vania-janet/multiturn-rag-retrieval-data huggingface dataset:
The shift to trading at the close began in 2008. Traders did not want to be caught off guard by surprise news and there was a lot of volatility during the financial crisis, so they would close their position in the evening. Thats how it began. There are two reasons why it sticks around. First, there has been an increase usage of index funds or passive funds. These funds tend to update their positions at the end of the day. From the WSJ: Another factor behind the shift has been the proliferation of passively managed investments, such as index funds. These funds aim to mimic an index, like the S&P 500, by owning the shares that comprise it. Index funds don’t trade as often as active investors, but when they do, it is typically near the market close, traders say. That is because buying or selling a stock at its closing price better aligns their performance with the index they are trying to emulate. The second reason is simply that volume attracts volume. As a result of whats mentioned above, you have a shift to end of day trading, and the corrolary to that is that there is a liquidity shortage from 10am to 3pm. Thus, if you want to buy or sell a stock, but there are few buyers or sellers around, you will significant move the price when you enter your order. Obviously this does not affect retail traders, but imagine hedge funds entering or closing a billion dollar position. It can make a huge impact on price. And one way to mitigate that is to wait until there are more market participants to take the other end of your trade, just as at the end of the day. So this is a self-reinforcing trend that has begun in the markets and will likely stick around. http://www.wsj.com/articles/traders-pile-in-at-the-close-1432768080
"Stock market indexes are generally based on market capitalization, which is not the same as GDP.  GDP includes the value of all goods and services produced in a country; this includes a large amount of small-scale production which may not be reflected in stock market capitalizations.  Thus the ratio between countries' GDPs may not be the same as the ratio of their total market capitalization.  For instance, US GDP is approximately 3.8 times as much as Japan's (see here), but US total market cap is about 5.5 as much as Japan's (see here). The discrepancy can be even more severe when comparing ""developed"" economies like the US to ""developing"" (or ""less-developed"") economies in which there is less participation in large-scale financial systems like stock markets.  For instance, US GDP is roughly 10 times that of Brazil, but US total market cap is roughly 36 times that of Brazil.  Switzerland has a total market cap nearly double that of Brazil despite its total GDP being less than half of Brazil's.  Since the all-world index includes all investable economies, it will include many economies whose share of market cap is disproportionately lower than their share of GDP. In addition, according to the fact sheet you linked to, that index tracks only large- and mid-cap stocks.  This will further skew the weighting to developed economies and to the US in particular, since the US has a disproportionate share of the largest companies. Obviously one would need to take a more detailed look at all the weights to determine if these factors account precisely for the level of discrepancy you see in this particular index.  But hopefully that explanation gives an idea of why the US might be weighted more heavily in a stock index than it is in raw GDP."
Each situation is different, but it has to do with assessing what the Company is trying to do. People always talk about WACC, but in reality, WACC is less important than figuring how how much debt a Company can support (determined by leverage and solvency statistics).  Here are a few things to think about:  -How stable are the Company's cash flows? (big difference between a Company that has multi-year contracts locked in place vs. variable/cyclical revenue streams; what type of Capex requirement is there?)  -What is the purpose of raising the capital? (growth vs. recapitalization; where are the proceeds going?)  -What collateral is available for creditors?  -What does working capital look like? (is there seasonality?)
The shortest-hand yet most reliable metric is daily volume / total shares outstanding.  A security with a high turnover rate will be more efficient than a lower one, ceteris paribus. The practical impacts are tighter spread and lower average percentage change between trades.  A security with a spread of 0% and an average change of 0% between trades is perfectly efficient.
"In addition to the answers provided above, the weight the Dow uses to determine the index is not the market capitalization of the company involved. That means that companies like Google and Apple with very high share prices and no particular inclination to split could adversely effect the Dow, turning it into essentially the ""Apple and Google and then some other companies"" Industrial Average. The highest share price Dow company right now, IIRC, is IBM. Both Google and Apple would have three times the influence on the Index as IBM does now."
The Dow's price-weighting is unusual as stock indices go. Most indices are weighted by market capitalization. That means the influence of a single company is proportional to its total value. This causes large companies like Apple to have a lot of influence on those indices, but since market capitalization isn't as arbitrary as stock price, most people see that as ok. Also, notice that I said ""company"" and not ""stock"". When a company has multiple classes of share (as Google does), market-cap-weighted indices include all of the share classes, while the Dow has no provision for such situations, which is another, albeit less important, reason why Google isn't in the Dow. (Keep this in mind the next time someone offers you a bar bet on how many stocks are in the S&P 500. The answer is (currently) 505!) Finally, you might be wondering why the Dow uses such an odd weighting in its calculations. The answer is that the Dow averages go back to 1896, when Charles Dow used to calculate the averages by hand. If your only tools are a pencil and paper, then a price-weighted index with only 30 stocks in it is a lot easier to calculate than a market-cap-weighted index with hundreds of constituents. About the Dow Jones Averages. Dow constituents and prices Apple's stock price chart. The split in 2014 is marked. (Note that prices before the split are retroactively adjusted to show a continuous curve.)"
