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what documents do i need to write my will | whether you do it on your own or consult an attorney you need a fair amount of documentation to complete your will basically you need to prove your own identity and list all of your assets establishing your own identity means collecting your birth certificate and documents like your marriage license listing your assets includes identifying all of your bank and investment account numbers mortgage documents and property deeds and the names and addresses of any lawyers accountants and financial advisers that you consult the bottom linewriting your will could be the last good deed that you can do for your friends and loved ones dying without a will or intestate leaves behind a mess for them to straighten out worse it could well mean that your good intentions are not carried out | |
william cavanaugh iii is an american businessman and philanthropist with a long history of leadership positions in the energy production and real estate industries | born in new orleans cavanaugh served in the united states navy for eight years before jumping into work in the energy sector he served in leadership roles at several energy companies and was most recently on the board of directors of duke realty which was an american real estate investment trust reit based in indianapolis cavanaugh has also been a key player in fighting deregulation in the energy industry and in the safe exploration of nuclear energy investopedia alison czinkotaearly life and educationwilliam cavanaugh iii was born in new orleans louisiana in 1939 as a young man he enrolled at tulane university in new orleans where he studied mechanical engineering he received his undergraduate degree in 1961 1upon graduation cavanaugh enlisted in the u s navy where he served for the next eight years he learned important lessons about nuclear power generation through the navy s nuclear submarine program he received an honorable discharge from the navy in 1969 23cavanaugh attended the kidder peabody utility corporate finance program in 1983 and harvard university s advanced management program in 1991 4 as a working student these designations helped prepare him for senior management roles in production within the energy sector notable accomplishmentsafter leaving the navy cavanaugh began his career at entergy in new orleans there he served in executive leadership roles at three of the firm s electric utility subsidiaries 3he joined carolina power light company as the company s president and chief operating officer coo in 1992 seven years later he rose to the role of chairman and chief executive officer ceo as the company s leader he was a key player in the firm s acquisition of florida progress which cp l bought for 54 a share 3the combined company adopted a new name progress energy and became what was at the time the ninth largest energy producer in the united states under cavanaugh s leadership the firm grew to become a fortune 500 company with a new headquarters in raleigh north carolina with approximately 8 billion in annual revenues 53 cavanaugh retired from the company in 2004 cavanaugh then served as chair of the world association of nuclear operators wano wano is an international association of nuclear power plant operators dedicated to promoting the safe exploitation of nuclear energy 3 the title of chairman is now held by tom mitchell former president and ceo of ontario power generation in canada 6cavanaugh was elected to the membership of the national academy of engineering in 2001 for his efforts to enhance electricity generated from nuclear power by establishing and achieving exemplary levels of performance 3he also had conferred on him the william s lee award for industry leadership from the nuclear energy institute and the american nuclear society s walter h zinn award 3progress energy was taken over by duke energy in july 2012 in a 26 billion merger that formed the nation s largest electric utility at the time 7legacycongress passed laws between 1989 and 1994 that allowed the purchase and sale of power on a wholesale basis and for energy to be traded cavanaugh notably resisted the resulting trend to shift operations into energy trading rather than jump in and expand the company in this way he remained cautious he focused on progress s primary business and helped keep it afloat this is in contrast to other players in the energy sector at the time such as enron corporation the leader in this movement enron was later disgraced after it was accused of lying to shareholders and manipulating energy markets its corporate leaders were prosecuted cavanaugh s skepticism led him to lobby against the deregulation of the energy industry in the end cavanaugh was vindicated and his reputation as a ceo with integrity grew cavanaugh is a professor emeritus at the university of south florida institute for advanced discovery innovation 3personal lifecavanaugh has been an active philanthropist whether donating to charities such as the american cancer society and the united way or investing in communities 8he is married to alyce lee cocchiara the couple has four children kyle craig chris and connie 2 | |
what is william cavanaugh iii best known for | although not necessarily a household name william cavanaugh iii is known in the energy industry he worked with several energy companies including carolina power light company the company later became known as progress energy and was acquired by duke energy in july 2012 cavanaugh protested the deregulation of the energy industry helping his company avoid many problems that other larger energy companies faced | |
what happened to progress energy | progress energy which was previously known as carolina power light company was acquired by duke energy in 2012 at the time the 26 million merger created the largest electric utility company in the u s | |
why was william cavanaugh iii against energy industry deregulation | william cavanaugh iii was skeptical about deregulation due to the potential for misuse and the lack as he saw it of benefits for energy customers this gave him a reputation as a solid leader within the industry the bottom linethe average person may not know of william cavanaugh iii but those in the energy sector may be familiar with him cavanaugh worked in the public energy sector for decades heading up carolina power light company which later became progress energy he was one of the key voices against the deregulation of the energy sector at a time when others were trading and sharing energy and expanding he bucked the trend and continued to manage the profitability of progress by tending to the company s primary business | |
william t dillard ii is the ceo of dillard s inc a department store chain based in little rock arkansas as caretaker of his father s company founded in 1938 william t dillard ii strives to preserve the company s strategy to offer fashionable products with exceptional customer service | early life and educationwilliam t dillard ii was born in nashville arkansas on march 4 1945 he graduated from the sam m walton college of business at the university of arkansas in 1966 with a bachelor s degree in accounting and earned an mba from harvard university as the eldest son of william t dillard sr founder of dillard department stores he began his career at dillard s in 1967 ceo of dillard sfounded in 1938 william t dillard sr built his company to include his children in addition to william t dillard ii his brothers alex dillard and mike dillard serve as president and executive vice president respectively daughters drue matheny and denise mahaffy and grandson bill dillard iii are also vice presidents the retail chain went public in 1969 offering two classes of stock a move meant to keep the family firmly in control and give the family the majority of voting rights 1 today william t dillard ii owns 10 of the company capitalizing on the growth of the mall in the mid 20th century some of dillard s success resides in its investment in real estate dillard s inc owns approximately 90 of the real estate that its stores occupy under william t dillard ii s leadership dillard instituted changes in automated inventory systems private label branding and real estate acquisition yet critics have claimed that the company s management is insular and reluctant to change with the retail industry of the 21st century however post pandemic success is evident in 2022 under william t dillard ii dillard s is a family business that s profitable debt free and leveraged in real estate holdings its stores are located in popular shopping malls and attract a slightly older customers making it somewhat less vulnerable to the online retail shift 90 of dillard s sales are in store purchases compared to 80 for nordstrom and 70 for macy s dillard s main competitors 1notable accomplishmentswilliam dillard ii has served on the board of directors of acxiom corporation since 1988 and on the board of directors of barnes noble inc since 1993 in 2015 he received the university of arkansas chancellor s medal for service in higher education and society he was inducted into the arkansas business hall of fame in 2016 | |
why did william t dillard ii start a private label at dillard s | by offering a private discounted brand at dillard s william t dillard ii provided customers with a choice between higher priced brand names and the less expensive private label | |
what is william t dillard ii s management style | he is regarded as a hands on manager who oversees product lines before they are stocked william t dillard ii has a reputation for traveling to stores and surveying customers and staff | |
how has william t dillard ii changed dillard s as its ceo | under dillard ii the company has capitalized on growth opportunities in physical stores and e commerce its strong long term prospects are also supported by ongoing inventory management initiatives trendy product offerings and shareholder approved moves 2the bottom linewilliam t dillard ii is regarded as a hands on ceo at dillard s inc with a lifetime of experience within his family business william t dillard ii has led dillard s into the 21st century while maintaining the original strategy of dillard s as defined by his father in 1938 | |
william t dillard ii is the ceo of dillard s inc a department store chain based in little rock arkansas as caretaker of his father s company founded in 1938 william t dillard ii strives to preserve the company s strategy to offer fashionable products with exceptional customer service | early life and educationwilliam t dillard ii was born in nashville arkansas on march 4 1945 he graduated from the sam m walton college of business at the university of arkansas in 1966 with a bachelor s degree in accounting and earned an mba from harvard university as the eldest son of william t dillard sr founder of dillard department stores he began his career at dillard s in 1967 ceo of dillard sfounded in 1938 william t dillard sr built his company to include his children in addition to william t dillard ii his brothers alex dillard and mike dillard serve as president and executive vice president respectively daughters drue matheny and denise mahaffy and grandson bill dillard iii are also vice presidents the retail chain went public in 1969 offering two classes of stock a move meant to keep the family firmly in control and give the family the majority of voting rights 1 today william t dillard ii owns 10 of the company capitalizing on the growth of the mall in the mid 20th century some of dillard s success resides in its investment in real estate dillard s inc owns approximately 90 of the real estate that its stores occupy under william t dillard ii s leadership dillard instituted changes in automated inventory systems private label branding and real estate acquisition yet critics have claimed that the company s management is insular and reluctant to change with the retail industry of the 21st century however post pandemic success is evident in 2022 under william t dillard ii dillard s is a family business that s profitable debt free and leveraged in real estate holdings its stores are located in popular shopping malls and attract a slightly older customers making it somewhat less vulnerable to the online retail shift 90 of dillard s sales are in store purchases compared to 80 for nordstrom and 70 for macy s dillard s main competitors 1notable accomplishmentswilliam dillard ii has served on the board of directors of acxiom corporation since 1988 and on the board of directors of barnes noble inc since 1993 in 2015 he received the university of arkansas chancellor s medal for service in higher education and society he was inducted into the arkansas business hall of fame in 2016 | |
why did william t dillard ii start a private label at dillard s | by offering a private discounted brand at dillard s william t dillard ii provided customers with a choice between higher priced brand names and the less expensive private label | |
what is william t dillard ii s management style | he is regarded as a hands on manager who oversees product lines before they are stocked william t dillard ii has a reputation for traveling to stores and surveying customers and staff | |
how has william t dillard ii changed dillard s as its ceo | under dillard ii the company has capitalized on growth opportunities in physical stores and e commerce its strong long term prospects are also supported by ongoing inventory management initiatives trendy product offerings and shareholder approved moves 2the bottom linewilliam t dillard ii is regarded as a hands on ceo at dillard s inc with a lifetime of experience within his family business william t dillard ii has led dillard s into the 21st century while maintaining the original strategy of dillard s as defined by his father in 1938 | |
bill gross is a renowned bond investor who co founded the pacific investment management company pimco and is known as the bond king | gross is the author of bill gross on investing everything you ve heard about investing is wrong and i m still standing early life and educationbill gross was born on april 13 1944 in middletown ohio he earned a bachelor s degree in psychology from duke university in 1966 and served in the united states navy during the vietnam war a risk taker bill gross spent his early career gambling and counting cards at poker tables before joining pacific mutual life in los angeles as an investment analyst in 1971 he founded his firm pacific investment management company pimco in newport beach california with friends jim muzzy and bill podlich 1pimcoknown as the bond king bill gross created the first investable market for fixed income securities accessible to all investors the company serves institutional investors high net worth individuals and individual investors with its account services and mutual funds bill gross is credited with aggressive bond investing and turning the quiet bond market into a destabilized game of high risk and reward before pimco bonds were rarely traded and only through paper documents historically the largest purchasers of bonds were insurers and pension funds but pimco initiated active trading in and out of positions and expanded into areas like junk bonds and emerging markets 2 managing assets of 1 74 trillion as of september 2023 pimco is the largest active fixed income fund management firm in the world 3in 2014 bill gross resigned from pimco during a period of internal management struggles he eventually sued and settled with pimco following his ousting notable accomplishmentsafter leaving pimco bill gross joined janus capital group until his retirement in 2019 4 gross reputation followed him and on the day his move to janus was publicly announced janus s share price climbed 43 representing a historical one day gain for the company 5bill gross is a renowned philatelist and is the benefactor of the william h gross stamp gallery at the smithsonian national postal museum 6 in 2005 he formed a complete collection of 19th century united states postage stamps 7 he auctioned a collection of british stamps in 2007 garnering proceeds of about 9 million all of which gross donated to doctors without borders 8in 2022 bill gross released his memoir i m still standing detailing his own american success story all proceeds from the book will be donated to charity through the william jeff and jennifer gross family foundation | |
why did bill gross resign from pimco | bill gross clashed with pimco s management including chief executive officer mohamed el erian and was known for his outbursts and boasts tensions allegedly forced gross to resign in september 2014 when he left pimco for janus 9 | |
