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The Advantages And Disadvantages Of Investing In Penny Stocks

written by shedinvests71

What are Penny Stocks?

Are you considering investing in penny stocks? While penny stocks have the potential to deliver high returns, they come with significant risks as well. Before you invest, it’s important to understand the advantages and disadvantages of investing in penny stocks.

In this article, we’ll discuss what penny stocks are, the advantages of investing in them, and the potential downside if you choose to invest in penny stocks.

We’ll also discuss the potential for fraud and other risks associated with investing in penny stocks. By the end of this article, you’ll have the information you need to make an informed decision about whether or not to invest in penny stocks.

Advantages of Investing in Penny Stocks

Investing in penny stocks can provide a wide range of benefits to those who are willing to take the risk and put in the work.

Penny stocks are stocks that are typically inexpensive and traded on exchanges outside of the major marketplaces—especially over-the-counter (OTC) exchanges. And, while the term penny stocks conjures up images of investors getting rich quick, the reality is that investing in penny stocks carries a lot of risks.

But if you understand the inherent risk associated with penny stocks, there are some advantages that you may want to consider as you decide if this type of investing is right for you.

The main advantage of investing in penny stocks is their low cost. With penny stocks, you can purchase a large number of shares for very little money. This makes it easy to diversify your investments with penny stocks and still stay within your budget. Additionally, penny stocks may have the potential to provide you with higher returns than other forms of investments.

In addition to penny stocks being low cost, they are also highly liquid. This means that you can purchase and sell penny stocks quickly, allowing you to take advantage of opportunities as they arise. Additionally, trading penny stocks on certain OTC exchanges may offer certain tax breaks.

Finally, penny stocks can provide investors with a lot of excitement. Because penny stocks are volatile, there is potential for huge gains or losses. For some investors, this potential for high gains or losses can provide a level of excitement to their lives that is missing from other forms of investments.

In summary, the advantages of investing in penny stocks include their low cost, high liquidity, potential for tax savings, and potential for huge gains or losses that makes them attractive investments for those willing to take the risk.

Low Initial Investment

Investing in penny stocks is attractive to many investors, as it requires less money than other types of investments. The initial stake in a penny stock is relatively small, ranging between $100 to $500.

This makes it a great option for those who are new to investing, as it is a low-risk way to get started. Additionally, investing in penny stocks is less expensive than traditional investments, making it a cost-efficient way to reach your financial goals.

Furthermore, many penny stocks have the potential for a large return, which makes it even more worth the initial lower cost.

High Potential Returns

When it comes to investing, investors are always searching for the next opportunity that could lead to huge payoffs.

Penny stocks offer exactly this – the potential for large returns. While it’s true that penny stock investments do come with significant risks, if you have the right knowledge, experience and budget, investing in these stocks can be a great way to make a lot of money.

With careful research and a sound investment strategy, you may be able to benefit from the potential high returns that these stocks offer.

Disadvantages of Investing in Penny Stocks

When it comes to penny stocks, there are both advantages and disadvantages. While penny stocks can offer great returns on your investment, they can also be a risky investment.

The main disadvantage of investing in penny stocks is their volatility. As penny stocks are less liquid and traded on smaller exchanges, they tend to be more volatile and can experience extreme price swings. This makes them riskier than stocks traded on major exchanges.

Another disadvantage of investing in penny stocks is that they are often highly speculative. Many penny stock companies are not profitable and may not even have any real business operations or products. Speculative stocks like these can be hard to value and can turn out to be complete failures. This can make it difficult for investors to determine which stocks are worth investing in.

Finally, investing in penny stocks can be risky due to the potential for manipulation. With penny stocks, the price can be easily manipulated by traders and investors interested in profiting from short-term price movements.

In summary, investing in penny stocks can be a risky venture and should only be done with caution and careful research. Its important to understand the potential risks and make an informed decision about whether or not penny stocks are right for you.

High Risk Investment

Investing in penny stocks comes with an inherent risk of losing money due to their highly volatile nature. Penny stocks tend to involve a higher risk than most other forms of investing and as such require special consideration.

Penny stocks are often traded on the Over-the-Counter Bulletin Board or OTCBB, which is a trading platform for penny stocks that are not listed on the major stock exchanges. This can make it harder to get accurate and timely information on the penny stocks you are investing in.

Additionally, penny stocks are often subject to fraud and some companies whose stocks are traded on the OTCBB have little to no information available about them, which can lead to larger losses if the stock falls.

Therefore, it is important to do extensive research before investing in penny stocks.

Illiquidity

When investing in penny stocks, illiquidity should be taken into consideration. Illiquidity defines how quickly an asset can be turned into cash.

As penny stocks have a low market capitalization, they tend to rank low on liquidity, meaning it can take a while to find a buyer in the market. As such, an investor may be unable to quickly convert the investment into cash if needed, which could be an issue if you have a short-term investment goal.

As such, it is important that investors consider the illiquidity of penny stocks before investing.

High Volatility

Investing in penny stocks can be a very high-risk venture since the stock prices of penny stocks can be very volatile. The prices of penny stocks can change drastically and quickly, depending on a variety of factors, such as news and speculation.

Although the potential to make a large profit is possible, it often comes with the same risk of large losses.

Moreover, penny stocks tend to be more illiquid than normal stocks, meaning there may be difficulty in buying or selling stocks. This means that it is easy to become trapped in a stock, unable to sell at a fair price.

Therefore, investors should be wary of investing in penny stocks due to the higher volatility and risk associated with them.

Potential for Fraud

Investing in penny stocks has its fair share of risks, one of the main ones being the potential for fraud.

Since penny stock companies often lack compliance regulations and the proper filing of financial statements, investors may not be able to assess the true value of the penny stock, leaving them vulnerable to manipulation.

