Stock Market Performance This Week
Today, and this week, the S& P, Dow and Nasdaq rose, and word is, that small caps have a better outlook. The Russell 2000 and the small caps are suffering due to the slow pandemic recovery, less travel than expected and the well publicized high infection rates in some states.
During the last two weeks, a number of key companies in the markets have reported earnings including , , Tesla, all reported big jumps in Q2 earnings. Google has consistently beat earnings expectations and the result is continued upward pressure on .
And the meaning of new infrastructure isnt appreciated as much as it should. If the US wants to keep its competitive trade possession and ween off of China, it must have a similar modern economic and business infrastructure. The Republicans claim private business will invest, but such trillion dollar investments can only come from the government. Unfortunately, much of the bill is to prop up social programs. The more they think about the bill, the more likely it will be cancelled.
Heres your top Mega caps:
See more on the best picks for 2022 and best tech stocks to buy and which stocks you may want to part with. Why 2023? 2023 is the year we see interest rates rise and government stimulus easing and quantitative easing finally ending. It cant go on forever.
How To Buy Stocks Faq
This guide should be more than enough to get your started in terms of buying individual stocks and investing in general.
However, we do realize that investing comes with many other questions, so we’ve decided to add this FAQ for those who are looking to start investing, but still have questions about stock trading after reading this guide.
E: Dollar Cost Averaging
This isn’t necessarily an investment strategy that will determine what stocks you will buy, but it will determine how you will buy those stocks.
Dollar cost averaging is somewhat of an automated form of buying shares of companies you like.
When an investor dollar cost averages, they are deciding to set aside an allocated amount toward a particular stock, regardless of the price. This can be every week, month, semi annually or even yearly.
The key to dollar cost averaging when buying stocks is to buy an exact dollar figure of the stock regardless of the price.
So, as an example, youve allocated $1000 every two months to stock ABC. The price currently sits at $50 a share. Your first purchase allows you to buy 20 shares.
Over the course of the next two months, the stocks price has dropped to $40. Youve done your research, and you still like the company, so you purchase another $1000 in shares.
Youve now dollar cost averaged your way down in price, as you now own 20 shares from your initial purchase at $50 a share, and 25 shares at $40.
You now own 45 total shares for $2000, or an average price of $44.44 a share.
Dollar cost averaging allows you to capitalize on short term volatility and build growth over the long term. Its important to keep up with the overall health of the company.
If something has changed, especially for the worse, you may want to cease your dollar cost strategy and instead sell your position.
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Drawbacks Of Gold Securities
- Volatility. Just as with any company, a miner’s operating costs, reserves, and management all play a factor in its performance. As a result, shares prices tend to be more volatile: If bullion sinks 10%, gold stocks often plummet 15%. Miners definitely “have a higher speculative aspect to them,” says investment strategist Lyn Alden, who follows precious metals and currencies.
- Systematic risks. A gold mining company’s share performance also reflects in political and economic conditions in its native country. Some of the biggest operations are in Africa, Russia, and Latin America places that have known their share of turbulence and are often avoided by socially responsible and institutional investors.
- You don’t own gold. Gold securities are less of a pure play. They represent physical gold but you don’t have the right to redeem them for the actual metal. So they don’t provide the protection against a paper currency or financial market meltdown that the metal itself does.
The Price To Earnings Ratio
Probably the most common investment metric available to those looking to buy stocks, the price to earnings ratio is a comparison of the companys stock price to its actual earnings.
Courtesy of Yahoo Finance
The P E ratio is quite simple. It is the company’s stock price dividend by its earnings per share.
So if a company has $5 in earnings per share and a $50 stock price, its price to earnings ratio would be 50/5 or 10.
The price to earnings on its own doesnt really tell you much about a stock.
A company with a price to earnings ratio of 15 could be overvalued, while a company with a price to earnings ratio of 30 could be severely discounted.
The key is to look at the industry average, like the telecom sector. Or, compare competitors.
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How To Gift Gold Bars To Someone
One of my favorite features on the app is this gifting program. You can gift any amount of gold to someone with just their name and email address. Theyll get an email, open an account and immediately have that gold in it. So lets do $1500 of gold here and Im going to gift it to a guy I know that rocks the bow-tie. Ill put in the email and write out a quick message hereand boom, youve just made your friend a gold investor.
You can set up your account to deposit and buy gold regularly or just do it manually whenever you like. Your gold will be stored there in the vault and verified monthly. If you ever want delivery, Vaulted sends certified mail through Fedex next-day or two-day straight to your door.
