New answers tagged

0

I don't think retail traders/investors are able to trade on news, because the news is probably priced-in by the time it is read by a human. Your assumption that it is all priced in is incorrect. Not everything rises (or drops) with the news release nor does price instantaneously gap up/down to its new price and then level out in the seconds after the news ...


1

You’re mistaking common and frequent. Stock pricing glitches are common, but not frequent. That’s because of the vast volume of data — prices every few seconds for thousands of equities means that there are millions of data points every day. If one out of every ten million of those data points is wrong, then there will be several errors per week, which makes ...


1

Why are there so many glitches in stock market data? The obvious answer is human error, aka GIGO (Garbage In, Garbage Out). Errors are made with stock market data entries. Web site providers of free data subscribe to services that collect data. There's no real incentive (free?) for the provider to fix errors. The classic example of this is Yahoo Finance ...


2

It is really quite simple for this and other corporate actions - and not just for ETFs. You need to be holding at the close of the day prior to the ex-date. You can buy at this time at or before this, but you must be holding as of the close. If you buy it any time after that, you will not be entitled to the dividend. The "ex" part of ex-dividend ...


0

When you purchase a share of stock from a legitimate brokerage, they hold an actual share of stock that belongs to you. Even if the brokerage goes bankrupt, your share of stock is still there. Mutual funds work the same way. A legitimate mutual fund actually holds all the shares that their investors own. If the brokerage is dishonest and not actually ...


6

Here's an article which gives some insight into what happened with Lehman. Here are the highlights: Lehman’s bankruptcy caused minimal disruptions to most customers of its broker dealer, Lehman Brothers Inc. (LBI). One reason is that, by law, customer assets and Lehman’s own assets were segregated. Also, perhaps because the bankruptcy was to some extent ...


3

If there is no activity for a while (buying or selling), your state government may take away your shares! Check out your state's escheat policies. Walter Schramm had $100,000 in Amazon stock taken from him because he wasn't actively trading. https://www.npr.org/2020/02/13/805760508/when-your-abandoned-estate-is-possessed-by-a-state-thats-escheat


0

Since you seem to enjoy worrying here is another scenario that happens frequently. At the time you bought your 100 shares, let's say that they represented 1 percent ownership in the company. Over time the company may issue additional shares, in which case your 100 shares (which haven't changed in number) now represent less than 1 percent ownership. There is ...


27

Welcome new user. Yes, the shares are safely yours forever. However... It may be you're thinking about "takeovers" or obscure situations such as public companies going private. If for example, incredibly, some group of people "privatized" Apple, there would be a vote on it. (You'd vote as one of the shareholders). If the "yes" ...


20

You did not pay the stock exchange for anything. You sent money to a stock broker, which in turn purchased shares of stock for you from another investor that sold them to you. Yes, the shares are yours to keep essentially forever, if you wish. You can sell them anytime you like. I would caution you from investing in things that you don't understand. ...


1

From Wikipedia's piece on the Madoff scandal: Madoff was a "master marketer" who, throughout the 1970s and 1980s, built a reputation as a wealth manager for a highly exclusive clientele. Investors who gained access, typically on word-of-mouth referral, believed that they had entered the inner circle of a money-making genius, and some were wary of ...


0

After hours of research & chatting with the SSA about this it seems that there are limited ways around this. any money to be saved can only be put into a savings account which has a rate of return that will never go below 0 at any time. money saved can by "gifted" to friends/family but must be down so with the written consent of the payee. ...


3

It mostly comes down to when you want to be able to use the invested money and whether you're hitting the (relatively low) contribution limits. The tax-advantaged accounts can only be used for retirement unless you want to pay a fortune to the IRS in penalties (which would, of course, defeat the purpose of using a tax-advantaged account, since you'd end up ...


1

KG & KGaA taxation in Switzerland Here is the excerpt from https://www.expatica.com/ch/finance/taxes/corporate-tax-in-switzerland-452226/ Corporate tax for sole traders, partnerships and limited partnerships In Switzerland, sole proprietorships, partnerships, and limited partnerships aren’t taxed in the same way as corporations. These kinds of companies ...


3

You have certain limit in Roth IRA contribution and it will not be sufficient to manage your retirement, with the Roth IRA growth alone. You have to save and invest as much as possible. There are people who save 70% of their income and invest. For every investment liquidity is a major factor. The invested money should be available to you in case you need it....


28

Some thoughts: There's a limit to how much you can put in a tax-advantaged account. Even with mega back-door and other ways to move money around, there's still limits into how much you can contribute There are income limits that reduce or even prevent your ability to use some tax-advantaged accounts Retirement accounts are designed for retirement. If you ...


