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why do energy stocks trade at lower prices compared to other sectors? | Large-scale price range of a stock isn't directly meaningful; that reflects how many shares exist, not just how desirable they are. A stock split, for example, doubles the number of shares everyone holds while cutting the value of each share in half; that's meaningless except that it makes the shares a bit easier to trade in. Change in price is more interesting. In the case of energy companies, that often reflects major changes in energy supply, distribution, use, or how well positioned people feel the company is for the next change in these. Fracking's surge and the questions raised against it, whether a major pipeline will or won't be built, international energy price trends, breakthroughs in renewables... if it might affect energy price, it might affect the company's strength, both absolute and relative to others. In other words, the same kinds of things that affect any stock. |
Investing tax (savings) | If you have a mortgage, making part of it a mortgage-backed overdraft (ANZ call theirs a Flexi loan) is worth looking at. I'm in a similar situation, consulting since 2010. I pay GST and provisional tax every six months. If I've budgeted right, the balance on the mortgage-backed overdraft loan goes to zero right before I send the massive payment to the tax department in May and October. One problem is that some banks don't like to give these accounts to sole traders. Using a mortgage broker may help get around that restriction. |
JCI headache part 2: How to calculate cost basis / tax consequences of JCI -> ADNT spinoff? | OK, I found this filing by JCI on the SEC website: U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders For U.S. federal income tax purposes, the distribution will not be eligible for treatment as a tax-free distribution by Johnson Controls with respect to its stock. Accordingly, the distribution will be treated as a taxable distribution by Johnson Controls to each Johnson Controls shareholder in an amount equal to the fair market value of the Adient ordinary shares received by such shareholder (including any fractional shares deemed received and any Adient ordinary shares withheld on account of any Irish withholding taxes), determined as of the distribution date (such amount, the "Distribution Amount"). The Distribution Amount received by a U.S. holder will be treated as a taxable dividend to the extent of such U.S. holder's ratable share of current or accumulated earnings and profits of Johnson Controls for the taxable year of the distribution (as determined under U.S. federal income tax principles). Any portion of the Distribution Amount that is treated as a dividend will not be eligible for the dividends-received deduction allowed to corporations under the Code. My broker's 1099-B form tells me that I received a Qualified Dividend from JCI on 10/31/2016 of $512.44, which would be equivalent to $45.349 valuation of ADNT as of the spinoff date for my 11.3 shares (before the 0.3 shares were sold as cash-in-lieu) . |
What does market cap (or market capitalization) mean? | Market cap is the current value of a company's equity and is defined as the current share price multiplied by the number of shares. Please check also "enterprise value" for another definition of a company`s total value (enterprise value = market cap adjusted for net nebt). Regarding the second part of your question: Issuing new shares usually does not affect market cap in a significant way because the newly issued shares often result in lower share prices and dilution of the existing share holders shares. |
Should I sell when my stocks are growing? | In my view, it's better to sell when there's a reason to sell, rather than to cap your gains at 8%. I'm assuming you have no such criteria on the other side - i.e. hold your losses down to 8%. That's because what matters is how much you make overall in your portfolio, not how much you make per trade. Example: if you own three stocks, equal amounts - and two go up 20% but one falls 20%. If you sell your gains at 8%, and hold the loser, you have net LOST money. So when do you actually sell? You might say a "fall of 10%" from the last high is good enough to sell. This is called a "trailing" stop, which means if a stock goes from 100 to 120, I'll still hold and sell if it retraces to 108. Needless to say if it had gone from 100 to 90, I would still be out. The idea is to ride the trend for as long as you can, because trends are strong. And keep your trailing stops wide enough for it to absorb natural jiggles, because you may get stopped out of a stock that falls 4% but eventually goes up 200%. Or sell under other conditions: if the earnings show a distinct drop, or the sector falls out of favor. Whenever you decide to sell, also consider what it would take for you to buy the stock back - increased earnings, strong prices, a product release, whatever. Because getting out might seem like a good thing, but it's just as important to not think of it as saying a stock is crappy - it might just be that you had enough of one ride. That doesn't mean you can't come back for another one. |
Merchant dispute with airline over missed flight, and which credit cards offer protection? | What you are looking for is travel insurance. I have never heard of this being offered as a credit card perk, but there might be something out there. You can buy this separately, but only you can decide if it is worth the costs. To me, it would seem to only be worth it for something quite expensive, like a cruise that costs thousands of dollars. The more you travel, the less likely it is to be worth it, since at some point the cost of one canceled trip is less than the insurance paid on the rest of the trips that went through fine. As a frequent traveller, I recommend that you build some flexibility into your plans, especially during the winter. It is not always possible, but try not to need to be somewhere the day of or the day after your flight. Try to book flights early in the day, as they are less likely to be delayed by problems in flights before them, and you have more options for rebooking. Flight delays due to weather and mechanical problems are not uncommon, and with generally full flights it is sometimes hard to be rebooked in a reasonable amount of time. Finally, be nice to the gate agents and other airline personel. In general, they aren't any happier about delays than you are (flight crews want to get home too) and don't have any power over weather or mechanical delays. Being rude to them will not help, and will make them less likely to go out of their way to find a solution. Be assertive in asking for what you want, but a smile and a kind word goes a long way. |
Advice on money transfer business | As soon as I see the word "friends" along with money transfer I think scam. But ignoring that red flag.... You will have American companies reporting to the IRS that you are a Canadian Vendor they have hired. Then you are transferring money to people in Bangladesh. Assuming also that you fill out all the regulatory paperwork to establish this Money transfer business you may still face annual reporting requirements to 3 national taxing authorities. In the United states there are situations where the US Government hires a large company to complete a project. As part of that contract they require the large company to hire small businesses to complete some of the tasks. In a situation where the large company is imply serving as a conduit for the money between the government and the sub-contractor; and the large company has no other responsibilities; the usual fee for providing that function is 8% of the funds. This pays for their expenses for their accounting functions plus profit and the taxes that will trigger. Yet you said "At the end of the day, I will not earn much, but the transactions will just burden my tax returns." The 8 percent fee doesn't include doesn't include having to file paperwork with 3 nations. Adding this to all the other risks associated with being an international bank, plus the legal costs of making sure you are following all the regulations...No thanks. |
What is vested stock and yearly dividends? | Vesting As you may know a stock option is the right to acquire a given amount of stock at a given price. Actually acquiring the stock is referred to as exercising the option. Your company is offering you options over 200,000 shares but not all of those options can be exercised immediately. Initially you will only be able to acquire 25,000 shares; the other 175,000 have conditions attached, the condition in this case presumably being that you are still employed by the company at the specified time in the future. When the conditions attached to a stock option are satisfied that option is said to have vested - this simply means that the holder of the option can now exercise that option at any time they choose and thereby acquire the relevant shares. Dividends Arguably the primary purpose of most private companies is to make money for their owners (i.e. the shareholders) by selling goods and/or services at a profit. How does that money actually get to the shareholders? There are a few possible ways of which paying a dividend is one. Periodically (potentially annually but possibly more or less frequently or irregularly) the management of a company may look at how it is doing and decide that it can afford to pay so many cents per share as a dividend. Every shareholder would then receive that number of cents multiplied by the number of shares held. So for example in 4 years or so, after all your stock options have vested and assuming you have exercised them you will own 200,000 shares in your company. If the board declares a dividend of 10 cents per share you would receive $20,000. Depending on where you are and your exact circumstances you may or may not have to pay tax on this. Those are the basic concepts - as you might expect there are all kinds of variations and complications that can occur, but that's hopefully enough to get you started. |
What forms of payment am I compelled to accept? | I just listened to a podcast on this topic this week, and Satanicpuppy is pretty much correct. If you are interested, here is a link to the podcast on Legal Lad: Can Businesses Refuse to Accept Cash? |
Where do countries / national governments borrow money from? | Depends on the country, whether its a currency issuer with floating exchange rate, and what the debt is denominated in. For instance, the US has no real debt, b/c its all in US dollars and can be printed at any time. It has no need to borrow anything, it issues its own currency. It used to be different 4 decades ago, on the gold standard, so in general people still think currency issuers need to borrow (or earn) to spend. Just a relic in thinking. But when the country does not issue its own currency, then it does need to earn or borrow in order to spend. In this case, it could borrow from anywhere that will lend it money. In US, a state would fit this description. Or Greece, as it borrowed Euros, for which it is not an issuer of. EDIT: just came across this blog http://pragcap.com/where-does-the-money-come-from Its title, "Where does the money come from". Maybe he saw this question. Anyway, the US does not need to borrow money. Why would it borrow what it creates? From the video: "Thinking is hard, that's why we don't do it a lot". Great line. |
Wardrobe: To Update or Not? How-to without breaking the bank | The best way to save on clothes is up to you. I have friends who save all year for two yearly shopping trips to update anything that may need updating at the time. By allowing themselves only two trips, they control the money spent. Bring it in cash and stop buying when you run out. On the other hand in my family we shop sales. When we determine that we need something we wait until we find a sale. When we see an exceptionally good sale on something we know we will need (basic work dress shoes, for example), we'll purchase it and save it until the existing item it is replacing has worn out. Our strategy is to know what we need and buy it when the price is right. We tend to wait on anything that isn't on sale until we can find the right item at a price we like, which sometimes means stretching the existing piece of clothing it is replacing until well after its prime. If you've got a list you're shopping from, you know what you need. The question becomes: how will you control your spending best? Carefully shopping sales and using coupons, or budgeting for a spree within limits? |
Selling non-dividend for dividend stocks | Is selling Vested RSU is the same as selling a regular stock? Yes. Your basis (to calculate the gain) is what you've been taxed on when the RSUs vested. Check your payslips/W2 for that period, and the employer should probably have sent you detailed information about that. I'm not a US citizen, my account is in ETrade and my stocks are of a US company, what pre arrangements I need to take to avoid tax issues? You will pay capital gains taxes on the sale in Israel. Depending on where you were when you earned the stocks and what taxes you paid then - it may open additional issues with the Israeli tax authority. Check with an Israeli tax adviser/accountant. |
