An investment vehicle is basically any structure or place where you put your money to try to make more money. Some examples of investment vehicles are stocks, bonds, and mutual funds.
Posts Tagged ‘stock’
An Investment Vehicle is…
Friday, June 3rd, 2011Price Per Share is…
Thursday, May 19th, 2011U.S. Companies Buying Stock… In Their Own Companies
Thursday, October 7th, 2010It’s an easy way to make your shares look better, but is it the kind of long-term investment companies need?
- Companies these days have a lot of cash on hand. Because of the recession, they’ve been scared to spend too freely and risk losing more money. So they’re doing something kind of unusual: they’re buying back stock they’ve sold to investors.
- Buying up lots of your own company’s shares makes your stock look better to investors because of a statistic called earnings per share. If you reduce the number of total shares available to the public (by buying them back), you make that number go up.
- Spending cash on shares means not investing in company infrastructure or workforce. Some people say it’s a bad long-term strategy because it’s based on short-term gains, not long-term growth.
Facts & Figures
- Firms plan to buy back $273 billion of their own shares this year.
- According to the Federal Reserve, companies (excluding financial firms) held $1.8 trillion in cash and other short-term assets as of June 2010.
- Some of the companies buying back large amounts of their own stock include Hewlett-Packard, Pepsico, and The Washington Post Co.
Best Quote
“It’s totally wasted money. It does not do anything long-term for companies.” – William Lazonick, Professor and Director of the Center for Industrial Competitiveness at University of MA at Lowell
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.
The SEC Boosts Investors’ Influence Over Management
Friday, July 30th, 2010In the lopsided world of shareholder voting, investors have to posses incredible gumption to effect any kind of change within a company.
- In most companies, the management owns the majority of the stock, meaning that shareholders have little influence in a company’s policies.
- The Securities and Exchange Commission is trying to even the playing field for shareholders, making it easier for them to effect change within a company.
- The SEC is imposing nonproxy measures – like electronic surveys – to gauge whether or not investors support management. And yet, despite these efforts, because of money and knowledge, the management still wields most of the power.
Best Quote
“Time and again, we have brought opportunities [for mergers or acquisitions] to the attention of the board. Each time, he says, the suggestion was rebuffed or ignored. It’s been a decade of complete nonaction.” – Shareholder, Cadus Corportation
First Impression Of The New iPhone: Negative
Thursday, July 15th, 2010Apple’s newest flashy iproduct might not be making quite the positive splash they’d hoped for…
- Consumer feedback has been harsh on the latest iPhone, reporting that when it is held a certain way reception is sketchy and calls are sometimes dropped.
- As a result, shares of Apple Inc. have dipped, leaving the company scrambling to issue software updates and attach a bumper accessory to fix the problem.
- Analysts, however, are doubtful that this blip in Apple stock will have any lasting effects. Apple products like the iPad and iPhone are still too widely popular to truly lower Apple’s stock valuation.
Best Quote
“Checks into Apple’s supply chain do not indicate slowdown in build plans or demand. But a greater focus on this issue could create risk to estimates.” – Shaw Wu, Analyst, Kaufman Bros.
Who’s looking at your trades?
Wednesday, July 14th, 2010This is a somewhat complicated question that depends largely on the situation you find yourself in. Much like the stock market or investment markets themselves, certain people are privy to certain types of information. But let’s say you bought a share of Microsoft (MSFT) yesterday. Who can see that you did that?
- On the most immediate level, you can. You can view your purchase in your account register.
- Your financial advisor or private banker can also see the trade because she or he has access to your account.
- Things start to get a bit impersonal here: theoretically, the bank or brokerage house that you are associated with can see that one more share of Microsoft was bought for one of their customers.
- The market will most likely not be affected with the purchase of your one share, but since it is technically the most recent sale, for a little while (we’re talking less than a second) your purchase will be the last visible sale of MSFT which is visible to anyone who is looking at MSFT at that moment.
The long and the short of it is that only you and your financial advisor/ institution can see that YOU personally bought a share of MSFT; the rest of the world can only see that one share of MSFT was bought by someone, somewhere. The identity of the purchaser is confidential information.
Best Buy Not So Hot First Quarter
Monday, June 21st, 2010Best Buy quarterly results show that Best Buy sales fell short of predictions.
- Best Buy’s stock fell 6% after disappointing quarterly results were released on Tuesday.
- While sales of notebook computers, cell phones, and appliances were strong, sales of games, music, movies, and televisions fell short.
- Executives are optimistic that customers will continue spending, though, and pull the company out of this rut.
Facts and Figures
- First quarter net earnings were 36 cents per share (less than predicted 50 cents per share)
- Reported sales for this quarter were $10.8 billion (less than predicted $10.9 billion)
- Retail sales fell by 1.2% in May 2010 (they were expected to rise 0.2%)
An Oil Company Actually Benefits From The Oil Spill
Wednesday, June 16th, 2010While most oil companies are suffering in the wake of the big spill, investors are becoming more confident in Brazil’s Petrobras because it doesn’t operate in the Gulf of Mexico.
- As BP shares continue to fall, shares of Brazilian oil company Petrobras have remained stable for weeks.
- Petrobras plans to make more stock available for sale later this summer, indicating that it’s doing well despite other oil companies suffering from the oil spill.
- While the oil spill is hurting stocks associated with the Gulf, investors are confident that oil companies elsewhere (like Petrobras) could actually benefit.
Facts and Figures
- Petrobras plans to offer $25 billion in equity this summer
- If they do sell all of their offered stock, it would be the second largest equity offering ever
- Petrobras operates worldwide – from Turkey to New Zealand to, of course, Brazil
Best Quote
“Petrobras does not have the headline risk that BP does right now. Investors are unlikely to move away completely from the oil sector but substitute from one company to another.” – Gerry Sparrow, Chief Investment Officer, Sparrow Capital
Investors Run For Cover In Low-Yield Investments
Monday, June 7th, 2010What should you do when the stock market gets unpredictable? You can hold on for dear life or you can hide your head in the government sand...
- There’s been a lot of ruckus in the stock market lately; between recession repercussions and the European debt crisis, investors are avoiding higher-risk, higher-return instruments in the stock market.
- Instead, people are funneling money into significantly lower-risk instruments that are also lower-yield, like money market funds and Treasury (government) bonds.
- The stock market is expected to improve in the future, but because of potential problems in Europe and a damaged financial infrastructure here in the U.S., investors are likely to stick to safe investments (like bonds) for now.
Facts & Figures
- The only mutual funds that outperformed the Treasury mutual funds in May were “bear market funds” – mutual funds that earn money only when the market goes down.
- Bear market funds returned an average of 8% on investment in May
- The going rate of return on a 30-year Treasury bond is 3.2%
Best Quote
“It’s still awfully close to zero. The amazing thing is that even at these rates, when you’re getting virtually no return on your money at all, people are still moving cash into money market funds. It’s sobering.” – Peter G. Crane, President of Crane Data