• Money Worries for Retiring Women

    Women face some unique financial planning issues, and the infographic below discusses some of the risks faced by women as they approach retirement. 

    From the New York Times (3 Mar 2017):

    Across all age groups, women have considerably less income in retirement than men, according to a report from the National Institute on Retirement Security. For women age 65 and older, their income is typically 25 percent lower than that of men. As men and women age, the gap widens to 44 percent by age 80.

    As a result, women were 80 percent more likely than men to be impoverished at age 65 and older, while women age 75 to 79 were three times more likely to fall below the poverty level than men the same age.

  • Best Money Practices for Millenials

    This infographic shows some best practices that millenials can use to improve their money management habits.

    For discussion:

    What can you add to the list?

    source: Nationwide

  • Trading Today Vs. Yesterday

    This video gives an interesting view of how trading has shifted from the open outcry chaos to the computer based trading of today. 

    For discussion:

    1. What are the changes that have taken place since the end of pit trading?

    2. What are the benefits and limitations of open outcry trading in the pits and on the trading floors?

    3. What are the benefits and limitations of electronic trading?

  • ICO or IPO: What's The Difference?

    Start-ups may be able to raise new money using an ICO instead of an IPO. This new fund-raising method has its critics, including the SEC. 

    From The Hill (28 Aug 2017)

    The Securities and Exchange Commission (SEC) on Monday issued a warning about investing in companies promising to raise capital by selling cryptocurrencies such as Bitcoin and Ethereum.

    The agency told investors to be wary of buying stock in companies that tout “initial coin offerings” (ICOs), sales of units of valuable currencies run through electronic ledger systems.

    As cryptocurrencies explode in popularity, accessibility, number and value, smaller companies and startups have used ICOs to build capital they’d struggle to win from venture capitalists and investment funds.

    For discussion:

    What are the benefits and risks of ICOs?

    In your opinion, what does the future hold for ICOs?

  • Credit Cards and College Students

    Credit card companies used to find new clients by advertising on college campuses. But the rules have changed:

    From US News & World Report:

    Banks have long feasted on unsuspecting young adults by offering them t-shirts, food, and other “free” knick-knacks in exchange for filling out credit card applications. The consequences, of course, were about the same as if cigarette companies were packaging toys with their cartons; the act-now-face-consequences-later attitude of most young adults set them on the road to debt for years to come, resulting in a lucrative source of interest and fee revenue for credit card issuers.

    This was supposed to come to an end with passage of the CARD Act, since the legislation expressly forbids banks from handing out tangible items to students who fill out credit card applications, on or near college campuses. It also requires that anyone under 21 who applies for a credit card demonstrate that they have sufficient income to cover the minimum payments.

  • Should You Invest In This Market?

    The equity market has been climbing, and this video tells how investors are finally getting used to the idea. In fact, it claims that investors are learning to love this market where they have been nervous to join it so far

    For discussion

    What is causing the market rally? Do you believe it is time to buy or sell this market?

  • Are We Close to a Cashless Society?

    There aren't many transactions today that require cash. You can eat, travel, take a cab or a shared ride, pay your bills, buy a snack, without ever pulling out a single dollar bill.

    From FastCompany:

    The U.S. government didn’t issue banknotes until 1862. Before that, people paid for goods and services with a mix of government-minted coins and currencies issued by private banks. And now cash is on its way out, accounting for just 40% of payments in 2012 and dropping. There are many benefits to removing cash from the economy, such as eliminating black markets and allowing more easy monetary policy. But there are also concerns when every single transaction can be monitored, examined, or manipulated. Regardless of where you fall, though, one thing is clear: As online shopping becomes yet more prevalent, and prepaid credit cards take the place of more and more low-value cash transactions, cash is well on its way to becoming obsolete.

    For discussion:

    What are the benefits and risks associated with a cashless society?

  • Alternative Financial Services

    Banks aren't the only financial institutions that offer financial services. If you want to borrow money, you can use a rent-to-own store or a pawn shop. If you want to cash a check, you can use some store cashiers or a check cashing store.

    Each type of institution has its benefits and its risks. While the benefits may be 24 hour access or loans in spit of poor credit, the risks include ever growing debt and very high costs.

    This infographics describes some of the alternative financial services that are available today. In your opinion, how much should they be regulated? What are the benefits and risks associated with these non-bank banks?

    Source: The Federal Reserve of St. Louis

  • Investing Tips for Everyone

    You can start investing now, no matter what your financial condition. The infographic below offers FIVE ideas for low budget investing. These ideas do not always involve investing in stocks or bonds and therefore are easily overlooked when making your financial plans.

    For discussion:

    What can you add to the list below?

    5-low-budget-investments-infographic

    Source: ccbank.us

  • The Wal-Mart Financial Picture

    When we determine the value of a share of stock, we need to consider the ability of the firm to generate positive cash flow.

    Consider Wal-Mart, for example. The stock is currently trading at a price of 86.62 per share and the trend over the last five years has been relatively flat, with some growth since a low in 2015. What are investors looking for in Wal-Mart stock? Probably the same thing they're looking for in any stock: earnings growth.

    For discussion:

    In the video below, consider some of the characteristics of Wal-Mart and then identify the factors that will drive the share price higher or lower. Would you invest your money in Wal-Mart shares? Why or why not?

