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Should You Use Put Options to Hedge Your Investments During the Pandemic?

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The stock market is irrational at the best of times. It cannot even claim to be a reflection of the economy’s health at this point. The derivative market is three times larger than the value of the world’s financial assets (all stocks, bonds, bank deposits) — showing that the market activity isn’t really that much to do with the actual value of its own assets.

S&P 500 for example has already rallied back after its March crash to the same price as Christmas time last year. Remember Christmas time last year? Black Friday, Cyber Monday, Christmas sales, no Coronavirus, everyone working…

The market doesn’t quite feel right at the moment, and it’s volatile. So, we’re going to explore what options are, and how option trading for hedging may be appropriate in dealing with this 2020 madness.

The rising popularity of Options

Options are often perceived to be a complex investment tool, and one that is used in riskier portfolios. They’re not widely used by retail investors, and they’re often argued to be a zero-sum game.

Buying calls and puts means that your winning percentage is likely going to be around 50%, which is less than most long-term stock investing strategies.

Now, this isn’t strictly true; they don’t have to be complicated nor risky, though there is somewhat of a learning curve. Times are clearly changing though, because there’s been 40% more options trades than this time last year. A new wave of investors on top of a turbulent, volatile market is what’s created this demand for options.

So, what exactly are options?

Options are contracts, and those contracts give the buyer the right (but not the obligation) to buy or sell an underlying asset at a specific price. These are trades for either income, speculation or to hedge against risk. They’re a derivative because their value is derived from an asset, and isn’t the asset itself.

The difference between call and put options is the difference between buying and selling. A call option is a contract giving the buyer the right to buy, whereas the put option contract gives the right to sell the underlying asset at a given price.


They are often used for speculative purposes, to wager on the direction of a stock. This isn’t the best use for them per se, but this strategy can be rewarding. They’re often used to hedge against a declining stock market, but you of course would benefit from this if you had a whole portfolio full of call options with no puts — because you want to be able to have a guaranteed sell price in the event of a market crash. Otherwise, you’re in a situation where the stock market falls by 10% but the calls lose 99%.

Why? Because you don’t actually own the stock, you only owned the right to buy the stock. But the benefits of this is that you’re in a leveraged situation where you can potentially increase your returns, and you can also limit your potential losses.

What does an option look like?

Let’s take a call option for example: You will see a call option quote as having the option type on it (in this case, call), what security it pertains to, it’s expiry, its strike price (what the option holder can purchase) and the premium (a price per share for this option). All options expire on the third Friday of the month listed. The day after this Friday, the option has expired.

Before this though, you don’t even need to exercise the option if you’re “in the money” and the market price is higher than the strike price. Instead, you can simply sell the option contract itself (now you can see the true nature of derivatives).

But if you were “out of the money”, i.e. the price had decreased, then you have no reason to exercise the purchase of these now-overpriced stocks. So, the options expire and you lose all of that premium money.

Should you be looking into using PUT options?

Put options are quite a bit different to call options. There’s one thing speculating on prices to go up and trying to nip in there early by leveraging a call option (that could then go on to become useless), and there’s another using it as a form of hedging (you can think of it like paying a premium for insurance).

In such turbulent times and a truly scary market which is beyond irrational, it should frighten the life out of you knowing that your net worth is tied up in such an absurd market. And if the market doesn’t scare you enough, freak incidents might.

Mistakes

It was only recently that the Solid8 CEO, a San Francisco tech firm, was caught on camera hurling racist abuse to a couple in a restaurant. The company this morning has been obliterated on Google Reviews, and if it was on a public exchange, there would be zero doubts around a price plummet.

In fact, Elon Musk knocked $14 billion off Tesla’s market value in one tweet. This is the kind of world we’re living in, where Hertz have gone up 8 times in value, two days after declaring bankruptcy, whilst you have unstable self-sabotaging CEOs self-immolating their own companies.

Conclusion

So, this brings us to protecting ourselves from a market collapse or your specific stocks from plummeting… Having put options with a guaranteed sell price would be an effective way to protect these losses. Of course, there are two concerns here.

The first is that your put option is redundant and out of the money if the stock continues to rise (which, every stock in this market seems to be rising… Until the next crash at least). Secondly, if you buy a put option too late, the premium will cost too much, making it an expensive way to hedge.

