Business English / Деловой английский язык
Investing in the stock market
Francesca Amato has arrived in Cardiff to do a postgraduate marketing course at the University of Wales. Her father, a businessman in Milan, has given her £40,000 to cover her fees and expenses while she is studying in Britain. Francesca, however, has other, more ambitious, ideas about what to do with the money.
|Francesca Amato||is doing a marketing diploma at the University of Wales. She is Italian.|
|Vocabulary||Bonds, shares and other securities; investment management; financial journalism.|
|Skills||Giving advice and warnings; explaining concepts and calculations.|
|Documents||A portfolio; a bank leaflet on investment; a newspaper stock market column; listed share prices.|
Getting investment advice
21.1 Listen and read
Francesca Amato is a postgraduate student at the University of Wales. A few days after her arrival in Cardiff, she visits Richard Price, her new bank manager. Listen to what they say. Does Richard think that her ideas are sensible?
|RICHARD||I see. You've got forty thousand pounds to invest. And the aim is a high income?|
|FRANCESCA||And capital growth. I was thinking of buying and selling on the currency market - that's how my father made his money - but...|
|RICHARD||Whoa! That is highly speculativeand very dangerous. Anyway, times have changed - forty thousand is peanuts in the foreign exchange market nowadays. Even on the stock market, it's frankly not a lot of money, but I think we can make it work for you.|
|FRANCESCA||Every day I read the city pages in the newspaper.I think at the moment the market is bullish.|
|RICHARD||Well, it's true that the one hundred share index has been rising this week, but that doesn't necessarily mean that the big investors think it will go on rising. Anyway, I would strongly advise you not to go playing the market.Leave that to the big financial institutions - the building societies, insurance companies, pension funds - they've got fund managers who are experts. What you want is a portfolio of investments which will give you a good return on your investment.|
|FRANCESCA||Mm, yes! Junk bonds - mezzanine finance...|
|RICHARD||No, no, no! The whole point of investment is to spread the risk. Look, I'll show you what I recommended the other day to a client in a somewhat similar position to yourself.|
21.2 Listening practice: an investment portfolio
Richard Price telephoned his client to give her the details of the portfolio he had arranged for her. Listen to what he says. As you listen, read the details of the portfolio in 21.3.
21.3 Document study
This is the portfolio Richard Price put together for his client. Read it carefully.
21.4 Listen and read
Richard explains the portfolio to Francesca. Listen to what they say. Notice how he explains many of the terms he uses. What is Richard trying to protect Francesca, and her money, from?
|FRANCESCA||But this is no good to me! Almost half of her money is still in cash! And seventeen per cent in gilts - those are government loan certificates, aren't they? I don't want to lend money to the government!|
|RICHARD||Gilts are government bonds, yes, but remember they're called gilts because they're gilt-edged - the safest, most secure investment you can have, and very easy to sell at any time. You can't go putting everything into equities- suppose there's another crash! The principle of any portfolio is to spread your risk, so whatever happens in the future you can be fairly certain your capital will be protected.|
|FRANCESCA||Mm. But these cash deposits are going to be eroded by inflation.|
|RICHARD||Yes, but you can't afford to be caught without cash in an emergency, can you? You must keep some liquidity. If all your assets are tied up, you're exposed to risk. That is what sound investment is all about - limiting your exposure to risk, covering your position.Your father used to be an international exchange dealer, you said; he knows all about hedging a deal so he keeps himself covered.|
|FRANCESCA||You haven't answered my question about inflation.|
|RICHARD||Right. The loss of value of the cash due to inflation is compensated for by interest payments, and by the gain in value of the other investments - which should rise faster than the RPI, in addition, of course, to paying dividends. Now, I do have to warn all clients that share prices can go down as well as up. But I think you appreciate that ...|
21.5 Reading for key words
Find the words or phrases in 21.1 that tell you the following:
|1||Extremely risky; you might win a lot, you would probably lose.
|2||Very little money.
|3||Organisations which act as savings banks, and lend people money to buy houses.
|4||A collection of investments of different types.
|5||Invest in several companies so as to reduce the possibility of losing money.
