Growth Investing vs Value Investing

A Stock Market is a public market, a loose network of economic transaction for the trading of company stock and derivatives at an agreed price. The very basic and bottom line to the stock market is to drive the best profit from it. Evaluating stock is the basic and easy work to do, but to reach at the level of evaluating one needs to know and understand the very basic difference between growth investing and value investing, and the fundamental and technical analysis.

When one tends to know and learn about the basic stock measurements and understand how to read the stock pages evaluation process becomes much easier and interesting. Everyone whosoever interested in putting up money in stock market do so, to earn more money in less period of time with least measure of risk. Growth investors actually look forward for the companies in the market that are sales and earning machines.

Such companies have more potential than the others available in the market race; the investors are ready to play with the hand look forward for repetitive sales and earnings. A growth company's potential might stem from a new product, a breakthrough patent, overseas expansion or excellent management.

A growth company without strong earning is like an Indy 500 race car without an engine. Dividends do play a role in the market but many growth companies do not give and allow the investors with dividends, instead the companies reinvest the profits to expand and improve their business; hoping to reinvestment produce even more growth of investors money in future. Most growth investors set minimum criteria for investing in a company. Perhaps it should be growing at least 20% a year and gaining new highs in stock price for the best benefits to the investors.

Growth companies which are in good business and very familiar names are Microsoft, Intel, Starbucks, and Home Depot. Now we got to know that what actually people mean when they drive past yet another Starbucks and say, That place is growing like weed.”

Growth Investors are searching for hot hands, not great bargains. Investors look forward to yield more money in terms of profits. They'll pay more for good companies. As a result, many growth investors don t even look at a stock price in relation to its earnings or its book value because they know a lot of growth stocks are expensive.

They look forward toward the potential of the stock and go for it, but at the back of their minds they do hope that the present success continue and get better so as to yield more monetary profits to them. They buy momentum, inertia, steam, rolling forward movement, that the nature of growth investment.

William O Neil - a top growth investor says and explains this in a very simple way. He says in one of his seminar that growth investors are like baseball teams, they pay huge salaries to top ranking players, as they know the batter will yield them with good and winning matches. They come at high price but if they keep batting 300 and winning matches then it s worth it. Likewise one won't find many bargains among growth stocks.

The growth stock basically depends on its earning and the accelerations of those earnings, the expectations of analyst and investors are high. The investors put more money for better results and are more positive towards the companies returns and growths which some times at the same time creates a risky situation.

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White Paper Shows Volatility Risk Premium Facilitated Higher Risk-Adjusted Returns for PUT Index

Using more than 32 years of analysis, University of Illinois at Chicago Professor Oleg Bondarenko explored if certain strategies could exploit the richness in pricing of index options. He shared his findings in the recent white paper, “Historical Performance of Put-Writing Strategies” and discussed his research at the 35^th annual Cboe Risk Management Conference. See what he has to say below.

Volatility Risk Premium (VRP) for S&P 500 Options

In his research, Bondarenko found that the S&P 500 Index implied volatility has considerably exceeded its realized volatility. From 1990 to 2018, the average implied volatility, as measured by the Cboe Volatility Index^® (VIX^®), was 19.3%, while the average realized volatility of the S&P 500^® Index was 15.1%. The Volatility Risk Premium (VRP) was a significant difference of 4.2 percentage points.

In light of the existence of the VRP, option-selling strategies may have had the potential to deliver superior risk-adjusted returns when compared to traditional asset classes and option-buying strategies.

Higher Risk-Adjusted Returns for PUT Index since Mid-1986

Professor Bondarenko’s paper analyzed the performance over more than 32 years (from June 30, 1986 to Dec. 31, 2018) of six benchmark indexes: the S&P 500, Russell 2000, MSCI World, Treasury bond and two benchmark indexes that engage in monthly transactions in SPX options.

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How Hedging a Portfolio Can Aid Investors

Hedging can be said to be a technique used by investors to protect against loss via a compensatory price action. Hedging techniques is what actually differentiates a professional from a newbie trader. This makes it so easy for many pro traders out there to survive the financial market and make profits from stock and option trading over the years.

This technique was derived from a term to hedge with a sole aim of minimizing or eradicating financial risk. It evidently is a calculated preemptive installation of guards and insurance within a portfolio in order to revert any unwanted actions.

In ordinary terms, hedging can simply be the purchase of a bullish stock which would go up as the current stocks fall. A stock for a firm KLU that has been profiting and an investor wishes to protect the stock in verge of a decline, hedging allows you to buy a stock of GHT, that has a potential to rise $0.05 if that of stock KLU drops by that same point. Invariably, this safe guards firm KLU during a decline as your stocks position would rise in company GHT.