Before using any form of derivative, understand the risks inherent to them. These can be great tools for rounding off a solid portfolio with some hedging, but if used exclusively, their leveraging nature can make them dangerous. Afterall, at least if you buy the stock yourself, time is the best healer in the event of a crash, unless they’re one of the companies that doesn’t survive it — and usually those recoveries are quick.

Read more great articles at Vintage Value Investing.

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By: Adam Albertson
Title: Should You Use Put Options to Hedge Your Investments During the Pandemic?
Sourced From: www.vintagevalueinvesting.com/should-you-use-put-options-to-hedge-your-investments-during-the-pandemic/?utm_source=rss&utm_medium=rss&utm_campaign=should-you-use-put-options-to-hedge-your-investments-during-the-pandemic
Published Date: Tue, 11 Aug 2020 15:42:28 +0000

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What is the Difference Between ETFs and Index Funds?

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ETFs and index funds attempt to mimic the growth of the stock market. The general trend of the stock market in its few hundred years of existence has been upward, even if it has its daily ups and downs. So, the goal of a diversified portfolio, like those available in both ETFs and index funds, is to tap into that growth for individual consumers. Usually, these assets are geared toward slow and steady, long-term growth.

Before you start looking for your next investment opportunity, it’s smart to become more familiar with the different kinds of financial products available. This post will cover what you need to know about the difference between ETFs, or exchange-traded funds, and index funds. The two investment tools are fairly similar, share many of the same perks, and are often suitable for similar long-term investing goals. However, they do differ in a few interesting ways. Some of the topics we’ll cover related to ETFs vs index funds include:

Before you call your broker, let’s cover the basics.

Understanding ETFs

An ETF stands for exchange-traded fund. There’s a lot going on in that term, so let’s break it down. “Exchange-traded” means it’s traded on a stock exchange, the same way that investors might trade shares in an individual company. “Fund” simply means it’s a large collection of money that many people can add to. Put the two together, and you get a fund where investors can pool their money into a collection of stocks and bonds.

ETFs come in two broad categories that are important to know about before investing any capital: index ETFs and actively managed ETFs.

  • Indexed ETFs track a market index, like the Dow Jones or S&P 500. These are collections of large companies whose overall trajectory closely mirrors the progress of the market as a whole. Over history, the general trend of the economy has been upward. So, the idea behind an index-based ETF is to simply tap into that growth by putting the pooled funds into a collection of stocks that will track market trends.
  • Actively managed ETFs are managed by a fund manager who intentionally invests in certain securities in order to reach a specific investment goal. The idea behind an actively managed fund is that the investors, and the fund manager, are hoping to grow high-yielding assets faster than they might by simply matching a market index.

For the sake of this post, we are mostly concerned with the difference between index funds and ETFs, so we’ll focus more on index-based ETFs because they are much more common than their actively managed counterparts.

Index fund basics

Index funds are a general name for a fund that seeks to track a market index. So, technically speaking, an indexed ETF is a type of index fund. Index funds, however, can also be mutual funds, which are another investment product that you can purchase.

A mutual fund is a company that bundles investors’ money and puts it toward a set of securities and bonds with a particular investment goal in mind. Index mutual funds try to track a market index, and so they tend to grow with the economy over time. Other mutual funds may try to out-perform the market, or try to cash in on a new and exciting innovation that presents an investment opportunity.

Index funds, however, tend to be the “slow and steady wins the race” option. In fact, 80% of actively managed funds (funds that are attempting to out-perform the market) did worse over time than the S&P 500. This means that, if you had invested in an index fund tracking the S&P 500 instead, you would likely have made more money than someone who invested in an actively managed fund.

If it sounds a lot like an index-tracking ETF and an index-tracking mutual fund are pretty similar, don’t worry; that’s because they are. However. there are still a few important differences to point out, which we will go over next.

Index funds vs ETFs: What’s the difference?

The difference between an index-based ETF and an index-based mutual fund is pretty technical, but understanding investing often requires working through technical terms. First, in a certain sense, simply comparing ETFs vs index funds is a bit of a false dichotomy. That’s because ETFs can be index funds, as long as they’re structured to track an index.