Additionally, penny stocks are often traded on the Over-the-Counter Bulletin Board (OTCBB) which is not as regulated as the major stock exchanges and leaves investors open to fraud.

In order to protect oneself from fraud when investing in penny stocks, always make sure to do thorough research before investing, understand the risks involved, and if possible, consult a financial advisor.

29 March 2023 0 comment

Articles

The Risks and Rewards of Investing in Commodities

written by shedinvests71

What Are Commodities?

Are you looking for a way to diversify your investment portfolio? If so, commodities may be the right choice for you. There are many types of commodities — agricultural, industrial, and financial — and each carries its own set of risks and rewards.

In this article, we’ll take a look at the different types of commodities, discuss some of the potential risks and rewards of investing in them, and provide some helpful tips for making wise investments.

We’ll also explore the reasons why investing in commodities can be an excellent way to hedge against inflation and diversify your portfolio. So without further ado, let’s get started!

Types of Commodities

From agricultural to financial, there are many different types of commodities to consider when it comes to investing. In this article, we will explore the three main categories of commodities: agricultural, industrial, and financial.

We will provide an overview of each type of commodity and its unique characteristics, so investors can make informed decisions about investing in the commodities market.

Agricultural Commodities

are commodities with a primary value derived from agricultural products, such as livestock, grains, and crops. Investing in these types of commodities can be rewarding but also present a variety of risks for investors.

Agricultural commodities are prone to volatility in terms of both demand and supply due to seasonal variations, weather conditions, and political unrest.

Additionally, agricultural commodities are also subject to changes in government regulations as well as subsidies, which can also impact demand and pricing. However, despite the risks, investing in agricultural commodities can offer investors potential returns that exceed the market average.

Additionally, agricultural commodities can be used as a diversification tool, allowing investors to spread out the risk of their portfolios.

Overall, investing in agricultural commodities involves a certain degree of risk, but the potential rewards may make the risk worth it.

Industrial Commodities

are those which are used to produce goods and services, as opposed to being consumed as a final product.

Examples of industrial commodities include energy sources like crude oil, natural gas, and coal; metals like iron ore, copper, and aluminum; and agricultural products like corn and wheat.

Investing in industrial commodities can be a highly lucrative form of investment, as the industrial sector is heavily reliant on the global economy.

In times of economic growth, prices for industrial commodities tend to rise, and there are a wide range of investment instruments such as futures, options, and exchange-traded funds to allow investors to access this market.

However, it is important to keep in mind that industrial commodities are highly volatile, and so potential investors must understand and be prepared for the risks of investing in this market.

Financial Commodities

are essentially securities or ‘investment products’ that derive their value from a portfolio of underlying investments.

Examples of financial commodities include stocks, bonds, mutual funds, and other financial instruments. Investing in these commodities involves taking substantial risks and rewards that must be thoroughly understood.

Financial commodities can offer a great return if managed properly, but also can lead to serious losses if not handled carefully.

Investors should be well informed of the risks involved and the potential rewards before investing in any financial commodity.

Risks of Investing in Commodities

Investing in commodities carries inherent risks, such as market volatility, commodity price fluctuations, and political risk.

These risks can significantly impact the market prices of commodities and the investor’s portfolio.

In this section, we will explore the different risks of investing in commodities and how investors can protect themselves from potential losses.

Market Volatility

is an unavoidable risk of Investing in commodities. The prices of commodities are constantly fluctuating due to changing forces, such as supply and demand, weather conditions, and currency rate fluctuations.

These changes can lead to significant losses if investors are not prepared to take on the risk of investing.

As with any investment, investors should always research the market trend and potential risks before Investing in commodities.

Commodity Price Fluctuations

Investing in commodities can be a riskier venture due to the fact that commodity prices are highly volatile and unpredictable.

Commodity prices can fluctuate quickly and dramatically due to changes in the market and other factors such as supply and demand.

This volatility can mean large rewards for investors willing to take risks, but it can also lead to large losses if not carefully managed.

As with any form of investing, it is important to understand the risks and be comfortable with them before investing in commodities.

Political Risk

is an important risk to consider when investing in commodities. Investing in commodities often involves investing in foreign markets, which naturally exposes investors to a heightened risk of changes in political or economic conditions around the world.

These unexpected changes can cause dramatic shifts in supply and demand and could have a major impact on the market.

For example, an upcoming election in a major producing country could lead to uncertainty in the political landscape, which can cause volatile and unpredictable market prices.

Therefore, it is important for investors to stay informed about geopolitical factors that could affect the commodities market before investing.

Rewards of Investing in Commodities

Investing in commodities has the potential to provide investors with a number of lucrative rewards.

This section will discuss the potential for high returns, how commodities can be used to hedge against inflation, and the diversification benefits of investing in commodities.

Potential for High Returns

Investing in commodities can be a high-risk, high-reward endeavor. With the right strategy and an understanding of the market and its dynamics, investors can see returns far greater than what they would see with other traditional investments.

Investing in commodities can be risky, however, due to the volatile nature of the market and the high prices of commodities.

However, for those investors who are willing to take on the risk, the potential returns can be significant.

Hedging Against Inflation

is a major reward of investing in commodities. Inflation occurs when the cost of goods and services increases. Investing in commodities can help protect investors from the effects of inflation, since they often rise when inflation increases.

Investing in commodities can provide a hedge against the buying power of currency, meaning that investors are able to retain the same amount of value and purchasing power even if inflation rises.

Although certain commodities might be more susceptible to price fluctuation than others, investments in commodities can often help to reduce overall portfolio risk.

Diversification Benefits

are an important reward of investing in commodities. Investing in commodities can help to diversify a portfolio by providing an alternative to more traditional investments like stocks and bonds.

Investing in commodities may also reduce the risk of investing solely in stocks or bonds, as commodities do not always move in the same direction as other financial assets.