Reading about the stock market
21.6 Writing practice: dictation
Listen again to Richard Price reading the details of the investment portfolio in 21.2. As you listen, write what he says. When you have finished, compare what you have written with the printed version in 21.2.
21.7 Document study
These are two of the documents about investments that Francesca reads. One is a leaflet which the bank gives to potential clients, the other is from the stock market column in a daily newspaper. Read through them carefully, and then do the exercise which follows.
21.8 Reading for key words
Find the words or phrases in 21.7 that tell you the following:
|1||The ability to make decisions as they think best.
|2||Buy or sell stocks and shares so that you are likely to make a profit.
|3||If you are registered for VAT.
|4||ICI did what the people who bought their shares hoped they would do.
|5||Allowed the possibility to remain.
|6||To make sure of the deal.
21.9 Find the right word
Read the text below about securities. Write a word from the box to fill each of the gaps.
21.10 Speaking practice: the bank's investment services
Listen to this conversation. Then listen again, and speak the part of the man.
|WOMAN||What exactly will the bank do for me, if I use their management service?|
|MAN||First, they'll deal on your behalf. Remember, you can only buy and sell shares through a stockbroker.|
|WOMAN||So you act as my stockbroker. Do I have to tell you what to do every time?|
|MAN||You can do, if you want, but usually customers ask us to buy and sell at our discretion.|
|WOMAN||OK, as long as you refer the decision to me for my approval.|
|MAN||We also keep you posted on company news: new issues, takeover bids, that kind of thing.|
|WOMAN||Why do I need to know about takeover bids?|
|MAN||Because the bidder may be making an offer for your shares. You've got to decide whether to accept.|
|WOMAN||And the money that comes in - does that have to go to my account?|
|MAN||No, we can forward dividends and other income anywhere you want - in accordance with your instructions.|
21.11 Writing practice: figures
Richard Price has to advise a customer who wants to invest £20,000. Look back at the dialogues and documents in this lesson. What advice would you give the customer? What fee will the bank charge him per year under its Investment Management Service? Explain to the customer how to calculate the smallest investment he must make to justify the bank's minimum fee.
21.12 Listen and read
Francesca is at a party for local business people. Listen to what they say. Notice how the different people give advice, and make and decline offers.
|YUKIO||So, you have come to Cardiff to study? What subject?|
|FRANCESCA||I'm doing a marketing diploma and I hope also a doctor's degree in business administration, but at the moment I'm studying the stock market.|
|HANS||Really? Is that just for fun, or have you some money to invest?|
|FRANCESCA||I'm very serious about it. I have to have an income so that I can continue to live in England.|
|HANS||Really! Excuse me a moment - Andreas - I would like you to meet a friend of mine. Francesca, can I introduce you to my business partner, Andreas Tsoulas. Andreas, this is Francesca - she is doing a marketing diploma at the university.|
|ANDREAS||Hello, Francesca, I'm pleased to meet you.|
|FRANCESCA||How do you do.|
|HANS||And she is looking for an investment with a good return. She has a large sum of money to invest.|
|ANDREAS||Ah! Really! Well, we have a great opportunity - you could get in on the ground floor.|
|YUKIO||You want her to put money into your road transport company? Huh! Don't you listen to them! They tried it on me last week. They know I'm only a production engineer so they think I don't understand money!|
|FRANCESCA||Don't worry! I can look after myself. But I can see now why my bank manager warned me not to play the market!|
Considering the options
21.13 Listen and read
Francesca meets Richard Price again to talk about her investments. Listen to what they say. Does Richard think that the p/e ratio is a useful way to value a company?
