Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
How To Choose Stocks For Day Trading
Day trading is a specific trading technique where a trader buys and/or sells a financial instrument multiple times over the course of a day, to exploit minute volatility in the assets pricing. While private investors may practice this investment strategy, it is more commonly an institutional phenomenon, as a financial institution can highly leverage its transactions to boost its profitability. As many brokerages allow for trading online, day trading can be conducted from virtually anywhere, with only a few necessary tools and resources. However, day trading is inherently a highly risky investment strategy.
High Liquidity and Volatility
Liquidity, in financial markets, refers to the relative ease with which a security is obtained, as well as the degree by which the price of the security is affected by its trading. Stocks that are more liquid are more easily day traded; moreover, liquid stocks tend to be more highly discounted than other stocks and are, therefore, cheaper. In addition, equity offered by corporations with higher market capitalizations are often more liquid than corporations with lower market caps, as it is easier to find buyers and sellers for the stock in question.
Stocks that exhibit more volatility lend themselves to day trading strategies , as well. For example, a stock may be volatile if its issuing corporation experiences more variance in its cash flows. While markets will anticipate these changes for the most part, when extenuating circumstances transpire, day traders can capitalize on asset mispricing, such as the currently ongoing euro crisis. Uncertainly in the marketplace creates an ideal day trading situation.
Trading Volume and Trade Volume Index (TVI)
The volume of the stock traded is a measure of how many times it is bought and sold in a given time period. This time period is most commonly within a day of trading. More volume indicates interest in a stock, whether that interest is of a positive or negative nature. Oftentimes, an increase in the volume traded of a stock is indicative of price movement that is about to transpire. Day traders frequently use the Trade Volume Index (TVI) to determine whether or not to buy into a stock, which measures the amount of money flowing in and out of an asset.
Financial Services
Financial services corporations provide excellent day-trading stocks. Bank of America, for example, is one of the most highly traded stocks per shares traded per trading session. BoA is a prime candidate for day trading, despite the banking system being viewed with increasing skepticism, as the industry has demonstrated systemic speculative activity, culminating in JP Morgans $2 billion derivative gaffe.
In addition, Bank of Americas trading volume is high, making it a relatively liquid stock. For the same reasons, Wells Fargo, JP Morgan
$HRRN BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/HRRN
Setting qualification standards for securities industry professionals; examining members for their financial and operational condition, as well as their compliance with appropriate rules and regulations; investigating alleged violations of securities laws; disciplining violators of applicable rules and regulations; and responding to inquiries and complaints from investors and members.
The Knowledge-Experience Continuum: Where Do You Fall?
It is only through studying the practicalities of investments that people learn and understand how it really works. Even so, their knowledge and understanding always has its limits, and learning and doing are two very different things.
These issues apply to a greater or lesser extent to almost everyone in the industry - theory and practice are often worlds apart, but many people dangerously treat them as one and the same.
In this article, we will look at what constitutes learning, understanding, experience and real expertise, as well as what sets the limits. The basic issue is that when it comes to investing, there is a huge gap between theory and practice. For this reason, it is important to take a look at the different levels of knowledge and how we achieve them.
The Dangers of Theoretical Knowledge
People who study business or economics in college generally learn passively just to pass exams. Many do not really understand the material until they start teaching the same theories. And even then, this is still just theory. Practice happens when students apply this theory in their personal investing.
Even business professors who write articles in related areas, such as economics, tend to do so theoretically and do not necessarily know much about the real world of investment. In fact, their own investments may be run by other people.
Unfortunately, some types of theory just arent helpful in practice. For example, although a good theoretical knowledge of economics, should help you learn quickly about real-world investments; unfortunately, the theory alone is of little practical use. Knowing about supply and demand, neoclassical interest rate theory and Keynesian cross diagrams is light years away from the real world of conflicts of interest, commission-hungry brokers and failed attempts at market timing. In other words, these theoretical models often assume the world has very specific and predictable conditions; does this sound like the world you live (and invest) in? (For related reading, see Economics Basics.)
In the world of investment, theory alone can even be dangerous, and this applies particularly to a limited degree of practical knowledge. The old saying that a little knowledge is a dangerous thing applies in this context, because it can inspire confidence in the investor, even when he or she has little experience and should be cautious.
The main problem is that the investment industry does not work the way an inexperienced person is likely to think. For example, who would ever dream that many fund managers try to beat an index and fail? How could the man in the street know that brokers may sell risky investments because these bring in the most money? Similarly, naive investors might put too much confidence in their brokers abilities and assume that they know what theyre doing without further investigation. Unfortunately, mismanagement is not uncommon, but for an investor with limited experience, this may not be apparent.
Experience Versus Real Expertise
As you now know, passive knowledge alone does not count for much; you need to actually do things to develop real expertise and skills. Nonetheless, it is also possible to have a lot of experience with something, without having a profound understanding of how it works. (To learn from experienced money managers, read Words From The Wise On Active Management.)
For example, someone who simply works in a bank may administer funds and other assets for years and or decades and not really know much about them. This is particularly the case with routine activities at lower levels. Another danger is that someone who worked with pensions for 20 years may get transferred to hedge funds two weeks before you turn up with your money. This person is then very experienced, but perhaps not in the right area.
The combination of directly relevant experience and various aspects of sophistication is really essential to good money management, both on the part of the investor and his or her broker /advisor. Motivation is also vital. This means being genuinely interested in and caring about your portfolio. If you do your own investing, this may not be a problem, but if you hire a broker, you will need to find one who is motivated to help you. No amount of education and experience counts if it is not applied appropriately. These are complex issues, but they are of fundamental importance.
Knowledge in One Area Is Still Ignorance in Another
Given the extraordinarily wide range of investments, someone who knows a lot about stocks may know (almost) nothing about bonds. And even a government bond expert could be relatively ignorant about the ins and outs of corporate bonds. The term experienced investor can therefore be extremely misleading.
Only experience in a specific sector is really likely to help. The extent to which knowledge with one asset class applies to another, for example, is extremely variable and cannot be taken for granted. Therefore, never assume that someone has the right package of skills, experience and expertise to advise or work in a particular field - do your research and determine exactly what experience a professional has and how directly it applies to his or her current line of work.
The Knowledge-Experience Continuum
Given the above, we can divide up private investors into three main knowledge-experience categories:
1. The Know Nothings. The first category would be those who, for all intents and purposes, know nothing. Almost everyone earns some money and perhaps even invests part of it, but if this is purely passive, uninterested and unmotivated, people can go through their entire adult lives without gaining any real knowledge or understanding of the investment process and what it entails.
2. The Know A Littles. The next group would be those with a limited degree of knowledge and experience. This knowledge could be very theoretical, such as from university economics or even some college finance courses, or it could be more practical, from reading newspapers, magazines and books.
Many people fall into this category. They know a bit or even a fair amount about stocks, bonds and real estate, but this knowledge may remain superficial and narrow. They would not necessarily know what constitutes a high versus low-risk portfolio or the difference between amutual fund and a hedge fund . They still have to rely heavily on the experts.
3. The Know A Lots. Moving on from the above level, there are obviously those with above-average or advanced levels of knowledge and experience. These people have been reading extensively for years, maybe even teaching or writing on investments or have been managing their own money or that of others quite actively. Despite this, they too will inevitably have gaps in their knowledge and experience.
Applying the Continuum to People in the Industry
When it comes to investment professionals , the three groups above still apply, but with some important differences. Professionals are extremely varied in terms of their area(s) of expertise and commitment to customers, so it is important to find out not only how experienced a professional is, but also in what areas.
Conclusions
What people really know, understand and can do in the investment industry is absolutely fundamental to managing your money or hiring someone else to manage your money properly. A complex interplay of education, motivation, relevance and sophistication all determine whether an investor or a professional can successfully manage a portfolio. It is therefore extremely important to know who you are really dealing with. This in itself constitutes one of the great challenges of the investment scene.
For thou convenience $STAU BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/STAU
This is preferable for broker-dealers because they receive commissions on both the buy and sell-side of the trade. In executing client orders, broker-dealers may also buy or sell for their own (principal) account, at their own risk. If, however, there is no match for a trade or a broker-dealer does not wish to trade for their own account then a broker-dealer must find another broker-dealer willing to trade that particular security.
When You Should Break Your Personal Finance Rules
Youve heard them time and time again, from parents, teachers, TV pundits and even friends: when it comes to personal finance, there are rules that must be followed to be successful. Like most conventional knowledge, most of these tried and true tidbits no longer apply to many of us. You dont need to look back too far to remember a time when conventional knowledge suggested that real estate values would continue to climb, seemingly forever, or that the Great Depression was an isolated event that could never again be possible, considering how far the worlds economies have come since the 1930s. All that being said, most people will continue to follow the same blueprint of financial rules as the generation before them. However, for those of you more interested in taking a more personalized approach to your personal finances, here are some rules that young adults are never supposed to break, but should consider breaking, anyway.
Saving or Investing a Set Portion of Your Income
Im sure youve heard, more times than you can remember, that by saving just a small amount of your pay check every month you can retire at 60, with an astronomically sized savings. Thats all well and good, when youre 60, but what about the 40 or so years of life from now until then? Usually the amount suggested is around 10%, and although the advice may be justifiable, your circumstances may not suit the strategy. For one, many young adults and students need to think about paying for the biggest expenses of their lifetime, such as a new car, home or post-secondary education. Taking away potentially 10 to 20% of available funds would be a definite setback in making said purchases. Additionally, saving for retirement doesnt make a whole lot of sense if you have credit cards or interest bearing loans that need to be paid off. The 19% interest rate on your Visa would probably negate the returns you get from your balanced mutual fund retirement portfolio, five times over. (For related reading, also see 8 Financial Tips For Young Adults.)
Also, saving your money to travel and experience new places and cultures can be an extremely rewarding experience, for a young person whos still not sure about their path in life. Most people cannot justify a year-long trip around the world when they are paying off a mortgage and car payments, not to mention putting away any extra money into their retirement savings. While being fiscally responsible at a young age is important, and thinking about your future in terms of a savings is crucial, the general rule of saving a given amount each period for your retirement may not be the best choice for young people just getting started in the real world. (For more, see Globetrotting On A Budget.)
Going to University
Although it may not be visible from afar, universities are a big business. Try to think of another industry where businesses can charge tens of thousands of dollars for their services, while at the same time receiving donations from happy old customers and receiving preferential tax treatment from Uncle Sam. Dont get me wrong, I am a big believer in the powers of higher education for individuals and society, as a whole. However, as the first-world shifts more and more positions overseas, and post-secondary enrollments continues to climb year after year, the laws of supply and demand are pointing to the contrary. More and more college grads are leaving school with no job prospects and thousands in student loans, and the importance of a college degree seems like a Catch 22. Employers are hesitant to hire applicants who dont have a college degree, however the number of qualified candidates can often far outnumber the positions needing to be filled.
