100K, none of it is deductible, and you have to itemize to get it). Bottom line - think twice. Summarizing the discussion in comments: If you have a very low AGI, I would guess that your tax liability is pretty low as well. Even if you deduct the whole $2K, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6K), you save say $300 if you're in 15% tax bracket. That's the most savings you have. However I'm assuming something here: I'm assuming that you're itemizing your deductions already and they're above the standard deduction. This is very unlikely, with such a low income. You don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and I would argue that with the low AGI you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. You can be in 15% bracket with AGI between (roughly) $8K and $35K, i.e.: you cannot deduct between $160 and $750 of the $2K, so it's already less than the maximum $300. If your AGI is $8K, the deduction doesn't matter, EIC might cover all of your taxes anyway. If your AGI is $30K, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. That, again, assuming it's above your other deductions, which in turn are already above the standard deduction. Highly unlikely. As I said in the comments - I do not think you can realistically save on taxes because of this loss in such a manner.","title":""},{"docid":"593976","text":"And he has to pay for it every home repair and every month the property sets empty. His loss each month is not $250, but probably closer to $500. In generally you need to clear at least $200 ABOVE PTI (principle, taxes and interest) to cover repair and the like to property. From your post, it sounds like your dad was forced into the land-lord business by the recession. Unless he plans to hold the property until its rental value has increased by $500 a month, he should consider selling it and writing-off the loss. Losing money bit by bit on a house isn't a tax write-off event. Selling a property for less than you bought it for generally is. FYI, I got the $500/month loss by assuming that repairs/emptiness/etc will cost you about $200 a month, and added $50 for your dad's time managing the property.","title":""},{"docid":"215214","text":"Others have already made good points, so I'll just add a few more: You say that if you bought it, your mortgage, insurance, and taxes minus the rental income from the bottom floor would leave you with costs of 1/4 of your current rent. That means you're getting a fantastic deal on the purchase price. I suspect you may be underestimating some of those costs. So, get exact figures on the mortgage, insurance and taxes and do the math. If it is that good, go for it, just make sure to get that home inspection (in case there's major problems and they're trying to get out while the gettin's good) Also, some advice: Be prepared to cover that entire monthly cost for a few months. Units can stand empty for a while. Also, you may want to rent out slowly - a good tenent found after a couple months is much better than a bad tenent found quickly. Also, have some money set aside for maintenence. As a renter, you've never really had to think about that before, but as a homeowner you do. As a landlord, it's even more important - you can not fix something in your own home for a while if you needed to wait, but in a tenent unit, you have to fix it immediately. Finally, taxes: You do get to deduct interest, and so on, but it'll work a little differently than you think. You'll have to split it in half (if the units are the same size) and deduct half the interest as a normal homeowner deduction, the other half as a business expense. Same for PMI, insurance, and property taxes. If you do maintenance that effects both units, like fixing the roof, half will be deductible, the other half not. However, maintenance that only affects the tenant unit is fully deductible. You can claim depreciation, but only for half. So, your starting amount you can depreciate would be (purchase price - land value)/2. Same thing here - half is your home, the other half is a business. Note that some things you'd think of as maintenance costs actually can't be deducted, only depreciated over time. Take that leaky roof, for example. If you replaced it instead of repairing it, you could not deduct your replacement costs. It counts as an improvement, and gets added to your cost-basis, where you depreciate it along with (half!) the house. If your tenant's refrigerator went out, and you replaced it, you couldn't deduct that either. However you can depreciate all of it on another schedule (seperate from home depreciation). If you repaired it instead, you can deduct all of it immediately. Taxes suck.","title":""},{"docid":"290862","text":"My basic rule of thumb is that if the the bill come from a government office of taxation, and that if you fail to pay the amount they can put a tax lien on the property it is a tax. for you the complication is in Pub530: Assessments for local benefits. You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property. You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge. If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this section to find how much of it, if any, you can deduct. I have never seen a tax bill that said this amount is for new streets, and the rest i for things the IRS says you can deduct. The issue is that if the Center City tax bill is a separate line or a separate bill then does it count. I would go back to the first line of the quote from Pub 530: You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Then I would look at the quote from the CCD web site: The Center City District (CCD) is a business improvement district. Our mission is to keep Philadelphia's downtown, called Center City, clean, safe, beautiful and fun. We provide security, cleaning and promotional services that supplement, but do not replace, basic services provided by the City of Philadelphia and the fundamental responsibilities of property owners. CCD also makes physical improvements to the downtown, installing and maintaining lighting, > signs, banners, trees and landscape elements. and later on the same page: CCD directly bills and collects mandatory payments from properties in the district. CCD also receives voluntary contributions from the owners of tax-exempt properties that benefit from our services. The issues is that it is a business improvement district (BID), and you aren't a business: I did find this document from the city of Philadelphia explain how to establish a BID: If the nature of the BID is such that organizers wish to include residential properties within the district and make these properties subject to the assessment, it may make sense to assess these properties at a lower level than a commercial property, both because BID services and benefits are business-focused, and because owner-occupants often cannot treat NID assessments as tax-deductible business expenses, like commercial owners do. Care must be taken to ensure that the difference in commercial and residential assessment rates is equitable, and complies with the requirements of the CEIA. from the same document: Funds for BID programs and services are generated from a special assessment paid by the benefited property owners directly to the organization that manages the BID’s activities. (Note: many leases have a clause that allows property owners to pass the BID assessment on to their tenants.) Because they are authorized by the City of Philadelphia, the assessment levied by the BID becomes a legal obligation of the property owner and failure to pay can result in the filing of a lien. I have seen discussion that some BIDS can accept tax deductible donations. This means if a person itemizes they can deduct the donation. I would then feel comfortable deducting the tax because: If you can't deduct it that would mean the only people who can't deduct it are home owners. So deduct it. (keep in mind I am not a tax professional)","title":""},{"docid":"279488","text":"To start, I hope you are aware that the properties' basis gets stepped up to market value on inheritance. The new basis is the start for the depreciation that must be applied each year after being placed in service as rental units. This is not optional. Upon selling the units, depreciation is recaptured whether it's taken each year or not. There is no rule of thumb for such matters. Some owners would simply collect the rent, keep a reserve for expenses or empty units, and pocket the difference. Others would refinance to take cash out and leverage to buy more property. The banker is not your friend, by the way. He is a salesman looking to get his cut. The market has had a good recent run, doubling from its lows. Right now, I'm not rushing to prepay my 3.5% mortgage sooner than it's due, nor am I looking to pull out $500K to throw into the market. Your proposal may very well work if the market sees a return higher than the mortgage rate. On the flip side I'm compelled to ask - if the market drops 40% right after you buy in, will you lose sleep? And a fellow poster (@littleadv) is whispering to me - ask a pro if the tax on a rental mortgage is still deductible when used for other purposes, e.g. a stock purchase unrelated to the properties. Last, there are those who suggest that if you want to keep investing in real estate, leverage is fine as long as the numbers work. From the scenario you described, you plan to leverage into an already pretty high (in terms of PE10) and simply magnifying your risk.","title":""},{"docid":"51497","text":"Those choices aren't mutually exclusive. Yes, most discussion of the mortgage interest deduction ignores the fact that for a standard itemizer, much, if not all of this deduction can be lost. For 2011, the std deduction for a single is $5,800. It's not just mortgage interest that's deductible, state income tax, realestate tax, and charitable contributions are among the other deductions. If this house is worth $350K, the property tax is about $5K, and since it's not optional, I'd be inclined to assume that it's the deduction that offsets the std deduction. Most states have an income tax, which tops off the rest. You are welcome to toss this aside as sophistry, but I view it as these other deductions as 'lost' first. I'm married, and our property tax is more than our standard deduction, so when doing the math, the mortgage is fully deductible, as are our contributions. In your case, the numbers may play out differently. No state tax? Great, so it's the property tax and deductions you'd add up first and decide on the value the mortgage deduction brings. Last, I don't have my mortgage for the deduction, I just believe that long term my other investments will exceed, after tax, the cost of that mortgage.","title":""},{"docid":"141738","text":"\"About deducting mortgage interest: No, you can not deduct it unless it is qualified mortgage interest. \"\"Qualified mortgage interest is interest and points you pay on a loan secured by your main home or a second home.\"\" (Tax Topic 505). According to the IRS, \"\"if you rent out the residence, you must use it for more than 14 days or more than 10% of the number of days you rent it out, whichever is longer.\"\" Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, \"\"The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.\"\" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these cannot be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read the official publications and get professional tax advice. Here's an excerpt from Publication 856 - Foreign Tax Credit for Individuals: \"\"In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040).\"\" Note and disclaimer: Sources: IRS Tax Topic 505 Interest Expense, IRS Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) , IRS Topic 514 Foreign Tax Credit , and Publication 856 Foreign Tax Credit for Individuals\"","title":""},{"docid":"409980","text":"In 2012, the standard deduction is $5950 for a single person. Let's assume you are very charitable, and by coincidence you donate exactly $5950 to charity. Everything that falls under itemized deductions would then be deductible. So, if your property tax is $6000, in your example - Other adjustments come into play, including an exemption of $3850, I am just showing the effect of the property tax. The bottom line is that deductions come off income, not off your tax bill. The saving from a deduction is $$ x your tax bracket.","title":""},{"docid":"462831","text":"In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs, but we still pay for them with after-tax money, and pay additional sales tax. Only interest (and not principal) on a mortgage is deductible in the US, which is great for people who take out mortgages (and helps banks get more business, I'm sure), but you're out of luck if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high.","title":""},{"docid":"83080","text":"The initial beneficiary of 529 plan can be virtually anyone you choose--even yourself. 529 deductions are not deductible from federal taxes. You have about a 60% chance of living in a state that allows you to deduct contributions to your state's plan from your state taxes. I'd be more specific, but your profile is pretty much empty and there's no location info to assist me in determining if this applies to you or not. if that does apply I'm pretty sure it's limited to earned income, so you get little benefit from depositing the loans, and it generally only applies to YOUR state's plan. The major benefits to 529 plans are that the money grows tax free, and withdrawals are not subject to taxes. However if you are not investing long term, then it's pretty hard to gain much from those benefits. Since you have such a short time horizon, you'll want to make sure the plan investments are directed to very low risk vehicles like a money market fund. One of the better sources for 528 info is www.savingforcollege.com","title":""},{"docid":"338563","text":"You will need to check the language of your sales contract. Most of the time, it will be written that the pro-rated property taxes will be part of closing costs. In general, If you've already paid taxes, then the buyer will pay you the pro-rated portion of that, from the closing date through the end of the year. If you haven't, then you would usually be charged the pro-rated amount to be held in the buyer's mortgage company escrow account, with the remainder being collected from the buyer at a later date. For your income tax purposes, you can deduct that tiny amount of the paid property taxes from your income (assuming itemized deductions). Doing some research on property tax for the state of Georgia brings up this interesting note: If you owned property on January 1, you are responsible for the ad valorem tax for the entire year even if you sell the property on January 2. Georgia law does not allow a refund for partial year residents. This leads me to believe that your sales contract would have it written in that the buyer paid you almost the entire year's property taxes in anticipation that you would be responsible for the property taxes, as you owned the property on January 1st. Again, you should consult with the settlement attorney and review your contract.","title":""},{"docid":"490888","text":"\"You need to do a bit more research and as @littleadv often wisely advises, consult a professional, in this case a tax layer or CPA. You are not allowed to just pull money out of a property and write off the interest. From Deducting Mortgage Interest FAQs If you own rental property and borrow against it to buy a home, the interest does not qualify as mortgage interest because the loan is not secured by the home itself. Interest paid on that loan can't be deducted as a rental expense either, because the funds were not used for the rental property. The interest expense is actually considered personal interest, which is no longer deductible. This is not exactly your situation of course, but it illustrates the restriction that will apply to you. Elsewhere in the article, it references how, if used for a business, the interest deduction still will not apply to the rental, but to the business via schedule C. In your case, it's worse, you can never deduct interest used to fund a tax free bond, or to invest in such a tax favored product. Putting the facts aside, I often use the line \"\"don't let the tax tail wag the investing dog.\"\" Borrowing in order to reduce taxes is rarely a wise move. If you look at the interest on the 90K vs 290K, you'll see you are paying, in effect, 5.12% on the extra 200K, due the higher rate on the entire sum. Elsewhere on this board, there are members who would say that given the choice to invest or pay off a 4% mortgage, paying it off is guaranteed, and the wiser thing to do. I think there's a fine line and might not be so quick to pay that loan off, an after-tax 3% cost of borrowing is barely higher than inflation. But to borrow at over 5% to invest in an annuity product whose terms you didn't disclose, does seem right to me. Borrow to invest in the next property? That's another story.\"","title":""},{"docid":"414692","text":"I’m not an expert on the VISA/US tax or insurance, but you're making enough mistakes in terms of all the associated costs involved in owning and renting houses/apartments that this already looks potentially unwise at this stage of your investment career. Renting cheap properties/to students involves the property constantly being trashed, often being empty and requiring extremely close management (which you either have to pay someone a lot to do, or do yourself and lose other potential earning time. If doing yourself you will also make lots of mistakes in the vetting/managing/marketing process etc at first as this is a complex art in itself). Costs on this type of rental can often get as high as 25% a year depending exactly how lucky you get even if you do it all yourself, and will typically be in the 5-15% range every year once everything you have to constantly maintain, replace and redecorate is totalled up. That's all pre what you could be earning in a job etc, so if you could earn a decent clip elsewhere in the same time also have to deduct that lost potential. Send it all to third parties (so all upkeep by hired contractors, all renting by an agency) you will be lucky to even break even off ~15k a year per property rents to students. You’re not seeming to price in any transaction costs, which usually run at ~5% a time for both entrance and exit. Thats between half and one years rent gone from the ten per property on these numbers. Sell before ten is up its even more. On point three, rounding projections in house price rises to one decimal place is total gibberish – no one who actually has experience investing their own money well ever makes or relies on claims like this. No idea on Pittsburgh market but sound projections of likely asset changes is always a ranged and imprecise figure that cannot (and shouldn’t) be counted on for much. Even if it was, it’s also completely unattainable in property because you have to spend so much money on upkeep: post costs and changes in size/standard, house values generally roughly track inflation. Have a look at this chart and play around with some reasonable yearly upkeep numbers and you will see what I mean. Renting property is an absolute graveyard for inexperienced investors and if you don't know the stuff above already (and it's less than 10% of what you need to know to do this profitably vs other uses of your time), you will nearly always be better off investing the money in more passive investments like diversified bonds, REITs and Stock.","title":""},{"docid":"161330","text":"No, it doesn't work like this. Your charitable contribution is limited to the FMV. In your scenario your charitable contribution is limited by the FMV, i.e.: you can only deduct the worth of the stocks. It would be to your advantage to sell the stocks and donate cash. Had your stock appreciated, you may be required to either deduct the appreciation amount from the donation deduction or pay capital gains tax (increasing your basis to the FMV), depending on the nature of your donation. In many cases - you may be able to deduct the whole value of the appreciated stock without paying capital gains. Read the link below for more details and exceptions. In this scenario, it is probably more beneficial to donate the stock (even if required to pay the capital gains tax), instead of selling and donating cash (which will always trigger the capital gains tax). Exceptions. However, in certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. Generally, this means reducing the fair market value to the property's cost or other basis. You must do this if: The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations, You choose the 50% limit instead of the special 30% limit for capital gain property, discussed later, The contributed property is intellectual property (as defined earlier under Patents and Other Intellectual Property ), The contributed property is certain taxidermy property as explained earlier, or The contributed property is tangible personal property (defined earlier) that: Is put to an unrelated use (defined later) by the charity, or Has a claimed value of more than $5,000 and is sold, traded, or otherwise disposed of by the qualified organization during the year in which you made the contribution, and the qualified organization has not made the required certification of exempt use (such as on Form 8282, Donee Information Return, Part IV). See also Recapture if no exempt use , later. See more here.","title":""},{"docid":"30343","text":"\"You've asked a number of questions. I can answer a few. I've quoted your question before each answer. What are the ins and outs of a foreigner like myself buying rental property in Canada? This is a pretty broad question which can address location, finances, basic suggestions etc. Here's some things to consider: Provincial considerations: Some ins and outs will depend on what province you are considering and what area in that Province. If you plan on owning in Montreal, for example, that's in the province of Quebec and that means you (or someone) will need to be able to operate in the French language. There are other things that might be different from province to province. See stat info below. Canadian vs. US Dollar: Now might be a great time to buy property in Canada since the Canada dollar is weak right now. To give you an idea, at a non-cash rate of 1.2846, a little over $76,000 US will get you over $100k Canadian. That's using the currency converter at rbcroyalbank.com. Taxes for non-resident rental property owners: According to the T4144 Income Tax Guide for Electing Under Section 216 – 2015: \"\"When you receive rental income from real or immovable property in Canada, the payer, such as the tenant or a property manager, has to withhold non-resident tax at the rate of 25% on the gross rental income paid or credited to you. The payer has to pay us the tax on or before the 15th day of the month following the month the rental income is paid or credited to you.\"\" If you prefer to send a separate Canadian tax return, you can choose to elect under section 216 of the Income Tax Act. A benefit of this way is that \"\"electing under section 216 allows you to pay tax on your net Canadian-source rental income instead of on the gross amount. If the non-resident tax withheld by the payer is more than the amount of tax payable calculated on your section 216 return, [they] will refund the excess to you.\"\" You can find this guide at Canada Revenue's site: http://www.cra-arc.gc.ca/E/pub/tg/t4144/README.html Stats: A good place for stats is the Canada Mortgage and Housing Corporation (CMHC). So, if you are interesting in vacancy rates for example, you can see a table that will show you that the vacancy rate in Ontario is 2.3% and in British Columbia it's 1.5%. However, in New Brunswick it's 8%. The rate for metropolitan areas across Canada is 2.8%. If you want to see or download this table showing the vacancy rates by province and also by metropolitan areas, go to the Canada Mortgage and Housing Corporation site http://www.cmhc.ca/housingmarketinformation/. You can get all sorts of housing information, reports and market information there. I've done well with Condos/Town-homes and would be interested in the same thing over there. Is it pretty much all the same? See the stat site mentioned above to get market info about condos, etc. What are the down payment requirements? For non-owner occupied properties, the down payment is at least 20%. Update in response to comments about being double taxed: Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, \"\"The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.\"\" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these would not be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read Publication 856 - Foreign Tax Credit for Individuals. Here's an excerpt: \"\"In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040).\"\" Disclaimers: Sources: IRS Topic 514 Foreign Tax Credit and Publication 856 Foreign Tax Credit for Individuals\"","title":""},{"docid":"393629","text":"Should I treat this house as a second home or a rental property on my 2015 taxes? If it was not rented out or available for rent then you could treat it as your second home. But if it was available for rent (i.e.: you started advertising, you hired a property manager, or made any other step towards renting it out), but you just didn't happen to find a tenant yet - then you cannot. So it depends on the facts and circumstances. I've read that if I treat this house as a rental property, then the renovation cost is a capital expenditure that I can claim on my taxes by depreciating it over 28 years. That is correct. 27.5 years, to be exact. I've also read that if I treat this house as a personal second home, then I cannot do that because the renovation costs are considered non-deductible personal expenses. That is not correct. In fact, in both cases the treatment is the same. Renovation costs are added to your basis. In case of rental, you get to depreciate the house. Since renovations are considered part of the house, you get to depreciate them too. In case of a personal use property, you cannot depreciate. But the renovation costs still get added to the basis. These are not expenses. But does mortgage interest get deducted against my total income or only my rental income? If it is a personal use second home - you get to deduct the mortgage interest up to a limit on your Schedule A. Depending on your other deductions, you may or may not have a tax benefit. If it is a rental - the interest is deducted from the rental income only on your Schedule E. However, there's no limit (although some may be deferred if the deduction is more than the income) if you're renting at fair market value. Any guidance would be much appreciated! Here's the guidance: if it is a rental - treat it as a rental. Otherwise - don't.","title":""},{"docid":"424427","text":"Edited in response to JoeTaxpayer's comment and OP Tim's additional question. To add to and clarify a little what littleadv has said, and to answer OP Tim's next question: As far as the IRS is concerned, you have at most one Individual Retirement Account of each type (Traditional, Roth) though the money in each IRA can be invested with as many different custodians (brokerages, banks, etc.) and different investments as you like. Thus, the maximum $5000 ($6000 for older folks) that you can contribute each year can be split up and invested any which way you like, and when in later years you take a Required Minimum Distribution (RMD) from a Traditional IRA, you can get the money by selling just one of the investments, or from several investments; all that the IRS cares is that the total amount that is distributed to you is at least as large as the RMD. An important corollary is that the balance in your IRA is the sum total of the value of all the investments that various custodians are holding for you in IRA accounts. There is no loss in an IRA until every penny has been withdrawn from every investment in your IRA and distributed to you, thus making your IRA balance zero. As long as you have a positive balance, there is no loss: everything has to come out. After the last distribution from your Roth IRA (the one that empties your entire Roth IRA, no matter where it is invested and reduces your Roth IRA balance (see definition above) to zero), total up all the amounts that you have received as distributions from your Roth IRA. If this is less than the total amount of money you contributed to your Roth IRA (this includes rollovers from a Traditional IRA or Roth 401k etc., but not the earnings within the Roth IRA that you re-invested inside the Roth IRA), you have a loss that can be deducted on Schedule A as a Miscellaneous Deduction subject to the 2% AGI limit. This 2% is not a cap (in the sense that no more than 2% of your AGI can be deducted in this category) but rather a threshold: you can only deduct whatever part of your total Miscellaneous Deductions exceeds 2% of your AGI. Not many people have Miscellaneous Deductions whose total exceeds 2% of their AGI, and so they end up not being able to deduct anything in this category. If you ever made nondeductible contributions to your Traditional IRA because you were ineligible to make a deductible contribution (income too high, pension plan coverage at work etc), then the sum of all these contributions is your basis in your Traditional IRA. Note that your deductible contributions, if any, are not part of the basis. The above rules apply to your basis in your Traditional IRA as well. After the last distribution from your Traditional IRA (the one that empties all your Traditional IRA accounts and reduces your Traditional IRA balance to zero), total up all the distributions that you received (don't forget to include the nontaxable part of each distribution that represents a return of the basis). If the sum total is less than your basis, you have a loss that can be deducted on Schedule A as a Miscellaneous Deduction subject to the 2% AGI threshold. You can only deposit cash into an IRA and take a distribution in cash from an IRA. Now, as JoeTaxpayer points out, if your IRA owns stock, you can take a distribution by having the shares transferred from your IRA account in your brokerage to your personal account in the brokerage. However, the amount of the distribution, as reported by the brokerage to the IRS, is the value of the shares transferred as of the time of the transfer, (more generally the fair market value of the property that is transferred out of the IRA) and this is the amount you report on your income tax return. Any capital gain or loss on those shares remains inside the IRA because your basis (in your personal account) in the shares that came out of the IRA is the amount of the distribution. If you sell these shares at a later date, you will have a (taxable) gain or loss depending on whether you sold the shares for more or less than your basis. In effect, the share transfer transaction is as if you sold the shares in the IRA, took the proceeds as a cash distribution and immediately bought the same shares in your personal account, but you saved the transaction fees for the sale and the purchase and avoided paying the difference between the buying and selling price of the shares as well as any changes in these in the microseconds that would have elapsed between the execution of the sell-shares-in-Tim's-IRA-account, distribute-cash-to-Tim, and buy-shares-in-Tim's-personal account transactions. Of course, your broker will likely charge a fee for transferring ownership of the shares from your IRA to you. But the important point is that any capital gain or loss within the IRA cannot be used to offset a gain or loss in your taxable accounts. What happens inside the IRA stays inside the IRA.","title":""},{"docid":"401146","text":"\"There are tax free bonds in the United States. They are for things like public housing and other urban projects. They are tax free for everyone but only rich people buy them. Why? The issue is that the tax free nature of the bond is included in its yield. So rather than yielding say a 5% return, they figure that the owner is getting 20% off due to not paying taxes. As a result, they only give a 4% return but are as risky as a 5% return investment. Net result, only rich people invest in tax free bonds. \"\"Rich\"\" is defined here to mean people paying a 20% tax on long term investment returns. Or take the State and Local Tax (SALT) deduction, which has been in the news recently. Again, it is technically open to everyone. But there is also a standard deduction that is open to everyone. For the typical family, state and local taxes might be 5% of income. So for a family making $100k a year, that's $5k. The same family can take a $13k or so standard deduction instead of itemizing. So why would they take the smaller deduction? As a practical matter, two groups take the SALT deduction. People rich enough to pay more than $13k in state and local taxes and people who also take the mortgage interest deduction. So it helps a lot of people who are rich quite a bit. And it helps a few middle class people some. But if you are lower middle class with a $30k mortgage on a tiny house and paying 4% interest, then that's only $1200 a year. Add in property taxes of $3000 and SALT of $2.8k and that's only $7k. Even if the person gives $3k to charity, the $13k deduction is a lot better and requires less paperwork. Contrast that with someone who has $500k mortgage at 3.6% interest. That's $18k in interest alone. Add in a SALT of $7k and property taxes of $50k, and there's $75k of itemized deductions, much better than $13k. Now a $7k donation to charity is entirely deductible. And even after the mortgage interest deduction goes away, the other $64k remains.\"","title":""},{"docid":"526499","text":"The rental income is indeed taxable income, but you reduce the taxable portion of it by deducting expenses (including mortgage interest, maintenance, insurance, HOA, real estate tax, and of course depreciation). Due to the depreciation, you may end up breaking even, or having very little taxable income. Note that when you sell the property, your basis is reduced by the depreciation you were allowed to deduct (even if you haven't deducted it for whatever reason), and also the personal residence exclusion might no longer be applicable - i.e.: you'll have to pay capital gains tax. You will not be able to deduct a loss though if you sell now, so it may be better to depreciate it as a rental, rather then sell at a loss that won't affect your taxes. Also, consider the fact that the basis for the depreciation is not the basis you currently have in the property (because you're under water). You have to remember that when calculating the taxes. This is not a tax advice, and you should seek a professional help.","title":""},{"docid":"527958","text":"It's true that the standard deduction makes the numbers less impressive. I ran your scenario through my favorite, most complete rent vs buy calculator, and your math isn't far off. However, there are a lot of deductions only available if you itemize. Medical expenses, moving expenses, job expenses, charitable contributions, local income/sales taxes, property tax, private mortgage insurance, etc. Property tax on that house alone is going to be nearly equal to the standard deduction, so the point is nearly moot. Anyways, the above linked calculator handles all of those, and more.","title":""},{"docid":"235484","text":"\"Is all interest on a first time home deductible on taxes? What does that even mean? If I pay $14,000 in taxes will My taxes be $14,000 less. Will my taxable income by that much less? If you use the standard deduction in the US (assuming United States), you will have 0 benefit from a mortgage. If you itemize deductions, then your interest paid (not principal) and your property tax paid is deductible and reduces your income for tax purposes. If your marginal tax rate is 25% and you pay $10000 in interest and property tax, then when you file your taxes, you'll owe (or get a refund) of $2500 (marginal tax rate * (amount of interest + property tax)). I have heard the term \"\"The equity on your home is like a bank\"\". What does that mean? I suppose I could borrow using the equity in my home as collateral? If you pay an extra $500 to your mortgage, then your equity in your house goes up by $500 as well. When you pay down the principal by $500 on a car loan (depreciating asset) you end up with less than $500 in value in the car because the car's value is going down. When you do the same in an appreciating asset, you still have that money available to you though you either need to sell or get a loan to use that money. Are there any other general benefits that would drive me from paying $800 in rent, to owning a house? There are several other benefits. These are a few of the positives, but know that there are many negatives to home ownership and the cost of real estate transactions usually dictate that buying doesn't make sense until you want to stay put for 5-7 years. A shorter duration than that usually are better served by renting. The amount of maintenance on a house you own is almost always under estimated by new home owners.\"","title":""},{"docid":"110117","text":"1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player.","title":""},{"docid":"417981","text":"\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"","title":""},{"docid":"389654","text":"I am also neither an attorney nor a tax advisor. Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible. For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month. If you live in 50% of the house, then he can deduct 50% (plus or minus) of the expenses associated with owning the house, including: All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year. Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.","title":""},{"docid":"343766","text":"In the US, mortgage payments are not deductible. What is deductible is the mortgage interest (to a limit). That, as well, is not deductible unconditionally, but rather as part of your itemized deductions on Schedule A of your yearly tax return. So if you're married and have a standard deduction of $12600 a year, live in a state with no state income tax, and your property tax and the mortgage interest are less than your standard deduction - you will not be getting any tax benefit whatsoever. That is, in fact, the case for many, if not majority, of the US mortgage payers. So in order to get a proper estimate, you need to take into account all the aspects of your tax calculations, which are by nature quite personal, and simulate the changes with the mortgage interest deduction. Most tax preparation software will allow you creating multiple files, so you can run the numbers for different scenarios.","title":""},{"docid":"18967","text":"\"No one has addressed the fact that your loan interest and property taxes are \"\"deductible\"\" on your taxes? So, for the first 2/3 years of your loan, you will should be able to deduct each year's mortgage payment off your gross income. This in turn reduces the income bracket for your tax calculation.... I have saved 1000's a year this way, while seeing my home value climb, and have never lost a down payment. I would consider trying to use 1/2 your savings to buy a property that is desirable to live in and being able to take the yearly deduction off your taxes. As far as home insurance, most people I know have renter's insurance, and homeowner's insurance is not that steep. Chances are a year from now if you change your mind and wish to sell, unless you're in a severely deflated area, you will reclaim at minimum your down payment.\"","title":""},{"docid":"60652","text":"\"I have done several days of additional research on this and found out that it appears I can deduct the cost of the books against a single year's royalty income by claiming a Section 179 deduction. The steps are as follows: (1) Write the maximum amount of property you can claim under section 179 on line 1 of Form 4562. (2) Add up the total cost of section 179 property you began using during the tax year, including books, and record the amount on line 2. (3) Write the limit of your deductions on line 3. (4) Subtract the amount on line 2 from the amount on line 3 and record it on line 4. If line 3 is larger than line 2, simply write \"\"0\"\" on line 4, then subtract the amount on line 4 from the amount on line 1 and record on line 5. Step 5 (5) Describe the property and books on line 6 and record the cost of each in section b. Write the amount of the expense you are claiming for each item in section c of line 6. You can claim the entire cost of the books. (6) Add the amount in line 6 c to any amounts on line 7 and write the total on line 8. Write either the amount on line 8 or the amount on 5 on line 9, depending on which is smaller. (7) Write the amount of your Schedule C income on line 11, unless it is greater than $500,000. On line 12, write the amount of your deduction, which is the total of line 9 plus any carry-over you may have had from the previous year. (8) Record the amount of your deduction for section 179 books and property on line 13 of your Schedule C, not line 22. Include form 4562 when you hand in your tax return. source: \"\"How to Deduct Books for Self-Employed\"\" by Emily Weller\"","title":""},{"docid":"278168","text":"\"Several, actually: Maintenance costs. As landlord, you are liable for maintaining the basic systems of the dwelling - structure, electrical, plumbing, HVAC. On top of that, you typically also have to maintain anything that comes with the space, so if you're including appliances like a W/D or fridge, if they crap out you could spend a months' rent or more replacing them. You are also required to keep the property up to city codes as far as groundskeeping unless you specifically assign those responsibilities to your tenant (and in some states you are not allowed to do so, and in many cases renters expect groundskeeping to come out of their rent one way or the other). Failure to do these things can put you in danger of giving your tenant a free out on the lease contract, and even expose you to civil and criminal penalties if you're running a real slum. Escrow payments. The combination of property tax and homeowner's insurance usually doubles the monthly housing payment over principal and interest, and that's if you got a mortgage for 20% down. Also, because this is not your primary residence, it's ineligible for Homestead Act exemptions (where available; states like Texas are considering extending Homestead exemptions to landlords, with the expectation it will trickle down to renters), however mortgage interest and state taxes do count as \"\"rental expenses\"\" and can be deducted on Schedule C as ordinary business expenses offsetting revenues. Income tax. The money you make in rent on this property is taxable as self-employment income tax; you're effectively running a sole proprietorship real-estate management company, so not only does any profit (you are allowed to deduct maintenance and administrative costs from the rent revenues) get added to whatever you make in salary at your day job, you're also liable for the full employee and employer portions of Medicare/Medicaid/SS taxes. You are, however, also allowed to depreciate the property over its expected life and deduct depreciation; the life of a house is pretty long, and if you depreciate more than the house's actual loss of value, you take a huge hit if/when you sell because any amount of the sale price above the depreciated price of the house is a capital gain (though, it can work to your advantage by depreciating the maximum allowable to reduce ordinary income, then paying lower capital gains rates on the sale). Legal costs. The rental agreement typically has to be drafted by a lawyer in order to avoid things that can cause the entire contract to be thrown out (though there are boilerplate contracts available from state landlords' associations). This will cost you a few hundred dollars up front and to update it every few years. It is deductible as an ordinary expense. Advertising. Putting up a \"\"For Rent\"\" sign out front is typically just the tip of the iceberg. Online and print ads, an ad agency, these things cost money. It's deductible as an ordinary expense. Add this all up and you may end up losing money in the first year you rent the property, when legal, advertising, initial maintenance/purchases to get the place tenant-ready, etc are first spent; deduct it properly and it'll save you some taxes, but you better have the nest egg to cover these things on top of everything your lender will expect you to bring to closing (assuming you don't have $100k+ lying around to buy the house in cash).\"","title":""},{"docid":"84963","text":"\"Your corporation would file a corporate income tax return on an annual basis. One single month of no revenue doesn't mean much in that annual scheme of things. Total annual revenue and total annual expenses are what impact the results. In other words, yes, your corporation can book revenues in (say) 11 of 12 months of the year but still incur expenses in all months. Many seasonal businesses operate this way and it is perfectly normal. You could even just have, say, one super-awesome month and spend money the rest of the year. Heck, you could even have zero revenue but still incur expenses—startups often work like that at first. (You'd need investment funding, personal credit, a loan, or retained earnings from earlier profitable periods to do that, of course.) As long as your corporation has a reasonable expectation of a profit and the expenses your corporation incurs are valid business expenses, then yes, you ought to be able to deduct those expenses from your revenue when figuring taxes owed, regardless of whether the expenses were incurred at the same approximate time as revenue was booked—as long as the expense wasn't the acquisition of a depreciable asset. Some things your company would buy—such as the computer in your example—would not be fully deductible in the year the expense is incurred. Depreciable property expenses are deducted over time according to a schedule for the kind of property. The amount of depreciation expense you can claim for such property each year is known as Capital Cost Allowance. A qualified professional accountant can help you understand this. One last thing: You wrote \"\"write off\"\". That is not the same as \"\"deduct\"\". However, you are forgiven, because many people say \"\"write off\"\" when they actually mean \"\"deduct\"\" (for tax purposes). \"\"Write off\"\", rather, is a different accounting term, meaning where you mark down the value of an asset (e.g. a bad loan that will never be repaid) to zero; in effect, you are recognizing it is now a worthless asset. There can be a tax benefit to a write-off, but what you are asking about are clearly expense deductions and not write-offs. They are not the same thing, and the next time you hear somebody using \"\"write off\"\" when they mean \"\"deduction\"\", please correct them.\"","title":""},{"docid":"33006","text":"Think carefully about the added expenses. It may still make sense, but it probably won't be as cheap as you are thinking. In addition to the mortgage and property taxes, there is also insurance and building maintenance and repairs. Appliances, carpets, and roofs need to be replaced periodically. Depending on the area of the country there is lawn maintenance and now removal. You need to make sure you can cover the expenses if you are without a tenant for 6 months or longer. When tenants change, there is usually some cleaning and painting that needs to be done. You can deduct the mortgage interest and property taxes on your part of the building. You need to claim any rent as income, but can deduct the other part of the mortgage interest and taxes as an expense. You can also deduct building maintenance and repairs on the rental portion of the building. Some improvements need to be depreciated over time (5-27 years). You also need to depreciate the cost of the rental portion of the building. This basically means that you get a deduction each year, but lower the cost basis of the building so you owe more capital gains taxes when you sell. If you do this, I would get a professional to do your taxes at least the first year. Its not hard once you see it done, but there are a lot of details and complications that you want to get right.","title":""}],"string":"[\n {\n \"docid\": \"277353\",\n \"text\": \"If you have multiple accounts, you have to empty them all before you can deduct any losses. Your loss is not a capital loss, its a deduction. It is calculated based on the total amount you have withdrawn from all your Roth IRA's, minus the total basis. It will be subject to the 2% AGI treshhold (i.e.: if your AGI is > 100K, none of it is deductible, and you have to itemize to get it). Bottom line - think twice. Summarizing the discussion in comments: If you have a very low AGI, I would guess that your tax liability is pretty low as well. Even if you deduct the whole $2K, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6K), you save say $300 if you're in 15% tax bracket. That's the most savings you have. However I'm assuming something here: I'm assuming that you're itemizing your deductions already and they're above the standard deduction. This is very unlikely, with such a low income. You don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and I would argue that with the low AGI you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. You can be in 15% bracket with AGI between (roughly) $8K and $35K, i.e.: you cannot deduct between $160 and $750 of the $2K, so it's already less than the maximum $300. If your AGI is $8K, the deduction doesn't matter, EIC might cover all of your taxes anyway. If your AGI is $30K, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. That, again, assuming it's above your other deductions, which in turn are already above the standard deduction. Highly unlikely. As I said in the comments - I do not think you can realistically save on taxes because of this loss in such a manner.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"593976\",\n \"text\": \"And he has to pay for it every home repair and every month the property sets empty. His loss each month is not $250, but probably closer to $500. In generally you need to clear at least $200 ABOVE PTI (principle, taxes and interest) to cover repair and the like to property. From your post, it sounds like your dad was forced into the land-lord business by the recession. Unless he plans to hold the property until its rental value has increased by $500 a month, he should consider selling it and writing-off the loss. Losing money bit by bit on a house isn't a tax write-off event. Selling a property for less than you bought it for generally is. FYI, I got the $500/month loss by assuming that repairs/emptiness/etc will cost you about $200 a month, and added $50 for your dad's time managing the property.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"215214\",\n \"text\": \"Others have already made good points, so I'll just add a few more: You say that if you bought it, your mortgage, insurance, and taxes minus the rental income from the bottom floor would leave you with costs of 1/4 of your current rent. That means you're getting a fantastic deal on the purchase price. I suspect you may be underestimating some of those costs. So, get exact figures on the mortgage, insurance and taxes and do the math. If it is that good, go for it, just make sure to get that home inspection (in case there's major problems and they're trying to get out while the gettin's good) Also, some advice: Be prepared to cover that entire monthly cost for a few months. Units can stand empty for a while. Also, you may want to rent out slowly - a good tenent found after a couple months is much better than a bad tenent found quickly. Also, have some money set aside for maintenence. As a renter, you've never really had to think about that before, but as a homeowner you do. As a landlord, it's even more important - you can not fix something in your own home for a while if you needed to wait, but in a tenent unit, you have to fix it immediately. Finally, taxes: You do get to deduct interest, and so on, but it'll work a little differently than you think. You'll have to split it in half (if the units are the same size) and deduct half the interest as a normal homeowner deduction, the other half as a business expense. Same for PMI, insurance, and property taxes. If you do maintenance that effects both units, like fixing the roof, half will be deductible, the other half not. However, maintenance that only affects the tenant unit is fully deductible. You can claim depreciation, but only for half. So, your starting amount you can depreciate would be (purchase price - land value)/2. Same thing here - half is your home, the other half is a business. Note that some things you'd think of as maintenance costs actually can't be deducted, only depreciated over time. Take that leaky roof, for example. If you replaced it instead of repairing it, you could not deduct your replacement costs. It counts as an improvement, and gets added to your cost-basis, where you depreciate it along with (half!) the house. If your tenant's refrigerator went out, and you replaced it, you couldn't deduct that either. However you can depreciate all of it on another schedule (seperate from home depreciation). If you repaired it instead, you can deduct all of it immediately. Taxes suck.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"290862\",\n \"text\": \"My basic rule of thumb is that if the the bill come from a government office of taxation, and that if you fail to pay the amount they can put a tax lien on the property it is a tax. for you the complication is in Pub530: Assessments for local benefits. You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property. You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge. If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this section to find how much of it, if any, you can deduct. I have never seen a tax bill that said this amount is for new streets, and the rest i for things the IRS says you can deduct. The issue is that if the Center City tax bill is a separate line or a separate bill then does it count. I would go back to the first line of the quote from Pub 530: You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Then I would look at the quote from the CCD web site: The Center City District (CCD) is a business improvement district. Our mission is to keep Philadelphia's downtown, called Center City, clean, safe, beautiful and fun. We provide security, cleaning and promotional services that supplement, but do not replace, basic services provided by the City of Philadelphia and the fundamental responsibilities of property owners. CCD also makes physical improvements to the downtown, installing and maintaining lighting, > signs, banners, trees and landscape elements. and later on the same page: CCD directly bills and collects mandatory payments from properties in the district. CCD also receives voluntary contributions from the owners of tax-exempt properties that benefit from our services. The issues is that it is a business improvement district (BID), and you aren't a business: I did find this document from the city of Philadelphia explain how to establish a BID: If the nature of the BID is such that organizers wish to include residential properties within the district and make these properties subject to the assessment, it may make sense to assess these properties at a lower level than a commercial property, both because BID services and benefits are business-focused, and because owner-occupants often cannot treat NID assessments as tax-deductible business expenses, like commercial owners do. Care must be taken to ensure that the difference in commercial and residential assessment rates is equitable, and complies with the requirements of the CEIA. from the same document: Funds for BID programs and services are generated from a special assessment paid by the benefited property owners directly to the organization that manages the BID’s activities. (Note: many leases have a clause that allows property owners to pass the BID assessment on to their tenants.) Because they are authorized by the City of Philadelphia, the assessment levied by the BID becomes a legal obligation of the property owner and failure to pay can result in the filing of a lien. I have seen discussion that some BIDS can accept tax deductible donations. This means if a person itemizes they can deduct the donation. I would then feel comfortable deducting the tax because: If you can't deduct it that would mean the only people who can't deduct it are home owners. So deduct it. (keep in mind I am not a tax professional)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"279488\",\n \"text\": \"To start, I hope you are aware that the properties' basis gets stepped up to market value on inheritance. The new basis is the start for the depreciation that must be applied each year after being placed in service as rental units. This is not optional. Upon selling the units, depreciation is recaptured whether it's taken each year or not. There is no rule of thumb for such matters. Some owners would simply collect the rent, keep a reserve for expenses or empty units, and pocket the difference. Others would refinance to take cash out and leverage to buy more property. The banker is not your friend, by the way. He is a salesman looking to get his cut. The market has had a good recent run, doubling from its lows. Right now, I'm not rushing to prepay my 3.5% mortgage sooner than it's due, nor am I looking to pull out $500K to throw into the market. Your proposal may very well work if the market sees a return higher than the mortgage rate. On the flip side I'm compelled to ask - if the market drops 40% right after you buy in, will you lose sleep? And a fellow poster (@littleadv) is whispering to me - ask a pro if the tax on a rental mortgage is still deductible when used for other purposes, e.g. a stock purchase unrelated to the properties. Last, there are those who suggest that if you want to keep investing in real estate, leverage is fine as long as the numbers work. From the scenario you described, you plan to leverage into an already pretty high (in terms of PE10) and simply magnifying your risk.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"51497\",\n \"text\": \"Those choices aren't mutually exclusive. Yes, most discussion of the mortgage interest deduction ignores the fact that for a standard itemizer, much, if not all of this deduction can be lost. For 2011, the std deduction for a single is $5,800. It's not just mortgage interest that's deductible, state income tax, realestate tax, and charitable contributions are among the other deductions. If this house is worth $350K, the property tax is about $5K, and since it's not optional, I'd be inclined to assume that it's the deduction that offsets the std deduction. Most states have an income tax, which tops off the rest. You are welcome to toss this aside as sophistry, but I view it as these other deductions as 'lost' first. I'm married, and our property tax is more than our standard deduction, so when doing the math, the mortgage is fully deductible, as are our contributions. In your case, the numbers may play out differently. No state tax? Great, so it's the property tax and deductions you'd add up first and decide on the value the mortgage deduction brings. Last, I don't have my mortgage for the deduction, I just believe that long term my other investments will exceed, after tax, the cost of that mortgage.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"141738\",\n \"text\": \"\\\"About deducting mortgage interest: No, you can not deduct it unless it is qualified mortgage interest. \\\"\\\"Qualified mortgage interest is interest and points you pay on a loan secured by your main home or a second home.\\\"\\\" (Tax Topic 505). According to the IRS, \\\"\\\"if you rent out the residence, you must use it for more than 14 days or more than 10% of the number of days you rent it out, whichever is longer.\\\"\\\" Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, \\\"\\\"The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.\\\"\\\" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these cannot be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read the official publications and get professional tax advice. Here's an excerpt from Publication 856 - Foreign Tax Credit for Individuals: \\\"\\\"In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040).\\\"\\\" Note and disclaimer: Sources: IRS Tax Topic 505 Interest Expense, IRS Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) , IRS Topic 514 Foreign Tax Credit , and Publication 856 Foreign Tax Credit for Individuals\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"409980\",\n \"text\": \"In 2012, the standard deduction is $5950 for a single person. Let's assume you are very charitable, and by coincidence you donate exactly $5950 to charity. Everything that falls under itemized deductions would then be deductible. So, if your property tax is $6000, in your example - Other adjustments come into play, including an exemption of $3850, I am just showing the effect of the property tax. The bottom line is that deductions come off income, not off your tax bill. The saving from a deduction is $$ x your tax bracket.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"462831\",\n \"text\": \"In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs, but we still pay for them with after-tax money, and pay additional sales tax. Only interest (and not principal) on a mortgage is deductible in the US, which is great for people who take out mortgages (and helps banks get more business, I'm sure), but you're out of luck if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"83080\",\n \"text\": \"The initial beneficiary of 529 plan can be virtually anyone you choose--even yourself. 529 deductions are not deductible from federal taxes. You have about a 60% chance of living in a state that allows you to deduct contributions to your state's plan from your state taxes. I'd be more specific, but your profile is pretty much empty and there's no location info to assist me in determining if this applies to you or not. if that does apply I'm pretty sure it's limited to earned income, so you get little benefit from depositing the loans, and it generally only applies to YOUR state's plan. The major benefits to 529 plans are that the money grows tax free, and withdrawals are not subject to taxes. However if you are not investing long term, then it's pretty hard to gain much from those benefits. Since you have such a short time horizon, you'll want to make sure the plan investments are directed to very low risk vehicles like a money market fund. One of the better sources for 528 info is www.savingforcollege.com\",\n \"title\": \"\"\n },\n {\n \"docid\": \"338563\",\n \"text\": \"You will need to check the language of your sales contract. Most of the time, it will be written that the pro-rated property taxes will be part of closing costs. In general, If you've already paid taxes, then the buyer will pay you the pro-rated portion of that, from the closing date through the end of the year. If you haven't, then you would usually be charged the pro-rated amount to be held in the buyer's mortgage company escrow account, with the remainder being collected from the buyer at a later date. For your income tax purposes, you can deduct that tiny amount of the paid property taxes from your income (assuming itemized deductions). Doing some research on property tax for the state of Georgia brings up this interesting note: If you owned property on January 1, you are responsible for the ad valorem tax for the entire year even if you sell the property on January 2. Georgia law does not allow a refund for partial year residents. This leads me to believe that your sales contract would have it written in that the buyer paid you almost the entire year's property taxes in anticipation that you would be responsible for the property taxes, as you owned the property on January 1st. Again, you should consult with the settlement attorney and review your contract.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"490888\",\n \"text\": \"\\\"You need to do a bit more research and as @littleadv often wisely advises, consult a professional, in this case a tax layer or CPA. You are not allowed to just pull money out of a property and write off the interest. From Deducting Mortgage Interest FAQs If you own rental property and borrow against it to buy a home, the interest does not qualify as mortgage interest because the loan is not secured by the home itself. Interest paid on that loan can't be deducted as a rental expense either, because the funds were not used for the rental property. The interest expense is actually considered personal interest, which is no longer deductible. This is not exactly your situation of course, but it illustrates the restriction that will apply to you. Elsewhere in the article, it references how, if used for a business, the interest deduction still will not apply to the rental, but to the business via schedule C. In your case, it's worse, you can never deduct interest used to fund a tax free bond, or to invest in such a tax favored product. Putting the facts aside, I often use the line \\\"\\\"don't let the tax tail wag the investing dog.\\\"\\\" Borrowing in order to reduce taxes is rarely a wise move. If you look at the interest on the 90K vs 290K, you'll see you are paying, in effect, 5.12% on the extra 200K, due the higher rate on the entire sum. Elsewhere on this board, there are members who would say that given the choice to invest or pay off a 4% mortgage, paying it off is guaranteed, and the wiser thing to do. I think there's a fine line and might not be so quick to pay that loan off, an after-tax 3% cost of borrowing is barely higher than inflation. But to borrow at over 5% to invest in an annuity product whose terms you didn't disclose, does seem right to me. Borrow to invest in the next property? That's another story.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"414692\",\n \"text\": \"I’m not an expert on the VISA/US tax or insurance, but you're making enough mistakes in terms of all the associated costs involved in owning and renting houses/apartments that this already looks potentially unwise at this stage of your investment career. Renting cheap properties/to students involves the property constantly being trashed, often being empty and requiring extremely close management (which you either have to pay someone a lot to do, or do yourself and lose other potential earning time. If doing yourself you will also make lots of mistakes in the vetting/managing/marketing process etc at first as this is a complex art in itself). Costs on this type of rental can often get as high as 25% a year depending exactly how lucky you get even if you do it all yourself, and will typically be in the 5-15% range every year once everything you have to constantly maintain, replace and redecorate is totalled up. That's all pre what you could be earning in a job etc, so if you could earn a decent clip elsewhere in the same time also have to deduct that lost potential. Send it all to third parties (so all upkeep by hired contractors, all renting by an agency) you will be lucky to even break even off ~15k a year per property rents to students. You’re not seeming to price in any transaction costs, which usually run at ~5% a time for both entrance and exit. Thats between half and one years rent gone from the ten per property on these numbers. Sell before ten is up its even more. On point three, rounding projections in house price rises to one decimal place is total gibberish – no one who actually has experience investing their own money well ever makes or relies on claims like this. No idea on Pittsburgh market but sound projections of likely asset changes is always a ranged and imprecise figure that cannot (and shouldn’t) be counted on for much. Even if it was, it’s also completely unattainable in property because you have to spend so much money on upkeep: post costs and changes in size/standard, house values generally roughly track inflation. Have a look at this chart and play around with some reasonable yearly upkeep numbers and you will see what I mean. Renting property is an absolute graveyard for inexperienced investors and if you don't know the stuff above already (and it's less than 10% of what you need to know to do this profitably vs other uses of your time), you will nearly always be better off investing the money in more passive investments like diversified bonds, REITs and Stock.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"161330\",\n \"text\": \"No, it doesn't work like this. Your charitable contribution is limited to the FMV. In your scenario your charitable contribution is limited by the FMV, i.e.: you can only deduct the worth of the stocks. It would be to your advantage to sell the stocks and donate cash. Had your stock appreciated, you may be required to either deduct the appreciation amount from the donation deduction or pay capital gains tax (increasing your basis to the FMV), depending on the nature of your donation. In many cases - you may be able to deduct the whole value of the appreciated stock without paying capital gains. Read the link below for more details and exceptions. In this scenario, it is probably more beneficial to donate the stock (even if required to pay the capital gains tax), instead of selling and donating cash (which will always trigger the capital gains tax). Exceptions. However, in certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. Generally, this means reducing the fair market value to the property's cost or other basis. You must do this if: The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations, You choose the 50% limit instead of the special 30% limit for capital gain property, discussed later, The contributed property is intellectual property (as defined earlier under Patents and Other Intellectual Property ), The contributed property is certain taxidermy property as explained earlier, or The contributed property is tangible personal property (defined earlier) that: Is put to an unrelated use (defined later) by the charity, or Has a claimed value of more than $5,000 and is sold, traded, or otherwise disposed of by the qualified organization during the year in which you made the contribution, and the qualified organization has not made the required certification of exempt use (such as on Form 8282, Donee Information Return, Part IV). See also Recapture if no exempt use , later. See more here.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"30343\",\n \"text\": \"\\\"You've asked a number of questions. I can answer a few. I've quoted your question before each answer. What are the ins and outs of a foreigner like myself buying rental property in Canada? This is a pretty broad question which can address location, finances, basic suggestions etc. Here's some things to consider: Provincial considerations: Some ins and outs will depend on what province you are considering and what area in that Province. If you plan on owning in Montreal, for example, that's in the province of Quebec and that means you (or someone) will need to be able to operate in the French language. There are other things that might be different from province to province. See stat info below. Canadian vs. US Dollar: Now might be a great time to buy property in Canada since the Canada dollar is weak right now. To give you an idea, at a non-cash rate of 1.2846, a little over $76,000 US will get you over $100k Canadian. That's using the currency converter at rbcroyalbank.com. Taxes for non-resident rental property owners: According to the T4144 Income Tax Guide for Electing Under Section 216 – 2015: \\\"\\\"When you receive rental income from real or immovable property in Canada, the payer, such as the tenant or a property manager, has to withhold non-resident tax at the rate of 25% on the gross rental income paid or credited to you. The payer has to pay us the tax on or before the 15th day of the month following the month the rental income is paid or credited to you.\\\"\\\" If you prefer to send a separate Canadian tax return, you can choose to elect under section 216 of the Income Tax Act. A benefit of this way is that \\\"\\\"electing under section 216 allows you to pay tax on your net Canadian-source rental income instead of on the gross amount. If the non-resident tax withheld by the payer is more than the amount of tax payable calculated on your section 216 return, [they] will refund the excess to you.\\\"\\\" You can find this guide at Canada Revenue's site: http://www.cra-arc.gc.ca/E/pub/tg/t4144/README.html Stats: A good place for stats is the Canada Mortgage and Housing Corporation (CMHC). So, if you are interesting in vacancy rates for example, you can see a table that will show you that the vacancy rate in Ontario is 2.3% and in British Columbia it's 1.5%. However, in New Brunswick it's 8%. The rate for metropolitan areas across Canada is 2.8%. If you want to see or download this table showing the vacancy rates by province and also by metropolitan areas, go to the Canada Mortgage and Housing Corporation site http://www.cmhc.ca/housingmarketinformation/. You can get all sorts of housing information, reports and market information there. I've done well with Condos/Town-homes and would be interested in the same thing over there. Is it pretty much all the same? See the stat site mentioned above to get market info about condos, etc. What are the down payment requirements? For non-owner occupied properties, the down payment is at least 20%. Update in response to comments about being double taxed: Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, \\\"\\\"The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.\\\"\\\" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these would not be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read Publication 856 - Foreign Tax Credit for Individuals. Here's an excerpt: \\\"\\\"In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040).\\\"\\\" Disclaimers: Sources: IRS Topic 514 Foreign Tax Credit and Publication 856 Foreign Tax Credit for Individuals\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"393629\",\n \"text\": \"Should I treat this house as a second home or a rental property on my 2015 taxes? If it was not rented out or available for rent then you could treat it as your second home. But if it was available for rent (i.e.: you started advertising, you hired a property manager, or made any other step towards renting it out), but you just didn't happen to find a tenant yet - then you cannot. So it depends on the facts and circumstances. I've read that if I treat this house as a rental property, then the renovation cost is a capital expenditure that I can claim on my taxes by depreciating it over 28 years. That is correct. 27.5 years, to be exact. I've also read that if I treat this house as a personal second home, then I cannot do that because the renovation costs are considered non-deductible personal expenses. That is not correct. In fact, in both cases the treatment is the same. Renovation costs are added to your basis. In case of rental, you get to depreciate the house. Since renovations are considered part of the house, you get to depreciate them too. In case of a personal use property, you cannot depreciate. But the renovation costs still get added to the basis. These are not expenses. But does mortgage interest get deducted against my total income or only my rental income? If it is a personal use second home - you get to deduct the mortgage interest up to a limit on your Schedule A. Depending on your other deductions, you may or may not have a tax benefit. If it is a rental - the interest is deducted from the rental income only on your Schedule E. However, there's no limit (although some may be deferred if the deduction is more than the income) if you're renting at fair market value. Any guidance would be much appreciated! Here's the guidance: if it is a rental - treat it as a rental. Otherwise - don't.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"424427\",\n \"text\": \"Edited in response to JoeTaxpayer's comment and OP Tim's additional question. To add to and clarify a little what littleadv has said, and to answer OP Tim's next question: As far as the IRS is concerned, you have at most one Individual Retirement Account of each type (Traditional, Roth) though the money in each IRA can be invested with as many different custodians (brokerages, banks, etc.) and different investments as you like. Thus, the maximum $5000 ($6000 for older folks) that you can contribute each year can be split up and invested any which way you like, and when in later years you take a Required Minimum Distribution (RMD) from a Traditional IRA, you can get the money by selling just one of the investments, or from several investments; all that the IRS cares is that the total amount that is distributed to you is at least as large as the RMD. An important corollary is that the balance in your IRA is the sum total of the value of all the investments that various custodians are holding for you in IRA accounts. There is no loss in an IRA until every penny has been withdrawn from every investment in your IRA and distributed to you, thus making your IRA balance zero. As long as you have a positive balance, there is no loss: everything has to come out. After the last distribution from your Roth IRA (the one that empties your entire Roth IRA, no matter where it is invested and reduces your Roth IRA balance (see definition above) to zero), total up all the amounts that you have received as distributions from your Roth IRA. If this is less than the total amount of money you contributed to your Roth IRA (this includes rollovers from a Traditional IRA or Roth 401k etc., but not the earnings within the Roth IRA that you re-invested inside the Roth IRA), you have a loss that can be deducted on Schedule A as a Miscellaneous Deduction subject to the 2% AGI limit. This 2% is not a cap (in the sense that no more than 2% of your AGI can be deducted in this category) but rather a threshold: you can only deduct whatever part of your total Miscellaneous Deductions exceeds 2% of your AGI. Not many people have Miscellaneous Deductions whose total exceeds 2% of their AGI, and so they end up not being able to deduct anything in this category. If you ever made nondeductible contributions to your Traditional IRA because you were ineligible to make a deductible contribution (income too high, pension plan coverage at work etc), then the sum of all these contributions is your basis in your Traditional IRA. Note that your deductible contributions, if any, are not part of the basis. The above rules apply to your basis in your Traditional IRA as well. After the last distribution from your Traditional IRA (the one that empties all your Traditional IRA accounts and reduces your Traditional IRA balance to zero), total up all the distributions that you received (don't forget to include the nontaxable part of each distribution that represents a return of the basis). If the sum total is less than your basis, you have a loss that can be deducted on Schedule A as a Miscellaneous Deduction subject to the 2% AGI threshold. You can only deposit cash into an IRA and take a distribution in cash from an IRA. Now, as JoeTaxpayer points out, if your IRA owns stock, you can take a distribution by having the shares transferred from your IRA account in your brokerage to your personal account in the brokerage. However, the amount of the distribution, as reported by the brokerage to the IRS, is the value of the shares transferred as of the time of the transfer, (more generally the fair market value of the property that is transferred out of the IRA) and this is the amount you report on your income tax return. Any capital gain or loss on those shares remains inside the IRA because your basis (in your personal account) in the shares that came out of the IRA is the amount of the distribution. If you sell these shares at a later date, you will have a (taxable) gain or loss depending on whether you sold the shares for more or less than your basis. In effect, the share transfer transaction is as if you sold the shares in the IRA, took the proceeds as a cash distribution and immediately bought the same shares in your personal account, but you saved the transaction fees for the sale and the purchase and avoided paying the difference between the buying and selling price of the shares as well as any changes in these in the microseconds that would have elapsed between the execution of the sell-shares-in-Tim's-IRA-account, distribute-cash-to-Tim, and buy-shares-in-Tim's-personal account transactions. Of course, your broker will likely charge a fee for transferring ownership of the shares from your IRA to you. But the important point is that any capital gain or loss within the IRA cannot be used to offset a gain or loss in your taxable accounts. What happens inside the IRA stays inside the IRA.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"401146\",\n \"text\": \"\\\"There are tax free bonds in the United States. They are for things like public housing and other urban projects. They are tax free for everyone but only rich people buy them. Why? The issue is that the tax free nature of the bond is included in its yield. So rather than yielding say a 5% return, they figure that the owner is getting 20% off due to not paying taxes. As a result, they only give a 4% return but are as risky as a 5% return investment. Net result, only rich people invest in tax free bonds. \\\"\\\"Rich\\\"\\\" is defined here to mean people paying a 20% tax on long term investment returns. Or take the State and Local Tax (SALT) deduction, which has been in the news recently. Again, it is technically open to everyone. But there is also a standard deduction that is open to everyone. For the typical family, state and local taxes might be 5% of income. So for a family making $100k a year, that's $5k. The same family can take a $13k or so standard deduction instead of itemizing. So why would they take the smaller deduction? As a practical matter, two groups take the SALT deduction. People rich enough to pay more than $13k in state and local taxes and people who also take the mortgage interest deduction. So it helps a lot of people who are rich quite a bit. And it helps a few middle class people some. But if you are lower middle class with a $30k mortgage on a tiny house and paying 4% interest, then that's only $1200 a year. Add in property taxes of $3000 and SALT of $2.8k and that's only $7k. Even if the person gives $3k to charity, the $13k deduction is a lot better and requires less paperwork. Contrast that with someone who has $500k mortgage at 3.6% interest. That's $18k in interest alone. Add in a SALT of $7k and property taxes of $50k, and there's $75k of itemized deductions, much better than $13k. Now a $7k donation to charity is entirely deductible. And even after the mortgage interest deduction goes away, the other $64k remains.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"526499\",\n \"text\": \"The rental income is indeed taxable income, but you reduce the taxable portion of it by deducting expenses (including mortgage interest, maintenance, insurance, HOA, real estate tax, and of course depreciation). Due to the depreciation, you may end up breaking even, or having very little taxable income. Note that when you sell the property, your basis is reduced by the depreciation you were allowed to deduct (even if you haven't deducted it for whatever reason), and also the personal residence exclusion might no longer be applicable - i.e.: you'll have to pay capital gains tax. You will not be able to deduct a loss though if you sell now, so it may be better to depreciate it as a rental, rather then sell at a loss that won't affect your taxes. Also, consider the fact that the basis for the depreciation is not the basis you currently have in the property (because you're under water). You have to remember that when calculating the taxes. This is not a tax advice, and you should seek a professional help.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"527958\",\n \"text\": \"It's true that the standard deduction makes the numbers less impressive. I ran your scenario through my favorite, most complete rent vs buy calculator, and your math isn't far off. However, there are a lot of deductions only available if you itemize. Medical expenses, moving expenses, job expenses, charitable contributions, local income/sales taxes, property tax, private mortgage insurance, etc. Property tax on that house alone is going to be nearly equal to the standard deduction, so the point is nearly moot. Anyways, the above linked calculator handles all of those, and more.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"235484\",\n \"text\": \"\\\"Is all interest on a first time home deductible on taxes? What does that even mean? If I pay $14,000 in taxes will My taxes be $14,000 less. Will my taxable income by that much less? If you use the standard deduction in the US (assuming United States), you will have 0 benefit from a mortgage. If you itemize deductions, then your interest paid (not principal) and your property tax paid is deductible and reduces your income for tax purposes. If your marginal tax rate is 25% and you pay $10000 in interest and property tax, then when you file your taxes, you'll owe (or get a refund) of $2500 (marginal tax rate * (amount of interest + property tax)). I have heard the term \\\"\\\"The equity on your home is like a bank\\\"\\\". What does that mean? I suppose I could borrow using the equity in my home as collateral? If you pay an extra $500 to your mortgage, then your equity in your house goes up by $500 as well. When you pay down the principal by $500 on a car loan (depreciating asset) you end up with less than $500 in value in the car because the car's value is going down. When you do the same in an appreciating asset, you still have that money available to you though you either need to sell or get a loan to use that money. Are there any other general benefits that would drive me from paying $800 in rent, to owning a house? There are several other benefits. These are a few of the positives, but know that there are many negatives to home ownership and the cost of real estate transactions usually dictate that buying doesn't make sense until you want to stay put for 5-7 years. A shorter duration than that usually are better served by renting. The amount of maintenance on a house you own is almost always under estimated by new home owners.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"110117\",\n \"text\": \"1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"417981\",\n \"text\": \"\\\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \\\"\\\"necessary and ordinary\\\"\\\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \\\"\\\"no\\\"\\\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\\\"\\\"pleasure\\\"\\\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \\\"\\\"business\\\"\\\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \\\"\\\"necessary and ordinary\\\"\\\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"389654\",\n \"text\": \"I am also neither an attorney nor a tax advisor. Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible. For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month. If you live in 50% of the house, then he can deduct 50% (plus or minus) of the expenses associated with owning the house, including: All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year. Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"343766\",\n \"text\": \"In the US, mortgage payments are not deductible. What is deductible is the mortgage interest (to a limit). That, as well, is not deductible unconditionally, but rather as part of your itemized deductions on Schedule A of your yearly tax return. So if you're married and have a standard deduction of $12600 a year, live in a state with no state income tax, and your property tax and the mortgage interest are less than your standard deduction - you will not be getting any tax benefit whatsoever. That is, in fact, the case for many, if not majority, of the US mortgage payers. So in order to get a proper estimate, you need to take into account all the aspects of your tax calculations, which are by nature quite personal, and simulate the changes with the mortgage interest deduction. Most tax preparation software will allow you creating multiple files, so you can run the numbers for different scenarios.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"18967\",\n \"text\": \"\\\"No one has addressed the fact that your loan interest and property taxes are \\\"\\\"deductible\\\"\\\" on your taxes? So, for the first 2/3 years of your loan, you will should be able to deduct each year's mortgage payment off your gross income. This in turn reduces the income bracket for your tax calculation.... I have saved 1000's a year this way, while seeing my home value climb, and have never lost a down payment. I would consider trying to use 1/2 your savings to buy a property that is desirable to live in and being able to take the yearly deduction off your taxes. As far as home insurance, most people I know have renter's insurance, and homeowner's insurance is not that steep. Chances are a year from now if you change your mind and wish to sell, unless you're in a severely deflated area, you will reclaim at minimum your down payment.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"60652\",\n \"text\": \"\\\"I have done several days of additional research on this and found out that it appears I can deduct the cost of the books against a single year's royalty income by claiming a Section 179 deduction. The steps are as follows: (1) Write the maximum amount of property you can claim under section 179 on line 1 of Form 4562. (2) Add up the total cost of section 179 property you began using during the tax year, including books, and record the amount on line 2. (3) Write the limit of your deductions on line 3. (4) Subtract the amount on line 2 from the amount on line 3 and record it on line 4. If line 3 is larger than line 2, simply write \\\"\\\"0\\\"\\\" on line 4, then subtract the amount on line 4 from the amount on line 1 and record on line 5. Step 5 (5) Describe the property and books on line 6 and record the cost of each in section b. Write the amount of the expense you are claiming for each item in section c of line 6. You can claim the entire cost of the books. (6) Add the amount in line 6 c to any amounts on line 7 and write the total on line 8. Write either the amount on line 8 or the amount on 5 on line 9, depending on which is smaller. (7) Write the amount of your Schedule C income on line 11, unless it is greater than $500,000. On line 12, write the amount of your deduction, which is the total of line 9 plus any carry-over you may have had from the previous year. (8) Record the amount of your deduction for section 179 books and property on line 13 of your Schedule C, not line 22. Include form 4562 when you hand in your tax return. source: \\\"\\\"How to Deduct Books for Self-Employed\\\"\\\" by Emily Weller\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"278168\",\n \"text\": \"\\\"Several, actually: Maintenance costs. As landlord, you are liable for maintaining the basic systems of the dwelling - structure, electrical, plumbing, HVAC. On top of that, you typically also have to maintain anything that comes with the space, so if you're including appliances like a W/D or fridge, if they crap out you could spend a months' rent or more replacing them. You are also required to keep the property up to city codes as far as groundskeeping unless you specifically assign those responsibilities to your tenant (and in some states you are not allowed to do so, and in many cases renters expect groundskeeping to come out of their rent one way or the other). Failure to do these things can put you in danger of giving your tenant a free out on the lease contract, and even expose you to civil and criminal penalties if you're running a real slum. Escrow payments. The combination of property tax and homeowner's insurance usually doubles the monthly housing payment over principal and interest, and that's if you got a mortgage for 20% down. Also, because this is not your primary residence, it's ineligible for Homestead Act exemptions (where available; states like Texas are considering extending Homestead exemptions to landlords, with the expectation it will trickle down to renters), however mortgage interest and state taxes do count as \\\"\\\"rental expenses\\\"\\\" and can be deducted on Schedule C as ordinary business expenses offsetting revenues. Income tax. The money you make in rent on this property is taxable as self-employment income tax; you're effectively running a sole proprietorship real-estate management company, so not only does any profit (you are allowed to deduct maintenance and administrative costs from the rent revenues) get added to whatever you make in salary at your day job, you're also liable for the full employee and employer portions of Medicare/Medicaid/SS taxes. You are, however, also allowed to depreciate the property over its expected life and deduct depreciation; the life of a house is pretty long, and if you depreciate more than the house's actual loss of value, you take a huge hit if/when you sell because any amount of the sale price above the depreciated price of the house is a capital gain (though, it can work to your advantage by depreciating the maximum allowable to reduce ordinary income, then paying lower capital gains rates on the sale). Legal costs. The rental agreement typically has to be drafted by a lawyer in order to avoid things that can cause the entire contract to be thrown out (though there are boilerplate contracts available from state landlords' associations). This will cost you a few hundred dollars up front and to update it every few years. It is deductible as an ordinary expense. Advertising. Putting up a \\\"\\\"For Rent\\\"\\\" sign out front is typically just the tip of the iceberg. Online and print ads, an ad agency, these things cost money. It's deductible as an ordinary expense. Add this all up and you may end up losing money in the first year you rent the property, when legal, advertising, initial maintenance/purchases to get the place tenant-ready, etc are first spent; deduct it properly and it'll save you some taxes, but you better have the nest egg to cover these things on top of everything your lender will expect you to bring to closing (assuming you don't have $100k+ lying around to buy the house in cash).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"84963\",\n \"text\": \"\\\"Your corporation would file a corporate income tax return on an annual basis. One single month of no revenue doesn't mean much in that annual scheme of things. Total annual revenue and total annual expenses are what impact the results. In other words, yes, your corporation can book revenues in (say) 11 of 12 months of the year but still incur expenses in all months. Many seasonal businesses operate this way and it is perfectly normal. You could even just have, say, one super-awesome month and spend money the rest of the year. Heck, you could even have zero revenue but still incur expenses—startups often work like that at first. (You'd need investment funding, personal credit, a loan, or retained earnings from earlier profitable periods to do that, of course.) As long as your corporation has a reasonable expectation of a profit and the expenses your corporation incurs are valid business expenses, then yes, you ought to be able to deduct those expenses from your revenue when figuring taxes owed, regardless of whether the expenses were incurred at the same approximate time as revenue was booked—as long as the expense wasn't the acquisition of a depreciable asset. Some things your company would buy—such as the computer in your example—would not be fully deductible in the year the expense is incurred. Depreciable property expenses are deducted over time according to a schedule for the kind of property. The amount of depreciation expense you can claim for such property each year is known as Capital Cost Allowance. A qualified professional accountant can help you understand this. One last thing: You wrote \\\"\\\"write off\\\"\\\". That is not the same as \\\"\\\"deduct\\\"\\\". However, you are forgiven, because many people say \\\"\\\"write off\\\"\\\" when they actually mean \\\"\\\"deduct\\\"\\\" (for tax purposes). \\\"\\\"Write off\\\"\\\", rather, is a different accounting term, meaning where you mark down the value of an asset (e.g. a bad loan that will never be repaid) to zero; in effect, you are recognizing it is now a worthless asset. There can be a tax benefit to a write-off, but what you are asking about are clearly expense deductions and not write-offs. They are not the same thing, and the next time you hear somebody using \\\"\\\"write off\\\"\\\" when they mean \\\"\\\"deduction\\\"\\\", please correct them.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"33006\",\n \"text\": \"Think carefully about the added expenses. It may still make sense, but it probably won't be as cheap as you are thinking. In addition to the mortgage and property taxes, there is also insurance and building maintenance and repairs. Appliances, carpets, and roofs need to be replaced periodically. Depending on the area of the country there is lawn maintenance and now removal. You need to make sure you can cover the expenses if you are without a tenant for 6 months or longer. When tenants change, there is usually some cleaning and painting that needs to be done. You can deduct the mortgage interest and property taxes on your part of the building. You need to claim any rent as income, but can deduct the other part of the mortgage interest and taxes as an expense. You can also deduct building maintenance and repairs on the rental portion of the building. Some improvements need to be depreciated over time (5-27 years). You also need to depreciate the cost of the rental portion of the building. This basically means that you get a deduction each year, but lower the cost basis of the building so you owe more capital gains taxes when you sell. If you do this, I would get a professional to do your taxes at least the first year. Its not hard once you see it done, but there are a lot of details and complications that you want to get right.\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":89,"cells":{"query_id":{"kind":"string","value":"6969"},"query":{"kind":"string","value":"How can I buy shares of oil? I'm told it's done through ETFs. How's that related to oil prices per barrel?"},"positive_passages":{"kind":"list like","value":[{"docid":"519025","text":"The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day. You can typically sell these futures anytime (if you find someone that buys them), and depending on the direction you bought, you will make or lose money according to oil rice changes - if you have the future to get oil for 50 $, and the market price is 60, this paper is obviously worth 10 $. Note that you will have to sell the future at some day before it runs out, or you get real oil in some harbor somewhere for it, which might not be very useful to you. As most traders don't want really any oil, that might happen automatically or by default, but you need to make sure of that. Note also that worst case you could lose a lot more money than you put in - if you buy a future to deliver oil for 50 $, and the oil price runs, you will have to procure the oil for new price, meaning pay the current price for it. There is no theoretical limit, so depending on what you trade, you could lose ten times or a thousand times what you invested. [I worded that without technical lingo so it is clear for beginners - this is the concept, not the full technical explanation]","title":""},{"docid":"303944","text":"While we're not supposed to make direct recommendations, and I am in no way advising anything, USO an ETF that buys light sweet crude oil futures with the intention of mirroring the price movements of oil.","title":""}],"string":"[\n {\n \"docid\": \"519025\",\n \"text\": \"The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day. You can typically sell these futures anytime (if you find someone that buys them), and depending on the direction you bought, you will make or lose money according to oil rice changes - if you have the future to get oil for 50 $, and the market price is 60, this paper is obviously worth 10 $. Note that you will have to sell the future at some day before it runs out, or you get real oil in some harbor somewhere for it, which might not be very useful to you. As most traders don't want really any oil, that might happen automatically or by default, but you need to make sure of that. Note also that worst case you could lose a lot more money than you put in - if you buy a future to deliver oil for 50 $, and the oil price runs, you will have to procure the oil for new price, meaning pay the current price for it. There is no theoretical limit, so depending on what you trade, you could lose ten times or a thousand times what you invested. [I worded that without technical lingo so it is clear for beginners - this is the concept, not the full technical explanation]\",\n \"title\": \"\"\n },\n {\n \"docid\": \"303944\",\n \"text\": \"While we're not supposed to make direct recommendations, and I am in no way advising anything, USO an ETF that buys light sweet crude oil futures with the intention of mirroring the price movements of oil.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"102698","text":"\"Anthony Russell - I agree with JohnFx. Petroleum is used in making many things such as asphalt, road oil, plastic, jet fuel, etc. It's also used in some forms of electricity generation, and some electric cars use gasoline as a backup form of energy, petrol is also used in electricity generation outside of cars. Source can be found here. But to answer your question of why shares of electric car companies are not always negatively related to one another deals with supply and demand. If investors feel positively about petroleum and petroleum related prospects, then they are going to buy or attempt to buy shares of \"\"X\"\" petrol company. This will cause the price of \"\"X\"\", petrol company to rise, ceteris paribus. Just because the price of petroleum is high doesn't mean investors are going to buy shares of an electric car company. Petrol prices could be high, but numerous electric car companies could be doing poorly, now, with that being said you could argue that sales of electric cars may go up when petrol prices are high, but there are numerous factors that come into play here. I think it would be a good idea to do some more research if you are planning on investing. Also, remember, after a company goes public they no longer set the price of the shares of their stock. The price of company \"\"X\"\" shares are determined by supply and demand, which is inherently determined by investors attitudes and expectations, ultimately defined by past company performance, expectations of future performance, earnings, etc.. It could be that when the market is doing well - it's a good sign of other macroeconomic variables (employment, GDP, incomes, etc) and all these factors power how often individuals travel, vacation, etc. It also has to deal with the economy of the country producing the oil, when you have OPEC countries selling petrol to the U.S. it is likely much cheaper per barrel than domestic produced and refined petrol because of the labor laws, etc. So a strong economy may be somewhat correlated with oil prices and a strong market, but it's not necessarily the case that strong oil prices drive the economy..I think this is a great research topic that cannot be answered in one post.. Check this article here. From here you can track down what research the Fed of Cleveland has done concerning this. My advice to you is to not believe everything your peers tell you, but to research everything your peers tell you. With just a few clicks you can figure out the legitimacy of many things to at least some degree.\"","title":""},{"docid":"127566","text":"Probably the easiest way for individual investors is oil ETFs. In particular, USO seems to be fairly liquid and available. You should check carefully the bid/ask spreads in this volatile time. There are other oil ETFs and leveraged and inverse oil ETFs exist as well, but one should heed the warnings about leveraged ETFs. Oil futures are another possibility though they can be more complicated and tough to access for an individual investor. Note that futures have a drift associated with them as well. Be careful close or roll any positions before delivery, of course, unless you have a need for a bunch of actual barrels of oil. Finally, you can consider investing in commodities ETFs or Energy stocks or stock ETFs that are strongly related to the price of oil. As Keshlam mentions, care is advised in all these methods. Many people thought oil reached its bottom a few weeks back then OPEC decided to do nothing and the price dropped even further.","title":""},{"docid":"315930","text":"Here is some good advice, read your UCO prospectus. It seems to hold 20% of it's value ($600MM out of $3B) via 13800 of the Apr 21st 2015 contracts. (expiring in 30 days) Those will be rolled very quickly into the May contracts at a significant loss of NAV. (based on current oil futures chains) Meaning if crude oil stays exactly the same price, you'd still lose 1% (5% spread loss * .20% the percentage of NAV based off futures contracts) on the roll each month. Their other $2.4Billion is held in swaptions or cash, unsure how to rate that exposure. All I know is those 13,800 contracts are in contango danger during roll week for the next few months (IMO). I wonder if there is a website that tracks inflows and outflows to see if they match up with before and after the roll periods. http://www.proshares.com/funds/uco_daily_holdings.html How Oil ETFs Work Many oil ETFs invest in oil futures contracts. An oil futures contract is a commitment to buy a given amount of crude oil at a given price on a particular date in the future. Since the purpose of oil ETFs is only to serve as an investment vehicle to track the price of oil, the creators of the fund have no interest in stockpiling actual oil. Therefore, oil ETFs such as USO periodically “roll over” their futures contracts by selling the contracts that are approaching expiration and buying contracts that expire farther into the future. The Contango Problem While this process of continually rolling over futures contracts may seem like a great way to track the price of crude oil, there’s a practical problem with the method: contango. The rollover method would work perfectly if oil funds could sell their expiring contracts for the exact same price that they pay for the futures contracts they buy each month. However, in reality, it’s often true that oil futures contracts get more expensive the farther their expiration date is in the future. That means that every time the oil ETFs roll over their contracts, they lose the difference in value between the contracts they sell and the contracts they buy. That’s why funds like USO, which invests only in WTI light, sweet crude oil futures contracts, don’t directly track the performance of the WTI crude oil spot price. http://www.etftrends.com/2015/01/positioning-for-an-oil-etf-rebound-watch-for-contango/ Due to these reasons, I'd deem UCO for swing trading, not for 'investing' (buy-and-hold). Maybe later I'll remember why one shouldn't buy and hold leveraged vehicles (leverage slippage/decay). Do you have an exit price in mind ? or are you buy and hold ?","title":""},{"docid":"25506","text":"Maybe not, but I think the point ElBrad was making is that you chart a pretty tight relation to price hikes by barrel and price increases at the pump over time. Price drops by barrel aren't usually followed by a drop at the pump though, as it takes a while for competition to drive that down. So while it's good news that oil prices are dropping per barrel (for non gasoline uses), it's fair to be totally cynical about the prospect of a cheaper prices at the pump when you hear news like this. Watching that per barrel rate drop and knowing this means a nice cushy profit trough for Exxon always comes with a slight taste of distain.","title":""},{"docid":"318073","text":"If you look at a few facts you can quickly understand the boom in the 1980's. Housing is the biggest driver of our economy because it drives consumption. When people buy a house the spend money. Baby boomers delayed buying houses because of a decade long recession in the 1970's because of a high price for oil. Oil price dropped from $100 to $10 per barrel. Taxes were cut for everybody. Baby boomers went on a seven year housing binge. Did corporate tax cuts help, sure, were they the primary reason for the growth, not even close. If anything they gave businesses a taste for how much they could save by cutting taxes and set loose the lobbying to cut taxes leading to huge federal deficits and debt.","title":""},{"docid":"154611","text":"\"In layman's terms, oil on the commodities market has a \"\"spot price\"\" and a \"\"future price\"\". The spot price is what the last guy paid to buy a barrel of oil right now (and thus a pretty good indicator of what you'll have to pay). The futures price is what the last guy paid for a \"\"futures contract\"\", where they agreed to buy a barrel of oil for $X at some point in the future. Futures contracts are a form of hedging; a futures contract is usually sold at a price somewhere between the current spot price and the true expected future spot price; the buyer saves money versus paying the spot price, while the seller still makes a profit. But, the buyer of a futures contract is basically betting that the spot price as of delivery will be higher, while the seller is betting it will be lower. Futures contracts are available for a wide variety of acceptable future dates, and form a curve when plotted on a graph that will trend in one direction or the other. Now, as Chad said, oil companies basically get their cut no matter what. Oil stocks are generally a good long-term bet. As far as the best short-term time to buy in to an oil stock, look for very short windows when the spot and near-future price of gasoline is trending downward but oil is still on the uptick. During those times, the oil companies are paying their existing (high) contracts for oil, but when the spot price is low it affects futures prices, which will affect the oil companies' margins. Day traders will see that, squawk \"\"the sky is falling\"\" and sell off, driving the price down temporarily. That's when you buy in. Pretty much the only other time an oil stock is a guaranteed win is when the entire market takes a swan dive and then bottoms out. Oil has such a built-in demand, for the foreseeable future, that regardless of how bad it gets you WILL make money on an oil stock. So, when the entire market's in a panic and everyone's heading for gold, T-debt etc, buy the major oil stocks across the spectrum. Even if one stock tanks, chances are really good that another company will see that and offer a buyout, jacking the bought company's stock (which you then sell and reinvest the cash into the buying company, which will have taken a hit on the news due to the huge drop in working capital). Of course, the one thing to watch for in the headlines is any news that renewables have become much more attractive than oil. You wait; in the next few decades some enterprising individual will invent a super-efficient solar cell that provides all the power a real, practical car will ever need, and that is simultaneously integrated into wind farms making oil/gas plants passe. When that happens oil will be a thing of the past.\"","title":""},{"docid":"74615","text":"\"The VDE fund is an energy fund so this is a function of recent price changes in oil (and gas, coal, &c). For example. Lets say last year when oil was $100 per barrel a bunch of companies saw a good return and put $ 100 million into a bunch of leases, boreholes, pumps, &c to return $10 million per year, and the market says yeah, they're all together worth 100M. Now oil is less, maybe $40 per the link. These exploration companies don't have a lot of labor or variable costs; they are operationally profitable, may have \"\"use it or lose it\"\" leases or minimum pumping requirements for contract or engineering reasons. Lets say the cash flow is 7M so the market values them at 70M. They still have about 100M book value so here we are at .7 and I believe the scenario in the question. Nobody would invest in new capacity at this oil price. The well equipment could be repurposed but not the borehole or lease, so the best use is to continue pumping and value it on cash flow. If an individual well runs negative long enough and goes bust, either a different pumper will pay the minimum price that gives profitable cash flow, or that borehole that cost millions to dig is shut off and rendered valueless. The CNBC article says some explorers are playing games with debt to maintain yield, so there is that too. In the ETF, your bet is that the market is wrong and oil will go up, increasing future cash flows (or you like the current yield, taking on the risk that some of these oil explorers could go bust).\"","title":""},{"docid":"591893","text":"\"This is the best tl;dr I could make, [original](http://www.reuters.com/article/us-global-oil-idUSKBN19B01W?il=0) reduced by 76%. (I'm a bot) ***** > TOKYO Oil markets held around seven-month lows on Tuesday as investors focused on persistent signs of rising supply that are undermining attempts by OPEC and other producers to support prices. > Libya&#039;s oil production has risen more than 50,000 bpd after the state oil company settled a dispute with Germany&#039;s Wintershall, a Libyan source told Reuters. > The oil market is heading in the right direction but still needs time to rebalance, al-Falih told the London-based newspaper Asharq al-Awsat. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6iblm4/oil_prices_hold_near_sevenmonth_lows_glut_keeps/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~148255 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Oil**^#1 **cut**^#2 **cent**^#3 **barrel**^#4 **OPEC**^#5\"","title":""},{"docid":"445535","text":"\"I think all transportation uses only 1/3 of oil produced at best. That includes many things that won't be electrifed soon, like planes and ships. Don't forget how much oil agriculture uses in both fertilizer, pesticides and the least in running the equipment itself. So while demand may soften over time, it's not like will suddenly glut. Peak Oil (which we reached with \"\"conventional oil\"\" vs fracked) kinda says that each subsequent barrel will get more and more expensive to pump out (rather the popular perception we will suddenly run out). That basically has been a truism since over a century, because ERoEI on oil has declined. At peak return, iirc in the 1930s or so, we were getting something like 300 barrels of oil out for every barrel of energy invested on some fields in Saudi Arabia, now the overall average is down to around 10 or less? Point is, oil won't go to $10. Oil industry could not survive on it and they know we don't have alternatives for many oil uses (it's the most easily portable liquid with the highest energy concentration), so why price it as such? If people really wanted to reduce their carbon/oil footprint, they'd stop pining for electric cars and switch to a plantbased diet - which will have a far greater impact for much less investment. On top of all the health benefits they accumulate.\"","title":""},{"docid":"347133","text":"\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-02/libya-s-oil-production-said-to-exceed-1-million-barrels-a-day) reduced by 75%. (I'm a bot) ***** > Libya&#039;s oil production has climbed to more than 1 million barrels a day for the first time in four years just as oil prices capped the longest run of gains in six months after U.S. shale explorers paused a record drilling expansion. > Libya&#039;a oil output has rebounded from only 690,000 barrels a day at the start of the year, with Sharara, the country&#039;s largest oil field, resuming production last month. > State National Oil Corp. Chairman Mustafa Sanalla said in April he wanted to boost national output to 1.1 million barrels a day by August. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6kwqac/libyas_crude_output_hits_a_new_high_just_as_oil/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~157830 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **day**^#1 **barrels**^#2 **oil**^#3 **million**^#4 **production**^#5\"","title":""},{"docid":"262925","text":"\"It is important to first understand that true causation of share price may not relate to historical correlation. Just like with scientific experiments, correlation does not imply causation. But we use stock price correlation to attempt to infer causation, where it is reasonable to do so. And to do that you need to understand that prices change for many reasons; some company specific, some industry specific, some market specific. Companies in the same industry may correlate when that industry goes up or down; companies with the same market may correlate when that market goes up or down. In general, in most industries, it is reasonable to assume that competitor companies have stocks which strongly correlate (positively) with each-other to the extent that they do the same thing. For a simple example, consider three resource companies: \"\"Oil Ltd.\"\" [100% of its assets relate to Oil]; \"\"Oil and Iron Inc.\"\" [50% of its value relates to Oil, 50% to Iron]; and \"\"Iron and Copper Ltd.\"\" [50% of its value relates to Iron, 50% to Copper]. For each of these companies, there are many things which affect value, but one could naively simplify things by saying \"\"value of a resource company is defined by the expected future volume of goods mined/drilled * the expected resource price, less all fixed and variable costs\"\". So, one major thing that impacts resource companies is simply the current & projected price of those resources. This means that if the price of Oil goes up or down, it will partially affect the value of the two Oil companies above - but how much it affects each company will depend on the volume of Oil it drills, and the timeline that it expects to get that Oil. For example, maybe Oil and Iron Ltd. has no currently producing Oil rigs, but it has just made massive investments which expect to drill Oil in 2 years - and the market expects Oil prices to return to a high value in 2 years. In that case, a drop in Oil would impact Oil Inc. severely, but perhaps it wouldn't impact Oil and Iron Ltd. as much. In this case, for the particular share price movement related to the price of Oil, the two companies would not be correlated. Iron and Copper Ltd. would be unaffected by the price of Oil [this is a simplification; Oil prices impact many areas of the economy], and therefore there would be no correlation at all between this company's shares. It is also likely that competitors face similar markets. If consumer spending goes down, then perhaps the stock of most consumer product companies would go down as well. There would be outliers, because specific companies may still succeed in a falling market, but in generally, there would be a lot of correlation between two companies with the same market. In the case that you list, Sony vs Samsung, there would be some factors that correlate positively, and some that correlate negatively. A clean example would be Blackberry stock vs Apple stock - because Apple's success had specifically negative ramifications for Blackberry. And yet, other tech company competitors also succeeded in the same time period, meaning they did not correlate negatively with Apple.\"","title":""},{"docid":"399370","text":"I know I'm talking to a bot Because prices where not allowed to increase the American people continued to drive as if oil was $3 per barrel. But if prices jumped to $6 or $9 a barrel the American people would have changed their behave on driving and started to take the bus and car-pool. This would allow people who really need the gas to always be able to fill up.","title":""},{"docid":"458665","text":"\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-06-19/oil-s-slide-stalls-as-investors-weigh-stockpiles-against-libya) reduced by 70%. (I'm a bot) ***** > The amount of oil stored in tankers reached a 2017 high of 111.9 million barrels earlier this month, according to Paris-based tracking company Kpler SAS. Oil has slipped below $45 a barrel as supplies in the U.S. remain plentiful and drillers continue to add rigs, raising concerns output cuts by the Organization of Petroleum Exporting Countries and allies including Russia won&#039;t succeed in draining bloated stockpiles. > Crude stockpiles remain more than 100 million barrels above the five-year average, according to data from the EIA. American production has climbed to 9.33 million barrels a day through June 9, near the highest since August 2015. > Libya is pumping about 900,000 barrels a day, according to a person with direct knowledge of the matter, who asked not to be identified for lack of authority to speak to the media. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ietvj/oil_prices_are_tumbling_more_than_2_toward_43/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~148648 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **barrel**^#1 **percent**^#2 **August**^#3 **U.S.**^#4 **Oil**^#5\"","title":""},{"docid":"100721","text":"a) Nothing would support this company going back to $.50 per share b) Fundamentally the market for this sectors has been obliterated and the fundamentals don't look like they will improve. Similar companies experience what this one is and will be going through, they borrow the hilt and hope they can pump enough oil and sell the oil at a high price. Oil goes below, WAYYY below the price they can sell it at and even break even, so they are burning cash until they declare bankruptcy. This company is not an exception. So here is what to look at on their balance sheet: assets and liabilities. Liabilities are debt. Their debt is over 50% of their assets, that debt has interest and there is NO WAY they are making a profit. Their website's last financial statement is from September 30th.. LOL, so they haven't even released a quarterly financial statement in two quarters straight, so have they released anything? Given what we know about the dire state of the entire oil drilling industry, lets see if these guys are the exception to the rule (spoiler; they aren't) February 15th, 2015 http://www.marketwatch.com/story/strategic-oil-gas-ltd-provides-operations-update-2015-02-19-16173591 The Company prudently elected to stop the winter Muskeg drilling program in order to preserve capital. So now they aren't even getting new assets to resale, they aren't making any money from that operation, their debt still has interest payments though. Approximately 700 Boe/d of production has been shut-in by suspending operations at Bistcho, Cameron Hills and Larne, which are not economic at current commodity prices. Predictable. Also, you should notice from their actual financial statements (from 6 months ago, lol) (when the price of oil was over 100% higher than it is today, lol), this company already wasn't a good performer. They have been financing themselves by doing private placements, by issuing shares to investors that are not you, and diluting the share value of ALL OTHER SHAREHOLDERS. Dead in the water. I got this from skimming their financial report, without even being familiar with how canadian companies report. Its just bad news. You shouldn't be married to this investment.","title":""},{"docid":"222798","text":"\"Not to mention that many oil fields don't make a profit below $40/barrel. The Saudis over-produced on purpose based on that premise, betting that they could drive much of the growing North American production out of business by keeping the price below the point where tar sands and hydraulic fracking could be profitable. If oil dropped to $10/barrel, few countries would bother pumping it. While Saudi Arabia and some of the UAE could make a profit at that point (for now), even Iraq would be losing money. https://www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx That reduced production would drive the price right back up, since oil is still used in plastics, shipping, road construction, etc. Even if every car being sold becomes electric overnight, *and* all the electric power plants become wind, nuclear or solar based tomorrow, we'd still have a decade or more of existing ICE cars on the road. It's not the world would stop using oil in the next 6-8 years just because \"\"investment pours into electric cars\"\". If anything, a drop to $10/barrel would slow the move away from oil significantly; what incentive would people have to buy a more expensive electric car when gas at the pump is suddenly is $1 again?\"","title":""},{"docid":"254556","text":"UNG United States Natural Gas Fund Natural Gas USO United States Oil Fund West Texas Intermediate Crude Oil UGA United States Gasoline Fund Gasoline DBO PowerShares DB Oil Fund West Texas Intermediate Crude Oil UHN United States Heating Oil Fund Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all. Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time. And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil.","title":""},{"docid":"434799","text":"\"I'm trying to understand how an ETF manager optimized it's own revenue. Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \"\"relations\"\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \"\"VWAP +\"\" trades you are eligible for their corporate well-being programs and other \"\"sponsorship\"\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\"","title":""},{"docid":"305794","text":"You acquire something because you expect to use it, or because you expect to exchange it for something that you want to use. Gold is a good candidate for storing value because it's rare, it's not easily counterfeited, it's divisible, it's portable, etc. Contrast this with your favorite currency: more can be printed up almost at will, etc. Overvaluedness/undervaluedness is only in reference to something else. How many dollars does it take to buy an ounce of gold? (About $1,500.) How many ounces does it take to equal the DJIA? (About 8.) How many ounces of silver does it take to buy an ounce of gold? How many barrels of oil can you buy with an ounce of gold? Etc., etc. But whatever measure you're using, the value of the gold you have is directly related to the mass of gold you own. Two ounces are twice as valuable as one ounce. As the old joke goes (no offense to taxi drivers intended!) when your cabbie starts talking about how to get rich with gold, it's probably overvalued. Sell it all! ;)","title":""},{"docid":"291600","text":"\"As I stated in my comment, options are futures, but with the twist that you're allowed to say no to the agreed-on transaction; if the market offers you a better deal on whatever you had contracted to buy or sell, you have the option of simply letting it expire. Options therefore are the insurance policy of the free market. You negotiate a future price (actually you usually take what you can get if you're an individual investor; the institutional fund managers get to negotiate because they're moving billions around every day), then you pay the other guy up front for the right of refusal later. How much you pay depends on how likely the person giving you this option is to have to make good on it; if your position looks like a sure thing, an option's going to be very expensive (and if it's such a sure thing, you should just make your move on the spot market; it's thus useful to track futures prices to see where the various big players are predicting that your portfolio will move). A put option, which is an option for you to sell something at a future price, is a hedge against loss of value of your portfolio. You can take one out on any single item in your portfolio, or against a portion or even your entire portfolio. If the stock loses value such that the contract price is better than the market price as of the delivery date of the contract, you execute the option; otherwise, you let it expire. A call option, which is an option to buy something at a future price, is a hedge against rising costs. The rough analog is a \"\"pre-order\"\" in retail (but more like a \"\"holding fee\"\"). They're unusual in portfolio management but can be useful when moving money around in more complex ways. Basically, if you need to guarantee that you will not pay more than a certain per-share price to buy something in the future, you buy a call option. If the spot price as of the delivery date is less than the contract price, you buy from the market and ignore the contract, while if prices have soared, you exercise it and get the lower contract price. Stock options, offered as benefits in many companies, are a specific form of call option with very generous terms for whomever holds them. A swaption, basically a put and a call rolled into one, allows you to trade something for something else. Call it the free market's \"\"exchange policy\"\". For a price, if a security you currently hold loses value, you can exchange it for something else that you predicted would become more valuable at the same time. One example might be airline stocks and crude oil; when crude spikes, airline stocks generally suffer, and you can take advantage of this, if it happens, with a swaption to sell your airline stocks for crude oil certificates. There are many such closely-related inverse positions in the market, such as between various currencies, between stocks and commodities (gold is inversely related to pretty much everything else), and even straight-up cash-for-bad-debt arrangements (credit-default swaps, which we heard so much about in 2008).\"","title":""},{"docid":"49235","text":"\"As others have alluded to but haven't said due to the lack of reputation points to spare, you can take advantage of oil prices by leveraging up and using as much credit and margin as the banks and brokerages (respectively) will lend you. People assume that the correct answer on this forum has to masquerade as conservative financial advice, and this is not advice nor conservative. Futures contracts are readily available, but they are expensive to obtain (like a minimum entry of $4,450). But if this expense is no such object to you then you can then obtain this contract which is actually worth 20x that and experience the price appreciation and depreciation of the whole contract. The concept is similar to a downpayment on a mortgage. You assume \"\"rock bottom\"\" oil prices, but fortunately for you, futures contracts will allow you to quickly change your bets from future price appreciation and allow you to speculate on future price depreciation. So although the union workers will be protesting full time after the drilling company lays them off, you will still be getting wealthier. Long Options. These are the best. The difference with options, amongst other speculation products, is that options require the least amount of capital risk for the greatest reward. With futures, or with trading shares of an ETF (especially on margin), you have to put up a lot of capital, and if the market does not go your desired direction, then will lose a lot. And on margin products you can lose more than you put in. Being long options does not come with these dilemmas. A long march 2015 call option on USO ETF can currently be bought for less than $200 of actual cash (ie. the trading quote will be less than $2.00, but this will cost you less than $200), and will be worth $1000 on a very modest rebound in prices. The most you can lose is the $200 for the contract. Compared to $4450 on the futures, or $100,000 (that you don't have) in the futures market if oil really moves against you, or compared to whatever large amount of cash needed to actually buy shares of an ETF needed to make any decent return. These are the most lucrative (and fun and exhilarating and ) ways to take advantage of rock bottom oil prices, as an individual.\"","title":""},{"docid":"93897","text":"I don't think the two are particularly linked. While Brick is right in that the price of oil is denominated in dollars, I don't think that's responsible for most of the movement here. Oil has been weak for intrinsic reasons related to oil: supply/demand imbalance, largely. (Oil also was way over-priced back when it was > $100 a barrel; a lot of that was due to worries about instability in the Middle East.) The dollar has been strong for other, separate intrinsic reasons. The American economy has had a stronger rebound than Europe or Asia; while we were hit hard in the 2008 recession, we rebounded pretty quickly from a whole-economy point of view (we still have a lot of weaknesses in terms of long-term unemployment, but that doesn't seem to be hurting our productivity much). Pick another time period, and you won't necessarily see the same matching path (and I would even say that those paths don't match particularly well). Marketwatch covered this for example; other sites show similar things. There is a weak correlation, but only in the short term, or for specific reasons.","title":""},{"docid":"373410","text":"Gold is not legal tender. I can't walk into Walmart and buy groceries with 1/20 ounce of gold. I can't buy a TV or car with gold. And you can't *buy* money--that's not how it works. I can sell a barrel of oil or a whatever of copper in any currency, but that doesn't make either of them currencies in and of themselves.","title":""},{"docid":"517675","text":"\"**1973 oil crisis** The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The embargo occurred in response to United States' support for Israel during the Yom Kippur War. By the end of the embargo in March 1974, the price of oil had risen from US$3 per barrel to nearly $12 globally; US prices were significantly higher. The embargo caused an oil crisis, or \"\"shock\"\", with many short- and long-term effects on global politics and the global economy. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/economy/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^| [^Source](https://github.com/kittenswolf/WikiTextBot) ^] ^Downvote ^to ^remove ^| ^v0.27\"","title":""},{"docid":"571327","text":"\"This is the best tl;dr I could make, [original](http://www.imf.org/en/Publications/WP/Issues/2017/07/18/A-Crude-Shock-Explaining-the-Impact-of-the-2014-16-Oil-Price-Decline-Across-Exporters-44966) reduced by 62%. (I'm a bot) ***** > The decline in oil prices in 2014-16 was one of the sharpest in history, and put to test the resilience of oil exporters. > We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative eects. > Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in scal revenue or economic activity. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6o5byg/imfa_crude_shock_explaining_the_impact_of_the/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~170095 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **oil**^#1 **export**^#2 **IMF**^#3 **view**^#4 **economic**^#5\"","title":""},{"docid":"2329","text":"\"This is the best tl;dr I could make, [original](http://www.msn.com/en-us/money/companies/shell-prepares-for-lower-forever-oil-prices/ar-AAoVbwb) reduced by 88%. (I'm a bot) ***** > LONDON-Royal Dutch Shell PLC laid out a pessimistic vision for the future of oil on Thursday, even as the company reported success in generating cash during a prolonged downturn. > Shell Chief Executive Ben van Beurden said the company has a mind-set that oil prices would remain &quot;Lower forever&quot;-a riff on the &quot;Lower for longer&quot; mantra the industry adopted for a price slump that proved unexpectedly lasting. > Oil&#039;s fragile recovery since then to around $50 a barrel has helped the sector, but Shell and its peers have also engaged in aggressive efforts to bring down costs so they can survive at lower prices. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6pz8ur/shell_prepares_for_lower_forever_oil_prices/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~177293 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **oil**^#1 **company**^#2 **Shell**^#3 **billion**^#4 **cash**^#5\"","title":""},{"docid":"18366","text":"\"This is the best tl;dr I could make, [original](http://www.npr.org/2017/05/24/529852301/boom-time-again-for-u-s-oil-industry-thanks-to-opec) reduced by 79%. (I'm a bot) ***** > Oil producers across the country are watching to see what OPEC does at its meeting in Vienna this week, since the cartel of oil-exporting countries has recently played a big role in turning around a two-year U.S. slump. > There are more than twice as many U.S. rigs drilling for oil as a year ago, a turnaround that&#039;s felt keenly in places like the Bakken oil patch in North Dakota. > In the dizzying boom-bust cycle of the oil industry, things were crazy busy here a few years back, when a barrel of oil was around $100. But that led to a surge in production that flooded the market, pushing the price of oil down. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ejcc3/boom_time_again_for_us_oil_industry_thanks_to_opec/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~133536 tl;drs so far.\"\") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Oil**^#1 **Dakota**^#2 **price**^#3 **U.S.**^#4 **Job**^#5\"","title":""},{"docid":"506616","text":"\"It's standard to price oil in US$. That means that if the US$ gets stronger, the prices of oil drops even if its \"\"intrinsic value\"\" remains constant. Same thing happens for other commodities, such as gold. Think of the oil price in barrels/$. If the denominator (value of the $) goes up, then the ratio tends to go down.\"","title":""},{"docid":"429123","text":"\"New SEC rules also now allow brokers to collect fees on non-dividend bearing accounts as an \"\"ADR Pass-Through Fee\"\". Since BP (and BP ADR) is not currently paying dividends, this is probably going to be the case here. According to the Schwab brokerage firm, the fee is usually 1-3 cents per share. I did an EDGAR search for BP's documents and came up with too many to read through (due to the oil spill and all of it's related SEC filings) but you can start here: http://www.schwab.com/public/schwab/nn/m/q207/adr.html\"","title":""},{"docid":"234115","text":"You can buy the exchange traded fund ETFS WTI Crude Oil (CRUD), amongst other ETFS products. http://funds.ft.com/uk/Tearsheet/Summary?s=CRUD:LSE:USD Note these funds do not 'jump' when the crude oil futures contracts are in contango (e.g. June contract is priced higher than May) and the futures roll-over, as they do monthly. When this happens the EFTS continues with no movement. Currently May is $52.85 and June is $54.15 (so in contango). LSE:CRUD is $13.40 and if the crude oil futures rolled-over it would carry straight on at that value. For this reason one should be cautious buying and holding LSE:CRUD longterm.","title":""},{"docid":"482399","text":"\"Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \"\"relations\"\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \"\"VWAP +\"\" trades you are eligible for their corporate well-being programs and other \"\"sponsorship\"\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\"","title":""}],"string":"[\n {\n \"docid\": \"102698\",\n \"text\": \"\\\"Anthony Russell - I agree with JohnFx. Petroleum is used in making many things such as asphalt, road oil, plastic, jet fuel, etc. It's also used in some forms of electricity generation, and some electric cars use gasoline as a backup form of energy, petrol is also used in electricity generation outside of cars. Source can be found here. But to answer your question of why shares of electric car companies are not always negatively related to one another deals with supply and demand. If investors feel positively about petroleum and petroleum related prospects, then they are going to buy or attempt to buy shares of \\\"\\\"X\\\"\\\" petrol company. This will cause the price of \\\"\\\"X\\\"\\\", petrol company to rise, ceteris paribus. Just because the price of petroleum is high doesn't mean investors are going to buy shares of an electric car company. Petrol prices could be high, but numerous electric car companies could be doing poorly, now, with that being said you could argue that sales of electric cars may go up when petrol prices are high, but there are numerous factors that come into play here. I think it would be a good idea to do some more research if you are planning on investing. Also, remember, after a company goes public they no longer set the price of the shares of their stock. The price of company \\\"\\\"X\\\"\\\" shares are determined by supply and demand, which is inherently determined by investors attitudes and expectations, ultimately defined by past company performance, expectations of future performance, earnings, etc.. It could be that when the market is doing well - it's a good sign of other macroeconomic variables (employment, GDP, incomes, etc) and all these factors power how often individuals travel, vacation, etc. It also has to deal with the economy of the country producing the oil, when you have OPEC countries selling petrol to the U.S. it is likely much cheaper per barrel than domestic produced and refined petrol because of the labor laws, etc. So a strong economy may be somewhat correlated with oil prices and a strong market, but it's not necessarily the case that strong oil prices drive the economy..I think this is a great research topic that cannot be answered in one post.. Check this article here. From here you can track down what research the Fed of Cleveland has done concerning this. My advice to you is to not believe everything your peers tell you, but to research everything your peers tell you. With just a few clicks you can figure out the legitimacy of many things to at least some degree.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"127566\",\n \"text\": \"Probably the easiest way for individual investors is oil ETFs. In particular, USO seems to be fairly liquid and available. You should check carefully the bid/ask spreads in this volatile time. There are other oil ETFs and leveraged and inverse oil ETFs exist as well, but one should heed the warnings about leveraged ETFs. Oil futures are another possibility though they can be more complicated and tough to access for an individual investor. Note that futures have a drift associated with them as well. Be careful close or roll any positions before delivery, of course, unless you have a need for a bunch of actual barrels of oil. Finally, you can consider investing in commodities ETFs or Energy stocks or stock ETFs that are strongly related to the price of oil. As Keshlam mentions, care is advised in all these methods. Many people thought oil reached its bottom a few weeks back then OPEC decided to do nothing and the price dropped even further.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"315930\",\n \"text\": \"Here is some good advice, read your UCO prospectus. It seems to hold 20% of it's value ($600MM out of $3B) via 13800 of the Apr 21st 2015 contracts. (expiring in 30 days) Those will be rolled very quickly into the May contracts at a significant loss of NAV. (based on current oil futures chains) Meaning if crude oil stays exactly the same price, you'd still lose 1% (5% spread loss * .20% the percentage of NAV based off futures contracts) on the roll each month. Their other $2.4Billion is held in swaptions or cash, unsure how to rate that exposure. All I know is those 13,800 contracts are in contango danger during roll week for the next few months (IMO). I wonder if there is a website that tracks inflows and outflows to see if they match up with before and after the roll periods. http://www.proshares.com/funds/uco_daily_holdings.html How Oil ETFs Work Many oil ETFs invest in oil futures contracts. An oil futures contract is a commitment to buy a given amount of crude oil at a given price on a particular date in the future. Since the purpose of oil ETFs is only to serve as an investment vehicle to track the price of oil, the creators of the fund have no interest in stockpiling actual oil. Therefore, oil ETFs such as USO periodically “roll over” their futures contracts by selling the contracts that are approaching expiration and buying contracts that expire farther into the future. The Contango Problem While this process of continually rolling over futures contracts may seem like a great way to track the price of crude oil, there’s a practical problem with the method: contango. The rollover method would work perfectly if oil funds could sell their expiring contracts for the exact same price that they pay for the futures contracts they buy each month. However, in reality, it’s often true that oil futures contracts get more expensive the farther their expiration date is in the future. That means that every time the oil ETFs roll over their contracts, they lose the difference in value between the contracts they sell and the contracts they buy. That’s why funds like USO, which invests only in WTI light, sweet crude oil futures contracts, don’t directly track the performance of the WTI crude oil spot price. http://www.etftrends.com/2015/01/positioning-for-an-oil-etf-rebound-watch-for-contango/ Due to these reasons, I'd deem UCO for swing trading, not for 'investing' (buy-and-hold). Maybe later I'll remember why one shouldn't buy and hold leveraged vehicles (leverage slippage/decay). Do you have an exit price in mind ? or are you buy and hold ?\",\n \"title\": \"\"\n },\n {\n \"docid\": \"25506\",\n \"text\": \"Maybe not, but I think the point ElBrad was making is that you chart a pretty tight relation to price hikes by barrel and price increases at the pump over time. Price drops by barrel aren't usually followed by a drop at the pump though, as it takes a while for competition to drive that down. So while it's good news that oil prices are dropping per barrel (for non gasoline uses), it's fair to be totally cynical about the prospect of a cheaper prices at the pump when you hear news like this. Watching that per barrel rate drop and knowing this means a nice cushy profit trough for Exxon always comes with a slight taste of distain.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"318073\",\n \"text\": \"If you look at a few facts you can quickly understand the boom in the 1980's. Housing is the biggest driver of our economy because it drives consumption. When people buy a house the spend money. Baby boomers delayed buying houses because of a decade long recession in the 1970's because of a high price for oil. Oil price dropped from $100 to $10 per barrel. Taxes were cut for everybody. Baby boomers went on a seven year housing binge. Did corporate tax cuts help, sure, were they the primary reason for the growth, not even close. If anything they gave businesses a taste for how much they could save by cutting taxes and set loose the lobbying to cut taxes leading to huge federal deficits and debt.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"154611\",\n \"text\": \"\\\"In layman's terms, oil on the commodities market has a \\\"\\\"spot price\\\"\\\" and a \\\"\\\"future price\\\"\\\". The spot price is what the last guy paid to buy a barrel of oil right now (and thus a pretty good indicator of what you'll have to pay). The futures price is what the last guy paid for a \\\"\\\"futures contract\\\"\\\", where they agreed to buy a barrel of oil for $X at some point in the future. Futures contracts are a form of hedging; a futures contract is usually sold at a price somewhere between the current spot price and the true expected future spot price; the buyer saves money versus paying the spot price, while the seller still makes a profit. But, the buyer of a futures contract is basically betting that the spot price as of delivery will be higher, while the seller is betting it will be lower. Futures contracts are available for a wide variety of acceptable future dates, and form a curve when plotted on a graph that will trend in one direction or the other. Now, as Chad said, oil companies basically get their cut no matter what. Oil stocks are generally a good long-term bet. As far as the best short-term time to buy in to an oil stock, look for very short windows when the spot and near-future price of gasoline is trending downward but oil is still on the uptick. During those times, the oil companies are paying their existing (high) contracts for oil, but when the spot price is low it affects futures prices, which will affect the oil companies' margins. Day traders will see that, squawk \\\"\\\"the sky is falling\\\"\\\" and sell off, driving the price down temporarily. That's when you buy in. Pretty much the only other time an oil stock is a guaranteed win is when the entire market takes a swan dive and then bottoms out. Oil has such a built-in demand, for the foreseeable future, that regardless of how bad it gets you WILL make money on an oil stock. So, when the entire market's in a panic and everyone's heading for gold, T-debt etc, buy the major oil stocks across the spectrum. Even if one stock tanks, chances are really good that another company will see that and offer a buyout, jacking the bought company's stock (which you then sell and reinvest the cash into the buying company, which will have taken a hit on the news due to the huge drop in working capital). Of course, the one thing to watch for in the headlines is any news that renewables have become much more attractive than oil. You wait; in the next few decades some enterprising individual will invent a super-efficient solar cell that provides all the power a real, practical car will ever need, and that is simultaneously integrated into wind farms making oil/gas plants passe. When that happens oil will be a thing of the past.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"74615\",\n \"text\": \"\\\"The VDE fund is an energy fund so this is a function of recent price changes in oil (and gas, coal, &c). For example. Lets say last year when oil was $100 per barrel a bunch of companies saw a good return and put $ 100 million into a bunch of leases, boreholes, pumps, &c to return $10 million per year, and the market says yeah, they're all together worth 100M. Now oil is less, maybe $40 per the link. These exploration companies don't have a lot of labor or variable costs; they are operationally profitable, may have \\\"\\\"use it or lose it\\\"\\\" leases or minimum pumping requirements for contract or engineering reasons. Lets say the cash flow is 7M so the market values them at 70M. They still have about 100M book value so here we are at .7 and I believe the scenario in the question. Nobody would invest in new capacity at this oil price. The well equipment could be repurposed but not the borehole or lease, so the best use is to continue pumping and value it on cash flow. If an individual well runs negative long enough and goes bust, either a different pumper will pay the minimum price that gives profitable cash flow, or that borehole that cost millions to dig is shut off and rendered valueless. The CNBC article says some explorers are playing games with debt to maintain yield, so there is that too. In the ETF, your bet is that the market is wrong and oil will go up, increasing future cash flows (or you like the current yield, taking on the risk that some of these oil explorers could go bust).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"591893\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](http://www.reuters.com/article/us-global-oil-idUSKBN19B01W?il=0) reduced by 76%. (I'm a bot) ***** > TOKYO Oil markets held around seven-month lows on Tuesday as investors focused on persistent signs of rising supply that are undermining attempts by OPEC and other producers to support prices. > Libya&#039;s oil production has risen more than 50,000 bpd after the state oil company settled a dispute with Germany&#039;s Wintershall, a Libyan source told Reuters. > The oil market is heading in the right direction but still needs time to rebalance, al-Falih told the London-based newspaper Asharq al-Awsat. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6iblm4/oil_prices_hold_near_sevenmonth_lows_glut_keeps/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~148255 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **Oil**^#1 **cut**^#2 **cent**^#3 **barrel**^#4 **OPEC**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"445535\",\n \"text\": \"\\\"I think all transportation uses only 1/3 of oil produced at best. That includes many things that won't be electrifed soon, like planes and ships. Don't forget how much oil agriculture uses in both fertilizer, pesticides and the least in running the equipment itself. So while demand may soften over time, it's not like will suddenly glut. Peak Oil (which we reached with \\\"\\\"conventional oil\\\"\\\" vs fracked) kinda says that each subsequent barrel will get more and more expensive to pump out (rather the popular perception we will suddenly run out). That basically has been a truism since over a century, because ERoEI on oil has declined. At peak return, iirc in the 1930s or so, we were getting something like 300 barrels of oil out for every barrel of energy invested on some fields in Saudi Arabia, now the overall average is down to around 10 or less? Point is, oil won't go to $10. Oil industry could not survive on it and they know we don't have alternatives for many oil uses (it's the most easily portable liquid with the highest energy concentration), so why price it as such? If people really wanted to reduce their carbon/oil footprint, they'd stop pining for electric cars and switch to a plantbased diet - which will have a far greater impact for much less investment. On top of all the health benefits they accumulate.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"347133\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-02/libya-s-oil-production-said-to-exceed-1-million-barrels-a-day) reduced by 75%. (I'm a bot) ***** > Libya&#039;s oil production has climbed to more than 1 million barrels a day for the first time in four years just as oil prices capped the longest run of gains in six months after U.S. shale explorers paused a record drilling expansion. > Libya&#039;a oil output has rebounded from only 690,000 barrels a day at the start of the year, with Sharara, the country&#039;s largest oil field, resuming production last month. > State National Oil Corp. Chairman Mustafa Sanalla said in April he wanted to boost national output to 1.1 million barrels a day by August. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6kwqac/libyas_crude_output_hits_a_new_high_just_as_oil/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~157830 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **day**^#1 **barrels**^#2 **oil**^#3 **million**^#4 **production**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"262925\",\n \"text\": \"\\\"It is important to first understand that true causation of share price may not relate to historical correlation. Just like with scientific experiments, correlation does not imply causation. But we use stock price correlation to attempt to infer causation, where it is reasonable to do so. And to do that you need to understand that prices change for many reasons; some company specific, some industry specific, some market specific. Companies in the same industry may correlate when that industry goes up or down; companies with the same market may correlate when that market goes up or down. In general, in most industries, it is reasonable to assume that competitor companies have stocks which strongly correlate (positively) with each-other to the extent that they do the same thing. For a simple example, consider three resource companies: \\\"\\\"Oil Ltd.\\\"\\\" [100% of its assets relate to Oil]; \\\"\\\"Oil and Iron Inc.\\\"\\\" [50% of its value relates to Oil, 50% to Iron]; and \\\"\\\"Iron and Copper Ltd.\\\"\\\" [50% of its value relates to Iron, 50% to Copper]. For each of these companies, there are many things which affect value, but one could naively simplify things by saying \\\"\\\"value of a resource company is defined by the expected future volume of goods mined/drilled * the expected resource price, less all fixed and variable costs\\\"\\\". So, one major thing that impacts resource companies is simply the current & projected price of those resources. This means that if the price of Oil goes up or down, it will partially affect the value of the two Oil companies above - but how much it affects each company will depend on the volume of Oil it drills, and the timeline that it expects to get that Oil. For example, maybe Oil and Iron Ltd. has no currently producing Oil rigs, but it has just made massive investments which expect to drill Oil in 2 years - and the market expects Oil prices to return to a high value in 2 years. In that case, a drop in Oil would impact Oil Inc. severely, but perhaps it wouldn't impact Oil and Iron Ltd. as much. In this case, for the particular share price movement related to the price of Oil, the two companies would not be correlated. Iron and Copper Ltd. would be unaffected by the price of Oil [this is a simplification; Oil prices impact many areas of the economy], and therefore there would be no correlation at all between this company's shares. It is also likely that competitors face similar markets. If consumer spending goes down, then perhaps the stock of most consumer product companies would go down as well. There would be outliers, because specific companies may still succeed in a falling market, but in generally, there would be a lot of correlation between two companies with the same market. In the case that you list, Sony vs Samsung, there would be some factors that correlate positively, and some that correlate negatively. A clean example would be Blackberry stock vs Apple stock - because Apple's success had specifically negative ramifications for Blackberry. And yet, other tech company competitors also succeeded in the same time period, meaning they did not correlate negatively with Apple.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"399370\",\n \"text\": \"I know I'm talking to a bot Because prices where not allowed to increase the American people continued to drive as if oil was $3 per barrel. But if prices jumped to $6 or $9 a barrel the American people would have changed their behave on driving and started to take the bus and car-pool. This would allow people who really need the gas to always be able to fill up.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"458665\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-06-19/oil-s-slide-stalls-as-investors-weigh-stockpiles-against-libya) reduced by 70%. (I'm a bot) ***** > The amount of oil stored in tankers reached a 2017 high of 111.9 million barrels earlier this month, according to Paris-based tracking company Kpler SAS. Oil has slipped below $45 a barrel as supplies in the U.S. remain plentiful and drillers continue to add rigs, raising concerns output cuts by the Organization of Petroleum Exporting Countries and allies including Russia won&#039;t succeed in draining bloated stockpiles. > Crude stockpiles remain more than 100 million barrels above the five-year average, according to data from the EIA. American production has climbed to 9.33 million barrels a day through June 9, near the highest since August 2015. > Libya is pumping about 900,000 barrels a day, according to a person with direct knowledge of the matter, who asked not to be identified for lack of authority to speak to the media. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ietvj/oil_prices_are_tumbling_more_than_2_toward_43/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~148648 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **barrel**^#1 **percent**^#2 **August**^#3 **U.S.**^#4 **Oil**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"100721\",\n \"text\": \"a) Nothing would support this company going back to $.50 per share b) Fundamentally the market for this sectors has been obliterated and the fundamentals don't look like they will improve. Similar companies experience what this one is and will be going through, they borrow the hilt and hope they can pump enough oil and sell the oil at a high price. Oil goes below, WAYYY below the price they can sell it at and even break even, so they are burning cash until they declare bankruptcy. This company is not an exception. So here is what to look at on their balance sheet: assets and liabilities. Liabilities are debt. Their debt is over 50% of their assets, that debt has interest and there is NO WAY they are making a profit. Their website's last financial statement is from September 30th.. LOL, so they haven't even released a quarterly financial statement in two quarters straight, so have they released anything? Given what we know about the dire state of the entire oil drilling industry, lets see if these guys are the exception to the rule (spoiler; they aren't) February 15th, 2015 http://www.marketwatch.com/story/strategic-oil-gas-ltd-provides-operations-update-2015-02-19-16173591 The Company prudently elected to stop the winter Muskeg drilling program in order to preserve capital. So now they aren't even getting new assets to resale, they aren't making any money from that operation, their debt still has interest payments though. Approximately 700 Boe/d of production has been shut-in by suspending operations at Bistcho, Cameron Hills and Larne, which are not economic at current commodity prices. Predictable. Also, you should notice from their actual financial statements (from 6 months ago, lol) (when the price of oil was over 100% higher than it is today, lol), this company already wasn't a good performer. They have been financing themselves by doing private placements, by issuing shares to investors that are not you, and diluting the share value of ALL OTHER SHAREHOLDERS. Dead in the water. I got this from skimming their financial report, without even being familiar with how canadian companies report. Its just bad news. You shouldn't be married to this investment.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"222798\",\n \"text\": \"\\\"Not to mention that many oil fields don't make a profit below $40/barrel. The Saudis over-produced on purpose based on that premise, betting that they could drive much of the growing North American production out of business by keeping the price below the point where tar sands and hydraulic fracking could be profitable. If oil dropped to $10/barrel, few countries would bother pumping it. While Saudi Arabia and some of the UAE could make a profit at that point (for now), even Iraq would be losing money. https://www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx That reduced production would drive the price right back up, since oil is still used in plastics, shipping, road construction, etc. Even if every car being sold becomes electric overnight, *and* all the electric power plants become wind, nuclear or solar based tomorrow, we'd still have a decade or more of existing ICE cars on the road. It's not the world would stop using oil in the next 6-8 years just because \\\"\\\"investment pours into electric cars\\\"\\\". If anything, a drop to $10/barrel would slow the move away from oil significantly; what incentive would people have to buy a more expensive electric car when gas at the pump is suddenly is $1 again?\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"254556\",\n \"text\": \"UNG United States Natural Gas Fund Natural Gas USO United States Oil Fund West Texas Intermediate Crude Oil UGA United States Gasoline Fund Gasoline DBO PowerShares DB Oil Fund West Texas Intermediate Crude Oil UHN United States Heating Oil Fund Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all. Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time. And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"434799\",\n \"text\": \"\\\"I'm trying to understand how an ETF manager optimized it's own revenue. Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \\\"\\\"relations\\\"\\\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \\\"\\\"VWAP +\\\"\\\" trades you are eligible for their corporate well-being programs and other \\\"\\\"sponsorship\\\"\\\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"305794\",\n \"text\": \"You acquire something because you expect to use it, or because you expect to exchange it for something that you want to use. Gold is a good candidate for storing value because it's rare, it's not easily counterfeited, it's divisible, it's portable, etc. Contrast this with your favorite currency: more can be printed up almost at will, etc. Overvaluedness/undervaluedness is only in reference to something else. How many dollars does it take to buy an ounce of gold? (About $1,500.) How many ounces does it take to equal the DJIA? (About 8.) How many ounces of silver does it take to buy an ounce of gold? How many barrels of oil can you buy with an ounce of gold? Etc., etc. But whatever measure you're using, the value of the gold you have is directly related to the mass of gold you own. Two ounces are twice as valuable as one ounce. As the old joke goes (no offense to taxi drivers intended!) when your cabbie starts talking about how to get rich with gold, it's probably overvalued. Sell it all! ;)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"291600\",\n \"text\": \"\\\"As I stated in my comment, options are futures, but with the twist that you're allowed to say no to the agreed-on transaction; if the market offers you a better deal on whatever you had contracted to buy or sell, you have the option of simply letting it expire. Options therefore are the insurance policy of the free market. You negotiate a future price (actually you usually take what you can get if you're an individual investor; the institutional fund managers get to negotiate because they're moving billions around every day), then you pay the other guy up front for the right of refusal later. How much you pay depends on how likely the person giving you this option is to have to make good on it; if your position looks like a sure thing, an option's going to be very expensive (and if it's such a sure thing, you should just make your move on the spot market; it's thus useful to track futures prices to see where the various big players are predicting that your portfolio will move). A put option, which is an option for you to sell something at a future price, is a hedge against loss of value of your portfolio. You can take one out on any single item in your portfolio, or against a portion or even your entire portfolio. If the stock loses value such that the contract price is better than the market price as of the delivery date of the contract, you execute the option; otherwise, you let it expire. A call option, which is an option to buy something at a future price, is a hedge against rising costs. The rough analog is a \\\"\\\"pre-order\\\"\\\" in retail (but more like a \\\"\\\"holding fee\\\"\\\"). They're unusual in portfolio management but can be useful when moving money around in more complex ways. Basically, if you need to guarantee that you will not pay more than a certain per-share price to buy something in the future, you buy a call option. If the spot price as of the delivery date is less than the contract price, you buy from the market and ignore the contract, while if prices have soared, you exercise it and get the lower contract price. Stock options, offered as benefits in many companies, are a specific form of call option with very generous terms for whomever holds them. A swaption, basically a put and a call rolled into one, allows you to trade something for something else. Call it the free market's \\\"\\\"exchange policy\\\"\\\". For a price, if a security you currently hold loses value, you can exchange it for something else that you predicted would become more valuable at the same time. One example might be airline stocks and crude oil; when crude spikes, airline stocks generally suffer, and you can take advantage of this, if it happens, with a swaption to sell your airline stocks for crude oil certificates. There are many such closely-related inverse positions in the market, such as between various currencies, between stocks and commodities (gold is inversely related to pretty much everything else), and even straight-up cash-for-bad-debt arrangements (credit-default swaps, which we heard so much about in 2008).