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Should I Buy the Same Companies Warren Buffett is Buying?
Absolutely yes. It would be a lot better if we knew about it at the time he was buying them, though. The only problem is, we only know which companies Warren Buffett bought after the fact, and this news has already been incorporated into the price by the time it becomes known to you (and everybody else). If you want to buy shares of companies that Warren Buffett is buying, purchase shares of Berkshire Hathaway – his investment vehicle. It can also still work to purchase shares of the same companies he does. Continue reading...
Who are Some of the More Well-Known Investment Managers?
There have been many notable investors who have withstood the test of time. Of those that are still living, Warren Buffett definitely stands out of the crowd. If you had invested $1,000 with him in 1965, the investment would be worth over $6 million today. Some of those who could be considered in the realm of "founding fathers" of sound investment strategy would include J.P. Morgan, Benjamin Graham (author of the famous "The Intelligent Investor"), and John Templeton. Continue reading...
What is a Value Stock?
Value Stock is a stock whose price has been deemed a value buy because of underlying fundamentals, book value, and projected earnings. Prices for stocks can temporarily be pushed around by sentiment, index tracking fund purchases, news and political effects, et cetera, and often the prices on very good and well positioned companies become undervalued as part of larger movements that overlook their inherent value. Continue reading...
What is the difference between active and passive money management?
The debate on whether active or passive management is better for investors has polarized many advisors and theorists for years. There are two schools of thought when it comes to long-term investing. One basically states that you should determine a proper allocation of asset classes for yourself, buy index funds to reflect each particular asset class, and possibly rebalance the portfolio periodically. This basically means “set it and forget it,” and the investor must be willing to ignore fluctuations in the markets and maintain a faith in an Efficient Market. Continue reading...
What is a Warrant?
A warrant is an agreement giving the holder the right to buy (or sell) a certain number of shares of a company. Warrants are often requested or granted when a company engages in a loan from private investors - it will give the lenders the opportunity to buy and own shares in the company if its stock appreciates or if the opportunity seems attractive. If the company fails to grow and deliver, the warrants can simply go unused with no financial impact for the holder. Like options, there are warrants that confer the option to buy shares (call warrants) and those that allow the holder to sell (put warrants). Continue reading...
What are currency warrants?
Currency warrants are relatively new to the international Forex market. They function like puts or calls, depending on whether it is a purchase warrant or a warrant to sell, but they have longer durations, usually between one and five years until they expire. They can be purchased to take a position on a currency index or on a currency pair. Warrants were originally issued by corporations, giving investors the ability to redeem the warrant like a call option to purchase a stock at a strike price. Continue reading...
What are Fully Diluted Shares?
Fully Diluted Shares are a calculation used to show how much the existing shares of common stock could potentially be diluted if all the convertible securities and employee stock options, were exercised. Fully Diluted Shares is a calculation used to show the potential number of shares that could hypothetically be called into existence instantaneously by the holders of convertible securities, warrants, employee stock options and so forth. Continue reading...
What are the top 25 investing quotes of all time?
Unlock the wisdom of the world's top investors in our article on the "Top 25 Investing Quotes of All Time." From Benjamin Franklin's call to invest in knowledge to Warren Buffett's sage advice on fear and greed, these timeless quotes provide invaluable insights for both novice and experienced investors. Discover the secrets to building a successful investment portfolio, managing risk, and achieving long-term financial success. Don't miss out on the chance to learn from the best in the field of finance. Read the full article now! #InvestingQuotes #FinancialWisdom #InvestmentSuccess Continue reading...
What is Times Interest Earned (TIE)?
Times Interest Earned (TIE) is also known as the interest coverage ratio, is a cash-flow analysis that compares the pre-tax earnings of a company to the total amount of interest payable on their debt obligations. A healthy ratio indicates that a company will probably not default on loan repayments. To compute this ratio, divide a company’s annual income before taxes by their annual interest payments on debt obligations. This ratio is not concerned with the actual principal due on loans since the principal amount is already pegged to some of the assets on the books of the company, and other fundamental equations will already factor that in. Continue reading...
What is a Run Rate?
