Stock Selling Mistakes
An important part of any investment strategy is developing a methodology for ultimately selling your investments. Unfortunately, many investors sell based on emotional factors, making one of several mistakes:
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August 25, 2010
July 14, 2010
How to Evaluate P/E Ratios
Price/earnings (P/E) ratios are a common measure of stock value, both for individual stocks and the overall market. Calculating a P/E ratio is straightforward -- it is simply the price of a single share of stock divided by the company's per share earnings. For example, a stock selling at $50 per share with $2 per share of earnings would have a P/E ratio of 25. However, P/E ratios can be calculated using different earnings numbers. Trailing P/E ratios, which are typically reported in newspapers, use earnings per share for the most recent four quarters, while forward P/E ratios use forecasts of future earnings per share.
June 3, 2010
Coming to Terms With Stock Market Volatility
With all of the volatility in the stock market over the past few years, it can be difficult to determine how to devise an investment strategy to help reach your financial goals. To help you determine a reasonable rate of return to expect on your stock investments, it might be instructive to review some "facts" about the stock market:
Continue reading " Coming to Terms With Stock Market Volatility" »
April 5, 2010
Investment Portfolio Losses
Capital gains on investments held for one year or less are short-term capital gains taxed at ordinary income tax rates. For investments held over one year, the maximum long-term capital gains tax rate in 2010 is 15% (0% for taxpayers in the 10% or 15% tax bracket). While the 15% rate is significantly below the maximum ordinary income tax rate of 35%, it still takes a significant chunk out of your investment portfolio.
August 10, 2009
Understand the Company Before You Invest
Before purchasing a stock, you should understand the basics about the company you are investing in. Make sure you can answer these questions first:
Continue reading "Understand the Company Before You Invest" »
July 13, 2009
Buying Stocks When Prices are Low
For some investors, a long or steep decline in the price of a stock is a signal to beware. For others, it's a temptation to pick up a bargain at a steep discount and make a handsome profit when the stock rebounds. In practice, it takes a lot of savvy to accomplish. Here are a few tips that will help you know when and when not to buy stocks.
February 14, 2009
Dow Chemical Bites the Bullet
When the markets are in decline, many investors look for solid dividend payers, relying on the cash flow to offset stock price declines. When choosing a dividend payer in these circumstances, many look for consistency. They want to see that a company has delivered its dividend for an extended period of time through all sorts of market conditions. Even better is a company with a long history of regularly increasing its dividend.
February 5, 2009
GM's Biggest Growth Market: China
Since the days when Henry Ford set up his first factory, the United States of America has been the single largest market for automobiles in the world. With America facing a deep recession US auto sales have fallen by as much as 37% this past month compared to year ago numbers resulting in the US, for the first time, losing its position as the world's number one car market. For the month of January, more cars were sold in China than in the United States. Japan's auto market ranks third in size behind the US and China.
February 2, 2009
NBC's Super Bowl Ad Business Sets Revenue Record
The Super Bowl is arguably the biggest advertising event in America each year. Viewers tune in not only to watch the game, but also to watch the commercials. This year the Associated Press reports that about 100 million viewers in the United States watched the big game. For companies looking to reach American homes with their advertising message, there is simply no other option with such high visibility. The best commercials are not only shown during the Super Bowl itself, but are picked up by television news organizations, ranked and voted on by web surfers, and can even go viral in today's era of connected consumers.
Continue reading "NBC's Super Bowl Ad Business Sets Revenue Record" »
January 30, 2009
HOT Goes Cold
Starwood Hotels and Resorts (NYSE: HOT)reports that their fourth quarter profit fell 46% and was impacted by charges associated with reducing staff and writedowns in value of two real estate ventures. Starwood Hotels operate under several recognized brand names including the Sheraton and tend to be higher end hotels. With most American consumers reigning in spending, it's no wonder that sales are down for the company.
January 27, 2009
Brace for Impact: Market Headed Down
"Brace for impact." These were the words of Captain "Sully" Sullenberger, the heroic pilot of the plane that splashed down safely in the Hudson River, but these same words might also be echoing a few blocks away on Wall Street this week. The downed US Airways plane is believed to have experienced a double bird strike that killed both of its engines leaving it without the power needed to stay aloft. The stock market may be facing its own double bird strike this week with bad news expected on several fronts likely to send stocks into another tailspin.
January 23, 2009
Stocks - What to Expect in 2009
We have talked here about the recent bankruptcy of Circuit City and faltering sales of other large retailers. We have also mentioned some weeks ago that certain discount retailers, like Wal-Mart, had yet to feel the pain of the current economic conditions as buyers switched from premium brands and retailers to lower priced alternatives. Well, now even Wal-Mart is feeling the pain.
January 22, 2009
Google Decides its Future Doesn't Include Print Media
Google (NASDAQ: GOOG) is making an about face. After a recent bid to begin selling print ads along with their online advertising, they have announced that they are leaving the print business to focus on their core strengths. We are generally in favor of companies trying new things and experimenting with expansion ideas, but this attempt was stupid on its face. The access to information that Google has helped foster on the internet has condemned America's newspaper industry to death row. Why in the world Google thought they should try to make a go in the very media that they were in the process of replacing is beyond us.