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"49235\",\n \"text\": \"\\\"As others have alluded to but haven't said due to the lack of reputation points to spare, you can take advantage of oil prices by leveraging up and using as much credit and margin as the banks and brokerages (respectively) will lend you. People assume that the correct answer on this forum has to masquerade as conservative financial advice, and this is not advice nor conservative. Futures contracts are readily available, but they are expensive to obtain (like a minimum entry of $4,450). But if this expense is no such object to you then you can then obtain this contract which is actually worth 20x that and experience the price appreciation and depreciation of the whole contract. The concept is similar to a downpayment on a mortgage. You assume \\\"\\\"rock bottom\\\"\\\" oil prices, but fortunately for you, futures contracts will allow you to quickly change your bets from future price appreciation and allow you to speculate on future price depreciation. So although the union workers will be protesting full time after the drilling company lays them off, you will still be getting wealthier. Long Options. These are the best. The difference with options, amongst other speculation products, is that options require the least amount of capital risk for the greatest reward. With futures, or with trading shares of an ETF (especially on margin), you have to put up a lot of capital, and if the market does not go your desired direction, then will lose a lot. And on margin products you can lose more than you put in. Being long options does not come with these dilemmas. A long march 2015 call option on USO ETF can currently be bought for less than $200 of actual cash (ie. the trading quote will be less than $2.00, but this will cost you less than $200), and will be worth $1000 on a very modest rebound in prices. The most you can lose is the $200 for the contract. Compared to $4450 on the futures, or $100,000 (that you don't have) in the futures market if oil really moves against you, or compared to whatever large amount of cash needed to actually buy shares of an ETF needed to make any decent return. These are the most lucrative (and fun and exhilarating and ) ways to take advantage of rock bottom oil prices, as an individual.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"93897\",\n \"text\": \"I don't think the two are particularly linked. While Brick is right in that the price of oil is denominated in dollars, I don't think that's responsible for most of the movement here. Oil has been weak for intrinsic reasons related to oil: supply/demand imbalance, largely. (Oil also was way over-priced back when it was > $100 a barrel; a lot of that was due to worries about instability in the Middle East.) The dollar has been strong for other, separate intrinsic reasons. The American economy has had a stronger rebound than Europe or Asia; while we were hit hard in the 2008 recession, we rebounded pretty quickly from a whole-economy point of view (we still have a lot of weaknesses in terms of long-term unemployment, but that doesn't seem to be hurting our productivity much). Pick another time period, and you won't necessarily see the same matching path (and I would even say that those paths don't match particularly well). Marketwatch covered this for example; other sites show similar things. There is a weak correlation, but only in the short term, or for specific reasons.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"373410\",\n \"text\": \"Gold is not legal tender. I can't walk into Walmart and buy groceries with 1/20 ounce of gold. I can't buy a TV or car with gold. And you can't *buy* money--that's not how it works. I can sell a barrel of oil or a whatever of copper in any currency, but that doesn't make either of them currencies in and of themselves.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"517675\",\n \"text\": \"\\\"**1973 oil crisis** The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The embargo occurred in response to United States' support for Israel during the Yom Kippur War. By the end of the embargo in March 1974, the price of oil had risen from US$3 per barrel to nearly $12 globally; US prices were significantly higher. The embargo caused an oil crisis, or \\\"\\\"shock\\\"\\\", with many short- and long-term effects on global politics and the global economy. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/economy/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^| [^Source](https://github.com/kittenswolf/WikiTextBot) ^] ^Downvote ^to ^remove ^| ^v0.27\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"571327\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](http://www.imf.org/en/Publications/WP/Issues/2017/07/18/A-Crude-Shock-Explaining-the-Impact-of-the-2014-16-Oil-Price-Decline-Across-Exporters-44966) reduced by 62%. (I'm a bot) ***** > The decline in oil prices in 2014-16 was one of the sharpest in history, and put to test the resilience of oil exporters. > We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative eects. > Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in scal revenue or economic activity. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6o5byg/imfa_crude_shock_explaining_the_impact_of_the/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~170095 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **oil**^#1 **export**^#2 **IMF**^#3 **view**^#4 **economic**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"2329\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](http://www.msn.com/en-us/money/companies/shell-prepares-for-lower-forever-oil-prices/ar-AAoVbwb) reduced by 88%. (I'm a bot) ***** > LONDON-Royal Dutch Shell PLC laid out a pessimistic vision for the future of oil on Thursday, even as the company reported success in generating cash during a prolonged downturn. > Shell Chief Executive Ben van Beurden said the company has a mind-set that oil prices would remain &quot;Lower forever&quot;-a riff on the &quot;Lower for longer&quot; mantra the industry adopted for a price slump that proved unexpectedly lasting. > Oil&#039;s fragile recovery since then to around $50 a barrel has helped the sector, but Shell and its peers have also engaged in aggressive efforts to bring down costs so they can survive at lower prices. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6pz8ur/shell_prepares_for_lower_forever_oil_prices/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~177293 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **oil**^#1 **company**^#2 **Shell**^#3 **billion**^#4 **cash**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"18366\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](http://www.npr.org/2017/05/24/529852301/boom-time-again-for-u-s-oil-industry-thanks-to-opec) reduced by 79%. (I'm a bot) ***** > Oil producers across the country are watching to see what OPEC does at its meeting in Vienna this week, since the cartel of oil-exporting countries has recently played a big role in turning around a two-year U.S. slump. > There are more than twice as many U.S. rigs drilling for oil as a year ago, a turnaround that&#039;s felt keenly in places like the Bakken oil patch in North Dakota. > In the dizzying boom-bust cycle of the oil industry, things were crazy busy here a few years back, when a barrel of oil was around $100. But that led to a surge in production that flooded the market, pushing the price of oil down. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6ejcc3/boom_time_again_for_us_oil_industry_thanks_to_opec/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~133536 tl;drs so far.\\\"\\\") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **Oil**^#1 **Dakota**^#2 **price**^#3 **U.S.**^#4 **Job**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"506616\",\n \"text\": \"\\\"It's standard to price oil in US$. That means that if the US$ gets stronger, the prices of oil drops even if its \\\"\\\"intrinsic value\\\"\\\" remains constant. Same thing happens for other commodities, such as gold. Think of the oil price in barrels/$. If the denominator (value of the $) goes up, then the ratio tends to go down.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"429123\",\n \"text\": \"\\\"New SEC rules also now allow brokers to collect fees on non-dividend bearing accounts as an \\\"\\\"ADR Pass-Through Fee\\\"\\\". Since BP (and BP ADR) is not currently paying dividends, this is probably going to be the case here. According to the Schwab brokerage firm, the fee is usually 1-3 cents per share. I did an EDGAR search for BP's documents and came up with too many to read through (due to the oil spill and all of it's related SEC filings) but you can start here: http://www.schwab.com/public/schwab/nn/m/q207/adr.html\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"234115\",\n \"text\": \"You can buy the exchange traded fund ETFS WTI Crude Oil (CRUD), amongst other ETFS products. http://funds.ft.com/uk/Tearsheet/Summary?s=CRUD:LSE:USD Note these funds do not 'jump' when the crude oil futures contracts are in contango (e.g. June contract is priced higher than May) and the futures roll-over, as they do monthly. When this happens the EFTS continues with no movement. Currently May is $52.85 and June is $54.15 (so in contango). LSE:CRUD is $13.40 and if the crude oil futures rolled-over it would carry straight on at that value. For this reason one should be cautious buying and holding LSE:CRUD longterm.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"482399\",\n \"text\": \"\\\"Here's an example that I'm trying to figure out. ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price. Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share) I think everything so far is pretty straight forward. Let me know if I missed something to this point. Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other \\\"\\\"relations\\\"\\\" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of \\\"\\\"VWAP +\\\"\\\" trades you are eligible for their corporate well-being programs and other \\\"\\\"sponsorship\\\"\\\" of ETF's interests including helping to pay for marketing, rent, computers, etc. Does that happen? Do these disclosures exist somewhere?\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":90,"cells":{"query_id":{"kind":"string","value":"10464"},"query":{"kind":"string","value":"How to interpret a 1,372.55% dividend payout ratio (GSK)?"},"positive_passages":{"kind":"list like","value":[{"docid":"558635","text":"I don't think it makes sense to allow accounting numbers that you are not sure how to interpret as being a sell sign. If you know why the numbers are weird and you feel that the reason for it bodes ill about the future, and if you think there's a reason this has not been accounted for by the market, then you might think about selling. The stock's performance will depend on what happens in the future. Financials just document the past, and are subject to all kinds of lumpiness, seasonality, and manipulation. You might benefit from posting a link to where you got your financials. Whenever one computes something like a dividend payout ratio, one must select a time period over which to measure. If the company had a rough quarter in terms of earnings but chose not to reduce dividends because they don't expect the future to be rough, that would explain a crazy high dividend ratio. Or if they were changing their capital structure. Or one of many other potentially benign things. Accounting numbers summarize a ton of complex workings of the company and many ratios we look at could be defined in several different ways. I'm afraid that the answer to your question about how to interpret things is in the details, and we are not looking at the same details you are.","title":""}],"string":"[\n {\n \"docid\": \"558635\",\n \"text\": \"I don't think it makes sense to allow accounting numbers that you are not sure how to interpret as being a sell sign. If you know why the numbers are weird and you feel that the reason for it bodes ill about the future, and if you think there's a reason this has not been accounted for by the market, then you might think about selling. The stock's performance will depend on what happens in the future. Financials just document the past, and are subject to all kinds of lumpiness, seasonality, and manipulation. You might benefit from posting a link to where you got your financials. Whenever one computes something like a dividend payout ratio, one must select a time period over which to measure. If the company had a rough quarter in terms of earnings but chose not to reduce dividends because they don't expect the future to be rough, that would explain a crazy high dividend ratio. Or if they were changing their capital structure. Or one of many other potentially benign things. Accounting numbers summarize a ton of complex workings of the company and many ratios we look at could be defined in several different ways. I'm afraid that the answer to your question about how to interpret things is in the details, and we are not looking at the same details you are.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"458345","text":"Great answers. Here's my two cents: First, don't forget to look at the overall picture, not just the dividend. Study the company's income statement, balance sheet and cash flow statement for the last few years. Make sure they have good earnings potential, and are not carrying too much debt. I know it's dull, but it's better to miss an opportunity than to buy a turkey and watch the dividends and the share price tank. I went through this with BAC (Bank of America) a couple of years ago. They had a 38-year history of rising dividends when I bought them, and the yield was about 8%. Then the banking crisis happened and the dividend went from $2.56/share to $0.04, and the price fell from $40 to $5. (I stuck with it, continuing to buy at lower and lower prices, and eventually sold them all at $12 and managed to break even, but it was not a pleasant experience) Do your homework. :) Still, one of the most reliable ways to judge a company's dividend-paying ability is to look at its dividend history. Once a company has started paying a dividend there is a strong expectation from shareholders that these payments will continue, and the company's management will try very hard to maintain them. (Though sometimes this doesn't work out, e.g. BAC) You should see an uninterrupted stream of non-decreasing payments over a period of at least 5 years (this timeframe is just a rule of thumb). Well-established, profitable companies also tend to increase their dividends over time, which has the added benefit of pushing up their share price. So you're getting increasing dividends and capital gains. Next, look at the company's payout ratio over time, and the actual cost of the dividend. Can the projected earnings cover the dividend cost without going above the payout ratio? If not, then the dividend is likely to get reduced. In the case of CIM, the dividend history is short and erratic. The earnings are also all over the place, so it's hard to predict what will happen next year. The company is up to its eyeballs debt (current ratio is .2), and its earnings have dropped by 20% in the last quarter. They have lost money in two of the last three years, even though earning have jumped dramatically. This is a very young company, and in my opinion it is too early for them to be paying dividends. A very speculative stock, and you are more likely to make money from capital gains than dividends. AAE is a different story. They are profitable, and have a long dividend history, although the dividend was cut in half recently. This may be a good to buy them hoping the dividend comes back once the economy recovers. However, they are trading at over 40 times earnings, which seems expensive, considering their low profit margins. Before investing your money, invest in your education. :) Get some books on interpretation of financial staments, and learn how to read the numbers. It's sort of like looking at the codes in The Matrix, and seeing the blonde in the red dress (or whatever it was). Good luck!","title":""},{"docid":"42427","text":"Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%.","title":""},{"docid":"503780","text":"\"Dividend rate is \"\"dividend per share\"\" over a specified time period, usually a year. So in the first example, if the company paid a $1/share dividend over the year before the stock dividend the shareholder would receive $100, while if it paid the $1/share the year after the stock dividend the shareholder would receive $105. The company could have achieved the same thing by paying total dividends of $1.05/share, which is what the last phrase of the last quoted paragraph is saying. Here's an Investopedia page on dividend rate. Also, what you're calling \"\"payout ratio\"\" is really \"\"dividend yield\"\". \"\"Payout ratio\"\" is how much of the company's net earnings are paid out in dividends. That's all in the US, I could see the terms being used differently outside the US.\"","title":""},{"docid":"522040","text":"\"The company was paying \"\"only\"\" $1 a share in dividends, compared to $10 a share in earnings. That is a so-called payout ratio of 10%, which is low. A more normal payout ratio would be 40%, something like $4 a share. If a $13 stock had a $4 dividend, the dividend yield would be about 30%, which would be \"\"too high,\"\" meaning that the price would go up to drive down the resulting yield. Even $1 a share on a $13 stock is a high dividend of about 7%, allowing for appreciation to say, the $20-$25 range. Graham was a great believer in the theory that management should pay out \"\"most\"\" of its earnings in dividends. He believed that by holding dividends so far below earnings, the company was either being \"\"stingy,\"\" or signalling that the $10 a share of earnings was unsustainable. Either of these would be bad for the stock. For instance, if $1 a share in dividends actually represented a 40% payout ratio, it would signal management's belief that they could normally earn only $2.50 a year instead of $10.\"","title":""},{"docid":"61193","text":"Do not confuse the DIV (%) value and the dividend yield. As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing. As the Investopedia page referenced above says: The payout ratio is calculated as follows: Annual Dividends per Share / Earnings per Share. which means that the dividends being paid out are more than the earnings of the company: In extreme cases, dividend payout ratios exceed 100%, meaning more dividends were paid out than there were profits that year. Significantly high ratios are unsustainable.","title":""},{"docid":"14277","text":"Best as i can tell, the simple answer is: the smartest approach to investing for dividends is to pick a company that is, has, and will continue to make a solid profits. there are lots of them out there. specifically, companies with no debt, a history of long-term and steady growth and a stable market share will, almost always recoup any drop in stock valuation due to a dividend payout...and usually in short order. this is why dividends were created...as a mechanism for distributing profits back to investor without diminishing thier stake in the company. the trick then, is to find such companies with the best ratio between stock price and dividend payout. and again, there are a lot of good options out there. All the trepidation is justified however, as many unscrupulous companies will try to pull investors in with high dividends as a means to simply generate capital. these companies have few of the quality attributes mentioned above. instead, High debt, fluctuating or negative profits, minimal market share or diminishing growth present a very risky long term play and will be avoided by this conservative investor.","title":""},{"docid":"412657","text":"Prices are adjusted for return and not payout. So if you take the ratio of the close price and the adjusted close price, it should remain constant. The idea behind a total return (back-)adjustment is to give you a feeling how much money you would have needed back then to reach the price today under the premise that all distributions (dividends, spin-offs, etc.) are reinvested instantly and that reinvestment doesn't cost anything.","title":""},{"docid":"9354","text":"How to find good divided stocks? Research and read. Google, Yahoo, and most likely your broker offer some sort of stock screener tool where you can look for stocks with given P/E ratios, dividend payouts, pricing, and any of a number of other filters. When you've found some that appeal to you, read what others are saying on stock talk websites like Vantagewire and Stockhouse. Read what each company is putting out as news and look at their quarterly reports. In Canada you can find a company's reports for free on Sedar. I'm afraid I don't know the U.S. equivalent. Reuters will be of help. Finding a good dividend-paying stock is the same as finding a good growth or value stock; research the company and the sector as if you were buying it to take the company over.","title":""},{"docid":"315748","text":"When dividend is announced the stock and option price may react to that news, but the actual payout of the dividend on the ex-dividend date is what you probably are referring to. The dividend payout affects the stock price on the ex-dividend date as the stock price will drop by the amount of paid out dividend (not taking into account other factors). This in turn drives the prices of all options. The amount of change in the option price for this event is not only dependent the dividend payout, but also on how far these are in our out of the money and what there time to expiration is. The price of a call option that is far out of the money would react less than the price of a put that would be far in the money. Therefore I would argue that these two will not necessarily offset each other.","title":""},{"docid":"162916","text":"In the absence of a country designation where the mutual fund is registered, the question cannot be fully answered. For US mutual funds, the N.A.V per share is calculated each day after the close of the stock exchanges and all purchase and redemption requests received that day are transacted at this share price. So, the price of the mutual fund shares for April 2016 is not enough information: you need to specify the date more accurately. Your calculation of what you get from the mutual fund is incorrect because in the US, declared mutual fund dividends are net of the expense ratio. If the declared dividend is US$ 0.0451 per share, you get a cash payout of US$ 0.0451 for each share that you own: the expense ratio has already been subtracted before the declared dividend is calculated. The N.A.V. price of the mutual fund also falls by the amount of the per-share dividend (assuming that the price of all the fund assets (e.g. shares of stocks, bonds etc) does not change that day). Thus. if you have opted to re-invest your dividend in the same fund, your holding has the same value as before, but you own more shares of the mutual fund (which have a lower price per share). For exchange-traded funds, the rules are slightly different. In other jurisdictions, the rules might be different too.","title":""},{"docid":"134497","text":"\"Both models understand that the value of a company is the sum total of all cashflows in the future, discounted back to the present. They vary in their definition of \"\"cash\"\". The Gordon Growth model uses dividends as a proxy for cashflow, under the assumption that this is the only true cash received by shareholders. (In theory, counting cash is meaningless if there's no eventual end-game where the accumulated cash is divvied up amongst the owners.) The Gordon model is best used to value companies that have an established, reliable dividend. The company should be stable, and the payout ratio high. GG will underestimate the value of firms that consistently maintain a low payout ratio, and instead accumulate cash. There are multiple DCF models. A firm valuation measures all cash available to both equity and debt holders. A traditional equity valuation measures all cash that can be claimed by shareholders. While the latter seems most intuitive and pertinent to a shareholder, the former is very good at showing what a company can do regardless of their choice of capital structure. A small add-on to a firm valuation is the concept of EVA, or economic value add, where the return on capital (all capital -- both debt and equity) is compared to the blended cost of capital. The DCF model is more flexible (optimistic?) than the Gordon in its approach to cash. The approach can be applied to many types of companies, at every stage in their maturity, even if they don't pay a dividend. A simplistic, or single-stage DCF is similar to the Gordon. The assumption is that the company is fully mature, growing at a rate perhaps just slightly above inflation, forever. For younger companies a multi-stage DCF can be employed, where you forecast fairly confident numbers for the next 3-5 years, then 3-5 years beyond that the forecast is less certain, but assumed to be slowing growth, and a generally maturing, stabilizing company. And then the steady-state stage is tacked on to the end. You'll want to check out Professor Aswath Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . He addresses all this and so much more, and has a big pile of spreadsheets freely downloadable to get you started. I also highly recommend his book \"\"Investment Valuation\"\". It's the bible on the topic.\"","title":""},{"docid":"456373","text":"\"Generally, a share of stock entitles the owner to all future per-share dividends paid by the company, plus a fraction of the company's assets net value in the event of liquidation. If one knew in advance the time and value of all such payouts, the value of the stock should equal the present cash value of that payout stream, which would in turn be the sum of the cash values of all the individual payouts. As time goes by, the present cash value of each upcoming payout will increase until such time as it is actually paid, whereupon it will cease to contribute to the stock's value. Because people are not clairvoyant, they generally don't know exactly what future payouts a stock is going to make. A sane price for a stock, however, may be assigned by estimating the present cash value of its future payments. If unfolding events would cause a reasonable person to revise estimates of future payments upward, the price of the stock should increase. If events cause estimates to be revised downward, the price should fall. In a sane marketplace, if the price of a stock is below people's estimates of its payouts' current cash value, people should buy the stock and push the price upward. If it is above people's estimates, they should sell the stock and push the price downward. Note that in a sane marketplace, rising prices are a red-flag indicator for people to stop buying. Unfortunately, sometimes bulls see a red flag as a signal to charge ahead. When that happens, prices may soar through the roof, but it's important to note that the value of the stock will still be the present cash value of its future payouts. If that value is $10/share, someone who buys a share for $50 basically gives the seller $40 that he was not entitled to, and which the buyer will never get back. The buyer might manage to convince someone else to pay him $60 for the share, but that simply means the new buyer is giving the the previous one $50 that he wasn't entitled to either. If the price falls back to $10, calling that fall a \"\"market correction\"\" wouldn't be a euphemism, but rather state a fact: the share was worth $10 before people sold it for crazy prices, and still worth $10 afterward. It was the market price that was in error. The important thing to focus on as a sane investor is what the stock is actually going to pay out in relation to what you put in. It's not necessary to look only at present price/earnings ratios, since some stocks may pay little or nothing today but pay handsomely next year. What's important, however, is that there be a reasonable likelihood that in the foreseeable future the stock will pay dividends sufficient to justify its cost.\"","title":""},{"docid":"46818","text":"Ponzi schemes (or pyramid schemes) are based on paying earlier investors from the money invested by the later ones. For Ponzi scheme, the idea is generally to distribute some relateviely high consistent dividend/payout based on the inflow of money from new investors. As long as new investors are coming, the scheme can be sustained for quite some time (see the Madoff's example that spanned over decades). In the mean time the scheme operator can take (some of) the investment money to himself (legally as fees and salary, illegally as embezzling). The scheme operator doesn't actually have to put in any money other than some organizational expenses. However, at some point the new investors' money won't be enough to pay all the existing investors (inevitably, sooner or later, since the dividend payout grows with each new investor and there are no infinite exponential amount of new investors to cover for it). That's when the $#!+ hits the fan and sons of the schemers start ending up hanging from the ceiling. Pyramid scheme is built on similar idea, but the dividend payout varies based on the level of the investor (i.e.: the investor gets paid based on how many new ones he brought in, and how many new ones rooted from them). Thus the incentive to bring new investors is directly shifted to the investors themselves. The schemers here are at the top and get the most payouts from all the rest of the participants. They themselves usually put no or very little investment. However, the end result is the same: couldn't possibly be enough investors to sustain this model forever, and it will inevitably fail at some point. When such a scheme fails - the paying fund ends up being bankrupt, either due to cashflow problems (not enough money in to pay money out) or because all the money dries out (usually - both). How to detect - if the reports are not falsified (which in most cases they are) you'll see clearly that there's no actual investment income in the cash-flow. But, the reports are usually falsified to conceal this exact fact. So, that's where the independent auditors and regulatory oversight come in handy. Generally, if an investment fund doesn't have a reputable independent auditor - stay away.","title":""},{"docid":"579097","text":"Having a very high payout ratio is fine if there aren't any sensible investments available for the company, and citi already had their payout ratio somewhere in the 80% range. The remaining excess is from them reducing the capital bed they were required to hold for the stress tests; cash that was essentially sitting around doing nothing. [WSJ link](https://www.wsj.com/articles/BT-CO-20170628-711143) for u/LupusSuperius","title":""},{"docid":"562238","text":"The P/E ratio is a measure of historic (the previous financial year) earnings against the current share price. If the P/E is high, this means that the market perceives a big increase in future earnings per share. In other words, the perception is that this is a fast growing company. Higher earnings may also equate to big increases in dividends and rapid expansion. On the other hand, if the P/E is low, then there is a perception that either earnings per share are decreasing or that future growth in earnings is negligible. In other words, low P/E equates to a perception of low future growth and therefore low prospects for future payout increases - possibly even decreases. The market is (rightly) usually willing to pay a premium for fast growing companies.","title":""},{"docid":"435722","text":"what do you mean exactly? Do you have a future target price and projected future dividend payments and you want the present value (time discounted price) of those? Edit: The DCF formula is difficult to use for stocks because the future price is unknown. It is more applicable to fixed-income instruments like coupon bonds. You could use it but you need to predict / speculate a future price for the stock. You are better off using the standard stock analysis stuff: Learn Stock Basics - How To Read A Stock Table/Quote The P/E ratio and the Dividend yield are the two most important. The good P/E ratio for a mature company would be around 20. For smaller and growing companies, a higher P/E ratio is acceptable. The dividend yield is important because it tells you how much your shares grow even if the stock price stays unchanged for the year. HTH","title":""},{"docid":"120297","text":"How do you find good quality dividend stocks? That is an easy one. Past performance has always been my key to this answer. also remember why you are investing in the first place. Do you want cash flow, security or capital growth. Also let's not forget... how much time do you want to devote to this venture. There is going to be a balance in your investing and your returns. More time in... the higher returns you get. As for finding good dividend stocks, look to the Dividend Aristocrats or the Dividend Contenders. These companies have consistently increased their payouts to their investors for years. There is a trading strategy that could escalate your returns. Dividend Capturing, simply put... You buy the stock before the ex-date and sell after date of record. Thus collecting a dividend and moving on to the next one. Warning: though this is a profitable strategy, it only works with certain stocks so do your research or find a good source.","title":""},{"docid":"315345","text":"The price of a share of a mutual fund is its Net Asset Value (nav). Before the payout of dividends and capital gain distribution, the fund was holding both stock shares and cash that resulted from dividends and capital gains. After the payout, a share only holds the stock. Therefore once the cash is paid out the NAV must drop by the same amount as was paid out per share. Thus of course assumes no other activity or valuation changes of the underlying assets. Regular market activity will obscure what the payout does to the NAV.","title":""},{"docid":"247005","text":"I would say that the answer is yes. Investors may move on purchasing a stock as a result of news that a stock is set to pay out their dividend. It would be interesting to analyze the trend based on a company's dividend payouts over 10 or so years to see what/how this impacts the market value of a given company.","title":""},{"docid":"487074","text":"Ya, that's a lot of data - especially considering your relative lack of experience and the likely fact that you have no idea what to do with what you're given. How do you even know you need minute or tick-based bid-ask data? You can get a lot more than OHLC/V/Split/Dividend. You can get: * Book Value; * Dividend information (Amount, yield, ex date, pay date); * EBITDA; * EPS (current AND estimates); * Price/sales ratio; * Price/book value; * Price/earnings ratio; * PEG ratio; * Short ratio; * Market cap. Among other things, all for free.","title":""},{"docid":"72189","text":"Why do people talk about stock that pay high dividends? Traditionally people who buy dividend stocks are looking for income from their investments. Most dividend stock companies pay out dividends every quarter ( every 90 days). If set up properly an investor can receive a dividend check every month, every week or as often as they have enough money to stagger the ex-dates. There is a difference in high $$ amount of the dividend and the yield. A $1/share dividend payout may sound good up front, but... how much is that stock costing you? If the stock cost you $100/share, then you are getting 1% yield. If the stock cost you $10/share, you are getting 10% yield. There are a lot of factors that come into play when investing in dividend stocks for cash flow. Keep in mind why are you investing in the first place. Growth or cash flow. Arrange your investing around your major investment goals. Don't chase big dollar dividend checks, do your research and follow a proven investment plan to reach your goals safely.","title":""},{"docid":"11032","text":"\"Let me provide a general answer, that might be helpful to others, without addressing those specific stocks. Dividends are simply corporate payouts made to the shareholders of the company. A company often decides to pay dividends because they have excess cash on hand and choose to return it to shareholders by quarterly payouts instead of stock buy backs or using the money to invest in new projects. I'm not exactly sure what you mean by \"\"dividend yield traps.\"\" If a company has declared an dividend for the upcoming quarter they will almost always pay. There are exceptions, like what happened with BP, but these exceptions are rare. Just because a company promises to pay a dividend in the approaching quarter does not mean that it will continue to pay a dividend in the future. If the company continues to pay a dividend in the future, it may be at a (significantly) different amount. Some companies are structured where nearly all of there corporate profits flow through to shareholders via dividends. These companies may have \"\"unusually\"\" high dividends, but this is simply a result of the corporate structure. Let me provide a quick example: Certain ETFs that track bonds pay a dividend as a way to pass through interest payments from the underlying bonds back to the shareholder of the ETF. There is no company that will continue to pay their dividend at the present rate with 100% certainty. Even large companies like General Electric slashed its dividend during the most recent financial crisis. So, to evaluate whether a company will keep paying a dividend you should look at the following: Update: In regards to one the first stock you mentioned, this sentence from the companies of Yahoo! finance explains the \"\"unusually\"\" dividend: The company has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its share holders.\"","title":""},{"docid":"192421","text":"\"The answer is Discounted Cash Flows. Companies that don't pay dividends are, ostensibly reinvesting their cash at returns higher than shareholders could obtain elsewhere. They are reinvesting in productive capacity with the aim of using this greater productive capacity to generate even more cash in the future. This isn't just true for companies, but for almost any cash-generating project. With a project you can purchase some type of productive assets, you may perform some kind of transformation on the good (or not), with the intent of selling a product, service, or in fact the productive mechanism you have built, this productive mechanism is typically called a \"\"company\"\". What is the value of such a productive mechanism? Yes, it's capacity to continue producing cash into the future. Under literally any scenario, discounted cash flow is how cash flows at distinct intervals are valued. A company that does not pay dividends now is capable of paying them in the future. Berkshire Hathaway does not pay a dividend currently, but it's cash flows have been reinvested over the years such that it's current cash paying capacity has multiplied many thousands of times over the decades. This is why companies that have never paid dividends trade at higher prices. Microsoft did not pay dividends for many years because the cash was better used developing the company to pay cash flows to investors in later years. A companies value is the sum of it's risk adjusted cash flows in the future, even when it has never paid shareholders a dime. If you had a piece of paper that obligated an entity (such as the government) to absolutely pay you $1,000 20 years from now, this $1,000 cash flows present value could be estimated using Discounted Cash Flow. It might be around $400, for example. But let's say you want to trade this promise to pay before the 20 years is up. Would it be worth anything? Of course it would. It would in fact typically go up in value (barring heavy inflation) until it was worth very close to $1,000 moments before it's value is redeemed. Imagine that this \"\"promise to pay\"\" is much like a non-dividend paying stock. Throughout its life it has never paid anyone anything, but over the years it's value goes up. It is because the discounted cash flow of the $1,000 payout can be estimated at almost anytime prior to it's payout.\"","title":""},{"docid":"564007","text":"Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/23ab8a02-5787-11e7-80b6-9bfa4c1f83d2?mhq5j=e1 By continuing to use this site you consent to the use of cookies on your device as described in our cookie policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. Dismiss cookie message Accessibility helpSkip to navigationSkip to contentSkip to footer Financial Times MYFT HOME WORLD UK COMPANIES MARKETS OPINION WORK & CAREERS LIFE & ARTS Portfolio My Account HOME WORLD UK COMPANIES MARKETS OPINION WORK & CAREERS LIFE & ARTS MYFT Bank stress tests Add to myFT US banks pass first round of annual stress tests Clean bill of health from Federal Reserve opens door to increased shareholder payouts Read next Week in Review Week in Review, July 1 © AFP Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email4 Save JUNE 22, 2017 by: Alistair Gray and Ben McLannahan in New York and Barney Jopson in Washington US banks have big enough capital buffers to keep trading through an economic meltdown, regulators said on Thursday, in a finding that improves their chances of boosting payouts to shareholders. In the first round of this year’s stress tests, the Federal Reserve probed how 34 banks would fare in a financial and economic slump in which the unemployment rate doubles and the stock market loses half its value. The central bank calculated that the banking sector would endure $493bn in losses in the simulated downturn. Yet officials concluded that the banks would emerge from the crash “well capitalised”, with cushions of shareholder funding still above the Fed’s minimum required levels. The largely upbeat results augur well for US banks as the Fed prepares to unveil the results of the tests’ second round next week, when investors will learn how much capital they can return through dividends and share buybacks. However, the figures released on Thursday do not foretell what the Fed will say about payouts, not least because regulators can approve or block US banks’ capital plans on qualitative as well as quantitative grounds. Lex Bank stress tests: chilled The once-vital check on the industry’s health is outliving its usefulness UBS analysts estimate that the four biggest by assets — JPMorgan, Bank of America, Citigroup and Wells Fargo — will be able to return a net $59.8bn this year, rising to $72.3bn in 2018. Citi and Morgan Stanley could be among about a dozen banks that will make requests to return more than 100 per cent of their annual earnings to shareholders, according to Goldman Sachs analysts. Despite the positive stress test results, not all investors would be comfortable with such a bonanza. Bill Hines, a fixed-income investment manager at Aberdeen Asset Management in Philadelphia, said the prospect of payouts in excess of profits “does scare us a little bit”. “If the safety blanket is pulled away . . . that may come to the detriment of capital and safety.” Across-the-board passes for the stress-test are “a good thing,” he said, as it shows that banks have rebuilt capital levels substantially since the crisis. “But from a creditor’s standpoint you don’t want to see all the profits go out the door.” While banks have already told the Fed what they propose to do on dividends and buybacks, they are now able to make more conservative payout plans if, based on the first-round results, they think it will reject them in the second round. Related article Regulators back Trump on looser financial rules Officials endorse Volcker rule revamp and bank relief from burden of ‘stress tests’ The regulator’s simulated downturn lasts for nine quarters. Banks’ overall loan losses and declines in capital under the worst crisis scenario were smaller than in last year’s stress tests, Fed officials said. Still, the test found that some banks would come close to breaching regulatory minimums during the meltdown on some metrics. For instance, Morgan Stanley’s “supplementary leverage ratio” — a new measure of financial strength that takes effect in 2018 — would drop as low as 3.8 per cent compared with a required level of 3 per cent. The results also drew attention to banks’ exposure to credit card lending. The Fed found banks would suffer the biggest losses in their card portfolios in the hypothetical crisis. Fed officials said that partly reflected a rapid expansion in the size of banks’ credit card assets and rising delinquency rates in the real world. Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web. Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email4 Save Latest on Bank stress tests Week in Review Week in Review, July 1 Fed stress tests give $1.6bn boost to Buffett Fed gives nod to ‘payout party time’ for banks Lex US banks: feeling special Premium Stress tests clear big US banks for $100bn payout Read latest Week in Review Week in Review, July 1 Latest on Bank stress tests Add to myFT Week in Review Week in Review, July 1 US banks pass test; Google, Takata, Fox and M&A also in the news Banks Fed stress tests give $1.6bn boost to Buffett Investor is one of the largest holders of US bank stocks and will reap big dividends Analysis Bank stress tests Fed gives nod to ‘payout party time’ for banks Buybacks and dividends set to soar after industry passes latest stress test Latest in Banks Add to myFT Central Banks BoE successfully tests new payment method ‘Interledger’ programme synchronises transactions between two central banks 3 HOURS AGO US banks US consumers set to be given power to sue banks Financial institutions express fury at CFPB proposal that could spur class actions UK banks BoE warns UK banks on accounting practices PRA chief Sam Woods says lenders should ‘expect questions’ on balance sheet trickery Follow the topics mentioned in this article JPMorgan Chase & Co. Add to myFT Companies Add to myFT Banks Add to myFT Wells Fargo Add to myFT Citigroup, Inc. Add to myFT Follow the authors of this article Barney Jopson Add to myFT Alistair Gray Add to myFT Take a tour of myFT Support View Site Tips Feedback Help Centre About Us Accessibility Legal & Privacy Terms & Conditions Privacy Cookies Copyright Slavery Statement Services FT Live Share News Tips Securely Individual Subscriptions Group Subscriptions Republishing Contracts & Tenders Analysts Research Executive Job Search Advertise with the FT Follow the FT on Twitter Ebooks UK Secondary Schools Tools Portfolio Today's Newspaper (ePaper) Alerts Hub Lexicon MBA Rankings Economic Calendar News feed Newsletters Currency Converter More from the FT Group Markets data delayed by at least 15 minutes. © THE FINANCIAL TIMES LTD 2017. FT and ‘Financial Times’ are trademarks of The Financial Times Ltd. The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice. CloseFinancial Times UK Edition Switch to International Edition Top sections Home World Show more World links UK Show more UK links Companies Show more Companies links Markets Show more Markets links Opinion Show more Opinion links Work & Careers Show more Work & Careers links Life & Arts Show more Life & Arts links Personal Finance Show more Personal Finance links Science Special Reports FT recommends Lex Alphaville EM Squared Lunch with the FT Video Podcasts Blogs News feed Newsletters myFT Portfolio Today's Newspaper (ePaper) Crossword Help Centre My Account Sign Out","title":""},{"docid":"235763","text":"**Human sex ratio** In anthropology and demography, the human sex ratio is the ratio of males to females in a population. More data are available for humans than for any other species, and the human sex ratio is more studied than that of any other species, but interpreting these statistics can be difficult. Like most sexual species, the sex ratio in humans is approximately 1:1. Due to higher female fetal mortality, the sex ratio at birth worldwide is commonly thought to be 107 boys to 100 girls, although this value is subject to debate in the scientific community. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/business/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^| [^Source](https://github.com/kittenswolf/WikiTextBot) ^] ^Downvote ^to ^remove ^| ^v0.27","title":""},{"docid":"453582","text":"\"Investopedia explains how a stock split impacts the stock's options: Each option contract is typically in control of 100 shares of an underlying security at a predetermined strike price. To find the new coverage of the option, take the split ratio and multiply by the old coverage (normally 100 shares). To find the new strike price, take the old strike price and divide by the split ratio. Say, for example, you own a call for 100 shares of XYZ with a strike price of $75. Now, if XYZ had a stock split of 2 for 1, then the option would now be for 200 shares with a strike price of $37.50. If, on the other hand, the stock split was 3 for 2, then the option would be for 150 shares with a strike price of $50. So, yes, a 2 for 1 stock split would halve the option strike prices. Also, in case the Investopedia article isn't clear, after a split the options still control 100 shares per contract. Regarding how a dividend affects option prices, I found an article with a good explanation: As mentioned above, dividends payment could reduce the price of a stock due to reduction of the company's assets. It becomes intuitive to know that if a stock is expected to go down, its call options will drop in extrinsic value while its put options will gain in extrinsic value before it happens. Indeed, dividends deflate the extrinsic value of call options and inflate the extrinsic value of put options weeks or even months before an expected dividend payment. Extrinsic value of Call Options are deflated due to dividends not only because of an expected reduction in the price of the stock but also due to the fact that call options buyers do not get paid the dividends that the stock buyers do. This makes call options of dividend paying stocks less attractive to own than the stocks itself, thereby depressing its extrinsic value. How much the value of call options drop due to dividends is really a function of its moneyness. In the money call options with high delta would be expected to drop the most on ex-date while out of the money call options with lower delta would be least affected. If a stock is expected to drop by a certain amount, that drop would already have been priced into the extrinsic value of its put options way beforehand. This is what happens to put options of dividend paying stocks. This effect is again a function of options moneyness but this time, in the money put options raise in extrinsic value more than out of the money put options. This is because in the money put options with delta of close to -1 would gain almost dollar or dollar on the drop of a stock. As such, in the money put options would rise in extrinsic value almost as much as the dividend rate itself while out of the money put options may not experience any changes since the dividend effect may not be strong enough to bring the stock down to take those out of the money put options in the money. So, no, a dividend of $1 will not necessarily decrease an option's price by $1 on the ex-dividend date. It depends on whether it's a call or put option, and whether the option is \"\"in the money\"\" or \"\"out of the money\"\" and by how much.\"","title":""},{"docid":"247895","text":"The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any. Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value. While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe. Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends.","title":""},{"docid":"342461","text":"Would if I had the capital it is an intensive and low margin area, it requires serious creativity and drive to do it and often needs at least one person per store that is seriously locally invested. Not sure where anger comes from, just stating my opnion as a 20 year professional consultant who has worked at the executive level for BB, Target and GSK and a lifetime of being a customer. Sorry my opnion is both appreny offensive and entirely incorrect. I honestly don't read much of the retail distribution industry trade publications. I just work here. EDIT: It's important to note that big box reailers and how they treated customers was already on the downslide and had been for nearly a decade prior to Amazon showing up. As such honestly very hard for one to make a direct comparision as the retailers had alredy given up much of thier competitive advantge prior to Amazon coming on the scene.","title":""},{"docid":"433905","text":"\"Yes, there are non-stock analogs to the Price/Earnings ratio. Rental properties have a Price/Rent ratio, which is analogous to stocks' Price/Revenue ratio. With rental properties, the \"\"Cap Rate\"\" is analogous to the inverse of the Price/Earnings ratio of a company that has no long-term debt. Bonds have an interest rate. Depending on whether you care about current dividends or potential income, the interest rate is analogous to either a stock's dividend rate or the inverse of the Price/Earnings ratio.\"","title":""},{"docid":"51205","text":"Here's what Investopedia says about payouts for ex-dividend stocks: A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend. Read more: Ex-Dividend Definition | Investopedia http://www.investopedia.com/terms/e/ex-dividend.asp#ixzz4Nl4J3s4k I hope this helps. Good luck!","title":""}],"string":"[\n {\n \"docid\": \"458345\",\n \"text\": \"Great answers. Here's my two cents: First, don't forget to look at the overall picture, not just the dividend. Study the company's income statement, balance sheet and cash flow statement for the last few years. Make sure they have good earnings potential, and are not carrying too much debt. I know it's dull, but it's better to miss an opportunity than to buy a turkey and watch the dividends and the share price tank. I went through this with BAC (Bank of America) a couple of years ago. They had a 38-year history of rising dividends when I bought them, and the yield was about 8%. Then the banking crisis happened and the dividend went from $2.56/share to $0.04, and the price fell from $40 to $5. (I stuck with it, continuing to buy at lower and lower prices, and eventually sold them all at $12 and managed to break even, but it was not a pleasant experience) Do your homework. :) Still, one of the most reliable ways to judge a company's dividend-paying ability is to look at its dividend history. Once a company has started paying a dividend there is a strong expectation from shareholders that these payments will continue, and the company's management will try very hard to maintain them. (Though sometimes this doesn't work out, e.g. BAC) You should see an uninterrupted stream of non-decreasing payments over a period of at least 5 years (this timeframe is just a rule of thumb). Well-established, profitable companies also tend to increase their dividends over time, which has the added benefit of pushing up their share price. So you're getting increasing dividends and capital gains. Next, look at the company's payout ratio over time, and the actual cost of the dividend. Can the projected earnings cover the dividend cost without going above the payout ratio? If not, then the dividend is likely to get reduced. In the case of CIM, the dividend history is short and erratic. The earnings are also all over the place, so it's hard to predict what will happen next year. The company is up to its eyeballs debt (current ratio is .2), and its earnings have dropped by 20% in the last quarter. They have lost money in two of the last three years, even though earning have jumped dramatically. This is a very young company, and in my opinion it is too early for them to be paying dividends. A very speculative stock, and you are more likely to make money from capital gains than dividends. AAE is a different story. They are profitable, and have a long dividend history, although the dividend was cut in half recently. This may be a good to buy them hoping the dividend comes back once the economy recovers. However, they are trading at over 40 times earnings, which seems expensive, considering their low profit margins. Before investing your money, invest in your education. :) Get some books on interpretation of financial staments, and learn how to read the numbers. It's sort of like looking at the codes in The Matrix, and seeing the blonde in the red dress (or whatever it was). Good luck!\",\n \"title\": \"\"\n },\n {\n \"docid\": \"42427\",\n \"text\": \"Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"503780\",\n \"text\": \"\\\"Dividend rate is \\\"\\\"dividend per share\\\"\\\" over a specified time period, usually a year. So in the first example, if the company paid a $1/share dividend over the year before the stock dividend the shareholder would receive $100, while if it paid the $1/share the year after the stock dividend the shareholder would receive $105. The company could have achieved the same thing by paying total dividends of $1.05/share, which is what the last phrase of the last quoted paragraph is saying. Here's an Investopedia page on dividend rate. Also, what you're calling \\\"\\\"payout ratio\\\"\\\" is really \\\"\\\"dividend yield\\\"\\\". \\\"\\\"Payout ratio\\\"\\\" is how much of the company's net earnings are paid out in dividends. That's all in the US, I could see the terms being used differently outside the US.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"522040\",\n \"text\": \"\\\"The company was paying \\\"\\\"only\\\"\\\" $1 a share in dividends, compared to $10 a share in earnings. That is a so-called payout ratio of 10%, which is low. A more normal payout ratio would be 40%, something like $4 a share. If a $13 stock had a $4 dividend, the dividend yield would be about 30%, which would be \\\"\\\"too high,\\\"\\\" meaning that the price would go up to drive down the resulting yield. Even $1 a share on a $13 stock is a high dividend of about 7%, allowing for appreciation to say, the $20-$25 range. Graham was a great believer in the theory that management should pay out \\\"\\\"most\\\"\\\" of its earnings in dividends. He believed that by holding dividends so far below earnings, the company was either being \\\"\\\"stingy,\\\"\\\" or signalling that the $10 a share of earnings was unsustainable. Either of these would be bad for the stock. For instance, if $1 a share in dividends actually represented a 40% payout ratio, it would signal management's belief that they could normally earn only $2.50 a year instead of $10.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"61193\",\n \"text\": \"Do not confuse the DIV (%) value and the dividend yield. As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing. As the Investopedia page referenced above says: The payout ratio is calculated as follows: Annual Dividends per Share / Earnings per Share. which means that the dividends being paid out are more than the earnings of the company: In extreme cases, dividend payout ratios exceed 100%, meaning more dividends were paid out than there were profits that year. Significantly high ratios are unsustainable.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"14277\",\n \"text\": \"Best as i can tell, the simple answer is: the smartest approach to investing for dividends is to pick a company that is, has, and will continue to make a solid profits. there are lots of them out there. specifically, companies with no debt, a history of long-term and steady growth and a stable market share will, almost always recoup any drop in stock valuation due to a dividend payout...and usually in short order. this is why dividends were created...as a mechanism for distributing profits back to investor without diminishing thier stake in the company. the trick then, is to find such companies with the best ratio between stock price and dividend payout. and again, there are a lot of good options out there. All the trepidation is justified however, as many unscrupulous companies will try to pull investors in with high dividends as a means to simply generate capital. these companies have few of the quality attributes mentioned above. instead, High debt, fluctuating or negative profits, minimal market share or diminishing growth present a very risky long term play and will be avoided by this conservative investor.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"412657\",\n \"text\": \"Prices are adjusted for return and not payout. So if you take the ratio of the close price and the adjusted close price, it should remain constant. The idea behind a total return (back-)adjustment is to give you a feeling how much money you would have needed back then to reach the price today under the premise that all distributions (dividends, spin-offs, etc.) are reinvested instantly and that reinvestment doesn't cost anything.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"9354\",\n \"text\": \"How to find good divided stocks? Research and read. Google, Yahoo, and most likely your broker offer some sort of stock screener tool where you can look for stocks with given P/E ratios, dividend payouts, pricing, and any of a number of other filters. When you've found some that appeal to you, read what others are saying on stock talk websites like Vantagewire and Stockhouse. Read what each company is putting out as news and look at their quarterly reports. In Canada you can find a company's reports for free on Sedar. I'm afraid I don't know the U.S. equivalent. Reuters will be of help. Finding a good dividend-paying stock is the same as finding a good growth or value stock; research the company and the sector as if you were buying it to take the company over.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"315748\",\n \"text\": \"When dividend is announced the stock and option price may react to that news, but the actual payout of the dividend on the ex-dividend date is what you probably are referring to. The dividend payout affects the stock price on the ex-dividend date as the stock price will drop by the amount of paid out dividend (not taking into account other factors). This in turn drives the prices of all options. The amount of change in the option price for this event is not only dependent the dividend payout, but also on how far these are in our out of the money and what there time to expiration is. The price of a call option that is far out of the money would react less than the price of a put that would be far in the money. Therefore I would argue that these two will not necessarily offset each other.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"162916\",\n \"text\": \"In the absence of a country designation where the mutual fund is registered, the question cannot be fully answered. For US mutual funds, the N.A.V per share is calculated each day after the close of the stock exchanges and all purchase and redemption requests received that day are transacted at this share price. So, the price of the mutual fund shares for April 2016 is not enough information: you need to specify the date more accurately. Your calculation of what you get from the mutual fund is incorrect because in the US, declared mutual fund dividends are net of the expense ratio. If the declared dividend is US$ 0.0451 per share, you get a cash payout of US$ 0.0451 for each share that you own: the expense ratio has already been subtracted before the declared dividend is calculated. The N.A.V. price of the mutual fund also falls by the amount of the per-share dividend (assuming that the price of all the fund assets (e.g. shares of stocks, bonds etc) does not change that day). Thus. if you have opted to re-invest your dividend in the same fund, your holding has the same value as before, but you own more shares of the mutual fund (which have a lower price per share). For exchange-traded funds, the rules are slightly different. In other jurisdictions, the rules might be different too.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"134497\",\n \"text\": \"\\\"Both models understand that the value of a company is the sum total of all cashflows in the future, discounted back to the present. They vary in their definition of \\\"\\\"cash\\\"\\\". The Gordon Growth model uses dividends as a proxy for cashflow, under the assumption that this is the only true cash received by shareholders. (In theory, counting cash is meaningless if there's no eventual end-game where the accumulated cash is divvied up amongst the owners.) The Gordon model is best used to value companies that have an established, reliable dividend. The company should be stable, and the payout ratio high. GG will underestimate the value of firms that consistently maintain a low payout ratio, and instead accumulate cash. There are multiple DCF models. A firm valuation measures all cash available to both equity and debt holders. A traditional equity valuation measures all cash that can be claimed by shareholders. While the latter seems most intuitive and pertinent to a shareholder, the former is very good at showing what a company can do regardless of their choice of capital structure. A small add-on to a firm valuation is the concept of EVA, or economic value add, where the return on capital (all capital -- both debt and equity) is compared to the blended cost of capital. The DCF model is more flexible (optimistic?) than the Gordon in its approach to cash. The approach can be applied to many types of companies, at every stage in their maturity, even if they don't pay a dividend. A simplistic, or single-stage DCF is similar to the Gordon. The assumption is that the company is fully mature, growing at a rate perhaps just slightly above inflation, forever. For younger companies a multi-stage DCF can be employed, where you forecast fairly confident numbers for the next 3-5 years, then 3-5 years beyond that the forecast is less certain, but assumed to be slowing growth, and a generally maturing, stabilizing company. And then the steady-state stage is tacked on to the end. You'll want to check out Professor Aswath Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . He addresses all this and so much more, and has a big pile of spreadsheets freely downloadable to get you started. I also highly recommend his book \\\"\\\"Investment Valuation\\\"\\\". It's the bible on the topic.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"456373\",\n \"text\": \"\\\"Generally, a share of stock entitles the owner to all future per-share dividends paid by the company, plus a fraction of the company's assets net value in the event of liquidation. If one knew in advance the time and value of all such payouts, the value of the stock should equal the present cash value of that payout stream, which would in turn be the sum of the cash values of all the individual payouts. As time goes by, the present cash value of each upcoming payout will increase until such time as it is actually paid, whereupon it will cease to contribute to the stock's value. Because people are not clairvoyant, they generally don't know exactly what future payouts a stock is going to make. A sane price for a stock, however, may be assigned by estimating the present cash value of its future payments. If unfolding events would cause a reasonable person to revise estimates of future payments upward, the price of the stock should increase. If events cause estimates to be revised downward, the price should fall. In a sane marketplace, if the price of a stock is below people's estimates of its payouts' current cash value, people should buy the stock and push the price upward. If it is above people's estimates, they should sell the stock and push the price downward. Note that in a sane marketplace, rising prices are a red-flag indicator for people to stop buying. Unfortunately, sometimes bulls see a red flag as a signal to charge ahead. When that happens, prices may soar through the roof, but it's important to note that the value of the stock will still be the present cash value of its future payouts. If that value is $10/share, someone who buys a share for $50 basically gives the seller $40 that he was not entitled to, and which the buyer will never get back. The buyer might manage to convince someone else to pay him $60 for the share, but that simply means the new buyer is giving the the previous one $50 that he wasn't entitled to either. If the price falls back to $10, calling that fall a \\\"\\\"market correction\\\"\\\" wouldn't be a euphemism, but rather state a fact: the share was worth $10 before people sold it for crazy prices, and still worth $10 afterward. It was the market price that was in error. The important thing to focus on as a sane investor is what the stock is actually going to pay out in relation to what you put in. It's not necessary to look only at present price/earnings ratios, since some stocks may pay little or nothing today but pay handsomely next year. What's important, however, is that there be a reasonable likelihood that in the foreseeable future the stock will pay dividends sufficient to justify its cost.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"46818\",\n \"text\": \"Ponzi schemes (or pyramid schemes) are based on paying earlier investors from the money invested by the later ones. For Ponzi scheme, the idea is generally to distribute some relateviely high consistent dividend/payout based on the inflow of money from new investors. As long as new investors are coming, the scheme can be sustained for quite some time (see the Madoff's example that spanned over decades). In the mean time the scheme operator can take (some of) the investment money to himself (legally as fees and salary, illegally as embezzling). The scheme operator doesn't actually have to put in any money other than some organizational expenses. However, at some point the new investors' money won't be enough to pay all the existing investors (inevitably, sooner or later, since the dividend payout grows with each new investor and there are no infinite exponential amount of new investors to cover for it). That's when the $#!+ hits the fan and sons of the schemers start ending up hanging from the ceiling. Pyramid scheme is built on similar idea, but the dividend payout varies based on the level of the investor (i.e.: the investor gets paid based on how many new ones he brought in, and how many new ones rooted from them). Thus the incentive to bring new investors is directly shifted to the investors themselves. The schemers here are at the top and get the most payouts from all the rest of the participants. They themselves usually put no or very little investment. However, the end result is the same: couldn't possibly be enough investors to sustain this model forever, and it will inevitably fail at some point. When such a scheme fails - the paying fund ends up being bankrupt, either due to cashflow problems (not enough money in to pay money out) or because all the money dries out (usually - both). How to detect - if the reports are not falsified (which in most cases they are) you'll see clearly that there's no actual investment income in the cash-flow. But, the reports are usually falsified to conceal this exact fact. So, that's where the independent auditors and regulatory oversight come in handy. Generally, if an investment fund doesn't have a reputable independent auditor - stay away.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"579097\",\n \"text\": \"Having a very high payout ratio is fine if there aren't any sensible investments available for the company, and citi already had their payout ratio somewhere in the 80% range. The remaining excess is from them reducing the capital bed they were required to hold for the stress tests; cash that was essentially sitting around doing nothing. [WSJ link](https://www.wsj.com/articles/BT-CO-20170628-711143) for u/LupusSuperius\",\n \"title\": \"\"\n },\n {\n \"docid\": \"562238\",\n \"text\": \"The P/E ratio is a measure of historic (the previous financial year) earnings against the current share price. If the P/E is high, this means that the market perceives a big increase in future earnings per share. In other words, the perception is that this is a fast growing company. Higher earnings may also equate to big increases in dividends and rapid expansion. On the other hand, if the P/E is low, then there is a perception that either earnings per share are decreasing or that future growth in earnings is negligible. In other words, low P/E equates to a perception of low future growth and therefore low prospects for future payout increases - possibly even decreases. The market is (rightly) usually willing to pay a premium for fast growing companies.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"435722\",\n \"text\": \"what do you mean exactly? Do you have a future target price and projected future dividend payments and you want the present value (time discounted price) of those? Edit: The DCF formula is difficult to use for stocks because the future price is unknown. It is more applicable to fixed-income instruments like coupon bonds. You could use it but you need to predict / speculate a future price for the stock. You are better off using the standard stock analysis stuff: Learn Stock Basics - How To Read A Stock Table/Quote The P/E ratio and the Dividend yield are the two most important. The good P/E ratio for a mature company would be around 20. For smaller and growing companies, a higher P/E ratio is acceptable. The dividend yield is important because it tells you how much your shares grow even if the stock price stays unchanged for the year. HTH\",\n \"title\": \"\"\n },\n {\n \"docid\": \"120297\",\n \"text\": \"How do you find good quality dividend stocks? That is an easy one. Past performance has always been my key to this answer. also remember why you are investing in the first place. Do you want cash flow, security or capital growth. Also let's not forget... how much time do you want to devote to this venture. There is going to be a balance in your investing and your returns. More time in... the higher returns you get. As for finding good dividend stocks, look to the Dividend Aristocrats or the Dividend Contenders. These companies have consistently increased their payouts to their investors for years. There is a trading strategy that could escalate your returns. Dividend Capturing, simply put... You buy the stock before the ex-date and sell after date of record. Thus collecting a dividend and moving on to the next one. Warning: though this is a profitable strategy, it only works with certain stocks so do your research or find a good source.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"315345\",\n \"text\": \"The price of a share of a mutual fund is its Net Asset Value (nav). Before the payout of dividends and capital gain distribution, the fund was holding both stock shares and cash that resulted from dividends and capital gains. After the payout, a share only holds the stock. Therefore once the cash is paid out the NAV must drop by the same amount as was paid out per share. Thus of course assumes no other activity or valuation changes of the underlying assets. Regular market activity will obscure what the payout does to the NAV.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"247005\",\n \"text\": \"I would say that the answer is yes. Investors may move on purchasing a stock as a result of news that a stock is set to pay out their dividend. It would be interesting to analyze the trend based on a company's dividend payouts over 10 or so years to see what/how this impacts the market value of a given company.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"487074\",\n \"text\": \"Ya, that's a lot of data - especially considering your relative lack of experience and the likely fact that you have no idea what to do with what you're given. How do you even know you need minute or tick-based bid-ask data? You can get a lot more than OHLC/V/Split/Dividend. You can get: * Book Value; * Dividend information (Amount, yield, ex date, pay date); * EBITDA; * EPS (current AND estimates); * Price/sales ratio; * Price/book value; * Price/earnings ratio; * PEG ratio; * Short ratio; * Market cap. Among other things, all for free.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"72189\",\n \"text\": \"Why do people talk about stock that pay high dividends? Traditionally people who buy dividend stocks are looking for income from their investments. Most dividend stock companies pay out dividends every quarter ( every 90 days). If set up properly an investor can receive a dividend check every month, every week or as often as they have enough money to stagger the ex-dates. There is a difference in high $$ amount of the dividend and the yield. A $1/share dividend payout may sound good up front, but... how much is that stock costing you? If the stock cost you $100/share, then you are getting 1% yield. If the stock cost you $10/share, you are getting 10% yield. There are a lot of factors that come into play when investing in dividend stocks for cash flow. Keep in mind why are you investing in the first place. Growth or cash flow. Arrange your investing around your major investment goals. Don't chase big dollar dividend checks, do your research and follow a proven investment plan to reach your goals safely.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"11032\",\n \"text\": \"\\\"Let me provide a general answer, that might be helpful to others, without addressing those specific stocks. Dividends are simply corporate payouts made to the shareholders of the company. A company often decides to pay dividends because they have excess cash on hand and choose to return it to shareholders by quarterly payouts instead of stock buy backs or using the money to invest in new projects. I'm not exactly sure what you mean by \\\"\\\"dividend yield traps.\\\"\\\" If a company has declared an dividend for the upcoming quarter they will almost always pay. There are exceptions, like what happened with BP, but these exceptions are rare. Just because a company promises to pay a dividend in the approaching quarter does not mean that it will continue to pay a dividend in the future. If the company continues to pay a dividend in the future, it may be at a (significantly) different amount. Some companies are structured where nearly all of there corporate profits flow through to shareholders via dividends. These companies may have \\\"\\\"unusually\\\"\\\" high dividends, but this is simply a result of the corporate structure. Let me provide a quick example: Certain ETFs that track bonds pay a dividend as a way to pass through interest payments from the underlying bonds back to the shareholder of the ETF. There is no company that will continue to pay their dividend at the present rate with 100% certainty. Even large companies like General Electric slashed its dividend during the most recent financial crisis. So, to evaluate whether a company will keep paying a dividend you should look at the following: Update: In regards to one the first stock you mentioned, this sentence from the companies of Yahoo! finance explains the \\\"\\\"unusually\\\"\\\" dividend: The company has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its share holders.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"192421\",\n \"text\": \"\\\"The answer is Discounted Cash Flows. Companies that don't pay dividends are, ostensibly reinvesting their cash at returns higher than shareholders could obtain elsewhere. They are reinvesting in productive capacity with the aim of using this greater productive capacity to generate even more cash in the future. This isn't just true for companies, but for almost any cash-generating project. With a project you can purchase some type of productive assets, you may perform some kind of transformation on the good (or not), with the intent of selling a product, service, or in fact the productive mechanism you have built, this productive mechanism is typically called a \\\"\\\"company\\\"\\\". What is the value of such a productive mechanism? Yes, it's capacity to continue producing cash into the future. Under literally any scenario, discounted cash flow is how cash flows at distinct intervals are valued. A company that does not pay dividends now is capable of paying them in the future. Berkshire Hathaway does not pay a dividend currently, but it's cash flows have been reinvested over the years such that it's current cash paying capacity has multiplied many thousands of times over the decades. This is why companies that have never paid dividends trade at higher prices. Microsoft did not pay dividends for many years because the cash was better used developing the company to pay cash flows to investors in later years. A companies value is the sum of it's risk adjusted cash flows in the future, even when it has never paid shareholders a dime. If you had a piece of paper that obligated an entity (such as the government) to absolutely pay you $1,000 20 years from now, this $1,000 cash flows present value could be estimated using Discounted Cash Flow. It might be around $400, for example. But let's say you want to trade this promise to pay before the 20 years is up. Would it be worth anything? Of course it would. It would in fact typically go up in value (barring heavy inflation) until it was worth very close to $1,000 moments before it's value is redeemed. Imagine that this \\\"\\\"promise to pay\\\"\\\" is much like a non-dividend paying stock. Throughout its life it has never paid anyone anything, but over the years it's value goes up. It is because the discounted cash flow of the $1,000 payout can be estimated at almost anytime prior to it's payout.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"564007\",\n \"text\": \"Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/23ab8a02-5787-11e7-80b6-9bfa4c1f83d2?mhq5j=e1 By continuing to use this site you consent to the use of cookies on your device as described in our cookie policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. Dismiss cookie message Accessibility helpSkip to navigationSkip to contentSkip to footer Financial Times MYFT HOME WORLD UK COMPANIES MARKETS OPINION WORK & CAREERS LIFE & ARTS Portfolio My Account HOME WORLD UK COMPANIES MARKETS OPINION WORK & CAREERS LIFE & ARTS MYFT Bank stress tests Add to myFT US banks pass first round of annual stress tests Clean bill of health from Federal Reserve opens door to increased shareholder payouts Read next Week in Review Week in Review, July 1 © AFP Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email4 Save JUNE 22, 2017 by: Alistair Gray and Ben McLannahan in New York and Barney Jopson in Washington US banks have big enough capital buffers to keep trading through an economic meltdown, regulators said on Thursday, in a finding that improves their chances of boosting payouts to shareholders. In the first round of this year’s stress tests, the Federal Reserve probed how 34 banks would fare in a financial and economic slump in which the unemployment rate doubles and the stock market loses half its value. The central bank calculated that the banking sector would endure $493bn in losses in the simulated downturn. Yet officials concluded that the banks would emerge from the crash “well capitalised”, with cushions of shareholder funding still above the Fed’s minimum required levels. The largely upbeat results augur well for US banks as the Fed prepares to unveil the results of the tests’ second round next week, when investors will learn how much capital they can return through dividends and share buybacks. However, the figures released on Thursday do not foretell what the Fed will say about payouts, not least because regulators can approve or block US banks’ capital plans on qualitative as well as quantitative grounds. Lex Bank stress tests: chilled The once-vital check on the industry’s health is outliving its usefulness UBS analysts estimate that the four biggest by assets — JPMorgan, Bank of America, Citigroup and Wells Fargo — will be able to return a net $59.8bn this year, rising to $72.3bn in 2018. Citi and Morgan Stanley could be among about a dozen banks that will make requests to return more than 100 per cent of their annual earnings to shareholders, according to Goldman Sachs analysts. Despite the positive stress test results, not all investors would be comfortable with such a bonanza. Bill Hines, a fixed-income investment manager at Aberdeen Asset Management in Philadelphia, said the prospect of payouts in excess of profits “does scare us a little bit”. “If the safety blanket is pulled away . . . that may come to the detriment of capital and safety.” Across-the-board passes for the stress-test are “a good thing,” he said, as it shows that banks have rebuilt capital levels substantially since the crisis. “But from a creditor’s standpoint you don’t want to see all the profits go out the door.” While banks have already told the Fed what they propose to do on dividends and buybacks, they are now able to make more conservative payout plans if, based on the first-round results, they think it will reject them in the second round. Related article Regulators back Trump on looser financial rules Officials endorse Volcker rule revamp and bank relief from burden of ‘stress tests’ The regulator’s simulated downturn lasts for nine quarters. Banks’ overall loan losses and declines in capital under the worst crisis scenario were smaller than in last year’s stress tests, Fed officials said. Still, the test found that some banks would come close to breaching regulatory minimums during the meltdown on some metrics. For instance, Morgan Stanley’s “supplementary leverage ratio” — a new measure of financial strength that takes effect in 2018 — would drop as low as 3.8 per cent compared with a required level of 3 per cent. The results also drew attention to banks’ exposure to credit card lending. The Fed found banks would suffer the biggest losses in their card portfolios in the hypothetical crisis. Fed officials said that partly reflected a rapid expansion in the size of banks’ credit card assets and rising delinquency rates in the real world. Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web. Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email4 Save Latest on Bank stress tests Week in Review Week in Review, July 1 Fed stress tests give $1.6bn boost to Buffett Fed gives nod to ‘payout party time’ for banks Lex US banks: feeling special Premium Stress tests clear big US banks for $100bn payout Read latest Week in Review Week in Review, July 1 Latest on Bank stress tests Add to myFT Week in Review Week in Review, July 1 US banks pass test; Google, Takata, Fox and M&A also in the news Banks Fed stress tests give $1.6bn boost to Buffett Investor is one of the largest holders of US bank stocks and will reap big dividends Analysis Bank stress tests Fed gives nod to ‘payout party time’ for banks Buybacks and dividends set to soar after industry passes latest stress test Latest in Banks Add to myFT Central Banks BoE successfully tests new payment method ‘Interledger’ programme synchronises transactions between two central banks 3 HOURS AGO US banks US consumers set to be given power to sue banks Financial institutions express fury at CFPB proposal that could spur class actions UK banks BoE warns UK banks on accounting practices PRA chief Sam Woods says lenders should ‘expect questions’ on balance sheet trickery Follow the topics mentioned in this article JPMorgan Chase & Co. Add to myFT Companies Add to myFT Banks Add to myFT Wells Fargo Add to myFT Citigroup, Inc. Add to myFT Follow the authors of this article Barney Jopson Add to myFT Alistair Gray Add to myFT Take a tour of myFT Support View Site Tips Feedback Help Centre About Us Accessibility Legal & Privacy Terms & Conditions Privacy Cookies Copyright Slavery Statement Services FT Live Share News Tips Securely Individual Subscriptions Group Subscriptions Republishing Contracts & Tenders Analysts Research Executive Job Search Advertise with the FT Follow the FT on Twitter Ebooks UK Secondary Schools Tools Portfolio Today's Newspaper (ePaper) Alerts Hub Lexicon MBA Rankings Economic Calendar News feed Newsletters Currency Converter More from the FT Group Markets data delayed by at least 15 minutes. © THE FINANCIAL TIMES LTD 2017. FT and ‘Financial Times’ are trademarks of The Financial Times Ltd. The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice. CloseFinancial Times UK Edition Switch to International Edition Top sections Home World Show more World links UK Show more UK links Companies Show more Companies links Markets Show more Markets links Opinion Show more Opinion links Work & Careers Show more Work & Careers links Life & Arts Show more Life & Arts links Personal Finance Show more Personal Finance links Science Special Reports FT recommends Lex Alphaville EM Squared Lunch with the FT Video Podcasts Blogs News feed Newsletters myFT Portfolio Today's Newspaper (ePaper) Crossword Help Centre My Account Sign Out\",\n \"title\": \"\"\n },\n {\n \"docid\": \"235763\",\n \"text\": \"**Human sex ratio** In anthropology and demography, the human sex ratio is the ratio of males to females in a population. More data are available for humans than for any other species, and the human sex ratio is more studied than that of any other species, but interpreting these statistics can be difficult. Like most sexual species, the sex ratio in humans is approximately 1:1. Due to higher female fetal mortality, the sex ratio at birth worldwide is commonly thought to be 107 boys to 100 girls, although this value is subject to debate in the scientific community. *** ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/business/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index) ^| [^Source](https://github.com/kittenswolf/WikiTextBot) ^] ^Downvote ^to ^remove ^| ^v0.27\",\n \"title\": \"\"\n },\n {\n \"docid\": \"453582\",\n \"text\": \"\\\"Investopedia explains how a stock split impacts the stock's options: Each option contract is typically in control of 100 shares of an underlying security at a predetermined strike price. To find the new coverage of the option, take the split ratio and multiply by the old coverage (normally 100 shares). To find the new strike price, take the old strike price and divide by the split ratio. Say, for example, you own a call for 100 shares of XYZ with a strike price of $75. Now, if XYZ had a stock split of 2 for 1, then the option would now be for 200 shares with a strike price of $37.50. If, on the other hand, the stock split was 3 for 2, then the option would be for 150 shares with a strike price of $50. So, yes, a 2 for 1 stock split would halve the option strike prices. Also, in case the Investopedia article isn't clear, after a split the options still control 100 shares per contract. Regarding how a dividend affects option prices, I found an article with a good explanation: As mentioned above, dividends payment could reduce the price of a stock due to reduction of the company's assets. It becomes intuitive to know that if a stock is expected to go down, its call options will drop in extrinsic value while its put options will gain in extrinsic value before it happens. Indeed, dividends deflate the extrinsic value of call options and inflate the extrinsic value of put options weeks or even months before an expected dividend payment. Extrinsic value of Call Options are deflated due to dividends not only because of an expected reduction in the price of the stock but also due to the fact that call options buyers do not get paid the dividends that the stock buyers do. This makes call options of dividend paying stocks less attractive to own than the stocks itself, thereby depressing its extrinsic value. How much the value of call options drop due to dividends is really a function of its moneyness. In the money call options with high delta would be expected to drop the most on ex-date while out of the money call options with lower delta would be least affected. If a stock is expected to drop by a certain amount, that drop would already have been priced into the extrinsic value of its put options way beforehand. This is what happens to put options of dividend paying stocks. This effect is again a function of options moneyness but this time, in the money put options raise in extrinsic value more than out of the money put options. This is because in the money put options with delta of close to -1 would gain almost dollar or dollar on the drop of a stock. As such, in the money put options would rise in extrinsic value almost as much as the dividend rate itself while out of the money put options may not experience any changes since the dividend effect may not be strong enough to bring the stock down to take those out of the money put options in the money. So, no, a dividend of $1 will not necessarily decrease an option's price by $1 on the ex-dividend date. It depends on whether it's a call or put option, and whether the option is \\\"\\\"in the money\\\"\\\" or \\\"\\\"out of the money\\\"\\\" and by how much.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"247895\",\n \"text\": \"The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any. Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value. While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe. Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"342461\",\n \"text\": \"Would if I had the capital it is an intensive and low margin area, it requires serious creativity and drive to do it and often needs at least one person per store that is seriously locally invested. Not sure where anger comes from, just stating my opnion as a 20 year professional consultant who has worked at the executive level for BB, Target and GSK and a lifetime of being a customer. Sorry my opnion is both appreny offensive and entirely incorrect. I honestly don't read much of the retail distribution industry trade publications. I just work here. EDIT: It's important to note that big box reailers and how they treated customers was already on the downslide and had been for nearly a decade prior to Amazon showing up. As such honestly very hard for one to make a direct comparision as the retailers had alredy given up much of thier competitive advantge prior to Amazon coming on the scene.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"433905\",\n \"text\": \"\\\"Yes, there are non-stock analogs to the Price/Earnings ratio. Rental properties have a Price/Rent ratio, which is analogous to stocks' Price/Revenue ratio. With rental properties, the \\\"\\\"Cap Rate\\\"\\\" is analogous to the inverse of the Price/Earnings ratio of a company that has no long-term debt. Bonds have an interest rate. Depending on whether you care about current dividends or potential income, the interest rate is analogous to either a stock's dividend rate or the inverse of the Price/Earnings ratio.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"51205\",\n \"text\": \"Here's what Investopedia says about payouts for ex-dividend stocks: A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend. Read more: Ex-Dividend Definition | Investopedia http://www.investopedia.com/terms/e/ex-dividend.asp#ixzz4Nl4J3s4k I hope this helps. Good luck!\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":91,"cells":{"query_id":{"kind":"string","value":"7501"},"query":{"kind":"string","value":"Risk and reward of a synthetic option position"},"positive_passages":{"kind":"list like","value":[{"docid":"517873","text":"You sold a call, and have a risk if the stock rises. You bought a put and gain when the stock drops. You, sir, have a synthetic short position. It's Case 3 from your linked example: Suppose you own Long Stock and the company is going to report earnings but you’re going on vacation. How can you hedge your position without selling your stock? You can short the stock synthetically with options! Short Stock = Short Call + Long Put They conclude with the net zero remark, because the premise was an existing long position. A long plus this synthetic short results in a neutral set of positions (and the author's ability to go on vacation not concerned about any movement in the stock.)","title":""},{"docid":"65134","text":"But if underlying goes to 103 at expiration, both the call and the put expire worthless If the stock closes at 103 on expiration, the 105 put is worth $2, not worthless.","title":""}],"string":"[\n {\n \"docid\": \"517873\",\n \"text\": \"You sold a call, and have a risk if the stock rises. You bought a put and gain when the stock drops. You, sir, have a synthetic short position. It's Case 3 from your linked example: Suppose you own Long Stock and the company is going to report earnings but you’re going on vacation. How can you hedge your position without selling your stock? You can short the stock synthetically with options! Short Stock = Short Call + Long Put They conclude with the net zero remark, because the premise was an existing long position. A long plus this synthetic short results in a neutral set of positions (and the author's ability to go on vacation not concerned about any movement in the stock.)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"65134\",\n \"text\": \"But if underlying goes to 103 at expiration, both the call and the put expire worthless If the stock closes at 103 on expiration, the 105 put is worth $2, not worthless.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"374797","text":"\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the \"\"catch\"\"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the \"\"downside risk\"\" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about \"\"vanilla\"\" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade.\"","title":""},{"docid":"232880","text":"A long put - you have a small initial cost (the option premium) but profit as the stock goes down. You have no additional risk if the shock rises, even a lot. Short a stock - you gain if the stock drops, but have unlimited risk if it rises, the call mitigates this, by capping that rising stock risk. The profit/loss graph looks similar to the long put when you hold both the short position and the long call. You might consider producing a graph or spreadsheet to compare positions. You can easily sketch put, call, long stock, short stock, and study how combinations of positions can synthetically look like other positions. Often, when a stock has no shares to short, the synthetic short can help you put your stock position in place.","title":""},{"docid":"242663","text":"\"Some thoughts on your questions in order, Duration: You might want to look at the longest-dated option (often a \"\"LEAP\"\"), for a couple reasons. One is that transaction costs (spread plus commission, especially spread) are killer on options, so a longer option means fewer transactions, since you don't have to keep rolling the option. Two is that any fundamentals-based views on stocks might tend to require 3-5 years to (relatively) reliably work out, so if you're a fundamental investor, a 3-6 month option isn't great. Over 3-6 months, momentum, short-term news, short squeezes, etc. can often dominate fundamentals in determining the price. One exception is if you just want to hedge a short-term event, such as a pending announcement on drug approval or something, and then you would buy the shortest option that still expires after the event; but options are usually super-expensive when they span an event like this. Strike: Strike price on a long option can be thought of as a tradeoff between the max loss and minimizing \"\"insurance costs.\"\" That is, if you buy a deeply in-the-money put or call, the time value will be minimal and thus you aren't paying so much for \"\"insurance,\"\" but you may have 1/3 or 1/2 of the value of the underlying tied up in the option and subject to loss. If you buy a put or call \"\"at the money,\"\" then you might have only say 10% of the value of the underlying tied up in the option and subject to loss, but almost the whole 10% may be time value (insurance cost), so you are losing 10% if the underlying stock price stays flat. I think of the deep in-the-money options as similar to buying stocks on margin (but the \"\"implied\"\" interest costs may be less than consumer margin borrowing rates, and for long options you can't get a margin call). The at-the-money options are more like buying insurance, and it's expensive. The commissions and spreads add significant cost, on top of the natural time value cost of the option. The annual costs would generally exceed the long-run average return on a diversified stock fund, which is daunting. Undervalued/overvalued options, pt. 1: First thing is to be sure the options prices on a given underlying make sense at all; there are things that \"\"should\"\" hold, for example a synthetic long or short should match up to an actual long or short. These kinds of rules can break, for example on LinkedIn (LNKD) after its IPO, when shorting was not permitted, the synthetic long was quite a bit cheaper than a real long. Usually though this happens because the arbitrage is not practical. For example on LNKD, the shares to short weren't really available, so people doing synthetic shorts with options were driving up the price of the synthetic short and down the price of the synthetic long. If you did actually want to be long the stock, then the synthetic long was a great deal. However, a riskless arbitrage (buy synthetic long, short the stock) was not possible, and that's why the prices were messed up. Another basic relationship that should hold is put-call parity: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity Undervalued/overvalued options, pt. 2: Assuming the relationship to the underlying is sane (synthetic positions equivalent to actual positions) then the valuation of the option could focus on volatility. That is, the time value of the option implies the stock will move a certain amount. If the time value is high and you think the stock won't move much, you might short the option, while if the time value is low and you think the stock will move a lot, you might buy the option. You can get implied volatility from your broker perhaps, or Morningstar.com for example has a bunch of data on option prices and the implied components of the price model. I don't know how useful this really is though. The spreads on options are so wide that making money on predicting volatility better than the market is pretty darn hard. That is, the spread probably exceeds the amount of the mispricing. The price of the underlying is more important to the value of an option than the assumed volatility. How many contracts: Each contract is 100 shares, so you just match that up. If you want to hedge 100 shares, buy one contract. To get the notional value of the underlying multiply by 100. So say you buy a call for $30, and the stock is trading at $100, then you have a call on 100 shares which are currently priced at $10,000 and the option will cost $30*100=3,000. You are leveraged about 3 to 1. (This points to an issue with options for individual investors, which is that one contract is a pretty large notional value relative to most portfolios.)\"","title":""},{"docid":"118633","text":"\"There are three ways to do this. So far the answers posted have only mentioned two. The three ways are: Selling short means that you borrow stock from your broker and sell it with the intent of buying it back later to repay the loan. As others have noted, this has unlimited potential losses and limited potential gains. Your profit or loss will go $1:$1 with the movement of the price of the stock. Buying a put option gives you the right to sell the stock at a later date on a price that you choose now. You pay a premium to have this right, and if the stock moves against you, you won't exercise your option and will lose the premium. Options move non-linearly with the price of the stock, especially when the expiration is far in the future. They probably are not for a beginner, although they can be powerful if used properly. The third option is a synthetic short position. You form this by simultaneously buying a put option and selling short a call option, both at the same strike price. This has a risk profile that is very much like the selling the stock short, but you can accomplish it entirely with stock options. Because you're both buying an selling, in theory you might even collect a small net premium when you open. You might ask why you'd do this given that you could just sell the stock short, which certainly seems simpler. One reason is that it is not always possible to sell the stock short. Recall that you have to borrow shares from your broker to sell short. When many people want to short the stock, brokers will run out of shares to loan. The stock is then said to be \"\"hard to borrow,\"\" which effectively prevents further short selling of the stock. In this case the synthetic short is still potentially possible.\"","title":""},{"docid":"531117","text":"\"First, your professor should learn proper grammar. Should be, \"\"Why **do**....\"\" Second, it looks like you're dealing with synthetic securities. You can create a synthetic T-Bill by doing a combination of long/short calls/puts. But ignore all that. Just think about this without the technical jargon. We know that the risk free rate is typically what T-Bills are yielding right? And we know that since options are inherently more risky than US government debt, investors will demand a higher interest rate to compensate them for the risk. So, as the risk free rate increases, the value of a call will move the same direction, otherwise investors would stop dealing with call options and would instead buy safer, less-risky \"\"riskless\"\" investments. It's not really an options question, just one of basic finance, risk, understanding of interest rates, etc.\"","title":""},{"docid":"550643","text":"If you can afford the cost and risk of 100 shares of stock, then just sell a put option. If you can only afford a few shares, you can still use the information the options market is trying to give you -- see below. A standing limit order to buy a stock is essentially a synthetic short put option position. [1] So deciding on a stock limit order price is the same as valuing an option on that stock. Options (and standing limit orders) are hard to value, and the generally accepted math for doing so -- the Black-Scholes-Merton framework -- is also generally accepted to be wrong, because of black swans. So rather than calculate a stock buy limit price yourself, it's simpler to just sell a put at the put's own midpoint price, accepting the market's best estimate. Options market makers' whole job (and the purpose of the open market) is price discovery, so it's easier to let them fight it out over what price options should really be trading at. The result of that fight is valuable information -- use it. Sell a 1-month ATM put option every month until you get exercised, after which time you'll own 100 shares of stock, purchased at: This will typically give you a much better cost basis (several dollars better) versus buying the stock at spot, and it offloads the valuation math onto the options market. Meanwhile you get to keep the cash from the options premiums as well. Disclaimer: Markets do make mistakes. You will lose money when the stock drops more than the option market's own estimate. If you can't afford 100 shares, or for some reason still want to be in the business of creating synthetic options from pure stock limit orders, then you could maybe play around with setting your stock purchase bid price to (approximately): See your statistics book for how to set ndev -- 1 standard deviation gives you a 30% chance of a fill, 2 gives you a 5% chance, etc. Disclaimer: The above math probably has mistakes; do your own work. It's somewhat invalid anyway, because stock prices don't follow a normal curve, so standard deviations don't really mean a whole lot. This is where market makers earn their keep (or not). If you still want to create synthetic options using stock limit orders, you might be able to get the options market to do more of the math for you. Try setting your stock limit order bid equal to something like this: Where put_strike is the strike price of a put option for the equity you're trading. Which option expiration and strike you use for put_strike depends on your desired time horizon and desired fill probability. To get probability, you can look at the delta for a given option. The relationship between option delta and equity limit order probability of fill is approximately: Disclaimer: There may be math errors here. Again, do your own work. Also, while this method assumes option markets provide good estimates, see above disclaimer about the markets making mistakes.","title":""},{"docid":"229242","text":"A synthetic position mimics the payout of a financial instrument. Synthetics are attractive when the liquidity/availability of an instrument is low or there is a mismatch in fees or values of the synthetic's components which could lead to arbitrage. In speculative trades, the seller of a CDS takes a positive view of the credit worthiness of the underlying security. The buyer of a CDS has a negative view of the credit of the underlying. So in this example, there is a limit on buying or shorting corporate bonds by how many bonds the company has issued, and the value you have to invest in the bond itself, so if you wanted heavy exposure to this company's credit; you would be limited by how many you could buy. Whereas with a CDS you can mimic the performance with a synthetic position; and as long as there is someone to take the other side of it, you can buy or sell however many you want and have more exposure than the debt the company issued would allow on its own. Hope that makes some sense.","title":""},{"docid":"171784","text":"\"Depends on how far down the market is heading, how certain you are that it is going that way, when you think it will fall, and how risk-averse you are. By \"\"better\"\" I will assume you are trying to make the most money with this information that you can given your available capital. If you are very certain, the way that makes the most money for the least investment from the options you provided is a put. If you can borrow some money to buy even more puts, you will make even more. Use your knowledge of how far and when the market will fall to determine which put is optimal at today's prices. But remember that if the market stays flat or goes up you lose everything you put in and may owe extra to your creditor. A short position in a futures contract is also an easy way to get extreme leverage. The extremity of the leverage will depend on how much margin is required. Futures trade in large denominations, so think about how much you are able to put to risk. The inverse ETFs are less risky and offer less reward than the derivative contracts above. The levered one has twice the risk and something like twice the reward. You can buy those without a margin account in a regular cash brokerage, so they are easier in that respect and the transactions cost will likely be lower. Directly short selling an ETF or stock is another option that is reasonably accessible and only moderately risky. On par with the inverse ETFs.\"","title":""},{"docid":"320101","text":"\"The two dimensions are to open the trade (creating a position) and to buy or sell (becoming long or short the option). If you already own an option, you bought it to open and then you would sell it to close. If you don't own an option, you can either buy it to open, or sell it (short it) to open. If you are already short an option, you can buy it back to close. If you sell to open covered, the point is you're creating a \"\"covered call\"\" which means you own the stock, and then sell a call. Since you own the stock, the covered call has a lot of the risk of loss removed, though it also subtracts much of the reward possible from your stock.\"","title":""},{"docid":"415705","text":"\"Firstly \"\"Most option traders don't want to actually buy or sell the underlying stock.\"\" THIS IS COMPLETELY UTTERLY FALSE Perhaps the problem is that you are only familiar with the BUY side of options trading. On the sell side of options trading, an options desk engages in DELTA HEDGING. When we sell an option to a client. We will also buy an appropriate amount of underlying to match the delta position of the option. During the life time of the option. We will readjust our hedge position whenever the delta changes (those who follow Black Scholes will know that normally that comes from (underlying) price changes). However, we lose money on each underlying change (we have to cross the bid-ask spread for each trade). That is why we lose money when there is volatility. That is why we are said to be \"\"short VEGA\"\" or \"\"short volatility\"\". So one way to think about \"\"buying\"\" options, is that you are paying someone to execute a specific trading strategy. In general, those who sell options, are also happy to buy options back (at a discount of course, so we make a profit). But when doing so, we need to unroll our hedging position, and that again incurs a cost (to us, the bank). Finally. Since this is \"\"money\"\" stackexchange rather than finance. You are most likely referring to \"\"warrants\"\" rather than \"\"options\"\", which are listed on stock exchanges. The exchange in most regions give us very specific and restrictive regulations that we must abide by. One very common one is that we MUST always list a price which we are willing to buy the warrants back at (which may not be an unreasonable spread from the sell price). Since an Option is a synthetically created investment instrument, when we buy back the Option from the investor, we simply unwind the underlying hedging positions that we booked to synthesize the Options with. Source: I've worked 2 years on a warrant desk, as a desk developer.\"","title":""},{"docid":"557630","text":"It doesn't matter. A convert can be recreated by using other instruments, so it can never be removed from the market. Kind if like an Asian market which tried to remove options or futures or some exotic derivative. Investors just created synthetic positions with the same properties.","title":""},{"docid":"7743","text":"\"So, yes, you may be having the inevitable epiphany where you realize that options can synthetically replicate the same risk profile of owning stock outright. Allowing you to manipulate risk and circumvent margin requirement differences amongst asset classes. Naked short puts are analogous to a covered call, but may have different (lesser) margin requirements. This allows you to increase your risk, and the broker has to account for that. The broker's clientele might not understand all the risks associated with that much leverage and so may simply consider it risky \"\"for your protection\"\"\"","title":""},{"docid":"214003","text":"\"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.\"","title":""},{"docid":"594226","text":"Edit: This is paywalled so I pasted it here. LONDON—The synthetic CDO, a villain of the global financial crisis, is back. A decade ago, investors’ bad bets on collateralized debt obligations helped fuel the crisis. Billed as safe, they turned out to be anything but. Now, more investors are returning to CDOs—and so are concerns that excess is seeping into the aging bull market. In the U.S., the CDO market sunk steadily in the years after the financial crisis but has been fairly flat since 2014. In Europe, the total size of market is now rising again—up 5.6% annually in the first quarter of the year and 14.4% in the last quarter of 2016, according to the Securities Industry and Financial Markets Association. Collateralized debt obligations package a bunch of assets, such as mortgage or corporate loans, into a security that is chopped up into pieces and sold to investors. The assets inside a synthetic CDO aren’t physical debt securities but rather derivatives, which in turn reference other investments such as loans or corporate debt. During the financial crisis, synthetic CDOs became a symbol of the financial excesses of the era. Labelled an “atomic bomb” in the movie “The Big Short,” they ultimately were the vehicle that spread the risks from the mortgage market throughout the financial system. Synthetic CDOs crammed with exposure to subprime mortgages—or even other CDOs—are long gone. The ones that remain contain credit-default swaps referencing a range of European and U.S. companies, effectively allowing investors to bet whether corporate defaults will pick up. Desperate for something that pays better than basic government bonds, insurance companies, asset managers and high-net worth investors are scooping up investments like synthetic CDOs, bankers say, which had largely become the preserve of hedge funds after 2008. Investment banks, which create and sell CDOs, are happy to oblige. Placid markets have made trading revenue weak this year, and such structured products are an increasingly important business line. Synthetic CDOs got “bad press,” says Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions. But “that market has never ceased to fully function,” he added. These days, Mr. Champion still trades synthetic CDOs, receiving a stream of income for effectively insuring against a sharp rise in European corporate defaults. Many investors, though, still view the products as unnecessarily complex and are concerned they may be hard to offload when markets get choppy—as they did in the last crisis. From the DepthsThe amount outstanding of European collateralized debt obligations has been growing again after years of shrinking. “We don’t see that demand from our clients and we wouldn’t recommend it,” said Markus Stadlmann, chief investment officer at Lloyds Private Banking, citing concerns over the products’ lack of transparency and lack of liquidity, meaning it could be hard to offload a position when needed. The return of synthetic CDOs could present other risks. Even if banks are currently less willing to loan money to help clients juice returns, credit default swaps can be very leveraged, potentially allowing investors to make outsize bets. Structured products accounted for nearly all the $2.6 billion year-on-year growth in trading-division revenue at the top 12 global investment banks in the first quarter, according to Amrit Shahani, research director at financial consultancy Coalition. “There has been an uptick in interest in any kind of yield-enhancement structure,” said Kokou Agbo-Bloua, a managing director in Société Générale SA’s investment bank. The fastest growth this year has come in credit—the epicenter of the 2007-08 crisis. The top global 12 investment banks had around $1.5 billion in revenue in structured credit in the first quarter, according to Coalition, more than doubling since the first quarter of 2016. Structured equities are largest overall, a business dominated by sales of derivatives linked to moves in stock prices, with revenue of $5 billion in the first quarter. “The low-yield environment hurts,” said Lionel Pernias, a credit-fund manager at AXA Investment Managers. “So there are a lot of asset owners looking at structured credit.” These days, the typical synthetic CDO involves a portfolio of credit-default swaps on a range of companies. The portfolio is sliced into tranches, and investors receive payouts based on the performance of the swaps. Those investors owning lower tranches tend to get paid more but are subject to higher losses if the swaps sour. Structured GrowthBank revenues from structured products such as collateralized debt obligations are rising faster than conventionaltrading of stocks, bonds and currencies. For instance, an investor can sell insurance against a pick-up in defaults in the lowest—or “equity”—tranche of the iTraxx Europe index, a widely traded CDS benchmark that tracks European investment-grade companies. In return, the investor will receive regular payments, but those will shrink with every company default and stop altogether once 3% of the portfolio has been wiped out through defaults. During the financial crisis, synthetic CDOs based on standardized indexes like iTraxx Europe suffered losses as traders expected defaults to pick up. Investors who held on, though, have since done “great,” says Mr. Champion. Investors who agreed to insure against a rise in defaults for 10 years on the equity tranche of the iTraxx Europe index in March 2008 have made roughly 10% a year, according to an analysis of data from IHS Markit . That’s despite defaults from two companies in the index: Italian lender Monte dei Paschi di Siena and Portugal Telecom International Finance BV. In contrast, investors who sold insurance on tailored CDOs packed with riskier credits—such as Icelandic banks or monoline insurers—would have been on the hook for losses. Synthetic CDOs have evolved since the crisis, bankers say. For instance, most are shorter-dated, running up to around two to three years rather than seven to 10 years. Some banks will only slice and dice standardized CDS indexes that trade frequently in the market rather than craft tailored baskets of credits. There are also fewer banks involved in arranging these trades. Those active include BNP Paribas SA, Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Société Générale. Postcrisis regulations have forced banks to set aside more capital against these transactions and use less leverage. That has encouraged banks to parcel out the risk to clients rather than keeping it on their own books. “There is a lot more regulation and scrutiny and a lot less leverage,” said Mr. Agbo-Bloua. Mr. Champion says he only trades tranches based on standardized CDS indexes, which he says are easier to buy and sell than more tailored products. Currently, he sees value in selling default protection on super-senior tranches. Mr. Champion said he has to lay down only around $1 million in upfront margin costs on a $100 million trade of this kind. “The cost of leverage in the derivatives space is very low,” he said. Any expectations of default rates picking up could inflict losses on synthetic CDOs, though at the moment analysts forecast they should decline. Still, the memory of how the market behaved in the immediate aftermath of the financial crisis is likely to keep many investors on the sidelines. “If you’re the person responsible for buying the synthetic CDO that suddenly goes wrong, your career risk is bigger than if you’d bought a plain vanilla bond that goes wrong. It has a bad name,” said Ulf Erlandsson, a portfolio manager at start-up hedge fund Glacier Impact, who until recently oversaw credit for one of Sweden’s public pension funds.","title":""},{"docid":"251003","text":"\"Mathematically it seems like the expected rate of return, whatever that might be, is the same for both. An aggressive strategy is higher risk and higher reward. A conservative strategy is lower risk and lower reward. That is not true. Roughly, the mathematical analogue of \"\"higher risk and higher reward\"\" is \"\"higher standard deviation and higher mean\"\". In other words, the aggressive strategy does have a higher expected rate of return (higher mean). Its disadvantage is that it has a higher likelihood of incurring intermediate losses (and/or higher magnitude of intermediate losses) on the way. This is classically illustrated with the following chart - from Vanguard. You can see that the average return is greater the riskier the portfolio (i.e., the more allocated to stocks relative to bonds), but this higher average return comes at the price of a greater range of possible returns. With an aggressive portfolio, you take a greater risk of losses at any given moment for a greater chance of gains over a long period. Given this, it should be obvious why the advice is to be aggressive early on. Early in life, you don't care about whether your current position is up or down, because you're not taking the money out. If your portfolio is down, you just leave the money in there until it goes back up again. Later in life, you need to spend the money; you now care about whether your current position is up or down, because you can't afford to wait out a down market and may have to realize a loss by selling. It's important to note that the expected return is always greater for a higher-risk portfolio, as is the expected risk; the expected rate of return doesn't magically change as you age. What changes is your ability to absorb losses to hold out for later gains.\"","title":""},{"docid":"393418","text":"By buying the call option, you are getting the benefit of purchasing the underlying shares (that is, if the shares go up in value, you make money), but transferring the risk of the shares reducing in value. This is more apparent when you are using the option to offset an explicit risk that you hold. For example, if you have a short position, you are at unlimited risk of the position going up in value. You could decide you only want to take the risk that it might rise to $X. In that case, you could buy a call option with $X strike price. Then you have transferred the risk that the position goes over $X to the counterpart, since, even if the shares are trading at $X+$Y you can close out the short position by purchasing the shares at $X, while the option counterpart will lose $Y.","title":""},{"docid":"107729","text":"\"In an \"\"efficient\"\" investment market the amount of risk premium would EXACTLY offset the likelihood of loss, such that over long time frames the expected return on investment would be equal for all investment options. In practice, we usually see that riskier investments yield a higher long-term return because the risk premium is larger than that \"\"efficient\"\" amount. This is because many investors don't have a long-term time horizon, and the pain of loss is greater than the reward of gain (\"\"asymmetric preferences\"\"). It's also important to think about the risk-reward interaction as being PERCEIVED risk to EXPECTED reward. If I'm lending money to somebody who is likely not to pay me back, I'd want a better deal than if I were lending to somebody who is certain to pay. I think that addresses your confusion, but if I misinterpreted what's puzzling you, please let me know and I\"","title":""},{"docid":"362473","text":"\"Seems like you are concerned with something called assignment risk. It's an inherent risk of selling options: you are giving somebody the right, but not the obligation, to sell to you 100 shares of GOOGL. Option buyers pay a premium to have that right - the extrinsic value. When they exercise the option, the option immediately disappears. Together with it, all the extrinsic value disappears. So, the lower the extrinsic value, the higher the assignment risk. Usually, option contracts that are very close to expiration (let's say, around 2 to 3 weeks to expiration or less) have significantly lower extrinsic value than longer option contracts. Also, generally speaking, the deeper ITM an option contract is, the lower extrinsic value it will have. So, to reduce assignment risk, I usually close out my option positions 1-2 weeks before expiration, especially the contracts that are deep in the money. edit: to make sure this is clear, based on a comment I've just seen on your question. To \"\"close out an options position\"\", you just have to create the \"\"opposite\"\" trade. So, if you sell a Put, you close that by buying back that exact same put. Just like stock: if you buy stock, you have a position; you close that position by selling the exact same stock, in the exact same amount. That's a very common thing to do with options. A post in Tradeking's forums, very old post, but with an interesting piece of data from the OCC, states that 35% of the options expire worthless, and 48% are bought or sold before expiration to close the position - only 17% of the contracts are actually exercised! (http://community.tradeking.com/members/optionsguy/blogs/11260-what-percentage-of-options-get-exercised) A few other things to keep in mind: certain stocks have \"\"mini options contracts\"\", that would correspond to a lot of 10 shares of stock. These contracts are usually not very liquid, though, so you might not get great prices when opening/closing positions you said in a comment, \"\"I cannot use this strategy to buy stocks like GOOGL\"\"; if the reason is because 100*GOOGL is too much to fit in your buying power, that's a pretty big risk - the assignment could result in a margin call! if margin call is not really your concern, but your concern is more like the risk of holding 100 shares of GOOGL, you can help manage that by buying some lower strike Puts (that have smaller absolute delta than your Put), or selling some calls against your short put. Both strategies, while very different, will effectively reduce your delta exposure. You'd get 100 deltas from the 100 shares of GOOGL, but you'd get some negative deltas by holding the lower strike Put, or by writing the higher strike Call. So as the stock moves around, your account value would move less than the exposure equivalent to 100 shares of stock.\"","title":""},{"docid":"226546","text":"\"Your broker likely didn't close your position out because it is a covered position. Why interfere with a trade that has no risk to it, from their perspective? There's no risk for the broker since your account holds the shares available for delivery (definition of covered), for if and when the options you wrote (sold) are exercised. And buyers of those options will eventually exercise the options (by expiration) if they remain in-the-money. There's only a chance that an option buyer exercises prematurely, and usually they don't because there's often time value left in the option. That the option buyer has an (ahem) \"\"option\"\" to exercise is a very key point. You wrote: \"\"I fully expected my position to be automatically liquidated by whoever bought my call\"\". That's a false assumption about the way options actually work. I suggest some study of the option exercise FAQs here: Perhaps if your position were uncovered – i.e. you wrote the call without owning the stock (don't try this at home, kids!) – and you also had insufficient margin to cover such a short position, then the broker might have justifiably liquidated your position. Whereas, in a covered call situation, there's really no reason for them to want to interfere – and I would consider that interference, as opposed to helpful. The situation you've described is neither risky for them, nor out of the ordinary. It is (and should be) completely up to you to decide how to close out the position. Anyway, your choices generally are:\"","title":""},{"docid":"298866","text":"I think that those options might well be your best bet, given the potential 700% return in one year if you're right. You could look and see if any Synthetic Zeros (a Synthetic Zero is a derivative that will pay out a set amount if the underlying security is over a certain price point) exist for the share but chances are if they do they wouldn't offer the 700% return. Also might be worth asking the question at the quant stack exchange to see if they have any other ideas.","title":""},{"docid":"192721","text":"It's an artifact of risk-neutral pricing, but the intuition is this: A call option can be viewed as a levered equity position - meaning, you can get the same exposure by borrowing money and buying the stock. Say you can buy some call options for $150 with a position delta of 1 (so it looks just like the stock). You could also buy the stock outright for $1000 (by borrowing $850 at the risk-free rate and using your $150 cash). If the risk-free rate rises, your cost of carry on the stock position increases. In the case of the call option, the change in price can be viewed as the cost of *leverage* increasing.","title":""},{"docid":"70806","text":"You can increase your monthly cash flow in two ways: It's really that simple. I'd even argue that to a certain extent, decreasing expenses can be more cash-positive than increasing income by the same amount if you're spending post-tax money because increasing income generally increases your taxes. So if you have a chunk of cash and you want to increase your cash flow, you could decrease debt (like Chris suggested) and it would have the same effect on your monthly cash flow. Or you could invest in something that pays a dividend or pays interest. There are many options other than real estate, including dividend-paying stocks or funds, CDs, bonds, etc. To get started you could open an account with any of the major brokerage firms and get suggestions from their financial professionals, usually for free. They'll help you look at the risk/reward aspects of various investments.","title":""},{"docid":"140371","text":"To expand on the comment made by @NateEldredge, you're looking to take a short position. A short position essentially functions as follows: Here's the rub: you have unlimited loss potential. Maybe you borrow a share and sell it at $10. Maybe in a month you still haven't closed the position and now the share is trading at $1,000. The share lender comes calling for their share and you have to close the position at $1,000 for a loss of $990. Now what if it was $1,000,000 per share, etc. To avoid this unlimited loss risk, you can instead buy a put option contract. In this situation you buy a contract that will expire at some point in the future for the right to sell a share of stock for $x. You get to put that share on to someone else. If the underlying stock price were to instead rise above the put's exercise price, the put will expire worthless — but your loss is limited to the premium paid to acquire the put option contract. There are all sorts of advanced options trades sometimes including taking a short or long position in a security. It's generally not advisable to undertake these sorts of trades until you're very comfortable with the mechanics of the contracts. It's definitely not advisable to take an unhedged short position, either by borrowing someone else's share(s) to sell or selling an option (when you sell the option you take the risk), because of the unlimited loss potential described above.","title":""},{"docid":"125388","text":"> He risked a lot in the beginning... You avoided my question. Your position is that entrepreneurs deserve great reward because they take on great risk. I disagree. When failure means moving out of your mansion and into a suburban neighborhood, I think that hardly qualifies as risk. Compare that to a single mom who only makes enough money to pay for food or heat. That seems like risk. Now consider President Trump. His companies filed for bankruptcy four times but he was able to insulate his wealth from those failures. Is that really risk or just being rich?","title":""},{"docid":"277311","text":"Automatic exercisions can be extremely risky, and the closer to the money the options are, the riskier their exercisions are. It is unlikely that the entire account has negative equity since a responsible broker would forcibly close all positions and pursue the holder for the balance of the debt to reduce solvency risk. Since the broker has automatically exercised a near the money option, it's solvency policy is already risky. Regardless of whether there is negative equity or simply a liability, the least risky course of action is to sell enough of the underlying to satisfy the loan by closing all other positions if necessary as soon as possible. If there is a negative equity after trying to satisfy the loan, the account will need to be funded for the balance of the loan to pay for purchases of the underlying to fully satisfy the loan. Since the underlying can move in such a way to cause this loan to increase, the account should also be funded as soon as possible if necessary. Accounts after exercise For deep in the money exercised options, a call turns into a long underlying on margin while a put turns into a short underlying. The next decision should be based upon risk and position selection. First, if the position is no longer attractive, it should be closed. Since it's deep in the money, simply closing out the exposure to the underlying should extinguish the liability as cash is not marginable, so the cash received from the closing out of the position will repay any margin debt. If the position in the underlying is still attractive then the liability should be managed according to one's liability policy and of course to margin limits. In a margin account, closing the underlying positions on the same day as the exercise will only be considered a day trade. If the positions are closed on any business day after the exercision, there will be no penalty or restriction. Cash option accounts While this is possible, many brokers force an upgrade to a margin account, and the ShareBuilder Options Account Agreement seems ambiguous, but their options trading page implies the upgrade. In a cash account, equities are not marginable, so any margin will trigger a margin call. If the margin debt did not trigger a margin call then it is unlikely that it is a cash account as margin for any security in a cash account except for certain options trades is 100%. Equities are convertible to cash presumably at the bid, so during a call exercise, the exercisor or exercisor's broker pays cash for the underlying at the exercise price, and any deficit is financed with debt, thus underlying can be sold to satisfy that debt or be sold for cash as one normally would. To preempt a forced exercise as a call holder, one could short the underlying, but this will be more expensive, and since probably no broker allows shorting against the box because of its intended use to circumvent capital gains taxes by fraud. The least expensive way to trade out of options positions is to close them themselves rather than take delivery.","title":""},{"docid":"202432","text":"\"How do option market makers actually hedge their positions so that they do not have a price risk? You cannot complete hedge away price risk of a sold call simply by buying the underlying and waiting. As the price of the underlying decreases, the \"\"Delta\"\" (price risk) decreases, so as the underlying decreases, you would gradually sell some of the underlying to reduce your price risk from the underlying to match the price risk of the option. The opposite is true as well - as the price of the underlying increases, you'd buy more of the underlying to maintain a \"\"delta neutral\"\" position. If you want to employ this strategy, first you need to fully understand what \"\"delta\"\" is and how to calculate it. Then you can use delta hedging to reduce your price risk.\"","title":""},{"docid":"290568","text":"\"At my soon to be legendary Stock Options Cafe, I recently wrote an article \"\"Betting On Apple at 9 to 2.\"\" It described a trade in which a 35% move in a stock over a fixed time (2 years) would result in a 354% gain in one's bet. In this case, the options serve to create remarkable leverage for speculators. In general, option help provide liquidity and extend the nature of the risk/reward curve. There are option trades that range from conservative (e.g. a 'covered call') to wildly speculative, as the one I described above.\"","title":""},{"docid":"120358","text":"If you have your long positions established and are investing responsibly (assuming you know the risks and can accept them), the next step IMO is typically learning hedging - using options or option strategies to solidify positions. Collars (zero cost) and put options are a good place to start your education and they can be put to use to both speculate (what you are effectively doing with short-position trading) or long-term oriented edging. Day trading equites can be lucrative but it is a difficult game to play - learning options (while more complex on speculation) can provide opportunities to solidify positions. Options trading is difficult grounds. I just think the payoff long term to knowing options is much greater than day-trading tactics (because of versatility)","title":""},{"docid":"171420","text":"\"I struggled with this one at first. It's easiest if you temporarily ignore the mathematical machinery of martingales and go back to the derivation that Black and Scholes provide in their 1973 paper. They basically show that when you construct a portfolio consisting of a long position in the option (the one being priced) and a short position on the replicating portfolio (consisting of shares of stock and cash in the risk-free bank account), then that portfolio will be entirely risk-less, and hence will earn the risk-free rate of interest. This makes intuitive sense if you think about it - every change in the value of the option is going to be countered by an opposite change in the replicating portfolio; by no arbitrage, that composite portfolio (the option + the replicating portfolio) must therefore earn the risk-free rate. The fact that the composite portfolio earns the risk-free rate provides the connection to martingale pricing. Recall that a martingale is basically* a stochastic process that has no drift, only volatility. Here, it's useful to think of the drift as being the \"\"risk premium\"\" or \"\"return\"\" of a particular asset (like the stock). What martingale pricing theory says is that to find the price of the option we (1) discount the value of the replicating portfolio by the cash bond (the numeraire asset), and (2) turn the stochastic process of the risky asset in the replicating portfolio into a martingale. This move intuitively makes sense because the Black-Scholes derivation shows that the replicating portfolio + the option must earn the risk-free rate, but if you divide the value of the Black-Scholes replicating portfolio by the numeraire asset, you're going to cancel out that risk-free rate -- e.g. have a Martingale. (I'm not a mathematician, so please correct me if I've mucked something up in my explanation). *I say basically because there are some technical conditions that need to be fulfilled, but that's generally true.\"","title":""},{"docid":"285918","text":"I am in a very similar situation as you (software engineer, high disposable income). Maximize your contributions to all tax-advantaged accounts first. From those accounts you can choose to invest in high risk funds. At your age and date-target funds will invest in riskier investments on your behalf; and they'll do it while avoiding the 30%+/- haircut that you'll be paying in taxes anyhow. If, after that, you're looking for bigger risk plays then look into a brokerage account that will let you buy and sell options. These are big risk swingers and they are sophisticated, complicated products which are used by many people who likely understand finance far better than you. You can make money with them but you should consider it akin to gambling. It might be more to your liking to maintain a long position in a stock and then trade options against your long position. Start with trading covered calls, then you could consider buying options (defined limited downside risk).","title":""}],"string":"[\n {\n \"docid\": \"374797\",\n \"text\": \"\\\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the \\\"\\\"catch\\\"\\\"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the \\\"\\\"downside risk\\\"\\\" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about \\\"\\\"vanilla\\\"\\\" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"232880\",\n \"text\": \"A long put - you have a small initial cost (the option premium) but profit as the stock goes down. You have no additional risk if the shock rises, even a lot. Short a stock - you gain if the stock drops, but have unlimited risk if it rises, the call mitigates this, by capping that rising stock risk. The profit/loss graph looks similar to the long put when you hold both the short position and the long call. You might consider producing a graph or spreadsheet to compare positions. You can easily sketch put, call, long stock, short stock, and study how combinations of positions can synthetically look like other positions. Often, when a stock has no shares to short, the synthetic short can help you put your stock position in place.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"242663\",\n \"text\": \"\\\"Some thoughts on your questions in order, Duration: You might want to look at the longest-dated option (often a \\\"\\\"LEAP\\\"\\\"), for a couple reasons. One is that transaction costs (spread plus commission, especially spread) are killer on options, so a longer option means fewer transactions, since you don't have to keep rolling the option. Two is that any fundamentals-based views on stocks might tend to require 3-5 years to (relatively) reliably work out, so if you're a fundamental investor, a 3-6 month option isn't great. Over 3-6 months, momentum, short-term news, short squeezes, etc. can often dominate fundamentals in determining the price. One exception is if you just want to hedge a short-term event, such as a pending announcement on drug approval or something, and then you would buy the shortest option that still expires after the event; but options are usually super-expensive when they span an event like this. Strike: Strike price on a long option can be thought of as a tradeoff between the max loss and minimizing \\\"\\\"insurance costs.\\\"\\\" That is, if you buy a deeply in-the-money put or call, the time value will be minimal and thus you aren't paying so much for \\\"\\\"insurance,\\\"\\\" but you may have 1/3 or 1/2 of the value of the underlying tied up in the option and subject to loss. If you buy a put or call \\\"\\\"at the money,\\\"\\\" then you might have only say 10% of the value of the underlying tied up in the option and subject to loss, but almost the whole 10% may be time value (insurance cost), so you are losing 10% if the underlying stock price stays flat. I think of the deep in-the-money options as similar to buying stocks on margin (but the \\\"\\\"implied\\\"\\\" interest costs may be less than consumer margin borrowing rates, and for long options you can't get a margin call). The at-the-money options are more like buying insurance, and it's expensive. The commissions and spreads add significant cost, on top of the natural time value cost of the option. The annual costs would generally exceed the long-run average return on a diversified stock fund, which is daunting. Undervalued/overvalued options, pt. 1: First thing is to be sure the options prices on a given underlying make sense at all; there are things that \\\"\\\"should\\\"\\\" hold, for example a synthetic long or short should match up to an actual long or short. These kinds of rules can break, for example on LinkedIn (LNKD) after its IPO, when shorting was not permitted, the synthetic long was quite a bit cheaper than a real long. Usually though this happens because the arbitrage is not practical. For example on LNKD, the shares to short weren't really available, so people doing synthetic shorts with options were driving up the price of the synthetic short and down the price of the synthetic long. If you did actually want to be long the stock, then the synthetic long was a great deal. However, a riskless arbitrage (buy synthetic long, short the stock) was not possible, and that's why the prices were messed up. Another basic relationship that should hold is put-call parity: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity Undervalued/overvalued options, pt. 2: Assuming the relationship to the underlying is sane (synthetic positions equivalent to actual positions) then the valuation of the option could focus on volatility. That is, the time value of the option implies the stock will move a certain amount. If the time value is high and you think the stock won't move much, you might short the option, while if the time value is low and you think the stock will move a lot, you might buy the option. You can get implied volatility from your broker perhaps, or Morningstar.com for example has a bunch of data on option prices and the implied components of the price model. I don't know how useful this really is though. The spreads on options are so wide that making money on predicting volatility better than the market is pretty darn hard. That is, the spread probably exceeds the amount of the mispricing. The price of the underlying is more important to the value of an option than the assumed volatility. How many contracts: Each contract is 100 shares, so you just match that up. If you want to hedge 100 shares, buy one contract. To get the notional value of the underlying multiply by 100. So say you buy a call for $30, and the stock is trading at $100, then you have a call on 100 shares which are currently priced at $10,000 and the option will cost $30*100=3,000. You are leveraged about 3 to 1. (This points to an issue with options for individual investors, which is that one contract is a pretty large notional value relative to most portfolios.)\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"118633\",\n \"text\": \"\\\"There are three ways to do this. So far the answers posted have only mentioned two. The three ways are: Selling short means that you borrow stock from your broker and sell it with the intent of buying it back later to repay the loan. As others have noted, this has unlimited potential losses and limited potential gains. Your profit or loss will go $1:$1 with the movement of the price of the stock. Buying a put option gives you the right to sell the stock at a later date on a price that you choose now. You pay a premium to have this right, and if the stock moves against you, you won't exercise your option and will lose the premium. Options move non-linearly with the price of the stock, especially when the expiration is far in the future. They probably are not for a beginner, although they can be powerful if used properly. The third option is a synthetic short position. You form this by simultaneously buying a put option and selling short a call option, both at the same strike price. This has a risk profile that is very much like the selling the stock short, but you can accomplish it entirely with stock options. Because you're both buying an selling, in theory you might even collect a small net premium when you open. You might ask why you'd do this given that you could just sell the stock short, which certainly seems simpler. One reason is that it is not always possible to sell the stock short. Recall that you have to borrow shares from your broker to sell short. When many people want to short the stock, brokers will run out of shares to loan. The stock is then said to be \\\"\\\"hard to borrow,\\\"\\\" which effectively prevents further short selling of the stock. In this case the synthetic short is still potentially possible.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"531117\",\n \"text\": \"\\\"First, your professor should learn proper grammar. Should be, \\\"\\\"Why **do**....\\\"\\\" Second, it looks like you're dealing with synthetic securities. You can create a synthetic T-Bill by doing a combination of long/short calls/puts. But ignore all that. Just think about this without the technical jargon. We know that the risk free rate is typically what T-Bills are yielding right? And we know that since options are inherently more risky than US government debt, investors will demand a higher interest rate to compensate them for the risk. So, as the risk free rate increases, the value of a call will move the same direction, otherwise investors would stop dealing with call options and would instead buy safer, less-risky \\\"\\\"riskless\\\"\\\" investments. It's not really an options question, just one of basic finance, risk, understanding of interest rates, etc.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"550643\",\n \"text\": \"If you can afford the cost and risk of 100 shares of stock, then just sell a put option. If you can only afford a few shares, you can still use the information the options market is trying to give you -- see below. A standing limit order to buy a stock is essentially a synthetic short put option position. [1] So deciding on a stock limit order price is the same as valuing an option on that stock. Options (and standing limit orders) are hard to value, and the generally accepted math for doing so -- the Black-Scholes-Merton framework -- is also generally accepted to be wrong, because of black swans. So rather than calculate a stock buy limit price yourself, it's simpler to just sell a put at the put's own midpoint price, accepting the market's best estimate. Options market makers' whole job (and the purpose of the open market) is price discovery, so it's easier to let them fight it out over what price options should really be trading at. The result of that fight is valuable information -- use it. Sell a 1-month ATM put option every month until you get exercised, after which time you'll own 100 shares of stock, purchased at: This will typically give you a much better cost basis (several dollars better) versus buying the stock at spot, and it offloads the valuation math onto the options market. Meanwhile you get to keep the cash from the options premiums as well. Disclaimer: Markets do make mistakes. You will lose money when the stock drops more than the option market's own estimate. If you can't afford 100 shares, or for some reason still want to be in the business of creating synthetic options from pure stock limit orders, then you could maybe play around with setting your stock purchase bid price to (approximately): See your statistics book for how to set ndev -- 1 standard deviation gives you a 30% chance of a fill, 2 gives you a 5% chance, etc. Disclaimer: The above math probably has mistakes; do your own work. It's somewhat invalid anyway, because stock prices don't follow a normal curve, so standard deviations don't really mean a whole lot. This is where market makers earn their keep (or not). If you still want to create synthetic options using stock limit orders, you might be able to get the options market to do more of the math for you. Try setting your stock limit order bid equal to something like this: Where put_strike is the strike price of a put option for the equity you're trading. Which option expiration and strike you use for put_strike depends on your desired time horizon and desired fill probability. To get probability, you can look at the delta for a given option. The relationship between option delta and equity limit order probability of fill is approximately: Disclaimer: There may be math errors here. Again, do your own work. Also, while this method assumes option markets provide good estimates, see above disclaimer about the markets making mistakes.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"229242\",\n \"text\": \"A synthetic position mimics the payout of a financial instrument. Synthetics are attractive when the liquidity/availability of an instrument is low or there is a mismatch in fees or values of the synthetic's components which could lead to arbitrage. In speculative trades, the seller of a CDS takes a positive view of the credit worthiness of the underlying security. The buyer of a CDS has a negative view of the credit of the underlying. So in this example, there is a limit on buying or shorting corporate bonds by how many bonds the company has issued, and the value you have to invest in the bond itself, so if you wanted heavy exposure to this company's credit; you would be limited by how many you could buy. Whereas with a CDS you can mimic the performance with a synthetic position; and as long as there is someone to take the other side of it, you can buy or sell however many you want and have more exposure than the debt the company issued would allow on its own. Hope that makes some sense.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"171784\",\n \"text\": \"\\\"Depends on how far down the market is heading, how certain you are that it is going that way, when you think it will fall, and how risk-averse you are. By \\\"\\\"better\\\"\\\" I will assume you are trying to make the most money with this information that you can given your available capital. If you are very certain, the way that makes the most money for the least investment from the options you provided is a put. If you can borrow some money to buy even more puts, you will make even more. Use your knowledge of how far and when the market will fall to determine which put is optimal at today's prices. But remember that if the market stays flat or goes up you lose everything you put in and may owe extra to your creditor. A short position in a futures contract is also an easy way to get extreme leverage. The extremity of the leverage will depend on how much margin is required. Futures trade in large denominations, so think about how much you are able to put to risk. The inverse ETFs are less risky and offer less reward than the derivative contracts above. The levered one has twice the risk and something like twice the reward. You can buy those without a margin account in a regular cash brokerage, so they are easier in that respect and the transactions cost will likely be lower. Directly short selling an ETF or stock is another option that is reasonably accessible and only moderately risky. On par with the inverse ETFs.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"320101\",\n \"text\": \"\\\"The two dimensions are to open the trade (creating a position) and to buy or sell (becoming long or short the option). If you already own an option, you bought it to open and then you would sell it to close. If you don't own an option, you can either buy it to open, or sell it (short it) to open. If you are already short an option, you can buy it back to close. If you sell to open covered, the point is you're creating a \\\"\\\"covered call\\\"\\\" which means you own the stock, and then sell a call. Since you own the stock, the covered call has a lot of the risk of loss removed, though it also subtracts much of the reward possible from your stock.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"415705\",\n \"text\": \"\\\"Firstly \\\"\\\"Most option traders don't want to actually buy or sell the underlying stock.\\\"\\\" THIS IS COMPLETELY UTTERLY FALSE Perhaps the problem is that you are only familiar with the BUY side of options trading. On the sell side of options trading, an options desk engages in DELTA HEDGING. When we sell an option to a client. We will also buy an appropriate amount of underlying to match the delta position of the option. During the life time of the option. We will readjust our hedge position whenever the delta changes (those who follow Black Scholes will know that normally that comes from (underlying) price changes). However, we lose money on each underlying change (we have to cross the bid-ask spread for each trade). That is why we lose money when there is volatility. That is why we are said to be \\\"\\\"short VEGA\\\"\\\" or \\\"\\\"short volatility\\\"\\\". So one way to think about \\\"\\\"buying\\\"\\\" options, is that you are paying someone to execute a specific trading strategy. In general, those who sell options, are also happy to buy options back (at a discount of course, so we make a profit). But when doing so, we need to unroll our hedging position, and that again incurs a cost (to us, the bank). Finally. Since this is \\\"\\\"money\\\"\\\" stackexchange rather than finance. You are most likely referring to \\\"\\\"warrants\\\"\\\" rather than \\\"\\\"options\\\"\\\", which are listed on stock exchanges. The exchange in most regions give us very specific and restrictive regulations that we must abide by. One very common one is that we MUST always list a price which we are willing to buy the warrants back at (which may not be an unreasonable spread from the sell price). Since an Option is a synthetically created investment instrument, when we buy back the Option from the investor, we simply unwind the underlying hedging positions that we booked to synthesize the Options with. Source: I've worked 2 years on a warrant desk, as a desk developer.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"557630\",\n \"text\": \"It doesn't matter. A convert can be recreated by using other instruments, so it can never be removed from the market. Kind if like an Asian market which tried to remove options or futures or some exotic derivative. Investors just created synthetic positions with the same properties.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"7743\",\n \"text\": \"\\\"So, yes, you may be having the inevitable epiphany where you realize that options can synthetically replicate the same risk profile of owning stock outright. Allowing you to manipulate risk and circumvent margin requirement differences amongst asset classes. Naked short puts are analogous to a covered call, but may have different (lesser) margin requirements. This allows you to increase your risk, and the broker has to account for that. The broker's clientele might not understand all the risks associated with that much leverage and so may simply consider it risky \\\"\\\"for your protection\\\"\\\"\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"214003\",\n \"text\": \"\\\"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.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"594226\",\n \"text\": \"Edit: This is paywalled so I pasted it here. LONDON—The synthetic CDO, a villain of the global financial crisis, is back. A decade ago, investors’ bad bets on collateralized debt obligations helped fuel the crisis. Billed as safe, they turned out to be anything but. Now, more investors are returning to CDOs—and so are concerns that excess is seeping into the aging bull market. In the U.S., the CDO market sunk steadily in the years after the financial crisis but has been fairly flat since 2014. In Europe, the total size of market is now rising again—up 5.6% annually in the first quarter of the year and 14.4% in the last quarter of 2016, according to the Securities Industry and Financial Markets Association. Collateralized debt obligations package a bunch of assets, such as mortgage or corporate loans, into a security that is chopped up into pieces and sold to investors. The assets inside a synthetic CDO aren’t physical debt securities but rather derivatives, which in turn reference other investments such as loans or corporate debt. During the financial crisis, synthetic CDOs became a symbol of the financial excesses of the era. Labelled an “atomic bomb” in the movie “The Big Short,” they ultimately were the vehicle that spread the risks from the mortgage market throughout the financial system. Synthetic CDOs crammed with exposure to subprime mortgages—or even other CDOs—are long gone. The ones that remain contain credit-default swaps referencing a range of European and U.S. companies, effectively allowing investors to bet whether corporate defaults will pick up. Desperate for something that pays better than basic government bonds, insurance companies, asset managers and high-net worth investors are scooping up investments like synthetic CDOs, bankers say, which had largely become the preserve of hedge funds after 2008. Investment banks, which create and sell CDOs, are happy to oblige. Placid markets have made trading revenue weak this year, and such structured products are an increasingly important business line. Synthetic CDOs got “bad press,” says Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions. But “that market has never ceased to fully function,” he added. These days, Mr. Champion still trades synthetic CDOs, receiving a stream of income for effectively insuring against a sharp rise in European corporate defaults. Many investors, though, still view the products as unnecessarily complex and are concerned they may be hard to offload when markets get choppy—as they did in the last crisis. From the DepthsThe amount outstanding of European collateralized debt obligations has been growing again after years of shrinking. “We don’t see that demand from our clients and we wouldn’t recommend it,” said Markus Stadlmann, chief investment officer at Lloyds Private Banking, citing concerns over the products’ lack of transparency and lack of liquidity, meaning it could be hard to offload a position when needed. The return of synthetic CDOs could present other risks. Even if banks are currently less willing to loan money to help clients juice returns, credit default swaps can be very leveraged, potentially allowing investors to make outsize bets. Structured products accounted for nearly all the $2.6 billion year-on-year growth in trading-division revenue at the top 12 global investment banks in the first quarter, according to Amrit Shahani, research director at financial consultancy Coalition. “There has been an uptick in interest in any kind of yield-enhancement structure,” said Kokou Agbo-Bloua, a managing director in Société Générale SA’s investment bank. The fastest growth this year has come in credit—the epicenter of the 2007-08 crisis. The top global 12 investment banks had around $1.5 billion in revenue in structured credit in the first quarter, according to Coalition, more than doubling since the first quarter of 2016. Structured equities are largest overall, a business dominated by sales of derivatives linked to moves in stock prices, with revenue of $5 billion in the first quarter. “The low-yield environment hurts,” said Lionel Pernias, a credit-fund manager at AXA Investment Managers. “So there are a lot of asset owners looking at structured credit.” These days, the typical synthetic CDO involves a portfolio of credit-default swaps on a range of companies. The portfolio is sliced into tranches, and investors receive payouts based on the performance of the swaps. Those investors owning lower tranches tend to get paid more but are subject to higher losses if the swaps sour. Structured GrowthBank revenues from structured products such as collateralized debt obligations are rising faster than conventionaltrading of stocks, bonds and currencies. For instance, an investor can sell insurance against a pick-up in defaults in the lowest—or “equity”—tranche of the iTraxx Europe index, a widely traded CDS benchmark that tracks European investment-grade companies. In return, the investor will receive regular payments, but those will shrink with every company default and stop altogether once 3% of the portfolio has been wiped out through defaults. During the financial crisis, synthetic CDOs based on standardized indexes like iTraxx Europe suffered losses as traders expected defaults to pick up. Investors who held on, though, have since done “great,” says Mr. Champion. Investors who agreed to insure against a rise in defaults for 10 years on the equity tranche of the iTraxx Europe index in March 2008 have made roughly 10% a year, according to an analysis of data from IHS Markit . That’s despite defaults from two companies in the index: Italian lender Monte dei Paschi di Siena and Portugal Telecom International Finance BV. In contrast, investors who sold insurance on tailored CDOs packed with riskier credits—such as Icelandic banks or monoline insurers—would have been on the hook for losses. Synthetic CDOs have evolved since the crisis, bankers say. For instance, most are shorter-dated, running up to around two to three years rather than seven to 10 years. Some banks will only slice and dice standardized CDS indexes that trade frequently in the market rather than craft tailored baskets of credits. There are also fewer banks involved in arranging these trades. Those active include BNP Paribas SA, Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Société Générale. Postcrisis regulations have forced banks to set aside more capital against these transactions and use less leverage. That has encouraged banks to parcel out the risk to clients rather than keeping it on their own books. “There is a lot more regulation and scrutiny and a lot less leverage,” said Mr. Agbo-Bloua. Mr. Champion says he only trades tranches based on standardized CDS indexes, which he says are easier to buy and sell than more tailored products. Currently, he sees value in selling default protection on super-senior tranches. Mr. Champion said he has to lay down only around $1 million in upfront margin costs on a $100 million trade of this kind. “The cost of leverage in the derivatives space is very low,” he said. Any expectations of default rates picking up could inflict losses on synthetic CDOs, though at the moment analysts forecast they should decline. Still, the memory of how the market behaved in the immediate aftermath of the financial crisis is likely to keep many investors on the sidelines. “If you’re the person responsible for buying the synthetic CDO that suddenly goes wrong, your career risk is bigger than if you’d bought a plain vanilla bond that goes wrong. It has a bad name,” said Ulf Erlandsson, a portfolio manager at start-up hedge fund Glacier Impact, who until recently oversaw credit for one of Sweden’s public pension funds.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"251003\",\n \"text\": \"\\\"Mathematically it seems like the expected rate of return, whatever that might be, is the same for both. An aggressive strategy is higher risk and higher reward. A conservative strategy is lower risk and lower reward. That is not true. Roughly, the mathematical analogue of \\\"\\\"higher risk and higher reward\\\"\\\" is \\\"\\\"higher standard deviation and higher mean\\\"\\\". In other words, the aggressive strategy does have a higher expected rate of return (higher mean). Its disadvantage is that it has a higher likelihood of incurring intermediate losses (and/or higher magnitude of intermediate losses) on the way. This is classically illustrated with the following chart - from Vanguard. You can see that the average return is greater the riskier the portfolio (i.e., the more allocated to stocks relative to bonds), but this higher average return comes at the price of a greater range of possible returns. With an aggressive portfolio, you take a greater risk of losses at any given moment for a greater chance of gains over a long period. Given this, it should be obvious why the advice is to be aggressive early on. Early in life, you don't care about whether your current position is up or down, because you're not taking the money out. If your portfolio is down, you just leave the money in there until it goes back up again. Later in life, you need to spend the money; you now care about whether your current position is up or down, because you can't afford to wait out a down market and may have to realize a loss by selling. It's important to note that the expected return is always greater for a higher-risk portfolio, as is the expected risk; the expected rate of return doesn't magically change as you age. What changes is your ability to absorb losses to hold out for later gains.