About Us
Online Investments Services Ltd. is the premier online
resource for online investment, risk management and advisory services to both
institutional and individual investors across the globe. We provide
comprehensive advice and wide range of investment solutions which are designed
to meet the needs of institutions, private and public clients, as well as,
high-net-worth individuals globally. We offer a variety of products and
functions of asset classes for all type of investors.
The main priority of our enterprise is the maximum availability of our services
to the investors of all levels. Due to the professionalism of our employees and
the introduction of cutting-edge stock market techniques, we manage to provide
top-quality service at minimal costs. Active local development policy of Online
Investments is aimed at providing the clients in any part on the world’s map
with the service of indubitable high quality to get investment income. Our
strategies and technology are the backbone of our business that allows us to set
the standard in the global marketplace. The Online Investments Services
Ltd. has efficiently
and creatively diversified strategies in financial managements to meet or exceed
expectations. Our motivations are to help clients flourish, by ensuring
financial performance through positive results.
Investment Sectors
NYSE
The New York Stock Exchange (NYSE) is a stock exchange located at 11 Wall Street
in lower Manhattan, New York City, USA. It is the world's largest stock exchange
by market capitalization of its listed companies at US$11.92 trillion as of Aug
2010.[4] Average daily trading value was approximately US$153 billion in 2008.
The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007
merger with the fully electronic stock exchange Euronext. The NYSE trading floor
is located at 11 Wall Street and is composed of four rooms used for the
facilitation of trading. A fifth trading room, located at 30 Broad Street, was
closed in February 2007. The main building, located at 18 Broad Street, between
the corners of Wall Street and Exchange Place, was designated a National
Historic Landmark in 1978,[5] as was the 11 Wall Street building.
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock
exchange. "NASDAQ" originally stood for "National Association of Securities
Dealers Automated Quotations Systems," but the exchange's official stance is
that the acronym is obsolete. It is the largest electronic screen-based equity
securities trading market in the United States and fourth largest by market
capitalization in the world. With 2919 ticker symbols, it has more trading
volume than any other electronic stock exchange in the world.
Stocks
The
capital stock (or just stock) of a business entity represents the original
capital paid into or invested in the business by its founders. It serves as a
security for the creditors of a business since it cannot be withdrawn to the
detriment of the creditors. Stock is distinct from the property and the assets
of a business which may fluctuate in quantity and value.
Commodity
A commodity is a good for which there is demand, but which is supplied without
qualitative differentiation across a market. Commodities are often substances
that come out of the earth and maintain roughly a universal price. A commodity
is fungible, that is, equivalent no matter who produces it. Examples are
petroleum and copper. The price of copper is universal, and fluctuates daily
based on global supply and demand. Stereo systems, on the other hand, have many
aspects of product differentiation, such as the brand, the user interface, the
perceived quality etc. And, the more valuable a stereo is perceived to be, the
more it will cost.
In contrast, one of the characteristics of a commodity good is that its price is
determined as a function of its market as a whole. Well-established physical
commodities have actively traded spot and derivative markets. Generally, these
are basic resources and agricultural products such as iron ore, crude oil, coal,
salt, sugar, coffee beans, soybeans, aluminum, copper, rice, wheat, gold,
silver, palladium, and platinum. Soft commodities are goods that are grown,
while hard commodities are the ones that are extracted through mining.
There is another important class of energy commodities which includes
electricity, gas, coal and oil. Electricity has the particular characteristic
that it is either impossible or uneconomical to store, hence, electricity must
be consumed as soon as it is produced.
Bonds
In finance, a bond is a debt security, in which the authorized issuer owes the
holders a debt and, depending on the terms of the bond, is obliged to pay
interest (the coupon) and/or to repay the principal at a later date, termed
maturity. A bond is a formal contract to repay borrowed money with interest at
fixed intervals.
Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is
the lender (creditor), and the coupon is the interest. Bonds provide the
borrower with external funds to finance long-term investments, or, in the case
of government bonds, to finance current expenditure. Certificates of deposit
(CDs) or commercial paper are considered to be money market instruments and not
bonds. Bonds must be repaid at fixed intervals over a period of time.
Bonds and stocks are both securities, but the major difference between the two
is that (capital) stockholders have an equity stake in the company (i.e., they
are owners), whereas bondholders have a creditor stake in the company (i.e.,
they are lenders). Another difference is that bonds usually have a defined term,
or maturity, after which the bond is redeemed, whereas stocks may be outstanding
indefinitely. An exception is a consol bond, which is a perpetuity (i.e., bond
with no maturity).
Currency
Any form of money that is in public circulation. Currency includes both hard
money (coins) and soft money (paper money). Typically currency refers to money
that is legally designated as such by the governing body, but in some cultures
currency can refer to any object that has a perceived value and can be exchanged
for other objects.
Options Trading
In finance an option strategy is the purchase and/or sale of one or various
option positions and possibly an underlying position.