Continue reading "Google Decides its Future Doesn't Include Print Media" »
January 21, 2009
The New York Times is Dead, Long Live the New York Times
The iconic newspaper, the New York Times, is facing an expiring credit line of $400 million dollars in May. To you and me, that's like your credit card companies, mortgage bank, and car loan companies all saying they want us to repay the full loans in the next three months. If that happened to us, we'd have three choices that are essentially the same choices that the New York Times has.
Continue reading "The New York Times is Dead, Long Live the New York Times" »
January 19, 2009
Circuit City: Funeral for a Friend
I have always had a particular affinity for gadgets and the stores that sell them. Whether it is a well crafted loudspeaker, an LCD television, an MP3 player, or the latest laptop computer, I have always enjoyed visiting these stores to see the latest offerings. This past week-end, I went to say good-bye to Circuit City. Of course, I also wanted to check out the liquidation sale to see if I could find a price that would make a large screen TV acceptable to my wife.
January 14, 2009
Recession Hits Alcoa and Raw Material Demand
With the stock looking to fall below its current $10 per share level, after reaching above $44 as recently as May of 2008,aluminum giant Alcoa (NYSE:AA) has certainly seen better days. CEO Klaus Kleinfeld said "The aluminum industry is caught in a perfect storm," when describing the company's current misfortunes to analysts after releasing the earnings results for the most recent quarter. Judging from the number of "perfect storms" that we've seen sweeping through the American economy, it's difficult to recommend any safe haven investors in the stock market at this point. Alcoa lost $1.19 billion dollars in the last three months according to their quarterly report.
Continue reading "Recession Hits Alcoa and Raw Material Demand" »
January 8, 2009
Times are so Hard Companies are Even Cutting Back on Mice
You know things are going from bad to worse when companies are even cutting back on mice, but that's just what's happening. The Swiss based Logitech (NASDAQ: LOGI), maker of computer mice and other peripherals, has announced that it will be reducing its workforce of 9000 employees by about 5% globally. The cuts, they said, would be concentrated in marketing, sales, legal, and information technology and would total about 500 lost jobs. Technically, then, they are not losing any mice makers, but some of the legal staff will be let go.
Continue reading "Times are so Hard Companies are Even Cutting Back on Mice" »
December 4, 2008
The Recession, Commodities and the Automakers
In a major recession, production slows. That means that factories are making fewer cars, fewer computers, fewer factory machines, and fewer of just about everything else as well. With less production, the need for raw materials drops as well. This is the reason why we see things like falling oil prices, falling steel prices, and so on. Unfortunately, this means a second wave of recessionary pressures as the producers of those raw materials feel the pinch and begin scaling back their operations to keep pace with the shrinking demand.
Continue reading "The Recession, Commodities and the Automakers" »
December 3, 2008
Is It Time to Consider International Investing?
During the 1990s, the U.S. stock market significantly outperformed international stock markets. International investments drew little attention during that time. But now the situation has reversed, with international investments outperforming U.S. stock investments over the past few years. Is now the time to take another look at international investments? Before deciding, consider these four main points:
Continue reading "Is It Time to Consider International Investing?" »
December 2, 2008
Yard Sale Finds: 97% Stake in Midway Games
Although it is no consolation for those of ordinary incomes, the recession is hitting even some of the country's richest men. Sumner Redstone is holding a yard sale of sorts. According to the Wall Street Journal, he has sold his 97% share of the videogame company, Midway Games (NYSE: MWY). While only 3% of the company trades on the market outside of his control, the current share price was $0.38 each as of Friday. That would put the value of Redstone's portion at well over $30 million dollars, but as with any yard sale, no one really expects to pay full price.
Continue reading "Yard Sale Finds: 97% Stake in Midway Games" »
November 27, 2008
Borders Book Stores Cancels Sale Plans
Borders Book Stores (NYSE: BGP) posted a third quarter loss of $0.64 per share against analysts' expectations of a much smaller loss of $0.50 per share. The results also showed a third quarter revenue decline of 9.4%. While the report did contain bad news, it had some brighter notes as well.
November 25, 2008
Drugstores Fight Retail Heartburn
Many US retailers are facing a bleak holiday selling season. Coming off already slow sales, earnings expectations are being lowered left and right. At least one retail segment, however, seems to be keeping bucking the retail tide, and even showed some small growth in same store sales in the most recent quarter. That group is retail pharmacy chains.
November 20, 2008
Homebuilder Confidence Hits Record Low
The National Association of Homebuilders released their survey asking homebuilders for their level of confidence in a near term recovery of the housing market. As you might imagine, the results were not good. In fact, the survey which has been conducted regularly since 1985 reflected the lowest level of confidence that it has ever recorded. During the most recent quarter, the Associated Press reports, fully 40% of all homes sold were bank sales of foreclosed properties. This contributed to a 9% decline in the median price of all homes sold during the period.
