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What causes stock prices to move dramatically during TRADING HOURS?

2011-10-28T07:11:00.001-07:00

What causes stock prices to move dramatically during TRADING HOURS?

Earning reports and conference calls usually happen outside of trading hours. What are the catalysts that create volatility during the trading hours?

Ans:

Right now there are many things that cause volatility. The whole Europe debt crisis is the main one that comes to mind, but I also believe that uncertainty about the economy as a whole also plays a large role.

Talking about earnings reports, Expectation and perception are two of the biggest influences of stock valuations. If more people are selling than buying then the stock price will go down, simple supply and demand. If however something called the "whisper number" is not sufficient enough for investors to highly value the company then that could cause the price to drop. An explanation of the whisper number is the expected quarterly or annual number that analysts expect from the report. It is purely 100% speculation.

Another thing to think about is that volatility works on the up side and the down side. So in theory, it can work in your favor.

Source(s):

Independent Investor

Can a movie that does well in the box office increase a stock?

2011-10-28T07:10:00.000-07:00

Can a movie that does well in the box office increase a stock?

If a movie makes upward of $500k in box office, or has a huge opening weekend, will the production company's stock increase?
if so, how soon after it comes out?

Ans:

Depends on how much they spent on making the movie ($500K is actually a pretty weak performance for anything outside small, independent releases), and how much they were expecting to make.

If it beats expectations, a bump in stock price would occur as early as the Monday after release.

Does India need tougher laws to tackle insider trading?

2011-10-28T07:09:00.000-07:00

Does India need tougher laws to tackle insider trading?

Ans:

There are enough laws only problem is their implementation with iron hands.

When the super rich start selling off currencies and start investing in farmland is that a good time to start?

2011-10-28T07:07:00.000-07:00

When the super rich start selling off currencies and start investing in farmland is that a good time to start?

Additional Details

acmeraven...I meant to give you a thumbs up and now that thumbs down is there forever....crows and ravens are the coolest animals on the planet...that is until we get our **** together. lolz

who is #1: Yeah I love the video, made me tear up :P Good song too! I'm going to be doing things differently in the coming year that's for sure. I had no idea about that aquifer, that's actually really scary too...especially since my new home base isn't so far from the old one ha ha.

Close to where I am now they were proposing to put a landfill on the only rising aquifer in the area....

*facepalm*

Ans:

http://www.thesurvivalpodcast.com/food-s…

Some prominent wealthy people have been investing in farmland for several years now. Because there has been a worldwide food shortage. If i recall correctly, in 8 of the last 10 years the world's grain crops have not been enough to meet effective demand.

And of course once we stop fighting over oil we will be fighting over water. One huge problem in America is that our midwest once was the bread basket of the world, but that's only been possible because (see map)
http://en.wikipedia.org/wiki/Ogallala_Aq…
they've been pumping water from a source which is ancient and may never refill itself. Already agricultural towns are becoming ghost towns because they pumped the water from a shallow place and the water level has dropped below where they can get at it.

And about 30 years from now, wars will be fought over sources of phosphates, which are necessary to grow food.

Right now, storable food is a great futures investment. Prices are already rising, but not as much as they should, because producers have been absorbing costs and playing little tricks like keeping the price the same while reducing the 16 oz box to 14.5 oz of contents, to keep the price per unit the same.

But people are adapting and there is a cultural revolution going on in America which will not be televised. Veggie gardens are springing up all over America, people are getting prosecuted for growing veggies in their front yard, and you will love this video:
http://www.youtube.com/watch?v=F8UPsSU_E…
Jack talks for 2 minutes, 10 seconds and then the song begins
THE REVOLUTION IS YOU
and 120 pics submitted by fans of
the survival podcast "Helping you to live a better life NOW, if times get tough or even if they don't".
http://www.thesurvivalpodcast.com/

Why do people buy stocks which don't pay dividends?

2011-10-28T07:06:00.000-07:00

Why do people buy stocks which don't pay dividends?

What's in it for me if I buy a stock which pays no dividend?

I own a piece of the company fine, but what does that do for me if I don't get a share of their profit?!

Ans:

When a company has cash earnings, it has two choices about what to do with those earnings. They can pay them out as dividends or they can reinvest them back into the business. If they choose to reinvest them back into the business, the business grows and your stock represents ownership of an ever-growing business. The larger business should create even more earnings. This is compounding.

Further, you don't get taxed on reinvested earnings but you do get taxed on dividends. You only get taxed on reinvested earnings when you sell the stock.