Options strategies can favor movements in the underlying that are bullish,
bearish or neutral. In the case of neutral strategies, they can be further
classified into those that are bullish on volatility and those that are bearish
on volatility. The option positions used can be long and/or short positions in
calls and/or puts at various strikes.
Mutual Funds
A
mutual fund is a professionally managed type of collective investment scheme
that pools money from many investors and invests typically in investment
securities (stocks, bonds, short-term money market instruments, other
mutual
funds, other securities, and/or commodities such as precious metals).[1] The
mutual fund will have a fund manager that trades (buys and sells) the fund's
investments in accordance with the fund's investment objective. In the U.S., a
fund registered with the Securities and Exchange Commission (SEC) under both SEC
and Internal Revenue Service (IRS) rules must distribute nearly all of its net
income and net realized gains from the sale of securities (if any) to its
investors at least annually. Most funds are overseen by a board of directors or
trustees (if the U.S. fund is organized as a trust as they commonly are) which
is charged with ensuring the fund is managed appropriately by its investment
adviser and other service organizations and vendors, all in the best interests
of the fund's investors.
Since 1940 in the U.S., with the passage of the Investment Company Act of 1940
(the '40 Act) and the Investment Advisers Act of 1940, there have been three
basic types of registered investment companies: open-end funds (or mutual
funds), unit investment trusts (UITs); and closed-end funds. Other types of
funds that have gained in popularity are exchange traded funds (ETFs) and hedge
funds, discussed below. Similar types of funds also operate in Canada, however,
in the rest of the world, mutual fund is used as a generic term for various
types of collective investment vehicles, such as unit trusts, open-ended
investment companies (OEICs), unitized insurance funds, undertakings for
collective investments in transferable securities (UCITS, pronounced "YOU-sits")
and SICAVs (pronounced "SEE-cavs").
Hedge Funds
A hedge fund is a lightly regulated investment fund that is typically open to a
limited range of investors who pay a performance fee to the fund's investment
manager.
Every
hedge fund has its own investment strategy that determines the type of
investments it undertakes and these strategies are highly individual. As a
class, hedge funds undertake a wider range of investment and trading activities
than traditional long-only investment funds, and invest in a broader range of
assets including long and short positions in shares, bonds and commodities. As
the name implies, hedge funds often seek to hedge some of the risks inherent in
their investments using a variety of methods, notably short selling and
derivatives.
In most jurisdictions, hedge funds are open only to a limited range of
professional or wealthy investors who meet criteria set by regulators, and are
accordingly exempted from many of the regulations that govern ordinary
investment funds. The net asset value of a hedge fund can run into many billions
of dollars, and the gross assets of the fund will usually be higher still due to
leverage. Hedge funds dominate certain specialty markets such as trading within
derivatives with high-yield ratings and distressed debt.
401k
In the United States, a 401(k) or 401k retirement savings plan allows a worker
to save for retirement, and have the savings invested while deferring current
income taxes on the saved money and earnings until withdrawal. This type of plan
is also known as a "traditional" 401(k).
401(k) plans are mainly employer-sponsored: employees elect to have a portion of
their wages paid directly into their individual 401(k) account, which is managed
by the employer. Such payments are known as "contributions".
Since 2006, another type of 401(k) plan is available. Participants in 401(k)
plans that have the proper amendments can allocate some or all of their
contributions to a separately-designated Roth account, commonly known as a Roth
401(k). These "Roth" contributions will be collected and treated as after-tax
dollars; that is, income tax is paid or withheld in the year contributed.
Qualified distributions from a designated Roth 401(k) account, including all
income, are tax-free. (A traditional 401(k) account is funded with pre-tax
dollars and, in general, tax must be paid when the original contribution and
earnings are withdrawn.)
As a benefit to the employee, the employer can optionally choose to "match" part
or sometimes all of the employee's contribution by depositing additional amounts
in the employee's 401(k) account or simply offering a profit-sharing
contribution to the plan. All employer matching funds are deposited into the
account on a pretax basis, even if the employee's contributions are all Roth
contributions. Employer contributions may be subject to vesting rules set by the
plan documents requiring the employee to reach a certain number of years of
service before they are entitled to keep the matching funds.
In participant-directed plans (the most common option), the employee can select
from a number of investment options, usually an assortment of mutual funds that
emphasize stocks, bonds, money market investments, or some mix of the above.
Many companies' 401(k) plans also offer the option to purchase the company's
stock. The employee can generally re-allocate money among these investment
choices at any time. In the less common trustee-directed 401(k) plans, the
employer appoints trustees who decide how the plan's assets will be invested.
The title of this article "401(k)" references 26 U.S.C. § 401(k), a section of
the Internal Revenue Code. The corresponding plan and section for non-profit
organizations is 403(b) (26 U.S.C. § 403(b)). For government entities, the
equivalent is a 457 plan, currently under 457(b) (26 U.S.C. § 457) although
older plans were established under 457(g).