Buying physical gold bars is easier than you think and can be the perfect protection against stock market risk. You can store your gold in official vaults or get delivery and keep it close. Gold bullion is the ultimate safety asset and could jump in value.
Use Futures And Options To Invest In Gold
Of all the ways to invest in gold, the riskiest is trading futures or options contracts, a form of speculative investing. Futures and options are derivatives, meaning their value is based entirely on the price of an underlying asset.
A futures contract is an agreement to buy or sell a security for a set price on a certain date, regardless of the current market conditions. An options contract, meanwhile, is an agreement that gives you the option to buy or sell a security if it reaches a certain price on or before a certain date.
In order to invest in futures or options, you need an account at an online broker that offers these vehicles. Many online brokerages allow for trading in these securities, but they may require account holders to sign additional forms acknowledging the risk of investing in these derivatives.
Once youve established a brokerage account to trade options or futures, you can buy and sell them directly via the platform. Most platforms charge a commission for all options and futures trades that varies based on the number of contracts you buy or sell.
People who choose to invest in gold via options or futures contracts need to actively monitor their holdings so they can sell, roll over or exercise their options before they expire worthless. In addition, each of these options includes a certain degree of leverage, or debt, by default, so investors who overuse them and experience market losses can see their losses mount quickly.
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Is Buying Gld Shares The Same As Buying Gold
From the average investor or trader’s standpoint, buying GLD shares is the same thing as buying gold. GLD shares will replicate exposure to gold prices, minus expenses related to storing the gold and trading GLD shares. However, it is important to understand that GLD shares do not give you ownership of physical gold. You can’t trade in your GLD shares for the gold bars, for example.
Numismatic Value And Gold Price Premiums
Numismatic value refers to certain beneficial features of a gold coin that increase its price. These include rarity, scarcity, artistic merit, age, condition, and so forth. Its up to you as an investor to decide if numismatic value is something to focus on or not. While the upfront prices are higher for gold with numismatic value, due to its rarity investors can be sure numismatic gold coins will bring a strong return on investment, yielding a high sale price no matter how volatile the market is.
To estimate numismatic value, take the total gold price of a numismatic 1oz coin and subtract the live gold spot price, fabrication costs, distribution fees and dealer mark-up. What remains is the current approximate numismatic value of the gold coin. While these numbers are sometimes hard to predict, doing the math before buying or selling your gold bullion will give you a more accurate estimate of what prices you will pay for your gold, and of what your ROI will look like.
Many collectors of numismatic gold bullion coins prefer to diversify their coin holdings with minted gold coins from around the world. The most reputable numismatic gold coins many collectors prefer consist of: Canadian gold coins, American gold eagles, Australian gold coins, Chinese gold pandas, British gold coins& African gold coins.
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Gold As An Investment
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets. Compared to other precious metals used for investment, gold has been the most effective safe haven across a number of countries.
Invest In Gold By Purchasing Stock In Gold Miners
Investing in the stock of companies that mine, refine and trade gold is a much more straightforward proposition than buying physical gold. Since this means buying the stocks of gold mining companies, you can invest using your brokerage account.
Some of the most popular stocks in this sector include:
- Newmont Corp. . Newmont is the worlds largest gold mining company, headquartered in Colorado. It operates mines in North and South America as well as Africa.
- Barrick Gold Corp. . This gold mining giant is headquartered in Toronto and operates in 13 countries around the world.
- Franco-Nevada Corp. . Franco-Nevada doesnt own any gold mines. Instead, it buys the rights to royalties from other gold miners.
Keep in mind, though, that the of gold companies are correlated with gold prices but also are based on fundamentals related to each companys current profitability and expenses. This means investing in individual gold companies carries similar risks as investing in any other stock. Single stocks may experience a certain level of volatility and do not provide you with the security of diversified funds.
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How To Invest In Physical Gold
Investing in physical gold can be challenging for investors more accustomed to trading stocks and bonds online. When it comes to physical gold, youll generally be interacting with dealers outside of traditional brokerages, and youll likely need to pay for storage and obtain insurance for your investment. The three main options to invest in physical gold are bullion, coins and jewelry.
What Is The Spot Price
The spot price is typically the base price of one troy ounce of a metal in any form. Any transaction you make in the gold market will be based upon the spot price.
Any quote of the spot price of gold in grams or kilos is typically just a conversion of the value in ounces, and not a separate trading market. Its the same for other currencies, like the euro or yuan, which are usually calculated using current foreign currency exchange rates.
