by 趙永祥 2017-12-07 07:48:08, 回應(0), 人氣(12)

The Greatest Investors

Becoming a successful investor takes education, patience and maybe even a little luck. 

Historically, the market has returned a solid 12% per year on average. The icons we'll present here represent the pinnacle of the financial world. Each one has dramatically exceeded market performance. They have all made a fortune off their success and in many cases, they've helped millions of others achieve similar returns. 

These investors differ widely in the strategies and philosophies they applied to their trading; some came up with new and innovative ways to analyze their investments, while others picked securites almost entirely by instinct. Where these investors don't differ is in their ability to consistently beat the market. 

Read on to learn more about these outstanding investors and how they made their fortunes.

The Greatest Investors: Thomas Rowe Price, Jr.

by 趙永祥 2017-12-07 07:41:35, 回應(0), 人氣(13)

Morgan Stanley Announces Launch of Morgan Stanley Access Investing

Morgan Stanley (MS) is getting into the online investing market, aiming to court millennial investors and steal the thunder from rivals Merrill EdgeWellsTrade and Ally Invest. Earlier this week, the Wall Street firm's wealth management unit announced the launch of Morgan Stanley Access Investing, which is a new online investing platform that relies on the company's proprietary goals-based wealth management technology to help investors build, monitor and automatically rebalance their investment portfolios online.

"Morgan Stanley Access Investing leverages the firm's intellectual capital to reach a broader audience of investors who are looking to achieve their financial goals," said Naureen Hassan, chief digital officer at Morgan Stanley Wealth Management, in a press release announcing the new platform. "Morgan Stanley Access Investing is an opportunity for financial advisors to grow their book of business by making connections with prospects earlier and eventually establishing full-service relationships when clients are ready."

[Check out Investopedia's  Ally Invest review to learn more about this low-cost broker with powerful charting tools.]

Access Investing was built in-house at Morgan Stanley and is aimed at self-directed investors who want a low-cost, easy-to-use platform. The launch pits Morgan Stanley against Merrill Lynch, Wells Fargo & Company (WFC​) and Ally Financial Inc. (ALLY) as they all go after younger investors who will become the future millionaires. Access Investing will provide customers with the ability to invest and trade exchange-traded funds, mutual funds and seven thematic portfolios with themes including sustainability, gender diversity, next-wave technology and emerging market trends.

"Our analysis has shown that the next generation of high net worth individuals is looking for more than traditional portfolio allocation. By offering a diverse set of portfolios, we are enabling our clients to invest in what they believe," said Lisa Shalett, head of investment and portfolio solutions at Morgan Stanley Wealth Management, in the same press release. "Morgan Stanley Access Investing portfolios are backed by the same proprietary manager selection analytics used throughout the firm, which we believe may improve the odds of adding performance value for the end investor." Customers must have at least $5,000 to open an account, and advisory fees are set at 0.35% of assets under management.

Morgan Stanley is just the latest traditional financial firm to get into the robo-advising market, which is growing in popularity. As more investors balk at paying hefty fees for hand-holding, they are turning to online investment services and exchange-traded funds to save money. Millennials by nature are more self directed and comfortable with technology, and as a result, they have no problem investing online. They also want help in some instances, which has sparked a race in the financial services industry to marry online investing with real-life advice, all at a cheap cost.

When Wells Fargo announced WellsTrade earlier this year, the firm said that it was going after existing millennial customers who may be looking to open their first investment account. Meanwhile, Merrill Edge and Ally Invest are embracing technology as a way to lure millennial investors their way. Ally Invest thinks it has an edge because it also has a digital bank that is resonating with younger generations. Morgan Stanley, meanwhile, is betting that offering out-of-the-box investment themes could serve as a differentiator.

Read more: Morgan Stanley Announces Launch of Morgan Stanley Access Investing | Investopedia 

by 趙永祥 2017-11-25 07:31:56, 回應(0), 人氣(17)

by 趙永祥 2017-11-17 07:17:24, 回應(0), 人氣(17)

The Amazon Effect On The U.S. Economy

Amazon.com Inc. (AMZNAMZNAmazon.com Inc 1,137.29+0.94%) is everywhere. By disrupting the way people shop, Amazon has created economic ripple effects that go far beyond the customer’s wallet to directly and indirectly impact economic activity, whether that impact is inflation, jobs or investment.

The Wallet Opener

Amazon started with books and then added pretty much everything you can think of, from engagement rings to coffins, for sale on their site. Add the convenience of having it delivered promptly to your doorstep, and customers have rewarded Amazon with open wallets, so much so that North American electronics and general merchandise sales for the company have grown from a mere 2% of total general merchandise retail sales (GAFO) in 2006 to more than 60% in 2016. Similarly over the past 10 years, this category of Amazon sales has increased from a little over 7% of e-commerce retail sales to more than 66%. And the growth is accelerating. Last year alone, this segment saw a 28% jump in sales compared to 2015.

If you consider a more macro picture, consumers spending more is a good sign because it contributes to the GDP. Having said that, in no way is consumer spending on Amazon significant enough yet to tip the GDP scale. But it could be in future.

The Inflation Killer

Amazon has disrupted traditional retail and accelerated the demise of struggling players. Without storefronts the company’s overhead costs are significantly lower than other retailers giving them an edge to undercut on prices and operate on wafer thin profit margins.

That makes some economy watchers nervous about Amazon’s deflationary impact. Ideally, low unemployment is accompanied by wage growth, which in turn fuels inflation as companies pass on the cost to consumers. This is the logic of the Phillip’s Curve, but Amazon has disrupted that as well.

Higher competition and lower prices limit the companies’ ability to pass on any wage increases to consumers. Those worries were recently echoed in the wake of the Whole Foods acquisition where remarks by Chicago Federal Reserve President Charles Evans were construed in that context.

“We know that technology is disruptive. It’s changing a number of business models that used to be very successful, and you have to wonder if certain economic actors can continue to maintain their price margins, or if they are under threat from additional competition,” Evans said according to Bloomberg. “And that could be an undercurrent for holding back inflation.”