How to compare the value of a Masters to the cost? | I wasn't 100% on which columns of the scale you were referring to, but think I captured the correct ones in this comparison, using the scale for BA and MA (MA scale starting 2 years later, with decreased income reflected for first two years), applying a 1% cost of living increase each year to the scale or to prior year after the scale maxes out and assuming you borrow 40k and repay years 3-10, then the difference and cumulative difference between each scenario: So it would be about 16 years to start coming out ahead, but this doesn't account for the tax deduction of student loan interest. Some things in favor of borrowing for a MA, there are loan forgiveness programs for teachers, you might only make 5-years of minimum payments before having the remainder forgiven if you qualify for one of those programs. Not sure how retirement works for teachers in WA, but in some states you can get close to your maximum salary each year in retirement. Additionally, you can deduct student loan interest without itemizing your tax return, so that helps with the cost of the debt. Edit: I used a simple student loan calculator, if you financed the full 40k at 6% you'd be looking at $444 monthly payments for 10 years, or $5,328/year (not calculating the tax deduction for loan interest). |
What would happen if the Euro currency went bust? | I'd have anything you would need for maybe 3-6 months stored up: food, fuel, toiletries, other incidentals. What might replace the currency after the Euro collapses will be the least of your concerns when it does collapse. |
How to get rid of someone else's debt collector? | Suing is a legitimate option as well as screening your calls but here's another idea which has personally worked and relates to the collections I did for awhile. Talk with the collector. Outstanding debt gets sold many times and each time a new collector gets their hands on an account they do their due diligence which means calling every single number multiple times. Collectors a looking for consumers who actively evade collections calls for years. My recommendation is to use logic and explain the situation. Give your first name and describe when you received the phone number and then ask a simple question. When in the last 3 1/2 years have you or any collector had a successful hit from this number. They'll respond never in 3 1/2 years. The collector notes the account for themselves and future collectors. Debt collectors are about about making money, not wasting time and they do review all notes pertaining to an account. Will it work? Maybe not but hopefully it will stop the calls with a short conversation. Good luck. |
As a beginner investor, should I start investing with mutual funds through my bank, or with an online broker? | What is the best option to start with? and I am not sure about my goals right now but I do want to have a major retirement account without changing it for a long time That is a loaded question. Your goals should be set up first, else what is stopping you from playing the mega millions lottery to earn the retirement amount instantly. If you have the time and resources, you should try doing it yourself. It helps you learn and at a latter stage if you don't have the time to manage it yourself, you can find an adviser who does it for you. To find a good adviser or find a fund who/which can help you achieve your monetary goals you will need to understand the details, how it works and other stuff, behind it. When you are thrown terms at your face by somebody, you should be able to join the dots and get a picture for yourself. Many a rich men have lost their money to unscrupulous people i.e. Bernie Madoff. So knowing helps a lot and then you can ask questions or find for yourself to calm yourself i.e. ditch the fund or adviser, when you see red flags. It also makes you not to be too greedy, when somebody paints you a picture of great returns, because then your well oiled mind would start questioning the rationale behind such investments. Have a look at Warren Buffet. He is an investor and you can follow how he does his investing. It is simple but very difficult to follow. Investing through my bank I would prefer to stay away from them, because their main service is banking and not allowing people to trade. I would first compare the services provided by a bank to TD Ameritrade, or any firm providing trading services. The thing is, as you mentioned in the question, you have to go through a specific process of calling him to change your portfolio, which shouldn't be a condition. What might happen is, if he is getting some benefits out of the arrangement(get it clarified in the first place if you intend to go through them), from the side of the fund, he might try to dissuade you from doing so to protect his stream of income. And what if he is on a holiday or you cannot get hold of him. Secondly from your question, it seems you aren't that investing literate. So it is very easy to get you confused by jargon and making you do what he gets the maximum benefit out of it, rather than which benefits you more. I ain't saying he is doing so but that could be a possibility too, so you have consider that angle too. The pro is that setting up an account through them might be much easier than directly going to a provider. But the best point doing it yourself is, you will learn and there is nothing which tops that. You don't want somebody else managing your money, however knowledgeable they maybe i.e. Anthony Bolton. |
Can you explain “time value of money” and “compound interest” and provide examples of each? | I will just explain the time value of money in general, descriptive terms and save the math for someone else. Imagine: You have half a million dollars. I'd like to borrow it all from you. I'll pay it all back, every penny, but no more. And I'll pay it back in about, oh, thirty years or so. (Imagine also that you can be 100% sure that I'll pay it back.) Does this sound like a good deal? Not really. Why not? Well, you could do something with that sort of money. With that sort of money, you could do a lot of things for 30 years. You could buy a nice house and live in it for 30 years and save yourself from spending a lot of money on rent during that time (or save money on interest by paying off a mortgage early) even if the price of the house goes nowhere. If you already had a house, you could do some home improvement, like insulate the place better (to save on heating bills) or even just on something that you're going to enjoy for part of those 30 years (a patio in the back yard). If you were feeling entrepreneurial, you could take that money and start a business. Or you could invest that money in the stock market, and get a lot more back.... and if that's too risky for you, just start a savings account and earn interest. And finally, in 30 years, the value of the dollar will be lower because of inflation, so it won't buy as much now as it will then. That's the time value of money. It's the opportunity cost of the best of the things that you could have done with that money during the time it was gone. When you take out a loan, your interest payments will depend in part on the time value of the money you're borrowing: the people making the loan could be investing that money somewhere else, like government bonds. (It will also depend on factors like the risk of default on the loan - this is why credit card debt is more expensive than debt like a mortgage that's backed by a big fat asset like a house which can be seized and sold if you happen to default.) This is how the Federal Reserve can affect interest rates across the economy by just buying or selling government bonds. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | Don't compare investing with a roll of the dice, compare it with blackjack and the decision to stand or hit, or put more money on the table (double down or increase bet size) , based on an assessment of the state of the table and history. A naive strategy of say "always hitting to 16" isn't as awful as randomly hitting and standing (which, from time to to time will draw to 21 fair and square) , but there's a basic strategy that gets close to 50% and by increasing or decreasing bet based on counting face cards can get into positive expectations. Randomly buying and selling stock is randomly hitting. Buying a market index fund is like always hitting to 16. Determining an asset allocation strategy and periodically rebalancing is basic strategy. Adjusting allocations based on business cycle and economic indicators is turning skill into advantage. |
Online Foreign Exchange Brokerages: Which ones are good & reputable for smaller trades? | I used XE trade once several years ago. I found them quite easy to use after the slightly fiddly account setup process (needed for security/anti-money laundering I think). I trusted them because I'd been using their online FX rates for a long time. I can't really comment on the specific questions you ask though as this was a long time ago and I haven't needed one since. |
How to start buying shares with small amount of money? | Before anything else, read up on the basics of economics. After that, there a few things you need to ask yourself before you even think about investing in anything: If you have an answer to those questions: Once you answered those questions I could make a simple first suggestion: Confident in handling it yourself and low maintenance with uncertain horizon: look up an online bank that offers ETFs such as IWDA (accumulation (dividend is not payed but reinvested) or income(dividend is payed out)) and maybe a few more specific ones then buy and hold for at least 5 years. Confident and high maintenance with long horizon: maybe stock picking but you'll probably never be able to beat the market unless you invest 10's of hours in research per week. However this will also cost a bit and given your initial amount not advisable to do. Be sure that you also have a VERY close look at the prospectus of an investment (especially if you go with a (retail) bank and they "recommend" you certain actively traded funds). They tend to charge you quite a bit (yearly management fees of 2-3% (which is A LOT if you are eying maybe 7%-8% yearly) aren't unheard of). ETF's such IWDA only have for example a yearly cost of 0.20%. Personally I have one portfolio (of many) only consisting of that ETF (so IWDA) and one global small cap. It's one of the best and most consistant ones to date. In the end, the amount you start with doesn't really matter so much as long as it's enough to buy at least a few shares of what you have in mind. If you can then increase your portfolio over time and keep the expenses in check, compounding interest should do the rest. |
FOK order type: can they be market or limit orders? | You can do FOK on both market and limit orders. Normal market orders will partial fill if you want more shares than are being offered, or if someone pulled their order before you get there and now there are fewer shares than you placed a trade for. With a FOK limit order not at the BBO you are shooting in the dark for a quick match, most of the time it does not fill. This is a commonly used order type for UHFT arbitrage. Some exchanges will not attempt to cross it for a match if its price is not at, or better than the market price. When the FOK limit order is at the BBO it is essentially a FOK market order. FYI: Sometimes you have a minimum quantity to fill option, so you can let the order sit on the book until it fills or you cancel. |
Capital Gains Tax - Does this apply only to the actual “gains” or to the entire amount of my sale? | Assuming you bought the stocks with after-tax money, you only pay tax on the difference. Had you bought he shares in a pretax retirement account, such as an IRA or 401(k), the taxation waits until you withdraw, at which point, it's all taxed as ordinary income. |
