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What’s a 403(b) Plan?

403(b) are basically just 401(k)s for non-profit organizations. A 403(b) Plan is essentially a 401(k) for publicly-funded institutions such as public schools and universities, and certain hospitals, and non-profit organizations. They are sometimes called TSAs, short for Tax-Sheltered Annuity, but this is outdated, and a misnomer since they do not need to use annuity products. The contributions are deducted from the paychecks in the same manner they would be for a 401(k), and the assets grow tax-deferred within the account. A Roth 403(b) is uncommon but sometimes offered. Continue reading...

Is there a Benefit to Self-Managing?

An investor may be able to save money in management fees self-managing, but there are also limitations and risks. Perhaps the biggest risk is the role that emotion can play in investing. Even the most skilled professionals are tempted by emotions in the market - big declines like the financial crisis can make one second-guess whether the market has hope of recovering, and big gains can create confidence that leads to less prudent risk-taking. Continue reading...

What Does Capital Loss Mean?

Capital Loss refers to a loss realized when a security is sold for less than it was purchased for. In stock trading, if an investor purchases stock ABC for $30 / share, and then sells the stock a few months later for $22 / share, they have realized an $8 / share capital loss. At the end of every year, as per U.S. tax policy, capital losses can be used to offset capital gains, so as to help an investor reduce their tax burden. A common year-end strategic approach is to “harvest” capital losses in an effort to offset any capital gains made from trading that year. Continue reading...

What is quantitative analysis?

What is quantitative analysis?

The attempt to represent events and phenomena mathematically and to thereby make reality more understandable is called quantitative analysis. To quantify something from the real world, an analyst will translate the factors and variables present in a real event into a coding system which will allow it to be represented in mathematical or computational symbology. The quantitative analysis that follows will attempt to create formulas and test them for external validity and replicability. Continue reading...

What is the Operating Cash Flow Ratio?

The operating cash flow ratio, or OCF ratio, is used to measure whether a company’s cash flows are sufficient to cover current liabilities. It essentially measures how many times a company can use cash flow from operations to cover debt expenses. It can be measured by dividing a company’s cash flow from operations by its current liabilities. Companies with high (relative to their peers or other companies in the sector OCF ratios are generally in good financial health, meaning they can adequately cover ongoing liabilities with cash flow from operations. Continue reading...

What is Bankruptcy Court?

Bankruptcy court is a special judicial proceeding which determines how a debtor can settle accounts and move on. Bankruptcy courts are always federal, and not state, courts. They were established in the Constitution and given structure by the Bankruptcy Reform Act of 1978. They give debtors a means of moving beyond debts that cannot be fully repaid. There are several kinds of bankruptcy filings (found here — ‘chapter 7-15’, some for individuals, some for businesses, some involving foreign entities or persons operating in the US. Some are for absolution and the dissolution of a business entity, and other filings are requests for partial debt forgiveness and reorganization of the entity. Continue reading...

What is a Run Rate?

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 Earnings Before Interest Depreciation and Amortization (EBIDA)?

EBIDA is one of the family of earnings metrics which give the analyst, investor, or accountant an opportunity to view earnings, which is synonymous with net income, with a few factors added back into it. In this case, interest payments on debt, depreciation of hard assets on the standard IRS schedules, and amortization of principal debts are all added back into the earnings of the company for the current period. Not to be confused with EBITDA, its more popular counterpart. Continue reading...

What is a Living Will? (in-depth)

A living will is sometimes called an advance directive or a medical directive, and it specifies a person’s wishes regarding life-prolonging medical procedures and other end-of-life issues. If a person is in a coma, for instance, it is intended to provide instructions for their care, including whether or not to use oxygen or “feeding tubes” to keep them alive. This might require a Do Not Resuscitate (DNR) waiver of some kind, which tells medical staff not to intervene if the person is dying. The living will is different than the “will” that most people are familiar with, which is a Last Will and Testament, stipulating the person’s wishes for their estate after he or she has died. Continue reading...

What is the Rising Pennant (Bullish) Pattern?

The Rising Pennant (or Bullish Pennant) pattern looks like a pennant with a mast. It forms when rising prices experience a consolidation period, and the price moves within a narrow range defined by the converging lines through points (2, ­4) and (3,­ 5). After the consolidation, the previous trend resumes. This type of formation happens when anticipation of an uptrend is high, and when the price of a pair consolidates within a range. It indicates growing investor interest in a potentially explosive uptrend. Continue reading...