Active trading is the pursuit of returns in excess of market benchmarks. Investors are advised to have a diverse portfolio, to hedge against the risk of seeing future financial plans devastated due to significant losses in one holding.
When attempting to diversify, investors will hear from the increasingly popular camp which believes that the best strategy is to use only passive index funds, which follow indexes using computer algorithms and have low expense ratios.
The other camp believes that active managers have a better chance of generating superior returns— after all, they have eyes and ears, and are likely to learn things that the computer algorithm running a passive fund will not. There are plenty of examples of active managers outperforming indexes, but detractors say that active managers who do well in one period will not continue to do well over the long-term.
Due to the fees being charged for active management, this does appear to be the case on average over the long -term. But, once again, past performance does not predict future results, and the next 20 years may have a different outcome. Proponents of active management also would suggest that investors remain nimble and don’t rely on one actively managed fund to generate all of their alpha.
The LIBOR is the benchmark interest rate that the world’s leading banks pay each other for short-term loans
The expense ratio is the annual management fee charged to shareholders by ETFs and mutual funds
Consensus is a measure of investor beliefs which are in-line with one another, and can be determined by strong trends
The Equity Multiplier is a number used to compare companies, arrived at by dividing total assets by owner’s equity
Some of the most common asset classes are stocks, bonds, cash (and cash equivalents), commodities, and real estate
Adaptive selling is a marketing principal where the product or services offered are modified based on the demographics
The Abandonment Value is the salvage value left if a capital project is stopped short at an unknown time
Investment advice may included recommendations of certain stocks of funds to pick, or when to buy and sell securities
There are many factors that determine how much you pay for health coverage, such as age, income level, and the type...
The Broadening Wedge Descending pattern forms when a stock price makes lower lows and lower highs, forming two slopes