- How Investors Can Calculate Year-Over-Year (YOY) Growth
Year-over-year (YOY) growth is a performance indicator often used by investors to measure financial progress and compare results from one period to another. The measurement, which looks at change across two comparable periods of time, can provide valuable information about trends, risks and opportunities. Investors can then use this information to evaluate the performance and… read more…
- What Is a Defensive Investment Strategy?
A defensive investment strategy is designed to protect a portfolio from losing money during market downturns. This approach prioritizes stability over high returns and as a result earnings can be expected to lag behind during rising markets. A defensive strategy could help you preserve capital while still providing modest growth. A defensive portfolio is likely… read more…
- Can a Financial Advisor Help Me Invest in Private Companies?
Most individual investors cannot invest in private companies that have issued shares of stock without registering the shares with the Securities and Exchange Commission. The exception is someone who meets the income, net worth or financial sophistication requirements to be an accredited investor. Many financial advisors qualify as accredited investors because of their professional training,… read more…
- How ETF Discounts Work
Exchange traded funds (ETFs) are portfolio-based assets typically organized around a specific investment goal. Investors invest in ETFs by purchasing shares of the portfolio on public exchanges. When the listed share price of an ETF dips significantly below the portfolio’s net asset value (NAV), the fund is at a “discount.” This is generally a good… read more…
- How Easement in Gross Works in Real Estate
An easement in gross is a legal right that allows an individual or entity to use another person’s property for a specific purpose without owning it. Unlike easement appurtenant, which is tied to the land itself, an easement in gross benefits a person or organization rather than a parcel of property. Common examples include utility… read more…
- How and Where to Invest Your Cash
If you’re starting to invest or refining your strategies, there are many options available based on your financial goals, risk tolerance and investment timeline. Common investments could range from safe, traditional savings accounts and CDs to riskier stocks, bonds and mutual funds. Each investment carries specific benefits and drawbacks. So diversifying your portfolio across these… read more…
- What Does It Mean to Be Risk Neutral as an Investor?
Investors differ in how they approach risk, and these approaches influence their decision-making and portfolio strategies. Risk-neutral investors focus solely on the potential returns of an investment, ignoring the level of risk involved. This theoretical perspective, which differs from risk-averse and risk-seeking behavior, can offer valuable insights, particularly in financial modeling and investment analysis. A… read more…
- What Are Revenue Bonds, and How Do They Work?
Revenue bonds are municipal bond issued to finance specific projects like utilities, airports, or toll roads. These bonds differ from general obligation bonds because they are repaid solely from the income produced by the project, such as tolls or fees, rather than tax revenue. Investors favor them for their connection to tangible assets and a… read more…
- If You Bet $10,000 on NVDA 5 Years Ago, Here’s Your Payday
NVIDIA (NVDA) plans to stay ahead. For about five years now, NVIDIA’s stock has been one of the hottest assets on the market, generating a roughly 2,200% return and a 40x cumulative stock split. Most of this growth has been due to NVIDIA’s place at the heart of the biggest technologies of the past 15… read more…
- How Right of First Offer (ROFO) Works
Right of first offer (ROFO) is a contractual right that gives a potential buyer the opportunity to make the first offer on a property or asset before the owner entertains bids from other parties. Typically used in real estate or business transactions, ROFO can benefit both parties. It can help the seller gauge interest. The… read more…
- Invisible Hand: What Does It Mean in Economics and Investing?
The invisible hand is a concept introduced by economist Adam Smith. It refers to the self-regulating nature of markets where individual actions, driven by personal interests, contribute to overall economic benefits. This phenomenon occurs when buyers and sellers, pursuing their own goals, unknowingly align with market needs through supply, demand and competition. Widely discussed in… read more…
- What Is the K-Ratio and How Do You Calculate It?
