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c7e597dd813bcc211c64e76bad9616b3
|
Can I get a mortgage from a foreign bank?
|
[
{
"docid": "7abd742d4a5146989505e42d26abfeba",
"text": "\"Simple answer YES you can, there are loads here are some links : world first , Baydon Hill , IPF Just googling \"\"foreign currency mortgage\"\", \"\"international mortgage\"\", or \"\"overseas mortgage\"\" gets you loads of starting points. I believe its an established and well used process, and they would be \"\"classified\"\" as a \"\"normal\"\" mortgage. The process even has its own wiki page Incidentally I considered doing it myself. I looked into it briefly, but the cost of fee's seemed to outweigh the possible future benefits of lower interest rates and currency fluctuations.\"",
"title": ""
},
{
"docid": "fbcfdd2fccff5c1708bebc49a7ad5d43",
"text": "You definitely used to be able to (see this BBC article from 2006), and I would imagine that you still can, although I also imagine that it would be more difficult than it used to be, as with all mortgages. EDIT: And here's an article from last year about Chinese banks targeting the UK mortgage market.",
"title": ""
}
] |
[
{
"docid": "c0e7a965e82c1984ba0795078090e9f8",
"text": "I am wondering weather it is worth it (how taxation works in this scenario ect.) or not and legally possible to do so ? Whether it is worth it or not is up to you. There's nothing illegal in this, unless of course there's a legal issue in the foreign country. The US doesn't care. Re taxes - it is a bit trickier. If your lender does not provide you with form 1098, you'll have to report the lender's name, address and SSN/ITIN on your tax return in order to claim a deduction. The IRS will then expect the lender to report that interest as income. This is US-sourced income and is taxed in the US despite the fact that the lender is non-resident. See here for more info. If the lender doesn't report the income and doesn't pay the taxes - your deduction may be denied as well for double-dipping. It is easier if this is an investment. Then the deduction is not going to Schedule A, but rather as an expense to Schedule E. The IRS may still require matching, but you won't need to report the SSN/ITIN - just have the expense properly documented. Obviously, the best when it comes to legal issues, is to talk to an attorney licensed in the State in question. Similarly with tax questions - you should talk to a EA/CPA licensed in that State. I'm neither.",
"title": ""
},
{
"docid": "14b1bc4d3cbbf1cde474d5ffda18cb1f",
"text": "My mortgage is with WF. I want to get away from them. I'm going to try to move in a year or two, and then I'll make sure I never touch them again. I have an account with a credit union. I'll be transferring everything over to there.",
"title": ""
},
{
"docid": "7dde74392ae43418f5636c60a710d5c6",
"text": "\"I'm not aware that any US bank has any way to access your credit rating in France (especially as you basically don't have one!). In the US, banks are not the only way to get finance for a home. In many regions, there are plenty of \"\"owner financed\"\" or \"\"Owner will carry\"\" homes. For these, the previous owner will provide a private mortgage for the balance if you have a large (25%+) downpayment. No strict lending rules, no fancy credit scoring systems, just a large enough downpayment so they know they'll get their money back if they have to foreclose. For the seller, it's a way to shift a house that is hard to sell plus get a regular income. Often this mortgage is for only 3-10 years, but that gives you the time to establish more credit and then refinance. Maybe the interest rate is a little higher also, but again it's just until you can refinance to something better (or sell other assets then pay the loan off quick). For new homes, the builders/developers may offer similar finance. For both owner-will-carry and developer finance, a large deposit will trump any credit rating concerns. There is usually a simplified foreclosure process, so they're not really taking much of a risk, so can afford to be flexible. Make sure the owner mortgage is via a title company, trust company, or escrow company, so that there's a third party involved to ensure each party lives up to their obligations.\"",
"title": ""
},
{
"docid": "4ebdef47b59f8a0bdd4e4fba0440b5b3",
"text": "This is fraud and could lead to jail time. The vast majority of people cannot obtain such loans without collateral and one would have to have a healthy income and good credit to obtain that kind of loan to purchase something secured by a valuable asset, such as a home. Has this been done before? Yes, despite it being the US, you may find this article interesting. Hopefully, you see how the intent of this hypothetical situation is stealing.",
"title": ""
},
{
"docid": "33580f0327e95b794853dd6c811a609b",
"text": "Generally, if you watch for the detail in the fine print, and stay away from non-FDIC insured investments, there is little difference, so yes, pick the highest you can get. The offered interest rate is influenced by what the banks are trying to accomplish, and how their current and desired customer base thinks. Some banks have customer bases with very conservative behavior, which will stick with them because they trust them no matter what, so a low interest rate is good enough. The disadvantage for the bank is that such customers prefer brick-and-mortar contact, which is expensive for the bank. Or maybe the bank has already more cash than they need, and has no good way to invest it. Other banks might need more cash flow to be able to get stronger in the mortgage market, and their way of getting that is to offer higher interest rates, so new customers come and invest new money (which the bank in turn can then mortgage out). They also may offer higher rates for online handling only. Overall, there are many different ways to make money as a bank, and they diversify into different niches with other focuses, and that comes with offering quite different interest rates.",
"title": ""
},
{
"docid": "d17ef9a66770652aa11692ef104a3cec",
"text": "When getting a mortgage it always depends on the bank and each bank may be more or less strict. With that being said there are rules and general guidelines which can help you understand how you fit in the world of mortgage approvals. If you can provide the same paper work as an employee of your company that you would normally provide from any other company then a bank may just accept that alone. However to me it seems like you will be looking at a new variation of what was known as a Self-certification mortgage A self-certification mortgage is basically a mortgage for those who cannot prove their income. As a result of the housing collapse, the rules on a traditional self-cert mortgages have changed. As someone who is self employed, it is more difficult today to get a mortgage but is still possible. This article provides some good information: Can the self employed still get a mortgage? I advise doing some research on this topic and speaking with a professional mortgage broker. Some Resources: Compare Self Cert Mortgages How to beat the mortgage famine in 2012 Can the self employed still get a mortgage?",
"title": ""
},
{
"docid": "b0b510c62b5a3e4373f767e7fca65d71",
"text": "For what its worth, I recently closed on a 30 year refinance mortage with an agent I found through Zillow. The lender has a perfect 5/5 reputation score, whose office was located within 5 miles of my house, and as suggested by justkt on MrChrister's response, I checked out the business on the better business bureau and its online presence prior to going forward with the bank. The process was relatively painless, and the APR and closing costs were less than my previous loan with a federal credit union which I've used in the past. I can't say if the bank I'll be using going forward is as good as the one I've used in the past, but overall I'm quite happy with it. I never met the individual in person but this saved both of us a fair amount of time honestly.",
"title": ""
},
{
"docid": "8f200ee7a5a6d36978324a23b4718750",
"text": "You cannot do this as per the reasons mentioned by others above, mainly foreign banks cannot hold mortgages over properties in other countries. If this was possible to do, don't you think many others would be applying overseas for mortgages and loans. And even if it was possible the overseas bank would give you a comparative rate to compete with the rates already offered in Australia (to compensate with the extra risks). If you cannot afford to purchase a property at record low rates of below 5% in Australia, then you may want to re-think your strategy.",
"title": ""
},
{
"docid": "85b29fb9f21e2f7238927cc9b7d31b6e",
"text": "If you have good credit, you already know the rate -- the bank has it posted in the window. If you don't have good credit, tell the loan officer your score. Don't have them run your credit until you know that you're interested in that bank. Running an application or prequal kicks off the sales process, which gets very annoying very quickly if you are dealing with multiple banks. A few pointers: You're looking for a plain vanilla 30 year loan, so avoid mortgage brokers -- they are just another middleman who is tacking on a cost. Brokers are great when you need more exotic loans. Always, always stay away from mortgage brokers (or inspectors or especially lawyers) recommended by realtors.",
"title": ""
},
{
"docid": "c518372928a9ebe110d7a5c884e5c820",
"text": "I am only familiar with American banks, but generally speaking, they will work with you if you can demonstrate that you have an adequate average income over a period of time. It is likely they will want a record of your income for at least the last 24 months (more would be better). The terms of the individual contracts (i.e. termination clauses, etc.) shouldn't be important as long as you have a demonstrated history of making a good income. I'd recommend finding a bank that performs manual underwriting, i.e. they actually have someone on staff that will look at your credit history, income, debt ratios, as opposed to them just generating an offer based on a computer model. Lending standards can vary quite a bit from bank to bank, and you have not listed your average annual income, so it is difficult to say whether they will offer you a mortgage, or for what amount, but you have a significant down payment. However, assuming that your numbers are good and that you can find someone intelligent to work with, it's unlikely that they will deny you simply because your income is uneven. Best of luck!",
"title": ""
},
{
"docid": "2b198461ba3b9f14c0cfd3e01b893a69",
"text": "I don't believe they're right. For international wire transfers you'd need either IBAN or SWIFT codes. I don't think any US bank participates in the IBAN network (mostly Europe and the Far East), so SWIFT is they way to go with the US. Credit unions frequently don't know what and how to do with international transactions because they don't have them that often. Some don't even have SWIFT codes of their own (many, in fact) and use intermediaries to receive money.",
"title": ""
},
{
"docid": "4868aca678dd9a4e058664e32d9ee78e",
"text": "There are no particular restrictions in the UK on sending money abroad, so if you can get the loan in the first place you can send the money abroad. The main potential issue will be that many (maybe all) unsecured personal loan providers will want some indication of the purpose of the loan, and you will need to be honest with them about this or it would be fraud. As with all financial transactions with friends and family, you should think very carefully about the risks both of not getting the money back and of the impact on your relationship. Can you definitely repay the loan even if your parents don't repay you? Who will take the exchange rate risk; will your parents repay you the GBP you borrowed or the EUR you lend them? Depending on the rules in your parents' country, they will likely need to declare the source of these funds to the mortgage provider, and the mortgage provider will always have first priority in getting repaid.",
"title": ""
},
{
"docid": "b93a5d77409254fa60210ce84930525a",
"text": "\"The first red-flag here is that an appraisal was not performed on an as-is basis - and if it could not be done, you should be told why. Getting an appraisal on an after-improvement basis only makes sense if you are proposing to perform such improvements and want that factored in as a basis of the loan. It seems very bizarre to me that a mortgage lender would do this without any explanation at all. The only way this makes sense is if the lender is only offering you a loan with specific underwriting guidelines on house quality (common with for instance VA-loans and how they require the roof be of a certain maximum age - among dozens of other requirements, and many loan products have their own standards). This should have been disclosed to you during the process, but one can certainly never assume anyone will do their job properly - or it may have only mentioned in some small print as part of pounds of paper products you may have been offered or made to sign already. The bank criteria is \"\"reasonable\"\" to the extent that generally mortgage companies are allowed to set underwriting criteria about the current condition of the house. It doesn't need to be reasonable to you personally, or any of us - it's to protect lender profits by aiding their risk models. Your plans and preferences don't even factor in to their guidelines. Not all criteria are on a a sliding scale, so it doesn't necessarily matter how well you meet their other standards. You are of course correct that paying for thousands of dollars in improvements on a house you don't own is lunacy, and the fact that this was suggested may on it's own suggest you should cut your losses now and seek out a different lender. Given the lender being uncooperative, the only reason to stick with it seems to be the sunk cost of the appraisal you've already paid for. I'd suggest you specifically ask them why they did not perform an as-is appraisal, and listen to the answer (if you can get one). You can try to contact the appraiser directly as well with this question, and ask if you can have the appraisal strictly as-is without having a new appraisal. They might be helpful, they might not. As for taking the appraisal with you to a new bank, you might be able to do this - or you might not. It is strictly up to each lender to set criteria for appraisals they accept, but I've certainly known of people re-using an appraisal done sufficiently recently in this way. It's a possibility that you will need to write off the $800 as an \"\"education expense\"\", but it's certainly worth trying to see if you can salvage it and take it with you - you'll just have to ask each potential lender, as I've heard it go both ways. It's not a crazy or super-rare request - lenders backing out based on appraisal results should be absolutely normal to anyone in the finance business. To do this, you can just state plainly the situation. You paid for an appraisal and the previous lender fell through, and so you would like to know if they would be able to accept that and provide you with a loan without having to buy a whole new appraisal. This would also be a good time to talk about condition requirements, in that you want a loan on an as-is basic for a house that is inhabitable but needs cosmetic repair, and you plan to do this in cash on your own time after the purchase closes. Some lenders will be happy to do this at below 75%-80% LTV, and some absolutely do not want to make this type of loan because the house isn't in perfect condition and that's just what their lending criteria is right now. Based on description alone, I don't think you really should need to go into alternate plans like buy cash and then get a home equity loan to get cash out, special rehab packages, etc. So I'd encourage you to try a more straight-forward option of a different lender, as well as trying to get a straight answer on their odd choice of appraisal order that you paid for, before trying anything more exotic or totally changing your purchase/finance plans.\"",
"title": ""
},
{
"docid": "86ef9962360668eba7a9c6caf07a7265",
"text": "Generally speaking, no they won't. In this case, though I haven't done it myself, I was recommended to put the mortgage on the real estate after it's been leased out and has a contract on it. Then, yes, they will use it for that. But, ex-ante don't expect any bank to count on income from it because, at that point, there's zero guarantee you'll get it leased, and even if you do, at what rate.",
"title": ""
},
{
"docid": "aa0ef326df4465ff87ce2aea2d17493a",
"text": "What is your time horizon? Over long horizons, you absolutely want to minimise the expense ratio – a seemingly puny 2% fee p.a. can cost you a third of your savings over 35 years. Over short horizons, the cost of trading in and trading out might matter more. A mutual fund might be front-loaded, i.e. charge a fixed initial percentage when you first purchase it. ETFs, traded daily on an exchange just like a stock, don't have that. What you'll pay there is the broker commission, and the bid-ask spread (and possibly any premium/discount the ETF has vis-a-vis the underlying asset value). Another thing to keep in mind is tracking error: how closely does the fond mirror the underlying index it attempts to track? More often than not it works against you. However, not sure there is a systematic difference between ETFs and funds there. Size and age of a fund can matter, indeed - I've had new and smallish ETFs that didn't take off close down, so I had to sell and re-allocate the money. Two more minor aspects: Synthetic ETFs and lending to short sellers. 1) Some ETFs are synthetic, that is, they don't buy all the underlying shares replicating the index, actually owning the shares. Instead, they put the money in the bank and enter a swap with a counter-party, typically an investment bank, that promises to pay them the equivalent return of holding that share portfolio. In this case, you have (implicit) credit exposure to that counter-party - if the index performs well, and they don't pay up, well, tough luck. The ETF was relying on that swap, never really held the shares comprising the index, and won't necessarily cough up the difference. 2) In a similar vein, some (non-synthetic) ETFs hold the shares, but then lend them out to short sellers, earning extra money. This will increase the profit of the ETF provider, and potentially decrease your expense ratio (if they pass some of the profit on, or charge lower fees). So, that's a good thing. In case of an operational screw up, or if the short seller can't fulfil their obligations to return the shares, there is a risk of a loss. These two considerations are not really a factor in normal times (except in improving ETF expense ratios), but during the 2009 meltdown they were floated as things to consider. Mutual funds and ETFs re-invest or pay out dividends. For a given mutual fund, you might be able to choose, while ETFs typically are of one type or the other. Not sure how tax treatment differs there, though, sorry (not something I have to deal with in my jurisdiction). As a rule of thumb though, as alex vieux says, for a popular index, ETFs will be cheaper over the long term. Very low cost mutual funds, such as Vanguard, might be competitive though.",
"title": ""
}
] |
fiqa
|
26235e726bbd4e08282181b5e226f70d
|
historical data for analysing pensions
|
[
{
"docid": "76e622fc225406dbd70fb144752364dc",
"text": "\"You could use any of various financial APIs (e.g., Yahoo finance) to get prices of some reference stock and bond index funds. That would be a reasonable approximation to market performance over a given time span. As for inflation data, just googling \"\"monthly inflation data\"\" gave me two pages with numbers that seem to agree and go back to 1914. If you want to double-check their numbers you could go to the source at the BLS. As for whether any existing analysis exists, I'm not sure exactly what you mean. I don't think you need to do much analysis to show that stock returns are different over different time periods.\"",
"title": ""
}
] |
[
{
"docid": "a3e2f1b61d32cacf842186f073f09885",
"text": "\"Note that the series you are showing is the historical spot index (what you would pay to be long the index today), not the history of the futures quotes. It's like looking at the current price of a stock or commodity (like oil) versus the futures price. The prompt futures quote will be different that the spot quote. If you graphed the history of the prompt future you might notice the discontinuity more. How do you determine when to roll from one contract to the other? Many data providers will give you a time series for the \"\"prompt\"\" contract history, which will automatically roll to the next expiring contract for you. Some even provide 2nd prompt, etc. time series. If that is not available, you'd have to query multiple futures contracts and interleave them based on the expiry rules, which should be publicly available. Also is there not a price difference from the contract which is expiring and the one that is being rolled forward to? Yes, since the time to delivery is extended by ~30 days when you roll to the next contract. but yet there are no sudden price discontinuities in the charts. Well, there are, but it could be indistinguishable from the normal volatility of the time series.\"",
"title": ""
},
{
"docid": "8874c2e14077c87317b65163a01e3d35",
"text": "\"The graphing tools within Yahoo offer a decent level of adjustment. You can easily choose start and end years, and 2 or more symbols to compare. I caution you. From Jan 1980 through Dec 2011, the S&P would have grown $1 to $29.02, (See Moneychimp) but, the index went up from 107.94 to 1257.60, growing a dollar to only $11.65. The index, and therefore the charts, do not include dividends. So long term analysis will yield false results if this isn't accounted for. EDIT - From the type of question this is, I'd suggest you might be interested in a book titled \"\"Stock Market Logic.\"\" If memory serves me, it offered up patterns like you suggest, seasonal, relations to Presidential cycle, etc. I don't judge these approaches, I just recall this book exists from seeing it about 20 years back.\"",
"title": ""
},
{
"docid": "686353aa0176a8522cfd0e1abcfd9131",
"text": "Over the last 100 years this has happened twice. It cant be considered an outlier. Especially considering the misery is far from over, euro crisis, looming pension crisis, food crisis, etc. There are a lot of things far from resolved. An event that happens once every 50 years is hardly an outlier just unlikely.",
"title": ""
},
{
"docid": "cf6c86216612076e2a691b7e92c45363",
"text": "\"From the Vanguard page - This seemed the easiest one as S&P data is simple to find. I use MoneyChimp to get - which confirms that Vanguard's page is offering CAGR, not arithmetic Average. Note: Vanguard states \"\"For U.S. stock market returns, we use the Standard & Poor's 90 from 1926 through March 3, 1957,\"\" while the Chimp uses data from Nobel Prize winner, Robert Shiller's site.\"",
"title": ""
},
{
"docid": "77f2fb35a2beff9e1f1c485393fb6fd7",
"text": "\"Hey guys I have a quick question about a financial accounting problem although I think it's not really an \"\"accounting\"\" problem but just a bond problem. Here it goes GSB Corporation issued semiannual coupon bonds with a face value of $110,000 several years ago. The annual coupon rate is 8%, with two coupons due each year, six months apart. The historical market interest rate was 10% compounded semiannually when GSB Corporation issued the bonds, equal to an effective interest rate of 10.25% [= (1.05 × 1.05) – 1]. GSB Corporation accounts for these bonds using amortized cost measurement based on the historical market interest rate. The current market interest rate at the beginning of the current year on these bonds was 6% compounded semiannually, for an effective interest rate of 6.09% [= (1.03 × 1.03) – 1]. The market interest rate remained at this level throughout the current year. The bonds had a book value of $100,000 at the beginning of the current year. When the firm made the payment at the end of the first six months of the current year, the accountant debited a liability for the exact amount of cash paid. Compute the amount of interest expense on these bonds for the last six months of the life of the bonds, assuming all bonds remain outstanding until the retirement date. My question is why would they give me the effective interest rate for both the historical and current rate? The problem states that the firm accounts for the bond using historical interest which is 10% semiannual and the coupon payments are 4400 twice per year. I was just wondering if I should just do the (Beginning Balance (which is 100000 in this case) x 1.05)-4400=Ending Balance so on and so forth until I get to the 110000 maturity value. I got an answer of 5474.97 and was wondering if that's the correct approach or not.\"",
"title": ""
},
{
"docid": "835aea544af9ee19eb114bf793e8f425",
"text": "\"I keep spreadsheets that verify each $ distribution versus the rate times number of shares owned. For mutual funds, I would use Yahoo's historical data, but sometimes shows up late (a few days, a week?) and it isn't always quite accurate enough. A while back I discovered that MSN had excellent data when using their market price chart with dividends \"\"turned on,\"\" HOWEVER very recently they have revamped their site and the trusty URLs I have previously used no longer work AND after considerable browsing, I can no longer find this level of detail anywhere on their site !=( Happily, the note above led me to the Google business site, and it looks like I am \"\"back in business\"\"... THANKS!\"",
"title": ""
},
{
"docid": "2136538e1c183dd41f933085eadd0b7f",
"text": "\"The mathematics site, WolframAlpha, provides such data. Here is a link to historic p/e data for Apple. You can chart other companies simply by typing \"\"p/e code\"\" into the search box. For example, \"\"p/e XOM\"\" will give you historic p/e data for Exxon. A drop-down list box allows you to select a reporting period : 2 years, 5 years, 10 years, all data. Below the chart you can read the minimum, maximum, and average p/e for the reporting period in addition to the dates on which the minimum and maximum were applicable.\"",
"title": ""
},
{
"docid": "39e680ba097f0ffc975fb39a29e5dcd0",
"text": "Check the answers to this Stackoverflow question https://stackoverflow.com/questions/754593/source-of-historical-stock-data a number of potential sources are listed",
"title": ""
},
{
"docid": "57fb897c059fe117bf76781c5306adb8",
"text": "\"Thanks for the response. I am using WRDS database and we are currently filtering through various variables like operating income, free cash flow etc. Main issue right now is that the database seems to only go up to 2015...is there a similar database that has 2016 info? filtering out the \"\"recent equity issuance or M&A activity exceeding 10% of total assets\"\" is another story, namely, how can I identify M&A activity? I suppose we can filter it with algorithm stating if company's equity suddenly jumps 10% or more, it get's flagged\"",
"title": ""
},
{
"docid": "9764ba3afd9210806de741e49eaf845a",
"text": "\"Google Docs spreadsheets have a function for filling in stock and fund prices. You can use that data to graph (fund1 / fund2) over some time period. Syntax: =GoogleFinance(\"\"symbol\"\", \"\"attribute\"\", \"\"start_date\"\", \"\"num_days|end_date\"\", \"\"interval\"\") where: This analysis won’t include dividends or distributions. Yahoo provides adjusted data, if you want to include that.\"",
"title": ""
},
{
"docid": "5596b89a7503739bfe1ed3ba97b4b993",
"text": "Robert Shiller has an on-line page with links to download some historical data that may be what you want here. Center for the Research in Security Prices would be my suggestion for another resource here.",
"title": ""
},
{
"docid": "5827c06d5930287cb79a7fb81e2df7d9",
"text": "I agree, i don’t think it was always like this. Here is a little story I was told about the coal miners in the Uk. Coal mining was massive industry in the uk for about 150 years, (its the reason the world ended up getting railways, symbiotically) the mines as usual was located in the poorer regions but they was good paying jobs for the working man, anyway along with the birth of the industrial revolution came unions and with unions came protection and in turn pensions. So together these minors saved and saved heavily, there pension pot swelled, unfortunately though the mining industry was hazardous one and these minors died young... anyway fast forward to the 70s Margret thatcher Ronald Regan, and the closure of mines. There was a lot less minors by then and a huge pension pot, every minor in the country could have stopped paying into the pension and retired before 50. Thatcher did not like this and neither did the wealthy bankers, so they stole it all and made new pension rules,",
"title": ""
},
{
"docid": "542f6a65b035a8b2d4c2355dadc9390b",
"text": "There are two ways to measure the value of money in the past. 1) As Victor mentioned there are inflation statistics covering the last 100 or so years that value the currency against an ever-changing basket of goods. This is sufficient when measuring general inflation over the period of the hundred years where there is data. This is how it was measured in your example. 2) For older time periods or where a value comparison is required between specific items (particularly where these were not in the basket of goods used for the inflation calculation) Historical records of the price of comparable goods can be used. This is in effect the same as mark to market valuations for illiquid financial instruments and requires poring through records to find the price of either a comparable basket of goods to one that would be used for inflation calculations today or a comparable set of items. An example of this is finding the value of a particular type of house (say a terraced house in London) in the 19th Century compared to the same house today by finding records of how much comparable houses would sell for, on average, then and now. This second measure is also used where the country in question didn't or doesn't keep reliable inflation statistics which may well be true of Colombia in the 90s. This means that there is a chance that this way of estimating Escobar's wealth in today's terms may have also been used. Another notable reason to use this methodology is that (unless you are using exchange rates in purchasing power parity terms) the value of money held in different currencies is different. This is even true today as the value of $1 in INR in India is likely to be higher than the value of a dollar in the US in terms of what you can buy. Using this methodology allows for a more accurate comparison in values where different countries and currencies are involved.",
"title": ""
},
{
"docid": "2591ce2451f7d5ac4b526b0f345156c6",
"text": "I use Yahoo Finance to plot my portfolio value over time. Yahoo Finance uses SigFig to link accounts (I've linked to Fidelity), which then allows you to see you exact portfolio and see a plot of its historical value. I'm not sure what other websites SigFig will allow you to sync with, but it is worth a try. Here is what the plot I have looks like, although this is slightly out of date, but still gives you an idea of what to expect.",
"title": ""
},
{
"docid": "0044afa440570181fb34cb566eaab389",
"text": "I found the zephyr database, which does the job. Nonetheless if someone knows other (open) sources, be welcome to answer.",
"title": ""
}
] |
fiqa
|
0ace4393df1519493b5b80d577c5a3d3
|
How can I know the minimum due credit card payment and date for an ANZ Visa card?
|
[
{
"docid": "d0068f26cba685778dddbd7871d4db30",
"text": "You are in luck, I have an ANZ credit card as well. I have just checked my paper statement with online, and was able to find a matching online statement in less than a minute. You simply click on your credit card account from the list of accounts. Under Date Range it will have the Current incomplete statement period. You simply click on the down arrow and select the last complete date range ending sometime in late April (depending on your credit card cycle). You then press on View next to the drop down box. This should provide you with a list of purchases and payment/credits for that period, followed by a line with your Credit Limit, Available Funds and Closing Balance. The line below that then shows your Due Date, and Overdue/Overlimit, the Minimum Payment and Amount Due Now If you are after paying only the minimum amount then you pay this amount by the due date (you will be charged interest if you only pay this amount). If, on the otherhand, you wish to avoid paying any interest then you need to pay the full Closing Balance before the due date. You should also be able to get electronic statements sent to your email address.",
"title": ""
}
] |
[
{
"docid": "8d3a8e900cecf7ac3996efc9e605a862",
"text": "\"I think your confusion comes from the negative impact when a creditor writes off your bad credit and ceases attempting to collect it. \"\"Chargebacks\"\" as you call them are an attempt to undo fraudulent charges on your card, whether from stolen credit card info or from a merchant who is using shady business practices. For what it's worth, if you joined on December 20, January 20 seems like a reasonable date for the next billing cycle, with the December 31 date reflecting the fact that their system couldn't automatically bill you the day you joined. I also think it's reasonable for you to ask them to refund the bill for the second month if you do not plan to use their gym further. So the dispute seems like a reasonable one on both sides. Good luck.\"",
"title": ""
},
{
"docid": "3c4999c3b65b141f9eacb8703aee109c",
"text": "Bigger than the three mentioned above is on-time payment and/or collections activity. If your report shows you have not paid accounts on time, or have accounts in collections, that is almost guaranteed decline except for the least desirable cards. Another factor is number of hard inquiries. If you have been on a recent application spree, you will get declined for too many recent inquiries. Wait 12-18 months for the inquiries to roll off your report. Applications for business cards are a little tricky depending on whether you are applying as an individual or as an employee of a corporation. I usually stay away from these as you can be liable for company debts you did not charge under the right circumstances.",
"title": ""
},
{
"docid": "a33b7e79c798f5df57f893117b965db2",
"text": "Thanks it is problem for class and I don't want to give the problem I just want to understand how to actually do it and the book hasn't been much help. Only additional information I can provide is In Inventory – 15 days Accounts Receivable outstanding – 35 days Vendor credit – 40 days Operating Cycle – 50 days",
"title": ""
},
{
"docid": "460dca0b3e5b5f08a08830116926fea6",
"text": "The fact that your credit card has seen the payment is strong evidence that the transaction did in fact take place. But it's not unusual for there to be a delay of one or two business days before transactions show up in your online banking records. Saturday and Sunday are not business days. I bet you will see it on Monday. If it's not there by Tuesday, you could call the bank.",
"title": ""
},
{
"docid": "7ca8008173ffeaca3849add20f32d982",
"text": "\"The best answer to this is: Read the fine print on your credit card agreement. What is common, at least in the US, is that you can make any charges you want during a time window. When the date comes around that your statement balance is calculated, you will owe interest on any amount that is showing up as outstanding in your account. Example... To revise the example you gave, let's say Jan 1. your account balance was $0. Jan. 3rd you went out and spent $1,000. Your account statement will be prepared every XX days... usually 30. So if your last statement was Dec. 27th, you can expect your next statement to be prepared ~Jan.24 or Jan. 27. To be safe, (i.e. not accrue any interest charges) you will want to make sure that your balance shows $0 when your statement is next prepared. So back to the example you gave--if your balance showed $1,000... and you paid it off, but then charged $2,000 to it... so that there was now a new set of $2,000 charges in your account, then the bank would begin charging you interest when your next statement was prepared. Note that there are some cards that give you a certain number of days to pay off charges before accruing interest... it just goes back to my saying \"\"the best answer is read the fine print on your card agreement.\"\"\"",
"title": ""
},
{
"docid": "b24927fef77052655e106ffadd076973",
"text": "The balance is the amount due.",
"title": ""
},
{
"docid": "1b83d776bf537990e414c342c29a1a44",
"text": "The first thing you need to do is look at your terms and conditions of your credit card, or ask your bank, how they will apply the payments. As Dilip notes in his answer, in the US, they will likely apply the minimum payment to the lower rate balance, and then must apply the rest above the minimum to the higher rate balance. In other countries, this will vary by law and custom. Do not assume it will pay off the higher balance, or proportionally, without asking. Let's take the following example. You owe $6000. $5000 is at 13.5% (normal purchase rate) and $1000 is at 22% (cash advance rate). If your bank applies payments to both balances proportionally, then a payment of $600 will reduce your purchase balance by $500 and your cash advance balance by $100. The average APR, then, is simply sum of the product of the APR times balance. So here, (.135*5000 + .225*1000)/6000 = 15%. This is called a weighted average. If the bank applies the payment differently - such as to the lower rate first, or some specified part to the lower rate and the rest to the higher rate - then this will be misleading if you enter it into a calculator, because your average APR will rise over time as you pay off the purchase balance but don't pay off the cash advance balance, or may decrease if the opposite happens. The weighted average is probably reasonably close in the circumstance that you describe, even if you have rules applying the balance differently, so long as they don't 100% pay down the lower rate - so it may be the simplest option for you in terms of rough calculations (where it's not critical to be correct, just close). One approach using the online calculators that might be better, is to treat these like two separate loans/cards. Many calculators exist for multiple balances. Then you can allocate funds differently to the two 'cards'. This would allow you to see how long you will need until you've paid off the higher balance, for example, although it probably won't perfectly match things - unless you find a site that has this specific option available you probably will have to either live with a small error in your calculations or do the math by hand.",
"title": ""
},
{
"docid": "2f8f990af90faba58a954153cb31db3a",
"text": "\"There are some loan types where your minimum payment may be less than the interest due in the current period; this is not true of credit cards in the US. Separately, if you have a minimum payment amount due of less than the interest due in the period, the net interest amount would just become principal anyway so differentiating it isn't meaningful. With credit cards in the US, the general minimum calculation is 1% of the principal outstanding plus all interest accrued in the period plus any fees. Any overpayment is applied to the principal outstanding, because this is a revolving line of credit and unpaid interest or fees appear as a charge just like your coffee and also begin to accrue interest. The issue arises if you have multiple interest rates. Maybe you did a balance transfer at a discounted interest rate; does that balance get credited before the balance carried at the standard rate? You'll have to call your lender. While there is a regulation in place requiring payment to credit the highest rate balance first the banks still have latitude on how the payment is literally applied; explained below. When there IS an amortization schedule, the issue is not \"\"principal or interest\"\" the issue is principle, or the next payment on the amortization schedule. If the monthly payment on your car loan is $200, but you send $250, the bank will use the additional $50 to credit the next payment due. When you get your statement next month (it's usually monthly) it will indicate an amount due of $150. When you've prepaid more than an entire payment, the next payment is just farther in to the future. You need to talk to your lender about \"\"unscheduled\"\" principal payments because the process will vary by lender and by specific loan. Call your lender. You are a customer, you have a contract, they will explain this stuff to you. There is no harm that can possibly come from learning the nuances of your agreement with them. Regarding the nuance to the payment regulation: A federal credit card reform law enacted in May 2009 requires that credit card companies must apply your entire payment, minus the required minimum payment amount, to the highest interest rate balance on your card. Some credit card issuers are aggressive here and apply the non-interest portion of the minimum payment to the lowest interest rate first. You'll need to call your bank and ask them.\"",
"title": ""
},
{
"docid": "00e5b6849aa3eb56d71d5a50da47a537",
"text": "\"Well, I answered a very similar question \"\"Credit card payment date\"\" where I showed that for a normal cycle, the average charge isn't due for 40 days. The range is 35-55, so if you want to feel good about the float just charge everything the day after the cycle closes, and nothing else the rest of the month. Why is this so interesting? It's no trick, and no secret. By the way, this isn't likely to be of any use when you're buying gas, groceries, or normal purchases. But, I suppose if you have a large purchase, say a big TV, $3000, this will buy you extra time to pay. It would be remiss of me to not clearly state that anyone who needs to take advantage of this \"\"trick\"\" is the same person who probably shouldn't use credit cards at all. Those who use cards are best served by charging what they can afford to pay at that moment and not base today's charges on what paychecks will come in by the due date of the credit card bill.\"",
"title": ""
},
{
"docid": "a0f1c12a9922bfe1bc6b682981781267",
"text": "\"Yes it is possible, the Google Summer of Code students have been doing so for years. They get a Prepaid card and then can spend that in there local countries. They have the billing address as Google and the shipping address as their own. A few retailers have trouble but that just their systems. The trouble people have had is more in transferring the money to their personal accounts, usually there is a charge on this transfer. Transfer money from US (\"\"prepaid\"\") VISA Debit to AU bank account\"",
"title": ""
},
{
"docid": "999a2dc2fff6a8b33603cd971c448913",
"text": "\"Here is how the Visa network works: A Visa transaction is a carefully orchestrated process. When a Visa account holder uses a Visa card to buy a pair of shoes, it’s actually the acquirer — the merchant’s bank — that reimburses the merchant for the shoes. Then, the issuer — the account holder’s bank — reimburses the acquirer, usually within 24 to 48 hours. Lastly, the issuer collects from the account holder by withdrawing funds from the account holder’s bank account if a debit account is used, or through billing if a credit account is used. I read this to mean the Merchant's Bank (the Acquirer Bank) gives the merchant the money within 2 days via the Card Issuer's Bank. The issuing bank is the one that provides the \"\"credit\"\" feature since that bank won't get reimbursed until the shopper's bill is paid (or perhaps even longer if the shopper carries a balance). You'll notice the Credit Card company (Visa/MC/etc) is only involved in the process as a way of passing messages. Of course they take a fee for this service so seller ultimately get's less than the buyer bought the shoes for.\"",
"title": ""
},
{
"docid": "d2ec2555cc2ad70761dec8b1d77383c1",
"text": "\"There are always little tricks you can play with your credit card. For example, the due date of your statement balance is not really set in stone as your bank would like you to believe. Banks have a TOS where they can make you liable to pay interest from the statement generation date (which is a good 25 days before your due date) on your balance, if you don't pay off your balance by your due date. However, you can choose to not pay your balance by your due date upto 30 days and they will not report your late payment to credit agencies. If they ask you to pay interest, you can negotiate yourself out of it as well (although not sure if it will work every-time if you make it a habit!) Be careful though: not all banks report your credit utilization based on your statement balance! DCU for example, reports your credit utilization based on your end-of-the-month balance. This can affect your short term credit score (history?) and mess around with your chances of pulling off these tricks with the bank CSRs. These \"\"little tricks\"\" can effectively net you more than 60 days of interest free loans, but I am not sure if anyone will condone this as a habit, especially on this website :-)\"",
"title": ""
},
{
"docid": "b6e0300830e19caf1b13f8bd9eb5c947",
"text": "In my experience dealing with credit cards and store cards, you may find that the store card is much more flexible than the credit card in terms of the enforcement of the card agreement. For instance, I've missed payments on credit cards and only been 1 day late and saw a rate increase, but on a store card when the same thing happened, it was like they didn't even notice. Granted, this was a 100% store card with no VISA/MC logo on it, and it was through their bank. This may not be true of all store cards and your experience may differ, but I felt like the store card was more of a tool for acquiring the merchandise and helping the store make a sale than it was for some big bank to make money off of my interest. With credit cards, you are the product, and the bank makes money purely from interest. The store, on the other hand, makes money from selling the product, and credit helps increase sales. My suggestion is to avoid credit altogether as all debt is risk, but if you must use credit, you may have a better experience with the store card. Of course, don't forget to consider the interest rates, payment plan, and other fees that may apply as they may affect your decision in terms of which to go with.",
"title": ""
},
{
"docid": "848ab8b6c4f59f784f99de5bb5c720c8",
"text": "Unless you're running a self-employed business with a significant turnover (more than £150k), you are entitled to use cash basis accounting for your tax return, which means you would put the date of transactions as the payment date rather than the billing date or the date a debt is incurred. For payments which have a lag, e.g. a cheque that needs to be paid in or a bank transfer that takes a few days, you might also need to choose between multiple payment dates, e.g. when you initiated the payment or when it took effect. You can pick one as long as you're consistent: You can choose how you record when money is received or paid (eg the date the money enters your account or the date a cheque is written) but you must use the same method each tax year.",
"title": ""
},
{
"docid": "18e1af1027d619f2518b7ce53d45abf1",
"text": "Check with your bank, usually a statement is either at the same day of month (e.g.: every 15th of the month), or every 30 days (e.g: March 15th, April 14th, May 14th, so forth). From my experience, most credit cards use the same day of month strategy. Keep in mind that if the day is not a business day (e.g.: weekend), the statement is closed either the previous or the next business day.",
"title": ""
}
] |
fiqa
|
30a7ccf79e11afaa3fdfbab5b9ca476a
|
While working overseas my retirement has not gone into a retirement account. Is it going to kill me on the FAFSA?
|
[
{
"docid": "fcf00c058fb795ee2b66e94a51bb9c79",
"text": "\"According to the FAFSA info here, they will count your nonretirement assets when figuring the EFC. The old Motley Fool forum question I mentioned in my comment suggests asking the school for a \"\"special circumstances adjustment to your FAFSA\"\". I don't know much about it, but googling finds many pages about it at different colleges. This would seem to be something you need to do individually with whatever school(s) your son winds up considering. Also, it is up to the school whether to have mercy on you and accept your request. Other than that, you should establish whatever retirement accounts you can and immediately begin contributing as much as possible. Given that the decision is likely to be complicated by your foreign income, you should seek professional advice from an accountant versed in such matters.\"",
"title": ""
},
{
"docid": "1c822fcf2b5ec83d30e82a9cfed95cce",
"text": "Are the schools going to count all my retirement I've saved over the last 20 years as assets and calculate my EFC on 5.x% of that?! Yes.",
"title": ""
}
] |
[
{
"docid": "ad04daeb3d0cbecfa093e1702e2200b8",
"text": "\"I was told if I moved my 401k into a Roth IRA that school purposes is one reasons you can withdraw money without having to pay a tax. Incorrect. You will need to pay tax on the amount converted, since a 401(k) is pre-tax and a Roth IRA is after-tax. It will be added to your regular income, so you will pay tax at your marginal tax rate. is there any hidden tax or fee at all for withdrawing money from a Roth IRA for educational purposes? You still will need to pay the tax on the amount converted, but you'll avoid the 10% penalty for early withdrawal. I know that tuition, books and fees are covered for educational purposes. Can I take out of my Roth IRA for living expenses while I'm attending school? Rent, gas, food, etc... Room and board, yes, so long as you are half-time, but not gas/food Possibly only room and board for staying on-campus, but I'm not certain, although I doubt you could call your normal house payment \"\"education expense\"\" with my 401k being smaller, would it just be better to go ahead and cash the whole thing and just pay the tax and use it for whatever I need it for? What is the tax if I just decide to cash the whole thing in? You pay your marginal tax rate PLUS a 10% penalty for early withdrawal. So no, this is probably not a wise move financially unless you're on the verge of bankruptcy or foreclosure (where distress costs are much higher then the 10% penalty) I can't answer the other questions regarding grants; I would talk to the financial aid department at your school. Bottom line, transferring your 401(k) is very likely a bad idea unless you can afford to pay the tax in cash (meaning without borrowing). My advice would be to leave your 401(k) alone (it's meant for retirement not for school or living expenses) Ideally, you should pay for as much as you can out of cash flow, and don't take out more student loans. That may mean taking fewer classes, getting another part time job, finding a different (cheaper) school, applying for more grants and scholarships, etc. I would not in ANY circumstance cash out your 401(k) to pay for school. You'll be much worse off in the long run, and there are much cheaper ways to get money.\"",
"title": ""
},
{
"docid": "5d7f244020437e6a98abac60a57ca848",
"text": "While it’s your personal choice on HOW you save for later its essential that you save. My sister works in a bank and recommended me not to put any money into retirement plans since the tax-advances seem fine but have to paid back when you take the money out of the accounts (in Switzerland, don't know about the united states). Many reasons exist that you suddenly need the money: Buying a house, needing a new car, health issues or just leaving the country forever (and the government trying to make it as hard as possible for you to get your money back). I recommend putting it on a savings account on a different bank that you normally use, without any cards and so on. In short: It can be dangerous to have money locked away – especially if you could easily have it at your hands and you know you're able to manage it.",
"title": ""
},
{
"docid": "b4888bff0729195733eff5acf5f368f1",
"text": "\"I'm in a similar situation. First, a 529 plan can be use for \"\"qualifying\"\" international schools. There are 336 for 2015, which includes many well known schools but also excludes many schools, especially lower level or vocational schools and schools in non-English speaking countries. I ran 3 scenarios to see what the impact would be if you invested $3000 a year for 14 years in something tracking the S&P 500 Index: For each of these scenarios, I considered 3 cases: a state with 0% income tax, a state with the median income tax rate of 6% for the 25% tax bracket, and California with an income tax rate of 9.3% for the 25% tax bracket. California has an addition 2.5% penalty on unqualified distributions. Additionally, tax deductions taken on contributions that are part of unqualified distributions will be viewed as income and that portion of the distribution will be taxed as such at the state level. Vanguard's 500 Index Portfolio has a 10 year average return of 7.63%. Vanguard's S&P 500 Index fund has a 10 year average return of 7.89% before tax and 7.53% after taxes on distributions. Use a 529 as intended: Use a 529 but do not use as intended: Invest in a S&P 500 Index fund in a taxable account: Given similar investment options, using a 529 fund for something other than education is much worse than having an investment in a mutual fund in a taxable account, but there's also a clear advantage to using a 529 if you know with certainty you can use it for qualified expenses. Both the benefits for correct use of a 529 and the penalties for incorrect use increase with state tax rates. I live in a state with no income tax so the taxable mutual fund option is closer to the middle between correct and incorrect use of a 529. I am leaning towards the investment in a taxable account.\"",
"title": ""
},
{
"docid": "2669a33346db6bd7409b21f9213218ad",
"text": "Don't frett to much about your retirement savings just put something towards it each year. You could be dead in ten years. You should always try to clear out debt when you can. But don't wipe yourself out! Expedite the repayment process.",
"title": ""
},
{
"docid": "e4ad5de991424ab48e01a72ac5cbd3ac",
"text": "\"I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The \"\"pay early\"\" question seems to hit an emotional nerve with most people. While I start with the above and then segue to \"\"would you be happy with a long term 5% return?\"\" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than \"\"paid in full\"\" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free.\"",
"title": ""
},
{
"docid": "cefa541aa15ef7357fbfaa6eafd73265",
"text": "I would go here and play with the FASFA financial aid calculator to see if you qualify for grants, which is probably your ultimate objective. It would seem to me that qualified retirement contributions do not count towards eligibility provided you are younger than 59.5, and even then it would be questionable.",
"title": ""
},
{
"docid": "d207ee331864241d260bee9c73f4be88",
"text": "If you can afford it, there are very few reasons not to save for retirement. The biggest reason I can think of is that, simply, you are saving in general. The tax advantages of 401k and IRA accounts help increase your wealth, but the most important thing is to start saving at an early age in your career (as you are doing) and making sure to continue contributing throughout your life. Compound interest serves you well. If you are really concerned that saving for retirement in your situation would equate to putting money away for no good reason, you can do a couple of things: Save in a Roth IRA account which does not require minimum distributions when you get past a certain age. Additionally, your contributions only (that is, not your interest earnings) to a Roth can be withdrawn tax and penalty free at any time while you are under the age of 59.5. And once you are older than that you can take distributions as however you need. Save by investing in a balanced portfolio of stocks and bonds. You won't get the tax advantages of a retirement account, but you will still benefit from the time value of money. The bonus here is that you can withdraw your money whenever you want without penalty. Both IRA accounts and mutual fund/brokerage accounts will give you a choice of many securities that you can invest in. In comparison, 401k plans (below) often have limited choices for you. Most people choose to use their company's 401k plan for retirement savings. In general you do not want to be in a position where you have to borrow from your 401k. As such it's not a great option for savings that you think you'd need before you retire. Additionally 401k plans have minimum distributions, so you will have to periodically take some money from the account when you are in retirement. The biggest advantage of 401k plans is that often employers will match contributions to a certain extent, which is basically free money for you. In the end, these are just some suggestions. Probably best to consult with a financial planner to hammer out all the details.",
"title": ""
},
{
"docid": "4c6948eab7cf70e0b02a20a9372d343b",
"text": "...funds received for the month of death and later must be returned. If the estate is bankrupt, as near as I can tell, the SSA is out of luck. (This applies to payment apart from that covered above.) If you need advice on something other than retirement insurance, a comprehensive list of applicable statutes and rulings is here.",
"title": ""
},
{
"docid": "7b4a6de4abd5979bec69ee4ab7328788",
"text": "The 401(k) contribution is Federal tax free, when you make the contribution, and most likely State too. I believe that is true for California, specifically. There was a court case some years ago about people making 401(k) or IRA contributions in New York, avoiding the New York state income tax. Then they moved to Florida (no income tax), and took the money out. New York sued, saying they had to pay the New York income tax that had been deferred, but the court said no. So you should be able to avoid California state income tax, and then later if you were to move to, for example, Texas (no income tax), have no state income tax liability. At the Federal level, you will have different problems. You won't have the money; it will be held by the 401(k) trustee. When you try to access the money (cash the account out), you will have to pay the deferred taxes. Effectively, when you remove the money it becomes income in the year it is removed. You can take the money out at any time, but if you are less than 59 1/2 at the time that you take it, there is a 10% penalty. The agreement is that the Feds let you defer paying the tax because it is going to finance your retirement, and they will tax it later. If you take it out before 59 1/2, they figure you are not retired yet, and are breaking your part of the agreement. Of course you can generally leave the money in the 401(k) plan with your old employer and let it grow until you are 59.5, or roll it over into another 401(k) with a new employer (if they let you), or into an IRA. But if you have returned to your own country, having an account in the U.S. would introduce both investment risk and currency risk. If you are in another country when you want the money, the question would be where your U.S. residence would be. If you live in California, then go to, say France, your U.S. residence would still be California, and you would still owe California income tax. If you move from California to Texas and then to France, your U.S. residence would be Texas. This is pretty vague, as you might have heard in the Rahm Emanual case -- was he a resident of Chicago or Washington, D.C.? Same problem with Howard Hughes who was born in Texas, but then spent most his life in California, then to Nevada, then to Nicaragua, and the Bahamas. When he died Texas, California and Nevada all claimed him as a resident, for estate taxes. The important thing is to be able to make a reasonable case that you are a resident of where ever you want to be -- driver's license, mailing address, living quarters, and so on.",
"title": ""
},
{
"docid": "eb0aaf07385a614da2199677cdbf2c77",
"text": "Look into the Coverdell Education Savings Account (ESA). This is like a Roth IRA for higher education expenses. Withdrawals are tax free when used for qualified expenses. Contributions are capped at $2000/year per beneficiary (not per account) so it works well for young kids, and not so well for kids about to go to College. This program (like all tax law) are prone to changes due to action (or inaction) in the US Congress. Currently, some of the benefits are set to sunset in 2010 though they are expected to be renewed in some form by Congress this year.",
"title": ""
},
{
"docid": "85a5d77aeba67dafed30a54c183028fe",
"text": "Why not just hold that cash until you graduate from college? Why? Because it's a safety net - make sure you don't have any sudden expenses (medical, school bills, car bills, etc). Then after school you're going to need some cash for job moving, relocation, clothes, downpayment on apartment, utilities, etc. If all that cash is tied up into a 401 or IRA then you can't touch it and if something happens you'll be tempted to take a loan out. Ack! You'll have plenty of time since you're just starting to save for retirement. Keep this cash as a beginning emergency fund and hang on cause as soon as you get out of school things really move fast. :)",
"title": ""
},
{
"docid": "5c31fd2ca20d45cccad3bed1bf0859cf",
"text": "\"Well.... If you have alllll your money invested, and then there's a financial crisis, and there's a personal crisis at the same time (e.g. you lose your job) then you're in big trouble. You might not have enough money to cover your bills while you find a new job. You could lose your house, ruin your credit, or something icky like that. Think 2008. Even if there's not a financial crisis, if the money is in a tax-sheltered retirement account then withdrawing it will incur ugly penalities. Now, after you've got an emergency fund established, things are different. If you could probably ride out six to twelve months with your general-purpose savings, then with the money you are investing for the long term (retirement) there's no reason you shouldn't invest 100% of the money in stocks. The difference is that you're not going to come back for that money in 6 months, you're going to come back for it in 40 years. As for retirement savings over the long term, though, I don't think it's a good idea to think of your money in those terms. If you ever lose 100% of your money on the stock market while you've invested in diversified instruments like S&P500 index funds, you're probably screwed one way or another because that represents the core industrial base of the US economy, and you'll have better things to worry about, like looking for a used shotgun. Myself, I prefer to give the suggestion \"\"don't invest any money in stocks if you're going to need to take it out in the next 5 years or so\"\" because you generally shouldn't be worried about a 100% loss of all the money in stocks your retirement accounts nearly so much as you should be worried about weathering large, medium-term setbacks, like the dot-com bubble crash and the 2008 financial crisis. I save the \"\"don't invest money unless you can afford to lose it all\"\" advice for highly speculative instruments like gold futures or social-media IPOs. Remember also that while you might lose a lot of your money on the stock market, your savings accounts and bonds will earn you pathetic amounts by comparison, which you will slowly lose to inflation. If you've had your money invested for decades then even during a crash you may still be coming out ahead relative to bonds.\"",
"title": ""
},
{
"docid": "a2c8cb46019e0553b262d0e0e3d9557d",
"text": "\"You are not allowed to take a retirement account and move it into the beneficiary's name, an inherited IRA is titled as \"\"Deceased Name for the benefit of Beneficiary name\"\". Breaking the correct titling makes the entire account non-retirement and tax is due on the funds that were not yet taxed. If I am mistaken and titling remained correct, RMDs are not avoidable, they are taken based on your Wife's life expectancy from a table in Pub 590, and the divisor is reduced by one each year. Page 86 is \"\"table 1\"\" and provides the divisor to use. For example, at age 50, your wife's divisor is 34.2 (or 2.924%). Each year it decrements by 1, you do not go back to the table each year. It sounds like the seller's recommendation bordered on misconduct, and the firm behind him can be made to release you from this and refund the likely high fees he took from you. Without more details, it's tough to say. I wish you well. The only beneficiary that just takes possession into his/her own account is the surviving spouse. Others have to do what I first described.\"",
"title": ""
},
{
"docid": "79f294f36463e93c64fe0b40f68bb3de",
"text": "\"If it is planned, then one can get a Bankers Check payable overseas; if destination is known. 1.) What will happen to the money? It will eventually go to Government as escheating. Unlcaimed.org can help you trace the funds and recover it. 2.) Will the banks close the accounts? 3.) After how much time will the banks close the accounts? Eventually Yes. If there is no activity [Note the definition of activity is different, A credit interest is not considered as activity, a authentic phone call / correspondence to change the address or any servicing request is considered activity] for a period of One year, the account is classified as \"\"Dormant\"\". Depending on state, after a period of 3-5 years, it would be inactive and the funds escheated. i.e. handed over to Government. 4.) Is there anything else to do? Any ideas? Before leaving? Try keeping it active by using internet banking or credit / debit cards linked to the account. These will be valid activities. 5.) Is there any way to send a relative to the US with any kind of paper of power, to unfreeze the accounts? 6.) The banks say they would need a power of attorney, but does that person actually need to be an attorney in the US, or can it simply be a relative WITH a paper (a paper that says power of attorney) or what is a power of attorney exactly, is it an actual attorney person, or just a paper? 7.) Is there any other way to unfreeze the accounts? Although I can confirm first hand; I think there would be an exception process if a person cannot travel to the Bank. It could even be that a person is in some remote state, not well etc and can't travel in person. I think if you are out of country, you could walk-in to an US embassy and provide / sign relevant documents there and get it attested. Although for different purpose, I know a Power of Attorney being created in other country and stamped / verified by US embassy and sent it over to US. This was almost a decade back. Not sure about it currently.\"",
"title": ""
},
{
"docid": "5cbb996244fc60be4ce51aa99ccabc02",
"text": "The short Answer is NO, HMRC do not like disguised employment which is what this is as you fall under IR35 you can bill them via an umbrella company and you should be charging the contractor rate not a permie rate. http://www.contractoruk.com/",
"title": ""
}
] |
fiqa
|
86ed7fcc2e9b3102f5c3e5675e30fae0
|
Negatives to increased credit card spending limit? [duplicate]
|
[
{
"docid": "02438e9bb394de18945773d7b7842e30",
"text": "The only drawback is if you spend more than you can with the new limit and end up having to pay interest if you can't pay the balance in full. Other than that, there are no drawbacks to getting a credit increase. On the flip side, it's actually good for you. It shows that the banks trust you with more credit, and it also decreases your credit utilization ratio (assuming you spend the same).",
"title": ""
},
{
"docid": "9ac0a14ae3c068850a23e474e5795d7a",
"text": "There is another drawback, and this is why I keep a low-limit card for online purchases and another for carrying in risky/unfamiliar situations (e.g. travelling) a small limit acts as as damage limitation in the event of theft. In theory you may not be liable if your card is stolen and used. In practice you may be out of pocket for a considerable amount of time, and trying to spend large sums on an overlimit card will soon trip it up (especially if those large sums are out of the ordinary)",
"title": ""
},
{
"docid": "e8a2434e4e41ba2a70e1dd06ac106b53",
"text": "The one big drawback I know is when you take the mortgage credit, your credit ability is calculated, and from that sum all of your credits are subtracted, and credit limit on credit card counts as credit... I don't know if it is worldwide praxis, but at least it is the case in Poland.",
"title": ""
},
{
"docid": "2d961e641ce8db03c4e7d97f1aca6034",
"text": "\"https://money.stackexchange.com/a/79252/41349 https://money.stackexchange.com/a/79261/41349 Adding to @Chris H answer about damage limitation Online purchases could include phone/tablet app purchases, which could be an issue if you have children or you are a victim of fraud. First link from googling \"\"Kid racks up almost $6,000 on Jurassic World in-app purchases\"\" Adding to @Michael C. Answer I think credit cards perhaps can make it more difficult to budget, if you are more lazy/have limited savings. These might happen more long term if you don't keep track of your spending. I.e. If your credit limit matches your monthly income, and if you pay off your card each month, I think it is harder to overspend as you don't have more credit available than you can afford to spend. However this is countered by that, a slightly higher credit limit may help to avoid fees from exceeding your credit card limit. I think due to that some/not all purchases are instantly \"\"banked\"\", i.e. the shop might send all of its monies to its bank at the end of the day or something like this, so you can just keep spending not realising you have exceeding your credit limit and get hit by fees.\"",
"title": ""
}
] |
[
{
"docid": "ada9b365d608336a462040cce275f6ab",
"text": "The old underwriting standards were 28% home debt to income ratio and 33% consumer debt to income ratio. Consumer debt is calculated based on minimum payments. Now, most models are revised upwards... I believe 33/38 is more common today. As long as you are current on the accounts, closing credit or store revolving accounts will have little or no bearing. Just leave them dormant... there is no positive result from closing accounts that have no balance. Having low or no balances has NO negative impact on your credit score. Low balances are NOT red flags to lenders. Period. Here's a quote from Fair Issac: It's just not true that you can have too much available credit. That by itself is never a negative with the score. Sometimes the things you do to get too much can be a problem, such as opening a bunch of new accounts, but for the most part, that's just kind of an old wives' tale. The major drivers of credit scoring are: To improve your prospects for getting a mortgage, you should be reducing your spending and focusing 60/40 on saving for a down payment and paying down that $15k credit card, respectively. Having cash for a down payment is critical to your buying power, as zero-down loans aren't widely available in 2011, and a large downpayment will allow you to eliminate or reduce the time you are paying PMI. PMI reduces your buying power, and is a big waste of money.",
"title": ""
},
{
"docid": "3654c49e93418a601245e84ca431ad22",
"text": "How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score? might answer your question if US based. In the US, what counts is what shows on the bill. I've run $20K through a card with a $10K limit, but still ended the month under $2K by making extra payments. As long as you stay ahead of the limit by making mid-cycle payments, I see no issue with this strategy. If you keep running $30K/mo through a card with a $10K limit, the bank will eventually catch this and raise your limit as you will have proven you are more credit worthy.",
"title": ""
},
{
"docid": "1a495a945460a40e2af146c24b9cb52f",
"text": "Credit scoring has changed since the time of this question (July 2017) and it is now possible that having a high available credit balance can negatively affect your credit score. ... VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly. Those who have prime credit scores may be hurt the most, since they are most likely to have multiple cards open. But those who like to play the credit card rewards program points game could be affected as well. source",
"title": ""
},
{
"docid": "7d87c699d1503768a304fa752a29f7e3",
"text": "Your score is real-time, updating every time new data hits the reporting agencies. Dilip is correct, go over 20%, and it will hit the report, but then the score returns to normal after the next bill shows a sub-20% utilization. Say your average spending is $1000, but your limit is $5000. There's no harm in asking for a small increase in the limit, or simply pay a bit toward the bill before the statement is cut. The bill and reported balance will be lower and your score, unaffected.",
"title": ""
},
{
"docid": "61485d3efeea291b92489c0fa68a02c2",
"text": "I wouldn't say you should have any particular limit, but it can't hurt to have a higher limit. I'd always accept the increase when offered, and feel free to request it sometimes, just make sure you find out if it will be a hard or soft inquiry, and pass on the hard inquires. From my own experience, there doesn't seem to be any rhyme or reason to the increases. I believe each bank acts differently based on the customer's credit, income, and even the bank's personal quotas or goals for that period. Here is some anecdotal evidence of this: I got my first credit card when I was 18 years old and a freshman in college. It had a limit of $500 at the time. I never asked for a credit line increase, but always accepted when offered one, and sometimes they didn't even ask, and in the last 20 years it worked it's way up to $25K. Another card with the same bank went from $5K to $15K in about 10 years. About 6 years ago I added two cards, one with a $5K limit and one with a $3K limit. I didn't ask for increases on those either, and today the 5K is up to $22K, and the 3K is still at $3K. An even larger disparity exists on the business side. Years ago I had two business credit cards with different banks. At one point in time both were maxed out for about 6 months and only minimums were being paid. Bank 1 started lowering my credit limit as I started to pay off the card, eventually prompting me to cancel the card when it was paid in full. At the same time Bank 2 kept raising my limit to give me more breathing room in case I needed it. Obviously Bank 1 didn't want my business, and Bank 2 did. Less than a year later both cards were paid off in full, and you can guess which bank I chose to do all of my business with after that.",
"title": ""
},
{
"docid": "17e6cb39363323512e4c56d5b0e5e694",
"text": "Credit cards and debit cards make up the bulk of the transactions in the US. Visa and Mastercard take a percentage of each credit card transaction. For the most part, this fee it built into the price of what you buy. That is, you don't generally pay extra at the grocery store if you use a credit card (gasoline purchases are a notable exception here.) If you were getting something like 2% of a third of all the retail transactions in the US, you'd probably not want to rock the boat too much either. Since there is little fraud relative to the amount of money they are taking in, and it can often be detected using statistical analysis, they don't really stand to gain that much by reducing it through these methods. Sure they can reduce the losses on the insurance they provide to the credit card consumer but they risk slowing down the money machine. These companies want avoid doing something like reducing fraud by 0.5% revenues but causing purchases with the cards drop by 1%. More security will be implemented as we can see with the (slow) introduction of chip cards in the US but only at a pace that will prevent disruption of the money machine. EMV will likely cause a large drop in CC fraud at brick-and-mortar stores but won't stop it online. You will likely see some sort of system like you describe rolled out for that eventually.",
"title": ""
},
{
"docid": "fad9d64626f90023c966ca639615a523",
"text": "Every reward program has to have a funding source. If the card gives you x percent back on all purchases. That means that their business is structured to entice you to pump more transactions through the system. Either their other costs are lower, or the increased business allows them to make more money off of late fees, and interest. If the card has you earn extra points for buying a type of item or from a type of store (home stores improvement in the Spring), they are trying to make sure you use their card for what can be a significant amount of business during a small window of time. Sometimes they cap it by saying 5% cash back at home improvement stores during the spring but only on the first $1500 of purchases. That limits it to $75 maximum. Adding more business for them, makes more money for them. Groceries and gas are a good year round purchase categories. Yes there is some variation depending on the season, and the weather, but overall there is not an annual cliff once the season ends. Gas and groceries account for thousands of dollars a year these are not insignificant categories, for many families are recession proof. If they perceive a value from this type of offer they will change their buying behavior. My local grocery store has a deal with a specific gas station. This means that they made a monetary deal. Because you earn points at the grocery store and spend points at the gas station, the grocery store is paying some compensation to the gas station every time you use points. The gas station must be seeing an increase in business so theoretically they don't get 100% compensation from the grocery store. In cases where credit cards give airline miles, the credit card company buys the miles from the airline at a discount because they know that a significant number of miles will never be used.",
"title": ""
},
{
"docid": "0e82dc8fadcfa9887733a3d37adfb011",
"text": "Incredible article, tons of data. Thank you! It does answer the above posters question if you're willing to read through. It provides data with and without 'revolving debt'. Side note; interesting to see how age and income trend. Debt increasing during the family-middle aged years, and during the peak income earning years. I'd say you want these credit card debt lower overall and on average; but with the distribution it may be sustainable.",
"title": ""
},
{
"docid": "e6d386b73dc66d3d6398075753f99043",
"text": "Personally the main disadvantages are perpetuation of the credit referencing system, which is massively abused and woefully under regulated, and encouraging people to think that it's ok to buy things you don't have the money to buy (either save up or question price/necessity).",
"title": ""
},
{
"docid": "a6734fb004cec0b47e1fe3632aba0ffa",
"text": "Unless a study accounts for whether the users are following a budget or not, it is irrelevant to those who are trying to take their personal finances seriously. I can certainly believe that those who have no budget will spend more on a credit card than they will on a debit card or with cash. Under the right circumstances spending with cards can actually be a tool to track and reduce spending. If you can see on a monthly and yearly basis where all of your money was spent, you have the information to make decisions about the small expenses that add up as well as the obvious large expenses. Debit cards and credit cards offer the same advantage of giving you an electronic record of all of your transactions, but debit cards do not come with the same fraud protection that credit cards have, so I (and many people like me) prefer to use credit cards for security reasons alone. Cash back and other rewards points bolster the case for credit cards over debit cards. It is very possible to track all of your spending with cash, but it is also more work. The frustration of accounting for bad transcriptions and rechecking every transaction multiple times is worth discussing too (as a reason that people get discouraged and give up on budgeting). My point is simply that credit cards and the electronic records that they generate can greatly simplify the process of tracking your spending. I doubt any study out there accounts for the people who are specifically using those benefits and what effect it has on their spending.",
"title": ""
},
{
"docid": "6989fe08953b803f5a250654774b1f23",
"text": "It is an issue of both utilization and average age of accounts. If your cards with $0 balances on them are: A) newer cards than the ones you are carrying balances on and you don't want them B) much lower limit cards than the ones you are carrying balances on then you can raise your score by closing them, as the utilization change won't be a large factor and you can raise the average age of your open accounts.",
"title": ""
},
{
"docid": "0bfbeea865a7de3a370c39b733d0c35e",
"text": "1- To max out rewards. I have 5 different credit cards, one gives me 5% back on gas, another on groceries, another on Amazon, another at restaurants and another 2% on everything else. If I had only one card, I would be missing out on a lot of rewards. Of course, you have to remember to use the right card for the right purchase. 2- To increase your credit limit. One card can give you a credit limit of $5,000, but if you have 4 of them with the same limits, you have increased your purchasing power to $20,000. This helps improve your credit score. Of course, it's never a good idea to owe $20,000 in credit card debt.",
"title": ""
},
{
"docid": "9e2725a626169f8bb0452fe6787d91dd",
"text": "The credit limit is not going to be the problem; the daily spending limit is more likely be tripped first. I'm not a lawyer but if you are not responsible for the credit card details being leaked it is very unlikely that the bank will be able to charge you for fraudulent spending on the card. The important thing is to notify the bank as soon as possible once you realize there is a problem and if practical keep evidence of that notification, it will then be the banks problem to fix. From my understanding Singapore has relatively good consumer protection and it is unlikely the bank will get very far even if they try to charge you.",
"title": ""
},
{
"docid": "870aab5ad61853f1b6b2527b6be59621",
"text": "\"Others have commented on the various studies. If, as JoeTaxpayer says, this one particular study he mentions does not really exist, there are plenty of others. (And in that case: Did someone blatantly lie to prove a bogus point? Or did someone just get the name of the organization that did the study wrong, like it was really somebody called \"\"B&D\"\", they read it as \"\"D&B\"\" because they'd heard of Dun & Bradstreet but not of whoever B&D is. Of course if they got the organization wrong maybe they got important details of the study wrong. Whatever.) But let me add one logical point that I think is irrefutable: If you always buy with cash, there is no way that you can spend more than you have. When you run out of cash, you have no choice but to stop spending. But when you buy with a credit card, you can easily spend more than you have money in the bank to pay. Even if it is true that most credit card users are responsible, there will always be some who are not, and credit cards make it easy to get in trouble. I speak from experience. I once learned that my wife had run up $20,000 in credit card debt without my knowledge. When she divorced me, I got stuck with the credit card debt. To this day I have no idea what she spent the money on. And I've known several people over the years who have gone bankrupt with credit card debt. Even if you're responsible, it's easy to lose track with credit cards. If you use cash, when you take out your wallet to buy something you can quickly see whether there's a lot of money left or not so much. With credit, you can forget that you made the big purchase. More likely, you can fail to add up the modest purchases. It's easy to say, \"\"Oh, that's just $100, I can cover that.\"\" But then there's $100 here and $100 there and it can add up. (Or depending on your income level, maybe it's $10 here and $10 there and it's out of hand, or maybe it's $10,000.) It's easier today when you can go on-line and check the balance on your credit card. But even at that, well just this past month when I got one bill I was surprised at how big it was. I went through the items and they were all legitimate, they just ... added up. Don't cry for me, I could afford it. But I had failed to pay attention to what I was spending and I let things get a little out of hand. I'm a pretty responsible person and I don't do that often. I can easily imagine someone paying less attention and getting into serious trouble.\"",
"title": ""
},
{
"docid": "2eac5e82a4c0a19adf1606429e902086",
"text": "From my 2003 Colorado experience here: Earnest money shows that your offer is legit and is held until escrow as you recall correctly. I assumed you meant escrow money, because I cannot think of any other non-refundable deposit you'd put on a home. Perhaps for a new home or a manufactured home?",
"title": ""
}
] |
fiqa
|
8d039d928b60090fcdb652e1ba82bb17
|
If I want to take cash from Portugal to the USA, should I exchange my money before leaving or after arriving?
|
[
{
"docid": "ac45f2f3493e3a94831f9570e181d4c0",
"text": "in my experience no-cash transactions are the best deal. Take your Portuguese credit card, get some cash ($60) for emergencies. Only pay with your credit card. It's much cheaper because it's all virtual. The best would be to set up an American bank account and transfer the money there. You can also get Paypal account, they offer credit cards too. The virtual banks, credit unions are the best option because they don't charge you for transactions. They don't have expenses with keeping actual money. Find some credit Union that accepts foreigners and take it from there. You can exchange your money on the airport because it's in tax free zone. I recommend the country of the currency since they sell you their 'valuts' and you are buying dollars. Not selling Euros... Make sure to find out what is the best deal.",
"title": ""
},
{
"docid": "ef274fde8ff9993d7e6a2b343d34d339",
"text": "\"You can find lots of answers to this question by googling. I found at least five pages about this in 30 seconds. Most of these pages seem to say that if you must convert cash, converting it in the destination country is probably better, because you are essentially buying a product (in this case, dollars), and it will cheaper where the supply is greater. There are more dollars in the USA than there are in Portugal, so you may be able to get them cheaper there. (Some of those pages mention caveats if you're trying to exchange some little-known currency, which people might not accept, but this isn't an issue if you're converting euros.) Some of those pages specifically recommend against airport currency exchanges; since they have a \"\"captive audience\"\" of people who want to convert money right away, they face less competition and may offer worse rates. Of course, the downside of doing the exchange in the USA is that you'll be less familiar with where to do it. I did find some people saying that, for this reason, it's better to do it in your own country where you can shop around at leisure to find the best rate. That said, if you take your time shopping around, shifts in the underlying exchange rate in the interim could erase any savings you find. It's worth noting, though, that the main message from all these pages is the same: don't exchange cash at all if you can possibly avoid it. Use a credit card or ATM card to do the exchange. The exchange rate is usually better, and you also avoid the risks associated with carrying cash.\"",
"title": ""
},
{
"docid": "397db742bda6c868bf076dce710d52be",
"text": "My experience (from European countries, but not Portugal specifically) is that it's better to change in the European country, as many banks will give you US $ as a matter of course, while in the US (insular place that it is), it can be rather difficult to find a place to exchange money outside an international airport. In fact, I have a few hundred Euros left from my last trip, several years ago. Expected to make another trip which didn't come off, and haven't found a place to exchange them. PS: Just for information's sake, at the time I was working in Europe, and found that by far the easiest way to transfer part of my salary back home was to get $100 bills from my European bank. Another way was to withdraw money from an ATM, as the US & European banks were on the same network. Unfortunately the IRS put a stop to that, though I don't know if it was all banks, or just the particular one I was using. Might be worth checking, though.",
"title": ""
},
{
"docid": "b2aadd8b941dcefd97754d89abc722d6",
"text": "I would just rely on the salary from my job in the US. If you don't have a job in the US, you're very unlikely to get a visa to move there and look for work, and so the question of how to take money there (except for a holiday) doesn't arise. (Unless you have dual Portuguese/American citizenship.)",
"title": ""
}
] |
[
{
"docid": "6af61f5dd721d751f9540dbf2bfab952",
"text": "You can open a NRE account or a NRO account online before you leave the US and transfer the bulk of your money into it. After returning to India, your tax status will be RNOR (Resident but Not Ordinarily Resident) and you can keep the NRE and NRO accounts for several years (three?) and can do whatever you like with the money in them: transfer the money to ordinary (resident) savings accounts, or reconvert back to US dollars for payment of any outstanding bills (e.g. credit card bills) or US taxes for 2017 etc. Don't forget to close your US bank account before you leave. Many banks allow opening of NRE and NRO accounts on-line, though some paperwork needs to be sent in (e.g. copies of passport pages, signature cards etc). In most cases, one month is more than enough time to complete these formalities.",
"title": ""
},
{
"docid": "6d87e11efcd1821a28428fdb83e5d531",
"text": "Most US banks allow to initiate wire transfers online. (I do it regularly with BoA and JPMorgan-Chase) Once you have your account details in Germany, you log on to your US account, set it up, and initiate the transfer; that should go through within one day. The exchange ratio is better than anything you would get buying/selling currency (paper cash money), no matter where you do it. Chase takes a fee of 40$ per online transaction; BoA 45$. The receiving bank might or might not take additional fees, they should be lower though (I have experienced between 0€ and 0.35%). Therefore, it is a good idea to bundle your transfers into one, if you can.",
"title": ""
},
{
"docid": "ba62c505f4d6f363fe60f7ca52e607cf",
"text": "I regularly transfer money from the US to Europe, and have found a simple US check a pretty useful way (if you are not in a hurry): you write a US dollar based check to yourself, and deposit it to a bank in your new location (which implies you open an account in France, yes). It takes some days (somedays 7 days), and then the money will be deposited. The local bank will convert it (so you can walk around and pick a bank that has a rate concept that pleases you, before you open the account), and there will be no fees on the US side (which means you can get every last dollar out of the account). Also, you have the control over how much you pull when - you can write yourself as many checks as you like (assuming you took your checkbook). This was the best rate I could get, considering that wire transfers cost significant fees. There are probably other options. If you are talking serious money (like 100 k$ or more), there will better ways, but most banks will be eager to help you with that. Note that as long as you make interest income in the US, you are required to file taxes in the US; your visa status and location don't matter.",
"title": ""
},
{
"docid": "332c7311f705acec1dd28a25e372bdce",
"text": "I'd have anything you would need for maybe 3-6 months stored up: food, fuel, toiletries, other incidentals. What might replace the currency after the Euro collapses will be the least of your concerns when it does collapse.",
"title": ""
},
{
"docid": "5317a819de3c515bffdc09816c4468cc",
"text": "You should definitely be able to keep the US bank account and credit cards. I'm a UK citizen and resident who worked in the US for a few months (on a temporary visa) many years back and I still have the US bank account from that time. Unless you are planning on moving to the UK permanently, you also should keep your US bank account and cards to make the process of moving back there eventually easier. I would also suggest keeping/moving at least a portion of your savings to the US at regular intervals to insure you against the risk that exchange rates will be against you when you move back. It'll also make things easier when you visit the US as you presumably will every so often - if you use your US account and cards you won't get hit so badly by charges for making each individual payment.",
"title": ""
},
{
"docid": "cd0807d14ae67ad37d5284c750633bce",
"text": "Typically, withdrawing cash from an ATM once abroad gives you the best exchange rate, but check if your bank imposes ATM withdrawal fees. This works well for all major currencies, such as GBP, Euro, Yen, AUD. I've also withdrawn Croatian kunas, Brazilian reais and Moroccan dirhams without any trouble. In Southeast Asia, it may be a different story. Thai ATMs, for example, reportedly impose a surcharge of about $5.",
"title": ""
},
{
"docid": "7d9579caffe876adaaec0604f08c7549",
"text": "Currency exchange is rather the norm than the exception in international wire transfers, so the fact that the amount needs to be exchanged should have no impact at all. The processing time depends on the number of participating banks and their speeds. Typically, between Europe and the US, one or two business days are the norm. Sending from Other countries might involve more steps (banks) which each takes a bit of time. However, anything beyond 5 business days is not normal. Consider if there are external delays - how did you initiate the sending? Was it in person with an agent of the bank, who might have put it on a stack, and they type it in only a day later (or worse)? Or was it online, so it is in the system right away? On the receiver side, how did you/your friend check? Could there be a delay by waiting for an account statement? Finally, and that is the most common reason, were all the numbers, names, and codes absolutely correct? Even a small mismatch in name spelling might trigger the receiving bank to not allocate the money into the account. Either way, if you contact the sender bank, you will be able to make them follow up on it. They must be able to trace where they money went, and where it currently is. If it is stuck, they will be able to get it ‘unstuck’.",
"title": ""
},
{
"docid": "680b056ab2e54bd4a50b6fa72c91b424",
"text": "Option 3 is a pretty unique offering. Nationwide offer free withdrawals abroad, but you need to pay £10 per month (you do get very good travel insurance and other services for that fee too). So I like option 3, good for the average tourist, then pay a nominal % as expected.",
"title": ""
},
{
"docid": "017b585703b7e141a871ab54e579c57b",
"text": "\"If you are going to keep your US bank account for any period of time, the very best option I know of is to withdraw Euros from an atm using your US card once you are in Germany. I draw on my US account regularly (I'm in Munich) and always get the going \"\"mid market\"\" exchange rate, which is better than what you get from a currency conversion service, transfer agency, or bank transfer, and there are no fees from the atm or my bank for the currency conversion or withdrawal. Of course you should check with your bank to verify their rules and fees for atm use internationally. It would also be wise to put a travel advisory on your account to be sure your transaction is not denied because you are out of country.\"",
"title": ""
},
{
"docid": "d81ccba684d73402c54dbdbd18286fb3",
"text": "Once you declare the amount, the CBP officials will ask you the source and purpose of funds. You must be able to demonstrate that the source of funds is legitimate and not the proceeds of crime and it is not for the purposes of financing terrorism. Once they have determined that the source and purpose is legitimate, they will take you to a private room where two officers will count and validate the amount (as it is a large amount); and then return the currency to you. For nominal amounts they count it at the CBP officer's inspection desk. Once they have done that, you are free to go on your way. The rule (for the US) is any currency or monetary instrument that is above the equivalent of 10,000 USD. So this will also apply if you are carrying a combination of GBP, EUR and USD that totals to more than $10,000.",
"title": ""
},
{
"docid": "551209fba299aa15ed4dd94754ca16ad",
"text": "Use prepaid cards. You only have to declare, or mention, or convert CASH. You can get as many $500 prepaid cards as you like and carry them across. US Code only mentions cash, so even if customs thought it was peculiar that you had one thousand prepaid cards in your trunk, it isn't something they look into. Prepaid cards come with small transaction fees though. And of course, you could also use a bank account in America and just withdraw from an ATM in canada. Finally, the FBAR isn't that much of a hassle, in case you did decide to get a canadian bank account. The US Federal Gov't doesn't care about all these crafty things you might do, as long as you are using POST-TAX money. If your foreign account earns interest, then you have some pre-tax money that the US Federal Gov't will care about.",
"title": ""
},
{
"docid": "31fa6913dcce1b5d529f2d45eb778025",
"text": "What sort of amount are we talking about here, and what countries are you travelling to? As long as it's not cash, most countries will neither know or care how much money is in your bank account or on your credit card limit, and can't even check if they wanted to. Even if they can, there are very few countries where they would check without already suspecting you of a crime. I think you're worrying over nothing. Even if it's cash, most countries have no border control anyway, and those who do (UK, Ireland) allow up to £10,000 or so cash without even having to declare it... Just open a second bank account and don't take the card (or cut the card up). Use online banking to transfer money in smaller chunks to your main account. Alternately (or additionally) take a credit card or two with a smaller limit (enough to make sure you're comfortably able to deal with one month plus emergency money). Then set up your regular bank account to pay this credit card off in full every month. If I was really concerned, I'd open a second bank account and add a sensible amount of money to it (enough to cover costs of my stay and avoid questions about whether I can afford my stay, but not so much it would raise question). Then I'd open two credit cards with a limit of perhaps $1000-2000: one covers the costs of living wherever I'm going, the other is for emergencies or if I misjudge and go over my amount per month. Set up your bank to pay these off each month, and you're sorted Honestly, I think you're worrying over nothing. People travel inside Europe every day with millions in the bank and raise no questions. You're legally allowed to have money!",
"title": ""
},
{
"docid": "a6f3673e71cdfeb5998f0abfae96975d",
"text": "In general, to someone in a similar circumstance I might suggest that the lowest-risk option is to immediately convert your excess currency into the currency you will be spending. Note that 'risk' here refers only to the variance in possible outcomes. By converting to EUR now (assuming you are moving to an EU country using the EUR), you eliminate the chance that the GBP will weaken. But you also eliminate the chance that the GBP will strengthen. Thus, you have reduced the variance in possible outcomes so that you have a 'known' amount of EUR. To put money in a different currency than what you will be using is a form of investing, and it is one that can be considered high risk. Invest in a UK company while you plan on staying in the UK, and you take on the risk of stock ownership only. But invest in a German company while you plan on staying in the UK, you take on the risk of stock ownership + the risk of currency volatility. If you are prepared for this type of risk and understand it, you may want to take on this type of risk - but you really must understand what you're getting into before you do this. For most people, I think it's fair to say that fx investing is more accurately called gambling [See more comments on the risk of fx trading here: https://money.stackexchange.com/a/76482/44232]. However, this risk reduction only truly applies if you are certain that you will be moving to an EUR country. If you invest in EUR but then move to the US, you have not 'solved' your currency volatility problem, you have simply replaced your GBP risk with EUR risk. If you had your plane ticket in hand and nothing could stop you, then you know what your currency needs will be in 2 years. But if you have any doubt, then exchanging currency now may not be reducing your risk at all. What if you exchange for EUR today, and in a year you decide (for all the various reasons that circumstances in life may change) that you will stay in the UK after all. And during that time, what if the GBP strengthened again? You will have taken on risk unnecessarily. So, if you lack full confidence in your move, you may want to avoid fully trading your GBP today. Perhaps you could put away some amount every month into EUR (if you plan on moving to an EUR country), and leave some/most in GBP. This would not fully eliminate your currency risk if you move, but it would also not fully expose yourself to risk if you end up not moving. Just remember that doing this is not a guarantee that the EUR will strengthen and the GBP will weaken.",
"title": ""
},
{
"docid": "559926fa2f62e66aaf0c0144d3b5aabb",
"text": "Find a good commercial bank in the us, or almost any bank in Canada, and exchange cash. Or use an ATM card in Canada; the surcharge is often minimal. (Check with your bank before traveling). You may or may not get a good exchange rate from your hotel desk; some view it as a courtesy, others as a service. You may be able to simply pay with American cash, near the border, but check the exchange rate. Or, for small amounts, you can simply not worry about whether you're getting the best possible exchange rate or not. I visit Canada periodically, and I use a mix of these solutions. Including that last one.",
"title": ""
},
{
"docid": "e9751acb6e9a16304e1187f41bf68f52",
"text": "If there are no traded options in a company you can get your broker to write OTC options but this may not be possible given some restrictions on accounts. Going short on futures may also be an option. You can also open a downside CFD (contract for difference) on the stock but will have to have margin posted against it so will have to hold cash (or possibly liquid assets if your AUM is large enough) to cover the margin which is unutilized cash in the portfolio that needs to be factored into any portfolio calculations as a cost. Diversifying into uncorrelated stock or shorting correlated (but low div yield) stock would also have the same effect. stop loss orders would probably not be appropriate as it is not the price of the stock that you are concerned with but mitigating all price changes and just receiving the dividend on the stock. warning: in a crash (almost) all stocks become suddenly correlated so be aware that might cause you a short term loss. CFDs are complex and require a degree of sophistication before you can trade them well but as you seem to understand options they should not be too hard to understand.",
"title": ""
}
] |
fiqa
|
00591a2880b6f89fd8be851e08769cb2
|
Potential phishing scam?
|
[
{
"docid": "a9449b114aa96e622e14f6d14a96e88a",
"text": "\"You need to talk to your bank. If you're unable to contact your bank until Monday, then wait until Monday. Don't fixate on the idea that the transaction may \"\"hard post\"\" on Monday. If it happens, it happens, but it's not the end of the world. Even if the transaction posts, it's not the end of the world. If the retailer is legit, they will refund your money, although it may take some time for things to get sorted out. Even if the transaction posts and the retailer is not legit, it's still not the end of the world. Your bank may help you in trying to recover the funds. That's why you need to talk to your bank. As you have realized, blindly calling the number in the email is not a good idea, because if it's fake, you're calling the scammers. Instead, what you should do is try to contact your bank through known trusted channels. That is, look on your bank's website. Do they have a phone number listed for fraud reporting or related inquiries? Is it the same number you see in the email? If so, you can call it. If it is not the same number, but the number on your bank's website is a 24-hour number, you can call them at that number and tell them the situation. Based on what you've described, my own guess would be that the retailer is legit, but that the unusual large transaction was flagged by your bank as potentially fraudulent, which is why you got the email. The fact that you happened to get the email just after canceling the order could be a coincidence. This is especially true if all this happened in a short time. Information about these transactions can't be transmitted and analyzed instantaneously, nor can emails be sent instantaneously; there may have been a delay in sending the email so it only arrived after the cancellation. As far as your worries about how \"\"enfact\"\" got your info, it is likely a fraud-detection service used by your bank. Doing a bit of googling reveals that it appears to be a legit service, but there have also been instances of phishing attacks using faked \"\"enfact\"\" emails. However, from what I see, these worked by trying to get you to click on a link, not call a phone number. Also, if a scammer is able to send you a scam email that includes your actual order details, that's not a phish, it's an outright hack. In that case the bank and/or retailer (whichever was hacked) would certainly want to know about it and would likely fall all over themselves trying to refund your money to avoid negative PR.\"",
"title": ""
},
{
"docid": "5acb983eea291394cd7c2527da68dd04",
"text": "Call your bank and inquire if they send out the kinds of notices like the one you received. Don't call the number in the message, because if it is a scam, you're calling the scammers themselves, more than likely. Be very cautious about this situation, and if your bank is local then it might not hurt to pay a visit to a local branch to talk to someone in person. Print out the message(s) you receive to show them and let their fraud division look into it.",
"title": ""
}
] |
[
{
"docid": "9a39a08965a080f9539a51b6829a919c",
"text": "This is a scam. Do not give them any money. A quick search on this site will yield many examples of this scam.",
"title": ""
},
{
"docid": "0eff6ff2fd1af79ab4bf06744b3cfdc6",
"text": "\"I doubt it's a scam. It would be extremely difficult (if not impossible) to pay someone money using PayPal and end up getting more than you paid back. PayPal doesn't have the concept of \"\"pulling\"\" money without the owner of the account signing up for a subscription. Otherwise the owner must \"\"push\"\" the payment to the recipient. So, it is very likely that someone simply mistyped an email address which happens to be an alias of yours (since the periods are optional in gmail addresses). As for what to do, I think you've already done the right thing by contacting both PayPal and the sender.\"",
"title": ""
},
{
"docid": "fa3ece4cecb006933c6acff5a5e9000b",
"text": "or is this a form of money laundering? May not be, generally the amounts involved in money laundering are much higher. So if there are quite a few such transactions then yes it could be money laundering. It could also be for circumventing taxes, depending on country regulations one may try to do this to get around gift taxes etc. In this specific case it looks more of link harvesting / SEO optimization. Take a low cost item that is often searched and link to other product. if you see the company link on Amazon; Cougar takes you to shoes. So maybe on its own Cougar shoes does not rank high, so link it with similar name brand in different segment and try to boost the link.",
"title": ""
},
{
"docid": "4931ca9196a891ddf7af02f5cbbd2266",
"text": "It's marketing or SCAM tentative. Please check with extreme attention before clicking any link present in the communication.",
"title": ""
},
{
"docid": "338231cbc70b8a243b50a393e02af534",
"text": "\"Here we go again! Why, oh why, would someone just open a bank account in your name with that much money for no good reason? Unless there's a very rich relative in your family tree, this can not come to a good ending. Besides, if this was money being left to you by someone as part of an inheritance, you'd hear from attorneys from the estate. Notwithstanding everything @NickR posted about the details of what makes it suspicious, ask yourself why a banker would contact you by email about an account with this much money in it. The bank would, at the very least, send you a registered/certified letter on official stationery. So what happens here is when you give them your banking information, whoever it is that's doing this will clean out your account, and that's for starters. They will ask for enough information to steal your identity too, and if you have good credit, that'll be gone in a heartbeat. The best scams (meaning the most successful ones) always appeal to peoples' greed, using large amounts of money that just miraculously belong to the victim, if only they'd give a little information to \"\"transfer\"\" the money. Worse yet, most of these scams will come up with some kind of \"\"fee\"\", \"\"tax\"\" or other expense that you have to pre-pay in order to make the transfer happen, so this just adds insult to injury when you find out (the hard way!) you've been scammed. DO NOT reply to the email you received or, if you already have, don't send any more responses. If they think they may have you on the hook then they won't stop trying, and it will become very messy very quickly. THIS IS NOT REAL MONEY! It isn't yours, it doesn't really exist, and all it will do is come to no good end if you go any further with it. Stay safe, my friend.\"",
"title": ""
},
{
"docid": "ba6bbc6453dd1e08cdff12c9c712c41a",
"text": "\"To add to @Dheer's answer, this is almost certainly a scam. The money deposited into your account is not from a person that made an honest mistake with account numbers. It's coming from someone that has access to \"\"send\"\" money that isn't their own. I don't know exactly what they're doing to \"\"send\"\" the money but at some point in the near future your bank will claw that money back from you on the grounds that it was illegitimately transferred to you in the first place. If you send someone money on the premise that you're returning this money then that will be a separate transaction which won't be undone when the deposit in question is undone. Another possibility is that this person has gained access to an account from which they can send domestic wires but not international wires. Their hope is to send money to someone domestically (you) and that this person will then send the money on to Nigeria. If you comply with them; you, in a worst case scenario, could be seen as a money laundering accomplice in addition to having the deposit taken back from you. It's not very likely you wouldn't be seen as another victim of a scam but people have been thrown in jail for less. You should not respond to this person at all. Don't answer the phone when they call and ignore their emails. Don't delete the emails, it's possible that someone at the bank or LE want them. Call your bank immediately and tell them what's up.\"",
"title": ""
},
{
"docid": "d7ffc224181a7cea2063b198e2da1ab2",
"text": "\"It doesn't matter if the terms are a \"\"fair deal\"\" or are \"\"too good to be true\"\" — either way, it's definitely a scam. They are \"\"phishing\"\" for your personal information, including your banking information, and have no intention of giving you a loan. How can I tell? Simple: all such offers like this everywhere are scams. There is no economic situation other than being a scammer to do this. Why would an individual put out their money to strangers at such a high risk for even a much, much higher purported return? They wouldn't.\"",
"title": ""
},
{
"docid": "3455b56dba1e6486b0bcb33787840b82",
"text": "The scammer is definitely up to something fishy. He (it's certain that the she is a he) may deposit some money into your father's account to gain his trust. After which, he will propose to come meet your dad. That's where the scamming begins. He will come up with a story about flight, VISA issues, or a problem he has to solve before coming over. Another is that he can use your dad's empty account to receive monies he scammed off people. That way there's no direct link with him and his other victim.",
"title": ""
},
{
"docid": "d951bbaa38928391c5551bcad1716fd8",
"text": "This is basically a form of credit card kiting, it's not necessarily illegal but it can be. It is, however, against the TOS in pretty much every merchant agreement (including Paypal and Square), so you'd most likely have your account suspended, and the merchant could pursue legal action if they felt they could prove intent to deceive. It's not practical given actual fee structures, but even if it were, most merchants are quite good at detecting this sort of thing and quick to shut down accounts.",
"title": ""
},
{
"docid": "10b23dddc005f397419d6d2771be33aa",
"text": "Yes it is a scam. There is no money. They are after your personal details so that they can get your money.",
"title": ""
},
{
"docid": "b7d9a5849f2f445daea08fec938a24c5",
"text": "\"You're potentially in very deep water here. You don't know who this person is that you're dealing with. Before you'd even met him, he just gave you his banking info, seemingly without a second thought. You have no idea what the sources of his money are, so what happens if the money is stolen or otherwise illegal? If it is determined that you used any of that money, you'll be on the hook to return it, at the very least. Who knows what the legal ramifications are either? So it sounds like you began spending his money before you had any kind of written agreement in place? Doesn't that seem odd to you to have someone just so trusting as to not even ask for that? Was the source of the email about the $2500 from PayPal, or from him or his advisor? PayPal always sends you a notice directly when funds are received into your account, and even if they were going to put a temporary hold on them for whatever reason (sometimes they do that), it would still show up in your account. I would HIGHLY (can I be more emphatic?) advise you not to go anywhere NEAR his bank account until or unless you can absolutely verify who he is, where his money comes from, and what the situation is. If you start dipping into his account, whether you think you're somehow entitled to the money or not, he could cry foul and have you arrested for theft. This is a very odd situation, and for someone who says he's normally cautious and skeptical, you sure let your guard down here when you started spending his money without making any serious effort to confirm his bona fides. Just because he passes himself off as smart and the \"\"doctor type\"\" doesn't mean squat. The very best scammers can do that (ever see the movie \"\"Catch Me If You Can\"\", based on a true story?), so you have no basis for knowing he's anything at all. I am thoroughly confused as to why you'd just willfully start using his money without knowing anything about him. That's deeply disconcerting, because you've opened yourself up to a world of potential criminal and civil liability if this situation goes south. If this guy was giving you money as an investment in your business and you instead used some of that money for your own personal expenses then you could land in very serious trouble for co-mingling of funds. Even if he told you it was okay, it doesn't sound like there's anything in writing, so he could just as easily deny giving you permission to use the money that way and have you charged with embezzlement. You need to step back, take a deep breath, stop using his money, and contact a lawyer for advice. Every attorney will give you a free consultation, and you need to protect yourself here. Be careful, my friend. If this makes you suspicious then you need to listen to that voice in your head and find a way to get out of this situation.\"",
"title": ""
},
{
"docid": "1ff100a83e490055396424d6e6a9ee73",
"text": "\"GB Stone are known scammers. I don't know why \"\"Joe Taxpayer\"\" removed this essential information from the question.\"",
"title": ""
},
{
"docid": "26df5f84fc25ddd998b843eefed72589",
"text": "\"It is likely a scam. In fact the whole mystery shopping \"\"job\"\" may be a scam. There is a Snopes page about cashier's check scams, as well as a US government page which specifically mentions mystery shopping as a scam angle. As for how the scam works, from the occ.gov site I just linked: However, cashier’s checks lately have become an attractive vehicle for fraud when used for payments to consumers. Although, the amount of a cashier’s check quickly becomes \"\"available\"\" for withdrawal by the consumer after the consumer deposits the check, these funds do not belong to the consumer if the check proves to be fraudulent. It may take weeks to discover that a cashier’s check is fraudulent. In the meantime, the consumer may have irrevocably wired the funds to a scam artist or otherwise used the funds—only to find out later, when the fraud is detected—that the consumer owes the bank the full amount of the cashier’s check that had been deposited. It is somewhat unusual in that, from what you say, there has been no attempt thus far to get money back. However, your sister-in-law may have received that info separately, or received it as part of her mystery shopping job but didn't mention it to you with regard to this check. Typically the scam involves telling the recipient to transfer money to a third party (e.g., by buying goods as a mystery shopper, or via wire transfer to \"\"reimburse\"\" someone associated with a sham operation). By the time the cashier's check is revealed as fraudulent, the victim has already transferred away his/her own real money. It's probably worth taking the check to your or her bank and asking them about it. They may have more info. Also, banks usually want to know about scams like this because, in the long run, they accumulate data on them and share that with law enforcement and can eventually catch some of the scammers. Edit: Just to help anyone who may be reading this later. The letter you added confirms it is absolutely a scam. My boss was once contacted via a scam operation very similar to this. The huge red flag (in addition to others already mentioned) is that you are being \"\"given\"\" a check for over $2000, of which only $25 is purportedly for actual mystery shopping and $285 is payment for you, the mystery shopper. The whole rest of the $2000+ amount is for you to wire to \"\"another Mystery/Secret Shopper in order for them to complete their assignment\"\". They are giving you $2000 to give to someone else who is supposedly another one of their own employees/contractors. Ask yourself what sane business would conduct their operations in this way. If you work at a law office, or a hamburger stand, or a school, or anything you like, does your boss ever say \"\"Here is your paycheck for $5000. I know you only earned $1000, but I'm just going to give you the whole $5000, and you're supposed to use $4000 of it to pay your coworker Joe his wages.\"\" No. There is no reason to do that except that the \"\"other mystery shopper\"\" is actually the scammer.\"",
"title": ""
},
{
"docid": "61107244a7aeebff7fdc6c97f2cf385e",
"text": "\"This is almost certainly a scam or a mistake. This is not good, spendable money: it is not yours to keep. Very simple to handle. Tell the bank, in writing that you were not expecting to receive this money and are a bit surprised to receive it. Preferably in a way that creates a paper trail. And then stop talking. Why? Because you honestly don't know. This puts you at arm's length to the money: disavowing it, but not refusing it. Wildest dreams: nobody wants it back ever. As for the person bugging you for the cash, tell them nothing except work with their own bank. Then ignore them completely. He probably hacked someone else, diverted their money into your account, and he's conning you into transferring it to a third location: him. Leaving you holding the bag when the reversals hit months later. He doesnt want you reversing; that would return the money to the rightful owner! He works this scam on dozens of people, and he wins if some cooperate. Now here's the hard part. Wait. This is not drama or gossip, you do not need to keep people updated. You are not a bank fraud officer who deals with the latest scams everyday, you don't know what the heck you are doing in this area of practice. (In fact, playing amateur sleuth will make you suspicious). There is nothing for you to do. That urge to \"\"do something\"\" is how scammers work on you. And these things take time. Not everyone banks in real time on smartphone apps. Of course scammers target those who'd be slow to notice; this game is all about velocity. Eventually (months), one of two things is likely to happen. The transfer is found to be fraudulent and the bank reverses it, and they slap you with penalties and/or the cops come knockin'. You refer them to the letter you sent, explaining your surprise at receiving it. That letter is your \"\"get out of jail free\"\" card. The other person works with their bank and claws back the money. One day it just disappears. (not that this is your problem, but they'd file a dispute with their bank, their bank talks to your bank, your bank finds your letter, oh, ok.) If a year goes by and neither of these things happens, you're probably in the clear. Don't get greedy and try to manipulate circumstances so you are more likely to keep the money. Scammers prey on this too. I think the above is your best shot.\"",
"title": ""
},
{
"docid": "8af7e8ec477f31b75d3b2a8e326a6fab",
"text": "That sounds pretty fishy to me. I'm an IT professional - I can determine more about him if I have full access to the email headers. Just give me your email and your password so I can log in and check the email he's using to contact you.",
"title": ""
}
] |
fiqa
|
35e1eb606a823934b9079731d890e83e
|
Would cross holding make market capitalization apparently more?
|
[
{
"docid": "8731553b794274231c27787eedc05ebb",
"text": "I started to work out, step by step, why this doesn't work, but the scenario is too convoluted to make that helpful. Basically, you're making mistakes in some or all of the following spots:",
"title": ""
},
{
"docid": "69997fc43a30d7d136f11e2c6cccf3ba",
"text": "Initially, Each company has 10k shares. Company B has $500k money and possibly other assets. Every company has stated purpose. It can't randomly buy shares in some other firm. Company A issued 5k new shares, which gives it $500k money. Listed companies can't make private placements without regulatory approvals. They have to put this in open market via Public issue or rights issue. Company B does the same thing, issuing 5k shares for $500k money. Company A bought those 5k shares using the $500k it just got There is no logical reason for shareholder of Company B to raise 5K from Company A for the said consideration. This would have to increase.",
"title": ""
}
] |
[
{
"docid": "3e363c6bd754da752d1092b160f4188f",
"text": "\"In addition to the answers provided above, the weight the Dow uses to determine the index is not the market capitalization of the company involved. That means that companies like Google and Apple with very high share prices and no particular inclination to split could adversely effect the Dow, turning it into essentially the \"\"Apple and Google and then some other companies\"\" Industrial Average. The highest share price Dow company right now, IIRC, is IBM. Both Google and Apple would have three times the influence on the Index as IBM does now.\"",
"title": ""
},
{
"docid": "10b9336b224f113874eff14b7ee9590a",
"text": "I don't see that this follows. Capital commitments require that one assess the ability to unwind as information changes - market frictions. Thats why private equity demands a premium. HFT is not investing - it is far closer to market making. In that regard it is a social good. What is of a concern is that they are far less supervised than a market maker. They provide liquidity the way bankers provide loans - when it is not essential. The old adage of an umbrella when it is sunny but take them back at the sign of rain. If there are requirements to commit capital and maintain orderly markets with some oversight on their ability to maintain their capital ratios, a shadow market maker, then they should get to enjoy making a spread in exchange for keeping those spreads relatively tight.",
"title": ""
},
{
"docid": "aa196599aea1fbefd2765f38b644ff1f",
"text": "\"This is a good question and my answer below, being the first rationale that crossed my mind, is far from fleshed-out. It's just a reply based on many books on the historical cycles of markets and it's something I've discussed at work (I work in finance). Historically we can observe that periods of financial \"\"booms\"\" entailing high valuations of public equities tend to lead to lower returns. It's a fairly simplistic notion, but if you're paying more now for something - when it's potentially close to a high water mark - then you're returns in the short term are likely to be somewhat stunted. Returns from the underlying companies have a hard time keeping up with high valuations such that investors aren't likely to see a bountiful return in the short run.\"",
"title": ""
},
{
"docid": "e1b1556891c640ff506cac3ad191e843",
"text": "Investopedia has a nice article on this here The Key benefit looks like better returns with lower capital. The disadvantage is few brokers offering that can be trusted. Potentially lower return due to margins / spreads. Higher leverage and can become an issue.",
"title": ""
},
{
"docid": "f4b8f5d68c2f735007219a77e1cb00ca",
"text": "Yes, but also note each exchange have rules that states various conditions when the market maker can enlarge the bid-ask (e.g. for situations such as freely falling markets, etc.) and when the market makers need to give a normal bid-ask. In normal markets, the bid-asks are usually within exchange dictated bounds. MM's price spread can be larger than bid-ask spread only when there are multiple market makers and different market makers are providing different bid-asks. As long as the MM under question gives bid and ask within exchange's rules, it can be fine. These are usually rare situations. One advice: please carefully check the time-stamps. I have seen many occasions when tick data time-stamps between different vendors are mismatched in databases whereas in real life it isn't. MM's profits not just from spreads, but also from short term mean-reversion (fading). If a large order comes in suddenly, the MM increases the prices in one direction, takes the opposite side, and once the order is done, the prices comes down and the MM off-loads his imbalance at lower prices, etc.",
"title": ""
},
{
"docid": "934ef0bc0a19ea24509fa1f5c7af0b94",
"text": "In my original question, I was wondering if there was a mathematical convention to help in deciding on whether an equity offering OR debt offering would be a better choice. I should have clarified better in the question, I used Vs. which may have made it unclear.",
"title": ""
},
{
"docid": "00fdc8a7e86e2d30d633cd91f6f28d61",
"text": "Yes, the larger number of ETFs will have a greater chance of enhancing the effect you observe. It's beyond a simple discussion, but the bottom line is that by carving out the different market segments your rebalancing will have greater impact.",
"title": ""
},
{
"docid": "fb4b88bcf2c456ec3675dac40b8c37c8",
"text": "Is this a time of day effect by using, e.g. closing prices, in markets that close at different times? If so, you can mitigate this by looking at returns over longer periods (weekly, monthly or quarterly). If the cross-listed equities are showing consistently different returns at the exact same time, then you should be more concerned in figuring out how to trade the arbitrage rather than estimating a beta.",
"title": ""
},
{
"docid": "66e0f00ac4ddfe238ea77d6e34291c88",
"text": "Stock markets are supposed to be about investment and providing capital to companies for operations and research. High frequency trading is only about gaming the market and nothing else. Arguments that this provides more capital or liquidity don't make any sense because the speed of trading is such that listed companies cannot take advantage and only high frequency traders are served.",
"title": ""
},
{
"docid": "a001317e3a15d3fcbcfd36349e4e3720",
"text": "\"As a common shareholder, why would I want to approve an increase in the number of authorized shares?\"\" Because it could increase the value of your existing shares. Companies sell new shares to raise capital, and they use capital to (among other things) expand. If Whole Foods issues new shares and uses the capital to opens new stores, then profit could increase enough to offset the dilution effect, and your stock price will go up. You should ask yourself: What areas is is your company of choice planning on expanding into? Will they do well there? Are there better ways for the company to raise capital (debt, cash in hand, cut expenses elsewhere, etc)? If you think that the management has a good plan for expanding, then authorizing new shares makes good sense for you personally.\"",
"title": ""
},
{
"docid": "0e0a17f4cb11fdeada4c57156bbd9bc1",
"text": "No, there is no real advantage. The discrepancies in how they track the index will (generally) be so small that this provides very, very limited diversification, while increasing the complexity of your investments.",
"title": ""
},
{
"docid": "013065f67d464e130ca06a9831fe8fca",
"text": "Everything would depend on whether the calculation is being done using the company's all-time high intraday trading price or all-time high closing price. Further, I've seen calculations using non-public pricing data, such as bid-offer numbers from market makers, although this wouldn't be kosher. The likelihood is that you're seeing numbers that were calculated using different points in time. For the record, I think Apple has overtaken Microsoft's all-time highest market cap with a figure somewhere north of $700 billion (nominal). Here's an interesting article link on the subject of highest-ever valuations: comparison of highest market caps ever",
"title": ""
},
{
"docid": "88eb0c2b6d234fab9d14c3c476390f47",
"text": "I am not a structured products expert, just relaying what's in the article, but I'd imagine it includes a larger equity tranche in the structured product, thereby giving more cushion against losses to the actual debt investors in the tranches above it in the payment water fall.",
"title": ""
},
{
"docid": "fc4e5345b999acd8d5ff16c1ae5ecfa6",
"text": "Yea good points and they definitely should not be overlooked. The whole point of the EV calculation is to get the analyst to look at what the true underlying business is and what one is really paying for when buying securities in a company. Market Cap can be misleading for many reasons and get real annoyed when people say things like, I own XYZ company because its cash account is greater than its market cap....",
"title": ""
},
{
"docid": "4046514c9c1f46c97d5cbb109400ba6e",
"text": "It depends completely on the current order book for that security. There is literally no telling how that buy order would move the price of a stock in general.",
"title": ""
}
] |
fiqa
|
7240358f9b90ffabca237d44aeda4421
|
Buying a mortgaged house
|
[
{
"docid": "97a18181ea7766c38540dd8c3eadfd38",
"text": "Just as a renter doesn't care what the landlord's mortgage is, the buyer of a house shouldn't care what the seller paid, what the current mortgage is, or any other details of the seller's finances. Two identical houses may be worth $400K. One still has a $450K loan, the other is mortgage free. You would qualify for the same value mortgage on both houses. All you and your bank should care about is that the present mortgage is paid or forgiven by the current mortgage holder so your bank can have first lien, and you get a clean title. To answer the question clearly, yes, it's common for a house with a mortgage to be sold, mortgage paid off, and new mortgage put in place. The profit or loss of the homeowner is not your concern.",
"title": ""
},
{
"docid": "e807732a034e0d32a4c0fe25c7b8cd02",
"text": "If someone owns a house that is not paid off...can someone buy it by taking another mortgage? Yes, but I'm not sure why you think the buyer would need to take another mortgage to buy it. If someone sells their home for X dollars, then the buyer needs X dollars to buy the house. How they get that money (use cash, take out a mortgage) is up to them. During the closing process, a portion of the funds generated from the sale are diverted to pay off the seller's loan and any leftover funds after closing are pocketed by the seller. What kind of offer would be most sensible? I assume that in this case the current owner of the house would want to make a profit. The amount that the house is sold for is determined by the market value of their home, not by the size of the mortgage they have left to pay off. You make the same offer whether they own their home or have a mortgage.",
"title": ""
},
{
"docid": "941f1d51b09cabfb7caf10a37e4ae868",
"text": "\"Go on a website that has real estate listings. Find similar homes in the same neighborhood and list out the prices. Once you have prices, pick out two with different prices and call the realtor of the more expensive listing. Tell that realtor about the other listing and ask why their listing is more expensive. Compare their answer to the home that you are considering buying. For example, they may say that their house has a newly remodeled kitchen. Does the house you are considering have a newly remodeled kitchen? If so, then use the higher priced listing and throw out the cheaper one. If not, use the cheap listing and throw out the expensive one. Or they might say that the expensive house is in a better location than the cheaper house. Further away from traffic. Easier to get to the highway or public transportation. If so, ask how the location compares to the house you are actually considering. The realtor will tell you if the listings are comparable. When I talk about \"\"similar homes,\"\" I mean homes that are similar in square footage, number of bedrooms, and number of bathrooms. Generally real estate sites will allow you to search by all of these as well as location. After all this, the potential seller may still turn you down. If he really wanted to sell, he'd have suggested a price. He may just be seeing if you're willing to overpay. If so, he could turn down an otherwise reasonable offer. How much he is willing to take is up to him. Note that this would all be easier if you just bought a house the normal way. Then the realtors would do the comparables portion of the work. You might be able to find a realtor or appraiser who would do the work for a set fee. Perhaps your bank would help you with that, as they have to appraise the property to offer a mortgage. You asked if you can buy out a mortgaged house with a mortgage. Yes, you can. That's a pretty normal occurrence. Normally the realtors would make all the necessary arrangements. I'm guessing that a title transfer company could handle that.\"",
"title": ""
},
{
"docid": "bdfc3e853580c00d5da19e51a2631af0",
"text": "\"Based on what you asked and your various comments on other answers, this is the first time that you will be making an offer to buy a house, and it seems that the seller is not using a real-estate agent to sell the house, that is, it is what is called a FSBO (for sale by owner) property (and you can learn a lot of about the seller's perspective by visiting fsbo.com). On the other hand, you are a FTB (first-time buyer) and I strongly recommend that you find out about the purchase process by Googling for \"\"first-time home buyer\"\" and reading some of the articles there. But most important, I urge you DO NOT make a written offer to purchase the property until you understand a lot more than you currently do, and a lot more than all the answers here are telling you about making an offer to buy this property. Even when you feel absolutely confident that you understand everything, hire a real-estate lawyer or a real-estate agent to write the actual offer itself (the agent might well use a standard purchase offer form that his company uses, or the State mandates, and just fill in the blanks). Yes, you will need to pay a fee to these people but it is very important for your own protection, and so don't just wing it when making an offer to purchase. As to how much you should offer, it depends on how much you can afford to pay. I will ignore the possibility that you are rich enough that you can pay cash for the purchase and assume that you will, like most people, be needing to get a mortgage loan to buy the house. Most banks prefer not to lend more than 80% of the appraised value of the house, with the balance of the purchase price coming from your personal funds. They will in some cases, loan more than 80% but will usually charge higher interest rate on the loan, require you to pay mortgage insurance, etc. Now, the appraised value is not determined until the bank sends its own appraiser to look at the property, and this does not happen until your bid has been accepted by the seller. What if your bid (say $500K) is much larger than the appraised value $400K on which the bank is willing to lend you only $320K ? Well, you can still proceed with the deal if you have $180K available to make the pay the rest. Or, you can let the deal fall apart if you have made a properly written offer that contains the usual contingency clause that you will be applying for a mortgage of $400K at rate not to exceed x% and that if you can't get a mortgage commitment within y days, the deal is off. Absent such a clause, you will lose the earnest money that you put into escrow for failure to follow through with the contract to purchase for $500K. Making an offer in the same ballpark as the market value lessens the chances of having the deal fall through. Note also that even if the appraised value is $500K, the bank might refuse to lend you $400K if your loan application and credit report suggest that you will have difficulty making the payments on a $400K mortgage. It is a good idea to get a pre-approval from a lender saying that based on the financial information that you have provided, you will likely be approved for a mortgage of $Z (that is, the bank thinks that you can afford the payments on a mortgage of as much as $Z). That way, you have some feel for how much house you can afford, and that should affect what kinds of property you should be bidding on.\"",
"title": ""
}
] |
[
{
"docid": "e3114d45827cfc2ab35bae84dc5fce87",
"text": "\"I'm in the \"\"big mortgage\"\" camp. Or, to put this another way - what would you be happier to have in 15 years? A house that is worth $300,000, or $50,000 of equity in a house and $225,000 in the bank? I would much rather have the latter; it gives me so many more options. (the numbers are rough; you can figure it out yourself based on the current interest rate you can get on investments vs the cost of mortgage interest (which may be less if you can deduct the mortgage interest)).\"",
"title": ""
},
{
"docid": "2c4bc25e5ecf9f7dd4e2a49e2fe716ba",
"text": "\"To add to what other have stated, I recently just decided to purchase a home over renting some more, and I'll throw in some of my thoughts about my decision to buy. I closed a couple of weeks ago. Note that I live in Texas, and that I'm not knowledgeable in real estate other than what I learned from my experiences in the area when I am located. It depends on the market and location. You have to compare what renting will get you for the money vs what buying will get you. For me, buying seemed like a better deal overall when just comparing monthly payments. This is including insurance and taxes. You will need to stay at a house that you buy for at least 5-7 years. You first couple years of payments will go almost entirely towards interest. It takes a while to build up equity. If you can pay more towards a mortgage, do it. You need to have money in the bank already to close. The minimum down payment (at least in my area) is 3.5% for an FHA loan. If you put 20% down, you don't need to pay mortgage insurance, which is essentially throwing money away. You will also have add in closing costs. I ended up purchasing a new construction. My monthly payment went up from $1200 to $1600 (after taxes, insurance, etc.), but the house is bigger, newer, more energy efficient, much closer to my work, in a more expensive area, and in a market that is expected to go up in value. I had all of my closing costs (except for the deposit) taken care of by the lender and builder, so all of my closing costs I paid out of pocket went to the deposit (equity, or the \"\"bank\"\"). If I decide to move and need to sell, then I will get a lot (losing some to selling costs and interest) of the money I have put in to the house back out of it when I do sell, and I have the option to put that money towards another house. To sum it all up, I'm not paying a difference in monthly costs because I bought a house. I had my closing costs taking care of and just had to pay the deposit, which goes to equity. I will have to do maintenance myself, but I don't mind fixing what I can fix, and I have a builder's warranties on most things in the house. To really get a good idea of whether you should rent or buy, you need to talk to a Realtor and compare actual costs. It will be more expensive in the short term, but should save you money in the long term.\"",
"title": ""
},
{
"docid": "2c8b73d5026f1e9bb5aa37158a80c2bf",
"text": "\"You are asking about a common, simple practice of holding the mortgage when selling a house you own outright. Typically called seller financing. Say I am 70 and wish to downsize. The money I sell my house for will likely be in the bank at today's awful rates. Now, a buyer likes my house, and has 20% down, but due to some medical bills for his deceased wife, he and his new wife are struggling to get financing. I offer to let them pay me as if I were the bank. We agree on the rate, I have a lien on the house just as a bank would, and my mortgage with them requires the usual fire, theft, vandalism insurance. When I die, my heirs will get the income, or the buyer can pay in full after I'm gone. In response to comment \"\"how do you do that? What's the paperwork?\"\" Fellow member @littleadv has often posted \"\"You need to hire a professional.\"\" Not because the top members here can't offer great, accurate advice. But because a small mistake on the part of the DIY attempt can be far more costly than the relative cost of a pro. In real estate (where I am an agent) you can skip the agent to hook up buyer/seller, but always use the pro for legal work, in this case a real estate attorney. I'd personally avoid the general family lawyer, going with the specialist here.\"",
"title": ""
},
{
"docid": "a9e31264f9315abe930f2a44710544f2",
"text": "\"There are a few of ways to do this: Ask the seller if they will hold a Vendor Take-Back Mortgage or VTB. They essentially hold a second mortgage on the property for a shorter amortization (1 - 5 years) with a higher interest rate than the bank-held mortgage. The upside for the seller is he makes a little money on the second mortgage. The downsides for the seller are that he doesn't get the entire purchase price of the property up-front, and that if the buyer goes bankrupt, the vendor will be second in line behind the bank to get any money from the property when it's sold for amounts owing. Look for a seller that is willing to put together a lease-to-own deal. The buyer and seller agree to a purchase price set 5 years in the future. A monthly rent is calculated such that paying it for 5 years equals a 20% down payment. At the 5 year mark you decide if you want to buy or not. If you do not, the deal is nulled. If you do, the rent you paid is counted as the down payment for the property and the sale moves forward. Find a private lender for the down payment. This is known as a \"\"hard money\"\" lender for a reason: they know you can't get it anywhere else. Expect to pay higher rates than a VTB. Ask your mortgage broker and your real estate agent about these options.\"",
"title": ""
},
{
"docid": "b016ad4e91e887d07872457741a50b2c",
"text": "Can anyone recommend a good textbook that covers Fannie Mae and Freddie Mac, or more broadly the US home mortgage market? A basic search seems to mostly turn up books that aim to make an ideological point rather than attempt to provide an actual explanation. I have a basic financial knowledge including a basic understanding of derivatives at the level of say the textbook by Hull, but know very little about the US mortgage market specifically. I don't mind technical detail, and am not afraid of math. I don't mind if the book is broader, as long as it includes a reasonably in depth look at these GSEs and their role. This seems to be a pretty basic piece of knowledge for many financial professionals, so I assume there must be at least one standard textbook on this that I just haven't been able to find. EDIT: I'm looking for something post 2008 of course.",
"title": ""
},
{
"docid": "167b251597ca2ddfdfb431069e0cb380",
"text": "The simple answer is that you are correct. You should not purchase a house until you are financially stable enough to do so. A house is an asset that you must maintain, and it can be expensive to do so. Over the long term, you will generally save money by purchasing. However, in any given year you may spend much more money than a similar rental situation - even if the rent is higher than your mortgage payment. If you are financially stable with good cash savings or investments plus a 20% down payment, then anytime is a good time to buy if that is part of your financial plan. As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? The mortgage rates are not the primary driver for your purchase decision. That might be like saying you should buy everything on sale at Target... because it's on sale. Don't speculate on future rates. Also, keep in mind that back when rates were high, banks were also giving much better savings/CD rates. That is all connected. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? You need to make sure you get a loan that allows it. Always do a break-even analysis, looking at the money up-front you spend to refi vs the savings-per-year you will get. This should give you how many years until the refi pays for itself. If you don't plan on being in the house that long, don't do it. How can people afford 10% mortgage? Buying a house they can afford, taking into consideration the entire payment+interest. It should be a reasonable amount of your monthly income - generally 25% or less. Note that this is much less than you will be 'approved' for by most lenders. Don't let good rates suck you into a deal you will regret. Make sure you have the margin to purchase and maintain a home. Consider where you want to be living in 5 years. Don't leave so little financial breathing room that any bump will place you at risk of foreclosure. That said, home ownership is great! I highly recommend it.",
"title": ""
},
{
"docid": "ff1b45edc4eca37b570b308f78dab670",
"text": "\"The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level \"\"paying rent\"\" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a \"\"4.16\"\" (The home price divided by annual rent) and another area as a \"\"20\"\", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses.\"",
"title": ""
},
{
"docid": "4f115259938b6a581b6db96d3ef7bae0",
"text": "I wondered about this problem too, so I looked into the maths and made this app :- http://demonstrations.wolfram.com/BuyOrRentInvestmentReturnCalculator/ (It uses the free Wolfram computable-document format (CDF) Player.) If you try it out you can see what conditions favour renting vs buying. My own conclusion was to aim to buy a property outright upon reaching retirement age, if not sooner. Example This example compares buying a £400,000 house with renting for £1,000 a month while depositing equivalent amounts (in savings) to total the same monthly outgoings as the buyer. Mortgage rate, deposit rate, property appreciation and rent inflation can be variously specified. The example mortgage term is 20 years. As you can see the buyer and renter come out about even after the mortgage term, but the buyer comes off better after that, (having no more mortgage to pay). Of course, the rent to live in a £400,000 house would probably be more than £1,000 but this case shows an equivalence point.",
"title": ""
},
{
"docid": "5a86f8a46f42233c11e7ebf54dfaf9ac",
"text": "Regarding the mortgage company, they will want to know where the down payment came from, and as long as you are honest about it, there is no fraud. It's possible that the mortgage company may have some reservations about the deal now that they know where the down payment came from, but that will depend on the size of the deal and other factors. If everyone involved has decent credit, and this is a fairly standard mortgage, it will probably have no impact at all.",
"title": ""
},
{
"docid": "235844a2d25fb6628b055a1f80b77c6c",
"text": "\"Because this question seems like it will stick around, I will flesh out my comments into an actual answer. I apologize if this does not answer your question as-asked, but I believe these are the real issues at stake. For the actual questions you have asked, I have paraphrased and bolded below: Firstly, don't do a real estate transaction without talking to a lawyer at some stage [note: a real estate broker is not a lawyer]. Secondly, as with all transactions with family, get everything in writing. Feelings get hurt when someone mis-remembers a deal and wants the terms to change in the future. Being cold and calculated now, by detailing all money in and out, will save you from losing a brother in the future. \"\"Should my brother give me money as a down payment, and I finance the remainder with the bank?\"\" If the bank is not aware that this is what is happening, this is fraud. Calling something a 'gift' when really it's a payment for part ownership of 'your' house is fraud. There does not seem to be any debate here (though I am not a lawyer). If the bank is aware that this is what is happening, then you might be able to do this. However, it is unlikely that the bank will allow you to take out a mortgage on a house which you will not fully own. By given your brother a share in the future value in the house, the bank might not be able to foreclose on the whole house without fighting the brother on it. Therefore they would want him on the mortgage. The fact that he can't get another mortgage means (a) The banks may be unwilling to allow him to be involved at all, and (b) it becomes even more critical to not commit fraud! You are effectively tricking the bank into thinking that you have the money for a down payment, and also that your brother is not involved! Now, to the actual question at hand - which I answer only for use on other transactions that do not meet the pitfalls listed above: This is an incredibly difficult question - What happens to your relationship with your brother when the value of the house goes down, and he wants to sell, but you want to stay living there? What about when the market changes and one of you feels that you're getting a raw deal? You don't know where the housing market will go. As an investment that's maybe acceptable (because risk forms some of the basis of returns). But with you getting to live there and with him taking only the risk, that risk is maybe unfairly on him. He may not think so today while he's optimistic, but what about tomorrow if the market crashes? Whatever the terms of the agreement are, get them in writing, and preferably get them looked at by a lawyer. Consider all scenarios, like what if one of you wants to sell, does the other have the right to delay, or buy you out. Or what if one if you wants to buy the other out? etc etc etc. There are too many clauses to enumerate here, which is why you need to get a lawyer.\"",
"title": ""
},
{
"docid": "d99d9f07d98a490df01d95a11efb58aa",
"text": "\"Your assumption is wrong. Land is definitely mortgageable. On the other hand, it may be simpler and attract a lower interest rate if you just mortgage your existing house. (I believe most companies call this \"\"remortgaging\"\" even if you have no existing mortgage). Any loan will be subject to proof that you'll be able to pay it off, like any other mortgage. If the land itself is mortgaged you would need a deposit (i.e. the value of the mortgage would need to be less than the value of the land).\"",
"title": ""
},
{
"docid": "ba60d9fa0ce32b27088a0dd282504573",
"text": "Another factor: When you sell this house and buy the next one, the more equity you have the easier the loan process tends to be. We rolled prior equity into this house and had a downpayment over 50%--and the lender actually apologized for a technicality I had to deal with--they perfectly well knew it was a basically zero-risk loan.",
"title": ""
},
{
"docid": "b74742b32b99f9bd32cd60cc84d3206f",
"text": "\"Often the counter-party has obligations with respect to timelines as well -- if your buying a house, the seller probably is too, and may have a time-sensitive obligation to close on the deal. I'm that scenario, carrying the second mortgage may be enough to make that deal fall through or result in some other negative impact. Note that \"\"pre-approval\"\" means very little, banks can and do pass on deals, even if the buyer has a good payment history. That's especially true when the economy is not so hot -- bankers in 2011 are worried about not losing money... In 2006, they were worried about not making enough!\"",
"title": ""
},
{
"docid": "0e8fefe281a9f811bfd8f1f21c19ed49",
"text": "If you define dollar cost cost averaging as investing a specific dollar amount over a certain fixed time frame then it does not work statistically better than any other strategy for getting that money in the market. (IE Aunt Ruth wants to invest $60,000 in the stock market and does it $5000 a month for a year.) It will work better on some markets and worse on others, but on average it won't be any better. Dollar cost averaging of this form is effectively a bet that gains will occur at the end of the time period rather than the beginning, sometimes this bet will pay off, other times it won't. A regular investment contribution of what you can afford over an indefinite time period (IE 401k contribution) is NOT Dollar Cost Averaging but it is an effective investment strategy.",
"title": ""
},
{
"docid": "1998aad62501d90096f94e435b798ef6",
"text": "The advice given at this site is to get approved for a loan from your bank or credit union before visiting the dealer. That way you have one data point in hand. You know that your bank will loan w dollars at x rate for y months with a monthly payment of Z. You know what level you have to negotiate to in order to get a better deal from the dealer. The dealership you have visited has said Excludes tax, tag, registration and dealer fees. Must finance through Southeast Toyota Finance with approved credit. The first part is true. Most ads you will see exclude tax, tag, registration. Those amounts are set by the state or local government, and will be added by all dealers after the final price has been negotiated. They will be exactly the same if you make a deal with the dealer across the street. The phrase Must finance through company x is done because they want to make sure the interest and fees for the deal stay in the family. My fear is that the loan will also not be a great deal. They may have a higher rate, or longer term, or hit you with many fee and penalties if you want to pay it off early. Many dealers want to nudge you into financing with them, but the unwillingness to negotiate on price may mean that there is a short term pressure on the dealership to do more deals through Toyota finance. Of course the risk for them is that potential buyers just take their business a few miles down the road to somebody else. If they won't budge from the cash price, you probably want to pick another dealer. If the spread between the two was smaller, it is possible that the loan from your bank at the cash price might still save more money compared to the dealer loan at their quoted price. We can't tell exactly because we don't know the interest rates of the two offers. A couple of notes regarding other dealers. If you are willing to drive a little farther when buying the vehicle, you can still go to the closer dealer for warranty work. If you don't need a new car, you can sometimes find a deal on a car that is only a year or two old at a dealership that sells other types of cars. They got the used car as a trade-in.",
"title": ""
}
] |
fiqa
|
df1d44a6e3ce372b7d81255b475c2571
|
What is street-side booking?
|
[
{
"docid": "1a48d26db49b7cce01b23f85ca9c3f47",
"text": "\"This is a technical term referring to the \"\"double entry\"\"-styled book keeping of trades by brokers. Suppose a client executes a buy order with their broker. The broker's accounting for this \"\"trade\"\" will be recorded as two different \"\"deals\"\" : One \"\"deal\"\" showing the client as buyer and the broker as seller, and a second \"\"deal\"\" showing the broker as buyer and the clearing house as seller. The net result of these two deals is that the broker has no net position while the client has a net buy and the clearing house has a net sell with respect to this broker's account as accounted for internally by the broker. (And the same methods apply for a client sell order.) The client/broker \"\"deal\"\" record - i.e., the client side of the trade - is called the \"\"client side booking\"\", while the broker/clearing house \"\"deal\"\" record is called the \"\"street side booking\"\".\"",
"title": ""
},
{
"docid": "7d90195024b1c1e1fa899da81704e26c",
"text": "The way I would use it is, every trade done by a broker has a client side and a street side. The client side is for their brokerage account, and the street side is whoever they traded with Say, John Doe calls me at Charles Schwab and wants to buy 100 IBM. I look at the market and decide that the best execution is on Arca. I trade on Arca for the client. Then, I book a client side trade into his account, and a street side trade against Arca. If I myself was a dealer in IBM and executed against my inventory, the street side would basically be internal, booking a trade against my account.",
"title": ""
}
] |
[
{
"docid": "f511c5c8f36267e47374254da89da9fe",
"text": "Considering that they are paying non-waitstaff 2.13/hr is a pretty good indication that they are looking at the (short term) bottom line, employee satisfaction (and service) be-damned. While pushing people to part-time status might not have been 'in the parking lot', I'd be willing to bet that cutting costs in any legal manner possible is probably right in the decision maker's wheelhouse. This approach can make a lot of sense...if you aren't in the service industry.",
"title": ""
},
{
"docid": "f51747c2902b870e31601ffd4ea04099",
"text": "Jackson Hole Backcountry Rentals, is the right place offers the best side by side and UTV rentals for the adventure lovers. We offer everything that you need in order to experience and enjoy a safe ride on a great day. Reserve Now! Call us at (307)2642525 for more info!",
"title": ""
},
{
"docid": "11bc291a6e553d3a51470c29ada8385f",
"text": "No. Not in the Uk anyway, they are just an extra person/company that you have to pay.",
"title": ""
},
{
"docid": "fc3f8d06b9fe93aa816e2e24c7cda133",
"text": "Our company provides the different types of online services, such as flights booking, hotels booking, tours and travel booking. If you want to go Sydney for your next vacation with your family, then you can book your next tour and Hotels in Sydney at our company website. In the Sydney, Shorelines are a famous draw, including any semblance of Bondi Beach. Bondi's Campbell Parade is a bustling region both day and night, and shops, bistros, and bars line the beachfront.",
"title": ""
},
{
"docid": "3e34ce0a7a0edc4d625f0313f6e93ed7",
"text": "The rental industry is seasonal. They purchase additional inventory (vehicles) for their busy seasons and sell the extra inventory afterwards.",
"title": ""
},
{
"docid": "20e5d31c3625214c31676b76c164ed6b",
"text": "\"Yeah it is actually. Another, one of the more out there concepts is Jo and Joe. The trend is sort of restructuring what we typically think of as traditional luxury services because younger travelers don't care so much about them, for example a bell boy. Millennials travelers instead are looking for \"\"unmanufactured\"\" experiences, using airBNB, looking to be more immersed where they are traveling and traditional luxury hotel are beginning to feel to sterile. So millennial hotels are trying to manufacture spaces for unmanufactured experiences. Big common areas, where you can leave your stuff in the room, go down to the lobby, and drink at the bar that takes up 5x more lobby space than the front desk.\"",
"title": ""
},
{
"docid": "787f11784d1d805cb3fe64a103a5078d",
"text": ">he found the process of booking the flight to be archaic and obscure. It required phone conversations with a broker, tedious insurance paperwork... and >JetSmarter acts as the concierge service, helping their tech-savvy users book flights and meet their travel needs, primarily through a messengering service on the app (although 24/7 human phone support is available). This doesn't sound tremendously different than what every single charter company does already. >JetSmarter hopes to enable jet-setters to sell unused seats on their chartered flights. Currently, “empty legs” are available at a discounted rate. Again, pretty much all charter companies already offer discounted empty legs. I do not know if any existing companies have an app, and that seems to be the only unique feature of JetSmarter but that's really all that it is. They don't provide pilots or aircraft so hopefully their 'finders fee' is enough to keep them afloat.",
"title": ""
},
{
"docid": "fad27976922503eead7445495e5a5c2c",
"text": "TravelGuysOnline is the largest online hotels and flight booking website in the United Kingdom. We also provide adventure tour and car hire service. If you want to cheap car hire for any destination, then you can search on our website and book your car at the cheapest rent. It is hard to convey the value of reputation and good service. However, with car hire, this comes in the form of quality cars that do not break down, 24/7 service and availability.",
"title": ""
},
{
"docid": "f6ba08c4083832fbb95bad5aa9fc8385",
"text": "I'm on the other side! I was recently (just today) extended an informal offer from a team that's seeing some pretty big growth recently. I'm 6 months into my entry/mid level management position and I've been thinking about working in client-facing roles. The earning potential is greater, and I'm attracted by the prospect of being your own boss/reporting to your team instead of where I'm currently at, a cog in a giant corporate hierarchy. It's nice as I get to cruise sometimes when things are quiet, and I won't feel stuck in a neverending loop of prospecting and closing. Right now, I'm just a messenger - I figure a research position would be much the same.",
"title": ""
},
{
"docid": "c45d1303c18a03e675efd46a16f3242c",
"text": "The job I have now, I am lucky enough to be able to be lax. At my last job I would have been fired if I wasn't available at all times. I also had clients who expected me to be available whenever they called or I would lose them. It wasn't being a doormat. It was the definition of the job and everyone from the lowest person on the pole to the top did the same thing.",
"title": ""
},
{
"docid": "5dc70523c2d5268a664981c3e619f05f",
"text": "DayPassWireless is a provider of wireless air card rentals, Wi-Fi rental and mobile hotspots rentals nationwide. Sprint, Verizon and AT&T air cards are available on rent for one day to several months with daily rates ranging between $4.79 and $9.79.",
"title": ""
},
{
"docid": "eb19bc4e2cb5eac7b2d169fad8d2cfc1",
"text": "Pro-Tip: You can get free reservations from many major rental companies (no credit card required, no cancellation fee even if you no call/no show), so you can often make redundant bookings to have fallback options. As discussed elsewhere in this thread any or all of those reservations might end up being worthless, but people with a reservation generally get priority over people without one, so it's at least slightly better than nothing.",
"title": ""
},
{
"docid": "fad5c288cdc71bfe74cf658261fc5a7f",
"text": "Ok I read the article and yeah I'm completely off topic. It's opening up the possibly for people to create apps etc or retrieve information from it. I guess an example would be a booking site linked to airbnb availability. Maybe we'll see a combo site including hotel space availability as well as airbnb availability. I've also heard of VRBO if that's a real thing.",
"title": ""
},
{
"docid": "f9b14590f5f078d5cf8ba640325c7ff0",
"text": "\"Yes, they are. Ridesharing is just a term for Unmarked taxi booked through app. I have no issue with that, since \"\"Government regulated taxi\"\" is so awful in almost every city on earth, that ridesharing has improved safety and convenience.\"",
"title": ""
},
{
"docid": "57fd51c1df927384b3918a2977173447",
"text": "\"Hi Ly Sok You could give free maps out to your clients. Easily print these off. Talk about the city as you drive through pointing out good value restaurants and places of interest. When someone buys something from me. I try to understand it as \"\"someone buying my time\"\" so I like to think of there problems. Your clients are mostly tourists or locals I assume. Locals like to here local news and learn things -like new roads being built or a cinema opening. Crime and cool things going on. Tourists want to make there money go further and so learning about the best local experience is often what they want to do. A pick up service is often appreciated and possibly you could emphasis to tourists how safe certain areas are and that maybe they should hide there flashy phone or camera in this area. I feel recommendations are the way to go. Giving a number they can text you on makes it easier to send a location. For pick ups. Since uber is a big thing for clients back home. Maybe you could parody the name \"\"TukUber\"\" This would instantly make people remember you and you could also look at how you could make your service like uber on a personal level. Sounds like a fun project. Good luck\"",
"title": ""
}
] |
fiqa
|
9ecd68f4ec88295c0d224e8fd7760595
|
What is the difference between a stop order and a stop limit order?
|
[
{
"docid": "d2fc2515b51b4b2bbb2d49c8f7ca2e87",
"text": "Stop order is shorter term for stop-loss order. The point being that is intended as a protective measure. A buy stop order would be used to limit losses when an investor has sold a stock short. (Meaning that they have borrowed stock and sold it, in hopes that they can take advantage of a decline in the stock's price by replacing the borrowed stock later at a cheaper price. The idea is to limit losses due to a rising stock price.) Meanwhile, a sell stop order would be used to limit losses on a stock that an investor actually owns, by selling it before the price declines further. The important thing to keep in mind about stop orders is that they turn into market orders when the stop price is reached. This means that they will be filled at the best available price when the order is actually executed. In fast moving markets, this can be a price that is quite different from the stop price. A limit order allows an investor to ensure that they do not buy/sell a stock at more/less than the specified amount. The thing to keep in mind is that a limit order is not guaranteed to execute. A stop-limit order is a combination of a stop-loss order and limit order, in that it becomes a limit order (instead of a market order) when the stop price is reached. Links to definitions: Stop order Stop-limit order Limit order Market order",
"title": ""
},
{
"docid": "b13d405f87b222d8e581eb027e754892",
"text": "\"An attempt at a simple answer for the normal investor: A normal investor buys stock then later sells that stock. (This is known as \"\"going long\"\", as opposed to \"\"going short\"\"). For the normal investor, a stop order (of either kind) is only used when selling. A stop-loss sell order (or stop sell) is used to sell your stock when it has fallen too much in price, and you don't want to suffer more losses. If the stock is at $50, you could enter a stop sell at $40, which means if the stock ever falls to $40 or lower, your stock will be sold at whatever price is available (e.g. $35). A stop-loss limit sell order (or stop limit sell) is the same, except you are also saying \"\"but don't sell for less than my limit price\"\". So you can enter a stop limit sell at $40 with a limit of $39, meaning that if the stock falls to $40, you will then have a limit order in effect to sell the stock at $39 or higher. Thus your stock will never be sold at $35 or any value below $39, but of course, if the stock falls fast from $40 to $35, your limit sell at $39 will not be done and you will be left still owning the stock (worth at that moment $35, say).\"",
"title": ""
}
] |
[
{
"docid": "f47dd54afc18d54b9d4d6befccbf9e16",
"text": "A trailing stop will sell X shares at some percentage below the current market price. Putting in this order with a 10% trailing stop when the stock price is $50 will sell the stock when it hits $45. It's a market order at that point (see below). A stop order will sell the stock when it reaches a certain price. The stop order becomes a market order when the magic price is hit. This means that you may not sell it at or below your price when the order is executed. But the stock will sell faster because the trader must execute. A stop limit order is the same as a stop order, except the stock won't be sold if it can't be gotten for the price. As a result, the sell may not be executed. More information here.",
"title": ""
},
{
"docid": "b91f27e36696c9822c4fee74730f9f53",
"text": "Probing for hidden limit orders usually involves sending the orders and then cancelling them before they get filled if they don't get filled. With trades actually going through multiple times for small amounts it looks more like a VWAP strategy where the trader is feeding small volumes into the market as part of a larger trade trying to minimize average cost. It could be probing but without seeing the orders and any cancels it would be difficult to tell. edit: I just had another thought; it could possibly be a market maker unwinding a bad position caused by other trading. Sometimes they drip trades into the market to prevent themselves from hitting big orders etc. that might move back against them. This is probably not right but is just another thought. source: I work for an organization that provides monitoring for these things to many large trading organizations.",
"title": ""
},
{
"docid": "f60d7f81daf86efdfc0766e558a22797",
"text": "\"Your logic breaks down because you assume that you are the only market participant on your side of the book and that the participant on the other side of the book has entered a market order. Here's what mostly happens: Large banks and brokerages trading with their own money (we call it proprietary or \"\"prop\"\" trading) will have a number of limit (and other, more exotic) orders sitting on both sides of the trading book waiting to buy or sell at a price that they feel is advantageous. Some of these orders will have sat on the book for many months if not years. These alone are likely to prevent your limit orders executing as they are older so will be hit first even if they aren't at a better price. On more liquid stocks there will also be a number of participants entering market orders on both sides of the book whose orders are matched up before limit orders are matched with any market orders. This means that pairing of market orders, at a better price, will prevent your limit order executing. In many markets high frequency traders looking for arbitrage opportunities (for example) will enter a few thousand orders a minute, some of these will be limit orders just off touch, others will be market orders to be immediately executed. The likelihood that your limit order, being as it is posited way off touch, is hit with all those traders about is minimal. On less liquid stocks there are market makers (large institutional traders) who effectively set the bid and offer prices by being willing to provide liquidity and fill the market orders at a temporary loss to themselves and will, in most cases, have limit orders set to provide this liquidity that will be close to touch. They are paid to do this by the exchange and inter-dealer brokers through their fees structure. They will fill the market orders that would hit your limit if they think that it would provide more liquidity in such a way that it fulfils their obligations. Only if there are no other participants looking to trade on the instrument at a better price than your limit (which, of course they can see unless you enter it into a dark pool) AND there is a market order on the opposite side of the book will your limit order be instantaneously be hit, executed, and move the market price.\"",
"title": ""
},
{
"docid": "9dd61f4b88dc34661b578a4696c6a5b5",
"text": "\"After learning about things that happened in the \"\"flash crash\"\" I always use limit orders. In an extremely rare instance if you place a market order when there is a some glitch, for example some large trader adds a zero at the end of their volume, you could get an awful price. If I want to buy at the market price, I just set the limit about 1% above the market price. If I want to sell, I set the limit 1% below the market price. I should point out that your trade is not executed at the limit price. If your limit price on a buy order is higher than the lowest offer, you still get filled at the lowest offer. If before your order is submitted someone fills all offers up to your limit price, you will get your limit price. If someone, perhaps by accident, fills all orders up to twice your limit price, you won't end up making the purchase. I have executed many purchases this way and never been filled at my limit price.\"",
"title": ""
},
{
"docid": "87a5f0d18bc2cb7e78e815104cdd5230",
"text": "TD will only sell the stock for you if there's a buyer. There was a buyer, for at least one transaction of at least one stock at 96.66. But who said there were more? Obviously, the stocks later fell, i.e.: there were not that many buyers as there were sellers. What I'm saying is that once the stock passed/reached the limit, the order becomes an active order. But it doesn't become the only active order. It is added to the list, and to the bottom of that list. Obviously, in this case, there were not enough buyers to go through the whole list and get to your order, and since it was a limit order - it would only execute with the limit price you put. Once the price went down you got out of luck. That said, there could of course be a possibility of a system failure. But given the story of the market behavior - it just looks like you miscalculated and lost on a bet.",
"title": ""
},
{
"docid": "69003ef4b8e5329aecf0172a01c19054",
"text": "Although this is possible with many brokers, it's not advisable. In many cases you may end up with both trades executed at the same time. This is because during the opening, the stock might spike up or down heavily, bid/ask spread widens, and both of your orders would get picked up, resulting in an instant loss. Your best bet is to place the stop manually sometime after you get filled.",
"title": ""
},
{
"docid": "84434322484e6ec1298d53c4d304f4a4",
"text": "The obvious thing would happen. 10 shares change owner at the price of $100. A partially still open selling order would remain. Market orders without limits means to buy or sell at the best possible or current price. However, this is not very realistic. Usually there is a spread between the bid and the ask price and the reason is that market makers are acting in between. They would immediately exploit this situation, for example, by placing appropriately limited orders. Orders without limits are not advisable for stocks with low trading activity. Would you buy or sell stuff without caring for the price?",
"title": ""
},
{
"docid": "21f3c534c3679bc20aad8e5a3dbfb959",
"text": "\"Correcting Keith's answer (you should have read about these details in the terms and conditions of your bank/broker): Entrustment orders are like a \"\"soft\"\" limit order and meaningless without a validity (which is typically between 1 and 5 days). If you buy silver at an entrustment price above market price, say x when the market offer is m, then parts of your order will likely be filled at the market price. For the remaining quantity there is now a limit, the bank/broker might fill your order over the next 5 days (or however long the validity is) at various prices, such that the overall average price does not exceed x. This is different to a limit order, as it allows the bank/broker to (partially) buy silver at higher prices than x as long as the overall averages is x or less. In a limit set-up you might be (partially) filled at market prices first, but if the market moves above x the bank/broker will not fill any remaining quantities of your order, so you might end up (after a day or 5 days) with a partially filled order. Also note that an entrustment price below the market price and with a short enough validity behaves like a limit price. The 4th order type is sort of an opposite-side limit price: A stop-buy means buy when the market offer quote goes above a certain price, a stop-sell means sell when the market bid quote goes below a certain price. Paired with the entrusment principle, this might mean that you buy/sell on average above/below the price you give. I don't know how big your orders are or will be but always keep in mind that not all of your order might be filled immediately, a so-called partial fill. This is particularly noteworthy when you're in a pro-rata market.\"",
"title": ""
},
{
"docid": "a1279b9f19d3f34f064ed3d1e0512b56",
"text": "Depending on your strategy, it could be though there is also something to be said for what kind of order are you placing: Market, limit or otherwise? Something else to consider is whether or not there is some major news that could cause the stock/ETF to gap at the open. For example, if a company announces strong earnings then it is possible for the stock to open higher than it did the previous day and so a market order may not to take into account that the stock may jump a bit compared to the previous close. Limit orders can be useful to put a cap on how much you'll pay for a stock though the key would be to factor this into your strategy of when do you buy.",
"title": ""
},
{
"docid": "12dfd7a4c63537325923b5f65bab573a",
"text": "Exchange-traded funds are bought and sold like stocks so you'd be able to place stop orders on them just like you could for individual stocks. For example, SPY would be the ticker for an S & P 500 ETF known as a SPDR. Open-end mutual funds don't have stop orders because of how the buying and selling is done which is on unknown prices and often in fractional shares. For example, the Vanguard 500 Index Investor shares(VFINX) would be an example of an S & P 500 tracker here.",
"title": ""
},
{
"docid": "d15ac36ec6dd0a7344427933d0cfe0b2",
"text": "\"The SEC reference document (PDF) explains order types in more detail. A fill-or-kill order is neither a market order nor a limit order; instead it's something in between. A market order asks to be filled at the best available price, whatever that price might be when the order gets to the exchange. Additionally, if there are not enough counterparties to fill the order at the best available price, then part of the order may be filled at a worse price. This all happens more or less immediately; there's no way to cancel it once it has been placed. A limit order asks to be filled at a particular price, and if no counterparties want to trade at that price right now, then the order will just sit around all day waiting for someone to agree on the price; it can be canceled at any time. A fill-or-kill order asks to be filled at a particular price (like a limit order), but if that price or a better one is not currently available then the order is immediately canceled. It does not accept a worse price (the way a market order does), nor does it sit around waiting (the way a limit order does). Since the exchange computes whether to \"\"fill\"\" or \"\"kill\"\" the order as soon as it is arrives, there's also no way to cancel it (like a market order).\"",
"title": ""
},
{
"docid": "e96cd274fba81dbc2091ded7359dabed",
"text": "When you place a bid between the bid/ask spread, that means you are raising the bid (or lowering the ask, if you are selling). The NBBO (national best bid and offer) is now changed because of your action, and yes, certain kinds of orders may be set to react to that (a higher bid or lower ask triggering them), also many algorithms (that haven't already queued an order simply waiting for a trigger, like in a stop limit) read the bid and ask and are programmed to then place an order at that point.",
"title": ""
},
{
"docid": "ac69142a86ecb34f05fac44c4c87b143",
"text": "The purpose of a market order is to guarantee that your order gets filled. If you try to place a limit order at the bid or ask, by the time you enter your order the price might have moved and you might need to keep amending your limit order in order to buy or sell, and as such you start chasing the market. A market order will guarantee your order gets executed. Also, an important point to consider, is that market orders are often used in combination with other orders such as conditional orders. For example if you have a stop loss (conditional order) set at say 10% below your buy price, you might want to use a market order to make sure your order gets executed if the price drops 10% and your stop loss gets triggered, making sure that you get out of the stock instead of being stuck with a limit order 10% below your buy price whilst the stock keeps falling further.",
"title": ""
},
{
"docid": "e913f8786ca00529c4ef8630f1710b33",
"text": "\"There needs to be a buyer of the shares you are offering. There are a lot of feature rich options for buying and selling. I don't understand them all in depth, but for example on TD Ameritrade here are some of the order types \"\"Limit\"\", \"\"Market\"\", \"\"Stop Market\"\", \"\"Stop Limit\"\", \"\"Trailing Stop %\"\", \"\"Trailing Stop $\"\". This web page will explain the different order types https://invest.ameritrade.com/cgi-bin/apps/u/PLoad?pagename=tutorial/orderTypes/overview.html Stock with a higher volume will allow your trade to execute faster, since there are more frequent trades than stocks with lower volume. (UPDATE: More specifically, not more frequent trades, but more shares changing hands.) I'm a bit of a noob myself, but that's what I understand.\"",
"title": ""
},
{
"docid": "5a484b5eb4efb839e85833035c389844",
"text": "\"What you are saying is a very valid concern. After the flash crash many institutions in the US replaced \"\"true market orders\"\" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative.\"",
"title": ""
}
] |
fiqa
|
d60bf7a675e257410a0c399585d1aad1
|
What rules govern when a new option series is issued?
|
[
{
"docid": "324e7f7b3a5ef459159f6ff8b426ab0f",
"text": "The CBOE Rule Book, Section 5.5 explains exactly what programmes are available, how and when they will start listing and expire. The super-concise summary is: It's a per-underlying decision process, though there's some rules that may provide you with a minimum set of options (e.g. the quarterly programme on highly capitalised stocks trading for more than $75, etc.) For greater detail, for better or worse, you will have to scan the New Listings service regularly.",
"title": ""
},
{
"docid": "386190460de32b5e310c3a1d749f95e6",
"text": "\"Without researching the securities in question I couldn't tell you which cycle each is in, but your answer is that they have different expiration cycles. The following definition is from the CBOE website; \"\"Expiration cycle An expiration cycle relates to the dates on which options on a particular underlying security expire. A given option, other than LEAPS®, will be assigned to one of three cycles, the January cycle, the February cycle or the March cycle.\"\"\"",
"title": ""
}
] |
[
{
"docid": "f9b021ef7bb5d287f2df29d74a2bf88f",
"text": "For margin, it is correct that these rules do not apply. The real problem becomes day trading funding when one is just starting out, broker specific minimums. Options settle in T+1. One thing to note: if Canada is anything like the US, US options may not be available within Canadian borders. Foreign derivatives are usually not traded in the US because of registration costs. However, there may be an exception for US-Canadian trade because one can trade Canadian equities directly within US borders.",
"title": ""
},
{
"docid": "14172702394ab119849c153d7c243981",
"text": "The price doesn't have to drop 5% in one go to activate your order. The trailing aspect simply means your sell trigger price will increase if the current value increases (it will never decrease).",
"title": ""
},
{
"docid": "81a6ee7d7f7b8ef9e63c33641f686053",
"text": "A broker does not have to allow the full trading suite the regulations permit. From brokersXpress: Do you allow equity and index options trading in brokersXpress IRAs? Yes, we allow trading of equity and index options in IRAs based on the trading level assigned to an investor. Trading in IRAs includes call buying, put buying, cash-secured put writing, spreads, and covered calls. I understand OptionsXpress.com offers the same level of trading. Disclosure - I have a Schwab account and am limited in what's permitted just as your broker does. The trade you want is no more risky that a limit (buy) order, only someone is paying you to extend that order for a fixed time. The real answer is to ask the broker. If you really want that level of trading, you might want to change to one that permits it.",
"title": ""
},
{
"docid": "705ee9b2dcdf79ccdb72df415ee392af",
"text": "thanks. I have real time quotes, but in the contest, if you put in a market order the trade might happen at the delayed quote price and not the real time price. Does anyone know at which price it will trade, delayed or real time?",
"title": ""
},
{
"docid": "8057d06cbcb766b7211eb29e90b52746",
"text": "This sometimes happens to me. It depends on how liquid the option is. Normally what I see happening is that the order book mutates itself around my order. I interpret this to mean that the order book is primarily market makers. They see a retail investor (me) come in and, since they don't have any interest in this illiquid option, they back off. Some other retail investor (or whatever) steps in with a market order, and we get matched up. I get a fill because I become the market maker for a brief while. On highly liquid options, buy limits at the bid tend to get swallowed because the market makers are working the spread. With very small orders (a contract or two) on very liquid options, I've had luck getting quick fills in the middle of the spread, which I attribute to MM's rebalancing their holdings on the cheap, although sometimes I like to think there's some other anal-retentive like me out there that hates to see such a lopsided book. :) I haven't noticed any particular tendency for this to happen more with puts or calls, or with buy vs sell transactions. For a while I had a suspicion that this was happening with strikes where IV didn't match IV of other strikes, but I never cared enough to chase it down as it was a minor part of my overall P/L.",
"title": ""
},
{
"docid": "45647bd5c16b69730e046f75a6a74533",
"text": "Link only answers aren't good, but the list is pretty long. It's a moving target, the requirement change based on a number of criteria. It usually jumps to force you to sell when you hold a losing position, or when your commodity is about to skyrocket.",
"title": ""
},
{
"docid": "f719c01ac03e037a88ca3dd067d103db",
"text": "This depends on the stock exchange in question. Generally if you modify an existing order [including GTC], these are internally treated as Cancel/Replace Orders. Depending on the action, you may lose the time priority position and a new position would get assigned. More here. (f) Cancel/Replace Orders. Depending on how a quote or order is modified, the quote or order may change priority position as follows: (1) If the price is changed, the changed side loses position and is placed in a priority position behind all orders of the same type (i.e., customer or non-customer) at the same price. (2) If one side's quantity is changed, the unchanged side retains its priority position. (3) If the quantity of one side is decreased, that side retains its priority position. (4) If the quantity of one side is increased, that side loses its priority position and is placed behind all orders of the same type at the same price.",
"title": ""
},
{
"docid": "fd998359fb000bcb3b812061132ec65b",
"text": "http://www.marketwatch.com/optionscenter/calendar would note some options expiration this week that may be a clue as this would be the typical end of quarter stuff so I suspect it may happen each quarter. http://www.investopedia.com/terms/t/triplewitchinghour.asp would note in part: Triple witching occurs when the contracts for stock index futures, stock index options and stock options expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. Triple witching days, particularly the final hour of trading preceding the closing bell, can result in escalated trading activity and volatility as traders close, roll out or offset their expiring positions. June 17 would be the 3rd Friday as the 3rd and 10th were the previous two in the month.",
"title": ""
},
{
"docid": "0400607794f04d15bf9fdfe8a22e00b3",
"text": "\"I thought the other answers had some good aspect but also some things that might not be completely correct, so I'll take a shot. As noted by others, there are three different types of entities in your question: The ETF SPY, the index SPX, and options contracts. First, let's deal with the options contracts. You can buy options on the ETF SPY or marked to the index SPX. Either way, options are about the price of the ETF / index at some future date, so the local min and max of the \"\"underlying\"\" symbol generally will not coincide with the min and max of the options. Of course, the closer the expiration date on the option, the more closely the option price tracks its underlying directly. Beyond the difference in how they are priced, the options market has different liquidity, and so it may not be able to track quick moves in the underlying. (Although there's a reasonably robust market for option on SPY and SPX specifically.) Second, let's ask what forces really make SPY and SPX move together as much as they do. It's one thing to say \"\"SPY is tied to SPX,\"\" but how? There are several answers to this, but I'll argue that the most important factor is that there's a notion of \"\"authorized participants\"\" who are players in the market who can \"\"create\"\" shares of SPY at will. They do this by accumulating stock in the constituent companies and turning them into the market maker. There's also the corresponding notion of \"\"redemption\"\" by which an authorized participant will turn in a share of SPY to get stock in the constituent companies. (See http://www.spdrsmobile.com/content/how-etfs-are-created-and-redeemed and http://www.etf.com/etf-education-center/7540-what-is-the-etf-creationredemption-mechanism.html) Meanwhile, SPX is just computed from the prices of the constituent companies, so it's got no market forces directly on it. It just reflects what the prices of the companies in the index are doing. (Of course those companies are subject to market forces.) Key point: Creation / redemption is the real driver for keeping the price aligned. If it gets too far out of line, then it creates an arbitrage opportunity for an authorized participant. If the price of SPY gets \"\"too high\"\" compared to SPX (and therefore the constituent stocks), an authorized participant can simultaneously sell short SPY shares and buy the constituent companies' stocks. They can then use the redemption process to close their position at no risk. And vice versa if SPY gets \"\"too low.\"\" Now that we understand why they move together, why don't they move together perfectly. To some extent information about fees, slight differences in composition between SPY and SPX over time, etc. do play. The bigger reasons are probably that (a) there are not a lot of authorized participants, (b) there are a relatively large number of companies represented in SPY, so there's some actual cost and risk involved in trying to quickly buy/sell the full set to capture the theoretical arbitrage that I described, and (c) redemption / creation units only come in pretty big blocks, which complicates the issues under point b. You asked about dividends, so let me comment briefly on that too. The dividend on SPY is (more or less) passing on the dividends from the constituent companies. (I think - not completely sure - that the market maker deducts its fees from this cash, so it's not a direct pass through.) But each company pays on its own schedule and SPY does not make a payment every time, so it's holding a corresponding amount of cash between its dividend payments. This is factored into the price through the creation / redemption process. I don't know how big of a factor it is though.\"",
"title": ""
},
{
"docid": "a066c38b2279b858bf2dd9cf934636d0",
"text": "You can't know. It's not like every stock has options traded on it, so until you either see the options listed or a company announcement that option will trade on a certain date, there's no way to be sure.",
"title": ""
},
{
"docid": "ae3bee0c5c32862b5c63bd0a18a24aa2",
"text": "\"The VIX is a mathematical aggregate of the implied volatilities of the S&P 500 Index components. It itself cannot be traded as there currently is no way to only hold a position on an implied volatility alone. Implied volatility can only currently be derived from an option relative to its underlying. Further, the S&P 500 index itself cannot be traded only the attempts to replicate it. For assets that are not tradable, derivatives can be \"\"cash settled\"\" where the value of the underlying is delivered in cash. Cash settlement can be used for underlyings that in fact due trade but are frequently only elected if the underlying is costly to deliver or there is an incentive to circumvent regulation. Currently, only futures that settle on the value of the VIX at the time of delivery trade; in other words, VIX futures holders must deliver on the value of the VIX in cash upon settlement. Options in turn trade on those futures and in turn are also cash settled on the value of the underlying future at expiration. The VXX ETF holds one to two month VIX futures that it trades out of before delivery, so while it is impossible to know exactly what is held in the VXX accounts unless if one had information from an insider or the VXX published such details, one can assume that it holds VIX futures contracts no later than two settlements from the preset. It should be noted that the VXX does not track the VIX over the long run because of the cost to roll the futures and that the futures are more stable than the VIX, so it is a poor substitute for the VIX over time periods longer than one day. \"\"Underlying\"\" now implies any abstract from which a financial product derives its value.\"",
"title": ""
},
{
"docid": "748bfbe778b2501fbeda326a35e22cb1",
"text": "\"You can call CBOE and tell them you want that series or a particular contract. And this has nothing to do with FLEX. Tell them there is demand for it, if they ask who you are, DONT SAY YOU ARE A RETAIL INVESTOR, the contracts will be in the option chain the next day. I have done this plenty of times. The CBOE does not care and are only limited by OCC and the SEC, but the CBOE will trade and list anything if you can think of it, and convince them that \"\"some people want to trade it\"\" or that \"\"it has benefits for hedging\"\" I've gotten 50 cent strike prices on stocks under $5 , I've gotten additional LEAPS and far dated options traded, I've gotten entire large chains created. I also have been with prop shops before, so I could technically say I was a professional trader. But since you are using IB and are paying for data feeds, you can easily spin that too.\"",
"title": ""
},
{
"docid": "98ca4d549287c7ab43dc505cd88d3e6b",
"text": "Not that I am aware. There are times that an option is available, but none have traded yet, and it takes a request to get a bid/ask, or you can make an offer and see if it's accepted. But the option chain itself has to be open.",
"title": ""
},
{
"docid": "3d3024badcf485a7f35871a15bc54bf9",
"text": "\"The question you are asking concerns the exercise of a short option position. The other replies do not appear to address this situation. Suppose that Apple is trading at $96 and you sell a put option with a strike price of $95 for some future delivery date - say August 2016. The option contract is for 100 shares and you sell the contract for a premium of $3.20. When you sell the option your account will be credited with the premium and debited with the broker commission. The premium you receive will be $320 = 100 x $3.20. The commission you pay will depend on you broker. Now suppose that the price of Apple drops to $90 and your option is exercised, either on expiry or prior to expiry. Then you would be obliged to take delivery of 100 Apple shares at the contracted option strike price of $95 costing you $9,500 plus broker commission. If you immediately sell the Apple shares you have purchased under your contract obligations, then assuming you sell the shares at the current market price of $90 you would realise a loss of $500 ( = 100x($95-$90) )plus commission. Since you received a premium of $320 when you sold the put option, your net loss would be $500-$320 = $180 plus any commissions paid to your broker. Now let's look at the case of selling a call option. Again assume that the price of Apple is $96 and you sell a call option for 100 shares with a strike price of $97 for a premium of $3.60. The premium you receive would be $360 = 100 x $3.60. You would also be debited for commission by your broker. Now suppose that the price of Apple shares rises to $101 and your option is exercised. Then you would be obliged to deliver 100 Apple shares to the party exercising the option at the contracted strike price of $97. If you did not own the shares to effect delivery, then you would need to purchase those shares in the market at the current market price of $101, and then sell them to the party exercising the option at the strike price of $97. This would realise an immediate loss of $400 = 100 x ($101-$97) plus any commission payable. If you did own the shares, then you would simply deliver them and possibly pay some commission or a delivery fee to your broker. Since you received $360 when you sold the option, your net loss would be $40 = $400-$360 plus any commission and fees payable to the broker. It is important to understand that in addition to these accounting items, short option positions carry with them a \"\"margin\"\" requirement. You will need to maintain a margin deposit to show \"\"good faith\"\" so long as the short option position is open. If the option you have sold moves against you, then you will be called upon to put up extra margin to cover any potential losses.\"",
"title": ""
},
{
"docid": "e01ecd127956459cee7b71abf819ac75",
"text": "\"I would think that a lot of brokers would put the restriction suggested in @homer150mw in place or something more restrictive, so that's the first line of answer. If you did get assigned on your short option, then (I think) the T+3 settlement rules would matter for you. Basically you have 3 days to deliver. You'll get a note from your broker demanding that you provide the stock and probably threatening to liquidate assets in your account to cover their costs if you don't comply. If you still have the long-leg of the calendar spread then you can obtain the stock by exercising your long call, or, if you have sufficient funds available, you can just buy the stock and keep your long call. (If you're planning to exercise the long call to cover the position, then you need to check with your broker to see how quickly the stock so-obtained will get credited to your account since it also has some settlement timeline. It's possible that you may not be able to get the stock quickly enough, especially if you act on day 3.) Note that this is why you must buy the call with the far date. It is your \"\"insurance\"\" against a big move against you and getting assigned on your short call at a price that you cannot cover. With the IRA, you have some additional concerns over regular cash account - Namely you cannot freely contribute new cash any time that you want. That means that you have to have some coherent strategy in place here that ensures you can cover your obligations no matter what scenario unfolds. Usually brokers put additional restrictions on trades within IRAs just for this reason. Finally, in the cash account and assuming that you are assigned on your short call, you could potentially could get hit with a good faith, cash liquidation, or free riding violation when your short call is assigned, depending on how you deliver the stock and other things that you're doing in the same account. There are other questions on that on this site and lots of information online. The rules aren't super-simple, so I won't try to reproduce them here. Some related questions to those rules: An external reference also on potential violations in a cash account: https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations\"",
"title": ""
}
] |
fiqa
|
24ca50eb70c714d004806d1a9886cc09
|
Who determines, and how, the composition of the S&P 500 index?
|
[
{
"docid": "7f1eb22c5ceb023258ce59d1b6a06a9f",
"text": "\"The S&P 500 index is maintained by S&P Dow Jones Indices, a division of McGraw Hill Financial. Changes to the index are made periodically, as needed. For Facebook, you'll find it mentioned in this December 11, 2013 press release (PDF). Quote: New York, NY, December 11 , 2013 – S&P Dow Jones Indices will make the following changes to the S&P 100, S&P 500, MidCap 400 and S&P SmallCap 600 indices after the close of trading on Friday, December 20: You can find out more about the S&P 500 index eligibility criteria from the S&P U.S. Indices methodology document (PDF). See pages 5 and 6: Market Capitalization - [...] Liquidity - [...] Domicile - [...] Public Float - [...] Sector Classification - [...] Financial Viability - Usually measured as four consecutive quarters of positive as reported earnings. [...] Treatment of IPOs - Initial public offerings should be seasoned for 6 to 12 months before being considered for addition to an index. Eligible Securities - [...] [...] Changes to the U.S. indices other than the TMIX are made as needed, with no annual or semi-annual reconstitution. [...] LabCorp may have a smaller market cap than Facebook, but Facebook didn't meet all of the eligibility criteria – for instance, see the above note about \"\"Treatment of IPOs\"\" – until recently. Note also that \"\"Initial public offerings should be seasoned for 6 to 12 months\"\" implies somebody at S&P makes a decision as to the exact when. As such, I would say, no, there is no \"\"simple rule or formula\"\", just the methodology above as applied by the decision-makers at S&P.\"",
"title": ""
},
{
"docid": "e3c2583945301f8f9b14c9f8f0af19fa",
"text": "S & P's site has a methodology link that contains the following which may be of use: Market Capitalization. Unadjusted market capitalization of US$ 4.6 billion or more for the S&P 500, US$ 1.2 billion to US$ 5.1 billion for the S&P MidCap 400, and US$ 350 million to US$ 1.6 billion for the S&P SmallCap 600. The market cap of a potential addition to an index is looked at in the context of its short- and medium-term historical trends, as well as those of its industry. These ranges are reviewed from time to time to assure consistency with market conditions. Liquidity. Adequate liquidity and reasonable price – the ratio of annual dollar value traded to float adjusted market capitalization should be 1.00 or greater, and the company should trade a minimum of 250,000 shares in each of the six months leading up to the evaluation date. Domicile. U.S. companies. For index purposes, a U.S. company has the following characteristics: The final determination of domicile eligibility is made by the U.S. Index Committee.",
"title": ""
}
] |
[
{
"docid": "18ba65edf360c23887d0043f4696facb",
"text": "Now, if I'm not mistaken, tracking a value-weighted index is extremely easy - just buy the shares in the exact amount they are in the index and wait. Yes in theory. In practise this is difficult. Most funds that track S&P do it on sample basis. This is to maintain the fund size. Although I don't have / know the exact number ... if one wants to replicate the 500 stocks in the same %, one would need close to billion in fund size. As funds are not this large, there are various strategies adopted, including sampling of companies [i.e. don't buy all]; select a set of companies that mimic the S&P behaviour, etc. All these strategies result in tracking errors. There are algorithms to reduce this. The only time you would need to rebalance your holdings is when there is a change in the index, i.e. a company is dropped and a new one is added, right? So essentially rebalance is done to; If so, why do passive ETFs require frequent rebalancing and generally lose to their benchmark index? lets take an Index with just 3 companies, with below price. The total Market cap is 1000 The Minimum required to mimic this index is 200 or Multiples of 200. If so you are fine. More Often, funds can't be this large. For example approx 100 funds track the S&P Index. Together they hold around 8-10% of Market Cap. Few large funds like Vangaurd, etc may hold around 2%. But most of the 100+ S&P funds hold something in 0.1 to 0.5 range. So lets say a fund only has 100. To maintain same proportion it has to buy shares in fraction. But it can only buy shares in whole numbers. This would then force the fund manager to allocate out of proportion, some may remain cash, etc. As you can see below illustrative, there is a tracking error. The fund is not truly able to mimic the index. Now lets say after 1st April, the share price moved, now this would mean more tracking error if no action is taken [block 2] ... and less tracking error if one share of company B is sold and one share of company C is purchased. Again the above is a very simplified view. Tracking error computation is involved mathematics. Now that we have the basic concepts, more often funds tracking S&P; Thus they need to rebalance.",
"title": ""
},
{
"docid": "adbf8533f813e6417c05b3596645eb28",
"text": "ETFs have caused many if not most stocks on the SP500 to become correlated. I think at some point in the last couple of years, 90% of the SP500 were correlated to the index itself. So you're going to see a lot of movement together of most stocks.",
"title": ""
},
{
"docid": "0eadff1bdec0fa49ee8e33f7037d3e4f",
"text": "\"The S&P 500 is an index. This refers to a specific collection of securities which is held in perfect proportion. The dollar value of an index is scaled arbitrarily and is based off of an arbitrary starting price. (Side note: this is why an index never has a \"\"split\"\"). Lets look at what assumptions are included in the pricing of an index: All securities are held in perfect proportion. This means that if you invest $100 in the index you will receive 0.2746 shares of IBM, 0.000478 shares of General Motors, etc. Also, if a security is added/dropped from the list, you are immediately rebalancing the remaining money. Zero commissions are charged. When the index is calculated, they are using the current price (last trade) of the underlying securities, they are not actually purchasing them. Therefore it assumes that securities may be purchased without commission or other liquidity costs. Also closely related is the following. The current price has full liquidity. If the last quoted price is $20 for a security, the index assumes that you can purchase an arbitrary amount of the security at that price with a counterparty that is willing to trade. Dividends are distributed immediately. If you own 500 equities, and most distributed dividends quarterly, this means you will receive on average 4 dividends per day. Management is free. All equities can be purchased with zero research and administrative costs. There is no gains tax. Trading required by the assumptions above would change your holdings constantly and you are exempt from short-term or long-term capital gains taxes. Each one of these assumptions is, of course, invalid. And the fund which endeavors to track the index must make several decisions in how to closely track the index while avoiding the problems (costs) caused by the assumptions. These are shortcuts or \"\"approximations\"\". Each shortcut leads to performance which does not exactly match the index. Management fees. Fees are charged to the investor as load, annual fees and/or redemptions. Securities are purchased at real prices. If Facebook were removed from the S&P 500 overnight tonight, the fund would sell its shares at the price buyers are bidding the next market day at 09:30. This could be significantly different than the price today, which the index records. Securities are purchased in blocks. Rather than buying 0.000478 shares of General Motors each time someone invests a dollar, they wait for a few people and then buy a full share or a round lot. Securities are substituted. With lots of analysis, it may be determined that two stocks move in tandem. The fund may purchase two shares of General Motors rather than one of General Motors and Ford. This halves transaction costs. Debt is used. As part of substitution, equities may be replaced by options. Option pricing shows that ownership of options is equivalent to holding an amount of debt. Other forms of leverage may also be employed to achieve desired market exposure. See also: beta. Dividends are bundled. VFINX, the largest S&P 500 tracking fund, pays dividends quarterly rather than immediately as earned. The dividend money which is not paid to you is either deployed to buy other securities or put into a sinking fund for payment. There are many reasons why you can't get the actual performance quoted in an index. And for other more exotic indices, like VIX the volatility index, even more so. The best you can do is work with someone that has a good reputation and measure their performance.\"",
"title": ""
},
{
"docid": "746b61376ddac3943da200be54cbe1c5",
"text": "From Wikipedia - To calculate the value of the S&P 500 Index, the sum of the adjusted market capitalization of all 500 stocks is divided by a factor, usually referred to as the Divisor. For example, if the total adjusted market cap of the 500 component stocks is US$13 trillion and the Divisor is set at 8.933 billion, then the S&P 500 Index value would be 1,455.28. From a strictly mathematical perspective, the divisor is not canceling out the units, and the S&P index is dollar denominated even though it's never quoted that way. A case in point is that the S&P is often said to have a P/E, and especially an E, the earnings attributed to one 'unit' of S&P. And if you buy a mutual fund sporting a low expense ratio, you can invest exactly that much money (the current S&P index value) and see the dividends accrue to your account, less the fee.",
"title": ""
},
{
"docid": "aad7fd152cc7c2878e7ebaf2e57adbf6",
"text": "It's either a broad benchmark sp500, msci world, lehman agg, and or a cash index. Most will not use a specific benchmark. While the broad benchmark may not be applicable from my experience its usually there as a proxy for the overall market.",
"title": ""
},
{
"docid": "631a51f311776fed607cd64ae31816d9",
"text": "Multiple overlapping indices exist covering various investment universes. Almost all of the widely followed indices were originally created by Lehman Brothers and are now maintained by Barclays. The broadest U.S. dollar based bond index is known as the Universal. The Aggregate (often abbreviated Agg), which is historically the most popular index, more or less includes all bonds in the Universal rated investment grade. The direct analog to the S&P 500 would be the U.S. Corporate Investment Grade index, which is tracked by the ETF LQD, and contains exactly what it sounds like. Citigroup (formerly Salomon Brothers) also has a competitor index to the Aggregate known as Broad Investment Grade (BIG), and Merrill Lynch (now Bank of America) has the Domestic Master. Multiple other indices also exist covering other bond markets, such as international (non-USD) bonds, tax-exempts (municipal bonds), securitized products, floating rate, etc.",
"title": ""
},
{
"docid": "1cbcf770e60f79eaa8769eba124b4658",
"text": "\"Split your contributions evenly across the funds on that list with the word \"\"core\"\" or \"\"S&P\"\" in the name. Maybe add \"\"International Large Cap Index\"\". Leave it & rebalance occasionally. Read a book on Modern Portfolio Theory sometime in the next 5 years.\"",
"title": ""
},
{
"docid": "bddbceba5540cf233b6ac80b6426420c",
"text": "\"The Dow Jones Industrial Average (DJIA) is a Price-weighted index. That means that the index is calculated by adding up the prices of the constituent stocks and dividing by a constant, the \"\"Dow divisor\"\". (The value of the Dow divisor is adjusted from time to time to maintain continuity when there are splits or changes in the roster.) This has the curious effect of giving a member of the index influence proportional to its share price. That is, if a stock costing $100 per share goes up by 1%, that will change the index by 10 times as much as if a stock costing $10 per share goes up by the same 1%. Now look at the price of Google. It's currently trading at just a whisker under $700 per share. Most of the other stocks in the index trade somewhere between $30 and $150, so if Google were included in the index it would contribute between 5 and 20 times the weight of any other stock in the index. That means that relatively small blips in Google's price would completely dominate the index on any given day. Until June of 2014, Apple was in the same boat, with its stock trading at about $700 per share. At that time, Apple split its stock 7:1, and after that its stock price was a little under $100 per share. So, post-split Apple might be a candidate to be included in the Dow the next time they change up the components of the index. Since the Dow is fixed at 30 stocks, and since they try to keep a balance between different sectors, this probably wouldn't happen until they drop another technology company from the lineup for some reason. (Correction: Apple is in the DJIA and has been for a little over a year now. Mea culpa.) The Dow's price-weighting is unusual as stock indices go. Most indices are weighted by market capitalization. That means the influence of a single company is proportional to its total value. This causes large companies like Apple to have a lot of influence on those indices, but since market capitalization isn't as arbitrary as stock price, most people see that as ok. Also, notice that I said \"\"company\"\" and not \"\"stock\"\". When a company has multiple classes of share (as Google does), market-cap-weighted indices include all of the share classes, while the Dow has no provision for such situations, which is another, albeit less important, reason why Google isn't in the Dow. (Keep this in mind the next time someone offers you a bar bet on how many stocks are in the S&P 500. The answer is (currently) 505!) Finally, you might be wondering why the Dow uses such an odd weighting in its calculations. The answer is that the Dow averages go back to 1896, when Charles Dow used to calculate the averages by hand. If your only tools are a pencil and paper, then a price-weighted index with only 30 stocks in it is a lot easier to calculate than a market-cap-weighted index with hundreds of constituents. About the Dow Jones Averages. Dow constituents and prices Apple's stock price chart. The split in 2014 is marked. (Note that prices before the split are retroactively adjusted to show a continuous curve.)\"",
"title": ""
},
{
"docid": "0f8ff70696e06a1a1df44938f4de14eb",
"text": "If you have access, factset and bloomberg have this. However, these aren't standardized due to non-existent reporting regulations, therefore each company may choose to categorize regions differently. This makes it difficult to work with a large universe, and you'll probably end up doing a large portion manually anyways.",
"title": ""
},
{
"docid": "b3cbd45fe7f0dcc84547f3ffbd8426e9",
"text": "I hate to point to Wikipedia as an answer, but it does describe exactly what you are looking for... The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock market exchanges; the New York Stock Exchange and the NASDAQ. The components of the S&P 500 are selected by committee... The committee selects the companies in the S&P 500 so they are representative of the industries in the United States economy. In addition, companies that do not trade publicly (such as those that are privately or mutually held) and stocks that do not have sufficient liquidity are not in the index. The S&P is a capitalization weighted index. If a stock price goes up, then it comprises more of the total index. If a stock goes down, it comprises less, and if it goes down too much, the committee will likely replace it. So to answer your question, if one stock were to suddenly skyrocket, nothing would happen beyond the fact that the index was now worth more and that particular stock would now make up a larger percentage of the S&P 500 index.",
"title": ""
},
{
"docid": "642b86f98a538677ffa13426a8d71943",
"text": "Is it POSSIBLE? Of course. I don't even need to do any research to prove that. Just some mathematical reasoning: Take the S&P 500. Find the performance of each stock in that list over whatever time period you want to use for your experiment. Now select some number of the best-performing stocks from the list -- any number less than 500. By definition, the X best must be better than or equal to the average. Assuming all the stocks on the S&P did not have EXACTLY the same performance, these 10 must be better than average. You now have a diversified portfolio that performed better than the S&P 500 index fund. Of course as they always say in a prospectus, past performance is not a guarantee of future performance. It's certainly possible to do. The question is, if YOU selected the stocks making up a diversified portfolio, would your selections do better than an index fund?",
"title": ""
},
{
"docid": "19c88318ddfa0f06ea6a64aae8644c24",
"text": "What makes the S&P 500 Index funds have low expenses ratios is that the amount of money spent by the mutual fund company on research is Zero. Standard and Poors does the research, the fund companies piggy back on that research. Another big factor in keeping expenses low is the fact the companies that makeup the index don't change very often. If the fund frequently changes the makeup of the investments not only can that trigger tax considerations but there are costs associated with all those transactions. The question is: do the other algorithms overcome the additional costs due to higher expenses and taxes.",
"title": ""
},
{
"docid": "e9149538d610725a2eac924e1aea37af",
"text": "As I write this, the NASDAQ Composite is at 2790.00, down 6.14 points from yesterday. To calculate the percentage, you take 6.14 and divide by yesterday's close of 2796.14 to yield 0.22%. In your example, if SPY drops from 133.68 to 133.32, you use the difference of -0.36 and divide by the original, i.e. -0.36/133.68 = -0.27%. SPY is an ETF which you can invest in that tracks the S&P 500 index. Ideally, the index would have dropped the same percentage as SPY, but the points would be different (~10x higher). To answer your question about how one qualifies a point, it completely depends on the index being discussed. For example, the S&P 500 is a market-capitalization weighted index of the common stock of 500 large-cap US public companies. It is as if you owned every share of each of the 500 companies, then divide by some large constant to create a number that's easily understood mentally (i.e. 1330). The NASDAQ Composite used the same methodology but includes practically all stocks listed on the NASDAQ. Meanwhile, the Dow Jones Industrial Average is a price-weighted index of 30 large-cap companies. It's final value is modified using a divisor known as the Dow Divisor, which accounts for stock splits and similar events that have occurred since a stock has joined the index. Thus, points when referring to an index do not typically represent dollars. Rather, they serve as a quantitative measure of how the market is doing based on the performance of the index constituents. ETFs like SPY add a layer of abstraction by creating an investible vehicle that ideally tracks the value of the underlying index directly. Finally, neither price nor index value is related to volume. Volume is a raw measurement of the total number of shares traded for a given stock or the aggregate for a given exchange. Hope this helps!",
"title": ""
},
{
"docid": "7644b5907cbc5ae92596e67e0dae1f2b",
"text": "The equation you show is correct, you've simply pointed out that you understand that you buy at the 'ask' price, and later sell at the 'bid.' There is no bid/ask on the S&P, as you can't trade it directly. You have a few alternatives, however - you can trade SPY, the (most well known) S&P ETF whose price reflects 1/10 the value or VOO (Vanguard's offering) as well as others. Each of these ETFs gives you a bid/ask during market hours. They trade like a stock, have shares that are reasonably priced, and are optionable. To trade the index itself, you need to trade the futures. S&P 500 Futures and Options is the CME Group's brief info guide on standard and mini contracts. Welcome to SE.",
"title": ""
},
{
"docid": "6d91739afcb1f6db012efe56d20c0d6a",
"text": "I wouldn't use it to take leverage unless you don't mind loosing your entire investment (this is a possibility as shares are already quite volatile). However, you don't have to take leverage and still trade CFDs. Benefits of doing so: Disadvantages:",
"title": ""
}
] |
fiqa
|
38c8ca85307c3a8831981913203b214b
|
Is selling put options an advisable strategy for a retiree to generate stable income?
