

C
CYCLICAL STOCK
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Dd
Daily trading limit
A limit imposed by many commodities and options
markets on the extent to which individual contracts may
rise or fall in value during a single day. Each stock ex-
change sets limits according to the sensitivity of the instru-
ment and the volumes traded. For example, the chicago
board of trade limits daily movements up or down in its
Treasury bond futures contract to two points ($200). The idea
is that this helps to maintain an orderly market.
Day trader
A retail investor who deals on the stockmarket via online
brokers. Day traders came to epitomise the boom (and subsequent
bust) of the dotcom era. Most make a living from trading in and
out of stocks on a daily basis, something that in the past only
professional investors with expensive equipment could do. Al-
though day traders can make money by selling the market short
(selling borrowed stock and then buying it at a lower price), it is
generally easier to prosper when stockmarkets are rising.
Dealer
An individual or firm acting as principal when buying or
selling securities. Unlike a broker, who acts on somebody
else’s behalf, a dealer trades on his or her own account and
bears the risk involved in a transaction. By law in the United
States customers must be told when they buy securities from a
broker who is acting as a dealer, because most financial-services
firms operate both as brokers and principals. (See also dual
capacity.)
Debenture
A long-term debt instrument which is often secured on the
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general creditworthiness of the issuer rather than on any spe-
cific asset. When a company goes bust and is liquidated,
debenture holders (like most other bond holders) take prece-
dence over ordinary shareholders in claiming a right to any of
the company’s remaining assets.
Debit card
A piece of plastic much like a credit card, except that it gives
the holder no credit. A debit card is passed through an elec-
tronic reading device at a point of sale and in this way debits the
holder’s bank account automatically (and immediately) with
the value of the sale. As with credit cards, banks usually charge
a fee to withdraw cash via a debit card from another bank’s
atm machine. Some banks also levy a surcharge for withdraw-
ing money from an atm abroad. Even so, it is still usually
cheaper to withdraw money via a debit card from a local atm
machine than to change one hard currency into another.
A borrower is servant to the lender.
Proverbs 22:7
Debt
An obligation of one person to pay something (usually money)
to another.
There are but two ways of paying debt: increase of industry in raising
income; increase of thrift in laying out.
Thomas Carlyle