Interest rates are too low – and they’ll be low for a long time to come.
Low rates are good news for borrowers.
But low rates are not good news for savers. Allow us to take a look at five ways you can increase the yields you receive for saving and investing your money.
Increasing Investment Yields
Enterprise value is a valuation assigned to a company to determine how much the whole enterprise is worth, including debt and equity.
We’ll use an example to show how enterprise value works. Then, we’ll detail how you can calculate enterprise value and make use of this statistic as you look to find quality stocks on the stock market.
Calculating Enterprise Value
MorningStar is one of the biggest ratings and analysis sites for mutual funds and stocks.
The company has countless analysts who study businesses and fund companies to find the best places to invest your money for the best risk-adjusted return.
Here's how MorningStar's rating system works:
MorningStar for Mutual Funds
Dividend growth stocks are stocks that pay a dividend, but which may pay larger dividends in the future.
Let’s discuss how dividend growth investing works, and how people can find companies that are poised for one or many dividend increases over time.
The Federal Reserve will continue Operation Twist to push down interest rates.
We will explore more about how Operation Twist works, and provide some background into why Operation Twist is important for the markets.
Operation Twist – What’s the Twist?
Investors and drivers rejoice – it looks like there might be life in the American automotive industry.
This week, Ford Motor Company won an award for the best engine of 2012. The engine was tiny – 999 cubic centimeters.
But the prize is not so tiny. Ford intends to ship 999cc engines in the popular Ford Focus in the European markets. The engine is expected to come to the United States in 2014 on the new Fiesta line-up. Consumers should rightfully flock to a car that promises up to 35 miles per gallon in combined highway and city driving.
Hybrids vs. Non-hybrids
The Chinese central bank made its first move in four years to cut its interest rate target by .25%. The move was seen as a defensive maneuver as Europe still struggles with fiscal concerns stemming from the so-called PIGS nations.
It was believed for a long time that China may have been entering an asset bubble similar to the US housing crisis. Housing prices have skyrocketed in metro areas, which made it possible for the economy to grow at a pace well in excess of every nation around the world for more than a decade.
Chinese Rate Cut Good for Commodities
The internet is abuzz with new information that may suggest Facebook is looking to make its own mobile device.
The thought process is simple: Facebook is currently built into a lot of the mobile software on mobile phones. However, now that Google (the creator of the most popular mobile operating system, Android) owns Motorola, it may deflect attention from Facebook to draw members to its own Google+ social network.
Therefore, Facebook needs to make sure that it stays on top of mobile social networking. Making its own phone is one way Facebook can retain users while defending its position as the United States’ preferred social network.
Facebook Phone Rumors
From a slowing automotive market to a financial crisis that nearly sent the firm into bankruptcy, Ford has faced plenty of challenges.
Today, however, Ford is back to recovery. Just weeks ago, Fitch upgraded Ford to investment grade citing improvements in automotive manufacturing and sales. The lift helped Ford’s bonds, which rallied tremendously on the news of the upgrade.
Today, however, it was Moody’s that gave Ford another bump to investment grade. The company noted improvements in car sales, and that it thought the company’s improvement would be long-lasting and continued.
Back to Investment Grade
The climate for business in the United States is forever changing. During the booming economy of the early 2000s, businesses were man’s best friend.
Today, following bailouts, golden parachutes, and a pervasive belief that the financial companies are ruining the world, one has to take a step back to think about the current business environment.
As a Wall Street protestor might say, “Goldman Sachs is evil!” But if Goldman Sachs is evil, then shouldn’t Apple be 10x more evil? If wealth is greed, and greed is evil, Apple is the greediest of them all!
Goldman’s Evil: $52 billion
What's one way to play falling interest rates? Real estate!
We've covered all kinds of real estate topics on this blog, as it is one of the better yielding asset classes in a volatile market. Also, low borrowing costs make real estate more attractive than it might ordinarily be in poor economic times.
So what should you make of REITs? Are mortgage REITs the way to play the market, or would property REITs be a better bet?
Key Differences Between Mortgage REITs and Property REITS
Investors often discuss the role of an economic moat as a valuable attribute of a common stock. So what is an economic moat?
How are moats created?
And what can you do to find businesses that have the benefit of a moat?
We’ll dig deeper to explain everything you need to know.