In a broad sense, the two vehicles are geared toward the same purpose, too: earning you money slowly but (mostly) surely over the long term (years to decades). You’re likely to find both ETFs and indexed mutual funds included as part of retirement portfolios.

Both ETFs and mutual funds (indexed or not) are SEC-registered investment companies. ETFs, however, trade just like stocks meaning that you can buy or sell shares at any time the market is open. Mutual funds, on the other hand, can not be traded during the day. Mutual Funds are priced at the end of each trading day, so if you placed a buy trade for a mutual fund on Monday the shares would not be purchased until Tuesday. This main difference is because ETFs, like stocks, can only be purchased in whole shares. So if an ETF is priced at $25 per share and you had $80 to invest you could only buy 3 shares for $75 dollars. In a mutual fund you can buy decimals of shares. For example, if you still had $80 to invest and a share of a mutual fund was $25 then you could get 3.2 shares.

Mutual funds may have simpler, more hands-off reinvestment opportunities. That is, if you earn dividends, they may be immediately reinvested in your fund. ETFs, on the other hand, may charge a small fee for this transaction; however, you can also turn on automatic reinvestment of dividends for ETFs, as well.

Ultimately, choosing to invest in an ETF or Mutual fund will depend on your personal preference and the options you have based on where you are investing.

How do I know what’s right for me?

Once you’re ready to start investing, it’s normal to wonder what options are right for you, and for your specific situation. Your particular investment path will depend primarily on three key variables:

  1. Your goals: What are you investing for? Are you saving for retirement, or are you planning a destination wedding or dream house?
  2. Your time horizon: How long do you have to reach your goals?
  3. Your risk tolerance: Are you okay with being a little risky in hope of a larger return, or would you rather play it safe and let slow and steady win the race?

Knowing what investment strategy is right given your answers to questions 1, 2, and 3 above is the first step in finding the portfolio that’s right for you. Whatever your specific situation, however, ETFs and index funds may be a solid choice.

Here are some of the benefits of investing through an ETF or index fund.

Long-term growth potential

As we noted above, the focus with index-based mutual funds and ETFs is to match the slow and steady growth of the market. While downturns do occur, and there may be periods where your investment portfolio is looking rougher than you’d like, chances are still good that you’ll be able to grow your investments in the long run.

In fact, the average historical growth of the S&P 500 is around 10% a year. That means, by investing in index funds that track that market index, you may be able to make similar gains — averaged over the long term.

Higher chance of long-term gains vs other assets

Take another look at the chart displayed above. It states that over 80% of actively managed funds under-performed the S&P 500. This suggests that, when investors try to be clever and invest in such a way that they beat the growth of the stock market, eight out of ten times, they fail to do so.

Again, if your aim is long-term growth, you may have a higher chance of achieving it by simply using an index-based ETF or index-based mutual fund to steadily grow your money, rather than risking it on an actively managed ETF or mutual fund that tries to out-perform the market.

Relatively low fees

Actively managed funds also tend to cost more. That’s because they require fund managers to actively research and pick out securities to invest in. Index funds (whether mutual funds or ETFs) avoid this by requiring little maintenance from fund managers. So, fees for investing tend to be lower.

ETF & index fund essentials: How to get started investing

Getting started investing can seem daunting, especially with so many options and technical terms floating around. Don’t worry; there are simple, concrete steps you can take to start taking advantage of ETFs and index funds. Consider these options:

  • Brokerage services: Brokerage services professionally manage your personal investment portfolio. They might help you plan for retirement, help you take advantage of tax breaks, or help you optimize investments for a specific goal. You can let them know you’re interested in investing in ETFs or through a mutual fund.
  • Robo investors: Rather than paying for an expensive human broker, a robo investor allows you to open a retirement account or personal investment portfolio with just a few taps of your phone. Cleverly programmed algorithms tailor an account to your preferences, including investing in ETFs and index funds.
  • Solo investing: You can choose to manage on your own and purchase a mutual fund directly from the company that runs it, or buy an ETF directly from a stock exchange. This might be a better option for those who know a bit about how to invest in stocks. (You may also want to take a look at our guide to investing mistakes to avoid before rushing to the exchanges.)
  • Retirement allocation: If you have an IRA that you’ve set up on your own, or you have a 401k through your employer, there’s a good chance you may already be invested in ETFs or an index-based mutual fund. If not, it’s a good idea to consider these options as part of your portfolio.

