What is a Home, Legally-Speaking?
The laws concerning a legal residence or primary residence may come into play for purposes of insurance, state taxes, and business matters. Some people have secondary residences, some people choose to remain legal residents of one state while they inhabit another. It can be quite complicated and various statutes may apply, depending on the situation. It can matter for a mortgage loan, for local voting, for healthcare and for business: what is a home? Continue reading...
How to use a Gann Fan in trading
W.D. Gann developed a suite of technical analysis tools around the 1930s, with Gann Fans being among the most essential in his toolkit. Gann fans are a collection of lines placed on a price chart that, in theory, help traders gauge potential price changes. Gann theorized that prices were likely to be sequentially bound by markers; that is, if a price broke through one marker, it would be likely to use the next ones as its new support or resistance level. The range between the lines gets wider the further they extend from the origin, which makes Gann fans suitable for long-term charting in which the number of traders and the size of total market cap grows over time. Continue reading...
What are foreign currency effects?
Companies with significant operations or sales abroad will be affected by changes in foreign currency exchange rates. If the dollar strengthens relative to a foreign currency, the price paid for the goods in the country will not be worth as much domestically when the company converts their profits back to dollars. Some foreign currencies fluctuate much more than the US dollar does, but even the dollar can behave unpredictably. This can have a tremendous effect on the bottom line of companies engaged in significant amounts of business abroad. Continue reading...
What is a foreign institutional investor?
Institutional investors are corporations, banks, pension funds, mutual funds, and other forms of pooled capital which act as one entity to engage in securities transactions in the best interest of the constituents or company that they represent. Foreign Institutional Investors are those whose company is based in another country. Investments made on behalf of foreign companies, foreign financial institutions, and foreign funds (such as the foreign equivalent of hedge funds, mutual funds, and pension funds) are foreign institutional investments. There are usually reporting requirements for both the foreign government for the county in which the interests are held and for the domestic government of the institutional investor. Continue reading...
What is market efficiency?
Market efficiency describes the degree to which relevant information is integrated into the price of a security. With the prevalence of information technology today, markets are considered highly efficient; most investors have access to the same information with prices and industry news, updated instantaneously. The Efficient Market Hypothesis stems from this idea. Efficient markets are said to have all relevant information priced-in to the securities almost immediately. High trading volume also makes a market more efficient, as there is a high degree of liquidity for buyers and sellers, and the spread between bid and ask prices narrows. Continue reading...
What were the Biggest Insider Trading Scandals?
In 2007, Qwest Communications CEO Joseph Nacchio was convicted of making over $50 million dollars through illegal trades. Essentially, Nacchio knew that the company wasn’t doing well, while telling the public that it was on track to pursue highly exaggerated revenue gains. He capitalized on the inflated stock, and was, of course, caught and found guilty. He’s currently serving a six year prison sentence. Continue reading...
What Can You Buy with Bitcoin?
With every day that passes, bitcoin is becoming a more usable and accepted form of payment for a variety of goods and services, even those in the mainstream economy. To be sure, it’s arguably a long way off from being able to use bitcoin for small purchases at your local coffee shop or for big purchases like buying a house, but it is not unfathomable. The financial company Visa (ticker: V) has been working with bitcoin wallet services and various cryptocurrency exchanges to make cryptocurrency debit cards easy to acquire and use. These cards are known by names such as the Shift Card, Bitwala, BitPay, and others, partially depending on the region of the world in which they can be used. These cards allow users to transfer funds from Bitcoin wallets and immediately convert them into spendable fiat currency wherever Visa debit cards are accepted. Customers can also withdraw national currencies from Visa debit ATM machines based on bitcoin and cryptocurrency exchange rates, which often fluctuate wildly. Continue reading...
What is active management?
Active management is the practice of attempting to outperform the market with selection and timing. Active management is a thoughtful and time-consuming approach to investing and is the opposite of Passive management. Active managers seek to outperform the benchmarks for their portfolio by researching and selecting stocks and other assets based on strategies and analysis methods thought to be superior. Continue reading...
AA+/Aa1 — credit rating
AA+ — S&P / Fitch Aa1 — Moody’s Major independent rating institutions such as Moody’s, Fitch, and Standard & Poor’s (S&P) can make or break a company or municipality’s ability to issue debt at a competitive yield. They rank companies and debt issues in terms of the risk of default. Ratings in the A range are considered Investment Grade, which is a rating mostly used by institutional investors. The interesting thing is that there are 7 kinds of A ratings, and they are different between the ratings institutions. We will not list them here, but charts that show the system are readily available online. Continue reading...
What is Sharpe Ratio?
The Sharpe Ratio is a risk-weighted metric for returns on investment. It measures whether an investment offers a good return for the amount of risk assumed by the investor. The risk/return trade-off is a positive linear relationship in most theoretical depictions – if an investor seeks greater returns, they will have to take on greater risk. For more stability and less risk, an investor will have to sacrifice some potential returns. Continue reading...