Personally, I think this one is best. RAROC (risk-adjusted return on capital) puts things in perspective for excess returns when considering risk-contribution. It does have its flaws, e.g. the quality of the VaR can be manipulated or simply incorrectly measured. But as in any model, it's GIGO (garbage-in garbage-out).
"In theory, say we had two soft drink companies, and no other existed. On Jan 1, they report they each had 50% market share for the past year. Over the next year, one company's gain is the other's loss. But over the year, for whatever reason, the market has grown 10% (all the stories of bad water helped this), and while the market share ends at 49/51, the 49 guy has improved his margins, and that stock rises by more than the other.  In general, companies in the same industry will be positively correlated, and strongly so.  I offer my ""spreadsheets are your friend"" advice. I took data over the last 10 years for Coke and Pepsi. Easy to pull from various sites, I tend to use Yahoo. In Excel the function CORREL with let you compare two columns of numbers for correlation. I got a .85 result, pretty high. To show how a different industry would have a lower correlation, I picked Intel. Strangely, enough, Intel and Pepsi had a .94 correlation. A coincidence, I suppose, but my point is that you can easily get data and perform your own analysis to better understand what's going on."
Do yourself a favor and get educated, inform yourself, because otherwise your money will be gone fast. Marketing campaigns such as this are targeted at people who do not have the knowledge required and thus lose a significant portion (most of the time all) of their deposits. Answer to the actual question: No, there is no better way. You can by the stock itself, or a derivative based on it. This means CFDs, options or futures. All of them require additional knowledge because they work differently than the stock. TL;DR: DumbCoder is absolutely right, do not do it if you do not know what it is about. EDIT: Revisiting this answer and reading the other answers, i realize this sounds like derivatives are bad in general. This is absolutely not the case, and i did not intend it to sound this way. I merely wanted to emphasize the point that without sufficient knowledge, trading such products is a great risk and in most cases, should be avoided.
Judging by the fact that 6% of the companies in the U.S earn roughly 50% of the profits, the Dow Jones is most certainty not useless. The 6% of companies that earn all the profit are the biggest movers of the market, thus they give a basic glimpse of how the economy is faring.
Taking as given that your definition of VA involves selling at intermediate times, your question can be made more general.  After all, value averaging is just one special case of a portfolio that rebalances to target weights periodically. Do back-end fees (and front-end fees) harm the value of portfolios that require rebalancing?  The answer is yes, they do.  Those fees are put in place in order to prevent investors from redeeming shares over any but the longest horizons.  Any portfolio that rebalances periodically will involve some periodic selling.  If you invest in a fund with front-end or back-end fees, it is optimal to leave your money in it for as long as possible and not do any rebalancing. If you want to run a portfolio that is at all active (involves rebalancing), then it is probably wise to use no-load funds. These are often some of the best and cheapest funds anyway, but even if front or back end load funds have a lower expense ratio, you will likely lose money on those loads as you rebalance.
Let's simplify things by assuming you only own 2 stocks. By owning VOO and VTI, you're overweight on large- and mid-cap stocks relative to the market composition. Likewise, by owning VTI and VT, you're overweight on U.S. stocks; conversely, by owning VXUS and VT, you're overweight on non-U.S. stocks. These are all perfectly fine positions to take if that's what you intend and have justification for. For example, if you're in the U.S., it may be a good idea to hold more U.S. stocks than VT because of currency risk. But 4 equity index ETFs is probably overcomplicating things. It is perfectly fine to hold only VTI and VXUS because these funds comprise thousands of stocks and thus give you sufficient diversification. I would recommend holding those 2 ETFs based on a domestic/international allocation that makes sense to you (Vanguard recommends 40% of your stock allocation to be international), and if for some reason you want to be overweight in large- and mid-cap companies, throw in VOO. You can use Morningstar X-Ray to look at your proposed portfolio and find your optimal mix of geographic and stock style allocation.
