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Happy Hour: Sad Decisions And Euro Zone Turn Around

August 2, 2013

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Jon

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.

Sad Decisions

There is a sadder but wiser theory floating around somewhere. Who knew? Apparently, it doesn’t apply to financial decisions. A recent study tried to test the effects of sadness on our financial decision making abilities. It didn’t turn out well. Impatience is just one of the side effects of sadness. That just happens to be a no-no for your finances, especially investment decisions. Continue Reading…
Stock Basics: The P/E Ratio

August 1, 2013

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Jon

Investors like ratios and the P/E ratio (Price/Earnings ratio) is the most popular. Some of the most successful value investors use the P/E ratio (along with other metrics) as a starting point in their research to find stocks that continuously beat the market. The reason is value investors tend to look for good quality stocks with lower than normal P/E ratios.

It’s not just value investors that use this ratio. The P/E ratio is used to argue under and overpriced stocks by every investment strategy, sometimes, far too often.

What is the P/E Ratio?

Any good financial site will list the P/E ratio right along side the stock price and it’s the best place to find it. The P/E or price to earnings is the simplest way to value a stock. What the P/E ratio tells you is how much someone is willing to pay for $1 of earnings. Which makes it a better representative of a stock than price alone. Continue Reading…
Breaking Down The New 3.8% Medicare Surtax

July 30, 2013

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Jon

A number of tax code changes took effect at the start of this year. There were changes made to the 2013 tax brackets thanks to the Taxpayer Relief Act. The Affordable Care Act added a 3.8% Medicare Surtax too. With half the year behind us, now is a good time to start planning for these changes, if you haven’t already.

Now, 3.8% seems like a drop in the bucket. But if you qualify (not everyone does), remember its a surtax. It’s a tax on top of what you’re already paying.

3.8% Medicare Surtax

Whether you qualify for the new 3.8% Medicare Surtax will depend on your net investment income or your Modified Adjusted Gross Income (MAGI). It will be the lessor of: Continue Reading…
Happy Hour: Chromecast And Keeping It Simple

July 26, 2013

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Jon

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.

Chromecast

The age of tying the internet to your TV is getting closer. Google introduced the Chromecast this week. It’s now the cheapest plug and play streaming TV device available. It also allows you to control your TV directly from your smart phone, notepad, notebook, or desktop. Continue Reading…
Emerging Markets ETF: Investing Overseas

July 25, 2013

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Jon

Emerging markets ETFs and index funds are high risk, high reward investments. They certainly haven’t been kind to investors lately. But it doesn’t have to be, if you understand the risks. While most are thinking its time to cut and run, it might be a reason to buy.

There are three ways to invest in emerging markets: buy stock in a local company doing business overseas, you can buy a foreign company through its ADR or American Depositary Receipt, or you can buy a diversified emerging markets ETF or index fund.

What Are Emerging Markets

You won’t find developed countries in these funds. Rather, emerging market economies are going through major industrial growth. Think of it as their own Industrial Revolution. New businesses are growing, infrastructure is being built, education levels are rising, and these countries are in the process of growing a middle class that brings higher wages and discretionary spending. Continue Reading…
Growth Investing Strategy: The Basics

July 23, 2013

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Jon

There are many different investment strategies to choose from. Growth investing is one of the more popular ones. It’s the most obvious strategy based on its goals. You guessed it…growth, specifically, growing companies. It follows that growing companies tend to outperform the market, but not every growing company qualifies.

What is Growth Investing

A growth investing strategy looks for companies with consistent, above average earnings and revenue growth. In turn, growth investors are willing to pay a premium for a stock now, because they believe the company will grow faster in the future. This leaves growth companies with a higher P/E ratio. Basically, growth investors are willing to pay a higher price (P) now, for long-term future earnings growth. Continue Reading…