November 18, 2008
Happy Holidays, You're Fired
Roughly two thirds of the American economy is based on consumer spending on items like new cars, home improvement items, electronics, and other common goods and services. When consumers start slowing down in their buying, the companies that produce and sell these items make less money and slow down their production. Slowing production means that these companies don't need as many workers and that means that unemployment rises. With more people out of work, fewer people are making purchases of items that are considered luxuries or that can be postponed until better days. This is the self-reinforcing cycle in which the American economy now finds itself.
November 13, 2008
Safety in Gold or in Golden Arches?
As people look for safe investment havens during the recession, many are looking at gold. Others, however, might do well to look for the golden arches that are the familiar trademark of McDonald's restaurants. The omnipresent fast food chain reported same store sales for October were up 8.2% over the same period last year. Although the chain's US figures lagged behind the rest of the world, the reported 5.3% US growth is still a very good number considering the state of the economy. McDonald's branches in the combined region of Asia, the Middle East, and Africa led the way with 11.5% same stores sales growth, while Europe operations managed a very healthy 9.8%.
November 6, 2008
Will Yahoo Get a Second Chance?
We recently wrote about Yahoo's (NASDAQ: YHOO) troubled stock price and questioned some of their business decisions. Now Google (NASDAQ: GOOG) has walked away from a plan to show its ads on Yahoo's search pages. This would have meant more revenue for Yahoo and would have been a needed shot in the arm for the ailing internet company. Yet even though the deal has fallen through, Yahoo's stock price was up over 5% in early Wednesday trading. The stock price is up because investors are hoping that Yahoo's management will get a second chance to make the right choice.
November 4, 2008
Ship Finance Limited: Hit Too Hard?
While volatility is still expected, the market in general looks as though it has found its bottom for the current cycle at least. Of course, with the US government now reporting a shrinking GDP and even formal measures indicating a full blown recession, further downside is certainly possible. But even with that risk, there are a number of companies trading at a considerable discount. Like every market correction or significant drop, prices will recover over the course of the next couple of years at the latest. That's not to say that some companies won't declare bankruptcy or disappear, they will. So although the entire market is on sale, it's still important to pick companies with strong fundamentals.
October 30, 2008
Another Bailout for Chrysler?
Chrysler is once again standing on the curb in Washington, D.C. begging for another handout. Taxpayers bailed the company out once back in the 1970's to the tune of 1.5 billion dollars of 1970's money. Now, Chrysler, in a joint effort with General Motors (NYSE: GM), is asking for another $10 billion in government assistance. Is it time to pull the plug on Chrysler and see if they can breathe on their own?
October 29, 2008
Verizon Bucks Trends and Follows Others
Lately, we're used to seeing bad news when companies report earnings, but Verizon (NYSE: VZ) is bucking the trend. Verizon reported 3rd quarter earnings growth of 31% versus the same quarter last year. Verizon shares were up sharply in early trading after the news was released on Monday morning. The figures amount to $0.66 per share which was right in line with analysts' expectations. In the detailed number breakdown, however, it is interesting to see confirmation of some growing trends in consumer behaviors that may provide clues about the future prospects of other companies.
Continue reading "Verizon Bucks Trends and Follows Others" »
October 23, 2008
Yahoo Slimming Down Again, Vying for America's Biggest Loser?
Yahoo, Inc. (NASDAQ: YHOO) may be wishing it had played more nicely with Microsoft (NASDAQ: MSFT) when Microsoft offered $33 per share in May. At the time Yahoo rejected the bid saying that Microsoft was undervaluing the company. Since then the market has voted for a value of under $13 per share for Yahoo as it continues to lose market share to Google (NASDAQ: GOOG). On Tuesday, Yahoo declared that it will reduce its workforce by 1500 workers and slash spending by as much as $400 million dollars for the year. Yahoo will outsource some jobs to lower-priced overseas workers and will close some its US offices.
Continue reading "Yahoo Slimming Down Again, Vying for America's Biggest Loser?" »
October 21, 2008
Circuit City Can't Raise Enough Cash to Declare Bankruptcy
Who's Next was the title of a classic rock album from The Who, of course, back in the days of vinyl records, but today when that phrase is mentioned it's more likely to be referring to the list of troubled companies on the verge of bankruptcy. Big box retailer Circuit City (NYSE: CC) may be next to declare themselves insolvent although they are said to be pulling out all the stops to avoid that outcome. Trading over $8 a share just one year ago, Circuit City's share price has been in steady decline and has fallen off the cliff lately to settle around 45 cents per share.
Continue reading "Circuit City Can't Raise Enough Cash to Declare Bankruptcy" »
October 16, 2008
Intel Posts Profit, But Sees Consumer Market Weakness
As the markets continue to experience volatility, investors had some good news from Intel (Nasdaq: INTC) as the company released its third quarter earnings report. Profit increased to $2.1 billion which is a 12% increase from the same quarter a year ago. Perhaps more importantly, Intel suggested that its fourth quarter numbers would also be strong. The company said that although there are some signs that the current economic slump is affecting sales, it is too early to tell just how strongly this might affect sales. Even as they told the market it was too early to tell how the country's economic difficulties would affect business, they predicted fourth quarter sales in the $10.1 to $10.9 billion range.
