SmallCapInvestor.com: Investing 101

Add a Little Glitter to Your Portfolio

Tue, 03 Jun 08 00:00:00 -0400

You would have had to be living under a rock for the last couple of years to be unaware of the phenomenal rise of gold.

Now, many investors are questioning – is it too late to get in on this rally?

On the pro side, there is no shortage of folks who say gold is a fool-proof investment. The advantages they tout include:

• Its historic value as an inflation hedge when the purchasing power of the dollar is eroding.
• The scarcity factor – you can’t make gold; it has to be mined, and there is a limit to the amount available around the world.
• Global affluence is growing, creating a booming demand for the metal.
• Uncertain economic and political climates often send investors flocking to gold, driving its price up and frequently leading it to outperform stocks and bonds during those periods.

However, owning gold is not without its drawbacks:

• Its price is very volatile, with its value determined by supply and demand, which is dependent upon the cravings of investors.
• During stock market rallies, the price of gold often declines.
• While frequently a great short-term investment, over the long-run, the return of gold is outpaced by equity returns. A dollar invested in gold in 1969, according to the Wall Street Journal, would have been worth about $20 by 2006. During the same period, $1 invested in the stock market, as measured by the S&P 500 index, would be worth more than twice that amount.
• Although touted as an inflation hedge, gold’s value has not always kept up with inflation.

Seven Signs of Fraud--How Do You Know Your Stock Isn't The Next Bear Stearns?

Tue, 29 Apr 08 00:00:00 -0400

Last month, many investors were again caught unaware when Bear Stearns, the fifth-largest U.S. investment bank, and one of the street's blue bloods, announced that it was being rescued by JP Morgan Chase and the Federal Reserve Bank of New York.

Stunned investors couldn't believe it! It was the first time since the Great Depression that the Fed has stepped in to give credit to a non-bank to keep it on its feet.

After being a force to reckon with for more than 80 years on Wall Street, the bank was a few days from bankruptcy, leaving many folks shaking their heads and asking what the heck happened?

This debacle is simply another domino in a long list of failed companies that allowed greed to get in the way of good sense. Enron, Long Term Capital, WorldCom, Tyco (and now, Bear Stearns) were all poster children for executives to find new ways to grab as much money as they could with no regard to the ultimate consequences for their shareholders or their more than 15,000 employees.

Why You Need a Roth IRA

Tue, 24 Jul 07 09:00:00 -0400

Individual Retirement Accounts (IRAs) were created in 1974, a boon to folks who either were not fortunate enough to participate in a company retirement plan and to others who just needed an impetus to begin saving for retirement. They were an almost immediate success. And by the end of 2005, according to the Investment Company Institute (ICI), IRA assets across the country totaled more than $3.3 trillion dollars.

And in today's world, with pensions few and far between, the need to personally save for retirement is more important than ever, propelling the growth of IRAs even faster and further!

In 1998, Congress added a new twist, when legislation authorized the creation of the Roth IRA. By the end of 2005, also according to the ICI, Americans held some $145 billion in Roth IRA assets.

The Investor's Bookshelf

Tue, 17 Jul 07 09:00:00 -0400

Meet EDGAR

Tue, 10 Jul 07 09:00:00 -0400

Meet EDGAR

Tue, 10 Jul 07 00:00:00 -0400

Financially Fit readers, meet EDGAR. You should get very well acquainted with EDGAR, because EDGAR is here to make you money.

EDGAR is the acronym for electronic data gathering and retrieval. The Securities and Exchange Commission (SEC) requires all entities that offer securities to the general public to make periodic filings to the SEC electronically – this is done through EDGAR. EDGAR can be accessed through the SEC site at http://www.sec.gov/edgar.shtml.

Specific company filings can be accessed by typing in a stock ticker or the company's name at http://www.sec.gov/edgar/searchedgar/companysearch.html. The site provides all company filings going back for a period of 10 years.

Key filings include:

Form 10-K: annual report every public firm files with the SEC within 75 days of the firm's year-end.

Form 10-Q: quarterly report every company files within 45 days of its quarter-end.

Form 20-F: annual and transition report of foreign issuers.

The Beauty of Options

Tue, 26 Jun 07 09:00:00 -0400

A Guide to IPO Investing

Tue, 19 Jun 07 09:00:00 -0400

A Guide to IPO Investing

Tue, 19 Jun 07 00:00:00 -0400

Investing in initial public offerings (IPOs) has been and continues to be largely reserved for institutional investors. To clarify, we’re referring to the right to buy shares in a company prior to the shares trading on the open market.

Occasionally, individual investors can get in on the IPO action, maybe to the tune of a hundred shares, if they’re lucky. While 100 shares is probably chump change to institutional investors, it could prove to be a sizable holding for an individual.

Understanding Financial Reports: Easier than you Think

Tue, 12 Jun 07 09:00:00 -0400