That means that if a company chooses to reinvest dividends you get compounding and tax deferral and you can still create your own "dividends" by selling some shares of stock whenever you want. In finance, there is a principle called "Dividend Irrelevance" that says that the dividend rate is irrelevant to the stock price for the reasons I've just listed.

In the real world, there is some evidence that you can get better total returns from buying stocks with dividends (though I doubt it's true if you include tax deferral) simply because dividend paying companies have reliable cash flow. You can certainly get at reliable cash flow in better ways than just looking at the dividend rate (e.g., AAPL has relaible cash flow but no dividends).

There is also some advantage to dividends if you are living off them as selling some stock every month or so would be painful and frought with errors.

Where in an NPV cash flow analysis do you insert further equity investment beyond Yr 0 and is it plus or minus?

2011-10-25T02:29:00.001-07:00

Where in an NPV cash flow analysis do you insert further equity investment beyond Yr 0 and is it plus or minus?

I am looking at a Capital Investment Appraisal question and money to fund the project (an MBO) is obtained from both equity and bank borrowings. In the middle of the project (years 2 and 3) more cash is needed which is provided by the shareholders. How is this extra funding shown which actually enhances the cashflow but is an investment like the Year 0 one which is a minus figure ? Is the additional money poured in negative (from the investor's viewpoint) or is it positive (from the cashflow viewpoint).

Ans:

Generally, the additional capital is considered to finance the negative CF of that period - i.e. the negative amount that gives rise to the need to raise (and contribute to the project) additional capital.
So THAT add'l capital is not a cash flow of the project, it is simply considered to be available to FINANCE the negative cash flows that I assume appear in years 2 & 3.

Consider...
When the net CF is goes negative, than at that stage the company owes money, so a high discount rate is not cautious but too optimistic. Some people see this as a problem with NPV. A way to avoid this problem is to include explicit provision for financing any losses after the initial investment, that is, explicitly calculate the cost of financing such losses. In your case, the cost to finance the losses is the cost (the required return) of the NEW equity raised for the project.

If you account for the cost of the new equity this way, you wouldn't change the discount rate to reflect the new capital structure because this would be double counting the cost of the new equity.
Example: r = begining discount rate
ke = cost of new equity
Basic CFs of the project (no new equity) ....(CFYr2)/(1+r)^2 + (CFYr2)/(1+r)^3....
above shows base negative CFs from the cash flow..add to year3's base cost (- i.e. increase the negative amount by), the cost of the new equity required to finance the base negative CF in year 2. In year 4 (which I assume by this time is positive) account for the costs of financing the base negative amounts in years 2 and 3. (I am assuming that the amount of add'l equity raised is equal to the sum of the 2 base negative years.) The cost of this financing continues for the remaining years of the project (unless you buy back the new equity out of those cash flows <unlikely.)

Again, don't change the discount rate or you'll be double counting.

Example:
CF2base = (10,000)
CF3base = (8,000)
CF4base = 6,000
Add'l equity req'd yr 2 = 10,000 * (ke) rate new equity, say 8% = add add'l $800 expense to CF3 before discounting
Add'l equity req'd yr 3 = 8,000 * 0.08 = $640 (+previous $800)=add add'l expense of $1440 to CF4 AND ALL subsequent CFs before discounting
Adjusted CFs to discount:
CF3 = (8,800)
CF4 = 4,560
etc.

Hope this helps....

Source(s):

http://en.wikipedia.org/wiki/Net_present…

What is a good company to invest in right now?

2011-10-25T02:28:00.001-07:00

What is a good company to invest in right now?

In stock market there is very large company available at very attractive level how to choose from all first you decide which sector is good my choice is metal and banking and than select good stock.

Are P/E Ratios and EPS Calculations Made Before Or After TIDA?

2011-10-25T02:27:00.001-07:00

Are P/E Ratios and EPS Calculations Made Before Or After TIDA?

Do all these financial websites use earnings calculations from before Taxes, Interest, Debt, and Amortization or after.

Ans:

Why would Mohammed answer this question if he didn't know the answer? Just to mess with the asker?

EPS is always calculated using net income which is earnings AFTER TIDA. P/E ratios just use EPS so also AFTER.

Source(s):

Ph.D., CFA

I am interested in two condos. A modern one and an older one. Which is a better investment? details below?

2011-10-25T02:26:00.000-07:00

I am interested in two condos. A modern one and an older one. Which is a better investment? details below?

I want to keep it for about 15 years. Price difference is about 40 K ( one is 325K, and the newer condo is 375K ) Same sizes, finishes, etc. Please tell me your thoughts. I want to purchase before Christmas.

