Index trading

Stock markets around the world maintain a variety of “indices” for stocks that make up each market. Each index represents a specific industry segment or broad market. In many cases, these indices themselves are traded instruments, and this feature is called “Index Trading”. An index is the aggregate picture of the companies (also known as the “components” of the Index) that make up the Index.

For example, the S&P 500 is a broad market index in the United States. The components of this Index are the 500 largest US companies by market capitalization (also called “Big Capitalization”). The S&P 500 is also a traded instrument in the futures and options markets, and it is traded under the SPX symbols in the options market and under the / ES symbol in the futures markets. Institutional investors as well as individual investors and traders have the opportunity to trade SPX and / ES. SPX can only be traded during normal hours of market trading, but A / ES can be traded almost 24 hours a day in futures markets.

There are several reasons why index trading is so popular. Because SPX or / ES is a microcosm of the entire S&P 500 companies ’index, an investor instantly gains access to the entire basket of stocks representing the index when they buy 1 option or a future SPX contract and / ES contracts. respectively. This means instant diversification to the largest companies in the US, built into the convenience of one security. Investors are constantly looking to diversify their portfolio to avoid the volatility associated with holding just a few stocks of a company. Buying a contract on the index provides an easy way to achieve this diversification.

The second reason for the popularity of index trading is due to how the index itself is designed. Every company in the Index has a certain relationship with the Index when it comes to price movements. For example, we may often notice that when an index rises or falls, most component stocks also rise or fall very similarly. Some stocks may rise more than the index, and some stocks may fall more than the index for similar movements in the index. This relationship between the stock and its parent index is a “beta” of the stock. Looking at the past price relationship between the stock and the index, the beta for each stock is calculated and available on all trading platforms. This then allows the investor to hedge the stock portfolio from losses by buying or selling a certain number of contracts in SPX or / ES instruments. Trading platforms have become sophisticated enough to instantly “beta weigh” your portfolio in SPX and / ES. This is a major advantage when a widespread market collapse is imminent or is already underway.

The third advantage of the index trade is that it allows investors to get a “macro view” of the markets in their trading and investment approaches. They no longer have to worry about how individual companies perform in the S&P 500. Even if a very large company faces difficulties in its business, the impact that this company will have on the Broad Market Index is exacerbated by the fact that other companies may be well . This is the effect that diversification should bring. Investors can adapt their approaches based on broad market factors rather than individual nuances of the company, which can be very cumbersome to follow.

The downside of index trading is that broad market returns tend to average single figures (6 to 8% on average), while investors have the opportunity to make much higher returns on individual stocks if they are willing to face volatility that goes along with owning individual stocks.

Sure things and growth choices in retail

If you need confident betting in retail, you should follow Wal-Mart Stores, Inc. (NYSE / WMT) and Costco Wholesale Corporation (NASDAQ / COST).

Costco gave good results on Wednesday, after announcing earnings of $ 312 million, or $ 0.71 per diluted share, exceeding the consensus estimate of $ 0.69 per diluted share, according to Thomson Reuters. Revenue growth was 11% to $ 19.24 billion, above a consensus estimate of $ 18.81 billion. The results are stable and continue to show steady growth, but for additional growth you need to look at smaller companies.

For example, Costco has a market capitalization of $ 29.88 billion and is estimated to report sales growth of 8.1% and 7.7% in 2011 and 2012 respectively.

However, look at the small capital of PriceSmart, Inc. (NASDAQ / PSMT), an operator of warehousing clubs in Central America and the Caribbean. PriceSmart reported a sharp 15.8% increase in sales at the same store in November and a 21% increase in November sales over the same period last year. These are strong figures, and consider PriceSmart’s comparative sales growth of 14.8% and 11.8% for 2011 and 2012 fing, respectively.

Retail is on the mend. Consumers are buying again. According to Retail Metrics, sales data from the next 30 retail chains rose 5.8% in November, the 14th consecutive increase and well above the 3.5% estimate.

Black Friday and Cyber ​​Monday were great.

Impressive demand for luxury items, including the strong results of Tiffany & Co. (NYSE / TIF) and high demand for expensive cars.

The key, as I said, is a strong holiday sales season that could lead to a New Year’s Santa Claus rally. Sales during the holiday season also look encouraging, given the stronger-than-expected consumer confidence index for November. The indicator of confidence is critical, as it indicates a positive mood of consumers.