Economic Moats Explained
Patents seem to be the new asset class when it comes to corporate balance sheets. Recently, Microsoft agreed to purchase a portfolio of patents from AOL for $1 billion.
Microsoft announced the sale of 625 patents - all of which came from AOL - to Facebook for $550 million. Facebook will also receive licensing agreements to the remaining 325 patents, and Microsoft will receive cash alongside additional licenses from Facebook's already existing patent portfolio.
Tech Playing Defense
Another even-numbered year rolls around, and this time it's presidential election season. As it stands, it appears that either Barack Obama will be elected for a second term, or a Republican challenger, likely Mitt Romney, will be the next president of the United States.
So how will either outcome of the 2012 presidential race affect the stock market?
Divided Government in 2012
Now that Best Buy seems to be finding itself in a precarious position, one that threatens the future of the company, investors are wondering if it’s time to go long Amazon.
In many ways, Amazon is stealing Best Buy’s market share. Yes, Best Buy is primarily an electronics retailer, but it is also a media company. Best Buy has thousands of square feet dedicated to movies and music, two products that Amazon and (in some ways) iTunes are completely dominating.
Best Buy’s Troubles
Groupon GRPN shares tanked on the Monday open as investors started losing love for the company earlier in the year named as the fastest growing company ever. Groupon seems to have more than its fair share of problems, many of which may be deeply rooted in accounting technique and tax law.
Groupon's Accounting Problems
Hedge funds are the quintessential “rich person” investment. Hedge funds can take investments from accredited investors and seek to deliver very high returns to investors.
Hedge funds are actively-managed by a portfolio manager who is compensated based on performance. The hedge fund typically accepts only a few investors – often less than 100 – which is significantly less than one might find in the smallest of mutual funds.
How Hedge Funds Work
Individual investors can increase their returns by building their own stock portfolio, ideally one that is diversified into several businesses and industries.
The thing about diversification is that there isn’t much need for extreme diversification. A portfolio of 8-15 stocks is often just as good, and even better, than a portfolio of 500 stocks. Having fewer stocks make up a larger part of your portfolio allows you to invest only in the best 8-20 opportunities, giving you the best possible returns.
So, you want to make money in real estate?
Real estate investors generally make their money from a few different sources.
Let’s break down how an investor can make money in real estate, and the sources for income with real estate investments.
How to Make Money in Real Estate
Real estate has a common theme: there is only so much of it, and there is not much more real estate made every day. Naturally, land has become an investment because it can be used to produce a profit in farming or other agriculture, or generate rents from people who lease the land from you.
Investing in land is very tricky, and has some very concerning implications for investors.
Investing in Land: What You Need to Know
The economy seems to be recovering. More jobs will likely be added in 2012 than in 2011, if not both 2010 and 2011. Now that new openings are available, and job seekers are thinking about a new job, let’s talk about why you should keep your job.
I know many people who have asked me directly, “why should I keep my job?” after having a bad week or even a bad day. There’s a perfectly logical reason to keep your job: cash flow.
Valuing Your Work
Foreclosure investing is big business. Everyone from individual investors to hedge fund managers find that the real estate market looks to be a very good place to put capital for the long haul. Given that real estate prices are falling and rents are rising, investors getting in the market now are getting great long-term deals.
So what do investors need to know about foreclosure investing? We’ll cover it all below!
Foreclosure Investing 101
Stock options are a derivative that have become very popular with traders. Traders and investors can use options to place a trade on a specific security without actually owning that security. Instead of purchasing 100 shares of Walmart, for example, an investor could simply purchase 100 options, which allows the investor to make money just as he would if he were to buy Walmart stock shares.
Options Investing 101
One of the hardest parts of investing is valuing a company. Valuing a company requires that you know a lot about the business – you have to know enough to know the future income potential, risks, and the expected return you want from your investments.
This is only made more complicated when it comes time to value a dot com company – an online company. Recently, Yelp.com had an IPO and was valued at $1.3 billion, even though the company has never made money itself.
Valuing Unprofitable Companies
The price to book ratio is one of the better valuation numbers for finding stocks with a margin of safety. Stocks with a low price to book ratio often have very good upside, as well as the protection of a large loss due to assets held by the firm.
How Price to Book Ratios Work