What are General Market ETFs?
General market ETFs seek to capture the movements of the market as a whole by tracking major market indices. General Market ETFs track the performance of major market indices such as the S&P 500 (SPY), the Dow Jones Industrial Average (DJIA), and NASDAQ-100 (QQQQ). Most funds that track indexes do so by purchasing shares of all the publicly traded companies within an index, usually proportionally weighted by the market cap of the company (but there are other popular weighting methods). Continue reading...
Can I Start Collecting My Social Security Benefits If I’m Still Working?
Yes, you can start receiving social security benefits before you actually stop working, and your benefit amount will not be affected if you have attained normal retirement age, or NRA, which is determined based on the year of your birth. NRA is 67 for most people today. If you start to take benefits while working and before the normal retirement age, your benefit will be reduced. But there are a few caveats to consider if you start to receive the benefits before your normal retirement age. Continue reading...
What is the security market line?
The Security Market Line (SML) is a visualization of the Capital Asset Pricing Model (CAPM) and shows the theoretical relationship between risk and return between securities and the entire market. The SML is plotted on a graph bound by an x-axis, which represents Beta (volatility above or below the market average), and a y-axis, which represents the rate of return. Beta is a volatility indicator that measures how many changes in price, and by how much, a security experiences over an amount of time. It describes whether the risk associated with a particular security is above or below the average of the market (or a more specific index), where 1 is a correlation with the market, and numbers above or below describe increased or decreased volatility, respectively. Continue reading...
What does correlation mean?
Financial traders use correlation to describe the movement of securities – how and when they move – relative to each other during a given time period. These relationships lend themselves well to pairs trading, where traders have developed an understanding of correlations and their behavior that allow them to confidently exploit slight changes to minimize risk and maximize profitable transactions. Continue reading...
What is Liability?
As a general statement, a liability refers to some form of currency (money or service) that is owed from one party to another, typically in the form of debt or a balance outstanding. On a balance sheet, a company’s liabilities would include its loans, accounts payable, outstanding debt. Short-term liabilities are generally those owed within a year, whereas long-term liabilities might stretch beyond that. Continue reading...
What is foreign debt?
Foreign Debt is also called International Debt or External debt. It is the amount of debt that is owed by one country to other countries or entities outside of the borrowing country’s borders. A country may find it easy to raise capital for operations and projects by issuing lots of bonds and taking on lots of debt obligations. If this proves to be unsustainable, or if the sheer amount of debt has investors worried, it can have significant detrimental effects and send an economy spiraling out of control. Continue reading...
What is a leading indicator?
Leading indicators are economic or price data which have some degree of correlation with a movement in the market or a stock price. Leading indicators tend to happen before the market or price movement occurs. Traders and economists use leading indicators frequently to prepare for what’s next; they are based on theory as well as empirical historical evidence but like all indicators, they do not have a 100% accuracy rate – past performance does not guarantee future results. Continue reading...
What is IRS Notice 433 – Interest and Penalty Information?
IRS Link to Notice — Found Here Notice 433 describes penalties and the applicable interest rates for various years of non-payment when corporate taxes are not paid in a timely manner. This does not apply to individuals unless they are incorporated, and is not to be confused with Forms 433-A, -B, -D, or -F which are for individual purposes and concern applications for a Compromise Notice 746 updates the interest rates for more recent years. Continue reading...
What is IRS Publication 521 on Moving Expenses?
IRS Link to Publication — Found Here Publication 521 details the methods and requirements for tax deductions related to moving expenses, where the move is necessary to start a new job or maintain a job that requires relocation. The IRS requires that the situation passes tests regarding the distance of the residence to the new job and the time spent at the new job. If an individual moves in order to take a new employment opportunity, he or she may re Moving expenses include travel expenses as well as storage, transportation, and labor costs connected with moving furniture and whatnot. Continue reading...
What is the Dead Cat Bounce (Bearish) Pattern?
The Dead Cat Bounce pattern appears when a pair’s price falls quickly but has a temporary “v-shaped” recovery before resuming its downward trend. The temporary bounce (from point 2 to point 3) may be explained by shorters covering their positions, or buying by investors who think the price has already reached a low point. It is important to wait for the confirmation move, which is when the price breaks below the low where the dead cat bounce occurred (point 2). Continue reading...