4

You've lumped stocks of different sectors under biotech. The companies you listed are biotech, manufacturers, medical equipment, drug manufacturers. They're rather different. I don't know why this correction occurred this morning but in the absence of major news, there can be a variety of reasons why one group of stocks does not track the market: Profit ...


2

What's the best option for where to put excess cash now is dependent primarily on what the market does going forward. No one knows what that will be. Risk and reward go hand in hand. In order to achieve greater reward, you need to accept higher risk than the safety of 0.5% APY. And then there's the question of if/when you'll need the money. Any answer ...


9

At a basic level, yes. Most finance websites will quote a "Beta" for a stock, which is the sensitivity the stock has to the price of the underlying market. It's also a rough measure of risk - if a stock has a beta of 2, it will fluctuate twice as much as the market, so it is "riskier" than average by that definition. The Beta quoted is ...


1

Yeah its pretty important although it likely won't make a difference in your portfolio's performance. These things often reveal rights and privileges and also landmines, all of which many other investors will not be aware of simply because they didn't read.


0

Having no shares available to short means they have already been borrowed and sold. The shares could be accurately valued already, or an expectation of worse news with unknown impact impairing the finances of a company. Always remember that the point of a company is to return value to shareholders, if the amount possible to return seems less likely, then you ...


4

In a word, convenience. Same reason I, and I think most people, buy mutual funds in the first place. I don't have to spend time thinking about which particular stocks I want to buy or sell, I can just log in to the mutual fund company's web site and transfer money. Takes a minute or two, vs the hours I would spend researching & trading individual ...


4

Because the odds of that overperformance are low enough that your expected value will be less than the guaranteed underperformance. The mere fact that overperformance is possible is not really meaningful; what matters is how likely it is. Taken to the extreme, it leads to ludicrous "justifications" of all manner of silly actions. Why would you ...


11

I think there are two questions here: Why pick index funds when they have costs. Easy, good index funds are very low cost. VTI has an expense ratio of 0.03%. That is, for every $1,000,000 of assets you have in VTI, you pay $300/year. Other strategies tend to have much higher costs. For example, if you decide to stock-pick yourself... how much is your ...


1

How do you take profit from stock trading while keeping capital invested? For a single stock the answer is a definitive no. You cannot keep the stock and sell it at the same time. It gets even worth as it is the same for any asset that is "gaining value", like real estate. You have to sell to realize the gain and can the invest the money or ...


2

What I personally do (although I'm definitely a novice investor) is have a goal of doubling my initial investment. Once I do so, I sell half of my shares, and typically reinvest that portion in another company. For example, say I bought 100 shares of FOOBAR for $20 each, or $2,000 total investment. If it hits $40, I will sell 50 shares to get back my initial ...


7

Imagine that you're on a train, headed to some place west of where you started. At some point, you realize that you're 300 kilometers west of your starting point. How do you collect those 300 kilometers while still being a train passenger? Well... you don't. It doesn't work that way. The question doesn't make sense. If you think that the train is headed ...


2

If you decide you no longer want a certain stock, you sell it. If you're a professional trader, you're most likely going to spend (the majority of) this money to buy other stocks. If you want to use all this money or a portion of it for something else, then you can do that too. Whether you consider briefly not owning stocks to be "out of the trading ...


2

After you sell FOOBAR, you're essentially back at square one. You have up to $Y to invest, you do some research, and you invest it (or a portion of it, e.g. just $X) in some company (or other type of security) you expect to make money for you in the future. What you were invested in in the past is irrelevant. Ideally you would have done this research before ...


3

As we know, there are two types of investors in stock market: Investor Trader Your question pertains to trader. Trader wants to leverage the price increase and make profit out of that. Without trading stocks, he cannot make profit out of the stock price increase. If he considers to hold the stocks and not trade them, then trader, has become investor, who ...


2

For most companies the announcements are largely irrelevant – usually it's 1 voting right per share, and every time the total shares in issue changes, they issue this announcement, and it doesn't mean much to individual shareholders. But I believe that having it as a requirement serves two functions that I can think of: Any companies with different share ...


9

I think to get at the heart of the issue, you should realize that if a stock you own has risen, you have already made money whether or not you sell. Your investment returns compound over time, regardless of whether you hold the same stock or switch between different stocks. Every day you continue to hold a stock, it is as if you sold it and then decided to ...


21

You don't have to sell just because the price has gone up 25%. You sell... if you need the money... because you think that the company share price will not be growing any more or even it will be going down... because you have found another investment that has more potential... because you want to rebalance your investments... because you have to pay a tax ...