Green Investments
Eco investing (or Green investing) is the practice of investing in companies
that support or provide environmentally friendly products and practices. These
companies encourage (and often profit from) new technologies that support the
transition from carbon dependence to more sustainable alternatives.
As industries’ environmental impacts become more apparent, green topics have not
only taken center stage in pop culture, but the financial world as well. Steve
Schueth, President of First Affirmative Financial Network in Colorado Springs,
Colorado, said that in the 1990s many investors “began to look for those
companies that were better than their competitors in terms of managing their
environmental impact.” While some investors still focus their funds to avoid
only “the most egregious polluters,” the emphasis for many investors has
switched to changing “the way money is used,” and using “it in a positive,
transformative way to get us from where we are now ultimately to a truly
sustainable society.”
The Global Climate Prosperity Scoreboard - launched by Ethical Markets Media and
The Climate Prosperity Alliance to monitor private investments in green
companies – estimated that over $1.248 trillion has been invested in solar,
wind, geothermal, ocean/hydro and other green sectors since 2007. This number
represents investments from North America, China, India, and Brazil, as well at
other developing countries.
Alternative Investments
An
alternative investment is an investment product other than the traditional
investments of stocks, bonds, cash or property. The term is a relatively loose
one and includes tangible assets such as Art, Wine, Antiques, Coins or Stamps[1]
and some financial assets such as commodities, private equity, hedge funds,
venture capital and financial derivatives.
Oil and Gas
Petroleum (L. petroleum, from Greek: petra (rock) + Latin: oleum (oil)) or
crude
oil is a naturally occurring, flammable liquid consisting of a complex mixture
of hydrocarbons of various molecular weights and other liquid organic compounds,
that are found in geologic formations beneath the Earth's surface. Petroleum is
recovered mostly through oil drilling. It is refined and separated, most easily
by boiling point, into a large number of consumer products, from gasoline and
kerosene to asphalt and chemical reagents used to make plastics and
pharmaceuticals.
The term petroleum was first used in the treatise De Natura Fossilium, published
in 1546 by the German mineralogist Georg Bauer, also known as Georgius Agricola
Natural Gas Natural gas is a gas consisting primarily of methane, typically with
0-20% higher hydrocarbons (primarily ethane). It is found associated with other
fossil fuels, in coal beds, as methane clathrates, and is an important fuel
source and a major feedstock for fertilizers.
Most natural gas is created by two mechanisms: biogenic and thermogenic.
Biogenic gas is created by methanogenic organisms in marshes, bogs, landfills,
and shallow sediments. Deeper in the earth, at greater temperature and pressure,
thermogenic gas is created from buried organic material.
Before natural gas can be used as a fuel, it must undergo processing to remove
almost all materials other than methane. The by-products of that processing
include ethane, propane, butanes, pentanes, and higher molecular weight
hydrocarbons, elemental sulfur, carbon dioxide, water vapor, and sometimes
helium and nitrogen.
Natural gas is often informally referred to as simply gas, especially when
compared to other energy sources such as oil or coal.
REITS
A
real estate investment trust or REIT (pronounced /ˈriːt/ rhymes with street)
is a tax designation for a corporate entity investing in real estate that
reduces or eliminates corporate income taxes. In return, REITs are required to
distribute 90% of their income, which may be taxable, into the hands of the
investors. The REIT structure was designed to provide a similar structure for
investment in real estate as mutual funds provide for investment in stocks.
Like other corporations, REITs can be publicly or privately held. Public REITs
may be listed on public stock exchanges like shares of common stock in other
firms.
REITs can be classified as equity, mortgage, or hybrid.
The key statistics to look at in a REIT are its net asset value (NAV), adjusted
funds from operations (AFFO) and cash available for distribution (CAD). REITs
face challenges from both a slowing U.S. economy and the global financial
crisis, depressing share values by 40 to 70 percent in some cases.
Real estate
Real estate is a legal term (in some jurisdictions, such as the United Kingdom,
Canada, Australia, USA and The Bahamas) that encompasses land along with
improvements to the land, such as buildings, fences, wells and other site
improvements that are fixed in location—immovable.Real estate law is the body of
regulations and legal codes which pertain to such matters under a particular
jurisdiction and include things such as commercial and residential real property
transactions. Real estate is often considered synonymous with real property
(sometimes called realty), in contrast with personal property (sometimes called
chattel or personalty under chattel law or personal property law).
However, in some situations the term "real estate" refers to the land and
fixtures together, as distinguished from "real property", referring to ownership
of land and appurtenances, including anything of a permanent nature such as
structures, trees, minerals, and the interest, benefits, and inherent rights
thereof. Real property is typically considered to be Immovable property. The
terms real estate and real property are used primarily in common law, while
civil law jurisdictions refer instead to immovable property.