Run rate is a term that can be applied to a certain type of accounting and management estimation or to the depletion of equity options. The first kind is when a current metric (such as sales revenue for a quarter) is assumed to extend out to the end of the year or accounting period for estimation or valuation purposes. The second kind uses the average dilution from the past three years, generally, to show the effect that convertible securities are having on the share price of a company. Continue reading...
What is Private Equity?
In the world of finance, private equity is a relatively new industry whereby private companies finance other businesses through direct investment, often in exchange for equity in the company and in some cases, decision-making capabilities. Private equity companies generally use capital of the principals or of high net worth investors to strategically invest in growing companies that need growth capital or seed capital to expand operations. Continue reading...
What are some Good Books on Investment?
The investing section in your bookstore has shelves packed with titles hoping to earn a five-star rating from you, but not all of these are going to be worth your time. There are thousands and thousands of books written about investments, stocks, Mutual Funds, retirement portfolios, and so on. By the time most of them hit the market, the information in these books has long become irrelevant. The classic treatise on investments is Ben Graham’s “The Intelligent Investor.” Try to avoid books with titles like “12 Steps to Financial Prosperity,” and “How to become a Zillionaire.” Continue reading...
What Are the Basic Best Practices for New Investors to Pick Stocks?
Entering the world of investing can be akin to setting sail in uncharted waters for new investors. With an abundance of stocks to choose from, the process can feel overwhelming. However, by applying some foundational best practices, you can navigate the market with greater confidence and poise. Here’s a guide to help you steer your investment journey. Continue reading...
Are Warrants the Risky yet Lucrative Investment Tool You've Been Overlooking?
In the world of finance, investors are constantly on the lookout for innovative ways to maximize their returns while minimizing risks. One such investment tool that often flies under the radar is warrants. Warrants, although not as popular as stocks or bonds, can be a lucrative yet risky addition to your investment portfolio. In this article, we'll explore what warrants are, their types, characteristics, and the advantages and disadvantages they offer. Continue reading...
What is an Accounting Interpretation?
Similar to the practice of law, the standards and practices of accountants will change based on an ongoing interpretation and application of tax law and codes. Accounting interpretations are generally publications from groups like the Financial Accounting Standards Board (FASB)and the American Institute of CPAs (AICPA). These interpretations are not official standards, and do not have to be followed the way a standard does, but they give insight and suggestions for situations which may be new developments. Continue reading...
What is Form 6781: Gains and Losses from Section 1256 Contracts and Straddles?
IRS Link to Form — Found Here Form 6781 is used to calculate and report gains and losses due from Section 1256 contracts, which covers futures on commodities and indexes, as well as their derivatives, and from straddles, which are options strategies defined under Section 1092. 6781 is used to report positions in futures and options at the end of the year even if no gains or losses were realized through trades. The value of the positions will be marked-to-market at the end of the year, and these will serve to compute the gains and losses for these purposes. Continue reading...
What insights can we gain from the wealth and success of the 10 richest people in the world?
What is Adjusted Gross Margin?
Adjusted Gross Margin accounts for the cost of maintaining inventory, which regular Gross Margin does not. Gross margin can be calculated offhand as the selling price of a good minus the price paid for the good (cost of goods sold). This is the simplest calculation for profit. The Adjusted Gross Margin takes into account the cost of maintaining an inventory as well, which is a step in the direction of accounting for the expenses of the business operation as a whole. Continue reading...
What is Turnover Ratio?
Turnover ratio is a term that can be used in reference to the rate at which a company goes through its physical inventory, or that a mutual fund sells and replaces its investment holdings. In the context of a company’s inventory of goods, a high turnover ratio is a positive sign. It means that a company is selling plenty of its products and is not wasting money on more warehousing space than it needs. This kind of turnover ratio is calculated as the cost of goods sold in a period divided by the average inventory during that time. In the context of mutual funds and ETFs, turnover ratio is a negative thing if it is high. Continue reading...
What is Income Property?
An income property is also called an investment property, which is a piece of developed commercial or residential real estate that is used by a third party tenant who makes rental or lease payments for the use of it. Income property can be a good source of income for an individual or business. It can include single- or multi-family residential or commercial properties. Sometimes people co-own income properties together, and receive a proportionate share of the proceeds according to the amount of the start-up capital they paid in. Continue reading...