Jargon puts British off dabbling in stock market

Published on Tuesday 27 July 2004 12:50

CONFUSING industry jargon is the main reason why more people in Britain are not dabbling in stocks and shares, according to a new survey from NatWest Stockbrokers.

Although the study found 85 per cent of respondents knew what the stock market was, more than half admitted they did not know how it worked.

Less than 40 per cent of those polled said they knew what terms such as FTSE (Financial Times Stock Exchange index) and equities (shares) meant.

Common terms used by stockbrokers to describe the performance of the FTSE, such as "bull market" (rising) and "bear market" (falling) were largely unrecognised. More than 80 per cent did not know "stag" was a term for someone who buys new issue shares - such as privatisation - in the hope they can sell immediately for a profit.

In addition, although three quarters of respondents knew what a basic dividend was, only 11 per cent of the 1008 people asked knew that a scrip dividend was when a shareholder chooses to take their dividend in new shares rather than cash.

Those in London had the best grasp of stock market terminology, while those in the West Midlands were least acquainted with it.

Bob Hamilton, chief executive of NatWest Stockbrokers, said: "New investors should not be put off by these terms. I would urge anyone who is baffled by jargon to seek a proper explanation before committing to an investment."