For some, taking another path can pay off in spades. Looking into vocational schools that offer more specific job training at a much lower cost can get you started in the workforce years before your college counterparts. Jobs in construction, the trades and fire fighting can pay very well, be very rewarding and do not require a college degree. Before doing what the rest of your colleagues are doing, by heading off to university, think about what job you would like to do and whether or not you need to spend four years and $80,000 to do it. (For more, read Top 6 Jobs that Dont Require Degrees.)
Long Term Investing / Investing in Riskier Assets When Youre Young
The rule of thumb for young investors is that they should have a long-term outlook on their investments and stick to a buy and hold philosophy. This rule is one of the easier ones to justify breaking. For one, investors who followed the rules of buy and hold are still stinging from the credit crisis that occurred during 2007 and 2008. Savvy investors find attractive entry and exit points for stocks and use volatility in the markets to their advantage. Being able to adapt to changing markets can be the difference between making money, or limiting your losses, compared to sitting idly by and watching as your hard earned savings shrink. Short-term investing has its advantages at any age.
Now, if youre no longer married to the idea of long-term investing, you can stick to less risky investments, as well. The logic was, since young investors have such a long investment time horizon, they should be investing in higher risk ventures, since they have the rest of their lives to recover from any losses they may suffer. However, if you dont want to take on undue risk in your short to medium-term investments, you dont have to. The idea of diversification is an important part of creating a strong investment portfolio; this includes both the riskiness of individual stocks and their intended investment horizon. Keep in mind that an investment should make sense for both aspects, and youll no longer need to follow these old and tired investing rules.
The Bottom Line
The personal finance realm may have more smart tips and healthy tidbits than any other. Although these convenient rules of thumb are meant as general guidelines for the majority of people, remember that you are an individual. These were just a few personal finance rules that dont work for many young adults, there are countless others. Examine your own situation closely and do what makes the most sense for you financially, and chances are youll end up in the same place these rules are meant for you to reach.
NITE-LYNX $MRFD BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/MRFD
Do not sign the new account agreement unless you thoroughly understand it and agree with the terms and conditions it imposes on you. Do not rely on statements about your account that are not in this agreement.
How To Dispute A Credit Card Charge
What happens when the brand-new digital camera you brought home turns out to be a bust? Or the DVD player you got for your spouses birthday gets stuck permanently on rewind? Or, when youve been double-charged for something youre sure you only came home with one of?
SEE: Check out our credit card comparison tool and find out which credit card is right for you.
If youve made these purchases on a credit card - and these days, thats a near certainty - youre in luck. Thanks to the Fair Credit Billing Act, consumers have a good deal of protection for their credit card purchases. This law allows consumers to withhold payment on poor-quality, damaged merchandise or incorrectly billed items they bought with a credit card until the matter is resolved. Read on as we show you how to dispute a credit card charge and actually come out on the winning side.
Retrace Your Steps
Your first move is always to go back and attempt to resolve the problem with the merchant. If you give them a chance to address your complaint, they very often will; especially if you approach them with politeness and courtesy. Most large retailers have customer service policies in place that err strongly on the side of being generous, at least within a certain period of time, and under ordinary circumstances.
Bottom line is, if you act promptly and reasonably, youre likely to get the full benefit of the doubt. If you dont have luck with the first representative you speak with, ask to talk with the manager or supervisor on duty. Be sure to keep records of each interaction, the person you spoke with as well as the date and time, so you can refer back to them if needed.
Put It In Writing
If the merchant wont budge, its time to put your complaint in writing. Draft a short, detailed letter outlining your particular dispute, and address it to the merchant via certified mail. Before you send it, make a few copies, so you can save one for your records and send another copy to your credit card company, as proof of your efforts to resolve this dispute.
Next youll draft a letter to your credit card company, to officially alert it of the disputed purchase amount. The Fair Credit Billing Act mandates that you do this in writing, within 60 days after the bill with the disputed charge was sent to you. In your letter, youll need to include your account number, the closing date of the bill on which the disputed charge appears, a description of the disputed item and the reason youre withholding payment. You should also enclose a copy of your complaint letter to the merchant, along with any other documentation that supports your position. This letter should also be sent via certified mail, return receipt requested; be sure you send it to the billing inquiries address at your credit card company, and not the regular address for payments (since these are often two separate departments).
Keep on Paying
Even though youre disputing an item on your current bill, its important to maintain your other payments. If youve charged anything else on your card during this cycle, youll need to send that payment and all financing charges to the regular address, otherwise youll incur interest and late-payment charges.
At this point, youre just waiting to hear the result of your challenge. Some card companies - especially the bigger firms, such as Capital One - will often give the benefit of the doubt to their consumers, and issue a temporary credit until the dispute is resolved. This isnt required by law, however, so dont assume you will get this consideration. Meanwhile, the card issuer will get in touch with the merchant to find out their side of the story. Basically, if they end up siding with you, you will enjoy a full refund. If not, youll have to pay for the disputed item, as well as any additional finance charges that may have accrued.
There are a few catches to the Fair Credit Billing Act. Technically, the sale must be for more than $50 and must have taken place in your home state or within 100 miles of your billing address, which means phone or internet orders may be immune. However, few issuers enforce these rules on purchases, because most credit card companies are eager to hold onto your business, given the highly competitive nature of the industry these days. But, theres still always a chance that your claim could be denied on these grounds.
You Have a Better Chance Than You Might Think
If you find yourself in the position of having to dispute a credit card charge, you may have more rights and advantages than you realize. The key is to act quickly and responsibly. Address the matter in a prompt and courteous fashion with the merchant in question, and if necessary, follow up with your credit card issuer. In most cases the whole matter can be resolved within a matter of weeks to your satisfaction.
BarChart Technical Analysis NITE-LYNX $PTEEF
http://www.barchart.com/technicals/stocks/PTEEF
RNVA News - Beat down to a 52 week low yesterday.
Rennova Health Announces Definitive Agreement to Acquire Jamestown, Tennessee Hospital From Community Health Systems
MARKET WIRE 3:15 PM ET 01/31/2018
Symbol Last Price Change
RNVA 0.0165down -0.0035 (-17.5%)
CYH 5.65down -0.12 (-2.08%)
QUOTES AS OF 03:56:24 PM ET 01/31/2018
WEST PALM BEACH, FL -- (Marketwired) -- 01/31/18 -- Rennova Health, Inc.(RNVA), ("Rennova" or the "Company"), a vertically integrated provider of industry-leading diagnostics and supportive software solutions to healthcare providers, that opened its first rural hospital in Oneida, Tenn. in August 2017, announced today that it has entered into a definitive asset purchase agreement to acquire an acute care hospital in Jamestown, Tenn. The hospital known as Tennova Healthcare - Jamestown, and its associated assets are being acquired from Community Health Systems, Inc.(CYH). The transaction is expected to close in the second quarter of 2018, subject to customary regulatory approvals and closing conditions.
Tennova Healthcare - Jamestown is a fully operational 85-bed facility including a 24/7 emergency department, radiology department, surgical center, and a wound care & hyperbaric center. The purchase includes a 90,000 sq. ft. hospital building on approximately 8 acres.
"This acquisition further demonstrates our commitment to expanding Rennova's rural hospital model to provide necessary services to patients while securing more predictable recurring revenues," said Seamus Lagan, CEO of Rennova. "This hospital is approximately 38 miles (less than a one-hour drive) from our current hospital in Oneida and will benefit by receiving patients from Oneida that require operations and treatment not provided there. The synergy of management and services in a close geographic location creates numerous efficiencies for Rennova and will allow us to support a greater number of health care providers and residents in the local area."
About Rennova Health, Inc.(RNVA)
Rennova provides industry-leading diagnostics and supportive software solutions to healthcare providers, delivering an efficient, effective patient experience and superior clinical outcomes. Through an ever-expanding group of strategic brands that work in unison to empower customers, we are creating the next generation of healthcare. For more information, please visit www.rennovahealth.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Additional information concerning these and other risk factors are contained in the Company's most recent filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Contacts:
Rennova Health(RNVA)
Sebastien Sainsbury, 561-666-9818
ssainsbury@rennovahealth.com
Investors
LHA
Kim Golodetz, 212-838-3777
Kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
Bvoss@lhai.com
Source: Rennova Health, Inc.(RNVA)
The OTC market and broker-dealers’ activities in the market are regulated by The Financial Industry Regulatory Authority (FINRA), the U.S. Securities and Exchange Commission (SEC) and various state securities regulators. In addition, companies with SEC-registered securities are regulated by the SEC. OTC Markets Group is neither a stock exchange nor self-regulatory organization (SRO) and is not regulated by FINRA or the SEC.
Signs That It Might Be Time To Sell
As a novice investor youre likely to focus most of your time on what to buy and when. Being a successful investor is as much about knowing when to sell as when to buy. But how do you know when its time to sell? What are the best reasons to liquidate a holding? Here are a few important basic principles about why and when you should let go of part of your portfolio. (Check out Signs A Stock Is Ready To Slide for more.)
Significant Corporate Structural Problems or Concerns
Every company is going to have peaks and valleys. However, if one of your investments has underlying structural problems, it may indicate that it doesnt have the business legs to go the distance. Pay close attention to news about a high turnover rate of its executive staff or Board of Directors, excessive executive compensation (particularly in light of mediocre or poor corporate earnings), questionable corporate ethics, etc. In addition, any company with long-standing, aging leadership should have a clear succession plan in place.
Unexplained Executive Stock Sell-Off
Corporate executives often receive large blocks of stock and/or stock options as part of their compensation package. Periodically they may choose to sell a portion for various personal reasons (i.e. a desire to diversify). However, when several executives at a company sell large blocks of stock it could indicate a lack of confidence in their own company. You can learn what a companys leaders are doing with their stock (if theyre buying or selling) because they are required to file Form 4 with the SEC, which you can research by using the SECs online Edgar database. If theyre selling it might be a sign for you to do the same.
Cutting or Canceling Dividends
While a companys decision to cut its dividends doesnt necessarily spell stock price doom, it can raise a red flag. Cutting or canceling stock dividend payouts is a move to conserve cash. The important question is why? For example, a company could anticipate needing cash if credit becomes tight during a difficulty economy (i.e. a recession) and choose to cut dividends accordingly. Or it could be a means of preserving cash needed to finance the acquisition of a competitor. However, it could mean that the company has mounting debt that it needs to repay or that its simply too low on cash to pay out dividends. Do a little digging to learn if the announcement indicates that its the time to sell.
Inexplicable High P/E Ratio Compared To Competitors
The P/E ratio is a companys stock price compared to its earnings. If a company has an inexplicably higher P/E ratio than its competitors, it means that its stock costs more but is generating the same earnings as lower-priced shares at firms operating in the same market. Companies may have overpriced stock due to investor enthusiasm, and without accompanying earnings results over time, it will unfortunately have no place to go but down. An inexplicably high P/E ratio might indicate that its time to sell and reinvest with a competitor that has a lower P/E ratio.
