Category: Stocks

Stocks are maybe the best way to build wealth. Holding them means that someone owns a share in the company that issued the stock. Exactly this Traders-Paradise wants to explain to its visitors.
The majority of traders trade them, ordinary people are investing in them and they are building their future based on stock quality. If the stock is good, it will increase your capital.
In this category, Traders-Paradise explains what are stocks and why people should invest in them. Our experts’ team explains how to effectively buy an ownership share in the company. You can read what is beneficial, how much you can earn by trading them, and how much by holding them in the long run. Also, Traders-Paradise provides readers a full insight into stocks’ nature, how volatile they can be, why stocks are the best way to build and grow the wealth.
Here we explain what is the primary reason that investors own stock. Just to mention, the returns are potentially great.
Also, we explain how stocks work.
Readers will also find is it better and wise to buy stock in just one company or that could have a negative influence on their investment portfolios. Also, we explain how to structure your stock portfolio when you hold shares of companies from various industries and geographies.

How stocks differ?
Most investors hold common stock, but there are many kinds of them, for example, preferred stocks. Traders-Paradise explains all the benefits from any kind of them, how to profit by trading them. So, here you’ll find trading and investing strategies, all calculations, and methods to evaluate the value of your holdings.

Is it Possible to Predict Stock Market Movements?

How is possible to predict stock market movements. Read to the end.

By Guy Avtalyon

Different gurus and many experts try to predict the stock market movements. Actually, they try to explain the stock markets by using many different theories. Sometimes, stock market predictions are more interesting than the last season of GoT which isn’t so hard, right?

Even if you are not a trader and you never traded stocks, the possibility to predict stock market movements is exciting. Imagine that you can do so. How much it can be beneficial to your financial status?

Real estate can be failed at its lows, money can be removed from mutual funds, anything can happen.

What we have to do when the markets start to turn around?

Maybe to invest in gold, oil, some other tangible assets? To leave crypto? To sell stocks?

Yes, when things rise to go bad, relocating money into tangible assets is a benefit. But is it possible to know the danger is ahead before it happens? How to successfully predict the stock market movements consistently over time?

Do you know the maxim that “past performance cannot predict future success”? The paradox of that saying is that it will come up to you just after your broker tells you how great that investment was acting in the past.

Wink-wink, bro! At some point, the future can be similar to the past. Even the same.

Stock markets go upward, stock markets go down

Why do stock markets do that? Well, it is easy to explain. When more buyers than sellers are in the market, the prices will go up and vice versa. When more sellers than buyers are in the market the prices will go down.

What provokes people to buy and sell? More often it is connected to the emotions than to logic. And here we come. The emotions are unpredictable. The stock markets are under the emotional influence, so they are unpredictable too.

And you may think it’s useless to try to predict stock market movements. Or they are created to be unpredictable. It is a partial truth.

We found this on investmentwarrior.com:

“If today’s market is up…there is a 73% probability of tomorrow’s market is being as well, and a 27% probability that tomorrow’s market will close down.

If today’s market is down…there is a 62% probability that tomorrow’s market will also be down, and only a 38% probability that the market will close higher.

Historically the market has advanced on 58% of all market days, demonstrating its overall historic upward bias.”

The future of the stocks in the market is a complex problem. Too many variables have to be calculated. Quantitative models, historical patterns, all failed.

The best prediction tools are our brains. It is a damn good forecast tool. But a human intellect cannot solve a mathematical equation so fast as a computer can. The human brain isn’t even close to the simple calculator. But the human brain developed powerful tools, machines, and algorithms. They can calculate very fast. Some of them will solve the most complicated formula in a sec.

Why predict stock market movements

Predicting stock market movements is possible. It isn’t a waste of time.

Experienced traders being a witness of a lot of market’s ups and downs, believe that the market will be equal, one day.

Let’s go back to the predicting tools.

There is something called “algo trading”. With AI you practically can have the possibility to make a profit almost for sure. How successful will you be, depends on the inputs you add to algo.

Can you predict how the bulk of traders would respond to some events? It can indeed be completely unpredictable.

Who want to predict stock market movements

They need to be sure they are investing in safe assets. Also, they have to know they will have fast and huge returns.

Here we come to algorithms. How? The historical data are extremely important for trading and investing, for predicting the stock market movements. Are you ready to spend days, weeks, or months to gather valuable results? Why would you torture yourselves? Instead, you can use some good stock predicting tool, very fast and reliable to calculate the final result, to show you where to invest, when to enter, and when to exit the trade.

Traders-Paradise is preparing – Find the Best Exit Strategy Algorithm

Traders-Paradise chooses to develop this tool because the exit strategy is maybe more important than anything in your trade. How is that? While you have many strategies and choices to enter the trade, the exit of trade can be done in only two ways: with lost or with profit.

To know when to exit your trade you will need a lot of data. The tool like mentioned one is the easiest way to obtain them. Also, at the same time, similar tools are going to help you to predict the stock market movements. This tool will estimate how far the price will move and ensure that your profit potential exceeds your risk. Without that data, it is impossible to predict when to exit the trade.

Traders-Paradise is preparing something for you from that field. You will see it soon and you’ll be able to use it. It is very useful and impressive. But, the best news comes last. You have to wait for a while but stay tuned

22nd August 2019
Don’t buy stocks on a dip

Many say the strategy is to “buy a dip”, but can it really lead to success? There are so many opposing opinions.

By Guy Avtalyon

Don’t buy stocks on the dip says UBS Group AG. It is a Swiss multinational investment bank. While analysts at Goldman Sachs Securities Division advised: “Buy bitcoin on the dip” for stocks it is a straight way to a loss.

