Author: Editor

Guaranteed Stop-Loss Order

3 min read

Guaranteed stop-loss order or GSLO act precisely the same as normal stop-loss order but as difference, it ensures to close you out of a trade at the price you define no matter how the market is volatile.

Guaranteed stop-loss order protects you against gapping. Gapping is when a price of stock opens above or below the prior close with no trading action in between. It can happen the price surges over a stop-loss level. The role of a guaranteed stop-loss order is to force order to go through at a particular price.

The market can top higher or drop more than the guaranteed stop-loss level. So, setting this kind of order is important to protect your profit especially if your holding very liquid stocks.

Particularly, using a guaranteed stop-loss order in the spread betting is extremely important.

The guaranteed stop-loss order, for instance, when used properly and in the right situations, is a right risk control tool since it guarantees the stop loss level. You can even rise the guaranteed stop-loss level up if the trade is going your direction. Also, it allows the stock to come back a little to provide profits run.

When guaranteed stop-loss order should be set?

The guaranteed stop-loss order is useful if you are trading in extremely hight volatile conditions, or you are trading in risky exchanges, for example. Actually, you should set a guaranteed stop-loss order every time you have some doubts about the risk.

A guaranteed stop-loss order will close your position at the stop price no matter what happens in the market.

Advantages of guaranteed stop-loss

As I said, it is useful when the markets are highly volatile and market gaps. Also, it is great protection against price dropping. If you set this order, the only risk you would have might be your initial investment. Moreover, the advantage of this order is that you have the possibility to know what is the maximum risk for any position. Also, you don’t have to control your position all the time.

How does it really work?

When you set a guaranteed stop-loss order there is no possibility to undo it but you may change the level.

You can’t add this order to the existing position, you can do it only on the new one during the trading hours.

You have to pay extra fees to broke for setting this order but it is worth. A guaranteed stop order must be placed inside distances of minimum and maximum from the current price of the stock.

Let’s say the ABC company buy/sell rates are $1,000 and $980. And assume you are buying 10 shares. The spread is $20. And, for example, you set the guaranteed stop-loss order at $920. The price of these shares may drop at $800 but your position would be closed at $920, not at $800.

Let’s calculate your loss with using GSLO

($920 – $1.000) x 10 – $20 = your loss is $820

and what is your loss without setting GSLO?

($800 – $ 1.000) x 10 = your loss would be $2.000

Can you see the importance of setting a guaranteed stop-loss order?

A normal stop-loss order serves as a guide to your broker to close your position when it hits a established price that is less desirable than the current price. But if there is a market gap or the market is highly volatile, the slippage will occur. The consequence is that your order will not be executed at the price you specified. By setting the GSLO you are protected from market gaps and volatility. They will not impact your trading position. As you can see, this kind of orders works in the same manner as normal stop-loss orders but with more protection for your trade and your money.

These orders are useful and recommended if you trade high volatile stocks, for example. Everywhere where the value may drop for 50% off the price, it is useful.

But, be aware, it isn’t a silver bullet in the spread betting.

The brokers usually allow you to set guaranteed stop-loss order 5 to 10% off the current price. This means that you may have a potential loss of 10% before your GSLO is activated. In such cases don’t set GSLO only 5% away from the market. It is too dangerous if you have a margin of 10% for trade. Also, even when the spread betting provider requires only 5% for trading your stock, there is always a margin call.

So, it doesn’t sound like the best money management.

22nd September 2019
Spread Betting With Examples

3 min read

Let’s be frank.

Spread betting is extremely risky. It’s highly dangerous. It’s not for beginners and people with lack of knowledge.

But to be totally honest, it is one of the simplest ways for an individual investor to support their ideas with hard cash. If you treat the market proper, you can get big gains, very fast.

What is spread betting and how it works?

Spread betting simply lets you guessing will the price of some stock climb or drop. You can speculate from stocks to house values.

Moreover, you don’t need to purchase the stock you want to trade. You just take a look at the prices submitted by the spread betting provider and speculate if the price will increase or decrease.

Spread betting brokerages give you a quote. The quote contains a bid price and an offer price which is a bit higher. Let’s see how it works on this example.

Your brokerage quoted some stock price at $5,000 and a spread betting provider will give you a bid price of $4,990, for example, and an offer price of, let’s say $5,010.

If you think the price will increase you can “buy” for $10 per point at $5,010. Every time the point is rising up you will earn $10. Say the price increased to $5,030. It is reasonable to close up the bet.

It is time to calculate your profit

5030 – 5010 = 20

20 x 10 = 200

So, your profit is $200.

This is in case you believe the market will grow, but if you think the market will drop, you can sell your stock at $4,990.

But you have to know that the risk is involved here. You can indeed make a lot of money with betting on small amounts but you may lose a lot too.