The Employer

In its latest annual report Amazon lists its total number of employees at 341,400. This includes both full-time and part-time employees. For a company this size that number is low but expected because Amazon does not have a significant storefront presence like Wal-Mart Stores Inc. (WMTWMTWal-Mart Stores Inc99.62+10.90%) which employs 2.3 million people worldwide.

Amazon also engages third party contractors/companies for tasks like deliveries. 

Those people go door to door dropping off Amazon packages but are not employees for the company. Does that matter? Yes and no.

In a way, these are jobs that are that people are doing, therefore, some credit could go to Amazon for job creation. On the other hand hiring contractual workers helps the company keep its costs in check. Amazon has in the past been sued by contingent workers claiming they received less than minimum wage, meanwhile there were others that criticized the company for harsh working conditions.

Another angle of the jobs conversation is how many jobs Amazon is eliminating. Considering the company is hurting other retailers, forcing them to shutter stores and cut back on costs, any job gains at Amazon may not in fact mean anything. Though the actual extent of job loss is hard to determine according to research by the Institute of Local Self-Reliance (ILSR), in 2015 Amazon’s impact on jobs in the U.S. was a net loss estimated at 148,774 jobs. Another estimate by American Booksellers Association (ABA) and Civic Economics pegged net job loss at 222,000 for 2015. This gap could increase further with automation.

Amazon’s quest for innovation and technology to achieve operational efficiency has people worried about elimination of jobs. Those worries are not far-fetched considering that the company is testing its Amazon Go store in Seattle.

The Facilitator

Amazon’s logistics infrastructure doesn’t just help it ship to consumers all across the globe, it also aids another group of people: small businesses. Listing their products on Amazon helps them increase their customer reach and the delivery essentially becomes Amazon’s headache.

“More than 100,000 entrepreneurs achieved over $100,000 in sales selling on Amazon in 2016,” the company said in a press release earlier this year.

As small businesses thrive, it will lead to further job creation and spending. Amazon says that 600,000 jobs were created outside of the company as a result of the Amazon Marketplace for small businesses and entrepreneurs.

The Tax Payer

Income Tax: Does Amazon pay tax? Yes. Is it a lot? No. Principally, President Trump’s claim about Amazon not paying any tax is wrong, however, a 2016 analysis by the New York Times and S&P Global Market Intelligence reveals that from 2007 to 2015, Amazon paid taxes at an average rate of 13%, nearly half of the 26.9% average for the S&P 500 companies. But it wasn’t alone. Other tech giants like Facebook, Alphabet and Apple also had an average tax rate significantly lower than the average.

Sales Tax: Not having a physical presence or employees in certain states also saved Amazon sales tax. Sales tax is a complicated subject with rates and rules varying across states. The most simple explanation in this context is that tax laws in many states need the physical presence of an online retailer in the state in order to collect sales tax. Therefore by not having its own warehouses or employees in certain states, Amazon saved on tax.

This however, wasn’t a problem specific to Amazon as this applied to any online retailer shipping goods across stateliness. The National Conference of State Legislatures in its most recent estimate pegs the 2015 tax revenue loss due to this peculiarity at $25 billion. Amazon acknowledged this issue in its annual reports, and over a period of time it started collecting sales tax on all goods that were sold in or delivered to states that have such a tax. Five states: Alaska, Delaware, Oregon, New Hampshire and Montana do not impose a sales tax.

The sales tax issue gets even more complicated when it pertains to third party sellers.

The Investment

Amazon is in the race to become the first trillion dollar company by market cap. This year it hit many milestones including crossing the $1,000 mark for its share price. A recent jump in shares briefly crowned CEO Jeff Bezos, who owns 17% in the company, as the richest man in the world.

The run for Amazon shares has been phenomenal for many years. The company made its stock market debut 20 years ago and $100 invested then would have turned close to a spectacular $63,000. (See also: If You Had Invested Right After Amazon's IPO.)

In the past 10 years, the stock has given a whopping 1180% return, as of August 17, 2017, while the 5 year return was nearly 300%. The S&P 500 meanwhile returned only 68% over the 10 year period. Imagine the wealth that was created by Amazon's stock return and the potential economic activities it could finance in the future.

The Investor

Amazon isn’t just a bumper investment for those who go in at the right time, it is a big investor itself. As of 2016 year-end, the company held a portfolio of $19.6 billion in cash equivalents and marketable debt securities. It also had $467 million worth of equity investments or equity warrants in public and private companies.

Read more: The Amazon Effect On The U.S. Economy | Investopedia 

by 趙永祥 2017-11-16 00:44:09, 回應(0), 人氣(14)

Technical Analysis: 

Fundamental VS.Technical Analysis

Technical analysis and fundamental analysis are the two main schools of thought when it comes to analyzing the financial markets. As we’ve mentioned, technical analysis looks at the price movement of a security and uses this data to predict future price movements. Fundamental analysis instead looks at economic and financial factors that influence a business. Let’s dive deeper into the details of how these two approaches differ, the criticism against technical analysis, and how technical and fundamental analysis can be used together.

The Differences

Tools of the Trade

Technical analysts typically begin their analysis with charts, while fundamental analysts start with a company’s financial statements. (For further reading, see Introduction To Fundamental Analysis and Advanced Financial Statement Analysis).

Fundamental analysts try to determine a company’s value by looking at its income statementbalance sheet, and cash flow statement. In financial terms, the analyst tries to measure a company’s intrinsic value by discounting the value of future projected cash flows to a net present value. A stock price that trades below a company’s intrinsic value is considered a good investment opportunity and vice versa.

Technical analysts believe that there’s no reason to analyze a company’s financial statements since the stock price already includes all relevant information. Instead, the analyst focuses on analyzing the stock chart itself for hints into where the price may be headed.