“Buy the dip” was a good plan for the bull market, but analysts at UBS addressed to stock investors:

“A world where leading indicators are accelerating is generally one where a correction in equities is an opportunity for investors and ‘buying the dip’ gets rewarded. In contrast, today’s backdrop with PMIs (purchasing managers indexes) in the low 50s and rates arguing for further declines often results in buying the dip being a losing proposition,” addressed strategists Francois Trahan and Samuel Blackman, in a Tuesday.

This announcement is quite strange because dip buyers are still making a profit.

The Dow Jones Industrial Average DJIA, +1.44% increased more above 370 points Tuesday. This increment came after the U.S. said it would pause imposing tariffs on some imports from China.

The S&P 500 SPX, +1.48% climbed 1.5%. The Dow is depressed 2.2% for the month, and the S&P 500 is 1.8% below in comparison to the previous month.

Trahan and Blackman have a different interpretation of the current market conditions.

What is buying on a dip

It is a losing proposition.

They said the historical records covering the last nine economic cycles, reveals that buy-the-dip works the best when leading economic indicators, like PMIs (private mortgage insurance), are accelerating.

The analysts said that buying-the-dip had a virtually excellent history. They call it the “risk-on” period. However, it is followed by the “risk-off” period. When PMIs fell under 50, labeled the “risk-aversion” period, dip-buying has poor benefits, they said.

Don’t buy stocks on a dip the analysts said

They said that defining the period of the cycle is just one piece of a three-item checklist. They also explained the perfect risk-reward scenario. It happens when the “risk-on” period is followed by interest rates, that carries an increase in the price/earnings ratio, so the earnings opportunity is promising.

Today, the potential dip buyers are 0-for-3, they explained. In other words, we are witnesses of the “risk-off” period, but the companies earnings opportunity has declined.

They also estimated interest rates.

They were looking at yields with an 18-month lag.

Their conclusion is: “the path laid by interest rates 18 months prior to today shows that there is now tightening in the pipeline, and it’s more likely we experience multiple contractions than expansion in the months ahead.”

Multiple expansion points the readiness of investors to pay more for a dollar of earnings. And they pointed out that the risk/reward for buying the dip “extremely poor”.

As you can see, analysts from Investment bank Goldman Sachs has advised investors to capitalize on the new dip and buy bitcoin.

The bank stated that its short-term target for bitcoin is $13,971. It also suggested to investors to buy Bitcoin on any dips in the current situation. But, don’t buy stocks on the dip, says UBS Group AG.

There is a difference.

15th August 2019
Top Stocks to Buy And Hold Forever
4 min read

So many people asked us what are the top stocks to buy in 2019.

It is on a daily base.

So, we will try to answer. This to all of you want to know and don’t have time to evaluate them.
We don’t want your one-time appearance here, we would like to build a real relationship and confidence.

This the article for you who want to enter the stock market this year.

Well, you know, Warren Buffett’s personal holding season is “forever” and look how is he.

Having that on our minds, here’s a summary of 5 stocks to buy and hold forever.

We understand, investing is difficult. Developing a portfolio of top stocks to buy is tricky even for economic experts.

There are still stocks to buy, don’t be worried. Moreover, they can give you really nice returns.
- Johnson & Johnson (JNJ)
Image Johnson & Johnson (JNJ) chart: source Yahoo Finance

Everyone needs their products. They will forever have something to sell, to us or the rest of the world. So why we, while buying their product, wouldn’t have an income?

List of Johnson & Johnson brands is so long.

J&J is a company with a long history. All can identify their best brands. For example, Johnson’s Baby Shampoo or Baby Powder.

It is founded the 1800s in New Jersey and since then Johnson & Johnson has extended its brands. Today, you can find Johnson & Johnson brands all over the world. From your bathrooms to your doctor cabinet.

The medicines, surgical products or healthcare solutions will never disappear. J&J has a really big portfolio.

No one should think even a second when it comes to investing in such a company. They have products, for example, cancer drugs that will produce good growth now and in the future.

The company is investing the robotic surgical opportunities gravely, in February announced that it’s buying robotic surgery firm Auris Health for $3.4 billion.

J&J annual yield on the dividend is 2.60% and has an 8.46% gain per year.

It is really among top stocks.
- Boeing Company (BA)
Image Boeing company chart: source Yahoo Finance

This company had hard March this year. After the fatal crash of Ethiopian Airlines, its shares fell down.

The company took the problems with their jet seriously and experts are working on new software.

On the beginning of the March this year their shares were worth $446, but now they are about $400. The stock could jump when their 737 Max types are on the sky again.

It is a very steady company. Their F-15 fighters are extremely valued.

Boeing arranged a selling of those fighters with US Air Force over the next 5 years for $8 billion.

The company raises the quarterly dividend yield for 2.6%.

Boeing announced a quarterly dividend of $2.055 per share which is $8.22 per year. This is a 20.2% rise from the previous dividend of $1.71.

The annual yield on the dividend is 2.6%.
- Colgate-Palmolive (CL)
Image Colgate-Palmolive chart: source Yahoo Finance

Why do we add Colgate here while everyone knows that this company recorded some suspicious inclinations in spending? Yes, we know that shareholders didn’t like that. That’s is changed as the company decided to make an important decrease in the costs. The advantages of that effort could last decades.

Their brands are among most buying products. For example, their toothpaste, or soap (of course Palmolive soaps), and manual toothbrush, and other pharmaceutical products for dentists.

The company is selling its products in more than 200 countries. Colgate-Palmolive includes two product sections:

ersonal, oral, and home care is one; and the second is pet nutrition.

It is a leader in the global oral care market.

Also, it is a leader in pet nutrition products for dogs and cats.

They’re all made by Colgate-Palmolive Company.

The company declared a dividend yield on 2.50% and the year-to-date gain of 16%.