Let’s assume that you sell your stock for $10 per point at $4,990.

How big your loss will be if the price increase to a spread at 4,990/5,020?

Let’s calculate this.

4990 – 5030 = 40

20 x $10 = $400

Your loss is $400.

You see, you can make huge losses if your trade goes in the wrong direction. And this isn’t the only loss you may gain. Spread betting brokers will demand you to pay margin. Usually, it is about 10% but can be less or more.

The dangerous situation can arise if your losses on the trade approach near to the margin. In such a case, the broker may require more money from you and activate a margin call. What will happen if you can not come with that? The spread betting provider may close and will do, your position at a current price.

You don’t want a margin call to control your losses or you’ll be broke. Instead, set stop-loss order to close your trade at a particular price.

Let’s use our example again.

For example, you sold stock at $4,990 but you placed a stop loss at an offer price of $5,010, how big your loss would be?

4990 – 5010 = -20

-20 x $10 = loss $200

Your loss would be $200 which is pretty much less than $400.

But there is a problem with markets moving. What if it is too fast? It is gapping. A normal stop-loss order will not prevent your trade since a lot of stop-loss orders are triggered together. That will cause the trades to be closed at the market price closest to the defined price and it usually isn’t the level you wanted or expected.

The better choice is to set a guaranteed stop. This will cost you more since your broker will ask more money to get you out at a settled price. In this case, it isn’t in the question how many other stop-loss orders are activated beside yours. Actually, your broker will buy you out of the trade. This is very important when the market is highly volatile and you would like to pay a bit more to stay in a safe zone.

But there must be advantages also

One end is the tax break. In many countries (we are sure for the UK), you will not pay taxes on profits gained in spread betting or on capital gains from it. The other reason is that you don’t need to pay a fee to your broker when spread betting. Your broker will earn money from the difference between the bid and offer price.

But spread betting isn’t all about money. It is all about the opportunity to speculate on a full spectrum of markets. Even if you don’t have regular access to them. As it is said in the beginning, you can bet on almost everything. Currency pairs, stocks, commodities, whatever.

20th September 2019
How to Invest in Marijuana Stocks?

Here are some tricks and tips on how to invest in marijuana stocks. They are in trend now.

By Guy Avtalyon

Marijuana stocks easily can be one of the most interesting industries in the coming decade. The sector is growing with very volatile stocks that can give possibly marvelous trades.

This sector is already expanding. But it may explode even more. We already have a lot of listed stocks, but new ones launching IPOs also.

How to invest in marijuana stocks?

Let’s be clear on what precisely a marijuana stock is.

Marijuana stocks are the stocks of companies that are included in the marijuana industry. Such companies are focused on growing, others on selling, and some on researching marijuana. Marijuana stocks you can find under the name pot stocks. Not only producers or merchants businesses are pot stocks. Pot stocks also refer to companies that are servicing firms in the marijuana or cannabis industry, for example, distribution companies. Any company that acquires more than 30% of its income from any business linked with marijuana can be a pot stock.

Tricks and tips

The marijuana sector is really hot. So, you have to be aware that it is a volatile industry. This is the reason more to read and watch the news like any other stock. The news is important because that is what makes changes in the market. The truth is that the news can make an enormous turnaround in the market, the prices may jump or drop on news, the stock may be tremendous or useless thanks to the news.

What you have to do is to watch your favorite marijuana stock tickers. Be very careful with that because some mistakes may appear.

Is trading marijuana stocks easy

It’s almost the same as any other stock. Use the charts. By using stock charts, you’ll be able to know where to enter a trade, where to set stop-loss order, what is the market sentiment about your stocks. A lot of data you may gather from charts.

To know how to invest in marijuana stocks you have to watch a stock scanner to find trade setups that match your standards and your goals. But one suggestion first. Since there is a bulk of marijuana tickers tracking all of them is simply wasting your time by watching all of them. Moreover, there is no need to do so since we have the technology to work for us. Yes, I am talking about stock scanners. All you have to do is to set up the criteria that you are looking for and after a few clicks, the technology will do the rest.

Adjust your portfolio to trade long and short. Of course, if you are an investor and not a trader, you don’t need this. Just buy and hold, you are already long and you are waiting for the price to rise. But if you are a trader, to be short means that you have to borrow the stock, sell them at a higher price and wait for the price to drop, and buy the stocks again at a lower price.

In the coming years, the marijuana industry might grow. But with stocks, we are talking about winners and losers. To be honest, it is much easier to find dropping stocks. So, the short-selling can be very tricky and you must have a really good strategy and be well educated to practice this.

How to find good marijuana stocks?

The main problem is that most investors habitually don’t have access to adequate sources to estimate a company. But still, there are choices. For example, you can invest in ETFs. There you can find pre-selected marijuana stocks.