It seems that a reversal could have taken place in retail. The main thing – to look for sales growth in the same store from retailers who sell non-essential goods. An increase here may mean that consumers are spending on goods and services that are not necessary. These include electronics, appliances, furniture, cars and other valuables.

My favorites in retail space are still discounters and large stores. Large stores now sell a wide range of electronics and replenish their product line. This will give consumers a single place to shop.

Subtly market your business with a professional golf logo

If you’re a golfer, then you know that one of the worst problems you have to deal with on the green is the sun in your eyes when you’re trying to make a prize shot. The fact is that golfers face this problem every day. Another fact is that many important business decisions are not made in the boardroom or in the office. They are made on green.

This is where your business comes to the rescue. You have the opportunity to declare your business while creating a professional image that will lead the business to your door. Golf hats with a logo are a great way to subtly sell your business, giving an answer to the problem of the golfer / businessman. The answer to the problem is to provide professional-looking golf cap logos. These caps will protect the sun from the eyes of the golfer, providing subtle marketing to anyone who sees him.

Marketing and business are all about sharing your mind. This is when people see and hear the company name and logo enough to be reflected in the mind. A share of the mind ultimately leads to a share of the market and this will increase the profits of your business. Knowing this, you will want to create a golf logo so that it is comfortable and eye-friendly. You want this cap to be the best golf cap with a logo for a golfer. After all, the more they wear it, the more people will see it and then you will create the impression you want. You are in business to drive traffic and increase revenue. So why not go straight to the mainstream of business negotiations? Make a profit with golf logos and say you are a professional, you are available and you have the product and or service they need.

Golf hats with a logo can be distributed in a variety of ways. You can give them away at trade shows as thank you gifts for purchases, gifts, marketing promotions and valued customers. A golf hat with a logo is a great and professional way to give your business directly to other businesses, as well as others who may need your product or service.

Choosing a company that will have the knowledge and commitment to quality to design a golf cap logo that will embrace the image you want to portray, you will need to choose wisely. There are many companies that can make these emblems for golf, but often there is no quality. There are a few things you will need to decide on, such as colors, screen printing or embroidery and even sizes. A professional company that manufactures these caps on a daily basis can help you make these decisions.

Increase profits in the low market

As an investment banker, I have regularly met with a number of professional investors. Each of these professionals had a unique style and focus. These included hedge funds, mutual funds, vulture funds, money market funds, debt funds, real estate funds. And even funds!

I am always surprised by one simple fact. Investment funds are more than stocks!

That’s right. For each stock traded in the markets, there is at least and usually more than one fund. And each of these professional investors has the same goal as you and me. We are all trying to make money in the market.

Most of these funds use a tool in their arsenal that is not used by individual investors (so far, if you’re smart). These professional investors are much more likely to occupy the shorts market.

The concept of closing the market is simple, but can be quite complex. An investor can short a single stock, a specific industry or even an entire market. Obviously they are trying to sell high and then buy back at a low price. This is how they make money in a reduced market.

So how do they do it?

There are several ways to reduce. You can borrow shares from your broker. . . if you have a large account, you are entitled to a margin and your broker wants to lend you shares. Another way to market shorts is to buy a put option. If you calculate these options correctly, the profit potential is huge, but remember that all options have an expiration date. Finally, there are ETFs that are designed for the shorts market.

Professional investors usually take a short position for one of two reasons. The first is to hedge or protect the investments they already have. Another reason is to make a profit.

There are a group of funds called long-term funds that do this all the time. These funds take the money they manage and invest in stocks that they think are growing. Then they borrow money and short stocks, in their opinion, fall.

Often these funds dedicate a fixed amount to each position. Some of the most popular long-short funds are also called 100% / 30% funds. This means they borrow 100% of their capital and then borrow another 30% to go to market. The idea is that even in the market up there are stocks that are falling. If they are right in both directions, they can make big money.

So how can an individual investor do the same without borrowing money?

Until now, it was difficult for an ordinary investor to manage his portfolio as a “long-short” fund. But now there are a number of new products available for this. So how do you safely go short?

