Money Weekly: Richard Hunter gives his answers to Investing FAQs

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Richard Hunter is the Head of UK Equities at Hargreaves Lansdown Stockbrokers. He is frequently quoted in the national press and appears regularly on national radio and TV.
Here he addresses several FAQs about stocks and shares. You can email Richard with your questions.

Please note that Richard will not be able to respond personally to these emails

Stocks and shares FAQs

My wife and I have a number of shares in a nominee portfolio in joint names. If we sell shares, is any capital gain split equally, i.e. both claim maximum allowance, or can we only claim one amount as it is a single account?

Have the good old days of takeover activity returned?

What is arbitrage?

What is a trade gap?

I keep hearing about the cost of borrowing in relation to credit spreads. What exactly are these?

In terms of the US market, what is the meaning of the “fear gauge” that I keep hearing about?

What is the importance of the “inventory effect” I keep hearing about?

I was an investor in Marconi back in the bad old days – 2000 – 2002. I ended up with 40,000 shares. Since then I have been travelling all over the world and have lost track of what happened in the intervening period. I do know about the debt for equity swap but have no clue about the possible value of my shares at that time and how many I may still have – if any. I heard that the dilution was something like 0.5% which would leave me with nothing much I know, but I would still be interested in having some idea of what exactly happened. Can you help me to uncover the history of the changes in value of my shares since that time until now?

I am a shareholder and am wondering what to do about the recent open offer from Lloyds Banking Group?

Does the recent negative Retail Price Inflation figure signal that we are moving towards a deflationary environment?

Which were the best performing stocks in the FTSE100 for the first quarter of 2009?

What are the annotations on a dealing screen which often follow the share price, such as “XR”, “AN” and so on?

As Executor for an estate, I came across three Post War Credits certificates, which were dated from 1941 to 1945. They also had values of £5-1-5, £5-4-0 and £5-1-5. Are these worth anything and if so, how do I go about redeeming them?

What is GDP and why does it continue to be revised whenever the latest figure is announced?

Given the current low level of interest rates, what kinds of alternatives have investors been looking to?

What are the meanings of economic terms such as “procyclical” and “lagging”?

What is currently happening with sterling and the euro in particular?

What is meant by the phrase “debt for equity swap”?

Do shareholder perks for investments still exist?

Why has the recently announced inflation figure fallen so much and what does it mean for interest rates now?

What are some of the factors which the Monetary Policy Committee/Bank of England consider when deciding what to do with interest rates?

Am I right in thinking that a company which reports an increase in earnings per share will also be increasing its dividend?

Many years ago I held shares in Star ( Great Britain ) Holdings Ltd and Associated Development Holdings Ltd. Having come across the certificates, I wondered whatever happened to these companies?

I have heard increasing talk from traders of “dark liquidity pools” – what does this mean?

Given the difficulties we are currently seeing, and assuming that at some point the markets will turn for the better, what are some of the things we should be looking for to show that maybe things are improving at last?

My friend tells me that when my broker is executing an order of mine (particularly a large one), he should always try to match the “VWAP”. What is VWAP and is this true?

I am in receipt of a share certificate for 650 G.R.A. Property Trust Limited Shares. Could you please advise me of an address associated with these Shares or the Registrar?

Could you help? I have shares in Telewest and they were changed over to Crest deposit when the company went through some trouble. How can I find out how much they are worth and how do I sell them?

I used to be an active investor, but due to a number of past losses my interest in share investing has dwindled and now my relatively small share portfolio is effectively unmanaged. Do you have any suggestions?

There seem to be a number of rights issues being announced at the moment. How does an investor stand if the shares are held in an ISA?

I have recently found a Barclays share certificate stating that I have 78 ordinary shares of £1 each fully paid. However, on my other Barclays share certificates it states that they are 25p fully paid. Is the ordinary £1 certificate valid?

I have 1800 shares in RBS. I have seen the announcement about the rights issue. How many rights will I get and what will my options be?

Given the difficult state of the market at the moment, I have heard talk of so-called “defensive” and “cyclical” shares. What exactly is the difference?

With the advent of electronic settlement, I assume there will be less and less need for share certificates, until such time as they are no longer issued at all. Is there any sort of market for old or rare share certificates, even if the underlying company no longer exists or the certs are simply invalid?

I have just found some old certificates in ICI but cannot find their current share quote anywhere. Can you help?

How could a parent buy and sell shares on behalf of a child? Can shares be bought by the parent but with the child’s name on the certificate? What, if any, are the tax implications of doing this?

Sometime in 1999 I bought shares in British Energy. I had 3 certificates. In December 1999 we moved and I lost them. I have just found them again, I don’t know if they are valid or not. I need to advise the company of my change of address and also want to know the value - but I don’t know what the procedure is, as I don’t do share business any more. I would be grateful if you could please guide me in the right direction to cash in these shares.

Is there a way I can release my Capital Gains Tax liability from my shares without giving them up?

What is the LIBOR rate that we have heard so much about during the credit crisis?

Why have pharmaceutical stocks such as GlaxoSmithKline had such a torrid time recently?

What are PIBS and are they risky as an investment?

With another interest rate decision due shortly, what are the sort of factors which will be taken into account by the Bank of England?

What are the origins of the terms “bull” and “bear”?

I’ve recently read a lot about rising food and agricultural prices. Why might this be and is there a relatively simple way for a private investor such as myself to gain exposure to such a trend?

The problems around the US sub prime crisis have been well covered. But in terms of the US Federal Reserve and the markets crunch there, I keep hearing the term “moral hazard”. What exactly does this mean?

I know I own shares in a couple of companies I bought years ago, but have lost the certificates – and worse still the paperwork during a house move. I am not even sure of the company details (having sold some of them, hence making the job of finding out what I own more complex) – I do have the broker’s details though. Do I have any chance of finding out what I own and if so how do I go about gaining ownership of these shares again?

I have been cold called by a company offering me shares in a “no-lose” foreign investment. I am not sure where they got my name from and it is not a company with which I am familiar. What should I do?

What is the difference between the terms adjusted earnings per share and diluted earnings per share?

What are the timings of a normal trading day on the London Stock Exchange?

I was in hospital for a long period last year at the time of the Ferrovial take-over of BAA. This meant I was unable to deal with the surrender of the shares at that time. I have now been approached by 'Keysearch' who have offered to assist in getting the money for me but ask for a 15% administration fee plus VAT. Is this (a) reasonable and (b) the only method left to me for disposal of these shares?

Should I invest for income or for growth?

I have shares in a company which has just been taken over. Within the paperwork I am being offered either cash or Loan notes for my existing shares. What exactly are Loan notes?

I bought some shares in Dragon Oil in the late 1990s and am considering selling them. How do I go about selling shares? I am a complete shares novice. I don’t want to go through a broker if possible – my shares won’t be worth much so to pay a minimum fee might make the exercise pointless. Can I sell them in person?

I have been offered a Save As You Earn/savings related share option scheme by my company. What should I be looking out for?

What exactly is meant by the terms “bottom-up” and “top-down” investing?

I bought shares for my children when they were young. On the certificates my name appears first followed by A/c and the child’s name. As my children are now in their twenties, who now legally owns these shares and what are the tax implications?

I am trying to calculate a potential capital gain for my US tax return from the sale of shares in BAA following the buyout in August 2006. I am having great difficulty in finding out the share price on the date that I acquired the shares (28 August 1999). I inherited these shares, so I have no record of purchase and I have searched long and hard on the Internet. Please help point me in the right direction

I have a certificate for 1000 shares in London Securities. They are ordinary 15p shares and the cert is dated 1988. Are they of any value?

To make sure that one qualifies for the dividend of a share which one is about to purchase, are there any pitfalls to avoid, i.e. buying at certain times? What are the general guidelines on the subject please?

I have some O2 shares. What are they worth and how do I cash them in?

The market seems weak at the moment, what has the dollar got to do with this?

I have shares in British Leyland. Are they worth anything at all?

I have noticed that Tesco shares are doing well recently. What are the reasons for this?

I have a share certificate for 196 Ordinary Shares of IR25 pence each in Dragon Oil plc which I acquired in 1997. I have since remarried and they are in my old married name. Can you tell me please:

If it is worth anything, and if so how much.
How I would redeem it, especially given it is in my old married name.

Chaco Resources is an active stock on the market, but I do not see much press coverage. Where can I pick up the latest news on this stock?

What is Enterprise Value?

Can you please tell me why the Pacific Media shares which I have held for many years have increased significantly during the last two weeks?

I’m obviously missing something about the “£9 billion returned to shareholders” by Vodafone. I stand to receive about £600 shortly, while my newly reduced shares are worth about £600 less. What is the point of this expensive exercise?

I bought some shares many years ago but in my parents’ name (with my initials suffixed, I believe this was because of my age). How do I transfer them back fully into my name?

As a Vodafone shareholder, am I right in thinking I should have received a cash payment from the company?

What is behind the recent share price hike in the supermarket William Morrison?

Do you know of any free reports on the Standard Life flotation?

Could you tell me what is happening with the Whitbread share price?

As a BAA shareholder, what are the terms of the Ferrovial offer?

What is meant by the term “triple witching”?

What has happened to the Intercontinental Hotels Group share price?

A number of the publications I have read have sections devoted to 'Directors dealings'. Is the amount of space they take up justified?

I'm one of the many that will benefit from from the Standard Life windfall. Now do I take the windfall or the shares?

What has happened to the Unilever share price? It seems to have jumped from around 520p to 1170p

Certain companies are only known by their initials - EMAP, EMI, HMV,WPP - are these dealing codes or do they mean something?

What is meant by the term "net asset value"?

Could you explain what ETFs are?

I keep hearing the term "quadruple play" when TV or telecom shares are being discussed. What does this mean?

Where next for interest rates?

My wife and I have both sold some shares this year. I have made just over £8,000 in gains and my wife has made £7,700. Can we pool our Capital Gains Tax (CGT) exemptions and avoid paying any tax?

I've inherited some shares from my grandmother and want to sell them, but I don't know how much she paid for them so I don't know what the CGT liablity might be.

I have found some old share certificates. How can I check whether or not they are still valid?

Can you suggest any sites that give the latest or current analysts' target prices for shares in the FTSE or Dow? This would greatly assist me in knowing when to enter or exit a share.

Can you explain what is meant by the term 'rolling settlement'?

What is a placing?

Is this a good time to buy Government or Corporate Bonds or should I wait interest rates next peak?

The Chancellor mentioned REITs in the Budget and this seemed to have a positive effect on property shares. What are REITs?

I was previously a Marconi shareholder – could you tell me what the latest position is?

I'm trying to find a site which lists ex-dividend dates for shares. I've been unable unanble to find this information - can you help - and is there a database or tool that summarises the ex-div dates for all companies? Is there a certain time of the year where most companies would have the ex-div?

I have always wondered - what is the actual difference between "stocks" and "shares"?

What does the phrase "corporate action" mean?

Following the sale of Boots Healthcare International to Reckitt Benckiser, I have received a special dividend of £2 per share from Boots. I remain interested in this sector, have you any thoughts as to how I could keep this money invested?

I have had shares in Griffin Mining since the end of last year. The company looks sound -no debt- ready market for zinc - even gold in the offing - good Regulatory News Service reports - why the low price?

Can you tell me why Marks and Spencer's shares increased so rapidly from July 2005 to December 2005?

I hold shares in an Australian bank. What is the best way to sell them?

Last year we had some documents about a class action against Cable and Wireless in the US. We duly filled in the forms and returned them. Are we benefit from this and if so when?

What are EPIC codes and what are they for?

What is the problem with rising oil prices and why do they cast such a shadow?

Is there any hope if I have share certificates which I know have no market value because the company has gone bust?

I have an old share certificate for ordinary shares in Express Dairies – is it of any value?

My recently widowed mother has found an old share certificate for GRA Property Trust. How can she find out if these shares are worth anything?

Why does the price of a share tend to drop when it is marked "ex dividend"?

Is it true that private investors can apply for shares in the float of the state-owned company QinetiQ? If so, how would I go about it?

I read that some of the FTSE sectors have been "reclassified". What does this mean?

I have shares in Providece Resources which I would like to sell. On checking the price, I find they are listed on AIM priced at £3.35 and the Irish exchange at 0.01 Euros. Can you explain why this is, and what price I could expect if I sell?

I have heard all about “SIPP”s (Self Invested Personal Pensions) and “A day” and wondered how to find out more, especially as I may consider putting my shares into this shelter?

What is meant by the term “hedging”?

What factors cause the value of Gilts to rise and fall?

What is meant by the term “averaging down”?

As a GUS shareholder, what is the effect on my holding following the Burberry demerger?

The FTSE100 seems to have put in a good performance in 2005. Which were the best performing stocks?

What are the more likely performers according to the different phases in an economy? And what is the definition of “performing”?

In May this year my adviser recommended that I should buy some Apollo Resources International shares (an oil company) as the company planned to have a dual listing on the AIM market in September, and since the AIM market is made up of about 70% Resources companies, this would be a good investment opportunity. Apollo is currently listed on the OTC bulletin board in the United States . September has come and gone – is there any way of finding out if Apollo are going to have a dual listing?

Often, when I sell a share that looks overvalued to me, it goes a lot higher. How can I get rid of this bad habit?

My sister-in-law has recently been left some shares in West Ham United in her mother's will. The share certificate is dated 1920 and it still shows the original holder from whom her mother inherited the shares. How can she have the shares transferred into her name? Also, will the nominal value of the shares have increased since the time of issue as the company is now a PLC? How can this be verified?

I have some O2 shares, which were initially acquired through the BT privatisation some 20 years ago and then the demerger of O2. For Capital Gains Tax purposes, what is the initial value of the O2 shares?

One of the companies I have invested in has just had a rights issue. Should I take up the rights?

I'm in a dilemma. I had shares in Infonet which was taken over by BT in February/March of this year…I had no communications whatsoever from Infonet since buying their shares (as a former company member)…(and was told by BT)….that the company should be in touch with me over how to sell the shares now that the takeover was complete….I'd like to get some money for these shares….but no one seems to be able to give me this information either!

With all this talk of a cold winter coming, I guess that some firms will do well out of this and we should invest. Any suggestions as to who we should watch?

What are the origins of the expressions “bull” and “bear” when talking about markets or general optimism?

I keep hearing about EBITDA when companies are reporting. What is this and what does it stand for?

What is meant by the term “yield curve”?

What is a reverse takeover?

I am an O2 shareholder and have read with interest about the bid from Telefonica of Spain . What action should I now be taking?

What is meant by the term “technical analysis”?

Where can you buy gilts and how can you find out what is available? I thought you could buy them through the Post Office as there used to be a leaflet on this. When I tried to get hold of a leaflet I was told it was no longer available.

What evidence is there that directors’ dealings are a positive indicator of share price movements? By the time I read about directors' dealings, is it too late?

I would like to invest in stocks and shares. However, I do not know where to look or begin. My colleague used to buy and sell shares, it seemed like an easy process. After reading a lot of literature on the website I am actually quite scared. Would I be able to get help and advice to get started for free? Could you recommend any companies or websites?

Often when I trade shares I cannot see evidence of the trade on trade monitors (ADVFN) even when less than normal market size, even hours later. Why not?

What are gilts?

What are OEICs?

I have a number of shares with various companies and have had them for about ten years. I now want to sell them all. Who are the best people to do this without costing me too much?

Please can you tell me if, when quoted, a high P/E figure is better than a low one and why?

Recently Psion has issued some “B” shares to their investors and returned monies of 20p per share on the existing shares. The new B shares have been issued at 3 B shares for 3 old shares. Apparently they are also issuing “A” shares. Can the new A and B shares be sold at the current market price by the shareholder, or do they have restrictions on these?

I purchased over 4000 shares in Loftus Road in July 2000, the company have gone into and out of receivership and also changed name to QPR Holdings. Are my original shares still valid, as the company did not fold but came out of administration, and where can I find them listed?

When British Energy reorganised its value of shares, I was issued with so many ordinary shares and so many warrants. I do not understand if these warrants are the same as shares and valued as such on the market.

How safe are corporate bonds?

I have heard that dealers can sell "short" to capitalise on the price performance of a stock. What does this mean and how does it work? Can dealers manipulate a company's price by selling and buying back later when the stock has lowered? If so, is this legal?

Can you please explain the term "ROCE" (expressed as a percentage) often quoted when looking at the financial elements of a company and is it any sort of indicator as to whether a company is worth investing in?

Why aren't Investment Trust prices reported in the Managed Funds pages of the FT alongside Unit Trusts?

I cannot understand why the market sometimes rises when bad economic figures are released?

I own shares in Glaxo SmithKline, but I haven't been receiving copies of its Report and Accounts. Can you help me?

Is the AIM market more risky than the main market?

I have heard talk about 'correlation' between markets, what does this mean?

What are ADRs?

I have heard talk about 'correlation' between markets, what does this mean?

Broker recommendations: What do they mean? What does overbought mean? And what likely potential outcome on price could such recommendations make?

What are ETFs and why would anyone use them?

How would I go about joining, or forming, an Investment Club?

What exactly is meant by the term "secondary market"?

I notice from the new RHM flotation that the share price may be subject to "stabilisation". What does this mean?

How do company dividend tax credits work?

What is meant by the term "gearing"?

What are "fixed" and "intangible" assets?

What is the meaning of "market size" when dealing?

What is a rights issue?

What is meant by the terms "active" and "passive" management?

What is the point of a scrip issue?

What is market capitalisation? And when I see "billions wiped off share prices" what has happened?

I recently read in the news that National Grid shareholders are to receive "B" Shares. What are "B" shares and why are they being distributed?

What is a "closed period" and how does it tie in to trading updates?

Has Sid finally come of age? All about windfall and privatisation shares

While checking a share price recently, I noticed that the company had various types of share - how many are there?

I bought a stock which is not quoted on the main market but on AIM. What does AIM mean and what problems will I encounter when I come to sell, such as if I use an online dealing service?

Why do shares often rise despite releasing what appear to be disappointing results, or indeed a disappointing announcement?

What sort of shares should I be looking at for potential income, as well as capital growth?

I want to use EPS and P/E ratios to calculate the value of a share - where can I find these figures so I can compare them?

Which shares are best in a recession and which companies did well in the last one?

I have received by post a share certificate for 100 shares from Asia Capital Plc with no other covering correspondence. It says the document is valuable and should be kept in a safe place. I have no knowledge of the company at all. Should I destroy the certificate?

I'm a Manchester United shareholder. Why is there such hostility towards a proposed bid from Malcolm Glazer?

I am a very small investor. Can I buy shares in quantities of 50 or less? Maybe 50 shares in Tesco. And if so, how do I do it?

I have some Alliance & Leicester bank shares I wish to sell in a few weeks time but do not wish to miss the dividend date. Can you tell me the date on which the sale would not affect the payment of the dividend which is due in May?

I have been told BP is planning a share buyback. What is this, why do they do it and what does it mean for me?

Where can I find the dividend covers for various UK shares?

When it comes to shares, what is a yield and what are dividends and ex-dividends

I have inherited shares in a number of companies and would like to keep track of their value. Are there any internet sites or software applications which can give me an up-to-date valuation report?

I have 50,000 Telewest shares. The company became New Telewest earlier this year so should I have received a new share certificate and are the shares trading?

Currently (2009/10 tax year) Capital Gains Tax has an exemption limit of £10100 per individual (raised from £9600 in the tax year 2008/09). The fact that the nominee account is single is something of a red herring - if the stock is held jointly, then any gains (or losses) are split equally.

There is therefore no need to split the stock, your wife and yourself simply need each to declare 50% of any gain on your individual tax returns. In future, you may also both wish to consider setting up separate ISAs, profits from which are entirely free of CGT.

Have the good old days of takeover activity returned?

Last week's announcements certainly gave a boost to the markets. The week began with a £10 billion hostile takeover bid by Kraft of the US for Cadbury. This was followed up with the news that Deutsche Telekom and France Telecom are looking to merge their UK businesses (T-Mobile and Orange respectively) to form what would be the largest UK operator.

The more recent strength in the markets generally may well have given some management boards the confidence to go shopping again. At the same time, some particularly well managed companies with little debt on their books may be looking to go on the acquisition trail – after all, their intended targets could easily be at a much lower price than they were a year or so ago, thus offering more compelling value. At the same time, there are certain industries where some consolidation is appearing increasingly likely, particularly those where the “barriers to entry” – the cost of setting up a new business – are extremely high. This could apply to the likes of the mining and even banking sectors.

As with the market overall, it is probably too early to be calling a full blown return to recovery and Merger and Acquisition activity. Even so, these recent announcements are undoubtedly a step in the right direction.

What is arbitrage?

Imagine the following. We are in the middle of a war with France two hundred years ago. A company which makes weapons is listed on the old London Stock Exchange and also on the French Stock Exchange. As such, its price is currently high on both exchanges.

The war ends abruptly, which will see a large drop off in demand. A soldier in France is aware that this news can only filter back to England by horse and ship and despatches a carrier pigeon to London to sell shares in the company (it is currently at the “old” price and therefore too high). At the same time he buys shares in the company in Paris (the price has realistically been marked down on the news). In so doing, he has arbitraged the discrepancy in price between the same or similar securities quoted in different markets to make a profit.