In the ideal world we can hardly get a scenario as perfect that explained above to serve as our hedging trade. Traders employ the use of derivatives like stock options. The most effective tool for stock options as a hedging tool is in an option trading strategy called the Married Put” or Protective Put.

The Option trading strategy is such that a contract of put option is purchased per 100 shares. For this type of stock options we see a $1 rise trigger the same drop in the underlying stock, hence hedging any kind of loss incurred by the stocks. Even newbie traders can delve into handling positions of stocks against loss, as the cost of purchasing the put option in this vein can be correlated to insurance purchase for your shares.

We must not forget that even after hedging a position, understanding how it works is very vital as we see a lot of big institutions out there hedge. A simple example is when oil firm hedge against oil prices, as opposed to mutual funds that would hedge against FX rates movements.

Investment is important, but yet risk is an element that can hardly be excluded from investment vehicles. It does not matter the kind of investor you choose to become, but the truth is that having a good understanding of how hedging works places you better in a world of constant economic changes that invariably needs protections against the shocks that follows such changes.

Learning how to hedge would greatly make you a better investor.

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The stock market would be much lower if it weren’t for companies buying back their own shares

Buybacks have gotten a bad rap from both Republican and Democratic lawmakers this year. But the stock market would be trading at a much lower level without them.

Data compiled by Ned Davis Research shows the S&P 500 would be 19% lower without buybacks. The firm looked at the S&P 500's performance between the first quarter of 2011 and the first three months of 2019. Then they subtracted the amount of net monthly repurchases to arrive to that conclusion. The broad market is up more than 125% in that time while net buybacks have totaled about $3.5 trillion.

"Without focusing too much on numbers, we can say that the S&P 500 index would probably be lower today if not for buybacks versus other uses of cash," Ed Clissold, chief U.S. strategist at Ned Davis Research, wrote in a note last month.

Lawmakers on both sides are bashing buybacks and want to make it harder for companies to repurchase their own stock. They argue that buybacks inflate corporate executives' pay and share price at the expense of a company's workers.

In a Feb. 20 Medium post, Sen. Charles Schumer, D-NY, said companies should reinvest their capital differently.

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When Is Covered Call Writing an Appropriate Strategy?

Every day people speculate wildly on stocks putting leveraged bets that a stock will be bought out, or surge in value. However, for every buyer there is a seller, for everyone who buys the leverage, there are people who sell the leverage. If you dream of a $1 stock flying to $100, this isn't for you, you should learn to be the one buying calls, not selling them. Be warned, however that if you are a buyer of call options that you will be taking on much greater risk, and you will be relying on the price of the stock moving up sometimes very significantly in order for you to make money. In addition, buying options require costs that are not redeemable, so even if the stock remains the same price you could still lose money buying options.

However, if you believe in buying for the long run, yet think things currently will stay the same, get worse, or better yet, get better, but by a limited amount, then a covered call strategy may in fact be right for you.

It is said that a call option is similar to putting a $100 nonrefundable down in hopes of reserving an item at a price lower than you believe it will be sold for. Now selling a call is instead selling that right to allow others to buy away your item that you own at a fixed price such as $1000. If for example there was a new car that wasn't even released yet, and the retail value was set at $20,000, and you believed there would be a lot of demand, you might pay 2000 to speculate at a set price of $22,000 that it would be worth more. The car would have to be worth $24,000 for you to break even, but if it was worth $26,000 you would double your money, where as someone who reserved it at $20,000 and paid the full $20,000 would tie up 10 times more money for the same gain. Now one can obviously see the excitement for owning a call option, but why would you sell an option?

Lets say you were actually the builder of that $20,000 car. You may have put $30,000 into it, you may have put $15,000 into it, it really doesn't matter, because you think that the car will be sold for around $20,000 which is what it would go for now. For some reason you think that this car actually will go up in value over time, however for the next month you do not. You would then sell the $20,000 option, and if you're right and the car stays under $22,000 then you collect that full $2000. If you're wrong and the car goes to $23,000, then you still collect $1000 as the contract is only worth $1000 but you sold it for $2,000. If the car goes to $26,000 you would owe $4000. Since you owned the car itself, you would pay the contract buyer the difference, or the car would be called in, and you would have to sell it at $22,000, and give the contract buyer the $4000 difference. If you still wanted the car, you would have to buy it back at $26,000. Even if the car went to $100,000 you would still gain $2,000 for the contract. Of course, you would miss out on a HUGE gain, but it is the price you pay for writing calls. The risk is both that you miss out on a bigger gain, and that you are still only offered limited protection from a loss.