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"393418\",\n \"text\": \"By buying the call option, you are getting the benefit of purchasing the underlying shares (that is, if the shares go up in value, you make money), but transferring the risk of the shares reducing in value. This is more apparent when you are using the option to offset an explicit risk that you hold. For example, if you have a short position, you are at unlimited risk of the position going up in value. You could decide you only want to take the risk that it might rise to $X. In that case, you could buy a call option with $X strike price. Then you have transferred the risk that the position goes over $X to the counterpart, since, even if the shares are trading at $X+$Y you can close out the short position by purchasing the shares at $X, while the option counterpart will lose $Y.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"107729\",\n \"text\": \"\\\"In an \\\"\\\"efficient\\\"\\\" investment market the amount of risk premium would EXACTLY offset the likelihood of loss, such that over long time frames the expected return on investment would be equal for all investment options. In practice, we usually see that riskier investments yield a higher long-term return because the risk premium is larger than that \\\"\\\"efficient\\\"\\\" amount. This is because many investors don't have a long-term time horizon, and the pain of loss is greater than the reward of gain (\\\"\\\"asymmetric preferences\\\"\\\"). It's also important to think about the risk-reward interaction as being PERCEIVED risk to EXPECTED reward. If I'm lending money to somebody who is likely not to pay me back, I'd want a better deal than if I were lending to somebody who is certain to pay. I think that addresses your confusion, but if I misinterpreted what's puzzling you, please let me know and I\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"362473\",\n \"text\": \"\\\"Seems like you are concerned with something called assignment risk. It's an inherent risk of selling options: you are giving somebody the right, but not the obligation, to sell to you 100 shares of GOOGL. Option buyers pay a premium to have that right - the extrinsic value. When they exercise the option, the option immediately disappears. Together with it, all the extrinsic value disappears. So, the lower the extrinsic value, the higher the assignment risk. Usually, option contracts that are very close to expiration (let's say, around 2 to 3 weeks to expiration or less) have significantly lower extrinsic value than longer option contracts. Also, generally speaking, the deeper ITM an option contract is, the lower extrinsic value it will have. So, to reduce assignment risk, I usually close out my option positions 1-2 weeks before expiration, especially the contracts that are deep in the money. edit: to make sure this is clear, based on a comment I've just seen on your question. To \\\"\\\"close out an options position\\\"\\\", you just have to create the \\\"\\\"opposite\\\"\\\" trade. So, if you sell a Put, you close that by buying back that exact same put. Just like stock: if you buy stock, you have a position; you close that position by selling the exact same stock, in the exact same amount. That's a very common thing to do with options. A post in Tradeking's forums, very old post, but with an interesting piece of data from the OCC, states that 35% of the options expire worthless, and 48% are bought or sold before expiration to close the position - only 17% of the contracts are actually exercised! (http://community.tradeking.com/members/optionsguy/blogs/11260-what-percentage-of-options-get-exercised) A few other things to keep in mind: certain stocks have \\\"\\\"mini options contracts\\\"\\\", that would correspond to a lot of 10 shares of stock. These contracts are usually not very liquid, though, so you might not get great prices when opening/closing positions you said in a comment, \\\"\\\"I cannot use this strategy to buy stocks like GOOGL\\\"\\\"; if the reason is because 100*GOOGL is too much to fit in your buying power, that's a pretty big risk - the assignment could result in a margin call! if margin call is not really your concern, but your concern is more like the risk of holding 100 shares of GOOGL, you can help manage that by buying some lower strike Puts (that have smaller absolute delta than your Put), or selling some calls against your short put. Both strategies, while very different, will effectively reduce your delta exposure. You'd get 100 deltas from the 100 shares of GOOGL, but you'd get some negative deltas by holding the lower strike Put, or by writing the higher strike Call. So as the stock moves around, your account value would move less than the exposure equivalent to 100 shares of stock.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"226546\",\n \"text\": \"\\\"Your broker likely didn't close your position out because it is a covered position. Why interfere with a trade that has no risk to it, from their perspective? There's no risk for the broker since your account holds the shares available for delivery (definition of covered), for if and when the options you wrote (sold) are exercised. And buyers of those options will eventually exercise the options (by expiration) if they remain in-the-money. There's only a chance that an option buyer exercises prematurely, and usually they don't because there's often time value left in the option. That the option buyer has an (ahem) \\\"\\\"option\\\"\\\" to exercise is a very key point. You wrote: \\\"\\\"I fully expected my position to be automatically liquidated by whoever bought my call\\\"\\\". That's a false assumption about the way options actually work. I suggest some study of the option exercise FAQs here: Perhaps if your position were uncovered – i.e. you wrote the call without owning the stock (don't try this at home, kids!) – and you also had insufficient margin to cover such a short position, then the broker might have justifiably liquidated your position. Whereas, in a covered call situation, there's really no reason for them to want to interfere – and I would consider that interference, as opposed to helpful. The situation you've described is neither risky for them, nor out of the ordinary. It is (and should be) completely up to you to decide how to close out the position. Anyway, your choices generally are:\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"298866\",\n \"text\": \"I think that those options might well be your best bet, given the potential 700% return in one year if you're right. You could look and see if any Synthetic Zeros (a Synthetic Zero is a derivative that will pay out a set amount if the underlying security is over a certain price point) exist for the share but chances are if they do they wouldn't offer the 700% return. Also might be worth asking the question at the quant stack exchange to see if they have any other ideas.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"192721\",\n \"text\": \"It's an artifact of risk-neutral pricing, but the intuition is this: A call option can be viewed as a levered equity position - meaning, you can get the same exposure by borrowing money and buying the stock. Say you can buy some call options for $150 with a position delta of 1 (so it looks just like the stock). You could also buy the stock outright for $1000 (by borrowing $850 at the risk-free rate and using your $150 cash). If the risk-free rate rises, your cost of carry on the stock position increases. In the case of the call option, the change in price can be viewed as the cost of *leverage* increasing.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"70806\",\n \"text\": \"You can increase your monthly cash flow in two ways: It's really that simple. I'd even argue that to a certain extent, decreasing expenses can be more cash-positive than increasing income by the same amount if you're spending post-tax money because increasing income generally increases your taxes. So if you have a chunk of cash and you want to increase your cash flow, you could decrease debt (like Chris suggested) and it would have the same effect on your monthly cash flow. Or you could invest in something that pays a dividend or pays interest. There are many options other than real estate, including dividend-paying stocks or funds, CDs, bonds, etc. To get started you could open an account with any of the major brokerage firms and get suggestions from their financial professionals, usually for free. They'll help you look at the risk/reward aspects of various investments.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"140371\",\n \"text\": \"To expand on the comment made by @NateEldredge, you're looking to take a short position. A short position essentially functions as follows: Here's the rub: you have unlimited loss potential. Maybe you borrow a share and sell it at $10. Maybe in a month you still haven't closed the position and now the share is trading at $1,000. The share lender comes calling for their share and you have to close the position at $1,000 for a loss of $990. Now what if it was $1,000,000 per share, etc. To avoid this unlimited loss risk, you can instead buy a put option contract. In this situation you buy a contract that will expire at some point in the future for the right to sell a share of stock for $x. You get to put that share on to someone else. If the underlying stock price were to instead rise above the put's exercise price, the put will expire worthless — but your loss is limited to the premium paid to acquire the put option contract. There are all sorts of advanced options trades sometimes including taking a short or long position in a security. It's generally not advisable to undertake these sorts of trades until you're very comfortable with the mechanics of the contracts. It's definitely not advisable to take an unhedged short position, either by borrowing someone else's share(s) to sell or selling an option (when you sell the option you take the risk), because of the unlimited loss potential described above.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"125388\",\n \"text\": \"> He risked a lot in the beginning... You avoided my question. Your position is that entrepreneurs deserve great reward because they take on great risk. I disagree. When failure means moving out of your mansion and into a suburban neighborhood, I think that hardly qualifies as risk. Compare that to a single mom who only makes enough money to pay for food or heat. That seems like risk. Now consider President Trump. His companies filed for bankruptcy four times but he was able to insulate his wealth from those failures. Is that really risk or just being rich?\",\n \"title\": \"\"\n },\n {\n \"docid\": \"277311\",\n \"text\": \"Automatic exercisions can be extremely risky, and the closer to the money the options are, the riskier their exercisions are. It is unlikely that the entire account has negative equity since a responsible broker would forcibly close all positions and pursue the holder for the balance of the debt to reduce solvency risk. Since the broker has automatically exercised a near the money option, it's solvency policy is already risky. Regardless of whether there is negative equity or simply a liability, the least risky course of action is to sell enough of the underlying to satisfy the loan by closing all other positions if necessary as soon as possible. If there is a negative equity after trying to satisfy the loan, the account will need to be funded for the balance of the loan to pay for purchases of the underlying to fully satisfy the loan. Since the underlying can move in such a way to cause this loan to increase, the account should also be funded as soon as possible if necessary. Accounts after exercise For deep in the money exercised options, a call turns into a long underlying on margin while a put turns into a short underlying. The next decision should be based upon risk and position selection. First, if the position is no longer attractive, it should be closed. Since it's deep in the money, simply closing out the exposure to the underlying should extinguish the liability as cash is not marginable, so the cash received from the closing out of the position will repay any margin debt. If the position in the underlying is still attractive then the liability should be managed according to one's liability policy and of course to margin limits. In a margin account, closing the underlying positions on the same day as the exercise will only be considered a day trade. If the positions are closed on any business day after the exercision, there will be no penalty or restriction. Cash option accounts While this is possible, many brokers force an upgrade to a margin account, and the ShareBuilder Options Account Agreement seems ambiguous, but their options trading page implies the upgrade. In a cash account, equities are not marginable, so any margin will trigger a margin call. If the margin debt did not trigger a margin call then it is unlikely that it is a cash account as margin for any security in a cash account except for certain options trades is 100%. Equities are convertible to cash presumably at the bid, so during a call exercise, the exercisor or exercisor's broker pays cash for the underlying at the exercise price, and any deficit is financed with debt, thus underlying can be sold to satisfy that debt or be sold for cash as one normally would. To preempt a forced exercise as a call holder, one could short the underlying, but this will be more expensive, and since probably no broker allows shorting against the box because of its intended use to circumvent capital gains taxes by fraud. The least expensive way to trade out of options positions is to close them themselves rather than take delivery.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"202432\",\n \"text\": \"\\\"How do option market makers actually hedge their positions so that they do not have a price risk? You cannot complete hedge away price risk of a sold call simply by buying the underlying and waiting. As the price of the underlying decreases, the \\\"\\\"Delta\\\"\\\" (price risk) decreases, so as the underlying decreases, you would gradually sell some of the underlying to reduce your price risk from the underlying to match the price risk of the option. The opposite is true as well - as the price of the underlying increases, you'd buy more of the underlying to maintain a \\\"\\\"delta neutral\\\"\\\" position. If you want to employ this strategy, first you need to fully understand what \\\"\\\"delta\\\"\\\" is and how to calculate it. Then you can use delta hedging to reduce your price risk.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"290568\",\n \"text\": \"\\\"At my soon to be legendary Stock Options Cafe, I recently wrote an article \\\"\\\"Betting On Apple at 9 to 2.\\\"\\\" It described a trade in which a 35% move in a stock over a fixed time (2 years) would result in a 354% gain in one's bet. In this case, the options serve to create remarkable leverage for speculators. In general, option help provide liquidity and extend the nature of the risk/reward curve. There are option trades that range from conservative (e.g. a 'covered call') to wildly speculative, as the one I described above.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"120358\",\n \"text\": \"If you have your long positions established and are investing responsibly (assuming you know the risks and can accept them), the next step IMO is typically learning hedging - using options or option strategies to solidify positions. Collars (zero cost) and put options are a good place to start your education and they can be put to use to both speculate (what you are effectively doing with short-position trading) or long-term oriented edging. Day trading equites can be lucrative but it is a difficult game to play - learning options (while more complex on speculation) can provide opportunities to solidify positions. Options trading is difficult grounds. I just think the payoff long term to knowing options is much greater than day-trading tactics (because of versatility)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"171420\",\n \"text\": \"\\\"I struggled with this one at first. It's easiest if you temporarily ignore the mathematical machinery of martingales and go back to the derivation that Black and Scholes provide in their 1973 paper. They basically show that when you construct a portfolio consisting of a long position in the option (the one being priced) and a short position on the replicating portfolio (consisting of shares of stock and cash in the risk-free bank account), then that portfolio will be entirely risk-less, and hence will earn the risk-free rate of interest. This makes intuitive sense if you think about it - every change in the value of the option is going to be countered by an opposite change in the replicating portfolio; by no arbitrage, that composite portfolio (the option + the replicating portfolio) must therefore earn the risk-free rate. The fact that the composite portfolio earns the risk-free rate provides the connection to martingale pricing. Recall that a martingale is basically* a stochastic process that has no drift, only volatility. Here, it's useful to think of the drift as being the \\\"\\\"risk premium\\\"\\\" or \\\"\\\"return\\\"\\\" of a particular asset (like the stock). What martingale pricing theory says is that to find the price of the option we (1) discount the value of the replicating portfolio by the cash bond (the numeraire asset), and (2) turn the stochastic process of the risky asset in the replicating portfolio into a martingale. This move intuitively makes sense because the Black-Scholes derivation shows that the replicating portfolio + the option must earn the risk-free rate, but if you divide the value of the Black-Scholes replicating portfolio by the numeraire asset, you're going to cancel out that risk-free rate -- e.g. have a Martingale. (I'm not a mathematician, so please correct me if I've mucked something up in my explanation). *I say basically because there are some technical conditions that need to be fulfilled, but that's generally true.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"285918\",\n \"text\": \"I am in a very similar situation as you (software engineer, high disposable income). Maximize your contributions to all tax-advantaged accounts first. From those accounts you can choose to invest in high risk funds. At your age and date-target funds will invest in riskier investments on your behalf; and they'll do it while avoiding the 30%+/- haircut that you'll be paying in taxes anyhow. If, after that, you're looking for bigger risk plays then look into a brokerage account that will let you buy and sell options. These are big risk swingers and they are sophisticated, complicated products which are used by many people who likely understand finance far better than you. You can make money with them but you should consider it akin to gambling. It might be more to your liking to maintain a long position in a stock and then trade options against your long position. Start with trading covered calls, then you could consider buying options (defined limited downside risk).\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":92,"cells":{"query_id":{"kind":"string","value":"7904"},"query":{"kind":"string","value":"Did an additional $32 billion necessarily get invested into Amazon.com stock on October 26th, 2017?"},"positive_passages":{"kind":"list like","value":[{"docid":"177424","text":"\"No, a jump in market capitalization does not equal the amount that has been invested. Market cap is simply the stock price times the total number of shares. This represents a theoretical value of the company. I say \"\"theoretical\"\" because the company might not be able to be sold for that at all. The quoted stock price is simply what the last buyer and seller of stock agreed upon for the price of their trade. They really only represent themselves; other investors may decide that the stock is worth more or less than that. The stock price can move on very little volume. In this case, Amazon had released a very good earnings report after the bell yesterday, and the price jumped in after hours trading. The stock price is up, but that simply means that the few shares traded overnight sold for much higher than the closing price yesterday. After the market opens today and many more shares are traded, we'll get a better idea what large numbers of investors feel about the price. But no matter what the price does, the change in market cap does not equal the amount of new money being invested in the company. Market cap is the price of the most recent trades extrapolated out across all the shares.\"","title":""},{"docid":"515738","text":"No. The market cap has no relation to actual money that flowed anywhere, it is simple the number of shares multiplied by the current price, and the current price is what potential buyers are (were) willing to pay for the share. So any news that increases or decreases interest in shares changes potentially the share price, and with that the market cap. No money needs to flow.","title":""},{"docid":"192600","text":"Stock A last traded at $100. Stock A has 1 million shares outstanding. No seller is willing to sell Stock A for less than $110 a share. One buyer is willing to buy 1 share for $110. The order executes. The buyer pays the seller $110. Stock A's new price is $110. An $110 investment increased the market cap by $10 million. Neat trick (for all who own Stock A).","title":""},{"docid":"135216","text":"\"The market capitalization of a stock is the number of shares outstanding (of each stock class), times the price of last trade (of each stock class). In a liquid market (where there are lots of buyers and sellers at all price points), this represents the price that is between what people are bidding for the stock and what people are asking for the stock. If you offer any small amount more than the last price, there will be a seller, and if you ask any small amount less than the last price, there will be a buyer, at least for a small amount of stock. Thus, in a liquid market, everyone who owns the stock doesn't want to sell at least some of their stock for a bit less than the last trade price, and everyone who doesn't have the stock doesn't want to buy some of the stock for a bit more than the last trade price. With those assumptions, and a low-friction trading environment, we can say that the last trade value is a good midpoint of what people think one share is worth. If we then multiply it by the number of shares, we get an approximation of what the company is worth. In no way, shape or form does it not mean that there is 32 billion more invested in the company, or even used to purchase stock. There are situations where a 32 billion market cap swing could mean 32 billion more money was invested in the company: the company issues a pile of new shares, and takes in the resulting money. People are completely neutral about this gathering in of cash in exchange for dilluting shares. So the share price remains unchanged, the company gains 32 billion dollars, and there are now more shares outstanding. Now, in some sense, there is zero dollars currently invested in a stock; when you buy a stock, you no longer have the money, and the money goes to the person who no longer has the stock. The issue here is the use of the continuous tense of \"\"invested in\"\"; the investment was made at some point, but the money doesn't really stay in this continuous state of being. Unless you consider the investment liquid, and the option to take money out being implicit, it being a continuous action doesn't make much sense. Sometimes the money is invested in the company, when the company causes stocks to come into being and sells them. The owners of stocks has invested money in stocks in that they spent that money to buy the stocks, but the total sum of money ever spent on stocks for a given company is not really a useful value. The market capitalization is an approximation, which under the efficient market hypothesis (that markets find the correct price for things nearly instantly) is reasonably accurate, of the value the company has collectively to its shareholders. The efficient market hypothesis isn't accurate, but it is an acceptable rule of thumb. Now, this value -- market capitalization -- is arguably not the total value of a company: other stakeholders include bond holders, labour, management, various contract counter-parties, government and customers. Some companies are structured so that almost all value is captured not by the stock owners, but by contract counter-parties (this is sometimes used for hiding assets or debts). But for most large publically traded companies, it (in theory) shouldn't be far off.\"","title":""}],"string":"[\n {\n \"docid\": \"177424\",\n \"text\": \"\\\"No, a jump in market capitalization does not equal the amount that has been invested. Market cap is simply the stock price times the total number of shares. This represents a theoretical value of the company. I say \\\"\\\"theoretical\\\"\\\" because the company might not be able to be sold for that at all. The quoted stock price is simply what the last buyer and seller of stock agreed upon for the price of their trade. They really only represent themselves; other investors may decide that the stock is worth more or less than that. The stock price can move on very little volume. In this case, Amazon had released a very good earnings report after the bell yesterday, and the price jumped in after hours trading. The stock price is up, but that simply means that the few shares traded overnight sold for much higher than the closing price yesterday. After the market opens today and many more shares are traded, we'll get a better idea what large numbers of investors feel about the price. But no matter what the price does, the change in market cap does not equal the amount of new money being invested in the company. Market cap is the price of the most recent trades extrapolated out across all the shares.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"515738\",\n \"text\": \"No. The market cap has no relation to actual money that flowed anywhere, it is simple the number of shares multiplied by the current price, and the current price is what potential buyers are (were) willing to pay for the share. So any news that increases or decreases interest in shares changes potentially the share price, and with that the market cap. No money needs to flow.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"192600\",\n \"text\": \"Stock A last traded at $100. Stock A has 1 million shares outstanding. No seller is willing to sell Stock A for less than $110 a share. One buyer is willing to buy 1 share for $110. The order executes. The buyer pays the seller $110. Stock A's new price is $110. An $110 investment increased the market cap by $10 million. Neat trick (for all who own Stock A).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"135216\",\n \"text\": \"\\\"The market capitalization of a stock is the number of shares outstanding (of each stock class), times the price of last trade (of each stock class). In a liquid market (where there are lots of buyers and sellers at all price points), this represents the price that is between what people are bidding for the stock and what people are asking for the stock. If you offer any small amount more than the last price, there will be a seller, and if you ask any small amount less than the last price, there will be a buyer, at least for a small amount of stock. Thus, in a liquid market, everyone who owns the stock doesn't want to sell at least some of their stock for a bit less than the last trade price, and everyone who doesn't have the stock doesn't want to buy some of the stock for a bit more than the last trade price. With those assumptions, and a low-friction trading environment, we can say that the last trade value is a good midpoint of what people think one share is worth. If we then multiply it by the number of shares, we get an approximation of what the company is worth. In no way, shape or form does it not mean that there is 32 billion more invested in the company, or even used to purchase stock. There are situations where a 32 billion market cap swing could mean 32 billion more money was invested in the company: the company issues a pile of new shares, and takes in the resulting money. People are completely neutral about this gathering in of cash in exchange for dilluting shares. So the share price remains unchanged, the company gains 32 billion dollars, and there are now more shares outstanding. Now, in some sense, there is zero dollars currently invested in a stock; when you buy a stock, you no longer have the money, and the money goes to the person who no longer has the stock. The issue here is the use of the continuous tense of \\\"\\\"invested in\\\"\\\"; the investment was made at some point, but the money doesn't really stay in this continuous state of being. Unless you consider the investment liquid, and the option to take money out being implicit, it being a continuous action doesn't make much sense. Sometimes the money is invested in the company, when the company causes stocks to come into being and sells them. The owners of stocks has invested money in stocks in that they spent that money to buy the stocks, but the total sum of money ever spent on stocks for a given company is not really a useful value. The market capitalization is an approximation, which under the efficient market hypothesis (that markets find the correct price for things nearly instantly) is reasonably accurate, of the value the company has collectively to its shareholders. The efficient market hypothesis isn't accurate, but it is an acceptable rule of thumb. Now, this value -- market capitalization -- is arguably not the total value of a company: other stakeholders include bond holders, labour, management, various contract counter-parties, government and customers. Some companies are structured so that almost all value is captured not by the stock owners, but by contract counter-parties (this is sometimes used for hiding assets or debts). But for most large publically traded companies, it (in theory) shouldn't be far off.\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"505331","text":"Amazon to Buy Whole Foods for $13.7 Billion - Whole Foods will continue to operate stores under its brand. By Austen Hufford - Jun 16, 2017 - Bloomberg News Amazon.com Inc. said it would buy Whole Foods Market Inc. for $13.7 billion as the giant internet retailer makes a deeper push into the grocery space. Amazon AMZN, +3.16% will pay $42 a share for Whole Foods WFM, +29.11% valuing the grocer at a 27% premium to its closing price Thursday. The deal is expected to close in the second half of this year. Amazon’s move tanked the stocks of grocery competitors as investors worried that Amazon could do to grocery the same as it did to booksellers. Kroger Co. shares KR, -11.56% fell 14%, Target Corp. shares TGT, -7.63% fell 12%, Supervalu Inc. shares SVU, -12.77% fell 19%, Costco Wholesale Corp. shares COST, -6.51% fell 6.2% and Wal-Mart Stores Inc. shares WMT, -5.15% dropped 5.8%. Amazon’s move into the grocery business comes at a time of change in the industry. Consumers are buying more of their groceries outside of traditional supermarkets. Online merchants, discounters and meal-kit delivery services are all grabbing market share. At the same time, a global commodity glut has pulled down prices for many staple foods over the past 18 months, putting pressure on many retailers to lower prices. An expanded version of this report appears at WSJ.com. http://www.marketwatch.com/story/amazon-to-buy-whole-foods-for-137-billion-2017-06-16-91035726","title":""},{"docid":"377056","text":"\"Yes, there is a financial benefit, if and only if you can live on 24/26th of your salary. Thus, bi-weekly is 12/13 lower than a bi-monthly income. However, you now get a so-called \"\"extra\"\" paycheck twice a year. (We typically get them in March and October.) You can either spend those extra paychecks on \"\"hookers and blow\"\" or spend them wisely on things like accelerated debt repayment, home/car down payment, property taxes, etc, etc. HOWEVER... none of this really matters, since you don't control whether or not you're paid bi-weekly or semi-monthly.\"","title":""},{"docid":"12277","text":"Since October 26th the marketers of the Savoury-cluster (Unox, Knorr, Bertolli, Conimex and Cup-a-Soup) are interacting on Facebook with hundred consumers for three months. Unilever’s marketers talk about consumer eating habits, cooking- and buying behavior. They also research what consumers think of their products, brands and advertising.","title":""},{"docid":"274945","text":"Investors hungry for returns are piling back into securities once tarnished by the financial crisis. Complex structured investments developed a bad reputation during the credit crunch. Ten years later, investors seeking yield are overcoming their skepticism and buying into securities that rely on financial engineering to juice returns. Volumes of CLOs, or collateralized loan obligations, hit a record $247 billion in the first nine months of the year, according to data from J.P. Morgan Chase JPM 1.59%▲ & Co. Fueled by a wave of refinancings and nearly $100 billion in new deals, that far outpaces their recent full-year high of $151 billion in 2014 and the precrisis peak of $136 billion in 2006. The CLO boom is the latest sign of the ferocious hunt for yield permeating markets. Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds. CLOs carve up a portfolio of bank loans to highly indebted companies into slices of securities with different levels of risk. The securities at the bottom of the CLO stack offer the highest potential source of returns, but they are also the first to absorb losses if there are defaults in the underlying loan portfolio. The more senior slices offer lower returns but are more insulated from losses. CLOs are often lumped together with other alphabet-soup acronyms of the financial crisis, such as more toxic CDOs, or collateralized debt obligations. But CLOs actually weathered the financial crisis well: Investors who bought at the top of the market in 2007 suffered paper losses, but there were no defaults at all for the highest-rated securities. That track record has helped boost CLOs’ appeal for investors with lingering concerns over scooping up more complex investments. . Taking off / Global CLO volumes “The demand for things like CLOs….is extraordinary,” said Rick Rieder, chief investment officer for global fixed income at BlackRock Inc. CLOs are one of the largest demand sources for the leveraged loan market, which has also been booming this year. Volumes of leveraged loans, often used by private-equity firms to fund buyouts, are on track to surpass their 2007 record, according to LCD, a unit of S&P Global Market Intelligence. At the same time, investors have voiced concerns about companies’ rising leverage level, and weaker creditor protections. Within a CLO are different risk profiles: Investors in the most senior, AAA-rated piece of debt get paid first and are the most insulated from losses if defaults rise in the underlying loan portfolio. They also receive the skinniest returns. Slices of debt further down receive higher returns, but will suffer losses if defaults spike. At the bottom sits the equity tranche, the first loss-absorber and last to get paid, but the highest potential source of returns. A 2014 report from Standard & Poor’s Ratings Services stated that AAA-rated and AA-rated CLO tranches incurred no losses at all between 1994 and 2013. Loss rates for lower-rated tranches, meanwhile, were low—just 1.1% for B-rated securities over that period. . Flying High / Market returns since J.P. Morgan recommended buying CLOs last July That doesn’t prevent some conservative investors from conflating the CLOs with the now-infamous CDOs, many of which were linked to subprime mortgages and spread and amplified losses in the U.S. housing market. One breed of CDOs are on a comeback path of their own, with more investors returning to them during an aging bull market. Many people were “burnt by these acronyms from the crisis,” said Zak Summerscale, head of credit fund management for Europe and Asia Pacific at Intermediate Capital Group . He is currently recommending that clients buy senior CLO tranches over investment-grade bonds. CLOs, like other types of securitizations, have been subject to greater regulation since the financial crisis. That includes forcing funds that manage a CLO to retain 5% of the securities, in an effort to align incentives with investors. That has “attracted additional capital into the market,” said Mike Rosenberg, a principal at alternative investment manager Tetragon. Assets under management in the “loan participation” sector—a proxy for funds that invest in CLOs—have grown 21% this year to $206 billion, according to Thomson Reuters Lipper. The pickup in CLOs has been a boon to banks weathering declines in trading revenues in the current low-volatility environment. Revenue from CLO-related activity at the top 12 global investment banks more than doubled over the first half of 2017 from a year earlier to almost $1 billion, according to financial consultancy Coalition. CLO investors have been handsomely rewarded in recent months. J.P. Morgan strategist Rishad Ahluwalia recommended clients buy CLOs last July as he thought they looked too cheap. Between then and the end of September, BB-rated CLO tranches returned 25.4%, compared with a 25.2% return for the technology-oriented Nasdaq stock index, according to his calculations. “CLOs have been an absolute home run,” said Mr. Ahluwalia, though he added such chunky returns aren’t repeatable. Analysts say CLOs got beaten down last year following a series of troubles in the underlying loan market, including distress in the energy sector. Some analysts think the strong rally in CLO tranches since then should give investors pause; others think the market has further to run. Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions, likes AAA-rated CLO tranches but with a twist: leverage. Mr. Champion says he buys senior European CLO tranches and borrows money against them to increase the size of his position between five and 10 times. That can amplify gains—and losses—significantly. “The difference between now and a year ago is the availability of leverage,” he said. Bankers say only a small proportion of CLO buyers use leverage and emphasize that trades are subject to daily margin calls. That means investors have to post cash to cover mark-to-market losses on a position, which in turn limits how much they are willing to borrow. “The leverage in the system today is a fraction compared to precrisis,” said J.P. Morgan’s Mr. Ahluwalia. Write to Christopher Whittall at christopher.whittall@wsj.com Appeared in the October 23, 2017, print edition as 'Crisis-Era Securities Regain Investors’ Favor.'","title":""},{"docid":"450949","text":"\"Standard deviation from Wikipedia : In statistics and probability theory, the standard deviation (represented by the Greek letter sigma, σ) shows how much variation or dispersion from the average exists.1 A low standard deviation indicates that the data points tend to be very close to the mean (also called expected value); a high standard deviation indicates that the data points are spread out over a large range of values. In the case of stock returns, a lower value would indicate less volatility while a higher value would mean more volatility, which could be interpreted as high much change does the stock's price go through over time. Mean would be interpreted as if all the figures had to be the same, what would they be? So if a stock returns 10% each year for 3 years in a row, then 10% would be the mean or average return. Now, it is worth noting that there are more than a few calculations that may be done to derive a mean. First, there is the straight forward sum and division by the number of elements idea. For example, if the returns by year were 0%, 10%, and 20% then one may take the sum of 30% and divide by 3 to get a simple mean of 10%. However, some people would rather look at a Compound Annual Growth Rate which in this case would mean multiplying the returns together so 1*(1+.1)*(1+.2)=1.1*1.2=1.32 or 32% since there is some compounding here. Now, instead of dividing a cubic root is taken to get approximately 9.7% average annual return that is a bit lower yet if you compound it over 3 years it will get up to 32% as 10% compounded over 3 years would be 33.1% as (1.1)^3=1.331. Sharpe Ratio from Investopedia: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Thus, this is a way to think about given the volatility how much better did the portfolio do than the 10 year bond. R-squared, Alpha and Beta: These are all around the idea of \"\"linear regression\"\" modelling. The idea is to take some standard like say the \"\"S & P 500\"\" in the case of US stocks and see how well does the portfolio follow this and what if one were to use a linear model are the multipliers and addition components to it. R-squared can be thought of it as a measure as to how good is the fit on a scale of 0 to 1. An S & P 500 index fund may well have an R-squared of 1.00 or 0.99 to the index as it will track it extremely closely while other investments may not follow that well at all. Part of modern portfolio theory would be to have asset classes that move independently of each other and thus would have a lower R-squared so that the movement of the index doesn't indicate how an investment will do. Now, as for alpha and beta, do you remember the formula for a line in slope-intercept form, where y is the portfolio's return and x is the index's return: y=mx+b In this situation m is beta which is the multiple of the return, and b is the alpha or how much additional return one gets without the multiple. Going back to an index fund example, m will be near 1 and b will be near 0 and there isn't anything being done and so the portfolio's return computed based on the index's return is simply y=x. Other mutual funds may try to have a high alpha as this is seen as the risk-free return as there isn't the ups and downs of the market here. Other mutual funds may go for a high beta so that there is volatility for investors to handle.\"","title":""},{"docid":"420267","text":"Yes, absolutely. Consider Microsoft, Updated Jan. 17, 2003 11:59 p.m. ET Software giant Microsoft Corp., finally bowing to mounting pressure to return some of its huge cash hoard to investors, said it will begin paying a regular annual dividend to shareholders. From Wall Street Journal. Thus, for the years prior to 2003, the company didn't pay dividends but changed that. There can also be some special one-time dividends as Microsoft did the following year according to the Wall Street Journal: The $32 billion one-time dividend payment, which comes to $3 for each share of Microsoft stock, could be a measurable stimulus to the U.S. economy -- and is expected to arrive just in time for holiday shopping. Course companies can also reduce to stop dividends as well.","title":""},{"docid":"405919","text":"\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-10-13/long-awaited-fed-balance-sheet-taper-begins-today-with-mortgages) reduced by 54%. (I'm a bot) ***** > After months of debate and conjecture about what&#039;s become known as the Federal Reserve&#039;s balance-sheet taper, the New York branch will announce at 3 p.m. its purchase schedule for a $4 billion per month roll off in the central bank&#039;s holdings. > The amount allowed to roll off will rise to $8 billion a month in January, to $12 billion a month in April and then ramp up in stages until it reaches a maximum of $20 billion in October 2018. > In the last schedule which ran from Sept. 28 to Oct. 13, 30-year 3.5s made up 52 percent of all the $14.75 billion of Fed purchases. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/769hn5/the_longawaited_fed_balance_sheet_taper_begins/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~227934 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **billion**^#1 **month**^#2 **purchase**^#3 **off**^#4 **Fed**^#5\"","title":""},{"docid":"524142","text":"I'm going to go the contrarian route and suggest you stay completely out of the stock market for the foreseeable future. We're entering a period of time this country and world has never seen before. Our country is broke / insolvent. We are printing money to buy our own debt. This is beyond stupid. It will destroy us, just like it did Germany in the 1920's. Many states are on the verge of bankruptcy. The only thing stopping them is a constitutional issue. California, Illinois, Michigan, New York etc. are all broke. They are billions in debt and massive underfunding of pensions. More than a half-dozen European countries are on the verge of financial implosion. The Euro is just as bad off as our dollar. There are extremely powerful forces at work bent on destroying this country and the US dollar, to usher in a One World Government and financial system. IMO, buy as much gold and silver has you can. Not necessarily as an investment vehicle. I would do it as a survival vehicle. And, I don't mean gold/silver stocks. I mean you buy gold/silver and you take physical possession.","title":""},{"docid":"174771","text":"\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-10-24/india-to-inject-32-billion-to-bolster-capital-at-state-banks) reduced by 81%. (I'm a bot) ***** > India will inject 2.11 trillion rupees of capital into state-controlled lenders over two years, an amount that&#039;s ten-fold higher than the government&#039;s previous pledge as it seeks to revive growth in Asia&#039;s third-largest economy. > The government will sell 1.35 trillion rupees of recapitalization bonds while banks will raise another 760 billion rupees through &quot;Budgetary support&quot; and from the markets, Rajiv Kumar, banking secretary at India&#039;s Finance Ministry said at a briefing on Tuesday. > The new funds will help banks, that have been plagued by rising stressed asset ratio, revive lending growth from a 25-year low. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/78pldf/india_to_inject_32_billion_into_state_banks_to/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~235025 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Bank**^#1 **government**^#2 **lenders**^#3 **year**^#4 **India**^#5\"","title":""},{"docid":"107819","text":"Private investors as mutual funds are a minority of the market. Institutional investors make up a substantial portion of the long term holdings. These include pension funds, insurance companies, and even corporations managing their money, as well as individuals rich enough to actively manage their own investments. From Business Insider, with some aggregation: Numbers don't add to 100% because of rounding. Also, I pulled insurance out of household because it's not household managed. Another source is the Tax Policy Center, which shows that about 50% of corporate stock is owned by individuals (25%) and individually managed retirement accounts (25%). Another issue is that household can be a bit confusing. While some of these may be people choosing stocks and investing their money, this also includes Employee Stock Ownership Plans (ESOP) and company founders. For example, Jeff Bezos owns about 17% of Amazon.com according to Wikipedia. That would show up under household even though that is not an investment account. Jeff Bezos is not going to sell his company and buy equity in an index fund. Anyway, the most generous description puts individuals as controlling about half of all stocks. Even if they switched all of that to index funds, the other half of stocks are still owned by others. In particular, about 26% is owned by institutional investors that actively manage their portfolios. In addition, day traders buy and sell stocks on a daily basis, not appearing in these numbers. Both active institutional investors and day traders would hop on misvalued stocks, either shorting the overvalued or buying the undervalued. It doesn't take that much of the market to control prices, so long as it is the active trading market. The passive market doesn't make frequent trades. They usually only need to buy or sell as money is invested or withdrawn. So while they dominate the ownership stake numbers, they are much lower on the trading volume numbers. TL;DR: there is more than enough active investment by organizations or individuals who would not switch to index funds to offset those that do. Unless that changes, this is not a big issue.","title":""},{"docid":"397383","text":"What is your investing goal? And what do you mean by investing? Do you necessarily mean investing in the stock market or are you just looking to grow your money? Also, will you be able to add to that amount on a regular basis going forward? If you are just looking for a way to get $100 into the stock market, your best option may be DRIP investing. (DRIP stands for Dividend Re-Investment Plan.) The idea is that you buy shares in a company (typically directly from the company) and then the money from the dividends are automatically used to buy additional fractional shares. Most DRIP plans also allow you to invest additional on a monthly basis (even fractional shares). The advantages of this approach for you is that many DRIP plans have small upfront requirements. I just looked up Coca-cola's and they have a $500 minimum, but they will reduce the requirement to $50 if you continue investing $50/month. The fees for DRIP plans also generally fairly small which is going to be important to you as if you take a traditional broker approach too large a percentage of your money will be going to commissions. Other stock DRIP plans may have lower monthly requirements, but don't make your decision on which stock to buy based on who has the lowest minimum: you only want a stock that is going to grow in value. They primary disadvantages of this approach is that you will be investing in a only a single stock (I don't believe that can get started with a mutual fund or ETF with $100), you will be fairly committed to that stock, and you will be taking a long term investing approach. The Motley Fool investing website also has some information on DRIP plans : http://www.fool.com/DRIPPort/HowToInvestDRIPs.htm . It's a fairly old article, but I imagine that many of the links still work and the principles still apply If you are looking for a more medium term or balanced investment, I would advise just opening an online savings account. If you can grow that to $500 or $1,000 you will have more options available to you. Even though savings accounts don't pay significant interest right now, they can still help you grow your money by helping you segregate your money and make regular deposits into savings.","title":""},{"docid":"568394","text":"If I gift 50k to my Father who is retired but getting pension, will I get a 50k tax benefit? If Yes, then under which section would it be? 80C or other? There is no tax benefit for you on the 50K. This can't be deducted under any section. You have to pay tax. if Father's income i.e. Pension+gift doesn't come under tax slab and he doesn't wish to invest in tax saving scheme would I still be getting benefit? See above you do not get any tax benefit. Other Notes: Edit: Start from zero, you don't have any money. Say for the year 2015-2016, you get Rs 30 lacs salary. After deductions [PF, etc] you pay [say approx] Rs 10 lacs as tax. Now you have Rs 20 lacs. Assuming you survive on thin air and save Rs 20 lacs. If you invest this 20 lacs into FD. For the year 2016-2017 you will get Rs 2 lacs as interest on 20 lacs. Plus you have salary of Rs 30 lacs. So now your total income is 32 lacs and your tax will go up by around Rs 60,000 [approx 30% of Rs 2 lacs]. Instead if you gift this Rs 20 lacs to your father, there is no gift tax for you or your father. Now your father invested this Rs 20 lacs in FD, he will get an interest of Rs 2 lacs. This can be tax free to him if he does not have any other income. If he has say an income of Rs 2.5 lacs, then he has to pay tax on the Rs 2 lacs at 10% ... Now he can gift you the Rs 2 lacs for 2016-2017 there is no gift tax to you or him.","title":""},{"docid":"422062","text":"\"Why do stock markets allow these differences in reporting? The IRS allows businesses to use fiscal calendars that differ from the calendar year. There are a number of reasons a company would choose do this, from preferring to avoid an accounting rush at end of year during holiday season, to aligning with seasonality for their profits (some like to have Q4 as the strongest quarter). Smaller businesses may prefer to keep the extra stress of year end closeout to a traditionally slower time for the business, and some just start their fiscal calendar when the company starts up. You'll notice the report dates are a couple weeks after fiscal quarter end, you would read it as \"\"three months ended...,\"\" so for Agilent, three months ended October 31, 2017, so August, September, October are their Q4 months.\"","title":""},{"docid":"441787","text":"In addition to being hauled before Congress, Mylan agreed in October to pay $465 million to settle federal allegations that it falsely classified EpiPen to overcharge Medicaid. Mylan did not admit to any wrongdoing. They don't admit to any wrongdoing because that makes the fine tax deductible in most cases. The government let's them do this and the taxpayer get fucked and then pays part of the fine for fucking them. The tax code needs to be rewritten such that any settlement with the government over misconduct is entirely off limits for deduction.","title":""},{"docid":"447499","text":"Is that really true though? He brought in via hedge fund when the stock was multiples more in 2004. He loaned it a bunch of money, many billions. He gets the Sears commerial real estate via Seritage but anyone who seen commercial real estate lately knows the market is flooded with excess square footage, retail is being stomped in general, and that Sears/Kmart strip malls in many cases aren't the prime areas anymore. I can see him making out better than the average Stockholder who keeps on holding onto it but nowhere near recuperating his investment. In fact, the average guy could and would have dropped it long ago with an simple website login, these big investors don't have that luxury of dumping stock on a whim so they go down with the ship. http://fortune.com/2017/03/31/sears-eddie-lampert-net-worth-hedge-fund/","title":""},{"docid":"592127","text":"\"This is the best tl;dr I could make, [original](http://www.marketwatch.com/story/amazons-moat-just-got-wider-and-thats-great-for-its-investors-2017-06-16?link=sfmw_tw) reduced by 91%. (I'm a bot) ***** > After Amazon.com Inc. AMZN, +2.44% announced it would purchase Whole Foods Market Inc. WFM, +29.10% for $13.7 billion, the only thing unrealistic about this notion is that anyone other than Amazon will be victorious. > Yes, there was a noteworthy Amazon dig made by President Donald Trump right around Election Day, but many politicos wrote that off simply as more ire over the media, as Jeff Bezos owns the Washington Post as well as Amazon, and the paper has hardly been friendly to Trump. > The more I think about Amazon&#039;s purchase, the more it&#039;s apparent that Amazon itself is the Big Guy. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6hyfnn/amazons_moat_just_got_wider_and_thats_great_for/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~147067 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Amazon**^#1 **more**^#2 **Inc.**^#3 **retail**^#4 **consumer**^#5\"","title":""},{"docid":"423754","text":"\"I don't think you have your head in the right space - you seem to be thinking of these lifecycle funds like they're an annuity or a pension, but they're not. They're an investment. Specifically, they're a mutual fund that will invest in a collection of other mutual funds, which in turn invest in stock and bonds. Stocks go up, and stocks go down. Bonds go up, and bonds go down. How much you'll have in this fund next year is unknowable, much less 32 years from now. What you can know, is that saving regularly over the next 32 years and investing it in a reasonable, and diversified way in a tax sheltered account like that Roth will mean you have a nice chunk of change sitting there when you retire. The lifecycle funds exist to help you with that \"\"reasonable\"\" and \"\"diversified\"\" bit.They're meant to be one stop shopping for a retirement portfolio. They put your money into a diversified portfolio, then \"\"age\"\" the portfolio allocations over time to make it go from a high risk, (potentially) high reward allocation now to a lower risk, lower reward portfolio as you approach retirement. The idea is is that you want to shoot for making lots of money now, but when you're older, you want to focus more on keeping the money you have. Incidentally, kudos for getting into seriously saving for retirement when you're young. One of the biggest positive effects you can have on how much you retire with is simply time. The more time your money can sit there, the better. At 26, if you're putting away 10 percent into a Roth, you're doing just fine. If that 5k is more than 10 percent, you'll do better than fine. (That's a rule of thumb, but it's based on a lot of things I've read where people have gamed out various scenarios, as well as my own, cruder calculations I've done in the past)\"","title":""},{"docid":"59394","text":"\"Invest in a high quality dividend paying group of stocks. Look up \"\"stock aristocrats\"\" to find longterm quality stocks that have regularly increased their dividends for over 20'years. 10'years is a safe period of time to invest in stocks. If you had bought stocks at their hight in 2007 and kept them through the 40% decline thru 2008 and 2009 and held on to them for 10 years until 2017, you would have earned a 40 % increase from when you purchased them. That is pretty much a worst case scenerio. If you had invested in dividend paying stocks and had earned an additional 2.5% per year, you would have exceeded your 5% goal. The lifetime yearly return of the stock market is 10%. Time is the only downside, but with ten years, you are almost certainly immune.\"","title":""},{"docid":"503467","text":"I found a comparison of stock and bond returns. The relevant portion here is that bonds went up by 10% in 2007 and 20% in 2008 (32% compounded). Stocks were already recovering in 2009, going up almost 26%. You don't mention what you were hoping to get from your gold investment, but bonds gave a very good return for those two years.","title":""},{"docid":"585500","text":"“Only 6 time in US History has the Stock Market had rallies with 9 or more days in a row of all time highs – Hoover in 1929, Eisenhower in 1955, LBJ in 1964, Reagan in 1987, Trump in 2017 and Trump again in 2017.” “Now President Trump is the only President in US History to oversee more than one Stock Market Rally of 9 or more days in a row of all time closing highs.” There are two related events like the growth in GDP and the decline in unemployment that shouldn’t be forgotten. “Unemployment is going down, good paying jobs are increasing, the US GDP broke $19 Trillion for the first time ever under President Trump, the US debt is down $100 billion since the inauguration and Americans are making money again” A healthy and growing middle-class is of a great importance to a nation like ours because working Americans have more disposable income and more capable of saving and investing for their retirements. Economies thrive when the power of government is restrained and economic freedom is promoted.","title":""},{"docid":"580757","text":"If you do not understand the volatility of the fx market, you need to stop trading it, immediately. There are many reasons that fx is riskier than other types of investing, and you bear those risks whether you understand them or not. Below are a number of reasons why fx trading has high levels of risk: 1) FX trades on the relative exchange rate between currencies. That means it is a zero-sum game. Over time, the global fx market cannot 'grow'. If the US economy doubles in size, and the European economy doubles in size, then the exchange rate between the USD and the EUR will be the same as it is today (in an extreme example, all else being equal, yes I know that value of currency /= value of total economy, but the general point stands). Compare that with the stock market - if the US economy doubles in size, then effectively the value of your stock investments will double in size. That means that stocks, bonds, etc. tied to real world economies generally increase when the global economy increases - it is a positive sum game, where many players can be winners. On the long term, on average, most people earn value, without needing to get into 'timing' of trades. This allows many people to consider long-term equity investing to be lower risk than 'day-trading'. With FX, because the value of a currency is in its relative position compared with another currency, 1 player is a winner, 1 player is a loser. By this token, most fx trading is necessarily short-term 'day-trading', which by itself carries inherent risk. 2) Fx markets are insanely efficient (I will lightly state that this is my opinion, but one that I am not alone in holding firmly). This means that public information about a currency [ie: economic news, political news, etc.] is nearly immediately acted upon by many, many people, so that the revised fx price of that currency will quickly adjust. The more efficient a market is, the harder it is to 'time a trade'. As an example, if you see on a news feed that the head of a central bank authority made an announcement about interest rates in that country [a common driver of fx prices], you have only moments to make a trade before the large institutional investors already factor it into their bid/ask prices. Keep in mind that the large fx players are dealing with millions and billions of dollars; markets can move very quickly because of this. Note that some currencies trade more frequently than others. The main currency 'pairs' are typically between USD and / or other G10 country-currencies [JPY, EUR, etc.]. As you get into currencies of smaller countries, trading of those currencies happens less frequently. This means that there may be some additional time before public information is 'priced in' to the market value of that currency, making that currency 'less efficient'. On the flip side, if something is infrequently traded, pricing can be more volatile, as a few relatively smaller trades can have a big impact on the market. 3) Uncertainty of political news. If you make an fx trade based on what you believe will happen after an expected political event, you are taking risk that the event actually happens. Politics and world events can be very hard to predict, and there is a high element of chance involved [see recent 'expected' election results across the world for evidence of this]. For something like the stock market, a particular industry may get hit every once in a while with unexpected news, but the fx market is inherently tied to politics in a way that may impact exchange rates multiple times a day. 4) Leveraging. It is very common for fx traders to borrow money to invest in fx. This creates additional risk because it amplifies the impact of your (positive or negative) returns. This applies to other investments as well, but I mention it because high degrees of debt leveraging is extremely common in FX. To answer your direct question: There are no single individual traders who spike fx prices - that is the impact you see of a very efficient market, with large value traders, reacting to frequent, surprising news. I reiterate: If you do not understand the risks associated with fx trade, I recommend that you stop this activity immediately, at least until you understand it better [and I would recommend personally that any amateur investor never get involved in fx at all, regardless of how informed you believe you are].","title":""},{"docid":"424679","text":"\"I cannot tell you what is or is not allowed under Islamic law. What I can tell you is that when most investors talk about the \"\"power of compound interest,\"\" they are not actually necessarily talking about interest! The idea of the magic of compound interest is that when you receive an interest payment on your investment, you now have a larger investment, earning more interest. Your investment grows exponentially. This doesn't just apply to interest payments, however, but can apply to any type of investment where the profits of the investment cause the investment to get larger. For example, if you invest in a company's stock, and the value of the stock goes up 10% in a year, after that year your investment is worth more than it was at the beginning. If it goes up another 10% the following year, you have gained more money in the second year than you did in the first. Your gains are compounding, even though interest payments are not involved at all. The same is true if you reinvest dividends or if you use business profit to expand your business, for example. The term \"\"power of compound interest\"\" is so named for historical reasons, but really applies to any type of investment where the investment itself is growing.\"","title":""},{"docid":"54257","text":"\"If you own 1% of a company, you are technically entitled to 1% of the current value and future profits of that company. However, you cannot, as you seem to imply, just decide at some point to take your ball and go home. You cannot call up the company and ask for 1% of their assets to be liquidated and given to you in cash. What the 1% stake in the company actually entitles you to is: 1% of total shareholder voting rights. Your \"\"aye\"\" or \"\"nay\"\" carries the weight of 1% of the total shareholder voting block. Doesn't sound like much, but when the average little guy has on the order of ten-millionths of a percentage point ownership of any big corporation, your one vote carries more weight than those of millions of single-share investors. 1% of future dividend payments made to shareholders. For every dollar the corporation makes in profits, and doesn't retain for future growth, you get a penny. Again, doesn't sound like much, but consider that the Simon property group, ranked #497 on the Fortune 500 list of the world's biggest companies by revenue, made $1.4 billion in profits last year. 1% of that, if the company divvied it all up, is $14 million. If you bought your 1% stake in March of 2009, you would have paid a paltry $83 million, and be earning roughly 16% on your initial investment annually just in dividends (to say nothing of the roughly 450% increase in stock price since that time, making the value of your holdings roughly $460 million; that does reduce your actual dividend yield to about 3% of holdings value). If this doesn't sound appealing, and you want out, you would sell your 1% stake. The price you would get for this total stake may or may not be 1% of the company's book value. This is for many reasons: Now, to answer your hypothetical: If Apple's stock, tomorrow, went from $420b market cap to zero, that would mean that the market unanimously thought, when they woke up tomorrow morning, that the company was all of a sudden absolutely worthless. In order to have this unanimous consent, the market must be thoroughly convinced, by looking at SEC filings of assets, liabilities and profits, listening to executive statements, etc that an investor wouldn't see even one penny returned of any cash investment made in this company's stock. That's impossible; the price of a share is based on what someone will pay to have it (or accept to be rid of it). Nobody ever just gives stock away for free on the trading floor, so even if they're selling 10 shares for a penny, they're selling it, and so the stock has a value ($0.001/share). We can say, however, that a fall to \"\"effectively zero\"\" is possible, because they've happened. Enron, for instance, lost half its share value in just one week in mid-October as the scope of the accounting scandal started becoming evident. That was just the steepest part of an 18-month fall from $90/share in August '00, to just $0.12/share as of its bankruptcy filing in Dec '01; a 99.87% loss of value. Now, this is an extreme example, but it illustrates what would be necessary to get a stock to go all the way to zero (if indeed it ever really could). Enron's stock wasn't delisted until a month and a half after Enron's bankruptcy filing, it was done based on NYSE listing rules (the stock had been trading at less than a dollar for 30 days), and was still traded \"\"over the counter\"\" on the Pink Sheets after that point. Enron didn't divest all its assets until 2006, and the company still exists (though its mission is now to sue other companies that had a hand in the fraud, get the money and turn it around to Enron creditors). I don't know when it stopped becoming a publicly-traded company (if indeed it ever did), but as I said, there is always someone willing to buy a bunch of really cheap shares to try and game the market (buying shares reduces the number available for sale, reducing supply, increasing price, making the investor a lot of money assuming he can offload them quickly enough).\"","title":""},{"docid":"545771","text":"They did, but Google also owns a significant portion of Uber - they put in $258 million for 6.8% of the company at a $3.7 billion valuation (probably somewhat diluted by now), so Google's investment is probably worth ~$3 billion now. Google stands to make more if Uber is successful in using the IP they stole and their valuation soars. My guess is that the lawsuit ends in a couple billion dollar settlement so Google gets some cash out of it, and their investment is not hurt.","title":""},{"docid":"561123","text":"\"While you would probably not use your ATM card to buy a $1M worth mansion, I've heard urban legends about people who bought a house on a credit card. While can't say its reliable, I wouldn't be surprised that some have actual factual basis. I myself had put a car down-payment on my credit card, and had I paid the sticker price, the dealer would definitely have no problem with putting the whole car on the credit card (and my limits would allow it, even for a luxury brand). The instruments are the same. There's nothing special you need to have to pay a million dollars. You just write a lot of zeroes on your check, but you don't need a special check for that. Large amounts of money are transferred electronically (wire-transfers), which is also something that \"\"regular\"\" people do once or twice in their lives. What might be different is the way these purchases are financed. Rich people are not necessarily rich with cash. Most likely, they're rich with equity: own something that's worth a lot. In this case, instead of a mortgage secured by the house, they can take a loan secured by the stocks they own. This way, they don't actually cash out of the investment, yet get cash from its value. It is similarly to what we, regular mortals, do with our equity in primary residence and HELOCs. So it is not at all uncommon that a billionaire will in fact have tons of money owed in loans. Why? Because the billions owned are owned through stock valuation, and the cash used is basically a loan secured by these stocks. It might happen that the stocks securing the loans become worthless, and that will definitely be a problem both to the (now ex-)billionaire and the bank. But until then, they can get cash from their investment without cashing out and without paying taxes. And if they're lucky enough to die before they need to repay the loans - they saved tons on money on taxes.\"","title":""},{"docid":"552578","text":"\"No! The \"\"mostly false\"\", as clearly stated, by Politifact, is because, despite the claim being true, and even with additional 22 Billion Dollars, \"\"*it’s a bit of a stretch for him to take credit for any changes in debt levels*\"\". Yes, you read it! \"\"it's a BIT of a stretch\"\", just a bit, because, oh yes, Trump did not enact any fiscal legislation (he did!) and deficits only get cut if you do \"\"fiscal legislations\"\" (they don't).\"","title":""},{"docid":"276954","text":">[**WHAT IS BITCOIN? Bitcoin Explained by Andreas Antonopoulos on London Real [5:32]**](http://youtu.be/Cpj_P4Dp5kU) >>Get your FREE copy of the The Business Idea Launch Guide. > [*^London ^Real*](https://www.youtube.com/channel/UCCZVmatSqIMTTB8uExk8xEg) ^in ^Science ^& ^Technology >*^10,451 ^views ^since ^Jan ^2017* [^bot ^info](/r/youtubefactsbot/wiki/index)","title":""},{"docid":"83734","text":"Energy Transfer Partners, LP (stock symbol ETP) is the parent company of Dakota Access LLC, the developer of the Dakota Access Pipeline. Since ETP is a publicly traded company, it is certainly possible to purchase the stock. To answer your questions: Would it not be possible to buy their stocks, bring down the price of the stocks and keep it there until investors pull out because it is financially unwise to these investors? You cannot artificially bring the price of a stock down by buying the stock. Purchasing large enough amounts would theoretically cause the price to go up, not down. You could theoretically cause the stock to go down by shorting the stock (borrowing shares and then selling them), but it would take a lot of shares to do this, and may not be successful. If not successful, your losses are potentially unlimited. Would it alternatively be possible to buy enough stock to have a voice in the operations of the company? Yes, you could theoretically purchase enough of the stock to control the company. The market capitalization of ETP is currently $17.9 Billion; if you owned half of the stock, you would have complete control of the company. But buying that much stock would certainly influence the price of the stock, so it would cost you more than half of that amount to buy that much stock. You could get yourself a voice at the table for less without owning a full half of the stock, but you would not have full control, and would need support from others to get the outcome you want. Alternatively, someone determined to exert their influence could theoretically make an offer to purchase the Dakota Access subsidiary from ETP, which might be less costly than purchasing half of the entire corporation. Even if an extremely wealthy person were to try one of these options and destroy this company, it wouldn't necessarily stop another company from building something similar. The investors you purchased the company from would have billions of dollars to do so with.","title":""},{"docid":"450132","text":"crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments.","title":""},{"docid":"363546","text":"\"A company's valuation includes its assets, in addition to projected earnings. Aside from the obvious issue that \"\"projected earnings\"\" can be wildly inaccurate or speculative (as in the case of startups and fast-moving industries like technology), a company's assets are not necessarily tied to the market the company is in. For the sake of illustration, say the government were to ban fast food tomorrow, and the market for that were to go all the way to zero. McDonald's would still have almost 30 billion dollars worth of real estate holdings that would surely make the company worth something, even though it would have to stop selling its products. Similarly, Apple is sitting on approximately $200 billion dollars in cash and securities in overseas subsidiaries. Even if they never make another cent selling iPhones and such, the company is still worth a lot because of those holdings. \"\"Corporate raiders\"\" back in the 70's and 80's made massive personal fortunes exploiting this disconnect in undervalued companies that had more assets than their market cap, by getting enough ownership to liquidate the company's assets. Oliver Stone even made a movie about the phenomenon. So yes, it's certainly possible for a company to be worth more than the size of the market for its products.\"","title":""}],"string":"[\n {\n \"docid\": \"505331\",\n \"text\": \"Amazon to Buy Whole Foods for $13.7 Billion - Whole Foods will continue to operate stores under its brand. By Austen Hufford - Jun 16, 2017 - Bloomberg News Amazon.com Inc. said it would buy Whole Foods Market Inc. for $13.7 billion as the giant internet retailer makes a deeper push into the grocery space. Amazon AMZN, +3.16% will pay $42 a share for Whole Foods WFM, +29.11% valuing the grocer at a 27% premium to its closing price Thursday. The deal is expected to close in the second half of this year. Amazon’s move tanked the stocks of grocery competitors as investors worried that Amazon could do to grocery the same as it did to booksellers. Kroger Co. shares KR, -11.56% fell 14%, Target Corp. shares TGT, -7.63% fell 12%, Supervalu Inc. shares SVU, -12.77% fell 19%, Costco Wholesale Corp. shares COST, -6.51% fell 6.2% and Wal-Mart Stores Inc. shares WMT, -5.15% dropped 5.8%. Amazon’s move into the grocery business comes at a time of change in the industry. Consumers are buying more of their groceries outside of traditional supermarkets. Online merchants, discounters and meal-kit delivery services are all grabbing market share. At the same time, a global commodity glut has pulled down prices for many staple foods over the past 18 months, putting pressure on many retailers to lower prices. An expanded version of this report appears at WSJ.com. http://www.marketwatch.com/story/amazon-to-buy-whole-foods-for-137-billion-2017-06-16-91035726\",\n \"title\": \"\"\n },\n {\n \"docid\": \"377056\",\n \"text\": \"\\\"Yes, there is a financial benefit, if and only if you can live on 24/26th of your salary. Thus, bi-weekly is 12/13 lower than a bi-monthly income. However, you now get a so-called \\\"\\\"extra\\\"\\\" paycheck twice a year. (We typically get them in March and October.) You can either spend those extra paychecks on \\\"\\\"hookers and blow\\\"\\\" or spend them wisely on things like accelerated debt repayment, home/car down payment, property taxes, etc, etc. HOWEVER... none of this really matters, since you don't control whether or not you're paid bi-weekly or semi-monthly.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"12277\",\n \"text\": \"Since October 26th the marketers of the Savoury-cluster (Unox, Knorr, Bertolli, Conimex and Cup-a-Soup) are interacting on Facebook with hundred consumers for three months. Unilever’s marketers talk about consumer eating habits, cooking- and buying behavior. They also research what consumers think of their products, brands and advertising.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"274945\",\n \"text\": \"Investors hungry for returns are piling back into securities once tarnished by the financial crisis. Complex structured investments developed a bad reputation during the credit crunch. Ten years later, investors seeking yield are overcoming their skepticism and buying into securities that rely on financial engineering to juice returns. Volumes of CLOs, or collateralized loan obligations, hit a record $247 billion in the first nine months of the year, according to data from J.P. Morgan Chase JPM 1.59%▲ & Co. Fueled by a wave of refinancings and nearly $100 billion in new deals, that far outpaces their recent full-year high of $151 billion in 2014 and the precrisis peak of $136 billion in 2006. The CLO boom is the latest sign of the ferocious hunt for yield permeating markets. Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds. CLOs carve up a portfolio of bank loans to highly indebted companies into slices of securities with different levels of risk. The securities at the bottom of the CLO stack offer the highest potential source of returns, but they are also the first to absorb losses if there are defaults in the underlying loan portfolio. The more senior slices offer lower returns but are more insulated from losses. CLOs are often lumped together with other alphabet-soup acronyms of the financial crisis, such as more toxic CDOs, or collateralized debt obligations. But CLOs actually weathered the financial crisis well: Investors who bought at the top of the market in 2007 suffered paper losses, but there were no defaults at all for the highest-rated securities. That track record has helped boost CLOs’ appeal for investors with lingering concerns over scooping up more complex investments. . Taking off / Global CLO volumes “The demand for things like CLOs….is extraordinary,” said Rick Rieder, chief investment officer for global fixed income at BlackRock Inc. CLOs are one of the largest demand sources for the leveraged loan market, which has also been booming this year. Volumes of leveraged loans, often used by private-equity firms to fund buyouts, are on track to surpass their 2007 record, according to LCD, a unit of S&P Global Market Intelligence. At the same time, investors have voiced concerns about companies’ rising leverage level, and weaker creditor protections. Within a CLO are different risk profiles: Investors in the most senior, AAA-rated piece of debt get paid first and are the most insulated from losses if defaults rise in the underlying loan portfolio. They also receive the skinniest returns. Slices of debt further down receive higher returns, but will suffer losses if defaults spike. At the bottom sits the equity tranche, the first loss-absorber and last to get paid, but the highest potential source of returns. A 2014 report from Standard & Poor’s Ratings Services stated that AAA-rated and AA-rated CLO tranches incurred no losses at all between 1994 and 2013. Loss rates for lower-rated tranches, meanwhile, were low—just 1.1% for B-rated securities over that period. . Flying High / Market returns since J.P. Morgan recommended buying CLOs last July That doesn’t prevent some conservative investors from conflating the CLOs with the now-infamous CDOs, many of which were linked to subprime mortgages and spread and amplified losses in the U.S. housing market. One breed of CDOs are on a comeback path of their own, with more investors returning to them during an aging bull market. Many people were “burnt by these acronyms from the crisis,” said Zak Summerscale, head of credit fund management for Europe and Asia Pacific at Intermediate Capital Group . He is currently recommending that clients buy senior CLO tranches over investment-grade bonds. CLOs, like other types of securitizations, have been subject to greater regulation since the financial crisis. That includes forcing funds that manage a CLO to retain 5% of the securities, in an effort to align incentives with investors. That has “attracted additional capital into the market,” said Mike Rosenberg, a principal at alternative investment manager Tetragon. Assets under management in the “loan participation” sector—a proxy for funds that invest in CLOs—have grown 21% this year to $206 billion, according to Thomson Reuters Lipper. The pickup in CLOs has been a boon to banks weathering declines in trading revenues in the current low-volatility environment. Revenue from CLO-related activity at the top 12 global investment banks more than doubled over the first half of 2017 from a year earlier to almost $1 billion, according to financial consultancy Coalition. CLO investors have been handsomely rewarded in recent months. J.P. Morgan strategist Rishad Ahluwalia recommended clients buy CLOs last July as he thought they looked too cheap. Between then and the end of September, BB-rated CLO tranches returned 25.4%, compared with a 25.2% return for the technology-oriented Nasdaq stock index, according to his calculations. “CLOs have been an absolute home run,” said Mr. Ahluwalia, though he added such chunky returns aren’t repeatable. Analysts say CLOs got beaten down last year following a series of troubles in the underlying loan market, including distress in the energy sector. Some analysts think the strong rally in CLO tranches since then should give investors pause; others think the market has further to run. Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions, likes AAA-rated CLO tranches but with a twist: leverage. Mr. Champion says he buys senior European CLO tranches and borrows money against them to increase the size of his position between five and 10 times. That can amplify gains—and losses—significantly. “The difference between now and a year ago is the availability of leverage,” he said. Bankers say only a small proportion of CLO buyers use leverage and emphasize that trades are subject to daily margin calls. That means investors have to post cash to cover mark-to-market losses on a position, which in turn limits how much they are willing to borrow. “The leverage in the system today is a fraction compared to precrisis,” said J.P. Morgan’s Mr. Ahluwalia. Write to Christopher Whittall at christopher.whittall@wsj.com Appeared in the October 23, 2017, print edition as 'Crisis-Era Securities Regain Investors’ Favor.'\",\n \"title\": \"\"\n },\n {\n \"docid\": \"450949\",\n \"text\": \"\\\"Standard deviation from Wikipedia : In statistics and probability theory, the standard deviation (represented by the Greek letter sigma, σ) shows how much variation or dispersion from the average exists.1 A low standard deviation indicates that the data points tend to be very close to the mean (also called expected value); a high standard deviation indicates that the data points are spread out over a large range of values. In the case of stock returns, a lower value would indicate less volatility while a higher value would mean more volatility, which could be interpreted as high much change does the stock's price go through over time. Mean would be interpreted as if all the figures had to be the same, what would they be? So if a stock returns 10% each year for 3 years in a row, then 10% would be the mean or average return. Now, it is worth noting that there are more than a few calculations that may be done to derive a mean. First, there is the straight forward sum and division by the number of elements idea. For example, if the returns by year were 0%, 10%, and 20% then one may take the sum of 30% and divide by 3 to get a simple mean of 10%. However, some people would rather look at a Compound Annual Growth Rate which in this case would mean multiplying the returns together so 1*(1+.1)*(1+.2)=1.1*1.2=1.32 or 32% since there is some compounding here. Now, instead of dividing a cubic root is taken to get approximately 9.7% average annual return that is a bit lower yet if you compound it over 3 years it will get up to 32% as 10% compounded over 3 years would be 33.1% as (1.1)^3=1.331. Sharpe Ratio from Investopedia: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Thus, this is a way to think about given the volatility how much better did the portfolio do than the 10 year bond. R-squared, Alpha and Beta: These are all around the idea of \\\"\\\"linear regression\\\"\\\" modelling. The idea is to take some standard like say the \\\"\\\"S & P 500\\\"\\\" in the case of US stocks and see how well does the portfolio follow this and what if one were to use a linear model are the multipliers and addition components to it. R-squared can be thought of it as a measure as to how good is the fit on a scale of 0 to 1. An S & P 500 index fund may well have an R-squared of 1.00 or 0.99 to the index as it will track it extremely closely while other investments may not follow that well at all. Part of modern portfolio theory would be to have asset classes that move independently of each other and thus would have a lower R-squared so that the movement of the index doesn't indicate how an investment will do. Now, as for alpha and beta, do you remember the formula for a line in slope-intercept form, where y is the portfolio's return and x is the index's return: y=mx+b In this situation m is beta which is the multiple of the return, and b is the alpha or how much additional return one gets without the multiple. Going back to an index fund example, m will be near 1 and b will be near 0 and there isn't anything being done and so the portfolio's return computed based on the index's return is simply y=x. Other mutual funds may try to have a high alpha as this is seen as the risk-free return as there isn't the ups and downs of the market here. Other mutual funds may go for a high beta so that there is volatility for investors to handle.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"420267\",\n \"text\": \"Yes, absolutely. Consider Microsoft, Updated Jan. 17, 2003 11:59 p.m. ET Software giant Microsoft Corp., finally bowing to mounting pressure to return some of its huge cash hoard to investors, said it will begin paying a regular annual dividend to shareholders. From Wall Street Journal. Thus, for the years prior to 2003, the company didn't pay dividends but changed that. There can also be some special one-time dividends as Microsoft did the following year according to the Wall Street Journal: The $32 billion one-time dividend payment, which comes to $3 for each share of Microsoft stock, could be a measurable stimulus to the U.S. economy -- and is expected to arrive just in time for holiday shopping. Course companies can also reduce to stop dividends as well.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"405919\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-10-13/long-awaited-fed-balance-sheet-taper-begins-today-with-mortgages) reduced by 54%. (I'm a bot) ***** > After months of debate and conjecture about what&#039;s become known as the Federal Reserve&#039;s balance-sheet taper, the New York branch will announce at 3 p.m. its purchase schedule for a $4 billion per month roll off in the central bank&#039;s holdings. > The amount allowed to roll off will rise to $8 billion a month in January, to $12 billion a month in April and then ramp up in stages until it reaches a maximum of $20 billion in October 2018. > In the last schedule which ran from Sept. 28 to Oct. 13, 30-year 3.5s made up 52 percent of all the $14.75 billion of Fed purchases. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/769hn5/the_longawaited_fed_balance_sheet_taper_begins/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~227934 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **billion**^#1 **month**^#2 **purchase**^#3 **off**^#4 **Fed**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"524142\",\n \"text\": \"I'm going to go the contrarian route and suggest you stay completely out of the stock market for the foreseeable future. We're entering a period of time this country and world has never seen before. Our country is broke / insolvent. We are printing money to buy our own debt. This is beyond stupid. It will destroy us, just like it did Germany in the 1920's. Many states are on the verge of bankruptcy. The only thing stopping them is a constitutional issue. California, Illinois, Michigan, New York etc. are all broke. They are billions in debt and massive underfunding of pensions. More than a half-dozen European countries are on the verge of financial implosion. The Euro is just as bad off as our dollar. There are extremely powerful forces at work bent on destroying this country and the US dollar, to usher in a One World Government and financial system. IMO, buy as much gold and silver has you can. Not necessarily as an investment vehicle. I would do it as a survival vehicle. And, I don't mean gold/silver stocks. I mean you buy gold/silver and you take physical possession.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"174771\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-10-24/india-to-inject-32-billion-to-bolster-capital-at-state-banks) reduced by 81%. (I'm a bot) ***** > India will inject 2.11 trillion rupees of capital into state-controlled lenders over two years, an amount that&#039;s ten-fold higher than the government&#039;s previous pledge as it seeks to revive growth in Asia&#039;s third-largest economy. > The government will sell 1.35 trillion rupees of recapitalization bonds while banks will raise another 760 billion rupees through &quot;Budgetary support&quot; and from the markets, Rajiv Kumar, banking secretary at India&#039;s Finance Ministry said at a briefing on Tuesday. > The new funds will help banks, that have been plagued by rising stressed asset ratio, revive lending growth from a 25-year low. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/78pldf/india_to_inject_32_billion_into_state_banks_to/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~235025 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **Bank**^#1 **government**^#2 **lenders**^#3 **year**^#4 **India**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"107819\",\n \"text\": \"Private investors as mutual funds are a minority of the market. Institutional investors make up a substantial portion of the long term holdings. These include pension funds, insurance companies, and even corporations managing their money, as well as individuals rich enough to actively manage their own investments. From Business Insider, with some aggregation: Numbers don't add to 100% because of rounding. Also, I pulled insurance out of household because it's not household managed. Another source is the Tax Policy Center, which shows that about 50% of corporate stock is owned by individuals (25%) and individually managed retirement accounts (25%). Another issue is that household can be a bit confusing. While some of these may be people choosing stocks and investing their money, this also includes Employee Stock Ownership Plans (ESOP) and company founders. For example, Jeff Bezos owns about 17% of Amazon.com according to Wikipedia. That would show up under household even though that is not an investment account. Jeff Bezos is not going to sell his company and buy equity in an index fund. Anyway, the most generous description puts individuals as controlling about half of all stocks. Even if they switched all of that to index funds, the other half of stocks are still owned by others. In particular, about 26% is owned by institutional investors that actively manage their portfolios. In addition, day traders buy and sell stocks on a daily basis, not appearing in these numbers. Both active institutional investors and day traders would hop on misvalued stocks, either shorting the overvalued or buying the undervalued. It doesn't take that much of the market to control prices, so long as it is the active trading market. The passive market doesn't make frequent trades. They usually only need to buy or sell as money is invested or withdrawn. So while they dominate the ownership stake numbers, they are much lower on the trading volume numbers. TL;DR: there is more than enough active investment by organizations or individuals who would not switch to index funds to offset those that do. Unless that changes, this is not a big issue.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"397383\",\n \"text\": \"What is your investing goal? And what do you mean by investing? Do you necessarily mean investing in the stock market or are you just looking to grow your money? Also, will you be able to add to that amount on a regular basis going forward? If you are just looking for a way to get $100 into the stock market, your best option may be DRIP investing. (DRIP stands for Dividend Re-Investment Plan.) The idea is that you buy shares in a company (typically directly from the company) and then the money from the dividends are automatically used to buy additional fractional shares. Most DRIP plans also allow you to invest additional on a monthly basis (even fractional shares). The advantages of this approach for you is that many DRIP plans have small upfront requirements. I just looked up Coca-cola's and they have a $500 minimum, but they will reduce the requirement to $50 if you continue investing $50/month. The fees for DRIP plans also generally fairly small which is going to be important to you as if you take a traditional broker approach too large a percentage of your money will be going to commissions. Other stock DRIP plans may have lower monthly requirements, but don't make your decision on which stock to buy based on who has the lowest minimum: you only want a stock that is going to grow in value. They primary disadvantages of this approach is that you will be investing in a only a single stock (I don't believe that can get started with a mutual fund or ETF with $100), you will be fairly committed to that stock, and you will be taking a long term investing approach. The Motley Fool investing website also has some information on DRIP plans : http://www.fool.com/DRIPPort/HowToInvestDRIPs.htm . It's a fairly old article, but I imagine that many of the links still work and the principles still apply If you are looking for a more medium term or balanced investment, I would advise just opening an online savings account. If you can grow that to $500 or $1,000 you will have more options available to you. Even though savings accounts don't pay significant interest right now, they can still help you grow your money by helping you segregate your money and make regular deposits into savings.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"568394\",\n \"text\": \"If I gift 50k to my Father who is retired but getting pension, will I get a 50k tax benefit? If Yes, then under which section would it be? 80C or other? There is no tax benefit for you on the 50K. This can't be deducted under any section. You have to pay tax. if Father's income i.e. Pension+gift doesn't come under tax slab and he doesn't wish to invest in tax saving scheme would I still be getting benefit? See above you do not get any tax benefit. Other Notes: Edit: Start from zero, you don't have any money. Say for the year 2015-2016, you get Rs 30 lacs salary. After deductions [PF, etc] you pay [say approx] Rs 10 lacs as tax. Now you have Rs 20 lacs. Assuming you survive on thin air and save Rs 20 lacs. If you invest this 20 lacs into FD. For the year 2016-2017 you will get Rs 2 lacs as interest on 20 lacs. Plus you have salary of Rs 30 lacs. So now your total income is 32 lacs and your tax will go up by around Rs 60,000 [approx 30% of Rs 2 lacs]. Instead if you gift this Rs 20 lacs to your father, there is no gift tax for you or your father. Now your father invested this Rs 20 lacs in FD, he will get an interest of Rs 2 lacs. This can be tax free to him if he does not have any other income. If he has say an income of Rs 2.5 lacs, then he has to pay tax on the Rs 2 lacs at 10% ... Now he can gift you the Rs 2 lacs for 2016-2017 there is no gift tax to you or him.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"422062\",\n \"text\": \"\\\"Why do stock markets allow these differences in reporting? The IRS allows businesses to use fiscal calendars that differ from the calendar year. There are a number of reasons a company would choose do this, from preferring to avoid an accounting rush at end of year during holiday season, to aligning with seasonality for their profits (some like to have Q4 as the strongest quarter). Smaller businesses may prefer to keep the extra stress of year end closeout to a traditionally slower time for the business, and some just start their fiscal calendar when the company starts up. You'll notice the report dates are a couple weeks after fiscal quarter end, you would read it as \\\"\\\"three months ended...,\\\"\\\" so for Agilent, three months ended October 31, 2017, so August, September, October are their Q4 months.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"441787\",\n \"text\": \"In addition to being hauled before Congress, Mylan agreed in October to pay $465 million to settle federal allegations that it falsely classified EpiPen to overcharge Medicaid. Mylan did not admit to any wrongdoing. They don't admit to any wrongdoing because that makes the fine tax deductible in most cases. The government let's them do this and the taxpayer get fucked and then pays part of the fine for fucking them. The tax code needs to be rewritten such that any settlement with the government over misconduct is entirely off limits for deduction.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"447499\",\n \"text\": \"Is that really true though? He brought in via hedge fund when the stock was multiples more in 2004. He loaned it a bunch of money, many billions. He gets the Sears commerial real estate via Seritage but anyone who seen commercial real estate lately knows the market is flooded with excess square footage, retail is being stomped in general, and that Sears/Kmart strip malls in many cases aren't the prime areas anymore. I can see him making out better than the average Stockholder who keeps on holding onto it but nowhere near recuperating his investment. In fact, the average guy could and would have dropped it long ago with an simple website login, these big investors don't have that luxury of dumping stock on a whim so they go down with the ship. http://fortune.com/2017/03/31/sears-eddie-lampert-net-worth-hedge-fund/\",\n \"title\": \"\"\n },\n {\n \"docid\": \"592127\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](http://www.marketwatch.com/story/amazons-moat-just-got-wider-and-thats-great-for-its-investors-2017-06-16?link=sfmw_tw) reduced by 91%. (I'm a bot) ***** > After Amazon.com Inc. AMZN, +2.44% announced it would purchase Whole Foods Market Inc. WFM, +29.10% for $13.7 billion, the only thing unrealistic about this notion is that anyone other than Amazon will be victorious. > Yes, there was a noteworthy Amazon dig made by President Donald Trump right around Election Day, but many politicos wrote that off simply as more ire over the media, as Jeff Bezos owns the Washington Post as well as Amazon, and the paper has hardly been friendly to Trump. > The more I think about Amazon&#039;s purchase, the more it&#039;s apparent that Amazon itself is the Big Guy. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6hyfnn/amazons_moat_just_got_wider_and_thats_great_for/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~147067 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **Amazon**^#1 **more**^#2 **Inc.**^#3 **retail**^#4 **consumer**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"423754\",\n \"text\": \"\\\"I don't think you have your head in the right space - you seem to be thinking of these lifecycle funds like they're an annuity or a pension, but they're not. They're an investment. Specifically, they're a mutual fund that will invest in a collection of other mutual funds, which in turn invest in stock and bonds. Stocks go up, and stocks go down. Bonds go up, and bonds go down. How much you'll have in this fund next year is unknowable, much less 32 years from now. What you can know, is that saving regularly over the next 32 years and investing it in a reasonable, and diversified way in a tax sheltered account like that Roth will mean you have a nice chunk of change sitting there when you retire. The lifecycle funds exist to help you with that \\\"\\\"reasonable\\\"\\\" and \\\"\\\"diversified\\\"\\\" bit.They're meant to be one stop shopping for a retirement portfolio. They put your money into a diversified portfolio, then \\\"\\\"age\\\"\\\" the portfolio allocations over time to make it go from a high risk, (potentially) high reward allocation now to a lower risk, lower reward portfolio as you approach retirement. The idea is is that you want to shoot for making lots of money now, but when you're older, you want to focus more on keeping the money you have. Incidentally, kudos for getting into seriously saving for retirement when you're young. One of the biggest positive effects you can have on how much you retire with is simply time. The more time your money can sit there, the better. At 26, if you're putting away 10 percent into a Roth, you're doing just fine. If that 5k is more than 10 percent, you'll do better than fine. (That's a rule of thumb, but it's based on a lot of things I've read where people have gamed out various scenarios, as well as my own, cruder calculations I've done in the past)\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"59394\",\n \"text\": \"\\\"Invest in a high quality dividend paying group of stocks. Look up \\\"\\\"stock aristocrats\\\"\\\" to find longterm quality stocks that have regularly increased their dividends for over 20'years. 10'years is a safe period of time to invest in stocks. If you had bought stocks at their hight in 2007 and kept them through the 40% decline thru 2008 and 2009 and held on to them for 10 years until 2017, you would have earned a 40 % increase from when you purchased them. That is pretty much a worst case scenerio. If you had invested in dividend paying stocks and had earned an additional 2.5% per year, you would have exceeded your 5% goal. The lifetime yearly return of the stock market is 10%. Time is the only downside, but with ten years, you are almost certainly immune.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"503467\",\n \"text\": \"I found a comparison of stock and bond returns. The relevant portion here is that bonds went up by 10% in 2007 and 20% in 2008 (32% compounded). Stocks were already recovering in 2009, going up almost 26%. You don't mention what you were hoping to get from your gold investment, but bonds gave a very good return for those two years.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"585500\",\n \"text\": \"“Only 6 time in US History has the Stock Market had rallies with 9 or more days in a row of all time highs – Hoover in 1929, Eisenhower in 1955, LBJ in 1964, Reagan in 1987, Trump in 2017 and Trump again in 2017.” “Now President Trump is the only President in US History to oversee more than one Stock Market Rally of 9 or more days in a row of all time closing highs.” There are two related events like the growth in GDP and the decline in unemployment that shouldn’t be forgotten. “Unemployment is going down, good paying jobs are increasing, the US GDP broke $19 Trillion for the first time ever under President Trump, the US debt is down $100 billion since the inauguration and Americans are making money again” A healthy and growing middle-class is of a great importance to a nation like ours because working Americans have more disposable income and more capable of saving and investing for their retirements. Economies thrive when the power of government is restrained and economic freedom is promoted.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"580757\",\n \"text\": \"If you do not understand the volatility of the fx market, you need to stop trading it, immediately. There are many reasons that fx is riskier than other types of investing, and you bear those risks whether you understand them or not. Below are a number of reasons why fx trading has high levels of risk: 1) FX trades on the relative exchange rate between currencies. That means it is a zero-sum game. Over time, the global fx market cannot 'grow'. If the US economy doubles in size, and the European economy doubles in size, then the exchange rate between the USD and the EUR will be the same as it is today (in an extreme example, all else being equal, yes I know that value of currency /= value of total economy, but the general point stands). Compare that with the stock market - if the US economy doubles in size, then effectively the value of your stock investments will double in size. That means that stocks, bonds, etc. tied to real world economies generally increase when the global economy increases - it is a positive sum game, where many players can be winners. On the long term, on average, most people earn value, without needing to get into 'timing' of trades. This allows many people to consider long-term equity investing to be lower risk than 'day-trading'. With FX, because the value of a currency is in its relative position compared with another currency, 1 player is a winner, 1 player is a loser. By this token, most fx trading is necessarily short-term 'day-trading', which by itself carries inherent risk. 2) Fx markets are insanely efficient (I will lightly state that this is my opinion, but one that I am not alone in holding firmly). This means that public information about a currency [ie: economic news, political news, etc.] is nearly immediately acted upon by many, many people, so that the revised fx price of that currency will quickly adjust. The more efficient a market is, the harder it is to 'time a trade'. As an example, if you see on a news feed that the head of a central bank authority made an announcement about interest rates in that country [a common driver of fx prices], you have only moments to make a trade before the large institutional investors already factor it into their bid/ask prices. Keep in mind that the large fx players are dealing with millions and billions of dollars; markets can move very quickly because of this. Note that some currencies trade more frequently than others. The main currency 'pairs' are typically between USD and / or other G10 country-currencies [JPY, EUR, etc.]. As you get into currencies of smaller countries, trading of those currencies happens less frequently. This means that there may be some additional time before public information is 'priced in' to the market value of that currency, making that currency 'less efficient'. On the flip side, if something is infrequently traded, pricing can be more volatile, as a few relatively smaller trades can have a big impact on the market. 3) Uncertainty of political news. If you make an fx trade based on what you believe will happen after an expected political event, you are taking risk that the event actually happens. Politics and world events can be very hard to predict, and there is a high element of chance involved [see recent 'expected' election results across the world for evidence of this]. For something like the stock market, a particular industry may get hit every once in a while with unexpected news, but the fx market is inherently tied to politics in a way that may impact exchange rates multiple times a day. 4) Leveraging. It is very common for fx traders to borrow money to invest in fx. This creates additional risk because it amplifies the impact of your (positive or negative) returns. This applies to other investments as well, but I mention it because high degrees of debt leveraging is extremely common in FX. To answer your direct question: There are no single individual traders who spike fx prices - that is the impact you see of a very efficient market, with large value traders, reacting to frequent, surprising news. I reiterate: If you do not understand the risks associated with fx trade, I recommend that you stop this activity immediately, at least until you understand it better [and I would recommend personally that any amateur investor never get involved in fx at all, regardless of how informed you believe you are].\",\n \"title\": \"\"\n },\n {\n \"docid\": \"424679\",\n \"text\": \"\\\"I cannot tell you what is or is not allowed under Islamic law. What I can tell you is that when most investors talk about the \\\"\\\"power of compound interest,\\\"\\\" they are not actually necessarily talking about interest! The idea of the magic of compound interest is that when you receive an interest payment on your investment, you now have a larger investment, earning more interest. Your investment grows exponentially. This doesn't just apply to interest payments, however, but can apply to any type of investment where the profits of the investment cause the investment to get larger. For example, if you invest in a company's stock, and the value of the stock goes up 10% in a year, after that year your investment is worth more than it was at the beginning. If it goes up another 10% the following year, you have gained more money in the second year than you did in the first. Your gains are compounding, even though interest payments are not involved at all. The same is true if you reinvest dividends or if you use business profit to expand your business, for example. The term \\\"\\\"power of compound interest\\\"\\\" is so named for historical reasons, but really applies to any type of investment where the investment itself is growing.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"54257\",\n \"text\": \"\\\"If you own 1% of a company, you are technically entitled to 1% of the current value and future profits of that company. However, you cannot, as you seem to imply, just decide at some point to take your ball and go home. You cannot call up the company and ask for 1% of their assets to be liquidated and given to you in cash. What the 1% stake in the company actually entitles you to is: 1% of total shareholder voting rights. Your \\\"\\\"aye\\\"\\\" or \\\"\\\"nay\\\"\\\" carries the weight of 1% of the total shareholder voting block. Doesn't sound like much, but when the average little guy has on the order of ten-millionths of a percentage point ownership of any big corporation, your one vote carries more weight than those of millions of single-share investors. 1% of future dividend payments made to shareholders. For every dollar the corporation makes in profits, and doesn't retain for future growth, you get a penny. Again, doesn't sound like much, but consider that the Simon property group, ranked #497 on the Fortune 500 list of the world's biggest companies by revenue, made $1.4 billion in profits last year. 1% of that, if the company divvied it all up, is $14 million. If you bought your 1% stake in March of 2009, you would have paid a paltry $83 million, and be earning roughly 16% on your initial investment annually just in dividends (to say nothing of the roughly 450% increase in stock price since that time, making the value of your holdings roughly $460 million; that does reduce your actual dividend yield to about 3% of holdings value). If this doesn't sound appealing, and you want out, you would sell your 1% stake. The price you would get for this total stake may or may not be 1% of the company's book value. This is for many reasons: Now, to answer your hypothetical: If Apple's stock, tomorrow, went from $420b market cap to zero, that would mean that the market unanimously thought, when they woke up tomorrow morning, that the company was all of a sudden absolutely worthless. In order to have this unanimous consent, the market must be thoroughly convinced, by looking at SEC filings of assets, liabilities and profits, listening to executive statements, etc that an investor wouldn't see even one penny returned of any cash investment made in this company's stock. That's impossible; the price of a share is based on what someone will pay to have it (or accept to be rid of it). Nobody ever just gives stock away for free on the trading floor, so even if they're selling 10 shares for a penny, they're selling it, and so the stock has a value ($0.001/share). We can say, however, that a fall to \\\"\\\"effectively zero\\\"\\\" is possible, because they've happened. Enron, for instance, lost half its share value in just one week in mid-October as the scope of the accounting scandal started becoming evident. That was just the steepest part of an 18-month fall from $90/share in August '00, to just $0.12/share as of its bankruptcy filing in Dec '01; a 99.87% loss of value. Now, this is an extreme example, but it illustrates what would be necessary to get a stock to go all the way to zero (if indeed it ever really could). Enron's stock wasn't delisted until a month and a half after Enron's bankruptcy filing, it was done based on NYSE listing rules (the stock had been trading at less than a dollar for 30 days), and was still traded \\\"\\\"over the counter\\\"\\\" on the Pink Sheets after that point. Enron didn't divest all its assets until 2006, and the company still exists (though its mission is now to sue other companies that had a hand in the fraud, get the money and turn it around to Enron creditors). I don't know when it stopped becoming a publicly-traded company (if indeed it ever did), but as I said, there is always someone willing to buy a bunch of really cheap shares to try and game the market (buying shares reduces the number available for sale, reducing supply, increasing price, making the investor a lot of money assuming he can offload them quickly enough).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"545771\",\n \"text\": \"They did, but Google also owns a significant portion of Uber - they put in $258 million for 6.8% of the company at a $3.7 billion valuation (probably somewhat diluted by now), so Google's investment is probably worth ~$3 billion now. Google stands to make more if Uber is successful in using the IP they stole and their valuation soars. My guess is that the lawsuit ends in a couple billion dollar settlement so Google gets some cash out of it, and their investment is not hurt.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"561123\",\n \"text\": \"\\\"While you would probably not use your ATM card to buy a $1M worth mansion, I've heard urban legends about people who bought a house on a credit card. While can't say its reliable, I wouldn't be surprised that some have actual factual basis. I myself had put a car down-payment on my credit card, and had I paid the sticker price, the dealer would definitely have no problem with putting the whole car on the credit card (and my limits would allow it, even for a luxury brand). The instruments are the same. There's nothing special you need to have to pay a million dollars. You just write a lot of zeroes on your check, but you don't need a special check for that. Large amounts of money are transferred electronically (wire-transfers), which is also something that \\\"\\\"regular\\\"\\\" people do once or twice in their lives. What might be different is the way these purchases are financed. Rich people are not necessarily rich with cash. Most likely, they're rich with equity: own something that's worth a lot. In this case, instead of a mortgage secured by the house, they can take a loan secured by the stocks they own. This way, they don't actually cash out of the investment, yet get cash from its value. It is similarly to what we, regular mortals, do with our equity in primary residence and HELOCs. So it is not at all uncommon that a billionaire will in fact have tons of money owed in loans. Why? Because the billions owned are owned through stock valuation, and the cash used is basically a loan secured by these stocks. It might happen that the stocks securing the loans become worthless, and that will definitely be a problem both to the (now ex-)billionaire and the bank. But until then, they can get cash from their investment without cashing out and without paying taxes. And if they're lucky enough to die before they need to repay the loans - they saved tons on money on taxes.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"552578\",\n \"text\": \"\\\"No! The \\\"\\\"mostly false\\\"\\\", as clearly stated, by Politifact, is because, despite the claim being true, and even with additional 22 Billion Dollars, \\\"\\\"*it’s a bit of a stretch for him to take credit for any changes in debt levels*\\\"\\\". Yes, you read it! \\\"\\\"it's a BIT of a stretch\\\"\\\", just a bit, because, oh yes, Trump did not enact any fiscal legislation (he did!) and deficits only get cut if you do \\\"\\\"fiscal legislations\\\"\\\" (they don't).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"276954\",\n \"text\": \">[**WHAT IS BITCOIN? Bitcoin Explained by Andreas Antonopoulos on London Real [5:32]**](http://youtu.be/Cpj_P4Dp5kU) >>Get your FREE copy of the The Business Idea Launch Guide. > [*^London ^Real*](https://www.youtube.com/channel/UCCZVmatSqIMTTB8uExk8xEg) ^in ^Science ^& ^Technology >*^10,451 ^views ^since ^Jan ^2017* [^bot ^info](/r/youtubefactsbot/wiki/index)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"83734\",\n \"text\": \"Energy Transfer Partners, LP (stock symbol ETP) is the parent company of Dakota Access LLC, the developer of the Dakota Access Pipeline. Since ETP is a publicly traded company, it is certainly possible to purchase the stock. To answer your questions: Would it not be possible to buy their stocks, bring down the price of the stocks and keep it there until investors pull out because it is financially unwise to these investors? You cannot artificially bring the price of a stock down by buying the stock. Purchasing large enough amounts would theoretically cause the price to go up, not down. You could theoretically cause the stock to go down by shorting the stock (borrowing shares and then selling them), but it would take a lot of shares to do this, and may not be successful. If not successful, your losses are potentially unlimited. Would it alternatively be possible to buy enough stock to have a voice in the operations of the company? Yes, you could theoretically purchase enough of the stock to control the company. The market capitalization of ETP is currently $17.9 Billion; if you owned half of the stock, you would have complete control of the company. But buying that much stock would certainly influence the price of the stock, so it would cost you more than half of that amount to buy that much stock. You could get yourself a voice at the table for less without owning a full half of the stock, but you would not have full control, and would need support from others to get the outcome you want. Alternatively, someone determined to exert their influence could theoretically make an offer to purchase the Dakota Access subsidiary from ETP, which might be less costly than purchasing half of the entire corporation. Even if an extremely wealthy person were to try one of these options and destroy this company, it wouldn't necessarily stop another company from building something similar. The investors you purchased the company from would have billions of dollars to do so with.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"450132\",\n \"text\": \"crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"363546\",\n \"text\": \"\\\"A company's valuation includes its assets, in addition to projected earnings. Aside from the obvious issue that \\\"\\\"projected earnings\\\"\\\" can be wildly inaccurate or speculative (as in the case of startups and fast-moving industries like technology), a company's assets are not necessarily tied to the market the company is in. For the sake of illustration, say the government were to ban fast food tomorrow, and the market for that were to go all the way to zero. McDonald's would still have almost 30 billion dollars worth of real estate holdings that would surely make the company worth something, even though it would have to stop selling its products. Similarly, Apple is sitting on approximately $200 billion dollars in cash and securities in overseas subsidiaries. Even if they never make another cent selling iPhones and such, the company is still worth a lot because of those holdings. \\\"\\\"Corporate raiders\\\"\\\" back in the 70's and 80's made massive personal fortunes exploiting this disconnect in undervalued companies that had more assets than their market cap, by getting enough ownership to liquidate the company's assets. Oliver Stone even made a movie about the phenomenon. So yes, it's certainly possible for a company to be worth more than the size of the market for its products.\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":93,"cells":{"query_id":{"kind":"string","value":"4206"},"query":{"kind":"string","value":"When will the U.K. convert to the Euro as an official currency?"},"positive_passages":{"kind":"list like","value":[{"docid":"111266","text":"When economies are strong, it is particularly alluring to have a single currency as it makes trade and tourism simpler and helps reduce costs. The problem comes when individual member economies get into trouble. Because the Eurozone is a loose grouping of nations, there is no direct equivalent of the US Federal government to coordinate a response, there is instead an odd mixture of National and Central government that makes it harder to get a unified approach to the economy (OK, it's maybe not so different to the US in reality). This lack of flexibility means that some of the key levers of international finance are compromised, for example a weak economy can't float its currency to improve exports. Similarly individual country's interest rates can't be adjusted to balance spending. I suspect the main reason though is political and based on concepts of sovereignty and national pride. The UK does the majority of its trade with the Eurozone, so the pros would possibly outweigh the cons, but the UK as a whole (and some of our papers in particular) have always regarded Europe with suspicion. Most Brits only speak English and find France and Germany a strange and obtuse place. The (almost) common language makes it easier to relate to the US and Canada than our near neighbours. It seems the perception amongst the political establishment is that any attempt to join the Euro is political suicide, while that is the case it is unlikely to happen. Purely from a personal perspective, I'd welcome the Euro except it means a lot of the products I routinely buy would become a lot more expensive if price is 'harmonised'. For an example compare the price of the iPod Touch in the UK (£209.99) to France(€299). The French pay £262 at the current exchange rate, which is close to 25% more. Ouch. See also my question about Canada adopting the US Dollar","title":""},{"docid":"361172","text":"Not anytime soon, I suspect, but not necessarily for financial reasons. I found this interesting, including the link to the five tests, but I think that this topic is only partially judged through financial eyes, there's a lot of political issues around this with national identity/immigration issues already in the spot light as well as political aspirations. If there will be a call in the near future to join the Euro, how would that reflect on the financial industry in the UK from a PR perspective? and on the political leadership and how it managed the financial crisis? I believe that it is in the interest of all the people in the high positions to show the country getting back on track rather than making ground shaking moves. But what do I know....:-)","title":""},{"docid":"498163","text":"\"I read an account of why the U.K. didn't end up with the euro as its currency in David M. Smick's great book The World Is Curved: Hidden Dangers to the Global Economy. Chapter 6 of the book is titled \"\"Nothing Stays the Same: The 1992 Sterling Crisis.\"\" Here's a very brief excerpt; emphasis mine: [...] As this story shows, such blindness to the realities of a changing world can be very dangerous. In this case, the result was the brutal collapse of the British pound, which explains why the British people still use their own currency, the pound or sterling, and not the euro. The events that unfolded in the autumn of 1992 were totally unforeseen, yet they reshaped the European monetary world and represent a phenomenon that continues to impact global economies. [...] Smick's account of the events around 1992 runs about 28 pages. Here's my version, in a nutshell: At the time, Britain was part of the European Exchange Rate Mechanism, or ERM. The belief in Europe was that by uniting currencies under a common mechanism, Europe could gain influence in international financial policy largely dominated by the United States. The ERM was a precursor to monetary union. The Maastricht Treaty would eventually create the European Union and the euro. Britain joined the ERM later than other nations, in 1990, and after some controversy. Being part of the ERM required member nations to agree to expand and contract their currencies only within certain agreed upon limits called currency bands. Due to the way this had been structured, Germany's strong position placed it at the top of the system. At some point in 1992, Germany had raised interest rates to curb future inflation. However, Britain wanted Germany to cut rates – Britain was not in as enviable a position, economically speaking, and its currency was under pressure. The currency band system would put Britain in a tighter spot with Germany raising rates. Enter George Soros, the Hungarian billionaire, a.k.a. \"\"the man who broke the Bank of England.\"\" Soros took a huge short position against the Sterling. He believed the Sterling was overvalued relative to the German deutsche mark, and Britain would be forced to devalue its currency and realign with respect to the ERM. Other traders followed and also sold the Sterling short. With much pressure on the currency, the Bank of England had to buy up Sterling in order to maintain its agreement under the ERM. Of course, they needed to borrow other currencies to do this. Soon the BoE was in over its head defending the Sterling, realizing the exchange rate it needed to maintain under the ERM simply wasn't sustainable. Britain was forced to withdraw from the ERM on Black Wednesday, September 16th, 1992. And so, Britain does not use the euro today – and any talk of doing so is politically controversial. Therefore I wouldn't bet on Britain adopting the euro any time soon – too many of the players are still in politics and remember 1992 well. I think if Britain adopting the euro is ever to happen, it will be when the memory of 1992 has faded away. BTW, George Soros made off with more than US$1 billion. Soros is a very smart guy.\"","title":""},{"docid":"150102","text":"I can't see it happening because most of the population seems to be against it, even if their reasoning on the whole is wrong. Theoretically, people are against the Euro here as a result of national pride. If it's the best thing to do for the good of the country then national pride shouldn't be taken into account. It'd be perverse in the sense that you'd be stopping your country from progressing because you love it. That doesn't add up. Personally, I don't think it's possible for an entire continent to have a single currency. There's too many different countries and cultures involved. For it to work you'd have to have centralised fiscal policy and this makes no sense at all for a continent. What works here might not work in France or Germany. What works in Greece might not work here. etc, etc. The make up of each country's economies is different.","title":""},{"docid":"26122","text":"In many countries in Europe the prices shot through the roof, so it is not all positive. Also the switching country gives out lot of monetary control that is not welcomed by many. I think that UK is not going to change to euro for a long long time.","title":""},{"docid":"440103","text":"A lot of smaller (and/or weaker) countries did not have much choice when Germany and France decided to rename the German Mark as the Euro, as most of their trade was already in Marks. It was even common for their population to have their savings in Marks. So the question was. Do we wish to have to use the Euro with or without a seat on the board? It was a no brainer for them at the time... The UK has a lot of trade with the USA and other countries outside of the Euro zone, so we are unlikely to have to join the Euro. So in the end it comes down to this point - if the British voters trust a UK government they elected more or less than an EEC government mostly elected by people in the other EEC countries. I don’t think the UK will be joining the Euro anytime soon, but everything can (and will) change with the passage of time. (After all the USA used to be part of the pound trading zone and please can you pay us all the back dated tax you stop paying after a little tea party!) Update: Given what has just happen to Grease and Spain and the Conservative Party has the most seats in the UK parliament, I don’t think the UK will not be joining the Euro for the next 5 years at least","title":""}],"string":"[\n {\n \"docid\": \"111266\",\n \"text\": \"When economies are strong, it is particularly alluring to have a single currency as it makes trade and tourism simpler and helps reduce costs. The problem comes when individual member economies get into trouble. Because the Eurozone is a loose grouping of nations, there is no direct equivalent of the US Federal government to coordinate a response, there is instead an odd mixture of National and Central government that makes it harder to get a unified approach to the economy (OK, it's maybe not so different to the US in reality). This lack of flexibility means that some of the key levers of international finance are compromised, for example a weak economy can't float its currency to improve exports. Similarly individual country's interest rates can't be adjusted to balance spending. I suspect the main reason though is political and based on concepts of sovereignty and national pride. The UK does the majority of its trade with the Eurozone, so the pros would possibly outweigh the cons, but the UK as a whole (and some of our papers in particular) have always regarded Europe with suspicion. Most Brits only speak English and find France and Germany a strange and obtuse place. The (almost) common language makes it easier to relate to the US and Canada than our near neighbours. It seems the perception amongst the political establishment is that any attempt to join the Euro is political suicide, while that is the case it is unlikely to happen. Purely from a personal perspective, I'd welcome the Euro except it means a lot of the products I routinely buy would become a lot more expensive if price is 'harmonised'. For an example compare the price of the iPod Touch in the UK (£209.99) to France(€299). The French pay £262 at the current exchange rate, which is close to 25% more. Ouch. See also my question about Canada adopting the US Dollar\",\n \"title\": \"\"\n },\n {\n \"docid\": \"361172\",\n \"text\": \"Not anytime soon, I suspect, but not necessarily for financial reasons. I found this interesting, including the link to the five tests, but I think that this topic is only partially judged through financial eyes, there's a lot of political issues around this with national identity/immigration issues already in the spot light as well as political aspirations. If there will be a call in the near future to join the Euro, how would that reflect on the financial industry in the UK from a PR perspective? and on the political leadership and how it managed the financial crisis? I believe that it is in the interest of all the people in the high positions to show the country getting back on track rather than making ground shaking moves. But what do I know....:-)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"498163\",\n \"text\": \"\\\"I read an account of why the U.K. didn't end up with the euro as its currency in David M. Smick's great book The World Is Curved: Hidden Dangers to the Global Economy. Chapter 6 of the book is titled \\\"\\\"Nothing Stays the Same: The 1992 Sterling Crisis.\\\"\\\" Here's a very brief excerpt; emphasis mine: [...] As this story shows, such blindness to the realities of a changing world can be very dangerous. In this case, the result was the brutal collapse of the British pound, which explains why the British people still use their own currency, the pound or sterling, and not the euro. The events that unfolded in the autumn of 1992 were totally unforeseen, yet they reshaped the European monetary world and represent a phenomenon that continues to impact global economies. [...] Smick's account of the events around 1992 runs about 28 pages. Here's my version, in a nutshell: At the time, Britain was part of the European Exchange Rate Mechanism, or ERM. The belief in Europe was that by uniting currencies under a common mechanism, Europe could gain influence in international financial policy largely dominated by the United States. The ERM was a precursor to monetary union. The Maastricht Treaty would eventually create the European Union and the euro. Britain joined the ERM later than other nations, in 1990, and after some controversy. Being part of the ERM required member nations to agree to expand and contract their currencies only within certain agreed upon limits called currency bands. Due to the way this had been structured, Germany's strong position placed it at the top of the system. At some point in 1992, Germany had raised interest rates to curb future inflation. However, Britain wanted Germany to cut rates – Britain was not in as enviable a position, economically speaking, and its currency was under pressure. The currency band system would put Britain in a tighter spot with Germany raising rates. Enter George Soros, the Hungarian billionaire, a.k.a. \\\"\\\"the man who broke the Bank of England.\\\"\\\" Soros took a huge short position against the Sterling. He believed the Sterling was overvalued relative to the German deutsche mark, and Britain would be forced to devalue its currency and realign with respect to the ERM. Other traders followed and also sold the Sterling short. With much pressure on the currency, the Bank of England had to buy up Sterling in order to maintain its agreement under the ERM. Of course, they needed to borrow other currencies to do this. Soon the BoE was in over its head defending the Sterling, realizing the exchange rate it needed to maintain under the ERM simply wasn't sustainable. Britain was forced to withdraw from the ERM on Black Wednesday, September 16th, 1992. And so, Britain does not use the euro today – and any talk of doing so is politically controversial. Therefore I wouldn't bet on Britain adopting the euro any time soon – too many of the players are still in politics and remember 1992 well. I think if Britain adopting the euro is ever to happen, it will be when the memory of 1992 has faded away. BTW, George Soros made off with more than US$1 billion. Soros is a very smart guy.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"150102\",\n \"text\": \"I can't see it happening because most of the population seems to be against it, even if their reasoning on the whole is wrong. Theoretically, people are against the Euro here as a result of national pride. If it's the best thing to do for the good of the country then national pride shouldn't be taken into account. It'd be perverse in the sense that you'd be stopping your country from progressing because you love it. That doesn't add up. Personally, I don't think it's possible for an entire continent to have a single currency. There's too many different countries and cultures involved. For it to work you'd have to have centralised fiscal policy and this makes no sense at all for a continent. What works here might not work in France or Germany. What works in Greece might not work here. etc, etc. The make up of each country's economies is different.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"26122\",\n \"text\": \"In many countries in Europe the prices shot through the roof, so it is not all positive. Also the switching country gives out lot of monetary control that is not welcomed by many. I think that UK is not going to change to euro for a long long time.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"440103\",\n \"text\": \"A lot of smaller (and/or weaker) countries did not have much choice when Germany and France decided to rename the German Mark as the Euro, as most of their trade was already in Marks. It was even common for their population to have their savings in Marks. So the question was. Do we wish to have to use the Euro with or without a seat on the board? It was a no brainer for them at the time... The UK has a lot of trade with the USA and other countries outside of the Euro zone, so we are unlikely to have to join the Euro. So in the end it comes down to this point - if the British voters trust a UK government they elected more or less than an EEC government mostly elected by people in the other EEC countries. I don’t think the UK will be joining the Euro anytime soon, but everything can (and will) change with the passage of time. (After all the USA used to be part of the pound trading zone and please can you pay us all the back dated tax you stop paying after a little tea party!) Update: Given what has just happen to Grease and Spain and the Conservative Party has the most seats in the UK parliament, I don’t think the UK will not be joining the Euro for the next 5 years at least\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"586772","text":"Citizens of India who are not residents to India (have NRI status) are not entitled to have ordinary savings accounts in India. If you have such accounts (e.g. left them behind to support your family while you are abroad), they need to be converted to NRO (NonResident Ordinary) accounts as soon as possible. Your bank will have forms for completion of this process. Any interest that these accounts earn will be taxable income to you in India, and possibly in the U.K. too, though tax treaties (or Double Taxation Avoidance Agreements) generally allow you to claim credit for taxes paid to other countries. Now, with regard to your question, NRIs are entitled to make deposits into NRO accounts as well as NRE (NonResident External) accounts. The differences are that money deposited into an NRE account, though converted to Indian Rupees, can be converted back very easily to foreign currency if need be. However, the re-conversion is at the exchange rate then in effect, and you may well lose that 10% interest earned because of a change in exchange rate. Devaluation of the Indian Rupee as occurred several times in the past 70 years. Once upon a time, it was essentially impossible to take money in an NRO account and convert it to foreign currency, but under the new recently introduced schemes, money in an NRO account can also be converted to foreign currencies, but it needs certification by a CA, and various forms to be filled out, and thus is more hassle. interest earned by the money in an NRE account is not taxable income in India, but is taxable income in the U.K. There is no taxable event (neither in U.K. nor in India) when you change an ordinary savings account held in India into an NRO account, or when you deposit money from abroad into an NRE or NRO account in an Indian bank. What is taxable is the interest that you receive from the Indian bank. In the case of an NRO account, what is deposited into your NRO account is the interest earned less the (Indian) income tax (usually 20%) deducted at the source (TDS) and sent to the Income Tax Authority on your behalf. In the case of an NRE account, the full amount of interest earned is deposited into the NRE account -- no TDS whatsoever. It is your responsibility to declare these amounts to the U.K. income tax authority (HM Revenue?) and pay any taxes due. Finally, you say that you recently moved to the U.K. for a job. If this is a temporary job and you might be back in India very soon, all the above might not be applicable to you since you would not be classified as an NRI at all.","title":""},{"docid":"583903","text":"\"On contrary of what Mike Scott suggested, I think in case of EURO DOOM it's a lot safer if your savings were changed into another currency in advance. Beware that bringing your money into an EURO CORE country (like Finland, Austria, Germany, Nethereland) it's useful if you think those banks are safer, but totally useless to avoid the conversion of your saving from Euro into your national currency. In case of EURO CRASH, only the Central Bank will decide what happens to ALL the Euro deposited wherever, single banks, even if they are Deutsche Bank or BNP or ING, can not decide what to do on their own. ECB (European Central Bank) might decide to convert EURO into local currencies based on the account's owner nationality. Therefor if you are Greek and you moved your saving in a German bank, the ECB might decide that your Euro are converted into New Dracma even if they sit in a German bank account. The funniest thing is that if you ask to a Finland bank: \"\"In case of Euro crash, would you convert my Euro into New Dracma?\"\", they sure would answer \"\"No, we can't!\"\", which is true, they can not because it's only the ECB (Europe Central Bank) the one that decides how an ordered Euro crash has to be manged, and the ECB might decide as I explained you above. Other Central Banks (Swiss, FED, etc.) would only follow the decisions of the ECB. Moreover in case of EURO DOOM, it's highly probable that the Euro currency looses a tremendous value compared to other currencies, the loss would be huge in case the Euro Crash happens in a disordered way (i.e. a strong country like Germany and their banks decides to get out and they start printing their own money w/o listening to the ECB anymore). So even if your saving are in Euro in Germany they would loose so much value (compared to other currencies) that you will regreat forever not to have converted them into another currency when you had the time to do it. Couple of advises: 1) If you want to change you savings into another currency you don't need to bring them into another bank/country (like US), you could simply buy US Shares/Bonds at your local bank. Shares/Bonds of a US company/US gov will always be worth their value in dollars no matter in what new pathetic currency your account will be converted. 2) But is there a drawback in converting my saving into another currency (i.e. buying dollars in the form of US treasury bonds)? Unfortunately yes, the drawback is that in case this Euro drama comes finally to an happy ending and Germans decide to open their wallets for the nth time to save the currency, the Euro might suddenly increase its value compared to other currencies, therefor if you changed your saving into another currency you might loose money (i.e. US dollars looses value against the Euro).\"","title":""},{"docid":"538582","text":"Andrew Lilico has a likely scenario for when Greece defaults on its sovereign debt: What happens when Greece defaults. Here are a few things: Every bank in Greece will instantly go insolvent. The Greek government will nationalise every bank in Greece. The Greek government will forbid withdrawals from Greek banks. To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law. Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting) The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts. As Megan McArdle says, there's more at the link, all depressing. I think you're focusing too much on Greece leaving the euro and not enough on why Greece would leave the euro. Greece would leave the euro precisely so that it could pay back its debt in a new currency worth less than valuable euros. The new currency will devalue, since that's the point of leaving. Along the way the government forces its citizens to take the new currency. The money they have in Greek banks will be converted to the new currency: The citizens don't have a choice to keep their euros.","title":""},{"docid":"79777","text":"\"It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's \"\"Supply:\"\" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank \"\"have\"\" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the \"\"multiplier effect.\"\" The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the \"\"supply\"\" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official \"\"basket of goods\"\" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.\"","title":""},{"docid":"134239","text":"\"The basic idea is that money's worth is dependent on what it can be used to buy. The principal driver of monetary exchange (using one type of currency to \"\"buy\"\" another) is that usually, transactions for goods or services in a particular country must be made using that country's official currency. So, if the U.S. has something very valuable (let's say iPhones) that people in other countries want to buy, they have to buy dollars and then use those dollars to buy the consumer electronics from sellers in the U.S. Each country has a \"\"basket\"\" of things they produce that another country will want, and a \"\"shopping list\"\" of things of value they want from that other country. The net difference in value between the basket and shopping list determines the relative demand for one currency over another; the dollar might gain value relative to the Euro (and thus a Euro will buy fewer dollars) because Europeans want iPhones more than Americans want BMWs, or conversely the Euro can gain strength against the dollar because Americans want BMWs more than Europeans want iPhones. The fact that iPhones are actually made in China kind of plays into it, kind of not; Apple pays the Chinese in Yuan to make them, then receives dollars from international buyers and ships the iPhones to them, making both the Yuan and the dollar more valuable than the Euro or other currencies. The total amount of a currency in circulation can also affect relative prices. Right now the American Fed is pumping billions of dollars a day into the U.S. economy. This means there's a lot of dollars floating around, so they're easy to get and thus demand for them decreases. It's more complex than that (for instance, the dollar is also used as the international standard for trade in oil; you want oil, you pay for it in dollars, increasing demand for dollars even when the United States doesn't actually put any oil on the market to sell), but basically think of different currencies as having value in and of themselves, and that value is affected by how much the market wants that currency.\"","title":""},{"docid":"40161","text":"If you plan to stay in Europe for some time, then you should match your income currency with your liability currency, and so should use the Euro loan to pay off the INR loan, thereby eliminating the currency risk that you currently bear every time you convert Euro into INR to pay down the loan. Plus, you have a much lower interest rate. So, do it !","title":""},{"docid":"115210","text":"GBP is widely traded currency and it is definitely possible to send GBP internationally with out any conversion. Of late banks are trying to maximize the FX and if they see a Euro country the sending bank assumes the beneficiary account is in Euro and converts to get FX spread than letting the beneficiary bank decide. Keep complaining to your bank and then the sending bank will put your account in exception and not convert next payments","title":""},{"docid":"42951","text":"Currency speculation is a very risky investment strategy. But when you are looking for which currency to denote your savings in, looking at the unit value is quite pointless. What is important is how stable the currency is in the long term. You certainly don't want a currency which is prone to inflation, because it means any savings denoted in that currency constantly lose purchasing power. Rather look for a currency which has a very low inflation rate or is even deflating. Another important consideration is how easy it is to exchange between your local currency and the currency you want to own. A fortune in some exotic currency is worth nothing when no local bank will exchange it into your local currency. The big reserve currencies like US Dollar, Euro, Pound Sterling and Japanes yen are usually safe bets, but there are regional differences which can be easily converted and which can't. When the political relations between your country and the countries which manage these currencies is unstable, this might change over night. To avoid these problems, rather invest into a diverse portfolio of commodities and/or stocks. The value of these kinds of investments will automatically adjust to inflation rate, so you won't need to worry about currency fluctuation.","title":""},{"docid":"260889","text":"As NRI/PIO (Non-Resident Indian/Person of Indian Origin), the overseas income and transfers in foreign currency are exempt from Indian income taxes. However, the account in India has to be designated NRE or FCNR. There are three kind of accounts that an NRI can maintain Interest earned in NRE and FCNR accounts is exempt from income taxes. Interest earned in NRO accounts is not exempt from income taxes, in fact banks would withhold about 30% of interest (TDS). The exact tax liability would depend upon income generated in India and TDS could be applied towards that liability when the tax returns are filed. There are other implications also of designating the account as NRE or NRO. NRE accounts can only be funded via inward remittance of permitted foreign currency e.g. deposit USD/GBP. So proceeds like rental income, pension etc. that are generated in INR within India can't be deposited in this account. The money deposited in NRE account can grow tax free and can be converted back in any foreign currency freely. On the other hand NRO accounts can be funded through both inward remittance of permitted foreign currency or local income e.g. rental, pension etc. All the amount in this account is treated as Indian originated INR (even if remitted in foreign currency) and thus is taxed as any other bank account. The amount in this account is subject to the annual cap of convertibility of USD 1 million. Both NRE and NRO accounts are maintained in INR and can be Saving and Term Deposit. Any remittance made to these accounts in any foreign currency is converted to INR at the time of deposit and is maintained in INR. FCNR account are held in foreign currency and can only be Term Deposit. Official definitions: Accounts for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs)","title":""},{"docid":"162263","text":"If the transfer is from a country in Euro region, then yes, using Does, it's possible. However if it's outside then all other details are required. Edit IBAN is used by EURO countries and is supposed to simplify things. However till its fully adopted by all countries and clearing networks, there is quite a bit of confusion and complexity for individuals. Low Value Transfer in Euro region in EUR currency is on SEPA network that only understands IBAN and only supports EUR currency. If you are transfering within UK [both banks in UK] in GBP, it would go on BACS network that only understands SortCode+AccountNumber. There are some Banks that give you interface that take an IBAN and convert to SortCode+AccountNumber and submit to BACS.","title":""},{"docid":"516635","text":"If the intention is after maturing to convert back the Rupees into Euro, its not a good idea. Generally the interest rate in Euro and the interest rate in Rupee are offset by the predicted exchange rate. i.e. the Rupee will fall compared to Euro by similar rate. The point at Step 5 is generally what is expected to happen. At times this can be less or more depending on the local / global factors. So on average you will not make money, some times you will loose and sometimes you will gain. Plus I have shown flat conversion rates, typically there is a Buy Rate and a Sell Rate for a pair of currencies. There is a difference / spread that is the margins of Bank. Typically in the range of 2 to 4% depending on the currency pairs.","title":""},{"docid":"368044","text":"\"It is not clear to me why you believe you can lose more than you put in, without margin. It is difficult and the chances are virtually nil. However, I can think of a few ways. Lets say you are an American, and deposit $1000. Now lets say you think the Indian rupee is going to devalue relative to the Euro. So that means you want to go long EURINR. Going long EURINR, without margin, is still different than converting your INRs into Euros. Assume USDINR = 72. Whats actually happening is your broker is taking out a 72,000 rupee loan, and using it to buy Euros, with your $1000 acting as collateral. You will need to pay interest on this loan (about 7% annualized if I remember correctly). You will earn interest on the Euros you hold in the meantime (for simplicity lets say its 1%). The difference between interest you earn and interest you pay is called the cost of carry, or commonly referred to as 'swap'. So your annualized cost of carry is $60 ($10-$70). Lets say you have this position open for 1 year, and the exchange rate doesnt move. Your total equity is $940. Now lets say an asteroid destroys all of Europe, your Euros instantly become worthless. You now must repay the rupee loan to close the trade, the cost of which is $1000 but you only have $940 in your account. You have lost more than you deposited, using \"\"no margin\"\". I would actually say that all buying and selling of currency pairs is inherently using margin, because they all involve a short sale. I do note that depending on your broker, you can convert to another currency. But thats not what forex traders do most of the time.\"","title":""},{"docid":"576569","text":"About the inflation or low interest rates in both the countries is out of the equation especially since rupee is always a low currency compared to Euro. You cannot make profit in Euros using rupee or vice-versa. It all depends on where you want to use the money, in India or Europe? If you want use the money from fixed deposit in Europe, then buy fixed deposit in euros from Europe. If you want to use the money in India, then convert the euros and buy FD in India.","title":""},{"docid":"369035","text":"The free market will determine exchange rates. But only sort of. If anyone leaves the euro expect and immediate mother-of-all-bank-runs. Then the new currency will begin to trade both officially and unofficially and eventually a market clearing price will be set. Whether that lands on an officially pegged rate or at a discount to that rate is a total crapshoot and not even worth trying to predict.","title":""},{"docid":"261101","text":"It's not necessary to convert it back for the changes to affect value. Lets say you have a euro account with 1000 euro and a gbp account with 920 gbp (the accounts are equal in value given current exchange rates). You could exchange either account for ~$1180 usd. If you exchange the euro account for USD, and say the euro gets stronger against the pound and dollar (and subsequently the pound and dollar are weaker against the euro); then if you would've kept the 1000 euro it would now be worth more than 920 gbp and more than 1180 usd, and you would've been better off exchanging the gbp account for usd. Barring some cataclysmic economic event; exchange rates between well established currencies don't radically change over a few weeks trip, so I wouldn't really worry about it one way or the other.","title":""},{"docid":"334071","text":"The best scenario I've heard is by Tyler Cowen: Basically, the Greek Government runs out of Euros. So they print up IOUs to issue to their workers, pensioners, etc promising payment of Euros at some future date. The first day, some wag holds up the IOUs says 'hey, look at these drachmas'. By the seventh day, the IOUs are trading at a discount - there's an exchange rate between the IOUS and Euros, and you in essence have a Drachma currency. What that does in terms of converting external debts, bank accounts, and etc from Drachmas into Euros I'm not sure about. Obviously this isn't the best way to go about getting out of the Euro, but it's the best 'muddle through' option and given how Europe in general has been dealing with this problem it's highly probable this is the method they'll take.","title":""},{"docid":"218045","text":"\"What EU wanted to force Cyprus to do is to break the insurance contract the government has with the bank depositors. The parliament rightfully refused, and it didn't pass. In the EU, and Cyprus as part of it, all bank deposits are insured up to 100,000EUR by the government. This is similar to the US FDIC insurance. Thus, requiring the \"\"small\"\" (up to 100K) depositors to participate in the bank reorganization means that the government breaks its word to people, and effectively defaults. That is exactly what the Cyprus government wanted to avoid, the default, so I can't understand why the idea even came up. Depositors of more than 100k are not guaranteed against bank failures, and indeed - in Cyprus these depositors will get \"\"haircuts\"\". But before them, first come shareholders and bondholders who would be completely wiped out. Thus, first and foremost, those who failed (the bank owners) will be the first to pay the price. However, governments can default. This happened in many places, for example in Russia in the 90's, in Argentina in 2000's (and in fact numerous times during the last century), the US in the 1930's, and many other examples - you can see a list in Wikipedia. When government defaults on its debts, it will not pay some or all of them, and its currency may also be devaluated. For example, in Russia in 1998 the currency lost 70% of its value against the USD within months, and much of the cash at hands of the public became worthless overnight. In the US in 1933 the President issued an executive order forbidding private citizens keeping gold and silver bullions and coins, which resulted in dollar devaluation by about 30% and investors in precious metals losing large amounts of money. The executive order requiring surrender of the Treasury gold certificates is in fact the government's failure to pay on these obligations. While the US or Russia control their own currency, European countries don't and cannot devaluate the currency as they wish in order to ease their debts. Thus in Euro-zone the devaluation solutions taken by Russia and the US are not possible. Cyprus cannot devaluate its currency, and even if it could - its external debt would not likely to be denominated in it (actually, Russian debt isn't denominated in Rubles, that's why they forced restructuring of their own debt, but devaluating the currency helped raising the money from the citizens similarly to the US seizing the gold in 1930's). Thus, in case of Cyprus or other Euro-zone countries, direct taxes is the only way to raise money from the citizens. So if you're in a country that controls its own currency (such as the US, Russia, Argentina, etc) and especially if the debt is denominated in that currency (mainly the US) - you should be worried more of inflation than taxes. But if you're in the Euro-zone and your country is in troubles (which is almost any country in the zone) - you can expect taxes. How to avoid that? Deal with your elected officials and have them fix your economy, but know that you can't just \"\"erase\"\" the debt through inflation as the Americans can (and will), someone will have to pay.\"","title":""},{"docid":"394296","text":"If you are a Russian citizen a much easier and common solution would be a USD or EUR withdrawal from your Webmoney account to your Cyprus bank account. You will need to create a Webmoney account (www.webmoney.ru), get a primary certificate in your local Webmoney office in Russia (The list is available at the website), create WMZ (for USD) and WME (for EURO) accounts in Webmoney (done online). Then you can easily top up your Webmoney WMR (Rubles) account (created automatically) with Rubles, convert the sum into USD (According to the Webmoney rate, which is only slightly different from the official central bank rate) and then withdraw the money from your USD Webmoney account to your Cyprus bank account. The money will be transfered to your Cyprus bank account from UK Webmoney dealer. The transaction description would say that this sum is transfered according to the contract of sale of securities. This method prevents any Russian regulatory authorities from seeing your transactions. And the best thig in Webmoney is that they have stable exchange rates and they use classic currencies such as USD, RUR, EUR, etc. Webmoney also has WMG accounts (Gold) and WMX accounts (Bitcoin). Non-Russian residents can also open a Webmoney accounts. You can get one even in Cyprus, by the way:)","title":""},{"docid":"95044","text":"The ruble was, is and will be very unstable because of unstable political situation in Russia and the economy strongly dependent of the export of raw resources. What you can do? I assume, you want to minimize risk. The best way to achieve that is to make your savings in some stable currency. Euro and Swiss Franc are currently very stable currencies, so storing your surpluses in them is a very good option if you want to keep your money safe. To prevent political risk, you should keep your money in countries with stable political regime, which are unlikely to 'nationalize' the savings of the citizens in predictable future. As for your existing savings in rubles, it's a hard deal. I assume, as the web developer, you have a plenty of money, which have lost a lot of value. If you convert them to euro or francs, you will preserver the current value (after the loss). You'll safe them agaist ruble falling down, but in case the ruble will return to previous value, you'll loose. Keeping savings in instable currencies is, however, speculation, like investing in gold etc. So if you can mentally accept the loss and want to sleep good, convert them. You have also option to invest in properties, for example buy an extra appartment. It's a good way to deal with financial surplus in Europe in US, however you should be aware, in Russland it's connected with the political risk. The real estates can be confiscated in any moment by the state and you can't run away with it (the savings can also be confiscated, but there's a fair chance you'll manage to rescue them if you act quickly).","title":""},{"docid":"96820","text":"\"If I understand right, you're asking whether it's better to withdraw a currency that is more valuable or less valuable, in currency units, than your home country's currency. That is, using your examples, you're asking whether it's better to withdraw euros when the euro is worth more than the Pakistani rupee, or when the euro is worth less. The answer is that it doesn't matter. What matters is whether the euro is worth more Pakistani rupees than it will be worth later. For instance, suppose that the exchange rate today is such that you can buy 115 PKR for 1 EUR, or equivalently, you can buy 1 EUR for 115 PKR. (Realistically the rates would be different due to conversion fees, but I'll keep it this way for simplicitly.) If tomorrow the exchange rate changes so that you need 120 PKR to buy 1 EUR, then you have to spend more rupees to buy a euro, so this is bad for you; it would have been better to buy earlier (when it was only 115 PKR for a euro). If on the other hand the exchange rate shfits the other way, so that you only need 110 PKR to buy a euro, then this benefits you. because you are spending less than you would have if you had bought earlier. So, in these terms, you want to change rupees into euros when one euro is worth fewer rupees (and you want to change euros into rupees when one euro is worth more rupees). It doesn't matter how many PKR you spend for a Euro in raw numbers. All that matters is, are you spending more for that one Euro than you would have spent had you bought earlier or later? Indeed, for your specific example, it is unlikely that one Pakistanee rupee will be worth more than one Euro in the foreseeable future; as far as I can see, the Euro has never been worth less than about 50 rupees. In practice, of course, it's hard to know whether the current rate is \"\"good\"\". You can't easily know how currency rates will change in the future. If you are just visiting for a short period of time, it probably doesn't make sense to worry about the exchange rates. Just take out as much money as you need when you need it. You're just as likely to lose money as to save money if you try to game the exchange rates. If you're staying in a place for a longer period of time, it might be worth pulling a bit extra out at a time when the rate is especially favorable, but you're still unlikely to see major savings in the long run.