Well, some can say Colgate is high-risk stock but with the big potential returns.
- Alphabet (GOOGL, GOOG)
Image Alphabet Inc. chart: source Yahoo Finance

Alphabet Inc declared $12.77 per share for the last quartal.

It looks that Alphabet is the revenue growth provider. Revenue grew 21.5% to $39.28 billion in the fourth quartal.

It is for sure one of the stocks which you have to buy and hold forever.

This tech titan is Google parent company.

Alphabet Class A and C shares have grown 15.5% and 15.4%, over the one-year period April 18. The S&P 500, including dividends, is up 9.4% over the same time frame.

Yes, the quarter’s reported earnings will be negatively influenced by a 1.5 billion euro (about $1.7 billion) penalty required by the European Commission in March.

The European Commission claimed that Google demonstrated anticompetitive methods linked to deals it had with Adsense for Search associates.

Well, the company is prepared to appeal, so investors may be sure that the penalty will be lower.

Google’s revenue grew quick.

The cost of sales would increase in the fourth quarter, forced by higher sales and projected content purchase costs at YouTube.

There are also, Fiber high-speed internet industry, and its Verily life science.

We all can see the changes because Alphabet’s self-driving vehicle tech branch Waymo recently start being monetized.
- The Walt Disney Company (DIS)
Image The Walt Disney Company (DIS) chart: source Yahoo Finance

Disney is the globe’s greatest media. They have movie studios, television networks.

Assets controlled by Disney add Disney Animation Studios, Pixar, Marvel, Star Wars, the ABC network, the Disney Channel.

Disney is close to finalizing an arrangement to take 21st Century Fox. That will combine the 20th Century Fox film studio, National Geographic, and a mixture of other media assets. But not the Fox News.

Disney has Disney Plus streaming service.

In the first half of April, it revealed the price, shows, and movies. Everything planned to overcome Netflix as a rival.

In 2018, Disney launched ESPN+, their streaming service, and in the time frame of five months had more than a million subscribers.

And don’t forget, Disney owns Hulu. Disney plans for its three platforms to be separate subscriptions, but it’s likely to connect them at a discount.

In the moment of writing this article, we are two days out from the release of Avengers: Endgame.

Predictions about how much money it will bring to Disney are fantastic.

THR – the range of $200-$250 million.

Deadline – passing $260 million, and maybe $300 million marks. ComicBook.com – prediction gathered from 3 analytics, $300 million.

Impressive.

Disney’s stock has jumped 13.6% in just five trading days in April. They will not look back now. Disney is a market sweetheart.

Not bad for an old player.

It is a good investment and one of the top stocks for sure.

Don’t waste your money!

risk disclosure
22nd April 2019
Leading Stock Exchanges In The World
3 min read

There are two basic types of stock markets:
1. physical location exchanges, which include the New York Stock Exchange (NYSE), and
2. electronic dealer-based markets that include the Nasdaq stock market, the less formal over-the-counter market, and the recently developed electronic communications networks (ECNs)
They are the world’s two leading stock exchanges.

A Stock market or exchange is a facility where people can buy or sell stocks, bonds, and securities through brokers and traders. Most often the traditional Exchange floor is where the selling and buying take place.

However, modern trading is now also done through electronic networks for its speed and lesser cost.

But there is the place where we can be faced with some problems.

The dark pools, electronic communication networks, and alternative trading systems are also using as trading locales.
Buyers and sellers are stock investors who may profit or lose capital depending on whether there is a bull or bear market, respectively. The stock market is usually preferred by investors for transparency.

As of April 2018, the New York Stock Exchange ranked as the largest by market capitalization with a value of tradable shares amounting to 23.14 trillion U.S. dollars.

Let’s say several words about each type of markets.

The physical location exchanges are formal organizations. They have tangible, physical locations and trading in designated securities.

There are exchanges for stocks, bonds, commodities, futures, and options.

The physical location exchanges are auction markets with securities going to the highest bidder. Buyers and sellers place orders with their brokers who then execute those orders by matching buyers and sellers.

Although specialists assist in providing continuity to the markets.

The electronic dealer-based market is consists of hundreds of brokers and dealers who are connected electronically by telephones and computers.

The dealer-based market facilitates the trading of securities that are not listed on a physical location exchange.

A dealer market includes all facilities to conduct security transactions not made on the physical location exchanges.

These facilities include:
1. the relatively few dealers who hold inventories of these securities and who are said to make a market in these securities;
2. the thousands of brokers who act as agents in bringing the dealers together with investors;
3. The computers, and networks that provide a communication link between dealers and brokers. Dealers continuously post a price at which they are willing to buy the stock (the bid price. Also, a price at which they are willing to sell the stock (the ask price). The ask price is always higher than the bid price. The difference (or “bid-ask spread”) represents the dealer’s markup or profit.
More about the leading stock exchanges

At the end of April 2018, the NYSE is the largest stock exchange operator by market capitalization. The total value of tradable shares amounting to 23.14 trillion U.S. dollars.

That is three times larger than the second largest operator, NASDAQ.

NASDAQ was the first stock market to start trading online. But NYSE is the first global equities exchange.

NYSE exchange has successfully grown into the powerhouse that it is today, due to a series of international mergers. The

NYSE merged with Euronext. That was the first integrated cross-border exchange. Now, NYSE trades almost twice as many foreign companies than NASDAQ.

The interesting fact is that the world’s two largest stock exchanges lie only a few minutes apart in New York City, United States.
The New York Stock Exchange founded on May 17, 1792, is the world’s biggest stock exchange in trade value and has a capitalization of $19.223 Trillion USD. Notable market events have included the 1929 Wall Street Crash, the 1987 Black Tuesday, and the 1997 mini-crash.

