Posts by Eric Reed:
An option contract is a form of financial asset known as a “derivative.” Purchasing an option contract it gives you the right to buy or sell some underlying asset on specific terms. You choose a price and date on which to trade this asset. When the time comes, you can choose to execute the contract if it’s profitable, or let it expire if not. Here’s what you need to know about option contracts. Read more
NAFTA is dead. Long live NAFTA! In 2018 and 2019, the Trump administration announced that it had signed a renegotiated version of the North American Free Trade Agreement. The administration tried to rebrand the deal, the USMCA, and claim credit. But this deal isn’t new or revolutionary. Read more
The Great Wealth Transfer is coming. More than 10,000 baby boomers are turning 65 every day, and over the next 20 to 30 years trillions of dollars’ worth of wealth will transfer to their children. It will cause some changes for everyone. Need help planning your estate? Find a financial advisor today. Read more
Don’t panic. At time of writing in March 2020, the stock market has posted some of its biggest losses and gains since the Great Recession. It’s been a roller coaster: One day stocks posted their… Read more
Morningstar ratings are a system for evaluating the strength of an investment based on how it has performed in the past. On a scale of one to five stars, a Morningstar rating measures investments… Read more
Participating preferred stock may be the most desirable security for an equity investor to own. Shareholders who own preferred stock generally receive any payments made by the underlying company,… Read more
A quantitative analyst uses mathematical models to review data, draw conclusions and make recommendations for businesses and investment firms. Their skills enable them to help retailers decide what… Read more
Funds want to be Lipper leaders. They want to beat a Lipper Average. But what the heck is it? It’s a way to classify funds based on their performance. A 1-to-5 scale separates Lipper losers from … Read more
“Did I get a good price?” Anyone who has traded a security has asked themselves this question. Did you buy when the stock was low enough? Did you sell right before it peaked? Did you get it wrong… Read more
An investment’s “expected return” is a critical number, but in theory it is fairly simple: It is the total amount of money you can expect to gain or lose on an investment with a predictable rate of… Read more
More than a decade out from the Great Recession, it might be hard to remember the sheer scope of misdeeds that led to the second worst financial crisis in modern history. While the proliferation of… Read more
Capital markets, more commonly known as financial markets, connect people and entities, either corporate or governmental, who have money (or “capital”) with people and businesses who need it. There… Read more
Are you a noise trader? If so, professional investors probably don’t like you. They’ve even come up with a specific name for how you influence stocks: noise trader risk. That’s volatility from… Read more
It’s tough to find a clear definition for “alternative beta.” Investors love to talk about this concept. It has become a hot topic among investors. But most of them publish articles on the subject of… Read more
A hybrid security is a single financial product that combines different types of financial securities, or has features of multiple kinds of securities. Typically, this means that the security has… Read more
An economic shock, also known as a macroeconomic shock, is any unexpected event that has a large-scale, unexpected impact on the economy. Many, but not all, economists also say that a shock has to be… Read more
Many publicly traded corporations periodically release statements about how they think they will do in the coming months. These statements, which typically come out every quarter, are known as… Read more
When deciding between two securities, the main factors to consider are risk and return. Investing in stocks is relatively risky, but over the long term, there’s great potential for returns. Bonds,… Read more
Broadly speaking, there are two approaches to investing: passive and active. The former entails buying assets and holding them, typically over a period of years, with the goal of building long-term… Read more
If you’re like most investors, your exposure to the bond market is likely limited to U.S. government debt. Treasury bonds have been popular investments for consumers since World War II and are by far… Read more
Hot money is a form of short-term investing in which investors move their money between financial markets to take advantage of interest rate fluctuations. Generally, this refers to moving money… Read more
For both retail and professional investors alike, most portfolios should strike a balance between risk mitigation and profit seeking. Long-short equity investing is one strategy that many large-scale… Read more
An asset’s total return measures how much value it generates in total. This includes both capital gains (when an asset gains market value) and income (when an asset makes a direct payment). Total… Read more
Many investors look at their portfolios piecemeal. They measure an asset by how much money it made, or by growth. For investors taking a comprehensive view, however, there is the idea of Total Return… Read more
If you own any investments, capital appreciation is probably your goal. Capital appreciation occurs when an investment asset gains value as reflected by its market price. When a stock’s price goes up… Read more