Mortgage
A mortgage loan is a loan secured by real property through the use of a mortgage
note which evidences the existence of the loan and the encumbrance of that
realty through the granting of a mortgage which secures the loan. However, the
word mortgage alone, in everyday usage, is most often used to mean mortgage
loan.
A home buyer or builder can obtain financing (a loan) either to purchase or
secure against the property from a financial institution, such as a bank, either
directly or indirectly through intermediaries. Features of mortgage loans such
as the size of the loan, maturity of the loan, interest rate, method of paying
off the loan, and other characteristics can vary considerably.
In many jurisdictions, though not all (Bali, Indonesia being one exception), it
is normal for home purchases to be funded by a mortgage loan. Few individuals
have enough savings or liquid funds to enable them to purchase property
outright. In countries where the demand for home ownership is highest, strong
domestic markets have developed.
Deed A deed is a signed and, in some jurisdictions, usually sealed legal
instrument in writing used to grant a right. Deeds have historically been part
of the broader category of instruments under seal, requiring only the affixing
of a common seal to render them valid. Today, however, deeds are instruments in
solemn form which require the author's signature and, depending upon the
jurisdiction, either notarization or a number of attesting witnesses. In some
places (but usually not in the United States), deeds are also referred to as
agreements under seal, contracts by deed, or specialties. A specialty is a
contract under seal (bond, legal mortgage, debt secured by writing under seal)
and formerly ranked in priority above a simple contract in the administration of
a decedent's estate for paying off liabilities, especially since specialties
have a 12 year limitation period, twice that of a simple contract. They are
often used by lawyers when a very formal document is required.
Annuities
In Finance Theory - The term annuity is used in finance theory to refer to any
terminating stream of fixed payments over a specified period of time. This usage
is most commonly seen in discussions of finance, usually in connection with the
valuation of the stream of payments, taking into account time value of money
concepts such as interest rate and future value.
Examples of annuities are regular deposits to a savings account, monthly home
mortgage payments and monthly insurance payments. Annuities are classified by
payment dates. The payments (deposits) may be made weekly, monthly, quarterly,
yearly, or at any other interval of time.
In the U.S. an annuity contract is created when an insured party, usually an
individual, gives a life insurance company money that will later be distributed
back to the insured party over time. Annuity contracts traditionally provide a
guaranteed distribution of income over time, until the death of the person or
persons named in the contract or until a final date, whichever comes first.
However, the majority of modern annuity customers use annuities only to
accumulate funds free of income and capital gains taxes and to later take
lump-sum withdrawals without using the guaranteed-income-for-life feature.
Carbon Credits
A carbon credit is a generic term for any tradable certificate or permit
representing the right to emit one tonne of carbon dioxide or carbon dioxide
equivalent (CO2-e).
Carbon credits and carbon markets are a component of national and international
attempts to mitigate the growth in concentrations of greenhouse gases (GHGs).
One carbon credit is equal to one ton of carbon dioxide, or in some markets,
carbon dioxide equivalent gases. Carbon trading is an application of an
emissions trading approach. Greenhouse gas emissions are capped and then markets
are used to allocate the emissions among the group of regulated sources. The
goal is to allow market mechanisms to drive industrial and commercial processes
in the direction of low emissions or less carbon intensive approaches than those
used when there is no cost to emitting carbon dioxide and other GHGs into the
atmosphere. Since GHG mitigation projects generate credits, this approach can be
used to finance carbon reduction schemes between trading partners and around the
world.
There are also many companies that sell carbon credits to commercial and
individual customers who are interested in lowering their carbon footprint on a
voluntary basis. These carbon offsetters purchase the credits from an investment
fund or a carbon development company that has aggregated the credits from
individual projects. The quality of the credits is based in part on the
validation process and sophistication of the fund or development company that
acted as the sponsor to the carbon project. This is reflected in their price;
voluntary units typically have less value than the units sold through the
rigorously validated Clean Development Mechanism.
Tax Deferments
Tax deferral refers to instances where a taxpayer can delay paying taxes to some
future period. In theory, the net taxes paid should be the same. Taxes can
sometimes be deferred indefinitely, or may be taxed at a lower rate in the
future, particularly for deferral of income taxes. It is a general fact of
taxation that when taxpayers can choose when to pay taxes, the total amount paid
in tax will likely be lower.
Blue Chips
According to NYSE, a blue-chip stock is stock in a company with a national
reputation for quality, reliability and the ability to operate profitably in
good times and bad. The most popular index which follows US blue chips is the
Dow Jones Industrial Average. The Dow Jones Industrial Average is a
price-weighted average of 30 blue-chip stocks that are generally the leaders in
their industry. It has been a widely followed indicator of the stock market
since October 1, 1928.
FOREX
The
foreign exchange market (forex, FX, or currency market) is a worldwide
decentralized over-the-counter financial market for the trading of currencies.
