Recently I sat down to think of possible improvements that I can make that will enhance the performance of my Questrade retirement investment portfolio. Like most people, I have significant exposure to the greater U.S. equity markets with approximately 45% of my finance portfolio invested in large capitalization equities, which are components of the S&P 500 Index.
The S&P 500 Index tracks the combined performance of the 500 largest companies in the U.S. So, buying a share in a mutual fund or Exchange-Traded Fund (ETF) that has an investment mandate to mirror the S&P 500 will give you returns equal to the index, less any fees and expenses related to managing the portfolio. In other words, if I hear someone say “the S&P 500 went up 2% today”, then it is highly probable that about 45% of investment portfolio increased in value by 2% as well.
Now, I am quite certain that for the foreseeable future my portfolio will continue to have significant S&P 500 Index exposure. Therefore, whether I know it or not, I am effectively saying, “I believe that investing in an S&P 500 Index Fund is going to give me the necessary long-term returns to fund … Read the restRead More
Mergers And Acquisitions
The often bandied terms of mergers and acquisitions are familiar to the business world and the stock market experts, but some Canadian investors are sadly unfamiliar with the terms’ definitions and what affect this may have on their investments. This introduction to these business actions and their stock market results may help. In the case of a merger, two or more companies combine their resource entities to make a new corporate entity different from the entities that originally entered into the merger.
This can affect the investor in a few ways. For instance, if there are two companies intending to merge and one of the company’s stock values is higher than the other, the resulting stock price of the newly formed corporation will find a middle ground between the two. This can affect the investor negatively by decreasing their investment value and percentage of company ownership. It is at this time that the newly formed corporation can implement a buy back program or some other value adding operation. However, a merger can increase stock value if both companies are strong performers and their financial outlook is positive.
The Canadian Competition Bureau oversees merger requests to ensure … Read the restRead More
Liquidity Ratio Part Two
When looking at a company’s financial details while considering investment, a significant item to review is various types of liquidity ratio. This represents a company’s capability in satisfying short-term debt obligations. You absolutely need to know this kind of stuff if you are going to be investing on your own in 2018.
We will take a look at some of the key points of an organization’s liquidity ratio, starting with the debt service coverage ratio, or DSCR. The interest coverage ratio measures the ability of a company to pay the interest on their outstanding debts. However, there are other commitments besides interest payments that a company is liable to pay. These include the principal of the debt, lease rentals and principle amount of other interest-free loans. Moreover, since debts are paid out of cash flows, creditors are interested in the amount of cash flow the company earns annually instead of operating profits. The debt service coverage ratio, or the DSCR is a liquidity ratio that measures the ability of a company to pay the interest and principle of all long-term debt. It is calculated as:
Debt Service Coverage Ratio = (PBT+ Depreciation+ Other non-cash charges+ … Read the restRead More
Limitations Of Financial Ratios
While you are observing financial ratios in your exploration, or fundamental analysis of a security to reach a decision to buy or reject, keep in mind the potential for these limitations of financial ratios.
Limitations of Financial Ratios
Financial ratios provide valuable insight into a company’s performance, efficiency and future growth prospects. However, limitations of financial ratios can exist when analyzing a stock, you must keep certain things in mind before interpreting these ratios. These ratios cannot be interpreted in isolation. Alternatively they should be compared with industry averages and ratios of competitors in the industry. For example, a net profit margin of 10% may sound low, but it may be considered normal if the company is operating in the infrastructure industry. Similarly, ratios vary across industries. While a net profit margin of 12% may be outstanding for one type of industry, it may be considered as mediocre to poor for another.
Trend analysis of ratios can provide better insight into a company’s performance. However, it is important to be sure that the assumptions applied in calculating the ratios are constant throughout.
Some ratios include items from the income statement and balance sheet, such as return… Read the rest Read More
An Introduction of Warren Buffett
A genius business magnate as well as investor and philanthropist of America, Warren Buffett serves as the CEO of Berkshire Hathaway. The third wealthiest man in the world had a net worth of astounding $87.5 billion, as of February the 17th, 2018. The ‘Sage’ or ‘Oracle’ of Omaha is known for his inspiring quotes and confidence in Investments.
How did Warren Buffett start out?
Developing an interest in Business during his early years of life, Mr. Buffett moulded the philosophy of investment upon the concept of value investing, originally brought in by Benjamin Graham. The firm of Buffet Partnership, created after meeting Charlie Munger, eventually incorporated the textile manufacturing firm now known as the Berkshire Hathaway. His hands still remain at value investing, in spite of being a wealthy philanthropist, and decided to give up 99% of his wealth for philanthropic interests.
He graduated with Science & Business Administration from University of Nebraska. He joined Columbia University to attend Benjamin-Graham’s lectures and earned an MSc. in Economics in 1951 before proceeding to to join the New-York Institute of Finance.
