Funds and Shares Lingo

Shares:
A share is an opportunity to own a portion of a company, it is a single unit of ownership.
'Shares Outstanding' are all the shares available (and sold) for that company.
There are two main types of share: Equity Shares, which carry voting rights and dividends (dependent on the value of the shares). Preference Shares do not have voting rights, however dividends are a fixed rate.
Further Differences in Equity and Preference Shares here.

Difference between Stocks and Bonds:
Stocks or shares represent ownership (as explained above). While Bonds are a type of debt owed by the 'issuer' to the owner of the bond (depending on the terms of the bond) the issuer is therefore written in to repay the debt at a later date, while paying interest on that bond.

Funds:
Mutual Funds are set investments plans (a group of shares) that are created for shareholders to have more diverse holdings (across different sectors) that are managed by professionals.

Some Common Types of Funds:

1. Money Market Funds: These funds are in short term fixed income securities such as government bonds. 
2. Fixed Income Funds: These funds pay a fixed rate of return (on a regular basis) which can come in the form of government bonds and corporate bonds. The difference between Money Market Funds and Fixed Income Funds is that Money Market Funds are a short term investment (usually a year) unlike Fixed Income Funds, which can be longer term. 
3. Equity Funds: These funds invest in stocks, and grow faster than both Fixed Income Funds and Money Market Funds (generally speaking the higher the growth rate the higher the risk). Equity Funds have many different types that specialise in growth stocks (usually means no dividends), income funds (large dividend pay out) and varieties of cap sizes. 
4. Balanced Funds: These funds mix Equities and Fixed Income Securities. Aiming to have high returns with lower risk. The ratio between low risk and high growth is dependent on how the fund is made- there is no set formula. 
5. Index Funds: These funds aim to track an index- such as the FTSE 100. Therefore the value of the fund responds the same as that of the index it is tracking. There are two types of index fund- one which is managed passively, or actively. Active Index Funds means there is a portfolio manager buying and selling investments on your behalf to outperform the benchmark (e.g the FTSE 100). While the passive fund follows the indexed fund directly-and holdings are only adjusted if the index is, which means a low cost as the portfolio manager does not have to actively research and change holdings independently.
6. Speciality Funds: Focuses on certain sectors such as Real Estate or social responsible investing (E.G companies which are environmentally friendly, or charitable donations). 

'Caps':
Small/Mid/Large caps explains the size of companies the funds incorporate (self explanatory)
Market cap is calculated by the 'shares outstanding' multiplied by the current market price of one share.
Small caps are usually start ups, but have significant growth potential- but clearly higher risk. Therefore they are highly volatile especially at times of market instability.
However most mutual funds don't invest in small cap investments.

Price/Earnings ratio (PE):
This a measure of how 'well' shares are doing relative to the price of the shares.

Market Value per Share/ Earnings per Share

E.G a company that is selling a share for £50, and the earnings over the year where £2 per share the PE ratio would be 50/2=25

Brexit.

Britain has voted to leave the EU. 

The immediate consequences of the 'Brexit' has already begun to show within the UK markets, exchange rates and political unrest.

David Cameron resigned after announcing the outcome of the referendum, after campaigning 'Remain' and promising reform. He gave a thoughtful speech explaining that he wouldn't be the "...right captain that steers our country to its next destination". Despite emphasising that "Brits aren't quitters". (Hmm.) Cameron announced he will continue to represent the UK over the next three months until a new PM is elected. 

Political reshuffling didn't stop there, with talks of Corbyn resigning after giving a "no-confidence vote", and "failing the leadership test" -critics from within Labour Party itself (Dame Margaret Hodge and MP Ann Coffey). Corbyn has since rebuffed these statements that he will not stand down to any leadership challenges within the Labour party. 

The UK Market fell across all sectors, FTSE 100 was down 8% when the Markets opened on the 24th June, since then they have begun to recover- by closing time in the UK Market was down only 3.2%, despite the secondary dip due to the US Markets opening that afternoon. 

Banking and Home-building stocks were hit hardest, while gold reserves jumped in value. 

The Pound Sterling fell to the lowest level seen in 30 years, a depreciation of 11.1%, however by the end of the US Market closing time the Pound Sterling was down only 8%. 

Aim of this Blog:

This blog aims to address some of the material covered in my undergraduate Economics degree, as well as helping me structure further reading and specialisation into different aspects of Economics and Finance.

I will write literature reviews, mathematical examples and applications of Economics, policy implications, and further general learning/understanding of more niche and diverse subjects: such as shares, funds , any relevant news updates and banking.

There will be no structure to what order in which posts are written, purely due to the when and if I feel like posting, however they will be organised into topic/subheadings within the blog itself.

This blog therefore comes with the aim solely for my own learning and understanding, to help me examine previous work/literature and begin to link my understanding to other topics.