Any buying and selling you want to do will be based upon the spot price at the moment of purchase or sale. Purchases are based on the ask price, and sales are based on the bid price.
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How To Buy Physical Gold
If you decide that investing in physical gold is the right move for you, here are some things to keep in mind.
1. Find a reputable dealer. From working with pushy salespeople to falling victim to scams, navigating the world of buying and selling gold can be sketchy. Sellers can inflate their products value, or use persuasion tactics to create a sense of urgency to buy immediately. Doing some homework ahead of time can help you avoid a bad investment.
You can use the National Futures Associations Background Affiliation Status Information Center to check on a firm or individuals background.
2. Watch out for fees. Gold dealers typically charge more than golds spot price, or the price at which gold trades on a commodities exchange. This premium typically consists of a dealers fee and manufacturing and distribution charges.
3. Find secure storage. People joke about burying gold for a reason: Its valuable, and because it’s a physical commodity, people may try to steal it. Its important to anticipate storing your gold somewhere safe, whether that is a literal safe or a safety deposit box at a bank. Storing gold safely can get expensive. Depending on their size, safety deposit boxes at a bank can run from $30 to a couple hundred dollars a year.
4. Consider purchasing insurance. Insurance is an additional cost of owning physical gold. If you purchase insurance, be sure your policy covers the exact type of asset you have.
Golds Only Significant Selloff Occurred Just After Its Biggest Bull Market In Modern History
Gold rose more than 2,300 percent from its low in 1970 to the 1980 peak. So it isnt terribly surprising that it fell with the broader stock market at that point. In recent years, the situation has been the exact opposite. Gold endured a 45 percent decline from its 2011 peak to its 2016 low, which was one of its worst bear markets in modern history. At the same time, this isnt entirely a shock either, given its quick gains during the 2008 crisis and the 2011 crash.
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Importance Of Spot Gold Price
Just like in any other form of investing, future ROI gained is set upon purchase. Tracking the live spot gold price should be the most important variable in your decision to invest. When purchasing any gold bullion investment, just like in all other forms of investing, buy your gold as low as possible and sell in waves near the peak.
Invest In Gold Etfs And Gold Mutual Funds
Investing in gold ETFs and mutual funds can provide you with exposure to golds long-term stability while offering more liquidity than physical gold and more diversification than individual gold stocks. There are a range of different types of gold funds. Some are passively managed index funds that track industry trends or the price of bullion using futures or options.
The SPDR Gold Shares ETF , for example, holds physical gold and deposit receipts, and its price tracks the price of physical bullion. VanEck Vectors Gold Miners ETF , on the other hand, is a passively managed fund that tracks an underlying basket of stocks of gold mining and refining companies.
Gold mutual funds like Franklin Templetons Gold and Precious Metals Fund are actively managed by professional investors. These funds aim to beat the returns of passively managed index funds. In exchange, they charge relatively high expense ratios.
Just remember, like gold stocks you arent buying gold, just paper that is theoretically backed by debt or equity of mining companies or futures and options contracts for physical bullion. This means the value of gold mutual funds and ETFs may not entirely match up with the market price of gold, and these investments may not perform the same as physical gold.
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Are Investments Over $10000 Taxed Differently
Investments over $10,000 in gold are not monitored by the government. Unlike cash investments, making a larger investment in gold means you benefit from fewer overhead prices & costs. Seeking advice from a financial advisor is recommended to ensure you will make the wisest decision with your investment strategy.
Caveats To Buying Physical Gold
Know where your gold is coming from
Gold mining can leave a significant toll on the environment, to say nothing of social, human rights and governance issues, as many gold mines are located in conflict-affected or otherwise high-risk areas.
In 2019, the World Gold Council took steps to implement guidelines for member companies, as did the International Council on Mining and Metals. Both require that participating mining companies publish information on their progress publicly, making it easier for consumers to find.
If youre buying gold bullion rounds or bars, its best practice to look for pieces stamped with information about the maker, weight, and purity of the gold.
When purchasing gold jewelry, some retailers are taking additional transparency measures similar to those implemented against so-called blood diamonds from conflict areas. Theyre often sold under the tags ethical or sustainable.
Understand the fees involved with physical gold
Buying physical gold entails a number of different costs that you wont find when investing in financial instruments. These include the storage fees in a bank deposit box or precious metals depository, insurance costs, transportation and delivery costs, transaction fees whose percentage is based on the value of the trade, and even fabrication fees. Gold dealers may also impose buy-back fees on any transaction. Small purchases may also involve processing fees and small lot fees.
Confirm the purity of your precious metals
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