Commodities can act as a hedge against inflation and other macroeconomic shocks, helping investors minimize losses due to adverse market movements.

For investors who choose to diversify their portfolios, commodities can provide a reliable source of income and the opportunity for capital appreciation.

Conclusion

Investing in commodities can be a lucrative way to diversify one’s portfolio, but it’s important to remember that these investments come with a certain degree of risk.

While investing in commodities can potentially provide significant returns, there’s also the very real possibility of losses.

It’s imperative for any investor to do their due diligence and understand the intricacies of the commodities market before investing.

Doing research, staying informed about market news, and keeping tabs on economic data can help mitigate the risks associated with investing in commodities and ensure that the rewards of investing in this volatile asset class outweigh the risks.

27 March 2023 0 comment

Articles Stock Markets

Some notable companies affected by Silicon Valley Bank

written by shedinvests71

As of March 11, 2023 the following notable companies have disclosed information related to their financial holdings in Silicon Valley Bank:

Roku Inc. (ROKU) – Roku’s SEC Form 8-K states, “The Company has total cash and cash equivalents of approximately $1.9 billion as of March 10, 2023. Approximately $487 million is held at SVB, which represents approximately 26% of the Company’s cash and cash equivalents balance as of March 10, 2023. Approximately $1.4 billion of the Company’s cash and cash equivalents is distributed across multiple large financial institutions…”

Roblox Corp. (RBLX) – Roblox’s SEC Form 8-K states, “Of Roblox Corporation’s (the “Company”) $3 billion of cash and securities balance as of February 28, 2023, approximately 5% ($150 Million, I.K) is held at Silicon Valley Bank. Thus, regardless of the ultimate outcome and the timing, this situation will have no impact on the day to day operations of the Company.”

Ginkgo Bioworks Holdings, Inc (DNA) – Gingko Bioworks’ SEC Form 8-K states, “Only the cash balance of the Company’s wholly-owned subsidiary Zymergen Inc. is held in deposit accounts at SVB, representing approximately $74 million or 6% of the Company’s cash and cash equivalents as of December 31, 2022. The Company does not maintain any other material accounts or lines of credit with SVB.”

Sangamo Therapeutics, Inc. (SGMO) – Sangamo Therapeutics’ SEC Form 8-K states, “As of March 10, 2023, Sangamo had approximately $34.4 million in deposits with SVB, substantially all of which is uninsured.”

Rocket Lab USA, Inc. (RKLB) – Rocket Lab’s SEC Form 8-K states, “On March 10, 2023, the Company announced that it has deposit accounts with SVB with an aggregate balance of approximately $38 million, which is approximately 7.9% of the Company’s total cash and cash equivalents and marketable securities as of December 31, 2022.”

LendingClub Corporation (LC) – LendingClub’s SEC Form 8-K states, “LendingClub’s relationship with SVB is limited to funds on deposit of $21 million, which amount is not material to the Company’s liquidity position or capital levels, and does not pose a risk to the Company’s ongoing business or operations. ”

Payoneer Global Inc. (PAYO) – Payoneer’s SEC Form 8-K states, “Of the Company’s approximately $6.4 billion in total cash balances as of December 31, 2022, less than $20 million is held at SVB, which is held through a combination of cash deposits and money market funds purchased through SVB but managed by a third party asset manager. The vast majority of Payoneer’s cash balances are held across more than 10 global systemically important banks.”

Compugen Ltd. (CGEN) – Compugen’s SEC Form 8-K states, “Compugen Ltd. (the “Company”), through its U.S. subsidiary, currently holds approximately 1.3% of its cash and cash equivalents ($1 Million, I.K) with SVB, and considers its exposure to any liquidity concern at SVB as immaterial.”

QuantumScape Corporation (QS) – QuantumScape’s SEC Form 8-K states, “The Company notes that it has very limited exposure to SVB, with only a low single digit percentage exposure relative to both the Company’s total liquidity and total assets.”

Fubotv Inc. (FUBO) – Fubo’s SEC Form 8-K states, “fuboTV Inc. (the “Company”) is aware that the Federal Deposit Insurance Corp. has taken control of Silicon Valley Bank (“SVB”). The Company does not hold any deposits at SVB or have any other direct investments at SVB.”

Sofi Technologies Inc (SOFI) – Sofi’s SEC Form 8-K states, “SoFi Technologies, Inc. (the “Company”) informs its investors that it does not hold assets with Silicon Valley Bank. The Company has an approximately 40 million dollar lending facility that is provided through Silicon Valley Bank, which is unaffected by the Federal Deposit Insurance Corporation’s receivership of Silicon Valley Bank.”

Lemonade (LMND) – Lemonade’s SEC Form 8-K states, “Lemonade, Inc. (“Lemonade”) is aware of media reports indicating liquidity concern at Silicon Valley Bank (“SVB”). Lemonade considers its exposure to any liquidity concern at SVB as immaterial given that it currently has less than $7,000 in cash at SVB, which is significantly below the FDIC-insured limit of $250,000. We believe our cash and assets are well diversified to minimize risk, and Lemonade uses large financial institutions for its commercial banking services that are not currently exposed to liquidity risk”

Summary

This is not even the full list, that Is the scarey thing here

Sources

https://www.washingtonpost.com/business/2023/03/11/silicon-valley-bank-companies-affected/

https://www.thedailybeast.com/roku-etsy-vox-media-companies-impacted-by-silicon-valley-bank-crash

https://www.pbs.org/newshour/economy/silicon-valley-banks-failure-shakes-companies-worldwide-from-wine-country-to-london

12 March 2023 0 comment

Articles

The Silicon Valley Bank Debacle Exposes a Flawed System.

written by shedinvests71

This article is an opinion piece, the biggest joke is I have to put this at the start because search engines like Google know best about Financial experts – OK then, just lik ethe clown on NBC who a couple of days ago said to invest in this bank. Brilliant

I am not a financial advisor. The ideas presented in this article are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.

financial crash image

Whats happened

Silicon Valley Bank’s bankruptcy is shaking Wall Street.

