Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
Would You Rather?
I saw a couple of tweets this week that were fixated on Apple’s stock price and a belief that it’s better than spending $700 on something other than stock. Yet in order for the stock to do well, it requires a lot of people to spend that much for its iStuff.
- Would you rather have $700 to spend in an Apple store or one share of Apple stock?
- Would you rather have two pair of LeBron’s new shoes or one share of Apple stock?
Both focused entirely on the share price and not what really matters. The share price is irrelevant. It doesn’t tell us, as investors, anything important. It certainly doesn’t tell us if we can make money if we bought the stock today. Continue Reading…
Behind every investment is a company (or government in the case of bonds) that has bills to pay. A well run company keeps those expenses in check and paid on time. It even carries an acceptable amount of debt too. But what happens to your investment when that company takes on too much debt? Or it can’t pay its bills anymore? A default risk premium is built into the price of every investment to cover this risk.
The Fed announcement of QE3 was the big news last week. Despite my misgivings and distaste for more easing, it’s here, it’s going to happen, so let’s make some money from it. Or more importantly, not lose any.
If you had the choice between paying full price, over paying or getting a discount, which you would choose? A sane person would take the discount. The shopping habit of actively searching for deals, bargain hunting is the basic idea behind a value investing strategy. Seriously, who doesn’t like a discount?