The easiest way I’ve found is short ETFs (sometimes called reverse ETFs). This new type of ETF is designed to increase value when markets fall. Like stocks, they can be bought and sold throughout the day. Now here’s the best. Unlike stock shorting, if you buy a short ETF, there is no risk of a margin call.

Proshares is one of a number of companies that create short ETFs. I like them because they have over 35 different short ETFs. They classified these short ETFs into four different categories. The largest group is ETFs with market capitalization, which allows you to short the Nasdaq 100, Dow, S&P 500 and a number of Russell indices. These market capitalized ETFs are great to use when the whole market is falling.

They also have investment style ETFs that allow you to short stocks based on a specific investment strategy. They can be used if one strategy is expected to be ineffective over the next few months. The third category is the International ETF. You can short various markets including Xinhua Market in China, the Japanese market and a basket of other emerging markets.

The last way, and my personal favorite, is sector ETFs. Here I see the greatest value for individual investors. These ETFs give you the ability to short a specific sector. You can choose which industries you think may fall in the coming weeks and months, and easily profit from it.

Proshares currently has 11 different industries including consumer goods, finance, healthcare, real estate and technology.

These ETFs are not for everyone. However, they can be an exciting way to increase the yield of your portfolio in a declining market.

Penny Stock Winners – Where Can I Find Penny Stocks That Are Worth Buying?

Before we delve into the search for the winners of penny stocks, we need to give a brief overview of those stocks. There are many definitions of penny stocks. Some of them include price, market capitalization, and others – the way they are traded. To simplify things, we can use a combination of three. For the purposes of this article, Penny stocks are stocks below $ 5.00, with a market capitalization of less than $ 5 million, and the company’s shares are traded over the counter (OTC or Pink Sheets).. Now that we’ve figured out the definition, let’s move on to choosing the best ones.

You’ve probably heard the phrase investigate before investing. We believe you should investigate, investigate and then more. This sounds trite, but your level of success in investing a penny in stocks depends largely on the amount of work you put into the study. Don’t be like most people. Don’t go to penny rallies because you got a hot tip from a friend or read in the newspaper that someone committed murder. Penny stocks are not necessarily a quick ticket to wealth. They should be just a component of your investment portfolio (not your entire portfolio!).

When we emphasize on the study involved, we are not claiming that it will take 20 hours just to study one action. The first choice you make will take longer than the others because there is a learning curve in the process. Once you get used to it, you will be able to quickly filter out bad penny choices from good ones.


We suggest starting your research with a basket of 10 pence. You can use a stock screener, for example Yahoo Screener or MSN Stock Screener to filter out stocks that match your criteria. You can start by trading stocks in a certain price range, have a positive price-to-earnings ratio and a range of earnings, earnings in the industry sector of your choice.


If you have a smaller set of stocks to study, you should go through stock price charts using websites like BigCharts or Wall Street Research Network. This will help you understand in what range stocks are traded, and with some practice you will begin to see what trading patterns are. You should keep a list of stocks that you are researching in a Yahoo Finance or Google Finance portfolio. In addition to being able to keep all your choices in one place, you will also be able to automatically get up to date with company and industry news.

Diamonds in rough processing

Often small market capitalization is ignored by the market. This means that there are significant opportunities for investors and traders, but also significant risks. Here I will tell you some tips on investing in stocks with small capitalizations. Diamond Search So you want to find the next Microsoft or the next Cochlear. Sounds great, but it’s not as easy as it seems. There are over 1,000 small companies listed on the ASX.

How do you find potential diamonds in the mud when there isn’t always a lot of information about these companies and certainly not a lot of research available? Research brokerage houses and analysts typically report the top 200 stocks in the Australian market. Also, it’s a case of finding a research team that specializes in small limits, or do it yourself. ASX Small Capitalization Index If you want to invest in a small capitalization basket, there is the ASX Small Capitalization Index. It invests in the top 300 companies, which are also not included in the top 100 index. What is a little hat? Low-cap companies are companies with a market capitalization of less than $ 300 million in the Australian stock market. Companies tend to have their own life cycle. With a small capitalization you usually look at businesses that are focused on growth. This focus on growth obviously brings additional risk, but also the potential for greater returns.

Growth is usually popular when the market is growing, but very unpopular when the market is falling.

