Bond is a debt instrument, where the issuer acknowledges debt owed to the holder and is responsible to repay the principal as well as the interest upon the maturity. Bonds are generally issued by the corporations and differ from the equity shares and stocks. Unlike, equity shares, bonds do not confer any ownership rights to the holder. Apart from corporations, bonds may be issued by several statutory bodies and even by the governments.
Bonds can be classified into four types a) Bonds issued by Federal Governments, such bonds are called ‘treasuries’ (b) Bonds issued by Government agencies. (C) Corporate Bonds (d) Bonds issued by state or local governments. Bonds are also known as fixed income securities, since they generate a pre-fixed income for their tenure. Interest payable on a bond is called ‘Coupon Rate’. Coupon rate is denoted as a percentage of par value. Tenure of bond is known as its ‘Maturity period’.
Bonds’ maturity period may range from a couple of months to several years. Another important factor to consider is ‘Par value’ which is the amount payable to holder on maturity of bond. Despite being called ‘Fixed Income security’, bonds still carry the risk of default. To counter this problem, bonds generally come with credit rating. Higher rating denotes lower risk of default.
Bonds are an extremely popular investment opportunity, with the bond market alone worth several billion dollars. Many investors dabble in the process of arbitrage where they can purchase the bonds at a discount and then collect the face value at maturity. This is actually a completely risk free way of making money from investing in bonds.
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There are stock market sites and blogs that tell you how you can earn from just a small cap investment. Of course, anyone who wants to get rich would understandably jump at the opportunity. But getting rich is not a quick scheme and no get-rich-quick books will tell you that it happens overnight. It does not happen overnight. Even if you think you have the most reliable penny stock listing in the world, it still does not guarantee financial wealth.
Many people get the misconception that millionaires, or at least those who are better off got luck. Luck has only a little to do with it. It’s all hard work. There are even people who life a low profile lifestyle but have fat bank accounts. Then there those who claim that they got rich because they have a dependable penny stock listing and they want you to try it.
Don’t get fooled by this hype. Today there are so many opportunists who would do anything to get a piece of your savings. The penny stock market is one of the attractive avenues for them. If you want to get rich from your penny shares, follow these tips:
- Do not spend beyond your means. Always keep in mind that the general rule of thumb is always to buy shares at low price. When the value appreciates and when the time is right, sell it. But do not use up too much of your savings. Just allocate portion of it. A safe margin would ten percent. And spend only for the list that you personally picked and not from those who suggested it to you.
- Learn and master the basic language, the slangs and the major concepts of the trade. Any penny stock listing is useless if you don’t know how to translate them. And to do that, you have to understand the back and front ends. Along that path you will be encountering so many stock market terms that may be alien to you. Terms like the PE ratio, ticker signs, liquidity, etc. Understand them and learn them by heart.
- Have a realistic commitment of your investment money. Your stock list is supposed to showcase the hot stocks to bid. However, the list can change overnight. What is hot today may not be hot tomorrow and that happens all the time. Always double check on which penny stock you think is most likely to expect profit for you.
- Learn about the trade continually. Your penny stock listing cannot exist alone. It needs partners. Because in this business, the survivors are not the rich, the smart, and the strong. The successful investors are those who keep track of constant changes. These are the stock market trends.
In reality, what makes you rich is not because you have a penny stock listing that guarantees success. What success means is dependent on how much work you are willing to put in your business. The ingredients to success are knowledge, rational analysis, and a roster of facts. If you want to be rich is really all up to you.
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Balancing high expectations with the actual stocks being in trade can be quite a challenge for the new penny stock investor. It is no joke to be investing in penny stocks. But if you have the stamina to overcome your first quarter hurdle, you should be good for the next challenge.
In this field, factual data should be coupled with a rational conclusion. Even with the best penny stock pick can’t compete with your decision.
When you get the feel of things, however, penny stock trading can be worth your investment. That is no myth and there are people who can tell you that it’s even fun. So where do you start? Know the basics first. Here are five tips that are most important to get your excited.
- Don’t be hasty in buying shares from ambiguous claims. Of course you wouldn’t buy a product in a grocery store if the label doesn’t say much about its content, would you? There may be phone calls and emails you’ll be getting saying stuff about penny shares that are up for grabs. Verify this claim first. Verify the source of the information too. It is important in your penny stock pick to have track records and an accurate stock price before you buy a penny share. The point is, don’t buy if the information you need is not given completely.
