The Glossary

Shareholders are people or organisations that own shares in a company or exchange traded fund (ETF). Shareholders have a shareholding, meaning they are part-owners of the company.

People own shares hoping that as the company grows their share values grow alongside. Shareholders that own shares in a company or ETF that pays their shareholders dividends, may also receive regular cash payments when the company shares profits with their owners. Shareholders are invited to attend company AGMs, vote on their future decisions and leadership, and potentially influence how a company is run. Some companies have additional benefits for shareholders - the perks of being an owner.

The total number of shares an investor owns in a company or ETF is referred to as a shareholding or holding. The combined shareholdings, which is all the shares they own, is their portfolio. Investors with shareholdings are shareholders.

Small-cap (small capitalisation) companies have a market capitalisation (total dollar value) of around US$300 million to US$2 billion. These companies are typically in the early stages of growth, and some may offer niche products, or operate in small markets. Examples of small-cap companies include La-Z-Boy (LZB), Sonos (SONO), Krispy Kreme (DNUT),  and Beyond Meat (BYND). 

Characteristics of small-cap companies

• High growth potential: Could have significant growth potential as they expand market share and develop their businesses
• Higher volatility: May tend to be more volatile and carry higher risk compared to mid-cap and large-cap companies due to their smaller size and being less established
• Less stability: Could be more impacted during economic downturns and market fluctuations
• Innovation: Many are innovative and agile, and are potentially able to adapt quickly to changing market conditions

A diversified investment portfolio may include a mix of large-cap, mid-cap, and small-cap stocks to balance risk and potential gains.

Despite how they are used in everyday conversation, a stock is not the same as a share. A stock represents ownership in a company as a whole (‘I own a company’s stock’), whereas a share is a unit of a stock (‘I own five shares in a company’s stock’). Does the difference matter? We don’t think so.

A stock exchange, or share market, is where buyers - called investors - and sellers trade company stocks, exchange traded funds (ETFs) and REITs. A stock market can also be known as an equity market. When a company goes public, it’s usually to raise capital (or pay debt), and investors have an opportunity to potentially gain in their profits. Publicly listed companies have shares traded on stock exchanges like the New York Stock Exchange (NYSE) and Nasdaq. While share prices can be influenced by many internal and external factors affecting a company, stock market trends can show the health of a country’s economy, as well as investor sentiment.

A stock split increases the number of shares of a company’s stock while reducing the price per share. This corporate action makes the stock more accessible to investors without changing the company’s market capitalisation. A reverse stock split reduces the number of shares and increases the price per share. This action may be taken by a company’s management to elevate market perception of the stock. Learn more about how share prices are calculated.

A stock symbol, stock ticker, or ticker is a series of 1-5 letters, or an abbreviation, that represents a company or ETF’s stock listed on a share market. They were introduced in November 1867, around the time of ticker tape machines, and were based on a ‘tick’ that shows movement of shares prices going up or down. They made trading across America more accurate and efficient using a shortened version of a company name. Today, some tickers are quirky and inventive, such as: Petco’s Health and Wellness Company’s WOOF, Harley-Davidson’s HOG, Cheesecake Factory CAKE, Dave & Buster's Entertainment’s PLAY, Gorilla Technology Group’s GRRR, Pacer US Small Cap Cash Cows CALF, Steven Madden’s SHOO, Southwest Airlines’ LUV, and Olympic Steel’s ZEUS. Learn more about the history of stock tickers here.

A stop-buy order enables an investor to buy shares at a higher share price than the current price when they place the order. An investor chooses this order if they believe a company has huge growth potential or is undervalued. For example, if a company’s stock has sat around $18 for a while, an investor may put in a stop-buy order to buy shares at $20. This is because they believe once that share price is hit, the floodgates will open, analysts and investors will take notice, and the share price could continue to rise. Stop-buy orders come with risk because share markets are volatile. Over a normal US market day, for example, share prices could swing up or down by 10-20%. This means a stop-buy could be triggered just before the share price starts to drop, so instead of paying a slight premium to buy shares on the way up, investors may have paid top dollar for them. When an investor makes a stop-buy order, it’ll turn into a market order as soon as the share price hits their stop-buy price. This means they’ll get the best available price once the stop-buy order is triggered and the order is placed. So if the price jumps up from $120 to $125 (or $150 etc.) between the order being triggered and the market open, that’s the price they’ll pay to buy the shares. Read more about placing stop-buy orders on Hatch.

An investor may create a stop-loss order to protect any gains, or to reduce any potential losses. For example, if an investor buys stock at $20, and the share price rises to $100. To protect their returns or minimise losses, they may create a stop-loss order for $80 per share, and if the stock drops to $80 or under, the shares will automatically be sold. To reduce the impact of a falling investment, an investor may decide whether a company or industry is sustainable over the long term, and opt to sell at a set price if it gets too low. Many long term investors never use stop-loss orders, however they can play a role in some short-term investing strategies, or when it’s looking like an investment or sector may flop. An example could be a company that boomed over the Covid pandemic, and dropped significantly after it, as happened with Peloton (PTON). Learn more about stop-loss orders.

When an asset, like a share, is held in ‘street name’, it means your brokerage or custodian holds it for you. The name on the certificate belongs to the broker, but you still own the securities. This setup can make trading easier for some investors, and ensures compliance with rules. For example, brokerages and custodians are typically audited every year.

Property, goods, treasure, prized objects. 