Strategies to recover from a bad short-term call options purchase where the underlying dropped instead? | For personal investing, and speculative/ highly risky securities ("wasting assets", which is exactly what options are), it is better to think in terms of sunk costs. Don't chase this trade, trying to make your money back. You should minimize your loss. Unwind the position now, while there is still some remaining value in those call options, and take a short-term loss. Or, you could try this. Let's say you own an exchange traded call option on a listed stock (very general case). I don't know how much time remains before the option's expiration date. Be that as it may, I could suggest this to effect a "recovery". You'll be long the call and short the stock. This is called a delta hedge, as you would be delta trading the stock. Delta refers to short-term price volatility. In other words, you'll short a single large block of the stock, then buy shares, in small increments, whenever the market drops slightly, on an intra-day basis. When the market price of the stock rises incrementally, you'll sell a few shares. Back and forth, in response to short-term market price moves, while maintaining a static "hedge ratio". As your original call option gets closer to maturity, roll it over into the next available contract, either one-month, or preferably three-month, time to expiration. If you don't want to, or can't, borrow the underlying stock to short, you could do a synthetic short. A synthetic short is a combination of a long put and a short call, whose pay-off replicates the short stock payoff. I personally would never purchase an unhedged option or warrant. But since that is what you own right now, you have two choices: Get out, or dig in deeper, with the realization that you are doing a lot of work just to trade your way back to a net zero P&L. *While you can make a profit using this sort of strategy, I'm not certain if that is within the scope of the money.stachexchange.com website. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | It seems to be that your main point is this: No matter what, my chances cannot be worse than random and if my trading system has an edge that is greater than the percentage of the transaction that is transaction cost, then I am probabilistically likely to make a profit? In general, yes, that is true, but... Consider this very bad strategy: Buy one share of stock and sell it one minute later, and repeat this every minute of the day. Obviously you would bleed your account dry with fees. However, even this horrible strategy still meets your criteria because: if this bad strategy had an edge beyond the transaction fees you would likely still make a profit. In other words, your conclusion reduces to an uninteresting statement: If there were no transactions fees, then if your trading system has an edge then you will likely make a profit. Sorry to be the bearer of bad news, but IMHO, that statement, and others made in the question are just obvious things stated in convoluted ways. I don't want to discourage you from thinking about these things though. I personally really enjoy these type of thought experiments. I just feel you missed the mark on this one... |
Where can I find open source portfolio management software? | I've just recently launched an open source wealth management platform - wealthbot.io ... "Webo" is mostly targeted at RIA's to help the manage multiple portfolios, etc. Take a look at the demo at demo.wealthbot.io, you'll also find links to github, etc. there. It's a rather involved project, but if you are looking for use cases of rebalancing, portfolio accounting, custodian integration, tax loss harvesting, and many other features available at some of the popular robo-advisors, you might find it interesting. |
What is the smartest thing to do in case of a stock market crash | If you know the market will crash, you could opt for going short. However, if you think this is too risky, not investing at all is probably your best move. In case of crises, correlation go up and almost all assets go down. |
Recommended finance & economy book/blog for a Software Engineer? | For economics I recommend mises or these videos to get you started. For daily critical analysis of financial markets, keynesian government policies, and other interesting reading I recommend zerohedge. I've learned more about financial markets and government regulations by reading the comments section on zerohedge articles than anywhere else on the internet. The comment section is very raw (i.e. lots of fucking cursing) but there are some jewels of information in there. For daily critical thinking I suggest lewrockwell. |
Stock Dividends & Splits: Are they always applied over night? | I've never seen a dividend, split or other corporate action during the day, but I have seen trade suspended a few times when something big happened. The market opening price is not in general the same as the close of the previous day. It can gap up or down and does frequently. I don't know of an api to find out if the dividend was cash or stock, but stock dividends are a lot less common. |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | You didn't get laid off or have your hours cut back when the minimum wage was raised? I guess you have much to be grateful for, including a higher hourly rate. An excellent record is its own reward. When you finish your degree you will be grateful for the good habits you have established. You won't ever lose a nights sleep looking back and thinking "I wish I didn't do the right thing." It's sad that there isn't a more immediate reward for doing more than average, but that's life, doing the right thing over a long period of time does eventually lead to the reward you're looking for. Sometimes those rewards aren't tangible. |
Using credit cards online: is it safe? | So, my questions: Are payment cards provide sufficient security now? Yes. If so, how is that achieved? Depending on your country's laws, of course. In most places (The US and EU, notably), there's a statutory limit on liability for fraudulent charges. For transactions when the card is not present, proving that the charge is not fraudulent is merchants' task. Why do online services ask for all those CVV codes and expiration date information, if, whenever you poke the card out of your wallet, all of its information becomes visible to everyone in the close area? What can I do to secure myself? Is it? Try to copy someones credit card info next time you're in the line at the local grocery store. BTW, some of my friends tend to rub off the CVV code from the cards they get immediately after receiving; nevertheless, it could have already been written down by some unfair bank employee. Rubbish. |
Why do card processing companies discourage “cash advance” activities | Square charges a 2.75% fee (which the merchant pays), so you would be losing money if you only got a 1.5% cashback bonus. I would guess that the real reason Square prohibits you from getting cash is because of Visa/MC, state and federal regulations. Visa/MC probably prohibit it for regular merchants due primarily to laws that are designed to prevent money-laundering. Certain merchants (like casinos) are allowed to give you cash advances against a credit card, but regular merchants are not allowed to do this. It is much more difficult to get Visa/MC to approve merchants to handle cash advances and they are subject to many additional regulations. Services like Western Union will let you send cash with a regular credit card, but they are classified as "money transmitters" and must comply with additional state and federal regulations. If Square were to allow cash advances, this would likely subject them to a bunch of additional regulations. It would cost them more to comply with these regulations and is outside their business model, so they simply prohibit it. |
Hiring a teenager as a household employee | Here is what I was able to find: Yes, but there are special instructions for minors: Working hours: New York State labor laws are slightly more strict than the federal: https://www.labor.state.ny.us/workerprotection/laborstandards/workprot/nyvsfed.shtm Minimum wage: The Dept of Labor's Youth & Labor page states: Occupations such as babysitting are not subject to the minimum wage law. No supporting documentation is given. Another page describes the Youth Minimum Wage Program: A minimum wage of not less than $4.25 may be paid to employees under the age of 20 for their first 90 consecutive calendar days However, I can't find any such exception in New York State minimum wage law. According to Publication 926, Household Employer's Tax Guide: Federal income tax withholding No, I am not required to withhold federal income taxes from a household employee. If we both want them to be withheld, a W-4 should be submitted to me. State income tax withholding No, according to NYS Pub 27: Withholding income tax (federal or New York State) from wages paid to household employees is voluntary on your part and your employee Social security and medicare No, I am not required to withhold FICA taxes because when calculated wages, I should not include: An employee who is under the age of 18 at any time during the year. Exception: Count these wages if providing household services is the employee's principal occupation. If the employee is a student, providing household services is not considered to be his or her principal occupation. Unemployment insurance No, I don't think I have to pay federal unemployment tax. I think the exception for FICA applies to FUTA. For New York (according to Household Employers Guide for Unemployment Insurance), there is an exception for paying state unemployment insurance: Daytime students who attend elementary or high school (However, you must pay UI taxes on wages you pay these students if you are liable under FUTA.) I can't find any specific requirements, but aside from numbers of hours times rate of pay, you might want to consider the information required by the Wage Theft Prevention Act: Also, consider this requirements from the NY Minimum Wage Act Every employer shall keep true and accurate records of hours worked by each employee covered by an hourly minimum wage rate, the wages paid to all employees, and such other information as the commissioner deems material and necessary, and shall, on demand, furnish to the commissioner or his duly authorized representative a sworn statement of the same. |
I might use a credit card convenience check. What should I consider? | Well, you might take a minor hit to your credit score. This is snapshot of my credit utilization written for an article on my site. The point there was that zero card use actually dinged the score, but for you, going over the 20% level is the risk. It's not too large a hit, depending how high the utilization goes. I'd not lose sleep over it. Kind of you to help. |
How should I be contributing to my 401(k), traditional or Roth? | I wrote a brilliant guest post at Don't Mess With Taxes, titled Roth IRAs and Your Retirement Income. (Note - this article now reflects 2012 rates. Just updated) Simply put, it's an ongoing question of whether your taxes will be higher now than at any point in the future. If you are in the 25% bracket now, it would take quite of bit of money for your withdrawals to put you in that bracket at retirement. In the case of the IRA, you have the opportunity to convert in any year between now and retirement if your rate that year drops for whatever reason. The simplest case is if you are now in the 25% bracket. I say go pre-tax, and track, year by year what your withdrawal would be if you retired today. At 15%, but with a good chance for promotion to the 25% bracket, start with Roth flavor and then as you hit 25%, use a combination. This approach would smooth your marginal rate to stay at 15%. To give you a start to this puzzle, in 2012, a couple has a $11,900 standard deduction along with 2 exemptions of $3800 each. This means the first $19,500 in an IRA comes out tax free at retirement. If you believe in a 4% withdrawal rate, you need a retirement account containing $500K pretax to generate this much money. This tick up with inflation, 2 years ago, it was $18,700 and $467K respectively. This is why those who scream "taxes will go up" may be correct, but do you really believe the standard deduction and exemptions will go away? Edit - and as time passes, and I learn more, new info comes to my attention. The above thoughts not withstanding, there's an issue of taxation of Social Security benefits. This creates a The Phantom Tax Rate Zone which I recently wrote about. A single person with not really too high an income gets thrust into the 46% bracket. Not a typo, 46.25% to be exact. |
Why do 10 year Treasury bond yields affect mortgage interest rates? | The yield on treasury bond indicates the amount of money anyone at can make at virtually zero risk. So lets say banks have X [say 100] amount of money. They can either invest this in treasury bonds and get Y% [say 1%] interest that is very safe, or invest into mortgage loans [i.e. lend it to people] at Y+Z% [say at 3%]. The extra Z% is to cover the servicing cost and the associated risk. (Put another way, if you wanted only Y%, why not invest into treasury bonds, rather than take the risk and hassle of getting the same Y% by lending to individuals?) In short, treasury bond rates drive the rate at which banks can invest surplus money in the market or borrow from the market. This indirectly translates into the savings & lending rates to the banks' customers. |
What happened when the dot com bubble burst? | To add to the already existing answers, most of the dotcom companies used an accounting sheningan so profusely that everything looked rosy. To account for revenues, what dotcom companies did was, get into a barter transaction with another dotcom company by selling advertising space and stuff on each other's website. So the final outcome was each had quite a substantial amount of revenue while in reality there wasn't any revenue earned. This cooked up their books to look quite rosy to investors who then poured in their money, without realizing they were pouring money into a black hole. As someone mentioned Cisco, which sells networking gear and was heavily dependent on the dotcom boost. So when everything went bust, its stock price also crashed heavily. This was for the losers, but some good ones did sail through. Dotcom companies which had substance took a hit, in fact everybody did, during the bust but more than made up for it later on when investors realized they are valuable. |