how did gambling in las vegas influence bill gross | as an avid blackjack player in las vegas gross noted that it gave him a sense of risk and taught him to avoid placing too many high stakes bets citing although the odds were many times in my favor if you took too much leverage and had too much debt then the house of cards will come tumbling down 10 | |
what is the william h gross stamp gallery | established in 2013 as part of the smithsonian national postal museum in washington d c and named after its primary benefactor the william h gross stamp gallery is the world s largest gallery dedicated to philately distributed throughout the thematic areas are hundreds of pullout frames containing more than 20 000 objects providing opportunities to view noteworthy stamps that have never been on public display 11the bottom linebill gross is a renowned bond investor who led his pacific investment management company pimco to become the largest active fixed income fund management firm in the world he is a successful author and stamp collector | |
william j o neil was a noted investor stockbroker and author he is known as one of the first investors to incorporate computers into his research and investment decision making process o neil also founded the influential investment publication investor s business daily | o neil published the highly acclaimed books how to make money in stocks and 24 essential lessons for investment success he died on may 28 2023 at the age of 90 1 | |
what is williams r | williams r also known as the williams percent range is a type of momentum indicator that moves between 0 and 100 and measures overbought and oversold levels the williams r may be used to find entry and exit points in the market the indicator is very similar to the stochastic oscillator and is used in the same way it was developed by larry williams and it compares a stock s closing price to the high low range over a specific period typically 14 days or periods 1 image by sabrina jiang investopedia 2021the formula for the williams r is wiliams r highest high close highest high lowest low where highest high highest price in the lookback period typically 14 days close most recent closing price lowest low lowest price in the lookback begin aligned text wiliams r frac text highest high text close text highest high text lowest low textbf where text highest high text highest price in the lookback text period typically 14 days text close text most recent closing price text lowest low text lowest price in the lookback text period typically 14 days end aligned wiliams r highest high lowest lowhighest high close wherehighest high highest price in the lookbackperiod typically 14 days close most recent closing price lowest low lowest price in the lookback | |
how to calculate the williams r | the williams r is calculated based on price typically over the last 14 periods | |
what does williams r tell you | the indicator is telling a trader where the current price is relative to the highest high over the last 14 periods or whatever number of lookback periods is chosen | |
when the indicator is between 20 and zero the price is overbought or near the high of its recent price range when the indicator is between 80 and 100 the price is oversold or far from the high of its recent range | during an uptrend traders can watch for the indicator to move below 80 when the price starts moving up and the indicator moves back above 80 it could signal that the uptrend in price is starting again the same concept could be used to find short trades in a downtrend when the indicator is above 20 watch for the price to start falling along with the williams r moving back below 20 to signal a potential continuation of the downtrend traders can also watch for momentum failures during a strong uptrend the price will often reach 20 or above if the indicator falls and then can t get back above 20 before falling again that signals that the upward price momentum is in trouble and a bigger price decline could follow the same concept applies to a downtrend readings of 80 or lower are often reached when the indicator can no longer reach those low levels before moving higher it could indicate the price is going to head higher the difference between williams r and the fast stochastic oscillatorthe williams r represents a market s closing level versus the highest high for the lookback period conversely the fast stochastic oscillator which moves between 0 and 100 illustrates a market s close in relation to the lowest low the williams r corrects for this by multiplying by 100 the williams r and the fast stochastic oscillator end up being almost the exact same indicator the only difference between the two is how the indicators are scaled limitations of using the williams roverbought and oversold readings on the indicator don t mean a reversal will occur overbought readings actually help confirm an uptrend since a strong uptrend should regularly see prices that are pushing to or past prior highs what the indicator is calculating the indicator can also be too responsive meaning it gives many false signals for example the indicator may be in oversold territory and starts to move higher but the price fails to do so this is because the indicator is only looking at the last 14 periods as periods go by the current price relative to the highs and lows in the lookback period changes even if the price hasn t really moved | |
definition of the williams act | the williams act is a federal law enacted in 1968 that defines the rules of acquisitions and tender offers it came in response to a wave of hostile takeover attempts from corporate raiders making cash tender offers for stocks they owned cash tender offers threatened to destroy value by forcing shareholders to tender shares on a shortened timetable to protect investors senator harrison a williams of new jersey proposed new legislation that required mandatory disclosure of information regarding takeover bids it demands bidders include all details of a tender offer in filings to the securities and exchange commissions sec and the target company the filing must include the offer terms cash source and the bidder s plans for the company after the takeover investopedia yurle villegasbreaking down williams actthe williams act also includes time constraints that specify the minimum time an offer may be open and the number of days shareholders can make a decision the law was passed in response to a wave of unannounced takeovers in the 1960s this posed a threat to managers and shareholders who were forced to make critical decisions under unreasonable time pressure legislators passed the williams act and amended the securities exchange act of 1934 to protect affected parties from ongoing takeovers | |
when a tender offer is made the bidding company must provide full and fair disclosure to shareholders and financial regulators any entity making a cash tender offer for a corporation must outline the source of the takeover funds the purpose for making a bid and the outlook of the acquired company that way shareholders have greater transparency into the potential outcomes of an acquisition | the act aimed to strike a careful balance in the market for corporate governance by providing shareholders with timely information to thoughtfully evaluate tender offers and allowing managers an opportunity to win over shareholders in passing the legislation congress aimed to protect shareholders without making takeover attempts overly difficult they recognize takeovers can benefit shareholders and managers when the company is failing or needs new management time to update the williams act some experts believe the ongoing evolution of corporate governance calls for a comprehensive review of the williams act for one thing the enactment of federal and state antitakeover laws render the coercive tender offers the williams act sought to address ineffective in addition the demographic of shareholders for publicly traded companies has changed dramatically in the past 50 years today majority shareholders are knowledgeable have access to information and can make decisions on a moment s notice other things to consider is the emergence of active shareholders who pursue investments differently from corporate raiders of the past | |
what is the willie sutton rule | the willie sutton rule is based on a statement by notorious american bank robber willie sutton who when asked by a reporter about why he stole from banks answered because that s where the money is in other words his end goal was money so why waste time looking for it in obscure or questionable places instead of taking the path of least resistance and most success and going straight to the source the rule can be applied across many different disciplines from investing to medicine science business and accounting understanding the willie sutton rulesome historians explain the willie sutton rule by way of arthur conan doyle s famous detective sherlock holmes who once said when you have eliminated the impossible whatever remains however improbable must be the truth both quotes mean the same they just drew conclusions coming from opposite directions in the financial world the rule is similar to picking the low hanging fruit in other words if you re looking to make money in the stock market start by choosing those positions that you can see clearly for what they are they may not be the biggest pieces of fruit but at least you know what you re getting only after seeking out the more obvious choices should you venture further into the tree and pick something that may be rotten or never develop fully another school of thought with respect to investing and the willie sutton rule is that it stresses the need for an individual to focus on activities that generate high returns rather than on actions that might be frivolous or yield lower returns the same goes for accounting the rule with respect to management accounting says that activity based costing prioritizing by necessity and budgeting accordingly should be applied to the highest costs because that will ultimately be where the largest savings are incurred willie sutton rule and medicinein medicine it is referred to when doctors make a diagnosis suggesting that it is worthwhile to first focus on the obvious and conduct medical tests that may confirm the most likely diagnosis rather than trying to diagnose a relatively uncommon medical condition this approach may yield faster and more accurate results while avoiding needless costs that would be incurred by conducting unnecessary medical tests the willie sutton rule is often taught to medical students as sutton s law it states that when making a diagnosis it is worthwhile to first focus on the obvious and conduct medical tests that may confirm the most likely diagnosis rather than trying to diagnose a relatively uncommon medical condition this approach may yield faster and more accurate results while avoiding needless costs that would be incurred by conducting unnecessary medical tests | |
what is the ft wilshire 5000 index ftw5000 | the ft wilshire 5000 index ftw5000 is a broad based market capitalization weighted index that seeks to capture 100 of the united states investible market the ft wilshire 5000 index was formerly known as the wilshire 5000 total market index tmwx before being rebranded on june 30 2021 as part of wilshire s partnership with the financial times understanding the ft wilshire 5000 index ftw5000 named for the nearly 5 000 stocks it contained at launch the wilshire 5000 grew to a high count of over 7 500 in 1998 since then the roster has fallen to the current level of 3 687 as of dec 31 2021 the index includes all u s equities with readily available prices with thinly traded and bulletin board issues excluded as with all market capitalization weighted indices the wilshire overweights companies with a higher firm value and underweights those with a lower firm value as of dec 31 2021 the index was weighted 28 toward the information technology sector 13 to the health care sector and 13 to the consumer discretionary sector special considerationswilshire as part of its partnership with the financial times launched six other indexes as part of the ft wilshire 5000 series the other six indexes include the ft wilshire 2500 index ftw2500 ft wilshire us mega cap index ftwusg ft wilshire us large cap index ftwusl ft wilshire us mid cap index ftwusd ft wilshire us small cap index ftwuss and ft wilshire us micro cap index ftwuso the ft wilshire 5000 index is meant to be the broadest based market index a broad based index is designed to reflect the movement of an entire market although it does not include every publicly traded company it does include a lot more than the other indices which people often refer to as the market like the s p 500 or the dow jones industrial average image by sabrina jiang investopedia 2021history of the ft wilshire 5000 index ftw5000 the ft wilshire 5000 index was established by the wilshire associates in 1974 and was renamed the dow jones wilshire 5000 in april 2004 after dow jones company took over its management on march 31 2009 the index returned to wilshire associates when the partnership with dow jones was terminated | |
when it started the value of the index was 1404 60 points on base date dec 31 1980 with a total market capitalization of 1 404 596 billion on that date each point on the index was equal to 1 billion but divisor adjustments due to corporate actions and index composition changes have changed the relationship over time | the index increased more than 10 times over in less than 20 years closing at a record high of 14 751 64 points on march 24 2000 that level wasn t surpassed until feb 20 2007 on april 20 2007 the index closed above 15 000 for the first time on that day the s p 500 was still several percentage points below its march 2000 high because small cap issues absent from the s p 500 and included in the wilshire 5000 outperformed the large cap issues that dominate the s p 500 during the cyclical bull market the index reached an all time high on oct 9 2007 at the 15 806 69 point level right before the onset of the great recession on oct 8 2007 the wilshire 5000 closed below 10 000 for the first time since 2003 the index continued trading downward toward a 13 year low reaching a bottom of 6 858 43 points on march 9 2009 representing a loss of about 10 9 trillion in market capitalization from its highs in 2007 the wilshire 5000 hit its first intraday high over 20 000 points on feb 28 2014 on march 4 the index closed above this milestone for the first time on july 1 2014 the index closed above the 21 000 level for the first time as of feb 1 2022 the index traded at a near all time high level of over 45 000 other broad market indexesthe wilshire 5000 may still be the most widely cited broad based market index but several other important broad indices also exist such as the crsp us total market index like the wilshire 5000 the crsp us total market index also strives to represent a full picture of u s equities with almost 4 000 holdings representing mega large small and micro capitalizations the dow jones u s total market index dwcf is a market capitalization weighted index that dow jones indexes maintains that provides broad based coverage of the u s stock market the dow jones u s market index considered a total market index includes all u s common market equities that meet certain eligibility requirements the russell 3000 index is another market capitalization weighted equity index maintained by ftse russell that provides exposure to the entire u s stock market the index tracks the performance of the 3 000 largest u s traded stocks which represent about 98 of all u s incorporated equity securities | |
what is the win loss ratio | the win loss ratio for traders is the total number of winning trades compared to the total number of losing trades in a specific period of time such as a trading session it does not take into account how much was won or lost but simply the number of trades that made money versus the number of trades that lost money the win loss ratio is also known as the success ratio the formula for the win loss ratiowin loss ratio wins losses text win loss ratio frac text wins text losses win loss ratio losseswins the win loss ratio can also be stated as winning trades losing trades | |