The big question on everyone’s mind: is contagion to the financial system likely?

To answer that question, let’s go back to what transpired in the last few hours.

On Wednesday, March 8, 2023, Silvergate, which had happened to be in danger for some time ever since the FTX debacle, declared that it would end operations.

On Thursday, March 9, 2023, it was learned that Silicon Valley Bank was running out of money. SVB’s share price dropped by 60%.

On Friday, March 10, 2023, SVB was in bankruptcy, taken control by the FDIC. A dismal week for the banking world in America!

In the final hours, SVB attempted to build up working capital but failed. Then SVB attempted to sell itself to a larger sized bank, but without success. Right now, the FDIC will try to protect SVB’s customers’ assets.

The important thing to remember here is that many other banks are experiencing the same problem as SVB. Their bond portfolios are locked at a low rate. As depositors withdraw their money in droves, banks have to sell their bonds at huge losses to rapidly recover the cash they are short.

Whats a bank run

When a bank like SVB faces a bank run, the bank’s deficits become enormous.

SVB’s issues began when the bank reported a $1.8 B loss on the sale of its AFS (Available for Sale) bond portfolio. Rumours started to spread that SVB was in difficulty with massive interest rate risk on its $91B portfolio.

A frenzy was developed amongst SVB’s clients with a bank run that started fairly quickly. The mass withdrawals of customers fed the vicious circle SVB was in by continuing to raise its losses as the bank attempted to protect the withdrawal needs of depositors.

How did this happen

SVB was the casualty of a flawed and not fixable monetary and financial system.

According to this system, SVB theoretically had the assets to cover customer deposits as required by law. The real problem here is that these assets were not liquid enough. Furthermore, when these assets are illiquid, can they be liquidated without triggering huge losses?

The answer was no in the case of SVB and that is how it best gave rise to the second-largest bank failure in American history. The largest since Lehman Brothers in 2008!

With the Fed’s rapid rate hike, some other banks are facing the same liquidity problem as SVB. Take the example of First Republic Bank whose stock lost up to 50% when SVB scared the banking market on March 9, 2023.

However, the word contagion does not seem to apply to bond portfolio concerns. This outcome has little to do with SVB’s connection with other banks.

In fact, managing interest rate risk is an inherent challenge for every bank. SVB has failed. The fear that this induces could however impact other banks, but this would come from customers who would withdraw their deposits en masse from other commercial banks.

In the coming hours and days, investors and analysts will scrutinize all United States banks to find which ones have the same prospective weaknesses as SVB. First Republic Bank has been pinpointed. Various other bank names will come out.

This purge will be considered vital by those who say that banks with bad business practices are the only ones at risk. According to these people, banks that responsibly manage their customers’ deposits and investments are safe.

Comparisons with previous debacles

A lot of want to match up the failure of SVB to the failure of Lehman Brothers in 2008 or Bear Stearns in 2008.

Both of these banks were investment banks while SVB is a commercial bank. A commercial bank can have issues as the SVB case shows, but there is no comparison to the 31x leverage that Lehman Brothers possessed at the time of its collapse.

The situation is different, however the risk on commercial banks is very real with this rapid rise in the Fed’s key rates. The fact that this hike is not going to stop quickly as Jerome Powell said not long ago will put more burden on the United States banks.

The recession that this will induce also will be horrendous for hard working people – the previous crashes have shown this. As for the banks there will be hatred and anger for a few years and then they will

Silvergate and SVB opted for to do trade with FTX, but so did a lot of other overvalued technology companies. The crash of these companies and the FTX fiasco is currently being paid for. The problem is, as always, that it is the customers who will foot part of the bill for the mismanagement by these bankers.

The present banking system is flawed. End of story . Is the current system reparable? I have major doubt sbut then again this might be yet another excuse to push the digital currencies that many countries are peddling – almost all at the same time.

Other banks

For those who question if banks like Wells Fargo or JPMorgan are in danger, here is what Michael Barr, the Fed’s vice chair for supervision, said in the last few hours:

” There are obviously large institutions that are also exposed to these risks too, but the exposure tends to be a very small part of their balance sheet. So even if they experience the same deposit outflows, they are more insulated.”

For those who challenge that this system is moved towards collapse, I believe what is happening at this moment should give them pause. But most importantly, look for a plan B that is separate of the control of central banks and governments. A pure unit of wealth.

Opinion

I have always diversified – crypto, stocks, etfs, gold and silver and many other investments.

The issue is this will impact the less wealthy the most as it always does but this is what happens. The previous major crash, there was a chance to make an example and put in measures. This didn’t happen and that was partly the fault of the US president at the time- Barack Obama.

I’ll let you read that on your own time but the utter cheek that governments are trying to hammer Bitcoin and crypto and yet turn a blind eye to this shambles, it says a lot.

Now, I believe there were issues with what SVB invested in – I had heard that the companies met a lot of current day criteria, not necessarily whether they were sound businesses who could make money but ticked a lot of the ESG boxes. I’ll see what I can dig up

Disclaimer

This content is for education and entertainment purposes only. investinginfo does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.

12 March 2023 0 comment

Articles

3 sites that provide you with free real time stock charts

written by shedinvests71

Here are a few of the best free real-time stock charting platforms to have a look at.

TradingView

TradingView gives free real-time stock charts that are aesthetically appealing and can possibly be modified with hundreds of technical indicators.

TradingView is also a social media site. Traders may easily share their charts and ideas with each other. You can even follow other traders and discuss stocks and other markets.

