The INDEXSP:.INX is nothing more than the S&P 500 Index. Known as the Standard & Poor’s 500 and created in 1923, the S&P is an American stock market index comprised of 500 of the largest companies listed on either the New York Stock Exchange or the NASDAQ. This index, like all other indexes, is capitalization-weighted, meaning the price of the index is created by the total weight of all 500 stocks. Here is the current breakdown of this index.
During our weekly webinar this weekend, we were asked the question, “which of the following is considered a diversified investment?”
And it was right in our wheelhouse and we love to speak about diversification. We love to speak about investing and diversification because it is something that Wall Street talks about ALL the time. And like anything else Wall Street, it is mostly a scam or a way for you to hand over your money to them so they can charge you fees.
Without getting into too much detail (we will get into plenty of detail later), diversification is a scam. It’s a joke. It’s not real and is based off fiction instead of facts. C’mon, are you really telling me that a “sector” of a stock can be the difference between it being a diversified investment or not? Give me a break.
Here we go, our answer to the question “which of the following is considered a diversified investment?” This one is going to be short and sweet because to find out what true diversification is not difficult at all. Like many concepts in investing, you have to look under the hood at the numbers to have a true understanding of what is taking place. Diversification is an excellent example of this.
We are going to jump right in. This post is going to be a good one. And even though I have only written three sentences, I already know this post is going to help a lot of people. I am going to expand on the concept of dividends and show you how using the examples of the BP dividend, the KMI dividend, and the GM dividend, we can turn these into cash generating monthly dividend stocks with very little effort at all.
The market interest rate related to a bond is also called the…? This is a fun little quiz we are going to have. Last night, we had a record 531 attendees at our weekly webinar and we are very proud of that if I do say so myself. We have gotten investors from all different shapes and sizes and years of experience. One of the things I am most proud of, however, is the fact that Stony Brook Securities continues to attract more and more students under the age of 25.
These students do not know the ins and outs of financial markets just yet, however, they have the confidence and the interest to ask a lot of questions. Asking questions is the only way to learn more.
We were asked the question “the market interest rate related to a bond is also called the”? Let’s do a fun little post. I will give you four answers and you are going to tell me what you think the answer is going to be. Let’s have some fun!
Tesla stock is an absolute beast. There is no questioning that. But before everyone gets all excited and continues to pile into Tesla stock, we have to consider everything from the current Tesla market cap to Tesla options to the Tesla PE ratio to the Tesla dividends.
The truth is, we would normally charge hundreds of dollars for this information. We are going to do something in this post that we do not normally do for free. We are going to go through everything we look at and know about Tesla stock to make an informed decision when considering a potential investment or trade.
Which best describes the effects of low and high interest rates on the economy? This is a question we received during one of our webinars this weekend, and it is not surprising that we continue to field question after question on interest rates.
We don’t blame our customers or readers for continuing to bring up these types of questions. It ‘s hard these days to not see current mortgage rates (which are indirectly tied to interest rates) being posted at the top of most websites and newspapers.
However, very few people have a complete understanding of interest rates and specifically how much they impact the general economy. We will get into this as this article progresses, but as we become more and more addicted and reliant upon debt as a society, we will be thriving or not almost entirely on the effects interest rates have on world economies.
Here we go, our answer to the question, “which best describes the effects of low and high interest rates on the economy?”
If you have ever watched financial media or read financial news, you undoubtedly have heard of the volatility index NYSEARCA:UVXY.
While NYSEARCA:UVXY is a very popular product, many people have absolutely no clue where it comes from or exactly how to trade it. We have to warn you, trading UVXY is no walk in the park and has caused many investors to completely blow up their accounts.
Being on the wrong side of volatility can be the difference between making money or losing money over the course of a year. UVXY is a tool that can put the odds on our side (if we understand what we are doing).
I’d like to walk you all through what UVXY is and exactly how we like to trade it so that we can give ourselves the best chance to make money. Here we go, Stony Brook Securities ultimate guide to trading NYSEARCA:UVXY.
Which best describes how an investor makes money from an equity investment? This was a question we received during one of our webinars this week from a new perspective 16-year-old student.
It is great as always to see young people getting interested in financial markets and more specifically getting interested in manage their finances.