Bear markets

If there is a bear market (fall), chances are that any small stocks you have will be killed. This is because risk is the first thing one seeks to exclude from portfolios when the market falls. Investors and traders tend to rush back to safe havens such as cash, or relatively safe havens such as defense campaigns with blue chips.

Bull markets

On the other hand, in a bullish (growing) market, small capitalizations usually work relatively well, as investors return risk to their portfolios. Profit The problem with small constraints is that many of them are not yet making a profit, so they are quite difficult to assess from a profit perspective. Traditional ratios such as P / E and return on equity (ROE) are not relevant if there is no historical revenue. If a company has sales, you can look at sales growth and price-to-sales ratio. At some point, sales will have to turn into profits to make the business model viable.

Stock Search Here are some tips to help you find these rough diamonds yourself:

o Look at the company’s shareholders. Does the company have the support of a large organization? Or maybe even the venture capital firm that won the majority of the shares? While this is unacceptable, it may be a sign that these shareholders have made difficult opportunities and looked deeply into the business potential of the core business.

o How many years before commercialization and what is the probability of commercialization? Read the annual report to work out the timing and business plan of the organization. What is the potential market after commercialization is achieved? What P / E ratios are traded by potential competitors or similar companies? What type of income can you expect based on these estimates?

o Who manages? Do they have experience doing the same before? Is there visibility of what is happening in the business or as a shareholder? Will it be a guessing game? It requires faith. Investing in small capital usually takes time. And it usually takes a lot of faith to determine if the ups and downs of a smaller growing company are worth your investment.

This is very risky. But on the other hand, there are potentially many companies that will follow Cochlear, Resmed or Fortescue. Why not dig in and get your hands dirty? You can just find this diamond in rough treatment.

What makes your stock prices fall?

Just as prices for all commodities fluctuate depending on several factors, stock prices in the stock market also vary depending on various factors. It is difficult to name only one or two factors that determine changes in stock prices.

In the stock market, the most basic rule in the economy – supply and demand – plays a very important role. Stock prices are directly affected by stock market trading trends. When more people sell a particular stock, its price falls, and it rises when more people buy that stock. It’s hard to say for sure about stock market trends, but an experienced stockbroker will be able to give you a pretty good idea of ​​how the market works. However, do not blindly follow his advice, try to do some research yourself.

One of the most important factors influencing stock prices is news. The good news about the company is relevant to the price increase because the interest of buyers will increase. A negative press release could destroy the potential of stocks. However, more important than the news itself is how the company as a whole works.

When you try to estimate the value of a company from the value of its shares, you are making a mistake. To determine a company’s value, a company’s market capitalization is more important than its shares. The total number of shares outstanding in the market needs to be multiplied by the stock price to calculate the company value or market capitalization.

The company’s earnings per share in the last quarter are the company’s earnings per share. Each open company must publish a quarterly report showing the earnings per share of the company. When deciding on the state of a company this is an important factor and it influences the buying trend in the market which leads to an increase in the stock price of that stock. So, if you want to profit from your investments in the stock market, you should pay attention to the quarterly reports of companies and explore various options before buying a particular stock.

The P / E ratio is the price / profit ratio of a company, which will give you a good enough idea of ​​how the value of the company’s shares is compared to its profit. If the stock price is too low compared to the company’s earnings, then the stock is undervalued and it is likely to rise in the near future.

These factors are some of the factors that affect the rise and fall of stock prices, but there are other factors that affect market trends and stock prices. There are certain stock factors that also strongly influence the price of a particular stock. So before you invest money, be sure to do some independent research.

How to invest in penny stocks are some of the complications

Many people are interested in them, but often have only the faintest idea of ​​how to invest in penny stocks. This term, usually interchangeable with microcap or nano stocks, refers to those stocks that are traded for less than five dollars. A more general definition would refer to the aggregate value of the company’s common shares outstanding. This is the market capitalization, not the stock price. But there is still no clear definition of a penny.

How to calculate the market capitalization of a company or market capitalization? Take the number of shares outstanding and multiply that by the company’s share price. This will give, at some point in time, the total value of all the company’s current shares in dollars. Penny stocks are now traded on the OTC or OTC market, unlike other stocks traded on the stock exchange. Most stock trading is done through agents or brokers who act on behalf of investors to arrange a transaction between a third party and the investor. Intermediaries – brokers and agents – get their piece of the pie through the commission they earn for aiding the trade.