\"","title":""},{"docid":"128048","text":"\"When you invest in an S&P500 index fund that is priced in USD, the only major risk you bear is the risk associated with the equity that comprises the index, since both the equities and the index fund are priced in USD. The fund in your question, however, is priced in EUR. For a fund like this to match the performance of the S&P500, which is priced in USD, as closely as possible, it needs to hedge against fluctuations in the EUR/USD exchange rate. If the fund simply converted EUR to USD then invested in an S&P500 index fund priced in USD, the EUR-priced fund may fail to match the USD-priced fund because of exchange rate fluctuations. Here is a simple example demonstrating why hedging is necessary. I assumed the current value of the USD-priced S&P500 index fund is 1,600 USD/share. The exchange rate is 1.3 USD/EUR. If you purchase one share of this index using EUR, you would pay 1230.77 EUR/share: If the S&P500 increases 10% to 1760 USD/share and the exchange rate remains unchanged, the value of the your investment in the EUR fund also increases by 10% (both sides of the equation are multiplied by 1.1): However, the currency risk comes into play when the EUR/USD exchange rate changes. Take the 10% increase in the price of the USD index occurring in tandem with an appreciation of the EUR to 1.4 USD/EUR: Although the USD-priced index gained 10%, the appreciation of the EUR means that the EUR value of your investment is almost unchanged from the first equation. For investments priced in EUR that invest in securities priced in USD, the presence of this additional currency risk mandates the use of a hedge if the indexes are going to track. The fund you linked to uses swap contracts, which I discuss in detail below, to hedge against fluctuations in the EUR/USD exchange rate. Since these derivatives aren't free, the cost of the hedge is included in the expenses of the fund and may result in differences between the S&P500 Index and the S&P 500 Euro Hedged Index. Also, it's important to realize that any time you invest in securities that are priced in a different currency than your own, you take on currency risk whether or not the investments aim to track indexes. This holds true even for securities that trade on an exchange in your local currency, like ADR's or GDR's. I wrote an answer that goes through a simple example in a similar fashion to the one above in that context, so you can read that for more information on currency risk in that context. There are several ways to investors, be they institutional or individual, can hedge against currency risk. iShares offers an ETF that tracks the S&P500 Euro Hedged Index and uses a over-the-counter currency swap contract called a month forward FX contract to hedge against the associated currency risk. In these contracts, two parties agree to swap some amount of one currency for another amount of another currency, at some time in the future. This allows both parties to effectively lock in an exchange rate for a given time period (a month in the case of the iShares ETF) and therefore protect themselves against exchange rate fluctuations in that period. There are other forms of currency swaps, equity swaps, etc. that could be used to hedge against currency risk. In general, two parties agree to swap one quantity, like a EUR cash flow, payments of a fixed interest rate, etc. for another quantity, like a USD cash flow, payments based on a floating interest rate, etc. In many cases these are over-the-counter transactions, there isn't necessarily a standardized definition. For example, if the European manager of a fund that tracks the S&P500 Euro Hedged Index is holding euros and wants to lock in an effective exchange rate of 1.4 USD/EUR (above the current exchange rate), he may find another party that is holding USD and wants to lock in the respective exchange rate of 0.71 EUR/USD. The other party could be an American fund manager that manages a USD-price fund that tracks the FTSE. By swapping USD and EUR, both parties can, at a price, lock in their desired exchange rates. I want to clear up something else in your question too. It's not correct that the \"\"S&P 500 is completely unrelated to the Euro.\"\" Far from it. There are many cases in which the EUR/USD exchange rate and the level of the S&P500 index could be related. For example: Troublesome economic news in Europe could cause the euro to depreciate against the dollar as European investors flee to safety, e.g. invest in Treasury bills. However, this economic news could also cause US investors to feel that the global economy won't recover as soon as hoped, which could affect the S&P500. If the euro appreciated against the dollar, for whatever reason, this could increase profits for US businesses that earn part of their profits in Europe. If a US company earns 1 million EUR and the exchange rate is 1.3 USD/EUR, the company earns 1.3 million USD. If the euro appreciates against the dollar to 1.4 USD/EUR in the next quarter and the company still earns 1 million EUR, they now earn 1.4 million USD. Even without additional sales, the US company earned a higher USD profit, which is reflected on their financial statements and could increase their share price (thus affecting the S&P500). Combining examples 1 and 2, if a US company earns some of its profits in Europe and a recession hits in the EU, two things could happen simultaneously. A) The company's sales decline as European consumers scale back their spending, and B) the euro depreciates against the dollar as European investors sell euros and invest in safer securities denominated in other currencies (USD or not). The company suffers a loss in profits both from decreased sales and the depreciation of the EUR. There are many more factors that could lead to correlation between the euro and the S&P500, or more generally, the European and American economies. The balance of trade, investor and consumer confidence, exposure of banks in one region to sovereign debt in another, the spread of asset/mortgage-backed securities from US financial firms to European banks, companies, municipalities, etc. all play a role. One example of this last point comes from this article, which includes an interesting line: Among the victims of America’s subprime crisis are eight municipalities in Norway, which lost a total of $125 million through subprime mortgage-related investments. Long story short, these municipalities had mortgage-backed securities in their investment portfolios that were derived from, far down the line, subprime mortgages on US homes. I don't know the specific cities, but it really demonstrates how interconnected the world's economies are when an American family's payment on their subprime mortgage in, say, Chicago, can end up backing a derivative investment in the investment portfolio of, say, Hammerfest, Norway.\"","title":""},{"docid":"196596","text":"\"The benefit of having gold to trade is that there is almost always someone that will take gold when the fiat currency is in trouble. The potential downfall of doing this is that when people think the fiat currency is in trouble, they tend to buy up gold, thus driving up the price. This means that you get less gold for each hour of work you perform (deer-haunch, basket of apples, etc.). Even more, if the financial crisis is limited to only one fiat currency, you have a situation where that fiat currency devalues but others can gain in value as people try to sell their old currency for the new standard currency. If people also sell their gold to buy up this currency, that lowers the price of gold in that currency. For example, let us assume that gold was 1000 dollars an ounce and 1000 euros an ounce. Suddenly, people start thinking that the euro is in trouble, so they start buying gold. The law of supply and demand kicks in (more buyers, same supply, so higher prices) and gold is suddenly worth 2000 dollars and 2000 euros an ounce. If you start buying at this point, you get half as much gold as the person who bought in the beginning. Suddenly, the euro collapses. Stores that used to take euros start demanding dollars. Suddenly, it costs 20,000 euros for an ounce of gold but an ounce of gold will only get you 1,000 dollars since everyone is selling their gold to get dollars. The people who buy gold in the \"\"panic\"\" end up losing half the value of their money if not more. The \"\"speculators\"\" that bought gold at $1,000, sold it at $2,000, and bought it back at $1,000 now have all their gold back plus the $1,000 the other people lost.\"","title":""},{"docid":"344004","text":"Suppose you're a European Company, selling say a software product to a US company. As much as you might want the US company to pay you in Euros they might insist (or you'll lose the contract) that you agree pricing in USD. The software is licensed on a yearly recurring amount, say 100K USD per year payable on the 1st January every year. In this example, you know that on the 1st Jan that 100K USD will arrive in your USD bank account. You will want to convert that to Euros and to remove uncertainty from your business you might take out an FX Forward today to remove your currency risk. If in the next 9 months the dollar strengthens against the Euro then notionally you'll have lost out by taking out the forward. Similarly, you've notionally gained if the USD weakens against the EURO. The forward gives you the certainty you need to plan your business.","title":""},{"docid":"61514","text":"e.g. a European company has to pay 1 million USD exactly one year from now While that is theoretically possible, that is not a very common case. Mostly likely if they had to make a 1 million USD payment a year from now and they had the cash on hand they would be able to just make the payment today. A more common scenario for currency forwards is for investment hedging. Say that European company wants to buy into a mutual fund of some sort, say FUSEX. That is a USD based mutual fund. You can't buy into it directly with Euros. So if the company wants to buy into the fund they would need to convert their Euros to to USD. But now they have an extra risk parameter. They are not just exposed to the fluctuations of the fund, they are also exposed to the fluctuations of the currency market. Perhaps that fund will make a killing, but the exchange rate will tank and they will lose all their gains. By creating a forward to hedge their currency exposure risk they do not face this risk (flip side: if the exchange rate rises in a favorable rate they also don't get that benefit, unless they use an FX Option, but that is generally more expensive and complicated).","title":""},{"docid":"447928","text":"\"This is the best tl;dr I could make, [original](https://uk.reuters.com/article/uk-italy-euro-analysis/italys-dual-currency-schemes-may-be-long-road-to-euro-exit-idUKKCN1BJ208) reduced by 90%. (I'm a bot) ***** > If any of their schemes are adopted with success they may convince many Italians that the economy can function without the euro, and make an eventual euro exit more likely. > They have settled on the dual currency proposal as a way of continuing to tap into widespread anti-euro sentiment in Italy while avoiding - at least for now - the huge upheaval and market turmoil that outright euro exit may trigger. > Italians were strongly pro-euro when the single currency was launched in 1999, but since then Italy has been the most sluggish euro zone economy and many blame the euro for their falling living standards and high unemployment. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6yz18c/italys_dual_currency_schemes_may_be_long_road_to/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~206798 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **euro**^#1 **currency**^#2 **Italy**^#3 **Italian**^#4 **proposal**^#5\"","title":""},{"docid":"180539","text":"All the fees are added to the amount you actually spend, but they only occur when you do these kind of transactions. They do not happen for any other reason. If you transfer a balance from another credit card this fee is added to your balance. Since this is your first credit card you don't have to transfer any balance. This site says that this is a special type of check, linked to your credit card account, not to your checking account. If you write this type of check to a merchant the additional fees will apply. If you use your credit card at an ATM this fee will be applied on top of the money you withdraw. Usually it is a percentage of the amount you withdraw. According to this site, a cash equivalent is something like casino chips which can be easily converted back into money without any loss. If you use your credit card in a different currency, for example Euro but your credit cards currency is Dollar. Usually a percentage of the amount (~3-5%). If you withdraw money from a foreign currency ATM they add usually a fixed amount plus a percentage or any combination of this.","title":""},{"docid":"475478","text":"\"You might convert all your money in local currency but you need take care of following tips while studying abroad.Here are some money tips that can be useful during a trip abroad. Know about fees :- When you use a debit card or credit card in a foreign country, there are generally two types of transaction fees that may apply: Understand exchange rates :- The exchange rate lets you know the amount of nearby money you can get for each U.S. dollar, missing any expenses. There are \"\"sell\"\" rates for individuals who are trading U.S. dollars for foreign currency, and, the other way around, \"\"purchase\"\" rates. It's a smart thought to recognize what the neighborhood money is worth in dollars so you can comprehend the estimation of your buys abroad. Sites like X-Rates offer a currency converter that gives the current exchange rate, so you can make speedy comparisons. You can utilize it to get a feel for how much certain amount (say $1, $10, $25, $50, $100) are worth in local currency. Remember that rates fluctuate, so you will be unable to suspect precisely the amount of a buy made in a foreign currency will cost you in U.S. dollars. To get cash, check for buddy banks abroad:- If you already have an account with a large bank or credit union in the U.S., you may have an advantage. Being a client of a big financial institution with a large ATM system may make it easier to find a subsidiary cash machine and stay away from an out-of-system charge. Bank of America, for example, is a part of the Global ATM Alliance, which lets clients of taking an interest banks use their debit cards to withdraw money at any Alliance ATM without paying the machine's operator an access fee, in spite of the fact that you may at present be charged for converting dollars into local currency used for purchases. Citibank is another well known bank for travelers because it has 45,000 ATMs in more than 30 countries, including popular study-abroad destinations such as the U.K., Italy and Spain. ATMs in a foreign country may allow withdrawals just from a financial records, and not from savings so make sure to keep an adequate checking balance. Also, ATM withdrawal limits will apply just as they do in the U.S., but the amount may vary based on the local currency and exchange rates. Weigh the benefits of other banks :- For general needs, online banks and even foreign banks can also be good options. With online banks, you don’t have to visit physical branches, and these institutions typically have lower fees. Use our checking account tool to find one that’s a good fit. Foreign banks:- Many American debit cards may not work in Europe, Asia and Latin America, especially those that don’t have an EMV chip that help prevent fraud. Or some cards may work at one ATM, but not another. One option for students who expect a more extended stay in a foreign country is to open a new account at a local bank. This will let you have better access to ATMs, and to make purchases more easily and without as many fees. See our chart below for the names of the largest banks in several countries. Guard against fraud and identity theft:- One of the most important things you can do as you plan your trip is to let your bank know that you’ll be abroad. Include exact countries and dates, when possible, to avoid having your card flagged for fraud. Unfortunately, incidents may still arise despite providing ample warning to your bank. Bring a backup credit card or debit card so you can still access some sort of money in case one is canceled. Passports are also critical — not just for traveling from place to place, but also as identification to open a bank account and for everyday purposes. You’ll want to make two photocopies and give one to a friend or family member to keep at home and put the other in a separate, secure location, just in case your actual passport is lost or stolen.\"","title":""},{"docid":"239876","text":"You are trying to predict the future currency fluctuations that can't be predicted. If you know for sure you are moving, convert it directly into Euros in near future rather than take a complicated route.","title":""},{"docid":"470032","text":"\"In my experience working at a currency exchange money service business in the US: Flat fees are the \"\"because we can\"\" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled. If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real \"\"fee\"\" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee \"\"hidden\"\" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine.\"","title":""},{"docid":"126565","text":"\"You can find lots of answers to this question by googling. I found at least five pages about this in 30 seconds. Most of these pages seem to say that if you must convert cash, converting it in the destination country is probably better, because you are essentially buying a product (in this case, dollars), and it will cheaper where the supply is greater. There are more dollars in the USA than there are in Portugal, so you may be able to get them cheaper there. (Some of those pages mention caveats if you're trying to exchange some little-known currency, which people might not accept, but this isn't an issue if you're converting euros.) Some of those pages specifically recommend against airport currency exchanges; since they have a \"\"captive audience\"\" of people who want to convert money right away, they face less competition and may offer worse rates. Of course, the downside of doing the exchange in the USA is that you'll be less familiar with where to do it. I did find some people saying that, for this reason, it's better to do it in your own country where you can shop around at leisure to find the best rate. That said, if you take your time shopping around, shifts in the underlying exchange rate in the interim could erase any savings you find. It's worth noting, though, that the main message from all these pages is the same: don't exchange cash at all if you can possibly avoid it. Use a credit card or ATM card to do the exchange. The exchange rate is usually better, and you also avoid the risks associated with carrying cash.\"","title":""}],"string":"[\n {\n \"docid\": \"586772\",\n \"text\": \"Citizens of India who are not residents to India (have NRI status) are not entitled to have ordinary savings accounts in India. If you have such accounts (e.g. left them behind to support your family while you are abroad), they need to be converted to NRO (NonResident Ordinary) accounts as soon as possible. Your bank will have forms for completion of this process. Any interest that these accounts earn will be taxable income to you in India, and possibly in the U.K. too, though tax treaties (or Double Taxation Avoidance Agreements) generally allow you to claim credit for taxes paid to other countries. Now, with regard to your question, NRIs are entitled to make deposits into NRO accounts as well as NRE (NonResident External) accounts. The differences are that money deposited into an NRE account, though converted to Indian Rupees, can be converted back very easily to foreign currency if need be. However, the re-conversion is at the exchange rate then in effect, and you may well lose that 10% interest earned because of a change in exchange rate. Devaluation of the Indian Rupee as occurred several times in the past 70 years. Once upon a time, it was essentially impossible to take money in an NRO account and convert it to foreign currency, but under the new recently introduced schemes, money in an NRO account can also be converted to foreign currencies, but it needs certification by a CA, and various forms to be filled out, and thus is more hassle. interest earned by the money in an NRE account is not taxable income in India, but is taxable income in the U.K. There is no taxable event (neither in U.K. nor in India) when you change an ordinary savings account held in India into an NRO account, or when you deposit money from abroad into an NRE or NRO account in an Indian bank. What is taxable is the interest that you receive from the Indian bank. In the case of an NRO account, what is deposited into your NRO account is the interest earned less the (Indian) income tax (usually 20%) deducted at the source (TDS) and sent to the Income Tax Authority on your behalf. In the case of an NRE account, the full amount of interest earned is deposited into the NRE account -- no TDS whatsoever. It is your responsibility to declare these amounts to the U.K. income tax authority (HM Revenue?) and pay any taxes due. Finally, you say that you recently moved to the U.K. for a job. If this is a temporary job and you might be back in India very soon, all the above might not be applicable to you since you would not be classified as an NRI at all.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"583903\",\n \"text\": \"\\\"On contrary of what Mike Scott suggested, I think in case of EURO DOOM it's a lot safer if your savings were changed into another currency in advance. Beware that bringing your money into an EURO CORE country (like Finland, Austria, Germany, Nethereland) it's useful if you think those banks are safer, but totally useless to avoid the conversion of your saving from Euro into your national currency. In case of EURO CRASH, only the Central Bank will decide what happens to ALL the Euro deposited wherever, single banks, even if they are Deutsche Bank or BNP or ING, can not decide what to do on their own. ECB (European Central Bank) might decide to convert EURO into local currencies based on the account's owner nationality. Therefor if you are Greek and you moved your saving in a German bank, the ECB might decide that your Euro are converted into New Dracma even if they sit in a German bank account. The funniest thing is that if you ask to a Finland bank: \\\"\\\"In case of Euro crash, would you convert my Euro into New Dracma?\\\"\\\", they sure would answer \\\"\\\"No, we can't!\\\"\\\", which is true, they can not because it's only the ECB (Europe Central Bank) the one that decides how an ordered Euro crash has to be manged, and the ECB might decide as I explained you above. Other Central Banks (Swiss, FED, etc.) would only follow the decisions of the ECB. Moreover in case of EURO DOOM, it's highly probable that the Euro currency looses a tremendous value compared to other currencies, the loss would be huge in case the Euro Crash happens in a disordered way (i.e. a strong country like Germany and their banks decides to get out and they start printing their own money w/o listening to the ECB anymore). So even if your saving are in Euro in Germany they would loose so much value (compared to other currencies) that you will regreat forever not to have converted them into another currency when you had the time to do it. Couple of advises: 1) If you want to change you savings into another currency you don't need to bring them into another bank/country (like US), you could simply buy US Shares/Bonds at your local bank. Shares/Bonds of a US company/US gov will always be worth their value in dollars no matter in what new pathetic currency your account will be converted. 2) But is there a drawback in converting my saving into another currency (i.e. buying dollars in the form of US treasury bonds)? Unfortunately yes, the drawback is that in case this Euro drama comes finally to an happy ending and Germans decide to open their wallets for the nth time to save the currency, the Euro might suddenly increase its value compared to other currencies, therefor if you changed your saving into another currency you might loose money (i.e. US dollars looses value against the Euro).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"538582\",\n \"text\": \"Andrew Lilico has a likely scenario for when Greece defaults on its sovereign debt: What happens when Greece defaults. Here are a few things: Every bank in Greece will instantly go insolvent. The Greek government will nationalise every bank in Greece. The Greek government will forbid withdrawals from Greek banks. To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law. Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting) The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts. As Megan McArdle says, there's more at the link, all depressing. I think you're focusing too much on Greece leaving the euro and not enough on why Greece would leave the euro. Greece would leave the euro precisely so that it could pay back its debt in a new currency worth less than valuable euros. The new currency will devalue, since that's the point of leaving. Along the way the government forces its citizens to take the new currency. The money they have in Greek banks will be converted to the new currency: The citizens don't have a choice to keep their euros.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"79777\",\n \"text\": \"\\\"It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's \\\"\\\"Supply:\\\"\\\" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank \\\"\\\"have\\\"\\\" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the \\\"\\\"multiplier effect.\\\"\\\" The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the \\\"\\\"supply\\\"\\\" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official \\\"\\\"basket of goods\\\"\\\" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"134239\",\n \"text\": \"\\\"The basic idea is that money's worth is dependent on what it can be used to buy. The principal driver of monetary exchange (using one type of currency to \\\"\\\"buy\\\"\\\" another) is that usually, transactions for goods or services in a particular country must be made using that country's official currency. So, if the U.S. has something very valuable (let's say iPhones) that people in other countries want to buy, they have to buy dollars and then use those dollars to buy the consumer electronics from sellers in the U.S. Each country has a \\\"\\\"basket\\\"\\\" of things they produce that another country will want, and a \\\"\\\"shopping list\\\"\\\" of things of value they want from that other country. The net difference in value between the basket and shopping list determines the relative demand for one currency over another; the dollar might gain value relative to the Euro (and thus a Euro will buy fewer dollars) because Europeans want iPhones more than Americans want BMWs, or conversely the Euro can gain strength against the dollar because Americans want BMWs more than Europeans want iPhones. The fact that iPhones are actually made in China kind of plays into it, kind of not; Apple pays the Chinese in Yuan to make them, then receives dollars from international buyers and ships the iPhones to them, making both the Yuan and the dollar more valuable than the Euro or other currencies. The total amount of a currency in circulation can also affect relative prices. Right now the American Fed is pumping billions of dollars a day into the U.S. economy. This means there's a lot of dollars floating around, so they're easy to get and thus demand for them decreases. It's more complex than that (for instance, the dollar is also used as the international standard for trade in oil; you want oil, you pay for it in dollars, increasing demand for dollars even when the United States doesn't actually put any oil on the market to sell), but basically think of different currencies as having value in and of themselves, and that value is affected by how much the market wants that currency.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"40161\",\n \"text\": \"If you plan to stay in Europe for some time, then you should match your income currency with your liability currency, and so should use the Euro loan to pay off the INR loan, thereby eliminating the currency risk that you currently bear every time you convert Euro into INR to pay down the loan. Plus, you have a much lower interest rate. So, do it !\",\n \"title\": \"\"\n },\n {\n \"docid\": \"115210\",\n \"text\": \"GBP is widely traded currency and it is definitely possible to send GBP internationally with out any conversion. Of late banks are trying to maximize the FX and if they see a Euro country the sending bank assumes the beneficiary account is in Euro and converts to get FX spread than letting the beneficiary bank decide. Keep complaining to your bank and then the sending bank will put your account in exception and not convert next payments\",\n \"title\": \"\"\n },\n {\n \"docid\": \"42951\",\n \"text\": \"Currency speculation is a very risky investment strategy. But when you are looking for which currency to denote your savings in, looking at the unit value is quite pointless. What is important is how stable the currency is in the long term. You certainly don't want a currency which is prone to inflation, because it means any savings denoted in that currency constantly lose purchasing power. Rather look for a currency which has a very low inflation rate or is even deflating. Another important consideration is how easy it is to exchange between your local currency and the currency you want to own. A fortune in some exotic currency is worth nothing when no local bank will exchange it into your local currency. The big reserve currencies like US Dollar, Euro, Pound Sterling and Japanes yen are usually safe bets, but there are regional differences which can be easily converted and which can't. When the political relations between your country and the countries which manage these currencies is unstable, this might change over night. To avoid these problems, rather invest into a diverse portfolio of commodities and/or stocks. The value of these kinds of investments will automatically adjust to inflation rate, so you won't need to worry about currency fluctuation.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"260889\",\n \"text\": \"As NRI/PIO (Non-Resident Indian/Person of Indian Origin), the overseas income and transfers in foreign currency are exempt from Indian income taxes. However, the account in India has to be designated NRE or FCNR. There are three kind of accounts that an NRI can maintain Interest earned in NRE and FCNR accounts is exempt from income taxes. Interest earned in NRO accounts is not exempt from income taxes, in fact banks would withhold about 30% of interest (TDS). The exact tax liability would depend upon income generated in India and TDS could be applied towards that liability when the tax returns are filed. There are other implications also of designating the account as NRE or NRO. NRE accounts can only be funded via inward remittance of permitted foreign currency e.g. deposit USD/GBP. So proceeds like rental income, pension etc. that are generated in INR within India can't be deposited in this account. The money deposited in NRE account can grow tax free and can be converted back in any foreign currency freely. On the other hand NRO accounts can be funded through both inward remittance of permitted foreign currency or local income e.g. rental, pension etc. All the amount in this account is treated as Indian originated INR (even if remitted in foreign currency) and thus is taxed as any other bank account. The amount in this account is subject to the annual cap of convertibility of USD 1 million. Both NRE and NRO accounts are maintained in INR and can be Saving and Term Deposit. Any remittance made to these accounts in any foreign currency is converted to INR at the time of deposit and is maintained in INR. FCNR account are held in foreign currency and can only be Term Deposit. Official definitions: Accounts for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"162263\",\n \"text\": \"If the transfer is from a country in Euro region, then yes, using Does, it's possible. However if it's outside then all other details are required. Edit IBAN is used by EURO countries and is supposed to simplify things. However till its fully adopted by all countries and clearing networks, there is quite a bit of confusion and complexity for individuals. Low Value Transfer in Euro region in EUR currency is on SEPA network that only understands IBAN and only supports EUR currency. If you are transfering within UK [both banks in UK] in GBP, it would go on BACS network that only understands SortCode+AccountNumber. There are some Banks that give you interface that take an IBAN and convert to SortCode+AccountNumber and submit to BACS.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"516635\",\n \"text\": \"If the intention is after maturing to convert back the Rupees into Euro, its not a good idea. Generally the interest rate in Euro and the interest rate in Rupee are offset by the predicted exchange rate. i.e. the Rupee will fall compared to Euro by similar rate. The point at Step 5 is generally what is expected to happen. At times this can be less or more depending on the local / global factors. So on average you will not make money, some times you will loose and sometimes you will gain. Plus I have shown flat conversion rates, typically there is a Buy Rate and a Sell Rate for a pair of currencies. There is a difference / spread that is the margins of Bank. Typically in the range of 2 to 4% depending on the currency pairs.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"368044\",\n \"text\": \"\\\"It is not clear to me why you believe you can lose more than you put in, without margin. It is difficult and the chances are virtually nil. However, I can think of a few ways. Lets say you are an American, and deposit $1000. Now lets say you think the Indian rupee is going to devalue relative to the Euro. So that means you want to go long EURINR. Going long EURINR, without margin, is still different than converting your INRs into Euros. Assume USDINR = 72. Whats actually happening is your broker is taking out a 72,000 rupee loan, and using it to buy Euros, with your $1000 acting as collateral. You will need to pay interest on this loan (about 7% annualized if I remember correctly). You will earn interest on the Euros you hold in the meantime (for simplicity lets say its 1%). The difference between interest you earn and interest you pay is called the cost of carry, or commonly referred to as 'swap'. So your annualized cost of carry is $60 ($10-$70). Lets say you have this position open for 1 year, and the exchange rate doesnt move. Your total equity is $940. Now lets say an asteroid destroys all of Europe, your Euros instantly become worthless. You now must repay the rupee loan to close the trade, the cost of which is $1000 but you only have $940 in your account. You have lost more than you deposited, using \\\"\\\"no margin\\\"\\\". I would actually say that all buying and selling of currency pairs is inherently using margin, because they all involve a short sale. I do note that depending on your broker, you can convert to another currency. But thats not what forex traders do most of the time.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"576569\",\n \"text\": \"About the inflation or low interest rates in both the countries is out of the equation especially since rupee is always a low currency compared to Euro. You cannot make profit in Euros using rupee or vice-versa. It all depends on where you want to use the money, in India or Europe? If you want use the money from fixed deposit in Europe, then buy fixed deposit in euros from Europe. If you want to use the money in India, then convert the euros and buy FD in India.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"369035\",\n \"text\": \"The free market will determine exchange rates. But only sort of. If anyone leaves the euro expect and immediate mother-of-all-bank-runs. Then the new currency will begin to trade both officially and unofficially and eventually a market clearing price will be set. Whether that lands on an officially pegged rate or at a discount to that rate is a total crapshoot and not even worth trying to predict.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"261101\",\n \"text\": \"It's not necessary to convert it back for the changes to affect value. Lets say you have a euro account with 1000 euro and a gbp account with 920 gbp (the accounts are equal in value given current exchange rates). You could exchange either account for ~$1180 usd. If you exchange the euro account for USD, and say the euro gets stronger against the pound and dollar (and subsequently the pound and dollar are weaker against the euro); then if you would've kept the 1000 euro it would now be worth more than 920 gbp and more than 1180 usd, and you would've been better off exchanging the gbp account for usd. Barring some cataclysmic economic event; exchange rates between well established currencies don't radically change over a few weeks trip, so I wouldn't really worry about it one way or the other.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"334071\",\n \"text\": \"The best scenario I've heard is by Tyler Cowen: Basically, the Greek Government runs out of Euros. So they print up IOUs to issue to their workers, pensioners, etc promising payment of Euros at some future date. The first day, some wag holds up the IOUs says 'hey, look at these drachmas'. By the seventh day, the IOUs are trading at a discount - there's an exchange rate between the IOUS and Euros, and you in essence have a Drachma currency. What that does in terms of converting external debts, bank accounts, and etc from Drachmas into Euros I'm not sure about. Obviously this isn't the best way to go about getting out of the Euro, but it's the best 'muddle through' option and given how Europe in general has been dealing with this problem it's highly probable this is the method they'll take.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"218045\",\n \"text\": \"\\\"What EU wanted to force Cyprus to do is to break the insurance contract the government has with the bank depositors. The parliament rightfully refused, and it didn't pass. In the EU, and Cyprus as part of it, all bank deposits are insured up to 100,000EUR by the government. This is similar to the US FDIC insurance. Thus, requiring the \\\"\\\"small\\\"\\\" (up to 100K) depositors to participate in the bank reorganization means that the government breaks its word to people, and effectively defaults. That is exactly what the Cyprus government wanted to avoid, the default, so I can't understand why the idea even came up. Depositors of more than 100k are not guaranteed against bank failures, and indeed - in Cyprus these depositors will get \\\"\\\"haircuts\\\"\\\". But before them, first come shareholders and bondholders who would be completely wiped out. Thus, first and foremost, those who failed (the bank owners) will be the first to pay the price. However, governments can default. This happened in many places, for example in Russia in the 90's, in Argentina in 2000's (and in fact numerous times during the last century), the US in the 1930's, and many other examples - you can see a list in Wikipedia. When government defaults on its debts, it will not pay some or all of them, and its currency may also be devaluated. For example, in Russia in 1998 the currency lost 70% of its value against the USD within months, and much of the cash at hands of the public became worthless overnight. In the US in 1933 the President issued an executive order forbidding private citizens keeping gold and silver bullions and coins, which resulted in dollar devaluation by about 30% and investors in precious metals losing large amounts of money. The executive order requiring surrender of the Treasury gold certificates is in fact the government's failure to pay on these obligations. While the US or Russia control their own currency, European countries don't and cannot devaluate the currency as they wish in order to ease their debts. Thus in Euro-zone the devaluation solutions taken by Russia and the US are not possible. Cyprus cannot devaluate its currency, and even if it could - its external debt would not likely to be denominated in it (actually, Russian debt isn't denominated in Rubles, that's why they forced restructuring of their own debt, but devaluating the currency helped raising the money from the citizens similarly to the US seizing the gold in 1930's). Thus, in case of Cyprus or other Euro-zone countries, direct taxes is the only way to raise money from the citizens. So if you're in a country that controls its own currency (such as the US, Russia, Argentina, etc) and especially if the debt is denominated in that currency (mainly the US) - you should be worried more of inflation than taxes. But if you're in the Euro-zone and your country is in troubles (which is almost any country in the zone) - you can expect taxes. How to avoid that? Deal with your elected officials and have them fix your economy, but know that you can't just \\\"\\\"erase\\\"\\\" the debt through inflation as the Americans can (and will), someone will have to pay.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"394296\",\n \"text\": \"If you are a Russian citizen a much easier and common solution would be a USD or EUR withdrawal from your Webmoney account to your Cyprus bank account. You will need to create a Webmoney account (www.webmoney.ru), get a primary certificate in your local Webmoney office in Russia (The list is available at the website), create WMZ (for USD) and WME (for EURO) accounts in Webmoney (done online). Then you can easily top up your Webmoney WMR (Rubles) account (created automatically) with Rubles, convert the sum into USD (According to the Webmoney rate, which is only slightly different from the official central bank rate) and then withdraw the money from your USD Webmoney account to your Cyprus bank account. The money will be transfered to your Cyprus bank account from UK Webmoney dealer. The transaction description would say that this sum is transfered according to the contract of sale of securities. This method prevents any Russian regulatory authorities from seeing your transactions. And the best thig in Webmoney is that they have stable exchange rates and they use classic currencies such as USD, RUR, EUR, etc. Webmoney also has WMG accounts (Gold) and WMX accounts (Bitcoin). Non-Russian residents can also open a Webmoney accounts. You can get one even in Cyprus, by the way:)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"95044\",\n \"text\": \"The ruble was, is and will be very unstable because of unstable political situation in Russia and the economy strongly dependent of the export of raw resources. What you can do? I assume, you want to minimize risk. The best way to achieve that is to make your savings in some stable currency. Euro and Swiss Franc are currently very stable currencies, so storing your surpluses in them is a very good option if you want to keep your money safe. To prevent political risk, you should keep your money in countries with stable political regime, which are unlikely to 'nationalize' the savings of the citizens in predictable future. As for your existing savings in rubles, it's a hard deal. I assume, as the web developer, you have a plenty of money, which have lost a lot of value. If you convert them to euro or francs, you will preserver the current value (after the loss). You'll safe them agaist ruble falling down, but in case the ruble will return to previous value, you'll loose. Keeping savings in instable currencies is, however, speculation, like investing in gold etc. So if you can mentally accept the loss and want to sleep good, convert them. You have also option to invest in properties, for example buy an extra appartment. It's a good way to deal with financial surplus in Europe in US, however you should be aware, in Russland it's connected with the political risk. The real estates can be confiscated in any moment by the state and you can't run away with it (the savings can also be confiscated, but there's a fair chance you'll manage to rescue them if you act quickly).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"96820\",\n \"text\": \"\\\"If I understand right, you're asking whether it's better to withdraw a currency that is more valuable or less valuable, in currency units, than your home country's currency. That is, using your examples, you're asking whether it's better to withdraw euros when the euro is worth more than the Pakistani rupee, or when the euro is worth less. The answer is that it doesn't matter. What matters is whether the euro is worth more Pakistani rupees than it will be worth later. For instance, suppose that the exchange rate today is such that you can buy 115 PKR for 1 EUR, or equivalently, you can buy 1 EUR for 115 PKR. (Realistically the rates would be different due to conversion fees, but I'll keep it this way for simplicitly.) If tomorrow the exchange rate changes so that you need 120 PKR to buy 1 EUR, then you have to spend more rupees to buy a euro, so this is bad for you; it would have been better to buy earlier (when it was only 115 PKR for a euro). If on the other hand the exchange rate shfits the other way, so that you only need 110 PKR to buy a euro, then this benefits you. because you are spending less than you would have if you had bought earlier. So, in these terms, you want to change rupees into euros when one euro is worth fewer rupees (and you want to change euros into rupees when one euro is worth more rupees). It doesn't matter how many PKR you spend for a Euro in raw numbers. All that matters is, are you spending more for that one Euro than you would have spent had you bought earlier or later? Indeed, for your specific example, it is unlikely that one Pakistanee rupee will be worth more than one Euro in the foreseeable future; as far as I can see, the Euro has never been worth less than about 50 rupees. In practice, of course, it's hard to know whether the current rate is \\\"\\\"good\\\"\\\". You can't easily know how currency rates will change in the future. If you are just visiting for a short period of time, it probably doesn't make sense to worry about the exchange rates. Just take out as much money as you need when you need it. You're just as likely to lose money as to save money if you try to game the exchange rates. If you're staying in a place for a longer period of time, it might be worth pulling a bit extra out at a time when the rate is especially favorable, but you're still unlikely to see major savings in the long run.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"128048\",\n \"text\": \"\\\"When you invest in an S&P500 index fund that is priced in USD, the only major risk you bear is the risk associated with the equity that comprises the index, since both the equities and the index fund are priced in USD. The fund in your question, however, is priced in EUR. For a fund like this to match the performance of the S&P500, which is priced in USD, as closely as possible, it needs to hedge against fluctuations in the EUR/USD exchange rate. If the fund simply converted EUR to USD then invested in an S&P500 index fund priced in USD, the EUR-priced fund may fail to match the USD-priced fund because of exchange rate fluctuations. Here is a simple example demonstrating why hedging is necessary. I assumed the current value of the USD-priced S&P500 index fund is 1,600 USD/share. The exchange rate is 1.3 USD/EUR. If you purchase one share of this index using EUR, you would pay 1230.77 EUR/share: If the S&P500 increases 10% to 1760 USD/share and the exchange rate remains unchanged, the value of the your investment in the EUR fund also increases by 10% (both sides of the equation are multiplied by 1.1): However, the currency risk comes into play when the EUR/USD exchange rate changes. Take the 10% increase in the price of the USD index occurring in tandem with an appreciation of the EUR to 1.4 USD/EUR: Although the USD-priced index gained 10%, the appreciation of the EUR means that the EUR value of your investment is almost unchanged from the first equation. For investments priced in EUR that invest in securities priced in USD, the presence of this additional currency risk mandates the use of a hedge if the indexes are going to track. The fund you linked to uses swap contracts, which I discuss in detail below, to hedge against fluctuations in the EUR/USD exchange rate. Since these derivatives aren't free, the cost of the hedge is included in the expenses of the fund and may result in differences between the S&P500 Index and the S&P 500 Euro Hedged Index. Also, it's important to realize that any time you invest in securities that are priced in a different currency than your own, you take on currency risk whether or not the investments aim to track indexes. This holds true even for securities that trade on an exchange in your local currency, like ADR's or GDR's. I wrote an answer that goes through a simple example in a similar fashion to the one above in that context, so you can read that for more information on currency risk in that context. There are several ways to investors, be they institutional or individual, can hedge against currency risk. iShares offers an ETF that tracks the S&P500 Euro Hedged Index and uses a over-the-counter currency swap contract called a month forward FX contract to hedge against the associated currency risk. In these contracts, two parties agree to swap some amount of one currency for another amount of another currency, at some time in the future. This allows both parties to effectively lock in an exchange rate for a given time period (a month in the case of the iShares ETF) and therefore protect themselves against exchange rate fluctuations in that period. There are other forms of currency swaps, equity swaps, etc. that could be used to hedge against currency risk. In general, two parties agree to swap one quantity, like a EUR cash flow, payments of a fixed interest rate, etc. for another quantity, like a USD cash flow, payments based on a floating interest rate, etc. In many cases these are over-the-counter transactions, there isn't necessarily a standardized definition. For example, if the European manager of a fund that tracks the S&P500 Euro Hedged Index is holding euros and wants to lock in an effective exchange rate of 1.4 USD/EUR (above the current exchange rate), he may find another party that is holding USD and wants to lock in the respective exchange rate of 0.71 EUR/USD. The other party could be an American fund manager that manages a USD-price fund that tracks the FTSE. By swapping USD and EUR, both parties can, at a price, lock in their desired exchange rates. I want to clear up something else in your question too. It's not correct that the \\\"\\\"S&P 500 is completely unrelated to the Euro.\\\"\\\" Far from it. There are many cases in which the EUR/USD exchange rate and the level of the S&P500 index could be related. For example: Troublesome economic news in Europe could cause the euro to depreciate against the dollar as European investors flee to safety, e.g. invest in Treasury bills. However, this economic news could also cause US investors to feel that the global economy won't recover as soon as hoped, which could affect the S&P500. If the euro appreciated against the dollar, for whatever reason, this could increase profits for US businesses that earn part of their profits in Europe. If a US company earns 1 million EUR and the exchange rate is 1.3 USD/EUR, the company earns 1.3 million USD. If the euro appreciates against the dollar to 1.4 USD/EUR in the next quarter and the company still earns 1 million EUR, they now earn 1.4 million USD. Even without additional sales, the US company earned a higher USD profit, which is reflected on their financial statements and could increase their share price (thus affecting the S&P500). Combining examples 1 and 2, if a US company earns some of its profits in Europe and a recession hits in the EU, two things could happen simultaneously. A) The company's sales decline as European consumers scale back their spending, and B) the euro depreciates against the dollar as European investors sell euros and invest in safer securities denominated in other currencies (USD or not). The company suffers a loss in profits both from decreased sales and the depreciation of the EUR. There are many more factors that could lead to correlation between the euro and the S&P500, or more generally, the European and American economies. The balance of trade, investor and consumer confidence, exposure of banks in one region to sovereign debt in another, the spread of asset/mortgage-backed securities from US financial firms to European banks, companies, municipalities, etc. all play a role. One example of this last point comes from this article, which includes an interesting line: Among the victims of America’s subprime crisis are eight municipalities in Norway, which lost a total of $125 million through subprime mortgage-related investments. Long story short, these municipalities had mortgage-backed securities in their investment portfolios that were derived from, far down the line, subprime mortgages on US homes. I don't know the specific cities, but it really demonstrates how interconnected the world's economies are when an American family's payment on their subprime mortgage in, say, Chicago, can end up backing a derivative investment in the investment portfolio of, say, Hammerfest, Norway.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"196596\",\n \"text\": \"\\\"The benefit of having gold to trade is that there is almost always someone that will take gold when the fiat currency is in trouble. The potential downfall of doing this is that when people think the fiat currency is in trouble, they tend to buy up gold, thus driving up the price. This means that you get less gold for each hour of work you perform (deer-haunch, basket of apples, etc.). Even more, if the financial crisis is limited to only one fiat currency, you have a situation where that fiat currency devalues but others can gain in value as people try to sell their old currency for the new standard currency. If people also sell their gold to buy up this currency, that lowers the price of gold in that currency. For example, let us assume that gold was 1000 dollars an ounce and 1000 euros an ounce. Suddenly, people start thinking that the euro is in trouble, so they start buying gold. The law of supply and demand kicks in (more buyers, same supply, so higher prices) and gold is suddenly worth 2000 dollars and 2000 euros an ounce. If you start buying at this point, you get half as much gold as the person who bought in the beginning. Suddenly, the euro collapses. Stores that used to take euros start demanding dollars. Suddenly, it costs 20,000 euros for an ounce of gold but an ounce of gold will only get you 1,000 dollars since everyone is selling their gold to get dollars. The people who buy gold in the \\\"\\\"panic\\\"\\\" end up losing half the value of their money if not more. The \\\"\\\"speculators\\\"\\\" that bought gold at $1,000, sold it at $2,000, and bought it back at $1,000 now have all their gold back plus the $1,000 the other people lost.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"344004\",\n \"text\": \"Suppose you're a European Company, selling say a software product to a US company. As much as you might want the US company to pay you in Euros they might insist (or you'll lose the contract) that you agree pricing in USD. The software is licensed on a yearly recurring amount, say 100K USD per year payable on the 1st January every year. In this example, you know that on the 1st Jan that 100K USD will arrive in your USD bank account. You will want to convert that to Euros and to remove uncertainty from your business you might take out an FX Forward today to remove your currency risk. If in the next 9 months the dollar strengthens against the Euro then notionally you'll have lost out by taking out the forward. Similarly, you've notionally gained if the USD weakens against the EURO. The forward gives you the certainty you need to plan your business.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"61514\",\n \"text\": \"e.g. a European company has to pay 1 million USD exactly one year from now While that is theoretically possible, that is not a very common case. Mostly likely if they had to make a 1 million USD payment a year from now and they had the cash on hand they would be able to just make the payment today. A more common scenario for currency forwards is for investment hedging. Say that European company wants to buy into a mutual fund of some sort, say FUSEX. That is a USD based mutual fund. You can't buy into it directly with Euros. So if the company wants to buy into the fund they would need to convert their Euros to to USD. But now they have an extra risk parameter. They are not just exposed to the fluctuations of the fund, they are also exposed to the fluctuations of the currency market. Perhaps that fund will make a killing, but the exchange rate will tank and they will lose all their gains. By creating a forward to hedge their currency exposure risk they do not face this risk (flip side: if the exchange rate rises in a favorable rate they also don't get that benefit, unless they use an FX Option, but that is generally more expensive and complicated).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"447928\",\n \"text\": \"\\\"This is the best tl;dr I could make, [original](https://uk.reuters.com/article/uk-italy-euro-analysis/italys-dual-currency-schemes-may-be-long-road-to-euro-exit-idUKKCN1BJ208) reduced by 90%. (I'm a bot) ***** > If any of their schemes are adopted with success they may convince many Italians that the economy can function without the euro, and make an eventual euro exit more likely. > They have settled on the dual currency proposal as a way of continuing to tap into widespread anti-euro sentiment in Italy while avoiding - at least for now - the huge upheaval and market turmoil that outright euro exit may trigger. > Italians were strongly pro-euro when the single currency was launched in 1999, but since then Italy has been the most sluggish euro zone economy and many blame the euro for their falling living standards and high unemployment. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6yz18c/italys_dual_currency_schemes_may_be_long_road_to/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \\\"\\\"Version 1.65, ~206798 tl;drs so far.\\\"\\\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \\\"\\\"PM's and comments are monitored, constructive feedback is welcome.\\\"\\\") | *Top* *keywords*: **euro**^#1 **currency**^#2 **Italy**^#3 **Italian**^#4 **proposal**^#5\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"180539\",\n \"text\": \"All the fees are added to the amount you actually spend, but they only occur when you do these kind of transactions. They do not happen for any other reason. If you transfer a balance from another credit card this fee is added to your balance. Since this is your first credit card you don't have to transfer any balance. This site says that this is a special type of check, linked to your credit card account, not to your checking account. If you write this type of check to a merchant the additional fees will apply. If you use your credit card at an ATM this fee will be applied on top of the money you withdraw. Usually it is a percentage of the amount you withdraw. According to this site, a cash equivalent is something like casino chips which can be easily converted back into money without any loss. If you use your credit card in a different currency, for example Euro but your credit cards currency is Dollar. Usually a percentage of the amount (~3-5%). If you withdraw money from a foreign currency ATM they add usually a fixed amount plus a percentage or any combination of this.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"475478\",\n \"text\": \"\\\"You might convert all your money in local currency but you need take care of following tips while studying abroad.Here are some money tips that can be useful during a trip abroad. Know about fees :- When you use a debit card or credit card in a foreign country, there are generally two types of transaction fees that may apply: Understand exchange rates :- The exchange rate lets you know the amount of nearby money you can get for each U.S. dollar, missing any expenses. There are \\\"\\\"sell\\\"\\\" rates for individuals who are trading U.S. dollars for foreign currency, and, the other way around, \\\"\\\"purchase\\\"\\\" rates. It's a smart thought to recognize what the neighborhood money is worth in dollars so you can comprehend the estimation of your buys abroad. Sites like X-Rates offer a currency converter that gives the current exchange rate, so you can make speedy comparisons. You can utilize it to get a feel for how much certain amount (say $1, $10, $25, $50, $100) are worth in local currency. Remember that rates fluctuate, so you will be unable to suspect precisely the amount of a buy made in a foreign currency will cost you in U.S. dollars. To get cash, check for buddy banks abroad:- If you already have an account with a large bank or credit union in the U.S., you may have an advantage. Being a client of a big financial institution with a large ATM system may make it easier to find a subsidiary cash machine and stay away from an out-of-system charge. Bank of America, for example, is a part of the Global ATM Alliance, which lets clients of taking an interest banks use their debit cards to withdraw money at any Alliance ATM without paying the machine's operator an access fee, in spite of the fact that you may at present be charged for converting dollars into local currency used for purchases. Citibank is another well known bank for travelers because it has 45,000 ATMs in more than 30 countries, including popular study-abroad destinations such as the U.K., Italy and Spain. ATMs in a foreign country may allow withdrawals just from a financial records, and not from savings so make sure to keep an adequate checking balance. Also, ATM withdrawal limits will apply just as they do in the U.S., but the amount may vary based on the local currency and exchange rates. Weigh the benefits of other banks :- For general needs, online banks and even foreign banks can also be good options. With online banks, you don’t have to visit physical branches, and these institutions typically have lower fees. Use our checking account tool to find one that’s a good fit. Foreign banks:- Many American debit cards may not work in Europe, Asia and Latin America, especially those that don’t have an EMV chip that help prevent fraud. Or some cards may work at one ATM, but not another. One option for students who expect a more extended stay in a foreign country is to open a new account at a local bank. This will let you have better access to ATMs, and to make purchases more easily and without as many fees. See our chart below for the names of the largest banks in several countries. Guard against fraud and identity theft:- One of the most important things you can do as you plan your trip is to let your bank know that you’ll be abroad. Include exact countries and dates, when possible, to avoid having your card flagged for fraud. Unfortunately, incidents may still arise despite providing ample warning to your bank. Bring a backup credit card or debit card so you can still access some sort of money in case one is canceled. Passports are also critical — not just for traveling from place to place, but also as identification to open a bank account and for everyday purposes. You’ll want to make two photocopies and give one to a friend or family member to keep at home and put the other in a separate, secure location, just in case your actual passport is lost or stolen.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"239876\",\n \"text\": \"You are trying to predict the future currency fluctuations that can't be predicted. If you know for sure you are moving, convert it directly into Euros in near future rather than take a complicated route.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"470032\",\n \"text\": \"\\\"In my experience working at a currency exchange money service business in the US: Flat fees are the \\\"\\\"because we can\\\"\\\" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled. If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real \\\"\\\"fee\\\"\\\" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee \\\"\\\"hidden\\\"\\\" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"126565\",\n \"text\": \"\\\"You can find lots of answers to this question by googling. I found at least five pages about this in 30 seconds. Most of these pages seem to say that if you must convert cash, converting it in the destination country is probably better, because you are essentially buying a product (in this case, dollars), and it will cheaper where the supply is greater. There are more dollars in the USA than there are in Portugal, so you may be able to get them cheaper there. (Some of those pages mention caveats if you're trying to exchange some little-known currency, which people might not accept, but this isn't an issue if you're converting euros.) Some of those pages specifically recommend against airport currency exchanges; since they have a \\\"\\\"captive audience\\\"\\\" of people who want to convert money right away, they face less competition and may offer worse rates. Of course, the downside of doing the exchange in the USA is that you'll be less familiar with where to do it. I did find some people saying that, for this reason, it's better to do it in your own country where you can shop around at leisure to find the best rate. That said, if you take your time shopping around, shifts in the underlying exchange rate in the interim could erase any savings you find. It's worth noting, though, that the main message from all these pages is the same: don't exchange cash at all if you can possibly avoid it. Use a credit card or ATM card to do the exchange. The exchange rate is usually better, and you also avoid the risks associated with carrying cash.\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":94,"cells":{"query_id":{"kind":"string","value":"763"},"query":{"kind":"string","value":"What can I expect to pay when meeting my first financial planner?"},"positive_passages":{"kind":"list like","value":[{"docid":"32385","text":"My suggestion would be to ask the planner as an initial question as there could be a couple possible explanations for a free meeting: Initial consultation - Within some industries there will be that first meeting which is free to see how well do two people work together. In Canada there are some lawyers that will give a half-hour of their time and I'd imagine some financial planners may have a similar practice. This would be where that first meeting is a half-hour or hour to see what is your situation and what expertise do you want that the planner would have. Straight commission - There is also the possibility that the planner is compensated by the products you purchase through him. In this case, the mutual fund companies, insurance companies and other institutions that he recommends will be handling his compensation. While this does present a conflict of interest, you have to decide whether you want a fee-only planner which wouldn't have this issue though you'd have to pay out of pocket. Something to consider is what are you bringing to this meeting and how long is it intended to be. If you are bringing a lot of paperwork then it is definitely worth asking upfront while if it is an informal chat for a half hour then things may be different.","title":""},{"docid":"260045","text":"A complete analysis of your current situation, goals, and formulating a plan to meet those goals, including discussing your risk tolerance cannot be completed during the initial meeting. The first meeting should be him trying to convince you of his skills and services, he will also be collecting the required data from you. You could inquire a few days before the meeting what information he needs from you. The less he asks for the less though the analysis at the initial meeting. This would also be a good time to ask about fee structure. Some planners make money on the initial plan, others make money on the execution of the plan. What fee that is expected for the initial analysis can vary greatly. You should ask, but most will consider this first meeting as the cost of doing business.","title":""}],"string":"[\n {\n \"docid\": \"32385\",\n \"text\": \"My suggestion would be to ask the planner as an initial question as there could be a couple possible explanations for a free meeting: Initial consultation - Within some industries there will be that first meeting which is free to see how well do two people work together. In Canada there are some lawyers that will give a half-hour of their time and I'd imagine some financial planners may have a similar practice. This would be where that first meeting is a half-hour or hour to see what is your situation and what expertise do you want that the planner would have. Straight commission - There is also the possibility that the planner is compensated by the products you purchase through him. In this case, the mutual fund companies, insurance companies and other institutions that he recommends will be handling his compensation. While this does present a conflict of interest, you have to decide whether you want a fee-only planner which wouldn't have this issue though you'd have to pay out of pocket. Something to consider is what are you bringing to this meeting and how long is it intended to be. If you are bringing a lot of paperwork then it is definitely worth asking upfront while if it is an informal chat for a half hour then things may be different.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"260045\",\n \"text\": \"A complete analysis of your current situation, goals, and formulating a plan to meet those goals, including discussing your risk tolerance cannot be completed during the initial meeting. The first meeting should be him trying to convince you of his skills and services, he will also be collecting the required data from you. You could inquire a few days before the meeting what information he needs from you. The less he asks for the less though the analysis at the initial meeting. This would also be a good time to ask about fee structure. Some planners make money on the initial plan, others make money on the execution of the plan. What fee that is expected for the initial analysis can vary greatly. You should ask, but most will consider this first meeting as the cost of doing business.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"595427","text":"\"It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensive plan - look at your whole life, goals, and non-investment issues such as insurance. You should expect to get a document with a Monte Carlo simulation showing your odds of success if you stick to the plan; for investments, you should expect to see a recommended asset allocation and an emphasis on low-cost no-commission (commission is \"\"load\"\") funds. See some of the other questions from past posts, for example What exactly can a financial advisor do for me, and is it worth the money? A good place to start for a planner might be http://napfa.org ; there's also a franchise of planners providing hourly advice called the Garrett Planning Network, I helped my mom hire someone from them and she was very happy, though I do think your results would depend mostly on the individual rather than the franchise. Anyway see http://www.garrettplanningnetwork.com/map.html , they do require planners to be fee-only and working on their CFP credential. You should really look for the Certified Financial Planner (CFP) credential. There are a lot of credentials out there, but many of them mean very little, and others might be hard to get but not mean the right thing. Some other meaningful ones include Chartered Financial Analyst (CFA) which would be a solid investment expert, though not necessarily someone knowledgeable in financial planning generally; and IRS Enrolled Agent, which means someone who knows a lot about taxes. A CPA (accountant) would also be pretty meaningful. A law degree (and estate law know-how) is very relevant to many planning situations, too. Some not-very-meaningful certifications include Certified Mutual Fund Specialist (which isn't bogus, but it's much easier to get than CFP or CFA); Registered Investment Adviser (RIA) which mostly means the person is supposed to understand securities fraud laws, but doesn't mean they know a lot about financial planning. There are some pretty bogus certifications out there, many have \"\"retirement\"\" or \"\"senior\"\" in the name. A good question for any planner is \"\"Are you a fiduciary?\"\" which means are they legally required to act in your interests and not their own. Most sales-oriented advisors are not fiduciaries; they wouldn't charge you a big sales commission if they were, and they are not \"\"on your side\"\" legally speaking. It's a good idea to check with your state regulators or the SEC to confirm that your advisor is registered and ask if they have had any complaints. (Small advisors usually register with the state and larger ones with the federal SEC). If they are registered, they may still be a salesperson who isn't acting in your interests, but at least they are following the law. You can also see if they've been in trouble in the past. When looking for a planner, one firm I found had a professional looking web site and didn't seem sketchy at all, but the state said they were not properly registered and not in compliance. Other ideas A good book is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 it's very approachable and you'd feel more confident talking to someone maybe with more background information. For companies to work with, stick to the ones that are very consumer-friendly and sell no-load funds. Vanguard is probably the one you'll hear about most. But T. Rowe Price, Fidelity, USAA are some other good names. Fidelity is a bit of a mixture, with some cheap consumer-friendly investments and other products that are less so. Avoid companies that are all about charging commission: pretty much anyone selling an annuity is probably bad news. Annuities have some valid uses but mostly they are a bad deal. Not knowing your specific situation in any detail, it's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. It's virtually certain that any planner who is for real, and not a ripoff salesperson, will talk a lot about how much you need to save and so forth, not just about choosing investments. Don't be afraid to pay for a planner. It's well worth it to pay someone a thousand dollars for a really thorough, fiduciary plan with your interests foremost. The \"\"free\"\" planners who get a commission are going to get a whole lot more than a thousand dollars out of you, even though you won't write a check directly. Be sure to convert those mutual fund expense ratios and sales commissions into actual dollar amounts! To summarize: find someone you're paying, not someone getting a commission; look for that CFP credential showing they passed a demanding exam; maybe read a quick and easy book like the one I mentioned just so you know what the advisor is talking about; and don't rush into anything! And btw, I think you ought to be fine with a solid plan. You and your husband have time remaining to work with. Good luck.\"","title":""},{"docid":"16733","text":"\"I have always found that the \"\"free\"\" planners are just salesmen pointing you in their best interests. Not that it won't get you a good deal in the processes, but, in my experience, they usually just recommend products that give them the best commission, finders fee, kickback, whatever. Flat fee financial planners are not really to my liking either. This is a taste thing, but generally, I feel like now that they have my fee, what interest do they have in taking care of me. That doesn't mean that they don't give good advise however. They may be a good first step. Percentage based financial planners, those that charge a percentage of assets under management, are my recommendation. The more money they make me the more money they make. This seems to work out quite well. Whatever you do, you need to be aware that financial planners are not just about recommending products, or saving money. That's part of it, but a good planner will also help you look at monthly budgets, current costs, liabilities, and investments. You want to look for someone that you can basically tell your goal to - \"\"I want to have x amount of money saved for y date,\"\" for example, or \"\"I want to reduce my bills by z amount in x months\"\". Run from any planner that looks only at the large sum as the \"\"solution\"\" or only source of money. You want a planner that will look at your first house mortgage(s), care loans, income, other investments, etc. and come up with a full plan for everything. If you're only trying to invest the new house money, and that's it, you're better off just sticking with Google and some research on your own.\"","title":""},{"docid":"47973","text":"\"First, I applaud you for caring. Most people don't! In fact, I was in that category. You bring up several issues and I'll try to address them separately. (1) Getting a financial planner to talk with you. I had the same experience! My belief is that they don't want to admit that they don't know how things work. I even asked if I could pay them an hourly fee to ask questions and review stocks with them. Most declined. You'll find that very few people actually take the time to get trained to evaluate stocks and the stock market as a whole. (See later Investools.com). After looking, however, I did find people who would spend an hour or two with me when we met once a quarter to review my \"\"portfolio\"\"/investments. I later found training that companies offered. I would attend any free training I could get because they actually wanted to spend time and talk and teach investors. Bottom line is: Talking to their clients is the job of a financial planner. If he (or she) is not willing to take this time, it is in your best interest to find someone who will spend that time. (2) Learning about investing! I'm not affiliated with anyone. I'm a software developer and I do my own trading/investments. The opinions I share are my own. When I was 20 years away from retirement, I started learning about the stock market so that I would know how it worked before I retired so that (a) I could influence a change if one was needed, and (b) so I wouldn't have to blindly accept the advice of the \"\"experts\"\" even when the stock market is crashing. I have used Investools.com, and TDAmeritrade's Think-or-Swim platform. I've learned a tremendous amount from the Investools training. I recommend them. But don't expect to learn how to get rich from them or any training you take. The TDA Think-or-swim platform I highly recommend BECAUSE it has a feature called \"\"Paper Money\"\". It lets you trade using the real market but with play money. I highly recommend ANY platform that you can use to trade IN PAPER money! The think-or-swim platform would allow you to invest $30,000 in paper money (you can have as much as you want) into any stock. This would let you see if you can make more money than your current investment advisor. You could invest $10K in one SPY, $10K in DIA and $10K in IWM (these are symbols for the S&P 500, Dow 30, and Small Cap stocks). This is just an example, I'm not suggesting any investment advise! It's important that you actually do this not just write down on a piece of paper or Excel spreadsheet what you were going to do because it's common to \"\"cheat\"\" and change the dates to meet your needs. I have found it incredibly helpful to understand how the market works by trying to do my own paper and now real money investing. I was and you will be surprised to find that many trades lose money during the initial start part of the trade because it's very difficult to buy at the exact right time. An important part of managing your own investments is learning to trade with rules and not get \"\"emotionally involved\"\" in your trades. (3) Return on investment. You were not happy with $12 return. Low returns are a byproduct of the way most investment firms (financial planners) take (diversification). They diversify to take a \"\"hands off\"\" approach toward investment because that approach has been the only approach that they have found that works relatively well in all market conditions. It's not (necessarily) a bad approach. It avoids large losses in down markets (most riskier approaches lose more than the market). The downside is it also avoids the high returns. If the market goes up 15% the investment might only go up 5%. 30K is enough to give to multiple investment firms a try. I gave two different firms $25K each to see how they would invest. The direction was to accept LOTS of risk (with the potential for large losses or large gains). In a year that the market did very well, one lost money, and one made a small gain. It was a learning experience. I, now, have taken the money back and invest it myself. NOTE: I would be happy with a guy who made me 10-15% year over year (in good times and bad) and didn't talk with me, but I haven't found someone who can do that. :-) NOTE 2: Don't believe what you hear from the news about the stock market being up 5% year to date. Do your own analysis. NOTE 3: Investing in \"\"the market\"\" (S&P 500 for example) is a great way to go if you're just starting. Few investment firms can beat \"\"the market\"\" although many try to do so. I too have found it's easier to do that than other approaches I've learned. So, it might be a good long term approach as well. Best wishes to you in your learning about the market and desires to make money with your money. That is what is all about.\"","title":""},{"docid":"174122","text":"Some sample prices for straightforward pay-for-hours-or-deliverables planners: I think I've seen some similar rates elsewhere, too. I'd feel like you might get something perfunctory and boilerplate for too much less than $1000 - how could the person afford to spend much time? - and I'd feel like lots more than $1000 for just a standard straightforward plan might be a ripoff. Basically you're paying $1000 for a day or two of work, you don't want just a couple hours of work, but you don't need a week of work either. Anyway, extracting the general guideline (since prices may vary regionally or over time), you could figure it takes a day or two to do a decent job on a basic complete financial plan without a lot of complexities in it. From there you can decide what's fair, adding or subtracting time if you need less than a complete plan or have complex issues. This is assuming you're paying for time and deliverables, which is not a given. The biggest factor in how much you pay is probably how they charge; a couple of the most common models, (There are other models but these are the ones I've seen most.) The difference between these two models is a lot of money over time. Hourly is going to be much cheaper, because it's a one-time cost instead of ongoing, and unrelated to what you have in assets. However, you won't get investment management, which can be valuable if you aren't the kind to stick to an investment plan or you want someone else to completely take care of it for you. The investment-management planners have the potential to make a lot more money (and are more likely to be in it for the money). Hourly planners don't really have as good a business from a business owner's perspective, but they are cheaper from a customer perspective, as long as you're happy to DIY a bit. One thing I like about hourly planners is that I don't really feel investments are the main place planners can add value, so it makes me nervous to have the compensation based on that. Insurance, estate planning, taxes, etc. are where it's harder for a layperson to know all the ins and outs and DIY. From what I've seen, the cheapest planners are the ones that you can get free or discounted from companies like USAA or Vanguard if you have an account with them. However, they will only recommend products from the company in question, so that's a downside, and you probably won't get to meet them in person. This question may be useful too: What exactly can a financial advisor do for me, and is it worth the money?","title":""},{"docid":"463260","text":"The answer will vary person to person and situation to situation. But the basic concept to always consider is this: What interest rate am I paying on my debt? 10%? 18%? And what interest rate am I making on my savings/investment, etc? 3%? 7%? It won't give you a hard and fast answer, but will definitely let you know if you should take a closer look at it. I'd suggest talking to a financial planner about it. Find a fee-based planner that you can turn to intermittently to make sure you are on the right track...not a commission-based planner, a fee-based one. (with respectful apologies to any commission-based planners who may read this.) My instinct is usually to pay off the debt, try to clean everything up so you don't have anything outstanding that is charging you interest. Debt is clutter, it's stressful, it can be a reminder of money you wish you hadn't spent. As long as you have access to money in case of emergency, job loss, etc, get your debt paid off and keep it paid off. You'll sleep much better.","title":""},{"docid":"129255","text":"Investing is really about learning your own comfort level. You will make money and lose money. You will make mistakes but you will also learn a great deal. First off, invest in your own financial knowledge, this doesn't require capital at all but a commitment. No one will watch or care for your own money better than yourself. Read books, and follow some companies in a Google Finance virtual portfolio. Track how they're doing over time - you can do this as a virtual portfolio without actually spending or losing money. Have you ever invested before? What is your knowledge level? Investing long term is about trying to balance risk while reducing losses and trying not to get screwed along the way (by people). My personal advice: Go to an independent financial planner, go to one that charges you per hour only. Financial planners that don't charge you hourly get paid in commissions. They will be biased to sell you what puts the most money in their pockets. Do not go to the banks investment people, they are employed by the banks who have sales and quota requirements to have you invest and push their own investment vehicles like mutual funds. Take $15k to the financial planner and see what they suggest. Keep the other $5K in something slow and boring and $1k under your mattress in actual cash as an emergency. While you're young, compound interest is the magic that will make that $25k increase hand over fist in time. But you need to have it consistently make money. I'm young too and more risk tolerant because I have time. While I get older I can start to scale back my risk because I'm nearing retirement and preserve instead of try to make returns.","title":""},{"docid":"386720","text":"You remind me a lot of myself as I was thinking about marriage. Luckily for me, my wife was much smarter about all this than I was. Hopefully, I can pass along some of her wisdom. Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. In marriage, there is no more financial independence. Do not think in those terms. Life can throw so many curve balls that you will regret it. Imagine sitting down with your new bride and running through the math. She is to contribute $X to the family each month and you are to contribute $Y. Then next thing you know, 6 months later, she has cancer and has to undergo expensive and debilitating treatment. There is no way she can contribute her $X anymore. You tell her that is okay and that you understand, but the pressure weighs down on her every day because she feels like she is not meeting your expectations. Or alternatively, everything goes great with your $X, $Y plan. A few years down the road your wife is pregnant, so you revisit the plan, readjust, etc. Everything seems great. When your child is born, however, the baby has a severe physical or mental handicap. You and your wife decide that she will quit her job to raise your beautiful child. But, the whole time, in the back of her mind she can't get out of her head that she is no longer financially independent and not living up to your expectations. These stresses are not what you want in your marriage. Here is what we do in my family. Hopefully, some of this will be helpful to you. Every year my wife and I sit down and determine what our financial goals are for the year. How much do we want to be putting in retirement? How much do we want to give to charity? Do we want to take any family vacations? We set goals together on what we want to achieve with our money. There is no my money or her money, just ours. Doesn't matter where it comes from. At the beginning of every month, we create a budget in a spreadsheet. It has categories like (food, mortgage or rent, transportation, clothing, utilities) and we put down how much we expect to spend on each of those. It also has categories for entertainment, retirement, charity, cell phones, internet, and so on. Again, we put down how much we expect to spend on each of those. In the spreadsheet, we also track how much income we expect that month and our totals (income minus expenses). If that value is positive, we determine what to do with the remainder. Maybe we save some for a rainy day or for car repairs. Maybe we treat ourselves to an extra fancy dinner. The point is, every dollar should be accounted for. If she wants to go to dinner with some friends, we put that in the budget. If I want a new video game, we put that in the budget. Once a week, we take all our receipts and tally up where we spent our money. We then see how we are doing on our budget. Maybe we were a little high in one category and lower than expected in another. We adjust. We are flexible. But, we go over our finances often to make sure we are achieving our goals. Some specific goals I'd recommend that the two of you consider in your first such yearly meeting: You get out of life what you put into it, and you will get out of your finances what the two of you put into them. By being on the same page, your marriage will be much happier. Money/finances are one of the top causes of divorce. If you two are working together on this, you are much more likely to succeed.","title":""},{"docid":"578677","text":"\"E) Spend a small amount of that money on getting advice from a paid financial planner. (Not a broker or someone offering you \"\"free\"\" advice; their recommendations may be biased toward what makes them the most money). A good financial planner will talk to you about your plans and expectations both short and long term, and about your risk tolerance (would a drop in value panic you even if you know it's likely to recover and average out in the long run, that sort of thing), and about how much time and effort you want to put into actively managing your portfolio. From those answers, they will generate an initial proposed plan, which will be tested against simulations of the stock market to make sure it holds up. Typically they'll do about 100 passes over the plan to get a sense of its probable risk versus growth-potential versus volatility, and tweak the plan until the normal volatility is within the range you've said you're comfortable with while trying to produce the best return with the least risk. This may not be a perfect plan for you -- but at the very least it will be an excellent starting point until you decide (if you ever do decide) that you've learned enough about investing that you want to do something different with the money. It's likely to be better advice than you'll get here simply because they can and will take the time to understand your specific needs rather than offering generalities because we're trying to write something that applies to many people, all of whom have different goals and time horizons and financial intestinal fortitude. As far as a house goes: Making the mistake of thinking of a house as an investment is a large part of the mindset that caused the Great Recession. Property can be an investment (or a business) or it can be something you're living in; never make the mistake of putting it in both categories at once. The time to buy a house is when you want a house, find a house you like in a neighborhood you like, expect not to move out of it for at least five years, can afford to put at least 20% down payment, and can afford the ongoing costs. Owning your home is not more grown-up, or necessarily financially advantageous even with the tax break, or in any other way required until and unless you will enjoy owning your home. (I bought at age 50ish, because I wanted a place around the corner from some of my best friends, because I wanted better noise isolation from my neighbors, because I wanted a garden, because I wanted to do some things that almost any landlord would object to, and because I'm handy enough that I can do a lot of the routine maintenance myself and enjoy doing it -- buy a house, get a free set of hobbies if you're into that. And part of the reason I could afford this house, and the changes that I've made to it, was that renting had allowed me to put more money into investments. My only regret is that I didn't realise how dumb it was not to max out my 401(k) match until I'd been with the company for a decade ... that's free money I left on the table.)\"","title":""},{"docid":"368698","text":"\"Whether your financial status is considered \"\"OK\"\" depends on your aspirations. You aren't spending more than you earn and have no debt. That puts you in the category of OK in my book, but the information in your post indicates that you would benefit from some financial advice--100 grand sounds like a lot of money to have in a bank unless you are on the verge of spending it. Financial advisors come in various shapes and sizes. Many will charge you a lot for what turns out to be helpful advice in the first meeting, but very little value-added thereafter. Some don't have the best incentives (they may be incentivized to encourage you to put your money into certain funds, for example). There are many financial advisors (of sorts) that you have access to that won't cost you anything. For example, if you have a 401(k) at work, I bet there is a representative from the plan administrator that will meet with you for free. If you open a brokerage account or IRA at any place (Fidelity, Vanguard, etc.) you can easily talk with one of their reps and get all sorts of advice. My personal take is to meet with anyone who will meet with me for free, but not to pay anyone for this service. It's too easy to get good advice and paying for it doesn't guarantee that you get better advice. Your financial situation will depend primarily on a few things you have not mentioned here. For example, How much are you setting aside for retirement and what are your retirement goals? This is something lots of people can give you advice on, but we don't know what market returns will be going forward so we don't really know. One bit of advice that may benefit you is how to set aside money for retirement in the most tax advantaged way. How much do you feel that you need saved up for large expenses? Thinking of starting a family? How many months worth of income are you comfortable having set aside? What is your tolerance of risk? If you put your money in risky assets, you may make more, but you may also actually lose money. Those are the questions a financial advisor will ask about. Once you have his/her advice--and preferrably after talking to a few advisors--you can make your own decision. Basically, your options are: Rules of thumb: Save only what makes sense to save in banks given your expected needs for cash. Put a lot in tax advantaged accounts (don't give Uncle Sam any gifts). Then look at financial and real investments. There are a number of free resources on the internet. For example FutureAdvisor. Or you can hit up the forums at BogleHeads. Those guys give and receive financial advice as a hobby. They aren't professionals, but you can get a lot of varying ideas and make up your own mind, which to me is better than (just) asking a professional. BTW, regarding the ESPP: these plans often give you a discount on stock and can therefore be a good idea. Just be sure you don't hold the stock longer than you need to. It's generally a bad idea to concentrate your wealth in any single investment, especially one highly correlated with your background risk (i.e., if the company does poorly you will already be worse off because you may lose your job or see fewer advancement opportunities. No need to add losses in your savings to that). 1 Please note: I am neither advocating nor discouraging buying guns, gold, or other controversial real assets. I'm just giving examples of items some people buy as part of their wealth-preservation strategy.\"","title":""},{"docid":"314252","text":"\"A financial planner can help with investments, insurance, estate planning, budgeting, retirement planning, saving for college, tax planning/prep, and other money topics. One way to get a sense is to look at this Certified Financial Planner topic list. Another idea is to look at this book (my favorite I've read) which covers roughly a similar topic list in a concise form: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 It could not hurt at all to read that before deciding to visit a planner, so you have baseline knowledge. By the way, look for the CFP certification which is a generalist certification. A CFP might also have a deeper cert in certain topics or connect you with someone who does. For example: You really want a generalist (CFP) who may have an additional credential as well. The idea is to holistically look at what you're trying to accomplish and all finance-related areas. Especially because there may be tradeoffs. The CFP would then refer you to or work with lawyers, accountants, etc. Importantly, some advisors are fiduciaries (must act in your interests) and some are not. In particular many stockbrokers are neither qualified planners (no CFP or equivalent) nor are they fiduciaries. Stay away. There are several models for paying a financial planner, including: There's an organization called NAPFA (napfa.org) for fiduciary non-commission-based planners. Membership there is a good thing to look for since it's a third party that defines what fee-only means and requires the no-commissions/fiduciary standard. Finally, the alternative I ended up choosing was to just take the CFP course myself. You can do it online via correspondence course, it costs about the same as 1 year of professional advice. I also took the exam, just to be sure I learned the stuff. This is the \"\"extreme DIY\"\" approach but it is cheaper over time and you know you are not going to defraud yourself. You still might do things that are counterproductive and not in your interests, but you know that already probably ;-) Anyway I think it's equivalent to about a quarter's worth of work at a decent college, or so. There are about 6 textbooks to dig through. You won't be an experienced expert at the end, but you'll know a lot. To get an actual CFP cert, you need 3 years experience on top of the courses and the exam - I haven't done that, just the book learning. Someone who puts \"\"CFP\"\" after their name will have the 3 years on top of the training. Some editorial: many planners emphasize investing, and many people looking for planners (or books on finance) emphasize investing. This is a big mistake, in my view. Investing is more or less a commodity and you just need someone who won't screw it up, overcharge, and/or lose your money on something idiotic or inappropriate. Some people are in plain-bad and inappropriate investments, don't get me wrong. But once you fix that and just get into anything decent, your biggest planning concerns are probably elsewhere. On investments, I'd look for a planner to just get you out of overpriced annuities and expensive mutual funds you may have been sold (anything you were sold by a salesperson is probably crap). And look for them to help you decide how much to invest, and how much in stocks vs. bonds. Those are the most important investment decisions.\"","title":""},{"docid":"455261","text":"You will want to focus on how much is needed for retirement, and what types of investments within the current 401K offerings will get you there. Also will need to discuss non-401K investments such as an IRA, college savings, savings for a house, and an emergency fund. The 401K should be a part of your overall financial picture, how much you invest in the 401K depends on the options you have (Roth 401K available), how much matching (some a little or a lot), and your family plans. You have a few choices: Your company through the 401K provider may provide this service. They may have limited knowledge in what non-401K funds you should invest in, but should be able to discuss types of investment. Fee only planner. They will be able to discus types of investments, and give you some suggestions. Because they don't work on a commission they will not make the investment for you. You need to be able to make the actual selection of investments, so make sure you get criteria to focus on as part of the package. Commission based planner. Will make money off your investment choices. May steer you towards investments that their company offers or ones that offer them the best commissions in that investment type. If the 401K doesn't use funds that the planner can research you will need to provide a copy of the prospectus provided by the 401K. My suggestion is the fee only planner. They balance the limited focus of the 401K company without limiting themselves to the funds their company sells. Before sitting down with the planner get in writing how they fee structure works. A flat fee or hourly fee planner will be expecting you to do all the investment work. This is what you want. Let the fee only planner help you define your plan. But also reanalyze the plan every few years as your needs change.","title":""},{"docid":"261714","text":"The severity of wealth inequality- more so than its existence- is what I'm getting at when I talk about the Fed. The cantillon effect is a theory that essentially states that the first recipients of stimulus are far better off than those 2 or 3 degrees of separation later. So if you look at Fed policies, where monetary stimulus is directed only towards the financial system and credit markets, certain parties will benefit disproportionately first before others later. In this case, that would be those employed by the industry (bankers, investors, etc), institutions in that industry (banks, hedge funds, pension/mutual funds), and owners of securities (the wealthy). Spillover effects impact the stock market, real estate, art, etc. and they are not a result of fundamentals, but rather of mis-allocated capital. What I'm getting at is we don't need central planners (i.e. the Fed) to make decisions regarding the market for money - interest rates - or pursue dubious financial experiments at best to somehow fix problems that they themselves caused in the past (through extended low interest rate environments). Central banking could take a very serious hit if cryptocurrencies become mainstream- which I do not expect for a long time- but it's the best emergent challenger to the existing paradigm.","title":""},{"docid":"118204","text":"I think the answers you're going to receive are all going to be a bit subjective. Looking at it from a high-level point of view, having this budget nailed down lets you analyze: Now you've got your budget, stick to it! This is really the most important part. You've done your homework, now make sure you don't exceed it without a good reason. If you're under budget in any given month, have a plan on what to do with the excess funds. If you go over budget on a certain area, you can react accordingly. I, personally, recommend hiring a financial planner. Ours has been a huge help with looking further down the line than we had been originally. If you show up to your first meeting with an FP and have this budgetary breakdown ready to go, you'll probably get a high-five. Well done, you!","title":""},{"docid":"521835","text":"it depends on the area you want to focus in. to be sure, i will say that pretty much all certificates in finance can be achieved online now. CFP is a pretty ok one. i have it myself. there is quite a bit of material, but isn't too challenging. it focuses on financial planning/personal finance. certainly aids your technical knowledge but is kind of an analog to help boost your sales. most pure planners i know have this but moreover a series of more technical designations. you must have a bachelors to be given the right to use the CFP. CFA is a great one for your resume (and knowledge), but makes the CFP look like a summer vacation. it is for analysis, but has a broad range of potential uses. i know brokers, advisors, planners, and people leaders with these marks. if you are very smart, it will take you a minimum of 2.5 years (really 3yr) to complete due to their testing schedule. they also grade on a very steep curve. from what i understand, the amount of information and level of command you must demonstrate also necessitate this lengthy schedule. beyond that, you can look at getting FINRA licensed in a desired area (e.g. series 7/63 to be a broker). i would caution against this, unless you are very sure of where you want to go or need to meet the requirement for a job. typically jobs with license requirements will permit you 3-6 months to obtain them on company money. you risk spending a good bit of money that won't be reimbursed by getting licensed independently. keep in mind that you cannot actually use your licenses without a firm sponsor. finally, there are a variety of specialized designations like CWS and CMT that i would also caution against unless sure of desired position or meeting job requirements. it is better, in my opinion, to find yourself in a place where getting these will better position you for your current job rather than wasting time on them and finding yourself in a place where they hold no water.","title":""},{"docid":"70668","text":"\"I will answer the question from the back: who can NOT afford luxury cars? Those whose parents paid for their college education, cannot afford luxury cars, but buy them anyway. Why? I have what may seem a rather shocking proposition related to the point of not saving for kids' college: parents do NOT owe children a college education. Why should they? Did your parents fund your college? Or did you get it through a mix of Pell grants, loans, and work? If they did, then you owe them $ back for it, adjusted for inflation. If they did not, well then why do you feel your children deserve more than you deserved when you were a child? You do not owe your children a college education. They owe it to themselves. Gifts do not set one up for success, they set one up for dependence. I will add one more hypothesis: financial discipline is best learned through one's own experiences. When an 18+ year old adult gets a very large amount of money as a gift every year for several years (in the form of paid tuition), does that teach them frugality and responsibility? My proposition is that those who get a free ride on their parents' backs are not well served in terms of becoming disciplined budgeters. They become the subjects of the question in this post: those why buy cars and houses they cannot afford, and pay for vacations with credit cards. We reap what we sow as a society. Of course, college is only one case in point, but a very illustrative one. The bigger point is that financial discipline can only be developed when there are opportunities to develop it. Such opportunities arise under one important condition: financial independence. What does buying children cars for their high-school graduation, buying them 4 years of college tuition, and buying them who knows what else (study abroad trips, airfare, apartment leases, textbooks, etc. etc.) teach? Does it teach independence or dependence? It can certainly (at least that's what you hope for) teach them to appreciate when others do super nice things for them. But does free money instill financial responsibility? Try to ask kids whose parents paid for their college WHY they did it. \"\"Because my parents want me to succeed\"\" is probably the best you can hope for. Now ask them, But do your parents OWE you a college education? \"\"Why yes, I guess they do.\"\" Why? \"\"Well, I guess because they told me they do. They said they owe it to me to set me up for success in life.\"\" Now think about this: Do people who become financially successful achieve that success because someone owed something to them? Or because they recognized that nobody owes them anything, and took it upon themselves to create that success for themselves? These are not very comfortable topics to consider, especially for those of you who have either already sunk many tens of thousands of dollars into your childrens' college education. Or for those who have been living very frugally and mindfully for the past 10-15 years driven by the goal of doing so. But I want to open this can of worms because I believe fundamentally it may be creating more problems than it is solving. I am sure there are some historical and cultural explanations for the ASSUMPTION that has at some point formed in the American society that parents owe their children a college education. But as with most social conventions, it is merely an idea -- a shared belief. It has become so ingrained in conversations at work parties and family reunions that it seems that many of those who are ardent advocates of the idea of paying for their childrens' education no longer even understand why they feel that way. They simply go with the flow of social expectations, unwilling or unable to question either the premises behind these expectations, or the long-term consequences and results of such expectations. With this comment I want to point to the connection between the free financial gifts that parents give to their (adult!) children, and the level of financial discipline of these young adults, their spending habits, sense of entitlement, and sense of responsibility over their financial decisions. The statistics of the U.S. savings rate, average credit card debt, foreclosures, and bankruptcy indeed tell a troubling story. My point is that these trends don't just happen because of lots of TV advertising and the proverbial Jones's. These trends happen because of a lack of financial education, discipline, and experience with balancing one's own checkbook. Perhaps we need to think more deeply about the consequences of our socially motivated decisions as parents, and what is really in our children's best interests -- not while they are in college, but while they live the rest of their lives after college. Finally, to all the 18+ y.o. adult 'children' who are reeling from the traumatic experience of not having their parents pay for their college (while some of their friends parents TOTALLY did!), I have this perspective to offer: Like you are now, your parents are adults. Their money is theirs to spend, because it was theirs to earn. You are under no obligation to pay for your parents' retirement (not that you were going to). Similarly your parents have no obligation to pay for your college. They can spend their money on absolutely whatever they want: be it a likeside cottage, vacations, a Corvette, or slots in the casino. How they spend their money is their concern only, and has nothing to do with your adult needs (such as college education). If your parents mismanage their finances and go bankrupt, it is their obligation to get themselves back in the black -- not yours. If you have the means and may be so inclined, you may help them; if you do not or are not, fair enough. Regardless of what you do, they will still love you as their child no less. Similarly, if your parents have the means and are so inclined, they may help you; if they do not or are not, fair enough. Regardless of what they do, you are to love them as your parents no less. Your task as an adult is to focus on how you will meet your own financial needs, not to dwell on which of your needs were not met by people whose finances should well be completely separate from yours at this point in life. For an adult, to harbor an expectation of receiving something of value for free is misguided: it betrays unjustified, illusory entitlement. It is the expectation of someone who is clueless as to the value of money measured by the effort and time needed to earn it. When adults want to acquire stuff or services, they have to pay for these things with their own money. That's how adults live. When adults want to get a massage or take a ride in a cab, are they traumatized by their parents' unfulfilled obligation to pay for these services? No -- they realize that it's their own responsibility to take care of these needs. They either need to earn the money to pay for these things, or buy them on credit and pay off the debt later. Education is a type of service, just like a massage or a cab ride. It is a service that you decide you need to get, in order to do xyz (become smarter, get a better paying job, join a profession, etc.). Therefore as with any other service, the primary responsibility for paying for this service is yours. You have 3 options (or their combination): work now so that you can earn the money to pay for this service later; work part-time while you are receiving this service; acquire the service on credit and work later to pay it off. That's it. This is called the real world. The better you can deal with it, the more successful you will become in it. Good luck!\"","title":""},{"docid":"117509","text":"What kind of financial analysis would make you comfortable about this decision? The HELOC and ARM are the biggest red flags to me in your current situation. While I don't expect interest rates to skyrocket in the near future, they introduce an interest rate risk that is easy to get rid of. Getting rid of the HELOC and converting to a fixed mortgage would be my first priority. If you also want to upgrade to a new home at the same time (meaning buy a new home contingent on the sale of your first, paying off the HELOC and mortgage), that's fine, but make sure that you can comfortably afford the payment on a fixed-rate mortgage with at least 20% down. I would not take additional cash out of your equity just to save it. You're going to pay more in interest that you're going to get in savings. From there things get trickier. While many people would keep the first property on a mortgage and rent it out, I am not willing to be a landlord for a part-time job, especially when the interest on the mortgage gouges my return on the rent. PLus leverage increases the risks as well - all it takes is to go one or two months without rent and you can find yourself unable to make a mortgage payment, wrecking your credit and possibly risking foreclosure. So my options in order of precedence would be: At what point does it make sense to become a landlord? The complicated answer is when the benefits (rent, appreciation) relative to the costs (maintenance, interest, taxes, etc.) and risks (lost rent, bad renters, home value variance) give you a better return that you could find in investments of similar risk. The simple answer is when you can pay cash for it. That takes interest and lost rent out of the equation. Again, some are willing to take those risks and pay 20% down on rental property. Some are able to make it work. Some of those go broke or lose their properties. when calculating the 20% down of a new property, does that need to be liquid funds, or can that be based on the value of the home you are selling You can make the purchase of the new home contingent on the sale of the first if you need to get the equity out of it to make the 20%. Do NOT refinance the first just to pull out the equity to make a down payment. It's not worth the fees of a refinance.","title":""},{"docid":"74402","text":"You want CFP or CFA who is also a fiduciary, meaning that by law they have to put your interests ahead of their own. Financial planners who are not fiduciaries can, and often do, recommend investment vehicles that earn them the most commission with little regard of your financial goals. If you already have $500,000 to invest and racking up $100,000 a month you probably qualify for most institutions private client programs. That means that the firm/advisor will look at your financial situation and come up with a custom-tailored investment plan for you which should also include tax planning. I would start with whatever financial institutions you already work with - Schwab, your bank etc. Set up a meeting and see what they have to offer. Make sure you interrogate them about their fees, their licenses/certifications and above all if they are a fiduciary.","title":""},{"docid":"84770","text":"\"My dad keeps complaining that I treat him like a kid but hey, when the shoe fits, right? That right there is some wisdom. I would question why you need a student account. If I found myself in this situation; and, decided to participate. I would open a savings account (no debit card) in both of your names. This account would have little or no fees, have a branch convenient for both of you, and no ability for him to overdraft. When I wanted to, I could deposit money into his account, and he could withdraw. You might even open your own account at the same bank that he does not have access to. Then it is a matter of transferring the money into his account which can be done by mobile phone. The thing that I would say to you, beyond your question, is that you are choosing to participate and enabling this insanity. By \"\"quickly\"\" sending him money you are not allowing him to find alternatives for his poor behavior. If it was me, I would require that he have some sort of financial literacy education. He needs help budgeting, planning, and managing a bank account. I am a Dave Ramsey guy, so I would require him to attend FPU, that I would happily pay for ~$100. Alternatives are more than fine, mostly there has to be progress in his financial literacy and behavior. If he asked for money in the future, I would ask to see his budget and explain what went wrong. If there was no budget, there would be no money. If there was some legitimacy to his need, I would help meet it. One example would be the company he worked for did not meet payroll. That is something mostly beyond his control and can really hurt when a person is just starting to take control of their life. So yes, I would send a check in that case. However, that choice is yours. For perspective, when my son was 18 he came to me for help with habitual bounced checks. He wanted me to pay the fee and probably pay it every month that he went crazy. I paid the fee once, and I provided the education he needed. After that he learned and was quickly a self-sufficient adult. I also made it very clear that I would only pay it once. My situation was normal, parents should teach their children. Your situation is insanity. There is no way you should be put in the situation you are in with your father. He needs to grow up, and you will have to help him somewhat. If nothing more you should cut him off financially.\"","title":""},{"docid":"425527","text":"\"Related to this question: I came across a post at The Financial Planning Exchange* titled \"\"The Top 10 Ways To Tell If You're Working With A Really Good Financial Planner.\"\" Here are a few tips I particularly liked: (* site is no longer available) 4. Make sure the planner is going to work with you on a Fiduciary basis. This means that they are going to recommend only what is in your best interest. A planner who tries to sell you a product is generally a red flag that they aren't looking out for your best interests. [...] 8. Interview the prospective planner that you are about to hire. Understand how they think, what their speciality is, and most importantly how they are going to get paid for their services. Be very very careful with a planner who is going to provide you with a free financial plan as that person more often than not has a motivation to sell you something. [..] 10. Last but not least, go to a person who works hand in hand with financial planners like an accountant or estate planning attorney for a referral. Accountants and estate planning/tax attorneys know the difference between a good and bad planner. Chances are they are a client of the person they'll refer you to.\"","title":""},{"docid":"14997","text":"I could be wrong, but I doubt that Bernie started out with any intention of defrauding anyone, really. I suspect it began the first time he hit a quarter when his returns were lower than everyone else's, or at least not as high as he'd promised his investors they'd be, so he fudged the numbers and lied to get past the moment, thinking he'd just make up for it the next quarter. Only that never happened, and so the lie carried forward and maybe grew as things didn't improve as he expected. It only turned into a ponzi because he wasn't as successful at investing as he was telling his investors he was, and telling the truth would have meant the probability that he would have lost most of his clients as they went elsewhere. Bernie couldn't admit the truth, so he had to keep up the fiction by actually paying out returns that didn't exist, which required constantly finding new money to cover what he was paying out. The source of that money turned out to be new investors who were lured in by people already investing with Bernie who told them how great he was as a financial wizard, and they had the checks to prove it. I think this got so far out of hand, and it gradually dragged more and more people in because such things turn into black holes, swallowing up everything that gets close. Had the 2008 financial crisis not hit then Bernie might still be at it. The rapid downturns in the markets hit many of Bernie's investors with margin calls in other investments they held, so they requested redemptions from him to cover their calls, expecting that all of the money he'd convinced to leave with him really existed. When he realized he couldn't meet the flood of redemptions, that was when he 'fessed up and the bubble burst. Could he have succeeded by simple investing in Berkshire? Probably. But then how many people say that in hindsight about them or Amazon or Google, or any number of other stocks that turned out similarly? (grin) Taking people's money and parking it all in one stock doesn't make you a genius, and that's how Bernie wanted to be viewed. To accomplish that, he needed to find the opportunities nobody else saw and be the one to get there first. Unfortunately his personal crystal ball was wrong, and rather than taking his lumps by admitting it to his investors, his pride and ego led him down a path of deception that I'm sure he had every intention of making right if he could. The problem was, that moment never came. Keep in mind one thing: The $64 billion figure everyone cites isn't money that really existed in the first place. That number is what Bernie claimed his fund was worth, and it is not the amount he actually defrauded people out of. His actual cash intake was probably somewhere in the $20 billion range over that time. Everything else beyond that was nothing more than the fictionalized returns he was claiming to get for his clients. It's what they thought they had in the bank with him, rather than what was really there.","title":""},{"docid":"155074","text":"I would make this a comment, but I am not worthy...... You will need to define your objectives before you can do anything. What is the money for? What is your risk tolerance? Where do you live? Capital appreciation? Preservation? Can you eat if your savings are cut in half? How much are you currently making? How much are you currently saving? What do you already have exposure to? How secure is your job? What is the makeup of the congregation? Do you have any tax-related surprises? Do you own your home? Have you previously consulted with a financial planner? There are many many factors obviously. More than I think most people want to give out over the internet, but they are all important to making a decision. Get a recommendation from someone you know for a financial planner. Ask upfront what their background is. Education, experience credentials. You want a certified financial planner or analyst. Ask how their fees are structured and what their approach is like, and make sure they're speaking intelligibly. Feel free to shop around until you find someone you like.","title":""},{"docid":"524912","text":"\"What percent of my salary should I save? is tightly coupled with its companion, What size “nest egg” should my husband and I have, and by what age? Interestingly, Mr.Christer's answer, 10%, is the number that plugs into the equation that I reference. Jay's 25X rule is part of this. We start with the assumption that one's required income at retirement will be 80% of their pre-retirement income. That's high by some observations, low by others. A quick look at the expenses that go away in retirement - The above can total 35-40% It would be great if it ended there, but there are costs that go up. The above extra spending is tough to nail down, after all, you knew what you spent, and what's going away, but the new items? Crapshoot. (For non-native speakers - this refers to a game with dice, meaning a random event) Again, referencing Mr Christer's answer \"\"financial planners whom you could pay to give you a very accurate number,\"\" I'm going to disagree with that soundbyte. Consider, when retirement is 30 years away, you don't know much If I can offer an analogy. I once had the pleasure of hearing Jim Lovell (The astronaut played by Tom Hanks in Apollo 13) give a speech. He said that for the first 99% of the trip to the moon, they simply aimed ahead of their target, never directly at the moon. In this manner, I suggest that with so many variables, accuracy is impossible, it's a moving target. Start young, take the 10% MrC offered, and keep saving. Every few years, stop and see if you are on target, if not, bump the number a bit. Better to turn 50 and find that after a good decade you've reached your number and can drop your savings to a minimum, perhaps just to capture a 401(k) match, than to turn 50 and realize you've undersaved and need to bump to an unsustainable level. Imagine planning ahead in 1999. You've seen 2 great decades of returns, and even realizing that 18%/yr couldn't continue, you plan for a below average 7%, this would double your 1999 balance in 10 years. Instead you saw zero return. For a decade. In sum, when each variable has an accuracy of +/-50% you are not going to combine them all and get a number with even 10% accuracy (as if MrC were wrong, but the pro would tell you 11% is right for you?). This is as absurd as packaging up a bunch of C rated debt, and thinking that enough of this paper would yield a final product that was AAA.\"","title":""},{"docid":"406409","text":"\"The definition I use for financial independence is 99% confidence that, at a specific estimated spending rate per year (allowing for estimated inflation, and budgeting for likely medical emergencies, and taxes on taxable investments), the money will outlast me. This translates to needing an average annual return on investment which covers the average yearly spending. For my purposes, that works out to my relying on being able to draw only a 4% income from the money each year, which should give me good odds of the money not just being sufficient but being able to deliver that rate \"\"forever\"\". (Historically, average US stock market rate if return is around 8%.) That is overkill, if course, I could plan on the money just barely lasting past my 120th birthday or something of that sort, but the goal us to be pretty sure not only that I won't run out but that I will have some cash unexpected needs. Which in turn means that I estimate I need investments 1/.04 times the yearly spending estimate to declare the \"\"forever\"\" independence/retirement, or 25x the yearly. From that, I can calculate how much longer, at a given savings rate and rate of return, it'll take for me to reach that target. Obviously you need to adjust all these numbers to reflect your opinions/understanding if the market, your own needs, your priorities and expected maximum age, and the phase of Saturn's moons. But that's the basic rationale. Or you can pay a financial planner to give you this number, and a strategy for getting there, based on the numbers you give him or her plus some statistical analysis of the market's overall history.\"","title":""},{"docid":"249972","text":"I'm of the belief that, long term, fees eat away at your performance. If you chose an ETF, say VOO, with its .05% expense, and a short term bond fund or money market fund, you are going be ahead, long term. It's pretty much accepted fact that money managers are not beating the average long term. For you to simply do as well as I do (S&P less .05%) your guy has to beat the market year in, year out, by 1.2%. Not going to happen. Yes, in hindsight, some funds have done this. Over the decades, losing funds are closed, or merged into performing ones. But, in the end, the average fund lags the average market return quite a bit. To pay someone 25% over two decades isn't what I'd recommend to anyone. There was recently a PBS Frontline special, The Retirement Gamble, (and this link to my article reviewing the show). I put up an image which shows the effect of 50 years' impact of expenses. The Vanguard S&P ETF, linked earlier has just a .05% fee. In my chart I show .1%, and then a total 1% or 2% fee. $447K return for .1%, $294K for 1%. I'm painfully aware that 3/4 of US taxpayers aren't saving at all. For those that are savers, the value in learning about investing is huge. This isn't a onetime $150K saved, but the savings on just that $10K deposit. Meanwhile, before you learn this, a pay-for-his-time fee-only planner is worth it, for a meeting and first year follow up.","title":""},{"docid":"35518","text":"Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.","title":""},{"docid":"568629","text":"Wow! First, congratulations! You are both making great money. You should be able to reach your goals. Are we on the right track ? Are we doing any mistakes which we could have avoided ? Please advice if there is something that we should focus more into ! I would prioritize as follows: Get on the same page. My first red flag is that you are listing your assets separately. You and your wife own property together and are raising your daughter together. The first thing is to both be on the same page with your combined income and assets. This is critical. Set specific goals for the future. Dreaming and big-picture life planning will be the foundation for building a detailed plan for reaching your goals. You will see more progress with more sacrifice. If you both are not equally excited about the goals, you will not both be equally willing to sacrifice lifestyle now. You have the income now to be able to set yourselves up to do whatever you want in 10 years, if you can agree on what you want. Hire a financial planner you trust. Interview people, ask someone who is where you want to be in 10 years. You need someone with experience that can guide you through these questions and understands how to manage your income stream. Start saving for retirement in tax-advantaged accounts. This should be as much as 10%-15% of your income combined, so $30k-$45k per year. You need to start diversifying your investments. Real estate is great, but I would never recommend it as this large a percentage of net worth. Start saving for your child's education. Hard to say what you need here, since I don't know your goals. A financial planner should assist you with this. Get rid of your debt. Out of your $2.1M of rental real estate and land, you have $1.4M of debt. It will be difficult to start a business with that much additional debt. It will also put stress on your retirement that you don't need. You are taking on lots of risk here. I would sell all but maybe one of the properties and let it cash flow. This will free up cash to start investing for retirement or future business too. Buy more rental in the future with cash only. You have plenty of income to do it this way, and you will be setting yourself up for a great future. At this point you can continue to pile funds into any/all your investments, with the goal of using the funds to start a business or to live on. If all your investments are tied up in real estate, you wont have anything to draw on if needed for a business opportunity. You need to weigh this out in your goal and planning. What should we do to prepare for a comfortable retirement and safety You cannot plan for or see all scenarios. However, good planning will give you more options and more choices. Investing driven by fear will set you up for failure. Spend less than you make. Be patient. Be generous. Cheers!","title":""},{"docid":"548014","text":"Unfortunately, this is a customer service issue. The bank has a set of term and conditions (Ts and Cs) which you received with the card or when you applied. It included your limit, and what happens when you go over, likely, a penalty for going over the limit. At the very least, they expect you to pay the overage or you'll see an over-limit charge next cycle too. In the future, I'd suggest checking your account on line to monitor your balance. Some accounts offer an alert email, mine will let me set an alert for when my balance goes over $xxx, which is helpful, as I can send in an early payment to bring that balance down. It still never hurts to ask. They might waive fees if any, if this is your first time. You can still try calling them, explain the odd timing, and see if you can get a temporary increase in credit line. In the end, you need to review your finances. Carrying balances month to month at 12-18% is no way to have a successful financial future. It's one of the first things to getting your situation under control. After that, a small savings account, an emergency fund, is the next step. One month of charges should never put you in this bad situation.","title":""},{"docid":"70702","text":"\"This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30 years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given. But, to go to another bank (or even to a different employee in the same bank), where you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and substantial annual expense fees, might just take you from the frying pan into the fire. You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment). But the point is, you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose. All this is not complicated at all. If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund companies offer a \"\"portfolio analysis\"\" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company). You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years. Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them or not, but you have control over how and where your IRA assets are invested. Over the years, as your IRA assets grow, you can branch out into investments other than \"\"staid\"\" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc. So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself.\"","title":""},{"docid":"106578","text":"I don't know what you mean by 'major'. Do you mean the fund company is a Fidelity or Vanguard, or that the fund is broad, as in an s&P fund? The problem starts with a question of what your goals are. If you already know the recommended mix for your age/risk, as you stated, you should consider minimizing the expenses, and staying DIY. I am further along, and with 12 year's income saved, a 1% hit would be 12% of a year's pay, I'd be working 1-1/2 months to pay the planner? In effect, you are betting that a planner will beat whatever metric you consider valid by at least that 1% fee, else you can just do it yourself and be that far ahead of the game. I've accepted the fact that I won't beat the average (as measured by the S&P) over time, but I'll beat the average investor. By staying in low cost funds (my 401(k) S&P fund charges .05% annual expense) I'll be ahead of the investors paying planner fees, and mutual fund fees on top of that. You don't need to be a CFP to manage your money, but it would help you understand the absurdity of the system.","title":""},{"docid":"424247","text":"\"Congratulations on a solid start. Here are my thoughts, based on your situation: Asset Classes I would recommend against a long-term savings account as an investment vehicle. While very safe, the yields will almost always be well below inflation. Since you have a long time horizon (most likely at least 30 years to retirement), you have enough time to take on more risk, as long as it's not more than you can live with. If you are looking for safer alternatives to stocks for part of your investments, you can also consider investment-grade bonds/bond funds, or even a stable value fund. Later, when you are much closer to retirement, you may also want to consider an annuity. Depending on the interest rate on your loan, you may also be able to get a better return from paying down your loan than from putting more in a savings account. I would recommend that you only keep in a savings account what you expect to need in the next few years (cushion for regular expenses, emergency fund, etc.). On Stocks Stocks are riskier but have the best chance to outperform versus inflation over the long term. I tend to favor funds over individual stocks, mostly for a few practical reasons. First, one of the goals of investing is to diversify your risk, which produces a more efficient risk/reward ratio than a group of stocks that are highly correlated. Diversification is easier to achieve via an index fund, but it is possible for a well-educated investor to stay diversified via individual stocks. Also, since most investors don't actually want to take physical possession of their shares, funds will manage the shares for you, as well as offering additional services, such as the automatic reinvestments of dividends and tax management. Asset Allocation It's very important that you are comfortable with the amount of risk you take on. Investment salespeople will prefer to sell you stocks, as they make more commission on stocks than bonds or other investments, but unless you're able to stay in the market for the long term, it's unlikely you'll be able to get the market return over the long term. Make sure to take one or more risk tolerance assessments to understand how often you're willing to accept significant losses, as well as what the optimal asset allocation is for you given the level of risk you can live with. Generally speaking, for someone with a long investment horizon and a medium risk tolerance, even the most conservative allocations will have at least 60% in stocks (total of US and international) with the rest in bonds/other, and up to 80% or even 100% for a more aggressive investor. Owning more bonds will result in a lower expected return, but will also dramatically reduce your portfolio's risk and volatility. Pension With so many companies deciding that they don't feel like keeping the promises they made to yesterday's workers or simply can't afford to, the pension is nice but like Social Security, I wouldn't bank on all of this money being there for you in the future. This is where a fee-only financial planner can really be helpful - they can run a bunch of scenarios in planning software that will show you different retirement scenarios based on a variety of assumptions (ie what if you only get 60% of the promised pension, etc). This is probably not as much of an issue if you are an equity partner, or if the company fully funds the pension in a segregated account, or if the pension is defined-contribution, but most corporate pensions are just a general promise to pay you later in the future with no real money actually set aside for that purpose, so I'd discount this in my planning somewhat. Fund/Stock Selection Generally speaking, most investment literature agrees that you're most likely to get the best risk-adjusted returns over the long term by owning the entire market rather than betting on individual winners and losers, since no one can predict the future (including professional money managers). As such, I'd recommend owning a low-cost index fund over holding specific sectors or specific companies only. Remember that even if one sector is more profitable than another, the stock prices already tend to reflect this. Concentration in IT Consultancy I am concerned that one third of your investable assets are currently in one company (the IT consultancy). It's very possible that you are right that it will continue to do well, that is not my concern. My concern is the risk you're carrying that things will not go well. Again, you are taking on risks not just over the next few years, but over the next 30 or so years until you retire, and even if it seems unlikely that this company will experience a downturn in the next few years, it's very possible that could change over a longer period of time. Please just be aware that there is a risk. One way to mitigate that risk would be to work with an advisor or a fund to structure and investment plan where you invest in a variety of sector funds, except for technology. That way, your overall portfolio, including the single company, will be closer to the market as a whole rather than over-weighted in IT/Tech. However, if this IT Consultancy happens to be the company that you work for, I would strongly recommend divesting yourself of those shares as soon as reasonably possible. In my opinion, the risk of having your salary, pension, and much of your investments tied up in the fortunes of one company would simply be a much larger risk than I'd be comfortable with. Last, make sure to keep learning so that you are making decisions that you're comfortable with. With the amount of savings you have, most investment firms will consider you a \"\"high net worth\"\" client, so make sure you are making decisions that are in your best financial interests, not theirs. Again, this is where a fee-only financial advisor may be helpful (you can find a local advisor at napfa.org). Best of luck with your decisions!\"","title":""}],"string":"[\n {\n \"docid\": \"595427\",\n \"text\": \"\\\"It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensive plan - look at your whole life, goals, and non-investment issues such as insurance. You should expect to get a document with a Monte Carlo simulation showing your odds of success if you stick to the plan; for investments, you should expect to see a recommended asset allocation and an emphasis on low-cost no-commission (commission is \\\"\\\"load\\\"\\\") funds. See some of the other questions from past posts, for example What exactly can a financial advisor do for me, and is it worth the money? A good place to start for a planner might be http://napfa.org ; there's also a franchise of planners providing hourly advice called the Garrett Planning Network, I helped my mom hire someone from them and she was very happy, though I do think your results would depend mostly on the individual rather than the franchise. Anyway see http://www.garrettplanningnetwork.com/map.html , they do require planners to be fee-only and working on their CFP credential. You should really look for the Certified Financial Planner (CFP) credential. There are a lot of credentials out there, but many of them mean very little, and others might be hard to get but not mean the right thing. Some other meaningful ones include Chartered Financial Analyst (CFA) which would be a solid investment expert, though not necessarily someone knowledgeable in financial planning generally; and IRS Enrolled Agent, which means someone who knows a lot about taxes. A CPA (accountant) would also be pretty meaningful. A law degree (and estate law know-how) is very relevant to many planning situations, too. Some not-very-meaningful certifications include Certified Mutual Fund Specialist (which isn't bogus, but it's much easier to get than CFP or CFA); Registered Investment Adviser (RIA) which mostly means the person is supposed to understand securities fraud laws, but doesn't mean they know a lot about financial planning. There are some pretty bogus certifications out there, many have \\\"\\\"retirement\\\"\\\" or \\\"\\\"senior\\\"\\\" in the name. A good question for any planner is \\\"\\\"Are you a fiduciary?\\\"\\\" which means are they legally required to act in your interests and not their own. Most sales-oriented advisors are not fiduciaries; they wouldn't charge you a big sales commission if they were, and they are not \\\"\\\"on your side\\\"\\\" legally speaking. It's a good idea to check with your state regulators or the SEC to confirm that your advisor is registered and ask if they have had any complaints. (Small advisors usually register with the state and larger ones with the federal SEC). If they are registered, they may still be a salesperson who isn't acting in your interests, but at least they are following the law. You can also see if they've been in trouble in the past. When looking for a planner, one firm I found had a professional looking web site and didn't seem sketchy at all, but the state said they were not properly registered and not in compliance. Other ideas A good book is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 it's very approachable and you'd feel more confident talking to someone maybe with more background information. For companies to work with, stick to the ones that are very consumer-friendly and sell no-load funds. Vanguard is probably the one you'll hear about most. But T. Rowe Price, Fidelity, USAA are some other good names. Fidelity is a bit of a mixture, with some cheap consumer-friendly investments and other products that are less so. Avoid companies that are all about charging commission: pretty much anyone selling an annuity is probably bad news. Annuities have some valid uses but mostly they are a bad deal. Not knowing your specific situation in any detail, it's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. It's virtually certain that any planner who is for real, and not a ripoff salesperson, will talk a lot about how much you need to save and so forth, not just about choosing investments. Don't be afraid to pay for a planner. It's well worth it to pay someone a thousand dollars for a really thorough, fiduciary plan with your interests foremost. The \\\"\\\"free\\\"\\\" planners who get a commission are going to get a whole lot more than a thousand dollars out of you, even though you won't write a check directly. Be sure to convert those mutual fund expense ratios and sales commissions into actual dollar amounts! To summarize: find someone you're paying, not someone getting a commission; look for that CFP credential showing they passed a demanding exam; maybe read a quick and easy book like the one I mentioned just so you know what the advisor is talking about; and don't rush into anything! And btw, I think you ought to be fine with a solid plan. You and your husband have time remaining to work with. Good luck.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"16733\",\n \"text\": \"\\\"I have always found that the \\\"\\\"free\\\"\\\" planners are just salesmen pointing you in their best interests. Not that it won't get you a good deal in the processes, but, in my experience, they usually just recommend products that give them the best commission, finders fee, kickback, whatever. Flat fee financial planners are not really to my liking either. This is a taste thing, but generally, I feel like now that they have my fee, what interest do they have in taking care of me. That doesn't mean that they don't give good advise however. They may be a good first step. Percentage based financial planners, those that charge a percentage of assets under management, are my recommendation. The more money they make me the more money they make. This seems to work out quite well. Whatever you do, you need to be aware that financial planners are not just about recommending products, or saving money. That's part of it, but a good planner will also help you look at monthly budgets, current costs, liabilities, and investments. You want to look for someone that you can basically tell your goal to - \\\"\\\"I want to have x amount of money saved for y date,\\\"\\\" for example, or \\\"\\\"I want to reduce my bills by z amount in x months\\\"\\\". Run from any planner that looks only at the large sum as the \\\"\\\"solution\\\"\\\" or only source of money. You want a planner that will look at your first house mortgage(s), care loans, income, other investments, etc. and come up with a full plan for everything. If you're only trying to invest the new house money, and that's it, you're better off just sticking with Google and some research on your own.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"47973\",\n \"text\": \"\\\"First, I applaud you for caring. Most people don't! In fact, I was in that category. You bring up several issues and I'll try to address them separately. (1) Getting a financial planner to talk with you. I had the same experience! My belief is that they don't want to admit that they don't know how things work. I even asked if I could pay them an hourly fee to ask questions and review stocks with them. Most declined. You'll find that very few people actually take the time to get trained to evaluate stocks and the stock market as a whole. (See later Investools.com). After looking, however, I did find people who would spend an hour or two with me when we met once a quarter to review my \\\"\\\"portfolio\\\"\\\"/investments. I later found training that companies offered. I would attend any free training I could get because they actually wanted to spend time and talk and teach investors. Bottom line is: Talking to their clients is the job of a financial planner. If he (or she) is not willing to take this time, it is in your best interest to find someone who will spend that time. (2) Learning about investing! I'm not affiliated with anyone. I'm a software developer and I do my own trading/investments. The opinions I share are my own. When I was 20 years away from retirement, I started learning about the stock market so that I would know how it worked before I retired so that (a) I could influence a change if one was needed, and (b) so I wouldn't have to blindly accept the advice of the \\\"\\\"experts\\\"\\\" even when the stock market is crashing. I have used Investools.com, and TDAmeritrade's Think-or-Swim platform. I've learned a tremendous amount from the Investools training. I recommend them. But don't expect to learn how to get rich from them or any training you take. The TDA Think-or-swim platform I highly recommend BECAUSE it has a feature called \\\"\\\"Paper Money\\\"\\\". It lets you trade using the real market but with play money. I highly recommend ANY platform that you can use to trade IN PAPER money! The think-or-swim platform would allow you to invest $30,000 in paper money (you can have as much as you want) into any stock. This would let you see if you can make more money than your current investment advisor. You could invest $10K in one SPY, $10K in DIA and $10K in IWM (these are symbols for the S&P 500, Dow 30, and Small Cap stocks). This is just an example, I'm not suggesting any investment advise! It's important that you actually do this not just write down on a piece of paper or Excel spreadsheet what you were going to do because it's common to \\\"\\\"cheat\\\"\\\" and change the dates to meet your needs. I have found it incredibly helpful to understand how the market works by trying to do my own paper and now real money investing. I was and you will be surprised to find that many trades lose money during the initial start part of the trade because it's very difficult to buy at the exact right time. An important part of managing your own investments is learning to trade with rules and not get \\\"\\\"emotionally involved\\\"\\\" in your trades. (3) Return on investment. You were not happy with $12 return. Low returns are a byproduct of the way most investment firms (financial planners) take (diversification). They diversify to take a \\\"\\\"hands off\\\"\\\" approach toward investment because that approach has been the only approach that they have found that works relatively well in all market conditions. It's not (necessarily) a bad approach. It avoids large losses in down markets (most riskier approaches lose more than the market). The downside is it also avoids the high returns. If the market goes up 15% the investment might only go up 5%. 30K is enough to give to multiple investment firms a try. I gave two different firms $25K each to see how they would invest. The direction was to accept LOTS of risk (with the potential for large losses or large gains). In a year that the market did very well, one lost money, and one made a small gain. It was a learning experience. I, now, have taken the money back and invest it myself. NOTE: I would be happy with a guy who made me 10-15% year over year (in good times and bad) and didn't talk with me, but I haven't found someone who can do that. :-) NOTE 2: Don't believe what you hear from the news about the stock market being up 5% year to date. Do your own analysis. NOTE 3: Investing in \\\"\\\"the market\\\"\\\" (S&P 500 for example) is a great way to go if you're just starting. Few investment firms can beat \\\"\\\"the market\\\"\\\" although many try to do so. I too have found it's easier to do that than other approaches I've learned. So, it might be a good long term approach as well. Best wishes to you in your learning about the market and desires to make money with your money. That is what is all about.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"174122\",\n \"text\": \"Some sample prices for straightforward pay-for-hours-or-deliverables planners: I think I've seen some similar rates elsewhere, too. I'd feel like you might get something perfunctory and boilerplate for too much less than $1000 - how could the person afford to spend much time? - and I'd feel like lots more than $1000 for just a standard straightforward plan might be a ripoff. Basically you're paying $1000 for a day or two of work, you don't want just a couple hours of work, but you don't need a week of work either. Anyway, extracting the general guideline (since prices may vary regionally or over time), you could figure it takes a day or two to do a decent job on a basic complete financial plan without a lot of complexities in it. From there you can decide what's fair, adding or subtracting time if you need less than a complete plan or have complex issues. This is assuming you're paying for time and deliverables, which is not a given. The biggest factor in how much you pay is probably how they charge; a couple of the most common models, (There are other models but these are the ones I've seen most.) The difference between these two models is a lot of money over time. Hourly is going to be much cheaper, because it's a one-time cost instead of ongoing, and unrelated to what you have in assets. However, you won't get investment management, which can be valuable if you aren't the kind to stick to an investment plan or you want someone else to completely take care of it for you. The investment-management planners have the potential to make a lot more money (and are more likely to be in it for the money). Hourly planners don't really have as good a business from a business owner's perspective, but they are cheaper from a customer perspective, as long as you're happy to DIY a bit. One thing I like about hourly planners is that I don't really feel investments are the main place planners can add value, so it makes me nervous to have the compensation based on that. Insurance, estate planning, taxes, etc. are where it's harder for a layperson to know all the ins and outs and DIY. From what I've seen, the cheapest planners are the ones that you can get free or discounted from companies like USAA or Vanguard if you have an account with them. However, they will only recommend products from the company in question, so that's a downside, and you probably won't get to meet them in person. This question may be useful too: What exactly can a financial advisor do for me, and is it worth the money?\",\n \"title\": \"\"\n },\n {\n \"docid\": \"463260\",\n \"text\": \"The answer will vary person to person and situation to situation. But the basic concept to always consider is this: What interest rate am I paying on my debt? 10%? 18%? And what interest rate am I making on my savings/investment, etc? 3%? 7%? It won't give you a hard and fast answer, but will definitely let you know if you should take a closer look at it. I'd suggest talking to a financial planner about it. Find a fee-based planner that you can turn to intermittently to make sure you are on the right track...not a commission-based planner, a fee-based one. (with respectful apologies to any commission-based planners who may read this.) My instinct is usually to pay off the debt, try to clean everything up so you don't have anything outstanding that is charging you interest. Debt is clutter, it's stressful, it can be a reminder of money you wish you hadn't spent. As long as you have access to money in case of emergency, job loss, etc, get your debt paid off and keep it paid off. You'll sleep much better.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"129255\",\n \"text\": \"Investing is really about learning your own comfort level. You will make money and lose money. You will make mistakes but you will also learn a great deal. First off, invest in your own financial knowledge, this doesn't require capital at all but a commitment. No one will watch or care for your own money better than yourself. Read books, and follow some companies in a Google Finance virtual portfolio. Track how they're doing over time - you can do this as a virtual portfolio without actually spending or losing money. Have you ever invested before? What is your knowledge level? Investing long term is about trying to balance risk while reducing losses and trying not to get screwed along the way (by people). My personal advice: Go to an independent financial planner, go to one that charges you per hour only. Financial planners that don't charge you hourly get paid in commissions. They will be biased to sell you what puts the most money in their pockets. Do not go to the banks investment people, they are employed by the banks who have sales and quota requirements to have you invest and push their own investment vehicles like mutual funds. Take $15k to the financial planner and see what they suggest. Keep the other $5K in something slow and boring and $1k under your mattress in actual cash as an emergency. While you're young, compound interest is the magic that will make that $25k increase hand over fist in time. But you need to have it consistently make money. I'm young too and more risk tolerant because I have time. While I get older I can start to scale back my risk because I'm nearing retirement and preserve instead of try to make returns.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"386720\",\n \"text\": \"You remind me a lot of myself as I was thinking about marriage. Luckily for me, my wife was much smarter about all this than I was. Hopefully, I can pass along some of her wisdom. Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. In marriage, there is no more financial independence. Do not think in those terms. Life can throw so many curve balls that you will regret it. Imagine sitting down with your new bride and running through the math. She is to contribute $X to the family each month and you are to contribute $Y. Then next thing you know, 6 months later, she has cancer and has to undergo expensive and debilitating treatment. There is no way she can contribute her $X anymore. You tell her that is okay and that you understand, but the pressure weighs down on her every day because she feels like she is not meeting your expectations. Or alternatively, everything goes great with your $X, $Y plan. A few years down the road your wife is pregnant, so you revisit the plan, readjust, etc. Everything seems great. When your child is born, however, the baby has a severe physical or mental handicap. You and your wife decide that she will quit her job to raise your beautiful child. But, the whole time, in the back of her mind she can't get out of her head that she is no longer financially independent and not living up to your expectations. These stresses are not what you want in your marriage. Here is what we do in my family. Hopefully, some of this will be helpful to you. Every year my wife and I sit down and determine what our financial goals are for the year. How much do we want to be putting in retirement? How much do we want to give to charity? Do we want to take any family vacations? We set goals together on what we want to achieve with our money. There is no my money or her money, just ours. Doesn't matter where it comes from. At the beginning of every month, we create a budget in a spreadsheet. It has categories like (food, mortgage or rent, transportation, clothing, utilities) and we put down how much we expect to spend on each of those. It also has categories for entertainment, retirement, charity, cell phones, internet, and so on. Again, we put down how much we expect to spend on each of those. In the spreadsheet, we also track how much income we expect that month and our totals (income minus expenses). If that value is positive, we determine what to do with the remainder. Maybe we save some for a rainy day or for car repairs. Maybe we treat ourselves to an extra fancy dinner. The point is, every dollar should be accounted for. If she wants to go to dinner with some friends, we put that in the budget. If I want a new video game, we put that in the budget. Once a week, we take all our receipts and tally up where we spent our money. We then see how we are doing on our budget. Maybe we were a little high in one category and lower than expected in another. We adjust. We are flexible. But, we go over our finances often to make sure we are achieving our goals. Some specific goals I'd recommend that the two of you consider in your first such yearly meeting: You get out of life what you put into it, and you will get out of your finances what the two of you put into them. By being on the same page, your marriage will be much happier. Money/finances are one of the top causes of divorce. If you two are working together on this, you are much more likely to succeed.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"578677\",\n \"text\": \"\\\"E) Spend a small amount of that money on getting advice from a paid financial planner. (Not a broker or someone offering you \\\"\\\"free\\\"\\\" advice; their recommendations may be biased toward what makes them the most money). A good financial planner will talk to you about your plans and expectations both short and long term, and about your risk tolerance (would a drop in value panic you even if you know it's likely to recover and average out in the long run, that sort of thing), and about how much time and effort you want to put into actively managing your portfolio. From those answers, they will generate an initial proposed plan, which will be tested against simulations of the stock market to make sure it holds up. Typically they'll do about 100 passes over the plan to get a sense of its probable risk versus growth-potential versus volatility, and tweak the plan until the normal volatility is within the range you've said you're comfortable with while trying to produce the best return with the least risk. This may not be a perfect plan for you -- but at the very least it will be an excellent starting point until you decide (if you ever do decide) that you've learned enough about investing that you want to do something different with the money. It's likely to be better advice than you'll get here simply because they can and will take the time to understand your specific needs rather than offering generalities because we're trying to write something that applies to many people, all of whom have different goals and time horizons and financial intestinal fortitude. As far as a house goes: Making the mistake of thinking of a house as an investment is a large part of the mindset that caused the Great Recession. Property can be an investment (or a business) or it can be something you're living in; never make the mistake of putting it in both categories at once. The time to buy a house is when you want a house, find a house you like in a neighborhood you like, expect not to move out of it for at least five years, can afford to put at least 20% down payment, and can afford the ongoing costs. Owning your home is not more grown-up, or necessarily financially advantageous even with the tax break, or in any other way required until and unless you will enjoy owning your home. (I bought at age 50ish, because I wanted a place around the corner from some of my best friends, because I wanted better noise isolation from my neighbors, because I wanted a garden, because I wanted to do some things that almost any landlord would object to, and because I'm handy enough that I can do a lot of the routine maintenance myself and enjoy doing it -- buy a house, get a free set of hobbies if you're into that. And part of the reason I could afford this house, and the changes that I've made to it, was that renting had allowed me to put more money into investments. My only regret is that I didn't realise how dumb it was not to max out my 401(k) match until I'd been with the company for a decade ... that's free money I left on the table.)\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"368698\",\n \"text\": \"\\\"Whether your financial status is considered \\\"\\\"OK\\\"\\\" depends on your aspirations. You aren't spending more than you earn and have no debt. That puts you in the category of OK in my book, but the information in your post indicates that you would benefit from some financial advice--100 grand sounds like a lot of money to have in a bank unless you are on the verge of spending it. Financial advisors come in various shapes and sizes. Many will charge you a lot for what turns out to be helpful advice in the first meeting, but very little value-added thereafter. Some don't have the best incentives (they may be incentivized to encourage you to put your money into certain funds, for example). There are many financial advisors (of sorts) that you have access to that won't cost you anything. For example, if you have a 401(k) at work, I bet there is a representative from the plan administrator that will meet with you for free. If you open a brokerage account or IRA at any place (Fidelity, Vanguard, etc.) you can easily talk with one of their reps and get all sorts of advice. My personal take is to meet with anyone who will meet with me for free, but not to pay anyone for this service. It's too easy to get good advice and paying for it doesn't guarantee that you get better advice. Your financial situation will depend primarily on a few things you have not mentioned here. For example, How much are you setting aside for retirement and what are your retirement goals? This is something lots of people can give you advice on, but we don't know what market returns will be going forward so we don't really know. One bit of advice that may benefit you is how to set aside money for retirement in the most tax advantaged way. How much do you feel that you need saved up for large expenses? Thinking of starting a family? How many months worth of income are you comfortable having set aside? What is your tolerance of risk? If you put your money in risky assets, you may make more, but you may also actually lose money. Those are the questions a financial advisor will ask about. Once you have his/her advice--and preferrably after talking to a few advisors--you can make your own decision. Basically, your options are: Rules of thumb: Save only what makes sense to save in banks given your expected needs for cash. Put a lot in tax advantaged accounts (don't give Uncle Sam any gifts). Then look at financial and real investments. There are a number of free resources on the internet. For example FutureAdvisor. Or you can hit up the forums at BogleHeads. Those guys give and receive financial advice as a hobby. They aren't professionals, but you can get a lot of varying ideas and make up your own mind, which to me is better than (just) asking a professional. BTW, regarding the ESPP: these plans often give you a discount on stock and can therefore be a good idea. Just be sure you don't hold the stock longer than you need to. It's generally a bad idea to concentrate your wealth in any single investment, especially one highly correlated with your background risk (i.e., if the company does poorly you will already be worse off because you may lose your job or see fewer advancement opportunities. No need to add losses in your savings to that). 1 Please note: I am neither advocating nor discouraging buying guns, gold, or other controversial real assets. I'm just giving examples of items some people buy as part of their wealth-preservation strategy.