Ans:

I currently lack too much information to give a professional answer.

Investments vary on location of condo, view, school zonings etc. Condo prices are also easily affected by the marketing industries. However, from my perspective at the moment, it is probably a good idea to purchase the 375K condo, it's probably more expensive for a reason.

Investments: fixed and variable costs

2011-10-25T02:25:00.000-07:00

Investments: fixed and variable costs?

In a slow year, a company will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million. What are the fixed and variable costs of hamburger production?

Ans:

Is there any further information? I don't think you could figure out fixed and variable costs just from this info. Variable costs are usually a % of sales and fixed costs remain the same no matter what...but it doesn't seem like there is enough info

What are some of the most reliable and up to date websites for viewing stock?

2011-10-25T02:24:00.000-07:00

What are some of the most reliable and up to date websites for viewing stock?

Ans :
In the United States all major brokerage firms have reliable and up to date websites available to their customers.

There are many website that are not broker/dealers that also have good websites
Zacks Research - http://www.zacks.com/ Smart Money - http://www.smartmoney.com/
Schaeffer’s Research http://www.schaeffersresearch.com/ Yahoo finance http://finance.yahoo.com/
MSN Money http://moneycentral.msn.com/home.asp
http://www.stockta.com/ http://busystock.com/index.php

I Found a 1914 Stock in my Grandmothers Attic?

2011-10-25T02:23:00.000-07:00

I Found a 1914 Stock in my Grandmothers Attic?

My family and I were cleaning out the attic of my grandmother, and we found a stock for "Imperial Silver Black Fox Company,Limited" Issued October 15, 1914. It's one share, and at the bottom it says SHARES $10.00 EACH, proceeded by CAPITAL STOCK $180,000. This a Canadian stock, ad it says Incorperated under the laws of the province of New Brunswick. How much is it worth and where are you supposed to take it in order to redeem it's value? Thanks.

Ans:

There is not a lot of information about the company from a google web search. The company did breed foxes. They advertised their stock in the United States.

One source indicated the company incorporated in Delaware in December of 1914.

The SEC has some information about finding the value of an old stock certificate at

http://www.sec.gov/answers/oldcer.htm

The page also notes that even if the certificate has no value as a financial instrument, that it may be of some value to people who collect stock certificates.

The SEC gives several references which may be available in a public library near you. That is where I recommend you start your research.

Source(s):

http://www.sec.gov/answers/oldcer.htm
http://books.google.com/books?id=q3wpAAA…

What In Your Opinion Is The Best Plan for Ultimate Wealth?

2011-10-25T02:20:00.001-07:00

What In Your Opinion Is The Best Plan for Ultimate Wealth?

Add how it is working out for you, and why you've chosen that plan.

Ans:

To do what you want to end up with takes nerve and risk.
You invest your money into small and micro cap stocks.
Also in emerging markets. Another choice is to invest into
mutual funds that take on high risk. Try these 2 (WAAEX)
and (OSFDX)
Any business that you try is very risky, especially for a beginner.
I choose mutual funds because it was an easy way to invest.
My portfolio is of moderate risk, making about 8% profit.

Do you think the current rally in the stock market will continue?

2011-10-25T02:19:00.000-07:00

Do you think the current rally in the stock market will continue?
What are your thoughts on the direction the major indexes (Dow / NASDAQ / S&P) for the remainder of 2011?

Ans:

Economic Indicators are trickling up.

The "Doom and Gloom" crowd would quickly and happily remind you that nothings changed..And they're obviously no worst the wear.The other guys to blame.

Then the "Doom and Gloom" crowd contagious to Greece,..Ignore the fact that Greece has been broke for a long time..But continue to hold our Investments Hostage...If Investors believe they're some how are infected/related,..this sham-wow still has legs....gullible suckers

We need a Suckers Poll,..cause sentiment effects the market, and might even give them their self fulfilling prophecy,..of a Total Economic Collapse,..And to those left standing the victors, get the spoils.
I.m 40% cash,..With no intention of selling anything...I'm tempted to believe the majority of Investors are with me?..Damned the Torpedoes(politics) .

Please help interpret this short interest ratio (what does it signify)?

2011-10-25T02:17:00.000-07:00

Please help interpret this short interest ratio (what does it signify)?