Penny stocks, however, are considered major broker transactions and are charged accordingly. This means that instead of paying a commission, the broker earns money through a so-called spread, selling and buying at the right time. This is because penny stocks are not bought and sold at the same static price, but at different prices. Spread is the difference between bid and ask prices. For most stocks the penalty is a spread of 25 to 33%, although sometimes it can increase to 50-100%. Another difficulty in calculating spreads for penny stocks is the fact that there are two request prices and two offer prices, and these are called external and internal question and offer prices. In general, the greatest interest is external sales prices and offers. In addition, penny stocks are subject to a mark-up with a surcharge if the broker holds a penny. Its price is inflated because the broker took some of the risk due to fluctuations in market prices.

It would seem that penny stocks are very complex, with many possible pitfalls and losses if these complications are not handled properly. Large sums of losses are quite possible and have happened before with investors trading penny stocks. However, penny stocks are still good potential investments, as they can help startups without much capital to invest. The best way to start would be to ask a reliable broker how to invest in penny stocks.

What is the difference between Micro Cap and Penny Stocks?

To answer this question, we must first understand what both of these types of stocks are.

The “cap” mentioned in the micro-equity example is a reduction from capitalization. When people talk about a particular business, they can talk about its market capitalization. This refers to the monetary value of the business. Anyone can solve this by learning only two essential facts – first, the number of shares he owns, and secondly, the value of each of these shares. Multiplying them together will give you the value of market capitalization.

Thus, micro-capitalization stocks belong to a business that has a low market capitalization. As a result, stock prices will tend to be quite low – sometimes less than a dollar – and as a result the company and its stocks will not hit the headlines.

While many people haven’t heard of micro-capitalization stocks, they’ve probably heard of penny stocks before. As the name implies, penny stocks are cheap stocks that are many times worth less than a dollar a share. However, they may be priced higher; you can see that penny stocks come up to $ 5 per share.

You can see that the share of the penalty is concerned primarily with the value of each individual stock. Penny stocks are not directly related to the market capitalization of the company that holds them. Micro cap stocks are different because they point to a company that has a relatively low price when it comes to its place in the world.

The only thing you need to think about with both types of investments is how the company is set up for future development. A company with micro capitalization is unlikely to have many assets, especially not compared to a large company. It is important not to give in because the company has millions of shares. What matters is not only the number of shares they hold, but also their value.

So think carefully if you want to invest in any of these types of stocks. They both have one thing in common, and that is that they are very risky. You can make big profits, but losses can also be at stake.

Three types of stock classes

The stock market is an interesting arena in which investors buy and sell stocks with the expectation of making a profit. Stocks are traded on a daily basis by professional traders and money managers. Long-term investors also buy stocks in the hope that they will appreciate over time. To better help investors understand how the market works, let’s look at three basic classifications of stocks that investors can buy.

Big stocks

Large stocks are some of the largest companies in the world. Major stocks are valued at more than $ 10 billion. They are the main pillars of the market. These are stocks that usually have a large amount of income and cash flow. Companies like Microsoft and General Electric are examples of high-cap stocks. They are widely owned by a large number of investors and operate around the world. Companies with large capital are considered the safest to invest in stocks because of their large size.

Mid Cap stock

Mid-cap stocks have grown in popularity in recent years because they give investors a combination of large and small companies. Medium-cap companies have growth potential because of their size and greater stability than small companies. They fall right in the middle of big and small companies. Medium-cap companies are defined by a market capitalization of more than $ 1 billion and less than $ 10 billion. Examples of these stocks are companies like GameStop and The Cheesecake Factory.

Small Cap shares

A small-cap company is any company with a market value of less than $ 1 billion. These companies are very small in size and offer much more risk than large companies. Small-cap stocks are defined by lower revenues and lower cash flows. Companies with small market capitalizations are much more volatile because they are owned by fewer investors and have fewer large institutions. The revenues of these smaller companies can be volatile, and it can be difficult to distinguish a small-cap winner from a loser. Investors never know whether they are buying the next Apple or Etoys.

Knowing the difference between these three different types of stocks is important because it can help shape your investment strategy. While large companies may be ideal for older investors ’portfolios, younger investors may find smaller stocks with greater risk more suitable for their portfolios.