If this is the first time you are reading this blog, please know that we hate Wall Street. We hate that their end game is to gather assets and charge fees. Because of this, our goal at Stony Book Securities is to empower the individual investor and give them every tool they need to succeed in the markets.
We are more than happy to field questions like this and also to publically answer them in the form of a blog post. This should be a fun one as the answer to the question “which best describes how an investor makes money from an equity investment?” maybe isn’t as obvious as everyone thinks. And again, thank you very much to that young man who asked this question! He is well on his way to becoming a rock star investor.
Most investors who would like to get exposure to soybeans would look no further than the soybean ETF $SOYB. While this is typically an excellent choice, we have to do some serious digging in and around this soybean ETF to make sure it is the one for us.
ETF’s are very popular these days as more and more institutions are competing for retail investor dollars by creating these products. The sell for these ETF’s and institutions is simply; create a product where retail investors can get exposure to many of the products they normally wouldn’t be able to. This can be a wide variety of products, going all that way from a basket of stocks to a replacement for an extra large futures contract.
The soybean ETF $SOYB is another example of the latter where not all individual investors have the permission to trade futures contracts but can now get direct exposure to the price of soybeans. Before we invest our hard earned money in $SOYB, we must first make sure it is the right kind of product for us.
Central Bank questions are some of my favorite. The mysterious world of Central Banking has been spoken about a ton lately with the Federal Reserve of the United States currently trying to raise interest rates off of their all-time lows.
There are many policies the Central Banks of the world can enact to do pretty much whatever they want. If they want inflation to be higher, they can enact certain policies that almost guarantees inflation grows as an example.
During a webinar last night, we received the question, “which best describes what a central bank uses monetary policy to do?” The reality is that when Central Banks use monetary policy, they can do whatever they want to do as they are not governed by any Government bodies and are free to do as they please as they answer to nobody.
Throughout the rest of this article, we will discuss Central Banks, how they came to be, and exactly what monetary policy means and how it is implemented by these private entities, as well as answer the question “which best describes what a central bank uses monetary policy to do?”
EVERYBODY loves dividends…right?
But do you know why? Dividends have always been very popular, however, when interest rates go down, dividends become more and more familiar.
There are certain types of investors who seek yield. They could be pension funds, endowments, or individual investors who are retired who live off the yield of their investments. When interest rates go down, it becomes a more profitable investment (something) to invest in dividend stocks as the higher yields coming from dividends returned more than fixed income instruments like bonds.
A dividend is pretty straight forward, however, many people get confused with the different types of dividends available. Let’s go through them and see which one of the following correctly describes the dividend yield?
Risk is something that we field questions about almost daily. About 50% of our clients and customers bring up the topic of risk at least one time during one on one sessions or webinars. The reality is, financial media has trained us to be concerned with risk and always worry about if we have too much risk or not.
We are here to tell you; it is not that hard to “manage your risk.” It is one of the simplest things we as investors can do because it is one of the few aspects of investing we have complete control over.
We have been asked the question “which one of the following is an example of systematic risk?”. This is an article and concept we are very much looking forward to flushing out as the idea of risk is just too much for some people to handle.
I’ll just come out of the gate and say it. We used to trade Yahoo options almost every week. Yahoo options had penny wide bid/ask spreads, volume in the tens of thousands, and as many expiration cycles as any stock out there.
Before writing this article, I thought this was going to be a layup. Not more than a year ago, Yahoo was at the top of our list of stocks to keep an eye on each and every day. That list was comprised of some of the top stocks that we almost had positions on in no matter what. This group included $SPY, $AAPL, and yes, even $YHOO.
But for some reason, Yahoo is no longer on that list. To be honest, I don’t remember why it was taken off. I know that there was something about them maybe being bought or them completely changing their name or business, but whatever the case, we do not follow Yahoo anymore and currently do not have any Yahoo options positions.
Let’s give Yahoo and Yahoo options their fair chance. We are going to examine their markets just like we do every other stock or ETF that we go through. Because Yahoo was such a great trading vehicle for us not too long ago, we hope that we just glossed over Yahoo months ago as opposed to just removing it from our list on purpose. Maybe we can even add a Yahoo options position after this is all said and done!
