All you want to know but never asked about the stocks and options markets.

jueves, 15 de octubre de 2015

What is an ADR: Trading in other markets

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Simply put, an ADR ("American Depositary Receipt") is a non-US stock which is traded in US markets.  To be more specific, it is a physical certificate representing deposited shares of a non-US company in an American bank. They have all rights and obligations, including dividend and voting rights, and may also be converted into the origin stock, which are known as ADS ("American Depositary Share") at any time at the request of the holder.

jueves, 8 de octubre de 2015

The scrip dividends

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The script dividends

The scrip dividends or stock dividends are the shares issued to reward shareholders instead of paying the traditional dividend. These shares are issued with preferential subscription rights on behalf of the shareholder.

In cases where the company remunerate the shareholders in this way, they can choose three options

  • Accept the subscription rights and add the new shares to their portfolio.
  • Sell the subscription rights to the company, at a price fixed in advance, being this option equivalent to a traditional dividend payment.
  • Sell the subscription rights on the market. As expected, in this case the price fluctuates, regardless of the nominal share value.

Why a company may prefer to pay scrip dividends?

The reason is simple. For the shareholder who accepts the new securities, it involves increasing the capital and not to touch the cash  flow.  In addition to avoiding the financial effort when paying  the cash, that liquidity can be used for other purposes. In the long term, it may be a strategy to recapitalize the company making use of the benefits, without the need for capital increases.

Moreover, we must not forget that the sale of rights have a dilutive effect for shareholders, since with the same value of the company there are more issued shares, thus, each worth less.

viernes, 2 de octubre de 2015

Why you should consider ETFs in your investment portfolio?

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exchange traded funds

The ETFs, short for Exchange Traded Funds, are the great discovery and solution in the world of asset management, investment, and especially of the particular investment. I invested in stocks, futures, CFDs, forex and bonds, but it was not until the ETFs when I discovered this great ally of the retail investor.

The ETFs began operating in 1993 in the US with the appearance of the SPY, the quintessential ETF of SP 500. The idea is simple: the investor get in a single asset a complete whole stock market, in this case, the S&P 500 index. The construction of the ETF is not so simple, but that does not concern us for now. The idea is that in a single asset, in this case the SPY, we have a basket of the 500 largest US companies. Today the minimum amount payable is $211 which is the cost of one unit.

jueves, 1 de octubre de 2015

The Nasdaq 100 Index

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the nasdaq  100 index

The Nasdaq 100 Index also known as simply Nasdaq 100 is a stock index of the United States that collects the stocks of the 100 most important companies in the industrial sector, including companies of hardware and software, telecommunications, retail sales, wholesales and biotechnology, which are enrolled in the New York Stock Exchange (NYSE) and listed on the Nasdaq Stock Market. In this index can be both American and international companies.

This index does not include financial stocks, including investment companies which differentiates the  Nasdaq 100 from other indices such as the S&P 500.

The Nasdaq 100 is abbreviated as NDX100. Its corresponding futures are traded on the Chicago Stock Exchange (Chicago Board of Trade). These contracts, abbreviated as ND, and its mini version, abbreviated as NQ, are one of the most traded futures in the Chicago Stock Exchange.