Time Horizon

Fundamental analysis takes a long-term approach to investing compared to the short-term approach taken by technical analysis. While stock charts can be delimited in weeks, days, or even minutes, fundamental analysis often looks at data over multiple quarters or years.

Fundamentally-focused investors often wait a long time before a company’s intrinsic value is reflected in the market. For example, value investors assume that the market is mispricing a security over the short-term, but that the price of the stock will correct itself over the long run. This “long run” can represent a timeframe as long as several years, in some cases. (For more insight, read Warren Buffett: How He Does It and What Is Warren Buffett’s Investing Style?).

Fundamentally-focused investors also rely on financial statements that are filed quarterly, as well as changes in earnings per share that don’t emerge on a daily basis like price and volume information. After all, a company can’t implement sweeping changes overnight and it takes time to create new products, marketing campaigns, and other strategies to turn around or improve a business. Part of the reason that fundamental analysts use a long-term timeframe, therefore, is because the data they use to analyze a stock is generated much more slowly than the price and volume data used by technical analysts.

Trading v. Investing

Technical analysis and fundamental analysis have different goals in mind. Technical analysts try to identify many short- to medium-term trades where they can flip a stock, while fundamental analysts try to make long-term investments in a stock’s underlying business. A good way to conceptualize the difference is to compare it to someone buying a home to flip versus someone that’s buying a home to live in for years to come.

The Critics

Many critics view technical analysis as unproven at best or wishful thinking at worst. Don’t be surprised to hear these critics question the validity of the discipline to the point where they mock supporters. While most Wall Street analysts focus on the fundamentals, just about any major brokerage employs technical analysts. There are also professional certifications for technical analysts and some techniques are included in the CFA exam, among others.

Much of the criticism of technical analysis is focused on the Efficient Market Hypothesis, which states that any past trading information is already reflected in the price of the stock. Taken to the extreme, the ‘strong form efficiency’ hypothesis states that both technical and fundamental analysis are useless because all information in the market is accounted for in a stock’s price. This thinking is explained in detail in books like a Random Walk Down Wall Street, which states that an investor is better of guessing than stock picking. (For more insight, read What Is Market Efficiency? and Working Through The Efficient Market Hypothesis).

The reality is that the EMH is still just that – a hypothesis. It’s up to investors to decide who is correct and determine their own philosophy.

Can They Co-Exist?

Technical analysis and fundamental analysis are often seen as opposing approaches to analyzing securities, but many investors have experienced success by combining the two techniques. For example, an investor may use fundamental analysis to identify an undervalued stock and use technical analysis to find a specific entry and exit point for the position. Often times, this combination works best when a security is severely oversoldand entering the position too early could prove costly.

Alternatively, some primarily technical traders will look at fundamentals to support their trade. For example, a trader may be eyeing a breakout near an earnings report and look at the fundamentals to get an idea of whether the stock is likely to beat earnings.

The idea of mixing technical and fundamental analysis isn’t always well-received by the most devoted groups in each school, but there are certainly benefits to at least understanding both schools of thought.

In the following sections, we’ll take a more detailed look at technical analysis.

Read more: Technical Analysis: Fundamental VS. Technical Analysis 

by 趙永祥 2017-11-15 22:11:23, 回應(0), 人氣(14)

Could Amazon's Market Cap Be $1 Trillion Within a Year?

Online retailing behemoth Amazon.com Inc. 

(Amazon.com Inc  1,136.84+0.68%/per share) is on a path to double its profits by the year 2020, pushing its market capitalization over $1 trillion as soon as one year from now, according to analysts at Morgan Stanley 

(MSMorgan Stanley  48.38-0.51%). 

These analysts note that non-retail businesses such as cloud computing, the Amazon Prime video subscription service, and advertising already are generating nearly half the company's profits.

In a November 12 research note entitled "Amazon.com Inc: The Math Behind the Trillion Dollar Bull Case," Morgan Stanley explains how Amazon's share price could exceed $2,000 by the end of 2018, up 77% from the open on November 14, and enough to push the company's market cap above $1 trillion, given its current shares outstanding.

On a sum-of-the-parts basis, Morgan Stanley places these values on Amazon's four principal lines of business: core retail, $600 billion; Amazon Web Services (AWS), its cloud-computing division, $270 billion; the Amazon Prime preferred shopper and video subscription service, $70 billion; and the Amazon Media Group (AMG), its advertising business, $55 billion. Those parts add up to $995 billion, and Morgan Stanley notes that their valuation of AWS is a particularly conservative estimate, in their opinion.

Largely based on projections that Amazon can triple its revenues by 2025, representing a significant slowdown from its recent history, research firm MKM Partners expects that its market cap can exceed $1.6 billion by that year, MarketWatch reports. (For more, see also: How Amazon Will Be Worth $1.6 Trillion in Less Than a Decade.)

Looking at gross profits, Morgan Stanley projects that these will grow from about $65 billion in 2017 to $133 billion in 2020. For 2017, the company's core retail business is estimated to contribute $34 billion, with the other $31 billion coming from the other businesses listed above. In 2020, Morgan Stanley expects core retail profits to be $68 billion, with $65 billion from the other businesses.

Core Retail

The core retail business consists of first-party (1P) and third-party (3P) sales. That is, sales made by Amazon directly out of its own inventory and sales made through Amazon's website by independent merchants that pay Amazon a commission. Morgan Stanley values the 1P business at $200 billion and the even more rapidly-growing 3P business at $400 billion.

The valuation of the 1P business is based on the assumption that Amazon will improve its EBIT margin from about 2% today to 5.5% by 2022, a 20% premium to the current 4.6% margin at Wal-Mart Stores Inc. (WMT

). Revenues are projected to be growing at a compound annual rate of 13% in 2020 – 2022, which Morgan Stanley considers to be conservative, even given a current peer group median of 5.5%. They also assume that the market would value this business at 12 times EBITDA, versus a median of 10.5 times for a peer group, justified by Amazon's faster sales growth.