what the win loss ratio can tell you | the win loss ratio is used mostly by day traders to assess their daily wins and losses from trading and as a way to gauge the success of the trading strategy that they used for example if the win loss ratio shows more wins than losses then they might continue using their current strategy all other things being equal if the ratio shows more losses than wins they might review and fine tune their trading strategy to address why they had those losses the win loss ratio is often used with the win rate which is the number of trades that make money out of the total number of trades conducted together the win loss ratio and the win rate can help traders understand the probability of their trading being profitable active traders should make it a habit to regularly review their win loss ratios risk reward ratios and win rates to stay on top of their trading efforts and avoid losing too much money essentially win loss ratios and win rates can alert you to how often you are winning or losing money on your trades | |
what are windfall profits | windfall profits are large unexpected gains resulting from lucky circumstances such profits are generally well above historical norms and may occur due to factors such as a price spike or supply shortage that are either temporary in nature or longer lasting windfall profits are generally reaped by an entire industry sector but can also find their way to an individual company in terms of an individual a windfall profit could be a spike in income as a result of a specific one time event such as winning the lottery inheriting money or suddenly being able to sell that rare piece of music memorabilia you own for a large amount of money after the singer passes away there was previously a tax on corporate windfall profits 1 however it was unpopular and there are currently no such taxes in the united states though reintroducing the tax has drawn much debate on wall street and in washington | |
how windfall profits work | among the reasons that windfall profits can arise are a sudden change in market structure an executive order from the government a court ruling or a dramatic shift in trade policy companies that are beneficiaries of windfall profits had not planned for them but they would be naturally pleased to receive them these profits would have a variety of uses dividend increases or a special one time dividend share buybacks reinvestments in the business for future growth or debt reduction windfall profits are presently not taxed in the u s though there have been tepid efforts to reintroduce the tax for an individual a windfall profit might result in a sudden boost in their income beyond what they could have reasonably expected unlike a corporation an individual is not expected to pass the profits on to others example of windfall profitsfrom time to time surging prices for crude oil and natural gas have generated windfall profits for many energy companies in this industry wherein supply and demand are the main force determining price levels for the commodities unexpected supply shortages have led to sharp and quick price rises in 2008 a barrel of wti crude oil climbed above 140 from 60 per barrel just one year earlier several factors on both the supply and demand sides conspired to spike the price turmoil in the middle east lingering effects of hurricane katrina supply disruptions in venezuela and nigeria strong demand from developing nations and speculative fervor by traders were all believed to be causes of the steep ascent of oil prices windfall profits for oil and gas producers followed but they proved short lived because a mere five months after the price peaked a barrel of oil was trading at only 40 per barrel 2 | |
what is a windfall tax | a windfall tax is a tax levied by governments against certain industries when economic conditions allow those industries to experience significantly above average profits windfall taxes are primarily levied on companies in the targeted industry that have benefited the most from the economic windfall most often commodity based businesses | |
how windfall taxes work | oil and gas companies are common targets of windfall taxes the massive net income increase for oil and natural gas producers the international energy agency estimates they will double from 2021 to 2022 hitting an unprecedented 2 trillion is the current trigger for the discussion and recent imposition of windfall taxes for example on september 30 2022 the council of the european union agreed to impose a temporary solidarity contribution on businesses in the crude petroleum natural gas coal and refinery sectors on profits that are above a 20 increase of of the average yearly taxable profits since 2018 this is on top of whatever taxes they already owe in their individual countries in each member state proceeds are to help households and companies and to ease the effects of high electricity prices and in october 2022 president biden threatened that he would seek a windfall profits tax on oil and gas companies which have reported very high profits and continue to charge high prices he told them to use their outrageous bonanza the effect of the ukraine war to expand oil supplies or reduce consumer prices the windfall tax debateas with all tax initiatives instituted by governments there is always a divide between those who are for and those who are against the tax the benefits of a windfall tax include proceeds being directly used by governments to bolster funding for social programs those against windfall taxes claim that they reduce companies initiatives to seek out profits they also believe that profits should be reinvested by companies to promote innovation that will in turn benefit society as a whole then there is the question of whether windfall taxes actually raise the amounts that are predicted consider the most recent example in the u s the crude oil windfall profit tax of 1980 imposed by congress during president jimmy carter s administration according to a 2006 report from the congressional research service the windfall profits tax wpt generated 80 billion in gross revenues between 1980 and 1988 significantly less than the 393 billion projected due to the deductibility of the wpt against the income tax cumulative net wpt revenues were about 38 billion significantly less than the 175 billion projected in a more current example the washington post reports that the windfall tax in italy had as of september 2022 yielded only about one fifth the income the government had hoped for on the other hand the taxes do yield revenue that would not otherwise be available to offset the societal costs of high prices critics point to other possible negative consequences while windfall profits are taxed to encourage the taxed entities to lower their prices for the benefit of consumers the tax could end up reducing investment because the new tax could make the after tax profit not worth the effort this happened with the 1980 tax according to the congressional research service report it notes that from 1980 to 1988 the wpt may have reduced domestic oil production anywhere from 1 2 to 8 0 320 to 1 269 million barrels dependence on imported oil grew from between 3 and 13 the tax was repealed in 1988 windfall taxes on individualswindfall taxes may also apply to individuals who gain sudden riches from receiving a significant sum of money through a gift inheritance or through game show gambling or lottery winnings in many cases inheritances gifts from family members or friends and life insurance payouts are tax free to the recipient however federal state or local taxes may be owed by the giver or by the estate from which the inheritance is received any wealth gained from playing the lottery or gambling is considered taxable income these winnings are fully taxable and must be reported to the internal revenue service irs by filing the individual tax return an individual who is awarded a sizeable monetary settlement after winning a lawsuit is likely to owe federal tax on the amount received while certain settlements such as damages for personal physical injuries or physical sickness are considered non taxable by the irs most other types of damages are taxed as ordinary income who has to pay a windfall tax companies and industrial sectors that can be subject to windfall taxes are those with massive increases in profits generally due to situations such as wartime commodities shortages and other situations and events that drive up prices individuals may also be taxed on windfalls such as those from inheritances or lottery winnings who benefits from revenue raised by windfall taxes taxes are imposed by governments and can be used for a variety of purposes during world war i and world war ii windfall profit tax revenue went to support the war effort the 1980 taxes added to general government funds revenue from the new eu council 2022 tax is to be used to provide financial support to households and companies and to mitigate the effects of high retail electricity prices | |
what was america s first windfall tax | during world war i before the u s entered the war in 1917 u s steel and dupont s annual profits increased by more than 1 000 each and pressure grew for a war efforts profit tax instituted in october 1917 the tax raised nearly 7 billion in revenue nearly 40 of all funds raised for the war and was the largest source of wartime taxation as larger companies found ways around the tax smaller companies were more affected the tax was abolished in 1921 the bottom linewindfall taxes will always be a contentious issue debated between the shareholders of profitable companies and the rest of society the massive net income increase for oil and natural gas producers the international energy agency estimates will double from 2021 to 2022 hitting an unprecedented 2 trillion is the current trigger for the discussion currently it is exxon s shareholders who have benefited they received a higher dividend raised after the company announced a nearly 20 billion profit just for july to september windfall taxes can be imposed on companies in certain segments of the economy such as oil and gas that benefit from situations such as commodity shortages that greatly increase the prices of their products at the expense of consumers individuals may also owe tax on a windfall depending on its source and the tax laws of the federal government or their state or locality | |
what is winding up | winding up is the process of liquidating a company while winding up a company ceases to do business as usual its sole purpose is to sell off stock pay off creditors and distribute any remaining assets to partners or shareholders the term is synonymous with liquidation which is the process of converting assets to cash | |
how winding up works | winding up a business is a legal process regulated by corporate laws as well as a company s articles of association or partnership agreement winding up can be compulsory or voluntary and can apply to publicly and privately held companies a company can be legally forced to wind up by a court order in such cases the company is ordered to appoint a liquidator to manage the sale of assets and distribution of the proceeds to creditors the court order is often triggered by a suit brought by the company s creditors they are often the first to realize that a company is insolvent because their bills have remained unpaid in other cases the winding up is the conclusion of a bankruptcy proceeding which can involve creditors trying to recoup money owed by the company in any case a company may not have sufficient assets to satisfy all of its debtors entirely and the creditors will face an economic loss a company s shareholders or partners may trigger a voluntary winding up usually by the passage of a resolution if the company is insolvent the shareholders may trigger a winding up to avoid bankruptcy and in some cases personal liability for the company s debts even if it is solvent the shareholders may feel their objectives have been met and it is time to cease operations and distribute company assets in other cases market situations may paint a bleak outlook for the business if the stakeholders decide the company will face insurmountable challenges they may call for a resolution to wind up the business a subsidiary also may be wound up usually because of its diminishing prospects or its inadequate contribution to the parent company s bottom line or profit winding up vs bankruptcywinding up a business is not the same as bankruptcy though it is usually a result of bankruptcy bankruptcy is a legal proceeding that involves creditors attempting to gain access to a company s assets so that they can be liquidated to pay off debts although there are various types of bankruptcy the proceedings can help a company emerge as a new entity that is debt free and usually smaller conversely once the winding up process has begun a company can no longer pursue business as usual the only action they may attempt is to complete the liquidation and distribution of its assets at the end of the process the company will be dissolved and will cease to exist example of winding upfor example payless the shoe retailer filed for bankruptcy in april 2017 almost two years before the business finally ceased operations under court supervision the company shut down about 700 stores and repaid about 435 million in debt four months later the court allowed it to emerge from bankruptcy 1it continued to operate until february 2019 when it abruptly shut down its remaining 2 500 u s stores and filed again for bankruptcy effectively beginning the winding up process it also wound down its e commerce business at the time the liquidation in 2019 did not have any effect on its latin american operations which in 2020 when the company emerged from bankruptcy was its new focus 2in 2020 the company also began expanding again in the u s opening more stores as it felt there was an opportunity for its goods 3some other examples of well known american companies that were liquidated or wound up includeall of the above retailers were in deep financial distress before filing for bankruptcy and agreeing to liquidate | |
what is the difference between winding up and dissolution | winding up and dissolution are both steps in the closing of a business winding up comes before dissolution winding up refers to closing the operations of a business selling off assets paying off creditors and distributing any remaining assets to the owners once the winding up process is complete the dissolution step comes into play this is when the company formally under law ceases to exist documentation is prepared to officially end the business as a legal entity | |
what are the legal consequences of not dissolving a business | if you do not legally dissolve a business you can incur taxes and penalty fees these taxes and fees can be incurred even if your business is not operating or earning any revenue income when a business has determined it will no longer operate and it has wound up operations it must legally dissolve | |
how long does it take to wind up a business | there are multiple steps in winding up a business it takes approximately two to three months to enter the liquidation process from there the liquidation process can last a few months to a year depending on how long it takes to sell off assets the bottom linecompanies close for many reasons either because they enter bankruptcy are legally required to or decide to sell off a non profitable business voluntarily when this happens the process of winding up begins which is the complete cessation of business activities and the selling off of assets | |
what is window dressing | window dressing is the term for a strategy used by retailers dressing up a window display to draw in customers the financial industry adopted it to refer to the practice of altering financial data to appear more attract investors businesses can time adjustments in their accounting procedures and investment holdings can be changed at specific times to seem as if they are more profitable have higher returns or have been performing well the entire period specific to investments it is used to refer to how a fund or portfolio manager might buy or sell securities at a particular time to appear to be performing better | |
