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Investing 101 Archive

  • It sounds a little like an old Johnny Carson bit, but you know things are really getting slow when burger and beer sales start to disappoint. With the U.S., Europe, and Asia all trying to juice their ailing economies, it's clear that the era of slow growth is more than a passing trend, despite the fact that corporate profits continue to come in at or near record levels.

    It's a predicament that investors of all sizes must contend with, and for our next installment of Investing 101, we've brought in Jerry Webman, chief economist at Oppenheimer Funds and author of the new book MoneyShift, to take a closer look at how you can prosper under these circumstances. We've compiled a list of five key things you need to remember to make money in a slow growth environment.

    Know Your Needs: At one point in your life, you may have teased little old ladies who dipped their toe in the pool before taking the plunge. However, Webman says investors should do the same thing, no matter their age or the water temperature.

    "Start thinking about your needs and objectives before you invest," Webman says in the attached video, adding that you need to know how much money you are able to put at risk before dipping that proverbial toe in the water.

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  • Hedge funds are often thought of as murky pools of capital, accessible only to the super wealthy. The only times the public hears anything about hedge funds are when they do something illegal or outrageously profitable. Generally speaking, these partnerships are much less secretive than you may think.

    To demystify hedge funds and explore ways that an everyday investor can benefit from their strategies, Breakout welcomed Maz Jadallah, founder of AlphaClone.

    What is a hedge fund?

    Jadallah says hedge funds are "an investment fund that has a much wider range of investment activities than a mutual fund." Broadly speaking, hedge funds have a mandate of making money, no matter what the market is doing.

    For instance, if the stock market is down big, such as it was in 2008, your vanilla mutual fund would be expected to fall with it. A hedge fund manager has no such excuse. Hedge funds typically get a management fee of around 2% per year and take a cut of the profits up to 20%. Whether or not these steep fees are worth it depends on the fund.

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  • If identifying cheap stocks were easy, then we would likely all be doing it, and therefore would all be rich. Since we're not, and many investors know all too well the pain of overpaying for a stock, our next installment of Investing 101 is about putting the proper price tag on investments.

    To do so, we brought in Jim O'Shaughnessy, founder of O'Shaughnessy Asset Management and author of "What Works on Wall Street" to talk about the two most common metrics for finding cheap stocks.

    Price to Earnings, or P/E Ratio

    If you had to pick just one method for determining whether or not a stock is cheap, the Price to Earnings, or P/E ratio, would have to be right at the top of the last. "Basic P/E is as simple as it gets," O'Shaughnessy says in the attached video. "It's probably the number that investors look at the most in trying to determine if a stock is cheap or expensive."

    As the name implies, a P/E is just that: The ratio of a stock's price to its earnings, and it is typically expressed as a multiple of earnings. For example, if Nestron Inc was trading at $10 a share and had earned $1.00 per share in profits in the past year, Nestron would have a P/E of 10, or could be said to be trading at 10x earnings.

    Read More »

Pagination

(13 Stories)

ABOUT INVESTING 101

Breakout’s Investing 101 is a new way to gain insight on money management and trading. Whether you’re managing your own retirement account, just beginning, or an advanced investor in need of a good refresher, Investing 101 will help you learn, grow, and keep you informed of the basic steps to effectively manage your money. Expect investing tips that focus on trading strategies, asset allocation, and portfolio management.





Investing 101

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