|
[
{
"docid": "cacd6db4295749b134fef57b9d3947b0",
"text": "No. In good years, the income seems free. In a down year, particularly a bad one, the investor will be subject to large losses that will prove the strategy a bad one. On the other hand, one often hears of the strategy of selling puts on stock you would like to own. If the stock rises, you keep the premium, if it drops, you own it at a bit of a discount from that starting point.",
"title": ""
},
{
"docid": "4215d59595db6fef019e68352fc63517",
"text": "\"This is a really bad idea. You are asking to be forced to pay for something at a time when you most likely NOT want to buy it. Why? There is no stability (much less any degree of predictability) to give up the right to control when and for how much you would be willing to own the S&P500. Just don't do it.....\"\"generate stable income\"\" and \"\"selling puts\"\" is an oxymoron. ===retired investment advisor\"",
"title": ""
},
{
"docid": "1e95b8558db9ce9f9fa34c465a4df46b",
"text": "I am close to retirement and sell cash secured puts and covered calls on a regular basis. I make 15 % plus per year from the puts. Less risky than buying stocks, which I also do. Riskier than bonds, but several times the income. Example: I owned 4,000 shares of XYZ, which I bought last year at 6.50 and was at 7.70 two months ago. I sold 3,000 shares, sold 10 Dec puts @ 7.50 (1,000 shares) for $.90 per share and sold 10 Dec calls at 10.00 for $.20. Now I had cash from the sale of 3,000 shares ($23,100) plus $900 cash from the sale of the puts, plus $200 cash from the sale of the calls. Price is now at 6.25. Had I held the 4,000 shares, I would be down $5,800 from when it was 7.70. Instead, I am down $1,450 from the held 1,000 shares, down $550 on the put and up $200 on the calls. So down $1,800 instead of down $5,800. I began buying XYZ back at 6.25 today.",
"title": ""
},
{
"docid": "84a52eb31913a2aea4d3f32967b290ca",
"text": "\"There is only one way to create \"\"stable\"\" income using options: write COVERED calls. This means you must own some stocks which offer an active and liquid option market (FB would be good; T would be useless.) In other words, you need to own some \"\"unstable\"\" stocks, tickers that have sometimes scary volatility, and of course these are not great stocks for a retiree. But, let's assume you own 500 shares of FB, which you bought in June of 2015 for $75. Today, you could have been paid $2,375 for selling five Mar18'16 $105 Calls. Your reasoning is: So, the rule is: ONLY SELL COVERED CALLS AT A PRICE YOU WOULD BE HAPPY TO ACCEPT. If you follow the rule, you'll generate more-or-less \"\"stable\"\" income. Do not venture off this narrow path into the rest of Option Land. There be dragons. You can select strike prices that are far out of the money to minimize the chance of being exercised (and sweeten the deal by collecting an even higher price if the stock flies that high). If you are thinking about doing this, study the subject thoroughly until you know the terminology backwards and forwards. (Don't worry about \"\"the greeks\"\" since market makers manipulate implied volatility so wildly that it overrides everything else.)\"",
"title": ""
},
{
"docid": "ecbb38a40d15f158007fdd49127c49bb",
"text": "As you move toward retirement, your portfolio is supposed to move toward low risk, stable investments, more bonds, less stocks, etc. Your question implies that you want to increase your income, most likely because your income is not satisfying your desires. First, any idea that you have that risks your savings, just eliminate it. You are not able to replace those savings. The time for those kind of plays has passed. However, you can improve your situation. Do random odd jobs. Find a part time job that you're willing to do for 10 hours a week or something. Keep this money separate from your retirement savings. Research the stock trades you would like to make and use that 'extra' money to play in the market. Set a rule that you do not touch your nest egg for trading. You may find that being retired gives you the time to do the #1 thing that helps investors make good investments -- research. Then when you make your first million doing this, write a book. If you call it Retire - And Then Get Rich, I expect royalties and a dedication.",
"title": ""
},
{
"docid": "83833c27853a9f356261bd0f87eb66d7",
"text": "Selling options is a great idea, but tweak it a bit and sell credit spreads on both sides of the market, i.e. sell OTM bear call spreads and OTM bull put spreads. This is also known as an iron condor, and limits risk, and allows for much more flexibility.",
"title": ""
},
{
"docid": "a3a5556c65644a684570337fc538784f",
"text": "Yes -- If you are prepared to own the stock and have the cash to buy it, it can be a good way to generate income. The downside is really no more than buying a stock and it goes down -- which can happen to any investment -- and you have the premium of the put. Just don't do it on any stock you would not buy outright. To the posters who say it's a bad idea, I would like some more info on why they think that. It's not more bad idea than any investment. Yes it has risk, but so does buying stocks in general, buying dividend stocks etc and since most options expire worthless the odds are more in your favor selling puts.",
"title": ""
}
] |
[
{
"docid": "f98e2c40271286a1f613521f95a2ab21",
"text": "Unless you plan to sell your home and live in a box during your retirement I wouldn't consider it an investment that is a viable replacement for a retirement account. Consider this: Even if housing prices DO go way up, you still need a place to live. When you sell that house and try to buy another one to live in, you will find that the other houses went up in price too, negating your gain. The only way this might work is if you buy a much bigger house than you will need later and trade down to pull out some equity, or consider a reverse-mortgage for retirement income.",
"title": ""
},
{
"docid": "6624eb2ad2488e72f86201f096a0e884",
"text": "You are probably right that using a traditional buy and hold strategy on common equities or funds is very unlikely to generate the types of returns that would make you a millionaire in short order. However, that doesn't mean it isn't possible. You just have to accept a more risk to become eligible for such incredible returns that you'd need to do that. And by more risk I mean a LOT more risk, which is more likely to put you in the poorhouse than a mansion. Mostly we are talking about highly speculative investments like commodities and real estate. However, if you are looking for potential to make (or more likely lose) huge amounts of money in the stock market without a very large cache of cash. Options give you much more leverage than just buying a stock outright. That is, by buying option contracts you can get a much larger return on a small movement in the stock price compared to what you would get for the same investment if you bought the stock directly. Of course, you take on additional risk. A normal long position on a stock is very unlikely to cause you to lose your entire investment, whereas if the stock doesn't move far enough and in the right direction, you will lose your entire investment in option contracts.",
"title": ""
},
{
"docid": "1a0149cc2f846557283e56fc4af26615",
"text": "\"Exactly. I'll \"\"retire\"\" from teaching in two years and will be given the chance to take half of my retirement in one lump sum payment and take home $1,000 a month, or take nothing and bring home 2,000 a month. The other thing to remember is the 30% tax payment that next April. That's tough. This looks like a no-brainer because in just seven years, I'd eclipse the cash out. However, I might do it because I'll take the money and possibly pay off a rental home. With a rental, I'll be able to raise the rent if inflation kicks in. Of course, if deflation continues, that might be a bad move. The thing is, I'll be able to decide.\"",
"title": ""
},
{
"docid": "e155a7538f8822b59bcea7d7e2f5090d",
"text": "In addition to what others have said, I think it is important to consider that government retirement assistance (whatever it is called in each instance) is basically a promise that can be revoked. I talked to a retired friend of mine just yesterday and we got onto that subject; she mentioned that when she was young, the promise was for 90% of one's pay, paid by the government after retiring. It is very different today. Yes, you can gamble that you won't need the saved money, and thus decide not to save anything. What then if you do end up needing the money you did not set aside, but rather spent? You are just now graduating college, and assuming of course that you get a decently-paying job, are likely going to have loads more money than you are used to. If you make an agreement with yourself to set aside even just 10-15% of the difference in income right from the start, that is going to grow into a pretty sizable nest egg by the time you approach retirement age. Then, you will have the option of continuing to work (maybe part-time) or quitting in a way you would not have had otherwise. Now I'm going to pull numbers out of thin air, but suppose that you currently have $1000/month net, before expenses, and can get a job that pays $1800/month net starting out. 10-15% of the difference means you'll be saving around $100/month for retirement. In 35 years, assuming no return on investment (pessimistic, but works if returns match inflation) and no pay rises, that will still be over $40K. That's somewhere on the order of $150/month added to your retirement income for 25 years. Multiply with whatever inflation rate you think is likely if you prefer nominal values. It becomes even more noticable if you save a significant fraction of the additional pay; if you save 1/3 of the additional money (note that you still effectively get a 50% raise compared to what you have been living on before), that gives you a net income of $1500/month instead of $1800 ($500/month more rather than $800/month more) which grows into about $110K in 35 years assuming no return on investment. Nearly $400 per month for 25 years. $100 per week is hardly chump change in retirement, and it is still quite realistic for most people to save 30% of the money they did not have before.",
"title": ""
},
{
"docid": "524a107fb5d13c11550c4082a928b284",
"text": "I think a larger issue is that you're trying to do market timing. Whether you had a large or small amount of money to invest, no one wants to put the money in to watch it go down. You can't really predict if prices in a market or security will go up in six months (in which case you want to put all your cash in now), of if it will go down (in which case you'd want to wait until the bottom), or if it will skitter around (in which case you'd want to only buy at the bottoms). Of course, if you're magic enough to nail all of those market conditions, you're a master finance trader and will quickly make billions. If you're really concerned with protecting your money and want to take some long positions, I'd look into some put options. You'll of course pay the fees for those put options, but they'll protect your downside. Much of this depends on your time horizon: at the age of 35, someone can expect to see ~6 more recessions and perhaps ~30 more market corrections before retirement. With that big of a time range, it's best to avoid micro-optimizing since that tends to hurt your performance overall (because you won't be able to time the market correctly most of the time). One thing that's somewhat reasonable, if you have the stomach for it, is to not buy at somewhat-obvious market highs and wait for corrections. This isn't fool proof by any means, but as an example many people realized that US equities basically were on a ~5 year up run by December 2014. Many people cashed out those positions, expecting that a correction would be due. And around late summer of 2015, that correction came. For those with patience, they made ~15% with a few mouse clicks. Of course many others would have been waiting for that correction since 2010 and missed out on the market increases. Boiled down:",
"title": ""
},
{
"docid": "c93bcfadf72babd57eae98f63c332b0a",
"text": "That's up to you, but I wouldn't play around with my retirement money if I was in your situation. Your earning potential during your retirement years will likely be at its nadir. Do you really want to risk being forced to be a Wal-Mart greeter when you are 80? Also, considering your earning potential now is probably at or near the peak, your opportunity cost for each hour of your life is much higher now than it will be later. So ultimately you'd be working a little harder now or a lot harder later for less money.",
"title": ""
},
{
"docid": "1b21e111173e3ecdcd7780e47437aa2b",
"text": "\"There are two things going on here, neither of which favors this approach. First, as @JohnFx noted, you should be wary of the sunk-cost fallacy, or throwing good money after bad. You already lost the money you lost, and there's no point in trying to \"\"win it back\"\" as opposed to just investing the money you still have as wisely as possible, forgetting your former fortune. Furthermore, the specific strategy you suggest is not a good one. The problem is that you're assuming that, whenever the stock hits $2, it will eventually rebound to $3. While that may often happen, it's far from guaranteed. More specifically, assuming the efficient market hypothesis applies (which it almost certainly does), there are theorems that say you can't increase your expected earning with a strategy like the one you propose: the apparent stability of the steady stream of income is offset by the chance that you lose out if the stock does something you didn't anticipate.\"",
"title": ""
},
{
"docid": "04cfc11786b1d6c8709679a6c244060f",
"text": "Assuming that you have capital gains, you can expect to have to pay taxes on them. It might be short term, or long term capital gains. If you specify exactly which shares to sell, it is possible to sell mostly losers, thus reducing or eliminating capital gains. There are separate rules for 401K and other retirement programs regarding down payments for a house. This leads to many other issues such as the hit your retirement will take.",
"title": ""
},
{
"docid": "eda4f865be43a29f1fffcd2bc0dd7ade",
"text": "I think it depends on your broker. Some brokers will not try to auto exercise in the money options. Others will try to do the exercise it if you have available funds. Your best bet, if find yourself in that situation, is to sell the option on the open market the day of or slightly before expiration. Put it on your calendar and don't forget, you could loose your profits. @#2 Its in the best interest of your broker to exercise because they get a commission. I think they are used to this situation where there is a lack of funds. Its not like bouncing a check. You will need to check with your broker on this. @#3 I think many or most options traders never intend on buying the underling stock. Therefore no, they do not always make sure there is enough funds to buy.",
"title": ""
},
{
"docid": "eefe526e99c585f680907b8039439560",
"text": "Best thing to do is convert your money into something that will retain value. Currency is a symbol of wealth, and can be significantly devalued with inflation. Something such as Gold or Silver might not allow you to see huge benefit, but its perhaps the safest bet (gold in particular, as silver is more volatile), as mentioned above, yes you do pay a little above spot price and receive a little below spot when and if you sell, but current projections for both gold and silver suggest that you won't lose money at least. Safe bet. Suggesting it is a bad idea at this time is just silly, and goes against the majority of advisers out there.",
"title": ""
},
{
"docid": "38209351c883c0ccdec99ec8f3586956",
"text": "\"I agree that you should CONSIDER a shares based dividend income SIPP, however unless you've done self executed trading before, enough to understand and be comfortable with it and know what you're getting into, I would strongly suggest that as you are now near retirement, you have to appreciate that as well as the usual risks associated with markets and their constituent stocks and shares going down as well as up, there is an additional risk that you will achieve sub optimal performance because you are new to the game. I took up self executed trading in 2008 (oh yes, what a great time to learn) and whilst I might have chosen a better time to get into it, and despite being quite successful over all, I have to say it's the hardest thing I've ever done! The biggest reason it'll be hard is emotionally, because this pension pot is all the money you've got to live off until you die right? So, even though you may choose safe quality stocks, when the world economy goes wrong it goes wrong, and your pension pot will still plummet, somewhat at least. Unless you \"\"beat the market\"\", something you should not expect to do if you haven't done it before, taking the rather abysmal FTSE100 as a benchmark (all quality stocks, right? LOL) from last Aprils highs to this months lows, and projecting that performance forwards to the end of March, assuming you get reasonable dividends and draw out £1000 per month, your pot could be worth £164K after one year. Where as with normal / stable / long term market performance (i.e. no horrible devaluation of the market) it could be worth £198K! Going forwards from those 2 hypothetical positions, assuming total market stability for the rest of your life and the same reasonable dividend payouts, this one year of devaluation at the start of your pensions life is enough to reduce the time your pension pot can afford to pay out £1000 per month from 36 years to 24 years. Even if every year after that devaluation is an extra 1% higher return it could still only improve to 30 years. Normally of course, any stocks and shares investment is a long term investment and long term the income should be good, but pensions usually diversify into less and less risky investments as they get close to maturity, holding a certain amount of cash and bonds as well, so in my view a SIPP with stocks and shares should be AT MOST just a part of your strategy, and if you can't watch your pension pot payout term shrink from 26 years to 24 years hold your nerve, then maybe a SIPP with stocks and shares should be a smaller part! When you're dependent on your SIPP for income a market crash could cause you to make bad decisions and lose even more income. All that said now, even with all the new taxes and loss of tax deductible costs, etc, I think your property idea might not be a bad one. It's just diversification at the end of the day, and that's rarely a bad thing. I really DON'T think you should consider it to be a magic bullet though, it's not impossible to get a 10% yield from a property, but usually you won't. I assume you've never done buy to let before, so I would encourage you to set up a spread sheet and model it carefully. If you are realistic then you should find that you have to find really REALLY exceptional properties to get that sort of return, and you won't find them all the time. When you do your spread sheet, make sure you take into account all the one off buying costs, build a ledger effectively, so that you can plot all your costs, income and on going balance, and then see what payouts your model can afford over a reasonable number of years (say 10). Take the sum of those payouts and compare them against the sum you put in to find the whole thing. You must include budget for periodic minor and less frequent larger renovations (your tenants WON'T respect your property like you would, I promise you), land lord insurance (don't omit it unless you maintain capability to access a decent reserve (at least 10-20K say, I mean it, it's happened to me, it cost me 10K once to fix up a place after the damage and negligence of a tenant, and it definitely could have been worse) but I don't really recommend you insuring yourself like this, and taking on the inherent risk), budget for plumber and electrician call out, or for appropriate schemes which include boiler maintenance, etc (basically more insurance). Also consider estate agent fees, which will be either finders fees and/or 10% management fees if you don't manage them yourself. If you manage it yourself, fine, but consider the possibility that at some point someone might have to do that for you... either temporarily or permanently. Budget for a couple of months of vacancy every couple of years is probably prudent. Don't forget you have to pay utilities and council tax when its vacant. For leaseholds don't forget ground rent. You can get a better return on investment by taking out a mortgage (because you make money out of the underlying ROI and the mortgage APR) (this is usually the only way you can approach 10% yield) but don't forget to include the cost of mortgage fees, valuation fees, legal fees, etc, every 2 years (or however long)... and repeat your model to make sure it is viable when interest rates go up a few percent.\"",
"title": ""
},
{
"docid": "6d8b34920de21050fcb63a2f13c75a62",
"text": "\"I would start with long term data. It would show how 40 years worth of stock investing puts the investor so far ahead of the \"\"safe\"\" investor that they can afford to lose half and still be ahead. But - then I would explain about asset allocation, and how the soon to be retired person had better be properly allocated if they weren't all along so that the impact of down years is mitigated. The retiree is still a long term investor as life spans of 90 are common. Look at the long term charts for the major indexes. So long as you average in, reinvest earnings (dividends) and stay diversified, you will be ahead. The market is still not where it was at the end of 2001, but in the decade, our worth has risen from 5X our income to 12.5X. This was not genius, just a combination of high savings and not panicking.\"",
"title": ""
},
{
"docid": "2328833836397e7b0dd33404beb1c97f",
"text": "You're correct in your implied point: Selling a cash secured put has less risk (in terms of both volatility and maximum loss) than buying the security outright. However, many brokerages don't allow cash-secured put writing in IRA accounts. There are three reasons this tends to be the case:",
"title": ""
},
{
"docid": "3539d10c4d9b8ee4cb6d011696498707",
"text": "If you have your long positions established and are investing responsibly (assuming you know the risks and can accept them), the next step IMO is typically learning hedging - using options or option strategies to solidify positions. Collars (zero cost) and put options are a good place to start your education and they can be put to use to both speculate (what you are effectively doing with short-position trading) or long-term oriented edging. Day trading equites can be lucrative but it is a difficult game to play - learning options (while more complex on speculation) can provide opportunities to solidify positions. Options trading is difficult grounds. I just think the payoff long term to knowing options is much greater than day-trading tactics (because of versatility)",
"title": ""
},
{
"docid": "763dca18472ae2314ce65c377eb644a0",
"text": "One advantage of paying down your primary residence is that you can refinance it later for 10-15 years when the balance is low. Refinancing a rental is much harder and interest rates are often higher for investors. This also assumes that you can refinance for a lower rate in the nearest future. The question is really which would you rather sell if you suddenly need the money? I have rental properties and i'd rather move myself, than sell the investments (because they are income generating unlike my own home). So in your case i'd pay off primary residence especially since the interest is already higher on it (would be a harder decision if it was lower)",
"title": ""
}
] |
fiqa
|
fa95def6116add1d41f57330a679535b
|
Why is short-selling considered more “advanced” than a simple buy?
|
[
{
"docid": "bf4dc0484ecb27f88bbc32a09a7fa536",
"text": "When you short a stock, you can lose an unlimited amount of money if the trade goes against you. If the shorted stock gaps up overnight you can lose more money than you have in your account. The best case is you make 100% if the stock goes to zero. And then you have margin fees on top of that. With long positions, it's the other way around. Your max loss is 100% and your gains are potentially unlimited.",
"title": ""
},
{
"docid": "9fe25aa1854aa86f6ddc2763e3e763ba",
"text": "In addition to the higher risk as pointed out by @JamesRoth, you also need to consider that there are regulations against 'naked shorting' so you generally need to either own the security, or have someone that is willing to 'loan' the security to you in order to sell short. If you own a stock you are shorting, the IRS could view the transaction as a Sell followed by a buy taking place in a less than 30 day period and you could be subject to wash-sale rules. This added complexity (most often the finding of someone to loan you the security you are shorting) is another reason such trades are considered more advanced. You should also be aware that there are currently a number of proposals to re-instate the 'uptick rule' or some circuit-breaker variant. Designed to prevent short-sellers from driving down the price of a stock (and conducting 'bear raids etc) the first requires that a stock trade at the same or higher price as prior trades before you can submit a short. In the latter shorting would be prohibited after a stock price had fallen a given percentage in a given amount of time. In either case, should such a rule be (re)established then you could face limitations attempting to execute a short which you would not need to worry about doing simple buys or sells. As to vehicles that would do this kind of thing (if you are convinced we are in a bear market and willing to take the risk) there are a number of ETF's classified as 'Inverse Exchange Traded Funds (ETF's) for a variety of markets that via various means seek to deliver a return similar to that of 'shorting the market' in question. One such example for a common broad market is ticker SH the ProShares Short S&P500 ETF, which seeks to deliver a return that is the inverse of the S&P500 (and as would be predicted based on the roughly +15% performance of the S&P500 over the last 12 months, SH is down roughly -15% over the same period). The Wikipedia article on inverse ETF's lists a number of other such funds covering various markets. I think it should be noted that using such a vehicle is a pretty 'aggressive bet' to take in reaction to the belief that a bear market is imminent. A more conservative approach would be to simply take money out of the market and place it in something like CD's or Treasury instruments. In that case, you preserve your capital, regardless of what happens in the market. Using an inverse ETF OTOH means that if the market went bull instead of bear, you would lose money instead of merely holding your position.",
"title": ""
},
{
"docid": "57a401b1ba49886d5d4103b0fe6c4bdb",
"text": "\"The margin rules are also more complicated. A simple buy on a non-margin account will never run into margin rules and you can just wait out any dips if you have confidence the stock will recover. A \"\"simple\"\" short sell might get you a call from your broker that you have a margin call, and you can't wait it out without putting more money in. Personally I have trouble keeping the short sale margin rules straight in my head, at least compared to a long sale. I got in way over my head shorting AMZN once, and lost a lot of money because I thought it was overvalued at the time, but it just kept going up and I wanted it to go down. I've never gotten stuck like that on a long position.\"",
"title": ""
}
] |
[
{
"docid": "907deeaa3c67ab33eead5ceaece419ad",
"text": "The point of short-selling as a separate instrument is that you can you do it when you can't sell the underlying asset... usually because you don't actually own any of it and in fact believe that it will go down. Shorting allows you to profit from a falling price. Another (non-speculative) possibility is that you don't have the underlying asset right now (and thus can't sell it) but will get it at a certain point in the future, e.g. because it's bonds that you've used to guarantee a loan... or grain that's still growing on your fields.",
"title": ""
},
{
"docid": "a87a785ece5786dd7c3b3761d25d5e96",
"text": "\"And what exactly do I profit from the short? I understand it is the difference in the value of the stock. So if my initial investment was $4000 (200 * $20) and I bought it at $3800 (200 * $19) I profit from the difference, which is $200. Do I also receive back the extra $2000 I gave the bank to perform the trade? Either this is extremely poorly worded or you misunderstand the mechanics of a short position. When you open a short position, your are expecting that the stock will decline from here. In a short position you are borrowing shares you don't own and selling them. If the price goes down you get to buy the same shares back for less money and return them to the person you borrowed from. Your profit is the delta between the original sell price and the new lower buy price (less commissions and fees/interest). Opening and closing a short position is two trades, a sell then a buy. Just like a long trade there is no maximum holding period. If you place your order to sell (short) 200 shares at $19, your initial investment is $3,800. In order to open your $3,800 short position your broker may require your account to have at least $5,700 (according to the 1.5 ratio in your question). It's not advisable to open a short position this close to the ratio requirement. Most brokers require a buffer in your account in case the stock goes up, because in a short trade if the stock goes up you're losing money. If the stock goes up such that you've exhausted your buffer you'll receive what's known as a \"\"margin call\"\" where your broker either requires you to wire in more money or sell part or all of your position at a loss to avoid further losses. And remember, you may be charged interest on the value of the shares you're borrowing. When you hold a position long your maximum loss is the money you put in; a position can only fall to zero (though you may owe interest or other fees if you're trading on margin). When you hold a position short your maximum loss is unlimited; there's no limit to how high the value of something can go. There are less risky ways to make short trades by using put options, but you should ensure that you have a firm grasp on what's happening before you use real money. The timing of the trades and execution of the trades is no different than when you take a plain vanilla long position. You place your order, either market or limit or whatever, and it executes when your trade criteria occurs.\"",
"title": ""
},
{
"docid": "54b2d8e307104d0ed9651537bd06468e",
"text": "A lot of people here talk about shorting stocks, buying options, and messing around with leveraged ETFs. While these are excellent tools, that offer novel opportunities for the sophisticated investor, Don't mess around with these until you have been in the game for a few years. Even if you can make money consistently right out of the gate, don't do it. Why? Making money isn't your challenge, NOT LOSING money is your challenge. It's hard to measure the scope of the risk you are assuming with these strategies, much less manage it when things head south. So even if you've gotten lucky enough to have figured out how to make money, you surely haven't learned out how to hold on to it. I am certain that every beginner still hasn't figured out how to comprehend risk and manage losing positions. It's one of those things you only figure out after dealing with it. Stocks (with little to no margin) are a great place to learn how to lose because your risk of losing everything is drastically lower than with the aforementioned tools of the sophisticated investor. Despite what others may say you can make out really well just trading stocks. That being said, one of my favorite beginner strategies is buying stocks that dip for reasons that don't fundamentally affect the company's ability to make money in the mid term (2 quarters). Wallstreet loves these plays because it shakes out amateur investors (release bad news, push the stock down shorting it or selling your position, amateurs sell, which you buy at a discount to the 'fair price'.) A good example is Netflix back in 2007. There was a lawsuit because netflix was throttling movie deliveries to high traffic consumers. The stock dropped a good chunk overnight. A more recent example is petrobras after their huge bond sale and subsequent corruption scandal. A lot of people questioned Petrobras' long-term ability to maintain sufficient liquidity to pay back the loans, but the cashflow and long term projections are more than solid. A year later the stock was pushed further down because a lot of amateur Brazilians invest in Petrobras and they sold while the stock was artificially depressed due to a string of corruption scandals and poor, though temporary, economic conditions. One of my favorite plays back in 2008-2011 was First Solar on the run-up to earnings calls. Analysts would always come out of these meetings downgrading the stock and the forums were full of pikers and pumpers claiming heavy put positions. The stock would go down considerably, but would always pop around earnings. I've made huge returns on this move. Those were the good ole days. Start off just googling financial news and blogs and look for lawsuits and/or scandals. Manufacturing defects or recalls. Starting looking for companies that react predictably to certain events. Plot those events on your chart. If you don't know how to back-test events, learn it. Google Finance had a tool for that back in the day that was rudimentary but helpful for those starting out. Eventually though, moreso than learning any particular strategy, you should learn these three skills: 1) Tooling: to gather, manipulate, and visualize data on your own. These days automated trading also seems to be ever more important, even for the small fish. 2) Analytical Thinking learn to spot patterns of the three types: event based (lawsuits, arbitrage, earnings etc), technical (emas, price action, sup/res), or business-oriented (accounting, strategy, marketing). Don't just listen to what someone else says you should do at any particular moment, critical thinking is essential. 3) Emotions and Attitude: learn how to comprehend risk and manage your trigger finger. Your emotions are like a blade that you must sharpen every day if you want to stay in the game. Disclaimer: I stopped using this strategy in 2011, and moved to a pure technical trading regime. I've been out totally out of the game since 2015.",
"title": ""
},
{
"docid": "042f9a1692281b7268716120e19011d8",
"text": "There is no magic bullet here. If you want professional management, because you think they know more about entry and exit points for short positions, have more time to monitor a position, etc... (but they might not) try a mutual fund or exchange traded fund that specializes in shorts. Note: a lot of these may not have done so well, your mileage may vary",
"title": ""
},
{
"docid": "239577845aeacb0b4cac2674fe3edaad",
"text": "In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. Remember your broker has to borrow it from somewhere, other clients or if they hold those specific stocks themselves. So if it isn't possible for them to lend you those stocks, they wouldn't. High P/E stocks would find more sellers than buyers, and if the broker has to deliver them, it would be a nightmare for him to deliver all those stocks, which he had lent you(others) back to whom he had borrowed from, as well as to people who had gone long(buy) when you went short(sell). And if every body is selling there is going to be a dearth of stocks to be borrowed from as everybody around is selling instead of buying.",
"title": ""
},
{
"docid": "e3b31f6ff09ba86956fe3909c37414b4",
"text": "\"As the other answer said, the person who owns the lent stock does not benefit directly. They may benefit indirectly in that brokers can use the short lending profits to reduce their fees or in that they have the option to short other stocks at the same terms. Follow-up question: what prevents the broker lending the shares for a very short time (less than a day), pocketing the interest and returning the lenders their shares without much change in share price (because borrowing period was very short). What prevents them from doing that many times a day ? Lack of market. Short selling for short periods of time isn't so common as to allow for \"\"many\"\" times a day. Some day traders may do it occasionally, but I don't know that it would be a reliable business model to supply them. If there are enough people interested in shorting the stock, they will probably want to hold onto it long enough for the anticipated movement to happen. There are transaction costs here. Both fees for trading at all and the extra charges for short sale borrowing and interest. Most stocks do not move down by large enough amounts \"\"many\"\" times a day. Their fluctuations are smaller. If the stock doesn't move enough to cover the transaction fees, then that seller lost money overall. Over time, sellers like that will stop trading, as they will lose all their money. All that said, there are no legal blocks to loaning the stock out many times, just practical ones. If a stock was varying wildly for some bizarre reason, it could happen.\"",
"title": ""
},
{
"docid": "76b3ed663f72d7d3a4b5b4f8254222b9",
"text": "This is often the case where traders are closing out short positions they don't want to hold overnight, for a variety of reasons that matter to them. Most frequently, this is from day traders or high-frequency traders settling their accounts before the markets close.",
"title": ""
},
{
"docid": "ddfe0fd135b294be3b3199c6a3eced9e",
"text": "Your original example is a little confusing because just shorting for 1k and buying for 1k is 100% leveraged or an infinitive leverage ratio. (and not allowed) Brokerage houses would require you to invest some capital in the trade. One example might be requiring you to hold $100 in the brokerage. This is where the 10:1 ratio comes from. (1000/10) Thus a return of 4.5% on the 1000k bond and no movement on the short position would net you $45 and voila a 45% return on your $100 investment. A 40 to 1 leverage ratio would mean that you would only have to invest $25 to make this trade. Something that no individual investor are allowed to do, but for some reason some financial firms have been able to.",
"title": ""
},
{
"docid": "b14dd8648d5c653d81d1eed23318e43d",
"text": "This can arise with very thinly traded stocks for large blocks of shares. If the market only has a few thousand dollars available at between 8.37 and 12.5 the price is largely meaningless for people who want to invest in hundreds of thousands/millions of dollars worth, as the quoted price can't get them anywhere near the number of shares they want. How liquid is the stock in question?",
"title": ""
},
{
"docid": "f43b6752d14990919da259fe34489f17",
"text": "Differences in liquidity explain why American-style options are generally worth more than their European-style counterparts. As far as I can tell, no one mentioned liquidity in their answer to this question, they just introduced needlessly complex math and logic while ignoring basic economic principles. That's not to say the previous answers are all wrong - they just deal with periphery factors instead of the central cause. Liquidity is a key determinant of pricing/valuation in financial markets. Liquidity simply describes the ease with which an asset can be bought and sold (converted to cash). Without going into the reasons why, treasury bills are one of the most liquid securities - they can be bought or sold almost instantly at any time for an exact price. The near-perfect liquidity of treasuries is one of the major reasons why the price (yield) of a t-bill will always be higher (lower yield) than that of an otherwise identical corporate or municipal bond. Stated in general terms, a relatively liquid asset is always worth more than an relatively illiquid asset, all else being equal. The value of liquidity is easy to understand - we experience it everyday in real life. If you're buying a house or car, the ability to resell it if needed is an important component of the decision. It's the same for investors - most people would prefer an asset that they can quickly and easily liquidate if the need for cash arises. It's no different with options. American-style options allow the holder to exercise (liquidate) at any time, whereas the buyer of a European option has his cash tied up until a specific date. Obviously, it rarely makes sense to exercise an option early in terms of net returns, but sometimes an investor has a desperate need for cash and this need outweighs the reduction in net profits from early exercise. It could be argued that this liquidity advantage is eliminated by the fact that you can trade (sell) either type of option without restriction before expiration, thus closing the long position. This is a valid point, but it ignores the fact that there's always a buyer on the other side of an option trade, meaning the long position, and the right/restriction of early exercise, is never eliminated, it simply changes hands. It follows that the American-style liquidity advantage increases an options market value regardless of one's position (call/put or short/long). Without putting an exact number on it, the general interest rate (time value of money) could be used to approximate the additional cost of an American-style option over a similar European-style contract.",
"title": ""
},
{
"docid": "130818239cca1a338b7421e7bf92936d",
"text": "An option gives you an option. That is, you aren't buying any security - you are simply buying an option to buy a security. The sole value of what you buy is the option to buy something. An American option offers more flexibility - i.e. it offers you more options on buying the stock. Since you have more options, the cost of the option is higher. Of course, a good example makes sense why this is the case. Consider the VIX. Options on the VIX are European style. Sometimes the VIX spikes like crazy - tripling in value in days. It usually comes back down pretty quick though - within a couple of weeks. So far out options on the VIX aren't worth just a whole lot more, because the VIX will probably be back to normal. However, if the person could have excercised them right when it got to the top, they would have made a fortune many times what their option was worth. Since they are Euroopean style, though, they would have to wait till their option was redeemable, right when the VIX would be about back to normal. In this case, an American style option would be far more valuable - especially for something that is difficult to predict, like the VIX.",
"title": ""
},
{
"docid": "cb660aaba77a61eab011bdf138688b57",
"text": "Some platforms/brokers have HTB indication for a stock symbol, meaning Hard To Borrow. That usually means you can't sell it short at the moment.",
"title": ""
},
{
"docid": "de44418b1a4e0c4e0b86ac2e3c8cc274",
"text": "\"During market hours, there are a lot of dealers offering to buy and sell all exchange traded stocks. Dealers don't actually care about the company's fundamentals and they set their prices purely based on order flow. If more people start to buy than sell, the dealer notices his inventory going down and starts upping the price (both his bid and ask). There are also traders who may not be \"\"dealers\"\", but are willing to sell if the price goes high enough or buy if the price goes low enough. This keeps the prices humming along smoothly. During normal trading hours, if you buy something and turn around and sell it two minutes later, you'll probably be losing a couple cents per share. Outside normal market hours, the dealers who continue to have a bid and ask listed know that they don't have access to good price information -- there isn't a liquid market of continuous buying and selling for the dealer to set prices he considers safe. So what does he do? He widens the spread. He doesn't know what the market will open tomorrow at and doesn't know if he'll be able to react quickly to news. So instead of bidding $34.48 and offering at $34.52, he'll move that out to $33 and $36. The dealer still makes money sometimes off this because maybe some trader realized that he has options expiring tomorrow, or a short position that he's going to get a margin call on, or some kind of event that pretty much forces him to trade. Or maybe he's just panicking and overreacting to some news. So why not trade after hours? Because there's no liquidity, and trading when there's no liquidity costs you a lot.\"",
"title": ""
},
{
"docid": "a03270bbdbedf537c5acd5a60962d3e8",
"text": "When you set up a short sale for equities you are borrowing stock from someone else; typically another client at the broker. The broker usually buries an agreement to let your shares be borrowed for short sales in your account details. So if Client A wants to short a stock, he borrows stock from Client B to do the short sale (it's usually not this direct as they can borrow from many clients). If Client B then wants to sell his shares; if the broker can't shift around assets to find another client's shares to let Client A borrow; then he has to close the short position out because he doesn't have the shares in the brokerage to let Client A borrow to short anymore.",
"title": ""
},
{
"docid": "f36e485e0a7440fb5ee9b39247f2c2c5",
"text": "A lot depends on how much is in the account, and whether you expect to be returning (or having any sort of financial dealings) in Europe in the future. My own experience (about 10 years out of date, and with Switzerland) is that the easiest way to transfer reasonable amounts (a few thousand dollars) was simply to get it in $100 bills from the European bank. I also kept the account open for a number of years while living in the US (doing contracting that was paid into the European bank), and could withdraw money from American ATMs. I eventually had to close the account due to issues between the bank and the IRS. I think it was only that particular bank (UBS) that was the problem, though.",
"title": ""
}
] |
fiqa
|
6cf08a1b4939025eb7b5eb29012218bc
|
Why do some stocks have a higher margin requirement?
|
[
{
"docid": "730d8d90a87f7157f2624f97a1eaf199",
"text": "It is a question of how volatile the stock is perceived to be, its beta correlation to the S&P500 or other index. Margin requirements are derived from the Federal Reserve, Self Regulatory Organizations, the exchange itself, the broker you use, and which margining system you are using. So that makes this a loaded question. There are at least three margin systems, before you have your own risk officer in a glass room that doesn't care how leveraged up you get. Brokers primarily don't want to lose money.",
"title": ""
},
{
"docid": "915530153fe8420174831d635f1a06ce",
"text": "It's about how volatile the instrument is. Brokers are concerned not about you but about potential lawsuits stemming from their perceived inadequate risk management - letting you trade extremely volatile stocks with high leverage. On top of that they run the risk of losing money in scenarios where a trader shorts a stock with all of the funds, the company rises 100% or more by the next day, in which case the trader owes money to the broker. If you look in detail you'll see that many of the companies with high margin requirements are extremely volatile pharmaceutical companies which depend heavily of FDA approvals.",
"title": ""
}
] |
[
{
"docid": "1fb94e8d47ea5630d5154ec36535c97f",
"text": "\"The margin money you put up to fund a short position ($6000 in the example given) is simply a \"\"good faith\"\" deposit that is required by the broker in order to show that you are acting in good faith and fully intend to meet any potential losses that may occur. This margin is normally called initial margin. It is not an accounting item, meaning it is not debited from you cash account. Rather, the broker simply segregates these funds so that you may not use them to fund other trading. When you settle your position these funds are released from segregation. In addition, there is a second type of margin, called variation margin, which must be maintained while holding a short position. The variation margin is simply the running profit or loss being incurred on the short position. In you example, if you sold 200 shares at $20 and the price went to $21, then your variation margin would be a debit of $200, while if the price went to $19, the variation margin would be a credit of $200. The variation margin will be netted with the initial margin to give the total margin requirement ($6000 in this example). Margin requirements are computed at the close of business on each trading day. If you are showing a loss of $200 on the variation margin, then you will be required to put up an additional $200 of margin money in order to maintain the $6000 margin requirement - ($6000 - $200 = $5800, so you must add $200 to maintain $6000). If you are showing a profit of $200, then $200 will be released from segregation - ($6000 + $200 = $6200, so $200 will be release from segregation leaving $6000 as required). When you settle your short position by buying back the shares, the margin monies will be release from segregation and the ledger postings to you cash account will be made according to whether you have made a profit or a loss. So if you made a loss of $200 on the trade, then your account will be debited for $200 plus any applicable commissions. If you made a profit of $200 on the trade then your account will be credited with $200 and debited with any applicable commissions.\"",
"title": ""
},
{
"docid": "9443fc7e998ed1319ccfc06ef4babaf3",
"text": "\"The question mentions a trailing stop. A trailing stop is a type of stop loss order. It allows you to protect your profit on the stock, while \"\"keeping you in the stock\"\". A trailing stop is specified as a percentage of market price e.g. you might want to set a trailing stop at 5%, or 10% below the market price. A trailing stop goes up along with the market price, but if the market price drops it doesn't move down too. The idea is that it is there to \"\"catch\"\" your profit, if the market suddenly moves quickly against you. There is a nice explanation of how that works in the section titled Trailing Stops here. (The URL for the page, \"\"Tailing Stops\"\" is misleading, and a typo, I suspect.)\"",
"title": ""
},
{
"docid": "9c613135e5b27ab8a5f96d0ea3560e5e",
"text": "\"But what happen if the stock price went high and then go down near expiry date? When you hold a short (sold) call option position that has an underlying price that is increasing, what will happen (in general) is that your net margin requirements will increase day by day. Thus, you will be required to put up more money as margin to finance your position. Margin money is simply a \"\"good faith\"\" deposit held by your broker. It is not money that is debited as cash from the accounting ledger of your trading account, but is held by your broker to cover any potential losses that may arise when you finally settle you position. Conversely, when the underlying share price is decreasing, the net margin requirements will tend to decrease day by day. (Net margin is the net of \"\"Initial Margin\"\" and \"\"Variation Margin\"\".) As the expiry date approaches, the \"\"time value\"\" component of the option price will be decreasing.\"",
"title": ""
},
{
"docid": "ff6a6b8b9211bde03bed2c76076b87f7",
"text": "Usually when a company is performing well both its share price and its dividends will increase over the medium to long term. Similarly, if the company is performing badly both the share price and dividends will fall over time. If you want to invest in higher dividend stocks over the medium term, you should look for companies that are performing well fundamentally and technically. Choose companies that are increasing earnings and dividends year after year and with earnings per share greater than dividends per share. Choose companies with share prices increasing over time (uptrending). Then once you have purchased your portfolio of high dividend stocks place a trailing stop loss on them. For a timeframe of 1 to 3 years I would choose a trailing stop loss of 20%. This means that if the share price continues going up you keep benefiting from the dividends and increasing share price, but if the share price drops by 20% below the recent high, then you get automatically taken out of that stock, leaving your emotions out of it. This will ensure your capital is protected over your investment timeframe and that you will profit from both capital growth and rising dividends from your portfolio.",
"title": ""
},
{
"docid": "0cfd6e811ae6aff8da01acafa664047e",
"text": "Because someone smarter than you by 50 IQ points (a quant) will depart their larger position long before you have a chance to see it coming. Your stop losses are useless as the market will open with the issue below your sell price. Your trade even if place at the same mine would settle after theirs. don't piss in the tall grass with the big dogs. If they are wrong or right does not matter you will be haircut or whipsawed.",
"title": ""
},
{
"docid": "7b1f115f7e7215d23a3d4e254c803a6e",
"text": "\"The short answer is that it depends on the industry. In other words, margin alone - even in comparison to peers - will not be a sufficient index to track company success. I'll mention Apple quickly as a special case that has managed to charge a premium margin for a mass-market product. Few companies can achieve this. As with all investment analysis, you need to have a very clear understanding of the industry (i.e. what is \"\"normal\"\" for debt/equity/gearing/margin/cash-on-hand) as well as of the barriers-to-entry which competitors face. A higher-than-normal margin may swiftly be undermined by competitors (Apple aside). Any company offering perpetual above-the-odds returns may just be a Ponzi scheme (Bernie Maddof, etc.). More important than high-margins or high-profits over some short-term track is consistency of approach, an ability to whether adverse cyclical events, and deep investment in continuity (i.e. the entire company doesn't come to a grinding halt when a crucial staff-member retires).\"",
"title": ""
},
{
"docid": "d96eada018190b559af05e3c817086ae",
"text": "Consider the case where a stock has low volume. If the stock normally has a few hundred shares trade each minute and you want to buy 10,000 shares then chances are you'll move the market by driving up the price to find enough sellers so that you can get all those shares. Similarly, if you sell way more than the typical volume, this can be an issue.",
"title": ""
},
{
"docid": "aa196599aea1fbefd2765f38b644ff1f",
"text": "\"This is a good question and my answer below, being the first rationale that crossed my mind, is far from fleshed-out. It's just a reply based on many books on the historical cycles of markets and it's something I've discussed at work (I work in finance). Historically we can observe that periods of financial \"\"booms\"\" entailing high valuations of public equities tend to lead to lower returns. It's a fairly simplistic notion, but if you're paying more now for something - when it's potentially close to a high water mark - then you're returns in the short term are likely to be somewhat stunted. Returns from the underlying companies have a hard time keeping up with high valuations such that investors aren't likely to see a bountiful return in the short run.\"",
"title": ""
},
{
"docid": "c372d42ad4cbdb97645e1f11384d9124",
"text": "\"Some investors worry about interest rate risk because they Additional reason is margin trading which is borrowing money to invest in capital markets. Since margin trading includes minimum margin requirements and maintenance margin to protect lender \"\"such as a broker\"\" , a decrease in the value of bonds might trigger a threat of a margin call There are other reasons why investors care about interest rate risk such as spread trade investors who benefit from difference in short term/ long term interest rates. Such investors borrow short term loans -which enables them to pay low interest- and lend long term loans - which enables them to gain high interest-. Any disturbance between the interest rate spread between short term and long term bonds might affect investor's profit and might even lead to losses. In summary , it all depends on you investment objective and financial condition. You should consult with your financial adviser to help plan for your financial goals.\"",
"title": ""
},
{
"docid": "dfe7cdcbff23350b408f12110c75cf4c",
"text": "Funds can't limit themselves to a small number of stocks without also limiting themselves to a small amount of total investment. I think 25 companies is too small to be practical from their point of view.",
"title": ""
},
{
"docid": "0cc8c705118c1a33d31241664c06f9e3",
"text": "I would think there would be heavy overlap between companies that do well and market cap. You're not going to get to largest market cap without being well managed, or at least in the top percentile. After all, in a normal distribution, the badly managed firms go out of business or never get large.",
"title": ""
},
{
"docid": "f9b021ef7bb5d287f2df29d74a2bf88f",
"text": "For margin, it is correct that these rules do not apply. The real problem becomes day trading funding when one is just starting out, broker specific minimums. Options settle in T+1. One thing to note: if Canada is anything like the US, US options may not be available within Canadian borders. Foreign derivatives are usually not traded in the US because of registration costs. However, there may be an exception for US-Canadian trade because one can trade Canadian equities directly within US borders.",
"title": ""
},
{
"docid": "0a5caacca9c03cc06f281e38db8dad98",
"text": "\"This is a complicated subject, because professional traders don't rely on brokers for stock quotes. They have access to market data using Level II terminals, which show them all of the prices (buy and sell) for a given stock. Every publicly traded stock (at least in the U.S.) relies on firms called \"\"market makers\"\". Market makers are the ones who ultimately actually buy and sell the shares of companies, making their money on the difference between what they bought the stock at and what they can sell it for. Sometimes those margins can be in hundreds of a cent per share, but if you trade enough shares...well, it adds up. The most widely traded stocks (Apple, Microsoft, BP, etc) may have hundreds of market makers who are willing to handle share trades. Each market maker sets their own price on what they'll pay (the \"\"bid\"\") to buy someone's stock who wants to sell and what they'll sell (the \"\"ask\"\") that share for to someone who wants to buy it. When a market maker wants to be competitive, he may price his bid/ask pretty aggressively, because automated trading systems are designed to seek out the best bid/ask prices for their trade executions. As such, you might get a huge chunk of market makers in a popular stock to all set their prices almost identically to one another. Other market makers who aren't as enthusiastic will set less competitive prices, so they don't get much (maybe no) business. In any case, what you see when you pull up a stock quote is called the \"\"best bid/ask\"\" price. In other words, you're seeing the highest price a market maker will pay to buy that stock, and the lowest price that a market maker will sell that stock. You may get a best bid from one market maker and a best ask from a different one. In any case, consumers must be given best bid/ask prices. Market makers actually control the prices of shares. They can see what's out there in terms of what people want to buy or sell, and they modify their prices accordingly. If they see a bunch of sell orders coming into the system, they'll start dropping prices, and if people are in a buying mood then they'll raise prices. Market makers can actually ignore requests for trades (whether buy or sell) if they choose to, and sometimes they do, which is why a limit order (a request to buy/sell a stock at a specific price, regardless of its current actual price) that someone places may go unfilled and die at the end of the trading session. No market maker is willing to fill the order. Nowadays, these systems are largely automated, so they operate according to complex rules defined by their owners. Very few trades actually involve human intervention, because people can't digest the information at a fast enough pace to keep up with automated platforms. So that's the basics of how share prices work. I hope this answered your question without being too confusing! Good luck!\"",
"title": ""
},
{
"docid": "e051c1d68cb00a50ab635c8eee34f5b3",
"text": "That's true. So instead, they brute force the exchange with buy orders before they know if there's even any demand for the equity. Most of these get cancelled. If they see someone else placing a large buy order, they let theirs go through and do not cancel. They meet the ask and get the order because they don't care about getting the best deal. The buy order the HFT sent through is for the entire book. The HFT can then demand the highest price possible. After that, they dump the unsought portion of the book back into the market. Regulation have cracked down on this practice. However, that just means HFT have decided to build their own exchanges. The HFT buy order was placed before they even knew there was anyone else looking for the same buy.",
"title": ""
},
{
"docid": "45647bd5c16b69730e046f75a6a74533",
"text": "Link only answers aren't good, but the list is pretty long. It's a moving target, the requirement change based on a number of criteria. It usually jumps to force you to sell when you hold a losing position, or when your commodity is about to skyrocket.",
"title": ""
}
] |
fiqa
|
91cdbe0b3e8e0d8a2b16669f9b4dc32a
|
Buying a more expensive house as a tax shelter (larger interest deduction)?
|
[
{
"docid": "2f1d730eaf1d003c5d7ae2525da05a6c",
"text": "No. This logic is dangerous. The apples to apples comparison between renting and buying should be between similar living arrangements. One can't (legitimately) compare living in a 600 sq ft studio to a 3500 sq ft house. With the proposal you offer, one should get the largest mortgage they qualify for, but that can result in a house far too big for their needs. Borrowing to buy just what you need makes sense. Borrowing to buy a house with rooms you may never visit, not a great idea. By the way, do the numbers. The 30 year rate is 4%. You'd need a $250,000 mortgage to get $10,000 in interest the first year, that's a $312,000 house given an 80% loan. On a median income, do you think it makes sense to buy a house twice the US median? Last, a portion of the tax savings is 'lost' to the fact that you have a standard deduction of nearly $6,000 in 2012. So that huge mortgage gets you an extra $4000 in write-off, and $600 back in taxes. Don't ever let the Tax Tail wag the Investing Dog, or in this case the House Dog. Edit - the investment return on real estate is a hot topic. I think it's fair to say that long term one must include the rental value of the house in calculating returns. In the case of buying of way-too-big house, you are not getting the return, it's the same as renting a four bedroom, but leaving three empty. If I can go on a bit - I own a rental, it's worth $200K and after condo fee and property tax, I get $10K/yr. A 5% return, plus whatever appreciation. Now, if I lived there, I'd correctly claim that part of my return is the rental value, the rent I don't pay elsewhere, so the return to me is the potential growth as well as saved rent. But if the condo rents for $1200, and I'd otherwise live in a $600 apartment with less space, the return to me is lost. In my personal case, in fact, I bought a too big house. Not too big for our paycheck, the cost and therefore the mortgage were well below what the bank qualified us for. Too big for the need. I paid for two rooms we really don't use.",
"title": ""
},
{
"docid": "f8e65433179d144a0fa508ebc7a70957",
"text": "Two points You don't really get the full 10,000 annual interest as tax free income. Well you do, but you would have gotten a substantial amount of that anyway as the standard deduction. ...From the IRS.... Standard deduction The standard deduction for married couples filing a joint return is at $11,900 for 2012. The standard deduction for single individuals and married couples filing separate returns is $5,950 for 2012. The standard deduction for heads of household increases by $50 to $8,700 for 2012. so If you were married it wouldn't even make sense to claim the 10,000 mortgage interest deduction as the standard one is larger. It can make sense to do what you are talking about, but ultimately you have to decide what the effective interest rate on your mortgage is and if you can afford it. For instance. I might have a 5% mortgage. If I am in a 20% tax bracket it effectively is a 4% mortgage to me. Even though I am saving tax money I am still paying effectively 4%. Ultimately the variables are too complex to generalize any hard and fast rules, but it often times does make sense. (You should also be aware that there has been some talk of eliminating or phasing out the mortgage interest deduction as a way to close the deficit and reduce the debt.)",
"title": ""
},
{
"docid": "a72367ed3b355a49ba309d26acf0c0cb",
"text": "Depending on the state you live in paying interest on a mortgage opens up other tax deduction options: Real estate taxes, Car tax, donations. See schedule A http://www.irs.gov/pub/irs-pdf/f1040sa.pdf The shocking bottom line is that it never works to your advantage in the short term. Owning your house: But there are big risks, ask anybody stuck with a house they can't sell. But it doesn't scale. You spend 10K more to save 2.5K in taxes. Buy because you want to, not to reduce taxes.",
"title": ""
}
] |
[
{
"docid": "1cc573e29b794b2fb46d931192a4dacb",
"text": "It's rare that you'd start to itemize before you have a house and the property tax and mortgage interest that brings. If your state has an income tax, that's first, but then you'll usually need far more in deductions to be over that standard deduction.",
"title": ""
},
{
"docid": "fe638c47505fa844419fd4a4523d8fb8",
"text": "\"A person can finance housing expenses in one of two ways. You can pay rent to a landlord. Or you can buy a house with a mortgage. In essence, you become your own landlord. That is, insta the \"\"renter\"\" pays an amount equal to the mortgage to insta the \"\"landlord,\"\" who pays it to the bank to reduce the mortgage. Ideally, your monthly debt servicing payments (minus tax saving on interest) should approximate the rent on the house. If they are a \"\"lot\"\" more, you may have overpaid for the house and mortgage. The advantage is that your \"\"rent\"\" is applied to building up equity (by reducing the mortgage) in your house. (And mortgage payments are tax deductible to the extent of interest expense.) At the end of 30 years, or whatever the mortgage term, you have \"\"portable equity\"\" in the form a fully paid house, that you can sell to move another house in Florida, or wherever you want to retire. Sometimes, you will \"\"get lucky\"\" if the value of the house skyrockets in a short time. Then you can borrow against your appreciation. But be careful, because \"\"sky rockets\"\" (in housing and elsewhere) often fall to earth. But this does represent another way to build up equity by owning a house.\"",
"title": ""
},
{
"docid": "42003e90df048ff0e41fe8dbc47ad5eb",
"text": "Doom and gloom. Everything adjusts. Less tax break here compensated by lower overall tax rates. Actually, Realtors have less concern with this then you would think. Those really concerned are bankers. The financial industry has been messaging Americans for years that mortgage deductions are the best thing in the world. They are just another way to promote bank loans.",
"title": ""
},
{
"docid": "35d71c3a6ce50b1edd296236ec48a960",
"text": "It's true that the standard deduction makes the numbers less impressive. I ran your scenario through my favorite, most complete rent vs buy calculator, and your math isn't far off. However, there are a lot of deductions only available if you itemize. Medical expenses, moving expenses, job expenses, charitable contributions, local income/sales taxes, property tax, private mortgage insurance, etc. Property tax on that house alone is going to be nearly equal to the standard deduction, so the point is nearly moot. Anyways, the above linked calculator handles all of those, and more.",
"title": ""
},
{
"docid": "2b325654181d951f0e841dc9a11bba72",
"text": "Should I treat this house as a second home or a rental property on my 2015 taxes? If it was not rented out or available for rent then you could treat it as your second home. But if it was available for rent (i.e.: you started advertising, you hired a property manager, or made any other step towards renting it out), but you just didn't happen to find a tenant yet - then you cannot. So it depends on the facts and circumstances. I've read that if I treat this house as a rental property, then the renovation cost is a capital expenditure that I can claim on my taxes by depreciating it over 28 years. That is correct. 27.5 years, to be exact. I've also read that if I treat this house as a personal second home, then I cannot do that because the renovation costs are considered non-deductible personal expenses. That is not correct. In fact, in both cases the treatment is the same. Renovation costs are added to your basis. In case of rental, you get to depreciate the house. Since renovations are considered part of the house, you get to depreciate them too. In case of a personal use property, you cannot depreciate. But the renovation costs still get added to the basis. These are not expenses. But does mortgage interest get deducted against my total income or only my rental income? If it is a personal use second home - you get to deduct the mortgage interest up to a limit on your Schedule A. Depending on your other deductions, you may or may not have a tax benefit. If it is a rental - the interest is deducted from the rental income only on your Schedule E. However, there's no limit (although some may be deferred if the deduction is more than the income) if you're renting at fair market value. Any guidance would be much appreciated! Here's the guidance: if it is a rental - treat it as a rental. Otherwise - don't.",
"title": ""
},
{
"docid": "ac33ea50dc277176327736a8f2fae978",
"text": "\"I think this is possible under very special conditions. The important part of the description here is probably retired and rich. The answers so far apply to people with \"\"normal\"\" incomes - both in the sense of \"\"not rich\"\" and in the sense of \"\"earned income.\"\" If you sit at the top tax bracket and get most of your income through things like dividends, then you might be able to win multiple ways with the strategy described. First you get the tax deduction on the mortgage interest, which everyone has properly noted is not by itself a winning game - You spend more than you save. BUT... There are other factors, especially for the rich and those whose income is mostly passive: I'm not motivated enough on the hypothetical situation to come up with a detailed example, but I think it's possible that this could work out. In any case, the current answers using \"\"normal sized\"\" incomes and middle tax brackets don't necessarily give the insight that you might hope if the tax payer really is unusually wealthy and retired.\"",
"title": ""
},
{
"docid": "e9f76816678c0a267f047910b324fe99",
"text": "With an investment, you tend to buy it for a very specific purpose, namely to make you some money. Either via appreciation (ie, it hopefully increases value after you take all the fees and associated costs into account, you sell the investment, realise the gains) or via a steady cashflow that, after you subtracted your costs, leaves you with a profit. Your primary residence is a roof over your head and first and foremost has the function of providing shelter for yourself and your family. It might go up in value, which is somewhat nice, but that's not its main purpose and for as long as you live in the house, you cannot realise the increase in value as you probably don't want to sell it. Of course the remortgage crowd would suggest that you can increase the size of the mortgage (aka the 'home atm') but (a) we all know how that movie ended and (b) you'd have to factor in the additional interest in your P&L calculation. You can also buy real estate as a pure investment, ie with the only objective being that you plan to make money on this. Normally you'd buy a house or an apartment with a view of renting it out and try to increase your wealth both due to the asset's appreciation (hopefully) and the rent, which in this scenario should cover the mortgage, all expenses and still leave you with a bit of profit. All that said, I've never heard someone use the reasoning you describe as a reason not to buy a house and stay in an apartment - if you need a bigger place for your family and can afford to buy something bigger, that falls under the shelter provision and not under the investment.",
"title": ""
},
{
"docid": "6f5817302bdf7050001df688b373b906",
"text": "If the mortgage is against your primary residence, then the only part that's (probably) deductible is the mortgage interest. If you pay down your loan principal faster, then all other things being equal you'll get less of a tax deduction, because you'll accrue less interest in the months after you throw a big chunk at the principal (the principal is less, so the interest is less). But don't worry; that's all right! It's a tax deduction, so your actual tax savings will be only a fraction of the interest you paid, so at the end of the day you'll be saving yourself money.",
"title": ""
},
{
"docid": "266260faec9cc263180d42275dbabe8c",
"text": "Those choices aren't mutually exclusive. Yes, most discussion of the mortgage interest deduction ignores the fact that for a standard itemizer, much, if not all of this deduction can be lost. For 2011, the std deduction for a single is $5,800. It's not just mortgage interest that's deductible, state income tax, realestate tax, and charitable contributions are among the other deductions. If this house is worth $350K, the property tax is about $5K, and since it's not optional, I'd be inclined to assume that it's the deduction that offsets the std deduction. Most states have an income tax, which tops off the rest. You are welcome to toss this aside as sophistry, but I view it as these other deductions as 'lost' first. I'm married, and our property tax is more than our standard deduction, so when doing the math, the mortgage is fully deductible, as are our contributions. In your case, the numbers may play out differently. No state tax? Great, so it's the property tax and deductions you'd add up first and decide on the value the mortgage deduction brings. Last, I don't have my mortgage for the deduction, I just believe that long term my other investments will exceed, after tax, the cost of that mortgage.",
"title": ""
},
{
"docid": "a17f801749c61e70721be29bae27a51d",
"text": "There is the underpayment penalty, and of course the general risk of any balloon-style loan. While you think that you have enough self-discipline, you never know what may happen that may prevent you from having enough cash at hands to pay the accumulated tax at the end of the year. If you try to do more risky investments (trying to maximize the opportunity) you may lose some of the money, or have some other kind of emergency that may preempt the tax payment.",
"title": ""
},
{
"docid": "f4337f65c2c443100a3f1bce1ce7805c",
"text": "Your wealth will go up if your effective rate after taxes is less than the inflation rate. That is, if your interest rate is R and marginal tax rate is T, then you need R*(1-T) to be less than inflation to make a loan worth it. Lately inflation has been bouncing around between 1% and 1.8%. Let's assume a 25% tax rate. Is your interest rate lower than between 1.3% and 2.4%? If not, don't take out a loan. Another thing to consider: when you take out a loan you have to do a ton of extra stuff to make the lender happy (inspections, appraisals, origination charges, etc.). These really add up and are part of the closing costs as well as the time/trouble of buying a house. I recently bought my house using 100% cash. It was 2 weeks between when I agreed to a price to when the deal was sealed and my realtor said I probably saved about $10,000 in closing costs. I think she was exaggerating, but it was a lot of time and money I saved. My final closing costs were only a few hundred, not thousands, of dollars. TL;DR: Loans are for suckers. Avoid if possible.",
"title": ""
},
{
"docid": "460d9b7f54847c2d1d61cf029e7a866c",
"text": "\"If this is an issue of opportunity cost then there is a benefit. Mortgage interest rates are extremely low, low enough that they can effectively be used to indirectly fund investments. If one stores equity in a house, ie \"\"pays it off\"\", then that wealth returns only the rate of growth of the house less expenditures. If one borrows against the house to fund investments, then the above stated returns which on average exceed the mortgage interest rate can be augmented by the investments, yielding a greater return. The tax benefit is more of a cherry on top. If one is using this as a justification to spend then it is frivolity.\"",
"title": ""
},
{
"docid": "fff2035f2cc2849e6eba49a486a61c8c",
"text": "\"Not sure what you are talking about. The house isn't part of a business so neither of you can deduct half of normal maintenance and repairs. It is just the cost of having a house. The only time this would be untrue is if the thing that you are buying for the house is part of a special deduction or rebate for that tax year. For instance the US has been running rebates and deductions on certain household items that reduce energy - namely insulation, windows, doors, and heating/cooling systems (much more but those are the normal things). And in actuality if your brother is using the entire house as a living quarters you should be charging him some sort of rent. The rent could be up to the current monthly market price of the home minus 50%. If it were my family I would probably charge them what I would pay for a 3% loan on the house minus 50%. Going back to the repairs... Really if these repairs are upgrades and not things caused by using the house and \"\"breaking\"\" or \"\"wearing\"\" things you should be paying half of this, as anything that contributes to the increased property value should be paid for equally if you both are expecting to take home 50% a piece once you sell it.\"",
"title": ""
},
{
"docid": "9743f3922210ecab0091b939ba07c985",
"text": "A $500K mortgage at 4.5% is $2533, right near the $2500 in your example. Interest the first year would be less than $22K, and your tax benefit (taking littleadv's answer into account, of course) would be $5500, max. The tax benefit is the least of the reasons to get a mortgage. On your hypothetical $100K income, and too-high mortgage, a $5500 benefit is nothing. If one needs this tax benefit to make the numbers work, they are budgeted too tightly. If you are considering trading a $1000 rent for a $500K mortgage with a $2500 payment, I'd look very carefully at the numbers. Search this board for the associated expenses of homeownership.",
"title": ""
},
{
"docid": "4756eab6ac2200618ce3994a7c1fc7a3",
"text": "That really depends on the lender, and in the current climate this is extremely unlikely. In the past it was possible to get a loan which is higher than the value of the house (deposit considered), usually on the basis that the buyer is going to improve the property (extend, renovate, etc.) and this increase the value of the property. Responsible lenders required some evidence of the plans to do this, but less responsible ones simply seem to have given the money. Here in the UK this was often based on the assumption that property value tends to rise relatively quickly anyway so a seemingly-reasonable addition to the loan on top of the current value of the property will quickly be covered. That meant that indeed some people have been able to get a loan which is higher than the cost of the purchase, even without concrete plans to actively increase the value of the property. Today the situation is quite different, lenders are a lot more careful and I can't see this happening. All that aside - had it been possible, is it a good idea? I find it difficult to come up with a blanket rule, it really depends on many factors - On the one hand mortgage interest rates tend to be significantly lower than shorter term interest rates and from that point of view, it makes sense, right?! However - they are usually very long term, often with limited ability to overpay, which means the interest will be paid over a longer period of time.",
"title": ""
}
] |
fiqa
|
7dbd7dfee4ffffb36a5d23f70844204e
|
I am moving to a new city. How do I plan and prepare - financially - for the move?
|
[
{
"docid": "12f6f30d4893c8cdb8769a6e56c5db0a",
"text": "Some of the costs you might incur include:",
"title": ""
},
{
"docid": "e5e09b8f3f1df05950ad6b60037318e2",
"text": "Utilities and cost of living vary from city to city but maybe not that much. For basic planning purposes you can probably figure to spend as much as you are now, maybe a little more. And adjust as needed when you get there. (And adjust if, for example, you're moving from a very low cost of living area or to a very high cost of living area.) The cost of housing varies quite a bit from city to city, but you can do this research using Zillow, Craigslist, other places. Now, on to moving itself. The cost of moving can vary hugely depending on how much stuff you have and how much work you want to do. On the cheap end, you can rent a U-Haul or one of those portable boxes that they plant outside your old house and move for you. You'll do all the packing/loading/unloading/unpacking yourself but it saves quite a bit of money. My family and I moved from Seattle to California last year using one of those portable box places and it ended up costing us ~$1400 including 30 days of storage at the destination while we looked for a place. We have a <1000 sq foot place with some furniture but not a huge amount and did all the packing/loading ourselves. If we had wanted full service where people come pack, load, unpack, etc, it could have been 2-3x that amount. (And if we had more stuff, it could have been a lot more expensive too. Try not to acquire too much stuff as you just end up having to move it around and take care of it all!) Your employer may cover moving expenses, ask about this when talking about job offers. Un-reimbursed moving expenses are tax-deductible in the US (even if you don't itemize). Since you're just starting out, your best bet is to overestimate how much you think things will cost, then adjust as you arrive and settle in for a few months. Try to save as much as you can, but remember to have fun too. Hope this helps!",
"title": ""
}
] |
[
{
"docid": "11b99a483d5d5978312e8c54093a0d5f",
"text": "\"Figure out how much money you earn, what you spend it on, and how that will change when you have kids (will one of you stay at home? if not, how much will daycare cost and how do you finance the first few month when your child is still too young for daycare?) You will usually plan to spend your current Kaltmiete (rent without utilities) on your mortgage (the Darlehen that is secured by your house) - keep in mind though that a house usually has a higher utility cost than an appartment. When you've figured out what you can save/pay towards a house now and how that will change when you have kids, you can go on to the next step. If you don't want to buy now but want to commit to saving up for a house and also want to secure today's really low interest rates, consider getting a \"\"Bausparvertrag\"\". I didn't find a good translation for Bausparvertrag, so here is a short example of how it works: You take a building saving sum (Bausparsumme) of 150000€ with a savings goal (Sparziel) of 50000€ (the savings goal is usually between 20% and 50% of the sum) and then you make monthly payments into the Bausparvertrag until you reach the savings goal at which point you can take out your savings and a loan of 100000 € (or whatever your difference between the Bausparsumme and Sparziel is). If you're living in an expenisve area, you're likely to need more than 150000 but this is just an example. Upsides: Downsides: If you decide to buy sooner, you can also use your Bausparvertrag to refinance later. If you have a decent income and a permanent job, then ask your bank if they would consider financing your house now. To get a sense of what you'll be able to afford, google \"\"wie viel Haus kann ich mir leisten\"\" and use a few of the many online calculators. Remember that these websites want to sell you on the idea of buying a house instead of paying rent, so they'll usually overestimate the raise in rents - repeat the calculation with rent raise set to 0% to get a feeling for how much you'll be able to afford in today's money. Also, don't forget that you're planning to get children, so do the calculation with only one income, not two, and add the cost of raising the kids to your calculation. Once you've decided on a property, shop around a bit at different banks to get the best financing. If you decide to buy now (or soon), start looking at houses now - go to model homes (Musterhäuser) to find out what style of house you like - this is useful whether you want to buy an existing house or build a new one. If buying an existing house is an option for you, start visiting houses that are on sale in your area in order to practice what to ask and what to look for. You should have a couple of visits under your belt before you really start looking for the one you want to buy. Once you're getting closer to buying or making a contract with a construction company, consider getting an expert \"\"Bausachverständiger\"\". When buying an existing house they can help you estimate the price and also estimate the renovation cost you'll have to factor in for a certain house (new heating, better insulation, ...). When building a new house they can advise you on the contract with the construction company and also examine the construction company's work at each major step (Zwischenabnahme). Source: Own experience.\"",
"title": ""
},
{
"docid": "3fca4003e45a73f2484e59a1c9047e12",
"text": "\"Look for states that have no income tax. A lot of these states supplement their revenue with higher property taxes, but if you rent and do not own property in the state, then you will have no state tax liability. Similarly, many states treat capital gains no differently than income tax, so if you make your earnings due to a large nest egg, then way you will still incur no tax liability on the state level Look for \"\"unincorporated\"\" areas, as these are administrative divisions of states that do not have a municipal government, and as such do not collect local taxes. Look for economic development perks of the new jurisdiction. Many states have some kind of formal tax credit for people that start business or buy in certain areas, but MONEY TALKS and you can make an individual arrangement with any agency, municipality etc. If the secretary at city hall doesn't know about a prepackaged formal arrangement that is offered to citizens, then ask for the \"\"expedited development package\"\" which generally has a \"\"processing fee\"\" involved. This is something you make up ie. \"\"What is the processing fee for the expedited development package, quote on quote\"\" States like Maryland and Nevada have formalized this process, but you are generally paying off the Secretary of State for favorable treatment. You'll always be paying off someone.\"",
"title": ""
},
{
"docid": "7ba5a90e9600c4a014d4364fbc629860",
"text": "Just set up a budget. Indicate how much money comes in, how much goes out to must pay expenses (lodging, food, gas, heat, cooling, etc), and determine how much is leftover for anything else you want. If that amount is ok, then you're fine. If not, something needs adjusting.",
"title": ""
},
{
"docid": "aef86ebe299a964f826a4562492623f3",
"text": "\"The suggestions towards retirement and emergency savings outlined by the other posters are absolute must-dos. The donations towards charitable causes are also extremely valuable considerations. If you are concerned about your savings, consider making some goals. If you plan on staying in an area long term (at least five years), consider beginning to save for a down payment to own a home. A rent-versus-buy calculator can help you figure out how long you'd need to stay in an area to make owning a home cost effective, but five years is usually a minimum to cover closing costs and such compared to rending. Other goals that might be worthwhile are a fully funded new car fund for when you need new wheels, the ability to take a longer or nicer vacation, a future wedding if you'd like to get married some day, and so on. Think of your savings not as a slush fund of money sitting around doing nothing, but as the seed of something worthwhile. Yes, you will only be young once. However being young does not mean you have to be Carrie from Sex in the City buying extremely expensive designer shoes or live like a rapper on Cribs. Dave Ramsey is attributed as saying something like, \"\"Live like no one else so that you can live like no one else.\"\" Many people in their 30s and 40s are struggling under mortgages, perhaps long-left-over student loan debt, credit card debt, auto loans, and not enough retirement savings because they had \"\"fun\"\" while they were young. Do you have any remaining debt? Pay it off early instead of saving so much. Perhaps you'll find that you prefer to hit that age with a fully paid off home and car, savings for your future goals (kids' college tuitions, early retirement, etc.). Maybe you want to be able to afford some land or a place in a very high cost of living city. In other words - now is the time to set your dreams and allocate your spare cash towards them. Life's only going to get more expensive if you choose to have a family, so save what you can as early as possible.\"",
"title": ""
},
{
"docid": "d375d8994b009877061e2a7b520df26b",
"text": "This is the exact reason I don't live in an expensive city. I turned down a job offer in DC paying 60k right out of school because I could get a similar salary in the midwest and pay about half as much in living expenses. --Sent from a 2 bedroom apartment in an urban area with included laundry facilities for $750/month.",
"title": ""
},
{
"docid": "b01c6e1d2a78ef5f00f3ba1ab810f5f4",
"text": "\"To begin, I'm not sure you understand what COL refers to. It's what you spend, not what you bring in. Let's say Bob makes 60k in some midwest town, but spends 30k for living. If his salary and his cost of living both increase at the same rate, let's say they both double, this means Bob now makes 120k but spends 60k. He now saves double what he would have before. That 30k extra saved is 30k extra saved. His purchasing power has now gone greatly up, especially in respect to housing outside of an expensive area like the valley. For one, let me clear this up - SF, the city itself, is expensive. I'm talking more generally about the bay area, and silicon valley as a whole. Most tech jobs from the big tech companies that we think of as \"\"the bay\"\" are not in SF. they are in mountain view, Sunnyvale, and that area. So this might explain some of our disagreements. Most people who work for large tech companies understand they have a decision to make - live in the city proper, pay a lot more than the greater valley, use transit into work (all of the giants have regular shuttles in), but get to love a more \"\"hip\"\" life, or be more conservative in the valley, where rental prices are on par with NYC. In talking to a lot of people who work for the big companies, they know this. Younger folks who want to live the city life pay the premium, but by far and wide they live outside of it, where it is closer to work, and they take the rail up for weekends out with buddies. I'm still not sure where you are getting a doubling of the COL in the valley versus outside. Yes, housing as a single item is going to be a person's largest expense. But all the rest of their expenses are not going to see a similar increase. It's also important to remember that saving 10% of 60 v 10% of 120 is significantly different. Lots of people take jobs in the valley, are able to save vastly larger amounts of cash, and then leave. In my calculations I evaluated the COL markup to be ~30% for the valley for a 200k job. That is, I spend maybe 50k of my earning on all living expenses in the Midwest (in a downtown, nice area), and would expect I'd pay about 70k for the same standard in the valley. But I'd be saving a shitton more. I've done the math, I'm not here to argue with someone who just googled SF cost of living searching for the answers I want. I've talked to actual people out there. I appreciate your passion for this, but your 100% increase in COL estimate is simply wrong. But then again, it depends on how you live and where you live in your current situation. I live in a large midwest city, actually in the city itself.\"",
"title": ""
},
{
"docid": "de2e1d3eb51b5f81aa4c32d67d136edd",
"text": "You question is a bit scary to me. You show $2100 rent, and let's even assume that's 100%, i.e. never a vacancy. (Rule of thumb is 10% vacancy. Depending on area, a tenant may stay a year, but when they leave, you might need to have a bit of maintenance and miss 2 months rent) You count the mortgage and taxes, and are left with $500/mo. Where is the list of ongoing expenses? I suggest you put that $500/mo into a separate account and let us know a year from now if anything is left. To Anthony's point. I agree 100%, no one can tell you everything you need to know. But, whatever my answer, or his, other members with experience (similar or different) will add to this, and in the end you'll have a great overview. The truth is that it's easy for me to sit here and see what you may be missing. By the way, if you look at the 'rules of thumb' they will make your head spin. There are those who say the target is for the rent to be 2% of the value of the house. But, there are markets where this will never happen. There's another rule that says the expenses (besides mort/tax) should be planned at 50% of the rent, i.e. you should put aside $1000/mo for expenses over the long term. The new house will be lower of course, but in years past year 10 or so, this number will start to look reasonable.",
"title": ""
},
{
"docid": "62ad6422a36d599ac2bb9651e5cab4c1",
"text": "I think the biggest thing you need in this situation is a budget/spending plan that you both agree on. Look at what your income is going to be and what expenses you'll have, and make cuts where needed. If it's important to you that she be able to spend some money on herself, then make sure there's a budget for it. Often, knowing that there's a plan that will work will help put someone's mind at ease. Also, make sure you're communicating, especially in the subtle non-verbal ways, that you're in this together, and that you don't think it is unfair that you're bringing in most of the income during this time. In general, make sure you're talking with each other a lot and being honest about your feelings about this major life change.",
"title": ""
},
{
"docid": "5e88382b08a124934ea96a6c792286bb",
"text": "\"How will 45K-60K \"\"end up in your pocket\"\"? Are you selling your home? Where are you going to live? You talk about moving to Arizona, what is so magical about that place? Congratulations on making a wise purchase. Some people with new found money use it to correct past mistakes. However, if they do not change their behavior they end up in the same situation just less them money they once had. While 50K income is respectable at your age, it is below the national average for households. One factor in having a college education is those with them tend to experience shorter and fewer periods of unemployment especially for males. Nothing will ever replace hustle, however. I'd ask you to have a plan to raise your income. Can you double it in 5 years? You need to get rid of the revolving debt. Do that out of current income. No need to touch the house proceeds for something so small. Shoot for 9 months. Then you need to get rid of the speeding fines and the vehicle loan. That is a lot of vehicle for your income. Again, I would do that out of current income or by selling the vehicle and moving to something more inline with your income. As far as to moving or flipping foreclosures that is more of a question that has to do with your hopes and dreams. Do you want to move your children every 3 years? What if you move to Arizona and it turns out to be quite horrible? You and your wife need to sit down and discuss what is best for your family.\"",
"title": ""
},
{
"docid": "bac44a8c730685829aae631e9b51a6dc",
"text": "\"Okay. Savings-in-a-nutshell. So, take at least year's worth of rent - $30k or so, maybe more for additional expenses. That's your core emergency fund for when you lose your job or total a few cars or something. Keep it in a good savings account, maybe a CD ladder - but the point is it's liquid, and you can get it when you need it in case of emergency. Replenish it immediately after using it. You may lose a little cash to inflation, but you need liquidity to protect you from risk. It is worth it. The rest is long-term savings, probably for retirement, or possibly for a down payment on a home. A blended set of stocks and bonds is appropriate, with stocks storing most of it. If saving for retirement, you may want to put the stocks in a tax-deferred account (if only for the reduced paperwork! egads, stocks generate so much!). Having some money (especially bonds) in something like a Roth IRA or a non-tax-advantaged account is also useful as a backup emergency fund, because you can withdraw it without penalties. Take the money out of stocks gradually when you are approaching the time when you use the money. If it's closer than five years, don't use stocks; your money should be mostly-bonds when you're about to use it. (And not 30-year bonds or anything like that either. Those are sensitive to interest rates in the short term. You should have bonds that mature approximately the same time you're going to use them. Keep an eye on that if you're using bond funds, which continually roll over.) That's basically how any savings goal should work. Retirement is a little special because it's sort of like 20 years' worth of savings goals (so you don't want all your savings in bonds at the beginning), and because you can get fancy tax-deferred accounts, but otherwise it's about the same thing. College savings? Likewise. There are tools available to help you with this. An asset allocation calculator can be found from a variety of sources, including most investment firms. You can use a target-date fund for something this if you'd like automation. There are also a couple things like, say, \"\"Vanguard LifeStrategy funds\"\" (from Vanguard) which target other savings goals. You may be able to understand the way these sorts of instruments function more easily than you could other investments. You could do a decent job for yourself by just opening up an account at Vanguard, using their online tool, and pouring your money into the stuff they recommend.\"",
"title": ""
},
{
"docid": "b17769ae176dec951f352f9edcad1a0c",
"text": "\"According to your numbers, you just stated that you spend approximately $1500 in discretionary expenditures per month, yet are unable to save. I fully realize that living in a big city is usually expensive, but on your (presumably after-tax) salary, I think you can easily save a substantial portion of your income. As others have already noted, enforcing saving of a significant portion of your discretionary income is the most obvious step. It's easy to say, but I suspect that if you are like most people who have difficulty saving, the psychological impact of quitting your previous spending habits \"\"cold turkey\"\" is likely to be very harsh, all the more so if you have an active social life. You may find yourself becoming depressed or resentful at \"\"having\"\" to save. You may lose motivation to work as hard because you might think that you're putting away all this money for the distant future, whereas you are young now and want to enjoy life while you can. It is in this context, then, that I looked at your other financial obligations. Paying $1300/month to your parents is a lot. It's over 20% of your after-tax salary. You do not specify the reasons for doing this other than a vague sense of familial duty, but my recommendation is to see if this could be reduced somewhat. If you can bring it down to $1000/month, that $300 would go into your savings, and you would psychologically feel a lot better about putting, say, $600 of your own discretionary income into savings as well. Now you have, all told, about $1000/month of savings without severely curtailing your extra expenditures. But I would start with that $1500/month of luxury spending first. And yes, you do need to view it as luxury spending. The proper frame of mind is to compare your financial situation to someone who is truly unable to save because their entire income is spent on actual necessities: food and shelter; their effective tax rate is 0% because they earn too little; and they usually find themselves in debt because they cannot make ends meet. Now look back at that $1500/month. Can you honestly say that you cannot afford to cut that spending?\"",
"title": ""
},
{
"docid": "746213ad410f6343982337e32c2410fe",
"text": "Thanks for the reply! Sadly, I have considered NYC, Chicago and even London, but my heart is set on Toronto. Also, I'm not quite sure I know what you mean by siphoning funds. I wasn't aware that financial engineers in Toronto do things differently than financial engineers in the US.",
"title": ""
},
{
"docid": "7758c3023162cce1343902f8f79088b2",
"text": "You don't say why you want to move. Without knowing that, it is hard to recommend a course of action. Anyway... The sequence of events for an ECONOMICAL outcome in a strong market is as follows: (1) You begin looking for a new house (2) You rent storage and put large items into storage (3) You rent an apartment and move into the apartment (4) The house now being empty you can easily do any major cleaning and renovations needed to sell it (5) You sell the house (and keep looking for a new house while you do so). Since the house is empty it will sell a lot more easily than if you are in it. (6) You invest the money you get from selling the house (7) You liquidate your investment and buy the new house that you find. If you are lucky, the market will have declined in the meantime and you will get a good deal on the new house in addition to the money you made on your investment. (8) You move your stuff out of storage into the new house. There are other possibilities that involve losing a lot of money. The sequence of events above will make money for you, possibly a LOT of money.",
"title": ""
},
{
"docid": "372d7bd635cc1c27a9062e554bf2b2c0",
"text": "\"If you want to be really \"\"financially smart,\"\" buy a used good condition Corolla with cash (if you want to talk about a car that holds re-sale value), quit renting and buy a detached house close to the city a for about $4,000/month (to build equity. It's NYC the house will appreciate in value). Last but not the least, DO NOT get married. Retire at 50, sell the house (now paid after 25-years). Or LEASE a nice brand new car every year and have a good time! You're 25 and single!\"",
"title": ""
},
{
"docid": "c6305c9801b75feeff406e17941e530b",
"text": "I would advise against this. My main reason for saying so is that you are in a time of major transition, and transition equals uncertainty. What if the new job turns out to be a bad one, and at the same time the house is more difficult to rent out than you expect? That seems like a situation that would be worse than the sum of its parts. Some other things to consider: first, if you want to buy a house where your new job is located, you will not be able to borrow as much for that house. This is especially important if you are moving to a city with a very high Cost of Living. Second, your margin on the rental doesn't sound like it would leave much room for profit. A $100 difference between your mortgage and your rent amount will be eaten up very quickly through property management fees and maintenance. If the value of the house does not rise like you expect, that could mean you put in a lot of effort for very little or no gain. Finally, this will require a good deal of time management. Between relocating, closing on this house, and beginning a new job, it sounds like you'll have a lot going on. This may not concern you much, but it's still worth considering.",
"title": ""
}
] |
fiqa
|
6bdd64e422b10b10e887d1d121fd6572
|
Is my mother eligible for SNAP?
|
[
{
"docid": "dcff7e8f03724fea6eca6a00a67ca652",
"text": "If she lives by herself, my guess would be that she qualifies as a household of one. Either way, her monthly income is below the threshold, so she should be eligible. Per the linked website The only way to determine if your household is eligible for SNAP benefits is to apply. I'd say it's worth a try.",
"title": ""
}
] |
[
{
"docid": "ef0e77135876efe3d9cb40b5a7014832",
"text": "Businesses from food to retail, all assume the risk of spoilage, theft, or any form of lost assets. It's just business. With that said, I'm sure your mom didn't imagine too many ways she could've lost out when opening her nailshop. I'm unsure what the policy is that you're looking for, but my best advice to you would be to cut your losses and learn from this. Hopefully you and your mother can be sure to check or figure out a system to ensure customers don't lie about their payments. Good luck",
"title": ""
},
{
"docid": "23a5c0093ece0aabf8dd3a31cad1c119",
"text": "\"The bottom line is you broke the law. While this is pretty much victimless, it is none the less a violation of the law and should be avoided in the future. I would have not agreed to this as a parent and it sets a bad precedent. As such I would avoid trading and move the money into cash until you turn 18. Once you turn 18 you should transfer the money into an account of your own. From there you may proceed as you wish. As far as paying taxes, of course you need to pay them. Your mother did this as a favor to you and by doing such you caused her tax bill to rise. As a gesture of goodwill you should at least provide her with half of the profits, not the 15% you propose. Fifteen percent would be the \"\"I am an ungrateful son\"\" minimum, and I would seriously consider giving all of the profits to her.\"",
"title": ""
},
{
"docid": "c092bf44c2f02f4c8d191a2e47685d81",
"text": "If a parent has access to the birth certificate, social security card, passport, and other legal documentation indicating family relationship along with the minimum balance, I expect either online or in-person creating a Joint Tenancy With Right of Survivorship account wouldn't be too difficult and allows for either party to add or remove funds. Conceivably the bank account could have been created as a Custodial account but risks when the son reaches the Age of Majority on the account she would lose control. If you have access to the above mentioned documents and depending on parental rights assigned after the divorce you can follow what is suggested in this link: https://blog.smartcredit.com/2011/07/28/what-age-can-i-have-a-credit-report/ to get the credit reports. The credit reports should list what lender accounts are tied to your son. They won't list any 'credit' assets like savings or investment accounts: http://www.myfico.com/crediteducation/in-your-credit-report.aspx As suggested a credit freeze would be appropriate. If he has reached 18 already, he can do it himself. Unless she under a Termination of Parental Rights order what I mentioned above should still hold.",
"title": ""
},
{
"docid": "ac6d741afb6245d76903ba31c7d5ffaf",
"text": "\"This is the best tl;dr I could make, [original](http://www.heritage.org/welfare/report/five-myths-about-welfare-and-child-poverty) reduced by 98%. (I'm a bot) ***** > Even in a non-expansion state, the single mother will still have substantially more combined income from welfare and earnings by holding a minimum-wage job than by relying only on welfare. > The notion of a welfare poverty trap is typically based on analyses using combinations of welfare benefits that rarely occur in the real world. > The data in the article show that when a single mother has earnings at the poverty level, she will typically have combined earnings and welfare at roughly twice the poverty level. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6uzqzz/five_myths_about_welfare_and_child_poverty/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~195270 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **welfare**^#1 **benefit**^#2 **work**^#3 **program**^#4 **percent**^#5\"",
"title": ""
},
{
"docid": "6c26cb8169b5246436c64281f34e0b34",
"text": "\"I think you're asking yourself the wrong question. The real question you should be asking yourself is this: \"\"Do I want to a) give my parents a $45,000 gift, b) make them $45,000 loan, or c) neither?\"\" The way you are talking in your question is as if you have the responsibility and authority to manage their lives. Whether they choose bankruptcy, and the associated stigma and/or negative self-image of financial or moral failure, or choose to muddle through and delay retirement to pay off their debt, is their question and their decision. Look, you said that loaning it to them was out, because you'd rather see them retire than continue to work. But what if they want to continue to work? For all the stress they're dealing with now, entrepreneurial people like that are not happy You're mucking about in their lives like you can run it. Stop it. You don't have the right; they're adults. There may come a time when they are too senile to be responsible for themselves, and then you can, and should, step up and take responsibility for them in their old age, just as they did for you when you were a child. But that time is not now. And by the way, from the information you've given, the answer should be C) neither. If giving or loaning them this kind of money taps you out, then you can't afford it.\"",
"title": ""
},
{
"docid": "b31b79ea910bbf70ddab9ee8a95344ae",
"text": "You don't get any tax benefit. When you are helping a relative or a friend in such situations the income is just gone. The only way to get around this is if you contribute to a charity, and they give it to your mom. You can then deduct the contributions to that charity. However, the IRS has cracked down on such situations and it probably is not worth pursuing. By the recent tax rules, that charity can use those contributions in which every way they choose, they cannot guarantee they go to your mom. Given that you are closed to your allowed exclusion (14K for 2017), I would work to keep your number under that. If you are married, you each get that exclusion so you can give up to 28K. I can't really speak to the reduction of benefits part as I am knowledgeable and more details on the type of transfer payments she receives would be germane to the discussion.",
"title": ""
},
{
"docid": "df4449c7883b32e00a325fda321ca845",
"text": "Obviously the best way to consolidate the real-estate loans is with a real-estate loan. Mortgages, being secured loans, provide much better interest rates. Also, interest can be deducted to some extent (depending on how the proceeds are used, but up to $100K of the mortgage can have deductible interest just for using the primary residence as a collateral). Last but not least, in many states mortgages on primary residence are non-recourse (again, may depend on the money use). That may prove useful if in the future your mother runs into troubles repaying it. So yes, your instincts are correct. How to convince your mother - that's between you and her.",
"title": ""
},
{
"docid": "73f5d3b823c65d40d639baf15cf77379",
"text": "\"Fitting a description? Stop it. That's a gut feeling you have no evidence of. Let's talk numbers. She took home $76 a day from Popeyes without taxes. She currently only has one job, so let's operate on that. She takes home $313 after taxes a week coming to $1278 per month. She has two sons. Let's say she has a two bedroom apartment. The medium price for that in Missouri is $883. The article mentioned her son's were two bus rides away. She can't drive because she can't afford insurance. A monthly bus pass for one person in Kansas City is $50. After Taxes, Rent, and transportation she has $345. According to USDA, her two sons would need $348 for a month \"\"thrifty\"\" (lowest income) level food budget because they're 14 and 15. She's already broke after Food, Rent, and Transportation. We haven't discussed utility or phone bills. Her children's transportation,Internet service, Clothing,Heat, or School supplies. Are their larger issues at play that allow this to happen? Absolutely. However, the minimum wage used to keep a family of three out of poverty. She's the head of a family of three and she's homeless. Her spending habits could've been better when she had two jobs. However, we don't know those, Her debt, the percentage of her money that goes to health care or any ailments her children might have, but we do know she suffers from high blood pressure. Which the average black patient spends $887 a year on hypertension medication. You're also completely disregarding that poor people can't do things in Bulk. It's more sensible to buy something that cost 0.15 per unit as opposed to 0.25 per unit. However, if you can't afford the bulk item, you're stuck buying the one with less value. Her house was condemned. She had to move. Signing a lease usually requires The First Month, Last month, and security deposit. If we're operating on the median rent, we're asking her to come up with close to 2700 dollars in a day. Do I think we should have a nation $15.00 Minimum wage? no. Do I think minimum wage should be based on average cost of living and median housing in states/large cities? Yes. Sources: https://www.cnpp.usda.gov/sites/default/files/usda_food_plans_cost_of_food/CostofFoodJul2014.pdf https://www.cbsnews.com/news/most-americans-cant-handle-a-500-surprise-bill/ http://piperreport.com/blog/2013/05/13/health-care-spending-hypertension-cost-high-blood-pressure/ http://store.kcata.org/31daypass.php /u/philosoraptor1000 it's not just personal responsibility. The cost of living has skyrocketed. The minimum wage hasn't. Your sarcasm is trash too. /u/thewaywardsaint This sub has become a joke because users like you spew trash, condescending, opinions instead of voicing your opinion using facts, concepts and numbers.\"",
"title": ""
},
{
"docid": "2d6130885a18b321ac8e637dc387bf10",
"text": "You're crazy to cash out your Roth or take on 401k loan, as that is addressing a short-term problem without doing anything about the longer-term issue. Just don't do it. Through no fault of her own, your mom is insolvent. It happens to people all of the time, and the solution is chapter 7 bankruptcy. The only thing that I would do with my money in this situation is help her with bankruptcy attorney fees if needed, and maybe bid on it at auction, if the house in in good shape.",
"title": ""
},
{
"docid": "b88f011e80981c6d7b69bdd61da050e6",
"text": "\"If you're under 18 there's not much you can do. As a minor, your kinda just stuck. There are routes to go, but not many. If you're over 18, here's what you can do. Now these steps won't help you not anger your mother. They're \"\"what you can do\"\" but it doesn't mean you \"\"should\"\". Keep in mind that it might be better just to have a conversation. In that conversation, if you think you need to say, \"\"I will file a complaint with the FBI, and have you arrested if you don't stop! You're breaking the law and invading my privacy.\"\" Again these are drastic steps to take. More moderate steps may be advisable.\"",
"title": ""
},
{
"docid": "eeefa579e9789a189943f7614788d455",
"text": "I'm amazed at how much debt my mom was able to accumulate before they finally cut her off. And it was all unsecured debt so there was jack shit they can do about her defaulting. If you're poor, and old (no assets, no house, no nothing), it makes sense to go as far into unsecured debt as possible.",
"title": ""
},
{
"docid": "df414047a4aeb337a3f7f42e8a3c734d",
"text": "I think the statute of limitations is 2 years so I suspect that she may not qualify, also BOA was not the last bank to hold her mortgage. I doubt she'll receive anything. She's just glad the whole mess is behind her.",
"title": ""
},
{
"docid": "eff1aef92ad7f047c4edc765b417c3d4",
"text": "\"You can pontificate about how life is so hard for her because shit costs money and you're right, she can't support herself and kids. However, that doesn't change the basic economic reality that working full time at Popeyes simply DOES NOT provide enough value to her employer and there are two many people with her very low skill set that she cannot command a higher wage. No amount of government programs will change that. Robbing the tax payers through welfare, killing businesses and destroying jobs by imposing a wage that simply is infeasible is counter productive, unsustainable, and simply misguided. Don't believe me? Ask the University of Washington who have the numbers on Seattle's ever escalating minimum wage and the effect on [jobs.] (http://www.zerohedge.com/news/2017-06-26/shocking-study-finds-seattle-min-wage-hikes-has-cost-works-14mm-hours-year-6700-jobs) This is, of course, assuming you care that people are being put out of work so a few can be paid a \"\"living wage\"\". Welfare is an endless tap of free money, [right?] (http://www.usdebtclock.org) The irony of your oh so well cited comment is that you didn't apply it to your own proposed solution of a minimum wage increase. [Here's](http://www.heritage.org/jobs-and-labor/report/higher-fast-food-wages-higher-fast-food-prices) a great analysis of effect of this change on consumer prices, how it affects the capital side of the equation of whether to operate a restaurant at all, and how a higher minimum wage impairs the creation of entry level jobs. Succinctly, minimum wage jobs were never meant to be able to support a family of three, no matter how much you wish it could. By creating artificially higher wages you'll get higher unemployment, more substitution of labor with more capital intensive solutions (ordering kiosks, etc), and higher taxes and consumer prices. Edit: Link B.S. Edit 2: **trigger warning** Also, it's a lot easier to raise kids with two working parents, that's just math for you. Talk about a bad personal choice that no one has touched on. Poor kids :(\"",
"title": ""
},
{
"docid": "62d5c32ad49fc3189ebd8b98819ce212",
"text": "Your relative in the US could buy a pre-paid Visa (aka Visa gift card) and give you the numbers on that to pay. They're available for purchase at many grocery/convenience stores. In most (all??) cases there'll be a fee of a several dollars charged in addition to the face value of the card. The biggest headache I can think of would be that pre-paid cards are generally only available in $25/50/100 increments; unless the current SAT price matches one of the standard increments they'll have to buy the next card size up and then get the remaining money off it in a separate transaction. A grocery store would be one of the easier places for your relative to do this because cashiers there are used to splitting transactions across multiple payment sources (something not true at most other types of business) due to regularly processing transactions partially paid for via welfare benefits.",
"title": ""
},
{
"docid": "355895b69526d03aa8b506b3138ca6b3",
"text": "\"The author really glosses over the impact of changes pertaining to \"\"return to work\"\" requirements/qualification. [In Georgia, some recipient groups have been reduced by 60%](http://www.myajc.com/news/breaking-news/more-will-have-work-keep-food-stamps/pu0Y9SASOVxc5QwEzJJLdJ/). I'd be cautious about celebrating this kind of report being connected to people rising out of poverty status. The more obvious conclusion is that the reductions owe more to people simply being excluded from SNAP.\"",
"title": ""
}
] |
fiqa
|
fe29d1dcc5f16ddd79634fcf1881e303
|
Is there any downside snapping a picture (or scanning a copy) of every check one writes vs. using a duplicate check?
|
[
{
"docid": "ce52603664902ae8e7733c89c63ff044",
"text": "\"For me, the main benefit of using duplicate checks is that the copy is created automatically. If I had to take an extra step, whether taking a photo or writing on a stub, I would probably not always remember to do it. There is also the issue that you might need to write a check when you don't have your smartphone with you, or it is broken or has a dead battery, etc. There are various pros and cons of having an electronic record versus a paper record. A paper copy of a check is more vulnerable to physical loss or intrusion, but an electronic record is more vulnerable to hacking. You also have to keep the images organized somehow, and take care of data security and backups for the images. You'll have to evaluate which is the greater concern for you. A minor side point is that check duplicates often omit the account number and obscure your signature. A photo of the original check would include both of these. As far as \"\"evidence\"\", it seems to me they're both equally good evidence that you wrote the check - but that's not really that useful. In most sorts of disputes, what you would need to prove is that you actually delivered the check to the intended recipient, and neither the photo nor the paper copy is evidence of that. You could have written the check, taken your photo / copy, and then torn it up.\"",
"title": ""
},
{
"docid": "c7cbd25677ebf66c427b4f71d96129c0",
"text": "No, there is no downside. I personally don't use duplicate checks. I simply make a record of the checks I write in the check register. A copy of the check, whether a duplicate or a photo, isn't really proof of payment for anyone but yourself, as it is very easy to write a check after the fact and put a different date on it.",
"title": ""
},
{
"docid": "db9727bc51b56367e0c52dcca1121c14",
"text": "\"When banks would return the actual physical cheque, at least you had some printing / writing from the other bank on it, as some type of not-easily-Photoshopped proof. Now many (most?) banks don't return the actual cheques anyway, just an image of it - sometimes a low quality shrunken B&W photocopy-like image too. You'd have to check with a lawyer or court in your area, but I suspect any photocopy or image, as well as a written or carbon-copy duplicate, would not be good enough proof for a law court, since they could all be easily re-written or Photoshopped. So I don't think there's a real upside anyway. Only an official bank statement saying that the name/people written actually cashed the cheque might be \"\"good evidence\"\" (I'm having doubts that the bank's own low quality \"\"image\"\" would even qualify, unless it's verified as coming directly from the bank somehow). I'd agree with Nate (+1) that a big downside could be identity theft, either online or alongside phone loss/theft.\"",
"title": ""
}
] |
[
{
"docid": "874a7c69d95291613b4d08871ce6dc57",
"text": "Assuming neither one charges a fee and you are talking about automated non-cash, non-check transactions: Withdrawal is slightly better if you are 100% sure you have the money (or better yet, twice the money) to cover it. It puts more incentive on the bank that is responsible for the act to do it correctly, because they will then be the bank holding the money. It also creates an added check because there is no possibility of having an error in transfer information result in sending your money to the wrong account. (This is unlikely anyway, but not impossible depending on the bank and interface). Deposit may be slightly better if you are not, or if you are concerned about technical foul-ups at the bank. Depending on the bank, a deposit with insufficient funds may be cancelled rather than going through and then being cancelled, which could result in various banking fees (returned item fees, overdraft fees, etc...). If there is a technical foul-up during a withdrawal, you run the risk of having banks get confused--I know of a case where it took a major bank months to fix a withdrawal transaction that was denied the second time when they activated it twice, but the account balance mistakenly showed an extra thousand dollars for the duration.",
"title": ""
},
{
"docid": "c1e1220560ce3d4ece5ce7f64ee937e5",
"text": "I still use checks to pay rent and occasionally some bills/liabilities. That said, I did notice an (elderly) lady paying by check at the supermarket a while ago. So is it really common to get a paycheck in the sense that you get a piece of paper? Yes and no. There are some people that opt for the physical paycheck. Even if they do not, there is a pay stub which serves as a record of it. My last employer went to online pay stubs and a bunch of us opted out, sticking with the good old paper in an envelope. We sure were glad of that when there were technical issues and security concerns with the online service.",
"title": ""
},
{
"docid": "ee98cdc37024de3dac00fdb75f6e1d98",
"text": "Believe it or not, this is done as a service to you. The reason for this has to do with a fundamental difference between a credit card account and a checking account. With a credit card account, there is no money in the account; every charge is borrowed money. When you get to your credit limit, your credit transactions will start getting declined, but if the bank does for some reason let one get approved, it's not a big deal for anyone; it just means that you owe a little more than your credit limit. Note that (almost) every credit card transaction today is an electronic transaction. A checking account, however, has real money in it. When it is gone, it is gone. When a balance inquiry is done, the bank has no way of knowing how many checks you've written that have not been cashed yet. It is a customer's responsibility to know exactly how much money is available to spend. If you write more checks than you have money for in your account, technically you have committed a crime. Unfortunately, there are too many people now that are not taking the responsibility of calculating their own checking account balance seriously, and bad checks are written all the time. When a bank allows these transactions to be paid even though you don't have enough money in your account, they are preventing a crime from being committed by you. The fee is a finance charge for loaning you the money, but it is also there to encourage you not to spend more than you have. Even if you use a debit card, it is still tied to a checking account, and the bank doesn't know if you have written enough checks to overdraw your account or not. It is still your responsibility to keep track of your own available balance. Every time this happens to you, thank the bank as you pay this fee, and then commit to keeping your own running balance and always knowing how much you have left in your account.",
"title": ""
},
{
"docid": "f57b3c54430661ed27fb51040d0e1cef",
"text": "\"It's called a \"\"checkbook register\"\" -- learn what it is and how to use it properly (not only recording your transactions & maintaining your own running balance, but also including \"\"reconciling\"\" it with your bank-issued statements or online transaction listings) and you will *not* overdraw. It's [fairly basic stuff](http://www.practicalmoneyskills.com/spanish/pdf/teachers/specialneeds/lev_3/lesson_06/6_3activity.pdf) but it never ceases to amaze me how many (supposedly \"\"smart\"\") people fail to do it properly (if at all).\"",
"title": ""
},
{
"docid": "bc0868f993b2fbc3bd7ab7251dc90b69",
"text": "I do this, and as you say the biggest downside is not having a separate account for your savings. If you're the type of person who struggles with restraint this is not for you. On the other hand this type of account gives more interest than any other type of US Checking or Savings account I've seen, so you will benefit from the interest.",
"title": ""
},
{
"docid": "e5bd30df315f45d3433c7b6140119124",
"text": "\"I'm no accounting expert, but I've never heard of anyone using a separate account to track outstanding checks. Instead, the software I use (GnuCash) uses a \"\"reconciled\"\" flag on each transaction. This has 3 states: n: new transaction (the bank doesn't know about it yet), c: cleared transaction (the bank deducted the money), and y: reconciled transaction (the transaction has appeared on a bank statement). The account status line includes a Cleared balance (which should be how much is in your bank account right now), a Reconciled balance (which is how much your last bank statement said you had), and a Present balance (which is how much you'll have after your outstanding checks clear). I believe most accounting packages have a similar feature.\"",
"title": ""
},
{
"docid": "ec5412057d995fa26c9d1cff9cdb278d",
"text": "\"The best reason for endorsing a check is in case it is lost. If the back is blank, a crooked finder could simply write \"\"pay to the order of \"\" on it and deposit it in his own account. You do not need a signature for the endorsement. The safest way to endorse a check is to write \"\"FOR DEPOSIT ONLY\"\" followed by an account number, in which case the signature is not needed. most businesses make up rubber stamps with this and stamp it the minute they receive a check. That way it has no value to anyone else. Depositing checks is increasingly going the way of the dodo. Many businesses today use check truncation - the business scans the check in, sends the digital image to the bank, and stores the check. I was surprised that Chase already has an applet for iPhones that you can use to deposit a check by taking a picture of it!\"",
"title": ""
},
{
"docid": "b941ec8a64dd8a7efd3690dab33cd768",
"text": "Try the following apps/services: Receipt Bank (paid service, gathers paper receipts, scans them and processes the data), I've tested it, and it recognizing receipts very well, taking picture is very quick and easy, then you can upload the expenses into your accounting software by a click or automatically (e.g. FreeAgent), however the service it's a bit expensive. They've apps for Android and iPhone. Expentory (app and cloud-based service for capturing expense receipts on the move),",
"title": ""
},
{
"docid": "43bf814aee8a481c647ff68c9defa496",
"text": "\"As others have noted, in the U.S. a checking account gives you the ability to write a check, while a savings account does not. I think you know what a check is even if you don't use them, right? Let me know if you need an explanation. Personally, I rarely write paper checks any more. I have an account for a small side business, and I haven't bothered to get new checks printed since I moved 6 years ago even though the checks still have my old address, because I've only written I think 3 paper checks on that account in that time. From the bank's point of view, there are all sorts of government regulations that are different for the two types of accounts. But that is probably of little concern to you unless you own a bank. If the software you have bought allows you to do the things you need to do regardless of whether you call the account \"\"savings\"\" or \"\"checking\"\", then ... who cares? I doubt that the banking software police will come to your house and beat you into unconsciousness and arrest you because you labeled an account \"\"checking\"\" that you were supposed to label \"\"savings\"\". If one account type does what you need to do and the other doesn't, then use the one that works.\"",
"title": ""
},
{
"docid": "a6a8bc7193252f2ccfec889fe8110dcb",
"text": "No, most check deposits are processed that way. Banks transmit the pictures of the checks between themselves, and allow business customers to deposit scans for quite some time now. I see no reason for you to be concerned of a check being in a dusty drawer, it's been deposited, cannot be deposited again. If you're concerned of forgery - well, nothing new there.",
"title": ""
},
{
"docid": "79cf9bb9c76a12e5bb6ccf3b1186e6be",
"text": "\"Firstly, it isn't so generous. It is a win-win, but the bank doesn't have to mail me a free box of checks with my new account, or offer free printing to compete for my business. They already have the infrastructure to send out checks, so the actual cost for my bank to mail a check on my behalf is pretty minimal. It might even save them some cost and reduce exposure. All the better if they don't actually mail a check at all. Per my bank Individuals and most companies you pay using Send Money will be mailed a paper check. Your check is guaranteed to arrive by the delivery date you choose when you create the payment. ... A select number of companies–very large corporations such as telecoms, utilities, and cable companies–are part of our electronic biller network and will be paid electronically. These payments arrive within two business days... So the answer to your question depend on what kind of bill pay you used. If it was an electronic payment, there isn't a realistic possibility the money isn't cashed. If your bank did mail a paper check, the same rules would apply as if you did it yourself. (I suppose it would be up to the bank. When I checked with my bank's support this was their answer.) Therefore per this answer: Do personal checks expire? [US] It is really up to your bank whether or not they allow the check to be cashed at a later date. If you feel the check isn't cashed quickly enough, you would have to stop payment and contact whoever you were trying to pay and perhaps start again. (Or ask them to hustle and cash the check before you stop it.) Finally, I would bet a dime that your bank doesn't \"\"pre-fund\"\" your checks. They are just putting a hold on the equivalent money in your account so you don't overdraw. That is the real favor they do for you. If you stopped the check, your money would be unfrozen and available. EDIT Please read the comment about me losing a dime; seems credible.\"",
"title": ""
},
{
"docid": "1321dc071d64c45d197ac4f381d77ac9",
"text": "\"It surely doesn't HURT to keep a receipt. I tend to pile up receipts in my desk drawer, never look at them, and then every few months throw them all out. If a vendor writes a receipt by hand or if the cash register is not tied in to the credit card system, keeping a receipt could give you evidence against mistakes or fraud. Like if the vendor gives you a receipt for $10 and then sends a transaction to the credit card company for $20, you could use the receipt as evidence of the problem. But if the vendor is trying to really cheat you, the most likely thing for him to do is run the legitimate transaction through, and then some time later run a fake transaction. So say today you go to vendor X, buy something for $20, and he bills your credit card $20. Then a few days later he bills you another $100 even though you never came back to the store. Sure, you have a receipt for $20. But you don't have a receipt for the $100 because you never authorized that transaction. Your receipt proves nothing -- presumably you're not disputing the $20. If you complain to the bank or go to the police or whatever, saying, \"\"Hey look, I don't have a receipt for the $100\"\" doesn't prove anything. How do they know you didn't just throw it away? It's difficult to prove that you never had such a receipt.\"",
"title": ""
},
{
"docid": "ac976ed1740aa33d2e14bfdd1b827286",
"text": "DCU, Alliant Credit Union has completely scan only options (no need to mail in checks later). BofA, SchoolsFirstCU allow initial scan, but you need to mail in checks later. All these are no fee.",
"title": ""
},
{
"docid": "38a29e35873ce5ddf201e4ff38c05842",
"text": "checkers should be paid by item quantity/rate they scan. Many o time have seen chatty checkers with a few in their line while the person next to them has moved 3 times the good quantity across the scanner. I also loathe check writers, they wait till the last minute, then ask the price again a few times and I swear use calligraphy to fill out the check - taking more time.",
"title": ""
},
{
"docid": "9dc9debd5d052930eabc49b7000d8de0",
"text": "The person writing the check has already signed and endorsed it. The depositer's signature is not to confirm the check's validity, but to demonstrate that the check was depisited to the correct Fred Smith's account, and permit charges to be brought if, eg, Fred Bonzo Smith tries to steal Fred Gnorph Smith's check.",
"title": ""
}
] |
fiqa
|
d001a1cfca93e4e230c691e9a5e9daa2
|
What happens to people without any retirement savings?
|
[
{
"docid": "8b3f1db667f6fef6484590e164986c9e",
"text": "\"I'm afraid you have missed a few of the outcomes commonly faced by millions of Americans, so I would like to take a moment to discuss a wider range of outcomes that are common in the United States today. Most importantly, some of these happen before retirement is ever reached, and have grave consequences - yet are often very closely linked to financial health and savings. Not planning ahead long-term - 10-20+ years - is generally associated with not planning ahead even for the next few months, so I'll start there. The most common thing that happens is the loss of a job, or illness/injury that put someone out of work. 6 in 10 adults in the US have less than $500 in savings, so desperation can set in very quickly, as the very next paycheck will be short or missing. Many of these Americans have no other source of saved money, either, so it's not like they can draw on retirement savings, as they don't have that either. Even if they are able to get another job or recover enough to get back to work in a few weeks, this can set off a desperate cycle. Those who have lost their jobs to technical obsolescence, major economic downturns, or large economic changes are often more severely affected. People once making excellent, middle-class (or above) wages with full benefits find they cannot find work that pays even vaguely similarly. In the past this was especially common in heavy labor jobs like manufacturing, meat-packing, and so on, but more recently this has happened in financial sectors and real estate/construction during the 2008 economic events. The more resilient people had padding, switched careers, and found other options - the less resilient, didn't. Especially during the 1970s and 1980s, many people affected by large losses of earning potential became sufficiently desperate that they fell heavily (or lost their functioning status) into substance abuse, including alcohol and drugs (cocaine and heroine being especially popular in this segment of the population). Life disruption - made even more major by a lack of savings - is a key trigger to many people who are already at risk of issues like substance addiction, mental health, or any ongoing legal issues. Another common issue is something more simple, like loss of transportation that threatens their ability to hold their job, and a lack of alternatives available through support networks, savings, family, and public transit. If their credit is bad, or their income is new, they may find even disreputable companies turn them away, or even worse - the most disreputable companies welcome them in with high interest and hair-trigger repossession policies. The most common cycle of desperation I have seen usually starts with banking over-drafts, and its associated fees. People who are afraid and desperate start to make increasingly desperate, short-sighted choices, as tunnel-vision sets in and they are unable to consider longer-term strategy as they focus on holding on to what they have and survival. Many industries have found this set of people quite profitable, including high-interest \"\"check cashing\"\", payday loans, and title loans (aka legal loan sharks), and it is not rare that desperate people are encouraged to get on increasing cycles of loan amounts and fees that worsen their financial situation in exchange for short-term relief. As fees, penalties, and interest add up, they lose more and more of their already strained income to stay afloat. Banks that are otherwise reputable and fair may soon blacklist them and turn them away, and suddenly only the least reputable and most predatory places offer to help at all - usually with a big smile at first, and almost always with awful strings attached. Drugs and alcohol are often readily available nearby and their use can easily turn from recreational to addictive given the allure of the escapism it offers, especially for those made vulnerable by increasing stress, desperation, loss of hope, isolation, and fear. Those who have not been within the system of poverty and desperation often do not see just how many people actively work to encourage bad decision making, with big budgets, charm, charisma, and talent. The voices of reason, trying to act as beacons to call people to take care of themselves and their future, are all too easily drowned out in the roar of a smooth and enticing operation. I personally think this is one of the greatest contributions of the movement to build personal financial health and awareness, as so many great people find ever more effective ways of pointing out the myriad ways people try to bleed your money out of you with no real concern for your welfare. Looking out for your own well-being and not being taking in by the wide array of cons and bad deals is all too often fighting against a strong societal current - as I'm sure most of our regular contributors are all too aware! With increasing desperation often comes illegal maneuvers, often quite petty in nature. Those with substance abuse issues often start reselling drugs to others to try to cover lost income or \"\"get ahead\"\", with often debilitating results on long-term earning potential if they get caught (which can include cost barriers to higher education, even if they do turn their life around). I think most people are surprised by how little and petty things can quickly cycle out of control. This can include things like not paying minor parking or traffic tickets, which can snowball from the $10-70 range into thousands of dollars (due to non-payment often escalating and adding additional penalties, triggering traffic stops for no other reason, etc.), arrest, and more. The elderly are not exempt from this system, and many of America's elderly spend their latter years in prison. While not all are tied to financial desperation as I've outlined above, a deeper look at poverty, crime, and the elderly will be deeply disturbing. Some of these people enter the system while young, but some only later in life. Rather than homelessness being something that only happens after people hit retirement, it often comes considerably earlier than that. If this occurs, the outcome is generally quite a bit more extreme than living off social security - some just die. The average life expectancy of adults who are living on the street is only about 64 years of age - only 2 years into early retirement age, and before full retirement age (which could of course be increased in the next 10-20 years, even if life expectancy and health of those without savings don't improve). Most have extremely restricted access to healthcare (often being emergency only), and have no comforts of home to rest and recuperate when they become ill or injured. There are many people dedicated to helping, yet the help is far less than the problem generally, and being able to take advantage of most of the help (scheduling where to go for food, who to talk to about other services, etc) heavily depends on the person not already suffering from conditions that limit their ability to care for themselves (mental conditions, mobility impairments, etc). There is also a shockingly higher risk of physical assault, injury, and death, depending on where the person goes - but it is far higher in almost every case, regardless. One of the chief problems in considering only retirement savings, is it assumes that you'll only have need for the savings and good financial health once you reach approximately the age of 62 (if it is not raised before you get there, which it has been multiple times to-date). As noted above, if homelessness occurs and becomes longstanding before that, the result is generally shortened lifespan and premature death. The other major issue of health is that preventative care - from simple dentistry to basic self-care, adequate sleep and rest, a safe place to rejuvenate - is often sacrificed in the scrambling to survive and limited budget. Those who develop chronic conditions which need regular care are more severely affected. Diabetic and injury-related limb loss, as one example, are far more likely for those without regular support resources - homeless, destitute, or otherwise. Other posters have done a great job in pointing out a number of the lesser-known governmental programs, so I won't list them again. I only note the important proviso that this may be quite a bit less in total than you think. Social Security on average pays retired workers $1300 a month. It was designed to avoid an all-too-common occurrence of simple starvation, rampant homelessness, and abject poverty among a large number of elderly. No guarantee is made that you won't have to leave your home, move away from your friends and family if you live in an expensive part of the country, etc. Some people get a bit more, some people get quite a bit less. And the loss of family and friend networks - especially to such at-risk groups - can be incredibly damaging. Note also that those financially desperate will be generally pushed to take retirement at the minimum age, even though benefits would be larger and more livable if they delayed their retirement. This is an additional cost of not having other sources of savings, which is not considered by many. Well, yes, many cannot retire whether they want to or not. I cannot find statistics on this specifically, but many are indeed just unable to financially retire without considerable loss. Social Security and other government plans help avoid the most desperate scenarios, but so many aspects of aging is not covered by insurance or affordable on the limited income that aging can be a cruel and lonely process for those with no other financial means. Those with no savings are not likely to be able to afford to regularly visit children and grandchildren, give gifts on holidays, go on cruises, enjoy the best assistive care, or afford new technological devices to assist their aging (especially those too new and experimental to be covered by the insurance plans they have). What's worse - but most people do not plan for either - is that diminished mental and physical capacity can render many people unable to navigate the system successfully. As we've seen here, many questions are from adult children trying to help their elderly parents in retirement, and include aging parents who do not understand their own access to social security, medicaid/medicare, assistive resources, or community help organizations. What happens to those aging without children or younger friend networks to step in and help? Well, we don't really have a replacement for that. I am not aware of any research that quantifies just how many in the US don't take advantage of the resources they are fully qualified to make use of and enjoy, due to a lack of education, social issues (feeling embarrassed and afraid), or inability to organize and communicate effectively. A resource being available is not very much help for those who don't have enough supportive resources to make use of it - which is very hard to effectively plan for, yet is exceedingly common. Without one's own independent resources, the natural aging and end of life process can be especially harsh. Elderly who are economically and food insecure experience far heightened incidence of depression, asthma, heart attack, and heart failure, and a host of other maladies. They are at greater risk for elder-abuse, accidental death, life-quality threatening conditions developing or worsening, and more. Scare-tactics aren't always persuasive, and they do little to improve the lives of many because the people who need to know it most generally just don't believe it. But my hope here is that the rather highly educated and sophisticated audience here will see a little more of the harsher world that their own good decisions, good fortune, culture, and position in society shields them from experiencing. There is a downside to good outcomes, which is that it can cause us to be blind to just how extremely different is the experience of others. Not all experience such terrible outcomes - but many hundreds of thousands in the US alone - do, and sometimes worse. It is not helpful to be unrealistic about this: life is not inherently kind. However, none of this suggests that being co-dependent or giving up your own financial well-being is necessary or advised to help others. Share your budgeting strategies, your plans for the future, your gentle concerns, and give of your time and resources as generously as you can - within your own set budgets and ensuring your own financial well-being. And most of all - do not so easily give up on your family and friends, and count them as life-long hopeless ne'er-do-wells. Let's all strive to be good, kind, honest, and offer non-judgmental support and advice to the best of our ability to the people we care about. It is ultimately their choice - restricted by their own experiences and abilities - but need not be fate. People regularly disappoint, but sometimes they surprise and delight. Take care of yourself, and give others the best chance you can, too.\"",
"title": ""
},
{
"docid": "176edc9065bac5e5c2b6e0bd9ca7c1ad",
"text": "Well, if you worked in the United States you have social security, and medicare and medicaid in most cases as well. So you have a small amount of income to spend every month to cover your most basic living expenses, as well as your basic medical expenses. At least, that's the idea. In reality, it probably isn't anywhere near enough money for most to live comfortably. Also, there is a real fear that the US will have to inflate itself out of its debt to some extent in the future. This theory implies that the money retired individuals have saved or are receiving down the road could buy significantly less in the future than they expect. If you have the ability to put money away into an IRA or 401K early in your life, it will be greatly beneficial to do so. However, that is another issue I won't begin to discuss fully here. Edit since your question was restated after I typed my initial response, the final answer is: You will receive some assistance from Social Security, Medicare, and Medicaid. You will most likely need to either continue working, draw on savings such as an IRA or 401k, or will need assistance from others. If none of those are options, you would most likely end up living in poverty or worse.",
"title": ""
},
{
"docid": "0209954893ab0d05c014d1e681592bee",
"text": "According to both Huffington Post and Investopedia: Trying to retire without any savings in the bank can be difficult, and that difficulty is compounded by other factors senior citizens need to keep in mind as they age, like health issues and mobility. If saving money is not possible for you, retirement doesn’t have to pass you by. There are plenty of government-assisted and nonprofit programs that can help you, such as the Commodity Supplemental Food Program, Medicare, senior housing help from Housing and Urban Development and other resources. Therefore, to answer your questions: Is this pretty much the destiny of everyone who cannot save for retirement? Yes, if you do not have help from family (or friends) then you have a chance of ending up homeless and/or on government assistance. Do most people really never retire? There are people who really will never retire. There are stories in the news about Walmart greeters or McDonald's cashiers who are in their 80s and 90s working because they need to support themselves. However, that's not the case for everyone. There's a greeter at my local Costco who is in her 80s and she works because she loves it (her career was in consulting and she doesn't have a lack of retirement money. She just really likes talking to people.). What really happens? I can't answer what really happens because I have never experienced it and don't know people that do. Therefore I have to go off of what the two articles have said.",
"title": ""
},
{
"docid": "cb69d68309783f2b7e25947e1d78a5c7",
"text": "This is a good question and you seemed troubled by this and this person's choices in life. And that is the rub, they are choices. They know how to make them, they know the consequences, and they know how to work around them. Its a skill you probably don't have (and don't want to have). In the end they will survive. If you go to a fast food store in a popular retirement location you will see plenty of elderly people working. They might live in low income housing, receive some financial assistance, and utilize other charities such a food banks. They might depend on family and friends. There is also the ugly, it is not a fairy tale that some supplement their diets with pet food. There is of course social security. The amount is very low for most workers, but the amount is almost inconsequential. They would spend it all anyway and still be short despite the predictability of the income and a time frame with predictable expenses. Budgeting is a skill. So I have a friend that deals with this himself, and is helping an elder relation. He and his wife provide some help, but when it started there was a endless stream of requests. His policy now is: No more help unless he works out a budget with the person requesting help. I've used his ideas myself, and by using this it becomes clear on who is in actual need and who is just looking for the next handout. You can feel good about yourself for helping an actual needy person or guiltless say no.",
"title": ""
},
{
"docid": "f1e68de4d5af666c6ba83f415ec29fd4",
"text": "There are a host of programs in the US to help low/no-income seniors: Many states discount property taxes for the elderly as well. Not a dream retirement, but plenty of people are provided for without having prepared for retirement whether due to poor decisions or unfortunate circumstances.",
"title": ""
},
{
"docid": "0a89fc74d044bafca1132e8bfc973e5a",
"text": "Social security was created with just such people in mind. It's a meager living, but it is an income stream that can be supplemented by Walmart greeter income. It probably isn't so dire that it leads to homelessness, but it might mean not having some of the other comforts that we take for granted.",
"title": ""
}
] |
[
{
"docid": "de896f5572edde69c8f8a5d595bdaf26",
"text": "\"The thing you appear to neglect is that: Many people don't have a choice of when they retire. Another issue is that \"\"work 'til I die\"\" people are often 20-50 years old. If they changed their minds or were forced to retire (see above) or came to a realization later in life that they would like to retire, they've missed their chance. They've lost decades of compounding interest because they thought they knew everything in the world when they were 23. Forced retire savings hedges this 'common' mistake.\"",
"title": ""
},
{
"docid": "1bed398557ab5aed028262e5a1c0a590",
"text": "\"I assume you get your information from somewhere where they don't report the truth. I'm sorry if mentioning Fox News offended you, it was not my intention. But the way the question is phrased suggests that you know nothing about what \"\"pension\"\" means. So let me explain. 403(b) is not a pension account. Pension account is generally a \"\"defined benefit\"\" account, whereas 403(b)/401(k) and similar - are \"\"defined contribution\"\" accounts. The difference is significant: for pensions, the employer committed on certain amount to be paid out at retirement (the defined benefit) regardless of how much the employee/employer contributed or how well the account performed. This makes such an arrangement a liability. An obligation to pay. In other words - debt. Defined contribution on the other hand doesn't create such a liability, since the employer is only committed for the match, which is paid currently. What happens to your account after the employer deposited the defined contribution (the match) - is your problem. You manage it to the best of your abilities and whatever you have there when you retire - is yours, the employer doesn't owe you anything. Here's the problem with pensions: many employers promised the defined benefit, but didn't do anything about actually having money to pay. As mentioned, such a pension is essentially a debt, and the retiree is a debt holder. What happens when employer cannot pay its debts? Employer goes bankrupt. And when bankrupt - debtors are paid only part of what they were owed, and that includes the retirees. There's no-one raiding pensions. No-one goes to the bank with a gun and demands \"\"give me the pension money\"\". What happened was that the employers just didn't fund the pensions. They promised to pay - but didn't set aside any money, or set aside not enough. Instead, they spent it on something else, and when the time came that the retirees wanted their money - they didn't have any. That's what happened in Detroit, and in many other places. 403(b) is in fact the solution to this problem. Instead of defined benefit - the employers commit on defined contribution, and after that - it's your problem, not theirs, to have enough when you're retired.\"",
"title": ""
},
{
"docid": "06c4af59265f64c078d4db3c960cee4a",
"text": "A lot of people don't, but some do and some of those give back in volunteering their time, knowledge, or expertise and sometimes the only way to do that is to retire with good savings. My granddad lived to 102 and he retired around 65, but he did nothing of any real substance for his community. He was kind and sort of funny and he loved me, but he wasted most of his life after retirement just watching tv.",
"title": ""
},
{
"docid": "24ac5b7453e82c94b72b34be3902a1fb",
"text": "\"If you dig deeper and look at the original study, what's being measured is \"\"retirement-plan participation\"\": specifically, money in 401(k) plans and IRAs. This omits every other possible source of retirement money: things such as general savings, non-retirement investments, property ownership, pensions, etc. As an extreme example, I know someone who's retired with property worth a million dollars, another million dollars in stock, a pension providing thousands of dollars a month plus health insurance, and not one penny of what the study would consider \"\"retirement savings\"\". Yes, the average American family is under-prepared for retirement. But it's nowhere near as bad as the article makes it sound.\"",
"title": ""
},
{
"docid": "530ba3f0e8050cdfe11a9e3dfe48a39f",
"text": "In theory, anything can happen, and the world could end tomorrow. However, with a reasonably sane financial plan you should be able to ride this out. If the government cannot or won't immediately pay its debt in full, the most immediate consequence is that people are going to be unwilling to lend any more money in future, except at very high rates to reflect the high risk of future default. Presumably the government has got into this state by running a deficit (spending more than they collect in tax) and that is going to have to come to an abrupt end. That means: higher taxes, public service retrenchments and restrictions of service, perhaps cuts to social benefits, etc. Countries that get into this state typically also have banks that have lent too much money to risky customers. So you should also expect to see some banks get into trouble, which may mean customers who have money on deposit will have trouble getting it back. In many cases governments will guarantee deposits, but perhaps only up to a particular ceiling like $100k. It would be very possible to lose everything if you have speculative investments geared by substantial loans. If you have zero or moderate debt, your net wealth may decrease substantially (50%?) but there should be little prospect of it going to zero. It is possible governments will simply confiscate your property, but I think in a first-world EU country this is fairly unlikely to happen to bank accounts, houses, shares, etc. Typically, a default has led to a fall in the value of the country's currency. In the eurozone that is more complex because the same currency is used by countries that are doing fairly well, and because there is also turbulence in other major currency regions (JPY, USD and GBP). In some ways this makes the adjustment harder, because debts can't be inflated down. All of this obviously causes a lot of economic turbulence so you can expect house prices to fall, share prices to gyrate, unemployment to rise. If you can afford it and come stomach the risk, it may turn out to be a good time to buy assets for the long term. If you're reasonably young the largest impact on you won't be losing your current savings, but rather the impact on your future job prospects from this adjustment period. You never know, but I don't think the Weimar Republic wheelbarrows-of-banknotes situation is likely to recur; people are at least a bit smarter now and there is an inflation-targeting independent central bank. I think gold can have some room in a portfolio, but now is not the time to make a sudden drastic move into it. Most middle class people cannot afford to have enough gold to support them for the rest of their life, though they may have enough for a rainy day or to act as a balancing component. So what I would do to cope with this is: be well diversified, be sufficiently conservatively positioned that I would sleep at night, and beyond that just ride it out and try not to worry too much.",
"title": ""
},
{
"docid": "7e2a088710a4724b40f0d72995b098fc",
"text": "It's such a good point. Millennials know that old age pensions won't exist by the time we're that age. In fact, there's decent evidence health care and education systems have nearly completely broken down. Rising rents and lack of options don't help. The future is getting complicated just to make ends meet.",
"title": ""
},
{
"docid": "4b415bf0559c3689eba88579cc1d0800",
"text": "WTF? Americans aren't saving enough for retirement as it is, SS is not going to be a viable way to fund retirement, and now they want to make it *harder* to put money away for retirement? We're getting pushed into a world where no one can retire but the job market is shrinking due to automation. Want the American Revolution 2.0 with pitchforks and torches? Because this is how you get the American Revolution 2.0 with pitchforks and torches.",
"title": ""
},
{
"docid": "73cb8371016921ef58e4aa8ca47d7116",
"text": "1) People aren't always going to be able to do their occupation, or their desired hobby. 2) Government assistance, or whatever you want to call it, is available at a certain age. Some people look forward to this and plan to rely on it, but it isn't really sufficient for living off of and keeping the standard of living you will be used to. Therefore, such situations require you to plan using a variety of other institutions to help you in that time. Finally, more is more: if your retirement funds exceed what you need, you can leave something for your family to help them start at a more stable financial place after you are gone.",
"title": ""
},
{
"docid": "6133f6d083b06457fb1454a44b740a51",
"text": "These scenarios discuss the period to 2025. They assess the deep uncertainty that is paralysing decision-taking. They identify the roots of this as the failure of the social model on which the West has operated since the 1920s. Related and pending problems imply that this situation is not recoverable without major change: for example, pensions shortfalls are greater in real terms that entire expenditure on World War II, and health care and age support will treble that. Due to the prolonged recession, competition will impact complex industries earlier than expected. Social responses which seek job protection, the maintenance of welfare and also support in old age will tear at the social fabric of the industrial world. There are ways to meet this, implying a major change in approach, and a characteristic way in which to fail to respond to it in time, creating a dangerous and unstable world. The need for such change will alter the social and commercial environment very considerably. The absence of such change will alter it even more. The summary is available [here](http://www.chforum.org/scenario2012/paper-4-6.shtml) or at the foot of the link given in the header. The much richer paper is [here](http://www.chforum.org/scenario2012/paper-4-1.shtml). These scenarios are the latest in a series in a project that dates back to 1995. Over a hundred people participated from every continent, over a six month period. The working documents are available on the web.",
"title": ""
},
{
"docid": "f3d21a515496587586d6dd5ed4764317",
"text": "What happened - affluence. No mortgage - one grandfather built his own house the other lived in a sod hut. No running water, no electricity, no natural gas/coal/oil heating. No car, no insurance, no gasoline They grew much of their own food. If you want it - it's all yours. Go for it.",
"title": ""
},
{
"docid": "3e848180b2ff5d8b1fd4fae0243110e5",
"text": "Actually, they'd just forego healthcare and either die when they get sick or go bankrupt. I agree with you on the income guarantee, though. It avoids many of the worst problems with our various government programs, particularly in regard to punishing people for starting to succeed a little.",
"title": ""
},
{
"docid": "d3d3e52e5ee9e04999bbe7b39a8f5570",
"text": "Hypothetical Question: What happens if the state can't make pension obligations anymore? Credit rating would go down, pensioneers (current and future) would have to take a cut and some taxes would increase or legislation would change that makes it impossible to enact pension holidays. Probably a combination of the above. What else would happen?",
"title": ""
},
{
"docid": "e6b6b282ec2c58732e168245a2809279",
"text": "Check out this recent Planet Money podcast on taxes & incentives via allowance for your children. It might not directly answer your question, but it brings up some interesting things to consider when setting up an allowance for your children.",
"title": ""
},
{
"docid": "b98dd815ef852c5d1e52b86ec13e8e41",
"text": "Barclays Bank, RBS, and Deutsche Bank have an agreement as part of the Global ATM Alliance that allows you to make withdrawals at Deutsche Bank ATMs at no charge. The usefulness of this arrangement to you depends on how you use your money and would entail opening an account at Barclays or Royal Bank of Scotland. Edit: David, it looks like you will need some kind of residency to open a Barclays account, but you may be able to qualify with the proper supporting documentation. See this website: UK banking services and UK bank accounts, from Barclays Wealth International",
"title": ""
}
] |
fiqa
|
c210303c5cf705ea3e76196629d4bb36
|
I am looking for software to scan and read receipts
|
[
{
"docid": "b4fb7c1fde6ac765d7261022789f77c5",
"text": "NeatReceipts come up from time to time on woot.com. You can read up on the discussions which typically include several user testimonials at these past sales:",
"title": ""
},
{
"docid": "b941ec8a64dd8a7efd3690dab33cd768",
"text": "Try the following apps/services: Receipt Bank (paid service, gathers paper receipts, scans them and processes the data), I've tested it, and it recognizing receipts very well, taking picture is very quick and easy, then you can upload the expenses into your accounting software by a click or automatically (e.g. FreeAgent), however the service it's a bit expensive. They've apps for Android and iPhone. Expentory (app and cloud-based service for capturing expense receipts on the move),",
"title": ""
},
{
"docid": "e15395babdfd31c5708f353b8677cfe6",
"text": "Scanning receipts is easy and any decent scanner will do a good job for you. The difficult part is the software that 'extracts' the data. Today there is no software that can do this really well because there is just too great a range of receipts (e.g. handwritten receipts, receipts in foreign languages, etc.). For this reason services like Shoeboxed (in the US) and Receipt Bank (in Europe) are very popular. (Added disclosure: Michael Wood's profile web site link indicates he is associated with Receipt Bank.)",
"title": ""
}
] |
[
{
"docid": "7e6a30f5616e94418f406aebfface37b",
"text": "Have you looked into GnuCash? It lets you track your stock purchases, and grabs price updates. It's designed for double-entry accounting, but I think it could fit your use case.",
"title": ""
},
{
"docid": "0507b77c98c3fcf6da71fa48b8d2b9c8",
"text": "My bank will let me download credit card transactions directly into a personal finance program, and by assigning categories to stores I can get at least a rough overview of that sidd of things, and then adjust categories/splits when needed. Ditto checks. Most of my spending is covered by those. Doesn't help with cash transactions, though; if I want to capture those accurately I need to save receipts. There are ocr products which claim to help capture those; haven't tried them. Currently, since my spending is fairly stable, I'm mostly leaving those as unknown; that wouldn't work for you.",
"title": ""
},
{
"docid": "11df2c61d4b972e329f7d49fe185d5b9",
"text": "I am no expert on the situation nor do I pretend to act like one, but, as a business owner, allow me to give you my personal opinion. Option 3 is closest to what you want. Why? Well: This way, you have both the record of everything that was done, and also IRS can see exactly what happened. Another suggestion would be to ask the GnuCash maintainers and community directly. You can have a chat with them on their IRC channel #gnucash, send them an email, maybe find the answer in the documentation or wiki. Popular software apps usually have both support people and a helpful community, so if the above method is in any way inconvenient for you, you can give this one a try. Hope this helps! Robert",
"title": ""
},
{
"docid": "e55daa3355f5efdf6e80a5c3081f2a87",
"text": "I've found it's just simpler to keep all of my receipts rather than debate which receipts to keep and which to throw away. I shove all my receipts from August in an envelope labeled August. Then, next year (12 months later) I shred the envelope. That way, if I see a bank error, need to find a receipt to do a return or warranty work, etc. I have all of them available for a year. Doing 1 envelope per month means I only have 12 envelopes at any time and I can shred an entire envelope without bothering to sort through receipts inside the envelope.",
"title": ""
},
{
"docid": "b67b218506ae7f85e3b2dc1ded7a4ddd",
"text": "Maxime Impex offers the Best of Best Currency Counting Machine With Fake Note Detection which is very easy to installation, very user friendly, gives dimensional accuracy, Automatic Clear and Accurate counting. For more information, Visit the website: http://www.maximeimpex.in/ or call us at: 9891878746",
"title": ""
},
{
"docid": "a471c4c58c07ed7ca866cff9414c8695",
"text": "There isn't one. I haven't been very happy with anything I've tried, commercial or open source. I've used Quicken for a while and been fairly happy with the user experience, but I hate the idea of their sunset policy (forced upgrades) and using proprietary format for the data files. Note that I wouldn't mind using proprietary and/or commercial software if it used a format that allowed me to easily migrate to another application. And no, QIF/OFX/CSV doesn't count. What I've found works well for me is to use Mint.com for pulling transactions from my accounts and categorizing them. I then export the transaction history as a CSV file and convert it to QIF/OFX using csv2ofx, and then import the resulting file into GNUCash. The hardest part is using categories (Mint.com) and accounts (GnuCash) properly. Not perfect by any means, but certainly better than manually exporting transactions from each account.",
"title": ""
},
{
"docid": "47d2401e8c9dcd835a24ea517a73bda6",
"text": "I've seen this tool. I'm just having a hard time finding where I can just get a list of all the companies. For example, you can get up to 100 results at a time, if I just search latest filings for 10-K. This isn't really an efficient way to go about what I want.",
"title": ""
},
{
"docid": "1094d051d0888469d5c8772a8afb6621",
"text": "Best Linux software is PostBooks. It is full double entry, but there is definitely a learning curve. For platform-agnostic, my favorite is Xero, which is web-based. It is full double entry balance sheet, the bank reconciliation is a pleasure to use, and they are coming out with a US version this summer. Easy to use and does everything I need.",
"title": ""
},
{
"docid": "446d9213a8f4ea94a44d0e75bf123e7b",
"text": "\"Mint is one alternative. If you want the raw data in CSV format, you can use \"\"Export\"\" feature under\"",
"title": ""
},
{
"docid": "46bc1213fb52a6c9ecdc1047f6d59daa",
"text": "For double entry bookkeeping, personal or small business, GnuCash is very good. Exists for Mac Os.",
"title": ""
},
{
"docid": "93651496bbc8ad51ee18fb100f61dfbc",
"text": "I used to use Quicken, but support for that has been suspended in the UK. I had started using Mvelopes, but support for that was suspended as well! What I use now is an IPhone app called IXpenseit to track my spending.",
"title": ""
},
{
"docid": "6e399cca341c7328876cd896e39d0d1e",
"text": "As a programmer*, I expect the ATM and counter receipts to have an error and look hard for it. If I don't find the error I usually cram it in my pocket which is the same as throwing it away. I should keep them, but I also look at my online balances for almost all of my accounts several times a week so I (perhaps foolishly) don't worry about paper receipts too much. *Maybe I should be a tester.",
"title": ""
},
{
"docid": "a0b27816a5462ba66cd4ee31b70b3784",
"text": "You would need additional information (login information [username and which service]) to fully make use of it though. I'm not sure how you would collect that? You could use such a service to build a dictionary for a dictionary attack I guess. It's only after this sort of attack that people start explicitly checking their passwords though? edit: From re-reading your comment I see you've already come up with the same limitations. To answer the question you actually asked, I would say you have no way of knowing these sha1 generators don't store the queries, just that it would be difficult to use the resulting dictionary. You would see which hashes are on your list versus the hashes on the leaked list. And then use those matches as a dictionary to attack someone's linkedin account.",
"title": ""
},
{
"docid": "39efebb7c6e866b8c97268e70ed69f1e",
"text": "I'm trying to organize my financial papers as well. I have a Fujitsu ScanSnap and it's tearing through my papers like a hot knife through butter (i.e. awesome). Here's how I'm addressing organizing the paper. I'm organizing mine a little bit organically. Here are the main parts: So anyway, all that to say that it's not necessary to organize the files to the hilt. If you want to, that's fine too, but it's a tradeoff: up-front organization for possibly some time savings later. The search function available is decreasing the advantage of organizing your files carefully. If throwing all of your files in a digital pile makes your skin crawl, then I won't force you otherwise, but I'm not worried about it for the time being. What you're doing with the other tracking sounds fine to me. Others may have different insights there.",
"title": ""
},
{
"docid": "8eee794d1fa47d5da44a6d71f612dcd0",
"text": "Well, consult with a CPA, but I guess you don't have to pay taxes on 2012 with a correct accounting system since this is the money you are going to completely earn within 2013 so you can record it as future earning which is called deferred revenue or advance payments or unearned revenue.",
"title": ""
}
] |
fiqa
|
c3184d8daa1b3e5bca6ec94ab16ec4fa
|
What to do with old company's 401k? [duplicate]
|
[
{
"docid": "345bf9d4cda4b61451247ce8aa4f1374",
"text": "I suggest rolling it over to the 401(k) with your new employer. Particularly if they match any percentage of your contribution, it would be in your interest to take as much of that money as possible. When it comes to borrowing money from your 401(k), it looks like the issues AbraCadaver mentioned only apply if you don't pay back the money (http://www.kiplinger.com/article/real-estate/T010-C000-S002-borrowing-from-your-retirement-plan-to-buy-a-home.html). The reasonable argument against taking money out of your 401(k) to buy a home is that it leaves a dent in your retirement nest egg (and its earning power) during key earning years. On the plus side for borrowing from your 401(k), it's very low interest--and it's interest you're paying back to yourself over a 5-year period. At its current value, the most you could borrow from your 401(k) is $35K. If you're fortunate in where you live, that could be most or all of the downpayment. In my own experience, my wife borrowed against her 401(k) balance for the earnest money when we purchased a new home. Fortunately for us, an investor snapped up my previous home within 4 days of us listing it, so she was able to pay back her loan in full right away.",
"title": ""
},
{
"docid": "4bb249d447ac7ea4fd596bef2416dbdf",
"text": "Your best bets are a Roth IRA or traditional IRA. If you roll it to a Roth, you will have to pay taxes on the amount you roll over (unless it was a Roth 401k), however what is in the Roth will grow tax free and it will be tax free when you withdraw. With a traditional IRA, you won't owe taxes on the money now but will pay taxes when you withdraw. You won't be able to withdraw this money until 59 1/2 years of age without paying a penalty, the same goes for your current 401k. If you take the money (for mortgage, other investment, etc.) and don't roll it over to a qualified account, you will owe taxes on it plus a 10% penalty. So you will only get between 60% and 70% of its value.",
"title": ""
}
] |
[
{
"docid": "34c47367a558c66e61037553d66b5d2e",
"text": "\"The biggest reason why one might want to leave 401k money invested in an ex-employer's plan is that the plan offers some superior investment opportunities that are not available elsewhere, e.g. some mutual funds that are not open to individual investors such as S&P index funds for institutional investors (these have expense ratios even smaller than the already low expense ratios of good S&P index funds) or \"\"hot\"\" funds that are (usually temporarily) closed to new investors, etc. The biggest reason to roll over 401k money from an ex-employer's plan to the 401k plan of a new employer is essentially the same: the new employer's plan offers superior investment opportunities that are not available elsewhere. Of course, the new employer's 401k plan must accept such roll overs. I do not believe that it is a requirement that a 401k plan must accept rollovers, but rather an option that a plan can be set up to allow for or not. Another reason to roll over 401k money from one plan to another (rather than into an IRA) is to keep it safe from creditors. If you are sued and found liable for damages in a court proceeding, the plaintiff can come after IRA assets but not after 401k money. Also, you can take a loan from the 401k money (subject to various rules about how much can be borrowed, payment requirements etc) which you cannot from an IRA. That being said, the benefits of keeping 401k money as 401k money must be weighed against the usually higher administrative costs and usually poorer and more limited choices of investment opportunities available in most 401k plans as Muro has said already.\"",
"title": ""
},
{
"docid": "4df4ef31459c723e37be3d006ae61558",
"text": "$10.90 for every $1000 per year. Are you kidding me!!! These are usually hidden within the expense ratio of the plan funds, but >1% seems to be quite a lot regardless. FUND X 1 year return 3% 3 year return 6% 10 year return 5% What does that exactly mean? This is the average annual rate of return. If measured for the last 3 years, the average annual rate of return is 6%, if measured for 1 year - it's 3%. What it means is that out of the last 3 years, the last year return was not the best, the previous two were much better. Does that mean that if I hold my mutual funds for 10 years I will get 5% return on it. Definitely not. Past performance doesn't promise anything for the future. It is merely a guidance for you, a comparison measure between the funds. You can assume that if in the past the fund performed certain way, then given the same conditions in the future, it will perform the same again. But it is in no way a promise or a guarantee of anything. Since my 401K plan stinks what are my options. If I put my money in a traditional IRA then I lose my pre tax benefits right! Wrong, IRA is pre-tax as well. But the pre-tax deduction limits for IRA are much lower than for 401k. You can consider investing in the 401k, and then rolling over to a IRA which will allow better investment options. After your update: Just clearing up the question. My current employer has a 401K. Most of the funds have the expense ratio of 1.20%. There is NO MATCHING CONTRIBUTIONS. Ouch. Should I convert the 401K of my old company to Traditional IRA and start investing in that instead of investing in the new employer 401K plan with high fees. You should probably consider rolling over the old company 401k to a traditional IRA. However, it is unrelated to the current employer's 401k. If you're contributing up to the max to the Roth IRA, you can't add any additional contributions to traditional IRA on top of that - the $5000 limit is for both, and the AGI limitations for Roth are higher, so you're likely not able to contribute anything at all to the traditional IRA. You can contribute to the employer's 401k. You have to consider if the rather high expenses are worth the tax deferral for you.",
"title": ""
},
{
"docid": "d368f5253c474f6a544beca62849f647",
"text": "I agree with harmanjd – best to roll it over to an IRA. Not only does that afford you better control of your money as pointed out already, but: If you choose your IRA provider wisely, you can get an account that provides you with a much wider array of investing choices, including funds and ETFs that charge much lower fees than what you would have had access to in an employer 401(k) plan. But here's one thing to consider first: Do you hold any of your previous employer's stock in your old 401(k)? There are special rules you might want to be aware of. See this article at Marketwatch: If your 401(k) includes your company's stock, a rollover may be a bad move. Additional Resource:",
"title": ""
},
{
"docid": "527abd6a746747a2ddcd1187414a9dec",
"text": "\"Does your company offer a 401k? or similar pre-tax retirement plans? Is your company a publicly traded company? These questions are important, basically the key to any of your investments should be diversification. This means buying more than one kind of investment, amongst stock(s), bonds, real estate or more. The answer to \"\"How Much\"\" of your salary should go to company stock, is subjective. I personally would contribute the max toward a retirement plan or even post-tax savings, which would be invested in a variety of public companies. Hope that helps.\"",
"title": ""
},
{
"docid": "8ad33eac31a9f04e5ed16e601158c497",
"text": "Should I convert the 401K of my old company to Traditional IRA and start investing in that instead of investing in the new employer 401K plan with high fees? Regarding the 401K funds from the previous employer, you can: Future investments: Roll overs don't have limits, but new investments do.",
"title": ""
},
{
"docid": "1930c68a28a19e4e2979740472fa1ec1",
"text": "This situation, wanting desperately to have access to an investment vehicle in a 401K, but it not being available reminds me of two suggestions some make regarding retirement investing: This allows you the maximum flexibility in your retirement investing. I have never, in almost 30 years of 401K investing, seen a pure cash investment, is was always something that was at its core very short term bonds. The exception is one company that once you had a few thousand in the 401K, you could transfer it to a brokerage account. I have no idea if there was a way to invest in a money market fund via the brokerage, but I guess it was possible. You may have to look and see if the company running the 401K has other investment options that your employer didn't select. Or you will have to see if other 401K custodians have these types of investments. Then push for changes next year. Regarding external IRA/Roth IRA: You can buy a CD with FDIC protection from funds in an IRA/Roth IRA. My credit union with NCUA protection currently has CDs and even bump up CDs, minimum balance is $500, and the periods are from 6 months to 3 years.",
"title": ""
},
{
"docid": "9b550cd328fc152dabda777f75e4d49b",
"text": "The S&P top 5 - 401(k) usually comply with the DOL's suggestion to offer at least three distinct investment options with substantially different risk/return objectives. Typically a short term bond fund. Short term is a year or less and it will rarely have a negative year. A large cap fund, often the S&P index. A balanced fund, offering a mix. Last, the company's stock. This is a great way to put all your eggs in one basket, and when the company goes under, you have no job and no savings. My concern about your Microsoft remark is that you might not have the choice to manage you funds with such granularity. Will you get out of the S&P fund because you think this one stock or even one sector of the S&P is overvalued? And buy into what? The bond fund? If you have the skill to choose individual stocks, and the 401(k) doesn't offer a brokerage window (to trade on your own) then just invest your money outside the 401(k). But. If they offer a matching deposit, don't ignore that.",
"title": ""
},
{
"docid": "720120bce6dbab69429fe0ebd7d38d5c",
"text": "It sounds like the two best options would be to roll it over into a traditional IRA or roll it over into your new 401(k). If there isn't much money in your SIMPLE IRA, it might make more sense to just roll it over into your 401(k) so you have fewer retirement accounts to keep track of. However, if you do have a significant amount of money in the SIMPLE IRA then you may wish to take advantage of the greater freedom in investment options that IRAs offer over most 401(k) plans. Keep in mind the 2-year rule for SIMPLE IRAs. You will face tax penalties if you roll it and it hasn't yet been 2 years since the SIMPLE IRA was opened.",
"title": ""
},
{
"docid": "cfc47ffc8876a35795d33d3b1eec2905",
"text": "It's important to remember what a share is. It's a tiny portion of ownership of a company. Let's pretend we're talking about shares in a manufacturing company. The company has one million shares on its register. You own one thousand of them. That means that you own 1/1000th of the company. These shares are valued by the market at $10 per share. The company has machinery and land worth $1M. That means that for every dollar of the company you own, 10c of that value is backed by the physical assets of the company. If the company closed shop tomorrow, you could, in theory at least, get $1 back per share. The other $9 of the share value is value based on speculation about the future and current ability of the company to grow and earn income. The company is using its $1M in assets and land to produce goods which cost the company $1M in ongoing costs (wages, marketing, raw cost of goods etc...) to produce and make $2M per year in sales. That means the company is making a profit of $1M per annum (let's assume for the sake of simplicity that this profit is after tax). Now what can the company do with its $1M profit? It can hand it out to the owners of the company (which means you would get a $1 dividend each year for each share that you own) or it can re-invest that money into additional equipment, product lines or something which will grow the business. The dividend would be nice, but if the owners bought $500k worth of new machinery and land and spent another $500k on ongoing costs and next year we would end up with a profit of $1.5M. So in ten years time, if the company paid out everything in dividends, you would have doubled your money, but they would have machines which are ten years older and would not have grown in value for that entire time. However, if they reinvested their profits, the compounding growth will have resulted in a company many times larger than it started. Eventually in practice there is a limit to the growth of most companies and it is at this limit where dividends should be being paid out. But in most cases you don't want a company to pay a dividend. Remember that dividends are taxed, meaning that the government eats into your profits today instead of in the distant future where your money will have grown much higher. Dividends are bad for long term growth, despite the rather nice feeling they give when they hit your bank account (this is a simplification but is generally true). TL;DR - A company that holds and reinvests its profits can become larger and grow faster making more profit in the future to eventually pay out. Do you want a $1 dividend every year for the next 10 years or do you want a $10 dividend in 5 years time instead?",
"title": ""
},
{
"docid": "b33667625868aa72db975098d0a594ef",
"text": "I'm afraid you're not going to get any good news here. The US government infused billions of dollars in capital as part of the bankruptcy deal. The old shares have all been cancelled and the only value they might have to you are as losses to offset other gains. I would definitely contact a tax professional to look at your current and previous returns to create a plan that best takes advantage of an awful situation. It breaks my heart to even think about it.",
"title": ""
},
{
"docid": "a9c3282d31b33acecbd05c2522be7f78",
"text": "\"Switching to only 401k or only SPY? Both bad ideas. Read on. You need multiple savings vehicles. 401k, Roth IRA, emergency fund. You can/should add others for long term savings goals and wealth building. Though you could combine the non-tax-advantaged accounts and keep track of your minimum (representing the emergency fund). SPY is ETF version of SPDR index mutual fund tracking the S&P 500 index. Index funds buy weighted amounts of members of their index by an algorithm to ensure that the total holdings of the fund model the index that they track. They use market capitalization and share prices and other factors to automatically rebalance. Individual investors do not directly affect the composition or makeup of the S&P500, at least not visibly. Technically, very large trades might have a visible effect on the index makeup, but I suspect the size of the trade would be in the billions. An Electronically Traded Fund is sold by the share and represents one equal share of the underlying fund, as divided equally amongst all the shareholders. You put dollars into a fund, you buy shares of an ETF. In the case of an index ETF, it allows you to \"\"buy\"\" a fractional share of the underlying index such as the S&P 500. For SPY, 10 SPY shares represent one S&P basket. Targeted retirement plan funds combine asset allocation into one fund. They are a one stop shop for a diversified allocation. Beware the fees though. Always beware the fees. Fidelity offers a huge assortment of plans. You should look into what is available for you after you decide how you will proceed. More later. SPY is a ETF, think of it as a share of stock. You can go to a bank, broker, or what have you and set up an account and buy shares of it. Then you have x shares of SPY which is the ETF version of SPDR which is an index mutual fund. If the company is matching the first 10% of your income on a 1:1 basis, that would be the best I've heard of in the past two decades, even with the 10 year vesting requirement. If this is them matching 1 dollar in 10 that you contribute to 401k, it may be the worst I've ever heard of, especially with 10 year vesting. Typical is 3-5% match, 3-5 year vesting. Bottom line, that match is free money. And the tax advantage should not be ignored, even if there is no match. Research: I applaud your interest. The investments you make now will have the greatest impact on your retirement. Here's a scenario: If you can figure out how to live on 50% of your take home pay (100k * 0.90 * 0.60 * 0.5 / 12) (salary with first 10% in 401k at roughly 60% after taxes, social security, medicare, etc. halved and divided by 12 for a monthly amount), you'll have 2250 a month to live on. Since you're 28 and single, it's far easier for you to do than someone who is 50 and married with kids. That leaves you with 2250 a month to max out 401k and Roth and invest the rest in wealth building. After four or five years the amount your investments are earning will begin to be noticeable. After ten years or so, they will eclipse your contributions. At that point you could theoretically live of the income. This works with any percentage rate, and the higher your savings rate is, the lower your cost of living amount is, and the faster you'll hit an investment income rate that matches your cost of living amount. At least that's the early retirement concept. The key, as far as I can tell, is living frugally, identifying and negating wasteful spending, and getting the savings rate high without forcing yourself into cheap behavior. Reading financial independence blog posts tells me that once they learn to live frugally, they enjoy it. It's a lot of work, and planning, but if you want to be financially independent, you are definitely in a good position to consider it. Other notes:\"",
"title": ""
},
{
"docid": "2d7f472ed1f6a12a3d0abd8268ef2fb2",
"text": "You generally cant roll funds from a 401k with a company you're still employed with. Some companies allow it depending on the custodial agreement but it's rare. Generally you need to wait until retirement or separation to roll funds out of a 401k.",
"title": ""
},
{
"docid": "fb9d030ac35296ba5c9fae89e43b890a",
"text": "Once upon a time, money rolled over from a 401k or 403b plan into an IRA could not be rolled into another 401k or 403b unless the IRA account was properly titled as a Rollover IRA (instead of Traditional IRA - Roth IRAs were still in the future) and the money kept separate (not commingled) with contributions to Traditional IRAs. Much of that has fallen by the way side as the rules have become more relaxed. Also the desire to roll over money into a 401k plan at one's new job has decreased too -- far too many employer-sponsored retirement plans have large management fees and the investments are rarely the best available: one can generally do better keeping ex-401k money outside a new 401k, though of course new contributions from salary earned at the new employer perforce must be put into the employer's 401k. While consolidating one's IRA accounts at one brokerage or one fund family certainly saves on the paperwork, it is worth keeping in mind that putting all one's eggs in one basket might not be the best idea, especially for those concerned that an employee might, like Matilda, take me money and run Venezuela. Another issue is that while one may have diversified investments at the brokerage or fund family, the entire IRA must have the same set of beneficiaries: one cannot leave the money invested in GM stock (or Fund A) to one person and the money invested in Ford stock (or Fund B) to another if one so desires. Thinking far ahead into the future, if one is interested in making charitable bequests, it is the best strategy tax-wise to make these bequests from tax-deferred monies rather than from post-tax money. Since IRAs pass outside the will, one can keep separate IRA accounts with different companies, with, say, the Vanguard IRA having primary beneficiary United Way and the Fidelity IRA having primary beneficiary the American Cancer Society, etc. to achieve the appropriate charitable bequests.",
"title": ""
},
{
"docid": "47bf776843d018598f96343213a8cc9a",
"text": "I am not required to hold any company stock. I also have an ESOP plan carrying a similar number of shares in company stock. So if it were to be sold, what would the recommendation be to replace it? I can move the shares into any option shown, and have quite a few others. Not dealing with any huge amounts, just a 4.5% contribution over three years (so far).",
"title": ""
},
{
"docid": "34f75daeea825fb48d7bdfcbe8d81d1d",
"text": "I thought the same. Money as a transferable item is against future items, and debt is a transferable item against future money, which is also seen as a much farther into the future item. Money = tomorrows item. Debt = tomorrows money = (tomorrows item)(time +1); or longer if we agree to pay it off over 20 years Interestingly I have seen a writeup on why gold is the material of choice. If someone can find this it would be great but I will try write from memory, Google is not helping. The story is something like this: Essentially when trading a material for jewellery we had difficulty finding what material to use. Obviously it must be something hardy and tough, but not common. Metals are the obvious choice, although crystalline structures like gems and opals are useful. The reason for metals are that they can easily and repeatably be shaped into a form that will be aesthetically pleasing and hold its shape. But which specific metal is to be chosen; obviously it must be chemically stable, so potassium magnesium and those metal like elements are removed from contention. It must be rare so items like lead, iron and copper are too common, although not worthless. The most stable, malleable and rare materials are Platinum, Silver and Gold. Platinum requires too high a melting point to be suitable; the requirements to smelt and handle it as a material are too high. Not to deny the value but the common use it prohibitive. Silver is easier to handle, but tends to tarnish. Continuous upkeep is required and this becomes a detraction of its full value. Finally Gold, rare, low melting point, resistant to tarnishing and oxidation, rare, malleable and pretty. A sweet spot of all materials.",
"title": ""
}
] |
fiqa
|
df1e502762f95677eb3725812be5523c
|
How can I spend less?
|
[
{
"docid": "8ff79e6f9a4089981415731884d6e04a",
"text": "One things about psychology - people spend more money when its an abstract concept instead of having cold, hard cash. What does this mean? People spend more money when they use credit cards for day to day purchases. While I still use a credit card for day to day purchases, there's a big difference between bringing $200 to costco to pay for groceries and laying out 10 $20 bills vs swiping a card when you see a number flash on the screen. If you're truly looking to reduce expenses, keep this in mind.",
"title": ""
},
{
"docid": "2fc79b65310eb6cba590a08089bf4016",
"text": "Try the Envelope Budgeting System. It is a pretty good system for managing your discretionary outflows. Also, be sure to pay yourself first. That means treat savings like an expense (mortgage, utilities, etc.) not an account you put money in when you have some left over. The problem is you NEVER seem to have anything leftover because most people's lifestyle adjusts to fit their income. The best way to do this is have the money automatically drafted each month without any action required on your part. An employer sponsored 401K is a great way to do this.",
"title": ""
},
{
"docid": "ac92c19e1f850a57164102e9918d4797",
"text": "Try having money automatically deducted from your paycheck and put into a retirement account or savings account. As long as you don't have a problem with spending more than you have, the easiest way to stop spending money is to have it automatically put somewhere that you can't (or are unlikely to) touch it.",
"title": ""
},
{
"docid": "2aee2f45e6e92de4cf4cfe1c7c1d28f3",
"text": "\"There are many tactics you can use. If your biggest problem is regretting your larger purchases, I'd suggest giving yourself rules before making any purchases over a certain minimum dollar amount that you set for yourself. For example, if that amount is $50 for an item, then any item starting at an average price of $51 would be subject to these rules. One of your long-term goals ought to be to become the kind of person who finds joy in saving money rather than spending it. Make friends with frugal people - look for those who prefer games nights and potlucks to nights out at the club buying expensive drinks and dinners at the newest steak joint in town. Learn the thrill of a deal, but even more learn the thrill of your savings growing. You don't want to enjoy money in the bank for the purposes of becoming a miser. Instead you want to realize that money in the bank helps you achieve your goals — buying the house you want, donating a significant amount of money to a cause you ardently support, allowing you to take a dream vacation, letting you buy with cash the car you always wanted, the possibilities are endless. As Dave Ramsey says, \"\"Live like no one else, so you can live like no one else.\"\"\"",
"title": ""
}
] |
[
{
"docid": "cc3086005a09f23f51ec19b84c467173",
"text": "The same as you would save for anything else, buget and make sure your expenses are less than your income each week. Put away a little each week for the item you want to buy, and when you have saved up enough for the item you can buy it. In the mean time whilst you are saving for it, you can shop around to see where you can buy it at the lowest price.",
"title": ""
},
{
"docid": "a3ad45a1751e575d896ca799157ad0be",
"text": "\"Many of my friends turn to me for financial advice, and here's what I always tell them because it's super effective for me... 1) I opened an online bank account with Scottrade for which I did not request a card or checks. I set up direct deposit straight to that account. It would be a complicated pain to take money out of that savings. The only time I did so was to buy my house (which was the purpose of the savings) and it involved a wire-transfer and printing of the form to fill out and faxing it in, etc. I have continued to use the account to save for my second house. I basically completely forget that the account is even there or that I am \"\"missing\"\" a large chunk of my money. 2) It is VERY important to actually budget for spending money to continue to spend on impulse items. Basically allow yourself to spend money on yourself but in a controlled way. Decide a specific amount that you want to put in a separate account that is just for you to spend to your hearts content and have it direct deposit. I find, (and Dave Ramsey also encourages this) that when I know how much money I am going to blow, I feel much more in control and it causes me to not get carried away and blow more than I realized. Take this a step further... Decide specifically what you want to buy for yourself, and label the account accordingly. For example, I decided back in March that I wanted to buy an Xbox One for when Star Wars Battlefront comes out this November. I calculated exactly how much money I would need at that time, figured how many paychecks I would receive until then, and did the math to determine exactly how much I need to direct deposit into an account JUST for saving to buy the Xbox and game. I use CapFed, and I can actually rename the account as it is displayed, so I called it \"\"Xbox fund\"\". Seeing that title, a reminder of what I really want\"\" encourages me to not touch it. What is your goal behind wanting to save money better? What are you saving for? Label your account accordingly so you don't just see it as money, but as progress.\"",
"title": ""
},
{
"docid": "d4bad8b443e8f4992518d4ee53d3a81b",
"text": "If it's feasible, try to get one card down to zero balance, and preferably one of your cash-back cards. Then keep that at zero every month (pay it off in full), and use it for your purchases as you describe above. The idea would be to get it so that you are not paying interest on your month to month purchases. This not only reduces the 20% or whatever that you're paying on that balance, but also the 20% or whatever you're paying on those purchases - remember, a card you carry a balance on charges you interest on those purchases from the current month. If this isn't feasible (if these are all very high balance cards), then I suppose the way you're currently doing it would be okay, though I think you're overthinking things to some extent - but with 80% interest, if that's a significant pile of money, you may need to as clearly that needs to be tackled first. I think it's mostly better for you to pay your day to day stuff out of pocket and not use your cards the way you are suggesting, but with the 80% loan(s) you may need to. The reason I say it's better not to use your card the way you suggest is that it is difficult to do properly and never get it wrong (i.e., never go over a balance), and it's also leaving you in the habit of using credit. It doesn't help you budget necessarily, either. Instead, set up a fully developed budget that includes all of those minimum payments and pay them. Certainly once you have the > 50% debt handled, I would switch to this method (not using credit cards at all).",
"title": ""
},
{
"docid": "9a271762775d6ef31bc9f577df2d73ec",
"text": "\"Honestly just keep track of your income and spending on a piece of paper. Write down every single thing. Also set goals like \"\"ok I will make $1000 this month, and my goal is to pay bills of $200 and only spend $500 therefore I should easily be able to save $300\"\" or something like that. Just do it there's no magic trick despite what some million stupid articles and forum posts will lead you to believe. Saving money is like being in good shape... or keeping yourself clean... it's an every day, every hour kinda thing\"",
"title": ""
},
{
"docid": "b36a0c5beca455949cf83821a90b2c93",
"text": "The best thing to do right now is track your spending. You know you're saving 1k a month, and you know you're spending 1k a month on rent. That's 24k so far. I presume you'll have some income tax taken out, let's assume it's another 6k to round us neatly up to 30k. Since you earn 80k and you've spent 30k so far, you have another 50k unaccounted for. If you're in the USA I'd recommend using mint.com or a similar service to automatically track your transactions, or even just a spreadsheet if you don't like handing out your bank details (and you shouldn't). After that, I agree with SoulsOpenSource's answer. Write a budget and try to figure out where the fat can be trimmed. When I started tracking I saw I was spending almost a hundred bucks every week on fast food, due to poor planning and laziness. I decided to cook more and plan better and now I'm spending less than half that - in the last year I've saved almost three thousand dollars! If you want to save up for your future (and good on you if you do!) then there'll be some choices to make ahead. If you're spending a few hundred bucks on going out drinking every weekend, or you grab two coffees every day, or you buy fifty blurays a month (do people still buy blurays?), you'll have to ask yourself: Will I be happier spending money here than saving for my future?",
"title": ""
},
{
"docid": "b35915a9c871398edc95d182cf732b29",
"text": "\"Realize that some friends are a bad influence, and maybe aren't really \"\"friends\"\". Don't be afraid to say \"\"sorry, I can't make it tonight\"\". Don't be afraid to go out shopping and not buy anything. Make sure they know why (Too much Credit Card Debit, saving for a house, etc). If your habits suddenly change with no explanation, they may think you are dissing them. But if you explain your reasons, they will probably support you (if they are real friends). In fact, they probably have the same money issues. Suggest lower-cost alternatives to hanging out. Instead of going out, suggest they come over to your place and watch a movie, play board games, Wii, etc. You can have snacks at your place. Alcohol is a lot cheaper when you pour it yourself!\"",
"title": ""
},
{
"docid": "cd862e04a2e145e96152e31acf77ebaa",
"text": "\"First, you must prioritize what a \"\"need\"\" and what a \"\"want\"\" is. This is different for everyone but generally, I think most people will agree that impulse items are \"\"want\"\" items. Look at the item, hold it, put it back and wait 30 days. Put the money that the item costs $x into your savings account (transfer from checking, straight deposit, etc) Come back to the store and hold the item again and as \"\"did I miss the fact that I didnt get it 30 days ago?\"\". 95% of the time, the answer is no. You saved $x for 30-days, and received what is a tiny bit of interest for it. This is cause for celebration! If you repeat this for every item you THINK you \"\"need\"\" or \"\"want\"\" then you'll be amazed at what you saved. Dont waste this money on a vacation to the islands either! Keep saving. There will be plenty of rainy days when you'll have wanted to trade that island vacation (or the impulse items you bought that you used once or twice and are lost in your garage somewhere) to pay for some unexpected emergency. Trust me on this!\"",
"title": ""
},
{
"docid": "fd6a4f884b261719e8decfbd228b5639",
"text": "\"I've found at various times we've spent a lot less when we've been absorbed by \"\"cheap pastimes\"\" or passions, such as: It's incredible how fast some things can burn through your money:\"",
"title": ""
},
{
"docid": "1d48235efe80861624e3349ef501bda4",
"text": "\"Spend less. As @jldugger said, shop around for textbooks. Make sure to look for used books: you can sometimes save a lot of money there. Be smart about food money. I could go to our on-campus grill and get a sandwich and a salad for lunch. If I packed both with toppings, the salad could be a 2nd meal for the same day. If you have the option, get a meal plan that is just 1 meal a day, and eat a lot that meal. Don't do the starbucks \"\"pay several dollars for a coffee each day\"\" thing. Small-ish regular expenses add up quickly. Quit smoking (if applicable). Ditch your car if possible. Some colleges are in cities with good public transportation or are small enough that a bike will do. Cars are very expensive. Try to find free activities to do in your free time. Usually college towns are great places to find free fun. Pick-up sports, student concerts/art shows, playing board/card/video games. Make sure to track how you're spending money to look for areas where you could be spending less. There are plenty of tools available to help with this. Some on-campus jobs involve sitting around and occasionally doing something: IE working the checkout desk at the library. A job like this (if you can find one) can effectively pay you for doing our homework. One other very important college-related financial tip is to not take out more loans than you can afford. I've heard a good rule of thumb is not take our more loans than you expect to earn your first year after graduating. Look up average starting salaries for the career you realistically expect to have after you graduate. If you would need to borrow much more than that to get your degree, rethink your plans. Being a slave to a bank for years is a crappy way to spend your life.\"",
"title": ""
},
{
"docid": "83ec63deaac1b4eddbad2daa9b6f0c13",
"text": "Apart from what others have contributed. Look at all your usual spendings. Can they be cheaper? (Telephone, Electricity, Gas, Car, Mortgage, Loans, Insurance...) Whenever you are tempted to buy anything, ask yourself: Do I need this? If the answer is 'Yes' go ahead and buy (food, basically). Otherwise, restrain yourself. Most things in life can be bought cheaper. Most things in shops are useless. For example, how many pairs of shoes do you need? You can drink water from the tab. You don't have to go to restaurants or bars, and if you do, you could budget yourself to some amount. If the restaurant is more expensive, walk. My 0,02€",
"title": ""
},
{
"docid": "f95098e67fcd7635e3e6cf608ddf168c",
"text": "\"First of all, I have to recognize up front that my \"\"spending personality\"\" is frugal. I don't recreational shop, and I save a lot of my total income. Building a budget and sticking to it is difficult, especially for people who are closer to living paycheck to paycheck than I. Theoretically, it should be easy to stick to a budget by overestimating expenses, but for many people planning to spend more than necessary isn't a luxury available. That said, I have a system that works for me, maybe it can work for you. This system lets me see how much I have to spend, and close to optimally arranges assets. As you can see, this system relies on some pretty strong upfront planning and adherence to the plan. And what you might not realize is that you can deviate from the plan in two ways: by spending variations and by timing variations. Credit should really help with a lot of the timing variations; it takes a series of expenses and translates them into one lump payment every month. As for spending variations, like spending 20 dollars for lunch when you only budgeted 5, it turns out this technique helps a lot. Some academic work suggests that spending with plastic is more likely to blow your budget than cash, unless you make detailed plans. But it sounds like your main problem is knowing whether you can afford to splurge. And the future minimum balance of your checking account can be your splurge number.\"",
"title": ""
},
{
"docid": "35a18ebf39052288dba1df16d3a440f3",
"text": "\"Budgeting is a tool for planning, not for execution. It sounds like you don't have a problem BUDGETING (planning what to spend on what things) but rather with the execution of your plan. That is - living frugally. This is primarily an issue of self control and personal psychology - not an issue with the mechanics of budgeting and finance, which explains why the most popular personal finance \"\"gurus\"\" (Dave Ramsey, Suze Ormond) deal as much with your relationship to money and spending as they do with financial knowledge. There is no easy answer here, but you can learn to spend less. One helpful thought is to realize that whatever your current income is, someone in your community is currently making less than that and surviving. What would you do differently if your real, actual income was $100 or $200 less than it is currently. If your food budget is a concern, learn to cook cheaply. (Often, this is more healthy.) You mentioned schooling, so I assume you are on or near a college campus. Many colleges have all sorts of free-food opportunities. (I used to eat free vegetarian meals weekly at a Hare Krsna temple. Price of admission: listening to the monk read from the Bhagavad Gita.) Fast food is, of course, a complete no-no on low-budget living. It probably goes without saying, but just in case you haven't: cancel cable, get a cheap phone plan (Ting is excellent if available in your area), and otherwise see how you can squeeze a few dollars out of your bills. On the subject of frugality, I have found no book more enlightening than: Money Secrets of the Amish: Finding True Abundance in Simplicity, Sharing, and Saving\"",
"title": ""
},
{
"docid": "b131c244e5b41d0188aca3f0f93a143c",
"text": "\"In the end, this is really not a finance question. It's about changing one's habits. (One step removed, however, since you are helping a friend and not seeking advice for yourself). I've learned a simple cause & effect question - Does someone who wants (goal here) do (this current bad habit)? For example, someone with weight to lose is about to grab the chips to sit and watch TV. They should quickly ask themselves \"\"Does a healthy, energetic person sit in front of the TV eating chips?\"\" The friend needs to make a connection between the expense he'd like to save up for and his current actions. There's a conscious decision in making the takeout purchase, he'd rather spend the money on that meal than to save .5% (or whatever percent) of the trip's cost. If he is clueless in the kitchen, that opens another discussion, one in which I'd remark that on the short list of things parents should teach their kids, cooking is up there. My wife is clueless in the kitchen, I taught our daughter how to be comfortable enough to make her own meals when she wants or when she's off on her own. If this is truly your friend's issue, you might need to be a cooking spirit guide to be successful.\"",
"title": ""
},
{
"docid": "e98e750e46a00a99b67ba8e983c4bb3d",
"text": "Maybe minimalism is an option for you. Make your self clear what you really want You only buy what you really need and for that you spend the money. Then there is no point of saving money, i.e. I for example like to invite friends and cook them some fancy diner with expensive products, but the value I get from that exceeds any money I spend. On the other hand most present are the opposite, they have less value to recipient than what they originally have costs.",
"title": ""
},
{
"docid": "8dce2a7775653e8466e87083aa928a60",
"text": "\"First, let me answer the question the best way I can: I don't know if there are any studies other than those that have already been mentioned. Now, let's talk about something more interesting: You don't need to base your behavior on any study, even if it is scientific. Let's pretend, for example, that we could find a scientifically valid study that shows that people spend 25% more when using a credit card than they do when spending cash. This does not mean that if you use a credit card, you will spend 25% more. All it means is that the average person spending with a credit card spends more than the average person paying cash. But there are outliers. There are plenty of people who are being frugal while using a credit card, and there are others who spend too much cash. Everyone's situation is different. The idea that you will automatically spend less by using cash would not be proven by such a study. When hearing any type of advice like this, you need to look at your own situation and see if it applies to your own life. And that is what people are doing with the anecdotal comments. Some say, \"\"Yep, I spend too much if I use a card.\"\" Others say, \"\"Actually, I find that when I have cash in my wallet, I spend it on junk.\"\" And both are correct. It doesn't matter what the study says the average person does, because you are not average. Now, let's say that you are a financial counselor who helps people work through disastrous financial messes. Your client has $20,000 in credit card debt and is having trouble paying all his bills. He doesn't have a budget and never uses cash. Probably the best advice for this guy is to stop using his card and start paying cash. It doesn't take a scientific study to see that this guy needs to change his behavior. For what it is worth, I keep a strict budget, keeping track of my spending on the computer. The vast majority of my spending is electronic. I find tracking my cash spending difficult, and sometimes I find that when I have cash in my wallet, it seems to disappear without a trace. :)\"",
"title": ""
}
] |
fiqa
|
933179814ea725f8194c2ca469af0808
|
what is a mortgage gift exchange?