Continue reading "Intel Posts Profit, But Sees Consumer Market Weakness" »
October 14, 2008
Hershey Kisses Off 3000 Workers
The Hershey Company (NYSE: HSY) has established a sweet spot for itself in rural Pennsylvania. With a town named after the company, and a Hershey-themed amusement park, few companies are as much a part of Americana as The Hershey Company. Hershey sales currently account for more than 42% of all the chocolate sold in the United States. Now, however, Hershey is eliminating 3000 jobs in the United States and Canada as it shutters 6 plants, according to an Associated Press report. Operations from the closing plants will be moved overseas as operations in Brazil, Mexico, India and China are expanded.
October 9, 2008
Alcoa Cans Share Buyback
Aluminum producer Alcoa (NYSE: AA) which ended the day Tuesday below $17 per share, released third quarter earnings after the market close. It wasn't good. Profit for the quarter was down to 268 million, a drop of 52% compared to the same quarter a year ago. Revenue for the period fell by only two percent to $7.23 billion. Per share earnings of $0.33 missed analyst expectations of $0.50 by a wide margin.
October 7, 2008
Warren Buffett's Private Bailout Moves
General Electric (NYSE:GE) has long been an icon of American business success and stability, but even that well-diversified giant has stumbled lately. Citing troubles in its GE Capital division, the company has lowered its earnings estimates twice since April of this year. General Electric is now planning to seek $12 billion in additional capital, selling new shares in a public offering. Other moves, reported by MSNBC include the sale of the GE Appliance division.
October 2, 2008
High Yield Dividend Payers Can Help Preserve Your Portfolio
In these turbulent times, it's hard to find safe places to invest. Many people are watching their 401k funds shrink before their eyes, particularly if they held any significant portion of their accounts in finance sector investments. Meanwhile, there are some stocks that are quietly paying dividends as usual. There's nothing like sending cash to each investor every three months to buoy confidence in a company's stock. That's exactly what World Wrestling Entertainment Inc. (NYSE: WWE) is doing. The company issued a statement on Monday that it "feels confident it can fund the dividend for the long term." The WWE press release cited its strong cash flow and healthy balance sheet.
Continue reading "High Yield Dividend Payers Can Help Preserve Your Portfolio" »
September 23, 2008
Wal-Mart Getting Roll-Back Pricing on Taxes?
Ads featuring Wal-Mart (NYSE: WMT) are all over the television recent days. Normally, that would be a good thing for the discount retailer. In this case, however, Wal-Mart is being used in a Barack Obama political ad. The ads claim that John McCain is giving millions of dollars in tax cuts to Wal-Mart "and millions more to its CEO." Seeking to play off the resentment many small communities and small business owners feel when a Wal-Mart store opens up in their towns, the Obama campaign is using the company as a surrogate for the evils of big business and the politicians that pay more attention to the rich than the everyday citizen.
Continue reading "Wal-Mart Getting Roll-Back Pricing on Taxes?" »
September 17, 2008
Chevy Volt Generates Interest
With all the talk about high gas prices, the car companies are rushing to launch high mileage or alternative power vehicles. General Motors (NYSE: GM) has just announced the new Chevy Volt, a rechargeable electric car. The car is entirely powered by electricity from its lithium ion battery. It is initially charged from any 120 volt household electric outlet and can travel forty miles on a single charge. Forty miles isn't a lot, but fortunately there's an extended range capability. A small gasoline engine kicks in when the battery runs low. However, the gasoline engine doesn't power the drive train like most hybrid cards. Instead it generates electricity for the electric motors which propel the car at all times. When the car arrives at its destination, you just plug it in to recharge the battery for another forty miles. We can imagine that workplace parking lots all over the country will be sprouting electrical outlets if this type of car catches on.
September 8, 2008
Paulson Says Treasury Adopting Fannie and Freddie
Well, despite statements by Fannie Mae (NYSE: FNM) execs as recently as the last quarterly statement that they did not foresee a federal takeover, it has happened. Treasury Secretary Henry Paulson announced on Sunday that the federal government will place Fannie Mae and Freddie Mac (NYSE: FRE) into a temporary conservatorship. Immediate actions under the conservatorship include the elimination of dividends for both owners of both common and preferred shares, immediate cessation of all lobbying and political activities, and a re-evaluation of charitable activities. These moves are designed to preserve as much of the companies' capital as possible while the Treasury and the FHFA recapitalize the nation's largest mortgage brokers through the periodic purchase of senior preferred shares. Current shareholders will also lose all rights to govern the management of the company.