Some investors look at the dividend yield of a stock as somewhat of an icing on the cake when deciding to make an investment or not. With real estate the talk of the town during rising interest rates (for now), those same investors are looking at the VNQ dividend when considering purchasing the Vanguard REIT ETF.
With a dividend rate of 4.66% according to Yahoo Finance, REITS are among the highest yielding assets classes out there. However, most investors will simply pile in all of their cash into these high-yielding REIT’s without understanding why these companies can pay such a high dividend.
Like everything else markets, Stony Brook Securities takes out time to understand the reason behind everything we can. There are specific reasons why REIT dividends and specifically the VNQ dividend pay out so much. It might not be what you think or a great investment strategy. Let’s find out exactly what is going on here.
Do not pass go. Do not collect $200.
Okay, we aren’t talking about Monopoly, but I like this photo.
Dividends…the yield-seeking investor’s dream. Get paid to hold the stock. Cash in the account. We get all that.
Here at Stony Brook Securities, we almost never look at the dividend of anything we are investing or trading in because we are looking for liquid opportunities and do not feel a dividend gives us a better chance of making money. So we simply don’t look at it.
In a consulting session last night I was asked about a stock called Frontier Communications Corporation (FTR) and specifically the FTR dividend. I did some research on the FTR dividend and the stock itself and am going to share my thoughts on it all. Sit back and relax, this is going to be an in-depth analysis of FTR, the FTR dividend, and how I look at situations like this one.
We get it…you want exposure to oil and think Barclays’ NYSEARCA:OIL is the best way to do it. We aren’t surprised about this at all.
I mean…oil is being talked about a lot lately and has been in play for well over a year now. OPEC has meetings multiple times a year where they talk about potentially cutting production supply in order to increase the price of crude oil.
Regardless of the outcome, whenever there is an OPEC meeting, crude oil is in play as it brings a lot of volatility. And when there is a lot of volatility we can be sure that there will be two-sided market action for us, thus, liquidity and opportunity.
NYSEARCA:OIL is an option for getting exposure to crude oil. Let’s see if it is the best solution for not for you.
Which of the following is not one of the responsibilities of the Federal Reserve? This is a question we received from another young client of ours who is interested in learning more about the Federal Reserve and specifically what they are supposed to do.
With interest rate hikes all the buzz as of late, this is probably a great time to throw in our two cents on the Fed. Very few people know why they were created and that their role has significantly expanded with every financial crisis that occurs.
They were founded with the mandate to provide liquidity to the system when a capital injection was required or necessary. However, they have a few more mandates than that (privately). Here we go…answering the question “which of the following is not one of the responsibilities of the Federal Reserve?”
This is the stock we are going to be discussing here. I know you are laughing right now but we suggest reading the rest of this article to really find out how bad NYSEARCA:JDST is.
Yes…that is $347 to $11.75 in less than a year. NYSEARCA:JDST is the Direxion Daily Jr Gold Miners Bear 3x ETF and it is an absolute pig. Like all ETF’s that are priced from their futures, there is a crazy negative drag to these triple leveraged instruments. However, if it is truly a liquid product, we should be adding it to our list because we add every liquid product we can get our hands on. This gives us true diversification.
Without any more hesitation, let’s see if NYSEARCA:JDST is liquid enough to be put on our list of tradable products that we will definitely only be trading from the short side.
Let’s find out what this Eaton Vance Tax-Managed Diversified Equity Income Fund ETY is all about. We have been fielding a lot of questions about this stock as a lot of our clients and students have been hearing about it lately.
Just like we have done many other times, we will go through ETY like we do everything else. We will talk about its liquidity because we do not ever trade or invest in any products that are not incredibly liquid.
To be honest, a stock that is managed by a professional having that long of a name scares me as it makes it look like a marketing ploy. We will give it a fair shot and see if we should add ETY to our portfolio or not.
I have a question for you. How far do you think the INDEXDJX:.DJI (Dow) can go up or down over the course of the next year?
This is a fun one for us because most people will throw out numbers that they may have heard on TV or read in the likes of the Wall Street Journal or Bloomberg. Maybe publications come out with a price target for not only the INDEXDJX:.DJI (Dow), but also the INDEXSP:.INX (S&P 500), or any index or stock in the world for that matter.