Sustained Decline in Corporate Earnings
Corporate earnings are an important piece of the puzzle known as stock valuation . If earnings are down - and particularly if they stay down - the stock price tends to follow. Youll want to know that little tidbit before you hold on to your investment too long.
Falling Operating Cash Flow Compared to Net Income
Operating cash flow is the amount of cash a company has coming in and how much it pays out within a specific amount of time. Net income is a companys bottom line profit or loss. While a business may be able to show a positive net income on paper, that profit may be in accounts receivable (AR) and the company could be cash-poor. Without adequate cash it may have to assume debt for financing operations. Debt means the company is paying interest just to operate, and without cash to fund day-to-day obligations, the riskier the companys long-term viability becomes. Watch these two variables to know when it might be time to pull out. (To learn more, see Operating Cash Flow: Better Than Net Income?)
Falling Gross and Operating Margins
Margin is the amount of profit a company makes on a sale. Gross margin is a companys profit on sales before factoring in all costs, such as interest and taxes. If a companys gross margin is falling, that could mean that the company is slashing prices (due to increased competition) or that cost of production is rising and the company cant increase prices to offset it.
A companys operating margin is the companys estimated profit after subtracting costs. Falling operating margin means the company is spending more money than it is making. A combination of sustained falling gross and operating margins may mean the company is having a difficult time of managing costs and/or its product price point. Either way it could mean that its time to sell.
High Debt-to-Equity Ratio
A high debt-to-equity ratio means that a company is carrying significantly more debt than it has in shareholder investment. If the ratio is greater than one, the company is operating more on the basis of debt than equity. Its important to know the generally acceptable debt-to-equity ratio for companies within an industry before you respond to a high number by dumping a stock. However, if the ratio continues to climb over time without explanation - and especially if the ratio is excessively high beyond either competitor or industry standards - it might be a signal to sell.
Sustained Increase in Corporate Receivables Compared to Sales
A companys accounts receivables is how much it has billed out and is waiting to be paid. There are a few reasons that receivables begin to climb:
• Clients/customers are in a cash crunch and are taking longer to pay their bills than in the past
• A company is falling behind in getting bills out
• A company has chosen to extend its payment due dates to accommodate customers financial strain or as a financial benefit to entice customer sales and/or loyalty
You can gauge a companys receivables compared to sales by reviewing its quarterly income statement and comparing the receivables (balance sheet) ratio to sales (income). Always compare numbers during the same period (i.e. a certain month or quarter) from one year to the next. If the company has sustained prolonged payment delays it could begin to erode its stock price.
Significant Market Shrinkage Or Product Commoditization
If a company holds a small percentage of its market and that overall market shrinks, it will need to quickly adapt to the new market fundamentals and innovate to establish a stronger position. If a companys competitors have quickly replicated its product and driven down the cost, the game has changed. If its not the lowest-cost producer or it doesnt have significant brand strength to charge higher prices for a product (i.e. Starbucks for coffee), it will need to respond quickly. Pay attention to the market trends for the companies in your portfolio and make sure that they have strong, effective responses to market shrinkage or product commoditization or your investment is ultimately what will shrink in value.
Hostile M
Behold the $MSVS BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/MSVS
Who Owns The Stock Exchanges?
Stock exchanges are not like other businesses. The performance of national stock exchanges is often taken as a proxy for the health of a nations economy, or at least investor enthusiasm for the countrys prospects. National exchanges also play an under-appreciated policy role in deciding the listing and compliance standards for companies that wish to go public. On top of all that, there is a nebulous but real sense that national pride is often somehow tied to stock exchanges. (Learn how British coffeehouses helped give rise to the juggernaut that is the NYSE.
With that in mind, recent moves in the stock exchange sector have garnered quite a bit of attention. The Deutsche Borse wishes to merge with NYSE-Euronext (NYSE:NYX) in a transaction that will have NYSE shareholders holding 40% of the combined company and ownership of the first (to say nothing of arguably most famous) U.S. exchange moving into foreign hands. At the same time, the London Stock Exchange (or rather, its partner London Stock Exchange Group) has reached an agreement to acquire TMX Group (owner of the Toronto Stock Exchange) in a $3.2 billion deal.
As these deals seem certain to shake up the structure of several of the worlds largest exchanges, it is a good opportunity to examine the ownership structure of several other major exchanges.
NYSE Euronext
NYSE Euronext is far and away the largest exchange in terms of both exchange market capitalization and exchange traded value, having gone public in 2006 after acquiring Archipelago and acquiring Euronext in 2007. NYSE Euronext is a public company, and Deutsche Borse has offered a merger proposal to the company.
Nasdaq OMX Group (Nasdaq:NDAQ)
The second largest public stock exchange by value, Nasdaq is also number two in terms of traded value. Nasdaq acquired seven Nordic and Baltic exchanges in 2008 (the OMX Group), after being rebuffed in its attempts to acquire the parent company of the London Stock Exchange.
Tokyo Stock Exchange
The third-largest stock exchange in the world is also the largest to not be publicly-traded. Though the Tokyo Stock Exchange is organized as a joint stock corporation, those shares are closely held by member firms like banks and brokerages. By contrast, the smaller Osaka Stock Exchange is publicly-traded, which perhaps befits long-held Japanese stereotypes about Osaka being more entrepreneurial and less hidebound than Tokyo.
London Stock Exchange
The worlds fourth-largest exchange is owned by the London Stock Exchange Group, which is itself a publicly-traded company. As previously discussed, the parent companies of the LSE and Toronto Stock Exchange are merging in a deal that will make the combined entity the second-largest exchange group in terms of the market cap of listed companies.
Hong Kong Stock Exchange
Asias third-largest exchange is a subsidiary of Hong Kong Exchanges and Clearing Ltd, a publicly-traded company that also owns the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company.
Shanghai Stock Exchange
This is the largest stock exchange in the world still owned and controlled by a government. The Shanghai exchange is operated as a non-profit entity by the China Securities Regulatory Commission and is arguably one of the most restrictive of the major exchanges in terms of listing and trading criteria.
Bombay Stock Exchange and National Stock Exchange of India
Along with the Tokyo Stock Exchange, these exchanges are throwbacks to how most exchanges used to organize themselves. While the NSE is demutualized, it is still largely owned by banks and insurance companies. Likewise, the BSE is about 40% owned by brokers, with other outside investors and domestic financial institutions owning the rest.
Other Exchanges
Of course, the trading and investment world is not just all about stocks. Derivatives are very lucrative to exchanges. In the United States, the Chicago Mercantile Exchange demutualized in 2000, went public, and eventually acquired the Chicago Board of Trade and NYMEX. CME Group (NYSE:CME) is a major player in the futures and derivatives world. On the options side, the Chicago Board Options Exchange (CBOE) also trades publicly as CBOE Holdings (Nasdaq:CBOE).
Eurex is a significant derivatives exchange owned by Deutsche Borse and SIX Swiss Exchange, while the London Metal Exchange is privately owned by its members through LME Holdings Ltd.
Last and not least, the Tokyo Commodity Exchange is structured in a fashion similar to the TSE and is owned principally by the banks, brokerage, and commodity trading firms that transact their business through it.
Shuffling Likely To Continue
Running an exchange is a great business; it is effectively a monopoly. Those who own exchanges can require companies to pay listing fees, traders to pay for market access and investors to pay transaction fees. It is not altogether surprising, then, that there is so much activity in this space. In addition to the aforementioned major mergers, the Singapore Exchange is trying to acquire the Australian Stock Exchange, while Brazils BM
From a trading perspective, liquidity is the ability of a security to be bought or sold without causing a significant movement in the price of the security. Liquid securities may be bought and sold in large numbers without a dramatic movement in the price of the security.
This link will help thou $GTGP BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/GTGP
10 Tips For The Successful Long-Term Investor
While it may be true that in the stock market there is no rule without an exception, there are some principles that are tough to dispute. Lets review 10 general principles to help investors get a better grasp of how to approach the market from a long-term view. Every point embodies some fundamental concept every investor should know.
1. Sell the losers and let the winners ride!
Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope of a rebound. If an investor doesnt know when its time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice. The following information might help:
• Riding a Winner - Peter Lynch was famous for talking about tenbaggers, or investments that increased tenfold in value. The theory is that much of his overall success was due to a small number of stocks in his portfolio that returned big. If you have a personal policy to sell after a stock has increased by a certain multiple - say three, for instance - you may never fully ride out a winner. No one in the history of investing with a sell-after-I-have-tripled-my-money mentality has ever had a tenbagger. Dont underestimate a stock that is performing well by sticking to some rigid personal rule - if you dont have a good understanding of the potential of your investments , your personal rules may end up being arbitrary and too limiting. (For more insight, see Pick Stocks Like Peter Lynch.)
• Selling a Loser - There is no guarantee that a stock will bounce back after a protracted decline. While its important not to underestimate good stocks, its equally important to be realistic about investments that are performing badly. Recognizing your losers is hard because its also an acknowledgment of your mistake. But its important to be honest when you realize that a stock is not performing as well as you expected it to. Dont be afraid to swallow your pride and move on before your losses become even greater.
In both cases, the point is to judge companies on their merits according to your research. In each situation, you still have to decide whether a price justifies future potential. Just remember not to let your fears limit your returns or inflate your losses. (For related reading, check out To Sell Or Not To Sell.)
2. Dont chase a hot tip.
Whether the tip comes from your brother, your cousin, your neighbor or even your broker, you shouldnt accept it as law. When you make an investment, its important you know the reasons for doing so; do your own research and analysis of any company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out, its also a type of gambling. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run. (Find what you should pay attention to - and what you should ignore in Listen To The Markets, Not Its Pundits.)
3. Dont sweat the small stuff.
As a long-term investor, you shouldnt panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitablevolatility of the short term. Also, dont overemphasize the few cents difference you might save from using a limit versus market order.
Granted, active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself. (Learn the difference between passive investing and apathy in Ostrich Approach To Investing A Bird-Brained Idea.)
4. Dont overemphasize the P/E ratio.
Investors often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesnt necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued. (For further reading, see our tutorial Understanding the P/E Ratio.)
4. Resist the lure of penny stocks .
A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a $5 stock that plunges to $0 or a $75 stock that does the same, either way youve lost 100% of your initial investment . A lousy $5 company has just as much downside risk as a lousy $75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it.
6. Pick a strategy and stick with it.
Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid. Take Warren Buffetts actions during the dotcom boom of the late 90s as an example. Buffetts value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that had no earnings and eventually crashed. (Want to adopt the Oracle of Omahas investing style? See Think Like Warren Buffett.)
