Documentation > Glossary N

Glossary N

The financial world is full of jargon - i.e. strange words no-one understands. Here we try to explain some of the many technical terms.

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NASDAQ

The US technology market.

Natural Resources

The rightful property of Wall Street/City of London.

Neural Network

A data processing architecture ('type of computer') based on analogy of the connectionism of the human brain. Many types, many training algorithms. Useful primarily for pattern recognition tasks in the presence of imprecise or noisy data. Big application in signal processing.

News, Importance of

News certainly affects share prices, but it is almost impossible to say with current techniques to what extent a piece of news will affect the share price. It is possible to say generally whether an event is good or bad, but that's about it. Sometimes the market is jumpy, other times, unmoved.

Most so-called news is pretty irrelevant stuff. Recycled opinion, pompous blustering, idle speculation, tittle-tattle, salacious gossip. Overwhelmingly, it does not matter much. But then something really big happens, and the share prices start to move in unexpected directions - this is the kind of thing one must be aware of. And it is the result why one cannot discount news in any sensible trading system; news will 'eventually' filter into the share price, but if you are not monitoring news as well as the price, you may find yourself taking a beating before you realise it, and too late to do anything about it.

Nominee

A type of account for holding shares with online brokerages. It means the broker does not have to issue individual share certificates to everyone.

Non-Stationary

A term usually applied to the domain of statistics. It means, in practice, lots harder than for 'stationary'.

Nightmares

Some cautionary tales for the wary investor. When things go wrong in the markets, they really do go wrong.

  • 1929 - The Wall Street Crash - the event which plunged the world into the depression of the 1930s.
  • LTCM - the hedge fund of Black and Scholes had leveraged almost 300 times its total assets; when Boris Yeltsin defaulted on an IMF loan, the market took an unexpected move which left the fund exposed - the automated trading systems in trying to recover their losses took on even more debt, which eventually could not be covered. (Something akin to the Gamblers' Ruin scenario.)
  • Black Wednesday - speculators, famously led by the Quantum Fund of George Soros, attacked the pound.
  • Thailand - speculators attacked the baht.
  • Barings - Nick Leeson. Derivatives. Slipshod back office practices. Clueless 'old boys' in the upper management, unaware of what was happening.
  • Marconi - overpriced acquisitions; late band wagon jumping.
  • Enron - massive fraud; inflating profits figure helped by complicit auditors.
  • WorldCom - massive fraud.
  • BCCI- fraud.
  • Guinness - fraud; insider dealing; the worlds only recoverer from Alzheimer's disease;

Noise

Another name for randomness.

In signal processing it tends to mean 'the bit we are not interested in' - i.e. the part you want to get rid of, to filter out.

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