An investor who makes selections of specific shares (or portfolios of shares) rather than investing in the market as a whole, with the aim of outperforming the return achieved by the market.

A strategy where an investor believes they can estimate specific risk better than the market and can therefore obtain better returns than the market by their share selections.

A share market where the underlying direction of share prices is downwards. The term applies to the markets in other financial assets too. 

The relative sensitivity of the return from a share (or a portfolio of shares) to that of the overall stock market: e.g. shares that are twice as sensitive or volatile relative to the market as a whole have a beta of 2.

Certificates of debt issues by government, companies and other institutions in order to borrow money.

Where rational decision-making can be undermined by limited cognitive ability, time constraints and imperfect information.

A share market where the underlying direction of share prices is upwards. The term applies to the markets in other financial assets too.

The leading measure of the prices of (a basket of) consumer goods in the UK.

The spreading of the money invested across a range of assets (e.g. shares).

A method of valuing shares based on the expected flow of future dividends the shares will earn.

Companies traded on the stock market where the share price is directly linked to the value of the underlying investments they hold.

A regulator of the financial services industry in the UK. The FCA regulates financial firms and financial markets.

The UK regulatory body that adjudicates in disputes between financial firms and their customers.

The estimation of the value of shares of a company based on intrinsic analysis, i.e. on all the relevant information about the company, its financial performance and the markets it conducts its business in.

Collective investment schemes (also known as investment funds) where the assets (typically shares) are owned collectively by a number of investors.

The prevailing annualised percentage return from investing in a bond and retaining it until its maturity date.

An investment fund that selects companies which are expected to grow quickly (in terms of sales etc.) and which are expected to see a related growth in their share prices.

An intermediary in the financial markets whose business is to quote the buying and selling prices of financial assets (like shares and bonds) and transact business in these assets with investors.

The only supplier of goods or services in a particular market.

The spreading of the money invested across a range of assets (e.g. shares) but without examining the risk-return features of each share or the interrelationships between how these shares would be expected to perform. For example, investing in the shares of twenty companies may be constituted as diversification but if the twenty companies are all high-street retailers the diversification is naïve.

A US stock exchange based in New York City. NASDAQ is an acronym for National Association of  Securities Dealers Automated Quotations.

A supplier of goods and services in a particular market where there are, in total, only a few suppliers

Investors who hold share market portfolios (plus any risk-free assets) rather than their own selections of specific shares from within the overall share market.

A collection of shares and/or other financial assets.

A method of investing where equal sums of money are invested in shares (or other financial assets) each month or year (or other time period). This method avoids the risk of investing larger, one-off, sums of money at times when share prices might be at a temporarily high level.

The property that is the main place of residence of a taxpayer.

Units of ownership interest issued by companies to investors to raise finance. Shares normally have no maturity date. They may be bought and sold on the relevant stock exchange at their prevailing price in the market. Also known as equity/equities.

The risk associated with a specific (individual) company (and hence its shares).

The action taken by active investors who select specific shares for their portfolio with the aim of achieving a greater return than the overall share market.

Financial investments where the return investors make is linked to a formula based on specific factors (e.g. the performance of an index, perhaps subject to a minimum and a maximum return). These products can be complex and risky.

The risk associated with the overall market for shares (stock market) and which cannot be diversified away.

The use of patterns of past price movements of shares (or other financial assets) to forecast their likely future price. This technique is also known as ‘chartism’ as it involves studying charts of past price levels.

An investment fund that selects companies whose shares appear to be cheap when measured by ratios such as the price-earnings (P/E) ratio.

The markets where financial institutions transact with each other (including lending and borrowing money).