Be careful of who you’re looking at since not every person posting charts and ideas will be a successful trader.

Traders can generate watch lists and alerts, see which stocks are in demand, and even trade straight from TradingView charts by accessing a broker. You are able to use the Strategy Tester to test a built-in strategy for an appropriate stock and time. The Pine Editor feature also lets you develop your own strategy to try.

TradingView also gives you chart indexes, stocks, bonds, futures, forex, cryptocurrencies, contracts for differences (CFDs), economic data, and global data, although futures data are delayed.2 You can purchase upgraded options that give additional features and official real-time data for stocks and futures markets around the globe.

TradingView provides a substantial list of markets, indexes, and economic data. You won’t have to swap charting platforms to view charts from other markets. It’s also the most socially integrated real-time stock chart of the free providers on our list.

StockCharts

StockCharts offers both paid and free products. StockCharts’ free capabilities are pretty effective. You may do bar, line, or candlestick charting with in excess of 30 line studies and modifiable technical indicators.

The free version only lets you plot three indicators at one time.

Data is disclosed on either a once-a-week or daily basis, but you can only go back three years for data unless you have a paid subscription. Other drawbacks to the free StockCharts option are that you can’t save your screens and the graphics are rather boring.

You can spend as low as $14.95 a month for a basic subscription or as much as $39.95 a month for a Pro subscription if you want more bells and whistles. The Extra subscription, with a slightly more advanced user interface, is available for $24.95 a month. A free one-month trial subscription at the Extra level is offered for brand-new customers.

You are able to upgrade your subscription plans even more by including a real-time data plan. The free, Basic, Extra, and Pro accounts come with a free data plan with Better Alternative Trading System (BATS) real-time data in the U.S., but all other markets are delayed. For more real-time data, you can select from a variety of plans that concentrate on specific stock exchanges.

Each costs an added $9.95 per month.

Yahoo Finance

Yahoo Finance provides free real-time quotes for stocks specified on the Dow Jones and Nasdaq indices.5 It also delivers real-time news. Yahoo Finance’s free interactive charts give in excess of 100 technical indicators.

Yahoo! Finance lets you make an unlimited list of stocks to follow and supplies daily trading ideas. It also enables you to link to your brokerage account to carry out trades built on your charted strategies.

For $35 a month or $350 annually, you can upgrade to Yahoo’s Essential tier, a service that offers enhanced charting features, third-party investment research, live chat support, and fewer ads, to name a few features. A 14-day free trial is provided to see if you consider the Essential level worth the money.

Yahoo in addition gives its Lite tier at $250 a year. It consists of features like daily trade ideas, fair value analysis, advanced tools, and 24/7 account support.

28 February 2023 0 comment

Articles

The Risk to Reward Ratio Explained

written by shedinvests71

The risk/reward ratio measures the potential profit an investment can produce for every dollar of losses the trade poses for an investor.

How Does the Risk/Reward Ratio Work?

All investing has risk. Whilst investors generally are aiming to make money from their investments, there’s the possibility to lose some or all the money invested as well. The risk/reward ratio is a tool investors are able to use to compare the possible profits and losses of an investment.

The risk/reward ratio works by comparing an investment’s potential losses to its possible profits. If you can calculate the possible risk and reward of a trade, all you must do is divide the risk by the reward to find the ratio. Think of it this way: It’s the profit you can look for on an investment per pound worth of risk involved in a trade.

This makes it possible for the risk/reward ratio to produce an easy insight into whether or not an investment is worthwhile making. This is popular with day traders who want to move in and out of the market quickly as it allows them to choose about how much to risk to generate a potential gain.

How To Calculate Risk/Reward Ratio.

To calculate the risk/reward ratio, use this formula:.

Potential loss/ potential profit = risk/reward ratio.

Some investors use the reward/risk ratio, which reverses the above formula. However, for reward/risk ratios, higher numbers are better for investors.

Investors determine the potential risk and reward of investment by setting profit targets and stop-loss orders. A stop-loss lets you automatically sell a security if it falls to a certain price.

Example of Risk/Reward Ratio.

Let’s say you’re thinking about two different investments: a high-risk, high-reward stock and a low-risk, low-reward bond. The stock has the possibility to increase in value by 50% but also has the possibility to lower in value by 25%. The bond has the capacity to grow in value by 5% but only has the potential to reduce in value by 2%.

If you work out the risk-to-reward ratio for each investment, you’ll get the following:.

High-risk, high-reward stock: 2:1 (50% potential profit divided by 25% potential loss).
Low-risk, low-reward bond: 2.5:1 (5% potential profit divided by 2% potential loss).

In this scenario, the low-risk, low-reward bond actually has a higher risk-to-reward ratio than the high-risk, high-reward stock. This means that the bond is a better investment choice if you’re trying to find a higher potential profit compared to a potential loss.

Another example might be if you’re considering two stocks: one with the possibility to increase in value by $10 per share and the possibility to decrease in value by $5 per share, and another with the potential to increase in value by $5 per share and the potential to decrease in value by $1 per share.

The risk-to-reward ratio for each investment would be as follows:.

First stock: 2:1 ($ 10 potential profit divided by $5 potential loss).
Second stock: 5:1 ($ 5 potential profit divided by $1 potential loss).

In this particular situation, the second stock has a higher risk-to-reward ratio, meaning that it’s a better investment choice if you’re trying to find a higher potential profit compared to a potential loss.

A risk/reward ratio that is less than 1 indicates an investment with greater potential reward than risk. Ratios higher than 1 indicate investments with more risk than the potential reward. A ratio equal to 1 indicates equal risks and rewards.1.

In general, it’s much better to make trades with low risk/reward ratios as that suggests the investments will make more profits than losses.