Financial centers around the world function as anchors of trading between a wide
range of different types of buyers and sellers around the clock, with the
exception of weekends. The foreign exchange market determines the relative
values of different currencies.
The primary purpose of the foreign exchange is to assist international trade and
investment, by allowing businesses to convert one currency to another currency.
For example, it permits a US business to import British goods and pay Pound
Sterling, even though the business's income is in US dollars. It also supports
speculation, and facilitates the carry trade, in which investors borrow
low-yielding currencies and lend (invest in) high-yielding currencies, and which
(it has been claimed) may lead to loss of competitiveness in some countries.
In a typical foreign exchange transaction, a party purchases a quantity of one
currency by paying a quantity of another currency. The modern foreign exchange
market began forming during the 1970s when countries gradually switched to
floating exchange rates from the previous exchange rate regime, which remained
fixed as per the Bretton Woods system.
The
foreign exchange market is unique because of
* its huge trading volume, leading to high liquidity;
* its geographical dispersion;
* its continuous operation: 24 hours a day except weekends, i.e. trading from
20:15 GMT on Sunday until 22:00 GMT Friday;
* the variety of factors that affect exchange rates;
* the low margins of relative profit compared with other markets of fixed
income; and
* the use of leverage to enhance profit margins with respect to account size.
As such, it has been referred to as the market closest to the ideal of perfect
competition, notwithstanding currency intervention by central banks. According
to the Bank for International Settlements, as of April 2010, average daily
turnover in global foreign exchange markets is estimated at $3.98 trillion, a
growth of approximately 20% over the $3.21 trillion daily volume as of April
2007.
The $3.98 trillion break-down is as follows:
* $1.490 trillion in spot transactions
* $475 billion in outright forwards
* $1.765 trillion in foreign exchange swaps
* $43 billion currency swaps
* $207 billion in options and other products
Interest
Interest is a fee paid on borrowed assets. It is the price paid for the use of
borrowed money, or, money earned by deposited funds. Assets that are sometimes
lent with interest include money, shares, consumer goods through hire purchase,
major assets such as aircraft, and even entire factories in finance lease
arrangements. The interest is calculated upon the value of the assets in the
same manner as upon money.
Interest can be thought of as "rent of money". defined as the compensation paid
by the borrower of money to the lender of money. When money is deposited in a
bank, interest is typically paid to the depositor as a percentage of the amount
deposited; when money is borrowed, interest is typically paid to the lender as a
percentage of the amount owed. The percentage of the principal that is paid as a
fee over a certain period of time (typically one month or year), is called the
interest rate.
Interest is compensation to the lender, for a) risk of principal loss, called
credit risk; and b) forgoing other useful investments that could have been made
with the loaned asset. These forgone investments are known as the opportunity
cost. Instead of the lender using the assets directly, they are advanced to the
borrower. The borrower then enjoys the benefit of using the assets ahead of the
effort required to obtain them, while the lender enjoys the benefit of the fee
paid by the borrower for the privilege. In economics, interest is considered the
price of credit.
Assets
In financial accounting, assets are economic resources. Anything tangible or
intangible that is capable of being owned or controlled to produce value and
that is held to have positive economic value is considered an asset. Simply
stated, assets represent ownership of value that can be converted into cash
(although cash itself is also considered an asset).
The balance sheet of a firm records the monetary value of the assets owned by
the firm. It is money and other valuables belonging to an individual or
business. Two major asset classes are tangible assets and intangible assets.
Tangible assets contain various subclasses, including current assets and fixed
assets. Current assets include inventory, while fixed assets include such items
as buildings and equipment.
Intangible assets are nonphysical resources and rights that have a value to the
firm because they give the firm some kind of advantage in the market place.
Examples of intangible assets are goodwill, copyrights, trademarks, patents and
computer programs, and financial assets, including such items as accounts
receivable, bonds and stocks.
Dividend
Dividends are payments made by a corporation to its shareholder members. It is
the portion of corporate profits paid out to stockholders. When a corporation
earns a profit or surplus, that money can be put to two uses: it can either be
re-invested in the business (called retained earnings), or it can be paid to the
shareholders as a dividend. Many corporations retain a portion of their earnings
and pay the remainder as a dividend.
For a joint stock company, a dividend is allocated as a fixed amount per share.
Therefore, a shareholder receives a dividend in proportion to their
shareholding. For the joint stock company, paying dividends is not an expense;
rather, it is the division of after tax profits among shareholders. Retained
earnings (profits that have not been distributed as dividends) are shown in the
shareholder equity section in the company´s balance sheet - the same as its
issued share capital. Public companies usually pay dividends on a fixed
schedule, but may declare a dividend at any time, sometimes called a special
dividend to distinguish it from a regular one.
Cooperatives, on the other hand, allocate dividends according to members'
activity, so their dividends are often considered to be a pre-tax expense.