7. Focus on the future.
The tough part about investing is that we are trying to make informed decisions based on things that have yet to happen. Its important to keep in mind that even though we use past data as an indication of things to come, its what happens in the future that matters most.
A quote from Peter Lynchs book One Up on Wall Street (1990) about his experience with Subaru demonstrates this: If Id bothered to ask myself, How can this stock go any higher? I would have never bought Subaru after it already went up twentyfold. But I checked the fundamentals, realized that Subaru was still cheap, bought the stock, and made sevenfold after that. The point is to base a decision on future potential rather than on what has already happened in the past.
8. Adopt a long-term perspective.
Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the get in, get out and make a killing mentality is a must for any investor. This doesnt mean that its impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors dont experience. As such, active trading requires certain specialized skills.
Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire.
9. Be open-minded.
Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps; over the decades from 1926-2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard
Within 30 seconds, members must report their transactions to FINRA’s OTC Reporting Facility, its service to accommodate reporting and dissemination of last sale reports in all OTC Equity Securities. The rule creates a uniform method of reporting obligations of member firms, including who must report, when those reports are due, what must be reported, and how to cancel trades already reported. Subsequent dissemination of transaction information by NASDAQ, on behalf of FINRA.
BarChart Technical Analysis NITE-LYNX $TLFX
http://www.barchart.com/technicals/stocks/TLFX
Why Do Companies Care About Their Stock Prices?
Heres the irony of the situation: companies live and die by their stock price, yet for the most part they dont actively participate in trading their stocks within the market. Companies receive money from the securities market only when they first sell a security to the public in the primary market, which is commonly referred to as an initial public offering (IPO). In the subsequent trading of these shares on the secondary market (what most refer to as the stock market), it is the regular investors buying and selling the stock who benefit from any appreciation in stock price. Fluctuating prices are translated into gains or losses for these investors as they shift ownership of stock. Individual traders receive the full capital gain or loss after transaction costs.
The original company that issues the stock does not participate in any profits or losses resulting from these transactions because this company has no vested monetary interest. This is what confuses many people. Why then does a company, or more specifically its management, care about a stocks performance in the secondary market when this company has already received its money in the IPO? Read on to find out.
Those in Management are Often Shareholders Too
The first and most obvious reason why those in management care about the stock market is that they typically have a monetary interest in the company. Its not unusual for the founder of a public company to own a significant number of the outstanding shares, and its also not unusual for the management of a company to have salary incentives or stock options tied to the companys stock prices. For these two reasons, management acts as stockholders and thus pay attention to their stock price. (Learn more in When Insiders Buy, Should Investors Join Them?)
Wrath of the Shareholders
Too often investors forget that stock means ownership. The job of management is to produce gains for the shareholders. Although a manager has little or no control of share price in the short run, poor stock performance could, over the long run, be attributed to mismanagement of the company. If the stock price consistently underperforms the shareholders expectations, the shareholders are going to be unhappy with the management and look for changes. In extreme cases shareholders can band together and try to oust current management in a proxy fight. To what extent shareholders can control management is debatable. Nevertheless, executives must always factor in the desires of shareholders since these shareholders are part owners of the company. (Learn more in Knowing Your Rights As A Shareholder.)
Financing
Another main role of the stock market is to act as a barometer for financial health. Analysts are constantly scrutinizing companies and this information affects the companies traded securities. Because of this, creditors tend to look favorably upon companies whose shares are performing strongly. This preferential treatment is in part due to the tie between a companys earnings and its share price. Over the long term, strong earnings are a good indication that the company will be able to meet debt requirements. As a result, the company will receive cheaper financing through a lower interest rate, which in turn increases the amount of value returned from a capital project.
Well show you how to turn $1k to $10k - 100% free!
Alternatively, favorable market performance is useful for a company seeking additional equity financing. If there is demand, a company can always sell more shares to the public to raise money. Essentially this is like printing money, and it isnt bad for the company as long as it doesnt dilute its existing share base too much, in which case issuing more shares can have horrible consequences for existing shareholders. (Find out how financing can affect share prices in Will Corporate Debt Drag Your Stock Down?)
The Hunters and the Hunted
Unlike private companies, publicly traded companies stand vulnerable to takeover by another company if they allow their share price to decline substantially. This exposure is a result of the nature of ownership in the company. Private companies are usually managed by the owners themselves, and the shares are closely held. If private owners dont want to sell, the company cannot be taken over. Publicly-traded companies, on the other hand, have shares distributed over a large base of owners who can easily sell at any time. To accumulate shares for the purpose of takeover, potential bidders are better able to make offers to shareholders when they are trading at lower prices. For this reason, companies would want their stock price to remain relatively stable, so that they remain strong and deter interested corporations from taking them.
On the other side of the takeover equation, a company with a hot stock has a great advantage when looking to buy other companies. Instead of having to buy with cash, a company will simply issue more shares to fund the takeover. In strong markets this is extremely common - so much that a strong stock price is a matter of survival in competitive industries. (For more on takeovers and mergers, check out Trademarks Of A Takeover Stock and Mergers And Acquisitions: Understanding Takeovers.)
Ego
Finally, a company may aim to increase share simply to increase their prestige and exposure to the public. Managers are human too, and like anybody they are always thinking ahead to their next job. The larger the market capitalization of a company, the more analyst coverage the company will receive. Essentially, analyst coverage is a form of free publicity advertising and allows both senior managers and the company itself to introduce themselves to a wider audience.
The Bottom Line
For these reasons, a companys stock price is a matter of concern. If performance of their stock is ignored, the life of the company and its management may be threatened with adverse consequences, such as the unhappiness of individual investors and future difficulties in raising capital.
FINRA members must report their short interest positions in all OTC Equity Securities mid-month and end-of-month. Short interest reporting brings more transparency to the short selling activities by member firms, and reduces the possibility of manipulative behavior associated with naked short selling.
NITE-LYNX $HAZH BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/HAZH
Finding The Right Trading Coach
If you have ever thought about getting a trading coach or trading program, or bought a book about trading, this topic may have crossed your mind. If the coach knows so much about trading, why is he or she teaching others? This is an interesting question and relates to the old adage: Those that cant ... teach. Meaning those who were unsuccessful at an endeavor move to the teaching realm to coach others. Many people dont like the idea that a trader who cant make big money should be teaching others. But does your coachs personal success really matter? In other words, is a full-time trader in a better position to help you than someone who no longer trades or has never traded? When we break down the pros and cons you may realize you werent giving some people the credibility they deserve, and were possibly giving too much credit to others. (For general investment information refer to Top 10 Commandments Of Investing.) Arguments for Both Sides
A coach who is a trader will claim to have definite advantage over someone who doesnt trade. This may be true if the coach has the track record to back this claim up, but just because a person is successful at trading does not mean he or she can effectively relay that skill to someone else.
On the other hand, a coach who no longer trades can still provide great benefit if he or she is an effective teacher . A non-trader coach may have been successful as a trader in the past, but has chosen to give up trading. The reasons for this are numerous: some traders prefer coaching to trading, have found trading too stressful, want to help others or have already succeeded and want a new challenge, to list but a few potential reasons. However, it may also be that the trader has failed miserably. At first it may seem that this person would not be a good coach, but this is not necessarily true; we can learn a lot from other peoples failures. In addition, even though someone was unable not implement a certain system themselves due to lack of discipline, psychological or physiological reasons, this does not mean that a different person cant be successful using the same method.
Both sides can likely agree on the fact that in order to coach someone else, a teacher needs to have experience in what students will go through. Essentially, coaches must have market experience in some form or another. The coach needs to know what hurdles students will have to go over, and be able to help them navigate through those obstacles. This does not mean they need to have traded personally, but they will at least have to have been in an environment where they witnessed others trading. Observation can be a great teacher that can lead to the teaching of others.
A Deeper Look
On both sides of the argument there are examples of traders being great and horrible coaches, as well as coaches who no longer trade (or never did) that are fantastic. Think for a moment about a sport. The athletes who play professional sports are the best athletes in the world, and yet they are often coached by someone who has inferior skill. This is OK, because the coach is there to help hone another persons skills. Just because coaches dont have the qualities of a peak performance athlete does not mean they cant pick out and elevate those qualities in others. On the flip side, we have had some amazing talents who could not and cannot effectively pass on whatever it was that made them great athletes.
When we look at trading, or investing , much worth is placed in those who dont actually trade the markets professionally. Market analysts gauge the market using varying tools and methods and relay that information to others. While many analysts may not be traders, some are often very accurate in their market analysis. Having a birds eye view of the unfolding situation allows them to make predictions without an investment in the outcome. These insights are helpful to many traders, even though the information comes from someone who may have never placed a trade.
Never having placed a trade does pose a problem for the trader. The market is constantly moving, and while an analyst may be able to anticipate the direction and magnitude of a move, the gyrations along the way can have the power to wipe a trader out if he or she executes a move at the wrong time. In this case, a student trader would benefit from having the information constructed into something tradeable by a trading coach.
How to Find a Good Coach
With arguments on both sides, there is no hard-and-fast rule when it comes to which is better. The bottom line is whether someone gets you the knowledge and skills that you want. If the coach is teaching you in a way you understand and you feel you are getting your moneys worth, that is what counts.
Trading and coaching is a business. Coaches need to recruit students - this is how they make money . Therefore, sales pitches abound across media sources. When seeking to improve your trading, this can be overwhelming. That said, you can often narrow your search down quite quickly by following a few simple guidelines.
1. Dont Focus on a Coachs Personal Results
Dont worry about whether a potential coach was a trader, is a trader or what his or her personal track record is. Personal trading results dont matter; what matters is how a given coachs students are doing. Look for reviews by students about a coach or training program , and if possible contact a few students directly to ask them about their experience.
2. Avoid Getting Emotional
Sales pages are meant for the hard sell. Therefore, sift through sales pages with an analytical mind, not an emotional one. Is there any substantiation to an advertisers claims? People who know the markets know that no one is right all the time, so skip past coaches and programs that promise outlandish results.
3. Consider Your Personality and Style
If you have some experience already, look for someone who meshes with your personality and style. Do you understand the language the coach uses? Does his or her method seem simple and easy to understand? Complex methods can be hard to implement and may not be easily passed from one person to another. Also, if you cant understand what someone else is saying when you are first introduced to their work, it is likely only going to get harder to understand down the road.
Conclusion
Good information, coaching and training programs can be found, but in order to hit on the best possible program, traders need to do some research. This includes finding reviews of any product or service being considered, and touching base with those companies or individuals to see what they have to offer. We can also discard any offers that promise outlandish results or are hard to understand. Trading can be difficult, but learning about it should be much easier - especially if you take the time to seek out the best possible sources.
