How long can the Federal Reserve continue to keep US interest rates at record lows?
This is the million dollar question.
Potential home buyers are waiting to see if they can wait just a little longer to score a cheaper interest rate. The mortgage industry is loving all the refinances, especially now that some people have refinanced once or even twice at low interest rates compared to previous home loans.
Investing isn’t something that can be learned in a day, week, or even a single year. Finance is a study which many people dedicate four to eight years of their lives studying in college.
But beginners have to start somewhere, and the stock market is a great place to get started in the world of investing. Let’s look at a few methods that beginners can use to buy and sell stock as an investment.
Cost of Goods Sold is a ratio-level financial indicator. The Cost of Goods Sold is used to determine how much of a company’s revenues are used to cover the basic costs of the products the company sells to customers.
Amazon had a COGS ratio of 77.45% of revenues in 2010. Thus, for every $1 in product Amazon sold to customers, the company had to spend 77.45 cents on the goods. The remaining amount could be used to pay for the operating expenses of the company.
After that item (usually known as SG&A) all amounts left over are pre-tax profits.
Active investing is a form of investment methodology where the investor takes an active stance in their individual investments.
Generally, active investors invest in the stock and bond markets, like most passive investors, but their investments are actively-managed. That is, active investors take a direct role in allocating their investment capital and finding new investment opportunities.
Active investing is most often contrasted to passive investing, or buy and hold investing strategies. A passive investor usually relies on market indices, such as the S&P500 index, to track the returns of the market. Due to lower expenses, passive investors get perhaps one of the best returns relative to their time investment.
Passive investors are more likely to favor routine monthly income investments, which provide regular cash flow back to investors.
Investors now have access to all the financial markets they could ever want.
Even individual investors can now buy exchange-traded funds and other investments that allow them to move money from one nation to another within a matter of minutes. This opportunity allows individual investors to go overseas to chase investment yields that may be higher than they can find in the US, but such opportunities require you to know the importance of interest rate parity in an investment.
Investing in copper is becoming a very popular trend for those looking to diversify into new metals other than precious metals.
There are a multitude of reasons one might chose to begin investing in copper, so we’ll break down the pros, cons, and the methods for buying copper as an investment.
Modern investment theory supports the idea of asset allocation in building a winning portfolio. Most investors, however, still have a common question: what is asset allocation?
Asset allocation is a careful study of picking investments based on their risk-profile. By combining many different investments into one, all-inclusive allocation strategy, an investor can reduce risks, increase returns, and generate a better annual return relative to the total risk.
Despite the turmoil and political unrest, more investors are looking to Africa as the new frontier market.
A frontier market is a market which hasn’t yet reached emerging market condition. Investing in Africa would certainly fit along the guidelines of a frontier market investment.
I don’t know of any IPO that had as much coverage this year as the daily deal leader Groupon. Many investors see opportunity in the Groupon IPO, noting that it’s a market leading company.
Others, however, see the nonprofitable firm as just another tech boom sure to go bust. What I do know is that no matter your opinion on the company, it’s likely that you lean one way or another, but not right down the middle.
For Financial Planners, the Certified Financial Planner Designation, or CFP for short, is one of the most important designations a financial planner can earn.
The CFP designation is well known, and also presents an opportunity for financial planners to stand out from the crowd.
But what does it mean for a financial planner’s customers? Should you work with a CFP just because they have the Certified Financial Planner designation?
As the markets become less certain, investors demand more certainty. One way to achieve certainty in an investment portfolio is to look for monthly income investments—investment products that provide cash flow each month.
Finding available investments for monthly income can be challenging. Traditional investments like CDs or other fixed-income products are often set to semi-annual or annual payments, which mean that they aren’t suitable for those who need income regularly. We’ve found a few monthly income investments that are widely available in the stock and fund markets, however.
Investors tend to stick with price-to-earnings ratios, or return on equity calculations to see how their favorite firms are performing. But earnings can be easy to manipulate, and any calculation gleaned from net earnings might not give investors a real representative look into a company.
So, when making decisions matters, and accuracy of information is paramount, investors often turn to free cash flow figures to find good investments.