In this electronic age, such opportunities exist less and less and need to be done in large sizes and in seconds on the relevant markets – such price discrepancies tend now to be very transient. However, the volatility of markets such as commodities and currencies can provide fleeting trading opportunities for the professional investor.

What is a trade gap?

The trade gap (or trade deficit in the US ) is the monetary difference between the imports and exports of an economy. Recent figures in the UK , for example, showed that the trade gap had widened to £6.5 billion, from £6.2 billion in May. Whilst exports rose 1.4% over the months, they were outstripped by imports, which rose 2.2%, therefore worsening the trade gap.

The more recent weakness of sterling has clearly not yet had time to feed through. A weaker pound means that UK goods are cheaper abroad, which should mean that exports are stronger. The current situation is being compounded by the fact that the very countries to whom the UK exports are having economic difficulties of their own. Meanwhile, the overall trade gap narrowed in the second quarter of this year to £19.6 billion, which was the smallest number in three years. The Bank of England recently stated that the environment remains challenging – “The world economy remains in recession, though there have been increasing signs that output in the UK 's main export market is stabilising. In the United Kingdom , the recession appears to have been deeper than previously thought.”

I keep hearing about the cost of borrowing in relation to credit spreads. What exactly are these?

All things interest bearing now seem to be coming into focus. With interest rates at all-time historical lows, savers and investors are looking for places to invest their cash. As such, the likes of credit spreads have come to the forefront of some investment thinking.

A credit spread is the difference between the yield (rate of return) on a (safe) government bond such as a gilt in the UK and a rather riskier corporate bond, as issued by a company. The corporate bond will be tied to the fortunes of the company issuing it and as we have seen during this downturn, companies can go bust.

As such it is seen as a riskier investment and therefore the returns tend to be higher to compensate for this additional risk. Thus if the current yield on say a 10 year gilt was 3% and on a well regarded corporate bond was 3.5%, the spread would be 0.5%, or 50 basis points.

As you move along the scale to less well regarded companies, the risk is seen to be even higher – sometimes these are referred to as junk bonds – and so the rate of return will also be higher. This of course will therefore increase the credit spread in turn.

In terms of the US market, what is the meaning of the “fear gauge” that I keep hearing about?

Over the course of the last 18 months, global markets have, more than ever, been studying every conceivable index, gauge, set of company results and economic data in an effort to understand both the sentiment of other investors and the likely direction of global markets.

One of the indexes which has risen to prominence in more recent months is the so-called “fear gauge” – the CBOE (Chicago Board Options Exchange) Volatility, or VIX, index. It describes itself as “a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility.”

In the weeks around the failure of Lehman's last year, the index soared to record highs, indicating risk aversion and extremely poor market sentiment. More recently, it has returned to its lowest level since that spike last September. At that time the index was at nearly 90, whereas it currently stands at around 25, which is much more in line with the historical average. This index – although it should not be used in isolation – could give the suggestion that investors do not perceive a return to the market lows as experienced in March of this year.

What is the importance of the “inventory effect” I keep hearing about?

This is another side effect of supply and demand. Inventories (or stocks of, say, manufactured products) are not sold and so the manufacturer ceases to make any more until the excess supply is sold – and, depending on the goods in question, this excess can take some time to sell off.

The theory is that a drop in natural demand is amplified by companies running down existing stocks. Again, in theory, when stocks then need to be replaced (or natural demand returns) this can help snap the economy back on track – more “inventories” exist and are being purchased, thus the company needs to take on more staff and so the recovery cycle begins.

By way of example, the car and housing markets provide good examples of the inventory effect. It is estimated that demand for new cars in the UK (notwithstanding the “cash for bangers” scheme) is down around 25% year-on-year, while production at some manufacturers is down 50% (or in some cases 100%). This has been exacerbated by shortening staff hours/cutting overtime/shutting plants in a further effort to cut costs.

I was an investor in Marconi back in the bad old days – 2000 – 2002. I ended up with 40000 shares. Since then I have been travelling all over the world and have lost track of what happened in the intervening period. I do know about the debt for equity swap but have no clue about the possible value of my shares at that time and how many I may still have – if any. I heard that the dilution was something like 0.5% which would leave me with nothing much I know, but I would still be interested in having some idea of what exactly happened. Can you help me to uncover the history of the changes in value of my shares since that time until now?

The amount of changes and consolidations make this a complicated (and more than likely costly) tale of woe. Amongst the more recent developments, in May 2003, Marconi became Marconi Corporation. 559 old shares were replaced with 1 new share and 10 warrants.

In July 2003, there was a consolidation which meant every 5 shares became 1 new share.

In March 2006, they changed name to Telent, paid a special dividend of £2.75 per share. They then consolidated every 7 shares into 2 new shares.

Finally, in January 2008, Telent was taken over by a Pension Fund (for the Pension) for £6/share.

So, if for example you started with 19565 original shares (which cost over £240k in Sept 2000), this became 35 shares, then became 7 shares, then 2 shares. You received a small div and finally a takeover payment of £12.

The warrants became worthless somewhere along the line as well. Given that a fair amount of time has elapsed, you may wish to contact the then Registrars – armed with your address at the time you bought the shares – at Computershare Investor Services, PO Box 82, The Pavilions, Bridgwater Road, Bristol. BS99 7NH.

I am a shareholder and am wondering what to do about the recent open offer from Lloyds Banking Group?

As ever, it will be down to the choice of the individual and whether you are prepared to commit more capital to Lloyds' prospects. Certainly, if you are, the share price has moved in your favour since this was originally announced in March, with the opportunity to pick shares up at 38.43p (versus a current share price of around 101p) on the basis of 0.6213 shares for every share currently held.

From a market perspective, the general view is that the shares are a sell. Whilst the news of the Chairman's departure was well received in terms of the share price movement, his replacement will have his work cut out. Quite apart from the ongoing losses from the HBOS part of the business, there are also more traditional recessionary writedowns to come, as more and more individuals and companies flounder.

There is also the issue of the group's high exposure to the UK market (and therefore a higher reliance on the fortunes of a currently ailing economy). The management team remain confident that the combined group's major presence in the mortgage and savings markets will bear fruit eventually, but for some shareholders this could be too long a wait.

Does the recent negative Retail Price Inflation figure signal that we are moving towards a deflationary environment?

The Retail Price Inflation figure (RPI) fell into negative territory for the first time in nearly 50 years in March 2009, as April's figures confirmed. The Index was flat on the month but was down 0.4% year on year. The RPI is a wider cost of living index than the Consumer Price Inflation measure, since it includes the likes of housing costs.

Traditionally, deflation is a time of falling prices – the theory runs that consumers hold back expecting prices to fall further, which they do as suppliers and retailers' pricing power is dampened, thus creating a downward spiral. However, the fall in the oil price (feeding through to fuel prices) and some downward pressure on food and drink also contributed to this figure.

Most analysts agree that the current low interest rate environment means that the fall is technical – not signalling deflation – and point to the fact that the CPI remains at 2.9%, still well above the Bank of England's target of 2%. It has also fallen less sharply than other industrialised nations.

Which were the best performing stocks in the FTSE100 for the first quarter of 2009?

The FTSE100 itself closed at the end of the first quarter down 11.5%, so perhaps some of the top performing stocks were a little surprising. Above all, however, the mining sector, which took a severe hit at the end of 2008 in the wake of the global recession, found something of a bounce on hopes of economic recovery later this year. The percentages can be slightly misleading, given that the share prices were coming from a lower base, but nonetheless showed strong outperformance of the wider index.

The top ten stocks were as follows – Fresnillo +102%, Kazakhmys + 69%, Rio Tinto and Lonmin + 57%, Petrofac + 53%, Marks & Spencer + 44%, Autonomy + 42%, Xstrata + 41%, Eurasian + 36% and Thomas Cook + 33%.

By way of interest, and continuing the theme from 2008, the UK banks and general finance sectors, along with the property sector, were amongst those dominating the worst performing list of the first three months of 2009 trading.

What are the annotations on a dealing screen which often follow the share price, such as “XR”, “AN” and so on?

The most common annotations are “XR” (ex-rights), “XC” (ex-capitalisation), “XD” (ex-dividend), “AN” (the company has made an announcement) and “N” (news has been released about the company, not from the company itself).

The “ex” date is a line in the sand, after which buyers of the stock are not entitled to that particular benefit. Prior to going “ex-dividend”, for example (known as the “cum” – or with – dividend period) buyers will receive the forthcoming dividend. On the day the stock goes XD, though, any new buyers of the stock will not receive the next dividend.

Holders of the stock who choose to sell their shares on the XD date will, however, receive the dividend, even though they have disposed of their shares. This is why a share price is marked down on the “ex” day by the amount of the entitlement, be that a dividend, capitalisation or rights issue.

We believe that the £5-1-5, £5-4-0 etc relates to pounds, shillings and pence.

We also believe that Post War Credits were something which workers paid into out of their salaries - during the war.

The Govt lowered Personal Allowances during the war and the extra tax that you paid because of this was recorded and credited to the Taxpayer. It was repaid to those who kept their certificates by 1973.

So these represent extra income tax paid by taxpayers between 1941 and 1946, with the promise that they would be repaid "some time" after the war. So they were, but only to people who applied, and only, in most cases, in 1972-73. There is still some £40m-odd outstanding. They, too, attracted some interest, at 2.5% a year, but only between 1959 and 1972.

For more details, write to: PWC Centre, Ty Glas, Llanishen, Cardiff CF4 5TX.

What is GDP and why does it continue to be revised whenever the latest figure is announced?

Gross Domestic Product (GDP) is a measure of economic activity and is often used as a major summary indicator of the health (or otherwise) of a country's economy and, to some degree, prospects.

In the UK , the first estimate of GDP (announced on a quarterly basis) is based on our output and production as an economy. It also shows how different industries are contributing to growth (or decline) and is published 3 ½ weeks after the quarter it measures. The second estimate then follows 4 ½ weeks later, based on information around output, income and expenditure. The third and final estimate is published 12 weeks after the quarter in question, around the UK National Accounts (the full national accounts).

As we have recently seen, confirmation of two successive quarters of negative economic growth (i.e. a decline) falls into the technical definition of a recession.

Given the current low level of interest rates, what kinds of alternatives have investors been looking to?

One such example is c orporate bonds, which are issued by companies in order to raise capital for their businesses. Similar to gilts (government bonds) they are quoted in nominal amounts of £100, have a (usually) fixed rate of interest which they pay and have a set redemption date when the investor should receive the return of their capital As a general rule of thumb, corporate bonds are categorised as having “investment grade” status (having a higher rating as awarded by commercial credit rating agencies) or high yield (popularly “junk” bond) status, where the higher rate of return is in exchange for the possibility of default by the issuer.

The more recent decrease in the levels of corporate bonds, through fear of credit defaults, has highlighted another level of risk aversion by investors. There is now an increasing band of investors who are as concerned about the return of their capital as the return on their capital.

As such, there has been a flight to quality, as evidenced by the ultra-safe government backed securities, such as Treasury Bills in the US and gilts in the UK . And – of course – an interest rate of (say) 4.5%, which would have looked somewhat anaemic just recently, all of a sudden begins to take on a new attraction, particularly since it would be a rate which the investor could lock in. The likelihood of the government issuing more gilts has certainly increased since its borrowing requirements have more recently increased sharply as it has begun to stand behind the banking and credit systems.

Nonetheless, a case still remains for corporate bonds, particularly for those investors who can afford to take an element of risk. And, even though they have seen a fall in recent months, they have still managed comfortably to outperform equities in relative terms.

One such access point for investors could be a corporate bond fund, which invests in a range of bonds in order to spread the risk. Furthermore, these investments can be held in an ISA or a SIPP and as such would be free of tax.

What are the meanings of economic terms such as “procyclical” and “lagging”?

Gross Domestic Product (GDP), for example, is a procyclical economic indicator, that is, if an economy is healthy and growing, so the figure for this will be rising. An economy in recession will therefore show shrinkage, and the Q4 US figure is expected to be around -0.8% versus the previous quarter's -0.5% when announced next week.

Incidentally, next week's US unemployment figures are known as a countercyclical economic indicator – as the economy worsens, so the figure rises.

Unemployment figures are also a lagging indicator, one not changing direction until after the economy does. As a general rule, unemployment tends to continue rising for two or three quarters after the economy starts to improve, as industry begins to pick up apace.

This leaves the other important economic gauge – the leading indicator. This changes ahead of the economy and can therefore prove extremely useful in an environment such as the one in which we find ourselves. Leading indicators may take the form of business confidence or an increase in manufacturing orders (both of which could positively affect today's markets), or indeed the stock market itself, which at any given time is trying to predict economic and company trends several months down the line .

What is currently happening with sterling and the euro in particular?

Whilst an interest rate cut last week by the Bank of England had been widely anticipated, the 0.5% reduction was less than some expected. This enabled Sterling to produce its biggest weekly gain against the Euro in the single currency's ten-year history.

The Euro came under heavy selling pressure as expectations increased that the European Central Bank (ECB) could cut interest rates this week (Thursday 15 th January). Inflation fell to an annual rate of 1.6%, significantly below the ECB's target of 'close to but below 2.0%' and its lowest level in more than two years.

As for growth prospects, the risks of a prolonged recession appear to be increasing, as evidenced by a drop in Eurozone service sector activity to a new low since the Euro's inception. German factory orders, a measure of manufacturing conditions in the Eurozone's largest economy, also sank by 6% in November. An unexpected rise in retail sales, confirmed on Friday, failed to significantly stem the Euro's decline.

The GBP/EUR rate recorded its biggest ever weekly gain, closing at 1.1255 - 7.73% higher from 1.0447 a week earlier, benefiting those converting Pounds into Euros.

What is meant by the phrase “debt for equity swap”?

This situation often arises where a company is in some financial trouble and is, for example, having problems in financing its debt (such as being able to repay the interest on its loans). Such a swap may involve the lender being offered shares in the company to the equivalent value, thereby reducing (or eliminating) its debt, whilst the lender is hoping that the company will continue to prosper and it will benefit from share price growth and dividends in the future.

The debt-for-equity swap is not such good news for existing shareholders, since they are diluted without being offered the chance to buy new shares. On the other hand, this is preferable to liquidation of the company, whereby shareholders would end up receiving nothing at all, with the value of their holding ultimately destroyed.

Do shareholder perks for investments still exist?

Whether it is a discount on airline tickets, a house purchase or even a dry cleaning bill, as a way of getting access to the market - maybe for the first time - shares with perks have a practical purpose as a gift, quite apart from their intrinsic value. While dividends and potential capital growth are key factors in a decision to buy a specific stock, anyone who enjoys the product or service of a company in which they own shares has in effect a triple whammy if the shares perform well and the dividend income is maintained.

There is a comprehensive list of perks on our website ( www.h-l.co.uk/shares/shareholder_perks ), but please note that investors should check with the company before buying the shares, since the perks do change from time to time. They are also usually subject to a minimum number of shares which vary between companies.

Stock selection is a difficult and important process for investors, and while the financials should be the first port of call, the perks offered can be a useful indicator of the management approach to delivering value and service, as well as investor relations.

Why has the recently announced inflation figure fallen so much and what does it mean for interest rates now?

The usual measure of inflation for monetary policy is the Consumer Prices Index (CPI) which fell the most in 16 years, as announced in mid-November. Whereas the previous month's figure had shown a reading of 5.2%, October's figure dropped significantly to 4.5%.

The recent falls in the oil price (currently below per barrel, compared to its record high of earlier in the year) has fed through to petrol prices, and the cost of food has also fallen. Another aggressive faller was transport costs. Even core inflation, which strips out fuel and food, also fell to 1.9% in October from the previous month's figure of 2.2%. In addition, the Retail Prices Index (RPI), which includes housing costs, also fell from 5% to 4.2%.

This gives the Bank of England more leeway to cut interest rates further at its December meeting, along with weakening growth figures, in an attempt to bolster the economy. The most recent cut – from 4.5% to 3% – is currently expected by most economists to be followed by a 0.5% cut (at least) in December, with the possibility of interest rates falling to 2% in 2009 becoming an increasing possibility.

What are some of the factors which the Monetary Policy Committee/Bank of England consider when deciding what to do with interest rates?

Interest rates are set by the Bank of England as a large part of monetary policy. They are designed to “guide” the economy – for example, economists will argue that high interest rates reflect a strong economy, where people are prepared to borrow at higher rates. By the same token, however, if they are too high, they may crimp investment and thus the ability of the economy to grow.

At the current time, the global economy is showing increasing signs of heading towards recession and, as such, many Central Banks have been playing the interest rate cut(s) card. At any given time, they will be looking at the main determinants of economic health (or otherwise), such as (un)employment, growth, the wider financial picture, inflation, house prices and consumer spending as part of their deliberations. Certainly in the UK, most of these factors are currently working against a healthy economy and, as such, the majority of economists expect the nearer term pressure on interest rates to be downwards.

Am I right in thinking that a company which reports an increase in earnings per share will also be increasing its dividend?

Dividends are indeed a form of earnings for the investor, but these are not the same as those represented in a company's earnings per share. EPS (earnings per share) is defined as the after-tax profit divided by the number of shares issued by a company. The result - usually in pence - acts as a guide to how well a company is performing. The EPS changes throughout the year allowing investors to monitor how much profit is being made for each share a company has issued. This being said, a sustained increase in eps could well result in a higher share price, from which you would benefit.

Dividends, on the other hand, are paid directly by the company to its shareholders (usually twice a year) from its profits. These are often paid in cash, although some companies have what is known as a DRIP scheme (Dividend Reinvestment Plan/Programme), allowing the dividend to be taken as shares and added to the existing holding, thus benefiting over time from the power of compounding.

In the majority of cases, growth in the eps would normally lead to dividend growth.

Many years ago I held shares in Star ( Great Britain ) Holdings Ltd and Associated Development Holdings Ltd. Having come across the certificates, I wondered whatever happened to these companies?

Taking the second first, we found that Associated Development Holdings were trading in the 1970s, although after that the trail goes completely cold. We are assuming therefore that the company no longer exists in any form.

As for Star (GB) Holdings, they changed name to English Property Corporation in 1974. This was the taken over by Olympic & York Developments in 1985 where shareholders received 81.33p per share. As far as we can see, shareholders did not need to hand over the share certificate, but even so you should have received payment at the time.

The “Register of Defunct Companies” used to be the ultimate resource for older enquiries such as these, and may still be accessible at the National Archives - National Register of Archives, c/o The National Archives, Kew, Richmond , Surrey . TW9 4DU www.nationalarchives.gov.uk/nra

Another place to try could be Companies House, London Information Centre, 21 Bloomsbury Street , London WC1B 3XD
www.companieshouse.gov.uk

I have heard increasing talk from traders of “dark liquidity pools” – what does this mean?

When looking, for an example, at an order book, traders will be confronted at a price and “normal market size” in which they can deal – such smaller deals are often done electronically. What an order book may mask, however, is where the real liquidity is, in other words if the trader is looking to execute a large deal. In such cases, he needs to find where the larger business is being done and, increasingly, he can electronically access these areas of liquidity in order to complete his trade.

Thus, the “dark pools” is reference to the fact that the real liquidity is not immediately visible, but needs to be found elsewhere. Another variation on this theme are so-called “iceberg orders”, where the small amount of liquidity on the order book may hide a much larger order below – or, the tip of the iceberg.

As the popularity of dark liquidity pools increases, so there are calls that these may actually be fragmenting markets, since these trades are sometimes done between institutions without touching a traditional stock exchange. This may ensure the institutions' privacy, but does not necessarily mean a level playing field for less informed traders.

The nearer term prospects are not particularly promising, either in terms of the UK economy or the market itself.

Nonetheless, part of the investor's toolkit is being able to recognise some potential glimmers of hope or, as the market insists on calling them, positive “inflection points”.

In the current environment, these turning points are possibly not even on the horizon, but a combination of any of the following might be useful alerts to the day when this particular bear market begins to become less grizzly.

Firstly, some proof that inflation has peaked. This in turn would change the interest rate outlook with the possibility of any cuts becoming a probability. (The current rate of inflation of 4.4% continues to make it difficult for an interest rate cut in the near term).

Corporate earnings trough, so that future comparative figures become less onerous. At this point, companies are able to envisage a stronger environment going forward and can benefit from the strict cost cutting strategies they have needed to employ during the downturn.

There is a fall in the oil price, which removes an inflationary pressure which is currently having a negative global impact. As a side issue, depending on the reason for the oil price drop – such as the removal of geopolitical tensions – this could have wider psychological benefit for the market. (The ongoing demand and supply imbalance, coupled with geopolitical worries, are combining to spike the oil price on a regular basis). There are potentially some signs of promise here, with the current oil price around the level compared to its recent record high of .

My friend tells me that when my broker is executing an order of mine (particularly a large one), he should always try to match the “VWAP”. What is VWAP and is this true?

VWAP is the Volume Weighted Average Price, quoted on live dealing systems for stocks where prices are formulated on an order book system. The VWAP is formed by dividing the value of trades at a particular time by the volume of trades executed over a given time period. The figure effectively provides a price at which the majority of a given day's trades were executed at. A closing 10 minute VWAP is used to set closing prices on the order book.