  • The Tulip Bubble...Again

    Bonds have been going up, up, up. Just like tulips did back in the 1600s.

    From Investopedia:

    In 1593 tulips were brought from Turkey and introduced to the Dutch. The novelty of the new flower made it widely sought after and therefore fairly pricey. After a time, the tulips contracted a non-fatal virus known as mosaic, which didn't kill the tulip population but altered them causing "flames" of color to appear upon the petals. The color patterns came in a wide variety, increasing the rarity of an already unique flower. Thus, tulips, which were already selling at a premium, began to rise in price according to how their virus alterations were valued, or desired. Everyone began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.

    The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season, depleting the supply further and increasing scarcity and demand. Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners, thereby reaping enormous profits. Somehow, the originally overpriced tulips enjoyed a twenty-fold increase in value - in one month!

    Read more here

    For discussion:

    After watching the video below, in what ways is the current bond market similar to the tulip mania in the 1600s?

  • Key Person Life Insurance

    Key man risk, or key person risk, is the reliance on one or few individuals in the firm such that their departure will significantly impact the future of the business. The infographic below discusses factors that influence key person risk.

    But before we look at the infographic, here is an example of this risk from a famous departure of a "key man" in the investment management industry.

    Bill Gross is the famous bond investor that left the Pacific Investment Management Company (PIMCO). From the Fitch Wire in 2014:

    Fitch Ratings-New York-03 October 2014: Active asset management firms that rise to prominence on the strengths and reputation of powerful investment managers invariably face the risk of these managers' departures. Bill Gross' exit from Pacific Investment Management Company, LLC (PIMCO) one week ago has made for one of the starkest case studies of why key man risk should not be underestimated as a critical assessment factor in investment manager and fund ratings, according to Fitch Ratings.

    Key man risk is not uncommon in the investment management space, typically arising when an investment management company becomes heavily reliant on a single person or a few key individuals, often the founders. We also see many alternative managers as exposed to the risk.

    PIMCO, in spite of its large size, diverse number of products, established processes and solid ownership backing, was still heavily influenced by a single person, who was also its founder and most visible chief investment officer. While PIMCO has evolved to a point where its operating and governance infrastructures served to alleviate key man risk, Gross' stature as a driver of the firm's success also drove the magnitude of the risk of negative response to his exit.

    A key individual's exit can cause a material outflows, disrupt the organization's future business prospects, damage its franchise and potentially support a competitor. For PIMCO, outflows thus far have not been material enough to raise serious concerns for the financial health of the company, given its continued AUM scale and diversity, and the background and expertise of the remaining management team.

    [Read the full article here]

    key-person-life-insurance-factors

    Source: Bestinfographics.com

  • What To Consider Before Applying For a Loan

    Growing your business requires capital, and entrepreneurs have several choices to finance their businesses. They can use their savings, they can sell assets, and they can borrow money from investors or from a bank.

    The infographic below identifies a few things an entrepreneur should consider before taking on bank debt.

    For discussion

    What are the advantages of debt financing for a small business? What are the disadvantages of debt financing for a small business?

    Things to consider before applying for Debt finance from a Bank

    Source: Oaknorth.com via invographicsarchive.com

  • How To Predict The Next Financial Crisis?

    Have we learned anything from the last 10 years? How can we protect ourselves from the next financial bubble?

    This Financial Times video points out a few rules of thumb to predict the next banking crisis:

    For discussion:

    What "myths" does this video point out regarding bank crises?

    Do you agree that these are indeed "myths?" Why or why not?

  • Investing Long Term Rather than Focusing on Short Term Changes

    In this video interview, legendary investor Warren Buffett talks about the principles of investing for the long term rather than watching daily, short-term valuations. He also discusses the impact of negative rates and how these rates distort everything

    For discussion

    What is the impact of interest rates on asset values? What is the impact of negative interest rates on how businesses make their daily investing and working capital decisions?

  • What Is The Fear Index

    This video describes the relationship between stock prices and the volatility index called the VIX. This index tracks volatility based on the current prices for options on the CBOE. Call options allow holders to buy shares at a predetermined strike price when markets rise, and put options allow holders to sell shares at a predetermined strike price when markets fall. Options become more valuable when markets are highly volatile.

    This volatility is what the VIX index captures, and is used by traders to bet on whether uncertainty is rising or falling.

    For discussion:

    What is implied volatility versus historical volatility?

  • Invest in What You Know

    Billionaire Mark Cuban gives some of the same investment advice we've heard in the past: invest in what you know. He invested in what he knew--technology--and came out a winner.

    For discussion:

    What does he add to Peter Lynch's legendary advice to invest in what you know?

  • Wealth Distribution of American Families

    The new Fed Survey of Consumer Finances shows:

    1. growth in family income and wealth since 2013

    2. mean family income is higher than median income

    For discussion:

    What do the differences between mean and median family income tell us about how incomes have changed for different income groups?

  • More On High-Frequency Trading

    Computer programs play an important role in the trading of stocks. In particular, the high-frequency trading (HFT) that is driven by computer algorithms that enter trades as lightning speed account for 50 percent of all trading. This activity is controversial, however, as investors and regulators try to determine what is fair and ethical in financial markets today.

    Infographic: High Frequency Trading

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