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What are the Different Types of Annuities?

There are fixed annuities, fixed/indexed annuities, variable annuities, hybrid annuities, income annuities, period income annuities, and possibly more. Insurance companies, and the insurance subsidiary wings of investment companies, have had many years to develop strategies and marketing ploys that help clients accumulate, protect, and distribute assets within various kinds of annuities. Variable annuities allow the annuitant to participate in the market through mutual funds — or, more accurately, “separate accounts” that mimic mutual funds. Continue reading...

Where Should I Open an IRA?

IRAs can be held at many kinds of institutions, even those that you only see online. It is completely your choice! IRAs can be opened at almost any large bank or brokerage firm, giving you plenty of options. Many online services make it possible to open an IRA from your phone or computer. Be sure to compare them because there are some distinctions, such as fee structures and the investments available within the account. Some institutions will only offer their proprietary funds, while others will let you access almost any investment on the market that is allowable inside of an IRA. Continue reading...

What is a REPO?

What is a REPO?

REPO is shorthand for Repurchase Agreement. It is a money-market practice where two entities agree to buy/sell government securities overnight and reverse the transaction the next day for the sake of providing the selling entity with short-term cash. Repurchase Agreements provide the selling party with short term liquidity, and are considered a money-market instrument. A third party usually acts as a clearing agent. Continue reading...

Stock Portfolio Definition

Stock Portfolio Definition

All of the investments held by an individual or mutual fund or other entity are referred to as that person or entity's portfolio. These investments can range from securities to cash to real assets held for the purpose of preservation, growth, or income; essentially anything that is part of a long-term financial strategy that is held separate from daily operations and cash flow can be considered part of a portfolio. The gains and losses of all the singular investments held are totaled up to find the overall return of the portfolio. Continue reading...

What are Utilities Stocks?

Utilities stocks are those who deal in services like water, electricity, gas, and other critical infrastructure. Recently, alternative energy has been added as a sub-sector due to its incremental rise in importance. Utilities are categorized as non-cyclical - even if the economy is in a recession, people still need water and electricity. For that reason, they are often treated as defensive stocks, which investors hope will outperform during more difficult economic times. There is little competition in the utilities sector, as the barrier to entry is generally extremely high for a new entrant, given the amount of infrastructure required. Continue reading...

What is the security market line?

What is the security market line?

The Security Market Line (SML) is a visualization of the Capital Asset Pricing Model (CAPM) and shows the theoretical relationship between risk and return between securities and the entire market. The SML is plotted on a graph bound by an x-axis, which represents Beta (volatility above or below the market average), and a y-axis, which represents the rate of return. Beta is a volatility indicator that measures how many changes in price, and by how much, a security experiences over an amount of time. It describes whether the risk associated with a particular security is above or below the average of the market (or a more specific index), where 1 is a correlation with the market, and numbers above or below describe increased or decreased volatility, respectively. Continue reading...

What is Federal Reserve Credit?

The Federal Reserve extends credit in the form of short-term loans to member banks. Banks avoid taking loans from the Fed if they can, because it is viewed as a sign of instability. The Federal Discount Rate applies to loans taken from what is known as the discount window at the Fed, and it tends to be a higher rate than what is charged between two banks. The Federal Reserve will extend credit only to banking institutions that are members of the Federal Reserve system. Continue reading...

What is Earnings Before Interest, Taxes ,and Depreciation (EBITD)?

Earnings Before Interest, Taxes, and Depreciation (EBITD) is one method of viewing the earnings of a company with some of the typical expenses added back into it. It is not to be confused with its close cousin EBITDA, which also adds amortization back in. Amortization is essentially the same thing as depreciation, but amortization applies to intangibles such as debt principal amounts and intellectual property. Continue reading...

What are Household Expenses?

Household expenses are sometimes also called a family budget. In some cases this can be limited to items purchased such as food and clothing, and services paid for such as utility bills, which only have to do with the livability of the home and the health of the family. This can be extended to included all out of pocket expenses for a family, from health insurance to school tuition. Household expenses are things that people feel that they must pay for to maintain their standard of living, for themselves and their family. You may not have to pay for natural gas to get heat and hot water, but you most likely do, and this is a household expense. The same goes for food and other necessities. 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...