Whilst it would be ideal if the majority of trades for both individual investors and institutional investors were near or matched VWAP, the sheer size of trades which any institutional investor is likely to deal in gives them a mathematical advantage. Your broker is bound to get “best execution” for your trade, which means that price is just one of the factors he will bear in mind when trading, along with settlement of the trade, speed of execution and so on.

I am in receipt of a share certificate for 650 G.R.A. Property Trust Limited Shares. Could you please advise me of an address associated with these Shares or the Registrar?

GRA Property Trust changed their name to GRA Group in 1982, and then to Wembley plc in 1988. Wembley plc went into ‘Members Voluntary Liquidation’ in 2005 and paid out 355p for each £1 ordinary share held.

All certificates other than the Ordinary £1 (which were issued in July 1995) are invalid, which means that it is unlikely that the GRA Property Trust shares have any value.

However, if you believe that you may have some Wembley shares (possibly 1/100th the quantity of GRA shares), you should contact the Registrar – Computershare – on 0870 702 0000.

Could you help? I have shares in Telewest and they were changed over to Crest deposit when the company went through some trouble. How can I find out how much they are worth and how do I sell them?

We believe that Telewest Communications became Telewest Global Inc. Around July 2004, there was a consolidation of 1 share into 0.00124316199 shares (so 804 old shares became 1 new share).

On 3rd March 2006, they merged with NTL Inc and shareholders received .25 AND 0.2875 New shares for every old share.

The name then changed to Virgin Media in December 2007 – which trades in the US. If you still hold these shares, the price is about £6. As for selling, it depends where the shares are held. Certificates need to go through a US Broker (such as Charles Schwab). If they are held in Crest (in other words an electronic account), you should go through the Crest Sponsor (which may be the Registrars – this will be mentioned within your paperwork).

I use to be an active investor, but due to a number of past losses my interest in share investing has dwindled and now my relatively small share portfolio is effectively unmanaged. Do you have any suggestions?

Share investing can be a new hobby which many people take to with great gusto. However, often as a result of inexperience, lack of patience, unrealistic expectations or a combination of these factors, that initial enthusiasm wanes. Rather than give up the stockmarket as a forum for investment – remembering that stocks and shares have outperformed all other asset classes over the longer term – such an investor might consider selling their remaining share portfolio (tax position permitting) and switching into managed funds.

Psychology is often a big factor here, with investors often reluctant to sell and thereby crystallise a loss. An investor’s tax position is another big consideration, and whilst professional guidance may be sensible, remember that each individual has an annual tax free capital gains allowance of £9600 for the current fiscal year – that covers profits not proceeds.

Funds offer a diversified range of shares with exposure to worldwide markets and you can leave all the day to day investment decisions to a fund manager. Furthermore, many brokers often have special cost saving deals in existence whereby investors can sell a number of individual shares at reduced or even zero commission rates and switch into one or more funds, such as www.h-l.co.uk

There seem to be a number of rights issues being announced at the moment. How does an investor stand if the shares are held in an ISA?

There have indeed been a number of rights issues announced recently, such as RBS, HBOS, Bradford & Bingley and Imperial Tobacco – with the possibility of more to follow.

The basic situation is as follows, bearing in mind the annual ISA allowance of £7200. If there are sufficient monies within the ISA to take up the rights then the process is straightforward. If there are not sufficient monies within the ISA and the investor has not yet used their ISA allowance this tax year, they can transfer monies in and use that money to take up the rights (providing their existing ISA manager will allow this). However if the investor has no available monies in the ISA and/or has used up this year’s allowance the only option is to take up the offer outside the ISA. The shares could then be moved into an ISA in a future tax year (using a “Bed & ISA” manoeuvre) up to the ISA allowance for that year.

In March 2002, Barclays shares had a subdivision whereby 1 share of £1 was consolidated into 4 shares of 25p each. This had the effect of reducing the then share price from around £24 to around £6, although shareholders had four times as many shares as before. New certificates were issued and therefore the reader may find that one of the ordinary 25p certificates is for 312 shares (78 x 4). As such, £1 share certificates are now invalid. For the avoidance of any doubt, the reader could contact the Registrar to check the shareholding – The Registrar (to Barclays PLC), Aspect House, Spencer Road, Lancing, West Sussex. BN99 6DA, or telephone 0871 384 2055.

I have 1800 shares in RBS. I have seen the announcement about the rights issue. How many rights will I get and what will my options be?

(Please note this is an example – the figure can only be worked out properly when the shares go “ex-rights”, the date for which has not yet been announced, but should be in mid-May).

Assuming a current RBS share price of 370p

You have 1800 shares – therefore current value of holding £6660

Terms of the rights issue – 11 for 18 @ £2

Therefore, eligible to take up 1100 shares at a cost of £2200

You would now hold 2900 (1800 + 1100) shares at an overall “cost” of £8860 (£6660 + £2200) – therefore, theoretical ex-rights price = 305.5p

Shareholder options

Take up rights. This will cost you £2200 and will mean that your stake is totally undiluted post the rights issue.
Sell the rights or let them lapse. The price of the nil paid rights trading in the market (in this example) would be 105.5p (305.5p – 200p) and therefore you could sell in the market – 1100 x 105.5p = £1160.50 (less broker’s commission) or let them lapse and receive a cheque from the company in due course (at the prevailing market price when the offer closes, no commission). This is a dilution of the shareholding.
Sell sufficient of the rights to take up the balance (a “STUBS” transaction – also sometimes known as “tail swallowing”). The purpose of this manoeuvre is to take up as many rights as possible without spending any more on the shares – thus you would sell 720 shares (raising 720 x 105.5p = £759.60). This means with this money, you could take up the balance of your rights of 380 shares (1100 – 720) at £2 each, at a cost of £760 (380 x £2) – no cost incurred (commissions excluded from example). This would be a partial dilution of the holding.

Given the difficult state of the market at the moment, I have heard talk of so-called “defensive” and “cyclical” shares. What exactly is the difference?

Defensive shares are best described as being industries which are largely unaffected by different parts of the economic cycle, because they provide certain services.

For example, the utility companies are classically defensive shares. Whatever the state of the economy, we all continue to need water, electricity and gas.

This is not to say that defensive shares will not suffer at all in a prolonged downturn, so much as they will suffer less than their cyclical counterparts.

Other sectors, however, are more cyclical by nature, and their fortunes will change as time goes on.

For example, at certain times during the economy, the makers of luxury goods and certain retailers will benefit from the consumers’ feel good factor.

Similarly, when things turn tough, so can the performance of these companies’ shares. The different seasons of the year can also result in a company having busy and quiet periods. In essence, these companies benefit during times of economic growth and then decline during recession.

The accepted wisdom is that if consumer spending starts to flag, the first sectors which will be hit are likely to be the retailers, housebuilders, motor distributors and then other companies which deal directly with consumers. This then tends to feed through to those companies which supply the goods and services to the High Street, who in turn trim their own capital investment and purchase of raw materials.

Professional investors, naturally, have their own agenda here. The generally accepted wisdom is to go “underweight” on cyclical shares in anticipation of a recession and then “overweight” as it bottoms out. Since most in the market have a similar strategy, share prices are at any time anticipating these economic changes long before they actually happen.

There is indeed and this is an area which has been attracting increasing attention. The practice of collecting share certificates – or scripophily as it is known – has been around for some time now. The International Bond and Share Society is a good place to start, at www.scripophily.org. Given that share certificates go back over hundreds of years, there are many interesting moments in history which can be captured by an old share certificate, and on rarer examples you may even find an original signature when the certificate was first signed, for example, by John D Rockefeller or even Walt Disney. As time goes on, even existing share certificates which would otherwise be worthless may gain some value due to their historical interest or even the artistry involved in the design of certain older certs. It is an interesting subject and the website as quoted above has a host of information on the subject.

I have just found some old certificates in ICI but cannot find their current share quote anywhere. Can you help?

ICI was taken over in December 2007 by Akzo Nobel of Holland (technically it was a Scheme of Arrangement, which is the same as a takeover, without the need to hand in the certificates). The deal was worth some £8 billion.

You should have received some documentation at the time – have you recently moved and not advised the Registrar? Does that also apply to any other shareholdings you may have?

In terms of ICI, this was a cash offer of 670p per share, although there was a Loan Note Alternative of £1 of loan notes per £1 cash consideration - however, you would have had to have elected to get this at the time the documentation was posted to you.

At the same time an interim dividend of 5p per share was paid and ICI's London listing was removed on 3 January 2008. It is unlikely that you can now elect for the Loan Notes, but you might wish to try the ICI Shareholders' helpline on 0870 694 0472 and also to try to claim your (presumably unpaid) dividend.

How could a parent buy and sell shares on behalf of a child? Can shares be bought by the parent but with the child’s name on the certificate? What, if any, are the tax implications of doing this?

Children under the age of 18 are not allowed to hold shares directly. The usual practice is for a relative to hold the shares on their behalf, using a designation account, where the child’s initials form the designation.

This would be the same whether you use a Nominee Account or hold certificates. Any dealing would have to be done by the relative.

Cash ISAs are open to 16 & 17 year olds, but you have to be 18 to own a Shares ISA (You cannot hold an ISA on behalf of children).

Everyone (including children) has their own CGT limit, so if shares bought on behalf on a child rise significantly, they will have to pay CGT. The same applies to Income Tax and if shares bought for a child generate sufficient income, they will again have to pay tax.

As for satisfying the HMRC that a designated account is actually held on behalf of a child as opposed to your own savings vehicle is a different matter. As far as we are aware, the Inland Revenue will be fairly sensible about this. For example, if you have an account designated ABC and you have a child called Andrew Ben Charles, then you should have a pretty good case. If, however, the designated account was set up before the birth of a child, or there are multiple designated accounts which number over a certain amount of children, this may be more difficult to prove.

All British Energy certificates were replaced by new ones in British Energy Group in January 2005, with the result that any certificates dated prior to this are now invalid. At that time, shareholders had the option to accept new shares and warrants in British Energy Group or take cash. If no election was made, the shareholder automatically received cash. Thus, if the wrong address was held at the Registrar, then it seems unlikely that you elected for shares. It also means that the cash would have been sent to the old address. The first step would be to phone the Registrars.

Ask them to check the shareholding, quoting the old address. If they confirm that there is no holding, ask them about the cheque that would have been sent in January 2005. Ask if it has been cashed yet. If not, request a duplicate cheque. On the other hand, if there is a shareholding, request duplicate certificates. The Registrar in question is Equiniti (formerly known as Lloyds TSB Registrars) and the phone number is 0870 600 3970.

Is there a way I can release my Capital Gains Tax liability from my shares without giving them up?

The reader is describing what is known as a "Bed and ISA", or share exchange. Every year you can make a certain level of gain without paying Capital Gains Tax, currently at £9200. However to realise that gain you actually need to sell your shares - if you want to hold on to them, the obvious solution could be to sell them and buy them back in an ISA.

By selling your shares you will realise any gains you have already made and make the most of your capital gains tax allowance. If you have shares showing a loss you can still benefit as you can offset the loss against any gains you make in the future. By then buying your shares back in an ISA you can continue to benefit from movement of the shares whilst protecting any future gains from tax.

Most stockbrokers will offer this service. By way of yardstick, for a Bed and ISA at Hargreaves Lansdown, we waive the normal stockbroking commission to sell your shares. All you pay is 1% (minimum £10, maximum £50) to buy your shares back within the ISA and stamp duty of 0.5%. Furthermore as we buy back the shares immediately, the only difference in price will be the standard bid offer spread. Thereafter, the annual management charge to hold shares is just 0.5% (+VAT).

What is the LIBOR rate that we have heard so much about during the credit crisis?

The London Inter-Bank Offer Rate (Libor) is the primary benchmark for interest rates around the world. It is basically the rate at which banks will lend to each other, and can be calculated over various timeframes (anything between one day and five years). It enables banks with liquidity requirements to borrow quickly from other banks, thus avoiding the need to hold excessive amounts of capital on their own balance sheets. The recent “freezing” of the credit market was a reflection of the fact that the banks had become unwilling to lend to each other, which in turn caused intervention by Central Banks around the world to inject some liquidity. Much more recently, the Libor rate has returned to levels previously seen before the US sub-prime fallout last summer.

Why have pharmaceutical stocks such as GlaxoSmithKline had such a torrid time recently?

The weakness of the pharmaceutical sector over the last few years has been due to the twin drags of the lack of new blockbuster drugs, with little visible in the pipeline, along with the imminent patent expiries on a number of existing drugs, thus removing a core income stream. Nonetheless, the long term story of higher margin specialist drugs for an ever ageing global population remains intact, whilst it appears that Western medicine is starting to become more accepted in Asia, and China in particular.

The fact that the larger companies have more recently been refining costs to improve margins should also bolster prospects going forward. For information, the current market consensus on the big three UK companies is as follows – GlaxoSmithKline (hold), AstraZeneca (hold), Shire Pharmaceuticals (buy).

What are PIBS and are they risky as an investment?

Several building societies and some banks began to issue Permanent Interest Bearing Shares (PIBS) in the early 1990s, and these became characterised by generally higher yields.

Part of the reason for these higher yields is the risk associated with them – there is no access to the Financial Services Compensation scheme, for example, should the issuer go bust and, in such an event, PIBS holders would rank below all other creditors. In addition, should the issuer decide for any reason to miss a payment, the interest is non-cumulative, that is the income would not be replaced.

Another point to bear in mind for PIBS is that whilst they do tend to display bond/gilt type characteristics – the price for example will react oppositely to the direction of interest rates – they are thinly traded, and your broker will need to bear this lack of liquidity in mind when buying (or indeed selling) PIBS on your behalf.

As a general rule, interest payments are made twice a year, though of course these dates vary between issuers. The price itself will be quoted “clean” to the investor, with accrued interest added or deducted accordingly (as for gilts). PIBS do not attract Capital Gains Tax, but Income Tax (although if held in an ISA for example this tax liability is mitigated).

The inherent risks of PIBS as described here are the main reason for the higher yields they tend to provide, subject to the usual risk/reward ratios. Yields do vary, but at the current time, they tend to range anything between 6% and 8%. Given the higher risk nature of PIBS as investments, it is generally accepted that they should only form part of a balanced and diversified portfolio.

With another interest rate decision due shortly, what are the sort of factors which will be taken into account by the Bank of England?

The Monetary Policy Committee (MPC) is tasked with setting interest rates and needs to gauge the current state of the economy in its deliberations. As ever, this month is no different, with a number of factors working against each other – the general market view at present is that rates will be left unchanged at the current level of 5.75%.

Amongst the many figures which the MPC must consider, the following five are probably the best known –

Retail sales. Are consumers continuing to spend regardless, or are the recent strong figures due to heavy discounting by the retailers? Does the situation need to be calmed down?
Growth (GDP). The current expectation is for growth in the economy to slow down in the final quarter of this year.
Housing market. A dilemma – it continues to appear that London and the South East potentially mask a slowdown in the wider country. Is the decline in mortgage approvals (for example) here to stay?
Inflation. Currently on target, but inflationary pressures remain – such as food prices and the oil prices recently brushing highs
Wider financial markets. Concerns from the US sub-prime fallout have recently resurfaced. Will this lead to the threat of recession in the US, with a potential knock-on impact to the UK?

It is generally felt that the MPC may maintain its “wait and see” attitude – as opposed to the more pre-emptive attitude of its US counterpart, the Federal Reserve - perhaps even delaying a potential rate cut until after the strength of the Christmas shopping season is known in early February.

What are the origins of the terms “bull” and “bear”?

We are, of course, all familiar with the terms “bull” and “bear” to signify rising and falling markets respectively. The origins of these phrases, as one might expect, goes back hundreds of years.

It has been suggested that the expressions relate to bull and bear fighting, previously a bloodsport in parts of Europe. Bulls would gore with their horns in an upward motion, whereas bears tended to swipe in a downward motion. The metaphor is obvious, but is unlikely to have been the true origin.

More likely is that the term “bear” derives from an old French proverb applied to the English market – “ ne vendez pas la peau de l’ours avant de l’avoir tué” (“don’t sell the bear’s skin before you’ve killed the bear”). This proverb was applied to speculators in the South Sea Bubble scheme around 1720, alluding to the risky practice of bear trappers who would sell on the skins before having caught them. Incidentally, the similar bearish term of share prices “going south” also finds its roots in the disaster of the South Sea Bubble.

As for the bull, it became the natural term to be paired with the bear to denote the opposite trend or activity, i.e. buying stock in the hope of a price rise.

One of the first examples of these terms appearing in print was in Thomas Mortimer’s 1785 book, “Every Man His Own Broker”. At that time the Market was situated in Exchange Alley, or simply "the Alley”. He said that “a man who in March buys in the Alley 40,000 pounds [of stocks for settlement] for May, and at the same time is not worth ten pounds in the world ... [he] is a Bull, till such time as he can discharge himself of his heavy burden by selling it to another person, and so adjusting his account, which, if the whole house be Bulls, he will be obliged to do at a considerable loss.”

And the bear? This was “a person who has agreed to sell any quantity of the public funds more than he is possessed of, and often without being possessed of any at all, which, nevertheless, he is obliged to deliver against a certain time: before this time arrives, he is continually going up and down seeking ... whose property he can devour; you will find him in a continual hurry; always with alarm, surprise, and eagerness painted on his countenance; greedily swallowing the least report of bad news; rejoicing in mischief, or any misfortune that may bring about the wished for change of falling stocks, that he may buy in low, and so settle his accounts to advantage.”

Maybe a case of “Plus ça change, plus c’est la même chose” – the more that things change, the more they stay the same!

I’ve recently read a lot about rising food and agricultural prices. Why might this be and is there a relatively simple way for a private investor such as myself to gain exposure to such a trend?

With wheat prices recently reaching record highs, agriculture has moved into investors’ thoughts of late. It appears that concerns in relation to possible global warming having been partly responsible. Not only are more erratic temperatures causing concerns for crop failures – in different parts of the world both droughts and floods have played havoc with crop production - but a move towards using biofuels such as sugar cane and palm oils is also exerting pressure on land which once might have been used for more traditional crops – such as wheat.

Investors wishing to gain diversified exposure to such trends might like to consider funds, for example. An Exchange Traded Fund (ETF) in the form of the ETFS Agriculture DJ-AIGCI fund could be considered. The epic code is AIGA.A. The fund is designed to track the Dow Jones-AIG Agriculture sub index. Please note that this particular ETF is dealt in US dollars, providing UK based investors with an additional currency risk.

Another possibility might something such as the CF Eclectica Agriculture OEIC. This is a traditional open end fund established in order to achieve long term capital growth via a portfolio of global equity investments that are involved in, related to, concerned with or affected by agriculture and farming related issues.

There are many such examples and potential investors should consider researching the area before committing. Once decided, your broker should be able to transact these funds on your behalf.

This phrase is said to have its origins in the insurance industry, whereby it is said that if someone is protected too well (against an accident for example), then they are more likely to behave recklessly, since they are more than financially covered.

In market terms, the principle is much the same. The debate on Wall Street at the moment revolves around the idea that if a government or central bank bails out a financial institution which is in difficulty, this may encourage those institutions to lend more riskily in the future. This would be on the basis that they know that ultimately they would be protected, regardless of the success or otherwise of their loans. In addition, and as a rule, riskier loans tend to be the most profitable for lenders. As with anything else it is, of course, not as quite straightforward as this and the liquidity of the money markets is something which the Federal Reserve has a duty to protect. Similarly, it would appear very likely that at least one US interest rate cut is imminent, with the possibility of more to follow, in an attempt to shore up the US economy. Any weakness in that economy, much less a recession, would have a knock-on effect globally, since it remains the largest world economy.

For the individual, a simple example might be a credit card, which usually comes with a spending limit. Applying moral hazard to this would be the fear that without such a limit, the borrower would spend recklessly, which could ultimately lead to a default for the lender.

The chances of success may not be high, but there are a couple of venues which may be worth exploring.

Firstly (and assuming that the shares to which you refer are/were UK listed), there are basically three Registrars covering the market, so there is every chance your holdings will be at one or all of these. You will certainly need to provide details of your full name and address at the time, and there may be a faint hope that the Registrars may be able to track something down. The three in question are Lloyds TSB Registrars (telephone 0870 600 3989), Capita Registrars (0870 162 3100) and Computershare (no telephone number unless you know the stocks in question – thus, postal address The Registrar, Computershare Investor Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol. BS99 7NH).

Alternatively, if you approach the broker through whom you dealt, you will need details as above plus your client reference number if you still have access to it. Failing this, it will be extremely difficult for the broker to be able to pinpoint your trades. Good luck!

In the first instance, treat this with extreme caution. As with most things, if something sounds too good to be true, then it usually is.

What you have described sounds like it could be a “boiler room” scam, which unfortunately is becoming all too common. A UK investor may be targeted (the fraudsters may have found your name on a company register showing that you own other shares) with the promise to invest in a company which, at best, is not a listed company and, at worst, does not exist. The company itself is usually domiciled abroad which means that it is outside the remit of the Financial Services Authority (FSA). The very fact that you were cold called should ring alarm bells, since cold calling is not allowed by UK authorised investment firms. The chances are that the shares being offered are in a third country (such as the US) with payment required to be made to yet another country. This “four dimensional” crime, as the City of London Police describe it, is increasingly sophisticated and difficult to convict. As a first rule of thumb, check whether the company calling you is regulated by the FSA – if not, it is probably best avoided. After that, try to find evidence of their location and, indeed, the “sure fire” investment they are peddling. Above all, however, if you are in any doubt – walk away from the situation.