Regarding the 3P business, Morgan Stanley projects a 25% EBITDA margin by 2022, in line with the roughly 29% margins enjoyed by competitors such as eBay Inc. (EBAY

), Etsy Inc. (ETSY
Etsy Inc
), MercadoLibre Inc. (MELI
MercadoLibre Inc
) and Alibaba Group Holding Ltd. (BABA
Alibaba Grp
). A valuation at 18 times EBITDA would be in line with peers, they say, and they project annualized revenue growth for Amazon at 28% in 2020 – 2022, versus 32% for peers.

Today's Virtual Mall

Rose Klimovich, who teaches retail and fashion marketing at Manhattan College in New York City, draws an analogy with the brick-and-mortar shopping malls that are in decline as a result of Amazon's onslaught. She says that Amazon is like the big department stores that serve as anchor tenants in traditional malls, drawing in smaller merchants that hope to increase their own customer traffic through this proximity. Today, Amazon is the premier virtual mall, and those smaller merchants are increasingly compelled to set up shop there.

Cloud Computing

Morgan Stanley projects that AWS, the market leader, can improve its operating margin by about 100 basis points per year, reaching 33% by 2022. They applied an EV/EBITDA valuation multiple of 13 times, versus about 14.5 times for its peer group, reaching a value of $270 billion. They also project that AWS will be growing revenues at an 18% annual rate in 2020 – 2022, versus a current median growth rate of 7% for its peers. (For more, see also: Microsoft Cloud Sales Show It's Catching Up With Amazon.)

Subscription and Advertising

The Amazon Prime subscription business is valued by Morgan Stanley at $70 billion, or EV/sales of 4.5 times, versus 6.0 times for a peer group. They project sales growth at 10% annually in 2020 – 2022, versus a current peer group median of 30%. Meanwhile, they value the AMG advertising business at $55 billion, at an EV/sales multiple of 6.0 times, compared to a peer group median of 5.25 times. They forecast revenue growth at 17% annually in 2020 – 22, compared to a peer group median of 20%.

Read more: Could Amazon's Market Cap Be $1 Trillion Within a Year? | Investopedia 

by 趙永祥 2017-11-15 08:48:48, 回應(0), 人氣(19)

Investment Valuation Ratios: Price/Cash Flow Ratio

The price/cash flow ratio is used by investors to evaluate the investment attractiveness, from a value standpoint, of a company's stock. This metric compares the stock's market price to the amount of cash flow the company generates on a per-share basis.

This ratio is similar to the price/earnings ratio, except that the price/cash flow ratio (P/CF) is seen by some as a more reliable basis than earnings per share to evaluate the acceptability, or lack thereof, of a stock's current pricing. The argument for using cash flow over earnings is that the former is not easily manipulated, while the same cannot be said for earnings, which, unlike cash flow, are affected by depreciation and other non-cash factors.



The dollar amount in the numerator is the closing stock price for the fictitious Zinzibar Holdings as of December 30, 2017 as reported in the financial press or over the Internet in online quotes. In the denominator, the cash flow per share is calculated by dividing the reported net cash provided by operating activities (cash flow statement) by the weighted average number of common shares outstanding (income statement) to obtain the $3.55 cash flow per share figure. By simply dividing, the equation gives us the price/cash flow ratio that indicates as of Zinzibar Holdings' 2017 fiscal yearend, its stock (at $67.44) was trading at 19.0-times the company's cash flow of $3.55 per share.


Sometimes free cash flow is used instead of operating cash flow to calculate the cash flow per share figure.


Just as many financial professionals prefer to focus on a company's cash flow as opposed to its earnings as a profitability indicator, it's only logical that analysts in this camp presume that the price/cash flow ratio is a better investment valuation indicator than the P/E ratio.

Investors need to remind themselves that there are a number of non-cash charges in the income statement that lower reported earnings. Recognizing the primacy of cash flow over earnings leads some analysts to prefer using the P/CF ratio rather than, or in addition to, the company's P/E ratio.

Despite these considerations, there's no question that the P/E measurement is the most widely used and recognized valuation ratio.

Read more: Investment Valuation Ratios: Price/Cash Flow Ratio 

by 趙永祥 2017-11-15 08:43:20, 回應(0), 人氣(24)

Investment Valuation Ratios: Price/Sales Ratio

A stock's price/sales ratio (P/S ratio) is another stock valuation indicator similar to the P/E ratio

The P/S ratio measures the price of a company's stock against its annual sales, instead of earnings.

Like the P/E ratio, the P/S reflects how many times investors are paying for every dollar of a company's sales. Since earnings are subject, to one degree or another, to accounting estimates and management manipulation, many investors consider a company's sales (revenue) figure a more reliable ratio component in calculating a stock's price multiple than the earnings figure.



The dollar amount in the numerator is the closing stock price for the fictitious Zinzibar Holdings as of December 31, 2017, as reported in the financial press or over the internet in online quotes. In the denominator, the sales per share figure is calculated by dividing the reported net sales (income statement) by the weighted average number of common shares outstanding (income statement) to obtain the $13.30 sales per share figure. By simply dividing, the equation gives us a P/S ratio indicating that, as of Zinzibar Holdings 2017 fiscal yearend, its stock (at $67.44) was trading at 5.1-times the company's sales of $13.30 per share. This means that investors would be paying $5.10 for every dollar of Zinzibar Holdings' sales.




"The king of the value factors" is how James O'Shaughnessy describes the P/S ratio in his seminal book on investing strategies, What Works on Wall Street (McGraw-Hill, 1997). Using Standard & Poor's CompuStat database, his exhaustive analysis makes clear that "the stock market methodically rewards certain investment strategies while punishing others." No matter what your style of investing, O'Shaughnessy's research concludes that "low price-to-sales ratios beat the market more than any other value ratio, and do so more consistently."