how window dressing works | window dressing is a deceptive practice no matter what industry it is used in or what purpose it serves it paints a false financial picture because information is changed to make a company seem to perform better than it did mutual funds are companies that purchase stocks and sell portions of those stocks to investors fund managers might replace non performing stocks near the end of a reporting period to make it seem as if a fund is performing better than it is companies can alter reportable financial information through their accounting procedures this changes the data that is reported on their quarterly and annual reports or letters to shareholders it is illegal for businesses to alter their accounting practices to change how their reports look but unless there is a clear violation of securities laws or if the fund alters its accounting methods to window dress investment managers are not doing anything illegal by replacing a fund s holdings at specific times that said it is an unethical practice because it attempts to deceive investors and regulators window dressing in mutual fundsfund and portfolio managers get paid to ensure investing instruments are performing if they don t perform investors may become interested in other products or services that appear to be offering better returns to prevent this from happening managers might replace holdings near the end of the reporting period to keep investors from moving money to other investments a hedge fund manager might sell stocks that have experienced significant losses and purchase high flying stocks near the end of the quarter or year these securities are then reported as part of the fund s holdings making it seem like they had been there the entire time | |
when performance has been lagging fund managers may sell stocks that have reported substantial losses and replace them with stocks expected to produce short term gains to improve the fund s overall performance for the reporting period | investors should pay close attention to holdings that appear outside of a fund s strategy and the assets that have been replaced for example imagine that a fund investing in stocks exclusively from the s p 500 has underperformed the index stocks a and b outperformed the total index but were underweight in the fund while stocks c and d were overweight in the fund but lagged the index to make it look like the fund was investing in stocks a and b all along the portfolio manager could sell out of stocks c and d replacing them with a and b this would also give an overweight to stocks a and b another way is for a manager to purchase stocks that do not meet the style or strategy of the mutual fund for example a precious metals fund might invest in stocks that were performing well and disguise them this gives the fund the appearance of a short term performance boost that is not aligned with the market or indexes it might mirror though disclosure rules are intended to aid in increasing transparency for investors window dressing can still obscure the practices of the fund manager there are some techniques you can use to identify window dressing first ensure holdings match the index the fund tracks if it is an index fund if it isn t an index fund make sure they meet the fund s published intent most funds have a description of what they are designed to invest in usually called the fund s objective for example the fidelity value fund s fdvlx objective is to seek capital appreciation using a strategy of valuating companies with valuable fixed assets and purchasing the stocks of the ones it believes are undervalued 1if you found holdings in this fund you believed didn t fit the objective and strategy it might be window dressing but then it might not because the fund s valuation methodology might allow it to change holdings second look over the fund s holdings and compare the returns of each one for instance fdvlx had more than 200 holdings on jan 31 2023 with the top ten stocks making up slightly more than 10 of the fund if you look at the fund s monthly holding report you can find each stock s ticker and evaluate it by comparing holdings from month to month you might also see them changing and be able to investigate performance differences between the old and new ones 2third use these reports to identify past and current turnover and determine when it occurs there might be a pattern of turnover such as a majority of stocks remaining in the fund s holdings with several non performers turning over at intervals that don t make sense this could be regular fund management but it pays to take a look finally look at the fund s management fund managers lacking trading acumen or who have experienced poor performance in the past are more likely to window dress good funds have experienced ethical managers that do not need to window dress window dressing in accountingpublicly owned companies must follow specific accounting guidelines that ensure investors and regulators have a transparent view of financial performance some hire accounting firms to ensure their books are kept up to date and that reports are generated there is always the chance that management or leadership will not like the results seen on these financial reports so they may try to make changes to accounts or accounting methods to make it look like they performed better than they did the most significant reason a business would window dress its financial reports is to ensure they don t lose investor interest investors and lenders make up a large portion of a company s fund raising efforts lenders use these reports to make lending decisions and investors use them for investing decisions therefore lower financial performance can mean less funding not all accounting window dressing is so evident as changing some numbers here are a few examples of changes in accounting methods 3it s important to understand that many businesses are honest and trying to do the right thing looking out for window dressing should be part of your tool kit when you re evaluating investment opportunities just in case you come across a company that is trying to cook the books or deceive you while difficult to determine you can identify window dressing by studying past financial reports and reading about a company s activities via their news releases and investor reports you may be able to identify discrepancies between them for instance examine the cash flow statement to see where cash is coming from and where it is going then compare it to cash flows from the last few periods if there are significant changes you should be able to find a summary in the investor or financial reports with a description of why it has changed if you don t see it you may want to investigate further look for a change in accounting procedures a company should publish that they began accounting differently for something recently in fact publicly traded companies are required to report accounting procedure changes look for increases in valuation a dramatic increase in sales that doesn t correspond to past seasonal or cyclical sales or another issue that might raise an eyebrow | |
what does it mean if something is window dressing | you may have heard that a stock is window dressing for a fund or that a business reports are window dressed this means that a stock has been replaced close to the end of a reporting period to boost performance falsely or the reports are altered to be more financially attractive to investors and lenders | |
is window dressing illegal in accounting | window dressing in accounting is unethical and illegal the financial industry regulatory authority finra has fined companies for window dressing 4 | |
how do you window dress financial statements | financial statements are an aggregation of the results of the accounting process for an accounting period there are several ways to window dress these statements some examples are recording certain expenses differently or capitalizing expenses rather than accounting for them as expenses the bottom linewindow dressing is used by some investment managers financial departments or executives to give the appearance that a particular investment or business is doing better than it is it is an illegal practice regarding accounting procedures and financial reporting but when investment managers window dress by replacing holdings at the end of a period to make an investment instrument appear to perform better it s more of a violation of ethical fund management practices it is an attempt to fool you into investing in something you might not invest in otherwise that s why it s essential to know what it is and how to identify it | |
what is a window guaranteed investment contract | window guaranteed investment wgic contracts are a type of investment plan in which the investor makes a series of payments to an insurance company and is guaranteed a return on investment this type of guaranteed investment contract gic differs from other gics in that the investor makes principal payments in installments over time rather than in one lump sum up front investors use window guaranteed investment contracts with 401 k plans and other defined contribution pension plans understanding window guaranteed investment contractswindow guaranteed investment contracts resemble certificates of deposit sold at banks but may have either fixed or variable interest investors consider wgics very safe investments because they involve little risk they offer relatively small returns when compared with other investment strategies however window gics often have better rates than those an investor would get through a bank which is where some of their popularity comes from smaller businesses find window gics attractive as do new plan start ups or other companies that want a fixed and guaranteed rate throughout the year the window describes the period of time during which the investor can make payments and receive the guaranteed interest rate often the issuer sets the window at one calendar year payments made by the investor go into the insurance company s general account investments in this account generally consist of conservative investments such as corporate bonds commercial mortgages and treasury securities from the window to maturityonce the window has closed and the investor may no longer make payments toward the gic the invested funds remain in the contract for a period of time during which the contract matures this period generally lasts for between three and seven years while the funds remain in the contract they earn the predetermined rate of return so that the investor s money grows once the contract matures the insurance company returns the investor s principal and interest to them and they can opt to reinvest in another gic even though the g in gic stands for guaranteed window gics are ultimately backed only by the insurance company that sells them they are not backed by the full faith and credit of the united states government in this way they differ from certificates of deposit insured by the fdic 1 if the insurance company becomes insolvent the investment could lose all of its value | |
what is a window of opportunity | a window of opportunity is a short often fleeting period during which a rare and desired action can be taken once the window closes the opportunity may never come again in a competitive market with many participants seeking to maximize tangible or intangible value shareholders employees and individuals often compete for investment options with a small window of opportunity finding opportunitiesin some cases it is possible to plan for and anticipate a window of opportunity and then act accordingly when the window opens sometimes an opportunity arises that is unforeseen and it is up to individuals to identify the opportunity and then act on it in situations with very brief or unpredictable windows of opportunity automation may be employed to take advantage of these windows as in algorithmic trading marketing tactics are often used to offer individuals specific windows of opportunity and may include examples of windows of opportunityinstitutional investors and the best retail clients of the underwriters for google s ipo in 2004 were given a chance to buy shares at the initial offering price those who took advantage of the window bought these oversubscribed shares at 85 per share 1financial investors often follow headlines to seek new ipo offerings arm one of the world s largest semiconductor companies and navan which operates a platform that provides travel and expense management for businesses are just two companies with planned ipos in 2023 2a 1984 1 000 investment in aapl shares would be worth approximately 1 162 615 73 in 2023 3the biotechnology industry is active with dozens of startups and firms in early stage pipeline development of therapies with blockbuster potential for the minority of companies that demonstrate efficacy and safety in their therapy large cap pharmaceutical and biotech companies will take notice and opportunities to invest in a merger or acquisition begin in 2022 johnson johnson the world s largest most diversified healthcare products company acquired abiomed a leader in breakthrough heart lung and kidney support technologies 4promising real estate investments often come within a window of opportunity individuals and companies can invest in foreclosures unoccupied buildings or open land blackrock a fiduciary asset manager invests and manages capital for clients in the public and private u s real estate markets as of 2023 blackrock invested approximately 120 billion in the u s residential real estate market and capital for mortgages to american families blackrock invests in new construction purpose built for rent housing developments to address the increasing demand 5 | |
how do individuals buy ipo shares | ipos are usually discounted to ensure sales which makes them even more attractive especially when they generate a lot of buyers all investors can participate but individual investors must have trading access the most common way for an investor to get shares is to have an account with a brokerage platform that has received an allocation of ipo shares to sell to clients | |
what do buyers in a merger or acquisition look for | the buying company in a merger or acquisition commonly looks for growth and value in the selling company along with opportunities for business model transformation technological capabilities and new talent resources 6 | |
what is windstorm insurance | windstorm insurance is a special type of property casualty insurance that protects policyholders from property damage caused by gales winds hail and other gusty hazards a subset of storm insurance windstorm insurance is usually offered as a rider on a standard casualty insurance policy through the extended coverage endorsement | |
how windstorm insurance works | windstorm insurance covers the types of excessively gusty events such as hurricanes and cyclones that are often considered vis major and so might be excluded from standard homeowners insurance policies those who live in areas susceptible to this type of peril must purchase this additional coverage to protect themselves residents of coastal and midwestern states where hurricanes and tornadoes are relatively common fall into this category if you have a mortgage loan and live in a high risk area for windstorms your mortgage lender may require you to purchase windstorm insurance windstorm insurance will typically cover physical damage to the property and personal belongings inside the home many policies also include coverage for detached structures such as garages and sheds when big winds harm roofs and windows rain and debris can cause additional damage in such cases most policies will cover repairs as long as the claim is filed soon after the event sometimes windstorms are followed by storm surges and flooding but windstorm insurance will not typically cover damage caused by these rising waters flood insurance coverage provided by the federal government must be purchased separately and it takes 30 days to go into effect 12neither windstorm insurance nor homeowners insurance will cover repairing or replacing a vehicle damaged by a wind toppled tree or other blowing debris you must carry a comprehensive auto insurance policy to cover a car 3filing a windstorm insurance claimto file a windstorm insurance claim you must take certain steps the most important thing is to act quickly many policies limit the time frame to file a claim for storm damage often this is because failure to fix problems promptly can lead to more damage later immediately after a windstorm a windstorm insurance policyholder should frequently asked questions faqs | |
what is the difference between homeowners insurance and windstorm insurance | homeowners insurance protects you financially from structural damage to your property theft or damage to personal belongings and liability homeowners insurance may cover wind damage due to hurricanes but it may not cover a high risk area like along the coast for wind damage as a result you would need windstorm insurance if your home is in a coastal area 4 | |
are you required to get windstorm insurance | typically you are not required to get windstorm insurance however if you live in a coastal area prone to wind damage and have a mortgage loan your mortgage lender may require you to buy windstorm insurance 4 | |