|
[
{
"docid": "8f364aab021845547452178a44d83fa4",
"text": "The issue is that the lender used two peoples income, debts, and credit history to loan both of you money to purchase a house. The only way to get a person off the loan, is to get a new loan via refinancing. The new loan will then be based on the income, debt, and credit history of one person. There is no paperwork you can sign, or the ex-spouse can sign, that will force the original lender to remove somebody from the loan. There is one way that a exchange of money between the two of you could work: The ex-spouse will have to sign paperwork to prove that it is not a loan that you will have to payback. I picked the number 20K for a reason. If the amount of the payment is above 14K they will have to document for the IRS that this is a gift, and the amount above 14K will be counted as part of their estate when they die. If the amount of the payment is less than 14K they don't even have to tell the IRS. If the ex-souse has remarried or you have remarried the multiple payments can be constructed to exceed the 14K limit.",
"title": ""
},
{
"docid": "16e013dd52ed1d3c03a5c5567b83da8c",
"text": "\"I'm guessing since I don't know the term, but it sounds like you're asking about the technique whereby a loan is used to gather multiple years' gift allowance into a single up-front transfer. For the subsequent N years, the giver pays the installments on the loan for the recipient, at a yearly amount small enough to avoid triggering Gift Tax. You still have to pay income tax on the interest received (even though you're giving them the money to pay you), and you must charge a certain minimum interest (or more accurately, if you charge less than that they tax you as if the loan was earning that minimum). Historically this was used by relatively wealthy folks, since the cost of lawyers and filing the paperwork and bookkeeping was high enough that most folks never found out this workaround existed, and few were moving enough money to make those costs worthwhile. But between the \"\"Great Recession\"\" and the internet, this has become much more widely known, and there are services which will draw up standard paperwork, have a lawyer sanity-check it for your local laws, file the official mortgage lien (not actually needed unless you want the recipient to also be able to write off the interest on their taxes), and provide a payments-processing service if you do expect part or all of the loan to be paid by the recipient. Or whatever subset of those services you need. I've done this. In my case it cost me a bit under $1000 to set up the paperwork so I could loan a friend a sizable chunk of cash and have it clearly on record as a loan, not a gift. The amount in question was large enough, and the interpersonal issues tricky enough, that this was a good deal for us. Obviously, run the numbers. Websearching \"\"family loan\"\" will find much more detail about how this works and what it can and can't do, along with services specializing in these transactions. NOTE: If you are actually selling something, such as your share of a house, this dance may or may not make sense. Again, run the numbers, and if in doubt get expert advice rather than trusting strangers on the web. (Go not to the Internet for legal advice, for it shall say both mu and ni.)\"",
"title": ""
}
] |
[
{
"docid": "b74742b32b99f9bd32cd60cc84d3206f",
"text": "\"Often the counter-party has obligations with respect to timelines as well -- if your buying a house, the seller probably is too, and may have a time-sensitive obligation to close on the deal. I'm that scenario, carrying the second mortgage may be enough to make that deal fall through or result in some other negative impact. Note that \"\"pre-approval\"\" means very little, banks can and do pass on deals, even if the buyer has a good payment history. That's especially true when the economy is not so hot -- bankers in 2011 are worried about not losing money... In 2006, they were worried about not making enough!\"",
"title": ""
},
{
"docid": "13579414bd19097f500ef210e2dfd057",
"text": "\"(Disclosure - PeerStreet was at FinCon, a financial blogger conference I attended last month. I had the chance to briefly meet a couple people from this company. Also, I recognize a number of the names of their financial backers. This doesn't guarantee anything, of course, except the people behind the scenes are no slackers.) The same way Prosper and Lending Club have created a market for personal loans, this is a company that offers real estate loans. The \"\"too good to be true\"\" aspect is what I'll try to address. I've disclosed in other answers that I have my Real Estate license. Earlier this year, I sold a house that was financed with a \"\"Hard Money\"\" loan. Not a bank, but a group of investors. They charged the buyer 10%. Let me state - I represented the seller, and when I found out the terms of the loan, it would have been a breach of my own moral and legal responsibility to her to do anything to kill the deal. I felt sick for days after that sale. There are many people with little credit history who are hard workers and have saved their 20% down. For PeerStreet, 25%. The same way there's a business, local to my area, that offered a 10% loan, PeerStreet is doing something similar but in a 'crowd sourced' way. It seems to me that since they show the duration as only 6-24 months, the buyer typically manages to refinance during that time. I'm guessing that these may be people who are selling their house, but have bad timing, i.e. they need to first close on the sale to qualify to buy the new home. Or simply need the time to get their regular loan approved. (As a final side note - I recalled the 10% story in a social setting, and more than one person responded they'd have been happy to invest their money at 6%. I could have saved the buyer 4% and gotten someone else nearly 6% more than they get on their cash.)\"",
"title": ""
},
{
"docid": "e918d6079515b710674ee738486d37a6",
"text": "\"What if there were no mortgage, and you gave the friend the house? They are getting the house' value. In your case the discount from market value is their instant profit. We often think of our house in terms of the equity we have, plus the mortgage. Equity therefore is what's left after the mortgage is paid off, if you sell the house. In your question, you are, in effect, \"\"giving all equity to your friend. Where else would you imagine it goes?\"",
"title": ""
},
{
"docid": "7a44496c2bd1e2232797a0e4fd167338",
"text": "\"Definitely consult a lawyer. Mortgages are highly regulated now, and regardless of how familiar borrower & lender are, the standard contract will be extremely long. (at least in the US) There are no \"\"friends and/or family\"\" exceptions. If the contract does not conform to regulations, it may be invalid, and all the money you lent could simply evaporate since it was the borrower who actually bought the house, and it's the loan contract that's rendered null & void; in that case, it may be better to simply donate the money.\"",
"title": ""
},
{
"docid": "acbeb847e1e665549107377e72fc6862",
"text": "\"If you need to transfer a larger amount than the $14K/person/person limit, one accepted workaround is to structure it as a loan, then gift the payments over the duration of the loan. There are \"\"intra-family mortgage\"\" companies which specialize in setting up this kind of transaction. Note that this doesn't allow you to give more without penalty, it just lets you transfer the actual cash earlier, in exchange for some bookkeeping overhead and some fees for the legal processing and mortgage registration.\"",
"title": ""
},
{
"docid": "6564b849fddb495c63f688e149b585d0",
"text": "Are there any known laws explicitly allowing or preventing this behavior? It's not the laws, it's what's in the note - the mortgage contract. I read my mortgage contracts very carefully to ensure that there's no prepayment penalty and that extra funds are applied to the principal. However, it doesn't have to be like that, and in older mortgages - many times it's not like that. Banks don't have to allow things that are not explicitly agreed upon in the contract. To the best of my knowledge there's no law requiring banks to allow what your friend wants.",
"title": ""
},
{
"docid": "f469e2fa5ef685010cd4b8febf2dc799",
"text": "In 2015 there's a $5.43M (That's million, as in 6 zeros) estate exemption. Even though it's $14K per year with no paperwork required, if you go over this, a bit of paperwork will let you tap your lifetime exemption. There's no tax consequence from this. The Applicable Federal Rate is the minimum rate that must be charged for this to be considered a loan and not a gift. DJ's answer is correct, otherwise, and is worth knowing as there are circumstances where the strategy is applicable. If the OP were a high net worth client trying to save his estate tax exemption, this (Dj's) strategy works just fine.",
"title": ""
},
{
"docid": "c542f973a653d2f26ee668515fa19193",
"text": "An issue with the initial plan was that the house was gifted to you. Therefore you owned it. Now two years later you wanted to get a mortgage. The IRS would look at it as a home equity debt not a home Acquisition debt, and the interest on the first $100,000 of home equity dept is deductible. This is from IRS pub 936 Mortgage treated as used to buy, build, or improve home. A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. This applies in the following situations. You buy your home within 90 days before or after the date you take out the mortgage. The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). (See Example 1 later.) You build or improve your home and take out the mortgage before the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. You build or improve your home and take out the mortgage within 90 days after the work is completed. The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. (See Example 2 later.) Example 1. You bought your main home on June 3 for $175,000. You paid for the home with cash you got from the sale of your old home. On July 15, you took out a mortgage of $150,000 secured by your main home. You used the $150,000 to invest in stocks. You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. At two years you would be way outside the 90 day limit. The pub also gives example on how calculate the amount of interest you can deduct.",
"title": ""
},
{
"docid": "b1e115ac713a46e238a12376ba07844d",
"text": "\"It would have to be made as a \"\"gift\"\", and then the return would be a \"\"gift\"\" back to you, because you're not allowed to use a loan for a down payment. I see some problems, but different ones than you do: One more question: is the market really hot right now? It was quite cold for the last few years.\"",
"title": ""
},
{
"docid": "235844a2d25fb6628b055a1f80b77c6c",
"text": "\"Because this question seems like it will stick around, I will flesh out my comments into an actual answer. I apologize if this does not answer your question as-asked, but I believe these are the real issues at stake. For the actual questions you have asked, I have paraphrased and bolded below: Firstly, don't do a real estate transaction without talking to a lawyer at some stage [note: a real estate broker is not a lawyer]. Secondly, as with all transactions with family, get everything in writing. Feelings get hurt when someone mis-remembers a deal and wants the terms to change in the future. Being cold and calculated now, by detailing all money in and out, will save you from losing a brother in the future. \"\"Should my brother give me money as a down payment, and I finance the remainder with the bank?\"\" If the bank is not aware that this is what is happening, this is fraud. Calling something a 'gift' when really it's a payment for part ownership of 'your' house is fraud. There does not seem to be any debate here (though I am not a lawyer). If the bank is aware that this is what is happening, then you might be able to do this. However, it is unlikely that the bank will allow you to take out a mortgage on a house which you will not fully own. By given your brother a share in the future value in the house, the bank might not be able to foreclose on the whole house without fighting the brother on it. Therefore they would want him on the mortgage. The fact that he can't get another mortgage means (a) The banks may be unwilling to allow him to be involved at all, and (b) it becomes even more critical to not commit fraud! You are effectively tricking the bank into thinking that you have the money for a down payment, and also that your brother is not involved! Now, to the actual question at hand - which I answer only for use on other transactions that do not meet the pitfalls listed above: This is an incredibly difficult question - What happens to your relationship with your brother when the value of the house goes down, and he wants to sell, but you want to stay living there? What about when the market changes and one of you feels that you're getting a raw deal? You don't know where the housing market will go. As an investment that's maybe acceptable (because risk forms some of the basis of returns). But with you getting to live there and with him taking only the risk, that risk is maybe unfairly on him. He may not think so today while he's optimistic, but what about tomorrow if the market crashes? Whatever the terms of the agreement are, get them in writing, and preferably get them looked at by a lawyer. Consider all scenarios, like what if one of you wants to sell, does the other have the right to delay, or buy you out. Or what if one if you wants to buy the other out? etc etc etc. There are too many clauses to enumerate here, which is why you need to get a lawyer.\"",
"title": ""
},
{
"docid": "cd08117069dd39c471f4e395776830a6",
"text": "You are using interchangeably borrow/loan and gift. They are very different. For the mortgage company, they would prefer that the money from friends and family be a gift. If it is a loan, then you have an obligation to pay it back. If they see money added to your bank accounts in the months just before getting the loan, they will ask for the source of the money. Anything you claim as a gift will be required to be documented by you and the person making the gift. You don't want to lie about it, and have the other person lie about it. They will make you sign documents, if they catch you in a lie you can lose the loan, or be prosecuted for fraud. If the money from friends and family is a loan, the payments for the loan will impact the amount of money you can borrow. From the view of the IRS the gift tax only comes into play if during one calendar year a person makes a gift to somebody else of 14,000 or more. There are two points related to this. It is person-to-person. So if your dad gives you 14K, and your mom gives you 14K, and your dad gives your wife 14k and your mom gives your wife 14K; everything is fine. So two people can give 2 people 56K in one year. Please use separate checks to make it clear to the IRS. If somebody gives a gift above the exclusion limit for the year, they will have to complete IRS form 709. This essentially removes the excess amount from their life time exclusion, in other words from their estate. Nothing to worry about from the IRS. The bank wants to see the documentation. Also you are not a charity, so they can't claim it as a donation. Why do you have 6,000 in cash sitting around. The mortgage company will want an explanation for all large deposits so you better have a good explanation. From the IRS FAQ on Gift Taxes: What can be excluded from gifts? The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts. Number 3 on the list is the one you care about.",
"title": ""
},
{
"docid": "ea5e67cf8ae3be48ce21e16b75727a24",
"text": "Answering the first part, it is basically a home equity loan. You are taking a loan out against available equity in your house. It generally is at a higher interest rate than what you would get on your first mortgage.",
"title": ""
},
{
"docid": "f8d5c327ce6e719e6a82fda9724475de",
"text": "While I agree with the existing bulk of comments and answers that you can't tell the lender the $7k is a gift, I do think you might have luck finding a mortgage broker who can help you get a loan as a group. (You might consider as an LLC or other form of corporation if no one will take you otherwise.) That is, each of you will be an owner of the house and appear on the mortgage. IIRC, as long as the downpayment only comes from the collective group, and the income-to-debt ratio of the group as a whole is acceptable, and the strongest credit rating of the group is good, you should be able to find a loan. (You may need a formal ownership agreement to get this accepted by the lender.) That said, I don't know if your income will trump your brother's situation (presumably high debt ratio or lower than 100% multiplier on his income dues to its source), but it will certainly help. As to how to structure the deal for fairness, I think whatever the two of you agree to and put down in writing is fine. If you each think you're helping the other, than a 50/50 split on profits at the sale of the property seems reasonable to me. I'd recommend that you actually include in your write up a defined maximum period for ownership (e.g. 5yr, or 10yr, etc,) and explain how things will be resolved if one side doesn't want to sell at that point but the other side does. Just remember that whatever percentages you agree to as ownership won't effect the lender's view of payment requirements. The lender will consider each member of the group fully and independently responsible for the loan. That is, if something happens to your brother, or he just flakes out on you, you will be on the hook for 100% of the loan. And vice-versa. Your write up ought to document what happens if one of you flakes out on paying agreed upon amounts, but still expects there ownership share at the time of sale. That said, if you're trying to be mathematically fair about apportioning ownership, you could do something like the below to try and factor in the various issues into the money flow: The above has the benefit that you can start with a different ownership split (34/66, 25/75, etc.) if one of you wants to own more of the property.",
"title": ""
},
{
"docid": "dd865e96fd492e3189f843200cf4f59a",
"text": "Lenders pay attention to where your down payment money comes from. If they see a large transfer of money into your bank account within about a year before your purchase, this WILL cause an issue for you. Down payments are not just there to make the principal smaller; they are primarily used as an underwriting data-point to assess your quality as a borrower. If you take the money as loan, it will count against your credit worthiness. If you take the money as a gift, it will raise some other red flags. All of this is done for a reason: if you can't get a down payment, you are a higher credit risk (poor discipline, lack of consistent income), even if you can (currently) pay the monthly cost of a mortgage. (PS - The cost of home ownership is much higher than the monthly mortgage payment.) Will all this mean you WON'T get a loan? Of course not. You can almost always get SOME loan. But it will likely be at a higher rate than you otherwise would qualify for if you just waited a little bit and saved money for a down payment. (Another option: cheaper house.) EDIT: The below comments provide examples where gifts were/are NOT a problem. My experience from buying a house just a few years ago (and my several friends who bought house in the same period, some with family gifts and some without) is that it IS an issue. Your best bet is to TALK, IN PERSON with an actual mortgage broker in your area who can go through the options with you, and the downsides to various approaches.",
"title": ""
},
{
"docid": "a6d3f8065db23cfea06bdb6040233857",
"text": "Limited transactions: what's to stop a firm from having thousands of bank accounts to avoid the limit. This of course is costly. Tax on transactions: some trades are worth $00.001 and some are $190,000. They shouldn't be taxed the same. Both increase costs of capital and literally everyone in America pays for it. Investment is more expensive. And our beautiful liquid market is no longer as efficient and can no longer responds as quickly to market forces. Investors now go to other foreign markets that don't limit or charge for transactions. Both plans will cost the economy billions of dollars and for what? So some computers don't trade almost instantaneously? Exactly why is that a problem other than class warfare? A lot of the risks that people have about flash crashes have been mitigated with better algorithms and rules.",
"title": ""
}
] |
fiqa
|
4f87db639547c10767bbe09f5f044ce8
|
Why should the P/E ratio of a growth stock match its percentage earnings growth rate?
|
[
{
"docid": "76c6225dc5f0d9e48a5430310a5a8e41",
"text": "This is only a rule of thumb. Peter Lynch popularized it; the ratio PE/growth is often called the Lynch Ratio. At best it's a very rough guideline. I could fill up this page with other caveats. I'm not saying that it's wrong, only that it's grossly incomplete. For a 10 second eyeball valuation of growth stocks, it's fine. But that's the extent of its usefulness.",
"title": ""
},
{
"docid": "6bc624692d06ad64e7f32232c19638f6",
"text": "Your observation is mostly right, that 1 is a the number around which this varies. You are actually referencing PEG, P/E to Growth ratio, which is a common benchmark to use to evaluate a stock. The article I link to provides more discussion.",
"title": ""
},
{
"docid": "99d863578d26125199b3f9ac63a5bf4a",
"text": "\"To perhaps better explain the \"\"why\"\" behind this rule of thumb, first think of what it means when the P/E ratio changes. If the P/E ratio increases, then this means the stock has become more expensive (in relative terms)--for example, an increase in the price but no change in the earnings means you are now paying more for each cent of earnings than you previously were; or, a decrease in the earnings but no change in the price means you are now paying the same for less earnings. Keeping this in mind, consider what happens to the PE ratio when earnings increase (grow)-- if the price of the stock remains the same, then the stock has actually become relatively \"\"cheaper\"\", since you are now getting more earnings for the same price. All else equal, we would not expect this to happen--instead, we would expect the price of the stock to increase as well proportionate to the earnings growth. Therefore, a stock whose PE ratio is growing at a rate that is faster than its earnings are growing is becoming more expensive (the price paid per cent of earnings is increasing). Similarly, a stock whose PE ratio is growing at a slower rate than its earnings is becoming cheaper (the price paid per cent of earnings is decreasing). Finally, a stock whose P/E ratio is growing at the same rate as its earnings are growing is retaining the same relative valuation--even though the actual price of the stock may be increasing, you are paying the same amount for each cent of the underlying company's earnings.\"",
"title": ""
}
] |
[
{
"docid": "babde865bb9d96b55faa268417c37cb3",
"text": "It's a way to help normalize the meaning of the earnings report. Some companies like Google have a small number of publicly traded shares (322 Million). Others like Microsoft have much larger numbers of shares (8.3 Billion). The meaning depends on the stock. If it's a utility company that doesn't really grow, you don't want to see lots of changes -- the earnings per share should be stable. If it's a growth company, earnings should be growing quickly, and flat growth means that the stock is probably going down, especially if slow growth wasn't expected.",
"title": ""
},
{
"docid": "7af4f32798568d7e60f0dbc247e02a37",
"text": "The price-earnings ratio is calculated as the market value per share divided by the earnings per share over the past 12 months. In your example, you state that the company earned $0.35 over the past quarter. That is insufficient to calculate the price-earnings ratio, and probably why the PE is just given as 20. So, if you have transcribed the formula correctly, the calculation given the numbers in your example would be: 0.35 * 4 * 20 = $28.00 As to CVRR, I'm not sure your PE is correct. According to Yahoo, the PE for CVRR is 3.92 at the time of writing, not 10.54. Using the formula above, this would lead to: 2.3 * 4 * 3.92 = $36.06 That stock has a 52-week high of $35.98, so $36.06 is not laughably unrealistic. I'm more than a little dubious of the validity of that formula, however, and urge you not to base your investing decisions on it.",
"title": ""
},
{
"docid": "0dba28ff9b2908da6f4be7d5ec49557e",
"text": "Let's take a step back. My fictional company 'A' is a solid, old, established company. It's in consumer staples, so people buy the products in good times and bad. It has a dividend of $1/yr. Only knowing this, you have to decide how much you would be willing to pay for one share. You might decide that $20 is fair. Why? Because that's a 5% return on your money, 1/20 = 5%, and given the current rates, you're happy for a 5% dividend. But this company doesn't give out all its earnings as a dividend. It really earns $1.50, so the P/E you are willing to pay is 20/1.5 or 13.3. Many companies offer no dividend, but of course they still might have earnings, and the P/E is one metric that used to judge whether one wishes to buy a stock. A high P/E implies the buyers think the stock will have future growth, and they are wiling to pay more today to hold it. A low P/E might be a sign the company is solid, but not growing, if such a thing is possible.",
"title": ""
},
{
"docid": "1dc5ad53dbebd7ef9cc8e2a028298b67",
"text": "\"You are probably going to hate my answer, but... If there was an easy way to ID stocks like FB that were going to do what FB did, then those stocks wouldn't exist and do that because they would be priced higher at the IPO. The fact is there is always some doubt, no one knows the future, and sometimes value only becomes clear with time. Everyone wants to buy a stock before it rises right? It will only be worth a rise if it makes more profit though, and once it is established as making more profit the price will be already up, because why wouldn't it be? That means to buy a real winner you have to buy before it is completely obvious to everyone that it is going to make more profit in the future, and that means stock prices trade at speculative prices, based on expected future performance, not current or past performance. Now I'm not saying past and future performance has nothing in common, but there is a reason that a thousand financially oriented websites quote a disclaimer like \"\"past performance is not necessarily a guide to future performance\"\". Now maybe this is sort of obvious, but looking at your image, excluding things like market capital that you've not restricted, the PE ratio is based on CURRENT price and PAST earnings, the dividend yield is based on PAST publications of what the dividend will be and CURRENT price, the price to book is based on PAST publication of the company balance sheet and CURRENT price, the EPS is based on PAST earnings and the published number of shares, and the ROI and net profit margin in based on published PAST profits and earnings and costs and number of shares. So it must be understood that every criteria chosen is PAST data that analysts have been looking at for a lot longer than you have with a lot more additional information and experience with it. The only information that is even CURRENT is the price. Thus, my ultimate conclusive point is, you can't based your stock picks on criteria like this because it's based on past information and current stock price, and the current stock price is based on the markets opinion of relative future performance. The only way to make a good stock pick is understand the business, understand its market, and possibly understand world economics as it pertains to that market and business. You can use various criteria as an initial filter to find companies and investigate them, but which criteria you use is entirely your preference. You might invest only in profitable companies (ones that make money and probably pay regular dividends), thus excluding something like an oil exploration company, which will just lose money, and lose it, and lose some more, forever... unless it hits the jackpot, in which case you might suddenly find yourself sitting on a huge profit. It's a question of risk and preference. Regarding your concern for false data. Google defines the Return on investment (TTM) (%) as: Trailing twelve month Income after taxes divided by the average (Total Long-Term Debt + Long-Term Liabilities + Shareholders Equity), expressed as a percentage. If you really think they have it wrong you could contact them, but it's probably correct for whatever past data or last annual financial results it's based on.\"",
"title": ""
},
{
"docid": "4edced1ac9a8249708dd0ee8f3852303",
"text": "While on the surface it might not make sense to pay more than one dollar to get just one dollar back, the key thing is that a good company's earnings are recurring each year. So, you wouldn't just be paying for the $1 dollar of earnings per share this year, but for the entire future stream of earnings per share, every year, in perpetuity -- and the earnings may grow over time too (if it remains a good company.) Your stock is a claim on a portion of the company's future. The brighter and/or more certain that future, the more investors are willing to pay for each recurring dollar of earnings. And the P/E ratio tells you, in effect, how many years it might take for your investment to earn back what you paid – assuming earnings remain the same. But you would hope the earnings would grow, too. When a company's earnings are widely expected to grow, the P/E for the stock is often higher than average. Bear in mind you don't actually receive the company's earnings, since management often decides to reinvest all or a portion of it to grow the company. Yet, many companies do pay a portion of earnings out as dividends. Dividends are money in your pocket each year.",
"title": ""
},
{
"docid": "3d2d90e1bda83babf879836b40840068",
"text": "\"If you look at the biotech breakdown, you'll find a lot of NAs when it comes to P/E since there are many young biotech companies that have yet to make a profit. Thus, there may be something to be said for how is the entire industry stat computed. Biotechnology can include pharmaceutical companies that can have big profits due to patents on drugs. As an example, look at Shire PLC which has a P/E of 1243 which is pretty high with a Market Capitalization of over a billion dollars, so this isn't a small company. I wonder what dot-com companies would have looked like in 1998/1999 that could well be similar as some industries will have bubbles you do realize, right? The reason for pointing out the Market Capitalization is that this a way to measure the size of a company, as this is merely the sum of all the stock of the company. There could be small companies that have low market capitalizations that could have high P/Es as they are relatively young and could be believed to have enough hype that there is a great deal of confidence in the stock. For example, Amazon.com was public for years before turning a profit. In being without profits, there is no P/E and thus it is worth understanding the limitations of a P/E as the computation just takes the previous year's earnings for a company divided by the current stock price. If the expected growth rate is high enough this can be a way to justify a high P/E for a stock. The question you asked about an industry having this is the derivation from a set of stocks. If most of the stocks are high enough, then whatever mean or median one wants to use as the \"\"industry average\"\" will come from that.\"",
"title": ""
},
{
"docid": "eb0b832c419be0fca81b784603de9143",
"text": "Earnings per share are not directly correlated to share price. NV Energy, the company you cited as an example, is an electric utility. The growth patterns and characteristics of utilities are well-defined, so generally speaking the value of the stock is driven by the quality of the company's cash flow. A utility with a good history of dividend increases, a dividend that is appropriate given the company's fiscal condition, (ie. A dividend that is not more than 80% of earnings) and a good outlook will be priced competitively. For other types of companies cash flow or even profits do not matter -- the prospects of future earnings matter. If a growth stock (say Netflix as an example) misses its growth projections for a quarter, the stock value will be punished.",
"title": ""
},
{
"docid": "73d3680c61fcca147e344498ea80ad56",
"text": "generally Forward P/E is computed as current price / forward earnings. The rationale behind this is that buying the stock costs you the current price, and it gives you a claim on the future earnings.",
"title": ""
},
{
"docid": "5405a84907defa303d3d8cc9bc1fcff5",
"text": "\"P/E is a pretty poor way to value the company as it exists today. The company generates free cash flow yield of 2.5-3.3% which isn't remarkably high, but it's not nearly as bad as the earnings yield of 1.1%. But let's operate within the P/E ratio for right now. The company sells $40 billion of \"\"stuff\"\" each year with a net margin of 2%. If they increased prices on every product by 1% (which really wouldn't be _that_ noticeable) their profit would grow 50%. Thus, P/E drops from 90 to 60. SGA expenses equal ~20% of their operating costs. Cut 5% of SGA and you get the same 1% increase in net margin. This could come from cost-cutting today, or by greater economies of scale in the future while keeping prices the same. So, yes, it's priced as a growth firm, but it doesn't necessarily need customer growth in the traditional sense to be fairly-valued.\"",
"title": ""
},
{
"docid": "2d04f9874a062efbbe276fb82e73c715",
"text": "The price to earnings ratio is a measure of the company's current share price compared to the annual net earnings per share. The other way to think about this is the number of years a company would take to pay back the share price if the earnings stay constant. This ignores factors like inflation and can be used as an indicator of risk. During the internet bubble many companies had P/E above 24 and no possible means of earning back the share prices that were inflated largely due to speculation. Most tools like Google Finance will list the P/E for a particular quote.",
"title": ""
},
{
"docid": "348d8bc951c93bbaffbbbcd54436669a",
"text": "GDP = total economic output (i.e. revenue), not income. But for investments, income is what matters. Add in productivity gains of around 2-3%/year due to technology and basic free market dynamics, and you will get closer to that 6% growth. Some mention mergers and acquisitions, but really that's just another form of productivity gains by gaining economy of scale and synergies. Now add in modest selective picking within the S&P index towards those companies which are doing the most in our current economy.",
"title": ""
},
{
"docid": "f0e4edcdd33450877c1a6c31eab9d4fc",
"text": "It might seem like the PE ratio is very useful, but it's actually pretty useless as a measure used to make buy or sell decisions, and taken largely on its own, pretty useless becomes utterly and completely useless. Stocks trade at prices based on future expectations and speculation, so that means if traders expect a company to double its profits next year, the share price could easily double (there are reasons it might not increase so much, and there are reasons it could increase even more than that, but that's not the point). The Price is now double, but the Earnings is still the same, so the PE ratio is double, and this doubling is based on something some traders know, or think they know, but other traders might not know or not believe! Once you understand that, what use is a PE ratio really? The PE ratio of a company might be low because it is in a death spiral, with many traders believing it will report lower and lower profits in years to come, and the lower the PE ratio of a given company gets probably, relatively, the more likely it is to go bust! If you buy a stock with a low PE ratio you must do so because you feel you understand the company, understand why the market is viewing it negatively, believe that the negativity is wrong or over done, and believe that it will turn around. Equally a PE ratio might be high, but be an excellent buy still because it has excellent growth prospects and potential even beyond what is priced in already! Lets face it, SOMEONE has been buying at the price that's put that PE ratio where is is, right? They might be wrong of course, or not! Or they might be justified now but circumstances might change before earnings ever reach the current priced in expectation. You'll know next year probably! To answer your actual question... first you should now understand there is no such thing as a stock that is on sale, just stocks that are priced broadly according to the markets consensus on its value in years to come, the closest thing being a stock that is 'over sold' (but one man's 'over sold' is another man's train crash remember)... so what to actually look for? The only way to (on average) make good buy and sell decisions is to know about investing and trading (buy some books, I have 12), understand the businesses you propose to invest in and understand their market(s) (which may also mean understanding national and international economics somewhat).",
"title": ""
},
{
"docid": "2c22c52e4aaebff770a0c2e1acd89cf3",
"text": "\"A share of stock is a share of the underlying business. If one believes the underlying business will grow in value, then one would expect the stock price to increase commensurately. Participants in the stock market, in theory, assign value based on some combination of factors like capital assets, cash on hand, revenue, cash flow, profits, dividends paid, and a bunch of other things, including \"\"intangibles\"\" like customer loyalty. A dividend stream may be more important to one investor than another. But, essentially, non-dividend paying companies (and, thus, their shares) are expected by their owners to become more valuable over time, at which point they may be sold for a profit. EDIT TO ADD: Let's take an extremely simple example of company valuation: book value, or the sum of assets (capital, cash, etc) and liabilities (debt, etc). Suppose our company has a book value of $1M today, and has 1 million shares outstanding, and so each share is priced at $1. Now, suppose the company, over the next year, puts another $1M in the bank through its profitable operation. Now, the book value is $2/share. Suppose further that the stock price did not go up, so the market capitalization is still $1M, but the underlying asset is worth $2M. Some extremely rational market participant should then immediately use his $1M to buy up all the shares of the company for $1M and sell the underlying assets for their $2M value, for an instant profit of 100%. But this rarely happens, because the existing shareholders are also rational, can read the balance sheet, and refuse to sell their shares unless they get something a lot closer to $2--likely even more if they expect the company to keep getting bigger. In reality, the valuation of shares is obviously much more complicated, but this is the essence of it. This is how one makes money from growth (as opposed to income) stocks. You are correct that you get no income stream while you hold the asset. But you do get money from selling, eventually.\"",
"title": ""
},
{
"docid": "68ad2d6cc4afb29c1b2f1b4a8f0d38f1",
"text": "All you have to do is ask Warren Buffet that question and you'll have your answer! (grin) He is the very definition of someone who relies on the fundamentals as a major part of his investment decisions. Investors who rely on analysis of fundamentals tend to be more long-term strategic planners than most other investors, who seem more focused on momentum-based thinking. There are some industries which have historically low P/E ratios, such as utilities, but I don't think that implies poor growth prospects. How often does a utility go out of business? I think oftentimes if you really look into the numbers, there are companies reporting higher earnings and earnings growth, but is that top-line growth, or is it the result of cost-cutting and other measures which artificially imply a healthy and growing company? A healthy company is one which shows year-over-year organic growth in revenues and earnings from sales, not one which has to continually make new acquisitions or use accounting tricks to dress up the bottom line. Is it possible to do well by investing in companies with solid fundamentals? Absolutely. You may not realize the same rate of short-term returns as others who use momentum-based trading strategies, but over the long haul I'm willing to bet you'll see a better overall average return than they do.",
"title": ""
},
{
"docid": "eb8297b5ca140c0fb70085814539e5a3",
"text": "The Gordon equation does not use inflation-adjusted numbers. It uses nominal returns/dividends and growth rates. It really says nothing anyone would not already know. Everyone knows that your total return equals the sum of the income return plus capital gains. Gordon simply assumes (perfectly validly) that capital gains will be driven by the growth of earnings, and that the dividends paid will likewise increase at the same rate. So he used the 'dividend growth rate' as a proxy for the 'earnings growth rate' or 'capital gains rate'. You cannot use inflation-removed estimates of equity rates of return because those returns do not change with inflation. If anything they move in opposite directions. Eg in the 1970's inflation the high market rates caused people to discount equity values at larger rates --- driving their values down -- creating losses.",
"title": ""
}
] |
fiqa
|
b842d3b53a47f3c068c50e9058fdc49e
|
Can someone explain recent AAMRQ stock price behavior to me?
|
[
{
"docid": "5fa116cdd8353e4c55f4f4fa6ca1daef",
"text": "There are things that are clearly beyond me as well. Cash per share is $12.61 but the debt looks like $30 or so per share. I look at that, and the $22 negative book value and don't see where the shareholders are able to recoup anything.",
"title": ""
}
] |
[
{
"docid": "58d12be977589164580793608e7d3fea",
"text": "Also a layman, and I didnt read the article because it did the whole 'screw you for blocking my ads' thing. But judging from the title, I'd guess someone bought a massive amount of call options for VIX, the stock that tracks volatility in the market. Whenever the market crashes or goes through difficult times, the VIX fund prospers. The 'by october' part makes me think it was call options that he purchased: basically he paid a premium for each share (a fraction of the shares cost) for the right to buy that share at today's price, from now until october. So if the share increases in value, for each call option he has, he can buy one share at todays price, and sell it at the price it is that day. Options can catapult your profit into the next dimension but if the share decreases in value or even stays the same price, he loses everything. Vicious redditors, please correct the mistakes ive made here with utmost discrimination",
"title": ""
},
{
"docid": "b0bf0ef396653e4732d06e483c36d84a",
"text": "I'm a bit skeptical of some of the views the author states, in particular: > The likelihood of executing a trade at the best price depends on the length of the queue to buy or sell and the incentives to trade. Longer queues lead to longer delays to execute a trade. Delays typically lead to worse outcomes. Quite simply, it makes no sense to wait on a longer line to receive a worse execution. Why would this be the case? If anything, I'd think that forcing through too many orders at once risks price slippage created by excess supply or demand. He argues that waiting in queue may impair price performance, but I'd think that possible favourable or adverse shifts in the price will average to zero over time. If this is the case and they do average to zero, then I think funds are doing the savvy thing by putting relatively small, low-priority trades in to the flow at a rate that saves the most money on average. I can see why day traders may not be too thrilled with this, but that is such a small slice of the mutual fund/brokerage clientele. In the broader picture, funds and brokerages are being squeezed so tightly on expense ratios that I'd think any cost saving/rebates they do get probably filter back to customers in the form of reduced fees. Take Robinhood as an example: they use their trading rebates to provide an extremely low cost trading platform for retail investors. That hardly seems unfair to me. Any traders care to comment? This is all just speculation on my part and I've not looked at any time series data yet.",
"title": ""
},
{
"docid": "7ccebb6bcea7089d89b1fd72e66e3b81",
"text": "Thank you for replying. I'm not sure I totally follow though, aren't you totally at mercy of the liquidity in the stock? I guess I'm havinga hard time visualizing the value a human can add as opposed to say vwapping it or something. I can accept that you're right, just having a difficult time picturing it",
"title": ""
},
{
"docid": "bddbceba5540cf233b6ac80b6426420c",
"text": "\"The Dow Jones Industrial Average (DJIA) is a Price-weighted index. That means that the index is calculated by adding up the prices of the constituent stocks and dividing by a constant, the \"\"Dow divisor\"\". (The value of the Dow divisor is adjusted from time to time to maintain continuity when there are splits or changes in the roster.) This has the curious effect of giving a member of the index influence proportional to its share price. That is, if a stock costing $100 per share goes up by 1%, that will change the index by 10 times as much as if a stock costing $10 per share goes up by the same 1%. Now look at the price of Google. It's currently trading at just a whisker under $700 per share. Most of the other stocks in the index trade somewhere between $30 and $150, so if Google were included in the index it would contribute between 5 and 20 times the weight of any other stock in the index. That means that relatively small blips in Google's price would completely dominate the index on any given day. Until June of 2014, Apple was in the same boat, with its stock trading at about $700 per share. At that time, Apple split its stock 7:1, and after that its stock price was a little under $100 per share. So, post-split Apple might be a candidate to be included in the Dow the next time they change up the components of the index. Since the Dow is fixed at 30 stocks, and since they try to keep a balance between different sectors, this probably wouldn't happen until they drop another technology company from the lineup for some reason. (Correction: Apple is in the DJIA and has been for a little over a year now. Mea culpa.) The Dow's price-weighting is unusual as stock indices go. Most indices are weighted by market capitalization. That means the influence of a single company is proportional to its total value. This causes large companies like Apple to have a lot of influence on those indices, but since market capitalization isn't as arbitrary as stock price, most people see that as ok. Also, notice that I said \"\"company\"\" and not \"\"stock\"\". When a company has multiple classes of share (as Google does), market-cap-weighted indices include all of the share classes, while the Dow has no provision for such situations, which is another, albeit less important, reason why Google isn't in the Dow. (Keep this in mind the next time someone offers you a bar bet on how many stocks are in the S&P 500. The answer is (currently) 505!) Finally, you might be wondering why the Dow uses such an odd weighting in its calculations. The answer is that the Dow averages go back to 1896, when Charles Dow used to calculate the averages by hand. If your only tools are a pencil and paper, then a price-weighted index with only 30 stocks in it is a lot easier to calculate than a market-cap-weighted index with hundreds of constituents. About the Dow Jones Averages. Dow constituents and prices Apple's stock price chart. The split in 2014 is marked. (Note that prices before the split are retroactively adjusted to show a continuous curve.)\"",
"title": ""
},
{
"docid": "3d8dba8e9987f3172b1977f28b4635e7",
"text": "Its Price/Earnings, or P/E, is at (roughly) 96 That means that for EVERY $1 that Amazon makes in profit, people are willing to pay $96 for it. This also means that for every $1 I invest in Amazon, I'll have to wait 96 years until I've collected on that - and that's assuming that 100% of their profit goes out through dividends, something that Amazon doesn't give out. This is either because the stock price is really high, or because its earnings is LOW. Is this kind of ridiculous P/E common among the US stock (I'm not from the US)? Is there something going on in Amazon? Am I missing something (I'm a little new myself)? I'm looking at [this graph](http://i.imgur.com/4YpDH.png). Return on Equity (aka RoE) has been going down. This is either because it has added more shareholders equity (equity issuance?), OR it's because net income has been falling. When you compare this to the rising P/E this recent year, something tells me that something is screwed up. People have been valuing Amazon *more and more*, while Amazon has been providing *less and less* to its shareholders! [Here's more statistics](http://i.imgur.com/kJjPW.png) showing profit margin going down the last year, while the valuation went up (though it has been falling as it maxed at P/E 113). So, either I've missed something (some awesome news or whatever), or I'm uneducated, or this stock has been overvalued. I'm assuming that it probably was a mix of the first and the last, and that this is just a correction. Correct *me* if I'm wrong.",
"title": ""
},
{
"docid": "eeebccfd8c6527653932d31d4e087b9a",
"text": "Since you asked about Apple, and I happen to have two positions - This is what happened. I was long the $500, short the $600, in effect, betting Apple would recover from its drop from $700 down to $450 or so. Friday, my target was to hope that Apple remain above $600, but not really caring how much it went over. Now, post split, the magic number is $85.71. My account shows the adjusted option pricing, but doesn't yet show AAPL's new price.",
"title": ""
},
{
"docid": "a217cbaefeb85839cd9f343a46cad2d9",
"text": "\"The simple answer could be that one or more \"\"people\"\" decided to buy. By \"\"people,\"\" I don't mean individual buyers of 100 shares like you or me, but typically large institutional investors like Fidelity, who might buy millions of shares at a time. Or if you're talking about a human person, perhaps someone like Warren Buffett. In a \"\"thinly\"\" traded small cap stock that typically trades a few hundred shares in a day, an order for \"\"thousands\"\" could significantly move the price. This is one situation where more or less \"\"average\"\" people could move a single stock.\"",
"title": ""
},
{
"docid": "d1d17cab7820e2dde13a9add87fa3ebb",
"text": "Analysts normally (oxymoron here) gauge their targets on where the stock is currently and more importantly where it has been. Except for in the case of say a Dryships where it was a hundred dollar stock and is now in the single digits, it is safe to assume that Apple for instance was well over $ 700 and is now at $500, and that a price guidance of $ 580 is not that remarkable and a not so difficult level to strike. Kind of like a meteorologist; fifty percent chance of rain. Analysts and weathermen.Hard to lose your job when your never really wrong. Mr Zip, Over and outta here",
"title": ""
},
{
"docid": "b42e15f40f75d337c1a93b03c9c664cb",
"text": "\"There are a few things you are missing here. These appear to be penny stocks or subpenny stocks. Buying these are easy.... selling is a total different ball game. Buying commissions are low and selling commissions are outrageous. Another thing you are missing in this order is... some trading platform may assume the \"\"AON\"\" sale. That is All Or None. There was an offer of 10k shares @ .63. The buyer only wanted 10k what was the broker to do with the other 20k? Did you inform the broker that partial sales where acceptable? You may want to contact your broker and explain this to them. The ALL OR NONE order has made plenty of investor a little unhappy, which seems to be your new learning experience for the day. Sorry, school of hard knocks is not always fun.\"",
"title": ""
},
{
"docid": "b4a07897823bdd213012a5c4d7dcf56d",
"text": "\"First: do you understand why it dropped? Was it overvalued before, or is this an overreaction to some piece of news about them, or about their industry, or...? Arguably, if you can't answer that, you aren't paying enough attention to have been betting on that individual stock. Assuming you do understand why this price swing occurred -- or if you're convinced you know better than the folks who sold at that price -- do you believe the stock will recover a significant part of its value any time soon, or at least show a nice rate of growth from where it is now? If so, you might want to hold onto it, risking further losses against the chance of recovering part or all of what is -- at this moment -- only a loss on paper. Basically: if, having just seen it drop, you'd still consider buying it at the new price you should \"\"buy it from yourself\"\" and go on from here. That way at least you aren't doing exactly what you hope to avoid, buying high and selling low. Heck, if you really believe in the stock, you could see this as a buying opportunity... On the other hand, if you do not believe you would buy it now at its new price, and if you see an alternative which will grow more rapidly, you should take your losses and move your money to that other stock. Or split the difference if you aren't sure which is better but can figure out approximately how unsure you are. The question is how you move on from here, more than how you got here. What happened happened. What do you think will happen next, and how much are you willing to bet on it? On the gripping hand: This is part of how the market operates. Risk and potential reward tend to be pretty closely tied to each other. You can reduce risk by diversifying across multiple investments so no one company/sector/market can hurt you too badly --- and almost anyone sane will tell you that you should diversify -- but that means giving up some of the chance for big winnings too. You probably want to be cautious with most of your money and go for the longer odds only with a small portion that you can afford to lose on. If this is really stressing you out, you may not want to play with individual stocks. Mutual funds have some volatility too, but they're inherently diversified to a greater or lesser extent. They will rarely delight you, but they won't usually slap you this way either.\"",
"title": ""
},
{
"docid": "b69d285da0ed0700b3cf059001f2f7e5",
"text": "\"There tends to be high volume around big changes in stock price. The volume of a stock does not remain constant and the term \"\"fat fingers\"\" can influence price.--> http://www.bloomberg.com/news/2014-10-01/that-japanese-fat-finger-can-absolutely-happen-in-u-s-.html That being said keshlam is 99% right when it comes to a stock moving when their is no news or earnings announcements. Check out these papers. http://onlinelibrary.wiley.com/doi/10.1111/j.1475-6803.2010.01285.x/full They do a time series analysis to try and predict future prices off of past demand during news events. They forecast using auto-regressive models. google \"\"forecasting autoregressive model\"\" and the upenn lecture will be helpful. I would post another link but I cannot because I do not have enough rep/ This is more of a quant question. Hope this helps. JL\"",
"title": ""
},
{
"docid": "3cbbb07f0be0ceda1705c96158f0c51d",
"text": "The price action is... untradeable. You have money flying in and out of trades without reason. Apple down? Then amzn goes up as tech trader cash tries to find a new trend. But trends are not materializing. There is no consensus between the news, trends the technical indicators, money managers... Just stay clear till the dust settles. Us dollars should be ok. Gold isnt even that reliable as qe3 is not certain. I think everything is heafing down en mass in the market but there is residual lunatic optimisim out there making shorts dangerous. I guess you could sell the highs.",
"title": ""
},
{
"docid": "abe4a232f283d9d04afaebe8eee9c613",
"text": "\"No one is quite sure what happened (yet). Speculation includes: The interesting thing is that Procter & Gamble stock got hammered, as did Accenture. Both of which are fairly stable companies, that didn't make any major announcements, and aren't really connected to the current financial instability in Greece. So, there is no reason for there stock prices to have gone crazy like that. This points to some kind of screw up, and not a regular market force. Apparently, the trades involved in this event are going to be canceled. Edit #1: One thing that can contribute to an event like this is automatic selling triggered by stop loss orders. Say someone at Citi makes a mistake and sells too much of a stock. That drives the stock price below a certain threshold. Computers that were pre-programmed to sell at that point start doing their job. Now the price goes even lower. More stop-loss orders get triggered. Things start to snowball. Since it's all done by computer these days something like this can happen in seconds. All the humans are left scratching their heads. (No idea if that's what actually happened.) Edit #2: IEEE Spectrum has a pretty concise article on the topic. It also includes some links to follow. Edit #3 (05/14/2010): Reuters is now reporting that a trader at Waddell & Reed triggered all of this, but not through any wrongdoing. Edit #4 (05/18/2010): Waddell & Reed claims they didn't do it. The House Financial Services Subcommittee investigated, but they couldn't find a \"\"smoking gun\"\". I think at this point, people have pretty much given up trying to figure out what happened. Edit #5 (07/14/2010): The SEC still has no idea. I'm giving up. :-)\"",
"title": ""
},
{
"docid": "43531848555bdaee1aff5d1e8f3c3af6",
"text": "Yeah, the past 4-5 years have been rough on fundamental guys (not to say companies like AAPL didn't fare well), but EVERYTHING has been macro. When correlations go to 1 across the board and central bank legislation has have a bigger impact on earnings than new products/good mgmt/etc. it's hard to be a fundamentalist. Like your style, this market environment is ripe for HF's though that can use leverage/hedges/and short-term positioning to create alpha while the mutual funds are stuck in long-term structured investment objective ruts and reduced risk. Not to say you can't create alpha through selecting better/undervalued stocks, it's just been damn near impossible the last 5 years to do it.",
"title": ""
},
{
"docid": "912d1ca43a19afff15b211b4e1968178",
"text": "Metals and Mining is an interesting special case for stocks. It's relationship to U.S. equity (SPX) is particularly weak (~0.3 correlation) compared to most stocks so it doesn't behave like equity. However, it is still stock and not a commodities index so it's relation to major metals (Gold for instance) is not that strong either (-0.6 correlation). Metals and Mining stocks have certainly underperformed the stock market in general over the past 25years 3% vs 9.8% (annualized) so this doesn't look particularly promising. It did have a spectacularly good 8 year period ('99-'07) though 66% (annualized). It's worth remembering that it is still stock. If the market did not think it could make a reasonable profit on the stock the price would decrease until the market thought it could make the same profit as other equity (adjusted slightly for the risk). So is it reasonable to expect that it would give the same return as other stock on average? Yes.. -ish. Though as has been shown in the past 25 years your actual result could vary wildly both positive and negative. (All numbers are from monthly over the last 25 years using VGPMX as a M&M proxy)",
"title": ""
}
] |
fiqa
|
abdab063f599d23956e878c99c00f64e
|
Why most of apple stock price since 10years have been gained overnight?
|
[
{
"docid": "8b8ddc850fe99c878acf046cdcaa9c0d",
"text": "\"I'll answer this question: \"\"Why do intraday traders close their position at then end of day while most gains can be done overnight (buy just before the market close and sell just after it opens). Is this observation true for other companies or is it specific to apple ?\"\" Intraday traders often trade shares of a company using intraday leverage provided by their firm. For every $5000 dollars they actually have, they may be trading with $100,000, 20:1 leverage as an example. Since a stock can also decrease in value, substantially, while the markets are closed, intraday traders are not allowed to keep their highly leveraged positions opened. Probabilities fail in a random walk scenario, and only one failure can bankrupt you and the firm.\"",
"title": ""
}
] |
[
{
"docid": "9358beed1bfe134a27092f25f9e2f0a4",
"text": "\"Ex-Apple Store employee here. I didn't read the article, but then again I didn't need to. Apple is a great company, blah blah blah. Here's the bottom line: If I sell $15,000 of computers in 6 hours (something that's not so terribly hard to do), I still get paid the same $11.5/hr. Why the fuck should I work harder to sell? Pressure from above. Also they print a list of how much everyone has sold by day, week, month, quarter and YTD. You want to be in the top 5 of that list. Now, I worked there from 2008-2010, so things could be a lot different there now. But I suspect they're not. There's a huge amount of churn, as someone said, and I'd argue that it is entirely to keep happy smiling dumb faces there all the time. The \"\"Lifers\"\" are huge tools who suck big ones. I still love Apple. Just glad I don't work for them.\"",
"title": ""
},
{
"docid": "f2f87ab35243177e019902c1bf6d3393",
"text": "It's important to note that this 10% share price drop comes after a year in which Best Buy's stock price has risen more than 50%. It's done this by focussing on matching Amazon's prices while providing better human-to-human customer service. https://www.nytimes.com/2017/09/18/business/best-buy-amazon.html",
"title": ""
},
{
"docid": "3e363c6bd754da752d1092b160f4188f",
"text": "\"In addition to the answers provided above, the weight the Dow uses to determine the index is not the market capitalization of the company involved. That means that companies like Google and Apple with very high share prices and no particular inclination to split could adversely effect the Dow, turning it into essentially the \"\"Apple and Google and then some other companies\"\" Industrial Average. The highest share price Dow company right now, IIRC, is IBM. Both Google and Apple would have three times the influence on the Index as IBM does now.\"",
"title": ""
},
{
"docid": "4192adc2bae1410a5825b4a8f0fa431a",
"text": "In an ideal world Say on 24th July the share price of Apple was $600. Everyone knows that they will get the $ 2.65 on 16th August. There is not other news that is affecting the price. You want to go in and buy the shares on 16th Morning at $600 and then sell it on 17th August at $600. Now in this process you have earned sure shot $2.65/- Or in an ideal world when the announcement is made on 24th July, why would I sell it at $600, when I know if I wait for few more days I will get $2.65/- so i will be more inclined to sell it at $602.65 /- ... so on 16th Aug after the dividend is paid out, the share price will be back to $600/- In a real world, dividend or no dividend the share price would be moving up or down ... Notice that the dividend amount is less than 1% of the stock price ... stock prices change more than this percentage ... so if you are trying to do what is described in paragraph one, then you may be disappointed as the share price may go down as well by more than $2.65 you have made",
"title": ""
},
{
"docid": "8abe679fe1c9ad63afa4e43cbea0f17a",
"text": "Intuitive? I doubt it. Derivatives are not the simplest thing to understand. The price is either in the money or it isn't. (by the way, exactly 'at the money' is not 'in the money.') An option that's not in the money has time value only. As the price rises, and the option is more and more in the money, the time value drops. We have a $40 stock. It makes sense to me that a $40 strike price is all just a bet the stock will rise, there's no intrinsic value. The option prices at about $4.00 for one year out, with 25% volatility. But the strike of $30 is at $10.68, with $10 in the money and only .68 in time premium. There's a great calculator on line to tinker with. Volatility is a key component of options trading. Think about it. If a stock rises 5%/yr but rarely goes up any more or less, just steady up, why would you even buy an option that was even 10% out of the money? The only way I can describe this is to look at a bell curve and how there's a 1/6 chance the event will be above one standard deviation. If that standard deviation is small, the chance of hitting the higher strikes is also small. I wrote an article Betting on Apple at 9 to 2 in which I describe how a pair of option trades was set up so that a 35% rise in Apple stock would return 354% and Apple had two years to reach its target. I offer this as an example of options trading not being theory, but something that many are engaged in. What I found curious about the trade was that Apple's volatility was high enough that a 35% move didn't seem like the 4.5 to 1 risk the market said it was. As of today, Apple needs to rise 13% in the next 10 months for the trade to pay off. (Disclosure - the long time to expiration was both good and bad, two years to recover 35% seemed reasonable, but 2 years could bring anything in the macro sense. Another recession, some worldwide event that would impact Apple's market, etc. The average investor will not have the patience for these long term option trades.)",
"title": ""
},
{
"docid": "bddbceba5540cf233b6ac80b6426420c",
"text": "\"The Dow Jones Industrial Average (DJIA) is a Price-weighted index. That means that the index is calculated by adding up the prices of the constituent stocks and dividing by a constant, the \"\"Dow divisor\"\". (The value of the Dow divisor is adjusted from time to time to maintain continuity when there are splits or changes in the roster.) This has the curious effect of giving a member of the index influence proportional to its share price. That is, if a stock costing $100 per share goes up by 1%, that will change the index by 10 times as much as if a stock costing $10 per share goes up by the same 1%. Now look at the price of Google. It's currently trading at just a whisker under $700 per share. Most of the other stocks in the index trade somewhere between $30 and $150, so if Google were included in the index it would contribute between 5 and 20 times the weight of any other stock in the index. That means that relatively small blips in Google's price would completely dominate the index on any given day. Until June of 2014, Apple was in the same boat, with its stock trading at about $700 per share. At that time, Apple split its stock 7:1, and after that its stock price was a little under $100 per share. So, post-split Apple might be a candidate to be included in the Dow the next time they change up the components of the index. Since the Dow is fixed at 30 stocks, and since they try to keep a balance between different sectors, this probably wouldn't happen until they drop another technology company from the lineup for some reason. (Correction: Apple is in the DJIA and has been for a little over a year now. Mea culpa.) The Dow's price-weighting is unusual as stock indices go. Most indices are weighted by market capitalization. That means the influence of a single company is proportional to its total value. This causes large companies like Apple to have a lot of influence on those indices, but since market capitalization isn't as arbitrary as stock price, most people see that as ok. Also, notice that I said \"\"company\"\" and not \"\"stock\"\". When a company has multiple classes of share (as Google does), market-cap-weighted indices include all of the share classes, while the Dow has no provision for such situations, which is another, albeit less important, reason why Google isn't in the Dow. (Keep this in mind the next time someone offers you a bar bet on how many stocks are in the S&P 500. The answer is (currently) 505!) Finally, you might be wondering why the Dow uses such an odd weighting in its calculations. The answer is that the Dow averages go back to 1896, when Charles Dow used to calculate the averages by hand. If your only tools are a pencil and paper, then a price-weighted index with only 30 stocks in it is a lot easier to calculate than a market-cap-weighted index with hundreds of constituents. About the Dow Jones Averages. Dow constituents and prices Apple's stock price chart. The split in 2014 is marked. (Note that prices before the split are retroactively adjusted to show a continuous curve.)\"",
"title": ""
},
{
"docid": "2c91dbcb174171eab32c85abaddec8f3",
"text": "\"What most of these answers here seem to be missing is that a stock \"\"price\"\" is not exactly what we typically expect a price to be--for example, when we go in to the supermarket and see that the price of a gallon of milk is $2.00, we know that when we go to the cash register that is exactly how much we will pay. This is not, however, the case for stocks. For stocks, when most people talk about the price or quote, they are really referring to the last price at which that stock traded--which unlike for a gallon of milk at the supermarket, is no guarantee of what the next stock price will be. Relatively speaking, most stocks are extremely liquid, so they will react to any information which the \"\"market\"\" believes has a bearing on the value of their underlying asset almost (if not) immediately. As an extreme example, if allegations of accounting fraud for a particular company whose stock is trading at $40 come out mid-session, there will not be a gradual decline in the price ($40 -> $39.99 -> $39.97, etc.)-- instead, the price will jump from $40 to say, $20. In the time between the the $40 trade and the $20 trade, even though we may say the price of the stock was $40, that quote was actually a terrible estimate of the stock's current (post-fraud announcement) price. Considering that the \"\"price\"\" of a stock typically does not remain constant even in the span of a few seconds to a few minutes, it should not be hard to believe that this price will not remain constant over the 17.5 hour period from the previous day's close to the current day's open. Don't forget that as Americans go to bed, the Asian markets are just opening, and by the time US markets have opened, it is already past 2PM in London. In addition to the information (and therefore new knowledge) gained from these foreign markets' movements, macro factors can also play an important part in a security's price-- perhaps the ECB makes a morning statement that is interpreted as negative news for the markets or a foreign government before the US markets open. Stock prices on the NYSE, NASDAQ, etc. won't be able to react until 9:30, but the $40 price of the last trade of a broad market ETF at 4PM yesterday probably isn't looking so hot at 6:30 this morning... don't forget either that most individual stocks are correlated with the movement of the broader market, so even news that is not specific to a given security will in all likelihood still have an impact on that security's price. The above are only a few of many examples of things that can impact a stock's valuation between close and open: all sorts of geopolitical events, announcements from large, multi-national companies, macroeconomic stats such as unemployment rates, etc. announced in foreign countries can all play a role in affecting a security's price overnight. As an aside, one of the answers mentioned after hours trading as a reason--in actuality this typically has very little (if any) impact on the next day's prices and is often referred to as \"\"amateur hour\"\", due to the fact that trading during this time typically consists of small-time investors. Prices in AH are very poor predictors of a stock's price at open.\"",
"title": ""
},
{
"docid": "3638cff72da83652ce2702193f1f578f",
"text": "Their argument is mostly nonsense. Take someone like Tim Cook, CEO of Apple. He has a not very large salary, and makes a lot more money through stock bonuses. You would never, ever expect him to buy Apple shares. And assuming that he doesn't want to end up one day as the richest man in the cemetery, you would expect him to sell significant numbers of shares, independent on whether he expects Apple to go up or down.",
"title": ""
},
{
"docid": "9e276c660232996a2c7ca6794e960005",
"text": "You could try to refine your options strategy: For instance you could buy the USD 750 call option(s) you mentioned and at the same time sell (short) call options with a higher strike price, which is above the share price level you expect that Apple will trade at in one year (for instance USD 1,100). By doing this, you would receive the premium of the call option(s) with the higher option, which in turn would help you finance buying your USD 750 call(s). The net effect of this trading strategy would be that you would give up the extra profit you would earn if Apple would rose above USD 1,100 (the strike price of the call option sold short). Your total risk would be even less than with your actual strategy (in my view).",
"title": ""
},
{
"docid": "06dc44ec6dd66aab8e5af5fb3f406ed7",
"text": "There's a case to be made that companies below a certain market cap have more potential than the higher ones. Consider, Apple cannot grow 100 fold from its current value. At $700B or so in value, that would be a $70T goal, just about the value of all the combined wealth in the entire US. At some point, the laws of large numbers take over, and exponential growth starts to flatten out. On the flip side, Apple may have as good or better chance to rise 10% over the next 6-12 months as a random small cap stock.",
"title": ""
},
{
"docid": "fca05efbdc5641fa55c112669d696760",
"text": "I think the list could have added: - Save in regular intervals using the same strategy. Just to make sure that good old dollar cost averaging is thrown in. That's probably where most people go way wrong. Save money all year, dump it on a stock they like because some family friend investment expert said that 'apple prices will go up' with out explaining that you need to take advantage of mean reversion to help spread the risk.",
"title": ""
},
{
"docid": "d4f3b37dbe4cf73e5868ed98aff74c06",
"text": "Re-invest it in the business, invest it long-term somewhere. It is a very bad business practice to have too much cash lying around. That cash could either generate a higher profit % used in the business or it could generate more money long term being invested somewhere. It seems apple has now done the latter, up until now it's been largely invested in cash-like things.",
"title": ""
},
{
"docid": "ea6d1cf4d269e3f9ed2721df920f0f01",
"text": "If you look at S&P 500's closing price for the first trading day on December and January for the last 20 years, you will see that for 10 of these years, stocks did better overall and for 10 others they did worse. Thus you can see that the price of stocks do no necessarily increase. You can play around with the data here",
"title": ""
},
{
"docid": "140c880b96c13bbfc7a40ea088de70d7",
"text": "\"Because more people bought it than sold it. That's really all one can say. You look for news stories related to the event, but you don't really know that's what drove people to buy or sell. We're still trying to figure out the cause of the recent flash crash, for example. For the most part, I feel journalism trying to describe why the markets moved is destined to fail. It's very complicated. Stocks can fall on above average earnings reports, and rise on dismal annual reports. I've heard a suggestion before that people \"\"buy on the rumor, sell on the news\"\". Which is just this side of insider trading.\"",
"title": ""
},
{
"docid": "eb6d0d22b8c60716e0865d82645735d4",
"text": "\"There's an expression, \"\"stock prices have no memory.\"\" Apple trades at about $115. Why would I carry my shares at anything but $115 even though I paid say $75 a share, while you just bought it at $115? The only difference, perhaps, is that if I hold them in a non retirement account, I might track the net I'd have, post tax.\"",
"title": ""
}
] |
fiqa
|
92304f944cab74f998185b6ac2a17daa
|
College student interested in starting a stock portfolio, how much should I invest?
|
[
{
"docid": "43ffaa8b095662452f8d5ec8a43c82bc",
"text": "You should invest a trivial (<500$USD) amount of money in a stock portfolio. If you aren't able to make more on the market than the interest rates of your loans, you are losing money. This question has discussed this topic as well.",
"title": ""
}
] |
[
{
"docid": "0b2ee1ec448b87a1e6e61d1e910eee61",
"text": "\"You can start investing with any amount. You can use the ShareBuilder account to purchase \"\"partial\"\" stocks through their automatic investment plan. Usually brokers don't sell parts of stock, and ShareBuilder is the only one allowing it IMHO using its own tricks. What they do basically is buy a stock and then divide it internally among several investors who bought it, while each of the investors doesn't really own it directly. That's perfect for investing small amounts and making first steps in investing.\"",
"title": ""
},
{
"docid": "3eba0ee9b9ecd19532789be1d9146812",
"text": "\"I find the question interesting, but it's beyond an intelligent answer. Say what you will about Jim Cramer, his advice to spend \"\"an hour per month on each stock\"\" you own appears good to me. But it also limits the number of stocks you can own. Given that most of us have day jobs in other fields, you need to decide how much time and education you can put in. That said, there's a certain pleasure in picking stocks, buying a company that's out of favor, but your instinct tells you otherwise. For us, individual stocks are about 10% of total portfolio. The rest is indexed. The amount that \"\"should be\"\" in individual stocks? None. One can invest in low cost funds, never own shares of individual stocks, and do quite well.\"",
"title": ""
},
{
"docid": "82ba87675f91884a32831141b0155fb4",
"text": "I'd look into ShareBuilder. You can buy stocks for as low as $2 each, and there is no minimum funding level. You have to be carefull about selling though, as they will charge you $10 each time you want to sell a stock, regardless of how much of it you want to sell.",
"title": ""
},
{
"docid": "d69f5e6cf8b569f776788242ee66c6a8",
"text": "\"Chris - you realize that when you buy a stock, the seller gets the money, not the company itself, unless of course, you bought IPO shares. And the amount you'd own would be such a small portion of the company, they don't know you exist. As far as morals go, if you wish to avoid certain stocks for this reason, look at the Socially Responsible funds that are out there. There are also funds that are targeted to certain religions and avoid alcohol and tobacco. The other choice is to invest in individual stocks which for the small investor is very tough and expensive. You'll spend more money to avoid the shares than these very shares are worth. Your proposal is interesting but impractical. In a portfolio of say $100K in the S&P, the bottom 400 stocks are disproportionately smaller amounts of money in those shares than the top 100. So we're talking $100 or less. You'd need to short 2 or 3 shares. Even at $1M in that fund, 20-30 shares shorted is pretty silly, no offense. Why not 'do the math' and during the year you purchase the fund, donate the amount you own in the \"\"bad\"\" companies to charity. And what littleadv said - that too.\"",
"title": ""
},
{
"docid": "2f38eecf4850782e35550e424c56d93d",
"text": "\"Kid, you need to start thinking in thresholds. There are several monetary thresholds that separate your class from a more well funded class. 1) You cannot use margin with less than $2000 dollars Brokers require that you have at least $2000 before they will lend to you 2) In 2010, Congress banned under 21 year olds from getting access to credit. UNLESS they get cosigned. This means that even if you have $2000, no broker will give you margin unless you have a (good) credit history already. There was a good reason for this, but its based on the assumption that everyone is stupid, not the assumption that some people are objective thinkers. 3) The brokers that will open an account for you have high commissions. The commissions are so high that it will destroy any capital gains you may make with your $1000. For the most part. 4) The pattern day trader rule. You cannot employ sophisticated risk management while being subject to the pattern day trader rule. It basically limits you from trading 3 times a day (its more complicated than that read it yourself) if you have less than $25,000 in one account. 5) Non-trade or stock related investments: Buy municipal or treasury bonds. They will give you more than a savings account would, and municipals are tax free. This isn't exactly what I would call liquid though - ie. if you wanted to access your money to invest in something else on a whim. 6) What are you studying? If its anything technical then you might get a good idea that you could risk your money on to create value. But I would stick to high growth stocks before blowing your $1000 on an idea. Thats not exactly what I would call \"\"access to capital\"\". 7) Arbitrage. Lets say you know a friend that buys the trendy collectors shoes at discount and sells them for a profit. He might do this with one $200 pair of tennis shoes, and then use the $60 profit different to go buy video games for himself. If he wanted to scale up, he couldn't because he never has more than $200 to play with. In comparison, you could do 5 pairs ($200 x 5) and immediately have a larger operation than him, making a larger profit ($60 x 5 = $300, now you have $1300 and could do it again with 6 pairs to make an even great er profit) not because you are better or worked at it, but solely because you have more capital to start with. Keep an eye out for arbitrage opportunities, usually there is a good reason they exist if you notice it: the market is too small and illiquid to scale up with, or the entire market will be saturated the next day. (Efficient Market Theory, learn about it) 8) Take everything I just taught you, and make a \"\"small investor newsletter\"\" website with subscribers. Online sites have low overhead costs.\"",
"title": ""
},
{
"docid": "f027ce814b88c3ba150778d55c32c992",
"text": "\"I'd answer it this way: What do you want to do? I'd say any amount is acceptable from as low as $100. When you look at the specific \"\"tree\"\" of investing paying $5 for a $100 seems unacceptable. However when observing the \"\"forest\"\" what does it matter if you \"\"waste\"\" $5 on a commission? Your friends (and maybe you) probably waste more than $5 multiple times per day. For them buying a latte might empower them, if buying another share of HD, for a similar cost, empowers you than do it. In the end who will be better off? Studies show that the more important part of building a significant investment portfolio is actually doing it. Rate of return and the cost of investing pales in comparison to actually doing it. How many of your peers are doing similar things? You are probably in very rare company. If it makes you happy, it is a wonderful way to spend your money.\"",
"title": ""
},
{
"docid": "a3a113c0cd742cb216d9b5d5517d7205",
"text": "\"You will invest 1000£ each month and the transaction fee is 10£ per trade, so buying a bunch of stocks each month would not be wise. If you buy 5 stocks, then transaction costs will eat up 5% of your investment. So if you insist on taking this approach, you should probably only buy one or two stocks a month. It sounds like you're interested in active investing & would like a diversified portfolio, so maybe the best approach for you is Core & Satellite Portfolio Management. Start by creating a well diversified portfolio \"\"core\"\" with index funds. Once you have a solid core, make some active investment decisions with the \"\"satellite\"\" portion of the portfolio. You can dollar cost average into the core and make active bets when the opportunity arises, so you're not killed by transaction fees.\"",
"title": ""
},
{
"docid": "e67ccb30c3a5db2fe0d4415199808c70",
"text": "You should invest in that with the best possible outcome. Right now that is in yourself. Your greatest wealth building tool, at this point, is your future income. As such anything you can do to increase your earnings potential. For some that might mean getting an engineering degree, for others it might mean starting a small business. For some it is both obtaining a college degree and learning about business. A secondary thing to learn about would be personal finance. I would hold off on stocks, at this time, until you get your first real job and you have an emergency fund in place. Penny stocks are worthless, forget about them. Bonds have their place, but not at this point in your life. Saving up for college and obtaining a quality education, debt free, should be your top priority. Saving up for emergencies is a secondary priority, but only after you have more than enough money to fund your college education. You can start thinking about retirement, but you need a career to help fund your savings plan. Put that off until you have such a career. Investing in stocks, at this juncture, is a bit foolish. Start a career first. Any job you take now should be seen as a step towards a larger goal and should not define who you are.",
"title": ""
},
{
"docid": "beb115f4b44422283c389edc50a1b8ed",
"text": "Congrats! That's a solid accomplishment for someone who is not even in college yet. I graduated college 3 years ago and I wish I was able to save more in college than I did. The rule of thumb with saving: the earlier the better. My personal portfolio for retirement is comprised of four areas: Roth IRA contributions, 401k contributions, HSA contributions, Stock Market One of the greatest things about the college I attended was its co-op program. I had 3 internships - each were full time positions for 6 months. I strongly recommend, if its available, finding an internship for whatever major you are looking into. It will not only convince you that the career path you chose is what you want to do, but there are added benefits specifically in regards to retirement and savings. In all three of my co-ops I was able to apply 8% of my paycheck to my company's 401k plan. They also had matching available. As a result, my 401k had a pretty substantial savings amount by the time I graduated college. To circle back to your question, I would recommend investing the money into a Roth IRA or the stock market. I personally have yet to invest a significant amount of money in the stock market. Instead, I have been maxing out my retirement for the last three years. That means I'm adding 18k to my 401k, 5.5k to my Roth, and adding ~3k to my HSA (there are limits to each of these and you can find them online). Compounded interest is amazing (I'm just going to leave this here... https://www.moneyunder30.com/power-of-compound-interest).",
"title": ""
},
{
"docid": "a8a7ff7c2d3aec7c39cd474e4c611c2d",
"text": "The answer may be a compromise... if your goal is to make bonds a larger part of your portfolio, sell both stocks and bonds in a 4:1 ratio. or (3:1 or whatever works for you) Also, just as you dollar-cost-average purchases of securities, you can do the same thing on the way out. Plan your sales and spread them over a period of time, especially if you have mutual funds.",
"title": ""
},
{
"docid": "b706705ca32fdc395379f7745cec687c",
"text": "There is no ideal number of stocks you should own. There are several factors you should consider though. First, how actively do you want to manage your portfolio. If you want to be very active then the number of stocks you own should be based on the amount of time you have to research the company, by reading SEC filings and listening to conference calls, so you are not surprised when the company reports every quarter. If you don't want to be very active, then you are better off buying solid companies that have a good reputation and good history of performance. Second, you should decide how much risk you are willing to take. If you have $10,000 that you can afford to lose, then you can put your money into more risky stocks or into fewer stocks, which could potentially have a higher return. If you want your $10,000 grow (or lose) with the market, better off, again, going with the good rep and history stocks or a variety of stocks. Third, this goes along with your risk to some extent, but you should consider if you are looking for short term or long term gains? If you are looking to put your money in the market for the short term, you will probably be looking at fewer stocks with more money in each. If you are looking for long term, you will be around 5 stocks that you swap as they reach goals you set out for each stock. In my opinion, and I am not a financial expert, I like to stay at around 5 companies, mostly for the fact that it is about the ideal number of companies to keep track of.",
"title": ""
},
{
"docid": "6ce8759db51b2ce834797cbbd3ed6464",
"text": "\"IMHO It is definitively not too early to start learning and thinking about personal finances and also about investing. If you like to try stock market games, make sure to use one that includes a realistic fee structure simulation as well - otherwise there'll be a very unpleasant awakening when switching to reality... I'd like to stress the need for low fees with the brokerage account! Sit down and calculate how much fees different brokers take for a \"\"portfolio\"\" of say, 1 ETF, 1 bond, 1 share of about $500 or $1000 each (e.g. order fee, annual fee, fee for paying out interest/dividend). In my experience, it is good if you can manage to make the first small investing steps before starting your career. Real jobs tend to need lots of time (particularly at the beginning), so time to learn investing is extremely scarce right at the time when you for the first time in your life earn money that could/should be invested. I'm talking of very slowly starting with a single purchase of say an ETF, a single bond next time you have saved up a suitable amount of toy money, then maybe a single share (and essentially not doing anything with them in order to avoid further fees). While such a \"\"portfolio\"\" is terrible with respect to diversification and relative fees*, this gives you the possibility to learn the procedures, to see how the fees cut in, what to do wrt taxes etc. This is why I speak about toy money and why I consider this money an investment in education. * An order fee of, say, $10 on a $500 position are terrible 4% (2 x $10) for buying + selling - depending on your local taxes, that would be several years of dividend yield for say some arbitrary Dow Jones ETF. Nevertheless, purchase + sale together are less than 3 cinema tickets.\"",
"title": ""
},
{
"docid": "b814e2e4f943f77864610939f302e619",
"text": "\"I find it interesting that you didn't include something like [Total Bond Market](http://stockcharts.com/freecharts/perf.html?VBMFX), or [Intermediate-Term Treasuries](http://stockcharts.com/freecharts/perf.html?VBIIX), in your graphic. If someone were to have just invested in the DJI or SP500, then they would have ignored the tenants of the Modern Portfolio Theory and not diversified adequately. I wouldn't have been able to stomach a portfolio of 100% stocks, commodities, or metals. My vote goes for: 1.) picking an asset allocation that reflects your tolerance for risk (a good starting point is \"\"age in bonds,\"\" i.e. if you're 30, then hold 30% in bonds); 2.) save as if you're not expecting annualized returns of %10 (for example) and save more; 3.) don't try to pick the next winner, instead broadly invest in the market and hold it. Maybe gold and silver are bubbles soon to burst -- I for one don't know. I don't give the \"\"notion in the investment community\"\" much weight -- as it always is, someday someone will be right, I just don't know who that someone is.\"",
"title": ""
},
{
"docid": "8aa5390be2d2d6ec9cad8daaab54faee",
"text": "Buddy I know how a student investment club works, my school had a great one but thanks for the explanation. Doesn't change the fact that a valuation by some college kids is meaningless, but you wouldn't understand that because you're still a 20 year old kid with no industry experience. I love that you're bragging about your college to someone who has already graduated and made it into the industry, shows you really have no accomplishments to speak of.",
"title": ""
},
{
"docid": "100c16089b98c6da4bdec9e3d52ba91b",
"text": "\"The raw question is as follows: \"\"You will be recommending a purposed portfolio to an investment committee (my class). The committee runs a foundation that has an asset base of $4,000,000. The foundations' dual mandates are to (a) preserve capital and (b) to fund $200,000 worth of scholarships. The foundation has a third objective, which is to grow its asset base over time.\"\" The rest of the assignment lays out the format and headings for the sections of the presentation. Thanks, by the way - it's an 8 week accelerated course and I've been out sick for two weeks. I've been trying to teach myself this stuff, including the excel calculations for the past few weeks.\"",
"title": ""
}
] |
fiqa
|
e08c998eb940cda76703ac0e18c3e2e6
|
Stock Exchange price target
|
[
{
"docid": "769dc868f0dcee762401d804833ea80f",
"text": "\"Price targets aren't set day to day, because of market fluctuations are so high from day to day. But in their stock recommendations, brokerage firms will often set price targets for \"\"one year out.\"\" These targets aren't set in stone, so use them at your risk.\"",
"title": ""
}
] |
[
{
"docid": "728e392d990ee0646c3ba5fc4c399afe",
"text": "\"You might consider learning how the \"\"matching\"\" or \"\"pairing\"\" system in the market operates. The actual exchange only happens when both a buyer and a seller overlap their respect quotes. Sometimes orders \"\"go to market\"\" for a particular volume. Eg get me 10,000 Microsoft shares now. which means that the price starts at the current lowest seller, and works up the price list until the volume is met. Like all market it trades, it has it's advantages, and it's dangers. If you are confident Microsoft is going to bull, you want those shares now, confident you'll recoup the cost. Where if you put in a priced order, you might get only none or some shares. Same as when you sell. If you see the price (which is the price of the last completed \"\"successful\"\" trade. and think \"\"I'm going to sell 1000 shares\"\". then you give the order to the market (or broker), and then the same as what happened as before. the highest bidder gets as much as they asked for, if there's still shares left over, they go to the next bidder, and so on down the price... and the last completed \"\"successful\"\" trade is when your last sale is made at the lowest price of your batch. If you're selling, and selling 100,000 shares. And the highest bidder wants 1,000,000 shares you'll only see the price drop to that guys bid. Why will it drop (off the quoted price?). Because the quoted price is the LAST sale, clearly if there's someone still with an open bid on the market...then either he wants more shares than were available (the price stays same), or his bid wasn't as high as the last bid (so when you sale goes through, it will be at the price he's offering). Which is why being able to see the price queues is important on large traders. It is also why it can be important put stops and limits on your trades, een through you can still get gapped if you're unlucky. However putting prices (\"\"Open Orders\"\" vs \"\"(at)Market Orders\"\") can mean that you're sitting there waiting for a bounce/spike while the action is all going on without you). safer but not as much gain (maybe ;) ) that's the excitement of the market, for every option there's advantages...and risks... (eg missing out) There are also issues with stock movement, shadowing, and stop hunting, which can influence the price. But the stuff in the long paragraphs is the technical reasons.\"",
"title": ""
},
{
"docid": "f34458f083eae68c8949828e68620000",
"text": "A stock market is just that, a market place where buyers and sellers come together to buy and sell shares in companies listed on that stock market. There is no global stock price, the price relates to the last price a stock was traded at on a particular stock market. However, a company can be listed on more than one stock exchange. For example, some Australian companies are listed both on the Australian Stock Exchange (ASX) and the NYSE, and they usually trade at different prices on the different exchanges. Also, there is no formula to determine a stock price. In your example where C wants to buy at 110 and B wants to sell at 120, there will be no sale until one or both of them decides to change their bid or offer to match the opposite, or until new buyers and/or sellers come into the market closing the gap between the buy and sell prices and creating more liquidity. It is all to do with supply and demand and peoples' emotions.",
"title": ""
},
{
"docid": "6ff491bfc4b2f438ed6236f9c30b6548",
"text": "\"I've alway thought that it was strange, but the \"\"price\"\" that gets quoted on a stock exchange is just the price of the last transaction. The irony of this definition of price is that there may not actually be any more shares available on the market at that price. It's also strange to me that the price isn't adjusted at all for the size of the transaction. A transaction of just 1 share will post a new price even if just seconds earlier 100,000 shares traded for a different price. (Ok, unrealistic example, but you get my point.) I've always believed this is an odd way to describe the price. Anyway, my diatribe here is supposed to illustrate the point that the fluctuations you see in price don't really reflect changing valuations by the stock-owning public. Each post in the exchange maintains a book of orders, with unmatched buy orders on one side and unmatched sell orders on the other side. If you go to your broker and tell him, \"\"fill my order for 50,000 shares at market price\"\", then the broker won't fill you 50,000 shares at .20. Instead, he'll buy the 50 @ .22, then 80 @ .23, then 100 @ .30, etc. Because your order is so large compared to the unmatched orders, your market order will get matched a bunch of the unmatched orders on the sell side, and each match will notch the posted price up a bit. If instead you asked the broker, \"\"open a limit order to buy 50000 shares at .20\"\", then the exchange will add your order to the book: In this case, your order likely won't get filled at all, since nobody at the moment wants to sell at .20 and historically speaking it's unlikely that such a seller will suddenly appear. Filling large orders is actually a common problem for institutional investors: http://www.businessweek.com/magazine/content/05_16/b3929113_mz020.htm http://www.cis.upenn.edu/~mkearns/papers/vwap.pdf (Written by a professor I had in school!)\"",
"title": ""
},
{
"docid": "7602775b21de86391db58f419dad795a",
"text": "Since I've been doing this since late 03 I have colo machines in Chicago and NYC, and have direct exchange data feeds etc. I mentioned in a prior post though, for someone starting out on algorithmic trading, I'd recommend Nanex for tick data and Interactive Brokers for your brokerage account. IB has a robust and easy to use API. It won't let you do the most low latency stuff bc you can't colo at the exchange and have to clear through their order management systems but if you are looking at opportunities that exist in the market in excess of 50ms it's probably a good place to start. If not, go Lightspeed imo, but that'll cost you on the colo/data a lot more.",
"title": ""
},
{
"docid": "fe41bd844ccdd880ae9b1f59abe82487",
"text": "\"Google Finance certainly has data for Tokyo Stock Exchange (called TYO on Google) listings. You could create a \"\"portfolio\"\" consisting of the stocks you care about and then visit it once per day (or write a script to do so).\"",
"title": ""
},
{
"docid": "fd1d8777b2b595b63e3e30e5f64116f0",
"text": "December, 8, 2011 ( 01:40 pm) :- Nifty breached the 5100 level with in the 1 hour of trade but after the announce of our country also affecting by the European crisis disapproval of the FDI in multi brands also made and session of market is in the profit booking mode. Nifty facing strong resistance at 5150 - 5180 under this Nifty trend keep weak for a down target of 4940 level. Banking index continuously providing good returns everyday with the really of SBI, AXIS & ICICI Bank.",
"title": ""
},
{
"docid": "99d8dbc7258bcc02dbd72eb71e62cbbe",
"text": "There isn't a single universal way to reference a stock, there are 4 major identifiers with many different flavours of exchange ticker (see xkcd:Standards) I believe CUSIPs and ISINs represent a specific security rather than a specific listed instrument. This means you can have two listed instruments with one ISIN but different SEDOLs because they are listed in different places. The difference is subtle but causes problems with settlement Specifically on your question (sorry I got sidetracked) take a look at CQS Symbol convention to see what everything means",
"title": ""
},
{
"docid": "316e57e2c474493f63b6f03c78c7bfcf",
"text": "What you should compare is SPX, SPY NAV, and ES fair value. Like others have said is SPX is the index that others attempt to track. SPY tracks it, but it can get a tiny bit out of line as explained here by @Brick . That's why they publish NAV or net asset value. It's what the price should be. For SPY this will be very close because of all the participants. The MER is a factor, but more important is something called tracking error, which takes into account MER plus things like trading expenses plus revenue from securities lending. SPY (the few times I've checked) has a smaller tracking error than the MER. It's not much of a factor in pricing differences. ES is the price you'll pay today to get SPX delivered in the future (but settled in cash). You have to take into account dividends and interest, this is called fair value. You can find this usually every morning so you can compare what the futures are saying about the underlying index. http://www.cnbc.com/pre-markets/ The most likely difference is you're looking at different times of the day or different open/close calculations.",
"title": ""
},
{
"docid": "16fc45daadb1b77449a00539b723e29d",
"text": "There are several Excel spreadsheets for downloading stock quotes (from Yahoo Finance), and historical exchange rates at http://investexcel.net/financial-web-services-kb",
"title": ""
},
{
"docid": "92c9301f6148be2b3f14b088581243d3",
"text": "Just to clarify Short Team Goals & Long Term Goals... Long Term goals are for something in future, your retirement fund, Children’s education etc. Short Term goals are something in the near future, your down payment for car, house, and holiday being planned. First have both the long and short terms goals defined. Of Couse you would need to review both these goals on a ongoing basis... To meet the short term goals you would need to make short term investments. Having arrived at a short term goal value, you would now need to make a decision as to how much risk you are willing [also how much is required to take] to take in order to meet your goal. For example if you goal is to save Rs 100,000 by yearend for the car, and you can easily set aside Rs 8,000 every month, you don't really need to take a risk. A simple Term / Fixed Deposit would suffice you to meet your goal. On the other hand if you can only save Rs 6,000 a year, then you would need to invest this into something that would return you around 35%. You would now need to take a risk. Stocks market is one option, there are multiple types of trades [day trades, shorts, options, regular trades] that one can do ... however the risk can wipe out even your capital. As you don't know these types of investments, suggest you start with dummy investing using quite a few free websites, MoneyControl is one such site, you get pseudo money and can buy sell and see how things actually move. This should teach you something about making quick gains or losses without actually gaining or loosing real money. Once you reach some confidence level, you can start trading using real money by opening a trading account almost every other bank in India offers online trading linked to bank account. Never lose sight of risk appetite, and revise if every now and then. When you don't have dependents, you can easily risk money for potential bumper, however after you have other commitments, you may want to tone down... Edit: http://moneybhai.moneycontrol.com/moneybhai-rules.html is one such site, there are quite a few others as well that offer you to trade on virtual money. Try this for few months and you will understand whether you are making right decissions or not.",
"title": ""
},
{
"docid": "8accfe15c696a664fe3605ddf9390c52",
"text": "Most likely economics then. What I'm looking to gain is an understanding of how the market works so that I may take that knowledge and use it to make investments, buy stocks, or possibly start a business. I have a very large amount of time between my studies for my classes and I think it would be a waste to not learn these tools (to give you a reason for my interest in this).",
"title": ""
},
{
"docid": "60955967a9968054fd87c5d6a11d7880",
"text": ".on intraday basis in stock market sensex start its trading at 15878, up 64 points, and Nifty is at 4752, up 18 points.today trend is expecting volatile. 1-Buy AANJANEYA @ 510 , stoploss 500 , target 518 - 526 - 538 – 550. 2-HUL buy above 410 with the target of 414 with the stop loss of 406.50.",
"title": ""
},
{
"docid": "ba9683a3eaa2a07d63ac4edb4a7b5fee",
"text": "The principle of demand-supply law will not work if spoofing (or layering, fake order) is implemented. However, spoofing stocks is an illegal criminal practice monitored by SEC. In stock market, aggressive buyer are willing to pay for a higher ask price pushing the price higher even if ask size is considerably larger than bid size, especially when high growth potential with time is expected. Larger bids may attract more buyers, further perpetuating a price increase (positive pile-on effect). Aggressive sellers are willing to accept a lower bid price pushing the price lower even if ask size is considerably smaller than bid size, when a negative situation is expected. Larger asks may attract more sellers, further perpetuating a price fall (negative pile-on effect). Moreover, seller and buyers considers not only price but also size of shares in their decision-making process, along with marker order and/or limit order. Unlike limit order, market order is not recorded in bid/ask size. Market order, but not limit order, immediately affects the price direction. Thus, ask/bid sizes alone do not give enough information on price direction. If stocks are being sold continuously at the bid price, this could be the beginning of a downward trend; if stocks are being sold continuously at the ask price, this could be the beginning of a upward trend. This is because ask price is always higher than bid price. In all the cases, both buyers and sellers hope to make a profit in a long-term and short-term view",
"title": ""
},
{
"docid": "cfd44d1b8f2c9b7a99bb5efdee49d5a1",
"text": "The definition of market cap is exactly shares oustanding * share price, so something is wrong here. It seems that the share price is expressed in pence rather pounds. There's a note at the bottom: Currency in GBp. Note the 'p' rather than 'P'. So the share price of '544' is actually 544p, i.e. £5.44. However it's not really clear just from the annotations which figures are in pence and which are actually in pounds. It seems that the market cap is in pounds but the enterprise value is in pence, given that 4.37 billion is about the right value in pounds whereas 441 billion only really makes sense if expressed in pence. It looks like they actually got the enterprise value wrong by a factor of 100. Perhaps their calculation treated the share price as being denominated in pounds rather than pence.",
"title": ""
},
{
"docid": "334ba78acb74a04355fe82d552a4d003",
"text": "Saxo Bank offers direct access to Athens Stock Exchange. Interactive Brokers is your next best bet, and as you probably already noticed, they do not have a free platform. They are open to US and non-US citizens. Although they do not currently have direct exposure to individual companies on the Athens Stock Exchange, the various european exchanges they do provide direct market access for will give a lot of exposure. There are a few Greek companies that trade on non-Greek stock exchanges, if you want exposure. There are also Greek ETFs which bundle several companies together or try to replicate Greek company indices.",
"title": ""
}
] |
fiqa
|
1bd1a25c64d4ac4ee613eb27a80932f3
|
How can I calculate the volatility(standard deviation) of a stock price? and/or ROI (return on investment) of a stock?
|
[
{
"docid": "2737555cec11157babb0aff5bd578d75",
"text": "\"the \"\"how\"\" all depends on your level of computer savvy. Are you an Excel spreadsheet user or can you write in programming languages such as python? Either approach have math functions that make the calculation of ROI and Volatility trivial. If you're a python coder, then look up \"\"pandas\"\" (http://pandas.pydata.org/) - it handles a lot of the book-keeping and downloading of end of day equities data. With a dozen lines of code, you can compute ROI and volatility.\"",
"title": ""
},
{
"docid": "a7a498ff5b209063fefb4cac4f013b83",
"text": "Use the Black-Scholes formula. If you know the current price, an options strike price, time until expiration, and risk-free interest rate, then knowing the market price of the option will tell you what the market's estimation of the volatility is. This does rely on a few assumptions, such as Gaussian random walk, but those are reasonable assumptions for most stocks. You can also get a list of past stock prices, put them in Excel, and ask Excel to calculate the standard deviation with stdev.s(), but that gives you the past volatility. The market's estimate of future volatility is more relevant.",
"title": ""
},
{
"docid": "58c92377c44bc8c6287bf7235b8014a8",
"text": "ROI and volatility should be calculated over a representative period of time, for example 3 or 5 years, depending on data availability. The ROI is simple, for example, over 5 years:- For the 5 year annualised volatility you can refer to the ESMA SRRI methodology. Box 1 (page 3) m is the annualisation factor. Stock volatility calculated from weekly data should not be compared with volatility calculated from monthly data. Also, for reference: How to Calculate your Portfolio's Rate of Return",
"title": ""
}
] |
[
{
"docid": "427040f8683b2a11bdd39178e27642de",
"text": "My level of analysis is not quite that advanced. Can you share what that would show and why that particular measure is the one to use? I've run regression on prices between the two. VIX prices have no correlation to the s&p500 prices. Shouldn't true volatility result in the prices (more people putting options on the VIX during the bad times and driving that price up) correlate to the selloff that occurs within the S&P500 during recessions and other events that would cause significant or minor volatility? My r2 showed no significance within a measurement of regression within Excel. But, *gasp* I could be wrong, but would love to learn more about better ways of measurement :)",
"title": ""
},
{
"docid": "e708f9f70f348131c33139a46aa03b34",
"text": "One thing to keep in mind when calculating P/E on an index is that the E (earnings) can be very close to zero. For example, if you had a stock trading at $100 and the earnings per share was $.01, this would result in a P/E of 10,000, which would dominate the P/E you calculate for the index. Of course negative earnings also skew results. One way to get around this would be to calculate the average price of the index and the earnings per share of the index separately, and then divide the average price of the index by the average earnings per share of the index. Different sources calculate these numbers in different ways. Some throw out negative P/Es (or earnings per share) and some don't. Some calculate the price and earnings per share separate and some don't, etc... You'll need to understand how they are calculating the number in order to compare it to PEs of individual companies.",
"title": ""
},
{
"docid": "17f38c31a0e4926f6d8060a3b997e667",
"text": "\"Standard deviation from Wikipedia : In statistics and probability theory, the standard deviation (represented by the Greek letter sigma, σ) shows how much variation or dispersion from the average exists.1 A low standard deviation indicates that the data points tend to be very close to the mean (also called expected value); a high standard deviation indicates that the data points are spread out over a large range of values. In the case of stock returns, a lower value would indicate less volatility while a higher value would mean more volatility, which could be interpreted as high much change does the stock's price go through over time. Mean would be interpreted as if all the figures had to be the same, what would they be? So if a stock returns 10% each year for 3 years in a row, then 10% would be the mean or average return. Now, it is worth noting that there are more than a few calculations that may be done to derive a mean. First, there is the straight forward sum and division by the number of elements idea. For example, if the returns by year were 0%, 10%, and 20% then one may take the sum of 30% and divide by 3 to get a simple mean of 10%. However, some people would rather look at a Compound Annual Growth Rate which in this case would mean multiplying the returns together so 1*(1+.1)*(1+.2)=1.1*1.2=1.32 or 32% since there is some compounding here. Now, instead of dividing a cubic root is taken to get approximately 9.7% average annual return that is a bit lower yet if you compound it over 3 years it will get up to 32% as 10% compounded over 3 years would be 33.1% as (1.1)^3=1.331. Sharpe Ratio from Investopedia: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Thus, this is a way to think about given the volatility how much better did the portfolio do than the 10 year bond. R-squared, Alpha and Beta: These are all around the idea of \"\"linear regression\"\" modelling. The idea is to take some standard like say the \"\"S & P 500\"\" in the case of US stocks and see how well does the portfolio follow this and what if one were to use a linear model are the multipliers and addition components to it. R-squared can be thought of it as a measure as to how good is the fit on a scale of 0 to 1. An S & P 500 index fund may well have an R-squared of 1.00 or 0.99 to the index as it will track it extremely closely while other investments may not follow that well at all. Part of modern portfolio theory would be to have asset classes that move independently of each other and thus would have a lower R-squared so that the movement of the index doesn't indicate how an investment will do. Now, as for alpha and beta, do you remember the formula for a line in slope-intercept form, where y is the portfolio's return and x is the index's return: y=mx+b In this situation m is beta which is the multiple of the return, and b is the alpha or how much additional return one gets without the multiple. Going back to an index fund example, m will be near 1 and b will be near 0 and there isn't anything being done and so the portfolio's return computed based on the index's return is simply y=x. Other mutual funds may try to have a high alpha as this is seen as the risk-free return as there isn't the ups and downs of the market here. Other mutual funds may go for a high beta so that there is volatility for investors to handle.\"",
"title": ""
},
{
"docid": "4e0a75beec67e1583279b4a0d8dae31a",
"text": "\"Certainly no one knows in advance how much a stock is going to swing around. However, there are measures of how much it has swung around in the past, and there are people who will estimate the probability. First of all, there's a measure of an individual stock's volatility, commonly referred to as \"\"beta\"\". A stock with a beta of 1 tends to rise and fall about as much as the market at large. A stock with a beta of 2, in the meantime, would rise 10% when the market is up 5%. These are, of course, historical averages. See Wikipedia: http://en.wikipedia.org/wiki/Beta_(finance) Secondly, you can get an implied measure of volatility expectations by looking at options pricing. If a stock is particularly volatile, the chance of a big price move will be baked into the price of the stock options. (Note also that other things affect options pricing, such as the time value of money.) For an options-based measure of the volatility of the whole market, see the Volatility Index aka the \"\"Fear Gauge\"\", VIX. Wikipedia: http://en.wikipedia.org/wiki/VIX Chart: http://finance.yahoo.com/q?s=%5EVIX Looking at individual stocks as a group (and there's an oxymoron for you), individual stocks are definitely much more likely to have big moves than the market. Besides Netflix, consider the BP oil spill, or the Tokyo Electric Power Company's Fukushima incident (yow!). I don't have any detailed statistics on quantitatively how much, mind you, but in application, a standard piece of advice says not to put more than 5% of your portfolio in a single company's stock. Diversification protects you. (Alternatively, if you're trying to play Mr. Sophisticated Stock-Picker instead of just buying an index fund, you can also buy insurance through stock options: hedging your bets. Naturally, this will eat up part of your returns if your pick was a good one).\"",
"title": ""
},
{
"docid": "efdd180becfba8054bd6540931d916d8",
"text": "\"Volume is really only valuable when compared to some other volume, either from a historical value, or from some other stock. The article you linked to doesn't provide specific numbers for you to evaluate whether volume is high or low. Many people simply look at the charts and use a gut feel for whether a day's volume is \"\"high\"\" or \"\"low\"\" in their estimation. Typically, if a day's volume is not significantly taller than the usual volume, you wouldn't call it high. The same goes for low volume. If you want a more quantitative approach, a simple approach would be to use the normal distribution statistics: Calculate the mean volume and the standard deviation. Anything outside of 1.5 to 2.0 standard deviations (either high or low) could be significant in your analysis. You'll need to pick your own numbers (1.5 or 2.0 are just numbers I pulled out of thin air.) It's hard to read anything specific into volume, since for every seller, there's a buyer, and each has their reasons for doing so. The article you link to has some good examples of using volume as a basis for strengthening conclusions drawn using other factors.\"",
"title": ""
},
{
"docid": "c41e61f063420043ec5dd6378082c882",
"text": "\"As I understand it, Implied Volatility represents the expected gyrations of an options contract over it's lifetime. No, it represents that expected movement of the underlying stock, not the option itself. Yes, the value of the option will move roughly in the same direction the value of the stock, but that's not what IV is measuring. I even tried staring at the math behind the Options pricing model to see if that could make more sense for me but that didn't help. That formula is correct for the Black-Scholes model - and it is not possible (or at least no one has done it yet) to solve for s to create a closed-form equation for implied volatility. What most systems do to calculate implied volatility is plug in different values of s (standard deviation) until a value for the option is found that matches the quoted market value ($12.00 in this example). That's why it's called \"\"implied\"\" volatility - the value is implied from market prices, not calculated directly. The thing that sticks out to me is that the \"\"last\"\" quoted price of $12 is outside of the bid-ask spread of $9.20 to $10.40, which tells me that the underlying stock has dropped significantly since the last actual trade. If the Implied Vol is calculated based on the last executed trade, then whatever algorithm they used to solve for a volatility that match that price couldn't find a solution, which then choose to show as a 0% volatility. In reality, the volatility is somewhere between the two neighbors of 56% and 97%, but with such a short time until expiry, there should be very little chance of the stock dropping below $27.50, and the value of the option should be somewhere around its intrinsic value (strike - stock price) of $9.18.\"",
"title": ""
},
{
"docid": "0c6d9c87fc60a8c5f72ee0140b593d35",
"text": "\"A stock, at its most basic, is worth exactly what someone else will pay to buy it right now (or in the near future), just like anything else of value. However, what someone's willing to pay for it is typically based on what the person can get from it. There are a couple of ways to value a stock. The first way is on expected earnings per share, most of would normally (but not always) be paid in dividends. This is a metric that can be calculated based on the most recently reported earnings, and can be estimated based on news about the company or the industry its in (or those of suppliers, likely buyers, etc) to predict future earnings. Let's say the stock price is exactly $100 right now, and you buy one share. In one quarter, the company is expected to pay out $2 per share in dividends. That is a 2% ROI realized in 3 months. If you took that $2 and blew it on... coffee, maybe, or you stuffed it in your mattress, you'd realize a total gain of $8 in one year, or in ROI terms an annual rate of 8%. However, if you reinvested the money, you'd be making money on that money, and would have a little more. You can calculate the exact percentage using the \"\"future value\"\" formula. Conversely, if you wanted to know what you should pay, given this level of earnings per share, to realize a given rate of return, you can use the \"\"present value\"\" formula. If you wanted a 9% return on your money, you'd pay less for the stock than its current value, all other things being equal. Vice-versa if you were happy with a lesser rate of return. The current rate of return based on stock price and current earnings is what the market as a whole is willing to tolerate. This is how bonds are valued, based on a desired rate of return by the market, and it also works for stocks, with the caveat that the dividends, and what you'll get back at the \"\"end\"\", are no longer constant as they are with a bond. Now, in your case, the company doesn't pay dividends. Ever. It simply retains all the earnings it's ever made, reinvesting them into doing new things or more things. By the above method, the rate of return from dividends alone is zero, and so the future value of your investment is whatever you paid for it. People don't like it when the best case for their money is that it just sits there. However, there's another way to think of the stock's value, which is it's more core definition; a share of the company itself. If the company is profitable, and keeps all this profit, then a share of the company equals, in part, a share of that retained earnings. This is very simplistic, but if the company's assets are worth 1 billion dollars, and it has one hundred million shares of stock, each share of stock is worth $10, because that's the value of that fraction of the company as divided up among all outstanding shares. If the company then reports earnings of $100 million, the value of the company is now 1.1 billion, and its stock should go up to $11 per share, because that's the new value of one ten-millionth of the company's value. Your ROI on this stock is $1, in whatever time period the reporting happens (typically quarterly, giving this stock a roughly 4% APY). This is a totally valid way to value stocks and to shop for them; it's very similar to how commodities, for instance gold, are bought and sold. Gold never pays you dividends. Doesn't give you voting rights either. Its value at any given time is solely what someone else will pay to have it. That's just fine with a lot of people right now; gold's currently trading at around $1,700 an ounce, and it's been the biggest moneymaker in our economy since the bottom fell out of the housing market (if you'd bought gold in 2008, you would have more than doubled your money in 4 years; I challenge you to find anything else that's done nearly as well over the same time). In reality, a combination of both of these valuation methods are used to value stocks. If a stock pays dividends, then each person gets money now, but because there's less retained earnings and thus less change in the total asset value of the company, the actual share price doesn't move (much). If a stock doesn't pay dividends, then people only get money when they cash out the actual stock, but if the company is profitable (Apple, BH, etc) then one share should grow in value as the value of that small fraction of the company continues to grow. Both of these are sources of ROI, and both are seen in a company that will both retain some earnings and pay out dividends on the rest.\"",
"title": ""
},
{
"docid": "60c9eac57d227944f7dd9dfc37899a80",
"text": "\"First, to mention one thing - better analysis calls for analyzing a range of outcomes, not just one; assigning a probability on each, and comparing the expected values. Then moderating the choice based on risk tolerance. But now, just look at the outcome or scenario of 3% and time frame of 2 days. Let's assume your investable capital is exactly $1000 (multiply everything by 5 for $5,000, etc.). A. Buy stock: the value goes to 103; your investment goes to $1030; net return is $30, minus let's say $20 commission (you should compare these between brokers; I use one that charges 9.99 plus a trivial government fee). B. Buy an call option at 100 for $0.40 per share, with an expiration 30 days away (December 23). This is a more complicated. To evaluate this, you need to estimate the movement of the value of a 100 call, $0 in and out of the money, 30 days remaining, to the value of a 100 call, $3 in the money, 28 days remaining. That movement will vary based on the volatility of the underlying stock, an advanced topic; but there are techniques to estimate that, which become simple to use after you get the hang of it. At any rate, let's say that the expected movement of the option price in this scenario is from $0.40 to $3.20. Since you bought 2500 share options for $1000, the gain would be 2500 times 2.8 = 7000. C. Buy an call option at 102 for $0.125 per share, with an expiration 30 days away (December 23). To evaluate this, you need to estimate the movement of the value of a 102 call, $2 out of the money, 30 days remaining, to the value of a 102 call, $1 in the money, 28 days remaining. That movement will vary based on the volatility of the underlying stock, an advanced topic; but there are techniques to estimate that, which become simple to use after you get the hang of it. At any rate, let's say that the expected movement of the option price in this scenario is from $0.125 to $ 1.50. Since you bought 8000 share options for $1000, the gain would be 8000 times 1.375 = 11000. D. Same thing but starting with a 98 call. E. Same thing but starting with a 101 call expiring 60 days out. F., ... Etc. - other option choices. Again, getting the numbers right for the above is an advanced topic, one reason why brokerages warn you that options are risky (if you do your math wrong, you can lose. Even doing that math right, with a bad outcome, loses). Anyway you need to \"\"score\"\" as many options as needed to find the optimal point. But back to the first paragraph, you should then run the whole analysis on a 2% gain. Or 5%. Or 5% in 4 days instead of 2 days. Do as many as are fruitful. Assess likelihoods. Then pull the trigger and buy it. Try these techniques in simulation before diving in! Please! One last point, you don't HAVE to understand how to evaluate projected option price movements if you have software that does that for you. I'll punt on that process, except to mention it. Get the general idea? Edit P.S. I forgot to mention that brokers need love for handling Options too. Check those commission rates in your analysis as well.\"",
"title": ""
},
{
"docid": "0a7f714f0a3b50be1430a11363a34698",
"text": "Aswath Damodaran's [Investment Valuation 3rd edition](http://www.amazon.com/Investment-Valuation-Techniques-Determining-University/dp/1118130731/ref=sr_1_12?ie=UTF8&qid=1339995852&sr=8-12&keywords=aswath+damodaran) (or save money and go with a used copy of the [2nd edition](http://www.amazon.com/gp/offer-listing/0471414905/ref=dp_olp_used?ie=UTF8&condition=used)) He's a professor at Stern School of Business. His [website](http://pages.stern.nyu.edu/~adamodar/) and [blog](http://aswathdamodaran.blogspot.com/) are good resources as well. [Here is his support page](http://pages.stern.nyu.edu/~adamodar/New_Home_Page/Inv3ed.htm) for his Investment Valuation text. It includes chapter summaries, slides, ect. If you're interested in buying the text you can get an idea of what's in it by checking that site out.",
"title": ""
},
{
"docid": "9ee6ef014bea7ddd8fbdc6c5770d5a80",
"text": "For implied volatility it is okey to use Black and scholes but what to do with the historical volatility which carry the effect of past prices as a predictor of future prices.And then precisely the conditional historical volatility.i suggest that you must go with the process like, for stock returns 1) first download stock prices into excel sheet 2) take the natural log of (P1/po) 3) calculate average of the sample 4) calculate square of (X-Xbar) 5) take square root of this and you will get the standard deviation of your required data.",
"title": ""
},
{
"docid": "6360e82fca576b1e4ac690aac5a37829",
"text": "\"I looked at data from Sept 2010 to present: Standard deviation is what shows the spread shape of returns over time, and it meanS that about 2/3 of the time, AAPL return was within +/- 1.65 higher/lower than the daily average return which was .21 %. Not sure where to go with this except to suggest that in fact, AAPL is more volatile than the S&P and even another random tech company. With time, I'd probably come up with a list of stock more volatile. I know that when I look at a list of stocks I track on Yahoo, there are always a few that are just as volatile on a given day. Excel makes the above analysis easy to do for a given stock, and it's actually an interesting exercise, at least for me. Disclaimer - the shape of stock returns is not a bell curve, and STdev is just a best fit. Edit - given more time to tinker on excel, it would be interesting to see how the stock's volatility tracked over the years, did it increase or does it feel that way due to the high price? A $20 swing on a $600 stock is the same as a $2 swing on a $60 stock, yet \"\"up $20\"\" sounds huge.\"",
"title": ""
},
{
"docid": "53b6b1913a3f7ad27e53d3412cdfb93b",
"text": "\"The key to evaluating book value is return on equity (ROE). That's net profit divided by book value. The \"\"value\"\" of book value is measured by the company's ROE (the higher the better). If the stock is selling below book value, the company's assets aren't earning enough to satisfy most investors. Would you buy a CD that was paying, say two percentage points below the going rate for 100 cents on the dollar? Probably not. You might be willing to buy it only by paying 2% less per year, say 98 cents on the dollar for a one year CD. The two cent discount from \"\"book value\"\" is your compensation for a low \"\"interest\"\" rate.\"",
"title": ""
},
{
"docid": "ad95ac2efa8c6f348e8f9de9c1bdc83f",
"text": "Risk and return always go hand by hand.* Risk is a measure of expected return volatility. The best investment at this stage is a good, easy to understand but thorough book on finance. *Applies to efficient markets only.",
"title": ""
},
{
"docid": "83ee753bf0e789e557df6966e4cfcbc9",
"text": "You could take these definitions from MSCI as an example of how to proceed. They calculate price indices (PR) and total return indices (including dividends). For performance benchmarks the net total return (NR) indices are usually the most relevant. In your example the gross total return (TR) is 25%. From the MSCI Index Defintions page :- The MSCI Price Indexes measure the price performance of markets without including dividends. On any given day, the price return of an index captures the sum of its constituents’ free float-weighted market capitalization returns. The MSCI Total Return Indexes measure the price performance of markets with the income from constituent dividend payments. The MSCI Daily Total Return (DTR) Methodology reinvests an index constituent’s dividends at the close of trading on the day the security is quoted ex-dividend (the ex-date). Two variants of MSCI Total Return Indices are calculated: With Gross Dividends: Gross total return indexes reinvest as much as possible of a company’s dividend distributions. The reinvested amount is equal to the total dividend amount distributed to persons residing in the country of the dividend-paying company. Gross total return indexes do not, however, include any tax credits. With Net Dividends: Net total return indexes reinvest dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties.",
"title": ""
},
{
"docid": "db43947227c383f6e6a93cc8c27cf938",
"text": "\"A minor tangent. One can claim the S&P has a mean return of say 10%, and standard deviation of say 14% or so, but when you run with that, you find that the actual returns aren't such a great fit to the standard bell curve. Market anomalies producing the \"\"100-year flood\"\" far more often than predicted over even a 20 year period. This just means that the model doesn't reflect reality at the tails, even if the +/- 2 standard deviations look pretty. This goes for the Black-Sholes (I almost abbreviated it to initials, then thought better, I actually like the model) as well. The distinction between American and European is small enough that the precision of the model is wider than the difference of these two option styles. I believe if you look at the model and actual pricing, you can determine the volatility of a given stock by using prices around the strike price, but when you then model the well out of money options, you often find the market creating its own valuation.\"",
"title": ""
}
] |
fiqa
|
0e80ece820258038472f83b2916507cc
|
Would selling significantly below market affect the value of a stock
|
[
{
"docid": "3f128f16f4e6731cf3b3b249ec63a4f4",
"text": "\"Assuming you are executing your order on a registered exchange by a registered broker, your order will be filled at the best bid price available. This is because brokers are legally obliged to get the best price available. For example, if the market is showing a bid of 49.99 and an offer of 50.01 and you submit an order to offer 1000 shares at 5.00, your order will be filled at 49.99. This is assuming the existing bids are for enough shares to fill all of the 1000 shares being offered. If the share you are offering lacks the necessary liquidity to fill the order - i.e., the 49.99 bid is for less than 1000 shares and the \"\"level two\"\" bids are not enough to fill the remaining shares, then the order would be posted in the market as an offer to sell the balance (1000 - shares filled at 49.99 and those filled at level two bids) at 5.00. I'm pretty sure that the scenario you are describing would be described as market manipulation and it would be against the law.\"",
"title": ""
},
{
"docid": "453c5779bab55a78a319c27698134930",
"text": "\"That amount of shares is too low to create \"\"ripples\"\" in the market. Usually you don't specify the price to sell the stock, unless you are personally on the floor trading the securities. And even then, with a volume of $50,000 it would just mean you threw away $45,000. For most people it would mean setting a $5 sell order, and the broker would understand that as \"\"sell this security so long the price is above $5\"\". When you get to the trading volume required to influence the price, usually you are also bound by some regulations banning some moves. One of them is the Pump and Dump, and even if you are suggesting the opposite, it might be in preparation of this scam. Also, the software used for High Frequency Trading (what all the cool kids[a] in Wall Street are using these days) employ advanced (and proprietary) heuristics to analyze the market and make thousands of trades in a short interval of time. On HTF's speed: Decisions happen in milliseconds, and this could result in big market moves without reason. So a human trader attempting to manipulate the market versus these HTF setups, would be like a kid in a tricile attempting to outrun the Flash (DC comics). [a] Cool Kid: not really kids, more like suited up sharks. Money-eating sharks.\"",
"title": ""
}
] |
[
{
"docid": "4e4095d42a193b554e513a451e5dc91b",
"text": "The company's value (which should be reflected in the share price) is not how much money it has in the bank, but something along the lines of 'how much money will it make between now and the end of times' (adjusted for time value of money and risk). So when you purchase a share of a company that has, say, little money in the bank, but expects to make 1M$ profit this year, 2M$ for the following 3 years, and say, nothing after, you are going to pay your fraction of 7M$ (minus some discount because of the risk involved). If now they announce that their profits were only 750k$, then people may think that the 2M$ are more likely to be 1.5M$, so the company's value would go to ~ 5M$. And with that, the market may perceive the company as more risky, because its profits deviated from what was expected, which in turn may reduce the company's value even further.",
"title": ""
},
{
"docid": "989448718845535e4a5840c6685f35e0",
"text": "Stock values are generally reflective of a company's overall potential; and to some extent investor confidence in the prospect of a continued growth of that potential. Sales over such a short period of time such as a single weekend do not noticeably impact a stock's valuation. A stock's value has more to do with whether or not they meet market expectations for sales over a certain period of time (generally 1 quarter of a year) than it does that they actually had sales (or profits) on any given day. Of course, catastrophic events, major announcements, or new product releases do sometimes cause significant changes in a stock's value. For this reason you will often see stocks have significant volatility in periods around earnings announcements, merger rumors, or when anything unexpected happens in the world that might benefit or hurt their potential sales and growth. But overall a normal, average weekend of sales is already built into the price of a stock during normal trading.",
"title": ""
},
{
"docid": "87a5f0d18bc2cb7e78e815104cdd5230",
"text": "TD will only sell the stock for you if there's a buyer. There was a buyer, for at least one transaction of at least one stock at 96.66. But who said there were more? Obviously, the stocks later fell, i.e.: there were not that many buyers as there were sellers. What I'm saying is that once the stock passed/reached the limit, the order becomes an active order. But it doesn't become the only active order. It is added to the list, and to the bottom of that list. Obviously, in this case, there were not enough buyers to go through the whole list and get to your order, and since it was a limit order - it would only execute with the limit price you put. Once the price went down you got out of luck. That said, there could of course be a possibility of a system failure. But given the story of the market behavior - it just looks like you miscalculated and lost on a bet.",
"title": ""
},
{
"docid": "9f94ab28cf420d279e87cabb6029f65c",
"text": "In simplest terms, when a company creates new shares and sells them, it's true that existing shareholders now own a smaller percentage of the company. However, as the company is now more valuable (since it made money by selling the new shares), the real dollar value of the previous shares is unchanged. That said, the decision to issue new shares can be interpreted by investors as a signal of the company's strategy and thereby alter the market price; this may well affect the real dollar value of the previous shares. But the simple act of creating new shares does not alter the value in and of itself.",
"title": ""
},
{
"docid": "008a497ad9c98d5e2cc27a2cebf27993",
"text": "Unless other people believe you have a reason for selling at a lower price, your sale probably has no lasting effect at all on the market. Of course, if people see you dump a few million dollars' worth of shares at a discount, they may be inclined to believe you have a reason. But if you just sell a few, they will conclude the reason is just that you needed cash in a hurry.",
"title": ""
},
{
"docid": "f59b1cc2dbefc70bc7921721434794d3",
"text": "\"Generally, a share of stock entitles the owner to all future per-share dividends paid by the company, plus a fraction of the company's assets net value in the event of liquidation. If one knew in advance the time and value of all such payouts, the value of the stock should equal the present cash value of that payout stream, which would in turn be the sum of the cash values of all the individual payouts. As time goes by, the present cash value of each upcoming payout will increase until such time as it is actually paid, whereupon it will cease to contribute to the stock's value. Because people are not clairvoyant, they generally don't know exactly what future payouts a stock is going to make. A sane price for a stock, however, may be assigned by estimating the present cash value of its future payments. If unfolding events would cause a reasonable person to revise estimates of future payments upward, the price of the stock should increase. If events cause estimates to be revised downward, the price should fall. In a sane marketplace, if the price of a stock is below people's estimates of its payouts' current cash value, people should buy the stock and push the price upward. If it is above people's estimates, they should sell the stock and push the price downward. Note that in a sane marketplace, rising prices are a red-flag indicator for people to stop buying. Unfortunately, sometimes bulls see a red flag as a signal to charge ahead. When that happens, prices may soar through the roof, but it's important to note that the value of the stock will still be the present cash value of its future payouts. If that value is $10/share, someone who buys a share for $50 basically gives the seller $40 that he was not entitled to, and which the buyer will never get back. The buyer might manage to convince someone else to pay him $60 for the share, but that simply means the new buyer is giving the the previous one $50 that he wasn't entitled to either. If the price falls back to $10, calling that fall a \"\"market correction\"\" wouldn't be a euphemism, but rather state a fact: the share was worth $10 before people sold it for crazy prices, and still worth $10 afterward. It was the market price that was in error. The important thing to focus on as a sane investor is what the stock is actually going to pay out in relation to what you put in. It's not necessary to look only at present price/earnings ratios, since some stocks may pay little or nothing today but pay handsomely next year. What's important, however, is that there be a reasonable likelihood that in the foreseeable future the stock will pay dividends sufficient to justify its cost.\"",
"title": ""
},
{
"docid": "d789e42d59c3ecd9aa81709d72c53a26",
"text": "Buy and sell orders always include the price at which you buy/sell. That's how the market prices for stocks are determines. So if you want to place a buy order at 106, you can do that. When that order was fulfilled and you have the stock, you can place a sell order at 107. It will be processed as soon as someone places a buy order at 107. Theoretically you can even place sell orders for stocks you haven't even bought yet. That's called short selling. You do that when you expect a stock to go down in the future. But this is a very risky operation, because when you mispredict the market you might end up owing more money than you invested. No responsible banker will even discuss this with you when you can not prove you know what you are doing.",
"title": ""
},
{
"docid": "46f306dff57c96fa3e115a1e5e51a28b",
"text": "In general, how does a large open market stock sale affect prices? A very general answer, all other things being equal, the price will move down. However there is nothing general. It depends on total number of shares in market and total turn over for that specific shares. The order book for the day etc. What is the maximum percentage of a company you could sell per day before the trading freezes, and what factors matter? Every stock exchange has rules that would determine when a particular stock would be suspended from trading, generally a 10-20% swing [either ways]. Generally highly liquid stock or stock during initial listing are exempt from such limits as they are left to arrive the market price ... A large sell order may or may not swing the price for it to get suspended. At times even a small order may do ... again it is specific to a particular stock.",
"title": ""
},
{
"docid": "2179472f1459f1f7ec70b6aac3a9d3be",
"text": "You are right that Facebook really doesn't get impacted as they got their $38. However it would make it slightly more difficult for Facebook to raise more money in future as large investors would be more cautious. This can keep the price lowers than it actually needs to be. Quite a few companies try to list the IPO at lower price so that it keeps going up and have more positive effect overall there by making it easier for future borrowings. See related question Why would a company care about the price of its own shares in the stock market?",
"title": ""
},
{
"docid": "a4afa8c2f6d30d437aba51b7bd25b53b",
"text": "Knowing the answer to this question is generally not as useful as it may seem. The stock's current price is the consensus of thousands of people who are looking at the many relevant factors (dividend rate, growth prospects, volatility, risk, industry, etc.) that determine its value. A stock's price is the market's valuation of the cash flows it entitles you to in the future. Researching a stock's value means trying to figure out if there is something relevant to these cash flows that the market doesn't know about or has misjudged. Pretty much anything we can list for you here that will affect a stock's price is something the market knows about, so it's not likely to help you know if something is mispriced. Therefore it's not useful to you. If you are not a true expert on how important the relevant factors are and how the market is reacting to them currently (and often even if you are), then you are essentially guessing. How likely are you to catch something that the thousands of other investors have missed and how likely are you to miss something that other investors have understood? I don't view gambling as inherently evil, but you should be clear and honest with yourself about what you are doing if you are trying to outperform the market. As people become knowledgeable about and experienced with finance, they try less and less to be the one to find an undervalued stock in their personal portfolio. Instead they seek to hold a fully diversified portfolio with low transactions costs and build wealth in the long term without wasting time and money on the guessing game. My suggestion for you is to transition as quickly as you can to behave like someone who knows a lot about finance.",
"title": ""
},
{
"docid": "7acc0cc7b924cbf49ca9a80edd4ec788",
"text": "The satisfaction from gains packs less of an emotional impact than the fear of loss. It's very difficult for many people to overcome this fear, so when prices begin to fall, many investors sell to minimize their potential loss. This causes a further drop, which can lead to more selling as other investors reach their emotional threshold for loss. This emotion-based selling keeps the market inefficient in the short term. If there aren't enough value investors waiting to scoop up the stock at the new discount, it can stay undervalued for a long time.",
"title": ""
},
{
"docid": "865734973d4b7c2127e0322bdd58ae69",
"text": "Fair value can mean many different things depending on the context. And it has nothing to do with the price at which your market order would be executed. For example if you buy market, you could get executed below 101 if there are hidden orders, at 101 if that sell order is large enough and it is still there when your order reaches the market, or at a higher price otherwise.",
"title": ""
},
{
"docid": "2348440127403f34ce321c38c6318907",
"text": "What is essential is that company you are selling is transparent enough. Because it will provide additional liquidity to market. When I decide to sell, I drop all volume once at a time. Liquidation price will be somewhat worse then usual. But being out of position will save you nerves for future thinking where to step in again. Cold head is best you can afford in such scenario. In very large crashes, there could be large liquidity holes. But if you are on upper side of sigmoid, you will be profiting from selling before that holes appear. Problem is, nobody could predict if market is on upper-fall, mid-fall or down-fall at any time.",
"title": ""
},
{
"docid": "35d418477f6f1ff8bf0e3e14b2082fe6",
"text": "Day traders see a dip, buy stocks, then sell them 4 mins later when the value climbed to a small peak. What value is created? Is the company better off from that trade? The stocks were already outside of company hands, so the trade doesn't affect them at all. You've just received money from others for no contribution to society. A common scenario is a younger business having a great idea but not enough capital funds to actually get the business going. So, investors buy shares which they can sell later on at a higher value. The investor gets value from the shares increasing over time, but the business also gets value of receiving money to build the business.",
"title": ""
},
{
"docid": "c6078bec30a597d160be10026c793a07",
"text": "\"Stocks with a low average daily trading volume (\"\"thinly traded stocks\"\") will also tend to have higher spreads. So you'll tend to pay more when you buy and get less when you sell.\"",
"title": ""
}
] |
fiqa
|
63c057f3bc9c59b2df96679bba0c9f8d
|
How to understand adding or removing “liquidity” in stock markets with market/non-market orders?
|
[
{
"docid": "ba6f8f2743a888f07fda211227d990f0",
"text": "Not all limit orders add liquidity, but all market orders remove liquidity presuming there is liquidity to remove. A liquidity providing order is one that is posted to the limit book. If an order, even a limit order, is filled before being posted to the limit book, it removes liquidity. Liquidity is measured by a balance and abundance of quantities posted on the limit book and the best spread between the lowest ask and the highest bid.",
"title": ""
}
] |
[
{
"docid": "afeaf1c9e6a8ed09de010bbaaea0a2f0",
"text": "I don't have all the answers. On a illiquid stock, such situations do arise and there are specific mechanisms used by exchanges to match the order. It is generally not advisable to use market order on illiquid stock. There are lots of different variations here. I guess this comes down to specifications for individual exchanges, but I'm wondering if there's a standard here or a way to approach it from basic rules that clears up all these situations. There are quite a few variations and different treatments. Market order that are placed when the market is closed or just around market opening are traded at Market Open price that each exchange has a formulae to calculate. In the process Market Buy are matched to Market Sell at the Exchange calculated price. Not all order get matched and there could be spill over's. These are then matched to limit orders. Is this determined based on which sell order came first, or based on which would result in the best deal for the incoming buyer? Generally Market orders have highest priority of execution.",
"title": ""
},
{
"docid": "9e9576dd3432fe0b79aa0199b062b03b",
"text": "Typically this isn't a random order- having a small volume just means it's not showing on the chart, but it is a vlid price point. Same thing would've happened if it would've been a very large order that shows on the chart. Consider also that this could have been the first one of many transactions that go far below your stop point - would you not have wanted it to be executed then, at this time, as it did? Would you expect the system to look into future and decide that this is a one time dip, and not sell; versus it is a crash, and sell? Either way, the system cannot look in the future, so it has no way to know if a crash is coming, or if it was a short dip; therefore the instrcutions are executed as given - sell if any transfer happens below the limit. To avoid that (or at least reduce the chance for it), you can either leave more distance (and risk a higher loss when it crashes), or trade higher volumes, so the short small dip won't execute your order; also, very liquid stocks will not show such small transaction dips.",
"title": ""
},
{
"docid": "cdfc4ac08efcdf6c897b314dd526af49",
"text": "Not really. This just shows you might be able to fill huge orders a little less cheaply now, but then somebody else gets to fill it at a better price and the HFT/Market Maker took on some risk for some profit. That's pretty much the definition of providing liquidity. How is this raising prices? It's not. Raising prices would be if HFT bought like 2mil worth of stock and just held it for some time, then tried to sell it to you later at a better price, but that's just investing.",
"title": ""
},
{
"docid": "86299ef4bea9c9731e109598830c18b3",
"text": "I would say the most challenging fact for this assertion is that HFT firms operate with extremely limited capital bases. For a stock with say 10m shares ADV, even a very large and successful HFT strategy might use a position limit of no more than 5000 shares. That is to say if you sum up and net the buys and sells for a stock across the day the HFT firm will never exceed 10,000 shares (2x position limits assuming it completely flipped) on a stock that trades 10,000,000 shares on a given day. The high volumes are attained through high turnover, the strategy might trade up to 500,000 shares (or 5% of the volume) attaining a 50x turnover. But that brings me back to the original point. In the market microstructure literature market impact generally has been found to scale linearly or even sub-linearly for net volume executed. If I alternate between thousands of 1 lot buy and sell orders, it would be very difficult for me to move the market because the market impact of every one of my buy orders roughly cancels the market impact of my almost exactly equal number of sell orders. There might be a higher-order mechanism at work, but I'm genuinely curious what you think it might be. How could strategies that attain such small net positions have such out-sized impact on market direction?",
"title": ""
},
{
"docid": "1089e6bf48d8e525ba8d50f75a91228b",
"text": "\"I'm not sure the term actually has a clear meaning. We can think of \"\"what does this mean\"\" in two ways: its broad semantic/metaphorical meaning, and its mechanical \"\"what actual variables in the market represent this quantity\"\". Net buying/selling have a clear meaning in the former sense by analogy to the basic concept of supply and demand in equilibrium markets. It's not as clear what their meaning should be in the latter sense. Roughly, as the top comment notes, you could say that a price decrease is because of net selling at the previous price level, while a price rise is driven by net buying at the previous price level. But in terms of actual market mechanics, the only way prices move is by matching of a buyer and a seller, so every market transaction inherently represents an instantaneous balance across the bid/ask spread. So then we could think about the notion of orders. Actual transactions only occur in balance, but there is a whole book of standing orders at various prices. So maybe we could use some measure of the volume at various price levels in each of the bid/ask books to decide some notion of net buying/selling. But again, actual transactions occur only when matched across the spread. If a significant order volume is added on one side or the other, but at a price far away from the bid/offer - far enough that an actual trade at that price is unlikely to occur - should that be included in the notion of net buying/selling? Presumably there is some price distance from the bid/offer where the orders don't matter for net buying/selling. I'm sure you'd find a lot of buyers for BRK.A at $1, but that's completely irrelevant to the notion of net buying/selling in BRK.A. Maybe the closest thing I can think of in terms of actual market mechanics is the comparative total volumes during the period that would still have been executed if forced to execute at the end of period price. Assuming that traders' valuations are fixed through the period in question, and trading occurs on the basis of fundamentals (which I know isn't a good assumption in practice, but the impact of price history upon future price is too complex for this analysis), we have two cases. If price falls, we can assume all buyers who executed above the last price in the period would have happily bought at the last price (saving money), while all sellers who executed below the last price in the period would also be happy to sell for more. The former will be larger than the latter. If the price rises, the reverse is true.\"",
"title": ""
},
{
"docid": "a798c7a4df57b38523165d841b23d497",
"text": "Market Capitalization is the product of the current share price (the last time someone sold a share of the stock, how much?) times the number of outstanding shares of stock, summed up over all of the stock categories. Assuming the efficient market hypothesis and a liquid market, this gives the current total value of the companies' assets (both tangible and intangible). Both the EMH and perfect liquidity may not hold at all times. Beyond those theoretical problems, in practice, someone trying to buy or sell the company at that price is going to be in for a surprise; the fact that someone wants to sell that many stocks, or buy that many stocks, will move the price of the company stock.",
"title": ""
},
{
"docid": "6840ddecbf02e8c564ec38036cce7563",
"text": "You can execute block trades on the options market and get exercised for shares to create a very large position in Energy Transfer Partners LP without moving the stock market. You can then place limit sell orders, after selling directly into the market and keep an overhang of low priced shares (the technical analysis traders won't know what you specifically are doing, and will call this 'resistance'). If you hit nice even numbers (multiples of 5, multiples of 10) with your sell orders, you can exacerbate selling as many market participants will have their own stop loss orders at those numbers, causing other people to sell at lower and lower prices automatically, and simultaneously keep your massive ask in effect. If your position is bigger than the demand then you can keep a stock lower. The secondary market doesn't inherently affect a company in any way. But many companies have borrowed against the price of their shares, and if you get the share price low enough they can get suddenly margin called and be unable to service their existing debt. You will also lose a lot of money doing this, so you can also buy puts along the way or attempt to execute a collar to lower your own losses. The collar strategy is nice because it is unlikely that other traders and analysts will notice what you are doing, since there are calls, puts and share orders involved in creating it. One person may notice the block trade for the calls initially, but nobody will notice it is part of a larger strategy with multiple legs. With the share position, you may also be able to vote on some things, but that solely depends on the conditions of the shares.",
"title": ""
},
{
"docid": "f43b6752d14990919da259fe34489f17",
"text": "Differences in liquidity explain why American-style options are generally worth more than their European-style counterparts. As far as I can tell, no one mentioned liquidity in their answer to this question, they just introduced needlessly complex math and logic while ignoring basic economic principles. That's not to say the previous answers are all wrong - they just deal with periphery factors instead of the central cause. Liquidity is a key determinant of pricing/valuation in financial markets. Liquidity simply describes the ease with which an asset can be bought and sold (converted to cash). Without going into the reasons why, treasury bills are one of the most liquid securities - they can be bought or sold almost instantly at any time for an exact price. The near-perfect liquidity of treasuries is one of the major reasons why the price (yield) of a t-bill will always be higher (lower yield) than that of an otherwise identical corporate or municipal bond. Stated in general terms, a relatively liquid asset is always worth more than an relatively illiquid asset, all else being equal. The value of liquidity is easy to understand - we experience it everyday in real life. If you're buying a house or car, the ability to resell it if needed is an important component of the decision. It's the same for investors - most people would prefer an asset that they can quickly and easily liquidate if the need for cash arises. It's no different with options. American-style options allow the holder to exercise (liquidate) at any time, whereas the buyer of a European option has his cash tied up until a specific date. Obviously, it rarely makes sense to exercise an option early in terms of net returns, but sometimes an investor has a desperate need for cash and this need outweighs the reduction in net profits from early exercise. It could be argued that this liquidity advantage is eliminated by the fact that you can trade (sell) either type of option without restriction before expiration, thus closing the long position. This is a valid point, but it ignores the fact that there's always a buyer on the other side of an option trade, meaning the long position, and the right/restriction of early exercise, is never eliminated, it simply changes hands. It follows that the American-style liquidity advantage increases an options market value regardless of one's position (call/put or short/long). Without putting an exact number on it, the general interest rate (time value of money) could be used to approximate the additional cost of an American-style option over a similar European-style contract.",
"title": ""
},
{
"docid": "7bee16dbc6399156761aef1df1bf3748",
"text": "Limit books are managed by exchanges. If an order is not immediately filled, it is sent to the book. From there, orders are generally executed on price-time-priority. The one major exception is the precedence hide-not-slide orders have over earlier placed visible slidden limit orders since unslidden orders are treated like a modification/cancellation. To an exchange, a modification is the same as a cancellation since it charges no fees for placing or canceling orders, only for trades. The timestamp is reset, and price-time-priority is applied in the same way, so if a modified order isn't immediately filled, it is sent back to the book to be filled in order of price-time-priority.",
"title": ""
},
{
"docid": "6ff491bfc4b2f438ed6236f9c30b6548",
"text": "\"I've alway thought that it was strange, but the \"\"price\"\" that gets quoted on a stock exchange is just the price of the last transaction. The irony of this definition of price is that there may not actually be any more shares available on the market at that price. It's also strange to me that the price isn't adjusted at all for the size of the transaction. A transaction of just 1 share will post a new price even if just seconds earlier 100,000 shares traded for a different price. (Ok, unrealistic example, but you get my point.) I've always believed this is an odd way to describe the price. Anyway, my diatribe here is supposed to illustrate the point that the fluctuations you see in price don't really reflect changing valuations by the stock-owning public. Each post in the exchange maintains a book of orders, with unmatched buy orders on one side and unmatched sell orders on the other side. If you go to your broker and tell him, \"\"fill my order for 50,000 shares at market price\"\", then the broker won't fill you 50,000 shares at .20. Instead, he'll buy the 50 @ .22, then 80 @ .23, then 100 @ .30, etc. Because your order is so large compared to the unmatched orders, your market order will get matched a bunch of the unmatched orders on the sell side, and each match will notch the posted price up a bit. If instead you asked the broker, \"\"open a limit order to buy 50000 shares at .20\"\", then the exchange will add your order to the book: In this case, your order likely won't get filled at all, since nobody at the moment wants to sell at .20 and historically speaking it's unlikely that such a seller will suddenly appear. Filling large orders is actually a common problem for institutional investors: http://www.businessweek.com/magazine/content/05_16/b3929113_mz020.htm http://www.cis.upenn.edu/~mkearns/papers/vwap.pdf (Written by a professor I had in school!)\"",
"title": ""
},
{
"docid": "6ea009c9cb60a6fff7331e6abd1e3c1e",
"text": "\"For stock options, where I'm used to seeing these terms: Volume is usually reported per day, whereas open interest is cumulative. In addition, some volume closes positions and some opens positions. For example, if I am long one contract and sell it to someone who was short one contract, then that adds to volume and reduces open interest. If I hold no contracts and sell (creating a short position) to someone who also had no contracts, then I add to volume and I increase open interest. EDIT: With the clarification in your comment, then I would say some people opened and closed positions in that one day. Their opening and closing trades both contribute to \"\"volume\"\" but they have not net position in the \"\"open interest.\"\"\"",
"title": ""
},
{
"docid": "65e15aec404bf25068aecdd8e101821d",
"text": "\"This is a great question precisely because the answer is so complicated. It means you're starting to think in detail about how orders actually get filled / executed rather than looking at stock prices as a mythical \"\"the market\"\". \"\"The market price\"\" is a somewhat deceptive term. The price at which bids and asks last crossed & filled is the price that prints. I.e. that is what you see on a market price data feed. ] In reality there is a resting queue of orders at various bids & asks on various exchanges. (source: Larry Harris. A size of 1 is 1H = 100 shares.) So at first your 1000H order will sweep through the standing queue of fills. Let's say you are trading a low-volume stock. And let's say someone from another brokerage has set a limit order at a ridiculous price. Part of your order may sweep through and part of it get filled at a ridiculously high price. Or maybe either the exchange or your broker / execution mechanism somehow will protect you against the really high fill. (Let's say your broker hired GETCO, who guarantees a certain VWAP.) Also people change their bids & asks in response to what they see others do. Your 1000H size will likely be marked as a human counterparty by certain players. Other players might see that order differently. (Let's say it was a 100 000H size. Maybe people will decide you must know something and decide they want to go the same direction as you rather than take the opportunity to exit. And maybe some super-fast players will weave in and out of the filling process itself.) There is more to it because, what if some of the resting asks are on other venues? What if both you and some of the asks match with someone who uses the same broker as you? Not only do exchange rules come into play, but so do national regulations. tl;dr: You will get filled, with price slippage. If you send in a big buy order, it will sweep through the resting asks but also there are complications.\"",
"title": ""
},
{
"docid": "62bd1ec7fbc41f09cab8725e9bfa0b4d",
"text": "\"Exchange A has 100 shares of a stock at $10, the next 100 shares cost $10.01. Exchange B has the same pricing structure. A fund manager wants to buy 200 shares of the stock, and decides that buying 100 shares at $10 from each exchange will be cheaper than staying in one exchange and paying $10.01 for the second half of his order. The manager places two separate orders. Let's say the first order reaches exchange A, and the trade executes at $10. Traders (algorithms) on exchange B see this happen, and adjust their price up to $10.01 accordingly. Now, when the manager's order reaches exchange B, there will no longer be any shares trading at $10. Some people say that this is front running, but if the manager only wanted 100 shares, the price would have still shifted. Some say this creates a more efficient market with tighter spreads due to the decreased risk to the market maker, but it also means the aggregate bid-ask offers across multiple exchanges are not necessarily accurate, creating a \"\"false liquidity\"\". You can decide for yourself whether or not this is a good thing.\"",
"title": ""
},
{
"docid": "06c22056b93c130f7c21a617fed4d224",
"text": "Depends on when you are seeing these bids & asks-- off hours, many market makers pull their bid & ask prices entirely. In a lightly traded stock there may just be no market except during the regular trading day.",
"title": ""
},
{
"docid": "6346bf2359cb8a27f603da4b4436f171",
"text": "You said the decision will be made by EOD. If you've made the decision prior to the market close, I'd execute on the closing price. If you are trading stocks with any decent volume, I'd not worry about the liquidity. If your strategy's profits are so small that your gains are significantly impacted by say, the bid/ask spread (a penny or less for liquid stocks) I'd rethink the approach. You'll find the difference between the market open and prior night close is far greater than the normal bid/ask.",
"title": ""
}
] |
fiqa
|
dcb121335582dfccacda58e25576ae3d
|
Is it possible that for shares to be reinvested in a stock you already sold?
|
[
{
"docid": "13264e24e496419687e087bd348bef42",
"text": "I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more before the dividend-payable date, your distribution will be paid in cash. If, however, you sell an entire position within the two day time frame of the security's payable date, the dividend will be reinvested, resulting in additional shares. Selling these subsequent shares will require another sell order, which will incur additional commission charges. Dividends which would have been reinvested into less than one whole share will be automatically liquidated into cash. If you want to guarantee you receive no fractional shares, I'd call your broker and ask whether selling stock ABC on a particular date will result in the dividend being paid in shares.",
"title": ""
}
] |
[
{
"docid": "9fbb3d32ea4121d054ca4956be87ef97",
"text": "You might be right about that, but your previous posts don't say that. In just the last one you said: >Because buyback decreases shares outstanding it **also decreases the company's total future dividend payouts as well** This is indicating that you believe there is a difference somehow, no?",
"title": ""
},
{
"docid": "d084210d431839be41ce1913e6277dae",
"text": "You'll need to talk to your broker about registering positions you already hold. I would personally expect this will cost you a not-insignificant fee. And I don't think you'll be able to do this on any shares held in a tax-advantaged account. That said, I'd recommend you go to the Investors sections of the company's website in question. This will usually tell you who the registrar of the company's stock is, and if they offer any direct-purchase, or DRIP, programs. You should find out from these contacts and program details how the direct program works and what it's costs are. I suspect, but have no firsthand knowledge that this will be true, that you'll end up with lower costs if you just sell the shares in your brokerage, take the cash out, send the cash to the registrar and re-purchase shares that way. I say this only because I know, from inheritance situations, that de-registering stock cost me a $75 fee at my brokerage, whereas transactions at the registrar were $19.95. My answers to your direct questions: (Edited to fully answer the question with itemized answers.)",
"title": ""
},
{
"docid": "396521793f12b66d59c2c86a671360b7",
"text": "Ignoring taxes, a share repurchase has exactly the same effect on the company and the shareholders' wealth as a cash dividend. In either case, the company is disbursing cash to its shareholders; in the former, in exchange for shares which shareholders happen to be selling on the market at the time; in the latter, equally to all shareholders. For those shareholders who do not happen to be selling their shares, a share repurchase by a company is equivalent to a shareholder's reinvestment of a cash dividend in additional shares of the same company. The only difference is the total number of shares left outstanding. Your shares after a share buyback represent ownership of a greater fraction of the company, since in effect the company is buying out other shareholders on your behalf. Theoretically, a share buyback leaves the price of the stock unchanged, whereas a cash dividend tends to reduce the price of the stock by exactly the amount of the dividend, (notwithstanding underlying earnings.) This is because a share buyback concentrates your ownership in the company, but at the same time, the company as a whole is devalued by the exact amount of cash disbursed to buy back shares. Taxwise, a share buyback generally allows you to treat your share of the company's profits as capital gains---and quite possibly defer taxes on it as long as you own the stock. You usually have to pay taxes on dividends at the time they are paid. However, dividends are sometimes seen as instilling discipline in management, because it's a very public and obvious sign of distress for a company to cut its dividend, whereas a share repurchase plan can often be quietly withdrawn without drawing that much attention. A third alternative to a dividend or a share repurchase is for the company to find profitable projects to reinvest its earnings in, and attempt to grow the company as a whole (in the hopes of even greater earnings in the future) rather than distribute current earnings back to shareholders. (A company may alse use its earnings to pay down or repurchase debt, as well.) As to your second question, the SEC has certain rules that regulate the timing and price of share repurchases on the open market.",
"title": ""
},
{
"docid": "a7bb7d45b47d80bb49f11fcf8f92205c",
"text": "No, the dividends can't be exploited like that. Dividends settlement are tied to an ex-dividend date. The ex-dividend, is the day that allows you to get a dividend if you own the stock. Since a buyer of the stock after this date won't get the dividend, the price usually drop by the amount of the dividend. In your case the price of a share would lose $2.65 and you will be credited by $2.65 in cash such that your portfolio won't change in value due to the dividend. Also, you can't exploit the drop in price by short-selling, as you would be owing the dividend to the person lending you the stock for the short sale. Finally, the price of the stock at the ex-dividend will also be affected by the supply and demand, such that you can't be precisely sure of the drop in price of the security.",
"title": ""
},
{
"docid": "7f45011a6336fee7be61768d0ccc71e1",
"text": "Yes, you often can buy stocks directly from the company at little or no transaction cost. Many companies have either a Dividend Reinvestment Plan (DRIP) or a Direct Stock Plan (DSP). With these plans, you purchase shares directly from the company (although, often there is a third party transfer agent that handles the transaction), and the stock is issued in your name. This differs from purchasing stock from a broker, where the stock normally remains in the name of the broker. Generally, in order to begin participating in a DRIP, you need to already be a registered stockholder. This means that you need to purchase your first share of stock outside of the DRIP, and get it in your name. After that, you can register with the DRIP and purchase additional shares directly from the company. If the company has a DSP, you can begin purchasing shares directly without first being a stockholder. With the advent of discount brokers, DRIPs do not save as much money for regular investors as they once did. However, they can still sometimes save money for someone who wants to purchase shares on a regular basis over even a discount broker. If you are interested in DRIPs and DSPs and want to learn more, there is an informative website at dripinvesting.org that has lots of information on which DRIPs are available and how to get started.",
"title": ""
},
{
"docid": "ce8d5627024191690537789aedb3f34f",
"text": "You are still selling one investment and buying another - the fact that they are managed by the same company should be irrelevant. So yes, it would get the same tax treatment as if they were managed by different companies.",
"title": ""
},
{
"docid": "dba12f6dd3394f6c0e5f0db98356b7fe",
"text": "How can they reduce the number of shares I hold? They may have purchased them. You don't say what stock it is, so we can only speculate. Let's say that the stock is called PENNY. So they may have taken your 1600 PENNY shares and renamed them to 1600 PENNYOLD shares. Then they created a new $5 PENNY share and gave you .2357 shares of that in exchange for your 1600 PENNYOLD shares. This suggests that your old shares were worth $1.1785 or less than a tenth of a cent each. As an example, MYLAN did this in 2015 as part of their tax inversion (moved official headquarters from the US to Europe). They did not change the number of shares at that time, but MYLAN is not a penny stock. This is the kind of thing that might happen in a bankruptcy. A reverse split (where they give you one share in exchange for more than one share) is also possible, although you received an odd amount for a reverse split. Usually those produce rounder numbers. A number like .2357 sounds more like a market price, as those can be bizarre.",
"title": ""
},
{
"docid": "f17ecbe00cf13ed220784c76a6014e3f",
"text": "Investors purchase additional shares all the time. Every investor that adds money to their investments does this every paycheck or every month. Investors do this every time they reinvest dividends, interest or capital gains. They also buy and sell shares when they decide to rebalance their portfolio. Whether you are investing via a broker, mutual fund or ETF the investment company can handle this issue. You do want to know how they want you to specify which shares you want them to sell. The laws in your country may specify a default procedure, or what needs to be done if you want to use another procedure, or if you are allowed to change once you have specified a procedure.",
"title": ""
},
{
"docid": "3958b9cb8e53f34f5db3249b09a9fa1e",
"text": "No, this isn't possible, especially not when you're trading a highly liquid stock like Apple. When you put in your buy order at $210, any other traders that have open limit sell orders with the correct parameters, e.g. price and volume, will have their order(s) filled. This will occur before you can put in your own sell order and purchase your own shares because the other orders are listed on the order book first. In the US, many tax-sheltered accounts like IRA's have specific rules against self-dealing, which includes buying and selling assets with yourself, so such a transaction would be prohibited by definition. Although I'm not entirely sure if this applies to stocks, the limitation described in the first paragraph still applies regardless. If this were possible, rest assured that high-frequency traders would take advantage of this tactic to manipulate share prices. (I've heard critics say that this does occur, but I haven't researched it myself or seen any data about it)",
"title": ""
},
{
"docid": "f3cd3ed069075fd5d61b92de73b50627",
"text": "\"Scenario 1 - When you sell the shares in a margin account, you will see your buying power go up, but your \"\"amount available to withdraw\"\" stays the same until settlement. Yes, you can reallocate the same day, no need to wait until settlement. There is no margin interest for this scenario. Scenario 2 - If that stock is marginable to 50%, and all you have is $10,000 in that stock, you can buy another $10,000. Once done, you are at 50% margin, exactly.\"",
"title": ""
},
{
"docid": "5aaf989374efb1f5f5ebbb2bda191750",
"text": "\"The dividend reinvestment won't change whether the dividends themselves are qualified or not for US income tax purposes. It's still the holding period on the stock that matters. If you bought stock in different lots, then you could have a situation where some of the dividends paid are qualified and some are not, but: For completeness, it's worth noting that some dividends cannot be \"\"qualified\"\" no matter how long you hold them, but if you've got an investment in a common corporate stock (vs. something more \"\"exotic\"\"), then what's above should apply.\"",
"title": ""
},
{
"docid": "75423c42d7f054dc33f42d982df55afc",
"text": "Only if you sell the stock in question, and use the proceeds to buy other stock. (You should probably never feel bad about selling your company stock, even if it goes up a lot later, because from a risk-exposure basis you are already exposed to your company's performance through your career. Unless you have a lot of other savings, you should diversify.)",
"title": ""
},
{
"docid": "0cbd3fa0278d381e5d7433908775a40a",
"text": "Your question is unanswerable as you haven't provided enough information. I.e. If those shares cost $1000 and you have $50000 ( or any number above $1000) of cash available in the account then you can't possibly free ride. I think your understanding of the free ride rule is incorrect. Basically what this rule is stating is that you have to have the cash when the trade is placed in order to settle the trade. Otherwise you are taking on margin (which you can't do in a cash account). So at order entry you have to have the cash to cover the purchase so it's able to be settled. If you do, no problem and you can sell that stock before trade settlement. There is no law that says you have to hold it past trade settlement. However, you cannot spend the same dollar more than once before it settles. This site does a good job explaining this more throughly with examples: http://www.invest-faq.com/articles/trade-day-free-ride.html",
"title": ""
},
{
"docid": "1ca84fafcaa42482b030c0de50552301",
"text": "\"Something to note is that when a company announces a share buyback program there is usually a time frame and amount of shares that are important details as it isn't like the company will make one big buy back of stock generally. Rather it may take months or even years as noted in the Wikipedia article about share repurchases. Wikipedia covers some of the technical details here but to give a specific set of answers: When a company announces a share buyback program, who do they actually buy back the shares from? From the Wikipedia link: \"\"Under US corporate law there are five primary methods of stock repurchase: open market, private negotiations, repurchase 'put' rights, and two variants of self-tender repurchase: a fixed price tender offer and a Dutch auction.\"\" Thus, there are open market and a couple of other possibilities. Openly traded shares on a stock exchange? Possibly, though there are other options. Is there a fixed price that they buy back at? Sometimes. I'd think a \"\"fixed price tender offer\"\" would imply a fixed price though the open market way may take various prices. If I own shares in that company, can I get them to buy back my shares? Selective Buy-Backs is noted in Wikipedia as: \"\"In broad terms, a selective buy-back is one in which identical offers are not made to every shareholder, for example, if offers are made to only some of the shareholders in the company. In the US, no special shareholder approval of a selective buy-back is required. In the UK, the scheme must first be approved by all shareholders, or by a special resolution (requiring a 75% majority) of the members in which no vote is cast by selling shareholders or their associates. Selling shareholders may not vote in favor of a special resolution to approve a selective buy-back. The notice to shareholders convening the meeting to vote on a selective buy-back must include a statement setting out all material information that is relevant to the proposal, although it is not necessary for the company to provide information already disclosed to the shareholders, if that would be unreasonable.\"\" Thus it is possible, though how probable is another question. While not in the question, something to consider is how the buybacks can be done as a result of offsetting the dilution of employees who have stock options that may exercise them and spread the earnings over more shares, but this is more on understanding the employee stock option scenario that various big companies use when it comes to giving employees an incentive to help the stock price.\"",
"title": ""
},
{
"docid": "af2c7f5fd12ca83d7807555f97965571",
"text": "Assuming US. The only con that I know of is that hassle factor. You have to remember to sell when you get the new shares, and your taxes become a bit more complicated; the discount that you receive is taxed as ordinary income, and then any change in the price of the stock between when you receive it and you sell it will be considered a capital gain or loss. It's not hard to account for properly if you keep good records.",
"title": ""
}
] |
fiqa
|
68b4d5e1b80d575c56a5c4051038513c
|
Does a stock's price represent current liquidation of all shares?
|
[
{
"docid": "c03fd2a93ac59c369f93c5f51ae09587",
"text": "\"What if everyone decided to sell all the shares at a given moment, let's say when the stock is trading at $40? I imagine supply would outweigh demand and the stock would fall. Yes this is the case. Every large \"\"Sell\"\" order results in price going down and every large \"\"Buy\"\" order results in price going up. Hence typically when large orders are being executed, they are first negotiated outside for a price and then sold at the exchange. I am not talking about Ownership change event. If a company wants a change in ownership, the buyer would be ready to pay a premium over the market price to get controlling stake.\"",
"title": ""
},
{
"docid": "742a3e3a277dc4cfb870febddb8c7d92",
"text": "\"What if everyone decided to sell all the shares at a given moment, let's say when the stock is trading at $40? It would fall to the lowest bid price, which could be $0.01 if someone had that bid in place. Here is an example which I happened to find online: Notice there are orders to buy at half the market price and lower... probably all the way down to pennies. If there were enough selling activity to fill all of those bids you see, then the market price would be the lowest bid on the screen. Alternatively, the bid orders could be pulled (cancelled), which would also let the price free-fall to the lowest bid even if there were few actual sellers. Bid-stuffing is what HFT (high frequency trading) algorithms sometimes do, which some say caused the Flash Crash of May 2010. The computers \"\"stuff\"\" bids into the order book, making it look like there is demand in order to trigger a market reaction, then they pull the bids to make the market fall. This sort of thing happens all the time and Nanex documents it http://www.nanex.net/FlashCrash/OngoingResearch.html Quote stuffing defined: http://www.investopedia.com/terms/q/quote-stuffing.asp I remember the day of the Flash Crash very well. I found this video on youtube of CNBC at that time. Watch from the 5:00 min mark on the video as Jim Crammer talks about PG easily not being worth the price of the market at that time. He said \"\"Who cares?\"\", \"\"Its not a real price\"\", \"\"$49.25 bid for 50,000 shares if I were at my hedge fund.\"\" http://www.youtube.com/watch?v=86g4_w4j3jU You can value a stock how you want, but its only actually worth what someone will give you for it. More examples: Anadarko Petroleum, which as we noted in today's EOD post, lost $45 billion in market cap in 45 milliseconds (a collapse rate of $1 billion per millisecond), flash crashing from $90 all the way to an (allegedly illegal) stub quote of $0.01. http://www.zerohedge.com/news/2013-05-17/how-last-second-flash-crash-pushed-sp-500-1667-1666 How 10,000 Contracts Crashed The Market: A Visual Deconstruction Of Last Night's E-Mini Flash Crash http://www.zerohedge.com/news/2012-12-21/how-10000-contracts-crashed-market-visual-deconstruction-last-nights-e-mini-flash-cr Symantec Flash-Crash Destroys Over $1.5 Billion In Less Than A Second http://www.zerohedge.com/news/2013-04-30/symantec-flash-crash-destroys-over-15-billion-less-second This sort of thing happens so often, I don't pay much attention anymore.\"",
"title": ""
},
{
"docid": "8694e43bff6988ceb43ffa191cd56b5d",
"text": "Is the stock's price at any given moment the price at which all shares could be sold to new investors? No. For the simple fact that the current bid/offer always have sizes associated. What you should be looking at is the consolidated price to buy/sell X shares (10bn doesn't really work as not everyone is willing to sell/buy). If you look at the spread of the consolidated price at your quantity level, you'd notice it would be in stark contrast to the spread of the best bid/offer but (by definition) that would be the price to buy or sell X shares to new investors. Edit Calculation of the consolidated price of X shares: You go through the order book and calculate the size-weighted average price until you covered X. Example: So the consolidated price for 3000 shares would be $39.80, the consolidated price for 2000 shares would be $39.90.",
"title": ""
}
] |
[
{
"docid": "351caceff65bf83be90d557d5c8a94f5",
"text": "I stock is only worth what someone will pay for it. If you want to sell it you will get market price which is the bid.",
"title": ""
},
{
"docid": "4046514c9c1f46c97d5cbb109400ba6e",
"text": "It depends completely on the current order book for that security. There is literally no telling how that buy order would move the price of a stock in general.",
"title": ""
},
{
"docid": "5db2500544c713428b4b849702c8e351",
"text": "In order to see whether you can buy or sell some given quantity of a stock at the current bid price, you need a counterparty (a buyer) who is willing to buy the number of stocks you are wishing to offload. To see whether such a counterparty exists, you can look at the stock's order book, or level two feed. The order book shows all the people who have placed buy or sell orders, the price they are willing to pay, and the quantity they demand at that price. Here is the order book from earlier this morning for the British pharmaceutical company, GlaxoSmithKline PLC. Let's start by looking at the left-hand blue part of the book, beneath the yellow strip. This is called the Buy side. The book is sorted with the highest price at the top, because this is the best price that a seller can presently obtain. If several buyers bid at the same price, then the oldest entry on the book takes precedence. You can see we have five buyers each willing to pay 1543.0 p (that's 1543 British pence, or £15.43) per share. Therefore the current bid price for this instrument is 1543.0. The first buyer wants 175 shares, the next, 300, and so on. The total volume that is demanded at 1543.0p is 2435 shares. This information is summarized on the yellow strip: 5 buyers, total volume of 2435, at 1543.0. These are all buyers who want to buy right now and the exchange will make the trade happen immediately if you put in a sell order for 1543.0 p or less. If you want to sell 2435 shares or fewer, you are good to go. The important thing to note is that once you sell these bidders a total of 2435 shares, then their orders are fulfilled and they will be removed from the order book. At this point, the next bidder is promoted up the book; but his price is 1542.5, 0.5 p lower than before. Absent any further changes to the order book, the bid price will decrease to 1542.5 p. This makes sense because you are selling a lot of shares so you'd expect the market price to be depressed. This information will be disseminated to the level one feed and the level one graph of the stock price will be updated. Thus if you have more than 2435 shares to sell, you cannot expect to execute your order at the bid price in one go. Of course, the more shares you are trying to get rid of, the further down the buy side you will have to go. In reality for a highly liquid stock as this, the order book receives many amendments per second and it is unlikely that your trade would make much difference. On the right hand side of the display you can see the recent trades: these are the times the trades were done (or notified to the exchange), the price of the trade, the volume and the trade type (AT means automatic trade). GlaxoSmithKline is a highly liquid stock with many willing buyers and sellers. But some stocks are less liquid. In order to enable traders to find a counterparty at short notice, exchanges often require less liquid stocks to have market makers. A market maker places buy and sell orders simultaneously, with a spread between the two prices so that they can profit from each transaction. For instance Diurnal Group PLC has had no trades today and no quotes. It has a more complicated order book, enabling both ordinary buyers and sellers to list if they wish, but market makers are separated out at the top. Here you can see that three market makers are providing liquidity on this stock, Peel Hunt (PEEL), Numis (NUMS) and Winterflood (WINS). They have a very unpalatable spread of over 5% between their bid and offer prices. Further in each case the sum total that they are willing to trade is 3000 shares. If you have more than three thousand Dirunal Group shares to sell, you would have to wait for the market makers to come back with a new quote after you'd sold the first 3000.",
"title": ""
},
{
"docid": "2fd055035118e9368579e888c579bdf7",
"text": "It depends to some extent on how you interpret the situation, so I think this is the general idea. Say you purchase one share at $50, and soon after, the price moves up, say, to $55. You now have an unrealized profit of $5. Now, you can either sell and realize that profit, or hold on to the position, expecting a further price appreciation. In either case, you will consider the price change from this traded price, which is $55, and not the price you actually bought at. Hence, if the price fell to $52 in the next trade, you have a loss of $3 on your previous profit of $5. This (even though your net P&L is calculated from the initial purchase price of $50), allows you to think in terms of your positions at the latest known prices. This is similar to a Markov process, in the sense that it doesn't matter which route the stock price (and your position's P&L) took to get to the current point; your decision should be based on the current/latest price level.",
"title": ""
},
{
"docid": "f1dae4b69e97c78b54205f926d8983c4",
"text": "I'd add, this is actually the way any stock opens every day, i.e. the closing price of the prior day is what it is, but the opening price will reflect whatever news there was prior to the day's open. If you watch the business news, you'll often see that some stock has an order imbalance and has not opened yet, at the normal time. So, as Geo stated, those who were sold shares at the IPO price paid $38, but then the stock could open at whatever price was the point where bid and ask balanced. I snapped a screen capture of this chart on the first day of trading, the daily charts aren't archived where I can find them. This is from Yahoo Finance. You can see the $42 open from those who simply wanted in but couldn't wait, the willingness of sellers to grab their profit right back to what they paid, and then another wave of buying, but then a sell-off. It closed virtually unchanged from the IPO price.",
"title": ""
},
{
"docid": "0c9e754e3769d7ad1a16dbc3e6c90ba5",
"text": "It seems like you want to compare the company's values not necessarily the stock price. Why not get the total outstanding shares and the stock price, generate the market cap. Then you could compare changes to market cap rather than just share price.",
"title": ""
},
{
"docid": "b36c46b51a234135d66ffed2a13bd785",
"text": "I think he means that if he liquidated his shares of Amazon, the stock would fall. Depending on how much he actually owns, which I have no idea, it could cause the stock price to plummet. In a more extreme scenario, a person that owns 40% of a company cannot liquidate their shares without the stock falling to ridiculously low levels.",
"title": ""
},
{
"docid": "41d5bfb7a9d47b8e32ca6736772ca243",
"text": "\"Yes and no. There are different classes of shares - Some have voting rights, some *don't*. Some take precedence over others in a bankruptcy. Some get larger dividends. \"\"Common\"\" isn't really a useful description of your stake in the company. You *do* have a \"\"stake\"\" in the company, but not all shares are equal.\"",
"title": ""
},
{
"docid": "511fd9fcdff5d9b942b80d3da0ec8b73",
"text": "\"To add to @keshlam's answer slightly a stock's price is made up of several components: the only one of these that is known even remotely accurately at any time is the book value on the day that the accounts are prepared. Even completed cashflows after the books have been prepared contain some slight unknowns as they may be reversed if stock is returned, for example, or reduced by unforeseen costs. Future cashflows are based on (amongst other things) how many sales you expect to make in the future for all time. Exercise for the reader: how many iPhone 22s will apple sell in 2029? Even known future cashflows have some risk attached to them; customers may not pay for goods, a supplier may go into liquidation and so need to change its invoicing strategy etc.. Estimating the risk on future cashflows is highly subjective and depends greatly on what the analyst expects the exact economic state of the world will be in the future. Investors have the choice of investing in a risk free instrument (this is usually taken as being modelled by the 10 year US treasury bond) that is guaranteed to give them a return. To invest in anything riskier than the risk free instrument they must be paid a premium over the risk free return that they would get from that. The risk premium is related to how likely they think it is that they will not receive a return higher than that rate. Calculation of that premium is highly subjective; if I know the management of the company well I will be inclined to think that the investment is far less risky (or perhaps riskier...) than someone who does not, for example. Since none of the factors that go into a share price are accurately measurable and many are subjective there is no \"\"right\"\" share price at any time, let alone at time of IPO. Each investor will estimate these values differently and so value the shares differently and their trading, based on their ever changing estimates, will move the share price to an indeterminable level. In comments to @keshlam's answer you ask if there is enough information to work out the share price if a company buys out the company before IPO. Dividing the price that this other company paid by the relative ownership structure of the firm would give you an idea of what that company thought that the company was worth at that moment in time and can be used as a surrogate for market price but it will not and cannot accurately represent the market price as other investors will value the firm differently by estimating the criteria above differently and so will move the share price based on their valuation.\"",
"title": ""
},
{
"docid": "87111ad5079b801b29090cb55023ea74",
"text": "\"It reminds me of the Efficient Market Hypothesis, except that just states in its weakest form that the current market price accounts for all information embedded in previous market prices. In other words, people buying today at 42 know it was selling for 40 yesterday, and the patterns and such. To say that stock is memoryless strikes me as not quite right -- to the extent that stocks are valued based on earnings, much of what we infer about future earnings relies on past and present earnings. One obvious counterexample to this \"\"memoryless\"\" claim is bankruptcy. If a stock files bankruptcy, and there isn't enough money to pay senior debt, your shares are worth 0 in perpetuity.\"",
"title": ""
},
{
"docid": "0ebd6d33c87dc7f7dd4620a6ab19a647",
"text": "Ask yourself a better question: Under my current investment criteria would I buy the stock at this price? If the answer to that question is yes you need to work out at what price you would now sell out of the position. Think of these as totally separate decisions from your original decisions to buy and at what price to sell. If you would buy the stock now if you didn't already hold a position then you should keep that position as if you had sold out at the price that you had originally seen as your take profit level and bought a new position at the current price without incurring the costs. If you would not buy now by those criteria then you should sell out as planned. This is essentially netting off two investing decisions. Something to think about is that the world has changed and if you knew what you know now then you would probably have set your price limit higher. To be disciplined as an investor also means reviewing current positions frequently and without any sympathy for past decisions.",
"title": ""
},
{
"docid": "49f779c5fabf42933fb87c49daf79771",
"text": "You would think that share prices is just a reflection of how well the company is doing but that is not always the case. Sometimes it reflects the investor confidence in the company more than the mere performance. So for instance if some oil company causes some natural disaster by letting one of there oil tankers crash into a coral reef then investor confidence my take a big hit and share prices my fall even if the bottom line of the company was not all that effected.",
"title": ""
},
{
"docid": "69ecd756d26ab41775af6aef6f9aa581",
"text": "P/E is the number of years it would take for the company to earn its share price. You take share price divided by annual earnings per share. You can take the current reported quarterly earnings per share times 4, you can take the sum of the past four actual quarters earnings per share or you can take some projected earnings per share. It has little to do with a company's actual finances apart from the earnings per share. It doesn't say much about the health of a company's balance sheet, and is definitely not an indicator for bankruptcy. It's mostly a measure of the market's assumptions of the company's ability to grow earnings or maintain it's current earnings growth. A share price of $40 trading for a P/E ratio of 10 means it will take the company 10 years to earn $40 per share, it means there's current annual earnings per share of $4. A different company may also be earning $4 per share but trade at 100 times earnings for a share price of $400. By this measure alone neither company is more or less healthy than the other. One just commands more faith in the future growth from the market. To circle back to your question regarding a negative P/E, a negative P/E ratio means the company is reporting negative earnings (running at a loss). Again, this may or may not indicate an imminent bankruptcy. Increasing balance sheet debt with decreasing revenue and or earnings and or balance sheet assets will be a better way to assess bankruptcy risk.",
"title": ""
},
{
"docid": "0575e37ec55ce1ee8435c931fd40b798",
"text": "\"Someone who buys a stock is fundamentally buying a share of all future dividends, plus the future liquidation value of the company in the event that it is liquidated. While some investors may buy stocks in the hope that they will be able to find other people willing to pay more for the stock than they did, that's a zero sum game. The only way investors can make money in the aggregate is if either stocks pay dividends or if the money paid for company assets at liquidation exceeds total net price for which the company sold shares. One advantage of dividends from a market-rationality perspective is that dividend payments are easy to evaluate than company value. Ideally, the share price of a company should match the present per-share cash value of all future dividends and liquidation, but it's generally impossible to know in advance what that value will be. Stock prices may sometimes rise because of factors which increase the expected per-share cash value of future dividends and liquidations. In a sane market, rising prices on an item will reduce people's eagerness to buy and increase people's eagerness to sell. Unfortunately, in a marketplace where steady price appreciation is expected the feedback mechanisms responsible for stability get reversed. Rapidly rising prices act as a red flag to buyers--unfortunately, bulls don't see red flags as signal to stop, but rather as a signal to charge ahead. For a variety of reasons including the disparate treatment of dividends and capital gains, it's often not practical for a company to try to stabilize stock prices through dividends and stock sales. Nonetheless, dividends are in a sense far more \"\"real\"\" than stock price appreciation, since paying dividends generally requires that companies actually have sources of revenues and profits. By contrast, it's possible for stock prices to go through the roof for companies which have relatively few assets of value and no real expectation of becoming profitable businesses, simply because investors see rising stock prices as a \"\"buy\"\" signal independent of any real worth.\"",
"title": ""
},
{
"docid": "86e438b21751aec4fe7f59a7bf147172",
"text": "\"The only thing that makes a stock worthless is when the company goes out of business. Note that bankruptcy, by itself, does not mean the company is closing. It could successfully restructure its affairs and come out of bankruptcy with a better outlook. Being a small or unprofitable business may cause a company's to trade in the \"\"penny stock\"\" range, but there is still some value there. Since most dying companies will pass through the penny stock phase, you may be able to track down what you're looking for by finding companies who have been (or are about to be) delisted. Delisting is not death, it's just the point at which the company's shares no longer meet the qualifications to be traded on a particular exchange. If you find old stock certificates in your grandmother's sock drawer, they may be a treasure, or they may be worthless pieces of paper if the company changed its ownership and Grandma didn't know about it.\"",
"title": ""
}
] |
fiqa
|
e17e5face57e176ad33dab576bbe8df3
|
How will a limit order be executed when the stock market opens if there is a large change from the price of the day before?
|
[
{
"docid": "e780f8fe3a75a5098b5bff95d2abd3c3",
"text": "The next day the market opens trading at 10.50, You haven't specified whether you limit order for $10.10 is to buy or sell. When the trading opens next day, it follows the same process of matching the orders. So if you have put a limit order to buy at $10.10 and there is no sell order at that price, your trade will not go through. If you have placed a limit sell order at $10.10 and there is a buyer at or higher price, it would go through. The Open price is the price of the first trade of the day.",
"title": ""
}
] |
[
{
"docid": "296a81752c761028129311c783eae40f",
"text": "Should do it through a limit auction book. Management and shareholders pre ipo submit sealed limit sell orders. Buyers submit sealed limit buy orders, nobody can see where the price is going. At 9AM, the price is calculated and whomever fills get filled and ta da everyone is trading at 9:30 when the market is open.",
"title": ""
},
{
"docid": "f1dae4b69e97c78b54205f926d8983c4",
"text": "I'd add, this is actually the way any stock opens every day, i.e. the closing price of the prior day is what it is, but the opening price will reflect whatever news there was prior to the day's open. If you watch the business news, you'll often see that some stock has an order imbalance and has not opened yet, at the normal time. So, as Geo stated, those who were sold shares at the IPO price paid $38, but then the stock could open at whatever price was the point where bid and ask balanced. I snapped a screen capture of this chart on the first day of trading, the daily charts aren't archived where I can find them. This is from Yahoo Finance. You can see the $42 open from those who simply wanted in but couldn't wait, the willingness of sellers to grab their profit right back to what they paid, and then another wave of buying, but then a sell-off. It closed virtually unchanged from the IPO price.",
"title": ""
},
{
"docid": "d1368ff9eae4bc580a900ba04e19cb65",
"text": "This all happens at once and quickly. Not in order. So the HFT floods the exchange with orders. This is independent of anything. They would be doing this no matter what. Simply in anticipation of finding someone who will want what they're trying to buy. They then notice someone wants what they have a buy order for. They, at the same time, cancel all orders that don't fit this criteria. At the same time, they're testing this guy to see what his price is. So while they're testing this guy they're cancelling all orders that are above his strike price for that stock. They let the right order go through, for a lower price. If they can't get a lower price, they just forget it. However, they probably can because they were in line first. They're buying before this guy and AFTER they know what he wants to pay. Then, they sell it to him.",
"title": ""
},
{
"docid": "9a0db602af711368a0219b1c7845726c",
"text": "\"Stock price is set to the price with the highest transaction volume at any given time. The stock price you cited was only valid in the last transaction on a specific stock exchange. As such it is more of an \"\"historic\"\" value. Next trade will be done with the next biggest volume. Depending on the incoming bids and asks this could be higher or lower, but you can assume it will not be too far off if there is no crash underway. Simple example stock exchange:\"",
"title": ""
},
{
"docid": "42e6c151f76413441c383a8aaf9f510f",
"text": "Your order may or may not be executed. The price of stock can open anywhere. Often yesterday's close is a good indication of today's open, but with a big event overnight, the open may be somewhere quite different. You'll have to wait and see like the rest of us. Also, even if it doesn't execute at the open, the price could vary during the day and it might execute later.",
"title": ""
},
{
"docid": "6c8a2f3388bbbf640add2b9191acf853",
"text": "The sentiment is because between closing and opening a lot can happen, and between opening and the time your order actually goes through, even more can happen. An after-hours trade has an extra amount of short-term risk attached; the price of a stock at the opening bell is technically the same as its price as of the closing the previous trading day, but within a tenth of a second, which is forever in a computerized exchange, that price may move drastically one way or the other, based on news and on other markets. The sentiment, therefore, is simple; if you're trading after-hours, you're trading risky. You're not trading based on what the market's actually doing, you're trading based on what you think the market will do in the morning, and there's still more math going on every second in the privately-held supercomputers in rented cubes in the NYSE basement than you could do all night, digesting this news and projecting what it's going to do to the stocks. Now, if you've done your homework and the stock looks like a good long-term buy, with or without any after-hours news, then place the order at 3 in the morning; who cares what the stock's gonna do at the opening bell. You're gonna hold that stock for the next ten years, maybe; what it does in 5 seconds of opening turmoil is relatively minor compared to the monthly trends that you should be worrying about.",
"title": ""
},
{
"docid": "5a484b5eb4efb839e85833035c389844",
"text": "\"What you are saying is a very valid concern. After the flash crash many institutions in the US replaced \"\"true market orders\"\" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative.\"",
"title": ""
},
{
"docid": "9ca579a1d52fc5a986c5132394e6ff7b",
"text": "It depends on how you place your stop order and the type of stop orders available from your broker. If you place a stop market order and the following day the stock opens below your stop your stock will be stopped out at or around the opening price, meaning you can potentially end up with quite a large gap. If you place a stop limit order, say you place your stop at $10.00 with a limit price of $9.90, and if the price opens below $9.90, say at $9.50, your limit sell order of $9.90 will be placed onto the market but it will not be executed until the price goes back up to $9.90 or above. The third option is to place a Guaranteed Stop Loss, and as specified you are guaranteed your stop price even if the price gaps down below your stop price. You will be paying an extra fee for the Guaranteed Stop Loss Order, and they are usually mainly available with CFD Brokers (so if you are in the USA you might be out of luck).",
"title": ""
},
{
"docid": "1cd39845c4506ace1ae07aecdfa65a9c",
"text": "Opening - is the price at which the first trade gets executed at the start of the trading day (or trading period). High - is the highest price the stock is traded at during the day (or trading period). Low - is the lowest price the stock is traded at during the day (or trading period). Closing - is the price at which the last trade gets executed at the end of the trading day (or trading period). Volume - is the amount of shares that get traded during the trading day (or trading period). For example, if you bought 1000 shares during the day and another 9 people also bought 1000 shares each, then the trading volume for the day would be 10 x 1000 = 10,000.",
"title": ""
},
{
"docid": "c7205cbaecf85917426224c0955e77ce",
"text": "\"For any large company, there's a lot of activity, and if you sell at \"\"market\"\" your buy or sell will execute in seconds within a penny or two of the real-time \"\"market\"\" price. I often sell at \"\"limit\"\" a few cents above market, and those sell within 20 minutes usually. For much smaller companies, obviously you are beholden to a buyer also wanting that stock, but those are not on major exchanges. You never see whose buy order you're selling into, that all happens behind the curtain so to speak.\"",
"title": ""
},
{
"docid": "46f306dff57c96fa3e115a1e5e51a28b",
"text": "In general, how does a large open market stock sale affect prices? A very general answer, all other things being equal, the price will move down. However there is nothing general. It depends on total number of shares in market and total turn over for that specific shares. The order book for the day etc. What is the maximum percentage of a company you could sell per day before the trading freezes, and what factors matter? Every stock exchange has rules that would determine when a particular stock would be suspended from trading, generally a 10-20% swing [either ways]. Generally highly liquid stock or stock during initial listing are exempt from such limits as they are left to arrive the market price ... A large sell order may or may not swing the price for it to get suspended. At times even a small order may do ... again it is specific to a particular stock.",
"title": ""
},
{
"docid": "956c4b8421dcdae2a37ff8d135d43cce",
"text": "In general stock markets are very similar to that, however, you can also put in limit orders to say that you will only buy or sell at a given price. These sit in the market for a specified length of time and will be executed when an order arrives that matches the price (or better). Traders who set limit orders are called liquidity (or price) makers as they provide liquidity (i.e. volume to be traded) to be filled later. If there is no counterparty (i.e. buyer to your seller) in the market, a market maker; a large bank or brokerage who is licensed and regulated to do so, will fill your order at some price. That price is based on how much volume (i.e. trading) there is in that stock on average. This is called average daily volume (ADV) and is calculated over varying periods of time; we use ADV30 which is the 30 day average. You can always sell stocks for whatever price you like privately but a market order does not allow you to set your price (you are a price taker) therefore that kind of order will always fill at a market price. As mentioned above limit orders will not fill until the price is hit but will stay on book as long as they aren't filled, expired or cancelled.",
"title": ""
},
{
"docid": "19b4cc4d6de16c1de1b3f8863affcb0b",
"text": "A stop-loss order becomes a market order when a trade has occurred at or below the trigger price you set when creating the order. This means that you could possibly end up selling some or all of your position at a price lower than your trigger price. For relatively illiquid securities your order may be split into transactions with several buyers at different prices and you could see a significant drop in price between the first part of the order and the last few shares. To mitigate this, brokers also offer a stop-limit order, where you set not only a trigger price, but also a minimum price that you are will to accept for your shares. This reduces the risk of selling at rock bottom prices, especially if you are selling a very large position. However, in the case of a flash crash where other sellers are driving the price below your limit, that part of your order may never execute and you could end up being stuck with a whole lot of shares that are worth less than both your stop loss trigger and limit price. For securities that are liquid and not very volatile, either option is a pretty safe way to cut your losses. For securities that are illiquid and/or very volatile a stop-limit order will prevent you from cashing out at bottom dollar and giving away a bargain to lurkers hanging out at the bottom of the market, but you may end up stuck with shares you don't want for longer than originally planned. It's up to you to decide which kind of risk you prefer.",
"title": ""
},
{
"docid": "de5fc302d9cddc53c62efcfcfa276d1b",
"text": "There are a couple of things you could do, but it may depend partly on the type of orders your broker has available to you. Firstly, if you are putting your limit order the night before after close of market at the top of the bids, you may be risking missing out if bid & offer prices increase by the time the market opens the next day. On the other hand, if bid & offer prices fall at the open of the next day you should get your order filled at or below your limit price. Secondly, you could be available at the market open to see if prices are going up or down and then work out the price you want to buy at then and work out the quantity you can buy at that price. I personally don't like this method because you usually get too emotional, start chasing the market if prices start rising, or start regretting buying at a price and prices fall straight afterwards. My preferred method is this third option. If your broker provides stop orders you can use these to both get into and out of the market. How they work when trying to get into the market is that once you have done your analysis and picked a price that you would want to purchase at, you put a stop buy order in. For example, the price closed at $9.90 the previous day and there has been resistance at $10.00, so you would put a stop buy trigger if the price goes over $10, say $10.01. If your stop buy order gets triggered you can have either a buy market order or a limit order above $10.01 (say $10.02). The market order would go through immediately whilst the limit order would only go through if the price continues going to $10.02 or above. The advantage of this is that you don't get emotional trying to buy your securities whilst sitting in front of the screen, you do your analysis and set your prices whilst the market is closed, you only buy when the security is rising (not falling). As your aim is to be in long term you shouldn't be concerned about buying a little bit higher than the previous days close. On the other hand if you try and buy when the price is falling you don't know when it will stop falling. It is better to buy when the price shows signs of rising rather than falling (always follow the trend).",
"title": ""
},
{
"docid": "4627e2e2e149b4cc2196a252bd34dbec",
"text": "\"if it opens below my limit order What exactly are you trying to achieve here? If your limit order is for 100 and the stock opens \"\"below\"\" your limit order, say 99, then it is obviously going to buy it automatically. also place a stop loss on the same order Most brokers allow limit + stop loss order at the same time on same order. What I conclude from your question is that you're with a broker that is using obscure technology. Get a better broker or maybe, retry phrasing your question correctly.\"",
"title": ""
}
] |
fiqa
|
3729a404a1c7ee7a89bada01fa909e33
|
How will my stock purchase affect my taxes?