Teams of analysts paid the required attention and chose to add some companies in these ETFs. The other solution is to engage some advisors and stock pickers.

Whatever you decide to do, keep in mind that marijuana stocks are volatile.

19th September 2019
Taking A Position While Investing

3 min read

What is the definition of taking a position? How to accurately control your portfolio positions?

By Gorica Gligorijevic

Taking a position in the stock market indicates that a trader is ready to make choices, to go long or short. These are two positions that an investor can take. Going long means to buy, short to sale.
When you hold a long position that means you own the stock. Why is this important? I like to say investing is a marathon.
Investing takes time to grow. It requires a relatively moderate risk and moderate returns in the short run. But investing may produce bigger returns by placing both, interests and dividends to hold for a longer period of time. So, we are taking a long position when investing.
You would like to hold your stock for several years and have a decent return. In most circumstances, you should take the profit when a stock grows 20% to 25% of the buy price.
A “short” position relates to the sale of a stock you really don’t own. You have to borrow shares from a stockbroker. You will have the open position of shares and that has to be closed after some time. Investors who sell short believe the price of the stock will go down. And they are selling, meaning they go short. After you go short, the price of the same stock may go down more and you can buy it back and make a profit. Never wait to the price of that stock to increase and then buy, you will catch the loss.

If the stock’s price fell to $0, you owe the stockbroker zero and your profit would 100%. What if the stock price grows doubles when you close the position? Calculate! You may gain loss to 200%, double more of your buying price.

But keep one thing in your minds, short selling isn’t for beginners.

Taking a position in the investment

You are facing the horror: that stock you bought go lower, from hour to hour, day after day.

If it fails 5%, you may say the market is changeable, so why to be worried. But the dropping is continuing. Your stock is 10% down, after a few days 25%. To defeat a 50% loss you will actually need a 100% gain.

How do you feel now? What are you going to do? To wait until it drops 50%?

So, what to do?

When to get out in the investment?

There are several possible scenarios on taking a position but at first, try not to get panicked.

You should get out in your investment when your stock no longer meets your goal. Or you purchased it by mistake, it can happen.

The other reason for selling a stock can be you need money, or you would like to get out your investment because of asset allocation or reallocation.

The general rule of investing is never getting out of your investment just because the stock price is dropping. The rule “buy high and sell low” isn’t relevant while investing. Otherwise, you will never earn money in the stock market.

A selling an investment too quickly can hurt your portfolio.

Can you “ensure” some positions?

All beginners, no matter how smart they are, have illusions, so they have losses. You have to keep your losses small, don’t let them scare you and survive.

The rules for managing the risk that we’ll show you may feel disturbing for beginners because they have small accounts. Well, the proper risk control may limits trade size. I know that. But it is important for you to know that it is a protection in the first place.

The crucial rule of risk control is the 2% rule: never risk more than 2% of your account investment on any opened trade.

Start by writing down three numbers for every trade: your entry, target and stop. Without them, a trade may become a gamble.

I want to share with you one of the best advice I got when I become an investor.

If you see your stock rises by 40% you should sell 20% of your position. When the stock later increases 49% more, sell the other 20%. That will provide you to have 125% of your primary position.

You have 100% of the initial position. And it grows 40%:

100%*1.4=140%

You sell 20% of it, which means that now in your hands you have 80% left:

140%*0.8=112%

Stocks rise for another 40% progressively:

112%*1.4=156.8%

Now you sell 20% of the stock you have in your hands:

156.8%*0.8=125.44%

You end up with a 125.44% value of the initial position.

To make this simpler, when you buy some stock you have 100% in your hands. After some time they rise by 40%, so you have 140% of the value. And you sell 20% of that 140% and you have 80% of that 140% in your hands which is 112%.
After some time that 112% rise for another 40% – that means you have 156,8% in your hands. And you make another selling of 20% from that 156,8% which means you will have, after second selling, 125,44% of your initial position.
Also, you may apply a 20% stop loss on all positions. This serves to block whipsawed. If you are properly handling your portfolio positions you could reduce lower-performing positions before the 20% level is scored.
Taking a position in trading and investing is always in the question, so you must know how to handle your portfolio. On some assets, you are taking a long position but on others, you are taking a short position. It is necessary because you would like to protect your investments as a whole.

19th September 2019
Five Singapore Companies Listed by Dow Jones – Reviews

5 min read

by Guy Avtalyon

According to Business Insider “, five Singapore companies on the Dow Jones Sustainability Index 2019 Asia Pacific, and two are on the World list.”

And BusinessInsider added

“On Tuesday (September 17), five of these firms -CapitaLand, City Developments, DBS Group Holdings, Sembcorp Industries, and ComfortDelGro – saw their initiatives recognized by the Dow Jones Sustainability Index (DJSI), which is seen as a key reference point for sustainability investment globally.”