What is the difference between the terms adjusted earnings per share and diluted earnings per share?

First of all, basic Earnings Per Share (EPS) is defined as the profit attributable to equity shareholders divided by the number of shares in issue.

Basic EPS

Profit attributable to equity shareholders
Number of shares in issue

However, in practice, life is a little more complicated. Whilst many calculations are made using the number of shares in issue at the time of the financial year end, best practice is to use the ‘weighted number of shares in issue over the year' – as the number of shares in issue can change greatly over a year's course.

To provide even greater accuracy, a Diluted EPS calculation is often made. Diluted EPS is a calculation made allowing for the many other types of share which a company may have in issue and which will/may eventually become ordinary equity, such as convertible preference shares, warrants or convertible debt. Diluted EPS, in effect, provides a better gauge of the quality of a company's earnings.

Adjusted EPS is a calculation made in order to make a better comparison from one year to the next. Here, a one off-profit such as the sale of a company property is excluded from the profit attributable to equity shareholders. Another example might be foreign exchange fluctuations which have, by luck, resulted in an additional profit.

In summary, dilutive calculations provide a better overall picture, taking into effect likely future events, whilst adjusted calculations are there to make sure we are comparing like with like.

The growth of Employee Savings Related Share Option schemes has again grabbed the spotlight of late, as many companies’ share prices have benefited from the recent strength of global stock markets.

The purists would say that as an investment, their popularity is obvious. Usually a monthly amount is put aside over a 3 or 5 year period, at the end of which the employee has the choice either to convert this cash to shares (if the price is higher than when the plan was taken out, the option price) or simply to have the cash returned if the current share price is below the option price. In the latter case, the only loss to the saver is in terms of the interest they could have earned over the period, although there would be no loss of capital. As such, they have become very popular schemes and are an excellent way to be introduced to owning shares.

With regard to the specific question – and bearing in mind that the reader should seek expert tax advice in addition, the situation is as follows.

Assuming the scheme is an approved scheme and the option has been held for the requisite period then there will be no income tax or CGT payable on exercise of the option.

Once the option has been exercised and the shares are then held, any subsequent sale will be liable to CGT on any gain. The base cost for this CGT calculation is the price paid for the shares. This base cost may be liable to indexation if the option was exercised prior to April 1998 and subsequent taper relief.

For any disposal (of the shares) after 1998, taper relief will apply on the gain between the sale proceeds and (indexed) acquisition cost. For most employees, business asset taper relief will apply which gives 75% relief on the gain if the shares are held for two years.

After taper relief has been applied, if the subsequent gain takes the investor above his CGT exemption for that tax year (assuming the exemption is not being used elsewhere) only then tax will be due.

What are the timings of a normal trading day on the London Stock Exchange?

The working day begins at 07.00, when the Regulatory News Service (RNS) opens. Announcements are made at this time, such as company results for example, giving the market a chance to digest such figures before the pre-Market Auction at 07.50. For ten minutes, the market has a chance to find its level in individual stocks and therefore the indices before the official Market open at 08.00. At 14.30, there is often a flurry of activity as the US markets open.

The UK market then officially closes at 16.30, with a post-Market auction lasting until 16.35. The RNS then officially closes at 18.30 - any significant announcements “after hours” will usually be picked up by the Press and Media in general.

As a result of the takeover, shareholders received 935p per share in cash around July 2006. Those who chose to do nothing at the time are now known as ‘dissenting shareholders’ and appear on a special register. Assuming you still hold a share certificate, it can be sent to the Registrars with a brief letter asking them to forward the takeover proceeds to you.

If you cannot find your share certificate, the process is similar to the above, however, there maybe an extra form or two to complete and a fee (typically £50) will be involved to replace your lost certificate. Keysearch have been appointed by the firm that bought BAA to tidy up the Register and ensure all shareholders receive their proceeds. The fee does seem quite expensive, particularly if yours was a large holding. However, if you prefer someone else to handle these things for you, Keysearch will no doubt be only too happy to help.

Should you wish to proceed yourself, the Registrar is Computershare, and the address is Computershare Investor Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH.

Should I invest for income or for growth?

In much the same way that investors have different attitudes to risk (none, low, medium or high) so they have different attitudes to and requirements from their investments. Traditionally, as they approach retirement age, they would normally looking for income to supplement their day to day living, whereas perhaps at a younger age they may have a requirement for capital growth, to build up the value of their portfolio. In addition, at any given time, they may wish to opt for a mixture of both.

Broadly speaking, income (or high yielding) shares are those which are characterised by historically high dividend payouts – although this cannot be guaranteed in the future necessarily – whereas capital growth shares may be characterised, for example, by smaller companies near the beginning of their corporate life whose aim is to grow the business (and therefore the share price) whilst being less concerned about dividend payments, perhaps because any profits are ploughed back into the business.

On some occasions, investors may be fortunate enough to benefit from a situation where they actually receive both income and capital growth – take the recent examples of Lloyds TSB and United Utilities, both traditionally high yielding shares whose share prices have received an extra boost due to persistent bid speculation.

I have shares in a company which has just been taken over. Within the paperwork I am being offered either cash or Loan notes for my existing shares. What exactly are Loan notes?

Most investors aim to use their annual Capital Gains Tax allowance (currently £9200) by selling enough shares up to a certain level and staying within the amount allowed before CGT becomes due.

In a takeover situation, however, if the offer is just for cash (in exchange for the shares held), a CGT liability might arise through no fault of the shareholder as the entire amount of the holding is effectively sold to the new company. Thus, for some time now, acquiring companies have been offering a loan note alternative to the cash offer.

Loans notes are effectively IOUs. The issuing company – normally the predator in a takeover situation - promises to pay investors a set amount of money at some point in the future. Normally the issuing company will write to holders of the loan notes and ask if they wish to redeem them. Loan notes are still securities in the new company, but they are not usually quoted, and are redeemable at set dates, normally twice a year. Their effective purpose is to help mitigate a potential Capital Gains Tax (CGT) liability, by enabling the investor to defer the CGT liability and to sell the shares at a pace which ties in with their CGT allowance.

New Dragon Oil share certificates were issued in September 1997, with anything issued before that being invalid. Since that time the shares have changed from Irish punts to Euros, but the quantity of shares and the certificates remained unchanged.

The traditional way to trade shares (either buying or selling) is through a stockbroker. The stockbroker charges a commission for which they ensure that both the buyer and the seller of shares are genuine, that the shareholding is genuine and that the money and shares change hands smoothly. Equally importantly, they will ensure that you achieve a fair price for the shares. Commissions these days are very reasonable, with a starting rate of around £10 not being uncommon.

Technically, it is possible to sell your shares without a stockbroker, in much the same way it is possible to sell your house without an estate agent, but you will obviously bear all the risks and have to ensure that all procedures and laws are followed. If you are confident on these points ( eg you get a good price, stamp duty is paid to HMRC, the Registrar is informed, etc) there is no reason why you cannot sell your shares to your neighbour or anyone else.

It is also worth remembering that Dragon Oil shares are Irish Registered and as such, all transactions must involve paying stamp duty to the Irish Government, which will complicate the process even further if a stockbroker is not involved.

I have been offered a Save As You Earn/savings related share option scheme by my company. What should I be looking out for?

The growth of Employee Savings Related Share Option schemes has again grabbed the spotlight of late (Tesco employees, for example) as many companies’ share prices have benefited from the recent strength of global stock markets.

The purists would say that as an investment, their popularity is obvious. Usually a monthly amount is put aside over a 3 or 5 year period, at the end of which the employee has the choice either to convert this cash to shares (if the price is higher than when the plan was taken out, the option price) or simply to have the cash returned if the current share price is below the option price. In the latter case, the only loss to the saver is in terms of the interest they could have earned over the period, although there would be no loss of capital. As a further sweetener, the option price is also, often, at a discount to the market value of the shares at the time.

Whilst there may be a CGT liability on selling the shares (after the CGT allowance and taper relief have been applied), no income tax or National Insurance is payable on receipt of your option. As such, these schemes have become very popular and are furthermore an excellent way to be introduced to owning shares.

What exactly is meant by the terms “bottom-up” and “top-down” investing?

“Bottom-up investing” is a term often used in the fund management industry to describe the style of investing which a particular fund manager adopts. Bottom-up investing focuses on the analysis of individual stocks and de-emphasises the significance of economic and market cycles.

Bottom-up investing assumes that individual companies can do well even in industries or economies that are not performing particularly well. “Top-down investing”, on the other hand, is the complete opposite.

Top-down investing focuses on the analysis of economic and market cycles and therefore de-emphasises the significance of individual stock picking.

Top-down investing is an attempt to select individual stocks and industry sectors which suit the point at which the fund manager believes the economy, stock market cycle or indeed industry will move to next.

Designations on a certificate do not convey ownership to anyone other than the registered shareholder (i.e. the parent). In order to transfer the shares, the reader should contact the registrar and 'gift' the shares to the child. Since the shares have been 'gifted', then the new owner is deemed to have paid the same price as the original purchaser on the same date, so all tax liabilities simply transfer from one to another. In terms of the procedure itself, an appropriately completed Stock Transfer Form (available from legal stationers) needs to be sent to the Registrar. The Registrars have details on how to complete this form, but a Stockbroker should also be able to help.

The certificate will also need to be sent with the Stock Transfer Form. If the certificate were to get lost in the post, the Registrar would charge a fee to get a replacement (typically about £50 in total). For peace of mind, the reader may wish to send the documents by Recorded Delivery or Special Delivery. Should the reader be able to deliver ‘by hand', make sure to ask for a receipt for the documents.

BAA was taken over by the Spanish company Ferrovial for 935p in cash. There was a loan note alternative, but this may not have been available for US investors. This would need to be verified with the company, as would the US tax position for UK shares.

In terms of this query, the prices are not readily available on the Internet to the best of our knowledge. For other readers requiring historic prices, the two obvious options are either to request this information from their stockbroker or to contact the London Stock Exchange. The LSE's “bible” of historic prices, the “Stock Exchange Daily Official List” is printed every day and can be obtained at £10 per day for old issues. The date mentioned of 28 August 1999 was in fact a Saturday, so we have found closing prices for the nearest two working days – Friday 27 August 641.5p and (following a Bank Holiday) Tuesday 31 August 650p.

I have a certificate for 1000 shares in London Securities. They are ordinary 15p shares and the cert is dated 1988. Are they of any value?

In 1992, the shares underwent a consolidation of 35 Ord. 15p shares into 1 Ord 1p share. This would have given you a new holding of 28 shares. However, at this point the old certificates became invalid and new certs were issued.

In 1994, there was a further consolidation of 100 Ord. 1p into 1 Ord. 10p which would have wiped out your holding. In 2003 the company changed its name to London Security plc and they look to be still trading now.

It is unlikely therefore that you still have a holding, and certainly the certificate you have has been replaced. For the removal of any doubt, you might like to contact the Registrars for the company – Capita Registrars, tel 0870 162 3100.

The date to watch out for is the “ex-dividend” date. This is effectively the cut-off time for the next dividend (most companies pay a dividend twice a year) and, all things being equal, the share price will be marked down that day by the amount of the dividend. Thus, if you are buying shares and want to ensure you receive the next dividend, you would need to buy the shares “cum dividend” (with dividend) any time before the “ex” date. Most companies will have details of the ex-dividend date on their website.

In broader terms, and in the current environment of (historically) low interest and savings rates, higher yielding equities can provide a welcome bonus to a portfolio. At the present time, many companies are enjoying higher cash balances which give them the ability to pay out more in dividends.

By looking at studies of equity returns over the years, it quickly becomes apparent just how important it is to consider the dividend and not just the capital element. In particular, the reinvestment of dividends can have dramatic results. For example, £1000 invested in equities at the end of 1899 would, by the end of 2005, have given a return in real terms of £1970. With income reinvested, however, this figure would have been £224 260, over a hundred times greater. (Source: Barclays Capital Equity-Gilt Study 2005).

I have some O2 shares. What are they worth and how do I cash them in?

O2 shares were subject to a takeover in February 2006 by the Spanish company Telefonica SA, for £2 in cash. (There was a Loan Note Alternative at the time, which we believe is no longer available).

The ‘Compulsory Acquisition’ phase ended in May 2006. If you still have your share certificate, you are now known as a ‘dissenting shareholder’ and will appear on the shareholder register as such.

Your £2 per share will effectively still be waiting for you and it can be claimed by contacting Lloyds TSB Registrars on 0870 850 6907, address Lloyds TSB Registrars, The Causeway, Worthing, West Sussex. BN99 6DA. (The telephone number is purely for dissenting shareholders and not for other enquiries).

The market seems weak at the moment, what has the dollar got to do with this?

Currency movements appear to be underlying current market declines. Leading into the traditionally quiet month of December, corporate earnings begin to take a back seat, leaving equity investors looking for other factors to concentrate on.

Weakness in the US dollar is potentially bad news for future UK corporate profits, Glaxo, Wolseley, Hanson and Pearson are all classic examples, since each conducts a lot of business in the US.

As the major global currency, the impact of the US Dollar weighs heavily on global commerce. The current opinion for the future of the dollar from the experts in the foreign exchange markets tends to be coloured by a number of concerns. The twin US deficits of the trade and budget balances have long been a concern from a national perspective.

Furthermore, Central Asian banks, which hold vast reserves in US dollars, are worrying about further dollar weakness and switching out in anticipation - with the Euro being first on their switch lists. This is potentially magnifying the US dollar's current decline.

However, the major underlying concern is likely to relate to future interest rate movements. US interest rates – despite recent steadfast comments from the Fed - could be heading downwards given recent weak economic data, whilst the UK and European Central Bank's next moves look likely to be up. This is all exaggerating potential interest rate differentials.

Of course, there are those in the markets who believe that the US government is eager to see a weaker US dollar. US exports become much more attractive and a weaker currency should help stem the tide of Asian imports, particularly from China.

I have shares in British Leyland. Are they worth anything at all?

The short answer is very possibly.

Originally called British Leyland Ltd, the company changed its name in July 1978 to BL plc. In July 1986, there was a further name change to Rover Group. The company was then acquired by British Aerospace in October 1988 for 100p per share (or, as an alternative, 1 British Aerospace share for every 4.93 Rover shares held). Since then, British Aerospace (now known as BAE Systems) split 1 into 4 shares in May 1998 and these shares are still valid today, the current price being around about 418p.

If the reader needs full confirmation, it would be worthwhile contacting the Registrars of the company – Lloyds TSB Registrars, The Causeway, Worthing, West Sussex. BN99 6DA. Telephone 0870 600 3989.

I have noticed that Tesco shares are doing well recently. What are the reasons for this?

After quite a long period of relative underperformance, the shares have indeed had something of a run of late.

Over the last 6 months, the share price has increased nearly 25% to its current level of around 395p. Recent interim results at the beginning of October showed that, if investors had any doubts about the sustainability of Tesco's growth strategy in its core food area, then these figures answered them. The group continues to go from strength to strength. It wasn’t just rival supermarkets which were looking on with envy, but the majority of general retailers were again casting a worried eye - with UK non-food sales on a like-for-like basis having increased by an impressive 12.6pc. Overall, Tesco remains the stockmarket darling of not only the food retailers, but of the entire UK retail sector. It is the only player with a serious and credible international expansion policy.

Despite the strength of the share price in recent months, market consensus opinion remains cautiously positive.

I have a share certificate for 196 Ordinary Shares of IR25 pence each in Dragon Oil plc which I acquired in 1997. I have since remarried and they are in my old married name. Can you tell me please:

If it is worth anything, and if so how much.

How I would redeem it, especially given it is in my old married name.

Dragon Oil certificates from 1997 would appear to be still valid. If the cert has a red border – it is valid. The price is about 145p per share. To be certain about the validity, it is best to check with the Registrar – in this case, Computershare Investor Services, PO Box 82 , The Pavilions, Bridgwater Road , Bristol . BS99 7NH.

In order to change the name on a share certificate, you will need to send the share certificate to the Registrars, together with the official documentation confirming the name change (marriage cert, deed poll, etc). Confusingly, in this example that is the Irish part of the Registrar – at Computershare Investor Services ( Ireland ) Ltd, Heron House, Corrig Road , Sandyford Industrial Estate, Dublin 18, Ireland .

Once the name change has been recorded, the shares can be sold by any stockbroker.

The shares could probably be sold without the name change taking place, but the stockbroker may charge extra for the additional work of performing the name change themselves.

Chaco Resources is an active stock on the market, but I do not see much press coverage. Where can I pick up the latest news on this stock?

Chaco Resources is an AIM listed company with a market capitalisation of approximately £77 million. It is a group engaged in investment in oil and gas exploration and development. In addition, it is not a company which makes many announcements, except regulatory ones – the last one, for instance, was simply confirmation that the AGM will be held on 10th October. The reader may wish to consider finding websites or indeed publications which specialise in such “growth” stocks. There is also a company website which should give further information and, for the latest news on the shares and a general background to the company it may be worthwhile trying either or both of the following links - http://uk.finance.yahoo.com/q?d=t&p=&q=q&s=chp&m=L or http://www.hemscott.com/companies/company-summary.do?companyId=4437

What is Enterprise Value?

Usually a company is measured in value by its market capitalisation, that is, the number of shares in issue multiplied by the share price. Enterprise value can be used as an alternative, and is calculated as market capitalisation plus debt, minority interests and preferred shares, less cash.

In some ways this is a more accurate value of a company’s worth since, in the event of a takeover for example, whilst the market capitalisation is relevant, the acquiring company will be receiving the target’s cash and of course taking on its debt also. As such, it has been described as the “theoretical takeover price”.

Can you please tell me why the Pacific Media shares which I have held for many years have increased significantly during the last two weeks?

A capital reorganisation is the reason for the increase in the share price. This was effective on the 1st August and the shares went to a post reorganisation price of around 60p, although they have subsequently halved.

The following are excerpts from a statement made by the Company on 30 June 2006 – “ Since 20 January 2000, the Company's share price has fallen from 14.00 to its current price of 0.05p. As a result of this, the substantial majority of the Company's shareholder base by number holds only a small minority of the existing ordinary shares of 0.01p each (Existing Ordinary Shares) by value. As at 29 June 2006 , Pacific Media had approximately 35,000 Shareholders. Of these, approximately 29,500 Shareholders (representing some 84 per cent. of the total number of Shareholders) have registered holdings of less than 40,000 Existing Ordinary Shares which would be valued at less than £20.00 at yesterday's closing price of 0.05p……Under the proposed terms of the Capital Reorganisation, shareholders who hold fewer than 40,000 Existing Ordinary Shares would not be entitled to receive any new ordinary shares of 16p each issued pursuant to the Capital Reorganisation (New Ordinary Shares). However, in accordance with the Listing Rules, these fractional entitlements would be aggregated and sold in the market for the benefit of Shareholders and distributed to them, except that any net proceeds which after the deduction of the expenses of sale are less than 5.00 would be retained for the benefit of the Company. This would allow these shareholders to dispose of their investment without incurring the associated dealing costs…..The Directors are proposing to consolidate every 40,000 Existing Ordinary Shares into one intermediate ordinary share of 4 each (Consolidation) and to sub- divide each intermediate ordinary share of 4 each thereby arising into 25 New Ordinary Shares (Sub-division). On completion of the Capital Reorganisation, each Shareholder shall…receive 25 New Ordinary Shares for every 40,000 Existing Ordinary Shares held by them on the Record Date.”

Depending on the number of shares the reader holds, it may be worthwhile contacting the company, or indeed the Registrar, to find out how he or she stands with regard to the above.

I’m obviously missing something about the “£9 billion returned to shareholders”. I stand to receive about £600 shortly, while my newly reduced shares are worth about £600 less. What is the point of this expensive exercise?

The reader refers to the announcement by Vodafone in May this year of a special dividend to shareholders resulting from the disposal of their Japanese unit. The monies (by way of the issue of “B” shares, or cash) were payable on 11 August at 15 pence per share.

From a market perspective, this is positive news. It centres around the return on capital, which institutional investors believe they can maximise by investing these monies elsewhere, rather than the cash effectively sitting in the Vodafone bank account. It also lessens the likelihood of an acquisition being made, which would not be received favourably whilst Vodafone continues to attempt to get its own house in order. Whether it is an expensive exercise is moot – companies are very streamlined in the issuance of shares and dividends at relatively low cost – and of course it is a small price to pay as opposed to making an acquisition which did not work out, or indeed otherwise failing to put this cash to good use.

I bought some shares many years ago but in my parents’ name (with my initials suffixed, I believe this was because of my age). How do I transfer them back fully into my name?

The probable reason for the suffix is, as you rightly suggest, that people under the age of 18 are unable to hold shares in their own name. For this procedure, you will need to gift the shares. An appropriately completed Stock Transfer Form (available from legal stationers) needs to be sent to the Registrar. The Registrars have details on how to complete this form, but a Stockbroker should also be able to help.

