Dividing Your Assets Between Stocks, Bonds and Cash
Posted on June 4, 2012 | Classroom
Step 1: Why Is the Allocation of My Assets Important?
At first glance, many investors assume that the basic asset allocation decision is easy. After all, at this level you are focusing on only three choices—stocks, bonds and cash (money market funds and short-term certificates of deposit).
While the choices are few, the way you allocate your portfolio among these three categories will have by far the greatest impact on your performance of any investment decision you make, assuming that you don’t violate the basic investment principles.
Collecting Basic Data on a Stock
Posted on May 30, 2012 | Classroom
The Valuation Worksheet provides a systematic approach to gathering information needed for the valuations. Clearly, the information sources play a critical role in the analysis. Here, we take a closer look at sources of information and some of the problems and differences you may encounter when using them.
FAQs about Financial Statements
Posted on April 19, 2012 | Classroom
Learn what intangibles are, how stock repurchase programs affect a company’s investment appeal and the difference between cash and pro forma earnings.
Making Your First Investments
Posted on March 19, 2012 | Classroom
To begin a basic investment program, you need to go through the whole asset allocation process—first determining your allocation among the major asset categories and then further down among the major stock market segments. And you come up with this mix: cash, 10%; intermediate-term bonds, 10%; and stocks, 80%—with the latter split 80% in a “core” holding of large-capitalization stocks (which would be 64% of your total portfolio), 10% in the stocks of smaller firms, and 10% in international stocks (8% of your total portfolio in each).
Putting the Numbers to Work: The Magic of Ratios
Posted on February 28, 2012 | Classroom
Financial ratio analysis relies on financial statements to study the past and develop a feel for a company’s attractiveness measured through factors such as its competitive position, financial strength, and profitability. We have selected some widely used ratios of interest to investors. The financial data used to illustrate the ratios is taken from a sample…
Fund Statements: What to Look For
Posted on February 16, 2012 | Classroom
The various reports provided by mutual fund companies contain vital information concerning financial matters and how the fund is managed.
Slicing Up the Stock and Bond Pies
Posted on January 23, 2012 | Classroom
At this stage in the allocation process, the goal is to try either to reduce those risks without substantially affecting overall return, or to enhance return without substantially adding to those risks—or both.
What You Need to Know: The Nine Essential Fund Facts
Posted on January 4, 2012 | Classroom
What to Look for: Well, the example is not a sector fund concentrating in one or a few closely allied industries. The fund’s strategy is to be diversified by firm and industry—a less risky approach than sector concentration. The option of holding debt securities is no surprise, since stock funds do hold cash but rarely move significantly into bonds. But where did foreign securities come in? The trend among managers of domestic equity funds is to have and use the flexibility to invest overseas. While not operating as a global fund, significant foreign holdings of up to 25% of the portfolio are not uncommon.
Collecting Basic Data on a Stock
Posted on October 19, 2011 | Classroom
The primary source for the per share information is the firm’s annual financial reports. Corporate annual reports will include both summary and detailed financial statements, although even more detailed financial statements are available in a separate report, the 10K. Both of these reports can be requested from the company, or obtained at the SEC’s website.