Dividends are usually settled on a cash basis, store credits (common among
retail consumers' cooperatives) and shares in the company (either newly created
shares or existing shares bought in the market.) Further, many public companies
offer dividend reinvestment plans, which automatically use the cash dividend to
purchase additional shares for the shareholder.
The word "dividend" comes from the Latin word "dividendum" meaning " the thing
which is to be divided among all."
Capital Gain
A capital gain is a profit that results from investments into a capital asset,
such as stocks, bonds or real estate, which exceeds the purchase price. It is
the difference between a higher selling price and a lower purchase price,
resulting in a financial gain for the investor. Conversely, a capital loss
arises if the proceeds from the sale of a capital asset are less than the
purchase price.
Capital gains may refer to "investment income" that arises in relation to real
assets, such as property; financial assets, such as shares/stocks or bonds; and
intangible assets such as goodwill.
Many countries impose a tax on capital gains of individuals or corporations,
although relief may be available to exempt capital gains: in relation to
holdings in certain assets such as significant common stock holdings, to provide
incentives for entrepreneurship, or to compensate for the effects of inflation.
Speculation
In finance, speculation is a financial action that does not promise safety of
the initial investment along with the return on the principal sum. Speculation
typically involves the lending of money or the purchase of assets, equity or
debt, but in a manner that has not been given thorough analysis or is deemed to
have low margin of safety or a significant risk of the loss of the principal
investment. The term, "speculation," which is formally defined as above in
Graham and Dodd's 1934 text, Security Analysis, contrasts with the term
"investment," which is a financial operation that, upon thorough analysis,
promises safety of principal and a satisfactory return.
In a financial context, the terms "speculation" and "investment" are actually
quite specific. For instance, although the word "investment" is typically used,
in a general sense, to mean any act of placing money in a financial vehicle with
the intent of producing returns over a period of time, most ventured
money—including funds placed in the world's stock markets—is actually not
investment, but speculation.
Speculators may rely on an asset appreciating in price due to any of a number of
factors that cannot be well enough understood by the speculator to make an
investment-quality decision. Some such factors are shifting consumer tastes,
fluctuating economic conditions, buyers' changing perceptions of the worth of a
stock security, economic factors associated with market timing, the factors
associated with solely chart-based analysis, and the many influences over the
short-term movement of securities.
There are also some financial vehicles that are, by definition, speculation. For
instance, trading commodity futures contracts, such as for oil and gold, is, by
definition, speculation. Short selling is also, by definition, speculative.
Financial speculation can involve the buying, holding, selling, and
short-selling of stocks, bonds, commodities, currencies, collectibles, real
estate, derivatives, or any valuable financial instrument to profit from
fluctuations in its price, irrespective of its underlying value.
In architecture speculation is used to determine works that show a strong
conceptual and strategic focus.
Futures Contract
In finance, a futures contract is a standardized contract between two parties to
buy or sell a specified asset (eg.oranges, oil, gold) of standardized quantity
and quality at a specified future date at a price agreed today (the futures
price). The contracts are traded on a futures exchange. Futures contracts are
not "direct" securities like stocks, bonds, rights or warrants. They are still
securities, however, though they are a type of derivative contract. The party
agreeing to buy the underlying asset in the future assumes a long position, and
the party agreeing to sell the asset in the future assumes a short position.
The price is determined by the instantaneous equilibrium between the forces of
supply and demand among competing buy and sell orders on the exchange at the
time of the purchase or sale of the contract.
In many cases, the underlying asset to a futures contract may not be traditional
"commodities" at all – that is, for financial futures, the underlying asset or
item can be currencies, securities or financial instruments and intangible
assets or referenced items such as stock indexes and interest rates.
The future date is called the delivery date or final settlement date. The
official price of the futures contract at the end of a day's trading session on
the exchange is called the settlement price for that day of business on the
exchange.
A closely related contract is a forward contract; they differ in certain
respects. Future contracts are very similar to forward contracts, except they
are exchange-traded and defined on standardized assets. Unlike forwards, futures
typically have interim partial settlements or "true-ups" in margin requirements.
For typical forwards, the net gain or loss accrued over the life of the contract
is realized on the delivery date.
A futures contract gives the holder the obligation to make or take delivery
under the terms of the contract, whereas an option grants the buyer the right,
but not the obligation, to establish a position previously held by the seller of
the option. In other words, the owner of an options contract may exercise the
contract, but both parties of a "futures contract" must fulfill the contract on
the settlement date. The seller delivers the underlying asset to the buyer, or,
if it is a cash-settled futures contract, then cash is transferred from the
futures trader who sustained a loss to the one who made a profit. To exit the
commitment prior to the settlement date, the holder of a futures position has to
offset his/her position by either selling a long position or buying back
(covering) a short position, effectively closing out the futures position and
its contract obligations.