The K-Ratio measures the consistency and quality of an investment’s returns over time, providing more detail than traditional metrics like the Sharpe ratio. It evaluates risk-adjusted performance by comparing the growth rate of returns to their volatility. This calculation highlights the steadiness of returns, helping investors refine their strategies. A financial advisor can help you… read more…
- How to Calculate Overhead Ratio
The overhead ratio measures how much of a company’s total revenue is spent on indirect costs. This metric is useful for identifying areas where costs can be reduced to improve profitability. Analyzing the overhead ratio helps businesses make better decisions about budgeting, resource use and planning. For investors, it provides insight into whether a company… read more…
- Why Overcapitalization Is Important for Investors
For investors, grasping the implications of overcapitalization can be the difference between a profitable venture and a financial misstep. Overcapitalization occurs when a company raises more capital than it can efficiently use, leading to diminished returns on investment and potentially inflated stock prices. This situation can signal underlying inefficiencies within a company, such as poor… read more…
- How to Invest in Distressed Assets
Distressed assets could offer investors high returns at lower upfront costs. Assets like real estate or corporate securities are often undervalued due to financial issues or poor market conditions. While the risks are high, they can be appealing to investors who are prepared to do substantial research and take a strategic approach. A financial advisor… read more…
- How to Identify Changes in Market Trends
The stock market operates in cycles, shifting between periods of upward, downward and sideways trends. For investors, recognizing when these trends change is important to assess the sale or hold of assets. Identifying changes in market trends involves analyzing price movements, market sentiment and economic indicators. Whether you’re a long-term investor or an active trader,… read more…
- Pros and Cons of Growth Investing Strategies
Growth investing focuses on companies with strong potential for future expansion, often shown through rising revenue, profits, or market share. These companies may not provide immediate returns through dividends but offer the chance for long-term capital growth. For investors comfortable with higher risk, growth investing can be a way to build wealth. However, like with… read more…
- Investing Strategies for a Volatile Market
Market volatility refers to rapid and significant price changes, which can cause anxiety for investors but also create opportunities for growth. Learning how to manage volatility and adjusting your investment approach during uncertain times can help protect your portfolio and position you to take advantage of price swings. A financial advisor could also work with… read more…
- Pros and Cons of Active Trading vs. Buy-and-Hold Investing
Active trading and buy-and-hold strategies suit different investors based on their goals, risk tolerance and time commitment. Active trading focuses on short-term gains with higher risk, while buy-and-hold investing takes a long-term approach with lower costs and less frequent trading. Here are the pros and cons for each strategy. A financial advisor can help you… read more…
- How to Calculate the Value of Preferred Stock
Preferred stock combines features of both equity and debt. Unlike common stock, preferred shares often offer fixed dividends and priority in asset distribution, making them attractive for income-focused investors. Calculating the value of preferred stock involves using a formula that factors in the fixed dividend payments and required rate of return. Knowing how to make… read more…
- Ways to Manage Counterparty Risk
Counterparty risk is the chance that the other party in a financial transaction may not meet their obligations. It can occur in loans, derivatives and trading contracts with banks, insurers, or other institutions. Managing this risk can reduce potential losses through strategies like evaluating counterparties, using collateral agreements and working with third-party clearinghouses. A financial… read more…
- How to Hedge Against Foreign Exchange Rate Risk
Foreign exchange rate risk, or currency risk, could potentially happen when the value of one currency fluctuates relative to another. For investors and businesses operating in global markets, this volatility can impact profitability and investment returns. Fortunately, there are many strategies and tools available to help hedge against foreign exchange rate risk. A financial advisor… read more…
- 4 Ways to Predict Market Performance
While no one can predict the future with complete accuracy, investors use a variety of strategies and tools to anticipate market trends. By studying historical data, monitoring key economic indicators and leveraging advanced technologies like artificial intelligence and machine learning, it’s possible to gain valuable insights into where the stock market may be headed. Factors… read more…
- How to Calculate the Liquidation Value of a Company
The liquidation value of a company represents the total value of its assets if the company were to go out of business and liquidate its assets to pay off debts. For investors, understanding a company’s liquidation value can provide insights into its financial health and potential risk level. In certain cases, companies with a stock… read more…
- What Is the Net Liquidation Value of an Investment Portfolio?
Net liquidation value (NLV) is a financial metric that represents the total value of an investment portfolio if all assets were sold and any associated liabilities were settled at current market prices. For investors, the NLV of their investment portfolio can provide a snapshot of what a portfolio is worth in liquid terms. This can… read more…