What is Earnings Momentum?
Earnings momentum is an indicator that is computed by not just looking at the earnings performance and estimations of a company, but looking at the positive or negative direction of earnings and the acceleration in that direction. Momentum in securities is much like momentum in physics. Where there is momentum, it is hard to slow things down and charge direction. Instead of looking only at the growth of earnings, which could be the slope of the inclining line, momentum also looks for increases in change to the growth rate, making earnings growth more parabolic or exponential. Continue reading...
What is IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer?
IRS Link to Publication — Found Here This publication contains both Form 4070A – Employee’s Daily Record of Tips, and Form 4070 – Employee’s report of Tips to Employer. It also gives detailed instructions for how to report tips, which generally includes any cash or credit card tips over $20 in a month. Publication 531 gives additional details about reporting tip income. Employees who earn tips over $20 a month must report them on Form 4070. At the end of the year, all tips, even those not reported due to being under $20, are to be reported on the individual’s 1040 for income tax. Continue reading...
What is Publication 504, Divorced and Separated individuals?
IRS Link to Publication — Found Here Divorce can be a hard thing on a personal level, and the tax returns can become more difficult to sort through as well. Publication 504 walks through the various choices available to those who are divorced or separated and who may need to adjust how their dependents are claimed, how property is divided up or sold, and who pays the taxes due at the time of divorce. Publication 504 gives detailed instructions concerning how to correctly report and file the proceeds of divorce. Continue reading...
Will Ripple Make a Superior Payment System?
Ripple is already making waves in the banking world and may be poised to become the #1 option for cross-border settlements between banks worldwide. Ripple is described as giving cross-border payments a protocol as universal as Http does for the web. The current default system for communicating cross-border payments, SWIFT, has been around since the 1970s, but transactions can take nearly a week to settle. This is because SWIFT only provides secure messaging services for the requests from different institutions, but each transaction still requires several intermediaries who each might take a day to negotiate or complete their part in the deal. Ripple offers a revolutionary way to complete transactions in a matter of seconds, by directly linking banks around the world and cutting out the middlemen wherever possible. 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...
What is Corporate Equity?
Corporate equity is retained earnings plus common shares outstanding. On a corporate balance sheet, the retained earnings and the outstanding common stock capitalization combined would be considered the corporate equity, also called shareholder’s equity / owner’s equity. Of the total corporate equity, the portion representing common stock equity is only the capital raised through the issuance of shares in an IPO (initial public offering), where payment for those shares was paid to the company. Subsequent trading in those shares does not affect the common stock equity on the company books. Continue reading...
What is a Reverse Mortgage?
A reverse mortgage is basically an annuity paid for with home equity. In a reverse mortgage, instead of paying to for your home, you’re getting paid for your home. It is considered a loan, but it does not have to be repaid, except by the proceeds from selling the home. Older Americans who need the income and aren’t concerned about their heirs getting their house might apply for a reverse mortgage. It is also known as a Home Equity Conversion Mortgage (HECM). Continue reading...
What is Capital Structure?
Capital structure gives a framework for a company’s makeup and how it finances its operations, because it includes long and short-term debt plus common and preferred equity. Capital structure is a mix of a company's long-term debt, specific short-term debt, common equity and preferred equity. Often times, investors will want to look at a company’s debt-to-equity ratio as a telltale of what their capital structure is. The higher the debt-to-equity ratio, the more that particular company is borrowing to finance operations versus using cash flow or assets on hand. Continue reading...
What is a Discount Broker?
Discount Broker is a financial organization that places trades at a discount to a full service broker, and also often will serve as a custodian for assets. With the onset of online trading platforms, the discount brokerage industry has seen plenty of growth over the last few years. In many cases, however, a discount broker will not offer any investment advice - hence the discounted price for trading services. An investor that wants a lot of personalized service should probably consider a full service broker over a discount broker, since a discount broker literally only focuses on trade execution and will not provide additional services, like research and advice. Continue reading...
What are some Good Books on Investment?
The investing section in your bookstore has shelves packed with titles hoping to earn a five-star rating from you, but not all of these are going to be worth your time. There are thousands and thousands of books written about investments, stocks, Mutual Funds, retirement portfolios, and so on. By the time most of them hit the market, the information in these books has long become irrelevant. The classic treatise on investments is Ben Graham’s “The Intelligent Investor.” Try to avoid books with titles like “12 Steps to Financial Prosperity,” and “How to become a Zillionaire.” Continue reading...