Ask Colin

What does it mean when someone says "shares have a personality"?

I must say that I have not come across this specific expression. However, I think I know what is meant by it.

Different shares trade in different ways depending on a few things such as:

1. The nature of the underlying business. If it is a staid old industry in a mature phase of its life cycle, it will trade slowly and sluggishly, because there are no great growth expectations. It will be a "cash cow", which means it throws off lots of cash with little new investment of capital needed. On the other hand a young growing business will move quickly upward when things are good and just as quickly downward when things go wrong.

2. The group who trade it. All shares have their devotees who follow it closely. They tend to trade in and out of it and be of a similar psychology which leads to a particular character to the movements in its price. Usually a company has a sponsoring broker and it is among the broker's clients that many of the original float shares were spread. Particular brokers tend to attract particular types of clients - investors and traders - and that flows through to the way they trade in the stock.