The certificate will also need to be sent with the Stock Transfer Form. If the certificate were to get lost in the post, the Registrar would charge a fee to get a replacement (typically about £50 in total). For peace of mind, you may wish to send the documents by Recorded Delivery or Special Delivery. Should you be able to deliver ‘by hand', make sure you get a receipt for the documents.

As a Vodafone shareholder, am I right in thinking I should have received a cash payment from the company?

Shareholders as at the close of business on 28 July 2006 will participate in a return of cash, which is being achieved by an issue of ‘B' shares. Shareholders will receive 1 ‘B' share for every share held. The company is also undergoing a consolidation whereby shareholders will receive 7 New Ordinary Shares for every 8 shares currently held – this consolidation should maintain the comparability of future and historic share prices. The new shares will be issued on the 31 July 2006 .

The ‘B' shares will be redeemable for 15p per ‘B' share and holders have 3 options:

1) Receive an Income payment

2) Receive a Capital payment

3) Defer redemption until a future date.

In all cases holders will receive a payment of 15p per share. If holders opt for either option 1 or 2 then the proceeds are expected on or around the 11 August. In the case of option 3 the ‘B' shares will be redeemable in January and July in 2007 and 2008 with all outstanding ‘B' shares being redeemed in August 2008. The B shares will not be listed, therefore if you elect to defer redemption then you will only be able to redeem them at one of the redemption opportunities.

What is behind the recent share price hike in the supermarket William Morrison?

Over the last week the share price has indeed risen by some 4%, based on rumours of a potential £6.5 billion bid for the company. It is not clear who might be in the frame although a private equity consortium remains the most favoured idea, should a bid emerge.

Morrisons had a torrid time in 2005 in particular, struggling as it did to complete the integration of its purchase of rival Safeway. There were a number of profit warnings throughout the year and, not surprisingly, the shares underperformed the wider market.

In comments made earlier this year by the company, the market took some glimmers of hope that perhaps the worst was over and, with the possibility of a bid now imminent, the shares are generally regarded as worth holding onto.

Do you know of any free reports on the Standard Life flotation?

With the price range having been confirmed as far as possible, and with the likelihood of the float being set for July, there have been some more developments around the whole issue of the demutualisation. Hargreaves Lansdown have produced a free report.

Read Yahoo!'s special feature about the Standard Life flotation .

Could you tell me what is happening with the Whitbread share price?

There has been a “Scheme of Arrangement”, effective 26 June 2006, whereby shareholders have received 17 new ordinary shares for every 20 existing ordinary shares, as well as 1 new B share for every 1 existing ordinary share held (B shares can be redeemed at 155p each). This means that the actual shareholding value should remained unchanged, as follows –

Closing price of Whitbread Friday 23 rd June = 1125p. Theoretical opening price on Monday 26 th June = 1125p x 20/17 = 1323.53p less value of B share 155p = 1168.53p. By way of interest, the shares actually closed on Monday at 1156p.

Please note that new certificates will be despatched on or around 6 th July and this will mean that existing certificates become invalid. If the reader does not receive the replacement certificate, he or she should contact the Registrar – Computershare Investor Services, on 0870 702 0002.

As a BAA shareholder, what are the terms of the Ferrovial offer?

Following Goldman Sachs' decision to withdraw from the battle to acquire BAA, the Ferrovial led consortium has won the day with its 950.25p per share offer. BAA's management is advising shareholders to accept the terms of the bid so it seems most likely that the offer will succeed. The terms/choices – bear in mind that action is required quickly, responses for acceptances have a deadline of 26 June - are as follows –

• the “ordinary recommended final offer” of 950.25p cash, comprising 935p cash per share and BAA's final dividend of 15.25p per share

• the “ordinary partial share alternative” of 898.5p cash per share plus one fifth of an “Altitude Assets” share. These shares will be quoted on AIM and will enable the investor to retain a stake in the “new” company. The Altitude Assets shares are initially valued at 184.75p, so a fifth of that value equates to 36.95p

• the “loan note alternative” where part of the proceeds can be taken in loan notes, thus deferring the individual's CGT liability, if there is one

• the “ordinary additional share election” whereby the investor can request less cash and more Altitude Assets shares.

What is meant by the term “triple witching”?

“Triple Witching” in the market signals the quarterly occurrence (on the third Friday in June, September, December and March) whereby the contracts for stock index futures, index options and equity options all expire on the same day. It takes place between 10.10am and 10.30am and so the next one is due this Friday, the 16 th June.

Between these times, there are usually high levels of trading activity coupled with unpredictable price movements. This is due to the market realigning options, futures and underlying ordinary share prices. At Hargreaves Lansdown , our advice to clients is, if your order is not time critical, then consider holding off until later in the day when the market has stabilised. In addition, Friday's event could prove particularly volatile given the wild gyrations which the markets have endured over recent weeks.

If clients wish to trade on Friday morning, they should consider:

• Setting a limit price on any order placed

• Monitoring the spread and volatility of the stock in question

• Standing back entirely from the market for this period if the order is not time critical

What has happened to the Intercontinental Hotels Group share price?

Since its separation from Six Continents in April 2003, IHG has made a number of hotel disposals and has returned some £2.75 billion to shareholders in the form of share buybacks and special dividends. The latest of these became effective on Monday 12 th June, whereby a consolidation saw holders of 8 ordinary 10p shares receiving 7 ordinary 11/37p shares, as well as a special dividend of 118p. The share price was therefore adjusted accordingly and shareholders will receive new share certificates shortly after 22 nd June. In terms of the value of shareholdings, these will have remained the same less the special dividend. For example, a holder of 560 “old” shares had a value of (closing price 9 th June 941.5p) = £5272.40. As of Monday (theoretical opening price of 958p) they would have 490 “new” shares = £4694.20. In addition they would have received a special dividend of 490 x 118p = £578.20. Total = £4694.20 + £578.20 = £5272.40.

A number of the publications I read have sections devoted to “Directors' dealings”. Is the amount of space which they take up justified?

My colleague Keith Bowman has recently looked at this issue and had the following comment – “In theory, no one should be in a better position to judge the potential of a company's sales, profits and future prospects than its directors. With this in mind, investors would be wise to pay some attention to the world of directors' share dealings for potential hints on what the future may bring.

However, at this point, it is worth noting that as is often the case in life, the theory and the practice do not always tally. History is littered with examples where the signals regarding directors' dealings eventually proved incorrect. Directors do occasionally prove overconfident in their company's likely future sales progress and therefore profit growth. Being the leader and possibly founder of a company can generate an element of almost blind optimism in its prospects.

Directors could be buying purely to send a note of optimism to investors. While this might seem an expensive habit, performance bonuses paid to directors can be linked to share price performance. Most directors are fully aware that the wider world of investors will be watching their every share transaction.

A large director's share sale could be being made for tax purposes in order to manage capital gains tax liabilities for example sake, as opposed to investors' suspicions that trading at the company must be deteriorating. Furthermore, a director may find him or herself entangled in a messy divorce and therefore having to sell assets (shares in his or her own company) in order to settle the affair. A sale could simply be being made because the director now considers his investment exposure to the fortunes of his/her own company are now too high, and portfolio diversification needs to be introduced.

Furthermore, do not forget that there are legal rules surrounding the timing of directors share transactions. A company moves into what is known as its ‘closed period' two months before its results are scheduled to be announced. Therefore there are large periods of time throughout the course of a year when directors are prohibited from dealing - given the sensitive (inside) information regarding coming results which they have knowledge of.

In summary, directors' share transactions can be made for a whole number of reasons which do not necessarily cast a judgement on future trading prospects at the company. That said, many directors' share transactions are likely to be made out of genuine judgement on the company's future prospects.”

I'm one of the many that will benefit from the windfall from Standard Life. Now do I take the windfall or the shares?

Nearly 2.5 million members of Standard Life could shortly be receiving windfalls of anything up to £1700, assuming that the imminent vote to demutualise is agreed. Hargreaves Lansdown will be producing a free, no-nonsense report for those involved in the demutualisation who are not sure what to do next with their shares, and the report also gives a background as to how the demutualisation has arisen and what it means for the company.

In a brief, four part, report, Hargreaves Lansdown will consider

• An introduction to the demutualization. Why, when and how. Why it is important to Standard Life. What a Stock Market flotation could mean to them. Key dates and actions required for members/potential shareholders.

• Standard Life as an investment opportunity. What are the strengths, weaknesses, opportunities and threats for them? How the market views the company, and key points which individual investors may wish to consider

• Why accepting shares in nominee format may limit choice and may not be the ideal thing to do for many investors

• How to add to the windfall for those investors who wish to invest further in Standard Life – details of an efficient and simple dealing service from Hargreaves Lansdown .

If you would like a copy of this free report, which should be available within the next couple of weeks, please feel free to register your interest here .

What has happened to the Unilever share price? It seems to have jumped from around 520p to 1170p?

At its AGM on 9 May 2006 , a share consolidation was agreed and this was implemented on Monday 22 May. Previous holders of 20 ordinary 1.4p shares now have 9 ordinary 3 1/9p shares. Thus, on Monday the share price was adjusted to take this into account – at the close of business on Friday 19 May, the price was 525.5p, which was therefore adjusted to 525.5 x 20/9 = 1167.78p in time for Monday's open. Equally, holders of Unilever shares will have had their holdings amended accordingly. For example, someone who held 100 “old” shares (price 525.5p, therefore value £525.50) will now hold 100 x 9/20 shares = 45 shares (price 1167.78, value £525.50). Replacement certificates are to be posted on Friday 26 May and if not received shortly thereafter, investors should contact the Registrar, Computershare Investor Services, on 0870 703 0300.

Certain companies are only known by their initials – EMAP, EMI, HMV, WPP – are these dealing codes or do they mean something?

All quoted companies do indeed have their own (Stock Exchange) dealing codes, but the stocks mentioned here are slightly different, since they originate from historic names, sometimes unconnected with what their main line of business is today. EMAP originally stood for East Midlands Allied Press, EMI for Electric and Musical Industries, HMV for His Master's Voice and WPP (oddly) for Wire and Plastic Products – apparently Sir Martin Sorrell chose this wire basket manufacturer as his foundation company for building up the global advertising company we know today. Other founders or owners have similarly added their mark, such as the partner T E S tockwell and founder Jack Co hen (Tesco) and Sir Alan Sugar – or A lan M ichael S ugar Trad ing (Amstrad).

What is meant by the term “net asset value”?

This term is usually (but not exclusively) used in the same breath as Investment Trusts. The net asset value (NAV) is a company's total assets, less its liabilities, in relation to the number of shares in issue and is usually expressed in pence per share. For example, company A has £25m in assets, £5m in liabilities and 40m shares in issue. The NAV is therefore 25m less 5m divided by 40m = 50p per share. Investment Trusts where the share price is less than the NAV are said to be trading at a discount (or a premium if the opposite applies). This is of particular interest to value investors, who wish to know the worth of their investment – in intellectual property shares, or other “knowledge” based shares it is much less of an issue, since the “assets” for those companies are largely intellectual rather than physical.

Could you explain what ETFs are?

Exchange Traded Funds, or ETFs, are index tracking funds/shares which are listed on the London Stock Exchange in much the same way as any other share. They allow the investor to access a basket of shares – such as the FTSE100 for example – through the purchase of one investment (as opposed to 100 for the FTSE100). They therefore attract the diversification of these indices without the need for stock specific investments, and are eligible for ISAs but attract no stamp duty. There is a small annual management fee, along with the broker's commission for dealing. For further details the reader might like to visit the LSE website at www.londonstockexchange.com

I keep hearing the term “quadruple play” when TV or telecom shares are being discussed. What does this mean?

Whereas content remains king for Media companies, especially of course TV and Radio, the way this content is delivered is beginning to converge at a rapid pace. At the moment, it is not unusual for us to have different suppliers – or connections – for our TV, internet (say broadband), fixed line telephone and mobile telephone. A number of providers are now positioning themselves to being able to provide all four of these services together under one roof – the so called “quadruple play” arena. In theory, this should result in efficiency gains as providers (and indeed consumers) simply use the one “pipe”, or connection for all these services. Some people will choose not to put all their eggs in one basket or simply not wish to move from their existing provider(s) – nonetheless, this is seen as a market which will explode and some household names (BT, NTL, BSkyB) are lining up for a share of the action.

Where next for interest rates?

The next interest rate decision is due on Thursday (4 th May) and the vast majority of economists expect no change from the current rate of 4.5% - indeed, many are predicting that this rate will hold for the remainder of the year. The difficulty in calling the next move (if any) is that the available economic indicators are sending mixed signals – certainly, until recently, most economists were predicting a modest rate reduction at some point over the summer. By way of example, contrast two of the leading indicators, consumer spending and the housing market. Some indicators are implying that consumer spending is beginning to return slowly, whereas others point to the general levels of consumer debt, along with surging household bills due to jumps in oil and gas prices. In terms of the housing market, mortgage approvals seem to be ticking up, as do general house prices – but is this just a London effect, or is it countrywide? Thus, on balance, even though other economies may still be in moving upwards in interest rate terms (US, China , Japan ) it seems that the precarious balance on which the UK stands does, for the moment, suggest that the economy is stable and an interest rate move is unnecessary in the short term.

My wife and I have both sold some shares this year. I have made just over £8,900 in gains and my wife has made £7,700. Can we pool our Capital Gains Tax (CGT) exemptions and avoid paying any tax?

Unfortunately not. The CGT exemption is £8,800 per person, not £17,600 per couple. You should have transferred ownership of assets to your wife before selling the shares, so that the gains were more evenly distributed, and that would have reduced your tax. You can't actually share your exemptions after the gains have crystallised. Another point worth thinking about for future years is that shares held within an ISA (or indeed a Self Invested Personal Pension, commonly known as a SIPP) are free of Capital Gains Tax. If in any doubt as to tax treatment of shares or dividends, it would be best to consult your normal tax adviser.

I've inherited some shares from my grandmother and want to sell them, but I don't know how much she paid for them so I don't know what the CGT liability might be.

It doesn't matter what your grandmother paid for them. In your hands, the 'base cost' for CGT purposes is the probate value of the shares. Ask the solicitor who dealt with the probate to tell you what that is – any chargeable gain to you will arise when you then dispose of the shares, with your acquisition price being the probate price as above. Incidentally, the tax situation regarding the estate will have been dealt with by the executor or administrator, although we believe that CGT is not actually payable on death by the estate – as in the question above, for the full tax implications please consult your normal tax adviser.

I have found some old share certificates. How can I check whether or not they are still valid?

There are a number of ways to do this. First of all, even if the name of the companies which you have found still exist, you will need to check that the par value on the certificate (for example, ordinary 25p shares) is still the same – if the company has undergone a consolidation or bonus issue, you may have more (or less) shares than you think and, in any event, the share certificate may have been superseded. If you cannot find the name listed on the share certificate, you could contact the City Business Library – go to www.cityoflondon.gov.uk and then follow the link to “ Business City ” or telephone 020 7332 1812. Another thing you may wish to try is contacting the Registrar for the company – on the basis that there are 3 registrars who more or less cover the entire market, the chances are that you will have some success with at least one of them! The 3 registrars in question are Computershare ( www.computershare.com , telephone 0870 702 0000), Lloyds TSB Registrars ( www.lloydstsb-registrars.co.uk , telephone 0870 600 3989) and Capita ( www.capitaregistrars.com , telephone 0870 162 3100).

Can you suggest any sites that give the latest or current analysts' target prices for shares in the FTSE or Dow? This would greatly assist me in knowing when to enter or exit a share.

There are not too many such sites to my knowledge which cover target prices closely, since they are subject to change on a fairly regular basis. This being said, the site Digital Look does have a fair smattering of reasonably recent broker targets and may be worth a look, certainly for UK shares – if you try www.digitallook.com and then follow the link to (the) “Company” (in question) and then on to “Broker views” you may have some success. There are also certain updates in the Press, usually at the weekend, some of which carry target prices, such as the Telegraph on a Saturday. Finally, elsewhere on this site is a “broker recommendations” link which will give roundups along with occasional references to target prices.

Can you explain what is meant by the term “rolling settlement”?

Settlement is simply the process by which investors pay for shares they have bought and receive payment for shares they have sold. Before 1994, “account settlement” was the norm. The year would be divided up into account periods of usually two weeks, and there would be one settlement day, usually the Monday week after the end of the account period. If an investor bought and sold shares during the account, the net figure would be settled (debited or credited to the account) on account day. This system was replaced by rolling settlement, where settlement takes place a certain number of working days after the trade. The initial number was 10 days, then 5, but is currently set at 3 working days – you may have heard the expression T+3, which simply means that settlement day is T(rade date) + 3 (working days until settlement). This also means that purchases and sales cannot be directly offset against each other unless they are made on the same trading day. The only way you are likely to encounter say, T+10 these days is if you are selling shares for which you hold a certificate, since the process takes longer and could not be achieved in 3 working days – and note that some brokers charge more for settling this way.

What is a placing?

A means of raising capital for a company, either pre or post flotation. For example, when a company initially comes to the market, it can raise capital in two main ways - , either as an 'offer for sale' to the general investing public or as a “placing” of shares with institutions. Post flotation, if it needs to raise further capital, it may elect to go for a “rights issue” (see previous definition below) or, again, “place” the shares with certain larger shareholders.

The privatisation and demutualization boom of the 1980s and 1990s, where offers for sale were widespread have, in recent years, been largely replaced by placings. The accepted wisdom of this is that the cost of placings is generally lower for companies than public offerings and the speed to market is quicker. In recent times, however, some companies have realised the importance of “smaller” shareholders, especially if their customers are also likely to be their shareholders, and there are tentative signs that there may be some return to an offer for sale environment, although extremely unlikely to be of the scale seen in the 80s and 90s.

Is this a good time to buy Government or Corporate Bonds or should I wait until interest rates next peak?

Just to clarify, Government bonds (or gilts) are seen to be low risk, whereas Corporate bonds carry slightly more risk on the basis they are attached to the financial health of the company issuing them. For the purposes of this answer, I shall refer to bonds in general. Conditions in the UK bond markets remain unprecedented – there have been few times in history when opinion on the next move in UK interests has been so divided. Your question implies that you think interest rates have not yet peaked. Many economists would agree, pointing to the spectre of rising energy and commodity costs. However, just as many economists would disagree and consider that rates have already peaked, given rising UK unemployment and the lid on inflation which competition from the likes of China imposes on potential price increases. Added to this uncertainty is the massive jump in demand for bond investments which changes to UK pension rules have brought with them. It appears that UK pension funds just can't get enough long term bond investments in order to match their pension fund liabilities. Is this situation causing a temporary bubble in bond prices? No one really knows and only time will tell. Given such an uncertain background, the answer might be to drip feed any funds into the bond markets over a series of months or even years. That way you will hopefully achieve an averaging effect and mitigate any excess which could currently be driving bond markets. You could do this yourself depending on the amount of funds you have to invest or you could utilise the services of a monthly savings scheme attached to a managed bond fund.

The Chancellor mentioned REITs in the Budget and this seemed to have a positive effect on property shares. What are REITs?

Real Estate Investment Trusts, or REITs (pronounced “reets”) are already popular in other countries such as the US and Japan . REITs pool investors' assets and buy a portfolio of properties, which are then let to individuals or companies. The REITs themselves will be normal shares and so give investors access to property movements with a couple of important differences from where we are today. At present, dividends from shares in property companies have the basic rate of tax deducted, which is not reclaimable. In REITs however, whilst the basic rate will be deducted (and topped up to the higher rate if applicable) this can be reclaimed if the investment is in an ISA or a pension. For the companies themselves, they will be free from Corporation Tax providing that they distribute 90% of their profits to investors. There will be a 2% charge to switch to REIT status – both of these figures were expected to be much higher, so this news was well received and some property shares jumped 10% on the basis that they are even more likely to convert. Many other companies with a large property portfolio (such as Tesco) are known to be considering whether to switch their property to REITs. Finally, in terms of risk, you should note that REITs will be nearer to shares than to direct property, so they will be inherently higher risk.

I was previously a Marconi shareholder – could you tell me what the latest position is?

Marconi Corporation recently completed the sale of the majority of its telecommunication equipment and international services businesses to Ericsson for approximately £1.2 billion. To reflect the company's new focus as a telecoms service provider, Marconi has changed its name to Telent PLC.

Following this disposal, the company announced that it would be returning around £590 million to shareholders in the form of a Special Dividend, and also undergoing a share consolidation. The Special Dividend has been set at 275p per share and is expected to be paid to shareholders on 31 st March, to shareholders as at 24 th March. Similarly, it is expected that the share consolidation (2 new shares for every 7 previously held) will become fully effective on Monday 27 th March. By now, you should have had such confirmation from the company – if not, I would suggest you contact the Registrars (Computershare Investor Services) on 0870 702 0002.

I'm trying to find a site which lists ex-dividend dates for shares. I've been unable to find this information – can you help? – and - Is there a database or tool that summarises the ex-div dates for all companies? Is there a certain time of year where most companies would have the ex-div?