EGShares is a relatively new entrant to the exchange-traded fund industry, but a new fund from the company could prove to be invaluable to long-term investors.
The EGShares HILO exchange-traded fund has a very noble goal—increase the yield available to investors in emerging markets while reducing volatility. The fund seeks out companies that pay attractive dividend yields, while offering the natural growth of the emerging market countries.
The fund also hopes to calm investors’ minds by seeking to eliminate volatility, which typically affects emerging market countries and their respective industries more than US-based equities.
Dollar cost averaging is one of the most respected investment perspectives in all of personal finance. In dollar cost averaging, an investor makes routine, ordinary investments in their favorite stocks, bonds, or other portfolio assets.
Dollar cost averaging is particularly popular because it works! Because stocks can be over or undervalued at any time, a dollar cost averaging strategy means that you buy deeply discounted and vastly overpriced stocks only occasionally. Most purchases are made at a very reasonable average price.
Read more…
Investors who chase yield want to know where they can find the safest investments with the highest returns.
Chasing yield is not at all a new process to the markets. With interest rates now at record lows going all the way out to 30-years, safe investments with high returns are almost laughable. How can investors protect their capital, enjoy safety, but also bring home some cash flow? We’ll try to answer.
Investors wonder what the European debt crisis means for their investment portfolio.
I figured that with a little help from a few sources this topic could go from “European debt crisis confusion” to European debt crisis explained.
We’ll explain what makes the European debt crisis so serious, and why you should follow the developments in your own portfolio.
So you have some money in the bank and you’re ready to get started in the world of investing? Good for you.
Most people will tell you that their number one regrets were that they didn’t “start early” when it came to saving, investing, and planning for their financial future. This is truer today than ever. As record low interest rates push down investment performance for retirees, many wonder why they didn’t start early.
Quantitative easing 3, better known as QE3, now looks like a sure bet. A combination of a weakening economic environment plus a call from market participants for the Fed to “do something” should lead investors to believe that the next round of monetizing of the Federal debt is sure to come.
QE3 explained: For those needing a quick recap, quantitative easing is a market action where the Federal Reserve trades current liquidity for short- and long-term US debt. By purchasing US Treasury obligations, the Federal Reserve can drive up the price of bonds, and drive down yields. Driving down yields is a great way to reduce interest rates across the financing landscape.
As the economy fails to start after several rounds of stimulus, investors wonder where they can park investment capital without accepting too much risk. Low risk investments are the perfect choice, but what investments qualify as low risk, and what kind of returns can I expect on my low risk investments?
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…
Over the weekend you may have heard about Carl Icahn’s $10 billion offer for Clorox. A known activist investor, Carl Icahn makes money by purchasing companies and reforming them. In some cases, he might not even buy the whole company, just enough to make his point clear.
Activist investing can be very, very profitable. Often, an activist investor will force the executive board to make a change to increase shareholder value.
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Much like Mint.com transformed personal finance from boring budgets to beautiful charts and graphs, Bettermint is hoping to make investing exciting again. Using exchange traded funds, the site allows investors to select asset allocation models that fit their retirement and savings goals.
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The payday loans business, sometimes referred to as bad credit loans, is an obvious counter-cyclical that thrives in difficult economic times. But to say that bad credit loans are thriving simply because the unemployment numbers remain stuck at high levels overlooks some key changes in how the industry works. This suggests the industry may remain robust even after an economic recovery.
Read more…
With the US financial markets worried about several key economic matters—oil price, OPEC decision, Fed policy, and whether or not the debt ceiling will be raised—there seems to be a new trade emerging: buy puts.
In recent days, put activity on the S&P 500 ETF (SPY) has been through the roof. A full hour after market open, investors have taken an interest in September dated options. Of the most popular are the 90, 94, and $95 strikes. These strike prices correspond with an S&P500 value of 900, 940, and 950, respectively.
Groupon’s IPO is a hot topic on Wall Street. After being titled as the “fastest growing company” by Forbes magazine, some investors are getting ready to pile in big. But we have to wonder: why isn’t Groupon profitable yet, and is there any chance that this company will ever deliver value to its shareholders?
I’m not so sure.