One example is if instead the car could only be sold for $18,000. Although this normally would be a $2,000 loss, you would collect the $2,000 from the option call buyer and lose nothing. Now if the car attracted no buyers, it would be worthless, and you would only collect a lousy $2,000. Options work in a very similar way to the above example. Writing a covered call is merely selling a contract that entitles someone else to you potential gains, that you risk giving up for guaranteed income. You sell hope for a sure thing at the expense of giving up your own potential for large gains, while still maintaining the downside risk of the stock.

In a covered call trading system, the idea is to write covered calls over and over again every single month, collecting a premium. Ideally you would want to have the stock rise to the strike price and expire, and then you could perform a covered call the next month at a higher and higher strike price as your stock actually gained in value.

Now say you own 100 shares of a stock at $73 per share. Lets say you don't expect it to go up beyond 75 this month. So you sell a covered call at $75, receiving a fixed amount like $200. If the stock rises above 75, you will not be entitled to the gain, but you will receive the $200 for the stock going from $73 to $75 ($2 per share for 100 shares). The hope is that you can continuously collect these calls and that the stock never goes above whatever strike price you buy. You are essentially trading a stocks potential for steady income. Of course if your stock goes to zero, you lose everything but the $200. Its important to own stocks that will be around for a long time, and to know this, you must understand a stocks balance sheet and financial statements, and you still probably want to be willing to cut your losses short, selling both your call and your stock price. You still need to educate yourself in the risk of the less liquid option market as there is a big difference in the bid and ask price.

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2 steps to take to protect your money from a recession, according to a financial expert and bestselling author

It's near impossible to recession-proof your money, says financial expert Ramit Sethi.

"The market will go up, the market will go to down. Nobody knows. Nobody can tell you. It doesn't matter if they're on some TV show or anything. It's all bullsh--," Sethi, who recently released the second edition of his bestselling book " I Will Teach You To Be Rich," told Business Insider.

"A better question is, 'Can I have a diversified portfolio?' ... And do you have enough cash just in an emergency fund in case there was something bad that happened to you on a day-to-day living basis?" Sethi said.

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Regardless of the state of the markets, diversifying your investments across, and within, stocks and bonds and securing an emergency fund are two of the most important steps to take with your money, he said.

"That's the best thing you can do," he said. "What you shouldn't do is try to predict what's going to happen because you will almost always lose."

Sethi recommends keeping cash reserves equal to at least three months and, ideally, up to a year's worth of expenses to fall back on whenever it's needed.

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Is Investing in Gold a Good Idea?

In times of economic crisis, some investors turn to gold as an investment hedge (a sort of financial insurance) to protect their investment portfolios. That makes a lot of sense today, given the current value of gold. While this value fluctuates (as with any investment), one thing is certain - as the oldest valuable commodity, the chances of gold ever being worthless are next to none. That is why investors have traditionally turned to precious metals in times of widespread financial woe. It still shines, and it will keep on shining.

Considering the current financial climate, one might consider if it is a good time to invest in gold. Even people who have very small or nonexistent investment portfolios are considering purchasing some gold. With the price of gold high and getting higher, wouldn't someone be crazy not to invest? Unfortunately, there is no straight answer to that question. For some people, now is absolutely the time to buy gold. For others, it is not a good time. So how do you know if it is a good time for you to buy gold?

Do you have a lot of consumer debt (credit card balances, car loans, or similar debt)? If so, you would be better off applying any extra money you have to your debt. Are you overly concerned with the short-term performance of your investment portfolio? If so, gold might not be the commodity for you. This is because gold does not generally have a good return.

How can that be? The gold prices are so high! If I had bought gold years ago, I could sell it for so much more now!

True, but all those years you would have kept gold in your portfolio, you would have been paying to keep it there. No matter how you hold your gold investment, it does cost something to keep it. If you keep your gold in exchange-traded funds (ticker symbol GLD), you pay a small fee to handle the price of storing the gold, and you pay your broker a fee on whatever you make on your gold. If you keep your gold in a safe-deposit box, you pay for the safe-deposit box and for the insurance you would need to protect your investment. The same goes for storing the gold in your home. The very thing that makes gold so attractive (the fact that it is tangible) is the thing that makes it so risky. If someone steals it, it is gone.

As a side note, the investment options mentioned above are the best way to own gold. It is not wise to invest in gold stocks - you are really investing in the company that mines the gold, so while you get partial ownership of that company's gold, you are still vulnerable to that company's business practices and financial pitfalls; Even buying gold coins, bullion, or bars is potentially risky. If you buy gold you want to make sure it is pure. Paying full price for a precious metal with fillers is a real possibility in a market that is flooded with questionable merchants pushing gold at every opportunity.