11

If the stock offers options, there are some strategies that can be used to lock in the much of the gain. Other than that, you don't have much choice. In lieu of that, you could sell 20% of the appreciated position, pulling out 25% of the invested capital but this would only book 5% of the gain. It's not a good solution for anything other than lowering cost ...


2

What I'm going to suggest might do the job but might not. "I wish to set up a way for him to take control of these assets when he is 18" "so in case I die before he is 16 (minimum director age), the assets do not have to go through a trust etc. to reach him." Both of these can be met by using a Junior ISA. These are tax-sheltered accounts ...


6

Is this a good idea? It's not a terrible idea, but it sounds like it's based mostly on emotion, so it may not be the best move financially. It's a trade-off of reduced risk and (possibly irrational) anxiety for most likely lower return. There are segments of bonds that can earn 8-10% on average, but with that kind of return you're bringing in different ...


18

The FDIC will not protect you in the event of a market crash. It will only protect cash deposits and other cash-equivalent securities held within your retirement accounts if the institution holding those deposits (not necessarily the brokerage account) fails. If you invest in stocks, mutual funds, bonds, etc. that go down in value due to a market crash, FDIC ...


0

This isn't uncommon in Canada. We've got a mortgage on the house combined with a HELOC that fluctuates but always stays around 80% of the value of the house. As the mortgage is paid down, the HELOC limit increases, which we then use to invest in dividend paying ETFs. Those dividends are then used to pay down the mortgage (also called a Smith Manoeuvre). It's ...


0

Another countries with tax advantaged accounts are: Sweden: ISK (Investingsparkskonto = Investment Savings Account) France: PEA (Plan d'Epargne en Action or shared savings plan) In addition to those, some countries in the EU have low or no Capital Gains Tax. Belgium has only a financial transaction tax and the Netherlands calculates them in a way that keeps ...


1

I'll give you the short answer. Yes, it's legal to borrow more than you think you need. You are free to invest your savings as you see fit. From a purely financial perspective, you need to ask yourself whether you are better off having your wealth tied down in the stock market, or your house. If the past is any guide to the future, stocks AND real estate are ...


4

Think of it from the bank's perspective. When they give you a loan, they want to profit from it. Now how much they profit (on average) from a loan of a fixed length depends mainly on two factors: The interest rate and the risk of not getting some or all of their money back. The interest rate is something they control, while the risk is more or less given to ...


17

As others have noted this is a bad idea all around. Just get a margin loan from your broker if you really want to trade stocks on leverage. That is what they are designed for. I will warn you that they can be very risky. Don't tie up your home with your risky investments though, that seems like a recipe for disaster.


3

Agree fully with the reasoning in Mike Scott's answer. As a small addendum, given the relatively low interest rates at the moment (2020), one option you might consider is NS&I Premium Bonds1. Savings in Premium Bonds are backed by the government, so are at least as safe as a normal savings account (up to the maximum holding of £50,000). The "...


13

There are some 103% mortgage programs that I found. There were more available before the 2000's housing market collapse. These programs are designed to cover the price of the house plus closing costs. They do it my having a primary mortgage and a second mortgage. That 2nd mortgage is more expensive but if you throw money at it you can pay it off faster. ...


3

For a small fund, don’t bother with any of those. Interest up to £1,000 per year (if you’re not a higher-rate taxpayer) and dividends up to £2,000 per year are tax-free anyway, so there’s no point putting your money in a tax-free vehicle unless you’re likely to go above those amounts. Which you’re not, for “a small rainy day fund“. Just find a regular ...


37

It is legal, yes. Will your bank offer it? Probably not, especially if you're already talking about only putting 10% down. The most common way this is accomplished is with a Home Equity Line of Credit. You put money down, then take out a loan (at a slightly higher rate of interest, usually) for the equity you have. There will be limits on Loan to Value ratio ...


-1

Hold cash, and then buy every month First, your premise is flawed. To make money without the possibility of losing money, you need a market crash and then a recovery. With only a crash and no recovery, one method is to buy puts with long expiration, but this costs money so it's not guaranteed you will recover. With no access to "professional tools",...


2

And the investors, hence, got the majority share in the company (like 95% or so) and the remaining an be considered to be possessed by Jeff Bezos (who had little money to contribute in it) Why would an person that started a company sell 95% of the company to the early investors. That means that those investors control the company. That means that the ...


2

Consider Jeff Bezos. He was just like anyone else (financially). Ah, SERIOUSLY? As per wikipedia: His last job pre Amazon "He worked there from 1988 to 1990.[32] He then joined D. E. Shaw & Co, a newly-founded hedge fund with a strong emphasis on mathematical modelling in 1990 and worked there until 1994. Bezos became D. E. Shaw's fourth senior ...


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