There is no particular time when ex-dividends are marked, except to mention that in February there was a raft of full year company results, at which time the full year dividend (date and amount) would normally be confirmed. In terms of a site which lists ex dividend dates, the reader(s) might like to try www.digitallook.com then go to “companies” and then “company diary”. Although these details are listed week by week, they do go a fair way into the future and so can give a very good summary of imminent dates. Beyond this, the reader(s) are probably going to need to find a subscription (or at the very least registration) site such as www.investorschronicle.co.uk or www.advfn.com

I have always wondered – what is the actual difference between “stocks” and “shares”?

It's really more of a historical distinction – strictly speaking, stocks are bonds, such as Government bonds (“gilt-edged stocks”, or gilts) whereas shares are equities, “ordinary shares of 25p”. These days the boundaries are rather more blurred, and shares are often referred to as stocks, although not vice versa. In the US , shares are probably best known as stocks, due to their descriptions, such as “common stock of no par value”.

What does the phrase “corporate actions” mean?

This is basically a term which applies to any event which affects shareholders, and one which needs to be monitored to reflect the new value of the shareholding. For example, a bonus (or scrip, or capitalisation) issue is a corporate action, where an investor receives (say) one new share for every share held – the corporate action would have the effect of doubling the investor's shareholding (and to compensate, the share price would halve in the market). Other examples of corporate actions are rights issues, stock consolidations/splits, and mergers. In broad terms, corporate actions will have one of three outcomes – (i) to alter the acquisition cost of the investor's shares for tax purposes, (ii) to alter the number of shares held (as in the scrip example above) or (iii) to alter the ratio of shares held by the investor in relation to the total number of shares in issue (such as a rights issue).

This deal was worth around £2 billion and was completed on 31 st January, with the proceeds being paid at the end of February to shareholders. Some of our clients had a similar enquiry and so we produced a very brief report with some commentary on the sector. You can view this free here.

I have had shares in Griffin Mining since the end of last year. The company looks sound – no debt – ready market for zinc – even gold in the offing – good Regulatory News Service reports – why the low price?

As you will be aware, Griffin Mining is a mining development and investment company, whose main asset is its Caijiaying zinc-gold mine in China. It is expected to reach full production levels in 2008 and a recent report in the Investors Chronicle (February 2006) stated its positives as being, amongst others, strong metal prices and the fact that production is set to increase. On the downside, it quoted the country risk in China and costs, which are running higher than anticipated. This being said, its recommendation was to buy the stock. Companies such as these tend to be more volatile and higher risk since they are mainly focussed on one site, or even activity – for example, it has been given a “Risk Grade” on the Digital Look website of 215 – by way of comparison, some typical blue chip companies have the following grades – United Utilities 73, Lloyds TSB 105, Tesco 93, British Petroleum 95. As for the share price itself, it has performed very strongly in recent times – over the last 3 months the price has risen 14%, over 6 months 65% and over the last year 74% - as such, it is moot as to whether the share price is low

Can you tell me why Marks and Spencer shares increased so rapidly from July 2005 to December 2005?

Indeed they did, and continue to do so – in the last 3 months, the share price has risen 12%, the last 6 months 44%. In the period the reader mentions the stock rose 42% and between September and now (27/2) alone the rise is nearly 50%. Whichever way the figures are cut, the market has seen this as a turnaround story. In the middle of last year, the shares were around 350p, below the 400p per share which Phillip Green had (unsuccessfully) bid for the company a year before – and today the price is around 515p. M&S has done many things to help the market perception – it continues to grow its sales on a quarter by quarter basis, it has focussed on selling less lines of the same product, it has instigated a fairly major TV advertising campaign, it had a strong Christmas and it has been bolstered by the ongoing success of its food sales – and all this in the face of a consumer spending slowdown, in a fiercely competitive market. Indeed, some in the market have been switching out of the previous sector “darling”, Next, into Marks and Spencer and it even now on the whole the general market consensus is positive in the hope that this recovery story will continue – bear in mind that the current retailing favourites tend to be those showing such a turnaround story (Sainsbury has also had some very favourable comments) as opposed to the established and robust market leaders such as Tesco where expectations are that much higher.

I hold shares in an Australian bank. What is the best way to sell them?

As in the shares of any country, much will depend on whether the shares are held in electronic (dematerialised) or paper (share certificate) format. Methods and charges will vary between brokers, some of whom will use their own Australian agents on your behalf, but most of whom will settle with you in sterling – assuming you are a UK reader. At Hargreaves Lansdown , for example, we would ask for a photocopy of either the share certificate or confirmation of holding prior to dealing, to ensure that the correct line of stock is being sold – dealing errors are notoriously expensive for international shares and so best avoided! – and our charges would be at 1.5% of the consideration (number of shares multiplied by the price) subject to a minimum of £25. Your usual broker should be able to help you, otherwise the Hargreaves Lansdown helpline is 0845 345

What are EPIC codes and what are they for?

You may have seen these codes while trying to check a share price online or indeed on a trading system. Very simply, they are three or four character stock codes which enable traders, or indeed investors, to look up prices more speedily. For example, rather than having to type in “Marks & Spencer” you would type in the EPIC code of “MKS”. Similarly, for a price in Scottish and Newcastle , the brewery stock, the EPIC is “SCTN”. These codes are still widely called by their old name of EPIC, after the old Stock Exchange computer ( Exchange Price Input Computer) although, strictly speaking, they should now be referred to as TIDM (Tradable Instrument Display Mnemonic) codes.

What is the problem with rising oil prices and why do they cast such a shadow?

The most obvious effect of a rise in oil prices is, of course, the price of petrol, which in turn mostly affects people with cars. This impact is more pronounced for US drivers since the amount of tax as a percentage of the overall price there is much less. It is not just drivers who may suffer, however – rising oil prices lead to higher business costs, which reduce profitability and can therefore lead to the loss of jobs.

Major users such as the airlines and road transport companies will also feel the pain and often use hedging strategies (that is, locking in to what they hope will be lower prices by buying oil futures), though this option is not always efficient for the smaller companies, who remain open to market forces.

The received wisdom is that higher oil prices are negative for the growth of an economy, particularly countries who are heavy importers. There is also a worry about keeping the demand-supply forces in equilibrium and OPEC ( Organisation of Petroleum Exporting Countries, the association of oil producing countries set up with the express purpose of influencing oil prices by controlling supplies) has already needed to reassure the market that supplies will be raised to respond to demand, especially later in the year as winter approaches. In addition, China 's massively growing economy is also putting a strain on supplies.

As ever, there are winners too, as evidenced by recent record results from BP and Royal Dutch Shell – so however obsolete talking about oil prices may seem, their level has a real impact.

Is there any hope if I have share certificates which I know have no market value because the company has gone bust?

The word in question is scripophily! The word results from combining the English word "scrip" (representing an ownership right) and the Greek word "philos" meaning to love. So what does it mean? It is simply the collecting of cancelled old stock, bonds and share certificates.

Due to their historical interest, age or just simply that they look impressive framed and hanging on your wall, this is an ever growing hobby among enthusiasts.

The vast majority of bonds and shares collected by scripophilists are in one sense or another 'defunct'. There are various ways in which they become available to collectors. The older certificates for example might arise from where Governments in many parts of the world have reneged on their bond obligations, usually due to a change in government after a revolution, or because they lost a war.

More recently, companies going into a merger would render the certificates themselves worthless, or indeed if a company simply went into liquidation. These then take on a value of their own – but for enthusiasts only!

The market itself in old share certificates has a promising future – particularly as dematerialisation takes root and share certificates in the UK are eventually phased out. In the meantime, if you happen to have any old share certificates lying around that you thought were no longer of value, there may just be a buyer out there for you!

I have an old share certificate for ordinary shares in Express Dairies – is it of any value?

Express Dairies changed its name to Arla Foods in October 2003. Existing certificates became invalid and new Arla Foods certificates were sent to shareholders on or around the 28th October 2003. If you believes you may still be a shareholder, we would suggest contacting the Registrars of Arla Foods (Computershare 0870 702 0000). If the shareholder has changed addresses recently, the original certificate may have been sent to the old address, so confirm all previous addresses to the Registrar.

My recently widowed mother has found an old share certificate for GRA Property Trust. How can she find out if these shares are worth anything?

These shares have undergone a number of changes. In April 1982, GRA Property Trust became GRA Group. GRA Group then became Wembley in February 1988. Wembley (ordinary 5p shares) became Wembley (ordinary 1p shares) in May 1995, before being consolidated into ordinary £1 shares in July 1995. At this point new certificates were sent and it is therefore likely that the original GRA certs are invalid. If in doubt, you should contact the Registrar, Computershare, either by post at PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH or telephone 0870 702 0000.

Why does the price of a share tend to drop when it is marked “ex dividend”?

All things being equal, in theory the share price should drop by exactly the amount of the dividend declared. This is quite simply because, as at that date, sellers of the stock will still receive the dividend, but buyers will not – as a result, the share price is marked down by the amount of the dividend to reflect this. Such a markdown does not always happen in practice because, for example, there may be positive news on the share that day which affects the share price and therefore hides the markdown. Also, when there are a number of FTSE100 companies going ex dividend on the same day, that will immediately have an impact on marking the level of the index down, in the same way as for individual shares.

Is it true that private investors can apply for shares in the float of the state-owned defence company QinetiQ? If so, how would I go about it?

Following on from some significant public interest, a handful of brokers have been able to provide a service whereby they will apply for shares on behalf of the private investor en bloc and then apportion them to investors, depending on how many shares they are successful in applying. At Hargreaves Lansdown Stockbrokers, for example, we have seen interest which is running into tens of thousands of investors, partly because you do not need to be a client to apply. Readers should register their interest and/or apply by visiting www.hargreaveslansdown.co.uk and should note that the deadline is only a few working days away, namely 5pm on Monday 6 February.

I read that some of the FTSE sectors have been “reclassified”. What does this mean?

The reclassification became effective on the first working day of this year, January 3, and aimed to (i) make sector comparisons easier, (ii) to reflect more accurately what companies actually do, so that they can be put into the correct sector, and also (iii) to bring the FTSE in line with the way many of the other Global indices are already classified. For example, there are a number of new sub sectors, such as “Personal Goods” and “Household Goods”, which are supposed to provide a better reflection of the times. Similarly, airline stocks will move from “Transport” to “Travel and Leisure”. Somewhat confusingly, house building shares will now find themselves in the “Household Goods” sub sector, since (the argument goes) they are now more consumer friendly. In the short term there may be some confusion as shares move sectors and become compared to a different set of competitors, but longer term it will enable easier comparisons to be made between similar companies, especially cross border – when considering telecom stocks, for example, it is more useful to compare Vodafone not just with BT, but with France Telecom, Deutsche Telekom, Telefonica, and so on.

I have shares in Providence Resources which I would like to sell. On checking the price, I find they are listed on AIM priced at £3.35 and the Irish Exchange at 0.01 (euro). Can you explain why this is, and what price I could expect if I sell?

There may be a little confusion here. Providence Resources is indeed dual listed on the London AIM Market and in Ireland, but the current sterling price (as at 24.1.06) is 3.2 to 3.35 pence per share, and the nominal value of the shares, which has no impact on the market value (such as Marks & Spencer ordinary 25p shares) is Euro 0.001. Thus, for a holding of say 10000 shares you would receive £320 (10000 x 3.2p) less commission.

I have heard all about “SIPP”s (Self Invested Personal Pensions) and “A day” and wondered how to find out more, especially as I may consider putting my shares into this shelter?

T he recent burst of mega-publicity over the Government's U-turn on individual residential properties brought SIPPs to the attention of a wider audience, and illuminated many of the benefits that they have over other types of personal pension.

SIPPs beat traditional pensions hands down in terms of flexibility, diversification potential, and sheer investment choice. Instead of being restricted to the limited fund range offered within an ordinary personal or stakeholder pension, SIPP investors can choose from and switch between thousands of unit trusts, investment trusts and Oeics, from across the market. On top of that they can choose to add individual shares, bonds, gilts and many other types of investment. And while this flexibility and choice used to be available only to the wealthiest pension investors, the advent of low-cost SIPPs has given this bespoke pension product an off-the-peg price. SIPPs' benefits are now within reach of most of us. To explain further, we have produced a free guide on the subject – please feel free either to visit www.bettersipp.com or telephone 0845 345 9405.

What is meant by the term “hedging”?

Hedging reduces or even negates risk to an investment, usually by taking the opposite view on the original asset, and normally by using derivatives, such as options for example. If this opposite view then happens, the profit on the hedge will offset the loss on the original investment and, conversely, if the opposite view doesn't happen, the profit on the original investment will outweigh the cost of the hedge – this is a defensive strategy designed to safeguard your investment whatever direction the price moves in.

A good recent example of hedging has been certain of the airline companies, who have been hedging the price of oil for some while now to ensure that any sharp increases in the oil price (such as last year) need not be passed on to the customer. Similarly, one would expect a large conglomerate which gathers most of its earnings overseas – say the US , as is the case for many FTSE companies - to have taken out some sort of US dollar hedge.

What factors cause the value of Gilts to rise and fall?

The headline coupon (rate of return) shown in a conventional gilts title e.g. Treasury 4% 2009, generally reflects the prevailing bank base rate at the time of the gilt's issuance by the Bank of England. However, as soon as any gilt is trading on the secondary market, a combination of the current bank base rate and the likely future movement in the Bank of England bank base rate, become the dominant factors in moving gilt prices.

The shorter the time length until a gilt is due to be redeemed by the Bank of England – known as short dated gilts - the greater the influence of the current bank base rate on its price. Shorter dated gilts tend to show fewer movements in price compared to longer dated gilts.

Longer dated gilts are far more affected by the prospects for future movements in the Bank of England's base rate. As a rule of thumb, if interest rates are seen as rising in the future, gilt prices may be expected to fall and therefore their income yield will rise to reflect this likely hike in rates and bring the gilt into line with market expectations. If interest rates are expected to fall in the future, then a gilts price will rise and the income yield being generated will fall, again bringing the gilt into line with market expectation.

In effect, any piece of economic news has a potential bearing on the Bank of England's thinking with regard to future interest rates and therefore the price of gilts.

What is meant by the term “averaging down”?

“Averaging down” is a trading term, on which there are differing opinions as to whether it is worthwhile! By way of example (and excluding transfer stamp, commission and so on) if you were to buy 50000 shares of Company X at 5p per share, your outlay would be £2500. If the share price subsequently fell to say 3p, you could buy a further 50000 shares for £1500, which means that in total you would be the holder of 100000 shares at an average price of 4p (total outlay £4000 for 100000 shares). This is said to be “averaging down” since it lowers the original price at which you bought the shares – although of course it involves more expenditure. This is the primary reason for the split in opinion – if you are buying more shares in a doomed or weak company (this practice is often associated with penny shares) then you are throwing good money after bad. If, on the other hand, you truly believe in the merits and long term capability of the company (and therefore your investment) then you are simply buying more shares at a price which you consider to be cheap compared to what the shares are worth. In either event, it pays to research any investment fully and to keep abreast of developments surrounding the stock and your investment.

As a GUS shareholder, what is the effect on my holding following the Burberry demerger?

The demerger of Burberry from GUS became effective on 13 December 2005 , and at the same time GUS underwent a share consolidation. In terms of the demerger, for every 1,000 GUS shares held at that date the shareholder received 305 Burberry Group shares. The remaining share capital of GUS was then consolidated with the nominal value of the shares changing from 25p to 29 3/43p. As a consequence, GUS shareholders received 860 new consolidated GUS shares of nominal value 29 3/43 pence each for every 1,000 old GUS Ordinary shares of nominal value 25 pence each previously held. Please note that this involved the issue of new ordinary share certificates of 29 3/43p, to replace the old 25p share certificates, which have now become valueless. In summary – 1000 GUS ordinary 25p shares held at the record date of 13 December 2005 is now equivalent to 860 GUS ordinary 29 3/43p shares plus 305 Burberry Group shares.

The FTSE100 seems to have put in a good performance in 2005. Which were the best performing stocks?

The FTSE100 did indeed put in its best performance for some years, rising over the course of 2005 by nearly 17% to finish the year at 5619. Of the stocks that were in the FTSE for the whole year (Persimmon rose 82% but only joined the FTSE100 in the December reshuffle of the index), Rolls-Royce took top honours after a rise of 78%. Next came the oil explorer Cairn Energy (76%) and the mining group Rio Tinto (73%), followed by BAE Systems (66%) and Royal and Sun Alliance (62%). Only 7 stocks registered falls over the year, such as Kingfisher (down 23%), BSkyB (12%), Vodafone (11%) and Compass Group (10%). (Figures source – FT)

In May this year my adviser recommended that I should buy some Apollo Resources International shares (an oil company) as the company planned to have a dual listing on the AIM market in September, and since the AIM market is made up of about 70% Resources companies, this would be a good investment opportunity. Apollo is currently listed on the OTC bulletin board in the United States . September has come and gone – is there any way of finding out if Apollo are going to have a dual listing?

There was indeed an announcement in May that the company had appointed advisers to help it achieve a listing on AIM, which would actually be a treble listing, since the shares are also quoted on the Berlin Stock Exchange. Since then, there seem to have been no definitive developments, nor does the Stock Exchange site shed any light on the matter – however, it is probably worth keeping an eye on this page - http://www.londonstockexchange.co.uk/en-gb/pricesnews/prices/newissues.htm - to await any developments. Alternatively, it may be worth contacting the company itself – the web site can be found at http://apolloresources.com with a named investor contact of Doug Jones on the (US) telephone number 214 522 0915. One other alternative, of course, would be to return to the adviser and see what additional information he can produce to back up his initial recommendation. Good luck!

What are the more likely performers according to the different phases in an economy? And what is the definition of “performing”?

“Performing” is always a relative measure – a share can underperform, perform in line or outperform compared to, for example, another share, the sector in which the share is quoted, or a broader index such as the FTSE100. There are also a whole host of different measures of performance, from the share price, the Return on Capital Employed, growth earnings and so on (see previous answers to discover the meanings of these terms).

Generally, certain stocks or sectors will perform better when the economy is strong and will suffer when any part of the economy is weak – such stocks are called cyclical and a good current example of these would be the general retailers, who have been suffering throughout the year due to the consumer spending slowdown. Equally, car manufacturers and leisure and hotel groups fall into this category.

Other categories are much less prone to a weak economy – it is not that their shares will not go down, rather that they are likely to go down much less than others in the market. These are usually known as defensive, or non-cyclical stocks, and include those goods and services which people will continue to spend on, regardless of the strength of the economy – sectors such as the Utilities, food, beverages, health telecoms and tobaccos.

Often, when I sell a share that looks overvalued to me, it goes a lot higher. How can I get rid of this bad habit?

It isn't necessarily a bad habit. The aim of investment is not to look for the maximum possible return and sell out at the very top, but the maximum consistent with the level of risk you are prepared to accept. In this case, what looks like getting out 'too soon' is actually getting out when the risk has become too high for you. That's good practice. There is an old stock market adage that “It is never wrong to take a profit” and, particularly if you had a certain return in mind when you initially bought the shares, selling at that profit level is no bad thing.

West Ham United are currently traded on a “matched bargain” basis (your broker will be able to arrange this for you) whereby the deal cannot be done until a buyer and a seller can be found to match each other. The current indication price for the shares is around the £2 level per share, and the nominal value of them is ordinary 25p shares. It is difficult to say whether the share certificate you have is of any value – certainly to collectors it may have – but if you contact the Registrars of the company, they can both confirm this for you and, if necessary, arrange a transfer into your sister-in-law's name. The Registrars are Capita IRG, The Registry, 34 Beckenham Road , Beckenham , Kent . BR3 4TU, telephone 0870 162 3100. One final thought, should the Registrars confirm that the shares have no market value – the hobby of share certificate collecting is called scripophily and you may be able to find a collector if you ever wished to sell – there are a number of sites that deal with this, and one of the more popular can be found at www.scripophily.org

The demerger of mmO2 from BT in November 2001 was calculated on the basis of the previous value of BT shares at 368.75p – in the new entities, this was split between BT 285.75p (77.54%) and mmO2 82.75p (22.46%). This means that for CGT purposes, you would need to multiply the initial acquisition cost of your BT shares by 77.54% to find the base cost of your BT shares, and by 22.46% for your mmO2 (now O2) shares – in terms of your actual liability, namely the number of shares you hold and any other investments (capital gains/losses) you may have, it is probably wise to enlist the services of an accountant for a full and detailed check.

One of the companies I have invested in has just had a rights issue. Should I take up the rights?

Rights issues need to be judged on a case by case basis. Normally the amount you are asked to pay for the new shares is at a discount to the current market price, which makes them superficially attractive. But if you don't actually want to spend money on new shares, one alternative is to sell some of your rights and use the money raised to pay for a few of the shares to which you are entitled – assuming you are still happy to be invested in that company and that by buying those extra shares it does not upset the balance of your portfolio.

The acquisition of Infonet by BT was completed in February 2005 on the basis of .06 per Infonet share, which valued the latter at m (£510m). The new entity became BT Infonet, part of BT's Global Services. Infonet shares had previously been trading on the New York Stock Exchange and this may be one of the reasons why the reader has had some difficulty in finally disposing of his shares. We have had a look towards who might be able to help and have come up with the following list of suggestions – try the website, www.btinfonet.com – telephone (US) Corporate Marketing on +1-310-335-1144 or Press Relations/Media (US) on +1-212-593-6343. There is also a UK contact number for BT Infonet of 020 7890 7500. You could also try Infonet Services Corporation, 2160 East Grand Avenue , El Segundo , California 90245 , attention – Investor Relations. The final suggestion would be to visit the US regulatory authority's website, the SEC, who will have full details of the takeover. Their address is www.sec.gov Happy hunting and hopefully these will help you to a successful conclusion!

