Investments

Leading Stocks Have Similarities

June 4, 2018 by Twila Van Leer

Among the hottest stocks on the market recently, three leaders have some interesting similarities, according to the Motley Fool.

The three are Align Technology, Editas Medicine and Nvidia, a pretty diverse sampling of current stock leaders. They are fast growing, with Align soaring some 50 percent so far this year. Editas is up by 30 percent and Nvidia 20 percent.

The three very different companies have something in common. Each is a leader in its genre. Align is dominating a clear dental aligner market. Editas is pioneering technology in CRISPR gene editing and Nvidia is booming with new approaches to production of chips for artificial intelligence, cryptocurrency mining and gaming. With a fixed focus, each of the companies is thriving in its corner of the market.

Align has developed a product and then created mass customization processes so that tens of thousands of Invisalign clear aligners can be produced and adapted specifically for a particular patient. They are shipped all over the country every day.

Although several biotech companies focus on gene editing, Editas has created its own niche targeting Leber congenital amaurosis type 10, the leading cause of blindness in children. Editas has several patents for its CRISPR processing gene editing used to treat the genetic blindness., as well as other genetic diseases.

Nvidia set the standard for powering gaming applications years ago with its graphics processing units. Turns out the GPUs created for gaming also could be used for running Al and cryptocurrency mining software. Nvidia has many would-be competitors, but to date leads the pack in the field.

Among the similarities they share is huge market opportunities. Each is making inroads into markets that have not been tapped out. Editas is the only company that offers treatment for LCA type 10 or several other genetic diseases that are being targeted for biotech remedies. The potential for years of amplifying their approach appears almost endless.

Align also has a rosy future. At present, the company claims just 12 percent of the possible market and less than 5 percent of the teen orthodontic market. That leaves plenty of room for expansion. Research that will allow for treatment of the most severe cases of tooth misalignment is expected to lead to 40 percent expansion in the next few years.

Nvidia’s prospects likewise appear to be unlimited. How much the Al market will grow is unpredictable, but prospects are for a much bigger market in the future. Continued predictions of growth in gaming, particularly in the areas of augmented reality and virtual reality all point to continuing success.

All three of these leading stocks are expensive and growing based almost solely on future prospects rather than current productivity.

Should you buy expensive stocks in high-growth markets? Not necessarily. The market has many examples of stocks with similar promise that have not performed as well as expected. And some of stocks that don’t meet the same criteria that have done unexpectedly well.

It’s the nature of playing the stock market.

What Would You Do With An Extra $500

March 30, 2018 by Twila Van Leer

What if you found yourself with $500 that wasn’t committed to any part of your budget. Could happen. An income tax return, for instance.

Regardless of the source of your windfall, it’s time to consider how to get the most benefit from it by looking at short-term investment options. Having one or more of these in your financial profile is a buffer against the unexpected.

Carefully look at the possibilities before putting your $500 on the line. The most common short-term options

• A term deposit, sometimes referred to as a certificate of deposit, means you put an amount into an account at a financial institution, with a fixed term. Maturity dates can be set for as short a time as six months or extend to five years. Most institutions charge a penalty if you close the account before the term is filled. In most instances, the institution pays a higher dividend on a term deposit than on a traditional savings account. You can increase the value of such a deposit by “laddering,” or opening multiple accounts that mature at different times, anywhere from a year to five years. When a deposit matures, you can flip it into a new term account. Creating a train of short-term deposits allows you to access money when you need it on a regular basis while still earning good dividends.

• Look at mutual funds, an investment program that takes money contributed by many people and putting it into securities. Beginning investors may be particularly interested because mutual funds are easy to understand and to buy. They are affordable and offer a variety of categories and types. Consider where you feel most comfortable placing your $500.

• Peer-to-peer lending puts people with money to invest together with people or organizations that need to borrow that money. These lending platforms operate online, so they have lower overhead and fewer transaction costs. Three- to five-year investments usually earn higher returns. As is usually the case, that means higher risk. It is possible the borrower could default and the debt go to collection, or be lost entirely. Diversity is the best approach. Putting small amounts of money into several loans minimizes the possibility of damage to your portfolio.