So, let’s see the inside of these Five Singapore companies.

CapitaLand Ltd.

Ticker SES(C31)
Market cap $13,198.89M

One of five Singapore companies on the Dow Jones list is CapitaLand. The main activity of this company is a real estate and consultancy services. CapitaLand Ltd. is the biggest real estate investor in Southeast Asia. It was founded in 2000 by a merger of DBS Land and Pidemco Land, two real estate investors in Singapore linked to the government. Temasek Holdings, Singapore’s wealth fund, holds an almost 40% share. CapitaLand is managed by CEO Lee Chee Koon.

The majority of its assets are in Singapore and China. CapitaLand has plans to grow more in China.

About 80% of CapitaLand’s assets are in Singapore and China, where the company plans to expand more.

The uniqueness and power of this company lie in developing many types of real estate such as shopping centers, apartments or individual projects. But CapitaLand owns The Ascot, one of the global biggest chains of international serviced apartments. Among other business, it holds 5 publicly listed real estate investment trusts and numerous private equity funds. For example, it privatized CapitaMalls Asia and immediately delisted it from the Singapore Exchange. The explanation was, it is a part of the restructuring. Australand Property Group was the part of CapitaLand but it has been sold.

The parts of this company are in Singapore, Malaysia, and Indonesia under ticker CL SMI, China under ticker CL China, Vietnam and there is, also, CapitaLand International. The company is geographically separated. Each part is involved in the area from where operates.

The CL International part involves in Europe, the US and the Middle East, but also in Singapore, Malaysia, Indonesia, China, and Vietnam. CapitaLand headquarter is in Singapore.

You want to know: Singapore Stock Market – Why To Invest?

City Developments Limited

Ticker SES(C09)
Market cap $6,481.47M

Another one of five Singapore companies on the Dow Jones is City Developments. It is one of the biggest real estate development companies in Singapore with a long history. Its focus is on residential and hotel development. It was established in 1963 and went public the same year, its shares were listed on the Malayan Stock Exchange. Today it is listed on the Singapore Exchange. City Developments is managed by Kwek Sherman. He is a grandson of the founder of Hong Leong’s Group and heir to one of the wealthiest families in Southeast Asia, Kwek Hong Png. Hong Leong Group still holds the majority of City Developments’ shares.

Its portfolio holds large condos, retail and office complexes in Singapore and overseas. It is the majority shareholder of Millennium & Copthorne Hotels and its more than 110 hotels all over the world, which is listed in London exchange.

When Singapore’s property market was a slowdown, the company find a place for developing in Japan. At the end of 2014, it bought 16,815 sq. meters of the estate in Tokyo’s downtown to build condos. At the same time, City Developments expanded in Australia.

City Developments Ltd. is focused on property development, rental properties, and hotel operations. But there is a so-called The Others Sector part which covers clubs ownership, other investments, consultancy services, etc. The company was founded on September 7, 1963, and its headquarters is in Singapore.

DBS Group Holdings

Ticker SES(D05)
Market cap $46,913.89M

DBS Group Holdings was founded in 1968 as The Development Bank of Singapore. At first, it was a financing company for Singaporean businesses and city development projects. But the bank expanded in China and Southeast Asia and in 2003 the name was changed to DBS as it became a regional bank.

DBS Group has the largest chain of over 2300 offices and self-service ATMs. It also holds the leading role in Singapore’s banking sector.

CEO Piyush Gupta is on the head of the group since 2009. Under Gupta’s management, DBS is experiencing expansion beyond the region. It bought Societe Generale’s private banking business in Singapore and Hong Kong in 2014 for $220 million. The aim was clear, to grow its money management business to attract millionaires in Asia. DBS was also the first Singaporean bank registered in China. It was in 2007. Now DBS has offices in 10 major Chinese cities, with more than 50 offices in Hong Kong only.

DBS Group Holdings Ltd. is an investment company. It is focused on retail, small and medium-sized companies, corporate, and investment banking assistance. It works as consumer banking/wealth management, institutional banking, and treasury markets. The Treasury Markets section is all about structuring, market-making, and trading of treasury products. The company was established in 1968 and its headquarter is in Singapore.

Sembcorp Industries

Ticker SES(U96)
Market cap $2,880.48M

This is one of Singapore’s largest conglomerates. Sembcorp Industries has three main businesses: marine, utility and urban development. The marine and offshore business are handled by publicly-listed subsidiary Sembcorp Marine. Its rigs and platforms are present in almost all foreign offshore oil places all over the world.