Continue reading "Paulson Says Treasury Adopting Fannie and Freddie" »
September 6, 2008
Staples Facing Tough Sales Environment
We recently talked about the Gap Stores (NYSE: GPS) efforts to cut costs and maintain profitability in the face of declining sales. We argued that this is a short term fix and profitability can't be sustained for long this way. Now we have a good example of that fact. Staples (Nasdaq: SPLS), the office supply store, is cutting spending too. However, they have had five quarters in a row of declining same store sales. You'll recall that same store sales are the comparison of sales in stores that have been open at least a year. This removes new stores from the mix and provides an apples-to-apples comparison of how a retail business is doing. For the just ended second quarter, Staples on Wednesday reported that US same store sales were down 7%. Despite the company's best cost-cutting efforts, the company's net fell by 16%. Staples did, however, say that it expects income to remain in the black for the remainder of the year. Overall, sales in North America fell by 1%. Staples cited "weak sales of furniture, desktop computers, printers and digital cameras" as the reason for the poor showing.
September 3, 2008
British Petroleum Moves into Arkansas
The second largest oil company in the European Union, British Petroleum (NYSE: BP), has announced that the company has entered into an agreement to purchase 25% of Chesapeake Energy's (NYSE: CHK) Fayetteville, Arkansas shale joint venture. British Petroleum is spending $1.9 billion dollars for the interest. Of the $1.9 billion dollar price tag, $800 will be paid by BP as they fund the drilling and development costs for Chesapeake's share of the venture through 2009. This maneuver adds 135,000 acres of rich shale deposit acreage to BP's US holdings. The Fayetteville properties are producing natural gas. Sharp appreciation in the price of natural gas has made it very worthwhile to pursue shale production fields which can be fairly expensive to develop.
August 25, 2008
Gap Saves Its Way to Higher Profits
At first glance, the Gap Stores (NYSE: GPS) reporting of a 51% increase in net profit for the most recent quarter looks like great news. Looking a little deeper there are signs of trouble. A key measure of success for retailers, same store sales, shows that on average, sales fell by 10% in stores that have been open at least a year. Overall, sales were down 5.1% across the board for Gap owned stores. Sales are down and not expected to turn around in the short term. Each existing store is taking in less money. You can cut costs for a while, but there's a sharp limit to how much can be cut without doing long term damage to the business. Unless sales pick up in the next six months, Gap may be hard-pressed to meet their earnings estimate of $1.30 -$1.35 for the full year. At this point, they are still saying they will get there.
August 22, 2008
Monitoring Your Stocks
As you monitor your stocks' performance there are five factors you should consider. These factors are: earnings; price and dividends; P/E and PEG ratios; insider transactions and stock buybacks; and sudden and large price changes on high volume.
August 21, 2008
First Solar "Outsources" New Facility to the USA
First Solar (Nasdaq: FSLR) issued a press release on Monday announcing a major expansion of its manufacturing facility in Toledo, Ohio. At a time when we are used to hearing about companies shuttering their US manufacturing in favor of low cost overseas factories, First Solar is doing the opposite. The move relies on incentives offered by state and local government officials to help offset the cost of the expansion. Politically, this is a win-win for the politicians. With this move they can claim credit for creating 134 new jobs in Ohio while supporting "green" technologies that help reduce America's dependence on foreign oil. That should be worth some votes in the next election.
Continue reading "First Solar "Outsources" New Facility to the USA" »
August 19, 2008
Waste Services Industry Consolidation Attempts
Republic Services Inc. (NYSE: RSG), currently trading at $33.15 at Friday's closing bell, is in demand. As the waste industry moves to consolidate, three of the top players are jockeying for the dominating position. The current industry leader, Waste Management (NYSE: WMI) originally announced $ 34/ share bid for Republic Services on July 11th, and more recently raised that offer to $37/ share. Republic Services has rejected both bids saying that the company is worth substantially more than that as an independent entity. Waste Management made its initial offer as a response to the merger, announced June 23rd, between Republic Services and Allied Waste Industries (NYSE: AW). The merger would combine the 2nd and 3rd largest solid waste services companies in a bid to rival the current dominance of Waste Management.
Continue reading "Waste Services Industry Consolidation Attempts" »
August 13, 2008
Wachovia Worsens but Still Survives
After initially announcing job cuts of 6350 employees in July, Wachovia (NYSE: WB) this week said that as many as 6950 employees may now be out of work. That doesn't include recent announcements of the departure of CFO Thomas J. Wurtz, and Chief Risk Officer Don Truslow. Wachovia is expecting the job cuts to cost as much as $650 million as it restructures it workforce. Recent days have seen the announcement of a class action lawsuit from shareholders, regulatory investigations, and increases in the amount estimated losses originally announced just a few weeks ago. Wachovia stock closed Monday at $18.21 per share off from its 52 week highs of more than $50.
August 11, 2008
Fannie Mae - The Next Six Months are Key
The ailing housing market is driving widening losses at Fannie Mae (NYSE: FNM). According to their latest earnings report, released on August 8th, Fannie Mae showed a net loss of $2.3 billion for the second quarter alone. This comes on top of a $2.2 billion loss reported for the first quarter of this year. This time the loss was primarily driven by higher than expected mortgage defaults and foreclosures. Fannie Mae reports that based on their mortgage portfolio performance in July, they expect things to get worse going forward. Loss reserves were increased by $3.7 billion in the quarter with more cash expected to be reserved against losses in Q3.