Securities that are not listed on any stock exchange nor formally quoted on OTC Markets or OTCBB are considered to be in the Grey Market. Unsolicited transactions are processed independently and not centrally listed or quoted. Trades are reported to a self-regulatory organization (SRO), which then passes the data on to market data companies.
Feast thine eyes upon $ZMRK BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/ZMRK
Will Corporate Debt Drag Your Stock Down?
When you invest in a company, you need to look at many different financial records to see if it is a worthwhile investment. But what does it mean to you if, after doing all your research, you invest in a company and then it decides to borrow money? Here we take a look at how you can evaluate whether the debt will affect your investment.
How Do Companies Borrow Money?
Before we can begin, we need to discuss the different types of debt that a company can take on. There are two main methods by which a company can borrow money :
1. by issuing fixed-income (debt) securities - like bonds, notes, bills and corporate papers
2. by taking out a loan at a bank or lending institution.
• Fixed-Income Securities
Debt securities issued by the company are purchased by investors. When you buy any type of fixed-income security, you are in essence lending money to a business or government. When issuing these securities, the company must pay underwriting fees. However, debt securities allow the company to raise more money and to borrow for longer durations than loans typically allow.
• Loans
Borrowing from a private entity means going to a bank for a loan or a line of credit. Companies will commonly have open lines of credit from which they may draw in order to meet their cash requirements of day-to-day activities. The loan a company borrows from an institution may be used to pay for the company payrolls, buy inventories and new equipment, or to keep as a safety net. For the most part, loans require repayment in a shorter time period than most fixed income securities .
What to Look for
There are a few obvious things that an investor should look for when whether deciding to continue his or her investment in a company that is taking on new debt. Here are some questions you can ask yourself:
How much debt does the company currently have?
If a company has absolutely no debt, then taking on some debt may be beneficial because it can give the company more opportunity to reinvest resources into its operations. However, if the company in question already has a substantial amount of debt, you might want to think twice. Generally, too much debt is a bad thing for companies and shareholders because it inhibits a companys ability to create a surplus in cash. Furthermore, high debt levels may negatively affect common stockholders, who are last in line for claiming payback from a company that becomes insolvent.
What kind of debt is the company trying to take on?
Loans and fixed-income securities that a company issues differ dramatically in their maturity dates. Some loans must be repaid within a few days of issue while others dont need to be paid for a several years. Typically, debt securities issued to the public (investors ) will have longer maturities than the loans offered by private institutions (banks). Large short-term loans may be harder for companies to repay, but long-term fixed-income securities with high interest rates may not be easier on the company. Try to determine if the length and interest rate of the debt is suitable for financing the project that the company wishes to undertake.
What is the debt for?
Is the debt a company is taking on meant to repay or refinance old debts, or is it for new projects that have the potential to increase revenues? Typically, you should think twice before purchasing stock in companies that have repeatedly refinanced their existing debt, which indicates an inability to meet financial obligations. A company that must consistently refinance may be doing so because it is spending more than it is making (expenses are exceeding revenues), which obviously is bad for investors. One thing to note, however, is that it is a good idea for companies to refinance their debt to lower their interest rates. However, this type of refinancing, which aims to reduce the debt burden, shouldnt affect the debt load and isnt considered new debt.
Can the company afford the debt?
Most companies will be sure of their ideas before committing money to them; however, not all companies succeed in making the ideas work. It is important you determine whether the company can still make its payments if it gets into trouble or its projects fail. You should look to see if thecompanys cash flows are sufficient enough to meet its debt obligations. And do make sure the company has diversified its prospects. (For more on how to analyze corporate debt and refinancing, read Debt Reckoning.)
Are there any special provisions that may force immediate pay back?
When looking at a companys debt, look to see if there are any loan provisions that may be detrimental to the company if the provision is enacted. For example, some banks require minimum financial ratio levels, so if any of the stated ratios of the company drop below a predetermined level, the bank has the right to call (or demand repayment) of the loan. Being forced to repay the loan unexpectedly can magnify any problem within the company and sometimes even force it into a liquidation state.
How does the companys new debt compare to its industry?
There are many different fundamental analysis ratios that may help you along the way. The following ratios are a good way to compare companies within the same industry.
• Quick Ratio (Acid Test) - This ratio tells investors approximately how capable the company is of paying off all of its short-term debt without having to sell any inventory.
• Current Ratio - This ratio indicates the amount of short-term assets versus short-term liabilities. The greater the short-term assets compared to liabilities, the better off the company is in paying off its short-term debts.
• Debt-to-Equity Ratio - This measures a companys financial leverage calculated by dividing long-term debt by shareholders equity. It indicates what proportions of equity and debt the company is using to finance its assets.
Conclusion
A company increasing its debt load should have a plan for repaying it. When you have to evaluate a companys debt, try to ensure that the company knows how the debt affects investors, how the debt will be repaid and how long it will take to do so.
Be wary of buying stocks on margin. Make sure you understand how a margin account works, and what happens in the worst case scenario before you agree to buy on margin.
NITE-LYNX $ABBY BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/ABBY
Achieving Optimal Asset Allocation
The important task of appropriately allocating your available investment funds among different assets classes can seem daunting, with so many securities to choose from. Here we will illustrate what asset allocation is, its importance and how you can determine your appropriate asset mix and maintain it.
What is Asset Allocation?
Asset allocation refers to the strategy of dividing your total investment portfolio among various asset classes, such as stocks, bonds and money market securities. Essentially, asset allocation is an organized and effective method of diversification.
To help determine which securities, asset classes and subclasses are optimal for your portfolio, lets define some briefly:
• Large-cap stock - These are shares issued by large companies with a market capitalization generally greater than $10 billion.
• Mid-cap stock - These are issued by mid-sized companies with a market cap generally between $2 billion and $10 billion.
• Small-cap stocks - These represent smaller-sized companies with a market cap of less than $2 billion. These types of equities tend to have the highest risk due to lower liquidity.
• International securities - These types of assets are issued by foreign companies and listed on a foreign exchange. International securities allow an investor to diversify outside of his or her country, but they also have exposure to country risk - the risk that a country will not be able to honor its financial commitments.
• Emerging markets - This category represents securities from the financial markets of a developing country. Although investments in emerging markets offer a higher potential return, there is also higher risk, often due to political instability, country risk and lower liquidity. (For further reading, see What Is An Emerging Market Economy?)
• Fixed-income securities - The fixed-income asset class comprises debt securities that pay the holder a set amount of interest, periodically or at maturity, as well as the return of principal when the security matures. These securities tend to have lower volatility than equities, and have lower risk because of the steady income they provide. Note that though payment of income is promised by the issuer, there is a risk of default. Fixed-income securities include corporate and government bonds.
• Money market - Money market securities are debt securities that are extremely liquid investments with maturities of less than one year. Treasury bills (T-bills) make up the majority of these types of securities.
• Real-estate investment trusts (REITs) - Real estate investment trusts (REITs) trade similarly to equities, except the underlying asset is a share of a pool of mortgages or properties, rather than ownership of a company.
Maximizing Return While Minimizing Risk
The main goal of allocating your assets among various asset classes is to maximize return for your chosen level of risk, or stated another way, to minimize risk given a certain expected level of return. Of course to maximize return and minimize risk, you need to know the risk-return characteristics of the various asset classes. Figure 1 compares the risk and potential return of some of the more popular ones:
Figure 1
Equities have the highest potential return, but also the highest risk. On the other hand, Treasury bills have the lowest risk since they are backed by the government, but they also provide the lowest potential return.
Figure 1 also demonstrates that when you choose investments with higher risk, your expected returns also increase proportionately. But this is simply the result of the risk-return tradeoff. They will often have high volatility and are therefore suited for investors who have a high risk tolerance(can stomach wide fluctuations in value), and who have a longer time horizon.
Its because of the risk-return tradeoff - which says you can seek high returns only if you are willing to take losses - that diversification through asset allocation is important. Since different assets have varying risks and experience different market fluctuations, proper asset allocation insulates your entire portfolio from the ups and downs of one single class of securities. So, while part of your portfolio may contain more volatile securities - which youve chosen for their potential of higher returns - the other part of your portfolio devoted to other assets remains stable. Because of the protection it offers, asset allocation is the key to maximizing returns while minimizing risk.
Deciding Whats Right for You
As each asset class has varying levels of return for a certain risk, your risk tolerance, investment objectives, time horizon and available capital will provide the basis for the asset composition of your portfolio.
To make the asset allocation process easier for clients, many investment companies create a series of model portfolios, each comprising different proportions of asset classes. These portfolios of different proportions satisfy a particular level of investor risk tolerance. In general, these model portfolios range from conservative to very aggressive:
Conservative model portfolios generally allocate a large percent of the total portfolio to lower-risk securities such as fixed-income and money market securities.
The main goal with a conservative portfolio is to protect the principal value of your portfolio. As such, these models are often referred to as capital preservation portfolios.
Even if you are very conservative and prefer to avoid the stock market entirely, some exposure can help offset inflation. You could invest the equity portion in high-quality blue chip companies, or an index fund, since the goal is not to beat the market. (For further reading, see the tutorialAll about Inflation.)
A moderately conservative portfolio is ideal for those who wish to preserve a large portion of the portfolios total value, but are willing to take on a higher amount of risk to get some inflation protection.
A common strategy within this risk level is called current income. With this strategy, you chose securities that pay a high level of dividends or coupon payments.
Moderately aggressive model portfolios are often referred to as balanced portfolios since the asset composition is divided almost equally between fixed-income securities and equities in order to provide a balance of growth and income.
Since these moderately aggressive portfolios have a higher level of risk than those conservative portfolios mentioned above, select this strategy only if you have a longer time horizon (generally more than five years), and have a medium level of risk tolerance.
Aggressive portfolios mainly consist of equities, so these portfolios value tends to fluctuate widely. If you have an aggressive portfolio, your main goal is to obtain long-term growth of capital. As such the strategy of an aggressive portfolio is often called a capital growth strategy.
To provide some diversification, investors with aggressive portfolios usually add some fixed-income securities.
Very aggressive portfolios consist almost entirely of equities. As such, with a very aggressive portfolio, your main goal is aggressive capital growth over a long time horizon.
Since these portfolios carry a considerable amount of risk, the value of the portfolio will vary widely in the short term.
Nothing is Set in Stone
Note that the above outline of model portfolios and the associated strategies offer only a loose guideline - you can modify the proportions above to suit your own individual investment needs. How you fine tune the models above can depend on your future needs for capital and on what kind of an investor you are. For instance, if you like to research your own companies and devote time to stock picking, you will likely further divide your equities portion of your portfolio among subclasses of stocks. By doing so, you can achieve a specialized risk-return potential within one portion of your portfolio. (For further reading, see the tutorial Guide to Stock-Picking Strategies.)
