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...
earnusd
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...
Investment, Speculation and Gambling, What is the Difference?
READERS must be curious to know the reason behind the strange title of this chapter. I am sure you must be wondering why should I be interested in discussing speculation and gambling in a website on investment.The reason is simple. The sidetracking of investors into...
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....
Investment can be illiquid
Based on the fact that people in general prefer the more liquid investments, the law of supply and demand will mean that in general, the more liquid is an investment, the lower is the return that an investor can expect to get. Thus, current account...