How Do I Calculate my Net Worth?
Calculating your net worth is a simple and worthwhile endeavor, and should be done once a year to measure your progress. Generally speaking, your net worth is the sum of all of your assets, minus the sum of your liabilities. For example, to calculate your net worth, you would need to add up the dollar values of all of your assets – usually consisting of your house, your cars, savings accounts, retirement accounts, CDs, cash, etc…, and your most valuable possessions (you don’t need to include your desk lamp into the calculations). Continue reading...
What is Publication 17 for Individual Federal Income Taxes?
IRS Link to Publication — Found Here The Publication 17 is a very large and detailed guide to help individuals correctly file their federal income tax returns. Form 1040, 1040-A, and 1040-EZ are the return forms used by individuals for federal income tax, but most people won’t know which one to use without either consulting a tax professional or reading this handy 290-some-odd page document. There are many ins-and-outs when it comes to filing federal income tax returns, and Publication 17 is robust enough to clear up many of the questions that might be asked by non-professional filers and CPAs alike. Issues such as filing status, charitable contributions, and a list of instructions for deductions individuals can take, are all listed, among other things. Continue reading...
What is the Inverted Cup-and-Handle (Bearish) Pattern?
The Inverted Cup-and-Handle (sometimes called Inverted Cup-and-Holder) pattern forms when prices rise then decline to create an upside-down “U”like shape (1, 2, 3, also known as the Cup), followed by a shorter relatively straight price increase that bounces from the right lip (from 3 to 4, creating the Handle). The rising handle forms as a result of mounting buying pressure created when the pair retests a low at the right lip of the cup. Once the buyers give up, sellers take over and the pair has the potential to decline rapidly. Continue reading...
What is the High-Low Index?
Often referred to in the media as “New Highs and New Lows,” the High-Low Index is an observation of the number of stocks which hit 52-week highs or lows in the current day. The High-Low Index is usually expressed as a simple moving average (10-day or longer) of the Record High Percent. A Simple Moving Average (SMA) is a technical indicator that can help traders determine whether a bull or bear trend will continue or reverse course. It typically adds up closing prices for a given time period, then divides that figure by the number of time periods used for the average. Simple moving averages are effective in their simplicity, but their efficacy is most closely tied to how they are used. By giving equal weight to each data point, SMAs can limit bias towards any specific point in a specific time period. Continue reading...
How to use the Relative Strength Index (RSI) in trading
The Relative Strength Index (RSI) was developed by J. Welles Wilder Jr. to measure asset momentum using price changes and the speed of those changes. Like stochastics, the RSI is an oscillator that reads between 0 and 100; in this case, the RSI calculation determines the ratio of upward and downward movement using 14 periods of data, then smooths it out so only strong trends approach 0 or 100. Traders traditionally interpret RSI values of 70 or greater as an indicator of an overbought asset, while values 30 or below indicate an asset has been oversold; higher or lower values (like 80 and 20) can be used to minimize the number of bought or sold readings. Continue reading...
What is the Federal Supplemental Education Opportunity Grant?
The Federal Government will give college students who have filled out a FAFSA and are found to be in dire financial need a grant of up to $4,000 a year. The grant does not have to be repaid. The Federal Supplemental Education Opportunity Grant provides funding for educational expenses to students with expected family contributions (EFCs). The maximum annual amount that can be received in a SEOG is $4,000 per student. Continue reading...
What is a Foreign Portfolio Investment (FPI)?
When foreigners purchase shares of domestic companies that represent less than 10% of the voting shares in the companies, and the investments are not those of company expansion or market penetration, but rather to add diversification to the foreigners’ investment portfolios, it is known as Foreign Portfolio Investment (FPI). FPI is the passive investing that foreigners do in a domestic market. It is separate from investments that companies might make into joint ventures or purchase facilities or acquire controlling interest in a domestic company — all of those are active investing and are usually called Foreign Direct Investment (FDI). FPI can be done by individuals or institutional investors. Institutional investors might run a mutual fund or pension fund in another country. 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 are the main technical indicators?
Technical indicators include moving average lines, trading bands, oscillators, and formations (found here), often presented in combinations. Popular indicators carry proper names. There are thousands of technical indicators, but the most popular ones are the MACD, Bollinger Bands, Stochastic Oscillators, the Directional Movement Indicator and various patterns of price behavior, such as “Head and Shoulder” formations. Continue reading...
What is Cost of Debt?
The cost of debt is a calculation that determines the actual cost of a company’s debt financing. Since interest payments are generally tax deductible, the cost of debt may not be as simple as just adding up all of the interest paid on a loan. It would have to be adjusted for the tax savings, such that it is total interest paid less the tax savings. Continue reading...