A to Z guide to a foreign language — finance and stockmarket talk

April 23, 2011 at 2:14 pm | Posted in Uncategorized | Leave a comment

The jargon used in the financial markets is a language all of its own. So we thought a quick A to Z might be handy for the next close encounter with your investment adviser

A Acid test. No it’s not a segment from MasterChef, it’s the measure of how quickly a company can meet short-term debts. It’s also for Air Pocket Stock, a stock that falls sharply after bad news.

B Broker and that’s what they’ll make ya as the saying goes. It’s also for Barefoot Pilgrim, an unsophisticated investor who often losses their way, and Bugs, which is a basket of unhedged gold stocks.

C Cage, the department within a broking firm that receives and distributes physical securities. It also stands for Convertible preferably red, sleek and very fast but the reality is this is a bit of a clunker stock or bond that later converts to an ordinary share.

D Dead Cat Bounce A Wall Street term that means a small, temporary recovery in the price of a dying stock. Its also for Dog and Pony Show, slang for financial road show. Day Trader is a more socially acceptable form of gambling.

E Eating Stock this is when you must buy a stock not because you want it but because you’re forced to. It also stands for EBIT “Earnings before interest and tax (some say irregularities and tampering).

F Fine. “A fine is a tax for doing wrong. A tax is a fine for doing well” – Anonymous. F also is for FOK, yes, be careful how you pronounce it, which stands for fill or kill, meaning to buy or sell a stock, which if it is not done immediately the order is cancelled.

G Gazunder. When you agree to buy a house or asset and then cut your offer just before contracts are finalised. It’s the first cousin of Gazumping, when the seller accepts your offer but at the last minute takes a higher one from someone else.

H Haircut, the amount of money that is lost between buying and selling. It also stands for Happiness. “What’s the use of happiness? It can’t buy you money” US comedian Henny Youngman.

I Institutional investor, the big guns of the investment game like fund managers and banks. It is also for In The Tank which is share market speak for prices have finished the day lower or an individual stock price is dropping rapidly.

J Jeep. Jeeps are mortgages that start off with reduced monthly payments and then gradually increase, in other words, graduated payments, also known as GPs. It is also for Jobber which is not a hit man for the mob but a wholesale buyer who specialises in small or odd job lots.

K Killer bees. Those who help a company to fend off an unwelcome takeover. Often investment bankers who devise nasty strategies to make the target difficult to acquire. K also is for Kangaroo Bond which is when a foreign-based company issues bonds in Australian denomination.

L Long legs nothing to do with fashion models or race horses. A long leg in finance speak means the part of an option play that represents a long call option. It also stands for LIFO, last in first out a reference to counting stock and inventory as it is sold, and it also relates to those first to go in a mass sacking or redundancy.

M Moral-suasion, a phrase in money markets to describe persuasion through influence rather than coercion. It’s also for Mineral rights. “The meek shall inherit the earth but not the mineral rights” billionaire J.P. Getty.

N Naked option put away your binoculars, a naked option is a type of share market option that is held on its own and not used to hedge a holding in another asset or option. It’s also for Noise, market fluctuations that are not relevant in its overall direction.

O Out the window, which means a very successful share issue that flew out the window to investors waiting to buy them. It is also for Ostrich, slang for investors who deliberately ignore important information about a company or situation.

PPE ratio the most common way analysts value a stock. It’s a stock’s market price divided by its earnings per share. P is also for Poison Pill, a tactic where a financial disaster will be triggered by a company’s existing management if someone else takes it over.

Q Quicksand , a fire sale of assets or attempt to raise new capital in a rapidly deteriorating market. It’s also for Quid Pro Quo, from the Latin meaning something for something. One party provides a service and in return gets another service instead of cash.

R Rehypothecation which can frequently lead to hypotension and hyperventilation. It’s when brokers pledge the shares in a customers’ margin account to a bank as collateral for the brokers’ loans.

S Skirt length. This relates to finance theory when skirt lengths are high, stock prices are high. When skirt lengths are low, stock prices are low. S is also for Standard and Poor’s, a credit rating agency.

