Shareholder advocacy is when people who own stock in a company (and therefore technically own part of the company) use their influence to promote corporate responsibility. Basically it means that you use your voice within the company, however small, to encourage the company as a whole to practice policies that are socially and environmentally responsible. Yeah, you can really do that!
Archive for the ‘Grow Page’ Category
Proxy Voting is…
Wednesday, October 6th, 2010Proxy voting is when someone casts a vote for someone else. If you are a shareholder in a company, you are allowed to vote on certain general decisions made about the company. If you are unable to attend the meeting where the voting takes place, then you might ask someone to be your proxy and submit your vote on your behalf.
What does it mean to take a company public?
Wednesday, October 6th, 2010When a company “goes public” it means that it has decided to expand its ownership to include shareholders from the general public. When a company first goes public it’s called an IPO, or initial public offering. Proceeds (or the money raised from the IPO) can be used to fund further growth or to reward original shareholders (a “payout”). When a company is public, it breaks itself up into shares of stock available to be bought and sold by investors. In the U.S. public companies must register with the Securities and Exchange Commission (SEC) a government agency that regulates U.S. financial markets. Public companies are also required to file public financial statements with the SEC every quarter.
This isn’t true for every company, though. Many companies are “privately held,” which means that only a few people own the company and benefit from its success. In other words, if someone has created a great new company and gone public, anyone can invest their money in that company and share in its success (or, let’s be honest: failures). Private companies are not required to disclose financial information to the public.
How do you keep track of your investment profits or losses?
Wednesday, October 6th, 2010When you calculate your net profit or loss on an investment, you have to factor in what it cost you to make the investment in the first place. That’s called the “cost basis” or “tax basis.”
Here’s a simple example: let’s say you buy 100 shares of Company A for $10 a share – $1,000 in total. That $1,000 is your cost basis. Your gain on the investment is whatever you make that’s above that number. So if you later sell those 100 shares for $15 a share, you make $1,500 in that transaction, but you have to subtract your cost basis, so your profit is $500. If you sell them for $7.50 a share, you make $750, but once you factor in your cost basis, you actually have a $250 loss.
Net Profit is…
Wednesday, October 6th, 2010Net profit is the amount a company makes (or loses) after taking its expenses into account. You can figure out net profit easily by subtracting a company’s total expenses from its total revenue. For example, if Company X has a total revenue of $1,000 in May, but spent $500 to produce the revenue, the net profit would be $500.
A 401(k) is…
Wednesday, October 6th, 2010A 401(k) is a retirement account that you don’t have to pay taxes on right away (the technical term is “tax-deferred”). These accounts are generally sponsored by employers, who can use them as a substitute for a traditional pension plan. Unlike a pension plan, which is managed and paid for entirely by the employer, a 401(k) acts as a personal retirement plan. Employees can contribute up to 15% of their salary every year (but no more than $11,000 a year for people under 50, and $12,00 for people over 50), which will not be taxed until they withdraw the money.
The interest, investment earnings and employer contributions (the employer can decide to pitch in to the account, if they want) are also not taxed until the employee withdraws the money. If the money is withdrawn before retirement age (currently 59.5 years old), the account holder faces an early withdrawal penalty fee.
Arbitrage is…
Wednesday, October 6th, 2010Arbitrage is a trading technique in which an investor (or sometimes a computer program) finds the same instrument (like a stock) offered at a lower price in one market and a higher price in another. The investor then buys the instrument at the lower price and immediately sells it in the other market for a higher price.
Verizon Refunding Up To $90 Million to Cellular Customers
Tuesday, October 5th, 2010Getting ripped off? It may pay to speak up – the squeaky wheel gets the $90 million dollar refund.
- The F.C.C. (Federal Communications Commission) has been receiving consumer complaints about bogus data charges assessed by Verizon Wireless on customers without active data plans.
- In response, Verizon announced it will voluntarily refund affected customers. The company will likely still face a fee from the FCC.
- Many customers were charged $1.99 every time they accidentally hit a key that opened their phone’s browser. Verizon has been accused of refusing to reverse these charges when individual customers called customer service to complain.
Facts & Figures
- According to a Verizon executive, about 15 million customers without data plans were billed for unintentional data usage in the past few years.
- Beginning in October, current and former customers will receive credits to their account ranging from $2-$6.
- In the end, the refunds are estimated to total $50 million.
Best Quote
The agency is “gratified to see the repayment, but for millions of Americans it’s a day late and a $1.99 short.” – Michele Ellison, Chief of the F.C.C. Enforcement Bureau
Culprit In ‘Flash Crash’ Identified
Monday, October 4th, 2010How one company broke the Internet stock market.
- The SEC and FTC just completed their report on the May 6th “flash crash” that resulted in a sudden loss of more than 600 points on the Dow Jones Industrial Average. The market rebounded, but not before a few trader meltdowns.
- The report says that the crash resulted from a single big trade, which happened to be executed on a day when the market was already unstable due (in part) to fears about European debt.
- Apparently a large trading company (which the WSJ identifies as Waddell & Reed Financial, a mutual fund company in Kansas) sold tens of thousands of futures contracts using a computer trading program. The sudden sale scared day traders into dumping their futures contracts and further destabilizing the market.
Facts & Figures
- The DJIA’s 600-point crash was its fastest decline ever.
- The trade in question involved selling over $4 billion in futures contracts at one time.
- A total of 75,000 futures contracts were sold.
Mr. Market and Behavioral Finance
Thursday, September 30th, 2010Excerpt from the 1987 Berkshire Hathaway Annual Report
Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is you partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.
Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.
Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.
But, like Cinderella at the ball, you must heed on warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”
In my own efforts to stay insulated, I have found it useful to keep Ben’s Mr. Market concept firmly in mind.
– Warren E. Buffett, February 29, 1988