With all this talk of a cold winter coming, I guess that some firms will do well out of this and we should invest. Any suggestions as to who we should watch?

Traditionally there are a number of sectors who might benefit from a cold winter, although the market does tend to try to factor this in to prices ahead of results actually confirming it. Obviously, if it is a particularly harsh winter the oil and gas shares should benefit as there is increased demand for heating, although this year the wider talk of oil shortages means that this has been a well watched sector. Also, in terms of the winter season, retailers tend to fare well – again, up until now, however, a number of retailers have been bemoaning the fact that it has been very mild so far, and so any good news may yet take a few months to filter through. On this particular point, for many of the retailers who have had a tough year because of the consumer spending slowdown, the Christmas period is going to be vital for their fortunes – if the reader has any strong thoughts about who may fare well, it could be an interesting time for the sector as the results flow through early in the new year. Other sectors which traditionally might do well from a very cold snap include pharmaceutical and healthcare shares, as anti flu and cold treatments are bought in increasing numbers. As mentioned, though, trying to double guess the market in this way can be difficult and a longer term and balanced approach to investments is often considered to be the preferred option.

What are the origins of the expressions “bull” and “bear” when talking about markets or general optimism?

Some say that the expressions relate to bull and bear fighting, a bloodsport in parts of Europe in past times, and the image of bulls goring with their horns in upward motion, whereas bears tended to swipe in a downward motion. This metaphor may certainly have helped to reinforce the expression, but is unlike to have been the origin.

It is most likely that the term “bear” derives from an old French proverb applied to the English market – namely “ ne vendez pas la peau de l'ours avant de l'avoir tué ” (“don't sell the bear's skin before you've killed the bear” - the English equivalent refers to catching rather than killing the bear).

At some stage after the bear term was established, the bull, already having various associations with the bear in folklore and imagery, became the natural term to be paired with the bear to denote the opposite trend or activity, i.e. buying stock in expectation of a price rise.

I keep hearing about EBITDA when companies are reporting. What is this and what does it stand for?

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortisation – is generally accepted to be a good way of measuring profitability, since it strips out those things which either cannot be avoided (interest on loans and taxes, for example) as well as those things which do not actually affect the cash flow of the company. In very broad terms, depreciation relates to fixed or real assets which lose value over a period of time (machinery, PCs, etc), whereas amortisation relates to a similar thing but for intangible assets, such as goodwill (a brand name) or trademark or patent. It has become a popular tool especially in more recent times, and in those industries which, for example, had expensive assets which needed to be written down over a long period of time. As with any other tool, it should be used in conjunction with others (see various answers below) to ascertain the true financial health of a company.

What is meant by the term “yield curve”?

We often hear talk of interest rates going up and going down as if all rates moved together. The reality is that the rates on bonds of different maturities behave quite independently of each other, with short-term rates and long-term rates often moving in opposite directions simultaneously and this difference is the yield curve. A normal yield curve shows that longer maturity bonds have a higher yield compared to short term bonds, due to the risks associated with time. Then, an inverted yield curve is one where the short term yields are higher than the longer-term yields, which can be a sign of upcoming recession. Finally, a flat yield curve is one in which the short and long term yields are very close to each other, which can mean the economic landscape is about to change. The slope of the yield curve is also seen as important, since the greater the slope, the greater the difference between short and long term rates. In a nutshell, the shape of the yield curve gives us clues about future interest rate movements and indeed economic activity.

What is a reverse takeover?

A reverse takeover, or a "back door" listing, is a transaction that results in a private company going public without having to file a prospectus and go through an IPO, or new issue. Instead, it is accomplished by the shareholders of the private company selling all of their shares to the public company in exchange for shares of the public company. While the transaction is a takeover of the private company by the public company, it is called a reverse takeover because the public company involved is typically a "shell" and it typically issues such a large number of shares to acquire the private company that the former shareholders of the private company end up controlling the public company. Using a “shell” has its advantages in that the new company already exists and does not need to be set up from scratch.

I am an O2 shareholder and have read with interest about the bid from Telefonica of Spain . What action should I now be taking?

Details of a £17.7 billion offer for O2 from the Spanish telephone giants were announced on Monday 31 st October, with a cash offer of 200p per share – by way of comparison, Friday 28 th October's closing price for the shares was 164.25p, so the offer represents a 22% premium to this price. It appears that the takeover is not hostile and that O2 has agreed to the deal. The market is prone to some speculation that a counter bid could emerge from another company, although this as yet remains to be seen. As a shareholder, assuming that you had not been thinking of selling the shares on the basis of needing the money, the obvious thing to do would normally be to hold on and await developments – in due course you will be contacted by the company to explain exactly what your options are.

What is meant by the term “technical analysis”?

Technical, or market analysis, is widely used by analysts who subscribe to the theory that share prices move in trends. Quite apart from the more obvious drivers of share price performance, such as supply and demand, “chartists” use historic movements in the share price to project and identify future price movements or trends. Such trends when identified may fall under categories such as a “head and shoulders formation”, “breakout”, “double top” and “support level”, using point and figure charts, bar charts or candle charts. As the term implies, it is a very technical area and for further reading on the subject, you might like to look at http://www.technicalanalysis.org.uk as a starting point.

You are quite right that the Post Office used to offer this service and it appears they no longer do so. Gilts can still be bought through your stockbroker in the normal way and the Government’s Debt Management Office seems to have taken over the Post Office’s previous service which uses a Registrar to carry out the instruction – go to the link http://www.dmo.gov.uk/gilts/retail/f2ret.htm for full details. Gilt prices can be found either at this site or in newspapers which carry sufficient financial coverage, such as the FT. (For a definition of gilts)

What evidence is there that directors’ dealings are a positive indicator of share price movements? By the time I read about directors' dealings, is it too late?

There is enough evidence to support the argument that when directors buy/sell shares in their own company, they do so because they think the shares are undervalued or overvalued. There is also plenty of evidence that their judgement is right in more cases than it is wrong. But the signals are not always correct. Directors' dealings should only ever be a factor in your decision-making, not the prime determinant. With any widely reported event likely to affect a share price, there is a danger that it will already be built into the price by the time you hear about it. The speed with which you get the information is obviously a factor. But in general, the significance of directors' dealings does not evaporate within days. The fact that you do not act within days does not mean you will have missed the opportunity for good.

As a general rule, reading around the subject is always a good start before even considering actually investing in shares. At any good bookshop, you will find a number of investment books which cater for every need from the investing novice to the sophisticated trader. A site worth looking at for some basics is the trade body for stockbrokers, APCIMS, whose address is www.apcims.co.uk Another alternative is to find like minded people who may also be thinking about investing in shares and forming an investment club, which is not as daunting as it may sound. Investment clubs are groups usually ranging between a few and 20 people, with the common objective of pooling their investments (based on a monthly contribution) and thereby spreading their risks. Quite apart from the "safety in numbers" aspect, it can be a very educational and also social experience. In the first instance, visit the ProShare website at www.proshareclubs.co.uk

Often when I trade shares I cannot see evidence of the trade on trade monitors (ADVFN) even when less than normal market size, even hours later. Why not?

You are right to point out the normal market size aspect here. The idea trade reporting and of NMS is to make the market more transparent, so that those who deal are aware of what deals are being done and whether they are buying or selling orders. The rules surrounding this are quite complex, but as a general rule of thumb, anything below the "Publication Level" (which is normally six times NMS) must be reported within 3 minutes. Anything larger than this size may be reported (depending on the stock, segment and size of the order) from times ranging between 1 hour and 5 working days. I have also spoken with our dealing team, who have told me that they have had a few instances of clients asking us to confirm that their trades have been executed since, like yourself, they have been unable to find the reports on ADVFN. From what you say, it would appear that your typical trade will be trade reported immediately and it may well be that the ADVFN website simply does not pick up all trade reports - you may wish to contact them for their views on this.

What are gilts?

In a nutshell, they are Government debt. The Government has three ways of raising money - by imposing taxes, selling National Savings and borrowing. When it needs to borrow, it asks institutions and private investors to lend it money. In return for the loan, the government promises to pay a fixed rate of interest twice a year and to return the money in full on a set date a number of years in the future. These loans are British Government stock, also called 'gilt-edged' stock or gilts. When you buy gilts, you are lending money to the government. You can buy gilts when they are issued, in units of £100 each, and hold them to maturity, when you will get £100 back. But you do not have to keep them that long. You can sell them at any time through the stock market, when you will get the prevailing market price at the time, which may be more or less than £100.

What are OEICs?

Open Ended Investment Companies (OEICs) are collective investments which enable individuals to pool their money into a fund, which is then invested in a wide spread of assets. As the name states they are 'open-ended' (investment managers may create or reduce the number of shares in line with demand and supply) and are a cross between Unit Trusts and Investment Trusts, having a company structure and dealing in shares rather than units.

An OEIC has a single price, both for buying and selling shares in the fund and offers investors the potential to achieve capital gains, although they do involve taking a degree of added risk. However some of this risk is lessened since you are effectively spreading it by investing in several companies at once.

I have a number of shares with various companies and have had them for about ten years. I now want to sell them all. Who are the best people to do this without costing me too much?

The simplest route would be to find an execution only stockbroker (dealing without advice stockbroker) who could arrange this for you. At Hargreaves Lansdown , for example, we can set up an account for you over the telephone and deal for you there and then. The following day you would receive contract note(s) confirming your sale(s) and then a cheque would be sent to you as settlement 10 working days after the deal(s), your having already returned your certificate(s) to us. The minimum commission per transaction is £15, subject to 1% on the first £10000 – thus, a sale worth £1000 would be subject to £15, a £2000 trade £20 and a £5000 trade £50. Should you wish to deal, the telephone number to contact is 0845 345 0801.

Please can you tell me if, when quoted, a high P/E figure is better than a low one and why?

(See below for a previous definition of Price/Earnings ratio). The theoretical answer would be that a high price earnings ratio (PER) is better than a low PER. A company's shares are usually rewarded with a high PER if investors consider that the prospects for the growth in profits going forward are exciting. An oil exploration company which already makes some profit, but where investors consider that the wells it is currently exploring will yield vast amounts of oil in the future, would probably sit on a high PER.

A company where investors consider prospects for the growth in profits to be relatively pedestrian, will likely sit on a low PER. Similarly, the shares of a supermarket, where investors consider that the amount of food consumed and therefore purchased is unlikely to grow in any substantial fashion, will likely sit on a low PER.

The theory regularly comes unstuck because there is so much guesswork involved. The oil explorer which investors had hoped would discover large amounts of oil, eventually discovers very little or no oil whatsoever. The dull food retailer where investors assumed very modest growth in profits has unexpectedly enjoyed a bumper Christmas sales season, stealing market share from its rivals and therefore profits will expand quicker than investors had previously forecast. Therefore, reality often turns the theory on its head and shares offering low PERs prove to be potential bargains while shares sat on high PERs can prove to be over hyped and expensive.

The issue of B shares by a company is a tax efficient way of paying a dividend. Shareholders receive these shares, which are therefore subject to CGT, as opposed to dividends which are subject to Income Tax. One course of action for the holder would be to instantly redeem these shares and therefore receive the cash immediately, unless this would cause a CGT declaration. Psion B shares are not listed, there was an opportunity to redeem them at 20p per share on 16 September 2005 (shareholders who did not return their election forms were deemed to have elected for immediate redemption) and the next opportunity will be on 14 April 2006. There are no “A” shares as such – the old Psion shares underwent a consolidation whereby, for every 3 old shares, holders received 1 consolidated ordinary share, along with 3 B shares – the current selling price for the consolidated ordinary shares is 154p.

QPR was acquired in 1996 by media tycoon Chris Wright, who merged it with Wasps rugby club and then floated it on the AIM market as Loftus Road. In April 2001 the club went into administration, but emerged from administration in May 2002, after borrowing £10 million from a Bahamas based corporation, secured against its ground. Last year the group who had nursed QPR through administration stepped down, and Gianni Paladini injected some £600 000 into the club, securing a further £1.6 million in new money from Italian investors in two Monaco-based consortiums. With regard to the original shares, they are no longer listed and it is extremely unlikely that they have any intrinsic value after the original administration. The reader may wish to contact QPR Holdings to clarify this situation, or the original administrators, BDO Stoy Hayward.

Warrants entitle you to subscribe for new shares, in the case of British Energy at a price of 98 pence per new share. Shareholders may exercise the warrants and subscribe for new shares at any time in the five year period after the warrants were issued on 14th January 2005, at the time of the consolidation. Warrants and ordinary shares are quoted separately on the market - the current prices are 487p for the ordinary shares and 388p for the warrants. Note that the difference between the two prices is approximately the amount it would cost the reader to convert the warrants into ordinary shares, namely 98p.

How safe are corporate bonds?

It depends on the financial solidity of the companies issuing them. Credit rating agencies like Standard & Poor's, Moody's and Fitch research the risk of default, and assign grades both to issuers and to their individual bond issues. The highest ratings go to those companies which they think are least likely to default either on interest payments or on capital repayment. Ratings above a certain grade are referred to as 'investment grade', whilst those below are called junk bonds. As a general rule, the more risk the investor is being asked to take, the higher the yield of the bond. You can ask your broker what the credit rating of any particular bond issue is.

The term "short selling" relates to the sale of shares (or derivatives of those shares, such as CFDs or Options) which are not owned - this is clearly done in the hope that the share price will fall and so the shares can be repurchased to cancel out the transaction, at a lower price, thereby creating a profit.

It brings its own risks, however, especially if selling the ordinary share - first of all, the transaction needs to be covered (by the purchase) on settlement day, which for most private clients is 3 business days after the trade - this is why more sophisticated investors use derivatives where this timeframe can be expanded. Equally, the theoretical loss on short sales is unlimited - the price could continue to rise and increase the investor's loss as it did so.

The larger institutions are not so much manipulating the market by selling short as taking a view - remember, for every seller there is a buyer and thus if the price continues to fall it is those buyers along the way who have lost money and not the short seller. Individually, especially in the larger stocks, it would be difficult for one firm to single-handedly flatten a share price, particularly if the general market sentiment is strong and there are more buyers than sellers - such a strategy could then end in disaster and underline what a risky strategy short selling can be.

ROCE, or Return on Capital Employed, is a measure which represents the efficiency with which capital is being used to generate revenue. It is calculated by dividing the earnings before interest and tax ("EBIT") by the total capital employed (broadly total assets less total liabilities) then multiplying by 100 to express the figure as a percentage. Thus, a company making an operating profit of £897m on total capital employed of £4342m would have a ROCE of 20.66% (897 / 4342 x 100).

The reason that this figure is of interest to shareholders is that they are looking to see that this figure is higher than the return they could have gained on an alternative investment - as such, a ROCE of more than 20% is considered to be a good one. If a company has a low ROCE, it is using its resources inefficiently - even if the profit margins are high - and unless it is higher than the cost of borrowing, any further increase in the company's borrowings (or indeed the general level of interest rates) will decrease the value of shareholder earnings.

Like any other ratio, it needs to be considered in tandem with others to give a full picture of the company's health, but due to its widely accepted importance it is known as the "primary ratio".

I own shares in Glaxo SmithKline, but I haven't been receiving copies of its Report and Accounts. Can you help me?

If you hold your shares in a nominee account run by your broker, you won't be sent company accounts, which is one of the disadvantages of nominee accounts. This being said, it may well be that your broker may be able to obtain a copy on your behalf, so it is worth asking. Also, increasingly, R&As are available online or through various newspapers - the company's website would be a good place to start. The other possible reason is that the registrar of Glaxo has not got your address correctly listed. Did you move house recently, and if so did you remember to tell the company?

Is the AIM market more risky than the main market?

In general, companies on AIM are less capitalised than their counterparts on the main market, and the received wisdom is that small companies are more risky than large ones because they are more easily blown off course. Smaller businesses are usually younger and not as well established in their markets. They are more vulnerable to competition, and because they have fewer resources they can have problems weathering a prolonged recession. So, on fundamentals, they are riskier. In recent years however, the share prices of even the largest companies have been volatile and there have even been big casualties - Marconi, for instance. So it is too simple to say that AIM is the riskier market, and to base your portfolio risk management on that premise. Ultimately, risk is about the quality of the companies you invest in, not the market on which they are listed.

What are ADRs?

ADR stands for American Depository Receipt. In simple terms, it is a receipt for the shares of a foreign (non-American) company. The share certificates themselves are held by an American bank which issues the ADRs, then collects dividends and distributes them to ADR holders after converting them into dollars. The holders of ADRs have all the rights of normal shareholders, including voting rights, and the ADRs are tradeable instruments in their own right.

Though started as a convenient way for Americans to invest in foreign companies, ADRs can also be bought by non-Americans. In some cases it can be cheaper (in terms of costs) for someone in London to buy ADRs in a UK company than to buy the shares on the London markets.

I have heard talk about 'correlation' between markets, what does this mean?

Correlation refers to how closely the fortunes of markets are linked. The UK stock market has a high correlation with the USA market because when prices are going up in America they also tend to go up here. 'When American sneezes, Britain catches a cold' is another way of putting it. By contrast, India is reckoned to have a low correlation with the USA . As a general rule, countries' stock markets will be quite closely correlated with the USA if their currency is pegged to the dollar, if their economies have high levels of American investment and if real estate is a dominant factor. The point of correlation analysis is that if all the investments in your portfolio are from high-correlation markets, they'll all go up and down together. If you put a few non-correlating investments in your basket, you achieve a better balance.

Broker recommendations: What do they mean? What does overbought mean? And what likely potential outcome on price could such recommendations make?

Brokers, especially institutional, produce research for their clients which gives trading ideas and investment strategies. Although different brokers have developed their own terminology, they are still largely based around the instructions buy, sell or hold - you may see the terms add, go overweight or outperform for buy, neutral for hold and reduce, go underweight and underperform for sells. Certain brokers (analysts) cover very specific sectors of the market and so when they come out with a recommendation (especially if it is materially different from its previous opinion) it can move the share price positively or negatively, depending on the comment, as investors act on the advice and start trading. The term "overbought" means that a broker considers that the price is currently too high and the prospects for the business do not justify the share price, and this comment may therefore have the effect of pushing the share price down (similarly for "oversold", the shares are looking cheap).

What are ETFs and why would anyone use them?

Exchange Traded Funds (ETFs) combine the advantages of index tracking funds and exchange-traded shares, thus giving access to an entire stock market index in a single share. The ability to track an index has long been recognised as a valuable way to diversify against risk, but was previously available only through collective investments schemes such as Unit Trusts. ETFs give you all the diversification of an index-tracker in a single, easily traded share. In addition, ETFs don't attract stamp duty at the time of purchase and just like Unit Trusts, they can be wrapped in tax-efficient vehicles like PEPs and ISAs.

There are currently 10 ETFs available to investors in the UK and they give access to global investment indices such as the UK FTSE 100 or the American S&P 500 (a US index). They can be bought and sold during market hours and, just like ordinary shares, transactions can be made through your broker. Prices can be checked in the Financial Times, or online.

What are "fixed" and "intangible" assets?

An asset is anything owned, but in accounting terms this may take many different forms. A fixed asset is something physical, such as buildings, machinery, equipment and so on. An intangible (or invisible) asset is one which is thought to add to the earnings of the business even though they are not physical - this could be goodwill (resulting from the strength of a brand name, for example), patents, trademarks, copyrights, or the rights to a publishing title or process. When being accounted for, a figure is usually put against any loss of value of these assets over time - in the case of fixed assets, this is known as depreciation and, for intangible assets, amortisation.

What is meant by the term "gearing"?

Gearing (or "leverage", as it is known in the US ) can be expressed as the ratio of debts to assets. For example, if you bought a house for £100000, where you deposit £10000 and borrow £90000, the gearing is 10%. In terms of shares, gearing can usually be found in one of two contexts. Firstly, where a company borrows to boost the return on capital or buy additional investments (such as an Investment Trust) it is said to be geared - 40% gearing would suggest that a company has levels of borrowing equivalent to 40% of its equity capital. Secondly, an investor may "gear up" to trade - in the case of an instrument which uses margin (such as a derivative) it is usually possible to "deposit" just 10% for the full effect - for example, an investor buys £1000 of ABC stock in the market. At the same time he buys a Certificate for Deposit (CFD) in the same stock - since 10% margin is required, he only actually pays £100 for exposure to £1000 of stock. If the share price now moves up by 10%, he will make £100 in both examples - for the stock, his profit is 10% (100/1000) but for the CFD it is 100% (100/100).

What is the meaning of "market size" when dealing?

When shares are traded, the prices are formed either on an "order driven" basis (where brokers and market participants enter orders which are immediately matched) or a "quote driven" basis, where market makers quote a bid price and offer price at which they will deal with brokers. These prices, however, are only up to a certain number of shares - the "normal market size" - since some shares are much more liquid (easily traded) than others, and indeed some companies are significantly larger than others. Usually the market size is based on the shares' past liquidity.

