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What are “Dark Pools” of Money?

Large institutional investors sometimes trade on “Electronic Trading Crossing Networks," which allow them to conduct trades without publicly exposing them. They are used by financial institutions to move large blocks of shares without public investors even knowing about such transactions. Such examples of networks are “Liquidnet,” “Pipeline,” “SIGMA X,” and many others. It might be difficult to fathom the size of the transactions conducted over these networks, but the ownership of dark pools involves almost every institutional trading house. This is a huge business and regulators are carefully looking into their activities. Continue reading...

What is the Barbell Strategy for Structuring my Bond Portfolio?

A barbell strategy avoids intermediate-term bonds and equally invests in very short term and very long term durations. The barbell strategy divides a sum, for instance $10,000, equally among bonds with short durations and bonds with long durations. If the interest rates will go up sharply, the proceeds from your short-duration bonds will be reinvested into new bonds with much higher coupons. If the interest rates drop sharply, the proceeds from the bonds with shorter durations will be reinvested at a much lower coupon, but on the other hand, your long-duration bonds will rise sharply in price. Continue reading...

Can I Rollover My Old 401(k) into a New 401(k)?

Most 401(k)s will accept custodian-to-custodian transfers from old 401(k)s. If your new employer has a 401(k) plan, you can usually rollover your old 401(k) into a new one, but you will need to check with your new employer to find out for sure. Keep in mind that the choice of mutual funds and other investments in the new 401(k) might be totally different from the investment options that your old employer offered. This means that you might need to liquidate all of your positions in the old 401(k) and transfer the cash balance. Continue reading...

How Do Deductible and Non-Deductible IRAs Differ?

It is possible to make non-deductible contributions to an IRA, even if you have a qualified plan at work. Traditional IRAs are a good place to stash retirement money because of the tax treatment. Some people will choose to make contributions even when they are not deductible, which gives us two kinds of Traditional IRAs: deductible and non-deductible. Deductible IRAs provide a way to lower your taxes because you can deduct contributions to your IRA from your income. Nondeductible IRAs do not allow you to deduct your contributions, but they still retain their tax-deferred growth. Unlike a Roth, these after-tax contributions will be taxed upon withdrawal as income. Continue reading...

Will My Spouse and Children Receive Social Security Benefits if I Die?

Will My Spouse and Children Receive Social Security Benefits if I Die?

Spouses and children can and do receive social security benefits upon the death of a person who paid into the system. A spouse who is older than 60 will always be able to receive either a majority of the benefit that was (or would have been) paid to you, using their own age against the full benefit amount that was part of your benefit equation. Children, including dependent grandchildren, can receive a payment equal to 75% of your full benefit amount until they are about 18. Continue reading...

What is Bond Insurance?

Bond insurance is a contract that protects the issuer and the holder of bonds from the risk that bond payments will not be made. Bond issues from the corporate or municipal world, or from derivative sources as with asset-backed securities and CDOs, come with the risk of default-- that is, that payments will not be made on time. The major credit ratings agencies (CRAs) assign a risk of default to each bond issue with proprietary analysis methods and ratings. Continue reading...

B/B2 — credit rating

B/B2 — credit rating

B — S&P / Fitch B2 — Moody’s A bond issue that has a moderate chance of default but a high yield might be given a B2/B rating by the major ratings institutions. Bonds are rated based on their risk of default by the Big Three ratings institutions: Moody’s, Fitch, and S&P. The latter two use the same symbols, so if the algorithms and analysts at the two ratings institutions come to similar conclusions, a company might have the same rating from each of them, such as the “B” in this example. B2/B ratings are the 15th ratings down the scale from the top rating of AAA/Aaa. Continue reading...

What is an Account Executive?

An account executive is an individual who has executive responsibility of the maintenance of client account. In certain businesses, some client accounts have a high degree of importance and priority with regards to sales and operations, perhaps because they generate significant revenue for the company. Examples of such businesses might be advertising, office products, and investment services. The title of account executive is especially fitting if there is a staff which supports the lead account executive in maintenance of the client relationship and account service, but a staff is not required to hold this title. In other businesses this position might be called an account manager. Continue reading...

What is the Symmetrical Triangle Top (Bearish) Pattern?

The Symmetrical Triangle Top pattern forms when the price of a pair fails to retest a high or low and ultimately forms two narrowing trend lines. The price is expected to move up or down past the triangle depending on which line is broken first. This pattern is commonly associated with directionless markets, since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). The price movement inside the triangle should fill the shape with some uniformity, without leaving large blank areas. Continue reading...

What Qualifies You as a "Trader," and How Do You Report Income and Expenses?

What Qualifies You as a "Trader," and How Do You Report Income and Expenses?

If you buy and sell securities, you may qualify for tax status as a ‘trader,’ which importantly may qualify you for certain business tax breaks. The rules governing this status can be confusing, however, making it difficult to determine whether you qualify as a trader, investor, or dealer. Let’s take a closer look at the qualifications for traders as defined by the IRS, as well as how to report income and expenses if qualified. Continue reading...