Benefits of owning Shares

Under the Companies Act as well as common law, a shareholder in a public company is entitled to certain benefits. Some of these benefits are more illusory than real and we can ignore them. The real benefits in so far as a typical small investor is…


Formal organisation of a company

We can now return to the question posed in the title of this chapter: “What is a share?” To understand what a share is, we must first have some understanding of how a company is organised. A ‘company’ is created when two or more like-minded people…


Origin & Development of Joint Stock Companies

We should perhaps start by looking at the historical background of shares. Joint stock companies are not recent phenomena. According to the Guinness Book of Records, the oldest company in the world is the Faversham Oyster Fishery Co. which has been in existence since before…


Differences Between Investment & Gambling

There is only one real difference between investment and gambling. Investment , one can expect to make a profit over the long run but: Gambling will always result in a loss over the long run although the gambler may not know it.   Why do…


Differences between Investment & Speculation

(a) Investment is rationally based on the knowledge of past share price behaviour. From such knowledge, it is possible to compute the probability of future return. A common method of investment analysis is to study the past range of PER or DY of a particular…


Science of statistics is not about certainty

Forecasting the future is a very tricky business. It is so difficult that statisticians can only give a guide on the occurrence of future events. Thus if asked about the chances of it raining the next day, most statisticians will give a probability forecast rather…


The Science Of Probabilities

The science of statistics deals with, among other things, the problem of calculating in advance the ‘probability’ of the occurrence of future events. ‘Probability‘ is a word used by statisticians to mean ‘1ikelihood‘ or ‘chances‘. The concept of probability is easy to understand if we…


Investor know thyself first

If the readers of this book intend to invest in shares, they should first ask themselves the following questions:. (a) Can I afford to have my savings tied up for a long period of time, maybe for years? (b)) Am I willing to accept the…


Regular Income VS Capital gain

An investment usually produces a combination of a regular income and a capital gain. Different types of investment produce different combinations of these two types of return to the investor. Some investments produce only a regular income without any capital gain; for example, fixed deposit….