how much does windstorm insurance cost | windstorm insurance can cost approximately 2 000 per year in coastal or high risk areas however the cost can vary depending on the size of the home its location and the insurer 5the bottom linewindstorm insurance covers excessively gusty events including hurricanes and cyclones often excluded from a homeowners insurance policy those living in high risk areas must purchase windstorm insurance in addition to their homeowners insurance however storm surges and flooding that follow a windstorm and cause property damage may not be covered by windstorm insurance | |
what is windstorm insurance | windstorm insurance is a special type of property casualty insurance that protects policyholders from property damage caused by gales winds hail and other gusty hazards a subset of storm insurance windstorm insurance is usually offered as a rider on a standard casualty insurance policy through the extended coverage endorsement | |
how windstorm insurance works | windstorm insurance covers the types of excessively gusty events such as hurricanes and cyclones that are often considered vis major and so might be excluded from standard homeowners insurance policies those who live in areas susceptible to this type of peril must purchase this additional coverage to protect themselves residents of coastal and midwestern states where hurricanes and tornadoes are relatively common fall into this category if you have a mortgage loan and live in a high risk area for windstorms your mortgage lender may require you to purchase windstorm insurance windstorm insurance will typically cover physical damage to the property and personal belongings inside the home many policies also include coverage for detached structures such as garages and sheds when big winds harm roofs and windows rain and debris can cause additional damage in such cases most policies will cover repairs as long as the claim is filed soon after the event sometimes windstorms are followed by storm surges and flooding but windstorm insurance will not typically cover damage caused by these rising waters flood insurance coverage provided by the federal government must be purchased separately and it takes 30 days to go into effect 12neither windstorm insurance nor homeowners insurance will cover repairing or replacing a vehicle damaged by a wind toppled tree or other blowing debris you must carry a comprehensive auto insurance policy to cover a car 3filing a windstorm insurance claimto file a windstorm insurance claim you must take certain steps the most important thing is to act quickly many policies limit the time frame to file a claim for storm damage often this is because failure to fix problems promptly can lead to more damage later immediately after a windstorm a windstorm insurance policyholder should frequently asked questions faqs | |
what is the difference between homeowners insurance and windstorm insurance | homeowners insurance protects you financially from structural damage to your property theft or damage to personal belongings and liability homeowners insurance may cover wind damage due to hurricanes but it may not cover a high risk area like along the coast for wind damage as a result you would need windstorm insurance if your home is in a coastal area 4 | |
are you required to get windstorm insurance | typically you are not required to get windstorm insurance however if you live in a coastal area prone to wind damage and have a mortgage loan your mortgage lender may require you to buy windstorm insurance 4 | |
how much does windstorm insurance cost | windstorm insurance can cost approximately 2 000 per year in coastal or high risk areas however the cost can vary depending on the size of the home its location and the insurer 5the bottom linewindstorm insurance covers excessively gusty events including hurricanes and cyclones often excluded from a homeowners insurance policy those living in high risk areas must purchase windstorm insurance in addition to their homeowners insurance however storm surges and flooding that follow a windstorm and cause property damage may not be covered by windstorm insurance | |
what is a winner takes all market | a winner takes all market refers to an economy in which the best performers are able to capture a very large share of the available rewards while the remaining competitors are left with very little the prevalence of winner takes all markets widens wealth disparities because a select few are able to capture increasing amounts of income that would otherwise be more widely distributed throughout the population winner takes all market definitionmany commentators believe that the prevalence of winner takes all markets is expanding as technology lessens the barriers to competition within many fields of commerce a good example of a winner takes all market can be seen in the rise of large multinational firms such as wal mart in the past a wide variety of local stores existed within different geographic regions today however better transportation telecommunications and information technology systems have lifted the constraints to competition large firms like wal mart are able to effectively manage vast resources in order to gain an advantage over local competitors and capture a large market share in almost every segment they enter the logical outcome to a winner takes all market system is one of oligopoly oligopoly is a market structure with just a small number of large powerful firms in the most extreme case a monopoly is where just a single firm exists controlling an entire market these large firms either buy up smaller firms or put them out of business by out competing them in the marketplace winner takes all in the stock marketthe meteoric rise of the u s equity markets between 2009 and 2019 has led to what some believe is a winner takes all market wealthy people who have a large percentage of their overall wealth invested in the u s equity markets have taken advantage of large market gains during this period which have led to outsized increases in income and wealth when compared to the growth experienced by the rest of the u s population wealth and income disparity have increased significantly during this period with a large portion of the gains going to those already residing within the top 1 of earners this is an example of the matthew effect first described by sociologists in the 1960s the effect is that in a winner takes all situation the rich get richer and leave the rest behind that is because stock markets and other winner takes all systems can be examples of zero sum games where winners must get ahead at the expense of the losers there are alternative systems where an increase in wealth raises all ships where there is mutual benefit to gains instead of being zero sum examples include countries with robust social welfare systems such as the scandinavian countries the potential downside is that those systems provide less overall potential benefit to winners since wealth is more evenly re distributed among all | |
what is the winner s curse | the winner s curse is a tendency for the winning bid in an auction to exceed the intrinsic value or true worth of an item the gap in auctioned versus intrinsic value can typically be attributed to incomplete information emotions or a variety of other subjective factors that may influence bidders in general subjective factors usually create a value gap because the bidder faces a difficult time determining and rationalizing an item s true intrinsic value as a result the largest overestimation of an item s value ends up winning the auction understanding the winner s cursethe term winner s curse was coined by three atlantic richfield engineers who observed the poor investment returns of companies bidding for offshore oil drilling rights in the gulf of mexico 1 in the investing world the term often applies to initial public offerings ipos comprehensively the winner s curse theory can be applied to any purchase done through auction as most investors know intrinsic value is usually quantifiable but situations and subjective factors make value estimates more unclear in real time and real life theoretically if perfect information was available to everyone and all participants were completely rational in their decisions and skilled at valuation a fully efficient market would exist and no overpayments or arbitrage opportunities would ever occur however while efficient markets are helpful to understand in theory historically they have proved to be unachievable 100 of the time thus emotions irrationalities rumors and other subjective factors can push prices far beyond their true values the winner s curse at its core is a combination of cognitive and emotional friction and is usually recognized after the fact the buyer is victorious in owning whatever asset they are bidding on however the asset is likely worth far less in resale value after ownership due to different factors affecting the purchase and influencing its value in the future the winner s curse can lead to an example of buyer s remorse wherein the buyer of something feels like they ve overpaid in retrospect overall when an individual has to bid more than somebody else to get something there is a good chance they end up paying more than they had wished unfortunately it s often only after the transaction has taken place that they see this an example of the winner s cursejim s oil joe s exploration and frank s drilling are all courting drilling rights for a specific area let s suppose that after accounting for all drilling related costs and potential future revenues the drilling rights have an intrinsic value of 4 million now let s imagine that jim s oil bids 2 million for the rights joe s exploration 5 million and frank s drilling 7 million while frank s won the auction it ended up overpaying by 3 million even if joe s exploration is 100 sure that this price is too high it can do nothing about it as the highest bid always wins the auction no matter how overpriced the bid may be | |
what is the winsorized mean | winsorized mean is a method of averaging that initially replaces the smallest and largest values with the observations closest to them this is done to limit the effect of outliers or abnormal extreme values or outliers on the calculation after replacing the values the arithmetic mean formula is then used to calculate the winsorized mean formula for the winsorized meanwinsorized mean x n x n 1 x n 2 x n n where n the number of largest and smallest data points to be replaced by the observation closest to them n total number of data points begin aligned text winsorized mean frac x n dots x n 1 x n 2 dots x n n textbf where begin aligned n text the number of largest and smallest data text points to be replaced by the observation text closest to them end aligned n text total number of data points end aligned winsorized mean nxn xn 1 xn 2 xn where n the number of largest and smallest datapoints to be replaced by the observationclosest to them n total number of data points winsorized means are expressed in two ways a kn winsorized mean refers to the replacement of the k smallest and largest observations where k is an integer an x winsorized mean involves replacing a given percentage of values from both ends of the data the winsorized mean is achieved by replacing the smallest and largest data points then summing all the data points and dividing the sum by the total number of data points | |
what does the winsorized mean tell you | the winsorized mean is less sensitive to outliers because it can replace them with less extreme values that is it is less susceptible to outliers versus the arithmetic average however if a distribution has fat tails the effect of removing the highest and lowest values in the distribution will have little influence because of the high degree of variability in the distribution figures one major downside for winsorized means is that they naturally introduce some bias into the data set by reducing the influence of outliers the analysis is modified for better analysis but also removes information about the underlying data strengths of winsorized meanthere are several situations in which using the winsorized mean is best these vague situations are listed below with more specific examples of where winsorized mean may be most useful in the next section times when it s sometimes best to use winsorized mean includes when there s winsorized mean levelthe winsorization level is crucial for effectively using the winsorized mean the winsorization level determines the percentage of extreme values to be replaced with less extreme ones to determine the appropriate winsorization level consider data exploration relying on domain knowledge conducting sensitivity analyses and consulting with experts who may be more familiar on what extreme values may look like | |
when assessing the winsorized level understanding the nature of outliers and their reasons can help determine the appropriate level outliers can influence the statistical analysis so a higher winsorization level may be beneficial if they unduly influence results however a lower level may be more appropriate if the goal is to preserve some of the data s original characteristics when picking the level gauge your interest in how important keeping the original data s composition is | in many cases data domain knowledge is essential in setting the winsorization level consider any data set and what the typical range of values would be without historical implicit knowledge of the industry it would be much more challenging to identify bad data in some cases experimentation is crucial in observing how the winsorized mean changes with varying levels winsorized mean and real world situationsmore specifically there s a handful of situations or industries where winsorized mean makes more sense than other forms of measurement these real world situations may include but aren t limited to the categories below market volatility can have a material impact on financial data stock prices asset returns and other financial indicators may display extreme levels in the world of finance and investing the impact of severe price volatility and outliers can be lessened when financial data estimates are computed using the winsorized mean distributions of salaries or payroll within businesses can occasionally be very skewed this is especially true in sectors where there is a significant income gap or sectors that materially reward those who have been in the industry long or penalize those who are just starting their careers by minimizing the impact of abnormally high or low incomes the winsorized mean can assist in providing a more accurate measurement of the typical pay range because of uncommon medical illnesses or extreme measures medical data may contain outliers health related indicators like blood pressure cholesterol levels or patient recovery durations can be better understood should extremes be removed for example information may be more helpful to know regarding a collective average of patients should that data set not be skewed by any abnormally high or abnormally low medical readings due to a variety of variables some children may have unusually high or low test results it may not be as useful to incorporate these abnormal test scores when evaluating a specific cohort s performance therefore an assessment s average score can be calculated using the winsorized mean to remove any negative or positive implications that student may have when evaluating how a specific teacher or course was perceived on a very similar note when assessing customer satisfaction ratings outliers may appear because a tiny percentage of consumers provided extremely good or negative comments in the example above regarding a class perhaps a single disgruntled student brings down the course evaluation score winsorized mean can help reduce the influence of these extreme scores and produce a more realistic picture of overall happiness with seemingly more uncommon occurrences or extreme weather conditions occurring there may be situations where environmental data without these extremes are useful for example consider a measure of average air quality or the amount of water contamination abnormally high or low levels of contamination in either context may mislead decision makers in understanding what the average daily situation may be for example environmental economic resources may be misallocated example of how to use winsorized meanlet s calculate the winsorized mean for the following data set 1 5 7 8 9 10 34 in this example we assume the winsorized mean is in the first order in which we replace the smallest and largest values with their nearest observations the data set now appears as follows 5 5 7 8 9 10 10 taking an arithmetic average of the new set produces a winsorized mean of 7 7 or 5 5 7 8 9 10 10 divided by 7 note that the arithmetic mean would have been higher 10 6 the winsorized mean effectively reduces the influence of the 34 value as an outlier or consider a 20 winsorized mean that takes the top 10 and bottom 10 and replaces them with their next closest value we will winsorize the following data set 2 4 7 8 11 14 18 23 23 27 35 40 49 50 55 60 61 61 62 75 the two smallest and two largest data points 20 of the 20 data points will be replaced with their next closest value thus the new data set is as follows 7 7 7 8 11 14 18 23 23 27 35 40 49 50 55 60 61 61 61 61 the winsorized mean is 33 9 or the total of the data 678 divided by the total number of data points 20 winsorized mean vs other measurementsthere are several other common forms of mean each of which slightly vary from winsorized mean also there are other measurement such as median that give comparable but different information in general the winsorized mean is designed to be more resistant to outliers compared to other types of means those other types of measurement may include can winsorized mean handle multiple outliers yes winsorized mean can handle multiple outliers within the dataset it effectively replaces the specified percentage of extreme values regardless of the number of outliers present by replacing multiple outliers with less extreme values the winsorized mean remains less sensitive to the influence of these outliers can winsorized mean be used with non numeric data not really winsorized mean is primarily designed for numeric data as it involves replacing numerical outliers with other numerical values for non numeric data such as categorical variables or text data other robust statistical measures or preprocessing techniques may be more appropriate | |
