Marcus Today Glossary
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A. Marcus Today and market terminology
ASX 200 – Australia's leading sharemarket index, made up of the 200 largest eligible companies listed on the ASX by market capitalisation.
All Ords – The All Ordinaries Index, covering a broader range of Australian listed companies than the ASX 200.
Big Bank Basket – A Marcus Today shorthand for the combined performance of the four major Australian banks, CBA, NAB, WBC and ANZ.
The Market – Usually refers to the overall sharemarket, rather than an individual stock.
Risk On – Investors are willing to take more risk. Typically positive for technology, small caps, speculative stocks and cyclicals.
Risk Off – Investors become more defensive. Money tends to flow into cash, bonds, gold and defensive companies.
Rotation – Money moving from one sector or investment style into another, for example, out of banks and into resources.
Catalyst – An event capable of changing investor perception or driving the share price. Examples include results, takeover bids, resource discoveries, regulatory approval or contract wins.
Overhang – A known or anticipated seller that may limit share price appreciation.
Liquidity – The ease with which shares can be bought or sold without significantly moving the price.
Free Float – The proportion of a company's shares available for public trading.
B. Fundamental analysis
Fundamental analysis examines the underlying business, its earnings, assets, cash flow, balance sheet, management and valuation.
Revenue – The money generated from selling goods or services.
Revenue Growth – The percentage increase or decrease in revenue compared with a previous period.
Organic Growth – Growth generated by the existing business, excluding acquisitions or major asset purchases.
Earnings – The profit generated by a company.
EPS – Earnings per share. Net profit divided by the number of shares on issue.
EPS Growth – The percentage growth in earnings per share.
NPAT – Net profit after tax.
Underlying NPAT – Profit adjusted to remove items management considers unusual, non-recurring or non-operating. Always check what has been excluded.
EBIT – Earnings before interest and tax, often referred to as operating profit.
EBITDA – Earnings before interest, tax, depreciation and amortisation. Widely used to compare operating performance, although it should not automatically be treated as cash flow.
Gross Profit – Revenue minus the direct cost of producing goods or services.
Gross Margin – Gross profit divided by revenue.
EBIT Margin – EBIT divided by revenue.
EBITDA Margin – EBITDA divided by revenue.
Operating Leverage – When revenue growth produces proportionally faster profit growth because fixed costs are spread across a larger revenue base.
Positive Jaws – Revenue is growing faster than costs.
Negative Jaws – Costs are growing faster than revenue.
Cost to Income Ratio – Operating expenses divided by operating income. Particularly important for banks and financial businesses.
FCF – Free cash flow. Cash generated by the business after operating costs and capital expenditure.
Operating Cash Flow – Cash generated from the core operations of the business.
CapEx – Capital expenditure, money spent on assets, equipment, infrastructure or other long-term investments.
Maintenance CapEx – Capital expenditure required simply to maintain the existing business.
Growth CapEx – Investment intended to expand production, capacity or future earnings.
C. Valuation terms
Market Capitalisation, Market Cap – Share price multiplied by the number of shares on issue.
EV – Enterprise value. A measure of the total value of a business, generally incorporating equity value and net debt. It is particularly useful when comparing companies with different debt levels.
PE Ratio – Price to earnings ratio. Share price divided by earnings per share. A high PE may indicate expensive valuation, but it may also reflect expectations of strong future growth.
Forward PE – The PE ratio based on forecast earnings rather than historical earnings.
Trailing PE – The PE ratio based on historical earnings.
PEG Ratio – Price/earnings to growth ratio. PE divided by expected earnings growth.
EV/EBITDA – Enterprise value divided by EBITDA. Commonly used to compare companies with different capital structures.
EV/EBIT – Enterprise value divided by EBIT.
EV/Sales – Enterprise value divided by annual revenue. Often used for high-growth companies that are not yet profitable.
P/B – Price to book. Share price divided by book value per share. Particularly relevant for banks, insurers and asset-heavy businesses.
DCF – Discounted cash flow. A valuation method that estimates the present value of future cash flows.
Terminal Value – The estimated value of a business beyond the explicit forecast period in a DCF model.
