- Differences of Spot vs. Futures Trading
Spot trading involves buying or selling an asset at its current market price for immediate delivery. Futures trading uses contracts to set a price and delivery date for a future transaction, allowing investors to speculate or hedge against price changes. Spot trading is ideal for immediate market exposure, while futures trading suits those focusing on… read more…
- Pros and Cons of Regulating Big Tech for Investors
Regulating big tech is a hot topic, with debates about its impact on consumers, competition and investors. Policies like stricter antitrust rules, data privacy laws, or content moderation could reduce monopolistic practices and boost competition but might also lower profitability and growth, affecting shareholder returns. Investors should weigh the potential for fairer markets against the… read more…
- Differences of Spot Trading vs. Day Trading
Spot trading and day trading are two popular investment strategies that investors often consider, each suited to different goals and risk levels. Knowing the differences can help investors choose the approach that fits their financial objectives. A financial advisor can also offer insights on how these strategies could support your overall investment portfolio. What Is… read more…
- Vanguard Evaluates Tax-Loss Harvesting Strategy to Offset Capital Gains: Is It Worth It?
Tax-loss harvesting can be valuable, potentially significantly so, to the right investor. This is the takeaway from a recent study released by Vanguard. The firm looked at the practice of tax-loss harvesting (TLH) to determine when this practice is most useful for an investor’s portfolio. Specifically, the authors analyzed how this can help maximize a portfolio’s… read more…
- How to Build a Recession-Proof Stock Portfolio
Building a recession-proof stock portfolio can help investors weather economic downturns with greater stability and confidence. While no investment portfolio can be entirely recession-proof, selecting resilient stocks from defensive sectors and diversifying your investments can help you mitigate the impact of a market downturn. A financial advisor can work with you to diversify your portfolio… read more…
- How Are Stock Prices Determined in Real-Time?
Knowing how stock prices are set in real time is useful for both new and experienced investors. Prices change constantly during the trading day based on available shares and demand from buyers. Though it sounds simple, complex systems and technologies drive these real-time valuations. A financial advisor can offer you additional insights for specific markets.… read more…
- Intrinsic Value vs. Market Value: Major Differences
Some investors compare intrinsic value with market value to assess whether an asset is overvalued, undervalued, or fairly priced. Intrinsic value estimates an asset’s true worth based on performance, future earnings potential and economic conditions. Market value, by contrast, is the current sale price, shaped by supply and demand, investor sentiment and market conditions. Both… read more…
- What Is the Tax Loss Harvesting Limit?
Tax loss harvesting allows investors to offset capital gains by intentionally selling other investments at a loss, but there are limits to how much of these losses can be applied. The tax loss harvesting limit depends on whether the loss is used to offset capital gains or ordinary income. This strategy can be particularly useful… read more…
- Weak Form Efficiency: Definition, Examples, Pros and Cons
Weak form market efficiency is a concept that suggests past stock prices and trading volumes do not predict future stock prices. In a weak form efficient market, all historical information is already reflected in current stock prices. This means that technical analysis, which relies on historical data to predict future price movements, is considered unlikely… read more…
- What Is the Cost of Equity Formula?
The cost of equity formula is a financial metric that represents the return investors expect for holding a company’s stock. This formula can help you evaluate whether a company’s stock is generating adequate returns relative to its risk level. This is helpful for investors and companies alike, as it affects investment decisions, valuation and the… read more…
- What Is Shareholder Value and How Is It Calculated?
Shareholder value represents the return that shareholders get from a company’s profit growth and increase in stock price. It’s a key metric investors use to gauge a company’s success. Companies can increase shareholder value by generating revenue, maintaining cost efficiency and making smart investment decisions. This can help them estimate how well a company maximizes… read more…
- What Are Weather Futures and How Do They Work?
Weather futures are financial contracts that allow investors and businesses to hedge against unexpected weather conditions. These futures are typically linked to measurable weather events, such as temperature fluctuations, rainfall amounts or snowfall levels, and they are traded on commodities exchanges similar to other derivatives. Weather futures can be especially useful for industries directly impacted… read more…
- What’s a Fair Valuation for Tesla ($TSLA) Today?