- The PE ratio principle is essential. This is a bit technical for you if you are just a beginner. PE stands for price to earnings ratio. The basic definition is that it’s the value being set by the stock market per dollar per share of a company’s annual earnings. Conduct a thorough research on this to get a better understanding of how it can be applied to your decision making.
- Do not trust hyped penny shares. Although it is true that press releases can pump up the value of a penny stock. But there are scams involved in this part of the trade and hype is often the favorite game. You should be confident enough of your penny stock pick to not get influenced by other stock broker’s opinion. Sure you’ll need these brokerage firms but your analysis is what matters most.
- Seek advice from credible sources. You decided to throw in your investments in your penny stock pick because it is your personal decision to. That means whatever risk you have, loss or gain is all yours for the taking. If someone else gives you an advice, make sure that they have traded their own money and have a good track record of successful transactions.
Nobody in the trading business can tell you how to make decisions. Nobody in the trading business can teach you penny stock wisdom. Nobody and that is a fact. Penny stock brokerage firms can give you advice and present you the hottest penny stock pick there is. Yes, that can be very helpful. But it’s your money out there. Even the stock market doesn’t own it.
Check out the best tips on how to select a penny stock pick. Know more about investing in penny stock from the masters.
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One of the worst things that can happen in the trading business is to go broke. Of course, anyone would do anything to prevent it from happening. If you run out of your investment funds, the stocks and shares just keep moving on and never stop. Of course you won’t be able to operate anymore because you have no money to spare. That couldn’t be difficult to understand, right? So that this horrible vision of bankruptcy will not happen, it is important that you set your limitations in penny stock investing.
Nothing can be more obvious than that. No matter how cheap the stocks are, it is important to keep your reservoir full as well. The stock market trend is not predictable. You share can sell high today and you could lose it tomorrow. What if that loss was the last investment money you have? Sad story but this can happen to anyone who is not setting clear goals for themselves. This article talks about some random guidelines on how to keep your savings intact.
- Spend only within your budget. This is common sense. You can’t spend any more than what you only have. But what this means exactly is that if you are into penny stock investing, don’t pour in all your savings. Set aside a budget for your investment to bank roll. A reasonable margin would be not more than ten percent of your personal funds. Any profit made, you can always add it to your savings. But don’t go above the 10% mark unless you can really afford it.
- Know the loops in penny stock investing. In this same way as setting up a business, you have to understand the dynamics and the operations. This will lead you to better understanding of the trade. With it, you can make decisions with better precision, not accurate but better.
- Know the risks you may encounter. Known to everyone in the trade, penny stock trading ranks the highest in risk scale. The stocks lack liquidity. Fraudulent exercises are very possible in this arena. You could lose your money like bubbles bursting in air. But good investors are natural risk takers. They understand it like it’s at the back of their hands. With this mindset, you can set your investment funds better.
- Learn when to invest and when to hold back. Don’t get carried away if you stock price goes up. It can go down just as fast. So it is important to learn some timing strategies in penny stock investing. This should save you from losing more money and keep your savings steady.
- Do not think of your investment as gambling. If you lose the bet, you can’t have it back. So you bet another. Although stock market trading behaves somewhat similar, it’s not exactly the same. Investment aims for profit. When you get your share, you bank roll it for more profit. And you’re not the only one benefiting it. Gambling is just for entertainment. Penny stock investing is for serious money makers.
The list can simply go on. But no matter how sensible and persuasive these tips are, it’s really up to you. It’s your penny stock investing money. You have full authority over it. Small cap trading can make you smile a lot if you stop betting your money and start thinking of it as investment.
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It may not be the NBA Finals, but as Dallas Mavericks billionaire owner Mark Cuban once quipped, “If you don’t follow the stock market, you are missing some amazing drama.”
As the stock market continues to reach record highs this year, a majority of Americans feel confident about their portfolios and their equity investments. According to a March poll by business channel CNBC, 60 percent of Americans feel confident that their stocks will trade higher this year, even after the survey was completed during a downturn in the market.
The market has seen an extraordinary run since last summer, going from the 10,000s to the high-13,000. Americans are becoming more secure with their financial aptitude nowadays, and realize that regular stock investing over time can result in tremendous returns.
The stock market isn’t without its defects, but a practical, easy-to-understand advice follows the logic that stocks have historically outperformed all other investments, averaging a 10 percent gain in the S&P 500 since 1926.
It’s no real secret that a diversified portfolio over the long run is part of a smart financial strategy. But there are rules to investing, and I believe the new book “How Come That Idiot’s Rich and I’m Not.” offers up some common-sense solutions for everyone who wants to invest in stocks and mutual funds.