YOU WOULD LIKE TO READ The minimum amount of money you need to start investing in the stock market

The second one on this the list is the tech-heavy NASDAQ. It is founded on February 4, 1971, also in New York, with a market capitalization of $6.831 Trillion. It is owned by NASDAQ, Inc, as the first exchange to use the electronic system in trading.

The other leading stock exchanges are the following:

Third on the list is the London Stock Exchange Group in the United Kingdom and Italy founded in 1801 and has a capitalization of $6.187 Trillion.

Notable market events have included the 2007 acquisition of Borsa Italiana, the 2009 acquisition of Millennium Information Technologies, Ltd., and the 2011 merger with TMX Group.

Asian leading stock exchanges

There is also the Japan Exchange Group in Japan founded on January 1, 2013, with a market capitalization of $4.485 Trillion.

It was formed with the merger of the Osaka Securities Stock Exchange and the Tokyo Stock Exchange. Notable market events have included the 2013 JPX was launched.

Fifth on the list can be the Shanghai Stock Exchange in China re-established on November 26, 1990, after a 41-year hiatus. With a market capitalization of $3.986 Trillion.

Memorable market events have included the 1891 founding of the first Chinese stock exchange. At the year 1904 registering of it as Shanghai Stock Exchange. In 1941 it stopped operations due to Japanese occupation and the 1949 closing during the Chinese Revolution.

Also, there is the Hong Kong Stock Exchange in Hong Kong (SAR China founded in 1891 with a market capitalization of $3.325 Trillion. It is owned by Hong Kong Exchanges and Clearing.

In 1914 renaming of it as the Hong Kong Stock Exchange, and the 2000 HK Exchanges and Clearing acquisition of the HK Stock Exchange.

And the Shenzhen Stock Exchange in China founded on December 1, 1990, with a market capitalization of $2.285 Trillion. It also owns a tech exchange, ChiNext, founded on October 23rd, 2009.

Canadian leading stock exchanges

Also, TMX Group in Canada founded on May 1, 2008, with a market capitalization of $1.939 Trillion.

It also owns the Montreal Exchange, NGX, TSX Alpha Exchange, and several other exchanges. The TMX Group is founded after the acquisition of Montreal Exchange by TSX Group.

European leading stock exchanges

Of course, the first is the London Stock Exchange Group. But, there are also the Euronext, United Kingdom, Belgium, Portugal, France, and the Netherlands with a market capitalization of $3.321 Trillion.

Notable market events have included the 2007 merger with NYSE, the 2013 International Exchange acquisition of NYSE Euronext, and the 2014 Euronext IPO.

The Tenth is the Deutsche Borse AG in Germany came in 1992 with a market capitalization of $1.762 Trillion. It runs the Frankfurt Stock Exchange and the Scoach. It is located in Frankfurt.

You would also like to know more about the Australian Stock Market

The bottom line

The stock exchanges in developed countries, as well as those exchanges in developing countries, serve as measurements of where the national economy is headed.

YOU WOULD LIKE TO READ How to research and choose stock?

Moreover, the largest stock exchanges play an important part in the world economy. The stock exchanges are A dealer market includes all facilities to conduct security transactions not made on the physical location exchanges. for the economic development of many developing countries.

In developing countries, there are also stock exchanges.

And the stock exchanges in the developed countries are mature and are the major backbones of that country’s economy.

Financial market growth equals higher standards of living as well as create more jobs. Mature financial markets support funding international projects. This funding mitigates poverty.

Risk Disclosure (read carefully!)
10th January 2019
Should you trade Forex or stocks?

Choose the instrument to trader based on your strategies, goals, and risk tolerance.

By Guy Avtalyon

The dilemma should you trade Forex or stocks isn’t natural because one trader can trade both. And it could be a smart decision if we consider portfolio diversification. But when people ask this question know exactly what do they want to know.: What has more profits involved? Trading Forex or trading “simple” stocks? Or is it trading options?
Investors and traders have access to a growing number of trading instruments. From tried-and-true blue-chip stocks and industrial to the fast-paced futures and Forex (foreign exchange) markets.

In order to make the best choice, you have to recognize which of these markets are for you.

Forex versus stocks

The most important factor may be the trader’s or investor’s risk tolerance and trading style. As an example, buy-and-hold investors will prefer participating in the stock market. While short-term traders, including swing, day, and scalp trader may prefer markets where price volatility is more present.

For traditional buy-and-hold, “long-only” investors, stocks remain an obvious option for a lot of reasons. Stocks have a long-term history of positive returns. So investors receive income from dividends.

But when it comes to trading, forex trading has a number of advantages to offer. And you should think when deciding whether to trade forex or stocks.

Forex versus Blue Chips

The forex market is the global largest financial market. The forex market has very high liquidity, you can trade around-the-clock, the amount of leverage that is allowed to traders. All these characteristics attract traders to enter the Forex market and start trading.

On the other side are blue chips. Blue chips are stocks from well-established companies, famous brands. These stocks are able to provide profitability even during challenging economic conditions and have a history of paying dividends.

Blue chips are less volatile than many other investments. They are often used to provide steady growth potential to investors’ portfolios.

Differences and similarities of trading Forex and stocks

These similarities or differences could give the final idea to your decision of should you trade forex or stocks. Let’s examine them in detail.

Volatility – Some traders, especially short-term or day traders, favor volatility. It provides them to profit from quick price swings in the market.

The other traders are comfier with less volatile and less risky investments. That’s why short-term traders are attracted to the forex markets. While buy-and-hold investors prefer the security which blue chips provide.

Leverage – The forex market offers significantly higher leverage of up to 50:1, and in some parts of the world even higher. But it isn’t all good as it looks. While higher leverage provides the opportunity to build equity with a very small investment (you can open forex accounts with $100), leverage can just as easily destroy a trading account.

