New answers tagged

1 vote

As an investor of a business, how do you prevent the founder from holding back growth?

You can't. As a minority shareholder, the majority shareholder can always outvote you. The only exception would be if the principle shareholder is misusing company money, for example by syphoning ...
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1 vote

What are the key facts to research before buying shares of a company?

I'd say the following are the most important things to consider: Debt. If you see a company with P/E of 5, but debt is 10x its enterprise value, the actual "debtless" P/E is 55 (to be more ...
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0 votes

What are the key facts to research before buying shares of a company?

When you buy a company’s shares, you are not only buying the company’s assets and liabilities, but also its reputation as a business. Before you invest your hard-earned money in a company, be sure to ...
1 vote

What are the key facts to research before buying shares of a company?

This is probably my top 5: Company history Current financial situation Future prospects Industry conditions Competitors
1 vote

In USA can I donate index funds to a charity? If not what's the lowest effort option to take advantage of security donation over money donations?

To answer the question in the title (ignoring the rant): yes, you can donate securities, including mutual fund shares, to a charity, and donating appreciated shares avoids capital gains taxes when ...
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2 votes

How to optimize my charitable donations by giving as little as possible to the US government if I already pay no income tax

I agree that this reads like a rant rather than a question, but assuming you are in the US the answer is simple: When you donate to tax-exempt charities they don't pay tax so you're already most of ...
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5 votes

What are the advantages of ETF's over mutual funds?

The main advantage of an ETF is that you can trade it during the day like stocks, where Mutual Funds only trade at one price at the end of the trading day. So you have slightly more control over what ...
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1 vote

Why is beta linear?

Beta is intended to measure the risk of an asset (measured by variance in returns) versus some benchmark (typically defined vaguely as "the market"). A linear beta is simple - it does not ...
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2 votes

How do I buy a life insurance policy as a collateral?

I have no idea what the life insurance thing is about. (See edit below.) Keeping the old house only makes sense if you are going to use that house for something that is worth continuing to pay ...
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2 votes

Why is beta linear?

It really goes back to the Capital Asset Pricing Model (CAPM), which became a central pillar of modern finance and portfolio theory. One can devise more complex models but that doesn't mean they'll be ...
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1 vote

For mutual funds, does average annual return mean compounded annually or continually or daily?

You should use annual compounding since that's how it was measured, but it shouldn't make a significant difference. There is enough variance in historical returns that the margin of error for ...
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2 votes

How do I buy a life insurance policy as a collateral?

It's very common to buy a house, and then sometime later sell this house and use the equity as a down payment on a bigger house. For example, you buy a house that costs $100,000. Over some period of ...
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1 vote

Why is beta linear?

This linear assumption is done all over the place in science and engineering. Sometimes, it works. Not always. For example, consider a spring. It has a force F = k*x ...but does it? No. Actually it ...
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1 vote

For mutual funds, does average annual return mean compounded annually or continually or daily?

Annually. If portfolio returns 9,21% annually, then after 4 years the return would be +42,25%
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2 votes

How can I find out about shareholder perks?

Shareholder perks can vary depending on the company, but some common perks may include discounts on products or services, invitations to exclusive events, or early access to new products or services. ...
-1 votes

How can I find out what percentage the publicly traded shares (float) are of the total company?

To find out what percentage the publicly traded shares (float) are of the total company, you can contact the company's investor relations department and ask for the most recent data on the company's ...
0 votes

Why do we ONLY care about the future of companies like Netflix? It was very profitable in the past

Maybe, maybe not. Consider if you are an automaker who builds internal combustion engines in-house. You earned a lot of money by making ICE vehicles, and invested the money you obtained into ... more ...
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0 votes
Accepted

(DCF valuation) Will the cashflows (per share) of company XYZ, every year in the future (2023...) be added up and go into its shares price every yr

The short answer to your question is: Yes, earning more cash than expected in year 1, would, simplistically, increase the value under a DCF valuation method by the amount of that extra cash when ...
1 vote

(DCF valuation) Will the cashflows (per share) of company XYZ, every year in the future (2023...) be added up and go into its shares price every yr

That's not quite how DCF models work. DCF does not add cash flows to the share price and then discount the final price back to the present. Instead, each cash flow is discounted back to the present ...
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0 votes

What are the ways in which a company *directly* affects its stock price and vice versa?

Stock events that affect the company: takeover attempts. Large shareholders or blocks voting in corporate elections and referenda. Most other things are negotiations between the shareholders with ...
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2 votes

(DCF valuation) Will the cashflows (per share) of company XYZ, every year in the future (2023...) be added up and go into its shares price every yr

Ah, if only it were that simple... The stock price reflects what people think the stock is worth now, in terms of what they think it will be worth in the future and the dividends it is expected to pay ...
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2 votes

How to reorganize crypto centric portfolio to more balanced approach?

It sounds like you are doing pretty well. Therefore, my advice would be to use bonds only for a small emergency fund. Maybe you could store one year of all your expenses to your emergency fund, and ...
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4 votes

Given the current market situation, should I put all my money in bonds?

The federal reserve has been raising interest rates for the past half a year, and it is unclear how long it will keep doing so. However, all expectations of future interest rate hikes have already ...
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6 votes

Given the current market situation, should I put all my money in bonds?

So in summary, should I invest heavily in bonds now, and remove most/all of my holdings in stocks? And then when the market seems like it's going back up, I can then invest in stocks? what you are ...
5 votes
Accepted

Indebted to managed investing service by entry error

The world is a harsh place. You told them “I want to invest $XXXX00” and they took you at your word. They sent you a warning email that you ignored. “I was busy!!” doesn’t cut the mustard. We’re ...
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5 votes

If the nominal interest rate on bonds becomes 10% and the historical average return of stocks in the US is 10% why would you ever invest in stocks?

You are comparing the past with the expected future. Yes, historically stocks have averaged around 10% growth, but that is an average over a long period of time, and there is massive fluctuation ...
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2 votes

If the nominal interest rate on bonds becomes 10% and the historical average return of stocks in the US is 10% why would you ever invest in stocks?

10% is unusually high for bonds, and it's not likely to stay that high for long. Unless you include high risk "junk bonds". 10% on shares is more common if you combine growth and dividends. ...
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1 vote

If the nominal interest rate on bonds becomes 10% and the historical average return of stocks in the US is 10% why would you ever invest in stocks?

If interest rates drop, then borrowers will issue new bonds ASAP at the lower rate, in order to redeem the high-rate bonds. Falling rates are also likely to stimulate growth, which means the stock ...
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