|
[
{
"docid": "8e9e81e12f5d38b6cadc8de5e386cc2d",
"text": "Assuming you are in the US, and are an average joe, the answer to your question is no. Investment costs do not reduce your taxable income for the year you make the investment. They do factor in to the cost basis of your investment and so will affect your taxes in the year you sell the investment. If you want to reduce your taxable income, you could contribute the $5000 to a traditional ira, or 401k, assuming you qualify. Depending on where the account is held, you may then be able to use that $5k to purchase stock in the company you are interested in. The stock would be held in your IRA or 401k account, and would be subject to more restrictions than a normal brokerage account.",
"title": ""
},
{
"docid": "87b1311ea060117cc2ce42d5a0981452",
"text": "Purchasing stock doesn't affect your immediate taxes any more than purchasing anything else, unless you purchase it through a traditional 401k or some other pre-tax vehicle. Selling stock has tax effects; that's when you have a gain or loss to report.",
"title": ""
}
] |
[
{
"docid": "0bfbb3a0f9d2ac58c9bb99f9390209f7",
"text": "\"Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC. Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%. The Income Tax Department of India has a publication titled \"\"How to Compute your Capital Gains,\"\" which goes into more detail about a variety of relevant situations.\"",
"title": ""
},
{
"docid": "ece78c28fdb7a538c04e1f1c16ad73a3",
"text": "No, you're not missing anything. RSUs are pretty simple when it comes to taxes. They are taxed as compensation at fair market value when they vest, basically equivalent to the company giving you a cash bonus and then using it to buy company stock. The fair market value at vesting then becomes your cost basis. Assuming the value has increased since vesting, selling the shares that vested at least a year ago (to qualify for lower long-term capital gains tax rates) with the highest cost basis with result in the minimum taxes.",
"title": ""
},
{
"docid": "875dad8f95dc8fdbe28434eb61a793ed",
"text": "You only got 75 shares, so your basis is the fair market value of the stock as of the grant date times the number of shares you got: $20*75. Functionally, it's the same thing as if your employer did this: As such, the basis in that stock is $1,500 ($20*75). The other 25 shares aren't yours and weren't ever yours, so they aren't part of your basis (for net issuance; if they were sell to cover, then the end result would be pretty similar, but there'd be another transaction involved, but we won't go there). To put it another way, suppose your employer paid you a $2000 bonus, leaving you with a $1500 check after tax withholding. Being a prudent person and not wishing to blow your bonus on luxury goods, you invest that $1500 in a well-researched investment. You wouldn't doubt that your cost basis in that investment at $1500.",
"title": ""
},
{
"docid": "c12ad1c75d8f5457aea6526a873e167c",
"text": "It's not all roses, as I understand it, one effect of a tax inversion move is that existing stockholders will get hit with capital gains tax on the stock they hold as part of the conversion process. Edit: going a bit further, often officers of the corporation are insulated from this tax as they have agreements that the company will pay their tax in the event of such a conversion. Seems like a potential for conflict of interest of officers vs shareholders to me. It's unknown if this is the case with BK execs.",
"title": ""
},
{
"docid": "622d9efc9997fa5f88883a7f7a3621cc",
"text": "ESPP tax treatment is complicated. If you received a discount on the purchase of your stock, that discount is taxable as ordinary income when you sell the stock. Any profit about the market value when the stock was purchased is taxed based upon the holding period of the stock. If you have held the stock less than a year, the profit is taxed at your marginal tax rate (ie taxed as ordinary income). If the stock is held for more than a year, it is taxed at a special capital gains tax rate, which ranges from 0-20% depending on your marginal tax rate (most people pay 15%).",
"title": ""
},
{
"docid": "93b6457e8a48c4363e86f317dbc0934e",
"text": "From 26 CFR 1.1012(c)(1)i): ... if a taxpayer sells or transfers shares of stock in a corporation that the taxpayer purchased or acquired on different dates or at different prices and the taxpayer does not adequately identify the lot from which the stock is sold or transferred, the stock sold or transferred is charged against the earliest lot the taxpayer purchased or acquired to determine the basis and holding period of the stock. From 26 CFR 1.1012(c)(3): (i) Where the stock is left in the custody of a broker or other agent, an adequate identification is made if— (a) At the time of the sale or transfer, the taxpayer specifies to such broker or other agent having custody of the stock the particular stock to be sold or transferred, and ... So if you don't specify, the first share bought (for $100) is the one sold, and you have a capital gain of $800. But you can specify to the broker if you would rather sell the stock bought later (and thus have a lower gain). This can either be done for the individual sale (no later than the settlement date of the trade), or via standing order: 26 CFR 1.1012(c)(8) ... A standing order or instruction for the specific identification of stock is treated as an adequate identification made at the time of sale, transfer, delivery, or distribution.",
"title": ""
},
{
"docid": "ab4e8f980720ba23c8a6f3b80ca1a3cf",
"text": "Note that you're asking about withholding, not about taxing. Withholding doesn't mean this is exactly the tax you'll pay: it means they're withholding a certain amount to make sure you pay taxes on it, but the tax bill at the end of the year is the same regardless of how you choose to do the withholding. Your tax bill may be higher or lower than the withholding amount. As far as tax rate, that will be the same regardless - you're just moving the money from one place to the other. The only difference would be that your tax is based on total shares under the plan - meaning that if you buy 1k shares, for example, at $10, so $1,500 discounted income, if you go the payroll route you get (say) $375 withheld. If you go the share route, you either get $375 worth of stock (so 38 shares) withheld (and then you would lose out on selling that stock, meaning you don't get quite as much out of it at the end) or you would ask them to actually buy rather more shares to make up for it, meaning you'd have a slightly higher total gain. That would involve a slightly higher tax at the end of it, of course. Option 1: Buy and then sell $10000 worth, share-based withholding. Assuming 15% profit, and $10/share at both points, then buy/sell 1000 shares, $1500 in profit to take into account, 38 shares' worth (=$380) withheld. You put in $8500, you get back $9620, net $1120. Option 2: Buy and then sell $13500 worth, share based withholding. Same assumptions. You make about $2000 in pre-tax profit, meaning you owe about $500 in tax withholding. Put in $11475, get back $13000, net $1525. Owe 35% more tax at the end of the year, but you have the full $1500 to spend on whatever you are doing with it. Option 3: Buy and then sell $1000 worth, paycheck withholding. You get the full $10000-$8500 = $1500 up front, but your next paycheck is $375 lighter. Same taxes as Option 1 at the end of the year.",
"title": ""
},
{
"docid": "af2c7f5fd12ca83d7807555f97965571",
"text": "Assuming US. The only con that I know of is that hassle factor. You have to remember to sell when you get the new shares, and your taxes become a bit more complicated; the discount that you receive is taxed as ordinary income, and then any change in the price of the stock between when you receive it and you sell it will be considered a capital gain or loss. It's not hard to account for properly if you keep good records.",
"title": ""
},
{
"docid": "2eece10018e187b5456011337e0d74c9",
"text": "It was not 100% clear if you have held all of these stocks for over a year. Therefore, depending on your income tax bracket, it might make sense to hold on to the stock until you have held the individual stock for a year to only be taxed at long-term capital gains rates. Also, you need to take into account the Net Investment Income Tax(NIIT), if your current modified adjusted income is above the current threshold. Beyond these, I would think that you would want to apply the same methodology that caused you to buy these in the first place, as it seems to be working well for you. 2 & 3. No. You trigger a taxable event and therefore have to pay capital gains tax on any gains. If you have a loss in the stock and repurchase the stock within 30 days, you don't get to recognize the loss and have to add the loss to your basis in the stock (Wash Sales Rules).",
"title": ""
},
{
"docid": "e1797c0491a4af3e6fa3e28b50e09be2",
"text": "The original post's $16 has two errors: Here is the first scenario: . Tax Liability($) on Net . Cash # of Price Paper Realized Value Time: ($) Shares ($/sh) Profits Profits ($) 1. Start with: 100 - n/a - - 100 2. After buy 10@10$/sh: - 10 10 - - 100 3. Before selling: - 10 12 (5) - 115 4. After sell 10@12$/sh: 120 - n/a - (5) 115 5. After buy 12@10$/sh: - 12 10 - (5) 115 6. Before selling: - 12 12 (6) (5) 133 7. After sell 12@12$/sh: 144 - n/a - (11) 133 8. After buy 14@10$/sh: 4 14 10 - (11) 133 9. Before selling: 4 14 12 (7) (11) 154 10.After sell 14@12$/sh: 172 - n/a - (18) 154 At this point, assuming that all of the transactions occurred in the same fiscal year, and the realized profits were subject to a 25% short-term capital gains tax, you would owe $18 in taxes. Yes, this is 25% of $172 - $100.",
"title": ""
},
{
"docid": "2ed3c177786d18301727f0854afccc2d",
"text": "\"In the USA there are two ways this situation can be treated. First, if your short position was held less than 45 days. You have to (when preparing the taxes) add the amount of dividend back to the purchase price of the stock. That's called adjusting the basis. Example: short at $10, covered at $8, but during this time stock paid a $1 dividend. It is beneficial for you to add that $1 back to $8 so your stock purchase basis is $9 and your profit is also $1. Inside software (depending what you use) there are options to click on \"\"adjust the basis\"\" or if not, than do it manually specifically for those shares and add a note for tax reviewer. Second option is to have that \"\"dividednd payment in lieu paid\"\" deducted as investment expence. But that option is only available if you hold the shorts for more than 45 days and itemize your deductions. Hope that helps!\"",
"title": ""
},
{
"docid": "5cd255593318509c2eba3620efead98a",
"text": "You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account. The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500. Yes. You sold ~$4500 of stock to pay income taxes. Both the cost basis and the sale price would probably be ~$4500, so no capital gain. This is because you received and sold the stock at the same time. If they waited a little, you could have had a small gain or loss. The remainder of the stock has a cost basis of ~$5500. There are at least two transactions here. In the future you may sell the remaining stock. It has a cost basis of ~$5500. Sale price of course unknown until then. You may break that into different pieces. So you might sell $500 of cost basis for $1000 with a ~$500 capital gain. Then later sell the remainder for $15,000 for a capital gain of ~$10,000.",
"title": ""
},
{
"docid": "6d7e73075bf69bbbe5adeff90c043137",
"text": "You normally only pay taxes on the difference between the sale price and the cost basis of the asset. In your example, you would probably pay taxes on the $10 difference, not the full sale price of $110. If you paid a commission, however, you would be taxed on your gain minus the commission you paid. Since you held the asset for less than a year, you wouldn't pay the long-term capital gains rate of 20%; you'd be taxed on the capital gain as if it were ordinary income, which depends on your federal income tax bracket. Also, littleadv makes a good point about the implications of buying the asset with after-tax funds too, so that's another part of the equation to consider as well.",
"title": ""
},
{
"docid": "9fa3e4c93672a2ca25f75d6d1d809c08",
"text": "\"This stock is the same as any other, but you need to keep clear in your head that you and your company are now different entities. You (the person) will pay tax on capital gains and losses when you sell any stock that you hold in your own name. You'll also owe \"\"regular\"\" tax if you draw a salary, etc. The fact that it may be \"\"your\"\" company does not change these things. The company will not recognize a gain by selling stock to raise capital since it's nominally exchanging things of equal value, say $100 in cash for $100 in stock. In order to sell stock, however, you MIGHT need to register with the SEC depending on how you're going about finding your investors, so keep that in mind.\"",
"title": ""
},
{
"docid": "bbf1a4e9a95e8154a0e768606992b801",
"text": "I gift my daughter stock worth $1000. No tax issue. She sells it for $2000, and has a taxable gain of $1000 that shows up on her return. Yes, you need to find out the date of the gift, as that is the date you value the fund for cost basis. The $3500 isn't a concern, as the gift seems to have been given well before that. It's a long term capital gain when you sell it. And, in a delightfully annoying aspect of our code, the dividends get added to basis each year, as you were paying tax on the dividend whether or not you actually received it. Depending on the level of dividends, your basis may very well be as high as the $6500 current value. (pls ask if anything here needs clarification)",
"title": ""
}
] |
fiqa
|
6319a67aa9aee265e1ace0105a619b6e
|
Shares in stock exchange and dividend payout relationship
|
[
{
"docid": "ebbd3c1b31839b69b58a9fce3bab627a",
"text": "It would be 0.22 * Rs 5 per share, i.e. Rs 1.1 per share. For 1000 share it would be Rs 1.1 * 1000, i.e. 1100",
"title": ""
}
] |
[
{
"docid": "e11a156276e3268bd1b63620fce86a21",
"text": "When you sell the stock your income is from the difference of prices between when you bought the stock and when you sold it. There's no interest there. The interest is in two places: the underlying company assets (which you own, whether you want it or not), and in the distribution of the income to the owners (the dividends). You can calculate which portion of the interest income constitutes your dividend by allocating the portions of your dividend in the proportions of the company income. That would (very roughly and unreliably, of course) give you an estimate what portion of your dividend income derives from the interest. Underlying assets include all the profits of the company that haven't been distributed through dividends, but rather reinvested back into the business. These may or may not be reflected in the market price of the company. Bottom line is that there's no direct correlation between the income from the sale of the stake of ownership and the company income from interest, if any correlation at all exists. Why would you care about interest income of Salesforce? Its not a bank or a lender, they may have some interest income, but that's definitely not the main income source of the company. If you want to know how much interest income exactly the company had, you'll have to dig deep inside the quarterly and annual reports, and even then I'm not sure if you'll find it as a separate item for a company that's not in the lending business.",
"title": ""
},
{
"docid": "34e4ff8c31dc911644bb906c3fa47495",
"text": "No - there are additional factors involved. Note that the shares on issue of a company can change for various reasons (such as conversion/redemption of convertible securities, vesting of restricted employee shares, conversion of employee options, employee stock purchase programs, share placements, buybacks, mergers, rights issues etc.) so it is always worthwhile checking SEC announcements for the company if you want an exact figure. There may also be multiple classes of shares and preferred securities that have different levels of dividends present. For PFG, they filed a 10Q on 22 April 2015 and noted they had 294,385,885 shares outstanding of their common stock. They also noted for the three months ended March 31 2014 that dividends were paid to both common stockholders and preferred stockholders and that there were Series A preferred stock (3 million) and Series B preferred stock (10 million), plus a statement: In February 2015, our Board of Directors authorized a share repurchase program of up to $150.0 million of our outstanding common stock. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders’ equity. Therefore the exact amount of dividend paid out will not be known until the next quarterly report which will state the exact amount of dividend paid out to common and preferred shareholders for the quarter.",
"title": ""
},
{
"docid": "f535a0d7cc0538b79c889db8e26ef801",
"text": "Stock price = Earning per share * P/E Ratio. Most of the time you will see in a listing the Stock price and the P/E ration. The calculation of the EPS is left as an exercise for the student Investor.",
"title": ""
},
{
"docid": "aa896ef199e1088f7bdc3a379dbc2767",
"text": "Less shares outstanding means that, holding the dividend per share constant you would have a lower total dividend expenditure. The more likely outcome is that, if you want to return capital to shareholders through a dividend, you just pay a higher amount per share.",
"title": ""
},
{
"docid": "8298d7869d0f0edb85f3c152d7d4f565",
"text": "\"Also note that a share of voting stock is a vote at the stockholder's meeting, whether it's dividend or non-dividend. That has value to the company and major stockholders in terms of protecting their own interests, and has value to anyone considering a takeover of the company or who otherwise wants to drive the company's policy. Similarly, if the company is bought out, the share will generally be replaced by shares in whatever the new owning company is. So it really does represent \"\"a slice of the company\"\" in several vary practical ways, and thus has fairly well-defined intrinsic value linked to the company's perceived value. If its price drops too low the company becomes more vulnerable to hostile takeover, which means the company itself will often be motivated to buy back shares to protect itself from that threat. One of the questions always asked when making an investment is whether you're looking for growth (are you hoping its intrinsic value will increase) or income (are you hoping it will pay you a premium for owning it). Non-dividend stocks are a pure growth bet. Dividend-paying stocks are typically a mixture of growth and income, at various trade-off points. What's right for you depends on your goals, timeframe, risk tolerance, and what else is already in your portfolio.\"",
"title": ""
},
{
"docid": "cc596ab411b839e7fddc66f3efd63334",
"text": "Various types of corporate actions will precipitate a price adjustment. In the case of dividends, the cash that will be paid out as a dividend to share holders forms part of a company's equity. Once the company pays a dividend, that cash is no longer part of the company's equity and the share price is adjusted accordingly. For example, if Apple is trading at $101 per share at the close of business on the day prior to going ex-dividend, and a dividend of $1 per share has been declared, then the closing price will be adjusted by $1 to give a closing quote of $100. Although the dividend is not paid out until the dividend pay date, the share price is adjusted at the close of business on the day prior to the ex-dividend date since any new purchases on or after the ex-dividend date are not entitled to receive the dividend distribution, so in effect new purchases are buying on the basis of a reduced equity. It will be the exchange providing the quote that performs the price adjustment, not Google or Yahoo. The exchange will perform the adjustment at the close prior to each ex-dividend date, so when you are looking at historical data you are looking at price data that includes each adjustment.",
"title": ""
},
{
"docid": "822bb2c67237202f012a871aa9b12118",
"text": "\"To Many question and they are all treated differently. I was wondering how the logistics of interest and dividend payments are handled on assets , such as mortgages, bonds, stocks, What if the owner is some high-frequency algorithm that buys and sells bonds and stocks in fractions of a second? When the company decides to pay dividends, does it literally track down every single owner of that stock and deposit x cents per share in that person's bank account? (This sounds absolutely absurd and seems like it would be a logistical nightmare). In Stocks, the dividends are issued periodically. The dividend date is declared well in advance. As on end of the day on Dividend date, the list of individuals [or entities] who own the stock is available with the Stock-Exchange / Registrar of the companies. To this list the dividends are credited in next few days / weeks via banking channel. Most of this is automated. What if the owner is some high-frequency algorithm that buys and sells bonds and stocks in fractions of a second? On bonds, things work slightly differently. An Bond is initially issued for say 95 [discount of 5%] and payment of 100 after say 5 years. So when the person sells it after an year, he would logically look to get a price of 96. Of course there are other factors that could fetch him a price of 94.50 or 95.50. So every change in ownership factors in the logical rate of interest. The person who submits in on maturity gets 100. For the homeowner, I'm assuming he / she still makes mortgage payments to the initial bank they got the mortgage from, even if the bank no longer \"\"owns\"\" the mortgage. In this case, does the trader on the secondary market who owns the mortgage also come back to that bank to collect his interest payment? This depends on how the original financial institution sells the mortgage to new institutions. Generally the homeowner would keep paying initial financial institution and they would then take a margin and pay the secondary investor. If this was collateral-ized as Mortgage backed security, it is a very different story.\"",
"title": ""
},
{
"docid": "0ccdc6551bab3d553a85e58f297e935e",
"text": "A share is more than something that yields dividends, it is part ownership of the company and all of its assets. If the company were to be liquidated immediately the shareholders would get (a proportion of) the net value (assets - liabilities) of the company because they own it. If a firm is doing well then its assets are increasing (i.e. more cash assets from profits) therefore the value of the underlying company has risen and the intrinsic value of the shares has also increased. The price will not reflect the current value of the firms assets and liabilities because it will also include the net present value of expected future flows. Working out the expected future flows is a science on par with palmistry and reading chicken entrails so don't expect to work out why a company is trading at a price so much higher than current assets - liabilities (or so much lower in companies that are expected to fail). This speculation is in addition to price speculation that you mention in the question.",
"title": ""
},
{
"docid": "c8e6b1e733931958f9180e8ad4a2b7d7",
"text": "No, they do not. Stock funds and bonds funds collect income dividends in different ways. Stock funds collect dividends (as well as any capital gains that are realized) from the underlying stocks and incorporates these into the funds’ net asset value, or daily share price. That’s why a stock fund’s share price drops when the fund makes a distribution – the distribution comes out of the fund’s total net assets. With bond funds, the internal accounting is different: Dividends accrue daily, and are then paid out to shareholders every month or quarter. Bond funds collect the income from the underlying bonds and keep it in a separate internal “bucket.” A bond fund calculates a daily accrual rate for the shares outstanding, and shareholders only earn income for the days they actually hold the fund. For example, if you buy a bond fund two days before the fund’s month-end distribution, you would only receive two days’ worth of income that month. On the other hand, if you sell a fund part-way through the month, you will still receive a partial distribution at the end of the month, pro-rated for the days you actually held the fund. Source Also via bogleheads: Most Vanguard bond funds accrue interest to the share holders daily. Here is a typical statement from a prospectus: Each Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net capital gains realized from the sale of its holdings. The Fund’s income dividends accrue daily and are distributed monthly. The term accrue used in this sense means that the income dividends are credited to your account each day, just like interest in a savings account that accrues daily. Since the money set aside for your dividends is both an asset of the fund and a liability, it does not affect the calculated net asset value. When the fund distributes the income dividends at the end of the month, the net asset value does not change as both the assets and liabilities decrease by exactly the same amount. [Note that if you sell all of your bond fund shares in the middle of the month, you will receive as proceeds the value of your shares (calculated as number of shares times net asset value) plus a separate distribution of the accrued income dividends.]",
"title": ""
},
{
"docid": "4731dfb1db064ae942c8e2fd7c36e757",
"text": "\"Dividends are declared by the board of directors of a corporation on date A, to stock holders of record on date B (a later date). These stockholders then receive the declared dividend on date C, the so-called payment date. All of these dates are announced on the first (declaration) date. If there is no announcement, no dividend will be paid. The stock typically goes down in price by approximately the amount of the dividend on the date it \"\"goes ex,\"\" but then moves in price to reflect other developments, including the possibility of another declaration/payment, three months hence. Dividends are important to some investors, especially those who live on the income. They are less important to investors who are out for capital gains (and who may prefer that the company reinvest its money to seek such gains instead of paying dividends). In actual fact, dividends are one component of \"\"total\"\" or overall return. The other component is capital gains, and the sum of the two represents your return.\"",
"title": ""
},
{
"docid": "ef79f26ff20897a23ca918338ef24e8b",
"text": "\"Dividend rate is \"\"dividend per share\"\" over a specified time period, usually a year. So in the first example, if the company paid a $1/share dividend over the year before the stock dividend the shareholder would receive $100, while if it paid the $1/share the year after the stock dividend the shareholder would receive $105. The company could have achieved the same thing by paying total dividends of $1.05/share, which is what the last phrase of the last quoted paragraph is saying. Here's an Investopedia page on dividend rate. Also, what you're calling \"\"payout ratio\"\" is really \"\"dividend yield\"\". \"\"Payout ratio\"\" is how much of the company's net earnings are paid out in dividends. That's all in the US, I could see the terms being used differently outside the US.\"",
"title": ""
},
{
"docid": "d0635c74f875d15a57b2671500a2f318",
"text": "Most corporations have a limit on the number of shares that they can issue, which is written into their corporate charter. They usually sell a number that is fewer than the maximum authorized number so that they have a reserve for secondary offerings, employee incentives, etc. In a scrip dividend, the company is distributing authorized shares that were not previously issued. This reduces the number of shares that it has to sell in the future to raise capital, so it reduces the assets of the company. In a split, every share (including the authorized shares that haven't been distributed) are divided. This results in more total shares (which then trade at a price that's roughly proportional to the split), but it does not reduce the assets of the company.",
"title": ""
},
{
"docid": "65341cfd9b4397498cdd8102ad2dbd20",
"text": "No. Share are equity in companies that usually have revenue streams and/or potential for creating them. That revenue can be used to pay out dividends to the shareholders or to grow the company and increase its value. Most companies get their revenue from their customers, and customers rarely give their money to a company without getting some good or service in exchange.",
"title": ""
},
{
"docid": "ae344d7b08ea5be0cb2b7470157192fb",
"text": "Regarding: 1) What's the point of paying a dividend if the stock price automatically decreases? Don't the shareholders just break even? As dividends distribution dates and amounts are announced in advance, probably the stock price will rise of the same amount of the divident before the day of distribution. If I know that stock share A's value is y and the dividend announced is x, I would be willing to buy shares of A for anything > y and < than x+y before the distribution.So, arbitrageurs probably would take the price to x+y before the dividend distribution, and then after the dividend distribution the price will fall back to y.",
"title": ""
},
{
"docid": "34bbcb90aefee6b1b90f85ab10a1b6d5",
"text": "While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time.",
"title": ""
}
] |
fiqa
|
7f444738c8bbd00f7c414e79c8cff0a3
|
Stock options value
|
[
{
"docid": "2e93cddcced62dfdb09049d2d96c932b",
"text": "What you will probably get is an option to buy, for £10,000, £10,000 worth of stock. If the stock price on the day your option is granted is £2.50, then that's 4,000 shares. Companies rarely grant discounted options, as there are tax disincentives. The benefit of the stock option is that when you exercise it, you still only pay £10,000, no matter what the 4,000 shares are now worth. This is supposed to be an incentive for you to work harder to increase the value of the company. You should also check the vesting schedule. You will typically not be able to exercise all your options for some years, although some portion of it may vest each year.",
"title": ""
}
] |
[
{
"docid": "dc97090be3ab27139fd98f9ac08e954b",
"text": "\"You are likely making an assumption that the \"\"Short call\"\" part of the article you refer to isn't making: that you own the underlying stock in the first place. Rather, selling short a call has two primary cases with considerably different risk profiles. When you short-sell (or \"\"write\"\") a call option on a stock, your position can either be: covered, which means you already own the underlying stock and will simply need to deliver it if you are assigned, or else uncovered (or naked), which means you do not own the underlying stock. Writing a covered call can be a relatively conservative trade, while writing a naked call (if your broker were to permit such) can be extremely risky. Consider: With an uncovered position, should you be assigned you will be required to buy the underlying at the prevailing price. This is a very real cost — certainly not an opportunity cost. Look a little further in the article you linked, to the Option strategies section, and you will see the covered call mentioned there. That's the kind of trade you describe in your example.\"",
"title": ""
},
{
"docid": "5647ff51faca34bb74459ad4f3d56779",
"text": "\"fennec has a very good answer but i feel it provides too much information. So i'll just try to explain what that sentence says. Put option is the right to sell a stock. \"\"16 puts on Cisco at 71 cents\"\", means John comes to Jim and says, i'll give you 71 cent now, if you allow me to sell one share of Cisco to you at $16 at some point in the future ( on expiration date). NYT quote says 1000 puts that means 1000 contracts - he bought a right to sell 100,000 shares of Cisco on some day at $16/share. Call option - same idea: right to buy a stock.\"",
"title": ""
},
{
"docid": "742924be536e77e72d8582ba9d07b79e",
"text": "Understanding the BS equation is not needed. What is needed is an understanding of the bell curve. You seem to understand volatility. 68% of the time an event will fall inside one standard deviation. 16% of the time it will be higher, 16%, lower. Now, if my $100 stock has a STD of $10, there's a 16% chance it will trade above $110. But if the STD is $5, the chance is 2.3% per the chart below. The higher volatility makes the option more valuable as there's a highr chance of it being 'in the money.' My answer is an over simplification, per your request.",
"title": ""
},
{
"docid": "c38937ba80ddc8d850d827280596e896",
"text": "\"Your scenario depicts 2 \"\"in the money\"\" options, not \"\"at the money\"\". The former is when the share price is higher than the option strike, the second is when share price is right at strike. I agree this is a highly unlikely scenario, because everyone pricing options knows what everyone else in that stock is doing. Much about an option has everything to do with the remaining time to expiration. Depending on how much more the buyer believes the stock will go up before hitting the expiration date, that could make a big difference in which option they would buy. I agree with the others that if you're seeing this as \"\"real world\"\" then there must be something going on behind the scenes that someone else knows and you don't. I would tread with caution in such a situation and do my homework before making any move. The other big factor that makes your question harder to answer more concisely is that you didn't tell us what the expiration dates on the options are. This makes a difference in how you evaluate them. We could probably be much more helpful to you if you could give us that information.\"",
"title": ""
},
{
"docid": "f9f75fbb78003bb77cd4b14e416ba5b2",
"text": "I am going to. Like I said I have not traded options much in general, but I can see a lot of potential in derivatives in general, and it makes me kind of grin. In the case of commodities, the advantages are really apparent. The only problem I see with stock options is that they expire, and thus if you are more long term bull on a stock, it would be harder. But for things like commodities, that are shorter term any ways and require margin, it makes a lot of sense IMO. I could see how you could gain a larger diversification through options (being able to bet on Russell 2000, S&P, etc. ) or esoteric markets (electricity). I will look up that book that you mentioned. Thanks man.",
"title": ""
},
{
"docid": "0907941b5a3b256dcc6ef439265e293e",
"text": "\"There are two components of option valuation, the value that's \"\"in the money\"\" and the \"\"time value.\"\" In the case of the $395 put, that option was already in the money and it will move less than the stock price by a bit as there will still be some time value there. $22.52 is intrinsic value (the right word for 'in the money') and the rest is time. The $365 strike is still out of the money, but as jldugger implied, the chance of it going through that strike is better as it's $6.66 closer. Looking at the options chain gives you a better perspective on this. If Apple went up $20 Monday, and down $20 Tuesday, these prices would be higher as implied volatility would also go higher. Now, I'd hardly call a drop of under 2% \"\"tanking\"\" but on the otherhand, I'd not call the 25% jump in the option price skyrocketing. Options do this all the time. Curious what prompted the question, are you interested in trading options? This stock in particular?\"",
"title": ""
},
{
"docid": "a5c9706bacdfd6d5292d408675b78aaf",
"text": "remember that IV is literally the volatility that would be present to equate to the latest price of a particular option contract, assuming the Black-Scholes-Merton model. Yahoo's free finance service lists the IV for all the options that it tracks.",
"title": ""
},
{
"docid": "94ca522ac3e692fc40a81e334445cace",
"text": "\"Many companies (particularly tech companies like Atlassian) grant their employees \"\"share options\"\" as part of their compensation. A share option is the right to buy a share in the company at a \"\"strike price\"\" specified when the option is granted. Typically these \"\"vest\"\" after 1-4 years so long as the employee stays with the company. Once they do vest, the employee can exercise them by paying the strike price - typically they'd do that if the shares are now more valuable. The amount they pay to exercise the option goes to the company and will show up in the $2.3 million quoted in the question.\"",
"title": ""
},
{
"docid": "b77ce1eda52bbf046d67670793dc2e8d",
"text": "You have a lot of different questions in your post - I am only responding to the request for how to value the ESPP. When valuing an ESPP, don't think about what you might sell the shares for in the future, think about what the market would charge you for that option today. In general, an option is worth much less than the underlying share itself. For the simplest example, assume you work at a public company, and your exercise price for your options is $.30, and you can only exercise those options until the end of today, and the cost of the shares on the public stock exchange is also $.30. You have the same 'strike price' as everyone else in the market, making your option worth nothing. In truth, holding that right to a specific strike price into the future does give you value, because it means you can realize the upside in share price gains, without risking any money on share losses. So, how do you value the options? If it's a public company with an active options market, you can easily compare your $.30 strike price with the value of call options in the market that have a $.30 strike price. That becomes the value to you of the option (caveat: it is unlikely you can find an exact match for the terms of your vesting period, but you should be able to find a good starting point). If it's a public company without an active options market, you will have to do a bit of estimation. If a current share is worth $.25 (so, close to your strike price), then your option is worth a little bit, but not much. Compare other shares in your industry / company size to get examples of the relative value between an option and a share. If the current share price is worth $.35, then your option is worth about $.05 [the $.05 profit you could get by immediately exercising and selling, plus a bit more for an option on a share that you can't buy in the open market]. If it's a private company, then you need to be very clear on how shares are to be valued, and what methods you have available to sell back to the company / other individuals. You can then consider as per above, how to value the option for a share, vs the share itself. Without a clear way to sell your shares of a private company [ideally through a sale directly back to the company that you are able to force them to agree on; ie: the company will buyback shares at 5x Net income for the previous year, or something like that], then the value of a small number of shares is very nebulous. There is an extremely limited market for shares of private companies, if you don't own enough to exert control. In your case, because the valuation appears to be $2/share [be sure that these are the same share classes you have the option to buy], your option would be worth a little more than $1.70, if you didn't have to wait 4 years to exercise it. This would be total compensation of about $10k, if you were able to exercise today. Many people don't end up working for an early job in their career for 4 years, so you need to consider whether how much that will reduce the value of the ESPP for you personally. Compared with salary of 90k, 10k worth of stock in 4 years may not be a heavy motivating compensation consideration. Note also that because the company is not public, the valuation of $2/share should be taken with a grain of salt.",
"title": ""
},
{
"docid": "bb7297662734c48964eb593b905aee35",
"text": "Another one I have seen mentioned used is Equity Feed. It had varies levels of the software depending on the markets you want and can provide level 2 quotes if select that option. http://stockcharts.com/ is also a great tool I see mentioned with lots of free stuff.",
"title": ""
},
{
"docid": "ca79662e35a8967e8928ef6b4e487cd4",
"text": "yes, you are double counting. Your profit is between ($7.25 and $8) OR ($7.75 and $8.50). in other words, you bought the stock at $7.75 and sold at $8.00 and made $0.50 on top. Profit = $8.00-$7.75+$0.50 (of course all this assumes that the stock is at or above $8.00 when the option expires. If it's below, then your profit = market price - $7.75 + $0.50 by the way the statement won't call me away until the stock reaches $8.50 is wrong. They already paid $0.50 for the right to buy the stock at $8.00. If the stock is $8.01 on the day of expiration your options will be executed(automatically i believe).",
"title": ""
},
{
"docid": "b1672008e1acaa64033b69362c83ac6c",
"text": "P/E = price per earnings. low P/E (P/E < 4) means stock is undervalued.",
"title": ""
},
{
"docid": "4650cb6a9fd26ed2e990dcb3e26b60da",
"text": "\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the \"\"catch\"\"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the \"\"downside risk\"\" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about \"\"vanilla\"\" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade.\"",
"title": ""
},
{
"docid": "77309b603ad362f75b20265cadb82d0a",
"text": "\"As JoeTaxpayer says, there's a lot you can do with just the stock price. Exploring that a bit: Stock prices are a combination of market sentiment and company fundamentals. Options are just a layer on top of that. As such, options are mostly formulaic, which is why you have a hard time finding historical option data -- it's just not that \"\"interesting\"\", technically. \"\"Mostly\"\" because there are known issues with the assumptions the Black-Scholes formula makes. It's pretty good, and importantly, the market relies on it to determine fair option pricing. Option prices are determined by: Relationship of stock price to strike. Both distance and \"\"moneyness\"\". Time to expiration. Dividends. Since dividend payments reduce the intrinsic value of a company, the prospect of dividend payments during the life of a call option depresses the price of the option, as all else equal, without the payments, the stock would be more likely to end up in the money. Reverse the logic for puts. Volatility. Interest rates. But this effect is so tiny, it's safe to ignore. #4, Volatility, is the biggie. Everything else is known. That's why option trading is often considered \"\"volatility trading\"\". There are many ways to skin this cat, but the result is that by using quoted historical values for the stock price, and the dividend payments, and if you like, interest rates, you can very closely determine what the price of the option would have been. \"\"Very closely\"\" depending on your volatility assumption. You could calculate then-historical volatility for each time period, by figuring the average price swing (in either direction) for say the past year (year before the date in question, so you'd do this each day, walking forward). Read up on it, and try various volatility approaches, and see if your results are within a reasonable range. Re the Black-Scholes formula, There's a free spreadsheet downloadable from http://optiontradingtips.com. You might find it useful to grab the concept for coding it up yourself. It's VBA, but you can certainly use that info to translate in your language of choice. Or, if you prefer to read Perl, CPAN has a good module, with full source, of course. I find this approach easier than reading a calculus formula, but I'm a better developer than math-geek :)\"",
"title": ""
},
{
"docid": "3905d2c2904e354193891754dc85ccd1",
"text": "It will be similar to what you have said -- the options price will adjust accordingly following a stock split - Here's a good reference on different scenarios - Splits, Mergers, Spinoffs & Bankruptcies also if you have time to read Characteristics & Risks of Standardized Options",
"title": ""
}
] |
fiqa
|
bbfbdaf0758bea2de99ae04b35e3233e
|
How can the ROE on a stock be more than 100%?
|
[
{
"docid": "6072ebcea4cea26764052ce54c25d864",
"text": "An operating margin will not compare with ROE. If a company has even a small margin on a large turnover and has a comparative lower shareholder equity, it ROE will be much higher. One ratio alone can not analyse a company. You need a full set of ratios and figures.",
"title": ""
},
{
"docid": "532b401ff5231afc707f25204765076c",
"text": "A company's Return on Equity (ROE) is its net income divided by its shareholder's equity. The shareholder's equity is the difference between total assets and total liabilities, and is not dependent on the stock price. What it takes to have a ROE over 100% is to have the income be greater than the equity. This might happen for a variety of reasons, but one way a high ROE happens is if the shareholder's equity (the divisor) is small, which can occur if past losses have eroded the company's capital (the original invested cash and retained earnings). If the equity has become a small value, the income for some period might exceed it, and so the ROE would be over 100%. Operating margin is not closely related to ROE. Although operating income is related to net income, to calculate the margin you divide by sales, which is completely unrelated to shareholder's equity. So there is no relationship with ROE to be expected. Operating margin is primarily dependent on market conditions, and can be substantially different in different industries.",
"title": ""
}
] |
[
{
"docid": "2ed911f77568237b1b793b7bbcf80834",
"text": "\"A company doesn't offer up 100% of its shares to the market. There's a float amount of varying significance, maybe 30% of the shares are put up for public offer. Generally some amount of current shareholders will pledge some or all of their shares for offer to the public. This may be how the venture capital, private equity or other current investors cash out their initial investment. The company may issue new shares in order to raise money for some initiative. It may be a combination of existing shares and new. Additionally, a company may hold some \"\"treasury shares\"\" on its balance sheet. In this instance fluctuations in the share price directly affect the health of the balance sheet. As far as incentive goes, stock options to management and C-Suite employees keep everyone interested in an increasing stock price.\"",
"title": ""
},
{
"docid": "75aa836bc1953b760977b22d48272ce3",
"text": "\"Your math is correct. These kind of returns are possible in the capital markets. (By the way, Google Finance shows something completely different for $CANV than my trading console in ThinkorSwim, ToS shows a high of $201, but I believe there may have been some reverse splits that are not accurately reflected in either of these charts) The problems with this strategy are liquidity and timing. Let's talk about liquidity, because that is a greater factor here than the random psychological factors that would have affected you LONG LONG before your $1,000 allowance was worth a million dollars. If you bought $1000 worth of this stock at $.05 share, this would have been 20,000 shares. The week of October 11th, 2011, during the ENTIRE WEEK only 5,000 shares were traded. From this alone, you can see that it would have been impossible for you to even acquire 20,000 shares, for yourself at $.05 because there was nobody to sell them to you. We can't even look at the next week, because there WERE NO TRADES WHATSOEVER, so we have to skip all the way to November 11th, where indeed over 30,000 shares were traded. But this pushed the price all the way up to $2.00, again, there was no way you could have gotten 20,000 shares at $.05 So now, lets talk about liquidation of your shares. After several other highs and lows in the $20s and $30s, are you telling me that after holding this stock for 2 years you WOULDN'T have taken a $500,000 profit at $25.00 ? We are talking about someone that is investing with $1,000 here. I have my doubts that there was no time between October 2011 and January 2014 that you didn't think \"\"hm this extra $100,000 would be really useful right now.. sell!\"\" Lets say you actually held your $1,000 to $85.55 there were EXACTLY TWO DAYS where that was the top of the market, and in those two days the volume was ~24,000 shares one day and ~11,000 shares the next day. This is BARELY enough time for you to sell your shares, because you would have been the majority of the volume, most likely QUADRUPLING the sell side quotes. As soon as the market saw your sell order there would be a massive selloff of people trying to sell before you do, because they could barely get their shares filled (not enough buyers) let alone someone with five times the amount of shares that day. Yes, you could have made a lot of money. Doing that simplistic math does not tell you the whole story.\"",
"title": ""
},
{
"docid": "c526e569e2ae563e14b933f146c30364",
"text": "\"Companies normally do not give you X% of shares, but in effect give you a fixed \"\"N\"\" number of shares. The \"\"N\"\" may translate initially to X%, but this can go down. If say we began with 100 shares, A holding 50 shares and B holding 50 shares. As the startup grows, there is need for more money. Create 50 more shares and sell it at an arranged price to investor C. Now the percentage of each investor is 33.33%. The money that comes in will go to the company and not to A & B. From here on, A & C together can decide to slowly cut out B by, for example: After any of the above the % of shares held by B would definitely go down.\"",
"title": ""
},
{
"docid": "64b54d4e4ecc2bbf9acb2240ed62c300",
"text": "Large volume just means a lot of market participants believe they know where the stock price will be (after some amount of time). The fact that the price is not moving just means that about 50% of those really confident traders think the stock will be moving up, and about 50% of those really confident traders think the stock will be moving down.",
"title": ""
},
{
"docid": "d9b868a06fb178e5790de8cb625cead1",
"text": "\"The answer to your question has to do with the an explanation of \"\"shares authorized, issued and outstanding.\"\" Companies, in their Articles of Incorporation, specify a maximum number of shares they are authorized to issue. For example purposes let's assume Facebook is authorized to issue 100 shares. Let's pretend they have actually issued 75 shares, but only 50 are outstanding (aka Float, i.e. freely trading stock in the market) and stock options total 25 shares. So if someone owns 1 share, what percentage of Facebook do they own? You might think 1/100, or 1%; you might think 1/75, or 1.3%; or you might think 1/50, or 2%. 2% is the answer, but only on a NON-diluted basis. So today someone who owns 1 share owns 2% of Facebook. Tomorrow Facebook announces they just issued 15 shares to Whatsapp to buy the company. Now there are 65 shares outstanding and 90 issued. Now someone who owns 1 share of Facebook own only 1/65, or 1.5% (down from 2%)! P.S. \"\"Valuation\"\" can be thought of as the price of the stock at the time of the purchase announcement.\"",
"title": ""
},
{
"docid": "0dba28ff9b2908da6f4be7d5ec49557e",
"text": "Let's take a step back. My fictional company 'A' is a solid, old, established company. It's in consumer staples, so people buy the products in good times and bad. It has a dividend of $1/yr. Only knowing this, you have to decide how much you would be willing to pay for one share. You might decide that $20 is fair. Why? Because that's a 5% return on your money, 1/20 = 5%, and given the current rates, you're happy for a 5% dividend. But this company doesn't give out all its earnings as a dividend. It really earns $1.50, so the P/E you are willing to pay is 20/1.5 or 13.3. Many companies offer no dividend, but of course they still might have earnings, and the P/E is one metric that used to judge whether one wishes to buy a stock. A high P/E implies the buyers think the stock will have future growth, and they are wiling to pay more today to hold it. A low P/E might be a sign the company is solid, but not growing, if such a thing is possible.",
"title": ""
},
{
"docid": "306e4dbc38dd9989c1d6bd8e12f8a6bc",
"text": "\"What you need to do is go to yahoo finance and look at different stock's P/E ratios. You'll quickly see that the stocks can be sorted by this number. It would be an interesting exercise to get an idea of why P/E isn't a fixed number, how certain industries cluster around a certain number, but even this isn't precise. But, it will give you an idea as to why your question has no answer. \"\"Annual earnings are $1. What is the share price?\"\" \"\"Question has no answer\"\"\"",
"title": ""
},
{
"docid": "b8c4048dcc3c547e7f46c1ce80de2504",
"text": "I think you are mixing up the likelihood of making a profit with the amount of profit. The likelyhood of profit will be the same, because if you buy $100 worth of shares and the price moves up you will make a profit. If you instead bought $1000 worth of the same shares at the same price and the price moved up you would once again make a profit. In fact if you don't include commissions and other fees, and you buy and sell at the same prices, you percentage profit would be the same. For example, if you bought at $10 and sold at $12, you percentage gain of 20% would be the same no matter how many shares you bought (not including commissions). So if you bought $100 worth your gain would have been 20% or $20 and if you bought $1000 worth your gain would have been 20% or $200. However, if you include commissions, say $10 in and $10 out, your net profit on $100 would have been $0 (0%) and your net profit on $1000 would have been $180 (18%).",
"title": ""
},
{
"docid": "fba69109c372ce3a7f882968dd7b3e36",
"text": "Note that your link shows the shares as of March 31, 2016 while http://uniselect.com/content/files/Press-release/Press-Release-Q1-2016-Final.pdf notes a 2-for-1 stock split so thus you have to double the shares to get the proper number is what you are missing. The stock split occurred in May and thus is after the deadline that you quoted.",
"title": ""
},
{
"docid": "d3de9e9bca0a07a1d3001ebb0cf33d1a",
"text": "Specific stock advice isn't permitted on these boards. I'm discussing the process of a call spread with the Apple Jan 13 calls as an example. In effect, you have $10 to 'bet.' Each bet you'd construct offers a different return (odds). For example, If you bought the $750 call at $37.25, you'd need to look to find what strike has a bid of $27 or higher. The $790 is bid $27.75. So this particular spread is a 4 to 1 bet the stock will close in January over $790, with a $760 break even. You can pull the number from Yahoo to a spreadsheet to make your own chart of spread costs, but I'll give one more example. You think it will go over $850, and that strike is now ask $18.85. The highest strike currently listed is $930, and it's bid $10.35. So this spread cost is $850, and a close over $930 returns $8000 or over 9 to 1. Again, this is not advice, just an analysis of how spreads work. Note, any anomalies in the pricing above is the effect of a particular strike having no trades today, not every strike is active so 'last trade' can be days old. Note: My answer adds to AlexR's response in that once you used the word bet and showed a desire to make a risky move, options are the answer. You acknowledged you understand the basic concept, but given the contract size of 100 shares, these suggestions are ways to bet under your $1000 limit and profit from the gain in the underlying stock you hope to see.",
"title": ""
},
{
"docid": "683104378e7088f185902f2ccb001608",
"text": "\"No. That return on equity number is a target that the regulators consider when approving price hikes. If PG&E tried to get a 20% RoE, the regulator would deny the request. Utilities are basically compelled to accept price regulation in return for a monopoly on utility business in a geographic area. There are obviously no guarantees that a utility will make money, but these good utilities are good stable investments that generally speaking will not make you rich, but appreciate nicely over time. Due to deregulation, however, they are a more complex investment than they once were. Basically, the utility builds and maintains a bunch of physical infrastructure, buys fuel and turns it into electricity. So they have fixed costs, regulated pricing, market-driven costs for fuel, and market-driven demand for electricity. Also consider that the marginal cost of adding capacity to the electric grid is incredibly high, so uneven demand growth or economic disruption in the utility service area can hurt the firms return on equity (and thus the stock price). Compare the stock performance of HE (the Hawaiian electric utlity) to ED (Consolidated Edison, the NYC utility) to SO (Southern Companies, the utility for much of the South). You can see that the severe impact of the recession on HE really damaged the stock -- location matters. Buying strategy is key as well -- during bad market conditions, money flows into these stocks (which are considered to be low-risk \"\"defensive\"\" investments) and inflates the price. You don't want to buy utilities at a peak... you need to dollar-cost average a position over a period of years and hold it. Focus on the high quality utilities or quality local utilities if you understand your local market. Look at Southern Co, Progress Energy, Duke Energy or American Electric Power as high-quality benchmarks to compare with other utilities.\"",
"title": ""
},
{
"docid": "bbc49c2f1936608bbed3759d5fdec2dd",
"text": "Don't know the name but it means you're long with conviction :P Unlimited gains, maximum loss of 95$ + (8-6) = 97$. Basically You are long @ 107 - -2 from 105 to 95. You would have to be ULTRA bullish to initiate this strategy.",
"title": ""
},
{
"docid": "cfaacbb67aed2a42ee2d7f7e859edd28",
"text": "Theoretically, when a company issues more shares, it does not affect the value of your shares. The reason is that when a company issues and sells more shares, the proceeds from the sale of those shares goes back into the company. Using your example, you have 10 out of 100 shares of the company, for a 10% stake. Let's say that the shares are valued at $1,000 each, meaning that the market value of the company is $100,000, and your stake is worth $10,000. Now the company issues 100 more shares at $1,000 each. The company receives $100,000 from new investors, and now the company is worth $200,000. Your stake is now only 5% of the company, but it is still worth $10,000. The authorized share capital is the amount of shares that a company has already planned on selling. When you buy stock in a company, you can look up how many shares exist, so you know what your percent stake in the company is. When a company wants to sell more shares, this is called an increase of authorized share capital. In order to do this, the company generally needs the approval of a majority of the existing shareholders.",
"title": ""
},
{
"docid": "f83e907fd4c969acb36a4db865744b4d",
"text": "I've read over these responses like a dozen times. It's really cool hearing from a business owner who has experienced things first-hand. Nobody in my family has ever been or known anything about business/stocks/Anything. I'm learning everything from the internet, friends, and now reddit. I'll certainly seek true legal advice but you have no idea how helpful you and every other person on this thread has been. Thank you! I'm all ears to anything else",
"title": ""
},
{
"docid": "0d60d0291fb26e11498224481db0d4a9",
"text": "\"This is not really the focus of your question, but it's worth noting that if you live in the United States (which your profile says you do), there are tax implications for you (but not for your children), depending on whether or not you charge your children (enough) interest. If you charge less interest than the appropriate Applicable Federal Rate (for May 2016, at least 0.67%), you must pay taxes on the interest payments you would have received from the debtor if you had charged the AFR, provided that the loan is for $10,001 or more (p. 7). This is referred to as \"\"imputed\"\" income.\"",
"title": ""
}
] |
fiqa
|
b92f0c17a331e43f4e6009058563ae4d
|
At what percentage drop should you buy to average down
|
[
{
"docid": "027b35341fe9921666c3bc278cf757d9",
"text": "\"TL;DR; There is no silver bullet. You have to decide how much to invest and when on your own. Averaging down definition: DEFINITION of 'Average Down' The process of buying additional shares in a company at lower prices than you originally purchased. This brings the average price you've paid for all your shares down. BREAKING DOWN 'Average Down' Sometimes this is a good strategy, other times it's better to sell off a beaten down stock rather than buying more shares. So let us tackle your questions: At what percentage drop of the stock price should I buy more shares. (Ex: should I wait for the price to fall by 5% or 10% to buy more.) It depends on the behaviour of the security and the issuer. Is it near its historical minimum? How healthy is the issuer? There is no set percentage. You can maximize your gains or your losses if the security does not rebound. Investopedia: The strategy is often favored by investors who have a long-term investment horizon and a contrarian approach to investing. A contrarian approach refers to a style of investing that is against, or contrary, to the prevailing investment trend. (...) On the other side of the coin are the investors and traders who generally have shorter-term investment horizons and view a stock decline as a portent of things to come. These investors are also likely to espouse trading in the direction of the prevailing trend, rather than against it. They may view buying into a stock decline as akin to trying to \"\"catch a falling knife.\"\" Your second question: How many additional shares should I buy. (Ex: Initially I bought 10 shares, should I buy 5,10 or 20.) That depends on your portfolio allocation before and after averaging down and your investor profile (risk apettite). Take care when putting more money on a falling security, if your portfolio allocation shifts too much. That may expose you to risks you shouldn't be taking. You are assuming a risk for example, if the market bears down like 2008: Averaging down or doubling up works well when the stock eventually rebounds because it has the effect of magnifying gains, but if the stock continues to decline, losses are also magnified. In such cases, the investor may rue the decision to average down rather than either exiting the position or failing to add to the initial holding. One of the pitfalls of averaging down is when the security does not rebound, and you become too attached to be able to cut your losses and move on. Also if you are bullish on a position, be careful not to slip the I down and add a T on said position. Invest with your head, not your heart.\"",
"title": ""
},
{
"docid": "634bdaeebed3f415b4930b0e86a0187e",
"text": "\"A big part of the answer depends on how \"\"beaten down\"\" the stock is, how long it will take to recover from the drop, and your taste for risk. If you honestly believe the drop is a temporary aberration then averaging down can be a good strategy to lower your dollar-cost average in the stock. But this is a huge risk if you're wrong, because now you're going to magnify your losses by piling on more stock that isn't going anywhere to the shares you already own at a higher cost. As @Mindwin pointed out correctly, the problem for most investors following an \"\"average down\"\" strategy is that it makes them much less likely to cut their losses when the stock doesn't recover. They basically become \"\"married\"\" to the stock because they've actualized their belief the stock will bounce back when maybe it never will or worse, drops even more.\"",
"title": ""
},
{
"docid": "2bc2a20185d2fda4812cfb2f6e6d6e19",
"text": "Only average down super blue chips with a long history or better still, ETFs or index type funds. I do it with income producing funds as I'm a retiree. Other people may have much shorter horizins.",
"title": ""
}
] |
[
{
"docid": "9195bb2a2faa4f1aa9f86cdf0eb07809",
"text": "If your gut told you to buy during the depths of '09, your gut might be well-calibrated. The problem is stock market declines during recessions are frequently not that large relative to the average long run return of 9%: A better strategy might be hold a percentage in equities based upon a probability distribution of historical returns. This becomes problematic because of changes in the definition of earnings and the recent inflation stability which has encouraged high valuations: Cash flow has not been as corrupted as earnings now, and might be a better indicator: This obviously isn't perfect either, but returns can be improved. Since there is no formulaic way yet conventionally available, the optimal primary strategy is still buy & hold which has made the most successful investor frequently one of the richest people on the planet for decades, but this could still be used as an auxiliary for cash management reserves during recessions once retired.",
"title": ""
},
{
"docid": "fdf94162520cb34844a06c5ba5755792",
"text": "Dollar cost averaging works if the stuff you're buying goes up within your time horizon. It won't protect you from losing money if it doesn't. Also consider that the person (or company, or industry) that suggests dollar-cost averaging might want you to start up a regular investment program and put it on auto-pilot, which subsequently increases the chance that you won't give due attention to the fact that you're sending them money every paycheck to buy an investment that make them money regardless of whether you make money or not.",
"title": ""
},
{
"docid": "c13483d7ac67ab58f7636decea28b3f1",
"text": "Points are index based. Simple take the total value of the stocks that compose the index, and set it equal to an arbitrary number. (Say 100 or 1000) This becomes your base. Each day, you recalculate the value of the index basket, and relate it to the base. So if our index on day 0 was 100, and the value of the basket went up 1%, the new index would be 101 points. For the example given, the percentage change would be (133.32 -133.68 ) / 133.68 * 100% = -0.27% Keep in mind that an index basket will change in composition over time. Assets are added and removed as the composition of the market changes. For example, the TSX index no longer includes Nortel, a stock that at one time made up a significant portion of the index. I'm not sure if a percentage drop in an index is really a meaningful statistic because of that. It is however, a good way of looking at an individual instrument.",
"title": ""
},
{
"docid": "37ecbc9531e92ed178dd05f3ac000953",
"text": "Swiss Central bank has a floor of 1.20, the reason why I have this pair is that my downside is limited. The actual differential is about 20 bps but im leveraged 50:1, which gives me a fun 10% annualized. I bought in at 1.2002, meaning my max downside on an investment of 20K (gives 1mn of exposure), is 200$ and my potential profit is 2000. Creating a risk to return of 10:1.",
"title": ""
},
{
"docid": "1c2688f4becf06c94fddfb1ce0810093",
"text": "If you were to stick to your guns, then yes, that's what you'd need to do. In practice, that kind of a hit should get your attention, and you'd be wise to look at why your investment dropped 10% in a month. Value averaging, dollar-cost averaging, or any other investment strategy needs to be done with eyes open and ears to the ground. At least with value averaging you need to look at your valuation each month! From my own experience, dollar-cost averaging breeds laziness and I ended up not paying much attention to what I was investing in, and lost a fair bit of money. Bottom line is you still have to think about what you're doing, and adjust.",
"title": ""
},
{
"docid": "3a99f73816bfe28fe29088b4b48d39f5",
"text": "\"From some of your previous questions it seems like you trade quite often, so I am assuming you are not a \"\"Buy and Hold\"\" person. If that is the case, then have you got a written Trading Plan? Considering you don't know what to do after a 40% drop, I assume the answer to this is that you don't have a Trading Plan. Before you enter any trade you should have your exit point for that trade pre-determined, and this should be included in your Trading Plan. You should also include how you pick the shares you buy, do you use fundamental analysis, technical analysis, a combination of the two, a dart board or some kind of advisory service? Then finally and most importantly you should have your position sizing and risk management incorporated into your Plan. If you are doing all this, and had automatic stop loss orders placed when you entered your buy orders, then you would have been out of the stock well before your loss got to 40%. If you are looking to hang on and hoping for the stock to recover, remember with a 40% drop, the stock will now need to rise by 67% just for you to break even on the trade. Even if the stock did recover, how long would it take? There is the potential for opportunity loss waiting for this stock to recover, and that might take years. If the stock has fallen by 40% in a short time it is most likely that it will continue to fall in the short term, and if it falls to 50%, then the recovery would need to be 100% just for you to break even. Leave your emotions out of your trading as much as possible, have a written Trading Plan which incorporates your risk management. A good book to read on the psychology of the markets, position sizing and risk management is \"\"Trade your way to Financial Freedom\"\" by Van Tharp (I actually went to see him talk tonight in Sydney, all the way over from the USA).\"",
"title": ""
},
{
"docid": "48e17e51600b5ac1eb0edcb144985bf8",
"text": "\"Option 1 is out. There are no \"\"safe returns\"\" that make much money. Besides, if a correction does come along how will you know when to invest? There is no signal that says when the bottom is reached, and you emotions could keep you from acting. Option 2 (dollar cost averaging) is prudent and comforting. There are always some bargains about. You could start with an energy ETF or a few \"\"big oil\"\" company stocks right now.\"",
"title": ""
},
{
"docid": "b809640eecffebcc467fe3278d7eec43",
"text": "Real world example. AGNC = 21.79 time of post. Upcoming .22 cents ex-div Mar 27th Weekly options Mar 27th - $22 strike put has a bid ask spread of .22 / .53. If you can get that put for less than .21 after trade fee's, you'll have yourself a .22 cent arbitrage. Anything more than .21 per contract eats into your arbitrage. At .30 cents you'll only see .13 cent arbitrage. But still have tax liability on .22 cents. (maybe .05 cents tax due to REIT non-exempt dividend rates) So that .13 gain is down to a .08 cents after taxes.",
"title": ""
},
{
"docid": "a1c94491cc27aa9195b884d40836d527",
"text": "\"You've laid out a strategy for deciding that the top of the market has passed and then realizing some gains before the market drops too far. Regardless of whether this strategy is good at accomplishing its goal, it cannot by itself maximize your long-term profits unless you have a similar strategy for deciding that the bottom of the market has passed. Even if you sell at the perfect time at the top of the market, you can still lose lots of money by buying at the wrong time at the bottom. People have been trying to time the market like this for centuries, and on average it doesn't work out all that much better than just plopping some money into the market each week and letting it sit there for 40 years. So the real question is: what is your investment time horizon? If you need your money a year from now, well then you shouldn't be in the stock market in the first place. But if you have to have it in the market, then your plan sounds like a good one to protect yourself from losses. If you don't need your money until 20 years from now, though, then every time you get in and out of the market you're risking sacrificing all your previous \"\"smart\"\" gains with one mistimed trade. Sure, just leaving your money in the market can be psychologically taxing (cf. 2008-2009), but I guarantee that (a) you'll eventually make it all back (cf. 2010-2014) and (b) you won't \"\"miss the top\"\" or \"\"miss the bottom\"\", since you're not doing any trading.\"",
"title": ""
},
{
"docid": "5a7975f7b904e476239cf8f0dc1eb4de",
"text": "\"If I buy property when the market is in a downtrend the property loses value, but I would lose money on rent anyway. So, as long I'm viewing the property as housing expense I would be ok. This is a bit too rough an analysis. It all depends on the numbers you plug in. Let's say you live in the Boston area, and you buy a house during a downtrend at $550k. Two years later, you need to sell it, and the best you can get is $480k. You are down $70k and you are also out two years' of property taxes, maintenance, insurance, mortgage interest maybe, etc. Say that's another $10k a year, so you are down $70k + $20k = $90k. It's probably more than that, but let's go with it... In those same two years, you could have been living in a fairly nice apartment for $2,000/mo. In that scenario, you are out $2k * 24 months = $48k--and that's it. It's a difference of $90k - $48k = $42k in two years. That's sizable. If I wanted to sell and upgrade to a larger property, the larger property would also be cheaper in the downtrend. Yes, the general rule is: if you have to spend your money on a purchase, it's best to buy when things are low, so you maximize your value. However, if the market is in an uptrend, selling the property would gain me more than what I paid, but larger houses would also have increased in price. But it may not scale. When you jump to a much larger (more expensive) house, you can think of it as buying 1.5 houses. That extra 0.5 of a house is a new purchase, and if you buy when prices are high (relative to other economic indicators, like salaries and rents), you are not doing as well as when you buy when they are low. Do both of these scenarios negate the pro/cons of buying in either market? I don't think so. I think, in general, buying \"\"more house\"\" (either going from an apartment to a house or from a small house to a bigger house) when housing is cheaper is favorable. Houses are goods like anything else, and when supply is high (after overproduction of them) and demand is low (during bad economic times), deals can be found relative to other times when the opposite applies, or during housing bubbles. The other point is, as with any trend, you only know the future of the trend...after it passes. You don't know if you are buying at anything close to the bottom of a trend, though you can certainly see it is lower than it once was. In terms of practical matters, if you are going to buy when it's up, you hope you sell when it's up, too. This graph of historical inflation-adjusted housing prices is helpful to that point: let me just say that if I bought in the latest boom, I sure hope I sold during that boom, too!\"",
"title": ""
},
{
"docid": "7e6f4f331cde178e6cbfb007797db5f9",
"text": "The risk of the particular share moving up or down is same for both. however in terms of mitigating the risk, Investor A is conservative on upside, ie will exit if he gets 10%, while is ready to take unlimited downside ... his belief is that things will not go worse .. While Investor B is wants to make at least 10% less than peak value and in general is less risk averse as he will sell his position the moment the price hits 10% less than max [peak value] So it more like how do you mitigate a risk, as to which one is wise depends on your belief and the loss appetite",
"title": ""
},
{
"docid": "afb2b27ef5043f88ddb4453d7898f1c5",
"text": "\"If you're talking about a single stock, you greatly underestimate the chances of it dropping, even long-term. Check out the 12 companies that made up the first Dow Jones Industrial Average in 1896. There is probably only one you've heard of: GE. Many of the others are long gone or have since been bought up by larger companies. And remember these were 12 companies that were deemed to be the most representative of the stock market around the turn of the 20th century. Now, if you're talking about funds that hold many stocks (up to thousands), then your question is a little different. Over the long-term (25+ years), we have never experienced a period where the overall market lost value. Of course, as you recognize, the psychology of investors is a very important factor. If the stock market loses half of its value in a year (as it has done a few times), people will be inundated with bad news and proclamations of \"\"this time it's different!\"\" and explanations of why the stock market will never recover. Perhaps this may be true some day, but it never has been thus far. So based on all the evidence we have, if you hold a well-diversified fund, the chances of it going down long-term (again, meaning 25+ years) are basically zero.\"",
"title": ""
},
{
"docid": "b60b4dc09e62f541f1c4c482a5ba87b5",
"text": "You should know when to sell your shares before you buy them. This is most easily done by placing a stop loss conditional order at the same time you place your buy order. There are many ways to determine at what level to place your stop losses at. The easiest is to place a trailing stop loss at a percentage below the highest close price, so as the price reaches new highs the trailing stop will rise. If looking for short to medium term gains you might place your trailing stop at 10% below the highest close, whilst if you were looking for more longer term gains you should probably place a 20% trailing stop. Another way to place your stops for short to medium term gains is to keep moving your trailing stop up to just below the last trough in an existing uptrend.",
"title": ""
},
{
"docid": "589e8e9ab52c413eb5b16076903fd7a3",
"text": "The optimal time period is unambiguously zero seconds. Put it all in immediately. Dollar cost averaging reduces the risk that you will be buying at a bad time (no one knows whether now is a bad or great time), but brings with it reduction in expected return because you will be keeping a lot of money in cash for a long time. You are reducing your risk and your expected return by dollar cost averaging. It's not crazy to trade expected returns for lower risk. People do it all the time. However, if you have a pot of money you intend to invest and you do so over a period of time, then you are changing your risk profile over time in a way that doesn't correspond to changes in your risk preferences. This is contrary to finance theory and is not optimal. The optimal percentage of your wealth invested in risky assets is proportional to your tolerance for risk and should not change over time unless that tolerance changes. Dollar cost averaging makes sense if you are setting aside some of your income each month to invest. In that case it is simply a way of being invested for as long as possible. Having a pile of money sitting around while you invest it little by little over time is a misuse of dollar-cost averaging. Bottom line: forcing dollar cost averaging on a pile of money you intend to invest is not based in sound finance theory. If you want to invest all that money, do so now. If you are too risk averse to put it all in, then decide how much you will invest, invest that much now, and keep the rest in a savings account indefinitely. Don't change your investment allocation proportion unless your risk aversion changes. There are many people on the internet and elsewhere who preach the gospel of dollar cost averaging, but their belief in it is not based on sound principles. It's just a dogma. The language of your question implies that you may be interested in sound principles, so I have given you the real answer.",
"title": ""
},
{
"docid": "76cafbb1aa70f96e51a3d4abac3ca65e",
"text": "How about this rule? Sell 10% of your shares every time they double in price. (of course, only buy stocks that repeatedly double in price)",
"title": ""
}
] |
fiqa
|
ed06e8ec477c79dd16e03182915f0298
|
Uni-Select (UNS.TO) Market Cap Incorrect?
|
[
{
"docid": "fba69109c372ce3a7f882968dd7b3e36",
"text": "Note that your link shows the shares as of March 31, 2016 while http://uniselect.com/content/files/Press-release/Press-Release-Q1-2016-Final.pdf notes a 2-for-1 stock split so thus you have to double the shares to get the proper number is what you are missing. The stock split occurred in May and thus is after the deadline that you quoted.",
"title": ""
}
] |
[
{
"docid": "df41c539018f1fb6adcf160c270d71fe",
"text": "Many of the Bitcoin exchanges mimic stock exchanges, though they're much more rudimentary offering only simple buy/sell/cancel orders. It's fairly normal for retail stock brokerage accounts to allow other sorts of more complex orders, where once a certain criteria is met, (the price falls below some $ threshold, or has a movement greater than some %) then your order is executed. The space between the current buy order and the current sell order is the bid/ask spread, it's not really about timing. Person X will buy at $100, person Y will sell at $102. If both had a price set at $101, they would just transact. Both parties think they can do a little bit better than the current offer. The width of the bid/ask spread is not universal by any means. The current highest buy order and the current lowest sell order, are both the current price. The current quoted market price is generally the price of the last transaction, whether it's buy or sell.",
"title": ""
},
{
"docid": "14d466d09b2c7db9002d7137ae5e34ee",
"text": "You, like DailyFail, don't understand why mentioning market cap and then comparing nothing more than current share prices is nonsense. That's without getting into the many ways the person you quoted and the foundation of his economic opinions are ridiculous.",
"title": ""
},
{
"docid": "d94213b22892d8c0384ec8dfa260408f",
"text": "On Monday, the 27th of June 2011, the XIV ETF underwent a 10:1 share split. The Yahoo Finance data correctly shows the historic price data adjusted for this split. The Google Finance data does not make the adjustment to the historical data, so it looks like the prices on Google Finance prior to 27 June 2011 are being quoted at 10 times what they should be. Coincidentally, the underlying VIX index saw a sudden surge on the Friday (24 June) and continued on the Monday (27 June), the date that the split took effect. This would have magnified the bearish moves seen in the historic price data on the XIV ETF. Here is a link to an article detailing the confusion this particular share split caused amongst investors. It appears that Google Finance was not the only one to bugger it up. Some brokers failed to adjust their data causing a lots of confusion amongst clients with XIV holdings at the time. This is a recurring problem on Google Finance, where the historic price data often (though not always) fails to account for share splits.",
"title": ""
},
{
"docid": "cfd59d5453f7bac8980471a1619cf26d",
"text": "Basic arbitrage is the (near-)simultaneous purchasing and selling of things that are convertible. The classic example is the international trading of equities. If someone in London wants to purchase a hundred shares of Shell for 40 GBP ea. and someone in New York wants to sell you a hundred shares of Shell for 61 USD ea., you can buy the shares from the guy in New York, sell them to the guy in London and convert your GBP back in to USD for a profit of $41.60 minus fees. Now, if after you buy the shares in New York, the price in London goes down, you'll be left holding 100 shares of Shell that you don't want. So instead you should borrow 100 shares in London and sell them at the exact same time that you buy the shares in New York, thus keeping your net position at 0. In fact, you should also borrow 4000GBP and convert them to USD at the same time, so that exchange rate changes don't get you.",
"title": ""
},
{
"docid": "548619a630faece1dba4884501db7316",
"text": "I should have been clearer but my point was that the NYSE seems to be blaming third party vendors for reporting invalid test data but their own website reported the same data so it seems like there might be another issue. Edit: Found the full comment. It seems that NASDAQ distributed the test data and other parties including the NYSE incorrectly displayed it. I can (barely) understand some third parties incorrectly reporting this data but it seems really bizarre that NYSE wouldn't know how to handle this.",
"title": ""
},
{
"docid": "5db2500544c713428b4b849702c8e351",
"text": "In order to see whether you can buy or sell some given quantity of a stock at the current bid price, you need a counterparty (a buyer) who is willing to buy the number of stocks you are wishing to offload. To see whether such a counterparty exists, you can look at the stock's order book, or level two feed. The order book shows all the people who have placed buy or sell orders, the price they are willing to pay, and the quantity they demand at that price. Here is the order book from earlier this morning for the British pharmaceutical company, GlaxoSmithKline PLC. Let's start by looking at the left-hand blue part of the book, beneath the yellow strip. This is called the Buy side. The book is sorted with the highest price at the top, because this is the best price that a seller can presently obtain. If several buyers bid at the same price, then the oldest entry on the book takes precedence. You can see we have five buyers each willing to pay 1543.0 p (that's 1543 British pence, or £15.43) per share. Therefore the current bid price for this instrument is 1543.0. The first buyer wants 175 shares, the next, 300, and so on. The total volume that is demanded at 1543.0p is 2435 shares. This information is summarized on the yellow strip: 5 buyers, total volume of 2435, at 1543.0. These are all buyers who want to buy right now and the exchange will make the trade happen immediately if you put in a sell order for 1543.0 p or less. If you want to sell 2435 shares or fewer, you are good to go. The important thing to note is that once you sell these bidders a total of 2435 shares, then their orders are fulfilled and they will be removed from the order book. At this point, the next bidder is promoted up the book; but his price is 1542.5, 0.5 p lower than before. Absent any further changes to the order book, the bid price will decrease to 1542.5 p. This makes sense because you are selling a lot of shares so you'd expect the market price to be depressed. This information will be disseminated to the level one feed and the level one graph of the stock price will be updated. Thus if you have more than 2435 shares to sell, you cannot expect to execute your order at the bid price in one go. Of course, the more shares you are trying to get rid of, the further down the buy side you will have to go. In reality for a highly liquid stock as this, the order book receives many amendments per second and it is unlikely that your trade would make much difference. On the right hand side of the display you can see the recent trades: these are the times the trades were done (or notified to the exchange), the price of the trade, the volume and the trade type (AT means automatic trade). GlaxoSmithKline is a highly liquid stock with many willing buyers and sellers. But some stocks are less liquid. In order to enable traders to find a counterparty at short notice, exchanges often require less liquid stocks to have market makers. A market maker places buy and sell orders simultaneously, with a spread between the two prices so that they can profit from each transaction. For instance Diurnal Group PLC has had no trades today and no quotes. It has a more complicated order book, enabling both ordinary buyers and sellers to list if they wish, but market makers are separated out at the top. Here you can see that three market makers are providing liquidity on this stock, Peel Hunt (PEEL), Numis (NUMS) and Winterflood (WINS). They have a very unpalatable spread of over 5% between their bid and offer prices. Further in each case the sum total that they are willing to trade is 3000 shares. If you have more than three thousand Dirunal Group shares to sell, you would have to wait for the market makers to come back with a new quote after you'd sold the first 3000.",
"title": ""
},
{
"docid": "cc774863ed13c1d2f406183d15b26019",
"text": "Quick and dirty paper but pretty interesting.. I'm not in Portfolio Management but I probably would have ended up at the modal number as well. I don't know the subject deeply enough to answer my own question, but is the bias always toward underestimation of variance? Or is that a complex of the way the problem was set up? Another question I have for those in investment management; Would this impact asset allocation?",
"title": ""
},
{
"docid": "049c73e6636485e2c9f7dcfce0f14540",
"text": "No, it's not even remotely accurate in the current sense. Both markets have counterparties directly executing against one another, and both have auctions. The auction mechanics are different (with NYSE's Specialist/DMM model) but during normal market hours there isn't much difference.",
"title": ""
},
{
"docid": "89e3beda30f53ba8ac2de67b874e8dd3",
"text": "This question is impossible answer for all markets but there are 2 more possibilities in my experience:",
"title": ""
},
{
"docid": "ab91c0b27278c08eb52d836cab5ca979",
"text": "USB is the ticker for US Bancorp. The numbers to me look like their prediction of the return for the day, I could be wrong but I think that's what it is.",
"title": ""
},
{
"docid": "052747f8e4e0394948fa0c493eb5d585",
"text": "You can D/K a trade if it is not confirmed in a timely manner. Also, UBS chose not to sell on the first day they waited hoping and got burned. So that first day loss argument doesn't stand here, it can't due to a technical error. My post states that it had to be a large holding for some time.",
"title": ""
},
{
"docid": "58f3407bdf68475135618142761e77bd",
"text": "What really matters is of course how it compares to future prices. Are we making the assumption that the future prices will be more like the average over the last 100 years (which, by looking at your diagram, we seem to be one standard deviation or so above)?",
"title": ""
},
{
"docid": "f824112e5846e465882fb442b9ec6dd2",
"text": "\"As an exercise, I want to give this a shot. I'm not involved in a firm that cares about liquidity so all this stuff is outside my purview. As I understand it, it goes something like this: buy side fund puts an order to the market as a whole (all or most possibly exchanges). HFTs see that order hit the first exchange but have connectivity to exchanges further down the pipe that is faster than the buy side fund. They immediately send their own order in, which reaches exchanges and executes before the buy side fund's order can. They immediately put up an ask, and buy side fund's order hits that ask and is filled (I guess I'm assuming the order was a market order from the beginning). This is in effect the HFT front running the buy side fund. Is this accurate? Even if true, whether I have a genuine issue with this... I'm not sure. Has anyone on the \"\"pro-HFT\"\" side written a solid rebuttal to Lewis and Katsuyama that has solid research behind it?\"",
"title": ""
},
{
"docid": "64e8dd8b36ad83931c55f3dc479cf037",
"text": "Market cap probably isn't as big of an issue as the bid/ask spread and the liquidity, although they tend to be related. The spread is likely to be wider on lesser traded ETF funds we are talking about pennies, likely not an issue unless you are trading in and out frequently. The expense ratios will also tend to be slightly higher again not a huge issue but it might be a consideration. You are unlikely to make up the cost of paying the commission to buy into a larger ETF any time soon though.",
"title": ""
},
{
"docid": "4c678bd788c38788989da1ab4bd3e480",
"text": "Why is it OK for companies to lose all of our personal information with absolutely no penalties? If the government fined these companies a dollar per SS number lost you bet your ass they'd start actually paying attention to security for a change.",
"title": ""
}
] |
fiqa
|
51d7904f5715d61f36cfa6b7390cc4af
|
Is there a time limit to cover an open short position? [duplicate]
|
[
{
"docid": "9be77ec1a7a6711cd9e39215f344a6e9",
"text": "\"There are situations where you can be forced to cover a position, particular when \"\"Reg SHO\"\" (\"\"regulation sho\"\") is activated. Reg SHO is intended to make naked short sellers cover their position, it is to prevent abusive failure to delivers, where someone goes short without borrowing someone else's shares. Naked shorting isn't a violation of federal securities laws but it becomes an accounting problem when multiple people have claims to the same underlying assets. (I've seen companies that had 120% of their shares sold short, too funny, FWIW the market was correct as the company was worth nothing.) You can be naked short without knowing it. So there can be times when you will be forced to cover. Other people being forced to cover can result in a short squeeze. A risk. The other downside is that you have to pay interest on your borrowings. You also have to pay the dividends to the owner of the shares, if applicable. In shorter time frames these are negligible, but in longer time frames, such as closer to a year or longer, these really add up. Let alone the costs of the market going in the opposite direction, and the commissions.\"",
"title": ""
}
] |
[
{
"docid": "6eeae50d64c7628d4b012453cccd6cc4",
"text": "Is it correct that there is no limit on the length of the time that the company can keep the money raised from IPO of its stocks, unlike for the debt of the company where there is a limit? Yes that is correct, there is no limit. But a company can buy back its shares any time it wants. Anyone else can also buy shares on the market whenever they want.",
"title": ""
},
{
"docid": "81c0ba6d26ca860bf07777e2e195e6ea",
"text": "\"4PM is the market close in NYC, so yes, time looks good. If \"\"out of the money,\"\" they expire worthless. If \"\"in the money,\"\" it depends on your broker's rules, they can exercise the option, and you'll need to have the money to cover on Monday or they can do an exercise/sell, in which case, you'd have two commissions but get your profit. The broker will need to tell you their exact procedure, I don't believe it's universal.\"",
"title": ""
},
{
"docid": "b04f790ab2bc20075ad02ef249001c1e",
"text": "\"The two dimensions are to open the trade (creating a position) and to buy or sell (becoming long or short the option). If you already own an option, you bought it to open and then you would sell it to close. If you don't own an option, you can either buy it to open, or sell it (short it) to open. If you are already short an option, you can buy it back to close. If you sell to open covered, the point is you're creating a \"\"covered call\"\" which means you own the stock, and then sell a call. Since you own the stock, the covered call has a lot of the risk of loss removed, though it also subtracts much of the reward possible from your stock.\"",
"title": ""
},
{
"docid": "f3d866356d946c26a7340a1cb7c42f55",
"text": "\"A \"\"covered put\"\" of the form of being short, and buying at the strike price if the \"\"put ... is put\"\" (excercise), is off the table simply because you can't do shorts in the retirement account. Even if you feel you \"\"win\"\" the argument that you're hedged by being short, any broker can say, \"\"we simply forbid shorts\"\" and that's that. A \"\"covered put\"\" of the form of posting the cash, and spending it to buy at the strike price if the \"\"put ... is put\"\" (excercise), might be forbidden by brokerages because, frankly, how do you account for the \"\"dedicated\"\" cash? Is it locked down like margin is, or escrow, or what? I don't know offhand how I would address that in my very own firm. Thus, any broker could say, \"\"we forbid it\"\" and that's that. The other answers are very interesting in conjunction with this. JoeTaxpayer says, very paraphrased, 'just cuz it's legal doesn't mean we have to offer it.' Jaydles says (again, completely paraphrasing), 'complex stuff for a safe little retirement savings account;' 'difficult to administer' (as I said, how do you account for it); and 'tradition' So maybe look at Scott, per Thorn's answer, LOL. It appears that you can shop around on this issue.\"",
"title": ""
},
{
"docid": "ffc2696f44abc36f9a01f7d5177739f5",
"text": "http://www.investopedia.com/university/shortselling/shortselling1.asp 'Therein lies the major risk of short selling, the fear of infinite losses. While the maximum loss for a long investor is the amount invested in a security, the maximum loss for a short seller is theoretically infinite, since there is no upper limit to a stock’s price appreciation. This risk is compounded by the fact that during a short squeeze or buy-in...' Never have shorted a stock. Too intimidated by that!",
"title": ""
},
{
"docid": "a87a785ece5786dd7c3b3761d25d5e96",
"text": "\"And what exactly do I profit from the short? I understand it is the difference in the value of the stock. So if my initial investment was $4000 (200 * $20) and I bought it at $3800 (200 * $19) I profit from the difference, which is $200. Do I also receive back the extra $2000 I gave the bank to perform the trade? Either this is extremely poorly worded or you misunderstand the mechanics of a short position. When you open a short position, your are expecting that the stock will decline from here. In a short position you are borrowing shares you don't own and selling them. If the price goes down you get to buy the same shares back for less money and return them to the person you borrowed from. Your profit is the delta between the original sell price and the new lower buy price (less commissions and fees/interest). Opening and closing a short position is two trades, a sell then a buy. Just like a long trade there is no maximum holding period. If you place your order to sell (short) 200 shares at $19, your initial investment is $3,800. In order to open your $3,800 short position your broker may require your account to have at least $5,700 (according to the 1.5 ratio in your question). It's not advisable to open a short position this close to the ratio requirement. Most brokers require a buffer in your account in case the stock goes up, because in a short trade if the stock goes up you're losing money. If the stock goes up such that you've exhausted your buffer you'll receive what's known as a \"\"margin call\"\" where your broker either requires you to wire in more money or sell part or all of your position at a loss to avoid further losses. And remember, you may be charged interest on the value of the shares you're borrowing. When you hold a position long your maximum loss is the money you put in; a position can only fall to zero (though you may owe interest or other fees if you're trading on margin). When you hold a position short your maximum loss is unlimited; there's no limit to how high the value of something can go. There are less risky ways to make short trades by using put options, but you should ensure that you have a firm grasp on what's happening before you use real money. The timing of the trades and execution of the trades is no different than when you take a plain vanilla long position. You place your order, either market or limit or whatever, and it executes when your trade criteria occurs.\"",
"title": ""
},
{
"docid": "544edd3bd1f3734a332ddf9166bad4ae",
"text": "I use over half my buying power of my portfolio for options, and I'm not a fan of any of the strategies listed above either (I stay away from negative theta trades for the most part), but I just listed them to point out that saying the reason someone wouldn't enter a short position is for fear of infinite losses is asinine. It's easy enough to make any trade risk defined if that is something the trader cares about.",
"title": ""
},
{
"docid": "a1e4de8d93d1a6251e291aae36e43b24",
"text": "First off, you should phone your broker and ask them just to be 100% certain. You will be exercised on the short option that was in the money. It is irrelevant that your portfolio does not contain AAPL stock. You will simply be charged the amount it costs to purchase the shares that you owe. I believe your broker would just take this money from your margin/cash account, they would not have let you put the position on if your account could not cover it. I can't see how you having a long dated 2017 call matters. You would still be long this call once assignment of the short call was settled.",
"title": ""
},
{
"docid": "b9058b6755c59aa95043d2ea72c11b6a",
"text": "\"If you sell a stock you don't own, it's called a short sale. You borrowed the shares from an owner of the stock and eventually would buy to close. On most normal shares, you can hold a short position indefinitely, but there are some shares that have a combination of either a small float or too high a short position that shares to short are not available. This can create a \"\"short squeeze\"\" where shorts are burned by being forced to buy the stock back. Last - when you did this, you should have instructed the broker that you were \"\"selling to open\"\" or \"\"selling short.\"\" In the old days, when people held stock certificates, you were required to send the certificate in when you sold. Today, the broker should know that wasn't your intention.\"",
"title": ""
},
{
"docid": "29c773c8f73383cc694b0fada66b967a",
"text": "\"In India the Short is what is called in other markets call as \"\"Naked Short\"\" [I think I got the right term]. It means that you can only short sell intra day and by the end of the day you have to buy back the shares [at whatever price, if you don't; the exchange will do it by force the next day]. In other markets the Intra day shorts are not allowed and one can short for several days by borrowing shares from someone else [arranged by broker] India has a futures market, so you can sell/buy something today with the execution date of one month. This is typically a fixed day of the month [I think last Thursday]\"",
"title": ""
},
{
"docid": "c5f9b74392d8746fd27848370364e09b",
"text": "This is a Short Diagonal Calender Put Spread Generally, you're writing that long dated one at the money, and buying the short dated one out of the money. The maximum amount that can be made is if the stock breaks out strongly to the upside, and you keep the upfront credit minus whatever small amount it took to buy the April puts back. You can also make money if it breaks strongly to the downside, but only if the credit when you opened your positions was more than $10. Example: Now say the stock falls to $500 by the time of that march expiration. You'd make $90/share on the march put, and lose $100/share on the April put (or a little more; but that deep in the money, there won't be much premium on it). That's a loss of $10/share, or -$1000. So: I make a point of pointing this out because in that article I linked to the fact that your upfront credit needs to be greater than the strike spread in order to profit to the downside is not clearly mentioned.",
"title": ""
},
{
"docid": "4b4d3454995bfc832e60836cefe5af3c",
"text": "\"Am I getting it right that in India in terms of short selling in F&O market its what in the rest of the world is called naked short and you actually make promise to depositary that you will deliver that security you sold on settlement without actually owning the security or going through SLB mechanism? In Future and Options; there is no concept of short selling. You buy a future for a security / index. On the settlement day; the exchange determines the settlement price. The trade is closed in cash. i.e. Based on the settlement price, you [and the other party] will either get money [other party looses money] or you loose money [other party gets the money]. Similarly for Options; on expiry, the all \"\"In Money\"\" [or At Money] Options are settled in cash and you are credit with funds [the option writer is debited with funds]. If the option is \"\"out of money\"\" it expires and you loose the premium you paid to exercise the option.\"",
"title": ""
},
{
"docid": "fc8258418510d335f3378e71ed7ab30e",
"text": "An option is freely tradable, and all options (of the same kind) are equal. If your position is 0 and you sell 1 option, your new position in that option is -1. If the counterparty to your trade buys or sells more options to close, open, or even reopen their position afterwards, that doesn't matter to your position at all. Of course there's also the issue with American and European Options. European Options expire at their due date, but American Options expire at their due date or at any time before their due date if the holder decides they expire. With American Options, if a holder of an American Option decides to exercise the option, someone who is short the same option will be assigned as the counterparty (this is usually random). Expiry is after market close, so if one of your short American Options expires early, you will need to reopen the position the next day. Keep in mind dividends for slightly increased complexity. American and European Options do not in any way refer to the continents they are traded on, or to the location of the companies. These terms simply describe the expiry rules.",
"title": ""
},
{
"docid": "1695261b4ee40cb33966686a30309dac",
"text": "Well, Taking a short position directly in real estate is impossible because it's not a fungible asset, so the only way to do it is to trade in its derivatives - Investment Fund Stock, indexes and commodities correlated to the real estate market (for example, materials related to construction). It's hard to find those because real estate funds usually don't issue securities and rely on investment made directly with them. Another factor should be that those who actually do have issued securities aren't usually popular enough for dealers and Market Makers to invest in it, who make it possible to take a short position in exchange for some spread. So what you can do is, you can go through all the existing real estate funds and find out if any of them has a broker that let's you short it, in other words which one of them has securities in the financial market you can buy or sell. One other option is looking for real estate/property derivatives, like this particular example. Personally, I would try to computationally find other securities that may in some way correlate with the real estate market, even if they look a bit far fetched to be related like commodities and stock from companies in construction and real estate management, etc. and trade those because these have in most of the cases more liquidity. Hope this answers your question!",
"title": ""
},
{
"docid": "c494d981cd42f26b230f546bd8aa58c1",
"text": "If you buy puts, there are no guaranteed proceeds though. If you short against the box, you've got immediate proceeds with a nice capital loss if it doesn't work out. Conversely, you could write a covered call, take the contract proceeds, and write off the long position losses. Nobody ever factors tax consequences into the equation here.",
"title": ""
}
] |
fiqa
|
ac4aa2694eb13d39bba0f8a5c68ffe28
|
How does Big Money work? (i.e. stocks, Enron, net worth)
|
[
{
"docid": "11bda8262f6a0bd63fa8bc706b8f948e",
"text": "1) You ignore dividends. You can hold your 10 million shares and never sell them and still get cash to live on if the security pays dividends. McDonalds stock pays 3% in dividends (a year). If you owned 10 million shares of McDonalds you would get 75,000 every three months. I am sure you could live on 25,000 a month. 2) Enron was an energy company. They sold energy and made a profit (or rather were supposed to). Enron didn't make their money by selling stock. McDonalds makes their money by selling hamburgers (and other food). The income of a company comes from their customers, not from selling stock. 3) IF you sold all of your 10 million shares within a short time frame it, likely, would drive the price of the stock down. But you do not need a billion dollars to live on. If you sold 1000 shares each month you would have plenty for buying cars and pizza. Selling 1000 shares may drive the price of the stock down for a minute or two. But the rest of the transactions, for that security made the same day, would quickly obscure the effect you had on the stock. 4) When you buy stock your money does not (usualy) go to the company. If I were to buy 100 shares of McDonalds, McDonalds would not get $11670.That money is (usually) paid to a 'Market Maker' who, in turn, will use the cash to buy MCD from other individual shareholders (presumably for less than 116.70 a share).",
"title": ""
}
] |
[
{
"docid": "d6c65aeccd0683c60a76071f66ac8b74",
"text": "Depending on the country, nothing. For example, the US has about $1.3 trillion dollars of cash in circulation. Which means that if you were to burn a million dollars of it, that would be 0.000077% of the circulating cash. But cash is a small portion of the actual money in the US. Only about 8% of all money is in cash, the rest is in other forms of value, which means that you'd only be destroying 0.0000062% of the US's money if you burned a full $1,000,000.",
"title": ""
},
{
"docid": "faf2af9aef0c7e879950338c52e1ccf0",
"text": "10k in taser stock at $1.00 per share made those who held into the hundreds per share made millions. But think about the likelihood of you owning a $1 stock and holding it past $10.00. They (taser millionaires) were both crazy and lucky. A direct answer, better off buying a lottery ticket. Stocks are for growing wealth not gaining wealth imho. Of course there are outliers though. To the point in the other answer, if it was repeatable the people teaching the tricks (if they worked) would make much more if they followed their own advice if it worked. Also, if everyone tells you how good gold is to buy that just means they are selling to get out. If it was that good they would be buying and not saying anything about it.",
"title": ""
},
{
"docid": "386d599549ca10d1935bf316265b5165",
"text": "Most of the information we get about how a company is running its business, in any market, comes from the company. If the information is related to financial statements, it is checked by an external audit, and then provided to the public through official channels. All of these controls are meant to make it very unlikely for a firm to commit fraud or to cook its books. In that sense the controls are successful, very few firms provide fraudulent information to the public compared with the thousands of companies that list in stock markets around the world. Now, there is still a handful of firms that have committed fraud, and it is probable that a few firms are committing fraud right now. But, these companies go to great lengths to keep information about their fraud hidden from both the public and the authorities. All of these factors contribute to such frauds being black swan events to the outside observer. A black swan event is an event that is highly improbable, impossible to foresee with the information available before the event (it can only be analyzed in retrospect), and it has very large impact. The classification of an event as a black swan depends on your perspective. E.g. the Enron collapse was not as unexpected to the Enron executives as it was to its investors. You cannot foresee black swan events, but there are a few strategies that allow you to insure yourself against them. One such strategy is buying out of the money puts in the stocks where you have an investment, the idea being that in the event of a crash - due to fraud or whatever other reason - the profits in your puts would offset the loses on the stock. This strategy however suffers from time and loses a little money every day that the black swan doesn't show up, thanks to theta decay. So while it is not possible to detect fraud before investing, or at least not feasible with the resources and information available to the average investor, it is possible to obtain some degree of protection against it, at a cost. Whether that cost is too high or not, is the million dollar question.",
"title": ""
},
{
"docid": "55765f7687c9396197d73e17d5c30658",
"text": "Since I'm missing the shortest and simplest answer, I'll add it: A car also doesn't offer dividends, yet it's still worth money. A $100 bill doesn't offer dividends, yet people are willing to offer services, or goods, or other currencies, to own that $100 bill. It's the same with a stock. If other people are willing to buy it off you for a price X, it's worth at least close to price X to you. In theory the price X depends on the value of the assets of the company, including unknown values like expected future profits or losses. Speaking from experience as a trader, in practice it's very often really just price X because others pay price X.",
"title": ""
},
{
"docid": "88ab9f9eb83e88b5b691d94aa1f7100e",
"text": "Many CEOs I have heard of earn a lot more than 200k. In fact a lot earn more than 1M and then get bonuses as well. Many wealthy people increase there wealth by investing in property, the stock market, businesses and other assets that will produce them good capital growth. Oh yeh, and luck usually has very little to do with their success.",
"title": ""
},
{
"docid": "6e6390bc4bd318df463271b969ab2ba9",
"text": "This has never really adequately explained it for me, and I've tried reading up on it all over the place. For a long time I thought that in a trade, the market maker pockets the spread *for that trade*, but that's not the case. The only sensible explanation I've found (which I'm not going to give in full...) is that the market maker will provide liquidity by buying and selling trades they have no actual view on (short or long), and if the spread is higher, that contributes directly to the amount they make over time when they open and close positions they've made. It would be great to see a single definitive example somewhere that shows how a market maker makes money.",
"title": ""
},
{
"docid": "8f27920a96da3bee8da7e7f98c9a00d8",
"text": "\"I believe Tom Au answered your key question. Let me just add in response to, \"\"What if someone was just simply rich to buy > 50%, but does not know how to handle the company?\"\" This happens all the time. Bob Senior is a brilliant business man, he starts a company, it is wildly successful, then he dies and Bob Junior inherits the company. (If it's a privately owned company he may inherit it directly; if it's a corporation he inherits a controlling interest in the stock.) Bob Junior knows nothing about how to run a business. And so he mismanages the company, runs it into the ground, and eventually it goes bankrupt. Stock holders lose their investment, employees lose their jobs, and in general everyone is very unhappy. I suppose it also happens that someone gets rich doing thing A and then decides that he's going to buy a business that does thing B. He has no idea how to run a business doing thing B and he destroys the company. I can't think of any specific examples of this off the top of my head, but I've heard of it happening with people who make a ton of money as actors or professional athletes and then decide to start a business.\"",
"title": ""
},
{
"docid": "3fbbb410b7ff1fb7eba4f60c84daad3f",
"text": "There are several problems with your reasoning: if I buy one share of GOOGLE now for $830, I could have $860 within the end of tonight -- totally possible and maybe even likely. You can do the same thing with 1,000,000 shares of google, and it's just as likely to go down as go up. if I were to invest $1,000.00 in gold to have $1,000.00 worth of gold, it's no different than keeping $1,000.00 in cash It's VERY different. Gold can be just as volatile as stocks, so it certainly is different as just keeping it in cash. Benefits of a larger portfolio:",
"title": ""
},
{
"docid": "8c86893856a5aa29dc8894ce05709be1",
"text": "\"Consider this thought experiment: Take 10 million people and give them each $3,000. Every day they each purchase a random stock with all of their money. The next day they flip a coin and if it's heads they do nothing, and if it's tails they sell it and purchase another random stock. Repeat everyday for 5 years. After 5 years, you'll probably have many people that lost all of their money due to the fees they paid for each trade they made. A lot of people will have lost a little or won a little. Some people will have doubled or tripled their money, or even better. A very small number of people will have made \"\"millions\"\". Some of those small number of people that made millions will likely go on to write books and sell seminars on how to make money in the stock market.\"",
"title": ""
},
{
"docid": "284f2fbee5b6cc709b75948be82d8d58",
"text": "An oxymoron is something that contradicts itself. Inside trading is sharing information that isn't public. How the fuck do you think these hedge funds and investment banks can offer almost 50% returns during these times in our economy??? Oh yea it's called inside trading. Reason why it's an oxymoron is because trading information is considered ilegal yet that what everyone does on the market, rules are made to give off fear but past that it's all open roads and deep pockets. And if you really don't believe that stock market isn't rigged then there is no reason for me to explain myself on that because it would be like taking to a wall. And I thank you for being one of those people that thinks it's not rigged because you help my portfolio look good from your dumb investments.",
"title": ""
},
{
"docid": "17a7e6a0eaea798308eb1a20630b2465",
"text": "This is exactly what happened with Enron. The 401k was mostly invested in company stock, so when the company went bankrupt the employees lost both their jobs and savings. The plan administrator was also faulted by the government for continuing to allow new purchases of stock even as the stock price (and hence the perceived fortunes of the company) tumbled. http://money.cnn.com/2001/11/26/401k/q_retire_enron_re/ http://www.investopedia.com/articles/analyst/011802.asp",
"title": ""
},
{
"docid": "c2f67d30263121ee023c4e9234794cc1",
"text": "TL;DR: Income is how much you make, net worth is the value of all your assets: cash, real estate, stocks, etc. With the case of Buffett: Berkshire Hathaway's - Buffett's company - market capitalisation is ~$460 Billion. Buffett controls 18% of shares. $460B x 18%: ~$80 Billion. So we can estimate that a large part of his net worth is tied up in BH stock (obviously this isn't perfect either as there are other factors at play here). BUT this is only on paper. Ie yes he's worth that, but he doesn't really have $80 Billion somewhere in a bank. He gets the money to live from other personal investments and business means.",
"title": ""
},
{
"docid": "23ef52c9774a6604d07c1c6fcc51ba5c",
"text": "\"Very simple. You open an account with a broker who will do the trades for you. Then you give the broker orders to buy and sell (and the money to pay for the purchases). That's it. In the old days, you would call on the phone (remember, in all the movies, \"\"Sell, sell!!!!\"\"? That's how), now every decent broker has an online trading platform. If you don't want to have \"\"additional value\"\" and just trade - there are many online discount brokers (ETrade, ScotTrade, TD Ameritrade, and others) who offer pretty cheap trades and provide decent services and access to information. For more fees, you can also get advices and professional management where an investment manager will make the decisions for you (if you have several millions to invest, that is). After you open an account and login, you'll find a big green (usually) button which says \"\"BUY\"\". Stocks are traded on exchanges. For example the NYSE and the NASDAQ are the most common US exchanges (there's another one called \"\"pink sheets\"\", but its a different kind of animal), there are also stock exchanges in Europe (notably London, Frankfurt, Paris, Moscow) and Asia (notably Hong Kong, Shanghai, Tokyo). Many trading platforms (ETrade, that I use, for example) allow investing on some of those as well.\"",
"title": ""
},
{
"docid": "aea82a840a26f319e88b143f6fc65bac",
"text": "Very wealthy people usually have an investment manager who is constantly moving money between investments and accounts. They hold cash (or cash equivalent) accounts for use in a near-term buying opportunity, for example if they believe certain stocks will go down in price soon. This amount can vary from under 1% (for a money manager with no intention of any short-term trading) to over 20% (for a market pessimist who expects a huge price reduction shortly). In rare cases they will also hold significant cash because of a planned large purchase, but there's almost never a reason for that to exceed 1% of their net worth.",
"title": ""
},
{
"docid": "499d8adf4782925193c55e97dde77c6a",
"text": "Enron did a wide range of dodgy financial accounting, using tricks to severely mis-represent their financial situation. They then used these doctored accounts to fool lenders and stock-buyers that the company had more money, and fewer debts or problems, than it really had. Eventually they ran out of money and went bankrupt, leaving the lenders and stock-buyers with nothing.",
"title": ""
}
] |
fiqa
|
708749ca4b08b763a97d97b665060b45
|
If an option's price is 100% made up of its intrinsic value, is there a way to guarantee a non-loss while having a chance at a profit?
|
[
{
"docid": "c82a14fca33c9b00f82005e06eac1fdc",
"text": "The strategy looks good on paper but in reality, the 150 call will have some time value particularly if it has got some time to mature. Let us say this time value is 0.50 , so the call costs 3.50. If the stock stays above 150 (actually above 149.50) , by the expiration of the call, you will lose this 0.50 . Then you need to keep buying calls over and over and hope one day a big down move will more than make up for all this lost premium. It is possible, but not entirely predictable. You may get lucky, but it may take many months to produce a significant move to make up for all the lost premium. If a big down move were to happen and the market had any indication of that in advance, that would be priced into the call already, so the 150 call may cost 4$ or 4.50$ if the market had wind of a big move. (a.k.a high implied volatility)",
"title": ""
},
{
"docid": "1e676b3dbee6e3a660c76ac613f54b5e",
"text": "Yes, one such strategy is dividend arbitrage using stock and in the money options. You have to find out which option is the most mispriced before the ex-dividend date.",
"title": ""
}
] |
[
{
"docid": "2eb5c9d745da2fe15810ffd0b2fd4451",
"text": "Hedging - You have an investment and are worried that the price might drop in the near future. You don't want to sell as this will realise a capital gain for which you may have to pay capital gains tax. So instead you make an investment in another instrument (sometimes called insurance) to offset falls in your investment. An example may be that you own shares in XYZ. You feel the price has risen sharply over the last month and is due for a steep fall. So you buy some put option over XYZ. You pay a small premium and if the price of XYZ falls you will lose money on the shares but will make money on the put option, thus limiting your losses. If the price continues to go up you will only lose the premium you paid for the option (very similar to an insurance policy). Diversification - This is when you may have say $100,000 to invest and spread your investments over a portfolio of shares, some units in a property fund and some bonds. So you are spreading your risks and returns over a range of products. The idea is if one stock or one sector goes down, you will not lose a large portion of your investment, as it is unlikely that all the different sectors will all go down at the same time.",
"title": ""
},
{
"docid": "2102470726f1fbc16578ce529e8d892a",
"text": "In absolute terms the risk is about the same. If you own the stock and your put option goes in the money, then you have the option to get rid of your stock at yesterday's higher price. If you don't, you can sell the option for a higher price than you paid for it. But, as you calculated yourself, the net gain or loss (in absolute terms, not percentage terms) is the same either way.",
"title": ""
},
{
"docid": "59430118e07e163ffeb46f261970388b",
"text": "No. Such companies don't exist. Derivative instruments have evolved over a period and there is a market place, stock exchange with members / broker with obligations etc clearly laid out and enforceable. If I understand correctly say the house is at 300 K. You would like a option to sell it to someone for 300 K after 6 months. Lets say you are ready to pay a premium of 10K for this option. After 6 months, if the market price is 400 K you would not exercise the option and if the market price of your house is 200 K you would exercise the option and ask the option writer to buy your house for 300 K. There are quite a few challenges, i.e. who will moderate this transaction. How do we arrive that house is valued at 300K. There could be actions taken by you to damage the property and hence its reduction in value, etc. i.e. A stock exchange like market place for house is not there and it may or may not develop in future.",
"title": ""
},
{
"docid": "d015bb7fb08fc382d9aa62e25c1b767a",
"text": "It's unclear what you're asking. When I originally read your question, it seemed that you had closed out one options position and opened another. When I read your question the second time, it seemed that you were writing a second option while the first was still open. In the second case, you have one covered and one naked position. The covered call will expire worthless, the naked call will expire in the money. How your broker will resolve that is a question best left for them, but my expectation is that they will assign the non-worthless calls. Whereas, if both options expired in the money, you would be assigned and you would have to come up with the additional shares (and again, that depends on how your broker works). In general, for both cases, your net is the premiums you received, plus the difference between strike price and the price that you paid for the stock, minus any cost to close out the position. So whether you make a profit is very much dependent on how much you received for your premiums. Scenario #1: close first call, write second: Scenario #2: write covered + naked, one expires worthless Scenario #3: write covered + naked, both expire in the money Disclaimer: the SEC does not consider me a financial/investment advisor, so this is not financial/investment advice",
"title": ""
},
{
"docid": "447cbfdf0310090c03122cfe7d7b8ab1",
"text": "\"How do option market makers actually hedge their positions so that they do not have a price risk? You cannot complete hedge away price risk of a sold call simply by buying the underlying and waiting. As the price of the underlying decreases, the \"\"Delta\"\" (price risk) decreases, so as the underlying decreases, you would gradually sell some of the underlying to reduce your price risk from the underlying to match the price risk of the option. The opposite is true as well - as the price of the underlying increases, you'd buy more of the underlying to maintain a \"\"delta neutral\"\" position. If you want to employ this strategy, first you need to fully understand what \"\"delta\"\" is and how to calculate it. Then you can use delta hedging to reduce your price risk.\"",
"title": ""
},
{
"docid": "d3cf1863509b8c42a3d70a5e28392a36",
"text": "I do this often with shares that I own - mostly as a learning/experience-building exercise, since I don't own enough individual stocks to make me rich (and don't risk enough to make me broke). Suppose I own 1,000 shares of X. I don't expect my shares to go down, but I want to be compensated in case they do go down. Sure, I could put in a stop-loss order, but another option is to sell a call above where the stock is now (out-of-the-money). So I get the premium regardless of what happens. From there three things can happen: So a covered call essentially lets you give up some upside for some compensation against downward moves. Mathematically it's roughly equivalent to selling a put option - you make a little money (from the premium) if the stock goes up but can lose a lot if the stock plummets. So you would sell call options if:",
"title": ""
},
{
"docid": "992515091016e92c23ab724308d91cbb",
"text": "\"There are people (well, companies) who make money doing roughly what you describe, but not exactly. They're called \"\"market makers\"\". Their value for X% is somewhere on the scale of 1% (that is to say: a scale at which almost everything is \"\"volatile\"\"), but they use leverage, shorting and hedging to complicate things to the point where it's nothing like a simple as making a 1% profit every time they trade. Their actions tend to reduce volatility and increase liquidity. The reason you can't do this is that you don't have enough capital to do what market makers do, and you don't receive any advantages that the exchange might offer to official market makers in return for them contracting to always make both buy bids and sell offers (at different prices, hence the \"\"bid-offer spread\"\"). They have to be able to cover large short-term losses on individual stocks, but when the stock doesn't move too much they do make profits from the spread. The reason you can't just buy a lot of volatile stocks \"\"assuming I don't make too many poor choices\"\", is that the reason the stocks are volatile is that nobody knows which ones are the good choices and which ones are the poor choices. So if you buy volatile stocks then you will buy a bunch of losers, so what's your strategy for ensuring there aren't \"\"too many\"\"? Supposing that you're going to hold 10 stocks, with 10% of your money in each, what do you do the first time all 10 of them fall the day after you bought them? Or maybe not all 10, but suppose 75% of your holdings give no impression that they're going to hit your target any time soon. Do you just sit tight and stop trading until one of them hits your X% target (in which case you start to look a little bit more like a long-term investor after all), or are you tempted to change your strategy as the months and years roll by? If you will eventually sell things at a loss to make cash available for new trades, then you cannot assess your strategy \"\"as if\"\" you always make an X% gain, since that isn't true. If you don't ever sell at a loss, then you'll inevitably sometimes have no cash to trade with through picking losers. The big practical question then is when that state of affairs persists, for how long, and whether it's in force when you want to spend the money on something other than investing. So sure, if you used a short-term time machine to know in advance which volatile stocks are the good ones today, then it would be more profitable to day-trade those than it would be to invest for the long term. Investing on the assumption that you'll only pick short-term winners is basically the same as assuming you have that time machine ;-) There are various strategies for analysing the market and trying to find ways to more modestly do what market makers do, which is to take profit from the inherent volatility of the market. The simple strategy you describe isn't complete and cannot be assessed since you don't say how to decide what to buy, but the selling strategy \"\"sell as soon as I've made X% but not otherwise\"\" can certainly be improved. If you're keen you can test a give strategy for yourself using historical share price data (or current share price data: run an imaginary account and see how you're doing in 12 months). When using historical data you have to be realistic about how you'd choose what stocks to buy each day, or else you're just cheating at solitaire. When using current data you have to beware that there might not be a major market slump in the next 12 months, in which case you won't know how your strategy performs under conditions that it inevitably will meet eventually if you run it for real. You also have to be sure in either case to factor in the transaction costs you'd be paying, and the fact that you're buying at the offer price and selling at the bid price, you can't trade at the headline mid-market price. Finally, you have to consider that to do pure technical analysis as an individual, you are in effect competing against a bank that's camped on top of the exchange to get fastest possible access to trade, it has a supercomputer and a team of whizz-kids, and it's trying to find and extract the same opportunities you are. This is not to say the plucky underdog can't do well, but there are systematic reasons not to just assume you will. So folks investing for their retirement generally prefer a low-risk strategy that plays the averages and settles for taking long-term trends.\"",
"title": ""
},
{
"docid": "77f40b3209aec2de9ea6811bdedc2815",
"text": "Focusing on options, many people and companies use them to mitigate risk(hedge) When used as a hedge the objective is not to win big, it is to create a more predictable outcome. Option traders win big by consistenly structuring trades with a high probability of success. In this way, they take 100 and turn it into 1000 with 100 small trades with a target profit of $10/trade. Although options are a 'zero sum' game, a general theory among options traders is the stock market only has a 54-56 probability of profit(PoP) - skewed from 50-50 win/loss because the market tends to go up over a long time frame. Using Option trading strategies strategically, you have more control over PoP and you can set yourself up to win whether the security goes up/down/sideways. A quick and dirty measure of PoP is an options' delta. If the delta on a call option is 19, there is roughly a 19% chance your option will be in the money at expiration - or a 19% chance of hitting a home run and multiplyimg your money. If the delta is 68, there is a 68% chance of a profitable trade or getting on base. There are more variables to this equation, but I hope this clearly explains the essence.",
"title": ""
},
{
"docid": "18fffb30cf851552aecb3366f6b51409",
"text": "By buying the call option, you are getting the benefit of purchasing the underlying shares (that is, if the shares go up in value, you make money), but transferring the risk of the shares reducing in value. This is more apparent when you are using the option to offset an explicit risk that you hold. For example, if you have a short position, you are at unlimited risk of the position going up in value. You could decide you only want to take the risk that it might rise to $X. In that case, you could buy a call option with $X strike price. Then you have transferred the risk that the position goes over $X to the counterpart, since, even if the shares are trading at $X+$Y you can close out the short position by purchasing the shares at $X, while the option counterpart will lose $Y.",
"title": ""
},
{
"docid": "772842302ea41327c93f85df4bda5751",
"text": "\"So, if an out-of-the-money option (all time value) has a price P (say $3.00), and there are N days... The extrinsic value isn't solely determined by time value as your quote suggests. It's also based on volatility and demand. Here is a quote from http://www.tradingmarkets.com/options/trading-lessons/the-mystery-of-option-extrinsic-value-767484.html distinguishing between extrinsic time value and extrinsic non-time value: The time value of an option is entirely predictable. Time value premium declines at an accelerating rate, with most time decay occurring in the last one to two months before expiration. This occurs on a predictable curve. Intrinsic value is also predictable and easily followed. It is worth one point for every point the option is in the money. For example, a call with a strike of 30 has three points of intrinsic value when the current value of the underlying stock is $33 per share; and a 40 put has two points of intrinsic value when the underlying stock is worth $38. The third type of premium, extrinsic value, increases or decreases when the underlying stock changes and when the distance between current value of stock and strike of the option get closer together. As a symptom of volatility, extrinsic value may be greater for highly volatile underlying stock, and lower for less volatile stocks. Extrinsic value is the only classification of option premium that is unpredictable. The SPYs you point out probably had a volatility component affecting value. This portion is a factor of expectations or uncertainty. So an event expected to conclude prior to expiration, but of unknown outcome can cause theta to be higher than p/n. For example, a drug company is being sued and the outcome of a trial will determine whether that company pays out millions or not. The extrinsic will be higher than p/n prior to the outcome of the trial then drops after. Of course, the most common situation where this happens is earnings. After the announcement, it's not unusual to see a dramatic drop in the extrinsic portion of options. This is why sometimes a new option trader gets angry when buying calls prior to earnings. When 'surprise' good earnings are announced as hoped, the rise is stock price is largely offset by a fall in extrinsic value giving call holders little or no gain! As for the reverse situation where theta is lower than p/n would expect? Well you can actually have negative theta meaning the extrinsic portion rises over time. (this statement is a little confusing because theta is usually described as negative, but since you describe it as a positive number, negative here means the opposite of what you'd expect). This is a quote from \"\"Option Volatility & Pricing\"\". Keep in mind that they use 'positive' theta to mean the time value increases up over time: Is it ever possible for an option to have a positive theta such that if nothing changes the option will be worth more tomorrow than it is today? When futures options are subject to stock-type settlement, as they currently are in the United States, the carrying cost on a deeply in-the-money option, either a call or a put, can, under some circumstances, be greater than the volatility component. If this happens, and the option is European (no early exercise permitted), it will have a theoretical value less than parity (less than intrinsic value). As expiration approaches, the value of the option will slowly rise to parity. Hence, the option will have a positive theta. Sheldon Natenberg. Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Kindle Locations 1521-1525). Kindle Edition.\"",
"title": ""
},
{
"docid": "5771743ff63660295d09ab422941f4d1",
"text": "Let's consider that transaction cost is 0(zero) for calculation. In the scenario you have stated, maximum profit that could be made is 55$, however risk is unlimited. Hedging can also be used to limit your losses, let's consider this scenario. Stock ABC trading @ 100$, I'll buy the stock ABC @ 100$ and buy a put option of ABC @ strike price 90$ for a premium of 5$ with an expiration date of 1 month. Possible outcomes I end up in a loss in 3 out of 4 scenarios, however my loss is limited to 15$, whereas profit is unlimited.",
"title": ""
},
{
"docid": "e3d1e48c30b962e0ee872af3c0d3f9db",
"text": "A few observations - A limit order can certainly work, as you've seen. I've put in such an order far beyond the true value, and gotten back a realistic bid/ask within 10 minutes or so. That at least gave me an idea where to set my limit. When this doesn't work, an exercise is always another way to go. You'll get the full intrinsic value, but no time value, by definition. Per your request in comment - You own a put, strike price $100. The stock (or ETF) is trading at $50. You buy the stock and tell the broker to exercise the put, i.e. deliver the stock to the buyer of the put.",
"title": ""
},
{
"docid": "8cde1f27c0432fe1c2c56d9cb5231181",
"text": "If you're into math, do this thought experiment: Consider the outcome X of a random walk process (a stock doesn't behave this way, but for understanding the question you asked, this is useful): On the first day, X=some integer X1. On each subsequent day, X goes up or down by 1 with probability 1/2. Let's think of buying a call option on X. A European option with a strike price of S that expires on day N, if held until that day and then exercised if profitable, would yield a value Y = min(X[N]-S, 0). This has an expected value E[Y] that you could actually calculate. (should be related to the binomial distribution, but my probability & statistics hat isn't working too well today) The market value V[k] of that option on day #k, where 1 < k < N, should be V[k] = E[Y]|X[k], which you can also actually calculate. On day #N, V[N] = Y. (the value is known) An American option, if held until day #k and then exercised if profitable, would yield a value Y[k] = min(X[k]-S, 0). For the moment, forget about selling the option on the market. (so, the choices are either exercise it on some day #k, or letting it expire) Let's say it's day k=N-1. If X[N-1] >= S+1 (in the money), then you have two choices: exercise today, or exercise tomorrow if profitable. The expected value is the same. (Both are equal to X[N-1]-S). So you might as well exercise it and make use of your money elsewhere. If X[N-1] <= S-1 (out of the money), the expected value is 0, whether you exercise today, when you know it's worthless, or if you wait until tomorrow, when the best case is if X[N-1]=S-1 and X[N] goes up to S, so the option is still worthless. But if X[N-1] = S (at the money), here's where it gets interesting. If you exercise today, it's worth 0. If wait until tomorrow, there's a 1/2 chance it's worth 0 (X[N]=S-1), and a 1/2 chance it's worth 1 (X[N]=S+1). Aha! So the expected value is 1/2. Therefore you should wait until tomorrow. Now let's say it's day k=N-2. Similar situation, but more choices: If X[N-2] >= S+2, you can either sell it today, in which case you know the value = X[N-2]-S, or you can wait until tomorrow, when the expected value is also X[N-2]-S. Again, you might as well exercise it now. If X[N-2] <= S-2, you know the option is worthless. If X[N-2] = S-1, it's worth 0 today, whereas if you wait until tomorrow, it's either worth an expected value of 1/2 if it goes up (X[N-1]=S), or 0 if it goes down, for a net expected value of 1/4, so you should wait. If X[N-2] = S, it's worth 0 today, whereas tomorrow it's either worth an expected value of 1 if it goes up, or 0 if it goes down -> net expected value of 1/2, so you should wait. If X[N-2] = S+1, it's worth 1 today, whereas tomorrow it's either worth an expected value of 2 if it goes up, or 1/2 if it goes down (X[N-1]=S) -> net expected value of 1.25, so you should wait. If it's day k=N-3, and X[N-3] >= S+3 then E[Y] = X[N-3]-S and you should exercise it now; or if X[N-3] <= S-3 then E[Y]=0. But if X[N-3] = S+2 then there's an expected value E[Y] of (3+1.25)/2 = 2.125 if you wait until tomorrow, vs. exercising it now with a value of 2; if X[N-3] = S+1 then E[Y] = (2+0.5)/2 = 1.25, vs. exercise value of 1; if X[N-3] = S then E[Y] = (1+0.5)/2 = 0.75 vs. exercise value of 0; if X[N-3] = S-1 then E[Y] = (0.5 + 0)/2 = 0.25, vs. exercise value of 0; if X[N-3] = S-2 then E[Y] = (0.25 + 0)/2 = 0.125, vs. exercise value of 0. (In all 5 cases, wait until tomorrow.) You can keep this up; the recursion formula is E[Y]|X[k]=S+d = {(E[Y]|X[k+1]=S+d+1)/2 + (E[Y]|X[k+1]=S+d-1) for N-k > d > -(N-k), when you should wait and see} or {0 for d <= -(N-k), when it doesn't matter and the option is worthless} or {d for d >= N-k, when you should exercise the option now}. The market value of the option on day #k should be the same as the expected value to someone who can either exercise it or wait. It should be possible to show that the expected value of an American option on X is greater than the expected value of a European option on X. The intuitive reason is that if the option is in the money by a large enough amount that it is not possible to be out of the money, the option should be exercised early (or sold), something a European option doesn't allow, whereas if it is nearly at the money, the option should be held, whereas if it is out of the money by a large enough amount that it is not possible to be in the money, the option is definitely worthless. As far as real securities go, they're not random walks (or at least, the probabilities are time-varying and more complex), but there should be analogous situations. And if there's ever a high probability a stock will go down, it's time to exercise/sell an in-the-money American option, whereas you can't do that with a European option. edit: ...what do you know: the computation I gave above for the random walk isn't too different conceptually from the Binomial options pricing model.",
"title": ""
},
{
"docid": "56941f61022dfec7fea49b5f306ff12e",
"text": "\"You can certainly try to do this, but it's risky and very expensive. Consider a simplified example. You buy 1000 shares of ABC at $1.00 each, with the intention of selling them all when the price reaches $1.01. Rinse and repeat, right? You might think the example above will net you a tidy $10 profit. But you have to factor in trade commissions. Most brokerages are going to charge you per trade. Fidelity for example, want $4.95 per trade; that's for both the buying and the selling. So your 1000 shares actually cost you $1004.95, and then when you sell them for $1.01 each, they take their $4.95 fee again, leaving you with a measly $1.10 in profit. Meanwhile, your entire $1000 stake was at risk of never making ANY profit - you may have been unlucky enough to buy at the stock's peak price before a slow (or even fast) decline towards eventual bankruptcy. The other problem with this is that you need a stock that is both stable and volatile at the same time. You need the volatility to ensure the price keeps swinging between your buy and sell thresholds, over and over again. You need stability to ensure it doesn't move well away from those thresholds altogether. If it doesn't have this weird stable-volatility thing, then you are shooting yourself in the foot by not holding the stock for longer: why sell for $1.01 if it goes up to $1.10 ten minutes later? Why buy for $1.00 when it keeps dropping to $0.95 ten minutes later? Your strategy means you are always taking the smallest possible profit, for the same amount of risk. Another method might be to only trade each stock once, and hope that you never pick a loser. Perhaps look for something that has been steadily climbing in price, buy, make your tiny profit, then move on to the next company. However you still have the risk of buying something at it's peak price and being in for an awfully long wait before you can cash out (if ever). And if all that wasn't enough to put you off, brokerages have special rules for \"\"frequent traders\"\" that just make it all the more complicated. Not worth the hassle IMO.\"",
"title": ""
},
{
"docid": "3bb4fd780184d18c4282487bb78fa2be",
"text": "You can do some very crafty hedging with the variety of options. For instance, deep out of the money options are affected more by changes of market volatility, knowing this you can get long or short vega very easily, as opposed to necessarily betting on changes in the underlying asset.",
"title": ""
}
] |
fiqa
|
ff8c050b9d122a67cbda18cbe07fd862
|
Where to find out conversion ratio between General Motors bonds and new GM stock?
|
[
{
"docid": "03a783452b4908e9fcc071843916546c",
"text": "Depending on the specific bond, here is the official info. http://www.wilmingtontrust.com/gmbondholders/index.html Bottom line, it won't be determined for a while yet, as the filing with the Bankruptcy Court still has lots of blanks.",
"title": ""
},
{
"docid": "2c7408482f9d6197e92aa8f2758cbc91",
"text": "I would imagine that as a holder you will receive information in the post when it's made public, but I don't think it's been decided yet. This thread on the Motley Fool boards is keeping an eye on them - you might want to keep an eye on the thread.",
"title": ""
},
{
"docid": "32c2716abf18c9873139c68bc1960ebb",
"text": "Looks like the result got decided recently, with a little uncertainty about exactly how much is the total allowed claims: http://www.wilmingtontrust.com/gmbondholders/plan_disclosure.html http://www.wilmingtontrust.com/gmbondholders/pdf/GUC_Trust_Agreement.pdf They give the following example: Accordingly, pursuant to Section 5.3 of the GUC Trust Agreement, a holder of a Disputed Claim in the Amount of $2,000,000 that was Allowed in the amount of $1,000,000 (A) as of the end of the first calendar quarter would receive: Corresponding to the Distribution to the Holders of Initial Allowed Claims: Corresponding to the First Quarter Distribution to Holders of Units: Total:",
"title": ""
}
] |
[
{
"docid": "af78c4c4186788dd4ac2f120b3c02a17",
"text": "Bonds are extremely illiquid and have traditionally traded in bulk. This has changed in recent years, but bonds used to be traded all by humans not too long ago. Currently, price data is all proprietary. Prices are reported to the usual data terminals such as Bloomberg, Reuters, etc, but brokers may also have price gathering tools and of course their own internal trade history. Bonds are so illiquid that comparable bonds are usually referenced for a bond's price history. This can be done because non-junk bonds are typically well-rated and consistent across ratings.",
"title": ""
},
{
"docid": "12226cbcd9d23ce4d27dc0efef65eece",
"text": "Don't have access to a Bloomberg, Eikon ect terminal but I was wondering if those that do know of any functions that show say, the percentage of companies (in different Mcap ranges) held by differing rates institutionally. For example - if I wanted to compare what percentage of small cap companies' shares are 75% or more held by institutions relative to large cap companies what could I search in the terminal?",
"title": ""
},
{
"docid": "e3c2a7eda895cea7c4aa4b482fc9f5e9",
"text": "Hey desquinbnt & pontsone, I had an explanation written up about Share and Bond evaluation and in which, one share evaluation technique utilizes the P/E ratio - hence I explained it. Have a read, if you'd want me to go more in depth, let me know! :) http://letslearnfinance.net/2012/06/09/introduction-to-bonds-and-share-valuation/",
"title": ""
},
{
"docid": "89c2990dfb7720502059f4fcbbbfa872",
"text": "I dont know if this data is available for the 1980s, but this response to an old question of mine discusses how you can pull stock related information from google or yahoo finance over a certain period of time. You could do this in excel or google spreadsheet and see if you could get the data you're looking for. Quote from old post: Google Docs spreadsheets have a function for filling in stock and fund prices. You can use that data to graph (fund1 / fund2) over some time period.",
"title": ""
},
{
"docid": "b30bd7a9465bf07e15893e3617051654",
"text": "\"I am doing an assignment for a finance class, and I am writing a recommendation for a specific capital structure. One of the concerns brought up by the \"\"board of directors\"\" was interest coverage, so in my addressing that topic in my report, I want to compare to competitors. The interest coverage ratio under this capital structure that I'm choosing is 11.8 and the two competitors we are given information on are Company A (who has an interest coverage ratio of 6.67) and Company B (who has an interest coverage ratio of 11.25). It seems good, but my concern is that I may be missing something, as Company A is similar in size (in terms of sales) to the company I am writing a report for while Company B has ~50 times more sales than the company I am writing a report for. Advice, things to consider as I move forward?\"",
"title": ""
},
{
"docid": "ff68b09fef2ab83c41d8cf7759d12c2c",
"text": "The point of that question is to test if the user can connect shares and stock price. However, that being said yeah, you're right. Probably gives off the impression that it's a bit elementary. I'll look into changing it asap.",
"title": ""
},
{
"docid": "9ce676212f9a76f4a1caaaed0e929408",
"text": "\"ycharts.com has \"\"Weighted Average PE Ratio\"\" and a bunch of other metrics that are meant to correspond to well known stock metrics. Other websites will have similar ratios.\"",
"title": ""
},
{
"docid": "1109a029b9265828ac0b300a07184763",
"text": "\"This is \"\"incentive financing\"\". Simply put, the car company isn't in the business of making money by buying government bonds. They're in the business of making money by selling cars. If you are \"\"qualified\"\" from a credit standpoint, and want to buy a $20k car on any given Sunday, you'll typically be offered a loan of between 6% and 9%. Let's say this loan is for three years and you can offer $4000 down payment and/or trade. The required monthly payment on the remaining $16k at the high end of 9% is $508.80, which over 3 years means you'll pay $2,316.64 in interest. Now, that may sound like a good chunk of change, and for the ordinary individual, it is, possibly enough that you decide not to buy today. Now, let's say, all other things being equal, that the company is offering 0.9% incentive financing. Same price, same down payment, same loan term. Your payments over 3 years decrease to $450.64, and over the same loan term you would only pay $222.97 in interest. You save over $2,093.67 in interest over three years, which for you is again a decent chunk of change. Theoretically, the car company's losing that same $2,093.67 in interest by offering this deal, and depending on how it's getting the money it lends you (most financial companies are middlemen, getting money from bond-buying investors who expect a rate of return), that could be a real loss and not just opportunity cost. But, that incentive got you to walk in their door, and not their competitor's. It helped convince you to buy the $20,000 car. The gross margin on that car (price minus direct costs) is typically 20% for the dealer, plus another 20% for the manufacturer, so by giving up the $2,000 on the financing side, the dealer and manufacturer just earned themselves 4 times that much. On top of that, by buying that car, you're committing to buy the parts for the car, a side business with even higher margins, of which the car company gets a pretty big chunk. You may even be required to use dealer service while the car's under warranty in order to keep the warranty valid, another cha-ching. When you get right down to it, the loss from the incentive financing is drowned in the gross profits they make from selling the car to you. Now, in reality, it's a fine balance. The percentages I mentioned are gross margins (EBITDASG&A - Earnings Before Interest, Taxes, Depreciation, Amortization, Sales, General and Administrative costs; basically, just revenue minus direct cost of goods sold). Add in all these side costs and you get a net margin of only about 3.5% of revenue, so your $20k car purchase may only make the car company's stakeholders $700 on the sale, plus slightly higher net margins on parts and service over the life of the car. Because incentive financing is typically only offered through the company's own financing subsidiary, the loss isn't in the form of a cost paid, but simply a revenue not realized, but it can still move a car company from net positive to net negative earnings if the program is too successful. This is why not everyone does it, and not all at the same time; if you're selling enough cars without it, why give away money? Typically, these incentives are offered for two reasons; to clear out old cars or excess inventory, or to maintain ground against a competitor's stronger sales numbers. Keeping cars on a lot ready to sell is expensive, and so is not having your brand driving around on the street turning heads and imprinting their name on the minds of potential customers.\"",
"title": ""
},
{
"docid": "8b16542ff6aa0d91ed303490a3691bc1",
"text": "You could use the Gordon growth model implied expected return: P = D/(r-g) --> r = D/P (forward dividend yield) + g (expected dividend growth). But obviously there is no such thing as a good market return proxy.",
"title": ""
},
{
"docid": "7087e71e1c3391d3fe316d13337cd21b",
"text": "In addition to the GE move, Buffett's firm also added a large share of Synchrony, equalling about $520.7 in value, and a $418.1 million stake in Store Capital. So, they bought one regular sized share? This is Why BI-journalists doesnt work in IB...",
"title": ""
},
{
"docid": "77f2fb35a2beff9e1f1c485393fb6fd7",
"text": "\"Hey guys I have a quick question about a financial accounting problem although I think it's not really an \"\"accounting\"\" problem but just a bond problem. Here it goes GSB Corporation issued semiannual coupon bonds with a face value of $110,000 several years ago. The annual coupon rate is 8%, with two coupons due each year, six months apart. The historical market interest rate was 10% compounded semiannually when GSB Corporation issued the bonds, equal to an effective interest rate of 10.25% [= (1.05 × 1.05) – 1]. GSB Corporation accounts for these bonds using amortized cost measurement based on the historical market interest rate. The current market interest rate at the beginning of the current year on these bonds was 6% compounded semiannually, for an effective interest rate of 6.09% [= (1.03 × 1.03) – 1]. The market interest rate remained at this level throughout the current year. The bonds had a book value of $100,000 at the beginning of the current year. When the firm made the payment at the end of the first six months of the current year, the accountant debited a liability for the exact amount of cash paid. Compute the amount of interest expense on these bonds for the last six months of the life of the bonds, assuming all bonds remain outstanding until the retirement date. My question is why would they give me the effective interest rate for both the historical and current rate? The problem states that the firm accounts for the bond using historical interest which is 10% semiannual and the coupon payments are 4400 twice per year. I was just wondering if I should just do the (Beginning Balance (which is 100000 in this case) x 1.05)-4400=Ending Balance so on and so forth until I get to the 110000 maturity value. I got an answer of 5474.97 and was wondering if that's the correct approach or not.\"",
"title": ""
},
{
"docid": "7d9fd9278d1df7eff6f2b32d543ed49d",
"text": "I've had luck finding old stock information in the Google scanned newspaper archives. Unfortunately there does not appear to be a way to search exactly by date, but a little browsing /experimenting should get what you want. For instance, here's a source which shows the price to be 36 3/4 (as far as I can read anyway) on that date.",
"title": ""
},
{
"docid": "5db2500544c713428b4b849702c8e351",
"text": "In order to see whether you can buy or sell some given quantity of a stock at the current bid price, you need a counterparty (a buyer) who is willing to buy the number of stocks you are wishing to offload. To see whether such a counterparty exists, you can look at the stock's order book, or level two feed. The order book shows all the people who have placed buy or sell orders, the price they are willing to pay, and the quantity they demand at that price. Here is the order book from earlier this morning for the British pharmaceutical company, GlaxoSmithKline PLC. Let's start by looking at the left-hand blue part of the book, beneath the yellow strip. This is called the Buy side. The book is sorted with the highest price at the top, because this is the best price that a seller can presently obtain. If several buyers bid at the same price, then the oldest entry on the book takes precedence. You can see we have five buyers each willing to pay 1543.0 p (that's 1543 British pence, or £15.43) per share. Therefore the current bid price for this instrument is 1543.0. The first buyer wants 175 shares, the next, 300, and so on. The total volume that is demanded at 1543.0p is 2435 shares. This information is summarized on the yellow strip: 5 buyers, total volume of 2435, at 1543.0. These are all buyers who want to buy right now and the exchange will make the trade happen immediately if you put in a sell order for 1543.0 p or less. If you want to sell 2435 shares or fewer, you are good to go. The important thing to note is that once you sell these bidders a total of 2435 shares, then their orders are fulfilled and they will be removed from the order book. At this point, the next bidder is promoted up the book; but his price is 1542.5, 0.5 p lower than before. Absent any further changes to the order book, the bid price will decrease to 1542.5 p. This makes sense because you are selling a lot of shares so you'd expect the market price to be depressed. This information will be disseminated to the level one feed and the level one graph of the stock price will be updated. Thus if you have more than 2435 shares to sell, you cannot expect to execute your order at the bid price in one go. Of course, the more shares you are trying to get rid of, the further down the buy side you will have to go. In reality for a highly liquid stock as this, the order book receives many amendments per second and it is unlikely that your trade would make much difference. On the right hand side of the display you can see the recent trades: these are the times the trades were done (or notified to the exchange), the price of the trade, the volume and the trade type (AT means automatic trade). GlaxoSmithKline is a highly liquid stock with many willing buyers and sellers. But some stocks are less liquid. In order to enable traders to find a counterparty at short notice, exchanges often require less liquid stocks to have market makers. A market maker places buy and sell orders simultaneously, with a spread between the two prices so that they can profit from each transaction. For instance Diurnal Group PLC has had no trades today and no quotes. It has a more complicated order book, enabling both ordinary buyers and sellers to list if they wish, but market makers are separated out at the top. Here you can see that three market makers are providing liquidity on this stock, Peel Hunt (PEEL), Numis (NUMS) and Winterflood (WINS). They have a very unpalatable spread of over 5% between their bid and offer prices. Further in each case the sum total that they are willing to trade is 3000 shares. If you have more than three thousand Dirunal Group shares to sell, you would have to wait for the market makers to come back with a new quote after you'd sold the first 3000.",
"title": ""
},
{
"docid": "57fb897c059fe117bf76781c5306adb8",
"text": "\"Thanks for the response. I am using WRDS database and we are currently filtering through various variables like operating income, free cash flow etc. Main issue right now is that the database seems to only go up to 2015...is there a similar database that has 2016 info? filtering out the \"\"recent equity issuance or M&A activity exceeding 10% of total assets\"\" is another story, namely, how can I identify M&A activity? I suppose we can filter it with algorithm stating if company's equity suddenly jumps 10% or more, it get's flagged\"",
"title": ""
},
{
"docid": "78c1dad9e8e61a6da10385bf32fbcf66",
"text": "Let's assume that the bonds have a par value of $1,000. If conversion happens, then one bond would be converted into 500 shares. The price in the market is unimportant. Regardless of the share price in the market, the income per share would be increased by the absence of $70 in interest expense. It would be decreased by the lost tax deduction. It would be further diluted by the increase in 500 shares. Likewise, the debt would be extinguished and the equity section increased. Whether it increased or decreased on a per share basis would depend upon the average amount paid in per share in the currently existing structure, adjusted for changes in retained earnings since the initial offering and for any treasury shares. There would be a loss in value, generally, if it is trading far from $2.00 because it would be valued based on the market price. Had the bond not converted, it would trade in the market as a pure bond if the stock price is far below the strike price and as an ordinary pure bond plus a premium if near enough to the strike price in a manner that depends upon the time remaining under the conversion privilege. I cannot think of a general case where someone would want to convert below strike and indeed, barring a very strange tax, inheritance or legal situation (such as a weird divorce), I cannot think of a case where it would make sense. It often does not make sense to convert far from maturity either as the option premium only vanishes well above $2. The primary case for conversion would be where the after-tax dividend is greater than the after-tax interest payment.",
"title": ""
}
] |
fiqa
|
742f4865a428b13929897bd00d85ffdf
|
Do post-IPO 'insider' stock lockup periods still apply if you separate from the company
|
[
{
"docid": "60a47bddacca3f0846c65b31dee5118f",
"text": "\"There are quite a few regulations on \"\"Insider Trading\"\". Blackouts are one of the means companies adopt to comply with \"\"Insider Trading\"\" regulations, mandating employees to refrain from selling/buying during the notified period. Once you leave the employment: So unless there is an urgent need for you to sell/buy the options, wait for some time and then indulge in trade.\"",
"title": ""
}
] |
[
{
"docid": "5ca9adafc2dd1effc7b43af95f937c0c",
"text": "\"This is a great question. I've participated in a deal like that as an employee, and I also know of friends and family who have been involved during a buyout. In short: The updated part of your question is correct: There is no single typical treatment. What happens to unvested restricted stock units (RSUs), unvested employee stock options, etc. varies from case to case. Furthermore, what exactly will happen in your case ought to have been described in the grant documentation which you (hopefully) received when you were issued restricted stock in the first place. Anyway, here are the two cases I've seen happen before: Immediate vesting of all units. Immediate vesting is often the case with RSUs or options that are granted to executives or key employees. The grant documentation usually details the cases that will have immediate vesting. One of the cases is usually a Change in/of Control (CIC or COC) provision, triggered in a buyout. Other immediate vesting cases may be when the key employee is terminated without cause, or dies. The terms vary, and are often negotiated by shrewd key employees. Conversion of the units to a new schedule. If anything is more \"\"typical\"\" of regular employee-level grants, I think this one would be. Generally, such RSU or option grants will be converted, at the deal price, to a new schedule with identical dates and vesting percentages, but a new number of units and dollar amount or strike price, usually so the end result would have been the same as before the deal. I'm also curious if anybody else has been through a buyout, or knows anybody who has been through a buyout, and how they were treated.\"",
"title": ""
},
{
"docid": "7ce961b6cfac8676162a167d62aa2949",
"text": "Is the parent company's common stock public? If not, then there will be absolutely no pressure from everyone liquidating at the same time. If so, consider the average daily volume of transactions in the parent company's stock. Is it much greater than the volume your 10k co-workers will have to liquidate? If so, I wouldn't expect much of an impact from all liquidating at once. Any other situation, you are probably right to be a bit worried about simultaneous liquidation. If this was my case, I'd probably submit a limit sell order so as to try and pick out a high for the timing of my liquidation, and lower my limit vs fair value as it got closer to the expiration of your ability to hold the parent company stock.",
"title": ""
},
{
"docid": "3e77db7e9fa33441623e940265591ae1",
"text": "\"When you exercise your options, you come up with cash to buy the shares. This makes you an owner of the company for shares at the share price your options let you have. Ideally, your share price is at a significant discount to what the company is worth. Being a shareholder, you gain from any share price appreciation in a sale. The only thing the \"\"60-day window\"\" applies to is whether you come up with the cash to buy fast enough, or your shares get permanently deleted from the company finances, where everyone else potentially makes more, you make nothing. The sale of the company is based on whenever the sell finalizes, which is between your company and the acquiring company.\"",
"title": ""
},
{
"docid": "5d3da25089418411eb6408c048816288",
"text": "In the United States, when key people in a company buy or sell shares there are reporting requirements. The definition of key people includes people like the CEO, and large shareholders. There are also rules that can lock out their ability to buy and sell shares during periods where their insider knowledge would give them an advantage. These reporting rules are to level the playing field regarding news that will impact the stock price. These rules are different than the reporting rules that the IRS has to be able to tax capital gains. These are also separate than the registration rules for the shares so that you get all the benefits of owning the stock (dividends, voting at the annual meeting, voting on a merger or acquisition).",
"title": ""
},
{
"docid": "2f950e48b5b647f608e84a5e1e387e60",
"text": "Yes, as long as you own the shares before the ex-dividend date you will get the dividends. Depending on your instructions to your broker, you can receive cash dividends or you can have the dividends reinvested in more shares of the company. There are specific Dividend ReInvestment Plans (or DRIPs) if you are after stock growth rather than income from dividend payments.",
"title": ""
},
{
"docid": "5aa0bc6369d80ae0d822ac99550e87f9",
"text": "When the deal closes, will it be as if I sold all of my ESPP shares with regards to taxes? Probably. If the deal is for cash and not stock exchange, then once the deal is approved and closed all the existing shareholders will sell their shares to the buyer for cash. Is there any way to mitigate this? Unlikely. You need to understand that ESPP is just a specific way to purchase shares, it doesn't give you any special rights or protections that other shareholders don't have.",
"title": ""
},
{
"docid": "fb0c0e9f4b233a6955d9dc36ca2f7d8c",
"text": "\"I worked for a small private tech company that was aquired by a larger publicly traded tech company. My shares were accelerated by 18 months, as written in the contract. I excercised those shares at a very low strike price (under $1) and was given an equal number of shares in the new company. Made about $300,000 pre tax. This was in 2000. (I love how the government considered us \"\"rich\"\" that year, but have never made that amount since!)\"",
"title": ""
},
{
"docid": "93860154dd97e77e09750e016a2bb41c",
"text": "\"Short answer: No. Being connected is very helpful and there is no consequence by securities regulators against the investor by figuring out how to acquire pre-IPO stock. Long answer: Yes, you generally have to be an \"\"Accredited Investor\"\" which basically means you EARN over $200,000/yr yourself (or $300,000 joint) and have been doing so for several years and expect to continue doing so OR have at least 1 million dollars of net worth ( this is joint worth with you and spouse). The Securities Exchange Commission and FINRA have put a lot of effort into keeping most classes of people away from a long list of investments.\"",
"title": ""
},
{
"docid": "b8da10c8337c08554e4582761a771d98",
"text": "underwriters aren't subject to lock-up. They actually don't hold anything. They oversell at IPO, with their short position covered by the green shoe (an option from the company). If the deal does well, the underwriters exercise the green shoe to cover their short. If the deal runs into some pressure, they step in to support the price by buying back shares... thereby covering their short. So they are doing price support in the early days of a deal, but it is almost always paid for by the company granting them an option. But the underwriters aren't taking stock. Correct that typically all insiders and existing investors are expected to sign-up a lock-up.",
"title": ""
},
{
"docid": "8ad5c2927fa3913dc196b47f4cff7d1a",
"text": "No, you trade the warrant and the warrant price of $11.50 for one stock. The warrant is a little like an option, but with a longer term. If you buy a IPOA.WS warrant then that warrant gives you the option to buy one share of class A stock at $11.50 at a future date. If in the future, the stock is worth $20, then you make $20 - $11.50 - per share. If you buy one IPOA.U, then you get 1/3 of a warrant and 1 share of stock, the warrants will be useless unless you buy in groups of 3 for the IPOA.U. I didn't see the timeframe of the warrant, they're usually good for 10+ years, and they're currently trading in the $1.5-1.8 range. To confirm, here's a decent article about how warrants work: http://www.investopedia.com/articles/04/021704.asp",
"title": ""
},
{
"docid": "9a1d3611099cbee3136ec36c06127dd7",
"text": "Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). No. That's exactly what the SO is NQ for. Read more on the differences between ISO and NQSO here. Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). At this point you no longer have NQSO, you have RSU. If you filed 83(b) when you exercised, then you pay capital gains tax when they vest. If you didn't - its ordinary income to you. NQSO is a red herring here since once exercised they no longer exist. If you didn't file 83(b), then when the stock vests the difference between the FMV at vest and the money you spent on it when exercising (if any) is considered wages and taxed as ordinary income (+FICA etc). From that point the RSU becomes a regular stock investment and the capital gains clock starts ticking.",
"title": ""
},
{
"docid": "b30ca28a9511d1c987202b799849f608",
"text": "\"The fact that your shares are of a Canadian-listed corporation (as indicated in your comment reply) and that you are located in the United States (as indicated in your bio) is highly relevant to answering the question. The restriction for needing to be a \"\"qualified institutional buyer\"\" (QIB) arises from the parent company not having registered the spin-off company rights [options] or shares (yet?) for sale in the United States. Shares sold in the U.S. must either be registered with the SEC or qualify for some exemption. See SEC Fast Answers - Securities Act Rule 144. Quoting: Selling restricted or control securities in the marketplace can be a complicated process. This is because the sales are so close to the interests of the issuing company that the law might require them to be registered. Under Section 5 of the Securities Act of 1933, all offers and sales of securities must be registered with the SEC or qualify for some exemption from the registration requirements. [...] There are regulations to follow and costs involved in such registration. Perhaps the rights [options] themselves won't ever be registered (as they have a very limited lifetime), while the listed shares might be? You could contact investor relations at the parent company for more detail. (If I guessed the company correctly, there's detail in this press release. Search the text for \"\"United States\"\".)\"",
"title": ""
},
{
"docid": "d06bd90c8c2f6535c34d228a6af19839",
"text": "I suspect this is related to the fact that Blue Apron completed its IPO very recently and insider shares are likely still under a lockup period. So in the case of APRN stock only the 30mm shares involved in the IPO are trading until the insider lockup expires which is usually about 90 days.",
"title": ""
},
{
"docid": "9ac7c6630baa51700ec34153a9559f2b",
"text": "Okay I don't know where my disconnect was, in my mind I was viewing that as a negative for some reason haha. Thanks! That makes sense. What is your perspective on the large amount of companies buying back shares right now?",
"title": ""
},
{
"docid": "37fc06a986a153ff45385b6d78c39786",
"text": "There's an odd anomaly that often occurs with shares acquired through company plans via ESPP or option purchase. The general situation is that the share value above strike price or grant price may become ordinary income, but a sale below the price at day the shares are valued is a capital loss. e.g. in an ESPP offering, I have a $10 purchase price, but at the end of the offering, the shares are valued at $100. Unless I hold the shares for an additional year, the sale price contains ordinary W2 income. So, if I see the shares falling and sell for $50, I have a tax bill for $90 of W2 income, but a $50 capital loss. Tax is due on $90 (and for 1K shares, $90,000 which can be a $30K hit) but that $50K loss can only be applied to cap gains, or $3K/yr of income. In the dotcom bubble, there were many people who had million dollar tax bills and the value of the money netted from the sale couldn't even cover the taxes. And $1M in losses would take 300 years at $3K/yr. The above is one reason the lockup date expiration is why shares get sold. And one can probably profit on the bigger companies stock. Edit - see Yelp down 3% following expiration of 180 day IPO lock-up period, for similar situation.",
"title": ""
}
] |
fiqa
|
20f3bd6a95a0411c14e7ce299533140b
|
Best buying price on stock marketing based on market depth detail (CSE atrad tool)
|
[
{
"docid": "4b24f69f03b345cf34ce1a673683d9fb",
"text": "If you are buying your order will be placed in Bid list. If you are selling your order will be placed in the Ask list. The highest Bid price will be placed at the top of the Bid list and the lowest Ask price will be placed at the top of the Ask list. When a Bid and Ask price are matched a transaction will take place and it will the last traded price. If you are looking to buy at a lower price, say $155.01, your Bid price will be placed 3rd in the Bid list, and unless the Ask prices fall to that level, your order will remain in the list until it trades, it expires or you cancel it. If prices don't fall to you Bid price you will not get a trade. If you wanted your trade to go through you could either place a limit buy order closer to the lowest Ask price (however this is still not a certainty), or to be certain place a market buy order which will trade at the lowest Ask price.",
"title": ""
},
{
"docid": "e7af1ab013bca5bac2eae729a51d9d64",
"text": "\"When I first started working in finance I was given a rule of thumb to decide which price you will get in the market: \"\"You will always get the worst price for your deal, so when buying you get the higher ask price and when selling you get the lower bid price.\"\" I like to think of it in terms of the market as a participant who always buys at the lowest price they can (i.e. buys from you) and sells at the highest price they can. If that weren't true there would be an arbitrage opportunity and free money never exists for long.\"",
"title": ""
}
] |
[
{
"docid": "46651b3b3476d6ee2c361efaaa80b1bb",
"text": "It's difficult to compile free information because the large providers are not yet permitted to provide bulk data downloads by their sources. As better advertising revenue arrangements that mimic youtube become more prevalent, this will assuredly change, based upon the trend. The data is available at money.msn.com. Here's an example for ASX:TSE. You can compare that to shares outstanding here. They've been improving the site incrementally over time and have recently added extensive non-US data. Non-US listings weren't available until about 5 years ago. I haven't used their screener for some years because I've built my own custom tools, but I will tell you that with a little PHP knowledge, you can build a custom screener with just a few pages of code; besides, it wouldn't surprise me if their screener has increased in power. It may have the filter you seek already conveniently prepared. Based upon the trend, one day bulk data downloads will be available much like how they are for US equities on finviz.com. To do your part to hasten that wonderful day, I recommend turning off your adblocker on money.msn and clicking on a worthy advertisement. With enough revenue, a data provider may finally be seduced into entering into better arrangements. I'd much rather prefer downloading in bulk unadulterated than maintain a custom screener. money.msn has been my go to site for mult-year financials for more than a decade. They even provide limited 10-year data which also has been expanded slowly over the years.",
"title": ""
},
{
"docid": "5484edae9880adaccd25bf5b7b63b89e",
"text": "Yes apply for live and dynamic data (you may have to pay for this depending on your broker and your country) and look at the market depth.",
"title": ""
},
{
"docid": "7438115dd136cd9ae0240180d5592f12",
"text": "In the stock market many participants enter orders that are not necessarily set at the current market price of the stock (i.e. they are not market orders, they are limit orders). They can be lower than the market price (if they want to buy) or they can be higher than the market price (if they want to sell). The set of orders at each point of time for a security is called the order book. The lowest selling price of the order book is the offer or ask, the higher buying price is the bid. The more liquid is a security, the more orders will be in the order book, and the narrower will be the bid-ask spread. The depth of the order book is the number of units that the order book can absorb in any direction (buy or sell). As an example: imagine I want to buy 100 units at the lowest offer, but the size of the lowest offer is only 50 units, and there is not any further order, that means the stock has little depth.",
"title": ""
},
{
"docid": "1af73c2101167cdcddce208ed32aeb24",
"text": "There is no such thing as buying at the best price. That only exists in hindsight. If you could consistently predict the lower bound, then you would have no reason to waste your time investing. Quit your job and bet with all leverage in. What if the price never reaches your lower bound and the market keeps rallying? What if today is crash day and you catch a falling knife? I'd say the best strategy would be just buy at whatever the market price is the moment your investment money hits your account with the smallest possible commission.",
"title": ""
},
{
"docid": "02e7e6416c346bea938301c41d6f9366",
"text": "Fundamental Analysis can be used to help you determine what to buy, but they won't give you an entry signal for when to buy. Technical Analysis can be used to help you determine when to buy, and can give you entry signals for when to buy. There are many Technical Indicator which can be used as an entry signal, from as simple as the price crossing above a moving average line and then selling when the price crosses back below the moving average line, to as complicated as using a combination of indicators to all line up for an entry signal to be valid. You need to find the entry signals that would suit your investing or trading and incorporate them as part of your trading plan. If you want to learn more about entry signals you are better off learning more about Technical Analysis.",
"title": ""
},
{
"docid": "e3834023eee46345c1a76dc2fc03ec2f",
"text": "Here is one the links for Goldmansachs. Not to state the obvious, but most of their research is only available to their clients. http://www.goldmansachs.com/research/equity_ratings.html",
"title": ""
},
{
"docid": "7978a163ea6fbead1bd037bcc1a14902",
"text": "I also searched for some time before discovering Market Archive, which AFAIK is the most affordable option that basically gives you a massive multi-GB dump of data. I needed sufficient data to build a model and didn't want to work through an API or have to hand-pick the securities to train from. After trying to do this on my own by scraping Yahoo and using the various known tools, I decided my time was better spent not dealing with rate-limiting issues and parsing quirks and whatnot, so I just subscribed to Market Archive (they update the data daily).",
"title": ""
},
{
"docid": "b9581148b6453c1697ee377b6f87be88",
"text": "The best ask is the lowest ask, and the best bid is the highest bid. If the ask was lower than the bid then they crossed, and that would be a crossed market and quickly resolved. So the bid will almost always be cheaper than the ask. A heuristic is that a bid is the revenue of the stock at any given time while the ask is the cost, so the market will only ever offer a profit to itself not to the liquidity seeker. If examining the book vertically, all orders are usually sorted descending. Since the best ask is the lowest ask, it is on the bottom of the asks, and vice versa for the best bid. The best bid & best ask will be those closest since that's the narrowest spread and price-time priority will promise that a bid that crosses the asks will hit the lowest ask, the best possible price for the bidder and vice versa for an ask that crosses the best bid.",
"title": ""
},
{
"docid": "98c511623d1fdfd6d509115f9d468932",
"text": "Technical Analysis in general is something to be cognizant of, I don't use a majority of studies and consider them a waste of time. I also use quantitative analysis more so than technical analysis, and prefer the insight it gives into the market. The markets are more about predicting other people's behavior, psychology. So if you are trading an equity that you know retail traders love, retail traders use technical analysis and you can use their fabled channel reversals and support levels against them, as examples. Technical analysis is an extremely broad subject. So I suggest getting familiar, but if your historical pricing charts are covered in various studies, I would say you are doing it wrong. A more objective criticism of technical analysis is that many of the studies were created in the 1980s or earlier. Edges in the market do not typically last more than a few weeks. On the other side of that realization, some technical analysis works if everyone also thinks it will work, if everyone's charts say buy when the stock reaches the $90 price level and everyone does, the then stock will go higher. But the market makers and the actions of the futures markets and the actions of options traders, can undermine the collective decisions of retail traders using technical analysis.",
"title": ""
},
{
"docid": "546e0c06691b487e035f23ed55eccc9a",
"text": "\"I am strongly skeptical of this. In fact, after reading your question, I did the following: I wrote a little program in python that \"\"simulates\"\" a stock by flipping a coin. Each time the coin comes up heads, the stock's value grows by 1. Each time the coin comes up tails, the stock's value drops by 1. I then group, say, 50 of these steps into a \"\"day\"\", and for each day I look at opening, closing, maximum and minimum. This is then graphed in a candlestick chart. Funny enough, those things look exactly like the charts analysts look at. Here are a few examples: If you want to be a troll, show these to a technical analyst and ask them which of these stocks you should sell short and which of them you should buy. You can try this at home, I posted the code here and it only needs Python with a few extra packages (Numpy and Pylab, should both be in the SciPy package). In reply to a comment from JoeTaxpayer, let me add some more theory to this. My code actually performs a one-dimensional random walk. Now Joe in the comments says that an infinite number of flips should approach the zero line, but that is not exactly correct. In fact, there is a high chance to end up far from the zero line, because the expected distance from the start for a random walk with N steps is sqrt(N). What does indeed approach the zero line is if you took a bunch of these random walks and then performed the average over those. There is, however, one important aspect in which this random walk differs from the stock market: The random walk can go down as far as it likes, whereas a stock has a bottom below which it cannot fall. Reaching this bottom means the company is bankrupt and gets removed from the market. This means that the total stock market, which we might interpret as a sum of random walks, does indeed have a bias towards upwards movement, since I'm only averaging over those random walks that don't go below a certain threshold. But you can really only benefit from this effect by being broadly diversified.\"",
"title": ""
},
{
"docid": "a635582cdd46c5dd1c4bcac24c074290",
"text": "The study of technical analysis is generally used (sometimes successfully) to time the markets. There are many aspects to technical analysis, but the simplest form is to look for uptrends and downtrends in the charts. Generally higher highs and higher lows is considered an uptrend. And lower lows and lower highs is considered a downtrend. A trend follower would go with the trend, for example see a dip to the trend-line and buy on the rebound. Whilst a bottom fisher would wait until a break in the downtrend line and buy after confirmation of a higher high (as this could be the start of a new uptrend). There are many more strategies dealing with the study of technical analysis, and if you are interested you would need to find and learn about ones that suit your investment styles and your appetite for risk.",
"title": ""
},
{
"docid": "742a3e3a277dc4cfb870febddb8c7d92",
"text": "\"What if everyone decided to sell all the shares at a given moment, let's say when the stock is trading at $40? It would fall to the lowest bid price, which could be $0.01 if someone had that bid in place. Here is an example which I happened to find online: Notice there are orders to buy at half the market price and lower... probably all the way down to pennies. If there were enough selling activity to fill all of those bids you see, then the market price would be the lowest bid on the screen. Alternatively, the bid orders could be pulled (cancelled), which would also let the price free-fall to the lowest bid even if there were few actual sellers. Bid-stuffing is what HFT (high frequency trading) algorithms sometimes do, which some say caused the Flash Crash of May 2010. The computers \"\"stuff\"\" bids into the order book, making it look like there is demand in order to trigger a market reaction, then they pull the bids to make the market fall. This sort of thing happens all the time and Nanex documents it http://www.nanex.net/FlashCrash/OngoingResearch.html Quote stuffing defined: http://www.investopedia.com/terms/q/quote-stuffing.asp I remember the day of the Flash Crash very well. I found this video on youtube of CNBC at that time. Watch from the 5:00 min mark on the video as Jim Crammer talks about PG easily not being worth the price of the market at that time. He said \"\"Who cares?\"\", \"\"Its not a real price\"\", \"\"$49.25 bid for 50,000 shares if I were at my hedge fund.\"\" http://www.youtube.com/watch?v=86g4_w4j3jU You can value a stock how you want, but its only actually worth what someone will give you for it. More examples: Anadarko Petroleum, which as we noted in today's EOD post, lost $45 billion in market cap in 45 milliseconds (a collapse rate of $1 billion per millisecond), flash crashing from $90 all the way to an (allegedly illegal) stub quote of $0.01. http://www.zerohedge.com/news/2013-05-17/how-last-second-flash-crash-pushed-sp-500-1667-1666 How 10,000 Contracts Crashed The Market: A Visual Deconstruction Of Last Night's E-Mini Flash Crash http://www.zerohedge.com/news/2012-12-21/how-10000-contracts-crashed-market-visual-deconstruction-last-nights-e-mini-flash-cr Symantec Flash-Crash Destroys Over $1.5 Billion In Less Than A Second http://www.zerohedge.com/news/2013-04-30/symantec-flash-crash-destroys-over-15-billion-less-second This sort of thing happens so often, I don't pay much attention anymore.\"",
"title": ""
},
{
"docid": "341d6a2a406972d0c1356d6762328b87",
"text": "\"Unfortunately, there is very little data supporting fundamental analysis or technical analysis as appropriate tools to \"\"time\"\" the market. I will be so bold to say that technical analysis is meaningless. On the other hand, fundamental analysis has some merits. For example, the realization that CDOs were filled with toxic mortgages can be considered a product of fundamental analysis and hence provided traders with a directional assumption to buy CDSs. However, there is no way to tell when there is a good or bad time to buy or sell. The market behaves like a random 50/50 motion. There are many reasons for this and interestingly, there are many fundamentally sound companies that take large dips for no reason at all. Depending on your goal, you can either believe that this volatility will smooth over long periods and that the market has generally positive drift. On the other hand, I feel that the appropriate approach is to remain active. You will be able to mitigate the large downswings by simply staying small and diversifying - not in the sense of traditional finance but rather looking for uncorrelated products. Remember, volatility brings higher levels of correlation. My second suggestion is to look towards products like options to provide a method of shaping your P/L - giving up upside by selling calls against a long equity position is a great example. Ground your trades with fundamental beliefs if need be, but use your tools and knowledge to combat risks that may create long periods of drawdown.\"",
"title": ""
},
{
"docid": "67fe7636e0ee67c732c363fae29c6bef",
"text": "That is true. You will not be able to reconstruct the value of the index from the data returned with this script. I initially wrote this script because I wanted data for a lot of stocks and I wanted to perform PCA on the stocks currently included in the index.",
"title": ""
},
{
"docid": "e74ea038c1bca2f3ddaca4d7d7d23a6f",
"text": "\"Finding the \"\"optimal\"\" solution (and even defining what optimal is) would probably take a lot of searching of all the possible combinations of stocks you could buy, given that you can't buy fractional shares. But I'd guess that a simple \"\"greedy\"\" algorithm should get you close enough. For any given portfolio state, look at which stock is furthest below the target size - e.g. in your example, S3 is 3.5% away whereas S1 is only 3.1% away and S2 is over-sized. Then decided to buy one stock of S3, recalculate the current proportions, and repeat until you can't buy more stocks because you've invested all the money. If you have to pay a transaction fee for each kind of stock you purchase you might want to calculate this in larger lot sizes or just avoid making really small purchases.\"",
"title": ""
}
] |
fiqa
|
39f2af00aa13a33d900585e57ce81e75
|
How to calculate stock price (value) based on given values for equity and debt?
|
[
{
"docid": "f5a95d65477663dfcf01e2ed5e2fbee3",
"text": "There is no formula for calculating a stock price based on the financials of a company. A stock price is set by the market and always has a component built into it that is based on something outside of the current valuation of a company using its financials. Essentially, the stock price of a company per share is whatever the best price it can get on the open market. If you are looking at how to evaluate if a stock is a good value at the current price, then look at some of the answers, but I wanted to answer this based on the way you phrased the question.",
"title": ""
},
{
"docid": "a1f8e1e935ad365e016e2e6468cf4797",
"text": "Adding assets (equity) and liabilities (debt) never gives you anything useful. The value of a company is its assets (including equity) minus its liabilities (including debt). However this is a purely theoretical calculation. In the real world things are much more complicated, and this isn't going to give you a good idea of much a company's shares are worth in the real world",
"title": ""
},
{
"docid": "94f4b7578a2b59e3af58c13213b7da6b",
"text": "I'll give you my quick and dirty way to value a company: A quick and dirty valuation could be: equity + 10 times profit. This quick way protects you from investing in companies in debt, or losing money. To go more in-depth you need to assess future profit, etc. I recommend the book from Mary Buffett about Warren Buffett's investing style.",
"title": ""
}
] |
[
{
"docid": "1972c4bb86c1c26f86d8243cf45d2cbc",
"text": "\"To your first comment: yup. To your second comment, A = L + E. If E goes down, and L goes up, the net effect is 0. Then, if L goes down, and A goes up, the net effect is 0 and we are balanced once again. There is no \"\"rebalancing\"\" equity. You just have to make sure that, at the end of your journal entries, the accounting equation holds. It's a very unintuitive concept to wrap your head around, but spend some time mapping out the flow of various journal entries. Once it clicks, you'll really understand the logic.\"",
"title": ""
},
{
"docid": "c1140caa8335ae427e6326430838e159",
"text": "\"Market cap is synonymous with equity value, which is one way of thinking of a company's \"\"worth.\"\" The alternative would be enterprise value, which is calculated as follows: Enterprise Value = Market Value of Equity + Market Value of Debt - Cash and Equivalents - Non-Operating Assets Enterprise value is essentially \"\"how much is the firm worth to ALL providers of capital.\"\" It can be viewed as \"\"if I wanted to buy the *entire* company, debt and all, what would I have to pay?\"\"\"",
"title": ""
},
{
"docid": "174e7774435b2f45ec3b37e9755dac8b",
"text": "Too calculate these values, information contained in the company's financial statements (income, balance, or cashflow) will be needed along with the price. Google finance does not maintain this information for BME. You will need to find another source for this information or analyze another another symbol's financial section (BAC for example).",
"title": ""
},
{
"docid": "64cea619996598815d7b5c3f25476352",
"text": "If you want to see a more academic version of this look up Weighted Average Cost of Capital (WACC). It's a formula that tells you how much it costs for a company to raise $1 of capital whether it be through issuing bonds or stocks. One thing you learn is that there are times that if you take on loans (even if you don't need it) you can raise shareholder value and therefore the total company netvalue. The thought process is (as it states in the article above) that a company can issue debt for cheaper than issue shares and it will have extra cash which it can use to get a better return than its net effective interest rate. I tried to give an example but I only ended up rehashing what it says in the article. Anyhow look up WACC and you'll understand the fundamentals.",
"title": ""
},
{
"docid": "62077bd6249e2f08079161e4588f0f94",
"text": "\"Will the investment bank evaluate the worth of my company more than or less than 50 crs. Assuming the salvage value of the assets of 50 crs (meaning that's what you could sell them for to someone else), that would be the minimum value of your company (less any outstanding debts). There are many ways to calculate the \"\"value\"\" of a company, but the most common one is to look at the future potential for generating cash. The underwriters will look at what your current cash flow projections are, and what they will be when you invest the proceeds from the public offering back into the company. That will then be used to determine the total value of the company, and in turn the value of the portion that you are taking public. And what will be the owner’s share in the resulting public company? That's completely up to you. You're essentially selling a part of the company in order to bring cash in, presumably to invest in assets that will generate more cash in the future. If you want to keep complete control of the company, then you'll want to sell less than 50% of the company, otherwise you can sell as much or as little as you want.\"",
"title": ""
},
{
"docid": "41372fce8481716fd887860e6d3e94db",
"text": "The three places you want to focus on are the income statement, the balance sheet, and cash flow statement. The standard measure for multiple of income is the P/E or price earnings ratio For the balance sheet, the debt to equity or debt to capital (debt+equity) ratio. For cash generation, price to cash flow, or price to free cash flow. (The lower the better, all other things being equal, for all three ratios.)",
"title": ""
},
{
"docid": "c8272dc25995314578ce4b67916ebc6f",
"text": "\"The basic equation taught in day one of accounting school is that Assets = Liabilities + Equity. My first point was that I looked at the actual financial statements published as of the end of the 2nd quarter 2017, and the total liabilities on their audited balance sheet were like $13 billion, not $20b. I don't know where the author got their numbers from. My second point: Debt usually needs to be paid on prearranged terms agreed upon by the debtor and the debtee, including interest, so it is important for a business to keep track of what they owe and to whom, so they can make timely payments. As long as they have the cash on hand to make payments plus whatever interest they owe, and the owners are happy with the total return on their investment, then it doesn't really matter how debt they have on the balance sheet. Remember the equation A=L+E. There are precisely two ways to finance a business that wants to acquire assets: liabilities and/or equity. The \"\"appropriate\"\" level of debt vs equity on a balance sheet varies wildly, and totally depends on the industry, size of the business, cash flow, personal preferences of the CEO, CFO, shareholders et al, etc. It gets way more detailed and complicated than that obviously, but the point is that looking at debt alone is a meaningless metric. This is corporate finance and accounting 101, so you can probably find tons of great articles and videos if you want to learn more.\"",
"title": ""
},
{
"docid": "03012414b99a9299647d1deae6efedac",
"text": "Are you trying to figure out if a project would increase the market value of equity? I think your issue is that the Market value of Equity will not be updated with the NPV of 40M (Assuming it is truly +, not sure if it's true with 50M of debt). EV = Market Value of Equity + Debt - Cash and CE Ev - Debt + Cash and CE = Market equity value. So I think you would have to update the market value of Equity up with 40M. This would then lead to EV = Equity Value + future income stream discounted + debt - Cash and Cash Equivalents.",
"title": ""
},
{
"docid": "00135dcac4fb6133749e18b232752e96",
"text": "you can check google scholar for some research reports on it. depends how complex you want to get... it is obviously a function of the size of the portfolio of each type of asset. do you have a full breakdown of securities held? you can get historical average volumes during different economic periods, categorized by interest rates for example, and then calculate the days required to liquidate the position, applying a discount on each subsequent day.",
"title": ""
},
{
"docid": "924ec97e56ea4c56464f722c7914e103",
"text": "Need help with a finance problem I'm currently facing in my business. My company might be going through an acquisition and I need to understand how the dilution works out for shareholders. They currently have large shareholder loans (debt), and will be converting to equity pre-transaction. For this case, if the original company value = $1 MM and the SHL value = $1 MM, I'm assuming that'd dilute equity by 50% for all shareholders if converted to equity at original company value. Correct? However, what if the $1 MM in shareholder loans were converted at the market value of the company, say $4 MM? I might be confusing myself, but just want to confirm.. thanks!",
"title": ""
},
{
"docid": "bca5b955ad21c09521f36d07d7b490dd",
"text": "Sure let's say we're starting with the equity value of a public company. Fully diluted shares times market price. We add debt and subtract all cash to give us enterprise value. Calculate a multiple on that. Look what we did up there, we subtracted out all cash. The DCF approach assumes we have an operating level of cash when it calculates a value. You're saying that the DCF spits out an enterprise value. It cannot be an enterprise value if the DCF approach assumes we hold cash. We would have to subtract out an operating level of cash from the DCF concluded value to compare it apples to apples to the cashless enterprise values we derived from the market approach multiples.",
"title": ""
},
{
"docid": "0a7f714f0a3b50be1430a11363a34698",
"text": "Aswath Damodaran's [Investment Valuation 3rd edition](http://www.amazon.com/Investment-Valuation-Techniques-Determining-University/dp/1118130731/ref=sr_1_12?ie=UTF8&qid=1339995852&sr=8-12&keywords=aswath+damodaran) (or save money and go with a used copy of the [2nd edition](http://www.amazon.com/gp/offer-listing/0471414905/ref=dp_olp_used?ie=UTF8&condition=used)) He's a professor at Stern School of Business. His [website](http://pages.stern.nyu.edu/~adamodar/) and [blog](http://aswathdamodaran.blogspot.com/) are good resources as well. [Here is his support page](http://pages.stern.nyu.edu/~adamodar/New_Home_Page/Inv3ed.htm) for his Investment Valuation text. It includes chapter summaries, slides, ect. If you're interested in buying the text you can get an idea of what's in it by checking that site out.",
"title": ""
},
{
"docid": "f63cceb091fed668aefa3680076af07f",
"text": "\"To know if a stock is undervalued is not something that can be easily assessed (else, everybody would know which stock is undervalued and everybody will buy it until it reaches its \"\"true\"\" value). But there are methods to assess the value of a company, I think that the 3 most known methods are: If the assets of the company were to be sold right now and that all its debts were to be paid back right now, how much will be left? This remaining amount would be the fundamental value of your company. That method could work well on real estate company whose value is more or less the buildings that they own minus of much they borrowed to acquire them. It's not really usefull in the case of Facebook, as most of its business is immaterial. I know the value of several companies of the same sector, so if I want to assess the value of another company of this sector I just have to compare it to the others. For example, you find out that simiral internet companies are being traded at a price that is 15 times their projected dividends (its called a Price Earning Ratio). Then, if you see that Facebook, all else being equal, is trading at 10 times its projected dividends, you could say that buying it would be at a discount. A company is worth as much as the cash flow that it will give me in the future If you think that facebook will give some dividends for a certain period of time, then you compute their present value (this means finding how much you should put in a bank account today to have the same amount in the future, this can be done by dividing the amount by some interest rates). So, if you think that holding a share of a Facebook for a long period of time would give you (at present value) 100 and that the share of the Facebook is being traded at 70, then buy it. There is another well known method, a more quantitative one, this is the Capital Asset Pricing Model. I won't go into the details of this one, but its about looking at how a company should be priced relatively to a benchmark of other companies. Also there are a lot's of factor that could affect the price of a company and make it strays away from its fundamental value: crisis, interest rates, regulation, price of oil, bad management, ..... And even by applying the previous methods, the fundemantal value itself will remain speculative and you can never be sure of it. And saying that you are buying at a discount will remain an opinion. After that, to price companies, you are likely to understand financial analysis, corporate finance and a bit of macroeconomy.\"",
"title": ""
},
{
"docid": "7617e14cd3d865fab29e1444486990d8",
"text": "Well i dont know of any calculator but you can do the following 1) Google S&P 500 chart 2) Find out whats the S&P index points (P1) on the first date 3) Find out whats the S&P index points (P2) on the second date 4) P1 - P2 = result",
"title": ""
},
{
"docid": "6b996e352bd15885b1fe99402e082c5d",
"text": "Maybe one of my issues is that I have a 5 year model with a terminal value. The repayment of debt principal is outside this time frame so I don't assume any repayment. If you're valuing a company share price though you don't model all debt repayments.",
"title": ""
}
] |
fiqa
|
829cb86e15a9a6e6c1b438e71b428337
|
For what dates are the NYSE and U.S. stock exchanges typically closed?