I have a position in the stock APKT. It dropped $10 on Friday, and now is at its 52 week low. My position is at 32.50. I read a tweet where people said it was a short squeeze candidate. I went and read about short squeeze, and it doesn't seem based on what I read, that APKT is a short squeeze candidate. There are 66 million shares outstanding, 54 million shares float, there are 3.72 million shares short. The short ratio is 1.70, and the short percentage of float is 7.0. Thanks for your input.

Ans:

The short interest ratio is the number of shares short divided by the average daily volume.

When looking at information about shares short, it is important to note that the figure published is usually out of date. As of now, the information on Yahoo quotes is from Sept. 30. So, 1.7 is the number of shares short as of Sept. 30 divided by the average volume as of Sept. 30.

There is one factor that may make it a better short squeeze candidate than you suspect. 18% of the shares are owned by insiders and 80% of the shares are owned by institutions. Insiders and institutions are usually not active traders, so the number of shares actually trading is probably a lot smaller than than the float.

I do not follow the stock and don't know what caused its recent decline, so I will not offer any opinion about how good a short squeeze candidate it might be.

Source(s):

http://finance.yahoo.com/q/ks?s=APKT+Key…

List of adverse Stock market conditions?

2011-10-25T02:14:00.000-07:00

Queatin:

List of adverse Stock market conditions?

What are the different kinds of adverse conditions that attack the stock market from time to time (and prevent traders from making money)?

I can name a few:
1.High volatility
2. Consolidating markets
3.Very thin with no volume

What are the others?

Ans:

Reasons are innumerable:
International political and economic events(eg property bubble of US, wars, present financial problems of some European countries, etc.).
National political and economic events(eg. 2G episode).
Natural Calamities.
Government actions affecting business sentiment.
Tightening of credit policy by central bank of a country.
Performance of the company.
Sympathy effect of bad performance of other companies doing similar Business.
Etc., etc.

Can I profit from a Portfoli of ETF's?

2011-10-25T02:12:00.000-07:00

So I want to get some mutal funds and invest $1000 nothing big just trying to start of. So I'm going to setup a starter portfoilo with Schawb but a diversifed one with four different mutal fund offerings. I like it because I can buy and sell ETFS online without a transaction fee. I need four to get going and it will be a moderate risk for a young investor like Myself so here is my plan I will buy them in this amount and order

Schwab US Large-Cap ETF (SCHX) Exp 0.08% $300
Schwab US Small-Cap ETF (SCHA) Exp 0.13% $200
Schwab International Equity ETF ( SCHF) Exp 0.13% $200
Schwab U.S Aggerate Bond ETF (SCHZ) 0.10% $300

So I covered the $1,000 minium needed to set up and have four diverse portfolis, so for those of you who understand business and this market do you think this is a good idea and how much will I profit? thanks.

Ans:

Sure you can profit from a portfolio of ETFs.. if they do well. People can also lose. Personally, I don't trust the market, at this time though you ARE approaching the traditional "Santa Claus Rally" time of year. Nonetheless, profit is not guaranteed, and the market may swing wildly towards the first half of next year considering worldwide economic events.
ETFs for the most part tend to be more volatile than mutual funds.. depends on selection.
While some ETFs model their trading similarly to certain mutual funds, and some mutual funds may contain ETFs, an ETF is not the same thing as a mutual fund, and brokerage fees for trading an ETF vs a mutual fund may be different. The costs of trading either will depend upon which brokerage you use.
Off the top of my head guess, you could make up to 10-15% profit optimistically by the year's end, 7% more realisticaly, and lose that and more by March.

Source(s):

like they say in the Grinch song.. "I wouldn't touch it, with a thirty-nine-and-a-half foot pole."

Im a teenager and i Have around $500 i want to invest with what do u suggest i do?

2011-10-25T02:11:00.000-07:00

I would find a good broker or a financial advisor (the latter is at a bank). I would tell him what I want to do. He should be impressed by a thrifty teenagerand recommend a mutual fund or something.
He should work out a savings plan with you, one you will feel comfortable with. Mutual funds buy up large amounts of stocks and bonds with saver's money. Avid a front end load if you can. With a
FEL you have to pay up front to buy in. Go talk to a fnancial advisor whether you buy a fund or not.

Has David Einhorn lost credibility by erroneous math on Green Mountain Coffee Roaster's strong growth numbers?

2011-10-25T02:09:00.000-07:00

I suppose you are referring to Chappell's rebuttal of Einhorn's presentation, for example, http://finance.yahoo.com/news/SunTrust-A… The only thing that could reasonably be called "erroneous math" is double counting the packaging between Starbucks and GMCR. Even if true, this is a difference of 7.5 cents per cup which doesn't undermine his thesis all that much (it's significant, for sure).