ETFs vs mutual funds vs index funds, and actively managed vs index-based — the terms can be tricky, but with the right background knowledge, you can make informed investment decisions to help grow your future.

Sources:

Investor.gov | Investopedia | SPIVA Statistics & Reports

The post What is the Difference Between ETFs and Index Funds? appeared first on MintLife Blog.

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By: Mint.com
Title: What is the Difference Between ETFs and Index Funds?
Sourced From: blog.mint.com/investing/etf-vs-index-fund/
Published Date: Tue, 28 Jul 2020 17:49:35 +0000

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Dividend Yield Formula: How to Calculate Dividend Yield

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INVESTING ADVICE

Whether you’re a seasoned investor or are just getting started, chances are you come across one investing term more often than others: dividend yield.

While defining “ In this post, we’ll explain what dividend yield means, why it matters, and show you how to use the dividend yield formula. Use the links below to navigate ahead, or read end to end for a more detailed overview of the topic.

What is Dividend Yield?

Before we define and learn how to calculate dividend yield, let’s make sure we’re all on the same page about dividends. Dividends are payments that companies make out to their shareholders for owning stock in their organization. Dividends can be earned from stock across a myriad of industries, including, real estate investments and consumer staples. Dividends are typically based on the company’s profit and performance throughout the year, and are generally paid out quarterly.

Definition of Dividend Yield

Dividend yield is the metric that can be used to help dividend investors anticipate how much a company pays out to shareholders in the form of dividends on an annual basis, compared to the current price of their shares.

Why does it matter? By comparing a company’s annual dividend share with the individual cost per share, investors can estimate their profit margins, and thereby, make more informed investment decisions.

Although calculating dividend yield can arm investors with essential information, it’s important to note that historical trends don’t always indicate future performance. In addition to finding a stock’s dividend yield, you may also want to consider some other variables and sources before making any investment decision—more on that a little later on.

How to Find Dividend Yield

To find dividend yield, you’ll need to start by identifying two important figures first: annual dividend per share and current share price. These numbers can both be found on the major stock market indexes. Note: to find the most accurate predictions, you’ll want to use the most updated data available.

Now that you have these details, you can calculate dividend yield using the dividend yield formula.

Dividend Yield Formula

To find the dividend yield, you must divide the dollar value of the annual dividend by the current share price.

Dividend Yield = Annual Dividend Per Share ($) ÷ Share Price ($)

Once you’ve divided the annual dividend per share by the share price, multiply the number by 100 to find the dividend yield percentage.

Dividend Yield Formula Example

To better understand how the dividend formula works, let’s take a look at a fictional example.

So if you buy shares today at $40 per share, you can estimate that you’ll earn 2.5% per year from dividends  (before tax).

There are a few things to consider once you’ve calculated dividend yield:

  1. If you reinvest your dividends, you get 2.5% compounded. For example, if you had enough shares invested and received $25 in dividends, you could reinvest these dividends to buy 62.5% of an additional share of stock, and that portion of stock next quarter will then also pay you a dividend. You can increase the dividends you will earn each quarter by reinvesting them (assuming the dividend rate and share price stayed the same).
  2. The higher the stock price goes, the lower the current yield. For example, if the stock price rises to $55 per share, that $1 per share is reduced to 1.8% ($1 ÷ $55 = 1.8%). However, you should calculate your dividend yield based on the price per share that you paid when you bought stock, and not on what it becomes later.
  3. By the same mathematical reasoning, when the stock price falls, the dividend yield rises. For example, if the price per share falls from $40 down to $32, the dividend yield rises to 3.125% ($1 ÷ $32 = 3.125%).

Important Notes on Dividend Yields

Now that you know how to calculate a stock’s dividend yield, let’s take a closer look at how this metric can be applied to buying, selling, and strategizing for your investment portfolio.