|
[
{
"docid": "f74107c60db39d730e328f977ebdf010",
"text": "The NYSE publishes a list of holidays at its website. New link: https://www.nyse.com/markets/hours-calendars Old link in the original answer that doesn't work now: http://www.nyse.com/about/newsevents/1176373643795.html Hope that helps!",
"title": ""
},
{
"docid": "f4987bb0da86c46f6b8b5e7fefc77df9",
"text": "Stumbled upon this question, I've found the updated dates for 2016 and 2017 in a more permanent location. https://www.nyse.com/markets/hours-calendars",
"title": ""
},
{
"docid": "84eab1cccef725a0fed082edc3bf44f6",
"text": "\"All public US equity exchanges are closed on the 9 US trading holidays (see below) and open on all other days. Exchanges also close early (13:00 ET) on the Friday after Thanksgiving and on the day before Independence Day if Independence Day is being observed on a Tuesday, Wednesday, Thursday, or Friday. (Some venues have extended trading hours as a matter of course; for them an \"\"early close\"\" might be later than 13:00 ET.) To answer the second question, yes, if you know NASDAQ's or AMEX's holiday schedule, then you know NYSE's (modulo the timing of their early close). I'm not sure about the options exchanges; they're not regulated the same way and are a good example of exchanges with extended trading hours in the first place. The US trading holidays are as follows. Note that trading holidays are not the same as federal or bank holidays, which include Columbus Day and Veterans Day but do not include Good Friday.\"",
"title": ""
}
] |
[
{
"docid": "31e6bf09f431ab5959949c087591b78b",
"text": "Is it possible that mutual funds account for a significant portion of this volume. Investors may decide to buy or sell anytime within a 24 hour period, but the transaction only happened at the close of the market. Therefore at 3:59 pm the mutual fund knows if they will be buying or selling stocks that day. As nws pointed out the non-market hours are longer and therefore accumulate more news event. Some financial news is specifically given during the time the market is closed. Therefore the reaction to that news has to either be in the morning when the market opens or in the late afternoon if they are trying to anticipate the news. Also in the US market the early morning trader may be reacting to European market activities.",
"title": ""
},
{
"docid": "edc378b948cee79cb0c04d4cec76667f",
"text": "The NYSE is not the only exchange in the world (or even the only one in the USA). Amazingly, the London stock exchange works on London time, the Shanghai exchange works on Shanghai time and the Australian stock exchange works on Sydney time. In addition futures exchanges work overnight.",
"title": ""
},
{
"docid": "370bf01afd80672f58b7757144ca2871",
"text": "There are several reasons why this may happen and I will update as I get more information from you. Volumes on that stock look low (supposing that they are either in a factor between 1s and 1000s) so it could well be that there was no volume on that day. If no trades occur then open, high and low are meaningless as they are statistics based on trades that occur that day and no trades occur. Remember that there has to be volume to get a price. The stock may have been frozen by either the exchange or the company for the day. This could be for various reasons including to prevent some illegal activity. In that case no trades were made because the market for that stock was closed. Another possibility is that all trades that day were cancelled by the exchange. The exchange may cancel all trades if there is unusual, potentially fraudulent or other illegal activity on the stock. In this case the last price for that day existed but was rolled back by the exchange and never occurred. This is a rare situation. Although I can't find any holidays on that date it is possible that this is how your data provider marks market holidays. It would be valid to ignore the data in that case as being from a non-market day. I cannot tell if this is possible without knowing exchange information. There is a possibility that some data providers don't receive data for a day or that it gets corrupted. It may be worth checking another source to ensure the integrity of the data that you are receiving. Whichever reason is true, the data provider has made the close equal to the previous day's close as no price movements occurred. Strictly the closing price is the price of the last trade made for that day and so should be null (and open, high and low should be null too and not 0 otherwise the price change on day is very large!). Therefore, to keep integrity, you have a few choices:",
"title": ""
},
{
"docid": "8594d94978172f7350c0c7453b2e530b",
"text": "You can find the NYSE holiday dates listed on the exchange's own site (already linked in answer above), which should obviously be consulted as the most reliable source; they are also published in an article that I have written here: NYSE Holidays 2016, which provides additional information about traditions and events that can be expected to lead to unscheduled closures, and closed dates for holidays that are day-of-month rather than date specific (e.g. President's Day and Memorial Day). NYSE Holidays are not quite identical to those for the Chicago Mercantile Exchange, though most US stock exchange dates are the same. Also, note that both the Merc (via the Globex platform) and NYSE Arca have different normal cash sessions and trading hours to the New York Stock Exchange.",
"title": ""
},
{
"docid": "9e23f734f751b12c8348d91beaac1cbf",
"text": "\"The third Friday of each month is an expiration for the monthly options on each stock. Stock with standardized options are in one of three \"\"cycles\"\" and have four open months at any give time. See http://www.investopedia.com/terms/o/optioncycle.asp In addition some stocks have weekly options now. Those generally have less interest because they are necessarily short-term. Anything expiring on April 8 and 22 (Fridays this year but not third Fridays of the month) are weeklies. The monthly options are open for longer periods of time so they attract more interest over the time that they are open. They also potentially attract a different type of investor due to their length of term, although, as it gets close to their expiration date they may start to behave more like weeklies.\"",
"title": ""
},
{
"docid": "42e6c151f76413441c383a8aaf9f510f",
"text": "Your order may or may not be executed. The price of stock can open anywhere. Often yesterday's close is a good indication of today's open, but with a big event overnight, the open may be somewhere quite different. You'll have to wait and see like the rest of us. Also, even if it doesn't execute at the open, the price could vary during the day and it might execute later.",
"title": ""
},
{
"docid": "6eb46f83af68ff1662f9f0da145e39fe",
"text": "Opened Long - is when you open a long position. Long means that you buy to open the position, so you are trying to profit as the price rises. So if you were closing a long position you would sell it. Closed Short - is when you close out a short position. Short means that you sell to open and buy back to close. With a short position you are trying to profit as the price falls. Scaled Out - means you get out of a position in increments as the price climbs (for long positions). Scaled In - means you set a target price and then invest in increments as the stock falls below that price (for long positions).",
"title": ""
},
{
"docid": "5b046169ed068a319df90d5012e5a886",
"text": "How come when I sell stocks, the brokerage won't let me cash out for three days, telling me the SEC requires this clearance period for the transaction to clear, but they can swap shit around in under a second? Be interesting to see what would happen if *every* transaction wasn't cleared until the closing bell.",
"title": ""
},
{
"docid": "1fd9eff2faeeb0d51d749525ca2d2c11",
"text": "What typically happens to brokerage accounts during similar situations? This depends on country, time and situation. Nothing is predictable in such situations. In Greece during the said period the stock exchanges were closed for 5 weeks. There was no trading. Edits: Every situation is different and it would be unfair to compare one against another or use it to predict something else. Right now in India due to demonitization, cash withdrawal is limited. One can trade in stocks, unlimited bank transfers, transfer money out of India ...etc. Everything same except for cash withdrawal. In 1990, the ASEAN countries survived a financial collapse, everything was allowed except moving money out of country.",
"title": ""
},
{
"docid": "fd998359fb000bcb3b812061132ec65b",
"text": "http://www.marketwatch.com/optionscenter/calendar would note some options expiration this week that may be a clue as this would be the typical end of quarter stuff so I suspect it may happen each quarter. http://www.investopedia.com/terms/t/triplewitchinghour.asp would note in part: Triple witching occurs when the contracts for stock index futures, stock index options and stock options expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. Triple witching days, particularly the final hour of trading preceding the closing bell, can result in escalated trading activity and volatility as traders close, roll out or offset their expiring positions. June 17 would be the 3rd Friday as the 3rd and 10th were the previous two in the month.",
"title": ""
},
{
"docid": "e2745d7a797d99a0b61f8636ccaacd94",
"text": "One of the fundamental of technical analysis suggests that holding a security overnight represents a huge commitment. Therefore it would follow that traders would tend to close their positions prior to market close and open them when it opens.",
"title": ""
},
{
"docid": "a8c371e758fe5e0eb141b70578ba7536",
"text": "\"You cannot determine this solely by the ticker length. However, there are some conventions that may help steer you there. Nasdaq has 2-4 base letters BATS has 4 base letters NYSE equity securities have 1-4 base letters. NYSE Mkt (formerly Amex) have 1-4 base letters. NYSE Arca has 4 base letters OTC has 4 base letters. Security types other than equities may have additional letters added, and each exchange (and data vendors) have different conventions for how this is handled. So if you see \"\"T\"\" for a US-listed security it would be only be either NASDAQ, NYSE or NYSE Mkt. If you see \"\"ANET\"\" then you cannot tell which exchange it is listed on. (In this case, ANET Arista Networks is actually a NYSE stock). For some non-equity security types, such as hybrids, and debt instruments, some exchanges add \"\"P\"\" to the end for \"\"preferreds\"\" (Nasdaq and OTC) and NYSE/NYSE Mkt have a variety of methods (including not adding anything) to the ticker. Examples include NYSE:TFG, NYSEMkt:IPB, Nasdaaq: AGNCP, Nasdaq:OXLCN. It all becomes rather confusing given the changes in conventions over the years. Essentially, you require data that provides you with ticker, listing location and security type. The exchanges allocate security tickers in conjunction with the SEC so there are no overlaps. eg. The same ticker cannot represent two different securities. However, tickers can be re-used. For example, the ticker AB has been used by the following companies:\"",
"title": ""
},
{
"docid": "0c8ebeab922a88a6568179e1480ad73d",
"text": "\"Prices reflect all available information. (Efficient markets hypothesis) A lot can happen between the time a stock closes on one day and opens on another. Particularly in a heavily traded stock such as IBM. Basically, you have a different \"\"information set\"\" the following day, which implies a different price. The instances where you are most likely to have a stock where the price opens at the same price is at the previous close is a thinly traded stock on which you have little information, meaning that the \"\"information set\"\" changes less from day to day.\"",
"title": ""
},
{
"docid": "c5e365b99a0855ac8c9e8a2098812503",
"text": "For exchange contracts, yes. A trader can close a position by taking an offsetting position. CME's introduction to Futures explains it quite well (on page 22). Exiting the Market Jack entered the market on the buy side, speculating that the S&P 500 futures price would move higher. He has three choices for exiting the market:",
"title": ""
},
{
"docid": "361023b21c7e267e455f2f7d9a7ec418",
"text": "\"During the day, market and limit orders are submitted at any time by market participants and there is a bid and an ask that move around over time. Trades occur whenever a market order is submitted or a limit order is submitted that at a price that matches or exceeds an existing limit order. If you submit a market order, it may consume all best-price limit orders and you can get multiple prices, changing the bid or ask at the same time. All that stuff happens during the trading day only. What happens at the end of the day is different. A bunch of orders that were submitted during the day but marked as \"\"on close\"\" are aggregated with any outstanding limit orders to create a single closing price according to the algorithm established by the exchange. Each exchange may handle the details of this closing event differently. For example, the Nasdaq's closing cross or the NYSE's closing auction. The close is the most liquid time of the day, so investors who are trading large amounts and not interested in intraday swings will often submit a market-on-close or limit-on-close order. This minimizes their chance of affecting the price or crossing a big spread. It's actually most relevant for smaller stocks, which may have too little volume during the day to make big trades, but have plenty at the close. In short, the volume you see is due to these on-close orders. The spike in volume most likely has no special information about what will happen overnight or the next day. It's probably just a normal part of the market for illiquid stocks.\"",
"title": ""
}
] |
fiqa
|
44d8007b93e1bda88480a34ce3119560
|
Which set of earnings is used to work out the P/E of a stock
|
[
{
"docid": "5f5014ca6d5e1582d914c4400f4a7023",
"text": "This is a note from my broker, CMC Markets, who use Morningstar: Morningstar calculate the P/E Ratio using a weighted average of the most recent earnings and the projected earnings for the next year. This may result in a different P/E Ratio to those based solely on past earnings as reported on some sites and other publications. They show the P/E as being 9.93. So obviously past earnings would usually be used but you would need to check with your source which numbers they are using. Also, as BHP's results just came out yesterday it may take a while for the most recent financial details to be updated.",
"title": ""
},
{
"docid": "16b8b7de9304dbd8cc5d377e97780409",
"text": "\"There are two common types of P/E ratio calculations: \"\"trailing\"\" and \"\"forward\"\" (and then there are various mixes of the two). Trailing P/E ratios are calculated as [current price] / [trailing 12-month EPS]. An alternative is the Forward P/E ratio, which is based on an estimate of earnings in the coming 12 months. The estimate used is usually called \"\"consensus\"\" and, to answer your question, is the average estimate of analysts who cover the stock. Any reputable organization will disclose how they calculate their financials. For example, Reuters uses a trailing ratio (indicated by \"\"TTM\"\") on their page for BHP. So, the first reason a PE ratio might not jump on an announcement is it might be forward looking and therefore not very sensitive to the realized earnings. The second reason is that if it is a trailing ratio, some of the annual EPS change is known prior to the annual announcement. For example, on 12/31 a company might report a large drop in annual earnings, but if the bulk of that loss was reported in a previous quarterly report, then the trailing EPS would account partially for it prior to the annual announcement. In this case, I think the first reason is the culprit. The Reuters P/E of nearly 12 is a trailing ratio, so if you see 8 I'd think it must be based on a forward-looking estimate.\"",
"title": ""
},
{
"docid": "2897001493318a038f0ffc2ddc37a741",
"text": "\"@jlowin's answer has a very good discussion of the types of PE ratio so I will just answer a very specific question from within your question: And who makes these estimates? Is it the market commentators or the company saying \"\"we'd expected to make this much\"\"? Future earnings estimates are made by professional analysts and analytical teams in the market based on a number of factors. If these analysts are within an investment company the investment company will use a frequently updated value of this estimate as the basis for their PE ratio. Some of these numbers for large or liquid firms may essentially be generated every time they want to look at the PE ratio, possibly many times a day. In my experience they take little notice of what the company says they expect to make as those are numbers that the board wants the market to see. Instead analysts use a mixture of economic data and forecasting, surveys of sentiment towards the company and its industry, and various related current events to build up an ongoing model of the company's finances. How sophisticated the model is is dependent upon how big the analytics team is and how much time resource they can devote to the company. For bigger firms with good investor relations teams and high liquidity or small, fast growing firms this can be a huge undertaking as they can see large rewards in putting the extra work in. The At least one analytics team at a large investment bank that I worked closely with even went as far as sending analysts out onto the streets some days to \"\"get a feeling for\"\" some companies' and industries' growth potential. Each analytics team or analyst only seems to make public its estimates a few times a year in spite of their being calculated internally as an ongoing process. The reason why they do this is simple; this analysis is worth a lot to their trading teams, asset managers and paying clients than the PR of releasing the data. Although these projections are \"\"good at time of release\"\" their value diminishes as time goes on, particularly if the firm launches new initiatives etc.. This is why weighting analyst forecasts based on this time variable makes for a better average. Most private individual investors use an average or time weighted average (on time since release) of these analyst estimates as the basis for their forward PE.\"",
"title": ""
}
] |
[
{
"docid": "420682ca10f90e896ec85db9f666cf3a",
"text": "Not quite. The EPS is noted as ttm, which means trailing twelve months --- so the earnings are taken from known values over the previous year. The number you quote as the dividend is actually the Forward Annual Dividend Rate, which is an estimate of the future year's dividends. This means that PFE is paying out more in the coming year (per share) than it made in the previous year (per share).",
"title": ""
},
{
"docid": "001e570c3a2a33bd32b83c3442ff2427",
"text": "Usually their PE ratio will just be listed as 0 or blank. Though I've always wondered why they don't just list the negative PE as from a straight math standpoint it makes sense. PE while it can be a useful barometer for a company, but certainly does not tell you everything. A company could have negative earnings for a lot of reasons, some good and some bad. The company could just be a bad company and could be losing money hand over fist, or the company could have had a one time occurrence such as a big acquisition or some other event that just affected this years earnings, or they could be an awesome high growth company that is heavily investing for their future and forgoing locking in profits now for much bigger profits in the future. Generally IPO company's fall into that last category as they are going public usually because they want an influx of cash that they are going to use to grow the company much more rapidly. So they are likely already taking all incoming $$ and taking on debt to grow the company and have exceeded all of those options and that's when they turn to the stock market for the additional influx of cash, so it is very common for these companies not to have earnings. Now you just have to decide if that company is investing that money wisely and will in the future translate to actual earnings.",
"title": ""
},
{
"docid": "e3ddaf7271004c475e64b50bd5c65277",
"text": "\"This formula is not calculating \"\"Earnings\"\". Instead, it is calculating \"\"Free Cash Flow from Operations\"\". As the original poster notes, the \"\"Earnings\"\" calculation subtracted out depreciation and amortization. The \"\"Free Cash Flow from Operations\"\" adds these values back, but for two different reasons:\"",
"title": ""
},
{
"docid": "0ae7681cfe1d319898337f727b749fc4",
"text": "Imagine you have a bank account with $100 in it. You are thinking about selling this bank account, so ask for some bids on what it's worth. You get quotes of around $100. You decide to sell it, but before you do, you take $50 out of it to have in cash. Would you expect the market to still pay $100 for the account? The dividend is effectively the cash being withdrawn. The stock had on account a large amount of cash (which was factored into it's share price), it moved that cash out of it's account (to its shareholders), and as a result the stock instantly becomes priced lower as this cash is no longer part of it, just as it is in the bank account example.",
"title": ""
},
{
"docid": "4a03c953af7e493438d0b7e0261d42eb",
"text": "\"Everything you are doing is fine. Here are a few practical notes in performing this analysis: Find all the primary filing information on EDGAR. For NYSE:MEI, you can use https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000065270&type=10-K&dateb=&owner=exclude&count=40 This is the original 10-K. To evaluate earnings growth you need per share earnings for the past three years and 10,11,12 years ago. You do NOT need diluted earnings (because in the long term share dilution comes out anyway, just like \"\"normalized\"\" earnings). The formula is avg(Y_-1+Y_-2+Y_-3) / is avg(Y_-10+Y_-11+Y_-12) Be careful with the pricing rules you are using, the asset one gets complicated. I recommend NOT using the pricing rules #6 and #7 to select the stock. Instead you can use them to set a maximum price for the stock and then you can compare the current price to your maximum price. I am also working to understand these rules and have cited Graham's rules into a checklist and worksheet to find all companies that meet his criteria. Basically my goal is to bottom feed the deals that Warren Buffett is not interested in. If you are interested to invest time into this project, please see https://docs.google.com/document/d/1vuFmoJDktMYtS64od2HUTV9I351AxvhyjAaC0N3TXrA\"",
"title": ""
},
{
"docid": "33e1168b647035deb672a2797e3a6afe",
"text": "\"Your company actually will most likely use some sort of options pricing model, either a binomial tree or black-scholes to determine the value for their accounting and, subsequently, for their issuance and realization. First, market value of equity will be determined. Given you're private (although \"\"pre-IPO could mean public tomorrow,\"\"), this will likely revolve around a DCF and/or market approaches. Equity value will then be compared to a cap table to create an equity waterfall, where the different classes of stock and the different options will be valued along tranches. Keep in mind there might be liquidation preferences that would make options essentially further out of the money. As such, your formulae above do not quite work. However, as an employee, it might be difficult to determine the necessary inputs to determine value. To estimate it, however, look for three key pieces of information: 1. Current equity value 2. Option strike price 3. Maturity for Options If the strike is close to the current equity value, and the maturity is long enough, and you expect the company to grow, then it would look like the options have more value than not. Equity value can be derived from enterprise value, or by directly determining it via a DCF or guideline multiples. Reliable forecasts should come from looking at the industry, listening to what management is saying, and then your own information as an insider.\"",
"title": ""
},
{
"docid": "86f7fb8aee91031e8893956bc83201aa",
"text": "Are you implying that Amazon is a better investment than GE because Amazon's P/E is 175 while GE's is only 27? Or that GE is a better investment than Apple because Apple's P/E is just 13. There are a lot of other ratios to consider than P/E. I personally view high P/E numbers as a red flag. One way to think of a P/E ratio is the number of years it's expected for the company to earn its market cap. (Share price divided by annual earnings per share) It will take Amazon 175 years to earn $353 billion. If I was going to buy a dry cleaners, I would not pay the owner 175 years of earnings to take control of it, I'd never see my investment back. To your point. There is so much future growth seemingly built in to today's stock market that even when a company posts higher than expected earnings, the company's stock may take a hit because maybe future prospects are a little less bright than everyone thought yesterday. The point of fundamental analysis is that you want to look at a company's management style and financial strategies. How is it paying its debt? How is it accumulating the debt? How is it's return on assets? How is the return on assets trending? This way when you look at a few companies in the same market segment you may have a better shot at picking the winner over time. The company that piles on new debt for every new project is likely to continue that path in to oblivion, regardless of the P/E ratio. (or some other equally less forward thinking management practice that you uncover in your fundamental analysis efforts). And I'll add... No amount of historical good decision making from a company's management can prepare for a total market downturn, or lack of investor confidence in general. The market is the market; sometimes it's up irrationally, sometimes it's down irrationally.",
"title": ""
},
{
"docid": "1af8f81a857213cb573cf7e58603bb56",
"text": "You don't. When you sell them - your cost basis would be the price of the stock at which you sold the stocks to cover the taxes, and the difference is your regular capital gain.",
"title": ""
},
{
"docid": "41372fce8481716fd887860e6d3e94db",
"text": "The three places you want to focus on are the income statement, the balance sheet, and cash flow statement. The standard measure for multiple of income is the P/E or price earnings ratio For the balance sheet, the debt to equity or debt to capital (debt+equity) ratio. For cash generation, price to cash flow, or price to free cash flow. (The lower the better, all other things being equal, for all three ratios.)",
"title": ""
},
{
"docid": "6bc624692d06ad64e7f32232c19638f6",
"text": "Your observation is mostly right, that 1 is a the number around which this varies. You are actually referencing PEG, P/E to Growth ratio, which is a common benchmark to use to evaluate a stock. The article I link to provides more discussion.",
"title": ""
},
{
"docid": "a8ee07f460a8a1fe9480e40afe4f4815",
"text": "Profit after tax can have multiple interpretations, but a common one is the EPS (Earnings Per Share). This is frequently reported as a TTM number (Trailing Twelve Months), or in the UK as a fiscal year number. Coincidentally, it is relatively easy to find the total amount of dividends paid out in that same time frame. That means calculating div cover is as simple as: EPS divided by total dividend. (EPS / Div). It's relatively easy to build a Google Docs spreadsheet that pulls both values from the cloud using the GOOGLEFINANCE() function. I suspect the same is true of most spreadsheet apps. With a proper setup, you can just fill down along a column of tickers to get the div cover for a number of companies at once.",
"title": ""
},
{
"docid": "0f3adf4b5a6d10cd96ff4f1b65cca73f",
"text": "P/E can use various estimates in its calculation as one could speculate about future P/E rations and thus could determine a future valuation if one is prepared to say that the P/E should be X for a company. Course it is worth noting that if a company isn't generating positive earnings this can be a less than useful tool, e.g. Amazon in the 1990s lost money every quarter and thus would have had a N/A for a P/E. PEG would use P/E and earnings growth as a way to see if a stock is overvalued based on projected growth. If a company has a high P/E but has a high earnings growth rate then that may prove to be worth it. By using the growth rate, one can get a better idea of the context to that figure. Another way to gain context on P/E would be to look at industry averages that would often be found on Yahoo! Finance and other sites.",
"title": ""
},
{
"docid": "9fbd83b14d7050adbbcb96175a40962c",
"text": "Thanks to this youtube video I think I understood the required calculation. Based on following notation: then the formula to find x is: I found afterwards an example on IB site (click on the link 'How to Determine the Last Stock Price Before We Begin to Liquidate the Position') that corroborate the formula above.",
"title": ""
},
{
"docid": "4e30ca5efd5d21101a2e6d781d8bcf48",
"text": "Some personal finance packages can track basis cost of individual purchase lots or fractions thereof. I believe Quicken does, for example. And the mutual funds I'm invested in tell me this when I redeem shares. I can't vouch for who/what would make this visible at times other than sale; I've never had that need. For that matter I'm not sure what value the info would have unless you're going to try to explicitly sell specific lots rather than doing FIFO or Average accounting.",
"title": ""
},
{
"docid": "6d2bbe8026eb8335cb86b52eee7df766",
"text": "\"For the S&P and many other indices (but not the DJIA) the index \"\"price\"\" is just a unitless number that is the result of a complicated formula. It's not a dollar value. So when you divide said number by the earnings/share of the sector, you're again getting just a unitless number that is incomparable to standard P-E ratios. In fact, now that I think about, it kinda makes sense that each sector would have a similar value for the number that you're computing, since each sector's index formula is presumably written to make all the index \"\"price\"\"s look similar to consumers.\"",
"title": ""
}
] |
fiqa
|
371508846d0315b9d73993b346091ae2
|
Is it possible to allocate pre-tax money to a specific stock?
|
[
{
"docid": "088fc89a500d498fc4ea9e5fb306a759",
"text": "Whether an investment is pre-tax is determined by the type of account (i.e., tax-advantaged vs ordinary taxable account), but whether you can invest in individual stocks is determined by the provider (i.e., the particular bank where you have the account). These are orthogonal choices. If you want to invest in individual stocks, you need to look for a bank that offers an IRA/401k/other tax-advantaged account and allows you to invest in individual stocks with it. For example, this page suggests that Fidelity would let you do that. Obviously you should look into various providers yourself to find one that offers the mix of features you want.",
"title": ""
}
] |
[
{
"docid": "5cf21e874ace52095a9263cd6b1e72b3",
"text": "If you are planning this as a tax avoidance scheme, well it is not. The gains will be taxable in your hands and not in the Banks hands. Banks simply don't cash out the stock at the same price, there will be quite a bit of both Lawyers and others ... so in the end you will end up paying more. The link indicates that one would pay back the loan via one's own earnings. So if you have a stock worth USD 100, you can pledge this to a Bank and get a max loan of USD 50 [there are regulations that govern the max you can get against 100]. You want to buy something worth USD 50. Option1: Sell half the stock, get USD 50, pay the captial gains tax on USD 50. Option2: Pledge the USD 100 stock to bank, get a loan of USD 50. As you have not sold anything, there is no tax. Over a period pay the USD 50 loan via your own earnings. A high valued customer may be able to get away with a very low rate of intrest and very long repayment period. The tax implication to your legal hier would be from the time the stock come to his/her hands to the time she sold. So if the price increase to 150 by the time Mark dies, and its sold at 160 later, the gain is only of USD 10. So rather than paying 30% or whatever the applicable tax rate, it would be wise to pay an interest of few percentages.",
"title": ""
},
{
"docid": "bfff0491e050a523aebe4524c2528913",
"text": "Theoretically, yes, you can only buy or sell whole shares (which is why you still have .16 shares in your account; you can't sell that fraction on the open market). This is especially true for voting stock; stock which gives you voting rights in company decisions makes each stock one vote, so effectively whomever controls the majority of one stock gets that vote. However, various stock management policies on the part of the shareholder, brokerage firm or the issuing company can result in you owning fractional shares. Perhaps the most common is a retirement account or other forward-planning account. In such situations, it's the dollar amount that counts; when you deposit money you expect the money to be invested in your chosen mix of mutual funds and other instruments. If the whole-shares rule were absolute, and you wanted to own, for instance, Berkshire Hathaway stock, and you were contributing a few hundred a month, it could take you your entire career of your contributions sitting in a money-market account (essentially earning nothing) before you could buy even one share. You are virtually guaranteed in such situations to end up owning fractions of shares in an investment account. In these situations, it's usually the fund manager's firm that actually holds title to the full share (part of a pool they maintain for exactly this situation), and your fractional ownership percentage is handled purely with accounting; they give you your percentage of the dividends when they're paid out, and marginal additional investments increase your actual holdings of the share until you own the whole thing. If you divest, the firm sells the share of which you owned a fraction (or just holds onto it for the next guy fractionally investing in the stock; no need to pay unnecessary broker fees) and pays you that fraction of the sale price. Another is dividend reinvestment; the company may indicate that instead of paying a cash dividend, they will pay a stock dividend, or you yourself may indicate to the broker that you want your dividends given to you as shares of stock, which the broker will acquire from the market and place in your account. Other common situations include stock splits that aren't X-for-1. Companies often aren't looking to halve their stock price by offering a two-for-one split; they may think a smaller figure like 50% or even smaller is preferable, to fine tune their stock price (and thus P/E ratio and EPS figures) similar to industry competitors or to companies with similar market capitalization. In such situations they can offer a split that's X-for-Y with X>Y, like a 3-for-2, 5-for-3 or similar. These are relatively uncommon, but they do happen; Home Depot's first stock split, in 1987, was a 3-for-2. Other ratios are rare, and MSFT has only ever been split 2-for-1. So, it's most likely that you ended up with the extra sixth of a share through dividend reinvestment or a broker policy allowing fractional-share investment.",
"title": ""
},
{
"docid": "95016e01b71321938f2cd9859aed3f34",
"text": "If you have a public company and shareholder A owns 25% and shareholder B owns 25%, and lets say the remaining 50% is owned by various funds/small investors. Say profits are 100mil, and a dividend is payed. Say 50 mil worth is payed out as dividend and 30 mil is kept as retained earnings for future investment. Can the remaining 20 mil be distributed to shareholders A and B, so that they both get 10mil each? Can certain shareholders be favored and get a bigger cut of profits than the dividends pay out is my question basically.",
"title": ""
},
{
"docid": "3338cdf93ea8e4afd56c25c5749a9ce7",
"text": "\"Retirement accounts often can be invested with pretax money, with the exception of Roth accounts that use post-tax and have tax-free growth if you follow the rules, rather than after tax money as well as provide a shelter so that you aren't having to pay annual taxes on dividends and other possible distributions. Another point would be to consider how much money you'd be investing as some funds may have institutional versions that can be much cheaper than others, e.g. compare Vanguard's index funds that the 500 Index in Investor shares, Admiral shares and institutional forms where the tickers would be VFINX, VFIAX, VINIX, VIIIX to consider. Some companies may have access to the institutional funds that aren't what you'd have unless you are investing millions of dollars upfront. Lastly, if there isn't an employer plan and you make a ton of cash, you may not qualify for a deductible IRA or Roth IRA contribution for something else that may happen if you want to start playing with, \"\"What if.\"\"\"",
"title": ""
},
{
"docid": "079146be252b00916828b6842bbca0da",
"text": "A public company should have a link for investor relations, which should help provide a trail of basis if this is a matter of company buyout, takeover, etc. This gets you close, but if you don't have an exact date, it will just be close, not exact. One clean way out of this, assuming the goal is to get rid of the stock and move on, is to donate the shares to charity. You will take the present value as a deduction, and be done. You can use a charitable gift fund such as those offered by Schwab or Fidelity, so if say, the shares are worth $20K, and you typically donate $5K per year, the fund lets you do this transaction at once, then send to the charities you wish over the next few years.",
"title": ""
},
{
"docid": "9c544c0eb4ec07e6e467f7e47f29f5ab",
"text": "I am relative newbie in the financial market trading and as I understand it, the response from Victor is accurate in respect of trading CFD contracts. However, there is also the option to 'trade' through a financial spread betting platform which as its name suggests is purely a bet based upon the price of the underlying stock/asset. As such, I believe that your theory to short a stock just prior to its ex-dividend date may be worth investigating further... Apart from that, it's worthwhile mentioning that financial spread betting is officially recognised by HMRC as gambling and therefore not currently [2015/16] subject to capital gains tax. This info is given in good faith and must not be relied upon when making any investment and/or trading decision(s). I hope this helps you make a fortune - if it does; then please remember me!",
"title": ""
},
{
"docid": "ac33ea50dc277176327736a8f2fae978",
"text": "\"I think this is possible under very special conditions. The important part of the description here is probably retired and rich. The answers so far apply to people with \"\"normal\"\" incomes - both in the sense of \"\"not rich\"\" and in the sense of \"\"earned income.\"\" If you sit at the top tax bracket and get most of your income through things like dividends, then you might be able to win multiple ways with the strategy described. First you get the tax deduction on the mortgage interest, which everyone has properly noted is not by itself a winning game - You spend more than you save. BUT... There are other factors, especially for the rich and those whose income is mostly passive: I'm not motivated enough on the hypothetical situation to come up with a detailed example, but I think it's possible that this could work out. In any case, the current answers using \"\"normal sized\"\" incomes and middle tax brackets don't necessarily give the insight that you might hope if the tax payer really is unusually wealthy and retired.\"",
"title": ""
},
{
"docid": "7e6a30f5616e94418f406aebfface37b",
"text": "Have you looked into GnuCash? It lets you track your stock purchases, and grabs price updates. It's designed for double-entry accounting, but I think it could fit your use case.",
"title": ""
},
{
"docid": "7b4949a3da3761f93882e91e555bf38b",
"text": "With robo-advisor services, you don't select which funds you buy or sell. All you do is decide on a risk profile, and when you add or remove funds to your account, they decide what to buy or sell based on that profile. Each service might decide how to do this differently. Looking at Betterment's case, it looks like they try to do rebalancing when you buy. So if you put a deposit in each month, they'll buy the lower priced funds to rebalance your account to the desired ratio. In a taxable account, Betterment likes to optimize your tax liability when you withdraw, so they sell the funds that have lost money before they sell the ones that have gained.",
"title": ""
},
{
"docid": "2b43fe73cf92fefdaffbeb5cfe26747b",
"text": "If you hold at least $2,000 of a company's shares for at least a year you can submit a proxy filing -- a stockholder proposal at the shareholders' meeting. Then you can use the media to agitate around that proposal. (See Hugh Fearnley-Whittingstall, mentioned here as well). Companies have been known to bow to media pressure around minority shareholder proposals. The guidelines for proxy filings are here: http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=47b43cbb88844faad586861c05c81595&rgn=div5&view=text&node=17:3.0.1.1.1&idno=17#17:3.0.1.1.1.2.82.201 Buying enough shares to assume control of a major money center bank is not possible, regardless of the amount of money you can raise (remember: there are poison pill provisions, not to mention the fact that the more shares you want to buy, the higher the price will be). tl;dr: The way to do what you're trying to do is not by accumulating shares but by using the media. You need $2,000.",
"title": ""
},
{
"docid": "eda6724430f8b24f3d39f71ef8ef4afa",
"text": "\"Private companies often \"\"make the market\"\" for their own stock. So they may offer to buy back so many shares a year, give staff the option to sell stock back after so many years, etc. But private companies can have their own restrictions. They can, for instance, forbid secondary trading or explicitly limit voting stock to family members. Ostensibly, someone could sell a big chunk of a company for whatever price they wanted (unless it was prohibited). For tax purposes, IRS will come after you if you get a bunch of value for less than you paid for. It is not an unheard of way to transfer wealth, but a dollar? Probably just gift it. But I'm not a tax attorney... But is absolutely not the same kind of price transparency, or price movement, that you see in public stock, you are correct. Larger private companies may have secondary markets that are still less transparent.\"",
"title": ""
},
{
"docid": "d090e456a27088b6844ae132bb20c829",
"text": "\"You mention \"\"early exercise\"\" in your title, but you seem to misunderstand what early exercise really means. Some companies offer stock options that vest over a number of years, but which can be exercised before they are vested. That is early exercise. You have vested stock options, so early exercise is not relevant. (It may or may not be the case that your stock options could have been early exercised before they vested, but regardless, you didn't exercise them, so the point is moot.) As littleadv said, 83(b) election is for restricted stocks, often from exercising unvested stock options. Your options are already vested, so they won't be restricted stock. So 83(b) election is not relevant for you. A taxable event happen when you exercise. The point of the 83(b) election is that exercising unvested stock options is not a taxable event, so 83(b) election allows you to force it to be a taxable event. But for you, with vested stock options, there is no need to do this. You mention that you want it not to be taxable upon exercise. But that's what Incentive Stock Options (ISOs) are for. ISOs were designed for the purpose of not being taxable for regular income tax purposes when you exercise (although it is still taxable upon exercise for AMT purposes), and it is only taxed when you sell. However, you have Non-qualified Stock Options. Were you given the option to get ISOs at the beginning? Why did your company give you NQSOs? I don't know the specifics of your situation, but since you mentioned \"\"early exercise\"\" and 83(b) elections, I have a hypothesis as to what might have happened. For people who early-exercise (for plans that allow early-exercise), there is a slight advantage to having NQSOs compared to ISOs. This is because if you early exercise immediately upon grant and do 83(b) election, you pay no taxes upon exercise (because the difference between strike price and FMV is 0), and there are no taxes upon vesting (for regular or AMT), and if you hold it for at least 1 year, upon sale it will be long-term capital gains. On the other hand, for ISOs, it's the same except that for long-term capital gains, you have to hold it 2 years after grant and 1 year after exercise, so the period for long-term capital gains is longer. So companies that allow early exercise will often offer employees either NQSOs or ISOs, where you would choose NQSO if you intend to early-exercise, or ISO otherwise. If (hypothetically) that's what happened, then you chose wrong because you got NQSOs and didn't early exercise.\"",
"title": ""
},
{
"docid": "47d1bf3a9f7853133fac81955ed45b8c",
"text": "I think what you're asking is, Can I buy 1000 shares of the stock at $1. For $1000. it goes up to $2, then sell 500 shares of the stock with proceeds of $1000, now having my original $1000 out of it, and still owning 500 shares. And that not create a taxable event. Since all I did was take my cost basis back out, and didn't collect any gains. And then I want to repeat that over and over. Nope, not in the USA anyway. Each sale is a separate taxable event. The first sale will have proceeds of $1000 and a cost basis of $500, with $500 of capital gains, and taxes owed at the time of that sale. The remaining stock will have a cost basis of $500 and proceeds of whatever you sell it for in the future. The next batch of stock will have a cost basis of whatever you pay for it. The only thing that works anything like the way you're thinking, is a Roth IRA... You can put your cost basis in, pull it back out, and put it back in again, all tax free. But every time your cost basis cycles in, that counts towed your contribution limits unless you do it fast enough to call it a rollover.",
"title": ""
},
{
"docid": "7ee2984c54c112d43b0ba985c3b222f1",
"text": "\"Some 401k plans allow you to make \"\"supplemental post-tax contributions\"\". basically, once you hit the pre-tax contribution limit (17.5k$ in 2014), you are then allowed to contribute funds on a post-tax basis. Because of this timing, they are sometimes called \"\"spillover\"\" contributions. Usually, this option is advertised as a way of continuing to get company match even if you accidentally hit the pre-tax limit. But if you actually pay attention to your finances, it is instead a handy way to put away additional tax-advantaged money. That said, you would only want to use this option if you already maxed out your pre-tax and Roth options since you don't get the traditional tax break on contributions or the Roth tax break on the earnings. However, when you leave the company, you can transfer the post-tax money directly into a Roth IRA when you transfer the pre-tax money, match, and earnings into a traditional IRA.\"",
"title": ""
},
{
"docid": "172847e4ae7acf0ba694e561857fc838",
"text": "No it is not safe to take out a new mortgage - loan or anything credit related or any investment - in greece. Growing political risk, bonds have junk credit rating. You will be underwater on your mortgage the day you apply for it. And you better believe that the buyers will be dry once you realize that it doesn't make sense to keep paying the mortgage. If you want to have some assets, there are more liquid things you can own, in your case: paper gold. Just rent.",
"title": ""
}
] |
fiqa
|
425503ce5d18977e2437946592186ecf
|
Top 3 things to do before year end for your Stock Portfolio?
|
[
{
"docid": "adb81b9babc2177e333b62b9aa5fe64a",
"text": "Bonus: Contribute to (or start!) your IRA for 2010. This doesn't have to be done have to be done by the end of the year; you can make your 2011 contribution in 2010, before you file your tax return (by Apr. 15 at the latest, even if you get an extension.)",
"title": ""
},
{
"docid": "271b245c66784da2295c00234b95afee",
"text": "Not knowing the US laws at all, you should worry more about having the best stock portfolio and less about taxes. My 0,02€",
"title": ""
}
] |
[
{
"docid": "dae84622294f488ae7fff5c11d07754a",
"text": "That looks like a portfolio designed to protect against inflation, given the big international presence, the REIT presence and TIPS bonds. Not a bad strategy, but there are a few things that I'd want to look at closely before pulling the trigger.",
"title": ""
},
{
"docid": "b4a4bf82635f2ab1149e9c69c34ecbd0",
"text": "Do you have a broker? Any online brokerage (TD Ameritrade, E*Trade, Scott Trade, etc) offer the functionality that you want. If you're not interested in opening a brokerage account, you can search for threads here related to stock market simulation, since most of those services also provide the features that you want. If you do you have a physical broker at some firm, contact him/her and ask about the online tools that the brokerage offers. Almost all of them have portfolio management tools available to clients.",
"title": ""
},
{
"docid": "b63dbe66dfdd7ba1c1fbc3d855852c6d",
"text": "A classic text on growth stock picking is Common Stock and Uncommon Profits By Philip Fisher, with a 15 point checklist. Here is a summary of the list that you can check out.",
"title": ""
},
{
"docid": "d5e71508fdf5bcc1d535cac18c15e692",
"text": "\"The best strategy for RSU's, specifically, is to sell them as they vest. Usually, vesting is not all in one day, but rather spread over a period of time, which assures that you won't sell in one extremely unfortunate day when the stock dipped. For regular investments, there are two strategies I personally would follow: Sell when you need. If you need to cash out - cash out. Rebalance - if you need to rebalance your portfolio (i.e.: not cash out, but reallocate investments or move investment from one company to another) - do it periodically on schedule. For example, every 13 months (in the US, where the long term cap. gains tax rates kick in after 1 year of holding) - rebalance. You wouldn't care about specific price drops on that day, because they also affect the new investments. Speculative strategies trying to \"\"sell high buy low\"\" usually bring to the opposite results: you end up selling low and buying high. But if you want to try and do that - you'll have to get way more technical than just \"\"dollar cost averaging\"\" or similar strategies. Most people don't have neither time nor the knowledge for that, and even those who do rarely can beat the market (and never can, in the long run).\"",
"title": ""
},
{
"docid": "8ea3fa55dc99d74165a2688fa631cbe1",
"text": "Don't over think about your choices. The most important thing to start now and keep adjusting and tuning your portfolio as you move along in your life. Each individual's situation is unique. Start with something simple and straight forward, like 100 - your age, in Total Stock market Index fund and the remaining total bond market index fund. For your 401k, at least contribute so much as to get the maximum employer match. Its always good if you can contribute the yearly maximum in your 401k or IRA. Once you have built up a substantial amount of assets (~ $50k+) then its time to think more about asset allocation and start buying into more specific investments as needed. Remember to keep your investment expenses low by using index funds. Also remember to factor in tax implications on your investment decisions. eg. buying an REIT fund in a tax advantaged account like 40k is more tax efficient than buying it in a normal brokerage account.",
"title": ""
},
{
"docid": "f5c7f7d203e7382c51786e86d48f3934",
"text": "Before you even enroll in a good financial school, register for an account with a bank that allows you to manage a stock portfolio. I prefer TD Ameritrade. You do have to be 18 (Just register it under your parents, it doesn't matter. Just make sure they fill out the information portion. Get the SSN and tax info right. Basically it's their account, you're just managing it. ) That way you'll have some good, practical experience going into it. Understand that working with money can be a very cut-throat industry, be ready to be competing with people constantly. Also, surround yourself with books from successful stock brokers, investment bankers, things like that. When you're working you'll want information like that. Good luck, and I hope this helps.",
"title": ""
},
{
"docid": "ac22618341c07a2678f24e43e1aad47a",
"text": "Personally I'm not a huge fan of rebalancing within an asset class. I would vote for leaving the HD shares alone and buying other assets until you get to the portfolio you want. Frequent buying and selling incurs costs and possible tax consequences that can really hurt your returns.",
"title": ""
},
{
"docid": "df9ab79001c00f515a3dc8ee69f05872",
"text": "I'm not really sure yet. I know I'm beginning my upper level finance courses (Corp. Finance & Investments this Autumn) so I am going to try and see what I like. Investments have always attracted me but I have to experience it before I can say what I would like. I'm really open to anything. I know excel quite well (thought of getting Microsoft certified to put on resume) and stats have always been fun for me. I took 2 intro to accounting courses but have forgotten most of the material. Is there any part of accounting you recommend is valuable (auditing, financial acct, reporting & financial statements, etc.; maybe any course suggestions bc I know Ohio State Uni has multiple courses on different acct topics)?",
"title": ""
},
{
"docid": "496e19544efadcd778720d5523807ea8",
"text": "\"The essence of hedging is to find an investment that performs well under the conditions that you're concerned about. If you're concerned about China stock dropping, then find something that goes up in value if that asset class goes down. Maybe put options on a Chinese index fund, or selling short one of those funds? Or, if you're already \"\"in the money\"\" on your Chinese stock position, set a stop loss: instruct your broker to sell if that stock hits X or lower. That way you keep some gains or limit your losses. That involves liquidating your position, but if you've had a nice run-up, it may be time to consider selling if you feel that the prospects are dimming.\"",
"title": ""
},
{
"docid": "cb7a295dd66a62cf18a6b8763ed80268",
"text": "I know it may not last longer but i was able to 2.5x my wealth over last 2 years.(2016, 2017 cont) I was successfully able to convert 70k into 452k in 21months. Now at this amount, I am really worried and want to take all the profit. I agree that I have been lucky with these returns but it was not all outright luck. Now my plan is to take 100k of it and try high risk investments while investing 350k in index funds.",
"title": ""
},
{
"docid": "f3b46a3bcf094f4b1063d750d505eb04",
"text": "From Vanguard's Best practices for portfolio rebalancing:",
"title": ""
},
{
"docid": "3f4d2782016a99449f0364ecead401b2",
"text": "https://www.google.ca/amp/s/amp.businessinsider.com/most-important-finance-books-2017-1 Bloomberg, finacial times, chat with traders, calculated risk, reuters, wsj, cnbc(sucks), bnn (if canadian) Audio books on youtube helped me read a lot of finance books in a short amount of time, listen while working out. One thing that helped me stand out at my student terms (4th year here) was learning outside of the classroom and joining an investment club. Learning programming can help if thats a strength, but its really not needed and it can waste time if yoi wont reach a point to build tools. Other than that at 18 you have more direction than i did, good luck!",
"title": ""
},
{
"docid": "976268f4edde8650833716e4d3ce89c9",
"text": "Competing against other groups and against computers. In this course we have some point in the future where we face a crisis. I would think I need to keep my debt levels low incase I need to get a long-term loan to cover my expenses over the 3rd year. In that case I might just hold off until before that date to maximize the debt load. I also don't know what effect on our stock price our balance sheet has. I feel like when I analyze companies and see their balance sheets have a lot of debt I shy away depending on their share price.",
"title": ""
},
{
"docid": "416ef7846826a6105c8771f921f2ad33",
"text": "\"You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams. The money returned by stock investing (capital gains and dividends) is just one such type of stream. Some others include owning rental properties, being a passive owner of a business, and producing goods that earn long-term royalties instead of just an immediate exchange of time & effort for cash. Of these, rental property is probably one of the most well-known and easiest to learn about, so I'd suggest you start with that as a second type of investment if you feel you need to diversify from stock ownership. Especially given your association with the military, it is likely there is a nearby supply of private housing that isn't too expensive (so easier to get started with) and has a high rental demand (so less risk in many ways.) Also, with our continued current low rate environment, now is the time to lock-in long term mortgage rates. Doing so will reap huge benefits as rates and rents will presumably rise from here (though that isn't guaranteed.) Regarding the idea of being a passive business owner, keep in mind that this doesn't necessarily mean starting a business yourself. Instead, you might look to become a partner by investing money with an existing or startup business, or even buying an existing business or franchise. Sometimes, perfectly good business can be transferred for surprisingly little down with the right deal structure. If you're creative in any way, producing goods to earn long-term royalties might be a useful path to go down. Writing books, articles, etc. is just one example of this. There are other opportunities depending on your interests and skill, but remember, the focus ought to be on passive royalties rather than trading time and effort for immediate money. You only have so many hours in a year. Would you rather spend 100 hours to earn $100 every year for 20 years, or have to spend 100 hours per year for 20 years to earn that same $100 every year? .... All that being said, while you're way ahead of the game for the average person of your age ($30k cash, $20k stocks, unknown TSP balance, low expenses,) I'm not sure I'd recommend trying to diversify quite yet. For one thing, I think you need to keep some amount of your $30k as cash to cover emergency situations. Typically people would say 6 months living expenses for covering employment gaps, but as you are in the military I don't think it's as likely you'll lose your job! So instead, I'd approach it as \"\"How much of this cash do I need over the next 5 years?\"\" That is, sum up $X for the car, $Y for fun & travel, $Z for emergencies, etc. Keep that amount as cash for now. Beyond that, I'd put the balance in your brokerage and get it working hard for you now. (I don't think an average of a 3% div yield is too hard to achieve even when picking a safe, conservative portfolio. Though you do run the risk of capital losses if invested.) Once your total portfolio (TSP + brokerage) is $100k* or more, then consider pulling the trigger on a second passive income stream by splitting off some of your brokerage balance. Until then, keep learning what you can about stock investing and also start the learning process on additional streams. Always keep an eye out for any opportunistic ways to kick additional streams off early if you can find a low cost entry. (*) The $100k number is admittedly a rough guess pulled from the air. I just think splitting your efforts and money prior to this will limit your opportunities to get a good start on any additional streams. Yes, you could do it earlier, but probably only with increased risk (lower capital means less opportunities to pick from, lower knowledge levels -- both stock investing and property rental) also increase risk of making bad choices.\"",
"title": ""
},
{
"docid": "38765067a397d9b0e341b2b3e44ba294",
"text": "\"Plenty! Following are just a few: For things like RESP and RRSP which have an \"\"end\"\" date; as you or your children age, you should be migrating to less speculative investments and more secure ones. When children are young, for example, you might be in a \"\"growth\"\" type fund. Later on, you would likely want to switch that to an \"\"income\"\" fund, which is also more conservative and less likely to lose principal. Are you getting the best benefit from your credit cards? Is there another card with benefits that you would get more \"\"back\"\" from using? Is that fee-based Air miles card worth it? Is cash-back better for you? If you have regular investment withdrawals, can you increase them? Do you like the plan they are going in to? Similarly look over any other long-term debt repayment. Student loans, car loans, mortgage. What is coming up this year, what is \"\"ending\"\". If, for example, car payment will end, how will you earmark that money, so it just does not disappear into general funds. While you could go over things like these more often, once a year should be plenty often to keep tabs and not obsess. Good Luck!\"",
"title": ""
}
] |
fiqa
|
9eddf22abec2e90c4b2eb10c6274232f
|
How to map stock ticker symbols to ISIN (International Securities Identification Number)?
|
[
{
"docid": "52fb421a3486c497b33316eea6c19866",
"text": "There is no simple way to convert an ISIN into a stock ticker symbol. The only way to even attempt to do so is to map the ISIN to a CUSIP or SEDOL or other national identifier and then map that identifier to a stock ticker symbol.",
"title": ""
},
{
"docid": "243594e6951dc7481b1d75097ae34b43",
"text": "\"It is possible to make a REST API call providing the ISIN to get the ticker in the response: Python code for getting ticker for ISIN=US4592001014: import requests url = 'https://api.openfigi.com/v1/mapping' headers = {'Content-Type':'text/json', 'X-OPENFIGI-APIKEY':'myKey' } payload = '[ {\"\"idType\"\":\"\"ID_ISIN\"\",\"\"idValue\"\":\"\"US4592001014\"\"}]' r = requests.post(url, data=payload, headers=headers)\"",
"title": ""
}
] |
[
{
"docid": "2d3de2e3532c4bf6ad539bc232c06e42",
"text": "If the first one is literally a company name, then 'company name' is fine. However, companies can issue shares more than once, and those shares might be traded separately, so you could have 'Google ordinary', 'Google preference', 'Google ordinary issue B'. Seeing the name spelled out in full like this isn't as common as just the company name, but I'd normally see it referred to as 'display name'. The second one is 'symbol', 'ticker', 'ID', and others. Globally, there are many incompatible ways of referring to a stock, depending on where it's listed (companies can have dual listings, and different exchanges have different conventions), and who's referring to it (Bloomberg and Reuters have different sets of IDs, with no predictable mapping between them). So there's no one shorthand name, and the word you use depends on the context. However, 'symbol' or 'ticker' is normally fine.",
"title": ""
},
{
"docid": "dd0cdb33bb16c2cd9885660a2f39574d",
"text": "The article links to William Bernstein’s plan that he outlined for Business Insider, which says: Modelling this investment strategy Picking three funds from Google and running some numbers. The international stock index only goes back to April 29th 1996, so a run of 21 years was modelled. Based on 15% of a salary of $550 per month with various annual raises: Broadly speaking, this investment doubles the value of the contributions over two decades. Note: Rebalancing fees are not included in the simulation. Below is the code used to run the simulation. If you have Mathematica you can try with different funds. Notice above how the bond index (VBMFX) preserves value during the 2008 crash. This illustrates the rationale for diversifying across different fund types.",
"title": ""
},
{
"docid": "432563b151d2e6afcfa8c7f9f577f54b",
"text": "I use and recommend barchart.com. Again you have to register but it's free. Although it's a US system it has a full listing of UK stocks and ETFs under International > London. The big advantage of barchart.com is that you can do advanced technical screening with Stochastics and RS, new highs and lows, moving averages etc. You're not stuck with just fundamentals, which in my opinion belong to a previous era. Even if you don't share that opinion you'd still find barchart.com useful for UK stocks.",
"title": ""
},
{
"docid": "bb7297662734c48964eb593b905aee35",
"text": "Another one I have seen mentioned used is Equity Feed. It had varies levels of the software depending on the markets you want and can provide level 2 quotes if select that option. http://stockcharts.com/ is also a great tool I see mentioned with lots of free stuff.",
"title": ""
},
{
"docid": "9fbd83b14d7050adbbcb96175a40962c",
"text": "Thanks to this youtube video I think I understood the required calculation. Based on following notation: then the formula to find x is: I found afterwards an example on IB site (click on the link 'How to Determine the Last Stock Price Before We Begin to Liquidate the Position') that corroborate the formula above.",
"title": ""
},
{
"docid": "a8c371e758fe5e0eb141b70578ba7536",
"text": "\"You cannot determine this solely by the ticker length. However, there are some conventions that may help steer you there. Nasdaq has 2-4 base letters BATS has 4 base letters NYSE equity securities have 1-4 base letters. NYSE Mkt (formerly Amex) have 1-4 base letters. NYSE Arca has 4 base letters OTC has 4 base letters. Security types other than equities may have additional letters added, and each exchange (and data vendors) have different conventions for how this is handled. So if you see \"\"T\"\" for a US-listed security it would be only be either NASDAQ, NYSE or NYSE Mkt. If you see \"\"ANET\"\" then you cannot tell which exchange it is listed on. (In this case, ANET Arista Networks is actually a NYSE stock). For some non-equity security types, such as hybrids, and debt instruments, some exchanges add \"\"P\"\" to the end for \"\"preferreds\"\" (Nasdaq and OTC) and NYSE/NYSE Mkt have a variety of methods (including not adding anything) to the ticker. Examples include NYSE:TFG, NYSEMkt:IPB, Nasdaaq: AGNCP, Nasdaq:OXLCN. It all becomes rather confusing given the changes in conventions over the years. Essentially, you require data that provides you with ticker, listing location and security type. The exchanges allocate security tickers in conjunction with the SEC so there are no overlaps. eg. The same ticker cannot represent two different securities. However, tickers can be re-used. For example, the ticker AB has been used by the following companies:\"",
"title": ""
},
{
"docid": "7617e14cd3d865fab29e1444486990d8",
"text": "Well i dont know of any calculator but you can do the following 1) Google S&P 500 chart 2) Find out whats the S&P index points (P1) on the first date 3) Find out whats the S&P index points (P2) on the second date 4) P1 - P2 = result",
"title": ""
},
{
"docid": "7f1eb22c5ceb023258ce59d1b6a06a9f",
"text": "\"The S&P 500 index is maintained by S&P Dow Jones Indices, a division of McGraw Hill Financial. Changes to the index are made periodically, as needed. For Facebook, you'll find it mentioned in this December 11, 2013 press release (PDF). Quote: New York, NY, December 11 , 2013 – S&P Dow Jones Indices will make the following changes to the S&P 100, S&P 500, MidCap 400 and S&P SmallCap 600 indices after the close of trading on Friday, December 20: You can find out more about the S&P 500 index eligibility criteria from the S&P U.S. Indices methodology document (PDF). See pages 5 and 6: Market Capitalization - [...] Liquidity - [...] Domicile - [...] Public Float - [...] Sector Classification - [...] Financial Viability - Usually measured as four consecutive quarters of positive as reported earnings. [...] Treatment of IPOs - Initial public offerings should be seasoned for 6 to 12 months before being considered for addition to an index. Eligible Securities - [...] [...] Changes to the U.S. indices other than the TMIX are made as needed, with no annual or semi-annual reconstitution. [...] LabCorp may have a smaller market cap than Facebook, but Facebook didn't meet all of the eligibility criteria – for instance, see the above note about \"\"Treatment of IPOs\"\" – until recently. Note also that \"\"Initial public offerings should be seasoned for 6 to 12 months\"\" implies somebody at S&P makes a decision as to the exact when. As such, I would say, no, there is no \"\"simple rule or formula\"\", just the methodology above as applied by the decision-makers at S&P.\"",
"title": ""
},
{
"docid": "d6614c80a1bfd3d9994c53dd2e02b2ba",
"text": "Try Google Finance Screener ; you will be able to filter for NASDAQ and NYSE exchanges.",
"title": ""
},
{
"docid": "b310de648ba5a6c87c2486eaa759c8ea",
"text": "One of the most useful ways to depict Open, High, Low, Close, and Volume is with a Candlestick Chart. I like to use the following options from Stockcharts.com: http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=3&dy=0&id=p57211761385",
"title": ""
},
{
"docid": "026e3c198ad75498e618bd0b17111839",
"text": "There are no legal reasons preventing you from trading as a F-1 visa holder, as noted in this Money.SE answer. Per this article, here are the things you need to set up an account: What do I need to have for doing Stock trading as F1 student ? Typically, most of the stock brokerage firms require Social Security Number (SSN) for stock trading. The reason is that, for your capital gains, it is required by IRS for tax purposes. If you work on campus, then you would already get SSN as part of the job application process…Typically, once you get the on-campus job or work authorization using CPT or OPT , you use that offer letter and take all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration(SSA) Office, check full details at SSA Website . SSN is typically used to report job wages by employer for tax purposes or check eligibility of benefits to IRS/Government. I do NOT have SSN, Can I still do stock trading as F1 student ? While many stock brokerage firms require SSN, you are not out of luck, if you do not have one…you will have to apply for an ITIN Number ( Individual Taxpayer Identification Number ) and can use the same when applying for stock brokerage account. While some of the firms accept ITIN number, it totally depends on the stock brokering firm and you need to check with the one that you are interested in. The key thing is that you'll need either a SSN or ITIN to open a US-based brokerage account.",
"title": ""
},
{
"docid": "def659aae548de1cffe0daa87eeb0196",
"text": "I believe that it's not possible for the public to know what shares are being exchanged as shorts because broker-dealers (not the exchanges) handle the shorting arrangements. I don't think exchanges can even tell the difference between a person selling a share that belongs to her vs. a share that she's just borrowing. (There are SEC regulations requiring some traders to declare that trades are shorts, but (a) I don't think this applies to all traders, (b) it only applies to the sells, and (c) this information isn't public.) That being said, you can view the short interest in a symbol using any of a number of tools, such as Nasdaq's here. This is often cited as an indicator similar to what you proposed, though I don't know how helpful it would be from an intra-day perspective.",
"title": ""
},
{
"docid": "7c3ce52de9c86c161b7c8be72e8139b4",
"text": "Yes, http://shares.telegraph.co.uk/stockscreener/ has what you're looking for.",
"title": ""
},
{
"docid": "495399b295f2a543d63c1288582a78bb",
"text": "\"A \"\"stock price\"\" is nothing but the price at which some shares of that stock were sold on an exchange from someone willing to sell those shares at that price (or more) to someone willing to buy them at that price (or less). Pretty much every question about how stock prices work is answered by the paragraph above, which an astonishingly large number of people don't seem to be aware of. So there is no explicit \"\"tracking\"\" mechanism at all. Just people buying and selling, and if the current going price on two exchanges differ, then that is an opportunity for someone to make money by buying on one exchange and selling on the other - until the prices are close enough that the fees and overhead make that activity unprofitable. This is called \"\"arbitrage\"\" and a common activity of investment banks or (more recently) hedge funds and specialized trading firms spun off by said banks due to regulation.\"",
"title": ""
},
{
"docid": "e05dcedf1a1bea716785027fabcee543",
"text": "\"Considering the fact that you are so unaware of how to find such data, I find it very very hard to believe that you actually need it. \"\"All trade and finance data for as much tickers and markets as possible.\"\" Wtf does that even mean. You could be referencing thousands of different types of data for any given \"\"ticker\"\" with a statement so vague. What are you looking for?\"",
"title": ""
}
] |
fiqa
|
2d5e45384d6a02ff77a11ea52424778a
|
What are NSCC illiquid charges?
|
[
{
"docid": "59cf5efd93208588af4d31a00b6e7d2d",
"text": "NSCC illiquid charges are charges that apply to the trading of low-priced over-the counter (OTC) securities with low volumes. Open net buy quantity represents the total unsettled share amount per stock at any given time during a 3-day settlement cycle. Open net buy quantity must be less than 5,000,000 shares per stock for your entire firm Basically, you can't hold a long position of more than 5 million shares in an illiquid OTC stock without facing a fee. You'll still be assessed this fee if you accumulate a long position of this size by breaking your purchase up into multiple transactions. Open net sell quantity represents the total unsettled share amount per stock at any given time during a 3-day settlement cycle. Open net sell quantity must be less than 10% percent of the 20-day average volume If you attempt to sell a number of shares greater than 10% of the stock's average volume over the last 20 days, you'll also be assessed a fee. The first link I included above is just an example, but it makes the important point: you may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. Technically, these fees are assessed to the clearing firm, not the individual investor, but usually the clearing firm will pass the fees along to the broker (and possibly add other charges as well), and the broker will charge a fee to the individual account(s) that triggered the restriction. Also, remember that when buying OTC/pink sheet stocks, your ability to buy or sell is also contingent on finding someone else to buy from/sell to. If you purchase 10,000 shares one day and attempt to sell them sometime in the future, but there aren't enough buyers to buy all 10,000 from you, you might not be able to complete your order at the desired price, or even at all.",
"title": ""
}
] |
[
{
"docid": "9a698c0e53d922a16a843c86718e60fc",
"text": "You can report the violation to the payment network (i.e., Mastercard or Visa). For instance here is a report form for Visa and here is one for MasterCard. I just found those by googling; there are no doubt other ways of contacting the companies. Needless to say, you shouldn't expect that this will result in an immediate hammer of justice being brought down on the merchant. Given the presence of large-scale fraud schemes, it's unlikely Visa is going to come after every little corner store owner who charges a naughty 50-cent surcharge. It is also unlikely that threatening to do this will scare the merchant enough to get them to drop the fee on your individual transaction. (Many times the cashier will be someone who has no idea how the process actually works, and won't even understand the threat.) However, this is the real solution in that it allows the payment networks to track these violations, and (at least in theory) they could come after the merchant if they notice a lot of violations.",
"title": ""
},
{
"docid": "6c3c5e2804a3f4ff19c1a1293a007deb",
"text": "E*Trade offers banking services, and will provide you with a security token free if you have sufficient assets there ($50,000). Otherwise they'll charge you a $25 fee.",
"title": ""
},
{
"docid": "94970535876170d6f406b405eaae7731",
"text": "was getting blood drawn for two doctors so multiple vials. technician says one test is mis-coded on the doctor's order and so I'd have to pay...**pay $563** or not have the test done so I was giving seven vials, now six. takes about 15 seconds to take the 7th and a machine does the analysis ...hmmmm",
"title": ""
},
{
"docid": "bc7685ecec082bcae6aa5d12e0fb7397",
"text": "Wow, I had never heard of this before but I looked into it a bit and Mikey was spot on. It seems that if you don't pay attention to the fine print when making credit card purchases (as most of us tend to skip) many companies have stipulations that allow continued charges if they are recurring fees (monthly, yearly, etc.) even after you have cancelled the card.",
"title": ""
},
{
"docid": "0f575010cfb2d70008bd14a524d90fbf",
"text": "\"Its a broker fee, not something charged by the reorganizing company. E*Trade charge $20, TD Ameritrade charge $38. As with any other bank fee - shop around. If you know the company is going to do a split, and this fee is of a significant amount for you - move your account to a different broker. It may be that some portion of the fee is shared by the broker with the shares managing services provider of the reorgonizing company, don't know for sure. But you're charged by your broker. Note that the fees differ for voluntary and involuntary reorganizations, and also by your stand with the broker - some don't charge their \"\"premier\"\" customers.\"",
"title": ""
},
{
"docid": "e9197aaacc5b542c14ef44ec964ea8b2",
"text": "You're 100% correct here. This is without a doubt on me. But it's still absurd do to me making a mistake about one large transaction bringing my balance negative, every small transaction past it is getting hit with a $35 dollar charge. Multiple transactions that a few dollars become an almost $50 dollar purchase a pop. They're making a killing off of people trying to make a living.",
"title": ""
},
{
"docid": "464e3ae477e3950b605f238bc0de4589",
"text": "\"An order is your command to the broker to, say, \"\"sell 100 shares of AAPL\"\". An executed order (or partially executed order) is when all (or some) of that command is successfully completed. A transaction is an actual exchange of shares for money, and there may be one or more transactions per executed order. For example, the broker might perform all of the following 5 transactions in order to do what you asked: On the other hand, if the broker cannot execute your order, then 0 transactions have taken place. The fee schedule you quote is saying that no matter how many transactions the broker has to perform in order to fill your order -- and no matter what the share prices are -- they're only going to charge you $0.005 per share ($0.50 in this example of 100 shares), subject to certain limits. However, as it says at the top of the page you linked, Our Fixed pricing for stocks, ETFs (Exchange Traded Products, or ETPs) and warrants charges a fixed amount per share or a set percent of trade value, and includes all IB commissions, exchange and most regulatory fees with the exception of the transaction fees, which are passed through on all stock sales. certain transaction fees are passed through to the client. The transaction fee you included above is the SEC fee on sales. Many (but not all) transaction fees DO depend on the prices of the shares involved; as a result they cannot be called \"\"fixed\"\" fees. For example, if you sell 100 shares of AAPL at $150 each, But if you sell 100 shares of AMZN at $940 each, So the broker will charge you the same $0.50 on either of those orders, but the SEC will charge you more for the expensive AMZN shares than for the cheaper AAPL shares. The reason this specific SEC fee mentions aggregate sales rather than trade value is because this particular SEC fee applies only to the seller and not to the buyer. So they could have written aggregate trade value, but they probably wanted to highlight to the reader that the fee is only charged on sells.\"",
"title": ""
},
{
"docid": "7cab7db1ae7dc6254b1b1bceb272e714",
"text": "The SIPC would protect individual investors up to $500K for securities & cash, with a max of $250K for cash. One would receive all securities that are already in your name or in the process. In case client money was diverted to company trades, then SIPC will investigate and try to find out how much money belonged to each customer. It would determine this on various inputs including your transaction records like money to transferred to MF Global, internal records, amongst other things. More information in the SIPC bulletin: http://www.sipc.org/Media/NewsReleases/release31Oct2011.aspx",
"title": ""
},
{
"docid": "a1720fa259e7eb90a6351b6ff9991e53",
"text": "The best way to invest 50k Indian rupees is in a 5 Year NSC(National Saving Certificate which can be obtained at the Post Office) yielding interest 8.1% p.a. (at present), which is more than the effective FDR interest rate offered by any bank in India. Investment in an NSC also permits a deduction u/s 80C of the Income Tax Act, 1961. So, investing in an NSC will save tax and get a higher return/benefit for your investment.",
"title": ""
},
{
"docid": "e41c8ec588a51a97e9137dca1ce3c600",
"text": "All openly traded securities must be registered with the SEC and setup with clearing agents. This is a costly process. The cost to provide an electronic market for a specific security is negligible. That is why the exchange fees per electronic trade are so small per security. It is so small in fact that exchanges compensate price makers partially at the expense of price takers, that exchanges partially give some portion of the overall fee to those that can help provide liquidity. The cost to provide an open outcry market for a specific security are somewhat onerous, but they are initiated before a security has any continual liquidity to provide a market for large trades, especially for futures. Every individual option contract must be registered and setup for clearing. Aside from the cost to setup each contract, expiration and strike intervals are limited by regulation. For an extremely liquid security like SPY, contracts could be offered for daily expiration and penny strike intervals, but they are currently forbidden.",
"title": ""
},
{
"docid": "e72fec842579c94379154c5c9e31b87d",
"text": "IESC has a one-time, non-repeatable event in its operating income stream. It magnifies operating income by about a factor of five. It impacts both the numerator and the denominator. Without knowing exactly how the adjustments are made it would take too much work for me to calculate it exactly, but I did get close to their number using a relatively crude adjustment rule. Basically, Yahoo is excluding one-time events from its definitions since, although they are classified as operating events, they distort the financial record. I teach securities analysis and have done it as a profession. If I had to choose between Yahoo and Marketwatch, at least for this security, I would clearly choose Yahoo.",
"title": ""
},
{
"docid": "b454bdd66734e04e3cd3b92bb4779f8f",
"text": "I'm an Australian who just got back from a trip to Malaysia for two weeks over the New Year, so this feels a bit like dejavu! I set up a 28 Degrees credit card (my first ever!) because of their low exchange rate and lack of fees on credit card transactions. People say it's the best card for travel and I was ready for it. However, since Malaysia is largely a cash economy (especially in the non-city areas), I found myself mostly just withdrawing money from my credit card and thus getting hit with a cash advance fee ($4) and instant application of the high interest rate (22%) on the money. Since I was there already and had no other alternatives, I made five withdrawals over the two weeks and ended up paying about $21 in fees. Not great! But last time I travelled I had a Commonwealth Bank Travel Money Card (not a great idea), and if I'd used that instead on this trip and given up fees for a higher exchange rate, I would have been charged an extra $60! Presumably my Commonwealth debit card would have been the same. This isn't even including mandatory ATM fees. If I've learned anything from this experience and these envelope calculations I'm doing now, it's these:",
"title": ""
},
{
"docid": "0529164de42f2b3e6ba64aae64e4b0fd",
"text": "Depends how you're doing the math. The actual damage done so far is zero or near zero. You're valuing potential damage. If your concern is fixing the error then the damage wouldn't be monetary - it'd be credit repair in the case of a problem.",
"title": ""
},
{
"docid": "37dc7c576d993146ced26769135dd173",
"text": "TL;DR.: Because eventually the CC issuer will pass the fraud bill to the customer, in the form of increased fees and/or taxes. Even with no liability in the case of fraud, the customer should put effort into security measures with their card. The expense from fraud may be the sole burden of the credit issuer / bank as per Ben Miller's answer, but this expense will someday find its way into the customer's pockets: Disclosure, i work at a bank. A banks' best ability probably is risk management. The ones that were bad at this probably went under in the last four decades. With regulations such as SOx, Basilea, and others, it is impossible for a bank to neglect risk management. Every expense, including operational losses, a bank incurs will reflect in increased fees / interest rates for the customers. So in the case of a sharp raise of credit card fraud, the banks will soon take measures to reduce these losses. That may mean canceling the cards of high-risk groups of customers, increasing fees or interest. A particular customer that is often the target of fraud (way more than the average for that customer's demographic) will probably see his card not renewed or even cancelled, or his limits decreased and/or rates/fees going up.",
"title": ""
},
{
"docid": "698111cd921bcfd014d15bcf5d87ae5c",
"text": "Many states have a simple method for assessing income tax on nonresidents. If you have $X income in State A where you claim nonresident status and $Y income overall, then you owe State A a fraction (X/Y) of the income tax that would have been due on $Y income had you been a resident of State A. In other words, compute the state income tax on $Y as per State A rules, and send us (X/Y) of that amount. If you are a resident of State B, then State B will tax you on $Y but give you some credit for taxes paid to State A. Thus, you might be required to file a State A income tax return regardless of how small $X is. As a practical matter, many commercial real-estate investments are set up as limited partnerships in which most of the annual taxable income is a small amount of portfolio income (usually interest income that you report on Schedule B of Form 1040), and the annual bottom line is lots of passive losses which the limited partners report (but do not get to deduct) on the Federal return. As a result, State A is unlikely to come after you for the tax on, say, $100 of interest income each year because it will cost them more to go after you than they will recover from you. But, when the real estate is sold, there will (hopefully) be a big capital gain, most of which will be sheltered from Federal tax since the passive losses finally get to be deducted. At this point, State A is not only owed a lot of money (it knows nothing of your passive losses etc) but, after it processes the income tax return that you filed for that year, it will likely demand that you file income tax returns for previous years as well.",
"title": ""
}
] |
fiqa
|
6e7bd0b66d1e4dd52b44875605d07354
|
Market Close Order
|
[
{
"docid": "361023b21c7e267e455f2f7d9a7ec418",
"text": "\"During the day, market and limit orders are submitted at any time by market participants and there is a bid and an ask that move around over time. Trades occur whenever a market order is submitted or a limit order is submitted that at a price that matches or exceeds an existing limit order. If you submit a market order, it may consume all best-price limit orders and you can get multiple prices, changing the bid or ask at the same time. All that stuff happens during the trading day only. What happens at the end of the day is different. A bunch of orders that were submitted during the day but marked as \"\"on close\"\" are aggregated with any outstanding limit orders to create a single closing price according to the algorithm established by the exchange. Each exchange may handle the details of this closing event differently. For example, the Nasdaq's closing cross or the NYSE's closing auction. The close is the most liquid time of the day, so investors who are trading large amounts and not interested in intraday swings will often submit a market-on-close or limit-on-close order. This minimizes their chance of affecting the price or crossing a big spread. It's actually most relevant for smaller stocks, which may have too little volume during the day to make big trades, but have plenty at the close. In short, the volume you see is due to these on-close orders. The spike in volume most likely has no special information about what will happen overnight or the next day. It's probably just a normal part of the market for illiquid stocks.\"",
"title": ""
}
] |
[
{
"docid": "19b4cc4d6de16c1de1b3f8863affcb0b",
"text": "A stop-loss order becomes a market order when a trade has occurred at or below the trigger price you set when creating the order. This means that you could possibly end up selling some or all of your position at a price lower than your trigger price. For relatively illiquid securities your order may be split into transactions with several buyers at different prices and you could see a significant drop in price between the first part of the order and the last few shares. To mitigate this, brokers also offer a stop-limit order, where you set not only a trigger price, but also a minimum price that you are will to accept for your shares. This reduces the risk of selling at rock bottom prices, especially if you are selling a very large position. However, in the case of a flash crash where other sellers are driving the price below your limit, that part of your order may never execute and you could end up being stuck with a whole lot of shares that are worth less than both your stop loss trigger and limit price. For securities that are liquid and not very volatile, either option is a pretty safe way to cut your losses. For securities that are illiquid and/or very volatile a stop-limit order will prevent you from cashing out at bottom dollar and giving away a bargain to lurkers hanging out at the bottom of the market, but you may end up stuck with shares you don't want for longer than originally planned. It's up to you to decide which kind of risk you prefer.",
"title": ""
},
{
"docid": "9ca579a1d52fc5a986c5132394e6ff7b",
"text": "It depends on how you place your stop order and the type of stop orders available from your broker. If you place a stop market order and the following day the stock opens below your stop your stock will be stopped out at or around the opening price, meaning you can potentially end up with quite a large gap. If you place a stop limit order, say you place your stop at $10.00 with a limit price of $9.90, and if the price opens below $9.90, say at $9.50, your limit sell order of $9.90 will be placed onto the market but it will not be executed until the price goes back up to $9.90 or above. The third option is to place a Guaranteed Stop Loss, and as specified you are guaranteed your stop price even if the price gaps down below your stop price. You will be paying an extra fee for the Guaranteed Stop Loss Order, and they are usually mainly available with CFD Brokers (so if you are in the USA you might be out of luck).",
"title": ""
},
{
"docid": "8767fd8487c7fbf1fe4d78d52a38411b",
"text": "\"My broker offers the following types of sell orders: I have a strategy to sell-half of my position once the accrued value has doubled. I take into account market price, dividends, and taxes (Both LTgain and taxes on dividends). Once the market price exceeds the magic trigger price by 10%, I enter a \"\"trailing stop %\"\" order at 10%. Ideally what happens is that the stock keeps going up, and the trailing stop % keeps following it, and that goes on long enough that accrued dividends end up paying for the stock. What happens in reality is that the stock goes up some, goes down some, then the order gets cancelled because the company announces dividends or something dumb like that. THEN I get into trouble trying to figure out how to re-enter the order, maintaining the unrealized gain in the history of the trailing stop order. I screwed up and entered the wrong type of order once and sold stock I didn't want to. Lets look at an example. a number of years ago, I bought some JNJ -- a hundred shares at 62.18. - Accumulated dividends are 2127.75 - My spreadsheet tells me the \"\"double price\"\" is 104.54, and double + 10% is 116.16. - So a while ago, JNJ exceeded 118.23, and I entered a Trailing Stop 10% order to sell 50 shares of JNJ. The activation price was 106.41. - since then, the price has gone up and down... it reached a high of 126.07, setting the activation price at 113.45. - Then, JNJ announced a dividend, and my broker cancelled the trailing stop order. I've re-entered a \"\"Stop market\"\" order at 113.45. I've also entered an alert for $126.07 -- if the alert gets triggered, I'll cancel the Market Stop and enter a new trailing stop.\"",
"title": ""
},
{
"docid": "fd25863c896820977eca451e4ac7e6ae",
"text": "It's done by Opening Auction (http://www.advfn.com/Help/the-opening-auction-68.html): The Opening Auction Between 07.50 and a random time between 08.00 and 08.00.30, there will be called an auction period during which time, limit and market orders are entered and deleted on the order book. No order execution takes place during this period so it is possible that the order book will become crossed. This means that some buy and sell orders may be at the same price and some buy orders may be at higher prices than some sell orders. At the end of the random start period, the order book is frozen temporarily and an order matching algorithm is run. This calculates the price at which the maximum volume of shares in each security can be traded. All orders that can be executed at this price will be filled automatically, subject to price and priorities. No additional orders can be added or deleted until the auction matching process has been completed. The opening price for each stock will be either a 'UT' price or, in the event that there are no transactions resulting form the auction, then the first 'AT' trade will be used.",
"title": ""
},
{
"docid": "4627e2e2e149b4cc2196a252bd34dbec",
"text": "\"if it opens below my limit order What exactly are you trying to achieve here? If your limit order is for 100 and the stock opens \"\"below\"\" your limit order, say 99, then it is obviously going to buy it automatically. also place a stop loss on the same order Most brokers allow limit + stop loss order at the same time on same order. What I conclude from your question is that you're with a broker that is using obscure technology. Get a better broker or maybe, retry phrasing your question correctly.\"",
"title": ""
},
{
"docid": "a1279b9f19d3f34f064ed3d1e0512b56",
"text": "Depending on your strategy, it could be though there is also something to be said for what kind of order are you placing: Market, limit or otherwise? Something else to consider is whether or not there is some major news that could cause the stock/ETF to gap at the open. For example, if a company announces strong earnings then it is possible for the stock to open higher than it did the previous day and so a market order may not to take into account that the stock may jump a bit compared to the previous close. Limit orders can be useful to put a cap on how much you'll pay for a stock though the key would be to factor this into your strategy of when do you buy.",
"title": ""
},
{
"docid": "76b3ed663f72d7d3a4b5b4f8254222b9",
"text": "This is often the case where traders are closing out short positions they don't want to hold overnight, for a variety of reasons that matter to them. Most frequently, this is from day traders or high-frequency traders settling their accounts before the markets close.",
"title": ""
},
{
"docid": "0016f018e4656ea0b9eaa3555dd39a65",
"text": "\"The risk of market orders depends heavily on the size of the market and the exchange. On big exchange and a security which is traded in hue numbers you're likely that there are enough participants to give you a \"\"fair\"\" price. Doing a market order on a security which is hardly dealed you might make a bad deal. In Germany Tradegate Exchange and the sister company the bank Tradegate AG are known to play a bit dirty: Their market is open longer than Frankfurt (Xetra) and has way lower liquidity. So it can happen that not all sell or buy orders can be processes on the Exchange and open orders are kept. Then Tradegate AG steps in with a new offer to full-fill these trades selling high or buying low. There is a German article going in details on wiwo.de either German or via Google Translate\"",
"title": ""
},
{
"docid": "705ee9b2dcdf79ccdb72df415ee392af",
"text": "thanks. I have real time quotes, but in the contest, if you put in a market order the trade might happen at the delayed quote price and not the real time price. Does anyone know at which price it will trade, delayed or real time?",
"title": ""
},
{
"docid": "bc948cfde0e1d4662142f3f88c5df161",
"text": "At any point of time, buyer wants to purchase a stock at lesser price and seller wants to sell the stock at a higher price. Let's consider this scenario Company XYZ is trading at 100$, as stated above buyer wants to purchase at lower price and seller at higher price, this information will be available in Market depth, let's consider there are 5 buyers and 5 sellers, below are the details of their orders Buyers List Sellers List Highest order in buyers list will contain the bid price and bid quantity, Lowest order in Sellers list will contain the offer price and offer quantity. Now, if I want to buy 50 Stocks of company XYZ, need to place an order first, it can be either limit or Market. Limit Order : In this order, I will mention the price(buy price) at which I wish to buy, if there is any seller selling the stock less than or equal to price I have mentioned, then the order will be executed else it will be added to buyers list Market Order : In this order, I will not mention the price, if I wish to purchase 50 Stocks, then it will find the lowest offer price and buy stocks, in our case it will be 101. if I wish to purchase 200 Stocks, then it will find the lowest offer price and buy stocks, in our case it will be 2 transactions, since entire request cannot be accommodated in single order Usually the volume(Ask Volume and Offer Volume) being displayed are all Limit orders and not Market orders, Market orders are executed immediately. This is just an example, However several transactions are executed within a second, hence we will get to know the exact value only after the order is completed(executed)",
"title": ""
},
{
"docid": "5775fcd5beb1fd715c83430a9b72b75a",
"text": "\"- In a quote driven market, must every investor trade with a market maker? In other words, two parties that are both not market makers cannot trade between themselves directly? In a way yes, all trades go through a market maker but those trades can be orders put in place by a \"\"person\"\" IE: you, or me. - Does a quote driven market only display the \"\"best\"\" bid and ask prices proposed by the market makers? In other words, only the highest bid price among all the market makers is displayed, and other lower bid prices by other market makers are not? Similarly, only the lowest ask price over all market makers is displayed, and other higher ask prices by other market makers are not? No, you can see other lower bid and higher ask prices. - In a order-driven market, is it meaningful to talk about \"\"the current stock price\"\", which is the price of last transaction? Well that's kind of an opinion. Information is information so it won't be bad to know it. Personally I would say the bid and ask price is more important. However in the real world these prices are changing constantly and quickly so realistically it is easier to keep track of the quote price and most likely the bid/ask spread is small and the quote will fall in between. The less liquid a security is the more important the bid/ask is. -- This goes for all market types. - For a specific asset, will there be several transactions happened at the same time but with different prices? Today with electronic markets, trades can happen so quickly it's difficult to say. In the US stock market trades happen one at a time but there is no set time limit between each trade. So within 1 second you can have a trade be $50 or $50.04. However it will only go to $50.04 when the lower ask prices have been exhausted. - Does an order driven market have market makers? By definition, no. - What are some examples of quote driven and order driven financial markets, in which investors are commonly trading stocks and derivatives, especially in U.S.? Quote driven market: Bond market, Forex. Order driven market: NYSE comes from an order driven market but now would be better classified as a \"\"hybird market\"\" Conclusion: If you are asking in order to better understand today's stock markets then these old definitions of Quote market or Order market may not work. The big markets in the real world are neither. (IE: Nasdaq, NYSE...) The NYSE and Nasdaq are better classified as a \"\"hybird market\"\" as they use more then a single tactic from both market types to insure market liquidity, and transparency. Markets these days are strongly electronic, fast, and fairly liquid in most cases. Here are some resources to better understand these markets: An Introduction To Securities Markets The NYSE And Nasdaq: How They Work Understanding Order Execution\"",
"title": ""
},
{
"docid": "7438115dd136cd9ae0240180d5592f12",
"text": "In the stock market many participants enter orders that are not necessarily set at the current market price of the stock (i.e. they are not market orders, they are limit orders). They can be lower than the market price (if they want to buy) or they can be higher than the market price (if they want to sell). The set of orders at each point of time for a security is called the order book. The lowest selling price of the order book is the offer or ask, the higher buying price is the bid. The more liquid is a security, the more orders will be in the order book, and the narrower will be the bid-ask spread. The depth of the order book is the number of units that the order book can absorb in any direction (buy or sell). As an example: imagine I want to buy 100 units at the lowest offer, but the size of the lowest offer is only 50 units, and there is not any further order, that means the stock has little depth.",
"title": ""
},
{
"docid": "d2323f60dcf6807c1151a04b0999014a",
"text": "\"You can place the orders like you suggested. This would be useful in a market that is moving quickly where you want to be reasonably sure of execution but don't want the full exposure of a market order. This won't jump your spot in the queue though in the sense that you won't get ahead of other orders that are \"\"ready\"\" for execution just because you have crossed the spread aggressively.\"",
"title": ""
},
{
"docid": "d15ac36ec6dd0a7344427933d0cfe0b2",
"text": "\"The SEC reference document (PDF) explains order types in more detail. A fill-or-kill order is neither a market order nor a limit order; instead it's something in between. A market order asks to be filled at the best available price, whatever that price might be when the order gets to the exchange. Additionally, if there are not enough counterparties to fill the order at the best available price, then part of the order may be filled at a worse price. This all happens more or less immediately; there's no way to cancel it once it has been placed. A limit order asks to be filled at a particular price, and if no counterparties want to trade at that price right now, then the order will just sit around all day waiting for someone to agree on the price; it can be canceled at any time. A fill-or-kill order asks to be filled at a particular price (like a limit order), but if that price or a better one is not currently available then the order is immediately canceled. It does not accept a worse price (the way a market order does), nor does it sit around waiting (the way a limit order does). Since the exchange computes whether to \"\"fill\"\" or \"\"kill\"\" the order as soon as it is arrives, there's also no way to cancel it (like a market order).\"",
"title": ""
},
{
"docid": "97e65970f20cad08d3fe6ee5ebb651e8",
"text": "Do not use a stop loss order as a long-term investor. The arguments in favor of stop losses being presented by a few users here rely on a faulty premise, namely, that there is some kind of formula that will let you set your stop such that it won't trigger on day-to-day fluctuations but will trigger in time to protect you from a significant loss in a serious market downturn. No such formula exists. No matter where you set your stop, it is as likely to dump you from your investment just before it begins climbing again as it is to shield you from continued losses. Each time that happens, you will have sold low and bought high, incurring trading fees into the bargain. It is very unlikely that the losses you avoid in a bear market (remember, you still incur the loss up until your stop is hit; it's only the losses after that that you avoid) will make up the costs of false alarms. On top of that, once you have stopped out of your first investment choice, then what? Will you reinvest in some other stock or fund? If those investments didn't look good to you when you first set up your asset allocation, then why should they look any better now, just because your primary investment has dropped by some arbitrary[*] amount? Will you park the money in cash while you wait for prices to bottom out? The market bottom is only apparent in retrospect. There is no formula for calling it in real time. Perhaps stop loss orders have their uses in active trading strategies, or maybe they're just chrome that trading platforms use to attract customers. Either way, using them on long-term investments will just cost you money in the long run. Forget the fancy order types, and manage your risk through your asset allocation. The overwhelming likelihood is that you will get better performance, and you will spend less time worrying about your investments to boot. [*] Why are the stop levels recommended by the formulae invariably multiples of 5%? Do the market gods have a thing for round numbers?",
"title": ""
}
] |
fiqa
|
9406028ce6a27af7fd82102c45e62517
|
Is capturing a loss a unique opportunity?
|
[
{
"docid": "4925a42610d9d45797fcb67ad5c8a122",
"text": "I agree, one should not let the tax tail wag the investing dog. The only question should be whether he'd buy the stock at today's price. If he wishes to own it long term, he keeps it. To take the loss this year, he'd have to sell soon, and can't buy it back for 30 days. If, for whatever reason, the stock comes back a bit, he's going to buy in higher. To be clear, the story changes for ETFs or mutual funds. You can buy a fund to replace one you're selling, capture the loss, and easily not run afoul of wash sale rules.",
"title": ""
}
] |
[
{
"docid": "d015bb7fb08fc382d9aa62e25c1b767a",
"text": "It's unclear what you're asking. When I originally read your question, it seemed that you had closed out one options position and opened another. When I read your question the second time, it seemed that you were writing a second option while the first was still open. In the second case, you have one covered and one naked position. The covered call will expire worthless, the naked call will expire in the money. How your broker will resolve that is a question best left for them, but my expectation is that they will assign the non-worthless calls. Whereas, if both options expired in the money, you would be assigned and you would have to come up with the additional shares (and again, that depends on how your broker works). In general, for both cases, your net is the premiums you received, plus the difference between strike price and the price that you paid for the stock, minus any cost to close out the position. So whether you make a profit is very much dependent on how much you received for your premiums. Scenario #1: close first call, write second: Scenario #2: write covered + naked, one expires worthless Scenario #3: write covered + naked, both expire in the money Disclaimer: the SEC does not consider me a financial/investment advisor, so this is not financial/investment advice",
"title": ""
},
{
"docid": "650d13866eec153909006378708fb75b",
"text": "\"You've described the process fairly well. It's tough to answer a question that ultimately is 'how is this fair?' It's fair in that it's part of the known risk. And for the fact that it applies to all, pretty equally. In general, this is not very common. (No, I don't have percents handy, I'm just suggesting from decades of trading it's probably occurring less than 10% of the time). Why? Because there's usually more value to the buyer in simply selling the option and using the proceeds to buy the stock. The option will have 2 components, its intrinsic value (\"\"in the money\"\") and the time premium. It takes the odd combination of low-to-no time premium, but desire of the buyer to own the stock that makes the exercise desirable.\"",
"title": ""
},
{
"docid": "7ec4040c3ac8334ab36c650435360cd4",
"text": "\"As Dilip said, if you want actual concrete, based in tax law, answers, please add the country (and if applicable, state) where you pay income tax. Also, knowing what tax bracket you're in would help as well, although I certainly understand if you're not comfortable sharing that. So, assuming the US... If you're in the 10% or 15% tax bracket, then you're already not paying any federal tax on the $3k long term gain, so purposely taking losses is pointless, and given that there's probably a cost to taking the loss (commission, SEC fee), you'd be losing money by doing so. Also, you won't be able to buy back the loser for 31 days without having the loss postponed due to the wash sale that would result. State tax is another matter, but (going by the table in this article), even using the highest low end tax rate (Tennessee at 6%), the $50 loss would only save you $3, which is probably less than the commission to sell the loser, so again you'd be losing money. And if you're in a state with no state income tax, then the loss wouldn't save you anything on taxes at the state level, but of course you'll still be paying to be able to take the loss. On the high end, you'd be saving 20% federal tax and 13.3% state tax (using the highest high end tax state, California, and ignoring (because I don't know :-) ) whether they tax long-term capital gains at the same rate as regular income or not), you'd be saving $50 * (20% + 13.3%) = $50 * 33.3% = $16.65. So for taxes, you're looking at saving between nothing and $16.65. And then you have to subtract from that the cost to achieve the loss, so even on the high end (which means (assuming a single filer)) you're making >$1 million), you're only saving about $10, and you're probably actually losing money. So I personally don't think taking a $50 loss to try to decrease taxes makes sense. However, if you really meant $500 or $5000, then it might (although if you're in the 10-15% brackets in a no income tax state, even then it wouldn't). So the answer to your final question is, \"\"It depends.\"\" The only way to say for sure is, based on the country and state you're in, calculate what it will save you (if anything). As a general rule, you want to avoid letting the tax tail wag the dog. That is, your financial goal should be to end up with the most money, not to pay the least taxes. So while looking at the tax consequences of a transaction is a good idea, don't look at just the tax consequences, look at the consequences for your overall net worth.\"",
"title": ""
},
{
"docid": "3e96dd8b815036db335e1e2920e91435",
"text": "True but it isn't too difficult . Perhaps a classic example would be Sony - 5 years losses , this last year US$1.1B , how long can it last ?! However the trick is not to initially concentrate on the corporates but to concentrate on the small to medium sized companies and to ensure that they are strategically placed engineering wise to step in and take over . Business wise they will be used to adapting quickly .",
"title": ""
},
{
"docid": "52981c665fee7c5690b99f2b7cb7e0d2",
"text": "The important thing to realize is, what would you do, if you didn't have the call? If you didn't have call options, but you wanted to have a position in that particular stock, you would have to actually purchase it. But, having purchased the shares, you are at risk to lose up to the entire value of them-- if the company folded or something like that. A call option reduces the potential loss, since you are at worst only out the cost of the call, and you also lose a little on the upside, since you had to pay for the call, which will certainly have some premium over buying the underlying share directly. Risk can be defined as reducing the variability of outcomes, so since calls/shorts etc. reduce potential losses and also slightly reduce potential gains, they pretty much by definition reduce risk. It's also worth noting, that when you buy a call, the seller could also be seen as hedging the risk of price decreases while also guaranteeing that they have a buyer at a certain price. So, they may be more concerned about having cash flow at the right time, while at the same time reducing the cost of the share losing in value than they are losing the potential upside if you do exercise the option. Shorts work in the same way but opposite direction to calls, and forwards and futures contracts are more about cash flow management: making sure you have the right amount of money in the right currency at the right time regardless of changes in the costs of raw materials or currencies. While either party may lose on the transaction due to price fluctuations, both parties stand to gain by being able to know exactly what they will get, and exactly what they will have to pay for it, so that certainty is worth something, and certainly better for some firms than leaving positions exposed. Of course you can use them for speculative purposes, and a good number of firms/people do but that's not really why they were invented.",
"title": ""
},
{
"docid": "ef4b0cff3e13cb4f5bf4142ca6be722e",
"text": "\"I'm going to take a very crude view of this: Suppose that you have an event that would cost $100,000 if it occurred. If there's a 10% chance that it'll happen to you and the insurance costs less than $10,000, you'll make a profit \"\"on average.\"\" This is, of course, assuming that you could afford a $100,000 loss. If you can't, the actual loss could be much higher (or different). For example, if you couldn't afford surgery because you didn't have health insurance, it could be a lot more \"\"costly\"\" in a way that could be difficult to compare to the $100,000. Obviously, this is a very simplistic view of things. For example, making more than you paid on the premium typically isn't the only reason you'd buy insurance (even if you're high net worth). Just wanted to throw this out there for what it's worth though.\"",
"title": ""
},
{
"docid": "eb5e9815faf7113e06c057aa15dd3c3e",
"text": "\"As long as the losing business is not considered \"\"passive activity\"\" or \"\"hobby\"\", then yes. Passive Activity is an activity where you do not have to actively do anything to generate income. For example - royalties or rentals. Hobby is an activity that doesn't generate profit. Generally, if your business doesn't consistently generate profit (the IRS looks at 3 out of the last 5 years), it may be characterized as hobby. For hobby, loss deduction is limited by the hobby income and the 2% AGI threshold.\"",
"title": ""
},
{
"docid": "2502f030fa961b4e3a9fc48d7cbecae3",
"text": "Sounds like an illiquid option, if there are actually some bidders, market makers, then sell the option at market price (market sell order). If there are not market makers then place a really low limit sell order so that you can sit at the ask in the order book. A lot of time there is off-book liquidity, so there may be a party looking for buy liquidity. You can also exercise the option to book the loss (immediately selling the shares when they get delivered to you), if this is an American style option. But if the option is worthless then it is probably significantly underwater, and you'd end up losing a lot more as you'd buy the stock at the strike price but only be able to sell at its current market value. The loss could also be increased further if there are even MORE liquidity issues in the stock.",
"title": ""
},
{
"docid": "0246968edf70ab6aa0e2c0c489c80dcc",
"text": "It is true that it may be somewhat of a loss. I would not lose any money with the other options as I have already made my money back but I would be at a loss as far as time investment goes. I agree number 1 is most logical but emotionally my heart is just not in it anymore that is why I put 2 and 3 in there too.",
"title": ""
},
{
"docid": "329675bf2c9692f2f78d55243aa4920e",
"text": "\"Yes, long calls, and that's a good point. Let's see... if I bought one contract at the Bid price above... $97.13 at expiry of $96.43 option = out of the money =- option price(x100) = $113 loss. $97.13 at expiry of $97.00 option = out of the money =- option price(x100) = $77 loss. $97.13 at expiry of $97.14 option = in the money by 1-cent=$1/contract profit - option price(x100) = $1-$58 = $57 loss The higher strike prices have much lower losses if they expire with the underlying stock at- or near-the-money. So, they carry \"\"gentler\"\" downside potential, and are priced much higher to reflect that \"\"controlled\"\" risk potential. That makes sense. Thanks.\"",
"title": ""
},
{
"docid": "5c2dde5217bba8832a2d722576b1c794",
"text": "\"Once you buy stocks on X day of the month, the chances of stocks never actually going above and beyond your point of value on the chart are close to none. How about Enron? GM? WorldCom? Lehman Brothers? Those are just a few of the many stocks that went to 0. Even stock in solvent companies have an \"\"all-time high\"\" that it will never reach again. Please explain to my why my thought is [in]correct. It is based on flawed assumptions, specifically that stock always regain any losses from any point in time. This is not true. Stocks go up and down - sometimes that have losses that are never made up, even if they don't go bankrupt. If your argument is that you should cash out any gains regardless of size, and you will \"\"never lose\"\", I would argue that you might have very small gains in most cases, but there are still times where you are going to lose value and never regain it, and those losses can easily wipe out any gains you've made. Never bought stocks and if I try something stupid I'll lose my money, so why not ask the professionals first..? If you really believe that you \"\"can't lose\"\" in the stock market then do NOT buy individual stocks. You may as well buy a lottery ticket (not really, those are actually worthless). Stick to index funds or other stable investments that don't rely on the performance of a single company and its management. Yes, diversification reduces (not eliminates) risk of losses. Yes, chasing unreasonable gains can cause you to lose. But what is a \"\"reasonable gain\"\"? Why is your \"\"guaranteed\"\" X% gain better than the \"\"unreasonable\"\" Y% gain? How do you know what a \"\"reasonable\"\" gain for an individual stock is?\"",
"title": ""
},
{
"docid": "418c1aba4dd73fbeabded92cc00ddb0c",
"text": "The question is valid, you just need to work backwards. After how much money-time will the lower expense offset the one time fee? Lower expenses will win given the right sum of money and right duration for the investment.",
"title": ""
},
{
"docid": "df0a822e90da03f08e77430b4a587980",
"text": "\"if you buy back the now ITM calls, then you will have a short term loss. That pair of transactions is independent, from a tax perspective, of your long position (which was being used as \"\"collateral\"\" in the very case that occurred). I can see your tax situation and can see the logic of taking a short term loss to balance a short term gain. Referring to D Stanley's answer, #2 and #3 are not the same because you are paying intrinsic value in the options and the skew in #2, whereas #3 has no intrinsic value. Of course, because you can't know the future, the stock price could move higher or lower between #2 and #3. #1 presumes the stock continues to climb.\"",
"title": ""
},
{
"docid": "02c97ee4d736684a28ad22e6d03a7610",
"text": "\"I'd like to modify the \"\"loss\"\" idea that's been mentioned in the other two answers. I don't think a retail location needs to be losing money to be a candidate for sale. Even if a retail location is not operating at a loss, there may be incentive to sell it off to free up cash for a better-performing line of business. Many large companies have multiple lines of business. I imagine Sunoco makes money a few ways including: refining the gas and other petroleum products, selling those petroleum products, selling gas wholesale to franchised outlets or other large buyers, licensing their brand to franchised outlets, selling gas and convenience items direct to consumers through its own corporate-owned retail outlets, etc. If a company with multiple lines of business sees a better return on investment in certain businesses, it may make sense to sell off assets in an under-performing business in order to free up the capital tied up by that business, and invest the freed-up capital in another business likely to perform better. So, even \"\"money making\"\" assets are sometimes undesirable relative to other, better performing assets. Another case in which it makes sense to sell an asset that is profitable is when the market is over-valuing it. Sell it dear, and buy it back cheap later.\"",
"title": ""
},
{
"docid": "1d75ded6258a5b4aa5a7f8490256dc8a",
"text": "You need to use one of each, so a single order wouldn't cover this: The stop-loss order could be placed to handle triggering a sell market order if the stock trades at $95 or lower. If you want, you could use a stop-limit order if you have an exit price in mind should the stock price drop to $95 though that requires setting a price for the stop to execute and then another price for the sell order to execute. The limit sell order could be placed to handle triggering a sell if the stock rises above $105. On the bright side, once either is done the other could be canceled as it isn't applicable anymore.",
"title": ""
}
] |
fiqa
|
70900f7d78c37f05f187b5f7c0a8f4fc
|
How to value employee benefits?
|
[
{
"docid": "ae7be7cb6cef755a474a988aa6536040",
"text": "To fairly compare a comp-only job to a job that offers insurance, get a quote for health insurance. Call your local insurance broker and find out what it would cost. Because if you aren't getting insurance from your employer, you'll have to get it elsewhere. If you get a quote on an HSA, don't forget to add in the annual deductible as part of the cost. On the ESPP, I'd count it as zero. The rationale being that so much of your financial status is tied to your employer that you don't really want to tie up too much more in company stock. (I.e. Company hits hard times, stock tanks, and then they lay you off. Double whammy -- both your assets and income.) But given that I've only been employed by companies that no longer exist in their original form, my perspective may be warped.",
"title": ""
},
{
"docid": "727f9d5e9d8d2eeb662eb94345ef72a2",
"text": "It would depend on the health insurance that was being offered, and if it covers your family or just you. We pay around $500-600 for individual health insurance for our employees (families cost north of 1500 a month). It's extremely expensive. Provide more details on the stock purchase plan as well (it sounds to me like in that case you'd only be getting for free what it would cost to purchase the stock... but that's only $10-15, so negligible in this case.)",
"title": ""
},
{
"docid": "a6415381eba61027f7d98941ad81ef79",
"text": "Employee Stock Purchase Plans (ESPPs) were heavily neutered by U.S. tax laws a few years ago, and many companies have cut them way back. While discounts of 15% were common a decade ago, now a company can only offer negligible discounts of 5% or less (tax free), and you can just as easily get that from fluctuations in the market. These are the features to look for to determine if the ESPP is even worth the effort: As for a cash value, if a plan has at least one of those features, (and you believe the stock has real long term value), you still have to determine how much of your money you can afford to divert into stock. If the discount is 5%, the company is paying you an extra 5% on the money you put into the plan.",
"title": ""
},
{
"docid": "3bd0d213ba6bad508c090fa5e0b2dca4",
"text": "Health insurance varies wildly per state and per plan and per provider - but check them out to have a baseline to know what it should cost if you did it yourself. Don't forget vacation time, too: many contract/comp-only jobs have no vacation time - how much is that 10 or 15 days a year worth to you? It effectively means you're getting paid for 2080 hours, but working 2000 (with the 2 week number). Is the comp-only offer allowing overtime, and will they approve it? Is the benefits-included job salaried? If it's truly likely you'll be working more than a normal 40 hour week on a routine basis (see if you can talk to other folks that work there), an offer that will pay overtime is likely going to be better than one that wouldn't .. but perhaps not in your setting if it also loses the PTO.",
"title": ""
}
] |
[
{
"docid": "dd530eb03f6f9993467b837d0b004b44",
"text": "\"sorry mate, its not about being loyal. it's about what you negotiate. you stay with a company long enough and you'll only rack up your annual 2% pay increase and see minor raises until you're promoted to incompetence. If you really want to see healthy compensation than you need to realize it's about negotiating to your true value to the market - not just join a company and cross your fingers for the best. Frankly, if someone is willing to pay more ($$ and other benefits) then you'd do yourself and those you support a disservice not going for it. There are times when you should be less aggressive about it for the long haul, but don't forget, a company's job is to turn a profit which means getting workers to work at the lowest possible salary. And when a corporation thinks someone is \"\"loyal\"\" and won't move, then a smart company will go ahead and test that assumption. Re: entry level expectations about their true value - absolutely agree, expect entry compensation. But don't think being \"\"loyal\"\" is what changes that. Only increasing your actual value does - not just because you've been around forever.\"",
"title": ""
},
{
"docid": "deadd2ee49ae396eaa2f340a6c7beb6a",
"text": "\"Logic fail. The qty of shares is irrelevant. What matters is the value, which is, of course, quite high -- and, what's more, the P/E ratio, which is extremely favorable. Having worked in operations at Apple for 7 years, I can tell you that the company is very lean and efficient. 25% matching is extremely generous. 25% contribution rates are standard in corporate jobs (contribution rates are what maximum percentage of your pre-tax income you can opt to set aside into a 401K; this is different than matching). It absolutely is not bare bones to be given 25% matching. Although I no longer work at Apple, I still have my 401K, and the administration of it is good, as is the choice of funds. Back to the matching... It's free money. For every $1 you put in your 401K (pretax, btw), Apple puts in a quarter. Having worked in other corporations over my career, I can tell you that this level of matching is pretty much as good as it gets. For a good part of the time I worked there I made around $30K (not in Retail, but in Operations, as mentioned before). I maxed out the Employee Stock Purchase Program contribution and mostly maxed out my 401K contribution. Now, 12 years later, my stock appreciated beyond my wildest expectations. I have made well over six figures on it over the years. If I never sold any, it would be worth over $500,000 by now. All that from 10% contributions on a salary that ranged from about $26K when I started out to about $46K when I left 7 years later. My 401K holdings are worth about $60K, I think, invested extremely conservatively. I have had it in money market funds since right before the 2008/2009 crash, which I anticipated. So the investment benefits at Apple served me extremely well. My stock appreciation paid for my car, and it will soon cover the down payment on a house. I was essentially able to \"\"retire\"\" to be a stay-at-home-mom when my son was born, thanks to the safety net I have from my Apple stock. Regarding health benefits... I think you meant to say copays, not deductibles. When I was there, there were no copays. I forgot what the deductibles were, but for most routine visits, you wouldn't need to pay out of pocket. Annual physicals are included in the health plan, up to $250. The health plan works with various local providers to ensure that the $250 allotment will cover all expenses needed for an annual physical. This physical is separate and in addition to a women's health annual exam (pap smear/pelvic exam/etc) that is also included without copay. I'm pretty sure annual mammograms are covered. All prenatal visits are covered with zero copay. All child well checks, including immunizations, covered with zero copay. Two dental checks a year. Dental Xrays at regular intervals included. Annual vision exams and, I think $300 annually towards glasses or contacts included, IIRC. Time off was pretty standard and accrued by the hour worked, which was nice. There was no \"\"you have to be with the company for X length of time\"\" before time off benefits began to accrue, or before any benefits kicked in, for that matter. By about Year 5, I had easily racked up enough vacation days to take 3 weeks off at a time. The longer you have been with the company, the faster your time off accrues. And each summer they'd offer a cash-out program, where you could double up on time off, where if you took off a week, you could opt to deplete your accrued vacation time by two weeks and get double pay for it. A lot of people liked this option. The points for absenteeism thing seemed a bit silly -- and seemed to only have been implemented in one store and then only for a brief time. From what I gathered in the article, it was an experiment that failed miserably. The other corporation I have spent a significant amount of time working at is Whole Foods Market, in their corporate office. While both Apple and Whole Foods always are selected as two of the top companies to work for by Forbes in their annual report, as far as benefits went, Apple's were far superior in most aspects. With respect to company culture, I personally found Whole Foods to be better, but that was sort of a personal preference. Both were dream jobs, and I consider myself very fortunate to have had the opportunity to work for two outstanding companies that both treated me very well. Oh- and incidentally, Ron Johnson, who was VP of Retail at Apple from the inception of the stores until like a year ago, now is CEO of JC Penny, and, I suspect, is fully behind JCP's ad campaigns which include images of families with same-sex parents. JCP has stepped deliberately and full-on into what is, unfortunately, still a controversial topic and has taken a firm stand in support of all types of loving families. I have to wonder if part of this might have been inspired by the fact that Apple's new CEO, Tim Cook, is gay. Ron Johnson would have worked closely alongside Cook during his tenure. I met Ron once and found him to be a great guy, and I worked with the Retail operations folks from the time the stores launched. They were a great team that worked hard and were very sincere and dedicated. You could see his leadership reflecting in each member of the team.\"",
"title": ""
},
{
"docid": "20f01969fc7c5ecc435420d3f8a15930",
"text": "This is not right. Inferring the employee stock pool’s takeaway is not as easy as just taking a fraction of the purchase price. As an example, that wouldn’t account for any preferred returns of other ownership classes, among other things. All considered though, it’s reasonable to assume that the employee stock pool will get some premium. Best of luck.",
"title": ""
},
{
"docid": "690784b8dd4cbe158f63b27de02ff410",
"text": "Cat has always had plants in IL. HQ is in Peoria (grew up there, several members of my family work for them), and plants all over the place. Canada probably had other things going against it at the time they pulled out. Depending on the timing, it's quite likely that the exchange rate had shifted such that, even without a raise, the workers were effectively costing the company considerably more. Articles like that seem to leave out all sorts of details. For instance, I only saw one point where salary was increased and it wasn't anywhere near a 60% increase - more like 15% which isn't entirely unheard of. There's also what looks like a one time cash payment - bonus for a good year. 3-4x salary isn't unheard of in executive bonus land. It's also highly variable and not guaranteed year to year. The rest would be in stocks and options. The trick there is that the amounts of those were probably determined when he signed his contract. The reason it makes for a big raise is because the stock price has gone up (though it's down nearly 20% over the last month - May kinda sucked for the stock market). You also need to look at whether the profits are higher because of higher volume (and possibly more workers), better margins, better deployment of capital, etc. And when there's talk about asking worker to pay more for their health care, is it more as a raw dollar amount, or more as a percentage of the health care costs. As to whacking defined benefit pensions -- personally, I'd rather have a 401k. The problem with defined benefit pensions is that you're tied to that company for life. Put in your 40 years and then retire with 80% pay or whatever it is. Leave after 4 or 5 and you've pretty much got nothing - with a 401k, leave after 4 or 5 and you have what you've put away + what the company matched.",
"title": ""
},
{
"docid": "be2ff4e65e7dd0fcf04b23b870b005c8",
"text": "\"All things being equal, a defined benefit pension is far better than an IRA or a 401(k). Think about it this way - let's say you can have a guaranteed $100 a month*, or the chance at $100 a month. Which is better? Now, obviously, your tolerance for risk is the difference - but this is the beauty of a defined benefit plan. Your employer is picking up the risk. Assuming that the pool of investments is about the same (which unless if their funds are tremendously under performing they are), the question is, who takes the risk - you or them? Especially if you are moving into a new position, having a defined benefit plan is like having a risk-free asset in your portfolio. It increases your safety. The only reason to roll this over into a 401(k) or IRA is if your expected value (risk * payout) is better. A worked example. If half the time you would earn more than $100 and half the time less, then you could imagine the two as being equally good. Only if you really love risk would you take that chance. In reality, only half the investments out there will \"\"beat\"\" the average, and as such, you actually have less than a 50/50 shot of beating a DB - unless if there are really low returns to it. More likely, I suspect you are over-estimating your ability to get a higher return.\"",
"title": ""
},
{
"docid": "047a5a59392e187e64af7fb96e1a105f",
"text": "\"While the other answers try to quantify the value of health care the question you ask is about employee vs contractor. The delta between those regarding benefits goes way beyond health care. In fact because almost every full time employee must have health care offered by their employer the option of \"\"you can have X with healthcare, or Y with no healthcare\"\" is no longer an option. I have seen situations in the last few years where employees who had no need for healthcare coverage (retired military) were offered additional vacation days to compensate for their lower cost to the employer. For employee vs contractor what is different isn't just healthcare. It also includes holidays, vacation days, sick days, employer portion of social security, education benefits, and 401k. Insurance benefits include not just healthcare but also dental, vision, short term and long term disability, and life insurance. The rule of thumb to cover all these benefits that are lost when you are a contractor is an amount equal to your income. Of course some of these benefits depend on single vs married and kids or not. But unless the rate they are paying the contractors is approaching twice the rate they are paying employees the contractor will be hard pressed to cover the missing benefits.\"",
"title": ""
},
{
"docid": "b5bdf9d528d9d22037096d1248682550",
"text": "There is some magic involved in that calculation, because what health insurance is worth to you is not necessarily the same it is worth for the employer. Two examples that illustrate the extreme ends of the spectrum: let's say you or a family member have a chronic or a serious illness, especially if it is a preexisting condition - for instance, cancer. In that case, health insurance can be worth literally millions of dollars to you. Even if you are a diabetic, the value of health insurance can be substantial. Sometimes, it could even make financial sense in that case to accept a very low-paying job. On the other extreme of the scale, if you are very young and healthy, many people decide to forego insurance. In that case, the value of health insurance can be as little as the penalty (usually, 2% of your taxable income, I believe).",
"title": ""
},
{
"docid": "aa344665605b817b56cbb03045fbfb56",
"text": "\"Not if they're unfunded and the company goes under, they don't. And more accurately, defined benefit plans have (perceived) value only to people who don't have the first clue how to soundly invest their own retirement funds - Which admittedly means \"\"almost everyone\"\". But TANSTAAFL - Even the rare pension plan that is fully funded and soundly invested will *still* tend to underpeform the market as a whole. If you really want to lock in a sub-5% return, just sink your entire retirement into whole-life annuities and you can gleefully call it a \"\"pension\"\".\"",
"title": ""
},
{
"docid": "f8b413ac5350b149280bf7267b6012d0",
"text": "I agree that to take the money from the defined benefit plan you are saying that you can get a better return than the plan. You are taking all the risk if you take the lump sum. But there are two more risks that you are taking by keeping the money in the plan even though you are decades from retirement. Funding risk: companies and state/city/county governments have underfunded their pension programs due to budget pressure. In some cases they have skipped payments when the market was good, because they felt they were ahead of their obligations. They also delayed or skipped contributions when they had a budget shortfall, and wanted to not end the government/company fiscal year in the red. The risk is that they can get so far behind that they change their promises to current and former employees. This was one of the issues with the city of Detroit this year. Bankruptcy: even though their are guarantees regarding pension benefits, the Pension Benefit Guaranty Corporation does set a maximum benefit. If the company goes bankrupt or the plan is terminated you might not get all the money you were expecting. While the chances of taking a haircut generally impacts people who have a long career, because they are entitled to a large benefit, it can impact people who don't expect it.",
"title": ""
},
{
"docid": "c3c0944e9e65e420b692ee0e47cded0d",
"text": "As others have pointed out, post-tax dollars are what you'll use. Just as a quick note, as you'll be using post-tax dollars; in the past, I've refused to take contractor plans because they almost always are inferior to what I've been able to get off the private exchange ehealthinsurance. A few people have written excellent articles on Get Rich Slowly here and here about them in detail if you want more information. Generally, contractors (and sometimes employees) are offered a few plans (3-4), and this health exchange gives you a little more freedom to pick your plan, which in your situation may help. It isn't always cheaper, but depending on your needs, you may obtain a better deal. Forgot to add this: this option has also made switching jobs easy as well since I don't have to pay COBRA. While it depends on the situation, this can sometimes come out significantly cheaper. For instance, if I were to take the employer health plan next year, I would lose ~$450 a month, whereas the private exchange option is ~$300. But, if I were to switch jobs, decide to opt for self-employment, or a layoff, the COBRA would be even higher than ~$450.",
"title": ""
},
{
"docid": "aba3a1d08a41fb457d6652751c4d6593",
"text": "\"I don't understand the worker mentality of accepting to be part of pension plans. The downside risk to you is ridiculously high -- you're basically making an investment that the next 30 years of corporate management and the company as a whole are going to be good. Pension plans are among the first to go.. employees that retired 20-30 years ago add no current value to the company, unless you consider that current employees are motivated by the idea of a pension or working for a company that \"\"takes care\"\" of its employees. Also, part of the reason pension funds are blowing up is that the risk-free return rate is less than 1%. I don't know who to blame or thank for that, but with government bonds now trading at negative yields in real and sometimes even absolute terms (see: Swiss yields), what else are you supposed to do?\"",
"title": ""
},
{
"docid": "f6f1061862d29930fecfddd11df34c74",
"text": "I've had stock options at two different jobs. If you are not getting a significant ownership stake, but rather just a portion of options as incentive to come work there, I would value them at $0. If you get the same salary and benefits, but no stock options at another company and you like the other company better, I'd go to the other company. I say this because there are so many legal changes that seem to take value from you that you might as well not consider the options in your debate. That being said, the most important question I'd want to know is what incentive does the company have to going public or getting bought? If the company is majority owned by investors, the stock options are likely to be worth something if you wait long enough. You are essentially following someone else's bet. If the company is owned by 2 or 3 individuals who want to make lots of money, they may or may not decide to sell or go public.",
"title": ""
},
{
"docid": "119d3174cd9bd0cf75e16baa4c33db53",
"text": "\"Pretty simple actually. This is a state-run defined benefit plan, where the benefit is calculated based on the length of the employment and the contributed amounts. This is what in the US is known as the Social Security. This is a defined contribution plan, where the employee can chose the level of risk based on certain pre-defined investment guidelines (more conservative or more aggressive). In Poland, it appears that there's a certain amount of the state-mandated SS tax is transferred to these plans. Nothing in the US is like that, but you can see it as a mandatory IRA with a preset limited choice of mutual funds to invest into, as an analogy. The recent change was to reduce the portion of the madatory contribution that is diverted to this plan from 7+% to 2.3% (on account of expanding the contribution to (1)). Probably the recent crashes of the stock markets that affected these accounts lead to this decision. This is voluntary defined contribution plan, similar to the US 401Ks. This division is actually pretty common, not unique to Poland. I'd say its the \"\"standard\"\" pension scheme, as opposed to what we're used to in the US.\"",
"title": ""
},
{
"docid": "2bff6cd7047ca4577a71b8922e71219c",
"text": "First let's define some terms. Your accrued benefit is a monthly benefit payable at your normal retirement age (usually 65). It is usually a life-only benefit but may have a number of years guaranteed or may have a survivor piece. It is defined by a plan formula (ie, it is a defined benefit). A lump sum is how much that accrued benefit is worth right now. Lump sums are based on applicable interest rates and mortality tables specified by the IRS (interest rates are released monthly, mortality annually). Your plan can either use the same interest rates for a whole year, or they can use new ones each month. Affecting your lump sum is whether your accrued benefit is payable now (immediately, you are age 65), or later (deferred, you are now age 30). For example, instead of being paid an annuity assume you are paid just one payment of $1,000 on your 65th birthday. The lump sum of that for a 65 year old would be $1,000 since there would be no interest discount, and no chance of dying before payment. For a 30 year old, at 4% interest the lump sum would be about $237 (including mortality discount). At age 36 the lump sum is $246. So the lump sum will get bigger just because you get older. Very important is the interest discount. At age 30 in the example, 2% interest would produce a $467 lump sum. And at 6% $122. The bigger the rate, the smaller the lump sum because interest helps an amount now grow bigger in the future. To complicate things, since 2008 the IRS bases lump sums on 3 different interest rates. The monthy annuity payments made within 5 years of the lump sum date use the 1st rate, past 5 and within 20 years use the 2nd rate, and past that use the 3rd rate. Since you are age 30, all of your monthly annuity payments would be made after 20 years, so that makes it simple since we'll only have to look at the 3rd rate. When you reach age 45 the 2nd rate will kick in. Here is the table of interest rates published by the IRS: http://www.irs.gov/Retirement-Plans/Minimum-Present-Value-Segment-Rates You'll find your rates above on the 2013 line for Aug-12. That means your lump sum is being made in 2013 and it is being based on the month August 2012. Most likely your plan will use the same rates for its entire plan year. But what is your plan year? If it is the calendar year, then you would have a 5 month lookback for the rates. But if is a September to August plan year with a 1 month lookback, the rates would have changed between August and September. Your August lump sum would be based on 4.52%, your September on would be based on 5.58% (see the All line for Aug-13). For comparison, a 30 year old with a $100 annuity payable at age 65 would have a lump sum value of $3,011 at 4.52%, but a lump sum value of $1,931 at 5.58%. The change in your accrued benefit by month will obviously have some impact on the lump sum value, but not as much as the change in interest rates if there is one. The amount they actually contribute to the plan has nothing to do with the value of the lump sum though.",
"title": ""
},
{
"docid": "f047a86a26ffe9decad612ab2b5ed4e0",
"text": "Note the above is only for shares. There are different rules for other assets like House, Jewellery, Mutual Funds, Debt Funds. Refer to the Income Tax guide for more details.",
"title": ""
}
] |
fiqa
|
f281fa5a1a8a5be23cfd53f726c4e44d
|
If I have 10,000 stocks to sell with 23 B market cap
|
[
{
"docid": "c47b52ea6e8fadc7db739bf74c559735",
"text": "\"You will almost certainly be able to sell 10,000 shares at once. The question is a matter of price. If you sell \"\"at market\"\" then you may get a lower price for each \"\"batch\"\" of the stock sold (one person buys 50, another buys 200, another buys 1000 etc) at varying prices. Will you be able to execute a single order to sell them all at the same price at the same time? Nobody can say, and it's not really a function of the company size. The exchange has what's called \"\"open interest\"\" which roughly correlates to how many people have active orders in at a given price. This number is constantly changing alongside the bid and ask (particularly for active stocks). So let's say you have 10,000 shares and you want to sell them for $100 each. What you need is at least 10,000 in open interest at $100 bid to execute. By contrast let's say you issue a limit order at $100 for 10,000 shares. Your ask will stay outstanding at that price and you'll be filled at that price if there are enough buyers. I you have a limit sell order at $100 for 10,000 shares the strike price of the stock cannot go to $100.01 until all of your sell orders are filled.\"",
"title": ""
},
{
"docid": "36a7e62ef126333a382f220a64bbd4fe",
"text": "\"First a quick terminology correction: I believe you're proposing selling 10,000 shares of the stock of a company, not \"\"10,000 stocks\"\". When you sell, you need to decide whether you're selling for a specific minimum price or just selling for whatever price you can get. If you set a specific lower limit on asking price, then if people aren't interested at that price it doesn't sell. Which may mean you sell only a few shares, or none if your asking price isn't considered reasonable. If you want to sell independent of price, then as you begin to flood the market with your shares, the price you get per additional share may decline until it finds a buyer. What that lower limit is will depend on what people think the stock is currently worth. This is one of the many complications I don't want to deal with, which is why I stick with index funds.\"",
"title": ""
}
] |
[
{
"docid": "2a2c27db18a6aa6c1335142a0fb1f2f3",
"text": "If you can afford the cost and risk of 100 shares of stock, then just sell a put option. If you can only afford a few shares, you can still use the information the options market is trying to give you -- see below. A standing limit order to buy a stock is essentially a synthetic short put option position. [1] So deciding on a stock limit order price is the same as valuing an option on that stock. Options (and standing limit orders) are hard to value, and the generally accepted math for doing so -- the Black-Scholes-Merton framework -- is also generally accepted to be wrong, because of black swans. So rather than calculate a stock buy limit price yourself, it's simpler to just sell a put at the put's own midpoint price, accepting the market's best estimate. Options market makers' whole job (and the purpose of the open market) is price discovery, so it's easier to let them fight it out over what price options should really be trading at. The result of that fight is valuable information -- use it. Sell a 1-month ATM put option every month until you get exercised, after which time you'll own 100 shares of stock, purchased at: This will typically give you a much better cost basis (several dollars better) versus buying the stock at spot, and it offloads the valuation math onto the options market. Meanwhile you get to keep the cash from the options premiums as well. Disclaimer: Markets do make mistakes. You will lose money when the stock drops more than the option market's own estimate. If you can't afford 100 shares, or for some reason still want to be in the business of creating synthetic options from pure stock limit orders, then you could maybe play around with setting your stock purchase bid price to (approximately): See your statistics book for how to set ndev -- 1 standard deviation gives you a 30% chance of a fill, 2 gives you a 5% chance, etc. Disclaimer: The above math probably has mistakes; do your own work. It's somewhat invalid anyway, because stock prices don't follow a normal curve, so standard deviations don't really mean a whole lot. This is where market makers earn their keep (or not). If you still want to create synthetic options using stock limit orders, you might be able to get the options market to do more of the math for you. Try setting your stock limit order bid equal to something like this: Where put_strike is the strike price of a put option for the equity you're trading. Which option expiration and strike you use for put_strike depends on your desired time horizon and desired fill probability. To get probability, you can look at the delta for a given option. The relationship between option delta and equity limit order probability of fill is approximately: Disclaimer: There may be math errors here. Again, do your own work. Also, while this method assumes option markets provide good estimates, see above disclaimer about the markets making mistakes.",
"title": ""
},
{
"docid": "37c2382b45e55c431fdc9686dd772e26",
"text": "Firstly 795 is not even. Secondly - generally you would pay tax on the sale of the 122 shares, whether you buy them back or not, even one minute later, has nothing to do with it. The only reason this would not create a capital gains event is if your country (which you haven't specified) has some odd rules or laws about this that I, and most others, have never heard of before.",
"title": ""
},
{
"docid": "bc0e632377b47b8cabb451a7c4bd1fc8",
"text": "\"I reread your question. You are not asking about the validity of selling a particular stock after a bit of an increase but a group of stocks. We don't know how many. This is the S&P for the past 12 months. Trading at 1025-1200 or so means that 80-100 points is an 8% move. I count 4 such moves during this time. The philosophy of \"\"you can't go wrong taking a gain\"\" is tough for me to grasp as it offers no advice on when to get (back) in. Studies by firms such as Dalbar (you can google for some of their public material) show data that supports the fact that average investors lag the market by a huge amount. 20 years ending 12/31/08 the S&P returned 8.35%, investor equity returns showed 1.87%. I can only conclude that this is a result of buying high and selling low, not staying the course. The data also leads me to believe the best advice one can give to people we meet in these circumstances is to invest in index funds, keeping your expenses low as you can. I've said this since read Jack Bogle decades ago, and this advice would have yielded about 8.25% over the 20 years, beating the average investor by far, by guaranteeing lagging the average by 10 basis points or so. A summary of the more extensive report citing the numbers I referenced is available for down load - QAIB 2015 - Quantitative Analysis of Investor Behavior. It's quite an eye-opener and a worthy read. (The original report was dated 2009, but the link broke, so I've updated to the latest report, 2015)\"",
"title": ""
},
{
"docid": "5158f026ede7c9b5abeba327ca1c33c0",
"text": "So in your screenshot, someone or some group of someones is willing to buy 3,000 shares at $3.45, and someone or some group of someones is willing to sell 2,000 shares at 3.88. Without getting in to the specific mechanics, you can place a market buy order for 10 (or whatever number) shares and it will probably transact at $3.88 per share because that's the lowest price for which someone will currently sell their shares. As a small fish, you can generally ignore the volume notations in the bid/ask quotes.",
"title": ""
},
{
"docid": "5aa3f904bf8a057a8e5e4f1f7d9de354",
"text": "There isn't a formula like that, there is only the greed of other market participants, and you can try to predict how greedy those participants will be. If someone decided to place a sell order of 100,000 shares at $5, then you can buy an additional 100,000 shares at $5. In reality, people can infer that they might be the only ones trying to sell 100,000 shares right then, and raise the price so that they make more money. They will raise their sell order to $5.01, $5.02 or as high as they want, until people stop trying to buy their shares. It is just a non-stop auction, just like on ebay.",
"title": ""
},
{
"docid": "b706705ca32fdc395379f7745cec687c",
"text": "There is no ideal number of stocks you should own. There are several factors you should consider though. First, how actively do you want to manage your portfolio. If you want to be very active then the number of stocks you own should be based on the amount of time you have to research the company, by reading SEC filings and listening to conference calls, so you are not surprised when the company reports every quarter. If you don't want to be very active, then you are better off buying solid companies that have a good reputation and good history of performance. Second, you should decide how much risk you are willing to take. If you have $10,000 that you can afford to lose, then you can put your money into more risky stocks or into fewer stocks, which could potentially have a higher return. If you want your $10,000 grow (or lose) with the market, better off, again, going with the good rep and history stocks or a variety of stocks. Third, this goes along with your risk to some extent, but you should consider if you are looking for short term or long term gains? If you are looking to put your money in the market for the short term, you will probably be looking at fewer stocks with more money in each. If you are looking for long term, you will be around 5 stocks that you swap as they reach goals you set out for each stock. In my opinion, and I am not a financial expert, I like to stay at around 5 companies, mostly for the fact that it is about the ideal number of companies to keep track of.",
"title": ""
},
{
"docid": "5db2500544c713428b4b849702c8e351",
"text": "In order to see whether you can buy or sell some given quantity of a stock at the current bid price, you need a counterparty (a buyer) who is willing to buy the number of stocks you are wishing to offload. To see whether such a counterparty exists, you can look at the stock's order book, or level two feed. The order book shows all the people who have placed buy or sell orders, the price they are willing to pay, and the quantity they demand at that price. Here is the order book from earlier this morning for the British pharmaceutical company, GlaxoSmithKline PLC. Let's start by looking at the left-hand blue part of the book, beneath the yellow strip. This is called the Buy side. The book is sorted with the highest price at the top, because this is the best price that a seller can presently obtain. If several buyers bid at the same price, then the oldest entry on the book takes precedence. You can see we have five buyers each willing to pay 1543.0 p (that's 1543 British pence, or £15.43) per share. Therefore the current bid price for this instrument is 1543.0. The first buyer wants 175 shares, the next, 300, and so on. The total volume that is demanded at 1543.0p is 2435 shares. This information is summarized on the yellow strip: 5 buyers, total volume of 2435, at 1543.0. These are all buyers who want to buy right now and the exchange will make the trade happen immediately if you put in a sell order for 1543.0 p or less. If you want to sell 2435 shares or fewer, you are good to go. The important thing to note is that once you sell these bidders a total of 2435 shares, then their orders are fulfilled and they will be removed from the order book. At this point, the next bidder is promoted up the book; but his price is 1542.5, 0.5 p lower than before. Absent any further changes to the order book, the bid price will decrease to 1542.5 p. This makes sense because you are selling a lot of shares so you'd expect the market price to be depressed. This information will be disseminated to the level one feed and the level one graph of the stock price will be updated. Thus if you have more than 2435 shares to sell, you cannot expect to execute your order at the bid price in one go. Of course, the more shares you are trying to get rid of, the further down the buy side you will have to go. In reality for a highly liquid stock as this, the order book receives many amendments per second and it is unlikely that your trade would make much difference. On the right hand side of the display you can see the recent trades: these are the times the trades were done (or notified to the exchange), the price of the trade, the volume and the trade type (AT means automatic trade). GlaxoSmithKline is a highly liquid stock with many willing buyers and sellers. But some stocks are less liquid. In order to enable traders to find a counterparty at short notice, exchanges often require less liquid stocks to have market makers. A market maker places buy and sell orders simultaneously, with a spread between the two prices so that they can profit from each transaction. For instance Diurnal Group PLC has had no trades today and no quotes. It has a more complicated order book, enabling both ordinary buyers and sellers to list if they wish, but market makers are separated out at the top. Here you can see that three market makers are providing liquidity on this stock, Peel Hunt (PEEL), Numis (NUMS) and Winterflood (WINS). They have a very unpalatable spread of over 5% between their bid and offer prices. Further in each case the sum total that they are willing to trade is 3000 shares. If you have more than three thousand Dirunal Group shares to sell, you would have to wait for the market makers to come back with a new quote after you'd sold the first 3000.",
"title": ""
},
{
"docid": "fce119d437797fae452a931d307b949c",
"text": "10% is way high unless you really dedicate time to managing your investments. Commodities should be a part of the speculative/aggressive portion of your portfolio, and you should be prepared to lose most or all of that portion of your portfolio. Metals aren't unique enough to justify a specific allocation -- they tend to perform well in a bad economic climate, and should be evaluated periodically. The fallacy in the arguments of gold/silver advocates is that metals have some sort of intrinsic value that protects you. I'm 32, and remember when silver was $3/oz, so I don't know how valid that assertion is. (Also recall the 25% price drop when the CBOE changed silver's margin requirements.)",
"title": ""
},
{
"docid": "fca73e29b05038112a00f43c8a4f49ef",
"text": "You are right: if the combined value of all outstanding GOOG shares was $495B, and the combined value of all GOOGL shares was $495B, then yes, Alphabet would have a market cap of at least $990B (where I say at least only because I myself don't know that there aren't other issues that should be in the count as well). The respective values of the total outstanding GOOG and GOOGL shares are significantly less than that at present though. Using numbers I just grabbed for those tickers from Google Finance (of course), they currently stand thus:",
"title": ""
},
{
"docid": "0a25be21ae1f082eaa8de2b1ee66c756",
"text": "If you bought 5 shares @ $20 each that would cost you $100 plus brokerage. Even if your brokerage was only $10 in and out, your shares would have to go up 20% just for you to break even. You don't make a profit until you sell, so just for you to break even your shares need to go up to $24 per share. Because your share holding would be so small the brokerage, even the cheapest around, would end up being a large percentage cost of any overall profits. If instead you had bought 500 shares at $20, being $1000, the $20 brokerage (in and out) only represents 2% instead of 20%. This is called economies of scale.",
"title": ""
},
{
"docid": "75aa836bc1953b760977b22d48272ce3",
"text": "\"Your math is correct. These kind of returns are possible in the capital markets. (By the way, Google Finance shows something completely different for $CANV than my trading console in ThinkorSwim, ToS shows a high of $201, but I believe there may have been some reverse splits that are not accurately reflected in either of these charts) The problems with this strategy are liquidity and timing. Let's talk about liquidity, because that is a greater factor here than the random psychological factors that would have affected you LONG LONG before your $1,000 allowance was worth a million dollars. If you bought $1000 worth of this stock at $.05 share, this would have been 20,000 shares. The week of October 11th, 2011, during the ENTIRE WEEK only 5,000 shares were traded. From this alone, you can see that it would have been impossible for you to even acquire 20,000 shares, for yourself at $.05 because there was nobody to sell them to you. We can't even look at the next week, because there WERE NO TRADES WHATSOEVER, so we have to skip all the way to November 11th, where indeed over 30,000 shares were traded. But this pushed the price all the way up to $2.00, again, there was no way you could have gotten 20,000 shares at $.05 So now, lets talk about liquidation of your shares. After several other highs and lows in the $20s and $30s, are you telling me that after holding this stock for 2 years you WOULDN'T have taken a $500,000 profit at $25.00 ? We are talking about someone that is investing with $1,000 here. I have my doubts that there was no time between October 2011 and January 2014 that you didn't think \"\"hm this extra $100,000 would be really useful right now.. sell!\"\" Lets say you actually held your $1,000 to $85.55 there were EXACTLY TWO DAYS where that was the top of the market, and in those two days the volume was ~24,000 shares one day and ~11,000 shares the next day. This is BARELY enough time for you to sell your shares, because you would have been the majority of the volume, most likely QUADRUPLING the sell side quotes. As soon as the market saw your sell order there would be a massive selloff of people trying to sell before you do, because they could barely get their shares filled (not enough buyers) let alone someone with five times the amount of shares that day. Yes, you could have made a lot of money. Doing that simplistic math does not tell you the whole story.\"",
"title": ""
},
{
"docid": "e780f8fe3a75a5098b5bff95d2abd3c3",
"text": "The next day the market opens trading at 10.50, You haven't specified whether you limit order for $10.10 is to buy or sell. When the trading opens next day, it follows the same process of matching the orders. So if you have put a limit order to buy at $10.10 and there is no sell order at that price, your trade will not go through. If you have placed a limit sell order at $10.10 and there is a buyer at or higher price, it would go through. The Open price is the price of the first trade of the day.",
"title": ""
},
{
"docid": "0572d6c64b6fb716f3f5bc637d43c6c4",
"text": "If you have $10000 and wish to buy 1000 shares of a $10 stock, you risk borrowing on margin if you go over a bit. For some people, that's a non-issue. Some folk with an account worth say, $250K don't mind going over now and then or even let the margin account run $100K on a regular basis. But your question is about market orders. A limit order above the market price will fast-fill at the market anyway. When I buy a stock, it's longer term usually. A dime on a $30 share price won't affect my buy decision, so market is ok for me.",
"title": ""
},
{
"docid": "b6a62a2fce4ea7b69f9998722e5496b0",
"text": "\"I think for this a picture is worth a thousand words. This is a \"\"depth chart\"\" that I pulled from google images, specifically because it doesn't name any security. On the left you have all of the \"\"bids\"\" to buy this security, on the right you have the \"\"asks\"\" to sell the security. In the middle you have the bid/ask spread, this is the space between the highest bid and the lowest ask. As you can see you are free to place you order to the market to buy for 232, and someone else is free to place their order to the market to sell for 234. When the bid and the ask match there's a transaction for the maximum number of available shares. Alternatively, someone can place a market order to buy or sell and they'll just take the current market price. Retail investors don't really get access to this kind of chart from their brokers because for the most part the information isn't terribly relevant at the retail level.\"",
"title": ""
},
{
"docid": "7034b1830c9bba00e0fa8ff154ab84d5",
"text": "\"Here's a dump from what I use. Some are a bit more expensive than those that you posted. The second column is the expense ratio. The third column is the category I've assigned in my spreadsheet -- it's how I manage my rebalancing among different classes. \"\"US-LC\"\" is large cap, MC is mid cap, SC is small cap. \"\"Intl-Dev\"\" is international stocks from developed economies, \"\"Emer\"\" is emerging economies. These have some overlap. I don't have a specific way to handle this, I just keep an eye on the overall picture. (E.g. I don't overdo it on, say, BRIC + Brazil or SPY + S&P500 Growth.) The main reason for each selection is that they provide exposure to a certain batch of securities that I was looking for. In each type, I was also aiming for cheap and/or liquid like you. If there are substitutes I should be looking at for any of these that are cheaper and/or more liquid, a comment would be great. High Volume: Mid Volume (<1mil shares/day): Low Volume (<50k shares/day): These provide enough variety to cover the target allocation below. That allocation is just for retirement accounts; I don't consider any other savings when I rebalance against this allocation. When it's time to rebalance (i.e. a couple of times a year when I realize that I haven't done it in several months), I update quotes, look at the percentages assigned to each category, and if anything is off the target by more than 1% point I will buy/sell to adjust. (I.e. if US-LC is 23%, I sell enough to get back to 20%, then use the cash to buy more of something else that is under the target. But if US-MC is 7.2% I don't worry about it.) The 1% threshold prevents unnecessary trading costs; sometimes if everything is just over 1% off I'll let it slide. I generally try to stay away from timing, but I do use some of that extra cash when there's a panic (after Jan-Feb '09 I had very little cash in the retirement accounts). I don't have the source for this allocation any more, but it is the result of combining a half dozen or so sample allocations that I saw and tailoring it for my goals.\"",
"title": ""
}
] |
fiqa
|
3eef1cd0b7a8c2197186a458a416cb20
|
Using stop-loss as risk management: Is it safe?
|
[
{
"docid": "4c7101cd989b37312b6a37d355b9d967",
"text": "A stop-loss does not guarantee a sale at the given price; it just automatically triggers an unlimited sale as soon as the market reaches the limit. Depending on the development, your sale could be right at, slightly under, or deeply under the stop-loss limit you gave - it could even be it is never executed, if there are no further deals. The point is that each sell needs a partner that buys for that price, and if nobody is buying, no sale happens, no matter what you do (automated or manually) - your stop loss cannot 'force' a sale. Stop-loss works well for minor corrections in liquid shares; it becomes less useful the less liquid a share is, and it will not be helpfull for seldomly traded shares.",
"title": ""
},
{
"docid": "19b4cc4d6de16c1de1b3f8863affcb0b",
"text": "A stop-loss order becomes a market order when a trade has occurred at or below the trigger price you set when creating the order. This means that you could possibly end up selling some or all of your position at a price lower than your trigger price. For relatively illiquid securities your order may be split into transactions with several buyers at different prices and you could see a significant drop in price between the first part of the order and the last few shares. To mitigate this, brokers also offer a stop-limit order, where you set not only a trigger price, but also a minimum price that you are will to accept for your shares. This reduces the risk of selling at rock bottom prices, especially if you are selling a very large position. However, in the case of a flash crash where other sellers are driving the price below your limit, that part of your order may never execute and you could end up being stuck with a whole lot of shares that are worth less than both your stop loss trigger and limit price. For securities that are liquid and not very volatile, either option is a pretty safe way to cut your losses. For securities that are illiquid and/or very volatile a stop-limit order will prevent you from cashing out at bottom dollar and giving away a bargain to lurkers hanging out at the bottom of the market, but you may end up stuck with shares you don't want for longer than originally planned. It's up to you to decide which kind of risk you prefer.",
"title": ""
}
] |
[
{
"docid": "5dc72381612728883984b05dc207493a",
"text": "\"Eventually, you'll end up buying a stock at or near a high-water mark. You might end up waiting a few years before you see your \"\"guaranteed\"\" $100 profit, and you now have $5K to $10K tied up in the wait. The more frequently you trade, the faster your money gets trapped. There are two ways to avoid this problem: 1) Do it during strong bull markets. If everything keeps going up you don't need to worry about peaks...but then why would you keep cashing out for $1 gains? 2) Accurately predict the peaks. If you can see the future, why would you keep cashing out for $1 gains? Either way, this strategy will only make your broker happy, $8 at a time.\"",
"title": ""
},
{
"docid": "cb1442dc3f4f3e60bf8c5d6bcbaed8b8",
"text": "\"My gut is to say that any time there seems to be easy money to be made, the opportunity would fade as everyone jumped on it. Let me ask you - why do you think these stocks are priced to yield 7-9%? The DVY yields 3.41% as of Aug 30,'12. The high yielding stocks you discovered may very well be hidden gems. Or they may need to reduce their dividends and subsequently drop in price. No, it's not 'safe.' If the stocks you choose drop by 20%, you'd lose 40% of your money, if you made the purchase on 50% margin. There's risk with any stock purchase, one can claim no stock is safe. Either way, your proposal juices the effect to creating twice the risk. Edit - After the conversation with Victor, let me add these thoughts. The \"\"Risk-Free\"\" rate is generally defined to be the 1yr tbill (and of course the risk of Gov default is not zero). There's the S&P 500 index which has a beta of 1 and is generally viewed as a decent index for comparison. You propose to use margin, so your risk, if done with an S&P index is twice that of the 1X S&P investor. However, you won't buy S&P but stocks with such a high yield I question their safety. You don't mention the stocks, so I can't quantify my answer, but it's tbill, S&P, 2X S&P, then you.\"",
"title": ""
},
{
"docid": "4c6dd2d49fe387974d70a9f22ca9e5f4",
"text": "\"This doesn't make sense to me. Writing a covered call gives him a long delta position - the exact opposite of what he wants. And the tax losses won't turn a losing position into a winning one. Is there something I'm missing? Edit: Also, doesn't \"\"shorting against the box\"\" mean he has to have a long position, and short against that? That means you've got zero net delta, which isn't very useful at all...\"",
"title": ""
},
{
"docid": "f82ed815f2a2c4fc305055e8b08f73ee",
"text": "\"If you really believe in the particular stocks, then don't worry about their daily price. Overall if the company is sound, and presumably paying a dividend, then you're in it for the long haul. Notwithstanding that, it is reasonable to look for a way out. The two you describe are quite different in their specifics. Selling sounds like the simpler of the two, but the trigger event, and if it is automatic or \"\"manual\"\" matters. If you are happy to put in a sell order at some time in the future, then just go ahead with that. Many brokers can place a STOP order, that will trigger on a certain price threshold being hit. Do note, however, that by default this would place a market order, and depending on the price that breaks through, in the event of a flash crash, depending on how fast the brokers systems were, you could find yourself selling quite cheaply. A STOP LIMIT order will place a limit order at a triggered price. This would limit your overall downside loss, but you might not sell at all if the market is really running away. Options are another reasonable way to deal with the situation, sort of like insurance. In this case you would likely buy a PUT, which would give you the right, but not the obligation to sell the stock at the price the that was specified in the option. In this case, no matter what, you are out the price of the option itself (hence my allusion to insurance), but if the event never happens then that was the price you paid to have that peace of mind. I cannot recommend a specific course of action, but hopefully that fleshed out the options you have.\"",
"title": ""
},
{
"docid": "57f22c47bf5f9f300b5ec61568a01f88",
"text": "\"This type of structured product is called a capital protection product. It's like an insurance product - where you give up some upside for protection against losses in certain cases. From the bank's perspective they take your investment, treat it as an \"\"interest-free loan\"\" and buy derivatives (like options) that give them an expected return greater then They make their money: With this product, you are giving up some potential upside in order to protect against losses (other than catastrophic losses if the lower index drops by 50% or more). What's the catch? There's not really a catch. It's a lot like insurance, you might come out ahead (e.g. if the market goes down less than 50%), but you might also give up some upside. The bank will sell enough of these in various flavors to reduce their risk overall (losses in your product will be covered by gains in another). Note that this product won't necessarily sell for $1,000. You might have to pay $1,100 (or $1,005, or whatever the bank can get people to buy them for) for each note whenever it's released. That's where the gain or loss comes into play. If you pay $1,100 but only get $1,000 back because the index didn't go up (or went down) you'd have a net loss of $100. It's subtle, but it is in the prospectus: The estimated value of the notes is only an estimate determined by reference to several factors. The original issue price of the notes will exceed the estimated value of the notes because costs associated with selling, structuring and hedging the notes are included in the original issue price of the notes. These costs include the selling commissions, the projected profits, if any, that our affiliates expect to realize for assuming risks inherent in hedging our obligations under the notes and the estimated cost of hedging our obligations under the notes.\"",
"title": ""
},
{
"docid": "f0b2dec86cc33c2268c96a302983fdcf",
"text": "Great question! It can be a confusing for sure -- but here's a great example I've adapted to your scenario: As a Day Trader, you buy 100 shares of LMNO at $100, then after a large drop the same day, you sell all 10 shares at $90 for a loss of $1,000. Later in the afternoon, you bought another 100 shares at $92 and resold them an hour later at $97 (a $500 profit), closing out your position for the day. The second trade had a profit of $500, so you had a net loss of $500 (the $1,000 loss plus the $500 profit). Here’s how this works out tax-wise: The IRS first disallows the $1,000 loss and lets you show only a profit of $500 for the first trade (since it was a wash). But it lets you add the $1,000 loss to the basis of your replacement shares. So instead of spending $9,200 (100 shares times $92), for tax purposes, you spent $10,200 ($9,200 plus $1,000), which means that the second trade is what caused you to lose the $500 that you added back (100 x $97 = $9,700 minus the 100 x $102 = $10,200, netting $500 loss). On a net basis, you get to record your loss, it just gets recorded on the second trade. The basis addition lets you work off your wash-sale losses eventually, and in your case, on Day 3 you would recognize a $500 final net loss for tax purposes since you EXITED your position. Caveat: UNLESS you re-enter LMNO within 30 days later (at which point it would be another wash and the basis would shift again). Source: http://www.dummies.com/personal-finance/investing/day-trading/understand-the-irs-wash-sale-rule-when-day-trading/",
"title": ""
},
{
"docid": "d2fc2515b51b4b2bbb2d49c8f7ca2e87",
"text": "Stop order is shorter term for stop-loss order. The point being that is intended as a protective measure. A buy stop order would be used to limit losses when an investor has sold a stock short. (Meaning that they have borrowed stock and sold it, in hopes that they can take advantage of a decline in the stock's price by replacing the borrowed stock later at a cheaper price. The idea is to limit losses due to a rising stock price.) Meanwhile, a sell stop order would be used to limit losses on a stock that an investor actually owns, by selling it before the price declines further. The important thing to keep in mind about stop orders is that they turn into market orders when the stop price is reached. This means that they will be filled at the best available price when the order is actually executed. In fast moving markets, this can be a price that is quite different from the stop price. A limit order allows an investor to ensure that they do not buy/sell a stock at more/less than the specified amount. The thing to keep in mind is that a limit order is not guaranteed to execute. A stop-limit order is a combination of a stop-loss order and limit order, in that it becomes a limit order (instead of a market order) when the stop price is reached. Links to definitions: Stop order Stop-limit order Limit order Market order",
"title": ""
},
{
"docid": "1276e1f81743f47e0912964e2eba3635",
"text": "\"Your strategy fails to control risk. Your \"\"inversed crash\"\" is called a rally. And These kind of things often turn into bigger rallies because of short squeezes, when all the people that are shorting a stock are forced to close their stock because of margin calls - its not that shorts \"\"scramble\"\" to close their position, the broker AUTOMATICALLY closes your short positions with market orders and you are stuck with the loss. So no, your \"\"trick\"\" is not enough. There are better ways to profit from a bearish outlook.\"",
"title": ""
},
{
"docid": "a195aa123226790c73bc1995aee219f8",
"text": "\"Of course, which is why you need to have a scoring function / utility function for the \"\"filters\"\", i.e. Are you going to value it by rate of accuracy hor by a metric where wins = +2, losses = -1, such that it uses a criteria like that to decide whether or not a filter adds value, (some even use a compound effect i.e. wins = 2+e^(1+w) where w is the consecutive wins). A metric like the above would capture the trade off between predictive power and profit. Also some traders watch their Max DD very carefully so they may be very risk averse.\"",
"title": ""
},
{
"docid": "9e767c26bb5156cea063ee0911642690",
"text": "\"Yes. I heard back from a couple brokerages that gave detailed responses. Specifically: In a Margin account, there are no SEC trade settlement rules, which means there is no risk of any free ride violations. The SEC has a FAQ page on free-riding, which states that it applies specifically to cash accounts. This led me to dig up the text on Regulation T which gives the \"\"free-riding\"\" rule in §220.8(c), which is titled \"\"90 day freeze\"\". §220.8 is the section on cash accounts. Nothing in the sections on margin accounts mentions such a settlement restriction. From the Wikipedia page on Free Riding, the margin agreement implicitly covers settlement. \"\"Buying Power\"\" doesn't seem to be a Regulation T thing, but it's something that the brokerages that I've seen use to state how much purchasing power a client has. Given the response from the brokerage, above, and my reading of Regulation T and the relevant Wikipedia page, proceeds from the sale of any security in a margin account are available immediately for reinvestment. Settlement is covered implicitly by margin; i.e. it doesn't detract from buying power. Additionally, I have personally been making these types of trades over the last year. In a sub-$25K margin account, proceeds are immediately available. The only thing I still have to look out for is running into the day-trading rules.\"",
"title": ""
},
{
"docid": "53b529f6246aff964b4158c99be3e588",
"text": "I would be using stop limit orders for stocks that are not too volatile. If you look at the chart and there are not many gaps especially after peaks, then you have more chance of being filled at your specified stop loss level using a stop limit order. If the stock is very volatile and has a large or many gaps down after most peak, then I would consider using a stop market order to make sure you do get out even if it is somewhat past your desired stop level. One think to consider is to avoid trading very volatile stocks that gap often. This is what I do, and using stop limit orders my stop level is achieved more than 95% of the time.",
"title": ""
},
{
"docid": "23a1942c7b909c8c0a16d1cbf824842e",
"text": "If you plan to take profit at $1.00 then your profit will be $40. Then, if you set your stop at $0.88 then your loss if you get stopped will be $20. So your Reward : Risk = 2:1. Note, that this does not take into account brokerage in and out and any slippage from the price gapping past your stop loss.",
"title": ""
},
{
"docid": "657fb692db7848c13e022c1b2868fcc7",
"text": "If the position starts losing money as soon as it is put on, then I would close it out ,taking a small loss. However, if it starts making money,as in the stock inches higher, then you can use part of the premium collected to buy an out of money put, thereby limiting your downside. It is called a collar.",
"title": ""
},
{
"docid": "c1d1d1731885d263af747739da2f2a3b",
"text": "The strategy could conceivably work if you had sufficient quantity of shares to fill all of the outstanding buy orders and fill your lower buy orders. But in this case you are forcing the market down by selling and reinforcing the notion that there is a sell off by filling ever lower buy orders. There is the potential to trigger some stop loss orders if you can pressure it low enough. There is a lot of risk here that someone sees what you are doing and decides to jump in and buy forcing the price back up. Could this work sure. But it is very risky and if you fail to create the panic selling then you risk losing big. I also suspect that this would violate SEC Rules and several laws. And if the price drops too far then trading on the stock would be halted and is likely to return at the appropriate price. Bottom line I can not see a scenario where you do not trigger the stop, net a profit and end up with as many or more stock that you had in the first place.",
"title": ""
},
{
"docid": "99de5b0c36477dac1660a6960ede1752",
"text": "In case you didn't see over the past few years, especially in banks, falling stock prices often lead to ratings downgrades. The logic is that a bank who's stock price is low, or falling, is suffering from a decrease in their ability to tap the equity markets in times of need. With less ability to tap the equity markets in times of need, this means it is less likely the bank can raise funds to pay off debt, and thus, makes their debt more risky. It's unfair for me to imply a 100% causal relationship here, because that's not the case, but each of the markets interact with each other in some way. You will at least notice that, whether leading or trailing, companies that have a decreasing stock price also often have a decreasing credit rating. You'll also notice that stocks which slip under $5 often times get put on credit watch. The logic could go any which way around the circle, but a company that cuts its dividend may lose some investors who were in it for the dividend. This can cause stock price to fall. Credit agencies, depending on the situation, may approve of companies that cut their dividend (more cash to pay off debt), or, may indicate the dividend cut is not enough to make up for the company's falling profits. In the absence of full information, a cut in the dividend is often seen as a sign of weakness or a sign of tough times for the company in the future. Companies which have changes in dividend are looked at as less stable, more unpredictable, blah blah blah. Again, I'm not implying a 100% causal relationship here, but, each of these markets work with each other somehow, and a bank which cuts its dividend may be expecting lower profitability, slower growth, need the funds to cover lawsuit payouts or settlements with insert-regulatory-agency, or any number of other situations.",
"title": ""
}
] |
fiqa
|
3883e44377972da8861b8d0a09acb0c1
|
What does investment bank risk during IPO?
|
[
{
"docid": "e3542af0fa7a035b01c65284f3a39088",
"text": "Investment banks don't have to buy anything. If they don't think the stock is worth buying - they won't. If they think it is - others on the secondary market will probably think so too. Initial public offering is offering to the public - i.e.: theoretically anyone can participate and purchase stocks. The major investment firms are not buying the stocks for themselves - but for their clients who are participating in this IPO. I, for example, receive email notifications from my brokerage firm each time there's another IPO that they have access to, and I can ask the brokerage to buy stocks from the IPO on my behalf. When that happens - they don't buy the stocks themselves and then sell to me. No, what happens is that I buy a stock, through them, and they charge me a commission for the service. Usually IPO participation commissions are higher than regular trading commissions. Most of the time those who purchase stocks at IPO are institutional investors - i.e.: mutual funds, pension plans, investment banks for their managed accounts, etc. Retail investors would probably not participate in the IPO because of the costs, limited access (not all the brokerage firms have access to all the IPOs), and the uncertainty, and rather purchase the stocks later on a secondary market.",
"title": ""
},
{
"docid": "3b872a6d02dd992b30960d6d7e9b2b31",
"text": "\"There are two kinds of engagements in an IPO. The traditional kind where the Banks assume the risks of unsold shares. Money coming out of their pockets to hold shares no one wants. That is the main risk. No one buying the stock that the bank is holding. Secondly, there is a \"\"best efforts\"\" engagement. This means that bank will put forth its best effort to sell the shares, but will not be on the hook if any don't sell. This is used for small cap / risky companies. Source: Author/investment banker\"",
"title": ""
}
] |
[
{
"docid": "ba6acbc9647ce3489c4578930493d383",
"text": "Automatic exercisions can be extremely risky, and the closer to the money the options are, the riskier their exercisions are. It is unlikely that the entire account has negative equity since a responsible broker would forcibly close all positions and pursue the holder for the balance of the debt to reduce solvency risk. Since the broker has automatically exercised a near the money option, it's solvency policy is already risky. Regardless of whether there is negative equity or simply a liability, the least risky course of action is to sell enough of the underlying to satisfy the loan by closing all other positions if necessary as soon as possible. If there is a negative equity after trying to satisfy the loan, the account will need to be funded for the balance of the loan to pay for purchases of the underlying to fully satisfy the loan. Since the underlying can move in such a way to cause this loan to increase, the account should also be funded as soon as possible if necessary. Accounts after exercise For deep in the money exercised options, a call turns into a long underlying on margin while a put turns into a short underlying. The next decision should be based upon risk and position selection. First, if the position is no longer attractive, it should be closed. Since it's deep in the money, simply closing out the exposure to the underlying should extinguish the liability as cash is not marginable, so the cash received from the closing out of the position will repay any margin debt. If the position in the underlying is still attractive then the liability should be managed according to one's liability policy and of course to margin limits. In a margin account, closing the underlying positions on the same day as the exercise will only be considered a day trade. If the positions are closed on any business day after the exercision, there will be no penalty or restriction. Cash option accounts While this is possible, many brokers force an upgrade to a margin account, and the ShareBuilder Options Account Agreement seems ambiguous, but their options trading page implies the upgrade. In a cash account, equities are not marginable, so any margin will trigger a margin call. If the margin debt did not trigger a margin call then it is unlikely that it is a cash account as margin for any security in a cash account except for certain options trades is 100%. Equities are convertible to cash presumably at the bid, so during a call exercise, the exercisor or exercisor's broker pays cash for the underlying at the exercise price, and any deficit is financed with debt, thus underlying can be sold to satisfy that debt or be sold for cash as one normally would. To preempt a forced exercise as a call holder, one could short the underlying, but this will be more expensive, and since probably no broker allows shorting against the box because of its intended use to circumvent capital gains taxes by fraud. The least expensive way to trade out of options positions is to close them themselves rather than take delivery.",
"title": ""
},
{
"docid": "8ad8c31cf38ded9ae11e02d78b881164",
"text": "\"Thank you for the in-depth, detailed explanation; it's refreshing to see a concise, non verbose explanation on reddit. I have a couple of questions, if that's alright. Firstly, concerning mezzanine investors. Based on my understanding from Google, these people invest after a venture has been partially financed (can I use venture like that in a financial context, or does it refer specifically to venture capital?) so they would receive a smaller return, yes? Is mezzanine investing particularly profitable? It sounds like you'd need a wide portfolio. Secondly, why is dilution so important further down the road? Is it to do with valuation? Finally, at what point would a company aim to meet an IPO? Is it case specific, or is there a general understanding of the \"\"best time\"\"? Thank you so much for answering my questions.\"",
"title": ""
},
{
"docid": "7aec2e5d1480a09c5e8c8671d32c6e8d",
"text": "\"A bit strange but okay. The way I would think about this is again that you need to determine for what purpose you're computing this, in much the same way you would if you were to build out the model. The IPO valuation is not going to be relevant to the accretion/dilution analysis unless you're trying to determine whether the transaction was net accretive at exit. But that's a weird analysis to do. For longer holding periods like that you're more likely to look at IRR, not EPS. EPS is something investors look at over the short to medium term to get a sense of whether the company is making good acquisition decisions. And to do that short-to-medium term analysis, they look at earnings. Damodaran would say this is a shitty way of looking at things and that you should probably be looking at some measure of ROIC instead, and I tend to agree, but I don't get paid to think like an investor, I get paid to sell shit to them (if only in indirect fashion). The short answer to your question is that no, you should not incorporate what you are calling liquidation value when determining accretion/dilution, but only because the market typically computes accretion/dilution on a 3-year basis tops. I've never put together a book or seen a press release in my admittedly short time in finance that says \"\"the transaction is estimated to be X% accretive within 4 years\"\" - that just seems like an absurd timeline. Final point is just that from an accounting perspective, a gain on a sale of an asset is not going to get booked in either EBITDA or OCF, so just mechanically there's no way for the IPO value to flow into your accretion/dilution analysis there, even if you are looking at EBITDA/shares. You could figure the gain on sale into some kind of adjusted EBITDA/shares version of EPS, but this is neither something I've ever seen nor something that really makes sense in the context of using EPS as a standardized metric across the market. Typically we take OUT non-recurring shit in EPS, we don't add it in. Adding something like this in would be much more appropriate to measuring the success of an acquisition/investing vehicle like a private equity fund, not a standalone operating company that reports operational earnings in addition to cash flow from investing. And as I suggest above, that's an analysis for which the IRR metric is more ideally situated. And just a semantic thing - we typically wouldn't call the exit value a \"\"liquidation value\"\". That term is usually reserved for dissolution of a corporate entity and selling off its physical or intangible assets in piecemeal fashion (i.e. not accounting for operational synergies across the business). IPO value is actually just going to be a measure of market value of equity.\"",
"title": ""
},
{
"docid": "c372d42ad4cbdb97645e1f11384d9124",
"text": "\"Some investors worry about interest rate risk because they Additional reason is margin trading which is borrowing money to invest in capital markets. Since margin trading includes minimum margin requirements and maintenance margin to protect lender \"\"such as a broker\"\" , a decrease in the value of bonds might trigger a threat of a margin call There are other reasons why investors care about interest rate risk such as spread trade investors who benefit from difference in short term/ long term interest rates. Such investors borrow short term loans -which enables them to pay low interest- and lend long term loans - which enables them to gain high interest-. Any disturbance between the interest rate spread between short term and long term bonds might affect investor's profit and might even lead to losses. In summary , it all depends on you investment objective and financial condition. You should consult with your financial adviser to help plan for your financial goals.\"",
"title": ""
},
{
"docid": "24e225892d3fc3dcb86b94cf231fc880",
"text": "There could be an impact on Facebook because just before the IPO, Morgan Stanley apparently sent information to selected clients that their analysts had just lowered their valuation of the company. There were also reports yesterday that the lowered valuation came about because Facebook sent some revised preliminary estimates of second quarter earnings (showing lower than expected earnings) to Morgan Stanley, and least one talking head said that Facebook might also face charges depending on what the cover letters and the e-mails back and forth between Facebook and Morgan Stanley said. Investigations have already been opened. Yes, a company wants to sell the stock being offered at the IPO at the highest price possible, but if it misled the public when offering the stock for sale (through its underwriters), it can also be liable, possibly even criminally liable. Material added in Edit: In fact, a lawsuit has already been filed in the US District Court in Manhattan in this matter. Whether the SEC ever does anything about the matter remains to be seen.",
"title": ""
},
{
"docid": "d1ae446b6658b9fd7ddafba5ac736a69",
"text": "In and of itself it wasn't. But could the ill will it left with the general investing public make people more wary of future IPOs and thus, lower their potential starting points? Thereby leading to a drought of IPOs as companies don't see themselves getting as much.",
"title": ""
},
{
"docid": "b8d7639e01902ca28754028bcf23657d",
"text": "\"Historically, Banks are mandated to take relatively safe risks with their money. In exchange, they gain a de-facto permission to invent new money. They have regulations about what mix of assets they are permitted to own. Real estate speculation will be in a different category than a mortgage to someone with good credit. Second, mortgages with a secured asset are pretty safe almost all of the time. That person might stop paying their mortgage, but it is secured; when that happens, the bank gets the secured asset (the right-to-apartment or house or what have you). In a sense, the bank loses only if both the person paying the mortgage is less creditworthy than they look, and the secured asset cannot recoup their losses. In comparison, the person paying the mortgage loses if the secured asset cannot recoup their losses. The bank is buffered from risk two fold. What more, the bank uses the customer to determine what to invest in. Deciding what to do with money is expensive and hard. By both having a customer willing to put their good credit on the line and doing due diligence on the apartment, the Bank in effect uses you as a consultant who decides this may be a solid investment. Much of the risk of failure is on you, so you have lots of incentive to make a good choice. If the Bank was instead deciding which apartment where worth buying, who would decide? A bank employee, whose bonus this year depends on finding a \"\"great apartment to invest in?\"\", but the consequence of a bad choice doesn't show up for many years? The people selling the bank the apartments? Such a business can exist. There are real estate companies that take money, and invest it in real estate. Often the borrow money from Banks secured against their existing real estate and use it to build more real estate. (Notice the bit about it being secured against existing real estate; things go south, Bank gets stuff). The Bank's indirect investment in that apartment in the current system is covered by appraisals, the seller, the mortgage holder, and the system deciding that the mortgage holder is creditworthy. Banks sell risk. They lend you money, you go off and do something risky with it, and they get a the low-risk return on investment of your loan. Multiple such low-risk investments provides them with a relatively dependable stream of money, which they give out to their bondholders, deposit account customers, shareholders or what have you. When you take a mortgage out for that, you are buying risk from the bank. You are more exposed to the failure of the investment than they are. They get less return if things go really well.\"",
"title": ""
},
{
"docid": "0cb7be283c0e2e14369c48b9b3020acf",
"text": "\"The \"\"risk\"\", other than losing principal (especially when rates go up) is capital gains. As with any mutual fund, this one might need to sell assets for cashflow. In which case the taxes on the sales are shifted to the investors. So you may end up with the fund losing value due to price fluctuations, yet you'll have capital gains (probably with a significant short term part since the maturity periods are relatively short) to pay taxes on. To what extent that may happen depends on the fund's cashflow (influx of money vs. withdrawals). Capital gains reduce your basis (since no money is actually distributed), but if you hold the fund for more than a year - you lose the difference between the short term and the long term tax for the short term portion of the gains.\"",
"title": ""
},
{
"docid": "4e4095d42a193b554e513a451e5dc91b",
"text": "The company's value (which should be reflected in the share price) is not how much money it has in the bank, but something along the lines of 'how much money will it make between now and the end of times' (adjusted for time value of money and risk). So when you purchase a share of a company that has, say, little money in the bank, but expects to make 1M$ profit this year, 2M$ for the following 3 years, and say, nothing after, you are going to pay your fraction of 7M$ (minus some discount because of the risk involved). If now they announce that their profits were only 750k$, then people may think that the 2M$ are more likely to be 1.5M$, so the company's value would go to ~ 5M$. And with that, the market may perceive the company as more risky, because its profits deviated from what was expected, which in turn may reduce the company's value even further.",
"title": ""
},
{
"docid": "f8ec0cc6cf3c726041c5ae43fb00288a",
"text": "I'm going to have to take you to task for this post. If someone is incapable of determining the implied current P/E in the IPO price then they should not be buying stocks. You cannot blame Wall Street for the greed and stupidity of the public.",
"title": ""
},
{
"docid": "70281c94fd300d4a6ec0f4228e10ae86",
"text": "There would be small generic risk that the company stock goes down real fast by more than 15% in a specific event to the company [fraud, segment company operates suffers a shock, etc] or a generic event to the stock market like recent events of Greece etc.",
"title": ""
},
{
"docid": "62077bd6249e2f08079161e4588f0f94",
"text": "\"Will the investment bank evaluate the worth of my company more than or less than 50 crs. Assuming the salvage value of the assets of 50 crs (meaning that's what you could sell them for to someone else), that would be the minimum value of your company (less any outstanding debts). There are many ways to calculate the \"\"value\"\" of a company, but the most common one is to look at the future potential for generating cash. The underwriters will look at what your current cash flow projections are, and what they will be when you invest the proceeds from the public offering back into the company. That will then be used to determine the total value of the company, and in turn the value of the portion that you are taking public. And what will be the owner’s share in the resulting public company? That's completely up to you. You're essentially selling a part of the company in order to bring cash in, presumably to invest in assets that will generate more cash in the future. If you want to keep complete control of the company, then you'll want to sell less than 50% of the company, otherwise you can sell as much or as little as you want.\"",
"title": ""
},
{
"docid": "2c0ae24ba33f029d528764a03af25505",
"text": "Yep, but it you didn't answer my question (edit: I know it was phrased as a question, but I do know youre supposed to model changes in cash). When bankers calculate all three approaches, how do they compare them? From what I see, the conclusion of each approach gives us: * Public Company Approach: Enterprise Value * Transaction Approach: Enterprise Value * Discounted Cash Flow Approach: Enterprise Value + Minimum Level of Operating Cash Does an investment banker subtract out that minimum level of operating cash at the end of the calculation to get to a value that he can then compare?",
"title": ""
},
{
"docid": "12da69444091327807a68231ca099ad8",
"text": "\"Discussing individual stocks is discouraged here, so I'll make my answer somewhat generic. Keep in mind, some companies go public in a way that takes the shares that are held by the investment VCs (venture capitalists) and cashes them out of their positions, i.e. most if not all shares are made public. In that case, the day after IPO, the original investors have their money, and, short of the risk of being sued for fraud, could not care less what the stock does. Other companies float a small portion up front, and retain the rest. This is a way of creating a market and valuing the company, but not floating so many shares the market has trouble absorbing it. This stock has a \"\"Shares Outstanding\"\" of 2.74B but has only floated 757.21M. The nearly 2 billion shares held by the original investors certainly impact their wallets with how this IPO went. See the key statistics for the details.\"",
"title": ""
},
{
"docid": "7c0418d8ab15cfc19f66cea6800e42c5",
"text": "I don't completely have GIPS down, risk management still gets me on some questions, and alternative investments is fucking me a bit. Any of the IPS questions will be iffy because I'm not good at paying attention to detail in the prompts. On the other hand, I memorized the micro and global attribution formulas so I'm hoping for a lot of questions on that shit.",
"title": ""
}
] |
fiqa
|
531eba7862ba78aad50171f2f16c4170
|
How to calculate 1 share movement
|
[
{
"docid": "b17badf725c241c03f061a9db2a96bff",
"text": "The price of a share has two components: Bid: The highest price that someone who wants to buy shares is willing to pay for them. Ask: The lowest price that someone who has a share is willing to sell it for. The ask is always higher than the bid, since if they were equal the buyer and seller would have a deal, make a transaction, and that repeats until they are not equal. For stock with high volume, there is usually a very small difference between the bid and ask, but a stock with lower volume could have a major difference. When you say that the share price is $100, that could mean different things. You could be talking about the price that the shares sold for in the most recent transaction (and that might not even be between the current bid and ask), or you could be talking about any of the bid, the ask, or some value in between them. If you have shares that you are interested in selling, then the bid is what you could immediately sell a share for. If you sell a share for $100, that means someone was willing to pay you $100 for it. If after buying it, they still want to buy more for $100 each, or someone else does, then the bid is still $100, and you haven't changed the price. If no one else is willing to pay more than $90 for a share, then the price would drop to $90 next time a transaction takes place and thats what you would be able to immediately sell the next share for.",
"title": ""
},
{
"docid": "008a497ad9c98d5e2cc27a2cebf27993",
"text": "Unless other people believe you have a reason for selling at a lower price, your sale probably has no lasting effect at all on the market. Of course, if people see you dump a few million dollars' worth of shares at a discount, they may be inclined to believe you have a reason. But if you just sell a few, they will conclude the reason is just that you needed cash in a hurry.",
"title": ""
}
] |
[
{
"docid": "ff68b09fef2ab83c41d8cf7759d12c2c",
"text": "The point of that question is to test if the user can connect shares and stock price. However, that being said yeah, you're right. Probably gives off the impression that it's a bit elementary. I'll look into changing it asap.",
"title": ""
},
{
"docid": "6bc624692d06ad64e7f32232c19638f6",
"text": "Your observation is mostly right, that 1 is a the number around which this varies. You are actually referencing PEG, P/E to Growth ratio, which is a common benchmark to use to evaluate a stock. The article I link to provides more discussion.",
"title": ""
},
{
"docid": "c9e6b039d5ab2e479f5befaba52149c0",
"text": "\"One of two things is true: You own less than 5% of the total shares outstanding. Your transaction will have little to no effect on the market. For most purposes you can use the current market price to value the position. You own more than 5% of the total shares outstanding. You are probably restricted on when, where, and why you can sell the shares because you are considered part owner of the company. Regardless, how to estimate (not really \"\"calculate,\"\" since some of the inputs to the formula are assumptions a.k.a. guesses) the value depends on exactly what you plan to with the result.\"",
"title": ""
},
{
"docid": "30c72cf08aece2888aa325bdcd8d2538",
"text": "\"For the first and last questions, I can do this multiple ways. For the middle question, I'll just make up values. If you want different ones, you will have to redo the math. I am going to assume that you participate in the merger exchange, swapping your share for their offer. If you own one share, it depends how they handle fractional shares. Your original one share of ABC can be worth either one share of XYZ or 1.05 shares of XYZ. If you get one share, you typically get an additional $.80 cash to make up for the fractional share. You might ask why you don't just get $20 cash and one share of XYZ. Consider the case where you own twenty shares of ABC. Then you'd own twenty-one shares of XYZ and $384. No need for fractional shares. Beyond all this though, the share value of XYZ is not set autocratically. The shares might be worth $16, $40, or $2 after the merger. If both stocks are perfectly valued and the market is aware of that value, then it will depend partially on the number of shares of each. For example, if we assume there are 10,000 shares of ABC and 50,000 shares of XYZ (including the shares paid for ABC), then their initial market values are $320,000 for ABC and $800,000 for XYZ. XYZ is paying $360,000, so its value drops to $440,000. But it is gaining ABC, which is worth $320,000. Net value now is $760,000 or $15.20 per share. This has assumed that the shares transferred from XYZ to the shareholders of ABC were already included in the market value. This may mean that the stock price was previously $20 or so with almost 40,000 shares in circulation. Then they issued new shares, diluting the value down to $16. We could start at 50,000 shares at $16 and end up with 60,000 to 60,050 shares at $13.332 to $13.333 per share. Then XYZ is really only paying $326,658.31 for ABC. That's a premium of only $6,658.31 for ABC and gives a final stock value of $13.222 per share. The problem though is that in reality, there is no equivalent of perfect value. So I say again that the market value might be $15.20 (the theoretic answer that best fits the question given the example quantities of shares), $13, $20, or something else. It will depend on how the market perceives the deal. Is the combined company worth more or less than the sum of its parts? And beyond this, you will have $19.20 to $20 in cash in addition to your XYZ share (or 1.05 shares). Assuming 1.05 shares, that would be $15.96 plus the $19.20--that's $35.16 total in theory or anything from $19.20 up in practice. With the givens, the only thing of which you can be sure is the $19.20 cash. The value of the stock is up in the air. If XYZ is only privately traded, this is still true. The stock is worth the price that someone will pay for it. The \"\"someone\"\" is just more limited with privately traded stocks.\"",
"title": ""
},
{
"docid": "6d710ce4d7a4275036f7b4a3cce5a07e",
"text": "\"The best place to start looking is the companies \"\"Balance Sheet\"\" (B/S). This would show you the total shares \"\"outstanding.\"\" The quarterly B/S's arent audited but a good starting point. To use in any quant method, You also need to look a growth the outstanding shares number. Company can issue shares to any employee without making a filing. Also, YOU will NEVER know exactly the total number because of stock options that are issued to employees that are out of the money arent account for. Some companies account for these, some dont. You should also explore the concepts of \"\"fully dilute\"\" shares and \"\"basis\"\" shares. These concepts will throw-off your calc if the company has convertible bonds.\"",
"title": ""
},
{
"docid": "9758a5c6885e6ddfe6022e9eb530ab12",
"text": "\"According to the following article the answer is \"\"first-in, first-out\"\": http://smallbusiness.chron.com/calculate-cost-basis-stock-multiple-purchases-21588.html According to the following article the last answer was just one option an investor can choose: https://www.usaa.com/inet/pages/advice-investing-costbasis?akredirect=true\"",
"title": ""
},
{
"docid": "3a43fd02236810d0cff0fa9231398b1d",
"text": "Let's suppose your friend gave your $100 and you invested all of it (plus your own money, $500) into one stock. Therefore, the total investment becomes $100 + $500 = $600. After few months, when you want to sell the stock or give back the money to your friend, check the percentage of profit/loss. So, let's assume you get 10% return on total investment of $600. Now, you have two choices. Either you exit the stock entirely, OR you just sell his portion. If you want to exit, sell everything and go home with $600 + 10% of 600 = $660. Out of $660, give you friend his initial capital + 10% of initial capital. Therefore, your friend will get $100 + 10% of $100 = $110. If you choose the later, to sell his portion, then you'll need to work everything opposite. Take his initial capital and add 10% of initial capital to it; which is $100 + 10% of $100 = $110. Sell the stocks that would be worth equivalent to that money and that's it. Similarly, you can apply the same logic if you broke his $100 into parts. Do the maths.",
"title": ""
},
{
"docid": "237d225e0da24ae0ac9d26ba666568d8",
"text": "i will not calculate it for you but just calculate the discounted cash flow (by dividing with 1.1 / 1.1^2 / 1.1^3 ...)of each single exercise as stated and deduct the 12.000 of the above sum. in the end compare which has the highest npv",
"title": ""
},
{
"docid": "bf0540111a2051185227f72005547c32",
"text": "\"Generally if you are using FIFO (first in, first out) accounting, you will need to match the transactions based on the number of shares. In your example, at the beginning of day 6, you had two lots of shares, 100 @ 50 and 10 @ 52. On that day you sold 50 shares, and using FIFO, you sold 50 shares of the first lot. This leaves you with 50 @ 50 and 10 @ 52, and a taxable capital gain on the 50 shares you sold. Note that commissions incurred buying the shares increase your basis, and commissions incurred selling the shares decrease your proceeds. So if you spent $10 per trade, your basis on the 100 @ 50 lot was $5010, and the proceeds on your 50 @ 60 sale were $2990. In this example you sold half of the lot, so your basis for the sale was half of $5010 or $2505, so your capital gain is $2990 - 2505 = $485. The sales you describe are also \"\"wash sales\"\", in that you sold stock and bought back an equivalent stock within 30 days. Generally this is only relevant if one of the sales was at a loss but you will need to account for this in your code. You can look up the definition of wash sale, it starts to get complex. If you are writing code to handle this in any generic situation you will also have to handle stock splits, spin-offs, mergers, etc. which change the number of shares you own and their cost basis. I have implemented this myself and I have written about 25-30 custom routines, one for each kind of transaction that I've encountered. The structure of these deals is limited only by the imagination of investment bankers so I think it is impossible to write a single generic algorithm that handles them all, instead I have a framework that I update each quarter as new transactions occur.\"",
"title": ""
},
{
"docid": "5aa3f904bf8a057a8e5e4f1f7d9de354",
"text": "There isn't a formula like that, there is only the greed of other market participants, and you can try to predict how greedy those participants will be. If someone decided to place a sell order of 100,000 shares at $5, then you can buy an additional 100,000 shares at $5. In reality, people can infer that they might be the only ones trying to sell 100,000 shares right then, and raise the price so that they make more money. They will raise their sell order to $5.01, $5.02 or as high as they want, until people stop trying to buy their shares. It is just a non-stop auction, just like on ebay.",
"title": ""
},
{
"docid": "923403f0704091c3e4cf237f5f4586ce",
"text": "Elaborating on kelsham's answer: You buy 100 shares XYZ at $1, for a total cost of $100 plus commissions. You sell 100 shares XYZ at $2, for a total income of $200 minus commissions. Exclusive of commissions, your capital gain is $100 for this trade, and you will pay taxes on that. Even if you proceed to buy 200 shares XYZ at $1, reinvesting all your income from the sale, you still owe taxes on that $100 gain. The IRS has met this trick before.",
"title": ""
},
{
"docid": "a8121c431651f7b2b2fdc9de6f5f909e",
"text": "Try to find the P/E ratio of the Company and then Multiply it with last E.P.S, this calculation gives the Fundamental Value of the share, anything higher than this Value is not acceptable and Vice versa.",
"title": ""
},
{
"docid": "fb1797631bbe56e4504988fc1ee766c1",
"text": "1 lot is 100 shares on London stock exchange",
"title": ""
},
{
"docid": "60e6bdbead28c05fcc3b0f90ae5bcc63",
"text": "Of course, this calculation does not take into consideration the fact that once the rights are issues, the price of the shares will drop. Usually this drop corresponds to the discount. Therefore, if a rights issue is done correctly share price before issuance-discount=share price after issuance. In this result, noone's wealth changes because shareholders can then sell their stock and get back anything they had to put in.",
"title": ""
},
{
"docid": "4a8ff89be169d4386afa9703d41dbe4a",
"text": "You say: Every time it seems the share price dips. Does it? Have you collected the data? It may just be that you are remembering the events that seem most painful at the time. To move the market with your trade you need to be dealing in a large amount of shares. Unless the stock is illiquid (e.g most VCT in the UK), I don’t think you are dealing in that large a number; if you were then you would likely have access to a real time feed of the order book and could see what was going on.",
"title": ""
}
] |
fiqa
|
e3839238f8541d7f0b6505951a78aff0
|
ESPP taxes after relocating from Europe to the United States?
