Managing a fund based on P/E Ratio generally tends to put valuation ahead of other criteria when selecting stocks. The main categories which can be derived from P/E Ratios are Growth and Value funds. Fund managers may intentionally invest in companies with a higher P/E than the market benchmark, because these tend to be considered Growth stocks. These companies are experiencing growth and are projected to continue to do so, which is seen in the high price of the stocks.
A margin call is a mandatory request by the custodian/broker for the account holder to add equity to the account, either by depositing cash or selling securities to raise cash. When an investor takes an account on margin, the custodian will require that they keep a certain amount of equity/cash in the account to maintenance the borrowed amount. If the account value drops past a certain level, the custodian may require the investor to add equity to the account to cover the margin balance.
Mortgage REITs are a type of Real Estate Investment Trust (REIT) which offers investors income distributions which result from the interest payment on mortgage loans. Investors enjoy REIT investments as a high-yield income investment which offers exposure to an asset class which is not necessarily correlated with other major asset classes. Mortgage REITs are a subset of this asset type which derives income from the interest due on mortgage loans, which are generally purchased in the form of mortgage-backed securities. Equity REITs are the other major type of REIT, and they invest directly in income-producing properties.
The federal funds rate is the overnight rate at which commercial lenders lend excess reserves to other institutions, on an un-collateralized basis. This term is unique to the United States, though other central banks around the world also have an overnight rate. The federal funds rate is a closely watched and crucial rate for determining how easy capital is to access. The lower the fed funds rate, the more accessible the Federal Reserve is trying to make cash - to inspire banks to borrow and lend. The opposite is also true, where the Fed may raise the fed funds rate if an economy is overheating or lending needs to be curbed.
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The Federal Government has established several ways to generate the revenue needed to pay for the operations of government agencies and capital improvements benefiting society. The primary source of these funds is through income taxes, which are assessed based on the earnings of an individual. Federal income taxes are paid by individuals in proportion to their earnings, after reducing the considered earnings by the allowable tax deductions.
Lifestyle inflation is a term used in personal financial planning for the tendency of people to increase their spending and standard of living right along with any raises and monetary resources, even if it’s is at the detriment of any plans for debt reduction or long-term savings. Monetary inflation describes the phenomenon when more money has no more utility value than a lesser amount used to because the cost of goods is going up. Lifestyle inflation is when people select higher-priced goods and lifestyle spending habits when they have the money available to do so.
The bullish head and shoulders is the opposite image of a bearish head and shoulders. It has all the same parts—two shoulders, a neckline, and the head. Only instead of the shoulders and head being formed at high points for the stock, they are formed at low points. The investor psychology is the opposite of the bearish pattern. The stock is falling and hits a temporary low to form the left shoulder before a bounce occurs and forms the left side of the neck. The upward momentum is temporary and the next down leg takes the stock lower than the left shoulder and forms the head.
The Broadening Bottom pattern forms when a security price makes higher highs (2, 4) and lower lows (1, 3, 5) following two widening trend lines. The price is expected to move up or down past the pattern depending on which line is broken first. What distinguishes a Broadening Bottom from a Broadening Top is that the price of the security is declining prior to entering the pattern formation. This type of formation happens when volatility is high or increasing, and when a security's price is moving with high volatility but or no direction. It potentially indicates growing investor nervousness and a little indecisiveness.
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