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"314252\",\n \"text\": \"\\\"A financial planner can help with investments, insurance, estate planning, budgeting, retirement planning, saving for college, tax planning/prep, and other money topics. One way to get a sense is to look at this Certified Financial Planner topic list. Another idea is to look at this book (my favorite I've read) which covers roughly a similar topic list in a concise form: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 It could not hurt at all to read that before deciding to visit a planner, so you have baseline knowledge. By the way, look for the CFP certification which is a generalist certification. A CFP might also have a deeper cert in certain topics or connect you with someone who does. For example: You really want a generalist (CFP) who may have an additional credential as well. The idea is to holistically look at what you're trying to accomplish and all finance-related areas. Especially because there may be tradeoffs. The CFP would then refer you to or work with lawyers, accountants, etc. Importantly, some advisors are fiduciaries (must act in your interests) and some are not. In particular many stockbrokers are neither qualified planners (no CFP or equivalent) nor are they fiduciaries. Stay away. There are several models for paying a financial planner, including: There's an organization called NAPFA (napfa.org) for fiduciary non-commission-based planners. Membership there is a good thing to look for since it's a third party that defines what fee-only means and requires the no-commissions/fiduciary standard. Finally, the alternative I ended up choosing was to just take the CFP course myself. You can do it online via correspondence course, it costs about the same as 1 year of professional advice. I also took the exam, just to be sure I learned the stuff. This is the \\\"\\\"extreme DIY\\\"\\\" approach but it is cheaper over time and you know you are not going to defraud yourself. You still might do things that are counterproductive and not in your interests, but you know that already probably ;-) Anyway I think it's equivalent to about a quarter's worth of work at a decent college, or so. There are about 6 textbooks to dig through. You won't be an experienced expert at the end, but you'll know a lot. To get an actual CFP cert, you need 3 years experience on top of the courses and the exam - I haven't done that, just the book learning. Someone who puts \\\"\\\"CFP\\\"\\\" after their name will have the 3 years on top of the training. Some editorial: many planners emphasize investing, and many people looking for planners (or books on finance) emphasize investing. This is a big mistake, in my view. Investing is more or less a commodity and you just need someone who won't screw it up, overcharge, and/or lose your money on something idiotic or inappropriate. Some people are in plain-bad and inappropriate investments, don't get me wrong. But once you fix that and just get into anything decent, your biggest planning concerns are probably elsewhere. On investments, I'd look for a planner to just get you out of overpriced annuities and expensive mutual funds you may have been sold (anything you were sold by a salesperson is probably crap). And look for them to help you decide how much to invest, and how much in stocks vs. bonds. Those are the most important investment decisions.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"455261\",\n \"text\": \"You will want to focus on how much is needed for retirement, and what types of investments within the current 401K offerings will get you there. Also will need to discuss non-401K investments such as an IRA, college savings, savings for a house, and an emergency fund. The 401K should be a part of your overall financial picture, how much you invest in the 401K depends on the options you have (Roth 401K available), how much matching (some a little or a lot), and your family plans. You have a few choices: Your company through the 401K provider may provide this service. They may have limited knowledge in what non-401K funds you should invest in, but should be able to discuss types of investment. Fee only planner. They will be able to discus types of investments, and give you some suggestions. Because they don't work on a commission they will not make the investment for you. You need to be able to make the actual selection of investments, so make sure you get criteria to focus on as part of the package. Commission based planner. Will make money off your investment choices. May steer you towards investments that their company offers or ones that offer them the best commissions in that investment type. If the 401K doesn't use funds that the planner can research you will need to provide a copy of the prospectus provided by the 401K. My suggestion is the fee only planner. They balance the limited focus of the 401K company without limiting themselves to the funds their company sells. Before sitting down with the planner get in writing how they fee structure works. A flat fee or hourly fee planner will be expecting you to do all the investment work. This is what you want. Let the fee only planner help you define your plan. But also reanalyze the plan every few years as your needs change.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"261714\",\n \"text\": \"The severity of wealth inequality- more so than its existence- is what I'm getting at when I talk about the Fed. The cantillon effect is a theory that essentially states that the first recipients of stimulus are far better off than those 2 or 3 degrees of separation later. So if you look at Fed policies, where monetary stimulus is directed only towards the financial system and credit markets, certain parties will benefit disproportionately first before others later. In this case, that would be those employed by the industry (bankers, investors, etc), institutions in that industry (banks, hedge funds, pension/mutual funds), and owners of securities (the wealthy). Spillover effects impact the stock market, real estate, art, etc. and they are not a result of fundamentals, but rather of mis-allocated capital. What I'm getting at is we don't need central planners (i.e. the Fed) to make decisions regarding the market for money - interest rates - or pursue dubious financial experiments at best to somehow fix problems that they themselves caused in the past (through extended low interest rate environments). Central banking could take a very serious hit if cryptocurrencies become mainstream- which I do not expect for a long time- but it's the best emergent challenger to the existing paradigm.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"118204\",\n \"text\": \"I think the answers you're going to receive are all going to be a bit subjective. Looking at it from a high-level point of view, having this budget nailed down lets you analyze: Now you've got your budget, stick to it! This is really the most important part. You've done your homework, now make sure you don't exceed it without a good reason. If you're under budget in any given month, have a plan on what to do with the excess funds. If you go over budget on a certain area, you can react accordingly. I, personally, recommend hiring a financial planner. Ours has been a huge help with looking further down the line than we had been originally. If you show up to your first meeting with an FP and have this budgetary breakdown ready to go, you'll probably get a high-five. Well done, you!\",\n \"title\": \"\"\n },\n {\n \"docid\": \"521835\",\n \"text\": \"it depends on the area you want to focus in. to be sure, i will say that pretty much all certificates in finance can be achieved online now. CFP is a pretty ok one. i have it myself. there is quite a bit of material, but isn't too challenging. it focuses on financial planning/personal finance. certainly aids your technical knowledge but is kind of an analog to help boost your sales. most pure planners i know have this but moreover a series of more technical designations. you must have a bachelors to be given the right to use the CFP. CFA is a great one for your resume (and knowledge), but makes the CFP look like a summer vacation. it is for analysis, but has a broad range of potential uses. i know brokers, advisors, planners, and people leaders with these marks. if you are very smart, it will take you a minimum of 2.5 years (really 3yr) to complete due to their testing schedule. they also grade on a very steep curve. from what i understand, the amount of information and level of command you must demonstrate also necessitate this lengthy schedule. beyond that, you can look at getting FINRA licensed in a desired area (e.g. series 7/63 to be a broker). i would caution against this, unless you are very sure of where you want to go or need to meet the requirement for a job. typically jobs with license requirements will permit you 3-6 months to obtain them on company money. you risk spending a good bit of money that won't be reimbursed by getting licensed independently. keep in mind that you cannot actually use your licenses without a firm sponsor. finally, there are a variety of specialized designations like CWS and CMT that i would also caution against unless sure of desired position or meeting job requirements. it is better, in my opinion, to find yourself in a place where getting these will better position you for your current job rather than wasting time on them and finding yourself in a place where they hold no water.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"70668\",\n \"text\": \"\\\"I will answer the question from the back: who can NOT afford luxury cars? Those whose parents paid for their college education, cannot afford luxury cars, but buy them anyway. Why? I have what may seem a rather shocking proposition related to the point of not saving for kids' college: parents do NOT owe children a college education. Why should they? Did your parents fund your college? Or did you get it through a mix of Pell grants, loans, and work? If they did, then you owe them $ back for it, adjusted for inflation. If they did not, well then why do you feel your children deserve more than you deserved when you were a child? You do not owe your children a college education. They owe it to themselves. Gifts do not set one up for success, they set one up for dependence. I will add one more hypothesis: financial discipline is best learned through one's own experiences. When an 18+ year old adult gets a very large amount of money as a gift every year for several years (in the form of paid tuition), does that teach them frugality and responsibility? My proposition is that those who get a free ride on their parents' backs are not well served in terms of becoming disciplined budgeters. They become the subjects of the question in this post: those why buy cars and houses they cannot afford, and pay for vacations with credit cards. We reap what we sow as a society. Of course, college is only one case in point, but a very illustrative one. The bigger point is that financial discipline can only be developed when there are opportunities to develop it. Such opportunities arise under one important condition: financial independence. What does buying children cars for their high-school graduation, buying them 4 years of college tuition, and buying them who knows what else (study abroad trips, airfare, apartment leases, textbooks, etc. etc.) teach? Does it teach independence or dependence? It can certainly (at least that's what you hope for) teach them to appreciate when others do super nice things for them. But does free money instill financial responsibility? Try to ask kids whose parents paid for their college WHY they did it. \\\"\\\"Because my parents want me to succeed\\\"\\\" is probably the best you can hope for. Now ask them, But do your parents OWE you a college education? \\\"\\\"Why yes, I guess they do.\\\"\\\" Why? \\\"\\\"Well, I guess because they told me they do. They said they owe it to me to set me up for success in life.\\\"\\\" Now think about this: Do people who become financially successful achieve that success because someone owed something to them? Or because they recognized that nobody owes them anything, and took it upon themselves to create that success for themselves? These are not very comfortable topics to consider, especially for those of you who have either already sunk many tens of thousands of dollars into your childrens' college education. Or for those who have been living very frugally and mindfully for the past 10-15 years driven by the goal of doing so. But I want to open this can of worms because I believe fundamentally it may be creating more problems than it is solving. I am sure there are some historical and cultural explanations for the ASSUMPTION that has at some point formed in the American society that parents owe their children a college education. But as with most social conventions, it is merely an idea -- a shared belief. It has become so ingrained in conversations at work parties and family reunions that it seems that many of those who are ardent advocates of the idea of paying for their childrens' education no longer even understand why they feel that way. They simply go with the flow of social expectations, unwilling or unable to question either the premises behind these expectations, or the long-term consequences and results of such expectations. With this comment I want to point to the connection between the free financial gifts that parents give to their (adult!) children, and the level of financial discipline of these young adults, their spending habits, sense of entitlement, and sense of responsibility over their financial decisions. The statistics of the U.S. savings rate, average credit card debt, foreclosures, and bankruptcy indeed tell a troubling story. My point is that these trends don't just happen because of lots of TV advertising and the proverbial Jones's. These trends happen because of a lack of financial education, discipline, and experience with balancing one's own checkbook. Perhaps we need to think more deeply about the consequences of our socially motivated decisions as parents, and what is really in our children's best interests -- not while they are in college, but while they live the rest of their lives after college. Finally, to all the 18+ y.o. adult 'children' who are reeling from the traumatic experience of not having their parents pay for their college (while some of their friends parents TOTALLY did!), I have this perspective to offer: Like you are now, your parents are adults. Their money is theirs to spend, because it was theirs to earn. You are under no obligation to pay for your parents' retirement (not that you were going to). Similarly your parents have no obligation to pay for your college. They can spend their money on absolutely whatever they want: be it a likeside cottage, vacations, a Corvette, or slots in the casino. How they spend their money is their concern only, and has nothing to do with your adult needs (such as college education). If your parents mismanage their finances and go bankrupt, it is their obligation to get themselves back in the black -- not yours. If you have the means and may be so inclined, you may help them; if you do not or are not, fair enough. Regardless of what you do, they will still love you as their child no less. Similarly, if your parents have the means and are so inclined, they may help you; if they do not or are not, fair enough. Regardless of what they do, you are to love them as your parents no less. Your task as an adult is to focus on how you will meet your own financial needs, not to dwell on which of your needs were not met by people whose finances should well be completely separate from yours at this point in life. For an adult, to harbor an expectation of receiving something of value for free is misguided: it betrays unjustified, illusory entitlement. It is the expectation of someone who is clueless as to the value of money measured by the effort and time needed to earn it. When adults want to acquire stuff or services, they have to pay for these things with their own money. That's how adults live. When adults want to get a massage or take a ride in a cab, are they traumatized by their parents' unfulfilled obligation to pay for these services? No -- they realize that it's their own responsibility to take care of these needs. They either need to earn the money to pay for these things, or buy them on credit and pay off the debt later. Education is a type of service, just like a massage or a cab ride. It is a service that you decide you need to get, in order to do xyz (become smarter, get a better paying job, join a profession, etc.). Therefore as with any other service, the primary responsibility for paying for this service is yours. You have 3 options (or their combination): work now so that you can earn the money to pay for this service later; work part-time while you are receiving this service; acquire the service on credit and work later to pay it off. That's it. This is called the real world. The better you can deal with it, the more successful you will become in it. Good luck!\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"117509\",\n \"text\": \"What kind of financial analysis would make you comfortable about this decision? The HELOC and ARM are the biggest red flags to me in your current situation. While I don't expect interest rates to skyrocket in the near future, they introduce an interest rate risk that is easy to get rid of. Getting rid of the HELOC and converting to a fixed mortgage would be my first priority. If you also want to upgrade to a new home at the same time (meaning buy a new home contingent on the sale of your first, paying off the HELOC and mortgage), that's fine, but make sure that you can comfortably afford the payment on a fixed-rate mortgage with at least 20% down. I would not take additional cash out of your equity just to save it. You're going to pay more in interest that you're going to get in savings. From there things get trickier. While many people would keep the first property on a mortgage and rent it out, I am not willing to be a landlord for a part-time job, especially when the interest on the mortgage gouges my return on the rent. PLus leverage increases the risks as well - all it takes is to go one or two months without rent and you can find yourself unable to make a mortgage payment, wrecking your credit and possibly risking foreclosure. So my options in order of precedence would be: At what point does it make sense to become a landlord? The complicated answer is when the benefits (rent, appreciation) relative to the costs (maintenance, interest, taxes, etc.) and risks (lost rent, bad renters, home value variance) give you a better return that you could find in investments of similar risk. The simple answer is when you can pay cash for it. That takes interest and lost rent out of the equation. Again, some are willing to take those risks and pay 20% down on rental property. Some are able to make it work. Some of those go broke or lose their properties. when calculating the 20% down of a new property, does that need to be liquid funds, or can that be based on the value of the home you are selling You can make the purchase of the new home contingent on the sale of the first if you need to get the equity out of it to make the 20%. Do NOT refinance the first just to pull out the equity to make a down payment. It's not worth the fees of a refinance.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"74402\",\n \"text\": \"You want CFP or CFA who is also a fiduciary, meaning that by law they have to put your interests ahead of their own. Financial planners who are not fiduciaries can, and often do, recommend investment vehicles that earn them the most commission with little regard of your financial goals. If you already have $500,000 to invest and racking up $100,000 a month you probably qualify for most institutions private client programs. That means that the firm/advisor will look at your financial situation and come up with a custom-tailored investment plan for you which should also include tax planning. I would start with whatever financial institutions you already work with - Schwab, your bank etc. Set up a meeting and see what they have to offer. Make sure you interrogate them about their fees, their licenses/certifications and above all if they are a fiduciary.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"84770\",\n \"text\": \"\\\"My dad keeps complaining that I treat him like a kid but hey, when the shoe fits, right? That right there is some wisdom. I would question why you need a student account. If I found myself in this situation; and, decided to participate. I would open a savings account (no debit card) in both of your names. This account would have little or no fees, have a branch convenient for both of you, and no ability for him to overdraft. When I wanted to, I could deposit money into his account, and he could withdraw. You might even open your own account at the same bank that he does not have access to. Then it is a matter of transferring the money into his account which can be done by mobile phone. The thing that I would say to you, beyond your question, is that you are choosing to participate and enabling this insanity. By \\\"\\\"quickly\\\"\\\" sending him money you are not allowing him to find alternatives for his poor behavior. If it was me, I would require that he have some sort of financial literacy education. He needs help budgeting, planning, and managing a bank account. I am a Dave Ramsey guy, so I would require him to attend FPU, that I would happily pay for ~$100. Alternatives are more than fine, mostly there has to be progress in his financial literacy and behavior. If he asked for money in the future, I would ask to see his budget and explain what went wrong. If there was no budget, there would be no money. If there was some legitimacy to his need, I would help meet it. One example would be the company he worked for did not meet payroll. That is something mostly beyond his control and can really hurt when a person is just starting to take control of their life. So yes, I would send a check in that case. However, that choice is yours. For perspective, when my son was 18 he came to me for help with habitual bounced checks. He wanted me to pay the fee and probably pay it every month that he went crazy. I paid the fee once, and I provided the education he needed. After that he learned and was quickly a self-sufficient adult. I also made it very clear that I would only pay it once. My situation was normal, parents should teach their children. Your situation is insanity. There is no way you should be put in the situation you are in with your father. He needs to grow up, and you will have to help him somewhat. If nothing more you should cut him off financially.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"425527\",\n \"text\": \"\\\"Related to this question: I came across a post at The Financial Planning Exchange* titled \\\"\\\"The Top 10 Ways To Tell If You're Working With A Really Good Financial Planner.\\\"\\\" Here are a few tips I particularly liked: (* site is no longer available) 4. Make sure the planner is going to work with you on a Fiduciary basis. This means that they are going to recommend only what is in your best interest. A planner who tries to sell you a product is generally a red flag that they aren't looking out for your best interests. [...] 8. Interview the prospective planner that you are about to hire. Understand how they think, what their speciality is, and most importantly how they are going to get paid for their services. Be very very careful with a planner who is going to provide you with a free financial plan as that person more often than not has a motivation to sell you something. [..] 10. Last but not least, go to a person who works hand in hand with financial planners like an accountant or estate planning attorney for a referral. Accountants and estate planning/tax attorneys know the difference between a good and bad planner. Chances are they are a client of the person they'll refer you to.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"14997\",\n \"text\": \"I could be wrong, but I doubt that Bernie started out with any intention of defrauding anyone, really. I suspect it began the first time he hit a quarter when his returns were lower than everyone else's, or at least not as high as he'd promised his investors they'd be, so he fudged the numbers and lied to get past the moment, thinking he'd just make up for it the next quarter. Only that never happened, and so the lie carried forward and maybe grew as things didn't improve as he expected. It only turned into a ponzi because he wasn't as successful at investing as he was telling his investors he was, and telling the truth would have meant the probability that he would have lost most of his clients as they went elsewhere. Bernie couldn't admit the truth, so he had to keep up the fiction by actually paying out returns that didn't exist, which required constantly finding new money to cover what he was paying out. The source of that money turned out to be new investors who were lured in by people already investing with Bernie who told them how great he was as a financial wizard, and they had the checks to prove it. I think this got so far out of hand, and it gradually dragged more and more people in because such things turn into black holes, swallowing up everything that gets close. Had the 2008 financial crisis not hit then Bernie might still be at it. The rapid downturns in the markets hit many of Bernie's investors with margin calls in other investments they held, so they requested redemptions from him to cover their calls, expecting that all of the money he'd convinced to leave with him really existed. When he realized he couldn't meet the flood of redemptions, that was when he 'fessed up and the bubble burst. Could he have succeeded by simple investing in Berkshire? Probably. But then how many people say that in hindsight about them or Amazon or Google, or any number of other stocks that turned out similarly? (grin) Taking people's money and parking it all in one stock doesn't make you a genius, and that's how Bernie wanted to be viewed. To accomplish that, he needed to find the opportunities nobody else saw and be the one to get there first. Unfortunately his personal crystal ball was wrong, and rather than taking his lumps by admitting it to his investors, his pride and ego led him down a path of deception that I'm sure he had every intention of making right if he could. The problem was, that moment never came. Keep in mind one thing: The $64 billion figure everyone cites isn't money that really existed in the first place. That number is what Bernie claimed his fund was worth, and it is not the amount he actually defrauded people out of. His actual cash intake was probably somewhere in the $20 billion range over that time. Everything else beyond that was nothing more than the fictionalized returns he was claiming to get for his clients. It's what they thought they had in the bank with him, rather than what was really there.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"155074\",\n \"text\": \"I would make this a comment, but I am not worthy...... You will need to define your objectives before you can do anything. What is the money for? What is your risk tolerance? Where do you live? Capital appreciation? Preservation? Can you eat if your savings are cut in half? How much are you currently making? How much are you currently saving? What do you already have exposure to? How secure is your job? What is the makeup of the congregation? Do you have any tax-related surprises? Do you own your home? Have you previously consulted with a financial planner? There are many many factors obviously. More than I think most people want to give out over the internet, but they are all important to making a decision. Get a recommendation from someone you know for a financial planner. Ask upfront what their background is. Education, experience credentials. You want a certified financial planner or analyst. Ask how their fees are structured and what their approach is like, and make sure they're speaking intelligibly. Feel free to shop around until you find someone you like.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"524912\",\n \"text\": \"\\\"What percent of my salary should I save? is tightly coupled with its companion, What size “nest egg” should my husband and I have, and by what age? Interestingly, Mr.Christer's answer, 10%, is the number that plugs into the equation that I reference. Jay's 25X rule is part of this. We start with the assumption that one's required income at retirement will be 80% of their pre-retirement income. That's high by some observations, low by others. A quick look at the expenses that go away in retirement - The above can total 35-40% It would be great if it ended there, but there are costs that go up. The above extra spending is tough to nail down, after all, you knew what you spent, and what's going away, but the new items? Crapshoot. (For non-native speakers - this refers to a game with dice, meaning a random event) Again, referencing Mr Christer's answer \\\"\\\"financial planners whom you could pay to give you a very accurate number,\\\"\\\" I'm going to disagree with that soundbyte. Consider, when retirement is 30 years away, you don't know much If I can offer an analogy. I once had the pleasure of hearing Jim Lovell (The astronaut played by Tom Hanks in Apollo 13) give a speech. He said that for the first 99% of the trip to the moon, they simply aimed ahead of their target, never directly at the moon. In this manner, I suggest that with so many variables, accuracy is impossible, it's a moving target. Start young, take the 10% MrC offered, and keep saving. Every few years, stop and see if you are on target, if not, bump the number a bit. Better to turn 50 and find that after a good decade you've reached your number and can drop your savings to a minimum, perhaps just to capture a 401(k) match, than to turn 50 and realize you've undersaved and need to bump to an unsustainable level. Imagine planning ahead in 1999. You've seen 2 great decades of returns, and even realizing that 18%/yr couldn't continue, you plan for a below average 7%, this would double your 1999 balance in 10 years. Instead you saw zero return. For a decade. In sum, when each variable has an accuracy of +/-50% you are not going to combine them all and get a number with even 10% accuracy (as if MrC were wrong, but the pro would tell you 11% is right for you?). This is as absurd as packaging up a bunch of C rated debt, and thinking that enough of this paper would yield a final product that was AAA.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"406409\",\n \"text\": \"\\\"The definition I use for financial independence is 99% confidence that, at a specific estimated spending rate per year (allowing for estimated inflation, and budgeting for likely medical emergencies, and taxes on taxable investments), the money will outlast me. This translates to needing an average annual return on investment which covers the average yearly spending. For my purposes, that works out to my relying on being able to draw only a 4% income from the money each year, which should give me good odds of the money not just being sufficient but being able to deliver that rate \\\"\\\"forever\\\"\\\". (Historically, average US stock market rate if return is around 8%.) That is overkill, if course, I could plan on the money just barely lasting past my 120th birthday or something of that sort, but the goal us to be pretty sure not only that I won't run out but that I will have some cash unexpected needs. Which in turn means that I estimate I need investments 1/.04 times the yearly spending estimate to declare the \\\"\\\"forever\\\"\\\" independence/retirement, or 25x the yearly. From that, I can calculate how much longer, at a given savings rate and rate of return, it'll take for me to reach that target. Obviously you need to adjust all these numbers to reflect your opinions/understanding if the market, your own needs, your priorities and expected maximum age, and the phase of Saturn's moons. But that's the basic rationale. Or you can pay a financial planner to give you this number, and a strategy for getting there, based on the numbers you give him or her plus some statistical analysis of the market's overall history.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"249972\",\n \"text\": \"I'm of the belief that, long term, fees eat away at your performance. If you chose an ETF, say VOO, with its .05% expense, and a short term bond fund or money market fund, you are going be ahead, long term. It's pretty much accepted fact that money managers are not beating the average long term. For you to simply do as well as I do (S&P less .05%) your guy has to beat the market year in, year out, by 1.2%. Not going to happen. Yes, in hindsight, some funds have done this. Over the decades, losing funds are closed, or merged into performing ones. But, in the end, the average fund lags the average market return quite a bit. To pay someone 25% over two decades isn't what I'd recommend to anyone. There was recently a PBS Frontline special, The Retirement Gamble, (and this link to my article reviewing the show). I put up an image which shows the effect of 50 years' impact of expenses. The Vanguard S&P ETF, linked earlier has just a .05% fee. In my chart I show .1%, and then a total 1% or 2% fee. $447K return for .1%, $294K for 1%. I'm painfully aware that 3/4 of US taxpayers aren't saving at all. For those that are savers, the value in learning about investing is huge. This isn't a onetime $150K saved, but the savings on just that $10K deposit. Meanwhile, before you learn this, a pay-for-his-time fee-only planner is worth it, for a meeting and first year follow up.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"35518\",\n \"text\": \"Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"568629\",\n \"text\": \"Wow! First, congratulations! You are both making great money. You should be able to reach your goals. Are we on the right track ? Are we doing any mistakes which we could have avoided ? Please advice if there is something that we should focus more into ! I would prioritize as follows: Get on the same page. My first red flag is that you are listing your assets separately. You and your wife own property together and are raising your daughter together. The first thing is to both be on the same page with your combined income and assets. This is critical. Set specific goals for the future. Dreaming and big-picture life planning will be the foundation for building a detailed plan for reaching your goals. You will see more progress with more sacrifice. If you both are not equally excited about the goals, you will not both be equally willing to sacrifice lifestyle now. You have the income now to be able to set yourselves up to do whatever you want in 10 years, if you can agree on what you want. Hire a financial planner you trust. Interview people, ask someone who is where you want to be in 10 years. You need someone with experience that can guide you through these questions and understands how to manage your income stream. Start saving for retirement in tax-advantaged accounts. This should be as much as 10%-15% of your income combined, so $30k-$45k per year. You need to start diversifying your investments. Real estate is great, but I would never recommend it as this large a percentage of net worth. Start saving for your child's education. Hard to say what you need here, since I don't know your goals. A financial planner should assist you with this. Get rid of your debt. Out of your $2.1M of rental real estate and land, you have $1.4M of debt. It will be difficult to start a business with that much additional debt. It will also put stress on your retirement that you don't need. You are taking on lots of risk here. I would sell all but maybe one of the properties and let it cash flow. This will free up cash to start investing for retirement or future business too. Buy more rental in the future with cash only. You have plenty of income to do it this way, and you will be setting yourself up for a great future. At this point you can continue to pile funds into any/all your investments, with the goal of using the funds to start a business or to live on. If all your investments are tied up in real estate, you wont have anything to draw on if needed for a business opportunity. You need to weigh this out in your goal and planning. What should we do to prepare for a comfortable retirement and safety You cannot plan for or see all scenarios. However, good planning will give you more options and more choices. Investing driven by fear will set you up for failure. Spend less than you make. Be patient. Be generous. Cheers!\",\n \"title\": \"\"\n },\n {\n \"docid\": \"548014\",\n \"text\": \"Unfortunately, this is a customer service issue. The bank has a set of term and conditions (Ts and Cs) which you received with the card or when you applied. It included your limit, and what happens when you go over, likely, a penalty for going over the limit. At the very least, they expect you to pay the overage or you'll see an over-limit charge next cycle too. In the future, I'd suggest checking your account on line to monitor your balance. Some accounts offer an alert email, mine will let me set an alert for when my balance goes over $xxx, which is helpful, as I can send in an early payment to bring that balance down. It still never hurts to ask. They might waive fees if any, if this is your first time. You can still try calling them, explain the odd timing, and see if you can get a temporary increase in credit line. In the end, you need to review your finances. Carrying balances month to month at 12-18% is no way to have a successful financial future. It's one of the first things to getting your situation under control. After that, a small savings account, an emergency fund, is the next step. One month of charges should never put you in this bad situation.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"70702\",\n \"text\": \"\\\"This is not a direct answer to your question, but you might want to consider whether you want to have a financial planner at all. Would a large mutual fund company or brokerage serve your needs better than a bank? You are still quite young and so have been contributing to IRAs for only a few years. Also, the wording in your question suggests that your IRA investments have not done spectacularly well, and so it is reasonable to infer that your IRA is not a large amount, or at least not as large as what it would be 30 years from now. At this level of investment, it would be difficult for you to find a financial planner who spends all that much time looking after your interests. That you should get away from your current planner, presumably a mid-level employee in what is typically called the trust division of the bank, is a given. But, to go to another bank (or even to a different employee in the same bank), where you will also likely be nudged towards investing your IRA in CDs, annuities, and a few mutual funds with substantial sales charges and substantial annual expense fees, might just take you from the frying pan into the fire. You might want to consider transferring your IRA to a large mutual fund company and investing it in something simple like one of their low-cost (meaning small annual expense ratio) index funds. The Couch Potato portfolio suggests equal amounts invested in a no-load S&P 500 Index fund and a no-load Bond Index fund, or a 75%-25% split favoring the stock index fund (in view of your age and the fact that the IRA should be a long-term investment). But the point is, you can open an IRA account, have the money transferred from your IRA account with the bank, and make the investments on-line all by yourself instead of having a financial advisor do it on your behalf and charge you a fee for doing so (not to mention possibly screwing it up.) You can set up Automated Investment too; the mutual fund company will gladly withdraw money from your checking account and invest it in whatever fund(s) you choose. All this is not complicated at all. If you would like to follow the Couch Potato strategy and rebalance your portfolio once a year, you can do it by yourself too. If you want to invest in funds other than the S&P 500 Index fund, etc. most mutual fund companies offer a \\\"\\\"portfolio analysis\\\"\\\" and advice for a fee (and the fee is usually waived when the assets increase above certain levels - varies from company to company). You could thus have a portfolio analysis done each year, and hopefully it will be free after a few more years. Indeed, at that level, you also typically get one person assigned as your advisor, just as you have with a bank. Once you get the recommendations, you can choose to follow them or not, but you have control over how and where your IRA assets are invested. Over the years, as your IRA assets grow, you can branch out into investments other than \\\"\\\"staid\\\"\\\" index funds, but right now, having a financial planner for your IRA might not be worth it. Later, when you have more assets, by all means if you want to explore investing in specific stocks with a brokerage instead of sticking to mutual funds only but this might also mean phone calls urging you to sell Stock A right now, or buy hot Stock B today etc. So, one way of improving your interactions and have a better experience with your new financial planner is to not have a planner at all for a few years and do some of the work yourself.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"106578\",\n \"text\": \"I don't know what you mean by 'major'. Do you mean the fund company is a Fidelity or Vanguard, or that the fund is broad, as in an s&P fund? The problem starts with a question of what your goals are. If you already know the recommended mix for your age/risk, as you stated, you should consider minimizing the expenses, and staying DIY. I am further along, and with 12 year's income saved, a 1% hit would be 12% of a year's pay, I'd be working 1-1/2 months to pay the planner? In effect, you are betting that a planner will beat whatever metric you consider valid by at least that 1% fee, else you can just do it yourself and be that far ahead of the game. I've accepted the fact that I won't beat the average (as measured by the S&P) over time, but I'll beat the average investor. By staying in low cost funds (my 401(k) S&P fund charges .05% annual expense) I'll be ahead of the investors paying planner fees, and mutual fund fees on top of that. You don't need to be a CFP to manage your money, but it would help you understand the absurdity of the system.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"424247\",\n \"text\": \"\\\"Congratulations on a solid start. Here are my thoughts, based on your situation: Asset Classes I would recommend against a long-term savings account as an investment vehicle. While very safe, the yields will almost always be well below inflation. Since you have a long time horizon (most likely at least 30 years to retirement), you have enough time to take on more risk, as long as it's not more than you can live with. If you are looking for safer alternatives to stocks for part of your investments, you can also consider investment-grade bonds/bond funds, or even a stable value fund. Later, when you are much closer to retirement, you may also want to consider an annuity. Depending on the interest rate on your loan, you may also be able to get a better return from paying down your loan than from putting more in a savings account. I would recommend that you only keep in a savings account what you expect to need in the next few years (cushion for regular expenses, emergency fund, etc.). On Stocks Stocks are riskier but have the best chance to outperform versus inflation over the long term. I tend to favor funds over individual stocks, mostly for a few practical reasons. First, one of the goals of investing is to diversify your risk, which produces a more efficient risk/reward ratio than a group of stocks that are highly correlated. Diversification is easier to achieve via an index fund, but it is possible for a well-educated investor to stay diversified via individual stocks. Also, since most investors don't actually want to take physical possession of their shares, funds will manage the shares for you, as well as offering additional services, such as the automatic reinvestments of dividends and tax management. Asset Allocation It's very important that you are comfortable with the amount of risk you take on. Investment salespeople will prefer to sell you stocks, as they make more commission on stocks than bonds or other investments, but unless you're able to stay in the market for the long term, it's unlikely you'll be able to get the market return over the long term. Make sure to take one or more risk tolerance assessments to understand how often you're willing to accept significant losses, as well as what the optimal asset allocation is for you given the level of risk you can live with. Generally speaking, for someone with a long investment horizon and a medium risk tolerance, even the most conservative allocations will have at least 60% in stocks (total of US and international) with the rest in bonds/other, and up to 80% or even 100% for a more aggressive investor. Owning more bonds will result in a lower expected return, but will also dramatically reduce your portfolio's risk and volatility. Pension With so many companies deciding that they don't feel like keeping the promises they made to yesterday's workers or simply can't afford to, the pension is nice but like Social Security, I wouldn't bank on all of this money being there for you in the future. This is where a fee-only financial planner can really be helpful - they can run a bunch of scenarios in planning software that will show you different retirement scenarios based on a variety of assumptions (ie what if you only get 60% of the promised pension, etc). This is probably not as much of an issue if you are an equity partner, or if the company fully funds the pension in a segregated account, or if the pension is defined-contribution, but most corporate pensions are just a general promise to pay you later in the future with no real money actually set aside for that purpose, so I'd discount this in my planning somewhat. Fund/Stock Selection Generally speaking, most investment literature agrees that you're most likely to get the best risk-adjusted returns over the long term by owning the entire market rather than betting on individual winners and losers, since no one can predict the future (including professional money managers). As such, I'd recommend owning a low-cost index fund over holding specific sectors or specific companies only. Remember that even if one sector is more profitable than another, the stock prices already tend to reflect this. Concentration in IT Consultancy I am concerned that one third of your investable assets are currently in one company (the IT consultancy). It's very possible that you are right that it will continue to do well, that is not my concern. My concern is the risk you're carrying that things will not go well. Again, you are taking on risks not just over the next few years, but over the next 30 or so years until you retire, and even if it seems unlikely that this company will experience a downturn in the next few years, it's very possible that could change over a longer period of time. Please just be aware that there is a risk. One way to mitigate that risk would be to work with an advisor or a fund to structure and investment plan where you invest in a variety of sector funds, except for technology. That way, your overall portfolio, including the single company, will be closer to the market as a whole rather than over-weighted in IT/Tech. However, if this IT Consultancy happens to be the company that you work for, I would strongly recommend divesting yourself of those shares as soon as reasonably possible. In my opinion, the risk of having your salary, pension, and much of your investments tied up in the fortunes of one company would simply be a much larger risk than I'd be comfortable with. Last, make sure to keep learning so that you are making decisions that you're comfortable with. With the amount of savings you have, most investment firms will consider you a \\\"\\\"high net worth\\\"\\\" client, so make sure you are making decisions that are in your best financial interests, not theirs. Again, this is where a fee-only financial advisor may be helpful (you can find a local advisor at napfa.org). Best of luck with your decisions!\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":95,"cells":{"query_id":{"kind":"string","value":"8227"},"query":{"kind":"string","value":"A deferred capital gains tax similar to the real estate 1031 Exchange but for securities reinvestment?"},"positive_passages":{"kind":"list like","value":[{"docid":"591157","text":"Sale of a stock creates a capital gain. It can be offset with losses, up to $3000 more than the gains. It can be deferred when held within a retirement account. When you gift appreciated stock, the basis follows. So when I gifted my daughter's trust shares, there was still tax due upon sale. The kiddy tax helped reduce but not eliminate it. And there was no quotes around ownership. The money is gone, her account is for college. No 1031 exchange exists for stock.","title":""}],"string":"[\n {\n \"docid\": \"591157\",\n \"text\": \"Sale of a stock creates a capital gain. It can be offset with losses, up to $3000 more than the gains. It can be deferred when held within a retirement account. When you gift appreciated stock, the basis follows. So when I gifted my daughter's trust shares, there was still tax due upon sale. The kiddy tax helped reduce but not eliminate it. And there was no quotes around ownership. The money is gone, her account is for college. No 1031 exchange exists for stock.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"416787","text":"What you are looking for is a 1031 exchange. https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031 Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. You may also sell your house for bitcoin and record the sales price on the deed with an equal or lesser amount that you bought it for.","title":""},{"docid":"201355","text":"1031 is a section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes. Taxes on capital gains are not charged on the sale of a property if the money is being used to purchase another property - the payment of tax is deferred until property is sold with no re-investment.","title":""},{"docid":"345793","text":"\"Overall the question is one of a political nature. However, this component can have objective answers: \"\"What behavior is trying to be prevented?\"\" There are mechanisms by which capital gains can be deferred (1031 like-kind exchange, or simply holding a long position for years) or eliminated by the estate step up in basis. With these available, mechanisms that enable basis-reduction are ripe for abuse. On the other hand, if this truly bothers you then if you meet the IRS qualifications of a day trader, you may elect to use \"\"mark to market\"\" accounting, eliminating this entirely as a concern. Special rules for traders of securities\"","title":""},{"docid":"210149","text":"In response to one of the comments you might be interested in owning the new home as a rental property for a year. You could flip this thinking and make the current home into a rental property for a period of time (1 year seems to be the consensus, consult an accountant familiar with real estate). This will potentially allow for a 1031 exchange into another property -- although I believe that property can't then be a primary residence. All potentially not worth the complication for the tax savings, but figured I'd throw it out there. Also, the 1031 exchange defers taxes until some point in the future in which you finally sell the asset(s) for cash.","title":""},{"docid":"79979","text":"Having lived in both places, I have to say you can find a higher income in the US for the same job and can live in a small town versus having to live in a big city in Canada to find decent salaries. For similar sized cities, the cost of housing is significantly lower in the US than Canada. That is your biggest factor in cost of living. If you are thinking of NYC or San Francisco, there are no comparable size cities in Canada and you would probably be better off in Canada. My tax preparer was amazed at how much I paid in Capital Gains taxes when I left Canada. Maybe it is different now but I doubt it. The biggest free lunch in the US is a generous capital gains exemption when you sell your primary residence without any lifetime cap or cap on the number of times you can do it. There are rules on how long you have to live in it before selling. For investment real estate, all expenses are deductible in addition to fictional depreciation so with a mortgage you can have positive cash flow and pay no income tax. You can keep doing tax deferred exchanges into bigger and bigger rentals. When you are close to retirement, you can exchange into your ultimate beach home, rent it out a few years, then convert to a primary residence.","title":""},{"docid":"257274","text":"\"There are ways to mitigate, but since you're not protected by a tax-deferred/advantaged account, the realized income will be taxed. But you can do any of the followings to reduce the burden: Prefer selling either short positions that are at loss or long positions that are at gain. Do not invest in stocks, but rather in index funds that do the rebalancing for you without (significant) tax impact on you. If you are rebalancing portfolio that includes assets that are not stocks (real-estate, mainly) consider performing 1031 exchanges instead of plain sale and re-purchase. Maximize your IRA contributions, even if non-deductible, and convert them to Roth IRA. Hold your more volatile investments and individual stocks there - you will not be taxed when rebalancing. Maximize your 401K, HSA, SEP-IRA and any other tax-advantaged account you may be eligible for. On some accounts you'll pay taxes when withdrawing, on others - you won't. For example - Roth IRA/401k accounts are not taxed at all when withdrawing qualified distributions, while traditional IRA/401k are taxed as ordinary income. During the \"\"low income\"\" years, consider converting portions of traditional accounts to Roth.\"","title":""},{"docid":"314342","text":"\"Many individual states, counties, and cities have their own income taxes, payroll taxes, sales taxes, property taxes, etc., you will need to consult your state and local government websites for information about additional taxes that apply based on your locale. Wages, Salaries, Tips, Cash bonuses and other taxable employee pay, Strike benefits, Long-term disability, Earnings from self employment Earned income is subject to payroll taxes such as: Earned income is also subject to income taxes which are progressively higher depending on the amount earned minus tax credits, exemptions, and/or deductions depending on how you file. There are 7 tax rates that get progressively larger as your income rises but only applies to the income in each bracket. 10% for the first 18,650 (2017) through 39.6% for any income above 470,700. The full list of rates is in the above linked article about payroll taxes. Earned income is required for contributions to an IRA. You cannot contribute more to an IRA than you have earned in a given year. Interest, Ordinary Dividends, Short-term Capital Gains, Retirement income (pensions, distributions from tax deferred accounts, social security), Unemployment benefits, Worker's Compensation, Alimony/Child support, Income earned while in prison, Non-taxable military pay, most rental income, and S-Corp passthrough income Ordinary income is taxed the same as earned income with the exception that social security taxes do not apply. This is the \"\"pure taxable income\"\" referred to in the other linked question. Dividends paid by US Corporations and qualified foreign corporations to stock-holders (that are held for a certain period of time before the dividend is paid) are taxed at the Long-term Capital Gains rate explained below. Ordinary dividends like the interest earned in your bank account are included with ordinary income. Stocks, Bonds, Real estate, Carried interest -- Held for more than a year Income from assets that increase in value while being held for over a year. Long term capital gains justified by the idea that they encourage people to hold stock and make long term investments rather than buying and then quickly reselling for a short-term profit. The lower tax rates also reflect the fact that many of these assets are already taxed as they are appreciating in value. Real-estate is usually taxed through local property taxes. Equity in US corporations realized by rising stock prices and dividends that are returned to stock holders reflect earnings from a corporation that are already taxed at the 35% Corporate tax rate. Taxing Capital gains as ordinary income would be a second tax on those same profits. Another problem with Long-term capital gains tax is that a big portion of the gains for assets held for multiple decades are not real gains. Inflation increases the price of assets held for longer periods, but you are still taxed on the full gain even if it would be a loss when inflation is calculated. Capital gains are also taxed differently depending on your income level. If you are in the 10% or 15% brackets then Long-term capital gains are assessed at 0%. If you are in the 25%, 28%, 33%, or 35% brackets, they are assessed at 15%. Only those in the 39.6% bracket pay 20%. Capital assets sold at a profit held for less than a year Income from buying and selling any assets such as real-estate, stock, bonds, etc., that you hold for less than a year before selling. After adding up all gains and losses during the year, the net gain is taxed as ordinary income. Collectibles held for more than a year are not considered capital assets and are still taxed at ordinary income rates.\"","title":""},{"docid":"393090","text":"would buying the stock of a REIT qualify as a 'Like-Kind' exchange? Short answer, no. Long answer, a 1031 (Starker) exchange only applies to real estate. From the Wikipedia page on the topic: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business, or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, although securitized properties are not excluded. A REIT, being stock in a real estate company, is excluded from Section 1031.","title":""},{"docid":"434694","text":"Probably. It sounds like you're looking for a 1031-exchange for stocks and bonds. From the wikipedia page for 1031-exchanges: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, though securitized properties are not excluded. 1031-exchanges usually are applicable in real estate.","title":""},{"docid":"86909","text":"I don't see anything in this forum on the leverage aspect, so I'll toss that out for discussion. Using generic numbers, say you make a $10k down payment on a $100,000 house. The house appreciates 3% per year. First year, it's $103,000. Second year, $106090, third it's 109,272.70. (Assuming straight line appreciation.) End of three years, you've made $9,272.70 on your initial $10,000 investment, assuming you have managed the property well enough to have a neutral or positive cash flow. You can claim depreciation of the property over those rental years, which could help your tax situation. Of course, if you sell, closing costs will be a big factor. Plus... after three years, the dreaded capital gains tax jumps in as mentioned earlier, unless you do a 1031 exchange to defer it.","title":""},{"docid":"390751","text":"\"A REIT is a real estate investment trust. It is a company that derives most of its gross income from and holds most of its assets in real estate investments, which, in this case, include either real property, mortgages, or both. They provide a way for investors to get broad exposure in a real estate market without going to buy a bunch of properties themselves. It also provides diversification within the real estate segment since REITs will often (but not necessarily) have either way more properties than an individual could get or have very large properties (like a few resorts) that would be too expensive for any one investor. By law, they must pay at least 90% of their taxable income as dividends to investors, so they typically have a good dividend rate (possibly but not necessarily) at the expense of growth of the stock price. Some of those dividends may be tax advantaged and some will not. An MLP is a master limited partnership. These trade on the exchange like corporations, but they are not corporations. (Although often used in common language as synonyms, corporation and company are not the same thing. Corporation is one way to organize a company under the law.) They are partnerships, and when you buy a share you become a partner in the company. This is an alternative form of ownership to being a shareholding. In this case you are a limited partner, which means that you have limited liability as with stock. The shares may appreciate or not, just like a stock, and you can generally sell them back to the market for a capital gain or loss under the same rules as a stock. The main difference here from a practical point of view is taxes: Partnerships (of any type) do no pay tax - Instead their income and costs are passed to the individual partners, who must then include it on their personal returns (Form 1040, Schedule E). The partnership will send each shareholder a Schedule K-1 form at tax time. This means you may have \"\"phantom income\"\" that is taxable even though cash never flowed through your hands since you'll have to account for the income of the partnership. Many partnerships mitigate this by making cash distributions during the year so that the partners do actually see the cash, but this is not required. On the other hand, if it does happen, it's often characterized as a return of capital, which is not taxable in the year that you receive it. A return of capital reduces your cost basis in the partnership and will eventually result in a larger capital gain when you sell your shares. As with any investment, there are pros and cons to each investment type. Of the two, the MLP is probably less like a \"\"regular\"\" stock since getting the Schedule K-1 may require some extra work at tax time, especially if you've never seen one before. On the other hand, that may be worth it to you if you can find one that's appreciating in value and still returning capital at a good rate since this could be a \"\"best of everything\"\" situation where you defer tax and - when you eventually do pay, you pay at favorable capital gains rates - but still manage to get your cash back in hand before you sell. (In case not clear, my comments about tax are specific to the US. No idea how this is treated elsewhere.) By real world example, I guess you meant a few tickers in each category? You can find whole lists online. I just did a quick search (\"\"list of MLP\"\" and \"\"list of REIT\"\"), found a list, and have provided the top few off of the first list that I found. The lists were alphabetical by company name, so there's no explicit or implicit endorsement of these particular investments. Examples of REIT: Examples of MLP:\"","title":""},{"docid":"110983","text":"In the US, dividends have special tax treatment similar to, but not the same as Capital Gains. No easy way to transform one to the other, the very fact that you invested your money in a company that has returned part of your capital as income means it is just that, income. Also in the US, you could invest in Master Limited Partnerships. These are companies that make distributions that are treated as a return of capital, instead of dividends. Throughout the life of the investment you receive tax forms that assign part of the operating expense/loss of the company to you as a tax payer. Then at the end of the investment life you are required to recapture those losses as Capital Gains on sale of the stock. In some ways, these investments do exactly what you are asking about. They transform periodic income into later capital gains, basically deferring tax on the income until the sale of the security. Here is an article I found about MLPs coming to the UK through an ETF: Master Limited Partnerships in the UK","title":""},{"docid":"108433","text":"While it may not be your preferred outcome, and doesn't eliminate the income, in the event you find yourself in the path described here you have a way to defer gains to the future. but I would then want to buy another house as a rental If you sell this house and buy another investment property (within strict time windows: 45 days to written contract and closed in 180 days), you can transfer your basis and defer your gains via what is called a 1031 like-kind exchange","title":""},{"docid":"573935","text":"There is nothing wrong with self directed IRA's the problem is that most of the assets they specialize in are better done in other ways. Real estate is already extremely tax advantaged in the US. Buying inside a Traditional IRA would turn longterm capital gains (currently 15%) into ordinary income taxed at your tax rate when you withdraw this may be a plus or minus, but it is more likely than not that your ordinary income tax rate is higher. You also can't do the live in each house for 2 years before selling plan to eliminate capital gains taxes (250k individual 500k married couple). The final problem is that you are going to have problems getting a mortgage (it won't be a conforming loan) and will likely have to pay cash for any real estate purchased inside your IRA. Foreign real estate is similar to above except you have additional tax complexities. The key to the ownership in a business is that there are limits on who can control the business (you and maybe your family can't control the business). If you are experienced doing angel investing this might be a viable option (assuming you have a really big IRA you want to gamble with). If you want to speculate on precious metals you will probably be better offer using ETF's in a more traditional brokerage account (lower transactions costs more liquidity).","title":""},{"docid":"322049","text":"I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a Canadian & US context, but should be similar to how this is viewed elsewhere in the world. First note that capital gains today are much more fluid in concept than even 100 years ago. When the personal income tax was first introduced [to pay for WWI], a capital gain was viewed as a very deliberate action; the permanent sale of property. Capital gains were not taxed at all initially [in Canada until 1971], under the view that income taxes would have been paid on income-earning assets all along [through interest, dividends, and rent], and therefore taxing capital gains would be a form of 'double-taxation'. This active, permanent sale was also viewed as an action that an investor would need to work for. Therefore it was seen as foolish to prevent investors from taking positive economic action [redistributing their capital in the most effective way], simply to avoid the tax. However today, because of favourable taxation on capital gains, many financial products attempt to package and sell capital gains to investors. For example, many Canadian mutual funds buy and sell investments to earn capital gains, and distribute those capital gains to the owners of the mutual fund. This is no longer an active action taken by the investor, it is simply a function of passive investing. The line between what is a dividend and what is a capital gain has been blurred by these and similar advanced financial products. To the casual investor, there is no practical difference between receiving dividends or capital gain distributions, except for the tax impact. The notional gain realized on the sale of property includes inflation. Consider a rental property bought in 1930 for $100,000, and sold in 1960 for $180,000, assuming inflation between 1930 and 1960 was 70%. In 1960 dollars, the property was effectively bought for 170k. This means the true gain after accounting for inflation is only $10k. But, the notional gain is $80k, meaning a tax on that capital gain would be almost entirely a tax on inflation. This is viewed by many as being unfair, as it does not actually represent true income. I will pause to note that any tax on any investment at all, taxes inflation; interest, for example, is taxed in full even though it can be almost entirely inflationary, depending on economic conditions. A tax on capital gains may restrict market liquidity. A key difference between capital gains and interest/rent/dividends, is that other forms of investment income are taxed annually. If you hold a bond, you get taxed on interest from that bond. You cannot gain value from a bond, deferring tax until the date it matures [at least in Canada, you are deemed to accrue bond interest annually, even if it is a 0 coupon bond]. However, what if interest rates have gone down, increasing the value of your bond, and you want to sell it to invest in a business? You may choose not to do this, to avoid tax on that capital gain. If it were taxed as much as regular income, you might be even more inclined to never sell any asset until you absolutely have to, thus restricting the flow of capital in the market. I will pause here again, to note that laws could be enacted to minimize capital gains tax, as long as the money is reinvested immediately, thus reducing this impact. Political inertia / lobbying from key interests has a significant impact on the tax structure for investments. The fact remains that the capital gains tax is most significantly an impact on those with accrued wealth. It would take significant public support to increase capital gain tax rates, for any political party to enact such laws. When you get right down to it, tax laws are complex, and hard to push in the public eye. The general public barely understands that their effective tax rate is far lower than their top marginal tax rate. Any tax increases at all are often viewed negatively, even by those who would never personally pay any of that tax due to lack of investment income. Therefore such changes are typically made quietly, and with some level of bi-partisan support. If you feel the capital gains tax rules are illogical, just add it to the pile of such tax laws that exist today.","title":""},{"docid":"379786","text":"You also may want to consider how this interacts with the stepped up basis of estates. If you never sell the stock and it passes to your heirs with your estate, under current tax law the basis will increase from the purchase price to the market price at the time of transfer. In a comment, you proposed: Thinking more deeply though, I am a little skeptical that it's a free lunch: Say I buy stock A (a computer manufacturer) at $100 which I intend to hold long term. It ends up falling to $80 and the robo-advisor sells it for tax loss harvesting, buying stock B (a similar computer manufacturer) as a replacement. So I benefit from realizing those losses. HOWEVER, say both stocks then rise by 50% over 3 years. At this point, selling B gives me more capital gains tax than if I had held A through the losses, since A's rise from 80 back to 100 would have been free for me since I purchased at 100. And then later thought Although thinking even more (sorry, thinking out loud here), I guess I still come out ahead on taxes since I was able to deduct the $20 loss on A against ordinary income, and while I pay extra capital gains on B, that's a lower tax rate. So the free lunch is $20*[number of shares]*([my tax bracket] - [capital gains rates]) That's true. And in addition to that, if you never sell B, which continues to rise to $200 (was last at $120 after a 50% increase from $80), the basis steps up to $200 on transfer to your heirs. Of course, your estate may have to pay a 40% tax on the $200 before transferring the shares to your heirs. So this isn't exactly a free lunch either. But you have to pay that 40% tax regardless of the form in which the money is held. Cash, real estate, stocks, whatever. Whether you have a large or small capital gain on the stock is irrelevant to the estate tax. This type of planning may not matter to you personally, but it is another aspect of what wealth management can impact.","title":""},{"docid":"33208","text":"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).","title":""},{"docid":"222232","text":"If an entity or individual has full rights to the land and land improvements, they can hold, transfer, delegate, or dispose of them on their terms. The only exception may be eminent domain. If the sovereignty meets the public necessity or public purpose tests they can assume or change the rights to your property in exchange for compensation. As others have said writing your own mortgage falls under the category of seller financing. A seller can write a mortgage with the help of a loan servicing company. Some loan service companies report to credit agencies, to help with buyer refinancing at a later point. Other forms of seller financing: Leasing Land contracts mineral contracts and more... Additionally, the seller can finance the minority of the property, called a junior mortgage. For example, the Bank finances 79% of the value, the seller finances 11%, and the buyer's 10% down payment covers the rest. If the buyer defaults, the superior mortgage (bank's) has collection priority. More commonly, the seller can option for a wrap-around mortgage or an 'all-inclusive mortgage'. The seller holds or refinances the existing mortgage and provides a junior mortgage in exchange for a secured promissory note and an all-inclusive trust deed. If the buyer defaults, the seller has foreclosure rights. It is not uncommon for entities or people to use financing strategies other than the traditional mortgage if they are unable to exclude the gain on sale. Check out section 1031 exchanges. In almost all cases I would tell people not to make decisions based on tax consequences alone, if your financial objective/goal for seller financing sounds like a 1031 exchange, take exception and carefully consider the tax consequences.","title":""},{"docid":"399583","text":"In a comment on this answer you asked It's not clear to me why the ability to defer the gains would matter (since you never materially benefit until you actually sell) but the estate step up in basis is a great point! Could you describe a hypothetical exploitive scenario (utilizing a wash sale) in a little more detail? This sounds like you still have the same question as originally, so I'll take a stab at answering with an example. I sell some security for a $10,000 profit. I then sell another security at a $10,000 loss and immediately rebuy. So pay no taxes (without the rule). Assuming a 15% rate, that's $1500 in savings which I realize immediately. Next year, I sell that same security for a $20,000 profit over the $10,000 loss basis (so a $10,000 profit over my original purchase). I sell and buy another security to pay no taxes. In fact, I pay no taxes like this for fifty years as I live off my investments (and a pension or social security that uses up my tax deductions). Then I die. All my securities step up in basis to their current market value. So I completely evade taxes on $500,000 in profits. That's $75,000 in tax savings to make my heirs richer. And they're already getting at least $500,000 worth of securities. Especially consider the case where I sell a privately held security to a private buyer who then sells me back the same shares at the same price. Don't think that $10,000 is enough? Remember that you also get the original value. But this also scales. It could be $100,000 in gains as well, for $750,000 in tax savings over the fifty years. That's at least $5 million of securities. The effective result of this would be to make a 0% tax on capital gains for many rich people. Worse, a poorer person can't do the same thing. You need to have many investments to take advantage of this. If a relatively poor person with two $500 investments tried this, that person would lose all the benefit in trading fees. And of course such a person would run out of investments quickly. Really poor people have $0 in investments, so this is totally impractical.","title":""},{"docid":"529435","text":"\"This forum is not intended to be a discussion group, but I would like to add a different perspective, especially for @MrChrister, on @littleadv's rhetorical question \"\"... estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why?\"\" For the cash in an estate, yes, that is after-tax money, but consider other assets such as stocks and real estate. Suppose a rich man bought stock in a small computer start-up company at $10 a share about 35 years ago, and that stock is now worth $500 a share. The man dies and his will bequeaths the shares to his son. According to US tax law, the son's basis in the shares is $500 per share, that is, if the son sells the shares, his capital gains are computed as if he had purchased the shares for $500 each. The son pays no taxes on the inheritance he receives. The deceased father's last income tax return (filed by the executor of the father's will) does not list the $490/share gain as a capital gain since the father did not sell the stock (the gain is what is called an unrealized gain), and so there is no income tax due from the father on the $490/share. Now, if there is no estate tax whatsoever, the father's estate tax return pays no tax on that gain of $490 per share either. Would this be considered an equitable system? Should the government not tax the gain at all? It is worth noting that it would be possible for a government to eliminate estate taxes entirely, but instead have tax laws that say that unrealized gains on the deceased's property would be taxed (as capital gains) on the deceased's final tax return.\"","title":""},{"docid":"309200","text":"A terrific resource is this article. To summarize the points given: PROS: CONS: There is no generic yes or no answer as to whether you ought to max out your 401(k)s. If you are a sophisticated investor, then saving the income for investing could be a better alternative. Long term capital gains are taxed at 15% in the US, so if you buy and hold on to good companies that reinvest their earnings, then the share price keeps going up and you'll save a lot of money that would go in taxes. If you're not a very good investor, however, then 401(k)s make a lot of sense. If you're going to end up setting up some asset allocation and buying ETFs and rebalancing or having a manager rebalance for you every year or so, then you might as well take the 401(k) option and lower your taxable income. Point #1 is simply wrong, because companies that reinvest earnings and growing for a long time are essentially creating tax-free gains for you, which is even better than tax-deferred gains. Nonetheless, most people have neither the time nor the interest to research companies and for them, the 401(k) makes more sense.","title":""},{"docid":"580802","text":"You cannot do a 1031 exchange with stocks, bonds, mutual funds, or ETFs. There really isn't much difference between an ETF and its equivalent index mutual fund. Both will have minimal capital gains distributions. I would not recommend selling an index mutual fund and taking a short-term capital gain just to buy the equivalent ETF.","title":""},{"docid":"459589","text":"Yes, you may make non-deductible contributions to an IRA. The main benefit of a non-deductible IRA is tax-deferred earnings. If the investment pays out dividends, they will be kept in the IRA (whether you take them in cash and put them in a Cash Management Account, or you automatically reinvest them). You do not get taxed on these earnings until you withdraw from the IRA during retirement. If your income at that time is significantly lower than your income while you're working, you will be in a lower tax bracket (unless tax rates change drastically between now and then), so the taxes you pay on these earnings will be lower than if you'd invested outside the IRA and paid taxes along the way. You also get the benefit of compounding of the tax-deferred earnings. There's one caveat -- when you withdraw from the IRA, all the growth is treated as ordinary income. Even if some of it is capital gains, it will be taxed at your ordinary income rate, not your capital gains rate. So this is most beneficial for investments that produce dividends. If you have a mix of deductible and non-deductible contributions to your IRA, the tax on the principle portion of your withdrawals is pro-rated based on the ratio of deductible to total contributions. This ensures that you eventually get taxed for the deductible portion (it's not really tax-free, it's tax-deferred), but don't get taxed twice for the non-deductible portion. Another option, if your 401(k) plan allows it, is to make after-tax contributions to the 401(k). At the end of the year, you can make an in-service distribution of these contributions and their earnings from the 401(k) to a Roth Conversion IRA. This allows you to contribute to a Roth IRA even if you're above the income limit for normal Roth IRA contributions. You can also do this even if you're also making non-deductible contributions to your regular IRA.","title":""},{"docid":"526661","text":"\"Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC. Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%. The Income Tax Department of India has a publication titled \"\"How to Compute your Capital Gains,\"\" which goes into more detail about a variety of relevant situations.\"","title":""},{"docid":"91405","text":"The real estate industry today is highly exploitative, you're right, but there are currently nothing stopping rents from rising. The major controls in place are are primarily supply constraints, which would lower prices if removed by allowing small, entrepreneurial developers and builders to create new housing more easily. There's also nothing to stop institutional investors from buying up all the housing right now, but those investors are generally not looking for high growth, they're looking for stable returns. Apartment buildings are viewed as similar to blue chip stock portfolios in that regard. Low growth, but also low risk. The reason capitalism wouldn't lead to monopoly is that it takes work both to gain resources, and to retain them, and the most reliable way to retain them is to reinvest them in the economy. Investment permits new businesses to grow, and new industries to form. It's precisely because the economy isn't limited to a fixed size that wealth of one group doesn't require to poverty of others. New value creation is the core of the theory, and nearly every living person has at least some capital (their body and mind) to begin employing toward value creation. I recommend reading Henry Hazlitt's Economics in One Lesson if you'd like to understand the theory behind why and how free market capitalism is supposed to work.","title":""},{"docid":"110343","text":"A mutual fund makes distributions of its dividends and capital gains, usually once a year, or seminanually or quarterly or monthly etc; it does not distribute any capital losses to its shareholders but holds them for offsetting capital gains in future years, (cf, this answer of mine to a different question). A stock pays dividends; a stock neither has nor does it distribute capital gains: you get capital gains (or losses) when you sell the shares of the stock, but these are not called distributions of any kind. Similarly, you incur capital gains or losses when you redeem shares of mutual funds but these are not called distributions either. Note that non-ETF mutual fund shares are generally not bought and sold on stock exchanges; you buy shares directly from the fund and you sell shares back (redeem them) directly to the fund. All of the above transactions are taxable events for the year to you unless the shares are being held in a tax-deferred account or are tax-free for other reasons (e.g. dividends from a municipal bond fund).","title":""},{"docid":"85229","text":"Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks.","title":""},{"docid":"113189","text":"Similarly to buying property on your own, REITs cannot get to good returns without leveraging. If you buy an investment property 100% cash only - chances are that 10% ROI is a very very optimistic scenario. If you use leveraging (i.e.: take out a mortgage) - you're susceptible to interest rate changes. REITs invest in properties all around all the time. They invest in mortgages themselves as well (In the US, that's the only security REITs can hold without being disqualified). You can't expect all that to be cash-only, there have to be loans and financing involved. When rates go up - financing costs go up. That brings net income down. Simple math. In the US, there's an additional benefit to investing in REIT vs directly holding real estate: taxes. REITs pay dividends, which have preferential (if qualified) taxation. You'll pay capital gains taxes on the dividends if you hold the fund long enough. If you own a rental property directly, your income after all the expenses is taxed at ordinary rates, which would usually be higher. Also, as you mentioned, you can use them as margin, and they're much much more liquid than holding real estate directly. Not to mention you don't need to deal with tenants or periods where you don't have any, or if local real-estate market tanks (while REITs are usually quite diversified in kinds of real estate they hold and areas). On the other hand, if you own real estate, you can leverage it at lower rates than margin (with HELOCs etc), and it provides some safety net in case of a stock market crash (which REITs are somewhat susceptible to). You can also live in your property, if needed, which is something that's hard to do with REITs....","title":""},{"docid":"359515","text":"A 401-K is something you get through an employer. I recommend getting a self-directed IRA. You can open an IRA with Scottrade with $500 The money you put into an IRA is tax deferred, meaning that you do not have to pay taxes on profits. It may also lower your tax liability. Scottrade has a feature to automatically reinvest any dividends from the securities you own. This feature allows you to avoid commissions on those automatic purchases. Don't try to time the market. Pick a good ETF (exchange traded fund) that pays dividends. It will give you diversification. Avoid the urge to buy and sell constantly. This only gives commissions to the broker.","title":""},{"docid":"403701","text":"This is really an extended comment on the last paragraph of @BenMiller's answer. When (the manager of) a mutual fund sells securities that the fund holds for a profit, or receives dividends (stock dividends, bond interest, etc.), the fund has the option of paying taxes on that money (at corporate rates) and distributing the rest to shareholders in the fund, or passing on the entire amount (categorized as dividends, qualified dividends, net short-term capital gains, and net long-term capital gains) to the shareholders who then pay taxes on the money that they receive at their own respective tax rates. (If the net gains are negative, i.e. losses, they are not passed on to the shareholders. See the last paragraph below). A shareholder doesn't have to reinvest the distribution amount into the mutual fund: the option of receiving the money as cash always exists, as does the option of investing the distribution into a different mutual fund in the same family, e.g. invest the distributions from Vanguard's S&P 500 Index Fund into Vanguard's Total Bond Index Fund (and/or vice versa). This last can be done without needing a brokerage account, but doing it across fund families will require the money to transit through a brokerage account or a personal account. Such cross-transfers can be helpful in reducing the amounts of money being transferred in re-balancing asset allocations as is recommended be done once or twice a year. Those investing in load funds instead of no-load funds should keep in mind that several load funds waive the load for re-investment of distributions but some funds don't: the sales charge for the reinvestment is pure profit for the fund if the fund was purchased directly or passed on to the brokerage if the fund was purchased through a brokerage account. As Ben points out, a shareholder in a mutual fund must pay taxes (in the appropriate categories) on the distributions from the fund even though no actual cash has been received because the entire distribution has been reinvested. It is worth keeping in mind that when the mutual fund declares a distribution (say $1.22 a share), the Net Asset Value per share drops by the same amount (assuming no change in the prices of the securities that the fund holds) and the new shares issued are at this lower price. That is, there is no change in the value of the investment: if you had $10,000 in the fund the day before the distribution was declared, you still have $10,000 after the distribution is declared but you own more shares in the fund than you had previously. (In actuality, the new shares appear in your account a couple of days later, not immediately when the distribution is declared). In short, a distribution from a mutual fund that is re-invested leads to no change in your net assets, but does increase your tax liability. Ditto for a distribution that is taken as cash or re-invested elsewhere. As a final remark, net capital losses inside a mutual fund are not distributed to shareholders but are retained within the fund to be written off against future capital gains. See also this previous answer or this one.","title":""}],"string":"[\n {\n \"docid\": \"416787\",\n \"text\": \"What you are looking for is a 1031 exchange. https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031 Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. You may also sell your house for bitcoin and record the sales price on the deed with an equal or lesser amount that you bought it for.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"201355\",\n \"text\": \"1031 is a section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes. Taxes on capital gains are not charged on the sale of a property if the money is being used to purchase another property - the payment of tax is deferred until property is sold with no re-investment.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"345793\",\n \"text\": \"\\\"Overall the question is one of a political nature. However, this component can have objective answers: \\\"\\\"What behavior is trying to be prevented?\\\"\\\" There are mechanisms by which capital gains can be deferred (1031 like-kind exchange, or simply holding a long position for years) or eliminated by the estate step up in basis. With these available, mechanisms that enable basis-reduction are ripe for abuse. On the other hand, if this truly bothers you then if you meet the IRS qualifications of a day trader, you may elect to use \\\"\\\"mark to market\\\"\\\" accounting, eliminating this entirely as a concern. Special rules for traders of securities\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"210149\",\n \"text\": \"In response to one of the comments you might be interested in owning the new home as a rental property for a year. You could flip this thinking and make the current home into a rental property for a period of time (1 year seems to be the consensus, consult an accountant familiar with real estate). This will potentially allow for a 1031 exchange into another property -- although I believe that property can't then be a primary residence. All potentially not worth the complication for the tax savings, but figured I'd throw it out there. Also, the 1031 exchange defers taxes until some point in the future in which you finally sell the asset(s) for cash.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"79979\",\n \"text\": \"Having lived in both places, I have to say you can find a higher income in the US for the same job and can live in a small town versus having to live in a big city in Canada to find decent salaries. For similar sized cities, the cost of housing is significantly lower in the US than Canada. That is your biggest factor in cost of living. If you are thinking of NYC or San Francisco, there are no comparable size cities in Canada and you would probably be better off in Canada. My tax preparer was amazed at how much I paid in Capital Gains taxes when I left Canada. Maybe it is different now but I doubt it. The biggest free lunch in the US is a generous capital gains exemption when you sell your primary residence without any lifetime cap or cap on the number of times you can do it. There are rules on how long you have to live in it before selling. For investment real estate, all expenses are deductible in addition to fictional depreciation so with a mortgage you can have positive cash flow and pay no income tax. You can keep doing tax deferred exchanges into bigger and bigger rentals. When you are close to retirement, you can exchange into your ultimate beach home, rent it out a few years, then convert to a primary residence.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"257274\",\n \"text\": \"\\\"There are ways to mitigate, but since you're not protected by a tax-deferred/advantaged account, the realized income will be taxed. But you can do any of the followings to reduce the burden: Prefer selling either short positions that are at loss or long positions that are at gain. Do not invest in stocks, but rather in index funds that do the rebalancing for you without (significant) tax impact on you. If you are rebalancing portfolio that includes assets that are not stocks (real-estate, mainly) consider performing 1031 exchanges instead of plain sale and re-purchase. Maximize your IRA contributions, even if non-deductible, and convert them to Roth IRA. Hold your more volatile investments and individual stocks there - you will not be taxed when rebalancing. Maximize your 401K, HSA, SEP-IRA and any other tax-advantaged account you may be eligible for. On some accounts you'll pay taxes when withdrawing, on others - you won't. For example - Roth IRA/401k accounts are not taxed at all when withdrawing qualified distributions, while traditional IRA/401k are taxed as ordinary income. During the \\\"\\\"low income\\\"\\\" years, consider converting portions of traditional accounts to Roth.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"314342\",\n \"text\": \"\\\"Many individual states, counties, and cities have their own income taxes, payroll taxes, sales taxes, property taxes, etc., you will need to consult your state and local government websites for information about additional taxes that apply based on your locale. Wages, Salaries, Tips, Cash bonuses and other taxable employee pay, Strike benefits, Long-term disability, Earnings from self employment Earned income is subject to payroll taxes such as: Earned income is also subject to income taxes which are progressively higher depending on the amount earned minus tax credits, exemptions, and/or deductions depending on how you file. There are 7 tax rates that get progressively larger as your income rises but only applies to the income in each bracket. 10% for the first 18,650 (2017) through 39.6% for any income above 470,700. The full list of rates is in the above linked article about payroll taxes. Earned income is required for contributions to an IRA. You cannot contribute more to an IRA than you have earned in a given year. Interest, Ordinary Dividends, Short-term Capital Gains, Retirement income (pensions, distributions from tax deferred accounts, social security), Unemployment benefits, Worker's Compensation, Alimony/Child support, Income earned while in prison, Non-taxable military pay, most rental income, and S-Corp passthrough income Ordinary income is taxed the same as earned income with the exception that social security taxes do not apply. This is the \\\"\\\"pure taxable income\\\"\\\" referred to in the other linked question. Dividends paid by US Corporations and qualified foreign corporations to stock-holders (that are held for a certain period of time before the dividend is paid) are taxed at the Long-term Capital Gains rate explained below. Ordinary dividends like the interest earned in your bank account are included with ordinary income. Stocks, Bonds, Real estate, Carried interest -- Held for more than a year Income from assets that increase in value while being held for over a year. Long term capital gains justified by the idea that they encourage people to hold stock and make long term investments rather than buying and then quickly reselling for a short-term profit. The lower tax rates also reflect the fact that many of these assets are already taxed as they are appreciating in value. Real-estate is usually taxed through local property taxes. Equity in US corporations realized by rising stock prices and dividends that are returned to stock holders reflect earnings from a corporation that are already taxed at the 35% Corporate tax rate. Taxing Capital gains as ordinary income would be a second tax on those same profits. Another problem with Long-term capital gains tax is that a big portion of the gains for assets held for multiple decades are not real gains. Inflation increases the price of assets held for longer periods, but you are still taxed on the full gain even if it would be a loss when inflation is calculated. Capital gains are also taxed differently depending on your income level. If you are in the 10% or 15% brackets then Long-term capital gains are assessed at 0%. If you are in the 25%, 28%, 33%, or 35% brackets, they are assessed at 15%. Only those in the 39.6% bracket pay 20%. Capital assets sold at a profit held for less than a year Income from buying and selling any assets such as real-estate, stock, bonds, etc., that you hold for less than a year before selling. After adding up all gains and losses during the year, the net gain is taxed as ordinary income. Collectibles held for more than a year are not considered capital assets and are still taxed at ordinary income rates.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"393090\",\n \"text\": \"would buying the stock of a REIT qualify as a 'Like-Kind' exchange? Short answer, no. Long answer, a 1031 (Starker) exchange only applies to real estate. From the Wikipedia page on the topic: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business, or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, although securitized properties are not excluded. A REIT, being stock in a real estate company, is excluded from Section 1031.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"434694\",\n \"text\": \"Probably. It sounds like you're looking for a 1031-exchange for stocks and bonds. From the wikipedia page for 1031-exchanges: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, though securitized properties are not excluded. 1031-exchanges usually are applicable in real estate.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"86909\",\n \"text\": \"I don't see anything in this forum on the leverage aspect, so I'll toss that out for discussion. Using generic numbers, say you make a $10k down payment on a $100,000 house. The house appreciates 3% per year. First year, it's $103,000. Second year, $106090, third it's 109,272.70. (Assuming straight line appreciation.) End of three years, you've made $9,272.70 on your initial $10,000 investment, assuming you have managed the property well enough to have a neutral or positive cash flow. You can claim depreciation of the property over those rental years, which could help your tax situation. Of course, if you sell, closing costs will be a big factor. Plus... after three years, the dreaded capital gains tax jumps in as mentioned earlier, unless you do a 1031 exchange to defer it.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"390751\",\n \"text\": \"\\\"A REIT is a real estate investment trust. It is a company that derives most of its gross income from and holds most of its assets in real estate investments, which, in this case, include either real property, mortgages, or both. They provide a way for investors to get broad exposure in a real estate market without going to buy a bunch of properties themselves. It also provides diversification within the real estate segment since REITs will often (but not necessarily) have either way more properties than an individual could get or have very large properties (like a few resorts) that would be too expensive for any one investor. By law, they must pay at least 90% of their taxable income as dividends to investors, so they typically have a good dividend rate (possibly but not necessarily) at the expense of growth of the stock price. Some of those dividends may be tax advantaged and some will not. An MLP is a master limited partnership. These trade on the exchange like corporations, but they are not corporations. (Although often used in common language as synonyms, corporation and company are not the same thing. Corporation is one way to organize a company under the law.) They are partnerships, and when you buy a share you become a partner in the company. This is an alternative form of ownership to being a shareholding. In this case you are a limited partner, which means that you have limited liability as with stock. The shares may appreciate or not, just like a stock, and you can generally sell them back to the market for a capital gain or loss under the same rules as a stock. The main difference here from a practical point of view is taxes: Partnerships (of any type) do no pay tax - Instead their income and costs are passed to the individual partners, who must then include it on their personal returns (Form 1040, Schedule E). The partnership will send each shareholder a Schedule K-1 form at tax time. This means you may have \\\"\\\"phantom income\\\"\\\" that is taxable even though cash never flowed through your hands since you'll have to account for the income of the partnership. Many partnerships mitigate this by making cash distributions during the year so that the partners do actually see the cash, but this is not required. On the other hand, if it does happen, it's often characterized as a return of capital, which is not taxable in the year that you receive it. A return of capital reduces your cost basis in the partnership and will eventually result in a larger capital gain when you sell your shares. As with any investment, there are pros and cons to each investment type. Of the two, the MLP is probably less like a \\\"\\\"regular\\\"\\\" stock since getting the Schedule K-1 may require some extra work at tax time, especially if you've never seen one before. On the other hand, that may be worth it to you if you can find one that's appreciating in value and still returning capital at a good rate since this could be a \\\"\\\"best of everything\\\"\\\" situation where you defer tax and - when you eventually do pay, you pay at favorable capital gains rates - but still manage to get your cash back in hand before you sell. (In case not clear, my comments about tax are specific to the US. No idea how this is treated elsewhere.) By real world example, I guess you meant a few tickers in each category? You can find whole lists online. I just did a quick search (\\\"\\\"list of MLP\\\"\\\" and \\\"\\\"list of REIT\\\"\\\"), found a list, and have provided the top few off of the first list that I found. The lists were alphabetical by company name, so there's no explicit or implicit endorsement of these particular investments. Examples of REIT: Examples of MLP:\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"110983\",\n \"text\": \"In the US, dividends have special tax treatment similar to, but not the same as Capital Gains. No easy way to transform one to the other, the very fact that you invested your money in a company that has returned part of your capital as income means it is just that, income. Also in the US, you could invest in Master Limited Partnerships. These are companies that make distributions that are treated as a return of capital, instead of dividends. Throughout the life of the investment you receive tax forms that assign part of the operating expense/loss of the company to you as a tax payer. Then at the end of the investment life you are required to recapture those losses as Capital Gains on sale of the stock. In some ways, these investments do exactly what you are asking about. They transform periodic income into later capital gains, basically deferring tax on the income until the sale of the security. Here is an article I found about MLPs coming to the UK through an ETF: Master Limited Partnerships in the UK\",\n \"title\": \"\"\n },\n {\n \"docid\": \"108433\",\n \"text\": \"While it may not be your preferred outcome, and doesn't eliminate the income, in the event you find yourself in the path described here you have a way to defer gains to the future. but I would then want to buy another house as a rental If you sell this house and buy another investment property (within strict time windows: 45 days to written contract and closed in 180 days), you can transfer your basis and defer your gains via what is called a 1031 like-kind exchange\",\n \"title\": \"\"\n },\n {\n \"docid\": \"573935\",\n \"text\": \"There is nothing wrong with self directed IRA's the problem is that most of the assets they specialize in are better done in other ways. Real estate is already extremely tax advantaged in the US. Buying inside a Traditional IRA would turn longterm capital gains (currently 15%) into ordinary income taxed at your tax rate when you withdraw this may be a plus or minus, but it is more likely than not that your ordinary income tax rate is higher. You also can't do the live in each house for 2 years before selling plan to eliminate capital gains taxes (250k individual 500k married couple). The final problem is that you are going to have problems getting a mortgage (it won't be a conforming loan) and will likely have to pay cash for any real estate purchased inside your IRA. Foreign real estate is similar to above except you have additional tax complexities. The key to the ownership in a business is that there are limits on who can control the business (you and maybe your family can't control the business). If you are experienced doing angel investing this might be a viable option (assuming you have a really big IRA you want to gamble with). If you want to speculate on precious metals you will probably be better offer using ETF's in a more traditional brokerage account (lower transactions costs more liquidity).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"322049\",\n \"text\": \"I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a Canadian & US context, but should be similar to how this is viewed elsewhere in the world. First note that capital gains today are much more fluid in concept than even 100 years ago. When the personal income tax was first introduced [to pay for WWI], a capital gain was viewed as a very deliberate action; the permanent sale of property. Capital gains were not taxed at all initially [in Canada until 1971], under the view that income taxes would have been paid on income-earning assets all along [through interest, dividends, and rent], and therefore taxing capital gains would be a form of 'double-taxation'. This active, permanent sale was also viewed as an action that an investor would need to work for. Therefore it was seen as foolish to prevent investors from taking positive economic action [redistributing their capital in the most effective way], simply to avoid the tax. However today, because of favourable taxation on capital gains, many financial products attempt to package and sell capital gains to investors. For example, many Canadian mutual funds buy and sell investments to earn capital gains, and distribute those capital gains to the owners of the mutual fund. This is no longer an active action taken by the investor, it is simply a function of passive investing. The line between what is a dividend and what is a capital gain has been blurred by these and similar advanced financial products. To the casual investor, there is no practical difference between receiving dividends or capital gain distributions, except for the tax impact. The notional gain realized on the sale of property includes inflation. Consider a rental property bought in 1930 for $100,000, and sold in 1960 for $180,000, assuming inflation between 1930 and 1960 was 70%. In 1960 dollars, the property was effectively bought for 170k. This means the true gain after accounting for inflation is only $10k. But, the notional gain is $80k, meaning a tax on that capital gain would be almost entirely a tax on inflation. This is viewed by many as being unfair, as it does not actually represent true income. I will pause to note that any tax on any investment at all, taxes inflation; interest, for example, is taxed in full even though it can be almost entirely inflationary, depending on economic conditions. A tax on capital gains may restrict market liquidity. A key difference between capital gains and interest/rent/dividends, is that other forms of investment income are taxed annually. If you hold a bond, you get taxed on interest from that bond. You cannot gain value from a bond, deferring tax until the date it matures [at least in Canada, you are deemed to accrue bond interest annually, even if it is a 0 coupon bond]. However, what if interest rates have gone down, increasing the value of your bond, and you want to sell it to invest in a business? You may choose not to do this, to avoid tax on that capital gain. If it were taxed as much as regular income, you might be even more inclined to never sell any asset until you absolutely have to, thus restricting the flow of capital in the market. I will pause here again, to note that laws could be enacted to minimize capital gains tax, as long as the money is reinvested immediately, thus reducing this impact. Political inertia / lobbying from key interests has a significant impact on the tax structure for investments. The fact remains that the capital gains tax is most significantly an impact on those with accrued wealth. It would take significant public support to increase capital gain tax rates, for any political party to enact such laws. When you get right down to it, tax laws are complex, and hard to push in the public eye. The general public barely understands that their effective tax rate is far lower than their top marginal tax rate. Any tax increases at all are often viewed negatively, even by those who would never personally pay any of that tax due to lack of investment income. Therefore such changes are typically made quietly, and with some level of bi-partisan support. If you feel the capital gains tax rules are illogical, just add it to the pile of such tax laws that exist today.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"379786\",\n \"text\": \"You also may want to consider how this interacts with the stepped up basis of estates. If you never sell the stock and it passes to your heirs with your estate, under current tax law the basis will increase from the purchase price to the market price at the time of transfer. In a comment, you proposed: Thinking more deeply though, I am a little skeptical that it's a free lunch: Say I buy stock A (a computer manufacturer) at $100 which I intend to hold long term. It ends up falling to $80 and the robo-advisor sells it for tax loss harvesting, buying stock B (a similar computer manufacturer) as a replacement. So I benefit from realizing those losses. HOWEVER, say both stocks then rise by 50% over 3 years. At this point, selling B gives me more capital gains tax than if I had held A through the losses, since A's rise from 80 back to 100 would have been free for me since I purchased at 100. And then later thought Although thinking even more (sorry, thinking out loud here), I guess I still come out ahead on taxes since I was able to deduct the $20 loss on A against ordinary income, and while I pay extra capital gains on B, that's a lower tax rate. So the free lunch is $20*[number of shares]*([my tax bracket] - [capital gains rates]) That's true. And in addition to that, if you never sell B, which continues to rise to $200 (was last at $120 after a 50% increase from $80), the basis steps up to $200 on transfer to your heirs. Of course, your estate may have to pay a 40% tax on the $200 before transferring the shares to your heirs. So this isn't exactly a free lunch either. But you have to pay that 40% tax regardless of the form in which the money is held. Cash, real estate, stocks, whatever. Whether you have a large or small capital gain on the stock is irrelevant to the estate tax. This type of planning may not matter to you personally, but it is another aspect of what wealth management can impact.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"33208\",\n \"text\": \"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).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"222232\",\n \"text\": \"If an entity or individual has full rights to the land and land improvements, they can hold, transfer, delegate, or dispose of them on their terms. The only exception may be eminent domain. If the sovereignty meets the public necessity or public purpose tests they can assume or change the rights to your property in exchange for compensation. As others have said writing your own mortgage falls under the category of seller financing. A seller can write a mortgage with the help of a loan servicing company. Some loan service companies report to credit agencies, to help with buyer refinancing at a later point. Other forms of seller financing: Leasing Land contracts mineral contracts and more... Additionally, the seller can finance the minority of the property, called a junior mortgage. For example, the Bank finances 79% of the value, the seller finances 11%, and the buyer's 10% down payment covers the rest. If the buyer defaults, the superior mortgage (bank's) has collection priority. More commonly, the seller can option for a wrap-around mortgage or an 'all-inclusive mortgage'. The seller holds or refinances the existing mortgage and provides a junior mortgage in exchange for a secured promissory note and an all-inclusive trust deed. If the buyer defaults, the seller has foreclosure rights. It is not uncommon for entities or people to use financing strategies other than the traditional mortgage if they are unable to exclude the gain on sale. Check out section 1031 exchanges. In almost all cases I would tell people not to make decisions based on tax consequences alone, if your financial objective/goal for seller financing sounds like a 1031 exchange, take exception and carefully consider the tax consequences.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"399583\",\n \"text\": \"In a comment on this answer you asked It's not clear to me why the ability to defer the gains would matter (since you never materially benefit until you actually sell) but the estate step up in basis is a great point! Could you describe a hypothetical exploitive scenario (utilizing a wash sale) in a little more detail? This sounds like you still have the same question as originally, so I'll take a stab at answering with an example. I sell some security for a $10,000 profit. I then sell another security at a $10,000 loss and immediately rebuy. So pay no taxes (without the rule). Assuming a 15% rate, that's $1500 in savings which I realize immediately. Next year, I sell that same security for a $20,000 profit over the $10,000 loss basis (so a $10,000 profit over my original purchase). I sell and buy another security to pay no taxes. In fact, I pay no taxes like this for fifty years as I live off my investments (and a pension or social security that uses up my tax deductions). Then I die. All my securities step up in basis to their current market value. So I completely evade taxes on $500,000 in profits. That's $75,000 in tax savings to make my heirs richer. And they're already getting at least $500,000 worth of securities. Especially consider the case where I sell a privately held security to a private buyer who then sells me back the same shares at the same price. Don't think that $10,000 is enough? Remember that you also get the original value. But this also scales. It could be $100,000 in gains as well, for $750,000 in tax savings over the fifty years. That's at least $5 million of securities. The effective result of this would be to make a 0% tax on capital gains for many rich people. Worse, a poorer person can't do the same thing. You need to have many investments to take advantage of this. If a relatively poor person with two $500 investments tried this, that person would lose all the benefit in trading fees. And of course such a person would run out of investments quickly. Really poor people have $0 in investments, so this is totally impractical.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"529435\",\n \"text\": \"\\\"This forum is not intended to be a discussion group, but I would like to add a different perspective, especially for @MrChrister, on @littleadv's rhetorical question \\\"\\\"... estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why?\\\"\\\" For the cash in an estate, yes, that is after-tax money, but consider other assets such as stocks and real estate. Suppose a rich man bought stock in a small computer start-up company at $10 a share about 35 years ago, and that stock is now worth $500 a share. The man dies and his will bequeaths the shares to his son. According to US tax law, the son's basis in the shares is $500 per share, that is, if the son sells the shares, his capital gains are computed as if he had purchased the shares for $500 each. The son pays no taxes on the inheritance he receives. The deceased father's last income tax return (filed by the executor of the father's will) does not list the $490/share gain as a capital gain since the father did not sell the stock (the gain is what is called an unrealized gain), and so there is no income tax due from the father on the $490/share. Now, if there is no estate tax whatsoever, the father's estate tax return pays no tax on that gain of $490 per share either. Would this be considered an equitable system? Should the government not tax the gain at all? It is worth noting that it would be possible for a government to eliminate estate taxes entirely, but instead have tax laws that say that unrealized gains on the deceased's property would be taxed (as capital gains) on the deceased's final tax return.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"309200\",\n \"text\": \"A terrific resource is this article. To summarize the points given: PROS: CONS: There is no generic yes or no answer as to whether you ought to max out your 401(k)s. If you are a sophisticated investor, then saving the income for investing could be a better alternative. Long term capital gains are taxed at 15% in the US, so if you buy and hold on to good companies that reinvest their earnings, then the share price keeps going up and you'll save a lot of money that would go in taxes. If you're not a very good investor, however, then 401(k)s make a lot of sense. If you're going to end up setting up some asset allocation and buying ETFs and rebalancing or having a manager rebalance for you every year or so, then you might as well take the 401(k) option and lower your taxable income. Point #1 is simply wrong, because companies that reinvest earnings and growing for a long time are essentially creating tax-free gains for you, which is even better than tax-deferred gains. Nonetheless, most people have neither the time nor the interest to research companies and for them, the 401(k) makes more sense.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"580802\",\n \"text\": \"You cannot do a 1031 exchange with stocks, bonds, mutual funds, or ETFs. There really isn't much difference between an ETF and its equivalent index mutual fund. Both will have minimal capital gains distributions. I would not recommend selling an index mutual fund and taking a short-term capital gain just to buy the equivalent ETF.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"459589\",\n \"text\": \"Yes, you may make non-deductible contributions to an IRA. The main benefit of a non-deductible IRA is tax-deferred earnings. If the investment pays out dividends, they will be kept in the IRA (whether you take them in cash and put them in a Cash Management Account, or you automatically reinvest them). You do not get taxed on these earnings until you withdraw from the IRA during retirement. If your income at that time is significantly lower than your income while you're working, you will be in a lower tax bracket (unless tax rates change drastically between now and then), so the taxes you pay on these earnings will be lower than if you'd invested outside the IRA and paid taxes along the way. You also get the benefit of compounding of the tax-deferred earnings. There's one caveat -- when you withdraw from the IRA, all the growth is treated as ordinary income. Even if some of it is capital gains, it will be taxed at your ordinary income rate, not your capital gains rate. So this is most beneficial for investments that produce dividends. If you have a mix of deductible and non-deductible contributions to your IRA, the tax on the principle portion of your withdrawals is pro-rated based on the ratio of deductible to total contributions. This ensures that you eventually get taxed for the deductible portion (it's not really tax-free, it's tax-deferred), but don't get taxed twice for the non-deductible portion. Another option, if your 401(k) plan allows it, is to make after-tax contributions to the 401(k). At the end of the year, you can make an in-service distribution of these contributions and their earnings from the 401(k) to a Roth Conversion IRA. This allows you to contribute to a Roth IRA even if you're above the income limit for normal Roth IRA contributions. You can also do this even if you're also making non-deductible contributions to your regular IRA.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"526661\",\n \"text\": \"\\\"Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC. Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%. The Income Tax Department of India has a publication titled \\\"\\\"How to Compute your Capital Gains,\\\"\\\" which goes into more detail about a variety of relevant situations.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"91405\",\n \"text\": \"The real estate industry today is highly exploitative, you're right, but there are currently nothing stopping rents from rising. The major controls in place are are primarily supply constraints, which would lower prices if removed by allowing small, entrepreneurial developers and builders to create new housing more easily. There's also nothing to stop institutional investors from buying up all the housing right now, but those investors are generally not looking for high growth, they're looking for stable returns. Apartment buildings are viewed as similar to blue chip stock portfolios in that regard. Low growth, but also low risk. The reason capitalism wouldn't lead to monopoly is that it takes work both to gain resources, and to retain them, and the most reliable way to retain them is to reinvest them in the economy. Investment permits new businesses to grow, and new industries to form. It's precisely because the economy isn't limited to a fixed size that wealth of one group doesn't require to poverty of others. New value creation is the core of the theory, and nearly every living person has at least some capital (their body and mind) to begin employing toward value creation. I recommend reading Henry Hazlitt's Economics in One Lesson if you'd like to understand the theory behind why and how free market capitalism is supposed to work.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"110343\",\n \"text\": \"A mutual fund makes distributions of its dividends and capital gains, usually once a year, or seminanually or quarterly or monthly etc; it does not distribute any capital losses to its shareholders but holds them for offsetting capital gains in future years, (cf, this answer of mine to a different question). A stock pays dividends; a stock neither has nor does it distribute capital gains: you get capital gains (or losses) when you sell the shares of the stock, but these are not called distributions of any kind. Similarly, you incur capital gains or losses when you redeem shares of mutual funds but these are not called distributions either. Note that non-ETF mutual fund shares are generally not bought and sold on stock exchanges; you buy shares directly from the fund and you sell shares back (redeem them) directly to the fund. All of the above transactions are taxable events for the year to you unless the shares are being held in a tax-deferred account or are tax-free for other reasons (e.g. dividends from a municipal bond fund).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"85229\",\n \"text\": \"Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"113189\",\n \"text\": \"Similarly to buying property on your own, REITs cannot get to good returns without leveraging. If you buy an investment property 100% cash only - chances are that 10% ROI is a very very optimistic scenario. If you use leveraging (i.e.: take out a mortgage) - you're susceptible to interest rate changes. REITs invest in properties all around all the time. They invest in mortgages themselves as well (In the US, that's the only security REITs can hold without being disqualified). You can't expect all that to be cash-only, there have to be loans and financing involved. When rates go up - financing costs go up. That brings net income down. Simple math. In the US, there's an additional benefit to investing in REIT vs directly holding real estate: taxes. REITs pay dividends, which have preferential (if qualified) taxation. You'll pay capital gains taxes on the dividends if you hold the fund long enough. If you own a rental property directly, your income after all the expenses is taxed at ordinary rates, which would usually be higher. Also, as you mentioned, you can use them as margin, and they're much much more liquid than holding real estate directly. Not to mention you don't need to deal with tenants or periods where you don't have any, or if local real-estate market tanks (while REITs are usually quite diversified in kinds of real estate they hold and areas). On the other hand, if you own real estate, you can leverage it at lower rates than margin (with HELOCs etc), and it provides some safety net in case of a stock market crash (which REITs are somewhat susceptible to). You can also live in your property, if needed, which is something that's hard to do with REITs....\",\n \"title\": \"\"\n },\n {\n \"docid\": \"359515\",\n \"text\": \"A 401-K is something you get through an employer. I recommend getting a self-directed IRA. You can open an IRA with Scottrade with $500 The money you put into an IRA is tax deferred, meaning that you do not have to pay taxes on profits. It may also lower your tax liability. Scottrade has a feature to automatically reinvest any dividends from the securities you own. This feature allows you to avoid commissions on those automatic purchases. Don't try to time the market. Pick a good ETF (exchange traded fund) that pays dividends. It will give you diversification. Avoid the urge to buy and sell constantly. This only gives commissions to the broker.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"403701\",\n \"text\": \"This is really an extended comment on the last paragraph of @BenMiller's answer. When (the manager of) a mutual fund sells securities that the fund holds for a profit, or receives dividends (stock dividends, bond interest, etc.), the fund has the option of paying taxes on that money (at corporate rates) and distributing the rest to shareholders in the fund, or passing on the entire amount (categorized as dividends, qualified dividends, net short-term capital gains, and net long-term capital gains) to the shareholders who then pay taxes on the money that they receive at their own respective tax rates. (If the net gains are negative, i.e. losses, they are not passed on to the shareholders. See the last paragraph below). A shareholder doesn't have to reinvest the distribution amount into the mutual fund: the option of receiving the money as cash always exists, as does the option of investing the distribution into a different mutual fund in the same family, e.g. invest the distributions from Vanguard's S&P 500 Index Fund into Vanguard's Total Bond Index Fund (and/or vice versa). This last can be done without needing a brokerage account, but doing it across fund families will require the money to transit through a brokerage account or a personal account. Such cross-transfers can be helpful in reducing the amounts of money being transferred in re-balancing asset allocations as is recommended be done once or twice a year. Those investing in load funds instead of no-load funds should keep in mind that several load funds waive the load for re-investment of distributions but some funds don't: the sales charge for the reinvestment is pure profit for the fund if the fund was purchased directly or passed on to the brokerage if the fund was purchased through a brokerage account. As Ben points out, a shareholder in a mutual fund must pay taxes (in the appropriate categories) on the distributions from the fund even though no actual cash has been received because the entire distribution has been reinvested. It is worth keeping in mind that when the mutual fund declares a distribution (say $1.22 a share), the Net Asset Value per share drops by the same amount (assuming no change in the prices of the securities that the fund holds) and the new shares issued are at this lower price. That is, there is no change in the value of the investment: if you had $10,000 in the fund the day before the distribution was declared, you still have $10,000 after the distribution is declared but you own more shares in the fund than you had previously. (In actuality, the new shares appear in your account a couple of days later, not immediately when the distribution is declared). In short, a distribution from a mutual fund that is re-invested leads to no change in your net assets, but does increase your tax liability. Ditto for a distribution that is taken as cash or re-invested elsewhere. As a final remark, net capital losses inside a mutual fund are not distributed to shareholders but are retained within the fund to be written off against future capital gains. See also this previous answer or this one.\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":96,"cells":{"query_id":{"kind":"string","value":"1269"},"query":{"kind":"string","value":"The risk of female prisoners harming themselves is ten times that of male prisoners."},"positive_passages":{"kind":"list like","value":[{"docid":"13900610","text":"BACKGROUND Self-harm and suicide are common in prisoners, yet robust information on the full extent and characteristics of people at risk of self-harm is scant. Furthermore, understanding how frequently self-harm is followed by suicide, and in which prisoners this progression is most likely to happen, is important. We did a case-control study of all prisoners in England and Wales to ascertain the prevalence of self-harm in this population, associated risk factors, clustering effects, and risk of subsequent suicide after self-harm. METHODS Records of self-harm incidents in all prisons in England and Wales were gathered routinely between January, 2004, and December, 2009. We did a case-control comparison of prisoners who self-harmed and those who did not between January, 2006, and December, 2009. We also used a Bayesian approach to look at clustering of people who self-harmed. Prisoners who self-harmed and subsequently died by suicide in prison were compared with other inmates who self-harmed. FINDINGS 139,195 self-harm incidents were recorded in 26,510 individual prisoners between 2004 and 2009; 5-6% of male prisoners and 20-24% of female inmates self-harmed every year. Self-harm rates were more than ten times higher in female prisoners than in male inmates. Repetition of self-harm was common, particularly in women and teenage girls, in whom a subgroup of 102 prisoners accounted for 17,307 episodes. In both sexes, self-harm was associated with younger age, white ethnic origin, prison type, and a life sentence or being unsentenced; in female inmates, committing a violent offence against an individual was also a factor. Substantial evidence was noted of clustering in time and location of prisoners who self-harmed (adjusted intra-class correlation 0·15, 95% CI 0·11-0·18). 109 subsequent suicides in prison were reported in individuals who self-harmed; the risk was higher in those who self-harmed than in the general prison population, and more than half the deaths occurred within a month of self-harm. Risk factors for suicide after self-harm in male prisoners were older age and a previous self-harm incident of high or moderate lethality; in female inmates, a history of more than five self-harm incidents within a year was associated with subsequent suicide. INTERPRETATION The burden of self-harm in prisoners is substantial, particularly in women. Self-harm in prison is associated with subsequent suicide in this setting. Prevention and treatment of self-harm in prisoners is an essential component of suicide prevention in prisons. FUNDING Wellcome Trust, National Institute for Health Research, National Offender Management Service, and Department of Health.","title":"Self-harm in prisons in England and Wales: an epidemiological study of prevalence, risk factors, clustering, and subsequent suicide"}],"string":"[\n {\n \"docid\": \"13900610\",\n \"text\": \"BACKGROUND Self-harm and suicide are common in prisoners, yet robust information on the full extent and characteristics of people at risk of self-harm is scant. Furthermore, understanding how frequently self-harm is followed by suicide, and in which prisoners this progression is most likely to happen, is important. We did a case-control study of all prisoners in England and Wales to ascertain the prevalence of self-harm in this population, associated risk factors, clustering effects, and risk of subsequent suicide after self-harm. METHODS Records of self-harm incidents in all prisons in England and Wales were gathered routinely between January, 2004, and December, 2009. We did a case-control comparison of prisoners who self-harmed and those who did not between January, 2006, and December, 2009. We also used a Bayesian approach to look at clustering of people who self-harmed. Prisoners who self-harmed and subsequently died by suicide in prison were compared with other inmates who self-harmed. FINDINGS 139,195 self-harm incidents were recorded in 26,510 individual prisoners between 2004 and 2009; 5-6% of male prisoners and 20-24% of female inmates self-harmed every year. Self-harm rates were more than ten times higher in female prisoners than in male inmates. Repetition of self-harm was common, particularly in women and teenage girls, in whom a subgroup of 102 prisoners accounted for 17,307 episodes. In both sexes, self-harm was associated with younger age, white ethnic origin, prison type, and a life sentence or being unsentenced; in female inmates, committing a violent offence against an individual was also a factor. Substantial evidence was noted of clustering in time and location of prisoners who self-harmed (adjusted intra-class correlation 0·15, 95% CI 0·11-0·18). 109 subsequent suicides in prison were reported in individuals who self-harmed; the risk was higher in those who self-harmed than in the general prison population, and more than half the deaths occurred within a month of self-harm. Risk factors for suicide after self-harm in male prisoners were older age and a previous self-harm incident of high or moderate lethality; in female inmates, a history of more than five self-harm incidents within a year was associated with subsequent suicide. INTERPRETATION The burden of self-harm in prisoners is substantial, particularly in women. Self-harm in prison is associated with subsequent suicide in this setting. Prevention and treatment of self-harm in prisoners is an essential component of suicide prevention in prisons. FUNDING Wellcome Trust, National Institute for Health Research, National Offender Management Service, and Department of Health.\",\n \"title\": \"Self-harm in prisons in England and Wales: an epidemiological study of prevalence, risk factors, clustering, and subsequent suicide\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"14843502","text":"BACKGROUND Self-reported health status in underserved population of prisoners has not been extensively explored. The purposes of this cross-sectional study were to assess self-reported health, quality of life, and access to health services in a sample of male prisoners of Italy. METHODS A total of 908 prisoners received a self-administered anonymous questionnaire pertaining on demographic and detention characteristics, self-reported health status and quality of life, access to health services, lifestyles, and participation to preventive, social, and rehabilitation programs. A total of 650 prisoners agreed to participate in the study and returned the questionnaire. RESULTS Respectively, 31.6% and 43.5% of prisoners reported a poor perceived health status and a poor quality of life, and 60% admitted that their health was worsened or greatly worsened during the prison stay. Older age, lower education, psychiatric disorders, self-reported health problems on prison entry, and suicide attempts within prison were significantly associated with a perceived worse health status. At the time of the questionnaire delivery, 30% of the prisoners self-reported a health problem present on prison entry and 82% present at the time of the survey. Most frequently reported health problems included dental health problems, arthritis or joint pain, eye problems, gastrointestinal diseases, emotional problems, and high blood pressure. On average, prisoners encountered general practitioners six times during the previous year, and the frequency of medical encounters was significantly associated with older age, sentenced prisoners, psychiatric disorders, and self-reported health problems on prison entry. CONCLUSIONS The findings suggest that prisoners have a perceived poor health status, specific care needs and health promotion programs are seldom offered. Programs for correction of risk behaviour and prevention of long-term effects of incarceration on prisoners' health are strongly needed.","title":"Self-reported health status and access to health services in a sample of prisoners in Italy"},{"docid":"20491205","text":"The prison population is increasing and the health problems of prisoners are considerable. Prison is designed with punishment, correction and rehabilitation to the community in mind and these goals may conflict with the aims of health care. A literature review showed that the main issues in prison health care are mental health, substance abuse and communicable diseases. Women prisoners and older prisoners have needs which are distinct from other prisoners. Health promotion and the health of the community outside prisons are desirable aims of prison health care. The delivery of effective health care to prisoners is dependent upon partnership between health and prison services and telemedicine is one possible mode of delivery.","title":"Prison health care: a review of the literature."},{"docid":"34227917","text":"OBJECTIVE To review the literature on mental health and psychiatric morbidity in prison populations and relate findings to a Danish study on remand prisoners. METHOD The literature is reviewed and subdivided in the following section: validity of psychometrics in prison populations, prevalence of psychiatric disorders prior to imprisonment, incidence of psychiatric disorders during imprisonment, psychopathy related to psychiatric comorbidity, dependence syndromes with special emphasis on different administrations of heroin use (smoke vs. injection). The results are compared with a longitudinal Danish study on remand prisoners in either solitary confinement (SC) or non-SC. RESULTS Many factors must be taken into consideration when dealing with prisoners and mental health, e.g. international differences, the prison setting, demographics and methodological issues. The prison populations in general are increasing worldwide. Psychometrics may perform differently in prison populations compared with general populations with the General Health Questionnaire-28 having a low validity in remand prisoners. Psychiatric morbidity including schizophrenia is higher and perhaps increasing in prison populations compared with general populations with dependence syndromes being the most frequent disorders. The early phase of imprisonment is a vulnerable period with a moderately high incidence of adjustment disorders and twice the incidence in SC compared with non-SC. Prevalence of psychopathy is lower in European than North American prisons. Medium to high scores of psychopathy is related to higher psychiatric comorbidity. Opioid dependence is the most frequent drug disorder with subjects using injection representing a more dysfunctional group than subjects using smoke administration. Many mentally ill prisoners remain undetected and undertreated. CONCLUSION There is a growing population of mentally ill prisoners being insufficiently detected and treated.","title":"Mental health in prison populations. A review--with special emphasis on a study of Danish prisoners on remand."},{"docid":"43855756","text":"The future organisation of prison health care 1 recommends that the NHS and the Prison Service work together to plan and provide health care services for prisoners. Whereas previously the Prison Service had this responsibility alone. The NHS will therefore have to take stock of the current level at which prison health care is demanded and provided. A key part of the information base for joint planning therefore includes data on current service utilisation. This paper compares primary care and inpatient health service utilisation data for UK prisoners with health services utilisation data for equivalent community populations. In the community, primary care is provided principally by general practitioners and professions allied to medicine (mostly nurses). Residents in the community have access to the full range of NHS outpatient and inpatient facilities. Within prisons, primary care is provided by medical officers (some of whom are general practitioners), nursing grades and health care officers (who have received some training in health care). Some prisons have their own inpatient facilities (health care centre beds). These provide a low level of inpatient care and do not have a direct equivalent in the community. Prisoners also have access to NHS outpatient and inpatient facilities and to visiting specialists. The prison population has a high turnover and varies from day to day. Because of this, the prison population is expressed as an average daily population during a one year period. …","title":"Use of health services by prison inmates: comparisons with the community."},{"docid":"20326526","text":"This series of studies describes the development of a measure of emotional intelligence based on the model of emotional intelligence developed by Salovey and Mayer [Salovey, P. & Mayer, J. D. (1990). Emotional intelligence. Imagination, Cognition and Personality, 9, 185–211.]. A pool of 62 items represented the different dimensions of the model. A factor analysis of the responses of 346 participants suggested the creation of a 33-item scale. Additional studies showed the 33-item measure to have good internal consistency and testretest reliability. Validation studies showed that scores on the 33-item measure 1. (a) correlated with eight of nine theoretically related constructs, including alexithymia, attention to feelings, clarity of feelings, mood repair, optimism and impulse control; 2. (b) predicted first-year college grades; 3. (c) were significantly higher for therapists than for therapy clients or for prisoners; 4. (d) were significantly higher for females than males, consistent with prior findings in studies of emotional skills; 5. (e) were not related to cognitive ability and 6. (f) were associated with the openness to experience trait of the big five personality dimensions.","title":"DEVELOPMENT AND VALIDATION OF A MEASURE OF EMOTIONAL INTELLIGENCE"},{"docid":"52072815","text":"Summary Background Alcohol use is a leading risk factor for death and disability, but its overall association with health remains complex given the possible protective effects of moderate alcohol consumption on some conditions. With our comprehensive approach to health accounting within the Global Burden of Diseases, Injuries, and Risk Factors Study 2016, we generated improved estimates of alcohol use and alcohol-attributable deaths and disability-adjusted life-years (DALYs) for 195 locations from 1990 to 2016, for both sexes and for 5-year age groups between the ages of 15 years and 95 years and older. Methods Using 694 data sources of individual and population-level alcohol consumption, along with 592 prospective and retrospective studies on the risk of alcohol use, we produced estimates of the prevalence of current drinking, abstention, the distribution of alcohol consumption among current drinkers in standard drinks daily (defined as 10 g of pure ethyl alcohol), and alcohol-attributable deaths and DALYs. We made several methodological improvements compared with previous estimates: first, we adjusted alcohol sales estimates to take into account tourist and unrecorded consumption; second, we did a new meta-analysis of relative risks for 23 health outcomes associated with alcohol use; and third, we developed a new method to quantify the level of alcohol consumption that minimises the overall risk to individual health. Findings Globally, alcohol use was the seventh leading risk factor for both deaths and DALYs in 2016, accounting for 2·2% (95% uncertainty interval [UI] 1·5–3·0) of age-standardised female deaths and 6·8% (5·8–8·0) of age-standardised male deaths. Among the population aged 15–49 years, alcohol use was the leading risk factor globally in 2016, with 3·8% (95% UI 3·2–4·3) of female deaths and 12·2% (10·8–13·6) of male deaths attributable to alcohol use. For the population aged 15–49 years, female attributable DALYs were 2·3% (95% UI 2·0–2·6) and male attributable DALYs were 8·9% (7·8–9·9). The three leading causes of attributable deaths in this age group were tuberculosis (1·4% [95% UI 1·0–1·7] of total deaths), road injuries (1·2% [0·7–1·9]), and self-harm (1·1% [0·6–1·5]). For populations aged 50 years and older, cancers accounted for a large proportion of total alcohol-attributable deaths in 2016, constituting 27·1% (95% UI 21·2–33·3) of total alcohol-attributable female deaths and 18·9% (15·3–22·6) of male deaths. The level of alcohol consumption that minimised harm across health outcomes was zero (95% UI 0·0–0·8) standard drinks per week. Interpretation Alcohol use is a leading risk factor for global disease burden and causes substantial health loss. We found that the risk of all-cause mortality, and of cancers specifically, rises with increasing levels of consumption, and the level of consumption that minimises health loss is zero. These results suggest that alcohol control policies might need to be revised worldwide, refocusing on efforts to lower overall population-level consumption. Funding Bill & Melinda Gates Foundation.","title":"Alcohol use and burden for 195 countries and territories, 1990–2016: a systematic analysis for the Global Burden of Disease Study 2016"},{"docid":"10209731","text":"STUDY OBJECTIVE The aim of the study was to analyse differences in mortality from the main cardiovascular diseases (ischaemic heart disease, hypertensive disease, and cerebrovascular disease) among Chinese, Malays, and Indians in Singapore. DESIGN The study was a survey using national death registration data in Singapore for the five years 1980 to 1984. The underlying cause of death, coded according to the ninth revision of the International Classification of Diseases, was taken for the analyses. SETTING The study was confined to the independent island state of Singapore, population 2.53 million (Chinese 76.5%, Malays 14.8%, Indians 6.4%, Others 2.3%). Death registration is thought to be complete. SUBJECTS All registered deaths in the age range 30-69 years during the study period were analysed by ethnic group. MEASUREMENT AND MAIN RESULTS Indians had higher mortality from ischaemic heart disease than the other ethnic groups in both sexes, with age-standardised relative risks of Indian v Chinese (males 3.8, females 3.4), Indian v Malay (males 1.9, females 1.6), and Malay v Chinese (males 2.0, females 2.2). The excess mortality in Indians declined with age. For hypertensive disease Malays had the highest mortality, with age-standardised relative risks of Malay v Chinese (males 3.4, females 4.4), Malay v Indian (males 2.0, females 2.5), and Indian v Chinese (males 1.6, females 1.6). For cerebrovascular disease there was little ethnic difference except for lower rates in Chinese females, with age-standardised relative risks of Malay v Chinese (males 1.1, females 1.9), Malay v Indian (males 1.0, females 1.1), and Indian v Chinese (males 1.1, females 1.7). CONCLUSIONS There are significant differences in mortality from the three main cardiovascular diseases in the different ethnic groups in Singapore.","title":"Cardiovascular diseases in Chinese, Malays, and Indians in Singapore. I. Differences in mortality."},{"docid":"36202354","text":"Both to address unmet medical needs and to improve industry competitiveness, regulators in both the United States and the European Union have taken bold steps to translate academic research from the university lab to the patient. A pharmaceutical public-private partnership (PPPP), which is a legally binding contract between a private pharmaceutical enterprise and a public research university (or a private university doing research funded with public funds), can be a significant tool to ensure a more efficient payoff in the highly regulated world of pharmaceuticals. In particular, a properly framed binding contract, coupled with respect for positive social norms, can move the parties away from an inefficient prisoners’ dilemma Nash Equilibrium to the Pareto Optimal Frontier. When coupled with appropriate attention to the difficult task of coordinating the actions of interdependent actors, a PPPP arrangement can enhance the likelihood of successful commercialization by flipping the parties’ incentives as compared with more traditional contracts. Because PPPPs are less common in Europe than in the United States, a key purpose of this article is to provide an annotated roadmap that universities, private firms, and EU policy makers can use to create efficient PPPPs to enhance for-profit innovation in the pharmaceutical industry in Europe. A secondary purpose is to suggest amendments to the U.S. laws governing the patenting of government-funded technology to prevent undue burdens on the sharing of certain upstream medical discoveries and research tools. Our analysis is not only comparative; it also combines, we believe for the first time, a game theory and law and management approach to for-profit PPPPs.","title":"Pharmaceutical Public-Private Partnerships in the United States and Europe: Moving from the Bench to the Bedside"},{"docid":"12232678","text":"Recent reports have suggested that birds lack a mechanism of wholesale dosage compensation for the Z sex chromosome. This discovery was rather unexpected, as all other animals investigated with chromosomal mechanisms of sex determination have some method to counteract the effects of gene dosage of the dominant sex chromosome in males and females. Despite the lack of a global mechanism of avian dosage compensation, the pattern of gene expression difference between males and females varies a great deal for individual Z-linked genes. This suggests that some genes may be individually dosage compensated, and that some less-than-global pattern of dosage compensation, such as local or temporal, exists on the avian Z chromosome. We used global gene expression profiling in males and females for both somatic and gonadal tissue at several time points in the life cycle of the chicken to assess the pattern of sex-biased gene expression on the Z chromosome. Average fold-change between males and females varied somewhat among tissue time-point combinations, with embryonic brain samples having the smallest gene dosage effects, and adult gonadal tissue having the largest degree of male bias. Overall, there were no neighborhoods of overall dosage compensation along the Z. Taken together, this suggests that dosage compensation is regulated on the Z chromosome entirely on a gene-by-gene level, and can vary during the life cycle and by tissue type. This regulation may be an indication of how critical a given gene's functionality is, as the expression level for essential genes will be tightly regulated in order to avoid perturbing important pathways and networks with differential expression levels in males and females.","title":"All dosage compensation is local: Gene-by-gene regulation of sex-biased expression on the chicken Z chromosome"},{"docid":"26673492","text":"AIMS Few studies have examined the role of gender and both area-level and individual socio-economic status (SES) as independent predictors of alcohol-related aggression (ARA) in and around licensed venues. METHODS The aim of the present study was to investigate the relationship between gender, area-level SES and individual SES (operationalised as occupational category) and ARA in and around licensed venues. The sample comprised 697 men and 649 women aged 16-47, who completed a patron intercept survey as part of a larger study assessing trends in harm and stakeholders' views surrounding local community level interventions in dealing with alcohol-related problems in the night-time economy. RESULTS Binary logistic regression analyses showed that age, gender, occupational category, area-level SES and level of intoxication at time of interview were all significant predictors of involvement in ARA. Being male doubled the odds of involvement in ARA, while age was a protective factor. Blue collar workers had more than double the odds of ARA involvement of professionals, while those living in the most socio-economically disadvantaged areas were over twice as likely to report experiencing ARA compared to those living in the most advantaged areas. However, assessment of the predictive model by gender revealed that effects of age, occupational category and area-level SES were restricted to male participants, with greater intoxication no longer predictive. CONCLUSIONS ARA among patrons was significantly more likely to occur among men, those in blue collar occupations, and individuals living in low SES areas, suggesting both individual and area-level disadvantage may play a role in ARA.","title":"Demographic Risk Factors for Alcohol-Related Aggression In and Around Licensed Venues."},{"docid":"2138767","text":"AIMS Cardiovascular disease (CVD) is now the most prevalent and debilitating disease affecting the Chinese population. The goal of the present manuscript was to analyse cardiovascular risk factors and the prevalence of non-fatal CVDs from data gathered from the 2007-2008 China National Diabetes and Metabolic Disorders Study. METHODS AND RESULTS A nationally representative sample of 46 239 adults, 20 years of age or older, was randomly recruited using a multistage stratified design method. Lifestyle factors, diagnosis of CVD, stroke, diabetes, and family history of each subject were collected, and an oral glucose tolerance test or a standard meal test was performed. Various non-fatal CVDs were reported by the subjects. SUDAAN software was used to perform all weighted statistical analyses, with P < 0.05 considered statistically significant. The prevalence of coronary heart disease, stroke, and CVDs was 0.74, 1.07, and 1.78% in males; and 0.51, 0.60, and 1.10% in females, respectively. The presence of CVDs increased with age in both males and females. The prevalence of being overweight or obese, hypertension, dyslipidaemia, or hyperglycaemia was 36.67, 30.09, 67.43, and 26.69% in males; and 29.77, 24.79, 63.98, and 23.62% in females, respectively. In the total sample of 46 239 patients, the prevalence of one subject having 1, 2, 3, or ≥4 of the 5 defined risk factors (i.e. smoking, overweight or obese, hypertension, dyslipidaemia, or hyperglycaemia) was 31.17, 27.38, 17.76, and 10.19%, respectively. Following adjustment for gender and age, the odds ratio of CVDs for those who had 1, 2, 3, or ≥4 risk factors was 2.36, 4.24, 4.88, and 7.22, respectively, when compared with patients with no risk factors. CONCLUSION Morbidity attributed to the five defined cardiovascular risk factors was high in the Chinese population, with multiple risk factors present in the same individual. Therefore, reasonable prevention strategies should be designed to attenuate the rapid rise in cardiovascular morbidity.","title":"Prevalence of cardiovascular disease risk factor in the Chinese population: the 2007-2008 China National Diabetes and Metabolic Disorders Study."},{"docid":"1102268","text":"BACKGROUND Suicide is a significant public health issue with almost one million people dying by suicide each year worldwide. Deliberate self harm (DSH) is the single most important risk factor for suicide yet few countries have reliable data on DSH. We developed a national DSH registry in the Republic of Ireland to establish the incidence of hospital-treated DSH at national level and the spectrum and pattern of presentations with DSH and repetition. METHODS AND FINDINGS Between 2003 and 2009, the Irish National Registry of Deliberate Self Harm collected data on DSH presentations to all 40 hospital emergency departments in the country. Data were collected by trained data registration officers using standard methods of case ascertainment and definition. The Registry recorded 75,119 DSH presentations involving 48,206 individuals. The total incidence rate fell from 209 (95% CI: 205-213) per 100,000 in 2003 to 184 (95% CI: 180-189) per 100,000 in 2006 and increased again to 209 (95% CI: 204-213) per 100,000 in 2009. The most notable annual changes were successive 10% increases in the male rate in 2008 and 2009. There was significant variation by age with peak rates in women in the 15-19 year age group (620 (95% CI: 605-636) per 100,000), and in men in the 20-24 age group (427 (95% CI: 416-439) per 100,000). Repetition rates varied significantly by age, method of self harm and number of previous episodes. CONCLUSIONS Population-based data on hospital-treated DSH represent an important index of the burden of mental illness and suicide risk in the community. The increased DSH rate in Irish men in 2008 and 2009 coincided with the advent of the economic recession in Ireland. The findings underline the need for developing effective interventions to reduce DSH repetition rates as a key priority for health systems.","title":"The Incidence and Repetition of Hospital-Treated Deliberate Self Harm: Findings from the World's First National Registry"},{"docid":"20280410","text":"Inherited mutations in the gene BRCA2 predispose carriers to early onset breast cancer, but such mutations account for fewer than 2% of all cases in East Anglia. It is likely that low penetrance alleles explain the greater part of inherited susceptibility to breast cancer; polymorphic variants in strongly predisposing genes, such as BRCA2, are candidates for this role. BRCA2 is thought to be involved in DNA double strand break-repair. Few mice in which Brca2 is truncated survive to birth; of those that do, most are male, smaller than their normal littermates and have high cancer incidence. Here we show that a common human polymorphism (N372H) in exon 10 of BRCA2 confers an increased risk of breast cancer: the HH homozygotes have a 1.31-fold (95% CI, 1.07–1.61) greater risk than the NN group. Moreover, in normal female controls of all ages there is a significant deficiency of homozygotes compared with that expected from Hardy-Weinberg equilibrium, whereas in males there is an excess of homozygotes: the HH group has an estimated fitness of 0.82 in females and 1.38 in males. Therefore, this variant of BRCA2 appears also to affect fetal survival in a sex-dependent manner.","title":"A common variant in BRCA2 is associated with both breast cancer risk and prenatal viability"},{"docid":"6647414","text":"IMPORTANCE The 2008 Physical Activity Guidelines for Americans recommended a minimum of 75 vigorous-intensity or 150 moderate-intensity minutes per week (7.5 metabolic-equivalent hours per week) of aerobic activity for substantial health benefit and suggested additional benefits by doing more than double this amount. However, the upper limit of longevity benefit or possible harm with more physical activity is unclear. OBJECTIVE To quantify the dose-response association between leisure time physical activity and mortality and define the upper limit of benefit or harm associated with increased levels of physical activity. DESIGN, SETTING, AND PARTICIPANTS We pooled data from 6 studies in the National Cancer Institute Cohort Consortium (baseline 1992-2003). Population-based prospective cohorts in the United States and Europe with self-reported physical activity were analyzed in 2014. A total of 661,137 men and women (median age, 62 years; range, 21-98 years) and 116,686 deaths were included. We used Cox proportional hazards regression with cohort stratification to generate multivariable-adjusted hazard ratios (HRs) and 95% CIs. Median follow-up time was 14.2 years. EXPOSURES Leisure time moderate- to vigorous-intensity physical activity. MAIN OUTCOMES AND MEASURES The upper limit of mortality benefit from high levels of leisure time physical activity. RESULTS Compared with individuals reporting no leisure time physical activity, we observed a 20% lower mortality risk among those performing less than the recommended minimum of 7.5 metabolic-equivalent hours per week (HR, 0.80 [95% CI, 0.78-0.82]), a 31% lower risk at 1 to 2 times the recommended minimum (HR, 0.69 [95% CI, 0.67-0.70]), and a 37% lower risk at 2 to 3 times the minimum (HR, 0.63 [95% CI, 0.62-0.65]). An upper threshold for mortality benefit occurred at 3 to 5 times the physical activity recommendation (HR, 0.61 [95% CI, 0.59-0.62]); however, compared with the recommended minimum, the additional benefit was modest (31% vs 39%). There was no evidence of harm at 10 or more times the recommended minimum (HR, 0.69 [95% CI, 0.59-0.78]). A similar dose-response relationship was observed for mortality due to cardiovascular disease and to cancer. CONCLUSIONS AND RELEVANCE Meeting the 2008 Physical Activity Guidelines for Americans minimum by either moderate- or vigorous-intensity activities was associated with nearly the maximum longevity benefit. We observed a benefit threshold at approximately 3 to 5 times the recommended leisure time physical activity minimum and no excess risk at 10 or more times the minimum. In regard to mortality, health care professionals should encourage inactive adults to perform leisure time physical activity and do not need to discourage adults who already participate in high-activity levels.","title":"Leisure time physical activity and mortality: a detailed pooled analysis of the dose-response relationship."},{"docid":"41380943","text":"During embryonic development, gonadal steroid hormones (androgens and estrogens) are thought to organize the sexual differentiation of the brain in the heterogametic sexes of higher vertebrates (males in mammals, females in birds). Brain differentiation of the homogametic sexes is thought to proceed by default, not requiring sex hormones for sex-specific organization. In gallinaceous birds such as the Japanese quail, female brain organization is thought to develop via estrogen-dependent demasculinization of a default male brain phenotype. We performed male donor-to-female host (MF), female-to-male (FM), male-to-male (MM), and female-to-female (FF) isotopic, isochronic transplantation of the forebrain primordium in Japanese quail embryos before gonadal differentiation had occurred; brain chimeras had a forebrain (including the hypothalamus) originating exclusively from donor cells. MM, FF, and MF chimeras all showed sexual behavior governed by the genetic sex of the host. In contrast, FM chimeras (genetically female forebrain, all other tissues genetically male) showed no mounting and only rudimentary crowing behavior. Although MM, FF, MF, and FM chimeras all showed host-typical production of steroid hormones during embryonic life, only FM chimeras were hypogonadal, had atypical low levels of circulating testosterone in adulthood, and showed reduction (crowing) or absence (mounting) of reproductive behaviors. Morphological features of the medial preoptic nucleus (a sexually dimorphic brain area) also were not male-like in FM males. These data demonstrate a brain-intrinsic, genetically determined component that organizes the sex-typical production of gonadal hormones in adulthood and call for a reevaluation of the mechanisms underlying brain sexual differentiation in other higher-vertebrate species.","title":"Male Japanese quails with female brains do not show male sexual behaviors."},{"docid":"38793927","text":"A major clinical manifestation of bone cancers is bone destruction. It is widely accepted that this destruction is not caused by the malignant cells themselves, but by osteoclasts, multinucleated cells of monocytic origin that are considered to be the only cells able to degrade bone. The present study demonstrates that bone-resorbing osteoclasts from myeloma patients contain nuclei with translocated chromosomes of myeloma B-cell clone origin, in addition to nuclei without these translocations, by using combined FISH and immunohistochemistry on bone sections. These nuclei of malignant origin are transcriptionally active and appear fully integrated amongst the other nuclei. The contribution of malignant nuclei to the osteoclast population analysed in this study was greater than 30%. Osteoclast-myeloma clone hybrids contained more nuclei than normal osteoclasts and their occurrence correlated with the proximity of myeloma cells. Similar hybrid cells were generated in myeloma cell-osteoclast co-cultures, as revealed by tracing myeloma nuclei using translocations, bromo-deoxyuridine, or the Y chromosome of male myeloma cells in female osteoclasts. These observations indicate that hybrid cells can originate through fusion between myeloma cells and osteoclasts. In conclusion, malignant cells contribute significantly to the formation of bone-resorbing osteoclasts in multiple myeloma. Osteoclast-myeloma clone hybrids reflect a previously unrecognized mechanism of bone destruction in which malignant cells participate directly. The possibility that malignant cells corrupt host cells by the transfer of malignant DNA may have been underestimated to date in cancer research.","title":"Osteoclast nuclei of myeloma patients show chromosome translocations specific for the myeloma cell clone: a new type of cancer-host partnership?"},{"docid":"70633421","text":"The incidence of malignant neoplasms among 11 483 male and 34 618 female individuals with rheumatoid arthritis was studied using two separate nationwide data registers covering the whole Finnish population: the Social Insurance Institution9s Population Data Register, which includes information on medication for certain chronic diseases, and the Finnish Cancer Registry, with data on all cancer patients diagnosed in Finland. The follow-up comprised a total of 213 911 person years. The total incidence of all malignant neoplasms was higher in males and on the level expected in females. The expected number of cases of leukemia, lymphomas, Hodgkin9s disease and myeloma in both sexes was 59·6 as compared with the 130 cases observed. This difference is statistically highly significant (p","title":"Excess risk of lymphomas, leukemia and myeloma in patients with rheumatoid arthritis"},{"docid":"24510595","text":"PURPOSE Patients with daily or near-daily headaches are commonly seen in neurology practices and in headache subspecialty centers, but there is little information on the prevalence of this condition in the general population. We present the first US-based study describing the prevalence and characteristics of frequent headache in the general population. METHODS In Baltimore County, Maryland, 13 343 individuals 18 to 65 years of age were selected by random-digit dialing and interviewed by telephone about their headaches. Subjects reporting 180 or more headaches per year were classified as having frequent headache. Three mutually exclusive subtypes of frequent headache were identified: frequent headache with migrainous features, chronic tension-type headache, and unclassified frequent headache. RESULTS The overall prevalence of frequent headache was 4.1% (5.0% female, 2.8% male; 1.8:1 female to male ratio). Frequent headache was 33% more common in Caucasians (4.4%) than in African Americans (3.3%). In both males and females, prevalence was highest in the lowest educational category. Among frequent headache sufferers, more than half (52% female, 56% male) met criteria for chronic tension-type headache, almost one third (33% female, 25% male) met criteria for frequent headache with migrainous features, and the remainder (15% female, 19% male) were unclassified. Overall, 30% of female and 25% of male frequent headache sufferers met International Headache Society (IHS) criteria for migraine (with or without aura). CONCLUSIONS Frequent headache is common in the general population and is more prevalent in Caucasians and in those with less than a high school education. Chronic tension-type headache is more common than frequent headache with migrainous features, though the latter is more disabling. Although more common in females than males, the female preponderance of frequent headache is less marked than in migraine. The sex ratio varies by frequent headache subtype.","title":"Prevalence of frequent headache in a population sample."