Does an individual share of a stock have some kind of unique identifier? | Nope, think what a nightmare that would be, a bunch of shares would be issued and then sold to tonnes of people, who might sell various partial numbers of them to others, who might buy them and others from 20 others all as part of one order though multiple fills... It would be nuts, and if one were to issue a certificate with the IDs of shares that were carried through such a process the likelihood is the fragmentation would be so great that 100K shares would have consist of almost as many fragments! Imagine a share certificate with 70K IDs/ranges? Yikes! |
In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? | This is something you should decide as part of entering a partnership with someone. Ideally before you make the initial purchase you have a detailed contract written up. If you have already bought the house and someone is now ready to move out the easiest thing to do is sell the house. If that is not an option, you'll have to decide on a plan together and then get it in writing. |
Why was S&P 500 PE Ratio so high on May 2009 | Asking why the p/e was so high is best answered "because reported earnings were so low". Recall that the S&P500 bottomed in early March 2009 when the panic of the financial crisis reached exhaustion. As noted on the page you have linked, the reported p/e ratios are computed using reported earnings from the trailing twelve months. During those twelve months the banks were writing down all of the bad debt associated with the mortgage backed securities that has lost so much value. This meant that the banks were reporting negative earnings. Since the financial sector is a large part of the S&P500, this alone had an enormous effect on the index p/e. However, the problem was compounded by a general collapse in earnings across the economy as consumers reacted to the resulting uncertainty. The same site reports earnings for the previous years at $17.11 for the S&P500, compared to $76.17 for the year prior to 2008. That is a collapse of about 78% in earnings. Although the S&P500 has suffered badly during this time, stock market investors being forward looking were starting to price in improved earnings by May 2009. Indeed, the S&P500 was up about 33% in just two months, from its low in March2009 to mid May2009. Thus, by May of 2009 prices were not suffering to the same extent as reported trailing earnings. This would account for the anomalous p/e value reporting in May2009. |
What evidence exists for claiming that you cannot beat the market? | There seems to be a common sentiment that no investor can consistently beat the market on returns. What evidence exists for or against this? First off, even if the markets were entirely random there would be individual investors that would consistently beat the market throughout their lifetime entirely by luck. There are just so many people this is a statistical certainty. So let's talk about evidence of beating the market due to persistent skill. I should hedge by saying there isn't a lot of good data here as most understandably most individual investors don't give out their investment information but there are some ok datasets. There is weak evidence, for instance, that the best individual investors keep outperforming and interestingly that the trading of individual investors can predict future market movements. Though the evidence is more clear that individual investors make a lot of mistakes and that these winning portfolios are not from commonly available strategies and involve portfolios that are much riskier than most would recommend. Is there really no investment strategy that would make it likely for this investor to consistently outperform her benchmark? There are so, many, papers (many reasonable even) out there about how to outperform benchmarks (especially risk-adjusted basis). Not too mention some advisers with great track records and a sea of questionable websites. You can even copy most of what Buffet does if you want. Remember though that the average investor by definition makes the average "market" return and then pays fees on top of that. If there is a strategy out there that is obviously better than the market and a bunch of people start doing it, it quickly becomes expensive to do and becomes part the market. If there was a proven, easy to implement way to beat the market everyone would do it and it would be the market. So why is it that on this site or elsewhere, whenever an active trading strategy is discussed that potentially beats the market, there is always a claim that it probably won't work? To start with there are a large number of clearly bad ideas posed here and elsewhere. Sometimes though the ideas might be good and may even have a good chance to beat the market. Like so many of the portfolios that beat the market though and they add a lot of uncertainty and in particular, for this personal finance site, risk that the person will not be able to live comfortably in retirement. There is so much uncertainty in the market and that is why there will always be people that consistently outperform the market but at the same time why there will be few, if any, strategies that will outperform consistently with any certainty. |
How to evaluate stocks? e.g. Whether some stock is cheap or expensive? | nan |
Is insurance worth it if you can afford to replace the item? If not, when is it? | Generically, like farnsy noted in the other answer, you will only come ahead in dollar terms when you are significantly riskier than the average insuree. Otherwise the insurance company would have higher rates to make a profit. In the case of Apple Care there can arguably be other factors involved. If you did not insure your $2000 laptop and it broke (unfixably) just after the warranty period, would you replace it with a new Apple product? Maybe not, so Apple could lose a customer. That means they have an incentive to keep you happy. If your product breaks but insurance replaces it, you are a happier customer and more likely to buy other Apple products. This is not an incentive for traditional insurance companies that only do business in insurance. Now, with the profit margins Apple likes in general, I don't know if they've underpriced their insurance. I sort of doubt it even. But their margins on it are probably not high, meaning it's a closer call even if you are only averagely risky. |
What actions can I take against a bank for lack of customer service? | I don't think the verbal confirmation from the branch manager is worth anything, unless you got it in writing it basically never happened. That said, what did you sign exactly? An application? I'd think they would be well within their rights to deny that, no matter what the branch manager said. If you actually signed a binding contract between you and the bank, things would be different but the fact that 'approval' was mentioned suggests that all you and the bank signed was an application and the bank manager made some unreasonable promises he or she doesn't want to be reminded of now. If the complaints department can't get off their collective backsides, a firm but polite letter to the CEO's office might help, or it might end up in the round filing cabinet. But it's worth a try. Other than that, if you are unhappy enough to go through the pain, you can try to remortgage with another bank and end the business relationship with your current bank. |
Does an index have a currency? | In practice, most (maybe all) stock indices are constructed by taking a weighted average of stock prices denominated in a single currency, and so the index implicitly does have that currency - as you suggest, US dollars for the S&P 500. In principle you can buy one "unit" of the S&P 500 for $2,132.98 or whatever by buying an appropriate quantity of each of its constituent stocks. Also, in a more realistic scenario where you buy an index via a tracker fund, you would typically need to buy using the underlying currency of the index and your returns will be relative to that currency - if the index goes up by 10%, your original investment in dollars is up by 10%. |
Will I get taxed on withdrawals from Real Cash Economy games? | Income from a hobby is tax exempt under Dutch law. To consider whether it's hobby, a few rules are applied such as: How much time do you spend on the activity? And is the hourly wage low? Obviously, having a boss is a sure sign of it not being a hobby. The typical example is making dolls and selling them on a crafts fair. If you travel the country and sell each weekend on a different fair, that's a lot of time. If you only sell them on the fair in your home town, it's a hobby. Situation 3 is the most difficult. If you just happened to luck out, it's still a hobby. If you spent significant time to improve the value of your holdings, e.g. by trading in-game, then it might be seen as work. In the latter case, you simply file it as "income from other sources, not yet taxed". For the purpose of determining income from a hobby, you may deduct actual expenses. So, in your case they'd look at the net income of $-1000, which is not unusual for a hobby. It wouldn't be any different if you took up horse riding, decided that you didn't like it, and sell your horse at a loss. |
Recourse with Credit Card company after victimized by fraud? | Concealing parts of a document in order to obtain a signature is illegal. The company committed signature forgery because they effectively modified the document after you signed it (i.e. unfolded the parts that were previously folded). I suggest that you go to your local police department to file a report, citing "signature forgery". Once you have the police report, call your bank's fraud department (not the general billing dispute line) and cite the police report right away, specifically calling out "signature forgery". I would be surprised if you don't get a favorable outcome. |
How do brokers make money from margin accounts? | They will make money from brokerage as usual and also from the interest they charge you for lending you the money for you to buy your shares on margin. In other words you will be paying interest on the $30,000 you borrowed from your broker. Also, as per Chris's comment, if you are shorting securities through your margin account, your broker would charge you a fee for lending you the securities to short. |
Do company-provided meals need to be claimed on my taxes? | It looks like the resource to deciding these is here Concerning the meals, the law seems a bit vague to me. You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests. This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals. If the whole point of google providing meals is to benefit Google as such people will not leave the googleplex when to obtain meals elsewhere causing increased productivity for Google, then this is covered as a business expense. (Even if it wasn't, Google would have to notify you that it was providing you a non-expensable benefit, i.e. compensation, by giving you a 1099 at the end of the year). Concerning the other benefits, the only way I could see those items not being taxable benefits is if one of the two applies. |
What are some sources of information on dividend schedules and amounts? | I have 3 favorite sites that I use. http://www.nasdaq.com/symbol/mcd/dividend-history - lists the entire history of dividends and what dates they were paid so you can predict when future dividends will be paid. http://www.dividend.com/dividend-stocks/services/restaurants/mcd-mcdonalds/ - this site lists key stats like dividend yield, and number of years dividend has increased. If the next dividend is announced, it shows the number of days until the ex-dividend date, the next ex-div and payment date and amount. If you just want to research good dividend stocks to get into, I would highly recommend the site seekingalpha.com. Spend some time reading the articles on that site under the dividends section. Make sure you read the comments on each article to make sure the author is not way off base. Finally, my favorite tool for researching good dividend stocks is the CCC Lists produced by Seeking Alpha's David Fish. It is a giant spreadsheet of stocks that have been increasing dividends every year for 5+, 10+, or 25+ years. The link to that spreadsheet is here: http://dripinvesting.org/tools/tools.asp under "U.S. Dividend Champions". |
Deferring claim of significant purchase of RRSPs | You can't defer reporting of the RRSP purchases. The financial institution will report those purchases to CRA, and the CRA expects to see you report those purchases on your return. If they don't match, expect to be audited and to pay penalties. However, you can defer the tax deduction of those purchases until later years. That means you but you must have the RRSP contribution room available in the year you make the purchase. So if you have $50 000 of contribution room, you can contribute $50 000 all at once and deduct $16 667 in the next 3 years. However, if you only have $20 000 of contribution room, CRA will make your life very unhappy if you contribute $50 000 all at once. In that case, your best bet is to contribute enough to use all your contribution room and repeat each year as you get more contribution room. Also, you have a $2000 lifetime overcontribution limit. That means whatever contribution room you have, you can contribute $2000 more. But you won't be able to deduct that amount, and you don't get more overcontribution space each year. |
