You've heard of bears, but what's a bear squeeze?

STOCK MARKET INVESTMENT: Tony Lyons deciphers market jargon

Whether you are an experienced investor or a stock market novice, you have to do your homework before investing. But to understand investment columns and the financial sector in general, you need to learn stock market jargon.

You may well know that a bull market is one where the prices of shares are rising, while they fall in a bear market. So what then is a stale bull? This is someone who keeps saying a share price will go up although it remains low and other investors choose to ignore the tale. A bear squeeze occurs when investors want to drive a company's share price down so that they can buy cheaply.

While a dividend is the income paid to the shareholder out of the profits the company earns, a potential investor needs to know that a share price quoted cum dividend (after the announcement of full-year or half-year results) means that he or she will be buying the share with the dividend attached. When a share price has gone ex dividend it tends to fall by the amount of the dividend paid out to shareholders.

Each company in a share price column has a p/e ratio. This is the share price divided by its last declared earnings per share. The higher the ratio compared with competitors, the more the growth normally expected.

A company's share price today reflects expectations for the next year to 18 months. When a company's shares are said to be good value, good growth is expected in the medium term. If a share is described as fully valued, the share price is unlikely to outperform its competitors so there is little reason to buy.

When you ask about a company, a broker will quote you two prices. The bid price is the price its shares are sold at while the offer price is what you pay to buy them. Prices quoted are usually for small deals, usually less than 5,000 shares. Larger deals could be at a different price.

The difference between the buying and selling prices is known as the spread, which provides the profit for the market maker, the wholesaler who buys shares to sell to a buyer.

If you want to make the purchase, you should tell the broker what price limit per share you are prepared to pay. Otherwise, the broker will buy at best, that is at the lowest price he can get in the market, and that could be more than you wish to pay.

Once you are a shareholder you are a part owner of the company, which means that you can attend the annual meeting. You can also take part in any rights issues, in which the company offers shares to its investors at a discount, typically raising money for an acquisition or to pay off expensive debts.

Sometimes a company will make a scrip issue when you can take your dividend in shares rather than cash.

If you invest in a company and its shares grow significantly, you could face capital gains tax when you come to sell. One way of reducing or removing this liability is to bed and breakfast your shares at the end of the financial year. Your broker will sell and buy back your shares overnight, for a small charge, to establish a new and higher buying price for the new financial year.

Once you become more advanced in market jargon you could ask you broker to explain what happens at the triple witching hour, what bulldogs are, or just what is a dead cat bounce.

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all