does winsorized mean preserve data variability | winsorized mean retains more data variability than the trimmed mean as it only replaces the extreme values with values closer to the dataset s central part therefore it preserves more of the original data range and variability making it a desirable choice in cases where maintaining variability is essential | |
how does winsorized mean impact hypothesis testing | winsorized mean can affect the results of hypothesis testing by reducing the impact of extreme values on statistical tests in cases where outliers might lead to erroneous conclusions winsorized mean can provide more reliable test outcomes making it a useful tool in hypothesis testing with non normal or skewed data the bottom linewinsorized mean is a statistical measure used to calculate the average of a dataset by replacing a specified percentage of extreme values or outliers with less extreme ones this approach reduces the impact of outliers providing a more robust estimate of the central tendency that is less sensitive to extreme values compared to the traditional arithmetic mean | |
what is wire fraud | wire fraud is a type of fraud that involves the use of some form of telecommunications or the internet these can include a phone call a fax an email a text or social media messaging among many other forms wire fraud is punishable by prison and or fines understanding wire fraudthe u s department of justice criminal resource manual section 941 18 u s c 1343 cites these as the key elements of wire fraud wire fraud is a federal crime that carries a sentence of up to 20 years imprisonment and fines of up to 250 000 for individuals and 500 000 for organizations the statute of limitations to bring a charge is five years unless the wire fraud targeted a financial institution in which case the statute of limitations is 10 years if the wire fraud is related to special circumstances such as a presidentially declared state of emergency or targets a financial institution it can carry a prison sentence of up to 30 years and a fine of up to 1 million a person need not have actually defrauded someone or personally sent a fraudulent communication to be convicted of wire fraud it is sufficient to prove the intent to defraud or acting with knowledge of fraudulent communications being sent 23not long ago in order to perpetrate a scheme fraudsters had to rely on the telephone and make hundreds of calls to try to hook a hapless gullible retiree or lonely heart the old fashioned phone call is still useful as a means to contact prey but today with the power of the internet to find potential victims a fraudster s work can be done online with a few fake postings of pictures a tale of woe and a promise of untold riches or everlasting love and all of this can be written with bad grammar and spelling if you get messages or solicitations to send money to a stranger delete them right away you can also report them to the fbi s internet crime complaint center 4example of wire frauda common example of wire fraud is the nigerian prince scam in this scam the scammer sends an email claiming to be a nigerian prince who is down on his luck in some way usually exiled and can t access the fortune in his nigerian bank account he claims to need the target to hold his millions for him and promises to give the target a handsome sum in return the goal of the scam is to obtain the target s financial information which the scammer will use to access the target s money although it s one of the oldest internet scams in the book there are still consumers who fall for this rip off or some variation of it no matter what the circumstances whether you receive an email from a wealthy traveler who needs your help getting back to the u s or your long lost cousin who claims to be in an emergency situation never wire money to a stranger once you wire cash especially overseas it s virtually impossible to reverse the transaction or trace the money if you re worried about your cousin check separately they ll probably be safe at home and you can alert them that their email s been hacked one of these nigerian princes was detained and charged on dec 28 2017 he turned out to be a 67 year old man from louisiana 5 this particular brand of the scheme first popped up in the 1980s and americans have lost millions of dollars to the scam 6 | |
how serious is wire fraud | wire fraud is a federal crime and a conviction is very serious you could spend up to 20 years in federal prison and owe 250 000 if you re found guilty of wire fraud the penalty is even steeper for crimes against financial institutions you could be imprisoned for 30 years and owe as much as 1 million in fines who investigates wire fraud the federal bureau of investigation fbi u s secret service and the u s department of homeland security are some of the organizations that investigate claims of wire fraud 7can you get your money back if you re a victim of a wire fraud scam you can try to get your money back but you might not be successful contact the company you used to wire the money such as western union and ask for a reversal of the fraudulent transaction if you sent the money through your bank contact them right away to let them know and ask if they can reverse it 8the bottom linewire fraud is a serious federal crime that can dramatically affect the lives of victims protect yourself by learning about the latest scam techniques and warning signs and never send money or personal information to strangers even if they propose a deal that s too good to be true | |
what is a wire room | wire rooms are facilities used by financial institutions to process fund transfers and order requests on behalf of clients typical tasks performed by wire room staff include receiving trade orders from brokers and other registered representatives transmitting those orders to the exchange floor or the firm s trading department and relaying notices of executed trade orders back to the brokers involved as financial services become increasingly automated many of these functions have now been replaced by computerized systems understanding a wire roomlarge firms can have entire teams of staff dedicated to the wire room while smaller firms may have staff members rotate between the wire room and other responsibilities increasingly though these tasks are becoming less reliant on humans as companies continue to automate their workflows using computers and software solutions nevertheless wire rooms remain an important part of a firm s operations their main function consists of receiving orders from brokers on behalf of clients which are then passed through to the firm s traders either inside the trading department or on the floor of the relevant stock exchange the traders will then make the relevant purchases on behalf of the client before relaying the completed order information to the wire room once the trades are finalized the wire room staff will then inform the broker who in turn notifies the client that their order has been filled among banks the wire room may have access to a fedline pc which is a computer used to access federal reserve banking services 1 for smaller banks banking software may be used which allows the firm to create payment orders in the fedwire funds service format so that they can then be uploaded to a fedline pc located at another institution 2today wire rooms are more prevalent in smaller banks whereas large banks utilize complex customized systems to facilitate traditional wire room functions any institution with a wire room should have security procedures in place to make sure that all incoming and outgoing payment orders are legitimate and accurate security procedures can include having a second staff member review outgoing payment orders using code words and callbacks and authorizing only certain employees to send and receive payment orders similarly wire rooms are required to keep detailed records of all incoming and outgoing payment orders historically this was accomplished using physical printouts of all messages sent and received staff members would need to review these records regularly throughout the day reporting any missing messages immediately special considerationstoday many financial firms operate using highly automated workflows accordingly many of these processes can be effectively combined for instance discount brokerage services can allow clients to fund their accounts execute trade orders and generate account management reports all from within an online user interface in this situation there are often few if any human staff involved instead all client requests are received and fulfilled electronically by advanced computer systems often within seconds or less | |
what is a wire transfer | a wire transfer is the electronic movement of money from one party to another without the exchange of cash wire transfers are conducted between financial institutions on behalf of clients and facilitate funds transfers across different regions | |
what is a banking room | a banking room is a room in a financial institution typically a bank where banking clerks or tellers sit in order to facilitate banking services for clients in person types of services most often include deposits withdrawals and transfers | |
are wire transfers immediate | most domestic wire transfers are completed within 24 hours international wire transfers can take a few days certain wire transfers such as those within the same financial institution can often be done immediately | |
what is a wire transfer | a wire transfer is an electronic transfer of funds via a network that is administered by banks and transfer service agencies around the world wire transfers are sent by one institution and received by another they require information from the party initiating the transfer such as the recipient s name and account number wire transfers don t actually involve the physical exchange of cash but are settled electronically they can be sent between banks or through a non bank service such as western union understanding wire transferswire transfers which are also known as wire payments allow you to move money quickly and securely without the need to send cash they allow two parties to transfer funds even if they re in different geographic locations safely a transfer is usually initiated from one bank or financial institution to another rather than cash the participating institutions share information about the recipient the bank receiving account number and the amount transferred the sender pays for the transaction upfront at their bank the sender must provide their bank with the following information once the information is documented the wire transfer can begin the initiating firm sends a message to the recipient s institution with payment instructions through a secure system such as fedwire or swift the recipient s bank receives the information from the initiating bank and deposits its own reserve funds into the correct account the two banking institutions then settle the payment on the back end after the money has been deposited wire transfers are important tools for anyone who needs to send money quickly and securely especially when they aren t in the same location they also allow entities to transfer a large amount of money firms do limit the amount that can be transferred but these caps tend to be fairly high for instance one company may use a wire transfer to pay for a large purchase from an international supplier non bank wire transfers do not require bank account numbers one popular non bank wire transfer company is western union whose international money transfer service is available in more than 200 countries 2types of wire transfersthere are two types of wire transfers domestic and international a domestic wire transfer is any type of wire payment that takes place between two different banks or institutions within the same country senders may require a code or the recipient s branch number if they want to execute a transaction these transactions are generally processed on the same day they are initiated and can be received within a few hours that s because a domestic wire transfer only has to go through a domestic automated clearing house ach and can be delivered within a day international wire transfers are initiated in one country and settled in another senders must initiate international transfers even when they send money to someone in another country who has an account at the same bank these payments require a routing or swift code these wire transfers are normally delivered within two business days this extra day is required because international wires must clear a domestic ach and also its foreign equivalent domestic wire transfers can cost up to 35 per transaction or more international wire transfers often cost much more some receiving institutions also charge a fee which is deducted from the total amount received by their customer risks associated with wire transferswire transfers are generally safe and secure provided you know the person who s receiving them if you use a legitimate wire transfer service each person involved in a wire transfer transaction should be required to prove their identity so that anonymous transfers are impossible international wire transfers that originate in the united states are monitored by the office of foreign assets control an agency of the u s treasury the agency makes sure the money sent overseas is not being used to fund terrorist activities or for money laundering purposes in addition they are also tasked with preventing money from going to countries that are the subject of sanctions by the u s government if the agency suspects that any of these scenarios are true the sending bank has the authority to freeze the funds and stop the wire transfer from going through 1wire transfers may be flagged for several reasons alerting officials to possible wrongdoing by either the recipient or the sender in the case of advantages and disadvantages of wire transferswire transfers offer a convenient way to send money and pay bills to a recipient who uses a different bank international wire transfers now take only a few days to settle and domestic wire transfers often settle on the same day unlike mailed checks they are unlikely to be misplaced or lost in the mail moreover they are also reliable while checks can bounce a wire transfer can only be initiated if the sender has sufficient funds in their account however there are some drawbacks banks often charge a flat fee for wire transfers which can range between 15 and 50 this can eat up a large percentage of the transferred amount especially for smaller transactions in addition some banks place a limit on the amount that can be wired in a single day moreover evolutions in fintech have provided alternatives that may be even faster than wire transfers tools like paypal and venmo allow domestic transfers in extremely small amounts even faster than a bank wire and for lower or no fees fast settlement even across borders cannot be bounced or held due to insufficient funds bank fees make wires impractical for some amounts banks may impose a limit on the maximum transfer alternative payment methods can be even faster and cheaper than wires alternatives to wire transfers | |