WACC – Weighted average cost of capital. The blended cost of debt and equity used as a discount rate in many valuation models.
Multiple Expansion – A share price rises because investors are prepared to pay a higher valuation multiple.
Multiple Compression – A share price falls because investors are prepared to pay a lower valuation multiple.
Rerating – A sustained increase in the valuation multiple assigned by the market.
Derating – A sustained reduction in the valuation multiple.
D. Profitability and quality
ROE – Return on equity. Profit generated relative to shareholders' equity.
ROIC – Return on invested capital. Measures the return generated from the capital invested in the business.
ROCE – Return on capital employed. Measures how effectively a company generates profits from its capital base.
Return on Incremental Capital – The return generated on newly invested capital.
Moat – A sustainable competitive advantage that protects a company's profitability.
Pricing Power – The ability to increase prices without losing significant customers or market share.
Recurring Revenue – Revenue that is expected to repeat regularly, such as subscriptions.
ARR – Annual recurring revenue. Commonly used by software and subscription businesses.
Churn – The rate at which customers cancel or stop using a product or service.
CAC – Customer acquisition cost. The cost of acquiring a new customer.
LTV – Lifetime value. The estimated value or profit generated by a customer over their relationship with a business.
Unit Economics – The profitability of a single customer, product or transaction.
E. Balance sheet and financial strength
Cash – Money immediately available to the company.
Net Cash – Cash exceeds interest-bearing debt.
Net Debt – Total debt minus cash.
Gearing – The level of debt relative to equity or the overall capital structure.
Debt to Equity – Debt divided by shareholders' equity.
Interest Cover – A measure of a company's ability to pay interest expenses from earnings.
Balance Sheet Strength – The overall financial resilience of a company, including cash, debt, liquidity and asset quality.
Working Capital – Current assets minus current liabilities.
Receivables – Money owed to the company by customers.
Inventory – Goods held for sale or production.
Goodwill – An accounting asset created when one company acquires another for more than the fair value of its identifiable net assets.
Impairment – A write-down in the carrying value of an asset.
F. Dividends and capital management
Dividend – Cash distributed by a company to shareholders.
Dividend Yield – Annual dividend divided by the share price.
Fully Franked – A dividend carrying the maximum level of Australian franking credits.
Franking Credits – Tax credits attached to dividends representing Australian company tax already paid.
Dividend Payout Ratio – The proportion of earnings paid to shareholders as dividends.
DRP – Dividend reinvestment plan. Allows shareholders to receive additional shares instead of cash dividends.
Special Dividend – A one-off dividend, usually funded by excess cash or asset sales.
Capital Return – Returning capital directly to shareholders.
Share Buyback – A company repurchases its own shares.
On-Market Buyback – Shares are repurchased through the stock exchange.
Off-Market Buyback – Shares are repurchased directly from shareholders under a specific arrangement.
Dilution – When new shares are issued, reducing the percentage ownership and potentially earnings per share attributable to existing shareholders.
Accretive – An acquisition or transaction that increases EPS.
Dilutive – An acquisition or transaction that reduces EPS.
G. Company results and reporting season
Beat – A result better than market expectations.
Miss – A result worse than market expectations.
In Line – A result broadly consistent with expectations.
Consensus – The average or aggregate expectations of analysts covering a company.
Guidance – Management's forecast or outlook for future performance.
Upgrade – An improvement in earnings guidance or analyst expectations.
Downgrade – A reduction in earnings guidance or expectations.
Earnings Revision – A change to expected future earnings.
Quality of Earnings – An assessment of how sustainable and reliable a company's profits are.
One-Off – An unusual or non-recurring item.
Normalisation – Adjusting earnings to remove unusual items and estimate sustainable profitability.
Look Through – Ignoring a short-term event and focusing on the longer-term earnings potential.
Headline Number – The most obvious figure in a result, often revenue or statutory profit.
The Devil Is in the Detail – The headline result may look good, but the underlying details are less impressive.
H. Resources and small cap terms
JORC – The Australian reporting code governing the public disclosure of exploration results, mineral resources and ore reserves.