However, the risk/reward of trade only demonstrates two basic pieces of information: potential gains or losses. It doesn’t indicate anything about the odds of generating either outcome.
Note.

For instance, a $1 lottery ticket with a $1 million jackpot has a risk/reward ratio of 0.000001. This is although that the odds of basically winning the jackpot are extremely low.

For this reason, lots of investors use other tools to account for things like the probability of attaining a certain gain or experiencing a certain loss.
Alternatives to the Risk/Reward Ratio.

Risk/reward ratio is just one tool traders are able to make use of to analyze investment opportunities. Day traders frequently use a different ratio, the win/loss ratio to consider their investments. This ratio measures how many of an investor’s trades turn a profit as opposed to how many generate a loss.

For example, an investor who makes 10 trades, five of which make a profit and five of which lose money, will have a win/loss ratio of 50%.

The higher an investor’s win/loss ratio, the more risk they can accept on individual trades because those trades are most likely to work out, assuming they put in a similar amount of attention and due care when making investing decisions.

Investors with low win/loss ratios should focus on investments with lower risk/reward ratios to ensure that their profits from winning trades exceed the losses from their more frequent unsuccessful trades.2.

Pros and Cons of the Risk/Reward Ratio.

Pros.

Easy to calculate: Risk/reward ratio uses a really simple formula, which means investors can quickly use it to make decisions on the fly.
Assists with risk management: The ratio explains the risk of an investment, giving an investor more information with which to determine whether or not to make a trade.

Cons.

May not be totally accurate: Risk/reward ratios are calculated using potential profits and stop-losses set by the investor. A stock may rise or fall in price too quickly for the investor to sell at the preferred price, meaning actual profit or loss could exceed the theoretical gain or loss.
Does not account for the odds of gains or losses: Risk/reward ratio considers only the potential profit and loss an investment could produce. There’s no space in the calculation to consider the likelihood of either outcome.
The ratio takes a look at binary outcomes without considering stable prices: Stocks can rise or fall in price, but they may also hold firm. Risk/reward ratios fail to consider this opportunity, which is a disadvantage for day traders who want to make regular trades.

What It Means for Investors.

Individual investors can use the risk/reward ratio when taking into consideration whether to make a trade. You may also use the ratio to decide where to put your price targets or stop-loss orders to create a trade that has the risk/reward potential you wish for.

For long-term investors, risk/reward ratio is less valuable because you are more likely to hold shares through a variety of price fluctuations.

28 February 2023 0 comment

Articles Stock Markets

10 of the best-yielding UK dividend stocks

written by shedinvests71

In this article, we look at 10 dividend stocks from the FTSE 100 with high dividend yields. These are stocks in companies that I might look at if I was trying to build up a dividend portfolio in UK stocks.

Disclaimer: This is my opinion and is not to be considered financial advice

Again, you should take a look at the following criteria

Check the company’s earnings and revenues are growing
Making sure the company has not got any large debts
Looking at the dividend history
Check the earnings per share divided by dividends per share
Check the dividends per share divided by earnings per share

In the 10 examples below we show the cost per share at the time we wrote the article, the total value of the company’s shares (market capitalisation), the price-to-earnings ratio, and the dividend yield at the time of writing based on the company’s last reported dividend and the current buy price

We also display the last 5 dividends, this i sto highlight the value and you can get a rough idea if there is a trend or not bear in mind the last 2 years and the difficult circumstances around the world

1. Antofagasta – 6.47%

Antofagasta plc is a Chilean multinational. It is one of the most important conglomerates of Chile with equity participation in Antofagasta Minerals, the railroad from Antofagasta to Bolivia, Twin Metals in Minnesota, and other exploration joint ventures in different parts of the world. Antofagasta is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

Open: 1,748.50p

Market capitalisation : £17.06 bn

P/E ratio: 14.98

Dividend yield: 6.47%

YEAR	VALUE
2021	$1.43
2020	$0.55
2019	$0.18
2018	$0.44
2017	$0.51

2. PHOENIX GROUP HOLDINGS PLC – 7.82%

Phoenix Group Holdings plc is a provider of insurance services based in London, England. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

Phoenix Group comprises a number of regulated life companies in the UK:

Phoenix Life, a closed life insurance business covering Phoenix Life and Phoenix Life Assurance (former Pearl Assurance)
Phoenix Wealth, the UK-based pensions and investments previously offered by AXA Wealth
Standard Life
ReAssure, covering ReAssure and ReAssure Life and also including Ark Life
SunLife

Open: 623.40p

Market capitalisation : £6.26 bn

P/E ratio: n/a

Dividend yield: 7.82%

You can see with this one that its been fairly stable over the last 5 years for payouts

YEAR	VALUE
2021	48.90p
2020	47.50p
2019	46.80p
2018	46.00p
2017	50.20p

3. Anglo American – 6.01%

Anglo American plc is a British-listed multinational mining company with headquarters in London, England. It is the world’s largest producer of platinum, with around 40% of world output, as well as being a major producer of diamonds, copper, nickel, iron ore and steelmaking coal. The company has operations in Africa, Asia, Australia, Europe, North America, and South America.

Anglo American has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. The company has a secondary listing on the Johannesburg Stock Exchange.

In the 2020 Forbes Global 2000, Anglo American was ranked as the 274th -largest public company in the world

Open: 3,607.00p

Market capitalisation : £47.70 bn

P/E ratio: 6.12

Dividend yield: 6.01%

2021 had 2 special dividends which boosted the overall dividend payout, they typically have 2 dividends throughout the year an interim and a final

YEAR	VALUE
2021	$4.19
2020	$1.00
2019	$1.09
2018	$1.00
2017	$1.02

4. Legal & General – 7.24%

Legal & General Group plc is a British multinational financial services and asset management company headquartered in London, England. Its products and services include investment management, lifetime mortgages (a form of equity release), pensions, annuities, and life assurance. As of January 2020, it no longer provides general insurance following the sale of Legal & General Insurance to Allianz.

