Book Review > The Australian Investors' Dictionary

This book, which runs to 215 pages, provides definitions of terms used in the investment industry, seeks to give them context and explain their significance to the investor. Areas covered encompass:

• shares and managed funds;
• fixed interest and bonds;
• options, warrants and futures;
• investment analysis;
• tax and superannuation;and
• government and regulatory bodies.

Entries relating to property investment and commodities are also included along with those from accounting, economics and law where they aid in understanding investment.
A large part of the content is relevant to investments overseas. There are entries relating to institutions and activities in many places, especially the USA. References to practices overseas are included where they might help local investors understand events in the wider world that have an impact on their portfolios. Overall, the dictionary is focused on Australia. Many of the entries describe structures and institutions, such as regulations, company types or professional associations, which relate solely to Australia.
The editor has not attempted to confine the dictionary to a single 'school' or 'philosophy' of investment. Consequently, it contains entries relating to technical analysis and defines concepts deriving from modern portfolio theory, as well as many that are used mainly for fundamental analysis.
A common form of cross-reference is from the particular to the general and vice versa. This enables the reader to quickly gain a sense of the relationships between terms and how individual concepts fit into the broader investment picture. This is a strength.
The editor, Richard Harrison, is an investment analyst with InvestorWeb Research based in Melbourne. A check of bookshops in a large regional centre, by the reviewer indicated only one dictionary was available so there may be a niche market for books such as this one. This book is current to January 2003. The editor and publisher hope to publish updated editions in coming years depending on its popularity.
The explanation of terms is, generally, easy to follow and is about the right length, eg the entry for hedge fund: 'An investment fund that typically: uses sophisticated and complex financial techniques; has a moderate to high level of gearing ('italics' means see another entry); was originally open only to large investors (there are now some retail hedge funds; and is domiciled outside a major financial centre. Hedge funds invest, speculate and trade in securities, derivatives, commodities, currencies and other assets.
'Originally, hedge funds used hedging strategies - hence the name - however nowadays this is not necessarily the case. There are now also retail funds open to smaller investors, and several have listed.'
There are no glaring omissions apart from the absence of an entry on the AIA! There is, however, one on the Australian Shareholders' Association which is defined as: 'A private Association formed to advance the interests of individual shareholders in listed companies.'
This is likely to be a valuable plain English reference guide to many investment terms and concepts for beginner and experienced investors alike and, possibly, the active trader. The dictionary is comprehensive with charts and tables used for further explanation where necessary. There are also longer descriptions of important items, eg credit rating.
As more people are taking control of their finances and investing their 'hard-earned money' this book should be useful in assisting them to understand the financial language used and, possibly, improve communication with their financial planner.