Chappell's big criticism is that Einhorn uses information from the class-action lawsuit to assert that GMCR's accounting practices are misleading. Chappell doesn't even say he's wrong, just that the information he uses to come to that conclusion are out-of-date (see quote in article from Chappell on this point). The jury is out on that and, frankly, GMCR ought to straighten it out and they haven't.

If Einhorn's analysis is fals, it shouldn't be up to SunTrust to rebut it; it should be up to GMCR. What do you make of GMCR leaving the job to an equity analyst? What I make of it and what the market makes of it, is that GMCR can't rebut Einhorn's analysis becausee it is largely true.

Einhorn doesn't have axes to grind. He probably drinks Green Mountain Coffee. He only cares about getting his picks right.

Why do people buy stocks which don't pay dividends?

2011-10-25T02:08:00.001-07:00

How to start in the stock market?

2011-10-25T02:07:00.000-07:00

A share of stock is a representation of ownership in a particular firm. For example, if a corporation (we'll call it Company A) decides to issue 100 shares of common stock and you purchase 5 shares, you now own 5% of that company. Common stockholders usually have voting rights on various issues, such as selecting the CEO and Board of Directors (the managers who run the company for the shareholders). Voting rights are in proportion to ownership, so to continue our example if you owned 5 out of the 100 shares of Company A, your vote would be worth 5% of all the votes cast.

Shareholders can also receive dividends. A dividend is when a company has earned a profit by conducting business, and decides to distribute those profits to the owners of the company (Dividends can also be issued as additional shares of stock instead of cash). Receipt of dividends is also proportionate with ownership percentage. So if Company A decides to issue $100,000 worth of dividends to its shareholders, you would receive 5% of that, or $5,000. However, dividends are not guaranteed to holders of common stock because the managers of the firm can decide to retain the earnings in order to reinvest in the company, in hopes of additional future growth.

In addition to earning money as an investor through dividends, you can also earn money through capital gains. Let's say you purchased 5 shares of stock in Company A for $10 per share, and a few years later sell your shares for $50 each. You've realized a capital gain of $40 per share, and you will be taxed on this income based on the current capital gains tax rate (It is also a risk that you will experience a capital loss, for example buying at $10 per share and later selling at $6 per share).

As with all investing, in order to earn a return you have to take risk. Investing in the stock market is no guarantee that you will make money. In fact a lot of people have lost money by investing in stocks. One of the most important things to remember is that you should NEVER invest your money in something that you don't understand. So don't run out and buy shares in Disney just because someone tells you its a good idea. However, lots of people have made a lot of money by investing in the stock market, and if you do it right it can be a great way to save for retirement.

Next, you might want to look around and talk to a few Financial Advisors. Make sure that you only work with someone who will be patient, and willing to explain things to you in a humble way. Don't ever pay someone to act smart and make all of your decisions for you.

One great way to build a diversified portfolio is to invest in indexed funds instead of single stocks. An example of this would be an Exchange Traded Fund that tracks the S&P 500. The S&P 500 is a very popular index, and many consider it to be one of the most dependable indicators of the state of our economy. It is a value-weighted index which follows the 500 largest publicly traded companies in the US. Companies like Apple, Microsoft, Home Depot, and McDonald's are all included in the S&P 500. By investing in an ETF tracking the S&P 500 you've taken a very easy, yet very effective way to diversify and hedge against company-specific risk.

Another thing to remember is to think long-term when investing, especially in the stock market. A good idea would be to set up a Roth IRA (Individual Retirement Account) which allows you to make after-tax contributions. This means that you pay taxes on your income before making your investments, and then your portfolio can grow tax free. When you retire, you won't pay any taxes on the money you pull out of your Roth IRA. Again, to do this you should find a good Financial Advisor in your area.

You asked about Mutual Funds: A Mutual Fund is an organization that pools the funds of a large group of investors and then uses that capital to invest in various securities, such as stocks, bonds, or even real estate. Most Mutual Funds are not traded on an exchange like shares of a publicly traded firm or like an ETF. Rather shares are purchased and redeemed directly from the Mutual Fund organization itself. There are some fees relating to Mutual Funds such as operating and load expenses, which can be viewed before buying into a Mutual Fund. It is easy to search around websites like Yahoo Finance or others to review how Mutual Funds have performed since their inception. My advice would be to pick a Fund that passively tracks an index, because studies have shows that these funds outperform those that try to actively manage the portfolio through constant trading.

I hope that helps! Let me know if you have more questions.