rallying - What is a rally in trading? A rally is a period in which the price of an asset sees sustained upward momentum. Typically, a rally will occur after a period in which prices have been flat, trading in a narrow band, or experiencing a decline.
stochastic oscillator -Instead of measuring price or volume, the stochastic oscillator compares the most recent closing price to the range for a given period. ... The stochastic oscillator is calculated by subtracting the low for the period from the current closing price, dividing by the total range for the period, and multiplying by 100.
Income shares - Pay larger dividends, compared to other types of shares, that can be used to generate income
without selling the shares, but the share price generally does not rise very quickly.
Blue chip shares - Issued by companies with long histories of growth and stability. Blue chip shares usually pay regular
dividends and generally maintain a fairly steady price trend.
Growth shares - Issued by entrepreneurial companies experiencing a faster rate of growth than their general
industries. These shares normally pay little or no dividends because the company needs most or all of its earnings to
finance expansion.
Cyclical shares - Issued by companies that are affected by general economic trends. The share prices tend to fall
during periods of economic recession and rise during economic booms. For example, mining, heavy machinery, and
home building companies.
Defensive shares - The opposite of cyclical shares. Companies producing staples such as food, beverages,
pharmaceuticals and insurance issue defensive shares. They typically maintain their value during economic
downturns. primary market - the listing of companies by issuing shares though an initial public offering IPO
Secondary market - The market place where you can buy or sell shares with other investors.
Liquidity - ability to convert an investment into cash
Index - In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current price levels with past prices to calculate market performance. It is computed from the prices of selected stocks
Index fund - An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index. Index funds offer more choices and lower costs, while a target-date fund is an easy way to invest for retirement without worrying about asset allocations
Target date fund - Target date funds are a mix of stocks and bonds in a single fund that automatically become less risky over time. “They're a simple way of investing with a single fund that adjusts the asset allocation mix over time to minimize risk
Dividend - Distribution of a companies net profits to shareholders
Franked dividents - the divident plus imputation credits
Imputation credits - a tax offset or a reduction in the amount of tax to be paid.
Divident re-investment plans (DRP)- an alternative to cash dividents that allows shareholders to purchase new shares instead of recieving a cash dividend.
float - the term used when a company seeks to raise money by offering its shares to the public for the first time
Listed Managed Investments (LMI) - privde investors with an interest in a professionally managed portfolio of assets. LMIs can offer diversification that can reduce risk without sacrificing returns.
Ordinary shares - The bulk of a company's basic ownership as the most common share traded. Shareholders benefit from distirubtion of dividends
Preferences shares - Are entitled to a preferred dividend paid before the ordinary dividend is announced. often paid at a fixed rate.
Trust units - In the form of property trusts and equity trusts. Units in listed trusts are similar to ordinary shares except that a full distribution of profit is made to unit holders instead of a dividend.
Contributing shares - Shares that are not fully paid for up front.
Bonus issues - Shares issued free of charge to shareholders.
Rights issues: Entitles shareholders to take up additional shares at a below market price with no brokerage cost
Index - measure of performance over time. A sharemarket index is a measure in the change in price of a basket of shares.
Accumulation index - An index that takes into accound both price movements and dividends Good idex: Low valitily, strong performance and high liquidity
GICS - Global Industry Classification Standard, A smaller component of a broad market index that gives you a better picture of which area of the market is driving its performance.
Direct investment - you are purchasing the share.
Indirect investment - shares are managed by someone else and acted on your behalf
Gearing - borrowing
Negative gearing- occurs when money is borrowed to invest in an incole producing asset and the income received from that asset is not sufficient to cover the interest payment on the money borrowed.
Neutral gearing - income received from an asset approximates the interest payment of the money borrowed
Positive gearing: Asset and the income received for that asset exceeds the interest payment of what was borrowed.
Margin lending - the term used for borrowing money from a broker or bank to buy shares and using those shares as collateral for the loan.
Loan to value ratio (LVR) - the proportion of the total investment a lender is prepared to advance for an investment in the sharemarket varies. The average value is about 35% so you will need to contribuye 65% in cash or shares already in your possesion
Fundamentals analysis - A detailed examination of the companies competitors, the industry or sector it is a member of and the broader economy. Used to select a company to invest in
Technical Analysis: Study of the past price movements of an individual share on the market as a whole. Charts are a key tool used in technical analysis
Financial reports - What company owns (Assets), Liabilities (What company owes), Equity, Income and expenses, including gains and losses, Other changes in equity, Cash flows. Balance sheet, income statement, statement of changes in equity, cash flow statement, notes.
Financial ratio analysis: Used to compare the performance of a company to its previous results, to its competitors, and to industry averages.
Dividend per share: Total divident paid divide by number of shares on issue. If not paid with current year's earnings consecutively over several years, check the payout ratio (dividend cover ratio) by obtaining the earnings and dividing it by the dividends paid.
Dividend yield: Dividends per share divide by share price.
Franking: The amount of tax the company has paid which attaches to the share.
Earnings per share: Shows the growth in earning from one year to the next and the relative size of earning to dividends. Price earnings ration (net profit after tax(NPAT) divide by number of shares on issue.
Price earnings ratio: Shows how many year it will take for your purchase to be covered by earnings. Share price divide by earnings per share. Low PE suggests that market expects no growth or lower profits. Compare the PE ratio of a company you are interesting in to that of other companies in the same sector and the market as a whole.
resitance line: A line that connects all of the highs in a trend. Market resits going higher because there are sellers who enter the market to sell more shares when the share trades at that price. The weight of their cumulative selling prevents the price from rising. Technical analysis see a break of resitance as a buy singal
Support line: Each time the price drops to this line a buyer emerges that is of sufficient volume to aborb the selling and prevent the price from falling through. If so, the buying has dried up and the selling is continuing at a lower price. This selling at a lower price suggests that sellers are becomming more aggresive.
Rising Volume: Rising volume at the time of a break of support or restiance is generally regarded as further confirmation that the break is legitimate and the price is expected to continue moving in the same direction
Moving average: An average of the closing prices for the last n days