Resource – A concentration of minerals with reasonable prospects for eventual economic extraction.
Reserve – The economically mineable component of a mineral resource.
DFS – Definitive feasibility study.
PFS – Pre-feasibility study.
Scoping Study – An early-stage assessment of the potential economics of a project.
AISC – All-in sustaining cost. A measure commonly used by gold companies to estimate the total ongoing cost of producing an ounce of gold.
Grade – The concentration of a valuable mineral within ore.
Strip Ratio – The amount of waste material that must be removed relative to the amount of ore mined.
Orebody – A naturally occurring concentration of minerals that may be economically mined.
Resource Upgrade – An increase in the estimated size or quality of a mineral resource.
Maiden Resource – The first formal mineral resource estimate for a project.
Offtake – An agreement under which a customer commits to purchase future production.
Hedging – Using financial contracts to lock in or protect against movements in commodity prices or currencies.
Hedge Book – The collection of outstanding hedging contracts held by a company.
Funding Runway – How long a company can continue operating before requiring additional capital.
Cash Burn – The rate at which a company spends its available cash.
Capital Raise – A company raising new equity or debt.
Placement – New shares issued to institutional or sophisticated investors.
SPP – Share purchase plan. An opportunity for eligible existing shareholders to buy additional shares.
Entitlement Offer – Existing shareholders are offered the right to buy new shares, usually at a discount.
I. Technical analysis
Technical analysis focuses primarily on price, volume and market behaviour, rather than the underlying financial performance of the company.
Trend – The general direction of a share price.
Uptrend – A series of higher highs and higher lows.
Downtrend – A series of lower highs and lower lows.
Sideways Market – A market moving within a relatively narrow range.
Support – A price area where buying has previously emerged.
Resistance – A price area where selling has previously emerged.
Breakout – A move above resistance or below support.
False Break – A breakout that quickly reverses.
Moving Average – An average share price calculated over a specified period. Common examples include the 20-day, 50-day, 100-day and 200-day moving averages.
SMA – Simple moving average.
EMA – Exponential moving average. Gives greater weighting to more recent prices.
Golden Cross – A shorter-term moving average crosses above a longer-term moving average.
Death Cross – A shorter-term moving average crosses below a longer-term moving average.
RSI – Relative strength index. A momentum indicator used to assess the speed and magnitude of recent price movements.
Overbought – A technical description suggesting a security has risen rapidly and may be vulnerable to a pullback. It does not necessarily mean the stock is fundamentally overvalued.
Oversold – A technical description suggesting a security has fallen rapidly and may be vulnerable to a bounce.
MACD – Moving average convergence divergence. A momentum and trend-following indicator based on the relationship between moving averages.
Momentum – The speed and strength of a price movement.
Divergence – When the price and a technical indicator move in opposite directions.
Volume – The number of shares traded.
Volume Confirmation – Strong trading volume supporting a price move.
Accumulation – Persistent buying of a stock, often over an extended period.
Distribution – Persistent selling of a stock.
Gap – A price area skipped during trading, often following major news.
Gap Up – A share opens significantly above the previous day's close.
Gap Down – A share opens significantly below the previous day's close.
J. Chart patterns
Double Top – A potentially bearish pattern where the share price fails twice near the same high.
Double Bottom – A potentially bullish pattern where the share price finds support twice near the same low.
Head and Shoulders – A chart pattern sometimes associated with a potential trend reversal.
Inverse Head and Shoulders – The opposite formation, sometimes interpreted as bullish.
Cup and Handle – A rounded consolidation followed by a smaller pullback.
Flag – A short consolidation following a sharp price movement.
Pennant – A triangular consolidation following a strong move.
Triangle – A chart pattern where the trading range narrows.
Consolidation – A period where the share price pauses or trades sideways.
K. Trading and portfolio management
Position Size – The percentage or dollar amount of a portfolio invested in a particular stock.
Conviction – The level of confidence an investor has in an investment idea.
High Conviction – A stock in which the investor has particularly strong confidence.
Portfolio Weight – The proportion of the portfolio invested in a stock.
