Industrials stocks include companies that are in the business of construction and manufacturing. Companies within the sector are those that play a role in infrastructure buildout and development, such as industrial machinery, tools, heavy equipment, engineering, and even aerospace and defense. Industrials companies are cyclicals, meaning they benefit the most during periods of economic expansion and are hurt during recessions. Continue reading...
Industry-specific funds attempt to capture the movements of a single industry. Industry-specific mutual funds will usually limit themselves to investing in particular industries. There are thousands of such funds. Their focus can be very broad (such as technology - here) or very narrow (such as solar energy - here). Investors who would like to gain exposure to specific industries to round out their portfolios can do so with an industry-specific fund which offers diversification among many different holdings in an industry, as opposed to one or two stocks in an industry. Continue reading...
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...
Sector ETFs hold a portfolio of stocks and other securities that represent a specific sector of the market. Sector ETFS are managed portfolios of securities which are representative of a specific industry or market sector. They might passively track a sector index or be actively seeking alpha over the sector benchmark. The word “sector” is a broad term for a grouping of companies in the market, but the word “industry” is sometimes used interchangeably. There are 10 sectors in the S&P 500: healthcare, financials, energy, consumer staples, consumer discretionary, utilities, materials, industrials, information technology, and telecommunications (telecom) services. Continue reading...
Real estate mutual funds invest in publicly-traded companies in the real estate industry, and are slightly different than REITs. A real estate mutual fund invests in companies in the real estate industry. These companies will include real estate brokerage companies in the commercial, residential, or raw land sector, as well as the lending institutions that are involved in such transactions, among other holdings. Continue reading...
Specialty funds may be completely unique and offer investors a strategy that they cannot find elsewhere, or they may just represent a strategy with an extremely narrow focus. There are many Specialty Funds, and their investment strategy is bounded only by the imaginations of the companies who create them. They tend to focus on markets that an investor may not have any exposure to otherwise, such as the Ultrashort Japan Fund. Continue reading...
Agricultural and mining businesses are exposed to commodity price risk, which is the possibility that the price of the commodity will change unfavorably by the time the commodity is ready to be delivered. They avoid unnecessary risk by using futures contracts, forward contracts, and possibly other derivative instruments. Commodity price risk means that an agricultural or mining business might not be able to predict the revenue that they can generate from the production or extraction of commodities. Continue reading...
When creating an index, it must be decided what criteria will affect the value of the index, and in the case of a price-weighted index, the only consideration is the price of shares. A price-weighted index is created by adding up the individual price per share of the companies included in the index and dividing by the number of companies. Essentially what you've done is arrived at the average price per share of the companies included in the index. Continue reading...
Market indexes attempt to give an overall picture of the behavior of the market by tracking the performance of a representative sample of stocks. Different indexes have different focuses. The Russell 3000 samples more of the smaller companies than the S&P 500. Index mutual funds and ETFs track specific indexes but, as you’ll notice in their disclosures, it is impossible to invest directly in an index; they only follow the index by investing in as many of the companies as possible and minimizing lag as much as they can. Indexes give numerical values for the progressive fluctuations in the price action for specific sets of stocks. Continue reading...
The Dow Theory may not always be accurate, but it has been part of the foundation of modern market analysis. The Dow Theory was formulated by the famous economist Charles Dow. What is important is that the Dow Theory concerns itself with the movements of very broad markets, rather than individual stocks. In particular, the Dow Theory, which was named post-mortem and summarized the editorials Dow wrote during his life, focuses on the movement of the Industrials (DJIA) relative to the Transportation index (DJTA) and theorizes that if one moves the other should follow, and if there is discord a reversal is probably coming. Continue reading...
Dow Theory is perhaps the longest-standing method of market analysis still used in modern finance. It suggests that markets experience primary trends (which last several years), intermediate trends (which last under a year), and minor trends (which last less than a month). Markets are in an upward trend if an average exceeds certain thresholds, followed by a similar movement from another average. Longer, larger trends are considered more predictive than smaller ones, though correctly reading the primary trend in the main goal. Continue reading...