Stairs To The Top and Few Short Retreats
In 1954, he joined Benjamin Graham’s … Read the restRead More
The Dow Jones and what it does for the stock market
The Dow Jones & Company commonly known as the Dow Jones was founded in November 1882. Its founders were Charles Dow, Edward Jones, and Charles Bergstresser. The Dow Jones headquarters are located in New York and the Company was well known due to its publications and other related market statistics.
In 2010, the companies indexes were sold to the CME group. This made the company focus on financial news publication. The company has thirty stocks as we talk. With this, the company is ranked the best selling in the American states.
The price of their 30 stocks is determined by adding them all together and dividing them by a common divisor called the Dow Divisor. It should be noted that the Dow divisor is not static and keeps on changing frequently due to the splits and other related events.
How to invest and start earning in Dow Jones
You first need to research the thirty companies represented by the Dow Jones. This will help you determine whether the companies fit you for investments objectives. You can perform this by consulting the companies investor relations departments, and request a … Read the restRead More
6 Effective Ways To Increase Your Net Worth
People are always concerned about different numbers when it comes to their finances. Nevertheless, the most important number is your net worth. Removing liabilities such as credit card debt and a mortgage from what you owe— checking account balances, investment accounts, retirement funds and house will produce your overall net worth.
Knowing your net worth will help to determine how future wealth can be affected by debt. It will also help to know the actual areas to concentrate on prior to retirement. Lets talk about ways to increase your net worth easily.
There is the possibility to accumulate more net worth when you spend less money. The first step to take at this juncture is to check your current expenses. It is important to know that a couple of dollars there and here can accumulate to a lot of money at the end of the year.
Your future wealth can increase quickly by lowering debt. The first thing to do is determining the highest interest debt. Increasing monthly payments or consolidating payments can help to lower your debt. Pay these debts off as quickly as you can, and … Read the restRead More
1) U.S. Downgrade is basically a ”Political Leader B#tch Slap” (one I think they deserve): Below is an excerpt from Standard & Poor’s (S&P) most recent Sovereign Default Study – the study most applicable for discussing US debt obligations. Notice anything concerning the difference between AAA, AA and A? This is an average cumulative default table – so on average, for instance, the 5-year cumulative default study for BBB-rated debt is 3.97%. THERE IS NO DISCERNIBLE DEFAULT FREQUENCY or frequency variation around any sovereign debt rated above A. Thus, S&P’s own study shows no default variation differential between AAA & A. The fact that the US is AA+ or A- is completely qualitative and arbitrary relative to historical default data. This means that the market will continue to view the U.S. as effectively AAA because the downgrade has nothing to do with statistics and models. BUT, it has everything to do with telling the U.S. Leaders that they screwed up so bad that a subjective over-ride of their debt rating model is warranted given the government’s inability to balance the budget and create a budget surplus, control spending (and its general failure investing money).
2) 10-year Treasury Yields of … Read the restRead More
Yesterday, LinkedIn (LNKD), the online professional networking service, priced a secondary offering of 8.8 million shares at $71 per share after reporting its first quarterly loss since its IPO back in May 2011.
So let’s review some numbers here because I am having a tough time with this one.
As of September 30, the company’s last 12-months (LTM) Revenues were $435MM and LTM Net Income of just over $10MM. With add-backs from depreciation and amortization the company generated Earnings-before-interest-taxes-depreciation-amortization (EBITDA) of about $25MM.
LinkedIn’s May IPO raised $352.8 million for the company ($248 million in net proceeds) and and as of September 30, the company still has $387MM in cash and short-term investments on its balance sheet and no real debt.
LinkedIn offers three major products
- Hiring Solutions: Revenue derived primarily from the sale of LinkedIn Corporate Solutions and LinkedIn Jobs products, selling LinkedIn Jobs on their website to enterprises and professional organizations.
- Marketing Solutions: Revenue derived primarily from fees received from marketers, principally advertising agencies, direct advertisers and user created ads that are displayed on their website.
- Premium Subscriptions: Revenue derived primarily from online sales of our Business, Business Plus and Executive subscription products. These are monthly
I love Christmas, it is great time of the year! The parties, the celebration, giving, receiving, seeing friends and family, in my eyes this is what life is all about: connecting with the most important people in your life.
Here are 10 Reasons that I love Christmas PLUS, 5 Reasons to love Christmas even if you do not celebrate Christmas.
- Giving to others ALWAYS makes me feel great! This year out picked out cool gifts (in my humble opinion) for my little nieces and I can’t wait to watch them tear open the presents. Makes you feel like a kid again just watching…
- Seeing people I love (including my cute wife). This is really great, the whole family gets together and celebrates each other, not just the formal Christmas/religious events. Connecting with my friends and family is very important and what better way to do it then over some egg nog and gift giving!
- Spending Money! You heard me right, spending money. As many of my regular readers know I am a saver, I like to save, I like to budget, I like to make sure I save enough and then double-check that I am saving enough. But at Christmas