Sembcorp has an important position in various governmental industrial park development plans in China and Vietnam. The current Group President Neil McGregor is CEO too. In 2006 with Tang in the head, Sembcorp Industries won the bid for water desalination and power plant project in the United Arab Emirates. It was its first big project in the Middle East. Temasek Holdings is its largest shareholder with about 50% ownership.

Sembcorp Industries Ltd. is an investment holding company. It is engaged in the production and supply of utility services, storage of oil products and chemicals. It operates through main sections: utilities, marine, and urban development. It is also involved in businesses relating to minting, design and construction activities, and offshore engineering. The company was established in 1998 and its headquarter is in Singapore.

Read this: Singapore Stock Market – Why To Invest?

ComfortDelGro Corp. Ltd.

Ticker SES(C52)
Market cap $3,852.21M

ComfortDelGro is a land transport and an investment holding company with more than 46,000 taxis, buses, and rental vehicles all over the world. It was established in 2003 with the merger of the Singaporean transport companies Comfort Group and DelGro. London’s Metroline (city bus operator) is one of ComfortDelGro’s major branches. The interesting fact about ComfortDelGro is that no shareholder holds more than 10% of shares.

Because of the limited area and population in Singapore, the company was forced to find opportunities away from this city-state. In 2013, it has bought a part of London’s FirstGroup’s bus business. In the same year, it bought the Melbourne bus operator Driver Group. Almost half of the company’s operating profit is produced from businesses in China, Australia, the U.K., Ireland, Vietnam, and Malaysia. Yang Ban Seng is managing director and group’s CEO.

ComfortDelGro is holding company which mainly invests in the ground transportation services. It is involved in several areas through separate divisions. It operates a public transportation service, which covers bus, rail, and taxi services. Bus division is also involved in operating shuttle and coach rental services, and fare collection. Taxi division is involved in operating the bureau services and advertising of it. The automotive engineering division is involved in the maintenance, manufacturing of specialized vehicles, coach assembly, collision repairs, automotive engineering services, and sale of diesel fuel. The inspection and testing division provides MOT and similar regulatory mandated vehicle testing, but also non-vehicle testing, inspections and consulting. The driving centers division is providing services for driving schools. While the car rental and leasing division is covering services of vehicle renting and leasing to customers.
The company was established in 2003 and its headquarter is in Singapore.

18th September 2019
Mutual Funds in India Are Popular

Why Investing in mutual funds in India is very popular and developing at amazing speed? Here is the answer.

By Guy Avtalyon

Investing in mutual funds in India is developing at an extraordinary speed. The AAUM (average assets under management) increased during the past 10 years more than 4,5 times. According to data from the beginning of this year, it was Rs. 23.16 trillion. Just compare it with Rs. 5.09 trillion in 2009. The investors have the opportunity to invest in 44 AMFI with more than 2,500 mutual fund schemes. AMFIs are associations of Mutual Funds in India.

That is quite a large number. Occasions like this may be difficult for investors when it comes to picking the right fund.

What are characteristics of mutual funds in India

A mutual fund is an investment tool supplied by money from different investors. The collected money is invested in an assortment of different asset classes. That can be equity, gold, foreign securities, etc. What is the secret of this popularity of mutual funds in India?

Mutual funds can bring numerous benefits to investors. First of all, it isn’t necessary to invest a large amount of money since you can build a diversified portfolio with just Rs. 500. That is a great benefit for Indian investors.

Another characteristic that gives mutual funds a favored choice amongst investors is the expert management of funds. Hence, investors may be pretty sure that their investments are safe. That’s the general characteristic of mutual funds. In India, the mutual funds are under SEBI and AMFI regulations which give additional security.

Which mutual funds are popular in India?

We already said that mutual funds in India are under SEBI regulations so they are grouped into three categories: Equity Funds, Debt Funds, and Hybrid Funds.

Equity Funds

This kind of mutual fund invests a minimum of 65% of its assets in equity and equity-related instruments. Equity funds may give comparatively high returns. The point is that their basic investment is in stocks of companies that are sensitive to fluctuations in the stock market and the economy. Hence, equity funds are a bit riskier.

SEBI recognizes 11 types of equity funds. One of the most popular is the ELSS – Equity Linked Savings Scheme. Its investments are almost 80% in equity and it is unique because ELSS is qualified for a tax deduction of up to Rs. 1.5 lakh. The lock-in period for this type of mutual fund in India is three years.

Debt Funds

A debt fund invests a bulk, but less than 65%, of its assets in debt and money market securities. There is a lower risk for investments than in the equities. Debt funds in India yield returns which higher than returns given by fixed return investments. According to SEBI categorization, there are 16 types of debt funds in India. The most popular type of debt fund is a liquid fund. The big companies use them to store their extra cash for a short time, usually up to 91 days. Because of the shorter maturity period, liquid funds are the lowest risk investments. The advantage of these funds is that they are giving returns higher than savings accounts and almost equal as fixed deposits while but more liquid than a fixed deposit.