T Terminal bonus, it sounds fatal and it usually is. This is the name given to a bonus payment that comes at the end of an insurance investment.

U Umbrella fund a type of trust with lots of sub-fund, so investors can often switch between the sub-funds without having to pay exit and entry fees.

V Voodoo Economics, a term referring to the emphasis on making it easy for people to produce goods, such as lower taxes and higher incentives, originally coined by former US president George W. Bush.

W Widows, orphans. These are low-risk stocks which keep paying a dividend every year. Widows and orphans can rely on them.

X Ex. There are a lot of exes and I’m not just talking divorce, but all usually mean money has been paid out. XD means ex-dividend, X-dis means ex-distribution, XR is ex-rights.

Y Yoyo, a stock that fluctuates wildly. Y is also for Yak, a US phrase to describe what you do into a bucket when you realise your shares plunged.

Z Zombie Banks, banks which act and look like they are solvent but are actually dead. It’s also for Zero and Zippo the real return from many superannuation funds during the past three years.

Original story here

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THE NEWS

Odd news from around the world

Penguins find love with keeper’s boots: “It’s spring in Germany, love is in the air and a young penguin’s fancy turns to thoughts of… rubber boots. And not just any boots – black and white ones that apparently look like a lady penguin lying on her stomach. In fact, so many of the male penguins at Sea Life Konstanz became infatuated with their keeper’s boots that he was forced to switch footwear to blue ones, Germany’s The Local reported overnight. “For three days I’ve been going with blue rubber boots in the enclosure,” said keeper Dennis Kubler of his attempts to get the penguins to turn their amorous attentions toward each other instead of his feet.”

Rich tastes: Termites dine on a fortune in banknotes: “Police say termites have devoured currency notes worth 10 million rupees ($200,000) in a steel bank chest in northern India. Officer Navneet Rana says the bank manager discovered the damage when he opened the reinforced room in an old bank building on Wednesday. Rana told The Associated Press: “It’s a matter of investigation how termites attacked bundles of currency notes stacked in a steel chest.” Rana said the termites had damaged bank furniture and documents in the past. The money was put in the bank chest in January. Rana says police have registered a case of negligence by bank officials in Barabanki, a town 30km southwest of Lucknow, the Uttar Pradesh state capital.”

Found: the world’s least stressful job: “Stressed out by your job and looking for a change? Chances are you work in media, and maybe should consider something in health care. A new US report on the most, and least stressful professions, showed that more than half of the 10 least-stressful jobs are in the health care, led by audiologists, who assess and treat hearing disorders. “Professions that involve low stress have very little danger and minimal physical demands,” said Tony Lee, publisher of careercast.com, a jobs website which compiled the report. Other jobs in the field that fill the bill for low pressure and competition, with shorter work weeks, include dietitian, dental hygienist, speech pathologist, occupational therapist and chiropractor.”

With rare vinyl records selling for up to £8,000, do you have a fortune sitting in your attic?: “It’s time to dig out those dusty old LPs as an increased demand for rare vinyl has sent prices spiralling. Original pressings of classic recordings are now being seen by experts as safe long-term investment opportunities. Record Collector magazine has compiled a list of the best 51 records for investors and at the top is the ultra-rare withdrawn Sex Pistols single God Save the Queen on A&M Records. The label famously dumped the band before it was released and destroyed most of the copies, making it worth £8,000 today on the rare occasions a copy turns up. The Beatles debut Please Please Me is in second place at £3500, although pristine copies are believed to be worth much more.”

Helping hound: The pet who can do household chores: “Jesse the Jack Russell helps around the house with pretty much every household chore and can even put his own dog bowl into the dishwasher. His owner, Heather Brook, based in Hollywood, has trained him how to untie her shoelaces, take off her socks and put them in the washing machine. In fact, so amazing is Jesse that he has also been trained how to stretch before he does exercises including step aerobics. His owner, Ms Brook said on her website: ‘My relationship with Jesse is that of a best friend, teacher, and guide. All of Jesse’s education has been done by me. We work together as a team to achieve all of our goals.”

And don’t forget to catch up with all the Strange Justice before you go.

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