How to safely earn interest on business profits (UK) | I found some UK personal accounts offer up to 3% interest (no names here, but it is well known bank with red logo). You can take out directors loan from your company, put the cash into that personal account and earn interest. Just don't forget to return this loan before end of financial year, so this interest does not become your dividends. |
Are money market instrument and short-term debt same? | The Money Market is a place where one trades Instruments. The market is similar to that of the Stock Market. The instruments traded in Money Markets include Short Term Debt Instruments as well as FX Swap Instruments and Mortgage & Asset Backed Securities. The FX & Mortgage Securities are not Debt instruments per se. They also include other custom created instruments that are traded. The definition of Short Term debt is any guaranteed instrument with a maturity of less than a year. These instruments are used in various transactions, including retail and the Money Market is not the only place these are traded. |
Advantages/Disadvantages to refinancing online? | If you've been in your house for a few years (and have built some equity up) and the market is active in your area, online is probably fine. The local banks will be better if it's not obvious to someone in Bangor, ME that your neighborhood in San Diego is worth substantially more than the crappy area 2 miles away. I've had 3 mortgages, one from a regional bank, one from a broker-sourced national mortgage company and another from a local bank. The bigger banks had better statements and were easier to do stuff with online. The smaller bank has been a better overall value, because the closing costs were low and they waived some customary fees. In my case, the national mortgage company had a better APR, but my time horizon for staying in the house made the smaller bank (which had a competitive APR, about a half point higher than the lowest advertised) a better value due to much lower up-front costs. |
What's the difference between a high yield dividend stock vs a growth stock? | There can be the question of what objective do you have for buying the stock. If you want an income stream, then high yield stocks may be a way to get dividends without having additional transactions to sell shares while others may want capital appreciation and are willing to go without dividends to get this. You do realize that both Pfizer and GlaxoSmithKline are companies that the total stock value is over $100 billion yes? Thus, neither is what I'd see as a growth stock as these are giant companies that would require rather large sales to drive earnings growth though it may be interesting to see what kind of growth is expected for these companies. In looking at current dividends, one is paying 3% and the other 5% so I'm not sure either would be what I'd see as high yield. REITs would be more likely to have high dividends given their structure if you want something to research a bit more. |
Is there an investment account where I can owe taxes only if the net of capital gain and dividend payment is positive? | No such account exists as capital gains aren't realized until holdings are sold. For example: OR Both scenarios would result in you owing the appropriate taxes on a $40 gain from the dividends. The $100 gain or $100 loss that isn't realized (you haven't sold the stock) isn't accounted for until the year of sale. |
If I put dividend-paying stocks in my IRA, where does the dividend go when paid? | The dividend goes into the IRA (either reinvested automatically or remains as cash until you invest it, per your choice). You're not taxed on this dividend (IRA is a taxed-deferred account - you're taxed on the distributions, but not on the capital gains within the account). |
Is a currency “hedged” ETF actually a more speculative instrument than an unhedged version? | Overall, since gold has value in any currency (and is sort of the ultimate reserve currency), why would anyone want to currency hedge it? Because gold is (mostly) priced in USD. You currency hedge it to avoid currency risk and be exposed to only the price risk of Gold in USD. Hedging it doesn't mean "less speculative". It just means you won't take currency risk. EDIT: Responding to OP's questions in comment what happens if the USD drops in value versus other major currencies? Do you think that the gold price in USD would not be affected by this drop in dollar value? Use the ETF $GLD as a proxy of gold price in USD, the correlation between weekly returns of $GLD and US dollar index (measured by major world currencies) since the ETF's inception is around -47%. What this says is that gold may or may not be affected by USD movement. It's certainly not a one-way movement. There are times where both USD and gold rise and fall simultaneously. Isn't a drop in dollar value fundamentally currency risk? Per Investopedia, currency risk arises from the change in price of one currency in relation to another. In this context, it's referring to the EUR/USD movement. The bottom line is that, if gold price in dollar goes up 2%, this ETF gives the European investor a way to bring home that 2% (or as close to that as possible). |
Does the low CAD positively or negatively impact Canadian Investors? | When you want to invest in an asset denominated by a foreign currency, your investment is going to have some currency risk to it. You need to worry not just about what happens to your own currency, but also the foreign currency. Lets say you want to invest $10000 in US Stocks as a Canadian. Today that will cost you $13252, since USDCAD just hit 1.3252. You now have two ways you can make money. One is if USDCAD goes up, two is if the stocks go up. The former may not be obvious, but remember, you are holding US denominated assets currently, with the intention of one day converting those assets back into CAD. Essentially, you are long USDCAD (long USD short CAD). Since you are short CAD, if CAD goes up it hurts you It may seem odd to think about this as a currency trade, but it opens up a possibility. If you want a foreign investment to be currency neutral, you just make the opposite currency trade, in addition to your original investment. So in this case, you would buy $10,000 in US stocks, and then short USDCAD (ie long CAD, short USD $10,000). This is kind of savvy and may not be something you would do. But its worth mentioning. And there are also some currency hedged ETFs out there that do this for you http://www.ishares.com/us/strategies/hedge-currency-impact However most are hedged relative to USD, and are meant to hedge the target countries currency, not your own. |
When is Cash Value Life Insurance a good or bad idea? | The standard answer I have heard is that if you were to purchase term life insurance and invest the difference between the cost of the policies, your investments would grow larger than the cash value of the insurance. Also when you take cash out of CVLI the insurance value drops by a like amount. So you can't have your cake and leave it to your heirs too. Either you get the cash value OR they get the insurance value. Hopefully, there could be some of both. Although I believe the philosophy of that answer I have two issues with it. First, you must be dedicated enough to invest the difference every month. I can imagine that might be tough to do consistently and if you take breaks from the investing will you still accumulate more than you would have with the insurance? Second, for the past couple of years all of my investments in mutual funds have lost value. My life insurance has continued to grow cash value over the same time period. Hmm, maybe there isn't a one size fits all solution. If you need a large amount of insurance, term life will certainly be more affordable. However, considering this as an investment I would not expect that to be a deciding factor. Good luck with your decision. It is great that at such a young age you are concerned about investments. |
Official Bank Check | How? Basically all banks nowadays allow online deposits from a smartphone - you take a picture from the front and back of the check, and submit it, and that's it. You still have the paper check, and it looks pristine, but it is deposited (and the paper is worthless). |
Is losing money in my 401K normal? | Bottom line is our system is broken. For three years running I am 0% return with over 600k in. Yet, the 401k admin institution charges us all enormous fees that most aren't even aware exist. A helpful tip is to also check out your expense ratios and learn how those work as well so you know how much you are paying in hidden fees. |
Why don't more people run up their credit cards and skip the country? | It's harder than you think. Once card companies start seeing your debt to credit line ratios climb, they will slash your credit lines quickly. Also, cash credit lines are always much smaller, so in reality, such a scheme would require you to buy goods that can be converted to cash, which dilutes your gains and makes it more likely that you're going to get detected and busted. Think of the other problems. Where do you store your ill-gotten gains? How do you get the money out of the country? How will your actions affect your family and friends? Also, most people are basically good people -- the prospect of defrauding $100k, leaving family and friends behind and living some anonymous life in a third world country isn't an appealing one. If you are criminally inclined, building up a great credit history is not very practical -- most criminals are by nature reactive and want quick results. |
Can the U.S. government retroactively tax gains made earlier in the fiscal year? | You're certainly referring to "Ex Post Facto" laws, and while the US is constitutionally prohibited from passing criminal laws that are retroactive, the US Supreme Court has upheld many tax laws that apply tax code changes retroactively. You might ask a similar question on Law.SE for a more thorough treatment of the legalities of congress passing those laws, but I will stick to the personal finance portion of the question. What this means is that you can't expect that the current tax laws will be in force in the future, and your investment/retirement plans should be as flexible as possible. You may wish to have some money in both Roth and traditional 401(k) accounts. You might not want to have millions of dollars in Roth accounts, because if congress does act to limit the tax benefits of those accounts, it will probably be targeting the larger balances. If you are valuing tax deductions, you should put slightly more weight on deductions that you can take today than deductions that would apply in the future. If you do find yourself in trouble because of a retroactive change, be sure to consult a tax lawyer that specializes in dealing with the IRS to possibly negotiate a settlement for a lower amount than the full tax bill that results from the changes. |
Should my husband's business pay my business? | I agree with some of the points of the other answers but why not avoid all the guesswork? I highly recommend you not charge him now. Wait until the end of the year when you have much more information about both of your companies and then you can run the numbers both ways and decide if it would benefit you (collectively). If either of your businesses runs on a cash basis and you decide to invoice, just make sure the check is deposited before Dec 31. Update: If you want to do this for 2016, at least your husband's business would have to be using an accrual basis (since it's too late to take the deduction on a cash basis). Simply run the numbers both ways and see if it helps you. If it doesn't help enough to warrant it for 2016 you could rerun the numbers near the end of 2017 to see if it helps then. Diclaimer: I think it's OK to do this type of manipulation for the scenario you described since you have done (or are doing) the work and you are charging a reasonable fee, but realize that you shouldn't manipulate the amount of the invoice, or fabricate invoices. For example, you shouldn't ever think about such things as: "If I invoice $50K instead of $3K, will that help us?" |