Trading Hours

Another consideration in choosing a should you trade forex or stocks is the time period that each of them is traded.

Trading sessions for stocks have a limitation. It is due to the exchange working hours. Generally 9:30 A.M. to 4 P.M. Eastern Standard Time (EST), Monday through Friday with the exception of market holidays.

The Forex market is active round-the-clock from 5 P.M. EST Sunday, through 5 P.M. EST Friday, opening in Sydney, then traveling around the world.

The flexibility to trade during U.S., Asian and European markets, with good liquidity virtually any time of day, is bonus plus to traders whose schedules would otherwise limit their trading activity.

Tax time

Various trading instruments are treated differently at tax time.

Short-term gains on futures contracts, for example, can be eligible for lower tax rates than short-term gains on stocks.

Furthermore, active traders may be qualified to choose the mark-to-market (MTM) status for IRS purposes. This allows deductions for trading-related expenses, such as platform fees or education.

It is strongly recommended that traders and investors ask the advice of a qualified accountant or some tax specialist. Especially since trading forex can make a complicated time to organize your taxes.

Should you trade forex

The internet and automated trading have opened doors to active traders and investors all over the globe. Anyone can participate since there is an expanding variety of markets.

To be able to make a very important decision about what should you trade stocks, forex, or futures you’ll have to understand your risk tolerance, to take into consideration account size, and convenience. If some active trader is not available during market hours to enter, exit, or properly manage trades, stocks are not the best option.

If some investor’s market strategy is to buy and hold for the long term, generating growth and earning dividends, stocks are a practical choice.

The instrument a trader or investor selects should be based on which is the best fit of strategies, goals, and risk tolerance.

25th September 2018
How Do Dividend Paying Stocks Work?

Dividends may be a sign of good stock but never invest in some stock just because of dividends it pays.

By Guy Avtalyon

The dividend is like interest on a loan. A company that earns real money every year operates with it on three options. First, the company can reinvest earnings to make new products, find more customers, or to make business more efficient. Some companies can buy back their stock in order to own more of the company and more profits. The third way is to return some of the money to shareholders through dividends. It is very important to understand how dividends work. Stocks that pay dividends can be great to hold.

Dividends are like interest on a loan. Assume you loan your relative $1000 for a year at 5% interest. You expect to get back your $1000 plus that 5%, which is $50 more. The dividend is that except the $1000 stays in the company because you still own part of it. It’s your part of the profit the company made.

Unfortunately, not all companies will pay dividends. Some companies don’t make the profit and they can’t pay out anything. Other companies flow all of their money back into the company to grow faster. The rule is there is no rule. What works for one business doesn’t work for others.

Is investing in dividends a good choice?

I know some people who like to receive dividend checks. For instance, some reliable companies may payout every three months. Even if the share price has small moves every year, investors still make money from these dividend payments and they don’t have to sell their shares to get that money. The check comes at the end of a certain period.

This money gets paid to all shareholders, no matter how many shares they own. The retiree who owns one share of some company gets the dividend in the same way as the wealthy hedge fund manager. The reliability of dividends gives them attractivity in investment.

Do Stock Pay Dividends?

High dividend-paying stocks have rates of 5%, 10%, or even more.

Why they are so high? It is simple to explain. Let’s see this simplified example.

A company with a share price of $100 which pays a dividend of $1 per share every year has a dividend yield of 1%, while a company with a share price of $10 which pays out $1 per share every year has a dividend yield of 10%.

Notice that the price you pay for a stock and the growth of the business over time determine how much money you make on that stock. Keep in mind there’s no shortcut to investing little money with high returns. Unfortunately, but that’s true.

The easiest way to find if a stock pays dividends is to look at any stock research site. You will find a dollar amount for the latest dividend announced, the annual amount paid, and the current yield. Always check the dates. The point is that stock may pay out one quarter and not the next.

Is it profitable to invest in the high dividend-paying stocks?

High dividend-paying stocks are paying more than the average dividend rate. Companies that pay high dividends are considered as good companies. But they may have some other reason like to attract investors to drive up the share price. It also may be a sign that the share price has dramatically gone down recently. Sometimes this means the stock is on sale or that the company is in trouble. You can’t know this just by looking at the share price or how high is the dividend amount. You have to have better information about the company’s business and its current financials.

The company must choose to pay a dividend and the amount paid may vary. Not all companies will regularly raise the number of its dividend payments.

Is investing in stocks that pay dividends a good strategy?

Yes, especially if you want regular cash coming in reliably. Reliability is the keyword because dividends aren’t guaranteed. You still have to do your research. It is better to buy great companies, not just stocks that pay the highest dividends per share.

High dividend stocks are not necessarily a good investment. Pay attention do they pay them every year, every quarter or does a certain company follow a regular schedule for the rise of its payment amount. It is possible to make more from dividends every year per share than you initially paid for the stock. Keep in mind this the tricky part of a dividend yield of stocks; it’s always calculated relative to the current price, not what you paid. A company that pays a huge dividend is a warning sign. How does the company plan to maintain its payment strategy? Is this a temporary trick to raise the stock price to fake levels? Always think about reliability.

Does value investors make money from high dividend-paying stocks?

Dividends are excellent. And value investing looks for underpriced stocks.

“What are the best stocks to invest in?” or “What are the reasons to invest in a company?”, can be the questions you ask yourself. In that case, dividends may be a sign of a good stock. But not all great stocks pay dividends, indeed. Some never do. Some pay from time to time. It depends.

If you pick a powerful company that gives you a check every quarter and if the price is right relative to the value, then you have no problem. That gem belongs to you.

18th September 2018
How to Find Dividend Yields on Stocks’ List?