Whatever you decide to do with your $500, don’t leap before carefully studying all of the possibilities. Be familiar with the institution in which you intend to invest your money. If you are uncertain, find a financial advisor who is familiar with the answers to your questions.

What Do You Want For Retirement

February 26, 2018 by Twila Van Leer

How Much Cash Do You Want In Retirement?

Ever tried to calculate how much money you would like to have to live on in the way you want to in retirement? Fifty thousand a year? $150,000? Maybe $500,000?

If you want to try to figure it out, subtract out income you currently have from your job and any other income sources. Divide the figure by .04 to see what assets it would take to support that level of annual income. Many financial planners use the .04 figure based on experience that says you could withdraw 4 percent of your money each year and put it into an account that would generate enough, over time, to maintain its value after calculating for inflation.

For example, if you think you would need to make $80,000 per year to live as you like. In fact, you only work part-time and make $20,000 per year. You assume that you can expect about $15,000 per year in Social Security. Take the $80,000 and subtract $35,000 and you’ll have $45,000. Divide that by the .04 and you’ll have a figure of $1,125,000. That’s the amount you would need to earn the other $65,000 from your investments if you want never to run out of money.

The next factor you need to decide on is when you will be wanting the money. If you are 30 and want to retire at 65, you have 35 years to get the money lined up. Use an online calculator such as calculators online, to figure it out how much in monthly savings you will need to reach the goal. Such a calculator also can guide you in different scenarios, showing how long it will take to reach your goals under different savings and investing plans.

Assuming an 8 percent return on your investments, you’d have to set aside $754.85 per month until retirement. (If you had started at age 25, the amount would be only $322.26 per month. If you had begun at 18, the monthly cost would have been $181.09. That’s the power of compounding.)

If you aren’t expecting to leave anything to family or friends, a charitable remainder trust could be a great choice. The savings figure would be much lower because this model assumes that you would maintain the $1,125,000 fund in perpetuity.

Many financial planners will estimate your lifespan and create a program that will see your money run out at your 85th birthday, or longer.

You can expedite your goal by saving more each month. Say $300 per month extra could help you arrive at the goal much, much earlier, possibly decades. That may take some sacrifice – a used vehicle instead of new, fewer meals out, less expensive clothing, etc. Your priorities are your own and no one can make this decision except you. But as a rule of thumb, the more you are willing to give up early on, the fast your will reach the goal. Avoiding unnecessary debt is one of the objectives you should set early and stick with.

Try to look ahead as much as you can. If your part of the country appears to be headed for depressed conditions, move to a place where the economic picture is more rosy. If that seems drastic, consider: If you are not willing to be inconvenienced for the chance of a better life, then you must be content to live in poverty.

Making a good beginning toward your retirement goals is wise. Passing up car ownership into your 20s may save you the costs of upkeep, fuel and insurance. Instant gratification can be costly.

Take Dow Drops Seriously

February 13, 2018 by Twila Van Leer

In recent weeks, the Down Jones Industrial Average, one of the indicators of how well the country’s investing is going, has dropped twice by more than 1,000 points in a single week.

What should you, as an investor, do? It’s natural to be nervous when it is possible more dips are in store. Mistakes in this kind of market could lead to even bigger mistakes in the future.

Take a lead from multi-millionaire Warren Buffett, whose holdings have declined in value by an 11-figure amount over the past week. He isn’t unhappy about it and sees it as the normal rise and fall of the market. He anticipates more attractive entry points to stock investments and a better chance to find a reasonably priced acquisition, a “more palatable stock price to consider implementing a buyback.”

If you aren’t as knowledgeable as Buffett, rely on past history. Market corrections are common, healthy occurrences that should be embraced as long-term opportunities.

