Are you learning how to invest in stocks? We've compiled multiple tips for investing newbies on actionable things that can make you a better investor today. InvestingTips360 was conceived with a simple goal in mind - to create the ultimate resource for helping new investors learn the basic concepts of stock market investing in an easy to read, easy to comprehend format.
George Soros is a Hungarian-born investor who lived through the Nazi regime that perpetrated the murder of over half a million Hungarian Jews. After World War II, Soros moved from Budapest to London where he studied at the London School of Economics and worked as a railway porter and nightclub waiter to support his studies. In 1956, he emigrated to the United States where he began his career in the financial sector and would become one of the most successful financiers in the world as the head of Soros Fund Management (later renamed Quantum Fund). In addition to his financial career, he has five children, some of whom chose similar career paths in finance and philanthropy.
Soros has amassed much of his wealth through his work in hedge fund management. He began his career by opening the Soros Fund Management hedge fund in 1970. During his time with the hedge fund, Soros has accumulated capital in several high-profile trades. In 1992, he famously shorted the British Pound, which reportedly earned him a profit of $1 billion while simultaneously crippling the Bank of England. But that was not his only controversial position. According to Business Insider, he also made money in 1997 by making trades against several Asian currencies, specifically Thailand and Malaysia. From the wealth that he amassed throughout his financial career, he started the Open Society Foundations which connects philanthropic projects in over 100 countries.
Why Many People Don’t Like Him
Soros is a vocal proponent of liberal, progressive political and economic policy. At a recent World Economic Forum dinner, he spoke out against the Chinese government, suggesting that the regime is utilizing machine learning and artificial intelligence to suppress people in China. A frequent keynote speaker, Soros uses his platform to call out world leaders that he considers to be a threat to open societies. He has spoken publicly in favor of past issues such as Kosovo’s independence, as well as more current concerns such as Donald Trump’s suitability as president, and the likelihood that Brexit will fail in Great Britain.
Many progressive causes have also been closely associated with Soros. He was an early proponent of same-sex marriage in the United States, dedicating at least $2.7 million to the cause in 2013 which is the year the U.S. Supreme Court ruled in favor of the cause. Soros has also been credited with kick-starting the medical marijuana movement. In an op-ed for the Wall Street Journal, Soros says that the “criminalization of marijuana did not prevent [it] from becoming the most widely used illegal substance in the United States and many other countries” and instead has cost taxpayers billions of dollars for a failing war on drugs.
His many outspoken opinions on political and economic policies mean that Soros has become a polarizing figure worldwide. Governments and politicians on the receiving end of his criticism dislike him, and opponents of his progressive causes consider him a formidable roadblock.
What Makes George Soros Admirable?
The financier and philanthropist is not afraid of tackling problems that many find hopeless. Soros created the Open Society Foundations to reflect the principles of philosopher Karl Popper’s work Open Society and Its Enemies. Popper’s principle suggest that there is no fundamental truth but that so long as a society adheres to the democratic ideals such as freedom of expression and individual rights, the society can advance.
The Foundations include more than twenty offices which oversee the work and influence the funding priorities of the overall organization. Their funding concerns cover a variety of domains, including support of Europe’s Roma minority population to criminal justice reform in the United States. According to the Open Society Foundations website, they usually “provide no more than 33 percent of the funding” to organizations they have chosen work with, in an effort to “maintain their autonomy” and often work with people whose work may be considered controversial by other investors or funders.
Despite his advanced age, Soros’ website reports that he “continues to take an active personal interest in the Open Society Foundations’ work, traveling widely to support their work and advocating for positive policy changes with world leaders both publicly and privately.”
Finding and creating personal financial security seems like a long lost goal for many. We have compiled a list of the top 20 books you can read to either start your journal to financial solvency and wealth or to elevate your current investment strategies to the next level. With lessons from the top investors over the years, they are providing their strategies on what to do or not do to create wealth for yourself and your future.
The Intelligent Investor
The Intelligent Investor by Benjamin Graham, known as the godfather of investing provides common sense basics for today’s common investor even after the first publishing over 70 years ago. With nearly 2,000 reviews on Amazon it has a 4.5 stars awarded.
The Little Book of Common Sense Investing
The Little Book of Common Sense Investing by John C Bogle has over 750 reviews on Amazon and they give it 4.5 stars. With a book endorsement from Warren Buffet and being the founder of Vanguard Group learning from him is common sense investing for small investors and big investors. Since this book was first published the stock market has had its highs and lows and with applying the strategies of the majority of investors have survived the highs and lows of the market.
The Only Investment Guide You’ll Ever Need
The Only Investment Guide You’ll Ever Need by Andrew Tobias has over 350 Amazon reviews and it was awards 4.5 stars. According to the New York Times and the Simple Dollar agree that this book is informative and entertaining at the same time. Even though this book was originally written in the late 70’s reading it was last updated in 2016 to show that the same strategies that worked then are still applicable today.
Angel: How to Invest in Technology
Angel: How to Invest in Technology by Jason Calacani is a breakdown of how to analyze new technology startups to see if they are a wise investment or not for angel investors. Whenever an angel investor works with a startup there is always the chance the company will flop and learning what to look for in a startup is not only key to their success, but yours as the investor. With nearly 400 reviews on Amazon this book has the rare 5 star review rating. The beauty of angel investing is usually you do not have to do the work, you just have to buy into a good company, good product or service and or know what to look for in them.
Rich Dad Poor Dad
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert Kiyosaki has a whopping 7,300+ Amazon reviews and has earned a 4.5 star rating. This book breaks down investments on how to become rich by explaining what he was taught and what he learned from two different men in his life. This book has been out for nearly two decades and still is listed as the top personal finance book.
The Essays of Warren Buffet
The Essays of Warren Buffet: Lessons for Corporate America by Lawrence Cunningham was last updated in 2015. If you could sit down and have a conversation with self-made billionaire Warren Buffet, it would be much like reading this compilation of writings regarding his thoughts and processes on how to invest and what he has learned over decades of investing.
Common Sense on Mutual Funds
Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by John C Bogle has over 200 reviews on Amazon with a 4.5 star rating. This book shares the insights Bogle has and has been updated regularly for the ever changing investment environment since 1999. His focus is on low cost mutual funds that if diversified enough will show better results than working with an investor on Wall Street.