It has operations in the United Kingdom and the United States, with investment management businesses in the Gulf, Europe, and Asia.

Legal & General is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Legal & General Investment Management (LGIM), the asset management arm of L&G, is the 10th largest investment management firm in the world by AUM.

It is also the second-largest institutional investment management firm in Europe

Open: 254.20p

Market capitalisation : £15.23 bn

P/E ratio: 7.41

Dividend yield: 7.24%

Constant growth and consistent dividend payout. 2022 will be interesting, and the steady growth keeps growing – one to watch for 2023. They typically have 2 dividends throughout the year an interim and a final

YEAR	VALUE
2021	18.45p
2020	17.57p
2019	17.57p
2018	16.42p
2017	15.35p

5. M&G – 8.90%

M&G plc is an investment manager headquartered in the City of London. Since its de-merger from Prudential plc, it has been listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

M&G operates two fully owned subsidiaries: M&G Real Estate, providing global real estate investment services, and Infracapital, a specialized infrastructure investment firm

Open: 203.10p

Market capitalisation : £4.83 bn

P/E ratio: 61.18

Dividend yield: 8.90%

Another company that seems to have constant growth and consistent dividend payout. 2022 again will be interesting, will the steady growth keep growing – it one to watch for 2023. They typically have 2 dividends throughout the year an interim and a final. The 2022 interim was higher than 2021, so looks promising,

YEAR	VALUE
2021	18.30p
2020	18.23p
2019	15.77p

6. Rio Tinto – 9.30%

Rio Tinto Group is an Anglo-Australian multinational company that is the world’s second-largest metals and mining corporation. The company was founded in 1873 when a group of investors purchased a mine complex on the Rio Tinto, in Huelva, Spain, from the Spanish government. It has grown through a long series of mergers and acquisitions. Although primarily focused on the extraction of minerals, Rio Tinto also has significant operations in refining, particularly the refining of bauxite and iron ore. Rio Tinto has joint head offices in London and Melbourne

Rio Tinto is a dual-listed company traded on both the London Stock Exchange, which is a component of the FTSE 100 Index and the Australian Securities Exchange, which is a component of the S&P/ASX 200 index. Rio Tinto was ranked as the 114th-largest public company in the world

Open: 6,233.00p

P/E ratio: 5.77

Dividend yield: 9.30%

YEAR	VALUE
2021	$10.40
2020	$5.57
2019	$4.43
2018	$5.50
2017	$2.90

7. Persimmon – 17.11%

Persimmon plc is a British housebuilding company, headquartered in York, England. The company is named after a horse that won the 1896 Derby and St. Leger for the Prince of Wales (the future Edward VII). It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

Open: 1,385.50p

P/E ratio: 5.54

Dividend yield: 17.11%

YEAR	VALUE
2021	235.00p
2020	345.00p
2019	0
2018	235.00p
2017	235.00p

8. Abrdn – 7.14%

Abrdn plc is a United Kingdom-based global investment company headquartered in Edinburgh, Scotland. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

It is the largest active asset manager in the UK, with investments in equities, multi-asset, fixed income, liquidity, sovereign wealth funds, real estate, and private markets. In July 2021 the company changed its name from Standard Life Aberdeen to Abrdn. The registered office of the company is at 1 George Street in Edinburgh

Open: 201.20p

P/E ratio: 14.46

Dividend yield: 7.14%

YEAR	VALUE
2021	14.60p
2020	14.60p
2019	21.60p
2018	21.60p
2017	21.30p

9. Imperial Brands – 6.88%

Imperial Brands plc (formerly Imperial Tobacco Group plc), is a British multinational tobacco company headquartered in Bristol, England. It is the world’s fourth-largest international cigarette company measured by market share after Philip Morris International, British American Tobacco, and Japan Tobacco, and the world’s largest producer of fine-cut tobacco and tobacco papers.

Imperial Brands produces over 320 billion cigarettes per year, has 51 factories worldwide, and its products are sold in over 160 countries. Its brands include Davidoff, West, Gauloises Blondes, Montecristo, Golden Virginia, Drum, and Rizla

The risk in this stock is the ongoing battles against smoking in various countries, how that affects the stock price, in the long run, we will have to see

Open: 2,054.00p

P/E ratio: 7.73

Dividend yield: 6.88%

YEAR	VALUE
2022	141.17p
2021	139.08p
2020	137.71p
2019	206.57p
2018	187.79p

10. Admiral Group – 6.21%

London Stock Exchange, is a constituent of the FTSE 100 Index, and markets the Admiral, Bell, Elephant, Diamond, and Veygo vehicle insurance brands, as well as launching the price comparison services Confused.com and Compare.com. The group employs more than 10,000 people across its brands.

Open: 2,117.00p

P/E ratio: 10.76

Dividend yield: 6.21%

YEAR	VALUE
2021	279.00p
2020	177.20p
2019	119.30p
2018	126.00p
2017	114.00p

Disclaimer

26 February 2023 0 comment

Articles Stock Markets

What exactly are Penny stocks

written by shedinvests71

In this article we look at penny stocks, what they are, and our take on them.

Disclaimer: This is my opinion and not to be considered financial advice

What is a penny stock?

A penny stock is a unit of common stock that trades with a low share price: these are valued at under £1 in the UK and under $5 in the US stock markets.

The companies will also have a lower market cap: in this case this is under £100 million in the UK and under $300 million in the US.

These stocks are often considered higher-risk investments, the general thinking for a lot of people is finding the ‘next big thing’ and capitalizing on the stock price if it was to suddenly take off. These companies will also not pay dividends – normally, so if that’s your investment strategy you will be out of luck here.