Here are three approaches that will keep your investments safe while the market readjusts:

Use dollar-cost averaging. Many people do this routinely. You invest a fixed amount of money on a regular basis into shares of stock or a mutual fund. Your 401(k) contributions, for instance, are an automatic form of dollar-cost averaging. Making regular deposits to a mutual fund or brokerage account is another way to dollar-cost average. Under this scenario, when stock prices fall, your fixed dollar amount buys more shares. It automatically helps you take greater advantage of corrections by purchasing more shares than you could have before the price drop.

Invest some now and some later. During the recent bull market, many people grew their amounts of cash. Not being able to predict if the current down-trend will than lead to a full bear market, be wary of investing everything now. You may get it wrong. One solution is to invest only a portion of your available money now, depending on your risk tolerance. Consider investing a third now, another third six months from now and retain the rest until you see how the market is trending by then.

Give your savings a bump. Though its emotionally easier to put your money to work in the market, it may pay during the term of a down-time to increase savings while stock prices are weakening so that you can begin to invest again when the time is right.

Market downturns can allow you to forget the reason you’re investing in the first place – to have enough money to meet long-term goals such as retirement. Get past the panic and stay focused on the future. Things will change.

Investment Advice? It’s As Old As The Hills

July 17, 2014 by Twila Van Leer

It probably began right after the Garden of Eden deal fell through. Swapping success stories has been part of the human condition since there were two entrepreneurs to swap tales. And some very good advice has survived for generations.

Forbes Magazine winnowed down the list to share with readers. Their pool of gurus includes five billionaires, a miser, a Nobel laureate, a founding father and assorted and sundry people whose names rise to the top whenever success is the topic.

Examples include:

Warren Buffet, whose $65 billion empire was built on buying businesses that he was certain were worth more than the sellers envisioned: “Whether socks or stocks, I like buying quality merchandise when it is marked down.”

Sir John Templeton, founder of Templeton Funds, who made a killing by defying the conventional wisdom about the stock market, buying when others were selling: “If you buy the same securities everyone else is buying, you will have the same results as everyone else. . . Buy at the point of maximum pessimism, sell at the point of maximum optimism.”

Nathan Mayer Rothschild, 1776-1836, founder of N. M. Rothschild & Sons. “Information is money.” Thanks to his extensive network of carrier pigeons, and the careful placing of his sons in strategic European cities, Rothschild knew that England had defeated France in the Battle of Waterloo before anyone else in London. As other traders on the stock exchange braced for a British loss, he capitalized on his early information to build a fortune.

Peter Lynch, manager, Fidelity Magellan Fund. “Buy what you know.” He applied his knowledge of wise money management to generate an annual return of 29 percent. His secret to profitable investing: Don’t buy Twitter or Amazon, but do buy those suggested by A.All .com and Validea.com, NetApp, Barrett Business Services, Honda, Publis and Alliance Fiber Optic.

Alexander Hamilton, first U.S. Secretary of the Treasury, who earned the nickname Little Lion. His bestseller: the $10 bill. During the country’s formative years, he tirelessly advocated for responsible federal finances. His lesson: Don’t buy securities in developing countries with dodgy rulers. “A nation which can prefer disgrace to danger is prepared for a master and deserves one.”

David Tepper, founder Appaloosa Management. During the panic of early 2009, he bet heavily on Bank of America, Citigroup and AIG. Quit Goldman Sachs in 1992 to build his own hedge fund. Reputation for clearheaded moves in environments of fear and misinformation. His quote: “I am the animal at the head of the pack. I either get eaten or I get the good grass.” He advises paying careful heed to central bankers and fiscal policymakers.

Hetty Green, 1834-1916: Description, miser; nicknamed “The Witch of Wall Street.” She inherited $5 million at age 30 and had multiplied it into $100 million by the time she died in 1916 by ferreting out investments that would earn her 6 percent annually, doubling her fortune every 12 years. The richest woman in the United States, she saved pennies by refusing to use hot water, wash her clothes or provide her son with decent medical care. “All you have to do is buy cheap and sell dear, act with thrift and shrewdness and be persistent.”