how is a wire transfer done | a wire transfer is most often used to transfer funds from one bank or financial institution to another no physical money is transferred between banks or financial institutions when conducting a wire transfer instead information is passed between banking institutions about the recipient the bank receiving account number and the amount transferred the sender first pays for the transaction upfront at their bank the sending bank sends a message to the recipient s bank with payment instructions through a secure system such as fedwire or swift the recipient s bank receives all the necessary information from the initiating bank and deposits its own reserve funds into the correct account the two banking institutions then settle the payment on the back end after the money has already been deposited | |
what are the advantages of wire transfers | wire transfers allow for the individualized transmission of funds from individuals or entities to others while still maintaining the efficiencies associated with the fast and secure movement of money the sender can initiate a wire transfer quickly and the recipient can access the funds immediately as there are usually no bank holds on the money wire transfers also allow people in different locations to safely transfer money to locales and financial institutions around the globe | |
how safe are wire transfers | a wire transfer is generally safe and secure provided you know the recipient a legitimate service will vet the identity of each entity involved in a transaction so that anonymous transfers are impossible international wire transfers that originate in the united states are monitored by the office of foreign assets control an agency of the u s treasury this agency makes sure the money being sent overseas is not being used to fund terrorist activities or for money laundering purposes they are also tasked with preventing money from going to countries that are the subject of sanctions by the u s government 1 | |
how long does a wire transfer take | domestic bank wires may take up to three days in the united states but they are usually much faster especially if the sender and recipient use the same banking institution international wires can take up to five business days however human error and other factors can sometimes cause delays in extreme cases of up to three weeks 3the bottom linewire transfers allow money to be sent over an electronic network between different banks bank wires are a relatively painless way to send large transactions whether domestic or international however there are fees involved and wires may take some time to clear | |
what is a wirehouse | a wirehouse is a term used to describe a full service broker dealer modern day wirehouses range from small regional brokerages to large institutions with global footprints understanding wirehousesthe term wirehouse was coined when brokerage firms were connected to their branches primarily through private telephone and telegraph wires this network connection enabled branches to have easy access to the same market information as the head office thereby allowing brokers to provide up to date stock quotes and market news to clients although traditionally used to describe broker dealers the term also described some banks and insurance companies that connected to their head office by wired telecommunication networks today the internet has made it possible for these institutions to communicate and transmit data wirelessly however many large brokerages are still referred to as wirehouses because of the substantial impact wire communication had on their operations wirehouses and the 2008 financial crisisthe global financial crisis of 2008 led to unprecedented turmoil among wirehouses primarily because of their exposure to mortgage backed securities mbs the failure to regulate mortgage backed securities and mortgage brokers were some of the contributing factors to this crisis a number of smaller brokerages were forced to close and some of the most prominent players e g merrill lynch and bear stearns were either acquired by banks or became insolvent e g lehman brothers after the 2008 financial crisis the landscape was sparse and mainly populated by powerhouse broker dealers wirehouses todaymost present day wirehouses are full service brokerages that provide a comprehensive range of services such as investment banking research trading and wealth management although the proliferation of discount brokerages and online quotes has eroded the edge in market information that the wirehouses formerly possessed their diversified activities in capital markets continue to make them very profitable entities examples of notable wirehouses include bank of america merrill lynch wells fargo and morgan stanley | |
do wire houses still use dedicated telephone and telegraph lines | no the internet and cloud computing have done away with any vestige of the past technology used by wirehouses the use of wirehouse to refer to a full service broker dealer is virtually non existent and is mostly supplanted by terminology such as broker dealer brokerage or investment bank | |
what are the leading wirehouses today | the leading banks throughout the world are typically registered as broker dealers to enable them to conduct all manner of securities transactions in various jurisdictions in the us some of the largest wirehouses are bank of america merrill lynch goldman sachs wells fargo and jp morgan chase just to name a few | |
what is a wirehouse broker | a wirehouse broker advises clients and trades stocks and other assets on their behalf as an employee of a full service brokerage house the word wirehouse implies that they are employed by one of the big players rather than working on their own or with an independent broker dealer company the four largest and best known full service wirehouse brokerage firms today are morgan stanley bank of america s merrill lynch ubs and wells fargo wirehouse is an archaic term for a broker dealer the number of financial advisors that merrill lynch has on its payroll morgan stanley has nearly 17 000 12wirehouse broker explainedbefore the advent of modern wireless communications brokerage firms were connected to their branches primarily through telephone and telegraph wires this gave branch offices access to the same market information as the head office allowing brokers to provide stock quotes and market news to their clients a wirehouse broker then and now is typically a full service broker that offers research investment advice and order execution by being affiliated with a wirehouse the broker gains access to the firm s proprietary investment products research and technology it was once thought that only brokers affiliated with the largest wirehouse firms could provide top service to their clients independent brokers were often assumed to be sellers of prepackaged products and were viewed as second class citizens in the financial world things have changed in this regard as an independent broker has access to top quality research wirehouses and the financial crisisthe global financial crisis led to unprecedented turmoil at wirehouses primarily because of the very substantial exposure that many of them had to mortgage backed securities at the time they collapsed a number of the smaller players were forced to close shop some of the most prominent names in the industry such as merrill lynch and bear stearns were acquired by bigger banks some disappeared into bankruptcy notably lehman brothers 3these events served to level the playing field as wirehouse brokers looked for new options after leaving the failed firms wirehouses and independents todaymost present day wirehouses are full service brokerages that provide a complete range of services to clients from investment banking and research to trading and wealth management although the proliferation of discount brokerages and online quotes has eroded the edge in market information that the wirehouses formerly possessed their diversified activities in capital markets continue to make them very profitable entities nevertheless some wirehouse brokers have opted to work as independents independent broker dealers such as raymond james and ameriprise have been morphing into wealth management advisors by 2023 they had 6 545 associates managing 295 3 billion in client assets 4 | |
what is the difference between a wirehouse and a brokerage | all wirehouses are brokerages but not all brokerages are wirehouses the wirehouse label is usually attached to the largest full service brokerage houses whose employees supply their clients with research in house analysis and trading services some brokers work independently or are associated with independent dealer broker firms rather than wirehouses | |
how many wirehouses are there | strictly speaking there are only four wirehouses morgan stanley bank of america s merrill lynch ubs and wells fargo there were about 3 378 broker deal firms many of them independents operating in the u s as of 2022 5 | |
do wirehouses still use telephone and telegraph wires | no wirehouses don t use telephone and telegraph wires any longer they use the internet just like the rest of us they don t even have those noisy machines that pumped out streams of stock prices printed on ticker tape and ready made for tossing out the windows during parades that was a telegraph technology too the bottom linethere are only four firms that can be reasonably described as wirehouses today the big four are morgan stanley bank of america s merrill lynch ubs and wells fargo but they have thousands of smaller competitors who can be described as independent broker dealers wealth management advisors or just plain brokerages | |
what is wisconsin school of business | wisconsin school of business is the business school of the university of wisconsin at madison founded in 1900 the school offers both undergraduate and graduate programs 1 the wisconsin school of business is known for its emphasis on applied learning with coursework often incorporating problems drawn directly from real business situations its master of business administration mba is regularly ranked among the top 40 in the united states | |
how wisconsin school of business works | unlike schools that rely on naming gifts from wealthy donors the wisconsin school of business has taken a different path in 2007 a group of 13 alumni donated 85 million to their alma mater in exchange for a promise that the school could not be renamed for 20 years 5 as such the school remains the wisconsin school of business whereas many other business schools are named after their wealthy donors in the fall of 2020 the wisconsin school of business enrolled 3 300 undergrads top majors included finance and investment banking marketing real estate and urban land economics and management and human resources 6 there were 96 students enrolled in the full time mba 2022 graduating class eighty percent of mba candidates scored between 610 and 700 on the gmat 3 in 2019 u s news world report ranked the school s undergraduate business program as no 7 among public schools and no 15 overall 7 the school also is a top producer of chief executive officers at fortune 500 companies 8 the wisconsin school of business offers a number of mba and postgraduate programs the full time mba program which includes a summer internship takes 21 months to complete the school offers virtual and weekend classes for working professionals for an mba that can be completed in two to five years its executive mba program is held on weekends every fortnight and includes a 10 day trip abroad 9 real world example of wisconsin school of businessfor 2019 forbes ranked the full time mba program at the wisconsin school of business as no 35 in the u s 10 u s news world report and businessweek ranked it no 37 while the economist gave it similar marks 11 12 13 tuition fees and expenses cost 21 166 per year for in state residents and 42 704 annually for non residents 2 the relatively lower tuition costs helped earn the school the no 1 spot for mba programs in terms of return on investment as ranked by u s news world report in 2018 14 recent graduates reported a starting salary of nearly 108 000 per year while the average signing bonus was 24 700 almost 90 of students had secured job offers within three months of graduation graduates have taken jobs in real estate risk management and insurance supply chain management brand and product management among other fields 4 | |
what is wisdom of crowds | wisdom of crowds is the idea that large groups of people are collectively smarter than individual experts when it comes to problem solving decision making innovating and predicting the idea is that the viewpoint of an individual can inherently be biased whereas taking the average knowledge of a crowd can result in eliminating the bias or noise to produce a clearer and more coherent result the theory is often applied to financial markets to show why markets in some instances operate efficiently and other times inefficiently market participants in the crowd need to be diverse and have an incentive for markets to function efficiently understanding wisdom of crowdsthe wisdom of crowds concept was popularized by james surowiecki in his 2004 book the wisdom of crowds which examines how large groups have made superior decisions in pop culture psychology biology behavioral economics and other fields the idea of wisdom of crowds can be traced back to aristotle s theory of collective judgment as presented in his work politics he used a potluck dinner as an example explaining that a group of individuals may come together to create a more satisfying feast for the group as a whole than what one individual might provide 1crowds aren t always wise in fact some can be the opposite take for instance frenzied investors who participate in a stock market bubble like the one that occurred in the 1990s with dotcom companies the group or crowd involved in this bubble invested based on speculation that internet startups would become profitable at some point in the future many of these companies stock prices soared despite the fact that they had yet to generate any revenue unfortunately a good portion of the companies went under as panic ensued in the markets following mass sell orders on the stocks of some of the major tech companies characteristics of a wise crowdaccording to surowiecki wise crowds have several key characteristics a 2018 study updated the wisdom of crowds theory by suggesting that crowds within an existing group are wiser than the group itself the researchers called their results an improvement over the existing wisdom of crowds theory 3they recorded responses to their questions privately from individuals and collectively by having small groups that were subdivisions of larger ones discuss the same question before providing an answer the researchers found that responses from the small groups in which the question was discussed before an answer was agreed upon were more accurate than individual responses 3wisdom of crowds in financial marketsthe wisdom of crowds can also help explain what makes markets which are a type of crowd efficient at times and inefficient at others if market participants are not diverse and if they lack incentives then markets will be inefficient and an item s price will be out of step with its value in a 2015 bloomberg article wealth manager and columnist barry ritholtz argued that prediction markets for example futures markets unlike markets for goods and services lack the wisdom of crowds because they do not have a large or diverse pool of participants 4he points out that prediction markets failed spectacularly in trying to guess the outcomes of events such as the greek referendum the michael jackson trial and the 2004 iowa primary the individuals trying to predict the outcomes of these events were simply guessing based on public polling data and did not have any special individual or collective knowledge 4while there is merit to the idea that the many are smarter than the few it is not always true particularly when members of the crowd are aware of and are influenced by one another s ideas consensus thinking among a group of people with poor judgment can unsurprisingly lead to poor group decision making this factor may have been one of the causes of the 2008 financial crisis it can also explain why democracies sometimes elect unqualified leaders in other words as explained by british science writer philip ball in a 2014 article for the bbc it matters who is in the crowd 5advantages and disadvantages of wisdom of crowdswisdom of crowds allows for diversity and a broad range of thinking this provides more color and experience in problem solving than that of an individual which may often be biased it also allows for the integration of information whereby the vast knowledge of separate individuals creates a larger knowledge pool one of the main criticisms of the wisdom of crowds is that humans tend to conform leading to groupthink which defeats the purpose of the diversity needed in wisdom of crowds in addition if many individuals are aiming to reach a decision and consensus it can lead to disagreements and in fighting diversityinformation integrationlarge knowledge poolconformitydisagreements and in fightingexamples of wisdom of crowdstwo examples that show how the concept works | |
