Saturday, January 28th, 2012
The Federal Reserve Board recently announced that it was committed to keeping key interest rates near zero until late 2014. This policy is intended to create jobs and stimulate the economy by making borrowing less expensive. When money is cheaper to borrow, it flows more freely.
But the announcement, which surprised some observers, can have many implications, not all of which are immediately clear.
Let’s start with the positives. Keeping money cheap for banks and other institutions does mean it will be easier for them to lend to businesses (more…)
Tags: borrowing, Federal Reserve, interest rates, stocks, value investing
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Thursday, December 22nd, 2011
During the great bull runs of the past two decades, finding value on Wall Street was child’s play. Novice investors struck gold day trading, and fund managers reaped huge returns at practically every turn.
But since the stock market’s 2008-09 meltdown, value investing has been no easy chore. Yet that hasn’t stopped the dedicated from scouring the world for the next big thing.
Value investors typically try to look beyond the markets’ daily ups and downs. Instead, they focus on fundamentals such as price-to-book and price-to-earnings ratios to ascribe value.
In most cases, value investors try to use their research to identify stocks whose book values exceed market valuations (more…)
Tags: contrarian, STOCK MARKET, stocks, value investing
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Sunday, December 4th, 2011
As you know, a bond is a security in which the issuer promises to pay you, the purchaser, a set interest rate for a fixed period of time for the use of your money. Bonds are generally less volatile than stocks and are considered safer because bonds are often secured by the assets of the issuer.
Also, bonds are usually a good hedge against stock investments. Why? Because bonds often go the opposite direction of stocks. When stocks are hot, bonds are not. But when stocks sag, bonds often perk up.
Some experts subscribe to the theory that bonds do not need to be a part of your portfolio. Why? Because over a long period of time, stocks tend to outperform bonds. (more…)
Tags: bonds, INVESTING, portfolio, stocks
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Friday, November 4th, 2011
Recent volatility in the stock market has dampened interest among many investors in initial public offerings of stock. But online coupon company Groupon has renewed interest in IPOs. As we post this story on Friday (11/4), Groupon has just offered its IPO. And despite some analysts’ gloomy reports on the company, this IPO has attracted lots of interest: Groupon’s stock jumped $9.52 to $29.52 in the first few hours after its IPO debuted.
But is an IPO a good opportunity for you?
The answer may not be instantly clear. (more…)
Tags: initial public offerings, INVESTING, IPO, STOCK MARKET, stocks
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Sunday, October 16th, 2011
With the stock market surging wildly up and down, many investors have been scared away from equities. But for most investors, a complete retreat from stocks is not the best move. What might make more sense is to rebalance your portfolio toward low-volatility stocks.
As The Wall Street Journal recently reported, the Standard & Poor’s Low Volatility Index, a portfolio of the 100 least-volatile stocks in the S&P 500 stock index, lost just 1.1 percent, compared with a 9.8 percent drop for the S&P 500 overall (more…)
Tags: beta, exchange traded funds, INVESTING, low volatility, S&P, STOCK MARKET, stocks
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Tuesday, August 9th, 2011
Accelerating fears of a new global recession sent the Dow Jones Industrial Average plummeting more than 634 points Monday (8/8) — wiping out $1 trillion in market value.
The massive stampede out of stocks, the second plunge of more than 50 points in the last three trading days, was fueled in large part by reaction to the U.S. credit rating downgrade. The sell-off threatened to further sap confidence in the faltering U.S. economy, giving businesses and consumers another reason to cut back on spending, (more…)
Tags: credit rating, debt, INVESTING, Standard & Poor's, STOCK MARKET, stocks
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Friday, April 22nd, 2011
As you probably know, a share of stock means a share in the company’s revenue, earnings, cash flow and equity. For the individual investor, a share of ownership entitles you to a share of all dividends. Even if the company’s stock does not currently have a dividend yield, there always remains the possibility that at some point in the future there could be.
Buying stock essentially means you’re acquiring a piece of the company. Before deciding how much to spend on its stock, you’ll want to know how much money that company makes.
The most common way of evaluating the worth of a stock is to look at the company’s profits against the stock price (more…)
Tags: branding, INVESTING, P/E ratio, stocks, value
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Wednesday, March 23rd, 2011
The idea of investing in Japan right now may seem counterintuitive. But Bloomberg News suggests that the devastating earthquake, tsunami and nuclear reactor crisis have created opportunities to do good as well as invest well.
The article, by Bloomberg’s John Doorfman, suggests that for those willing to wait as long as five years to make a profit, investing now in Japan makes sense. He points out that many major Japanese stocks — Toyota, Honda and Sony among them — are relative bargains for investors based on corporate sales figures. (more…)
Tags: contrarian, INVESTING, Japan, stocks, value investing
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Saturday, March 19th, 2011
During the halcyon years preceding the Great Recession, many investors were lulled into believing that if they only contributed regularly to a retirement account, they reasonably could expect a materially comfortable life in their golden years.
Much has changed. IRA and 401(k) savings were sliced in half during the stock-market free fall of 2008 and early 2009. Despite a rebound, the market’s recovery has come in fits with frequent setbacks.
Equity investments, like the age-indexed mutual funds that became widely popular early in the last decade, have lost their luster. (more…)
Tags: 401(k), bonds, exchange traded funds, financial planning, goals, INVESTING, retirement planning, savings, stocks
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