As an investor this is something to bear in mind when dealing in smaller companies - for example, if the market size of the shares is 5000 and you wish to buy 20000, you may find yourself paying a higher price when you come to buy the shares to reflect the extra risk the market maker is taking on - conversely you may receive a slightly lower price when selling.

What is a rights issue?

This is a method by which a quoted company can raise capital. It does this by offering new shares to its existing shareholders at a discount to the market price (by way of incentive) and on a pro rata (proportional) basis.

For example, John Laing (the house builder) is currently in the throes of a rights issue. They are looking to raise approximately £100 million by offering existing shareholders 13 new ordinary shares for every 51 currently held at a price of 200p (there is also a preference shares element but for simplicity we look at just the ordinary part). Since the current share price is 241p, this means that the "rights" have a value of their own and so there is also a line of stock in John Laing representing the rights, and the price of these is the difference, namely 41p. Investors have the choice of selling these rights in the market, letting them lapse and receiving payment from the company, or taking up the rights by agreeing to pay the balance due (number of shares held multiplied by 200p). This offer will only remain open for a certain time, after which the rights will lapse, and the new shares will be taken up by someone else.

For the company, this is a relatively straightforward way of raising new money, and for the investor, an opportunity to invest further in the company at a discounted price should they so wish.

What is meant by the terms "active" and "passive" management?

Active fund management aims to outperform the overall market (or index) by using asset allocation, market timing or stock selection (or any combination of these). Since fund managers must research and analyse their decisions to help them make the right choices, costs to the investor of this style tend to be higher.

Conversely, passive fund management does not try to beat the market or index, but simply aims to track it by investing in companies precisely in accordance with the constituents of an index, or by buying a fund which represents all of the constituents - a "tracker fund". The managers of these funds have far lower expenses, and the charges to investors are lower than for active funds.

Supporters of passive funds would argue that many actively managed funds fail to match the index, let alone beat it - on the other hand, advocates of active funds argue that the more investors there are investing in index funds, the more opportunity there is for active investors to be selective and invest in outperforming shares.

What is the point of a scrip issue?

A "scrip" issue (also known as a "capitalisation" or "bonus" issue) is a process by which a company converts its cash reserves into new shares and issues them to existing shareholders on a pro rata basis, at no cost to the shareholder. For example, imagine a shareholder who has 100 shares in a company whose share price is £15, value £1500. If the company announces a 2 for 1 scrip issue, the shareholder will now hold 300 shares and therefore the share price will be reduced to £5 to reflect this (new value = 300 x £5 = still £1500). It is also widely accepted that this action can make a share more marketable to potential new investors, simply because the price becomes "cheaper".

What is market capitalisation? And when I see "billions wiped off share prices" what has happened?

Market capitalisation is generally accepted as being the value of a quoted company and is calculated by multiplying the number of shares in issue by the current share price. For example, at the moment British Airways has 1083 million shares issued and their share price is 270p, so their market capitalisation is approximately £2924 million, or £2.9 billion. It is worth noting that this is the current valuation - this can change markedly if, for example one company launches a takeover bid for another and (as frequently happens) pays a premium over the pre-bid price, which will affect the market cap upwards. On the other side of the coin "billions can be wiped off share prices" when the market is falling and prices are marked down - consider that British Airways is just one company and if its share price were to fall to say 170p the market cap would reduce to 1083m x 170p = £1841 million, or £1.8 billion, a loss of over £1 billion on just one company.

I recently read in the news that National Grid shareholders are to receive "B" Shares. What are "B" shares and why are they being distributed?
National Grid Transco considers that part of the funds it will receive from recent gas network disposals would be better distributed to its shareholders than retained in the business. It has decided to return £2bn of the £5.8bn in cash received.

If Shareholders approve this plan, the "B" shares will be issued in order to allow shareholders to lessen the tax liability incurred by the return of funds. Each shareholder will receive one "B" share for every ordinary share currently held and will then have three options -

- They can elect to receive a single dividend of 65p for each "B" share

- They can sell their "B" shares via JPMorgan Cazenove for the same 65 pence each, which is free of dealing charges.

- They can retain their "B" shares with the option of selling them at a later date at 65 pence each

The choice for the shareholder will probably be based on his/her particular tax situation. For example, a higher rate taxpayer with no capital gains liabilities in the current tax year might look to utilize option two and effectively take the funds as a return of capital. Of course, each individual investor might wish to consult with their normal tax advisor before making a decision.

The "B" shares will be issued on a one for one basis with existing shares, and the remaining shares will be subdivided and consolidated, so shareholders effectively receive 43 new ordinary shares for every 49 existing ordinary shares they owned on 29 July 2005 . In other words, if you previously held 49 ordinary shares, after 29 July you will hold 43 ordinary shares and 49 "B" shares.

What is a "closed period" and how does it tie in to trading updates?

The term "closed period" applies to a period before any regular reporting event (such as interim or final results) and is usually of two months' duration, during which time Directors and other "relevant" employees (those with access to price sensitive information) are not permitted to deal in the shares of their company. Many companies make it an in-house rule not to communicate with the Market during these periods, although this is not a regulatory requirement - this being said, they are still bound to report any events which are price sensitive regardless.
Thus, with the two month period in mind, many companies choose to issue a trading update since it will probably be the last communication with the Market prior to the event/results and it is an opportunity to bring important news to the investing community. The timetable for these "pre closing updates" can usually be found on the company's websites. Other reasons for trading updates can be when the share price makes a major move (the company comments on whether it knows a good reason for this to have happened, or it knows none) or it becomes aware of something not generally known and is bound to make the information public - such as trading being worse than expected and a profits warning needs to be issued.

Has Sid finally come of age? All about windfall and privatisation shares

“If you see Sid, tell him” was the catchphrase of the British Gas privatisation in the mid 1980s as most of us will remember, and in December this year it will have been 21 years since the privatisation which really captured the imagination of the public, namely BT. Since those times there have been a host of privatisations, followed by the demutualisations of the 1990s – but how are these investments looking today for those who held on as opposed to just selling the shares on the first day of trading at a (usually) thumping profit?
The Investors Chronicle recently calculated that £100 invested in each of the major privatisations when they came to market – a total of £2800 – would have totalled more than £33000 by March 2004, with all dividends reinvested. Similar good fortune has largely been enjoyed by those investors handed free shares in the demutualisation of the building societies and life assurers in the 90s.

Perhaps in some ways this is not too much of a surprise – after all, many of the companies privatised were defensive shares, namely water, power and electricity and even the demutualisations were part of a highly profitable industry which has continued to produce outstanding returns.

What has changed, though, is the competitive pressures these companies now face. We have come a long way since the 80s and 90s in terms of technological advances, which has given rise to more efficiencies but lower margins, more opportunities but more competitors.

As holders of such shares, there is a danger of having become overly sentimental about them (or even having forgotten about them) and therefore not disposing of them at the right time. It is also worth bearing in mind that as a general rule of thumb, if these shares represent the entirety of the portfolio, they do not give much diversity beyond the utilities and financials and therefore have the added complication of having all your eggs in one (or two) baskets.

There are still good investment opportunities amongst these companies, but this is not true for all. We have recently commissioned the Investors Chronicle to research and rate the privatisation and windfall shares, and their findings can be found here.

Even though the views are not necessarily our own, they give a full background to the current state of affairs and as such should at the very least be food for thought when deciding whether it is time to break out of Sid's mould and consider other opportunities within the market.

While checking a share price recently, I noticed that the company had various types of share - how many are there?

There are various types, or "lines" of stock which a company may issue. Of course, the most common are ordinary shares, for which the holder is part owner of the company, receives dividends and is eligible to attend AGMs. Preference shares come ahead of ordinary shares in dividend payments, or in the event of liquidation of the company. Cumulative shares are for when dividends are not paid ("passed") but may be paid in arrears to cumulative shareholders. Redeemable preference shares have a fixed repayment date while convertible shares may be switched to ordinary shares at defined dates on defined terms. There are still some "A" shares in existence, which usually limits or waives the right of the shareholder to vote. Deferred shares do not usually qualify for a dividend until a company's profits reach a certain level. These are probably the most common types of share the reader will encounter.
I bought a stock which is not quoted on the main market but on AIM. What does AIM mean and what problems will I encounter when I come to sell, such as if I use an online dealing service?

AIM - the Alternative Investment Market - was formed in June 1995 and is geared towards small, young and growing companies, by offering them a market listing but with less stringent and less expensive listing requirements than the standard Stock Exchange ones.
It is fully regulated and almost a subsidiary of the London Stock Exchange, but because the companies quoted on AIM are 'growth' companies, such as mining companies, their shares may be less easy to trade and the investment may be higher-risk.
So be careful when thinking about buying AIM shares. Unless you are dealing in large numbers of shares, you should see little difference between trading AIM shares and ordinary shares. Contact your broker in the usual way and they will deal accordingly. It should be straightforward to trade them online.

Why do shares often rise despite releasing what appear to be disappointing results, or indeed a disappointing announcement?

There is an old market adage that "it's what you don't know that is important" and, indeed, the market likes neither uncertainty nor shocks. Thus, if a company comes out with a poor trading statement that was not expected (as was the recent case with Next) the shares tend to take a short-term slide. Conversely, if the market is expecting bad news from a company, should the announcement be better than was feared, this can have a positive effect on the share price - even though the news may have been bad, it was not as bad as expected! Sentiment is an important factor in the market and as part of this expectations are important - as you will often see quoted post a company's results - "the shares were broadly in line with expectations", which would not have a particularly strong effect on the share price either way in the short term.

What sort of shares should I be looking at for potential income, as well as capital growth?

In our current environment of low interest and savings rates, higher yielding equities can provide a welcome bonus to a portfolio. At the present time, many companies are enjoying higher cash balances which give them the ability to pay out more in dividends.
Quite apart from any attractions the share may have in its own right, there are companies which are noted for their high dividend payouts, such as Lloyds Bank or BT; others have this reputation whilst having the additional advantage of being defensive stocks - that is, stocks which retain stable earnings throughout all phases of the economic cycle - the utility companies, such as United Utilities and the tobacco companies, such as Gallaher, are well-known examples.
Potential takeover approaches or bid rumours then simply add to the spice!

I want to use EPS and P/E ratios to calculate the value of a share - where can I find these figures so I can compare them?

EPS (earnings per share) is defined as the after-tax profit divided by the number of shares issued by a company.

The result - usually in pence - acts as a guide to how well a company is performing. The EPS changes throughout the year allowing investors to monitor how much profit is being made for each share a company has issued.

Another primary tool for investors is to compare a company's share price with its earnings, known as the price to earnings ratio or p/e . This is done by dividing a company's price with its earnings per share (as defined above).

These figures can be found easily in most broadsheet newspapers or at various financial sites online.

Which shares are best in a recession and which companies did well in the last one?

No companies do well in a recession, although some suffer less than others. It is, however, generally accepted that if 'recession-proof' shares exist, they are the defensive ones.

Defensive stocks are those companies that provide necessary and essential services, such as electricity, gas, water and food. Because of the nature of these products, they are accepted as being able to provide a degree of stability during periods when the economy is in decline.

People will always need to eat, drink and keep warm. Defensive stocks might also be systematically undervalued because investors shun their lack of glamour. If so, they should consistently outperform.

This contrasts with cyclical companies, businesses whose earnings are closely tied to the business cycle. When business conditions are good, these are usually profitable, and the share price may rise.

In a recession, or when business conditions are in decline, the company's earnings and share price usually fall. Steel, cement, building, airlines and motor manufacturers are considered cyclical industries.

I have received by post a share certificate for 100 shares from Asia Capital Plc with no other covering correspondence. It says the document is valuable and should be kept in a safe place. I have no knowledge of the company at all. Should I destroy the certificate?

Asia Capital was previously known as Gaming Insight, and also underwent a 10 for 1 share consolidation. It is therefore possible that the reader was in fact previously the holder of 1000 Gaming Insight shares - this can be checked by contacting the Registrar of the company, who are Capita Registrars in Beckenham. The telephone number is 0870 162 3100."

I'm a Manchester United shareholder. Why is there such hostility towards a proposed bid from Malcolm Glazer?

There has yet to be a formal bid but there has unquestionably been a proposal which the United board are considering before making an announcement to the Stock Exchange and recommending a course of action to the shareholders. It is understood that such a bid would be an offer at 300p per share (current price around 272p) which would value United at around £800 million. Of this, it is believed that £500 million would come from Glazer's own money and the remaining £300 million would be made up of debt (Man Utd is currently debt free). The worries from shareholders (and most vociferously from fans) are - the taking on of debt, which they believe may result in higher ticket prices and the lack of a transfer budget as the debt is repaid - and of course the loss of independence of Man United's own existence. Core to the whole situation, though, is the shareholding of the two Irish magnates (McManus and Magnier) via their investment vehicle Cubic Expression, which holds 29% of the shares - without their approval, any proposed bid would be doomed. There is now a 17 May deadline for Glazer to "put up or shut up" with regards to any bid.

I am a very small investor. Can I buy shares in quantities of 50 or less? Maybe 50 shares in Tesco. And if so, how do I do it?

There is no minimum number of shares an investor can buy - people have been known to buy one share simply to get hold of the share certificate. Buying one, or any small number, of shares will get you on to the share register, which entitles you to attend AGMs, receive the annual report and accounts, and so on.

Of course, as an investment decision it is a fairly pointless exercise, in that dealing costs will be the same for one share will be the same as for more, so with typical minimum commission ranging from £10 to £25, the cost of commission can far outweigh the cost of the shares themselves.

I have some Alliance & Leicester bank shares I wish to sell in a few weeks time but do not wish to miss the dividend date. Can you tell me the date on which the sale would not affect the payment of the dividend which is due in May?

Richard Hunter at Hargreaves Lansdown Stockbrokers says: 'In order to retain the dividend, you need to be a shareholder as at the 'ex dividend' date, which for the current period is 6 April 2005. If you sell the shares on this date or afterwards, you will retain the dividend of 32.6p per share (48.3p in total for the full year) and payment for this current dividend is due on 9 May 2005.

I have been told BP is planning a share buyback. What is this, why do they do it and what does it mean for me?

Richard Hunter, at the London office of stockbroker Hargreaves Lansdown, says: BP has a continuing share buyback programme, which is often characterised as a windfall for investors.

It is particularly popular as the moment as companies find themselves with excess profits and the choice of how to use that capital – by acquiring another company, for example, by paying a special dividend, by reducing its debt, or by undertaking a share buyback.

It works like this: the company buys its own shares on the open market. It then cancels these shares, which means the available dividend payment is spread between fewer shares, so the remaining shareholders enjoy payouts of a higher dividend per share.

When a company announces that it intends to buy back its own shares, it often leads to a rise in the share price because, in theory, there are fewer shares in issue, making them relatively more in demand.

If any further buybacks were planned, shareholders would be notified by the company.

Where can I find the dividend covers for various UK shares?

Richard Hunter at Hargreaves Lansdown Stockbrokers says : You can work out the dividend cover of shares for yourself. Divide the earnings per share (EPS) figure by the dividend per share (DPS) to give the dividend cover. For instance, if the EPS is 10p and the DPS 5p, the dividend cover is 2.

This only works where companies would be profitable, of course. If you don't fancy doing the sums, look in the Financial Times on Mondays which lists dividend cover figures. They don't change dramatically so once a week is probably often enough to look.

When it comes to shares, what is a yield and what are dividends and ex-dividends ?

Richard Hunter from Hargreaves Lansdown Stockbrokers says: It's probably helpful to answer your questions in a different order.

Dividends are the return in income on your shares, generally paid in varying amounts twice a year, a couple of months after interim (half year) and full year (final) results, and hence called interim and final dividends.

Sometimes, instead of a cash dividend you may be offered shares in lieu. These are called scrip dividends, and the number issued is calculated according to the average market price of the share in the week before the shares go ex-dividend (see below). The advantage of this form of payment to the company is that cash resources are retained while the shareholder gets more shares at no cost.

Ex-dividend For a period before the dividend is paid, usually about six weeks, the share price is quoted as 'ex-dividend'. If you sell your shares in this period you will still be entitled to get the forthcoming dividend payment, but the buyer will not. Once a share price is quoted as ex-dividend there is usually an adjustment in its price to compensate for the dividend.

Yield There are a number of different types of yield and occasionally different ways are used to calculate each, but for our purposes we refer to the dividend yield.

You work this out by dividing the gross dividend for the year (interim plus final) by the price of the shares, e.g. a gross dividend yield of 10p divided by a price per share of 160p and multiplied by 100 gives a dividend yield of 6.25%.

I have inherited shares in a number of companies and would like to keep track of their value. Are there any internet sites or software applications which can give me an up-to-date valuation report?

Richard Hunter from Hargreaves Lansdown Stockbrokers says: There are a number of ways to do this, the most simple of which is to check the financial press on a regular basis for regular share prices. Online there are also a host of possibilities - most brokers have online portfolios on their websites, whereby the reader simply enters details of the shares held and the portfolio is updated on a virtually real time basis (prices are usually 15 minutes delayed). If the reader does not currently have a broker, he/she could try http://uk.finance.yahoo.com (free online portfolio - registration required).

I have 50,000 Telewest shares. The company became New Telewest earlier this year so should I have received a new share certificate and are the shares trading?

Richard Hunter from Hargreaves Lansdown Stockbrokers says: Telewest underwent a financial restructuring which became effective in July 2004, whereby shareholders received 1 new Telewest share for every 804 previously held – thus, on a shareholding of 50000 shares the reader will now have approximately 62 shares in the “new” company. These shares are now chiefly traded on the US' NASDAQ index, although shareholders will have received notification that their shares are now held in CDI (CREST Depositary Interest) format. This basically means that they are being held in a nominee account at Lloyds Registrars, and can either be transferred to the reader's broker or indeed sold via Lloyds Registrars' postal service. The shares are thinly traded in London and at the time of writing they are approximately 880p per share. To dispose of the shares using the Lloyds service the reader should contact Lloyds Registrars at The Causeway, Worthing, West Sussex. BN99 6DA, telephone 0870 532 9430.

I notice from the new RHM flotation that the share price may be subject to "stabilisation". What does this mean?

In any public offer of shares, there is likely to be a sudden increase in supply of shares to the market for one reason or another, which will put downward pressure on the shares, causing in some cases a large downward movement in the share price. The idea of stabilisation is to prevent this happening, whereby the lead manager of the offer may buy shares in the market in order to prop up the share price - this can only be done, however, when the market price is at or below the offer price. This is an accepted form of share manipulation, since it ensures an orderly market in the shares, which can be volatile when initially traded. Another benefit is that it increases confidence that the market can support new issues, and therefore more companies are likely to consider this route. Similar practices take place in other major markets.

How do company dividend tax credits work?

When you receive a dividend, it is treated as though it has been paid after a 10% deduction. Thus, if you received a dividend for £90, effectively the (gross) dividend was £100, less the £10 "tax credit". This is the only tax liability on dividends for non and basic rate taxpayers. For higher rate taxpayers, there is an additional 22.5% tax to pay, so in the above example, on top of the £10 already paid, a further £22.50 will payable, leaving a net dividend of £67.50.

How would I go about joining, or forming, an Investment Club?

Investment clubs are groups usually ranging between a few and 20 people, with the common objective of pooling their investments (based on a monthly contribution) and thereby spreading their risks. They are typified by having members from all walks of life, and usually have a very social side to them also! Without doubt, the "Holy Grail" for anyone wishing to form or join an Investment Club is provided by ProShare, and their website - http://www.proshareclubs.co.uk/ - is an absolute must for investment club members, potential, new and seasoned. For investment clubs themselves, many brokers offered a tailored service, such as ours at Hargreaves Lansdown Stockbrokers - visit http://www.hargreaveslansdown.co.uk/siteredesign/stockbrokers/frameset.asp?url=25

What exactly is meant by the term "secondary market"?

When a company floats in order to raise capital, the market for these new securities is known as the "primary market" and is represented by the security being purchased directly from the issuer. The shares are then effectively sold on, whereby trading begins on the secondary market - where the vast majority of share dealing as we understand it, takes place. The presence of secondary markets is seen to be vital, even though the capital has already been raised, since it gives confidence to other companies who are thinking of raising capital in this way, by providing a liquid market - that is, one where the shares continue to be easily traded - as well as providing the ability to trade these newly issued shares from the primary market.

Why aren't Investment Trust prices reported in the Managed Funds pages of the FT alongside Unit Trusts?

Investment Trusts and Unit Trusts both invest money in other companies, but their ownership structure is very different. Investment Trusts are companies which issue shares, and daily prices are listed on the main share prices page under their own category. Unit Trusts are real "trusts" and they issue units rather than shares - the price of units is determined by a formula based on the net asset value of the fund's assets, which makes them a completely different beast. As such, they get their own pages in the FT.

I cannot understand why the market sometimes rises when bad economic figures are released?

The short answer is that the figures were not as bad as the market was expecting. The key point here is that share price movements are partly the result of the market anticipating news - whether that be corporate profits or the nation's economic health. If the news is better than anticipated, the market perks up - if it is worse, it is marked down. However, by concentrating on the medium term health of the companies you are investing in, most of the monthly economic data you will come across will have little impact - which you could not already have anticipated yourself - on your portfolio.

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