},{"docid":"12443371","text":"OBJECTIVE To evaluate the association between apolipoprotein E (APOE) polymorphisms (E2, C/T Arg158Cys; E4, T/C Cys112Arg; and promoter, g-219t) and the history of concussion in college athletes. We hypothesized that carrying 1 or more APOE rare (or minor) allele assessed in this study would be associated with having a history of 1 or more concussions. DESIGN Multicenter cross-sectional study. SETTING University athletic facilities. PARTICIPANTS One hundred ninety-six male football (n = 163) and female soccer (n = 33) college athletes volunteered. INTERVENTIONS Written concussion history questionnaire and saliva samples for genotyping. MAIN OUTCOME MEASURES Self-reported history of a documented concussion and rare APOE genotype (E2, E4, promoter). RESULTS There was a significant association (Wald χ² = 3.82; P = 0.05; odds ratio = 9.8) between carrying all APOE rare alleles and the history of a previous concussion. There was also a significant association (Wald χ² = 3.96, P = 0.04, odds ratio = 8.4) between carrying the APOE promoter minor allele and experiencing 2 or more concussions. CONCLUSIONS Carriers of all 3 APOE rare (or minor) alleles assessed in this study were nearly 10 times more likely to report a previous concussion and may be at a greater risk of concussion versus noncarriers. Promoter minor allele carriers were 8.4 times more likely to report multiple concussions and may be at a greater risk of multiple concussions versus noncarriers. Research involving larger samples of individuals with multiple concussions and carriers of multiple APOE rare alleles is warranted.","title":"Apolipoprotein E genotype and concussion in college athletes."},{"docid":"26067999","text":"The U.S. Preventive Services Task Force (USPSTF) makes recommendations about the effectiveness of specific preventive care services for patients without related signs or symptoms. It bases its recommendations on the evidence of both the benefits and harms of the service and an assessment of the balance. The USPSTF does not consider the costs of providing a service in this assessment. The USPSTF recognizes that clinical decisions involve more considerations than evidence alone. Clinicians should understand the evidence but individualize decision making to the specific patient or situation. Similarly, the USPSTF notes that policy and coverage decisions involve considerations in addition to the evidence of clinical benefits and harms. Summary of Recommendation and Evidence The USPSTF recommends annual screening for lung cancer with low-dose computed tomography (LDCT) in adults aged 55 to 80 years who have a 30 pack-year smoking history and currently smoke or have quit within the past 15 years. Screening should be discontinued once a person has not smoked for 15 years or develops a health problem that substantially limits life expectancy or the ability or willingness to have curative lung surgery. (B recommendation) See the Clinical Considerations section for suggestions for implementation in practice. See the Figure for a summary of the recommendation and suggestions for clinical practice. Figure. Screening for lung cancer: clinical summary of U.S. Preventive Services Task Force recommendation. Appendix Table 1 describes the USPSTF grades, and Appendix Table 2 describes the USPSTF classification of levels of certainty about net benefit. Appendix Table 1. What the USPSTF Grades Mean and Suggestions for Practice Appendix Table 2. USPSTF Levels of Certainty Regarding Net Benefit Supplement. Consumer Fact Sheet. Rationale Importance Lung cancer is the third most common cancer and the leading cause of cancer-related death in the United States (1). The most important risk factor for lung cancer is smoking, which results in approximately 85% of all U.S. lung cancer cases (2). Although the prevalence of smoking has decreased, approximately 37% of U.S. adults are current or former smokers (2). The incidence of lung cancer increases with age and occurs most commonly in persons aged 55 years or older. Increasing age and cumulative exposure to tobacco smoke are the 2 most common risk factors for lung cancer. Lung cancer has a poor prognosis, and nearly 90% of persons with lung cancer die of the disease. However, early-stage nonsmall cell lung cancer (NSCLC) has a better prognosis and can be treated with surgical resection. Detection Most lung cancer cases are NSCLC, and most screening programs focus on the detection and treatment of early-stage NSCLC. Although chest radiography and sputum cytologic evaluation have been used to screen for lung cancer, LDCT has greater sensitivity for detecting early-stage cancer (3). Benefits of Detection and Early Treatment Although lung cancer screening is not an alternative to smoking cessation, the USPSTF found adequate evidence that annual screening for lung cancer with LDCT in a defined population of high-risk persons can prevent a substantial number of lung cancerrelated deaths. Direct evidence from a large, well-conducted, randomized, controlled trial (RCT) provides moderate certainty of the benefit of lung cancer screening with LDCT in this population (4). The magnitude of benefit to the person depends on that person's risk for lung cancer because those who are at highest risk are most likely to benefit. Screening cannot prevent most lung cancerrelated deaths, and smoking cessation remains essential. Harms of Detection and Early Intervention and Treatment The harms associated with LDCT screening include false-negative and false-positive results, incidental findings, overdiagnosis, and radiation exposure. False-positive LDCT results occur in a substantial proportion of screened persons; 95% of all positive results do not lead to a diagnosis of cancer. In a high-quality screening program, further imaging can resolve most false-positive results; however, some patients may require invasive procedures. The USPSTF found insufficient evidence on the harms associated with incidental findings. Overdiagnosis of lung cancer occurs, but its precise magnitude is uncertain. A modeling study performed for the USPSTF estimated that 10% to 12% of screen-detected cancer cases are overdiagnosedthat is, they would not have been detected in the patient's lifetime without screening. Radiation harms, including cancer resulting from cumulative exposure to radiation, vary depending on the age at the start of screening; the number of scans received; and the person's exposure to other sources of radiation, particularly other medical imaging. USPSTF Assessment The USPSTF concludes with moderate certainty that annual screening for lung cancer with LDCT is of moderate net benefit in asymptomatic persons who are at high risk for lung cancer based on age, total cumulative exposure to tobacco smoke, and years since quitting smoking. The moderate net benefit of screening depends on limiting screening to persons who are at high risk, the accuracy of image interpretation being similar to that found in the NLST (National Lung Screening Trial), and the resolution of most false-positive results without invasive procedures (4). Clinical Considerations Patient Population Under Consideration The risk for lung cancer increases with age and cumulative exposure to tobacco smoke and decreases with time since quitting smoking. The best evidence for the benefit of screening comes from the NLST, which enrolled adults aged 55 to 74 years who had at least a 30 pack-year smoking history and were current smokers or had quit within the past 15 years. As with all screening trials, the NLST tested a specific intervention over a finite period. Because initial eligibility extended through age 74 years and participants received 3 annual screening computed tomographic scans, the oldest participants in the trial were aged 77 years. The USPSTF used modeling studies to predict the benefits and harms of screening programs that use different screening intervals, age ranges, smoking histories, and times since quitting. A program that annually screens adults aged 55 to 80 years who have a 30 pack-year smoking history and currently smoke or have quit within the past 15 years is projected to have a reasonable balance of benefits and harms. The model assumes that persons who achieve 15 years of smoking cessation during the screening program discontinue screening. This model predicts the outcomes of continuing the screening program used in the NLST through age 80 years. Screening may not be appropriate for patients with substantial comorbid conditions, particularly those at the upper end of the screening age range. The NLST excluded persons who were unlikely to complete curative lung cancer surgery and those with medical conditions that posed a substantial risk for death during the 8-year trial. The baseline characteristics of the NLST showed a relatively healthy sample, and fewer than 10% of enrolled participants were older than 70 years (5). Persons with serious comorbid conditions may experience net harm, no net benefit, or at least substantially less net benefit. Similarly, persons who are unwilling to have curative lung surgery are unlikely to benefit from a screening program. Assessment of Risk Age, total exposure to tobacco smoke, and years since quitting smoking are important risk factors for lung cancer and were used to determine eligibility in the NLST. Other risk factors include specific occupational exposures, radon exposure, family history, and history of pulmonary fibrosis or chronic obstructive lung disease. The incidence of lung cancer is relatively low in persons younger than 50 years but increases with age, especially after age 60 years. In current and former smokers, age-specific incidence rates increase with age and cumulative exposure to tobacco smoke. Smoking cessation substantially reduces a person's risk for developing and dying of lung cancer. Among persons enrolled in the NLST, those who were at highest risk because of additional risk factors or a greater cumulative exposure to tobacco smoke experienced most of the benefit (6). A validated multivariate model showed that persons in the highest 60% of risk accounted for 88% of all deaths preventable by screening. Screening Tests Low-dose computed tomography has shown high sensitivity and acceptable specificity for the detection of lung cancer in high-risk persons. Chest radiography and sputum cytologic evaluation have not shown adequate sensitivity or specificity as screening tests. Therefore, LDCT is currently the only recommended screening test for lung cancer. Treatment Surgical resection is the current standard of care for localized NSCLC. This type of cancer is treated with surgical resection when possible and also with radiation and chemotherapy. Annual LDCT screening may not be useful for patients with life-limiting comorbid conditions or poor functional status who may not be candidates for surgery. Other Approaches to Prevention Smoking cessation is the most important intervention to prevent NSCLC. Advising smokers to stop smoking and preventing nonsmokers from being exposed to tobacco smoke are the most effective ways to decrease the morbidity and mortality associated with lung cancer. Current smokers should be informed of their continuing risk for lung cancer and offered cessation treatments. Screening with LDCT should be viewed as an adjunct to tobacco cessation interventions. Useful Resources Clinicians have many resources to help patients stop smoking. The Centers for Disease Control and Prevention has developed a Web site with many such resources, including information on tobacco quit lines, available in several languages (www.cdc.gov/tobacco/campaign/tips). Quit l","title":"Screening for Lung Cancer: U.S. Preventive Services Task Force Recommendation Statement"},{"docid":"20610390","text":"OBJECTIVES To investigate incidence, mortality and case survival trends for cancer of unknown primary site (CUP) and consider clinical implications. METHOD South Australian Cancer Registry data were used to calculate age-standardised incidence and mortality rates from 1977 to 2004. Disease-specific survivals, socio-demographic, histological and secular predictors of CUP, compared with cancers of known primary site, and of CUP histological types, using multivariable logistic regression were investigated. RESULTS Incidence and mortality rates increased approximately 60% between 1977--80 and 1981--84. Rates peaked in 1993--96. Male to female incidence and mortality rate ratios approximated 1.3:1. Incidence and mortality rates increased with age. The odds of unspecified histological type, compared with the more common adenocarcinomas, were higher for males than females, non-metropolitan residents, low socio-economic areas, and for 1977--88 than subsequent diagnostic periods. CUP represented a higher proportion of cancers in Indigenous patients. Case survival was 7% at 10 years from diagnosis. Factors predictive of lower case survival included older age, male sex, Indigenous status, lower socio-economic status, and unspecified histology type. CONCLUSION Results point to poor CUP outcomes, but with a modest improvement in survival. The study identifies socio-demographic groups at elevated risk of CUP and of worse treatment outcomes where increased research and clinical attention are required.","title":"Exploring the epidemiological characteristics of cancers of unknown primary site in an Australian population: implications for research and clinical care."},{"docid":"2787558","text":"BACKGROUND Lifestyle factors including cigarette smoking, alcohol consumption and nutritional habits impact on health, wellness, and the risk of chronic diseases. In the areas of in-vitro fertilization (IVF) and pregnancy, lifestyle factors influence oocyte production, fertilization rates, pregnancy and pregnancy loss, while chronic, low-grade oxidative stress may underlie poor outcomes for some IVF cases. METHODS Here, we review the current literature and present some original, previously unpublished data, obtained from couples attending the PIVET Medical Centre in Western Australia. RESULTS During the study, 80 % of females and 70 % of male partners completed a 1-week diary documenting their smoking, alcohol and fruit and vegetable intake. The subsequent clinical outcomes of their IVF treatment such as quantity of oocytes collected, fertilization rates, pregnancy and pregnancy loss were submitted to multiple regression analysis, in order to investigate the relationship between patients, treatment and the recorded lifestyle factors. Of significance, it was found that male smoking caused an increased risk of pregnancy loss (p = 0.029), while female smoking caused an adverse effect on ovarian reserve. Both alcohol consumption (β = 0.074, p < 0.001) and fruit and vegetable consumption (β = 0.034, p < 0.001) had positive effects on fertilization. CONCLUSION Based on our results and the current literature, there is an important impact of lifestyle factors on IVF clinical outcomes. Currently, there are conflicting results regarding other lifestyle factors such as nutritional habits and alcohol consumption, but it is apparent that chronic oxidative stress induced by lifestyle factors and poor nutritional habits associate with a lower rate of IVF success.","title":"The effect of cigarette smoking, alcohol consumption and fruit and vegetable consumption on IVF outcomes: a review and presentation of original data"},{"docid":"13230773","text":"CONTEXT Population surveys indicate that physical activity levels are low in the United States. One consequence of inactivity, low cardiorespiratory fitness, is an established risk factor for cardiovascular disease (CVD) morbidity and mortality, but the prevalence of cardiorespiratory fitness has not been quantified in representative US population samples. OBJECTIVES To describe the prevalence of low fitness in the US population aged 12 through 49 years and to relate low fitness to CVD risk factors in this population. DESIGN, SETTING, AND PARTICIPANTS Inception cohort study using data from the cross-sectional nationally representative National Health and Nutrition Examination Survey 1999-2002. Participants were adolescents (aged 12-19 years; n = 3110) and adults (aged 20-49 years; n = 2205) free from previously diagnosed CVD who underwent submaximal graded exercise treadmill testing to achieve at least 75% to 90% of their age-predicted maximum heart rate. Maximal oxygen consumption (VO2max) was estimated by measuring the heart rate response to reference levels of submaximal work. MAIN OUTCOME MEASURES Low fitness defined using percentile cut points of estimated VO2max from existing external referent populations; anthropometric and other CVD risk factors measured according to standard methods. RESULTS Low fitness was identified in 33.6% of adolescents (approximately 7.5 million US adolescents) and 13.9% of adults (approximately 8.5 million US adults); the prevalence was similar in adolescent females (34.4%) and males (32.9%) (P = .40) but was higher in adult females (16.2%) than in males (11.8%) (P = .03). Non-Hispanic blacks and Mexican Americans were less fit than non-Hispanic whites. In all age-sex groups, body mass index and waist circumference were inversely associated with fitness; age- and race-adjusted odds ratios of overweight or obesity (body mass index > or =25) ranged from 2.1 to 3.7 (P<.01 for all), comparing persons with low fitness with those with moderate or high fitness. Total cholesterol levels and systolic blood pressure were higher and levels of high-density lipoprotein cholesterol were lower among participants with low vs high fitness. CONCLUSION Low fitness in adolescents and adults is common in the US population and is associated with an increased prevalence of CVD risk factors.","title":"Prevalence and cardiovascular disease correlates of low cardiorespiratory fitness in adolescents and adults."},{"docid":"34228604","text":"Females live longer than males in many species, including humans. We have traced a possible explanation for this phenomenon to the beneficial action of estrogens, which bind to estrogen receptors and increase the expression of longevity-associated genes, including those encoding the antioxidant enzymes superoxide dismutase and glutathione peroxidase. As a result, mitochondria from females produce fewer reactive oxygen species than those from males. Administering estrogens has serious drawbacks, however--they are feminizing (and thus cannot be administered to males) and may increase the incidence of serious diseases such as uterine cancer in postmenopausal women. Phytoestrogens, which are present in soy or wine, may have some of the favorable effects of estrogens without their undesirable effects. Study of gender differences in longevity may help us to understand the basic processes of aging and to devise practical strategies to increase the longevity of both females and males.","title":"Why females live longer than males: control of longevity by sex hormones."},{"docid":"36178047","text":"The same 15 male Wistar rats at the ages of 2.5, 6, 10, 14, 18, and 22 months were successively randomly mated with 2.5-month-old females. In a separate experiment, 15 male Wistar rats at the age of 2.5 months and 15 at the age of 23 months were simultaneously randomly mated with 2.5-month-old females. Offspring were evaluated in regard to the mean number per litter, sex ratio, frequency of gross external malformations, growth pattern, and mortality in the first 13 weeks of life and reproductive capacity at 13 weeks of age. They were also evaluated for spontaneous activity and emotionality with an open field test and for learning capacity with an avoidance conditioning test, both carried out between 10 and 13 weeks of age. Only learning capacity of the offspring, expressed in percentage of success for male or female, decreased consistently and significantly as the father's age increased. But females did not seem to be affected in the same way as males. The genetic implications are briefly discussed.","title":"Decrease of learning capacity in offspring with increasing paternal age in the rat."},{"docid":"24724242","text":"BACKGROUND The absolute risk of fractures in renal transplant patients is 3 times that of matched controls. Most of the symptomatic fractures are peripheral, suggesting a greater compromise of cortical bone. Peripheral quantitative computed tomography (pQCT) is a new imaging technique that allows separate noninvasive evaluations of cortical and trabecular bones. We investigated cortical bone by pQCT in 12 renal transplant patients (seven men and five women) for comparison with 27 normal controls. METHODS pQCT (XCT 960, Stratec, Pforheim, Germany) was performed upon the distal radius of the nondominant forearm (15% the length of the ulna, proximal from the radius end plate). We evaluated total and cortical bone mineral density (TBMD, cBMD), total (cross-sectional) and cortical area (TA, cA), cortical thickness (cThk), endosteal and periosteal circumferences, and the buckling ratio (r/cThK). RESULTS Compared with normal controls transplant patients as a whole showed a significant increase in TA, in endosteal circumference (P < .001), and in the buckling ratio (P < .001) with a significant reduction in cThK (P < .001). Female patients had a marked decrease in cA (51.4 vs 69.3 [pixel n]; P < .0001) and cThK (2.08 vs 2.78 mm; P < .0001). Male patients also had a decrease in cThK (2.54 vs 3.30 mm; P = .0001) and an increase in endosteal perimeter (31.2 vs 26.4 mm; P < .0001). Total time on dialysis prior to renal graft correlated negatively with cortical thickness (r = .62; P < .01). CONCLUSIONS Our results suggest that a marked thinning of cortical bone may explain the increased incidence of peripheral fractures among renal transplant patients.","title":"Evaluation of cortical bone by peripheral quantitative computed tomography in renal transplant recipients."},{"docid":"7209559","text":"CONTEXT The incidence of distal forearm fractures in children peaks around the time of the pubertal growth spurt, possibly because physical activity increases at the time of a transient deficit in cortical bone mass due to the increased calcium demand during maximal skeletal growth. Changes in physical activity or diet may therefore influence risk of forearm fracture. OBJECTIVE To determine whether there has been a change in the incidence of distal forearm fractures in children in recent years. DESIGN, SETTING, AND PATIENTS Population-based study among Rochester, Minn, residents younger than 35 years with distal forearm fractures in 1969-1971, 1979-1981, 1989-1991, and 1999-2001. MAIN OUTCOME MEASURE Estimated incidence of distal forearm fractures in 4 time periods. RESULTS Comparably age- and sex-adjusted annual incidence rates per 100 000 increased from 263.3 (95% confidence interval [CI], 231.1-295.4) in 1969-1971 to 322.3 (95% CI, 285.3-359.4) in 1979-1981 and to 399.8 (95% CI, 361.0-438.6) in 1989-1991 before leveling off at 372.9 (95% CI, 339.1-406.7) in 1999-2001. Age-adjusted incidence rates per 100 000 were 32% greater among male residents in 1999-2001 compared with 1969-1971 (409.4 [95% CI, 359.9-459.0] vs 309.4 [95% CI, 259.3-359.5]; P =.01) and 56% greater among female residents in the same time periods (334.3 [95% CI, 288.6-380.1] vs 214.6 [95% CI, 174.9-254.4]; P<.001). The peak incidence and greatest increase occurred between ages 11 and 14 years in boys and 8 and 11 years in girls. CONCLUSIONS There has been a statistically significant increase in the incidence of distal forearm fractures in children and adolescents, but whether this is due to changing patterns of physical activity, decreased bone acquisition due to poor calcium intake, or both is unclear at present. Given the large number of childhood fractures, however, studies are needed to define the cause(s) of this increase.","title":"Incidence of childhood distal forearm fractures over 30 years: a population-based study."},{"docid":"15669393","text":"Transient activation of estrogen receptors (ER) in the developing brain during a limited perinatal \"window of time\" is recognized as a key mechanism of defeminization of neural control of reproductive function and sexual behavior. Two major ER isoforms, alpha and beta, are present in neural circuits that govern ovarian cycle and sexual behavior. Using highly selective ER agonists, this study provides the first evidence for distinct contribution of individual ER isoforms to the process of estrogen dependent defeminization. Neonatal activation of the ERalpha in female rats resulted in abrogation of cyclic ovarian activity and female sexual behavior in adulthood. These effects are associated with male-like alterations in the morphology of the anteroventral periventricular (AVPV) and sexually dimorphic nucleus of the preoptic area (SDN-POA), as well as refractoriness to estrogen-mediated induction of sexual receptivity. Exposure to an ERbeta-selective agonist induced persistent estrus and had a strong defeminizing effect on the hypothalamic gonadotropin \"surge generator\" AVPV. However, neonatal ERbeta activation failed to alter female sexual behavior, responsiveness to estrogens and morphometric features of the behaviorally relevant SDN-POA. Thus, although co-present in several brain regions involved in the control of female reproductive function, ER isoforms convey different, and probably not synergistic, chemical signals in the course of neonatal sex-specific brain organization.","title":"brain organization"},{"docid":"7988832","text":"Epigenetic processes play a key role in orchestrating transcriptional regulation during development. The importance of DNA methylation in fetal brain development is highlighted by the dynamic expression of de novo DNA methyltransferases during the perinatal period and neurodevelopmental deficits associated with mutations in the methyl-CpG binding protein 2 (MECP2) gene. However, our knowledge about the temporal changes to the epigenome during fetal brain development has, to date, been limited. We quantified genome-wide patterns of DNA methylation at ∼ 400,000 sites in 179 human fetal brain samples (100 male, 79 female) spanning 23 to 184 d post-conception. We identified highly significant changes in DNA methylation across fetal brain development at >7% of sites, with an enrichment of loci becoming hypomethylated with fetal age. Sites associated with developmental changes in DNA methylation during fetal brain development were significantly underrepresented in promoter regulatory regions but significantly overrepresented in regions flanking CpG islands (shores and shelves) and gene bodies. Highly significant differences in DNA methylation were observed between males and females at a number of autosomal sites, with a small number of regions showing sex-specific DNA methylation trajectories across brain development. Weighted gene comethylation network analysis (WGCNA) revealed discrete modules of comethylated loci associated with fetal age that are significantly enriched for genes involved in neurodevelopmental processes. This is, to our knowledge, the most extensive study of DNA methylation across human fetal brain development to date, confirming the prenatal period as a time of considerable epigenomic plasticity.","title":"Methylomic trajectories across human fetal brain development."},{"docid":"4388470","text":"In the mammalian model of sex determination, embryos are considered to be sexually indifferent until the transient action of a sex-determining gene initiates gonadal differentiation. Although this model is thought to apply to all vertebrates, this has yet to be established. Here we have examined three lateral gynandromorph chickens (a rare, naturally occurring phenomenon in which one side of the animal appears male and the other female) to investigate the sex-determining mechanism in birds. These studies demonstrated that gynandromorph birds are genuine male:female chimaeras, and indicated that male and female avian somatic cells may have an inherent sex identity. To test this hypothesis, we transplanted presumptive mesoderm between embryos of reciprocal sexes to generate embryos containing male:female chimaeric gonads. In contrast to the outcome for mammalian mixed-sex chimaeras, in chicken mixed-sex chimaeras the donor cells were excluded from the functional structures of the host gonad. In an example where female tissue was transplanted into a male host, donor cells contributing to the developing testis retained a female identity and expressed a marker of female function. Our study demonstrates that avian somatic cells possess an inherent sex identity and that, in birds, sexual differentiation is substantively cell autonomous.","title":"Somatic sex identity is cell-autonomous in the chicken"}],"string":"[\n {\n \"docid\": \"14843502\",\n \"text\": \"BACKGROUND Self-reported health status in underserved population of prisoners has not been extensively explored. The purposes of this cross-sectional study were to assess self-reported health, quality of life, and access to health services in a sample of male prisoners of Italy. METHODS A total of 908 prisoners received a self-administered anonymous questionnaire pertaining on demographic and detention characteristics, self-reported health status and quality of life, access to health services, lifestyles, and participation to preventive, social, and rehabilitation programs. A total of 650 prisoners agreed to participate in the study and returned the questionnaire. RESULTS Respectively, 31.6% and 43.5% of prisoners reported a poor perceived health status and a poor quality of life, and 60% admitted that their health was worsened or greatly worsened during the prison stay. Older age, lower education, psychiatric disorders, self-reported health problems on prison entry, and suicide attempts within prison were significantly associated with a perceived worse health status. At the time of the questionnaire delivery, 30% of the prisoners self-reported a health problem present on prison entry and 82% present at the time of the survey. Most frequently reported health problems included dental health problems, arthritis or joint pain, eye problems, gastrointestinal diseases, emotional problems, and high blood pressure. On average, prisoners encountered general practitioners six times during the previous year, and the frequency of medical encounters was significantly associated with older age, sentenced prisoners, psychiatric disorders, and self-reported health problems on prison entry. CONCLUSIONS The findings suggest that prisoners have a perceived poor health status, specific care needs and health promotion programs are seldom offered. Programs for correction of risk behaviour and prevention of long-term effects of incarceration on prisoners' health are strongly needed.\",\n \"title\": \"Self-reported health status and access to health services in a sample of prisoners in Italy\"\n },\n {\n \"docid\": \"20491205\",\n \"text\": \"The prison population is increasing and the health problems of prisoners are considerable. Prison is designed with punishment, correction and rehabilitation to the community in mind and these goals may conflict with the aims of health care. A literature review showed that the main issues in prison health care are mental health, substance abuse and communicable diseases. Women prisoners and older prisoners have needs which are distinct from other prisoners. Health promotion and the health of the community outside prisons are desirable aims of prison health care. The delivery of effective health care to prisoners is dependent upon partnership between health and prison services and telemedicine is one possible mode of delivery.\",\n \"title\": \"Prison health care: a review of the literature.\"\n },\n {\n \"docid\": \"34227917\",\n \"text\": \"OBJECTIVE To review the literature on mental health and psychiatric morbidity in prison populations and relate findings to a Danish study on remand prisoners. METHOD The literature is reviewed and subdivided in the following section: validity of psychometrics in prison populations, prevalence of psychiatric disorders prior to imprisonment, incidence of psychiatric disorders during imprisonment, psychopathy related to psychiatric comorbidity, dependence syndromes with special emphasis on different administrations of heroin use (smoke vs. injection). The results are compared with a longitudinal Danish study on remand prisoners in either solitary confinement (SC) or non-SC. RESULTS Many factors must be taken into consideration when dealing with prisoners and mental health, e.g. international differences, the prison setting, demographics and methodological issues. The prison populations in general are increasing worldwide. Psychometrics may perform differently in prison populations compared with general populations with the General Health Questionnaire-28 having a low validity in remand prisoners. Psychiatric morbidity including schizophrenia is higher and perhaps increasing in prison populations compared with general populations with dependence syndromes being the most frequent disorders. The early phase of imprisonment is a vulnerable period with a moderately high incidence of adjustment disorders and twice the incidence in SC compared with non-SC. Prevalence of psychopathy is lower in European than North American prisons. Medium to high scores of psychopathy is related to higher psychiatric comorbidity. Opioid dependence is the most frequent drug disorder with subjects using injection representing a more dysfunctional group than subjects using smoke administration. Many mentally ill prisoners remain undetected and undertreated. CONCLUSION There is a growing population of mentally ill prisoners being insufficiently detected and treated.\",\n \"title\": \"Mental health in prison populations. A review--with special emphasis on a study of Danish prisoners on remand.\"\n },\n {\n \"docid\": \"43855756\",\n \"text\": \"The future organisation of prison health care 1 recommends that the NHS and the Prison Service work together to plan and provide health care services for prisoners. Whereas previously the Prison Service had this responsibility alone. The NHS will therefore have to take stock of the current level at which prison health care is demanded and provided. A key part of the information base for joint planning therefore includes data on current service utilisation. This paper compares primary care and inpatient health service utilisation data for UK prisoners with health services utilisation data for equivalent community populations. In the community, primary care is provided principally by general practitioners and professions allied to medicine (mostly nurses). Residents in the community have access to the full range of NHS outpatient and inpatient facilities. Within prisons, primary care is provided by medical officers (some of whom are general practitioners), nursing grades and health care officers (who have received some training in health care). Some prisons have their own inpatient facilities (health care centre beds). These provide a low level of inpatient care and do not have a direct equivalent in the community. Prisoners also have access to NHS outpatient and inpatient facilities and to visiting specialists. The prison population has a high turnover and varies from day to day. Because of this, the prison population is expressed as an average daily population during a one year period. …\",\n \"title\": \"Use of health services by prison inmates: comparisons with the community.\"\n },\n {\n \"docid\": \"20326526\",\n \"text\": \"This series of studies describes the development of a measure of emotional intelligence based on the model of emotional intelligence developed by Salovey and Mayer [Salovey, P. & Mayer, J. D. (1990). Emotional intelligence. Imagination, Cognition and Personality, 9, 185–211.]. A pool of 62 items represented the different dimensions of the model. A factor analysis of the responses of 346 participants suggested the creation of a 33-item scale. Additional studies showed the 33-item measure to have good internal consistency and testretest reliability. Validation studies showed that scores on the 33-item measure 1. (a) correlated with eight of nine theoretically related constructs, including alexithymia, attention to feelings, clarity of feelings, mood repair, optimism and impulse control; 2. (b) predicted first-year college grades; 3. (c) were significantly higher for therapists than for therapy clients or for prisoners; 4. (d) were significantly higher for females than males, consistent with prior findings in studies of emotional skills; 5. (e) were not related to cognitive ability and 6. (f) were associated with the openness to experience trait of the big five personality dimensions.\",\n \"title\": \"DEVELOPMENT AND VALIDATION OF A MEASURE OF EMOTIONAL INTELLIGENCE\"\n },\n {\n \"docid\": \"52072815\",\n \"text\": \"Summary Background Alcohol use is a leading risk factor for death and disability, but its overall association with health remains complex given the possible protective effects of moderate alcohol consumption on some conditions. With our comprehensive approach to health accounting within the Global Burden of Diseases, Injuries, and Risk Factors Study 2016, we generated improved estimates of alcohol use and alcohol-attributable deaths and disability-adjusted life-years (DALYs) for 195 locations from 1990 to 2016, for both sexes and for 5-year age groups between the ages of 15 years and 95 years and older. Methods Using 694 data sources of individual and population-level alcohol consumption, along with 592 prospective and retrospective studies on the risk of alcohol use, we produced estimates of the prevalence of current drinking, abstention, the distribution of alcohol consumption among current drinkers in standard drinks daily (defined as 10 g of pure ethyl alcohol), and alcohol-attributable deaths and DALYs. We made several methodological improvements compared with previous estimates: first, we adjusted alcohol sales estimates to take into account tourist and unrecorded consumption; second, we did a new meta-analysis of relative risks for 23 health outcomes associated with alcohol use; and third, we developed a new method to quantify the level of alcohol consumption that minimises the overall risk to individual health. Findings Globally, alcohol use was the seventh leading risk factor for both deaths and DALYs in 2016, accounting for 2·2% (95% uncertainty interval [UI] 1·5–3·0) of age-standardised female deaths and 6·8% (5·8–8·0) of age-standardised male deaths. Among the population aged 15–49 years, alcohol use was the leading risk factor globally in 2016, with 3·8% (95% UI 3·2–4·3) of female deaths and 12·2% (10·8–13·6) of male deaths attributable to alcohol use. For the population aged 15–49 years, female attributable DALYs were 2·3% (95% UI 2·0–2·6) and male attributable DALYs were 8·9% (7·8–9·9). The three leading causes of attributable deaths in this age group were tuberculosis (1·4% [95% UI 1·0–1·7] of total deaths), road injuries (1·2% [0·7–1·9]), and self-harm (1·1% [0·6–1·5]). For populations aged 50 years and older, cancers accounted for a large proportion of total alcohol-attributable deaths in 2016, constituting 27·1% (95% UI 21·2–33·3) of total alcohol-attributable female deaths and 18·9% (15·3–22·6) of male deaths. The level of alcohol consumption that minimised harm across health outcomes was zero (95% UI 0·0–0·8) standard drinks per week. Interpretation Alcohol use is a leading risk factor for global disease burden and causes substantial health loss. We found that the risk of all-cause mortality, and of cancers specifically, rises with increasing levels of consumption, and the level of consumption that minimises health loss is zero. These results suggest that alcohol control policies might need to be revised worldwide, refocusing on efforts to lower overall population-level consumption. Funding Bill & Melinda Gates Foundation.\",\n \"title\": \"Alcohol use and burden for 195 countries and territories, 1990–2016: a systematic analysis for the Global Burden of Disease Study 2016\"\n },\n {\n \"docid\": \"10209731\",\n \"text\": \"STUDY OBJECTIVE The aim of the study was to analyse differences in mortality from the main cardiovascular diseases (ischaemic heart disease, hypertensive disease, and cerebrovascular disease) among Chinese, Malays, and Indians in Singapore. DESIGN The study was a survey using national death registration data in Singapore for the five years 1980 to 1984. The underlying cause of death, coded according to the ninth revision of the International Classification of Diseases, was taken for the analyses. SETTING The study was confined to the independent island state of Singapore, population 2.53 million (Chinese 76.5%, Malays 14.8%, Indians 6.4%, Others 2.3%). Death registration is thought to be complete. SUBJECTS All registered deaths in the age range 30-69 years during the study period were analysed by ethnic group. MEASUREMENT AND MAIN RESULTS Indians had higher mortality from ischaemic heart disease than the other ethnic groups in both sexes, with age-standardised relative risks of Indian v Chinese (males 3.8, females 3.4), Indian v Malay (males 1.9, females 1.6), and Malay v Chinese (males 2.0, females 2.2). The excess mortality in Indians declined with age. For hypertensive disease Malays had the highest mortality, with age-standardised relative risks of Malay v Chinese (males 3.4, females 4.4), Malay v Indian (males 2.0, females 2.5), and Indian v Chinese (males 1.6, females 1.6). For cerebrovascular disease there was little ethnic difference except for lower rates in Chinese females, with age-standardised relative risks of Malay v Chinese (males 1.1, females 1.9), Malay v Indian (males 1.0, females 1.1), and Indian v Chinese (males 1.1, females 1.7). CONCLUSIONS There are significant differences in mortality from the three main cardiovascular diseases in the different ethnic groups in Singapore.\",\n \"title\": \"Cardiovascular diseases in Chinese, Malays, and Indians in Singapore. I. Differences in mortality.\"\n },\n {\n \"docid\": \"36202354\",\n \"text\": \"Both to address unmet medical needs and to improve industry competitiveness, regulators in both the United States and the European Union have taken bold steps to translate academic research from the university lab to the patient. A pharmaceutical public-private partnership (PPPP), which is a legally binding contract between a private pharmaceutical enterprise and a public research university (or a private university doing research funded with public funds), can be a significant tool to ensure a more efficient payoff in the highly regulated world of pharmaceuticals. In particular, a properly framed binding contract, coupled with respect for positive social norms, can move the parties away from an inefficient prisoners’ dilemma Nash Equilibrium to the Pareto Optimal Frontier. When coupled with appropriate attention to the difficult task of coordinating the actions of interdependent actors, a PPPP arrangement can enhance the likelihood of successful commercialization by flipping the parties’ incentives as compared with more traditional contracts. Because PPPPs are less common in Europe than in the United States, a key purpose of this article is to provide an annotated roadmap that universities, private firms, and EU policy makers can use to create efficient PPPPs to enhance for-profit innovation in the pharmaceutical industry in Europe. A secondary purpose is to suggest amendments to the U.S. laws governing the patenting of government-funded technology to prevent undue burdens on the sharing of certain upstream medical discoveries and research tools. Our analysis is not only comparative; it also combines, we believe for the first time, a game theory and law and management approach to for-profit PPPPs.\",\n \"title\": \"Pharmaceutical Public-Private Partnerships in the United States and Europe: Moving from the Bench to the Bedside\"\n },\n {\n \"docid\": \"12232678\",\n \"text\": \"Recent reports have suggested that birds lack a mechanism of wholesale dosage compensation for the Z sex chromosome. This discovery was rather unexpected, as all other animals investigated with chromosomal mechanisms of sex determination have some method to counteract the effects of gene dosage of the dominant sex chromosome in males and females. Despite the lack of a global mechanism of avian dosage compensation, the pattern of gene expression difference between males and females varies a great deal for individual Z-linked genes. This suggests that some genes may be individually dosage compensated, and that some less-than-global pattern of dosage compensation, such as local or temporal, exists on the avian Z chromosome. We used global gene expression profiling in males and females for both somatic and gonadal tissue at several time points in the life cycle of the chicken to assess the pattern of sex-biased gene expression on the Z chromosome. Average fold-change between males and females varied somewhat among tissue time-point combinations, with embryonic brain samples having the smallest gene dosage effects, and adult gonadal tissue having the largest degree of male bias. Overall, there were no neighborhoods of overall dosage compensation along the Z. Taken together, this suggests that dosage compensation is regulated on the Z chromosome entirely on a gene-by-gene level, and can vary during the life cycle and by tissue type. This regulation may be an indication of how critical a given gene's functionality is, as the expression level for essential genes will be tightly regulated in order to avoid perturbing important pathways and networks with differential expression levels in males and females.\",\n \"title\": \"All dosage compensation is local: Gene-by-gene regulation of sex-biased expression on the chicken Z chromosome\"\n },\n {\n \"docid\": \"26673492\",\n \"text\": \"AIMS Few studies have examined the role of gender and both area-level and individual socio-economic status (SES) as independent predictors of alcohol-related aggression (ARA) in and around licensed venues. METHODS The aim of the present study was to investigate the relationship between gender, area-level SES and individual SES (operationalised as occupational category) and ARA in and around licensed venues. The sample comprised 697 men and 649 women aged 16-47, who completed a patron intercept survey as part of a larger study assessing trends in harm and stakeholders' views surrounding local community level interventions in dealing with alcohol-related problems in the night-time economy. RESULTS Binary logistic regression analyses showed that age, gender, occupational category, area-level SES and level of intoxication at time of interview were all significant predictors of involvement in ARA. Being male doubled the odds of involvement in ARA, while age was a protective factor. Blue collar workers had more than double the odds of ARA involvement of professionals, while those living in the most socio-economically disadvantaged areas were over twice as likely to report experiencing ARA compared to those living in the most advantaged areas. However, assessment of the predictive model by gender revealed that effects of age, occupational category and area-level SES were restricted to male participants, with greater intoxication no longer predictive. CONCLUSIONS ARA among patrons was significantly more likely to occur among men, those in blue collar occupations, and individuals living in low SES areas, suggesting both individual and area-level disadvantage may play a role in ARA.\",\n \"title\": \"Demographic Risk Factors for Alcohol-Related Aggression In and Around Licensed Venues.\"\n },\n {\n \"docid\": \"2138767\",\n \"text\": \"AIMS Cardiovascular disease (CVD) is now the most prevalent and debilitating disease affecting the Chinese population. The goal of the present manuscript was to analyse cardiovascular risk factors and the prevalence of non-fatal CVDs from data gathered from the 2007-2008 China National Diabetes and Metabolic Disorders Study. METHODS AND RESULTS A nationally representative sample of 46 239 adults, 20 years of age or older, was randomly recruited using a multistage stratified design method. Lifestyle factors, diagnosis of CVD, stroke, diabetes, and family history of each subject were collected, and an oral glucose tolerance test or a standard meal test was performed. Various non-fatal CVDs were reported by the subjects. SUDAAN software was used to perform all weighted statistical analyses, with P < 0.05 considered statistically significant. The prevalence of coronary heart disease, stroke, and CVDs was 0.74, 1.07, and 1.78% in males; and 0.51, 0.60, and 1.10% in females, respectively. The presence of CVDs increased with age in both males and females. The prevalence of being overweight or obese, hypertension, dyslipidaemia, or hyperglycaemia was 36.67, 30.09, 67.43, and 26.69% in males; and 29.77, 24.79, 63.98, and 23.62% in females, respectively. In the total sample of 46 239 patients, the prevalence of one subject having 1, 2, 3, or ≥4 of the 5 defined risk factors (i.e. smoking, overweight or obese, hypertension, dyslipidaemia, or hyperglycaemia) was 31.17, 27.38, 17.76, and 10.19%, respectively. Following adjustment for gender and age, the odds ratio of CVDs for those who had 1, 2, 3, or ≥4 risk factors was 2.36, 4.24, 4.88, and 7.22, respectively, when compared with patients with no risk factors. CONCLUSION Morbidity attributed to the five defined cardiovascular risk factors was high in the Chinese population, with multiple risk factors present in the same individual. Therefore, reasonable prevention strategies should be designed to attenuate the rapid rise in cardiovascular morbidity.\",\n \"title\": \"Prevalence of cardiovascular disease risk factor in the Chinese population: the 2007-2008 China National Diabetes and Metabolic Disorders Study.\"\n },\n {\n \"docid\": \"1102268\",\n \"text\": \"BACKGROUND Suicide is a significant public health issue with almost one million people dying by suicide each year worldwide. Deliberate self harm (DSH) is the single most important risk factor for suicide yet few countries have reliable data on DSH. We developed a national DSH registry in the Republic of Ireland to establish the incidence of hospital-treated DSH at national level and the spectrum and pattern of presentations with DSH and repetition. METHODS AND FINDINGS Between 2003 and 2009, the Irish National Registry of Deliberate Self Harm collected data on DSH presentations to all 40 hospital emergency departments in the country. Data were collected by trained data registration officers using standard methods of case ascertainment and definition. The Registry recorded 75,119 DSH presentations involving 48,206 individuals. The total incidence rate fell from 209 (95% CI: 205-213) per 100,000 in 2003 to 184 (95% CI: 180-189) per 100,000 in 2006 and increased again to 209 (95% CI: 204-213) per 100,000 in 2009. The most notable annual changes were successive 10% increases in the male rate in 2008 and 2009. There was significant variation by age with peak rates in women in the 15-19 year age group (620 (95% CI: 605-636) per 100,000), and in men in the 20-24 age group (427 (95% CI: 416-439) per 100,000). Repetition rates varied significantly by age, method of self harm and number of previous episodes. CONCLUSIONS Population-based data on hospital-treated DSH represent an important index of the burden of mental illness and suicide risk in the community. The increased DSH rate in Irish men in 2008 and 2009 coincided with the advent of the economic recession in Ireland. The findings underline the need for developing effective interventions to reduce DSH repetition rates as a key priority for health systems.\",\n \"title\": \"The Incidence and Repetition of Hospital-Treated Deliberate Self Harm: Findings from the World's First National Registry\"\n },\n {\n \"docid\": \"20280410\",\n \"text\": \"Inherited mutations in the gene BRCA2 predispose carriers to early onset breast cancer, but such mutations account for fewer than 2% of all cases in East Anglia. It is likely that low penetrance alleles explain the greater part of inherited susceptibility to breast cancer; polymorphic variants in strongly predisposing genes, such as BRCA2, are candidates for this role. BRCA2 is thought to be involved in DNA double strand break-repair. Few mice in which Brca2 is truncated survive to birth; of those that do, most are male, smaller than their normal littermates and have high cancer incidence. Here we show that a common human polymorphism (N372H) in exon 10 of BRCA2 confers an increased risk of breast cancer: the HH homozygotes have a 1.31-fold (95% CI, 1.07–1.61) greater risk than the NN group. Moreover, in normal female controls of all ages there is a significant deficiency of homozygotes compared with that expected from Hardy-Weinberg equilibrium, whereas in males there is an excess of homozygotes: the HH group has an estimated fitness of 0.82 in females and 1.38 in males. Therefore, this variant of BRCA2 appears also to affect fetal survival in a sex-dependent manner.\",\n \"title\": \"A common variant in BRCA2 is associated with both breast cancer risk and prenatal viability\"\n },\n {\n \"docid\": \"6647414\",\n \"text\": \"IMPORTANCE The 2008 Physical Activity Guidelines for Americans recommended a minimum of 75 vigorous-intensity or 150 moderate-intensity minutes per week (7.5 metabolic-equivalent hours per week) of aerobic activity for substantial health benefit and suggested additional benefits by doing more than double this amount. However, the upper limit of longevity benefit or possible harm with more physical activity is unclear. OBJECTIVE To quantify the dose-response association between leisure time physical activity and mortality and define the upper limit of benefit or harm associated with increased levels of physical activity. DESIGN, SETTING, AND PARTICIPANTS We pooled data from 6 studies in the National Cancer Institute Cohort Consortium (baseline 1992-2003). Population-based prospective cohorts in the United States and Europe with self-reported physical activity were analyzed in 2014. A total of 661,137 men and women (median age, 62 years; range, 21-98 years) and 116,686 deaths were included. We used Cox proportional hazards regression with cohort stratification to generate multivariable-adjusted hazard ratios (HRs) and 95% CIs. Median follow-up time was 14.2 years. EXPOSURES Leisure time moderate- to vigorous-intensity physical activity. MAIN OUTCOMES AND MEASURES The upper limit of mortality benefit from high levels of leisure time physical activity. RESULTS Compared with individuals reporting no leisure time physical activity, we observed a 20% lower mortality risk among those performing less than the recommended minimum of 7.5 metabolic-equivalent hours per week (HR, 0.80 [95% CI, 0.78-0.82]), a 31% lower risk at 1 to 2 times the recommended minimum (HR, 0.69 [95% CI, 0.67-0.70]), and a 37% lower risk at 2 to 3 times the minimum (HR, 0.63 [95% CI, 0.62-0.65]). An upper threshold for mortality benefit occurred at 3 to 5 times the physical activity recommendation (HR, 0.61 [95% CI, 0.59-0.62]); however, compared with the recommended minimum, the additional benefit was modest (31% vs 39%). There was no evidence of harm at 10 or more times the recommended minimum (HR, 0.69 [95% CI, 0.59-0.78]). A similar dose-response relationship was observed for mortality due to cardiovascular disease and to cancer. CONCLUSIONS AND RELEVANCE Meeting the 2008 Physical Activity Guidelines for Americans minimum by either moderate- or vigorous-intensity activities was associated with nearly the maximum longevity benefit. We observed a benefit threshold at approximately 3 to 5 times the recommended leisure time physical activity minimum and no excess risk at 10 or more times the minimum. In regard to mortality, health care professionals should encourage inactive adults to perform leisure time physical activity and do not need to discourage adults who already participate in high-activity levels.\",\n \"title\": \"Leisure time physical activity and mortality: a detailed pooled analysis of the dose-response relationship.\"\n },\n {\n \"docid\": \"41380943\",\n \"text\": \"During embryonic development, gonadal steroid hormones (androgens and estrogens) are thought to organize the sexual differentiation of the brain in the heterogametic sexes of higher vertebrates (males in mammals, females in birds). Brain differentiation of the homogametic sexes is thought to proceed by default, not requiring sex hormones for sex-specific organization. In gallinaceous birds such as the Japanese quail, female brain organization is thought to develop via estrogen-dependent demasculinization of a default male brain phenotype. We performed male donor-to-female host (MF), female-to-male (FM), male-to-male (MM), and female-to-female (FF) isotopic, isochronic transplantation of the forebrain primordium in Japanese quail embryos before gonadal differentiation had occurred; brain chimeras had a forebrain (including the hypothalamus) originating exclusively from donor cells. MM, FF, and MF chimeras all showed sexual behavior governed by the genetic sex of the host. In contrast, FM chimeras (genetically female forebrain, all other tissues genetically male) showed no mounting and only rudimentary crowing behavior. Although MM, FF, MF, and FM chimeras all showed host-typical production of steroid hormones during embryonic life, only FM chimeras were hypogonadal, had atypical low levels of circulating testosterone in adulthood, and showed reduction (crowing) or absence (mounting) of reproductive behaviors. Morphological features of the medial preoptic nucleus (a sexually dimorphic brain area) also were not male-like in FM males. These data demonstrate a brain-intrinsic, genetically determined component that organizes the sex-typical production of gonadal hormones in adulthood and call for a reevaluation of the mechanisms underlying brain sexual differentiation in other higher-vertebrate species.\",\n \"title\": \"Male Japanese quails with female brains do not show male sexual behaviors.\"\n },\n {\n \"docid\": \"38793927\",\n \"text\": \"A major clinical manifestation of bone cancers is bone destruction. It is widely accepted that this destruction is not caused by the malignant cells themselves, but by osteoclasts, multinucleated cells of monocytic origin that are considered to be the only cells able to degrade bone. The present study demonstrates that bone-resorbing osteoclasts from myeloma patients contain nuclei with translocated chromosomes of myeloma B-cell clone origin, in addition to nuclei without these translocations, by using combined FISH and immunohistochemistry on bone sections. These nuclei of malignant origin are transcriptionally active and appear fully integrated amongst the other nuclei. The contribution of malignant nuclei to the osteoclast population analysed in this study was greater than 30%. Osteoclast-myeloma clone hybrids contained more nuclei than normal osteoclasts and their occurrence correlated with the proximity of myeloma cells. Similar hybrid cells were generated in myeloma cell-osteoclast co-cultures, as revealed by tracing myeloma nuclei using translocations, bromo-deoxyuridine, or the Y chromosome of male myeloma cells in female osteoclasts. These observations indicate that hybrid cells can originate through fusion between myeloma cells and osteoclasts. In conclusion, malignant cells contribute significantly to the formation of bone-resorbing osteoclasts in multiple myeloma. Osteoclast-myeloma clone hybrids reflect a previously unrecognized mechanism of bone destruction in which malignant cells participate directly. The possibility that malignant cells corrupt host cells by the transfer of malignant DNA may have been underestimated to date in cancer research.\",\n \"title\": \"Osteoclast nuclei of myeloma patients show chromosome translocations specific for the myeloma cell clone: a new type of cancer-host partnership?\"\n },\n {\n \"docid\": \"70633421\",\n \"text\": \"The incidence of malignant neoplasms among 11 483 male and 34 618 female individuals with rheumatoid arthritis was studied using two separate nationwide data registers covering the whole Finnish population: the Social Insurance Institution9s Population Data Register, which includes information on medication for certain chronic diseases, and the Finnish Cancer Registry, with data on all cancer patients diagnosed in Finland. The follow-up comprised a total of 213 911 person years. The total incidence of all malignant neoplasms was higher in males and on the level expected in females. The expected number of cases of leukemia, lymphomas, Hodgkin9s disease and myeloma in both sexes was 59·6 as compared with the 130 cases observed. This difference is statistically highly significant (p\",\n \"title\": \"Excess risk of lymphomas, leukemia and myeloma in patients with rheumatoid arthritis\"\n },\n {\n \"docid\": \"24510595\",\n \"text\": \"PURPOSE Patients with daily or near-daily headaches are commonly seen in neurology practices and in headache subspecialty centers, but there is little information on the prevalence of this condition in the general population. We present the first US-based study describing the prevalence and characteristics of frequent headache in the general population. METHODS In Baltimore County, Maryland, 13 343 individuals 18 to 65 years of age were selected by random-digit dialing and interviewed by telephone about their headaches. Subjects reporting 180 or more headaches per year were classified as having frequent headache. Three mutually exclusive subtypes of frequent headache were identified: frequent headache with migrainous features, chronic tension-type headache, and unclassified frequent headache. RESULTS The overall prevalence of frequent headache was 4.1% (5.0% female, 2.8% male; 1.8:1 female to male ratio). Frequent headache was 33% more common in Caucasians (4.4%) than in African Americans (3.3%). In both males and females, prevalence was highest in the lowest educational category. Among frequent headache sufferers, more than half (52% female, 56% male) met criteria for chronic tension-type headache, almost one third (33% female, 25% male) met criteria for frequent headache with migrainous features, and the remainder (15% female, 19% male) were unclassified. Overall, 30% of female and 25% of male frequent headache sufferers met International Headache Society (IHS) criteria for migraine (with or without aura). CONCLUSIONS Frequent headache is common in the general population and is more prevalent in Caucasians and in those with less than a high school education. Chronic tension-type headache is more common than frequent headache with migrainous features, though the latter is more disabling. Although more common in females than males, the female preponderance of frequent headache is less marked than in migraine. The sex ratio varies by frequent headache subtype.\",\n \"title\": \"Prevalence of frequent headache in a population sample.\"\n },\n {\n \"docid\": \"12443371\",\n \"text\": \"OBJECTIVE To evaluate the association between apolipoprotein E (APOE) polymorphisms (E2, C/T Arg158Cys; E4, T/C Cys112Arg; and promoter, g-219t) and the history of concussion in college athletes. We hypothesized that carrying 1 or more APOE rare (or minor) allele assessed in this study would be associated with having a history of 1 or more concussions. DESIGN Multicenter cross-sectional study. SETTING University athletic facilities. PARTICIPANTS One hundred ninety-six male football (n = 163) and female soccer (n = 33) college athletes volunteered. INTERVENTIONS Written concussion history questionnaire and saliva samples for genotyping. MAIN OUTCOME MEASURES Self-reported history of a documented concussion and rare APOE genotype (E2, E4, promoter). RESULTS There was a significant association (Wald χ² = 3.82; P = 0.05; odds ratio = 9.8) between carrying all APOE rare alleles and the history of a previous concussion. There was also a significant association (Wald χ² = 3.96, P = 0.04, odds ratio = 8.4) between carrying the APOE promoter minor allele and experiencing 2 or more concussions. CONCLUSIONS Carriers of all 3 APOE rare (or minor) alleles assessed in this study were nearly 10 times more likely to report a previous concussion and may be at a greater risk of concussion versus noncarriers. Promoter minor allele carriers were 8.4 times more likely to report multiple concussions and may be at a greater risk of multiple concussions versus noncarriers. Research involving larger samples of individuals with multiple concussions and carriers of multiple APOE rare alleles is warranted.\",\n \"title\": \"Apolipoprotein E genotype and concussion in college athletes.\"\n },\n {\n \"docid\": \"26067999\",\n \"text\": \"The U.S. Preventive Services Task Force (USPSTF) makes recommendations about the effectiveness of specific preventive care services for patients without related signs or symptoms. It bases its recommendations on the evidence of both the benefits and harms of the service and an assessment of the balance. The USPSTF does not consider the costs of providing a service in this assessment. The USPSTF recognizes that clinical decisions involve more considerations than evidence alone. Clinicians should understand the evidence but individualize decision making to the specific patient or situation. Similarly, the USPSTF notes that policy and coverage decisions involve considerations in addition to the evidence of clinical benefits and harms. Summary of Recommendation and Evidence The USPSTF recommends annual screening for lung cancer with low-dose computed tomography (LDCT) in adults aged 55 to 80 years who have a 30 pack-year smoking history and currently smoke or have quit within the past 15 years. Screening should be discontinued once a person has not smoked for 15 years or develops a health problem that substantially limits life expectancy or the ability or willingness to have curative lung surgery. (B recommendation) See the Clinical Considerations section for suggestions for implementation in practice. See the Figure for a summary of the recommendation and suggestions for clinical practice. Figure. Screening for lung cancer: clinical summary of U.S. Preventive Services Task Force recommendation. Appendix Table 1 describes the USPSTF grades, and Appendix Table 2 describes the USPSTF classification of levels of certainty about net benefit. Appendix Table 1. What the USPSTF Grades Mean and Suggestions for Practice Appendix Table 2. USPSTF Levels of Certainty Regarding Net Benefit Supplement. Consumer Fact Sheet. Rationale Importance Lung cancer is the third most common cancer and the leading cause of cancer-related death in the United States (1). The most important risk factor for lung cancer is smoking, which results in approximately 85% of all U.S. lung cancer cases (2). Although the prevalence of smoking has decreased, approximately 37% of U.S. adults are current or former smokers (2). The incidence of lung cancer increases with age and occurs most commonly in persons aged 55 years or older. Increasing age and cumulative exposure to tobacco smoke are the 2 most common risk factors for lung cancer. Lung cancer has a poor prognosis, and nearly 90% of persons with lung cancer die of the disease. However, early-stage nonsmall cell lung cancer (NSCLC) has a better prognosis and can be treated with surgical resection. Detection Most lung cancer cases are NSCLC, and most screening programs focus on the detection and treatment of early-stage NSCLC. Although chest radiography and sputum cytologic evaluation have been used to screen for lung cancer, LDCT has greater sensitivity for detecting early-stage cancer (3). Benefits of Detection and Early Treatment Although lung cancer screening is not an alternative to smoking cessation, the USPSTF found adequate evidence that annual screening for lung cancer with LDCT in a defined population of high-risk persons can prevent a substantial number of lung cancerrelated deaths. Direct evidence from a large, well-conducted, randomized, controlled trial (RCT) provides moderate certainty of the benefit of lung cancer screening with LDCT in this population (4). The magnitude of benefit to the person depends on that person's risk for lung cancer because those who are at highest risk are most likely to benefit. Screening cannot prevent most lung cancerrelated deaths, and smoking cessation remains essential. Harms of Detection and Early Intervention and Treatment The harms associated with LDCT screening include false-negative and false-positive results, incidental findings, overdiagnosis, and radiation exposure. False-positive LDCT results occur in a substantial proportion of screened persons; 95% of all positive results do not lead to a diagnosis of cancer. In a high-quality screening program, further imaging can resolve most false-positive results; however, some patients may require invasive procedures. The USPSTF found insufficient evidence on the harms associated with incidental findings. Overdiagnosis of lung cancer occurs, but its precise magnitude is uncertain. A modeling study performed for the USPSTF estimated that 10% to 12% of screen-detected cancer cases are overdiagnosedthat is, they would not have been detected in the patient's lifetime without screening. Radiation harms, including cancer resulting from cumulative exposure to radiation, vary depending on the age at the start of screening; the number of scans received; and the person's exposure to other sources of radiation, particularly other medical imaging. USPSTF Assessment The USPSTF concludes with moderate certainty that annual screening for lung cancer with LDCT is of moderate net benefit in asymptomatic persons who are at high risk for lung cancer based on age, total cumulative exposure to tobacco smoke, and years since quitting smoking. The moderate net benefit of screening depends on limiting screening to persons who are at high risk, the accuracy of image interpretation being similar to that found in the NLST (National Lung Screening Trial), and the resolution of most false-positive results without invasive procedures (4). Clinical Considerations Patient Population Under Consideration The risk for lung cancer increases with age and cumulative exposure to tobacco smoke and decreases with time since quitting smoking. The best evidence for the benefit of screening comes from the NLST, which enrolled adults aged 55 to 74 years who had at least a 30 pack-year smoking history and were current smokers or had quit within the past 15 years. As with all screening trials, the NLST tested a specific intervention over a finite period. Because initial eligibility extended through age 74 years and participants received 3 annual screening computed tomographic scans, the oldest participants in the trial were aged 77 years. The USPSTF used modeling studies to predict the benefits and harms of screening programs that use different screening intervals, age ranges, smoking histories, and times since quitting. A program that annually screens adults aged 55 to 80 years who have a 30 pack-year smoking history and currently smoke or have quit within the past 15 years is projected to have a reasonable balance of benefits and harms. The model assumes that persons who achieve 15 years of smoking cessation during the screening program discontinue screening. This model predicts the outcomes of continuing the screening program used in the NLST through age 80 years. Screening may not be appropriate for patients with substantial comorbid conditions, particularly those at the upper end of the screening age range. The NLST excluded persons who were unlikely to complete curative lung cancer surgery and those with medical conditions that posed a substantial risk for death during the 8-year trial. The baseline characteristics of the NLST showed a relatively healthy sample, and fewer than 10% of enrolled participants were older than 70 years (5). Persons with serious comorbid conditions may experience net harm, no net benefit, or at least substantially less net benefit. Similarly, persons who are unwilling to have curative lung surgery are unlikely to benefit from a screening program. Assessment of Risk Age, total exposure to tobacco smoke, and years since quitting smoking are important risk factors for lung cancer and were used to determine eligibility in the NLST. Other risk factors include specific occupational exposures, radon exposure, family history, and history of pulmonary fibrosis or chronic obstructive lung disease. The incidence of lung cancer is relatively low in persons younger than 50 years but increases with age, especially after age 60 years. In current and former smokers, age-specific incidence rates increase with age and cumulative exposure to tobacco smoke. Smoking cessation substantially reduces a person's risk for developing and dying of lung cancer. Among persons enrolled in the NLST, those who were at highest risk because of additional risk factors or a greater cumulative exposure to tobacco smoke experienced most of the benefit (6). A validated multivariate model showed that persons in the highest 60% of risk accounted for 88% of all deaths preventable by screening. Screening Tests Low-dose computed tomography has shown high sensitivity and acceptable specificity for the detection of lung cancer in high-risk persons. Chest radiography and sputum cytologic evaluation have not shown adequate sensitivity or specificity as screening tests. Therefore, LDCT is currently the only recommended screening test for lung cancer. Treatment Surgical resection is the current standard of care for localized NSCLC. This type of cancer is treated with surgical resection when possible and also with radiation and chemotherapy. Annual LDCT screening may not be useful for patients with life-limiting comorbid conditions or poor functional status who may not be candidates for surgery. Other Approaches to Prevention Smoking cessation is the most important intervention to prevent NSCLC. Advising smokers to stop smoking and preventing nonsmokers from being exposed to tobacco smoke are the most effective ways to decrease the morbidity and mortality associated with lung cancer. Current smokers should be informed of their continuing risk for lung cancer and offered cessation treatments. Screening with LDCT should be viewed as an adjunct to tobacco cessation interventions. Useful Resources Clinicians have many resources to help patients stop smoking. The Centers for Disease Control and Prevention has developed a Web site with many such resources, including information on tobacco quit lines, available in several languages (www.cdc.gov/tobacco/campaign/tips). Quit l\",\n \"title\": \"Screening for Lung Cancer: U.S. Preventive Services Task Force Recommendation Statement\"\n },\n {\n \"docid\": \"20610390\",\n \"text\": \"OBJECTIVES To investigate incidence, mortality and case survival trends for cancer of unknown primary site (CUP) and consider clinical implications. METHOD South Australian Cancer Registry data were used to calculate age-standardised incidence and mortality rates from 1977 to 2004. Disease-specific survivals, socio-demographic, histological and secular predictors of CUP, compared with cancers of known primary site, and of CUP histological types, using multivariable logistic regression were investigated. RESULTS Incidence and mortality rates increased approximately 60% between 1977--80 and 1981--84. Rates peaked in 1993--96. Male to female incidence and mortality rate ratios approximated 1.3:1. Incidence and mortality rates increased with age. The odds of unspecified histological type, compared with the more common adenocarcinomas, were higher for males than females, non-metropolitan residents, low socio-economic areas, and for 1977--88 than subsequent diagnostic periods. CUP represented a higher proportion of cancers in Indigenous patients. Case survival was 7% at 10 years from diagnosis. Factors predictive of lower case survival included older age, male sex, Indigenous status, lower socio-economic status, and unspecified histology type. CONCLUSION Results point to poor CUP outcomes, but with a modest improvement in survival. The study identifies socio-demographic groups at elevated risk of CUP and of worse treatment outcomes where increased research and clinical attention are required.\",\n \"title\": \"Exploring the epidemiological characteristics of cancers of unknown primary site in an Australian population: implications for research and clinical care.\"\n },\n {\n \"docid\": \"2787558\",\n \"text\": \"BACKGROUND Lifestyle factors including cigarette smoking, alcohol consumption and nutritional habits impact on health, wellness, and the risk of chronic diseases. In the areas of in-vitro fertilization (IVF) and pregnancy, lifestyle factors influence oocyte production, fertilization rates, pregnancy and pregnancy loss, while chronic, low-grade oxidative stress may underlie poor outcomes for some IVF cases. METHODS Here, we review the current literature and present some original, previously unpublished data, obtained from couples attending the PIVET Medical Centre in Western Australia. RESULTS During the study, 80 % of females and 70 % of male partners completed a 1-week diary documenting their smoking, alcohol and fruit and vegetable intake. The subsequent clinical outcomes of their IVF treatment such as quantity of oocytes collected, fertilization rates, pregnancy and pregnancy loss were submitted to multiple regression analysis, in order to investigate the relationship between patients, treatment and the recorded lifestyle factors. Of significance, it was found that male smoking caused an increased risk of pregnancy loss (p = 0.029), while female smoking caused an adverse effect on ovarian reserve. Both alcohol consumption (β = 0.074, p < 0.001) and fruit and vegetable consumption (β = 0.034, p < 0.001) had positive effects on fertilization. CONCLUSION Based on our results and the current literature, there is an important impact of lifestyle factors on IVF clinical outcomes. Currently, there are conflicting results regarding other lifestyle factors such as nutritional habits and alcohol consumption, but it is apparent that chronic oxidative stress induced by lifestyle factors and poor nutritional habits associate with a lower rate of IVF success.\",\n \"title\": \"The effect of cigarette smoking, alcohol consumption and fruit and vegetable consumption on IVF outcomes: a review and presentation of original data\"\n },\n {\n \"docid\": \"13230773\",\n \"text\": \"CONTEXT Population surveys indicate that physical activity levels are low in the United States. One consequence of inactivity, low cardiorespiratory fitness, is an established risk factor for cardiovascular disease (CVD) morbidity and mortality, but the prevalence of cardiorespiratory fitness has not been quantified in representative US population samples. OBJECTIVES To describe the prevalence of low fitness in the US population aged 12 through 49 years and to relate low fitness to CVD risk factors in this population. DESIGN, SETTING, AND PARTICIPANTS Inception cohort study using data from the cross-sectional nationally representative National Health and Nutrition Examination Survey 1999-2002. Participants were adolescents (aged 12-19 years; n = 3110) and adults (aged 20-49 years; n = 2205) free from previously diagnosed CVD who underwent submaximal graded exercise treadmill testing to achieve at least 75% to 90% of their age-predicted maximum heart rate. Maximal oxygen consumption (VO2max) was estimated by measuring the heart rate response to reference levels of submaximal work. MAIN OUTCOME MEASURES Low fitness defined using percentile cut points of estimated VO2max from existing external referent populations; anthropometric and other CVD risk factors measured according to standard methods. RESULTS Low fitness was identified in 33.6% of adolescents (approximately 7.5 million US adolescents) and 13.9% of adults (approximately 8.5 million US adults); the prevalence was similar in adolescent females (34.4%) and males (32.9%) (P = .40) but was higher in adult females (16.2%) than in males (11.8%) (P = .03). Non-Hispanic blacks and Mexican Americans were less fit than non-Hispanic whites. In all age-sex groups, body mass index and waist circumference were inversely associated with fitness; age- and race-adjusted odds ratios of overweight or obesity (body mass index > or =25) ranged from 2.1 to 3.7 (P<.01 for all), comparing persons with low fitness with those with moderate or high fitness. Total cholesterol levels and systolic blood pressure were higher and levels of high-density lipoprotein cholesterol were lower among participants with low vs high fitness. CONCLUSION Low fitness in adolescents and adults is common in the US population and is associated with an increased prevalence of CVD risk factors.\",\n \"title\": \"Prevalence and cardiovascular disease correlates of low cardiorespiratory fitness in adolescents and adults.\"\n },\n {\n \"docid\": \"34228604\",\n \"text\": \"Females live longer than males in many species, including humans. We have traced a possible explanation for this phenomenon to the beneficial action of estrogens, which bind to estrogen receptors and increase the expression of longevity-associated genes, including those encoding the antioxidant enzymes superoxide dismutase and glutathione peroxidase. As a result, mitochondria from females produce fewer reactive oxygen species than those from males. Administering estrogens has serious drawbacks, however--they are feminizing (and thus cannot be administered to males) and may increase the incidence of serious diseases such as uterine cancer in postmenopausal women. Phytoestrogens, which are present in soy or wine, may have some of the favorable effects of estrogens without their undesirable effects. Study of gender differences in longevity may help us to understand the basic processes of aging and to devise practical strategies to increase the longevity of both females and males.\",\n \"title\": \"Why females live longer than males: control of longevity by sex hormones.\"\n },\n {\n \"docid\": \"36178047\",\n \"text\": \"The same 15 male Wistar rats at the ages of 2.5, 6, 10, 14, 18, and 22 months were successively randomly mated with 2.5-month-old females. In a separate experiment, 15 male Wistar rats at the age of 2.5 months and 15 at the age of 23 months were simultaneously randomly mated with 2.5-month-old females. Offspring were evaluated in regard to the mean number per litter, sex ratio, frequency of gross external malformations, growth pattern, and mortality in the first 13 weeks of life and reproductive capacity at 13 weeks of age. They were also evaluated for spontaneous activity and emotionality with an open field test and for learning capacity with an avoidance conditioning test, both carried out between 10 and 13 weeks of age. Only learning capacity of the offspring, expressed in percentage of success for male or female, decreased consistently and significantly as the father's age increased. But females did not seem to be affected in the same way as males. The genetic implications are briefly discussed.\",\n \"title\": \"Decrease of learning capacity in offspring with increasing paternal age in the rat.\"\n },\n {\n \"docid\": \"24724242\",\n \"text\": \"BACKGROUND The absolute risk of fractures in renal transplant patients is 3 times that of matched controls. Most of the symptomatic fractures are peripheral, suggesting a greater compromise of cortical bone. Peripheral quantitative computed tomography (pQCT) is a new imaging technique that allows separate noninvasive evaluations of cortical and trabecular bones. We investigated cortical bone by pQCT in 12 renal transplant patients (seven men and five women) for comparison with 27 normal controls. METHODS pQCT (XCT 960, Stratec, Pforheim, Germany) was performed upon the distal radius of the nondominant forearm (15% the length of the ulna, proximal from the radius end plate). We evaluated total and cortical bone mineral density (TBMD, cBMD), total (cross-sectional) and cortical area (TA, cA), cortical thickness (cThk), endosteal and periosteal circumferences, and the buckling ratio (r/cThK). RESULTS Compared with normal controls transplant patients as a whole showed a significant increase in TA, in endosteal circumference (P < .001), and in the buckling ratio (P < .001) with a significant reduction in cThK (P < .001). Female patients had a marked decrease in cA (51.4 vs 69.3 [pixel n]; P < .0001) and cThK (2.08 vs 2.78 mm; P < .0001). Male patients also had a decrease in cThK (2.54 vs 3.30 mm; P = .0001) and an increase in endosteal perimeter (31.2 vs 26.4 mm; P < .0001). Total time on dialysis prior to renal graft correlated negatively with cortical thickness (r = .62; P < .01). CONCLUSIONS Our results suggest that a marked thinning of cortical bone may explain the increased incidence of peripheral fractures among renal transplant patients.\",\n \"title\": \"Evaluation of cortical bone by peripheral quantitative computed tomography in renal transplant recipients.\"\n },\n {\n \"docid\": \"7209559\",\n \"text\": \"CONTEXT The incidence of distal forearm fractures in children peaks around the time of the pubertal growth spurt, possibly because physical activity increases at the time of a transient deficit in cortical bone mass due to the increased calcium demand during maximal skeletal growth. Changes in physical activity or diet may therefore influence risk of forearm fracture. OBJECTIVE To determine whether there has been a change in the incidence of distal forearm fractures in children in recent years. DESIGN, SETTING, AND PATIENTS Population-based study among Rochester, Minn, residents younger than 35 years with distal forearm fractures in 1969-1971, 1979-1981, 1989-1991, and 1999-2001. MAIN OUTCOME MEASURE Estimated incidence of distal forearm fractures in 4 time periods. RESULTS Comparably age- and sex-adjusted annual incidence rates per 100 000 increased from 263.3 (95% confidence interval [CI], 231.1-295.4) in 1969-1971 to 322.3 (95% CI, 285.3-359.4) in 1979-1981 and to 399.8 (95% CI, 361.0-438.6) in 1989-1991 before leveling off at 372.9 (95% CI, 339.1-406.7) in 1999-2001. Age-adjusted incidence rates per 100 000 were 32% greater among male residents in 1999-2001 compared with 1969-1971 (409.4 [95% CI, 359.9-459.0] vs 309.4 [95% CI, 259.3-359.5]; P =.01) and 56% greater among female residents in the same time periods (334.3 [95% CI, 288.6-380.1] vs 214.6 [95% CI, 174.9-254.4]; P<.001). The peak incidence and greatest increase occurred between ages 11 and 14 years in boys and 8 and 11 years in girls. CONCLUSIONS There has been a statistically significant increase in the incidence of distal forearm fractures in children and adolescents, but whether this is due to changing patterns of physical activity, decreased bone acquisition due to poor calcium intake, or both is unclear at present. Given the large number of childhood fractures, however, studies are needed to define the cause(s) of this increase.\",\n \"title\": \"Incidence of childhood distal forearm fractures over 30 years: a population-based study.\"\n },\n {\n \"docid\": \"15669393\",\n \"text\": \"Transient activation of estrogen receptors (ER) in the developing brain during a limited perinatal \\\"window of time\\\" is recognized as a key mechanism of defeminization of neural control of reproductive function and sexual behavior. Two major ER isoforms, alpha and beta, are present in neural circuits that govern ovarian cycle and sexual behavior. Using highly selective ER agonists, this study provides the first evidence for distinct contribution of individual ER isoforms to the process of estrogen dependent defeminization. Neonatal activation of the ERalpha in female rats resulted in abrogation of cyclic ovarian activity and female sexual behavior in adulthood. These effects are associated with male-like alterations in the morphology of the anteroventral periventricular (AVPV) and sexually dimorphic nucleus of the preoptic area (SDN-POA), as well as refractoriness to estrogen-mediated induction of sexual receptivity. Exposure to an ERbeta-selective agonist induced persistent estrus and had a strong defeminizing effect on the hypothalamic gonadotropin \\\"surge generator\\\" AVPV. However, neonatal ERbeta activation failed to alter female sexual behavior, responsiveness to estrogens and morphometric features of the behaviorally relevant SDN-POA. Thus, although co-present in several brain regions involved in the control of female reproductive function, ER isoforms convey different, and probably not synergistic, chemical signals in the course of neonatal sex-specific brain organization.\",\n \"title\": \"brain organization\"\n },\n {\n \"docid\": \"7988832\",\n \"text\": \"Epigenetic processes play a key role in orchestrating transcriptional regulation during development. The importance of DNA methylation in fetal brain development is highlighted by the dynamic expression of de novo DNA methyltransferases during the perinatal period and neurodevelopmental deficits associated with mutations in the methyl-CpG binding protein 2 (MECP2) gene. However, our knowledge about the temporal changes to the epigenome during fetal brain development has, to date, been limited. We quantified genome-wide patterns of DNA methylation at ∼ 400,000 sites in 179 human fetal brain samples (100 male, 79 female) spanning 23 to 184 d post-conception. We identified highly significant changes in DNA methylation across fetal brain development at >7% of sites, with an enrichment of loci becoming hypomethylated with fetal age. Sites associated with developmental changes in DNA methylation during fetal brain development were significantly underrepresented in promoter regulatory regions but significantly overrepresented in regions flanking CpG islands (shores and shelves) and gene bodies. Highly significant differences in DNA methylation were observed between males and females at a number of autosomal sites, with a small number of regions showing sex-specific DNA methylation trajectories across brain development. Weighted gene comethylation network analysis (WGCNA) revealed discrete modules of comethylated loci associated with fetal age that are significantly enriched for genes involved in neurodevelopmental processes. This is, to our knowledge, the most extensive study of DNA methylation across human fetal brain development to date, confirming the prenatal period as a time of considerable epigenomic plasticity.\",\n \"title\": \"Methylomic trajectories across human fetal brain development.\"\n },\n {\n \"docid\": \"4388470\",\n \"text\": \"In the mammalian model of sex determination, embryos are considered to be sexually indifferent until the transient action of a sex-determining gene initiates gonadal differentiation. Although this model is thought to apply to all vertebrates, this has yet to be established. Here we have examined three lateral gynandromorph chickens (a rare, naturally occurring phenomenon in which one side of the animal appears male and the other female) to investigate the sex-determining mechanism in birds. These studies demonstrated that gynandromorph birds are genuine male:female chimaeras, and indicated that male and female avian somatic cells may have an inherent sex identity. To test this hypothesis, we transplanted presumptive mesoderm between embryos of reciprocal sexes to generate embryos containing male:female chimaeric gonads. In contrast to the outcome for mammalian mixed-sex chimaeras, in chicken mixed-sex chimaeras the donor cells were excluded from the functional structures of the host gonad. In an example where female tissue was transplanted into a male host, donor cells contributing to the developing testis retained a female identity and expressed a marker of female function. Our study demonstrates that avian somatic cells possess an inherent sex identity and that, in birds, sexual differentiation is substantively cell autonomous.\",\n \"title\": \"Somatic sex identity is cell-autonomous in the chicken\"\n }\n]","isConversational":false}}},{"rowIdx":97,"cells":{"query_id":{"kind":"string","value":"8935"},"query":{"kind":"string","value":"Is it better to buy US stocks on US stock exchanges as a European?"},"positive_passages":{"kind":"list like","value":[{"docid":"125568","text":"\"No, there are neither advantages nor disadvantages. I'll take on this question from an accounting standpoint. Financial statements, the tools at which the market determines (amongst other things) the value of a stock, are converted at year end to the home currency (see 1.1.3).If Company A has revenue of 100,000 USD and the conversion to EUR is .89, revenue in the European market will be reported as 89,000 EUR. These valuations, along with ratios, analysis, and \"\"expert\"\" opinions determine if a person should own shares in Company A. Now, if we're talking about comparing markets this is a entirely different question. Example: Should I buy stock of Company A, who is in the American market (as an European)? Should I buy stock of Company B, who is in the European market (as an American)? I would recommend this as additional level of diversification of your portfolio to inlcude possible large inflation of either the currency. The possible gains of this foreign exchange may be greater if one or the other currency becomes weak.\"","title":""},{"docid":"255097","text":"Liquidity on dual listed equities is rarely the same on both exchanges. More liquidity means you would typically get a better price assuming you execute the trades using the same order types. It's recommended to trade where the liquidity is greater unless your trading method benefits somehow from it being lower. It's important to remember that some ADRs (some European companies listed in US) have ADR fees which vary. USD/EUR transaction fees are low when using a decent broker but you're obviously participating in the currency risk.","title":""}],"string":"[\n {\n \"docid\": \"125568\",\n \"text\": \"\\\"No, there are neither advantages nor disadvantages. I'll take on this question from an accounting standpoint. Financial statements, the tools at which the market determines (amongst other things) the value of a stock, are converted at year end to the home currency (see 1.1.3).If Company A has revenue of 100,000 USD and the conversion to EUR is .89, revenue in the European market will be reported as 89,000 EUR. These valuations, along with ratios, analysis, and \\\"\\\"expert\\\"\\\" opinions determine if a person should own shares in Company A. Now, if we're talking about comparing markets this is a entirely different question. Example: Should I buy stock of Company A, who is in the American market (as an European)? Should I buy stock of Company B, who is in the European market (as an American)? I would recommend this as additional level of diversification of your portfolio to inlcude possible large inflation of either the currency. The possible gains of this foreign exchange may be greater if one or the other currency becomes weak.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"255097\",\n \"text\": \"Liquidity on dual listed equities is rarely the same on both exchanges. More liquidity means you would typically get a better price assuming you execute the trades using the same order types. It's recommended to trade where the liquidity is greater unless your trading method benefits somehow from it being lower. It's important to remember that some ADRs (some European companies listed in US) have ADR fees which vary. USD/EUR transaction fees are low when using a decent broker but you're obviously participating in the currency risk.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"9672","text":"\"You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in \"\"safe\"\" stocks like P&G/Coca-Cola/etc. Even these safe stocks are at risk of wild price swings in the short- to intermediate-term, especially in the event of international crises such as major European debt defaults and the like. These stocks are suitable for long-term growth objectives, but they are not as a replacement for a savings account. Coca-Cola lost a third of its value between 2007 and 2009. (It's recovered, and is currently doing better than ever.) P&G went from $74/share to $46/share. (It's partially recovered and back at $63). On the other hand, these stocks may indeed be suitable as long-term investments to protect you against local currency inflation. And yes, they even pay dividends. If you're after this investment, a good option is probably a sector-specific exchange-traded fund, such as a consumer-staples ETF. It will likely be more diversified and safer than anything you could come up with using a list of individual stocks. You can also investigate recommendations that show up when you search for a \"\"defensive ETF\"\". If you do not wish to buy the ETF directly, you can also look at listings of the ETF's holdings. Read the prospectus for an idea of the risks associated with these funds. You can buy these funds with any brokerage that gives you access to US stock exchanges.\"","title":""},{"docid":"516078","text":"I work at BATS Chi-X Europe and wanted to provide some clarity/answers to these questions. BATS Chi-X Europe is a Recognised Investment Exchange, so it is indeed a stock exchange. Sometimes the term “equity market” could be used when explaining our business, but essentially we are a stock exchange. As some background, BATS Chi-X Europe was formed by the acquisition of Chi-X Europe by BATS Trading in November 2011. At the time of the acquisition, each company operated as a Multilateral Trading Facility (MTF) for the trading of pan-European equities via a single trading platform. The category of MTF was introduced by MIFID (markets in Financial Instrument Directive) in 2007, which introduced competition in equities trading and allowed European stocks, to be traded on any European platform. Until 2007, many European stocks had to be traded only their local exchanges due to so-called “Concentration Rules”. Following the acquisition, BATS Chi-X Europe became the largest MTF in Europe, offering trading in more than 2,000 securities (2,700 securities by September 2013) across 15 major European markets, on a single trading platform. In May 2013, BATS Chi-X Europe received Recognised Investment Exchange status from the UK Financial Conduct Authority, meaning that BATS Chi-X Europe has changed from an MTF status to full exchange status. In response to question 1: The equities traded on BATS Chi-X Europe are listed on stock exchanges such as the LSE but also listed on the other European Exchanges. The term “third party” equities is not particularly useful as all stock trading in Europe is generally a “second hand” business referred to as “secondary market” trading. At the time of listing a firm issues shares; trading in these shares after the listing exercise is generally what happens in equity markets and these shares can be bought and sold on stock exchanges across Europe. Secondary market trading describes all trading on all exchanges or MTFs that takes place after the listing. In response to question 2: BATS Chi-X Europe trades over 2,700 stocks on its own trading platform. When trading on BATS Chi-X Europe, orders are executed on their own platform and will not end up of the LSE order books or platform. The fact that a stock was first listed on the LSE, does not mean that all trading in this stock happens via the LSE. However settlement process ensures that stocks end up being logged in a single depository. This means that a stock bought on BATS Chi-X Europe can be offset against the same stock sold on the LSE. In response to question 3: As noted above, BATS Chi-X Europe received Recognised Investment Exchange (RIE) status from the UK Financial Conduct Authority in May 2013, meaning that BATS Chi-X Europe has changed from an MTF status to full stock exchange status. As an exchange / RIE, BATS Chi-X Europe is authorised to offer primary and secondary listings alongside its existing business. According to the Federations of European Securities Exchanges (FESE), BATS Chi-X Europe has been the largest equity exchange in Europe by value traded in every month so far in 2013. In August, 24.1% of European equities trading in the 15 markets covered were traded on BATS Chi-X Europe. In July and August, the average notional value traded on BATS Chi-X Europe was around €7.2 billion per day. Hope this information is helpful.","title":""},{"docid":"14781","text":"\"Yes, you're still exposed to currency risk when you purchase the stock on company B's exchange. I'm assuming you're buying the shares on B's stock exchange through an ADR, GDR, or similar instrument. The risk occurs as a result of the process through which the ADR is created. In its simplest form, the process works like this: I'll illustrate this with an example. I've separated the conversion rate into the exchange rate and a generic \"\"ADR conversion rate\"\" which includes all other factors the bank takes into account when deciding how many ADR shares to sell. The fact that the units line up is a nice check to make sure the calculation is logically correct. My example starts with these assumptions: I made up the generic ADR conversion rate; it will remain constant throughout this example. This is the simplified version of the calculation of the ADR share price from the European share price: Let's assume that the euro appreciates against the US dollar, and is now worth 1.4 USD (this is a major appreciation, but it makes a good example): The currency appreciation alone raised the share price of the ADR, even though the price of the share on the European exchange was unchanged. Now let's look at what happens if the euro appreciates further to 1.5 USD/EUR, but the company's share price on the European exchange falls: Even though the euro appreciated, the decline in the share price on the European exchange offset the currency risk in this case, leaving the ADR's share price on the US exchange unchanged. Finally, what happens if the euro experiences a major depreciation and the company's share price decreases significantly in the European market? This is a realistic situation that has occurred several times during the European sovereign debt crisis. Assuming this occurred immediately after the first example, European shareholders in the company experienced a (43.50 - 50) / 50 = -13% return, but American holders of the ADR experienced a (15.95 - 21.5093) / 21.5093 = -25.9% return. The currency shock was the primary cause of this magnified loss. Another point to keep in mind is that the foreign company itself may be exposed to currency risk if it conducts a lot of business in market with different currencies. Ideally the company has hedged against this, but if you invest in a foreign company through an ADR (or a GDR or another similar instrument), you may take on whatever risk the company hasn't hedged in addition to the currency risk that's present in the ADR/GDR conversion process. Here are a few articles that discuss currency risk specifically in the context of ADR's: (1), (2). Nestle, a Swiss company that is traded on US exchanges through an ADR, even addresses this issue in their FAQ for investors. There are other risks associated with instruments like ADR's and cross-listed companies, but normally arbitrageurs will remove these discontinuities quickly. Especially for cross-listed companies, this should keep the prices of highly liquid securities relatively synchronized.\"","title":""},{"docid":"48800","text":"The main difference is that VOO trades on US stock exchanges while VUSA/VUSD trade on the London Stock Exchange. (VUSA is listed in British pounds while VUSD is listed in US dollars.) They are essentially the same product, but the fees and legal hurdles for a European citizen to trade on the LSE may be quite different from those on US stock exchanges.","title":""},{"docid":"433023","text":"Saxo Bank offers direct access to Athens Stock Exchange. Interactive Brokers is your next best bet, and as you probably already noticed, they do not have a free platform. They are open to US and non-US citizens. Although they do not currently have direct exposure to individual companies on the Athens Stock Exchange, the various european exchanges they do provide direct market access for will give a lot of exposure. There are a few Greek companies that trade on non-Greek stock exchanges, if you want exposure. There are also Greek ETFs which bundle several companies together or try to replicate Greek company indices.","title":""},{"docid":"458635","text":"\"This page from the CRA website details the types of investments you can hold in a TFSA. You can hold individual shares, including ETFs, traded on any \"\"designated stock exchange\"\" in addition to the other types of investment you have listed. Here is a list of designated stock exchanges provided by the Department of Finance. As you can see, it includes pretty well every major stock exchange in the developed world. If your bank's TFSA only offers \"\"mutual funds, GICs and saving deposits\"\" then you need to open a TFSA with a different bank or a stock broking company with an execution only service that offers TFSA accounts. Almost all of the big banks will do this. I use Scotia iTrade, HSBC Invest Direct, and TD, though my TFSA's are all with HSBC currently. You will simply provide them with details of your bank account in order to facilitate money transfers/TFSA contributions. Since purchasing foreign shares involves changing your Canadian dollars into a foreign currency, one thing to watch out for when purchasing foreign shares is the potential for high foreign exchange spreads. They can be excessive in proportion to the investment being made. My experience is that HSBC offers by far the best spreads on FX, but you need to exchange a minimum of $10,000 in order to obtain a decent spread (typically between 0.25% and 0.5%). You may also wish to note that you can buy unhedged ETFs for the US and European markets on the Toronto exchange. This means you are paying next to nothing on the spread, though you obviously are still carrying the currency risk. For example, an unhedged S&P500 trades under the code ZSP (BMO unhedged) or XUS (iShares unhedged). In addition, it is important to consider that commissions for trades on foreign markets may be much higher than those on a Canadian exchange. This is not always the case. HSBC charge me a flat rate of $6.88 for both Toronto and New York trades, but for London they would charge up to 0.5% depending on the size of the trade. Some foreign exchanges carry additional trading costs. For example, London has a 0.5% stamp duty on purchases. EDIT One final thing worth mentioning is that, in my experience, holding US securities means that you will be required to register with the US tax authorities and with those US exchanges upon which you are trading. This just means fill out a number of different forms which will be provided by your stock broker. Exchange registrations can be done electronically, however US tax authority registration must be submitted in writing. Dividends you receive will be net of US withholding taxes. I am not aware of any capital gains reporting requirements to US authorities.\"","title":""},{"docid":"231195","text":"I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do. There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier. Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail. So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague. Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares). Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose. US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead. Some links for further reference: Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful. Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds. I hope this helps! There's not much more, but it's all condensed in a handful of blogs.","title":""},{"docid":"179201","text":"The US has been the most trusted since WWII. I'll be happy to take my chances with the US stock market over any other. Yea, there are definitely bubbles in the US economy, where else would you put your money then? Bitcoin, gold, in the euro, Chinese stock market (LOL), land in the US or German bunds? how about oil or Japanese stock market? I'll take US land and US equity any day of the week over any of the other. Maybe some gold sprinkled in. You can invest in the Chinese stock market and the European stock exchanges","title":""},{"docid":"332924","text":"\"I recommend avoiding trading directly in commodities futures and options. If you're not prepared to learn a lot about how futures markets and trading works, it will be an experience fraught with pitfalls and lost money – and I am speaking from experience. Looking at stock-exchange listed products is a reasonable approach for an individual investor desiring added diversification for their portfolio. Still, exercise caution and know what you're buying. It's easy to access many commodity-based exchange-traded funds (ETFs) on North American stock exchanges. If you already have low-cost access to U.S. markets, consider this option – but be mindful of currency conversion costs, etc. Yet, there is also a European-based company, ETF Securities, headquartered in Jersey, Channel Islands, which offers many exchange-traded funds on European exchanges such as London and Frankfurt. ETF Securities started in 2003 by first offering a gold commodity exchange-traded fund. I also found the following: London Stock Exchange: Frequently Asked Questions about ETCs. The LSE ETC FAQ specifically mentions \"\"ETF Securities\"\" by name, and addresses questions such as how/where they are regulated, what happens to investments if \"\"ETF Securities\"\" were to go bankrupt, etc. I hope this helps, but please, do your own due diligence.\"","title":""},{"docid":"531953","text":"Rates are arrived at by the cumulative buying and selling on the foreign exchange market, much the same way that stock prices are arrived at. If there are more people wanting to buy dollars with euros, EUR/USD goes down. If more people want to buy euros with dollars, then EUR/USD goes up. The initial rate was about $1.18 per euro when it began trading on January 1st, 1999. It replaced the European Currency Unit at that time, which was a weighted basket of currencies of (more or less) the participating countries. You're correct about the printing press in the US and other countries. The exchange rates do reflect in part how much of a relative workout those printing presses get.","title":""},{"docid":"535340","text":"\"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets. If you are currently banking with one of the six big bank, then they will offer stockbroking services. You can shop around for the best commission rates. If you wish to manage your own investments, then you will open a \"\"self-directed\"\" account. You can shelter your investments from all taxation by opening a TFSA account with your stock broker. Currently, you can add $5,500 per year to your TFSA. Unused allowances from previous years can still be used. Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling \"\"unmanaged index funds\"\" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets. However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency. There are also issues to do with foreign withholding taxes when you trade foreign shares directly. In the case of the US, you will also need to register with the US tax authorities. Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market. The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs. For example, you can track all of the major US indices by trading in Toronto in Canadian dollars. The S&P500, the Dow Jones, and the NASDAQ100 are offered in both \"\"currency hedged\"\" and \"\"unhedged\"\" forms. In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering \"\"covered call\"\" strategies and \"\"put write\"\" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website.\"","title":""},{"docid":"29642","text":"Some of the ETFs you have specified have been delisted and are no longer trading. If you want to invest in those specific ETFs, you need to find a broker that will let you buy European equities such as those ETFs. Since you mentioned Merrill Edge, a discount broking platform, you could also consider Interactive Brokers since they do offer trading on the London Stock Exchange. There are plenty more though. Beware that you are now introducing a foreign exchange risk into your investment too and that taxation of capital returns/dividends may be quite different from a standard US-listed ETF. In the US, there are no Islamic or Shariah focussed ETFs or ETNs listed. There was an ETF (JVS) that traded from 2009-2010 but this had such little volume and interest, the fees probably didn't cover the listing expenses. It's just not a popular theme for North American listings.","title":""},{"docid":"340730","text":"When your options vest, you will have the option to buy your company's stock at a particular price (the strike price). A big part of the value of the option is the difference between the price that your company's stock is trading at, and the strike price of the option. If the price of the company stock in the market is lower than the strike price of the option, they are almost worthless. I say 'almost' because there is still the possibility that the stock price could go up before the options expire. If your company is big enough that their stock is not only listed on an exchange, but there is an active options market in your company's stock, you could get a feel for what they are worth by seeing what the market is willing to buy or sell similar exchange listed options. Once the options have vested, you now have the right to purchase your company's stock at the specified strike price until the options expire. When you use that right, you are exercising the option. You don't have to do that until you think it is worthwhile buying company stock at that price. If the company pays a dividend, it would probably be worth exercising the options sooner, (options don't receive a dividend). Ultimately you are buying your company's stock (albeit at a discount). You need to see if your company's stock is still a good investment. If you think your company has growth prospects, you might want to hold onto the stock. If you think you'd be better off putting your money elsewhere in the market, sell the stock you acquired at a discount and use the money to invest in something else. If there are any additional benefits to holding on to the stock for a period of time (e.g. selling part to fit within your capital gain allowance for that year) you should factor that into your investment decision, but it shouldn't force you to invest in, or remain invested in something you would otherwise view as too risky to invest in. A reminder of that fact is that some employees of Enron invested their entire retirement plans into Enron stock, so when Enron went bankrupt, these employees not only lost their job but their savings for retirement as well...","title":""},{"docid":"467825","text":"\"These have the potential to become \"\"end-of-the-world\"\" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece.\"","title":""},{"docid":"537222","text":"If a company's shares trade in multiple exchanges, the prices in every exchange are very near to each other, otherwise you could earn money by doing arbitrage deals (buying in one, selling in the other) - and people do that once it becomes worth it. Which stock exchange you use is more a convenience for the buyer/seller - many investment banks offer only something local/near, and you have to go to specific investment banks to use other exchanges. For example, in Germany, it is easy to deal in Frankfurt, but if you want to trade at the the NASDAQ, you have to run around and find a bank that offers it, and you probably have to pay extra for it. In the USA, most investment banks offer NASDAQ, but if you want to trade in Frankfurt, you will have run around for an international company that offers that. As a stock owner/buyer, you can sell/buy your shares on any stock exchange where the company is listed (again, assuming your investment broker supports it). So you can buy in Frankfurt and sell in Tokyo seconds later, as nothing needs to be physically moved. Companies that are listed in multiple stock exchangs are typically large, and offer this to make trading their shares easier for a larger part of the world. Considering your 'theoretical buy all shares' - the shares are not located in the exchanges, they are in the hands of the owners, and not all are for sale, for various reasons. The owners decide if and when they want them offered for sale, and they also decide which stock exchange they offer them on; so you would need to go to all exchanges to buy them all. However, if you raise your offer price in one exchange only slightly, someone will see the arbitrage and buy them in the other locations and offer them to you in your stock exchange; in other words, for a small fee the shares will come to you. But again, most shares are typically not for sale. It's the same as trying to buy all Chevy Tahoes - even if you had the money, most owners wouldn't know or care about you. You would have to go around and contact every single one and convince them to sell.","title":""},{"docid":"343638","text":"\"In the US there is only one stock market (ignoring penny stocks) and handfuls of different exchanges behind it. NYSE and NASDAQ are two different exchanges, but all the products you can buy on one can also be bought on the other; i.e. they are all the same market. So a US equities broker cannot possibly restrict access to any \"\"markets\"\" in the US because there is only one. (Interestingly, it is commonplace for US equity brokers to cheat their customers by using only exchanges where they -- the brokers -- get the best deals, even if it means your order is not executed as quickly or cheaply as possible. This is called payment for order flow and unfortunately will probably take an Act of Congress to stop.) Some very large brokers will have trading access to popular equity markets in other countries (Toronto Stock Exchange, Mexico Stock Exchange, London Stock Exchange) and can support your trades there. However, at many brokers or in less popular foreign markets this is usually not the case; to trade in the average foreign country you typically must open an account with a broker in that country.\"","title":""},{"docid":"550992","text":"\"I can address what it means to \"\"pick off\"\" all those trades... As quantycuenta & littleadv have said, it is absolutely true that professionals \"\"prey\"\" on less-sophisticated market participants. They aren't in the market for charity's sake. If you're not familiar with the definition of the word \"\"arbitrage\"\", look it up. One possible strategy that can be employed with HFT machinery in order to arbitrage successfully in the stock market is to 'intercept' orders that are placed on various exchanges. In order to do this, an HFT organization watches all the transactions at once to find opportunities to buy low and sell high. A good explanation of it is described here in this NY Times article; I'll paraphrase what that article lays out. Stocks are traded through multiple exchanges The first key point to understand is that stocks listed on one exchange (i.e. the NYSE) can be sold on multiple exchanges. That's where the actual \"\"I would like to sell 100 shares of Ford stock\"\" is matched with \"\"I would like to buy 100 shares of Ford stock.\"\" There are multiple clearinghouses on the various exchanges. Your order gets presented to one exchange at a Time An ideal market maker would like to look at the order books for a given stock, say Ford, and see that in exchange A there's a sell order for 100 shares of F at $15.85, and in exchange B there's a buy order for 100 shares of F at $15.90. Arbitrage Market maker buys from A, sells in B, and pockets $0.05 * 100... $5. It's not much, but it was relatively risk free. Also, scale this up to the scale of the US' multiple stock exchanges, and there are lots of opportunities to make $5 every second. Computers are (of course) faster than people To tie it in completely with your question about 'picking off trades', HFT rigs can be set up and programmed to go faster than an average retail investor's order. Let's say you execute the trade to buy 100 shares @ $15.85 as a retail investor. The HFT rigs see your order starting to make the rounds of the different exchanges that your brokerage works through, and go out in front in a matter of milliseconds, finding the orders that are less than $15.85 and less than or equal to 100 shares. They execute a transaction, buy them up, sell to you, and pocket the difference. You have been \"\"picked off\"\". It's admittedly not the only way to use HFT equipment to make money, but it's definitely one way to do it.\"","title":""},{"docid":"79777","text":"\"It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's \"\"Supply:\"\" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank \"\"have\"\" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the \"\"multiplier effect.\"\" The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the \"\"supply\"\" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official \"\"basket of goods\"\" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.\"","title":""},{"docid":"362035","text":"My experience (from European countries, but not Portugal specifically) is that it's better to change in the European country, as many banks will give you US $ as a matter of course, while in the US (insular place that it is), it can be rather difficult to find a place to exchange money outside an international airport. In fact, I have a few hundred Euros left from my last trip, several years ago. Expected to make another trip which didn't come off, and haven't found a place to exchange them. PS: Just for information's sake, at the time I was working in Europe, and found that by far the easiest way to transfer part of my salary back home was to get $100 bills from my European bank. Another way was to withdraw money from an ATM, as the US & European banks were on the same network. Unfortunately the IRS put a stop to that, though I don't know if it was all banks, or just the particular one I was using. Might be worth checking, though.","title":""},{"docid":"369266","text":"A stock, bond or ETF is basically a commodity. Where you bought it does not really matter, and it has a value in USD only inasmuch as there is a current market price quoted at an American exchange. But nothing prevents you from turning around and selling it on a European exchange where it is also listed for an equivalent amount of EUR (arbitrage activities of investment banks ensure that the price will be equivalent in regard to the current exchange rate). In fact, this can be used as a cheap form of currency conversion. For blue chips at least this is trivial; exotic securities might not be listed in Europe. All you need is a broker who allows you to trade on European exchanges and hold an account denominated in EUR. If necessary, transfer your securities to a broker who does, which should not cost more than a nominal fee. Mutual funds are a different beast though; it might be possible to sell shares on an exchange anyway, or sell them back to the issuer for EUR. It depends. In any case, however, transferring 7 figure sums internationally can trigger all kinds of tax events and money laundering investigations. You really need to hire a financial advisor who has international investment experience for this kind of thing, not ask a web forum!","title":""},{"docid":"98510","text":"There's a possibility to lose money in exchange rate shifts, but just as much chance to gain money (Efficient Market Hypothesis and all that). If you're worried about it, you should buy a stock in Canada and short sell the US version at the same time. Then journal the Canadian stock over to the US stock exchange and use it to settle your short sell. Or you can use derivatives to accomplish the same thing.","title":""},{"docid":"227232","text":"Gold is traded on the London stock exchange (LSE) and the New York stock exchange (NYSE) under various separate asset tickers, mainly denominated in sterling and US dollars respectively. These stocks will reflect FX changes very quickly. If you sold LSE gold and foreign exchanged your sterling to dollars to buy NYSE gold you would almost certainly lose on the spreads upon selling, FX'ing and re-buying. In short, the same asset doesn't exist in multiple currencies. It may have the same International Securities Identification Number (ISIN), but it can trade with different Stock Exchange Daily Official List (SEDOL) identifiers, reflecting different currencies and/or exchanges, each carrying a different price at any one time.","title":""},{"docid":"109796","text":"You might have better luck using Quandl as a source. They have free databases, you just need to register to access them. They also have good api's, easier to use than the yahoo api's Their WIKI database of stock prices is curated and things like this are fixed (www.quandl.com/WIKI ), but I'm not sure that covers the London stock exchange. They do, however, have other databases that cover the London stock exchange.","title":""},{"docid":"426591","text":"\"Former financial analyst here, happy to help you. First off, you are right to not be entirely trusting of advisors and attorneys. They are usually trustworthy, but not always. And when you are new to this, the untrustworthy ones have a habit of reaching you first - you're their target market. I'll give you a little breakdown of how to plan, and a starting investment. First, figure out your future expenses. A LOT of that money may go to medical bills or associated care - don't forget the costs of modifications and customizations to items so you can have a better quality of life. Cars can be retrofit to assist you with a wheelchair, you can build a chair lift into a staircase, things like that which will be important for mobility - all depending on the lingering medical conditions. Mobility and independence will be critically important for you. Your past expenses are the best predictor of future expenses, so filter out the one-time legal and medical costs and use those to predict. Second, for investing there is a simple route to get into the stock market, and hopefully you will hear it a lot: Exchange Traded Funds (ETFs). You'll hear \"\"The S&P 500 increased by 80 points today...\"\" on the news; the S&P is a combination of 500 different stocks and is used to gauge the market overall. You can buy an exchange traded fund as a stock, and it's an investment in all those components. There's an ETF for almost anything, but the most popular ones are for those big indexes. I would suggest putting a few hundred thousand into an S&P 500 indexed ETF (do it at maybe $10,000 per month, so you spread the money out and ensure you don't buy at a market peak), and then let it sit there for many years. You can buy stocks through online brokerages like Scottrade or ETrade, and they make it fairly easy - they even have local offices that you can visit for help. Stocks are the easiest way to invest. Once you've done this, you can also open a IRA (a type of retirement account with special tax benefits) and contribute several thousand dollars to it per year. I'll be happy to give more advice if/when you need it, but there are a number of good books for beginning investors that can explain it better than I. I would suggest that you avoid real estate, especially if you expect to move overseas, as it is significantly more complicated and has maintenance costs and taxes.\"","title":""},{"docid":"289466","text":"\"I expect that data may be copyright. Data that's published (e.g. on a newsfeed or web site) is subject to terms of use. Standard & Poor's web site says, about the Shiller indexes, Who do I contact at S&P to license my use of these indices? Questions regarding licensing the S&P/Case-Shiller Home Price Indices can be addressed to: Bo Chung Managing Director bo_chung@standardandpoors.com, +1.212.438.3519 As for 'recording' the information yourself, that may depend on how and where (e.g. from what source) you're recording it. If for example you tried to record prices from the Canadian MLS (Realtor's) network, they too have their own terms of use on the data they publish. Copyright laws vary from country to country (and terms of use certainly vary): for example see http://en.wikipedia.org/wiki/Feist_v._Rural which is case law about copyrighting a phone directory in the USA, and contrast that with http://en.wikipedia.org/wiki/Database_right which is European legislation. So who owns data if it is determined by free market? I guess that \"\"determined by free market\"\" means that buyers and sellers are publishing their offers-to-buy and their offers-to-sell, and I guess that the publisher (e.g. the stock exchange) has 'terms of use' about the data (the offers) that they're publishing.\"","title":""},{"docid":"113786","text":"\"There are two umbrellas in investing: active management and passive management. Passive management is based on the idea \"\"you can't beat the market.\"\" Passive investors believe in the efficient markets hypothesis: \"\"the market interprets all information about an asset, so price is equal to underlying value\"\". Another idea in this field is that there's a minimum risk associated with any given return. You can't increase your expected return without assuming more risk. To see it graphically: As expected return goes up, so does risk. If we stat with a portfolio of 100 bonds, then remove 30 bonds and add 30 stocks, we'll have a portfolio that's 70% bonds/30% stocks. Turns out that this makes expected return increase and lower risk because of diversification. Markowitz showed that you could reduce the overall portfolio risk by adding a riskier, but uncorrelated, asset! Basically, if your entire portfolio is US stocks, then you'll lose money whenever US stocks fall. But, if you have half US stocks, quarter US bonds, and quarter European stocks, then even if the US market tanks, half your portfolio will be unaffected (theoretically). Adding different types of uncorrelated assets can reduce risk and increase returns. Let's tie this all together. We should get a variety of stocks to reduce our risk, and we can't beat the market by security selection. Ideally, we ought to buy nearly every stock in the market so that So what's our solution? Why, the exchange traded fund (ETF) of course! An ETF is basically a bunch of stocks that trade as a single ticker symbol. For example, consider the SPDR S&P 500 (SPY). You can purchase a unit of \"\"SPY\"\" and it will move up/down proportional to the S&P 500. This gives us diversification among stocks, to prevent any significant downside while limiting our upside. How do we diversify across asset classes? Luckily, we can purchase ETF's for almost anything: Gold ETF's (commodities), US bond ETF's (domestic bonds), International stock ETFs, Intl. bonds ETFs, etc. So, we can buy ETF's to give us exposure to various asset classes, thus diversifying among asset classes and within each asset class. Determining what % of our portfolio to put in any given asset class is known as asset allocation and some people say up to 90% of portfolio returns can be determined by asset allocation. That pretty much sums up passive management. The idea is to buy ETFs across asset classes and just leave them. You can readjust your portfolio holdings periodically, but otherwise there is no rapid trading. Now the other umbrella is active management. The unifying idea is that you can generate superior returns by stock selection. Active investors reject the idea of efficient markets. A classic and time proven strategy is value investing. After the collapse of 07/08, bank stocks greatly fell, but all the other stocks fell with them. Some stocks worth $100 were selling for $50. Value investors quickly snapped up these stocks because they had a margin of safety. Even if the stock didn't go back to 100, it could go up to $80 or $90 eventually, and investors profit. The main ideas in value investing are: have a big margin of safety, look at a company's fundamentals (earnings, book value, etc), and see if it promises adequate return. Coke has tremendous earnings and it's a great company, but it's so large that you're never going to make 20% profits on it annually, because it just can't grow that fast. Another field of active investing is technical analysis. As opposed to the \"\"fundamental analysis\"\" of value investing, technical analysis involves looking at charts for patterns, and looking at stock history to determine future paths. Things like resistance points and trend lines also play a role. Technical analysts believe that stocks are just ticker symbols and that you can use guidelines to predict where they're headed. Another type of active investing is day trading. This basically involves buying and selling stocks every hour or every minute or just at a rapid pace. Day traders don't hold onto investments for very long, and are always trying to predict the market in the short term and take advantage of it. Many individual investors are also day traders. The other question is, how do you choose a strategy? The short answer is: pick whatever works for you. The long answer is: Day trading and technical analysis is a lot of luck. If there are consistent systems for trading , then people are keeping them secret, because there is no book that you can read and become a consistent trader. High frequency trading (HFT) is an area where people basically mint money, but it s more technology and less actual investing, and would not be categorized as day trading. Benjamin Graham once said: In the short run, the market is a voting machine but in the long run it is a weighing machine. Value investing will work because there's evidence for it throughout history, but you need a certain temperament for it and most people don't have that. Furthermore, it takes a lot of time to adequately study stocks, and people with day jobs can't devote that kind of time. So there you have it. This is my opinion and by no means definitive, but I hope you have a starting point to continue your study. I included the theory in the beginning because there are too many monkeys on CNBC and the news who just don't understand fundamental economics and finance, and there's no sense in applying a theory until you can understand why it works and when it doesn't.\"","title":""},{"docid":"9274","text":"\"Futures are an agreement to buy or sell something in the future. The futures \"\"price\"\" is the price at which you agree to make the trade. This price does not indicate what will happen in the future so much as it indicates the cost of buying the item today and holding it until the future date. Hence, for very liquid products such as stock index futures, the futures price is a very simple function of today's stock index value and current short-term interest rates. If the stock exchange is closed but the futures exchange is open, then using the futures price and interest rates one can back out an implied \"\"fair value\"\" for the index, which is in essence the market's estimate of what the stock index value would be right now if the stock market were open. Of course, as soon as the stock exchange opens, the futures price trades to within a narrow band of the actual index value, where the size of the band depends on transaction costs (bid-ask spread, commissions, etc.).\"","title":""},{"docid":"455856","text":"Shorting the Euro is the same as staying long the dollar, so if you're in the US you don't need to do anything. If you want to make some serious money you would want to either short specific European bank stocks, or buy puts on some of the European indices.","title":""},{"docid":"291600","text":"\"As I stated in my comment, options are futures, but with the twist that you're allowed to say no to the agreed-on transaction; if the market offers you a better deal on whatever you had contracted to buy or sell, you have the option of simply letting it expire. Options therefore are the insurance policy of the free market. You negotiate a future price (actually you usually take what you can get if you're an individual investor; the institutional fund managers get to negotiate because they're moving billions around every day), then you pay the other guy up front for the right of refusal later. How much you pay depends on how likely the person giving you this option is to have to make good on it; if your position looks like a sure thing, an option's going to be very expensive (and if it's such a sure thing, you should just make your move on the spot market; it's thus useful to track futures prices to see where the various big players are predicting that your portfolio will move). A put option, which is an option for you to sell something at a future price, is a hedge against loss of value of your portfolio. You can take one out on any single item in your portfolio, or against a portion or even your entire portfolio. If the stock loses value such that the contract price is better than the market price as of the delivery date of the contract, you execute the option; otherwise, you let it expire. A call option, which is an option to buy something at a future price, is a hedge against rising costs. The rough analog is a \"\"pre-order\"\" in retail (but more like a \"\"holding fee\"\"). They're unusual in portfolio management but can be useful when moving money around in more complex ways. Basically, if you need to guarantee that you will not pay more than a certain per-share price to buy something in the future, you buy a call option. If the spot price as of the delivery date is less than the contract price, you buy from the market and ignore the contract, while if prices have soared, you exercise it and get the lower contract price. Stock options, offered as benefits in many companies, are a specific form of call option with very generous terms for whomever holds them. A swaption, basically a put and a call rolled into one, allows you to trade something for something else. Call it the free market's \"\"exchange policy\"\". For a price, if a security you currently hold loses value, you can exchange it for something else that you predicted would become more valuable at the same time. One example might be airline stocks and crude oil; when crude spikes, airline stocks generally suffer, and you can take advantage of this, if it happens, with a swaption to sell your airline stocks for crude oil certificates. There are many such closely-related inverse positions in the market, such as between various currencies, between stocks and commodities (gold is inversely related to pretty much everything else), and even straight-up cash-for-bad-debt arrangements (credit-default swaps, which we heard so much about in 2008).\"","title":""},{"docid":"415061","text":"This post has been wrote in 2014, so if you read this text be aware. At the time, and since France does tax a lot investment, I'd suggest you start a PEA and filling in using the lazy investment portfolio. That means buying European and/or French ETFs & index, and hold them as long as you can. You can fill your PEA (Plan d'Epargne en Action) up to 150.000€ for a period of at least 8 years as long as you fill it with European and French stocks. After the period of 8 years your profit is taxed at only mere 15%, instead of the 33% you see in a raw broker account. Since you are young, I think a 100% stocks is something you can hold on. If you can't sleep at night with 100% stocks, take some bonds up to 25%, even more. Anyway, the younger you start investing, the more ahead you may eventually go.","title":""}],"string":"[\n {\n \"docid\": \"9672\",\n \"text\": \"\\\"You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in \\\"\\\"safe\\\"\\\" stocks like P&G/Coca-Cola/etc. Even these safe stocks are at risk of wild price swings in the short- to intermediate-term, especially in the event of international crises such as major European debt defaults and the like. These stocks are suitable for long-term growth objectives, but they are not as a replacement for a savings account. Coca-Cola lost a third of its value between 2007 and 2009. (It's recovered, and is currently doing better than ever.) P&G went from $74/share to $46/share. (It's partially recovered and back at $63). On the other hand, these stocks may indeed be suitable as long-term investments to protect you against local currency inflation. And yes, they even pay dividends. If you're after this investment, a good option is probably a sector-specific exchange-traded fund, such as a consumer-staples ETF. It will likely be more diversified and safer than anything you could come up with using a list of individual stocks. You can also investigate recommendations that show up when you search for a \\\"\\\"defensive ETF\\\"\\\". If you do not wish to buy the ETF directly, you can also look at listings of the ETF's holdings. Read the prospectus for an idea of the risks associated with these funds. You can buy these funds with any brokerage that gives you access to US stock exchanges.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"516078\",\n \"text\": \"I work at BATS Chi-X Europe and wanted to provide some clarity/answers to these questions. BATS Chi-X Europe is a Recognised Investment Exchange, so it is indeed a stock exchange. Sometimes the term “equity market” could be used when explaining our business, but essentially we are a stock exchange. As some background, BATS Chi-X Europe was formed by the acquisition of Chi-X Europe by BATS Trading in November 2011. At the time of the acquisition, each company operated as a Multilateral Trading Facility (MTF) for the trading of pan-European equities via a single trading platform. The category of MTF was introduced by MIFID (markets in Financial Instrument Directive) in 2007, which introduced competition in equities trading and allowed European stocks, to be traded on any European platform. Until 2007, many European stocks had to be traded only their local exchanges due to so-called “Concentration Rules”. Following the acquisition, BATS Chi-X Europe became the largest MTF in Europe, offering trading in more than 2,000 securities (2,700 securities by September 2013) across 15 major European markets, on a single trading platform. In May 2013, BATS Chi-X Europe received Recognised Investment Exchange status from the UK Financial Conduct Authority, meaning that BATS Chi-X Europe has changed from an MTF status to full exchange status. In response to question 1: The equities traded on BATS Chi-X Europe are listed on stock exchanges such as the LSE but also listed on the other European Exchanges. The term “third party” equities is not particularly useful as all stock trading in Europe is generally a “second hand” business referred to as “secondary market” trading. At the time of listing a firm issues shares; trading in these shares after the listing exercise is generally what happens in equity markets and these shares can be bought and sold on stock exchanges across Europe. Secondary market trading describes all trading on all exchanges or MTFs that takes place after the listing. In response to question 2: BATS Chi-X Europe trades over 2,700 stocks on its own trading platform. When trading on BATS Chi-X Europe, orders are executed on their own platform and will not end up of the LSE order books or platform. The fact that a stock was first listed on the LSE, does not mean that all trading in this stock happens via the LSE. However settlement process ensures that stocks end up being logged in a single depository. This means that a stock bought on BATS Chi-X Europe can be offset against the same stock sold on the LSE. In response to question 3: As noted above, BATS Chi-X Europe received Recognised Investment Exchange (RIE) status from the UK Financial Conduct Authority in May 2013, meaning that BATS Chi-X Europe has changed from an MTF status to full stock exchange status. As an exchange / RIE, BATS Chi-X Europe is authorised to offer primary and secondary listings alongside its existing business. According to the Federations of European Securities Exchanges (FESE), BATS Chi-X Europe has been the largest equity exchange in Europe by value traded in every month so far in 2013. In August, 24.1% of European equities trading in the 15 markets covered were traded on BATS Chi-X Europe. In July and August, the average notional value traded on BATS Chi-X Europe was around €7.2 billion per day. Hope this information is helpful.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"14781\",\n \"text\": \"\\\"Yes, you're still exposed to currency risk when you purchase the stock on company B's exchange. I'm assuming you're buying the shares on B's stock exchange through an ADR, GDR, or similar instrument. The risk occurs as a result of the process through which the ADR is created. In its simplest form, the process works like this: I'll illustrate this with an example. I've separated the conversion rate into the exchange rate and a generic \\\"\\\"ADR conversion rate\\\"\\\" which includes all other factors the bank takes into account when deciding how many ADR shares to sell. The fact that the units line up is a nice check to make sure the calculation is logically correct. My example starts with these assumptions: I made up the generic ADR conversion rate; it will remain constant throughout this example. This is the simplified version of the calculation of the ADR share price from the European share price: Let's assume that the euro appreciates against the US dollar, and is now worth 1.4 USD (this is a major appreciation, but it makes a good example): The currency appreciation alone raised the share price of the ADR, even though the price of the share on the European exchange was unchanged. Now let's look at what happens if the euro appreciates further to 1.5 USD/EUR, but the company's share price on the European exchange falls: Even though the euro appreciated, the decline in the share price on the European exchange offset the currency risk in this case, leaving the ADR's share price on the US exchange unchanged. Finally, what happens if the euro experiences a major depreciation and the company's share price decreases significantly in the European market? This is a realistic situation that has occurred several times during the European sovereign debt crisis. Assuming this occurred immediately after the first example, European shareholders in the company experienced a (43.50 - 50) / 50 = -13% return, but American holders of the ADR experienced a (15.95 - 21.5093) / 21.5093 = -25.9% return. The currency shock was the primary cause of this magnified loss. Another point to keep in mind is that the foreign company itself may be exposed to currency risk if it conducts a lot of business in market with different currencies. Ideally the company has hedged against this, but if you invest in a foreign company through an ADR (or a GDR or another similar instrument), you may take on whatever risk the company hasn't hedged in addition to the currency risk that's present in the ADR/GDR conversion process. Here are a few articles that discuss currency risk specifically in the context of ADR's: (1), (2). Nestle, a Swiss company that is traded on US exchanges through an ADR, even addresses this issue in their FAQ for investors. There are other risks associated with instruments like ADR's and cross-listed companies, but normally arbitrageurs will remove these discontinuities quickly. Especially for cross-listed companies, this should keep the prices of highly liquid securities relatively synchronized.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"48800\",\n \"text\": \"The main difference is that VOO trades on US stock exchanges while VUSA/VUSD trade on the London Stock Exchange. (VUSA is listed in British pounds while VUSD is listed in US dollars.) They are essentially the same product, but the fees and legal hurdles for a European citizen to trade on the LSE may be quite different from those on US stock exchanges.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"433023\",\n \"text\": \"Saxo Bank offers direct access to Athens Stock Exchange. Interactive Brokers is your next best bet, and as you probably already noticed, they do not have a free platform. They are open to US and non-US citizens. Although they do not currently have direct exposure to individual companies on the Athens Stock Exchange, the various european exchanges they do provide direct market access for will give a lot of exposure. There are a few Greek companies that trade on non-Greek stock exchanges, if you want exposure. There are also Greek ETFs which bundle several companies together or try to replicate Greek company indices.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"458635\",\n \"text\": \"\\\"This page from the CRA website details the types of investments you can hold in a TFSA. You can hold individual shares, including ETFs, traded on any \\\"\\\"designated stock exchange\\\"\\\" in addition to the other types of investment you have listed. Here is a list of designated stock exchanges provided by the Department of Finance. As you can see, it includes pretty well every major stock exchange in the developed world. If your bank's TFSA only offers \\\"\\\"mutual funds, GICs and saving deposits\\\"\\\" then you need to open a TFSA with a different bank or a stock broking company with an execution only service that offers TFSA accounts. Almost all of the big banks will do this. I use Scotia iTrade, HSBC Invest Direct, and TD, though my TFSA's are all with HSBC currently. You will simply provide them with details of your bank account in order to facilitate money transfers/TFSA contributions. Since purchasing foreign shares involves changing your Canadian dollars into a foreign currency, one thing to watch out for when purchasing foreign shares is the potential for high foreign exchange spreads. They can be excessive in proportion to the investment being made. My experience is that HSBC offers by far the best spreads on FX, but you need to exchange a minimum of $10,000 in order to obtain a decent spread (typically between 0.25% and 0.5%). You may also wish to note that you can buy unhedged ETFs for the US and European markets on the Toronto exchange. This means you are paying next to nothing on the spread, though you obviously are still carrying the currency risk. For example, an unhedged S&P500 trades under the code ZSP (BMO unhedged) or XUS (iShares unhedged). In addition, it is important to consider that commissions for trades on foreign markets may be much higher than those on a Canadian exchange. This is not always the case. HSBC charge me a flat rate of $6.88 for both Toronto and New York trades, but for London they would charge up to 0.5% depending on the size of the trade. Some foreign exchanges carry additional trading costs. For example, London has a 0.5% stamp duty on purchases. EDIT One final thing worth mentioning is that, in my experience, holding US securities means that you will be required to register with the US tax authorities and with those US exchanges upon which you are trading. This just means fill out a number of different forms which will be provided by your stock broker. Exchange registrations can be done electronically, however US tax authority registration must be submitted in writing. Dividends you receive will be net of US withholding taxes. I am not aware of any capital gains reporting requirements to US authorities.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"231195\",\n \"text\": \"I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do. There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier. Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail. So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague. Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares). Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose. US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead. Some links for further reference: Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful. Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds. I hope this helps! There's not much more, but it's all condensed in a handful of blogs.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"179201\",\n \"text\": \"The US has been the most trusted since WWII. I'll be happy to take my chances with the US stock market over any other. Yea, there are definitely bubbles in the US economy, where else would you put your money then? Bitcoin, gold, in the euro, Chinese stock market (LOL), land in the US or German bunds? how about oil or Japanese stock market? I'll take US land and US equity any day of the week over any of the other. Maybe some gold sprinkled in. You can invest in the Chinese stock market and the European stock exchanges\",\n \"title\": \"\"\n },\n {\n \"docid\": \"332924\",\n \"text\": \"\\\"I recommend avoiding trading directly in commodities futures and options. If you're not prepared to learn a lot about how futures markets and trading works, it will be an experience fraught with pitfalls and lost money – and I am speaking from experience. Looking at stock-exchange listed products is a reasonable approach for an individual investor desiring added diversification for their portfolio. Still, exercise caution and know what you're buying. It's easy to access many commodity-based exchange-traded funds (ETFs) on North American stock exchanges. If you already have low-cost access to U.S. markets, consider this option – but be mindful of currency conversion costs, etc. Yet, there is also a European-based company, ETF Securities, headquartered in Jersey, Channel Islands, which offers many exchange-traded funds on European exchanges such as London and Frankfurt. ETF Securities started in 2003 by first offering a gold commodity exchange-traded fund. I also found the following: London Stock Exchange: Frequently Asked Questions about ETCs. The LSE ETC FAQ specifically mentions \\\"\\\"ETF Securities\\\"\\\" by name, and addresses questions such as how/where they are regulated, what happens to investments if \\\"\\\"ETF Securities\\\"\\\" were to go bankrupt, etc. I hope this helps, but please, do your own due diligence.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"531953\",\n \"text\": \"Rates are arrived at by the cumulative buying and selling on the foreign exchange market, much the same way that stock prices are arrived at. If there are more people wanting to buy dollars with euros, EUR/USD goes down. If more people want to buy euros with dollars, then EUR/USD goes up. The initial rate was about $1.18 per euro when it began trading on January 1st, 1999. It replaced the European Currency Unit at that time, which was a weighted basket of currencies of (more or less) the participating countries. You're correct about the printing press in the US and other countries. The exchange rates do reflect in part how much of a relative workout those printing presses get.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"535340\",\n \"text\": \"\\\"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets. If you are currently banking with one of the six big bank, then they will offer stockbroking services. You can shop around for the best commission rates. If you wish to manage your own investments, then you will open a \\\"\\\"self-directed\\\"\\\" account. You can shelter your investments from all taxation by opening a TFSA account with your stock broker. Currently, you can add $5,500 per year to your TFSA. Unused allowances from previous years can still be used. Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling \\\"\\\"unmanaged index funds\\\"\\\" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets. However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency. There are also issues to do with foreign withholding taxes when you trade foreign shares directly. In the case of the US, you will also need to register with the US tax authorities. Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market. The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs. For example, you can track all of the major US indices by trading in Toronto in Canadian dollars. The S&P500, the Dow Jones, and the NASDAQ100 are offered in both \\\"\\\"currency hedged\\\"\\\" and \\\"\\\"unhedged\\\"\\\" forms. In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering \\\"\\\"covered call\\\"\\\" strategies and \\\"\\\"put write\\\"\\\" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"29642\",\n \"text\": \"Some of the ETFs you have specified have been delisted and are no longer trading. If you want to invest in those specific ETFs, you need to find a broker that will let you buy European equities such as those ETFs. Since you mentioned Merrill Edge, a discount broking platform, you could also consider Interactive Brokers since they do offer trading on the London Stock Exchange. There are plenty more though. Beware that you are now introducing a foreign exchange risk into your investment too and that taxation of capital returns/dividends may be quite different from a standard US-listed ETF. In the US, there are no Islamic or Shariah focussed ETFs or ETNs listed. There was an ETF (JVS) that traded from 2009-2010 but this had such little volume and interest, the fees probably didn't cover the listing expenses. It's just not a popular theme for North American listings.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"340730\",\n \"text\": \"When your options vest, you will have the option to buy your company's stock at a particular price (the strike price). A big part of the value of the option is the difference between the price that your company's stock is trading at, and the strike price of the option. If the price of the company stock in the market is lower than the strike price of the option, they are almost worthless. I say 'almost' because there is still the possibility that the stock price could go up before the options expire. If your company is big enough that their stock is not only listed on an exchange, but there is an active options market in your company's stock, you could get a feel for what they are worth by seeing what the market is willing to buy or sell similar exchange listed options. Once the options have vested, you now have the right to purchase your company's stock at the specified strike price until the options expire. When you use that right, you are exercising the option. You don't have to do that until you think it is worthwhile buying company stock at that price. If the company pays a dividend, it would probably be worth exercising the options sooner, (options don't receive a dividend). Ultimately you are buying your company's stock (albeit at a discount). You need to see if your company's stock is still a good investment. If you think your company has growth prospects, you might want to hold onto the stock. If you think you'd be better off putting your money elsewhere in the market, sell the stock you acquired at a discount and use the money to invest in something else. If there are any additional benefits to holding on to the stock for a period of time (e.g. selling part to fit within your capital gain allowance for that year) you should factor that into your investment decision, but it shouldn't force you to invest in, or remain invested in something you would otherwise view as too risky to invest in. A reminder of that fact is that some employees of Enron invested their entire retirement plans into Enron stock, so when Enron went bankrupt, these employees not only lost their job but their savings for retirement as well...\",\n \"title\": \"\"\n },\n {\n \"docid\": \"467825\",\n \"text\": \"\\\"These have the potential to become \\\"\\\"end-of-the-world\\\"\\\" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"537222\",\n \"text\": \"If a company's shares trade in multiple exchanges, the prices in every exchange are very near to each other, otherwise you could earn money by doing arbitrage deals (buying in one, selling in the other) - and people do that once it becomes worth it. Which stock exchange you use is more a convenience for the buyer/seller - many investment banks offer only something local/near, and you have to go to specific investment banks to use other exchanges. For example, in Germany, it is easy to deal in Frankfurt, but if you want to trade at the the NASDAQ, you have to run around and find a bank that offers it, and you probably have to pay extra for it. In the USA, most investment banks offer NASDAQ, but if you want to trade in Frankfurt, you will have run around for an international company that offers that. As a stock owner/buyer, you can sell/buy your shares on any stock exchange where the company is listed (again, assuming your investment broker supports it). So you can buy in Frankfurt and sell in Tokyo seconds later, as nothing needs to be physically moved. Companies that are listed in multiple stock exchangs are typically large, and offer this to make trading their shares easier for a larger part of the world. Considering your 'theoretical buy all shares' - the shares are not located in the exchanges, they are in the hands of the owners, and not all are for sale, for various reasons. The owners decide if and when they want them offered for sale, and they also decide which stock exchange they offer them on; so you would need to go to all exchanges to buy them all. However, if you raise your offer price in one exchange only slightly, someone will see the arbitrage and buy them in the other locations and offer them to you in your stock exchange; in other words, for a small fee the shares will come to you. But again, most shares are typically not for sale. It's the same as trying to buy all Chevy Tahoes - even if you had the money, most owners wouldn't know or care about you. You would have to go around and contact every single one and convince them to sell.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"343638\",\n \"text\": \"\\\"In the US there is only one stock market (ignoring penny stocks) and handfuls of different exchanges behind it. NYSE and NASDAQ are two different exchanges, but all the products you can buy on one can also be bought on the other; i.e. they are all the same market. So a US equities broker cannot possibly restrict access to any \\\"\\\"markets\\\"\\\" in the US because there is only one. (Interestingly, it is commonplace for US equity brokers to cheat their customers by using only exchanges where they -- the brokers -- get the best deals, even if it means your order is not executed as quickly or cheaply as possible. This is called payment for order flow and unfortunately will probably take an Act of Congress to stop.) Some very large brokers will have trading access to popular equity markets in other countries (Toronto Stock Exchange, Mexico Stock Exchange, London Stock Exchange) and can support your trades there. However, at many brokers or in less popular foreign markets this is usually not the case; to trade in the average foreign country you typically must open an account with a broker in that country.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"550992\",\n \"text\": \"\\\"I can address what it means to \\\"\\\"pick off\\\"\\\" all those trades... As quantycuenta & littleadv have said, it is absolutely true that professionals \\\"\\\"prey\\\"\\\" on less-sophisticated market participants. They aren't in the market for charity's sake. If you're not familiar with the definition of the word \\\"\\\"arbitrage\\\"\\\", look it up. One possible strategy that can be employed with HFT machinery in order to arbitrage successfully in the stock market is to 'intercept' orders that are placed on various exchanges. In order to do this, an HFT organization watches all the transactions at once to find opportunities to buy low and sell high. A good explanation of it is described here in this NY Times article; I'll paraphrase what that article lays out. Stocks are traded through multiple exchanges The first key point to understand is that stocks listed on one exchange (i.e. the NYSE) can be sold on multiple exchanges. That's where the actual \\\"\\\"I would like to sell 100 shares of Ford stock\\\"\\\" is matched with \\\"\\\"I would like to buy 100 shares of Ford stock.\\\"\\\" There are multiple clearinghouses on the various exchanges. Your order gets presented to one exchange at a Time An ideal market maker would like to look at the order books for a given stock, say Ford, and see that in exchange A there's a sell order for 100 shares of F at $15.85, and in exchange B there's a buy order for 100 shares of F at $15.90. Arbitrage Market maker buys from A, sells in B, and pockets $0.05 * 100... $5. It's not much, but it was relatively risk free. Also, scale this up to the scale of the US' multiple stock exchanges, and there are lots of opportunities to make $5 every second. Computers are (of course) faster than people To tie it in completely with your question about 'picking off trades', HFT rigs can be set up and programmed to go faster than an average retail investor's order. Let's say you execute the trade to buy 100 shares @ $15.85 as a retail investor. The HFT rigs see your order starting to make the rounds of the different exchanges that your brokerage works through, and go out in front in a matter of milliseconds, finding the orders that are less than $15.85 and less than or equal to 100 shares. They execute a transaction, buy them up, sell to you, and pocket the difference. You have been \\\"\\\"picked off\\\"\\\". It's admittedly not the only way to use HFT equipment to make money, but it's definitely one way to do it.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"79777\",\n \"text\": \"\\\"It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's \\\"\\\"Supply:\\\"\\\" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank \\\"\\\"have\\\"\\\" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the \\\"\\\"multiplier effect.\\\"\\\" The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the \\\"\\\"supply\\\"\\\" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official \\\"\\\"basket of goods\\\"\\\" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"362035\",\n \"text\": \"My experience (from European countries, but not Portugal specifically) is that it's better to change in the European country, as many banks will give you US $ as a matter of course, while in the US (insular place that it is), it can be rather difficult to find a place to exchange money outside an international airport. In fact, I have a few hundred Euros left from my last trip, several years ago. Expected to make another trip which didn't come off, and haven't found a place to exchange them. PS: Just for information's sake, at the time I was working in Europe, and found that by far the easiest way to transfer part of my salary back home was to get $100 bills from my European bank. Another way was to withdraw money from an ATM, as the US & European banks were on the same network. Unfortunately the IRS put a stop to that, though I don't know if it was all banks, or just the particular one I was using. Might be worth checking, though.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"369266\",\n \"text\": \"A stock, bond or ETF is basically a commodity. Where you bought it does not really matter, and it has a value in USD only inasmuch as there is a current market price quoted at an American exchange. But nothing prevents you from turning around and selling it on a European exchange where it is also listed for an equivalent amount of EUR (arbitrage activities of investment banks ensure that the price will be equivalent in regard to the current exchange rate). In fact, this can be used as a cheap form of currency conversion. For blue chips at least this is trivial; exotic securities might not be listed in Europe. All you need is a broker who allows you to trade on European exchanges and hold an account denominated in EUR. If necessary, transfer your securities to a broker who does, which should not cost more than a nominal fee. Mutual funds are a different beast though; it might be possible to sell shares on an exchange anyway, or sell them back to the issuer for EUR. It depends. In any case, however, transferring 7 figure sums internationally can trigger all kinds of tax events and money laundering investigations. You really need to hire a financial advisor who has international investment experience for this kind of thing, not ask a web forum!\",\n \"title\": \"\"\n },\n {\n \"docid\": \"98510\",\n \"text\": \"There's a possibility to lose money in exchange rate shifts, but just as much chance to gain money (Efficient Market Hypothesis and all that). If you're worried about it, you should buy a stock in Canada and short sell the US version at the same time. Then journal the Canadian stock over to the US stock exchange and use it to settle your short sell. Or you can use derivatives to accomplish the same thing.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"227232\",\n \"text\": \"Gold is traded on the London stock exchange (LSE) and the New York stock exchange (NYSE) under various separate asset tickers, mainly denominated in sterling and US dollars respectively. These stocks will reflect FX changes very quickly. If you sold LSE gold and foreign exchanged your sterling to dollars to buy NYSE gold you would almost certainly lose on the spreads upon selling, FX'ing and re-buying. In short, the same asset doesn't exist in multiple currencies. It may have the same International Securities Identification Number (ISIN), but it can trade with different Stock Exchange Daily Official List (SEDOL) identifiers, reflecting different currencies and/or exchanges, each carrying a different price at any one time.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"109796\",\n \"text\": \"You might have better luck using Quandl as a source. They have free databases, you just need to register to access them. They also have good api's, easier to use than the yahoo api's Their WIKI database of stock prices is curated and things like this are fixed (www.quandl.com/WIKI ), but I'm not sure that covers the London stock exchange. They do, however, have other databases that cover the London stock exchange.