Continue reading "Fannie Mae - The Next Six Months are Key" »
August 8, 2008
Stock Market Lessons From the Past
The stock market volatility of the past few years has taught some valuable lessons about the stock market. In essence, the stock market tends to revert to the mean. Avoid strategies designed to "get rich quick" in the stock market, and diversify, diversify, diversify.
August 6, 2008
General Motors Sales and Stock Price Continue to Decline
It should come as no surprise in this economy that US auto sales are down dramatically. General Motors (GM) last week posted a $15.5 billion loss for the most recent quarter. Fully $9.2 billion of this loss was related to one-time expenses as the company wrote down assets, dealt with restructuring costs and expenses related to ailing Delphi. For the balance of the loss, General Motors cited plummeting SUV prices and poor sales overall along with corresponding declines in its financing operations as the primary contributors to the loss. July 2008's sales for General Motors fell more than 27 percent compared to the same month a year ago. This compares to Ford's 15 percent year on year sales decline for July.
Continue reading "General Motors Sales and Stock Price Continue to Decline" »
August 4, 2008
Chevron's Q2 Earnings
Chevron (NYSE: CVX) announced its second quarter earnings on August 1st. Although Chevron didn't match Exxon's $1500 per second for the quarter, they did earn over $760 for each second of the second quarter. Chevron reported net income of $6 billion up 11% from the same quarter a year ago. That translates to earnings of $2.90/ share diluted, a shortfall from analysts' consensus estimates of $3.03. Strong oil prices were the biggest contributor to the gain. Natural gas prices were also a strong contributor.
Chevron also reported in their August 1st press release that their refining operations were hurt by the high cost of crude as the price of gasoline did not keep pace with the rising cost of oil. As a result Chevron reported a loss of $734 million in its refining operations.
April 11, 2008
The Basics of Stock Earnings Calculations
When evaluating a stock, you'll typically look at a variety of historical figures. One of the most important statistic is earnings, which is also used as a basis for several other important statistics.
Continue reading "The Basics of Stock Earnings Calculations" »
February 18, 2008
Four Great Businesses to Choose When Investing
Whether you're interesting in earning money through investing for your retirement, or to purchase a future big-ticket item, investing can really pay off for you. One thing that you must be sure of is that you invest in companies that are going to produce money instead of the opposite. Buying stock into the wrong company can really wreck havoc on your finances, which is why you need to do your homework on the businesses that you wish to invest in before making a final decision. You don't necessarily need the assistance of a stock broker in order to make wise investing decisions, but if you have the money to pay a reputable broker, it might prove to be a great idea.
Continue reading "Four Great Businesses to Choose When Investing" »
November 7, 2007
How to Handle Stock Price Declines
When a stock's price declines substantially, you might wonder what you should do. If you own the stock, should you sell before the stock declines more or purchase more shares at the lower price? If you are interested in the stock, should you purchase now or stay away from it? Before you decide, you need to assess the cause of the price decline. Typically, the stock's price is reacting to one of three things:
October 4, 2007
How to Assess Stock Returns
When designing an investment program, your expected rate of return is a critical element in determining how much to periodically invest to help reach a future goal. Since no one can predict future returns, the expected rate of return is typically estimated based on an analysis of past returns for various investments. So what return can you expect in the future for stock investments? The average annual return for the Standard & Poor's 500 (S&P 500) for the period from 1926 to 2006 was 10.4%, but you don't want to simply use this return without determining whether it is reasonable for the future.*
October 3, 2007
How to Evaluate a Stock Investment
You should thoroughly analyze a stock before purchase. However, if you pick up a company's annual report you can quickly become overwhelmed by all the numbers. What figures should you concentrate on when evaluating a stock? At a minimum, you should look for answers to these eight questions:
October 1, 2007
Overview of Small Cap Stocks
Before we write about small cap stocks it is important to understand what the term means. Companies are usually broken down into sizes based on their capitalized values. This value is determined by multiplying the number of shares of the company by the current market value of those shares as determined on the relevant stock exchange. For example, if we have a company with 100,000,000 shares outstanding and the stock id trading at $9.00 per share then the capitalized value is $900,000,000 ($9.00 per share X 100,000,000 shares). In the investment world a small cap stock is generally considered to be a company with a capitalization of less than $1,000,000,000 (one billion dollars).
June 4, 2007
Measuring Your Investment Risk
How has your portfolio performed compared to the major indexes? Has it experienced sharper or milder fluctuations? The answer to these questions will help you determine your portfolio’s risk. Different measures of risk exist for stocks versus bonds.
May 15, 2007
Home Depot 1Q profit drops 29.5 percent
Bad weather, soft real estate home sales, and subprime lending problems appear to be catching up with Home Depot, the world's largest home improvement supply chain.