As powerful a valuation metric as the P/S ratio may be, it would be a mistake for investors to put all their stock price valuation eggs in one basket. However, the P/S ratio does provide another perspective that complements the other valuation indicators - particularly the P/E ratio - and is a worthwhile addition to an investor's stock analysis toolbox.

by 趙永祥 2017-11-11 16:09:27, 回應(0), 人氣(19)

Find and Itemize Your Assets

The first step in this process is to take stock of what you have right now. You may have any number of accounts with banks, former employers, insurance companies and more; now it’s time to track them all down and make a list of them. If your records are up to date, this will be easy. But if they happen to be old, incomplete or apparently lost, finding the documentation may involve some detective work, so be prepared to devote time and effort when you start this project. Here are some of the possible methods you can use to find lost or misplaced assets.

Life Insurance

You vaguely remember purchasing a policy for yourself in the past, but you can’t seem to locate any paperwork for it. All is not lost: If you remember the name of your carrier, an internet search followed by either a phone call or online inquiry should quickly get you a replacement copy of your policy. If it is permanent life insurance, find out how much cash value is in the policy (term life insurance generally doesn’t accrue a cash value; see Intro to Insurance: Types of Life Insurance to learn more). Also inquire as to the amount of the death benefit, whether the policy is still in force and, if it has lapsed, whether it can be reinstated – provided you pay whatever premium is due.

If a relative purchased life insurance when you were a child, naming you as the beneficiary, and the paperwork that he or she gave you when you graduated from high school has long since disappeared, then a polite inquiry may be necessaryIf you are simply unable to recall the company that holds the policy, you can use a search service. For a fee, this site will search through a vast database of insurance policies in just a few minutes. There are billions of dollars of unclaimed death benefits waiting for their beneficiaries to collect them.

Savings Bonds

The first step in this process is to take stock of what you have right now. You may have any number of accounts with banks, former employers, insurance companies and more; now it’s time to track them all down and make a list of them. If your records are up to date, this will be easy. But if they happen to be old, incomplete or apparently lost, finding the documentation may involve some detective work, so be prepared to devote time and effort when you start this project. Here are some of the possible methods you can use to find lost or misplaced assets.

Life Insurance

You vaguely remember purchasing a policy for yourself in the past, but you can’t seem to locate any paperwork for it. All is not lost: If you remember the name of your carrier, an internet search followed by either a phone call or online inquiry should quickly get you a replacement copy of your policy. If it is permanent life insurance, find out how much cash value is in the policy (term life insurance generally doesn’t accrue a cash value; see Intro to Insurance: Types of Life Insurance to learn more). Also inquire as to the amount of the death benefit, whether the policy is still in force and, if it has lapsed, whether it can be reinstated – provided you pay whatever premium is due.

If a relative purchased life insurance when you were a child, naming you as the beneficiary, and the paperwork that he or she gave you when you graduated from high school has long since disappeared, then a polite inquiry may be necessaryIf you are simply unable to recall the company that holds the policy, you can use a search service. For a fee, this site will search through a vast database of insurance policies in just a few minutes. There are billions of dollars of unclaimed death benefits waiting for their beneficiaries to collect them.

Savings Bonds

Read more: Find and Itemize Your Assets | Investopedia 

by 趙永祥 2017-11-11 16:06:18, 回應(0), 人氣(15)

Midlife Retirement Planning Guide

If you’re like a lot of people, you have probably changed jobs – or even careers – many times over the years. You probably weren’t thinking too much about retirement, even if you did participate in one or more employer-sponsored retirement plans and opened a few individual retirement accounts (IRAs). Having reached your midlife years, there’s a good chance you have a collection of plans and accounts scattered around, although off the top of your head, you may not know exactly where they all are and what each is invested in.

Now it’s time to get organized. This may seem like a daunting task. For starters, if record-keeping is not your forte, you may be unsure of where to start your search. What's more, in all likelihood, many of your friends (and perhaps you, too) seriously wonder if you will ever be able to stop working, let alone whether you will live with any degree of comfort or security afterwards.

Feeling unsure that you’ll like what you find, you may have procrastinated. That is why we created this tutorial – because we know that having some guidance can help you take the steps you need to in order to help secure your future.

The following chapters will spell out those steps in detail. They are designed to assist you in identifying the topics that pertain to you and in developing a realistic plan to get your arms around what you've already saved for retirement and start planning seriously for the future. If you're married, go through this process with your spouse and make sure that your plans are coordinated.

We suggest you start by reading through all the chapters, then decide what works best for you.

Read more: Introduction to Midlife Retirement Planning | Investopedia 

by 趙永祥 2017-11-11 16:04:28, 回應(0), 人氣(17)

Evaluate the Performance of Your Investments

Congratulations, you’re halfway done! Now that you know what you have along with some idea of how to accomplish your goals, it’s time to go over your portfolio to see whether it fits the investment objectives and risk tolerance that you identified. You also need to examine each of your investments and other assets to see whether each one is providing you with a competitive return relative to its peers.

You may want to hire a professional to help you analyze your holdings, in part because there are some tough things they can do fairly easily – such as mathematically quantify the volatility of your portfolio. From reading the previous chapter, you should have at least a general idea of whether your current portfolio fits your objectives. In order to give you an idea of how this works, let’s look at a hypothetical scenario.

A Performance Scenario

Wendy P. is 42 years old and works full time in marketing. She moved around from job to job in years past, but is making good money in her current position and plans to stay there for the foreseeable future.