Indexes track markets in different ways, and Weighted Average Market Capitalization is a method which gives market cap, or the cumulative value of outstanding shares for a company, greater weight. Market Capitalization is the sum total value of all outstanding shares and is one way to judge the size of a company or at least its size in the market. Indexes such as the S&P 500 are Cap-Weighted indexes, which means they give greater emphasis the to the largest companies, and the dramatic price movements of only a few of the largest companies would mean that the index would swing disproportionately for large-cap companies. Continue reading...
The “Nikkei” is the most referenced index for measuring Japanese stocks. The Nikkei 225 - often just referred to as “the Nikkei” - is an index that tracks the performance of Japan’s top 225 publicly-traded companies on the Tokyo Stock Exchange. It is to Japan what the Dow Jones Industrial Average is to the United States. The Nikkei is a price-weighted index. What is a Bear Straddle? What is Foreign Exchange? Continue reading...
An industry is a classification that refers to a group of companies related by their primary business activities. In this article, we will explore the definition of an industry, its importance, and how it fits into the broader economic landscape. An industry is essentially a grouping of companies that share common characteristics or are engaged in similar business activities. These commonalities can range from the products they manufacture or sell to the services they provide. The classification of companies into industries is a systematic way to categorize businesses, allowing for better analysis, comparison, and understanding of their operations. Continue reading...
The world of finance can be complex, especially when it comes to options trading. Options offer unique opportunities but can be challenging to understand for both investors and financial advisors. That's where the Options Industry Council (OIC) comes into play. Established in 1992, the OIC is a cooperative effort by U.S. options exchanges and the Options Clearing Corporation (OCC) to educate and empower individuals about the benefits and risks of exchange-traded equity options. Continue reading...
The tobacco industry, long recognized for its traditional cigarette products, has been undergoing a significant transformation. This metamorphosis is marked by the industry's shift towards smoke-free items and e-vapor products, catering to a new generation of consumers while grappling with regulatory challenges and evolving public health perspectives. In this article, we delve into the financial aspects of some of the most notable companies within this sector, focusing on their market capitalization, recent performances, and future prospects. Continue reading...
In the ever-evolving landscape of healthcare, the vaccine industry stands out as a beacon of innovation and resilience. This subset of the biotech and pharmaceutical sectors is not just about combating seasonal flu or childhood diseases; it's at the forefront of addressing global health challenges. The current players in this domain, notably Merck & Co (MRK), Pfizer (PFE), and Novavax (NVAX), are not just manufacturers of vaccines but pioneers in medical science. Continue reading...
In the ever-evolving landscape of industrial manufacturing and services, the valves industry stands as a pivotal sector. This industry, encompassing companies involved in the manufacture, installation, and repair of valves, pumps, and pipe fittings, is a critical component of the global infrastructure. Among its notable players are Hebron Technology Co Ltd., Circor International Inc., and Flowserve Corp. This article delves into the financial dynamics of the valves industry, offering a comprehensive analysis of its top-performing stocks. Continue reading...
The cargo industry, an essential component of the global economy, represents a diverse mix of companies specializing in transportation and logistics. Notably, this sector includes prominent airlines and trucking companies, each playing a critical role in the movement of goods across the world. This article delves into the financial performance and market positioning of top companies within the cargo theme, highlighting United Parcel Service (UPS), FedEx Corp (FDX), Delta Air Lines (DAL), United Airlines Holdings (UAL), C.H. Robinson Worldwide (CHRW), and American Airlines Group (AAL), among others. Continue reading...
Cement is not just a fundamental material used in construction but also a significant indicator of economic activity and growth. As the world continues to expand its infrastructure, the demand for cement and related products such as ready-mix concrete, aggregates, and clinker shows no signs of slowing down. This article delves into the cement industry, spotlighting the top stocks that are the building blocks of the construction sector. With an average market capitalization of $12.8 billion, companies like Cemex S.A.B. De C.V. (CX), James Hardie Industries plc (JHX), and Eagle Materials Inc. (EXP) stand out in the industry. CRH plc (CRH) tops the valuation chart at $37.9 billion, while Cementos Pacasmayo S.A.A. (CPAC) is valued at $417.8 million, showcasing the wide valuation range within this sector. Continue reading...