Glossary

SEATS

The screen-trading system adopted by the ASX.

Second Line

Smaller than blue chip companies, second line companies have a market capitalisation of less than $1billion.

Security

General term for the instruments that signify ownership of an asset class. Units, shares or bonds are all types of ‘security’.

Sell

Overpriced, with the risk of holding on to such stocks being greater than the chances of continued capital gain. There are usually better, and safer, opportunities elsewhere.

Sell and Switch

As with a sell recommendation, although in this case we suggest an alternative stock for those who want continued exposure in that particular sector.

Settlement date

The date, three days after the transaction, by which you must supply cash or documentation for a securities purchase or sale.

Part ownership of a business.

Share registry

A company which maintains the list of shareholders and processes documentation such as share transfers, dividends and reports to shareholders.

Shareprice Risk

This is something altogether different, being the degree to which we think a share price corresponds to the real, or intrinsic, value of a stock, and an assessment of its volatility. So, companies that we believe are extremely overpriced and prone to volatility will have a high rating while those that are reasonable value and backed by a good dividend won't. Such methods don't conform to conventional academic theory, which states that risk relates solely to a share price's volatility, but we make no apologies for that. To our minds, the primary risk of a business is in it going broke. And the share price, in the short term at least, is a reflection of what a group of not necessarily informed people are prepared to pay for a stock, not a reflection of its true value. There is a relationship between the fundamentals of a business and its share price but it is only revealed over a reasonable period, sometimes many years. That is why companies in the dot.com boom could be 'worth' hundreds of millions one day and insolvent the next.

Short term

An investment period that usually refers to days or months rather than years.

Slow Growers

Large and typically mature companies that are expected to grow only slightly faster than the economy itself. These companies tend to pay generous and regular dividends. One of Peter Lynch's six categories of stocks.

Speculative

A term that denotes a higher risk type of investment.

Speculative Buy

A number of factors could earn a stock this tag but, ultimately, it refers to a more risky investment. We'd suggest that you don't put too much of your portfolio at risk following such recommendations.

Speculator

An individual who bets on price movements, usually in the short term.

Stalwarts

Large and typically long established companies that tend to grow faster than slow growers thanks to their strong market positions or brand names. These stocks often provide some protection against recession conditions. One of Peter Lynch's six categories of stocks.

Strong Buy

To warrant a strong buy a stock must be grossly undervalued and offer significant downside protection - a high dividend yield for example. But don't expect 'Strong Buy' recommendations to rise in price immediately: sometimes the opposite can occur. Eventually, though, the value is realised.