|
[
{
"docid": "d3aa0e53873e068ee63eb8e1179eae2b",
"text": "\"I would suggest to get an authoritative response from a CPA. In any case it would be for your own benefit to have at least the first couple of years of tax returns prepared by a professional. However, from my own personal experience, in your situation the income should not be regarded as \"\"US income\"\" but rather income in your home country. Thus it should not appear on the US tax forms because you were not resident when you had it, it was given to you by your employer (which is X(Europe), not X(USA)), and you should have paid local taxes in your home country on it.\"",
"title": ""
},
{
"docid": "b71efbb3f5044251b6e0a556fed686ed",
"text": "\"If you haven't been a US resident (not citizen, different rules apply) at the time you sold the stock in Europe but it was inside the same tax year that you moved to the US, you might want to have a look at the \"\"Dual Status\"\" part in IRS publication 519.\"",
"title": ""
}
] |
[
{
"docid": "8047ca318e5d8637aa90fa19584d5cce",
"text": "With something this complicated you are going to want to consult professionals. Either a professional with international experience, who will tell you the best tax arrangement overall but might come expensive, or one professional in each country who will optimize for that country. You will have to pay US taxes, and depending on your residency probably some in Spain. Double tax agreements should kick in to prevent you paying tax on the same money twice. You do not have to pay separate 'European' taxes. If you do substantial business in another country you might have to pay there, but one of your professionals should sort it out.",
"title": ""
},
{
"docid": "22b5a58c9b402f5d89f7f3c5801e101a",
"text": "Hi u/Sagiv1, Short answer: Yes, you do have to pay taxes in Israel for all your worldincome. Long answer: All countries within the OCDE consider you as a fiscal resident in the country where you spend over half a year in (183 days and up). If you do not spend that much time in any country, there are other tying measures to avoid people not being fiscal residents in any country. Since you are living in Israel, you will have to pay all your worlwide generated income in Israel, following the tax regulation that is in place there. I am no Isarely Tax Lawyer so I cannot help you there. Having a lot of business internationally brings other headaches with it. Taking for example the U.S. there is a possibility that they withold taxes in their payments. It is unlikely, though, as they have a Tax Treaty to prevent double taxation. You can ask for this witholded money to be returned from the U.S. or other countries through each country's internal process. Another thing to take into account is that you can be taxed in other countries for any revenue you generate in said country. This is especially relevant for revenue that comes from Real Estate. The country where the real estate is will tax you in the country and you will have to deduct these taxes paid in your country, Israel in this case. If there is no tax treaty you might possibly be paying twice. I know you said you do promotion, but I have to warn you about this, because I ignore what other countries tax or do not tax. So been giving more info won't hurt. If the US is the main and/or only country you will be doing business with, I strongly recommend you real the Tax treaty with lots of love and patience. You can find it here: https://www.irs.gov/pub/irs-trty/israel.pdf or here: Treaty:http://mfa.gov.il/Style%20Library/AmanotPdf/005118.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005120.pdf If you are from Israel and prefer it in Hebrew, here are the treaties in your language: Treaty: http://mfa.gov.il/Style%20Library/AmanotPdf/005119.pdf Amendment: http://mfa.gov.il/Style%20Library/AmanotPdf/005121.pdf Normally most IRS Departments have sections with very uselful help on these sort of matters. I'd recomment you to take a look at yours. Last, what I've explained is the normal process that applies almost all over the world. But each country has their own distinctions and you need to look carefully. Take what I said as a starting point and do your own research or ideally try to find a tax consultant/lawyer who helps you. Best of luck.",
"title": ""
},
{
"docid": "4a89404183a0ad268890174c0623c23d",
"text": "This question came up again (Living in Florida working remotely - NY employer withholds NYS taxes - Correct or Incorrect?) and the poster on the new version didn't find the existing answers to be adequate, so I'm adding a new answer. NYS will tax this income if the arrangement is for the convenience of the employee. If the arrangement is necessary to complete the work, then you should have no NYS tax. New York state taxes all New York-source salary and wage income of nonresident employees when the arrangement is for convenience rather than by necessity (Laws of New York, § 601(e), 20 NYCRR 132.18). Source: http://www.journalofaccountancy.com/issues/2009/jun/20091371.html Similar text can also be found here: http://www.koscpa.com/newsletter-article/state-tax-consequences-telecommuting/ The NYS tax document governing this situation seems to be TSB-M-06(5)I. I looked at this page from NYS that was mentioned in the answer by @littleadv. That language does at first glance seem to lead to a different answer, but the ruling in the tax memo seems to say that if you're out of state only for your convenience then the services were performed in NYS for NYS tax purpose. From the memo: However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of- state duties in the service of his employer.",
"title": ""
},
{
"docid": "5aa0bc6369d80ae0d822ac99550e87f9",
"text": "When the deal closes, will it be as if I sold all of my ESPP shares with regards to taxes? Probably. If the deal is for cash and not stock exchange, then once the deal is approved and closed all the existing shareholders will sell their shares to the buyer for cash. Is there any way to mitigate this? Unlikely. You need to understand that ESPP is just a specific way to purchase shares, it doesn't give you any special rights or protections that other shareholders don't have.",
"title": ""
},
{
"docid": "a41efbee5c826099835787e354a813b0",
"text": "I just tried doing that on my PP which is in the Netherlands, I have added a USD bank account (from my dutch bank) and they sent the verification amount in Euros, I called the bank and wonder why they didn't let me choose account currency they said it's not possible and if I cashout Dollars that I have in my PP (cause we usually do international business so we set it to dollars) it will be changed to Euros, So we decided to keep the dollars in account to pay our bills instead of getting ripped off by PayPal in xchange rates.",
"title": ""
},
{
"docid": "db571656437f699d18b3d7941b386abd",
"text": "Any large stockbroker will offer trading in US securities. As a foreign national you will be required to register with the US tax authorities (IRS) by completing and filing a W-8BEN form and pay US withholding taxes on any dividend income you receive. US dividends are paid net of withholding taxes, so you do not need to file a US tax return. Capital gains are not subject to US taxes. Also, each year you are holding US securities, you will receive a form from the IRS which you are required to complete and return. You will also be required to complete and file forms for each of the exchanges you wish to received market price data from. Trading will be restricted to US trading hours, which I believe is 6 hours ahead of Denmark for the New York markets. You will simply submit an order to the desired market using your broker's online trading software or your broker's telephone dealing service. You can expect to pay significantly higher commissions for trading US securities when compared to domestic securities. You will also face potentially large foreign exchange fees when exchaning your funds from EUR to USD. All in all, you will probably be better off using your local market to trade US index or sector ETFs.",
"title": ""
},
{
"docid": "2618439a77ba81ca15dd63b8927dd0b6",
"text": "See if there are any favorable tax treaties between your two countries. (check US state department - or find the nearest PWC, Deloitte, KPMG, these are global auditing firms that deal with international tax and compliance) A tax treaty could have possible goodies such as a lower more favorable tax or even a tax credit from. For instance, if you paid 28% tax in the US then your new country will give you a credit on the taxes owed to them. The point of tax treaties are to prevent double taxation, but in the effort to do so they often create their own new tax rates for transfers between countries. You'll be better off just paying the 28% US income tax on your 401k distribution. And using the post-tax money as you please. US citizens are on the hook for income tax several years after they leave the US.",
"title": ""
},
{
"docid": "bc721c0bcdd095c130ae3e926407beb0",
"text": "Companies in the US will take care of paying a portion of your required income tax on your behalf based on some paperwork you fill out when starting work. However, it is up to you as an individual to submit an income tax return. This is used to ensure that you did not end up under or overpaying based on what your company did on your behalf and any other circumstances that may impact your actual tax owed. In my experience, the process is similar in Europe. I think anyone who has a family, a house or investments in Europe would need to file an income tax return as that is when things start to get complex.",
"title": ""
},
{
"docid": "43cc8bc27d099e616f7caa21a347e45a",
"text": "No state taxes, but Italy also has a favorable treaty with the US Federal Government. Look into to lowering your federal taxes to 5% ;) its a thick read, http://www.irs.gov/businesses/international/article/0,,id=169601,00.html and also try to determine if the Foreign Earned Income Exclusion applies to you, reducing your Federal tax to ZERO on the first $95,100 earned abroad. http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html but then you may be subject to a 20%+ italy tax. so maybe you should just try for the tax treaty",
"title": ""
},
{
"docid": "ac92b9bf00a4d1b18d5a4e79b41b059e",
"text": "Typically, the discount is taxable at sale time But what about taxes? When the company buys the shares for you, you do not owe any taxes. You are exercising your rights under the ESPP. You have bought some stock. So far so good. When you sell the stock, the discount that you received when you bought the stock is generally considered additional compensation to you, so you have to pay taxes on it as regular income. Source: Turbotax. Second source. Your pretax rate of return would be: 17% (100/85) In your scenario where the stock price is fixed at $100. Your tax rate would be your marginal rate. If the stock stayed at 100, you would still be taxed as income on $15/share (the discount) and would receive no benefit for holding the stock one year. Assuming you are in the 25% tax bracket, your after tax rate of return would be 13% ((15*.75)+85)/85)",
"title": ""
},
{
"docid": "8dd55b46d9c07218fb9f8baf97aa6c57",
"text": "There is Free employer money on both sides of the tax fence for some employees. On the pretax side, your employer may provide you a match. If so, invest the maximum to get 100% of the match. On the after tax side, many companies offers a 15% discount on ESPP plans and a one year hold. My wife has such an employer. The one year hold is fine because it allows us to be taxed at Long Term Capital gains if the stock goes up which is lower than our current income bracket. After creating a seasoned pool of stocks that we could sell after the one year hold, we are then able to sell the same number of stocks purchased each month. This provides a 17.6% guaranteed gain on a monthly basis. How much would you purchase if you had a guaranteed 17.6% return. Our answer is 15% (our maximum allowed). The other trick is that while the employer is collecting the money, you will purchase the stock at the lowest day of the period. You will usually sell for even more than the purchase price unless the day purchased was the lowest day of month. The trick is to reinvest the money in tax free investments to balance out the pretax investing. Never leave the money in the plan. That is too much risk.",
"title": ""
},
{
"docid": "a16a073fbef02fb2422c039375c8413b",
"text": "\"What would be the best strategy to avoid paying income taxes on the sale after I move to another US state? Leaving the US and terminating your US residency before the sale closes. Otherwise consider checking your home country's tax treaty with the US. In any case, for proper tax planning you should employ a licensed tax adviser - an EA, CPA or an attorney licensed in your State (the one you'd be when the sale closes). No-one else is legally allowed to provide you tax advice on the matter. Because the company abroad is befriended, I have control over when (and e.g. in how many chunks) the earnings of the sale flow into my LLC. So I can plan where I live when that money hits my US account. I'm not familiar with the term \"\"befriended\"\" in this context, but form what I understand your description - its a shell corporation under your own control. This means that the transfer of money between the corporation and your LLC is of no consequence, you constructively received the money when the corporation got it, not the LLC. Your fundamental misunderstanding is that there's importance to when the money hits your US bank account. This is irrelevant. The US taxes your worldwide income, so it is taxed when you earn it, not when you transfer it into the country (as opposed to some other countries, for example India or the UK). As such, in your current scheme, it seems to me that you're breaking the US tax law. This is my personal impression, of course, get a professional advice from a licensed tax professional as I defined earlier.\"",
"title": ""
},
{
"docid": "cbc909847ba684c0856d3df9be9f5403",
"text": "If you're a US citizen/resident - you pay taxes on your worldwide income regardless of where you live. The logic is that Americans generally don't agree to the view that there's more than one country in the world. If you're non-US person, not physically present in the US, and provide contract work for a US employer - you generally don't pay taxes in the US. The logic is that the US doesn't actually have any jurisdiction over that money, you didn't earn it in the US. That said, your employer might withheld tax and remit it to the IRS, and you'll have to chase them for refund. If you receive income from the US rental property or dividends from a US company - you pay income tax to the US on that income, and then bargain with your home tax authority on refunds of the difference between what you paid in the US and what you should have paid at home. You can also file non-resident tax return in the US to claim what you have paid in excess. The logic is that the money sourced in the US should be taxed in the US. You earned that money in the US. There are additional rules to more specific situation, and there are also bilateral treaties between countries (including a US-Canadian treaty) that supersede national laws. Bottom line, not only that each country has its own laws, there are also different laws for different situations, and if some of the international treaties apply to you - it further complicates the situation. If something is not clear - get a professional advice form a tax accountant licensed in the relevant jurisdictions (in your case - any of the US states, and the Canadian province where you live).",
"title": ""
},
{
"docid": "38ce8853a945c37b03874890c7effc66",
"text": "It essentially works the same. Some states don't have any income taxes at all (like Florida or Wyoming), some only tax income derived in the state, and some tax worldwide income (like New York or California), similarly to the Federal income taxes. However, if you're living abroad (i.e.: you're a citizen or resident of a foreign country and you live there), you're not considered resident by most of the states (check with your state for specific definitions) for most, if not all, the time of your residency abroad. In such case - you don't pay state taxes, only Federal. You have to remember that foreign income exclusion doesn't apply to the income from your 401k, so you pay the taxes as if you're in the US. You can not use foreign taxes credit as well (but depending on the tax treaty with the country you're moving to, your 401k income might not be taxable there). In some cases you may end up with double taxation: US will tax your 401k income as you're a US citizen and the income is derived from the US sources, and the foreign country will tax the income based on its own laws. This is not a tax advice, and this answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.",
"title": ""
},
{
"docid": "96503ad0863d795ad2f0d81405f41c31",
"text": "75k is short of the 'highly compensated' category. Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense. Tax shelters usually don't come into play for this level of income. However, there are certain things which provide deductions. Some things that make it better to pay someone: Use the free online tax forms to sandbox your returns. If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA. Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding. Tax treaties likely make sure that you get credit on each side for the money paid in the other. For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US. If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero. By the same token, if I have not paid up to my US burden, then I owe the balance to the US. But this is way better than paying taxes to your home country and to the host country where you earned the money.",
"title": ""
}
] |
fiqa
|
35a925418860448a830c85a3bfde2ad9
|
Different ways of looking at P/E Ratio vs EPS
|
[
{
"docid": "7aa54db9a4904567ac7fe6bc6c909344",
"text": "\"You could not have two stocks both at $40, both with P/E 2, but one an EPS of $5 and the other $10. EPS = Earnings Per Share P/E = Price per share/Earnings Per Share So, in your example, the stock with EPS of $5 has a P/E of 8, and the stock with an EPS of $10 has a P/E of 4. So no, it's not valid way of looking at things, because your understanding of EPS and P/E is incorrect. Update: Ok, with that fixed, I think I understand your question better. This isn't a valid way of looking at P/E. You nailed one problem yourself at the end of the post: The tricky part is that you have to assume certain values remain constant, I suppose But besides that, it still doesn't work. It seems to make sense in the context of investor psychology: if a stock is \"\"supposed to\"\" trade at a low P/E, like a utility, that it would stay at that low P/E, and thus a $1 worth of EPS increase would result in lower $$ price increase than a stock that was \"\"supposed to\"\" have a high P/E. And that would be true. But let's game it out: Scenario Say you have two stocks, ABC and XYZ. Both have $5 EPS. ABC is a utility, so it has a low P/E of 5, and thus trades at $25/share. XYZ is a high flying tech company, so it has a P/E of 10, thus trading at $50/share. If both companies increase their EPS by $1, to $6, and the P/Es remain the same, that means company ABC rises to $30, and company XYZ rises to $60. Hey! One went up $5, and the other $10, twice as much! That means XYZ was the better investment, right? Nope. You see, shares are not tokens, and you don't get an identical, arbitrary number of them. You make an investment, and that's in dollars. So, say you'd invested $1,000 in each. $1,000 in ABC buys you 40 shares. $1,000 in XYZ buys you 20 shares. Their EPS adds that buck, the shares rise to maintain P/E, and you have: ABC: $6 EPS at P/E 5 = $30/share. Position value = 40 shares x $30/share = $1,200 XYZ: $6 EPS at P/E 10 = $60/share. Position value = 20 shares x $60/share = $1,200 They both make you the exact same 20% profit. It makes sense when you think about it this way: a 20% increase in EPS is going to give you a 20% increase in price if the P/E is to remain constant. It doesn't matter what the dollar amount of the EPS or the share price is.\"",
"title": ""
},
{
"docid": "216fb89e9f562ceb58dd1d07bd9fc3dc",
"text": "all other things being equal if you have two stocks, both with a P/E of 2, and one has an EPS of 5 whereas the other has an EPS of 10 is the latter a better purchase? What this really boils down to is the number of shares a company has outstanding. Given the same earnings & P/E, a company with fewer shares will have a higher EPS than a company with more shares. Knowing that, I don't think the number of shares has much if anything to do with the quality of a company. It's similar to the arguments I hear often from people new to investing where they think that a company with a share price of $100/share must be better than a company with a share price of $30/share simply because the share price is higher.",
"title": ""
},
{
"docid": "7c9353f6a0cae024f3d16f95ca48999b",
"text": "\"Check your math... \"\"two stocks, both with a P/E of 2 trading at $40 per share lets say, and one has an EPS of 5 whereas the other has an EPS of 10 is the latter a better purchase?\"\" If a stock has P/E of 2 and price of $40 it has an EPS of $20. Not $10. Not $5.\"",
"title": ""
}
] |
[
{
"docid": "9e3f98e37300ff02c60507a576ce78a9",
"text": "I see this same argument with Amazon who's P/E is also through the roof. Valuation is way more complicated than looking at income statement ratios. There are some pretty solid reasons for its valuation. I'm inclined to agree it is overvalued, but not as much as you think.",
"title": ""
},
{
"docid": "a8121c431651f7b2b2fdc9de6f5f909e",
"text": "Try to find the P/E ratio of the Company and then Multiply it with last E.P.S, this calculation gives the Fundamental Value of the share, anything higher than this Value is not acceptable and Vice versa.",
"title": ""
},
{
"docid": "8a6e87ece5bda5dbb3720b8f90837b88",
"text": "\"Here is how I would approach that problem: 1) Find the average ratios of the competitors: 2) Find the earnings and book value per share of Hawaiian 3) Multiply the EPB and BVPS by the average ratios. Note that you get two very different numbers. This illustrates why pricing from ratios is inexact. How you use those answers to estimate a \"\"price\"\" is up to you. You can take the higher of the two, the average, the P/E result since you have more data points, or whatever other method you feel you can justify. There is no \"\"right\"\" answer since no one can accurately predict the future price of any stock.\"",
"title": ""
},
{
"docid": "70e23a1994c05aa2ebbf3034d32bde75",
"text": "PEG is Price/Earnings to Growth. It is calculated as Price/Earnings/Annual EPS Growth. It represents how good a stock is to buy, factoring in growth of earnings, which P/E does not. Obviously when PEG is lower, a stock is more undervalued, which means that it is a better buy, and more likely to go up. Additional References:",
"title": ""
},
{
"docid": "b7bbbba72cb8dc5b8dcf6cba5fd65700",
"text": "The S&P 500 is a market index. The P/E data you're finding for the S&P 500 is data based on the constituent list of that market index and isn't necessarily the P/E ratio of a given fund, even one that aims to track the performance of the S&P 500. I'm sure similar metrics exist for other market indexes, but unless Vanguard is publishing it's specific holdings in it's target date funds there's no market index to look at.",
"title": ""
},
{
"docid": "76c6225dc5f0d9e48a5430310a5a8e41",
"text": "This is only a rule of thumb. Peter Lynch popularized it; the ratio PE/growth is often called the Lynch Ratio. At best it's a very rough guideline. I could fill up this page with other caveats. I'm not saying that it's wrong, only that it's grossly incomplete. For a 10 second eyeball valuation of growth stocks, it's fine. But that's the extent of its usefulness.",
"title": ""
},
{
"docid": "1dc5ad53dbebd7ef9cc8e2a028298b67",
"text": "\"You are probably going to hate my answer, but... If there was an easy way to ID stocks like FB that were going to do what FB did, then those stocks wouldn't exist and do that because they would be priced higher at the IPO. The fact is there is always some doubt, no one knows the future, and sometimes value only becomes clear with time. Everyone wants to buy a stock before it rises right? It will only be worth a rise if it makes more profit though, and once it is established as making more profit the price will be already up, because why wouldn't it be? That means to buy a real winner you have to buy before it is completely obvious to everyone that it is going to make more profit in the future, and that means stock prices trade at speculative prices, based on expected future performance, not current or past performance. Now I'm not saying past and future performance has nothing in common, but there is a reason that a thousand financially oriented websites quote a disclaimer like \"\"past performance is not necessarily a guide to future performance\"\". Now maybe this is sort of obvious, but looking at your image, excluding things like market capital that you've not restricted, the PE ratio is based on CURRENT price and PAST earnings, the dividend yield is based on PAST publications of what the dividend will be and CURRENT price, the price to book is based on PAST publication of the company balance sheet and CURRENT price, the EPS is based on PAST earnings and the published number of shares, and the ROI and net profit margin in based on published PAST profits and earnings and costs and number of shares. So it must be understood that every criteria chosen is PAST data that analysts have been looking at for a lot longer than you have with a lot more additional information and experience with it. The only information that is even CURRENT is the price. Thus, my ultimate conclusive point is, you can't based your stock picks on criteria like this because it's based on past information and current stock price, and the current stock price is based on the markets opinion of relative future performance. The only way to make a good stock pick is understand the business, understand its market, and possibly understand world economics as it pertains to that market and business. You can use various criteria as an initial filter to find companies and investigate them, but which criteria you use is entirely your preference. You might invest only in profitable companies (ones that make money and probably pay regular dividends), thus excluding something like an oil exploration company, which will just lose money, and lose it, and lose some more, forever... unless it hits the jackpot, in which case you might suddenly find yourself sitting on a huge profit. It's a question of risk and preference. Regarding your concern for false data. Google defines the Return on investment (TTM) (%) as: Trailing twelve month Income after taxes divided by the average (Total Long-Term Debt + Long-Term Liabilities + Shareholders Equity), expressed as a percentage. If you really think they have it wrong you could contact them, but it's probably correct for whatever past data or last annual financial results it's based on.\"",
"title": ""
},
{
"docid": "763b874917da099d22ea9724fbc4d829",
"text": "PEG is Price to Earnings Growth. I've forgotten how it's calculated, I just remember that a PEG ratio of 1-2 is attractive by Graham & Dodd standards.",
"title": ""
},
{
"docid": "33e88a0fd8405877ed821efe13bd3a78",
"text": "P/E ratio is useful but limited as others have said. Another problem is that it doesn't show leverage. Two companies in the same industry could have the same P/E but be differently leveraged. In that case I would buy the company with more equity and less debt as it should be a less risky investment. To compare companies and take leverage/debt into account you could use the EV/EBIT ratio instead. Its slightly more complicated to calculate and isn't presented by as many data sources though. Enterprise Value (EV) can be said to represent the value of the company if someone would buy it today and then pay off all its (interest bearing) debt. EV is essentially calculated like this: (Market Capitalization plus cash & cash equivalents) minus interest-bearing debt. This is then divided by EBIT (Earnings before interest and tax) to get the ratio. One drawback of this ratio though is that it can't be used for financials since their balance sheet pretty much consists of debt and the Enterprise Value therefore doesn't tell us very much. Also, like the P/E ratio it is dependent on fresh numbers. A balance sheet is just a glimpse of the companys financial situation on ONE DAY, and this could (and probably will, although not drastically for bigger companies) change to the next day.",
"title": ""
},
{
"docid": "f0e4edcdd33450877c1a6c31eab9d4fc",
"text": "It might seem like the PE ratio is very useful, but it's actually pretty useless as a measure used to make buy or sell decisions, and taken largely on its own, pretty useless becomes utterly and completely useless. Stocks trade at prices based on future expectations and speculation, so that means if traders expect a company to double its profits next year, the share price could easily double (there are reasons it might not increase so much, and there are reasons it could increase even more than that, but that's not the point). The Price is now double, but the Earnings is still the same, so the PE ratio is double, and this doubling is based on something some traders know, or think they know, but other traders might not know or not believe! Once you understand that, what use is a PE ratio really? The PE ratio of a company might be low because it is in a death spiral, with many traders believing it will report lower and lower profits in years to come, and the lower the PE ratio of a given company gets probably, relatively, the more likely it is to go bust! If you buy a stock with a low PE ratio you must do so because you feel you understand the company, understand why the market is viewing it negatively, believe that the negativity is wrong or over done, and believe that it will turn around. Equally a PE ratio might be high, but be an excellent buy still because it has excellent growth prospects and potential even beyond what is priced in already! Lets face it, SOMEONE has been buying at the price that's put that PE ratio where is is, right? They might be wrong of course, or not! Or they might be justified now but circumstances might change before earnings ever reach the current priced in expectation. You'll know next year probably! To answer your actual question... first you should now understand there is no such thing as a stock that is on sale, just stocks that are priced broadly according to the markets consensus on its value in years to come, the closest thing being a stock that is 'over sold' (but one man's 'over sold' is another man's train crash remember)... so what to actually look for? The only way to (on average) make good buy and sell decisions is to know about investing and trading (buy some books, I have 12), understand the businesses you propose to invest in and understand their market(s) (which may also mean understanding national and international economics somewhat).",
"title": ""
},
{
"docid": "cfc6a71d87f7cc84ff75401a7965d421",
"text": "I look at the following ratios and how these ratios developed over time, for instance how did valuation come down in a recession, what was the trough multiple during the Lehman crisis in 2008, how did a recession or good economy affect profitability of the company. Valuation metrics: Enterprise value / EBIT (EBIT = operating income) Enterprise value / sales (for fast growing companies as their operating profit is expected to be realized later in time) and P/E Profitability: Operating margin, which is EBIT / sales Cashflow / sales Business model stability and news flow",
"title": ""
},
{
"docid": "fdb0d925b58ea2b1b9af8fe85c545a4c",
"text": "E&P can be valid throug Net Present Value methods, on a field-by-field basis. As no field is ever-lasting, and there Are not an unlimited number of fields, perpetuity-formulaes Are shitty. FCFF on a per-field basis with WC and Capex, with a definite lifetime. Thank you for the compliment.",
"title": ""
},
{
"docid": "202984fdfca72013590d80a373c28d40",
"text": "\"P/E is Price divided by Earnings Per Share (EPS). P/E TTM is Price divided by the actual EPS earned over the previous 12 months - hence \"\"Trailing Twelve Month\"\". In Forward P/E is the \"\"E\"\" is the average of analyst expectations for the next year in EPS. Now, as to what's being displayed. Yahoo shows EPS to be 1.34. 493.90/1.34 = P/E of 368.58 Google shows EPS to be 0.85. 493.40/0.85 = P/E of 580.47 (Prices as displayed, respectively) So, by the info that they are themselves displaying, it's Google, not Yahoo, that's displaying the wrong P/E. Note that the P/E it is showing is 5.80 -- a decimal misplacement from 580 Note that CNBC shows the Earnings as 0.85 as well, and correctly show the P/E as 580 http://data.cnbc.com/quotes/BP.L A quick use of a currency calculator reveals a possible reason why EPS is listed differently at yahoo. 0.85 pounds is 1.3318 dollars, currently. So, I think the Yahoo EPS listing is in dollars. A look at the last 4 quarters on CNBC makes that seem reasonable: http://data.cnbc.com/quotes/BP.L/tab/5 those add up to $1.40.\"",
"title": ""
},
{
"docid": "8dd14465a90edf3ad4f5450dd7ba028f",
"text": "Just from my experience and observation... VC there are spikes of activity. Where many deals are closing and board meetings and issues pile up on top of each other and happen all at once. But VC there are lulls where not much is going on. PE is more consistent and predictable in general. Yes of course exceptions arise but I found PE to be more 9 to 5 ish.",
"title": ""
},
{
"docid": "7e2e68179cb7715afc6b734828b30557",
"text": "PE can be misleading when theres a good risk the company simply goes out of business in a few years. For this reason some people use PEG, which incorporates growth into the equation.",
"title": ""
}
] |
fiqa
|
1500f915fbda5ae2275acb5a9e738da0
|
Putting the gordon equation into practice
|
[
{
"docid": "eb8297b5ca140c0fb70085814539e5a3",
"text": "The Gordon equation does not use inflation-adjusted numbers. It uses nominal returns/dividends and growth rates. It really says nothing anyone would not already know. Everyone knows that your total return equals the sum of the income return plus capital gains. Gordon simply assumes (perfectly validly) that capital gains will be driven by the growth of earnings, and that the dividends paid will likewise increase at the same rate. So he used the 'dividend growth rate' as a proxy for the 'earnings growth rate' or 'capital gains rate'. You cannot use inflation-removed estimates of equity rates of return because those returns do not change with inflation. If anything they move in opposite directions. Eg in the 1970's inflation the high market rates caused people to discount equity values at larger rates --- driving their values down -- creating losses.",
"title": ""
}
] |
[
{
"docid": "8f41df48721af72be30a3317aeb290be",
"text": "\"Despite having a math degree, I basically only use basic algebra/probability/calculus on a day to day basis as my career has gone a different direction away from the modelling/quanty stuff. Some fun reading: * The SABR Model - [SABR/LIBOR Model](http://www.amazon.com/SABR-LIBOR-Market-Model-Interest-Rate/dp/0470740051) * Shevre's Stochastic Calculus for Finance - [Book 1](http://www.amazon.com/Stochastic-Calculus-Finance-Binomial-Textbooks/dp/0387249680/) & [Book 2](http://www.amazon.com/Stochastic-Calculus-Finance-Continuous-Time-Textbooks/dp/144192311X/) One of the big 'hard' problems is calibrating a swap curve w/ what's known as the 3s6s Basis. As a number of true quants have said to me it is a \"\"non-trivial problem\"\". Its basically trying to match two curves with different compounding over a number of different knot points. SABR Model, listed above, is all about calibrating and figuring out how the current rate enviroment is behaving, is it normal or lognormal? What is the blend between the two, how do you know when you are in a different environment etc. Can rates go negative?\"",
"title": ""
},
{
"docid": "2f695763ca65e9af96afa7b18eaabb85",
"text": "I'm not sure of another other forums, maybe WSO? For subreddits, perhaps r/Economics can at least guide you better. Thanks for sharing the papers! I wish I had some I could share with you but I don't know any. Maybe you can ask your profs, or even profs at other institutions? I'm sure they will appreciate the initiative and help you out. I really don't know much about any of that yet unfortunately. Wish I could be of more help!",
"title": ""
},
{
"docid": "75d4310262273e34e841a9af94674387",
"text": "I don't expect you to remember the area for the surface of a sphere; I do expect you to be able to take a derivative of a volume. Especially if you are a PhD. Believe it or not, it IS faster than looking it up on the internet. And abilities to do quick back of the napkin estimations are very handy in my field (CS). Also, I noticed that meetings with people who are in command of basic facts are usually faster and more productive than with people who are constantly looking things up on the internet.",
"title": ""
},
{
"docid": "431f46bfded2c023fa118d293c6f5bce",
"text": "But an axiomatic approach only works in a deterministic environment, it does not work in a probabilistic environment. By your own arguments, because humans have free will so economics cannot be equated with a deterministic branch like physics. At this point now you are just contradicting yourself over and over. And it depends entirely on how accurate the axioms are. If observations do not match equation outcomes, then while the mathematics of the equation might be sound, the obvious conclusion is that the axioms themselves are faulty.",
"title": ""
},
{
"docid": "e14660d08b4b2fa45f1d81f43002d2c7",
"text": "\"Wow, this turns out to be a much more difficult problem than I thought from first looking at it. Let's recast some of the variables to simplify the equations a bit. Let rb be the growth rate of money in your bank for one period. By \"\"growth rate\"\" I mean the amount you will have after one period. So if the interest rate is 3% per year paid monthly, then the interest for one month is 3/12 of 1% = .25%, so after one month you have 1.0025 times as much money as you started with. Similarly, let si be the growth rate of the investment. Then after you make a deposit the amount you have in the bank is pb = s. After another deposit you've collected interest on the first, so you have pb = s * rb + s. That is, the first deposit with one period's growth plus the second deposit. One more deposit and you have pb = ((s * rb) + s) * rb + s = s + s * rb + s * rb^2. Etc. So after n deposits you have pb = s + s * rb + s * rb^2 + s * rb^3 + ... + s * rb^(n-1). This simplifies to pb = s * (rb^n - 1)/(rb - 1). Similarly for the amount you would get by depositing to the investment, let's call that pi, except you must also subtract the amount of the broker fee, b. So you want to make deposits when pb>pi, or s*(ri^n-1)/(ri-1) - b > s*(rb^n-1)/(rb-1) Then just solve for n and you're done! Except ... maybe someone who's better at algebra than me could solve that for n, but I don't see how to do it. Further complicating this is that banks normally pay interest monthly, while stocks go up or down every day. If a calculation said to withdraw after 3.9 months, it might really be better to wait for 4.0 months to collect one additional month's interest. But let's see if we can approximate. If the growth rates and the number of periods are relatively small, the compounding of growth should also be relatively small. So an approximate solution would be when the difference between the interest rates, times the amount of each deposit, summed over the number of deposits, is greater than the fee. That is, say the investment pays 10% per month more than your bank account (wildly optimistic but just for example), the broker fee is $10, and the amount of each deposit is $200. Then if you delay making the investment by one month you're losing 10% of $200 = $20. This is more than the broker fee, so you should invest immediately. Okay, suppose more realistically that the investment pays 1% more per month than the bank account. Then the first month you're losing 1% of $200 = $2. The second month you have $400 in the bank, so you're losing $4, total loss for two months = $6. The third month you have $600 in the bank so you lose an additional $6, total loss = $12. Etc. So you should transfer the money to the investment about the third month. Compounding would mean that losses on transferring to the investment are a little higher than this, so you'd want to bias to transferring a little earlier. Or, you could set up a spreadsheet to do the compounding calculations month by month, and then just look down the column for when the investment total minus the bank total is greater than the broker fee. Sorry I'm not giving you a definitive answer, but maybe this helps.\"",
"title": ""
},
{
"docid": "abe202e328349c719107ab04bcc0000a",
"text": "\"Using the following equations from the book a stab at the correlation can be made. Calculating the residual volatilities from equation 2.4 The correlation of stock A with stock B is 0.378 and stock B has the higher residual volatility. However, the correlation is given as a \"\"simple model\"\", which may suggest that it is an approximation. If I have applied it correctly, some testing shows that it is only approximate. Also of interest\"",
"title": ""
},
{
"docid": "149c4682dfbc9647724e92e4509ee2da",
"text": "Think of it this way: C + (-P) = forward contract. Work it out from there. Anyways, this stack is meant for professionals, not students, I think.",
"title": ""
},
{
"docid": "f04fb092a2a8b06046799dcc5521819c",
"text": "\"Both models understand that the value of a company is the sum total of all cashflows in the future, discounted back to the present. They vary in their definition of \"\"cash\"\". The Gordon Growth model uses dividends as a proxy for cashflow, under the assumption that this is the only true cash received by shareholders. (In theory, counting cash is meaningless if there's no eventual end-game where the accumulated cash is divvied up amongst the owners.) The Gordon model is best used to value companies that have an established, reliable dividend. The company should be stable, and the payout ratio high. GG will underestimate the value of firms that consistently maintain a low payout ratio, and instead accumulate cash. There are multiple DCF models. A firm valuation measures all cash available to both equity and debt holders. A traditional equity valuation measures all cash that can be claimed by shareholders. While the latter seems most intuitive and pertinent to a shareholder, the former is very good at showing what a company can do regardless of their choice of capital structure. A small add-on to a firm valuation is the concept of EVA, or economic value add, where the return on capital (all capital -- both debt and equity) is compared to the blended cost of capital. The DCF model is more flexible (optimistic?) than the Gordon in its approach to cash. The approach can be applied to many types of companies, at every stage in their maturity, even if they don't pay a dividend. A simplistic, or single-stage DCF is similar to the Gordon. The assumption is that the company is fully mature, growing at a rate perhaps just slightly above inflation, forever. For younger companies a multi-stage DCF can be employed, where you forecast fairly confident numbers for the next 3-5 years, then 3-5 years beyond that the forecast is less certain, but assumed to be slowing growth, and a generally maturing, stabilizing company. And then the steady-state stage is tacked on to the end. You'll want to check out Professor Aswath Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . He addresses all this and so much more, and has a big pile of spreadsheets freely downloadable to get you started. I also highly recommend his book \"\"Investment Valuation\"\". It's the bible on the topic.\"",
"title": ""
},
{
"docid": "5070df72e782e7506f474de8de546a33",
"text": "This is a useful metric in that it gives you a trust factor on how reliable the beta is for future expectations It is akin to velocity and acceleration First and second order derivatives of distance / time. Erratic acceleration implies the velocity is less trustworthy Same idea for beta",
"title": ""
},
{
"docid": "3bfae4ee3ce21e5318f8c77e2a1927e1",
"text": "I would use neither method. Taking a short example first, with just three compounding periods, with interest rate 10%. The start value y0 is 1. So after three years the value is 1.331, the same as y0 (1 + 0.1)^3. Depreciating (like inflation) by 10% (to demonstrate) gets us back to y0 = 1 Appreciating and depreciating by 10% cancels out: Appreciating by 10% interest and depreciating by 3% inflation: This is the same as y0 (1 + 0.1)^3 (1 + 0.03)^-3 = 1.21805 So for 50 years the result is y0 (1 + 0.1)^50 (1 + 0.03)^-50 = 26.7777 Note You can of course use subtraction but the not using the inflation figure directly. E.g. (edit: This appears to be the Fisher equation.) 2nd Note Further to comments, here is a chart to illustrate how much the relative performance improves when inflation is accounted for. The first fund's return is 6% and the second fund's return varies from 3% to 6%. Inflation is 3%.",
"title": ""
},
{
"docid": "e486927a79afd6d5ac23b8d65901d117",
"text": "The details of the DJIA methodology is outlined in the official methodology document on their website. In addition, you will need their index mathematics document, which gives the nitty-gritty details of any type of adjustments that must be made. Between the two you should have the complete picture in as fine a detail as you want, including exactly what is done in response to various corporate actions like splits and structural changes.",
"title": ""
},
{
"docid": "994e6b8db9d29bee15c4ac75aa0e3452",
"text": "\"What are you trying to do Exactly? What is a covariance \"\"profile\"\"? (Cov Matrix)? Also lose the jargon. From my understanding you want the same covariance in the portfolio, however it doesn't work like that as covariance is an observed matrix. It's hard enough to target variance in a portfolio (see GMV) and to target covariance would be even more difficult. You can attempt to use the weights you have right now in terms of exposures, but LEAPS may give you unwanted theta. Are you long short or long only? if you're long only the interplay between the positions is rather irrelevent, as right now all that matters are the weights.\"",
"title": ""
},
{
"docid": "a5cb9d360bc48e77121b81a76aab2c86",
"text": "There are entire 5-person teams dedicated to forecasting *individual products* at major companies that roll up to product class teams, which then roll up to balance sheet forecasting. Since all of those companies have major capital markets operations, these things get huge. The real forecasters are spending 10-14 hours a day, year-round using massive models to come up with competent forecasts. I did this for a few years, it's leaps and bounds more than applying multiples. I hope you get a lot of participation, but you have to see the flaw in this dataset. I think this would be better done by honing your focus in on what forecasting you're talking about. It's a very, very broad field.",
"title": ""
},
{
"docid": "8d7a645445e4dd9f686ffb012d9da31f",
"text": "I just used the formula in below link and did some math. I have that book too but haven't looked at it yet really. Lots of maths to have fun with. Let me know if this is correct or needs fixing. Source: http://wiki.fool.com/How_to_Calculate_Beta_From_Volatility_%26_Correlation",
"title": ""
},
{
"docid": "b864d4d85ad3aab45056ecc7fe48123e",
"text": "\"I'm reasonably familiar with the field for a non-specialist, certainly with the 14 qubit example and the D-Wave stuff. I've experimented with quantum lambda calculi, which relate to my own interests. But an article much like this could have been written back in the mid-90s. The fact is we don't know yet what limitations, hard or soft (e.g. economic), will be encountered. Although the article admitted that, it just felt too hyped to me overall. To be fair to the author, it's not just him: e.g. he quotes Seth Lloyd saying that quantum computing \"\"allow us to understand the universe in its own language\"\". Which, btw, is nonsense when you consider that imposing qubits on some underlying substrate is actually just encoding a specific approach to computation, and has nothing to do with the universe's \"\"own language\"\", whatever that means.\"",
"title": ""
}
] |
fiqa
|
72bea4c9d1339ff62d8b35afd695a687
|
How does a CFD work behind the scenes?
|
[
{
"docid": "8e59a5631dd56e3ef6ee6e5ed64fb044",
"text": "There are several ways that the issuers profit from CFDs. If the broker has trades on both sides (buy and sell) they can net the volumes off against each other and profit off the spread whilst using the posted margins to cover p&l from both sides. Because settlement for most securities is not on the same day that the order is placed they can also buy the security with no intention of taking delivery and simply sell it off at the end of day to pass delivery on to someone else. Here again they profit from the spread and that their volumes give them really low commissions so their costs are much lower than the value of the spread. If they have to do this rather than netting the position out the spreads will be wider. Sometimes that may be forced to buy the security outright but that is rare and the spreads will be even wider so that they can make a decent profit.",
"title": ""
}
] |
[
{
"docid": "7e752ab7ea0f45f9753fb227fc7c0d11",
"text": "We aren't faking it. IT is an extremely complex job so we often have to learn or relearn a technology at the whim of some bean counter because they want to save a few bucks or a junior executive because they attended a seminar and want to try that cool new thing they heard about (cough, DevOps, cough...)",
"title": ""
},
{
"docid": "6c228b923306614c984e13541acecbf3",
"text": "My company has a dashboard that basically does this. We select industries / companies we want to be notified of and we get an email in outlook when a new analyst note, research report, or SEC filing is posted on that industry or company.",
"title": ""
},
{
"docid": "c9caccb962d6f961a4e0a4490e6e7096",
"text": "IB's overnight financing cost for US CFDs below $100,000 is the Benchmark Rate + 1.5% for long positions and the Benchmark Rate -1.5% for short positions. You can check the IB CFD Contract Interest for their full list of financing costs for share CFDs. IB's commissions for an executed trade (where your monthly volume is below $300,000) is $0.005 per share with a minimum per order of $1.00. Commissions and overnight financing are 2 different fees, the overnight financing is charged because CFDs are leveraged. An order is just that, it is not a trade. It means your order has not been executed yet and is still an active order which you have not paid any commissions for yet. Regarding the orders that persist overnight, an example might be, you place an order to buy to open 200 CFDs. If only 100 CFDs are traded on that day, and the remaining 100 CFDs of your order remains active overnight, it will be considered a new order for the purposes of determining commission minimums.",
"title": ""
},
{
"docid": "affca50008f37c4c32001f49b5da4822",
"text": "I'm not that familiar with them, but as I understand it Eladian is mostly run by Automated Trading Desk guys. (Don't get me wrong ADT was definitely a strong firm at its prime, but I think Citi really gutted it). I'm sure they have some ex-Citadel people there, but I'm not sure how important they were (I could be wrong, like I said I don't know who's at Eladian). Without dropping names, Headwinds snagged the researcher who pretty much wrote all of Citadel's core HFT algorithms.",
"title": ""
},
{
"docid": "7e508e58a6af2695c9b32f3f8514b04b",
"text": "1) Yes, there are. Advances in materials or aerodynamics reduce fuel consumption thereby reducing carbon emissions. 2) There is plenty of evidence that businesses act to reduce costs. Any important question is how they measure carbon emissions. Are the emissions charges reduced with more efficient aircraft? Airlines may find ways to reduce the charges in ways that don't necessarily help the environment.",
"title": ""
},
{
"docid": "505c9939253e1a67b2af05457365a6bb",
"text": "As many people here have pointed out, a CFD is a contract for difference. When you invest in stock at eToro, you buy a CFD reflecting a bid on the price movement of the underlying stock, however, you do not actually own the stock or hold any rights shareholders have. The counterparty to the CFD is eToro. When you close your position, eToro shall pay you the amount representing the difference between your buy and sell price for each stock. I suggest you read the following article about CFDs, it explains everything clearly and thoroughly: http://www.investopedia.com/articles/stocks/09/trade-a-cfd.asp#axzz2G9ZsmX3A As some of the responders have pointed out, and as is mentioned in the article, a broker can potentially misquote the prices of underlying assets in order to manipulate CFDs to their advantage. However, eToro is a highly reputable broker, with over 2 million active accounts, and we guarantee accurate stock quotes. Furthermore, eToro is regulated in Europe (Germany, UK, France, etc.) by institutions that exact strict regulations on the CFD trading sector, and we are obligated to comply with these regulations, which include accurate price quoting. And of course, CFD trading at eToro has tremendous benefits. Unlike a direct stock investment, eToro allows you to invest as much or as little as you like in your favorite stocks, even if the amount is less than the relevant stock price (i.e. fraction stocks). For example: if you invest $10 in Microsoft, and on the day of execution eToro’s average aggregated price was $30 after a spread of 0.1%, you will then have a CFD representing 0.33 stocks of Microsoft in your eToro account. In addition, with eToro you can invest in stock in the context of a social trading network, meaning that you can utilize the stock trading expertise of other trader to your advantage by following them, learning their strategies, and even copying their stock investments automatically. To put it briefly, you won’t be facing the stock market alone! Before you make a decision, I suggest that you try stock trading with an eToro demo account. A free demo account grants you access to all our instruments at real market rates, as well as access to our social network where you can view and participate in trader discussions about trading stocks with eToro, all without risking your hard earned money. Bottom line – it’s free, there are no strings attached, and you can get a much firmer idea of what trading stocks with eToro is like. If you have any further questions, please don’t hesitate to contact us through our site: www.etoro.com.",
"title": ""
},
{
"docid": "e6c0022c9123f09d4d1f69dcf4beedd4",
"text": "\"In May 2011, a report to the board by Promontory Financial Group, a Washington consultant hired as part of the CFTC Dooley settlement, concluded that the firm had vastly improved\"\" its systems and risk controls, and praised management for setting \"\"a tone at the top\"\" supporting \"\"best practices.\"\" I actually did some technology work for Promontory Financial Group for a short period. What a bunch of tools. They had a nice office in a newer office building in the business district of Washington DC, not far from the Treasury. Their \"\"server room\"\" was actually a closet. The number of servers they had produced a lot of heat. It had minimal ventiliation. Their solution? Bring in a portable A/C unit. Great, but due to the humidity and the amount of heat/energy transfer, it produced a lot of condensation runoff. There was no drain. The solution? Think of the largest Rubbermaid outdoor garbage can that you can buy, and put it under the unit to collect the condensation output. It was probably 50 gallons. It filled up in about three or four days, an indication of the output. Part of the nightly cleaning crew's responsibility was to bail (literally) the water out of the can, and put it in a mop bucket, and wheel it down to the cleaning closet that did have a sink and empty it. The can had wheels, but who would want to risk rolling 400 pounds of water on tinkery casters down a lavish passageway? Problem? On long weekends/holidays, there was no cleaning crew. So they purchased a \"\"Mister Sensaphone\"\" (yes there really was such a device), so that when the can started to overflow, the moisture detector would trigger, it would page the system administrator, and they would drive into the office and bail it out. All of that because they did not want to pay $30,000 to install additional ac capacity on the roof and ventilate their server room. I think they were actually proud of this setup, like it was a demonstration of some \"\"out of the box\"\" creativity.\"",
"title": ""
},
{
"docid": "6aa511a77fafafded13c778a2239ddd6",
"text": "\"There is no secret sauce. Leadership and good decision making is an organic process. Sometimes, the Sr. VP is going to say, \"\"This quarter, it was more important to expand X through hiring than it was to upgrade Y infrastructure. Next quarter, we'll do Y. I know it sucks to have your project delayed, because you've worked very hard on it, but that's the decision we've made.\"\" The difficulty is when corporations get to the point where everyone is running around CYA, instead of admitting that real business constraints can mean that the best-laid plans have to be scrapped or delayed.\"",
"title": ""
},
{
"docid": "4571314d35b39aaa79c3fad8a33a7265",
"text": "Yes, just set aside the amount of money. If you buy a cfd long in a stock for a 1000$, set aside 1000$. If you buy a cfd short, set aside the same amount and include a stoploss at the value at which the money is depleted. In this case however, you can stil lose more, because of opening gaps. By doing this, you replicate the stock return, apart from the charged interest rate.",
"title": ""
},
{
"docid": "0964d9db32ade538d1fd0fdb8d764ecf",
"text": "Something really does seem seedy that if I invest $2500, that I'll make above 50k if the stock doubles. Is it really that easy? You only buy or sell on margin. Think of when the stock moves in the opposite direction. You will loose 50k. You probably didn't look into that. Investment will vanish and then you will have debt to repay. Holding for long term in CFD accounts are charged per day. Charges depends on different service providers. CFD isn't and should not be used for long term. It is primarily for trading in the short term, maybe a week at the maximum. Have a look at the wikipedia entry and educate yourself.",
"title": ""
},
{
"docid": "d0d32795fb708850657d5f006b8a351b",
"text": "\"We used an internal billing system where we have Project numbers, overheads, and proposal numbers. Projects may or may not have a client backing them, Overheads are strictly that, overhead costs. In the chargeback system we utilize (written by yours truly) we devised an SLO (Service Level Offering) which is the default, PC and Default software such as Office, Adobe Reader, Windows etc... and the hardware itself plus depreciation. This, when analyzed with total Business Unit working manhours, can devise an hourly rate that we apply to all Projects/Overheads/Proposals through time booked to these account through the Timecard system. A rate of 3.00 per manhour worked is applied accross the business Unit. Additional costs are divied by percentage based on Timecards. If Employee A charges 50% time to Project 1, 40% to Project 2 and 10% to project C, then those percentages will be applied to divy out the additional IT costs to the various projects, and thus making these items billable back to the client. This lowers our Overhead costs, transfers cost from Cost Centre to Profit Centre and lowers our GMAF. As for external to IT, it often prevents shit from getting done. \"\"Hey man, can you help me for a second?\"\" \"\"RAAAAAAWWW GIMME CHARGE NUMBER!!!!!!!!\"\" and creates internal animosity between project managers.\"",
"title": ""
},
{
"docid": "58e29c34fcc3a95022ae5988ef5a8eb5",
"text": "Every job that I've had, I have automated myself out of. I'm an engineer and have always designed the tools to create the final product rather than the final product itself. It's mostly an easy task and getting much easier. Ever since college when I was interning, I've questioned the implications of this and don't have any answers. In many ways things simultaneously take longer and shorter to come to pass.",
"title": ""
},
{
"docid": "2b91ea9ba00641d019c71d2986da2f19",
"text": "the financial information is generally filed via SEDAR (Canada) or SEC (US) before the conference call with the investment community. This can take before either before the market opens or after the market closes. The information is generally distribute to the various newswire service and company website at the same time the filing is made with SEDAR/SEC.",
"title": ""
},
{
"docid": "41edaece3a849c76e79e57d348b0c2b5",
"text": "No, CFD is not viable as a long term trading strategy. You have a minimum margin to maintain, and you are given X days to top up your margin should you not meet the margin requirements. Failure to meet margin requirements will result in a forced sell where you are no longer able to hold onto the stock. A long term trading strategy is where you hold onto the stock through the bad times of the company and keep it long enough to see the good times. However, with CFD, you may be forced to sell before you see the good times. In addition, you incur additional lending charges (e.g. 4%-6%) for the ability to leverage.",
"title": ""
},
{
"docid": "78cfcd228c6b57a256ce9a8742a60081",
"text": "I'm no pro with how all this stuff works, but you can make a company look more profitable. FedEx structure is pretty complex and I'm no MBA/Accountant. They have like 7 companies under the FedEx Corporation shell company and 100's of accountant and lawyers. I'm sure this is true of many fortune 500 companies.",
"title": ""
}
] |
fiqa
|
3d4eda8fedcb3f2dcf1992f863944c56
|
What does “issued XXX and YYY shares” mean?
|
[
{
"docid": "8912f02ac787a6e6f08a83f0916b5ded",
"text": "authorized 100,000,000 shares They cannot issue shares more than that so 102M isn't possible. Common stock - $.01 par value, authorized 100,000,000 shares, issued 51,970,721 and 51,575,743 shares If you look at the right 2 columns it become clear what it means. You missed the $ symbol and on the top (In thousands, except share amounts) ouststanding share 51,970,721 -> 520 On Sept 30, 2014 outstanding shares * 0.01 and rounded off to arrive at 520. ouststanding share 51,575,743 -> 516 On June 30, 2014 outstanding shares * 0.01 and rounded off to arrive at 516.",
"title": ""
}
] |
[
{
"docid": "9f94ab28cf420d279e87cabb6029f65c",
"text": "In simplest terms, when a company creates new shares and sells them, it's true that existing shareholders now own a smaller percentage of the company. However, as the company is now more valuable (since it made money by selling the new shares), the real dollar value of the previous shares is unchanged. That said, the decision to issue new shares can be interpreted by investors as a signal of the company's strategy and thereby alter the market price; this may well affect the real dollar value of the previous shares. But the simple act of creating new shares does not alter the value in and of itself.",
"title": ""
},
{
"docid": "f1356e9e5e523c2d79e5036f86cc129c",
"text": "During a stock split the only thing that changes is the number of shares outstanding. Typically a stock splits to lower its price per share. Sometimes if a company's value is falling it will do a reverse split where X shares will be exchanged for Y shares. This is typically done to avoid being de-listed from an exchange if the price per share falls below a certain threshold, usually $1. Again the only thing changing is the number of shares outstanding. A 20 for 1 reverse split means for every 20 shares outstanding the shareholder will be granted one new share. Example X Co. has 1,000,000 shares outstanding for a price of $100 per share. It does a 1 for 10 split. Now there are 10,000,000 shares outstanding for a price of $10 per share. Example Y Co has 1,000,000 shares outstanding for a price of $1 per share. It does a 10 for 1 reverse split. Now there are 100,000 shares outstanding for a price of $10. Quickly looking at the news for ASTI it looks like it underwent a 20 for 1 reverse split. You should probably look at your statements and ask your broker how the arithmetic worked in your case. Investopedia links for Reverse Stock Split and Stock Split",
"title": ""
},
{
"docid": "36a14f2330785694a4d87d0fcc7a6ecc",
"text": "\"The language in the starbucks accounts is highly ambiguous. But Starbucks has no treasury shares which helps work out what is going on. Where it says \"\"respectively\"\" it is referring to the years 2014 and 2013 rather than \"\"issued and outstanding\"\"...even though it doesn't read that way. Not easy to work out. The figures are: Authorised 1200 2014 Issued 749.5 2014 Outstanding 749.5 2013 Issued 753.2 2013 Outstanding 753.2\"",
"title": ""
},
{
"docid": "29fe0c7d6df327399b6bcc2d68f757c9",
"text": "If you own the stock today, it doesn't matter what it traded for yesterday. If XYZ is trading for $40 and you own it, ask yourself if it's worth buying today for $40. If it isn't, you may want to consider selling it and buying something that is worth $40.",
"title": ""
},
{
"docid": "24457d4ce386548e8e53051b0455ad59",
"text": "They are 2 different class of shares belonging to the same company. Class A shares [par value of 0.01] have 100 voting rights per share. Class B shares [par value of 0.0002] have one voting rights. Both are listed separately with different ISN and trade at slightly different values. The Class A at higher value than Class B which looks right as it has more voting power.",
"title": ""
},
{
"docid": "071a7b62c6852acd9eb2928fe9bf16ca",
"text": "\"listed simultaneously in New York, London, and maybe even some Asian markets - is this correct? If the exchanges are not connected, then in primary market the shares are listed. On other exchanges, the \"\"Depository Receipts\"\" are listed. i.e. the Company will keep say 100,000 shares with the primary stock exchange / depository. Based on this it would create new instruments \"\"Depository Receipts\"\". They can be 1:1 or whatever ratio. hypothetically, if I want to buy all of the company's stock Even if it is on one exchange, buying all stocks would trigger various regulatory aspects of Companies Act, or Stock Exchange rules. This is not simple or easy like clicking some buttons and buying everything. That is, let's say that in New York the company has listed 1000 shares, and in London only 10 shares, each worth 10 USD Market capitalization is sum of all outstanding shares into value.\"",
"title": ""
},
{
"docid": "187f3a5c7edd8b2f15765e8c96cb1b6e",
"text": "I do not fully understand the transactions involved, but it appears that there was a reverse stock split (20:1) and some legal status change as well on June 29th. This seems to be the cause for the change in valuation of the stock as the dates match the drop. https://www.otcmarkets.com/stock/RMSLD/filings",
"title": ""
},
{
"docid": "284c486ca2a8ccd6a4b1fab62921e22f",
"text": "Options or Shares vest by date they are granted. It would strike me as odd for anyone to say their shares were given with 4 year vesting, but the clock was pre-started years prior. In my opinion, you have nothing to complain about.",
"title": ""
},
{
"docid": "56596fac5107f6f0af730a04194202f2",
"text": "\"A little terminology: Grant: you get a \"\"gift\"\" with strings attached. \"\"Grant\"\" refers to the plan (legal contract) under which you get the stock options. Vesting: these are the strings attached to the grant. As long as you're employed by the company, your options will vest every quarter, proportionally. You'll become an owner of 4687 or 4688 options every quarter. Each such vest event means you'd be getting an opportunity to buy the corresponding amount of stocks at the strike price (and not the current market price which may be higher). Buying is called exercising. Exercising a nonqualified option is a taxable event, and you'll be taxed on the value of the \"\"gift\"\" you got. The value is determined by the difference between the strike price (the price at which you have the option to buy the stock) and the actual fair market value of the stock at the time of vest (based on valuations). Options that are vested are yours (depending on the grant contract, read it carefully, leaving the company may lead to forfeiture). Options that are not vested will disappear once you leave the company. Exercised options become stocks, and are yours. Qualified vs Nonqualifed - refers to the tax treatment. Nonqualified options don't have any special treatment, qualified do. 3.02M stocks issued refers to the value of the options. Consider the total valuation of the company being $302M. With $302M value and 3.02M stocks issued, each stock is worth ~$100. Now, in a year, a new investor comes in, and another 3.02M stocks are issued (if, for example, the new investor wants a 50% stake). In this case, there will be 6.04M stocks issued, for 302M value - each stock is worth $50 now. That is called dilution. Your grant is in nominal options, so in case of dilution, the value of your options will go down. Additional points: If the company is not yet public, selling the stocks may be difficult, and you may own pieces of paper that no-one else wants to buy. You will still pay taxes based on the valuations and you may end up paying for these pieces of paper out of your own pocket. In California, it is illegal to not pay salary to regular employees. Unless you're a senior executive of the company (which I doubt), you should be paid at least $9/hour per the CA minimum wages law.\"",
"title": ""
},
{
"docid": "86eecbaba47bd89a6c87a43197a402b9",
"text": "Ex-Date is a function of the exchange, as well as the dividend. Consider Deutsche Bank AG, DB on the NYSE, DKR on Xetra. For a given dividend, each exchange sets the ex-date for trades on that exchange. (See http://www.sec.gov/answers/dividen.htm for a description of how it works in the US; other exchanges/countries are similar.) This ex-date is normally based on the dividends record date, which is when you must be on the company's books as a shareholder to receive the dividend, and based on when trades for an exchange are settled. The ex-date is the first date for which trades on that date will not settle until after the record date. This means that the ex-date can be different for different exchanges. If you sell your shares on an exchange before the ex-date for that exchange, you will not get the dividend. If you sell your shares on or after the ex-date for the exchange, you do not get the dividend. So it depends on the time zone of the exchange. Most stock exchanges trade T+3, but this can still come into play if there are bank holidays in different countries at different times.",
"title": ""
},
{
"docid": "45647bd5c16b69730e046f75a6a74533",
"text": "Link only answers aren't good, but the list is pretty long. It's a moving target, the requirement change based on a number of criteria. It usually jumps to force you to sell when you hold a losing position, or when your commodity is about to skyrocket.",
"title": ""
},
{
"docid": "9fdf28910c6c087886ca35c2b395f9f7",
"text": "The dividend is what represents your ownership in the CU. The APY is a calculated figure that will help you compare apples to apples the return of the investment from many vendors and many types. (I think you CU might have had two different people writing that portion of the website, because the comparisons pages don't make that clear, and the pages don't layout the same way.)",
"title": ""
},
{
"docid": "f4644d808e6ad59b2b32bb273f916605",
"text": "Just adding on a touch, when market participants refer to swaps they are talking about the fixed leg. So for example, if I said a 5y Receiver, it means I am receiving fixed, paying floating. Ie I want yields to fall. Opposite for a Payer. Swaption is just an option on these swaps, so basic swaptions: Long Payer Short Payer Long Receiver Short Receiver",
"title": ""
},
{
"docid": "ecb156f821da90cf6b20e5f77a89ecea",
"text": "Let's work from the inside out. Options are not stock. Options are a contract that give you the right to own the stock. For options to have value they have to be exercised. Straight line means that each quarter 1/16th of the option grant becomes yours and the company cannot take it away. Four quarters in a year times four years is 16 quarters. 'Grant' means they are giving you the options at no cost to you. 'Nonqualified' means that there is nothing you have to do, or be, in order to get the options. (Some options are only for management.)",
"title": ""
},
{
"docid": "686c79bee148b44dfd8d5893636b200c",
"text": "Does this make sense? I'm concerned that by buying shares with post tax income, I'll have ended up being taxed twice or have increased my taxable income. ... The company will then re-reimburse me for the difference in stock price between the vesting and the purchase share price. Sure. Assuming you received a 100-share RSU for shares worth $10, and your marginal tax rate is 30% (all made up numbers), either: or So you're in the same spot either way. You paid $300 to get $1,000 worth of stock. Taxes are the same as well. The full value of the RSU will count as income either way, and you'll either pay tax on the gains of the 100 shares in your RSU our you'll pay tax on gains on the 70 shares in your RSU and the 30 shares you bought. Since they're reimbursing you for any difference the cost basis will be the same (although you might get taxed on the reimbursement, but that should be a relatively small amount). This first year I wanted to keep all of the shares, due to tax reasons and because believe the share price will go up. I don't see how this would make a difference from a tax standpoint. You're going to pay tax on the RSU either way - either in shares or in cash. how does the value of the shares going up make a difference in tax? Additionally I'm concerned that by doing this I'm going to be hit by my bank for GBP->USD exchange fees, foreign money transfer charges, broker purchase fees etc. That might be true - if that's the case then you need to decide whether to keep fighting or decide if it's worth the transaction costs.",
"title": ""
}
] |
fiqa
|
20e3e2e07517c31c3db202d71cd160ab
|
Hdgs to be removed from the S&P/ASX Indices
|
[
{
"docid": "dfd51b3ed342ca374cd054ca6b806335",
"text": "As I said in the comments, from the SMH article, you will get $3.30 per share you hold in Wotif. The bit about Wotif veing replaced in the S&P ASX200 index by another company has no impact on your shares in Wotif. It just means that the index (the amalgamation of 200 companies) will have one drop out (Wotif) and another replace it (Healthscope).",
"title": ""
}
] |
[
{
"docid": "c287e5af3ece0bb6ceabfbf809e21f8e",
"text": "There are a number of ways this can result. In a broad ETF, such as SPY, the S&P 500 spider, the S&P index will have 500 stocks no matter what, so a buyout would simply result in a re-shuffling of the index makeup. No buyout will happen so quickly that there's no time to choose the next stock to join the index. In your case, if the fund manager (per the terms of the prospectus) wishes to simply reallocate the index to remove the taken-over stock that's probably how he handle it. Unless of course, the prospectus dictates otherwise. In which case, a cash dividend is a possible alternative.",
"title": ""
},
{
"docid": "2a9ccb93058b7630955699cdcd88ddbd",
"text": "This may make Australian exports cheaper, which can be a good thing. However it is at the expense of making imports more expensive. Look to Japan, which is devaluing their currency, and is a large importer of energy: I wont say its bad or unnecessary to hold money in other currencies. However, keep in mind that all AUD-denominated assets will, or at least should, rise as the currency falls. If just AUD/USD falls this may not apply, but if AUD is weakened all around it should hold true. Again, look to Japan, where the Nikkei is closely correlated with the strength of the yen: Another possibility is to buy gold which should rise in AUD terms but other forces are at work with gold price so some would not agree with this.",
"title": ""
},
{
"docid": "f4303dc4fdce909f8af8b9e3d983cc1f",
"text": "Because the distribution date was APR 21, 2011, THAT should be the correct date for ascertainng the stock prices of the GM stock and warrants. The subsequent distributions after April should also be allocated in accordance with their distribution dates, with tax basis being reduced from the original APR 21st date's allocations, and reallocated to those subsequent distributions, taking into account any interim sales you might have made.",
"title": ""
},
{
"docid": "43ebac4a47c1dd39672ccb1576d136ca",
"text": "I'd call it pretty worrisome. HOOB is trading over the counter, in fact, on the pink sheets, so it has been delisted from the major exchanges. It appears that it lacks recent financial disclosures. You'll have to investigate to see if you think it's worth keeping, but trading is thin.",
"title": ""
},
{
"docid": "9d9cfa352ce07f9aa89d06d2a710373e",
"text": "I don't see it in any of the exchange feeds I've gone through, including the SIPs. Not sure if there's something wrong with Nasdaq Last Sale (I don't have that feed) but it should be putting out the exact same data as ITCH.",
"title": ""
},
{
"docid": "62fce22d874701280896565f7ce28c74",
"text": "\"Pension- and many \"\"low-risk\"\" investment funds may only invest in AAA-rated stocks and bonds. While the S&P rating alone doesn't imply that such funds must immediately disinvest in US bonds (Fitch and Moody's are holding), it does create the risk that the other rating agencies will follow suite and also lower the US rating. As the largest issuer of bonds, controller of the world's reserve currency, and with many emerging markets placing almost all their current account surpluses in US bonds, this risk change has implications everywhere. Some companies will already start disinvestment while some investors will start demanding higher interest returns in order to buy US bonds. It isn't yet a stampede, but the gates are now open. That said, S&P is simply reflecting the opinions of bond traders. Markets were already unstable long before the downrating. However, from the US perspective, it is a timely reminder to politicians that the global balance is shifting and that the US cannot count on incumbency to protect it from the disapproval of financial analysts.\"",
"title": ""
},
{
"docid": "11039963d89778913a087c6edd322ab5",
"text": "\"This is the best tl;dr I could make, [original](http://www.afr.com/business/banking-and-finance/financial-services/maurice-blackburn-weighs-cba-class-action-20170823-gy235k) reduced by 84%. (I'm a bot) ***** > Law firm Maurice Blackburn and ASX-listed litigation funder IMF Bentham are preparing to launch a class action against Commonwealth Bank of Australia alleging failures to disclose to the stockmarket AUSTRAC&#039;s investigation of its anti money laundering shortcomings. > Disclosure should have been as early as August 17, 2015, the class action will argue - the date CBA released its annual report and a retail booklet for a $5 billion rights issue. > CBA has around 800,000 retail shareholders but under class action law, only those who purchased shares and held some of them during the period of alleged non-disclosure will be able to participate in the action. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6vikty/maurice_blackburn_weighs_cba_class_action/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~196808 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **CBA**^#1 **action**^#2 **class**^#3 **AUSTRAC**^#4 **case**^#5\"",
"title": ""
},
{
"docid": "545e9e42cce983a37760a9ff4bb41ede",
"text": "I tried direct indexing the S&P500 myself and it was a lot of work. Lots of buys and sells to rebalance, tons of time in spreadsheets running calculations/monitoring etc, dealing with stocks being added or removed from the index, adding money (inflows). Etc. All of the work is the main reason I stopped. I came to realize the 0.05% I pay Vanguard is a great deal.",
"title": ""
},
{
"docid": "def648b0f1e2398f7fe7edaa820838d7",
"text": "I would not sell unless the stock is starting to fall in price. If you are a long term investor you can review the weekly chart on a weekly basis to determine if the stock is still up-trending. Regarding HD below is a weekly chart for the last 4 years: Basically if the price is making Higher Highs (HH) and Higher Lows (HL) it is up-trending. If it starts to make Lower Lows (LL) followed by Lower Highs (LH) then the uptrend is over and the stock could be entering a downtrend. With HD, the price has been up-trending but seems to now be hitting some headwinds. It has been making some HHs followed by some HLs throughout the last 2 years. It did make a LL in late August 2015 but then recovered nicely to make a new HH, so the uptrend was not broken. In early November 2016 it made another LL but this time it seems to be followed by a LH in mid-December 2016. This could be clear evidence that the uptrend may be ending. The final confirmation would be if the price drops below the early November low of $119.20 (the orange line). If price drops below this price it would be confirmation that the uptrend is over and this should be the point at which you should sell your HD shares. You could place an automatic stop loss order just below $119.20 so that you don't even need to monitor the stock frequently. Another indication that the uptrend may be in trouble is the divergence between the HHs of the price and the peaks of a momentum indicator (in this case the MACD). The two sloping red lines show that the price made HHs in April and August 2016 whilst the momentum indicator made LHs at these peaks in the price. As the lines are sloping in different directions it is demonstrating negative divergence, which means that the momentum of the uptrend is slowing down and can act as an early warning system to be more cautious in the near future. So the question you could be asking is when is a good time to sell out of HD (or at least some of your HD to rebalance)? Why sell something that is still increasing in price? Only sell if you can determine that the price will not be increasing anymore in the near to medium term.",
"title": ""
},
{
"docid": "57fb897c059fe117bf76781c5306adb8",
"text": "\"Thanks for the response. I am using WRDS database and we are currently filtering through various variables like operating income, free cash flow etc. Main issue right now is that the database seems to only go up to 2015...is there a similar database that has 2016 info? filtering out the \"\"recent equity issuance or M&A activity exceeding 10% of total assets\"\" is another story, namely, how can I identify M&A activity? I suppose we can filter it with algorithm stating if company's equity suddenly jumps 10% or more, it get's flagged\"",
"title": ""
},
{
"docid": "2d542d9c12741601382214e526bfc569",
"text": "One more effect that's not yet been mentioned is that companies based in Australia and listed on the Australian Securities Exchange, but which do most of their business overseas, will increase their earnings in AU$, since most of what they earn will be in foreign currencies. So their shares are likely to appreciate (in AU$).",
"title": ""
},
{
"docid": "b7bbbba72cb8dc5b8dcf6cba5fd65700",
"text": "The S&P 500 is a market index. The P/E data you're finding for the S&P 500 is data based on the constituent list of that market index and isn't necessarily the P/E ratio of a given fund, even one that aims to track the performance of the S&P 500. I'm sure similar metrics exist for other market indexes, but unless Vanguard is publishing it's specific holdings in it's target date funds there's no market index to look at.",
"title": ""
},
{
"docid": "813858cf2f0c16b3f5c4ca408f424b67",
"text": "Like in the US, more flexibility is extended to hidden orders. Australia has taken an aggressive approach to hidden orders in the direction of lower ticks. Aussies have a rich financial that evolved differently than the Dutch custom more familiarly known in the UK and US. They, like Chicago evolved out of commodities trade rather than trade. When commodities are worth nearly nothing per unit, larger precision comes naturally. For the Dutch, it was the opposite. A single ship would trade in 1/64 share or for the largest vessels, 1/128 share. Here, there's no point to high precision. New York, founded by the Dutch specialized in logistics just the same. To a man with a hammer, everything looks like a nail, so both Chicago, Australia, and other financial systems built by commodities rather than trade have extended the higher precision logic to everything else, and pricing is fantastic. It should not be a surprise why Australia has taken a lead in pushing infinite precision.",
"title": ""
},
{
"docid": "c5baeb8780d8466112dbb69e6084318a",
"text": "Assuming you purchased shares that were granted at a discount under the ESPP the 50% exemption would not apply. It's pretty unusual to see a US parent company ESPP qualify for the 110(1)(d) exemption, as most US plans provide for a discount",
"title": ""
},
{
"docid": "a6b6f34e6af19228c13d0ee80944cdd1",
"text": "Interesting, but I don't think we are talking the same thing. This seems to say that that the fund itself doesn't have the rule applied: I.E. the MF can't get hit with the 5% commission when you buy it. That makes sense. What I'm asking though is that when my (say) American Fund that I own already does a rebalance, the constituent holdings change. Those securities are not exempt from the rule and thus when they are transacted can have commissions applied. As a matter of fact the broker for those securities has no idea if the fund is eligible or not. Where did you get this from? As I'm. It studying for a series 7 I'm probably missing some foundational sources.",
"title": ""
}
] |
fiqa
|
27395b4dd21ab5c899620ac84fd1a39a
|
How does conversion of Secured Convertible Notes work?
|
[
{
"docid": "78c1dad9e8e61a6da10385bf32fbcf66",
"text": "Let's assume that the bonds have a par value of $1,000. If conversion happens, then one bond would be converted into 500 shares. The price in the market is unimportant. Regardless of the share price in the market, the income per share would be increased by the absence of $70 in interest expense. It would be decreased by the lost tax deduction. It would be further diluted by the increase in 500 shares. Likewise, the debt would be extinguished and the equity section increased. Whether it increased or decreased on a per share basis would depend upon the average amount paid in per share in the currently existing structure, adjusted for changes in retained earnings since the initial offering and for any treasury shares. There would be a loss in value, generally, if it is trading far from $2.00 because it would be valued based on the market price. Had the bond not converted, it would trade in the market as a pure bond if the stock price is far below the strike price and as an ordinary pure bond plus a premium if near enough to the strike price in a manner that depends upon the time remaining under the conversion privilege. I cannot think of a general case where someone would want to convert below strike and indeed, barring a very strange tax, inheritance or legal situation (such as a weird divorce), I cannot think of a case where it would make sense. It often does not make sense to convert far from maturity either as the option premium only vanishes well above $2. The primary case for conversion would be where the after-tax dividend is greater than the after-tax interest payment.",
"title": ""
}
] |
[
{
"docid": "d1f834db0aa4222f7fcf6262e15b5ace",
"text": "If it had immediate purchase power of $525, can I use that to buy more $500 bonds over and over again? Your idea is flawed. You can't just make money out of thin air, unless you are running a Ponzi scheme.",
"title": ""
},
{
"docid": "4abdf55b8e3aee2b6ddfaed7e3f5b5ee",
"text": "Your biggest concern will be what happens during the transition period. In the past when my employer made a switch there has been a lockout period where you couldn't move money between funds. Then over a weekend the money moved from investment company A to investment Company B. All the moves were mapped so that you knew which funds your money would be invested in, then staring Monday morning you could switch them if you didn't like the mapping. No money is lost because the transfer is actually done in $'s. Imagine both investment companies had the same S&P 500 fund, and that the transfer takes a week. If when the first accounts are closed the S&P500 fund has a share value of $100 your 10 hares account has a value of $1000. If the dividend/capital gains are distributed during that week; the price per share when the money arrives in the second investment company will now be $99. So that instead of 10 shares @ $100 you now will buy 10.101 shares @ $99. No money was lost. You want that lookout period to be small, and you want the number of days you are not invested in the market to be zero. The lockout limits your ability to make investment changes, if for instance the central bank raises rates. The number of days out of the market is important if during that period of time there is a big price increase, you wouldn't want to miss it. Of course the market could also go lower during that time.",
"title": ""
},
{
"docid": "de4312884f19663ad7e0d0e07b86898f",
"text": "You're talking about floating rate loans. It's so that the bond is marked back to market every 90 days. Any more often would be a hassle to deal with for everyone involved, any less often and they would be significant variance from LIBOR vs. the loan's specific rate.",
"title": ""
},
{
"docid": "cdede2d6ab1995907a3815ae89f6983d",
"text": "it sounds like you don't have experience in this, and neither does your *investor*; which is a recipe for disaster (pun intended). Your first order of business is to check whether your investor is an *Accredited Investor* (google to see what it means), if s/he's not, **walk away**. If s/he's an accredited investor, find a lawyer who can help you navigate this process, however these are the issues: * lawyers are expensive, and lawyers who have experience in these type of transactions are even more expensive * you actually need 2 lawyers, one for you and one for the investor * if neither of you have experience, there will be a lot more billable hours from the lawyers..... In principle this can go 3 ways: 1. The investors give you a loan, you pay them interests on a periodic basis, and then also principal. Items to be negotiated: interest rates, repayment schedule, collateral, personal guarantees. Highly unlikely this is what the investors wants. 2. The Investors get equity. items to be negotiated: your compensation, % of ownership, how profits are divided, how profits are paid; who gets to decide what. 3. A combination of 1 and 2 above, a *Convertible Note*. There's a lot more, too much for a Reddit post. There's not an easy ELI5.",
"title": ""
},
{
"docid": "2091e876d65d16a2472976058dc08912",
"text": "A security is a class of financial instrument you can trade on the market. A share of stock is a kind of security, for example, as is a bond. In the case of your mortgage, what happens: You take out a loan for $180k. The loan has two components. a. The payment stream (meaning the principal and the interest) from the loan b. The servicing of the loan, meaning the company who is responsible for accepting payments, giving the resulting income to whomever owns it. Many originating banks, such as my initial lender, do neither of these things - they sell the payment stream to a large bank or consortium (often Fannie Mae) and they also sell the servicing of the loan to another company. The payment stream is the primary value here (the servicing is worth essentially a tip off the top). The originating bank lends $180k of their own money. Then they have something that is worth some amount - say $450k total value, $15k per year for 30 years - and they sell it for however much they can get for it. The actual value of $15k/year for 30 years is somewhere in between - less than $450k more than $180k - since there is risk involved, and the present value is far less. The originating bank has the benefit of selling that they can then originate more mortgages (and make money off the fees) plus they can reduce their risk exposure. Then a security is created by the bigger bank, where they take a bunch of mortgages of different risk levels and group them together to make something with a very predictable risk quotient. Very similar to insurance, really, except the other way around. One mortage will either default or not at some % chance, but it's a one off thing - any good statistician will tell you that you don't do statistics on n=1. One hundred mortgages, each with some risk level, will very consistently return a particular amount, within a certain error, and thus you have something that people are willing to pay money on the market for.",
"title": ""
},
{
"docid": "d67d3a9f9940d33d75c8fbfa7f854d74",
"text": "The general idea is that if the statement wasn't true there would be an arbitrage opportunity. You'll probably want to do the math yourself to believe me. But theoretically you could borrow money in country A at their real interest rate, exchange it, then invest the money in the other country at Country B's interest rate. Generating a profit without any risk. There are a lot of assumptions that go along with the statement (like borrowing and lending have the same costs, but I'm sure that is assumed wherever you read that statement.)",
"title": ""
},
{
"docid": "f6b679633154acbe373b9083d360bc67",
"text": "No. Bonds don't work like that. When you buy a bond, you buy pieces of notional at a price. 1K denotes the amount you would get back at maturity (+ coupons), So the smallest piece size would be 1k. I've even seen 50K plus but thats for more illiquid products....",
"title": ""
},
{
"docid": "a0fd3892b5b4a6ff7c51355d21f1b976",
"text": "For the US government, they've just credited Person B with a Million USD and haven't gained anything (afterall, those digits are intangible and don't really have a value, IMO). Two flaws in this reasoning: The US government didn't do anything. The receiving bank credited the recipient. If the digits are intangible, such that they haven't gained anything, they haven't lost anything either. In practice, the role of governments in the transfer is purely supervisory. The sending bank debits the sender's account and the receiving bank credits the recipient's account. Every intermediary makes some money on this transaction because the cost to the sender exceeds the credit to the recipient. The sending bank typically receives a credit to their account at a correspondent bank. The receiving bank typically receives a debit from their account at a correspondent bank. If a bank sends lots of money, eventually its account at its correspondent will run dry. If a bank receives lots of money, eventually its account at its correspondent will have too much money. This is resolved with domestic payments, sometimes handled by governmental or quasi-governmental agencies. In the US, banks have an account with the federal reserve and adjust balances there. The international component is handled by the correspondent bank(s). They also internally will credit and debit. If they get an imbalance between two currencies they can't easily correct, they will have to sell one currency to buy the other. Fortunately, worldwide currency exchange is extremely efficient.",
"title": ""
},
{
"docid": "b9584a6f6554b2d2367ec417532961f0",
"text": "e.g. a European company has to pay 1 million USD exactly one year from now While that is theoretically possible, that is not a very common case. Mostly likely if they had to make a 1 million USD payment a year from now and they had the cash on hand they would be able to just make the payment today. A more common scenario for currency forwards is for investment hedging. Say that European company wants to buy into a mutual fund of some sort, say FUSEX. That is a USD based mutual fund. You can't buy into it directly with Euros. So if the company wants to buy into the fund they would need to convert their Euros to to USD. But now they have an extra risk parameter. They are not just exposed to the fluctuations of the fund, they are also exposed to the fluctuations of the currency market. Perhaps that fund will make a killing, but the exchange rate will tank and they will lose all their gains. By creating a forward to hedge their currency exposure risk they do not face this risk (flip side: if the exchange rate rises in a favorable rate they also don't get that benefit, unless they use an FX Option, but that is generally more expensive and complicated).",
"title": ""
},
{
"docid": "8ed8bf7342dacdca59824555d53f7ff7",
"text": "The reason it's not automatic is that Questrade doesn't want to force you to convert in margin accounts at the time of buying the stock. What if you bought a US stock today and the exchange rate happened to be very unfavorable (due to whatever), wouldn't you rather wait a few days to exchange the funds rather than lose on conversion right away? In my opinion, Questrade is doing you a favor by letting you convert at your own convenience.",
"title": ""
},
{
"docid": "3091eda9cb4abbce57a1fd1559c2da15",
"text": "This is all answered in the prospectus. The money not yet invested (available/committed to a note but not yet funded) is held in pooled trust account insured by FDIC. Money funded is delivered to the borrower. Lending Club service their notes themselves. Read also my reviews on Lending Club.",
"title": ""
},
{
"docid": "a48564da87b5eb0b0cc3034531aa5dd7",
"text": "The money is transferred through an electronic funds transfer, which is an umbrella term that encompasses wire transfers, direct debits, etc. The application form for Key Trade Bank (the only place I can find that uses that exact phrasing) lists a SWIFT number. This usually indicates that the transfer of funds is done through an international wire transfer. In the most basic sense, the process works like this: Key Trade Bank uses the SWIFT number to notify your current bank of the transfer. Your bank instructs the settlement bank, e.g. the central bank of your country, where your bank is located, to transfer funds to Key Trade. If Key Trade is in another country from your current country, your central bank will send money to the central bank where Key Trade is located, which will in turn send the money to Key Trade. Otherwise, your central bank deposits the money into the account that Key Trade also has with them, and the transfer is complete.",
"title": ""
},
{
"docid": "cdb2c9e7a8162c2a1041367a9e534e2c",
"text": "They all basically mean the same thing - a type of debt than can be exchanged for (converted into) equity at some point. It's only the mechanics that can be different. A convertible bond is structured just like a regular bond - it (usually) pays periodic interest and has a face value that's due at maturity. The difference is that the bond holder has the option to exchange the debt for equity at some point during the life of the bond. There can be restrictions on when that conversion is possible, and they typically define a quantity of equity (number of shares) that the bond can be converted into. If the market price of the shares goes above a price that would make the shares more valuable than the bond, it's in the best interest of the bond holder to convert. A convertible note is typically used to describe a kind of startup financing that does not pay interest or have a face value that's redeemed, but instead is redeemed for equity as part of a later financing round. Rather than specifying a specific number of shares, the bond holder receives equity at a certain discount to the rest of the market. So they both are debt instruments that can turn into equity investments, just through different mechanisms. A debenture is a fancy word for unsecured debt, and convertible debt could be used to described either structure above, so those terms could mean either type of structure.",
"title": ""
},
{
"docid": "864377bc38eace23fc5c87a8d9cd31bd",
"text": "True blue preferred shares are considered loose hybrids of credit and equity. They are more senior than common equity in bankruptcy liquidation but pay out a dividend which is not mandatory. Financial institutions issue the bulk of genuine preferred shares because of their need for more flexibility than a bond but not so much that they can afford the cost to shareholders by diluting common equity. Since it is a credit-like security that receives none of the income from operations but merely pays out a potentially unpredictable yet fixed amount of income, it will perform much more like a bond, rising when interest rates fall and vice versa, and since interest rates do not move to the extent of common equity valuations, preferreds' price variances will correspond much more to bonds than common equities. If the company stops paying the preferred dividend or looks to become in financial trouble, the price of the preferred share should be expected to fall. There are more modern preferred however. It has now become popular to fund intermediate startups with convertible preferred shares. Because these are derivatives based upon the common equity, they can be expected to be much more variant.",
"title": ""
},
{
"docid": "6de8275802733d88deb52209a02a4bd5",
"text": "\"Someone has to hand out cash to the seller. Even if no physical money changes hands (and I've bought a house; I can tell you a LOT of money changes hands at closing in at least the form of a personal check), and regardless of exactly how the bank accounts for the actual disbursement of the loan, the net result is that the buyer has cash that they give the seller, and are now in debt to the bank for least that amount (but, they now have a house). Now, the bank probably didn't have that money just sitting in its vault. Money sitting in a vault is money that is not making more money for the bank; therefore most banks keep only fractionally more than the percentage of deposit balances that they are required to keep by the Feds. There are also restrictions on what depositors' money can be spent on, and loans are not one of them; the model of taking in money in savings accounts and then loaning it out is what caused the savings and loan collapse in the 80s. So, to get the money, it turns to investors; the bank sells bonds, putting itself in debt to bond holders, then takes that money and loans it out at a higher rate, covering the interest on the bond and making itself a tidy profit for its own shareholders. Banks lose money on defaults in two ways. First, they lose all future interest payments that would have been made on the loan. Technically, this isn't \"\"revenue\"\" until the interest is calculated for each month and \"\"accrues\"\" on the loan; therefore, it doesn't show on the balance sheet one way or the other. However, the holders of those bonds will expect a return, and the banks no longer have the mortgage payment to cover the coupon payments that they themselves have to pay bondholders, creating cash flow problems. The second, and far more real and damaging, way that banks lose money on a foreclosure is the loss of collateral value. A bank virtually never offers an unsecured \"\"signature loan\"\" for a house (certainly not at the advertised 3-4% interest rates). They want something to back up the loan, so if you disappear off the face of the earth they have a clear claim to something that can help them recover their money. Usually, that's the house itself; if you default, they get the house from you and sell it to recover their money. Now, a major cause of foreclosure is economic downturn, like the one we had in 2009 and are still recovering from. When the economy goes in the crapper, a lot of things we generally consider \"\"stores of value\"\" lose that value, because the value of the whatzit (any whatzit, really) is based on what someone else would pay to have it. When fewer people are looking to buy that whatzit, demand drops, bringing prices with it. Homes and real estate are one of the real big-ticket items subject to this loss of value; when the average Joe doesn't know whether he'll have a job tomorrow, he doesn't go house-hunting. This average Joe may even be looking to sell an extra parcel of land or an income property for cash, increasing supply, further decreasing prices. Economic downturn can often increase crime and decrease local government spending on upkeep of public lands (as well as homeowners' upkeep of their own property). By the \"\"broken window\"\" effect, this makes the neighborhood even less desirable in a vicious cycle. What made this current recession a double-whammy for mortgage lenders is that it was caused, in large part, by a housing bubble; cheap money for houses made housing prices balloon rapidly, and then when the money became more expensive (such as in sub-prime ARMs), a lot of those loans, which should never have been signed off on by either side, went belly-up. Between the loss of home value (a lot of which will likely turn out to be permanent; that's the problem with a bubble, things never recover to their peak) and the adjustment of interest rates on mortgages to terms that will actually pay off the loan, many homeowners found themselves so far underwater (and sinking fast) that the best financial move for them was to walk away from the whole thing and try again in seven years. Now the bank's in a quandary. They have this loan they'll never see repaid in cash, and they have this home that's worth maybe 75% of the mortgage's outstanding balance (if they're lucky; some homes in extremely \"\"distressed\"\" areas like Detroit are currently trading for 30-40% of what they sold for just before the bubble burst). Multiply that by, say, 100,000 distressed homes with similar declines in value, and you're talking about tens of billions of dollars in losses. On top of that, the guarantor (basically the bank's insurance company against these types of losses) is now in financial trouble themselves, because they took on so many contracts for debt that turned out to be bad (AIG, Fannie/Freddie); they may very well declare bankruptcy and leave the bank holding the bag. Even if the guarantor remains solvent (as they did thanks to generous taxpayer bailouts), the bank's swap contract with the guarantor usually requires them to sell the house, thus realizing the loss between what they paid and what they finally got back, before the guarantor will pay out. But nobody's buying houses anymore, because prices are on their way down; the only people who'd buy a house now versus a year from now (or two or three years) are the people who have no choice, and if you have no choice you're probably in a financial situation that would mean you'd never be approved for the loan anyway. In order to get rid of them, the bank has to sell them at auction for pennies on the dollar. That further increases the supply of cheap homes and further drives down prices, making even the nicer homes the bank's willing to keep on the books worth less (there's a reason these distresed homes were called \"\"toxic assets\"\"; they're poisonous to the banks whether they keep or sell them). Meanwhile, all this price depression is now affecting the people who did everything right; even people who bought their homes years before the bubble even formed are watching years of equity-building go down the crapper. That's to say nothing of the people with prime credit who bought at just the wrong time, when the bubble was at its peak. Even without an adjusting ARM to contend with, these guys are still facing the fact that they paid top dollar for a house that likely will not be worth its purchase price again in their lifetime. Even with a fixed mortgage rate, they'll be underwater, effectively losing their entire payment to the bank as if it were rent, for much longer than it would take to have this entire mess completely behind them if they just walked away from the whole thing, moved back into an apartment and waited it out. So, these guys decide on a \"\"strategic default\"\"; give the bank the house (which doesn't cover the outstanding balance of course) and if they sue, file bankruptcy. That really makes the banks nervous; if people who did everything right are considering the hell of foreclosure and bankruptcy to be preferable to their current state of affairs, the bank's main threat keeping people in their homes is hollow. That makes them very reluctant to sign new mortgages, because the risk of default is now much less certain. Now people who do want houses in this market can't buy them, further reducing demand, further decreasing prices... You get the idea. That's the housing collapse in a nutshell, and what banks and our free market have been working through for the past five years, with only the glimmer of a turnaround picking up home sales.\"",
"title": ""
}
] |
fiqa
|
608a56dbf62270210be5dda98755fefa
|
What are the tax implications of exercising options early?
|
[
{
"docid": "e6490424e5263580f16ebbb1e729d423",
"text": "Despite a fair number of views, no one besides @mbhunter answered, so I'll gather the findings of my own research here. Hopefully, this will help others in similar situations. If you spot any errors, please let me know!",
"title": ""
},
{
"docid": "49f2c1135a02e617d75fde347d752472",
"text": "The difference is whether your options qualify as incentive stock options (ISOs), or whether they are non-qualifying options. If your options meet all of the criteria for being ISOs (see here), then (a) you are not taxed when you exercise the options. You treat the sale of the underlying stock as a long term capital gain, with the basis being the exercise price (S). There is something about the alternative minimum tax (AMT) as they pertain to these kinds of options. Calculating your AMT basically means that your ISOs are treated as non-qualifying options. So if your exercise bumps you into AMT territory, too bad, so sad. If you exercise earlier, you do get a clock ticking, as you put it, because one of the caveats of having your options qualify as ISOs is that you hold the underlying stock (a) at least two years after you were granted the options and (b) at least one year after you exercise the options.",
"title": ""
}
] |
[
{
"docid": "56596fac5107f6f0af730a04194202f2",
"text": "\"A little terminology: Grant: you get a \"\"gift\"\" with strings attached. \"\"Grant\"\" refers to the plan (legal contract) under which you get the stock options. Vesting: these are the strings attached to the grant. As long as you're employed by the company, your options will vest every quarter, proportionally. You'll become an owner of 4687 or 4688 options every quarter. Each such vest event means you'd be getting an opportunity to buy the corresponding amount of stocks at the strike price (and not the current market price which may be higher). Buying is called exercising. Exercising a nonqualified option is a taxable event, and you'll be taxed on the value of the \"\"gift\"\" you got. The value is determined by the difference between the strike price (the price at which you have the option to buy the stock) and the actual fair market value of the stock at the time of vest (based on valuations). Options that are vested are yours (depending on the grant contract, read it carefully, leaving the company may lead to forfeiture). Options that are not vested will disappear once you leave the company. Exercised options become stocks, and are yours. Qualified vs Nonqualifed - refers to the tax treatment. Nonqualified options don't have any special treatment, qualified do. 3.02M stocks issued refers to the value of the options. Consider the total valuation of the company being $302M. With $302M value and 3.02M stocks issued, each stock is worth ~$100. Now, in a year, a new investor comes in, and another 3.02M stocks are issued (if, for example, the new investor wants a 50% stake). In this case, there will be 6.04M stocks issued, for 302M value - each stock is worth $50 now. That is called dilution. Your grant is in nominal options, so in case of dilution, the value of your options will go down. Additional points: If the company is not yet public, selling the stocks may be difficult, and you may own pieces of paper that no-one else wants to buy. You will still pay taxes based on the valuations and you may end up paying for these pieces of paper out of your own pocket. In California, it is illegal to not pay salary to regular employees. Unless you're a senior executive of the company (which I doubt), you should be paid at least $9/hour per the CA minimum wages law.\"",
"title": ""
},
{
"docid": "8a8c4a856d3e41d819f65e69170148d0",
"text": "It depends how deep in the money it is, compared to the dividend. Even an in the money call has some time premium. As the call holder, if I exercise instead of selling the call, I am trading the potential for a dividend, which I won't receive, for getting that time premium back by selling. Given the above, you'll notice a slight distortion in options pricing as a dividend date approaches, as the option will reflect not just the time premium, but the fact that exercising with grab the dividend. Edit to address your comment - $10 stock, $9 strike, 50 cent div. If the option price is high, say $2, because there's a year till expiration, exercising makes no sense. If it's just $1.10, I gain 40 cents by exercising and selling after the dividend.",
"title": ""
},
{
"docid": "683ed52a2c1f779f32da70bf19112b14",
"text": "Yes, and there's a good reason they might. (I'm gonna use equity options for the example; FX options are my thing, but they typically trade European style). The catch is dividends. Imagine you're long a deep-ITM call on a stock that's about to pay a dividend. If that dividend is larger than the time value remaining on the option, you'd prefer to exercise early - giving you the stock and the dividend payment - rather than hanging on to the time value of the option. You can get a similar situation in FX options when you're long a deep-ITM American call on a positive-carry currency (say AUDJPY); you might find yourself so deep in the money, with so little time value left on the option, that you'd rather exercise the option and give up the remaining time value in return for the additional carry from getting the spot position early.",
"title": ""
},
{
"docid": "d090e456a27088b6844ae132bb20c829",
"text": "\"You mention \"\"early exercise\"\" in your title, but you seem to misunderstand what early exercise really means. Some companies offer stock options that vest over a number of years, but which can be exercised before they are vested. That is early exercise. You have vested stock options, so early exercise is not relevant. (It may or may not be the case that your stock options could have been early exercised before they vested, but regardless, you didn't exercise them, so the point is moot.) As littleadv said, 83(b) election is for restricted stocks, often from exercising unvested stock options. Your options are already vested, so they won't be restricted stock. So 83(b) election is not relevant for you. A taxable event happen when you exercise. The point of the 83(b) election is that exercising unvested stock options is not a taxable event, so 83(b) election allows you to force it to be a taxable event. But for you, with vested stock options, there is no need to do this. You mention that you want it not to be taxable upon exercise. But that's what Incentive Stock Options (ISOs) are for. ISOs were designed for the purpose of not being taxable for regular income tax purposes when you exercise (although it is still taxable upon exercise for AMT purposes), and it is only taxed when you sell. However, you have Non-qualified Stock Options. Were you given the option to get ISOs at the beginning? Why did your company give you NQSOs? I don't know the specifics of your situation, but since you mentioned \"\"early exercise\"\" and 83(b) elections, I have a hypothesis as to what might have happened. For people who early-exercise (for plans that allow early-exercise), there is a slight advantage to having NQSOs compared to ISOs. This is because if you early exercise immediately upon grant and do 83(b) election, you pay no taxes upon exercise (because the difference between strike price and FMV is 0), and there are no taxes upon vesting (for regular or AMT), and if you hold it for at least 1 year, upon sale it will be long-term capital gains. On the other hand, for ISOs, it's the same except that for long-term capital gains, you have to hold it 2 years after grant and 1 year after exercise, so the period for long-term capital gains is longer. So companies that allow early exercise will often offer employees either NQSOs or ISOs, where you would choose NQSO if you intend to early-exercise, or ISO otherwise. If (hypothetically) that's what happened, then you chose wrong because you got NQSOs and didn't early exercise.\"",
"title": ""
},
{
"docid": "88ba377b99fd666c1496ae559efa681f",
"text": "\"You hit on the biggest advantage of keeping things out of tax-advantaged accounts: Easier access to the money. It hurts to take money out of a 401(k) early. It may hurt more in the future. (Do you think the reason the 10% penalty is there in order to protect you from yourself?) It also may be converted into a vehicle besides what you have it in now, due to a \"\"national liquidity crisis.\"\" You have plenty in tax-advantaged accounts, IMO.\"",
"title": ""
},
{
"docid": "96347bc9f864460e64c7d4b3f9adb866",
"text": "My understanding is that all ETF options are American style, meaning they can be exercised before expiration, and so you could do the staggered exercises as you described.",
"title": ""
},
{
"docid": "7c5cf4b1b6b9177ec68035790d397fee",
"text": "I would recommend not paying it off early for 2 key reasons: If you are a resident of the U.S. you get tax deductibility of mortgage interest, which as pointed out in previous posts, reduces the effective interest rate on your mortgage, never in your life will you ever be allowed to obtain such high leverage at such a low rates. You can probably get higher returns with not much risk. @JoeTaxpayer mentioned various statistics regarding returns when investing in equities. Even though they are a decent bet over the long term, you can get an even better risk reward tradeoff by considering municipal bonds. If you are in the U.S. and invest in the municipal bonds of your state, the interest income will be both federal and state tax-free. In other words, if you were making 3.5% investing in equities, your after tax returns would be significantly less depending on your tax bracket whereas investment-grade municipal bond ETFs will yield probably the same or higher and have no tax. They are also significantly less volatile. Even though they have default risk, the risk is small since most of these bonds are backed by future tax obligations, or other income streams derived from hard assets such as tolls or property. Furthermore, an ETF will have a portfolio of these bonds which will also dampen the impact of any individual defaults. In essence, you are getting paid this spread for simply having access to credit, take advantage of it while you can.",
"title": ""
},
{
"docid": "495c342f3cfec0dc4d35802cfc0b6011",
"text": "An option gives you the option rather than the obligation to buy (or sell) the underlying so you don't have to exercise you can just let the option expire (so long it doesn't have an automatic expiry). After expiration the option is worthless if it is out of the money but other than that has no hangover. Option prices normally drop as the time value of the option decays. An option has two values associated with it; time value and exercise value. Far out of the money (when the price of the underlying is far from the strike price on the losing side) options only have time value whereas deep in the money options (as yours seems to be) has some time value as well as the intrinsic value of the right to buy (sell) at a low (high) price and then sell (buy) the underlying. The time value of the option comes from the possibility that the price of the underlying will move (further) in your favour and make you more money at expiry. As expiry closes it is less likely that there will be a favourable mood so this value declines which can cause prices to move sharply after a period of little to no revaluing. Up to now what I have said applies to both OTC and traded options but exchange traded options have another level of complexity in their trading; because there are fewer traders in the options market the size of trade at which you can move the market is much lower. On the equities markets you may need to trade millions of shares to have be substantial enough to significantly move a price, on the options markets it could be thousands or even hundreds. If these are European style options (which sounds likely) and a single trading entity was holding a large number of the exchange traded options and now thinks that the price will move significantly against them before expiry their sell trade will move the market lower in spite of the options being in the money. Their trade is based on their supposition that by the time they can exercise the option the price will be below the strike and they will lose money. They have cashed out at a price that suited them and limited what they will lose if they are right about the underlying. If I am not correct in my excise style assumption (European) I may need more details on the trade as it seems like you should just exercise now and take the profit if it is that far into the money.",
"title": ""
},
{
"docid": "89ec2c32f8875d784be9200e9b3c8c6d",
"text": "\"I think the issue you are having is that the option value is not a \"\"flow\"\" but rather a liability that changes value over time. It is best to illustrate with a balance sheet. The $33 dollars would be the premium net of expense that you would receive from your brokerage for having shorted the options. This would be your asset. The liability is the right for the option owner (the person you sold it to) to exercise and purchase stock at a fixed price. At the moment you sold it, the \"\"Marked To Market\"\" (MTM) value of that option is $40. Hence you are at a net account value of $33-$40= $-7 which is the commission. Over time, as the price of that option changes the value of your account is simply $33 - 2*(option price)*(100) since each option contract is for 100 shares. In your example above, this implies that the option price is 20 cents. So if I were to redo the chart it would look like this If the next day the option value goes to 21 cents, your liability would now be 2*(0.21)*(100) = $42 dollars. In a sense, 2 dollars have been \"\"debited\"\" from your account to cover your potential liability. Since you also own the stock there will be a credit from that line item (not shown). At the expiry of your option, since you are selling covered calls, if you were to be exercised on, the loss on the option and the gain on the shares you own will net off. The final cost basis of the shares you sold will be adjusted by the premium you've received. You will simply be selling your shares at strike + premium per share (0.20 cents in this example)\"",
"title": ""
},
{
"docid": "bf7ccbc105437f3d6bfe35d321e0db6c",
"text": "Really all you need to know is that American style can be exercised at any point, European options cannot be exercised early. Read on if you want more detail. The American style Call is worth more because it can be exercised at any point. And when the company pays a dividend, and your option is in the money, if the extrinsic value is worth less than the dividend you can be exercised early. This is not the case for a European call. You cannot be exercised until expiration. I trade a lot of options, you wont be exercised early unless the dividend scenario I mentioned happens. Or unless the extrinsic value is nothing, but even then, unless the investor really wants that position, he is more likely to just sell the call for an equivalent gain on 100 shares of stock.",
"title": ""
},
{
"docid": "0ab357979737b8b271ff89429bd966c3",
"text": "\"I was told by the lawyers there was no tax consequence because the two numbers were the same. That is correct. However, a tax professional tells me that since the start-up stock was \"\"realized\"\" there invokes a taxable event now. That is correct. I'm now led to believe I owe cap-gains tax on the entire 4 year vest this year That is incorrect. You owe capital gains tax on the sale of your startup stock. Which is accidentally the exact same amount you \"\"paid\"\" for the new unvested stocks. There's no taxable event with regards to the new stocks because the amount you paid for them was the amount you got for the old stocks. But you did sell the old stocks, and that is a taxable event.\"",
"title": ""
},
{
"docid": "348f28772be625458b9fa95554b49887",
"text": "Investopedia states: While early exercise is generally not advisable, because the time value inherent in the option premium is lost upon doing so, there are certain circumstances under which early exercise may be advantageous. For example, an investor may choose to exercise a call option that is deeply in-the-money (such an option will have negligible time value) just before the ex-dividend date of the underlying stock. This will enable the investor to capture the dividend paid by the underlying stock, which should more than offset the marginal time value lost due to early exercise. So the question is how well do you see the time value factor here?",
"title": ""
},
{
"docid": "01922e347ccbfd39856506f44be23d16",
"text": "With a tax-sheltered account like an IRA, timing is irrelevant with respect to taxes. So enjoy your vacation. When you get back, don't invest in one lump sum -- break up your purchases over a period of weeks if possible. If you are investing in ETFs for your index funds, many brokers have no transaction fee ETF options now.",
"title": ""
},
{
"docid": "c3d239c130b81bd9fa913591c6178870",
"text": "The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets. It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits.",
"title": ""
},
{
"docid": "28f13758cf91f1e70e60d49db4f80a9b",
"text": "\"According to page 56 of the 2015 IRS Publication 550 on Investment Income and Expenses: Wash sales. Your holding period for substantially identical stock or securities you acquire in a wash sale includes the period you held the old stock or securities. It looks like the rule applies to stocks and other securities, including options. It seems like the key is \"\"substantially identical\"\". For your brokerage / trading platform to handle these periods correctly for reporting to IRS, it seems best to trade the same security instead of trying to use something substantially identical.\"",
"title": ""
}
] |
fiqa
|
3c9e5cce4bd6ac6a0717b2b08de124e3
|
Are assets lost in a bankruptcy valued at the time of loss, or according to current value?
|
[
{
"docid": "aa4741c68677d146703292d52bc6bff0",
"text": "You are not the person or entity against whom the crime was committed, so the Casualty Loss (theft) deduction doesn't apply here. You should report this as a Capital Loss, the same way all of the Enron shareholders did in their 2001 tax returns. Your cost basis is whatever you originally paid for the shares. The final value is presumably zero. You can declare a maximum capital loss of $3000, so if your net capital loss for the year is greater than that, you'll have to carry over the remainder to the following years. IRS publication 547 states: Decline in market value of stock. You can't deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. You report a capital loss on Schedule D (Form 1040). For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Pub. 550.",
"title": ""
}
] |
[
{
"docid": "27eac77085ef8132f3750af1c9f86670",
"text": "Sorry, I got even more confused. I assumed IC referred to equity only. At least under English accounting practice it's the norm to refer only to equity investment as capital in that context. The debt is listed as both an asset (cash or whatever asset the cash has been put towards) and a liability, cancelling it out. That being the case, the number would be the same, no?",
"title": ""
},
{
"docid": "a5d1e46007a73134f5a59e6f5781bd63",
"text": "To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, you quit paying the mortgage and they have to foreclose. Can the bank get their $200,000 back? An appraisal is only an estimate; nobody can predict perfectly how much a property will sell for. Maybe the appraiser missed something significant, and the property will only fetch $180,000. Even if the appraisal was accurate when it was made, property values may have dropped in the meantime. Maybe a sudden economic crisis is driving real estate prices down across the board. Maybe interest rates have spiked. Maybe the county has changed the zoning regulations to locate a toxic waste dump next door to the property. In any of these cases, the property may again fetch well under $200,000. Maybe the condition of the property has changed. Perhaps you trashed the place and it will take $30,000 to clean it up. (People have a tendency to do things like that when they get foreclosed.) If the bank wants to get full market value for the property, they will incur the usual costs of selling a property: paying a real estate agent's commission, painting, renting furniture to stage the property, and so on. This will eat into the net amount they actually get from the sale. It may take some time (perhaps months) for a property to sell at its full market value. During this time, the bank is out $200,000. That's money they would rather be loaning out at interest to someone else, so this represents lost income. Foreclosing a mortgage is a fairly complicated procedure. The bank has to pay its staff, including lawyers, for a significant number of hours to get the foreclosure done. There will be court filing fees and so on. If you refuse to leave, they may have to get the sheriff to evict you; that has a fee as well. If you fight the foreclosure, that racks up even more legal fees. This too eats into the net proceeds from the sale. So if the bank loans you the full $200,000, they stand a pretty significant risk of not getting all of it back, after expenses. You can understand that risk may not be worth the interest they would get from you on the extra $40,000. On the other hand, if they loan you only 80% of the property's appraised value ($160,000), they effectively shift that risk onto you. Should you default on the loan, and they foreclose, all they have to do is sell the property for $160,000 or a little bit more. That shouldn't be too hard, even if it is not freshly painted or a bit trashed. They probably don't need to hire a real estate agent: just hold a quick auction, maybe first calling up a few investors who might be interested in flipping it. If it happens to sell for more than the outstanding principal of the loan, plus the bank's costs, then they will pay you the difference; but they have no incentive to make that happen, and every incentive to just get it sold quick. So any difference between the property's true value and the actual sale price now represents a loss to you first, not to the bank. So you can see why the bank would rather not loan you the full value of the property. 80% is a somewhat arbitrary figure but it cuts their risk by a lot.",
"title": ""
},
{
"docid": "b061042bc1a63291c7674d4992bb781f",
"text": "Safe deposit boxes are rented out to customers, and their content is not bank's property. Money deposits are not being taken by the creditors if a bank goes bankrupt, for the same reason - its not bank's money, it belongs to the depositors. However, frequently banks go bankrupt because they do not have enough cash at hand to pay back the depositors. In this case, unless insured (up to $250K in the US, EUR100K in EU), some or all of the deposits may not be immediately (or even at all) available. Depositors become creditors of the bank in the bankruptcy proceedings. Safe deposit box, however, is rented to the customer, and the content is not removed by the bank to be used elsewhere, as happens with monetary deposits. So even if the bank is bankrupt and doesn't have enough money to cover the monetary deposits, the content of the safe deposit boxes doesn't magically disappear, and the owner can get it back. The access to the deposit box itself may be limited due to the bankruptcy, but the content will remain there waiting for its owners. In the United States, when a bank goes bankrupt, FDIC takes over it and its assets. Safe deposit box rental contract is an asset. It is taken over by the FDIC and will be sold to a buyer (usually as a part of the whole branch where the box is located), who will continue operating/servicing it.",
"title": ""
},
{
"docid": "f5bb582ddcd8c917d6198c11313a43a0",
"text": "Are there any other losses that can be expected beyond the above? The lender may have to invest some money into the house in order to get it in shape to sell. Also, while the lender possesses the house they are liable to the property taxes and possibly utilities. are there any statutes or pressures to motivate the financial institution to get fair price when the property is sold? The lender is motivated to at least break even when selling the property in order to limit losses on their investment. This means they are very motivated to seek a higher price, but they're also motivated to sell the property quickly in order to limit their losses due to property taxes. Usually the lender takes a loss of the investment if foreclosure occurs; only 10 percent to 20 percent of auctioned foreclosed houses did yield a surplus. When the lender sells the foreclosed property using a realtor, they're motivated to sell it as quickly as possible so long as they break even. In this case there is little motivation to sell the property for a surplus. If the property is being sold via auction, then time is not a factor and the lender will just sell to the highest bidder.",
"title": ""
},
{
"docid": "69ecd756d26ab41775af6aef6f9aa581",
"text": "P/E is the number of years it would take for the company to earn its share price. You take share price divided by annual earnings per share. You can take the current reported quarterly earnings per share times 4, you can take the sum of the past four actual quarters earnings per share or you can take some projected earnings per share. It has little to do with a company's actual finances apart from the earnings per share. It doesn't say much about the health of a company's balance sheet, and is definitely not an indicator for bankruptcy. It's mostly a measure of the market's assumptions of the company's ability to grow earnings or maintain it's current earnings growth. A share price of $40 trading for a P/E ratio of 10 means it will take the company 10 years to earn $40 per share, it means there's current annual earnings per share of $4. A different company may also be earning $4 per share but trade at 100 times earnings for a share price of $400. By this measure alone neither company is more or less healthy than the other. One just commands more faith in the future growth from the market. To circle back to your question regarding a negative P/E, a negative P/E ratio means the company is reporting negative earnings (running at a loss). Again, this may or may not indicate an imminent bankruptcy. Increasing balance sheet debt with decreasing revenue and or earnings and or balance sheet assets will be a better way to assess bankruptcy risk.",
"title": ""
},
{
"docid": "2b143acbcb0db499f15b967cf333ea82",
"text": "The book value is Total Assets minus Total Liabilities and so if you increase the Total Assets without changing the Total Liabilities the difference gets bigger and thus higher. Consider if a company had total assets of $4 and total liabilities of $3 so the book value is $1. Now, if the company adds $2 to the assets, then the difference would be 4+2-3=6-3=3 and last time I checked 3 is greater than 1. On definitions, here are a couple of links to clarify that side of things. From Investopedia: Equity = Assets - Liabilities From Ready Ratios: Shareholders Equity = Total Assets – Total Liabilities OR Shareholders Equity = Share Capital + Retained Earnings – Treasury Shares Depending on what the reinvestment bought, there could be several possible outcomes. If the company bought assets that appreciated in value then that would increase the equity. If the company used that money to increase sales by expanding the marketing department then the future calculations could be a bit trickier and depend on what assumptions one wants to make really. If you need an example of the latter, imagine playing a game where I get to make up the rules and change them at will. Do you think you'd win at some point? It would depend on how I want the game to go and thus isn't something that you could definitively say one way or the other.",
"title": ""
},
{
"docid": "84a8c379b6f77302a89c99b6816ec0ad",
"text": "I once bought both preferred and common shares in a bankrupt company. It is true that those preferred shares had less potential for appreciation than the common shares. The reason is because the preferred shares were trading around $50 and had a face value of $1000. This means that if the bankruptcy proceedings ended up finding enough assets to make the preferred shares whole, then the preferred shareholders would be paid $1000 per share and no more than that. So if you bought the preferred shares at $50 and received $1000 per share for them, then you made a 1900% gain. But if the bankruptcy proceedings found enough assets to pay not just the preferred shareholders but also the common shareholders, then the common shareholders had the potential for a greater gain than the preferred shareholders. The common stock was trading around 20 cents at the time, and if enough assets were found to pay $10 per share to the common shareholders, then that would have been a 4900% gain. The preferred shares were capped by their face value, but the common shares had no limit on how high they could go.",
"title": ""
},
{
"docid": "7b8658a97c1892504d56a0ec070df7d3",
"text": "If you have two other assets whose payoffs tomorrow are known and whose prices today are known, you can value it. Let's say you can observe a risk-free bond and a stock. Using those, you can calculate the state prices/risk-neutral probabilities. NOTE: You do not need to know the true probabilities. The value of your asset is then the state-price weighted sum of future payoffs.",
"title": ""
},
{
"docid": "6c34001b866ef2645fa7f2a902a9c870",
"text": "All investors of equal standing get the same proportion of the net assets on bankruptcy but not all shareholders are of equal standing. In general, once all liabilities are covered, bond holders are paid first as that type of investment is company debt, then preferred stock holders are paid out and then common shareholders. This is the reason why preferred stock is usually cheaper - it is less risky as it has a higher claim to assets and therefore commands a lower risk premium. The exact payout schedule is very corporation dependent so needs research on a per firm basis.",
"title": ""
},
{
"docid": "7b8f26b9c664f83164a67fe7323ab686",
"text": "\"This depends on your definitions of assets and liabilities. The word \"\"asset\"\" has a fairly straight forward definition. Generally speaking, an asset in finance is something that you own/control that has economic value. The asset has value because it is generating income for you or because you expect that it will be worth something to someone in the future. \"\"Liability\"\" is tougher to define, and depends on context. In accounting, a liability is a debt or obligation that is owed. It is essentially the opposite of an asset; where an asset represents something of value that you own, increasing your balance sheet, a liability is a value that you owe, decreasing your balance sheet. In that sense, a website or domain name that you own is an asset, not a liability, because it is something you own that has some value. It is not a debt. Many people use the word \"\"liability\"\" informally to refer to a bad asset: something that is losing value or is causing more in expenses than it is generating in income. (See definition #5 on Wiktionary.) With this definition, you might consider a website or a domain name a liability if it is losing money. Alternatively, depending on your business, you might not consider it an asset or a liability, but an expense instead. An expense is a cost of doing business. For example, if your business is selling something, you might need a website to make that happen. The website isn't purchased as an investment, and it might not have any value apart from your business. It is simply a necessary expense for your business.\"",
"title": ""
},
{
"docid": "8e67b6911d14a79d53b0b47b4fdd2ac1",
"text": "\"Accounts track value: at any given time, a given account will have a given value. The type of account indicates what the value represents. Roughly: On a balance sheet (a listing of accounts and their values at a given point in time), there is typically only one equity account, representing net worth, I don't know much about GNUCash, though. Income and expenses accounts do not go on the balance sheet, but to find out more, either someone else or the GNUCash manual will have to describe how they work in detail. Equity is more similar to a liability than to assets. The equation Assets = Equity + Liabilities should always hold; you can think of assets as being \"\"what my stuff is worth\"\" and equity and liabilities together as being \"\"who owns it.\"\" The part other people own is liability, and the part you own is equity. See balance sheet, accounting equation, and double-entry bookkeeping for more information. (A corporate balance sheet might actually have more than one equity entry. The purpose of the breakdown is to show how much of their net worth came from investors and how much was earned. That's only relevant if you're trying to assess how a company has performed to date; it's not important for a family's finances.)\"",
"title": ""
},
{
"docid": "0abf2d4619c289bdab3c1e7ba705521d",
"text": "\"A repossessed automobile will have lost some value from sale price, but it's not valueless. They market \"\"title loans\"\" to people without good credit on this basis so its a reasonably well understood risk pool.\"",
"title": ""
},
{
"docid": "aafdddb3091909bfbfb4540db55893ac",
"text": "I have an example that may be interesting for your question. My grandfather had a tennis club around 35 years ago, and some other businesses. Some investments went bad and he was heading for bankruptcy due to the tennis club's expensive payments. So he asked to renegotiate a variable rate rather than a fixed rate, even though the interest rates were going up, not down. The idea was that if the current situation is going to bankrupt you, taking a chance might be better. As an analogy, if you can't swim and you'll drown in 6 feet of water, it doesn't matter that you're taking the risk to go deeper. You might have to take that chance to survive. He did keep the tennis club in the end but that's irrelevant here. For student loans, if I'm not mistaken, declaring bankruptcy doesn't free you of all their debt, so it may not be applicable. And this situation is when renegotiating, not when negotiating the first time. because obviously if you're in trouble financially, taking a loan you know you can't repay is suicide.",
"title": ""
},
{
"docid": "980e48c749e05c0432b46adffc11cd8a",
"text": "Imagine a poorly run store in the middle of downtown Manhattan. It has been in the family for a 100 years but the current generation is incompetent regarding running a business. The store is worthless because it is losing money, but the land it is sitting on is worth millions. So yes an asset of the company can be worth more than the entire company. What one would pay for the rights to the land, vs the entire company are not equal.",
"title": ""
},
{
"docid": "eba9f3d4075fd407da235b87ffd12e38",
"text": "Yes, the borrower is responsible for paying back the full amount of the loan. Foreclosure gives the bank possession of the property, which they can (and do) sell. Any shortfall is still the borrower's responsibility. But, no, the bank can't sell the property for a dollar; they have to make a reasonable effort. Usually the sale is done through a sheriff's sale, that is, a more or less carefully supervised auction. Bankruptcy will wipe out the shortfall, and most other debts, but the downside is that most of the rest of your assets will also be sold to help pay off what you owe. Details of what you can keep vary from state to state. If you want to go this route, hire a lawyer.",
"title": ""
}
] |
fiqa
|
e021461544bea019db4f88da38db8248
|
How to exercise options when you they're worth more money than you have? [duplicate]
|
[
{
"docid": "972cce8568cc0e5fb62e7e6a4a2e76a8",
"text": "The fact that the option is deep in the money will be reflected in the market price of the option so you can just sell it at a profit. If there's a (n almost) guaranteed profit to be had, however, you can always find someone who will lend you the money to cover the exercise... they'll charge you interest, however!",
"title": ""
}
] |
[
{
"docid": "72175f90adc2e004c434fd308c1d2327",
"text": "That is a weird one. Typically one never needs to layout cash to exercise an option. One would only choose to use option 1, if one is seeking to buy the options. This would occur if an employee was leaving a company, would no longer be eligible for the ISO (and thereby forfeit any option grant), and does not want to exercise the options. However, what is not weird is the way income tax works, you are taxed on your income in the US. I assume you are talking about the US here. So if you exercise 10K shares, if under either option, you will be taxed on the profit from those share. Profit = (actual price - strike price) * shares - fees",
"title": ""
},
{
"docid": "c38937ba80ddc8d850d827280596e896",
"text": "\"Your scenario depicts 2 \"\"in the money\"\" options, not \"\"at the money\"\". The former is when the share price is higher than the option strike, the second is when share price is right at strike. I agree this is a highly unlikely scenario, because everyone pricing options knows what everyone else in that stock is doing. Much about an option has everything to do with the remaining time to expiration. Depending on how much more the buyer believes the stock will go up before hitting the expiration date, that could make a big difference in which option they would buy. I agree with the others that if you're seeing this as \"\"real world\"\" then there must be something going on behind the scenes that someone else knows and you don't. I would tread with caution in such a situation and do my homework before making any move. The other big factor that makes your question harder to answer more concisely is that you didn't tell us what the expiration dates on the options are. This makes a difference in how you evaluate them. We could probably be much more helpful to you if you could give us that information.\"",
"title": ""
},
{
"docid": "f17641cdf736100a78e0521fc4b00a67",
"text": "\"I think the question, as worded, has some incorrect assumptions built into it, but let me try to hit the key answers that I think might help: Your broker can't really do anything here. Your broker doesn't own the calls you sold, and can't elect to exercise someone else's calls. Your broker can take action to liquidate positions when you are in margin calls, but the scenario you describe wouldn't generate them: If you are long stock, and short calls, the calls are covered, and have no margin requirement. The stock is the only collateral you need, and you can have the position on in a cash (non-margin) account. So, assuming you haven't bought other things on margin that have gone south and are generating calls, your broker has no right to do anything to you. If you're wondering about the \"\"other guy\"\", meaning the person who is long the calls that you are short, they are the one who can impact you, by exercising their right to buy the stock from you. In that scenario, you make $21, your maximum possible return (since you bought the stock at $100, collected $1 premium, and sold it for $120. But they usually won't do that before expiration, and they pretty definitely won't here. The reason they usually won't is that most options trade above their intrinsic value (the amount that they're in the money). In your example, the options aren't in the money at all. The stock is trading at 120, and the option gives the owner the right to buy at 120.* Put another way, exercising the option lets the owner buy the stock for the exact same price anyone with no options can in the market. So, if the call has any value whatsoever, exercising it is irrational; the owner would be better off selling the call and buying the stock in the market.\"",
"title": ""
},
{
"docid": "495c342f3cfec0dc4d35802cfc0b6011",
"text": "An option gives you the option rather than the obligation to buy (or sell) the underlying so you don't have to exercise you can just let the option expire (so long it doesn't have an automatic expiry). After expiration the option is worthless if it is out of the money but other than that has no hangover. Option prices normally drop as the time value of the option decays. An option has two values associated with it; time value and exercise value. Far out of the money (when the price of the underlying is far from the strike price on the losing side) options only have time value whereas deep in the money options (as yours seems to be) has some time value as well as the intrinsic value of the right to buy (sell) at a low (high) price and then sell (buy) the underlying. The time value of the option comes from the possibility that the price of the underlying will move (further) in your favour and make you more money at expiry. As expiry closes it is less likely that there will be a favourable mood so this value declines which can cause prices to move sharply after a period of little to no revaluing. Up to now what I have said applies to both OTC and traded options but exchange traded options have another level of complexity in their trading; because there are fewer traders in the options market the size of trade at which you can move the market is much lower. On the equities markets you may need to trade millions of shares to have be substantial enough to significantly move a price, on the options markets it could be thousands or even hundreds. If these are European style options (which sounds likely) and a single trading entity was holding a large number of the exchange traded options and now thinks that the price will move significantly against them before expiry their sell trade will move the market lower in spite of the options being in the money. Their trade is based on their supposition that by the time they can exercise the option the price will be below the strike and they will lose money. They have cashed out at a price that suited them and limited what they will lose if they are right about the underlying. If I am not correct in my excise style assumption (European) I may need more details on the trade as it seems like you should just exercise now and take the profit if it is that far into the money.",
"title": ""
},
{
"docid": "1536c848cdd591d961acfde183d022a6",
"text": "\"Number 2 cannot occur. You can buy the call back and sell the stock, but the broker won't force that #2 choice. To trade options, you must have a margin account. No matter how high the stock goes, once \"\"in the money\"\" the option isn't going to rise faster, so your margin % is not an issue. And your example is a bit troublesome to me. Why would a $120 strike call spike to $22 with only a month left? You've made the full $20 on the stock rise and given up any gain after that. That's all. The call owner may exercise at any time. Edit: @jaydles is right, there are circumstances where an option price can increase faster than the stock price. Options pricing generally follows the Black-Scholes model. Since the OP gave us the current stock price, option strike price, and time to expiration, and we know the risk free rate is <1%, you can use the calculator to change volatility. The number two scenario won't occur, however, because a covered call has no risk to the broker, they won't force you to buy the option back, and the option buyer has no motive to exercise it as the entire option value is time premium.\"",
"title": ""
},
{
"docid": "2502f030fa961b4e3a9fc48d7cbecae3",
"text": "Sounds like an illiquid option, if there are actually some bidders, market makers, then sell the option at market price (market sell order). If there are not market makers then place a really low limit sell order so that you can sit at the ask in the order book. A lot of time there is off-book liquidity, so there may be a party looking for buy liquidity. You can also exercise the option to book the loss (immediately selling the shares when they get delivered to you), if this is an American style option. But if the option is worthless then it is probably significantly underwater, and you'd end up losing a lot more as you'd buy the stock at the strike price but only be able to sell at its current market value. The loss could also be increased further if there are even MORE liquidity issues in the stock.",
"title": ""
},
{
"docid": "f9f75fbb78003bb77cd4b14e416ba5b2",
"text": "I am going to. Like I said I have not traded options much in general, but I can see a lot of potential in derivatives in general, and it makes me kind of grin. In the case of commodities, the advantages are really apparent. The only problem I see with stock options is that they expire, and thus if you are more long term bull on a stock, it would be harder. But for things like commodities, that are shorter term any ways and require margin, it makes a lot of sense IMO. I could see how you could gain a larger diversification through options (being able to bet on Russell 2000, S&P, etc. ) or esoteric markets (electricity). I will look up that book that you mentioned. Thanks man.",
"title": ""
},
{
"docid": "8cf3ee798df981b9efef187f812a8619",
"text": "If you're talking about ADBE options, that is an American style option, which can be exercised at any time before expiration. You can exercise your options by calling your broker and instructing them to exercise. Your broker will charge you a nominal fee to do so. As an aside, you probably don't want to exercise the option right now. It still has a lot of time value left, which you'll lose if you exercise. Just sell the option if you don't think ADBE will keep going up.",
"title": ""
},
{
"docid": "63a56308a95aeff53e47b12fe249d161",
"text": "\"You may look into covered calls. In short, selling the option instead of buying it ... playing the house. One can do this on the \"\"buying side\"\" too, e.g. let's say you like company XYZ. If you sell the put, and it goes up, you make money. If XYZ goes down by expiration, you still made the money on the put, and now own the stock - the one you like, at a lower price. Now, you can immediately sell calls on XYZ. If it doesn't go up, you make money. If it does goes up, you get called out, and you make even more money (probably selling the call a little above current price, or where it was \"\"put\"\" to you at). The greatest risk is very large declines, and so one needs to do some research on the company to see if they are decent -- e.g. have good earnings, not over-valued P/E, etc. For larger declines, one has to sell the call further out. Note there are now stocks that have weekly options as well as monthly options. You just have to calculate the rate of return you will get, realizing that underneath the first put, you need enough money available should the stock be \"\"put\"\" to you. An additional, associated strategy, is starting by selling the put at a higher than current market limit price. Then, over a couple days, generally lowering the limit, if it isn't reached in the stock's fluctuation. I.e. if the stock drops in the next few days, you might sell the put on a dip. Same deal if the stock finally is \"\"put\"\" to you. Then you can start by selling the call at a higher limit price, gradually bringing it down if you aren't successful -- i.e. the stock doesn't reach it on an upswing. My friend is highly successful with this strategy. Good luck\"",
"title": ""
},
{
"docid": "95425b2dd48fd47992af3dbce0ba899e",
"text": "You're assuming options traded on the open market. To close open positions, a seller buys them back on the open market. If there's little on offer, this will drive the price up.",
"title": ""
},
{
"docid": "a3b07a4b217c94d673981374e4e7ced8",
"text": "This can be done, you can be prosecuted for some forms of it, in any case there are more riskless ways of doing what you suggested. First, buying call options from market makers results in market makers buying shares at the same delta as the call option. (100 SHARES X DELTA = How many shares MM's bought). You can time this with the volume and depth of the shares market to get a bigger resulting move caused by your options purchase to get bigger quote changes in your option. So on expiration day you can be trade near at the money options back and forth between being out the money and in the money. You would exit the position into liquidity at a profit. The risk here is that you can be sitting on a big options position, where the commissions costs get really big, but you can spread this out amongst several options contracts. Second, you can again take advantage of market maker inefficiencies by getting your primary position (whether in the share market or options market) placed, and then your other position being a very large buy order a few levels below the best bid. Many market makers and algorithms will jump in front of your, they think they are being smart, but it will raise the best bid and likely make a few higher prints for the mark, raising the price of your call option. And eventually remove your large buy order. Again, you exit into liquidity. This is called spoofing. There have been some regulatory actions against people in doing this in the last few years. As for consequences, you need to put things into perspective. US capital market regulators have the most nuanced regulations and enforcement actions of worldwide capital market regulators, and even then they get criticized for being unable or unwilling to curb these practices. With that perspective American laws are basically a blueprint on what to do in 100 other country's stock exchanges, where the legislature has never gotten around to defining the same laws, the securities regulator is even more underfunded and toothless, and the markets more inefficient. Not advice, just reality.",
"title": ""
},
{
"docid": "3631af51555feb4c27a4241fe7870abe",
"text": "\"Your broker likely didn't close your position out because it is a covered position. Why interfere with a trade that has no risk to it, from their perspective? There's no risk for the broker since your account holds the shares available for delivery (definition of covered), for if and when the options you wrote (sold) are exercised. And buyers of those options will eventually exercise the options (by expiration) if they remain in-the-money. There's only a chance that an option buyer exercises prematurely, and usually they don't because there's often time value left in the option. That the option buyer has an (ahem) \"\"option\"\" to exercise is a very key point. You wrote: \"\"I fully expected my position to be automatically liquidated by whoever bought my call\"\". That's a false assumption about the way options actually work. I suggest some study of the option exercise FAQs here: Perhaps if your position were uncovered – i.e. you wrote the call without owning the stock (don't try this at home, kids!) – and you also had insufficient margin to cover such a short position, then the broker might have justifiably liquidated your position. Whereas, in a covered call situation, there's really no reason for them to want to interfere – and I would consider that interference, as opposed to helpful. The situation you've described is neither risky for them, nor out of the ordinary. It is (and should be) completely up to you to decide how to close out the position. Anyway, your choices generally are:\"",
"title": ""
},
{
"docid": "b77ce1eda52bbf046d67670793dc2e8d",
"text": "You have a lot of different questions in your post - I am only responding to the request for how to value the ESPP. When valuing an ESPP, don't think about what you might sell the shares for in the future, think about what the market would charge you for that option today. In general, an option is worth much less than the underlying share itself. For the simplest example, assume you work at a public company, and your exercise price for your options is $.30, and you can only exercise those options until the end of today, and the cost of the shares on the public stock exchange is also $.30. You have the same 'strike price' as everyone else in the market, making your option worth nothing. In truth, holding that right to a specific strike price into the future does give you value, because it means you can realize the upside in share price gains, without risking any money on share losses. So, how do you value the options? If it's a public company with an active options market, you can easily compare your $.30 strike price with the value of call options in the market that have a $.30 strike price. That becomes the value to you of the option (caveat: it is unlikely you can find an exact match for the terms of your vesting period, but you should be able to find a good starting point). If it's a public company without an active options market, you will have to do a bit of estimation. If a current share is worth $.25 (so, close to your strike price), then your option is worth a little bit, but not much. Compare other shares in your industry / company size to get examples of the relative value between an option and a share. If the current share price is worth $.35, then your option is worth about $.05 [the $.05 profit you could get by immediately exercising and selling, plus a bit more for an option on a share that you can't buy in the open market]. If it's a private company, then you need to be very clear on how shares are to be valued, and what methods you have available to sell back to the company / other individuals. You can then consider as per above, how to value the option for a share, vs the share itself. Without a clear way to sell your shares of a private company [ideally through a sale directly back to the company that you are able to force them to agree on; ie: the company will buyback shares at 5x Net income for the previous year, or something like that], then the value of a small number of shares is very nebulous. There is an extremely limited market for shares of private companies, if you don't own enough to exert control. In your case, because the valuation appears to be $2/share [be sure that these are the same share classes you have the option to buy], your option would be worth a little more than $1.70, if you didn't have to wait 4 years to exercise it. This would be total compensation of about $10k, if you were able to exercise today. Many people don't end up working for an early job in their career for 4 years, so you need to consider whether how much that will reduce the value of the ESPP for you personally. Compared with salary of 90k, 10k worth of stock in 4 years may not be a heavy motivating compensation consideration. Note also that because the company is not public, the valuation of $2/share should be taken with a grain of salt.",
"title": ""
},
{
"docid": "dbb76265c128c9637b1abd885171a05d",
"text": "Think of it this way: 1) You buy 1k in call options that will let you buy 100k of stock when they expire in the money in a year. 2) You take the 99k you would have spent on the stock and invest it in a risk free savings account. 3) Assume the person who sold you the call, immediately hedges the position by buying 100k of stock to deliver when the options expire. The amount of money you could make on risk free interest needs to be comparable to the premium you paid the option writer for tying up their capital, or they wouldn't have made the trade. So higher risk free rates would mean a higher call price. NOTE: The numbers are not equal because of the risk in writing the option, but they will move the same direction.",
"title": ""
},
{
"docid": "f8a43686a30c04e0ad06aa716e32d72c",
"text": "\"Black-Scholes is \"\"close enough\"\" for American options since there aren't usually reasons to exercise early, so the ability to do so doesn't matter. Which is good since it's tough to model mathematically, I've read. Early exercise would usually be caused by a weird mispricing for some technical / market-action reason where the theoretical option valuations are messed up. If you sell a call that's far in the money and don't get any time value (after the spread), for example, you probably sold the call to an arbitrageur who's just going to exercise it. But unusual stuff like this doesn't change the big picture much.\"",
"title": ""
}
] |
fiqa
|
ce93198bcdc353d6139a5990121e9b4e
|
Value of a call option spread
|
[
{
"docid": "5f2843f0727becf25573f503842927fc",
"text": "On expiry, with the underlying share price at $46, we have : You ask : How come they substract 600-100. Why ? Because you have sold the $45 call to open you position, you must now buy it back to close your position. This will cost you $100, so you are debited for $100 and this debit is being represented as a negative (subtracted); i.e., -$100 Because you have purchased the $40 call to open your position, you must now sell it to close your position. Upon selling this option you will receive $600, so you are credited with $600 and this credit is represented as a positive (added) ; i.e., +$600. Therefore, upon settlement, closing your position will get you $600-$100 = $500. This is the first point you are questioning. (However, you should also note that this is the value of the spread at settlement and it does not include the costs of opening the spread position, which are given as $200, so you net profit is $500-$200 = $300.) You then comment : I know I am selling 45 Call that means : As a writer: I want stock price to go down or stay at strike. As a buyer: I want stock price to go up. Here, note that for every penny that the underlying share price rises above $45, the money you will pay to buy back your short $45 call option will be offset by the money you will receive by selling the long $40 call option. Your $40 call option is covering the losses on your short $45 call option. No matter how high the underlying price settles above $45, you will receive the same $500 net credit on settlement. For example, if the underlying price settles at $50, then you will receive a credit of $1000 for selling your $40 call, but you will incur a debit of $500 against for buying back your short $45 call. The net being $500 = $1000-$500. This point is made in response to your comments posted under Dr. Jones answer.",
"title": ""
},
{
"docid": "cd145cb1b9257d7f0fc1084a1d650913",
"text": "I think you're missing the fact that the trader bought the $40 call but wrote the $45 call -- i.e. someone else bought the $45 call from him. That's why you have to subtract 600-100. At expiration, the following happens: So $600 + -$100 = $500 total profit. Note: In reality he would probably use the shares he gets from the first call to satisfy the shares he owes on the second call, so the math is even simpler:",
"title": ""
},
{
"docid": "3738d4730492b2c16c3e0de5fa4b797b",
"text": "You have to look at the real price of the share to calculate the value of the spread. 42$ at the start, 46$ at the end. Think of it this way: When price was 42$ the call 45$ was out of the money, worth 100$ of time value only=100 the call 40$ was in the money and worth 200$ of intrinsic + 100 time value=300 the difference was 200$ Now that price is 46$ the call 45$ is worth 100$ in the money, real or intrinsic value the call 40$ is worth 600$ in the money, real or intrinsic value the difference is 500$ NOTE: 1. Commission fees are not included. 2. Time value of 100$ on both calls when price is 42$ is incorrect and for teaching purpose only.",
"title": ""
},
{
"docid": "3e6d4ac77831963abd6658de914ac4f9",
"text": "The Explanation is correct. The Traders buys the 1st call and profits linearly form 40$ onwards. At at 45 the short call kick in and neutralizes any further profit on the first call.",
"title": ""
}
] |
[
{
"docid": "9f9c661e50e60782e8737963f1e16b86",
"text": "The value of an option has 2 components, the extrinsic or time value element and the intrinsic value from the difference in the strike price and the underlying asset price. With either an American or European option the intrinsic value of a call option can be 'locked in' any time by selling the same amount of the underlying asset (whether that be a stock, a future etc). Further, the time value of any option can be monitised by delta hedging the option, i.e. buying or selling an amount of the underlying asset weighted by the measure of certainty (delta) of the option being in the money at expiry. Instead, the extra value of the American option comes from the financial benefit of being able to realise the value of the underlying asset early. For a dividend paying stock this will predominantly be the dividend. But for non-dividend paying stocks or futures, the buyer of an in-the-money option can realise their intrinsic gains on the option early and earn interest on the profits today. But what they sacrifice is the timevalue of the option. However when an option becomes very in the money and the delta approaches 1 or -1, the discounting of the intrinsic value (i.e. the extra amount a future cash flow is worth each day as we draw closer to payment) becomes larger than the 'theta' or time value decay of the option. Then it becomes optimal to early exercise, abandon the optionality and realise the monetary gains upfront. For a non-dividend paying stock, the value of the American call option is actually the same as the European. The spot price of the stock will be lower than the forward price at expiry discounted by the risk free rate (or your cost of funding). This will exactly offset the monetary gain by exercising early and banking the proceeds. However for an option on a future, the value today of the underlying asset (the future) is the same as at expiry and its possible to fully realise the interest earned on the money received today. Hence the American call option is worth more. For both examples the American put option is worth more, slightly more so for the stock. As the stock's spot price is lower than the forward price, the owner of the put option realises a higher (undiscounted) intrinsic profit from selling the stock at the higher strike price today than waiting till expiry, as well as realising the interest earned. Liquidity may influence the perceived value of being able to exercise early but its not a tangible factor that is added to the commonly used maths of the option valuation, and isn't really a consideration for most of the assets that have tradeable option markets. It's also important to remember at any point in the life of the option, you don't know the future price path. You're only modelling the distribution of probable outcomes. What subsequently happens after you early exercise an American option no longer has any bearing on its value; this is now zero! Whether the stock subsequently crashes in price is irrelevent. What is relevant is that when you early exercise a call you 'give up' all potential upside protected by the limit to your downside from the strike price.",
"title": ""
},
{
"docid": "582717eb89dc9346c0ff6f09069b1c98",
"text": "\"It depends on the volatility of the underlying stock. But for \"\"normal\"\" levels of volatility, the real value of that option is probably $3.50! Rough estimates of the value of the option depending on volatility levels: Bottom line: unless this is a super volatile stock, it is trading at $3.50 for a reason. More generally: it is extremely rare to find obvious arbitrage opportunities in the market.\"",
"title": ""
},
{
"docid": "4ba855945cfa8e9af71a8036def16481",
"text": "\"Bull means the investor is betting on a rising market. Puts are a type of stock option where the seller of a put option promises to buy 100 shares of stock from the buyer of the put option at a pre-agreed price called the strike price on any day before expiration day. The buyer of the put option does not have to sell (it is optional, thats why it is called buying an option). However, the seller of the put is required to make good on their promise to the buyer. The broker can require the seller of the put option to have a deposit, called margin, to help make sure that they can make good on the promise. Profit... The buyer can profit from the put option if the stock price moves down substantially. The buyer of the put option does not need to own the stock, he can sell the option to someone else. If the buyer of the put option also owns the stock, the put option can be thought of like an insurance policy on the value of the stock. The seller of the put option profits if the stock price stays the same or rises. Basically, the seller comes out best if they can sell put options that no one ends up using by expiration day. A spread is an investment consisting of buying one option and selling another. Let's put bull and put and spread together with an example from Apple. So, if you believed Apple Inc. AAPL (currently 595.32) was going up or staying the same through JAN you could sell the 600 JAN put and buy the 550 put. If the price rises beyond 600, your profit would be the difference in price of the puts. Let's explore this a little deeper (prices from google finance 31 Oct 2012): Worst Case: AAPL drops below 550. The bull put spread investor owes (600-550)x100 shares = $5000 in JAN but received $2,035 for taking this risk. EDIT 2016: The \"\"worst case\"\" was the outcome in this example, the AAPL stock price on options expiry Jan 18, 2013 was about $500/share. Net profit = $2,035 - $5,000 = -$2965 = LOSS of $2965 Best Case: AAPL stays above 600 on expiration day in JAN. Net Profit = $2,035 - 0 = $2035 Break Even: If AAPL drops to 579.65, the value of the 600 JAN AAPL put sold will equal the $2,035 collected and the bull put spread investor will break even. Commissions have been ignored in this example.\"",
"title": ""
},
{
"docid": "bbf944a4d58bf8b85e060ca338784b6b",
"text": "Your math shows that you bought an 'at the money' option for .35 and when the stock is $1 above the strike, your $35 (options trade as a contract for 100 shares) is now worth $100. You knew this, just spelling it out for future readers. 1 - Yes 2 - An execute/sell may not be nesesary, the ooption will have time value right until expiration, and most ofter the bid/ask will favor selling the option. You should ask the broker what the margin requirement is for an execute/sell. Keep in mind this usually cannot be done on line, if I recall, when I wanted to execute, it was a (n expensive) manual order. 3 - I think I answered in (2), but in general they are not identical, the bid/ask on options can get crazy. Just look at some thinly traded strikes and you'll see what I mean.",
"title": ""
},
{
"docid": "ea1540671e85c547c40d496a04afd912",
"text": "\"The blue line is illustrating the net profit or loss the investor will realise according to how the price of the underlying asset settles at expiry. The x-axis represents the underlying asset price. The y-axis represents the profit or loss. In the first case, the investor has a \"\"naked put write\"\" position, having sold a put option. The strike price of the put is marked as \"\"A\"\" on the x-axis. The maximum profit possible is equal to the total premium received when the option contract was sold. This is represented by that portion of the blue line that is horizontal and extending from the point above that point marked \"\"A\"\" on the x-axis. This corresponds to the case that the price of the underlying asset settles at or above the strike price on the day of expiry. If the underlying asset settles at a price less than the strike price on the day of expiry, then the option with be \"\"in the money\"\". Therefore the net settlement value will move from a profit to a loss, depending on how far in the money the option is upon expiry. This is represented by the diagonal line moving from above the \"\"A\"\" point on the x-axis and moving from a profit to a loss on the y-axis. The diagonal line crosses the x-axis at the point where the underlying asset price is equal to \"\"A\"\" minus the original premium rate at which the option was written - i.e., net profit = zero. In the second case, the investor has sold a put option with a strike price of \"\"B\"\" and purchase a put option with a strike price \"\"A\"\", where A is less than B. Here, the reasoning is similar to the first example, however since a put option has been purchase this will limit the potential losses should the underlying asset move down strongly in value. The horizontal line above the x-axis marks the maximum profit while the horizontal line below the x-axis marks the maximum loss. Note that the horizontal line above the x-axis is closer to the x-axis that is the horizontal line below the x-axis. This is because the maximum profit is equal to the premium received for selling the put option minus the premium payed for buying the put option at a lower strike price. Losses are limited since any loss in excess of the strike price \"\"A\"\" plus the premium payed for the put purchased at a strike price of \"\"A\"\" is covered by the profit made on the purchased put option at a strike price of \"\"A\"\".\"",
"title": ""
},
{
"docid": "01bc163dafeb74461141b9a95710d206",
"text": "\"A covered call risks the disparity between the purchase price and the potential forced or \"\"called\"\" sale price less the premium received. So buy a stock for $10.00 believing it will drop you or not rise above $14.00 for a given period of days. You sell a call for a $1.00 agreeing to sell your stock for $14.00 and your wrong...the stock rises and at 14.00 or above during the option period the person who paid you the $1.00 premium gets the stock for a net effective price of $15.00. You have a gain of 5$. Your hypothecated loss is unlimited in that the stock could go to $1mil a share. That loss is an opportunity loss you still had a modest profit in actual $. The naked call is a different beast. you get the 1.00 in commission to sell a stock you don't own but must pay for that right. so lets say you net .75 in commission per share after your sell the option. as long as the stock trades below $14.00 during the period of the option you sold your golden. It rises above the strike price you must now buy that stock at market to fill the order when the counter party choses to exercise the option which results in a REAL loss of 100% of the stocks market price less the .75 a share you made. in the scenarios a 1000 shares that for up $30.00 a share over the strike price make you $5,000 in a covered call and lose you $29,250 in a naked call.Naked calls are speculative. Covered calls are strategic.\"",
"title": ""
},
{
"docid": "ac4977a4961a36d663225f022a72b039",
"text": "Not to be a jerk, since I'm learning about options myself, but I think you have a few things wrong about your tesla put postion. First, assuming it was itm or atm within a week of strike it would maybe be worth $12-15, I glanced at the 11/10 put strikes ~325 trades for $12.65 https://www.barchart.com/stocks/quotes/TSLA/options?expiration=2017-11-10 The closer it gets to expiry theta decay reduces put value significantly, the 325's that expire tomorrow are only worth $2.60. Expecting TSLA to drop from 325 to 50 a share by Jan has a .006% chance of occuring according to the current delta. It's a lottery ticket at best. _____ Lastly the $50 price is the expected share price at the date of expiry. The price you pay is 57c for the options. So in order to get to your 494k number TSLA would need to decline $50 dollars to a price of 275 a share. You wouldn't want to buy 50 dollar puts, just the 275 puts, provided it declines very quickly. EDIT: I was looking at the recent expiration to get an idea of atm or itm prices, since it's not like you would hold to expiration. Also the Jan has a 0.6% chance of hitting 50, not .006%. That said what I've noticed when things start to slide is that puts have a weird way of pricing themselves. For example when something gradually goes up all of the calls go up down the chain through time frames, but puts do not in the same fashion. Further out lower priced puts won't move nearly as much unless the company is basically headed for bankruptcy.",
"title": ""
},
{
"docid": "3d3024badcf485a7f35871a15bc54bf9",
"text": "\"The question you are asking concerns the exercise of a short option position. The other replies do not appear to address this situation. Suppose that Apple is trading at $96 and you sell a put option with a strike price of $95 for some future delivery date - say August 2016. The option contract is for 100 shares and you sell the contract for a premium of $3.20. When you sell the option your account will be credited with the premium and debited with the broker commission. The premium you receive will be $320 = 100 x $3.20. The commission you pay will depend on you broker. Now suppose that the price of Apple drops to $90 and your option is exercised, either on expiry or prior to expiry. Then you would be obliged to take delivery of 100 Apple shares at the contracted option strike price of $95 costing you $9,500 plus broker commission. If you immediately sell the Apple shares you have purchased under your contract obligations, then assuming you sell the shares at the current market price of $90 you would realise a loss of $500 ( = 100x($95-$90) )plus commission. Since you received a premium of $320 when you sold the put option, your net loss would be $500-$320 = $180 plus any commissions paid to your broker. Now let's look at the case of selling a call option. Again assume that the price of Apple is $96 and you sell a call option for 100 shares with a strike price of $97 for a premium of $3.60. The premium you receive would be $360 = 100 x $3.60. You would also be debited for commission by your broker. Now suppose that the price of Apple shares rises to $101 and your option is exercised. Then you would be obliged to deliver 100 Apple shares to the party exercising the option at the contracted strike price of $97. If you did not own the shares to effect delivery, then you would need to purchase those shares in the market at the current market price of $101, and then sell them to the party exercising the option at the strike price of $97. This would realise an immediate loss of $400 = 100 x ($101-$97) plus any commission payable. If you did own the shares, then you would simply deliver them and possibly pay some commission or a delivery fee to your broker. Since you received $360 when you sold the option, your net loss would be $40 = $400-$360 plus any commission and fees payable to the broker. It is important to understand that in addition to these accounting items, short option positions carry with them a \"\"margin\"\" requirement. You will need to maintain a margin deposit to show \"\"good faith\"\" so long as the short option position is open. If the option you have sold moves against you, then you will be called upon to put up extra margin to cover any potential losses.\"",
"title": ""
},
{
"docid": "89ec2c32f8875d784be9200e9b3c8c6d",
"text": "\"I think the issue you are having is that the option value is not a \"\"flow\"\" but rather a liability that changes value over time. It is best to illustrate with a balance sheet. The $33 dollars would be the premium net of expense that you would receive from your brokerage for having shorted the options. This would be your asset. The liability is the right for the option owner (the person you sold it to) to exercise and purchase stock at a fixed price. At the moment you sold it, the \"\"Marked To Market\"\" (MTM) value of that option is $40. Hence you are at a net account value of $33-$40= $-7 which is the commission. Over time, as the price of that option changes the value of your account is simply $33 - 2*(option price)*(100) since each option contract is for 100 shares. In your example above, this implies that the option price is 20 cents. So if I were to redo the chart it would look like this If the next day the option value goes to 21 cents, your liability would now be 2*(0.21)*(100) = $42 dollars. In a sense, 2 dollars have been \"\"debited\"\" from your account to cover your potential liability. Since you also own the stock there will be a credit from that line item (not shown). At the expiry of your option, since you are selling covered calls, if you were to be exercised on, the loss on the option and the gain on the shares you own will net off. The final cost basis of the shares you sold will be adjusted by the premium you've received. You will simply be selling your shares at strike + premium per share (0.20 cents in this example)\"",
"title": ""
},
{
"docid": "285a03c9ad4b1e6cab12e0675e95ec57",
"text": "If we were to observe some call price (e.g., 15), and then derived implied volatilities from the BS formula depending on different strike prices but fixed maturity (i.e, maturity = 1, and strike goes from 80 to 140??), would we then see a smile? Yes. Market prices for various strikes and a given maturity often have higher implied volatilities from the Black-Scholes model away from at-the-money. It is not accounted for in the Black-Scholes model in the fact that volatility is not a function of strike, so volatility is assumed to be constant across strikes, but the market does not price options that way. I don't know that a quantitative theory has ever been proven; I've always just assumed that people are willing to pay slightly more for options deep in or out of the money based on their strategy, but I have no evidence to base that theory on.",
"title": ""
},
{
"docid": "325b30fb598f679f0d3dc954b0dbdfdf",
"text": "I have an example of a trade I made some time ago. By entering the position as a covered call, I was out of pocket $5.10, and if the stock traded flat, i.e. closed at the same $7.10 16 months hence, I was up 39% or nearly 30%/yr. As compared to the stock holder, if the stock fell 28%, I'd still break even, vs his loss of 28%. Last, if the stock shot up, I'd get 7.50/5.10 or a 47% return, vs the shareholder who would need a price of $10.44 to reflect that return. Of course, a huge jump in the shares, say to $15, would benefit the option buyer, and I would have left money on the table. But this didn't happen. The stock was at $8 at expiration, and I got my 47% return. The option buyer got 50 cents for his $2 bet. Note, the $2 option price reflected a very high implied volatility.",
"title": ""
},
{
"docid": "94d834e964f6c5946049a37c89b31d7f",
"text": "\"Joke warning: These days, it seems that rogue trading programs are the big market makers (this concludes the joke) Historically, exchange members were market makers. One or more members guaranteed a market in a particular stock, and would buy whatever you wanted to sell (or vice-versa). In a balanced market -- one where there were an equal number of buyers and sellers -- the spread was indeed profit for them. To make this work, market makers need an enormous amount of liquidity (ability to hold an inventory of stocks) to deal with temporary imbalances. And a day like October 29, 1929, can make that liquidity evaporate. I say \"\"historically,\"\" because I don't think that any stock market works this way today (I was discussing this very topic with a colleague last week, went to Wikipedia to look at the structure of the NYSE, and saw no mention of exchange members as market makers -- in fact, it appears that the NYSE is no longer a member-based exchange). Instead, today most (all?) trading happens on \"\"electronic crossing networks,\"\" where the spread is simply the difference between the highest bid and lowest ask. In a liquid stock, there will be hundreds if not thousands of orders clustered around the \"\"current\"\" price, usually diverging by fractions of a cent. In an illiquid stock, there may be a spread, but eventually one bid will move up or one ask will move down (or new bids will come in). You could claim that an entity with a large block of stock to move takes the role of market maker, but it doesn't have the same meaning as an exchange market maker. Since there's no entity between the bidder and asker, there's no profit in the spread, just a fee taken by the ECN. Edit: I think you have a misconception of what the \"\"spread\"\" is. It's simply the difference between the highest bid and the lowest offer. At the instant a trade takes place, the spread is 0: the highest bid equals the lowest offer, and the bidder and seller exchange shares for money. As soon as that trade is completed, the spread re-appears. The only way that a trade happens is if buyer and seller agree on price. The traditional market maker is simply an entity that has the ability to buy or sell an effectively unlimited number of shares. However, if the market maker sets a price and there are no buyers, then no trade takes place. And if there's another entity willing to sell shares below the market maker's price, then the buyers will go to that entity unless the market's rules forbid it.\"",
"title": ""
},
{
"docid": "43851a63b4ac85e017a720b23423841a",
"text": "A long call options spread. In this case, a bet that the USO ETF would recover to $35. You can see, I got in when USO was $28, and it's continued to drop, but it has till Jan '17 to recover. The spread is set up to give leverage, when I entered the trade, a 50% recovery would result in a 200% gain, or 3X my bet. An option spread can be bought using any two strikes, and with different payouts depending on how far out of the money the strikes are.",
"title": ""
},
{
"docid": "fc099b1abdf9dc876d19f6f58c312c29",
"text": "\"When the buyout happens, the $30 strike is worth $10, as it's in the money, you get $10 ($1000 per contract). Yes, the $40 strike is pretty worthless, it actually dropped in value today. Some deals are worded as an offer or intention, so a new offer can come in. This appears to be a done deal. From Chapter 8 of CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS - FEB 1994 with supplemental updates 1997 through 2012; \"\"In certain unusual circumstances, it might not be possible for uncovered call writers of physical delivery stock and stock index options to obtain the underlying equity securities in order to meet their settlement obligations following exercise. This could happen, for example, in the event of a successful tender offer for all or substantially all of the outstanding shares of an underlying security or if trading in an underlying security were enjoined or suspended. In situations of that type, OCC may impose special exercise settlement procedures. These special procedures, applicable only to calls and only when an assigned writer is unable to obtain the underlying security, may involve the suspension of the settlement obligations of the holder and writer and/or the fixing of cash settlement prices in lieu of delivery of the underlying security. In such circumstances, OCC might also prohibit the exercise of puts by holders who would be unable to deliver the underlying security on the exercise settlement date. When special exercise settlement procedures are imposed, OCC will announce to its Clearing Members how settlements are to be handled. Investors may obtain that information from their brokerage firms.\"\" I believe this confirms my observation. Happy to discuss if a reader feels otherwise.\"",
"title": ""
},
{
"docid": "a0b27816a5462ba66cd4ee31b70b3784",
"text": "You would need additional information (login information [username and which service]) to fully make use of it though. I'm not sure how you would collect that? You could use such a service to build a dictionary for a dictionary attack I guess. It's only after this sort of attack that people start explicitly checking their passwords though? edit: From re-reading your comment I see you've already come up with the same limitations. To answer the question you actually asked, I would say you have no way of knowing these sha1 generators don't store the queries, just that it would be difficult to use the resulting dictionary. You would see which hashes are on your list versus the hashes on the leaked list. And then use those matches as a dictionary to attack someone's linkedin account.",
"title": ""
}
] |
fiqa
|
56d7969a95eae04a20ba7219c84333ce
|
Can a put option and call option be exercised for the same stock with different strike prices?
|
[
{
"docid": "ced0eec88f0ff8ca5c9fb5e786ee9731",
"text": "\"What you did is called a \"\"strangle.\"\" It's rather unlikely that both will be exercised on the same day. But yes, it can happen. That is if the market is very volatile on a given day, so that the stock hits 13 in the morning, the put gets exercised, and then hits 15 later in the day, so the call gets exercised. Or vice versa. More to the point, the prices are close enough that one might be hit on one day, and the other on a DIFFERENT day. In either case, if one side gets hit, you need to reevaluate your position in the other. But basically, any open position you have can be hit at any time. The only way to avoid this risk is not to have positions.\"",
"title": ""
},
{
"docid": "a46d1b49e84a23dc41d9a8c35eb44328",
"text": "You could have both options exercised (and assigned to you) on the same day, but I don't think you could lose money on both on the same day. The reason is that while exercises are immediate, assignments are processed after the markets close at the end of each day. See http://www.888options.com/help/faq/assignment.jsp for details. So you would get both assignments at the same time, that night. The net effect should be that you don't own any stock (someone would put you the stock, then it'd be called away) and you don't have the options anymore. You should have incoming cash of $1500 selling the stock to the call exerciser and outgoing cash of $1300 buying from the put exerciser, right? So you would have no more options but $200 more cash in your account in the morning. You bought at 13 and sold at 15. This options position is an agreement to buy at 13 and sell at 15 at someone else's option. The way you lose money is if one of the options isn't exercised while the other is, i.e. if the stock is below 13 so nobody is going to opt to buy from you at 15, but they'll sell to you at 13; or above 15 so nobody is going to opt to sell to you at 13, but they'll buy from you at 15. You make money if neither is exercised (you keep the premium you sold for) or both are exercised (you keep the gap between the two, plus the premium). Having both exercised is surely rare, since early exercise is rare to begin with, and tends to happen when options are deep in the money; so you'd expect both to be exercised if both are deep in the money at some point. Having both be exercised on the same day ... can't be common, but it's maybe most likely just before expiration with minimal time value, if the stock moves around quickly so both options are in the money at some point during the day.",
"title": ""
}
] |
[
{
"docid": "4a80711ceb6fd70f6930a17b1ec00e4a",
"text": "In the first case, if you wish to own the stock, you just exercise the option, and buy it for the strike price. Else, you can sell the option just before expiration, it will be priced very close to its in-the-money value.",
"title": ""
},
{
"docid": "b9a82ca866a082205ecebfd675b8480e",
"text": "I cannot believe noone mentioned this so far: Every decision you make is independent from previous decisions (that is, if you only care about your expected gain). This means that your decision whether to buy the option should be the same whether you bought the same option before or not.",
"title": ""
},
{
"docid": "bbf944a4d58bf8b85e060ca338784b6b",
"text": "Your math shows that you bought an 'at the money' option for .35 and when the stock is $1 above the strike, your $35 (options trade as a contract for 100 shares) is now worth $100. You knew this, just spelling it out for future readers. 1 - Yes 2 - An execute/sell may not be nesesary, the ooption will have time value right until expiration, and most ofter the bid/ask will favor selling the option. You should ask the broker what the margin requirement is for an execute/sell. Keep in mind this usually cannot be done on line, if I recall, when I wanted to execute, it was a (n expensive) manual order. 3 - I think I answered in (2), but in general they are not identical, the bid/ask on options can get crazy. Just look at some thinly traded strikes and you'll see what I mean.",
"title": ""
},
{
"docid": "4650cb6a9fd26ed2e990dcb3e26b60da",
"text": "\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the \"\"catch\"\"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the \"\"downside risk\"\" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about \"\"vanilla\"\" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade.\"",
"title": ""
},
{
"docid": "72175f90adc2e004c434fd308c1d2327",
"text": "That is a weird one. Typically one never needs to layout cash to exercise an option. One would only choose to use option 1, if one is seeking to buy the options. This would occur if an employee was leaving a company, would no longer be eligible for the ISO (and thereby forfeit any option grant), and does not want to exercise the options. However, what is not weird is the way income tax works, you are taxed on your income in the US. I assume you are talking about the US here. So if you exercise 10K shares, if under either option, you will be taxed on the profit from those share. Profit = (actual price - strike price) * shares - fees",
"title": ""
},
{
"docid": "9b40cfde36c298fa85ed57128325b279",
"text": "Yes. There are levels of option trading permission. For example, I've never set myself up for naked put writing. But, if you already have the call spread, buying back the shorted call will leave you with a long call. This wouldn't be an issue. As long as you have the cash/margin to buy back that higher strike call.",
"title": ""
},
{
"docid": "34d5acf9a4e7a1b948c7f879ea9530e8",
"text": "(Note: I am omitting the currency units. While I strongly suspect it's US$ I don't know from the chart. The system works the same no matter what the currency.) A call or a put is the right to sell (put) or buy (call) shares at a certain price on a certain day. This is why you see a whole range of prices. Not all possible stock values are represented, the number of possibilities has to be kept reasonable. In this case the choices are even units, for an expensive stock they may be spaced even farther apart than this. The top of the chart says it's for June. It's actually the third Friday in the month, June 15th in this case. Thus these are bets on how the stock will move in the next 10 days. While the numbers are per share you can only trade options in lots of 100. The left side of the chart shows calls. Suppose you sell a call at 19 (the top of the chart) The last such trade would have gotten you a premium of 9.70 per share (the flip side of this is when the third friday rolls around it will most likely be exercised and they'll be paying you only 19 a share for a stock now trading at something over 26.) Note the volume, bid and ask columns though--you're not going to get 9.70 for such a call as there is no buyer. The most anybody is offering at present is 7.80 a share. Now, lets look farther down in the chart--say, a strike price of 30. The last trade was only .10--people think it's very unlikely that FB will rise above 30 to make this option worthwhile and thus you get very little for being willing to sell at that price. If FB stays at 26 the option will expire worthless and go away. If it's up to 31 when the 15th rolls around they'll exercise the option, take your shares and pay you 30 for them. Note that you already gave permission for the trade by selling the call, you can't back out later if it becomes a bad deal. Going over to the other side of the chart with the puts: Here the transaction goes the other way, come the 15th they have the option of selling you the shares for the strike price. Lets look at the same values we did before. 19? There's no trading, you can't do it. 30? Here you will collect 3.20 for selling the put. Come the 15th they have the right to sell you the stock for 30 a share. If it's still 26 they're certainly going to do so, but if it's up to 31 it's worthless and you pocket the 3.20 Note that you will normally not be allowed to sell a call if you don't own the shares in question. This is a safety measure as the risk in selling a call without the stock is infinite. If the stock somehow zoomed up to 10,000 when the 15th rolls around you would have to come up with the shares and the only way you could get them is buy them on the open market--you would have to come up with a million dollars. If there simply aren't enough shares available to cover the calls the result is catastrophic--whoever owns the shares simply gets to dictate terms to you. (And in the days of old this sometimes happened.)",
"title": ""
},
{
"docid": "6e6e40c1fea4268cb12f780d66f98e66",
"text": "Yes When exercising a stock option you will be buying the stock at the strike price so you will be putting up your money, if you lose that money you can declare it as a loss like any other transaction. So if the stock is worth $1 and you have 10 options with a strike at $0.50 you will spend $500 when you exercise your options. If you hold those shares and the company is then worth $0 you lost $500. I have not verified my answer so this is solely from my understanding of accounting and finance. Please verify with your accountant to be sure.",
"title": ""
},
{
"docid": "0653f5ab32bb47bfcd897c56ae279247",
"text": "\"The simplest thing to do here is to speak to your employer about what is allowed. This should be spelt out in your company's \"\"Stock Options Plan\"\" documentation. In particular, this document will include details of the vesting schedule. For example, the schedule may only allow you to exercise 25% in the first year, 25% in the second year, and the remainder in the third year. Technically I can see no reason to prevent you from the mix-and-match approach you are suggesting. However, this may not be the case according to the schedule specification.\"",
"title": ""
},
{
"docid": "83ce1b5e977862952bf765e2bcea55ad",
"text": "\"In general there are two types of futures contract, a put and call. Both contract types have both common sides of a transaction, a buyer and a seller. You can sell a put contract, or sell a call contract also; you're just taking the other side of the agreement. If you're selling it would commonly be called a \"\"sell to open\"\" meaning you're opening your position by selling a contract which is different from simply selling an option that you currently own to close your position. A put contract gives the buyer the right to sell shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to put the shares on someone else. A call contract gives the buyer the right to buy shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to call on someone for shares. \"\"American\"\" options contracts allow the buyer can exercise their rights under the contract on or before the expiration date; while \"\"European\"\" type contracts can only be exercised on the expiration date. To address your example. Typically for stock an option contract involves 100 shares of a stock. The value of these contracts fluctuates the same way other assets do. Typically retail investors don't actually exercise their contracts, they just close a profitable position before the exercise deadline, and let unprofitable positions expire worthless. If you were to buy a single call contract with an exercise price of $100 with a maturity date of August 1 for $1 per share, the contract will have cost you $100. Let's say on August 1 the underlying shares are now available for $110 per share. You have two options: Option 1: On August 1, you can exercise your contract to buy 100 shares for $100 per share. You would exercise for $10,000 ($100 times 100 shares), then sell the shares for $10 profit per share; less the cost of the contract and transaction costs. Option 2: Your contract is now worth something closer to $10 per share, up from $1 per share when you bought it. You can just sell your contract without ever exercising it to someone with an account large enough to exercise and/or an actual desire to receive the asset or commodity.\"",
"title": ""
},
{
"docid": "eda8ddc560acfd40fd1c1bb8cb99f4f5",
"text": "\"First, welcome to Money.SE. The selected page is awful. I don't know the value in listing different expirations at the same strike. Usually, all the strikes are grouped by month, so I'd be looking at Jan '15 across all strikes. \"\"In the money\"\" means the price of a stock is trading above the strike price, if a call, or below it, if a put. On 10/20 of some year, Intel was trading at $23.34. The January $25 call strike was just $0.70, and April's was $1.82. These were out of the money. The $25 puts were \"\"in the money\"\" by $1.66 so you could have paid $1.90 for the Jan $25 put, with $.24 of time premium. By November, the price rose and the put fell, to $.85, all time premium. As with stocks, the key thing is to only buy calls of stock that are going to go up. If a stock will fall, buy puts. Curious, what was the class discussion just before the teacher gave you this image?\"",
"title": ""
},
{
"docid": "9e1c1d248918ff767562b5549d2a3218",
"text": "\"According to Yahoo, AAPL was trading at $113.26 at 1:10 PM on 11/13/15, which is the approximate time of your option quote. You provided a quote for AAPL at 4:15, and the stock happened to keep going down most of the that afternoon. To make a sensible comparison, you need to take contemporary prices on both the stock and the option. The quote on the option also shows the \"\"price\"\" being outside of the bid-ask range, which suggests that the option was trading thinly and that the last price occurred sometime earlier in the day. If you use a price in the bid-ask range ($21.90-$22.30) and use the price of AAPL at the time of the put quote, you'll come up with a price that's much closer to your expectation.\"",
"title": ""
},
{
"docid": "fa31bcf6bbf9f52810afac727898f14b",
"text": "\"I can sell a PUT on it a bit out of the money, and I seemingly \"\"win\"\" either way: i.e. make money on selling the PUT, and either I get to pick up the stock cheaper if XYZ goes down, or the PUT expires worthless. In 2008, I see a bank stock (pick one) trading at $100. I buy that put from you, a $90 strike, and pay you $5 for the option. The bank blew up, and trades for a dollar. I then buy the $1 share and sell it to you for $90. You made $500 on the sale of the put, but lost $8900 when it went bad. You don't win either way, there is a chart you can construct (or a table) showing your profit or loss for every price of the underlying stock. When selling a put, you need to know what happens if the stock goes to zero since the odds of such an occurrence is non-trivial. A LEAP is already an option. With the new coding scheme for options, I'm not sure there's really any distinction between a LEAP and standard option, the LEAP just starts with a long-till-expiration time. There are no options on LEAPS that I am aware of, as they are options already.\"",
"title": ""
},
{
"docid": "98ca4d549287c7ab43dc505cd88d3e6b",
"text": "Not that I am aware. There are times that an option is available, but none have traded yet, and it takes a request to get a bid/ask, or you can make an offer and see if it's accepted. But the option chain itself has to be open.",
"title": ""
},
{
"docid": "524afee62b9dc9c8606c83b85562b9b0",
"text": "Put options are basically this. Buying a put option gives you the right but not the obligation to sell the underlying security at a certain date for a fixed price, no matter its current market value at that time. However, markets are largely effective, and the price of put options is such that if you bought them to cover you the whole time, you would on average pay more than you'd gain from the underlying security. There is no such thing as a risk-free investment.",
"title": ""
}
] |
fiqa
|
faea014eca13a0edf25eefd2a94a8631
|
Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough?
|
[
{
"docid": "303c32a5303d2c73fffe82046aca7602",
"text": "\"Having cash and bonds in your portfolio isn't just about balancing out the risk and volatility inherent in equities. Consider: If you are 100% invested in equities and the market declines by 30%, you'll be hard pressed to come up with additional money to \"\"buy low\"\". You'll miss out on the rebalancing bonus. But, if you make a point of keeping some portion of your portfolio in cash and bonds, then when the market has such a decline (and it will), you'll be able to rebalance your portfolio back to target weights — i.e. redeploy some of your cash and bonds into equities to take advantage of the lower prices.\"",
"title": ""
},
{
"docid": "a957e26c9c2338bb6e50c5611c3d019e",
"text": "\"This is always a judgement call based on your own tolerance for risk. Yes, you have a fairly long time horizon and that does mean you can accept more risk/more volatility than someone closer to starting to draw upon those savings, but you're old enough and have enough existing savings that you want to start thinking about reducing the risk a notch. So most folks in your position would not put 100% in stocks, though exactly how much should be moved to bonds is debatable. One traditional rule of thumb for a moderately conservative position is to subtract your age from 100 and keep that percentage of your investments in stock. Websearch for \"\"stock bond age\"\" will find lots of debate about whether and how to modify this rule. I have gone more aggressive myself, and haven't demonstrably hurt myself, but \"\"past results are no guarantee of future performance\"\". A paid financial planning advisor can interview you about your risk tolerance, run some computer models, and recommend a strategy, with some estimate of expected performance and volatility. If you are looking for a semi-rational approach, that may be worth considering, at least as a starting point.\"",
"title": ""
},
{
"docid": "544e60114bca79f9816488d8a77231cb",
"text": "I've had the same thoughts recently and after reading Investing at Level 3 by James Cloonan I believe his thesis that for the passive investor you're giving up too much if you're not 100% in equities. He is clear to point out that you need to be well aware of your withdrawal horizons and has specific tactics for shifting the portfolio when you know you must have the money in the next five years and wouldn't want to pull money out when you're at a market low. The kicker for me was shifting your thought to a plotting a straight line of reasonable expectations on your return. Then you don't worry about how far down you are from your high (or up from your low) but you measure yourself against the expected return and you'll find some real grounding. You're investing for the long term so you're going to see 2-3 bear markets. That isn't the the time to get cold feet and react. Stay put and it will come back. The market gets back to the reasonable expectations very quickly as he confirms in all the bear markets and recessions of any note. He gives guidelines for a passive investing strategy to leverage this mentality and talks about venturing into an active strategy but doesn't go into great depth. So if you're looking to invest more passively this book may be enough to get you rolling with thinking differently than the traditional 70/30 split.",
"title": ""
}
] |
[
{
"docid": "83cdc3f29e96ce627f0bb5369a48319f",
"text": "I don't think you can always assume a 12-month time horizon. Sometimes, the analyst's comments might provide some color on what kind of a time horizon they're thinking of, but it might be quite vague.",
"title": ""
},
{
"docid": "69e661b4e1154b9542f9d63bc5d62bbb",
"text": "So I did some queries on Google Scholar, and the term of art academics seem to use is target date fund. I notice divided opinions among academics on the matter. W. Pfau gave a nice set of citations of papers with which he disagrees, so I'll start with them. In 1969, Paul Sameulson published the paper Lifetime Portfolio Selection By Dynamic Stochaistic Programming, which found that there's no mathematical foundation for an age based risk tolerance. There seems to be a fundamental quibble relating to present value of future wages; if they are stable and uncorrelated with the market, one analysis suggests the optimal lifecycle investment should start at roughly 300 percent of your portfolio in stocks (via crazy borrowing). Other people point out that if your wages are correlated with stock returns, allocations to stock as low as 20 percent might be optimal. So theory isn't helping much. Perhaps with the advent of computers we can find some kind of empirical data. Robert Shiller authored a study on lifecycle funds when they were proposed for personal Social Security accounts. Lifecycle strategies fare poorly in his historical simulation: Moreover, with these life cycle portfolios, relatively little is contributed when the allocation to stocks is high, since earnings are relatively low in the younger years. Workers contribute only a little to stocks, and do not enjoy a strong effect of compounding, since the proceeds of the early investments are taken out of the stock market as time goes on. Basu and Drew follow up on that assertion with a set of lifecycle strategies and their contrarian counterparts: whereas a the lifecycle plan starts high stock exposure and trails off near retirement, the contrarian ones will invest in bonds and cash early in life and move to stocks after a few years. They show that contrarian strategies have higher average returns, even at the low 25th percentile of returns. It's only at the bottom 5 or 10 percent where this is reversed. One problem with these empirical studies is isolating the effect of the glide path from rebalancing. It could be that a simple fixed allocation works plenty fine, and that selling winners and doubling down on losers is the fundamental driver of returns. Schleef and Eisinger compare lifecycle strategy with a number of fixed asset allocation schemes in Monte Carlo simulations and conclude that a 70% equity, 30% long term corp bonds does as well as all of the lifecycle funds. Finally, the earlier W Pfau paper offers a Monte Carlo simulation similar to Schleef and Eisinger, and runs final portfolio values through a utility function designed to calculate diminishing returns to more money. This seems like a good point, as the risk of your portfolio isn't all or nothing, but your first dollar is more valuable than your millionth. Pfau finds that for some risk-aversion coefficients, lifecycles offer greater utility than portfolios with fixed allocations. And Pfau does note that applying their strategies to the historical record makes a strong recommendation for 100 percent stocks in all but 5 years from 1940-2011. So maybe the best retirement allocation is good old low cost S&P index funds!",
"title": ""
},
{
"docid": "73cb4a5a8b550837de047e034d0e4582",
"text": "One should fund a 401(k) or matched retirement account up to the match, even if you have other debt. Long term, you will come out ahead, but you must be disciplined in making the payments. If one wants to point out the risk in a 401(k), I'd suggest the money need not be invested in stocks, there's always a short term safe option.",
"title": ""
},
{
"docid": "69dd9dbb23a5fbb80ce41d7c0fa951cb",
"text": "\"Making these difficult portfolio decisions for you is the point of Target-Date Retirement Funds. You pick a date at which you're going to start needing to withdraw the money, and the company managing the fund slowly turns down the aggressiveness of the fund as the target date approaches. Typically you would pick the target date to be around, say, your 65th birthday. Many mutual fund companies offer a variety of funds to suit your needs. Your desire to never \"\"have to recover\"\" indicates that you have not yet done quite enough reading on the subject of investing. (Or possibly that your sources have been misleading you.) A basic understanding of investing includes the knowledge that markets go up and down, and that no portfolio will always go up. Some \"\"recovery\"\" will always be necessary; having a less aggressive portfolio will never shield you completely from losing money, it just makes loss less likely. The important thing is to only invest money that you can afford to lose in the short-term (with the understanding that you'll make it back in the long term). Money that you'll need in the short-term should be kept in the absolute safest investment vehicles, such as a savings account, a money market account, short-term certificates of deposit, or short-term US government bonds.\"",
"title": ""
},
{
"docid": "88d87b4f1a4fd8e36334599add627835",
"text": "If you want to invest in the stock market, whether over a shorter period of 1 to 2 years or over a longer period of 10 or 20 years or longer you need to take some precautions and have a written investment plan with a risk management strategy incorporated in your plan. Others have said that 1 to 2 years is too short to invest in the stock market as the stock market can have a correction and fall by 50%. But it doesn't matter if you invest for 1 year or if you invest for 50 years, the stock market can still fall by 50% just before you plan to withdraw your funds. What you need to figure out is a way to get out before the market falls by 40% to 50%. A simple way to do this is to use technical indicators to warn you when a market trend is starting to change and that it is time to get out of the market. Two simple indicators you can use on a market index are the Rate of Change (ROC) indicator and the 100 week Moving Average (MA). Below is a 10 year weekly chart of the S&P500 with these two indicators charted. They show good times to get into the market and good times to get out. If you are using the 100 week MA you would buy in when the price crosses above the MA line and sell when the price crosses below the MA line. If you are using the ROC indicator you would buy in when the ROC indicator crosses above the zero line and sell when the ROC indicator crosses below the zero line. So your investment plan could be to buy an Index ETF representing the S&P500 when the ROC moves above zero and sell when it crosses below zero. You can also place a trailing stop loss of 10% to protect you in case of a sudden fall over a couple of days. You can manage your investments in as little as 10 minutes per week by checking the chart once per week and adjusting your stop loss order. If you want to progressively add to your investment each month you could check the charts and only add any new funds if both the ROC is above zero and sloping upwards. Another option for adding new funds could be if the price is above the MA and moving further away from the MA. All these rules should be incorporated into your investment plan so that you are not basing your decisions based on emotions. There are many other Technical Analysis Indicators you could also learn about to make better educated decisions about your stock market investments. However, what I have provided here is enough for anyone to test over different indexes and time frames and do their own paper trading on to gain some confidence before placing any real money on the table.",
"title": ""
},
{
"docid": "95c440a3ea760230e65be9f6b8d00d70",
"text": "\"In general, yes. If interest rates go higher, then any existing fixed-rate bonds - and hence ETFs holding those bonds - become less valuable. The further each bond is from maturity, the larger the impact. As you suggest, once the bonds do mature, the fund can replace them at a market price, so the effect tails off. The bond market has a concept known as \"\"duration\"\" that helps reason about this effect. Roughly, it measures the average time from now to each payout of the bond, weighted by the payout. The longer the duration, the more the price will change for a given change in interest rates. The concept is just an approximation, and there are various slightly different ways of calculating it; but very roughly the price of a bond will reduce by a percentage equal to the duration times the increase in interest rates. So a bond with a duration of 5 years will lose 5% of its value for a 1% rise in interest rates (and of course vice-versa). For your second question, it really depends on what you're trying to achieve by diversifying - this might be best as a different question that gives more detail, as it's not very related to your first question. Short-term bonds are less risky. But both will lose value if the underlying company is in trouble. Gilts (government bonds) are less risky than corporate bonds.\"",
"title": ""
},
{
"docid": "15983d0615c613868763cc51ea2610bd",
"text": "It looks like an improvement to me, if for no other reason than lowering the expenses. But if you are around 35 years away from retirement you could consider eliminating all bond funds for now. They will pay better in a few years. And the stock market(s) will definitely go up more than bonds over the next 35 years.",
"title": ""
},
{
"docid": "cfb9bb5b67139aec1f3c0e9f3c09453a",
"text": "A stopped clock is right two times a day. We may get a market crash similar to the financial crisis or the dot com crash or we may not. What if over the next 10 years rates rise very sluggishly, low inflation, and low growth more or less continues with maybe one brief and shallow recession. In that case I bet US stocks produce 4-5% returns per year and US bonds produce maybe 1-2% per year. European and emerging market stocks should have higher returns because they are in an earlier part of the cycle. I think your baseline has to look something like that. The last two crashes were caused by the tech bubble and the housing bubble - where is the bubble today? US stocks are expensive, but probably not in bubble territory. Bonds worldwide are unattractive with low or negative yields - negative yields maybe a bubble, but central banks will be the most hurt by negative rates and they are in a strong position to take the pain. There could be a crash I just don't see how we get there yet - maybe china?",
"title": ""
},
{
"docid": "c2ae3e850c9a05b457725c0e854dd8f8",
"text": "The problem is that short-term trends are really unpredictable. There is nobody who can accurately predict where a fund (or even moreso, a single stock or bond) is going to move in a few hours, or days or even months. The long-term trends of the entire market, however, are (more or less) predictable. There is a definite upward bias when you look at time-scales of 5, 10, 20 years and more. Individual stocks and bonds may crash, and different sectors perform differently from year to year, but the market as a whole has historically always risen over long time scales. Of course, past performance never guarantees future performance. It is possible that everything could crash and never come back, but history shows that this would be incredibly unlikely. Which is the entire basis for strategies based on buying and holding (and periodically rebalancing) a portfolio containing funds that cover all market sectors. Now, regarding your 401(k), you know your time horizon. The laws won't let you withdraw money without penalty until you reach retirement age - this might be 40 years, depending on your current age. So we're definitely talking long term. You shouldn't care about where the market goes over a few months if you won't be using the money until 20 years from now. The most important thing for a 401(k) is to choose funds from those available to you that will be as diverse as possible. The actual allocation strategy is something you will need to work out with a financial advisor, since it will be different for every person. Once you come up with an appropriate allocation strategy, you will want to buy according to those ratios with every paycheck and rebalance your funds to those ratios whenever they start to drift away. And review the ratios with your advisor every few years, to keep them aligned with large-scale trends and changes in your life.",
"title": ""
},
{
"docid": "67a8f8a83db55a5a110890deeebbdcf3",
"text": "\"You have a high risk tolerance? Then learn about exchange traded options, and futures. Or the variety of markets that governments have decided that people without high income are too stupid to invest in, not even kidding. It appears that a lot of this discussion about your risk profile and investing has centered around \"\"stocks\"\" and \"\"bonds\"\". The similarities being that they are assets issued by collections of humans (corporations), with risk profiles based on the collective decisions of those humans. That doesn't even scratch the surface of the different kinds of asset classes to invest in. Bonds? boring. Bond futures? craziness happening over there :) Also, there are potentially very favorable tax treatments for other asset classes. For instance, you mentioned your desire to hold an investment for over a year for tax reasons... well EVERY FUTURES TRADE gets that kind of tax treatment (partially), whether you hold it for one day or more, see the 60/40 rule. A rebuttal being that some of these asset classes should be left to professionals. Stocks are no different in that regards. Either educate yourself or stick with the managed 401k funds.\"",
"title": ""
},
{
"docid": "050c767b77c61494380662aa4b300d36",
"text": "\"Investing is always a matter of balancing risk vs reward, with the two being fairly strongly linked. Risk-free assets generally keep up with inflation, if that; these days advice is that even in retirement you're going to want something with better eturns for at least part of your portfolio. A \"\"whole market\"\" strategy is a reasonable idea, but not well defined. You need to decide wheher/how to weight stocks vs bonds, for example, and short/long term. And you may want international or REIT in the mix; again the question is how much. Again, the tradeoff is trying to decide how much volatility and risk you are comfortable with and picking a mix which comes in somewhere around that point -- and noting which assets tend to move out of synch with each other (stock/bond is the classic example) to help tune that. The recommendation for higher risk/return when you have a longer horizon before you need the money comes from being able to tolerate more volatility early on when you have less at risk and more time to let the market recover. That lets you take a more aggressive position and, on average, ger higher returns. Over time, you generally want to dial that back (in the direction of lower-risk if not risk free) so a late blip doesn't cause you to lose too much of what you've already gained... but see above re \"\"risk free\"\". That's the theoretical answer. The practical answer is that running various strategies against both historical data and statistical simulations of what the market might do in the future suggests some specific distributions among the categories I've mentioned do seem to work better than others. (The mix I use -- which is basically a whole-market with weighting factors for the categories mentioned above -- was the result of starting with a general mix appropriate to my risk tolerance based on historical data, then checking it by running about 100 monte-carlo simulations of the market for the next 50 years.)\"",
"title": ""
},
{
"docid": "cafffcc507a7d7a0376e05fbf08013fd",
"text": "Nobody can give you a safe 6% return with that portfolio under current conditions. It looks like the current 10 year treasury is yielding about 2.2%. With 60% in bonds, the stocks would have to yield about 12%, which just isn't happening safely now.",
"title": ""
},
{
"docid": "df98651db0e0f28abc31f565f9bb29b5",
"text": "\"The time horizon for your IRA is years or decades, therefore there is little evidence that there is a benefit to waiting for the \"\"perfect time\"\" to invest. Unless you plan on making only one or 2 years of investments now and then waiting till retirement; the other deposits you will make over the decades will have a greater influence on returns. If you are going to search for the perfect time to invest in your index fund, pick a deadline. \"\"I will take the first sign better than X but will not wait beyond Y\"\".\"",
"title": ""
},
{
"docid": "c0fea97c96090eb26efdb523482da421",
"text": "If the time horizon is 5 years, I don't think that playing games with Roth IRAs or investments is really productive. I'd look at an online savings account as a holding place for this money. EDIT: Another option is the US is Savings Bonds. The rates earned right now are poor (as of 04/2011 EE bonds earn 0.6% and I bonds yielded 0.37%), and there is an interest penalty if you redeem them in less than five years. But, they are not state taxable, and you can defer tax payments until you cash them.",
"title": ""
},
{
"docid": "883e13003661c691b6adae423ffef8b1",
"text": "\"A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at \"\"dry periods\"\" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan \"\"relies\"\" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio?\"",
"title": ""
}
] |
fiqa
|
f7b36fbbabe503eaa61d96dd7e57985c
|
When I calculate “internal rate of return (IRR)”, should I include cash balance?