Your question is a complex one because knowledge of the investor's beliefs about the market is required.  For almost any quantitative portfolio, one must have a good estimate of the expected return vector and covariance matrix of the assets in question.  The expected return vector, in particular, is far from estimable.  No one agrees on it and there is no way to know who is right and who is wrong. In a world satisfying the conditions of the CAPM, you can bypass this problem because the main implication of the CAPM is that the market weights are optimal.  In that case the answer to your question is that you should determine the market weights of the various assets and use those along with saving in a risk-free account or borrowing, depending on your risk tolerance.  This portfolio has the added benefit that you don't need to rebalance much...the weights in your portfolio adjust at the same rate as the market weights. Any portfolio that has something besides this also includes some notion of expected return aside from CAPM fair pricing.  The question for you, then, is whether you have such a notion.  If you do, you can mix your information with the market weights to come up with a portfolio.  This is what the Black-Litterman method does, for example: get the expected return vector implied by market weights and the covariance matrix, mix with your expected return vector, then use mean-variance optimization to come up with your final weights.
In addition to the expatriation case already mentioned by Ben Miller, traders/investors are required to use mark-to-market accounting on certain investments.  These go by Section 1256 contracts due to the part of the law  that defines them.  Mark-to-market is also required on straddles (combination of a long and and a short position in equities that are expected to vary inversely to each other). Mark-to-market means that you have to treat the positions as if you closed them at their end-of-year market value (even if you still have the position across the new year).
"Always use limit orders never market orders. Period. Do that and you will always pay what you said you would when the transaction goes through. Whichever broker you use is not going to ""negotiate"" for the best price on your trade if you choose a market order.  Their job is to fill that order so they will always buy it for more than market and sell it for less to ensure the order goes through. It is not even a factor when choosing between TradeKing and Scottrade. I use Trade King and my friend uses ScottTrade.  Besides the transaction fee (TK is a few $$ cheaper), the only other things to consider are the tools and research (and customer service if you need it) that each site offers. I went with TK and the lower transaction fee since tools and research can be had from other sources. I basically only use it when I want to make a trade since I don't find the tools particularly useful and I never take an analyst's opinion of a stock at face value anyway since everybody always has their own agenda."
"Read again what I said in my original post.  ""Enterprise Value is the sort of ""bare bones"" total firm value. It doesn't include any cash because you'd basically be paying cash for cash. Also, this makes analysis of transaction multiples more streamlined, as some firms may have a ton of excess cash on their balance sheet, skewing multiples.""  I said that that is WHY we use enterprise value. Because if you didn't it would skew multiples."
"This is an example from another field, real estate. Suppose you buy a $100,000 house with a 20 percent down payment, or $20,000, and borrow the other $80,000. In this example, your ""equity"" or ""market cap"" is $20,000. But the total value, or ""enterprise value"" of the house, is actually $100,000, counting the $80,000 mortgage.  ""Enterprise value"" is what a buyer would have to pay to own the company or the house ""free and clear,"" counting the debt."
I think the most concise way to understand EV is the value of the *operating assets* of the firm. It's most generally used when using income statement or cash flow ratios that are unlevered - before applying interest expense (which if the firm is optimally financed, in theory should only impact the equity). Examples include revenue, EBIT, EBITDA, unlevered FCF, etc.  In your hypothetical scenario, you would expect the equity value of the firm to increase linearly as cash builds up. In other words, in some implausible, ceteris paribus formulation of the firm, the enterprise value should remain constant.
"Neither. Why would you have to classify startups as value or growth?  A startup is its own category.  You can find startups at ""classic"" valuations (price/book...  Etc) that would make investors' eyes water...   But that happens because many startups are early stage and so revenue or book value or other classic valuations don't quite suit."
"This question drives at what value a shareholder actually provides to a corporation, and by extent, to the economy. If you subscribe for new shares (like in an Initial Public Offering), it is very straightforward to say ""I have provided capital to the corporation, which it is using to advance its business."" If you buy shares that already exist (like in a typical share purchase on a public exchange), your money doesn't go to the company. Instead, it goes to someone who paid someone who paid someone who paid someone (etc.) who originally contributed money to the corporation. In theory, the value of a share price does not directly impact the operation of the company itself, apart from what @DanielCarson aptly noted (employee stock options are affected by share price, impacting morale, etc.). This is because in theory, the true value of a company (and thus, the value of a share) is the present value of all future cashflows (dividends + final liquidation). This means that in a technical sense, a company's share price should result from the company's value. The company's true value does not result from the share price. But what you are doing as a shareholder is impacting the liquidity available to other potential investors (also as mentioned by @DanielCarson, in reference to the desirability for future financing). The more people who invest their money in the stock market, the more liquid those stocks become. This is the true value you add to the economy by investing in stocks - you add liquidity to the market, decreasing the risk of capital investment generally. The fewer people there are who are willing to invest in a particular company, the harder it is for an investor to buy or sell shares at will. If it is difficult to sell shares in a company, the risk of holding shares in that company is higher, because you can't ""cash out"" as easily. This increased risk then does change the value of the shares - because even though the corporation's internal value is the same, the projected cashflows of the shares themselves now has a question mark around the ability to sell when desired. Whether this actually has an impact on anything depends on how many people join you in your declaration of ethical investing.