Making the most of your dividends

Anyone who tries to time the purchase or sale of stock to maximize dividend income should be aware of how the dividend distribution dates are figured. The ex-dividend date is the date on which stockholders earn their respective dividends. However, investors should note that those dividends are not paid out until several weeks later. So before you buy or sell shares with the intention of earning dividend income, find out when the ex-date occurs. If you buy after that date (or sell before), you will not earn the quarterly dividend.

Using the dividend yield formula to evaluate investments

The dividend yield should be a part of your evaluation of your portfolio and in the selection of companies whose stock you are thinking of buying if you are using a dividend investment strategy. Some companies pay exceptionally high dividends and yet are considered very safe investments. This is not always the case, so if you just pursue the highest possible yield, it makes sense to perform a few fundamental tests first, and to determine whether or not it is safe to buy shares.

Never pick a stock based solely on dividend yield. But when all else is comparable, a higher dividend can work as a means for reducing your list of prospects.

In addition to calculating a stock’s dividend yield, here are some other things you can do to empower and inform your investment decisions:

  • Think about investing in the context of your personal finances first. Only you can make the appropriate financial decisions for your lifestyle and goals. Use financial tools like Mint to help you gain perspective on where your budget and financial wellness stands.
  • Understand the element of risk, and assess your comfort level. All investments involve some level of risk, from stock volatility to market changes, so it’s a good idea to establish your comfortability with investment risk first. Ask yourself how much you’d be willing to lose in the hopes that you’ll actually turn a profit.
  • Consider your options. If you’re not comfortable plunging into the stock market just yet, you might look for other ways to start growing your wealth. High-yield savings accounts and retirement plans offer less-risky options to boost your bucks.
  • Do your research. Publicly traded companies are required to provide consumers with important financial information so that those wanting to invest can make informed fiscal decisions. By looking to gov, Investor.gov, and other reputable sources, you can arm yourself with the knowledge to make the right decisions based on your goals.

Wrapping Up

Calculating dividend yield can provide some useful insight for investors looking to earn dividend income. To find this metric, simply divide the annual annual dividend per share by the current share price, then multiply by 100.

Investors should keep in mind that dividend yield is just one piece of the puzzle when it comes to vetting investment opportunities. Doing extra research, reviewing historical trends, and considering your own financial goals will help you make the best decision for your financial health.

Need help tailoring your investment strategy? Head over to our investment calculator to start crunching the numbers!

Michael C. Thomsett is author of over 60 books, including Winning with Stocks and Annual Reports 101 (both published by Amacom Books), and Getting Started in Stock Investing and Trading (John Wiley and Sons, scheduled for release in Fall, 2010). He lives in Nashville, Tennessee and writes full time.

Investing 101: How to Calculate Dividend Yield was provided by Minyanville.com.

The post Dividend Yield Formula: How to Calculate Dividend Yield appeared first on MintLife Blog.

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By: Minyanville.com
Title: Dividend Yield Formula: How to Calculate Dividend Yield
Sourced From: blog.mint.com/investing/investing-101-dividend-yield-01042011/
Published Date: Wed, 15 Jul 2020 19:21:24 +0000

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Stock Card Review: Easy and Effective Stock Research

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What if there was a way to cut through the massive amount of data we face when analyzing stocks? There is more data available to individual investors than ever before. Efficiently summarizing all that data and trying to make sense of it in a way to make actionable decisions can save us all a lot of time. This is what a service like Stock Card strives to do.

What is Stock Card?

Stock Card is a tool that lets you cut through a lot of the complexity of the market and summarizes stocks into ratings in a few categories. This way of looking at stocks makes it easy to see what the advantages and limitations of each stock are. When a stock is performing well, you can easily see that at a glance without having to dig into the numbers. But the interface is not so simplistic that it ignores value. Stock Card aims to give users an easy-to-use overview of the market.

What does Stock Card Offer?

Stock Card allows you to research specific companies that interest you, find new stock ideas, and monitor a portfolio quickly and efficiently. You can filter through thousands of stock symbols to find particular categories that interest you, like “undervalued stocks” or “company strength.”

 

Each stock is represented with a square made up of four quadrants. These quadrants are “growth” at the top left, “strength” at the top right, “performance” at the bottom left and “value” at the bottom right. Growth is represented by a chart segment, strength by a dumbbell, performance by a building with columns and value with a rectangle and a dollar sign.