Wendy has a moderate risk tolerance and plans to work until age 67 (25 years from now). She has accumulated the following assets since she graduated from college:

• Whole life insurance policy: $100K face value; $11,000 cash value

• 300 shares of Sprint, purchased for her as a college graduation gift and held in a retail brokerage account

• $10,000 in her employer’s 401(k) plan with a 3% matching contribution (she contributes 7% of her $50,000 salary), invested in an aggressive growth fund

• $20,000 IRA rollover at Merrill Lynch, invested in a utility stock fund

• $15,000 contributory Roth IRA at her bank, invested in a growth-and-income fund

• $10,000 in a money market fund

• $40,000 of home equity, remaining balance on mortgage of $70,000, which will be paid off in 18 years

Meanwhile, if her utility and growth-and-income funds grow at a rate of 6% over that time, they will be collectively worth about $150,000 by retirement. Her house should be paid off by then, and when she stops working, she may want to look at rolling over her retirement plan into a fixed or indexed annuity that can pay her a guaranteed stream of income for life. In fact, her growth fund may actually be housed inside an annuity contract inside her retirement plan now, but this may only reduce her returns over time, as
 variable annuities come with several layers of fees and expenses that will reduce her returns over time. If Wendy wants to really let her money grow, she would be wise to invest directly in a growth fund that is not part of a variable contract if that is available in her plan.Wendy appears to be reasonably on track. Because of her age, her primary investment objective at this point should still be growth, and, for the most part, her portfolio seems to reflect that. She has an adequate emergency fund and her home equity is increasing, as it should be. The mutual funds in her retirement accounts seem to be weighted a bit conservatively at this point since they can grow for another 25 years, but if Wendy continues to contribute $3,500 annually to her aggressive growth fund with a matching contribution of $1,500, it will become her main holding in just a few years. In 25 years, it could be worth about $600,000 if it grows at an average annual rate of 10%.

As noted in the introduction to this section, it’s also a good idea to examine each of your holdings separately. Wendy would be wise to get a fact sheet on each of her mutual funds from Morningstar or another third-party analyst that can provide unbiased commentary on the fund’s performance as well as a breakdown of historical performance, fees and expenses and how the fund compares to its peers. She is wise to hold her stock outside of a retirement account so that she can get long-term capital gains treatment on the sale whenever she decides to liquidate it. If she reinvests the dividends now, that may be another source of income when she retires.

Of course, your risk tolerance and time horizon will likely differ from Wendy’s. If you were in her shoes, perhaps you wouldn’t feel comfortable having that much of your retirement money invested in an aggressive mutual fund and would choose more moderate alternatives. Just remember that you need to have at least the majority of your retirement money growing faster than inflation over time, so that your purchasing power is increasing. Wendy still has her moderate funds, plus her home equity and the cash value in her policy, to access in addition to her emergency fund (the money market account) if she needs to.

Read more: Evaluate the Performance of Your Investments | Investopedia 

by 趙永祥 2017-11-04 15:09:53, 回應(0), 人氣(20)

Investment Valuation Ratios: Price/Book Value Ratio

The price-to-book value ratio is also helpful to investors valuating a company. It compares a stock's per-share price (market value) to its book value (shareholders' equity). The price-to-book value ratio, expressed as a multiple (i.e. how many times a company's stock is trading per share compared to the company's book value per share), is an indication of how much shareholders are paying for the net assets of a company.

The book value of a company is the value of a company's assets expressed on the balance sheet. It is the difference between the balance sheet assets and balance sheet liabilities and is an estimation of the value if it were to be liquidated.

The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm.



The dollar amount in the numerator, $67.44, is the closing stock price for the fictitious Zinzibar Holdings as of December 30, 2017, as reported in the financial press or over the Internet in online quotes. In the denominator, the book value per share is calculated by dividing the reported shareholders' equity (balance sheet) by the number of common shares outstanding (balance sheet) to obtain the $18.90 book value per-share figure. By simply dividing, the equation gives us the price/book value ratio indicating that, as of Zinzibar Holdings' 2017 fiscal yearend, its stock was trading at 3.6-times the company's book value of $18.90 per share.


A conservative alternative to using a company's reported shareholders' equity (book value) figure would be to deduct a company's intangible assets from its reported shareholders' equity to arrive at a tangible shareholders' equity (tangible book value) amount. For example, Zinzibar Holdings' FY 2017 balance sheet reports goodwill (in millions $) of $2,428.8 and net intangible assets of $756.6, which total $3,185.4. If we deduct these intangible assets from its shareholders' equity of $4,682.8 of the same date, Zinzibar Holdings is left with a significantly reduced tangible shareholders' equity of $1,497.4. Factoring this amount into our equation, the company has a book value per share of only $6.04, and the price/book value ratio then skyrockets to 11.2 times.


If a company's stock price (market value) is lower than its book value, it can indicate one of two possibilities. The first scenario is that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price. That's the way value investors think. It is assumed that the company's positive fundamentals are still in place and will eventually lift it to a much higher price level.

On the other hand, if the market's low opinion and valuation of the company are correct (the way growth investors think), at least over the foreseeable future, as a stock investment, it will be perceived at its worst as a losing proposition and at its best as being a stagnant investment.

Some analysts feel that because a company's assets are recorded at historical cost that its book value is of limited use. Outside the United States, some countries' accounting standards allow for the revaluation of the property, plant and equipment components of fixed assets in accordance with prescribed adjustments for inflation. Depending on the age of these assets and their physical location, the difference between current market value and book value can be substantial, and most likely favor the former with a much higher value than the latter.

Also, intellectual property, particularly as we progress at a fast pace into the so-called "information age", is difficult to assess in terms of value. Book value may well grossly undervalue these kinds of assets, both tangible and intangible.

The P/B ratio therefore has its shortcomings but is still widely used as a valuation metric. It is probably more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks.

In terms of general usage, it appears that the price-to-earnings (P/E) ratio is firmly entrenched as the valuation of choice by the investment community. (Skip ahead to the P/E chapter here.)

Read more: Investment Valuation Ratios: Price/Book Value Ratio 

by 趙永祥 2017-11-03 21:26:13, 回應(0), 人氣(15)

9 Stocks Outperforming by Investing in Growth: Goldman

by 趙永祥 2017-10-21 20:54:08, 回應(0), 人氣(22)

The Greatest Investors: Warren Buffett

Watch what happened when we approached five strangers on the streets of New York to answer questions about Warren Buffett.