Hybrid Funds

A hybrid fund invests in two or more asset classes including equities. It can be debt, gold, abroad securities, money market instruments, etc. But usually, a hybrid fund invests in two asset classes: equity and debt. The mixture of equity and debt allows a hybrid fund to provide returns comparable with those provided by equity funds but promising proportionately lower risk levels like debt funds. According to SEBI categorization, we can recognize 7 types of hybrid funds.

The most well-liked type is the Dynamic Asset Allocation Fund. It can invest between zero to 100% of its assets in equities or debts. This type of fund trades equities and profiting during overvalued equity market conditions. A Dynamic Asset Allocation Fund reduces its debt vulnerability during the undervalued markets and increases its debt holdings when is a bull run.

Money Market Funds

Some investors trade stocks in the stock market, the others invest in the money market. The government, banks, or companies regularly issue money market securities, for example, bonds, dated securities, and certificates of deposits are some of them. The fund invests your money and pays you proper dividends in return. In short-term investing, for instance, no longer than 13 months, the risk is lower.

The benefits of investing in India

You can start investing with just Rs. 500 and there is no maximum limit to your investment. Also, you will get professional management of your investment. Funds corporations will charge you some fee for that service. It is a so-called expense ratio and it can vary from 0,5% to 1,5%, but due to the SEBI regulation, it will never be more than 2,5%.

Moreover, you may gain higher returns since mutual funds allow long term returns in a range from 7% and 15% or more for investments for more than 5 years. It is clear that these returns are higher than the inflation rate and that is the reason why they are so popular.

Diversification is another reason. Mutual funds permit investors to access to a broad and diversified investment portfolio. That provides a balance between risk and return which is extremely important for every investor. And as we said in the beginning, investing in mutual funds in India is developing at an extraordinary speed due to the various possibilities for investors and lower investment risk.

17th September 2019
Oil Stocks Rose After The Attack on Saudi Arabia’s Oil Facilities

2 min read

Oil stocks rose and all energy stocks rose but Wall Street fell on Monday after weekend attacks on Saudi Arabia’s oil facilities. Investors’ are concerned about this geopolitical risk and its influence on the global economy.

The attack carried oil prices up more than 20%. But easing came after many countries stated they would use crisis reserves to ensure stable supplies.

The Dow Jones Industrial Average dropped 0.52% to end at 27,076.82 points. At the same time, the S&P 500 fell 0.31% to 2,997.96. The Nasdaq Composite fell 0.28% to 8,153.54. Eight of the 11 main S&P sectors moved lower.

Also, oil futures rose10% Monday morning as a consequence of the attack. Saudi Arabia suspended 5.7 million barrels of daily production, which is more than 5% of the total production in the whole world.

Brent crude, the international benchmark, rose 10% to $66.27 in first-day trading. For example, West Texas futures increased by 10.2% to $60.44.

Oil companies and industrial stocks will benefit from new higher prices. Industrial companies that sell substances, pumps, and vehicles, processors, and sellers or auto parts companies.

As energy prices increase, investors may need to evaluate some of these energy stocks.

Oil Stocks Are Rising Which Ones to Buy

Some oil companies hit much larger gains as investors hurried to close their positions and avoid losses. For example, Carrizo Oil & Gas CRZO stock rose 19.53%, it had 39% of shares open for trading sold-short, reported FactSet. The shares climbed up 19.5% and close at $10.22. But, it is lower 62% from the 52-week intraday high of $26.67 placed in September last year.

MarketWatch published a list of energy companies in the S&P 1500 favorable to invest in now.

THE LIST IS HERE

How to determine the good one

Investors have to estimate the company’s balance sheet to reveal is it in stable financial status. Does the company have the money to satisfy its business obligations, if market conditions worsen? This is important data. Secondly, investors have to check companies leverage ratio. But the most important factor for oil investors when choosing the oil stock has to be its debt to EBITDA ratio and net debt to capital ratio.

If a company produces or uses crude oil a debt-to-EBITDA ratio should be below 2.0 times and net debt to capital ratio should be less than 30%. Although, if the company has fee-based cash flow net debt to capital ratio can be 50%.

Majority of oil companies will issue their current leverage metrics on their website so it is easy to check.

Investors should take care of the company’s liquidity.

That is money to which a company has immediate access to satisfy its financial obligations. The company must have enough cash for that purposes, a fund for several months, for example. How will you know that? Just divide a company’s declared capital budget by its cash on accounts.

An oil stock that is enough protected against a big fall in oil prices owns a stable credit rating, low leverage ratio, and much liquidity. Such companies are good investments, despite the oil prices droppings.

17th September 2019
Gold In India Is High But Tracking Global Signals

2 min read

The gold in the Indian market continued its rise with an over 1% surge today, September 16.