By Guy Avtalyon

The dividend yields are metric. For every single investor, the most important question is ‘How much money can I make’. At least, the reason to buy a stock or bond or ETF is to make money. It is important to understand what people mean when they talk about yield, return, and types of both. Investors have several ways to measure the money they expect to get, Depending on their investment strategies, investors have several ways to measure the money they expect to get. Managing risk is important.

What produces the dividend yields?

Yield is the earnings you can make with an investment in a period of time. It’s the cash you get from making the loan. For example, you loan a friend $1,000 for a year. And your friend agrees to pay you back that $1,000 in twelve months, as well as $10 a month. For that loan, you’ll get back the principal as well as an extra $120.

That means you’ll end up with 12% more money at the end of the year than you started with. This is easy to understand with loans and it’s similar to bonds, where the bond rate and payout periods determine what kind of money you get back and how often you’re paid.

Do bonds give yields?

But bonds are a little bit more complicated than loans because you can buy them from other investors. But the yield falls as the price rises because the yield depends on both the interest rate and the price you paid.

Let’s say someone else bought the loan to your friend for $1100 and the 12% interest rate stayed the same, they’d only get $20 for the year, or 1.82% interest. That’s a different yield from 12%, don’t you think.

What determines the yields?

The yield depends on both the interest rate and the price you paid. If you want a higher yield, you either need to earn more money from your investment every month or pay a lower price for the investment.

Hence, there are different types of yield you can measure. But, you must know how stocks produce yield, for this to make sense.

Do stocks give yields?

Stocks don’t pay interest, but stocks may pay dividends. The dividend yield is easy to compare to other investments if you know what you paid for a stock. The problem is you can’t measure what everyone else paid for it. There are more possible to see the current yield of a stock, which divides the annual dividend payout with the current price of the stock.

How to find dividend yields?

If you want a regular cash income from your stock portfolio, you’ll have to understand dividend yield. The dividend yield is a pivotal metric that enables investors to analyze stocks. According to stock capability to generate dividends traders are trading them at many higher prices. To define dividend yield, you’ll need to know the total of a stock’s dividend payments per year and the current stock price.
To calculate dividend yield you’ll have to add all the dividends paid per common share over the last year. Further, divide this amount by the current price. Then, multiply this result by 100 to discover the yield.

For example, if the stock trades at $10 per share, the dividend yield is $0.70 divided by $10 and times 100, which is 7%.
That would mean that for every $100 you invest in this stock, you receive income of $7 per year. Compare dividend yields of different stocks, and you’ll find the best investment choice.

What is the difference between dividend yields and returns?

But, not all stocks pay dividends. You might earn a great return that never pays you a penny. But it is possible you’ll get money from selling a share for more than you paid for it. The same goes for bonds.

Slowly, that combination of the profit you made from the sale plus any dividends you’ve received makes up your total return. Exactly as with yield, the price you paid is the most important factor in your return.

But notice that there is one more essential difference between yield and return.

The yield looks to the future.

What can you earn in a year, what dividends will you receive, what interest payments will you get? These are predictable, depending on the risk of the investment of course.

Return looks to the past.

It includes interest or dividend payments, but it also depends on the price at which you sold your investment.

What to maximize yield or return?

The real goal of understanding yield and return is to compare how similar investments meet your investing goals. Any investment that returns money to you, produce regular income. If you can live from the incomes of your investments, that can be a great modus operandi.

But if you want to build real wealth and you have enough for a long-term investment, total return is more important. But never ignore yield because it can be a great way to make better your returns. Pay attention to yield but look for good returns from share price realization as well.

Whatever, being careful about the price you pay for investment will help you improve your yields and total returns.

17th September 2018
What Are The Main Characteristics Of Call Options?

Ways to use call options trading to make money

By Guy Avtalyon

Call options represent a deal between a buyer and a seller to buy a stock at an accepted and agreed price. This agreement lasts up until a fixed expiration date. The buyer has the right, there is no obligation, to exercise the call and purchase the stock. The seller is obliged to deliver the stock if the option is exercised.

What are call options in stocks?

A trader would choose to buy a call option if expects the stock is going to rise in the near future. Some traders buy options rather than to buy a particular share because the options are cheaper than stocks.
Call options are limited by time, of course. They have an expiration date associated with them. The same comes with all options.
What are the main characteristics of call options?
No matter if the options is “call” or “put” the characteristics are the same. Both have three essential characteristics: exercise price, expiration date, and time to expiration.

Call options are a kind of a derivatives contract that gives the buyer the right to buy a stock at a specific price known as the strike price of the option and has to exercise it within a defined time frame. The seller has an obligation to sell the stocks to the buyer if the buyer chooses to exercise the option to make a purchase. There is one requirement that the buyer must fulfill – such has to exercise the option at any time but prior to a named expiration date. The expiration date depends on buyers and seller agreement and may vary from three months to even one year.

The seller will receive the buying price for the option, but the amount depends on how close the option strike price is to the price of the stock at the time the option is bought. Also, on how long is a period of time to the option’s expiry date.
To put a long story short, the options price will vary depending on how possible or not possible is for the buyer to profitably exercise the option before the expiry date.

What is the exercise price of stock options?

The exercise price is the price at which stock can be bought or sold when trading a call or put options.
For example, you own call options for ABC company with an exercise price of $50. The underlying stock is trading at $60. It indicates the call options are trading in the money by $10. So, the exercise price is lower than the current stock.

The call options will give you the right to buy the stock at $50 even it is trading at $60. That allows you to make $10 per share if exercise the option. Your profit would be $10 reduced by the premium or cost you paid to the seller for the option.
But if ABS company is trading at $60, and the strike price of your call option is $65, the situation is quite different. Your option is out of the money. You will not profit if exercise that option because why would you like to pay $65 by using the option if you can buy the stock at a lower price for $60.