Also, the amount of cash and equivalents, or money market instruments you place in your portfolio will depend on the amount of liquidity and safety you need. If you need investments that can be liquidated quickly or you would like to maintain the current value of your portfolio, you might want to put a larger portion of your investment portfolio in money market or short-term fixed-income securities. Those investors who do not have liquidity concerns and have a higher risk tolerance will have a small portion of their portfolio within these instruments.
Maintaining Your Portfolio
Once you have chosen your portfolio investment strategy, it is important to conduct periodic portfolio reviews, as the value of the various assets within your portfolio will change, affecting the weighting of each asset class. For example, if you start with a moderately conservative portfolio, the value of the equity portion may increase significantly during the year, making your portfolio more like that of an investor practicing a balanced portfolio strategy , which is higher risk!
In order to reset your portfolio back to its original state, you need to rebalance your portfolio. Rebalancing is the process of selling portions of your portfolio that have increased significantly, and using those funds to purchase additional units of assets that have declined slightly or increased at a lesser rate. This process is also important if your investment strategy or tolerance for risk has changed.
Conclusion
Asset allocation is a fundamental investing principle, because it helps investors maximize profits while minimizing risk. The different asset allocation strategies described above can help any investor do this regardless of their risk tolerance and investment goals. In turn, choosing an appropriate asset allocation strategy and conducting periodic reviews will ensure you maintain your long-term investment goals and reach your desired return at the lowest amount of risk possible.
Short selling carries with it unlimited risk because the purchase price of a security can rise to any price point. Conversely, long investors (buyers) may only lose the amount invested – if, for example, the security price drops to zero.
Feast thine eyes upon $MZRTF BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/MZRTF
7 Investing Mistakes And How To Avoid Them
Making mistakes is part of the learning process. However, its all too often that plain old common sense separates a successful investor from a poor one. At the same time, nearly all investors, new or experienced, have fallen astray from common sense and made a mistake or two. Being perfect may be impossible, but knowing some of common investing errors can help deter you from going down the well-traveled, yet rocky, path of losses. Here are some of the most common investing mistakes.
SEE: How To Avoid Common Investing Problems
Using Too Much Margin
Margin is the use of borrowed money to purchase securities. Margin can help you make more money; however, it can also exaggerate your loses - a definite downside.
The absolute worst thing you can do as a new investor is become carried away with what seems like free money - if you use margin and your investment doesnt go your way, you end up with a large debt obligation for nothing. Ask yourself if you would buy stocks with your credit card. Of course you wouldnt. Using margin excessively is essentially the same thing (albeit likely at a lower interest rate).
Additionally, using margin requires you to monitor your positions much more closely because of the exaggerated gains and losses that accompany small movements in price. If you dont have the time or knowledge to keep a close eye on and make decisions about your positions and the positions drop, your brokerage firm will sell your stock to recover any losses you have accrued.
As a new investor, use margin sparingly, if at all. Use it only if you understand all its aspects and dangers. It can force you to sell all your positions at the bottom, the point at which you should be in the market for the big turnaround.
Buying On Unfounded Tips
We think everyone makes this mistake at one point or another in their investing career. You may hear your relatives or friends talking about a stock that they heard will get bought out, have killer earnings or soon release a groundbreaking new product. Even if these things are true, they do not necessarily mean that the stock truly is the next big thing and that you should run to the nearest phone to call your broker.
Other unfounded tips come from investment professionals on TV who often tout a specific stock as though its a must-buy, but really is nothing more than the flavor of the day. These stock tips often dont pan out and go straight down after you buy them. Remember, buying on media tips is often founded on nothing more than a speculative gamble.
Now this isnt to say that you should balk at every stock tip. If one really grabs your attention, the first thing to do is consider the source. The next thing is to do your own homework. Make sure you research, research and research so that you know what you are buying and why. Buying a tech stock with some proprietary technology should be based on whether its the right investment for you, not solely on what some mutual fund manager said on TV.
Next time youre tempted to buy a hot tip, dont do so until youve got all the facts and are comfortable with the company. Ideally, obtain a second opinion from other investors or unbiased financial advisors.
Day Trading
If you insist on becoming an active trader, think twice before day trading. Day trading is a dangerous game and should be attempted only by the most seasoned investors. In addition to investment savvy, a successful day trader needs access to special equipment that is rarely available to the average trader. Did you know that the average day-trading workstation (with software) can cost in the range of $50,000? Youll also need a similar amount of trading money to maintain an efficient day trading strategy.
The need for speed is the main reason you cant start day trading with simply the extra $5,000 in your bank account: online brokers do not have systems fast enough to service the true day trader, so quite literally the difference of pennies per share can make the difference between a profitable and losing trade. In fact, day trading is deemed such a difficult endeavor that most brokerages who offer day trading accounts require investors to take formal trading courses.
Unless you have the expertise, equipment and access to speedy order execution, think twice before day trading. If you arent particularly adept at dealing with risk and stress, there are much better options for an investor looking to build wealth.
Buying Stocks that Appear Cheap
This is a very common mistake, and those who commit it do so by comparing the current share price with the 52-week high of the stock. Many people using this gauge assume that a fallen share price represents a good buy. But the fact that a companys share price happened to be 30% higher last year will not help it earn more money this year. Thats why it pays to analyze why a stock has fallen.
Deteriorating fundamentals, a CEO resignation and increased competition are all possible reasons for the lower stock price - but they are also provide good reasons to suspect that the stock might not increase anytime soon. A company may be worth less now for fundamental reasons. It is important always to have a critical eye since a low share price might be a false buy signal.
Avoid buying stocks that simply look like a bargain. In many instances, there is a strong fundamental reason for a price decline. Do your homework and analyze a stocks outlook before you invest in it. You want to invest in companies which will experience sustained growth in the future.
Underestimating Your Abilities
Some investors tend to believe they can never excel at investing because stock market success is reserved for sophisticated investors. This perception has no truth at all. While any commission-based mutual fund salesmen will probably tell you otherwise, most professional money managers dont make the grade either - the vast majority underperform the broad market. With a little time devoted to learning and research, investors can become well equipped to control their own portfolio and investing decisions - and be profitable. Remember, much of investing is sticking to common sense and rationality.
Besides having the potential to become sufficiently skillful, individual investors do not face the liquidity challenges and overhead costs large institutional investors do. Any small investor with a sound investment strategy has just as good a chance of beating the market, if not better, than the so-called investment gurus.
Never underestimate your abilities or your own potential. That is, dont assume you are unable to successfully participate in the financial markets simply because you have a day job.
When Buying a Stock, Overlooking the Big Picture
For a long-term investor one of the most important - but often overlooked - things to do is qualitative analysis, or to look at the big picture. Fund manager and author Peter Lynch once stated that he found the best investments by looking at his childrens toys and the trends they would take on. Brand name is also very valuable. Think about how almost everyone in the world knows Coke; the financial value of the name alone is therefore measured in the billions of dollars. Whether its about iPods or Big Macs, no one can argue against real life.
So pouring over financial statements or attempting to identify buy and sell opportunities with complex technical analysis may work a great deal of the time, but if the world is changing against your company, sooner or later you will lose. After all, a typewriter company in the late 1980s could have outperformed any company in its industry, but once personal computers started to become commonplace, an investor in typewriters of that era would have done well to assess the bigger picture.
Assessing a company from a qualitative standpoint is as important as looking at the sales and earnings. Qualitative analysis is a strategy that is one of the easiest and most effective for evaluating a potential investment.
Compounding Your Losses by Averaging Down
Far too often investors fail to accept the simple fact that they are human and prone to making mistakes just as the greatest investors do. Whether you made a stock purchase in haste or one of your long-time big earners has suddenly taken a turn for the worse, the best thing you can do is accept it. The worst thing you can do is let your pride take priority over your pocketbook and hold on to a losing investment, or worse yet, buy more shares of the stock since it is much cheaper now.
Remember, a companys future operating performance has nothing to do with what price you happened to buy its shares at. Anytime there is a sharp decrease in your stocks price, try to determine the reasons for the change and assess whether the company is a good investment for the future. If not, do your pocketbook a favor and move your money into a company with better prospects.
Letting your pride get in the way of sound investment decisions is foolish and it can decimate your portfolios value in a short amount of time. Remain rational and act appropriately when you are inevitably confronted with a loss on what seemed like a rosy investment.
The Bottom Line
With the stock markets penchant for producing large gains (and losses) there is no shortage of faulty advice and irrational decisions. As an individual investor , the best thing you can do to pad your portfolio for the long term, is to implement a rational investment strategy you are comfortable with and willing to stick to. If you are looking to make a big win by betting your money on your gut feelings, try the casino. Take pride in your investment decisions and in the long run, your portfolio will grow to reflect the soundness of your actions.
All OTC securities are assigned a market tier based on their reporting method (SEC Reporting, Alternative Reporting Standard) and disclosure category – Current, Limited or No Information. Securities on OTCQX, the highest tier of the OTC market, are required to have Current disclosure and meet minimum financial qualifications. Securities in OTCQB tier must be SEC, Bank or Insurance reporting and must be Current in their disclosure.
This link will help thou $AERO BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/AERO
The Risks Of Investing In Emerging Markets
Investing is always risky business; corporate scandals regularly surface in the news, corporate bonds are frequently downgraded, accounting fraud is often revealed and market imperfections such as the flash crash continuously bring a level of uncertainty. Even the most stable domestic blue chip companies will face times of tremendous volatility.
Emerging markets offer numerous benefits to investors such as elevated economic growth rates, higher expected returns and diversification benefits. However, there are a number of important risks to consider before investing in regions outside of the developed world. (Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors. See What Is An Emerging Market Economy?)
1) Foreign Exchange Rate Risk
Foreign investments in stocks and bonds will typically produce returns in the local currency of the investment. As a result, investors will have to convert this local currency back into their domestic currency. An American who purchases a Brazilian stock in Brazil will have to buy and sell the security using the Brazilian real. Therefore, currency fluctuations can impact the total return of investment. If, for example, the local value of a held stock increased by 5%, but the real depreciated by 10%, the investor will experience a net loss in terms of total returns when selling and converting back to U.S. dollars.
2) Non-Normal Distribution
North American market returns arguably follow a pattern of normal distributions. As a result, financial models can be used to price derivatives and make somewhat accurate economic forecasts about the future of equity prices. Emerging market securities, on the other hand, cannot be valuated using the same type of mean-variance analysis. Also, because emerging markets are undergoing constant changes, it is almost impossible to utilize historical information in order to draw proper correlations between events and returns.
3) Lax Insider Trading Restrictions
Although most countries claim to enforce strict laws against insider trading, none have proved to be as rigorous as America in terms of prosecuting unfair trading practices. Insider trading and various forms of market manipulation introduce market inefficiencies, whereby equity prices will significantly deviate from their intrinsic value. Such a system can be subject to extreme speculation, and can also be heavily controlled by those holding privileged information.