Trying to outwit the experts is fruitless. People [who go to Vegas] always tell you about the time they went and won, but they never tell them about the other eight trips where they lost. If you’re a hobbyist picking stocks part time thinking you’re going to outsmart Wall Street, you’re out of your mind.
Robert Shemin, JD, MBA, and Wall Street Journal bestseller, who was once considered the “least likely to succeed,” is a multi-millionaire who speaks to hundreds of thousands yearly, regularly sharing the podium with such financial luminaries as Donald Trump, Robert Kiyosaki, David Bach, Suze Orman and Tony Robbins. Shemin has worked with high-net-worth individuals for Goldman Sachs, helped create four companies, and been involved in over l,000 real-estate transactions. Find out more about Robert at http://www.claimmybonus.com
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If you are looking for extraordinary growth coupled with market-risk levels, you want telecommunication stocks in 2008! The industry as a whole has been one of the strongest performers to date, and it is generally somewhat recession proof (people always want to talk!). Catalysts for the long-term include explosive growth in emerging mobile markets, increasing demand for bandwidth (speed), and a large-scale shift from copper wiring to fiber and broadband wireless. The bulls are out, lets grab some value.
Telecom Services - AT&T (NYSE: T)
Wireless momentum continues to power the market in 2008, and AT&T is right there leading the pack with over 65 million subscribers in the United States. They met expectations in their forth-quarter earnings call (that’s the 11th straight quarter of double-digit growth in earnings), but the really important news here is that wireless results were above expectations and guidance for 2008 was reaffirmed. I think AT&T has what it takes to lead the market into the mobile age of technology. Already, we have seen 57.5% year-over-year growth in wireless data revenues, driven by this increasing adoption of smart phones and 3G wireless devices. Essentially, computers are becoming smaller, and I think that these iPhones and Blackberrys are simply early models of the personal computers of the future.
What’s wrong with Verizon (NYSE: VZ)? I really can’t say, as it is a bit of a crap shoot at this point. I’d have to give the edge to AT&T because of their proven ability to grow earnings despite being so large, and their willingness to open networks toward new computing technology. What really pushes T over the edge for me is its steady 4.5% dividend yield, earnings visibility, growing wireless business, favorable balance sheet, long-term strategy and strategic acquisitions (successful acquisition of BellSouth in 2007). You can look toward their IP-services and whatnot… but you want AT&T for their superior wireless dominance in 2008.
Telecom Services - Millicom (NYSE: MICC)
Once again, Millicom blew away expectations by producing an amazing 3.4 million net subscribers and 41% revenue growth in the forth quarter alone. This company is on cloud nine right now, and while margins were slightly below expectations… guess what… they were 40.0%. Essentially, what Millicom is doing is bringing wireless technology to places that are underdeveloped. They charge by the second, rather than minute, to increase their value to thrifty subscribers and are very active in emerging markets. I am confident in their growth, and Millicom is my Telecom stock for 2008.
MICC is going to kick off 1Q08 with a bang due to their 4Q recorded net-add increase. Broken down by region: Central America growth should drive from new 3G technology and higher-quality customers, African markets have seen dramatic margin increases with new subscribers, Columbia has been negatively impacted by connection fees but should rebound nicely and Asian market investments should continue to propel strength in this key market. MICC is impressive across the board, and their huge international exposure should prove beneficial in 2008.
Comm. Equipment - L-3 Communications (NYSE: LLL)
The Telecom sector of the Nittany Lion Fun, LLC. regards L-3 as a communications company. We argue in jest back and forth, but I’ll give them the benefit of the doubt here and put them in my Telecom portfolio for now. Anyway. L-3 is NOT a value play, they are just a great recession-weathering, military-contracting, growth-driving powerhouse that trades at a premium and deserves it. Analysts that put this company at a HOLD rating just don’t understand their fundamentals. Again, L-3 raised guidance for 2008 in the face of a recession. Cash is still king for LLL, at $1.11 billion in free cash flow for the year (1.47x net-income) and they seem to be in a great spot for further M&A activity in 2008.
One of their chief growth ventures has been the “Linguist program,” a support services contract initially lost to Global Linguistic Solutions LLC (NYSE: GLS). LLL has protested this to the point that they have a major share in the project and are continuing to expand their funding in the project, meaning a huge potential catalyst in 2008. Even without this, their backlog saw another record level (now $9.6 billion) and despite the fact that they are trading at a premium… growth continues onward and upward. Bottom line: take the skeptics views and factor them into your purchasing price, try to buy this one on the dip. My point: L-3 is a winner and justifies a premium share price.
