Sometimes, financial news can be hard to understand, which is just like the professional words, such as rotary kiln, vibratory feeder, etc. Understanding them is not easy. Here, a former official of Goldman Sachs investment bank explains what his group did before the financial crisis.Josh Birnbaum was involved in synthetic C.D.O.s. These are really financial bets on whether some asset will gain or lose value. They are at the heart of the...more
President Obama now turns his attention to financial reform after his victory last month on health care.He met Wednesday with congressional leaders from both parties at the White House. Republicans and Democrats differ on what to do. But the president says there are some areas on which both sides can agree.BARACK OBAMA: "If there's one lesson that we've learned, it's that [an] unfettered market where people are taking huge risks and expecting...more
Everyone understands that it is prudent and wise to diversify the assets in various investments, such as a wide portfolio of securities or mutual funds. This is what is called "not putting all your eggs in one basket". Is to give up on finding the ideal investment in exchange for greater security and lower the risk of the entire estate.The temporal diversification is much less known but just as useful or more that diversification of assets in different assets. Spacing is to go shopping over time. They can be regular intervals or can be flexible depending on market conditions and investor knowledge. The goal is not to invest all the assets just before a major crisis or stock market crash. In the same way that asset diversification is surrendered to find the ideal investment to diversify temporary waiver of finding the ideal time to invest.Many people, especially those who are thinking about starting to invest in the stock market, spend a lot of time and energy to find on your own, or have an expert tell you, what is the best time to go from having invested 100 % of assets in fixed income to have 100% of assets in equities.The prudent and sensible answer to this question is that...more
The opportunity cost is something every investor should keep in mind permanently. This is what is left to gain by not having the money invested anywhere else other than that found today.In theory everyone (except for rare exceptions) is provided at a cost incurring opportunity because you can not have all the assets invested permanently in the...more
Diversification is based on prudence. Diversifying is to accept a lower return in exchange for a lower risk also.If an investor was able to know what is the most value will go up in the future would not need to diversify, since in that case would invest all his money on that value and get the maximum return.But in practice we do not know what that...more
Ideally find some way or system to detect the minimum (and maximum) of market movements. But it is not realistic. Some tools try to detect the minimum (and maximum) of each movement, such as graphic and technical analysis, Japanese candlestick or candlesticks, the analysis of money flows, etc.. But no tool is infallible and sometimes give false signals.Many investors expect to get advice from someone more experienced to tell them how far it will drop the stock to buy the shares that are scheduled at a better price and thus increase profitability. But to perceive the true difficulty of the task is to put it in perspective:One investor who was able to know the highs and lows become a millionaire in a short space of time. For little money to count, thanks to the leverage of derivatives such as options and futures, the results would be absolutely spectacular.Therefore, realistic strategies should be designed bearing in mind that you will not buy the smallest and will sell at the highest. Also, to have a good return, even very good, not essential.A good solution when entering stock diversification is temporary space that is shopping at the time with malice aforethought. Two possible...more
It is commonly accepted that the vast majority of mutual funds fail to even match the performance of its benchmark index (IBEX 35, Eurostox 50, S & P 500, etc.). Long term. Some may beat during certain periods of time, but are not able to overcome...more
The big Spanish banks (Banco Santander, BBVA, Banco Popular) and any other company, such as Iberdrola, have programs of reinvestment of dividends to its shareholders. For example, dividends that are charged to the shares of Banco Santander which are...more
The stock index (IBEX 35, Stock Exchange General Index of Madrid, S & P 500, Dow Jones, Eurostoxx 50, Xetra DAX, CAC 40, etc.) Do not include dividends paid by companies. This means that when, based on a particular index, a means of public...more
Average, or pyramiding, low is to buy more shares of a value that already has at prices below that made the initial purchase.Do it right or not depending on the value and the strategy that uses the inverter.I think when you trade should not be...more
The Spanish stock market is one of the cheapest (in terms of transaction costs), efficient and transparent in the world. In addition, many Spanish companies are among the strongest and best managed in the world. It is therefore logical that a large...more
Financial agreements can be accessed by any two people who are married or are preparing to marry. Financial agreements are binding - in that sense they are very hard to overturn - but they do need to satisfy the official requirements specified in...more