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"426591\",\n \"text\": \"\\\"Former financial analyst here, happy to help you. First off, you are right to not be entirely trusting of advisors and attorneys. They are usually trustworthy, but not always. And when you are new to this, the untrustworthy ones have a habit of reaching you first - you're their target market. I'll give you a little breakdown of how to plan, and a starting investment. First, figure out your future expenses. A LOT of that money may go to medical bills or associated care - don't forget the costs of modifications and customizations to items so you can have a better quality of life. Cars can be retrofit to assist you with a wheelchair, you can build a chair lift into a staircase, things like that which will be important for mobility - all depending on the lingering medical conditions. Mobility and independence will be critically important for you. Your past expenses are the best predictor of future expenses, so filter out the one-time legal and medical costs and use those to predict. Second, for investing there is a simple route to get into the stock market, and hopefully you will hear it a lot: Exchange Traded Funds (ETFs). You'll hear \\\"\\\"The S&P 500 increased by 80 points today...\\\"\\\" on the news; the S&P is a combination of 500 different stocks and is used to gauge the market overall. You can buy an exchange traded fund as a stock, and it's an investment in all those components. There's an ETF for almost anything, but the most popular ones are for those big indexes. I would suggest putting a few hundred thousand into an S&P 500 indexed ETF (do it at maybe $10,000 per month, so you spread the money out and ensure you don't buy at a market peak), and then let it sit there for many years. You can buy stocks through online brokerages like Scottrade or ETrade, and they make it fairly easy - they even have local offices that you can visit for help. Stocks are the easiest way to invest. Once you've done this, you can also open a IRA (a type of retirement account with special tax benefits) and contribute several thousand dollars to it per year. I'll be happy to give more advice if/when you need it, but there are a number of good books for beginning investors that can explain it better than I. I would suggest that you avoid real estate, especially if you expect to move overseas, as it is significantly more complicated and has maintenance costs and taxes.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"289466\",\n \"text\": \"\\\"I expect that data may be copyright. Data that's published (e.g. on a newsfeed or web site) is subject to terms of use. Standard & Poor's web site says, about the Shiller indexes, Who do I contact at S&P to license my use of these indices? Questions regarding licensing the S&P/Case-Shiller Home Price Indices can be addressed to: Bo Chung Managing Director bo_chung@standardandpoors.com, +1.212.438.3519 As for 'recording' the information yourself, that may depend on how and where (e.g. from what source) you're recording it. If for example you tried to record prices from the Canadian MLS (Realtor's) network, they too have their own terms of use on the data they publish. Copyright laws vary from country to country (and terms of use certainly vary): for example see http://en.wikipedia.org/wiki/Feist_v._Rural which is case law about copyrighting a phone directory in the USA, and contrast that with http://en.wikipedia.org/wiki/Database_right which is European legislation. So who owns data if it is determined by free market? I guess that \\\"\\\"determined by free market\\\"\\\" means that buyers and sellers are publishing their offers-to-buy and their offers-to-sell, and I guess that the publisher (e.g. the stock exchange) has 'terms of use' about the data (the offers) that they're publishing.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"113786\",\n \"text\": \"\\\"There are two umbrellas in investing: active management and passive management. Passive management is based on the idea \\\"\\\"you can't beat the market.\\\"\\\" Passive investors believe in the efficient markets hypothesis: \\\"\\\"the market interprets all information about an asset, so price is equal to underlying value\\\"\\\". Another idea in this field is that there's a minimum risk associated with any given return. You can't increase your expected return without assuming more risk. To see it graphically: As expected return goes up, so does risk. If we stat with a portfolio of 100 bonds, then remove 30 bonds and add 30 stocks, we'll have a portfolio that's 70% bonds/30% stocks. Turns out that this makes expected return increase and lower risk because of diversification. Markowitz showed that you could reduce the overall portfolio risk by adding a riskier, but uncorrelated, asset! Basically, if your entire portfolio is US stocks, then you'll lose money whenever US stocks fall. But, if you have half US stocks, quarter US bonds, and quarter European stocks, then even if the US market tanks, half your portfolio will be unaffected (theoretically). Adding different types of uncorrelated assets can reduce risk and increase returns. Let's tie this all together. We should get a variety of stocks to reduce our risk, and we can't beat the market by security selection. Ideally, we ought to buy nearly every stock in the market so that So what's our solution? Why, the exchange traded fund (ETF) of course! An ETF is basically a bunch of stocks that trade as a single ticker symbol. For example, consider the SPDR S&P 500 (SPY). You can purchase a unit of \\\"\\\"SPY\\\"\\\" and it will move up/down proportional to the S&P 500. This gives us diversification among stocks, to prevent any significant downside while limiting our upside. How do we diversify across asset classes? Luckily, we can purchase ETF's for almost anything: Gold ETF's (commodities), US bond ETF's (domestic bonds), International stock ETFs, Intl. bonds ETFs, etc. So, we can buy ETF's to give us exposure to various asset classes, thus diversifying among asset classes and within each asset class. Determining what % of our portfolio to put in any given asset class is known as asset allocation and some people say up to 90% of portfolio returns can be determined by asset allocation. That pretty much sums up passive management. The idea is to buy ETFs across asset classes and just leave them. You can readjust your portfolio holdings periodically, but otherwise there is no rapid trading. Now the other umbrella is active management. The unifying idea is that you can generate superior returns by stock selection. Active investors reject the idea of efficient markets. A classic and time proven strategy is value investing. After the collapse of 07/08, bank stocks greatly fell, but all the other stocks fell with them. Some stocks worth $100 were selling for $50. Value investors quickly snapped up these stocks because they had a margin of safety. Even if the stock didn't go back to 100, it could go up to $80 or $90 eventually, and investors profit. The main ideas in value investing are: have a big margin of safety, look at a company's fundamentals (earnings, book value, etc), and see if it promises adequate return. Coke has tremendous earnings and it's a great company, but it's so large that you're never going to make 20% profits on it annually, because it just can't grow that fast. Another field of active investing is technical analysis. As opposed to the \\\"\\\"fundamental analysis\\\"\\\" of value investing, technical analysis involves looking at charts for patterns, and looking at stock history to determine future paths. Things like resistance points and trend lines also play a role. Technical analysts believe that stocks are just ticker symbols and that you can use guidelines to predict where they're headed. Another type of active investing is day trading. This basically involves buying and selling stocks every hour or every minute or just at a rapid pace. Day traders don't hold onto investments for very long, and are always trying to predict the market in the short term and take advantage of it. Many individual investors are also day traders. The other question is, how do you choose a strategy? The short answer is: pick whatever works for you. The long answer is: Day trading and technical analysis is a lot of luck. If there are consistent systems for trading , then people are keeping them secret, because there is no book that you can read and become a consistent trader. High frequency trading (HFT) is an area where people basically mint money, but it s more technology and less actual investing, and would not be categorized as day trading. Benjamin Graham once said: In the short run, the market is a voting machine but in the long run it is a weighing machine. Value investing will work because there's evidence for it throughout history, but you need a certain temperament for it and most people don't have that. Furthermore, it takes a lot of time to adequately study stocks, and people with day jobs can't devote that kind of time. So there you have it. This is my opinion and by no means definitive, but I hope you have a starting point to continue your study. I included the theory in the beginning because there are too many monkeys on CNBC and the news who just don't understand fundamental economics and finance, and there's no sense in applying a theory until you can understand why it works and when it doesn't.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"9274\",\n \"text\": \"\\\"Futures are an agreement to buy or sell something in the future. The futures \\\"\\\"price\\\"\\\" is the price at which you agree to make the trade. This price does not indicate what will happen in the future so much as it indicates the cost of buying the item today and holding it until the future date. Hence, for very liquid products such as stock index futures, the futures price is a very simple function of today's stock index value and current short-term interest rates. If the stock exchange is closed but the futures exchange is open, then using the futures price and interest rates one can back out an implied \\\"\\\"fair value\\\"\\\" for the index, which is in essence the market's estimate of what the stock index value would be right now if the stock market were open. Of course, as soon as the stock exchange opens, the futures price trades to within a narrow band of the actual index value, where the size of the band depends on transaction costs (bid-ask spread, commissions, etc.).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"455856\",\n \"text\": \"Shorting the Euro is the same as staying long the dollar, so if you're in the US you don't need to do anything. If you want to make some serious money you would want to either short specific European bank stocks, or buy puts on some of the European indices.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"291600\",\n \"text\": \"\\\"As I stated in my comment, options are futures, but with the twist that you're allowed to say no to the agreed-on transaction; if the market offers you a better deal on whatever you had contracted to buy or sell, you have the option of simply letting it expire. Options therefore are the insurance policy of the free market. You negotiate a future price (actually you usually take what you can get if you're an individual investor; the institutional fund managers get to negotiate because they're moving billions around every day), then you pay the other guy up front for the right of refusal later. How much you pay depends on how likely the person giving you this option is to have to make good on it; if your position looks like a sure thing, an option's going to be very expensive (and if it's such a sure thing, you should just make your move on the spot market; it's thus useful to track futures prices to see where the various big players are predicting that your portfolio will move). A put option, which is an option for you to sell something at a future price, is a hedge against loss of value of your portfolio. You can take one out on any single item in your portfolio, or against a portion or even your entire portfolio. If the stock loses value such that the contract price is better than the market price as of the delivery date of the contract, you execute the option; otherwise, you let it expire. A call option, which is an option to buy something at a future price, is a hedge against rising costs. The rough analog is a \\\"\\\"pre-order\\\"\\\" in retail (but more like a \\\"\\\"holding fee\\\"\\\"). They're unusual in portfolio management but can be useful when moving money around in more complex ways. Basically, if you need to guarantee that you will not pay more than a certain per-share price to buy something in the future, you buy a call option. If the spot price as of the delivery date is less than the contract price, you buy from the market and ignore the contract, while if prices have soared, you exercise it and get the lower contract price. Stock options, offered as benefits in many companies, are a specific form of call option with very generous terms for whomever holds them. A swaption, basically a put and a call rolled into one, allows you to trade something for something else. Call it the free market's \\\"\\\"exchange policy\\\"\\\". For a price, if a security you currently hold loses value, you can exchange it for something else that you predicted would become more valuable at the same time. One example might be airline stocks and crude oil; when crude spikes, airline stocks generally suffer, and you can take advantage of this, if it happens, with a swaption to sell your airline stocks for crude oil certificates. There are many such closely-related inverse positions in the market, such as between various currencies, between stocks and commodities (gold is inversely related to pretty much everything else), and even straight-up cash-for-bad-debt arrangements (credit-default swaps, which we heard so much about in 2008).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"415061\",\n \"text\": \"This post has been wrote in 2014, so if you read this text be aware. At the time, and since France does tax a lot investment, I'd suggest you start a PEA and filling in using the lazy investment portfolio. That means buying European and/or French ETFs & index, and hold them as long as you can. You can fill your PEA (Plan d'Epargne en Action) up to 150.000€ for a period of at least 8 years as long as you fill it with European and French stocks. After the period of 8 years your profit is taxed at only mere 15%, instead of the 33% you see in a raw broker account. Since you are young, I think a 100% stocks is something you can hold on. If you can't sleep at night with 100% stocks, take some bonds up to 25%, even more. Anyway, the younger you start investing, the more ahead you may eventually go.\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":98,"cells":{"query_id":{"kind":"string","value":"4374"},"query":{"kind":"string","value":"Why does gold have value?"},"positive_passages":{"kind":"list like","value":[{"docid":"229153","text":"\"Gold has value because for the most of the history of mankind's use of money, Gold and Silver have repeatedly been chosen by free markets as the best form of money. Gold is durable, portable, homogeneous, fungible, divisible, rare, and recognizable. Until 1971, most of the world's currencies were backed by Gold. In 1971, the US government defaulted on its obligation to redeem US Dollars (by which most other currencies were backed) in Gold, as agreed to by the Bretton Woods agreement of 1944. We didn't choose to go off the Gold Standard, we had no choice - Foreign Central Banks were demanding redeption in Gold, and the US didn't have enough - we inflated too much. I think that the current swell of interest in Gold is due to the recent massive increase in the Federal Reserve's balance sheet, plus the fast growing National debt, plus a looming Social Security / Medicare crisis. People are looking for protection of their savings, and they wish to \"\"opt-out\"\" of the government bail-outs, government deficits, government run health-care, and government money printing. They are looking for a currency that doesn't have a counter-party. \"\"Gold is money and nothing else\"\" - JP Morgan \"\"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.\"\" - Alan Greenspan\"","title":""},{"docid":"80156","text":"Gold's value starts with the fact that its supply is steady and by nature it's durable. In other words, the amount of gold traded each year (The Supply and Demand) is small relative to the existing total stock. This acting as a bit of a throttle on its value, as does the high cost of mining. Mines will have yields that control whether it's profitable to run them. A mine may have a $600/oz production cost, in which case it's clear they should run full speed now with gold at $1200, but if it were below $650 or so, it may not be worth it. It also has a history that goes back millennia, it's valued because it always was. John Maynard Keynes referred to gold as an archaic relic and I tend to agree. You are right, the topic is controversial. For short periods, gold will provide a decent hedge, but no better than other financial instruments. We are now in an odd time, where the stock market is generally flat to where it was 10 years ago, and both cash or most commodities were a better choice. Look at sufficiently long periods of time, and gold fails. In my history, I graduated college in 1984, and in the summer of 82 played in the commodities market. Gold peaked at $850 or so. Now it's $1200. 50% over 30 years is hardly a storehouse of value now, is it? Yet, I recall Aug 25, 1987 when the Dow peaked at 2750. No, I didn't call the top. But I did talk to a friend advising that I ignore the short term, at 25 with little invested, I only concerned myself with long term plans. The Dow crashed from there, but even today just over 18,000 the return has averaged 7.07% plus dividends. A lengthy tangent, but important to understand. A gold fan will be able to produce his own observation, citing that some percent of one's holding in gold, adjusted to maintain a balanced allocation would create more positive returns than I claim. For a large enough portfolio that's otherwise well diversified, this may be true, just not something I choose to invest in. Last - if you wish to buy gold, avoid the hard metal. GLD trades as 1/10 oz of gold and has a tiny commission as it trades like a stock. The buy/sell on a 1oz gold piece will cost you 4-6%. That's no way to invest. Update - 29 years after that lunch in 1987, the Dow was at 18448, a return of 6.78% CAGR plus dividends. Another 6 years since this question was asked and Gold hasn't moved, $1175, and 6 years' worth of fees, 2.4% if you buy the GLD ETF. From the '82 high of $850 to now (34 years), the return has a CAGR of .96%/yr or .56% after fees. To be fair, I picked a relative high, that $850. But I did the same choosing the pre-crash 2750 high on the Dow.","title":""},{"docid":"36066","text":"I use to play marbles at school. Marbles were like gold the more you had the richer you were. They were a scarce commodity only a few in circulation. Once I secured a wealth of marbles I realized they were of little real value. They were only of illusory value. As long as we all were deceived into believe they had value they I was rich. Sure marble could be used to make marble floors ;) they were lovely to look at, and every one wanted them. Then one day, I discovered the emperor had no clothes. Wow, the day that everyone sees the true value of gold, what a stock market crash that will be. I tried to avoid gold as much as possible, but this is hard to do in todays stock market. My solace is that we will all be in the same golden (Titanic) boat, only I hope to limit my exposure as much as possible. Anyone want a gold watch for a slice of bread?","title":""},{"docid":"99089","text":"\"Gold can be thought of to have value in one of two ways; (1) as a means and (2) as an end. Means takes the shape of currency. In this form, we value gold in the same way we value the dollar, it allows us to purchase things we want. As a medium of exchange, gold has no definitive value and is only assigned one during the process of an exchange. For example, I would be valuing one ingot of gold to be worth a dog if I traded a dog for one ingot of gold. The value of gold in this sense is subjective as each person decides for themselves what gold is worth during the transaction. Gold as an end is valued for its own sake. A good example of this is a jeweler who purchases gold directly because of the intrinsic property(s) gold possesses. This is closer to the \"\"true value\"\" of gold than using it as a means, but virtually no one in our society views gold in this manor because virtually no one can use gold in this manor. \"\"You know what I could use right now, a block of gold.\"\" - said no one ever. But even if you are one of the select few who value gold for its own sake, this is usually done because gold provides a function. For example, if people no longer want to ware jewelry, then a jeweler will likely have to find a new line of work where he would likely no longer view gold as valuable as an ends. To sum up, gold has a perceived value for most people and an \"\"intrinsic value\"\" to a select few (for the time being).\"","title":""},{"docid":"470759","text":"A lot of people probably don't agree with him, but Warren Buffett has some great quotes on why he doesn't invest in gold: I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils. And his classic quote: [Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.","title":""},{"docid":"137444","text":"\"Why does the value of gold go up when gold itself doesn't produce anything? Why do people invest in gold? Your perception, that the value of gold goes up in the long run, is based on the price of gold measured in your favorite paper currency, for example the US Dollar. An increasing price of gold means that in the visible gold market, market participants are willing to exchange more paper currency units for the same amount of gold. There are many possible reasons for this: While HFT became extremely important for the short term price movements, I will continue with long term effects, excluding HFT. So when - as a simple thought experiment - the amount of available paper currency units (US $ or whatever) doubles, and the amount of goods and services in an economy stay the same, you can expect that the price of everything in this economy will double, including gold. You might perceive that the value of gold doubled. It did not. It stayed the same. The number of printed dollars doubled. The value of gold is still the same, its price doubled. Does the amount of paper currency units grow over time? Yes: https://research.stlouisfed.org/fred2/series/BASE/ In this answer my term \"\"paper currency units\"\" includes dollars that exist only as digits in bank accounts and \"\"printing currency\"\" includes creating those digits in bank accounts out of thin air. So the first answer: gold holds its value while the value of paper currency units shrinks over time. So gold enables you to pass wealth to the next generation (while hiding it from your government). That gold does not produce anything is not entirely true. For those of us mortals who have only a few ounces, it is true. But those who have tons can lease it out and earn interest. (in practice it is leased out multiple times, so multiple that gain. You might call this fraud, and rightfully so. But we are talking about tons of gold. Nobody who controls tons of physical gold goes to jail yet). Let's talk about Fear. You see, the perceived value of gold increases as more paper currency is printed. And markets price in expected future developments. So the value of gold rises, if a sufficient number of wealthy people fear the the government(s) will print too much paper currency. Second Answer: So the price of gold not only reflects the amount of paper currency, it is also a measurement of distrust in government(s). Now you might say something is wrong with my argument. The chart mentioned above shows that we have now (mid 2015) 5 times as much printed currency units than we had 2008. So the price of gold should be 5 times as high as 2008, assuming the amount of distrust in governments stayed the same. There must be more effects (or I might be completely wrong. You decide). But here is one more effect: As the price of gold is a measurement of distrust in governments (and especially the US government since the US Dollar is perceived as the reserve currency), the US government and associated organizations are extremely interested in low gold prices to prove trust. So people familiar with the topic believe that the price of gold (and silver) is massively manipulated to the downside using high frequency trading and shorts in the futures markets by US government and wall street banks to disprove distrust. And wall street banks gain huge amounts of paper currency units by manipulating the price, mostly to the downside. Others say that countries like china and russia are also interested in low gold prices because they want to buy as much physical gold as possible. Knowing of the value that is not reflected by the price at the moment. Is there one more source of distrust in governments? Yes. Since 1971, all paper currencies are debt. They receive their value by the trust that those with debt are willing and able to pay back their debt. If this trust is lost, the downward manipulation (if you think that such a thing exists) of the gold and silver prices in the futures markets might fail some day. If this is the case (some say when this is the case). you might see movements in gold and silver prices that bring them back to equilibrium with the amount of printed paper currencies. In times of the roman empire you got a good toga and a pair of handmade shoes for an ounce of gold. In our days, you get a nice suite and a good pair of shoes for an ounce of gold. In the mean time, the value of each paper currency in the history of each country went to zero and the US $ lost 98% of its initial value. As long as there is not enough distrust, more paper currency is made in equity markets and bond markets on average. (Be aware that you earn that currency only after you were able to sell at this price, not while you hold it) Gerd\"","title":""},{"docid":"74248","text":"To start with gold has value because it is scarce, durable, attractive and can be made into jewellery. But that does not explain its current value. In the current economic climate, it is difficult for many investors to get a positive return on conventional investments such as equities or bonds. I theorise that, in such conditions, investors decide to park their money in gold simply because there are few other good options. This in itself drives the price of gold up, making it a better investment and causing a speculative boom. As you will see here, here, and here the gold price is negatively correlated with stock market indices.","title":""},{"docid":"446972","text":"\"Most of the answers here reflect a misunderstanding of what gold actually is from a financial perspective. I'll answer your question by asking two questions, and I do challenge you to stop and think about what we mean when we say \"\"cash\"\" or \"\"unit of exchange\"\" because without understanding those, you will completely miss this answer. In 1971, the DXY was 110. For people who don't know, the DXY is the US Dollar Index - it weighs the strength of the US Dollar relative to other currencies. Hey look, it's a pretty graph of the DXY's history. In 1971, gold was $35 an ounce. The DXY is 97 today. Gold is $1170 an ounce today. Now the questions: If shares of Company A in 1971 were $10 a share, but now are $100 a share and some of this is because the company has grown, but some of it is because of inflation and the DXY losing value, what would the value of the company be if it was held in grams of gold and not dollars? Benjamin Graham, who influenced Warren Buffett, is a \"\"supposed\"\" critic of gold, yet what percent of his life were we not on a gold standard? In his day, the dollar was backed by gold - why would you buy gold if every dollar represented gold. Finally, consider how many US Dollars exist, and how few metric tonnes of gold exist (165,000). Even Paul Volcker admitted that a new gold standard would be impossible because the value of gold, if we did it today, would put gold in the $5000-$10000 range - which is absurd: To get on a gold standard technically now, an old fashioned gold standard, and you had to replace all the dollars out there in foreign hands with gold, God the price, you buy gold, because the price of gold would have to be enormous. So, you're all left hoping the Federal Reserve figures how to get us all out of this mess without causing trouble, otherwise, let me just kindly say, you WILL realize the value of gold then. As the old saying goes, \"\"A fool and his money are soon parted.\"\" I could be wrong, but I'd say that those who've been buying gold since 1971 for their \"\"cash holdings\"\" (not index funds) aren't the suckers.\"","title":""},{"docid":"548676","text":"I think the primary reason it is so pricey now is that it is an inflation hedge, and considering how shaky the economies and out of control the spending is in many countries right now, people are running to it as a safe harbor. The increased demand raises the price as it does with any asset. This brings us to the titular question. Why does gold have value? The same reason anything has value. There is someone out there who wants it enough to trade something else of value to get it. It is in the news so much because it is so high right now, which unfortunately is going to cause a lot of people to foolishly invest in it at likely the worst possible time.","title":""},{"docid":"176869","text":"\"Because people are willing to trade for it. People are willing to trade for Gold because: The value of gold goes up because the demand for it goes up, while the supply has been basically static (or growing at a low static rate) for a long time. The demand is going up because people see it as a safe place to put their money. Another reason Gold's value in dollars goes up, is because the value of the item it's traded against (dollars, euros, yen, etc) goes down, while its own value stays roughly the same. You point out Gold is not as liquid as cash, but gold (both traded on an exchange, and held physically) is easily sold. There is always someone willing to trade you cash for gold. Compare this to some of the bank stocks during the first part of our current recession. People were not willing to give much of anything for your shares. As the (annoying, misleading) advertisements say, \"\"Gold has never been worth zero\"\".\"","title":""},{"docid":"4171","text":"\"It has semantic value (because we culturally believe gold is valuable). There is a very important point here. Gold and many other coin metals. This \"\"semantic value\"\" is enshrined in law through the special tax status of coin metals. You can buy a kilo of gold and not pay sales tax. You can't buy a kilo of iron or tin and do the same. This is the important part because investors shouldn't care about semantics. I read that the taxable status varies by state or nation, so you need to be very careful. It's possible to evade taxes without realizing it. It also doesn't necessarily exempt you from the form of gold. An ingot should be tax exempt. A collector's coin may or may not be, depending on your local laws and the difference between the value of the weight of the gold, and the value of the form of the coin.\"","title":""},{"docid":"532381","text":"\"Everything is worth what its purchaser will pay for it. --Publilius Syrus. Gold has value because people want to buy it. Electronics manufacturers like the fact that it's conductive. Jewellers like that its shiny. Glenn Beck likes that he's selling it and his audience will buy it. Proponents of gold claim that it has \"\"real\"\" value, as opposed to fiat currency (which has no commodity backing). Opponents of gold claim that all wealth is illusory, and that gold has no more inherent value than the paper we use now. I'm inclined to agree with the latter (money is only money because we agree that it is, and the underlying material is meaningless), however the issue is hotly debated.\"","title":""},{"docid":"542788","text":"\"Gold has very useful physical properties for some engineering applications. Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. For example: Gold can be \"\"beaten\"\" or electroplated to produce very thin shiny coatings. Entire roofs (of famous buildings) have been covered with \"\"gold leaf\"\", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire.\"","title":""}],"string":"[\n {\n \"docid\": \"229153\",\n \"text\": \"\\\"Gold has value because for the most of the history of mankind's use of money, Gold and Silver have repeatedly been chosen by free markets as the best form of money. Gold is durable, portable, homogeneous, fungible, divisible, rare, and recognizable. Until 1971, most of the world's currencies were backed by Gold. In 1971, the US government defaulted on its obligation to redeem US Dollars (by which most other currencies were backed) in Gold, as agreed to by the Bretton Woods agreement of 1944. We didn't choose to go off the Gold Standard, we had no choice - Foreign Central Banks were demanding redeption in Gold, and the US didn't have enough - we inflated too much. I think that the current swell of interest in Gold is due to the recent massive increase in the Federal Reserve's balance sheet, plus the fast growing National debt, plus a looming Social Security / Medicare crisis. People are looking for protection of their savings, and they wish to \\\"\\\"opt-out\\\"\\\" of the government bail-outs, government deficits, government run health-care, and government money printing. They are looking for a currency that doesn't have a counter-party. \\\"\\\"Gold is money and nothing else\\\"\\\" - JP Morgan \\\"\\\"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.\\\"\\\" - Alan Greenspan\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"80156\",\n \"text\": \"Gold's value starts with the fact that its supply is steady and by nature it's durable. In other words, the amount of gold traded each year (The Supply and Demand) is small relative to the existing total stock. This acting as a bit of a throttle on its value, as does the high cost of mining. Mines will have yields that control whether it's profitable to run them. A mine may have a $600/oz production cost, in which case it's clear they should run full speed now with gold at $1200, but if it were below $650 or so, it may not be worth it. It also has a history that goes back millennia, it's valued because it always was. John Maynard Keynes referred to gold as an archaic relic and I tend to agree. You are right, the topic is controversial. For short periods, gold will provide a decent hedge, but no better than other financial instruments. We are now in an odd time, where the stock market is generally flat to where it was 10 years ago, and both cash or most commodities were a better choice. Look at sufficiently long periods of time, and gold fails. In my history, I graduated college in 1984, and in the summer of 82 played in the commodities market. Gold peaked at $850 or so. Now it's $1200. 50% over 30 years is hardly a storehouse of value now, is it? Yet, I recall Aug 25, 1987 when the Dow peaked at 2750. No, I didn't call the top. But I did talk to a friend advising that I ignore the short term, at 25 with little invested, I only concerned myself with long term plans. The Dow crashed from there, but even today just over 18,000 the return has averaged 7.07% plus dividends. A lengthy tangent, but important to understand. A gold fan will be able to produce his own observation, citing that some percent of one's holding in gold, adjusted to maintain a balanced allocation would create more positive returns than I claim. For a large enough portfolio that's otherwise well diversified, this may be true, just not something I choose to invest in. Last - if you wish to buy gold, avoid the hard metal. GLD trades as 1/10 oz of gold and has a tiny commission as it trades like a stock. The buy/sell on a 1oz gold piece will cost you 4-6%. That's no way to invest. Update - 29 years after that lunch in 1987, the Dow was at 18448, a return of 6.78% CAGR plus dividends. Another 6 years since this question was asked and Gold hasn't moved, $1175, and 6 years' worth of fees, 2.4% if you buy the GLD ETF. From the '82 high of $850 to now (34 years), the return has a CAGR of .96%/yr or .56% after fees. To be fair, I picked a relative high, that $850. But I did the same choosing the pre-crash 2750 high on the Dow.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"36066\",\n \"text\": \"I use to play marbles at school. Marbles were like gold the more you had the richer you were. They were a scarce commodity only a few in circulation. Once I secured a wealth of marbles I realized they were of little real value. They were only of illusory value. As long as we all were deceived into believe they had value they I was rich. Sure marble could be used to make marble floors ;) they were lovely to look at, and every one wanted them. Then one day, I discovered the emperor had no clothes. Wow, the day that everyone sees the true value of gold, what a stock market crash that will be. I tried to avoid gold as much as possible, but this is hard to do in todays stock market. My solace is that we will all be in the same golden (Titanic) boat, only I hope to limit my exposure as much as possible. Anyone want a gold watch for a slice of bread?\",\n \"title\": \"\"\n },\n {\n \"docid\": \"99089\",\n \"text\": \"\\\"Gold can be thought of to have value in one of two ways; (1) as a means and (2) as an end. Means takes the shape of currency. In this form, we value gold in the same way we value the dollar, it allows us to purchase things we want. As a medium of exchange, gold has no definitive value and is only assigned one during the process of an exchange. For example, I would be valuing one ingot of gold to be worth a dog if I traded a dog for one ingot of gold. The value of gold in this sense is subjective as each person decides for themselves what gold is worth during the transaction. Gold as an end is valued for its own sake. A good example of this is a jeweler who purchases gold directly because of the intrinsic property(s) gold possesses. This is closer to the \\\"\\\"true value\\\"\\\" of gold than using it as a means, but virtually no one in our society views gold in this manor because virtually no one can use gold in this manor. \\\"\\\"You know what I could use right now, a block of gold.\\\"\\\" - said no one ever. But even if you are one of the select few who value gold for its own sake, this is usually done because gold provides a function. For example, if people no longer want to ware jewelry, then a jeweler will likely have to find a new line of work where he would likely no longer view gold as valuable as an ends. To sum up, gold has a perceived value for most people and an \\\"\\\"intrinsic value\\\"\\\" to a select few (for the time being).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"470759\",\n \"text\": \"A lot of people probably don't agree with him, but Warren Buffett has some great quotes on why he doesn't invest in gold: I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils. And his classic quote: [Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"137444\",\n \"text\": \"\\\"Why does the value of gold go up when gold itself doesn't produce anything? Why do people invest in gold? Your perception, that the value of gold goes up in the long run, is based on the price of gold measured in your favorite paper currency, for example the US Dollar. An increasing price of gold means that in the visible gold market, market participants are willing to exchange more paper currency units for the same amount of gold. There are many possible reasons for this: While HFT became extremely important for the short term price movements, I will continue with long term effects, excluding HFT. So when - as a simple thought experiment - the amount of available paper currency units (US $ or whatever) doubles, and the amount of goods and services in an economy stay the same, you can expect that the price of everything in this economy will double, including gold. You might perceive that the value of gold doubled. It did not. It stayed the same. The number of printed dollars doubled. The value of gold is still the same, its price doubled. Does the amount of paper currency units grow over time? Yes: https://research.stlouisfed.org/fred2/series/BASE/ In this answer my term \\\"\\\"paper currency units\\\"\\\" includes dollars that exist only as digits in bank accounts and \\\"\\\"printing currency\\\"\\\" includes creating those digits in bank accounts out of thin air. So the first answer: gold holds its value while the value of paper currency units shrinks over time. So gold enables you to pass wealth to the next generation (while hiding it from your government). That gold does not produce anything is not entirely true. For those of us mortals who have only a few ounces, it is true. But those who have tons can lease it out and earn interest. (in practice it is leased out multiple times, so multiple that gain. You might call this fraud, and rightfully so. But we are talking about tons of gold. Nobody who controls tons of physical gold goes to jail yet). Let's talk about Fear. You see, the perceived value of gold increases as more paper currency is printed. And markets price in expected future developments. So the value of gold rises, if a sufficient number of wealthy people fear the the government(s) will print too much paper currency. Second Answer: So the price of gold not only reflects the amount of paper currency, it is also a measurement of distrust in government(s). Now you might say something is wrong with my argument. The chart mentioned above shows that we have now (mid 2015) 5 times as much printed currency units than we had 2008. So the price of gold should be 5 times as high as 2008, assuming the amount of distrust in governments stayed the same. There must be more effects (or I might be completely wrong. You decide). But here is one more effect: As the price of gold is a measurement of distrust in governments (and especially the US government since the US Dollar is perceived as the reserve currency), the US government and associated organizations are extremely interested in low gold prices to prove trust. So people familiar with the topic believe that the price of gold (and silver) is massively manipulated to the downside using high frequency trading and shorts in the futures markets by US government and wall street banks to disprove distrust. And wall street banks gain huge amounts of paper currency units by manipulating the price, mostly to the downside. Others say that countries like china and russia are also interested in low gold prices because they want to buy as much physical gold as possible. Knowing of the value that is not reflected by the price at the moment. Is there one more source of distrust in governments? Yes. Since 1971, all paper currencies are debt. They receive their value by the trust that those with debt are willing and able to pay back their debt. If this trust is lost, the downward manipulation (if you think that such a thing exists) of the gold and silver prices in the futures markets might fail some day. If this is the case (some say when this is the case). you might see movements in gold and silver prices that bring them back to equilibrium with the amount of printed paper currencies. In times of the roman empire you got a good toga and a pair of handmade shoes for an ounce of gold. In our days, you get a nice suite and a good pair of shoes for an ounce of gold. In the mean time, the value of each paper currency in the history of each country went to zero and the US $ lost 98% of its initial value. As long as there is not enough distrust, more paper currency is made in equity markets and bond markets on average. (Be aware that you earn that currency only after you were able to sell at this price, not while you hold it) Gerd\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"74248\",\n \"text\": \"To start with gold has value because it is scarce, durable, attractive and can be made into jewellery. But that does not explain its current value. In the current economic climate, it is difficult for many investors to get a positive return on conventional investments such as equities or bonds. I theorise that, in such conditions, investors decide to park their money in gold simply because there are few other good options. This in itself drives the price of gold up, making it a better investment and causing a speculative boom. As you will see here, here, and here the gold price is negatively correlated with stock market indices.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"446972\",\n \"text\": \"\\\"Most of the answers here reflect a misunderstanding of what gold actually is from a financial perspective. I'll answer your question by asking two questions, and I do challenge you to stop and think about what we mean when we say \\\"\\\"cash\\\"\\\" or \\\"\\\"unit of exchange\\\"\\\" because without understanding those, you will completely miss this answer. In 1971, the DXY was 110. For people who don't know, the DXY is the US Dollar Index - it weighs the strength of the US Dollar relative to other currencies. Hey look, it's a pretty graph of the DXY's history. In 1971, gold was $35 an ounce. The DXY is 97 today. Gold is $1170 an ounce today. Now the questions: If shares of Company A in 1971 were $10 a share, but now are $100 a share and some of this is because the company has grown, but some of it is because of inflation and the DXY losing value, what would the value of the company be if it was held in grams of gold and not dollars? Benjamin Graham, who influenced Warren Buffett, is a \\\"\\\"supposed\\\"\\\" critic of gold, yet what percent of his life were we not on a gold standard? In his day, the dollar was backed by gold - why would you buy gold if every dollar represented gold. Finally, consider how many US Dollars exist, and how few metric tonnes of gold exist (165,000). Even Paul Volcker admitted that a new gold standard would be impossible because the value of gold, if we did it today, would put gold in the $5000-$10000 range - which is absurd: To get on a gold standard technically now, an old fashioned gold standard, and you had to replace all the dollars out there in foreign hands with gold, God the price, you buy gold, because the price of gold would have to be enormous. So, you're all left hoping the Federal Reserve figures how to get us all out of this mess without causing trouble, otherwise, let me just kindly say, you WILL realize the value of gold then. As the old saying goes, \\\"\\\"A fool and his money are soon parted.\\\"\\\" I could be wrong, but I'd say that those who've been buying gold since 1971 for their \\\"\\\"cash holdings\\\"\\\" (not index funds) aren't the suckers.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"548676\",\n \"text\": \"I think the primary reason it is so pricey now is that it is an inflation hedge, and considering how shaky the economies and out of control the spending is in many countries right now, people are running to it as a safe harbor. The increased demand raises the price as it does with any asset. This brings us to the titular question. Why does gold have value? The same reason anything has value. There is someone out there who wants it enough to trade something else of value to get it. It is in the news so much because it is so high right now, which unfortunately is going to cause a lot of people to foolishly invest in it at likely the worst possible time.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"176869\",\n \"text\": \"\\\"Because people are willing to trade for it. People are willing to trade for Gold because: The value of gold goes up because the demand for it goes up, while the supply has been basically static (or growing at a low static rate) for a long time. The demand is going up because people see it as a safe place to put their money. Another reason Gold's value in dollars goes up, is because the value of the item it's traded against (dollars, euros, yen, etc) goes down, while its own value stays roughly the same. You point out Gold is not as liquid as cash, but gold (both traded on an exchange, and held physically) is easily sold. There is always someone willing to trade you cash for gold. Compare this to some of the bank stocks during the first part of our current recession. People were not willing to give much of anything for your shares. As the (annoying, misleading) advertisements say, \\\"\\\"Gold has never been worth zero\\\"\\\".\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"4171\",\n \"text\": \"\\\"It has semantic value (because we culturally believe gold is valuable). There is a very important point here. Gold and many other coin metals. This \\\"\\\"semantic value\\\"\\\" is enshrined in law through the special tax status of coin metals. You can buy a kilo of gold and not pay sales tax. You can't buy a kilo of iron or tin and do the same. This is the important part because investors shouldn't care about semantics. I read that the taxable status varies by state or nation, so you need to be very careful. It's possible to evade taxes without realizing it. It also doesn't necessarily exempt you from the form of gold. An ingot should be tax exempt. A collector's coin may or may not be, depending on your local laws and the difference between the value of the weight of the gold, and the value of the form of the coin.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"532381\",\n \"text\": \"\\\"Everything is worth what its purchaser will pay for it. --Publilius Syrus. Gold has value because people want to buy it. Electronics manufacturers like the fact that it's conductive. Jewellers like that its shiny. Glenn Beck likes that he's selling it and his audience will buy it. Proponents of gold claim that it has \\\"\\\"real\\\"\\\" value, as opposed to fiat currency (which has no commodity backing). Opponents of gold claim that all wealth is illusory, and that gold has no more inherent value than the paper we use now. I'm inclined to agree with the latter (money is only money because we agree that it is, and the underlying material is meaningless), however the issue is hotly debated.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"542788\",\n \"text\": \"\\\"Gold has very useful physical properties for some engineering applications. Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. For example: Gold can be \\\"\\\"beaten\\\"\\\" or electroplated to produce very thin shiny coatings. Entire roofs (of famous buildings) have been covered with \\\"\\\"gold leaf\\\"\\\", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire.\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"352485","text":"The answer is that other than a small number of applications (the approx. 10% of gold production that goes to 'industrial uses') gold does not have intrinsic value beyond being pretty and rare (and useful for making jewelry.) There are a number of 'industrial' applications and uses for gold (see other answers for a list) but the volume consumed this way is fairly small, especially relative to the capacity to mine new gold and reclaim existing gold. If you removed investment, and jewelry usage (especially culturally driven jewelry usage) then there's no way the remaining uses for industry and dentistry could sustain the price levels we currently see for gold. Furthermore, and perhaps more importantly, the best data I can find for this shows the total number of tons consumed for industrial uses has been shrinking for several years now, and that was prior to recent price increases, so it is difficult to tie that reduced demand to increasing prices. And one might postulate in a 'collapsed society' you seem to be referring to in your question, that a lot of the recent industrial demand (e.g. the '50 cents of gold in each cellphone') could quite possibly disappear entirely. The argument many people use for gold having value is usually 'been used as money for thousands of years'. But this confuses gold having a value of its own with the reasons why something makes a useful currency. Gold has a large number of characteristics that make it an ideal currency, and of all the elements available it is perhaps the best physical element to serve as a currency. BUT just as with a dollar bill, just because it is a good currency, does NOT give it an intrinsic value. Any currency is only worth what someone will trade you for it. The value is set by the economy etc., not the medium used as a currency. So yes, people will probably always use gold as money, but that doesn't make the money worth anything, it's just a medium of exchange. Incidentally two other things should be noted. The first is that you have a problem when the medium itself used for a currency becomes worth more than the face value. Hence why we stopped using silver in coins, and there were concerns over pennies due to the price of copper. This leads to the second point, which is that currently, gold is TOO RARE to suffice as a world currency, hence why all countries went off the gold standard years ago. The size of national and global economies was growing faster than the supply of gold, and hence it was becoming impossible to have enough gold to back all the currencies (inflation concerns aside).","title":""},{"docid":"10813","text":">But gold does have other uses. It is a metal that's used for jewelry, it has decorative value. Exchanging something for gold is like a caveman giving you a stone ax if you do some cave paintings for him. That's not quite the point. I was addressing a specific problem. I'm aware that it's more complex, hence my disclaimer of simplicity. But to address your point, not everyone is a goldsmith. Imagine if the medium was saltpeter. Of course someone's going to use it to make explosives, but most people are not in that line of work. To most people, gold has no use except as a store of value. Why is an identically designed plastic necklace so much cheaper than a gold one? Because as many uses as it has, plastic doesn't store value (some say intrinsically, I say artificially) the way gold does. >because they lack the manufacturing capacity to do so. Like I said, they can invest in factory expansion or new factory construction. To stick to the metaphor, they need to plant more apple trees. There may not be a million apples available, but if that's what the demand is -and why else would anyone offer a million apples- that's the potential market size (especially if the supply exists in China). So the farmer ought to increase his yield, thereby lowering his average cost to produce an apple. If he knows he can only plant 100 apple trees, he's not going to promise a million apples when asking for a loan to expand his orchard. EDIT: >with their nominal value that people agreed upon. The same phenomenon occurs in bullion currency.","title":""},{"docid":"240894","text":"\"Gold may have some \"\"intrinsic value\"\" but it cannot be accurately determined by investors by any known valuation techniques. In fact, if you were to apply the dividend discount model of John Burr Williams - a variation of which is the basis of Discounted Cash Flow (DCF) analysis and the basis of most valuation techniques - gold would have zero intrinsic value because it produces no cash flow. Legendary focus investor Warren Buffett argues that investing in gold is pure speculation because of the reason mentioned above. As others have mentioned, gold prices are affected by supply and demand, but the bigger influence on the price of gold is how the economy is. Gold is seen as a store of value because, according to some, it does not \"\"lose value\"\" unlike paper currency during inflation. In inflationary times, demand increases so gold prices do go up, which is why gold behaves similar to a commodity but has far less uses. It is difficult to argue whether or not gold gains or loses value because we can't determine the intrinsic value of gold, and anyone who attempts to justify any given price is pulling blinders over your eyes. It is indisputable that, over history, gold represents wealth and that in the past century and the last decade, gold prices rise in inflationary conditions as people dump dollars for gold, and it has fallen when the purchasing power of currency increases. Many investors have talked about a \"\"gold bubble\"\" by arguing that gold prices are inflated because of inflation and the Fed's money policy and that once interest rates rise, the money supply will contract and gold will fall, but again, nobody can say with any reasonable accuracy what the fair value of gold at any given point is. This article on seeking alpha: http://seekingalpha.com/article/112794-the-intrinsic-value-of-gold gives a quick overview, but it is also vague because gold can't be accurately priced. I wouldn't say that gold has zero intrinsic value because gold is not a business so traditional models are inappropriate, but I would say that gold *certainly * doesn't have a value of $1,500 and it's propped so high only because of investor expectation. In conclusion, I do not believe you can accurately state whether gold is undervalued or overvalued - you must make judgments based on what you think about the future of the market and of monetary policy, but there are too many variables to be accurate consistently.\"","title":""},{"docid":"305794","text":"You acquire something because you expect to use it, or because you expect to exchange it for something that you want to use. Gold is a good candidate for storing value because it's rare, it's not easily counterfeited, it's divisible, it's portable, etc. Contrast this with your favorite currency: more can be printed up almost at will, etc. Overvaluedness/undervaluedness is only in reference to something else. How many dollars does it take to buy an ounce of gold? (About $1,500.) How many ounces does it take to equal the DJIA? (About 8.) How many ounces of silver does it take to buy an ounce of gold? How many barrels of oil can you buy with an ounce of gold? Etc., etc. But whatever measure you're using, the value of the gold you have is directly related to the mass of gold you own. Two ounces are twice as valuable as one ounce. As the old joke goes (no offense to taxi drivers intended!) when your cabbie starts talking about how to get rich with gold, it's probably overvalued. Sell it all! ;)","title":""},{"docid":"311133","text":"\">So why not talk to your employer, and ask them to pay you in gold dust? Then when tax time comes, just convert some gold dust into the amount of USD in taxes you owe. Because selling gold and buying dollars has an effect on the market: it reduces the value of gold, and increases the value of dollars. Understand? So being forced to use dollars *artificially increases the value of dollars*. The reason we are forced to use Dollars is because the central bank has the monopoly on printing dollars. Without legal tender laws, that monopoly would be worthless. >Of course, you'd have to find farmers and shoemakers and electronic stores willing to accept payment in gold dust as well... As the value of gold increases over time, the government taxes the increased value as \"\"capital gains tax\"\". So gold cannot be money under these circumstances - the government considers it an investment now.\"","title":""},{"docid":"270944","text":"diamonds are intrinsically worthless -- and therefore have quite little resale value It may be true that De Beers has a near monopoly on diamond supply, but they are still a scarce resource, so their supply is still very limited. They do have resale value - that's one reason why diamond jewelry is stolen so often. There's just not a huge secondary market for diamonds that I know of (unlike cars, for example). You can sell diamond jewelry at pawn shops or online brokers, but you probably only get a fraction of their retail value. They are not intrinsically worthless. They do have value in the industrial sector as powerful cutters, although synthetic diamonds are much more prevalent in this market. Their value in industry is much lower than their worth as jewelry. Think about gold - it does not have a monopolic supplier but it still has a relatively very high value.","title":""},{"docid":"1642","text":"\"During Graham's career, gold and currency were the same thing because of the gold standard. Graham did not advise investing in currencies, only in bonds and stocks, the latter only for intelligent speculation. Graham died a couple of years after Nixon closed the gold window, ending the gold standard. Gold may be thought of as a currency even today, as endowments and other investors use it as a store of value or for diversification of risks. However, currency or commodities investing does not seem Graham-like. How could you reliably estimate intrinsic value of a currency or commodity, so that you can have a Graham-like margin of safety after subtracting the intrinsic value from the market value? Saying that gold is \"\"clearly underpriced in today's market\"\" is just hand-waving. A Graham analysis such as \"\"net net\"\" (valuing stocks by their current tangible assets net of all liabilities) is a quantitative analysis of accounting numbers audited by CPAs and offers a true margin of safety.\"","title":""},{"docid":"511616","text":"\"[There's about 10 trillion in gold](http://en.wikipedia.org/wiki/Gold_reserve) and about [2.8 trillion of US cash](http://visualeconomics.creditloan.com/the-value-of-united-states-currency-in-circulation/) in the world. Neither of these is anywhere large enough to be used for all the transactions in the world. For example, about [4 trillion a **day**](http://en.wikipedia.org/wiki/Foreign_exchange_market) changes hands in the currency markets alone - if that were required to be cash or gold it would be impossible to do so, and you'd suffer from more poorly priced goods since markets could not adjust as quickly, so vendors would charge more premium to handle the risk. Yes, there is not (and has not been) enough cash in circulation to run the world economy. There is also vastly too little gold, unless you want to strangle commerce due to not being enough money to trade. > \"\"posing as the money supply\"\" All money is debt, and always has been. Money is a placeholder that you can trade for goods *later* meaning someone owes you a thing. The value of that money is the debt they (or society) owes you for something you already did to get that money. So there is no posing, just most don't understand money, how it originated, why it exists, or why it works. They never ask the question \"\"how does money come into existance\"\". > Does defaulting on ones debt create inflation since that money is still in the system and not being paid off? Probably not much. Loans are made expecting some default, so the interest others pay on their loans helps offset the defaulted ones. If loans become riskier, the interest demanded increases, so the lender still (if they do their risk analysis well and no external events break their expectations) makes money. When you pay off a debt, that money, as you're paying it, is likely being lent in other loans, so paying it off does not do much. If you could pay off about 100 trillion in debt into the US economy in one payment you might break some things :)\"","title":""},{"docid":"174002","text":"Gold is a commodity. It has a tracked price and can be bought and sold as such. In its physical form it represents something real of signifigant value that can be traded for currency or barted. A single pound of gold is worth about 27000 dollars. It is very valuable and it is easily transported as opposed to a car which loses value while you transport it. There are other metals that also hold value (Platinum, Silver, Copper, etc) as well as other commodities. Platinum has a higher Value to weight ratio than gold but there is less of a global quantity and the demand is not as high. A gold mine is an investement where you hope to take out more in gold than it cost to get it out. Just like any other business. High gold prices simply lower your break even point. TIPS protects you from inflation but does not protect you from devaluation. It also only pays the inflation rate recoginized by the Treasury. There are experts who believe that the fed has understated inflation. If these are correct then TIPS is not protecting its investors from inflation as promised. You can also think of treasury bonds as an investment in your government. Your return will be effectively determined by how they run their business of governing. If you believe that the government is doing the right things to help promote the economy then investing in their bonds will help them to be able to continue to do so. And if consumers buy the bonds then the treasury does not have to buy any more of its own.","title":""},{"docid":"137353","text":"\"My question boiled down: Do stock mutual funds behave more like treasury bonds or commodities? When I think about it, it seems that they should respond the devaluation like a commodity. I own a quantity of company shares (not tied to a currency), and let's assume that the company only holds immune assets. Does the real value of my stock ownership go down? Why? On December 20, 1994, newly inaugurated President Ernesto Zedillo announced the Mexican central bank's devaluation of the peso between 13% and 15%. Devaluing the peso after previous promises not to do so led investors to be skeptical of policymakers and fearful of additional devaluations. Investors flocked to foreign investments and placed even higher risk premia on domestic assets. This increase in risk premia placed additional upward market pressure on Mexican interest rates as well as downward market pressure on the Mexican peso. Foreign investors anticipating further currency devaluations began rapidly withdrawing capital from Mexican investments and selling off shares of stock as the Mexican Stock Exchange plummeted. To discourage such capital flight, particularly from debt instruments, the Mexican central bank raised interest rates, but higher borrowing costs ultimately hindered economic growth prospects. The question is how would they pull this off if it's a floatable currency. For instance, the US government devalued the US Dollar against gold in the 30s, moving one ounce of gold from $20 to $35. The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. But now, the US Dollar is not backed by anything, so how do they devalue it now (outside of intentionally inflating it)? The Hong Kong Dollar, since it is fixed to the US Dollar, could be devalued relative to the Dollar, going from 7.75 to 9.75 or something similar, so it depends on the currency. As for the final part, \"\"does the real value of my stock ownership go down\"\" the answer is yes if the stock ownership is in the currency devalued, though it may rise over the longer term if investors think that the value of the company will rise relative to devaluation and if they trust the market (remember a devaluation can scare investors, even if a company has value). Sorry that there's too much \"\"it depends\"\" in the answer; there are many variables at stake for this. The best answer is to say, \"\"Look at history and what happened\"\" and you might see a pattern emerge; what I see is a lot of uncertainty in past devaluations that cause panics.\"","title":""},{"docid":"374638","text":"\"> If a penny worth of copper is worth 1.8 cents and I choose to make it into a a coin with a value of 1 cent then my opportunity cost is .8 cents. No, not at all. A coin represents value, it is not value (in terms of its denomination). A coin does however have value as facilitator of exchange of value, but that is in principle unrelated to that coin's denomination. So the value of a 1 cent coin (as a facility of exchange) is unknown. It is however easy to make the case that this unknown is very low, or even negative. > A gold coin back before fiat currencies was worth its weight in gold. Gold is just very slightly different in this regard, and substantially the same. It is used to represent value, and has very low intrinsic value. It's just a naturally limited resource instead of an \"\"artificially\"\" limited one such as fiat currency. This would be immediately evident if by some freak act of nature there was an abundance of gold raining down on everyone tomorrow. Nobody would become rich (just some unfortunate people overloaded with gold assets would become poor). Gold teeth and jewelry would become cheaper, though I imagine the latter would go out of fashion quite quickly. > When I make the spending power less than the value the purpose of a fiat currency breaks down. Not at all, there's in principle no relationship between \"\"value\"\" and denomination. You just need means of exchange that are cost-effective and practical. Single cents are becoming impractical and basically useless, and this would be just as true even if they cost .0001 cents each to produce.\"","title":""},{"docid":"163359","text":"I think what the person meant to say is that Gold is not a one stop solution. There's nothing wrong with having Gold in an otherwise diversified portfolio but you need to be aware about the potential downsides: The problem with gold is that its value nowadays depends mainly on investor confidence, or the lack of it (actual demand for gold cannot explain the rise in value gold had after the crisis). If people are afraid the world and currencies with it will go to hell, the gold price will go up. Why? Because if currencies seize to exist, Gold will still be accepted. It can replace currencies. What many people tend to forget: let's consider the extreme example and currencies really cease to exist and all hell breaks lose. What good are gold bars at the bank, or even at home, for that matter? You'll be better off with gold coins to use in barter and to pay off marauders. But that's not about investing anymore, that's survivalism.","title":""},{"docid":"317429","text":"I apply what you term 'money' to the word 'commodity'. And I agree with littleadv, you are just selling us your perspective on (such things as) precious metals. What I want you to think about is these truths: When used as currency gold just has two values: utility value and currency value. I hold it is better to separate the two. There is not enough gold in the earth to represent the value in aggregate economies of the world. Trying to go back to the gold standard would only induce an unimaginable hyperinflation in gold. Recent years shows that gold does not retain value. See the linked chart.","title":""},{"docid":"266984","text":"\">We were on the \"\"gold standard\"\" in name only since about 1910. There a few nuances behind the \"\"gold standard\"\" but all revolve around indebtedness and currency devaluation. The US actually started off in 1785 with a Silver standard. By the turn of the 18th century there was a fixed ratio of silver and gold to dollars. Silver was not required to back all of the currency, gold was used as well. This bi-metallic standard continued until 1920s. Gold and Silver were legal tender. The US treasury was on a strict hard-money standard. Doing business in only gold and silver until 1848 which seperated the Federal Government from the banking system. It was only after this move the federal government started the devaluation/overvaluation of silver in order to \"\"borrow\"\" from England. Silver came in, Gold came out. This also largely catalyzed the 1849 Gold Rush. Then in 1853 the US started reducing the weight of silver coins. In 1857 banks suspended payment in Silver. But the basic weakness in a gold standard started with GOVERNMENT wanting to manipulate value to unfairly skew debt/loan situations. >There was not enough gold to remotely back the US currency This is not true. US currency did just fine, and as governments print, so too do prices go up. So if there is only 50 Billion currency units in existance and eggs cost 10 cents (as they did for previous decades), when the federal government prints its way to trillions thats where we end up with eggs costing 2-3 bucks. That's why your grandparents house cost 6,000 and ones today cost 600,000. >which is why during the great depression when people started wanting to turn their cash back in to gold there was no enough No, they turned back to gold because of the devaluation of the dollar. If the dollar was falling as it is today, why would you want to keep your assets in dollars? Gold cannot be printed at whim, this is one of the most important factors. It forces government to be much more strict with debt. If taxpayers were faced with higher taxes or devaluation to pay for the current Iraq/Afganistan wars, would it have happened? No, but since the government could print money at whim, it served as an invisible tax. >and gold possession had to be outlawed It was outlawed because as the dollar plummeted and gold was eventually made illegal, the value of gold doubled and rapidly increased overnight, this happened again in 1970 when nixon took us off the gold standard. Gold posession was made illegal to prevent \"\"hoarders and opportunists\"\". You make it sound like gold redemption is a bad thing, when really its the government being naughty and citizens simply playing the game and by the rules set up by the government. >So no, we were not on a gold standard. Yeah I never said we were. But there is a very important reason we once were, so government couldnt devalue currency to rack up more debt. (A HUGE issue that has now played out to its logical conclusion, maximum indebtedness mixed with massive mechanisms for manipulation) >Secondly, when you're on a (any fixed item) standard, your economy only can grow at roughly the rate you fond more of the (fixed item). Is that why the US did just fine between 1780 and 1913? Over a hundred years. The cost of many items was stable for DECADES. Nowadays we have a doubling effect with cars costing 4,000 in 1970, 26,000 in 2000, 45,000 in 2012. The same with houses, food, education, medical services, you name it. >There are many reasons for this, and it is partially why for thousands of years of various gold standard there was so little economic growth. Once countries stopped limiting the amount of total economic growth to the amount of gold they could dig up, that economies were able to grow at the sustained rate they have for the past 200ish years. Wrong again, this is because of productivity from technology and invention, oil, electricity, automobiles, airplanes and eventually computers. Infact as I said above, fiat currency actually kills productivity. Its hard to compare the turn of the century, but we can see what happened after nixon took us off the gold standard here: http://azizonomics.files.wordpress.com/2012/06/tfp.jpeg as soon as the USA left the gold exchange standard, total factor productivity began to dramatically stagnate. 1.Leaving the gold exchange standard was a free lunch for policymakers: GDP growth could be achieved without any real gains in productivity, or efficiency, or in infrastructure, but instead by just pumping money into the system. 2.Leaving the gold exchange standard was a free lunch for businesses: revenue growth could be achieved without any real gains in productivity, or efficiency. >So, besides the fact that the US has not in modern history been backed by gold, despite the name, there is ample evidence from hundreds of economies and thousands of years that being on a gold standard = little or no economic growth. Since nixon took us off the gold standard in terms of dollar connection in anyway to gold the value of the dollar has plummeted 70%. Its over 95% if you go back to the early 1900s and currency debasement. There was plenty of economic growth while we were on the gold standard and to say otherwise is simply false.\"","title":""},{"docid":"285606","text":">Since gold in this very simple hypothetical system has absolutely no use other than a store of value, it is debt. But gold does have other uses. It is a metal that's used for jewelry, it has decorative value. Exchanging something for gold is like a caveman giving you a stone ax if you do some cave paintings for him. If all the civilization disappeared, gold would still have a value, different from bank notes. Gold is a convenient standard commodity for exchange for several reasons: it's indestructible, it's compact, it's easily recognizable. All the gold ever mined in the world would fit inside a typical five-story apartment building. Yet it doesn't burn, doesn't spoil, can be stored forever, different from apples or oranges. >these firms would be adjusting their capacity, and not sitting on trillions of dollars of currency that ought to be liquid. Here s where the difference between actual work that has been performed and a promise make a real difference. These companies are sitting on trillions of dollars of promises, not products. What they have is paper, shares, bonds, debentures, whatever. They are unable to transform those papers into products, because they lack the manufacturing capacity to do so. They do not have a million apples, they have a paper where the farmer said he would grow a million apples. Overall, the corporations in the US have invested heavily in acquisitions of other corporations, this trend has been going on for several decades now. These papers cannot be easily converted into anything useful. For the moment they are just there, with their nominal value that people agreed upon. It's not easy to turn that investment into production.","title":""},{"docid":"471825","text":"\"We measure the value of gold by comparing it to other things. Sorry, but there is no better answer than that. There is no gold standard (pun intended) by which objects can be measured in value because \"\"value\"\" is a subjective term. It would be comparable to asking how funny is an object. Different objects are funny to different people. Even if we gathered all the really \"\"funny\"\" object together, there is no guaranty those objects would be funny next year - unless we all agreed they were as part of a social contract. Which is basically what we do with currency. While gold does not need a social contract in order for it to retain its value, this is only because it is has been (1) very useful and (2) rare. If either of these two factors change, the value of gold will change - which it has on several occasions. WARRING: Rant about \"\"Intrinsic Value\"\" of gold below. Gold has no \"\"intrinsic\"\" value. None whatsoever. \"\"Intrinsic value\"\" makes just as much sense as a \"\"cat dog\"\" animal. \"\"Dog\"\" and \"\"cat\"\" are referring to two mutually exclusive animals, therefore a \"\"cat dog\"\" is a nonsensical term. Intrinsic Value: \"\"The actual value of a company or an asset based on an underlying perception of its true value ...\"\" Intrinsic value is perceived, which means it is worth whatever you, or a group of people, think it is. Intrinsic value has nothing, I repeat, absolutely nothing, to do with reality. The most obvious example of this is the purchase of a copy-right. You are assigning an intrinsic value to a copy-right by purchasing it. However, when you purchase a copy-right you are not buying ink on a page, you are purchasing an idea. Someone's imaginings that, for all intensive purposes, doesn't even exist in reality! By definition, things that do not exist do not have \"\"intrinsic\"\" properties - because things that don't exist, don't have any natural properties at all. \"\"Intrinsic\"\" according to Websters Dictionary: \"\"Belonging to the essential nature or constitution of a thing ... (the intrinsic brightness of a star).\"\" An intrinsic property of an object is something we know that exists because it is a natural property of that object. Suns emit light, we know this because we can measure the light coming from it. It is not subjective. \"\"Intrinsic Value\"\" by definition is the OPPOSITE of \"\"Intrinsic\"\"\"","title":""},{"docid":"483389","text":"\"Are you talking about a country besides the US? And you're talking about a commercial bank, right? In the US, banks don't buy gold from consumers. The last time they sort of did (in the early 1900s), they were trading gold coins for gold certificates, and then they later stopped allowing consumers to trade them back. This is known by a well-known financial term: \"\"Gotcha, suckers!\"\" If someone were naive enough to deposit a $50 Gold American Eagle today in a bank, the depositor will get a credit of $50 on their account, and later some clever person will ask the teller if they have any \"\"strange money\"\" lying around, and that lucky person will be able to withdraw a $1,700 coin for $50, if it lasted for even a second in the teller's drawer. But let's say you're going to a place that does indeed still buy gold coins. The discount depends on the type of coin, and the type of damage. An old (collectible) coin has a part of its value set by the gold value, and part by the collector's premium. Better specimens command better collector's premiums, so a damaged coin, as long as it isn't a chunk of the coin missing, won't be worth less than the melt value. (You may not get that much from a dealer, but it should be fairly close.) If part of the coin is missing, then the person buying it should weigh the coin and adjust the price proportionately. It's likely, though, that if you have the items in a safe, you may have a puddle or blob of gold, but it should still all be there unless someone takes it. Gold melts at about 1850 degrees Fahrenheit, but it would take half the surface temperature of the sun for it to boil away. If it's unidentifiable, it may need to be assayed again.\"","title":""},{"docid":"512265","text":"> ever eat paper? Yeah, of course, plenty of times. Not (usually) intentionally, but sometimes a wrapper will get stuck, etc. Also, it's a good way to get rid of something if you don't have a lighter. More so when I was a kid and messing around with 'secret notes' and the like but.. ..yeah, I've eaten paper. Granted, I've probably eaten gold as well, and there are some benefits or health values of gold.. .. within the pseudoscientific / alt-health crowd.. ..not sure I buy into those but. ..it has some value. But, nothing like paper. Obviously there are different materials used for making paper.. ... lots of barks have a value from a health perspective, a relative nutritional value. Growing the tree, depending on the type, can provide fruit, building materials, etc.. ..with the pulp providing a paper value. So, multiple benefits can come from paper.. ...and, that's just the post-harvest aspect.. well, the case of fruit I guess not. but, there's the environmental benefits of trees and such as well; habitats for wild life, wind breaks, carbon sequestration. soil health, etc. Multiple benefits, and that's just from tree-based paper. If you expand it out to something like, say, hemp paper? well, there's the oil.. ... which can be used for fuel production, various other uses, and, most especially, the health benefits and consumption from it.. ...while the remaining fibers can be used for construction... be it compressed bricks, hempcrete (which has excellent values in strength, durability, insulation, weight-to-strength *ratio*, etc. And, again, the health benefits of hemp oil... ...argued to be the single 'thing' you can consume solely (+ water) and get 100% of the nutrients you need.. ...in mixed ratios and obviously it isn't as great as other things in concentrations, but.. ..it's extremely nutritious. Also, the plant is really good for the soil, again, habitats, sequesters carbon, helps to pull toxins and such *out* of the soil for bioremediation. Is quick to grow, grows densely, is durable, has minimal inputs needed, hardy, ... all around a great crop. and, again, the health benefits of its oil are *combined* with its paper making capabilities. .... and, good strong paper too. has a great weight, feel, durable, can/will last a really long time if properly handled.. ..and has much wider variance *in* 'proper handling' than tree-based paper. Solid product. You should look into it, ... here, I'll give you some links to help you out. * [9 Health Benefits of Hemp Oil That You Should Know](http://www.zliving.com/wellness/natural-remedies/9-health-benefits-of-hemp-oil-that-you-should-know) * [10 Incredible Benefits of Hemp Oil](http://herb.co/2016/10/17/incredible-benefits-hemp-oil/) * [12 Ways Using Hemp Seed Oil Will Improve Your Health & Your Life](http://www.naturallivingideas.com/hemp-seed-oil/) A bit sensationalistic in the headlines... and, well, as to be expected I suppose, but regardless, pretty great stuff! ..and, again, that's just the oil. The post-oil-extraction pulp can still go on to be used for the more-applicable-to-conversation paper. But, since USD's seem to be the main focus... ...though other countries are progressively (or more-progressively I suppose) utilizing even *more* durable plastic in their notes.. ..but, for USD, still paper.. and, as such, the more durable cotton paper. Now, comparing cotton to hemp is really... .. [hemp wins nearly every time](https://www.davidwolfe.com/hemp-vs-cotton/) but... cotton is cotton and, recent headline and social controversy of cotton flower decorations aside.. cotton is cotton. Most everything that I'm wearing right now is made of cotton. It's a nice fabric. Durable, flexible, soft, etc. Good stuff. Not the easiest to work with but, clearly not something the world is in short supply of. but, that doesn't really address your point though exactly.. Like hemp, you can get cotton oil (or cotton seed oil to be more specific) from the plant while also getting the fibers that you'd need for paper production. It's a bit of a 'mixed back' and definitely *not* as straight forward as hemp's purported health benefits (and I didn't even *get* into the CBD oil stuff that hemp can provide)... . * [15 Benefits of Cottonseed Oil](http://www.searchhomeremedy.com/15-best-benefits-of-cotton-seed-oil/) * [7 Amazing Benefits & Uses of Cottonseed Oil](https://www.organicfacts.net/health-benefits/oils/cottonseed-oil.html) * [10 Best Benefits of Cotton Seed Oil](http://www.stylecraze.com/articles/best-benefits-of-cotton-seed-oil/#gref) but, from there, things start to turn a little south, and weren't necessarily all that 'great' to begin with.... * [Is Cottonseed Oil Okay?](https://www.drweil.com/diet-nutrition/nutrition/is-cottonseed-oil-okay/) * [3 Best and Worst Oils For Your Health](https://www.bonappetit.com/trends/article/3-best-and-worst-oils-for-your-health) So, I suppose my point is... if I even really have a singular one... is that paper, regardless of source, has at least *some* sort of nutritional value.. or could anyway. As well, the crops used to produce the paper have the capability of ranging from some medicinal qualities all the way up to a seemingly really beneficial quantity of nutrients and compounds. At worst, the crops provide a habitat for various organisms. The problem with gold and paper currency is that, in the end, they're both inherently valued by the civilization that deems them valuable. I mean, take the quantity of gold in reserves around the world. Cross that with the industrial uses of gold (of which there are many) and, in turn, cross that with the artistic value of it. It's price isn't based on its use... it's based on similar principals *as* fiat (paper... and, increasingly, plastic) currency: society's perception that it has value. Gold has many properties that are excellent for many applications... superior to most (all?) in certain cases. ...but, that's not why it's valued at its current price. ..again, it's valued at its current price because of perceived value. Even from an artistic perspective, the amount of gold used in the Palace of Versailles... for the paint and such, was 'minuscule' given how much of the palace is covered in gold. It was something like just a few ounces because the layering is so thin. Point: if 'the look of gold' was all that people were going for they could easily just use another metal coated in a very thin layer of gold and.. externally, the appearance would be the same effect and the weight could theoretically be even lighter (or heavier). But, people want *more* than 'just the look'. They feel that the gold itself has a value beyond just the 'look'.. ..and, for all intents & purposes, it *does*. but *only* because they and other people choose to perceive it as having such. I've traded gold (profitably) for over 20 years. I understand the arguments very well.. ..but, vs food? In the end, the gold is a means not an end.","title":""},{"docid":"506792","text":"Of course. But then, paper also has utility. So do seashells and pinecones. There is no obvious reason why, even in a perfect world, we would go looking for a malleable, highly-conductive, corrosion-resistant metal as something to peg the value of our banknotes to. The argument in favor of a gold standard is not whether gold is intrinsically more valuable than paper or seal skins or anything else, it's that gold is fairly inelastic in terms of supply, so it limits the ability of central bankers to mess up the value of the currency through interventionist funny business. If you picked up a rock and started going around telling people that we should use it as money because it's highly malleable and conductive and can be used in computer parts, they would look at you like you're a crazy person. That's not why gold is/was/should be a currency. Gold was indisputably the perfect currency for thousands of years, because it was easy to identify, easy to handle, hard to falsify, and rare. Those were important characteristics when strangers had to carry physical money to different places without any ATMs, credit-cards, or paypal accounts. They are somewhat less critical today, but still... The one characteristic that might *still* argue in favor of a gold standard is rarity: Since the amount of gold in the world is somewhat fixed, forcing the currency supply to be restricted to the gold supply semi-prevents governments and central bankers from getting into too much mischief (or at least, that's the theory). I will leave it to others to argue over whether a return to the gold standard would be a good idea, but the argument has nothing to with the intrinsic utility of gold. I'm sure we can all agree that gold is a fine metal with many good qualities.","title":""},{"docid":"259440","text":"\"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).\"","title":""},{"docid":"450922","text":"I think you are asking a few questions here. Why is gold chosen as money? In a free market there are five characteristics of a good money: Gold and silver meet all five characteristics. Diamonds are not easily divisible which is why they are not normally used as money. Copper, Iron, and lead are not scarce enough - you would need a lot of these metals to make weekly or daily purchases. Paper is also way too plentiful to be used as money. By the way, historically silver has been used for money more than gold. How does international trade work with gold as money (is this what you are asking with your hypothetical example of 10 countries each with y amount of gold?) Typically a government will issue a currency that is backed by gold. This means you can redeem your currency for actual gold. Then when an American spends 5 US dollars (USD) to purchase a Chinese good the Chinese man now owns 5 USDs. The Chinese man can either redeem the 5 USD for gold or spend the 5 USD in the US. If a government issues more currency then they have gold for then the gold will start to flow from that country to other countries as the citizens of the other countries redeem the over-issued currency for gold. This outflow of gold restricts governments from over-issuing paper currency. Who creates the procedures and who supervises them in modern worldwide economy? The Federal Reserve, IMF, and Bank of International Settlements all are involved in the current system where the US dollar (see Bretton Woods agreement) is the reserve currency used by central banks throughout the world. Some think this system is coming to an end. I tend to agree.","title":""},{"docid":"189612","text":"Approximately 5.3 billion ounces have been mined. This puts the total value of all gold in the world at about $9.5 trillion, based on $1800/oz. Total world net worth was $125T in 2006. There's an odd thing that happens when one asset's value is suddenly such a large percent of all assets. (This reminds me of how and why the tech bubble burst. Cisco and EMC would have been worth more than all other stocks combined if they grew in the 00's like they did in the 90's.) Production (in 2005/6) ran about 80 million oz/yr. Just over 1.5% impact to total supply, so you are right in that observation. On the other hand, the limited amount out here, means that if everyone decided to put their wealth in gold, it would be done by driving the price to bubblicious levels. One can study this all day, and parse out how much is in investment form (as compared to jewelry, etc) and realize that a few trillion dollars in value pales in comparison to the wealth of the US alone, let alone the world. Half the world can't buy two oz if they tried. Of course there's pressure to reopen mines that had costs pushing $800/oz. Understand that the supply of $300 gold is long gone. As the easy gold has been mined, and cost goes up, there's a point where mines close. But as the price of gold trades at these levels, the mines that couldn't produce at $600 are now opening.","title":""},{"docid":"575834","text":"\"Suppose you have a bar of gold and are hungry. I buy the gold from you for cash, which you then use to buy food, clothes and generally support yourself. Would it be fair to say that I paid for your food, clothes etc? I don't think so - I think *you* paid for them, in gold. I facilitated the exchange of gold into money, and without me or someone like me around to provide liquidity for your gold, you'd still be hungry. But fundamentally, it was the gold that was valuable. Now, suppose there is a lack of liquidity in gold - there's a shortage of gold buyers. I take advantage of this distortion to offer to buy your gold for half its free market value. You don't want to accept this deal, but since your only alternative is starvation, you accept. I say this is wrong, not because of socialism, but because of capitalism. The efficiency of capitalism arises from the price system of value. Goods and services command a fair market price, and buyers and sellers have access to both liquidity and good information about the relative value of things. When distortions are allowed to interfere with free market pricing - as inevitably happens under lassiez-faire capitalism - this efficiency is lost. Good government regulation is necessary to keep markets free and efficient, and this is good for everyone. So what does this have to do with David Siegel? First, nothing in my example above changes when you substitute \"\"labor\"\" for \"\"gold.\"\" If I am hungry but I have a skill, and I sell you some of my labor for cash, then use the cash to buy food, *you did not give me the food*. You did not \"\"pay for my food,\"\" you did not \"\"make it possible for me to get food,\"\" or anything of the sort. *I paid for it myself*, by trading labor for cash in exactly the same way that you could trade gold for cash. Second, the price system of value allows you to earn a \"\"normal profit,\"\" which means sufficient profit for resources to remain within an industry. But \"\"excess profit\"\" harms market efficiency and thus the price system. This is pure capitalist theory, straight from Adam Smith; it is nothing to do with socialism or communism. It is quite clear that David Siegel is taking excess profit. This is no different from the sort of profiteering I described when there's only one gold dealer in town. It is parasitic behavior according to *capitalist* theory. And finally, David Siegel is the guy who invented high-pressure selling of timeshares by inviting familes to a \"\"free\"\" vacation, trapping them in a room, and basically holding them hostage until they sign on the dotted line. His business is near-criminal. You can argue that drug kingpins also create thousands of jobs - that doesn't make them good people, or their actions beneficial to society. I already thought David Siegel was a parasite on society before I ever heard of his opinion on Obama. And quite frankly, I'm shocked and appalled that people are actually defending him.\"","title":""},{"docid":"449941","text":"\"These are meaningless statistics on multiple levels: 1. These value rises are as of 2016. This does not indicate any sort of significant trend in the rise in value of these bags over time. Did they lose 30% in 2015? Will value stagnate in 2018? 2. Even if a trend were established (it is not), it doesn't suggest any sort of future movements whatsoever, as past price movements don't ensure future movements. 3. The fundamental idea of \"\"investing\"\" in an accessory is questionable at best. While collectors will buy things like cars and art, and some will sit on them as stores of value, the economics of generating future returns on these items is not so logically sound as with stocks or bonds. These collectors items do not generate future value in a way that produces cash flows. An individual has to purely hope that somebody is willing to pay more for it in the future; the item does not fundamentally necessitate higher payment. This is the fundamental problem also with \"\"investing\"\" in commodities, and why a fundamentalist like Buffet would never do it. You bet on a commodity move (hopefully with information that you believe the market to be incorrectly synthesizing); you don't really \"\"invest\"\" in one. What makes a stock or bond (a company) different is that a company can be thought of as a black box that prints more money than it is fed. We feed money into a company as investors; the company uses that money to buy assets (e.g. Machines, inventory) at book value; the assets are made to work in tandem to produce goods/services that have more value than the sum of their parts; those goods/services are sold at the now higher value for a profit, and cash flows are returned to investors for an annual return on your investment (sometimes dividends aren't paid, but are reinvested with the expectation that reinvestment will lead to far larger dividends in the future). As such, the money investors feed into a company is turned into more money at the other end, and thus the company has produced more value than it's inputs alone. It has done so through the combination of resources (assets) in a way that makes their value greater than the sum of their parts. A company fundamentally is a logical investment (barring doubts about management's ability to create this value). It is like a black box that prints more money over time than you feed it. Purses do not; gold does not; oil does not. Don't invest in purses. Collect then if you love them, but don't bank on a payday.\"","title":""},{"docid":"430570","text":"\"Of course. The rationale is exactly the same as always: profit is taxed. The fact that you use intermediate barter to make that profit is irrelevant. To clarify, as it seems that you think it makes a difference that no money \"\"changed hands\"\". Consider this situation: So far your cost is $10000. How will the tax authority address this? They will look at the fair market value of the barter. You got gold worth of $20000. So from their perspective, you got $20000, and immediately exchanged it into gold. What does it mean for you? That you're taxed on the $10000 gain you made on your product X (the $20000 worth of barter that you received minus the $10000 worth of work/material/expenses that you spend on producing the merchandise), and that you have $20000 basis in the gold that you now own. If in a year, when you plan to sell the gold, its price drops - you can deduct investment losses. If its price goes up - you'll have investment gain. But for the gain you're making on your product X you will pay taxes now, because that's when you realized it - sold the merchandize and received in return something else of a value.\"","title":""},{"docid":"181574","text":"Depends what kind of expenses you intend to use this money for. If you plan to buy housing in the future (eg you're saving a deposit), then you need to ensure that the value doesn't deteriorate relative to the value of the housing you are likely to buy - so you could buy a Residential REIT, or buy some investment property. If you expect to use this money for food, then you should buy suitable assets (eg Wheat futures, etc). Link the current asset to the future expense, and you will be fine. If you buy Gold, then you are making a bet that Gold will retain its value compared to the thing you want to purchase in future. It doesn't matter what the price of Gold does in $US.","title":""},{"docid":"156211","text":"\"Extrinsic value is not a factor with respect to gold. Intrinsic value by definition is the natural value of a commodity set by the market -- extrinsic value is externally set. The \"\"extrinsic\"\" value of gold in the United States is $50/oz. If the market value of gold fell below $50/oz, a US American Eagle coin would be worth $50 in the US. If you take away the attributes that make a commodity valuable, the value drops. Substitutes of equal or better quality for most industrial or other uses of gold exist, so if if the popularity of gold declines, or if the hoarders of gold have to liquidate, it's value will diminish. I have no idea what that value would be, but it would set by the market demand for gold jewelry and other valuable industrial uses.\"","title":""},{"docid":"15643","text":"\">How does \"\"doing business in\"\" something increase its value? By this logic, all businesses should be successful. When you work, you are creating value. Even if your business fails within the first year, there's still all the value you have created such as: hiring handypeople to fix up your businessplace, hiring people to work at your business, buying office supplies, etc. Just because you didn't profit off of your business doesn't mean that other people didn't. >you're basically saying \"\"Things are currently like X, therefore things should (and would) be like X under a different legal structure.\"\" How do you think the concept of money came about? >I can't take this line of argument seriously, I'm sorry. Why not? This is the reason that hedge fund managers and CEOs pay so little in taxes...most / all of their compensation is in stocks and bonds, taxed as investment income. If you were paid in gold, i'm sure you could claim the same. >You're emotionally invested in a fiat paper standard. That's sillie: i'm emotionally invested in a gift economy. I *accept* a fiat paper standard.\"","title":""},{"docid":"502832","text":"\">There is no obvious reason why, even in a perfect world, we would go looking for a malleable, highly-conductive, corrosion-resistant metal as something to peg the value of our banknotes to. If this were true, why force citizens to use a specific central bank's paper money via \"\"legal tender laws\"\"? ;) >I will leave it to others to argue over whether a return to the gold standard would be a good idea, but the argument has nothing to with the intrinsic utility of gold. I'm sure we can all agree that gold is a fine metal with many good qualities. Then what was the point of your post? If you don't want to use gold as money, I would never force you to use gold. It is the contention of the Austrian economists that there should be free and open competition in the money industry. Allow people to choose their money. Allow entrepreneurs to create systems to simplify the communication of prices across various monies. The root of the problem is force and monopoly.\"","title":""},{"docid":"314085","text":"\"The difference is in the interrelation between the varied investments you make. Hedging is about specifically offsetting a possible loss in an investment by making another related investment that will increase in value for the same reasons that the original investment would lose value. Gold, for instance, is often regarded as the ultimate hedge. Its value is typically inversely correlated to the rest of the market as a whole, because its status as a material, durable store of value makes it a preferred \"\"safe haven\"\" to move money into in times of economic downturn, when stock prices, bond yields and similar investments are losing value. That specific behavior makes investing in gold alongside stocks and bonds a \"\"hedge\"\"; the increase in value of gold as stock prices and bond yields fall limits losses in those other areas. Investment of cash in gold is also specifically a hedge against currency inflation; paper money, account balances, and even debt instruments like bonds and CDs can lose real value over time in a \"\"hot\"\" economy where there's more money than things to buy with it. By keeping a store of value in something other than currency, the price of that good will rise as the currencies used to buy it decrease in real value, maintaining your level of real wealth. Other hedges are more localized. One might, for example, trade oil futures as a hedge on a position in transportation stocks; when oil prices rise, trucking and airline companies suffer in the short term as their margins get squeezed due to fuel costs. Currency futures are another popular hedge; a company in international business will often trade options on the currencies of the companies it does business in, to limit the \"\"jitters\"\" seen in the FOREX spot market caused by speculation and other transient changes in market demand. Diversification, by contrast, is about choosing multiple unrelated investments, the idea being to limit losses due to a localized change in the market. Companies' stocks gain and lose value every day, and those companies can also go out of business without bringing the entire economy to its knees. By spreading your wealth among investments in multiple industries and companies of various sizes and global locations, you insulate yourself against the risk that any one of them will fail. If, tomorrow, Kroger grocery stores went bankrupt and shuttered all its stores, people in the regions it serves might be inconvenienced, but the market as a whole will move on. You, however, would have lost everything if you'd bet your retirement on that one stock. Nobody does that in the real world; instead, you put some of your money in Kroger, some in Microsoft, some in Home Depot, some in ALCOA, some in PG&E, etc etc. By investing in stocks that would be more or less unaffected by a downturn in another, if Kroger went bankrupt tomorrow you would still have, say, 95% of your investment next egg still alive, well and continuing to pay you dividends. The flip side is that if tomorrow, Kroger announced an exclusive deal with the Girl Scouts to sell their cookies, making them the only place in the country you can get them, you would miss out on the full possible amount of gains you'd get from the price spike if you had bet everything on Kroger. Hindsight's always 20/20; I could have spent some beer money to buy Bitcoins when they were changing hands for pennies apiece, and I'd be a multi-millionaire right now. You can't think that way when investing, because it's \"\"survivor bias\"\"; you see the successes topping the index charts, not the failures. You could just as easily have invested in any of the hundreds of Internet startups that don't last a year.\"","title":""}],"string":"[\n {\n \"docid\": \"352485\",\n \"text\": \"The answer is that other than a small number of applications (the approx. 10% of gold production that goes to 'industrial uses') gold does not have intrinsic value beyond being pretty and rare (and useful for making jewelry.) There are a number of 'industrial' applications and uses for gold (see other answers for a list) but the volume consumed this way is fairly small, especially relative to the capacity to mine new gold and reclaim existing gold. If you removed investment, and jewelry usage (especially culturally driven jewelry usage) then there's no way the remaining uses for industry and dentistry could sustain the price levels we currently see for gold. Furthermore, and perhaps more importantly, the best data I can find for this shows the total number of tons consumed for industrial uses has been shrinking for several years now, and that was prior to recent price increases, so it is difficult to tie that reduced demand to increasing prices. And one might postulate in a 'collapsed society' you seem to be referring to in your question, that a lot of the recent industrial demand (e.g. the '50 cents of gold in each cellphone') could quite possibly disappear entirely. The argument many people use for gold having value is usually 'been used as money for thousands of years'. But this confuses gold having a value of its own with the reasons why something makes a useful currency. Gold has a large number of characteristics that make it an ideal currency, and of all the elements available it is perhaps the best physical element to serve as a currency. BUT just as with a dollar bill, just because it is a good currency, does NOT give it an intrinsic value. Any currency is only worth what someone will trade you for it. The value is set by the economy etc., not the medium used as a currency. So yes, people will probably always use gold as money, but that doesn't make the money worth anything, it's just a medium of exchange. Incidentally two other things should be noted. The first is that you have a problem when the medium itself used for a currency becomes worth more than the face value. Hence why we stopped using silver in coins, and there were concerns over pennies due to the price of copper. This leads to the second point, which is that currently, gold is TOO RARE to suffice as a world currency, hence why all countries went off the gold standard years ago. The size of national and global economies was growing faster than the supply of gold, and hence it was becoming impossible to have enough gold to back all the currencies (inflation concerns aside).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"10813\",\n \"text\": \">But gold does have other uses. It is a metal that's used for jewelry, it has decorative value. Exchanging something for gold is like a caveman giving you a stone ax if you do some cave paintings for him. That's not quite the point. I was addressing a specific problem. I'm aware that it's more complex, hence my disclaimer of simplicity. But to address your point, not everyone is a goldsmith. Imagine if the medium was saltpeter. Of course someone's going to use it to make explosives, but most people are not in that line of work. To most people, gold has no use except as a store of value. Why is an identically designed plastic necklace so much cheaper than a gold one? Because as many uses as it has, plastic doesn't store value (some say intrinsically, I say artificially) the way gold does. >because they lack the manufacturing capacity to do so. Like I said, they can invest in factory expansion or new factory construction. To stick to the metaphor, they need to plant more apple trees. There may not be a million apples available, but if that's what the demand is -and why else would anyone offer a million apples- that's the potential market size (especially if the supply exists in China). So the farmer ought to increase his yield, thereby lowering his average cost to produce an apple. If he knows he can only plant 100 apple trees, he's not going to promise a million apples when asking for a loan to expand his orchard. EDIT: >with their nominal value that people agreed upon. The same phenomenon occurs in bullion currency.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"240894\",\n \"text\": \"\\\"Gold may have some \\\"\\\"intrinsic value\\\"\\\" but it cannot be accurately determined by investors by any known valuation techniques. In fact, if you were to apply the dividend discount model of John Burr Williams - a variation of which is the basis of Discounted Cash Flow (DCF) analysis and the basis of most valuation techniques - gold would have zero intrinsic value because it produces no cash flow. Legendary focus investor Warren Buffett argues that investing in gold is pure speculation because of the reason mentioned above. As others have mentioned, gold prices are affected by supply and demand, but the bigger influence on the price of gold is how the economy is. Gold is seen as a store of value because, according to some, it does not \\\"\\\"lose value\\\"\\\" unlike paper currency during inflation. In inflationary times, demand increases so gold prices do go up, which is why gold behaves similar to a commodity but has far less uses. It is difficult to argue whether or not gold gains or loses value because we can't determine the intrinsic value of gold, and anyone who attempts to justify any given price is pulling blinders over your eyes. It is indisputable that, over history, gold represents wealth and that in the past century and the last decade, gold prices rise in inflationary conditions as people dump dollars for gold, and it has fallen when the purchasing power of currency increases. Many investors have talked about a \\\"\\\"gold bubble\\\"\\\" by arguing that gold prices are inflated because of inflation and the Fed's money policy and that once interest rates rise, the money supply will contract and gold will fall, but again, nobody can say with any reasonable accuracy what the fair value of gold at any given point is. This article on seeking alpha: http://seekingalpha.com/article/112794-the-intrinsic-value-of-gold gives a quick overview, but it is also vague because gold can't be accurately priced. I wouldn't say that gold has zero intrinsic value because gold is not a business so traditional models are inappropriate, but I would say that gold *certainly * doesn't have a value of $1,500 and it's propped so high only because of investor expectation. In conclusion, I do not believe you can accurately state whether gold is undervalued or overvalued - you must make judgments based on what you think about the future of the market and of monetary policy, but there are too many variables to be accurate consistently.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"305794\",\n \"text\": \"You acquire something because you expect to use it, or because you expect to exchange it for something that you want to use. Gold is a good candidate for storing value because it's rare, it's not easily counterfeited, it's divisible, it's portable, etc. Contrast this with your favorite currency: more can be printed up almost at will, etc. Overvaluedness/undervaluedness is only in reference to something else. How many dollars does it take to buy an ounce of gold? (About $1,500.) How many ounces does it take to equal the DJIA? (About 8.) How many ounces of silver does it take to buy an ounce of gold? How many barrels of oil can you buy with an ounce of gold? Etc., etc. But whatever measure you're using, the value of the gold you have is directly related to the mass of gold you own. Two ounces are twice as valuable as one ounce. As the old joke goes (no offense to taxi drivers intended!) when your cabbie starts talking about how to get rich with gold, it's probably overvalued. Sell it all! ;)\",\n \"title\": \"\"\n },\n {\n \"docid\": \"311133\",\n \"text\": \"\\\">So why not talk to your employer, and ask them to pay you in gold dust? Then when tax time comes, just convert some gold dust into the amount of USD in taxes you owe. Because selling gold and buying dollars has an effect on the market: it reduces the value of gold, and increases the value of dollars. Understand? So being forced to use dollars *artificially increases the value of dollars*. The reason we are forced to use Dollars is because the central bank has the monopoly on printing dollars. Without legal tender laws, that monopoly would be worthless. >Of course, you'd have to find farmers and shoemakers and electronic stores willing to accept payment in gold dust as well... As the value of gold increases over time, the government taxes the increased value as \\\"\\\"capital gains tax\\\"\\\". So gold cannot be money under these circumstances - the government considers it an investment now.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"270944\",\n \"text\": \"diamonds are intrinsically worthless -- and therefore have quite little resale value It may be true that De Beers has a near monopoly on diamond supply, but they are still a scarce resource, so their supply is still very limited. They do have resale value - that's one reason why diamond jewelry is stolen so often. There's just not a huge secondary market for diamonds that I know of (unlike cars, for example). You can sell diamond jewelry at pawn shops or online brokers, but you probably only get a fraction of their retail value. They are not intrinsically worthless. They do have value in the industrial sector as powerful cutters, although synthetic diamonds are much more prevalent in this market. Their value in industry is much lower than their worth as jewelry. Think about gold - it does not have a monopolic supplier but it still has a relatively very high value.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"1642\",\n \"text\": \"\\\"During Graham's career, gold and currency were the same thing because of the gold standard. Graham did not advise investing in currencies, only in bonds and stocks, the latter only for intelligent speculation. Graham died a couple of years after Nixon closed the gold window, ending the gold standard. Gold may be thought of as a currency even today, as endowments and other investors use it as a store of value or for diversification of risks. However, currency or commodities investing does not seem Graham-like. How could you reliably estimate intrinsic value of a currency or commodity, so that you can have a Graham-like margin of safety after subtracting the intrinsic value from the market value? Saying that gold is \\\"\\\"clearly underpriced in today's market\\\"\\\" is just hand-waving. A Graham analysis such as \\\"\\\"net net\\\"\\\" (valuing stocks by their current tangible assets net of all liabilities) is a quantitative analysis of accounting numbers audited by CPAs and offers a true margin of safety.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"511616\",\n \"text\": \"\\\"[There's about 10 trillion in gold](http://en.wikipedia.org/wiki/Gold_reserve) and about [2.8 trillion of US cash](http://visualeconomics.creditloan.com/the-value-of-united-states-currency-in-circulation/) in the world. Neither of these is anywhere large enough to be used for all the transactions in the world. For example, about [4 trillion a **day**](http://en.wikipedia.org/wiki/Foreign_exchange_market) changes hands in the currency markets alone - if that were required to be cash or gold it would be impossible to do so, and you'd suffer from more poorly priced goods since markets could not adjust as quickly, so vendors would charge more premium to handle the risk. Yes, there is not (and has not been) enough cash in circulation to run the world economy. There is also vastly too little gold, unless you want to strangle commerce due to not being enough money to trade. > \\\"\\\"posing as the money supply\\\"\\\" All money is debt, and always has been. Money is a placeholder that you can trade for goods *later* meaning someone owes you a thing. The value of that money is the debt they (or society) owes you for something you already did to get that money. So there is no posing, just most don't understand money, how it originated, why it exists, or why it works. They never ask the question \\\"\\\"how does money come into existance\\\"\\\". > Does defaulting on ones debt create inflation since that money is still in the system and not being paid off? Probably not much. Loans are made expecting some default, so the interest others pay on their loans helps offset the defaulted ones. If loans become riskier, the interest demanded increases, so the lender still (if they do their risk analysis well and no external events break their expectations) makes money. When you pay off a debt, that money, as you're paying it, is likely being lent in other loans, so paying it off does not do much. If you could pay off about 100 trillion in debt into the US economy in one payment you might break some things :)\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"174002\",\n \"text\": \"Gold is a commodity. It has a tracked price and can be bought and sold as such. In its physical form it represents something real of signifigant value that can be traded for currency or barted. A single pound of gold is worth about 27000 dollars. It is very valuable and it is easily transported as opposed to a car which loses value while you transport it. There are other metals that also hold value (Platinum, Silver, Copper, etc) as well as other commodities. Platinum has a higher Value to weight ratio than gold but there is less of a global quantity and the demand is not as high. A gold mine is an investement where you hope to take out more in gold than it cost to get it out. Just like any other business. High gold prices simply lower your break even point. TIPS protects you from inflation but does not protect you from devaluation. It also only pays the inflation rate recoginized by the Treasury. There are experts who believe that the fed has understated inflation. If these are correct then TIPS is not protecting its investors from inflation as promised. You can also think of treasury bonds as an investment in your government. Your return will be effectively determined by how they run their business of governing. If you believe that the government is doing the right things to help promote the economy then investing in their bonds will help them to be able to continue to do so. And if consumers buy the bonds then the treasury does not have to buy any more of its own.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"137353\",\n \"text\": \"\\\"My question boiled down: Do stock mutual funds behave more like treasury bonds or commodities? When I think about it, it seems that they should respond the devaluation like a commodity. I own a quantity of company shares (not tied to a currency), and let's assume that the company only holds immune assets. Does the real value of my stock ownership go down? Why? On December 20, 1994, newly inaugurated President Ernesto Zedillo announced the Mexican central bank's devaluation of the peso between 13% and 15%. Devaluing the peso after previous promises not to do so led investors to be skeptical of policymakers and fearful of additional devaluations. Investors flocked to foreign investments and placed even higher risk premia on domestic assets. This increase in risk premia placed additional upward market pressure on Mexican interest rates as well as downward market pressure on the Mexican peso. Foreign investors anticipating further currency devaluations began rapidly withdrawing capital from Mexican investments and selling off shares of stock as the Mexican Stock Exchange plummeted. To discourage such capital flight, particularly from debt instruments, the Mexican central bank raised interest rates, but higher borrowing costs ultimately hindered economic growth prospects. The question is how would they pull this off if it's a floatable currency. For instance, the US government devalued the US Dollar against gold in the 30s, moving one ounce of gold from $20 to $35. The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. But now, the US Dollar is not backed by anything, so how do they devalue it now (outside of intentionally inflating it)? The Hong Kong Dollar, since it is fixed to the US Dollar, could be devalued relative to the Dollar, going from 7.75 to 9.75 or something similar, so it depends on the currency. As for the final part, \\\"\\\"does the real value of my stock ownership go down\\\"\\\" the answer is yes if the stock ownership is in the currency devalued, though it may rise over the longer term if investors think that the value of the company will rise relative to devaluation and if they trust the market (remember a devaluation can scare investors, even if a company has value). Sorry that there's too much \\\"\\\"it depends\\\"\\\" in the answer; there are many variables at stake for this. The best answer is to say, \\\"\\\"Look at history and what happened\\\"\\\" and you might see a pattern emerge; what I see is a lot of uncertainty in past devaluations that cause panics.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"374638\",\n \"text\": \"\\\"> If a penny worth of copper is worth 1.8 cents and I choose to make it into a a coin with a value of 1 cent then my opportunity cost is .8 cents. No, not at all. A coin represents value, it is not value (in terms of its denomination). A coin does however have value as facilitator of exchange of value, but that is in principle unrelated to that coin's denomination. So the value of a 1 cent coin (as a facility of exchange) is unknown. It is however easy to make the case that this unknown is very low, or even negative. > A gold coin back before fiat currencies was worth its weight in gold. Gold is just very slightly different in this regard, and substantially the same. It is used to represent value, and has very low intrinsic value. It's just a naturally limited resource instead of an \\\"\\\"artificially\\\"\\\" limited one such as fiat currency. This would be immediately evident if by some freak act of nature there was an abundance of gold raining down on everyone tomorrow. Nobody would become rich (just some unfortunate people overloaded with gold assets would become poor). Gold teeth and jewelry would become cheaper, though I imagine the latter would go out of fashion quite quickly. > When I make the spending power less than the value the purpose of a fiat currency breaks down. Not at all, there's in principle no relationship between \\\"\\\"value\\\"\\\" and denomination. You just need means of exchange that are cost-effective and practical. Single cents are becoming impractical and basically useless, and this would be just as true even if they cost .0001 cents each to produce.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"163359\",\n \"text\": \"I think what the person meant to say is that Gold is not a one stop solution. There's nothing wrong with having Gold in an otherwise diversified portfolio but you need to be aware about the potential downsides: The problem with gold is that its value nowadays depends mainly on investor confidence, or the lack of it (actual demand for gold cannot explain the rise in value gold had after the crisis). If people are afraid the world and currencies with it will go to hell, the gold price will go up. Why? Because if currencies seize to exist, Gold will still be accepted. It can replace currencies. What many people tend to forget: let's consider the extreme example and currencies really cease to exist and all hell breaks lose. What good are gold bars at the bank, or even at home, for that matter? You'll be better off with gold coins to use in barter and to pay off marauders. But that's not about investing anymore, that's survivalism.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"317429\",\n \"text\": \"I apply what you term 'money' to the word 'commodity'. And I agree with littleadv, you are just selling us your perspective on (such things as) precious metals. What I want you to think about is these truths: When used as currency gold just has two values: utility value and currency value. I hold it is better to separate the two. There is not enough gold in the earth to represent the value in aggregate economies of the world. Trying to go back to the gold standard would only induce an unimaginable hyperinflation in gold. Recent years shows that gold does not retain value. See the linked chart.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"266984\",\n \"text\": \"\\\">We were on the \\\"\\\"gold standard\\\"\\\" in name only since about 1910. There a few nuances behind the \\\"\\\"gold standard\\\"\\\" but all revolve around indebtedness and currency devaluation. The US actually started off in 1785 with a Silver standard. By the turn of the 18th century there was a fixed ratio of silver and gold to dollars. Silver was not required to back all of the currency, gold was used as well. This bi-metallic standard continued until 1920s. Gold and Silver were legal tender. The US treasury was on a strict hard-money standard. Doing business in only gold and silver until 1848 which seperated the Federal Government from the banking system. It was only after this move the federal government started the devaluation/overvaluation of silver in order to \\\"\\\"borrow\\\"\\\" from England. Silver came in, Gold came out. This also largely catalyzed the 1849 Gold Rush. Then in 1853 the US started reducing the weight of silver coins. In 1857 banks suspended payment in Silver. But the basic weakness in a gold standard started with GOVERNMENT wanting to manipulate value to unfairly skew debt/loan situations. >There was not enough gold to remotely back the US currency This is not true. US currency did just fine, and as governments print, so too do prices go up. So if there is only 50 Billion currency units in existance and eggs cost 10 cents (as they did for previous decades), when the federal government prints its way to trillions thats where we end up with eggs costing 2-3 bucks. That's why your grandparents house cost 6,000 and ones today cost 600,000. >which is why during the great depression when people started wanting to turn their cash back in to gold there was no enough No, they turned back to gold because of the devaluation of the dollar. If the dollar was falling as it is today, why would you want to keep your assets in dollars? Gold cannot be printed at whim, this is one of the most important factors. It forces government to be much more strict with debt. If taxpayers were faced with higher taxes or devaluation to pay for the current Iraq/Afganistan wars, would it have happened? No, but since the government could print money at whim, it served as an invisible tax. >and gold possession had to be outlawed It was outlawed because as the dollar plummeted and gold was eventually made illegal, the value of gold doubled and rapidly increased overnight, this happened again in 1970 when nixon took us off the gold standard. Gold posession was made illegal to prevent \\\"\\\"hoarders and opportunists\\\"\\\". You make it sound like gold redemption is a bad thing, when really its the government being naughty and citizens simply playing the game and by the rules set up by the government. >So no, we were not on a gold standard. Yeah I never said we were. But there is a very important reason we once were, so government couldnt devalue currency to rack up more debt. (A HUGE issue that has now played out to its logical conclusion, maximum indebtedness mixed with massive mechanisms for manipulation) >Secondly, when you're on a (any fixed item) standard, your economy only can grow at roughly the rate you fond more of the (fixed item). Is that why the US did just fine between 1780 and 1913? Over a hundred years. The cost of many items was stable for DECADES. Nowadays we have a doubling effect with cars costing 4,000 in 1970, 26,000 in 2000, 45,000 in 2012. The same with houses, food, education, medical services, you name it. >There are many reasons for this, and it is partially why for thousands of years of various gold standard there was so little economic growth. Once countries stopped limiting the amount of total economic growth to the amount of gold they could dig up, that economies were able to grow at the sustained rate they have for the past 200ish years. Wrong again, this is because of productivity from technology and invention, oil, electricity, automobiles, airplanes and eventually computers. Infact as I said above, fiat currency actually kills productivity. Its hard to compare the turn of the century, but we can see what happened after nixon took us off the gold standard here: http://azizonomics.files.wordpress.com/2012/06/tfp.jpeg as soon as the USA left the gold exchange standard, total factor productivity began to dramatically stagnate. 1.Leaving the gold exchange standard was a free lunch for policymakers: GDP growth could be achieved without any real gains in productivity, or efficiency, or in infrastructure, but instead by just pumping money into the system. 2.Leaving the gold exchange standard was a free lunch for businesses: revenue growth could be achieved without any real gains in productivity, or efficiency. >So, besides the fact that the US has not in modern history been backed by gold, despite the name, there is ample evidence from hundreds of economies and thousands of years that being on a gold standard = little or no economic growth. Since nixon took us off the gold standard in terms of dollar connection in anyway to gold the value of the dollar has plummeted 70%. Its over 95% if you go back to the early 1900s and currency debasement. There was plenty of economic growth while we were on the gold standard and to say otherwise is simply false.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"285606\",\n \"text\": \">Since gold in this very simple hypothetical system has absolutely no use other than a store of value, it is debt. But gold does have other uses. It is a metal that's used for jewelry, it has decorative value. Exchanging something for gold is like a caveman giving you a stone ax if you do some cave paintings for him. If all the civilization disappeared, gold would still have a value, different from bank notes. Gold is a convenient standard commodity for exchange for several reasons: it's indestructible, it's compact, it's easily recognizable. All the gold ever mined in the world would fit inside a typical five-story apartment building. Yet it doesn't burn, doesn't spoil, can be stored forever, different from apples or oranges. >these firms would be adjusting their capacity, and not sitting on trillions of dollars of currency that ought to be liquid. Here s where the difference between actual work that has been performed and a promise make a real difference. These companies are sitting on trillions of dollars of promises, not products. What they have is paper, shares, bonds, debentures, whatever. They are unable to transform those papers into products, because they lack the manufacturing capacity to do so. They do not have a million apples, they have a paper where the farmer said he would grow a million apples. Overall, the corporations in the US have invested heavily in acquisitions of other corporations, this trend has been going on for several decades now. These papers cannot be easily converted into anything useful. For the moment they are just there, with their nominal value that people agreed upon. It's not easy to turn that investment into production.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"471825\",\n \"text\": \"\\\"We measure the value of gold by comparing it to other things. Sorry, but there is no better answer than that. There is no gold standard (pun intended) by which objects can be measured in value because \\\"\\\"value\\\"\\\" is a subjective term. It would be comparable to asking how funny is an object. Different objects are funny to different people. Even if we gathered all the really \\\"\\\"funny\\\"\\\" object together, there is no guaranty those objects would be funny next year - unless we all agreed they were as part of a social contract. Which is basically what we do with currency. While gold does not need a social contract in order for it to retain its value, this is only because it is has been (1) very useful and (2) rare. If either of these two factors change, the value of gold will change - which it has on several occasions. WARRING: Rant about \\\"\\\"Intrinsic Value\\\"\\\" of gold below. Gold has no \\\"\\\"intrinsic\\\"\\\" value. None whatsoever. \\\"\\\"Intrinsic value\\\"\\\" makes just as much sense as a \\\"\\\"cat dog\\\"\\\" animal. \\\"\\\"Dog\\\"\\\" and \\\"\\\"cat\\\"\\\" are referring to two mutually exclusive animals, therefore a \\\"\\\"cat dog\\\"\\\" is a nonsensical term. Intrinsic Value: \\\"\\\"The actual value of a company or an asset based on an underlying perception of its true value ...\\\"\\\" Intrinsic value is perceived, which means it is worth whatever you, or a group of people, think it is. Intrinsic value has nothing, I repeat, absolutely nothing, to do with reality. The most obvious example of this is the purchase of a copy-right. You are assigning an intrinsic value to a copy-right by purchasing it. However, when you purchase a copy-right you are not buying ink on a page, you are purchasing an idea. Someone's imaginings that, for all intensive purposes, doesn't even exist in reality! By definition, things that do not exist do not have \\\"\\\"intrinsic\\\"\\\" properties - because things that don't exist, don't have any natural properties at all. \\\"\\\"Intrinsic\\\"\\\" according to Websters Dictionary: \\\"\\\"Belonging to the essential nature or constitution of a thing ... (the intrinsic brightness of a star).\\\"\\\" An intrinsic property of an object is something we know that exists because it is a natural property of that object. Suns emit light, we know this because we can measure the light coming from it. It is not subjective. \\\"\\\"Intrinsic Value\\\"\\\" by definition is the OPPOSITE of \\\"\\\"Intrinsic\\\"\\\"\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"483389\",\n \"text\": \"\\\"Are you talking about a country besides the US? And you're talking about a commercial bank, right? In the US, banks don't buy gold from consumers. The last time they sort of did (in the early 1900s), they were trading gold coins for gold certificates, and then they later stopped allowing consumers to trade them back. This is known by a well-known financial term: \\\"\\\"Gotcha, suckers!\\\"\\\" If someone were naive enough to deposit a $50 Gold American Eagle today in a bank, the depositor will get a credit of $50 on their account, and later some clever person will ask the teller if they have any \\\"\\\"strange money\\\"\\\" lying around, and that lucky person will be able to withdraw a $1,700 coin for $50, if it lasted for even a second in the teller's drawer. But let's say you're going to a place that does indeed still buy gold coins. The discount depends on the type of coin, and the type of damage. An old (collectible) coin has a part of its value set by the gold value, and part by the collector's premium. Better specimens command better collector's premiums, so a damaged coin, as long as it isn't a chunk of the coin missing, won't be worth less than the melt value. (You may not get that much from a dealer, but it should be fairly close.) If part of the coin is missing, then the person buying it should weigh the coin and adjust the price proportionately. It's likely, though, that if you have the items in a safe, you may have a puddle or blob of gold, but it should still all be there unless someone takes it. Gold melts at about 1850 degrees Fahrenheit, but it would take half the surface temperature of the sun for it to boil away. If it's unidentifiable, it may need to be assayed again.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"512265\",\n \"text\": \"> ever eat paper? Yeah, of course, plenty of times. Not (usually) intentionally, but sometimes a wrapper will get stuck, etc. Also, it's a good way to get rid of something if you don't have a lighter. More so when I was a kid and messing around with 'secret notes' and the like but.. ..yeah, I've eaten paper. Granted, I've probably eaten gold as well, and there are some benefits or health values of gold.. .. within the pseudoscientific / alt-health crowd.. ..not sure I buy into those but. ..it has some value. But, nothing like paper. Obviously there are different materials used for making paper.. ... lots of barks have a value from a health perspective, a relative nutritional value. Growing the tree, depending on the type, can provide fruit, building materials, etc.. ..with the pulp providing a paper value. So, multiple benefits can come from paper.. ...and, that's just the post-harvest aspect.. well, the case of fruit I guess not. but, there's the environmental benefits of trees and such as well; habitats for wild life, wind breaks, carbon sequestration. soil health, etc. Multiple benefits, and that's just from tree-based paper. If you expand it out to something like, say, hemp paper? well, there's the oil.. ... which can be used for fuel production, various other uses, and, most especially, the health benefits and consumption from it.. ...while the remaining fibers can be used for construction... be it compressed bricks, hempcrete (which has excellent values in strength, durability, insulation, weight-to-strength *ratio*, etc. And, again, the health benefits of hemp oil... ...argued to be the single 'thing' you can consume solely (+ water) and get 100% of the nutrients you need.. ...in mixed ratios and obviously it isn't as great as other things in concentrations, but.. ..it's extremely nutritious. Also, the plant is really good for the soil, again, habitats, sequesters carbon, helps to pull toxins and such *out* of the soil for bioremediation. Is quick to grow, grows densely, is durable, has minimal inputs needed, hardy, ... all around a great crop. and, again, the health benefits of its oil are *combined* with its paper making capabilities. .... and, good strong paper too. has a great weight, feel, durable, can/will last a really long time if properly handled.. ..and has much wider variance *in* 'proper handling' than tree-based paper. Solid product. You should look into it, ... here, I'll give you some links to help you out. * [9 Health Benefits of Hemp Oil That You Should Know](http://www.zliving.com/wellness/natural-remedies/9-health-benefits-of-hemp-oil-that-you-should-know) * [10 Incredible Benefits of Hemp Oil](http://herb.co/2016/10/17/incredible-benefits-hemp-oil/) * [12 Ways Using Hemp Seed Oil Will Improve Your Health & Your Life](http://www.naturallivingideas.com/hemp-seed-oil/) A bit sensationalistic in the headlines... and, well, as to be expected I suppose, but regardless, pretty great stuff! ..and, again, that's just the oil. The post-oil-extraction pulp can still go on to be used for the more-applicable-to-conversation paper. But, since USD's seem to be the main focus... ...though other countries are progressively (or more-progressively I suppose) utilizing even *more* durable plastic in their notes.. ..but, for USD, still paper.. and, as such, the more durable cotton paper. Now, comparing cotton to hemp is really... .. [hemp wins nearly every time](https://www.davidwolfe.com/hemp-vs-cotton/) but... cotton is cotton and, recent headline and social controversy of cotton flower decorations aside.. cotton is cotton. Most everything that I'm wearing right now is made of cotton. It's a nice fabric. Durable, flexible, soft, etc. Good stuff. Not the easiest to work with but, clearly not something the world is in short supply of. but, that doesn't really address your point though exactly.. Like hemp, you can get cotton oil (or cotton seed oil to be more specific) from the plant while also getting the fibers that you'd need for paper production. It's a bit of a 'mixed back' and definitely *not* as straight forward as hemp's purported health benefits (and I didn't even *get* into the CBD oil stuff that hemp can provide)... . * [15 Benefits of Cottonseed Oil](http://www.searchhomeremedy.com/15-best-benefits-of-cotton-seed-oil/) * [7 Amazing Benefits & Uses of Cottonseed Oil](https://www.organicfacts.net/health-benefits/oils/cottonseed-oil.html) * [10 Best Benefits of Cotton Seed Oil](http://www.stylecraze.com/articles/best-benefits-of-cotton-seed-oil/#gref) but, from there, things start to turn a little south, and weren't necessarily all that 'great' to begin with.... * [Is Cottonseed Oil Okay?](https://www.drweil.com/diet-nutrition/nutrition/is-cottonseed-oil-okay/) * [3 Best and Worst Oils For Your Health](https://www.bonappetit.com/trends/article/3-best-and-worst-oils-for-your-health) So, I suppose my point is... if I even really have a singular one... is that paper, regardless of source, has at least *some* sort of nutritional value.. or could anyway. As well, the crops used to produce the paper have the capability of ranging from some medicinal qualities all the way up to a seemingly really beneficial quantity of nutrients and compounds. At worst, the crops provide a habitat for various organisms. The problem with gold and paper currency is that, in the end, they're both inherently valued by the civilization that deems them valuable. I mean, take the quantity of gold in reserves around the world. Cross that with the industrial uses of gold (of which there are many) and, in turn, cross that with the artistic value of it. It's price isn't based on its use... it's based on similar principals *as* fiat (paper... and, increasingly, plastic) currency: society's perception that it has value. Gold has many properties that are excellent for many applications... superior to most (all?) in certain cases. ...but, that's not why it's valued at its current price. ..again, it's valued at its current price because of perceived value. Even from an artistic perspective, the amount of gold used in the Palace of Versailles... for the paint and such, was 'minuscule' given how much of the palace is covered in gold. It was something like just a few ounces because the layering is so thin. Point: if 'the look of gold' was all that people were going for they could easily just use another metal coated in a very thin layer of gold and.. externally, the appearance would be the same effect and the weight could theoretically be even lighter (or heavier). But, people want *more* than 'just the look'. They feel that the gold itself has a value beyond just the 'look'.. ..and, for all intents & purposes, it *does*. but *only* because they and other people choose to perceive it as having such. I've traded gold (profitably) for over 20 years. I understand the arguments very well.. ..but, vs food? In the end, the gold is a means not an end.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"506792\",\n \"text\": \"Of course. But then, paper also has utility. So do seashells and pinecones. There is no obvious reason why, even in a perfect world, we would go looking for a malleable, highly-conductive, corrosion-resistant metal as something to peg the value of our banknotes to. The argument in favor of a gold standard is not whether gold is intrinsically more valuable than paper or seal skins or anything else, it's that gold is fairly inelastic in terms of supply, so it limits the ability of central bankers to mess up the value of the currency through interventionist funny business. If you picked up a rock and started going around telling people that we should use it as money because it's highly malleable and conductive and can be used in computer parts, they would look at you like you're a crazy person. That's not why gold is/was/should be a currency. Gold was indisputably the perfect currency for thousands of years, because it was easy to identify, easy to handle, hard to falsify, and rare. Those were important characteristics when strangers had to carry physical money to different places without any ATMs, credit-cards, or paypal accounts. They are somewhat less critical today, but still... The one characteristic that might *still* argue in favor of a gold standard is rarity: Since the amount of gold in the world is somewhat fixed, forcing the currency supply to be restricted to the gold supply semi-prevents governments and central bankers from getting into too much mischief (or at least, that's the theory). I will leave it to others to argue over whether a return to the gold standard would be a good idea, but the argument has nothing to with the intrinsic utility of gold. I'm sure we can all agree that gold is a fine metal with many good qualities.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"259440\",\n \"text\": \"\\\"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).\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"450922\",\n \"text\": \"I think you are asking a few questions here. Why is gold chosen as money? In a free market there are five characteristics of a good money: Gold and silver meet all five characteristics. Diamonds are not easily divisible which is why they are not normally used as money. Copper, Iron, and lead are not scarce enough - you would need a lot of these metals to make weekly or daily purchases. Paper is also way too plentiful to be used as money. By the way, historically silver has been used for money more than gold. How does international trade work with gold as money (is this what you are asking with your hypothetical example of 10 countries each with y amount of gold?) Typically a government will issue a currency that is backed by gold. This means you can redeem your currency for actual gold. Then when an American spends 5 US dollars (USD) to purchase a Chinese good the Chinese man now owns 5 USDs. The Chinese man can either redeem the 5 USD for gold or spend the 5 USD in the US. If a government issues more currency then they have gold for then the gold will start to flow from that country to other countries as the citizens of the other countries redeem the over-issued currency for gold. This outflow of gold restricts governments from over-issuing paper currency. Who creates the procedures and who supervises them in modern worldwide economy? The Federal Reserve, IMF, and Bank of International Settlements all are involved in the current system where the US dollar (see Bretton Woods agreement) is the reserve currency used by central banks throughout the world. Some think this system is coming to an end. I tend to agree.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"189612\",\n \"text\": \"Approximately 5.3 billion ounces have been mined. This puts the total value of all gold in the world at about $9.5 trillion, based on $1800/oz. Total world net worth was $125T in 2006. There's an odd thing that happens when one asset's value is suddenly such a large percent of all assets. (This reminds me of how and why the tech bubble burst. Cisco and EMC would have been worth more than all other stocks combined if they grew in the 00's like they did in the 90's.) Production (in 2005/6) ran about 80 million oz/yr. Just over 1.5% impact to total supply, so you are right in that observation. On the other hand, the limited amount out here, means that if everyone decided to put their wealth in gold, it would be done by driving the price to bubblicious levels. One can study this all day, and parse out how much is in investment form (as compared to jewelry, etc) and realize that a few trillion dollars in value pales in comparison to the wealth of the US alone, let alone the world. Half the world can't buy two oz if they tried. Of course there's pressure to reopen mines that had costs pushing $800/oz. Understand that the supply of $300 gold is long gone. As the easy gold has been mined, and cost goes up, there's a point where mines close. But as the price of gold trades at these levels, the mines that couldn't produce at $600 are now opening.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"575834\",\n \"text\": \"\\\"Suppose you have a bar of gold and are hungry. I buy the gold from you for cash, which you then use to buy food, clothes and generally support yourself. Would it be fair to say that I paid for your food, clothes etc? I don't think so - I think *you* paid for them, in gold. I facilitated the exchange of gold into money, and without me or someone like me around to provide liquidity for your gold, you'd still be hungry. But fundamentally, it was the gold that was valuable. Now, suppose there is a lack of liquidity in gold - there's a shortage of gold buyers. I take advantage of this distortion to offer to buy your gold for half its free market value. You don't want to accept this deal, but since your only alternative is starvation, you accept. I say this is wrong, not because of socialism, but because of capitalism. The efficiency of capitalism arises from the price system of value. Goods and services command a fair market price, and buyers and sellers have access to both liquidity and good information about the relative value of things. When distortions are allowed to interfere with free market pricing - as inevitably happens under lassiez-faire capitalism - this efficiency is lost. Good government regulation is necessary to keep markets free and efficient, and this is good for everyone. So what does this have to do with David Siegel? First, nothing in my example above changes when you substitute \\\"\\\"labor\\\"\\\" for \\\"\\\"gold.\\\"\\\" If I am hungry but I have a skill, and I sell you some of my labor for cash, then use the cash to buy food, *you did not give me the food*. You did not \\\"\\\"pay for my food,\\\"\\\" you did not \\\"\\\"make it possible for me to get food,\\\"\\\" or anything of the sort. *I paid for it myself*, by trading labor for cash in exactly the same way that you could trade gold for cash. Second, the price system of value allows you to earn a \\\"\\\"normal profit,\\\"\\\" which means sufficient profit for resources to remain within an industry. But \\\"\\\"excess profit\\\"\\\" harms market efficiency and thus the price system. This is pure capitalist theory, straight from Adam Smith; it is nothing to do with socialism or communism. It is quite clear that David Siegel is taking excess profit. This is no different from the sort of profiteering I described when there's only one gold dealer in town. It is parasitic behavior according to *capitalist* theory. And finally, David Siegel is the guy who invented high-pressure selling of timeshares by inviting familes to a \\\"\\\"free\\\"\\\" vacation, trapping them in a room, and basically holding them hostage until they sign on the dotted line. His business is near-criminal. You can argue that drug kingpins also create thousands of jobs - that doesn't make them good people, or their actions beneficial to society. I already thought David Siegel was a parasite on society before I ever heard of his opinion on Obama. And quite frankly, I'm shocked and appalled that people are actually defending him.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"449941\",\n \"text\": \"\\\"These are meaningless statistics on multiple levels: 1. These value rises are as of 2016. This does not indicate any sort of significant trend in the rise in value of these bags over time. Did they lose 30% in 2015? Will value stagnate in 2018? 2. Even if a trend were established (it is not), it doesn't suggest any sort of future movements whatsoever, as past price movements don't ensure future movements. 3. The fundamental idea of \\\"\\\"investing\\\"\\\" in an accessory is questionable at best. While collectors will buy things like cars and art, and some will sit on them as stores of value, the economics of generating future returns on these items is not so logically sound as with stocks or bonds. These collectors items do not generate future value in a way that produces cash flows. An individual has to purely hope that somebody is willing to pay more for it in the future; the item does not fundamentally necessitate higher payment. This is the fundamental problem also with \\\"\\\"investing\\\"\\\" in commodities, and why a fundamentalist like Buffet would never do it. You bet on a commodity move (hopefully with information that you believe the market to be incorrectly synthesizing); you don't really \\\"\\\"invest\\\"\\\" in one. What makes a stock or bond (a company) different is that a company can be thought of as a black box that prints more money than it is fed. We feed money into a company as investors; the company uses that money to buy assets (e.g. Machines, inventory) at book value; the assets are made to work in tandem to produce goods/services that have more value than the sum of their parts; those goods/services are sold at the now higher value for a profit, and cash flows are returned to investors for an annual return on your investment (sometimes dividends aren't paid, but are reinvested with the expectation that reinvestment will lead to far larger dividends in the future). As such, the money investors feed into a company is turned into more money at the other end, and thus the company has produced more value than it's inputs alone. It has done so through the combination of resources (assets) in a way that makes their value greater than the sum of their parts. A company fundamentally is a logical investment (barring doubts about management's ability to create this value). It is like a black box that prints more money over time than you feed it. Purses do not; gold does not; oil does not. Don't invest in purses. Collect then if you love them, but don't bank on a payday.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"430570\",\n \"text\": \"\\\"Of course. The rationale is exactly the same as always: profit is taxed. The fact that you use intermediate barter to make that profit is irrelevant. To clarify, as it seems that you think it makes a difference that no money \\\"\\\"changed hands\\\"\\\". Consider this situation: So far your cost is $10000. How will the tax authority address this? They will look at the fair market value of the barter. You got gold worth of $20000. So from their perspective, you got $20000, and immediately exchanged it into gold. What does it mean for you? That you're taxed on the $10000 gain you made on your product X (the $20000 worth of barter that you received minus the $10000 worth of work/material/expenses that you spend on producing the merchandise), and that you have $20000 basis in the gold that you now own. If in a year, when you plan to sell the gold, its price drops - you can deduct investment losses. If its price goes up - you'll have investment gain. But for the gain you're making on your product X you will pay taxes now, because that's when you realized it - sold the merchandize and received in return something else of a value.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"181574\",\n \"text\": \"Depends what kind of expenses you intend to use this money for. If you plan to buy housing in the future (eg you're saving a deposit), then you need to ensure that the value doesn't deteriorate relative to the value of the housing you are likely to buy - so you could buy a Residential REIT, or buy some investment property. If you expect to use this money for food, then you should buy suitable assets (eg Wheat futures, etc). Link the current asset to the future expense, and you will be fine. If you buy Gold, then you are making a bet that Gold will retain its value compared to the thing you want to purchase in future. It doesn't matter what the price of Gold does in $US.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"156211\",\n \"text\": \"\\\"Extrinsic value is not a factor with respect to gold. Intrinsic value by definition is the natural value of a commodity set by the market -- extrinsic value is externally set. The \\\"\\\"extrinsic\\\"\\\" value of gold in the United States is $50/oz. If the market value of gold fell below $50/oz, a US American Eagle coin would be worth $50 in the US. If you take away the attributes that make a commodity valuable, the value drops. Substitutes of equal or better quality for most industrial or other uses of gold exist, so if if the popularity of gold declines, or if the hoarders of gold have to liquidate, it's value will diminish. I have no idea what that value would be, but it would set by the market demand for gold jewelry and other valuable industrial uses.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"15643\",\n \"text\": \"\\\">How does \\\"\\\"doing business in\\\"\\\" something increase its value? By this logic, all businesses should be successful. When you work, you are creating value. Even if your business fails within the first year, there's still all the value you have created such as: hiring handypeople to fix up your businessplace, hiring people to work at your business, buying office supplies, etc. Just because you didn't profit off of your business doesn't mean that other people didn't. >you're basically saying \\\"\\\"Things are currently like X, therefore things should (and would) be like X under a different legal structure.\\\"\\\" How do you think the concept of money came about? >I can't take this line of argument seriously, I'm sorry. Why not? This is the reason that hedge fund managers and CEOs pay so little in taxes...most / all of their compensation is in stocks and bonds, taxed as investment income. If you were paid in gold, i'm sure you could claim the same. >You're emotionally invested in a fiat paper standard. That's sillie: i'm emotionally invested in a gift economy. I *accept* a fiat paper standard.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"502832\",\n \"text\": \"\\\">There is no obvious reason why, even in a perfect world, we would go looking for a malleable, highly-conductive, corrosion-resistant metal as something to peg the value of our banknotes to. If this were true, why force citizens to use a specific central bank's paper money via \\\"\\\"legal tender laws\\\"\\\"? ;) >I will leave it to others to argue over whether a return to the gold standard would be a good idea, but the argument has nothing to with the intrinsic utility of gold. I'm sure we can all agree that gold is a fine metal with many good qualities. Then what was the point of your post? If you don't want to use gold as money, I would never force you to use gold. It is the contention of the Austrian economists that there should be free and open competition in the money industry. Allow people to choose their money. Allow entrepreneurs to create systems to simplify the communication of prices across various monies. The root of the problem is force and monopoly.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"314085\",\n \"text\": \"\\\"The difference is in the interrelation between the varied investments you make. Hedging is about specifically offsetting a possible loss in an investment by making another related investment that will increase in value for the same reasons that the original investment would lose value. Gold, for instance, is often regarded as the ultimate hedge. Its value is typically inversely correlated to the rest of the market as a whole, because its status as a material, durable store of value makes it a preferred \\\"\\\"safe haven\\\"\\\" to move money into in times of economic downturn, when stock prices, bond yields and similar investments are losing value. That specific behavior makes investing in gold alongside stocks and bonds a \\\"\\\"hedge\\\"\\\"; the increase in value of gold as stock prices and bond yields fall limits losses in those other areas. Investment of cash in gold is also specifically a hedge against currency inflation; paper money, account balances, and even debt instruments like bonds and CDs can lose real value over time in a \\\"\\\"hot\\\"\\\" economy where there's more money than things to buy with it. By keeping a store of value in something other than currency, the price of that good will rise as the currencies used to buy it decrease in real value, maintaining your level of real wealth. Other hedges are more localized. One might, for example, trade oil futures as a hedge on a position in transportation stocks; when oil prices rise, trucking and airline companies suffer in the short term as their margins get squeezed due to fuel costs. Currency futures are another popular hedge; a company in international business will often trade options on the currencies of the companies it does business in, to limit the \\\"\\\"jitters\\\"\\\" seen in the FOREX spot market caused by speculation and other transient changes in market demand. Diversification, by contrast, is about choosing multiple unrelated investments, the idea being to limit losses due to a localized change in the market. Companies' stocks gain and lose value every day, and those companies can also go out of business without bringing the entire economy to its knees. By spreading your wealth among investments in multiple industries and companies of various sizes and global locations, you insulate yourself against the risk that any one of them will fail. If, tomorrow, Kroger grocery stores went bankrupt and shuttered all its stores, people in the regions it serves might be inconvenienced, but the market as a whole will move on. You, however, would have lost everything if you'd bet your retirement on that one stock. Nobody does that in the real world; instead, you put some of your money in Kroger, some in Microsoft, some in Home Depot, some in ALCOA, some in PG&E, etc etc. By investing in stocks that would be more or less unaffected by a downturn in another, if Kroger went bankrupt tomorrow you would still have, say, 95% of your investment next egg still alive, well and continuing to pay you dividends. The flip side is that if tomorrow, Kroger announced an exclusive deal with the Girl Scouts to sell their cookies, making them the only place in the country you can get them, you would miss out on the full possible amount of gains you'd get from the price spike if you had bet everything on Kroger. Hindsight's always 20/20; I could have spent some beer money to buy Bitcoins when they were changing hands for pennies apiece, and I'd be a multi-millionaire right now. You can't think that way when investing, because it's \\\"\\\"survivor bias\\\"\\\"; you see the successes topping the index charts, not the failures. You could just as easily have invested in any of the hundreds of Internet startups that don't last a year.\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false}}},{"rowIdx":99,"cells":{"query_id":{"kind":"string","value":"7781"},"query":{"kind":"string","value":"Deriving the put-call parity"},"positive_passages":{"kind":"list like","value":[{"docid":"251190","text":"Think of it this way: C + (-P) = forward contract. Work it out from there. Anyways, this stack is meant for professionals, not students, I think.","title":""}],"string":"[\n {\n \"docid\": \"251190\",\n \"text\": \"Think of it this way: C + (-P) = forward contract. Work it out from there. Anyways, this stack is meant for professionals, not students, I think.\",\n \"title\": \"\"\n }\n]","isConversational":false},"negative_passages":{"kind":"list like","value":[{"docid":"374797","text":"\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the \"\"catch\"\"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the \"\"downside risk\"\" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about \"\"vanilla\"\" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade.