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what is ishares | a global leader in exchange traded funds etfs ishares has over 2 trillion invested in more than 800 different product offerings across a wide range of asset classes and investment strategies 1 ishares is a subsidiary of blackrock the world s largest asset management company and blackrock is responsible for issuing and marketing ishares products 2founded in the year 2000 the initial ishares listings were established on major exchanges such as the nyse euronext chicago board options exchange nasdaq and nyse arca 3the basics of isharesetfs from ishares are a flexible low cost way for investors to gain exposure to various market segments including fixed income emerging markets and broad based indexes for example the ishares core s p 500 etf ivv tracks the s p 500 index whereas the ishares msci emerging market etf eem follows more than 800 large and mid cap companies in developing countries 45by combining low fees with tax efficiency in an asset that seeks to match an index etfs can build greater longer term savings compared with mutual funds beyond savings most etfs aim to match the performance of a benchmark index which means turnover is less frequent and thus fees are lower however this doesn t come at the expense of performance in fact ishares core etfs outperformed more than 76 of their peers on average from 2015 to 2020 6almost all major global marketplaces list ishares funds including the london stock exchange the hong kong stock exchange the toronto stock exchange among others at any given time ishares and vanguard represent more than 50 of the total etf market 7examples of ishares etfsfor u s investors ishares offers 394 etfs focused on commodities equities fixed income multi assets and real estate in addition investors can choose to focus on developing emerging or frontier markets specific regions and individual countries industry sectors megatrends such as climate change demographic change and technological breakthroughs thematic investing such as environmental social and governance esg criteria and other selection methodologies 8 below are some popular products under the ishares brand | |
what is islamic banking | islamic banking also referred to as islamic finance or shariah compliant finance refers to financial activities that adhere to shariah islamic law two fundamental principles of islamic banking are the sharing of profit and loss and the prohibition of the collection and payment of interest by lenders and investors | |
how islamic banking practices work | there are more than 560 banks and over 1 900 mutual funds around the world that comply with islamic principles between 2015 and 2021 islamic financial assets grew to about 4 trillion from 2 17 trillion and are projected to rise to roughly 5 9 trillion by 2026 according to a 2022 report by the islamic corporation for the development of private sector icd and refinitiv 1this growth is largely due to the rising economies of muslim countries especially those that have benefited from oil price increases the global islamic finance industry grew in 2021 and 2022 due to increased bond issuance and a continuing economic recovery in the financial markets according to s p global ratings islamic assets also managed to expand over 10 in 2020 despite the pandemic 2islamic banking is grounded in the tenets of the islamic faith as they relate to commercial transactions the principles of islamic banking are derived from the quran which is the central religious text of islam in islamic banking all transactions must comply with shariah the legal code of islam based on the teachings of the quran 3 the rules that govern commercial transactions in islamic banking are referred to as fiqh al muamalat employees of institutions that abide by islamic banking are trusted to not deviate from the fundamental principles of the quran while they are conducting business when more information or guidance is necessary islamic bankers turn to learned scholars or use independent reasoning based on scholarship and customary practices one of the primary differences between conventional banking systems and islamic banking is that islamic banking prohibits usury and speculation shariah strictly prohibits any form of speculation or gambling which is referred to as maisir 4shariah also prohibits taking interest on loans in addition any investments involving items or substances that are prohibited in the quran including alcohol gambling and pork are also prohibited 5 in this way islamic banking can be considered a culturally distinct form of ethical investing an islamic bank is entirely operated using islamic principles while an islamic window refers to services that are based on islamic principles provided by a conventional bank some commercial banks offer islamic banking services through dedicated windows or sections to earn money without the typical practice of charging interest islamic banks use equity participation systems equity participation means if a bank lends money to a business the business will pay back the loan without interest and instead give the bank a share in its profits if the business defaults or doesn t earn a profit then the bank also doesn t benefit in general islamic banking institutions tend to be more risk averse in their investment practices as a result they typically avoid business that could be associated with economic bubbles history of islamic bankingthe practices of islamic banking are usually traced back to businesspeople in the middle east who started engaging in financial transactions with their european counterparts during the medieval era at first they used the same financial principles as the europeans however over time as trading systems developed and european countries started establishing local branches of their banks in the middle east some of these banks adopted the local customs of the region where they were newly established primarily no interest financial systems that worked on a profit and loss sharing method by adopting these practices these european banks could also serve the needs of local businesspeople who were muslim beginning in the 1960s islamic banking resurfaced in the modern world and since 1975 many new interest free banks have opened 6though the majority of these islamic banking institutions were founded in muslim countries islamic banks also opened in western europe during the early 1980s in addition national interest free banking systems have been developed by the governments of iran sudan and to a lesser extent pakistan 7example of islamic bankingthe mit ghamr savings bank established in 1963 in egypt is commonly referred to as the first example of islamic banking in the modern world when mit ghamr lent money to businesses it did so based on a profit sharing model 8the mit ghamr project was closed in 1967 due to political factors but during its year of operations the bank exercised a great deal of caution only approving about 40 of its business loan applications however in economically good times the bank s default ratio was said to be zero 9 | |