The Millionaire Next Door
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J Stanley and William D Danko has over 2,600 reviews on Amazon giving it a 4.5 star rating. This book focuses on seven similarities between successful people instead of the hundreds of ways to analyze companies to invest in. Knowing that someone is living next door or in your neighborhood and is a millionaire, you’d never know it. But simple concepts for instance living within or below your means can make a huge impact in your ability to build wealth.
A Random Walk Down Wall Street
A Random Walk Down Wall Street by Burton G Malkiel has over 800 Amazon customer reviews which award it 4.5 stars. While this book isn’t necessarily for the beginner it is definitely one you should read after you have a general understanding of how investment strategies work. Malkiel provides a wide variety of investment techniques with plans of action ready for readers to jump right in.
One Up On Wall Street
One Up On Wall Street by Peter Lynch, while the book is nearly 20 years old the same conservative principles can still by applied. Nearly 700 Amazon reviews gives this book 4.5 stars. Author is a very successful mutual fund manager who breaks down the best way for the common investor to succeed with their own common knowledge, which can beat a professional at the game of investing.
Security Analysis by Benjamin Graham was his first book on investing and it is quite detailed in his methods for investing. This book gives insight on how to evaluate companies before investing in the market. The book was last updated in 2008. With over 350 reviews on Amazon this book has a 4.5 star rating. Many reviews on Amazon state that the latest version excludes some valuable information and they recommend getting earlier editions that include the pertinent information that is excluded from the 2008 edition.
Common Stock, Uncommon Profits and Other Writings
Common Stock, Uncommon Profits and Other Writings by Philip Fisher, while only having a little over 200 Amazon reviews it maintains a 4.5 star rating. It was first published in the late 1960’s and Warren Buffet has attributed this book to the development of his investment philosophy. In 2003 the son of author Philip Fisher updated the book giving it a much needed update of almost 50 years of changes in the investment world.
The Book on Rental Property Investing
The Book on Rental Property Investing: How to create wealth and passive income through smart buy and hold real estate investing by Brandon Turner written in 2015 is a guide on how to make yourself into a millionaire with rental properties. With nearly 500 Amazon reviews it has been awarded 4.5 stars. If you follow pod-casts this author is one of the co-hosts of BiggerPockets which posts a new podcast every Thursday is a great way to follow up everything you learn after reading his book.
The Little Book That Still Beats the Market
The Little Book That Still Beats the Market by Joel Greenblatt has nearly 500 reviews on Amazon with a 4 star rating. Greenblatt’s book focuses on exposing the formula he uses to invest and how anyone using it will be successful, even if ‘everyone’ uses it. The formula is so basic that it boasts that it is at 6th grade level math. The book is a step by step manual on how to implement the formula into your portfolio creating long term success for you in the market.
How to Make Money in Stocks
How to Make Money in Stocks: A Winning System in Good Times and Bad by William O’Neil has nearly 600 book reviews on Amazon with an overall 4.5 star rating. It is recognized as a national best seller. This book focuses on a seven step process to lessen risks and increase gains. Following seven simple steps allows new investors to make educated decisions that impact their portfolios in a positive way.
Stocks for the Long Run
Stocks for the Long Run: The Definitive Guide to Financial market Returns and Long-Term Investment Strategies by Jeremy Siegel has roughly 175 Amazon reviews with a 4.5 star rating. This book provides an analysis on the financial crisis and how emerging market and international investments are making an impact. Giving some insight into the international market is different than many of these other books as they focus on domestic investments. Adding worldwide trading adds a level of complexity and risk.
Winning the Loser’s Game
Winning the Loser’s Game: Timeless Strategies for Successful Investing by Charles D Ellis has a 4.5 star rating on Amazon. The Money Magazine has called author Charles D Ellis the ‘Wall Street’s Wisest Man,’ he explains fees, how to revamp 401(k) plans, indexing and active indexing and following behavior economics is vital to investors.
The Four Pillars of Investing
The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J Bernstein has over 250 Amazon reviews with a 4.5 star rating. Bernstein provides instructions on how to build your portfolio without a financial advisor. Providing four pillars of discussion without a lot of nonsense discussion. He proposes that mutual fund companies and stockbrokers are more like your competition rather than your partners in the industry.
The 5 Mistakes Every Investor Makes and How to Avoid Them
The 5 Mistakes Every Investor Makes and How to Avoid Them: getting Investing Right by Peter Mallouk, JD CFP MBA, has a 4.5 star rating on Amazon and is a New York Times bestseller. Many of the aforementioned books were a highlights as to what to follow and what to do, Mallouk puts his focus on what ‘NOT’ to do. Sometimes knowing what to avoid and what not to do is more than half the battle and a different perspective on investing than many of these other top books on investing.
The Money Masters
The Money Masters by John Train has a 4.5 star rating on Amazon and is a national bestseller. Train breaks down top investors over time, many who were mentioned or authors of the above books in this list. He explains how each investment strategy worked for each individual investor making them the success they are today or were. He believes these strategies can be applied by any investor.
Choosing a path for your financial security has many different roads and the key to many successful investors is not following one particular path but following many paths. Your ability to follow simple math or instructions can be the beginning of your financial solvency and success. Relying on a 401(k) plan, pension or social security just isn’t enough anymore. While you may not read all of these books, finding one or two that fit your current financial situation can help get you moving in the right direction and or up your level in the game and yes, it is a game, it has winners and it has losers. The best part is there can be many winners, if you choose to be one of them.
Until about a decade ago, trading was done in loud, boisterous pits in places like the New York Stock Exchange. However, as the internet grew in speed and reach, a new generation of traders began swapping financial products from the comfort of home offices and coffee shops.
This has made financial markets accessible to anyone with an internet connection. When most hear the word ‘trading’, they think about stocks. These products have notable drawbacks, though – for one, they can only be bought or sold during a stock exchange’s business hours. Secondly, commissions can be high, forcing you to not only outperform the market but your broker’s fees as well.
For some traders, the futures market makes more sense. Contracts on these exchanges can be purchased 24 hours per day, fees are low, liquidity is deep, and trades are highly leveraged. The Chicago Mercantile Exchange, a major commodities trading house, has a market cap of $67 billion dollars. The goods traded on its floor are worth many billions more. Suffice to say, it is easy to make a lot of money in futures markets.
In this article, we’ll teach you the basics of trading futures, what you’ll need to get started, and its advantages and disadvantages versus other markets.
What is the futures market?
Before we dive deep into its inner workings, it might be helpful to know what futures markets are. Futures markets are auction-style marketplaces where commodities like crude oil, wheat, and coffee are bought and sold.
To open a position, the buyer bids on a contract. The seller responds with a counteroffer, with dialogue continuing until a price is agreed upon. This is the amount that will be paid to a supplier on a specific date in the future. This is done to provide cost certainty for the buyer and seller. In the absence of futures contracts, sudden swings in price could leave either party short of capital.
Futures markets have even evolved beyond commodities. There are platforms where you can buy non-physical products like securities, debt, and mortgages in the same way you would buy soybeans or orange juice.
Ready to buy your first contract? We’ll teach you how to do that next.
How do I trade futures?
There are two things a person needs to begin trading futures: an internet connection and access to sufficient funds. There are no certifications and educational requirements needed to begin trading; however, it is important to know your industry well to minimize your risk of ruin.
Online brokerages do have minimum bankroll requirements which must be satisfied before futures contracts can be purchased. E-mini futures, which are traded on the S&P 500, have limits as low as $500 (plus allowances for price fluctuations).
Does this mean you should sign up for a day trading account as soon as you have $500 to spare? No – the most successful traders in the business adhere to the 1% rule, which prohibits risking more than 1% of your bankroll on a single contract.
On top of this, they also employ stop/loss orders to further protect their working capital. Six ticks (the smallest rate at which a commodity price can move) is a common stop loss. If you are trading gold (which moves in increments of 0.10, each worth $10), this will get you out at -$60. According to the bankroll rule, this means you should have at least $6,000 in your account before making a trade like this.
The process for buying futures is as we described it earlier in this article: the buyer and seller negotiate on price until they reach a number that suits both parties. However, be sure to always read every contract before buying.
When the price of wheat goes down by ten cents, it is multiplied by every bushel you bought. If you acquired 5000 bushels, this equates to a loss of $500, not $0.10. On a bad day without a stop/loss, a mistake like this could clean out your account.
Beginner futures traders should start out by buying mini futures. These instruments trade for a fifth of the value of a standard futures contract, greatly diminishing risk.
Finally, you’ll need software to not only execute trades but to also monitor positions and conduct analysis on potential deals. NinjaTrader is used by many day traders, as it offers easy-to-understand charts, feeds from market data providers, as well as the ability to set up automated trading systems.
Futures versus options
Options are popular with many beginner traders, as it is impossible to lose more than your initial investment. However, futures are less volatile than options – this means less slippage in price when executing large orders.
Futures versus CFDs
A CFD, or contract for difference, is a form of derivative that allows traders to profit off price movements without owning the underlying asset. CFDs have a lower barrier to entry than futures, as they are sold by brokers. Further, you aren’t obligated to make a sizable minimum order that requires substantial capital to finance.
On the other hand, the price of futures contracts are transparent, as they are traded on a public exchange. Relative to commissions, futures are the better choice, as experienced investors can make huge orders that dilute the impact of commissions on their bottom line.
The pros and cons of trading futures
Like any financial products, futures contracts have upsides and drawbacks. Let’s review several of them below:
PRO: Futures positions on most exchanges close overnight. This avoids losses during after-hours trading, which makes it easier for you to sleep at night.
PRO: Futures traders make more deals (2-3 per day) than other traders. Some only make one trade per week, meaning you’ll gain experience in trading quicker than investors in other fields.
CON: Commissions can be higher than you would expect. While they may be lower than other markets, they can add up over time. For example, the National Futures Association fee is $0.04 per round turn; until you attain the skill needed to be a seasoned trader, these can chip away at your slim profits.
CON: The vast majority of futures traders lose money. Beating the exchange, as well as experienced investors, is obnoxiously hard. Those who lack discipline and a willingness to do the necessary research will eventually lose their money to the market.
Like any worthwhile endeavour, futures trading isn’t easy. Most traders will go broke, heading back to their day jobs with their tail between their legs. However, if you are prepared to study a specific commodity and its related industries until you know them like the back of your hand, you’ll have a better chance of success than those who treat the market like a casino.
Julian Robertson is a big name in US investing, and it’s no wonder why since he is renowned as both the ‘Father of Hedge Funds’ and the ‘Wizard of Wall Street’.
He set up Tiger Management in
New York in 1980, the first hedge fund and it catapulted him to become one of
the world’s most successful hedge fund managers with a net worth of more than
$4 billion according to Forbes.
Investing on global macro principles
He built his fund on a strategy of investing on global macro principles – where the overall direction of the economy of a country was considered to decide on the investments that would be made by the fund. For example, if a country such as the USA was likely to head into recession, the fund would ‘short sell’ major markets to benefit from the fall in prices when the recession hit. In contrast, it would then seek opportunities in more appealing but perhaps more risky countries, such as smaller economies where opportunities for growth were greater.
At this stage, ideally Mr Robertson was looking to invest in countries where the competition to find good, long-term investments was weaker. For example, the Tiger Fund invested in both Korea and Japan at a much earlier stage than other funds. As countries become increasingly researched and more attractive to other investors, the opportunities to find excellent opportunities recede.
However, in the 1990s conditions
started to change, and the increasing interest in the internet and online
businesses meant more money was flowing into Silicon Valley and out of his
hedge fund which was avoiding these tech-focused investments.
It actually showed that his assessment of the tech boom was correct, but that did not help him.
Mr Robertson’s reluctance to buy into the
tech boom actually saved his fund from some of the metaphoric bloodshed
suffered by his contemporaries when the bubble burst, yet it also eventually
resulted in his decision to close Tiger Management. He realised his rational
approach to valuation and trading within his fund was likely to be less
effective in what was becoming a new investment world.
Tiger Management closes
So, following a period of poor performance
during the dotcom boom and then bust, the Tiger fund was liquidated and closed
its doors in 2000. From that point on Mr Robertson became a mentor to various
hedge fund managers who became known as his ‘Tiger cubs’.
Although he has now retired, Mr Robertson is still sought out by the media for his commentary on the economy and stockmarket moves. In one of his most recent interviews he praised US President Donald Trump for his “excellent job” on the economy, and claimed he deserved more credit than he was receiving.
Trump deserves more credit
Mr Robertson was particularly happy about the move on corporation tax President Trump instigated, which sees the rate cut from 21% from 35%, which is likely to boost US businesses.
Of course, there are pros and cons to any
investment strategy, and the way Julian Robertson has invested is no different.
For example, his fund avoided the heavy losses suffered by some other funds
that had invested extensively in the dotcom bubble, but his lack of interest in
this area resulted in a punishing move away from his fund by investors.
But, there are some key ways to make your
investments most likely to succeed if you follow in his footsteps:
If you want to make money, you have to try to keep your losses to a minimum. Using a long and short investment strategy – where you ‘short’ assets you believe are going to perform badly over a specific period, perhaps because you expect a country to go into recession – you should maximise your gains.
For longer term investments, you need to
trust in your research and take an extended view on whether your choice of
investment is right.
sure your best stock choices will always outperform your worst ones
This refers back to the ‘long’ and ‘short’
investment strategies, as you need to be sure you are going to be making money
in a hedge fund whether the stocks are rising or falling.
not be afraid to pull the trigger
Mr Robertson was known for being the ‘trigger puller’ at his Tiger Fund, and if you want to invest the same way, you need to be prepared to make a decision when the time is right. Dithering on whether to buy, hold or sell can lead to losses that would not be made if you have the courage of your convictions to make a decision.
2018 is a heady time to be involved in the stock market. Over the past five years, the Dow Jones Industrial Average, the S&P 500, and the NASDAQ indexes have doubled in value. Look back to the bottom of the Great Recession and one will see that stock values have quadrupled.
Yet, the best traders have managed to crush these unwieldy numbers. Eminently skilled in picking stocks, their biggest wins have helped them beat one of the most robust bull markets in history.
How do they do it? By embracing the teachings of gurus like Warren Buffett and Peter Lynch. They have amassed their fortunes by buying undervalued equities and holding them for the long-term.
Today’s article is part inspiration, part tutorial. We’ll start by profiling the best stocks of all time, then we’ll go over the basics of how to pick a value-priced stock.
Let’s jump to it, shall we?
Oracle Corporation (ORCL)
Despite not being around as long as other blue-chip companies, tech stocks have made a huge impact on the market. Oracle is among the oldest of the bunch, as this maker of database management software went public in 1986.
Like most tech stocks, it got caught up in the dot-com euphoria of the late 1990s. Cast aside by retail investors in the crash that followed, only those who saw the internet as the future (and not a fad) found it to be undervalued at $7 in September 2002.
These buyers were rewarded for their vision, as ORCL closed at $51 in September 2018, an all-time high.
JPMorgan Chase (JPM)
An iconic financial institution that has been around since 1799, JPMorgan Chase is the stud of the American financial industry.
Most banks are solid investments, as they post consistent profits year after year. JPMorgan Chase is as good as they come – in Q1 2009 when American banks collectively lost $10 billion, JPMorgan Chase managed to post a profit of $1.5 billion.
Despite this remarkable performance, their stock price took a 50% haircut from October 2008 to February 2009. Those able to keep their fears at bay and buy at $23 now hold a stock worth $115 in October 2018.
Pharma stocks are tricky to pick. All it takes is one recall to tank a price, and potentially, an entire company. Those who accepted these risks to purchase a piece of Merck years ago have been rewarded with a steady string of profits tied to the success of its life-changing drugs.
Treating everything from diabetes to HIV, MRK’s trend line has gone much higher than the average pharma stock. Despite swings typical of a pharmaceutical stock, those confident in its bedrock drugs offer have been rewarded for holding it long-term.
Sitting at $14 in 1994, Merck is now worth $71.23 as of its most recent close.
Who ever thought sugar water could take over the world? If founder John Pemberton could see his company today, we imagine this would be the first thought that would have come to his mind.
A tasty carbonated beverage derived from the kola nut, this pitch-black soft drink can now be found in almost every nation on Earth (except for Cuba and North Korea).
Founded in 1886, Coca-Cola began trading on Dow Jones in 1987 at around $2.50. Today, that investment is worth around $46 – more than enough to buy a few pops for one’s friends.
A leviathan of online commerce, Amazon was once little more than a paltry book seller. Many thought this company wouldn’t survive the fallout of the dot-com bust. They managed to hold on, and have since gone on to become the internet equivalent of Wal-Mart.
They recently moved into brick and mortar grocery, acquiring Whole Foods. This, combined with the meteoric rise of online shopping over the past decade, has sent AMZN into the stratosphere. Stuck in the $40 to $80/share range for much of the 2000s, its believers have profited massively in the 2010s.
This stock broke through the $2,000 ceiling in August 2018, with some experts saying it still has more room left to run.
Berkshire Hathaway (BRK.B)
Most people excel at only a small set of skills. Accordingly, most investors are terrible at stock picking. There’s beauty in keeping things simple. Why not leave the yeoman’s work of value investing to the experts?
It is this philosophy that investors in Berkshire Hathaway embrace. Headed up by two of the wisest investment gurus in the world (Warren Buffett and Charlie Munger), BRK.B has seen solid and steady growth over its 22-year existence.
Berkshire Hathaway issues two classes of stock. The A class became too expensive (it recently closed at $327,900/share) for most retail investors to afford, so in 1996, a cheaper B class was issued at $20/share.
Those who got in at that price have enjoyed steady gains, with recent closes above the $218 mark.
Founding the world’s most popular search engine was just the beginning for Google. As the world’s foremost broker of information and data, the future is filled with infinite possibilities for the corporation now known as Alphabet.
Once overlooked as a simple technology company, it turns out gathering data on just about every facet of online life is actually quite profitable. It allowed Alphabet to sell tailored ads to its customers – when a company’s message can get in front of those most likely to buy, magic happens.
In the 2010s, it took the wealth generated from revenues and its IPO to start/acquire a series of future-facing companies. From self-driving cars (Waymo) to intelligent appliances driven by the Internet of Things (Nest Labs), it is set to make astronomical profits in the years ahead.
Investors agree. Starting from $46 when its IPO was issued, Alphabet now sits at $1,177. In an age defined by technology and data, that climb is sure to continue.
No stranger to controversy in its pursuit of every day low prices, WalMart is the king of discount department stores. Around for longer than most realise, WMT was listed on the New York Stock Exchange for 1972 for $0.04/share.
Despite the occasional plunge after a disappointing earnings report, WalMart has enjoyed a steady rise in the market over the years. Hiking its dividend every year since 1974 has drawn in a steady stream of investors, helping its price to cross the $100 threshold in January 2018.
Though it faces headwinds from Amazon, WalMart has managed to keep up in the online space, investing heavily in its e-commerce infrastructure.
Giving people what they want has always been a sure route to profit. Apple turned that rule on its head by giving folks gadgets they didn’t know they needed (until they saw them).
Creating products out of thin air is a risky game. Fortunately, Steve Jobs had a knack for crafting innovative products – it was this gift that helped him birth one of the most successful companies in history.
As a publicly-traded stock, APPL has been through some gut-wrenching times. The mid-1990s was a scary time, as the company flirted with bankruptcy after a series of disastrous decisions.
The return of Steve Jobs righted the ship. Focusing on core competencies and developing new products like the iPod revived the company, but it was the iPhone that turned this corporation into a world-beater.
Ushering in the era of smartphones sent APPL on a hockey stick trajectory; those who bought in at $11.50 in the depths of the Great Recession now hold a stock worth over $200 in 2018.
For better or worse, oil & gas are the linchpin commodities of modern civilization. Our cars and trucks run on them. Plastics are made from them. Fertilizer is synthesized using them.
Accordingly, those who extract, refine, and distribute crude oil-derived products have accrued massive wealth over the last century. ExxonMobil leads them all, having made $1 trillion for its shareholders since the late 1960s.
Available at roughly $2/share during the oil price bust of the 1980s, those still holding today ($85) enjoyed a 42x increase in their investment.
What do all of these companies have in common?
For every dynamo in the stock market, there are duds that go break-even over the long-term. Worse, some companies, like Enron or Blockbuster, go bankrupt.
To cover bad bets, an investor needs big winners in their portfolio. To pick them, one must identify traits many rock star stocks have in common with each other.
Let’s discuss a few of them.
They provide an inelastic need
Modern society could not function without gasoline – ExxonMobil provides that. Many small towns depend on WalMart for anything that isn’t groceries. Businesses big and small wouldn’t be able to expand without loans from institutions like JPMorgan Chase.
Corporations that offer a product/service essential for everyday life tend to do well no matter the state of the economy.
They excel at innovation
Technological and scientific progress is advancing at a pace unprecedented in human history. Companies like Tesla, Alphabet, and Apple are leading the charge, providing people with products they didn’t know they needed – until they got their hands on them.
The iPhone seemed little more than a fun gadget – until people realised they could use it to look up directions, order food, and surf the internet from anywhere with a cell signal.
When companies ‘invent’ demand for something they created, the resulting stock gains can be astronomical.
They get in front of ‘waves’ so they can catch them
Some of the biggest business opportunities have their roots in societal trends and innovations. Amazon never really took off until online commerce did in the 2010s. The rise of the internet in the 1990s lived Oracle out of the doldrums.
As we speak, boomers are swelling the ranks of the retired like never before. Just a hunch, but now might be a good time to go looking for undervalued travel and health care companies.
Is it possible to pick superstar stocks before they get famous?
Let’s be honest – nearly everyone wishes they bought Amazon at $40 in the 2000s. The question that leads from this desire is an obvious one – are there signs one which indicates a possible juggernaut stock in waiting?
Everybody has a system to pedal. Most of these, however, focus on the ‘greater fool’ theory of investing – that by riding a wave of speculation, there is always a bigger sucker out there willing to buy.
In addition to keeping the commonalities of major stocks in mind, there is only one approach we can recommend – value investing.
It is not an easy path to follow, as it requires extensive research to determine a company’s true value. On top of this, investors must commit to holding stocks for the long haul.
Let’s discuss this approach in further detail.
2020: Stockpocalypse Now
The year is 2020. Investors finally realise how overbought the Dow Jones is, triggering a massive crash. The index falls 40%, taking down just about every blue-chip stock with it.
Some companies, like overextended real estate developers, get punished correctly in accordance with the lack of demand for their products.
However, the value of other stocks ends up getting distorted on the way down. Take Coca-Cola for example; its drinks sell well around the world, no matter the state of local economies. Does that mean it deserved to have its share price axed by 40% in our hypothetical sell-off? Unlikely.
In this instance, the intrinsic value of Coca-Cola, which includes sales, profits, and strength of its management team, exceeds its current share price. This makes it a buy.
Applying this logic to lesser-known stocks will help investors find plenty of solid buys for their portfolio. Of these, a few may end up becoming superstars.
However, not Warren Buffett, nor Jim Cramer, nor the fortune teller down the street can point at any one stock and proclaim confidently that it will sell for 40x its current price ten years from now.
Whether you are a first time investor or seasoned one, knowing all your options on funding is a good place to start. The interest rates on loans are low, really low. The rates are so low; some people might think that with these low interest rates that they could create a long term arbitrage between a personal loan and the stock market. You might think that knowing the average return on the stock market over time and with a fixed loan term you might be able to play the system and come out ahead. Well, that is ‘possible’ but highly advised against.
What You Do Know
If you are borrowing funds, you know what the lender will charge you for the funds. According to CNBC.com the average rate of return of the S & P 500 is 9.8%. Loan rates for a personal home loan with Wells Fargo today are 4.49% with good credit and other needed requirements by the lender.
Loan Term Breakdown
If the stock market yields an average of 9.8% return, you’d think that you would earn the variance between the interest incurred on the loan and the interest earned on the investment, however the math isn’t that simple. You also need to deduct the monthly payments that need to be made to the financial institution for the loan during the investment / loan term. Using a calculator at BankRate.com for an investment with monthly withdraws.
Using the initial investment of $100,000 and varying terms of 10, 20 and 30 years for the loan and length of the investment we have calculated these figures for you. While they look promising these numbers are only indicative of the actual interest earned, this variable can make or break these predictions. Borrowing funds to invest is tricky but some believe with enough knowledge the gap between the interest earned and interest owed it is worth the gamble.
Loan Interest Rate
Earned Interest Rate
Initial Loan / Investment Amount
Loan Interest Paid Over Term
Investment Interest Earned Over Term
Potential Gain on Loan & Investment
What You Don’t Know
According to CreditMonkey.com the average return for the last 10 years starting in 2008-2018 the average return is only 6.88% which would change the investment interest earned over the 10 year period to only $16, 713 which doesn’t allow for the investment and loan to yield a return. You actually end up paying $7,595 in the interest on the loan than you would have earned on the investment after the $24,308 paid in interest on the loan.
TheBalance.com compiled a list of the best and worst returns on the stock market during a one-year period. During 2009 the worst return was during the crash of the mortgage industry the market lost 43%. The best return was in 1983 where there was a return of 61%. So not being able to predict the market when big wins will come and big hits will happen it is strongly advised to not invest with funds you cannot afford to lose. Just like in gambling you shouldn’t use money that isn’t yours to lose. If you lose every penny you borrowed, you still owe the money. If you lose funds you already had, you are at least at zero, no gains but nothing owed either. While that is not an ideal situation it is much better than borrowing funds and losing them and then still owing them to a lender.
The rate of return decides if your investment turns a profit or a loss. If you earn 9.8% on a 20-year investment you can earn $150,149 in interest. However if the average interest earned is only 6.4% you pay more in interest on the loan ($51,706) than you earn on the investment ($44,524) a net of -$7,182. The worst rate of return on the market for a 20 year period being that of 6.4%, this would not lead to a profitable investment. These rates are only for periods that TheBalance used for research, so there might be worse periods of investments but they were not tracked for the reporting article.
While the return on the investment can be enticing, the uncertainty of the stock market should be a deterrent that keeps people from investing with borrowed funds. The market can be affected by great many external factors that you have no control over. The stock market it intertwined nationally and globally. If there is a hurricane that hits the parts of the US that impact oil prices it can easily affect the stock market on all goods domestic and imported. This can lower expected returns on stocks and depending on the period of time of your investment it may hinder your ability to turn a profit.
Historically speaking, when a company or brand made it to the status of being a household name, it was quite common to invest in the company without a substantial investment strategy due to the trust in the brand. This strategy is an important pitfall of stock investors that new investors need to be aware of in order to protect their portfolios of when a major corporation may be bankrupt. Additionally, it is important to look to many globally diverse markets other than the United States such as China, to examine a wide range of investment portfolio options for ultimate earning potential.
By using this technique, it will be possible to build a portfolio that has substantial not only short term, but long term returns as well. This strategy is a great way for investors to maximize the best returns out of their investment capital. In order to learn more about major corporate failures and important words of wisdom to investors, analyze the information below:
10 Household Names that Went Out of Business
It is very unusual; however, it does happen when a major brand goes out of business. Many times, these cases are due to poor management at the senior level. Here are ten examples of major household name companies that have gone out of business and their causes for doing so:
TWA is a great example of a company that excelled in the beginning, became a household name, and then was won by Carl Icahn in 1985 by a hostile takeover. Once Icahn acquired the company, he privatized it, pocked substantial profits in excess of $500 million and then sold the company in debt. The situation led to TWA declaring bankruptcy and being purchased by American Airlines in 2001.
Arthur Anderson’s downfall was tied to their involvement in the Enron scandal. Previously, they had been a member of the “Big 8” accounting firms. By being Enron’s auditor, it used its credibility to facilitate special purpose entities that engaged in many illegal accounting practices. Their failure resulted in the loss of 85,000 jobs.
General Foods Corp
General Foods Corp. is an example of how a top food company with well-known brands can be acquired by a competitor. General Foods Corp. had products such as: Tang, Kool-Aid, and Oscar Mayer. Philip Morris later acquired General Foods Corp.
Standard Oil was the largest oil company in the world until the Supreme Court held in 1911 that the company violated the Sherman Anti-Trust Act of 1890 by using exceedingly low prices to wipe out its competition. Subsequently, the company was broken up to be Chevron, Exxon Mobil, and ConocoPhillips.
Pan Am was a cultural icon in the age where traveling on airlines had a sense of elegance and sophistication. Pan Am made several poor financial decisions in their senior management, which made the airline subsequently file for bankruptcy.
Enron had 22,000 employees and filed revenues of $111 billion, which caused their accounting fraud to become apparent. It is one of the largest cases of fraud, corruption, and bankruptcy in U.S. history.
Woolworth’s was a company that capitalized on the idea of an American shopping mall with many stores in one place. They expanded too quickly by acquiring Kinney Shoes, Champs Sports, and Foot Locker. Woolworth’s stores subsequently disappeared and now the company was acquired by additional investors and renamed Foot Locker.
MCI WorldCom specialized in long distance call discount services; however, the telecom industry began to have a downturn. As a result, management tried to use fraudulent accounting practices to keep the stock afloat. MCI WorldCom filed for bankruptcy and was later acquired by Verizon.
Compaq was a famous computer company and had one of the largest inventories of PCs in the 1980’s – 1990’s. Compaq was then purchased by HP to grow their market share substantially to compete with growing competitors in the computer industry.
Merry-Go-Round was successful on Wall Street and sold shirts, sweaters, V-neck sweater vests, and rayon blouses. Merry-Go-Round is a great example of a clothing company that had its height during a fashion trend and then did not keep engaging its consumers. As a result, it filed for bankruptcy in 1994 due to lack of interest and sales from its customers.
Words of Wisdom to Investors
With the many investment options available, it is important for investors to be quite selective about how they are diversifying their portfolios. There are many common pitfalls that can be avoided by being properly informed. For example, merely investing in a company because it has a “big name,” is not wise because that status could easily change due to poor management. One of the primary strategies that investors should place importance on is creating a long-term strategy that is consistent and sticking to that strategy. By merely chasing “hot tips,” it can be ineffective and derail an investor’s portfolio from their long-term investment goals. Lastly, it is important for investors to be very selective about who is managing their portfolios. Failure to select the right portfolio manager can be detrimental to an investor’s portfolio.
Concluding Remarks on the Subject
It is important for investors to be aware of major corporations that have failed. It is also important for investors to consider investing their capital on many different stock markets around the globe. By doing so, they will be able to have a more diverse portfolio. For example, China is an incredible market to watch as it is seen to have an even more expansive economic landscape by 2030. China’s investment in healthcare and technology alone will catapult their profitability substantially in the years to come. Investors should be prepared to have a long-term strategy that will allow them secure and informed investment practices for the best returns. By knowing the full background of each investment, investors will be able to make sound decisions to grow their net worth in the longer term.
Biotechnology has become an industry that is quite attractive to individuals in terms of investing. One of the reasons for this is that biotechnology is a field where there will always be a demand for consumers given that people will always need medicine and that the technology and prescriptions used to treat medical diseases will always evolve. The key when investing in Biotechnology companies is to understand which ones are about to release essential treatments or new innovations to their patients.
Additionally, finding out when certain Biotechnology have been approved by large governmental bodies such as the European Commission or the Food and Drug Administration in the United States is a great indicator to which stocks will obtain potential gains. Furthermore, finding Biotechnology companies that are finding better Cancer treatments, for example, will be quite successful on the stock market as well.
Consider the conversation below when trying to decide which Biotechnology companies to invest in.
Ideal Biotechnology Companies to Invest In 2019
When trying to select which Biotechnology stocks to invest in, it is recommended to consider some of the companies below. Please note, the author of this article may have invested in these stocks. This list of biotechnology companies may not be considered as advice, but merely a list of stocks you can look into and make your own decisions whether to invest into them or not.
EDITAS is a pharmaceutical company from Cambridge, Massachusetts that is heavily involved in gene editing technology. EDITAS is listed on the stock market as EDIT.
CRISPR Therapeutics is a company from Zug, Switzerland that focuses on developing transformative gene-based medicines for patients with serious and life-threatening diseases. CRISPR Therapeutics is listed on the stock market as CRSP.
Vascular Biogenics is a company from Israel that focus on the discovery, development, and distribution of treatments for Cancer. Their primary target is to locate newly formed angiogenic blood vessels and destroy them with gene therapy. Vascular Biogenics is listed on the stock market as VBLT.
Clovis Oncology is a company from Boulder, Colorado that specializes on treatment development for particular types of Cancers. Recently, the company received the approval from the European Commission for their BCRA-mutant Ovarian Cancer treatment. Clovis Oncology is listed on the stock market as CLVS.
Nightstar Therapeutics is gene therapy company from the United Kingdom that focuses on developing one-time treatments for patients suffering from rare inherited retinal diseases that typically cause blindness. Nightstar Therapeutics is listed on the stock market as NITE.
Axsome is a pharmaceutical company from New York, New York that focuses on developing treatments for Depression and Alzheimer’s Disease. Axsome is listed on the stock market as AXSM.
Adaptimmune Therapeutics is a company from the United Kingdom that has made several developments regarding how Cancer treatment is performed. Adaptimmune Therapies uses their SPEAR T-cell therapy, which has had incredible results on shrinking the size of tumors in under four weeks. Adaptimune Therapeutics is listed on the stock market as ADAP.
Voyager Therapeutics Inc.
Voyager Therapeutics Inc. is a company from Campbell, California that specializes in developing gene therapies for neurological diseases. Voyager Therapeutics Inc. has established several partnerships with leading Biotechnology companies such as AbbVie that will grow its revenues substantially. Voyager Therapeutics Inc. is listed on the stock market as VYGR.
Xencor is a Biotechnology company from Monrovia, California that has already had high level of profits since its initial IPO. Xencor has produced an XmAB antibody engineering platform. Xencor is listed on the stock market as XNCR.
Aptose Biosciences is a company from Toronto, Canada that specializes in oncology. The company’s goal is to create treatments that do not have toxic side effects. The company is listed on the stock exchange as APTO.
Final Remarks on the Subject
Biotechnology companies will usually be safe investments to pursue due to the perpetual need for individuals to receive medical care. Additionally, there are diverse investment opportunities in relation to Biotechnology companies due to IPO’s that come from new prescription drugs or medical technology that gets released into the marketplace. As these advances continue, there will be many more different companies to invest in. In order to make sound decisions about which Biotechnology companies to pursue, it is highly recommended that you regularly read medical journals about emerging technologies or release.
Additionally, global newspapers such as the Wall Street Journal or the Economist do regular editorials about Science and Medical Innovation. These articles are great tools to understand more about the Biotechnology marketplace and the upcoming trends that are occurring for investment. This, combined with working with an investment firm will help you to have incredible potential investment in Biotechnology companies that will likely have substantial returns for your investment portfolio.
Property has been a popular investment for generations, as the attraction of bricks and mortar continues to lure more investors looking for alternatives to stocks and shares, particularly as a way of generating retirement income.
However, whether you should be looking at property in preference to stocks and shares depends on a number of factors, not least what returns you can expect from each and how easy or difficult it is to access them.
Property: Pros and Cons
There are a number of pros when it comes to investing in property, including:
You can borrow money to make your investment in the form of a mortgage.
You have an asset which, on balance, has increased in value over time.
You can generate rental income from the property.
You can live in a property.
You have to pay to maintain and insure a property.
You will be taxed on the sale of a property if it is an investment property/second home.
You have a high level of costs associated with buying a property.
The property can be subject to natural disasters or other damage.
It can cost a lot to sell a property.
The investment is not liquid and could be hard to sell if the markets are against you.
Stocks: Pros and Cons
There is very little cost to buy shares initially.
Many countries have tax-efficient wrappers, like the Individual Savings Account (Isa) in the UK which reduce or remove any tax liabilities.
The investment is highly liquid, so if you want to sell your shares at any point, it should be easy to do.
Shares can go up significantly in a single day.
Shares can go down significantly in a day.
If a company goes bust, it is possible to lose your entire investment.
Buying shares outside of a tax-efficient wrapper means you could face big tax bills if your shares grow considerably over time.
If you buy and sell shares on a regular basis, the charges you can incur will be substantial.
Which has performed better – house prices or stocks and shares?
House prices have done very well in the last 13 years, especially when you consider the correction during the credit crunch. The average house price in the UK, for example, was £150,633 in January 2005, according to the Office for National Statistics. By June 2018, that had risen to £228,384 – a 52% increase in value.
Shares have grown slightly more over the same period, but the difference is minimal. In January 2005 the FTSE 100 was at 4820.80, but by June 1, 2018 it had risen to 7701.77. This is a near 60% rise in value. If you consider the S&P 500, the growth over the same period is even more impressive. In January 2005, the S&P 500 reached a high of 1186.19. By June 2018 this had risen to 2779.66 – a rise of more than 134%.
So, which is the better investment?
Whether shares or property is the best investment depends on the period over which you are investing, and where the investment is made. The property and stockmarkets will perform differently in different countries, so this is something to consider when making your decision.
That said, a study by economists at the University of Californis, Davis, working with the University of Bonn and the German Central Bank which analysed data over 145 years to produce a paper called The Rate of Return on Everything, 1870-2015 – found that the average return over that period on property was just over 7% a year, with around half of that growth coming from rental income. For shares over the same period, the average annual growth was just under 7% so not substantially different, but still lower than real estate returns.
But which is right for you?
Choosing which is the best investment will largely depend on what cash you have available, and what other investments you already have in your portfolio. It will also depend on whether you want to buy and take care of a property, or prefer to invest your money in shares that have lower ongoing costs.
You must also have the appetite – and ability – to get a mortgage to invest in property, if you need to. The advantage of borrowing to invest, which is what you are doing with a mortgage, is that you can amplify the gains you make while taking a lower risk with your own money. The downside is you can amplify losses if the property market moves against you.
A diverse portfolio
No matter which type of investment you prefer, you will be in a better position if you choose to spread the risk you are taking with your money and that means diversifying your portfolio. If you have a large amount of money, then adding property to that portfolio might make sense. If not, tying up so much in a relatively illiquid investment could prove problematic if you need that money in a hurry.
If you are unsure about whether property or shares are right for you, then you should get some independent financial advice before making any decisions.
Investing can be stressful and confusing. But using advice from professional investors can help you to cut through the sea of information available and dig for the best practices you need to succeed.
In his letter sent in January of 2017 to the shareholders of Berkshire Hathaway Inc., Warren Buffett said: “What is smart at once price is stupid at another.” Warren Buffett is often viewed as the investing guru of our time.
On Jan 10 of 2018, Charlie Munger, Warren Buffet’s partner who is considered an investing guru, has said on CNBC’s show “Squawk Box” that “Yeah sure [on bitcoin] and venture capital, too,” Munger replied. “There are always bubbles … that are going to end badly.”
Tidjane Thiam, CEO of global bank Credit Suisse, said on Nov 2 of 2017 in a Reuters interview that “I think most banks in the current state of regulation have little or no appetite to get involved in a currency which has such anti-money laundering challenges.”
In his interview with CNBC on Monday, February 27, 2017, Warren Buffett, billionaire investor, said that, “We aren’t smarter now than they were 240 years ago, and we certainly don’t work harder. But once you started opening up human potential, the sky’s the limit. And it’s just starting.” He was referencing, of course, the potential for America’s economy to continually rise against the odds.
In a December 2017 interview with Fortune, David Giroux, portfolio manager of the T. Rowe Price Capital Appreciation Fund (PRWCX), said: “Globally, wherever you look, valuations are high and credit spreads are tight.”
Jack Bogle, founder of Vanguard, predicted in a November 2017 interview with CNBC that, “Stocks will return about 4% annually over the next decade or so rather than the 10% average annual returns of recent decades.”
CEO of JP Morgan Chase, Jamie Dimon, made a controversial bitcoin prediction when he said, “If you’re stupid enough to buy it, you’ll pay the price for it one day,” in an October 2017 “Power Lunch” press conference.
Harvard economics professor, Kenneth Rogoff, said in a January 2018 interview with the New York Times that this is the, “Best moment in the global economy since the ‘50s.”
Dan Chung, Fred Alger Management CEO and CIO, said in a December 2017 interview with Fortune, “I think China would be in a very strong position for investors. Their Internet industry is just as strong as the U.S. They’re making huge investments in the Silk Road initiative for infrastructure.”
Joseph Stiglitz, Nobel laureate, said that, “Bitcoin is successful only because of its potential for circumvention. It doesn’t serve any socially useful function.” In a December 2017 interview with CNN Money.
Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch Global Research said in a December 2017 interview with Fortune that, “By next July  if the market continues to go up, we’ll be in officially the longest bull market, by technical definitions, in history. And it doesn’t feel good to buy equities now.”
The Federal Reserve’s newest regional Fed president, Thomas Barkin, said in a speech covered by Reuters in May 2018 that, “The economy’s performance as we sit here today is remarkably strong: above trend growth, low unemployment inflation at target.”
Kevin Kennedy, head of Individual Retirement business at AXA US said, “Clients want their financial professionals to move beyond the standard risk tolerance questionnaire and engage them in a thorough discussion of options, including some planning for health care expenses,” in a statement made for AXA US covering the increase in need for financial protection in today’s market.
Jim Cramer, host of Mad Money and Co-Anchor of CNBC’s “Squawk on the Street” said in a 2018 interview for CNBC, “Buffett’s comments reveal that he thinks Apple’s ecosystem is superior to others.”
In an interview with Mic in March 2018, Bruce Greenwald, a professor of finance and asset management at Columbia Business School, said: “Most people get in trouble specifically when they think of investing as a way to get rich quickly.”
Daniel Pinto, JPMorgan’s co-president, said in an interview with Bloomberg Television on March 8, 2018, that, “Markets are going to be nervous, nervous about anything. Nervous about anything that relates to inflation, nervous about anything that relates to growth.”
Robert Shiller, a Nobel Prize winner and Yale economics professor, said in a November 2017 interview with CNBC that, “The problem is that if you are talking about passive indexing, that is something that is really free-riding on other people’s work,” he said. “So people say, ‘I’m not going to try to beat the market. The market is all-knowing.’ But how in the world can the market be all-knowing, if nobody is trying — well, not as many people — are trying to beat it?”