October gold futures values on the MCX were trading higher by Rs 491.00 or 1.31% at Rs. 38015.00 per 10gm. The silver also climbed in price by 2.4% or Rs. 1100 to Rs. 46,856 per kg.

The notable increases in domestic gold price is a consequence of dropping of the rupee. It is to 71.62 per US dollar today. India imports most of its gold demand, and decrease in the price of rupee caused gold to be so expensive in the Indian markets.

The additional value of gold comes from the unstable geopolitical situation in the Middle-East.

Gold was trading higher at 1.6% ($1,512) in Singapore and silver was trading higher at 3.2% ($17.9938) per ounce. Earlier this month, gold prices hit a 6-year high of over $ 1550 per ounce in the global market.

Gold could go up in the next week because some traders are buying it feeling uncertainty because of the attack on Saudi Arabian oil facilities during the last weekend. It is the so-called “safe-haven” buying. Gold traders are also interested in Wednesday’s Fed interest rate and further monetary policy.

Anyway, the gold price is higher than ever and precious in India which is phenomena per se. So, it deserves some explanation.

Why is gold so valuable in India?

Gold is valuable as a store of value and as a raw material for jewelry and electronic industry. Did you know that a lot of Indian nationals like to hold gold more than money in the banks?

That habit has its opposing side too. Indian banks have fewer funds to lend. That’s why the credits are more expensive and companies are not so enthusiastic to invest, therefore. And there is that tricky situation, a classical Catch 22.

When there are not enough investments and economic activity, the value of deposits and savings will be low. In turn, the borrowing, which is supposed to fund new investments and economic activity will be low, thus they will stay low. Because of these conditions wages, GDP and employment will stagnate. And also, there is a great possibility for domestic currency to go lower and become weaker. It can be, at the same time, a great possibility to grow export. But gold is our subject now.

India is the biggest gold importer in the world. But the Indian government set limitations to importing gold. That caused another problem. There is great consumer demand but less supply. Hence, the price of gold goes up.

The weaker currency has many consequences.

The inflation could be higher and the capacity for repayment foreign debt could be lower.

The rupee has proceeded to decrease due to different circumstances. Besides the gold demand, the reduced growth expectations have led to a fall in the equities markets. Foreign investors had to buy rupee to be able to invest in the market and now they are selling the rupee to cash out. This is extremely strong pressure on the rupee. It looks like the fundamental changes needed in the Indian economy.

You would like to know Who are the most successful investors in India?

16th September 2019
Investing With Just $100 Per Month

You don’t believe it’s possible? Well, you should read this post.

By Guy Avtalyon

Ok, you have an extra $100 each month and you are enthusiastic about investing but you don’t how it works? Also, you are worried if $100 is enough? Investing with just $100 per month is possible, of course.

You don’t need thousands of dollars or euros or whatever to become an investor and get into investment. Traders-Paradise found several possibilities for investing with just $100 per month.

Reasonably, you will not make a ton of profit off a $100 investment, but the crucial thing is really getting started. $100 may not appear important, but you can make it expand into more.

This is where it gets a bit more difficult.

One of the hugest problems with investing a small sum is that brokerage fees can be expensive. For example, if you want to buy some stock that can cost you up to $20 with some brokerage and your investment easilly may become $80 worth. Yes, there is a simpler way and cheaper brokerage.

There is one way that will cost you less. Just use some investment app. Most of them will charge you a $1 per month fee. The great thing about investment apps is that you can easily pick the simple portfolios related to your goals, interests, and ideas about investing.

The app will do the rest.

Honestly, when it comes to investing, time is more significant than the sum. Let’s say you are in your 18s. With an interest rate of 7%, you could end with almost $50,000 after 20 years by investing with just $100 per month.

It’s never too start investing, but why should you waste your time and miss the opportunity to get the wealth.

Savings account

The best place for you to start with $100 per month is to set it in a savings account. That will be more an emergency fund than investing with current interest rates. But it will provide you to get into more serious investments because you will build a safety net. You will not capture great returns but you will be safe even if you lose your current job. At least by putting $100 every month on your savings account you will have several months of breath if such an incident appears.

Hold it as the source to something bigger. Wise investing can turn your $100 into a great future and you have to begin around.

The time frame will make an immense variance in how you should invest. So, suppose you want to invest in stocks.

Stock investing with just $100 per month

If you have $100 that you’re able to load every month, you should think to invest in individual stocks. I already mentioned that will cost you 20% of your investment and you may think it is too expensive. But think again. The misconception is that you need a lot of money to be able to invest in a stock. Investing with just $100 per month is quite good for the start.

Let’s debunk the theories.