A color is given to each quadrant based on whether the stock is good, neutral or bad in that aspect. For example, Apple (NASDAQ:AAPL) is green in all quadrants except value, as it almost always trades at a high multiple. Electrolux AB (OTC:ELUXF) is gray in the value quadrant because there is not enough information to estimate the value of the company’s stock. The site uses green for “good,” yellow for “neutral,” red for “bad” and gray for “unclear.”

Research Specific Companies

You can research a certain company by typing the stock symbol into the search field under “Research Specific Companies.” Let’s use EEFT as an example. The site brings up a summary page, which lays out many interesting insights about the stock.

On the left side of the page, you can see how many users viewed the stock, how many are following and watching the stock, how many own the stock and how many have sold the stock. On the right side of the page, you will see many quantitative and qualitative measures of the stock. The company’s high growth potential is identified as good, while “Stable operations”, “Same return as the market” and “Fair share price” all cause a neutral rating.

You can click on each of these cards for more analysis so you can dig into exactly what is driving each rating. A meter shows the investor sentiment for the stock. The “Investors’ strategy for EEFT” section shows what investors from the Stock Card community plan for this stock. You can click the box and add your own strategy to the record. At the bottom of this area, the stock chart for EEFT is displayed.

Below the analysis section, there is a box containing key information for the stock. Information discussing the business’s operations, the IPO date, and the company’s market value are all laid out in an easy-to-read format. A link is provided to the company’s investor relations website, making it easy to dig deeper directly from the source.

Additionally, the “Industries, themes, and country” box shows the categories that the stock fits into. You can see that EEFT is a technology and software-related company. You can use these collections to find similar stocks based on these traits. Lastly, the “Earnings report and dividend-related dates” box shows earnings release dates and dates related to the dividends for the stock. 

At the bottom of this page, we have the content that anchors from the cards at the top of the page, which goes into detail for each rating. We see that the company has high growth potential because the “Technology” sector as a whole is expected to have moderate growth and the “Software – Infrastructure” sector is expected to have high growth.

The next box is Stable operations, which is a mixed bag regarding EEFT. There is a combination of positive and negative signs that combined to contribute to the moderate rating. “Stable operations” is split up into important segments, such as Sales growth, Profitability, Cash availability, and Management effectiveness.

You can click on each of these to drill down into why each of these subcategories got the rating they did. You can similarly drill down on the next cards, “Same return as the market” and “Fair share price.”

Next is the Investor Sentiment card. This card uses a variety of fundamental and technical indicators to measure the investor sentiment for the stock. These include the Chaikin Money Inflow, Short Interest, Simple Moving Average and Relative Strength Index. With EEFT, you can see that all the measures are neutral except for the simple moving average, which is bearish.

Then we come to the Analyst Consensus section, where you see a pie chart of how financial analysts see the stock. With 9 buys and 2 holds, analysts are bullish on the stock.

The Qualitative Research card shows the areas of strength, things to watch and reasons to worry.

Discover Interesting Stocks

By clicking “Find Interesting Stocks” on the Home page or Discover on the menu bar at the top, you arrive at the Discover page. This page shows you Your View History, “Stock Cards You Follow” and suggests other stocks based on the stocks that you have previously viewed. Other tabs include “Featured Themes,” which shows you original collections of stocks grouped together to fit a theme.

For example, Microsoft, Slack Technologies, and Zoom are all components of the Work-From-Home theme. Other themes include “Companies shaping the future” and stocks that fit a particular style investor, such as stocks for dividend seekers or risk-takers.

“Popular on Stock Card” gives you the most-viewed cards, the top gainers and top losers for that day, and stocks reporting earnings today or this week. The “All Stock Cards” tab gives you all the available stocks, which you can narrow down using the filters on the left.

The filters on the left allow you to filter out stocks based on stock price, market capitalization, growth potential, company strength, past investment return, value, dividend yield and the age of the stock card.

Monitor Your Investments

Clicking on “Monitor Your Investments” from the Home page or clicking “Monitor” on the top menu takes you to your Portfolio page. Here, you can see your view history, which forms a portfolio of its own and you can see how it would perform. You can also see your watchlist and add or remove stocks from it. You can track the performance of your watchlist as well. Finally, you can create an unlimited number of portfolios and you can track their performance.