what is the difference between wisdom of crowds and crowdsourcing | wisdom of the crowd is a theory that assumes large crowds are collectively smarter than individual experts it believes that the collective knowledge and opinions of a group are better at decision making problem solving and innovating than an individual crowdsourcing is the process of gathering information work data or opinions from a large group of individuals crowdsourcing can be voluntary or come from paid freelancers | |
what is the crowd within | the crowd within theory states that the average of two estimates made by one individual is more accurate than a single estimate made from that same person the theory seeks to prove that the overall idea of wisdom of crowds can be achieved through the crowd within 6 | |
what are wisdom of crowds criticisms | one of the main criticisms of wisdom of crowds is that if the crowd itself is not particularly educated or diverse then the outcome of the wisdom of the crowd will be no better and most often worse than that of an individual expert the wisdom of crowds idea significantly depends on the quality of the crowd in addition humans tend to conform in groups which leads to groupthink defeating the purpose of having a diversified group the bottom linewisdom of crowds is a theory that assumes that the knowledge of a crowd results in better decision making innovation and problem solving than that of an individual a crowd needs to be large diverse and individuals within the crowd cannot be influenced by others for the theory to work wisdom of crowds can explain much of the efficiency and inefficiency of financial markets | |
what is the witching hour | the witching hour is the last hour of trading on the third friday of each month when options and futures on stocks and stock indexes expire this time is when there are likely heavier trading volumes as traders close out options and futures contracts before expiration positions are then typically reopened in contracts that expire at a later date understanding witching hoursthe witching hour is the final hour of trading before the expiration of derivatives contracts more often traders will use terms such as triple witching which is the expiration of stock options index options and index futures on the same day this event occurs on the third friday of march june september and december 1 | |
when single stock futures were permitted to trade in the u s between 2002 and 2020 they expired on the same quarterly schedule giving rise to quadruple witching meanwhile double witching occurs on the third friday of the eight months that aren t triple witching the expiring contracts are options on stocks and stock indexes | the activity during monthly witching hours is related to rolling out or closing expiring contracts to avoid the expiration and having to buy the underlying asset due to imbalances that could happen when these trades are placed arbitrageurs could look to profit from the resulting price inefficiencies reasons to offset positionsthe primary reason for the increased action on witching hour days is that if the contracts are not closed before expiration that could mean having to buy or sell the underlying security for example futures contracts that are not closed require the seller to deliver the specified quantity of the underlying security or commodity to the contract buyer options that are in the money that is profitable may mean the underlying asset is exercised and assigned to the contract owner in both cases if the contract owner or contract writer can pay for security to be delivered the contract must be closed out before expiration 2rolling out or rolling forward meanwhile is when a position in the expiring contract is closed and replaced with a contract expiring at a later date the trader closes the expiring position settling the gain or loss and then opens a new position in a different contract at the current market rate opportunities for arbitragebesides the increased trading the witching hour can also result in price inefficiencies and hence arbitrage opportunities because of the heavy volume of trades coming in quickly traders seek to profit from even slight price imbalances for example contracts representing large short positions those taken expecting the security price to drop may be bid higher if traders anticipate that the contracts will be bought to close positions before expiration when this happens traders may sell contracts at temporarily high prices and then close them out before the end of the witching hour alternatively they might buy the contract to ride the wave up then sell once the buying frenzy slows down the witching hour and triple quadruple witchingtriple and quadruple witching days occur when three or four of the following expire stock index futures stock index options single stock options and options on stock index futures triple witching happens four times per year but quadruple witching is rare the concentration of expiring contracts on these dates can catalyze higher market volatility and heavy trading volumes 34triple witching occurs on the last friday of each trading quarter i e march june september and december the final triple witching for 2023 is on dec 15 the triple witching dates in 2024 are march 15 june 21 sept 20 and dec 20 5as contract expiration deadlines approach the witching hour trading activity usually surges as market participants rush to close or roll over positions before it s too late thus volatility frequently spikes during this frenetic final trading hour across the derivatives markets and their underlying assets as speculative plays and hedging activities spill over to equities to whip up the market further so while witching days stand out for active trading the last witching hour stands out even more as the frenzy hits a maximum before the inevitable expiration and settlement activity in the moments ahead of the stock market close | |
why does trading volume tend to spike during the witching hour | the concentration of expiring contracts simultaneously across asset classes encourages a spike in trading activity from those closing or rolling over positions those speculating on last minute volatility or dynamically hedging and those taking advantage of fleeting mispricing this combination inevitably leads to the surge during the witching hour | |
why is it called the witching hour | in folklore the witching hour refers to a time at night usually midnight associated with supernatural events when witches demons and ghosts are thought to be most powerful the name witching hour was likely chosen in the financial context because of the heightened volatility and increased trading volume which often occurs at heightened levels before the stock markets version of midnight the end of the trading day as these derivatives reach their expiration traders are often scrambling to close roll out or fulfill their option and futures contracts leading to a flurry of activity and sometimes unpredictable market moves much like the chaos in store for some during the witching hour of folklore | |
what other trading hours feature a flurry of trading activity | the bottom linein financial markets the witching hour refers to the last trading hour on the third friday of each month when options and futures on stocks and indexes expire this period is characterized by heavy trading volumes and increased volatility as investors rush to close or roll over positions before the end of the trading day double triple and quadruple witching can occur when two three or four asset class contracts expire simultaneously these events particularly triple witching can be particularly volatile because of the concentration of expiring contracts | |
what is a with approved credit wac statement | a with approved credit statement or wac statement for short is a qualifier used in advertisements it is intended to clarify that the offer being promoted is conditional on the buyer having an adequate credit rating wac statements are typically included in relation to offers of financing such as hypothetical lease terms provided in an ad for a new car understanding wac statementswac statements are one of many types of qualifying statements that are commonly used in ads these statements colloquially known as the ad s fine print due to the small font in which they are usually written are intended to protect the advertiser against allegations of false or misleading advertising to that end qualifying statements generally provide additional details on the conditions associated with the particular offer being promoted in the ad in the case of wac statements the offer typically relates to the financeability of the product such as when a car or other big ticket item can be purchased using credit provided by the seller or an affiliated lender these advertisements often include incentives such as interest free periods or minimal down payments including a wac statement is an import risk minimization strategy for the advertiser without this disclaimer the advertiser might be accused of using bait and switch practices this practice consists of offering a product or service to a group of customers where some or all of those customers will in fact not be able to purchase that product or service under the price or terms advertised bait and switch tactics are considered fraudulent and are a violation of consumer protection laws 1 consequently companies are careful to avoid this liability by disclosing the terms of their offerings through wac statements and other disclaimers the wac statements themselves typically clarify that in order to qualify for the advertised terms the customer will need to qualify for credit approval based on considerations such as their credit rating their current and historical income level and their employment status however consumer protection legislation such as the equal credit opportunity act ecoa prevents companies from considering personal identity factors such as the customer s ethnicity gender age religion or sexual orientation 2example of a wac statementlaura is in the market to purchase a new car one day she encounters a tv ad for a new car that seems to meet the specifications she is looking for although the car would typically be more expensive than she can afford the advertisement states that the manufacturer is currently offering an attractive financing package featuring a minimal down payment and very low interest rates for the first 12 months upon further inspection however laura realizes that she would not be able to participate in this offer written in fine print near the bottom of the ad the company s wac statement clarifies that these attractive financing terms are only available subject to a credit approval process in which the applicant s credit score current income and collateral will be taken into consideration because laura currently has a poor credit score and limited collateral she anticipates that her application would not be approved | |
what is with benefit of survivorship | with benefit of survivorship refers to a legal agreement where property co owners automatically receive full ownership when another co owner dies this process avoids legal hassles involved with estate settlements understanding with benefit of survivorshipwith benefit of survivorship typically describes a form of joint tenancy ownership where when one owner dies the assets automatically pass to one or more surviving members of the agreement such agreements are often termed joint tenants with right of survivorship and they commonly occur when two or more people own big ticket items such as real estate business entities or investment accounts joint tenancy with benefit of survivorship bypasses the probate process that otherwise applies when conveying an estate s assets to survivors joint tenancy and tenancy in commonsurvivorship benefits form the basis of most decisions to enter into joint tenancy common law requires distinct circumstances to recognize a joint tenancy agreement all co owners must acquire the same title on the asset at the same time and all owners must control an equal share of the asset all owners must also have equal rights to possess the asset agreements that lack any of these requirements would fail to qualify as joint tenancy tenancy in common tic agreements offer an option for co ownership of assets without benefit of survivorship tenancy in common agreements cover all co ownership situations that fail to meet the necessary criteria for joint tenancy as well as situations in which one or more of the co owners desire to pass their ownership interest to another individual in the event of their death assets inherited from tenancy in common agreements do not avoid the probate process in the way that assets automatically passed to survivors in a joint tenancy do however joint ownership with benefit of survivorship is common in family and marital properties without this arrangement the ownership of a deceased s share of the asset would pass through probate with potentially unexpected consequences other agreements with survivor beneficiariesother elements of estate planning also involve the passage of survivor benefits specifically life insurance plans retirement plans annuities and social security benefits can automatically pass to another individual when the covered person dies in addition to the basic passage of such assets through a named beneficiary some insurance policies and annuities offer riders that allow the insurance policy or annuity itself to pass to a specified survivor after the primary insured or annuitant dies examples include variable survivorship life insurance and joint and survivor annuities example of with benefit of survivorshipif a married couple jointly owned a home with right of survivorship then ownership of the entire home would automatically pass to the surviving spouse upon their partner s death without such an agreement and in the absence of other estate planning options such as trusts the home would go through the probate process which takes time and may not always go according to the desires of all those expecting an inheritance | |
what is the difference between survivorship and beneficiary | in retirement planning a survivor is someone usually a spouse who continues to receive your benefits after you die while a beneficiary is someone who receives any remaining account balance after you die the difference is that survivorship benefits are paid out for the lifetime of the survivor while beneficiaries simply receive the remaining account balance | |
how long do survivorship benefits last | if you are eligible to collect social security benefits your spouse or surviving children may qualify for survivorship benefits these benefits may also be available to dependent parents surviving stepchildren grandchildren and disabled older children depending on their relationship to the deceased these benefits are available to surviving spouses for the remainder of their lives or to surviving children until they reach 19 adult children can also qualify if they were disabled by an injury before age 22 | |
how much are survivor benefits | the amount of survivorship benefits depends on the lifetime earnings for the deceased surviving spouses at retirement age typically earn around 100 of the benefits that the deceased would have earned alive surviving spouses who have not reached retirement age surviving children and surviving dependent parents typically receive 75 82 of the deceased s benefits the bottom linewith benefit of survivorship is a legal arrangement that allows shared ownership of a property or asset between a small group of people when one of the co owners dies their share automatically passes to the other surviving owners rather than to any children or heirs this arrangement allows ownership rights to pass without the usual hassle of estate settlements and probate |
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