Whakataukī: 

He peka kai, he peka taonga — Some food and property, these are what a person needs

To care for, safeguard, keep hold of, or look after for others.

Whakataukī: 

Poipoia te kakano kia puawai — Nurture the seed and it will grow

A ticker, stock ticker, or stock symbol, is a series of 1-5 letters, or an abbreviation, that represents a company or ETF’s stock listed on a share market. They were introduced in November 1867, around the time of ticker tape machines, and were based on a ‘tick’ that shows movement of shares prices going up or down. They made trading across America more accurate and efficient using a shortened version of a company name. Today, some tickers are quirky and inventive, such as: Petco’s Health and Wellness Company’s WOOF, Harley-Davidson’s HOG, Cheesecake Factory CAKE, Dave & Buster's Entertainment’s PLAY, Gorilla Technology Group’s GRRR, Pacer US Small Cap Cash Cows CALF, Steven Madden’s SHOO, Southwest Airlines’ LUV, and Olympic Steel’s ZEUS. Learn more about the history of stock tickers here.

To grow, increase, spring, begin, develop, sprout, prosper.

Whakataukī: 

Hapaitia te ara tika pumau ai te rangatiratanga mo nga uri whakatipu — Foster the pathway of knowledge to strength, independence and growth for future generations

Total shareholder return (TSR) measures the performance of a company's stock. It shows the combined returns an investor receives from owning shares in a company from capital gains and (for dividend-paying companies) dividends. TSR is shown as a percentage, and investors can use it to assess historical performance during a specific period (such as ‘last 10 years’), or use it to compare the performance of different investments or companies.

TSR formula:

For example: If you’d bought a stock at US$50, and after one year, the stock price increased to US$60. And during the year, the company paid you a US$2 dividend for every share you owned, then the TSR would be:

In financial markets, a trade is buying or selling securities, commodities, or derivatives. On a share market like the NYSE or Nasdaq, a trade is when an investor sells shares to another investor. With Hatch, you can place four types of orders:

• Market order - Buying and selling shares in real-time (or when the markets next open)
• Auto-invest - A market order will be placed on your behalf at the frequency you choose, such as ‘the 21st of every month’ or every fortnight, month, quarter, etc
• Limit order - Enter the exact number of shares and price wanted to buy or sell shares; if the share price isn't reached, the order will not be completed‍
• Stop-loss orders and stop-buy orders - Instructions to sell shares if they drop in value to a certain price, called the stop price

The minimum subscription is the lowest amount of IPO shares investors need to buy for a company’s IPO to complete successfully and list on a share market - typically 90%. If the threshold isn’t met for a minimum subscription, it’s considered an undersubscribed IPO - where supply is greater than demand. While it’s not common, the company returns the money from the orders placed. An undersubscribed IPO can be due to poor promotion, overpricing, or share market or economic conditions at the time. It can also be referred to as underbooking. This contrasts with an oversubscribed IPO.

Underwriters are investment banks like Morgan Stanley or JP Morgan that work closely with companies to manage the end-to-end IPO process. They help decide the initial offering price, promote the IPO in a roadshow and distribute shares to investors. They reduce the company’s risks during the IPO process by agreeing to assume the risk of buying all or a portion of the shares to be issued in the IPO and then selling those to the public at the IPO price. But of course, they command big fees for doing so.

Volatility refers to how much the price of an asset, such as a stock or cryptocurrency, can go up or down in value. When an asset is considered volatile, its price can change rapidly in either direction. Investors often consider volatility when making decisions about buying or selling assets. High volatility can mean higher risk but also potentially higher returns.

In share market indexes, weighting determines the relative importance of each component included on the index. There are a few different methods for weighting:

• Price-weighted: Where stocks with a higher value have more influence on the index, such as used on the Dow Jones Industrial Average (DJIA)
• Market cap-weighted: Stocks with larger market capitalisations (total dollar market value) have more influence, such as on the S&P 500
• Equal-weighted: Each stock has the same influence, regardless of its price or market cap‍
• Fundamentally weighted: Stocks are weighted based on fundamental metrics, such as earnings or dividends

Show me the money 🤑

To plan or chart your path.

Whakataukī:

Whāia te iti kahurangi ki te tūohu koe me he maunga teitei — Aim for the highest cloud so that if you miss it, you will hit a lofty mountain

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Short term goals.

Whakataukī: 

Tē tōia, tē haumatia — Nothing can be achieved without a plan, a workforce and a way of doing things

Long term goals.

Whakataukī: 

Kua hua te marama — Something has completed a full cycle

Year-over-year, or YOY, compares performance of a stock, ETF or REIT today with the previous year, that is, 12 months ago. Analysts and companies commonly use YOY comparisons to look at growth or declines, trends, and to understand whether a company’s or ETF’s strategy or decisions have been successful. Understanding year-over-year changes is valuable for investors who want to understand performance and progress of an investment over time.

Year-to-date, or YTD, refers to the time from the beginning of the current calendar year up to the current date, usually from 1 January up to today. YTD provides a snapshot of progress so far in the year. It’s useful for looking at business trends, comparing how stocks are tracking against other stocks or their own stocks performance one year ago - that is have they gone up or down - and calculating things like returns and a company’s market cap.

The absence of any quantity or value. Or the figure ‘0’.

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‘My mortgage is several hundred thousand dollars, I wish it was zero’

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‘I’m getting my money working harder by investing to grow more zeros’

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