With so much to consider, one might be inclined to skip the current and gold rush. Not so fast. For some investors, now is a great time to buy gold. If you have some extra money for investing and know how gold will affect your portfolio, gold is a great addition that will round out your portfolio and reduce fluctuations. If you are comfortable enough to put some money away for the long term, gold might be the way to go. Additionally, if you have a reputable dealer and some place safe to store it, you could buy gold to store yourself. There is something to be said for having assets you can touch.

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A CEO who manages a $1 billion firm teaches her teen daughter 3 core lessons about investing

Moms are chock full of advice, but when Renee Kwok talks to her daughter about money, her words may very well carry twice the weight.

Kwok is a certified financial planner and the CEO of TFC Financial, a $1 billion financial planning and asset management firm based in Boston.

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She tells her daughter to "work hard and save most of your money. The three-bucket philosophy endures today: spend a little, donate some — and save most." But, Kwok says, it's what you do with your savings that matters most.

1. Put your savings in a high-interest account

"You can't collect interest or grow your stacks of cash if they are sitting in an envelope in your desk drawer," Kwok tells her daughter.

A high-yield savings account or money-market account is often the best place to keep savings so it grows, but remains easily accessible. While you won't wreck your financial life by not storing savings in a high-interest account, your money will almost certainly lose value thanks to inflation.

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Mortgage Early Repayment Calculator

If you are new to the world of finance, one question you may want answered relates to what is amortization. In simple terms, amortization is the process of paying off a loan in the form of uniquely structured payments given on a periodic basis. An amortized loan is different than regular loans because of the way that the structure of the repayments are defined.

Perhaps the most common type of amortized loans that most people would come across are mortgages. In fact the terms "mortgage" and "amortization" come from the same Latin word "Mort". This root word can be transliterated as meaning to kill off, eliminate, or deaden, hence why it is used in relation to paying back a debt.

When planning to invest in real estate, it can be useful to check out what is APR and the information on a wide selection of mortgage broker's websites. It is likely that they will provide some information about amortized loans, and perhaps offer tools such as special online loan calculators that can be used to help understand the amortizing process in full.

Payments are typically calculated by a division of the principal with the number of agreed months that have been allocated for repayment. The interest is then added to the total. For each payment that is given, a percentage of the interest and the principal is eliminated.

It is important not to confuse an amortized with an interest only loan. They differ in so much that the latter would involve payments that are given going towards the interest that is due and not the principal, though there can be the option of choosing to make principal payments. For this reason, the money given each month is typically less with an interest only plan.

Because of the way they are structured, with an amortized loan it usually takes around half the life of the loan for the interest and principal payments to balance out. Over time the money being paid towards the principal begins to outweigh the interest, therefore depleting the balance at a faster pace.

Depending upon the lender chosen, there may be the option of paying an extra amount each month which is used specifically to bring down the principal balance. As the interest charged directly relates to the principal, by lowering this amount the interest will also come down. Making extra payments on a regular basis can reduce the term of a loan.

Hopefully you are now a lot clearer about the answer to the question what is amortization. It is important that you understand the language used by lenders if you are to choose a product that best suits your personal circumstances.

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A woman who studied 600 millionaires says the same traits helped them get rich — and there are 2 key ways anyone can develop them

Millionaires are often cut from the same cloth — they're disciplined, have focus, are resilient, and practice perseverance.

These are all qualities that help them build wealth, according to Sarah Stanley Fallaw, co-author of " The Next Millionaire Next Door: Enduring Strategies for Building Wealth" and the director of research for the Affluent Market Institute. But these traits aren't necessarily innate — there are two ways anyone can develop them.

The first way, according to Stanley Fallaw, is to understand where you are today.

"If you know that you're prone to make emotional decisions, it's first being aware of that and kind of taking stock of that and asking yourself, okay, when is it that I'm making decisions that are really not in my best interest?" she said in an Afford Anything podcast with writer Paula Pant.

Once you've built awareness, you should then build new behaviors around typical behaviors, Stanley Fallaw said. She referenced Charles Duhigg's book, " The Power of Habit," for an understanding of building new behaviors around things you don't often give thought to.

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Growth, Momentum And Tech Are Back In Style At Hedge Funds

Hedge funds in general seem to be having a much better year this year. Interestingly, the first quarter looked somewhat similar to what we have seen in the last few years in terms of sector and factor favorites.

