While few investors can pick stocks that beat the market, almost everyone can beat the risk-free returns. In this day and age, with computers scouring the markets with electronic eyes faster than that of humans, it makes a lot of sense to start targeting an ideal asset allocation instead of market-beating returns.
While not exactly a household name, its products surely are. Pfizer is the world’s largest pharmaceutical company, having bought out rival pharma company Wyeth, and small King Pharmaceuticals for a total price of more than $70 billion.
But where investors are starting to get concerned that Pfizer is growing too big, too fast, and simply won’t be able to continue its growth model, it’s starting to look like there is opportunity in investors’ fears. There is no better time to go all-in when other companies are getting cautious.
Cutting Back on R&D
As investors tire of the same old stocks, the same old bonds, and those boring ol’ mutual funds, peer-to-peer lending sites are finding that investors are willing to “get social” when it comes to investing, too. It isn’t all about the dollars and cents—some find that lending to others helps other people and themselves by providing attractive returns on their investment dollars.
Strategies for Peer to Peer Lending Success
So it seems as though the disaster is almost over in Japan…er, not really, maybe Libya just took over the headlines. Regardless, it’s probably time to start thinking about how the world has been pricing in disaster, and whether fearful investors sold the Nikkei too low. The index, basically the Dow Jones of the Japanese stock markets, is still nearly 1,500 points, or roughly 15%, from where it began prior to the series of natural disasters.
Scarier than Earthquakes, Tsunamis, and Whirlpools Combined
In a recent post we uncovered the effects of high gas prices on economic growth, but it is also important to understand everything that the market has priced into oil. We’ll dissect oil’s pricetag, and seek to find what makes investors so bullish on higher prices for oil now and in the future.
The time value of oil
With all the talk of the Japanese Yen appreciating at what might best be described as an alarming rate, there’s plenty of interest in playing it against the dollar. But while the retail game may be new to ETFs, currency ETFs are an entirely different ballgame.
The ETFs investors aren’t digging
The Federal Reserve has agreed to allow banking companies to bring back their dividend policy, ending a provision that was intended to keep revenue in bank coffers until bailout money could be repaid.
In going forward, the nation’s largest banks, many of which were once some of the highest-yielding firms on Wall Street, may again become high-yielding.
The Fed ‘s Bank Dividend Policy
You probably wouldn’t know that the reinsurance industry existed if you hadn’t gone looking for it. In fact, it is probably one of the few businesses with which so many rely but so few actually interface. You see, the reinsurance industry is made up of giant insurance companies that insure your insurance company.
A Game of Chance
Every day it seems I see a new headline about medical marijuana and the on-going political discussion going on in the United States. While last decade’s battleground was the West Coast, particularly California, the new battleground is right in the center of the country: Colorado. But I want to know how I can get in on this new goldmine with Medical Marijuana stocks.
How the Business Works
There’s plenty of talk in investing circles about the attractive yields to be had in real estate investment trusts with what is a relatively low-risk (at least at these prices) investment. But while REITs may seem to be attractive at eye-level, you may be buying into one of the most toxic investment strategy ever.
Why REITS Should Scare You
Everyone seems to be baffled about how Twitter makes money; it seems a site with so few ads and virtually no space dedicated to anything other than tweets and profiles couldn’t be that profitable. And compare Twitter to its cousin, Facebook; they have very little in common, especially when we start dissecting how each company makes money.
Twitter Makes Money Differently
It must be that time of the year again, my email box is loaded with people who think that they have found the next big Pink Sheets penny stocks, and they’re willing to share with me! While I appreciate their desire to help others, especially with a stock pick they think is going to the moon, I’m not so keen on taking advice from spammers.
Penny Stocks and the Pink Sheets
Thanks to a change to tax law as part of the health insurance reform legislation enacted by Congress and signed into law by President Barack Obama, effective January 1, 2011 all over the counter drugs will require a prescription for reimbursement from flexible spending accounts and health savings accounts.
While I’ve previously covered bond convexity and bond barbell’s on this blog, I think it is important to cover a very powerful savings strategy, the certificate of deposit (CD) ladder. At its core, the CD ladder is very much like the bond barbell; the number one goal is to reduce exposure to low interest rates and set your portfolio up for the best possible returns with the least amount of risk.
Pre-paid tuition was set to become one of the most popular methods for “saving” for an eventual college education, but as state budgets turn red, new worries have emerged that those who have put so much into paying for a college education might not get everything they paid for. In fact, Illinois, admittedly a state with the worst budget crisis, sees a short-fall of 31% between paid-in capital and the total cost of tuition.
What this means for College Savers
Yesterday we discussed counterparty risk, so it’s probably time to talk about credit default swaps, what they are, and how they work. During the financial crisis, credit default swaps were partially to blame, and you may have heard people refer to them as “CDS.”
What is a credit default swap?
Even though the financial crisis is long over—at least it appears to be!—counterparty risk isn’t yet gone. It’s still alive and well, and just as much part of the financial markets in 2011 as it was in 2007-2008. It’s probably about time we understand what it is.
What is Counterparty Risk?
The Dow Jones is not a benchmark, though the media and others like to use it as such. The weird thing about this particular average is that you couldn’t easily replicate its returns with a simple buy and hold strategy. Sure, you could buy an exchange-traded fund like the DIA etf, but you cannot recreate the performance of the DJIA like you could the S&P—by purchasing the stocks in equal weights.
What is Price Weighting?
As the world exits from recession and the United States considers remedies to a growing Federal deficit, we’re sure to hear plenty of references to the yield curve for both monetary policy decisions, as well as fiscal policy from the US House and Senate. Now might be a good time to know what the yield curve is; we’ll explain below.
What is the Yield Curve?
After a second glimpse into their books, the US Treasury found that the Chinese government actually owns far more US debt than was previously thought—some 30 percent more. In fact, following a release two months ago, China’s ownership of US debt was revised up to $1.6 Trillion.