Core Concepts
Share / Stock: A security representing partial ownership of a company. Shareholders may receive dividends and vote at general meetings.
Market Capitalisation: Share price multiplied by total shares outstanding. It measures a company's size on the exchange.
IPO (Initial Public Offering): The first time a private company sells shares to the public and lists on an exchange.
Dividend: A portion of a company's profit paid out to shareholders, usually quarterly or annually.
Valuation Metrics
P/E Ratio (Price-to-Earnings): Share price divided by earnings per share. Indicates how much investors are paying for each unit of profit. Always compare within the same sector.
P/B Ratio (Price-to-Book): Market value divided by book (accounting) value. A ratio below 1 may suggest the company trades below its net assets.
EBITDA: Earnings before interest, taxes, depreciation and amortisation. A proxy for operational cash generation.
Dividend Yield: Annual dividend per share divided by share price. A high yield isn't always positive — check whether it reflects a falling share price.
Market Conditions
Bull Market: A period of rising prices and investor optimism, typically defined as a 20%+ gain from a recent low.
Bear Market: A decline of 20% or more from a recent peak, accompanied by negative sentiment.
Volume: The number of shares traded in a given period. A price move accompanied by high volume indicates broader participation.
Short Selling: A strategy where borrowed shares are sold and later repurchased at a lower price. A high-risk approach frequently mentioned in financial news coverage.
Circuit Breaker: A mechanism that temporarily halts trading when a stock or index moves beyond set limits.