By some accounts, the hedge fund industry had its best first quarter since the Global Financial Crisis. The Eurekahedge Hedge Fund Index was up 1.06% for March and 4.36% for the first quarter, making it the best first quarter since the financial crisis. The HFRI FWI index was up 5.9% for the first quarter, beating Eurekahedge.

Markets and hedge funds are going strong

In their monthly "CIO Hedge Funds" report, UBS analysts Karim Cherif and Georg Weidlich said other than macro/ trading hedge funds, most posted positive returns for the first quarter.

They also noted other positive signs in the market which have been great for hedge funds.

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Best Mutual Fund for Gold

Gold is an object that never loses its value, no matter what era, what generation, what country you reside in. Gold is still as valuable today as it was centuries ago, when it was used as a royal give away. Investment in gold has always been a good way to earn back high profits. All you have to do is buy gold bullions or gold jewelry and later have them sold off when rates go up.

This is one of the best ways to earn a good profit. If however, you want to make a bigger investment in gold, then its time you step into gold shares investment market. This step however, is pretty much complicated and you cannot proceed with it effectively, if you do not have experienced financial advisors or investment houses to help you out.

Here are a few guidelines to help you invest in gold shares.

First and foremost, get a financial advisor, because it's a critical step for understanding the gold share investment market. Remember, we are not dealing with simple gold bars, we are dealing with gold shares, so you have to understand the pros and cons. When it comes to shares, you know you have to actually make a mark in a huge financial hub, therefore a financial broker should be your foremost priority.

If you're a novice, then you should consider approaching the Gold Exchange Traded Fund for investing in gold shares. ETF is an organization that allows investment in gold bullions, and giving out shares to respective members. This means that you can take out gold bullions anytime you want to move away from the shares. While you are there, you are investing in its shares, without possessing it physically.

If you have a considerable amount of cash, then you can invest in a company that deals with gold mines. However, you will have to be prepared facing loss along with the company if it faces a dwindling market. There are also scammers out there who claim to be running gold mines and lure people to invest in them. Be sure you avoid such unknown entities.

If gold mine companies are not for you then you can take on gold mutual fund shares. When you get into mutual funds, you actually get into an organized and reliable way of investing. In mutual funds, you actually invest in the entire gold market, and are sure to receive benefits from somewhere or the other, instead of depending on any one company. In this way you could ensure good profit, rather than facing loss for a company's downfall.

As with all financial and investment matters, you should be aware and informed of all procedures and must always get legal assistance.

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Credit-card losses edge higher, bad news for U.S. banks

Growth Stock vs Value Stock

This article explains the meaning of growth stocks and the points to remember while selecting such stocks. The article also goes on to explain penny stocks and how to avoid such stocks as well as the importance of growth stocks in a well balanced portfolio.andnbsp; It is essential to realize the meaning of the term growth stock before a person attempts to analyze the significance of growth stock in an established portfolio. As a matter of fact, a growth stock is the share of a mid cap company that is growing. These shares are capable of yielding higher returns to the investors compared with other shares.

Selecting the Right Growth Stock

While selecting a growth stock an in-depth knowledge of the company that one is investing in is also essential as the fate of the growth stock depends entirely on how the company fares in the long run or the reputation that the company gains in the market over a period of time. For this one has to study the balance sheets, assets and liabilities, competitors and present earnings of the company. Then an evaluation of the Profit Earning Ratio gives the investor the price earning status of the company. The information about the financial assets of a company can be obtained from the internet as well.andnbsp; After studying the Stock Market Report one can make the best stock pick which will give the best returns in the future. Such stocks have a trustworthy reputation, are transparent in their operations thus ending up with reliable financial statements.

Importance of Growth Stock in a Well Balanced Portfolio

An established portfolio is generally well balanced with a number of investments made in some of the best stock picks. These stock picks can include stocks and shares of well known and reputed companies that have stood the test of time as well as new and emerging companies that have high growth potentials. As it is known that growth stock picks are stocks of relatively inexpensive companies, which have high growth potentials they seem attractive to investors.

A portfolio is a must for any investor as it is a record of all his investments made over a period of time. Maintaining a portfolio helps to have a systematic collection of all the investments made by you thus saving you the time and effort of searching for bonds and shares when you require selling or buying stocks. There are diverse securities in a portfolio with some of the best stock picks along with established stock picks, growth stock, stock market picks and probably the stock report as well.andnbsp; The portfolio must have a mix of well known bonds and shares along with growth stock picks so that there is a high potential of growth value in the portfolio as well. Besides, if a particular growth stock falls in price the overall value of the portfolio is not adversely affected.

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