For beginners, if you’re ready to do your homework and buy around amid brokers, you will find a great potential. For instance, you can find a broker with bare-bones $5 commission and without minimum deposit terms. What you have to think about is that low-cost brokers may charge you some additional costs, for example, inactivity fees or additional costs connected with buying stocks trading below $2 per share.

But, if you buy individual stocks you are entering the long run. Yes, it is possible to find a good stock for investing with just $100 if you have a long investment horizon. You will hold your stock for years. If you trade them you will pay 10% commission for every buying or selling, that’s true. If you don’t like to pay commissions every month you can make savings of $300 or $400 and buy stocks every 3 or 4 months, you don’t need to buy stocks every month. In this way, you can lessen your cumulative commission charges.

Certificates Of Deposit or CD

Of course, there is an alternative to investing in stocks. You can invest in CDs. This simple way. All you have to do is to loan your money to the bank and collect the interest on it. CDs range in time from 3 months to 10 years. The point is, the longer you invest, the higher interest you will catch.

Moreover, the CD is penalty-free. That gives you the possibility to withdraw your money if you want and without penalty. But read everything you have to sign, some CDs have penalties. Some banks can charge you if you withdraw your money before the maturity of the contract.

Another solution for your investing with just $100 per month is peer-to-peer (P2P) loans.

The cool thing with this type of investment is that you can decide not only how much you want to invest but also, how your investment will be used. You may choose one particular investment from the different loans, also, you can determine an interest rate and loan period. As an investor, you will get your money back according to repayment plans.

Index funds are a good choice for investing with just $100 per month

Some companies don’t have a minimum balance requirement for index funds. So you can invest $100 in a class of stocks. The primary index fund tracks the S&P 500, but you can find numerous other. Index funds are good because they give the diversification of your investment portfolio. Some stocks will rise in value, some will drop, but the final result is that you will profit.

What do you want wit that $100? Do you want to improve your current financial situation, or maybe you want your capital to grow? You have to figure out that.

If your finances are in good health, then there is no excuse to delay investing.

Start building your wealth. Don’t worry if you have just $100. It is enough to start, it will turn into more! But if you don’t begin investing, you will never have that chance to earn. The day when you will think how smart you were when invested $100 is so close. So, simply start investing with just $100 per month.

16th September 2019
How To Profit By Investing In Bad Companies

2 min read

You don’t believe it is possible. Profit by investing in bad companies sounds pretty stupid and naive. But it is possible.

To be more precise, sometimes it is possible to make notable investment returns by buying the stocks with minimum chances. The key is to recognize the companies which will grow in the future.

There is some math behind. The point is to make a difference between business and stocks.

Let’s be more clear!

For example, you have some money aside and want to invest in some cheap stocks. But you find two similar companies in the same industry, say gold.

Company ABC is a large one. Gold is currently at $100, its exploration and other costs are $60, that is a $40 profit. Not bad.

Company XYZ is a disastrous business. It’s exploration and other costs of $90, which is only $10 in profit at the current gold price of $100.

Which one to choose?

The logical answer would be ABC but the wrong one.

Let’s assume the hypothetical situation.

The price of gold suddenly rise in the market, and the current it is $300, for example.

Let’s see the numbers for those companies.

Company ABC offers $240 in profit.

$300 gold price – $60 in expenses = $240 profit

Company XYZ offers $210 in profit

$300 gold price – $90 in costs = $210

But here is where the math has the greatest influence.

Company ABC earns more money for any reason, its profit rose 600% from $40 to $240. But, compare it with company XYZ which grew its profit 2,100%.

Moreover, there is a phenomenon

It is very reasonable to assume that company XYZ will experience a multiple expansion, meaning added increase. The possible final result: company XYZs stock price is raising exponentially more, much more than the stock price of company ABC.

What to say? Company ABC is maybe a healthier business, but company XYZ is better as a market choice.

How is possible to profit by investing in bad companies?

This is recognized as operating leverage.

Operating leverage describes a company’s level of fixed costs in comparison to its revenue. Companies with high operating leverage have large fixed expenses. They are obliged to cover them as first. If fixed expenses are exceeded, the revenue will fall. Such a situation may cause great difficulties for the company, from large cuts to lower profits, even bankruptcy.

You can find companies with high operating leverage in almost all sectors and industries. Gold miners, airlines, crude oil companies, are some examples. Actually, you may find these companies where the business has enormous changes in revenue. You will notice enormous profitability fluctuations. That comes because fixed costs can’t always adapt as quickly as the market value.

But you have to know that investing in bad companies carry a lot of stress and risk. Investing in some of these companies can make you rich but it is almost impossible for them to provide you a constant profit.

It’s easier to invest in some solid businesses with steady profit and dividend. You should avoid headaches.

You would like to read How to Become A Trader or Investor in Just 10 Minutes

15th September 2019