We are going to show you that is it not a guess. Financial institutions might send their best and brightest all over the world to give them the edge over the competition in coming up with the most “accurate” price target for the INDEXDJX:.DJI (Dow). While this is great and we have no opinion of how these institutions spend their money, we are going to show you how in about five seconds time, you will be able to know the EXACT expected price move for the INDEXDJX:.DJI (Dow) over the course of the next year. This number will not be a guess and it will be EXACTLY what the market expects and prices in.
Trading the INDEXDJX:DJI (Dow)…this should be fun and a nice addition to our ultimate guides to trading the INDEXSP:.INX (S&P 500) and the INDEXNASDAQ:.IXIC. We all know the Dow…it’s the one that gets talked about every single day on the likes of CNBC and Bloomberg. The INDEXDJX:DJI (Dow) was created by Charles H. Dow (who was also a founder of the Wall Street Journal) back in 1898 to serve as a benchmark for the greater US stock market. At that time, 12 companies were added to the Dow with only General Electric still a member of the group of now 30 stocks. Here is a list of the 30 stocks there today:
“Which of the following statements about federal student loans is true?”. This is a question we received in a portfolio consultation last week with a prospective client who also happens to be just out of college.
You see, this individual wants to get involved in the markets, compound the earnings of his profits over decades, and be able to manage his money himself. We applaud everyone like this, in fact, we hate Wall Street and believe everyone can manage their money and be very successful in doing so.
The reality is that student loans, however valuable they are perceived to be, cause significant damage to not only a majority of the individuals who get them but also for the broad overall economy. Here we go…our answer to the question “Which of the following statements about federal student loans is true?”
The INDEXNASDAQ:.IXIC is the Nasdaq Composite, and along with the Dow Jones Industrial Average and the S&P 500, is one of the most followed indexes in the world. The Nasdaq stock exchange, which opened in 1971, is a place for innovative technology companies to be listed and have their stock traded. Currently, there are about 2,500 total stocks listed on the Nasdaq exchange and the INDEXNASDAQ:.IXIC is a way to track the changes of the entire Nasdaq market. Here are the top 10 stocks traded and available on the INDEXNASDAQ:.IXIC along with their current market cap and industry.
|Kraft Heinz||$111.95B||Packaged Foods|
The Nasdaq is obviously the best gauge for all things technology and biotechnology and is watched by all institutions and professional money managers and traders all day. Why? Because some of the names in this list in the Nasdaq are incredibly correlated to the index.
Makes sense, Apple, Google, and Microsoft move with a 90+ correlation to the Nasdaq. For the rest of this article, we are going to talk about the top three ways to have immediate exposure to the INDEXNASDAQ:.IXIC (Nasdaq) and talk about which ones are right for you.
Yes, the famous stock market crash of 1929. Many people speak about it today as it is still the worth stock market crash of all time and lead to the largest recession and subsequent depression in history.
There are a lot of competing opinions for what caused this crash. Maybe historians and universities have given their opinions on the crash. However, in 1929 the stock market crashed because of some of the loose monetary policies at the time (that we still see today).
This article is going to be very much an opinion piece at it is difficult to say exactly what caused the crash back then, however, we are here to say that in 1929 the stock market crashed because of two reasons.
Which of the following conditions will maximize the amount of interest you earn? This is a question we received last night during one of our weekly webinars. It is a very interesting question, and we are happy to continue answering these questions from customers and readers to everyone on our blog.
Getting any interest of any size these days is something that is very difficult. We are currently in an environment where almost half the world yields negative interest rates, with over two trillion dollars worldwide currently collecting negative interest. Wow.
There are two different conditions that we can point out that will help us answer the question to “which of the following conditions will maximize the amount of interest you earn?” in this short article. Buckle up as it will be fun!
Yea…after I finish writing this article about CMG options I am definitely going to go to Chipotle and get one of these bad boys.
But before that, we are here to talk business, and specifically the making money business.
Every day there are hundreds of opportunities in the market, some being better than other. We would like to let our customers, clients, and readers understand how to narrow their focus to only the best opportunities which give us the best chances of making money.
Chipotle is a $400+ stock. While there are a lot of opportunities in Chipotle each and every day, we want to make sure CMG options are liquid enough for our money. Let’s see how they stack up.