what is the basis of islamic banking | islamic banking is grounded in the tenets of the islamic faith as they relate to commercial transactions the principles of islamic banking are derived from the quran the central religious text of islam in islamic banking all transactions must comply with shariah the legal code of islam based on the teachings of the quran the rules that govern commercial transactions in islamic banking are referred to as fiqh al muamalat | |
how are conventional and islamic banking different | one of the primary differences between conventional banking systems and islamic banking is that islamic banking prohibits usury and speculation shariah strictly prohibits any form of speculation or gambling which is referred to as maisir shariah also prohibits taking interest on loans also any investments involving items or substances forbidden in the quran including alcohol gambling and pork are prohibited | |
how do islamic banks make money | to earn money without the typical practice of charging interest islamic banks use equity participation systems which are similar to profit sharing equity participation means if a bank lends money to a business the business will pay back the loan without interest and instead give the bank a share in its profits if the business defaults or doesn t earn a profit then the bank also doesn t get paid the bottom lineislamic banking is also referred to as islamic finance or shariah compliant finance it refers to finance or banking activities that comply with islamic law there are many differences between islamic and mainstream finance but two of the most important are the methods of sharing profit and loss and the prohibition of the collection and payment of interest by lenders and investors shariah also prohibits taking interest on loans islamic banks make a profit through equity participation which requires a borrower to give the bank a share in their profits rather than paying interest | |
what is the ism manufacturing index | the ism manufacturing index also known as the purchasing managers index pmi is a monthly indicator of u s economic activity based on a survey of purchasing managers at manufacturing firms nationwide it is considered to be a key indicator of the state of the u s economy formally called the manufacturing ism report on business the survey is conducted by the institute for supply management ism understanding the ism manufacturing indexthe ism manufacturing index or pmi measures the change in production levels across the u s economy from month to month the report is released on the first business day of each month thus it is one of the earliest indicators of economic activity that investors and business people get regularly the ism manufacturing index is a composite index that gives equal weight to new orders production employment supplier deliveries and inventories each factor is seasonally adjusted 1the ism report on business contains three separate purchasing managers indexes based on surveys in addition to the manufacturing pmi the ism produces a services pmi for the non manufacturing sector which is released on the third business day of the month a hospital s pmi is released on the fifth business day of the month the institute also releases a semi annual economic forecast in may and december 2uses of the ism manufacturing indexby monitoring the ism manufacturing index investors can better understand national economic trends and conditions when the index is rising investors anticipate a bullish stock market in reaction to higher corporate profits the opposite is the case in the bond markets which may fall as the ism manufacturing index rises because of the sensitivity of bonds to inflation the monthly announcement of the ism manufacturing index can greatly influence investor and business confidence this is because the index is a survey of purchasing managers and supply management executives who are at the forefront of their companies supply chains purchasing managers are in the best position to assess the ebb and flow of business conditions the manufacturers they work for must respond quickly to changes in demand ramping up or scaling back purchases of materials they use in anticipation of demand for their finished products an index of more than 50 indicates an expansion in the manufacturing segment of the economy in comparison with the previous month while a reading of 50 indicates no change and a reading below 50 suggests a contraction of the manufacturing sector 1index constructionthe ism survey is broadly diversified across industries based on the north american industry classification system naics which is weighted by each industry s share of u s gross domestic product gdp survey responses are delineated into 18 industry sectors such as chemical products computer and electronic products and transportation equipment survey respondents are asked whether activities in their organizations are increasing decreasing or stagnant the activities include new orders production employment supplier deliveries inventories customers inventories commodity prices order backlog new export orders and imports for each of the categories a diffusion index is calculated by adding the percentage of respondents reporting an increase to half of the percentage of respondents reporting no change the composite manufacturing index is calculated by taking an equal 20 weighting for five categories of questions on new orders production employment supplier deliveries and inventories 1the pmi has been calculated and published monthly since 1948 by the ism a not for profit professional association ism manufacturing index readingat the beginning of june 2024 the ism released the series index information for may 2024 the monthly report compared series data from april 2024 index information from the report is below 1the first three columns from the report indicate the most recent findings from the survey as well as the month over month change in each index the report also signals the rate of change in addition to longer term trends how long each index has been moving in any given direction in terms of months in may the manufacturing sector in the u s contracted for the second consecutive month after the contraction seen in april 2024 before april march witnessed an expansion which ended a 16 month streak of contractions 1 | |