4) Less Liquidity
Emerging markets are generally less liquid than those found in the developed world. This market imperfection results in higher broker fees and an increased level of price uncertainty. Investors who try to sell stocks in an illiquid market face substantial risks that their orders will not be filled at the current price, and the transactions will only go through at an unfavorable level. Additionally, brokers will charge higher commissions, as they have to make more diligent efforts to find counterparties for trades. Illiquid markets prevent investors realizing the benefits of fast transactions.
5) Difficulty Raising Capital
A poorly developed banking system will prevent firms from having the proper access to financing that is required to grow their businesses. Attained capital will usually be issued at a high required rate of return, increasing the companys weighted average cost of capital (WACC). The major concern with having a high WACC is that fewer projects will produce a high enough return to yield a positive net present value. Therefore, financial systems found in developed nations do not allow companies to undertake a higher variety of profit-generating projects. (This asset class has left much of its unstable past behind. Find out how to invest in it, in Investing In Emerging Market Debt.)
6) Poor Corporate Governance System
A solid corporate governance structure within any organization is correlated with positive stock returns. Emerging markets sometimes have weaker corporate governance systems, whereby management, or even the government, has a greater voice in the firm than shareholders. Furthermore, when countries have restrictions on corporate takeovers, management does not have the same level of incentive to perform in order to maintain job security. While corporate governance in the emerging markets has a long road to go before being considered fully effective by North American standards, many countries are showing improvements in this area in order to gain access to cheaper international financing.
7) Increased Chance of Bankruptcy
A poor system of checks and balances and weaker accounting audit procedures increase the chance of corporate bankruptcy. Despite that bankruptcy is common in every economy, such risks are most common outside of the developed world. Within emerging markets, firms can more freely cook the book to give an extended picture of profitability. Once the corporation is exposed, it experiences a sudden drop in value. This is not to say that such occurrences do not happen in North America and Europe.
Because emerging markets are viewed as being more risky, they will have to issue bonds that pay higher interest rates. The increased debt burden further increases borrowing costs and strengthens the potential for bankruptcy.
8) Political Risk
Political risk refers to uncertainty regarding adverse political decisions. Developed nations tend to follow a free market discipline of low government intervention, whereas emerging market businesses are often privatized upon demand. Some additional factors that contribute to political risk are: possibility of war, tax increase, loss of subsidy, change of market policy, inability to control inflation and laws regarding resource extraction. Major political instability can also result in civil war and a shutdown of industry, as workers either refuse or are no longer able to do their jobs. (Find out how these worldly offerings can spice up your portfolio. Check out Go International With Foreign Index Funds.)
Conclusion
Investing in emerging markets can produce substantial returns to ones portfolio. However, investors must be aware that all high returns must be judged within the risk and reward framework. The aforementioned risks are some of the most prevalent that must be assessed prior to investing. Unfortunately, however, the premiums associated with these risks can often only be estimated, rather than determined on a concrete basis.
They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse. //
Behold the $IXEH BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/IXEH
Does Tax Loss Harvesting Really Work?
Its about as traditional as putting up your holiday themed decorations, having the holiday office party, and exchanging gifts. For investors, tax loss harvesting has been a December tradition for as long as theyve been an investor, and to say anything negative about it could make you the Wall Street Grinch. As an investor you should always have data to back up your decision. Well look at whether the data supports the stated benefits of tax harvesting. (To learn more, read Tax-Loss Harvesting: Reduce Investment Losses.)
What Is It?
Not too up on this whole tax loss harvesting thing? Lets say in 2011 you were absolutely sure that gold was going to $2,100 so when it hit $1,900 you pulled the trigger on some shares of SPDR Gold Shares (ARCA:GLD), the most popular exchange traded fund (ETF) that tracks the price of gold. Your call hasnt materialized so you youve lost $2,000 on that position. Youre still sure its going to push through the $2,100 level so you would really like to hold on to it, but youve had a good year and you have $8,000 that are subject to capital gains taxes.
Heres your plan. Youre going to take your loss on your GLD position and put the $2,000 against your $8,000 in gains so you only have to pay taxes on $6,000 of capital gains. You know you have to avoid something called a wash-sale rule that doesnt allow you to sell and immediately repurchase GLD so you may put your money to work somewhere else for 30 days and then reinvest in GLD after that. Thats tax loss harvesting. (For related reading, see Selling Losing Securities For A Tax Advantage.)
The Problem
Trying to beat the system is often a fools game and in the case of tax loss harvesting, that may be true. The Wall Street Journal took on the role of the investing Grinch when they looked at how well tax loss harvesting actually works. They found that it wasnt as much of a gift under the tree that some people think.
Tax expert Kent Smetters is a professor of risk management at the University of Pennsylvanias Wharton School and cites a few of the normal culprits that remain a thorn in the side of investors: inflation and tax rates.(Check out Timeless Ways To Protect Yourself From Inflation.)
Because tax loss harvesting isnt removing your tax liability, youre going to pay the taxes sometime in the future. When you sold your GLD position at a loss, you lowered your entry point, or tax basis by $2,000 for the next position you open.
Later on, presuming your call of $2,100 gold comes to fruition, you now owe that extra $2,000 that you harvested in 2011 and youll pay the taxes on that gain at what could be a higher tax rate and using dollars that are worth less in the future than they are today. All of that, according to Smetters adds up to minuscule savings, if any at all.
The Bottom Line
Smetters analysis doesnt suggest that all tax loss harvesting is ill advised. Investors along with their financial and tax advisers should instead carefully consider and calculate the potential savings involved in this strategy instead of believing conventional wisdom.
$ZMRK BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/ZMRK
No Information - Companies that are not able or willing to provide disclosure to the public markets - either to a regulator, an exchange or OTC Markets.
How To Invest In Private Companies
The internet has revolutionized the world of retail stock investing by making vast amounts of financial information quickly and easily available to individual investors. And though still in the early stages, the advent of digital information exchange is also making it easier for more individuals to invest in privately-held companies. Just as eBay has put buyers in contact with sellers of collectibles that used to collect dust on attic shelves, today private companies are much more able to seek out buyers of their securities to allow them to raise capital. TUTORIAL: Advanced Financial Statement Analysis
The drawback to vast amounts of information is the difficultly in knowing what to focus on. Below is a comparison of private companies to public ones, overview of private company types and varieties, investment options currently available for interested investors, and a survey of other considerations to make when investing in private companies.
Private Companies versus Public Companies
Overall, it is much easier to invest in a publicly-traded firm. Public companies, especially larger ones, can easily be bought and sold on the stock market and therefore have superior liquidity and a quote market value. Conversely, it can be years before a private firm can again be sold and prices must be negotiated between the seller and buyer.
In addition, public companies must file financial statements with the Securities and Exchange Commission (SEC), making it easy to track how they are doing on a quarterly and annual basis. Private companies are not required to provide any information to the public, so it can be extremely difficult to determine their financial soundness, historical sales and profit trends.
Investing in a public company may seem far superior to investing in a private one, but there are a handful of benefits to not being public. A major criticism of many public firms is that they are overly focused on quarterly results and meeting Wall Street analyst short-term expectations. This can cause them to miss out on long-term value creating opportunities, such as investing in a product that may take years to develop, hurting profits in the near term. Private firms can be better managed for the long term as they are out of Wall Streets reach. An annual report by the World Economic Forum has detailed that productivity increases when a public firm is taken private. They can also create more jobs when run more efficiently and profitably.
Being an owner of a private firm also means sharing more directly in the underlying firms profits. Earnings may grow at a public, firm but they are retained unless paid out as dividends or used to buy back stock. Private firm earnings can be paid directly to the owners. Private owners can also have a larger role in the decision-making process at the firm, especially those with large ownership stakes.
Types of Private Companies
From an investment standpoint, a private company is defined by its stage in development. For instance, when an entrepreneur is first starting a business he or she usually receives funding from a friend or family member on very favorable terms. This stage is referred to as angel investing, while the private company is known as an angel firm. Past the start-up phase is venture capital: investing where a group of more savvy investors comes along and offers growth capital and managerial know-how and other operational assistance. At this stage a firm is seen to have at least some long-term potential.
Past this stage can be mezzanine investing, which consists of equity and debt, the last of which will convert to equity if the private company cant meet its interest payment obligations. Later-stage private investing is simply referred to as private equity and is currently a multi-billion dollar business with many large players.
For investors, the stage of development a private company is in can help define how risky it is as an investment. For instance, approximately 40% of angel investments fail and the risk falls the more developed and profitable a private company becomes. And although the goal of many private firms is to eventually go public and provide liquidity for company founders or other investors, other private business may prefer to stay private given the benefits given above. Family businesses may also prefer privacy and the handing of ownership across generations. These are important matters to become aware of when deciding to invest in a private company. (To learn more, see What Is Private Equity?)
How to Invest in Private Companies
Early-stage private investing offers the most investment opportunities but is also the most risky. As a result, joining an angel investor organization or investment group may be a good idea to make the process easier and potentially spread the investment risks across a wide group of firms. Venture funds also exist and solicit outside partners for investing capital.
As noted above, the internet has quickly become a central source to find these types of organizations, while other websites have sprung up to fill a void and put buyers and sellers of many types of private companies together. Online sources also have made it easier to at least locate basic information on a private firm. This can be done by visiting the companys websites, and reading online blogs and articles that discuss the firm and its industry.
Other resources that can be used include small or private business brokers that specialize in buying and selling these firms. Private equity is also an option, and ironically a number of the largest private equity firms are publicly traded so can be purchased by any investor. A number of mutual funds can also offer at least some exposure to private companies.
Other Considerations
Overall, it is important to reiterate that private companies are illiquid and require very long investing time frames. Most investors will also need an eventual liquidity event to cash out. This includes when the company goes public, buys out private shareholders, or is bought out by a rival or another private equity firm. And just like with any security, private companies need to be valued to determine if they are fairly valued, overvalued or undervalued.
It is also important to note that investing directly in private firms is usually reserved only for wealthy individuals. The motivation is that they can handle the additional illiquidity and risk that goes with private investing. The SEC definition calls these wealthy individuals accredited investor or qualified institutional buyer (QIB) when considering institutions.
The Bottom Line
It is now easier than ever to invest in private companies, but an investor still has to do his or her homework. Investing directly is still not going to be a viable option for most investors, but there are still ways to gain exposure to private firms through more diversified investment vehicles. Overall, an investor definitely has to work harder an overcome more obstacles when investing in a private firm as compared to a public one, but they work can be worth it as there are a number of advantages to be gained by investing in private companies.
For thou convenience $GHRI BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/GHRI
OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such. Products traded on the exchange must be well standardized. This means that exchanged deliverables match a narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in trading.
