Investors realize many things about the market but fail to piece them together.
The executives that lead companies are mostly paid for growing the company. The shareholders reward the company with a higher stock price when it grows.
Naturally, companies should want to grow at any time they can to make more money. But it’s hard to grow a company in recession. So companies will have to buy growth.
As the recession lags on for what seems like eternity, the prospect of a student loan bubble is on the top of everyone’s minds.
This is especially the case with so many people unemployed.
If college graduates are leaving school to the same, weak job market, then why would college degrees make any sense?
If students are taking on more student loans but earning less, a student loan bubble might just be the only realistic outcome.
Remember, the Obama Administration did announce a student loan forgiveness program to deflate any bubble before it pops.
There seems to be a surge in interest surrounding pawn shops. On TV, two popular shows, Hardcore Pawn and the Pawn Stars reality shows expose a new business model to otherwise disinterested audiences.
But how can you start a pawn shop business to tap into the growth? We set out to answer this question.
Pawn shops make money in two ways: Read more…
A new policy enacted by the Federal Reserve sought to remove the burden of debit card fees on small business owners. Previously, banks were free to set their own debit card swipe fees, which often cost businesses as much as 3% of the total purchase price. Now that a new policy is in place to limit the impact of debit card fees at point of sale locations, banks are passing on fees to consumers to increase revenue.
The Fed policy restricts banks to only 21 cents per swipe of a debit card, plus 1/20th of 1 percent in total purchase price. Thus, a $5 purchase costs the retailer 21.25 cents. A $500 purchase would cost the retailer $.46. Previously, a $500 purchase could create $10-15 in service fees for banks.
Read more…
General Motors (NYSE: GM) is an American icon, a company which was once one of America’s largest employers. Over time, the lofty wages and pension programs offered to employees were too much for the All-American firm in a story that later ended in a government bailout, bankruptcy, and a relaunch.
Today, the new GM is nothing like the old. Sure it makes many of the same cars, and its logo is still unchanged. However, on the balance sheet, the new GM clearly distinguishes it from its first life as an automotive maker. Read more…
You have bills to pay, a mouth (or more than one!) to feed, and you’ve cut every last expense from your budget. At the end of each month, you wonder if it was really your spending that makes you broke, or whether it might just be your income.
You’re not in the minority here; most people find that even after cutting their budget to a manageable amount, they could still afford to make some extra money on the side. We’ll give you a few ways to make money on the side to boost your income.
Three ways to make money on the side: Read more…
It is far too easy for investors to suffer from information paralysis, the state of having too much information to make a decision. There are many different investment ratios. For stocks, there’s the PE ratio, return on equity, the net interest margin, and countless other data points. Read more…
Just yesterday we posted about how banks run on net interest margin, the difference between their cost of acquiring capital and their net interest earnings on the capital they lend to borrowers. Now that we’ve covered how banks make money, let’s cover why they don’t: banks can’t make loans to small business owners.
In a recent appearance before the Federal Reserve, Jamie Dimon, CEO of JP Morgan, explained his biggest fear to Fed Chairman Ben Bernanke. In his short speech, Dimon said that he worried new regulations would prevent capital from flowing to the people who need it, stifling any economic recovery.
Net interest margin is one of the most basic concepts in all of finance, but it is easily one of the most important. The calculation for net interest margin is, put simply, the earnings on capital minus the cost of the same amount of debt.
When banks go to make a loan of any type—mortgage loans, credit cards, student loans, etc.—banks want to know how much money they’ll make on the loan. They look for their “net interest margin.”
Skype prides itself as a free internet “telephony” service, which allows people to talk via text, voice, and video over the web. While many of its services are free—you can make calls, conduct online conversations, and use video at zero-cost—Skype is a nearly-profitable company thanks to some of its paid services. We’ll run through Skype’s revenue-generating services, and discuss how Skype makes money in the article below.
The United States had better act, and had better act fast; that was the message from the Brics economic group which agreed to unilaterally remove the dollar from its international trading pact.
The group will now account for international commerce between one another in their own currencies, rather than the US dollar; doing so means that they are free to set monetary policy that can affect only themselves and better account for their own domestic and international trading volumes.
Normally I’d never recommend buying any “For Dummies” books. They’re expensive, and often very, very simplistic. In the case of their “Investing for Dummies” book, I couldn’t recommend it more.
In fact, the simplicity of the topics I saw in my 5-minute thumbing of the book was perfect for every investor familiar and unfamiliar with the market.
So green investments aren’t at all risk-free, everyone knows that. But they’re not as safe now as they were before the nuclear disaster in Japan. With plenty of controversy surrounding nuclear’s future, it’s probably a good time to start thinking about how to play the green energy wave.
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.
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.
I write plenty on the topic of mergers and acquisitions. While I tend to cover them as news stories, it’s also important to evaluate why mergers and acquisition activity is good for the stock market.
A number of companies have tried the online Pay wall, a digital wall designed to limited free surfing of popular newspaper websites. The New York Times, one of the most respected and subscribed newspapers in the world, will be trying this new model.
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.
As we look at how different web 2.0 businesses make money, especially in light of new IPOs, I thought it might be important to examine how Facebook makes money, and how it will continue to grow revenue in an industry that is very much unprofitable.
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.
The hottest thing since sliced bread may soon be coming to a stock market near you: Groupon. The company, which is attributed with the title of the fastest-growing company in history, may be due for an IPO. As for how to value a future Groupon IPO, no one really knows.
Mergers are a good thing, they help find a company’s true value to a company, not an investor, and help make the markets more rational. They also allow some businesses to lower input and output costs on a per unit basis, taking advantage of economies of scale.
But at what point do we worry that the mergers in the finance space, especially the mergers between stock markets, are a bad thing? Should we have one company running every major stock exchange across the world? Read more…
LinkedIn has filed for an IPO. That attracted some interest, obviously, but it was only due to the fact that it is a social network.
LinkedIn will be the pre-Facebook IPO, something to watch to get an idea for Facebook’s IPO at a later date, just like investors watched Mastercard after it followed Visa into an IPO. While that makes sense, I don’t think it is even worth following by itself.
News Corporation’s (NASDAQ: NWSA) CEO Rupert Murdoch may be old, but he still has a few tricks up his sleeve. Just launched, News Corp’s new flagship digital product, I believe, will be a killer hit in the online/tablet news segment. Read more…
