Defining Yield: A Word of Many Meanings

The term “yield” is thrown about often by the financial press and others. The trouble is that yield has many different meanings and implications for investors. This workshop will try and sort out some of the major differences. It will not, however, attempt to present mathematically all of the possible yield calculations created by institutions…

 

Shareholder Letter Revelations: Can You Trust the Leadership?

Judging a firm’s leaders is an important step in analyzing a stock for investment. But it’s a murky area that offers no solid statistics to review. And most investors don’t get the chance to actually meet a company’s CEO and other officers in order to get a feel for how the firm is run. The…

 

Options: The Concept of Equivalent Strategies

Naked put selling is equivalent to covered call writing in terms of where and how profits and losses are incurred. But it can be advantageous in terms of cost savings and potential reward. Talk to an investor who is involved in a covered call writing program about his doing some naked put selling instead and…

 

Valuing Growth Stocks

If you pay too much for a stock, your return on investment won’t be satisfactory. In the AAII world of Shadow Stocks—companies with some history of growth, little or no dividend yield and a small amount of the stock outstanding owned by institutions—you hope to profit mainly through appreciation in the price. You expect that…

 

Mistakes Must Serve a Purpose: Some Early Lessons

Experience is that marvelous thing that enables you to recognize a mistake … when you make it again. —Franklin P. Jones It is not that easy to talk about one’s mistakes. In the early days of Tocqueville Asset Management, I suggested that the senior partners jointly write a report about their most memorable investment mistakes…

 

The Covered Call: An Income-Generating Options Strategy

The covered call provides extra income to a buy-and-hold strategy. In exchange for this income, there is a risk of lost opportunity. If the stock’s price rises well above the fixed strike price of the call, you have your 100 shares of stock called away below current market value. For some investors, this is an…

 

Using Sell Signals to Improve Results

There are three elements of successful portfolio management: buying, holding and selling. Yet many investors focus their energies almost exclusively on buying and fail to make a plan for selling. It is crucial to find the best stocks and buy at the right time, but to keep profits, it is equally key to understand when…

 

When to Sell and Nail Down Your Profits—While You Still Have Them

When you go through a complete market cycle—from the start of a new bull to the bottom of the next bear—your real objective is to nail down as much of the profits you’ve built as possible. But most investors give back more of their profits than they should, and too many give back the whole…

 

Investors Prefer Dividend-Paying Companies in Market Downturns

It may not be comforting, but individuals are rewarded over the long term for investing in stocks because stock prices can go up or down. Short-term market volatility and uncertainty creates a risk premium to entice investors to buy and hold stocks. It is important to note, however, that all stocks do not react equally…

 

Why Technical Analysis Matters

Technical analysis is a bit of a misnomer since it is really not that technical. A better name for the use of charts to make investment decisions might be risk/reward analysis or even market psychology. Sure, there are some complex mathematical concepts involved with some of its more esoteric indicators. But at its core, technical…