|
[
{
"docid": "9dc01201aa4269618c5e42e2e8990c96",
"text": "Both are correct depending on what you are really trying to evaluate. If you only want to understand how that particular investment you were taking money in and out of did by itself than you would ignore the cash. You might use this if you were thinking of replacing that particular investment with another but keeping the in/out strategy. If you want to understand how the whole investment strategy worked (both the in/out motion and the choice of investment) than you would definitely want to include the cash component as that is necessary for the strategy and would be your final return if you implemented that strategy. As a side note, neither IRR or CAGR are not great ways to judge investment strategies as they have some odd timing issues and they don't take into account risk.",
"title": ""
}
] |
[
{
"docid": "e579c480f632018d2e79008cd1ccaa4b",
"text": "Line one shows your 1M, a return with a given rate, and year end withdrawal starting at 25,000. So Line 2 starts with that balance, applies the rate again, and shows the higher withdrawal, by 3%/yr. In Column one, I show the cumulative effect of the 3% inflation, and the last number in this column is the final balance (903K) but divided by the cumulative inflation. To summarize - if you simply get the return of inflation, and start by spending just that amount, you'll find that after 20 years, you have half your real value. The 1.029 is a trial and error method, as I don't know how a finance calculator would handle such a payment flow. I can load the sheet somewhere if you'd like. Note: This is not exactly what the OP was looking for. If the concept is useful, I'll let it stand. If not, downvotes are welcome and I'll delete.",
"title": ""
},
{
"docid": "62f088dba0ac32effa798e86ebec2ba4",
"text": "Problem with deciding investments in a company is that you have multiple potential options, each with their projected returns, but each also has some hard-to-estimate risks. A further problem is that these opportunities arrive one-by-one, so you usually cannot compare project A vs. project B to decide which one is better. The internal rate of return is a rule-of-thumb like way to make these decisions. The company board may set an IRR target of e.g. 15%, and each executive will compare their projects against that target. They'll execute only the projects that are projected to give a good return, but some of these projects will end up failing. Thus the real average profit will not be equal to IRR. Important thing is that this target number gives ways to compare projects, and also for the board to control the investments. If the company has a good track record of being successful at projects, the board might set an IRR target of 10% and expect to get e.g. 8% return on their investment. However, if the company has a much larger risk of projects failing, they might demand a predicted IRR of 20% to account for the risk. Ultimately if the IRR target is set too high, the company will find no projects it considers profitable to invest in. In practice if this happens, the company owners are better off taking out the cash as dividends and investing it elsewhere.",
"title": ""
},
{
"docid": "134a2b54f8d2ddefd07691afbcb16bc6",
"text": "The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project.",
"title": ""
},
{
"docid": "0d4101687bba339129bacff76ff10e39",
"text": "Your example isn't consistent: Q1 end market value (EMV) is $15,750, then you take out $2,000 and say your Q2 BMV is $11,750? For the following demo calculations I'll assume you mean your Q2 BMV is $13,750, with quarterly returns as stated: 10%, 5%, 10%. The Q2 EMV is therefore $15,125. True time-weighted return :- http://en.wikipedia.org/wiki/True_time-weighted_rate_of_return The following methods have the advantage of not requiring interim valuations. Money-weighted return :- http://en.wikipedia.org/wiki/Rate_of_return#Internal_rate_of_return Logarithmic return :- http://en.wikipedia.org/wiki/Rate_of_return#Logarithmic_or_continuously_compounded_return Modified Dietz return :- http://en.wikipedia.org/wiki/Modified_Dietz_method Backcalculating the final value (v3) using the calculated returns show the advantage of the money-weighted return over the true time-weighted return.",
"title": ""
},
{
"docid": "57d4127f36956d651366ce1fbfaec39e",
"text": "Yes, if your IRR is 5% per annum after three years then the total return (I prefer total rather than your use of actual) over those three years is 15.76%. Note that if you have other cashflows in and out, it gets a bit more complicated (e.g. using the XIRR function in Excel), but the idea is to find an effective annual percentage return that you're getting for your money.",
"title": ""
},
{
"docid": "f8a1334425c28ad0d665f9d763925dde",
"text": "You're 100% right! The IRR is the rate at which the project breaks even. You project cash flow/profitability metrics, and then you see what, under your projections, is the discount rate at which your project breaks even (the IRR). But remember, it breaks even today! So it's saying that you should make a worthwhile investment today because the return that you will obtain at points in the future are worth you putting your investment in today! You still make a healthy return overtime if you project a reasonable IRR, but your IRR is showing you whether it's at least as worth it today to put your money in today (whether, given what you'll make over the future, it's at least as worth it to put your money in today).",
"title": ""
},
{
"docid": "459429ef21f36166ec015f3ce19a0566",
"text": "WRONG. Assuming each account has the same investment option the rate of return is not dependent on the initial amount of money in the account, but rather the allocation amongst said investment. Suppose based on your investment allocation in either account you gain 10% interest over the year. In the first scenario your ending balance will be (30000+4800)*1.10 = $38,280. In the second scenario your first account will be worth 30000*1.10 = $33,000, and the second account will be worth 4800*1.10 = 5280, for a total of 33000+5280 = $38,280.",
"title": ""
},
{
"docid": "d434bac93e59b6bc54b351997abe1226",
"text": "\"(I'm assuming USA tax code as this is untagged) As the comments above suggest there is no \"\"right\"\" answer or easy formula. The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes. Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad. I highly recommend that you take some time closely analyze your business and personal taxes for the previous year. Once you understand the problem better, you can optimize around it. If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions.\"",
"title": ""
},
{
"docid": "b987480a00109e250c5865bd585c4a7f",
"text": "\"If you are considering this to be an entry for your business this is how you would handle it.... You said you were making a balance sheet for monthly expenses. So on the Balance Sheet, you would be debiting cash. For the Income Statement side you would be crediting Owner's Equity to balance the equation: Assets = Liabilities + Owner's Equity So if you deposited $100 to your account the equation would be affected thus: $ 100 in Assets (Debit to Cash Account) = 0 Liabilities - $100 (Credit to Owner's Equity) It is correctly stated above from the bank's perspective that they would be \"\"Crediting\"\" you account with $100, and any outflow from the bank account would be debiting your account.\"",
"title": ""
},
{
"docid": "85ec14f084fa130fad51e5b6d27fee4a",
"text": "> Does it make sense to calculate the IRR based on the outstanding value of the project, or just use the cash flows paid out? What is the outstanding value of the project based on? I'm guessing it is the PV of net cash flow? The timing of each cash outflow (i.e. investment) is crucial to calculating a proper IRR because of time value of money. Putting in $x each year for 49 years will give you a different figure from putting in $49x in the first year and zero for the next 48 years because a larger figure is tied up for a longer time period.",
"title": ""
},
{
"docid": "dba4f638e967cf689e1b735cc9daed10",
"text": "No, it would not show up on the income statement as it isn't income. It would show up in the cash flow statement as a result of financing activities.",
"title": ""
},
{
"docid": "d9a638edb28c13980a548d2a47c26aad",
"text": "IRR is not subjective, this is a response to @Laythesmack, to his remark that IRR is subjective. Not that I feel a need to defend my position, but rather, I'm going to explain his. My company offered stock at a 15% discount. We would have money withheld from pay, and twice per year buy at that discount. Coworkers said it was a 15% gain. I offered some math. I started by saying that 100/85 was 17.6%, and that was in fact, the gain. But, the funds were held by the company for an average of 3 months, not 6, so that gain occurred in 3 months and I did the math 1.176^4 and resulted in 91.5% annual return. This is IRR. It's not that it's subjective, but it assumes the funds continue to be invested fully during the time. In our case the 91.5% was real in one sense, yet no one doubled their money in just over a year. Was the 91% useless? Not quite. It simply meant to me that coworkers who didn't participate were overlooking the fact that if they borrowed money at a reasonable rate, they'd exceed that rate, especially for the fact that credit lines are charged day to day. Even if they borrowed that money on a credit card, they'd come out ahead. IRR is a metric. It has no emotion, no personality, no goals. It's a number we can calculate. It's up to you to use it correctly.",
"title": ""
},
{
"docid": "2a68e04504132a0f2f77cc815c32f537",
"text": "Ok - what's your starting point? Are you starting with equity value and then working your way back to an enterprise value? Then yes, you must subtract cash and add debt. If you're doing a DCF, you don't have to make any changes to the values at the end if you're looking for an enterprise value. If you're looking for an equity value, you would need to add cash and subtract debt. If you're simply applying a enterprise value multiple (such as EV / EBITDA) you don't need to make any changes. Just multiply the Company's EBITDA by the multiple in question. Enterprise values are supposed to be capital structure independent because they are only valuing the company on metrics that occur before the impact of the Company's capital structure.",
"title": ""
},
{
"docid": "60e096d50149b10d70b6d360eeb8e2f8",
"text": "This is in the balance sheet, but the info is not usually that detailed. It is safe to assume that at least some portion of the cash/cash equivalents will be in liquid bonds. You may find more specific details in the company SEC filings (annual reports etc).",
"title": ""
},
{
"docid": "ef1d46e35b4796f95e4728a467cc4b46",
"text": "\"A mutual fund's return or yield has nothing to do with what you receive from the mutual fund. The annual percentage return is simply the percentage increase (or decrease!) of the value of one share of the mutual fund from January 1 till December 31. The cash value of any distributions (dividend income, short-term capital gains, long-term capital gains) might be reported separately or might be included in the annual return. What you receive from the mutual fund is the distributions which you have the option of taking in cash (and spending on whatever you like, or investing elsewhere) or of re-investing into the fund without ever actually touching the money. Regardless of whether you take a distribution as cash or re-invest it in the mutual fund, that amount is taxable income in most jurisdictions. In the US, long-term capital gains are taxed at different (lower) rates than ordinary income, and I believe that long-term capital gains from mutual funds are not taxed at all in India. You are not taxed on the increase in the value of your investment caused by an increase in the share price over the year nor do you get deduct the \"\"loss\"\" if the share price declined over the year. It is only when you sell the mutual fund shares (back to the mutual fund company) that you have to pay taxes on the capital gains (if you sold for a higher price) or deduct the capital loss (if you sold for a lower price) than the purchase price of the shares. Be aware that different shares in the sale might have different purchase prices because they were bought at different times, and thus have different gains and losses. So, how do you calculate your personal return from the mutual fund investment? If you have a money management program or a spreadsheet program, it can calculate your return for you. If you have online access to your mutual fund account on its website, it will most likely have a tool called something like \"\"Personal rate of return\"\" and this will provide you with the same calculations without your having to type in all the data by hand. Finally, If you want to do it personally by hand, I am sure that someone will soon post an answer writing out the gory details.\"",
"title": ""
}
] |
fiqa
|
096c87135bfdeaa0631e69d9c8caf67b
|
What are overnight fees? [duplicate]
|
[
{
"docid": "63de4b8a0b02285435349aac69fa015c",
"text": "From the etoro website: In the financial trading industry, rollover is the interest paid or earned for holding currency overnight. Each currency has an interest rate associated with it, and because currencies are traded in pairs, every trade involves two different interest rates. If the interest rate on the currency you bought is lower than the interest rate on the currency you sold, then you will pay rollover fees. If the interest rate on the currency you bought is higher than the interest rate of the currency/commodity you sold, then you will earn rollover fees. http://www.etoro.com/blog/product-updates/05062014/important-upcoming-change-fee-structure/",
"title": ""
}
] |
[
{
"docid": "e216b8086ba2920e1ff98ceb87590304",
"text": "Its not just late fees. The fees for going over your credit limit are exorbitant. To make things worse, they will rearrange the transactions you make during a day so that they can charge you more by making more of them fail.",
"title": ""
},
{
"docid": "439151cb6e1e678a8e181775962fbbeb",
"text": "\"Charge less money. That's the only thing. What that really means is negotiating lower ticket prices with venues, not removing fees. People don't realize that Ticketmaster's business model is shielding venues from public ire, not adding arbitrary amounts to tickets for the minor service of buying online, a service everyone knows costs very little to perform. The arbitrary fees mostly go back to the venue per their agreement, however, they're divided out as \"\"admin fees\"\" and \"\"processing fees\"\" and \"\"convenience fees\"\" charged by Ticketmaster so that Ticketmaster eats the blowback instead of the venue charging exorbitant prices.\"",
"title": ""
},
{
"docid": "743c6881d0b842774d1c99412f4e33aa",
"text": "\"> \"\"So I'll either stop shipping prescriptions or switch to FedEx or UPS -- which cost me three times what the USPS currently charges.\"\" Basically, the USPS is delivering overnight packages for 1/3 the cost of FedEx and UPS and can't make that work. So now business costs will go up when sending things overnight as they're forced to switch to private carriers. Thus, in essence, the USPS has been \"\"subsidizing\"\" business that send things overnight.\"",
"title": ""
},
{
"docid": "a72d3d0c6af58a24af1bad27a75d7846",
"text": "If it's always the same person, you could open a joint account. Then fees are avoided altogether. How fast the funds are available depends on what you deposit. Cash is immediate.",
"title": ""
},
{
"docid": "346dde80264c35ac1d211efd5b83ad38",
"text": "\"My gym has a habit of randomly increasing our monthly payment with a $20 \"\"Special Fee\"\" a couple times a year. This charge was not initiated until after I signed up, and signed authorization for a set monthly fee. The agreement I signed included no wording of this fee, so I have not given them permission to charge me this fee. I also have received no type of notification of this fee prior to it being charged to my credit card on file. This seems very illegal to me. Am I right? What course of action might I have to get this stopped?\"",
"title": ""
},
{
"docid": "d899808fa90a16ba03f9f52314a91313",
"text": "So I can get a maximum of $25.50 (17x1.50) in ticketmaster credit, that I can only use $3 at a time. And if I am part of the subclass for UPS overnight shipping, I get an extra $5. BREAK OUT THE MOTHERFUCKING CHAMPAGNE AND CAVIAR BITCHES!!!! OPF CLAIMS - ALL CLASS MEMBERS If you take no action, and the settlement is approved by the Court, you will automatically receive, via email at the most recent email address associated with your purchases on Ticketmaster.com, discount codes (“Codes”) which can be used for future purchases for U.S. events from Ticketmaster’s Website (except for events at venues owned or operated by AEG as set forth in the Settlement Agreement). For each transaction that you made during the Class Period, you will receive one code via email for a $1.50 discount, up to a maximum of 17 codes. This does not include the additional benefits, for the UPS Subclass members, which are described below. The Codes may be combined up to a maximum of two credits ($3.00) that may be applied on future transactions as described above. The Codes are non-transferable, expire 48 months from distribution, and may be redeemed only for purchases made using the email address to which they were sent (or an updated address provided to the Claims Administrator or Ticketmaster and verified as belonging to the Class Member). UPS SUBCLASS MEMBERS If you are a member of the UPS Subclass, you will be entitled to additional relief under the Settlement. Specifically, for each transaction you made using UPS delivery of your tickets (up to 17 transactions), you will receive one UPS code (“UPS Code”) via email, for $5.00 off subsequent expedited delivery fees on purchases from Ticketmaster’s Website (except for events at venues owned or operated by AEG as set forth in the Settlement Agreement) of tickets that are shipped via UPS or some other form of overnight delivery that Ticketmaster may offer in the future. These UPS Codes may not be combined, and only one UPS Code may be used per transaction. However, this benefit may be used for a ticket order together with the OPF Code described above. The UPS Codes are non-transferable, expire 48 months after they are first usable, and may be redeemed only for purchases made using the email address to which they were sent (or an updated address provided to the Claims Administrator or Ticketmaster and verified as belonging to the Class Member).",
"title": ""
},
{
"docid": "c743007f4e745fb1bbad1caed4a16da7",
"text": "I looked at Publication 463 (2014), Travel, Entertainment, Gift, and Car Expenses for examples. I thought this was the mot relevant. No regular place of work. If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses. This only deals with transportation to and from the temporary work site. Transportation expenses do not include expenses you have while traveling away from home overnight. Those expenses are travel expenses discussed in chapter 1 . However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. See Car Expenses , later. You will also have to consider the cost of tolls of the use of a trailer if those apply.",
"title": ""
},
{
"docid": "ea7ad98d87baa9eb86994523cdf01adb",
"text": "/r/personalfinance might be better. Not really sure where this falls... this sub is more for just specific financial industry news and topics. Here's the DOL page. In all honesty, I'd imagine it'd be considered fair if the law only required him to pay you hourly for the work periods during the day so long as they expensed all your travel expenses. Seems absurd to give you 24 hours of pay if you're going to go stay overnight somewhere that's already paid for by the employer and work a normal day. http://www.dol.gov/whd/regs/compliance/whdfs53.htm",
"title": ""
},
{
"docid": "280680d5d3ddc6cf6b0754c78c200143",
"text": "I recently engaged in a dispute with a ski resort that was proposing several hotels (about 500 rooms) along with a new lodge, which will host conventions. I have a home (3 bedrooms) I rent on Airbnb located next to the resort and was a statutory party to their permit hearing. After all was said and done, I managed to take away approximately 250 parking spots, forcing them to build a parking garage. They were permitted for the new lodge, which they are building now, but not for the hotels. I will now be able to raise my rates as there will be a severe lack of short term housing to accommodate the new lodge.",
"title": ""
},
{
"docid": "4c7e517d976445ea8fea5aa4c0baa1f4",
"text": "What bank, and is there restrictions on the trades? (i.e. they only go through once a week?) I do light medium term trading - maybe 5-10 trades per quarter - and would love to be able to cut out the fees.",
"title": ""
},
{
"docid": "c4da0f6689c697989f3e85d5e528ac56",
"text": "\"It says that you are exempt \"\"as long as such interest income is not effectively connected with a United States trade or business\"\". So the interest is from money earned from doing business with/through AirBnb, a US company. So you will have to report it. Even if your bank doesn't send you a 1099-INT, you have to report it, unless it is under $0.49 because the IRS allows rounding.\"",
"title": ""
},
{
"docid": "49c8e0800f5550f63ded1f3beb94a283",
"text": "Get a checking account with Ally Bank. They refund all ATM fees from within the US, so effectively, every ATM transaction will have no surcharge.",
"title": ""
},
{
"docid": "53be1ba189808d8c123d1c6ab5e021f5",
"text": "If you are careful, you don't need to spend much more than the cruise price. The cruises I've been on, they biggest extra was soda and alcohol (mainly wine with dinner). If you are fine drinking water or iced tea, there is no need for that. Food extras, like ice cream at the pool, may be an extra charge as well. The way it works is that your room key acts like a credit card, and gets charged to your room. Its easy to run up a big bill if you aren't paying attention, so you may want to keep track of it as you go along. You can also go to the pursers office at any time and find out your current account. Generally, the cruise automatically charges a certain amount per day for tips for your room steward and dining room attendants. You are expected to tip for spa services (another extra charge) and shore excursion guides. Shore excursions vary greatly depending on what you are doing. Maybe $50-$100 per person for a bus tour to much more than that for things like scuba diving, or fishing. You can also either book tours yourself, or just get off and wander around. It depends where you are going. Many times, the ships dock far away from anything you might want to see. There are generally taxis or shuttles to the tourist places, but that is another charge. Shipboard internet is generally charged by hour, and quite expensive (several dollars per hour). Part of the attraction for me is unplugging completely, so I generally don't bother. On older ships, you probably are limited to the internet lounge. Some of the newer ships have wi-fi in the state rooms as well. The drinks on board aren't cheap, but not outrageous either. Probably similar to an upscale club. They also have a daily drink special, which is cheaper. Technically, you aren't allowed to bring your own alcohol on board. If you buy something in a port, you need to check it with them. This policy may vary by cruise line, but has been true on the Princess and Costa cruises I've been on. That said, as long as you are low-key, they probably won't know or care.",
"title": ""
},
{
"docid": "59cf5efd93208588af4d31a00b6e7d2d",
"text": "NSCC illiquid charges are charges that apply to the trading of low-priced over-the counter (OTC) securities with low volumes. Open net buy quantity represents the total unsettled share amount per stock at any given time during a 3-day settlement cycle. Open net buy quantity must be less than 5,000,000 shares per stock for your entire firm Basically, you can't hold a long position of more than 5 million shares in an illiquid OTC stock without facing a fee. You'll still be assessed this fee if you accumulate a long position of this size by breaking your purchase up into multiple transactions. Open net sell quantity represents the total unsettled share amount per stock at any given time during a 3-day settlement cycle. Open net sell quantity must be less than 10% percent of the 20-day average volume If you attempt to sell a number of shares greater than 10% of the stock's average volume over the last 20 days, you'll also be assessed a fee. The first link I included above is just an example, but it makes the important point: you may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. Technically, these fees are assessed to the clearing firm, not the individual investor, but usually the clearing firm will pass the fees along to the broker (and possibly add other charges as well), and the broker will charge a fee to the individual account(s) that triggered the restriction. Also, remember that when buying OTC/pink sheet stocks, your ability to buy or sell is also contingent on finding someone else to buy from/sell to. If you purchase 10,000 shares one day and attempt to sell them sometime in the future, but there aren't enough buyers to buy all 10,000 from you, you might not be able to complete your order at the desired price, or even at all.",
"title": ""
},
{
"docid": "f76bbd6a16d8ffce02efdb14a4d6b3a4",
"text": "If such an investment existed, then why would the banks be parking their overnight funds with the Federal Reserve at an interest rate of pretty much nothing?",
"title": ""
}
] |
fiqa
|
46340685db4e30df43bdbf49835e02a8
|
Why liquidity implies tight spread and low slippage
|
[
{
"docid": "d96eada018190b559af05e3c817086ae",
"text": "Consider the case where a stock has low volume. If the stock normally has a few hundred shares trade each minute and you want to buy 10,000 shares then chances are you'll move the market by driving up the price to find enough sellers so that you can get all those shares. Similarly, if you sell way more than the typical volume, this can be an issue.",
"title": ""
},
{
"docid": "1eb7cc400f45f63142875802f3ff7dcc",
"text": "Theoretically, it's a question of rate of return. If a desired or acceptable rate of return for market makers' capital is X, and X is determined by the product of margin & turnover then higher turnover means lower margin for a constant X. Margin, in the case of trading, is the bid/ask spread, and turnover, in the case of trading, is volume. Empirically, it has been noted in the last markets still offering such wide-varying evidence, equity options: http://faculty.baruch.cuny.edu/lwu/890/mayhew_jf2002.pdf",
"title": ""
},
{
"docid": "408b55cf5d99100c61738355162a6405",
"text": "You have just answered your question in the last sentence of your question: More volume just means more people are interested in the stock...i.e supply and demand are matched well. If the stock is illiquid there is more chance of the spread and slippage being larger. Even if the spread is small to start with, once a trade has been transacted, if no new buyers and sellers enter the market near the last transacted price, then you could get a large spread occurring between the bid and ask prices. Here is an example, MDG has a 50 day moving average volume of only 1200 share traded per day (obviously it does not trade every day). As you can see there is already an 86% spread from the bid price. If a new bid price is entered to match and take out the offer price at $0.039, then this spread would instantly increase to 614% from the bid price.",
"title": ""
}
] |
[
{
"docid": "5b3d846df86ace8da22c5a5604c27b19",
"text": "If the stock has low liquidity, yes there could be times when there are no buyers or sellers at a specific price, so if you put a limit order to buy or sell at a price with no other corresponding sellers or buyers, then your order may take a while to get executed or it may not be executed at all. You can usually tell if a stock has low liquidity by the small size of the average daily volume, the lack of order depth and the large size of the gap between bids and offers. So if a stock for example has last sale price of $0.50, has a highest bid price of $0.40 and a lowest offer price of $0.60, and an average daily volume of 10000 share, it is likely to be very illiquid. So if you try to buy or sell at around the $0.50 mark it might take you a long time to buy or sell this stock at this price.",
"title": ""
},
{
"docid": "89940e315a6cc1493916b85e348e62eb",
"text": "In my experience thanks to algorithmic trading the variation of the spread and the range of trading straight after a major data release will be as random as possible, since we live in an age that if some pattern existed at these times HFT firms would take out any opportunity within nanoseconds. Remember that some firms write algorithms to predict other algorithms, and it is at times like those that this strategy would be most effective. With regards to my own trading experience I have seen orders fill almost €400 per contract outside of the quoted range, but this is only in the most volatile market conditions. Generally speaking, event investing around numbers like these are only for top wall street firms that can use co-location servers and get a ping time to the exchange of less than 5ms. Also, after a data release the market can surge/plummet in either direction, only to recover almost instantly and take out any stops that were in its path. So generally, I would say that slippage is extremely unpredictable in these cases( because it is an advantage to HFT firms to make it so ) and stop-loss orders will only provide limited protection. There is stop-limit orders( which allow you to specify a price limit that is acceptable ) on some markets and as far as I know InteractiveBrokers provide a guaranteed stop-loss fill( For a price of course ) that could be worth looking at, personally I dont use IB. I hope this answer provides some helpful information, and generally speaking, super-short term investing is for algorithms.",
"title": ""
},
{
"docid": "15f11c4326b15fa7637a697314e30e43",
"text": "And the fact that if notes trade up high enough they tend to get taken out with lower yielding notes (pending the call schedule), so in theory there is more limited upside in high-yield, whereas equity could theoretically trade to infinity. The positives for high-yield is that they generate monthly cash flow via coupon payments and have less down-side relative to equities. Naturally this lower down-side comes at the expense of lower up-side as well.",
"title": ""
},
{
"docid": "6a54e644b5544df0d9b26eb811dd81af",
"text": "You can't tell for sure. If there was such a technique then everyone would use it and the price would instantly change to reflect the future price value. However, trade volume does say something. If you have a lemonade stand and offer a large glass of ice cold lemonade for 1c on a hot summer day I'm pretty sure you'll have high trading volume. If you offer it for $5000 the trading volume is going to be around zero. Since the supply of lemonade is presumably limited at some point dropping the price further isn't going to increase the number of transactions. Trade volumes reflect to some degree the difference of valuations between buyers and sellers and the supply and demand. It's another piece of information that you can try looking at and interpreting. If you can be more successful at this than the majority of others on the market (not very likely) you may get a small edge. I'm willing to bet that high frequency trading algorithms factor volume into their trading decisions among multiple other factors.",
"title": ""
},
{
"docid": "7a75b535aa087132d36f9dd54f4abc64",
"text": "I understand the question, I think. The tough thing is that trades over the next brief time are random, or appear so. So, just as when a stock is $10.00 bid / $10.05 ask, if you place an order below the ask, a tick down in price may get you a fill, or if the next trades are flat to higher, you might see the close at $10.50, and no fill as it never went down to your limit. This process is no different for options than for stocks. When I want to trade options, I make sure the strike has decent volume, and enter a market order. Edit - I reworded a bit to clarify. The Black–Scholes is a model, not a rigid equation. Say I discover an option that's underpriced, but it trades under right until it expires. It's not like there's a reversion to the mean that will occur. There are some very sophisticated traders who use these tools to trade in some very high volumes, for them, it may produce results. For the small trader you need to know why you want to buy a stock or its option and not worry about the last $0.25 of its price.",
"title": ""
},
{
"docid": "b82b747d9970443247e234207d2758ca",
"text": "While the Vanguard paper is good, it doesn't do a very good job of explaining precisely why each level of stocks or bonds was optimal. If you'd like to read a transparent and quantitative explanation of when and why a a glide path is optimal, I'd suggest the following paper: https://www.betterment.com/resources/how-we-construct-portfolio-allocation-advice/ (Full disclosure - I'm the author). The answer is that the optimal risk level for any given holding period depends upon a combination of: Using these two factors, you construct a risk-averse decision model which chooses the risk level with the best expected average outcome, where it looks only at the median and lower percentile outcomes. This produces an average which is specifically robust to downside risk. The result will look something like this: The exact results will depend on the expected risk and return of the portfolio, and the degree of risk aversion specified. The result is specifically valid for the case where you liquidate all of the portfolio at a specific point in time. For retirement, the glide path needs to be extended to take into account the fact that the portfolio will be liquidated gradually over time, and dynamically take into account the longevity risk of the individual. I can't say precisely why Vanguard's path is how it is.",
"title": ""
},
{
"docid": "006c2bb9d3880cc1d341159d8214249a",
"text": "Slippage is tied to volatility, so when volatility increases the spread will also increase. There is no perfect formula to figure out slippage but from observations, it might make sense to look at the bar size in relation to previous bars to determine slippage (assuming fixed periods). This is because when there is a sudden spike in price, it's usually due to stop order triggering or a news event and those will increase the volatility dramatically in seconds.",
"title": ""
},
{
"docid": "75e51cb67a3b7e9ba97858666994b26e",
"text": "\"High liquidity doesn't necessarily mean that \"\"everybody is getting rid of the stock\"\", since somebody is obviously buying whatever stock that is being sold. Also, as mentioned, low liquidity may mean that you would have trouble selling the stock in the future.\"",
"title": ""
},
{
"docid": "5671482527712efcef940b6b31d2b8fb",
"text": "I'd think that liquidity and speed are prioritized (even over retail brokers and in come cases over PoP) for institutional traders who by default have large positions. When the going gets tough, these guys are out and the small guys - trading through average retail brokers - are the ones left holding the empty bag.",
"title": ""
},
{
"docid": "a5521f7148cf222dc455fd11e5870e74",
"text": "a smaller spread indicates a flat yield curve, which means banks and investors are uncertain about future economic conditions (like the current environment). When the spread widens and the curve becomes upward sloping (considered a normal yield curve), investors expect future growth and minimal inflation. Longer term rates increase as investors demand a higher yield in return for lending their money for a longer period of time. Increase demand for credit (industries expanding) also drive up longer term rates. A negative spread indicates an inverted yield curve and investors believe the economy is overheating and interest rates will fall. Investors pull money out of the stock market and into long term bonds (raising the price, lowering the yield) while companies stop borrowing, reducing the demand for credit and lower the cost, or interest rate, on a loan. Keep in mind central banks determine short term rates, so inverted curves are rare in the sense the market perceives uncertainty and rushes to safety (bonds) before the central bank reacts and lowers short term rates.",
"title": ""
},
{
"docid": "7438115dd136cd9ae0240180d5592f12",
"text": "In the stock market many participants enter orders that are not necessarily set at the current market price of the stock (i.e. they are not market orders, they are limit orders). They can be lower than the market price (if they want to buy) or they can be higher than the market price (if they want to sell). The set of orders at each point of time for a security is called the order book. The lowest selling price of the order book is the offer or ask, the higher buying price is the bid. The more liquid is a security, the more orders will be in the order book, and the narrower will be the bid-ask spread. The depth of the order book is the number of units that the order book can absorb in any direction (buy or sell). As an example: imagine I want to buy 100 units at the lowest offer, but the size of the lowest offer is only 50 units, and there is not any further order, that means the stock has little depth.",
"title": ""
},
{
"docid": "992515091016e92c23ab724308d91cbb",
"text": "\"There are people (well, companies) who make money doing roughly what you describe, but not exactly. They're called \"\"market makers\"\". Their value for X% is somewhere on the scale of 1% (that is to say: a scale at which almost everything is \"\"volatile\"\"), but they use leverage, shorting and hedging to complicate things to the point where it's nothing like a simple as making a 1% profit every time they trade. Their actions tend to reduce volatility and increase liquidity. The reason you can't do this is that you don't have enough capital to do what market makers do, and you don't receive any advantages that the exchange might offer to official market makers in return for them contracting to always make both buy bids and sell offers (at different prices, hence the \"\"bid-offer spread\"\"). They have to be able to cover large short-term losses on individual stocks, but when the stock doesn't move too much they do make profits from the spread. The reason you can't just buy a lot of volatile stocks \"\"assuming I don't make too many poor choices\"\", is that the reason the stocks are volatile is that nobody knows which ones are the good choices and which ones are the poor choices. So if you buy volatile stocks then you will buy a bunch of losers, so what's your strategy for ensuring there aren't \"\"too many\"\"? Supposing that you're going to hold 10 stocks, with 10% of your money in each, what do you do the first time all 10 of them fall the day after you bought them? Or maybe not all 10, but suppose 75% of your holdings give no impression that they're going to hit your target any time soon. Do you just sit tight and stop trading until one of them hits your X% target (in which case you start to look a little bit more like a long-term investor after all), or are you tempted to change your strategy as the months and years roll by? If you will eventually sell things at a loss to make cash available for new trades, then you cannot assess your strategy \"\"as if\"\" you always make an X% gain, since that isn't true. If you don't ever sell at a loss, then you'll inevitably sometimes have no cash to trade with through picking losers. The big practical question then is when that state of affairs persists, for how long, and whether it's in force when you want to spend the money on something other than investing. So sure, if you used a short-term time machine to know in advance which volatile stocks are the good ones today, then it would be more profitable to day-trade those than it would be to invest for the long term. Investing on the assumption that you'll only pick short-term winners is basically the same as assuming you have that time machine ;-) There are various strategies for analysing the market and trying to find ways to more modestly do what market makers do, which is to take profit from the inherent volatility of the market. The simple strategy you describe isn't complete and cannot be assessed since you don't say how to decide what to buy, but the selling strategy \"\"sell as soon as I've made X% but not otherwise\"\" can certainly be improved. If you're keen you can test a give strategy for yourself using historical share price data (or current share price data: run an imaginary account and see how you're doing in 12 months). When using historical data you have to be realistic about how you'd choose what stocks to buy each day, or else you're just cheating at solitaire. When using current data you have to beware that there might not be a major market slump in the next 12 months, in which case you won't know how your strategy performs under conditions that it inevitably will meet eventually if you run it for real. You also have to be sure in either case to factor in the transaction costs you'd be paying, and the fact that you're buying at the offer price and selling at the bid price, you can't trade at the headline mid-market price. Finally, you have to consider that to do pure technical analysis as an individual, you are in effect competing against a bank that's camped on top of the exchange to get fastest possible access to trade, it has a supercomputer and a team of whizz-kids, and it's trying to find and extract the same opportunities you are. This is not to say the plucky underdog can't do well, but there are systematic reasons not to just assume you will. So folks investing for their retirement generally prefer a low-risk strategy that plays the averages and settles for taking long-term trends.\"",
"title": ""
},
{
"docid": "d05eec50ca1f8a73a7bc81e46cb175e1",
"text": "Short answer: Liquidity. Well, you have to see it from an exchange's point of view. Every contract they put up is a liability to them. You have to allocate resources for the order book, the matching engine, the clearing, etc. But only if the contract is actually trading they start earning (the big) money. Now for every new expiry they engage a long term commitment and it might take years for an option chain to be widely accepted (and hence before they're profitable). Compare the volumes and open interests of big chains versus the weeklies and you'll find that weeklies can still be considered illiquid compared to their monthly cousins. Having said that, like many things, this is just a question of demand. If there's a strong urge to trade July weeklies one day, there will be an option chain. But, personally I think, as long as there are the summer doldrums there will be no rush to ask for Jul and Aug chains.",
"title": ""
},
{
"docid": "732d7e94a01d2d9f4a5574b742e151da",
"text": "Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during.",
"title": ""
},
{
"docid": "739a5cc8792b387f4c5766483658062d",
"text": "The dynamics of different contracts and liquidity can be quite different on the last day on the month and for intraday trade make sure you use bid-ask data as opposed to historical trades. I'm not saying whether it works or not, but im just giving you ideas to improve your testing.",
"title": ""
}
] |
fiqa
|
fe6a244802810aefdd7973dec0655cc2
|
What are my risks of early assignment?
|
[
{
"docid": "113742bbdb9cf59fa9a788140d27ddcd",
"text": "One reason this happens is due to dividends. If the dividend amount is greater than the time value left on a call, it can make sense to exercise early to collect the dividend. Deep in the money puts also may get exercised early. There's usually little premium on a deep in the money put and the spread on the bid-ask might erase what little premium there is. If you have stock worth $5,000 but own puts on them that will give you $50,000 upon exercise (and no spread to worry about), the interest you can gain on the $50k might be more than the little to no time value left on the position... even at several weeks to expiration.",
"title": ""
},
{
"docid": "51b5c76d797c8d5ec07442442d21a783",
"text": "The put vs call assignment risk, is actually the reverse: in-the-money calls are more likely to be exercised early than puts. Exercising a call locks in profit for the option holder because they can buy the shares at below market price, and immediately sell them at the higher market price. If there are dividends due, the risk is even higher. By contrast, exercising an in-the-money put locks in a loss for the holder, so it's less common.",
"title": ""
}
] |
[
{
"docid": "d459e150ca648cfee8e5b0562028f8cf",
"text": "Interns are not hired to do work, they are hired so that people at the company can get a look at their abilities in a real situation (not an interview) before hiring them for real. This way instead of 30% of your new hires being a dud, it's more like 5%, because the bad ones were filtered out in the intern process. If you are self-motivated and good enough, then it's quite possible that you will start getting real work while you're at the company, as opposed to throwaway assignments that nobody cares about. Once you're in that position, it means they trust you to actually accomplish something, and you will be viewed as a hopeful hire. Assuming you like the company, getting into that position is half the value of the internship. So I'd take it as-is with one caveat - ask them about schedule flexibility ahead of time, explicitly for the purpose of making sure your class schedule works. If they're a decent place to work for they will probably grant you that point outright. EDIT: One more note. If you've got a favor to burn, save it. Use it if you like the place and need to ask them for an H1B sponsorship, or any other kind of immigration assistance.",
"title": ""
},
{
"docid": "48cd4949e3ad440ad5a9dc2de50fcca8",
"text": "\"Nobody is going to hold your hands and prepare a structured program, simply because how you deal with this situation is part of the evaluation of your performance. I performed poorly in my first intership because I was really afraid of being perceived as annoying. The guys were not very receptive and when I asked if they could teach me something, they usually explained quickly and without a lot of attention. Dumb as I was, I would try to not annoy anyone anymore, stop asking questions and go back to my chair to create some macros in VBA. When my boss gave me the feedback after some months, it was fucking awful. The whole team said that my posture was too passive and that I should be A LOT MORE agressive. So, don't be afraid to be a little annoying. Ask a shit ton of questions until you understand everything and don't pretend that you understood something (I used to do the classic \"\"mm-hmm...mm-hmm...\"\" when someone was explaining something I wasn't understanting because I was afraid of looking dumb. Don't do that, you aren't fooling anyone). If you feel that there is nothing for you to do, go to your boss and say that to him. If he doesn't find something, go ask someone else (\"\"Hey man, what are you doing there? Seems interesting. Can you teach me when you have the time?\"\") Just for Christ's sake, don't keep your butt in the chair waiting someone to tell you what to do. This is not college anymore.\"",
"title": ""
},
{
"docid": "b5319fce97219fcf592177ea477d4494",
"text": "Great, thank you very much! I guess I will just do my 7/66 first and then worry about the others (CFP or CFA) later if I really want to get them. I just wanted to make sure I wasn’t doing something I didn’t *really* need to do.",
"title": ""
},
{
"docid": "98398da01efbe021f1bc313cfaa8aead",
"text": "For conversions you do not to be 59-1/2 to avoid penalty. The 5-yr rule thus creates an early withdrawal option if planned well in advance. See the flow chart in http://www.irs.gov/publications/p590/ch02.html#en_US_2012_publink1000231030 For where I sourced the answer. Note : I edited to correct my answer. User102008 called me out on my mistake, and rightly so. The dialog is in the comments, where he points out the mistake. Good job, new User.",
"title": ""
},
{
"docid": "f15c805501c2179fe1b63291c4daf753",
"text": "Besides spending all your money, and then not being able to find a new job when you want to and where you want to, the biggest risk is the lack of health insurance. Research your options regarding your existing insurance under COBRA. It will cover your preexisting conditions at the full price of the insurance, that means without the contribution from your employer. Make sure you have fully investigated the options to understand your out of pocket maximums, and the full price of insurance. You will also have to understand the maximum amount of time you are covered under COBRA. If your unemployment goes beyond that period of time, you will have to get individual insurance. You need to avoid a gap in coverage or when you do get a new job, the insurance may not cover some preexisting conditions. Before NASA send astronauts to the space station for months, they give the astronauts a full physical, including a visit to the dentist and eye doctor. It would be advisable to do the same before announcing to the employer that you plan on quitting. the insurance will generally transition to the COBRA program at the end of your last work day. Because both of you work you could do the transition is phases. One would quit, then spend their time getting the sabbatical site established. The insurance would come from the employed spouse during this transition. Some employers do have sabbatical programs where they will ease your transition if you are going to work on your education full time, or work for a charity. They will need you to return at the end of an agreed time period. Even if they don't have a official sabbatical period they usually have a reemployment plan. If you return before the time period expires, usually one or two years, you aren't considered a new employee. That can be important for years of service calculations for a pension, vacation and sick leave earned, 401K matching.",
"title": ""
},
{
"docid": "76f88f0cd1824938c0967712aa2c1b41",
"text": "First, don't owe (much) money on a car that's out of warranty. If you have an engine blow up and repairs will cost the lion's share of the car's bluebook value, the entire car loan immediately comes due because the collateral is now worthless. This puts you in a very miserable situation because you must pay off the car suddenly while also securing other transportation! Second, watch for possible early-payment penalties. They are srill lokely cheaper than paying interest, but run the numbers. Their purpose is to repay the lender the amount of money they already paid out to the dealer in sales commission or kickback for referring the loan. The positive effects you want for your credit report only require an open loan; owing more money doesn't help, it hurts. However, interest is proportional to principal owed, so a $10,000 car loan is 10 times the interest cost of a $1000 car loan. That means paying most of it off early can fulfill your purpose. As the car is nearer payoff, you can reduce costs further (assuming you cna handle the hit) by increasing the deductible on collision and comprehensive (fire and theft) auto insurance. It's not just you paying more co-pay, it also means the insurance company doesn't have to deal with smaller claims at all, e.g. Nodody with a $1000 deductivle files a claim on an $800 repair. If the amount you owe is small compared to its bluebook value, and within $1000-2000 of paid off, the lender may be OK with you dropping collision and comprehensive coverage altogether (assuming you are). All of this adds up to paying most of it off, but not all, may be the way to go. You could also talk to your lender about paying say, 3/4 of it off, and refinancing the rest as a 12-month deal.",
"title": ""
},
{
"docid": "e01ecd127956459cee7b71abf819ac75",
"text": "\"I would think that a lot of brokers would put the restriction suggested in @homer150mw in place or something more restrictive, so that's the first line of answer. If you did get assigned on your short option, then (I think) the T+3 settlement rules would matter for you. Basically you have 3 days to deliver. You'll get a note from your broker demanding that you provide the stock and probably threatening to liquidate assets in your account to cover their costs if you don't comply. If you still have the long-leg of the calendar spread then you can obtain the stock by exercising your long call, or, if you have sufficient funds available, you can just buy the stock and keep your long call. (If you're planning to exercise the long call to cover the position, then you need to check with your broker to see how quickly the stock so-obtained will get credited to your account since it also has some settlement timeline. It's possible that you may not be able to get the stock quickly enough, especially if you act on day 3.) Note that this is why you must buy the call with the far date. It is your \"\"insurance\"\" against a big move against you and getting assigned on your short call at a price that you cannot cover. With the IRA, you have some additional concerns over regular cash account - Namely you cannot freely contribute new cash any time that you want. That means that you have to have some coherent strategy in place here that ensures you can cover your obligations no matter what scenario unfolds. Usually brokers put additional restrictions on trades within IRAs just for this reason. Finally, in the cash account and assuming that you are assigned on your short call, you could potentially could get hit with a good faith, cash liquidation, or free riding violation when your short call is assigned, depending on how you deliver the stock and other things that you're doing in the same account. There are other questions on that on this site and lots of information online. The rules aren't super-simple, so I won't try to reproduce them here. Some related questions to those rules: An external reference also on potential violations in a cash account: https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations\"",
"title": ""
},
{
"docid": "a3f2365912ad92fdb6806f5009bb20a8",
"text": "As far as I know, the AMT implications are the same for a privately held company as for one that is publicly traded. When I was given my ISO package, it came with a big package of articles on AMT to encourage me to exercise as close to the strike price as possible. Remember that the further the actual price at the time of purchase is from the strike price, the more the likely liability for AMT. That is an argument for buying early. Your company should have a common metric for determining the price of the stock that is vetted by outside sources and stable from year to year that is used in a similar way to the publicly traded value when determining AMT liability. During acquisitions stock options often, from what I know of my industry, at least, become options in the new company's stock. This won't always happen, but its possible that your options will simply translate. This can be valuable, because the price of stock during acquisition may triple or quadruple (unless the acquisition is helping out a very troubled company). As long as you are confident that the company will one day be acquired rather than fold and you are able to hold the stock until that one day comes, or you'll be able to sell it back at a likely gain, other than tying up the money I don't see much of a downside to investing now.",
"title": ""
},
{
"docid": "d6e1c7be19e14244540a6cc23e28f71c",
"text": "- Would you want to work in an environment where your pay drops significantly if a large client leaves? You do nothing wrong, the client goes bankrupt, and you're assigned the work of smaller accounts to fill out your work week but you're making 15% less despite being more experienced than the year before and doing a great job. - Whoever is handling assignments would be granted an obscene amount of power within the organisation. How do accounts get shuffled fairly? Are people assigned permanently or do they get shuffled around to even things out? In short, your idea could be very good for the company, but terrible for the employees. Innovation would stagnate (or be kept to each employee in the hopes of gaining an edge), office politics would increase, and the environment could turn toxic quickly. Turnover would probably increase as well.",
"title": ""
},
{
"docid": "1f96bfee69cfdf9f7b0449bd154e8df2",
"text": "As you point out in your question your risk level is personal. If you really believe your job is stable there is no more risk. However the overall evidence is that most jobs are less stable, and if you do lose your job you're likely going to be out of work for a while. One thing to consider though is that if you have planned on emergency credit in the past, that option is not really viable anymore.",
"title": ""
},
{
"docid": "276f2d9f5e360c3c23e8e092a020d02c",
"text": "If you know that you want that advanced degree; And there is a way to have your employer pay for some of it or all of it; And you are reasonably certain that you will not be quitting for X years after completing the degree; Then it is financially sound to consider having the company pay for it. If you are interested in finding out if an advanced degree in that field is possible/feasible for you; but you aren't 100% sure; And it is possible for your company to pay for the first few classes; then it is financially sound to consider having them pay for the first semesters worth of classes. The key is to determine if the company has a requirement that you must complete the degree, or you will owe them the money. In many cases you are not committed to having them pay for all semesters. I have known employees who used the company to pay for the early classes, then paid for the last few on their own. Keep in mind that most employers only pay you for the classes that you have good grades; they require you to submit paperwork before the semester; but don't pay you back until after the semester. Because of a rolling time frame you can protect yourself by keeping in reserve the maximum amount that you would have to repay the employer if you quit. For the companies I have worked for you only had to stay an extra year, you would only have owed them for that last year if you quit. Keeping a years tuition in reserve allows you to mitigate the risk of having to quit. If the question is about risk, then hedging make sense.",
"title": ""
},
{
"docid": "8c97110c32f226e776d5bfe11a4844d3",
"text": "I would strongly encourage you to either find specifically where in your written contract the handling of early/over payments are defined and post it for us to help you, or that you go and visit a licensed real estate attorney. Even at a ridiculously high price of 850 pounds per hour for a top UK law firm (and I suspect you can find a competent lawyer for 10-20% of that amount), it would cost you less than a year of prepayment penalty to get professional advice on what to do with your mortgage. A certified public accountant (CPA) might be able to advise you, as well, if that's any easier for you to find. I have the sneaking suspicion that the company representatives are not being entirely forthcoming with you, thus the need for outside advice. Generally speaking, loans are given an interest rate per period (such as yearly APR), and you pay a percentage (the interest) of the total amount of money you owe (the principle). So if you owe 100,000 at 5% APR, you accrue 5,000 in interest that year. If you pay only the interest each year, you'll pay 50,000 in interest over 10 years - but if you pay everything off in year 8, at a minimum you'd have paid 10,000 less in interest (assuming no prepayment penalties, which you have some of those). So paying off early does not change your APR or your principle amount paid, but it should drastically reduce the interest you pay. Amortization schedules don't change that - they just keep the payments even over the scheduled full life of the loan. Even with prepayment penalties, these are customarily billed at less than 6 months of interest (at the rate you would have payed if you kept the loan), so if you are supposedly on the hook for more than that again I highly suspect something fishy is going on - in which case you'd probably want legal representation to help you put a stop to it. In short, something is definitely and most certainly wrong if paying off a loan years in advance - even after taking into account pre-payment penalties - costs you the same or more than paying the loan off over the full term, on schedule. This is highly abnormal, and frankly even in the US I'd consider it scandalous if it were the case. So please, do look deeper into this - something isn't right!",
"title": ""
},
{
"docid": "ad0028567b8dc2822bbcb30238ef587a",
"text": "\"Concise answers to your questions: Depends on the loan and the bank; when you \"\"accelerate\"\" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a \"\"job\"\"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a \"\"starter\"\", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you \"\"break even\"\" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you.\"",
"title": ""
},
{
"docid": "2cfa0834b636fde849cb2ec3218d1032",
"text": "To add to this, that risk is really only a problem if you don't have the cash flow to service the debt. If the surplus dips but your ultimately profitable on whatever trade you made, you're okay. If you default, you're not okay. Volitility relative to loan term effectively.",
"title": ""
},
{
"docid": "c4eeed1ef12f17beb4e7a2a0d12b5fcc",
"text": "\"Since it's not tagged united-states, I'd like to offer a more general advice. Your emergency fund should match the financial risks that are relevant to you. The two main classes of financial risk are of course a sudden increase in costs or a decrease in income. You'd have to address both independently. First, loss of income. For most, this would simply equate to the loss of a job. How much benefits would you expect to get, and for how long? This is often the most important question; the 6 months advise in the US is based on a lack of benefits. With two incomes, you're less likely to lose both jobs at the same time. That's a general advise, though. If you both work for the same employer, the risk of losing two jobs at the same time is certainly real. Also, in countries with little protection against dismissal (such as the US), the chance of being layed off at the same time is also higher. On the debit side, there are also two main risks. The first is the loss or failure of an essential possession, i.e. one which requires immediate replacement. This could include a car, or a washing machine. You already paid for one before, so you should have a good idea how much it costs. The second expenditure risk is health-related costs. Those can suddenly crop up, but often you have some kind of insurance. If not, you'd need to account for some costs, but it's hard to come up with an objective number here. The two categories are dependent, of course. Health-related costs may very well coincide with a loss of income, especially if you're self-employed. Now, once you've figured out what the risks are, it's time to figure out how to insure against them. Insurance might be a better choice than an emergency fund, especially for the health costs. You might even discover that you don't need an emergency fund at all. In large parts of Europe, you could establish a credit margin that's not easily revoked (i.e. overdraft agreements), and unemployment benefits are sufficient to cover your regular cost of living. The main risk would then be a sudden lack of liquidity if your employer goes bankrupt and fails to pay the monthly wages, which means your credit should be guaranteed sufficient to borrow one month of expenses. (This of course assumes quite good credit; \"\"pay off my car\"\" doesn't suggest that.)\"",
"title": ""
}
] |
fiqa
|
296ef5d8da72a219f877ba0855a95218
|
Good/Bad idea to have an ETF that encompasses another
|
[
{
"docid": "d917fd88122a0370b8a89e8598d25e42",
"text": "Let's simplify things by assuming you only own 2 stocks. By owning VOO and VTI, you're overweight on large- and mid-cap stocks relative to the market composition. Likewise, by owning VTI and VT, you're overweight on U.S. stocks; conversely, by owning VXUS and VT, you're overweight on non-U.S. stocks. These are all perfectly fine positions to take if that's what you intend and have justification for. For example, if you're in the U.S., it may be a good idea to hold more U.S. stocks than VT because of currency risk. But 4 equity index ETFs is probably overcomplicating things. It is perfectly fine to hold only VTI and VXUS because these funds comprise thousands of stocks and thus give you sufficient diversification. I would recommend holding those 2 ETFs based on a domestic/international allocation that makes sense to you (Vanguard recommends 40% of your stock allocation to be international), and if for some reason you want to be overweight in large- and mid-cap companies, throw in VOO. You can use Morningstar X-Ray to look at your proposed portfolio and find your optimal mix of geographic and stock style allocation.",
"title": ""
},
{
"docid": "7f07447ba3dc4293af568924c7c111b9",
"text": "\"You are overthinking it. Yes there is overlap between them, and you want to understand how much overlap there is so you don't end up with a concentration in one area when you were trying to avoid it. Pick two, put your money in those two; and then put your new money into those two until you want to expand into other funds. The advantage of having the money in an IRA held by a single fund family, is that moving some or all of the money from one Mutual fund/ETF to another is painless. The fact it is a retirement account means that selling a fund to move the money doesn't trigger taxes. The fact that you have about $10,000 for the IRA means that hopefully you have decades left before you need the money and that this $10,00 is just the start. You are not committed to these investment choices. With periodic re-balancing the allocations you make now will be adjusted over the decades. One potential issue. You said: \"\"I'm saving right not but haven't actually opened the account.\"\" I take it to mean that you have money in a Roth TRA account but it isn't invested into a stock fund, or that you have the money ready to go in a regular bank account and will be making a 2015 contribution into the actual IRA before tax day this year, and the 2016 contribution either at the same time or soon after. If it is the second case make sure you get the money for 2015 into the IRA before the deadline.\"",
"title": ""
}
] |
[
{
"docid": "43740123fa97c27cf5e4af82928e3592",
"text": "But if you add a security to the index you also remove one from the index, thus both a buy and sell. If weights change some go up, some go down thus some need to be purchased and some need to be sold. So I still don't see how ETFs are net sinks beyond their simple AUM.",
"title": ""
},
{
"docid": "27b2a76855ba5487a5675d1aae1da197",
"text": "Putting your money in the same account as a parent could cause many problems, with very few benefits. One of you would have to claim the dividends and capital gains that the fund might earn during the year. That person might have to pay taxes on those earnings. You would have to find some way of figuring out how to split the costs, and somebody would have to reimburse the other. If one person wanted to sell, figuring out which shares to sell would be much more complex. If these are retirement accounts, which have maximum limits based on income, and the use of other retirement accounts, there is no way to co-mingle the funds. Even if it was possible to combine the funds, the reality is that two people decades apart have different investment goals, and risk tolerances, so the types of investments that a great for one, are very poor for the other. The only benefit is that an existing account would already have more than the minimum investment, so some investments would be easier to make. Also some investments have lower fees if you meet specific investment thresholds. If the fund increases in value by 10% in a year, it doesn't make a difference if the value at the start of the year was 10K or 100K. The rate is the same. The benefits are minor and few; the drawbacks are many; and some situations make it impossible to co-mingle the funds.",
"title": ""
},
{
"docid": "fd894d1730795d2534bc64b24977b373",
"text": "Sure, but as a retail client you'd be incurring transaction fees on entry and exit. Do you have the necessary tools to manage all the corporate actions, too? And index rebalances? ETF managers add value by taking away the monstrous web of clerical work associated with managing a portfolio of, at times, hundreds of different names. With this comes the value of institutional brokerage commissions, data licenses, etc. I think if you were to work out the actual brokerage cost, as well as the time you'd have to spend doing it yourself, you'd find that just buying the ETF is far cheaper. Also a bit of a rabbit hole, but how would you (with traditional retail client tools) even coordinate the simultaneous purchase of all 500 components of something like SPY? I would guess that, on average, you're going to have significantly worse slippage to the index than a typical ETF provider. Add that into your calculation too.",
"title": ""
},
{
"docid": "f010325a3fe156fe86ddd14c85278e5e",
"text": "\"Of course. \"\"Best\"\" is a subjective term. However relying on the resources of the larger institutions by pooling with them will definitely reduce your own burden with regards to the research and keeping track. So yes, investing in mutual funds and ETFs is a very sound strategy. It would be better to diversify, and not to invest all your money in one fund, or in one industry/area. That said, there are more than enough individuals who do their own research and stock picking and invest, with various degrees of success, in individual securities. Some also employe more advanced strategies such as leveraging, options, futures, margins, etc. These advance strategies come at a greater risk, but may bring a greater rewards as well. So the answer to the question in the subject line is YES. For all the rest - there's no one right or wrong answer, it depends greatly on your abilities, time, risk tolerance, cash available to invest, etc etc.\"",
"title": ""
},
{
"docid": "8b90dc3f316e64f6d93f0fd4e355334d",
"text": "An index fund is inherently diversified across its index -- no one stock will either make or break the results. In that case it's a matter of picking the index(es) you want to put the money into. ETFs do permit smaller initial purchases, which would let you do a reasonable mix of sectors. (That seems to be the one advantage of ETFs over traditional funds...?)",
"title": ""
},
{
"docid": "7e769761effd1d77533856624ea79940",
"text": "If you have 100% of your money in one security that is inherently more risky than splitting your money 50/50 between two securities, regardless of the purported riskiness of the two securities. The calculations people use to justify their particular breed of diversification may carry some assumptions related risk/reward calculations. But these particular justifications don't change the fact that spreading your money across different assets protects your money from value variances of the individual assets. Splitting your $100 between Apple and Microsoft stock is probably less valuable (less well diversified) than splitting your money between Apple and Whole Foods stock but either way you're carrying less risk than putting all $100 in to Apple stock regardless of the assumed rates of return for any of these companies stock specifically. Edit: I'm sure the downvotes are because I didn't make a big deal about correlation and measuring correlation and standard deviations of returns and detailed portfolio theory. Measuring efficacy and justifying your particular allocations (that generally uses data from the past to project the future) is all well and good. Fact of the matter is, if you have 100% of your money in stock that's more stock risk than 25% in cash, 25% in bonds and 50% in stock would be because now you're in different asset classes. You can measure to your hearts delight the effects of splitting your money between different specific companies, or different industries, or different market capitalizations, or different countries or different fund managers or different whatever-metrics and doing any of those things will reduce your exposure to those specific allocations. It may be worth pointing out that currently the hot recommendation is a plain vanilla market tracking S&P 500 index fund (that just buys some of each of the 500 largest US companies without any consideration given to risk correlation) over standard deviation calculating actively managed funds. If you ask me that speaks volumes of the true efficacy of hyper analyzing the purported correlations of various securities.",
"title": ""
},
{
"docid": "0293c56e8290ecce3606fdb9ca285fe9",
"text": "http://www.efficientfrontier.com/ef/104/stupid.htm would have some data though a bit old about open-end funds vs an ETF that would be one point. Secondly, do you know that the Math on your ETF will always work out to whole numbers of shares or do you plan on using brokers that would allow fractional shares easily? This is a factor as $3,000 of an open-end fund will automatically go into fractional shares that isn't necessarily the case of an ETF where you have to specify a number of shares when you purchase as well as consider are you doing a market or limit order? These are a couple of things to keep in mind here. Lastly, what if the broker you use charges account maintenance fees for your account? In buying the mutual fund from the fund company directly, there may be a lower likelihood of having such fees. I don't know of any way to buy shares in the ETF directly without using a broker.",
"title": ""
},
{
"docid": "a42527eda7326131233542acb2a672f6",
"text": "While you would reduce risk by diversifying into other stock ETFs across the world, Developed Market returns (and Emerging Markets to a lesser extent) are generally highly correlated with another (correlation of ~0.85-0.90). This implies that they all go up in bull-markets and go down together in bear markets. You are better off diversifying into other asset-classes given your risk tolerance (such as government bonds, as you have mentioned). Alternatively, you can target a portfolio owning all of the assets in the universe (assuming you're trading in Frankfurt, a combination of something similar to H4ZJ and XBAG, but with higher volumes and/or lower fees)! A good starting resource would be the Bogleheads Wiki: https://www.bogleheads.org/wiki/Asset_allocation",
"title": ""
},
{
"docid": "96316907f30923f52fde39c6eb9b971b",
"text": "Well on a levered fund it makes a lot of sense. If you lose 10% on day one and you are 2x levered you just lost 20%. Now on the next day if it corrects 10% you are still down because you've gone up 20% of a lesser amount then you went down by. Then even worse with oil or commodity funds they are forced to roll their futures since they don't want to take delivery, which allows them to be picked off by traders. This is referred to as levered ETF decay. If you do trade levered funds it should be on an intraday basis, and then you're dealing with serious transaction costs.",
"title": ""
},
{
"docid": "fd9d434a2adaf3a25464738a3a6b48e3",
"text": "Fair enough. I would imagine the ETF could get a better option pricing if that were the case, plus liquidity and counterpart risk concerns but your point is well taken. Serves me right to shoot my mouth off on something I do not do (short). Speaking of which, do you do a lot of shorting? Cover positions or speculation?",
"title": ""
},
{
"docid": "1bd71d2b21416caa623fa525043c3812",
"text": "That's not 100% correct, as some leveraged vehicles choose to re-balance on a monthly basis making them less risky (but still risky). If I'm not mistaken the former oil ETN 'DXO' was a monthly re-balance before it was shut down by the 'man' Monthly leveraged vehicles will still suffer slippage, not saying they won't. But instead of re-balancing 250 times per year, they do it 12 times. In my book less iterations equals less decay. Basically you'll bleed, just not as much. I'd only swing trade something like this in a retirement account where I'd be prohibited from trading options. Seems like you can get higher leverage with less risk trading options, plus if you traded LEAPS, you could choose to re-balance only once per year.",
"title": ""
},
{
"docid": "1d78a5b716489ff3fa60038e90e411c1",
"text": "\"Don't put money in things that you don't understand. ETFs won't kill you, ignorance will. The leveraged ultra long/short ETFs hold swaps that are essentially bets on the daily performance of the market. There is no guarantee that they will perform as designed at all, and they frequently do not. IIRC, in most cases, you shouldn't even be holding these things overnight. There aren't any hidden fees, but derivative risk can wipe out portions of the portfolio, and since the main \"\"asset\"\" in an ultra long/short ETF are swaps, you're also subject to counterparty risk -- if the investment bank the fund made its bet with cannot meet it's obligation, you're may lost alot of money. You need to read the prospectus carefully. The propectus re: strategy. The Fund seeks daily investment results, before fees and expenses, that correspond to twice the inverse (-2x) of the daily performance of the Index. The Fund does not seek to achieve its stated investment objective over a period of time greater than a single day. The prospectus re: risk. Because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from twice the inverse (-2x) of the return of the Index over the same period. A Fund will lose money if the Index performance is flat over time, and it is possible that the Fund will lose money over time even if the Index’s performance decreases, as a result of daily rebalancing, the Index’s volatility and the effects of compounding. See “Principal Risks” If you want to hedge your investments over a longer period of time, you should look at more traditional strategies, like options. If you don't have the money to make an option strategy work, you probably can't afford to speculate with leveraged ETFs either.\"",
"title": ""
},
{
"docid": "fbaf8f14b52cfeedf9a2bdeac8dc656c",
"text": "They have ETFs for most of what you listed above. Except the deep-fried candy bars. You know that's just a distributed candy bar that is THEN fried right? They have a few religious ETFs as well as some socially responsible ones. There is no reason to make one based on a single person's preference though - ETFs make their money on fees. For that they need VOLUME. Move Volume = More Money Also, there are over 1,411 ETF's in the US as of 2014. That means there are a lot of options already. You could always create your own if you are a great salesperson though. Source",
"title": ""
},
{
"docid": "46954434d854deff0918901928a5d57c",
"text": "How much should a rational investor have in individual stocks? Probably none. An additional dollar invested in a ETF or low cost index fund comprised of many stocks will be far less risky than a specific stock. And you'd need a lot more capital to make buying, voting, and selling in individual stocks as if you were running your own personal index fund worthwhile. I think in index funds use weightings to make it easier to track the index without constantly trading. So my advice here is to allocate based not on some financial principal but just loss aversion. Don't gamble with more than you can afford to lose. Figure out how much of that 320k you need. It doesn't sound like you can actually afford to lose it all. So I'd say 5 percent and make sure that's funded from other equity holdings or you'll end up overweight in stocks.",
"title": ""
},
{
"docid": "067252b5ff9ca4e62bf6ff506f4bd7cb",
"text": "The general rule is: Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly: Exclusively seems to be the toughest standard and I do not know exactly how strict the IRS's interpretation is. Working in your living room where you regularly watch TV and have people over on the weekends would seem to fail that test. A separate room with your computer in it would pass it. If it was your only computer and you regularly played online games with it, that would seem to be a grey area. The IRA booklet covering this area is here http://www.irs.gov/pub/irs-pdf/p587.pdf I know people that have rented rooms in other places or made use of rental offices for this purpose.",
"title": ""
}
] |
fiqa
|
26aff66bd047d4eae5c918e19b853a52
|
Settlement of Shares Underlying a Covered Call Option
|
[
{
"docid": "4564883eefc225e8c2d7e3d01ae46a2f",
"text": "It's a covered call. When I want to create a covered call position, I don't need to wait before the stock transaction settles. I enter it as one trade, and they settle at different times.",
"title": ""
}
] |
[
{
"docid": "0de9e9a762696f6dba56fbf83b75a153",
"text": "You bought the right – but not the obligation – to buy a certain number of shares at $15 from whomsoever sold you the option, and you paid a premium for it. You can choose whether you want to buy the shares at $15 during the period agreed upon. If you call for the shares, the other guy has to sell the shares to you for $15 each, even if the market price is higher. You can then turn around and promptly resell the purchased shares at the higher market price. If the market price never rises above $15 at any time while the option is open, you still have the right to buy the shares for $15 if you choose to do so. Most rational people would let the option expire without exercising it, but this is not a legal requirement. Doing things like buying shares at $15 when the market price is below $15 is perfectly legal; just not very savvy. You cannot cancel the option in the sense of going to the seller of the option and demanding your premium money back because you don't intend to exercise the option because the market price is below $15. Of course, if the market price is above $15 and you tell the seller to cancel the contract, they will be happy to do so, since it lets them off the hook. They may or may not give you the premium back in this case.",
"title": ""
},
{
"docid": "02ecc79bbe98859380636df1e95a5c82",
"text": "Yes, the ADR will trade on a separate exchange from the underlying one, and can (and does) see fluctuations in price that do not match the (exchange corrected) fluctuations that occur in the original market. You are probably exposing yourself to additional risk that is related to:",
"title": ""
},
{
"docid": "d3cf1863509b8c42a3d70a5e28392a36",
"text": "I do this often with shares that I own - mostly as a learning/experience-building exercise, since I don't own enough individual stocks to make me rich (and don't risk enough to make me broke). Suppose I own 1,000 shares of X. I don't expect my shares to go down, but I want to be compensated in case they do go down. Sure, I could put in a stop-loss order, but another option is to sell a call above where the stock is now (out-of-the-money). So I get the premium regardless of what happens. From there three things can happen: So a covered call essentially lets you give up some upside for some compensation against downward moves. Mathematically it's roughly equivalent to selling a put option - you make a little money (from the premium) if the stock goes up but can lose a lot if the stock plummets. So you would sell call options if:",
"title": ""
},
{
"docid": "bd1a333f0d4845d3bfc8aa0017e0da31",
"text": "\"Without any highly credible anticipation of a company being a target of a pending takeover, its common stock will normally trade at what can be considered non-control or \"\"passive market\"\" prices, i.e. prices that passive securities investors pay or receive for each share of stock. When there is talk or suggestion of a publicly traded company's being an acquisition target, it begins to trade at \"\"control market\"\" prices, i.e. prices that an investor or group of them is expected to pay in order to control the company. In most cases control requires a would-be control shareholder to own half a company's total votes (not necessarily stock) plus one additional vote and to pay a greater price than passive market prices to non-control investors (and sometimes to other control investors). The difference between these two market prices is termed a \"\"control premium.\"\" The appropriateness and value of this premium has been upheld in case law, with some conflicting opinions, in Delaware Chancery Court (see the reference below; LinkedIn Corp. is incorporated in the state), most other US states' courts and those of many countries with active stock markets. The amount of premium is largely determined by investment bankers who, in addition to applying other valuation approaches, review most recently available similar transactions for premiums paid and advise (formally in an \"\"opinion letter\"\") their clients what range of prices to pay or accept. In addition to increasing the likelihood of being outbid by a third-party, failure to pay an adequate premium is often grounds for class action lawsuits that may take years to resolve with great uncertainty for most parties involved. For a recent example and more details see this media opinion and overview about Dell Inc. being taken private in 2013, the lawsuits that transaction prompted and the court's ruling in 2016 in favor of passive shareholder plaintiffs. Though it has more to do with determining fair valuation than specifically premiums, the case illustrates instruments and means used by some courts to protect non-control, passive shareholders. ========== REFERENCE As a reference, in a 2005 note written by a major US-based international corporate law firm, it noted with respect to Delaware courts, which adjudicate most major shareholder conflicts as the state has a disproportionate share of large companies in its domicile, that control premiums may not necessarily be paid to minority shareholders if the acquirer gains control of a company that continues to have minority shareholders, i.e. not a full acquisition: Delaware case law is clear that the value of a dissenting [target company's] stockholder’s shares is not to be reduced to impose a minority discount reflecting the lack of the stockholders’ control over the corporation. Indeed, this appears to be the rationale for valuing the target corporation as a whole and allocating a proportionate share of that value to the shares of [a] dissenting stockholder [exercising his appraisal rights in seeking to challenge the value the target company's board of directors placed on his shares]. At the same time, Delaware courts have suggested, without explanation, that the value of the corporation as a whole, and as a going concern, should not include a control premium of the type that might be realized in a sale of the corporation.\"",
"title": ""
},
{
"docid": "f4ea07c1d545d71f26856ad9d46c4ed8",
"text": "Outside of software that can calculate the returns: You could calculate your possible returns on that leap spread as you ordinarily would, then place the return results of that and the return results for the covered call position side by side for any given price level of the stock you calculate, and net them out. (Netting out the dollar amounts, not percentage returns.) Not a great answer, but there ya go. Software like OptionVue is expensive",
"title": ""
},
{
"docid": "aae251f0f02378096008d1da385f7c25",
"text": "No, if your stock is called away, the stock is sold at the agreed upon price. You cannot get it back at your original price. If you don't want your stock to be called, make sure you have the short call position closed by expiration if it is ITM. Also you could be at risk for early assignment if the option has little to no extrinsic value, although probably not. But when dividends are coming, make sure you close your short ITM options. If the dividend is worth more than the extrinsic value, you are pretty much guaranteed to be assigned. Been assigned that way too many times. Especially in ETFs where the dividends aren't dates are not always easy to find. It happens typically during triple witching. If you are assigned on your short option, you will be short stock and you will have to pay the dividend to the shareholder of your short stock. So if you have a covered call on, and you are assigned, your stock will be called away, and you will have to pay the dividend.",
"title": ""
},
{
"docid": "c10c959c65c599fb50b396f3f0c03689",
"text": "\"If your shares get called on stock at a price below what you paid for the stock, your gain or loss depends on what premium you got for the options you sold. \"\"can I deliver shares at that assigned strike using margin or additional capital if I have it? Can the broker just take care of it and let me collect the time premium? \"\" You don't need margin or any cash because you already hold the shares. A covered call means your cash requirements are 'covered'. So they'll just buy your shares at the strike price of $50. And you still get to keep the premium (which you should have gotten when you sold the covered call). You only need cash or margin when you've sold an uncovered call or put.\"",
"title": ""
},
{
"docid": "e8ae56207c7b41a3488d268e08cb8ae3",
"text": "They can sell a lower price call if they expect the stock to plummet in the near term but they are bullish on the longer term. What they are looking to do is collect the call premium and hope it expires worthless. And then again 'hope' that the stock will ultimately turn around. So yes, a lot of hoping. But can you explain what you mean by 'my brokerage gives premiums for prices lower than the current price'? Do you mean you pay less in commissions for ITM calls?",
"title": ""
},
{
"docid": "954c15a2906ae58f160e91c32a0a1c96",
"text": "I wouldn't get too caught up with this. Doesn't sound like this is even stock reconciliation, more ensuring the cash you've received for dividends & other corporate actions agrees to your expected entitlements and if not raising claims etc.",
"title": ""
},
{
"docid": "e70f0066d19eaedec124fcd4763bf86e",
"text": "\"When the strike price ($25 in this case) is in-the-money, even by $0.01, your shares will be sold the day after expiration if you take no action. If you want to let your shares go,. allow assignment rather than close the short position and sell the long position...it will be cheaper that way. If you want to keep your shares you must buy back the option prior to 4Pm EST on expiration Friday. First ask yourself why you want to keep the shares. Is it to write another option? Is it to hold for a longer term strategy? Assuming this is a covered call writing account, you should consider \"\"rolling\"\" the option. This involves buying back the near-term option and selling the later date option of a similar or higher strike. Make sure to check to see if there is an upcoming earnings report in the latter month because you may want to avoid writing a call in that situation. I never write a call when there's an upcoming ER prior to expiration. Good luck. Alan\"",
"title": ""
},
{
"docid": "6bf38299a224a2ca9d6a6c7ecb4498dd",
"text": "\"This is the sad state of US stock markets and Regulation T. Yes, while options have cleared & settled for t+1 (trade +1 day) for years and now actually clear \"\"instantly\"\" on some exchanges, stocks still clear & settle in t+3. There really is no excuse for it. If you are in a margin account, regulations permit the trading of unsettled funds without affecting margin requirements, so your funds in effect are available immediately after trading but aren't considered margin loans. Some strict brokers will even restrict the amount of uncleared margin funds you can trade with (Scottrade used to be hyper safe and was the only online discount broker that did this years ago); others will allow you to withdraw a large percentage of your funds immediately (I think E*Trade lets you withdraw up to 90% of unsettled funds immediately). If you are in a cash account, you are authorized to buy with unsettled funds, but you can't sell purchases made on unsettled funds until such funds clear, or you'll be barred for 90 days from trading as your letter threatened; besides, most brokers don't allow this. You certainly aren't allowed to withdraw unsettled funds (by your broker) in such an account as it would technically constitute a loan for which you aren't even liable since you've agreed to no loan contract, a margin agreement. I can't be sure if that actually violates Reg T, but when I am, I'll edit. While it is true that all marketable options are cleared through one central entity, the Options Clearing Corporation, with stocks, clearing & settling still occurs between brokers, netting their transactions between each other electronically. All financial products could clear & settle immediately imo, and I'd rather not start a firestorm by giving my opinion why not. Don't even get me started on the bond market... As to the actual process, it's called \"\"clearing & settling\"\". The general process (which can generally be applied to all financial instruments from cash deposits to derivatives trading) is: The reason why all of the old financial companies were grouped on Wall St. is because they'd have runners physically carting all of the certificates from building to building. Then, they discovered netting so slowed down the process to balance the accounts and only cart the net amounts of certificates they owed each other. This is how we get the term \"\"bankers hours\"\" where financial firms would close to the public early to account for the days trading. While this is all really done instantly behind your back at your broker, they've conveniently kept the short hours.\"",
"title": ""
},
{
"docid": "1e9cebde4465fbb20cb434e8b71958d4",
"text": "First, a margin account is required to trade options. If you buy a put, you have the right to deliver 100 shares at a fixed price, 50 can be yours, 50, you'll buy at the market. If you sell a put, you are obligated to buy the shares if put to you. All options are for 100 shares, I am unaware of any partial contract for fewer shares. Not sure what you mean by leveraging the position, can you spell it out more clearly?",
"title": ""
},
{
"docid": "89ec2c32f8875d784be9200e9b3c8c6d",
"text": "\"I think the issue you are having is that the option value is not a \"\"flow\"\" but rather a liability that changes value over time. It is best to illustrate with a balance sheet. The $33 dollars would be the premium net of expense that you would receive from your brokerage for having shorted the options. This would be your asset. The liability is the right for the option owner (the person you sold it to) to exercise and purchase stock at a fixed price. At the moment you sold it, the \"\"Marked To Market\"\" (MTM) value of that option is $40. Hence you are at a net account value of $33-$40= $-7 which is the commission. Over time, as the price of that option changes the value of your account is simply $33 - 2*(option price)*(100) since each option contract is for 100 shares. In your example above, this implies that the option price is 20 cents. So if I were to redo the chart it would look like this If the next day the option value goes to 21 cents, your liability would now be 2*(0.21)*(100) = $42 dollars. In a sense, 2 dollars have been \"\"debited\"\" from your account to cover your potential liability. Since you also own the stock there will be a credit from that line item (not shown). At the expiry of your option, since you are selling covered calls, if you were to be exercised on, the loss on the option and the gain on the shares you own will net off. The final cost basis of the shares you sold will be adjusted by the premium you've received. You will simply be selling your shares at strike + premium per share (0.20 cents in this example)\"",
"title": ""
},
{
"docid": "9e767c26bb5156cea063ee0911642690",
"text": "\"Yes. I heard back from a couple brokerages that gave detailed responses. Specifically: In a Margin account, there are no SEC trade settlement rules, which means there is no risk of any free ride violations. The SEC has a FAQ page on free-riding, which states that it applies specifically to cash accounts. This led me to dig up the text on Regulation T which gives the \"\"free-riding\"\" rule in §220.8(c), which is titled \"\"90 day freeze\"\". §220.8 is the section on cash accounts. Nothing in the sections on margin accounts mentions such a settlement restriction. From the Wikipedia page on Free Riding, the margin agreement implicitly covers settlement. \"\"Buying Power\"\" doesn't seem to be a Regulation T thing, but it's something that the brokerages that I've seen use to state how much purchasing power a client has. Given the response from the brokerage, above, and my reading of Regulation T and the relevant Wikipedia page, proceeds from the sale of any security in a margin account are available immediately for reinvestment. Settlement is covered implicitly by margin; i.e. it doesn't detract from buying power. Additionally, I have personally been making these types of trades over the last year. In a sub-$25K margin account, proceeds are immediately available. The only thing I still have to look out for is running into the day-trading rules.\"",
"title": ""
},
{
"docid": "5a9627f82260bb39df76ebc5d187e383",
"text": "according to the Options Industry council ( http://www.optionseducation.org/tools/faq/splits_mergers_spinoffs_bankruptcies.html ) put options the shares (and therefore the options) may continue trading OTC but if the shares completely stop trading then: if the courts cancel the shares, whereby common shareholders receive nothing, calls will become worthless and an investor who exercises a put would receive 100 times the strike price and deliver nothing. The reason for this is that it is not the company whose shares you have the option on that you have a contract with but the counterparty who wrote the option. If the counterparty goes bankrupt then you may not get paid out (depending on assets available at liquidation - this is counterparty risk) but, unless the two are the same, if the company whose shares you have a put option on declares bankruptcy then you will get paid",
"title": ""
}
] |
fiqa
|
fe7c12e0c35f70fc6995557a3a7579e6
|
Is it legal to not get a 1099-b until March 15?
|
[
{
"docid": "aae960d23c9df2ece3adbc6604646ba6",
"text": "\"If one looks at the \"\"Guide to Information Returns\"\" in the Form 1099 General Instructions (the instructions that the IRS provides to companies on how to fill out 1099 and other forms), it says that the 1099-B is due to recipient by February 15, with a footnote that says \"\"The due date is March 15 for reporting by trustees and middlemen of WHFITs.\"\" I doubt that exception applies, though it may. There's also a section in the instructions on \"\"Extension of time to furnish statements to recipients\"\" which says that a company can apply to the IRS to get an extension to this deadline if needed. I'm guessing that if you were told that there were \"\"complications\"\" that they may have applied for and been given this extension, though that's just a guess. While you could try calling the IRS if you want (and in fact, their web site does suggest calling them if you don't receive a W-2 or 1099-R by the end of February), my honest opinion is that they won't do much until mid-March anyway. Unfortunately, you're probably out of luck being able to file as early as you want to.\"",
"title": ""
},
{
"docid": "16751293163f70b8b38d46f634cf3a96",
"text": "The deadline to mail is February 15. However, if the form is being prepared by a middleman (i.e. Wells Fargo) then they have until March 15th (on page 24). Also, if you haven't received your 1099 form by February 14, you may contact the IRS and they will contact and request the missing form on your behalf. I know that's a lot of information, but to answer your question, yes, there are situations where March 15th is the deadline instead of February 15th.",
"title": ""
}
] |
[
{
"docid": "a4bd4532cbf311f482521dedb9c34ea4",
"text": "\"As long as you paid 100% of your last year's tax liability (overall tax liability, the total tax to pay on your 1040) or 90% of the total tax liability this year, or your underpayment is no more than $1000, you won't be penalized as long as you pay the difference by April 15th. That's per the IRS. I don't know where the \"\"10% of my income\"\" came from, I'm not aware of any such rule.\"",
"title": ""
},
{
"docid": "57fbee9831e6442f6cf8d4f9f3c712b6",
"text": "I can't find specific information for Form 1099-DIV for this tax year. However, I found this quote for next tax season that talks about Form 1099-B: Due date for certain statements sent to recipients. The due date for furnishing statements to recipients for Forms 1099-B, 1099-S, and 1099-MISC (if amounts are reported in box 8 or 14) is February 15, 2018. [emphasis added] I know many brokerages bundle the 1099-DIV with the 1099-B, so one might assume that the deadlines are the same. February 15 seems consistent with the messages I got from my brokerages that said the forms will be mailed by mid-February.",
"title": ""
},
{
"docid": "4462ce3779ad4d896b290b0c34ec9834",
"text": "There are penalties for failure to file and penalties for failure to pay tax. The penalties for both are based on the amount of tax due. So you would owe % penalties of zero, otherwise meaning no penalties at all. The IRS on late 1040 penalties: Here are eight important points about penalties for filing or paying late. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time. If the IRS owes you a refund, April 15 isn't much of a deadline. I suppose the real deadline is April 15, three years later - that's when the IRS keeps your refund and it becomes property of the Treasury. Of course, there's little reason to wait that long. Don't let the Treasury get all your interest.",
"title": ""
},
{
"docid": "ae5066c9a5bc07ef196332219cdba89b",
"text": "\"I'm no lawyer and no expert, so take my remarks as entertainment only. Also see this question. If you have a U.S. SSN which is eligible for work, they may be able to pay you on 1099 basis with your SSN as a sole proprietor, unless they have some personal reason for avoiding that. So perhaps try asking about that specifically. HR policies can be weird and tricky, maybe a nudge in the right direction will help. Not What You Asked: regardless, I might recommend you register as an LLC and get an EIN (sort of SSN for companies) for a variety of reasons. It's called a \"\"limited liability\"\" company for a reason. You may also have an easier time reaping various business-related rewards, like writing off expenses. If you do so, consider a state with no income tax like Wyoming. (Or, for convenience sake, WA if you live in BC, or maybe NH if you live in Ontario.. etc.)\"",
"title": ""
},
{
"docid": "7acb0fe6e2fb77240b7fcaafd353a62b",
"text": "\"Some of this may depend on how your employer chose to deal with your notice period. Most employers employ you for the duration (which means you'd be covered for March on your insurance). They could 'send you home' but pay you (in which case you're an employee for the duration still); or they could terminate you on your notice day, and give you effectively a severance equal to two weeks' pay. That is what it sounds like they did. They should have made this clear to you when you left (on 2/23). Assuming you work in an at-will state, there's nothing wrong (legally) with them doing it this way, although it is not something I believe is right morally. Basically, they're trying to avoid some costs for your last two weeks (if they employ you through 3/6, they pay for another month of insurance, and some other things). In exchange, you lose some insurance benefits and FSA benefits. Your FSA terminates the day you terminate employment (see this pdf for a good explanation of these issues). This means that the FSA administrator is correct to reject expenses incurred after 2/23. The FSA is in no way tied to your insurance plan; you can have one or the other or both. You still can submit claims for expenses prior to 2/23 during your runout period, which is often 60 or 90 days. In the future, you will want to think ahead when leaving employment, and you may want to time when you give notice carefully to maximize your benefits in the event something like this happens again. It's a shady business practice in my mind (to terminate you when you give notice), but it's not unknown. As far as the HSA/FSA, you aren't eligible to contribute to an HSA in a year you're also in an FSA, except that they use \"\"plan year\"\" in the language (so if your benefits period is 6/1/yy - 5/31/yy, that's the relevant 'year'). I'd be cautious about opening a HSA without advice from a tax professional, or at least a more knowledgeable person here.\"",
"title": ""
},
{
"docid": "3e29685e4fc19ff48e0634c8621dfe68",
"text": "If you're waiting for Apple to send you a 1099 for the 2008 tax season, well, you shouldn't be. App Store payments are not reported to the IRS and you will not be receiving a 1099 in the mail from anyone. App Store payments are treated as sales commissions rather than royalties, according to the iTunes Royalty department of Apple. You are responsible for reporting your earnings and filing your own payments for any sums you have earned from App Store. – https://arstechnica.com/apple/2009/01/app-store-lessons-taxes-and-app-store-earnings The closest thing to sales commissions in WA state seems to be Service and Other Activities described at http://dor.wa.gov/content/FileAndPayTaxes/BeforeIFile/Def_TxClassBandO.aspx#0004. When you dig a little deeper into the tax code, WAC 458-20-224 (Service and other business activities) includes: (4) Persons engaged in any business activity, other than or in addition to those for which a specific rate is provided in chapter 82.04 RCW, are taxable under the service and other business activities classification upon gross income from such business. - http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-224 I am not a lawyer or accountant, so caveat emptor.",
"title": ""
},
{
"docid": "7774c2bceeeac395e113b4bb31b43ee7",
"text": "Many of the custodians (ie. Schwab) file for an extension on 1099s. They file for an extension as many of their accounts have positions with foreign income which creates tax reporting issues. If they did not file for extension they would have to send out 1099s at the end of January and then send out corrected forms. Obviously sending out one 1099 is cheaper and less confusing to all. Hope that helps,",
"title": ""
},
{
"docid": "08ce58ecb8c53049e321d3a7a58234a2",
"text": "Note that folks may also be shopping for supplies for a nonprofit tax-exempt organization. I made such a purchase a few weeks ago. Whatever the legal basis of the exception, you need to be able to prove to the store that you have it. If you can't, they must collect the tax.",
"title": ""
},
{
"docid": "d581f5da4cbbd3a23e4b057cf1e03f0d",
"text": "\"I think I found the answer, at least in my specific case. From the heading \"\"Questar/Dominion Resources Merger\"\" in this linked website: Q: When will I receive tax forms showing the stock and dividend payments? A: You can expect a Form 1099-B in early February 2017 showing the amount associated with payment of your shares. You also will receive a Form 1099-DIV by Jan. 31, 2017, with your 2016 dividends earned.\"",
"title": ""
},
{
"docid": "5e20fcec6c8c6bffd7c63b45263466c2",
"text": "\"I think there are several issues here. First, there's the contribution. As littleadv said, there is no excess contribution. Excess contribution is only if you exceed the contribution limit. The contribution limit for Traditional IRAs does not depend on how high your income goes or whether you have a 401(k). It's the deduction limit that may depend on those things. Not deducting it is perfectly legitimate, and is completely different than an \"\"excess contribution\"\", which has a penalty. Second, the withdrawal. You are allowed to withdraw contributions made during a year, plus any earnings from those contributions, before the tax filing deadline for the taxes of that year (which is April 15 of the following year, or even up to October 15 of the following year), and it will be treated as if the contribution never happened. No penalties. The earnings will be taxed as regular income (as if you put it in a bank account). That sounds like what you did. So the withdrawal was not an \"\"early withdrawal\"\", and the 1099-R should reflect that (what distribution code did they put?). Third, even if (and it does not sound like the case, but if) it doesn't qualify as a return of contributions before the tax due date as described above (maybe you withdrew it after October 15 of the following year), as littleadv mentioned, your contribution was a non-deductible contribution, and when withdrawing it, only the earnings portion (which after such a short time should only be a very small part of the distribution) would be subject to tax and penalty.\"",
"title": ""
},
{
"docid": "691ebc769be4882276be7460d9e1cd52",
"text": "Checkout the worksheet on page 20 of Pub 535. Also the text starting in the last half of the third column of page 18 onward. https://www.irs.gov/pub/irs-pdf/p535.pdf The fact that you get a W-2 is irrelevant as far as I can see. Your self-employment business has to meet some criteria (such as being profitable) and the plan needs to be provided through your own business (although if you're sole proprietor filing on Schedule C, it looks like having it in your own name does the trick). Check the publication for all of the rules. There is this exception that would prevent many people with full-time jobs on W-2 from taking the deduction: Other coverage. You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2014, do not use amounts paid for coverage for that month to figure the deduction. (Pages 20-21). Sounds like in your case, though, this doesn't apply. (Although your original question doesn't mention a spouse, which might be relevant to the rule if you have one and he/she works.) The publication should help. If still in doubt, you'll probably need a CPA or other professional to assess your individual situation.",
"title": ""
},
{
"docid": "b891606bf041cfd022f36635be258918",
"text": "This form is due March 15. This year, the 15th is Saturday, so the deadline is Monday March 17th. Keep in mind, the software guys would have two choices, wait until every last form is finalized before releasing, or put the software out by late November when 80%+ are good to go. Nothing is broken in this process. Keep in mind that there are different needs depending on the individual. I like to grab a copy in early December, and have a preliminary idea of what my return with look like. I'll also know if I'll owe so much that I should send in a quarterly tax payment. The IRS isn't accepting any return until 1/31 I believe, so you've lost no time. When you open the program, it usually ask to 'phone home' and update. In a couple weeks, all should be well. (Disclosure - I have guest posted on tax issues at both TurboTax and H&R Block's blogs. The above are my own views.)",
"title": ""
},
{
"docid": "98e4a30799ac22fdf632c7ade120ac85",
"text": "\"The decision whether this test is or is not met seems to be highly dependent on the specific situation of the employer and the employee. I think that you won't find a lot of general references meeting your needs. There is such a thing as a \"\"private ruling letter,\"\" where individuals provide specific information about their situation and request the IRS to rule in advance on how the situation falls with respect to the tax law. I don't know a lot about that process or what you need to do to qualify to get a private ruling. I do know that anonymized versions of at least some of the rulings are published. You might look for such rulings that are close to your situation. I did a quick search and found two that are somewhat related: As regards your situation, my (non-expert) understanding is that you will not pass in this case unless either (a) the employer specifies that you must live on the West Coast or you'll be fired, (b) the employer would refuse to provide space for you if you moved to Boston (or another company location), or (c) you can show that you could not possibly do your job out of Boston. For (c), that might mean, for example, you need to make visits to client locations in SF on short-notice to meet business requirements. If you are only physically needed in SF occasionally and with \"\"reasonable\"\" notice, I don't think you could make it under (c), although if the employer doesn't want to pay travel costs, then you might still make it under (a) in this case.\"",
"title": ""
},
{
"docid": "97ae846da79dfb8cf406399d59a40041",
"text": "For questions 1 and 2. 1) If you are packing the loans into a CDO, they are being sold on the open market. Once it achieves a AAA rating, as most did even though they were mostly subprime, alt a, or arm, it is sold and shipped off the originator's books (While the originator of the CDO collects X% in fees) Basically how the originator makes their money is by X amount of CDOs they sell. There was no incentive to pick and choose the best borrowers to sell a loan to because how the CDOs were sold they achieved the best rating regardless of the borrowers credit risk. Due to this model, people are going to try and get as many people into the homes and sell the CDO asap. This caused questionable lending practices to result, NINJA (no income, no job, no assets) loans, manipulating borrowers income, assets, etc. Things that could be changed to help not have this occur again: a) Feds monetary policy was pretty meh during this period, due to low interest rates the banks had pretty much an endless supply of money and when all the reasonable ventures dried up they had to explore other opportunities to lend. b) Ratings agencies need an overhaul in how they receive their commission, preferably they should be being paid by the investor not the person issuing the security. This will help to eliminate the bias that results. c) Having X% (2-5) remain on the institutions books who created the CDO will help to make them responsibly lend. This is because if they are required to have it remain on their books, they will make better longer term decisions in who to lend to. I'm pretty sure all of these issues are discussed in Nouriel Roubini's book [Crisis Economics](http://www.amazon.com/Crisis-Economics-Course-Future-Finance/dp/1594202508) Another Great book already mentioned in this thread is by Michael Lewis [The Big Short](http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393338827/ref=sr_1_1?s=books&ie=UTF8&qid=1324140607&sr=1-1) If your interested in the European Crisis Michael Lewis also just came out with [Boomerang](http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0393081818/ref=sr_1_1?s=books&ie=UTF8&qid=1324140665&sr=1-1)",
"title": ""
},
{
"docid": "30bf137e511d09d4938a14afc10266e8",
"text": "Actually to be truth full..it was a little more.I believe 62 before closing costs.We also had to do a few repairs....However still yea it would be hard to buy the land and build for that price.Unless your in a really depressed area.",
"title": ""
}
] |
fiqa
|
172afc911d351dbc9582e20bb4d3f10b
|
Oil Price forcasting
|
[
{
"docid": "b5577687015abf8effe0f8e71efa4b86",
"text": "The Oil futures are exactly that. They are people forecasting the price of oil at a point of time in the future where they are willing to buy oil at that price. That said, Do you have evidence of a correlation of Price of oil to the shares of oil stocks? Oil companies that are good investments are generally good investments regardless of the cost of oil. If you did not know about oil futures then you might be best served by consulting an investment professional for some guidance.",
"title": ""
},
{
"docid": "2ce1cee0983831c85823c1166a154b4e",
"text": "\"In layman's terms, oil on the commodities market has a \"\"spot price\"\" and a \"\"future price\"\". The spot price is what the last guy paid to buy a barrel of oil right now (and thus a pretty good indicator of what you'll have to pay). The futures price is what the last guy paid for a \"\"futures contract\"\", where they agreed to buy a barrel of oil for $X at some point in the future. Futures contracts are a form of hedging; a futures contract is usually sold at a price somewhere between the current spot price and the true expected future spot price; the buyer saves money versus paying the spot price, while the seller still makes a profit. But, the buyer of a futures contract is basically betting that the spot price as of delivery will be higher, while the seller is betting it will be lower. Futures contracts are available for a wide variety of acceptable future dates, and form a curve when plotted on a graph that will trend in one direction or the other. Now, as Chad said, oil companies basically get their cut no matter what. Oil stocks are generally a good long-term bet. As far as the best short-term time to buy in to an oil stock, look for very short windows when the spot and near-future price of gasoline is trending downward but oil is still on the uptick. During those times, the oil companies are paying their existing (high) contracts for oil, but when the spot price is low it affects futures prices, which will affect the oil companies' margins. Day traders will see that, squawk \"\"the sky is falling\"\" and sell off, driving the price down temporarily. That's when you buy in. Pretty much the only other time an oil stock is a guaranteed win is when the entire market takes a swan dive and then bottoms out. Oil has such a built-in demand, for the foreseeable future, that regardless of how bad it gets you WILL make money on an oil stock. So, when the entire market's in a panic and everyone's heading for gold, T-debt etc, buy the major oil stocks across the spectrum. Even if one stock tanks, chances are really good that another company will see that and offer a buyout, jacking the bought company's stock (which you then sell and reinvest the cash into the buying company, which will have taken a hit on the news due to the huge drop in working capital). Of course, the one thing to watch for in the headlines is any news that renewables have become much more attractive than oil. You wait; in the next few decades some enterprising individual will invent a super-efficient solar cell that provides all the power a real, practical car will ever need, and that is simultaneously integrated into wind farms making oil/gas plants passe. When that happens oil will be a thing of the past.\"",
"title": ""
},
{
"docid": "cd51c8b0f826c8b008476a7bd09e4a32",
"text": "If past is prologue, I'd say $20, give or take, inflation adjusted of course. http://www.antagoniste.net/WP-Uploads/2007/01/oil_prices_1861_2006.jpg If supplies are at nightmare oversupply, say, as an absurd unlikely scenario, 82 year high in US oil supplies or an all time record in EIA weekly inventories, it looks like the oil price could be capped at the cost of oil sands: This one's just plain scary. Unless if there were some changes refinery laws or technology that I'm not aware of, refineries cutting 50% of the retail gasoline volumes looks bad:",
"title": ""
}
] |
[
{
"docid": "f3a59c57da20adef21327a28f4e6b7f5",
"text": "\"Sure, and I made it clear in my post that I'm willing to accept that I may be wrong. But the author does a poor job of arguing his point, his argument in the article is based on an unsubstantiated claim that a certain activity is bad. He says it \"\"impairs price performance\"\" but offers no proof that this occurs. Now granted, I haven't had a chance to look at the data either, but as myself and other posters have mentioned, this claim is quite debatable. I need a bit more material to be convinced.\"",
"title": ""
},
{
"docid": "018370cc6d766b838bd463ba78f8bbc3",
"text": "I am not hooked up to the US MSM, so i dont know if they have really said what the article claims it is saying. (or that way, or that much) But the whole article claims the idea there will be more oil is bullshit, and that the MSM is covering it ... poorly.",
"title": ""
},
{
"docid": "6e565dff7908157a23a049aca8e6aa30",
"text": "No, and using a 37 year old formula in finance that is as simple as: should make it obvious technical analysis is more of a game for retail traders than investment advice. When it comes to currencies, there are a myriad of macroeconomic occurrences that do not follow a predictable timescale. Using indicators like RSI on any time frame will not magically illuminate broad human psychology and give you an edge. It is theoretically possible for a single public stock's price to be driven by a range of technical traders who all buy at RSI 30 and sell at RSI 70, after becoming a favorite stock on social media, but it is infinitely more likely for all market participants to have completely different goals.",
"title": ""
},
{
"docid": "01706bac2eb5968e35feb904cbea1381",
"text": "Gone are the days when in India, the fuel price was revised on every fortnight. Many times you would have filled up the tank one day before to save few bucks. Now, from 16th June 2017 onwards, Government has decided to revise the daily fuel price at 6 AM according to the international crude oil and dollar prices with respect to rupee value. The notion behind taking this step was just to remove the big leap in fuel rates and also a government initiative to maintain the demand and supply situation in equilibrium.",
"title": ""
},
{
"docid": "eb0299e0e2742cda3ef07689492964a8",
"text": "I used to trade power for a closed end hedge fund. Yes, weather derivatives are very important. They help power traders / utilities hedge for unaccountable variables, IE weather. For example, lets say it costs a utility $50 an hour to produce power for the load when it is 80 degrees outside. Lets say I trade the contract with them to guarantee the weather will be under 80 degrees. If the weather is higher than 80 degrees, more people turn in their AC, the load on the grid goes up, and the utility has to start generating power at $70 an hour. Under this contract, I would be liable to pay the utility the net difference in their cost (the additional $20 per hour they generate per mw). In that case I am a loser. If the power comes in under 80 degrees, I make money as I priced (sold) the contract at a premium according to the risk I calulated for offereing the contract. This has many many applications, but yes, its not a weird thing to trade. Hope this helps.",
"title": ""
},
{
"docid": "cad8151c8bf74c3cb7cd47218f79ec3c",
"text": "Summarized article: Recent mishaps causing supply disruptions at 14 California refineries caused wholesale gas prices to reach an all-time high of $4.39 per gallon. Local gas stations increased prices to 30 cents or more per gallon overnight, with some stations charging as much as $5.79 per gallon. Some stations chose not to buy high-priced wholesale gas for fear they wouldn't be able to sell it. While others shut off their pumps after they ran out of the gas they bought at lower wholesale prices. Some of the refinery mishaps include an oil pipeline problem, a power outage at Exxon Mobil Corp's Torrance refinery and a shutdown of the crude distillation unit at Chevron Corp's Richmond refinery. It is unknown when wholesale prices will come down but one solution may be to allow refineries to switch over from the summer blend to the cheaper winter blend earlier than planned. The California Energy Commission is considering the idea but notes an early switch over could impact air quality. The summer blend reduces evaporation of pollutants during warm weather which would be less damaging to air quality in California's current heat wave. * For more summarized news, subscribe to the [/r/SkimThat](http://www.reddit.com/r/SkimThat) subreddit",
"title": ""
},
{
"docid": "06d2f6233e1a92a2bfff3ee90a2f8a83",
"text": "\"This is the best tl;dr I could make, [original](http://www.npr.org/2017/05/24/529852301/boom-time-again-for-u-s-oil-industry-thanks-to-opec) reduced by 79%. (I'm a bot) ***** > Oil producers across the country are watching to see what OPEC does at its meeting in Vienna this week, since the cartel of oil-exporting countries has recently played a big role in turning around a two-year U.S. slump. > There are more than twice as many U.S. rigs drilling for oil as a year ago, a turnaround that&#039;s felt keenly in places like the Bakken oil patch in North Dakota. > In the dizzying boom-bust cycle of the oil industry, things were crazy busy here a few years back, when a barrel of oil was around $100. But that led to a surge in production that flooded the market, pushing the price of oil down. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ejcc3/boom_time_again_for_us_oil_industry_thanks_to_opec/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~133536 tl;drs so far.\"\") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Oil**^#1 **Dakota**^#2 **price**^#3 **U.S.**^#4 **Job**^#5\"",
"title": ""
},
{
"docid": "1036b5a2d57545cec61d53dda57b458c",
"text": "On international stock exchanges, they trade Puts and Calls, typically also for currencies. If for example 1 NOK is worth 1 $ now, and you buy Calls for 10000 NOK at 1.05 $ each, and in a year the NOK is worth 1.20 $ (which is what you predict), you can execute the Call, meaning 'buying' the 10000 NOK for the contracted 1.05 $ and selling them for the market price of 1.20 $, netting you 12000 - 10500 = 1500 $. Converting those back to NOK would give you 1250 NOK. Considering that those Calls might cost you maybe 300 NOK, you made 950 NOK. Note that if your prediction is common knowledge, Calls will be appropriately priced (=expensive), and there is little to make on them. And note also that if you were wrong, your Calls are worth less than toilet paper, so you lost the complete 300 NOK you paid for them. [all numbers are completely made up, for illustration purposes] You can make the whole thing easier if you define the raise of the NOK against a specific currency, for example $ or EUR. If you can, you can instead buy Puts for that currency, and you save yourself converting the money twice.",
"title": ""
},
{
"docid": "2a66e981710e458857583f84a3a86316",
"text": "There is some precedent but not to the same degree: http://blogs.worldbank.org/prospects/what-can-history-tell-us-about-cartels-commodity-markets The surplus of oil is scrutinized more because (1) it is vitally important and (2) it has been successfully restricted three times (Standard Oil, TRC, OPEC) over relatively long periods of time .",
"title": ""
},
{
"docid": "7dc5fd33e0a1483b15dfee7f63f2cb6c",
"text": "[Here's](http://www.macrotrends.net/1369/crude-oil-price-history-chart) what I found. I think the gist of it is that because we've invested so heavily in pumping domestic oil in North America, it's lowering worldwide demand. Countries that rely really heavily on oil revenues, like Russia, Venezuela, Libya, Saudi etc., suffer when oil prices drop.",
"title": ""
},
{
"docid": "1067dd18b9d8b1ceff059de0557e2110",
"text": "Just because pricing isn't tracked, doesn't mean the dollar price is not backed up by oil (they are others factors involved, of course). But the very fact that OPEC, the worlds largest oil cartel, currently only trade in dollars, effectively means that everyone who wants oil needs dollars to buy it. Therefore, to function in modern global economy, dollars are always needed regardless of exchange rates or interest rates on bonds. In reality the amount debt the US has backed up against its currency wouldn't hold for any other country, apart from US, with its petrodollar status.",
"title": ""
},
{
"docid": "75eb6b18fbd847609b48d145eea7c83f",
"text": "\"It's not impossible to forecast the future price of a commodity. However, it's exactly that; an educated guess, much like the weather, and the further out that prediction is made, the higher the percentage error is expected. A lot of information is gathered by various instruments, spotters etc at a very high cost of time and money, to produce a prediction that starts breaking down after about five days and is no more than a wild guess after about ten. How accurately a price can be forecast depends on the commodity. There are seasonal and thus cyclical changes in many commodities, on top of which there is a general trend which is nearer term. A pretty decent prediction can thus be arrived at with a relatively simple seasonally-adjusted percentage change algorithm; take a moving average of the last few measurements, compute the percent change versus the same period last year (current minus last divided by last) and multiply it by last year's number for the current day or month to arrive at a pretty decent prediction for the current and near-future periods (up to about as far ahead as you have looked behind). Another thing you may need to do is normalize. Many price graphs are very jittery; the price of a stock may fluctuate many percentage points on a single day, and there's a lot of \"\"noise\"\" inherent in them. A common tool to normalize is a box-and-whisker plot, which for a given time period will aggregate all samples within that period, and give you a measurement of the lowest sample, highest sample, median, and quartiles (the range of each 25% of the full sample space). Box plots can also be plotted on the \"\"interquartile range\"\" or \"\"middle fifty\"\"; this throws away the very noisy outliers and constructs a much more regular plot from the inner part of the bell curve. You can reverse-engineer a best-fit line connecting the elements of each box, and the closer two lines are, the more likely the real future data will be around that area (because the quartile between those to lines is very dense; 25% of the values are in a very small range meaning many samples occurred there). Lastly, there are outside factors that are not included in simple percentage growth. Big news must be taken into account by introducing more subjective guesses about future data. If you see an active hurricane season coming (or a hurricane bearing down on Galveston/Houston) then it's reasonable to assume that the price of oil and/or refined oil products (like gas and jet fuel) will skyrocket. A cyclical growth model will not predict these events, but you can factor in the likelihood of a big change with a base onto which you add last year's numbers, and onto that you add regular growth. Conversely, when a huge spike happens due to a non-cyclical event like a natural disaster, you must smooth it out by reducing the readings to fit in the curve, otherwise your model for next year will expect the same anomaly at the same time and so it will be wrong. These adjustments are necessary, but the more of them you make, the less the graph reflects real history and the more it reflects what you think it should have been.\"",
"title": ""
},
{
"docid": "daa664c057893bc74d2c32aeb7a8a58b",
"text": "What would be the best way to estimate / calculate the basis risk exposure of a commodity trading company? Naturally companies are very cagey when it comes to such info, but is there a way to come up with an approximate number?",
"title": ""
},
{
"docid": "17bf504fcbf1cba3d0b4ea70911e7d59",
"text": "\"This is the best tl;dr I could make, [original](http://reuters.com/article/idUSKBN19A029) reduced by 74%. (I'm a bot) ***** > If the rig count holds at current levels, the bank added, U.S. oil production would increase by 770,000 bpd between the fourth quarter of last year and the same quarter this year in the Permian, Eagle Ford, Bakken and Niobrara shale oil fields. > India, which recently overtook Japan as Asia&#039;s second-biggest oil importer, took in 4.2 percent less crude oil in May than it did a year ago. > In China, which is challenging the United States as the world&#039;s biggest importer, oil demand growth has been slowing for some time, albeit from record levels, and analysts expect growth to slow further in coming months. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6i59zv/oil_prices_dip_on_further_rise_in_us_drilling/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~147659 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Oil**^#1 **U.S.**^#2 **percent**^#3 **year**^#4 **crude**^#5\"",
"title": ""
},
{
"docid": "e9948929aaf617dfbf4968b14dc626dc",
"text": "The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day. You can typically sell these futures anytime (if you find someone that buys them), and depending on the direction you bought, you will make or lose money according to oil rice changes - if you have the future to get oil for 50 $, and the market price is 60, this paper is obviously worth 10 $. Note that you will have to sell the future at some day before it runs out, or you get real oil in some harbor somewhere for it, which might not be very useful to you. As most traders don't want really any oil, that might happen automatically or by default, but you need to make sure of that. Note also that worst case you could lose a lot more money than you put in - if you buy a future to deliver oil for 50 $, and the oil price runs, you will have to procure the oil for new price, meaning pay the current price for it. There is no theoretical limit, so depending on what you trade, you could lose ten times or a thousand times what you invested. [I worded that without technical lingo so it is clear for beginners - this is the concept, not the full technical explanation]",
"title": ""
}
] |
fiqa
|
6d4f86f8e02f80215cfb13453d229958
|
What is the purpose of a Share owner services?
|
[
{
"docid": "fc295cbc2414b81fc1c98c6719ee76db",
"text": "\"Wells Fargo Shareowner Services main job is as a Transfer Agent and Dividend Paying Agent. They work on behalf of a company (say Acme Inc.) to keep track of who the shareowners are, their job is to constantly update the official record of who owns how many Acme shares. (Also, obviously, they pay out dividends). You can see how they got involved: they are the ones who were able to \"\"rename\"\" your deceased relative's shares so they are now in your name, no one else can do that. Now, however, they don't have to keep your shares, you can transfer them elsewhere if you wish. You will have to legally prove your identity, which is not difficult to do in most cases (assuming you are in US, have a government issued ID and a bank account, and some time to do some paperwork).\"",
"title": ""
}
] |
[
{
"docid": "34e6df966186974f602a13e3ae0d3721",
"text": "A share of stock is an asset not much different than any other asset. If the share is being held in a joint account, it's being jointly owned. If the share is being held by a company with multiple owners then the share is owned by the various owners. If you're married and in a community property state, then it's technically owned by both parties.",
"title": ""
},
{
"docid": "18e5ae8298e346338d69d4bfd5e80117",
"text": "Well it depends on whether or not your differentiating against. If its capital stock or stock as in a share certificate in the company. If its a share in the company then in my opinion using Equity would be best as it is a form of an asset and does refer to a piece of ownership of the entity. I wouldn't consider a share of stock a service, since the service to you is say Facebook or the broker who facilitates the transaction of buying or selling FB stock. I also would not consider it a Capital Good, as the Capital Good's would be the referring to the actual capital like the servers,other computer equipments etc.",
"title": ""
},
{
"docid": "bcd3b110442aaa733e8fad6a61bf2ad6",
"text": "You need to understand the business and the books as an owner do it for your parents also the manager could be the issue but it could a lot of things I’d like to see the quarterlies for the last 3 Years and a few other things like monthly statements payrolls some accounts etc... to do the math. it could be a partner? The only way to know this is to follow the paper trail.",
"title": ""
},
{
"docid": "d80b33775084481e3cce09445f2b3a83",
"text": "I don't think that you will be able to find a list of every owner for a given stock. There are probably very few people who would know this. One source would be whoever sends out the shareholder meeting mailers. I suspect that the company itself would know this, the exchange to a lesser extent, and possibly the brokerage houses to a even lesser extent. Consider these resources:",
"title": ""
},
{
"docid": "20118d2acc2ddab6bc7eba66d3175b22",
"text": "From what you have written, it could be a boiler room company. These operate with fancy website and have proper book keeping systems but are elaborate scams. How did you find about this broker. If there was a seller when you purchased the shares, there is no reason you can't be seller",
"title": ""
},
{
"docid": "928598067c978d7ba6b404631e154c70",
"text": "The person holding the majority of shares can influence the decisions of the company. Even though the shareholder holds majority of the shares,the Board of Directors appointed by the shareholders in the Annual General Meeting will run the company. As said in the characteristics of the company,the owners and the administrators of the company are different. The shareholder holding majority of the shares can influence the business decisions like appointing the auditor,director etc. and any other business decisions(not taken in the ordinary business) that are taken in the Annual General Meeting.",
"title": ""
},
{
"docid": "33559cb95204fca917084c32f4a7cebd",
"text": "\"None of that is filtered my way as a \"\"part owner\"\". Sure it is, it's just not always obvious. When a company makes money it either: Other then the fourth option, the first three all increase the total value of the company. If you owned 1% of a company that was worth X, and is now worth X+1, the value of that 1% ownership should go up as well. One model of the value of a share of stock is the present value of all future cash flows that the company produces for its shareholders, which would be either through dividends, earnings (provided that they are invested back into the company) or through liquidation (sale). So as earnings increase (or more accurately as projected future earnings increase), so does the value of a share of the company. Also note that the payment of dividends causes the price of a stock to go down when the dividend is paid, since that's equity (cash) that's leaving the company, reducing the value of the company by an equivalent amount. Of course, there's also something to be said for the behavioral aspect of investing, meaning that people sometimes invest in companies that they like, and sell stock of companies that they don't like or disagree with (e.g. Nordstrom's).\"",
"title": ""
},
{
"docid": "8be243534531945387a55667d9391d39",
"text": "\"As an owner of a share of a business you also \"\"own\"\" profits made by the business. But you delegate company management to reinvest those profits, on your behalf, to make even more profits. So your share of the business is a little money-making machine that should grow, without you having to pay taxes on the dividends and without you having to decide where to reinvest your share of the profit.\"",
"title": ""
},
{
"docid": "837cbd14f721b7d3fbbde09e11bd72e8",
"text": "\"Profit sharing adds complexity. I'd pitch it as a percentage of revenue to him. \"\"Profit\"\" is a term than can be abused. Sales are sales. Somewhat related, if you're giving him 30% of all profit on all deals, you're basically selling 30% of your business for $80K. No surprise he's interested. Think more about how you'll finance working capital. You need money to buy the pool supplies, pay for labor, etc. Ideally, you should float as little of this money as you can. An incentive structure that rewards the salespeople should also be taken into consideration. Build that in somewhere. You want his reps to want to pitch your pools. They need some kind of incentive. These are just thoughts off the top of my head. I don't completely understand the details, but maybe it'll help.\"",
"title": ""
},
{
"docid": "8678ed4f912e6edb926d4ad3c93d5ea7",
"text": "Shareholders have voting rights, and directors have fiduciary obligations to shareholders. Sure, shareholders have rights to the dividends, but stock confers decisionmaking powers. I'm not really sure what your answer to this is, or how you are differentiating the concept of ownership from this.",
"title": ""
},
{
"docid": "b32701eca361387d32f57d1bcda9f2b7",
"text": "I believe, I could be wrong, it has been a long day. By exercising this right you have the right to purchase the equivalent of their current share. Eg. Someone owns 50 of 100 shares. and the company does a rights offering and is expanding the shares to 200. That person has first right to purchase 50 more shares to keep his share from being diluted.",
"title": ""
},
{
"docid": "3aeb17bf4b73d0f13117216075ec7f99",
"text": "\"What you are describing is a very specific case of the more general principle of how dividend payments work. Broadly speaking, if you own common shares in a corporation, you are a part owner of that corporation; you have the right to a % of all of that corporation's assets. The value in having that right is ultimately because the corporation will pay you dividends while it operates, and perhaps a final dividend when it liquidates at the end of its life. This is why your shares have value - because they give you ownership of the business itself. Now, assume you own 1k shares in a company with 100M shares, worth a total of $5B. You own 0.001% of the company, and each of your shares is worth $50; the total value of all your shares is $50k. Assume further that the value of the company includes $1B in cash. If the company pays out a dividend of $1B, it will now be only worth $4B. Your shares have just gone down in value by 20%! But, you have a right to 0.001% of the dividend, which equals a $10k cash payment to you. Your personal holdings are now $40k worth of shares, plus $10k in cash. Except for taxes, financial theory states that whether a corporation pays a dividend or not should not impact the value to the individual shareholder. The difference between a regular corporation and a mutual fund, is that the mutual fund is actually a pool of various investments, and it reports a breakdown of that pool to you in a different way. If you own shares directly in a corporation, the dividends you receive are called 'dividends', even if you bought them 1 minute before the ex-dividend date. But a payment from a mutual fund can be divided between, for example, a flow through of dividends, interest, or a return of capital. If you 'looked inside' your mutual fund you when you bought it, you would see that 40% of its value comes from stock A, 20% comes from stock B, etc etc., including maybe 1% of the value coming from a pile of cash the fund owns at the time you bought your units. In theory the mutual fund could set aside the cash it holds for current owners only, but then it would need to track everyone's cash-ownership on an individual basis, and there would be thousands of different 'unit classes' based on timing. For simplicity, the mutual fund just says \"\"yes, when you bought $50k in units, we were 1/3 of the year towards paying out a $10k dividend. So of that $10k dividend, $3,333k of it is assumed to have been cash at the time you bought your shares. Instead of being an actual 'dividend', it is simply a return of capital.\"\" By doing this, the mutual fund is able to pay you your owed dividend [otherwise you would still have the same number of units but no cash, meaning you would lose overall value], without forcing you to be taxed on that payment. If the mutual fund didn't do this separate reporting, you would have paid $50k to buy $46,667k of shares and $3,333k of cash, and then you would have paid tax on that cash when it was returned to you. Note that this does not \"\"falsely exaggerate the investment return\"\", because a return of capital is not earnings; that's why it is reported separately. Note that a 'close-ended fund' is not a mutual fund, it is actually a single corporation. You own units in a mutual fund, giving you the rights to a proportion of all the fund's various investments. You own shares in a close-ended fund, just as you would own shares in any other corporation. The mutual fund passes along the interest, dividends, etc. from its investments on to you; the close-ended fund may pay dividends directly to its shareholders, based on its own internal dividend policy.\"",
"title": ""
},
{
"docid": "55e504dd2b06ad669db1d5bbf87eb186",
"text": "\"This answer relies on why you are holding shares of a company in the first place. So let's address that: So does this mean you would like to vote with your shares on the directions the company takes? If so, your reasons for selling would be different from the next speculator who only is interested in share price volatility. Regardless of your participation in potential voting rights associated with your share ownership, a different reason to sell is based on if your fundamental reasons for investing in the company have changed. Enhancements on this topic include: Trade management, how to deal with position sizes. Buying and selling partial positions based on price action while keeping a core long term position, but this is not something \"\"long term investors\"\" generally put too much effort in. Price targets, start your long term investment with a price target in mind, derived from a future market cap based on your initial fundamental analysis of the company's prospects. And finally, there are a lot of things you can do with a profitable investment in shares.\"",
"title": ""
},
{
"docid": "12693d5ab42b95c35af04f25645e47be",
"text": "It is also worth noting that one of the character defining features of a publicly traded company is that the management that is responsible for the day to day operations of the stands independent of those who have ownership. Shareholder of a public company typically don't have influence over the day to day running of the company.",
"title": ""
},
{
"docid": "20328a7274b9f741cbf64695f0baee00",
"text": "This is going to be a philosophical answer, but here it goes. What is the purpose of an insurance? In my perspective, insurance is a way to protect yourself from risks in life you can not afford to take. Following this principle, most of the people do not have enough money to fix a Ferrari, or pay the medical expenses of a third party--so insurance against liabilities makes financial sense, but many can afford buying an equivalent car as they are insuring. If you have enough money to buy an equivalent car, you are paying for a risk you can take yourself. Then, instead of paying the comprehensive fee which is used to pay the different accidents, the company's administrative fees and the shareholder profits; I would save your money in a separate account and use it as a self-insurance. That is at least what I do. I even put other insurances and extended warranties, which respective risks I have decided to absorve; that way I diversify my fund.",
"title": ""
}
] |
fiqa
|
abd4cb2b89961cf6b548d67c03a861c1
|
Why adjust for inflation annually, as opposed to realising it after the holding period?
|
[
{
"docid": "3bfae4ee3ce21e5318f8c77e2a1927e1",
"text": "I would use neither method. Taking a short example first, with just three compounding periods, with interest rate 10%. The start value y0 is 1. So after three years the value is 1.331, the same as y0 (1 + 0.1)^3. Depreciating (like inflation) by 10% (to demonstrate) gets us back to y0 = 1 Appreciating and depreciating by 10% cancels out: Appreciating by 10% interest and depreciating by 3% inflation: This is the same as y0 (1 + 0.1)^3 (1 + 0.03)^-3 = 1.21805 So for 50 years the result is y0 (1 + 0.1)^50 (1 + 0.03)^-50 = 26.7777 Note You can of course use subtraction but the not using the inflation figure directly. E.g. (edit: This appears to be the Fisher equation.) 2nd Note Further to comments, here is a chart to illustrate how much the relative performance improves when inflation is accounted for. The first fund's return is 6% and the second fund's return varies from 3% to 6%. Inflation is 3%.",
"title": ""
}
] |
[
{
"docid": "c0bac9a98e7ae3f01a8f47c2fd878128",
"text": "\"Krugman argues (and I agree with him on this one) that this is a telltale sign that the US is in a [liquidity trap](http://en.wikipedia.org/wiki/Liquidity_trap). Basically interest rates are near 0 and the banks are very risk adverse right now, so they sit on reserves instead of lending them out. In this scenario, the government \"\"printing\"\" money has no effect on inflation (or much of anything) because it just sits in bank reserves. A more right wing economist might spin a different story though.\"",
"title": ""
},
{
"docid": "c19193e24bda7e5901b24d261c9f47e6",
"text": "What is much more likely is immediate or close to immediate investment. but this is exactly my point of contention with how they do things. I know for a fact that the money is immediately invested, which is why i find it wrong that interest for money collected in a given financial year is announced after the end of the next financial year. i was wondering if this was a common practice in other countries.",
"title": ""
},
{
"docid": "931efdb6af74a7feffd7a87fd30575f2",
"text": "Inflation is not applicable in the said example. You are better off paying 300 every month as the balance when invested will return you income.",
"title": ""
},
{
"docid": "69ac9022804733592e6acd79726b8624",
"text": "You are losing something - interest on your deposit. That money you are giving to the bank is not earning interest so you are losing money considering inflation is eating into it.",
"title": ""
},
{
"docid": "0d4694b1a2b6366c8246417079ec2e9f",
"text": "\"Let's say there's a product worth $10 in July and the inflation rate in August is 10%. Will it then cost $11 in August? Yes. That's basically what inflation means. However. The \"\"monthly\"\" inflation numbers you typically see are generally a year over year inflation rate on that month. Meaning August 2017 inflation is 10% that means inflation was 10% since last July 2016, not since July 2017. At the micro consumer level, inflation is very very very vague. Some sectors of the economy will inflate faster than the general inflation rate, others will be slower or even deflate. Sometimes a price increase comes with a value increase so it's not really inflation. And lastly, month over month inflation isn't something you will feel. Inflation is measured on the whole economy, but actual prices move in steps. A pear today might cost $1, and a pear in five years might cost $1.10. That's 10% over 5 years or about 2% per year but the actual price change might have been as abrupt as yesterday a pear was $1 and now it's $1.10. All of the prices of pears over all of the country won't be the same. Inflation is a measure of everything in the economy roughly blended together to come up with a general value for the loss in purchasing power of a currency and is applicable over long periods. A USD inflation rate of 3% does not mean the pear you spent $1 on today will necessarily cost $1.03 next year.\"",
"title": ""
},
{
"docid": "685969de8f725ad8bdedd6839e4ee42c",
"text": "The general discussion of inflation centers on money as a medium of exchange and a store of value. It is impossible to discuss inflation without considering time, since it is a comparison between the balance between money and goods at two points in time. The whole point of using money, rather than bartering goods, is to have a medium of exchange. Having money, you are interested in the buying power of the money in general more than the relative price of a specific commodity. If some supply distortion causes a shortage of tobacco, or gasoline, or rental properties, the price of each will go up. However, if the amount of circulating money is doubled, the price of everything will be bid up because there is more money chasing the same amount of wealth. The persons who get to introduce the additional circulating money will win at the expense of those who already hold cash. Most of the public measures that are used to describe the economy are highly suspect. For example, during the 90s, the federal government ceased using a constant market basket when computing CPI, allowing substitutions. With this, it was no longer possible to make consistent comparisons over time. The so-called Core CPI is even worse, as it excludes food and energy, which is fine provided you don't eat anything or use any energy. Therefore, when discussing CPI, it is important to understand what exactly is being measured and how. Most published statistics understate inflation.",
"title": ""
},
{
"docid": "1a39d869d535ae5426b2772847469f00",
"text": "Is it true that due the to the increase in interest rates that inflation is likely to increase as well? It is typically the reverse where inflation causes interest rates to rise. Interest rates fundamentally reflect the desire for people to purchase future goods over present day goods. If I loan money to someone for 5 years I lose the ability to use that money. In order to entice me to loan the money the borrower would have to offer me an incentive, that is, they would have to give me additional money at the end of that 5 years. This additional money is the interest rate and it reflects the desire of people to spend money in the future versus the present day. If offered the same amount of money today versus 5 years from now almost everyone would chose to take the money now. Money in the present is more valuable than the same amount of money in the future. Interest rates would still exist even with a currency that could not be printed. I would still prefer to have the currency today than in the future. If the currency is continually devalued (i.e. the issuer is printing more of the currency) than borrowers may charge additional interest to compensate for the loss in purchasing power when they make a loan. Also, it is hard to compare interest rates and inflation. Inflation is very difficult to calculate. New products and services, as well as ever changing consumer desires, continually change the mixture of goods in the market so it is nearly impossible to compare a basket of goods today to a basket of goods 5, 10, 20, or 30 years ago.",
"title": ""
},
{
"docid": "cf90b0dcaa1f707395818029b671ef11",
"text": "\"Over time, gold has mainly a hedge against inflation, based on its scarcity value. That is, unless finds some \"\"killer app\"\" for it that would also make it a good investment. The \"\"usual\"\" ones, metallurgical, electronic, medicine, dental, don't really do the trick. It should be noted that gold performs its inflation hedge function over a long period of time, say $50-$100 years. Over shorter periods of time, it will spike for other reasons. The latest classic example was in 1979-80, and the main reason, in my opinion, was the Iranian hostage crisis (inflation was secondary.) This was a POLITICAL risk situation, but one that was not unwarranted. An attack on 52 U.S. hostages (diplomats, no less), was potenially an attack on the U.S. dollar. But gold got so pricey that it lost its \"\"inflation hedge\"\" function for some two decades (until about 2000). Inflation has not been a notable factor in 2011. But Mideastern political risk has been. Witness Egypt, Libya, and potentially Syria and other countries. Put another way, gold is less of an investment that a \"\"hedge.\"\" And not just against inflation.\"",
"title": ""
},
{
"docid": "f1688c0affff288ef6402d045731b746",
"text": "The answer would depend on the equities held. Some can weather inflation better than others (such as companies that have solid dividend growth) and even outpace inflation. Some industries are also safer against inflation than others, such as consumer staples and utilities since people usually have to purchase these regardless of how much $ they have. In looking over the data comparing S&P 500 returns, dividends, and inflation, the results are all over the map. In the 50's the total return was 19.3% with inflation at 2.2%. Then in the 70's returns were 5.8% with inflation at 7.4 percent, leading one to think that inflation diminished returns. But then in the 80's inflation was 5.1%, yet the return on the S&P was up to 17.3% Either way, aside from the 70's every other decade since 1950 has outpaced inflation (as long as you are including dividends; hence my first paragraph). S&P 500: Total and Inflation-Adjusted Historical Returns Also, the 7% average stock appreciation you mention is just that, an average. You are comparing a year-over-year number (7% inflation) with an aggregated one (stock performance over x number of years) and that is a misrepresentation and is not being weighted for the difference in what those numbers mean. Finally, there are thousands of things that have an effect on the stock market and stocks. Some are controllable and others are not. The idea that any one of them, such as inflation, has any sort of long-term, everlasting effect on prices that they cannot outmaneuver is improbable. This is where researching your stocks comes in...and if done prudently, who cares what the inflation rate is?",
"title": ""
},
{
"docid": "5eb94df80246aae2b4d230cca77cd1f7",
"text": "It is supported by inflation and historical values. if you look at real estate as well as the stock market they have consistently increased over a long period of history even with short term drops. It is also based on inflation and the fact that the price of land and building material has increased over time.",
"title": ""
},
{
"docid": "72cd18a6de1e80e2251a563f6319b2c6",
"text": "I believe that the Wikipedia article is attempting to draw a difference between dollar cost averaging as a result of investing when money becomes available (i.e. 401k contributions from your paycheck) and spreading out a lump sum investment. For the former you want to continuously invest as the money becomes available following your predetermined plan for allocation. For the later it may be reasonable to consider the market as you decide how and the timing for investing.",
"title": ""
},
{
"docid": "7bbdff4b74a172dce539bd323e632508",
"text": "\"The time value of money is very important in understanding this issue. Money today is worth more than money next year, two years from now, etc. It's a well understood economics concept, and well worth reading about if you have some, well, time. Not only is money literally worth more now than later due to inflation, but there is the simple fact that, assuming you have money for the purpose of doing something, being able to do that thing today is better than doing that same thing tomorrow. \"\"A bird in the hand is worth two in the bush\"\" gets to this rather directly; having it now is better than probably having it later. Would you rather have a nice meal tonight, or eat beans and rice tonight and then have the same nice meal next year? That's why interest exists, in part: you're offered some money now, for more money later; or in the case of buying a bond, you're offered more money later for some money now. The fact that people have different discount rates for money later is why the loan market can exist: people with more money than they can use now have a lower discount for future money than people who really need money right now (to buy a house, to pay their rent, whatever). So when choosing to buy a bond, you look at the money you're going to get, both over the short term (the coupon rate) and the long term (the face value), and you consider whether $80 now is worth $100 in 20 years, plus $2 per year. For some people it is - for some people it isn't, and that's why the price is as it is ($80). Odds are if you have a few thousand USD, you're probably not going to be interested in this - or if you have a very long term outlook; there are better ways to make money over that long term. But, if you're a bank needing a secure investment that won't lose value, or a trust that needs high stability, you might be willing to take that deal.\"",
"title": ""
},
{
"docid": "a8ddcd2bb7d01b9ae2744c9547cfa41c",
"text": "\"The public doesn't really need to \"\"notice\"\" for inflation to take effect. Inflation happens there's more money relative to things to buy. Most people think that if say we increase the money supply by 2x, everything should get more expensive. But it matters \"\"where\"\" the increase in money supply is and to \"\"whom\"\" is receiving it. For example, the liquid money supply for US$ increased almost 4 times from 2009 to 2017 via quantitative easing, where the central bank purchased not just short term treasuries, but also longer term bonds. You would think that having 4x the amount of US$ circulating would lead to a lot of inflation on consumer prices. For every $1 that was floating around in 2009, we now have $4, so people should be willing to pay more for a given good, increasing its price. However, the \"\"new\"\" money has been primarily used to purchase assets, and drive up their prices. It has not really found its way to into worker pay (or to the general public), as median income for workers has stayed relatively flat in that time frame. So it can be argued that the \"\"asset\"\" markets are feeling the effects of \"\"inflation\"\" from the increased money supply. Where real estate prices, public stock prices, venture capital investments, etc. have all seen a large increase in their costs to acquire relative to the same asset and opportunity. These assets are acting like a \"\"sponge\"\" for the \"\"new money\"\" that prevents the effects of its inflationary properties from exiting out into the consumer economy. That is also why central banks across the globe are in a predicament in how to \"\"stop\"\" quantitative easing. If they were to shrink the money supply, the inflationary pressures on assets would go down because there's not enough new money to keep raising their prices. Doing it the wrong way would cause housing, stocks, and investment markets to stop growing, because there wouldn't be as much \"\"new money\"\" creating demand for those assets. The best way I can illustrate this is with an example: Say you have an economy that consists of an \"\"Orange Tree\"\" that produces 10 oranges per year. There are 10 people in this economy that each want 1 orange per year. And there is a circulating money supply of $10. The owner of the Orange Tree hires all 10 people to pick 1 orange for him, and pays them $1 to pick. In this scenario, each person picks 1 orange and gives it to the owner. They then receive $1. They then turn around and purchase one of the oranges from the owner of the tree. Because demand is 10 oranges, and supply is 10 oranges, and the money supply is $10, each orange is priced at $1 and everyone is happy. Now let's say the central bank \"\"prints\"\" $100 more dollars. If the central bank gave it to the \"\"people\"\" evenly, each person would end up with $11. Now we have 10 people that want 10 oranges and each have $11. So, the price for the oranges would \"\"inflate\"\" to $11 per orange. Now let's say instead of giving the extra $100 to the \"\"people,\"\" the central bank instead gives it to the \"\"orange tree owner.\"\" The owner can still pick his 10 oranges with the 10 people (the labor force), and can still charge $1 per orange. As long as oranges are still $1, he doesn't really need to increase the \"\"wages\"\" of the orange pickers. So, instead, he invests the $50 into building a bigger house for himself, and then puts the remaining $50 into developing an \"\"orange picking machine.\"\" The supply of oranges is the same, the demand for oranges is the same, and the supply of money that demands oranges is the same, so each orange will continue to be priced at $1. In this scenario, the supply of money increased by 10x, but the prices of oranges did not inflate. This is because the new money went into assets, not consumer demand. Now play this scenario forward a few years. The orange tree owner now has a machine that picks oranges, so he stops hiring people to pick oranges. Now he has a new house and all the oranges he can eat. Now let's say this economy was replicated 100 times, but here are only 20 houses. So there are 100 \"\"orange tree owners\"\" and 1,000 people that get paid to pick oranges and are willing to pay to consume oranges. The central bank hands $100 to each of the 100 orange tree owners. In this case, some of the Orange Tree owners will bid up the price of the houses from $50 to $100. The other Orange Tree Owners may invest in bigger and better \"\"Orange Tree Picking\"\" machines. That automation will lower the cost to pick oranges, and increase profits if prices stay the same. Eventually, those owners will be able to bid more than $100 for one of the 20 houses. As this plays out, the price of a house will continue to increase until all orange picking is automated, but no one can afford oranges because they are not needed to pick them anymore. This is a simplified version of what's basically happening on a global scale.\"",
"title": ""
},
{
"docid": "eb8297b5ca140c0fb70085814539e5a3",
"text": "The Gordon equation does not use inflation-adjusted numbers. It uses nominal returns/dividends and growth rates. It really says nothing anyone would not already know. Everyone knows that your total return equals the sum of the income return plus capital gains. Gordon simply assumes (perfectly validly) that capital gains will be driven by the growth of earnings, and that the dividends paid will likewise increase at the same rate. So he used the 'dividend growth rate' as a proxy for the 'earnings growth rate' or 'capital gains rate'. You cannot use inflation-removed estimates of equity rates of return because those returns do not change with inflation. If anything they move in opposite directions. Eg in the 1970's inflation the high market rates caused people to discount equity values at larger rates --- driving their values down -- creating losses.",
"title": ""
},
{
"docid": "a747f397b3e354d4128fc189b485e4c1",
"text": "First off, inflation doesn't necessarily imply that goods and services will rise in price. The amount of goods & services increases over time as well, and this is balanced (partly), by an increase in the money supply. Without inflation you lose the incentive to invest, as your dollar would become more valuable over time. Why invest in a risky venture if I know that my dollar will buy more if I just wait it out. Might as well stick the money under the mattress. (This is bad)",
"title": ""
}
] |
fiqa
|
b1d02a752005e6782024923cf5fa8dba
|
taxes, ordinary income, and adjusted cost basis for RSUs
|
[
{
"docid": "91ffa5ed8478fc188d5928f275b34075",
"text": "What happened is that they do not track (and report) your original cost basis for 1099-B purposes. That is because it is an RSU. Instead, they just reported gross proceeds ($5200) and $0 for everything else. On your Schedule D you adjust the basis to the correct one, and as a comment you add that it was reported on W2 of the previous year. You then report the correct $1200 gain. You keep the documentation you have to back this up in case of questions (which shouldn't happen, since it will match what was indeed reported on your W2).",
"title": ""
},
{
"docid": "2c3122d7636f15842b326dc32f0f5598",
"text": "The sale of shares on vesting convolutes matters. In a way similar to how reinvested dividends are taxed but the newly purchased fund shares' basis has to be increased, you need to be sure to have the correct per share cost basis. It's easy to confuse the total RSU purchase with the correct numbers, only what remained. The vesting stock is a taxable event, ordinary income. You then own the stock at that cost basis. A sale after that is long or short term and the profit is the to extent it exceeds that basis. The fact that you got these shares in 2013 means you should have paid the tax then. And this is part two of the process. Of course the partial sale means a bit of math to calculate the basis of what remained.",
"title": ""
}
] |
[
{
"docid": "26ce60fef4f08824a11abf3f8009ba3b",
"text": "The IRS defines income quite specifically. On the topic What is Taxable and Nontaxable Income, they note: You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties. Bartering, or giving someone wages (or similar) in something other than currency (or some other specifically defined things, like fringe benefits), is taxed at fair market value: Bartering Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. For additional information, Refer to Tax Topic 420 - Bartering Income and Barter Exchanges. Bartering is more specifically covered in Topic 420 - Bartering Income: You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 for information on filing an amended return. More details about income in general beyond the above articles is available in Publication 525, Taxable and Nontaxable Income. It goes into great detail about different kinds of income. In your example, you'd have to calculate the fair market value of an avocado, and then determine how much cash-equivalent you were paid in. The IRS wouldn't necessarily tell you what that value was; you'd calculate it based on something you feel you could justify to them afterwards. The way I'd do it would be to write down the price of avocados at each pay period, and apply a dollar-cost-averaging type method to determine the total pay's fair value. While the avocado example is of course largely absurd, the advent of bitcoins has made this much more relevant. Publication 525 has this to say about virtual currency: Virtual Currency. If your employer gives you virtual currency (such as Bitcoin) as payment for your services, you must include the fair market value of the currency in your income. The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, Federal Insurance Contribution Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement. Gold would be fundamentally similar - although I am not sure it's legal to pay someone in gold; assuming it were, though, its fair market value would be again the definition of income. Similarly, if you're paid in another country's currency, the US dollar equivalent of that is what you'll pay taxes on, at the fair market value of that currency in US dollars.",
"title": ""
},
{
"docid": "826d062a6cf54470248a68681ae46fc4",
"text": "\"Very interesting question. While searching i also found that some precious metal ETFs (including IAU) gains are taxed at 28% because IRS considers it \"\"collectible\"\", rather than the usual long term 15% for stocks and stock holding ETFs. As for capital gain tax you have to pay now my guess it's because of the following statement in the IAU prospectus (page 34): When the trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss ....\"",
"title": ""
},
{
"docid": "8b27a63bdb0730b88a8c021fafa174de",
"text": "Both US GAAP and IFRS are accrual basis frameworks. 99.9% of businesses report under those frameworks (or their local gaaps, but still accrual based). Usually it's public sector entities which are cash-basis in my experience. Anyway, accrual basis has more to do with revenue recognition, not taxation, so that's not really relevant here. The value date of an invoice (ie in which moment it becomes taxable) depends on tax legislation (which sets the rules to determine the so called date of taxable event), not so much on accounting principles. In many cases taxable rules are intertwined with cash collection/payment, however, to prevent creative accounting for tax evasion purposes. For example, provisions for various uncertain future events might be required by accounting rules, but the corresponding expenses are generally not deductible for tax purposes (so you won't be able to deduct them until the event actually occurs and you pay).",
"title": ""
},
{
"docid": "0c8b81f8345d86c56215b7b3dd6e4a8c",
"text": "Here's an answer received elsewhere. Yes, it looks like you have a pretty good understanding the concept and the process. Your wife's income will be so low - why? If she is a full-time student in any of those months, you may attribute $250 x 2 children worth of income for each of those months. Incidentally, even if you do end up paying taxes on the extra $3000, you won't be paying the employee's share of Social Security and Medicare (7.65%) or state disability on those funds. So you still end up saving some tax money. No doubt, there's no need to remind you to be sure that you submit all the valid receipts to the administrator in time to get reimbursed. And a must-have disclaimer: Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this email, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. ... Any information contained in this email does not fall under the guidelines of IRS Circular 230.",
"title": ""
},
{
"docid": "a936419d8168fea5981f592849805c79",
"text": "Since you reference SS, I surmise you are in the US. Stock you inherit gets a stepped up basis when it's inherited. (so long as it was not contained within a tax deffered retirement account.) When you sell, the new basis is taken from that day you inherited it. It should be minimal compared to your desire to diversify.",
"title": ""
},
{
"docid": "8d2aec1de811964e2da70276232ae2eb",
"text": "Interesting. How would they account for it? Monthly? And if so do they modify the cost basis for each lot for the month and then restate? It's hard to imagine they do that. I have a million questions regarding this topic do you know where in the regs it is covered?",
"title": ""
},
{
"docid": "1679ed0311b0aed45606aa58c7616453",
"text": "You can get really nerdy with the EV calc, but I would just add that it's important to deduct any non-operating, non-consolidated assets in addition to the minority interest adjustment - e.g. unconsolidated subsidiaries, excess real estate, excess working capital, etc.",
"title": ""
},
{
"docid": "4e30ca5efd5d21101a2e6d781d8bcf48",
"text": "Some personal finance packages can track basis cost of individual purchase lots or fractions thereof. I believe Quicken does, for example. And the mutual funds I'm invested in tell me this when I redeem shares. I can't vouch for who/what would make this visible at times other than sale; I've never had that need. For that matter I'm not sure what value the info would have unless you're going to try to explicitly sell specific lots rather than doing FIFO or Average accounting.",
"title": ""
},
{
"docid": "ce2b9eb61772188ef8886e5a8af07a1c",
"text": "\"RSUs are not \"\"essentially cash\"\". \"\"R\"\" in the RSU stands for restricted. These awards have strings attached, and as long as the strings are attached - you don't really own the money. As such, most banks do not include RSUs in the income considerations. Some do, especially if they have a specific agreement with your employer (check your HR/benefits coordinator). Specifically for mortgage loan, where the underwriting is very strict, I'm not aware of banks that include RSUs as income without a specific agreement with the employer as a perk. For credit cards/car loans, where you just need to write a number, they would probably care less. Some banks (but not all) consider past performance, and would include bonuses (and maybe RSUs) if you can show several consecutive years of comparable bonuses.\"",
"title": ""
},
{
"docid": "d4b9db2532d31e7ac04a8971d89360cf",
"text": "\"If you sell a stock, with no distributions, then your gain is taxable under §1001. But not all realized gains will be recognized as taxable. And some gains which are arguably not realized, will be recognized as taxable. The stock is usually a capital asset for investors, who will generate capital gains under §1(h), but dealers, traders, and hedgers will get different treatment. If you are an investor, and you held the stock for a year or more, then you can get the beneficial capital gain rates (e.g. 20% instead of 39.6%). If the asset was held short-term, less than a year, then your tax will generally be calculated at the higher ordinary income rates. There is also the problem of the net investment tax under §1411. I am eliding many exceptions, qualifications, and permutations of these rules. If you receive a §316 dividend from a stock, then that is §61 income. Qualified dividends are ordinary income but will generally be taxed at capital gains rates under §1(h)(11). Distributions in redemption of your stock are usually treated as sales of stock. Non-dividend distributions (that are not redemptions) will reduce your basis in the stock to zero (no tax due) and past zero will be treated as gain from a sale. If you exchange stock in a tax-free reorganization (i.e. contribute your company stock in exchange for an acquirer's stock), you have what would normally be considered a realized gain on the exchange, but the differential will not be recognized, if done correctly. If you hold your shares and never sell them, but you engage in other dealings (short sales, options, collars, wash sales, etc.) that impact those shares, then you can sometimes be deemed to have recognized gain on shares that were never sold or exchanged. A more fundamental principle of income tax design is that not all realized gains will be recognized. IRC §1001(c) says that all realized gains are recognized, except as otherwise provided; that \"\"otherwise\"\" is substantial and far-ranging.\"",
"title": ""
},
{
"docid": "ee913e8ea8db7a5465c14f52c1d98bf1",
"text": "The tax cost at election should be zero. The appreciation is all capital gain beyond your basis, which will be the value at election. IRC §83 applies to property received as compensation for services, where the property is still subject to a substantial risk of forfeiture. It will catch unvested equity given to employees. §83(a) stops taxation until the substantial risk of forfeiture abates (i.e. no tax until stock vests) since the item is revocable and not yet truly income. §83(b) allows the taxpayer to make a quick election (up to 30 days after transfer - firm deadline!) to waive the substantial risk of forfeiture (e.g. treat shares as vested today). The normal operation of §83 takes over after election and the taxable income is generally the value of the vested property minus the price paid for it. If you paid fair market value today, then the difference is zero and your income from the shares is zero. The shares are now yours for tax purposes, though not for legal purposes. That means they are most likely a capital asset in your hands, like other stocks you own or trade. The shares will not be treated as compensation income on vesting, and vesting is not a tax matter for elected shares. If you sell them, you get capital gain (with tax dependent on your holding period) over a basis equal to FMV at the election. The appreciation past election-FMV will be capital gain, rather than ordinary income. This is why the §83(b) election is so valuable. It does not matter at this point whether you bought the restricted shares at FMV or at discount (or received them free) - that only affects the taxes upon §83(b) election.",
"title": ""
},
{
"docid": "829ff126b899af4b65aa225ce89badc3",
"text": "Lets just get to the point...Ordinary income (gains) earned from S-Corp operations (i.e. income earned after all expenses for providing services or selling products) is passed through to the owners/shareholders and taxed at the owner's personal tax rate. Separately, if an S-Corp earns capital gains (i.e. the S-Corp buys and sells stock, earns dividends from investments, etc), those gains are passed through to the owners and taxed at a capital gains rate Capital gains are not the same as ordinary income (gains). Don't get the two confused, they are as different for S-Corp taxation as they are for personal taxation. In some cases an exception occurs, but only when the S-Corp was formally a C-Corp and the C-Corp had non-distributed earnings or losses. This is a separate issue whereas the undistributed C-Corp gains/losses are treated differently than the S-Corp gains/losses. It takes years of college coursework and work experience to grasp the vast arena of tax. It should not be so complex, but it is this complex. It is not within the scope of the non-tax professional to make sense of this stuff. The CPA exams, although very difficult and thorough, only scrape the surface of tax and accounting. I hope this provides some perspective on any questions regarding business tax for S-Corps and any other entity type. Hire a good CPA... if you can find one.",
"title": ""
},
{
"docid": "7156a9fde48c1a3aec096bab435c99e9",
"text": "Yes, you can do what you are contemplating doing, and it works quite well. Just don't get the university's payroll office too riled by going in each June, July, August and September to adjust your payroll withholding! Do it at the end of the summer when perhaps most of your contract income for the year has already been received and you have a fairly good estimate for what your tax bill will be for the coming year. Don't forget to include Social Security and Medicare taxes (both employee's share as well as employer's share) on your contract income in estimating the tax due. The nice thing about paying estimated taxes via payroll deduction is that all that tax money can be counted as having been paid in four equal and timely quarterly payments of estimated tax, regardless of when the money was actually withheld from your university paycheck. You could (if you wanted to, and had a fat salary from the university, heh heh) have all the tax due on your contract income withheld from just your last paycheck of the year! But whether you increase the withholding in August or in December, do remember to change it back after the last paycheck of the year has been received so that next year's withholding starts out at a more mellow pace.",
"title": ""
},
{
"docid": "875dad8f95dc8fdbe28434eb61a793ed",
"text": "You only got 75 shares, so your basis is the fair market value of the stock as of the grant date times the number of shares you got: $20*75. Functionally, it's the same thing as if your employer did this: As such, the basis in that stock is $1,500 ($20*75). The other 25 shares aren't yours and weren't ever yours, so they aren't part of your basis (for net issuance; if they were sell to cover, then the end result would be pretty similar, but there'd be another transaction involved, but we won't go there). To put it another way, suppose your employer paid you a $2000 bonus, leaving you with a $1500 check after tax withholding. Being a prudent person and not wishing to blow your bonus on luxury goods, you invest that $1500 in a well-researched investment. You wouldn't doubt that your cost basis in that investment at $1500.",
"title": ""
},
{
"docid": "cc596ab411b839e7fddc66f3efd63334",
"text": "Various types of corporate actions will precipitate a price adjustment. In the case of dividends, the cash that will be paid out as a dividend to share holders forms part of a company's equity. Once the company pays a dividend, that cash is no longer part of the company's equity and the share price is adjusted accordingly. For example, if Apple is trading at $101 per share at the close of business on the day prior to going ex-dividend, and a dividend of $1 per share has been declared, then the closing price will be adjusted by $1 to give a closing quote of $100. Although the dividend is not paid out until the dividend pay date, the share price is adjusted at the close of business on the day prior to the ex-dividend date since any new purchases on or after the ex-dividend date are not entitled to receive the dividend distribution, so in effect new purchases are buying on the basis of a reduced equity. It will be the exchange providing the quote that performs the price adjustment, not Google or Yahoo. The exchange will perform the adjustment at the close prior to each ex-dividend date, so when you are looking at historical data you are looking at price data that includes each adjustment.",
"title": ""
}
] |
fiqa
|
f61ea137361259b11e6482904c4b15ba
|
Evaluating worth of ESPP (Startup)
|
[
{
"docid": "b77ce1eda52bbf046d67670793dc2e8d",
"text": "You have a lot of different questions in your post - I am only responding to the request for how to value the ESPP. When valuing an ESPP, don't think about what you might sell the shares for in the future, think about what the market would charge you for that option today. In general, an option is worth much less than the underlying share itself. For the simplest example, assume you work at a public company, and your exercise price for your options is $.30, and you can only exercise those options until the end of today, and the cost of the shares on the public stock exchange is also $.30. You have the same 'strike price' as everyone else in the market, making your option worth nothing. In truth, holding that right to a specific strike price into the future does give you value, because it means you can realize the upside in share price gains, without risking any money on share losses. So, how do you value the options? If it's a public company with an active options market, you can easily compare your $.30 strike price with the value of call options in the market that have a $.30 strike price. That becomes the value to you of the option (caveat: it is unlikely you can find an exact match for the terms of your vesting period, but you should be able to find a good starting point). If it's a public company without an active options market, you will have to do a bit of estimation. If a current share is worth $.25 (so, close to your strike price), then your option is worth a little bit, but not much. Compare other shares in your industry / company size to get examples of the relative value between an option and a share. If the current share price is worth $.35, then your option is worth about $.05 [the $.05 profit you could get by immediately exercising and selling, plus a bit more for an option on a share that you can't buy in the open market]. If it's a private company, then you need to be very clear on how shares are to be valued, and what methods you have available to sell back to the company / other individuals. You can then consider as per above, how to value the option for a share, vs the share itself. Without a clear way to sell your shares of a private company [ideally through a sale directly back to the company that you are able to force them to agree on; ie: the company will buyback shares at 5x Net income for the previous year, or something like that], then the value of a small number of shares is very nebulous. There is an extremely limited market for shares of private companies, if you don't own enough to exert control. In your case, because the valuation appears to be $2/share [be sure that these are the same share classes you have the option to buy], your option would be worth a little more than $1.70, if you didn't have to wait 4 years to exercise it. This would be total compensation of about $10k, if you were able to exercise today. Many people don't end up working for an early job in their career for 4 years, so you need to consider whether how much that will reduce the value of the ESPP for you personally. Compared with salary of 90k, 10k worth of stock in 4 years may not be a heavy motivating compensation consideration. Note also that because the company is not public, the valuation of $2/share should be taken with a grain of salt.",
"title": ""
}
] |
[
{
"docid": "0c8f913a856ac688cfd1708acb1be602",
"text": "I have a hard time giving them a P/E higher than 25 on the absolute top end. Given current numbers, that takes another ~60% off their share price putting them right around $10. Now... that's my top end estimate, I'd probably be willing to buy right around $8. In order to support the IPO price, the models I've seen come in at projecting an average growth rate of 40% YoY for the next 5 years. If FB pulled that off, they'd be growing ~5X over the next 5 years (once compounded). As it stands, they've got 900B+ users. Doubling that would require a significant number of new people to start coming on line - 5x that would be impossible. So... next option... They figure out how to monetize existing users/traffic better. It's possible - they don't do a very good job with this as it stands, but they've got a fine line to walk. They need to pull it off without driving users, or advertisers, away. Suppose they were able to double their user base. They'd still need to do ~2.5x better per user to make the numbers. This doesn't take into account that the next billion users are significantly less valuable as an audience than the first billion. (Not in human terms, but in financial/marketing terms.) I'm willing to give them a 20% growth rate for the next 5 years. That'd put them at a bit better than 2.5x over that time. It's still a stretch. That should put them in the same P/E range as GOOG (currently trading at a P/E of 17ish). Any price higher than $10/share at this point is gambling on their ability to crack monetization. The higher you go, the higher you think the odds are. One last thing I'd keep in mind. Most of the early employees with options are locked out of selling for the first 6 months after the IPO. There's a fairly large number of shares that will become available when that time is up. I'm curious to see how many of the early employees call in rich and go start new companies. (Think about what happened to paypal after being sold to ebay - yelp, youtube, and others all came out of the early employees.) I'd be watching the quarterly reports through the quarter ending 12/31. The numbers at that point will give a better gauge of a proper valuation. I absolutely wouldn't hold shares of FB during the period when employees first have their chance to cash their lottery tickets.",
"title": ""
},
{
"docid": "0a7f714f0a3b50be1430a11363a34698",
"text": "Aswath Damodaran's [Investment Valuation 3rd edition](http://www.amazon.com/Investment-Valuation-Techniques-Determining-University/dp/1118130731/ref=sr_1_12?ie=UTF8&qid=1339995852&sr=8-12&keywords=aswath+damodaran) (or save money and go with a used copy of the [2nd edition](http://www.amazon.com/gp/offer-listing/0471414905/ref=dp_olp_used?ie=UTF8&condition=used)) He's a professor at Stern School of Business. His [website](http://pages.stern.nyu.edu/~adamodar/) and [blog](http://aswathdamodaran.blogspot.com/) are good resources as well. [Here is his support page](http://pages.stern.nyu.edu/~adamodar/New_Home_Page/Inv3ed.htm) for his Investment Valuation text. It includes chapter summaries, slides, ect. If you're interested in buying the text you can get an idea of what's in it by checking that site out.",
"title": ""
},
{
"docid": "0e8002a8483e94f44f69a314c387ea4a",
"text": "I believe @Dilip addressed your question alread, I am going to focus on your second question: What are the criteria one should use for estimating the worth of the situation? The criteria are: I hope this helps.",
"title": ""
},
{
"docid": "55007fd29e85f7c0371128de9781b4b8",
"text": "\"Think about the implications if the world worked as your question implies that it \"\"should\"\": A $15 share of stock would return you (at least) $15 after 3 months, plus another $15 after 6 months, plus another after 9 and 12 months. This would have returned to you $60 over the year that you owned it (plus you still own the share). Only then would the stock be worth buying? Anything less than $60 would be too little to be worth bothering about for $15? Such a thing would indeed be worth buying, but you won't find golden-egg laying stocks like that on the stock market. Why? Because other people would outbid your measly $15 in order to get this $60-a-year producing stock (in fact, they would bid many hundreds of dollars). Since other people bid more, you can't find such a deal available. (Of course, there are the points others have brought up: the earnings per share are yearly, not quarterly, unless otherwise noted. The earnings may not be sent to you at all, or only a small part, but you would gain much of their value because the company should be worth about that much more by keeping the earnings.)\"",
"title": ""
},
{
"docid": "a6415381eba61027f7d98941ad81ef79",
"text": "Employee Stock Purchase Plans (ESPPs) were heavily neutered by U.S. tax laws a few years ago, and many companies have cut them way back. While discounts of 15% were common a decade ago, now a company can only offer negligible discounts of 5% or less (tax free), and you can just as easily get that from fluctuations in the market. These are the features to look for to determine if the ESPP is even worth the effort: As for a cash value, if a plan has at least one of those features, (and you believe the stock has real long term value), you still have to determine how much of your money you can afford to divert into stock. If the discount is 5%, the company is paying you an extra 5% on the money you put into the plan.",
"title": ""
},
{
"docid": "dcf6b3771ad03916adfe08e2982cd346",
"text": "\"An answer can be found in my book, \"\"A Modern Approach to Graham and Dodd Investing,\"\" p. 89 http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1 \"\"If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, bu the net present value of the dividend stream is less than book value.\"\" A company with a stock trading below book value is believed to be \"\"impaired,\"\" perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate.\"",
"title": ""
},
{
"docid": "7ffa49547ede3ac0898ebc62bf9ffbc6",
"text": "Yep, a lot of startup funding these days is called equity, which makes for nice valuation, but there are often so many extra stipulations (I've even read of caps on upside; wish I could find the Matt Levine column on it now) that it really is effectively debt.",
"title": ""
},
{
"docid": "53b6b1913a3f7ad27e53d3412cdfb93b",
"text": "\"The key to evaluating book value is return on equity (ROE). That's net profit divided by book value. The \"\"value\"\" of book value is measured by the company's ROE (the higher the better). If the stock is selling below book value, the company's assets aren't earning enough to satisfy most investors. Would you buy a CD that was paying, say two percentage points below the going rate for 100 cents on the dollar? Probably not. You might be willing to buy it only by paying 2% less per year, say 98 cents on the dollar for a one year CD. The two cent discount from \"\"book value\"\" is your compensation for a low \"\"interest\"\" rate.\"",
"title": ""
},
{
"docid": "0c9e754e3769d7ad1a16dbc3e6c90ba5",
"text": "It seems like you want to compare the company's values not necessarily the stock price. Why not get the total outstanding shares and the stock price, generate the market cap. Then you could compare changes to market cap rather than just share price.",
"title": ""
},
{
"docid": "cbe2602216d25f7f2f97e3625c46ea0b",
"text": "\"(Value of shares+Dividends received)/(Initial investment) would be the typical formula though this is more of a percentage where 1 would indicate that you broke even, assuming no inflation to be factored. No, you don't have to estimate the share price based on revenues as I would question how well did anyone estimate what kind of revenues Facebook, Apple, or Google have had and will have. To estimate the value of shares, I'd likely consider what does my investment strategy use as metrics: Is it discounted cash flow, is it based on earnings, is it something else? There are many ways to determine what a stock \"\"should be worth\"\" that depending on what you want to believe there are more than a few ways one could go.\"",
"title": ""
},
{
"docid": "8a6e87ece5bda5dbb3720b8f90837b88",
"text": "\"Here is how I would approach that problem: 1) Find the average ratios of the competitors: 2) Find the earnings and book value per share of Hawaiian 3) Multiply the EPB and BVPS by the average ratios. Note that you get two very different numbers. This illustrates why pricing from ratios is inexact. How you use those answers to estimate a \"\"price\"\" is up to you. You can take the higher of the two, the average, the P/E result since you have more data points, or whatever other method you feel you can justify. There is no \"\"right\"\" answer since no one can accurately predict the future price of any stock.\"",
"title": ""
},
{
"docid": "876a9afbec24369bf05e5fbbf8a0ed8f",
"text": "I think you're not applying the right time scale here. ESPP (Employee Stock Purchase Plan) is usually vesting every 6 months. So every half a year you receive a chunk of stocks based on your salary deduction, with the 15% discount. Every half a year you have a chunk of money from the sale of these stocks that you're going to put into your long term investment portfolio. That is dollar cost averaging. You're investing periodically (every 6 months in this case), same (based on your salary deferral) amount of money, regardless of the stock market behavior. That is precisely what dollar cost averaging is.",
"title": ""
},
{
"docid": "40d3eb1c81f085cd157f373631b1f4c2",
"text": "\"The major pros tend to be: The major cons tend to be: Being in California, you've got state income tax to worry about as well. It might be worth using some of that extra cash to hire someone who knows what they're doing to handle your taxes the first year, at least. I've always maxed mine out, because it's always seemed like a solid way to make a few extra dollars. If you can live without the money in your regular paycheck, it's always seemed that the rewards outweighed the risks. I've also always immediately sold the stock, since I usually feel like being employed at the company is enough \"\"eggs in that basket\"\" without holding investments in the same company. (NB: I've participated in several of these ESPP programs at large international US-based software companies, so this is from my personal experience. You should carefully review the terms of your ESPP before signing up, and I'm a software engineer and not a financial advisor.)\"",
"title": ""
},
{
"docid": "86f7fb8aee91031e8893956bc83201aa",
"text": "Are you implying that Amazon is a better investment than GE because Amazon's P/E is 175 while GE's is only 27? Or that GE is a better investment than Apple because Apple's P/E is just 13. There are a lot of other ratios to consider than P/E. I personally view high P/E numbers as a red flag. One way to think of a P/E ratio is the number of years it's expected for the company to earn its market cap. (Share price divided by annual earnings per share) It will take Amazon 175 years to earn $353 billion. If I was going to buy a dry cleaners, I would not pay the owner 175 years of earnings to take control of it, I'd never see my investment back. To your point. There is so much future growth seemingly built in to today's stock market that even when a company posts higher than expected earnings, the company's stock may take a hit because maybe future prospects are a little less bright than everyone thought yesterday. The point of fundamental analysis is that you want to look at a company's management style and financial strategies. How is it paying its debt? How is it accumulating the debt? How is it's return on assets? How is the return on assets trending? This way when you look at a few companies in the same market segment you may have a better shot at picking the winner over time. The company that piles on new debt for every new project is likely to continue that path in to oblivion, regardless of the P/E ratio. (or some other equally less forward thinking management practice that you uncover in your fundamental analysis efforts). And I'll add... No amount of historical good decision making from a company's management can prepare for a total market downturn, or lack of investor confidence in general. The market is the market; sometimes it's up irrationally, sometimes it's down irrationally.",
"title": ""
},
{
"docid": "514a395c4d97f5947bd3de87e72b0662",
"text": "Usually the amount of the ESPP stocks is very small compared to the overall volume of the trading, so it shouldn't matter. But check if for your company it not so (look at the stock history for the previous ESPP dates, and volumes).",
"title": ""
}
] |
fiqa
|
7dfd9b2ec753508528b1aaef2fd264c5
|
Dollar-cost averaging: How often should one use it? What criteria to use when choosing stocks to apply it to?
|
[
{
"docid": "62abb3bb00c6b735d7180702956ddb3c",
"text": "\"Why do people keep talking about 401K's at work? That is NOT dollar cost averaging. DCA refers to when you have a large sum of money. Do you invest it all at once or spread it out over several smaller purchases over a period of time? There really isn't a \"\"when\"\" should I use it. It is simply a matter of where your preferences lie on the risk/reward scpectrum. DCA has lower risk and lower reward than lump sum investing. In my opinion, I don't like it. DCA only works better than lump sum investing if the price drops. But if you think the price is going to drop, why are you buying the stock in the first place? Example: Your uncle wins the lottery and gives you $50,000. Do you buy $50,000 worth of Apple now, or do you buy $10,000 now and $10,000 a quarter for the next four quarters? If the stock goes up, you will make more with lump-sum(LS) than you will with DCA. If the stock goes down, you will lose more with LS than you will with DCA. If the stock goes up then down, you will lose more with DCA than you will with LS. If the stock goes down then up, you will make more with DCA than you will with LS. So it's a tradeoff. But, like I said, the whole point of you buying the stock is that you think it's going to go up! So why pick the strategy that performs worse in that scenario?\"",
"title": ""
},
{
"docid": "5800de4dbaf9f112a91a9532ed49279b",
"text": "Dollar cost averaging is a great strategy to use for investment vehicles where you can't invest it in a lump sum. A 401K is perfect for this. You take a specific amount out of each paycheck and invest it either in a single fund, or multiple funds, or some programs let you invest it in a brokerage account so you can invest in virtually any mutual fund or stock. With annual or semi-annual re-balancing of your investments dollar cost averaging is the way to invest in these programs. If you have a lump sum to invest, then dollar cost averaging is not the best way to invest. Imagine you want to invest 10K and you want to be 50% bonds and 50% stocks. Under dollar cost averaging you would take months to move the money from 100% cash to 50/50 bonds/stocks. While you are slowly moving towards the allocation you want, you will spend months not in the allocation you want. You will spend way too long in the heavy cash position you were trying to change. The problem works the other way also. Somebody trying to switch from stocks to gold a few years ago, would not have wanted to stay in limbo for months. Obviously day traders don't use dollar cost averaging. If you will will be a frequent trader, DCA is not the way to go. No particular stock type is better for DCA. It is dependent on how long you plan on keeping the investment, and if you will be working with a lump sum or not. EDIT: There have be comments regarding DCA and 401Ks. When experts discuss why people should invest via a 401K, they mention DCA as a plus along with the company match. Many participants walk away with the belief that DCA is the BEST strategy. Many articles have been written about how to invest an inheritance or tax refund, many people want to use DCA because they believe that it is good. In fact in the last few years the experts have begun to discourage ever using DCA unless there is no other way.",
"title": ""
},
{
"docid": "b9d819ec9577a248f9bd639cd5dfe85e",
"text": "\"How often should one use dollar-cost averaging? Trivially, a dollar cost averaging (DCA) strategy must be used at least twice! More seriously, DCA is a discipline that people (typically investors with relatively small amounts of money to invest each month or each quarter) use to avoid succumbing to the temptation to \"\"time the market\"\". As mhoran_psprep points out, it is well-suited to 401k plans and the like (e.g. 403b plans for educational and non-profit institutions, 457 plans for State employees, etc), and indeed is actually the default option in such plans, since a fixed amount of money gets invested each week, or every two weeks, or every month depending on the payroll schedule. Many plans offer just a few mutual funds in which to invest, though far too many people, having little knowledge or understanding of investments, simply opt for the money-market fund or guaranteed annuity fund in their 4xx plans. In any case, all your money goes to work immediately since all mutual funds let you invest in thousandths of a share. Some 401k/403b/457 plans allow investments in stocks through a brokerage, but I think that using DCA to buy individual stocks in a retirement plan is not a good idea at all. The reasons for this are that not only must shares must be bought in whole numbers (integers) but it is generally cheaper to buy stocks in round lots of 100 (or multiples of 100) shares rather than in odd lots of, say, 37 shares. So buying stocks weekly, or biweekly or monthly in a 401k plan means paying more or having the money sit idle until enough is accumulated to buy 100 shares of a stock at which point the brokerage executes the order to buy the stock; and this is really not DCA at all. Worse yet, if you let the money accumulate but you are the one calling the shots \"\"Buy 100 shares of APPL today\"\" instead of letting the brokerage execute the order when there is enough money, you are likely to be timing the market instead of doing DCA. So, are brokerages useless in retirement fund accounts? No, they can be useful but they are not suitable for DCA strategies involving buying stocks. Stick to mutual funds for DCA. Do people use it across the board on all stock investments? As indicated above, using DCA to buy individual stocks is not the best idea, regardless of whether it is done inside a retirement plan or outside. DCA outside a retirement plan works best if you not trust yourself to stick with the strategy (\"\"Ooops, I forgot to mail the check yesterday; oh, well, I will do it next week\"\") but rather, arrange for your mutual fund company to take the money out of your checking account each week/month/quarter etc, and invest it in whatever fund(s) you have chosen. Most companies have such programs under names such as Automatic Investment Program (AIP) etc. Why not have your bank send the money to the mutual fund company instead? Well, that works too, but my bank charges me for sending the money whereas my mutual fund company does AIP for free. But YMMV. Dollar-cost averaging generally means investing a fixed amount of money on a periodic basis. An alternative strategy, if one has decided that owning 1200 shares of FlyByKnight Co is a good investment to have, is to buy round lots of 100 shares of FBKCO each month. The amount of money invested each month varies, but at the end of the year, the average cost of the 1200 shares is the average of the prices on the 12 days on which the investments were made. Of course, by the end of the year, you might not think FBKCO is worth holding any more. This technique worked best in the \"\"good old days\"\" when blue-chip stocks paid what was for all practical purposes a guaranteed dividend each year, and people bought these stocks with the intention of passing them on to their widows and children.\"",
"title": ""
},
{
"docid": "19aa9c19267c1a995f6a6466b63680aa",
"text": "Dollar cost averaging can be done in a retirement plan, and can be done for individual stock purchases, as this will increase your returns by reducing your risk, especially if you are buying a particular stock for the first time. How many time have I purchased a stock, bottom fishing, thinking I was buying at the low, only to find out there was a new low. Sitting with a thousand shares that are now down $3-$4K. I have a choice to sell at a loss, hold what I've got or double down. I usually add more shares if I'm thinking I'll recover, but at that time I'd wished I'd eased into my investment. That way I would have owned more shares at a smaller cost basis. Anything can happen in the market, not knowing whether the price will increase or decrease. In the example above a $3,000 loss is equal to the brokerage cost of about 300 trades, so trading cost should not be a factor. Now I'm not saying to slowly get into the market and miss the bull, like we're having today with Trump, but get into individual stocks slowly, being fully invested in the market. Also DCA means you do not buy equal number of shares per period, say monthly, but that you buy with the same amount of money a different number of shares, reducing your total costs. Let's say you spend $2000 on a stock trading at $10 (200 shares), if the stock rose to $20 you would spend $2000 and buy 100 shares, and if the stock dropped to $5 you would spend $2000 and buy 400 shares, by now having amassed 700 shares for $6,000. On the other hand and in contrast to DCA had you purchased 200 shares for $2000 at $10/share, then 200 shares for $4000 at $20/share, and finally 200 more shares for $1000 at $5/share, you would have amassed only 600 shares for $7000 investment.",
"title": ""
}
] |
[
{
"docid": "fca05efbdc5641fa55c112669d696760",
"text": "I think the list could have added: - Save in regular intervals using the same strategy. Just to make sure that good old dollar cost averaging is thrown in. That's probably where most people go way wrong. Save money all year, dump it on a stock they like because some family friend investment expert said that 'apple prices will go up' with out explaining that you need to take advantage of mean reversion to help spread the risk.",
"title": ""
},
{
"docid": "61a3236acf34529cae6bfa96e07ccccb",
"text": "\"As Dheer pointed out, the top ten mega-cap corporations account for a huge part (20%) of your \"\"S&P 500\"\" portfolio when weighted proportionally. This is one of the reasons why I have personally avoided the index-fund/etf craze -- I don't really need another mechanism to buy ExxonMobil, IBM and Wal-Mart on my behalf. I like the equal-weight concept -- if I'm investing in a broad sector (Large Cap companies), I want diversification across the entire sector and avoid concentration. The downside to this approach is that there will be more portfolio turnover (and expense), since you're holding more shares of the lower tranches of the index where companies are more apt to churn. (ie. #500 on the index gets replaced by an up and comer). So you're likely to have a higher expense ratio, which matters to many folks.\"",
"title": ""
},
{
"docid": "5d7736255f034e29a930b7eab8d3047c",
"text": "\"Forecasts of stock market direction are not reliable, so you shouldn't be putting much weight on them. Long term, you can expect to do better in stocks, but obtaining this better expected return has the danger of \"\"buying in\"\" to the market at a particularly bad moment, leading to a substantially lower return. So mitigate that risk while moving in a big piece of cash by \"\"dollar cost averaging\"\". An example would be to divide your cash hoard (conceptually) into say six pieces, and invest each piece in the index fund two months apart. After a year you will have invested the whole sum at about the average of the index for the year.\"",
"title": ""
},
{
"docid": "ce6d317e89ec1170e735acd3e5886923",
"text": "\"Personally, I think you are approaching this from the wrong angle. You're somewhat correct in assuming that what you're reading is usually some kind of marketing material. Systematic Investment Plan (SIP) is not a universal piece of jargon in the financial world. Dollar cost averaging is a pretty universal piece of jargon in the financial world and is a common topic taught in finance classes in the US. On average, verified by many studies, individuals will generate better investment returns when they proactively avoid timing the market or attempting to pick specific winners. Say you decide to invest in a mutual fund, dollar cost averaging means you invest the same dollar amount in consistent intervals rather than buying a number of shares or buying sporadically when you feel the market is low. As an example I'll compare investing $50 per week on Wednesdays, versus 1 share per week on Wednesdays, or the full $850 on the first Wednesday. I'll use the Vanguard Large cap fund as an example (VLCAX). I realize this is not really an apples to apples comparison as the invested amounts are different, I just wanted to show how your rate of return can change depending on how your money goes in to the market even if the difference is subtle. By investing a common dollar amount rather than a common share amount you ultimately maintain a lower average share price while the share price climbs. It also keeps your investment easy to budget. Vanguard published an excellent paper discussing dollar cost averaging versus lump sum investing which concluded that you should invest as soon as you have funds, rather than parsing out a lump sum in to smaller periodic investments, which is illustrated in the third column above; and obviously worked out well as the market has been increasing. Ultimately, all of these companies are vying to customers so they all have marketing teams trying to figure out how to make their services sound interesting and unique. If they all called dollar cost averaging, \"\"dollar cost averaging\"\" none of them would appear to be unique. So they devise neat acronyms but it's all pretty much the same idea. Trickle your money in to your investments as the money becomes available to you.\"",
"title": ""
},
{
"docid": "0aeeee908b0718dd8905df1decf1431b",
"text": "You will maximize your expected wealth by investing all the money you intend to invest, as soon as you have it available. Don't let the mythos of dollar cost averaging induce you to allocate more much money to a savings account than is optimal. If you want the positive expected return of the market, don't put your money in a savings account. That's especially true now, when you are certainly earning a negative real interest rate on your savings account. Dollar cost averaging and putting all your money in at the beginning would have the same expected return except that if you put all your money in earlier, it spends more time in the market, so your expected return is higher. Your volatility is also higher (because your savings account would have very low volatility) but your preference for investment tells me that you view the expected return and volatility tradeoff of the stock market as acceptable. If you need something to help you feel less stress about investing right away, think of it as dollar cost averaging on a yearly basis instead of monthly. Further, you take take comfort in knowing that you have allocated your wealth as you can instead of letting it fizzle away in real terms in a bank account.",
"title": ""
},
{
"docid": "d48668c03c328eebe5c349e9895587fc",
"text": "Dollar cost averaging is an great way to diversify your investment risk. There's mainly 2 things you want to achieve when you're saving for retirement: 1) Keep your principal investment; 2) Grow it. The best methods recommended by most financial institutions are as follows: 1) Diversification; 2) Re-balance. There are a lot of additional recommendations, but these are my main take away. When you dollar cost average, you're essentially diversifying your exchange risk between the value of the funds you're investing. Including the ups and downs of the value of the underlying asset, may actually be re-balancing. Picking your asset portfolio: 1) You generally want to include within your 401k or any other invest, classes of investments that do not always move in total correlation as this allows you to diversify risk; 2) I'm making a lot of assumptions here - since you may have already picked your asset classes. Consider utilizing the following to tell you when to buy or sell your underlying investment: 1) Google re-balance excel sheet to find several examples of re-balance tools to help you always buy low and sell high; 2) Enter your portfolio investment; 3) Utilize the movement to invest in the underlying assets based on market movement; and 4) Execute in an emotionless way and stick to your plan. Example - Facts 1) I have 1 CAD and 1 USD in my 401k. Plan I will invest 1 dollar in the ratio of 50/50 - forever. Let's start in 2011 since we were closer to par: 2010 - 1 CAD (value 1 USD) and 1 USD (value 1 USD) = 50/50 ratio 2011 start - 1 CAD ( value .8 USD) and 1 USD (value 1 USD) = 40/60 ratio 2011 - rebalance - invest 1 USD as follows purchase .75 CAD (.60 USD) and purchase .40 USD = total of 1 USD reinvested 2011 end - 1.75 CAD (value 1.4USD) and 1.4 USD (value 1.4 USD) - 50/50 ratio As long as the fundamentals of your underlying assets (i.e. you're not expecting hyperinflation or your asset to approach 0), this approach will always build value over time since you're always buying low and selling high while dollar averaging. Keep in mind it does reduce your potential gains - but if you're looking to max gain, it may mean you're also max potential loss - unless you're able to find A symmetrical investments. I hope this helps.",
"title": ""
},
{
"docid": "234d69bfb72ed4adf33d3eb4134b168c",
"text": "\"Ryan's suggestion to index for your main strategy is dead on. Your risk is highest with one given stock, and decreases as you diversify. Yet, picking the stocks one at a time is an effort, when done right, it's time consuming. For what one can say about Jim \"\"mad money\"\" Cramer, his advice to spend an hour a month studying each stock you own, is pretty decent advice. Penny stocks are sub one dollar priced, typically small companies which in theory can grow to be large companies, but the available information tends to be tougher to get hold of. Options are a discussion for a different thread, I discussed the covered call strategy elsewhere and show that options are not necessarily high risk, it depends how they are used.\"",
"title": ""
},
{
"docid": "081512f0aaafbef6ec324b5e271c4821",
"text": "\"Check out Professor Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . Tons of good stuff there to get you started. If you want more depth, he's written what is widely considered the bible on the subject of valuation: \"\"Investment Valuation\"\". DCF is very well suited to stock analysis. One doesn't need to know, or forecast the future stock price to use it. In fact, it's the opposite. Business fundamentals are forecasted to estimate the sum total of future cash flows from the company, discounted back to the present. Divide that by shares outstanding, and you have the value of the stock. The key is to remember that DCF calculations are very sensitive to inputs. Be conservative in your estimates of future revenue growth, earnings margins, and capital investment. I usually develop three forecasts: pessimistic, neutral, optimistic. This delivers a range of value instead of a false-precision single number. This may seem odd: I find the DCF invaluable, but for the process, not so much the result. The input sensitivity requires careful work, and while a range of value is useful, the real benefit comes from being required to answer the questions to build the forecast. It provides a framework to analyze a business. You're just trying to properly fill in the boxes, estimate the unguessable. To do so, you pore through the financials. Skimming, reading with a purpose. In the end you come away with a fairly deep understanding of the business, how they make money, why they'll continue to make money, etc.\"",
"title": ""
},
{
"docid": "3293e141c7f31eef2fd7569dc3de00c7",
"text": "\"Dollar cost averaging is a fancy name someone came up with to say \"\"Invest all of the time\"\". I would not bother with spreading out purchases. If the market is too expensive right now ...so what? The items you sell will bring top dollar. The fund you buy will cost top dollar. It all evens out. You could sell your assets and just sit on cash, but that would require knowing when the next market drop is coming..which no one knows. Also, it never really is cash; it goes into a money market fund which is not guaranteed. I would rather own companies(VSTAX) and collect the dividend.\"",
"title": ""
},
{
"docid": "b505f32724b6c6439754066ecf6fba7c",
"text": "Edit3: Regarding the usefulness of the bare number itself, it is not useful unless, for example, an employer uses that average in the computation of how many options the employer grants to the employee as part of the compensation paid. One of my employers used just such an average. What is far more common is to use two or more moving averages, of different periods, plotted on a chart. My original response continues below... Assuming there are 252 trading days a year, the following chart does what you have done but with a moving average: AAPL on Stockcharts.com Edit: BTW, I looked up the number of Federal holidays, there are 9. The average year has 365.2422 days. 365.2422 × 5/7 = 260.8873. Subtract 9 and you get 251.8873 trading days in the average year. So 252 is a better number for the SMA than 250 if you want to average a year. Edit2: Here is the same chart with more than one average included: AAPL chart w/indicators",
"title": ""
},
{
"docid": "cc774863ed13c1d2f406183d15b26019",
"text": "Quick and dirty paper but pretty interesting.. I'm not in Portfolio Management but I probably would have ended up at the modal number as well. I don't know the subject deeply enough to answer my own question, but is the bias always toward underestimation of variance? Or is that a complex of the way the problem was set up? Another question I have for those in investment management; Would this impact asset allocation?",
"title": ""
},
{
"docid": "818f4cb44f509dfe75279353ce92a310",
"text": "In general, lump sum investing will tend to outperform dollar cost averaging because markets tend to increase in value, so investing more money earlier will generally be a better strategy. The advantage of dollar cost averaging is that it protects you in times when markets are overvalued, or prior to market corrections. As an extreme example, if you done a lump-sum investment in late 2008 and then suffered through the subsequent market crash, it may have taken you 2-3 years to get back to even. If you began a dollar cost averaging investment plan in late 2008, it may have only taken you a 6 months to get back to even. Dollar cost averaging can also help to reduce the urge to time the market, which for most investors is definitely a good thing.",
"title": ""
},
{
"docid": "f23e3365d2baf8d026f99b1755e53154",
"text": "\"Trying to \"\"time the market\"\" is usually a bad idea. People who do this every day for a living have a hard time doing that, and I'm guessing you don't have that kind of time and knowledge. So that leaves you with your first and third options, commonly called lump-sum and dollar cost averaging respectively. Which one to use depends on where your preferences lie on the risk/reward scpectrum. Dollar cost averaging (DCA) has lower risk and lower reward than lump sum investing. In my opinion, I don't like it. DCA only works better than lump sum investing if the price drops. But if you think the price is going to drop, why are you buying the stock in the first place? Example: Your uncle wins the lottery and gives you $50,000. Do you buy $50,000 worth of Apple now, or do you buy $10,000 now and $10,000 a quarter for the next four quarters? If the stock goes up, you will make more with lump-sum(LS) than you will with DCA. If the stock goes down, you will lose more with LS than you will with DCA. If the stock goes up then down, you will lose more with DCA than you will with LS. If the stock goes down then up, you will make more with DCA than you will with LS. So it's a trade-off. But, like I said, the whole point of you buying the stock is that you think it's going to go up, which is especially true with an index fund! So why pick the strategy that performs worse in that scenario?\"",
"title": ""
},
{
"docid": "74e5c4eb9edac1768960798a29a788c8",
"text": "\"Beatrice does a good job of summarizing things. Tracking the index yourself is expensive (transaction costs) and tedious (number of transactions, keeping up with the changes, etc.) One of the points of using an index fund is to reduce your workload. Diversification is another point, though that depends on the indexes that you decide to use. That said, even with a relatively narrow index you diversify in that segment of the market. A point I'd like to add is that the management which occurs for an index fund is not exactly \"\"active.\"\" The decisions on which stocks to select are already made by the maintainers of the index. Thus, the only management that has to occur involves the trades required to mimic the index.\"",
"title": ""
},
{
"docid": "5302883e4ef2d58442e748de9792466f",
"text": "Since I am no longer a minor, can I start contributing to this account right away and claim tax relief for my contributions? Yes Do I need to submit some paperwork to the bank Not to my knowledge. Best check with Bank. What will be the features of such a PPF account with respect to maturity, withdrawals, interest, tax on interest, etc. No difference. i.e. the Account would continue, as it was opened 10 years back, it would mature in another 5 years. You can extend this by a block of 5 years as long as required. The withdrawals are tax free in your hands including interest.",
"title": ""
}
] |
fiqa
|
918dff6a322a624c76933edec06e03b1
|
40 year old A and J makes 1M a year. What is the best investment to save on tax?
