Tag Archives: Investing

by | December 27, 2013 · 1:52 pm

Prepare for next year

It was not so hard to earn money in 2013 if you invested in U.S stocks. 9 out of 10 stocks in the S&P 500 was in positive territory. But everything associated with gold gave you losses. Did you sell the gold related investments in 2013 and what are you gonna do with it next year?

The gold is down about 30% in 2013, so owning a stake in a gold mine was not the smart way to make money this year. The worst U.S large Cap stocks was Newmont Mining. The second largest gold producer is down about 50%, and 30% of its corporate office staff is eliminated.

They are not only building cars in China. They are building factories to meet the demand for cars because the sales of automobiles are surging in China. The main partner of Ford Motor is Chongqing Changan Automobile Co. (000625). Changan`s earnings per share is up 400% and are the best International stock!

To be an investor is like being a school student. You have to do your homework every day. I don`t say you have to follow every stock you have in your portfolio with every tick of intraday trading.

What I prefer is to follow the stocks and the stock market for important changes over time. Sometimes it is important to evaluate and update the portfolio, like now, in the year end.

You can save money and take advantage of last minute tax savings in preparation of your portfolio. If you do all the things alone, you may do some work. You have to prepare your portfolio for the next year. I have created a few things to consider:

  1. Tax planning. Take a good look at your portfolio and check your winners and losers. You can offset capital gains with capital losses. If you have lost everything in one stock, you can sell it before the end of the year to offset any pending gains you may have on other stocks. Check the IRS rules and talk with a tax adviser before you take any tax decisions.

  1. Goals. What is your goals for 2014? What have happened so far this year? What do you think will happen next year? What is your plan for next year? Do you want to spend more money in the financial markets? How will your economy be next year? marriage or divorce? Some kids? What about you family situation? Some dramatic changes in 2013, or next year? You get the idea. Create a trading plan for 2014.

  2. The right balance. Do you have all you eggs in one bag? What is your mix today. Do you only go for stocks? Do you have bonds? Currency? Do you have the right mix in your portfolio or do you need some adjustments?

2013 have been a great year in the stock market. Many investors have done it better than the market in 2013. Is this going to continue next year? Try to follow the market and read the news and do as best as you can to understand them. Don`t always listen to everything people say on TV, and think by yourself. Be smart and look for great opportunities and be a winner in the market next year!

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 10, 2013 · 1:04 pm

Dividend payout ratio (DPR)

Not so many investors talks about this metrics and DPR is considered to be a tedious measurement. It looks like an important measurement, but nobody know why. DPR measures what a company pays out to investors and money makers in the form of dividends.

You can calculate like this:

DPR = Dividends Per Share / EPS

Let`s say Company A have paid out $2 per share in annual dividends and they had $3 in EPS, the DPR is 66%. ($2/$3=66%). Younger companies have lower payouts or no dividends at all, than the older one.

The companies that is older do business in mature industries that is still growing and therefore can pay out higher dividends which is the best use of their profits. But again, you cannot look on this measurement isolated, but in relationship to other tools and in context of the company`s industry.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | December 4, 2013 · 1:49 pm

Dividend Yield

Some investors are looking for technology stocks with high growth. You can look for them in stock screens and search for dividend paying characteristics. If you are looking for dividend income and act like a value investor, then you can look for Dividend Yield.

This Dividend Yield number tells you what percentage return for example Coca Cola pays out to shareholders. Older companies like Coca Cola will normally pay out higher percentage than younger companies like for example Twitter.

You calculate like this:

Dividend Yield = annual dividend per share / stock’s price per share

Let`s say a stock trades at $100, and the dividend Yield is 3%. Annual dividend is $3.

($3/$100 = 0,03).

To be in the market and invest money in different markets is like a college class that never ends. As an investor you need to monitor existing stocks and always be on the look for new and great opportunities.