Futures contracts, or simply futures, (but not future or future contract) are
exchange-traded derivatives. The exchange's clearing house acts as counterparty
on all contracts, sets margin requirements, and crucially also provides a
mechanism for settlement.
Diversification
In finance, diversification means reducing risk by investing in a variety of
assets. If the asset values do not move up and down in perfect synchrony, a
diversified portfolio will have less risk than the weighted average risk of its
constituent assets, and often less risk than the least risky of its
constituents. Therefore, any risk-averse investor will diversify to at least
some extent, with more risk-averse investors diversifying more completely than
less risk-averse investors.
Diversification is one of two general techniques for reducing investment risk.
The other is hedging. Diversification relies on the lack of a tight positive
relationship among the assets' returns, and works even when correlations are
near zero or somewhat positive. Hedging relies on negative correlation among
assets, or shorting assets with positive correlation.
It is important to remember that diversification only works because investment
in each individual asset is reduced. If someone starts with $10,000 in one stock
and then puts $10,000 in another stock, they would have more risk, not less.
Diversification would require the sale of $5,000 of the first stock to be put
into the second. There would then be less risk. Hedging, by contrast, reduces
risk without selling any of the original position.
The risk reduction from diversification does not mean anyone else has to take
more risk. If person A owns $10,000 of one stock and person B owns $10,000 of
another, both A and B will reduce their risk if they exchange $5,000 of the two
stocks, so each now has a more diversified portfolio
Divestment
In finance and economics, divestment or divestiture is the reduction of some
kind of asset for either financial or ethical objectives or sale of an existing
business by a firm. A divestment is the opposite of an investment.
Gold
Of all the precious metals, gold is the most popular as an investment. Investors
generally buy gold as a hedge or safe haven against any economic, political,
social, or fiat currency crises (including investment market declines,
burgeoning national debt, currency failure, inflation, war and social unrest).
The gold market is also subject to speculation as other commodities are,
especially through the use of futures contracts and derivatives. The history of
the gold standard, the role of
gold reserves in central banking, gold's low
correlation with other commodity prices, and its pricing in relation to fiat
currencies during the financial crisis of 2007–2010, suggest that gold has
features of being money.
Tangibles
A tangible investment is something that you can pick up and hold. This contrasts
with financial investments such as stocks, bonds, and real estate.
Tangible investments are sometimes used as a tool to reduce overall investment
risk through diversification.
Intangible Assets
Intangible assets are defined as identifiable non-monetary assets that cannot be
seen, touched or physically measured, which are created through time and/or
effort and that are identifiable as a separate asset. There are two primary
forms of intangibles - legal intangibles (such as trade secrets (e.g., customer
lists), copyrights, patents, and trademarks) and competitive intangibles (such
as knowledge activities (know-how, knowledge), collaboration activities,
leverage activities, and structural activities). Legal intangibles are known
under the generic term intellectual property and generate legal property rights
defensible in a court of law. Competitive intangibles, whilst legally non-ownable,
directly impact effectiveness, productivity, wastage, and opportunity costs
within an organization - and therefore costs, revenues, customer service,
satisfaction, market value, and share price. Human capital is the primary source
of competitive intangibles for organizations today. Competitive intangibles are
the source from which competitive advantage flows, or is destroyed. The area of
finance that deals with intangible assets is known as Intangible Asset Finance.
The Uniform Commercial Code (Section 9-102(a)(42)) defines "general intangibles"
as
"any personal property...other than accounts, chattel paper, commercial tort
claims, deposit accounts, documents, goods, instruments, investment property,
letter of credit rights, letters of credit, money, and oil, gas, or other
minerals before extraction. The term includes payment intangibles and software."
Megaproject
A megaproject (sometimes also called "major program") is an extremely
large-scale investment project. Megaprojects are typically defined as costing
more than US$1 billion and attracting a lot of public attention because of
substantial impacts on communities, environment, and budgets. Megaprojects can
also be defined as "initiatives that are physical, very expensive, and public".
Care in the project development process may be needed to reduce any possible
optimism bias and strategic misrepresentation.
Megaprojects include bridges, tunnels, highways, railways, airports, seaports,
power plants, dams, wastewater projects, Special Economic Zones, oil and natural
gas extraction projects, public buildings, information technology systems,
aerospace projects, and weapons systems; however, the most common megaprojects
are in the categories of hydroelectric facilities, nuclear power plants and
large public transportation projects
Market trends
A
market trend is a putative tendency of a financial market to move in a
particular direction over time. These trends are classified as secular for long
time frames, primary for medium time frames, and secondary lasting short times.
Traders identify market trends using technical analysis, a framework which
characterizes market trends as a predictable price response of the market at
levels of price support and price resistance, varying over time.
The terms bull market and bear market describe upward and downward market
trends, respectively, and can be used to describe either the market as a whole
or specific sectors and securities.
