Why do ICOs Matter to Ethereum and Bitcoin?
ICOs can help the market and developers test the waters for new concepts using blockchain technology. When a new idea succeeds or fails after using an ICO, it could be said that the company had made use of every advantage at its disposal and that it had the best chance at success in that environment as it could have had anywhere else. It could have done so more cheaply, and with less interference, than in the “real world,” generally speaking. Continue reading...
What is the Price to Cash Flow Ratio (PCFR)?
The Price to Cash Flow Ratio (PCFR) is a valuation measure that looks at a company’s stock price relative to its cash flow per share. Generally speaking, the lower the ratio, the better chance the company is undervalued - it basically means the company produces a lot of cash flow relative to how much it costs to acquire a share on the open market. A very high PCFR indicates that a company is trading at a high price relative to the amount of cash flow it produces. Start-up technology companies, for instance, would generally have high PCFRs because they may not produce high levels of cash flow in early stages, but investors may bid up the price in anticipation of future growth. Continue reading...
What is an ADV form?
A form ADV can be requested to find out all about the fees and professional backgrounds of a financial advisory firm. Firms who engage in the solicitation of securities or give investment advice must file form ADV with the SEC and keep it updated, usually on an annual basis. It is similar to the form U4 that individual securities-licensed professionals must submit and keep updated in the event of changes of address, tax liens, industry disciplinary actions, and so forth, but the ADV is filed on behalf of a firm instead of an individual. FINRA and the NASAA keep up with the filings as well. Continue reading...
What are Accounting Earnings?
Earnings that are reported in a given year may differ for the same company if different accounting methods were used. Earnings are the revenues of the company minus the cost of good sold, expenses, and investment losses. If that seems like something that’s pretty cut-and-dried, and will look the same no matter who is doing the accounting… well, that’s not entirely correct. Earnings can be made to look different if different non-GAAP or pro-forma methods are used. If non-recurring expenses are ignored or amortized in a pro-forma accounting method, then earnings will not match up to the GAAP-based books. Continue reading...
What are Accounting Records?
Accounting records are the supporting documents that verify the history of transactions, audits, and reports. Accounting documents are sometimes required to be kept on file for a certain number of years. They may be paper or electronic records. Records may include point-of-sale documents such as receipts and invoices, as well as inventory delivery and audit records, and the results of internal and third-party audits from various periods. Continue reading...
A+/A1 — credit rating
A+ — S&P / Fitch A1 — Moody’s In the spectrum of ratings given to bonds and companies, A+/A1 is a very good rating to get, even if it is the 5th rating from the top. The Big Three ratings institutions, which are Fitch, Moody’s, and S&P, give ratings for creditworthiness after inspecting the books of companies who issue bonds. There are credit ratings given for companies and credit ratings given to bond issues. Continue reading...
What are “Dark Pools” of Money?
Large institutional investors sometimes trade on “Electronic Trading Crossing Networks," which allow them to conduct trades without publicly exposing them. They are used by financial institutions to move large blocks of shares without public investors even knowing about such transactions. Such examples of networks are “Liquidnet,” “Pipeline,” “SIGMA X,” and many others. It might be difficult to fathom the size of the transactions conducted over these networks, but the ownership of dark pools involves almost every institutional trading house. This is a huge business and regulators are carefully looking into their activities. Continue reading...
What is a Financial Advisor?
The term "Financial Advisor" applies to professionals who are compensated for helping to implement investment strategies, but it is a broad and non-specific term. There are thousands of people who are called “Financial Advisors” – but within this category are various professions with different specialties and compensation structures. There are Financial Advisors, Financial Planners, Investment Managers, Registered Investment Advisors (RIAs), and at times even CPAs, insurance agents, and lawyers are included in this umbrella term. Continue reading...
Is There Anything Else I Need to Know About Bonds?
There will always be more to learn in the investment world: innovation is always happening and the products will change along with market conditions. Bonds are no exception. The bond market is huge — actually larger than the stock market, if you can believe that — and there are literally hundreds of economic, market, and tax-related factors which influence the decisions of which bonds to buy. You must look at the yield curve, duration, rating of the issuer, your own cash flow needs, expected changes in the interest rate environment, changes in the overall health of the economy, tax implications, account in which you're buying bonds, and so forth. Therefore, structuring fixed income accounts is a task which is perhaps better left to professional advisors. Continue reading...
Should I invest in commodities?
Investing in commodities has lately become accessible to even small retail investors via ETFs. There are now literally hundreds of different commodity ETFs, linked to various individual commodities and baskets (such as agricultural baskets, commodity indices, etc.) These instruments are very complex and sometimes do not reflect the behavior of the underlying commodity. While investing in commodities may significantly diversify your portfolio, it requires profound knowledge of the behavior of the underlying assets. Continue reading...