How many options contracts you can buy?

Each option contract holds 100 shares of the underlying stock. Buying 2 call options contracts, for example, grants the owner the right, but not the obligation, to buy 200 shares (2 x 100 = 300).
Suppose you think ABC Company stock is going to rise over a specific period of time. You may consider buying as many call options as your budget allows you. In other words, consider the trade amount that your account can support. This means to decide the maximum amount of money you want to use to buy call options.

What is the expiration date?

Options do not last forever. They have an expiration date.

But if the stock closes below the strike price and a call option has not been exercised by the expiration date, it expires worthless. And the trader no longer has the right to buy the underlying asset and the trader loses the premium paid for the option. Most stocks have options contracts that last up to nine months. Traditional options contracts typically expire on the third Friday of each month.

What do we pay when trading the options?

When you buy the stock for the stock price, you buy options for what’s known as the premium.

Premium is the price to buy options. In 100 XY call options example, the premium might be $4 per contract. It means the total cost of buying one XY 100 call option contract would be $400 ($4 premium per contract x 100 shares that the options control x 1 contract = $400). If the premium were $6 per contract, instead of $4, the total cost of buying 2 contracts would be $1,200 ($6 per contract x 100 shares that the options control x 2 total contracts = $1,200).

What orders to use when trading options?

Options prices are constantly changing, like stocks.

So, you may choose the type of trading order with which to purchase some options contract. There are several types of orders, including market, limit, stop-loss, stop-limit, trailing-stop-loss, and trailing-stop-limit.

2nd September 2018
Call options -How to sell & write

4 min read

Call options are an investment contract in which a fee is paid for the right to buy or sell shares at a future date. When we are talking about writing a put or call option we are speaking about an investment contract in which a fee is paid for the right to buy or sell shares at a future date.

Put and call options for stocks are typically sold in lots of 100 shares.

A little review of history.

The origins of writing an option date back to ancient times. Don’t think it is something new. Aristotle, the Greek philosopher, recorded an early example of options trading in his ”Politics”.

The philosopher and mathematician Thales of Miletus studied astronomy as a way to predict olive harvests for his region. Thales believed there would be a coming bountiful olive harvest. But did not have the money to buy his own olive presses. So instead paid a fee for the right to access the olive presses of others.

Do you see? This was the first options contract.

So, writing a call option means that you are selling a call option. If you sell a call (also known as a “short call”) then you are obliged to sell stock at the strike price.

Typically, a call is sold against long stock.

When you buy some option $400 call option that you have the right to buy 100 shares of some company at $400.

And maybe you asked yourself the question “who exactly am I buying it from?”

To have the right to buy the stock at the strike price, somebody has had to take the other side of that transaction and agreed to give you the right to buy it.

The ones that take the opposite side of the call option buyer are the “call option sellers.” And sometimes they are known as “call option writers”.

When you BUY call options, you bought it from someone.

That means that someone is giving you the rights to buy the underlying stock at the strike price by selling you that option.

The act of CREATING and SELLING that call options contract to you by that person is the act of WRITING a call option.

In execution, this means opening a call options position using the SELL TO OPEN order.

When you do that, you create a new call options contract for trading in the options market and that is known as “Write” a call options contract because you are exactly “writing it up”.

Selling options, whether Calls or Puts, is a popular trading technique to increase the returns on the portfolio.

Selling Premium can prove successful when performed on a selective basis. But, if you don’t follow some specific guidelines, your long-term prospect of profitability is doubtful.

Selling options for Income can be debatable because you don’t know are you making money with your options trading. When you take a look in your overall portfolio it can be difficult to measure each transaction success.

But in this environment is yield-seeking, and selling options is a strategy designed to generate current income.

Selling options is a bit more complex than buying options.

That can involve extra risk. If sold options expire worthlessly, the seller gets to keep the money received for selling them.

To be clear with more details.

There are two types of call option selling.

If you bought a call option and the price has gone up you can always just sell the call on the open market. This type of transaction is called a “Sell to Close” transaction because you are selling a position that you currently have.

If you do not currently own the call option, but rather you are creating a new option contract and selling someone the right to buy the stock from you, then this is called “Sell to Open“, “Writing an Option“, or sometimes just “Selling an Option.”

Writing or selling a call option is when you give the buyer of the call option the right to buy a stock from you at a certain price by a certain date. Simpler, the seller (also known as the writer) of the call option can be forced to sell a stock at the strike price. The seller of the call receives the premium that the buyer of the call option pays. If the seller of the call owns the underlying stock, then it is called “writing a covered call.” If the seller of the call does NOT own the underlying stock, then it is called “writing a naked call.” A covered call enables you to own a stock with unlimited downside risk and collect a premium for the call you sold.

When you sell a covered call you are actually selling a synthetic put.

If you are not comfy selling naked puts, then you should not be comfy selling a covered call. It is exactly the same as selling a put.

If you are comfortable with the covered call, then there are numerous factors to analyze when entering any options position.

Now, it is convenient to look at what factors can make a trade more likely to be profitable than another.

At the top of any list is liquidity or the percentage of the difference between the bid and ask.
If you are giving away too great a percentage to the market-makers or algorithms, then the costs of entering the transaction are too high.

You should look to trade an options contract that has a bid/ask spread of less than 1.5%. Always consider that the more you give away to the bid/ask spread, not only entering but exiting the transaction.

Well, this may prove difficult at times, but it isn’t easy to make money.

Besides this, all trade evaluations must consider the cost of commissions. While all of these costs make profitable trading that much more difficult, they must be included in your analysis.