Telecom Services - Telefonica (NYSE: TEF)
Telefonica is an international telecommunications value play in the market. I actually favor them over competitor America Movil (NYSE: AMX) because they are trading at nearly a 2:1 discount (10.5x versus 20.5x). But not only does TEF have a strong position in core domestic markets (main source of cash flow), but they offer the speculative growth opportunities through ongoing international investments. Standard and Poor’s ranks their growth portfolio best-in-class, and I agree with them because of their strength in margins (EBITDA 40%%2B) and consistent sales.
We’ve kind of seen “roller coaster” growth from Telefonica over the years, but it all trends upwards and that’s what we care about. Finding value in TEF, we see an attractive price to get in right now in the mid-to-low $80s. The Latin American markets account for most of the revenue for Telefonica, but only 10% of the EBITDA growth. There is without at doubt very high risk to competition, but I see Telefonica as beating its peers in the long-term, maintaining its great margins and expansion capacity. Noting their apparent risky-business, they actually are not too risky with a PEG of 0.58 and Beta at 0.88. You can count on this international powerhouse for continued growth in 2008, despite all of the lurking naysayers.
The Telecom sector is a great opportunity for investors, and is often missed when viewing the stock market’s relative strengths and weaknesses. The truth is, a strong trend toward mobile technology calls for diversification into the telecommunications sector in order to ride the bull. AT&T, Millicom, L-3 and Telefonica are all stellar performers that should add great value to any portfolio.
-The Net Fool
http://www.thenetfool.com - Turn Time Into Cash - I’m Bullish on the Net!
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January 12th, 2008 by admin
Ever wonder how the penny stock market works? Why it is there? How come some people talk about penny shares going up and down? Who are these so called stock brokers? Two words should be enough to give you a brief idea. These are because of investments and profits. The stock exchange is a public center where company stocks and shares are being sold and bought everyday. People keep on investing in penny stock trading daily because there is money to be made.
Everyday, shares sold in the market rise and fall. While every investor’s goal is to earn good hefty profit, there will always be lost investments and gain at the end of the day. Some investors own penny stocks in several small cap companies. They do this to increase their probability of profit. They could lose in one deal but gained a great amount of income from another buy.
It’s a good challenge to invest in penny stock companies. If you’re new to this business, check this outline:
- Some facts about investing in penny stock - Common penny stocks are traded between one dollar and five dollars per share. These shares are not traded frequently. Information is usually scarce in this arena. Penny stocks are usually hyped and are more exposed to media press releases. These stocks are usually difficult to accurately price. While it is true that penny stocks are not easy to sell, investors still believe in investing in penny stock trading because of its huge potential leverage.
- Hints of fraud - It is commonly know to investors that penny shares are prone to fraud. This is mainly caused by the lack of information and inaccurate pricing. There are some ways to determine if a penny stock or the stock broker is reliable of not. Here are some of them:
1. Stock brokers that claim impressive history of success in penny stock investing without any documents to show for it;
2. When the media over-exaggerates it, making it sound too good to be true;
3. Sales strategies that talks about huge companies today that started out as penny stocks;
- Brokers and Advisers - These firms are your best friends in the business. They can do a lot for your investments for a commission. Stock brokerage firms possess the stock market intelligence to level up your confidence. So when investing in penny stock trade, consider getting a broker. You’ve seen how major stock exchanges like NYSE, AMEX, and NASDAQ work. You just can’t do it alone.
- Penny stock investment advices - Learn, learn, and learn. Your assumption must also include the risk of investment loss whether in part or in whole. Research and analyze the trends. Know the best stocks available. Knowing all these things may still not be enough. The stock market is a very fast paced business environment. You must be extremely alert if possible if you decide on investing in penny stock trading. There is actually no guarantee. At the end of the day, what counts most is your decision. And that is always based on how much you know and understand it.
Find out how successful people go about penny stock investing Study more basic guidelines on investing in penny stocks!
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January 12th, 2008 by admin
Online stock trading is the easiest way to make money. You just need a computer and an Internet connection. You are not required to have huge investment, expertise, or any strategic kind of specialized business training involving business secrets. The initial investment can be ludicrously minimal; it can just be $ 3, the cost of a pack of cigarettes. In case you lose, you do not lose your entire investment. It is only a small percentage, which comes to a few pennies in this case.
If you are a beginner, you can grow gradually-learn while you earn. Your stockbroker is always ready to help you understand the strategies of making money through stock trading. It is in his vested interest to help you to earn. The more you earn and stay with him, the more he earns in the form of brokerage. If you lose and leave, he loses his business.