|
[
{
"docid": "723b27f016355e96d8163e8dacd36331",
"text": "\"There is nothing legal you can do in the United States to avoid the tax burden of income earned as an employee other than offsetting it with pre-tax contributions (which it sounds like you're already doing), making charitable contributions, or incurring investment losses (which is cutting off your nose to spite your face). So that $660K can't be helped. As for the $80K in stock dividends, you could move those investments into \"\"growth\"\" companies rather than \"\"value\"\" companies. Growth companies are those that pay less in dividends, where the primary increase in wealth occurs only in share price increase. This puts off your tax bill until you finally sell your shares, and (depending on how the tax laws are at that time) your tax bill will be lower on those capital gains than they are currently on these dividends. Regarding rental income I know nothing, but I think you're entitled to depreciate your property's value over time and count that against the taxes you owe on the rents. And you can deduct all the upkeep expenses. As with employment income, intentionally incurring rental losses to lower your tax bill is not logical: for every dollar you earn, you only have to give about 50 cents to the government, whereas for every dollar you lose, you've lost a dollar.\"",
"title": ""
}
] |
[
{
"docid": "9ea76cb35e09336fff8dc63f70321ead",
"text": "That 2t is if you invest the money for a decade before cutting checks, which is the methodology with which I mentioned I disagree. From the article: > After spending a little quality time in Microsoft Excel, I’d say it’s somewhere the ballpark of $1,350 per household, or $1,000 per worker.* If you divide $1000 per worker by ten years, you get $100 per year, which is what I said and which the title mislabeled. Edit: I see what you mean, I typed households instead of workers. Thanks for pointing out my typo, I edited the comment to correct and show I misspoke originally. Also I put 200b instead of 2t. Either way, the point is it is $100 per year, not $1000. I should’ve paid attention when commenting, but the point remains valid",
"title": ""
},
{
"docid": "b4f272cbcf780e50d86fda8794acb691",
"text": "You might be confusing two different things. An advantage of investing over a long term is the compounding of returns. Those returns can be interest, dividends, or capital gains. The mix between them depends on what you invest it and how you invest in it. This advantage applies whether your investment is in a taxable brokerage account or in a tax-advantaged 401K or IRA. So, start investing early so that you have longer for this compounding of returns to happen. The second thing is the tax deferral you get from 401(k) or IRAs. If you invest in a ordinary taxable account, then you have to pay taxes on your interest and dividends for the year in which they occur. You also have to pay taxes on any capital gains which you realize during the year. These yearly tax payments are then money that you don't get the benefit of compounding on. With 401(k) and IRAs, you don't have to pay taxes during these intermediate years.",
"title": ""
},
{
"docid": "6ec31ff25a842884336420f39e6b4a99",
"text": "I am in a very similar situation as you (software engineer, high disposable income). Maximize your contributions to all tax-advantaged accounts first. From those accounts you can choose to invest in high risk funds. At your age and date-target funds will invest in riskier investments on your behalf; and they'll do it while avoiding the 30%+/- haircut that you'll be paying in taxes anyhow. If, after that, you're looking for bigger risk plays then look into a brokerage account that will let you buy and sell options. These are big risk swingers and they are sophisticated, complicated products which are used by many people who likely understand finance far better than you. You can make money with them but you should consider it akin to gambling. It might be more to your liking to maintain a long position in a stock and then trade options against your long position. Start with trading covered calls, then you could consider buying options (defined limited downside risk).",
"title": ""
},
{
"docid": "1286da8a6b6708506c4ec2759ac83219",
"text": "\"While I can appreciate you're coming from a strongly held philosophy, I disagree strongly with it. I do not have any 401k or IRA I don't like that you need to rely on government and keep the money there forever. A 401k and an IRA allows you to work within the IRS rules to allow your gains to grow tax free. Additionally, traditional 401ks and IRAs allow you to deduct income from your taxes, meaning you pay less taxes. Missing out on these benefits because the rules that established them were created by the IRS is very very misguided. Do you refuse to drive a car because you philosophically disagree with speed limits? I am planning on spending 20k on a new car (paying cash) Paying cash for a new car when you can very likely finance it for under 2% means you are loosing the opportunity to invest that money which can conservatively expect 4% returns annually if invested. Additionally, using dealership financing can often be additional leverage to negotiate a lower purchase price. If for some reason, you have bad credit or are unable to secure a loan for under 4%, paying cash might be reasonable. The best thing you have going for you is your low monthly expenses. That is commendable. If early retirement is your goal, you should consider housing expenses as a part of your overall plan, but I would strongly suggest you start investing that money in stocks instead of a single house, especially when you can rent for such a low rate. A 3 fund portfolio is a classic and simple way to get a diverse portfolio that should see returns in good years and stability in bad years. You can read more about them here: http://www.bogleheads.org/wiki/Three-fund_portfolio You should never invest in individual stocks. People make lots of money to professionally guess what stocks will do better than others, and they are still very often wrong. You should purchase what are sometimes called \"\"stocks\"\" but are really very large funds that contain an assortment of stocks blended together. You should also purchase \"\"bonds\"\", which again are not individual bonds, but a blend of the entire bond market. If you want to be very aggressive in your portfolio, go with 100-80% Stocks, the remainder in Bonds. If you are nearing retirement, you should be the inverse, 100-80% bonds, the remainder stocks. The rule of thumb is that you need 25 times your yearly expenses (including taxes, but minus pension or social security income) invested before you can retire. Since you'll be retiring before age 65, you wont be getting social security, and will need to provide your own health insurance.\"",
"title": ""
},
{
"docid": "30feb5a4ba881b67248e3400ceb0ad70",
"text": "\"What a lovely position to find yourself in! There's a lot of doors open to you now that may not have opened naturally for another decade. If I were in your shoes (benefiting from the hindsight of being 35 now) at 21 I'd look to do the following two things before doing anything else: 1- Put 6 months worth of living expenses in to a savings account - a rainy day fund. 2- If you have a pension, I'd be contributing enough of my salary to get the company match. Then I'd top up that figure to 15% of gross salary into Stocks & Shares ISAs - with a view to them also being retirement funds. Now for what to do with the rest... Some thoughts first... House: - If you don't want to live in it just yet, I'd think twice about buying. You wouldn't want a house to limit your career mobility. Or prove to not fit your lifestyle within 2 years, costing you money to move on. Travel: - Spending it all on travel would be excessive. Impromptu travel tends to be more interesting on a lower budget. That is, meeting people backpacking and riding trains and buses. Putting a resonable amount in an account to act as a natural budget for this might be wise. Wealth Managers: \"\"approx. 12% gain over 6 years so far\"\" equates to about 1.9% annual return. Not even beat inflation over that period - so guessing they had it in ultra-safe \"\"cash\"\" (a guaranteed way to lose money over the long term). Give them the money to 'look after' again? I'd sooner do it myself with a selection of low-cost vehicles and equal or beat their return with far lower costs. DECISIONS: A) If you decided not to use the money for big purchases for at least 4-5 years, then you could look to invest it in equities. As you mentioned, a broad basket of high-yielding shares would allow you to get an income and give opportunity for capital growth. -- The yield income could be used for your travel costs. -- Over a few years, you could fill your ISA allowance and realise any capital gains to stay under the annual exemption. Over 4 years or so, it'd all be tax-free. B) If you do want to get a property sooner, then the best bet would to seek out the best interest rates. Current accounts, fixed rate accounts, etc are offering the best interest rates at the moment. Usual places like MoneySavingExpert and SavingsChampion would help you identify them. -- There's nothing wrong with sitting on this money for a couple of years whilst you fid your way with it. It mightn't earn much but you'd likely keep pace with inflation. And you definitely wouldn't lose it or risk it unnecessarily. C) If you wanted to diversify your investment, you could look to buy-to-let (as the other post suggested). This would require a 25% deposit and likely would cost 10% of rental income to have it managed for you. There's room for the property to rise in value and the rent should cover a mortgage. But it may come with the headache of poor tenants or periods of emptiness - so it's not the buy-and-forget that many people assume. With some effort though, it may provide the best route to making the most of the money. D) Some mixture of all of the above at different stages... Your money, your choices. And a valid choice would be to sit on the cash until you learn more about your options and feel the direction your heart is pointing you. Hope that helps. I'm happy to elaborate if you wish. Chris.\"",
"title": ""
},
{
"docid": "dfc2aa4d3688ac396c2defe618e2c11a",
"text": "Your main choices are ISAs and property. You can put over £15,000 per year into an ISA, which means over £450,000 by the time you retire, not allowing for growth in your ISA investments. But if you're paying rent, and worried about being able to pay rent when you retire, the obvious choice is to buy a flat now on a thirty-year mortgage so that you can stop paying rent and the mortgage will be paid off by the time you retire.",
"title": ""
},
{
"docid": "dbe1f56847fc4a43242381d1d2bcfc43",
"text": "\"Firstly, you should familiarise yourself with your options for your pension fund. They changed as of 6th April 2015 so it's all quite new. The Government's guidance on it is here. If you haven't already taken a tax-free lump sum from your pension fund, you can take up to 25% totally tax free immediately. That makes getting a house for 40K very accessible. Beyond the 25%, you can take any of it out whenever you want (\"\"flexi-access drawdown\"\" or \"\"lump sum payment\"\", depending on whether you take the 25% out up front or not). That'll be taxed, as if you earned it as income. So if you didn't have any other income, you can take another £10600 without tax this tax year, and then another £10600 or whatever the allowance goes up to next tax year, and so on. Above that you'd have to pay 20% tax until you reach the higher-rate tax threshold at about £40K/year. You say you do have other income so you'll have to take that into account as well when calculating what tax you'd have to pay. If you've reached state pension age that will add some more income, of course. Or, as you suggest, you can buy an annuity. You can do that with some or all of the money, and you can still take the 25% tax-free first. If you do buy an annuity the income from it will all be taxed, but again your personal allowance will apply. Essentially an annuity is the least risky option, particularly if you get one that is uprated with inflation. Uprating with inflation makes the initial income even lower but protects you against cost of living rises as you get older. In exchange for avoiding that risk, you probably lose out on average compared to some more risky options. You might choose to get an annuity large enough to cover your basic needs and take more chances with the rest.\"",
"title": ""
},
{
"docid": "8e072d360a7c83613e174f8ea6d56d93",
"text": "A Junior ISA might be one option if you are eligible do you have a CTF? (child trust fund) though the rules are changing shortly to allow those with CTF's to move to a junior ISA. JISA are yielding about 3.5% at the moment Or as you are so young you could invest in one or two of the big Generalist Investment trusts (Wittan, Lowland) - you might need an adult open this and it would be held via a trust for you. Or thinking really far ahead you could start a pension with say 50% of the lumpsum",
"title": ""
},
{
"docid": "b53f7aa9e406ea773a4b45621660c971",
"text": "Your first home can be up to £450,000 today. But that figure is unlikely to stay the same over 40 years. The government would need to raise it in line with inflation otherwise in 40 years you won't be able to buy quite so much with it. If inflation averages 2% over your 40 year investment period say, £450,000 would buy you roughly what £200,000 would today. Higher rates of inflation will reduce your purchasing power even faster. You pay stamp duty on a house. For a house worth £450,000 that would be around £12,500. There are also estate agent's fees (typically 1-2% of the purchase price, although you might be able to do better) and legal fees. If you sell quickly you'd only be able to access the balance of the money less all those taxes and fees. That's quite a bit of your bonus lost so why did you tie your money up in a LISA for all those years instead of investing in the stock market directly? One other thing to note is that you buy a LISA from your post tax income. You pay into a pension using your pre-tax income so if you're investing for your retirement then a pension will start with a 20% bonus if you're a lower rate taxpayer and a whopping 40% bonus if you're a higher rate taxpayer. If you're a higher rate taxpayer a pension is much better value.",
"title": ""
},
{
"docid": "d3dc2476ab41b785e705976afa3e7f65",
"text": "The 1.09% is per year, not per month, so you will be getting about 1K per year just for sitting around on your backside. Some important things. It is almost certain that you can earn a better interest rate elsewhere, if you are prepared to leave your 100K untouched. For example, even in Natwest you can earn 3.2% over the next year if you buy a fixed rate bond. For 100K that is certainly worth looking at. Or maybe put 90K in a fixed rate bond and leave 10K in an instant access account. Taxes should not be a problem since you can earn around 7K before you start paying taxes. However be aware that in the UK most bank accounts deduct tax at source. That means they send the tax they think you should have paid to the government, and you then have to claim it back from them. Accounts for young people may work differently. Ask your bank.",
"title": ""
},
{
"docid": "a0ee72e0f45538a89c714aff65edec8b",
"text": "James, money saved over the long term will typically beat inflation. There are many articles that discuss the advantage of starting young, and offer: A 21 year old who puts away $1000/yr for 10 years and stops depositing will be ahead of the 31 yr old who starts the $1000/yr deposit and continues through retirement. If any of us can get a message to our younger selves (time travel, anyone?) we would deliver two messages: Start out by living beneath your means, never take on credit card debt, and save at least 10%/yr as soon as you start working. I'd add, put half your raises to savings until your rate is 15%. I can't comment on the pension companies. Here in the US, our accounts are somewhat guaranteed, not for value, but against theft. We invest in stocks and bonds, our funds are not mingled with the assets of the investment plan company.",
"title": ""
},
{
"docid": "dfc2f3c33075335b08c50365125d6639",
"text": "Congrats on saving aggressively when you're young. I'm not a huge fan of tax-advantaged accounts because the rules can change on them, and there's already a penalty for you to take out that money for most purposes until you've almost tripled your age. Free money (a match) overcomes this reservation for me, but I'm not contributing anything beyond that. I'm paying my taxes on the rest and am done with them. Watching your money grow tax-free for another 37 1/2 years only to see your (and everyone else's) marginal tax rate rise isn't much fun. I'm not saying that will happen, but it certainly could.",
"title": ""
},
{
"docid": "f3d69f4722cc4215f1e83375d2f9ed40",
"text": "10-15% of the bat you want to keep liquid in a savings account with interest at 1.5% that best at the moment. In case of a real emergency. Look in to dividend stocks they can bring in 10-15% on your investment and fairly liquid as well. There's also rental properties but 40k isn't much room to move around with in that area.",
"title": ""
},
{
"docid": "c2d0acd73942fdaf40b3cd3e4c76c664",
"text": "The above is very true, but the biggest bang for your buck can also be in the RESP, assuming you qualify for the grant of 20% per year...it's hard to beat free money from the government...in this account, your investment grows, and the growth and grant is taxed in the hands of the child when it is withdrawn. (Normally, they dont have much income at this point, so pay little or no tax) However, you do not get any income tax deduction or tax break at the time you make the deposit.",
"title": ""
},
{
"docid": "983096f3afa1f54c5e96cfe44c01b014",
"text": "So a interesting note is that this doesn't seem to take into account cost of living arbitrage OR investments. The reason it's so good to make that money isn't so you can spend it on sports cars and cheap (read: expensive) women. If you invest you can put away like 50k/year, which will probably net you at least 5% return per year (more if you're risky) . So you make 100k for like 5 years, put away 250k and get like 20k from doing nothing.",
"title": ""
}
] |
fiqa
|
ffeb51a9e0cc0a8e3cb4388ca64357a5
|
How risky is it to keep my emergency fund in stocks?
|
[
{
"docid": "8965f489cca99abdd4001c2050f1b79a",
"text": "I know this is heresy but if you have funds for significantly more than 6 months of expenses (let's say 12 months), how risky would it be to put it all into stock index funds? Quite risky as if you do need to dip into it, how fast could you get the cash? Also, do you realize the tax implications when you do sell the shares should you have an emergency? In the worst-case scenario, let's say you have a financial emergency at the same time the stock market crashes and loses half its value. You could still liquidate the rest and have sufficient funds for 6 months. Am I underestimating the risks of this strategy? That's not worst case scenario though. Worst case scenario would be another 9/11 where the markets are closed for nearly a week and you need the money but can't get the funds converted to cash in the bank that you can use. This is in addition to the potential wait for a settlement in the case of using ETFs if you choose to go that way. In the case of money market funds, CDs and other near cash equivalents these can be accessed relatively easily which is part of the point. A staggered approach where some cash is kept in house, some in accounts that can easily accessed and some in other investments may make sense though the breakdown would differ depending on how much risk people are willing to take. If it truly is an emergency fund then the odds of needing it should be very slim, so why live with near zero return on that money? Something to consider is what is called an emergency here? For some people a sudden $1,000 bill to fix their car that just broke down is an emergency. For others, there could be emergency trips to visit family that may have gotten into accidents or gotten a diagnosis that they may pass away soon. Consider what do you want to call an emergency here as chances are you may not be considering all that people would think is an emergency. There is the question of what other sources of money do you have to cover should issues arise.",
"title": ""
},
{
"docid": "c51982782aa3d8d08ddcc69360b72bf1",
"text": "Keeping your “big emergency” fund in stocks if you have 12 months income saved is OK. However you should keep your “small emergency” fund in cash. (However I find that even my stock broker accounts have some cash in them, as I like to let the dividends build up enough to make the dealing charges worthwhile. You don’t wish to be forced to sell at a bad time due to your boiler needing replacing or your car breaking down. However if you lost your job in the same week that your boiler broke down and your car needed replacing then being forced to sell stocks at a bad time is not much of an issue. Also if you are saving say 1/3 of your income each month and you have a credit card with large unused credit limit that is paid of each month, then most “small emergency” that are under 2/3 of your monthly income can be covered on the credit card with little or no interest charges. One option is to check you bank balance on the day after you are paid, and if it is more than 2x your monthly income, then move some of it to long term savings, but only if you tend to spend a lot less then you earn most months.",
"title": ""
},
{
"docid": "9e8d85d78ecbeb8f53dec0110eed30fe",
"text": "There's something very important no one else has mentioned... times when the stock market falls dramatically are often the times when you're most likely to lose your job, and when it's hardest to get loans. So if you ever do need your emergency fund, it will more than likely be related to a dip in the stock market.",
"title": ""
},
{
"docid": "3414a9831fe266b28d86c9ca5e4cadd5",
"text": "I've read the answers and respect the thought behind them. I'd like to focus on (a) the magnitude of the emergency, and (b) the saving rate of the people affected. 3-6 months is interesting. It's enough not just to fix the car, repair the A/C, etc, but more than enough to lose one's job and recover. (Let's avoid the debate of how long it take to find a job, no amount of 'emergency savings' can solve that.) If one is spending below their means, any unexpected expense that can paid off within, say 3 months, doesn't really need to tap emergency funds (EF). And, at some level of income and retirement savings, one can more easily run a much lower EF. My own situation - I had 9mo worth of expenses saved as EF. We were living well beneath our means, and I was looking at the difference between our mortgage (6%+) vs bank interest (near 0%). I used the funds to pay down principal, refinanced to a lower rate, and at the same closing got a HELOC. The psychology of this is tough, it then appears that for simple expenses, I'd be borrowing from my HELOC. On the other hand, the choice was between a known cost, the $5K/year the money was costing by sitting there plus the lower rate by going to a non-jumbo loan at the time, vs the risk of using 3% money from the HELOC. In the end, the HELOC was never tapped for more than a small portion of its line, and I never regretted the decision. Ironically, it's the person who isn't saving much that need the EF most. If you are a saver, you need to judge how long it would take to replace the funds. I offer the above not as a recommendation, but as devil's advocate to the other excellent advice here. All cash flows are a choice, $100 going here, can't go there. I'd slip in a warning that one should capture matching 401(k) contributions, if offered, before funding the EF. And pay down any high interest debt. After that, the decision of how liquid to be is a personal choice, what worked for my wife and me may not be for everyone.",
"title": ""
},
{
"docid": "6e3e8a90aa1f33b7f4dd08e42cd3e2bf",
"text": "\"A major danger of keeping \"\"emergency\"\" funds in the form of stocks is that many of the scenarios where one would need quick access to the money will also momentarily depress the stock market. Someone whose emergency funds were in some other form could avoid selling stocks during a momentary downturn, but someone who has no other emergency funds would have no choice but to sell during the downturn (thus losing money as well as making the downturn more significant for everyone else).\"",
"title": ""
},
{
"docid": "aed6c8a2de8cc877cb499bc37e5253b8",
"text": "\"This is basically the short-term/long-term savings question in another form: savings that you hope are long-term but which may turn short-term very suddenly. You can never completely eliminate the risk of being forced to draw on long term savings during a period when the market is doing Something Unpleasant that would force you to take a loss (or right before it does Something Pleasant that you'd like to be fully invested during). You can only pick the degree of risk that you're willing to accept, balancing that hazard of forced sales against the lower-but-more-certain returns you'd get from a money market or equivalent. I'm considered a moderately aggressive investor -- which doesn't mean I'm pushing the boundaries on what I'm buying (not by a long shot!), but which does mean I'm willing to keep more of my money in the market and I'm more likely to hold or buy into a dip than to sell off to try to minimize losses. That level of risk-tolerance also means I'm willing to maintain a ready-cash pool which is sufficient to handle expected emergencies (order of $10K), and not become overly paranoid about lost opportunity value if it turns out that I need to pull a few thou out of the investments. I've got decent health insurance, which helps reduce that risk. I'm also not particularly paranoid about the money. On my current track, I should be able to maintain my current lifestyle \"\"forever\"\" without ever touching the principal, as long as inflation and returns remain vaguely reasonable. Having to hit the account for a larger emergency at an Inconvenient Time wouldn't be likely to hurt me too much -- delaying retirement for a year or two, perhaps. It's just money. Emergencies are one of the things it's for. I try not to be stupid about it, but I also try not to stress about it more than I must.\"",
"title": ""
},
{
"docid": "2af89fe14e34eb8e5c2a27ab13b14984",
"text": "From mid 2007 to early 2009 the DJI went down about 50 %. This market setback won't happen on a single day or even a few weeks. Emergency funds should be in cash only. Markets could be closed for an unknown period of time. Markets where closed September 11 until September 17 in 2001.",
"title": ""
},
{
"docid": "2f6dbee2a64e74d7236cc6693d80ca1c",
"text": "I do this very thing, but with asset allocation and risk parity in mind. I disagree with the cash or bust answers above, but many of the aforementioned facts are valuable and I don't mean to undermine them in anyway. That said, let's look at two examples: Option 1: All-in For the sake of argument let's say you had $100k invested in the SPY (S&P 500 ETF) in early 2007, and you kept it there until today. Your lowest balance would have been about $51k, and at this point the possibility of you losing your job was probably at a peak. Today you would be left with $170k assuming no withdrawal. Option 2: Risk Parity BUT if you balanced your investments with a risk parity approach, using negatively correlated asset classes you avoid this dilemma. If you had invested 50% in XLP (Consumer Staples Sector ETF) and 50% in TLT ( Long Term Treasury ETF) your investments low point would have been $88k, and your lowest annual return would be +0.69%. Today you would be left with $214k assuming no withdrawals. I chose option #2 and it hasn't failed me yet, even in 2016 so far the results are steady and reliably given the reward. My general opinion is simple: when you have money always grow it. Just be sure to cover your ass and prepare for rain. Backtesting for this was done at portfoliovisualizer.com, the one caveat to this approach is that inflation and a lack of international exposure are a risk here.",
"title": ""
}
] |
[
{
"docid": "e42eb3ea9a05e96191e2a1ab5b50adcb",
"text": "My take on this is that this reduces your liquidity risk. Stocks, bonds and many other investment vehicles on secondary markets you may think of are highly liquid but they still require that markets are open and then an additional 3-5 business days to settle the transaction and for funds to make their way to your bank account. If you require funds immediately because of an emergency, this 3-5 business days (which gets longer as week-ends and holidays are in the way) can cause a lot of discomfort which may be worth a small loss in potential ROI. Think of your car breaking down or a water pipe exploding in your home and having to wait for the stock sale to process before you can make the payment. Admittedly, you have other options such as margin loans and credit cards that can help absorb the shock in such cases but they may not be sufficient or cause you to pay interest or fees if left unpaid.",
"title": ""
},
{
"docid": "2c367ceba9490ae54dce5a02b9fc2171",
"text": "\"You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in \"\"safe\"\" stocks like P&G/Coca-Cola/etc. Even these safe stocks are at risk of wild price swings in the short- to intermediate-term, especially in the event of international crises such as major European debt defaults and the like. These stocks are suitable for long-term growth objectives, but they are not as a replacement for a savings account. Coca-Cola lost a third of its value between 2007 and 2009. (It's recovered, and is currently doing better than ever.) P&G went from $74/share to $46/share. (It's partially recovered and back at $63). On the other hand, these stocks may indeed be suitable as long-term investments to protect you against local currency inflation. And yes, they even pay dividends. If you're after this investment, a good option is probably a sector-specific exchange-traded fund, such as a consumer-staples ETF. It will likely be more diversified and safer than anything you could come up with using a list of individual stocks. You can also investigate recommendations that show up when you search for a \"\"defensive ETF\"\". If you do not wish to buy the ETF directly, you can also look at listings of the ETF's holdings. Read the prospectus for an idea of the risks associated with these funds. You can buy these funds with any brokerage that gives you access to US stock exchanges.\"",
"title": ""
},
{
"docid": "f87226ad36fb57cd8b9f6f94267f6536",
"text": "I would say that, for the most part, money should not be invested in the stock market or real estate. Mostly this money should be kept in savings: I feel like your emergency fund is light. You do not indicate what your expenses are per month, but unless you can live off of 1K/month, that is pretty low. I would bump that to about 15K, but that really depends upon your expenses. You may want to go higher when you consider your real estate investments. What happens if a water heater needs replacement? (41K left) EDIT: As stated you could reduce your expenses, in an emergency, to 2K. At the bare minimum your emergency fund should be 12K. I'd still be likely to have more as you don't have any money in sinking funds or designated savings and the real estate leaves you a bit exposed. In your shoes, I'd have 12K as a general emergency fund. Another 5K in a car fund (I don't mind driving a 5,000 car), 5k in a real estate/home repair fund, and save about 400 per month for yearly insurance and tax costs. Your first point is incorrect, you do have debt in the form of a car lease. That car needs to be replaced, and you might want to upgrade the other car. How much? Perhaps spend 12K on each and sell the existing car for 2K? (19K left). Congratulations on attempting to bootstrap a software company. What kind of cash do you anticipate needing? How about keeping 10K designated for that? (9K left) Assuming that medical school will run you about 50K per year for 4 years how do you propose to pay for it? Assuming that you put away 4K per month for 24 months and have 9K, you will come up about 95K short assuming some interests in your favor. The time frame is too short to invest it, so you are stuck with crappy bank rates.",
"title": ""
},
{
"docid": "24329d0b0b2ea93507a071531632951c",
"text": "\"Two options not mentioned: -No information about your emergency fund in your question. If you don't have 6 months of expenses saved up in a \"\"safe\"\" place (high yield savings account or money market fund) I'd add to that first. -Could you auto-withdraw the amount over six months, then when you can start contributing, contribute twice as much so you are still putting in $18,000 a \"\"year\"\"? The amount you pulled into savings the first 6 months could be used to make up for the extra income coming out after the six months are over. Depending on your income, and since you have the ability to save, it's important not to \"\"lose\"\" access to these tax efficient accounts. And also... -After-tax brokerage account (as mentioned above) is also fine. But if you will use this money for downpayment on a home or something similar within the next five years, I wouldn't recommend investing it. However, having money invested in an after-tax account isn't a terrible thing, yes you'll get taxed when you sell the investments but you have a lot of flexibility to access that money at any time, unlike your retirement accounts.\"",
"title": ""
},
{
"docid": "8f6a7869cc81af2d7818cada8a80e926",
"text": "An emergency fund is about managing risk. What would you do if your furnace, water heater, and cars all broke down at the same time? Being in Michigan, I can imagine that you wouldn't want to take cold showers, heat the entire house by wood fire, and walk to work every day. So how do you manage this risk? What would happen if you lost your job and couldn't find one for a few months? By only having $5k in the bank in an emergency fund, you are putting your family at risk. If these sorts of things happened, you would be in trouble. You would have to borrow money either hurting equity in the home that you have worked hard to build up, or by some other means. You and your spouse should sit down and decide what a good emergency fund looks like for your family. A reserve of 3-6 months of expenses is a good emergency fund. This could cover your family in the event of a lost job while you look for a new one. It would also cover you when Murphy strikes and things break down all at the same time. Once you and your spouse have determined how much you want to set aside, you two must determine how you will get there. Maybe you put in some extra hours at work, maybe you lower the retirement contributions temporarily, maybe you try to pay off the car as quickly as possible then put what you were paying on the car into the emergency fund. It will likely take a mix of things to get you there. You don't have to get it done in a day, a month, or even a year. But once you have that emergency fund fully funded, you will feel better. What may be a catastrophe now will be a minor annoyance with a fully funded emergency fund. Finally, I'd recommend going to your bank and setting up a separate account for this emergency fund. A separate account specifically labeled as your emergency fund. This way you will think twice before spending it on a non-emergency.",
"title": ""
},
{
"docid": "661faa4d48f96d63ec1a4467fefc9842",
"text": "The catch is that you're doing a form of leveraged investing. In other words, you're gambling on the stock market using money that you've borrowed. While it's not as dangerous as say, getting money from a loan shark to play blackjack in Vegas, there is always the chance that markets can collapse and your investment's value will drop rapidly. The amount of risk really depends on what specific investments you choose and how diversified they are - if you buy only Canadian stocks then you're at risk of losing a lot if something happened to our economy. But if your Canadian equities only amount to 3.6% of your total (which is Canada's share of the world market), and you're holding stocks in many different countries then the diversification will reduce your overall risk. The reason I mention that is because many people using the Smith Maneuver are only buying Canadian high-yield dividend stocks, so that they can use the dividends to accelerate the Smith Maneuver process (use the dividends to pay down the mortgage, then borrow more and invest it). They prefer Canadian equities because of preferential tax treatment of the dividend income (in non-registered accounts). But if something happened to those Canadian companies, they stand to lose much of the investment value and suddenly they have the extra debt (the amount borrowed from a HELOC, or from a re-advanceable mortgage) without enough value in the investments to offset it. This could mean that they will not be able to pay off the mortgage by the time they retire!",
"title": ""
},
{
"docid": "44eb02cae8302ba335d2032af7a43460",
"text": "You can only lose your 7%. The idea that a certain security is more volatile than others in your portfolio does not mean that you can lose more than the value of the investment. The one exception is that a short position has unlimited downside, but i dont think there are any straight short mutual funds.",
"title": ""
},
{
"docid": "ded0e3e2ae24f3120d1de379d488bdd6",
"text": "\"You are not wrong - just about anything can be charged and paid off in 30 days with a sale of non-liquid investments. So there are not any emergencies I can think of that require completely liquid funds (cash). For me, the risks are more behavioral than financial: I'm not saying it's a ridiculous, stupid idea, and these are all \"\"what-if\"\"s that can be countered with discipline and wise decisions, but having an emergency fund in cash certainly makes all of this simpler and reduces risk. If you have investments that you would have no hesitation liquidating to cover an emergency, then you can make it work. For most people, the choice is either paying cash, or charging it without having investment funds to pay it off, and they're back in the cycle of paying minimum payments for months and drowning in debt.\"",
"title": ""
},
{
"docid": "79a7be86c8b7c56dca5a5d1caa005029",
"text": "\"Since this is your emergency fund, you generally want to avoid volatility while keeping pace with inflation. You really shouldn't be looking for aggressive growth (which means taking on some risk). That comes from money outside of the emergency fund. The simplest thing to do would be to shop around for a different savings account. There are some deals out there that are better than ING. Here is a good list. The \"\"traditional\"\" places to keep an emergency fund are Money Market Mutual Funds (not to be confused with Money Market Accounts). They are considered extremely safe investments. However, the returns on such a fund is pretty low these days, often lower than a high-yield online savings account. The next step up would be a bond fund (more volatility, slightly better return). Pick something that relies on Government bonds, not \"\"high-yield\"\" (junk) bonds or anything crazy like that. Fidelity Four in One comes pretty close to your \"\"index of indexes\"\" request, but it isn't the most stable thing. You'd probably do better with a safer investment.\"",
"title": ""
},
{
"docid": "3d30eb1d846cb2dccc6062df19744ad0",
"text": "\"As long as you are disciplined about it, you can certainly have your emergency fund and other savings funds in one account. Multiple accounts may incur added costs, since you may not have the minimum balances to avoid the fees. Some banks provide tools or account features to help track separate \"\"buckets\"\" of funds within one account. One important principle for an emergency fund is liquidity. Those funds should be easily accessible, ideally without withdrawal penalties or transaction costs. For this reason, certificates of deposit (CD) or money market funds should be avoided for this purpose. Another important principle, for any savings fund, is capital preservation/safety. That money should not be held in risky assets. Depending on the purpose of the fund, you may consider other options beyond just a savings account. For example, you may consider placing funds for a house in CD(s) early on, before you are actually looking for the house. As you get closer to having enough for a down payment, you would shift that money into a savings account. One drawback of such an approach is the extra management that this requires on your part. A spreadsheet is a simple way to track these funds, though that requires more manual management and discipline to do that tracking. It also requires some knowledge of spreadsheets, but it provides you with flexibility so you can create a process that works well for you. Any accounting software should allow you to do this in some fashion with (hopefully) less effort than maintaining a spreadsheet, though you may have to do things in a certain way that may be awkward in some cases. Those are the basic principles that come to mind. I am sure others can provide more specific suggestions, like banks which allow you track buckets of funds or accounting software that can help you track the funds.\"",
"title": ""
},
{
"docid": "ec1bd6cc358334f5a0aef37cd798fd8b",
"text": "i think emergency fund should be in a more liquid account (like regular saving or money market) so you can withdraw money any time, while your regular saving can be tied up in a long term CD, bond or an investment account.",
"title": ""
},
{
"docid": "e6a21aae1590e3bc1adc26bba980101b",
"text": "\"Now store the money in -- okay here, think about a realistic worst case scenario. Not zombie attack or meteor mega-strike, but the kinds in which you are not entirely helpless: job loss stacked on top of the worst recession since the Great Depression, along with credit drying up so you can't just borrow your way through the hard times. Store the money in an account and investment which is relatively liquid, meaning you could extract cash value from it fairly easily in a worst case scneario. Safe -- essentially impossible to lose significant value in a worst case scenario. (or, you only count the part of its value that's sure to be there in a worst case.) If you're much too cool for an emergency fund, then sorry to waste your valuable time! For the rest of us, it's a planning tool. Even dot-coms do this: it's called a \"\"burn-rate\"\" and they know exactly how many more weeks their VC can fund operations. Of course in practicality, it may not go to X months of routine expenses. Most of it may get burned up in month 2 on a new transmission. You can't really predict this stuff, the \"\"X month\"\" paradigm is just an arm-wave. For the financially uneducated, it's also a training tool. In the US, school does not provide financial education. Most people get financial habits from their parents, and like most family lessons, they are deeply emotionally wired, even if they are unconscious of that fact. For instance, some people don't ask for the salaries they deserve, and spend lavishly until the checkbook is zero - they literally push money away. Suffice it to say, it's a challenge to get some people to even realize that savings is a thing, when they have never in their whole lives been able to hold onto more than $20 for more than a week. The concept of an emergency fund is a sellable way to break through that \"\"I can't save\"\" mental-block. So I can see where you might think the emergency fund is greasy kidstuff. Fair. But it's not just that, it's also a very practical planning tool.\"",
"title": ""
},
{
"docid": "0ecc8616fb5f160f3313dc4e1418ff23",
"text": "(To be clear, IRA accounts are just wrappers, and can contain a large variety of investments. I'm restricting myself to the usual setup of investment in the stock market.) So, let's say you have $5000 in savings, as an emergency fund. Of the top of my head, putting some of it into a Roth IRA could backfire in the following ways: The basic principle here is that the stock market is not a good place for storing your emergency cash, which needs to be secured against loss and immediately accessible. Once you're happy with your level of emergency cash, however, tax-advantaged investment accounts are a reasonable next step.",
"title": ""
},
{
"docid": "f43a0b7b433e2b4d389c13d44e373ed1",
"text": "\"Yes... but it is a matter of balancing risks. It is wiser to keep a small amount of \"\"ready cash\"\" as an emergency/buffer -- and to suffer the gradual loss to inflation... Than it is risk becoming \"\"stuck\"\" in an emergency with zero dollars in any (low or no cost) source of funds -- those kinds of \"\"emergencies\"\" ($500 or $1,000 \"\"unexpected/unbudgeted\"\" expenses) are fairly frequent and virtually inevitable. You lose vastly MORE money when you are forced to borrow those amounts (interest -- even **low-rate** loans -- is virtually always higher than the average inflation rate).\"",
"title": ""
},
{
"docid": "8b477b8705f3623c151cf578701be593",
"text": "Yes, there are some real dangers in having your money locked into an investment. Those dangers are well worth thinking about and planning for. Where you are going off the rails is acting like those are the only dangers to your money, and perhaps having an exaggerated idea of the size of the dangers. It is an excellent idea to keep an emergency fund with a few months living expenses in a readily accessible savings or checking account. However, a standard retail savings account is always going to pay less in interest then you are loosing through inflation. We're living in a low-inflation period, but it's still continuously eating away at the value of your savings. It makes sense to accept the danger of inflation for your emergency fund, but probably not for your retirement savings. To reduce the hazards of inflation, you need to find an investment that has some chance of paying more than the inflation rate. This is inevitably going to mean locking up your money for some period of time or accepting some other type of risk. There is no guaranteed safe path in the world. You can only do your best to understand the risks you are running. As an example, you could put your savings in a CD rather than a vanilla savings account. A CD these days won't pay much in interest, but it will be more than a savings account. However, you have to commit to a term for the CD. If you take your money out early you will have to pay a penalty. How much of a penalty? In the worse case it could be in the neighborhood of 4% of the amount you withdraw. So, yeah if you deposit $10,000 in a 5-year CD and end up needing it all back the very next day, you could end up paying the bank $400. If you withdraw money from a 401k before you are 59 1/2, you will pay a 10% penalty, and you will have to have income tax withheld on the amount you withdraw. On the other hand, if your employer matches 100% of your 401k contributions, you could be throwing away 50% of your possible retirement savings because of your fear of the possibility of a 10% loss! In addition 401k plans do have some exceptions to the early withdrawal penalty. There are provisions for medical emergencies and home purchases for example. However, the qualifications are not entirely straight-forward, and you should read up on them before enrolling. The real answer to your fears is planning. Figure out your living expenses. Figure out how much you want in an emergency fund. Figure out when you will be wanting to buy a house, have a child, or go back to school. Set aside the savings you'll need for all those, and then for the remainder of your money you can consider long term investments with some confidence that you probably won't need to face the early withdrawal penalties.",
"title": ""
}
] |
fiqa
|
a56d7bba82642172cafc5225fc86297c
|
What does it mean for issuing corporations to “crank out expensive shares when markets are frothy … and issue debt when markets are cheap”?
|
[
{
"docid": "11cfdfcc4a6791fcf6838952eb2bfec9",
"text": "crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments.",
"title": ""
}
] |
[
{
"docid": "ad0d34f05161b6d87f6d771f60b5c750",
"text": "The first statement is talking about a sudden sharp increase in volume (double or more of average volume) with a sudden increase in price. In other words, there has been a last rush to buy the stock exhausting all the current bulls (buyers), so the bears (sellers) take over, at least temporarily. Whilst the second statement is talking about a gradual increase in volume as the price up trends (thus the use of a volume oscillator). In other words (in an uptrend), the bulls (buyers) are gradually increasing in numbers sending the price higher, and new buyers keep entering the market. (The opposite is the case for a down-trend).",
"title": ""
},
{
"docid": "1f0cc6bb61f9c5b56558eef57ce1ed1a",
"text": "\"You ask two questions - First - the market value can drop for two reasons (that I know), the company itself may have issues, and investors don't trust they'll be paid, or a general rise in interest rates. In the latter case, there's little to worry about, but for the former, well, that's your decision, you say \"\"the company is in trouble\"\" yet you believe they'll pay. Tough call. Second - yes, when a bond matures, the money appears in your account.\"",
"title": ""
},
{
"docid": "9e7ad04b740b5ca4b1109bdbae853e07",
"text": "Fundamentally, it's no different than normal. A risky entity must entice investors with higher interest rates than less risky entities. We're just in such a low interest rate environment that the rate spread now dips below zero and very low risk entities can issue debt with a negative coupon. Though I agree that this makes no sense and the world's gone mad.",
"title": ""
},
{
"docid": "c8e8f09180d76941c341da190f45bca5",
"text": "The market moves faster than ratings agencies. Everyday the market is trying to figure out the true value of Assets - Liabilities and thus its overall equity value. The financial crisis illustrated this perfectly when Bear Sterns got stuck in a liquidity trap. It's MBS(CDO) was still highly rated, likewise its overall credit rating was sound, however in reality the value of assets were much higher due to coming default, credit providers realized assets Bear had posted as collateral were falling in value quickly. This started the death spiral, or feedback loop in which it isn't clear if the tail wagged the dog or the dog wagged the tail, but as equity value fell Bear could no longer get access to credit markets to fund daily operations, once it got margin called and couldn't pay, it was all over. When it was sold to JPM, they basically stole the entire company at a fire sale price, everyone knew they were getting a deal, as reflected in the post buyout price jump of JPM stock. So in a technical sense you are right, they have nothing to do with each other. But in a practical sense as we see equity value collapse we are approaching bankruptcy, and thus default, and credit ratings should represent likelihood of default so the two should have a positive correlation to one another, assuming equity value is the 'true value'.",
"title": ""
},
{
"docid": "a594531713f25db64f1f7048814d8604",
"text": "A stock is an ownership interest in a company. There can be multiple classes of shares, but to simplify, assuming only one class of shares, a company issues some number of shares, let's say 1,000,000 shares and you can buy shares of the company. If you own 1,000 shares in this example, you would own one one-thousandth of the company. Public companies have their shares traded on the open market and the price varies as demand for the stock comes and goes relative to people willing to sell their shares. You typically buy stock in a company because you believe the company is going to prosper into the future and thus the value of its stock should rise in the open market. A bond is an indebted interest in a company. A company issues bonds to borrow money at an interest rate specified in the bond issuance and makes periodic payments of principal and interest. You buy bonds in a company to lend the company money at an interest rate specified in the bond because you believe the company will be able to repay the debt per the terms of the bond. The value of a bond as traded on the open exchange varies as the prevailing interest rates vary. If you buy a bond for $1,000 yielding 5% interest and interest rates go up to 10%, the value of your bond in the open market goes down so that the payment terms of 5% on $1,000 matches hypothetical terms of 10% on a lesser principal amount. Whatever lesser principal amount at the new rate would lead to the same payment terms determines the new market value. Alternatively, if interest rates go down, the current value of your bond increases on the open market to make it appear as if it is yielding a lower rate. Regardless of the market value, the company continues to pay interest on the original debt per its terms, so you can always hold onto a bond and get the original promised interest as long as the company does not go bankrupt. So in summary, bonds tend to be a safer investment that offers less potential return. However, this is not always the case, since if interest rates skyrocket, your bond's value will plummet, although you could just hold onto them and get the low rate originally promised.",
"title": ""
},
{
"docid": "58bb884158f8aea9bc18842b1ccdee1a",
"text": "When he says shitty, he means less likely to actually pay back the money. If I have a company that's not doing well enough, and I have already issued $100,000 in bonds onto this market, and I want to pay back all my bond-holders, maybe I convince a near-bankrupt company to give me $100,000 of bonds in their company for $50,000 in goods. I then repay my bondholders with the $100,000 in shitty bonds. Or maybe I give them $300,000 in goods and they give me $600,000 in their shitty bonds (since thier company is about to fall apart and they know I'll give them a kickback down the line). Then I pay back my 100k bonds with the new shitty bonds, and I go buy $500k worth of raw material for my company and pay for them using almost-bankrupt-company's shitty bonds . Then I have no debt, $500k worth of raw material, the people I used to owe money to (AND my suppliers) now hold a total of $600k in shitty bonds, and then my friend's almost-bankrupt-company DOES go bankrupt.... and my suppliers and old lenders realize the paper I just gave them is worthless.",
"title": ""
},
{
"docid": "88eb0c2b6d234fab9d14c3c476390f47",
"text": "I am not a structured products expert, just relaying what's in the article, but I'd imagine it includes a larger equity tranche in the structured product, thereby giving more cushion against losses to the actual debt investors in the tranches above it in the payment water fall.",
"title": ""
},
{
"docid": "635ce7920fdb62bbb83e572f92765298",
"text": "Yeah it was a mix between the issuing agencies and the credit agencies. If the credit agencies didnt rate them as AAA then the financial institutions would just go to the other agency. So there was a conflict of interest in rating them higher. There was mismanagement on both sides of the fence and when the CDOs started to default it created a forced selling environment where people HAD to sell their CDOs/stocks at a steep discount to get enough liquidity to pay their own mortgages.",
"title": ""
},
{
"docid": "adbdd54925b565f216b4280ab7340fb6",
"text": "Selling stock means selling a portion of ownership in your company. Any time you issue stock, you give up some control, unless you're issuing non-voting stock, and even non-voting stock owns a portion of the company. Thus, issuing (voting) shares means either the current shareholders reduce their proportion of owernship, or the company reissues stock it held back from a previous offering (in which case it no longer has that stock available to issue and thus has less ability to raise funds in the future). From Investopedia, for exmaple: Secondary offerings in which new shares are underwritten and sold dilute the ownership position of stockholders who own shares that were issued in the IPO. Of course, sometimes a secondary offering is more akin to Mark Zuckerberg selling some shares of Facebook to allow him to diversify his holdings - the original owner(s) sell a portion of their holdings off. That does not dilute the ownership stake of others, but does reduce their share of course. You also give up some rights to dividends etc., even if you issue non-voting stock; of course that is factored into the price presumably (either the actual dividend or the prospect of eventually getting a dividend). And hopefully more growth leads to more dividends, though that's only true if the company can actually make good use of the incoming funds. That last part is somewhat important. A company that has a good use for new funds should raise more funds, because it will turn those $100 to $150 or $200 for everyone, including the current owners. But a company that doesn't have a particular use for more money would be wasting those funds, and probably not earning back that full value for everyone. The impact on stock price of course is also a major factor and not one to discount; even a company issuing non-voting stock has a fiduciary responsibility to act in the interest of those non-voting shareholders, and so should not excessively dilute their value.",
"title": ""
},
{
"docid": "3dec6527bd0a515914b6241198a5034c",
"text": "\"When people (even people in the media) say: \"\"The stock market is up because of X\"\" or \"\"The stock market is down because of Y\"\", they are often engaging in what Nicolas Taleb calls the narrative falacy. They see the market has moved in one direction or another, they open their newspaper, pick a headline that provides a plausible reason for the market to move, and say: \"\"Oh, that is why the stock market is down\"\". Very rarely do statements like this actually come from research, asking people why they bought or sold that day. Sometimes they may be right, but it is usually just story telling. In terms of old fashioned logic this is called the \"\"post hoc, ergo proper hoc\"\" fallacy. Now all the points people have raised about the US deficit may be valid, and there are plenty of reasons for worrying about the future of the world economy, but they were all known before the S&P report, which didn't really provide the markets with much new information. Note also that the actual bond market didn't move much after hearing the same report, in fact the price of 10 year US Treasury bonds actually rose a tiny bit. Take these simple statements about what makes the market go up or down on any given day with several fistfuls of salt.\"",
"title": ""
},
{
"docid": "13852cdf972191f4fed31803125728b2",
"text": "To issue corporate grade bonds the approval process very nearly matches that for issuing corporate equity. You must register with the sec, and then generally there is a initial debt offering similar to an IPO. (I say similar in terms of the process itself, but the actual sale of bonds is nothing like that for equities). It would be rare for a partnership to be that large as to issue debt in the form of bonds (although there are some that are pretty big), but I suppose it is possible as long as they want to file with the sec. Beyond that a business could privately place bonds with a large investor but there is still registration requirements with the sec. All that being said, it is also pretty rare for public bonds to be issued by a company that doesn't already have public equity. And the amounts we are talking about here are huge. The most common trade in corporate debt is a round lot of 100,000. So this isn't something a small corporation would have access to or have a need for. Generally financing for a smaller business comes from a bank.",
"title": ""
},
{
"docid": "a2463d84961fd43c553e785776200866",
"text": "Ultra-low rates can spur an unhealthy boon in M&A deals/Corporate takeovers as management (defensively) and raiders (offensively) lever up cheaply to acquire companies. This can be problematic down the line when takeovers/large investments (that were funded with cheap debt) dont pan out and interest rates rise, and with it the cost of servicing that debt.",
"title": ""
},
{
"docid": "d9396749268a659ce313b7b2c78795b7",
"text": "The most obvious example would be a situation where a Company is growth constrained, but cash flow positive. It may have enough cash flow to service $10 million of debt, but it needs to build a new facility that will cost $20 million. There is the option to raise debt and equity or just raise equity and move quicker to getting that facility up and running. There are also situations where debt is used to replace equity (i.e. dividend recapitalization or leveraged share redemption).",
"title": ""
},
{
"docid": "00a0f668c312a0bb26121ab7a1b1a124",
"text": "\"With debts exceeding assets by a billion dollars, this activity likely comes from penny stock speculators and \"\"pump and dump\"\" schemers. There is no rational expectation that the stock is even worth multiple pennies when the company is that far upside-down on its debts. Even if the debts could be restructured in a chapter 11, the equity shares would likely lose all of their value in the bankruptcy proceedings. Shareholders are at the bottom of the totem-pole when debts are being adjusted by the courts.\"",
"title": ""
},
{
"docid": "c89162b7fe8c56145e5885660c778ff7",
"text": "One reason a lot of bond ETFs like Financials are because of how financial companies work. They usually have amazing cash flows due to deposits and fees and therefore have little risk associated with paying their debts in the short term. The rest of VCSH contains companies with low default risk and good cash flow generation as well: This is of course the objective of VCSH: Banks themselves issue a lot of bonds to raise cash to lend for other purposes. Banks are intermediary and help make funds liquid for investors and spenders. Hope that helped answer your question. If not comment below and I'll try to adjust the answer to be more complete.",
"title": ""
}
] |
fiqa
|
c04a669fc1e079a5960737ab495aba25
|
How are RSU's factored into Income during loan qualification?
|
[
{
"docid": "ce2b9eb61772188ef8886e5a8af07a1c",
"text": "\"RSUs are not \"\"essentially cash\"\". \"\"R\"\" in the RSU stands for restricted. These awards have strings attached, and as long as the strings are attached - you don't really own the money. As such, most banks do not include RSUs in the income considerations. Some do, especially if they have a specific agreement with your employer (check your HR/benefits coordinator). Specifically for mortgage loan, where the underwriting is very strict, I'm not aware of banks that include RSUs as income without a specific agreement with the employer as a perk. For credit cards/car loans, where you just need to write a number, they would probably care less. Some banks (but not all) consider past performance, and would include bonuses (and maybe RSUs) if you can show several consecutive years of comparable bonuses.\"",
"title": ""
},
{
"docid": "990ada206b3efd2ac13b0f6e35791830",
"text": "Long ago when I was applying for my first mortgage I had to list all my income and assets. At the time I had some US Savings Bonds from payroll deduction. I asked about them. The loan officer told me that unless I was willing/planning on selling them to make the down payment, they were immaterial to the loan application. So unless you have a habit of turning RSUs into cash, or are willing to do so for the down payment, it is no different from having money in a 401K or IRA: the restrictions on selling them make them illiquid.",
"title": ""
}
] |
[
{
"docid": "58a1ef9474acf62ced2a5cac70384910",
"text": "Make sure you can really do what you plan on doing: Look at the maximum loan length and the maximum loan amount. From the IRS- retirement plans faqs regarding loans A qualified plan may, but is not required to provide for loans. If a plan provides for loans, the plan may limit the amount that can be taken as a loan. The maximum amount that the plan can permit as a loan is (1) the greater of $10,000 or 50% of your vested account balance, or (2) $50,000, whichever is less ... A plan that provides for loans must specify the procedures for applying for a loan and the repayment terms for the loan. Repayment of the loan must occur within 5 years, and payments must be made in substantially equal payments that include principal and interest and that are paid at least quarterly. Loan repayments are not plan contributions. The referenced documents also discuss the option regarding multiple loans, and the maximum amount of all active and recent loans Having a 401K loan will still count against the maximum amount of monthly payments you can afford. Also check the interest rate, and yes they required to charge interest. Some companies will not allow you to make contributions to a 401K while you have an outstanding loan. If that is true with your company then you will miss out on the matching funds.",
"title": ""
},
{
"docid": "9a1d3611099cbee3136ec36c06127dd7",
"text": "Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). No. That's exactly what the SO is NQ for. Read more on the differences between ISO and NQSO here. Now assume these shares are vested, held for at least 1 year, and are then sold for $5 each. Everything I've read implies that the grantee now owes long-term capital gains taxes on the difference, which would be 10k * ($5 - $1). At this point you no longer have NQSO, you have RSU. If you filed 83(b) when you exercised, then you pay capital gains tax when they vest. If you didn't - its ordinary income to you. NQSO is a red herring here since once exercised they no longer exist. If you didn't file 83(b), then when the stock vests the difference between the FMV at vest and the money you spent on it when exercising (if any) is considered wages and taxed as ordinary income (+FICA etc). From that point the RSU becomes a regular stock investment and the capital gains clock starts ticking.",
"title": ""
},
{
"docid": "3a483c837a44ef2446f50dc0408ebc42",
"text": "They use an amortization table like can be found Here. The Forumula is not that complex where: A = payment Amount per period P = initial Principal (loan amount) r = interest rate per period n = total number of payments or periods You will need to add 50 to the A to account for the payment fee amount though.",
"title": ""
},
{
"docid": "7cf5c99fe0c5d5951803ae8a0299a763",
"text": "The days are long gone when offered mortgages were simply based on salary multiples. These days it's all about affordability, taking into account all incomes and all outgoings. Different lenders will have different rules about what they do and don't accept as incomes; these rules may even vary per-product within the same lender's product list. So for example a mortgage specifically offered as buy-to-let might accept rental income (with a suitable void-period multiplier) into consideration, but an owner-occupier mortgage product might not. Similarly, business rules will vary about acceptance of regular overtime, bonuses, and so on. Guessing at specific answers: #1 maybe, if it's a buy-to-let product, Note that these generally carry a higher interest rate than owner-occupier mortgages; expect about 2% more #2 in my opinion it's extremely unlikely that any lender would consider rental income from your cohabiting spouse #3 probably yes, if it's a buy-to-let product",
"title": ""
},
{
"docid": "26ab88c2da901106d4f0286c66eec052",
"text": "it's just a passthrough security essentially. sofi packages a bunch of loans, refinances them for the student, and you invest in sofi corporate debt as they pass through the returns on the loan to you in the form of bond cpns. i mean its not exactly the same, but its pretty close",
"title": ""
},
{
"docid": "b43743e858132b99004d6b4fb30a5151",
"text": "\"I speak from a position of experience, My BS and MS are both in Comp Sci. I know very little about loans or finances. That is very unfortunate as you are obviously an intelligent human being. Perhaps this is a good time to pause your formal education and get educated in personal finance. To me, it is that important. I study computer science, and am thus confident that I will be able to find work after I finish school. This kind of attitude can lead to trouble. You will likely have a high salary, but that does not always translate into prosperity. Personal finance is more about behavior then mathematics. I currently work with people that have high salaries in a low cost of living area. Some have lost homes due to foreclosure some are very limited in their options because of high student loan balances. Some are millionaires without hitting the IPO/startup lotto. The difference is behavior. It's possible that someone in my family will be able to cosign and help me out with this loan. This is indicative of lack of knowledge and poor financial behavior. This kind of thing can lead to strained relationships to the point where people don't talk to each other. Never co-sign for anyone, and if you value the relationship with a person never ask them to co-sign. I'll be working as a TA again for a $1000 stipend. Yikes! Why in the world would you work for 1K when you need 4K? You should find a way to earn 6K this semester so you can save some and put some toward the loans you already acquired. Accepting this kind of situation \"\"raises red flags\"\" on your attitude towards personal finance. And yes it is possible, you can earn that waiting tables and if you can find a part time programming gig you can make a lot more then that. Consider working as a TA and wait tables until you find that first programming gig. I am just about done with my undergraduate degree, and will be starting graduate school at the same university next semester. To me this is a recipe for failure in most cases. You have expended all your financing options to date and are planning to go backwards even more. Why not get out of school with your BS, and go to work? You can save up some of your MS tuition and most companies will provide tuition reimbursement. Computer Science/Software Engineering can be a fickle market. Right now things are going crazy and times are really good. However that was not always the case during my career and unlikely for yours. For example, Just this year I bypassed my highest rate of pay that occurred in 2003. I was out of work most of 2004, and for part of 2005 I actually made less then when I was working while in college. In 2009 my company cut our salaries by 5%, but the net cost to me was more like a 27% cut. In 2001 I worked as a contractor for a company that had a 10% reduction in full time employees, yet they kept us contractors working. Recently I talked with a recruiter about a position doing J2EE, which is what I am doing now. It required a high level security clearance which is not an easy thing to get. The rub was that it was located in a higher cost of living area and only paid about 70% of what I am making now. They required more and paid less, but such is the market. You need to learn about these things! Good luck.\"",
"title": ""
},
{
"docid": "c58315e4f2d1114fe198979ab5842f02",
"text": "In the United States, when applying for credit cards, proof of income is on an honor system. You can make $15k a year and write on your application that you make $150k a year. They don't check that value other than to have their computer systems figure out risk and you get a yes or no. It was traditionally easy to attain credit, but that got tightened in 2008/2009 with the housing crisis. This is starting to change again and credit is flowing much more easily.",
"title": ""
},
{
"docid": "0a650c6cb599a5da5b1517644cefd71c",
"text": "It's not a question with a single right answer. Other answers have addressed some aspects, my case may provide some guidance as to one way of looking at some of the issues. When I had student loans, the interest rate was RPI¹ and I could get more than that as the return on a savings account. At the time I could get a whole year's worth of loan at the start of the year, save it, and draw from the savings, partly because I had a little working capital saved already. Importantly in my case, the loans were use-it-or-lose-it: if I didn't take the loan out by about halfway through each academic year, it was no longer available to me. The difference in interest rates was probably similar to what you can get with a careful choice of savings account and 0% on the loan (I did this in the 90s when interest rates were higher). Over a four year degree the interest I earned this way added up to no more than about £100, which went someway towards offsetting the fact I would be paying interest after graduation. If you can clear the loan before you pay any interest it would give you a return, but a small one that could easily be eroded by rate changes or errors on your part (like not keeping on top of the paperwork). It still may be beneficial to take out the loans depending on your capital needs -- in my case it made buying a house after graduating much easier, as we still had money for the deposit (downpayment) and student loan rates were much lower than mortgage rates (100% mortgages were also available then, but expensive). ¹ RPI stands for retail price index, a measure of inflation.",
"title": ""
},
{
"docid": "ece78c28fdb7a538c04e1f1c16ad73a3",
"text": "No, you're not missing anything. RSUs are pretty simple when it comes to taxes. They are taxed as compensation at fair market value when they vest, basically equivalent to the company giving you a cash bonus and then using it to buy company stock. The fair market value at vesting then becomes your cost basis. Assuming the value has increased since vesting, selling the shares that vested at least a year ago (to qualify for lower long-term capital gains tax rates) with the highest cost basis with result in the minimum taxes.",
"title": ""
},
{
"docid": "1a5352b97ed3708b09f8a8e4769ed2b0",
"text": "\"Eh. A FICO change is more important than you think. Underwriting waterfalls almost always include **minimum** FICO scores. This only really becomes important when you get into securitization and the standards (both GSE and Private-Label) required for MBS issuance. Because -- of course -- an underwriter can originate a loan and then hold it it on the books (this is very prevalent in non-conforming Jumbo loans). That said, if you want to sell the whole loans to a GSE or private label, they have to meet underwriting requirements (Reps & Warranties). To your original answer: you're right that it probably won't make a difference but not because FICO doesn't matter. Moreso because there are only 9 million potential \"\"borrowers\"\" affected and that 9 million most likely doesn't constitute any real demand for mortgages. This also ignores the possibility that FICO requirements in underwriting standards adjust to FICO 9; but I really doubt that they will.\"",
"title": ""
},
{
"docid": "2120e469025fbd901c6c37965d30050c",
"text": "Do you know how SoFi's business model works? They're usually pretty conservative with their loans and refinancing. But I guess if they were looking to expand into riskier loans then it sounds like they've got some red tape that'd hold them back. Thank you for the explanation, much appreciated.",
"title": ""
},
{
"docid": "2c3122d7636f15842b326dc32f0f5598",
"text": "The sale of shares on vesting convolutes matters. In a way similar to how reinvested dividends are taxed but the newly purchased fund shares' basis has to be increased, you need to be sure to have the correct per share cost basis. It's easy to confuse the total RSU purchase with the correct numbers, only what remained. The vesting stock is a taxable event, ordinary income. You then own the stock at that cost basis. A sale after that is long or short term and the profit is the to extent it exceeds that basis. The fact that you got these shares in 2013 means you should have paid the tax then. And this is part two of the process. Of course the partial sale means a bit of math to calculate the basis of what remained.",
"title": ""
},
{
"docid": "d427c82c7caca0c57b1ffc41a0b9a437",
"text": "\"From the HLSS 1st quarter 10Q: \"\"Match funded advances on loans serviced for others result from our transfers of residential loan servicing advances to SPEs in exchange for cash. The SPEs issue debt supported by collections on the transferred advances. We made these transfers under the terms of our advance facility agreements. These transfers do not qualify for sale accounting because we retain control over the transferred assets. As a result, we account for these transfers as financings and classify the transferred advances on our Interim Condensed Consolidated Balance Sheet as Match funded advances and the related liabilities as Match funded liabilities. We use collections on the Match funded advances pledged to the SPEs to repay principal and to pay interest and the expenses of the entity. Holders of the debt issued by this entity can look only to the assets of the entity itself for satisfaction of the debt and have no recourse against HLSS.\"\" I'm not an expert in the accounting of these things but I'll take a stab from the view of a bond investor. Let's assume the mortgage(s) in question have been pooled together and sold into the bond market in the form of a mortgage-backed security (MBS). When a homeowner falls behind on their payment, scheduled principal and interest (their monthly mortgage payment amount, or \"\"P&I\"\") is advanced as if the borrower is still current to the person who holds the MBS. This is typically done from the time they first fall behind until either they 1) catch up on their payments or, 2) are foreclosed upon and the home is sold to repay the mortgage balance. In either instance the advanced monthly payments are recaptured by the servicer before the holder of the MBS is paid. In this sense, the servicer develops a sort of prepaid asset over time by advancing money they are almost certain to recover at a future date (usually via foreclosure and liquidation). Due to a high number of borrowers falling behind on their payments since the housing crisis and the resulting time it takes to foreclose on a property, the servicers (OCN, HLSS, etc.) have built a large balance of advances on the asset side of their balance sheet. To free up this cash prior to liquidation of the home, they have sold short term bonds against this asset (via an SPE), thereby creating the liability you reference. So in essence they have, say, a home they expect to be liquidated in twelve months that they have advanced P&I on. The short term bonds sold via the SPE offset this asset at an equivalent term, thereby making the asset and liability \"\"match funded\"\".\"",
"title": ""
},
{
"docid": "175a9f550ec56623c289df7f2fe0dc18",
"text": "Here is how it should look: 100 shares of restricted stock (RSU) vest. 25 shares sold to pay for taxes. W2 (and probably paycheck) shows your income going up by 100 shares worth and your taxes withheld going up by 25 shares worth. Now you own 75 shares with after-tax money. If you stop here, there would be no stock sale and no tax issues. You'd have just earned W2 income and withheld taxes through your W2 job. Now, when you sell those 75 shares whether it is the same day or years later, the basis for those 75 shares is adjusted by the amount that went in to your W2. So if they were bought for $20, your adjusted basis would be 75*$20.",
"title": ""
},
{
"docid": "f92d195707bc8910972f6def5a6b7f6d",
"text": "It's important because you may be able to reduce the total amount of interest paid (by paying the loan faster); but you can do nothing to reduce the total of your principal repayments. The distinction can also affect the amount of tax you have to pay. Some kinds of interest payments can be counted as business expenses, which means that they reduce the amount of income you have to pay tax on. But this is not generally the case for money used to repay the loan principal.",
"title": ""
}
] |
fiqa
|
cebdc338ea7ae044ef847a05937664d6
|
How do I find out the Earnings Per Share of a Coca Cola Co Share?
|
[
{
"docid": "caf4adfd21859c172926d3c5efe935fd",
"text": "\"You're missing a very important thing: YEAR END values in (U.S.) $ millions unless otherwise noted So 7098 is not $7,098. That would be a rather silly amount for Coca Cola to earn in a year don't you think? I mean, some companies might happen upon random small income amounts, but it seems pretty reasonable to assume they'll earn (or lose) millions or billions, not thousands. This is a normal thing to do on reports like this; it's wasteful to calculate to so many significant digits, so they divide everything by 1000 or 1000000 and report at that level. You need to look on the report (usually up top left, but it can vary) to see what factor they're dividing by. Coca Cola's earnings per share are $1.60 for FY 2014, which is 7,098/4450 (use the whole year numbers, not the quarter 4 numbers; and here they're both in millions, so they divide out evenly). You also need to understand that \"\"Dividend on preferred stock\"\" is not the regular dividend; I don't see it explicitly called out on the page you reference. They may not have preferred stock and/or may not pay dividends on it in excess of common stock (or at all).\"",
"title": ""
},
{
"docid": "b6ed8fecb07ede6439c758eb40d85dfe",
"text": "Market cap should be share price times number of shares, right? That's several orders of magnitude right there...",
"title": ""
}
] |
[
{
"docid": "cfea65956e6385a78c8890560327b685",
"text": "/ in relative to the Tesla's performance, and current inflation. They can split and reverse split at anytime the board decides without any regard to inflation or performance. OP points to Tesla at 350- he doesn't point to PE. It makes no differences what the price of one share is. If they split 10 for 1 it would be 35- but what difference does that make- the PE remains the same. OP does not understand value- only price.",
"title": ""
},
{
"docid": "5fa116cdd8353e4c55f4f4fa6ca1daef",
"text": "There are things that are clearly beyond me as well. Cash per share is $12.61 but the debt looks like $30 or so per share. I look at that, and the $22 negative book value and don't see where the shareholders are able to recoup anything.",
"title": ""
},
{
"docid": "babde865bb9d96b55faa268417c37cb3",
"text": "It's a way to help normalize the meaning of the earnings report. Some companies like Google have a small number of publicly traded shares (322 Million). Others like Microsoft have much larger numbers of shares (8.3 Billion). The meaning depends on the stock. If it's a utility company that doesn't really grow, you don't want to see lots of changes -- the earnings per share should be stable. If it's a growth company, earnings should be growing quickly, and flat growth means that the stock is probably going down, especially if slow growth wasn't expected.",
"title": ""
},
{
"docid": "12226cbcd9d23ce4d27dc0efef65eece",
"text": "Don't have access to a Bloomberg, Eikon ect terminal but I was wondering if those that do know of any functions that show say, the percentage of companies (in different Mcap ranges) held by differing rates institutionally. For example - if I wanted to compare what percentage of small cap companies' shares are 75% or more held by institutions relative to large cap companies what could I search in the terminal?",
"title": ""
},
{
"docid": "61365a9bee6d9911a16ce51eecbbaf4c",
"text": "You could sum the P/E ratio of all the companies in the industry and divide it by the number of companies to find the average P/E ratio of the industry. Average P/E ratio of industry = Sum of P/E ratio of all companies in Industry / Number of companies in industry",
"title": ""
},
{
"docid": "ebf518848523d7cdbf96cea331263318",
"text": "\"1. Most of the information you want can be found in the annual report of the company. Go to their official website, look for shareholders information and then download the annual report. This will answer: \"\"number of issued stock, voting rights, if there is more than one kind of stock, etc. In summary all the legal and formal details of a given stock. 2. After reading the annual report, check on investors websites to see if you can find analyst reports written on this company. You can sometimes find them in some free newsletters. These reports will complete the information you have found in the annual report like \"\"if the dividends are always paid, etc.\"\"\"",
"title": ""
},
{
"docid": "f245448cef4bd0cb4b082095362b7a41",
"text": "Your best bet is to just look at comparative balance sheets or contact the company itself. Otherwise, you will need access to a service like PrivCo to get data.",
"title": ""
},
{
"docid": "7a4af6d5d949050b38d46a09f9238888",
"text": "And the kind folk at Yahoo Finance came to the same conclusion. Keep in mind, book value for a company is like looking at my book value, all assets and liabilities, which is certainly important, but it ignores my earnings. BAC (Bank of America) has a book value of $20, but trades at $8. Some High Tech companies have negative book values, but are turning an ongoing profit, and trade for real money.",
"title": ""
},
{
"docid": "985975023a13cbcb386766fa4e23c83d",
"text": "See this link...I was also looking an answer to the same questions. This site explains with an example http://www.independent-stock-investing.com/PE-Ratio.html",
"title": ""
},
{
"docid": "eaf8fbb6297344fa58d97ad8831b11ca",
"text": "Having all of the numbers you posted is a start. It's what you need to perform the calculation. The final word, however, comes from the company itself, who are required to issue a determination on how the spin-off is valued. Say a company is split into two. Instead of some number of shares of each new company, imagine for this example it's one for one. i.e. One share of company A becomes a share each in company B and company C. This tell us nothing about relative valuation, right? Was B worth 1/2 of the original company A, or some other fraction? Say it is exactly a 50/50 split. Company A releases a statement that B and C each should have 1/2 the cost basis of your original A shares. Now, B and C may very well trade ahead of the stock splitting, as 'when issued' shares. At no point in time will B and C necessarily trade at exactly the same price, and the day that B and C are officially trading, with no more A shares, they may have already diverged in price. That is, there's nothing you can pull from the trading data to identify that the basis should have been assigned as 50% to each new share. This is my very long-winded was of explaining that the company must issue a notice through your broker, and on their investor section of their web site, to spell out the way you should assign your basis to each new stock.",
"title": ""
},
{
"docid": "546e4f72d09bc4718e190a0dd240b4fd",
"text": "In theory, GS has a Chinese Wall between the department which issued the advice and any departments which may profit from such advice. This would take away some of your distrust, except for the fact that GS did violate these rules in the past (see the answer from user10665). You're wondering about the timing, prior to the release of figures by Tesla itself. This is quite normal. Predicting the past is not that useful ;) The price range indeed is wide, but that too is a meaningful opinion. It says that GS thinks Tesla's share price strongly depends on factors which are hard to predict. In comparison, Coca Cola's targets will be in a much smaller range because its costs and sales are very stable.",
"title": ""
},
{
"docid": "7a1af1f518ca2fda333f2639837459d9",
"text": "PE ratio is the current share price divided by the prior 4 quarters earnings per share. Any stock quote site will report it. You can also compute it yourself. All you need is an income statement and a current stock quote.",
"title": ""
},
{
"docid": "a0a4756367c596b3fda74b485d5ea1a0",
"text": "\"See Berkshire Hathaway Inc. (BRK-A) (The Class A shares) and it will all be clear to you. IMHO, the quote for the B shares is mistaken, it used earning of A shares, but price of B. strange. Excellent question, welcome to SE. Berkshire Hathaway is a stock that currently trades for nearly US$140,000. This makes it difficult for individual investors to buy or sell these shares. The CEO Warren Buffet chose to reinvest any profits which means no dividends, and never to split the shares, which meant no little liquidity. There was great pressure on him to find a way to make investing in Berkshire Hathaway more accessible. In June '96, the B shares were issued which represented 1/30 of a share of the Class A stock. As even these \"\"Baby Berks\"\" rose in price to pass US$4500 per share, the stock split 50 to 1, and now trade in the US$90's. So, the current ratio is 1500 to 1. The class B shares have 1/10,000 the voting rights of the A. An A share may be swapped for 1500 B shares on request, but not vice-versa.\"",
"title": ""
},
{
"docid": "c2b46f3a5cbcb74f41b3770d96231ea4",
"text": "You could look up their old SEC filings before they were placed in conservatorship. Derive WACC from that. Comp to peer financials from the same timeframe; see how they compare. Assume some sort of size premium if you so desire. That might give you a picture of the business's cost of capital were it an independent entity. Since it's a GSE, you could make the case that its cost of capital is the rate on US treasury securities. In reality, it's current cost of capital is probably a mix of the two.",
"title": ""
},
{
"docid": "0c827880aa2aea2a90fadbf4dd07ad8b",
"text": "You can calculate the fully diluted shares by comparing EPS vs diluted (adjusted) EPS as reported in 10K. I don't believe they report the number directly, but it is a trivial math exercise to reach it. The do report outstanding common stock (basis for EPS).",
"title": ""
}
] |
fiqa
|
f04930946267e91a874ad1fc6649f80c
|
What does a contract's worth mean?
|
[
{
"docid": "1d4e862ef7728b54f1e9bb19530c9621",
"text": "The amount stated is the total amount of money the customer will be paying to the company. How much profit that will translate into is dependent on the type of contract. Some types of contracts: Cost plus fixed fee: they are paid what it costs to complete the contract plus a fee on top of that. That fee represents their profits. The costs will include salary, benefits, overhead, equipment, supplies. Firm fixed price: They perform the service, and they get paid a fixed amount. If their costs are higher than they forecast, then they may lose money. If they can be more efficient than they forecast, then they make more money. Time and materials: They are paid for completing each sub-task based on the number of hours it takes to complete each sub task, plus materials. This is used to hire a company to maintain a fleet of trucks. If the trucks are used a lot they will need more standard maintenance, plus additional repairs based on the type of use. They pay X for labor and Y for materials for an oil change, but A for labor and B for materials for a complete engine rebuild. There are many variations on these themes. Some put the risk on the customer, some on the company. How and when the company is paid is based on the terms of the contract. Some pay X% a month, others pay based on meeting milestones. Some pay based on the number of tasks completed in each time period. Some contracts run for a specific period of time, others have an initial period plus option years. The article may or may not specify if the quoted amount is the minimum amount of the contract or the maximum amount. The impact on the stock price is much more complex. Much more needs to be known about the structure of the contract, and who will be providing the service to determine if there will be profits. Some companies will bid to lose money, if it will serve as a bridge to another contract or to fill a gap that will allow them to delay layoffs.",
"title": ""
},
{
"docid": "e05228687ad0b3dbfaf6626b8b33b0b1",
"text": "\"$400M is the gross \"\"check\"\" the company will receive as payment for the project. The contract will specify payment schedule. And it can range from a payment per milestone achieved to a pay in full on completion. The profit will hopefully be positive, but it's not impossible for a bid to underestimate the full cost, resulting in no profit at all. In theory, if you knew the expected profit from the deal, you should be able to estimate the value it adds to the company's value.\"",
"title": ""
},
{
"docid": "12b89079c7fbc1cf5425bddf6210cabc",
"text": "It means $400m expected revenue, likely spread out over multiple years as it gets implemented, and not entirely guaranteed to happen as they still need to fulfill the contract. The impact on the stock price is complex - it should be positive, but nowhere close to a $400m increase in market cap. If the company is expected to routinely win such contracts, it may have no significant effect on the stock price, as it's already priced in - say, if analysts expect the company to win 1.2b contracts in this fiscal year, and now they've done 1/3 of that, as expected.",
"title": ""
}
] |
[
{
"docid": "79bd1f7fa03d24bd2c00af21a84a8ba9",
"text": "isn't the answer in the question? it says the company starts officially NEXT year, yet it is asking for the net present value...i.e what that project is worth today. it could be that funds for that particular project may not be necessary for another year, but there may be other projects to evaluate against today.",
"title": ""
},
{
"docid": "98ddd1dc09381088b4b6ac1ea095b6dc",
"text": "When people are crowing about their achievements, they often take liberties with those achievements. Vitalik's interpretation -- net worth, is probably what you would naturally come to mind. But when someone is bragging, that could mean anything -- $1M of total revenue.",
"title": ""
},
{
"docid": "691507a8b59982fbc66bf4fc3f3fa831",
"text": "\"It is called \"\"Opportunity Cost.\"\" Opportunity cost is the value you lose because of a decision you made. This is the book definition from Investopedia. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% - 2%).\"",
"title": ""
},
{
"docid": "d887055c4633a9d621e067397ea7054f",
"text": "All the existing answers are right and the general theme is: contracting is a different kind of relationship. It's a business-to-business relationship rather than a business-to-employee relationship. This has implications such as: Of course, some contractors are effectively just over-paid employees, and some of the above points don't apply to them, but that's the idea behind bona fide contracting.",
"title": ""
},
{
"docid": "aef5bf998c6e0d8e920b4fecd6beea3d",
"text": "Sure, its worth something. For example, not being able to speak freely would appear to devalue the wedding package this hotel offers. Another way being able to speak freely is worth something is when you get sued for libel. You can speak your mind, then pay the price to the lawyers and the court if what you said construed libel.",
"title": ""
},
{
"docid": "0aead3049de7a22bb0e128792c7e1b97",
"text": "\"Valuation by definition is what an item is worth, not what you paid for it. Net worth should be market value for fixed assets or \"\"capital\"\" goods. I would consider this cars, real property, furniture, jewelry, appliances, tools, etc. Everything else can be valued by liquidation value. You can use valuation guides for tax deductions as a way to guide your valuation. Insurance companies usually just pick a percentage of your home's value as a guesstimate for content value. I could see doing this as a way to guide purchase decisions for appliances, cars or the like. But if you are trying to figure out the market value of your socks and underwear, I would argue that you're doing something that's a little silly.\"",
"title": ""
},
{
"docid": "d812183064b4ab8b2a5a2aa6110e9587",
"text": "Hang on.. Lawyer here.. Regarding the promised twelve loddars: why would the promise to pay the loddars be destroyed by the fire - unless the promise is eg conditional on the existence of apples at the relevant time (a more risky promise)? If it IS contingent on something in that way then surely it can't be said to be equivalent to loddars (money)?",
"title": ""
},
{
"docid": "0aec4e6399f295898ce18ba28850340d",
"text": "\"There's no objective definition of what your house is worth between sales. If you sell it for $107K, then that's the current functional definition of its worth. There is not \"\"extra\"\" money to be had because you sold it for less than it was worth. If the buyer is able to flip it for more, then the value of the house effectively went up and he will pocket the difference when he sells it. EDIT This turned out to be unexpectedly controversial, so let me be more precise in my answer. I think this is important because it seems like many people misunderstand equity and how it figures (or doesn't) into the value of their home, which then leads to significant confusion and errors in what's many people's largest single investment. At any given time there are several possible ways to put a dollar value on your home. A non-exclusive list that includes: Some of these obviously are more \"\"official\"\" than others. It would not be strange for these different values to vary by quite a bit at any given time. (This is what I meant in my original answer when I said there's \"\"no objective definition of what your house is worth between sales.\"\") The interesting thing - and what I meant in my original answer when I wrote \"\"current functional definition of its worth\"\" - is that none of these factor directly into the transaction that the OP described of selling his house except for the last. Using the numbers from the OP's example, that means the $107K. Wherever the OP got the number $155K (either from one of the options on my list above or somewhere else), it won't be directly part of the sale between him and his friend. (For completeness, with a nod to Eric's comments on my original answer, some of these numbers may indirectly influence the sale. For example, the buyer typically won't be able to get a mortgage for a value greater than the appraised value of the house, and so that might influence what he's willing and able to bid. There may also be tax consequences if the price is artificially low, like, say, a gift. As further expounded below, however, that's not directly relevant to answering the OP's stated question.) Now, the OP seemed to believe that there is an \"\"extra\"\" $48K in cash up for grabs in this scenario. That comes from the $155K value that the OP claims his house has and the $107K price of the actual proposed sale. This is a complete misconception. When the buyer and seller sit down at closing and the title agent sums up who owes and who receives cash in this transaction, the $155K \"\"theoretical\"\" value will not enter into the calculation and therefore no one will pocket it. Subsequently, however, after the buyer takes possession, he may sell it. If it's true that he \"\"got a deal\"\" on the transaction at $107K, then he maybe able to flip it and turn a profit. But if that happens, it will be in a completely separate, subsequent transaction. Even if you look to this hypothetical second sale, however, the $155K doesn't really figure. The new owner will have to find his own buyer, and they will have to agree on a price. That might happen to be $155K, but there's no real reason to believe that it will or it won't.\"",
"title": ""
},
{
"docid": "34d0f3b06540c73259cd1844103b9366",
"text": "\"This is typically referred to as the \"\"market value\"\" of your holdings--it is the revenue you would generate if you sold your holdings at that moment (less any transaction costs, of course)\"",
"title": ""
},
{
"docid": "bcb7fc910fe1d242fcc4a395828b5462",
"text": "\"This isn't negotiations anymore. They are trying to change the deal after the fact. Stop negotiating and tell them they are bound to the agreement they signed. They are leaning on you because they know you are small and likely can't fight them. Document every conversation. Do not allow them to keep pushing after they've signed the agreement. They accepted your bid (after giving your pricing to a competitor, which is shitty and should have been your first red flag). Then they started working on you. At that point your answer should have been \"\"we have a verbal agreement of x services for y price. A different scope of work is not scalable and would require a new quote.\"\" At this point you can either accept that they will continue to beat you up, or you can jam the contract down their throats until they agree or walk away. I've been in a situation like this before. A major multinational asked for bid pricing that was agreed to be estimated only based on very loose requirements. Then they handed us a contract with that pricing included as \"\"not to exceed\"\". We ended up walking away. It sounds like you may want to do the same if you can. Big companies often will have legal and payables departments that basically exist to fight any obligation to pay out money. In our case shortly after we ran into someone in our industry who'd worked with that company, and they said to assume that company would reject 30% of all invoices we sent. If nothing else, to delay payment just a bit longer so they could keep earning interest on the money. Also, in the future I wouldn't turn away work until you are under a signed contract for a big project like this. You can't rely on such a contract to come through. If they drag feet and your schedule is full that's on them, or you bring in additional help or subcontract the work to deliver.\"",
"title": ""
},
{
"docid": "487f70fefde2260535df8ddd74de4414",
"text": "NAV is how much is the stuff of the company worth divided by the number of shares. This total is also called book value. The market cap is share price times number of shares. For Amazon today people are willing to pay 290 a share for a company with a NAV of 22 a share. If of nav and price were equal the P/B (price to book ratio) would be 1, but for Amazon it is 13. Why? Because investors believe Amazon is worth a lot more than a money losing company with a NAV of 22.",
"title": ""
},
{
"docid": "7a01acf95a353dcd5c011f4163d3d225",
"text": "To understand the answer we first have to understand what Goodwill is. Goodwill in a companies balance sheet is an intangible asset that represents the extra value because of a strong brand name, good customer relations, good employee relations and any patents or proprietary technology. An article from The Economist explains this very well and actually talks about Time Warner directly - The goodwill, the bad and the ugly When one firm buys another, the target’s goodwill—essentially the premium paid over its book value—is added to the combined entity’s balance-sheet. Goodwill and other intangibles on the books of companies in the S&P 500 are valued at $2.6 trillion, or 10% of their total assets, according to analysts at Goldman Sachs. As the economy deteriorates and more firms trade down towards (or even below) their book value, empire-builders are having to mark down the value of assets they splashed out on in rosier times. A recently announced $25 billion goodwill charge is expected to push Time Warner into an operating loss for 2008, for instance. Michael Moran of Goldman Sachs thinks such hits could amount to $200 billion or more over the cycle. Investors have so far paid little attention to intangibles, but as write-downs proliferate they are likely to become increasingly wary of industries with a high ratio of goodwill to assets, such as health care, consumer goods and telecoms. How bad things get will depend on the beancounters. American firms used to be allowed to amortise goodwill over many years. Since 2002, when an accounting-rule change ended that practice, goodwill has had to be tested every year for impairment. In this stormy environment, with auditors keener than ever to avoid being seen to go easy on clients, companies are being told to mark down assets if there is any doubt about their value. The sanguine point out that this has no effect on cashflow, since such charges are non-cash items. Moreover, some investors take goodwill write-offs with a pinch of salt, preferring to look past such non-recurring costs and accept the higher “normalised” earnings numbers to which managers understandably cling. The largest companies are thus able to survive thumping blows that might otherwise floor them, such as the $99 billion loss that the newly formed but ill-conceived AOL Time Warner, as it then was, reported for 2002. But the impact can be all too real, as write-downs reduce overall book value and increase leverage ratios, a particular concern in these debt-averse times.",
"title": ""
},
{
"docid": "803cc957e0204d38e88920103c85f4e1",
"text": "It won't be worth $1050 at maturity. You are not accounting for tym. So to see the 'worth: of a bond you will need it's yield (5%) and the current market rate of a similar bond. Then just use the bond valuation formula to solve (on mobilw so can't explain further/better) sorry",
"title": ""
},
{
"docid": "8b380b00b07239459c50359b0c5c4661",
"text": "Here's my answer for what it's worth:",
"title": ""
},
{
"docid": "821e3eecf2857fc1405d1f4b33e8d359",
"text": "The value of a company is, simplified, the sum of the value of the equity and the value of the debt. There are some other things to add/subtract to that, but just think about those for now. You could also say the value of a company is the value of its assets, or more precisely the value of the net cash flows those assets will generate in the future. So let's say you want to start a company, so you want to buy some assets. Maybe you want to buy a $200 asset. Well, you only have $100, so you take out a loan (debt) for $100 for the remainder. You buy the asset and start generating income. Let's say after a month you get bored and decide to sell the company. Let's assume the value of the assets hasn't changed. Your equity is worth $100, and you find a buyer who is willing to pay $100 for your company. Great! Right? Well there's still the $100 loan you owe, so you have to pay that back. And suddenly you now have $0. So in fact, you should have negotiated $200 with the buyer, because that's what the assets are actually worth. Then you can pay back the loan and still have the $100 in equity you deserve. (Alternatively, you could have negotiated the buyer to assume responsibility for the loan; same outcome for you.) Did that help?",
"title": ""
}
] |
fiqa
|
a8dcb88b142aadc1fd0d7086f6fab7df
|
Should my retirement portfolio imitate my saving portfolio?
|
[
{
"docid": "a29bec6d3af870f1e5a648819ca6ac7c",
"text": "One big pie chart. Traditional (pretax) 401(k) and IRA, Roth 401(k) and IRA, and non-tax favored accounts. All of these need to be viewed holistically, the non-favored money is where I'd keep cash/low return safe instruments, Roth IRA for highest growth.",
"title": ""
},
{
"docid": "f32d03ea60fd0a998b6e6358b78fd644",
"text": "Short Answer: Length of Time invested and risk should be correlated. From what I am hearing this is pretty good game plan for your age. Minutia: Once you get closer to retirement lets say in 20 years. You might want to treat two lumps of money with different risk. For me at 49 I have a lump of money for 55-70 that carries a lot less risk then another lump of money for when I hit 80. This way I can wait and take Social Security at 70 when it pays the most per month. Then I'll have another pile of money for when my care costs start being very expensive. Or I think most people would benefit from making sure you have the funds you need for the next 5 years in items with extremely low risk and funds you need 6 years out or more you can have some risk tolerance there. Best laid plans though.",
"title": ""
}
] |
[
{
"docid": "e7777b222351bc03f73b9c5d9a640863",
"text": "Your asset mix should reflect your own risk tolerance. Whatever the ideal answer to your question, it requires you to have good timing, not once, but twice. Let me offer a personal example. In 2007, the S&P hit its short term peak at 1550 or so. As it tanked in the crisis, a coworker shared with me that he went to cash, on the way down, selling out at about 1100. At the bottom, 670 or so, I congratulated his brilliance (sarcasm here) and as it passed 1300 just 2 years later, again mentions how he must be thrilled he doubled his money. He admitted he was still in cash. Done with stocks. So he was worse off than had he held on to his pre-crash assets. For sake of disclosure, my own mix at the time was 100% stock. That's not a recommendation, just a reflection of how my wife and I were invested. We retired early, and after the 2013 excellent year, moved to a mix closer to 75/25. At any time, a crisis hits, and we have 5-6 years spending money to let the market recover. If a Japanesque long term decline occurs, Social Security kicks in for us in 8 years. If my intent wasn't 100% clear, I'm suggesting your long term investing should always reflect your own risk tolerance, not some short term gut feel that disaster is around the corner.",
"title": ""
},
{
"docid": "ee041db509c90ead2bc996a8bf01e099",
"text": "How is not different? You want to retire early; hence, you will save what you deem necessary to retire early. On the other hand, if you turn your retirement savings into capital gains; that's good. Nonetheless, if you start to earn capital gains that is detrimental to the economic value of the state; then, your taxes should be at higher rate to compensate for that. Everyone encourages business; rarely anyone would encourage a monopoly. Earning wealth is good business, hoarding wealth is a monopoly.",
"title": ""
},
{
"docid": "acd6ecb60230cccbe47d3f7ed7d5ef80",
"text": "Take the easy approach - as suggested by John Bogle (founder of Vanguard - and a man worthy of tremendous respect). Two portfolios consisting of 1 index fund each. Invest your age% in the Fixed Income index fund. Invest (1-age)% in the stock index fund. Examples of these funds are the Total Market Index Fund (VTSMX) and the Total Bond Market Index (VBMFX). If you wish to be slightly more adventurous, blend (1-age-10)% as the Total Market Index Fund and a fixed 10% as Total International Stock Index (VGTSX). You will sleep well at night for most of your life.",
"title": ""
},
{
"docid": "740de5afea45123d65bdc09bc1208f1b",
"text": "\"Yes, the \"\"based on\"\" claim appears to be true – but the Nobel laureate did not personally design that specific investment portfolio ;-) It looks like the Gone Fishin' Portfolio is made up of a selection of low-fee stock and bond index funds, diversified by geography and market-capitalization, and regularly rebalanced. Excerpt from another article, dated 2003: The Gone Fishin’ Portfolio [circa 2003] Vanguard Total Stock Market Index (VTSMX) – 15% Vanguard Small-Cap Index (NAESX) – 15% Vanguard European Stock Index (VEURX) – 10% Vanguard Pacific Stock Index (VPACX) – 10% Vanguard Emerging Markets Index (VEIEX) – 10% Vanguard Short-term Bond Index (VFSTX) – 10% Vanguard High-Yield Corporates Fund (VWEHX) – 10% Vanguard Inflation-Protected Securities Fund (VIPSX) – 10% Vanguard REIT Index (VGSIX) – 5% Vanguard Precious Metals Fund (VGPMX) – 5% That does appear to me to be an example of a portfolio based on Modern Portfolio Theory (MPT), \"\"which tries to maximize portfolio expected return for a given amount of portfolio risk\"\" (per Wikipedia). MPT was introduced by Harry Markowitz, who did go on to share the 1990 Nobel Memorial Prize in Economic Sciences. (Note: That is the economics equivalent of the original Nobel Prize.) You'll find more information at NobelPrize.org - The Prize in Economics 1990 - Press Release. Finally, for what it's worth, it isn't rocket science to build a similar portfolio. While I don't want to knock the Gone Fishin' Portfolio (I like most of its parts), there are many similar portfolios out there based on the same concepts. For instance, I'm reminded of a similar (though simpler) portfolio called the Couch Potato Portfolio, made popular by MoneySense magazine up here in Canada. p.s. This other question about asset allocation is related and informative.\"",
"title": ""
},
{
"docid": "b255e47ebb7c1a770f6272185f798254",
"text": "At a very high-level, the answer is yes, that's a good idea. For money that you want to invest on the scale of decades, putting money into a broad, market-based fund has historically given the best returns. Something like the Vanguard S&P 500 automatically gives you a diverse portfolio, with super low expenses. As it sounds like you understand, the near-term returns are volatile, and if you really think you might want this money in the next few years, then the stock market might not be the best choice. As a final note, as one of the comments mentioned, it makes sense to hold a broad, market-based fund for your IRA as well, if possible.",
"title": ""
},
{
"docid": "f7776d8529615f03d3a1ff066204e2e5",
"text": "I have a similar plan and a similar number of accounts. I think seeking a target asset allocation mix across all investment accounts is an excellent idea. I use excel to track where I am and then use it to adjust to get closer (but not exactly) to my target percentages. Until you have some larger balances, it may be prudent to use less categories or realize that you can't come exactly to your percentages, but can get close. I also simplify by primarily investing in various index funds. That means that in my portfolio, each category has 1 or 2 funds, not 10 or 20.",
"title": ""
},
{
"docid": "8e0cc6474e82e1d2d036cd295fc54b37",
"text": "\"You're right, the asset allocation is one fundamental thing you want to get right in your portfolio. I agree 110%. If you really want to understand asset allocation, I suggest any and all of the following three books, all by the same author, William J. Bernstein. They are excellent – and yes I've read each. From a theory perspective, and being about asset allocation specifically, the Intelligent Asset Allocator is a good choice. Whereas, the next two books are more accessible and more complete, covering topics including investor psychology, history, financial products you can use to implement a strategy, etc. Got the time? Read them all. I finished reading his latest book, The Investor's Manifesto, two weeks ago. Here are some choice quotes from Chapter 3, \"\"The Nature of the Portfolio\"\", that address some of the points you've asked about. All emphasis below is mine. Page 74: The good news is [the asset allocation process] is not really that hard: The investor only makes two important decisions: Page 76: Rather, younger investors should own a higher portion of stocks because they have the ability to apply their regular savings to the markets at depressed prices. More precisely, young investors possess more \"\"human capital\"\" than financial capital; that is, their total future earnings dwarf their savings and investments. From a financial perspective, human capital looks like a bond whose coupons escalate with inflation. Page 78: The most important asset allocation decision is the overall stock/bind mix; start with age = bond allocation rule of thumb. [i.e. because the younger you are, you already have bond-like income from anticipated employment earnings; the older you get, the less bond-like income you have in your future, so buy more bonds in your portfolio.] He also mentions adjusting that with respect to one's risk tolerance. If you can't take the ups-and-downs of the market, adjust the stock portion down (up to 20% less); if you can stomach the risk without a problem, adjust the stock portion up (up to 20% more). Page 86: [in reference to a specific example where two assets that zig and zag are purchased in a 50/50 split and adjusted back to targets] This process, called \"\"rebalancing,\"\" provides the investor with an automatic buy-low/sell-high bias that over the long run usually – but not always – improves returns. Page 87: The essence of portfolio construction is the combination of asset classes that move in different directions at least some of the time. Finally, this gem on pages 88 and 89: Is there a way of scientifically picking the very best future allocation, which offers the maximum return for the minimum risk? No, but people still try. [... continues with description of Markowitz's \"\"mean-variance analysis\"\" technique...] It took investment professionals quite a while to realize that limitation of mean-variance analysis, and other \"\"black box\"\" techniques for allocating assets. I could go on quoting relevant pieces ... he even goes into much detail on constructing an asset allocation suitable for a large portfolio containing a variety of different stock asset classes, but I suggest you read the book :-)\"",
"title": ""
},
{
"docid": "91ac8519ecdfef7fe122c4fde90a549d",
"text": "\"Note that an index fund may not be able to precisely mirror the index it's tracking. If enough many people invest enough money into funds based on that index, there may not always be sufficient shares available of every stock included in the index for the fund to both accept additional investment and track the index precisely. This is one of the places where the details of one index fund may differ from another even when they're following the same index. IDEALLY they ought to deliver the same returns, but in practical terms they're going to diverge a bit. (Personally, as long as I'm getting \"\"market rate of return\"\" or better on average across all my funds, at a risk I'm comfortable with, I honestly don't care enough to try to optimize it further. Pick a distribution based on some stochastic modelling tools, rebalance periodically to maintain that distribution, and otherwise ignore it. That's very much to the taste of someone like me who wants the savings to work for him rather than vice versa.)\"",
"title": ""
},
{
"docid": "a68a6190f8f1909ef9cf515c36ca5e0d",
"text": "\"The goal of the single-fund with a retirement date is that they do the rebalancing for you. They have some set of magic ratios (specific to each fund) that go something like this: Note: I completely made up those numbers and asset mix. When you invest in the \"\"Mutual-Fund Super Account 2025 fund\"\" you get the benefit that in 2015 (10 years until retirement) they automatically change your asset mix and when you hit 2025, they do it again. You can replace the functionality by being on top of your rebalancing. That being said, I don't think you need to exactly match the fund choices they provide, just research asset allocation strategies and remember to adjust them as you get closer to retirement.\"",
"title": ""
},
{
"docid": "4235c550d5320e788346bb69d057967b",
"text": "\"In general, I'd try to keep things as simple as possible. If your plan is to have a three-fund portfolio (like Total Market, Total International, and Bond), and keep those three funds in general, then having it separated now and adding them all as you invest more is fine. (And upgrade to Admiral Shares once you hit the threshold for it.) Likewise, just putting it all into Total Market as suggested in another answer, or into something like a Target Retirement fund, is just fine too for that amount. While I'm all in favor of as low expense ratios as possible, and it's the kind of question I might have worried about myself not that long ago, look at the actual dollar amount here. You're comparing 0.04% to 0.14% on $10,000. That 0.1% difference is $10 per year. Any amount of market fluctuation, or buying on an \"\"up\"\" day or selling on a \"\"down\"\" day, is going to pretty much dwarf that amount. By the time that difference in expense ratios actually amounts to something that's worth worrying about, you should have enough to get Admiral Shares in all or at least most of your funds. In the long run, the amount you manage to invest and your asset allocation is worth much much more than a 0.1% expense ratio difference. (Now, if you're going to talk about some crazy investment with a 2% expense ratio or something, that's another story, but it's hard to go wrong at Vanguard in that respect.)\"",
"title": ""
},
{
"docid": "b999a06246cc4ab75c1b6138c20c3969",
"text": "Fire your fund manager. There are several passive funds that seek to duplicate the S&P 500 Index returns. They have lower management fees, which will make returns lower than S&P, and they have less risk by following a broadly diversified strategy (versus midcap growing stocks). There's also ETFs, but evidence is growing that they're not as safe as hoped. But here's the deal: the S&P has been on a tear lately. It could be overvalued and what looks like a good investment could start falling again. A possible alternative would be one of the Lifetime funds that seek to perform portfolio adjustment with a retirement decade target; they're fairly new which mostly means nobody knows how they screw you over yet. In theory, this decade structure means the brokerage can execute trading cash for stocks, stocks for bonds, and bonds for cash in house.",
"title": ""
},
{
"docid": "afc7c50144969e4676e73b6ccda36cf9",
"text": "JoeTapayer has good advice here. I would like to add my notes. If they give a 50% match that means you are getting a 50% return on investment(ROI) immediately. I do not know of a way to get a better guaranteed ROI. Next, when investing you need to determine what kind of investor you are. I would suggest you make yourself more literate in investments, as I suggest to anyone, but there are basic things you want to look for. If your primary worry is loss of your prinicipal, go for Conservative investments. This means that you are willing to accept a reduced expected ROI in exchange for lower volatility(risk of loss of principal). This does not mean you have a 100% safe investment as the last market issues have shown, but in general you are better protected. The fidelity investments should give you some information as to volatility or if they deem the investments conservative. Conservative investments are normally made up of trading bonds, which have the lowest ROI in general but are the most secure. You can also invest in blue chip companies, although stock is inherently riskier. It is pointed out in comments that stocks always outperform bonds in the long term, and this has been true over the last 100 years. I am just suggesting ways you can protect yourself against market downturns. When the market is doing very well bonds will not give you the return your friends are seeing. I am just trying to give you a basic idea of what to look for when you pick your investments, nothing can replace a solid investment adviser and taking the time to educate yourself.",
"title": ""
},
{
"docid": "1cc1cbf238b28b58a628df8b2952238f",
"text": "he general advice I get is that the younger you are the more higher risk investments you should include in your portfolio. I will be frank. This is a rule of thumb given out by many lay people and low-level financial advisors, but not by true experts in finance. It is little more than an old wive's tale and does not come from solid theory nor empirical work. Finance theory says the following: the riskiness of your portfolio should (inversely) correspond to your risk aversion. Period. It says nothing about your age. Some people become more risk-averse as they get older, but not everyone. In fact, for many people it probably makes sense to increase the riskiness of their portfolio as they age because the uncertainty about both wealth (social security, the value of your house, the value of your human capital) and costs (how many kids you will have, the rate of inflation, where you will live) go down as you age so your overall level of risk falls over time without a corresponding mechanical increase in risk aversion. In fact, if you start from the assumption that people's aversion is to not having enough money at retirement, you get the result that people should invest in relatively safe securities until the probability of not having enough to cover their minimum needs gets small, then they invest in highly risky securities with any money above this threshold. This latter result sounds reasonable in your case. At this point it appears unlikely that you will be unable to meet your minimum needs--I'm assuming here that you are able to appreciate the warnings about underfunded pensions in other answers and still feel comfortable. With any money above and beyond what you consider to be prudent preparation for retirement, you should hold a risky (but still fully diversified) portfolio. Don't reduce the risk of that portion of your portfolio as you age unless you find your personal risk aversion increasing.",
"title": ""
},
{
"docid": "586200e8f685acbfec8ff09bf4bec44f",
"text": "If the portfolio itself is taxable, then yes; if you have two stocks and you're rebalancing them, without using new cash, you are forced to sell one stock to buy another. That sale is taxable, unless you're in some sort of tax deferred/deductible account, such as an IRA. If you're talking about you being in a mutual fund and the fund itself rebalances, the same rules apply as above, though indirectly; you'll have capital gains realized and distributed to you, those gains will be taxed unless, again, your account is a retirement account.",
"title": ""
},
{
"docid": "af7535b950b00daa65f3e587fcb3e827",
"text": "Most of the “recommendations” are just total market allocations. Within domestic stocks, the performance rotates. Sometimes large cap outperform, sometimes small cap outperform. You can see the chart here (examine year by year): https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428692400000&chddm=99646&chls=IntervalBasedLine&cmpto=NYSEARCA:VO;NYSEARCA:VB&cmptdms=0;0&q=NYSEARCA:VV&ntsp=0&ei=_sIqVbHYB4HDrgGA-oGoDA Conventional wisdom is to buy the entire market. If large cap currently make up 80% of the market, you would allocate 80% of domestic stocks to large cap. Same case with International Stocks (Developed). If Japan and UK make up the largest market internationally, then so be it. Similar case with domestic bonds, it is usually total bond market allocation in the beginning. Then there is the question of when you want to withdraw the money. If you are withdrawing in a couple years, you do not want to expose too much to currency risks, thus you would allocate less to international markets. If you are investing for retirement, you will get the total world market. Then there is the question of risk tolerance. Bonds are somewhat negatively correlated with Stocks. When stock dips by 5% in a month, bonds might go up by 2%. Under normal circumstances they both go upward. Bond/Stock allocation ratio is by age I’m sure you knew that already. Then there is the case of Modern portfolio theory. There will be slight adjustments to the ETF weights if it is found that adjusting them would give a smaller portfolio variance, while sacrificing small gains. You can try it yourself using Excel solver. There is a strategy called Sector Rotation. Google it and you will find examples of overweighting the winners periodically. It is difficult to time the rotation, but Healthcare has somehow consistently outperformed. Nonetheless, those “recommendations” you mentioned are likely to be market allocations again. The “Robo-advisors” list out every asset allocation in detail to make you feel overwhelmed and resort to using their service. In extreme cases, they can even break down the holdings to 2/3/4 digit Standard Industrial Classification codes, or break down the bond duration etc. Some “Robo-advisors” would suggest you as many ETF as possible to increase trade commissions (if it isn’t commission free). For example, suggesting you to buy VB, VO, VV instead a VTI.",
"title": ""
}
] |
fiqa
|
30c1774653e7ab4bebd45919b76a0e4a
|
How do UK Gilts interest rates and repayments work?
|
[
{
"docid": "f29a86a321e07b5b5de007b5c99d4858",
"text": "\"A title such as \"\"5% Treasury Gilt 2020\"\" expresses the nominal yield. In other words, 5% is the yield you will receive if you are able to buy the Gilt at the nominal (issue) price of GBP100. Of course, you will not be able to buy such a Gilt in today's market for the nominal price of GBP100. It will be trading at a considerable premium and therefore, if you hold it until maturity you will realise a capital loss to offset the relatively high income you have received. Here is an example. The \"\"8% June 2021 Gilt\"\" has a coupon of 8%. To purchase a GBP100 nominal Gilt in today's market will cost you GBP135.89. Thus, you will pay 135.89 to receive GBP8.00 income annually. This represents a 5.88% yield (8/135.89 = 5.88%). That sounds pretty good. However, if you hold the Gilt until maturity you will only receive GBP100 on redemption and therefore you will experience a capital loss GBP35.89 on each Gilt purchased. When this capital loss is taken into account it means that the 5.88% yield you are receiving as income will be offset by the capital loss so that you have earned the equivalent of 0.757% annually. You can of course sell the Gilt before its 2021 maturity date, however as the maturity date gets closer the market price will get closer to the GBP100 nominal value and you will again face a capital loss. There's no free ride in the markets. 5 year Gilts currently have a redemption yield of about 0.75%, while 10 year Gilts currently have a redemption yield of about 1.15%. You may also wish to note that buying Gilts in the open market requires a minimum purchase of GBP10,000 nominal value. However, you can purchase small Gilt holdings through the post office.\"",
"title": ""
},
{
"docid": "78015aab391f1e140edca5a2b2e7ccb6",
"text": "\"The name of the Gilt states the redemption date, but not the original issue date. A gilt with 8.75% yield and close to its redemption date may have been issued at a time when interest rates were indeed close to 8.75%. For example in the early 1990s, the UK inflation rate was about 8%. One reason for preferring high or low coupon gilts is the trade off between capital gains and income, and the different taxation rules for each. If you buy a gilt and hold it to its maturity date, you know in advance the exact price that it will be redeemed for (i.e. £100). You may prefer to take a high level of income now, knowing you will make a capital loss in future (which might offset some other predictable capital gain for tax purposes) or you may prefer not to take income that you don't need right now, and instead get a guaranteed capital gain in future (for example, when you plan to retire from work). Also, you can use the change in the market value of gilts as a gamble or a hedge against your expectation of interest rate changes in future, with the \"\"government guaranteed\"\" fallback position that if your predictions are wrong, you know exactly what return you will get if you hold the gilts to maturity. The same idea applies to other bond investments - but without the government guarantee, of course.\"",
"title": ""
}
] |
[
{
"docid": "f70c8c562e977d956ae841fdb3c441b5",
"text": "Your calc is spot on, the output is small because it's just 5 days worth of interest, and at today's low rates that's practically 0. Also the rate you would want to use is money market rates as that's typically where companies will park cash to earn interest since its a highly liquid market.",
"title": ""
},
{
"docid": "be1e573ee5dca62d49e337262a6e5084",
"text": "There are quite a few advantages to credit cards in the uk. But don't borrow on them past the grace period. Set up a direct debit to pay amount in full.",
"title": ""
},
{
"docid": "9ffb3ef759cbb56470d2a1ac59d3fd1b",
"text": "\"Lots of loans that are shady to say the least are advertised currently on TV in the UK. I'm happily in a situation where I don't need a loan but might be asked to be a guarantor. If anyone asked me to be a guarantor for a loan, I'd either be capable and willing to loan that money to the person myself, or I wouldn't guarantee. I'd never, ever in a million years be a guarantor. There is one company in particular offering loans \"\"the good old-fashioned way\"\" asking for 49.9% interest with a guarantor. That is an interest rate that can bankrupt the guarantor. If you take the loan with me as the guarantor, and you decide that you are not interested in paying back the loan, I'm stuck with this loan. So since the guarantor must trust you, if he or she is established in the UK, the best thing to do would be for them to take a loan from a bank (or any supermarket nowadays will give you a loan at a decent rate) in their own name, give the money to you, and hope that you pay back the money. I'm equally responsible for repayment whether I'm guarantor or whether the loan is in my name, so I'd get that loan at a decent rate from a reputable bank.\"",
"title": ""
},
{
"docid": "d9ff22fad222bb44d548c34d3f973584",
"text": "Yes, the interest rate on a Treasury does change as market rates change, through changes in the price. But once you purchase the instrument, the rate you get is locked in. The cashflows on a treasury are fixed. So if the market rate increase, the present value of those future cashflows decreases, so the price of the treasury decreases. If you buy the bond after this happens, you would pay a lower price for the same fixed cashflows, hence you will receive a higher rate. Note that once you purchase the treasury instrument, your returns are locked in and guaranteed, as others have mentioned. Also note that you should distinguish between Treasury Bills and Treasury Bonds, which you seem to use interchangeably. Straight from the horse's mouth, http://www.treasurydirect.gov/indiv/products/products.htm: Treasury Bills are short term securities with maturity up to a year, Treasury Notes are medium term securities with maturity between 1 and 10 years, and Treasury Bonds are anything over 10 years.",
"title": ""
},
{
"docid": "91d7641faa256507c857e5aca1d56be4",
"text": "\"What you are looking for is the \"\"debt maturity profile\"\" (to make it easier to google. Most countries continuously roll over their debt, in effect just paying interest forever. So when your debt is due, you issue another loan for the same amount and use the new loan to pay off the old one.\"",
"title": ""
},
{
"docid": "1c5f7796e8581ad364cb3aa2a495ea88",
"text": "\"Taking the last case first, this works out exactly. (Note the Bank of England interest rate has nothing to do with the calculation.) The standard loan formula for an ordinary annuity can be used (as described by BobbyScon), but the periodic interest rate has to be calculated from an effective APR, not a nominal rate. For details, see APR in the EU and UK, where the definition is only valid for effective APR, as shown below. 2003 BMW 325i £7477 TYPICAL APR 12.9% 60 monthly payments £167.05 How does this work? See the section Calculating the Present Value of an Ordinary Annuity. The payment formula is derived from the sum of the payments, each discounted to present value. I.e. The example relates to the EU APR definition like so. Next, the second case doesn't make much sense (unless there is a downpayment). 2004 HONDA CIVIC 1.6 i-VTEC SE 5 door Hatchback £6,999 £113.15 per month \"\"At APR 9.9% [as quoted in advert], 58 monthly payments\"\" 58 monthly payments at 9.9% only amount to £5248.75 which is £1750.25 less than the price of the car. Finally, the first case is approximate. 2005 TOYOTA COROLLA 1.4 VVTi 5 door hatchback £7195 From £38 per week \"\"16.1% APR typical, a 60 month payment, 260 weekly payments\"\" A weekly payment of £38 would imply an APR of 14.3%.\"",
"title": ""
},
{
"docid": "acbae95606e012afa793a1d678fdec38",
"text": "I'm pretty sure you are don't actually plan to put £120,000 into a zero interest account, because when you take inflation into account, in 20 years, then £120,000 won't be worth anywhere near that amount. For its value to grow you need the interest rate to exceed the rate of inflation and so paying 20% (or even 40%) tax on the interest can make the difference between whether being richer and getting poorer.",
"title": ""
},
{
"docid": "f9dce05a7255e9cf5cd86ec82fce3395",
"text": "This is more of an interesting question then it looks on first sight. In the USA there are some tax reliefs for mortgage payments, which we don’t have in the UK unless you are renting out the property with the mortgage. So firstly work out the interest rate on each loan taking into account any tax reliefs, etc. Then you need to consider the charges for paying off a loan, for example often there is a charge if you pay off a mortgage. These days in the UK, most mortgagees allow you to pay off at least 10% a year without hitting such a charge – but check your mortgage offer document. How interest is calculated when you make an early payment may be different between your loans – so check. Then you need to consider what will happen if you need another loan. Some mortgages allow you to take back any overpayments, most don’t. Re-mortgaging to increase the size of your mortgage often has high charges. Then there is the effect on your credit rating: paying more of a loan each month then you need to, often improves your credit rating. You also need to consider how interest rates may change, for example if you mortgage is a fixed rate but your car loan is not and you expect interest rates to rise, do the calculations based on what you expect interest rates to be over the length of the loans. However, normally it is best to pay off the loan with the highest interest rate first. Reasons for penalties for paying of some loans in the UK. In the UK some short term loans (normally under 3 years) add on all the interest at the start of the loan, so you don’t save any interest if you pay of the loan quicker. This is due to the banks having to cover their admin costs, and there being no admin charge to take out the loan. Fixed rate loans/mortgagees have penalties for overpayment, as otherwise when interest rates go down, people will change to other lenders, so making it a “one way bet” that the banks will always loose. (I believe in the USA, the central bank will under right such loans, so the banks don’t take the risk.)",
"title": ""
},
{
"docid": "9290868dcd38bddb8c9ff8d0d73e8d8a",
"text": "The idea is correct; the details are a little off. You need to apply it to the actual cash flow the bond would create. The best advice I can give you is to draw a time-line diagram. Then you would see that you receive £35 in 6 months, £35 in 12 months, £35 in 18 months, and £1035 in 24 months. Use the method you've presented in your question and the interest rate you've calculated, 3% per 6 months, to discount each payment the specified amount, and you're done. PS: If there were more coupons, say a 20 year quarterly bond, it would speed things up to use the Present Value of an Annuity formula to discount all the coupons in one step...",
"title": ""
},
{
"docid": "b3666af20f9bb3570574b277a7faccb3",
"text": "Unless you are getting the loan from a loan shark, it is the most common case that each payment is applied to the interest accrued to date and the rest is applied towards reducing the principal. So, assuming that fortnightly means 26 equally-spaced payments during the year, the interest accrued at the end of the first fortnight is $660,000 x (0.0575/26) = $1459.62 and so the principal is reduced by $2299.61 - $1459.62 = $839.99 For the next payment, the principal still owing at the beginning of that fortnight will be $660,000-$839.99 = $659,160.01 and the interest accrued will be $659,160.01 x (0.0575/26) = $1457.76 and so slightly more of the principal will be reduced than the $839.99 of the previous payment. Lather, rinse, repeat until the loan is paid off which should occur at the end of 17.5 years (or after 455 biweekly payments). If the loan rate changes during this time (since you say that this is a variable-rate loan), the numbers quoted above will change too. And no, it is not the case that just %5.75 of the $2300 is interest, and the rest comes off the principle (sic)? Interest is computed on the principal amount still owed ($660,000 for starters and then decreasing fortnightly). not the loan payment amount. Edit After playing around with a spreadsheet a bit, I found that if payments are made every two weeks (14 days apart) rather than 26 equally spaced payments in one year as I used above, interest accrues at the rate of 5.75 x (14/365)% for the 14 days rather than at the rate of (5.75/26)% for the time between payments as I used above each 14 days, $2299.56 is paid as the biweekly mortgage payment instead of the $2299.61 stated by the OP, then 455 payments (slightly less than 17.5 calendar years when leap years are taken into account) will pay off the loan. In fact, that 455-th payment should be reduced by 65 cents. In view of rounding of fractional cents and the like, I doubt that it would be possible to have the last equal payment reduce the balance to exactly 0.",
"title": ""
},
{
"docid": "c2a19b85909548e452288bbc78626295",
"text": "Different rates. What the BoE is conducting is known as Quantitative Easing, which is a form of monetary policy avalable to central banks whenever interest rates are already too close to zero or at zero (just like in the UK). In this case, the central banks hopes to influence longer-term rates, rather than just short-term rates. It is useful to remember that the rate central banks announce is a short-term rate used for interbank lending.",
"title": ""
},
{
"docid": "8ae1d1b1312fe92617416fb321e35db0",
"text": "Your plan will probably work. I speak from past experience approx 5-10 years ago, when Lloyds used to offer tiered interest of up to 4% on £5000 in their Vantage accounts. It was allowed for an individual person to have up to three Vantage accounts. The criteria for obtaining the headline interest rates were simply: What I, and many others, did was to set up three Vantage accounts, call them A, B, and C, and a standing order on each to transfer minimum amount + £1 on the same day each month in this manner: This satisfied the letter of conditions, though perhaps not the spirit. Most importantly it satisfied the bank, and all three accounts received that headline interest rate. These days banks have got a little wiser to this and have started including the 'set up n direct debits' condition, which makes this a more time-consuming system to arrange - you must assign your various bills across your accounts - but I believe that the overall plan still works. They don't care where the money comes from, or whether it stays - just that it comes in. Enough people get it wrong that they don't have to worry about the few who get it perfectly right (see also: how 0% balance transfer offers can be profitable...)",
"title": ""
},
{
"docid": "a19ebf47a6a423a517f69a38387dc80f",
"text": "If it's number of years and the interest is per-annum the formula is the same as the normal one. this should work on most hand-held calculators.",
"title": ""
},
{
"docid": "fbcfdd2fccff5c1708bebc49a7ad5d43",
"text": "You definitely used to be able to (see this BBC article from 2006), and I would imagine that you still can, although I also imagine that it would be more difficult than it used to be, as with all mortgages. EDIT: And here's an article from last year about Chinese banks targeting the UK mortgage market.",
"title": ""
},
{
"docid": "09341e6010c64a265197ec01f49e1ee6",
"text": "As no one has mentioned them I will... The US Treasury issues at least two forms of bonds that tend to always pay some interest even when prevailing rates are zero or negative. The two that I know of are TIPS and I series bonds. Below are links to the descriptions of these bonds: http://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm",
"title": ""
}
] |
fiqa
|
b6a30a7ebcc0870603b115e0ccc1a14a
|
Why are american call options more valuable than european options ONLY if the underlying asset pays cash flows?
|
[
{
"docid": "bf7ccbc105437f3d6bfe35d321e0db6c",
"text": "Really all you need to know is that American style can be exercised at any point, European options cannot be exercised early. Read on if you want more detail. The American style Call is worth more because it can be exercised at any point. And when the company pays a dividend, and your option is in the money, if the extrinsic value is worth less than the dividend you can be exercised early. This is not the case for a European call. You cannot be exercised until expiration. I trade a lot of options, you wont be exercised early unless the dividend scenario I mentioned happens. Or unless the extrinsic value is nothing, but even then, unless the investor really wants that position, he is more likely to just sell the call for an equivalent gain on 100 shares of stock.",
"title": ""
}
] |
[
{
"docid": "b89990eeba193697f81dbf2659aaadf4",
"text": "\"First it is worth noting the two sided nature of the contracts (long one currency/short a second) make leverage in currencies over a diverse set of clients generally less of a problem. In equities, since most margin investors are long \"\"equities\"\" making it more likely that large margin calls will all be made at the same time. Also, it's worth noting that high-frequency traders often highly levered make up a large portion of all volume in all liquid markets ~70% in equity markets for instance. Would you call that grossly artificial? What is that volume number really telling us anyway in that case? The major players holding long-term positions in the FX markets are large banks (non-investment arm), central banks and corporations and unlike equity markets which can nearly slow to a trickle currency markets need to keep trading just for many of those corporations/banks to do business. This kind of depth allows these brokers to even consider offering 400-to-1 leverage. I'm not suggesting that it is a good idea for these brokers, but the liquidity in currency markets is much deeper than their costumers.\"",
"title": ""
},
{
"docid": "f421dbba401128f5f86359abcdc613db",
"text": "1) Yes, both of your scenarios would lead to earning $10 on the transaction, at the strike date. If you purchased both of them (call it Scenario 3), you would make $20. 2) As to why this transaction may not be possible, consider the following: The Call and Put pricing you describe may not be available. What you have actually created is called 'arbitrage' - 2 identical assets can be bought and sold at different prices, leading to a zero-risk gain for the investor. In the real marketplace, if an option to buy asset X in January cost $90, would an option to sell asset X in January provide $110? Without adding additional complexity about the features of asset x or the features of the options, buying a Call option is the same as selling a Put option [well, when selling a Put option you don't have the ability to choose whether the option is exercised, meaning buying options has value that selling options does not, but ignore that for a moment]. That means that you have arranged a marketplace where you would buy a Call option for only $90, but the seller of that same option would somehow receive $110. For added clarity, consider the following: What if, in your example, the future price ended up being $200? Then, you could exercise your call option, buying a share for $90, selling it for $200, making $110 profit. You would not exercise your put option, making your total profit $110. Now consider: What if, in your example, the future price ended up being $10? You would buy for $10, exercise your put option and sell for $110, making a profit of $100. You would not exercise your call option, making your total profit $100. This highlights that if your initial assumptions existed, you would earn money (at least $20, and at most, unlimited based on a skyrocketing price compared to your $90 put option) regardless of the future price. Therefore such a scenario would not exist in the initial pricing of the options. Now perhaps there is an initial fee involved with the options, where the buyer or seller pays extra money up-front, regardless of the future price. That is a different scenario, and gets into the actual nature of options, where investors will arrange multiple simultaneous transactions in order to limit risk and retain reward within a certain band of future prices. As pointed out by @Nick R, this fee would be very significant, for a call option which had a price set below the current price. Typically, options are sold 'out of the money' initially, which means that at the current share price (at the time the option is purchased), executing the option would lose you money. If you purchase an 'in the money' option, the transaction cost initially would by higher than any apparent gain you might have by immediately executing the option. For a more realistic Options example, assume that it costs $15 initially to buy either the Call option, or the Put option. In that case, after buying both options as listed in your scenarios you would earn a profit if the share price exceeded $120 [The $120 sale price less the $90 call option = $30, which is your total fee initially], or dropped below $80 [The $110 Put price less the $80 purchase price = $30]. This type of transaction implies that you expect the price to either swing up, or swing down, but not fall within the band between $80-$120. Perhaps you might do this if there was an upcoming election or other known event, which might be a failure or success, and you think the market has not properly accounted for either scenario in advance. I will leave further discussion on that topic [arranging options of different prices to create specific bands of profitability / loss] to another answer (or other questions which likely already exist on this site, or in fact, other resources), because it gets more complicated after that point, and is outside the root of your question.",
"title": ""
},
{
"docid": "8cde1f27c0432fe1c2c56d9cb5231181",
"text": "If you're into math, do this thought experiment: Consider the outcome X of a random walk process (a stock doesn't behave this way, but for understanding the question you asked, this is useful): On the first day, X=some integer X1. On each subsequent day, X goes up or down by 1 with probability 1/2. Let's think of buying a call option on X. A European option with a strike price of S that expires on day N, if held until that day and then exercised if profitable, would yield a value Y = min(X[N]-S, 0). This has an expected value E[Y] that you could actually calculate. (should be related to the binomial distribution, but my probability & statistics hat isn't working too well today) The market value V[k] of that option on day #k, where 1 < k < N, should be V[k] = E[Y]|X[k], which you can also actually calculate. On day #N, V[N] = Y. (the value is known) An American option, if held until day #k and then exercised if profitable, would yield a value Y[k] = min(X[k]-S, 0). For the moment, forget about selling the option on the market. (so, the choices are either exercise it on some day #k, or letting it expire) Let's say it's day k=N-1. If X[N-1] >= S+1 (in the money), then you have two choices: exercise today, or exercise tomorrow if profitable. The expected value is the same. (Both are equal to X[N-1]-S). So you might as well exercise it and make use of your money elsewhere. If X[N-1] <= S-1 (out of the money), the expected value is 0, whether you exercise today, when you know it's worthless, or if you wait until tomorrow, when the best case is if X[N-1]=S-1 and X[N] goes up to S, so the option is still worthless. But if X[N-1] = S (at the money), here's where it gets interesting. If you exercise today, it's worth 0. If wait until tomorrow, there's a 1/2 chance it's worth 0 (X[N]=S-1), and a 1/2 chance it's worth 1 (X[N]=S+1). Aha! So the expected value is 1/2. Therefore you should wait until tomorrow. Now let's say it's day k=N-2. Similar situation, but more choices: If X[N-2] >= S+2, you can either sell it today, in which case you know the value = X[N-2]-S, or you can wait until tomorrow, when the expected value is also X[N-2]-S. Again, you might as well exercise it now. If X[N-2] <= S-2, you know the option is worthless. If X[N-2] = S-1, it's worth 0 today, whereas if you wait until tomorrow, it's either worth an expected value of 1/2 if it goes up (X[N-1]=S), or 0 if it goes down, for a net expected value of 1/4, so you should wait. If X[N-2] = S, it's worth 0 today, whereas tomorrow it's either worth an expected value of 1 if it goes up, or 0 if it goes down -> net expected value of 1/2, so you should wait. If X[N-2] = S+1, it's worth 1 today, whereas tomorrow it's either worth an expected value of 2 if it goes up, or 1/2 if it goes down (X[N-1]=S) -> net expected value of 1.25, so you should wait. If it's day k=N-3, and X[N-3] >= S+3 then E[Y] = X[N-3]-S and you should exercise it now; or if X[N-3] <= S-3 then E[Y]=0. But if X[N-3] = S+2 then there's an expected value E[Y] of (3+1.25)/2 = 2.125 if you wait until tomorrow, vs. exercising it now with a value of 2; if X[N-3] = S+1 then E[Y] = (2+0.5)/2 = 1.25, vs. exercise value of 1; if X[N-3] = S then E[Y] = (1+0.5)/2 = 0.75 vs. exercise value of 0; if X[N-3] = S-1 then E[Y] = (0.5 + 0)/2 = 0.25, vs. exercise value of 0; if X[N-3] = S-2 then E[Y] = (0.25 + 0)/2 = 0.125, vs. exercise value of 0. (In all 5 cases, wait until tomorrow.) You can keep this up; the recursion formula is E[Y]|X[k]=S+d = {(E[Y]|X[k+1]=S+d+1)/2 + (E[Y]|X[k+1]=S+d-1) for N-k > d > -(N-k), when you should wait and see} or {0 for d <= -(N-k), when it doesn't matter and the option is worthless} or {d for d >= N-k, when you should exercise the option now}. The market value of the option on day #k should be the same as the expected value to someone who can either exercise it or wait. It should be possible to show that the expected value of an American option on X is greater than the expected value of a European option on X. The intuitive reason is that if the option is in the money by a large enough amount that it is not possible to be out of the money, the option should be exercised early (or sold), something a European option doesn't allow, whereas if it is nearly at the money, the option should be held, whereas if it is out of the money by a large enough amount that it is not possible to be in the money, the option is definitely worthless. As far as real securities go, they're not random walks (or at least, the probabilities are time-varying and more complex), but there should be analogous situations. And if there's ever a high probability a stock will go down, it's time to exercise/sell an in-the-money American option, whereas you can't do that with a European option. edit: ...what do you know: the computation I gave above for the random walk isn't too different conceptually from the Binomial options pricing model.",
"title": ""
},
{
"docid": "f7dc405bb6c0a5643bd207f52b3bf406",
"text": "\"According to the book of Hull, american and european calls on non-dividend paying stocks should have the same value. American puts, however, should be equals to, or more valuable than, european puts. The reason for this is the time value of money. In a put, you get the option to sell a stock at a given strike price. If you exercise this option at t=0, you receive the strike price at t=0 and can invest it at the risk-free rate. Lets imagine the rf rate is 10% and the strike price is 10$. this means at t=1, you would get 11.0517$. If, on the other hand, you did'nt exercise the option early, at t=1 you would simply receive the strike price (10$). Basically, the strike price, which is your payoff for a put option, doesn't earn interest. Another way to look at this is that an option is composed of two elements: The \"\"insurance\"\" element and the time value of the option. The insurance element is what you pay in order to have the option to buy a stock at a certain price. For put options, it is equals to the payout= max(K-S, 0) where K=Strike Price and St= Stock price. The time value of the option can be thought of as a risk-premium. It's difference between the value of the option and the insurance element. If the benefits of exercising a put option early (i.e- earning the risk free rate on the proceeds) outweighs the time value of the put option, it should be exercised early. Yet another way to look at this is by looking at the upper bounds of put options. For a european put, today's value of the option can never be worth more than the present value of the strike price discounted at the risk-free rate. If this rule isn't respected, there would be an arbitrage opportunity by simply investing at the risk-free rate. For an american put, since it can be exercised at any time, the maximum value it can take today is simply equals to the strike price. Therefore, since the PV of the strike price is smaller than the strike price, the american put can have a bigger value. Bear in mind this is for a non-dividend paying stock. As previously mentioned, if a stock pays a dividend it might also be optimal to exercise just before these are paid.\"",
"title": ""
},
{
"docid": "c58ebff07998781fe4dc4daaa5b83705",
"text": "You made 94$ on an investment of 554.80 *100 = 55480$ for an approx holding period of 1 year. So the % return is ~0.16%, which is not much better than the short term us treasury rate. The current 1 year treasury rate is 0.27%: http://ycharts.com/indicators/1_year_treasury_rate So yes, you have a risk free portfolio, so you make the risk free rate. Remember this is an European option, so you are stuck for 1 year. if you found the same mispricing in an American option, then you found an arbitrage.",
"title": ""
},
{
"docid": "4aca16b8c90d88a5a94d287aa50dfd6f",
"text": "On NYSE it isn't the equity which is listed but is an ADR(American Depositary Receipt). Source A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. Else people would make a killing on the arbitrage opportunity. Frankly speaking arbitrage opportunities are more or less non existent. They occur for maybe seconds or milliseconds and the HFT firms and banks trade on it to remove the arbitrage.",
"title": ""
},
{
"docid": "206e7e13b863859a138a48dd1a13ef3b",
"text": "as no advantage from exerting American call option early,we can use Black schole formula to evaluate the option.However, American put option is more likely to be exercised early which mean Black schole does not apply for this style of option",
"title": ""
},
{
"docid": "c9913cfdb3e9d4ea37c2c119a1ce6a8b",
"text": "\"Look, as my final comment. You're overthinking this. Companies routinely have waaaay more cash on their books than they \"\"need\"\" because they keep a rainy day fund. Yes, there are extreme examples like Apple that has about 60 billion more than they need but practically all companies are going to maintain excess cash for emergencies, acquisitions, etc. As I said in another comment, the common theme between a DCF and an EV multiple is that they are both capital structure independent. Even here there are going to be differences, companies with a really shitty capital structure (read: too much debt) will trade publicly at a lower enterprise value multiple because of the risk that they go bankrupt. In an acquisition, this (probably) would not be the case. In the case of a DCF, you would probably raise your discount rate to account for the risk of bankruptcy.\"",
"title": ""
},
{
"docid": "a4380d3bed0e99990fb75de7a61c45f9",
"text": "You can think of a free cash flow as dividends from operations. FCF = cash from operations - investment in operations. The present value of these cash flows into the future is the value of the firm (DCF is very much like the dividend discount model). Now why does a DCF produce enterprise value and not equity value? Because a DCF values the firm's operating assets. To find the equity value, you use the accounting relation: assets = liabilities + equity (or in financial terms net operating assets = net financial obligations + common stockholders equity). This means you take away net debt from the value produced by the DCF to find equity. Now all your excess cash is netted off against your financial obligations (debt) to find the net debt. Cash used for day to day operations is an operating asset and should be treated as such, operating cash should not deducted from value of assets when finding the value of equity. At least that's what they're teaching at university now (i'm a uni student who's just finished my business valuation subject).",
"title": ""
},
{
"docid": "f04fb092a2a8b06046799dcc5521819c",
"text": "\"Both models understand that the value of a company is the sum total of all cashflows in the future, discounted back to the present. They vary in their definition of \"\"cash\"\". The Gordon Growth model uses dividends as a proxy for cashflow, under the assumption that this is the only true cash received by shareholders. (In theory, counting cash is meaningless if there's no eventual end-game where the accumulated cash is divvied up amongst the owners.) The Gordon model is best used to value companies that have an established, reliable dividend. The company should be stable, and the payout ratio high. GG will underestimate the value of firms that consistently maintain a low payout ratio, and instead accumulate cash. There are multiple DCF models. A firm valuation measures all cash available to both equity and debt holders. A traditional equity valuation measures all cash that can be claimed by shareholders. While the latter seems most intuitive and pertinent to a shareholder, the former is very good at showing what a company can do regardless of their choice of capital structure. A small add-on to a firm valuation is the concept of EVA, or economic value add, where the return on capital (all capital -- both debt and equity) is compared to the blended cost of capital. The DCF model is more flexible (optimistic?) than the Gordon in its approach to cash. The approach can be applied to many types of companies, at every stage in their maturity, even if they don't pay a dividend. A simplistic, or single-stage DCF is similar to the Gordon. The assumption is that the company is fully mature, growing at a rate perhaps just slightly above inflation, forever. For younger companies a multi-stage DCF can be employed, where you forecast fairly confident numbers for the next 3-5 years, then 3-5 years beyond that the forecast is less certain, but assumed to be slowing growth, and a generally maturing, stabilizing company. And then the steady-state stage is tacked on to the end. You'll want to check out Professor Aswath Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . He addresses all this and so much more, and has a big pile of spreadsheets freely downloadable to get you started. I also highly recommend his book \"\"Investment Valuation\"\". It's the bible on the topic.\"",
"title": ""
},
{
"docid": "59f54cbaa67b1798e28fbcb031da4510",
"text": "\"The term \"\"stock\"\" here refers to a static number as contrasted to flows, e.g. population vs. population growth. Stock, in this context, is not at all related to an equity instrument. Yes, annual refinance costs, interest rate payments etc. are what we should be looking at when assessing debt burden. Those are flows. That was my point when cautioning against naive debt GDP comparisons. Also, keep in mind that by borrowing in it's sovereign currency, the US has an enormous amount of monetary tools to handle the debt if it ever became a problem. Greece, by comparison, is at the mercy of the ECB, so they only have fiscal levers to pull. The interest expense does not strike me as especially concerning, but I'd be happy to verify BIS or IMF reports if you would like.\"",
"title": ""
},
{
"docid": "9fb29846e10c9ff3c42e0d9cc33ab4a2",
"text": "\"For sake of simplicity, say the Euro is trading at $1.25. You have leveraged control of $100,000 given the 100x leverage. If you are bullish on the Euro, you are long 80,000 euros. For every 1% it rises, you gain $1000. If it drops by the same 1%, you are wiped out, you lost your $1000. With the contracts I am familiar with, there is a minimum margin, and your account is \"\"marked to market\"\" each night. If your positive balance drops too low, you get the margin call. It's a zero sum game, for every dollar you make, there's a guy on the other side of the trade. Odds are he's doing this full time and is smarter than you.\"",
"title": ""
},
{
"docid": "fe7d0de6d9aca0529a5ca0680752e91b",
"text": "\"I don't know how much finance you know, but a fundamental idea is that something's value is the present value of all its future cash flows. Basically what those cash flows are worth today. So if we can predict the cash flows the equity holders will get in the future (not easy), and determine at what rate to discount the cash flows (not easy), we can value the equity. So a company will have cash flows coming in. But not all go to the equity holders. Some will go to debt holders, if any (interest payments). Some will go to preferred equity holders (dividends), if any. What's left over is what the equity holders will get. If there's no debt, preferred equity or other things like that, then the equity holders get all the cash flows. This doesn't mean the equity holders literally receive the cash - they'll get whatever is given out via dividends. But, they \"\"own\"\" the cash and it may be reinvested in the business to generate more cash in the future.\"",
"title": ""
},
{
"docid": "9d18889447c8fc8276bc3652b2e55cd1",
"text": "Yes. If I own a call, an American call option can be exercised at my wish. A European call can only be exercised at expiration, by the way. Your broker doesn't give you anything but a current quote for a given strike price. There are a number of good option related questions here. A bit of searching and reading will help you understand the process.",
"title": ""
},
{
"docid": "c7a7414980706b09d841d7c47ad28a7f",
"text": "if you don't intent to touch the money for 10 years or longer, then dumping 100% into a low-expense-ratio index fund seems like a perfectly reasonable thing to do. it is simple, low maintenance and fairly mindless. just remember to reinvest the dividends occasionally (e.g. every 6 months). however, if you are the kind of person who is going to lose their nerve when the market goes down 30%, then putting some of your money into a bond index fund or even a treasury note fund would be better than selling stock in a down market. just figure out how much of your portfolio you are comfortable losing, and put that in stocks. then put the rest in some stable value fund and watch it's value get slowly washed away by inflation while your stock investments rise through violent swings.",
"title": ""
}
] |
fiqa
|
12f5f83b122c48a75326db19177b4423
|
When are stop market/limit orders visible on the open market?
|
[
{
"docid": "fba9914819f98040a5ae17c9cd641ae5",
"text": "From the non-authoritative Investopedia page: A stop-limit order will be executed at a specified price, or better, after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better. So once the stop price has been breached, your limit order is placed and will be on the order books as a $9 ask. For a vanilla stop order, a market order will be placed and will be filled using the highest active bid(s).",
"title": ""
}
] |
[
{
"docid": "9a0574b1f4c64467251aa44803c3685e",
"text": "If you want your order to go through no matter what then you should be using market orders rather than limit orders. With limit orders you may get the price you are after or better but you are not guaranteed to get your order transacted. With a market order you are guaranteed to get you order transacted but may get a price inferior to what you were after. Most times this should only be a few cents but can get much larger in a fast moving or less liquid market. You should incorporate this slippage into your trading plan. Maybe a better option for you, if you are looking at + or - 0.5% from the last price, would be to use conditional triggers (stop buy and sell orders) with your market orders. Once the market moves in your direction your conditional order will be triggered and the stock will be bought at current market price.",
"title": ""
},
{
"docid": "d98a2df07419d2713839cdac91f60204",
"text": "I don't think you're missing anything. Many modern trading systems actually warn you when trying to enter a market order, asking if you are sure that you wouldn't prefer to set a limit. I fully agree with you that it is usually just better to define a limit even 20% higher than just doing a market trade. Let me give you some examples when you still might prefer to use a market order instead of a limit: But even in those two examples a (wide) limit order might just be the safer thing to do. So, what it really comes down to is speed: A market order has no other criterias to be defined, is thus entered faster and saves you a few seconds that might be crucial.",
"title": ""
},
{
"docid": "5a484b5eb4efb839e85833035c389844",
"text": "\"What you are saying is a very valid concern. After the flash crash many institutions in the US replaced \"\"true market orders\"\" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative.\"",
"title": ""
},
{
"docid": "54de8f950e5eb26faf4845ac8f2c2bc7",
"text": "From your question, I am guessing that you are intending to have stoploss buy order. is the stoploss order is also a buy order ? As you also said, you seems to limit your losses, I am again guessing that you have short position of the stock, to which you are intending to place a buy limit order and buy stoploss order (stoploss helps when when the price tanks). And also I sense that you intend to place buy limit order at the price below the market price. is that the situation? If you place two independent orders (one limit buy and one stoploss buy). Please remember that there will be situation where two orders also get executed due to market movements. Add more details to the questions. it helps to understand the situation and others can provide a strategic solution.",
"title": ""
},
{
"docid": "2272a5d2f2b5c88cf72bfd3066ffabc1",
"text": "It will depend largely on your broker what type of stop and trailing stop orders they provide. Saying that, I have not come across any brokers yet that offer limit orders with trailing stop orders. Unlike a standard stop order where you can either make it a market stop order or a limit stop order, usually most brokers have trailing stop orders as market orders only, where you can either set the trailing stop to be a dollar value or percentage from the most recent high. Remember also, that trailing stop orders will be based on the intra-day highs and not the highest closing price. That means that if the share price spikes up during the day your trailing stop will move up, and if the price then spikes down you may be stopped out prematurely, after which the price might rally again. For this reason I try to base my trailing stops on the highest closing price by using standard stop loss orders and moving it up manually after the close of trade if the share price has closed at a new high. This takes a few minutes each evening (depending on how many stocks you have to check and adjust the stops for) but gives you more control. Using this method will also enable you to set limit orders attached to your stop loss triggers, and you won't have to keep your trailing too close to the last high price thus potentially causing you to get stopped out prematurely. Slightly off track but may be handy if you set profit targets, my broker has recently introduced Trailing Take Profit Orders. The way it works is, say you have a profit target of 50%, so you buy at $2 and want to take profits if the price reaches $3, you could set your Trailing Take Profit Trigger at say $3.10 or above and set a Trail by Amount of say $0.10. So if the price after hitting $3.10 falls to $3.00 you will be stopped out and collect your profits. If the price moves up to $3.30 and then falls to $3.20, you will be stopped out at $3.20 and make some extra profits. If the price continues going up the Trailing Take Profit will continue to move up always $0.10 below the highest price reached. I think this would be a very useful order if you were range trading where you could set the Trailing Take Profit trigger near recent resistance so you can get out if prices start reversing at or around the resistance, but continue profiting if the price breaks through the resistance.",
"title": ""
},
{
"docid": "c7205cbaecf85917426224c0955e77ce",
"text": "\"For any large company, there's a lot of activity, and if you sell at \"\"market\"\" your buy or sell will execute in seconds within a penny or two of the real-time \"\"market\"\" price. I often sell at \"\"limit\"\" a few cents above market, and those sell within 20 minutes usually. For much smaller companies, obviously you are beholden to a buyer also wanting that stock, but those are not on major exchanges. You never see whose buy order you're selling into, that all happens behind the curtain so to speak.\"",
"title": ""
},
{
"docid": "5061169c2f03aa81b293446c30602627",
"text": "\"Yes there is, it is called a One-Cancels-the-Other Order (OCO). Investopedia defines a OCO order as: Definition of 'One-Cancels-the-Other Order - OCO' A pair of orders stipulating that if one order is executed, then the other order is automatically canceled. A one-cancels-the-other order (OCO) combines a stop order with a limit order on an automated trading platform. When either the stop or limit level is reached and the order executed, the other order will be automatically canceled. Seasoned traders use OCO orders to mitigate risk. I use CMC Markets in Australia, and they allow free conditional and OCO orders either when initially placing a buy order or after already buying a stock. See the Place New Order box below: Once you have selected a stock to buy, the number of shares you want to buy and at what price you can place up to 3 conditional orders. The first condition is a \"\"Place order if...\"\" conditional order. Here you can place a condition that your buy order will only be placed onto the market if that condition is met first. Say the stock last traded at $9.80 and you only want to place your order the next day if the stock price moves above the current resistance at $10.00. So you would Place order if Price is at or above $10.00. So if the next day the price moves up to $10 or above your order will be placed onto the market. The next two conditional orders form part of the OCO Orders. The second condition is a \"\"Stop loss\"\" conditional order. Here you place the price you want to sell at if the price drops to or past your stop loss price. It will only be placed on to the market if your buy order gets traded. So if you wanted to place your stop loss at $9.00, you would type in 9.00 in the box after \"\"If at or below ?\"\" and select if you want a limit or market order. The third condition is a \"\"Take profit\"\" conditional order. This allows you to take profits if the stock reaches a certain price. Say you wanted to take profits at 30%, that is if the price reached $13.00. So you would type in 13.00 in the box after \"\"If at or above ?\"\" and again select if you want a limit or market order. Once you have bought the stock if the stop order gets triggered then the take profit order gets cancelled automatically. If on the other hand the take profit order gets triggered then the stop loss order gets cancelled automatically. These OCO conditional orders can be placed either at the time you enter your buy order or after you have already bought the stock, and they can be edited or deleted at any time. The broker you use may have a different process for entering conditional and OCO orders such as these.\"",
"title": ""
},
{
"docid": "9ca579a1d52fc5a986c5132394e6ff7b",
"text": "It depends on how you place your stop order and the type of stop orders available from your broker. If you place a stop market order and the following day the stock opens below your stop your stock will be stopped out at or around the opening price, meaning you can potentially end up with quite a large gap. If you place a stop limit order, say you place your stop at $10.00 with a limit price of $9.90, and if the price opens below $9.90, say at $9.50, your limit sell order of $9.90 will be placed onto the market but it will not be executed until the price goes back up to $9.90 or above. The third option is to place a Guaranteed Stop Loss, and as specified you are guaranteed your stop price even if the price gaps down below your stop price. You will be paying an extra fee for the Guaranteed Stop Loss Order, and they are usually mainly available with CFD Brokers (so if you are in the USA you might be out of luck).",
"title": ""
},
{
"docid": "df41c539018f1fb6adcf160c270d71fe",
"text": "Many of the Bitcoin exchanges mimic stock exchanges, though they're much more rudimentary offering only simple buy/sell/cancel orders. It's fairly normal for retail stock brokerage accounts to allow other sorts of more complex orders, where once a certain criteria is met, (the price falls below some $ threshold, or has a movement greater than some %) then your order is executed. The space between the current buy order and the current sell order is the bid/ask spread, it's not really about timing. Person X will buy at $100, person Y will sell at $102. If both had a price set at $101, they would just transact. Both parties think they can do a little bit better than the current offer. The width of the bid/ask spread is not universal by any means. The current highest buy order and the current lowest sell order, are both the current price. The current quoted market price is generally the price of the last transaction, whether it's buy or sell.",
"title": ""
},
{
"docid": "3806ced71d2e8fcf8b5645ceb665f31a",
"text": "My broker collates the order book by price and marketplace, displaying the number of shares available at each level, sorted as in Victor's screencap. You can glean information from not just a snapshot of the order book but also by watching how it changes over time. Although it's not always a complete picture -- many brokers hold limit orders internally until the market is close, at which point they'll route to an exchange or trade internally. And of course skilled market participants know that there's people out there looking to glean information from the order book and will act to confuse the picture. The order book can show you: Combined with a list of trades (price & size, and whether it was a buy or sell), you can get a much more complete picture of what's going on with a stock than by looking at charts alone.",
"title": ""
},
{
"docid": "8767fd8487c7fbf1fe4d78d52a38411b",
"text": "\"My broker offers the following types of sell orders: I have a strategy to sell-half of my position once the accrued value has doubled. I take into account market price, dividends, and taxes (Both LTgain and taxes on dividends). Once the market price exceeds the magic trigger price by 10%, I enter a \"\"trailing stop %\"\" order at 10%. Ideally what happens is that the stock keeps going up, and the trailing stop % keeps following it, and that goes on long enough that accrued dividends end up paying for the stock. What happens in reality is that the stock goes up some, goes down some, then the order gets cancelled because the company announces dividends or something dumb like that. THEN I get into trouble trying to figure out how to re-enter the order, maintaining the unrealized gain in the history of the trailing stop order. I screwed up and entered the wrong type of order once and sold stock I didn't want to. Lets look at an example. a number of years ago, I bought some JNJ -- a hundred shares at 62.18. - Accumulated dividends are 2127.75 - My spreadsheet tells me the \"\"double price\"\" is 104.54, and double + 10% is 116.16. - So a while ago, JNJ exceeded 118.23, and I entered a Trailing Stop 10% order to sell 50 shares of JNJ. The activation price was 106.41. - since then, the price has gone up and down... it reached a high of 126.07, setting the activation price at 113.45. - Then, JNJ announced a dividend, and my broker cancelled the trailing stop order. I've re-entered a \"\"Stop market\"\" order at 113.45. I've also entered an alert for $126.07 -- if the alert gets triggered, I'll cancel the Market Stop and enter a new trailing stop.\"",
"title": ""
},
{
"docid": "361023b21c7e267e455f2f7d9a7ec418",
"text": "\"During the day, market and limit orders are submitted at any time by market participants and there is a bid and an ask that move around over time. Trades occur whenever a market order is submitted or a limit order is submitted that at a price that matches or exceeds an existing limit order. If you submit a market order, it may consume all best-price limit orders and you can get multiple prices, changing the bid or ask at the same time. All that stuff happens during the trading day only. What happens at the end of the day is different. A bunch of orders that were submitted during the day but marked as \"\"on close\"\" are aggregated with any outstanding limit orders to create a single closing price according to the algorithm established by the exchange. Each exchange may handle the details of this closing event differently. For example, the Nasdaq's closing cross or the NYSE's closing auction. The close is the most liquid time of the day, so investors who are trading large amounts and not interested in intraday swings will often submit a market-on-close or limit-on-close order. This minimizes their chance of affecting the price or crossing a big spread. It's actually most relevant for smaller stocks, which may have too little volume during the day to make big trades, but have plenty at the close. In short, the volume you see is due to these on-close orders. The spike in volume most likely has no special information about what will happen overnight or the next day. It's probably just a normal part of the market for illiquid stocks.\"",
"title": ""
},
{
"docid": "e3ecc559805b43e2987fe28d3406698f",
"text": "Because in the case for 100/101, if you wanted to placed a limit buy order at top of the bid list you would place it at 101 and get filled straight away. If placing a limit buy order at the top of 91 (for 90/98) you would not get filled but just be placed at the top of the list. You might get filled at a lower price if an ask comes in matching your bid, however you might never get filled. In regards to market orders, with the 100/101 being more liquid, if your market order is larger than the orders at 101, then the remainder of your order should still get filled at only a slightly higher price. In regards to market orders with the 90/98, being less liquid, it is likely that only part of your order gets filled, and any remained either doesn't get filled or gets filled at a much higher price.",
"title": ""
},
{
"docid": "b91f27e36696c9822c4fee74730f9f53",
"text": "Probing for hidden limit orders usually involves sending the orders and then cancelling them before they get filled if they don't get filled. With trades actually going through multiple times for small amounts it looks more like a VWAP strategy where the trader is feeding small volumes into the market as part of a larger trade trying to minimize average cost. It could be probing but without seeing the orders and any cancels it would be difficult to tell. edit: I just had another thought; it could possibly be a market maker unwinding a bad position caused by other trading. Sometimes they drip trades into the market to prevent themselves from hitting big orders etc. that might move back against them. This is probably not right but is just another thought. source: I work for an organization that provides monitoring for these things to many large trading organizations.",
"title": ""
},
{
"docid": "5be66c09f25b275e7671d63c53758148",
"text": "What you have to remember is that Options are derivatives of another asset like stocks for example. The price of the Option is derived from the price of the underlying. If the underlying is a stock for example, as the price of the stock moves up and down during the trading day, so will the Market Maker's fair value for the Option. As Options are usually less liquid than the underlying stock, Market Makers are usually more active in 'Providing a Market' with Options. Thus if you place a limit order half way between the current Bid and Ask and the underlying stock price moves towards your limit order, the Market Maker will do their job and 'Provide a Market' at that price, thus executing your order.",
"title": ""
}
] |
fiqa
|
1a604d06b51ac31fb12326f9756c516c
|
Which type of investments to keep inside RRSP?
|
[
{
"docid": "f4bfc1a0536a77bfd6749a19a25c5874",
"text": "Everything else can be held inside or outside your registered account depending on your investment or tax needs",
"title": ""
},
{
"docid": "698ecbc5f376b9422759beed783616bb",
"text": "Milliondollarjourney.com has a couple of articles on this topic. How Investing Taxes Work part 1 and part 2. The following is a summary of that article. Capital gains and dividends are taxed at a preferred rate, while interest tax is taxed at your regular rate. Interest is taxed at your marginal rate, but capital gains are taxed at only 50% of your marginal rate. That means that it makes sense to place the interest bearing account inside the RRSP but keep stocks outside. Additionally, you can claim your losses on your capital appreciating stocks against your gains if they are outside of your RRSP. Hopefully, your stocks will never go down but that's not very realistic. Dividends from Canadian companies are eligible for a dividend tax credit, but not dividends from foreign companies. [I actually understood that dividends from U.S. companies are treated as a special case] It's not clear to me from reading the article how much of this applies to mutual funds. The summary is as follows:",
"title": ""
}
] |
[
{
"docid": "bec55c44ea141f5e27b7fa29ede776dd",
"text": "A questoin that I deal with almost every day. Like most investments it comes down to.....What is the purpose for this money? If it is truly a rainy day savings account that you may need in the short term, then fixed income investments like savings accounts, GIC's, Bonds, Bond funds and Fixed Income ETF's are ideal as they are taxed very inefficiently outside of any registered plan (therefore tax free in here). However if you have a plan in place that has all your short term needs covered elsewhere, I believe this is the place that you should be the most aggressive in your overall portfolio. If that mining stock goes up by 1000% wouldn't it be nice to put all of that gain in your pocket?",
"title": ""
},
{
"docid": "b611ab7be380f386dbf483a0cc9637eb",
"text": "I personally invest in 4 different ETFs. I have $1000 to invest every month. To save on transaction costs, I invest that sum in only one ETF each month, the one that is most underweight at the time. For example, I invest in XIC (30%), VTI (30%), VEA (30%), and VWO (10%). One month, I'll buy XIC, next month VTA, next month, VEA, then XIC again. Eventually I'll buy VWO when it's $1000 underweight. If one ETF tanks, I may buy it twice in a row to reach my target allocation, or if it shoots up, I may skip buying it for a while. My actual asset allocation never ends up looking exactly like the target, but it trends towards it. And I only pay one commission a month. If this is in a tax-sheltered account (main TFSA or RRSP), another option is to invest in no-load index mutual funds that match the ETFs each month (assuming there's no commission to buy them). Once they reach a certain amount, sell and buy the equivalent ETFs. This is not a good approach in a non-registered account because you will have to pay tax on any capital gains when selling the mutual funds.",
"title": ""
},
{
"docid": "1e1c05f9836fca87e718e24af6bfbd37",
"text": "Let's say your marginal tax rate is 33%. For every dollar you put in an RRSP, you'll get 33 cents back on your taxes, while the whole amount grows tax free inside the investment. If you can afford it, money in an RRSP generates a lot of free money.",
"title": ""
},
{
"docid": "c253ebf855b319f28cf3fbec6ba7d326",
"text": "You will not benefit at tax time like you did with your initial contributions, because you have already benefited and are simply repaying your withdrawn contributions. However, capital gains are not taxed inside of your RRSP, until you withdraw the money. Let's say you have $10,000 to repay and have all the money now. It makes sense to repay it immediately. Whatever interest or capital gains you make inside of the RRSP are not taxed. However, your $10,000 contribution this year will not offer you any deductions on your tax return. There are exactly two reasons I can see to not immediately repay the full amount, if able. First, you may need the money for an emergency fund, and there are significant implications for removing money from your RRSP in such a case. Second, if you believe you will be in a higher tax bracket when you retire, it may not make sense to put any money into an RRSP right now. Almost certainly, you want to repay the entire lump sum if able.",
"title": ""
},
{
"docid": "46ef1c349a7e585f5f3bd1e59c73d059",
"text": "Here's how I think about money. There are only 3 categories / contexts (buckets) that my earned money falls into. Savings is my emergency fund. I keep 6 months of total expenses (expenses are anything in the consumption bucket). You can be as detailed as you want with this area but I tend to leave a fudge factor. In other words, if I estimate that I spend approximately $3,000 a month in consumption dollars then I'll save $3,500 times 6 in the bank. This money needs to be liquid. Some people use a HELOC, other people use their ROTH contributions. In any case, you need to put this money some place you can get access to it in case you go from accumulation (income exceed expenses) to decumulation mode (expenses exceed income). This money is distinct from consumption which I will cover in paragraph three. Investments are stocks, bonds, income producing real estate, small businesses, etc. These dollars require a strategy. The strategy can include some form of asset allocation but more importantly a timeline. These are the dollars that are working for you. Each dollar placed here will multiply over time. Once you put a dollar here it shouldn't be taken out unless there is some sort of catastrophe that your savings can't handle or your timeline has been achieved. Notice that rental real estate is included so liquidating stocks to purchase rental real estate is NOT considered removing investment dollars. Just reallocating based on your asset allocation. This bucket includes 401k's, IRAs, all tax-sheltered accounts, non-sheltered brokerage accounts, and rental real estate. In general your primary residence is not included in this bucket. Some people include the equity of their primary residence in the investment column but it can complicate the equation and I prefer to leave it out. The consumption bucket is the most important bucket and the one you spend the most time with. It requires a budget. This includes your $5 magazine and your $200 bottle of wine. Anything in this bucket is gone. You can recover a portion of it by selling it on ebay for $3 (these are earned dollars) but the original $5 is still considered spent. The reason your thought process in this area is distinct from the other two, the decisions made in this area will have the biggest impact on your personal finances. Warren Buffett was famous for skimping on haircuts because they are worth thousands of dollars down the road if they are invested instead. Remember this is a zero-sum game so every $1 not consumed is placed in one of the other buckets. Once your savings bucket is full every dollar not consumed is sent to investments. Remember to include everything that does not fit in the other two buckets. Most people forget their car insurance, life insurance, tax bill at the end of the year, accountant bill, etc. In conclusion, there are three buckets. Savings, which serve as your emergency bucket. This money should not be touched unless you switch from accumulation to decumulation. Investments, which are your dollars that are working for you over time. They require a strategy and a timeline. Consumption, which are your monthly expenses. These dollars keep you alive and contribute to your enjoyment. This is a short explanation of my use of money. It can get as complicated and detailed as you want it to be but as long as you tag your dollars correctly you'll be okay IMHO. HTH.",
"title": ""
},
{
"docid": "97910c0d3329b9a60f4607ab27d7c2a4",
"text": "You don't seem to have any particular question to be answered. Your understanding of RRSPs seems to be very good. Have you considered whether you might be better off putting your retirement savings into a TFSA instead? Both types can protect your growth from taxation (provided you reinvest the refund from the RRSP). The main way in which the RRSP is better than TFSA is that you can pay the tax on the contribution at a time when your income is lower, and thus have a lower marginal tax rate. Most people retire with a lower income than during their earning years, but it's a matter of tax brackets. If you think you'll be in the same bracket (same marginal tax rate) when you retire, then the TFSA and RRSP work out even in that regard. So in your case, the question you want to ask yourself is: when I retire, will I have an income (including CPP, OAS, pension payments, etc) that exceeds $45,282 worth of today's dollars? If so, your RRSP holds no advantage over the TFSA. In fact, the RRSP may even be worse, since the withdrawals count as income and reduce the amount of OAS and perhaps GIS payments that the government gives you - at least under current regulations. If you're unsure, I suggest you try this calculator from taxtips.ca that runs both scenarios and helps you see which one is more beneficial. It even factors in the OAS/GIS clawbacks.",
"title": ""
},
{
"docid": "ca08e689fcc2c9d406480c808f9c09c8",
"text": "This is a somewhat complicated question because it really depends on your personal situation. For example, the following parameters might impact your optimal asset allocation: If you need the money before 3 years, I would suggest keeping almost all of it in cash, CDs, Treasuries, and ultra safe short-term corporate bonds. If however, you have a longer time horizon (and since you're in your 30s you would ideally have decades) you should diversify by investing in many different asset classes. This includes Australian equity, international equity, foreign and domestic debt, commodities, and real estate. Since you have such a long time horizon market timing is not that important.",
"title": ""
},
{
"docid": "16741273c6cb8b6491a181cee2385490",
"text": "\"shouldn't withdraw stock investments for at least 5 years would be better re-phrased as: \"\"don't invest money in stocks if you (really) need it within next few years\"\". The underlying principle is: stocks are one of the higher-risk investment classes out there. While that's exactly what you want over a long time horizon (longer than the ebb and flow of the broader economy); if you know you'll definitely have to withdraw $50k (or any large chunk) of it within just a few years, it's possible that a great long-term vehicle like stocks, could actually rob you of money on a shorter time horizon. So if you want to start a business 2 years from now, you'll probably want to retain some of that $300k initial pile in lower-risk investment vehicles (e.g. bonds, CDs, certain ETFs and mutual funds aimed at \"\"capital preservation\"\", etc). That said, interest rates are so low, that if you're flexible with how much money you'll need to start that business, I'd probably keep as much as you can stomach in diversified stocks (per your original plan).\"",
"title": ""
},
{
"docid": "8cc580ba6436559c6830165d5702216b",
"text": "I was thinking to do mix of ELSS and Tax Saving FDs. But is my choice correct? Also what other options I am left with? This depends on individual's choice and risk appetite. Generally at younger age, investment in ELSS / PPF is advisable. Other options are Life Insurance, Retirement Plans by Mutual Funds, NSC, etc",
"title": ""
},
{
"docid": "f5fb93b7a5cd0209d2b227983b37eb21",
"text": "Most people carry a diversity of stock, bond, and commodities in their portfolio. The ratio and types of these investments should be based on your goals and risk tolerance. I personally choose to manage mine through mutual funds which combine the three, but ETFs are also becoming popular. As for where you keep your portfolio, it depends on what you're investing for. If you're investing for retirement you are definitely best to keep as much of your investment as possible in 401k or IRAs (preferably Roth IRAs). Many advisers suggest contributing as much to your 401k as your company matches, then the rest to IRA, and if you over contribute for the IRA back to the 401k. You may choose to skip the 401k if you are not comfortable with the choices your company offers in it (such as only investing in company stock). If you are investing for a point closer than retirement and you still want the risk (and reward potential) of stock I would suggest investing in low tax mutual funds, or eating the tax and investing in regular mutual funds. If you are going to take money out before retirement the penalties of a 401k or IRA make it not worth doing. Technically a savings account isn't investing, but rather a place to store money.",
"title": ""
},
{
"docid": "cc5ab13ec048f5bc308e798782c73ef4",
"text": "\"Your question is based on incorrect assumptions. Generally, there's no \"\"penalty\"\", per se, to make a withdrawal from your RRSP, even if you make a withdrawal earlier than retirement, however you define it. A precise meaning for \"\"retirement\"\" with respect to RRSPs is largely irrelevant.* Our U.S. neighbours have a 10% penalty on non-hardship early withdrawals (before age 59 ½) from retirement accounts like the 401k and IRA. It's an additional measure designed to discourage early withdrawals, and raise more tax. Yet, in Canada, there is no similar penalty. Individual investments inside your RRSP may have associated penalties, such as the dreaded \"\"deferred sales charge\"\" (DSC) of some back-end loaded mutual funds, or such as LSVCC funds that generated additional special tax credits that could get clawed back. Yet, these early withdrawal penalties are distinct from the RRSP nature of your account. Choose your investments carefully to avoid these kinds of surprises. Rather, an RRSP is a tax-deferred account, and it works like this: The government allows you to claim a nice juicy tax deduction, which can reduce your income tax at your marginal rate in the year you make a contribution, or later if you should choose to defer the deduction. The resulting pre-tax money accumulated in your RRSP benefits from further tax deferral: assets can grow without attracting annual income tax on earned interest, dividends, or capital gains. You don't need to declare on your income tax return any of the income earned inside your RRSP, unlike a regular investment account. Here's the rub: Once you decide to withdraw money from your RRSP, the entire amount withdrawn is considered regular income in the year in which you make the withdrawal. Thus, your withdrawals are subject to income tax, and yes, at your marginal rate. This is always the case, whether before or after retirement. You mentioned two special programs: The Home Buyers' Plan (HBP), and the Lifelong Learning Plan (LLP). Neither the HBP nor the LLP permit tax-free withdrawals. Rather, each of these programs are special kinds of loans that you can borrow from your own RRSP. HBP and LLP loan money isn't taxed when you get it because you are required to pay it back, and you pay it back into your own RRSP: You always pay income tax at your marginal rate on your RRSP withdrawals.** * Above, I said a precise meaning for \"\"retirement\"\" with respect to RRSPs is largely irrelevant. Yet, there are ages that matter: By the end of the year in which you turn 71, you are required to convert your RRSP to a RRIF. It's similar, but you can no longer contribute, and you must withdraw a minimum amount each year. Other circumstances related to age may qualify for minor tax relief intended for retirees, such as the Age Amount or the Pension Income Credit. Generally, such measures don't significantly change the fact that you pay income tax on RRSP withdrawals at your marginal rate – these measures raise the minimum you can take out without attracting tax, but most do nothing at the margin.** ** Exception: One might split eligible pension income with a spouse or common-law partner, which may reduce tax at the margin.\"",
"title": ""
},
{
"docid": "dd95be1f34ff8792c8faad39fb544908",
"text": "I would focus first on maxing out your RRSPs (or 401k) each year, and once you've done that, try to put another 10% of your income away into unregistered long term growth savings. Let's say you're 30 and you've been doing that since you graduated 7 years ago, and maybe you averaged 8% p.a. return and an average of $50k per year salary (as a round number). I would say you should have 60k to 120k in straight up investments around age 30. If that's the case, you're probably well on your way to a very comfortable retirement.",
"title": ""
},
{
"docid": "2b0f50c6befa43aa0f99833600320dd9",
"text": "\"First, you don't state where you are and this is a rather global site. There are people from Canada, US, and many other countries here so \"\"mutual funds\"\" that mean one thing to you may be a bit different for someone in a foreign country for one point. Thanks for stating that point in a tag. Second, mutual funds are merely a type of investment vehicle, there is something to be said for what is in the fund which could be an investment company, trust or a few other possibilities. Within North America there are money market mutual funds, bond mutual funds, stock mutual funds, mutual funds of other mutual funds and funds that are a combination of any and all of the former choices. Thus, something like a money market mutual fund would be low risk but quite likely low return as well. Short-term bond funds would bring up the risk a tick though this depends on how you handle the volatility of the fund's NAV changing. There is also something to be said for open-end, ETF and closed-end funds that are a few types to consider as well. Third, taxes are something not even mentioned here which could impact which kinds of funds make sense as some funds may invest in instruments with favorable tax-treatment. Aside from funds, I'd look at CDs and Treasuries would be my suggestion. With a rather short time frame, stocks could be quite dangerous to my mind. I'd only suggest stocks if you are investing for at least 5 years. In 2 years there is a lot that can happen with stocks where if you look at history there was a record of stocks going down about 1 in every 4 years on average. Something to consider is what kind of downside would you accept here? Are you OK if what you save gets cut in half? This is what can happen with some growth funds in the short-term which is what a 2 year time horizon looks like. If you do with a stock mutual fund, it would be a gamble to my mind. Don't forget that if the fund goes down 10% and then comes up 10%, you're still down 1% since the down will take more.\"",
"title": ""
},
{
"docid": "af4dbc0ed1f473214c1b014c4152a01e",
"text": "Question One: Question Two: Your best reference for this would be a brokerage account with data privileges in the markets you wish to trade. Failing that, I would reference the Chicago Mercantile Exchange Group (CME Group) website. Question Three: Considering future tuition costs and being Canadian, you are eligible to open a Registered Education Savings Plan (RESP). While contributions to this plan are not tax deductible, any taxes on income earned through investments within the fund are deferred until the beneficiary withdraws the funds. Since the beneficiary will likely be in a lower tax bracket at such a time, the sum will likely be taxed at a lower rate, assuming that the beneficiary enrolls in a qualifying post secondary institution. The Canadian government also offers the Canada Education Savings Grant (CESG) in which the federal government will match 20% of the first $2500 of your annual RESP contribution up to a maximum of $500.",
"title": ""
},
{
"docid": "9bfb14f75b20b2131bdcdd92b68e6dc4",
"text": "I would say yes, it makes sense to keep some money in taxable accounts. Retirement accounts are for retirement, and the various early withdrawal penalties are designed to enforce that. If you're anticipating using the money before retirement (e.g., for home purchase), it makes sense to keep it out of retirement accounts. On the other hand, be aware that, regardless of what kind of account it is in, you face the usual risk/return tradeoff. If you put your money in the S&P 500 and the S&P 500 tanks just before you were going to buy a house, your down payment evaporates and you will have to wait and buy a house later. You can manage this by shifting the allocation of this money and perhaps cashing it out if a certain amount is gained (i.e., it grows to the level of your target down payment) and you are close enough to the house purchase time that you don't want to risk it anymore. Basically, if you invest money for a pre-retirement use, you may want to keep it in a taxable account, but you also need to take account of when you'll need it and manage the risk accordingly.",
"title": ""
}
] |
fiqa
|
d908709a720662215839e5835327dcd5
|
How do I track 401k rollovers in Quicken?
|
[
{
"docid": "5b84351cd997a480899815bba8c83fd9",
"text": "When I did this I sold the stock out of my 401k account. Then transferred the cash to my rollover IRA account. No tax event was created for me. Make sure your rollover IRA account is listed as tax deferred. If this still doesn't work for you then it could be a bug in Quicken and your best bet is the Quicken forums. Good luck.",
"title": ""
},
{
"docid": "8aecb89aa542ff8f7d271b5459c3effc",
"text": "You definitely should NOT do what you are doing now (#2) since this is not a reflection of what actually is going on. (Unless you actually did transfer the equities themselves and not the cash.) Your first option is correct solution. As noted by mpenrow you need to make sure that the target account is also tax deferred. If that still doesn't work and there is a bug you should still do it this way anyway. If it messes up your tax planner just make sure to include a comment so that everyone knows what is really going on. When I have had issues like this in the past I always try to stick to whatever is the closest indication of what actually occurred.",
"title": ""
}
] |
[
{
"docid": "e3187c81565c030bb4ce834c1add5895",
"text": "\"Before anything, I see that no one mentioned the one thing about 401(k) accounts that's just shy of magic - The matching deposit. In 2015, 42% of companies offered a dollar for dollar match on deposits. Can't beat that. (Note - to respond to Xalorous' comment, the $18K OP deposits can be nearly any percent of his income. The typical match is 'up to' 6% of gross income. If that's the case, the 401(k) deposits are doubled. But say he makes $100K. The $18K deposit will see a $6K match. This adds a layer of complexity to the answer that I preferred to avoid, as I show with no match at all, and no change in tax brackets, the deferral alone shows value to the investor.) On to the main answer - Let's pull out a spreadsheet - We start with $10,000, and assume the 25% bracket. This gives a choice of $10,000 in the 401(k) or $7500 in the taxable account. Next, let 20 years pass, with 10% return each year. The 401(k) sees the full 10% and after 20 years, $67K. The taxable account owner waits to get the 15% cap gain rate and adjusts portfolio, thus seeing an 8.5% return each year and carrying no ongoing gains. After 20 years of 8.5% returns, he has $38K net. The 401(k) owner on withdrawal pays the 25% tax and has $50K, still more than 25% more money that the taxable account. Because transactions within the account were all tax deferred. EDIT - With respect to davmp's comment, I'll offer the other extreme - In his comment, he (rightly) objected that I chose to trade every year, although I did assign the long term 15% cap gain rate, he felt the annual trade was my attempt to game the analysis. Above, I offer his extreme case, a 10% return each year, no trade, no dividend. Just a cap gain at the end. The 401(k) still wins. I also left the tax (on the 401(k)) at withdrawal at 25%, when in fact, much, if not all will be taxed at 15% or lower, which would put the net at $57K or 30% above the taxable account final withdrawal. The next issue I'd bring up is that the 401(k) is taken out at the top (marginal) tax rate, e.g. a single filer with taxable income over $37,650 (in 2016) would save 25% on that 401(k) deduction. Of course if the deduction pulls you under that line, I'd go Roth or taxable. But, withdrawals start at zero. Today, a single retiree has a standard deduction ($4050) and exemption ($6300) for a total $10,350 \"\"zero bracket\"\" with the next $9275 taxed at 10%. This points to needing $500K in pre tax accounts before withdrawals each year would get you past the 10% bracket. (This comes from the suggestion of using 4% as an annual withdrawal rate). Last - the tax discussion has 2 major points in time, deposit and withdrawal, of course. But, the answers here all ignore all the time in between. In between, you see that for any number of reasons, you'll drop from the 25% bracket to 15% that year. That's the time to convert a bit of money to Roth and 'top off' the 15% bracket. It can happen due to job loss, marriage with new spouse either not working or having lower income, new baby, house purchase, etc. Or in-between, a disability put you out of work. That permits you to take money out with no penalty, and little chance of paying even the 25% that you paid going in. This, from personal experience with a family member, funded a 401(k) with 28% money. Then divorced and disabled, able to take the $10K/yr to supplement worker's comp (non taxed) income.\"",
"title": ""
},
{
"docid": "2b73da30654362e0cc93d27591559691",
"text": "Post-86 After tax contributions to a 401k are after tax. The earnings on that money is taxable, but not the contributions. This means: You'll have $15,000 in the 401k and $10,000 is considered after-tax and $5,000 is considered pre-tax. The after-tax portion can be converted to a Roth IRA without paying taxes or penalties. New in September 2014 The IRS has made substantial changes that now enable this to happen. You can request a distribution from your 401k provider where they divide the money into pre-tax and after-tax funds. In my example, you'd get a check for $10,000 that you could send to a Roth IRA and a check for $5,000 you could add to a traditional Roll-over IRA. Neither of those would be taxable events and you'd end with a Roth IRA with $10K and a Traditional, Rollover IRA with $5K in it. Notes:",
"title": ""
},
{
"docid": "c1b97df8f72eb9db4c987059358d87ac",
"text": "\"Because you've sold something you've received cash (or at least an entry on your brokerage statement to say you've got cash) so you should record that as a credit in your brokerage account in GnuCash. The other side of the entry should go into another account that you create called something like \"\"Open Positions\"\" and is usually marked as a Liability account type (if you need to mark it as such). If you want to keep an accurate daily tally of your net worth you can add a new entry to your Open Positions account and offset that against Income which will be either negative or positive depending on how the position has moved for/against you. You can also do this at a lower frequency or not at all and just put an entry in when your position closes out because you bought it back or it expired or it was exercised. My preferred method is to have a single entry in the Open Positions account with an arbitrary date near when I expect it to be closed and each time I edit that value (daily or weekly) so I only have the initial entry and the current adjust to look at which reduces the number of entries and confusion if there are too many.\"",
"title": ""
},
{
"docid": "c309295ef3466cb375fe3949759e0e2a",
"text": "Former pension/retirement/401(k) administrator here. 1. If you don't want to bother with maintaining your own investments, you can 'roll-over' your existing 401(k) into *your new company's 401(k) plan*. Then you will choose your investments in the new plan, you will be 100% vested in 'rollover account'. 2. If you want control over your own investments (recommended!) you can roll over your existing 401(k) into an IRA (Individual Retirement Account). Then *your entire account* will go into your new IRA. 3. You can take part, or all, of your existing account as cash, paid directly to you. Note that this will trigger *20% mandatory Federal Withholding* on whatever goes straight to you. So some of your money is going to the IRS.",
"title": ""
},
{
"docid": "c8dee8604abe737c83388711bbc7a2cc",
"text": "Don’t do anything that causes taxes or penalties, beyond that it’s entirely personal choice and other posters have already done a great job enumerating then. I recently switched jobs in June and rolled over a 401k from my old company to new company and the third party managing the account at the new company was much more professional and walked me through all the required steps and paperwork.",
"title": ""
},
{
"docid": "9c7310340478610eea3f1d4b154baaf6",
"text": "\"As far as I can tell there are no \"\"out-of-the-box\"\" solutions for this. Nor will Moneydance or GnuCash give you the full solution you are looking for. I imaging people don't write a well-known, open-source, tool that will do this for fear of the negative uses it could have, and the resulting liability. You can roll-you-own using the following obscure tools that approximate a solution: First download the bank's CSV information: http://baruch.ev-en.org/proj/gnucash.html That guy did it with a perl script that you can modify. Then convert the result to OFX for use elsewhere: http://allmybrain.com/2009/02/04/converting-financial-csv-data-to-ofx-or-qif-import-files/\"",
"title": ""
},
{
"docid": "566f05e9449bb06f1efcf50438c9f274",
"text": "You should never roll a 401(k) to a Roth IRA. If the intention is to do so, you are better off rolling to a traditional IRA, and then converting. (Per the comment below, I should add - if the 401(k) contained post tax money, this portion rolls to a Roth, not a Tradition IRA. You then have the exercise of converting/recharacterizing just the TIRA money, as the Roth stands aside) This preserves the ability to recharacterize back to a traditional IRA. You might wish to do this if: The answers so far are great, but I'll add what I see missing -",
"title": ""
},
{
"docid": "d61106255d47fa74cf132bd113018d29",
"text": "I would check to see what the fee schedule is on your previous employer's 401k. Depending on how it was setup, the quarterly/annual maintenance fee may be lower/higher than your current employer. Another reason to rollover/not-rollover is that selection of funds available is better than the other plan. And of course always consider rolling over your old plan into a standard custodial rollover IRA where the management company gives you a selection of investment options. At least look at the fees and expense ratios of your prior employer's plan and see if anything reaches a threshold of what you consider actionable and worth your time. Note: removed reference to self directed IRA as vehicle is more complicated account type allowing for more than just stocks, bonds, and mutual funds. Not for your typical retail investor.",
"title": ""
},
{
"docid": "fc0d806c6200317d44f2331e13dd7676",
"text": "You'll want to roll the 401k over to a specifically designated rollover IRA. Rollover IRAs differ from an ordinary IRA account because they have NO contribution limit per year. Also Rolling over a 401k to a Roth IRA has consequences. There won't be a penalty but you will have to pay taxes on the amount being rolled over. The choice of Roth or Traditional IRA depends on your current tax situation as well as your expected taxes at retirement. Typically if you are in a low tax bracket and expect to be in a higher tax bracket at retirement a Roth IRA is suggested as withdrawals are tax free. With a rollover conversion you will have to evaluate whether paying taxes now outweighs the potential benefits of tax free withdrawals when you retire.",
"title": ""
},
{
"docid": "6a1058ac40757fc030bfb80a83559e10",
"text": "rollover funds only mean the funds one was foolish enough to first roll into this 401(k). With no matching, and need for cash, I'd stop depositing to that account. But, from details you gave, you can't withdraw that money.",
"title": ""
},
{
"docid": "f1e2b2fb775eb50ea82359cd6eda94ad",
"text": "Perhaps you should use your own tracking software, such as GnuCash, Quicken, Mint, or even Excel. The latter would work given you say you're manually putting in your transactions. There's lots of pre-done spreadsheets for tracking investments if you look around. I'm hoping that a web search gets you help on migrating transaction data, but I've yet to run into any tools to do the export and import beyond a manual effort. Then again, I haven't checked for this lately. Not sure about your other questions, but I'd recommend you edit the question to only contain what you're asking about in the subject.",
"title": ""
},
{
"docid": "0e1d597ab1d99ac6d618b795375ca10f",
"text": "As to the rollover question. Only rollover to a ROTH if you have other funds you can use to pay the taxes you will be hit with if you do that. DO NOT pay the taxes out of the funds in the 401k. If you don't have a way to pay the taxes, then roll it to a traditional IRA. You never want to pay the government any taxes 'early' and you don't want to reduce the balance. beyond that, A lot depends on how long you figure you will be with that company. If it's only a few years, or if you and other employees can make enough of a fuss that they move the fund to someplace decent (any of the big no-load companies such as Vanguard would be a better custodian), then I'd go ahead and max it out. If you figure to be there for a long while, and it looks like someone is in bed with the custodian and there's no way it will be changed, then maybe look to max out a Roth IRA instead.",
"title": ""
},
{
"docid": "2094d7156fc883a75b08ffc70efb33db",
"text": "It's really boring and you should automate it. Most front office guys worth their salt have built something that will normally calculate what they should have in their portfolios. Basically we own X units of stock K, stock K pays dividend D on date M, you check on date M that we have received X*D for all K's. When trades are made you also need to verify that the dollar amounts are correct, for equity its usually automatic but for fixed income and OTC products you can build a tool to check it.",
"title": ""
},
{
"docid": "180e87b8bc2cab1c42dd460fd98a8b67",
"text": "\"I'm not sure what you mean by \"\"receive retirement benefits\"\". If the company had a 401k, that probably is the retirement plan. Few companies have both a 401k and an old-style pension plan, you typically have one or the other. So if your 401k was rolled over into some other account, you have already received your retirement benefits. If you mean that the 401k was rolled over into an IRA and you are asking if you can now start withdrawing from the IRA, see Excel Strategies answer. Short answer: Yes you can, but there's a 10% penalty unless you meet one of the exceptions.\"",
"title": ""
},
{
"docid": "80a7baf28f607ad43f866848dbc4e9dd",
"text": "Similar to the lawn care you mentioned: if you have space, you could have the kids create a mini-farmstand. They could grow flowers for cutting, some vegetables, etc. It would be a different twist on the classic lemonade stand. If the kids are into animals and space and zoning allows, you could keep chickens and add eggs to your mini-farmstand. Upfront costs for the garden would be small enough that they can learn about how investing in a business works at a very small scale. Along with learning about money, they also learn responsibility because it requires commitment and daily attention. It's also seasonal in a way that meshes well with school (though having animals is a constant year-round responsibility).",
"title": ""
}
] |
fiqa
|
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