Born: August 30, 1930 (Omaha, Nebraska)

Key Positions: Buffet-Falk & Co. (1951-54)

Graham-Newman Corp. (1954-56)

Buffett Partnership, Ltd. (1956-69)

Berkshire Hathaway, Inc. (1970-present)

Personal History:
Warren Buffett spent much of his childhood in Washington, D.C., where his father was a long-term member of the United States Congress when he wasn't focusing on his own investment career. Buffett was an active entrepreneur and aspiring investor from a young age. After two years at the Wharton School at the University of Pennsylvania, Buffett completed his college degree at the University of Nebraska in 1950. Inspired by reading "The Intelligent Investor" by Benjamin Graham, Buffett enrolled in a graduate program at Columbia University, where Graham was a professor, obtaining his Master of Science degree in economics in 1951.

Buffett returned to Omaha in 1951, where he founded the investment firm Buffett-Falk & Co., for which he worked as an investment salesman until 1954. He then returned to Omaha and formed the investment firm of Buffett-Falk & Company, and worked as an investment salesman from 1951 to 1954. In these early years of his career, Buffett became close with Graham and with Lorimer Davidson, the Vice President of GEICO insurance, learning a great deal from each of them. The interactions between former professor and student eventually led to Buffett securing a job with Graham's New York company, Graham-Newman Corp., where Buffett was employed as a security analyst from 1954 to 1956. Buffett would later credit this early experience and Graham's exacting investment strategy as critical in the development of his own investment abilities and philosophy.

Feeling a desire to manage his own partnership, Buffett returned home to Omaha to found Buffet Partnership, Ltd. Though Buffett was just 25 years old, the company started with a capital base of around $100,000 (about $900,000 in today's dollars). Over the subsequent 13 years, from 1956 to 1969, Buffett and his investors experienced a gain of 30 times their value per share. During this time, Buffett also acquired Berkshire Hathaway, an unprofitable textile company headquartered in New Bedford, Massachusetts (1965). Under Buffett's guidance, Berkshire altered its basic financial framework; it maintained its textile business even despite external pressures to shut down, and Berkshire also became a holding company for a series of separate investments. Buffett Partnership was liquidated in 1969, when he focused his attention on Berkshire.

Buffett's early years with Berkshire Hathaway were incredibly successful. He first bought shares in the Massachusetts company for $7.60 each. Within three years, the price per share had jumped to $19. He moved Berkshire into the insurance sector and eventually eliminated its textile arm in 1985. Following the 1973-74 market collapse, Buffett began to acquire other companies at bargain prices, including substantial holdings in The Washington Post, ABC, and The Coca-Cola Company, among others. Today, Berkshire is a massive conglomerate with total assets above $620 billion (2016) and nearly 400,000 employees.

Investment Philosophy:
Warren Buffett's investments focus on intrinsic value and simplicity.

John Train, author of "The Money Masters" (1980), provides a succinct description of Buffett's investment approach: "The essence of Warren's thinking is that the business world is divided into a tiny number of wonderful businesses – well worth investing in at a price – and a large number of bad or mediocre businesses that are not attractive as long-term investments. Most of the time, most businesses are not worth what they are selling for, but on rare occasions the wonderful businesses are almost given away. When that happens, buy boldly, paying no attention to current gloomy economic and stock market forecasts."

Buffett's criteria for "wonderful businesses" include, among others, the following:

  • A strong return on capital without a great deal of debt.
  • An understandable business model
  • A realization of profits in cash flow.
  • Strong franchises and an accompanying freedom to price.
  • Lack of reliance on a singular individual executive.
  • Predictable earnings.
  • Owner-oriented management.

While Buffett has not authored any books of his own, he is well known among investors as a writer of annual shareholder letters to Berkshire investors. Buffett has consistently impressed with his broad investment knowledge and capacity for storytelling in these 20-page missives. Copies of the annual shareholder letter are available from 1977 onward through Berkshire's website.

  • "Buffett: The Making of an American Capitalist" by Roger Lowenstein (1996).
  • "Warren Buffett Speaks: Wit And Wisdom From The World's Greatest Investor" (1997)
  • "The Warren Buffett Way" by Robert G. Hagstrom (2005)


"Shares are not mere pieces of paper. They represent part ownership of a business. So, when contemplating an investment, think like a prospective owner."

"All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies."

"Look at market fluctuations as your friend rather than your enemy. Profit from folly rather than participate in it."

"If, when making a stock investment, you're not considering holding it at least ten years, don't waste more than ten minutes considering it."

Read more: The Greatest Investors: Warren Buffett 

by 趙永祥 2017-10-21 20:49:04, 回應(0), 人氣(33)

Short Selling Strategies and Margin

  1. Short Selling Strategies and Margin
  2. Timing a Short Sale
  3. Short Selling Analytics
  4. Short Selling Alternatives
  5. Risks of Short Selling
  6. Ethics And The Role Of Short Selling
  7. Short Selling Guide: Conclusion

Generally, the two main reasons to short are to either speculate or to hedge.

Conventional long strategies can be classified as investment or speculation, depending on two parameters – (a) the degree of risk undertaken in the trade, and (b) the time horizon of the trade. Investment tends to be lower risk and generally has a long-term time horizon that spans years or decades. Speculation is a substantially higher-risk activity, and typically has a short-term time horizon.

Short selling is seldom classified as a core “investment” strategy. Even the most astute and experienced short sellers may shy away from labeling short selling as an investment strategy per se. Some famed hedge fund managers may hold “strategic” short positions in certain stocks or sectors for a long period of time, but their deep pockets make them the exception rather than the norm. The average trader may hold short positions for only a few weeks or months. Because of the inherently higher degree of risk and the short time horizon, short selling is more accurately classified as a speculative activity rather than as an investment strategy.

Apart from speculation, short selling has another extremely useful purpose – hedging – often perceived as the lower-risk and more respectable avatar of shorting. The primary objective of hedging is protection, as opposed to the pure profit motivation of speculation. Hedging is undertaken to protect gains or mitigate losses in a portfolio, but since it comes at a significant cost, the vast majority of retail investors do not consider it during normal times.