Going All-In: Comparing Investing And Gambling
How many times during a discussion with friends about investing have you heard someone utter: Investing in the stock market is just like gambling at a casino? Is this adage really true? Lets examine these two activities more closely and see if we can point out some of the key differences and also some surprising similarities.
Investing and gambling both involve risk and choice. Interestingly, both the gambler and the investor must decide how much they want to risk. Some traders typically risk 2-5% of their capital base on any particular trade. Longer-term investors constantly hear the virtues of diversification across different asset classes. This, in essence, is a risk management strategy, and spreading your dollars across different investments will likely help minimize potential losses.
Gamblers must also carefully weigh the amount of capital they want to put in play. Pot odds are a way of assessing your risk capital versus your risk reward: the amount of money to call a bet compared to what is already in the pot. If the odds are favorable, the player is more likely to call the bet. Most professional gamblers are quite proficient at risk management. In both gambling and investing, a key principle is to minimize risk while maximizing profits.
Throwing It in the Pot
Sports betting is probably one of the most common gambling activities in which the average person engages. From the weekly football office pool to the Final Four, sport betting is an American tradition. Only by thinking about your betting habits will you realize that you have no way to limit your losses. If you pony up $10 a week for the NFL office pool and you dont win, you lose all of your capital. When betting on sports (or really any other pure gambling activity), there are no loss-mitigation strategies.
This is a key difference between investing and gambling. Stock investors and traders have a variety of options to prevent total loss of risked capital. Setting stop losses on your stock investment is a simple way to avoid undue risk. If your stock drops 10% below its purchase price, you have the opportunity to sell that stock to someone else and still retain 90% of your risk capital. However, if you bet $100 that the Jacksonville Jaguars will win the Super Bowl this year, you cannot get part of your money back if they just make it to the Super Bowl. Betting on sports is truly a speculative activity which prevents individuals from minimizing losses.
Another key difference between the two activities has to do with the concept of time. Gambling is a time-bound event while an investment in a company can last several years. With gambling, once the game or hand is over, your opportunity to profit from your wager has come and gone. You either have won or lost your capital. Stock investing , on the other hand, can be time-rewarding. Investors who purchase shares in companies that pay dividends are actually rewarded for their risked dollars. Companies pay you money regardless of what happens to your risk capital, as long as you hold on to their stock. Savvy investors realize that returns from dividends are a key component to making money in stocks over the long term.
Playing the Odds
Both stock investors and gamblers look for an edge in order to help enhance their performance. Good gamblers and great stock investors study behavior in some form or another. Gamblers playing poker typically look for cues from the other players at the table, and great poker players can remember what their opponents wagered 20 hands back. They also study the mannerisms and betting patterns of their opponents with the hope of gaining useful information. This information may be just enough to help predict future behavior. Similarly, some stock traders study trading patterns by interpreting stock charts. Stock market technicians try to leverage the charts to glean where the stock is going in the future. This area of study dedicated to analyzing charts is commonly referred to as technical analysis. (To learn more, see our Technical Analysis Tutorial.)
Another difference between investing and gambling is the availability of information. Information is a valuable commodity in the world of poker as well as stock investing. Stock and company information is readily available for public use. Company earnings, financial ratios and management teams can be studied before committing capital. Stock traders who make hundreds of transactions a day can use the days activities to help with future decisions. Nonetheless, stock information is far from perfect, otherwise, there would not be insider trading or the Securities and Exchange Commission (SEC).
If you sit down at a Blackjack table in Las Vegas, you have no information about what happened an hour, a day or a week ago at that particular table. You may hear that the table is either hot or cold, but that information is not quantifiable.
Conclusion
The next time you hear someone say that stock investing is the same as playing in a casino, remind them that in fact there are some similarities and some major differences. Both activities involve risk of capital with hopes of future profit. Gambling is typically a short-lived activity, while stock investing can last a lifetime. Some companies actually pay you money in the form of dividends to go along with an ownership stake. In general, most average investors will do better investing in stocks over a lifetime than trying to win the World Series of Poker.
$CTCC BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/CTCC
Investigation of Fraud or Other Criminal Activities — There is an investigation of fraudulent or other criminal activity involving the company, its securities or insiders. When OTC Markets becomes aware of such investigation, the companies’ securities may be subject to Caveat Emptor.
Knowing Your Rights As A Shareholder
Say you just bought stock in Disney (NYSE:DIS). As a part owner of the company does this mean you and the family can hit Disneyland for free this summer? Why is it that Anheuser-Busch (NYSE:BUD) shareholders dont get a case of beer each quarter? (Forget the dividends!) Although these perks are highly unlikely, they do raise a good question: what rights and privileges do shareholders have? While they may not be entitled to free rides and beer, many investors are unaware of their rights as shareowners. In this article, we discuss what privileges come with being ashareholder and which do not.
Levels of Ownership Rights
Before getting into the nitty-gritty of shareholder rights, lets first look at a companys pecking order. Every company has a hierarchical structure of rights that accompany the three main classes of securities that companies issue: bonds, preferred stock and common stock (To learn more, see our Stocks Basics Tutorial.)
The priority of each security is best understood by looking at what happens when a company goes bankrupt. You may think that as an owner youd be first in line for getting a portion of the companys assets if it went belly up. After all, you did pay for them. In reality, as a common shareholder you are at the very bottom of the corporate food chain when a company liquidates; you are the corporate equivalent of a hyena that eats only after the lions have eaten their share. During insolvency proceedings, it is the creditors who first get dibs on the companys assets to settle their outstanding debts, then the bondholders get first crack at those leftovers, followed by preferred shareholders and finally the common shareholders . This hierarchy forms according to the principle of absolute priority.
In addition to the rules of absolute priority, there are other rights that differ with each class of security. For example, usually a companys charter states that only the common stockholders have voting privileges and preferred stockholders must receive dividends before common stockholders. The rights of bondholders are determined differently because a bond agreement, or indenture, represents a contract between the issuer and the bondholder. The payments and privileges the bondholder receives are governed by the indenture (tenets of the contract).
Risks and Rewards
Sounds pretty bad for common shareholders, doesnt it? Dont be fooled, common shareholders are still the part owners of the business and if the business is able to turn a profit, then common shareholders gain. The liquidation preference we described makes logical sense: shareholders take on a greater risk (they receive next to nothing if the firm goes bankrupt) but they also have a greater reward potential through exposure to share price appreciation when the company succeeds, whereas there are usually fewer preferred stocks held by a select few. As such, preferred stocks generally experience less price fluctuation.
Common Shareholders Six Main Rights
1. Voting Power on Major Issues
This includes electing directors and proposals for fundamental changes affecting the company such as mergers or liquidation. Voting takes place at the companys annual meeting. If you cant attend, you can do so by proxy and mail in your vote.
2. Ownership in a Portion of the Company
Previously we discussed the event of a corporate liquidation where bondholders and preferred shareholders are paid first. However, when business thrives, common shareholders own a piece of something that has value. Said another way, they have a claim on a portion of the assets owned by the company. As these assets generate profits, and as the profits are reinvested in additional assets, shareholders see a return in the form of increased share value as stock prices rise.
• The Right to Transfer Ownership
Right to transfer ownership means shareholders are allowed to trade their stock on an exchange. The right to transfer ownership might seem mundane, but the liquidity provided by stock exchanges is extremely important. Liquidity is one of the key factors that differentiates stocks from an investment like real estate. If you own property, it can take months to convert your investment into cash. Because stocks are so liquid, you can move your money into other places almost instantaneously.
• An Entitlement to Dividends
Along with a claim on assets, you also receive a claim on any profits a company pays out in the form of a dividend . Management of a company essentially has two options with profits: they can be reinvested back into the firm (hopefully increasing the companys overall value) or paid out in the form of a dividend. You dont have a say in what percentage of profits should be paid out - this is decided by the board of directors. However, whenever dividends are declared, common shareholders are entitled to receive their share.
• Opportunity to Inspect Corporate Books and Records
This opportunity is provided through a companys public filings, including its annual report. Nowadays, this isnt such a big deal as public companies are required to make their financials public. It can be more important for private companies.
• The Right to Sue for Wrongful Acts
Suing a company usually takes the form of a shareholder class-action lawsuit. A good example of this type of suit occurred in the wake of the accounting scandal that rocked WorldCom in 2002, after it was discovered that the company had grossly overstated earnings, giving shareholders and investors an erroneous view of its financial health. The telecom giant faced a firestorm of shareholder class-action suits as a result.
Shareholder rights vary from state to state, and country to country, so it is important to check with your local authorities and public watchdog groups. In North America, however, shareholders rights tend to be more developed than other nations and are standard for the purchase of any common stock. These rights are crucial for the protection of shareholders against poor management.
Corporate Governance
In addition to the six basic rights of common shareholders, it is vital that you thoroughly research the corporate governance policies of a company. These policies are often crucial in determining how a company treats and informs its shareholders.
Shareholder Rights Plan
Despite its name, this plan differs from the standard shareholder rights outlined by the government (the six rights we touched on). Shareholder rights plans outline the rights of a shareholder in a specific corporation. A companys shareholder rights plan, it is usually accessible in the investors relations section of its corporate website or by contacting the company directly.
In most cases, these plans are designed to give the companys board of directors the power to protect shareholder interests in the event of an attempt by an outsider to acquire the company. To prevent a hostile takeover, the company will have a shareholder rights plan that can be exercised when another person or firm acquires a certain percentage of outstanding shares.
The way a shareholder rights plan may work can be best demonstrated with an example: lets say Corys Tequila Co. notices that its competitor, Joes Tequila Co., has purchased more than 20% of its common shares. A shareholder rights plan might then stipulate that existing common shareholders have the opportunity to buy shares at a discount to the current market price (usually a 10-20% discount). This maneuver is sometimes referred to as a flip-in poison pill. By being able to purchase more shares at a lower price, investors get instant profits and more importantly, they dilute the shares held by the competitor, whose takeover attempt is now more difficult and expensive. There are numerous techniques like this that companies can put into place to defend themselves against a hostile takeover.
Sometimes There are Little Extras
Are you still looking for other perks? Although free beer may be a little far-fetched there are companies that offer shareholders little extras. For instance, Anheuser-Busch does offer its shareholders discounted rates to some of the companys entertainment parks, among other things. Other companies have been known to give their shareholders small tokens of their appreciation along with their annual reports. For example, AT
The margin account agreement generally provides that the securities in your margin account may be lent out by the brokerage firm at any time without notice or compensation to you. The firm's lending of securities does not affect the value of your account.
Followers
|
1492
|
Posters
|
|
Posts (Today)
|
0
|
Posts (Total)
|
821321
|
Created
|
03/04/10
|
Type
|
Free
|
Moderator PhotoChick | |||
Assistants Nilbud ManicTrader |
Posts Today
|
0
|
Posts (Total)
|
821321
|
Posters
|
|
Moderator
|
|
Assistants
|
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |