Why Bitcoin, Ethereum, and Dogecoin Lost $55 Billion in Market Cap Today

There are 3 major drugstore chains in the US: Walgreens, CVS, and Rite Aid. Below are some key statistics about the 3 major drugstore chains as of 2012:

1. Walgreens ranks first with market cap of $28.51 Billion, $72.2 Billion in 2011 total revenue ($45.1B from prescription revenues), and an S&P rating of A. According to Walgreens, 75% of the US population lives within 3 miles from its stores. In April 2010, it acquired 258 Duane Reade drug stores in New York Metropolitan area which brings a total of 7841 drug stores Walgreens operates as of February 2012, including 137 hospital on-site pharmacies.

2. CVS ranks second with market cap of $56.56 Billion, $107.1 Billion in revenue ($40.5 Billion from CVS prescription revenues and $16.1B from its Caremark prescription mail order revenue), and an S&P rating of BBB+. As of December 31, 2011, CVS operates 7404 drug stores.

3. Rite Aid ranks third (fourth, behind Walmart in terms of prescription revenues) with market cap of $1.49 Billion, $26.1 Billion in revenue ($17.1B from prescription revenues), operates 4714 drug stores as of February 2011 and has an S&P rating of B-.

Investors purchase properties occupied by these drugstore chains for the following reasons:

1. The drugstore business is very recession-insensitive. People need medicine when they are sick, regardless of the state of the economy. Both rich and poor people in the US have access to medicine. Some even argue that low-income people use more medicine due to free or low-cost drugs offered by government-assisted programs. So the tenants should do well during tough time and have money to pay rent to landlords.

2. The drugstore business has a good prospect in the US:

· People are living longer and need more medicine to sustain longevity, e.g. Actonel for osteoporosis, Aricept for Alzheimer’s symptoms. Older people tend to use more medicine than younger ones as they often have more medical problems. As the 78 million baby boomers are getting closer to retiring age starting from 2008, the drugstore chains anticipate the demand for medicine to increase in next 20 years.

· The drug market continues to expand as the US population continues to grow. More and more Americans suffer from various diseases. The number of Americans suffers from seasonal allergies doubled in the last 15 years to 37 million people per Fortune magazine. They spent $5.4 Billion in 2009 for allergy drugs. As their waist lines balloon (75% of Americans are forecasted to be either overweight or obese by 2020), more Americans are diagnosed with diabetes, along with high cholesterol at younger and younger ages. In addition, doctors also recommend treating various diseases sooner than later due to better understanding about the diseases. For example, doctors now prescribe antiretroviral drugs for patients soon after infected with HIV virus instead of waiting for the infection to become AIDS. More doctors combine insulin with oral medicines to treat type-2 Diabetes instead of just oral medicines alone. All these factors increase the size of the drug market.

· Advance in genetic engineering has introduced various new genetic DNA testing kits which allow the genetic diagnosis of vulnerabilities to inherited diseases and disorders. Genetic testing is currently the highest growth segment in the diagnostics industry. Some of these genetic tests will probably transform into direct-to-consumer testing kits available in drug stores in the near future.Upon FDA approval, these new products will potentially bring in additional revenue for drug stores.

· Using a new method of tailoring molecules called structure-based design; drug companies come up with new medicines that they might not have discovered otherwise, e.g. Xalkori by Pfizer to treat lung cancer.

· The passage of Health Care Reform Bill on March 23, 2010 provides insurance coverage to an estimated 33 million more American. This is a great present to the drugstore industry.

· There are new drugs to treat previously untreatable illnesses, and new diseases, e.g. Viagra for men’s unhappiness, Avastin for colon cancer, Herceptin for breast cancer,. The new medicines are very expensive, e.g. a year’s supply of Avastin costs about $55,000. Eli Lilly has sold about $4.8 billion of Zyprexa in 2007 for schizophrenia and yet most people have never heard of this medicine.

· There are existing drugs now approved to treat new illnesses and thus increase their sales revenue. For example, Lyrica was originally intended to treat pain caused by nerve damagein people with diabetes. It is now approved by FDA to treat Fibromyalgia which affects 5.8 million Americans per WebMD.

· Big advances in genetics, biology and stem cells research are expected to produce a new class of drugs to treat diabetes, Parkinson’s and various rare genetic disorders. For example the new drug Ilaris from Novartis targets genetic causes of an inherited disorder that there are only 7000 known cases worldwide. However, Novartis hopes to gradually broaden its drugs to a blockbuster drug to more common disorders caused by similar genetics.

· Technology and modern life introduce and require new products, e.g. pregnancy test kits, Lamisil for stronger clearer toe nails, Latisse for longer & thicker eyelashes, Propecia for male hair loss, Premarin for menopausal symptoms, diabetic monitors, electronic toothbrushes, contact lenses, lenses cleaners, diet pills, vitamins, birth-control pills, IUDs, nutrition supplements and Cholesterol-lowering pills (Americans spent nearly $26B in 2006 on Cholesterol medications alone per IMS Health, a Connecticut-based consulting company that monitors pharmaceutical sales.)

· Before the customers can get to the medicine aisles or pharmacy counters, they have to pass by chocolates, sodas, digital cameras, watches, toys, dolls, beers and wines, cosmetics, video games, flowers, fragrances, and greeting cards. Drug stores hope you use the one-hour photos services there. The stores also carry seasonal items, e.g. Halloween costumes, and “As Seen on TV” merchandise, e.g. Shamwow. As a result, customers buy more than their prescriptions and medicine in these drugstores. CVS reported that non-pharmacy sales represented 30% of the company’s total sales in January of 2007. The figure for Walgreens is 34% and 37% for Rite Aid. Many pharmacy locations are in effect convenience stores especially ones that are in residential or rural areas. And so Walgreens hopes that customers also pick up WD-40, and screwdrivers at its stores instead of at Home Depot; Thai Jasmine rice, and fish sauce to avoid a trip to Safeway or Kroger Supermarkets. During the recession, sales of these non-drug items are down as customers buy what they need and not what they want. Walgreens tries to reduce the number of items by 4000. It also introduces its own private label which has higher profit margins.

· There are more and more generic medications on the market as a number of enormously popular brand-name blockbusters lose their 20-year long patents, e.g. Lipitor (best selling drug in the world to lower cholesterol) in 2010, Viagra (you know what it’s for) in 2012. Drugstores prefer to sell generic drugs to customers due to higher profit margins than the brand-name medications.

· Many people are addicted to pain killers, e.g. Hydrocodone/Oxycodone. Per the DEA in 2012, there are 1.5 million American addicted to cocaine but 7 million addicted to prescription drugs.

· This author estimates that at least 10% of the dispensed prescription drugs are not used at all and sit idle in the medicine cabinets. They are eventually expired and thrown away.

3. These companies sign very long-term NNN leases, guaranteed by their corporate assets. This makes the investment in the underlying property fairly low risk, especially for Walgreens with a S&P “A” rating. In fact, these properties are sometimes referred to as investment-grade properties. Once the drugstore chains sign the lease, they pay the rent promptly and timely. This author is not aware of any properties leased by one of these drugstore chains in which the tenants failed to pay rents. Even when the stores are closed due to weak sales (Walgreens closed 119 stores in 2007), these companies may sublease the properties to other companies, e.g. Advance Auto Parts and continue to pay rents on the master leases.

· A typical Walgreens lease consists of 20-25 year primary term plus 8-10 five-year options. During primary term and options, there will be no rent increases in most of the leases. This is the main disadvantage of investing in Walgreens drugstores.

· A typical CVS lease consists of 20-25 year primary term plus 4-5 five-year options. The rent is normally flat during the primary term and then there is a 2.5%-10% rent increase in each 5-year option.

· A typical Rite Aid lease consists of 20-25 year primary term plus 4-8 five-year options. The lease often has a rent increase every 5-10 years.

Investment Risks

Although the pharmacy business in general is recession-insensitive, there are risks involved in your investment:

1) The main downside about investing in pharmacies is there is little or no rent bump for a long time, e.g. 20-50 years, especially for Walgreens. So the rent is effectively reduced after inflation is factored in. This is one of the main reasons these properties do not appeal to younger investors, especially when the cap rate is low.

2) The 3 drugstore chains now have a new formidable competitor, Walmart. Walmart sells prescription drugs in more than 4000 Walmart, Sam’s Club and Neighborhood Market stores in 49 states. As of 2012, Walmart is the third largest drug retailer with $17.4B in prescription sales, just ahead of Rite Aid with $17.1B in prescription sales. The retail giant is known for launching in 2006 a highly-publicized $4 generic prescription drug program which now sells 350 generic medications for a 30-day supply. The actual number of medications is less as the medications with different strengths are counted as different medications. For example, Metformin 500 mg, 850 mg, and 1000 mg are counted as 3 medications. Walmart probably makes very little profits on these medications if any. However, the marketing campaign–created by Bill Simon, the President and CEO of Walmart US, generates a lot of publicity for Walmart. Walmart hopes to draw customers to its stores with other prescriptions where it has higher profit margins. In an unscientific survey with just one brand-name prescription of Lyrica, this author finds the lowest price at Costco, the highest price at Walgreens and Walmart at the middle. Other drug chains try to counter Walmart in different ways. Target now offers the same 350 generic medications for $4 for a 30-day supply. Walgreens has a Prescription drugs club with membership fee which offers 1400 generic medications for as little as $1/week. CVS says it will match any offers from its competitors.

3) Chief Business Correspondent Rick Newman from US World & News Report predicted that Rite Aid might not survive in 2009. Rite Aid is still around in 2012. The prediction seems to go away in 2012 as Rite Aid as it was able to refinance the long terms debts and sales revenue has increased.

4) Drugs are also sold in thousands of supermarkets, Target stores, and Costco warehouses. However, there are no drive-through windows at these stores or Walmart to conveniently drop off the prescriptions and pick up medicines. Customers will not be able to pick up their prescriptions during lunch hour or after 7PM at Target stores or supermarkets. They need to have membership to buy medicines at Costco. Others may not fill their prescriptions at Walmart because they don’t want to mingle with typical Walmart customers who are in lower income brackets. And some baby boomers don’t want their prescriptions filled at Target or Walmart because there are no comfortable chairs for them to sit down and wait for their medicines.

5) Drugs retail business to some degree is controlled by the Pharmacy Benefits Managers (PBMs). Customers normally get prescription coverage from their health insurance companies, e.g. Blue Cross. These PBM manage prescription benefits on behalf of the insurance companies. In 2012 Walgreens lost a contract valued at over $5 Billion with Express Scripts, a major PBM. Walgreen revenue was immediately fallen in the first quarter of 2012 as Express Scripts customers cannot fill their prescriptions at Walgreens. The PBMs are also in the drugs retail business via mail orders which do not require leasing expensive retail spaces. The prescription mail orders currently capture over 20% market share of the total prescription revenue. Should customers change their prescription purchase habits to mail orders (there is no such evidence in 2012), it could have negative impact to the business of drugstore chains.

6) Many leases in areas with hurricanes and tornadoes are NNN leases with the exception of roof and structure. So if the roof is damaged, you will have to pay for the expenses.

7) The tenant may move to a new location down the road or across the street when the lease expires. This risk is high when the property is located in small town where there is low barrier for entry, i.e. lots of vacant & developable land.

8) The tenant may ask for rent concession to improve its bottom line during tough times. The possibility is higher if the tenant is Rite Aid and if the store has low sales revenue and/or higher than market rent.

9) More Americans are walking away from their prescriptions, especially the most expensive brand-name medicines. This may have negative impact on the sales revenue and profits of drug stores and consequently may cause drug store closures. According to Wolters Kluwer Pharma Solution, a health-care data company, nearly 1 in 10 new prescriptions for brand-name drugs were abandoned by people with commercial health plans in 2010. This is up 88% compared to 4 years ago just before the recession began. This trend is driven in part by higher and higher co-pays for brand name drugs as employers are shifting more insurance costs to their employees.

Among 3 drugstore chains, Walgreens and CVS pharmacies in general have the best locations-at major intersections while Rite Aid has less than premium locations. Walgreens tends to hire only the top graduates from pharmacy schools while Rite Aid settles with bottom graduates to save costs. When possible, all drugstore chains try to fill the prescriptions with generic medications which have higher profit margins.

1) Walgreens: the company was founded in 1901 by Charles Walgreen, Sr. in Chicago. While the company has existed for more than 100 years, most stores are only 5-10 years old. This is the best managed company among the three drugstore chains and also among the most admired public companies in the US. The company has been run by executives with proven track records and hires the top graduates from universities. Due to its superior financial strength–S&P A rating– and premium irreplaceable locations, properties with leases from Walgreens get the highest price per square foot and/or the lowest cap rate among the 3 drugstore chains. In addition, Walgreens gets flat rent or very low rent increases for 20 to 60 years. The cap rate is often in the low 5% to 6.5% range in 2012. Investors who buy Walgreens tend to be more mature, i.e. closer to retirement age. They are looking for a safe investment where it’s more important to get the rent check than to get appreciation. They often compare the returns on their Walgreens investment with the lower returns from US treasury bonds or Certificate of Deposits from banks. Walgreens opened many new stores in 2008 and 2009 and thus you see many new Walgreens stores for sale. It will slow down this expansion in 2010 and beyond and focus on renovation of existing stores instead.

2) CVS Pharmacy: CVS Corporation was founded in 1963 in Lowell, MA by Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland. The name CVS stands for “Consumer Value Stores”. As of 2009, CVS has about 6300 stores in the US, mostly through acquisitions. In 2004, CVS bought 1,200 Eckerd Drugstores mostly in Texas and Florida. In 2006, CVS bought 700 Savon and Osco drugstores mostly in Southern California. And in 2008 CVS acquired 521 Longs Drugs stores in California, Hawaii, Nevada and Arizona for $2.9B dollars. The acquisition of Long Drugs appears to be a good one as it CVS did not have any stores in Northern CA and Arizona. Besides, the price also included real estate. It is also bought Caremark, one of the largest PBMs and changed the corporation name to CVS Caremark. When CVS bought 1,200 Eckerd stores, it formed a single-entity LLC (Limited Liability Company) to own each Eckerd store. Each LLC signs the lease with the property owner. In the event of a default, the owner can only legally go after the assets of the LLC and not from any other CVS-owned assets. Although the owner loses the guaranty security from CVS corporate assets, this author is not aware of any incident where CVS closes a store and does not pay rent.

3) Rite-Aid: Rite Aid was founded by Alex Grass (he just passed away on Aug 27, 2009 at the age of 82) and opened its first store in 1962 as “Thrif D Discount Center” in Scranton, Pennsylvania. It officially incorporated as Rite Aid Corporation and went public in 1968. By the time Alex Grassstepped down as the company’s chairman and chief executive officer in 1995, Rite Aid was the nation’s largest drugstore chain in terms of total stores and No. 2 in terms of revenue. His son, Martin Grass, took over but was ousted in 1999 for overstatement of Rite Aid’s earnings in the late 1990s. Rite Aid is now the weakest financially among the 3 drugstore chains. In 2007, Rite-Aid acquired about 1,850 Brooks and Eckerd drugstores, mostly along the East coast to catch up with Walgreens and CVS. In the process, it added a huge long term debt and is the most leveraged drugstore chain based on its market value. The integration of Brooks and Eckerd did not seem to go well. Revenue from some of these stores went down as much as 20% after they change the sign to Rite Aid. In 2009, Rite-Aid had over 4900 stores and over $26 Billion in revenues. The figures went down in 2010 to 4780 stores and $25.53 billion in revenue. On January 21, 2009 Moody’s Investor Services downgraded Rite Aid from “Caa1” to “Caa2”, eight notches below investment grade. Both ratings are “junk” which indicate very high credit risk. Rite Aid contacted a number of its landlords in 2009 trying to get rent concession to improve the bottom line. In June 2009, Rite Aid successfully completed refinancing $1.9 Billion of its debts. In 2012, Rite Aid benefits from Walgreens contract problem with Express Scripts. Same store sales increased 2.2%, 3.2%, and 3.6% for January, February and March of 2012, respectively. Rite Aid is still losing money in fiscal year 2012 which ended in March 3, 2012. However, it is losing less, $0.43 per share in 2012 versus $0.64 per share in fiscal year 2011. The company expects better outlook in fiscal year 2013.

Things to consider when invested in a pharmacy

If you are interested in investing in a property leased by drugstore chains, here are a few things to consider:

1. If you want a low risk investment, go with Walgreens. In stable or growing areas, the degree of safety is the same whether the property is in California where you get a 5.5% cap or Texas where you may get a 6.5% cap. So, there is no significant advantage to invest in properties in California as the property value is based primarily on the cap rate. In 2012, the offered cap rate for Walgreens seems to come down from 7.5%-8.4% in 2009 to 5.5%-6.5% for new stores.

2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 9% cap rate in 2012. However, among the 3 drug chains, Rite Aid has 10.5% chance of going under in 2010. Should it declare bankruptcy, Rite Aid has the option to pick and choose which locations to keep open and which locations to terminate the lease. To minimize the risk that the store is shuttered, choose a location with strong sales and low rent to revenue ratio.

3. Financing should be an important consideration. While the cap rate is lower for Walgreens than Rite Aid, you will be able to get the best rates and terms for Walgreens.

4. If you are not a conservative investor or risk taker, you may want to consider a CVS pharmacy. It has BBB+ S&P credit rating. Its cap rate is higher than Walgreens but lower than Rite Aid. Some leases may offer better rent bumps. On the other hand, some CVS leases, especially for properties in hurricane areas, e.g. Florida are not truly NNN leases where landlords are responsible for the roof and structure. So make sure you adjust the cap rate down accordingly. Some of the CVS locations have onsite Minuteclinic staffed by registered nurses. Since this clinic idea was introduced recently, it’s not clear having a clinic inside CVS is a plus or minus to the bottom line of the store.

5. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 10,000 – 14,500 SF on a 1.5 – 2 acre lot, preferably at a corner with about 75 – 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-through. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-through windows. There is a chance that these drugstores may not want to renew the lease unless the property is located in a densely-populated area with no vacant land nearby. In addition, if you acquire a property that does not meet the new requirements, for example a drive-through, you may have a problem getting financing as lenders are aware of these requirements.

6. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.

7. Many properties may have a percentage lease, i.e. the landlord can get additional rent when the store’s annual revenue exceeds a certain figure, e.g. $5M. However, the revenue used to compute percentage rent often excludes a page-long list of items, e.g. wine and sodas, tobacco products, items sold after 10 PM, drugs paid by governmental programs. The excluded sales revenue could account for as much as 70% of store’s gross revenue. As a result, this author has seen only 2 stores in which the landlord is able to collect additional percentage rent. The store with a percentage rent is required to report its annual sales to the landlord. As an investors, you want to invest in a store with strong gross sales, e.g. over $500 per square foot a year. In addition, you also want to check the rent to revenue ratio. If the figure is in the 2-4% range, the store is likely to be very profitable so the chance the store is shut down is low.

8. It does not matter how good the tenants are, avoid investing in declining, e.g. Detroit and/or low-income areas or small towns with less than 30,000 residents within 5 miles ring. In a small town, it may be the only drug store in town and captures most of the market share. However, if a competitor opens a new location in the area, revenue may be severely affected. In addition, the tenant can always moves to a new location down the road when the lease expires since there is low barrier to entry in a small town. These properties are easy to buy now and hard to sell later. When the credit market is tight, you may have problems finding a lender to finance these properties.

9. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, think twice about buying this property. You should clearly understand loan assumption requirements of the lenders before moving forward. Should you fail to assume the existing loan (assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and may be liable to pay capital gain.

10. With few exceptions, drugstore chains do not own the stores they occupy for several reasons. Here are just a couple of them:

– They know the pharmacy business but don’t know real estate. Stock investors also don’t want Walgreens to become a real estate investment company.

– Owning the real estate will require them to carry lots of long term debts which is not a brilliant idea for a publicly-traded company.

11. About 10% of the drugstore properties for sale and typically CVS pharmacies require very small amount of equity to acquire, e.g. 10% of the purchase price. However, you are required to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7-9% range, and the interest rate on the loan could be attractive in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, you have no positive cash flow. This requires you to come up with outside cash to pay income tax on the rental profits (the difference between the rent and mortgage interest). The longer you own the property, the more outside cash you will need to pay income taxes as the mortgage interest will get less and less toward the end. So who would buy this kind of property?

– The investors who have substantial losses from other investment properties. By acquiring this zero cash flow property, they may offset the income from the drugstore tenant against the losses from other investment properties. For example, a property has $105,000 of rental profits a year, and the investor also has losses of $100,000 from other properties. As a result, the combined taxable profits are only $5,000.

– The uninformed investors who fail to consider that they have to raise additional cash to pay income taxes.

Out of the Box Thinking

If you put too much weight on the S&P rating of the tenants, you may end up either taking a lot of risks or passing up good opportunities.

1. A Good location should be the key in your decision on which drug store to invest in. It’s often said a lousy business should do well at a great location while the best tenant will fail at a lousy location. A Walgreens store that is closed down later on (yes, Walgreens closed 119 stores in 2007) is still a bad investment even though Walgreens continues paying rent on time. So you don’t want to blindly invest in a drug store simply because it has a Walgreens sign on the building.
2. No company is crazy enough to close a profitable location. It does not take rocket science to understand that a financially-weak company like Rite Aid will make every effort to keep a profitable location open. On the other hand, a financially-strong Walgreens will need justifications to keep an unprofitable location open. So how do you determine if a drug store location is profitable or not if the tenant is not required to disclose its profit & loss statement? The answer is you cannot. However, you can make an educated guess based on the store’s annual gross revenue which is often reported to the landlord as required by the percentage clause in the lease. With the gross revenue, you can determine the rent to income ratio. The lower the ratio, the more likely the store is profitable. For example, if the annual base rent is $250,000 while the store’s gross revenue is $5M then the rent to income ratio is 5%. As a rule of thumb, it’s hard to make a profit if this ratio is more than 8%. So if you see a Rite Aid with 3% rent to income ratio then you know it’s likely a very profitable location. In the event Rite Aid declares bankruptcy, it will keep this location open and continue paying rent. If you see a Rite Aid drug store with 3% rent to income ratio offering 10% cap, chances are it’s a low risk investment with good returns and the tenant will most likely to renew the lease. The weakness of corporate guaranty from Rite Aid is probably not as critical and the risk of having Rite Aid as a tenant is not really that significant.
3. Drug stores with new 25 years leases tend to sell at lower cap, e.g. 6-7% cap on new stores versus 8.0-8.5% cap on established locations with 5-10 years remaining on the lease. This is because investors are afraid that the tenants may not renew the leases. Unfortunately, lenders also have the same fear! As a result, many lenders will not finance drug stores with 2-3 years left on the leases. The fact that drugstores with new leases have a premium on the price means they have potential of 20% depreciation (buying new at 6% cap and selling at 7.5% cap when the leases have 8 year left). Some investors will not consider investing in drug stores with 5-10 years left on the lease. They might simply ignore the fact that the established stores may be at irreplaceable locations with very strong sales. Tenants simply have no other choices other than renewing the lease.

For some time now, I have been closely monitoring the performance of cryptocurrencies to understand where the market is heading. The usual regimen taught to me by an elementary school teacher – when you wake up, pray, brush your teeth and have breakfast, a little switch to waking up, praying, and then online (starting with coinmarketcap) to know which crypto-assets are in the red.

The start of 2018 was not very pleasant for altcoins and related assets. Their performance has been crippled by frequent bankers ’speculations that the crypto-bubble is about to burst. However, ardent supporters of cryptocurrency are still “holding on,” and, truth be told, they are reaping the big ones.

Recently, bitcoin returned to nearly $ 5,000; Bitcoin Cash has approached $ 500, and Ethereum has found peace of mind at $ 300. Virtually every coin received a hit, except for beginners who were still in the excitement stage. At the time of writing, bitcoin is back on track and is priced at $ 8,900. Many other cryptocurrencies have doubled since the beginning of the uptrend, and the market capitalization is $ 400 billion from the recent $ 250 billion.

If you are slowly warming up to cryptocurrencies and want to become a successful trader, the tips below will help you with that.

Practical tips on how to trade cryptocurrencies

• Start modestly

You have heard that cryptocurrency prices are rising rapidly. You’ve also probably got the news that this uptrend may not last long. Some skeptics, mostly respected bankers and economists, usually call them schemes of rapid enrichment without a stable basis.

Such news can make you rush to invest and not follow moderation. A little analysis of market trends and decent currencies that you can invest in can guarantee you a good return. Whatever you do, don’t invest all your hard-earned money in these assets.

• Understand how exchanges work

I recently saw a friend of mine post a Facebook post about one of his friends who continued to trade on the stock exchange, he had no idea how it worked. This is a dangerous step. Always review the site you are going to use before registering or at least before you start trading. If they represent a fictitious account that you can play with, take this opportunity to find out what the dashboard looks like.

• Don’t insist on trading everyone

There are over 1,400 cryptocurrencies to trade, but it is impossible to deal with all of them. Spreading your portfolio to a huge amount of crypto than you can effectively manage minimizes your profits. Just pick a few of them, read more about them and how to get their trading signals.

• Stay sober

Cryptocurrencies are unstable. This is both famous and good for them. As a trader, you need to understand that wild price fluctuations are inevitable. Uncertainty about when to take a step makes a person an ineffective trader. Use accurate data and other research methods to be sure when making a deal.

Successful traders belong to various online forums where cryptocurrency trends and signals are discussed. Sure, your knowledge may be enough, but you need to rely on other traders to get more relevant data.

• Diversify content

Virtually everyone will tell you to expand your portfolio, but no one will remind you to deal with real-world currencies. There are a few bad coins you can deal with for quick money, but it’s best to deal with cryptocurrencies that solve existing problems. Coins with actual use tend to be less volatile.

Don’t diversify sooner or later. And before you buy any crypto-asset, make sure you know its market capitalization, price changes and daily trading volumes. Maintaining a healthy portfolio is a way to get the most out of these digital assets.

Whether it’s the idea of ​​the cryptocurrency itself or the diversification of its portfolio, people from all walks of life are investing in digital currencies. If you are new to this concept and you are wondering what is going on, here are some basic concepts and considerations for investing in cryptocurrencies.

What cryptocurrencies are available and how to buy them?

With a market capitalization of about $ 278 billion, bitcoin is the most famous cryptocurrency. Ethereum ranks second with a market capitalization of more than $ 74 billion. In addition to these two currencies, there are a number of other options, including Ripple ($ 28 billion), Lightcoin ($ 17 billion) and MIOTA ($ 13 billion).

Being the first in the market, there are many exchanges for bitcoin trading around the world. BitStamp and Coinbase are two well-known exchanges in the United States. Bitcoin.de is an established European exchange. If you are interested in trading other digital currencies along with bitcoins, then on the crypto market you will find all digital currencies in one place. Here is a list of exchanges based on their 24-hour trading volume.

What money storage options do I have?

Another important point is the storage of coins. One option, of course, is to keep it on the exchange where you buy them. However, when choosing an exchange you need to be careful. The popularity of digital currencies has led to the emergence of many new, unknown exchanges. Take the time to exercise due diligence to avoid scammers.

Another option that you have with cryptocurrencies is that you can store them yourself. One of the safest options for storing your investment is hardware wallets. Companies like Ledger allow you to store bitcoin and several other digital currencies.

What is a market and how can I learn more about it?

The cryptocurrency market fluctuates greatly. The changing nature of the market makes it more suitable for long-term gaming.

There are many established news sites that report on digital currencies, including Coindesk, Business Insider, Coin Telegraph and Cryptocoin News. Aside from these sites, there are also many Twitter accounts that write about digital currencies, including @BitcoinRTs and @AltCoinCalendar.

Digital currencies aim to destroy the traditional currency and commodity market. Although there is still a long way to go before these currencies, the success of bitcoins and Ethereum has proven that there is a real interest in this concept. Understanding the basics of investing in cryptocurrency will help you go in the right direction.

Diversify or perish. I think this is a quote from HG Wells.

Okay, okay, I know it’s actually “adapting or dying”. But if H. G. Wells had been guided by investment rather than words, I would have argued that he would have corrected that quote to my version.

In fact, you’ve probably heard of this golden nugget of investment wisdom. This is something that every investor should be familiar with, because it is the key to successful investing.

Simple and easy: never put all your investment eggs in one basket. If the market falls out from under that basket, your egg will crack and spill your savings on the floor.

It’s simple advice, I know. We can say that diversification is a smart route, but what exactly should be diversified?

I have one answer to this question today: metal companies.

Every investor should have a little contact with miners – especially small-cap miners, if you like to capture the fast jumps that most Wall Street tends to miss.

It just gives you access to above-average stock price volatility. Especially today.

Now many of you may say, “But isn’t it risky?”

It can be absolutely. Any sector in which there is constant volatility (such as crypto-assets) can be a bit risky, but much of that risk is managed by having a plan. This protects you from abrupt movements or holding back investments longer than necessary.

You just need the right strategy. And if you don’t have it, I’d say you should start looking for it now because the focus of the mining industry is when the commodity market recovers.

According to a PwC report published last year, 2016 saw a turning point in the mining industry. The 40 largest mining companies earned total net profits of $ 20 billion, well above the $ 28 billion loss in 2015. Meanwhile, their score rose in 2017. .

In fact, the market capitalization of these 40 companies grew by 45% in 2016 to $ 714 billion.

And the good news for the miners continues.

Take, for example, gold. Miners are particularly sensitive to rising gold prices right now. As gold continues to grow (and will), gold reserves will grow.

It’s time to go long in this area.

In fact, since the beginning of December, the VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) has been moving away from the support line for about $ 30. Now it has grown by about 14.8%, this is a good rally that could break through if it breaks current levels.

All of this means that if you want to diversify more, a miner is a great bet.

In 2017, bitcoin grew strongly and people made a lot of money in the process. Even today, bitcoin is one of the most lucrative markets. If you are just a beginner, you can do your homework before putting money into bitcoin. Here are 5 expert tips to help you avoid some common mistakes when trading bitcoin.

1. Learn the basics first

First of all, you can learn the basics to get a better idea of ​​how to buy and sell Bitcoin. Alternatively, you can read reviews of popular Bitcoin exchanges to find the best platform.

As with other types of financial investments, you can find ways to protect your investments. Make sure your assets are protected from scammers and cyberattacks. After all, security is the most important aspect of any type of investment.

2. Consider market capitalization

It is not good to make such a decision based only on the price of the coin. However, the value of cryptocurrency is valid only if you take into account the existing stock in circulation.

If you want to buy bitcoin, don’t focus too much on the existing value of the currency. Instead, you can take into account the aggregate market capitalization.

3. Invest in Bitcion instead of mining bitcoins

The bitcoin mining industry is growing in popularity at a rapid pace. At first, it wasn’t that hard to earn bitcoin by cracking cryptographic puzzles. Later, bitcoin could be mined only in special data centers.

These centers are full of machines designed to mine Bitcoin. Today, if you want to build a home mining center, you may have to spend millions. Therefore, it is better to invest in bitcoin.

4. Diversify your investments

New investors in bitcoin tend to be short-lived with cryptocurrency. In fact, with bitcoin you can diversify your investment risk. If you invest wisely in cryptocurrency, you can enjoy the same rewards as investing in Forex. All you need to do is put together a robust risk management strategy.

In other words, you can’t put all your eggs in one basket. This way, you can invest in other cryptocurrencies.

5. Set clear goals

Because bitcoin is a new market, it can be difficult for you to determine the right time to trade your bitcoin. The value of bitcoin is volatile, which means you need to have clear targets regarding profits and losses.

You may not want to make the mistake of making investment decisions based on your emotions. Smart steps can help you minimize losses and make good progress.

In short, if you are going to invest in bitcoin, we suggest you follow the tips given in this article. This will help you make wise decisions and at the same time be safe. Just make sure you avoid common mistakes when running this business.

Blue chips are shares of a well-established company with stable finances. The word blue chip comes from the casino, where the blue chip refers to the counter that has the highest value.

Most blue chip stocks pay reasonable dividends; it’s even if the company is doing worse than usual. Shares of companies with multibillion-dollar turnover, such as Microsoft, P&G, etc., are some of the best stocks of blue chips. They are relatively safe compared to other investment options.

Why invest in blue chip stocks?

There are many reasons why investing in blue chip stocks is a good option, these are:

1. Proven track record: Companies will have a confirmed track record. Even as industrial trends decline, they suffer very little. These companies have probably gone through the same problems before and will have a clear idea of ​​how to deal with these situations.

2. Diversity: These companies have diverse interests and will not focus on just one sector or product. As a result, they suffer less when one sector slows down because other sectors that perform better will compensate for losses.

3. Stable growth: these companies will have stabilized growth as opposed to new companies. New companies can make a profit in one quarter and then lose in the next, their growth uneven. Shares of blue chips can easily yield a profit of 15% year on year.

4. Best long-term bets: The best stocks of blue chips may be the best for long-term investments. They provide excellent results in the long run. These companies will have a proper foundation, and after a while there will be only one way left, that is UP. Keep them as a first option if you plan to invest in the long run.

The main question here – how to recognize the shares of blue chips?

Four ways to identify blue chip stocks:

1. Strong balance:

These companies will have very strong balance sheets. Moderate and low debts will be observed along with a history of successive dividends.

2. Strong order book:

These companies are characterized by strong order books consisting of billions of dollars. Strong order books suggest that the company’s growth will not stop under any circumstances. The company will continue to grow, which is very important for the investor.

3. Market capitalization:

The market capitalization of blue chip stocks will be one of the highest in the stock market. If the market capitalization of a particular stock is billions of dollars, it should be a stock of the best blue chips.

4. Various interests:

These companies will have diverse interests and will not focus on one specific sector or interests.

If the stock shows these characteristics, it can be called a blue chip stock.

Well, I hope this article has given you enough information about blue chip stocks. Use this information to find the best stocks with blue chips you can invest in and let the money come in. Promotions with blue chips can prove to be your personal money-making machine.

Since I write quite a bit and talk about investment opportunities in international markets, some may get the impression that I am not very interested in the prospects of investing in American stocks. In addition, most exchange-traded funds in the Chartwell ETF Advisor portfolios have been international or global since early 2003.

But I seem to be more confident in America’s future than most. A recent poll conducted by the Chicago Board of Global Affairs found that 55% of respondents believe that in the next fifty years, the United States will be equal to or superior to the world power. A group of Chinese respondents believe that their country will catch up with America in global influence within ten years.

In my opinion, while the world is clearly filling up, and new competitors like India and China are rapidly catching up with us because of rapid advances in technology and communications, the American economy is more than holding on.

And as the valuation gap between U.S. and foreign markets has narrowed significantly, I believe that the overall performance of the U.S. stock market, and in particular some sectors such as finance, technology and healthcare, may be ahead of global markets. The US dollar may also surprise pessimistic experts. Our ETF portfolios will adjust accordingly on an incremental basis and are likely to be balanced between U.S. and international markets soon. One of my favorite ETFs, the iShares S&P Global 100 (IOO), reflects this balance well, giving investors access to the world’s 100 largest companies, 50% of which are American.

On what do I base this renewed confidence in American markets? Let’s start by reviewing America’s strong current position, its competitive advantages and, most importantly, where it is heading.

America accounts for about 23% of world GDP, and from 2003 to 2006, US GDP was larger than China in its history. California’s GDP is twice that of India. In addition, 693 of the world’s 2,000 largest companies and 83 of the world’s 200 largest companies are located in America.

Americans received all the Nobel Prizes in Science in 2006. 46% of the market capitalization of the world’s 200 largest companies are American. It has the deepest and most liquid capital markets with companies listed on the NYSE, with a total value of $ 15 trillion – three times more than its closest competitor, Japan.

The restructuring of the American economy, while painful for many, has created a very flexible economic platform that has created 30 million new jobs over the past 20 years, while Europe has created zero new jobs. America is still the most dynamic of the major industrialized nations with 75% of the current Fortune 100 companies not even existing in the 1980s. In terms of ease of starting a new business and the number of new companies, no other country is close. America remains open to business – worldwide.

Even in manufacturing America remains a powerful power with a larger share of the world market than any country, and with a production volume twice that of our nearest competitor, Japan. There are also signs that as wages and other costs increase in emerging markets, concerns about quality, protection of intellectual capital and logistics are growing; offshore production will soon begin to return home.

And the U.S. will increasingly be seen as a safe haven for investors as uncertainty in the world grows with the constant challenge of radical Islam, the more prone stance of Russia and China, and reduced defense spending in Europe.

Although the U.S. dollar has lost ground over the past few years, the pendulum is likely to turn the other way, and its status as a key world reserve currency is unlikely to be challenged for very long.

As I mentioned earlier, most international stock markets have outperformed broad U.S. indexes since 2003, but the gap in valuation has narrowed significantly, and the inevitable return to the average signal that the tables are starting to turn.

For all its shortcomings, the U.S. political system is the most transparent and stable in the world and far superior to multi-party parliamentary systems, such as in India, where a small member of the Communist Party coalition can slow down market reforms. When making decisions, investors tend to take into account economic factors much more than political ones, but in many cases politics is more important. Large bullish markets, such as we now see in Australia, Ireland and India, began with ambitious market reforms.

Next is the demographic perspective. The US, largely due to immigration, continues to grow, while much of Europe, Japan and especially Russia are declining rapidly. Although much of Asia is home to a relatively young population, China is an exception, which will put a huge strain on its budget.

But my greatest belief in America’s golden future is based not on what it has achieved or on its current position of strength, but on how it is being renewed and reformed to respond to growing challenges from countries like India and China. Our continued commitment to freedom, openness and flexibility is key to our continued strength, innovation and leadership.

Instead of being content and complacent, America will move toward significantly simplifying the tax system (one simple tax rate?), Relentlessly innovating in education according to lines outlined this week by Bill Gates in his U.S. Senate testimony, use leverage our huge consumer market to open up overseas markets, reform our credit card industry and impose restrictions on federal spending growth combined with reform of eligibility for payments. Our foreign policy will also become more pragmatic and will avoid extremes of isolationism and adventurism that are not based on national interests.

I am confident that all of these reforms and more will be achieved because they need to be to keep America on top. Americans do not agree to less.

Many people ask what the difference is between a penny stock and a microcapital. The answer is simple, they are both stocks that typically sell for less than five dollars, and most are sold for pennies.

There’s really no official deadline for microcapital and penny stocks, actually, which are, and which won’t depend on who you ask. Each trader will have a different set of criteria for deciding whether stocks are “retirement stocks” or “microcopic” or not.

But whatever you call them, they are usually defined by three things. (1) the price per share, (2) the market in which the shares are traded, and (3) the market capitalization of the company.

Of course, you will find some variations of each of these factors. In some cases, some brokerage firms will treat all shares of companies with a certain market capitalization as pennies. They usually sell for less than $ 5.

No matter what you call them both are high risk. Their appeal is that they can bring high rewards for the small amount of money you will use to trade them. But you have to study these stocks carefully.

You need to make sure you understand that it is easy to lose all your money. Microcap / Penny stocks can be volatile and very unpredictable. But with good planning, you can quickly make money on these stocks.

It is recommended to get a very good, reputable service to collect shares with micro-capital / interest, which will conduct the necessary research for these shares of small companies that have not yet been tested. This way you can limit your chances of losing money and greatly increase your chances of having to do with them very well. These services do all the research for you, and the good ones will give you realistic entry and exit points.

Microcap shares / pennies can be profitable in the right hands. Because they are usually from small and largely untested companies, they can be purchased at bargain prices. If the company suddenly has a surge in growth, you are not only under a huge rise in prices, but also just made a big profit.

In the Czech securities market, corporate governance plays a crucial role in strengthening investor confidence and ensuring an efficient market. After the fall of communism, the economy in a very short time moved from state to capitalist. Since then, the Czech Republic has come a long way to quickly reach the standards of other capitalist markets and successfully join the European Union. As the market continues to evolve, there is a growing need for transparency of information and interaction between board members and managers in firms.

From the voucher privatization program of the Czech Republic in 1992 to the late 1990s, corporate governance was viewed negatively and / or did not exist for Czech public companies. The path began with a lack of regulation, continued with a lack of enforcement, and finally turned since 1998 with the Securities and Exchange Commission Act. Even now, as Czech companies strive to become more competitive globally in the marketplace, awareness among firms of the need for structured corporate governance and greater transparency in their reporting information is fixed as an ongoing effort to report and align enterprise goals with other stakeholders.

Using an analysis of the ten largest public companies in terms of market capitalization on the Prague Stock Exchange, I will assess the availability of information on corporate governance to determine the current state of compliance with the Corporate Governance Code. This information will serve as a benchmark and allow investors to link the positions of the largest companies on PSE with other companies in the Czech Republic, as well as apply knowledge in general in the Czech securities market. The results allow investors and other stakeholders to gain insight into corporate governance practices and information transparency in companies operating in the Czech Republic today.

Current state of corporate governance

I now turn to the analysis of corporate governance disclosure in the modern Czech market. Using the ten largest publicly traded companies (see Table 1) listed on the Prague Stock Exchange in terms of market capitalization, I will determine the extent to which their stated corporate governance policies are disclosed, as found in their recent annual reports. This is the annual report of all companies for 2004. In addition, I will briefly assess the availability of information on company websites.

Table 1

The top ten companies that register for PSE

Rank Company Market Capitalization. (Miles. CZK) Market capitalization. (Million USD)

1 CEZ 402,881 16,293

2 Erste Bank 317 598 12 844

3 Český Telecom 160 014 6 471

4 Commercial Bank 128 397 5 193

5 Unipetrol 42,922 1,736

6 Zentiva 41 683 1 686

7 CETV 39 718 1 606

8 Philip Morris CR 32 816 1 327

9 Severocheske Doly 14 434 584

10 Prague Energy 11 492 465

Source: Prague Stock Exchange, November 2005

THROUGH

CEZ, a joint-stock company, is the largest energy conglomerate in Central and Eastern Europe. The company’s website has a section for investors with information on stocks, bonds and financial information, and the date of the annual general meeting, but does not provide information that specifically relates to corporate governance practices and the structure as a whole. The site presents the structure of shareholders, relationships and dividends. In the annual report, ČEZ adheres to the German corporate governance model, and key board members are also part of the management. The structure of the council and the members of the council are widely discussed. The board of directors usually meets weekly, where the requirement is monthly. The company complies with the Commercial Code for the Protection of Shareholders’ Rights, and bases its corporate governance on the Corporate Governance Code. ČEZ Group actually participated in the development of the Corporate Governance Code in 2004. In general, the company provides reports on most key areas of corporate governance, but does not have a single section on their policies, making it necessary to scan the entire report for relevant information.

Erste Bank

Erste Bank, based in Austria, is a leading financial services provider in Central Europe. Its website contains a section on investor relations, which provides detailed information, as well as a section on corporate governance, in which the company shows that in practice it adheres to the Austrian Code of Corporate Governance. In the annual report, the company shows that it complies with all statutory provisions of the Code and follows most of the recommendations. It directs individuals to the website to learn about the actual provisions of corporate governance, making the information available but not detailed in the annual report itself. In addition, shareholder policy was difficult to distinguish.

Czech Telecom

Český Telecom is a telecommunications group operating mainly in the Czech Republic. The company has a website with information about shareholders, including board structure and notice of the annual general meeting. In addition, access to the company’s annual report leads to a broad discussion of corporate governance. The company recognizes improved reporting in this area since the 2004 Annual Report compared to previous annual reports, and as stated in the 2002 Annual Report, the company will fully comply with the Corporate Governance Code by 2005. One note made in the Report includes a list of members of the Supervisory Board who qualify as independent, which is an important provision in line with the recommendations of the 2004 Code.