New to options trading and need help understanding an options spread risk graph. What am I missing? | Suppose the stock is $41 at expiry. The graph says I will lose money. I think I paid $37.20 for (net debit) at this price. I would make money, not lose. What am I missing? The `net debit' doesn't have anything to do with your P/L graph. Your graph is also showing your profit and loss for NOW and only one expiration. Your trade has two expirations, and I don't know which one that graph is showing. That is the "mystery" behind that graph. Regardless, your PUTs are mitigating your loss as you would expect, if you didn't have the put you would simply lose more money at that particular price range. If you don't like that particular range then you will have to consider a different contract. it was originally a simple covered call, I added a put to protect from stock going lower.. Your strike prices are all over the place and NBIX has a contract at every whole number.... there is nothing simple about this trade. You typically won't find an "always profitable" combination of options. Also, changes in volatility can distort your projects greatly. |
What is the value in using the “split transaction” feature present in some personal finance management tools? | Split transactions are indispensable to anybody interested in accurately tracking their spending. If I go to the big-box pharmacy down the road to pick up a prescription and then also grab a loaf of bread and a jug of milk while there, then I'd want to enter the transaction into my software as: I desire entering precise data into the software so that I can rely on the reports it produces. Often, I don't need an exact amount and estimated category totals would have been fine, e.g. to inform budgeting, or compare to a prior period. However, in other cases, the expenses I'm tracking must be tracked accurately because I'd be using the total to claim an income tax deduction (or credit). Consider how Internet access might be commingled on the same bill with the home's cable TV service. One is a reasonable business expense and deduction for the work-at-home web developer, whereas the other is a personal non-deductible expense. Were split transaction capability not available, the somewhat unattractive alternatives are: Ignore the category difference and, say, categorize the entire transaction as the larger or more important category. But, this deliberately introduces error in the tracked data, rendering it useless for cases where the category totals need to be accurate, or, Split the transaction manually. This doesn't introduce error into the tracked data, but suffers another problem: It makes a lot of work. First, one would need to manually enter two (or more) top-level transactions instead of the single one with sub-amounts. Perhaps not that much more work than if a split were entered. Worse is when it comes time to reconcile: Now there are two (or more) transactions in the register, but the credit card statement has only one. Reconciling would require manually adding up those transactions from the register just to confirm the amount on the statement is correct. Major pain! I'd place split transaction capability near the top of the list of "must have" features for any finance management software. |
Why do shareholders participate in shorting stocks? | There are two primary reasons shares are sold short: (1) to speculate that a stock's price will decline and (2) to hedge some other related financial exposure. The first is acknowledged by the question. The second reason may be done for taxes (shorting "against the box" was once permitted for tax purposes), for arbitrage positions such as merger arbitrage and situations when an outright sale of stock is not permitted, such as owning restricted stock such as employer-granted shares. Why would a shareholder lend the investor the shares? The investor loaning his stock out to short-sellers earns interest on those shares that the borrower pays. It is not unusual for the annualized cost of borrowing stock to be double digits when there is high demand for heavily shorted shares. This benefit is however not available to all investors. |
Why are some funds only recommended for investors starting out? | The simple answer is that whatever strategy is implemented with e-series, could be implemented at a lower cost with ETFs. |
Why do credit cards have minimum limits? | I believe it's just to limit the less well-off from acquiring one. If your credit history and income do not support a $15,000 credit limit, then don't even think about applying for an Altitude Black card. If they do, then don't bother with a student card. It's primarily about market segmentation by wealth or income. |
Capital gains tax: Retirement vehicle (IRA, 401k) vs. anything else? | First of all, there are some differences between the retirement accounts that you mentioned regarding taxes. Traditional IRA and 401(k) accounts allow you to make pre-tax contributions, giving you an immediate tax deduction when you contribute. Roth IRA, Roth 401(k) are funded with after tax money, and a non-retirement account is, of course, also funded with after tax money. So if you are looking for the immediate tax deduction, this is a point in favor of the retirement accounts. Roth IRA & Roth 401(k) accounts allow the investment to grow tax-free, which means that the growth is not taxed, even when taking the investment out at retirement. With Traditional IRA and 401(k) accounts, you need to pay tax on the gains realized in the account when you withdraw the money, just as you do with a non-retirement account. This is a point in favor of the Roth retirement accounts. To answer your question about capital gains, yes, it is true that you do not have a capital gain until an investment is sold. So, discounting the contribution tax deductions of the retirement accounts, if you only bought individual stocks that never paid a dividend, and never sold them until retirement, you are correct that it really wouldn't matter if you had it in a regular brokerage account or in a traditional IRA. However, even people dedicated to buy-and-hold rarely actually buy only individual stocks and hold them for 30 years. There are several different circumstances that will generally happen in the time between now and when you want to withdraw the money in retirement that would be taxable events if you are not in a retirement account: If you sell an investment and buy a different one, the gains would be taxable. If you want to rebalance your holdings, this also involves selling a portion of your investments. For example, if you want to maintain an 80% stock/20% bond ratio, and your stock values have gone up to 90%, you might want to sell some stock and buy bonds. Or if you are getting closer to retirement, you might decide to go with a higher percentage of bonds. This would trigger capital gains. Inside a mutual fund, anytime the management sells investments inside the fund and realizes capital gains, these gains are passed on to the investors, and are taxable. (This happens more often with managed funds than index funds, but still happens occasionally with index funds.) Dividends earned by the investments are taxable. Any of these events in a non-retirement account would trigger taxes that need to be paid immediately, even if you don't withdraw a cent from your account. |
As a 22-year-old, how risky should I be with my 401(k) investments? | +1 on all the answers above. You're in a great position and have the right attitude. A good book on the subject is A Random Walk Down Wall Street - well worth a read. Essentially, go for low tax paying in, low tax taking out approach (in the uk that's a SIPP or ISA), a low cost well diversified unit fund (like a Vanguard LifeStrategy 100), on a low cost platform ("Annual Management Charge" in be UK). Keep paying a regular amount and let compound interest take care of things. I'd also add that you should think about what lifestyle you would want at specific ages and work out what you need to save to achieve these - even though they are probably a long time in the future, it makes your goals "real". Read Mr Money Moustache for some ideas http://www.mrmoneymustache.com |
Retirement Funds: Betterment vs Vanguard Life strategy vs Target Retirement | First, congratulations on choosing to invest in low cost passively managed plans. If you choose any one of these options and stick with it, you will already be well ahead of most individual investors. Almost all plans will allow you to re-balance between asset classes. With some companies, sales agents will encourage you to sell your overweighted assets and buy underweighted assets as this generates brokerage commissions for them, but when you only need to make minor adjustments, you can simply change the allocation of the new money going into your account until you are back to your target weights. Most plans will let you do this for free, and in general, you will only need to do this every few years at most. I don't see much reason for you to be in the Target funds. The main feature of these plans is that they gradually shift you to a more conservative asset allocation over time, and are designed to prevent people who are close to retirement from being too aggressive and risking a major loss just before retirement. It's very likely that at your age, most plans will have very similar recommendations for your allocation, with equities at 80% or more, and this is unlikely to change for the next few decades. The main benefits of betterment seems to be simplicity and ease of use, but there is one concern I would have for you with betterment. Precisely because it is so easy to tweak your allocation, I'm concerned that you might hurt your long-term results by reacting to short-term market conditions: I know I said I wanted a hands off account, but what if the stock market crashes and I want to allocate more to bonds??? One of the biggest reasons that stock returns are better than bond returns on average is that you are being paid to accept additional risk, and living with significant ups and downs is part of what it means to be in the stock market. If you are tempted to take money out of an asset class when it has been "losing/feels dangerous" and put more in when it is "winning/feels safe", my concerns is that you will end up buying high and selling low. I'd recommend taking a look at this article on the emotional cycle of investing. My point is simply that it's very likely that if you are moving money in and out of stocks based on volatility, you're much less likely to get the full market return over the long term, and might be better off putting more weight in asset classes with lower volatility. Either way, I'd recommend taking one or more risk tolerance assessments online and making sure you're committed to sticking with a long-term plan that doesn't involve more risk than you can really live with. I tend to lean toward Vanguard Life Strategy simply because Vanguard as a company has been around longer, but betterment does seem very accessible to a new investor. Best of luck with your decision! |
I have a horrible 401k plan, with high expenses. Should I stay with it or move my money elsewhere? | 2%? I would put in just what it takes to share in the profit sharing, not a dime more. My S&P fund cost is .02% (edited, as it dropped to .02 since original post), 1/100 of the cost of most funds you list. Doesn't take too many years of this fee to negate the potential tax savings, and not many more to make this a real loser. |
When an in-the-money stock option expires does the broker always execute it or does its value become worthless if the owner doesn't execute it? | It depends on the broker, each one's rules may vary. Your broker should be able to answer this question for how they handle such a situation. The broker I used would execute and immediately sell the stock if the option was 25 cents in the money at expiration. If they simply executed and news broke over the weekend (option expiration is always on Friday), the client could wake up Monday to a bad margin call, or worse. |
Stochastic Oscillator for Financial Analysis | While trading in stochastic I've understood, one needs reference (SMA/EMA/Bolinger Band and even RSI) to verify trade prior entering it. Stochastic is nothing to do with price or volume it is about speed. Adjusting K% has ability to turn you from Day trader to -> swing trader to -> long term investor. So you adjust your k% according to chart time-frame. Stochastic setup for 1 min, 5 min ,15, 30, 60 min, daily, weekly, monthly, quarterly, half yearly and yearly are all different. If you try hopping from one time-frame to another just because it is below oversold or above overbought region with same K%, you may get confused. Worst you may not square-off your loss making trade. And rather not use excel; charts gives better visual for oscillators. |
