What is “contango?”

What is “contango?”

Contango is when the price of a futures contract is higher than the current spot price of a commodity, and the expected future spot price. Some contango falls within the normal range, but too much is generally unfavorable. Contango means that the price of a futures contract has become inflated beyond the expected price range of a commodity. Backwardation is the word for the opposite of contango, in which futures contracts are being sold for less than the current spot price and below the probable future spot price. Some backwardation and contango is part of life and considered normal, but contango markets can have a particularly negative impact on some ETFs. Continue reading...

What is Medicare Part D?

What is Medicare Part D?

Part D is prescription drug coverage to supplement the coverage of Medicare Part A and Part B. It can be a standalone policy, or it can be included in a package with Part C. Medicare Part D is purchased through private insurers. While the premiums vary, they tend to range from $15- $150 a month. There was a maximum deductible of $360 for these plans in 2016, after which the insurer would trigger 75/25 coinsurance or something in that range. Continue reading...

How Does a Health Savings Account Work?

How Does a Health Savings Account Work?

A Health Savings Account (HSA) allows the owner to save (and invest) money in an account, which can be used to pay for health expenses on a tax advantaged basis. Generally speaking, your contributions to a HSA are tax deductible, the earnings grow on a tax deferred basis, and you can withdraw the money tax free if used for a qualified health expense. As 2016, you are allowed to contribute $3,350 (for individuals) and $6,750 (for families) to the account, plus an additional $1,000 if you’re over 55. Continue reading...

What is Mortgage Modification?

Mortgage modifications are arrangements agreed to by the lender that are outside of the contractual mortgage agreement, in instances where the borrower experiences unique circumstances or hardship. An example of a mortgage modification is a loan forbearance, which is when a lender agrees to let the borrower temporarily stop payments for an agreed-upon span of time, before resuming payments with an added repayment stipulation for the time spent not paying. Continue reading...

What is the Symmetrical Triangle Bottom (Bearish) Pattern?

What is the Symmetrical Triangle Bottom (Bearish) Pattern?

The Symmetrical Triangle Bottom pattern forms when the price of a security fails to retest a high or a low and ultimately forms two narrowing trend lines. Points 1­ 5 form the triangle patterns. The price is expected to move up or down past the triangle depending on which line is broken first. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). Continue reading...

What is the Ethereum Virtual Machine?

What is the Ethereum Virtual Machine?

Ethereum has a Turing-complete platform built into it that allows the blockchain to function like a large distributed computer. The Ethereum Virtual Machine is a part of every Ethereum client software on the blockchain, and it allows the interconnected computers to function as one processor. Distributed computation such as this is not really a new thing, but the fact that it allows all developers in Ethereum to decentralized their projects makes this one of the most revolutionary aspects of the Ethereum platform. Continue reading...

What is Discounted Cash Flow?

Discounted Cash Flow (DCF) uses an estimated future cash flow amount and a Discount Rate to determine the Present Value (PV). An investor or business executive might project an estimated future cash flow for a business based on recent growth rates, industry information, futurism, estimated inflation, etc. The most common future cash flow to use is free cash flow, which takes out capital expenditures. Continue reading...

What are Net Tangible Assets?

Net Tangible Assets represent a company’s total amount of physical assets less its intangible assets, like intellectual property and equipment, and also less the fair market value of its liabilities. Tangible assets can include things such as cash, inventory, and accounts receivable, versus liabilities like accounts payable, long-term debt and loans. This measurement of a company's tangible assets is important because it allows a firm's management team to analyze its asset position without including obsolete or difficult to value intangible assets. A company's return on assets (ROA) can be more accurate when net tangible assets are used in the calculation. Continue reading...

What is a Bond?

A bond is a contract which “binds” the lender to the debtor, where an individual investor is generally the lender and the debtor is the company or government which has borrowed funds. When a company or government entity needs more capital, whether to fund operations or a specific project, it can borrow money from investors instead of from a banking institution. Where there is a risk of the investor not being repaid, the interest rate will be proportionally higher. The simplest way a bond works is with set payments at set intervals that gradually repay the debt and interest owed to the investor over a set amount of time. Continue reading...

What is the Wilshire 5000 Index?

What is the Wilshire 5000 Index?

The Wilshire 5000 is about as broad as an index gets. There are over 9,000 companies traded on all of the U.S. equity markets, and the Wilshire 5000 tries to capture a broad sense for how they are performing. Though the index says 5000, there are actually just under 7,000 listed stocks in the index. It is a cap-weighted index meaning bigger stocks have more influence, and vice versa. It can be considered the broadest index of all U.S. equity markets. Continue reading...