In my Margin is a Double-Edged Sword and Investing Using Margin Debt Leaves You Vulnerable articles, I touched upon the risks of employing the use of margin debt for investment purposes. Margin investing is the practice of borrowing money from a brokerage firm to make investments. Traders tap this to increase buying power and then [...]
Life teaches us what is not taught in school. I learned very quickly that inflation erodes the value of money and that your investment strategy should account for inflation's impact! I vividly recollect some things and then there are other things about which I have no recollection. For example, a former co-worker retired a few [...]
Several existing holdings, or companies on my watch-list, are trading at forward-adjusted diluted PE levels above the upper-20s. These companies with lofty valuations, however, have hundreds of thousands and millions of shares trading hands daily. This has me wondering what type of investors are buying stocks when valuations are high. Before I delve into this, [...]
In my recent The Secret to Making Money – Positive Cash Flow article I indicated the simple secret to making money is positive cash flow. In this article, I lay out the two questions I ask before investing money. These questions are: Will this investment generate a level of return commensurate with its level of [...]
Most people complicate the process to generate wealth when the simple secret to making money is positive cash flow. The secret to generating positive cash flow is the extent to which you pull two levers. Lever 1 - Increase your total cash inflow (income) Lever 2 - Decrease your total cash outflow (expenses). It is [...]
CorporateFinanceInstitute.com Reduce Unsystematic Risk Through Proper Diversification It is all well and good to assess an investment's potential return. The problem is, however, many investors neglect to assess the risk aspect of their investments. It is important investors reduce Unsystematic Risk through proper diversification otherwise they may get a ‘rude awakening’. In my [...]
CorporateFinanceInstitute.com Be Aware of Systematic Risk It is all well and good to assess an investment's potential return. The problem is, however, many investors neglect to assess the risk aspect of their investments. It is important investors be aware of Systematic Risk and Unsystematic Risk otherwise they may get a ‘rude awakening’. In [...]
The degree of irrational exuberance we are witnessing suggests many investors are focusing on the 'hype' and are paying little heed to reality. The 'fear of missing out' is what is likely driving many investors to 'invest' in companies or instruments which they do not fully understand. The valuation of many companies with no proven [...]
Cisco Systems, Inc. (CSCO) is a dominant supplier of switches, routers, firewalls, and complementary networking products. Its products are mission critical for network performance, stability, and security. It released its Q4 and FY2019 results and provided Q1 2020 guidance following the August 14, 2019 market close. The broad investment community was not pleased with results [...]
Legendary investor Howard Marks, chairman and co-founder of Oaktree Capital Management, has published two books in which he explains the keys to successful investing, the pitfalls that can destroy capital, and the importance of having a keen understanding of the reasons behind the rhythm of cycles. In my opinion, the current investment environment is such [...]
