What are Alternative Funds?
The idea with Alternative fund investing is to gain exposure to assets which are not highly correlated with the rest of your portfolio, and which use non-traditional approaches to fund management. Alternative Funds are mutual funds that invest in non-traditional asset classes such as commodities (gold, silver, oil, etc.), agricultural products (cocoa futures, orange futures, pork-belly futures), non-publicly traded companies and limited partnerships, and so on. Continue reading...
Who Establishes a 401(k)?
Employers make the decision to establish a 40(k), but it has to be good enough for employees to want to participate. An employer is responsible for establishing a 401(k) and for overseeing it as the sponsor and fiduciary. A self-employed individual can also establish an Individual 401(k), which has the same contribution limits and requires none of the testing or auditing of a regular plan. Other options for work-site retirement plans are SIMPLE IRAs, SEP IRAs, and various kinds of profit-sharing and deferred compensation arrangements. Continue reading...
How Much Will Medigap Cost?
There are many Medigap policies offered by many different insurers, so this is hard to answer. Plan F is the most robust coverage, currently, and it will be the most expensive, with premiums that can go up to $10,000 a year. There isn’t a concrete answer. Your costs will depend on how old you are, your health, and which of the 12 plans you choose. Medigap policies come in flavors such as Part F, Part K, and Part L. Continue reading...
Is Bitcoin Legal?
Bitcoin remains a technology and a currency that primarily exists outside of the influence and control of governments and regulated markets. In most places, it is accepted for what it is. In some countries, it is explicitly banned. Bitcoin is technically illegal in a few parts of the world, but for the most part, it remains in the extra-legal realm, existing outside of the traditional legal system and the regulated markets. Bitcoin was created in large part to be difficult to understand and to pin down, to be part of the fringe and underground that could not be controlled by a central authority. It is open-source, so no one owns the rights to the code, and the community of programmers interested in shaping the future of cryptocurrency frequently attempts to make small upgrades and tweaks to blockchain technology in the interest of creating more efficient, more scalable blockchain cryptocurrency. Continue reading...
What are Adjusted Earnings?
Adjusted Earnings are also known as pro forma, non-GAAP earnings, and are usually met with some cynicism. Non-GAAP methods of accounting for earnings are something that is not allowed to be used to mislead investors, according to SEC rules. GAAP stands for Generally Accepted Accounting Principles, and they represent the standards and SEC rulebook for a publicly-traded company’s accounting. There are times when it makes sense to use adjusted earnings instead of GAAP earnings because adjusted earnings will ignore non-recurring one-time expenses so that analysts can compare company performance in other areas without being distracted by a large one-time expense. Continue reading...
What is market neutral?
Market neutral is a term used to describe strategies of investing that are poised to benefit whether the market goes up or down, or even if it stays stagnant. Some professionally managed funds might take a market-neutral stance in their entirety, or investors might employ market-neutral strategies for specific parts of their portfolio. Market Neutral means that your position as an investor is neither bearish nor bullish, and you may be able to profit whether the market moves up or down, or even if it doesn’t move at all. Options traders, for instance, have a wide variety of market-neutral positions that they can take, since profiting may depend more on the presence of volatility rather than price movement in one direction or another. Continue reading...
What is a commodity pool?
Commodity pools are like the REITs of the commodity world, and some of them can be categorized as hedge funds or managed futures accounts (MFAs). Accredited investors, who meet qualifying requirements regarding income and total net worth, pool their money to be managed by a commodity pool operator (CPO) or commodity trading advisor (CTA) for the purpose of investing in commodities and commodity derivative instruments. Continue reading...
Is there any merit to some other portfolio theories?
Plenty of theories are known because they are useful, and it is up to you to discern which ones may be worth your time and fit your situation and investment or analysis style. There’s always merit to any theory which has been put through rigorous statistical tests. However, keep in mind that as with any other statistical inferences, an event with probability zero sometimes happens (Black Swans), and an event with probability one sometimes doesn’t. Continue reading...
What is active management?
Active management is the practice of attempting to outperform the market with selection and timing. Active management is a thoughtful and time-consuming approach to investing and is the opposite of Passive management. Active managers seek to outperform the benchmarks for their portfolio by researching and selecting stocks and other assets based on strategies and analysis methods thought to be superior. Continue reading...
What is the Dow Jones Industrial Average?
The Dow Jones Industrial Average (DJIA) is an index comprised of 30 'significant' U.S. stocks, typically the biggest and most frequently traded. The Dow Jones Industrial Average was created in 1896 by Charles Dow, as a way to track the general trend of U.S. stocks. The index is price-weighted versus cap-weighted, meaning that if a company splits 2 for 1 its contribution to the index will drop by half (even though the company's value did not change). Continue reading...