Commercial Bank

Komerční Banka is one of the most important banks in the Czech Republic and the region of Central and Eastern Europe and provides comprehensive services to customers in the field of retail, corporate and investment banking services. The company’s website provides access to key shareholder information and also has an investor relations section. However, there is no specific section of corporate governance. Access to the annual report allows you to see most of the corporate governance requirements, but there is no specific mention of their overall corporate governance policy, nor is there any mention of their adherence to or lack of a Corporate Governance Code.

Unibenzin

Unipetrol, a group of companies operating in the Czech chemical industry, is a major company in Central Europe. The company’s website has direct links to board members as well as an investor page with access to its annual report, but does not contain detailed information on corporate governance. The annual report does not improve the company’s corporate governance policy. There are no statements about the company’s policy regarding corporate governance, and the information provided is primarily a list of board members. Qualifications are not given, and the rights of shareholders are not disclosed or discussed.

Zentiva

Zentiva is a pharmaceutical group that holds leading positions in the Czech and Slovak markets, as well as among the largest players in Central and Eastern Europe. The Zentiva website contains extensive information on corporate governance, including factual rules governing boards. Investor relations are also prominent on the company’s website, which includes information about shareholders, the date of the general meeting and other important information. According to the annual report, the company adheres to the Dutch Corporate Governance Code.

CETV

Central European Media Enterprises, or CME, is traded on the Prague Stock Exchange as CETV. The Bermuda-based company is an international television company that operates a group of networks and stations in Central and Eastern Europe. The company’s website contains board members and their qualifications, as well as the company’s financial results and policies, such as their code of ethics. Interestingly, analyst reports regarding CME are available on the company’s website. CME is listed on the NASDAQ, so information on the annual report is available through their website according to SEC documents.

Philip Morris of the Czech Republic

Philip Morris ČR is a subsidiary of Philip Morris International, whose parent company is the Altria Group. The Philip Morris website directs all investors requesting shareholder information to its parent company’s website, although some financial details, general meeting date and agenda are disclosed at its location in Kutná Hora in the Czech Republic. As with CETV, Altria Group has extensive information disclosed in its SEC documents. The Altria Group website extensively discusses corporate governance, lists statutes, as well as board members and governance recommendations.

Northern Valleys

Severočeské Doly is the largest producer of lignite in the Czech Republic. The company extracts, processes and sells lignite and its by-products. The company’s website lists the members of the board of directors, their qualifications and shareholder structure. There is no area devoted to corporate governance structure or policy. In its annual report, the company revealed that it does not comply with the Corporate Governance Code, but respects the requirements of the law and hopes to adopt more principles in the future. The report makes it easy to find key areas of corporate governance, and although the company says it does not adhere to the Code, it does very well with the reporting required and recommended information.

Prague Energy

Prazská Energetika is a company for the purchase, distribution and sale of electricity in Prague and Roztok, as well as a trader in the wholesale market in the Czech Republic. The Prazská Energetika website lists the composition of the management and board, the shareholder structure and access to the annual report. There is no section specifically for corporate governance. In the annual report, the company reports legislative information in accordance with the requirements of the Commercial Code, but fails to detail corporate governance. He also does not mention his commitment to any part of the Corporate Governance Code.

Conclusions

After reviewing the information provided on the website of the listed companies or their annual report (see Table 2), it was found that the transparency of the information was achieved. At least, as stated, most companies comply with the provisions of the Commercial Code and other laws, and six out of ten companies comply with the recommendations of the Corporate Governance Code. Of the four who did not adopt the principles of the Code, some mentions of corporate governance policy go through the disclosure of relevant information.

I found that companies listed on the Prague Stock Exchange with large market capitalizations improved their corporate governance reporting in their 2004 annual reports for previous years. These companies took steps to adopt the recommendations of the Corporate Governance Code even before they became legislative regulations. Although these are stated measures that have been taken, it is assumed that the policy is implemented as a result of an audit statement regarding the reporting of the information contained in the annual reports. Overall, investor confidence in the Czech securities market should improve due to increased transparency of information, and future legislation on additional requirements for corporate governance will improve this further.

Table 2

The results of the company’s analysis

Disclosure ČEZ EB CT KB UZ CETV PMČR SD PE

Does the company disclose YYYYNYY YYY

corporate governance structure

and politics?

Does the company use YY * YN NY ** Y *** Y *** NN

Corporate Governance Code

as a basis?

Is a joint stock property of YYYY NYY YYY

disclosed and the right to vote?

Membership in the board and YYYYYYY YYY

disclosed qualifications?

Remuneration of a member of the board YYYYYYY YYYY

disclosed?

Contains website NYNN NYNYNN

area of ​​corporate governance?

* Austrian Code of Corporate Governance

** Dutch Code of Corporate Governance

*** Requirements of the US Securities and Exchange Commission

Source: Annual reports for relevant companies for 2004

There is no exact definition of the shares of the “blue chips”. The term is commonly used to denote stocks that outperform others in terms of performance, dividends and earnings. It is a stock of a well-established company that has had a stable return for decades and an equally long and transparent record of dividend payouts to shareholders.

These promotions got their name from a special chip used in gambling that is blue in color and has the highest price. The different characteristics of this promotion are that it has proven itself well and has an excellent track record in both good and bad times. It should also have a high credit rating in the bond and commercial paper markets and a large size relative to the stock market as a whole in terms of income and market capitalization.

The “blue chip” status assigned to a company is a dynamic phenomenon, not a well-established classification. This is a large stock capitalization, which is considered a safe rate in the long run. This is because they usually pay good dividends and are easy to eliminate in emergencies because they have a wide and diverse product line and a global presence. As you can see, they are at the opposite end of the scale with low prices and volatile penny stocks.

There are several ways in which blue chip stocks differ from medium and small cap stocks. Any stocks with a small capitalization will be volatile, but this does not apply to stocks of blue chips. In fact volatility is relatively unheard of in blue chip stocks because they are a large capitalization of stocks. It is a term coined by the investment community and refers to a company with a market capitalization of more than ten billion US dollars. Market capitalization is calculated by multiplying the number of company shares in circulation by the share price.

You can purchase shares of blue chips in several different ways. You can buy them directly from a reputable broker or through a mutual fund that specializes in these stocks. In addition, diamonds are an investment instrument traded on the American Stock Exchange. Diamonds are preferable to mutual funds with blue chips because of their low cost ratio as well as their tax efficiency. Because they are traded on an exchange, underlying stocks are sold only to reflect changes in Dow companies. This leads to a reduction in capital gains tax.