|RICHARD||You see, Miss Amato, it's a question really of knowing what to look for. With blue-chip companies like ICI your money is safe, but the market price of the shares is obviously high. You know, of course, that share prices are published every day in the newspaper. This is what it says about ICI in today's listing. Where are we? Yes, here. Now, 'high and low' means the highest and lowest prices of this stock during the current year. The stock, of course, is ICI - stocks and shares are practically the same thing - and the star means that ICI is rated an alpha stock - as I said, a blue-chip company. Yesterday's closing price was 1080p , for a share with a par value of one pound. That's 20p higher than the day before, so the change column says plus twenty. 'Yield' means the percentage of return on your investment - assuming you've had your shares for at least a year, you'll get a six point eight per cent return on what you paid for them. And the price-to-earnings ratio - ah, now this is supposed to be the key to the whole thing. You take the price of the shares as quoted on the Stock Exchange and multiply by the number of shares issued; that gives you the market valuation of the company. Then you divide that valuation by the company's earnings - that means its latest profit figure, after tax. In fact, of course, there are so many factors that influence market valuation and how big companies account for their profits that, in my opinion, p/e ratios are pretty meaningless.|
|FRANCESCA||Yes, it's not as easy as it looks, is it? Do you know, I met two young men at a party who wanted me to put all my money into their international road transport consortium?|
|RICHARD||Oh, did they now?|
|FRANCESCA||But I would rather the bank looked after my financial affairs. I know you're very discreet.|
|RICHARD||Yes. Discretion is the name of the game for bankers.|
21.14 Reading for key words
Find the words or phrases in 21.13 that tell you the following:
|1||You must know precisely what information you require.
|2||The amount you have to pay if you want to buy one share.
|3||The amount you would have to pay if you wanted to buy all the shares.
|4||A large international business organisation.
|5||Doing something without other people knowing about it.
|6||An essential quality in this job.
21.15 Listen and read
Francesca has another meeting with Richard Price to talk about her investments. Listen to what they say. How will Francesca be able to give her father the money back when she returns home?
|RICHARD||With your income from this portfolio, and the money you earn working part-time for that road transport company, I should think you'll have enough to live on quite comfortably. Probably won't have to dig into the capital at all.|
|FRANCESCA||That's my intention. In three years' time I'll go back to Milan and say to my father: 'Here's your eighty million lire, I don't need it after all.'|
|RICHARD||Hm, and what's his reaction going to be to that?|
|FRANCESCA||He'll say: 'That's what I hoped you would do. You can keep the money, here's another eighty million - now start your own business!'|
21.16 Structure practice: giving advice
Richard Price gives Francesca advice on her investments in a number of ways. Perhaps the most obvious is when he uses the verb 'advise':
I would strongly advise you not to go playing the market.
The pattern here is:
to advise (someone) to do (something).
You can also use the noun 'advice':
Let me give you some advice. Let me give you a piece of advice.
But there are many other ways of giving advice to people.
I suggest that you do ...
If I were you, I'd do ...
Why don't you do ...
Why not do ...
How about doing ...
What about doing ...
You meet a friend who has some money to invest. Give him some advice. Use each of the phrases listed above. Make sure that you use the right form of the verb with each.
I would advise you to go and talk to your bank manager.
Let me give you some advice - go and talk to your bank manager.
21.17 Find the right word
Read the text below on securities. Write a word from the box to fill each of the gaps.
Your bank can act as your a ; it will deal in b on your behalf, at its own c or in accordance with your instructions, referring decisions to you for d if you wish. It will also advise you if, for instance, one of the companies you hold shares in is the subject of a e bid. The only way a company can take over another is to buy a controlling f in it - that is, at least 51% of its g . This can happen to even the most successful companies, rated as h ' companies' or i ' stocks' on the Stock Exchange. A takeover is not necessarily a disaster; rumours of one usually send the share price j sharply, sometimes far above its k value.
A company that wants to increase its capital must normally l more shares. It may take the opportunity to reward and encourage its existing shareholders by giving them shares as a m , or by offering them the right to buy the new shares before they are offered on the open n .