\"","title":""},{"docid":"573077","text":"\"Being \"\"Long\"\" something means you own it. Being \"\"Short\"\" something means you have created an obligation that you have sold to someone else. If I am long 100 shares of MSFT, that means that I possess 100 shares of MSFT. If I am short 100 shares of MSFT, that means that my broker let me borrow 100 shares of MSFT, and I chose to sell them. While I am short 100 shares of MSFT, I owe 100 shares of MSFT to my broker whenever he demands them back. Until he demands them back, I owe interest on the value of those 100 shares. You short a stock when you feel it is about to drop in price. The idea there is that if MSFT is at $50 and I short it, I borrow 100 shares from my broker and sell for $5000. If MSFT falls to $48 the next day, I buy back the 100 shares and give them back to my broker. I pocket the difference ($50 - $48 = $2/share x 100 shares = $200), minus interest owed. Call and Put options. People manage the risk of owning a stock or speculate on the future move of a stock by buying and selling calls and puts. Call and Put options have 3 important components. The stock symbol they are actionable against (MSFT in this case), the \"\"strike price\"\" - $52 in this case, and an expiration, June. If you buy a MSFT June $52 Call, you are buying the right to purchase MSFT stock before June options expiration (3rd Saturday of the month). They are priced per share (let's say this one cost $0.10/share), and sold in 100 share blocks called a \"\"contract\"\". If you buy 1 MSFT June $52 call in this scenario, it would cost you 100 shares x $0.10/share = $10. If you own this call and the stock spikes to $56 before June, you may exercise your right to purchase this stock (for $52), then immediately sell the stock (at the current price of $56) for a profit of $4 / share ($400 in this case), minus commissions. This is an overly simplified view of this transaction, as this rarely happens, but I have explained it so you understand the value of the option. Typically the exercise of the option is not used, but the option is sold to another party for an equivalent value. You can also sell a Call. Let's say you own 100 shares of MSFT and you would like to make an extra $0.10 a share because you DON'T think the stock price will be up to $52/share by the end of June. So you go to your online brokerage and sell one contract, and receive the $0.10 premium per share, being $10. If the end of June comes and nobody exercises the option you sold, you get to keep the $10 as pure profit (minus commission)! If they do exercise their option, your broker makes you sell your 100 shares of MSFT to that party for the $52 price. If the stock shot up to $56, you don't get to gain from that price move, as you have already committed to selling it to somebody at the $52 price. Again, this exercise scenario is overly simplified, but you should understand the process. A Put is the opposite of a Call. If you own 100 shares of MSFT, and you fear a fall in price, you may buy a PUT with a strike price at your threshold of pain. You might buy a $48 June MSFT Put because you fear the stock falling before June. If the stock does fall below the $48, you are guaranteed that somebody will buy yours at $48, limiting your loss. You will have paid a premium for this right (maybe $0.52/share for example). If the stock never gets down to $48 at the end of June, your option to sell is then worthless, as who would sell their stock at $48 when the market will pay you more? Owning a Put can be treated like owning insurance on the stock from a loss in stock price. Alternatively, if you think there is no way possible it will get down to $48 before the end of June, you may SELL a $48 MSFT June Put. HOWEVER, if the stock does dip down below $48, somebody will exercise their option and force you to buy their stock for $48. Imagine a scenario that MSFT drops to $30 on some drastically terrible news. While everybody else may buy the stock at $30, you are obligated to buy shares for $48. Not good! When you sold the option, somebody paid you a premium for buying that right from you. Often times you will always keep this premium. Sometimes though, you will have to buy a stock at a steep price compared to market. Now options strategies are combinations of buying and selling calls and puts on the same stock. Example -- I could buy a $52 MSFT June Call, and sell a $55 MSFT June Call. I would pay money for the $52 Call that I am long, and receive money for the $55 Call that I am short. The money I receive from the short $55 Call helps offset the cost of buying the $52 Call. If the stock were to go up, I would enjoy the profit within in $52-$55 range, essentially, maxing out my profit at $3/share - what the long/short call spread cost me. There are dozens of strategies of mixing and matching long and short calls and puts depending on what you expect the stock to do, and what you want to profit or protect yourself from. A derivative is any financial device that is derived from some other factor. Options are one of the most simple types of derivatives. The value of the option is derived from the real stock price. Bingo? That's a derivative. Lotto? That is also a derivative. Power companies buy weather derivatives to hedge their energy requirements. There are people selling derivatives based on the number of sunny days in Omaha. Remember those calls and puts on stock prices? There are people that sell calls and puts based on the number of sunny days in Omaha. Sounds kind of ridiculous -- but now imagine that you are a solar power company that gets \"\"free\"\" electricity from the sun and they sell that to their customers. On cloudy days, the solar power company is still on the hook to provide energy to their customers, but they must buy it from a more expensive source. If they own the \"\"Sunny Days in Omaha\"\" derivative, they can make money for every cloudy day over the annual average, thus, hedging their obligation for providing more expensive electricity on cloudy days. For that derivative to work, somebody in the derivative market puts a price on what he believes the odds are of too many cloudy days happening, and somebody who wants to protect his interests from an over abundance of cloudy days purchases this derivative. The energy company buying this derivative has a known cost for the cost of the derivative and works this into their business model. Knowing that they will be compensated for any excessive cloudy days allows them to stabilize their pricing and reduce their risk. The person selling the derivative profits if the number of sunny days is higher than average. The people selling these types of derivatives study the weather in order to make their offers appropriately. This particular example is a fictitious one (I don't believe there is a derivative called \"\"Sunny days in Omaha\"\"), but the concept is real, and the derivatives are based on anything from sunny days, to BLS unemployment statistics, to the apartment vacancy rate of NYC, to the cost of a gallon of milk in Maine. For every situation, somebody is looking to protect themselves from something, and somebody else believes they can profit from it. Now these examples are highly simplified, many derivatives are highly technical, comprised of multiple indicators as a part of its risk profile, and extremely difficult to explain. These things might sound ridiculous, but if you ran a lemonade stand in Omaha, that sunny days derivative just might be your best friend...\"","title":""},{"docid":"13260","text":"Options reflect expectations about the underlying asset, and options are commonly priced using the Black-Scholes model: N(d1) and N(d2) are probability functions, S is the spot (current) price of the asset, K is the strike price, r is the risk free rate, and T-t represents time to maturity. Without getting into the mathematics, it suffices to say that higher volatility or expectation of volatility increases the perceived riskiness of the asset, so call options are priced lower and put options are priced higher. Think about it intuitively. If the stock is more likely to go downwards, then there's an increased chance that the call option expires worthless, so call options must be priced lower to accommodate the relative change in expected value of the option. Puts are priced similarly, but they move inversely with respect to call option prices due to Put-Call parity. So if call option prices are falling, then put option prices are rising (Note, however, that call prices falling does not cause put prices to rise. The inverse relationship exists because of changes in the underlying factors and how pricing works.) So the option action signifies that the market believes the stock is headed lower (in the given time frame). That does not mean it will go lower, and option traders assume risk whenever they take a particular position. Bottom line: gotta do your own homework! Best of luck.","title":""},{"docid":"345410","text":"The crucial insight is that the alternative to early exercise of an American call is not necessarily to hold it to expiry, but to sell it. And selling it, at its value, is always better than exercising it. Note that this holds only for options on assets that don't pay dividends. Here's the proof, using Put-Call-Parity. We know that at expiry T, we have (using a Call and a Put both struck at K): C(T) - P(T) = S(T) - K (if this is not clear to you, consider the case where S is less than, equal to, or greater than K at maturity, and go through each of them.) If the stock S doesn't pay any dividends (and there is no cost of carry etc.), we can replicate both sides now at time 0; we just buy one call, sell one put (that gives us the left hand side), buy the stock, and borrow money so that at time T we have to repay K (that gives us the right hand side). That means that now, we only need to borrow df * K, where df is the discount factor, and is less than one (assuming the good old pre-2009 world where interest rates are positive). Thus: C(0) - P(0) = S(0) - df * K. Rearranging gives: C(0) = S(0) - df * K + P(0). That's the value of the call, if we sell it (or hold it). However, if we exercise, we only get: C_ex = S(0) - K Now, we see that C(0) > C_ex, because we subtract less (df*K < K), and add P(0).","title":""},{"docid":"108","text":"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.","title":""},{"docid":"354559","text":"What you are asking about is called Interest Rate Parity. Or for a longer explanation the article Interest Rate Parity at Wikipedia. If the US has a rate of say zero, and the rate in Elbonia is 10%, one believes that in a year the exchange rate will be shifted by 10%, i.e. it will take 1.1 unit of their currency to get the dollars one unit did prior. Else, you'd always profit from such FOREX trades. (Disclaimer - I am not claiming this to be true or false, just offering one theory that explains the rate difference effect on future exchange rates.","title":""},{"docid":"480337","text":"\"So, if an out-of-the-money option (all time value) has a price P (say $3.00), and there are N days... The extrinsic value isn't solely determined by time value as your quote suggests. It's also based on volatility and demand. Here is a quote from http://www.tradingmarkets.com/options/trading-lessons/the-mystery-of-option-extrinsic-value-767484.html distinguishing between extrinsic time value and extrinsic non-time value: The time value of an option is entirely predictable. Time value premium declines at an accelerating rate, with most time decay occurring in the last one to two months before expiration. This occurs on a predictable curve. Intrinsic value is also predictable and easily followed. It is worth one point for every point the option is in the money. For example, a call with a strike of 30 has three points of intrinsic value when the current value of the underlying stock is $33 per share; and a 40 put has two points of intrinsic value when the underlying stock is worth $38. The third type of premium, extrinsic value, increases or decreases when the underlying stock changes and when the distance between current value of stock and strike of the option get closer together. As a symptom of volatility, extrinsic value may be greater for highly volatile underlying stock, and lower for less volatile stocks. Extrinsic value is the only classification of option premium that is unpredictable. The SPYs you point out probably had a volatility component affecting value. This portion is a factor of expectations or uncertainty. So an event expected to conclude prior to expiration, but of unknown outcome can cause theta to be higher than p/n. For example, a drug company is being sued and the outcome of a trial will determine whether that company pays out millions or not. The extrinsic will be higher than p/n prior to the outcome of the trial then drops after. Of course, the most common situation where this happens is earnings. After the announcement, it's not unusual to see a dramatic drop in the extrinsic portion of options. This is why sometimes a new option trader gets angry when buying calls prior to earnings. When 'surprise' good earnings are announced as hoped, the rise is stock price is largely offset by a fall in extrinsic value giving call holders little or no gain! As for the reverse situation where theta is lower than p/n would expect? Well you can actually have negative theta meaning the extrinsic portion rises over time. (this statement is a little confusing because theta is usually described as negative, but since you describe it as a positive number, negative here means the opposite of what you'd expect). This is a quote from \"\"Option Volatility & Pricing\"\". Keep in mind that they use 'positive' theta to mean the time value increases up over time: Is it ever possible for an option to have a positive theta such that if nothing changes the option will be worth more tomorrow than it is today? When futures options are subject to stock-type settlement, as they currently are in the United States, the carrying cost on a deeply in-the-money option, either a call or a put, can, under some circumstances, be greater than the volatility component. If this happens, and the option is European (no early exercise permitted), it will have a theoretical value less than parity (less than intrinsic value). As expiration approaches, the value of the option will slowly rise to parity. Hence, the option will have a positive theta. Sheldon Natenberg. Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Kindle Locations 1521-1525). Kindle Edition.\"","title":""},{"docid":"48947","text":"You'd likely be most familiar with them with respect to options and futures on commodities but they're used for credit/interest as well. The intrinsic value of an option is *derived* from the spread between call/put price and strike price; the value of the contract I've paid for or sold is derived from the current market value of the underlying asset, be it rice, platinum, or the Swedish kroner","title":""},{"docid":"314508","text":"There's a concept called interest rate parity, which sort of says that you cannot profit on the difference in interest rates. This difference accounts for the predicted movement in exchange rates as well, along with the stability of the currencies.","title":""},{"docid":"6574","text":"Options are a derivative product, and in this case, derive their value from an underlying security, a traded stock. An option gives you the right, but not the obligation, to buy a stock at a given price (the strike price) by a given time (the expiration date.) What I just described is a call option. The opposite instrument is a put, giving you the right, but not the obligation, to sell the stock at a given price. Volumes have been written on the subject, but I'd suggest that for a custodial Roth, I'd not activate the ability to trade options. How to get started with options investing? offers a nice introduction to trading options. In my response, I offer an example of a trade that's actually less risky due to the option component.","title":""},{"docid":"365228","text":"\"In Orange County (southern California), one agent has blogged pretty extensively about using rental parity to determine when it is time to rent or buy. Rental parity is achieved when the cost of renting is equal to the cost of owning; in theory, if you buy when a home is selling above rental parity, you're overpaying, and you'd be better off renting. He has many posts on the subject; a few you might care to read would be this one, and this other one. You might get a better sense of how to calculate rental parity by looking at an example or two. There is also the NY Times calculator mentioned in other responses, and the Patrick.net calculator. Be aware, the calculators are garbage in, garbage out. In other words, you have to consider the input carefully. In particular, I found the defaults on the Patrick.net calculator were not realistic. So far as I am aware, the agent at OCHousingNews does not make his calculations public (though I have never actually asked). He's using a spreadsheet which I have never seen. That is another option, if you care to do this kind of analysis yourself. Search around, you can find a spreadsheet that someone has posted here and there. But keeping something like that updated is not trivial. In my experience, in practice, it's difficult to be totally rational and mathematical when it comes to many decisions, and as other respondents have noted, where you live is one of those decisions. Too, saying \"\"buy when rental parity is achieved\"\" is sort of like saying \"\"buy low, sell high,\"\" as though it were perfectly clear when stocks are at a bottom and/or a peak. In our case, we bought a house about 12 years ago, before rental parity was being discussed in the blogsphere. Looking back, we supposedly bought at the wrong time, according to that agent's rating system, but it turned out fine for us. Our house has appreciated, whereas the S&P 500 is basically where it was 12 years ago. Had we been thinking in terms of rental parity, we might not have bought at that time. Of course, your mileage may vary, and hindsight is always 20/20. I think the most helpful advice I can offer was something I got from a real estate agent around the time we were looking. He told me \"\"when you're looking at houses, be sure you like the floor plan and the location, because those two things are not easily changed.\"\" That advice really helped us to see things more clearly.\"","title":""},{"docid":"50726","text":"\"people are willing to pay higher premiums for options when stocks go down. Obviously the time value and intrinsic value and interests rates of the option doesn't change because of this so the miscalculation remainder is priced into the implied volatility part of the formula. Basically, anything that suggests the stock price will get volatile (sharp moves in either direction) will increase the implied volatility of the option. For instance, around earnings reports, the IV in both calls and puts in the nearest expiration dates are very high. When stocks go down sharply, the volatility is high because some people are buying puts for protection and others are buying calls because they think there will be a rebound move in the other direction. People (the \"\"sleep-at-night\"\" investors, not the derivatives traders ;) ) tend to be calm when stocks are going up, and fearful when they are going down. The psychology is important to understand and observe and profit from, not to quantitatively prove. The first paragraph should be your qualitative answer\"","title":""},{"docid":"20079","text":"The basic idea behind a derivative is very simple actually. It is a contract where the final value depends on (is derived from) the value of something else. Stock, for instance, is not a derivative because the contract itself is actually ownership of part of a company. Whereas car insurance is a derivative because the payout depends on the value of something else namely your (and other peoples') cars. The problem with such a simple definition is that it covers such a broad class. It covers simple contracts like Futures where the end value just depends on the price of something on a future date. But it extends to contracts complicated enough that people in finance call them Exotics. Derivatives are broadly used for two things reducing risk (sometimes called insurance) and speculation. A farmer can use derivatives to make sure she gets paid a certain amount for her corn. A banker can group a bunch of loans together and sell slices to reduce the pain of a particular loan failing. At the same time people can use the same instruments to speculate on the price of (for example) that corn or those loans and the main advantage is that they don't have to buy the corn or loans directly. Any farmer will tell you corn can be very expensive to store. Derivatives generally cause problems both individually and sometimes world wide when people don't properly understand the risks involved. The most famous example being Mortgage-backed Securities and the recent Great Recession. You can start understand the instruments and their risks by this wonderful Wikipedia article and later perhaps a used collection of CFA books which cover derivatives in great detail. Edit: Michael Grünewald mentioned Hull's text on derivatives a wonderful middle ground between Wikipedia and the CFA books that I can't believe I didn't think about myself.","title":""},{"docid":"520098","text":"\"A derivative contract can be an option, and you can take a short (sell) position , much the same way you would in a stock. When BUYING options you risk only the money you put in. However when selling naked(you don't have the securities or cash to cover all potential losses) options, you are borrowing. Brokers force you to maintain a required amount of cash called, a maintenance requirement. When selling naked calls - theoretically you are able to lose an INFINITE amount of money, so in order to sell this type of options you have to maintain a certain level of cash in your account. If you fail to maintain this level you will enter into whats often referred to as a \"\"margin-call\"\". And yes they will call your phone and tell you :). Your broker has the right to liquidate your positions in order to meet requirements. PS: From experience my broker has never liquidated any of my holdings, but then again I've never been in a margin call for longer then a few days and never with a severe amount. The margin requirement for investors is regulated and brokers follow these regulations.\"","title":""},{"docid":"119976","text":"\"One alternative strategy you may want to consider is writing covered calls on the stock you have \"\"just sitting there\"\". This will allow you to earn a return (the premium from the calls) without necessarily having to give up your holding. As a brief overview, \"\"options\"\" are derivatives that give the holder the right (or option) to buy or sell shares at a specified price. Holders of call options with a strike prike $x on a particular security have the right to purchase that security at the strike price $x. Conversely, holders of put options with a strike price of $x have the right to sell that security at the strike price $x. Always on the other side of a call or put option is a person that has sold the option, which is called \"\"writing\"\" the option. If this person writes a call option, then he will be obligated to sell a certain amount of stock (100 shares per contract) at the strike price if that option is exercised. A writer of a put option will be obligated to by 100 shares per contract at the strike price if that option is exercised. Covered calls involve writing call contracts on stock that you own. For example, say you own 100 shares of AAPL, and that AAPL is currently trading for $330. You decide to write a Jan 21, 2012 call on these shares at a strike price of $340, earning you a premium of say $300. Two things can now happen: if the price of AAPL is not at least $340 on January 21, then the options are \"\"out of the money\"\" and will expire unexercised (why exercise an option to buy at $340 when you can buy at the currently cheaper market price?). You keep your AAPL stock plus the $300 premium you earn. If, however, the price of AAPL is greater than $340, the option will be exercised and you will now be required to sell the shares you own at $340. You will earn a return of $10/share ($340-$330), plus the $300 premium from the call option. You still make out in the end, but have unfortunately incurred an opportunity cost, as had you not written the call option you would have been able to sell at the market price, which is higher than the $340 strike price. Covered calls are considered relatively safe and conservative, however the strategy is most effective for stocks that are expected to stay within a relatively narrow price range for the duration of the contract. They do provide one option of earning additional money on stocks you are currently holding, albeit at the risk of giving up some returns if the stock price rises above the strike price.\"","title":""},{"docid":"41160","text":"If we assume constant volatility, gamma increases as the stock gets closer to the strike price. Thus, delta is increasing at a faster rate as the stock reaches closer to ITM because gamma is the derivative of delta. As the stock gets deeper ITM, the gamma will slow down as delta reaches 1 or -1 (depends if a call or a put). Thus, the value of the option will change depending upon the level of the delta. I am ignoring volatility and time for this description. See this diagram from Investopedia: Gamma","title":""},{"docid":"336618","text":"If I understand what you're asking, I think you're looking at the relationship wrong. Yes, when one currency has a higher interest rate relative to another, it's value should, theoretically, appreciate. For example, if the USD interest rate is 10% and the EUR is 5%, the USD should appreciate in value against the EUR. However, the parity relationship tells you the price at which an investor would be indifferent to the difference in interest rates. So using the formula for interest rate parity: (1+r(USD))/(1+r(EUR)) = F/S and plugging in the interest rates from above and a spot rate of $1.5/EUR: (1.1)/(1.05) = F/(1.5) The 1 year forward rate would have to be $1.5714/EUR in order for the investor to be INDIFFERENT between holding USD or EUR. All this assuming interest rate parity holds. I'm not big on Econ but this is how I understood it when studying for the CFA exam the past few months. So please, someone correct me if I'm wrong.","title":""},{"docid":"493679","text":"Hey! I've just put my take on your question: [What are Derivatives?](http://letslearnfinance.net/2012/06/08/what-are-derivatives/) Let me know of your thoughts, if you get a chance to read it. I know I haven't covered everything on Derivatives, perhaps not everything our fellow redditors have mentioned - but I kept telling myself it's an introduction to derivatives - not an explanation of everything! :P","title":""},{"docid":"276403","text":"I understand what you're asking for (you want to write options ON call options... essentially the second derivative of the underlying security), and I've never heard of it. That's not to say it doesn't exist (I'm sure some investment banker has cooked something like this up at some point), but if it does exist, you wouldn't be able to trade it as easily as you can a put or a LEAP. I'm also not sure you'd actually want to buy such a thing - the amount of leverage would be enormous, and you'd need a massive amount of margin/collateral. Additionally, a small downward movement in the stock price could wipe out the entire value of your option.","title":""},{"docid":"122432","text":"\"Defining parity as \"\"parity is the amount by which an option is in the money\"\", I'd say there may be an arbitrage opportunity. If there's a $50 strike on a stock valued at $60 that I can buy for less than $10, there's an opportunity. Keep in mind, options often show high spreads, my example above might show a bid/ask of $9.75/$10.25, in which case the last trade of $9.50 should be ignored in favor of the actual ask price you'd pay. Mispricing can exist, but in this day and age, is far less likely.\"","title":""},{"docid":"242663","text":"\"Some thoughts on your questions in order, Duration: You might want to look at the longest-dated option (often a \"\"LEAP\"\"), for a couple reasons. One is that transaction costs (spread plus commission, especially spread) are killer on options, so a longer option means fewer transactions, since you don't have to keep rolling the option. Two is that any fundamentals-based views on stocks might tend to require 3-5 years to (relatively) reliably work out, so if you're a fundamental investor, a 3-6 month option isn't great. Over 3-6 months, momentum, short-term news, short squeezes, etc. can often dominate fundamentals in determining the price. One exception is if you just want to hedge a short-term event, such as a pending announcement on drug approval or something, and then you would buy the shortest option that still expires after the event; but options are usually super-expensive when they span an event like this. Strike: Strike price on a long option can be thought of as a tradeoff between the max loss and minimizing \"\"insurance costs.\"\" That is, if you buy a deeply in-the-money put or call, the time value will be minimal and thus you aren't paying so much for \"\"insurance,\"\" but you may have 1/3 or 1/2 of the value of the underlying tied up in the option and subject to loss. If you buy a put or call \"\"at the money,\"\" then you might have only say 10% of the value of the underlying tied up in the option and subject to loss, but almost the whole 10% may be time value (insurance cost), so you are losing 10% if the underlying stock price stays flat. I think of the deep in-the-money options as similar to buying stocks on margin (but the \"\"implied\"\" interest costs may be less than consumer margin borrowing rates, and for long options you can't get a margin call). The at-the-money options are more like buying insurance, and it's expensive. The commissions and spreads add significant cost, on top of the natural time value cost of the option. The annual costs would generally exceed the long-run average return on a diversified stock fund, which is daunting. Undervalued/overvalued options, pt. 1: First thing is to be sure the options prices on a given underlying make sense at all; there are things that \"\"should\"\" hold, for example a synthetic long or short should match up to an actual long or short. These kinds of rules can break, for example on LinkedIn (LNKD) after its IPO, when shorting was not permitted, the synthetic long was quite a bit cheaper than a real long. Usually though this happens because the arbitrage is not practical. For example on LNKD, the shares to short weren't really available, so people doing synthetic shorts with options were driving up the price of the synthetic short and down the price of the synthetic long. If you did actually want to be long the stock, then the synthetic long was a great deal. However, a riskless arbitrage (buy synthetic long, short the stock) was not possible, and that's why the prices were messed up. Another basic relationship that should hold is put-call parity: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity Undervalued/overvalued options, pt. 2: Assuming the relationship to the underlying is sane (synthetic positions equivalent to actual positions) then the valuation of the option could focus on volatility. That is, the time value of the option implies the stock will move a certain amount. If the time value is high and you think the stock won't move much, you might short the option, while if the time value is low and you think the stock will move a lot, you might buy the option. You can get implied volatility from your broker perhaps, or Morningstar.com for example has a bunch of data on option prices and the implied components of the price model. I don't know how useful this really is though. The spreads on options are so wide that making money on predicting volatility better than the market is pretty darn hard. That is, the spread probably exceeds the amount of the mispricing. The price of the underlying is more important to the value of an option than the assumed volatility. How many contracts: Each contract is 100 shares, so you just match that up. If you want to hedge 100 shares, buy one contract. To get the notional value of the underlying multiply by 100. So say you buy a call for $30, and the stock is trading at $100, then you have a call on 100 shares which are currently priced at $10,000 and the option will cost $30*100=3,000. You are leveraged about 3 to 1. (This points to an issue with options for individual investors, which is that one contract is a pretty large notional value relative to most portfolios.)\"","title":""},{"docid":"15385","text":"I do this very thing, but with asset allocation and risk parity in mind. I disagree with the cash or bust answers above, but many of the aforementioned facts are valuable and I don't mean to undermine them in anyway. That said, let's look at two examples: Option 1: All-in For the sake of argument let's say you had $100k invested in the SPY (S&P 500 ETF) in early 2007, and you kept it there until today. Your lowest balance would have been about $51k, and at this point the possibility of you losing your job was probably at a peak. Today you would be left with $170k assuming no withdrawal. Option 2: Risk Parity BUT if you balanced your investments with a risk parity approach, using negatively correlated asset classes you avoid this dilemma. If you had invested 50% in XLP (Consumer Staples Sector ETF) and 50% in TLT ( Long Term Treasury ETF) your investments low point would have been $88k, and your lowest annual return would be +0.69%. Today you would be left with $214k assuming no withdrawals. I chose option #2 and it hasn't failed me yet, even in 2016 so far the results are steady and reliably given the reward. My general opinion is simple: when you have money always grow it. Just be sure to cover your ass and prepare for rain. Backtesting for this was done at portfoliovisualizer.com, the one caveat to this approach is that inflation and a lack of international exposure are a risk here.","title":""},{"docid":"208926","text":"Ok, so disregarding passivity, could you help me through a simplified example? Say I only had two assets, SPY and TLT, with a respective weight of 35 and 65% and I want want to leverage this to 4x. Additionally, say daily return covar is: * B/B .004% * B/S -.004% * S/S .02% Now, if I read correctly, I should buy ATM calls xxx days in the future. Which may look like: Ticker, S, K, Option Price, Delta, Lambda * TLT $126.04 $126.00 $4.35 0.50 14.5 * SPY $134.91 $134.00 $6.26 0.55 11.8 ^ This example is pretty close but some assets are far off. I feel like I'm on the wrong track so I'll stop here. I just want to lever up my risk-parity. Margin rates are too high and I'm docked by Reg-T.","title":""},{"docid":"98285","text":"They are actually pretty common and it's the reason that anyone who takes a Board seat at a company without D&O insurance is playing russian roulette. Now winning a shareholder suit on the merits (whether personal or derivative liability) is a whole different story - at least in Delaware Chancellery (fun fact DE has two judicial systems, one for corporate stuff with world class talent and one for everything else). There's this doctrine called the 'Business Judgment Rule' which is a very high bar for a shareholder to overcome. Otherwise you'd see shareholder suits for every business deal that went wrong. The other problem these Uber investors might run into is they haven't realized a loss, nor are they likely to have a negative return on the initial investment. Marking down a gain against a high water mark is an uphill battle. Based on what it public, idk the cause of action, maybe Kalanick is going back on contractual language in his separation agreement (which is currently non-public) or that some of his actions as CEO could be considered self-dealing (again, not information currently in the public domain). Or maybe it's just a threat to put all the non-public shitty things he has done in a pleading and therefore put it in the public domain.","title":""},{"docid":"568299","text":"If you already own shares in a company and sell some, you won't be short selling these shares if sold from the same brokerage account, because your existing shares with that broker need to be sold first before you are able to short sell any. If you own a portfolio of shares however, you may be able to short sell an index to hedge your current portfolio. Also, if you have your existing shares in a company but don't want to sell your existing shares, for example you don't want to crystallise a capital gain, you can always hedge you current shares by short selling them through a different broker. Some other hedging options possibly available to you include: buying put options over the shares, writing cover call options, or short selling some other derivatives like CFDs (if your country allows them).","title":""},{"docid":"134752","text":"You appear to be thinking of option writers as if they were individuals with small, nondiversified, holdings and a particular view on what the underlying is going to do. This is not the best way to think about them. Option writers are typically large institutions with large portfolios and that provide services in all sorts of different areas. At the same time as they are writing calls on a particular stock, they are writing puts on it and options on other stocks. They are buying and selling the underlying and all kinds of different derivatives. They are not necessarily writing the option because they are expecting or hoping to benefit from a price move. It's just small part of their business. They write the option if the option price is good enough that they think they are selling it for very slightly more than it's worth. Asking why an option writer creates a call is like asking why a grocery store keeps buying groceries from their distributors. Don't they know the price of food may not always rise? Sure, but their business is selling the food for slightly more than they pay for it, not speculating on what will happen to its price. Most option writers are doing the same thing, except what they are buying and selling is sets of cash flows and risk. As a general rule, the business model of option writers is to profit from the few cents of spread or mispricing, not from aggregate changes in the price of the underlying. They should and often do maintain balanced portfolios so their option writing activities don't expose them to a lot of risk. Also note that there could be lots of reasons for writing options, even if you do have a particular view. For example, perhaps the option writer thinks volatility of the underlying will decrease. Writing a call could be part of an overall strategy that profits from this view.","title":""},{"docid":"568067","text":"The product itself is a derivative as it derives its value from another stock or commodity. It's similar to a US option, which offers (in the case of a 'call') the right, but not the obligation to buy a stock at a predetermined price before a certain date. But, unlike the US option, instead of buying the stock, the contract is only closed out in cash. I've made the analogy to betting, so I believe it to be a fair comparison. I hope this question is theoretical. You should never buy a financial instrument with no clue how it works.","title":""},{"docid":"129454","text":"There is no margin call. Inverse ETFs use derivatives that would lose value in the case you describe though this doesn't force a margin call as you may be misunderstanding how these funds are constructed.","title":""},{"docid":"588153","text":"A derivative is a financial instrument of a special kind, the kind “whose price depends on, or is derived from, another asset”. This definition is from John Hull, Options, Futures and Other Derivatives – a book definitely worth to own if you are curious about this, you can easily find old copies for a few dollars. The first point is that a derivative is a financial instrument, like credits, or insurances, the second point is that its price depends closely from the price of something else, the mentioned asset. In most cases derivatives can be understood as financial insurances against some risk bound to the asset. In the sequel I give a small list of derivatives and highlight the assets and the risk they can be bound to. And first, let me point out that the definition is (marginally) wrong because some derivatives depend on things which are not assets, nor do they have a price, like temperature, sunlight, or even your own life in the case of mortgages. But before going in this list, let me go through the remaining points of your question. What is the basic idea and concept behind a derivative? As already noted, in most cases, a derivative can be understood as a financial insurance compensating from a risk of some sort. In a classical insurance contract, one party of the contract is an insurance company, but in the broader case of a derivative, that counterparty can be pretty anything: an insurance, a bank, a government, a large company, and most probably market makers. How is it really used, and how does this deviate from the first point? Briefly, how does is it affecting people, and how is it causing problems? An important point with derivatives is that it can be arbitrarily complicated to compute their prices. Actually what is hidden in the attempt of giving a definition for derivatives, is that they are products whose price Y is a measurable function of one or several random variables X_1, X_2, … X_n on which we can use the theory of arbitrage pricing to get hints on the actual price Y of the asset – this is what the depends on means in technical terms. In the most favorable case, we obtain an easy formula linking Y to the X_is which tells us what is the price of our financial instrument. But in practice, it can be very difficult, if at all possible, to determine a price for derivatives. This has two implications: Persons possessing sophisticated techniques to compute the price of derivatives have a strategic advantage on derivatives market, in comparison to less advanced actors on the market. Organisation owning assets they cannot price cannot compute their bilan anymore, so that they cannot know for sure their financial situation. They are somehow playing roulette. But wait, if derivatives are insurances they should help to mitigate some financial risk, which precisely means that they should help their owners to more accurately see their financial situation! How is this not a contradiction? Some persons with sophisticated techniques to compute the price of derivatives are actually selling complicated derivatives to less knowledgeable persons. For instance, many communes in France and Germany have contracted credits whose reimbursements have a fixed interest part, like in a classical credit, and a variable interest part whose rate is computed against a complicated formula involving the value of the Swiss frank at each quarter starting from the inception of the credit. (So, for a 25 years running credit of theis type, the price Y of the credit at its inception depends on 100 Xs, which are the uncertain prices for the Swiss frank each quarter of the 25 next years.) Some of these communes can be quite small, with 5.000 inhabitants, and needless to say, do not have the required expertise to analyse the risks bound to such instruments, which in that special case led the court call the credit a swindling and to cancel the credit. But what chain of events leads a 5.000 inhabitants city in France to own a credit whose reimbursements depends on the Swiss frank? After the credit crunch in 2007 and the fall of Lehman Brothers in 2008, it has begun to be very hard to organise funding, which basically means to conclude credits running long in time on large amounts of money. So, the municipality needs a 25 years credit of 10.000.000 EUROS and goes to its communal bank. The communal bank has hundreds or thousands of municipalities looking for credits and needs itself a financing. So the communal bank goes to one of the five largest financial institutions in the world, which insists on selling a huge credit whose reimbursements have a variable part depending on hundred of values the Swiss frank will have in the 25 next years. Since the the big bank has better computation techniques than the small bank it makes a big profit. Since the small bank has no idea, how to compute the correct price of the credit it bought, it cuts this in pieces and sell it in the same form to the various communes it works with. If we were to attribute this kind of intentions to the largest five banks, we could ask about the possibility that they designed the credit to take advantage of the primitive evaluation methods of the small bank. We could also ask if they organised a cartel to force communal banks to buy their bermudean snowballs. And we could also ask, if they are so influent that they eventually can manipulate the Swiss frank to secure an even higher profit. But I will not go into this. To the best of my understanding, the subprime crisis is a play along the same plot, with different actors, but I know this latter subject only by what I could read in French newspapers. So much for the “How is it causing problems?” part. What is some of the terminology in relation to derivatives (and there meanings of course)? Answering this question is basically the purpose of the 7 first chapters of the book by Hull, along with deriving some important mathematical principles. And I will not copy these seven chapters here! How would someone get started dealing in derivatives (I'm playing a realistic stock market simulation, so it doesn't matter if your answer to this costs me money)? If you ask the question, I understand that you are not a professional, so that your are actually trying to become the one that has money and zero knowledge in the play I outlined above. I would recommand not doing this. That said, if you have a good mathematical background and can program well, once you are confindent with the books of Hull and Joshi, you can have fun implementing various market models and implementing trading strategies. Once you are confident with this, you can also read the articles on quantitative finance on arXiv.org. And once you are done with this, you can decide for yourself if you want to play the same market as the guys writing these articles. (And yes, even for the simplest options, they have better models than you have and will systematically outperform you in the long run, even if some random successes will give you the feeling that you do well and could do better.) (indeed, I've made it a personal goal to somehow lose every last cent of my money) You know your weapons! :) Two parties agree today on a price for one to deliver a commodity to the other at some future instant. This is a classical future contract, it can be modified in every imaginable way, usually by embedding options. For instance one party could have the option to choose between different delivery points or delivery days. Two parties write today a contract allowing the one party to buy at some future time a commodity to the the second party. The price is written today, as part of the contract. (There is the corresponding option entitling the owner to sell something.) Unlike the future contract, only one party can be obliged to do something, the other jas a right but no obligation. If you buy and option, your are buying some sort of insurance against a change of price on some asset. This is the most familiar to anybody. Credits can come in many different flavours, especially the formula to compute interests, or also embed options. Common options are early settlement options or restructuration options. While this is not completely inutitive, the credit works like an insurance. This is most easily understood from the side of the organisation lending the money, that speculates that the ratio of creanciers going bankrupt will be low enough for her to make profit, just like a fire insurance company speculates that the ratio of fire accidents will be low enough for her to make a profit. This is like a mortgage on a financial institution. Two parties agree that one will recive an upfront today and give a compensation to the second one if some third party defaults. Here this is an explicit insurance against the unfortuante event, where a creancier goes bankrupt. One finds here more or less standard options on electricity. But electricity have delicious particularities as it can practically not be stored, and fallout is also (usually) avoided. As for classical options, these are insurances against price moves. A swap is like two complementary credits on the same amount of money, so that it ends up in the two parties not actually exchanging the credit nominal and only paying interest one to the other — which makes only sense if these interests are computed with different formulas. Typical example are fixed rate vs. EURIBOR on some given maturity, which we interpret as an insurance against fluctuations of the EURIBOR, or a fixed rate vs. the exchange ratio between two currencies, which we interpret as an insurance against the two currencies decorrelating. Swaps are the richest and the most generic category of financial derivatives. The off-the-counter market features very imaginative, very customised insurance products. The most basic form is the insurance against drought, but you can image different dangers, and once you have it you can put it in options, in a swap, etc. For instance, a restaurant with a terrasse could enter in a weather insurance, paying each year a fixed amount of money and becoming in return an amount of money based on the amount of rainy day in a year. Actually, this list is virtually without limits!","title":""},{"docid":"356388","text":"\"Derivatives derive their value from underlying assets. This is expressed by the obligation of at least one counterparty to trade with the other counterparty in the future. These can take on as many combinations as one can dream up as it is a matter of contract. For futures, where two parties are obligated to trade at a specific price at a specific date in the future (one buyer, one seller), if you \"\"short\"\" a future, you have entered into a contract to sell the underlying at the time specified. If the price of the future moves against you (goes up), you will have to sell at a loss. The bigger the move, the greater the loss. You go ahead and pay this as well as a little extra to be sure that you satisfy what you owe due to the future. This satisfaction is called margin. If there weren't margin, people could take huge losses on their derivative bets, not pay, and disrupt the markets. Making sure that the money that will trade is already there makes the markets run smoothly. It's the same for shorting stocks where you borrow the stock, sell it, and wait. You have to leave the money with the broker as well as deposit a little extra to be sure you can make good if the market moves to a large degree against you.\"","title":""}],"string":"[\n {\n \"docid\": \"374797\",\n \"text\": \"\\\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the \\\"\\\"catch\\\"\\\"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the \\\"\\\"downside risk\\\"\\\" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about \\\"\\\"vanilla\\\"\\\" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"573077\",\n \"text\": \"\\\"Being \\\"\\\"Long\\\"\\\" something means you own it. Being \\\"\\\"Short\\\"\\\" something means you have created an obligation that you have sold to someone else. If I am long 100 shares of MSFT, that means that I possess 100 shares of MSFT. If I am short 100 shares of MSFT, that means that my broker let me borrow 100 shares of MSFT, and I chose to sell them. While I am short 100 shares of MSFT, I owe 100 shares of MSFT to my broker whenever he demands them back. Until he demands them back, I owe interest on the value of those 100 shares. You short a stock when you feel it is about to drop in price. The idea there is that if MSFT is at $50 and I short it, I borrow 100 shares from my broker and sell for $5000. If MSFT falls to $48 the next day, I buy back the 100 shares and give them back to my broker. I pocket the difference ($50 - $48 = $2/share x 100 shares = $200), minus interest owed. Call and Put options. People manage the risk of owning a stock or speculate on the future move of a stock by buying and selling calls and puts. Call and Put options have 3 important components. The stock symbol they are actionable against (MSFT in this case), the \\\"\\\"strike price\\\"\\\" - $52 in this case, and an expiration, June. If you buy a MSFT June $52 Call, you are buying the right to purchase MSFT stock before June options expiration (3rd Saturday of the month). They are priced per share (let's say this one cost $0.10/share), and sold in 100 share blocks called a \\\"\\\"contract\\\"\\\". If you buy 1 MSFT June $52 call in this scenario, it would cost you 100 shares x $0.10/share = $10. If you own this call and the stock spikes to $56 before June, you may exercise your right to purchase this stock (for $52), then immediately sell the stock (at the current price of $56) for a profit of $4 / share ($400 in this case), minus commissions. This is an overly simplified view of this transaction, as this rarely happens, but I have explained it so you understand the value of the option. Typically the exercise of the option is not used, but the option is sold to another party for an equivalent value. You can also sell a Call. Let's say you own 100 shares of MSFT and you would like to make an extra $0.10 a share because you DON'T think the stock price will be up to $52/share by the end of June. So you go to your online brokerage and sell one contract, and receive the $0.10 premium per share, being $10. If the end of June comes and nobody exercises the option you sold, you get to keep the $10 as pure profit (minus commission)! If they do exercise their option, your broker makes you sell your 100 shares of MSFT to that party for the $52 price. If the stock shot up to $56, you don't get to gain from that price move, as you have already committed to selling it to somebody at the $52 price. Again, this exercise scenario is overly simplified, but you should understand the process. A Put is the opposite of a Call. If you own 100 shares of MSFT, and you fear a fall in price, you may buy a PUT with a strike price at your threshold of pain. You might buy a $48 June MSFT Put because you fear the stock falling before June. If the stock does fall below the $48, you are guaranteed that somebody will buy yours at $48, limiting your loss. You will have paid a premium for this right (maybe $0.52/share for example). If the stock never gets down to $48 at the end of June, your option to sell is then worthless, as who would sell their stock at $48 when the market will pay you more? Owning a Put can be treated like owning insurance on the stock from a loss in stock price. Alternatively, if you think there is no way possible it will get down to $48 before the end of June, you may SELL a $48 MSFT June Put. HOWEVER, if the stock does dip down below $48, somebody will exercise their option and force you to buy their stock for $48. Imagine a scenario that MSFT drops to $30 on some drastically terrible news. While everybody else may buy the stock at $30, you are obligated to buy shares for $48. Not good! When you sold the option, somebody paid you a premium for buying that right from you. Often times you will always keep this premium. Sometimes though, you will have to buy a stock at a steep price compared to market. Now options strategies are combinations of buying and selling calls and puts on the same stock. Example -- I could buy a $52 MSFT June Call, and sell a $55 MSFT June Call. I would pay money for the $52 Call that I am long, and receive money for the $55 Call that I am short. The money I receive from the short $55 Call helps offset the cost of buying the $52 Call. If the stock were to go up, I would enjoy the profit within in $52-$55 range, essentially, maxing out my profit at $3/share - what the long/short call spread cost me. There are dozens of strategies of mixing and matching long and short calls and puts depending on what you expect the stock to do, and what you want to profit or protect yourself from. A derivative is any financial device that is derived from some other factor. Options are one of the most simple types of derivatives. The value of the option is derived from the real stock price. Bingo? That's a derivative. Lotto? That is also a derivative. Power companies buy weather derivatives to hedge their energy requirements. There are people selling derivatives based on the number of sunny days in Omaha. Remember those calls and puts on stock prices? There are people that sell calls and puts based on the number of sunny days in Omaha. Sounds kind of ridiculous -- but now imagine that you are a solar power company that gets \\\"\\\"free\\\"\\\" electricity from the sun and they sell that to their customers. On cloudy days, the solar power company is still on the hook to provide energy to their customers, but they must buy it from a more expensive source. If they own the \\\"\\\"Sunny Days in Omaha\\\"\\\" derivative, they can make money for every cloudy day over the annual average, thus, hedging their obligation for providing more expensive electricity on cloudy days. For that derivative to work, somebody in the derivative market puts a price on what he believes the odds are of too many cloudy days happening, and somebody who wants to protect his interests from an over abundance of cloudy days purchases this derivative. The energy company buying this derivative has a known cost for the cost of the derivative and works this into their business model. Knowing that they will be compensated for any excessive cloudy days allows them to stabilize their pricing and reduce their risk. The person selling the derivative profits if the number of sunny days is higher than average. The people selling these types of derivatives study the weather in order to make their offers appropriately. This particular example is a fictitious one (I don't believe there is a derivative called \\\"\\\"Sunny days in Omaha\\\"\\\"), but the concept is real, and the derivatives are based on anything from sunny days, to BLS unemployment statistics, to the apartment vacancy rate of NYC, to the cost of a gallon of milk in Maine. For every situation, somebody is looking to protect themselves from something, and somebody else believes they can profit from it. Now these examples are highly simplified, many derivatives are highly technical, comprised of multiple indicators as a part of its risk profile, and extremely difficult to explain. These things might sound ridiculous, but if you ran a lemonade stand in Omaha, that sunny days derivative just might be your best friend...\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"13260\",\n \"text\": \"Options reflect expectations about the underlying asset, and options are commonly priced using the Black-Scholes model: N(d1) and N(d2) are probability functions, S is the spot (current) price of the asset, K is the strike price, r is the risk free rate, and T-t represents time to maturity. Without getting into the mathematics, it suffices to say that higher volatility or expectation of volatility increases the perceived riskiness of the asset, so call options are priced lower and put options are priced higher. Think about it intuitively. If the stock is more likely to go downwards, then there's an increased chance that the call option expires worthless, so call options must be priced lower to accommodate the relative change in expected value of the option. Puts are priced similarly, but they move inversely with respect to call option prices due to Put-Call parity. So if call option prices are falling, then put option prices are rising (Note, however, that call prices falling does not cause put prices to rise. The inverse relationship exists because of changes in the underlying factors and how pricing works.) So the option action signifies that the market believes the stock is headed lower (in the given time frame). That does not mean it will go lower, and option traders assume risk whenever they take a particular position. Bottom line: gotta do your own homework! Best of luck.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"345410\",\n \"text\": \"The crucial insight is that the alternative to early exercise of an American call is not necessarily to hold it to expiry, but to sell it. And selling it, at its value, is always better than exercising it. Note that this holds only for options on assets that don't pay dividends. Here's the proof, using Put-Call-Parity. We know that at expiry T, we have (using a Call and a Put both struck at K): C(T) - P(T) = S(T) - K (if this is not clear to you, consider the case where S is less than, equal to, or greater than K at maturity, and go through each of them.) If the stock S doesn't pay any dividends (and there is no cost of carry etc.), we can replicate both sides now at time 0; we just buy one call, sell one put (that gives us the left hand side), buy the stock, and borrow money so that at time T we have to repay K (that gives us the right hand side). That means that now, we only need to borrow df * K, where df is the discount factor, and is less than one (assuming the good old pre-2009 world where interest rates are positive). Thus: C(0) - P(0) = S(0) - df * K. Rearranging gives: C(0) = S(0) - df * K + P(0). That's the value of the call, if we sell it (or hold it). However, if we exercise, we only get: C_ex = S(0) - K Now, we see that C(0) > C_ex, because we subtract less (df*K < K), and add P(0).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"108\",\n \"text\": \"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.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"354559\",\n \"text\": \"What you are asking about is called Interest Rate Parity. Or for a longer explanation the article Interest Rate Parity at Wikipedia. If the US has a rate of say zero, and the rate in Elbonia is 10%, one believes that in a year the exchange rate will be shifted by 10%, i.e. it will take 1.1 unit of their currency to get the dollars one unit did prior. Else, you'd always profit from such FOREX trades. (Disclaimer - I am not claiming this to be true or false, just offering one theory that explains the rate difference effect on future exchange rates.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"480337\",\n \"text\": \"\\\"So, if an out-of-the-money option (all time value) has a price P (say $3.00), and there are N days... The extrinsic value isn't solely determined by time value as your quote suggests. It's also based on volatility and demand. Here is a quote from http://www.tradingmarkets.com/options/trading-lessons/the-mystery-of-option-extrinsic-value-767484.html distinguishing between extrinsic time value and extrinsic non-time value: The time value of an option is entirely predictable. Time value premium declines at an accelerating rate, with most time decay occurring in the last one to two months before expiration. This occurs on a predictable curve. Intrinsic value is also predictable and easily followed. It is worth one point for every point the option is in the money. For example, a call with a strike of 30 has three points of intrinsic value when the current value of the underlying stock is $33 per share; and a 40 put has two points of intrinsic value when the underlying stock is worth $38. The third type of premium, extrinsic value, increases or decreases when the underlying stock changes and when the distance between current value of stock and strike of the option get closer together. As a symptom of volatility, extrinsic value may be greater for highly volatile underlying stock, and lower for less volatile stocks. Extrinsic value is the only classification of option premium that is unpredictable. The SPYs you point out probably had a volatility component affecting value. This portion is a factor of expectations or uncertainty. So an event expected to conclude prior to expiration, but of unknown outcome can cause theta to be higher than p/n. For example, a drug company is being sued and the outcome of a trial will determine whether that company pays out millions or not. The extrinsic will be higher than p/n prior to the outcome of the trial then drops after. Of course, the most common situation where this happens is earnings. After the announcement, it's not unusual to see a dramatic drop in the extrinsic portion of options. This is why sometimes a new option trader gets angry when buying calls prior to earnings. When 'surprise' good earnings are announced as hoped, the rise is stock price is largely offset by a fall in extrinsic value giving call holders little or no gain! As for the reverse situation where theta is lower than p/n would expect? Well you can actually have negative theta meaning the extrinsic portion rises over time. (this statement is a little confusing because theta is usually described as negative, but since you describe it as a positive number, negative here means the opposite of what you'd expect). This is a quote from \\\"\\\"Option Volatility & Pricing\\\"\\\". Keep in mind that they use 'positive' theta to mean the time value increases up over time: Is it ever possible for an option to have a positive theta such that if nothing changes the option will be worth more tomorrow than it is today? When futures options are subject to stock-type settlement, as they currently are in the United States, the carrying cost on a deeply in-the-money option, either a call or a put, can, under some circumstances, be greater than the volatility component. If this happens, and the option is European (no early exercise permitted), it will have a theoretical value less than parity (less than intrinsic value). As expiration approaches, the value of the option will slowly rise to parity. Hence, the option will have a positive theta. Sheldon Natenberg. Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Kindle Locations 1521-1525). Kindle Edition.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"48947\",\n \"text\": \"You'd likely be most familiar with them with respect to options and futures on commodities but they're used for credit/interest as well. The intrinsic value of an option is *derived* from the spread between call/put price and strike price; the value of the contract I've paid for or sold is derived from the current market value of the underlying asset, be it rice, platinum, or the Swedish kroner\",\n \"title\": \"\"\n },\n {\n \"docid\": \"314508\",\n \"text\": \"There's a concept called interest rate parity, which sort of says that you cannot profit on the difference in interest rates. This difference accounts for the predicted movement in exchange rates as well, along with the stability of the currencies.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"6574\",\n \"text\": \"Options are a derivative product, and in this case, derive their value from an underlying security, a traded stock. An option gives you the right, but not the obligation, to buy a stock at a given price (the strike price) by a given time (the expiration date.) What I just described is a call option. The opposite instrument is a put, giving you the right, but not the obligation, to sell the stock at a given price. Volumes have been written on the subject, but I'd suggest that for a custodial Roth, I'd not activate the ability to trade options. How to get started with options investing? offers a nice introduction to trading options. In my response, I offer an example of a trade that's actually less risky due to the option component.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"365228\",\n \"text\": \"\\\"In Orange County (southern California), one agent has blogged pretty extensively about using rental parity to determine when it is time to rent or buy. Rental parity is achieved when the cost of renting is equal to the cost of owning; in theory, if you buy when a home is selling above rental parity, you're overpaying, and you'd be better off renting. He has many posts on the subject; a few you might care to read would be this one, and this other one. You might get a better sense of how to calculate rental parity by looking at an example or two. There is also the NY Times calculator mentioned in other responses, and the Patrick.net calculator. Be aware, the calculators are garbage in, garbage out. In other words, you have to consider the input carefully. In particular, I found the defaults on the Patrick.net calculator were not realistic. So far as I am aware, the agent at OCHousingNews does not make his calculations public (though I have never actually asked). He's using a spreadsheet which I have never seen. That is another option, if you care to do this kind of analysis yourself. Search around, you can find a spreadsheet that someone has posted here and there. But keeping something like that updated is not trivial. In my experience, in practice, it's difficult to be totally rational and mathematical when it comes to many decisions, and as other respondents have noted, where you live is one of those decisions. Too, saying \\\"\\\"buy when rental parity is achieved\\\"\\\" is sort of like saying \\\"\\\"buy low, sell high,\\\"\\\" as though it were perfectly clear when stocks are at a bottom and/or a peak. In our case, we bought a house about 12 years ago, before rental parity was being discussed in the blogsphere. Looking back, we supposedly bought at the wrong time, according to that agent's rating system, but it turned out fine for us. Our house has appreciated, whereas the S&P 500 is basically where it was 12 years ago. Had we been thinking in terms of rental parity, we might not have bought at that time. Of course, your mileage may vary, and hindsight is always 20/20. I think the most helpful advice I can offer was something I got from a real estate agent around the time we were looking. He told me \\\"\\\"when you're looking at houses, be sure you like the floor plan and the location, because those two things are not easily changed.\\\"\\\" That advice really helped us to see things more clearly.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"50726\",\n \"text\": \"\\\"people are willing to pay higher premiums for options when stocks go down. Obviously the time value and intrinsic value and interests rates of the option doesn't change because of this so the miscalculation remainder is priced into the implied volatility part of the formula. Basically, anything that suggests the stock price will get volatile (sharp moves in either direction) will increase the implied volatility of the option. For instance, around earnings reports, the IV in both calls and puts in the nearest expiration dates are very high. When stocks go down sharply, the volatility is high because some people are buying puts for protection and others are buying calls because they think there will be a rebound move in the other direction. People (the \\\"\\\"sleep-at-night\\\"\\\" investors, not the derivatives traders ;) ) tend to be calm when stocks are going up, and fearful when they are going down. The psychology is important to understand and observe and profit from, not to quantitatively prove. The first paragraph should be your qualitative answer\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"20079\",\n \"text\": \"The basic idea behind a derivative is very simple actually. It is a contract where the final value depends on (is derived from) the value of something else. Stock, for instance, is not a derivative because the contract itself is actually ownership of part of a company. Whereas car insurance is a derivative because the payout depends on the value of something else namely your (and other peoples') cars. The problem with such a simple definition is that it covers such a broad class. It covers simple contracts like Futures where the end value just depends on the price of something on a future date. But it extends to contracts complicated enough that people in finance call them Exotics. Derivatives are broadly used for two things reducing risk (sometimes called insurance) and speculation. A farmer can use derivatives to make sure she gets paid a certain amount for her corn. A banker can group a bunch of loans together and sell slices to reduce the pain of a particular loan failing. At the same time people can use the same instruments to speculate on the price of (for example) that corn or those loans and the main advantage is that they don't have to buy the corn or loans directly. Any farmer will tell you corn can be very expensive to store. Derivatives generally cause problems both individually and sometimes world wide when people don't properly understand the risks involved. The most famous example being Mortgage-backed Securities and the recent Great Recession. You can start understand the instruments and their risks by this wonderful Wikipedia article and later perhaps a used collection of CFA books which cover derivatives in great detail. Edit: Michael Grünewald mentioned Hull's text on derivatives a wonderful middle ground between Wikipedia and the CFA books that I can't believe I didn't think about myself.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"520098\",\n \"text\": \"\\\"A derivative contract can be an option, and you can take a short (sell) position , much the same way you would in a stock. When BUYING options you risk only the money you put in. However when selling naked(you don't have the securities or cash to cover all potential losses) options, you are borrowing. Brokers force you to maintain a required amount of cash called, a maintenance requirement. When selling naked calls - theoretically you are able to lose an INFINITE amount of money, so in order to sell this type of options you have to maintain a certain level of cash in your account. If you fail to maintain this level you will enter into whats often referred to as a \\\"\\\"margin-call\\\"\\\". And yes they will call your phone and tell you :). Your broker has the right to liquidate your positions in order to meet requirements. PS: From experience my broker has never liquidated any of my holdings, but then again I've never been in a margin call for longer then a few days and never with a severe amount. The margin requirement for investors is regulated and brokers follow these regulations.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"119976\",\n \"text\": \"\\\"One alternative strategy you may want to consider is writing covered calls on the stock you have \\\"\\\"just sitting there\\\"\\\". This will allow you to earn a return (the premium from the calls) without necessarily having to give up your holding. As a brief overview, \\\"\\\"options\\\"\\\" are derivatives that give the holder the right (or option) to buy or sell shares at a specified price. Holders of call options with a strike prike $x on a particular security have the right to purchase that security at the strike price $x. Conversely, holders of put options with a strike price of $x have the right to sell that security at the strike price $x. Always on the other side of a call or put option is a person that has sold the option, which is called \\\"\\\"writing\\\"\\\" the option. If this person writes a call option, then he will be obligated to sell a certain amount of stock (100 shares per contract) at the strike price if that option is exercised. A writer of a put option will be obligated to by 100 shares per contract at the strike price if that option is exercised. Covered calls involve writing call contracts on stock that you own. For example, say you own 100 shares of AAPL, and that AAPL is currently trading for $330. You decide to write a Jan 21, 2012 call on these shares at a strike price of $340, earning you a premium of say $300. Two things can now happen: if the price of AAPL is not at least $340 on January 21, then the options are \\\"\\\"out of the money\\\"\\\" and will expire unexercised (why exercise an option to buy at $340 when you can buy at the currently cheaper market price?). You keep your AAPL stock plus the $300 premium you earn. If, however, the price of AAPL is greater than $340, the option will be exercised and you will now be required to sell the shares you own at $340. You will earn a return of $10/share ($340-$330), plus the $300 premium from the call option. You still make out in the end, but have unfortunately incurred an opportunity cost, as had you not written the call option you would have been able to sell at the market price, which is higher than the $340 strike price. Covered calls are considered relatively safe and conservative, however the strategy is most effective for stocks that are expected to stay within a relatively narrow price range for the duration of the contract. They do provide one option of earning additional money on stocks you are currently holding, albeit at the risk of giving up some returns if the stock price rises above the strike price.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"41160\",\n \"text\": \"If we assume constant volatility, gamma increases as the stock gets closer to the strike price. Thus, delta is increasing at a faster rate as the stock reaches closer to ITM because gamma is the derivative of delta. As the stock gets deeper ITM, the gamma will slow down as delta reaches 1 or -1 (depends if a call or a put). Thus, the value of the option will change depending upon the level of the delta. I am ignoring volatility and time for this description. See this diagram from Investopedia: Gamma\",\n \"title\": \"\"\n },\n {\n \"docid\": \"336618\",\n \"text\": \"If I understand what you're asking, I think you're looking at the relationship wrong. Yes, when one currency has a higher interest rate relative to another, it's value should, theoretically, appreciate. For example, if the USD interest rate is 10% and the EUR is 5%, the USD should appreciate in value against the EUR. However, the parity relationship tells you the price at which an investor would be indifferent to the difference in interest rates. So using the formula for interest rate parity: (1+r(USD))/(1+r(EUR)) = F/S and plugging in the interest rates from above and a spot rate of $1.5/EUR: (1.1)/(1.05) = F/(1.5) The 1 year forward rate would have to be $1.5714/EUR in order for the investor to be INDIFFERENT between holding USD or EUR. All this assuming interest rate parity holds. I'm not big on Econ but this is how I understood it when studying for the CFA exam the past few months. So please, someone correct me if I'm wrong.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"493679\",\n \"text\": \"Hey! I've just put my take on your question: [What are Derivatives?](http://letslearnfinance.net/2012/06/08/what-are-derivatives/) Let me know of your thoughts, if you get a chance to read it. I know I haven't covered everything on Derivatives, perhaps not everything our fellow redditors have mentioned - but I kept telling myself it's an introduction to derivatives - not an explanation of everything! :P\",\n \"title\": \"\"\n },\n {\n \"docid\": \"276403\",\n \"text\": \"I understand what you're asking for (you want to write options ON call options... essentially the second derivative of the underlying security), and I've never heard of it. That's not to say it doesn't exist (I'm sure some investment banker has cooked something like this up at some point), but if it does exist, you wouldn't be able to trade it as easily as you can a put or a LEAP. I'm also not sure you'd actually want to buy such a thing - the amount of leverage would be enormous, and you'd need a massive amount of margin/collateral. Additionally, a small downward movement in the stock price could wipe out the entire value of your option.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"122432\",\n \"text\": \"\\\"Defining parity as \\\"\\\"parity is the amount by which an option is in the money\\\"\\\", I'd say there may be an arbitrage opportunity. If there's a $50 strike on a stock valued at $60 that I can buy for less than $10, there's an opportunity. Keep in mind, options often show high spreads, my example above might show a bid/ask of $9.75/$10.25, in which case the last trade of $9.50 should be ignored in favor of the actual ask price you'd pay. Mispricing can exist, but in this day and age, is far less likely.\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"242663\",\n \"text\": \"\\\"Some thoughts on your questions in order, Duration: You might want to look at the longest-dated option (often a \\\"\\\"LEAP\\\"\\\"), for a couple reasons. One is that transaction costs (spread plus commission, especially spread) are killer on options, so a longer option means fewer transactions, since you don't have to keep rolling the option. Two is that any fundamentals-based views on stocks might tend to require 3-5 years to (relatively) reliably work out, so if you're a fundamental investor, a 3-6 month option isn't great. Over 3-6 months, momentum, short-term news, short squeezes, etc. can often dominate fundamentals in determining the price. One exception is if you just want to hedge a short-term event, such as a pending announcement on drug approval or something, and then you would buy the shortest option that still expires after the event; but options are usually super-expensive when they span an event like this. Strike: Strike price on a long option can be thought of as a tradeoff between the max loss and minimizing \\\"\\\"insurance costs.\\\"\\\" That is, if you buy a deeply in-the-money put or call, the time value will be minimal and thus you aren't paying so much for \\\"\\\"insurance,\\\"\\\" but you may have 1/3 or 1/2 of the value of the underlying tied up in the option and subject to loss. If you buy a put or call \\\"\\\"at the money,\\\"\\\" then you might have only say 10% of the value of the underlying tied up in the option and subject to loss, but almost the whole 10% may be time value (insurance cost), so you are losing 10% if the underlying stock price stays flat. I think of the deep in-the-money options as similar to buying stocks on margin (but the \\\"\\\"implied\\\"\\\" interest costs may be less than consumer margin borrowing rates, and for long options you can't get a margin call). The at-the-money options are more like buying insurance, and it's expensive. The commissions and spreads add significant cost, on top of the natural time value cost of the option. The annual costs would generally exceed the long-run average return on a diversified stock fund, which is daunting. Undervalued/overvalued options, pt. 1: First thing is to be sure the options prices on a given underlying make sense at all; there are things that \\\"\\\"should\\\"\\\" hold, for example a synthetic long or short should match up to an actual long or short. These kinds of rules can break, for example on LinkedIn (LNKD) after its IPO, when shorting was not permitted, the synthetic long was quite a bit cheaper than a real long. Usually though this happens because the arbitrage is not practical. For example on LNKD, the shares to short weren't really available, so people doing synthetic shorts with options were driving up the price of the synthetic short and down the price of the synthetic long. If you did actually want to be long the stock, then the synthetic long was a great deal. However, a riskless arbitrage (buy synthetic long, short the stock) was not possible, and that's why the prices were messed up. Another basic relationship that should hold is put-call parity: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity Undervalued/overvalued options, pt. 2: Assuming the relationship to the underlying is sane (synthetic positions equivalent to actual positions) then the valuation of the option could focus on volatility. That is, the time value of the option implies the stock will move a certain amount. If the time value is high and you think the stock won't move much, you might short the option, while if the time value is low and you think the stock will move a lot, you might buy the option. You can get implied volatility from your broker perhaps, or Morningstar.com for example has a bunch of data on option prices and the implied components of the price model. I don't know how useful this really is though. The spreads on options are so wide that making money on predicting volatility better than the market is pretty darn hard. That is, the spread probably exceeds the amount of the mispricing. The price of the underlying is more important to the value of an option than the assumed volatility. How many contracts: Each contract is 100 shares, so you just match that up. If you want to hedge 100 shares, buy one contract. To get the notional value of the underlying multiply by 100. So say you buy a call for $30, and the stock is trading at $100, then you have a call on 100 shares which are currently priced at $10,000 and the option will cost $30*100=3,000. You are leveraged about 3 to 1. (This points to an issue with options for individual investors, which is that one contract is a pretty large notional value relative to most portfolios.)\\\"\",\n \"title\": \"\"\n },\n {\n \"docid\": \"15385\",\n \"text\": \"I do this very thing, but with asset allocation and risk parity in mind. I disagree with the cash or bust answers above, but many of the aforementioned facts are valuable and I don't mean to undermine them in anyway. That said, let's look at two examples: Option 1: All-in For the sake of argument let's say you had $100k invested in the SPY (S&P 500 ETF) in early 2007, and you kept it there until today. Your lowest balance would have been about $51k, and at this point the possibility of you losing your job was probably at a peak. Today you would be left with $170k assuming no withdrawal. Option 2: Risk Parity BUT if you balanced your investments with a risk parity approach, using negatively correlated asset classes you avoid this dilemma. If you had invested 50% in XLP (Consumer Staples Sector ETF) and 50% in TLT ( Long Term Treasury ETF) your investments low point would have been $88k, and your lowest annual return would be +0.69%. Today you would be left with $214k assuming no withdrawals. I chose option #2 and it hasn't failed me yet, even in 2016 so far the results are steady and reliably given the reward. My general opinion is simple: when you have money always grow it. Just be sure to cover your ass and prepare for rain. Backtesting for this was done at portfoliovisualizer.com, the one caveat to this approach is that inflation and a lack of international exposure are a risk here.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"208926\",\n \"text\": \"Ok, so disregarding passivity, could you help me through a simplified example? Say I only had two assets, SPY and TLT, with a respective weight of 35 and 65% and I want want to leverage this to 4x. Additionally, say daily return covar is: * B/B .004% * B/S -.004% * S/S .02% Now, if I read correctly, I should buy ATM calls xxx days in the future. Which may look like: Ticker, S, K, Option Price, Delta, Lambda * TLT $126.04 $126.00 $4.35 0.50 14.5 * SPY $134.91 $134.00 $6.26 0.55 11.8 ^ This example is pretty close but some assets are far off. I feel like I'm on the wrong track so I'll stop here. I just want to lever up my risk-parity. Margin rates are too high and I'm docked by Reg-T.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"98285\",\n \"text\": \"They are actually pretty common and it's the reason that anyone who takes a Board seat at a company without D&O insurance is playing russian roulette. Now winning a shareholder suit on the merits (whether personal or derivative liability) is a whole different story - at least in Delaware Chancellery (fun fact DE has two judicial systems, one for corporate stuff with world class talent and one for everything else). There's this doctrine called the 'Business Judgment Rule' which is a very high bar for a shareholder to overcome. Otherwise you'd see shareholder suits for every business deal that went wrong. The other problem these Uber investors might run into is they haven't realized a loss, nor are they likely to have a negative return on the initial investment. Marking down a gain against a high water mark is an uphill battle. Based on what it public, idk the cause of action, maybe Kalanick is going back on contractual language in his separation agreement (which is currently non-public) or that some of his actions as CEO could be considered self-dealing (again, not information currently in the public domain). Or maybe it's just a threat to put all the non-public shitty things he has done in a pleading and therefore put it in the public domain.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"568299\",\n \"text\": \"If you already own shares in a company and sell some, you won't be short selling these shares if sold from the same brokerage account, because your existing shares with that broker need to be sold first before you are able to short sell any. If you own a portfolio of shares however, you may be able to short sell an index to hedge your current portfolio. Also, if you have your existing shares in a company but don't want to sell your existing shares, for example you don't want to crystallise a capital gain, you can always hedge you current shares by short selling them through a different broker. Some other hedging options possibly available to you include: buying put options over the shares, writing cover call options, or short selling some other derivatives like CFDs (if your country allows them).\",\n \"title\": \"\"\n },\n {\n \"docid\": \"134752\",\n \"text\": \"You appear to be thinking of option writers as if they were individuals with small, nondiversified, holdings and a particular view on what the underlying is going to do. This is not the best way to think about them. Option writers are typically large institutions with large portfolios and that provide services in all sorts of different areas. At the same time as they are writing calls on a particular stock, they are writing puts on it and options on other stocks. They are buying and selling the underlying and all kinds of different derivatives. They are not necessarily writing the option because they are expecting or hoping to benefit from a price move. It's just small part of their business. They write the option if the option price is good enough that they think they are selling it for very slightly more than it's worth. Asking why an option writer creates a call is like asking why a grocery store keeps buying groceries from their distributors. Don't they know the price of food may not always rise? Sure, but their business is selling the food for slightly more than they pay for it, not speculating on what will happen to its price. Most option writers are doing the same thing, except what they are buying and selling is sets of cash flows and risk. As a general rule, the business model of option writers is to profit from the few cents of spread or mispricing, not from aggregate changes in the price of the underlying. They should and often do maintain balanced portfolios so their option writing activities don't expose them to a lot of risk. Also note that there could be lots of reasons for writing options, even if you do have a particular view. For example, perhaps the option writer thinks volatility of the underlying will decrease. Writing a call could be part of an overall strategy that profits from this view.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"568067\",\n \"text\": \"The product itself is a derivative as it derives its value from another stock or commodity. It's similar to a US option, which offers (in the case of a 'call') the right, but not the obligation to buy a stock at a predetermined price before a certain date. But, unlike the US option, instead of buying the stock, the contract is only closed out in cash. I've made the analogy to betting, so I believe it to be a fair comparison. I hope this question is theoretical. You should never buy a financial instrument with no clue how it works.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"129454\",\n \"text\": \"There is no margin call. Inverse ETFs use derivatives that would lose value in the case you describe though this doesn't force a margin call as you may be misunderstanding how these funds are constructed.\",\n \"title\": \"\"\n },\n {\n \"docid\": \"588153\",\n \"text\": \"A derivative is a financial instrument of a special kind, the kind “whose price depends on, or is derived from, another asset”. This definition is from John Hull, Options, Futures and Other Derivatives – a book definitely worth to own if you are curious about this, you can easily find old copies for a few dollars. The first point is that a derivative is a financial instrument, like credits, or insurances, the second point is that its price depends closely from the price of something else, the mentioned asset. In most cases derivatives can be understood as financial insurances against some risk bound to the asset. In the sequel I give a small list of derivatives and highlight the assets and the risk they can be bound to. And first, let me point out that the definition is (marginally) wrong because some derivatives depend on things which are not assets, nor do they have a price, like temperature, sunlight, or even your own life in the case of mortgages. But before going in this list, let me go through the remaining points of your question. What is the basic idea and concept behind a derivative? As already noted, in most cases, a derivative can be understood as a financial insurance compensating from a risk of some sort. In a classical insurance contract, one party of the contract is an insurance company, but in the broader case of a derivative, that counterparty can be pretty anything: an insurance, a bank, a government, a large company, and most probably market makers. How is it really used, and how does this deviate from the first point? Briefly, how does is it affecting people, and how is it causing problems? An important point with derivatives is that it can be arbitrarily complicated to compute their prices. Actually what is hidden in the attempt of giving a definition for derivatives, is that they are products whose price Y is a measurable function of one or several random variables X_1, X_2, … X_n on which we can use the theory of arbitrage pricing to get hints on the actual price Y of the asset – this is what the depends on means in technical terms. In the most favorable case, we obtain an easy formula linking Y to the X_is which tells us what is the price of our financial instrument. But in practice, it can be very difficult, if at all possible, to determine a price for derivatives. This has two implications: Persons possessing sophisticated techniques to compute the price of derivatives have a strategic advantage on derivatives market, in comparison to less advanced actors on the market. Organisation owning assets they cannot price cannot compute their bilan anymore, so that they cannot know for sure their financial situation. They are somehow playing roulette. But wait, if derivatives are insurances they should help to mitigate some financial risk, which precisely means that they should help their owners to more accurately see their financial situation! How is this not a contradiction? Some persons with sophisticated techniques to compute the price of derivatives are actually selling complicated derivatives to less knowledgeable persons. For instance, many communes in France and Germany have contracted credits whose reimbursements have a fixed interest part, like in a classical credit, and a variable interest part whose rate is computed against a complicated formula involving the value of the Swiss frank at each quarter starting from the inception of the credit. (So, for a 25 years running credit of theis type, the price Y of the credit at its inception depends on 100 Xs, which are the uncertain prices for the Swiss frank each quarter of the 25 next years.) Some of these communes can be quite small, with 5.000 inhabitants, and needless to say, do not have the required expertise to analyse the risks bound to such instruments, which in that special case led the court call the credit a swindling and to cancel the credit. But what chain of events leads a 5.000 inhabitants city in France to own a credit whose reimbursements depends on the Swiss frank? After the credit crunch in 2007 and the fall of Lehman Brothers in 2008, it has begun to be very hard to organise funding, which basically means to conclude credits running long in time on large amounts of money. So, the municipality needs a 25 years credit of 10.000.000 EUROS and goes to its communal bank. The communal bank has hundreds or thousands of municipalities looking for credits and needs itself a financing. So the communal bank goes to one of the five largest financial institutions in the world, which insists on selling a huge credit whose reimbursements have a variable part depending on hundred of values the Swiss frank will have in the 25 next years. Since the the big bank has better computation techniques than the small bank it makes a big profit. Since the small bank has no idea, how to compute the correct price of the credit it bought, it cuts this in pieces and sell it in the same form to the various communes it works with. If we were to attribute this kind of intentions to the largest five banks, we could ask about the possibility that they designed the credit to take advantage of the primitive evaluation methods of the small bank. We could also ask if they organised a cartel to force communal banks to buy their bermudean snowballs. And we could also ask, if they are so influent that they eventually can manipulate the Swiss frank to secure an even higher profit. But I will not go into this. To the best of my understanding, the subprime crisis is a play along the same plot, with different actors, but I know this latter subject only by what I could read in French newspapers. So much for the “How is it causing problems?” part. What is some of the terminology in relation to derivatives (and there meanings of course)? Answering this question is basically the purpose of the 7 first chapters of the book by Hull, along with deriving some important mathematical principles. And I will not copy these seven chapters here! How would someone get started dealing in derivatives (I'm playing a realistic stock market simulation, so it doesn't matter if your answer to this costs me money)? If you ask the question, I understand that you are not a professional, so that your are actually trying to become the one that has money and zero knowledge in the play I outlined above. I would recommand not doing this. That said, if you have a good mathematical background and can program well, once you are confindent with the books of Hull and Joshi, you can have fun implementing various market models and implementing trading strategies. Once you are confident with this, you can also read the articles on quantitative finance on arXiv.org. And once you are done with this, you can decide for yourself if you want to play the same market as the guys writing these articles. (And yes, even for the simplest options, they have better models than you have and will systematically outperform you in the long run, even if some random successes will give you the feeling that you do well and could do better.) (indeed, I've made it a personal goal to somehow lose every last cent of my money) You know your weapons! :) Two parties agree today on a price for one to deliver a commodity to the other at some future instant. This is a classical future contract, it can be modified in every imaginable way, usually by embedding options. For instance one party could have the option to choose between different delivery points or delivery days. Two parties write today a contract allowing the one party to buy at some future time a commodity to the the second party. The price is written today, as part of the contract. (There is the corresponding option entitling the owner to sell something.) Unlike the future contract, only one party can be obliged to do something, the other jas a right but no obligation. If you buy and option, your are buying some sort of insurance against a change of price on some asset. This is the most familiar to anybody. Credits can come in many different flavours, especially the formula to compute interests, or also embed options. Common options are early settlement options or restructuration options. While this is not completely inutitive, the credit works like an insurance. This is most easily understood from the side of the organisation lending the money, that speculates that the ratio of creanciers going bankrupt will be low enough for her to make profit, just like a fire insurance company speculates that the ratio of fire accidents will be low enough for her to make a profit. This is like a mortgage on a financial institution. Two parties agree that one will recive an upfront today and give a compensation to the second one if some third party defaults. Here this is an explicit insurance against the unfortuante event, where a creancier goes bankrupt. One finds here more or less standard options on electricity. But electricity have delicious particularities as it can practically not be stored, and fallout is also (usually) avoided. As for classical options, these are insurances against price moves. A swap is like two complementary credits on the same amount of money, so that it ends up in the two parties not actually exchanging the credit nominal and only paying interest one to the other — which makes only sense if these interests are computed with different formulas. Typical example are fixed rate vs. EURIBOR on some given maturity, which we interpret as an insurance against fluctuations of the EURIBOR, or a fixed rate vs. the exchange ratio between two currencies, which we interpret as an insurance against the two currencies decorrelating. Swaps are the richest and the most generic category of financial derivatives. The off-the-counter market features very imaginative, very customised insurance products. The most basic form is the insurance against drought, but you can image different dangers, and once you have it you can put it in options, in a swap, etc. For instance, a restaurant with a terrasse could enter in a weather insurance, paying each year a fixed amount of money and becoming in return an amount of money based on the amount of rainy day in a year. Actually, this list is virtually without limits!\",\n \"title\": \"\"\n },\n {\n \"docid\": \"356388\",\n \"text\": \"\\\"Derivatives derive their value from underlying assets. This is expressed by the obligation of at least one counterparty to trade with the other counterparty in the future. These can take on as many combinations as one can dream up as it is a matter of contract. For futures, where two parties are obligated to trade at a specific price at a specific date in the future (one buyer, one seller), if you \\\"\\\"short\\\"\\\" a future, you have entered into a contract to sell the underlying at the time specified. If the price of the future moves against you (goes up), you will have to sell at a loss. The bigger the move, the greater the loss. You go ahead and pay this as well as a little extra to be sure that you satisfy what you owe due to the future. This satisfaction is called margin. If there weren't margin, people could take huge losses on their derivative bets, not pay, and disrupt the markets. Making sure that the money that will trade is already there makes the markets run smoothly. It's the same for shorting stocks where you borrow the stock, sell it, and wait. You have to leave the money with the broker as well as deposit a little extra to be sure you can make good if the market moves to a large degree against you.\\\"\",\n \"title\": \"\"\n }\n]","isConversational":false}}}],"truncated":false,"partial":false},"paginationData":{"pageIndex":0,"numItemsPerPage":100,"numTotalItems":6309,"offset":0,"length":100}},"jwt":"eyJhbGciOiJFZERTQSJ9.eyJyZWFkIjp0cnVlLCJwZXJtaXNzaW9ucyI6eyJyZXBvLmNvbnRlbnQucmVhZCI6dHJ1ZX0sImlhdCI6MTc3MjkyMzEyMCwic3ViIjoiL2RhdGFzZXRzL3Nza3RvcmEvc2NpZmFjdC1maXFhLWNvbWJpbmUiLCJleHAiOjE3NzI5MjY3MjAsImlzcyI6Imh0dHBzOi8vaHVnZ2luZ2ZhY2UuY28ifQ.ipb7MmaIPA1N7dNQB0sqMq11oEZH1pT6nPJRwylTyNa7xuJP_n6srIzgPt033oUIor_JBu1rOToEboFLazW2Cg","displayUrls":true,"splitSizeSummaries":[{"config":"default","split":"train","numRows":6309,"numBytesParquet":198500525}]},"discussionsStats":{"closed":0,"open":0,"total":0},"fullWidth":true,"hasGatedAccess":true,"hasFullAccess":true,"isEmbedded":false,"savedQueries":{"community":[],"user":[]}}">
query_id stringlengths 1 5 | query stringlengths 14 249 | positive_passages listlengths 1 23 | negative_passages listlengths 30 30 |
|---|---|---|---|
2882 | How Often Should I Chase a Credit Card Signup Bonus? | [
{
"docid": "99279",
"text": "An inquiry to your credit report is a slight ding and lasts 2 years. I'd suggest that if you are playing the bonus game you watch your score closely, and if it drops below the level you'd like to maintain, hold off a while. Credit Karma offers a good simulation to show the impac... | [
{
"docid": "297274",
"text": "\"I would recommend putting it on a credit card, just not your current credit card. Run a Google search for \"\"credit cards with good signup bonuses\"\" and you will potentially come across these links: http://www.cardrates.com/advice/11-best-signup-bonus-credit-cards/ https:/... |
6843 | Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | [
{
"docid": "385095",
"text": "\"I primarily intend to add on to WBT's answer, which is good. It has been shown that \"\"momentum\"\" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term v... | [
{
"docid": "170247",
"text": "I can think of a few simple and quick techniques for timing the market over the long term, and they can be used individually or in combination with each other. There are also some additional techniques to give early warning of possible turns in the market. The first is using a ... |
748 | MafA ubiquitination increases the recruitment of coavtivator P/CAF by MafA. | [
{
"docid": "11291348",
"text": "The Maf oncoproteins are b-Zip transcription factors of the AP-1 superfamily. They are involved in developmental, metabolic, and tumorigenic processes. Maf proteins are overexpressed in about 50% of human multiple myelomas. Here, we show that Maf-transforming activity is cont... | [
{
"docid": "3727986",
"text": "Cancer-associated fibroblasts (CAFs) promote tumour invasion and metastasis. We show that CAFs exert a physical force on cancer cells that enables their collective invasion. Force transmission is mediated by a heterophilic adhesion involving N-cadherin at the CAF membrane and ... |
1687 | Australian stocks - any dividend tax or capital gains tax? | [
{
"docid": "73457",
"text": "\"For non Australian residents: Dividends withholding tax rate is 30%. Depending upon your country of residence where there is a tax treaty in place to avoid double taxation, then this can be reduced. Note that only dividends that are unfranked are subject to this (in Australi... | [
{
"docid": "507276",
"text": "\"Are these all of the taxes or is there any additional taxes over these? Turn-over tax is not for retail investors. Other taxes are paid by the broker as part of transaction and one need not worry too much about it. Is there any \"\"Income tax\"\" to be paid for shares bought/... |
9175 | Shareholder in US based company | [
{
"docid": "188776",
"text": "Companies need to go public before you can buy their shares on a public stock exchange, but all companies have shares, even if there's only one share. And anyone who owns those shares can give them to whoever they like (there are generally restrictions on selling shares in unli... | [
{
"docid": "521489",
"text": "\"If you have an S-Corp with several shareholders - you probably also have a tax adviser who suggested using S-Corp to begin with. You're probably best off asking that adviser about this issue. If you decided to use S-Corp for multiple shareholders without a professional guidi... |
1001 | R2D2 stops miRNA production by increasing the selectivity of Dcr2 for long dsRNA. | [
{
"docid": "5702790",
"text": "Drosophila Dicer-2 generates small interfering RNAs (siRNAs) from long double-stranded RNA (dsRNA), whereas Dicer-1 produces microRNAs (miRNAs) from pre-miRNA. What makes the two Dicers specific for their biological substrates? We find that purified Dicer-2 can efficiently cle... | [
{
"docid": "23913146",
"text": "In Drosophila, three types of endogenous small RNAs-microRNAs (miRNAs), PIWI-interacting RNAs (piRNAs), and endogenous small-interfering RNAs (endo-siRNAs or esiRNAs)-function as triggers in RNA silencing. Although piRNAs are produced independently of Dicer, miRNA and esiRNA ... |
5637 | Is “folio” an acceptable contraction of “portfolio”? | [
{
"docid": "25029",
"text": "\"Technically, no. According to the dictionary, a folio is a single sheet, and a portfolio is a folder or case for keeping your folios. In finance, your collection of investments is called your portfolio, probably because your broker (before the digital age) would keep the recor... | [
{
"docid": "291600",
"text": "\"As I stated in my comment, options are futures, but with the twist that you're allowed to say no to the agreed-on transaction; if the market offers you a better deal on whatever you had contracted to buy or sell, you have the option of simply letting it expire. Options theref... |
6719 | Debit cards as bad as credit cards? | [
{
"docid": "102340",
"text": "How about just stop buying stuff?",
"title": ""
},
{
"docid": "516608",
"text": "This sounds more like a behavioral than a debit card issue to me TBH. Did you put the money you're putting away into a separate savings account that you (mentally) labelled 'for inv... | [
{
"docid": "454412",
"text": "Unless a study accounts for whether the users are following a budget or not, it is irrelevant to those who are trying to take their personal finances seriously. I can certainly believe that those who have no budget will spend more on a credit card than they will on a debit card... |
3740 | What is a Discount Called in the Context of a Negative Interest Rate? | [
{
"docid": "574011",
"text": "\"Negative Yields on Bonds is opposite of Getting profit on your investment. This is some kind of new practice from world wide financial institute. the interest rate is -0.05% for ten years. So a $100,000 bond under those terms would be \"\"discounted\"\" to $100,501, give o... | [
{
"docid": "42475",
"text": "\"The interest rate offered by a bond is called the nominal interest rate. The so-called real interest rate is the nominal interest rate minus the rate of inflation. If inflation is equal to or greater than the nominal rate at any given time, the REAL interest rate is zero or n... |
804 | Monoclonal antibody targeting of N-cadherin inhibits growth. | [
{
"docid": "22180793",
"text": "The transition from androgen-dependent to castration-resistant prostate cancer (CRPC) is a lethal event of uncertain molecular etiology. Comparing gene expression in isogenic androgen-dependent and CRPC xenografts, we found a reproducible increase in N-cadherin expression, wh... | [
{
"docid": "6550579",
"text": "Epidermal growth factor receptor (EGFR) and HER3 each form heterodimers with HER2 and have independently been implicated as key coreceptors that drive HER2-amplified breast cancer. Some studies suggest a dominant role for EGFR, a notion of renewed interest given the developmen... |
4259 | Are there any hedged international funds in India? | [
{
"docid": "283774",
"text": "There aren't and for a good reason. The long term trend of INR against USD, GBP, EUR and other harder currencies is down. Given the inflation differential between these economies and India's, fund managers and investors should expect this to continue. Therefore, if you are inve... | [
{
"docid": "386173",
"text": "It isn't just ETFs, you have normal mutual funds in India which invest internationally. This could be convenient if you don't already have a depository account and a stockbroker. Here's a list of such funds, along with some performance data: Value Research - Equity: Internatio... |
7648 | Insider Trading? | [
{
"docid": "543103",
"text": "I am a flight attendant on a private jet and I hear a bank CEO discussing a merger or a buyout. I proceed to purchase that stock before the announcement. The CEO did not tell me to buy it, I just overheard him. If you are a flight attendant on a private jet that is operat... | [
{
"docid": "551766",
"text": "Insider trading is any trading done on material non-public information relating to an instrument. If my sister, who works for a drugs testing company, tells me that stage 3 trials of a drug look like they will fail and I trade on that information (probably by shorting a compan... |
5570 | Can future rental income be applied to present debt-to-income ratio when applying for second mortgage? | [
{
"docid": "367930",
"text": "They will include the rental income into the calculation. They don't give you a 100% credit for the income because they have to factor that you might have a gap between tenants. Years ago they only credited me with 66% of the expected monthly income. Example: This expense was... | [
{
"docid": "465648",
"text": "Even after the real estate crash, there are banks that lend money outside of the rules I'll share. A fully qualified mortgage is typically run at debt to income ratios of 28/36, where 28% of your gross monthly income can apply to the mortgage, property tax, and insurance, and ... |
1334 | Type 1 Diabetes is associated with subtle perturbations in T reg development. | [
{
"docid": "13940200",
"text": "Genome-wide association studies are now identifying disease-associated chromosome regions. However, even after convincing replication, the localization of the causal variant(s) requires comprehensive resequencing, extensive genotyping and statistical analyses in large sample ... | [
{
"docid": "266641",
"text": "Regulatory T (T reg) cells are critical regulators of immune tolerance. Most T reg cells are defined based on expression of CD4, CD25, and the transcription factor, FoxP3. However, these markers have proven problematic for uniquely defining this specialized T cell subset in hum... |
8342 | May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes? | [
{
"docid": "457689",
"text": "\"Part of it was an Oops, but not all of it. There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock's price was enough to trigger \"\"sell\"\" orders across the market. Source: http:/... | [
{
"docid": "484190",
"text": "\"What most of these answers here seem to be missing is that a stock \"\"price\"\" is not exactly what we typically expect a price to be--for example, when we go in to the supermarket and see that the price of a gallon of milk is $2.00, we know that when we go to the cash regis... |
7673 | Comparing ETFs following the same index | [
{
"docid": "492212",
"text": "The key two things to consider when looking at similar/identical ETFs is the typical (or 'indicative') spread, and the trading volume and size of the ETF. Just like regular stocks, thinly traded ETF's often have quite large spreads between buy and sell: in the 1.5-2%+ range in ... | [
{
"docid": "408524",
"text": "Index Funds & ETFs, if they are tracking the same index, will be the same in an ideal world. The difference would be because of the following factors: Expense ratio: i.e. the expense the funds charge. This varies and hence it would lead to a difference in performance. Tracking ... |
945 | Physical activity level has no association with the difference in maximal oxygen consumption between black and white youth. | [
{
"docid": "13083189",
"text": "OBJECTIVES Despite recognition of the important influence of environmental determinants on physical activity patterns, minimal empirical research has been done to assess the impact of environmental/contextual determinants of physical activity. This article aims to investigate... | [
{
"docid": "18537148",
"text": "The purpose of this investigation was to determine whether maximal oxygen consumption (VO2max) differed between two selected groups of black and white children and whether a difference existed to determine whether it was related to hematologic profiles, body composition, and/... |
737 | MICAL redox enzymes regulate actin dynamics in many cell types. | [
{
"docid": "16562534",
"text": "The overall size and structure of a synaptic terminal is an important determinant of its function. In a large-scale mutagenesis screen, designed to identify Drosophila mutants with abnormally structured neuromuscular junctions (NMJs), we discovered mutations in Drosophila mic... | [
{
"docid": "4417558",
"text": "How instructive cues present on the cell surface have their precise effects on the actin cytoskeleton is poorly understood. Semaphorins are one of the largest families of these instructive cues and are widely studied for their effects on cell movement, navigation, angiogenesis... |
799 | Moderate consumption of candy and chocolate reduces the risk of cardiovascular disease (CVD). | [
{
"docid": "5293024",
"text": "Our attitude towards candy—“if it tastes that good, it can't be healthy”—betrays society's puritanical stance towards pleasure. Candy has been blamed for various ills, including hyperactivity in children; however, clinical trials have not supported this.1 Candy—sugar confecti... | [
{
"docid": "7454794",
"text": "Statins are widely used in the evidence-based lowering of cardiovascular disease (CVD) risk. The use of these drugs for secondary prevention of CVD is well founded, but their expanding use in primary prevention—in individuals without documented CVD—has raised some concerns. Fi... |
6293 | Difference between Hedge Fund and Private Equity? | [
{
"docid": "179664",
"text": "Private Equity is simply some type of an investment company, which is owned in a way not accessible to the public. ie: Warren Buffet runs Berkshire Hatheway, which is an investment company which itself is traded on the New York Stock Exchange. This means that anyone can buy sha... | [
{
"docid": "210683",
"text": "DB runs hedge funds that own stock in both companies, has a US bank that lends to both companies, has a US equity division that trades the stock of both companies, is a prime broker to hedge funds that own stock in both companies. They are also a lender to private equity firms ... |
4300 | Upward Spike in US Treasuries despite S&P Downgrade in August 2011 | [
{
"docid": "294",
"text": "US government bonds are where money goes when the markets are turbulent and investors are fleeing from risk, and that applies even if the risk is a downgrade of the US credit rating, because there's simply nowhere else to put your money if you're in search of safety. Most AAA-rate... | [
{
"docid": "341427",
"text": "If you spoke in front of a group of people in 2001 about the possibility of be lowered, you would be written off as a kook. Now S&P is talking about a negative credit outlook -- scary stuff. It's scary because a base assumption in any risk model is that US Treasury debt is utte... |
4131 | When is it worth it to buy dividend-bearing stocks? | [
{
"docid": "322417",
"text": "\"Yes, they are, and you've experienced why. Generally speaking, stocks that pay dividends will be better investments than stocks that don't. Here's why: 1) They're actually making money. They can finagle balance sheets and news releases, but cash is cash, it tells no lies. Th... | [
{
"docid": "63882",
"text": "\"This question is predicated on the assumption that investors prefer dividends, as this depends on who you're speaking to. Some investors prefer growth stocks (some which don't pay dividends), so in this case, we're covering the percent of investors who like dividend paying st... |
6065 | In Australia, how to battle credit card debt? | [
{
"docid": "386611",
"text": "JoeTaxpayer mentioned a budget. Staying on top of your spending will be the result of getting out from under this debt. You may have Excel on your PC now, if not Open Office is free which has a program that handles finance applications. There is budgeting software for free out ... | [
{
"docid": "521987",
"text": "Congratulations on seeing your situation clearly! That's half the battle. To prevent yourself from going back into debt, you should get rid of any credit cards you have and close the accounts. Just use your debit card. Your post indicates you're not the type to splurge and get ... |
9911 | Paying taxes on dividends even though your capital gains were $0? | [
{
"docid": "348424",
"text": "You are incorrect in saying that you have a capital gains of $0. You either have no capital gains activity, because you haven't realized it or you have an unrealized capital gains of -$10k. If you were to sell immediately after receiving the dividend you would end up as a wash ... | [
{
"docid": "322049",
"text": "I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a ... |
2702 | What should I be aware of as a young investor? | [
{
"docid": "526577",
"text": "If you're tending toward stocks because you have a long time horizon, you're looking at them for the right reasons. I'm twice your age. I have a mortgage -- two of them, actually! -- a wife, and a six-year-old. I can't really justify being terribly risky with my money because... | [
{
"docid": "422946",
"text": "You are young so you have time on your side. This allows you to invest in more aggressive investments. I would do the following 1) Contribute at least what your company is willing to match on your 401k, if your company offers a Roth 401k use that instead of the normal 401k (Whe... |
725 | Acquiring first office clothes | [
{
"docid": "430005",
"text": "Sounds like you're a man, so you're in luck. Our formalwear all looks similar enough that you can get by on a very short rotation. You can buy 1 pair of decent slacks in a versatile color like navy or grey with a pair of brown shoes with matching belt then have as little as 2 b... | [
{
"docid": "86147",
"text": "\">I'm playing devil's advocate mostly I should hope so, because it seems disingenuous to suggest that viewing \"\"tons of photos\"\" is equivalent to seeing and touching something in real life, particularly shoes or clothes. Also, say, for example, you go to your local sho... |
2552 | Does cash back apply to online payments with credit card | [
{
"docid": "451897",
"text": "\"Retail purchases are purchases made at retail, i.e.: as a consumer/individual customer. That would include any \"\"standard\"\" individual expenditure, but may exclude wholesale sales or purchases from merchants who identify themselves as service providers to businesses. Spec... | [
{
"docid": "526989",
"text": "\"Not only does the interest get charged from Day 1 on new purchases as long as you have a revolving balance, but the credit card agreement often says something to the effect that any partial payment is applied first to the interest to date, and then transfer balances on which... |
7704 | What exactly is the profit and loss of a portfolio? | [
{
"docid": "168006",
"text": "When we 'delta-hedge', we make the value of a portfolio 0. No - you make the risk relative to some underlying 0. The portfolio does have a value, but if whatever underlying you're hedging against changes slightly the value of your portfolio should not change. But, what is the... | [
{
"docid": "259084",
"text": "Diversification is used by many to hopefully reduce the risk when bad investments are made. Diversification does not help you make more profits but instead averages down your profits. There is no way one can tell whether a stock or portfolio of stocks will go up or down once th... |
3846 | What is a “convertible note”? | [
{
"docid": "87696",
"text": "Source, see if you have access to it Convertible notes are often used by angel investors who wish to fund businesses without establishing an explicit valuation of the company in which they are investing. When an investor purchases equity in a startup, the purchase price of th... | [
{
"docid": "519845",
"text": "\"A \"\"fiat\"\" currency is non-convertible paper currency that a government establishes as legal tender. Most countries today are using fiat currencies. The rest have currencies pegged (or convertible to) US Dollars (which is a fiat currency). In the past, money was usually b... |
3142 | How to shop for mortgage rates ? | [
{
"docid": "115111",
"text": "\"You can shop for a mortgage rate without actually submitting a mortgage application. Unfortunately, the U.S. Government has made it illegal for the banks to give you a \"\"good faith estimate\"\" of the mortgage cost and terms without submitting a mortgage application. On t... | [
{
"docid": "264586",
"text": "\"I guess I don't understand how you figure that taking out a car loan for $20k will result in adding $20k in equity. A car loan is a liability, not an asset like your $100k in cash. Besides, you don't get a dollar-for-dollar consideration when figuring a car's value against ... |
10056 | Where can I get AEX historical data - Amsterdam? | [
{
"docid": "468490",
"text": "\"Try the general stock exchange web page. http://www.aex.nl I did a quick trial myself and was able to download historical data for the AEX index for the last few years. To get to the data, I went to the menu point \"\"Koersen\"\" on the main page and chose \"\"Indices\"\". I... | [
{
"docid": "23115",
"text": "I understand what the headline is trying to say, but there is more to Amsterdam than just pot (and prostitutes). Amsterdam is a super cool and historic place with great people and culture. Vegas is just... Well it is Vegas. They really aren't alike, and pot dens aren't going to ... |
1973 | How do LLC losses affect personal income taxes in the US? | [
{
"docid": "373481",
"text": "The short answer is yes, losses get passed through to members. Limits/percentages do apply, primarily based on your share in the business. Check out the final post in this thread: http://community2.business.gov/t5/Other-Business-Issues/Paying-oneself-in-a-LLC/td-p/16060 It's ... | [
{
"docid": "299211",
"text": "\"-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items t... |
5240 | 1099-MISC vs K-1 — duplicated numbers? | [
{
"docid": "435798",
"text": "Well, you won't be double taxed based on what you described. Partners are taxed on income, typically distributions. Your gain in the partnership is not income. However, you were essentially given some money which you elected to invest in the partnership, so you need to pay tax ... | [
{
"docid": "57229",
"text": "Your clients should not send you 1099-MISC if they paid with a credit card. You can refer them to this text in the instructions for the form 1099-MISC: Payments made with a credit card or payment card and certain other types of payments, including third party network transacti... |
2991 | Self assessment expenses - billing date or payment date? | [
{
"docid": "457013",
"text": "Unless you're running a self-employed business with a significant turnover (more than £150k), you are entitled to use cash basis accounting for your tax return, which means you would put the date of transactions as the payment date rather than the billing date or the date a deb... | [
{
"docid": "188530",
"text": "You definitely have an argument for getting them to reverse the late fee, especially if it hasn't happened very often. (If you are late every month they may be less likely to forgive.) As for why this happens, it's not actually about business days, but instead it's based on whe... |
1081 | Side effects associated with antidepressants do not represent a mortality risk to postmenopausal women. | [
{
"docid": "5691302",
"text": "OBJECTIVES To investigate the association between antidepressant treatment and risk of several potential adverse outcomes in older people with depression and to examine risks by class of antidepressant, duration of use, and dose. DESIGN Cohort study of people aged 65 and over ... | [
{
"docid": "16701509",
"text": "BACKGROUND The prevalence of metabolic syndrome (obesity, glucose intolerance, low serum high-density lipoprotein cholesterol [HDL-C], high serum triglycerides, hypertension) is high and increasing in parallel with an increasing breast cancer incidence worldwide. HDL-C repres... |
946 | Physical activity level is associated with the difference in maximal oxygen consumption between black and white youth. | [
{
"docid": "13083189",
"text": "OBJECTIVES Despite recognition of the important influence of environmental determinants on physical activity patterns, minimal empirical research has been done to assess the impact of environmental/contextual determinants of physical activity. This article aims to investigate... | [
{
"docid": "18537148",
"text": "The purpose of this investigation was to determine whether maximal oxygen consumption (VO2max) differed between two selected groups of black and white children and whether a difference existed to determine whether it was related to hematologic profiles, body composition, and/... |
7755 | Does VSMAX invest in smaller companies than FSEVX? | [
{
"docid": "472067",
"text": "You are comparing apples and oranges: the charts show the capital appreciation excluding dividends. If you include dividends and calculate a total return over that period you see VSMAX up 132% vs. FSEVX up 129%, i.e. quite close. That residual difference is possibly due to a pe... | [
{
"docid": "512381",
"text": "\"> can I use venture like that in a financial context, or does it refer specifically to venture capital? Yes, any business is a \"\"venture\"\" so to speak. > so they would receive a smaller return, yes? POSSIBLY yes. Mezzanine investors are, well, \"\"middle\"\" in... |
7363 | How splits and dividends affect option prices | [
{
"docid": "453582",
"text": "\"Investopedia explains how a stock split impacts the stock's options: Each option contract is typically in control of 100 shares of an underlying security at a predetermined strike price. To find the new coverage of the option, take the split ratio and multiply by the old cove... | [
{
"docid": "315748",
"text": "When dividend is announced the stock and option price may react to that news, but the actual payout of the dividend on the ex-dividend date is what you probably are referring to. The dividend payout affects the stock price on the ex-dividend date as the stock price will drop by... |
2162 | VAT and German freelance working on international project | [
{
"docid": "484352",
"text": "\"11 / 111 / 11111 looks like the (old) tax number: it is used by the tax office to know who you are, it isn't good at all for the spanish company. It would even change when you move inside Germany. VAT IDs are not exclusive to GmbHs (but a GmbH always has one). As freelancers... | [
{
"docid": "573821",
"text": "Being a CTO is different than freelancing, obviously. You have to ask yourself what you would more prefer to do! My initial recommendation would be to receive your normal freelance compensation for the freelance work you do AND separately deal with the issue of being a CTO. A... |
2573 | What effect would a company delisting from the LSE to move to china have on shareholders? | [
{
"docid": "404852",
"text": "Source Rule 41 of the AIM Rules sets out the procedure for delisting. In summary, a company that wishes to cancel the right of any of its trading securities must: The notification to the Exchange should be made by the company’s nominated adviser and should be given at least 20... | [
{
"docid": "592484",
"text": "\"Such data is typically only available from paid sources due to the amount of research involved in determining the identity of delisted securities, surviving entities in merger scenarios, company name changes, symbol changes, listing venue changes, research of all capital even... |
4802 | How exactly could we rank or value how “rich” a company brand is? | [
{
"docid": "265447",
"text": "\"Matt explains the study numbers in his answer, but those are the valuation of the brand, not the value of the company or how \"\"rich\"\" the company is. Presuming that you're asking the value of the company, the usual way for a publicly traded company to be valued is by th... | [
{
"docid": "130687",
"text": "His 'brand' is exactly the point of my original post, not so much his career as a cyclist. His name is tarnished, but to what extent? Consequently, for marketing purposes, I think a discussion of exactly how much does it matter? Yes he has been defamed, but he is still recogniz... |
4975 | Solid reading/literature for investment/retirement/income taxes? | [
{
"docid": "136825",
"text": "For the mechanices/terms of stock investing, I recommend Learn to Earn by Peter Lynch. I also like The Little Book of Common Sense Investing by John Bogle. It explains why indexing is the best choice for most people. For stock picking, a good intro is The Little Book of Value I... | [
{
"docid": "241423",
"text": "\"See Solid reading/literature for investment/retirement/income taxes? – not exactly the same question, but a great reading list for you. You are putting the cart before the horse here, first, you learn, then you invest. There's a large danger in confusing intelligent investing... |
34 | A deficiency of folate increases blood levels of homocysteine. | [
{
"docid": "11705328",
"text": "BACKGROUND Lowering serum homocysteine levels with folic acid is expected to reduce mortality from ischemic heart disease. Homocysteine reduction is known to be maximal at a folic acid dosage of 1 mg/d, but the effect of lower doses (relevant to food fortification) is unclear... | [
{
"docid": "42441846",
"text": "INTRODUCTION Elevated plasma total homocysteine is a major risk for coronary artery disease (CAD). Methyltetrahydrofolate reductase (MTHFR) is a main regulatory enzyme in homocysteine metabolism; a common C677T mutation in the MTHFR gene results in decreased enzyme activity, ... |
5758 | Impact on Credit Worthiness (Getting A Loan with a Co-signer vs without) | [
{
"docid": "369075",
"text": "It doesn't matter to the credit agencies if there is a co-signer or not. However, your family member will need to take into consideration if they are willing to be responsible for the loan in the event you are unable to make payments. Being a co-signer means they are agreeing t... | [
{
"docid": "453263",
"text": "Is your name on the title at all? You may have (slightly) more leverage in that case, but co-signing any loans is not a good idea, even for a friend or relative. As this article notes: Generally, co-signing refers to financing, not ownership. If the primary accountholder fail... |
5566 | How do I factor dividends and yield into the performance of a security? | [
{
"docid": "140769",
"text": "Instead of a price chart can use a performance chart, which is usually expressed as a percentage increase from the original purchase price. To factor in the dividends, you can either add in all of your dividends to the final price, or subtract the accumulated dividends from yo... | [
{
"docid": "495600",
"text": "\"Question 1: How do I start? or \"\"the broker\"\" problem Get an online broker. You can do a wire transfer to fund the account from your bank. Question 2: What criticism do you have for my plan? Dividend investing is smart. The only problem is that everyone's currently doin... |
1116 | Faster degree with debt or slower degree with no debt? | [
{
"docid": "242501",
"text": "Basically do some math on the 2 schools. Let's say you know it will take 4 years if you go the cheaper route, at $8k/yr, plus the $300/month, total cost: $46,400. If you (for these purposes) do not have to pay back new loans until school is completed, (and depending on the rate... | [
{
"docid": "6537",
"text": "When coming to that conclusion, you only consider half of the facts. Yes, all money is debt. But what you miss is that there are other values and assets out there, not just money. These actually match each other to some degree. If the value of all these other assets grow at the ... |
639 | Sage Instant Accounts or Quickbooks? | [
{
"docid": "78117",
"text": "The company I work with uses Intuit QuickBooks Online and have had zero problems with it. The functionality is effective and it fits the size of our company as well. (Not huge, but I wouldn't consider it a 'small business') Also, you can try a 30 day free trial. QuickBooks Simpl... | [
{
"docid": "24890",
"text": "\"Since this is a cooperative I'm guessing your partners may want to be able to view the books so another key point you may want to consider is collaboration. QuickBooks desktop has all of these same issues because it is meant to be used on a single desktop. We're in an age of ... |
568 | In a naive state, blocking Wingless-Int-1 secretion from mouse embryonic stem cells inhibits self-renewal of the mouse embryonic stem cells. | [
{
"docid": "23418635",
"text": "Pluripotent stem cells exist in naive and primed states, epitomized by mouse embryonic stem cells (ESCs) and the developmentally more advanced epiblast stem cells (EpiSCs; ref. ). In the naive state of ESCs, the genome has an unusual open conformation and possesses a minimum ... | [
{
"docid": "6441369",
"text": "The interconversion between naive and primed pluripotent states is accompanied by drastic epigenetic rearrangements. However, it is unclear whether intrinsic epigenetic events can drive reprogramming to naive pluripotency or if distinct chromatin states are instead simply a re... |
4137 | My bank wants to lower my credit limit on my credit card. Will this impact me negatively? | [
{
"docid": "264341",
"text": "Will having a lower credit limit, which I will still never reach, negatively impact my ability to get a mortgage in future? This would increase your utilization, the percentage of your total available credit that you use at any one time. Because it decreases the divisor, your ... | [
{
"docid": "348313",
"text": "I wouldn't say you should have any particular limit, but it can't hurt to have a higher limit. I'd always accept the increase when offered, and feel free to request it sometimes, just make sure you find out if it will be a hard or soft inquiry, and pass on the hard inquires. Fr... |
2901 | What percent of your portfolio should be in a money market account? | [
{
"docid": "295155",
"text": "I would disagree with your analysis. To me there are two purposes for a money market (MM): Your emergency fund should be from 3 to 6 months of expenses. Think of it of an insurance policy against Murphy. You may want to have some money designated for big expenses, or even si... | [
{
"docid": "542795",
"text": "So I did some queries on Google Scholar, and the term of art academics seem to use is target date fund. I notice divided opinions among academics on the matter. W. Pfau gave a nice set of citations of papers with which he disagrees, so I'll start with them. In 1969, Paul Sameul... |
9949 | Most important skills needed to select profitable stocks | [
{
"docid": "376179",
"text": "Coolness - It's not only a matter of staying calm when being up or down. You must keep yourself from chasing a stock that appears to be running away. Or from betting all your money that something(like say a crash) will happen tomorrow because that would be great for you. Use yo... | [
{
"docid": "160170",
"text": "What explains the most of the future returns of a portfolio is the allocation between asset classes. In the long term, stock investments are almost certain to return more than any other kinds of investments. For 40+ years, I would choose a portfolio of 100% stocks. How to const... |
7793 | Can you sell stocks/commodities for any price you wish (either direct or market)? | [
{
"docid": "96807",
"text": "\"You answered your own question \"\"whether someone buys is a different thing\"\". You can ask any price that you want. (Or given an electronic brokerage, you can enter the highest value that the system was designed to accept.) The market (demand) will determine whether anyone ... | [
{
"docid": "212685",
"text": "At any point of time, buyer wants to purchase a stock at lesser price and seller wants to sell the stock at a higher price. Let's consider this scenario Company XYZ is trading at 100$, as stated above buyer wants to purchase at lower price and seller at higher price, this inf... |
1314 | Transcription rates in S. cerevisiae range between 0.7 and 2 kb/min. | [
{
"docid": "13072112",
"text": "A number of proteins and drugs have been implicated in the process of transcriptional elongation by RNA polymerase (Pol) II, but the factors that govern the elongation rate (nucleotide additions per min) and processivity (nucleotide additions per initiation event) in vivo are... | [
{
"docid": "43566999",
"text": "This study was designed to determine the influence of a long-term, moderate-intensity treadmill training program on the distribution of blood flow within and among muscles of rats during exercise. One group (T) of male Sprague-Dawley rats trained for 1 h/day for 13-17 wk at 3... |
817 | Myelin sheaths are lipid-rich cellular structures. | [
{
"docid": "17814815",
"text": "We report a newly developed technique for high-resolution in vivo imaging of myelinated axons in the brain, spinal cord and peripheral nerve that requires no fluorescent labeling. This method, based on spectral confocal reflectance microscopy (SCoRe), uses a conventional lase... | [
{
"docid": "27731651",
"text": "The bacterial type VI secretion system (T6SS) is an organelle that is structurally and mechanistically analogous to an intracellular membrane-attached contractile phage tail. Recent studies determined that a rapid conformational change in the structure of a sheath protein com... |
9203 | Are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option? | [
{
"docid": "236176",
"text": "In the first case, if you wish to own the stock, you just exercise the option, and buy it for the strike price. Else, you can sell the option just before expiration, it will be priced very close to its in-the-money value.",
"title": ""
},
{
"docid": "477011",
"t... | [
{
"docid": "118360",
"text": "First, it depends on your broker. Full service firms will tear you a new one, discount brokers may charge ~nothing. You'll have to check with your broker on assignment fees. Theoretically, this is the case of the opposite of my answer in this question: Are underlying assets s... |
6590 | bid & ask prices and technical indicators | [
{
"docid": "459052",
"text": "If you are looking to go long (buy) you would use bid prices as this is what you will be matched against for your order to be executed and a trade to go through. If you are looking to go short (sell) you would use the ask prices as this is what you will be matched against for y... | [
{
"docid": "351518",
"text": "Bid and ask prices of stocks change not just daily, but continuously. They are, as the names suggest, what price people are asking for to be willing to sell their stock, and how much people are bidding to be willing to buy it at that moment. Your equation is accurate in theory... |
6626 | Diversify or keep current stock to increase capital gains | [
{
"docid": "30774",
"text": "The biggest challenge with owning any individual stock is price fluctuation, which is called risk. The scenarios you describe assume that the stock behaves exactly as you predict (price/portfolio doubles) and you need to consider risk. One way to measure risk in a stock or in a ... | [
{
"docid": "584304",
"text": "\"You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams. ... |
3012 | Why buy insurance? | [
{
"docid": "57325",
"text": "The odds could very well be in your favor, even when the insurance company expects profit. What matters to you is not the expected amount of money you'll have, but the expected amount of utility you'll get from it: getting enough money to buy food to eat is much more important t... | [
{
"docid": "65344",
"text": "The reason people buy earthquake insurance is not because normal insurance goes straight to the lender (it does not) but because oftentimes earthquake damage is not covered under normal homeowner's insurance. Natural disasters are often not covered under regular insurance. This ... |
11019 | Forex vs day trading for beginner investor | [
{
"docid": "506078",
"text": "Forex vs Day Trading: These can be one and the same, as most people who trade forex do it as day trading. Forex is the instrument you are trading and day trading is the time frame you are doing it in. If your meaning from your question was comparing trading forex vs stocks, the... | [
{
"docid": "316497",
"text": "\"When trading Forex each currency is traded relative to another. So when shorting a currency you must go long another currency vs the currency you are shorting, it seems a little odd and can be a bit confusing, but here is the explanation that Wikipedia provides: An example of... |
448 | Gastric infection with Helicobacter pylori increases risk of gastric cancer in humans. | [
{
"docid": "2052720",
"text": "OBJECTIVE To investigate the association between gastric cancer and prior infection with Helicobacter pylori. DESIGN Case-control comparison of prevalence of IgG antibodies to H pylori in blood samples collected prospectively, before diagnosis of gastric cancer in the cases. P... | [
{
"docid": "24705390",
"text": "BACKGROUND & AIMS Helicobacter pylori is an important etiologic factor in the development of gastric cancer. The aim of this study was to analyze the role of H. pylori infections in the induction of mutagenic events in gastric epithelial cells. The effect of a high-salt diet ... |
8466 | In what ways is IEX different than a typical dark pool or a typical exchange? | [
{
"docid": "285643",
"text": "You've said what's different in your question. There's 330 microseconds of network latency between IEX and anywhere else, so HFTs can't get information about trades in progress on IEX and use it to jump in ahead of those traders on other exchanges. All exchanges should have art... | [
{
"docid": "202829",
"text": "\"Pay to play? You mean they pay for beefier data feeds that other firms don't need, sure they do. But everyone can trade on the US exchanges now (NYSE, NASDAQ, BATS, etc) which was not true 20 years ago when NYSE had the specialist monopoly, so yes the markets are more democra... |
6585 | How to correctly track a covered call write (sell to open) in double-entry accounting? | [
{
"docid": "538505",
"text": "I skimmed the answer from mirage007, and it looked correct if you're going to set this up from scratch. Since you said you already have a system for tracking stocks, however, maybe you'd prefer to use that. It should handle almost everything you need: Note that only the last ... | [
{
"docid": "355450",
"text": "Thanks for your reply. I’m not familiar with the term “Held-For-Trading Security”. My securities are generally held as collateral against my shorts. To clarify, I am just trying to track the “money in” and “money out” entries in my account for the shorts I write. The transactio... |
933 | Pediatric SCD patients with vaso-occlusive crisis show increased morphine use after breathing 80 ppm iNO for 4 hours. | [
{
"docid": "14711483",
"text": "CONTEXT Vaso-occlusion is central to the painful crises and acute and chronic organ damage in sickle cell disease. Abnormal nitric oxide-dependent regulation of vascular tone, adhesion, platelet activation, and inflammation contributes to the pathophysiology of vaso-occlusion... | [
{
"docid": "29947146",
"text": "BACKGROUND Obesity is an epidemic that affects 1 in 3 individuals in the United States, and recent evidence suggests that enteric microbiota may play a significant role in the development of obesity. This study evaluated the association between methanogenic archaea and obesit... |
7672 | What are the taxes for trading debt/equity in India? | [
{
"docid": "507276",
"text": "\"Are these all of the taxes or is there any additional taxes over these? Turn-over tax is not for retail investors. Other taxes are paid by the broker as part of transaction and one need not worry too much about it. Is there any \"\"Income tax\"\" to be paid for shares bought/... | [
{
"docid": "457968",
"text": "Under what section do I declare my profits when I pay tax? You have to declare this as income from other source and pay tax as per tax brackets. I'm from India and have been trading in binary options for a while now Trading in India on binary options is illegal. If you are usin... |
3361 | Should I be worried that I won't be given a receipt if I pay with cash? | [
{
"docid": "258504",
"text": "In some states, it is your responsibility to pay the sales tax on a transaction, even if the party your purchase from doesn't collect it. This is common with online purchases across state lines; for example, here in Massachusetts, if I buy something from New Hampshire (where th... | [
{
"docid": "85252",
"text": "\"In this answer, I won't elaborate on the possibilities of fraud (or pure human error), because something can always go wrong. I will, however, explain why I think you should always keep receipts. When the (monthly or so) time comes to pay your credit card bill, your credit car... |
342 | Diabetic patients with acute coronary syndrome experience decreased short-term and long-term risk for bleeding events. | [
{
"docid": "5884524",
"text": "BACKGROUND Although unstable coronary artery disease is the most common reason for admission to a coronary care unit, the long-term prognosis of patients with this diagnosis is unknown. This is particularly true for patients with diabetes mellitus, who are known to have a high... | [
{
"docid": "19308127",
"text": "BACKGROUND P2Y12 inhibitor switching has appeared in clinical practice as a consequence of prasugrel and ticagrelor availability, apart from clopidogrel, for use in patients with acute coronary syndrome (ACS) undergoing percutaneous coronary intervention (PCI). METHODS In the... |
394 | Excess gestational weight gain is associated with obesity-related pregnancy outcomes. | [
{
"docid": "11360768",
"text": "OBJECTIVE To evaluate the effects of dietary and lifestyle interventions in pregnancy on maternal and fetal weight and to quantify the effects of these interventions on obstetric outcomes. DESIGN Systematic review and meta-analysis. DATA SOURCES Major databases from inception... | [
{
"docid": "70455704",
"text": "As women of childbearing age have become heavier, the trade-off between maternal and child health created by variation in gestational weight gain has become more difficult to reconcile. Weight Gain During Pregnancy responds to the need for a reexamination of the 1990 Institut... |
5111 | Will refinancing my auto loan hurt my mortgage approval or help it? | [
{
"docid": "222476",
"text": "\"Generally it is not recommended that you do anything potentially short-term deleterious to your credit during the process of seeking a mortgage loan - such as opening a new account, closing old accounts, running up balances, or otherwise applying for any kind of loan (people ... | [
{
"docid": "230297",
"text": "\"tl;dr: Your best course of action is probably to do a soft pull (check your own credit) and provide that to the lender for an unofficial pre-approval to get the ball rolling. The long of it: The loan officer is mostly correct, and I have recent personal evidence that corrobor... |
4769 | Free, web-based finance tracking with tag/label support? | [
{
"docid": "188695",
"text": "hledger fits your criteria, have you tried it ? Here's the web interface.",
"title": ""
},
{
"docid": "103125",
"text": "Mint.com does all of that (except for the cash at hand).",
"title": ""
}
] | [
{
"docid": "239484",
"text": "The short answer is that there are no great personal finance programs out there any more. In the past, I found Microsoft Money to be slick and feature rich but unfortunately it has been discontinued a few years ago. Your choices now are Quicken and Mint along with the several ... |
5538 | Any good software for value investment? | [
{
"docid": "201771",
"text": "As @littleadv and @DumbCoder point out in their comments above, Bloomberg Terminal is expensive for individual investors. If you are looking for a free solution I would recommend Yahoo and Google Finance. On the other side, if you need more financial metrics regarding historic... | [
{
"docid": "494808",
"text": "Interesting. When you say DIY you mean pencil and paper. For most of us the choice came down to using a professional vs using the software. Your second bullet really hits the point. The tax return is a giant spreadsheet with multiple cells depending on each other. Short of bui... |
4361 | What is inflation? | [
{
"docid": "204711",
"text": "Money itself has no value. A gold bar is worth (fuzzy rushed math, could be totally wrong on this example figure) $423,768.67. So, a 1000 dollars, while worthless paper, are a token saying that you own %.2 of a gold bar in the federal reserve. If a billion dollars are printed, ... | [
{
"docid": "117578",
"text": "\"Inflation is an attempt to measure how much less money is worth. It is a weighted average of some bundle of goods and services price's increase. Money's value is in what you can exchange it for, so higher prices means money is worth less. Monthly inflation is quoted either a... |
3084 | What Did Benjamin Graham Mean by Earnings Stability in The Intelligent Investor? | [
{
"docid": "217749",
"text": "\"Yes - this is exactly what it means. No losses (negative earnings). With today's accounting methods, you might want to determine whether you view earnings including or excluding extraordinary items. For example, a company might take a once-off charge to its earnings when... | [
{
"docid": "526015",
"text": "The Motley Fool's How to Invest How To Invest Benjamin Graham's The Intelligent Investor The Intelligent Investor If you like The Intelligent Investor then try Benjamin's Security Analysis. But that one is not a beginner book.",
"title": ""
},
{
"docid": "112411",
... |
6975 | What is Bearish Bar Reversal? | [
{
"docid": "196461",
"text": "What it is trying to describe is the psychology around the current price of the stock. In candlestick charts for example, if you get what is called a Bearish Engulfing Candle (where the open is higher than the previous day's close and the close is lower than the previous day's... | [
{
"docid": "58882",
"text": "\"Each candlestick in a candlestick chart represents the open, close, high and low for a period of time. If you are looking at a daily chart it represents the open price, close price, high price and low price for that day. If you are looking at an hourly chart, then a single can... |
3191 | Does the profit of a company directly affect its stock or indirectly by causing people to buy or sell? | [
{
"docid": "236611",
"text": "people implicity agree to sell stocks when a company does bad But, remember, when you sell the stock of a company that, in your estimation, 'did bad', someone else had to buy; otherwise, there is no sale. The someone else who bought your shares evidently disagrees with your ass... | [
{
"docid": "332323",
"text": "Stock trading (as opposed to IPO) doesn't directly benefit the company. But it affects their ability to raise additional funds; if they're valued higher, they don't need to sell as many shares to raise a given amount of money. And the stockholders are part owners of the compan... |
2606 | Where to categorize crypto-currencies | [
{
"docid": "594655",
"text": "\"Forex. I will employ my skill for \"\"suspension of disbelief\"\" and answer with no visceral reaction to Bitcoin itself. The Euro is not an 'investment.' It's a currency. People trade currencies in order to capture relative movements between pairs of currencies. Unlike stock... | [
{
"docid": "413676",
"text": "\"There was recently a Chinese temporary ban of crypto currency platform ICOs, followed by a bunch of fake news of crypto currencies being banned, then some uncertainty instilling official statements. China is improving regulation and oversight for crypto currency exchanges and... |
7375 | Should I sell my stocks to reduce my debt? | [
{
"docid": "53047",
"text": "Obviously, you should not buy stock when the option is to pay down your debt. However, your question is different. Should you sell to reduce debt. That really depends on your personal situation. If you were planning to sell the stock anyway, go ahead and reduce your loans. Check... | [
{
"docid": "279606",
"text": "Reading IRS Regulations section 15a.453-1(c) more closely, I see that this was a contingent payment sale with a stated maximum selling price. Therefore, at the time of filing prior years, there was no way of knowing the final contingent payment would not be reached and thus the... |
5931 | Are there statistics showing percentage of online brokerage customers that are actually making a profit trading forex/futures/options? | [
{
"docid": "76466",
"text": "\"It looks like these types of companies have to disclose the health of their accounts to CFTC (Commodity Futures Trading Commission). That is the gist I get at least from this article about the traders that lost money due to the Swiss removing the franc’s cap against the euro. ... | [
{
"docid": "18855",
"text": "\"Without knowing what you are trying to achieve - make a bit of pocket money, become financially independent, invest for retirement, learn trading to become a trader - I'll give you a few thoughts ... The difficulty you will have trading with $400-600 is that brokerage will be... |
1426 | Are in-kind donations from my S-Corp tax-deductible in any way? | [
{
"docid": "310612",
"text": "\"You should probably have a tax professional help you with that (generally advisable when doing corporation returns, even if its a small S corp with a single shareholder). Some of it may be deductible, depending on the tax-exemption status of the recipients. Some may be deduct... | [
{
"docid": "396968",
"text": "Basically, no. You have retirement plan options and can either go with a Roth option, which won't change your current tax burden, or go with a traditional plan, which is tax deductible but won't change your business deductions or self-employment taxes. This article has an expl... |
2538 | Buying a home with down payment from family as a “loan” | [
{
"docid": "591163",
"text": "Lenders pay attention to where your down payment money comes from. If they see a large transfer of money into your bank account within about a year before your purchase, this WILL cause an issue for you. Down payments are not just there to make the principal smaller; they are p... | [
{
"docid": "358795",
"text": "\"The loan-to-value ratio (LTV Ratio) is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. It sounds like your lender has a 60% requirement. Remember the home is the collateral for the loan. If you stop making p... |
164 | Bariatric surgery increases rates of colorectal cancer. | [
{
"docid": "5824985",
"text": "BACKGROUND Bariatric surgery is becoming a more widespread treatment for obesity. Comprehensive evidence of the long-term effects of contemporary surgery on a broad range of clinical outcomes in large populations treated in routine clinical practice is lacking. The objective o... | [
{
"docid": "18872233",
"text": "IMPORTANCE Bariatric surgery is associated with sustained weight loss and improved physical health status for severely obese individuals. Mental health conditions may be common among patients seeking bariatric surgery; however, the prevalence of these conditions and whether t... |
6816 | Is it possible that for shares to be reinvested in a stock you already sold? | [
{
"docid": "501931",
"text": "I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more befor... | [
{
"docid": "596518",
"text": "I was not able to find any authority for the opinion you suggest. Wash sale rules should, IMHO, apply. According to the regulations, you attribute the newly purchased shares to the oldest sold shares for the purposes of the calculation of the disallowed loss and cost basis. (c)... |
1110 | Recourse with Credit Card company after victimized by fraud? | [
{
"docid": "322428",
"text": "\"I agree that you shouldn't give up trying to get your money back, but I strongly feel that this is not sufficient. If they are trying to victimize you, they are trying to victimize others. Taking care of getting your own money back should be your top concern, but contacting ... | [
{
"docid": "197093",
"text": "\"This question has the [united kingdom] tag, so the information about USA or other law and procedures is probably only of tangential use. Except for understanding that no, this is not something to ignore. It may well indicate someone trying to use your id fraudulently, or some... |
934 | Perigenital skin is not the primary site of HIV acquisition. | [
{
"docid": "8563659",
"text": "To explore the mechanism by which herpes simplex virus (HSV)-2 infection is related to HIV-1 acquisition, we conducted in situ analysis of the cellular infiltrate from sequential biopsies of HSV-2 lesions from patients on and off antiviral therapy. CD4(+) and CD8(+) T cells an... | [
{
"docid": "28821565",
"text": "To prevent acquisition of HIV through oral sex, drugs used for preexposure prophylaxis (Prep) need to diffuse in saliva. We measured tenofovir (TFV) and emtricitabine (FTC) concentrations simultaneously in the plasma and saliva of 41 HIV-infected patients under stable antiret... |
1456 | Will I have to pay taxes for Australia if I have an Australian bank account? | [
{
"docid": "12906",
"text": "\"If you are a resident of New Zealand for tax purposes, you will be taxed in New Zealand on all of your \"\"worldwide income\"\". This is income derived from New Zealand as well as income derived from all other countries Source: http://www.ird.govt.nz/international/nzwithos/inc... | [
{
"docid": "21130",
"text": "I'm having a difficult time understanding how Chevron is avoiding taxes through party related loans. From my understanding, Chevron is providing loans to its Australian subsidiary at interest rates higher than market benchmarks. Does this shift profits from Australia to the U.S.... |
225 | Cancer-associated fibroblasts (CAFs) have no known interaction with cancer cells in the formation and activation of CAFs. | [
{
"docid": "6944800",
"text": "Cancers develop in complex tissue environments, which they depend on for sustained growth, invasion and metastasis. Unlike tumor cells, stromal cell types within the tumor microenvironment (TME) are genetically stable and thus represent an attractive therapeutic target with re... | [
{
"docid": "3727986",
"text": "Cancer-associated fibroblasts (CAFs) promote tumour invasion and metastasis. We show that CAFs exert a physical force on cancer cells that enables their collective invasion. Force transmission is mediated by a heterophilic adhesion involving N-cadherin at the CAF membrane and ... |
9567 | Compute average price even if I do not have the prices before | [
{
"docid": "289429",
"text": "What I do have is this (sample only): Stock X: Average Price of all I purchased before = 80 Total Shares = 200 So if Stock X's price today is 100 how do I know how much my average price will be? Using your sample if you buy 100 new shares and the price is 85 for the purpose of ... | [
{
"docid": "146926",
"text": "\"You have actually asked several questions, so I think what I'll do is give you an intuition about risk-neutral pricing to get you started. Then I think the answer to many of your questions will become clear. Physical Probability There is some probability of every event out t... |
708 | What are the tax implications if I do some work for a company for trade, rather than pay? | [
{
"docid": "513362",
"text": "Yes, the business can count that as an expense but you will need to count that as income because a computer = money.",
"title": ""
},
{
"docid": "338439",
"text": "Bartering is a tricky discussion. Yes, it definitely applies when you are self-employed and do a j... | [
{
"docid": "5188",
"text": "Basically you have 4 options: Use your cash to pay off the student loans. Put your cash in an interest-bearing savings account. Invest your cash, for example in the stock market. Spend your cash on fun stuff you want right now. The more you can avoid #4 the better it will be for ... |
6853 | Incentive Stock Option (ISO) tax question - more specific this time | [
{
"docid": "570112",
"text": "\"I've bought ISO stock over they years -- in NYSE traded companies. Every time I've done so, they've done what's called \"\"sell-to-cover\"\". And the gubmint treats the difference between FMV and purchase price as if it's part of your salary. And for me, they've sold some ... | [
{
"docid": "193717",
"text": "\"You mention \"\"early exercise\"\" in your title, but you seem to misunderstand what early exercise really means. Some companies offer stock options that vest over a number of years, but which can be exercised before they are vested. That is early exercise. You have vested st... |
2323 | Tax deductions on empty property | [
{
"docid": "275543",
"text": "This doesn't sound very legal to me. Real estate losses cannot generally be deducted unless you have other real estate income. So the only case when this would work is when that person has bunch of other buildings that do produce income, and he reduces that income, for tax purp... | [
{
"docid": "277353",
"text": "If you have multiple accounts, you have to empty them all before you can deduct any losses. Your loss is not a capital loss, its a deduction. It is calculated based on the total amount you have withdrawn from all your Roth IRA's, minus the total basis. It will be subject to the... |
6969 | How can I buy shares of oil? I'm told it's done through ETFs. How's that related to oil prices per barrel? | [
{
"docid": "519025",
"text": "The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day. You can typically sell these futures anytime (if you find some... | [
{
"docid": "102698",
"text": "\"Anthony Russell - I agree with JohnFx. Petroleum is used in making many things such as asphalt, road oil, plastic, jet fuel, etc. It's also used in some forms of electricity generation, and some electric cars use gasoline as a backup form of energy, petrol is also used in ele... |
10464 | How to interpret a 1,372.55% dividend payout ratio (GSK)? | [
{
"docid": "558635",
"text": "I don't think it makes sense to allow accounting numbers that you are not sure how to interpret as being a sell sign. If you know why the numbers are weird and you feel that the reason for it bodes ill about the future, and if you think there's a reason this has not been accou... | [
{
"docid": "458345",
"text": "Great answers. Here's my two cents: First, don't forget to look at the overall picture, not just the dividend. Study the company's income statement, balance sheet and cash flow statement for the last few years. Make sure they have good earnings potential, and are not carrying t... |
7501 | Risk and reward of a synthetic option position | [
{
"docid": "517873",
"text": "You sold a call, and have a risk if the stock rises. You bought a put and gain when the stock drops. You, sir, have a synthetic short position. It's Case 3 from your linked example: Suppose you own Long Stock and the company is going to report earnings but you’re going on v... | [
{
"docid": "374797",
"text": "\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, ... |
7904 | Did an additional $32 billion necessarily get invested into Amazon.com stock on October 26th, 2017? | [
{
"docid": "177424",
"text": "\"No, a jump in market capitalization does not equal the amount that has been invested. Market cap is simply the stock price times the total number of shares. This represents a theoretical value of the company. I say \"\"theoretical\"\" because the company might not be able to... | [
{
"docid": "505331",
"text": "Amazon to Buy Whole Foods for $13.7 Billion - Whole Foods will continue to operate stores under its brand. By Austen Hufford - Jun 16, 2017 - Bloomberg News Amazon.com Inc. said it would buy Whole Foods Market Inc. for $13.7 billion as the giant internet retailer makes a deep... |
4206 | When will the U.K. convert to the Euro as an official currency? | [
{
"docid": "111266",
"text": "When economies are strong, it is particularly alluring to have a single currency as it makes trade and tourism simpler and helps reduce costs. The problem comes when individual member economies get into trouble. Because the Eurozone is a loose grouping of nations, there is no d... | [
{
"docid": "586772",
"text": "Citizens of India who are not residents to India (have NRI status) are not entitled to have ordinary savings accounts in India. If you have such accounts (e.g. left them behind to support your family while you are abroad), they need to be converted to NRO (NonResident Ordinary... |
763 | What can I expect to pay when meeting my first financial planner? | [
{
"docid": "32385",
"text": "My suggestion would be to ask the planner as an initial question as there could be a couple possible explanations for a free meeting: Initial consultation - Within some industries there will be that first meeting which is free to see how well do two people work together. In Can... | [
{
"docid": "595427",
"text": "\"It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensiv... |
8227 | A deferred capital gains tax similar to the real estate 1031 Exchange but for securities reinvestment? | [
{
"docid": "591157",
"text": "Sale of a stock creates a capital gain. It can be offset with losses, up to $3000 more than the gains. It can be deferred when held within a retirement account. When you gift appreciated stock, the basis follows. So when I gifted my daughter's trust shares, there was still tax... | [
{
"docid": "416787",
"text": "What you are looking for is a 1031 exchange. https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031 Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides a... |
1269 | The risk of female prisoners harming themselves is ten times that of male prisoners. | [
{
"docid": "13900610",
"text": "BACKGROUND Self-harm and suicide are common in prisoners, yet robust information on the full extent and characteristics of people at risk of self-harm is scant. Furthermore, understanding how frequently self-harm is followed by suicide, and in which prisoners this progression... | [
{
"docid": "14843502",
"text": "BACKGROUND Self-reported health status in underserved population of prisoners has not been extensively explored. The purposes of this cross-sectional study were to assess self-reported health, quality of life, and access to health services in a sample of male prisoners of Ita... |
8935 | Is it better to buy US stocks on US stock exchanges as a European? | [
{
"docid": "125568",
"text": "\"No, there are neither advantages nor disadvantages. I'll take on this question from an accounting standpoint. Financial statements, the tools at which the market determines (amongst other things) the value of a stock, are converted at year end to the home currency (see 1.1.... | [
{
"docid": "9672",
"text": "\"You're talking about money in a savings account, and avoiding the risks posed by an ongoing crisis, and avoiding risk. If you are risk-averse, and likely to need your money in the short term, you should not put your money in the stock market, even in \"\"safe\"\" stocks like P&... |
4374 | Why does gold have value? | [
{
"docid": "229153",
"text": "\"Gold has value because for the most of the history of mankind's use of money, Gold and Silver have repeatedly been chosen by free markets as the best form of money. Gold is durable, portable, homogeneous, fungible, divisible, rare, and recognizable. Until 1971, most of the ... | [
{
"docid": "352485",
"text": "The answer is that other than a small number of applications (the approx. 10% of gold production that goes to 'industrial uses') gold does not have intrinsic value beyond being pretty and rare (and useful for making jewelry.) There are a number of 'industrial' applications and... |
7781 | Deriving the put-call parity | [
{
"docid": "251190",
"text": "Think of it this way: C + (-P) = forward contract. Work it out from there. Anyways, this stack is meant for professionals, not students, I think.",
"title": ""
}
] | [
{
"docid": "374797",
"text": "\"There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, ... |
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