Continue reading " Home Depot 1Q profit drops 29.5 percent" »
April 22, 2007
Free Stock Trades and Hot Dogs
ManagingMoney.com recently came across another way our users can Save Money. How about Free Stock Trades? That's right, free. You can't get a much better deal than that.
Zecco.com, a division of Equinox Securities out of Ontario, California, is billing themselves as the industry's first online trading website that provides zero commission stock trading. Investors can make up to 10 trades in any one day up to a total of 40 trades a month at no cost with a minimum initial investment of only $2,500 in cash or securities. If you manage to do over 40 trades in one month the cost is only $3.50 per trade.
January 1, 2007
First International Real Estate ETF Launched
On December 19th, right before the Holidays, State Street Global Advisors launched the first Exchange Traded Fund (ETF) designed to track overseas real-estate stocks. The streetTracks Dow Jones Wilshire International Real Estate ETF is traded under the symbol RWX on the American Stock Exchange.
Continue reading "First International Real Estate ETF Launched" »
December 17, 2006
Intuit Teams Up With Kiplinger
Intuit (INTU), the Mountain View California based maker of the hugely popular TurboTax, Quickbooks, and Quicken software titles announced this month a new collaboration with The Kiplinger Washington Editors, Inc.
December 13, 2006
What Are American Depository Receipts
American Depository Receipts (ADRs) are the form in which foreign stocks trade on U.S. stock exchanges. An ADR is a negotiable certificate issued by a U.S. bank (the depositary), representing shares of a foreign stock. The original foreign stock certificates are owned by the bank and held in the issuer’s country. Each ADR can represent a multiple or fraction of the original foreign stock. This ratio is set by the depositary so the ADR’s price falls within a range considered typical for U.S. stocks. ADR's offer several benefits for individuals wanting to purchase stocks on foreign stock exchanges.
December 9, 2006
Determining When to Sell a Stock
It’s always difficult to determine the proper time to sell a stock. What if you sell and the stock price increases dramatically? Or what if you hold onto the stock and its price declines? To help you decide when to sell, consider these signals:
December 7, 2006
MedImmune Ventures Scores Big with Vanda Pharmaceuticals
Shareholders of Vanda Pharmaceuticals (VNDA) are not the only happy people today as the stock currently is up over $10 per share on news of a successful Phase III trial of their antipsychotic drug Iloperidone. Another happy party is MedImmune Ventures , Inc., a wholly owned venture capital subsidiary of MedImmune (MEDI). MedImmune Ventures, Inc. was formed in 2002 and seeded over the course of the year with $200 million.To date they have invested in ~15 early and mid-stage biotech companies with Vanda Pharmaceuticals being one of those. Over the last couple of weeks MedImmune Ventures, Inc. has registered to sell 964,000 shares of Vanda. At $25 per share this equals $24,100,000, not a bad start for this young venture capital company.
December 2, 2006
Amazon Starts Competing with Google and Yahoo
Amazon.com is best known for being the largest online book seller, a somewhat dubious distinction as the profit margins in selling books are razor thin. So thin in fact, that a few years ago Barron's ran a front page story calling the company Amazon.bomb. However, despite the low margins and Barrons' forecast of doom, Amazon is making money and has diversified into other higher margin online products like Consumer Electronics and more. In a relatively unnoticed event this month, Amazon also started beta testing of a Search product modeled after Google and Yahoo keyword ads.
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November 3, 2006
Halloween Was a Treat for Lions Gate Entertainment
October is traditionally a scary month for investors. Does anyone remember the 1987 Stock Market Crash? This October was, however, quite good for investors, with a number of major indices hitting 5 year highs. This October and Halloween were especially good for an independent film company out of Vancouver named Lions Gate Entertainment (LGF).
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October 29, 2006
The Loser's Game
Warren Buffett, perhaps the greatest investor alive today, has an amusing way to describe his rules for investing:
Rule #1 — never lose money
Rule #2 — don’t forget rule #1
Although this may seem like an overly simple and conservative way to succeed, I hope to show you that these simple rules hold the key to successful investing for the vast majority of people: understand when you are playing a loser’s game and then play accordingly.
October 11, 2006
Stock Allocation
Your asset allocation mix represents your personal decisions about how much of your portfolio to allocate to various investment categories, such as stocks, bonds, and cash. How much you allocate to each category depends on your financial objectives and personal circumstances. However, it is a percentage that is likely to change over time. As your needs for safety of principal and a steady income stream become more important, the percentage of stocks you own is likely to decrease. Some factors to consider when deciding how much to allocate to stocks include:
September 16, 2006
Quickbooks Teams Up With Google
Intuit, the maker of the popular Quickbooks accounting software, and Google, the Search giant, announced this week their intent to imbed Google's search and advertising products into the new 2007 Quickbooks software.