Get Well-Researched Picks

Clicking “Get Well-Researched Picks” on the Home page or clicking the “Stock Picks” option on the top menu gets you to the Portfolio Store. Only subscribers to the VIP plan can view the stocks in these portfolios. This feature offers you many well-performing portfolios and a few that haven’t performed so well.

For example, Phoenix is a portfolio composed of COVID-19-resilient companies like Slack Technologies and Clorox. This portfolio gained 86.76% from March 31, 2020 to August 3, 2020. However, The Green Fund, a portfolio of cannabis-related stocks, didn’t perform so well in the face of COVID-19, losing 82.16% over much the same period.

Advantages

Here are some things that stand out about Stock Card that make it an excellent tool for stock analysis.

Great for Beginners

Stock Card is great for individuals who are new to investing and is a great way to offer investing newbies a simple and easy-to-grasp view of stocks. It clearly defines the four categories that make up a stock rating, making it easy to pick out stocks that fit all the criteria.

These are all solid criteria for judging stocks, but experts will have the advantage of being able to interpret the nuance inherent to each category. The simplicity of the analysis may be a good starting point for an expert, but the site is just what a beginner needs.

Simple Interface and Great Community

You can’t get much simpler than abstracting stocks down into a set of cards, and that’s what Stock Card aims to do. The website is uncluttered and very clean, with no wasted space. In addition to the Stock Card site itself, there is also a blog, podcast, Facebook group and YouTube channel.

The blog gives you good information about starting to invest in stocks and about the different categories of stocks. But much of the content leads you back into the site into parts where you will need a premium subscription. Their YouTube channel provides a lot of video content about how to use the site effectively.

Affordable Plans

The Starter plan limits you to five stock cards each month. In order to really dig into a particular group of stocks or a sector, you will need access to more. Luckily, the Prime and VIP plans are affordable—$11.99/month and $14.99/month respectively at the time of this writing.

The Prime plan allows unlimited stock card views and allows you to request three stock cards for lesser-known companies.

With a Stock Card VIP plan, you get to make three stock card requests with priority response. Also, VIP plan members get the Stock Card Team’s decision for each stock card, which is a quick overview on whether the stock is a good investment and why. The VIP plan also nets you the Portfolio Store, Weekly Stock Picks and a Monthly Investment Theme.

Limitations

Given all its advantages, Stock Card is probably not for everyone. Here are a few limitations that the platform suffers from.

Probably Not Enough for Experienced Investors

Experienced investors may find Stock Card a good starting point or a kind of advanced stock screener, but they are unlikely to really feel the need for it. Fundamental traders and value traders might feel more at home here, but even they will want to dig deeper than what the site provides.

The service does a good job of summarizing fundamental measures into magnitudes (good, bad, etc.), and incorporates many value investing metrics like price-to-book and price-to-sales. Other software like Stock Rover are probably better-suited for experience investors who are detail oriented.

Starter Plan Too Limited to be Useful for Extensive Research

The Starter Plan, which is free, only allows you to view five stock cards per month. While this may be perfectly adequate for someone new to stock investing, someone who wants to really dig into finding stocks meeting certain criteria they’re looking for will need to upgrade to the Prime or VIP levels.

Is Stock Card for You?

If you are a beginning trader or someone with a budding interest in the stock market, Stock Card would be a great tool to view the vast array of stocks out there in a way that clearly frames them in an easy-to-digest way.

If you are an experienced investor with a fundamental or value investing perspective, Stock Card may be an interesting experience for you. While the data is mostly quantitative figures expressed in a qualitative way, it may be a good way to cut through some of the noise similar to how you might use a stock screener.

Read more great articles at Vintage Value Investing.

—————-

By: Dillon (Mr. Vintage Value Investing)
Title: Stock Card Review: Easy and Effective Stock Research
Sourced From: www.vintagevalueinvesting.com/stock-card-review-easy-and-effective-stock-research/?utm_source=rss&utm_medium=rss&utm_campaign=stock-card-review-easy-and-effective-stock-research
Published Date: Wed, 12 Aug 2020 15:37:05 +0000

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