The costs of hedging are twofold. There’s the actual cost of putting on the hedge, such as the expenses associated with short sales, or the premiums paid for protective put options. In addition, there’s also the opportunity cost of capping the portfolio’s upside if markets continue to move higher. As a simple example, if 50% of a portfolio that has a close correlation with the S&P 500 index (S&P 500) is hedged, and the index moves up 15% over the next 12 months, the portfolio would only record approximately half of that gain, or 7.5%.

The following example illustrates the use of short selling in speculation and hedging.


Speculation: Assume you are bearish on the near-term outlook for the S&P 500, and therefore short sell the SPDR S&P 500 exchange-traded fund (SPY on the NYSE). You short sell 500 SPY units at $234 and put up $58,500 as margin for the short sale. You have a 10% profit objective and a 5% stop loss.

Scenario 1Market trends lower

Your forecast is correct and the S&P 500 heads lower over the course of the next few weeks. Your profit target is reached when the SPY trades at $210.60, at which point you cover the short position.

Your gross profit on this trade is: ($234.00 - $210.60) x 500 units = $11,700

Your gross return on investment (ROI) = $11,700 / $58,500 = 20%

(Note: To keep things simple, we calculate gross profit, which excludes costs and expenses associated with the trade such as commissions, borrowing costs, margin interest etc.)

Scenario 2Market trends higher

Your forecast is incorrect and the S&P 500 heads higher over the course of the next few weeks, triggering your stop loss when the SPY trades at $245.70.

Your loss on this trade is: ($234.00 - $245.70) x 500 units = -$5,850

Your return on investment (ROI) = -$5,850 / $58,500 = -10%

Hedging: Assume you have a $250,000 portfolio of U.S. blue-chips that trade in lockstep with the S&P 500. You are concerned about the near-term outlook for the U.S. equity market, and think 10% downside is a possibility. But as a long-term investor, you are reluctant to sell your holdings and would prefer to hedge your downside risk through a short sale of the SPDR S&P 500 exchange-traded fund (SPY). With the SPY units trading at $234, you therefore short 1,068 units to hedge your portfolio.

Scenario 1Market trends lower

Your concerns prove to be correct and the S&P 500 heads lower over the course of the next few weeks. When the decline in the index reaches 10%, you cover your short position at a SPY price of $210.60, at which point your profit-and-loss statement (P&L) looks like this:

Loss on $250,000 portfolio due to 10% market decline = -$25,000

Gain on hedging strategy (short sale of SPY units) = ($234 - $210.60) x 1,068 units = $24,991.20

Overall gross P&L = -$25,000 + $24,991.20 = -$8.80

Thus, the gain on the short SPY position almost perfectly offset the loss on the long portfolio, effectively hedging its downside exposure.

Scenario 2Market trends higher

Your forecast is incorrect and the S&P 500 heads higher over the course of the next few week. When the index has gained 5%, you acknowledge that your view many have been incorrect and cover the short position with the SPY units trading at $245.70. Here’s what your P&L would look like:

Gain on $250,000 portfolio due to 5% market advance = $12,500

Loss on hedging strategy (short sale of SPY units) = ($234 - $245.70) x 1,068 units = -$12,495.60

Overall gross P&L = $12,500 - $12,495.60 = $4.40

Here, putting on the hedge resulted in the portfolio being unable to participate in the market’s upward move.

While we have assumed that the entire position is hedged in this example, in reality, you may decide to hedge only a part of the position. The proportion of the hedged part of the portfolio in relation to the value of the entire position is known as the hedge ratio. If $50,000 of a $250,000 portfolio is hedged, the hedge ratio is 0.2.

Short Selling and Margin

Short selling can generally only be undertaken in margin accounts, which are accounts offered by brokerages that allow investors to borrow money to trade securities. Because of the higher degree of risk involved in short selling, the short seller has to ensure that he or she has always has adequate capital (or “margin”) in the account to hold on to the short position.

Short selling is the mirror image of buying stocks on margin. Thus, since the short seller is putting up less than the full value of the securities sold short, margin interest is charged by the broker-dealer on the balance amount of the transaction.

Note that although the short seller receives an inflow of funds from the shares sold short, these funds technically do not belong to the short seller, as they are obtained from the sale of a borrowed asset. The short seller therefore has to deposit an additional amount in the margin account as collateral for the short sale.

As with stocks purchased on margin, the margin requirement on short sales depends on the price and quality of the stock, since these determine the risk associated with the short position. Hence, blue-chip stocks with prices in the mid to high single digits have substantially lower margin requirements than speculative small-cap stocks that trade in the low single digits.

For instance, the margin requirement on a short sale may mandate that 150% of the value of the short sale be held in a margin account when the short sale is made. Since 100% comes from the short sale, the trader has to put up the balance 50% as margin.

Thus if a trader shorts 100 shares of a stock trading at $50, this margin requirement would require the trader to deposit an additional $2,500 (50% of $5,000) as margin. This margin is constantly monitored by the broker-dealer to ensure that it stays above the minimum mandated level (known as the "maintenance margin") and would need to be topped up without delay (the dreaded “margin call”) by the trader if the short sale does not work out—if the stock, instead of declining, appreciates significantly.

The following four points should be noted with regard to short sales in margin accounts:

  1. The short seller does not receive interest on the proceeds of a short sale.
  2. Margin maintenance requirements – ensuring that there is adequate margin to hold on to the short position – are based on the current market price of the security, and not on the initial price at which the security was sold short.
  3. Margin requirements can be fulfilled through contributing cash or eligible securities to the account.
  4. If the short seller is unable to meet the margin requirements, the broker-dealer will usually close out the short position at the prevailing market price, potentially saddling the short seller with a huge loss.

Read more: 

by 趙永祥 2017-10-13 12:07:17, 回應(0), 人氣(39)