Now it is important to realize that these companies are not just listed on the smaller markets like FTSE AIM, some are actually FTSE 100 or FTSE 250 companies. Currently, in the UK, Lloyds bank and Vodafone are under that £1 per share. These were their prices at the time of writing this articles.

Lloyds Banking Group plc – 49.27
Vodafone Group plc – 91.88

Now there are obviously reasons for this, banking has taken a hit and retail has also taken a battering and obviously, the pandemic to put it mildly has had a huge impact. The point is that established companies can have low priced stock or the price can drop fo a variety of reasons, it is then up to you to decide whether it will recover and then invest before this happens and take advantage of potential big gains.

You need to weigh up any risk as always.

Penny Stock Analysis

Like all stock, it is important to do some basic analysis

This is the list of categories on the Freetrade web site – your online dealer or app may have a similar screen or way of selecting stocks but as you can see they are nicely categorized into what I would call as different niches.

Now let’s click on the Mining icon and look at those companies as this is an area I am interested in due to the prices of precious metals and also the need for minerals in the push for ‘green’, especially EV vehicles.

This is only a small selection of the companies that you can trade with the Freetrade app – as you can see looking at the pounds symbol and the price, there are a couple of stocks that fit into the penny stock category

I selected Alien Metals Ltd from the listing and visited https://simplywall.st/, this site allows some basic analysis for free. You can search by the name or the ticker symbol on the website.

This was the basic analysis – now if you pay the money you can get more data and there are other sites you can get this level of information from but for me there were a lot of red flags and worrying signs.

Earnings have declined by 9.6% per year over past 5 years
Has less than 1 year of cash runway
Makes less than USD$1m in revenue ($0)
Volatile share price over the past 3 months
Shareholders have been diluted in the past year
Does not have a meaningful market cap (£28M)

The declining revenues, revenue warnings, and the dilution of shareholders were warning signs that this was not for me personally. As I will state many times, you may feel differently but that was my take on this.

Now after doing that it’s basically going through a lot of these companies in various categories and seeing if any are appealing – yes, it’s a lot of work but take notes of any you like the look of.

I also have a Hargreaves Lansdown account and you can also look at prices over the last 10 years, news for the stock, you can download reports, can see director deals, see financial information, and more – between these sites you can build up a solid picture of a company. As I have said this is time-consuming but if you are serious enough then its worth the time and effort.

Penny Stock Strategy

The important word here is diversification, it doesn’t really make a lot of sense to put £300 in one company for example – that is a big gamble but you could buy 30 companies at £10 a go. That would spread the risk around, it also allows you to focus on certain categories or niches. You do not want your exposure

Of course, you want to spend £10 and if that stock doubles to say £20 then sell or hold on to see if the company really starts booming

What you should do is think of the categories that interest you, What categories are currently popular or may be popular in the near future. Let us see some examples.

Green energy – Whether you believe it or not a lot of money and investment will be going into green and renewable energy, this may be the big boom in the next 10 years or so.

Blockchain – The use of blockchain technology is not going away and no this doesn’t mean cryptocurrency like Bitcoin it’s the usage of the blockchain technology.

Artificial Intelligence – Again, like blockchain this is not going away and when you look at the money which has gone into the company that owns ChatGPT recently you can see this will be another hot category.

Now for some established categories

Mining – Whatever you think of mining it is not going anywhere with the scramble for resources, political situations, and the need for minerals and precious metals not stopping anytime soon, a company that invests in this is worth watching. Although a lot of these are speculative.

Pharma – We are not talking about the big players like GSK or AstarZeneca, this is your smaller companies that may have new drugs and innovations in the space.

Disclaimer

Again for requirements

This content is for education and entertainment purposes only. Investinginfo does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.

Links

Freetrade link

26 February 2023 0 comment

Articles

50 Trading and Investment Quotes and Tips

written by shedinvests71

Sometimes the best advice on this journey is simple, these 50 simple one liner tips

Quotes Part 1

Be patient.
Be disciplined.
Be Open-Minded.
Be a TV Critic.
Don’t Forget Bonds.
No risk, no return.
Focus on the Future.
Master your emotions.
Don’t Buy All at Once.
Take informed decision.
Avoid the herd mentality.
Create a broad portfolio.
Beware of Wall Street Hype.
Resolve to learn something.
Don’t Sweat the Small Stuff.
Have realistic expectations.
Buy Best-of-Breed Companies.
Defend Some Stocks, Not All.
No Woulda, Shoulda, Couldas.
Don’t try to time the market.
Adopt a Long-Term Perspective.
Invest only your surplus funds.
Expect, Don’t Fear Corrections.
Resist the Lure of Penny Stocks.
Invest in change for the better.

Quotes Part 2

No One Made a Dime by Panicking.
Don’t limit day trading to stocks.
Don’t Overemphasize the P/E Ratio.
Pick a Strategy and Stick With It.
Invest in business you understand.
Monitor your investment rigorously.
Do not underestimate your abilities.
Never Subsidize Losers With Winners.
Wait 30 Days After Preannouncements.
Money is made by sitting, not trading.
When the Chiefs Retreat, So Should You.
Know your tolerance for risky business.
The key to success is a stop-loss order.
Never risk too much capital on one trade.
Sell the Losers and Let the Winners Ride!
Follow a disciplined investment approach.
Do not let emotions cloud your judgement.
Be Concerned About Taxes, but Don’t Worry.
Buy Damaged Stocks, Not Damaged Companies.
If you personalize losses, you can’t trade.
Always set price targets before you jump in.
Don’t make mistake of Using Too Much Margin.
Only day trade with money you can afford to lose.
An investment in knowledge pays the best interest.
One should identify a few stocks and focus on them.

19 February 2023 0 comment

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