Tesla stock ($TSLA) has been on a tear since the results of the 2024 election became clear. After closing just over $251 on Tuesday, November 5, the stock rose 27.8% by end of week to just over $321, putting $TSLA over a $1 trillion market cap for the first time since April 2022. While political… read more…
- 5 Benefits of Regularly Rebalancing Your Investment Portfolio
Rebalancing a portfolio involves adjusting the asset mix to maintain a desired allocation, which can help align investments with specific financial goals. The benefits of rebalancing a portfolio include helping to manage risk, as assets that have grown significantly may alter the intended balance of risk and reward. By periodically realigning the portfolio, investors may… read more…
- Differences of Fiat Money vs. Commodity Money
Fiat money and commodity money represent two distinct forms of currency, each defined by what gives it value. Fiat money is government-issued currency that has no intrinsic value but holds purchasing power because of government decree and public trust in its stability. In contrast, commodity money is backed by a physical good – typically precious… read more…
- Differences of Forward Market vs. Spot Market
The forward market and spot market offer two distinct approaches to trading assets, differing by timing, risk and pricing structure. In a spot market, transactions are settled “on the spot,” meaning buyers and sellers agree on a price, and the asset changes hands almost immediately. On the other hand, the forward market involves agreements to… read more…
- What Is the Extrinsic Value of an Option?
In options trading, the extrinsic value of an option represents the portion of the option’s price that’s based on factors other than the immediate value of exercising it. Also known as “time value,” extrinsic value reflects the potential for the option to become profitable before it expires. For options traders, the extrinsic value of an… read more…
- How to Calculate the Growth Rate of an Investment
The growth rate of an investment shows how much its value increases over time, helping to evaluate performance. A common way to calculate this is by using the compound annual growth rate (CAGR), which averages yearly growth with compounding. This is useful for long-term investments, and knowing this rate could help you determine whether an… read more…
- How Are Zero Coupon Bonds Taxed?
Zero coupon bonds are taxed differently because they don’t pay regular interest. Instead, they’re sold at a discount and reach full value at maturity. Each year, investors must report “imputed interest”—the difference between the purchase price and maturity value—even though they don’t receive cash until maturity. This amount gets taxed as ordinary income. Some, like… read more…
- Does Issuing More Stock Shares Decrease the Cost of Equity?
Investors often consider the impact of a company issuing more stock shares, particularly on the cost of equity. The cost of equity represents the return that investors expect for holding a company’s stock. When a company issues additional shares, it can influence the stock price, investor perception and even the company’s overall financial structure. A… read more…
- How to Choose Investment Objectives for Your Portfolio
Investors need investment objectives to provide a clear direction for their portfolios. These objectives can help align their investments with specific financial goals, risk tolerance and time horizons. Investors use them to select a mix of assets, such as stocks, bonds, or alternative investments, that aims to achieve outcomes like growth, income, or capital preservation.… read more…
- How a Gross Lease Works in Commercial Real Estate Investing
A gross lease in real estate is a commercial lease where the tenant pays fixed rent while the landlord covers most property operating expenses, including taxes, insurance, utilities, and maintenance. This setup offers predictability for tenants and simplifies expense management for landlords. Knowing how a gross lease works helps investors and business owners assess potential… read more…
- What Is Upside Risk and How Does It Work?
Upside risk refers to the potential for an investment or strategy to perform better than expected. Unlike downside risk, which focuses on the likelihood of losses, upside risk highlights the chance that positive outcomes could exceed projections. Investors and financial advisors consider upside risk when analyzing growth opportunities, as it can influence asset allocation, portfolio… read more…
- Fiat Money: Definition, Examples, Pros and Cons
Fiat money refers to a type of currency that holds value because a government declares it as legal tender, rather than being backed by a physical commodity like gold or silver. Most modern economies rely on fiat money, with examples including the U.S. dollar, the euro and the Japanese yen. Its value depends on the… read more…
- Enterprise Value (EV) Formula: What It Is and How to Use It
The enterprise value (EV) formula measures the total value of a company, considering both its equity and debt. It reflects what it would cost to acquire the business, including adjustments for cash and debt, offering a more comprehensive view than market capitalization alone. The enterprise value formula is pretty simple: add a company’s market capitalization… read more…