Why is there two currencies in Venezuela's money? | Venezuela is a command economy, and one that isn't doing terribly well right now, with rampant inflation in the several hundred percent range. As such, they've tried to limit or eliminate exchanges between their currency and foreign currencies. Currently, they allow a limited amount of exchange at fixed rates (according to a Bloomberg article, those vary between 6.3, 13.5, and 200) for certain purchases, and then otherwise disallow exchange between the currencies. However, there is a black market (illegal in Venezuela, but legal in the US) which allows the price to float, and is much higher - 800 or so according to that article from last year. A recent Valuewalk article lists the black market rate at closer to 900, and slightly different official rates. It's worth a read as it explains the different official rates in detail: Currently there are four exchange rates: First is the official one, called CENCOEX, and which charges 6.30 bolivars to the dollar. It is only intended for the importation of food and medicine. The next two exchange rates are SICAD I (12 bolivars per dollar) and SICAD 2 (50 bolivars per dollar); they assign dollars to enterprises that import all other types of goods. Because of the fact that US dollars are limited, coupons are auctioned only sporadically; usually weekly in the case of SICAD 1 and daily for SICAD 2. However, due to the economic crisis, no dollars have been allocated for these foreign exchange transactions and there hasn’t been an auction since August 18, 2015. As of November 2015, the Venezuelan government held only $16 billion in foreign exchange reserves, the lowest level in over ten years, and an amount that will dry up completely in four years time at the current rate of depletion. The last and newest exchange rate is the SIMADI, currently at 200 bolivars per dollar. This rate is reserved for the purchase and sale of foreign currency to individuals and businesses. |
How do credit card banks detect fraudulent transactions without requiring a travel advisory? | One bank is more willing to risk losses and customer hassle in exchange for lower processing costs than the other bank is. It's strictly a business decision. Regarding how they detect suspicious transactions: Patten detection based on your past usage history. I've gotten calls asking me to confirm that I just placed a large order with a company I'd never bought from before, or in a country that I haven't previously visited, or... |
No transaction fee ETF trades - what's the catch? | Banks often offer cash to people who open savings accounts in order to drive new business. Their gain is pretty much as you think, to grow their asset base. A survey released in 2008 by UK-based Age Concern declared that only 16% of the British population have ever switched their banks‚ while 45% of marriages now end in divorce. Yip, till death do most part. In the US, similar analysis is pointing to a decline in people moving banks from the typical rate of 15% annually. If people are unwilling to change banks then how much more difficult for online brokers to get customers to switch? TD Ameritrade is offering you 30 days commission-free and some cash (0.2% - 0.4% depending on the funds you invest). Most people - especially those who use the opportunity to buy and hold - won't make much money for them, but it only takes a few more aggressive traders for them to gain overall. For financial institutions the question is straightforward: how much must they pay you to overcome your switching cost of changing institutions? If that number is sufficiently smaller than what they feel they can make in profits on having your business then they will pay. EDIT TO ELABORATE: The mechanism by which any financial institution makes money by offering cash to customers is essentially one of the "law of large numbers". If all you did is transfer in, say, $100,000, buy an ETF within the 30-day window (or any of the ongoing commission-free ones) and hold, then sell after a few years, they will probably lose money on you. I imagine they expect that on a large number of people taking advantage of this offer. Credit card companies are no different. More than half of people pay their monthly credit balance without incurring any interest charges. They get 30 days of credit for free. Everyone else makes the company a fortune. TD Ameritrade's fees are quite comprehensive outside of this special offer. Besides transactional commissions, their value-added services include subscription fees, administration fees, transaction fees, a few extra-special value-added services and, then, when you wish to cash out and realise your returns, an outbound transfer fee. However, you're a captured market. Since most people won't change their online brokers any more often than they'd change their bank, TD Ameritrade will be looking to offer you all sorts of new services and take commission on all of it. At most they spend $500-$600 to get you as a customer, or, to get you to transfer a lot more cash into their funds. And they get to keep you for how long? Ten years, maybe more? You think they might be able to sell you a few big-ticket items in the interim? Maybe interest you in some subscription service? This isn't grocery shopping. They can afford to think long-term. |
What effect would sovereign default of a European country have on personal debt or a mortgage? | If the default happens through mass monetary inflation rather than openly ("We're not paying interest on our bonds") then make sure you pay off your house. There may not be a very long window to do so. If the currency becomes worthless, then it depends on what you have of value that would be accepted by the lender as payment. If you don't have anything, the lender will take it back, as they're probably entitled to on the notes. |
Should I get an accountant for my taxes? | A reason to get an accountant is to avoid penalties for possible mistakes. That is, if you make a mistake, the IRS can impose penalties on you for negligence. If the professional makes the SAME mistake, the burden of proof for "negligence" shifts to the IRS, which probably means that you'll pay more taxes and interest, but NO penalties; hiring an accountant is prima facie evidence of NOT being negligent. I would get an accountant since this the first time for you in the present situation, when mistakes are most likely. If you feel that s/he did the same for you that you would have done for yourself, then you might go back to doing your own taxes in later years. |
How much do big firms and investors affect the stock market? | It's not either or. Much of the time the value of the stock has some tangible relation to the financial prospects of the company. The value of Ford and GM stock rose when they were selling a lot of cars, and collapsed when their cars became unpopular. Other companies (Enron for example) frankly 'cook the books' to make it appear they are prospering, when they are actually drowning in debt and non-performing assets. So called "penny stocks" have both low prices and low volumes and are susceptible to "pump and dump" schemes, where a manipulator buys a bunch of the stock, touts the stock to the world, pointing to the recent increase in price. They then sell out to all the new buyers, and the price collapses. If you are going to invest in the stock market it's up to you to figure out which companies are which. |
What does investment bank risk during IPO? | Investment banks don't have to buy anything. If they don't think the stock is worth buying - they won't. If they think it is - others on the secondary market will probably think so too. Initial public offering is offering to the public - i.e.: theoretically anyone can participate and purchase stocks. The major investment firms are not buying the stocks for themselves - but for their clients who are participating in this IPO. I, for example, receive email notifications from my brokerage firm each time there's another IPO that they have access to, and I can ask the brokerage to buy stocks from the IPO on my behalf. When that happens - they don't buy the stocks themselves and then sell to me. No, what happens is that I buy a stock, through them, and they charge me a commission for the service. Usually IPO participation commissions are higher than regular trading commissions. Most of the time those who purchase stocks at IPO are institutional investors - i.e.: mutual funds, pension plans, investment banks for their managed accounts, etc. Retail investors would probably not participate in the IPO because of the costs, limited access (not all the brokerage firms have access to all the IPOs), and the uncertainty, and rather purchase the stocks later on a secondary market. |
What is the best way to short the San Francisco real estate market? | You could short home builders who do a lot of their business in Northern California. (Not just San Francisco, Silicon Valley, or even the Bay Area.) Home prices in Sacramento and the northern San Joaquin Valley are correlated with Bay Area home prices. Many of these builders went broke during the last bust, so you might have trouble finding a publicly traded home builder that is concentrated in just one market. |
For very high-net worth individuals, does it make sense to not have insurance? | Let's face it: most people pay more in insurance premiums than they "get back" in claims. I put "get back" in quotes because, with very few exceptions, the money paid out in claims does not go to the insured, but to others, such as doctors and hospitals. But even if you ignore the question who does the money actually go to, it's a losing proposition for most people. The exceptions are those who have a major loss, greater than what they put in over the years. But never forget: these are exceptions. The return on your money, on the average, is only a little better than playing the lottery. The usual counter-argument to the above is, but what if you are one of the exceptions? I for one refuse to let my life be dictated by worries of unlikely events that might happen. If you're the sort who obsesses on what could (but probably won't) happen, then maybe you should have insurance. Just don't tell me I need to do the same. When I lived in California, they had a program where you could deposit $25,000 with the State, and then you could drive, legally, without insurance. I did this for a while, didn't have any accidents, and exited the system (when I moved out of state) a few years later with more money (interest) than I put in. You don't accomplish that with insurance. But let's get back to rich people. Unless you get into an accident with you at fault and the other guy needing a head transplant as a result (joke), you could probably absorb the cost of an accident without blinking an eye. Those in the upper-middle-class might do well with high-deductible insurance that only pays out if there's an extreme accident. Then again if you have to borrow to buy something expensive (making monthly payments), they will usually demand you buy insurance with it. This is a way for the lender to protect himself at your expense, and if you refuse, good luck getting a loan somewhere else. I hate the idea of insurance so much I would make an act of insurance punishable by law. |
What percentage of my portfolio should be in individual stocks? | If you are comfortable with the risk etc, then the main thing to worry about is diversity. For some folks, picking stocks is beyond them, or they have no interest in it. But if it's working for you, and you want to keep doing it, more power to you. If you are comfortable with the risk, you could just as well have ALL your equity position in individual stocks. I would offer only two pieces of advice in that respect. 1) no more than 4% of your total in any one stock. That's a good way to force diversity (provided the stocks are not clustered in a very few sectors like say 'financials'), and make yourself take some of the 'winnings off the table' if a stock has done well for you. 2) Pay Strong attention to Taxes! You can't predict most things, but you CAN predict what you'll have to pay in taxes, it's one of the few known quantities. Be smart and trade so you pay as little in taxes as possible 2A)If you live someplace where taxes on Long term gains are lower than short term (like the USA) then try really really hard to hold 'winners' till they are long term. Even if the price falls a little, you might be up in the net compared to paying out an extra 10% or more in taxes on your gains. Obviously there's a balancing act there between when you feel something is 'done' and the time till it's long term.. but if you've held something for 11 months, or 11 months and 2 weeks, odds are you'd be better off to hold till the one year point and then sell it. 2B) Capture Losses when you have them by selling and buying a similar stock for a month or something. (beware the wash sale rule) to use to offset gains. |
Does Edmunds get a kick-back from the use of Edmunds Price Promise? | Yes, Edmunds gets money from the dealerships in this program. According to this USA Today article from 2013, dealers pay Edmunds a monthly fee to participate in the program. This contrasts with TrueCar.com, a similar service, where dealers pay a fee for each sale. And yes, it is certainly possible to negotiate a lower price than the Edmunds Price Promise quote, if you enjoy haggling. The purpose of the program is not to get you the best price, just the easiest buying experience. From the USA Today article: Edmunds.com's price promise business model is designed to take the uncertainty out of pricing, speed up the buying process and also comes with the expectation that the customer will be given top-notch customer service. Dealers who have participated find that they are able to sell their cars for $300 to $500 more than consumers who go through the more traditional price quote request process. Customers, [Edmunds.com president and chief operating officer Seth] Berkowitz said, are willing to pay a little more than the best possible deal if they can save time, get great customer service and know they are getting a fair price. |