Short-Term Investment Fund (STIF)
A Short-Term Investment Fund (STIF) is a type of investment fund which invests
in money market investments of high quality and low risk. They are commonly used
by investors to temporarily store funds while arranging for their transfer to
another investment vehicle that will provide higher returns. <http://en.wikipedia.org/wiki/Short-Term_Investment_Fund#cite_note-0>
This type of fund aims to protect capital while generating a return that
compares favourably with a particular benchmark, such as a Treasury Bill index.
These types of fund have low management fees (usually well beneath 1% p.a.) and
relatively low rates of return, commensurate with their low-risk investment
style.
Index
In economics and finance, an index is a statistical measure of changes in a
representative group of individual data points. These data may be derived from
any number of sources, including company performance, prices, productivity, and
employment. Economic indices (index, plural) track economic health from
different perspectives. Influential global financial indices such as the Global
Dow, and the NASDAQ Composite track the performance of selected large and
powerful companies in order to evaluate and predict economic trends. The Dow
Jones Industrial Average and the S&P 500 primarily track U.S. markets, though
some legacy international companies are included.[1] The Consumer Price Index
tracks the variation in prices for different consumer goods and services over
time in a constant geographical location, and is integral to calculations used
to adjust salaries, bond interest rates, and tax thresholds for inflation. The
GDP Deflator Index, or real GDP, measures the level of prices of all new,
domestically produced, final goods and services in an economy.[2] Market
performance indices include the labour market index/job index and proprietary
stock market index investment instruments offered by brokerage houses.
Some indices display market variations that cannot be captured in other ways.
For example, the Economist provides a Big Mac Index that expresses the adjusted
cost of a globally ubiquitous Big Mac as a percentage over or under the cost of
a Big Mac in the U.S. with a U.S. dollar (estimated: $3.57).[3] Norway prices
reflect most relatively expensive Big Mac, at an 84% increase over U.S. prices,
or $6.5725 U.S. The least relatively expensive Big Mac price occurs in Hong
Kong, at a 52% reduction from U.S. prices, or $1.71 U.S. The Big Mac index is
used to predict currency values. From this example, it would be assumed that
Hong Kong currency is undervalued, and provides a currency investment
opportunity.
Capitalization-Weighted Index
A capitalization-weighted index is an index whose components are weighted
according to the total market value of their outstanding shares. Also called a
market-value-weighted index. The impact of a component's price change is
proportional to the issue's overall market value, which is the share price times
the number of shares outstanding.
For example, the AMEX Composite Index (XAX) has more than 800 component stocks.
The weighting of each stock constantly shifts with changes in the stock's price
and the number of shares outstanding. The index fluctuates in line with the
price move of the stocks.
Some capitalization-weighted indices
* NASDAQ Composite Index
* NASDAQ-100 Index
* NYSE Composite Index
* Hang Seng Index in Hong Kong
* Russell 2000 Index
* S&P 500 - Now float-weighted
* Standard & Poor's 100 Index (OEX) - now float weighted
* IBEX 35 Index - index comprising the 35 most liquid Spanish stocks traded in
the continuous market, and is Bolsa de Madrid's benchmark.
* Indice de Precios y Cotizaciones (IPC) - index of 35 of the Bolsa Mexicana de
Valores (BMV) most highly marketable issuers with a minimum market value of $100
million; revised every six months.
* Kuala Lumpur Composite Index (KLCI)
* FTSE TechMark
* CAC 40 Index
* VN-Index
* Taiwan Capitalization Weighted Stock Index
S&P500
The S&P 500 is a free-float capitalization-weighted index published since 1957
of the prices of 500 large-cap common stocks actively traded in the United
States. The stocks included in the S&P 500 are those of large publicly held
companies that trade on either of the two largest American stock market
exchanges; the New York Stock Exchange and the NASDAQ.
The index focus is U.S.-based companies although there are a few legacy
companies with headquarters in other countries. Any new companies added to the
index are U.S. based, and, when a U.S. company shifts its headquarters overseas,
it is replaced by a U.S. company, as happened when Transocean moved from Houston
to Switzerland in 2008.
After the Dow Jones Industrial Average, the S&P 500 is the most widely followed
index of large-cap American stocks. It is considered a bellwether for the
American economy, and is included in the Index of Leading Indicators. Many
mutual funds, exchange-traded funds, and other funds such as pension funds, are
designed to track the performance of the S&P 500 index. Hundreds of billions of
US dollars have been invested in this fashion.
The index is the best known of the many indices owned and maintained by Standard
& Poor's, a division of McGraw-Hill. S&P 500 refers not only to the index, but
also to the 500 companies that have their common stock included in the index.
The ticker symbol for the S&P 500 index varies. Some examples of the symbol are
^GSPC, .INX, and $SPX. The stocks included in the S&P 500 index are also part of
the broader S&P 1500 and S&P Global 1200 stock market indices.