Overweight – Holding more of a stock or sector than a benchmark or normal allocation.
Underweight – Holding less than the benchmark or normal allocation.
Benchmark – An index or portfolio used to measure performance.
Cash Weighting – The proportion of the portfolio held in cash.
Dry Powder – Cash available to invest when opportunities emerge.
Scale In – Buy a position gradually.
Scale Out – Sell a position gradually.
Trim – Sell part of a holding.
Top Up – Buy additional shares in an existing position.
Average Down – Buying more shares after the price has fallen, reducing the average purchase price.
Average Up – Buying more shares after the price has risen.
Stop Loss – A predetermined level at which an investor exits a position to limit losses.
Risk/Reward – The potential upside compared with the potential downside.
Drawdown – The decline from a portfolio or investment's previous peak.
Maximum Drawdown – The largest peak-to-trough decline over a specified period.
Beta – A measure of how sensitive a stock is to movements in the overall market.
Sharpe Ratio – A measure of risk-adjusted return, comparing returns with the volatility taken to achieve them.
L. Macro and economic terms
CPI – Consumer price index, the most widely used measure of consumer inflation.
Trimmed Mean Inflation – A measure of underlying inflation that excludes unusually large price movements.
Headline Inflation – The broad CPI inflation figure.
Core Inflation – A measure designed to remove temporary or volatile price movements.
Cash Rate – The interest rate targeted by the Reserve Bank of Australia (RBA).
Basis Point, bp – One hundredth of one percentage point. 100 basis points = 1%.
Yield Curve – A graph showing interest rates across different maturities.
Inverted Yield Curve – Short-term interest rates are higher than longer-term interest rates.
Soft Landing – Inflation falls without causing a significant economic recession.
Hard Landing – An aggressive economic slowdown or recession following monetary tightening.
Stagflation – Low economic growth combined with high inflation.
Recession – A significant and sustained decline in economic activity.
Leading Indicator – Economic data that tends to move before the broader economy.
Lagging Indicator – Data that tends to change after the economy has already shifted direction.
M. Market behaviour and Marcus Today expressions
FOMO – Fear of missing out. Investors buy because prices are rising and they are worried about being left behind.
Capitulation – The point at which investors finally give up and sell, often after a prolonged fall.
The Herd – Investors collectively chasing the same theme or trade.
Narrative – The story investors are buying. Sometimes the narrative is more important to the share price than the immediate fundamentals.
Climbing the Wall of Worry – Markets continue rising despite numerous risks and negative headlines.
Buy the Dip – Buying a share or market following a fall in the expectation that the decline is temporary.
Sell the Rally – Using a bounce in the share price to reduce or exit a position.
Dead Cat Bounce – A temporary recovery in a falling share price or market.
Bagholder – An investor left holding a share after a significant fall.
Ten-Bagger – A stock that rises tenfold from the purchase price.
Multibagger – A stock that increases several times from the original purchase price.
Don't Fight the Trend – The prevailing market direction is often more important than individual opinions.
The Trend Is Your Friend – A reminder that momentum can persist longer than investors expect.
Mr Market – A metaphor for the emotional and often irrational behaviour of the market.
Price Is Truth – Regardless of an investor's view, the market ultimately determines the current price.
Time in the Market – The idea that long-term participation is often more valuable than trying to perfectly time every entry and exit.
It's a Marathon, Not a Sprint – Successful investing generally requires patience and discipline.
The Market Can Stay Irrational Longer Than You Can Stay Solvent – A warning against assuming that an apparently irrational market must quickly correct.
Don't Catch a Falling Knife – Avoid buying simply because a share price has fallen sharply.
Let Your Winners Run – Avoid automatically selling successful investments too early.
Cut the Flowers and Water the Weeds – The classic investing mistake of selling winning positions and holding losing ones.
Sell in May and Go Away – A seasonal market saying suggesting weaker returns over the northern hemisphere summer. It is not a reliable rule.
Buy on Rumour, Sell on Fact – A share price may rise ahead of an anticipated event and fall once the event actually occurs.
Punching the Air – When things are going too well, and hubris is high. Usually a sign of a slice of humble pie coming.