"Your comment is more related to economics rather than finance. You're right that with conventional, everyday goods that ""value"" is an entirely subjective thing. Economists formalize this idea with the notion that people's preferences determine market prices.  In finance, though, ""fundamental value"" relates to the value of the cash-flows produced by a financial asset. In Marxian terms, we're talking about exchange value - what can I get if I take this bond/stock and sell it. The value I get should be equivalent to the monetary value of the cashflows produced by that asset over time, discounting for uncertainty, etc. So, ""fundamental value"" is a bit more objective in finance since these things produce something quasi-objective - cash."
The value of a company is, simplified, the sum of the value of the equity and the value of the debt. There are some other things to add/subtract to that, but just think about those for now.  You could also say the value of a company is the value of its assets, or more precisely the value of the net cash flows those assets will generate in the future.  So let's say you want to start a company, so you want to buy some assets. Maybe you want to buy a $200 asset. Well, you only have $100, so you take out a loan (debt) for $100 for the remainder. You buy the asset and start generating income.  Let's say after a month you get bored and decide to sell the company. Let's assume the value of the assets hasn't changed. Your equity is worth $100, and you find a buyer who is willing to pay $100 for your company. Great! Right?  Well there's still the $100 loan you owe, so you have to pay that back. And suddenly you now have $0.   So in fact, you should have negotiated $200 with the buyer, because that's what the assets are actually worth. Then you can pay back the loan and still have the $100 in equity you deserve. (Alternatively, you could have negotiated the buyer to assume responsibility for the loan; same outcome for you.)  Did that help?
I was merely trying to be helpful - Conceptually, you have dump this idea that something is skewed. It isn't. Firm A sold for $500 (equity value aka purchase price to shareholders) + debt (zero) - cash (50) for 450.  Enterprise value is the cash free, debt free sale price.  The implied ev multiple is 4.5x on A - that is the answer. The other business sold for a higher multiple of 5x.  If you would pile on more cash onto A, the purchase price would increase, but the EV wouldn't.      The idea is to think hard about the difference between equity value and enterprise value when examining a transaction.
I think I understand what I am doing wrong.  To provide some clarity, I am trying to determine what the value of a project is to a firm.  To do this I am taking FCF, not including interest or principal payments, and discounting back to get an NPV enterprise value.  I then back off net debt to get to equity value.  I believe what I am doing wrong is that I show that initial $50M as a cash outflow in period 0 and then back it off again when I go from enterprise value to equity value.  Does this make any sense?  Thanks for your help.
There are books on the subject of valuing stocks. P/E ratio has nothing directly to do with the value of a company. It may be an indication that the stock is undervalued or overvalued, but does not indicate the value itself. The direct value of company is what it would fetch if it was liquidated. For example, if you bought a dry cleaner and sold all of the equipment and receivables, how much would you get? To value a living company, you can treat it like a bond. For example, assume the company generates $1 million in profit every year and has a liquidation value of $2 million. Given the risk profile of the business, let's say we would like to make 8% on average per year, then the value of the business is approximately $1/0.08 + $2 = $14.5 million to us. To someone who expects to make more or less the value might be different. If the company has growth potential, you can adjust this figure by estimating the estimated income at different percentage chances of growth and decline, a growth curve so to speak. The value is then the net area under this curve.  Of course, if you do this for NYSE and most NASDAQ stocks you will find that they have a capitalization way over these amounts. That is because they are being used as a store of wealth. People are buying the stocks just as a way to store money, not necessarily make a profit. It's kind of like buying land. Even though the land may never give you a penny of profit, you know you can always sell it and get your money back. Because of this, it is difficult to value high-profile equities. You are dealing with human psychology, not pennies and dollars.
Assuming there are no other liabilities...  The enterprise value is $5mm. $1mm loan + $4mm equity. The proforma enterprise value will be the same, but the equity will now represent all of it at $5mm. Your 4% will now be 3.2%, but equal the same value; $160,000.
I look at the following ratios and how these ratios developed over time, for instance how did valuation come down in a recession, what was the trough multiple during the Lehman crisis in 2008, how did a recession or good economy affect profitability of the company. Valuation metrics: Enterprise value / EBIT (EBIT = operating income) Enterprise value / sales (for fast growing companies as their operating profit is expected to be realized later in time) and P/E Profitability: Operating margin, which is EBIT / sales Cashflow / sales Business model stability and news flow