You should consider the relative strength index of the underlying, extreme conditions tend to provide more interesting trading opportunities.

A seller is obligated to buy or sell an underlying security at a specified strike price if the buyer chooses to exercise the option.

There must be a seller for every option buyer.

There are several resolutions that must be made before selling options:

1) What security to sell options on
2) The type of option (call or put)
3) The type of order (market, limit, stop-loss, stop-limit, trailing-stop-loss, or trailing-stop-limit)
4) Trade amount that can be supported
5) The number of options to sell
6) The expiration month

When all this information is collected, a trader goes into the brokerage account, select security and go to an options chain. Once an option has been selected, the trader goes to the options trade ticket. Then enter a sell to open order to sell options and makes the appropriate selections to place the order.

Here are the key things you should remember with respect to buying and selling call options.

You buy a call option only when you are bullish about the underlying asset.

Upon expiry, the call option will be profitable only if the underlying has moved over and above the strike price. Buying a call option is also referred to as ‘Long on a Call Option’ or simply ‘Long Call’. To buy a call option you need to pay a premium to the option writer.

The call option buyer has a limited risk (to the extent of the premium paid) and a potential to make an unlimited profit. The breakeven point is the point at which the call option buyer neither makes money nor experiences a loss.

P&L = Max [0, (Spot Price – Strike Price)] – Premium Paid
Breakeven point = Strike Price + Premium Paid
When you sell a call option (also called option writing) only when you believe that upon expiry, the underlying asset will not increase beyond the strike price.

Selling a call option is also called ‘Shorting a call option’ or simply ‘Short Call’.

When you sell a call option you receive the premium amount. The profit of an option seller is restricted to the premium he receives, however his loss is potentially unlimited.

The breakdown point is the point at which the call option seller gives up all the premium he has made, which means he is neither making money nor is losing money.

Since short option position carries unlimited risk, he is required to deposit margin. Margins in case of short options are similar to futures margin.

P&L = Premium – Max [0, (Spot Price – Strike Price)]
Breakdown point = Strike Price + Premium Received
When you are bullish on a stock you can either buy the stock in the spot, buy its futures, or buy a call option.

When you are bearish on a stock you can either sell the stock in the spot (although on an intraday basis), short futures, or short a call option.

The calculation of the intrinsic value for the call option is standard, it does not change based on whether you are an option buyer/ seller.

You sell a call option when you are bearish on a stock.

When you sell a call option you receive a premium.

Selling a call option requires you to deposit a margin.

When you sell a call option your profit is limited to the extent of the premium you receive and your loss can potentially be unlimited.

Nothing more, nothing less.

Risk Disclosure (read carefully!)

27th August 2018
Women are better at investing Than Men

2 min read

Reports find that women are better at investing than men.

Period!

The big investment firm Fidelity says that female investors outperformed males last year by 0.3%. In fact, Fidelity found that females outdid men in the past decade.

Women have had a pretty bad reputation in global financial markets. As investors, the perception is that they joined the game too late, they saved too little and they invested too conservatively.

Additionally, insults about women capacities and their mental abilities appeared from respectable figures. Larry Summers’ comment that innate differences between men and women may explain the relatively low number of women scholars in the physical sciences. Those words raised a lot of uproar in academic circles and at Harvard University, where at the time Summers was serving as president. Some are ready to claim that this controversy cost Summers his job. Lawrence Summers must be noted, served as U.S. Treasury Secretary during the Bill Clinton presidential years and became an economics professor at age 28 and has written 150 scholarly papers. He advised President Obama on what to do about the biggest banks and the auto industry during the Wall Street subprime debt meltdown of 2008.

Have you seen the statue of the “fearless girl” facing the Wall Street bull?

State Street Global Advisors put up the statue to mark International Women’s Day and it’s getting a lot of attention.

What that statue try to tell us? The market is blind to your sex. The market is blind to your gender.

Try to type in some browser, “Are women investors better than men?” Google will list a stream of stories that argue such a case. I found AARP’s website began one article with these words: “Overall, women are better investors than men.”

And as an example, they cited research from professors at the University of California-Berkeley who concluded, after a study of stock trading patterns between the sexes, that men trade 45% more than women. The scholars argued that since frequent trading eats away at returns, women thus performed a full percentage point better than men.

C’mon! That is NOT the right reason.

The true fact is: In 2016 female investors earned higher returns and saved more of their pay to fund retirement accounts than men. The first thing that Fidelity said was that men were 35% more likely to make more trades, meaning that brokerage eats away at the portfolio. That is the first women’s advantage.

“It is a double whammy,” says Alexandra Taussig, Fidelity’s senior vice president for women investors. “The myth that men are better investors is just that – a myth.”

The second advantage is that women assume less risk, such as not loading up entirely on equities. They also invest more in vehicles like target-date funds, whose automatic allocations make for smarter diversification, Fidelity said.

Women are better at investing because women have more guts. Meredith Whitney became famous for making a bearish call on Citigroup (C) in late 2007, saying the big bank will be forced to suspend its dividend and she was right.

Over the years, women have made strides in the field of equity research and portfolio management. You can read about their adventures on Wall Street via books such as “Tiger Woman on Wall Street” by Junheng Li.

A study by academics Terrance Odean (University of California, Berkeley) and Brad Barber (University of California, Davis), also found that women outperform men, by roughly 1 percent a year.

Invest like a wonder woman, means shifting to a long-term focus, saving more up front and giving up on trying to time the market with brilliant trades.

As I said in the beginning, success in the market does not depend solely on gender affiliation.

The stock market doesn’t know who you are, it cannot know whether you’re male or female. Nor will it ever care, in the first place. But women are better at investing.

Do you know where to invest? FIND HERE

Risk Disclosure (read carefully!)

10th July 2018