A good broker offers investment products that are oriented towards every type of investor. Both the beginners and the advanced professionals can benefit from such dispensation. You can build a long term and diversified investment portfolio without using expensive and complicated strategies or techniques. You can benefit from a broad spectrum of investment products ranging from stocks to index tracking exchange traded funds. Besides, you can also use fractional share investing in your long term investment plans.
You can invest in two ways. The first is to invest through an automated investment plan. If you have no time to attend to your portfolio frequently, you can opt for an automated investment plan. Automated investment plan, as the name suggests, allows the investor to make everything happen by itself. You can schedule your plan on daily, weekly or monthly basis - whenever the markets are open. All you are required to do is to set up automatic funding and decide what stock to buy, how much to buy and how often to buy. You leave your broker to do the rest.
The brokers generally devise various automatic investment options to suit the needs of the various investors. Each plan or option is given some name for the convenience of identification. In case of automatic investment plan, there may be three or four options. The best option, let us say is called platinum plan, may allow the investor to make 15 free trades per month. He may do more trades at an additional payment of $ 1.00. In the next best plan, let us say it is called gold plan, an investor may avail 5 free trades per month. He may have to pay $ 2 for every additional trade. In the next plan option, the investor may have to pay $ 3 per automated trade.
The second option for stock trading is the real time market trade. The best plan- say the platinum plan-may allow the investor to $ 1.5 per trade for any number of trades. The next best plan-say the gold plan– allows the investor to pay $2.00 per trade. And in the third plan, an investor has to pay $ 3 per trade.
The third investment option is the real time limit trade. The fees charged in this scheme are the same as in real time market trade.
It must be noted that “for trades above 5,000 shares, the commission cost may be the regular commission plus a small fee, say $ 0.005 for each share traded above 5,000 shares.”
If you are a long term investor, you can opt for Dollar cost averaging and compound interest return plans. These do-it-yourself plans allow your investments to grow over a long time. You can avoid paying middlemen costs such as management, load and administrative fees. Your returns can dramatically increase through such strategies.
Yet another trading option is to invest in index-tracking exchange traded funds or ETFs. These funds allow for automatic diversification and reduce the risks associated with putting all the eggs in one basket.
It must be noted that exchange traded funds can be traded like any stock. The benefit of this option is that the ETF tracks the value of a stock index or the market as a whole. There are several popular exchange traded funds in the market. Some of the most popular ETFs are QQQQ which tracks the NASDAQ 100. ETFs are liquid funds. So you can buy and sell them very easily.
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January 12th, 2008 by admin
Do you that Warren Buffet was the only student ever to earn A+ in Benjamin Graham’s class? Despite that, Warren Buffet still has to persuade Benjamin Graham to get place in Graham Partnership. And amazingly, Buffet’s portfolio grew 1328% in just 7 years!
So, what exactly made Warren Buffet so powerful after working for Benjamin Graham? Read on to discover what Buffet learnt from Graham while working in Graham Partnership.
Buy Great and Proven Companies
Graham research stock’s profitability from its annual report. He focused on balance sheet and income statement to decide if the stock is worth investing. Earnings per share growth rate (EPSGR) and return on equity (ROE) are some of the important key financial ratios used to investigate the stock.
Buffet loves facts and figures as much as Graham does but soon he discovered something that is equally important. To him, integrating the profitability figure with company’s management efficiency is the perfect combination. Since then he paid more attention on how the company worked, what is the business model and how the company makes money.
That is why he owned great companies like Coca Cola, American Express and Gillette.
Go Shopping When Stock is on Sale
Both Graham and Buffet agreed that buying great companies is not good enough. In order to be profitable, they had to buy the stocks at great discount. At this juncture, Graham had decided to study how much is the business worth. Graham used discounted cash flow model (DCF) to calculate intrinsic value and buy the stock if the price is lower than its margin of safety.
But Buffet looked at it quite differently. He prefers discounted earnings growth model (EG) instead. The reason could be he loves growth stocks than matured companies. As the company grow, so does his portfolio. And buying the stocks only if the price was 60% less than its intrinsic value gives him the advantage of having more shares than anyone did.
No wonder why his portfolio grew 25% annually and eventually earned himself the title of The Most Successful Stock Investor in History.
Want to invest like Warren Buffet? Continue reading on how to value stock to calculate intrinsic value at http://www.Stock-Investment-Made-Easy.com/
Chart Profits The Easy Way with A Step-by-Step Guide to Stock Investing for Beginners
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