How to decide if I should take my money with me or leave it invested in my home country? | I will attempt to answer three separate questions here: The standard answer is that an emergency fund should not be in an investment that can lose value. The safest course of action is to put it in a savings account or other very low risk investment somewhere. This question becomes: can a reasonable and low risk investment in Sweden be comparable to or better than a low risk investment in Brazil? Inflation in Brazil has averaged a little less than 6% over the last 10 years with a recent spike up above 8%. A cursory search indicates interest rates on savings accounts in Brazil are outpacing inflation so you might still expect a positive return on money in a savings account there. By contrast, Sweden's inflation rate has been around 1% over the last 10 years and has hovered around 0 or even deflation in recent years. Swedish interest rates for savings accounts right now are very low, nearly 0%. Putting money in a savings account in Sweden would likely hold its value or lose a slight amount of value. Based on this, you might be better off leaving your emergency fund invested in BRL in Brazil. The answer to this a little unclear. The Brazilian stock market has been all over the place in the last 10 years, with a slight downard trend in recent years. In comparison, Sweden's stock market has shown fairly consistent growth in spite of the big dip in 2008. Given this, it seems like the fairest comparison would your current 13% ROI investment in Brazil vs. a fund or ETF that tracks the Swedish stock market index. If we assume a consistent 13% ROI on your investment in Brazil and a consistent inflation rate of 6%, your adjusted ROI there would be around 7% per year. The XACT OMS30 ETF that tracks the Swedish OMS 30 Index has a 10 year annualized return of 9.81%. If you subtract 0.8% inflation, you get an adjusted ROI 9%. Based on this, Sweden may be a safer place for longer term, moderate risk investments right now. |
Does home equity grow with the investment put into the house? | If I have a house that its market value went from $100k to $140k can I get HELOC $40K? Maybe - the amount that you can borrow depends on the market value of the house, so if you already have $100k borrowed against it, it will be tough to borrow another $40k without paying a higher interest rate, since there is a real risk that the value will decrease and you will be underwater. Can I again ask for HELOC after I finish the renovation in order to do more renovation and maybe try to end up renovating the house so its value raises up to $500k? I doubt you can just "renovate" a house and increase its market value from $140k to $500K. Much of a house's value is determined by its location, and you can quickly outgrow a neighborhood. If you put $360k in improvements in a neighborhood where other homes are selling for $140k you will not realize nearly that amount in actual market value. People that buy $500k houses generally want to be in an area where other homes are worth around the same amount. If you want to to a major renovation (such as an addition) I would instead shop around for a Home Improvement Loan. The main difference is that you can use the expected value of the house after improvements to determine the loan balance, instead of using the current value. Once the renovations are complete, you roll it and the existing mortgage into a new mortgage, which will likely be cheaper than a mortgage + HELOC. The problem is that the cost of the improvements is generally more than the increase in market value. It also helps you make a wise decision, versus taking out a $40k HELOC and spending it all on renovations, only to find out that the increase in market value is only $10k and you're now underwater. So in your case, talk to a contractor to plan out what you want to do, which will tell you how much it will cost. Then talk to a realtor to determine what the market value with those improvements will be, which will tell you how much you can borrow. It's highly likely that you will need to pay some out-of-pocket to make up the difference, but it depends on what the improvements are and what comparable homes sell for. |
When to use a stop limit order over a stop order | This is to protect your position in specific highly volatile market conditions. If the stock is free falling and you only have a stop order at $90, it's possible that this order could be filled at $50 or even less. The limit is to protect you from that, as there are certain very specific times where it's better to just hold the stock instead of taking a huge loss (ie when price is whipsawing). |
Would every FX currency pair or public stock that is under the 30 level using Relative Strength Index (RSI) be an undervalued pair? | No. The long-term valuation of currencies has to do with Purchasing Power Parity. The long-term valuation of stocks has to do with revenues, expenses, market sizes, growth rates, and interest rates. In the short term, currency and stock prices change for many reasons, including interest rate changes, demand for goods and services, asset price changes, political fears, and momentum investing. In any given time window, a currency or stock might be: The Relative Strength Index tries to say whether a currency or stock has recently been rising or falling; it does not inherently say anything about whether the current value is high or low. |
Is there any US bank that does not charge for incoming wire transfers? | Schwab High Yield Investor Checking does not charge for incoming wires. |
Unrealized Profit & Loss for Non-Stock Securities | Suddenly its not just comparing the current price to the price of the contract, or is it? Sure it is. Suppose you bought 100 option contracts (each for 100 shares) and paid a $1 per share premium ($10,000 total). Now those options are trading for $1.50 per share. You have an unrealized $0.50 gain per share, or $5,000. The $10,000 in options you bought are now worth $15,000. It holds whether they were bought to open or close a position, or whether they are puts or calls. The only difference is whether you bought or sold the options (the arithmetic is just reversed for selling an option). But lets say we have an Option, where the payoff is max(St-K, c0) where ct is the market price. What do you do then? Your current, unrealized P&L is different than the payoff. The payoff only happens at maturity. The current P&L is based on current market prices, just like stock. Option prices all have a "time premium" making them worth more than their payoff (intrinsic) value prior to maturity. |
Possible to purchase multiple securities on 1 transaction? | There is such a thing as a buy-write, which is buying a stock and writing a (covered) call simultaneously. But as far as I know brokers charge two commissions, one stock trade and one options trade so you're not going to save on commissions. |
What should I be aware of as a young investor? | You can't get much better advice for a young investor than from Warren Buffet. And his advice for investors young and old, is "Put 10% of the cash in short‑term government bonds, and 90% in a very low‑cost S&P 500 index fund." Or as he said at a different time, "Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees". You are not going to beat the market. So just save as much money as you can, and invest it in something like a Vanguard no-load, low-cost mutual fund. Picking individual stocks is fun, but treat it as fun. Never put in more money than you would waste on fun. Then any upside is pure gravy. |
How to trade “exotic” currencies? | There are firms that let you do this. I believe that Saxo Bank is one such firm (note that I'm not endorsing the company at all, and have no experience with it) Keep in mind that the reason that these currencies are "exotic" is because the markets for trading are small. Small markets are generally really bad for retail/non-professional investors. (Also note: I'm not trying to insult Brazil or Thailand, which are major economies. In this context, I'm specifically concerned with currency trading volume.) |
Buy or sell futures contracts | Futures contracts are a member of a larger class of financial assets called derivatives. Derivatives are called such because their payoffs depend on the price of other assets (financial or real). Other kinds of derivatives are call options, put options. Fixed income assets that mimic the behavior of derivatives are callable bonds, puttable bonds etc. A futures contract is a contract that specifies the following: Just like with any other contract, there are two parties involved. One party commits to delivering the underlying asset to the other party on expiration date in exchange for the futures price. The other party commits to paying the futures price in exchange for the asset. There is no price that any of the two parties pay upfront to engage in the contract. The language used is so that the agent committing to receiving the delivery of the underlying asset is said to have bought the contract. The agent that commits to make the delivery is said to have sold the contract. So answer your question, buying on June 1 a futures contract at the futures price of $100, with a maturity date on August 1 means you commit to paying $100 for the underlying asset on August 1. You don't have to pay anything upfront. Futures price is simply what the contract prescribes the underlying asset will exchange hands for. |
What does “Company Distribution” mean on Google Finance's stock screener? | Company Distribution is attempting to show a histogram of how many companies fall within a given range so you can visualize the number of companies that meet a certain parameter. For example if you move the "Market Cap" sliders so the minimum slider is just before the large rise in the distribution and move the maximum slider so it is just after the fall off in distribution, you can see that most companies have a market cap between ~5700 and ~141B. |
What would the broker do about this naked call option? | If the underlying is currently moving as aggressively as stated, the broker would immediately forcibly close positions to maintain margin. What securities are in fact closed depends upon the internal algorithms. If the equity in the account remains negative after closing all positions if necessary, the owner of the account shall owe the broker the balance. The broker will close the account and commence collections if the owner of the account does not pay the balance quickly. Sometimes, brokers will impose higher margin requirements than mandated to prevent the above eventuality. Brokers frequently close positions that violate internal or external margin requirements as soon as they are breached. |
What funds were closed during or after the recent recessions? | Yes, many hedge funds (for example) did not survive 2008-2009. But hedge funds were failing both before and after that period, and other hedge funds thrived. Those types of funds are particularly risky because they depend so much on leverage (i.e. on money that isn't actually theirs). More publically-visible funds (like those of the big-name index fund companies) tended not to close because they are not leveraged. You say that "a great many companies" failed during the recession, but that's not actually true. I can't think of more than a handful of publically-traded companies that went bankrupt. So, since the vast majority of publically-traded companies stayed in business, their stocks kept some/most of their value, and the funds that owned those stocks stayed afloat. I personally did not see a single index fund that went out of business due to the recession. |
In a competitive market, why is movie theater popcorn expensive? | I think a labor management issue explains the high cost of popcorn. Some weeks theaters are loaded with patrons and other weeks there are many fewer patrons. If popcorn were priced so that most patrons bought some the theater manager would have to have lots of employees to sell popcorn on the really busy days. The manager would have to cover the cost of wages on the slow days. A simple solution would be to adjust employee hours. To a certain extent I suspect this is done. If you look at the situation from the standpoint of the employee being sent home early or being told not to work tomorrow or, perhaps for the next week because the theater has a bunch of bombs, is not a good situation. A job in popcorn sales is probably not a high paying job so the employees may just quit and they may do this, not by giving notice, but rather by not showing up for a scheduled shift. The result of this is that managers determine the maximum number of employees they can hire if there theater has low drawing movies and they set the price of popcorn so that when the theater is filled this number of employees will not be overwhelmed by patron buying popcorn. At least not to the extent that the start of the movie has to be delayed. |
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