A dramatic week for global markets: rare earth trade relief from China, surprise U.S. inflation data, and Israel's strike on Iran sent oil and gold soaring. From Tesla’s robotaxi rally to GameStop’s plunge, explore the top moves and market-shaping headlines. Continue reading...
A market maker is a broker-dealer firm or a registered individual that will hold a certain number of shares of a security in order to facilitate trading. There could be as many as 50 market makers for one particular security, and they compete for customer order flows by displaying buy and sell quotations for a guaranteed number of shares. The market maker spread refers to the difference between the amount a market maker is willing to pay for a security and the amount that the other party is willing to sell it. Continue reading...
You don’t want to overdo it, but it’s important to stay on top of things. Generally speaking, if your portfolio is run by professional investment managers, you should check the performance quarterly; otherwise, you may not give them enough room to do their jobs. If you run your own portfolio, it is entirely up to you how often you check the performance, but be aware that the closer and more short-term your focus gets, the higher the chance you have of losing sight of the bigger picture. Continue reading...
The difference between the Bid and Ask prices on a stock or other security are known as the Spread. Designated market makers are traders whose job it is to make a market for securities, by offering to buy or sell shares, and thus creating liquidity, often at the same time. Their money is made on the spread. In highly liquid markets, the spread will shrink. So if everyone is buying and selling the same stock one day, there may be virtually no spread between the Bid and the Ask price, and this is seen as efficient. Continue reading...
Gross Domestic Product (GDP) measures the production of all industries within a country, to get a picture of how the national economy is doing. GDP is one of the most important number to economists, and it is calculated every quarter. Growth for the current quarter compared to the previous quarter is a good sign. Two consecutive quarters of decline in GDP are an indication of a recession, but it is not the only metric used to make that call. Continue reading...
While a client should be involved in communication efforts as well, it’s really the advisor that should be reaching out with information and scheduling appointments at least once a year. You should definitely discuss your investment portfolio with your Financial Advisor at least annually. Even if nothing has changed, it’s important to keep communication lines open. On the other hand, doing that more than once a quarter without a pressing need to do so might lead you to make poor decisions based on emotions and shortsightedness, rather than on investment discipline. Continue reading...
Earnings season describes not one, but four times in a year, when corporations release their quarterly earnings reports. Investors look forward to this time because they are able to get an update about how the year is going, compared to projections. After each fiscal quarter ends, there are a few weeks in which companies file their quarterly reports with the SEC and announce their current earnings and sales numbers. Each of these periods is known as earnings season. Continue reading...
Nominal GDP is the value of all goods and services produced in a country, without adjustments for inflation. GDP is the market value of all final goods and services produced within a country in a given period of time, and is usually expressed quarterly. Nominal GDP is primarily used to compare quarters in the same year, and does not contain an inflation adjustment as with Real GDP, which is more useful for comparisons across years. Continue reading...
There are different methods and theories about rebalancing, and the answer is basically “it depends.” There is no set rule for the frequency of rebalancing your portfolio, and any generic rules that exist do not necessarily apply to or predict the performance of your particular portfolio. If you’re not very familiar with it, rebalancing is the redistribution of gains from the winning areas of your portfolio to the other areas. Continue reading...
Mark to Market (MTM) is an accounting method meant to price an asset by its most recent market price. An example would be mutual funds, whose “NAV” price is a mark to market price of how much the mutual fund closed for at the end of a trading session. The mark to market accounting method has some pros and cons. On the pro side, if an asset is very liquid, then MTM will provide an accurate reflection of its current value. Continue reading...
A Profit and Loss Statement, also referred to as an “income statement,” is a corporate statement that summarizes the revenues, costs and expenses incurred by a company during a specific time period, such as a quarter or a fiscal year. The main difference between a P&L statement and a balance sheet is that the P&L is designed to show changes in line items over the period analyzed, versus a balance sheet which simply shows a comprehensive snapshot of a company’s asset and liabilities on a set date. Continue reading...
An accounting convention is an established an agreed-upon method of documenting specific items on a company’s books. The most widely-used accounting conventions are part of the Generally Accepted Accounting Principals (GAAP), which is the only accounting methodology accepted for quarterly 10-Q filings with the SEC in the United States, and has also become the basis for regulatory accounting practices in other countries. Continue reading...
Market research is the process of evaluating a possible opportunity for entering into a market with a new product or company, or for evaluating the effectiveness of a product or company in a market that they are already invested in. Market research can also be important for decisions regarding mergers and acquisitions. It may involve surveys and market study groups. Sometimes a company will conduct its own market research, but often third-party companies are hired for the task. These companies may specialize in sampling and surveying methods for consumer groups, and/or statistical analysis of a business model or product’s chance of success in a given market. Companies may look to such analysts if they are considering a merger or acquisition, or of launching a new product. Continue reading...
An earnings call is when a company opens up a teleconference line or webcast that the public can join to hear the company management talk about how the company performed recently, their plans for the future, and the market forces that exist in the current environment. Most publicly traded companies today have adopted this practice. Earnings calls may take place once a year or during earnings seasons after the quarterly earnings have been announced in a press release. Companies often have one executive whose job is to interface with the shareholders in such settings, but various executives are often given a chance to present some thoughts. Continue reading...
EPS is derived by taking the net income of a company and dividing it by the share price. That gives an individual investor an idea of how much growth was captured by their shares. Earnings per share is one of the main articles that is announced by the quarterly reports given by companies to their investors. Earnings per share does not mean that each share has appreciated a certain amount, but if the quarterly reports in earnings seasons stir up demand for the shares based on solid fundamentals at a company, it can result in a higher price per share. Continue reading...
IRS Link to Publication — Found Here This IRS guide gives taxpayers and businesses an idea of how to calculate the appropriate amount of withholding to do and how to continually estimate tax rate on an ongoing basis for an entire year. It is about 60 pages long and touches on many issues related to tax withholding. Tax withholding applies to payroll needs, self-employed reporting, as well as some retirement planning applications, among other things. Continue reading...
An accounting period is a specific time frame from which documents and records have been used by accountants to arrive at reported balances and statements. An accounting period can be a fiscal year, quarter, or month, or any other time frame for which reporting is being done. At any given time, there may be different accounting periods running. Books are kept and reports are made for different tiers of accounting periods. Continue reading...
Traders can enter time-specific trade orders in the form of opening or closing orders, which are only to be executed as close to the opening or closing price as possible. Market-on-open orders are looking to buy or sell immediately after the market opens, at the opening price. Market-on-open orders are instructions for a broker or floor trader (even though we don’t see those much anymore these days) to buy or sell shares at opening price of the stock being traded. Continue reading...
Market efficiency describes the degree to which relevant information is integrated into the price of a security. With the prevalence of information technology today, markets are considered highly efficient; most investors have access to the same information with prices and industry news, updated instantaneously. The Efficient Market Hypothesis stems from this idea. Efficient markets are said to have all relevant information priced-in to the securities almost immediately. High trading volume also makes a market more efficient, as there is a high degree of liquidity for buyers and sellers, and the spread between bid and ask prices narrows. Continue reading...
Market Saturation is the point at which there are few consumers that are still interested in buying a product because those who were ever likely to already have done so. Saturation can be said to exist for all similar products in a market. This may call for different strategies which could keep a company going. One is that products can be made to wear out after a certain amount of time and need replacement. Another is that the business can shift its focus to subscription or service-based income. Continue reading...