Now it is a good time to check your stock portfolio before the year ends. I will write about that later. News today: ADP non-farm employment change, and trade balance at 8:15am, ISM Non-Manufactoring PMI, and New home sales at 10.00am, Crude Oil inventories at 10.30am.

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by | November 27, 2013 · 2:05 pm

Price to book ratio (P/B)

Now and then I write about some stock tools, and today I will write about price to book ratio (P/B). Let`s say a stock price for company A is $10 (1 million shares). This is called the market value. Market is often investors, analysts and newspapers. But this is often not the value of the business according to its “books” or financial value.

The companies book value is calculated from the balance sheet, and it is the difference between a company’s total assets and total liabilities. This is what we call the shareholders equity. Let`s say company A has total assets of $50 million, and total liabilities is $30 million. Then the value of the company is $20 million.

If Company A sold the assets and paid the liabilities, the equity value, or the net worth of the business would be $20 million. If the stock price was trading at $10 (and they have 1 million shares), then you know that the company is undervalued. This is how it is so important to look at the P/B compared to the equity price.

Definition of price to book ratio: P/B is used to compare a stocks market value to its book value.

Value investors are searching for stocks that the market has passed by. What they are looking for is really HOT stocks. They simply look for companies that no one are paying much attention to at the beginning and that is often called penny stocks. Is is a strategy to hold the stocks for years until one day the market discovers the stocks on their screen and start to buy.

At this stage, value investors are looking for other indicators than earnings growth. What they are looking for is Price to book ratio (P/B). This measurement simply tells us the value the market places on the book value of the company.

A low P/B can indicate that the stock is undervalued, but it could also mean that it is something terribly wrong. Be aware that this ratio (like other ratios) varies from industry to industry. In addition; it tells you whether you are paying too much for what`s left in the company if it went bankrupt tomorrow.

Calculate like this:

P/B = Share Price / Book Value Per Share

The lower the P/B, the better the value. It is better to identify potential companies this way.

News today (all times are Eastern Times):

Core Durable Goods & Unemployment Claims at 8:30am,

Chicago PMI & Revised Consumer Confidence at 9:55am,

Crude Oil Inventories at 10:30am.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | November 15, 2013 · 1:14 pm

Earnings per share (EPS) 1

Don`t look at only the price of the stock. That is not enough. A stock that is priced at $30 can be cheaper than a stock priced at $10. Some people tend to think that a stock price reflects the value relative to other stocks, but that is terribly wrong!

The price of the shares is completely meaningless to investors that is doing fundamental analysis. The market cap is found by multiplying the per-share price times the total number of outstanding shares. This number gives you the total value of the company or stated another way, what it would cost to buy the whole company on the open market.

The per-share price is changing all the time, and that is why we aren`t so concerned about it. All the companies have a different number of outstanding shares, and that doesn`t tell us what the value of the company is. What we are looking for are the market capitalization (market cap).

You can find the market cap by multiplying the per-share price times the total number of outstanding shares which means what investors need to pay for the whole company on the open market.

Let`s say the stock price is $5. Outstanding shares: 10 million. The market cap is $5 x 10 000 000 = 50 000 000. But, what if Company B have a stock price of $2 and outstanding shares is 100 000 000? Market cap is $200 000 000. So, what company do you want`t own? Stock price $5 or $2?

Do not only look at the per-share prices because it doesn`t tell much. Look for a stock compared to another stock that is similar in the same business. Market cap gives you a better picture of the companys value, and the market put the stocks into three categories:

Small Cap under $1 billion

Mid Cap $1 – $10 billion

Large Cap $10 billion+

The most important thing is to understand the comparing companies of similar size in the same business when you are doing your evaluation. Market Cap is better than evaluating per-share price of a stock. How do you find earnings per-share? I will write more about that next week.

News today: Empire State Manufacturing Index & Import Prices at 8:30am, Capacity Utilization Rate & Industrial Production at 9:15am.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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