September 7, 2006
Should You Favor Growth or Value Investing
The two basic investing styles are growth and value. While one style tends to perform better at any given time, the dominant style varies over time. The basic elements of each style include:
Continue reading "Should You Favor Growth or Value Investing" »
April 4, 2006
An Interview with Three Value Managers
Consuelo Mack on Wealthtrack recently interviewed three top value managers, David Winters, Susan Byrne, and John Montgomery. David Winters is portfolio manager for the Wintergreen Fund and specializes in global value investing, Susan Byrne is CEO of Westwood Management that runs the Westwood Large-Cap Equity Fund and focuses on large-cap U.S. stocks, and John Montgomery with Bridgeway Funds uses quantitative computer models in his search for value. Each gave their perspective as to where they are finding value despite stock markets and interest rates both at recent highs.
March 17, 2006
Stock Market Lessons
The stock market volatility of the past few years has been painful to endure, but that pain can teach some valuable lessons about the stock market:
January 25, 2006
Evaluating Potential Stock Investments
With thousands of stocks to choose from, developing a systematic approach to evaluating stocks can make it easier to make your selections. The first step is to narrow the options from the thousands of possible choices to ones most likely to meet your objectives. That typically involves screening companies based on criteria important to you. For instance, if you are interested in growth stocks, you might look for earnings growth over a certain percentage. Or for value stocks, you might look for companies with low price/earnings ratios or low price-to-book values.
November 14, 2005
A Return to Stock Dividends
During the bull market of the 1990s, dividends fell out of favor. With stock prices rising so dramatically, dividends didn’t seem to matter. Historically, however, dividends have been a significant component of stocks’ total return. For instance, from 1926 to 1985, dividends equaled approximately 49% of the total return of the Standard & Poor’s 500 (S&P 500), with an average dividend yield of 4.8%. In contrast, from 1998 to 2004, the average dividend yield was 1.5%.*
October 11, 2005
A Look at Price/Earnings (P/E) Ratios
Price/earnings (P/E) ratios are a common measure of stock value, both for individual stocks and the overall market. Calculating a P/E ratio is straightforward — it is simply the price of a single share of stock divided by the company’s per share earnings. For example, a stock selling at $50 per share with $2 per share of earnings would have a P/E ratio of 25. However, P/E ratios can be calculated using different earnings numbers. Trailing P/E ratios, which are typically reported in newspapers, use earnings per share for the most recent four quarters, while forward P/E ratios use forecasts of future earnings per share.
Coming to Terms with Stocks
With all of the volatility in the stock market over the past several years, it can be difficult to determine how to devise an investment strategy to help achieve your financial goals. To help you determine a reasonable rate of return to expect on your stock investments, it might be helpful to review some “facts” about the stock market:
September 12, 2005
Investing in Foreign Stocks at Home
Looking for a way to invest in specific foreign companies without learning all the intricacies of other countries’ stock markets? You may want to consider American Depositary Receipts (ADRs).
June 15, 2005
Using Financial Reports to Predict a Slowing Economy
Reports of slowing growth or earnings declines can severely punish a stock’s price. So that you aren’t surprised by this type of news for your stocks, look out for these three warning signs when you review financial reports:
Continue reading "Using Financial Reports to Predict a Slowing Economy" »
January 15, 2005
Signs It's Time To Sell A Stock
It’s always difficult to determine the proper time to sell a stock. What if you sell and the stock price increases dramatically? Or what if you hold on to the stock and its price goes nowhere or declines? To help you decide when to sell, consider these signs:
November 13, 2004
Are Stock Market Correlations Increasing?
A primary reason to invest in international stocks is to diversify your portfolio to reduce its risk. If world markets do not move in perfect harmony, owning stocks from different countries should reduce the impact of a downturn in one stock market. But as investing becomes more global in nature, there is concern that stock markets are becoming more correlated.
Continue reading "Are Stock Market Correlations Increasing?" »
July 14, 2004
The Basics of Stock Market Indexes
Historically, stock market indexes have been closely watched as an indicator
of the market's overall performance. While that role is still important, the number
of stock market indexes has grown explosively as mutual funds and investment managers
search for relevant indexes to use as benchmarks to compare performance.
Measuring a Stock's Risk - Market Risk & Nonmarket Risk
Basically, stocks are subject to two types of risk - market risk and nonmarket
risk. Nonmarket risk, also called specific risk, is the risk that events specific
to a company or its industry will adversely affect the stock's price.
Continue reading "Measuring a Stock's Risk - Market Risk & Nonmarket Risk" »
December 1, 2003
Convertible Bonds - Part Bond, Part Stock
Convertible bonds are a hybrid investment, combining features of both stocks and bonds. Like all bonds, convertibles pay a fixed interest rate for the bond's life, with the principal returned at the end of the bond's term. However, convertible bonds can also be exchanged for a specific number of shares of the issuing company's common stock.
Continue reading "Convertible Bonds - Part Bond, Part Stock" »
May 1, 2003
Should You Invest Globally?
For much of the 1990s, the U.S. stock market significantly outperformed international stock markets. Never a particularly large percentage of U.S. investment portfolios, international investments drew even less attention during this time. But the U.S. stock market has experienced its third consecutive year of negative returns, with many expecting U.S. stocks to encounter below-average returns in the future. Is now the time to take another look at international investments? Before deciding, consider the following:
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