what is the current ism manufacturing index | as of may 2024 the united states ism manufacturing pmi is 48 7 1 | |
when is ism data released | the ism manufacturing report on business is released on the first business day of each month at 10 00 a m est the services ism report on business is released on the third business day of each month at the same time 3 | |
how do i read pmi data | the ism manufacturing index provides a number that indicates whether the manufacturing sector is growing or contracting a pmi reading over 50 or over 50 means the sector is growing compared to the previous month while a pmi reading under 50 or under 50 means the sector has contracted month over month 1 | |
is ism a leading indicator | ism pmi data is considered to be a leading indicator of economic trends not only does the ism manufacturing index report information on the prior two months but it also outlines long term trends that have been building over time based on prevailing economic conditions the bottom linethe institute for supply management s monthly manufacturing pmi report on business outlines directional trends for several manufacturing indexes this report details month over month changes in growth or contraction in addition to reporting how long each index has been moving in its current direction the ism manufacturing index is useful in understanding the direction of economic activity from the lens of the country s primary manufacturing companies | |
what is an iso currency code | iso currency codes are the three letter alphabetic codes that represent the various currencies used throughout the world when combined in pairs they make up the symbols and cross rates used in currency trading each of the country specific three letter alphabetic codes also have a corresponding three digit numeric code these codes are identified by the international organization for standardization iso a nongovernmental organization that provides standards for manufacturing commerce technology and communication for currencies the governing document is called iso 4217 2015 understanding iso currency codesiso currency codes are central to currency pairs which are the quotation and pricing structures of the currencies traded in the forex market the value of a currency is a rate and is determined by its comparison to another currency the first three digit code used to designate a currency in a currency pair quotation is called the base currency and the second currency is called the quote currency the currency pair indicates how much of the quote currency is needed to purchase one unit of the base currency for example eur usd is the quote for the euro against the u s dollar eur is the three letter iso currency code for the euro and usd is the code for the u s dollar a quoted price for this pair of 1 2500 means that one euro is exchanged for 1 2500 u s dollars because in this case eur is the base currency and usd is the quote currency or counter currency this means that 1 euro can be exchanged for 1 25 u s dollars another way of looking at this is that it will cost you usd 125 to buy eur 100 iso wasn t involved in currency transactions until 1973 when the standards making body decided it would be useful to be involved after five years of collaboration and deliberation the first standardized currency codes were published in 1978 with a standard on how they should change special considerationsaccording to the iso website iso 4217 2015 specifies the structure for a three letter alphabetic code and an equivalent three digit numeric code for the representation of currencies for those currencies having minor units it also shows the decimal relationship between such units and the currency itself for example the three digit numeric code for the u s dollar is 840 and the numeric code for the euro is 978 but you wouldn t see currencies quoted using numbers like this 978 840 though as the iso document explains iso 4217 2015 is intended for use in any application of trade commerce and banking where currencies and where appropriate funds are required to be described it is designed to be equally suitable for manual users and for those employing automated systems were it useful to do so trading or order processing algorithms could use numeric codes for more effective processing major currency codesthe iso website offers a complete list of currency codes in xml and xms formats all of the major currency pairs have very liquid markets that trade 24 hours a day every business day and they have very narrow spreads the major currency pairs are as follows value traded vs the u s dollar is the top criteria for classification as major currency pairs other important currencies include | |
what is an isoquant curve | an isoquant curve is a concave shaped line on a graph used in the study of microeconomics that charts all the factors or inputs that produce a specified level of output this graph is used as a metric for the influence that the inputs most commonly capital and labor have on the obtainable level of output or production the isoquant curve assists companies and businesses in making adjustments to inputs to maximize production and thus profits understanding an isoquant curvethe term isoquant broken down in latin means equal quantity with iso meaning equal and quant meaning quantity essentially the curve represents a consistent amount of output the isoquant is known alternatively as an equal product curve or a production indifference curve it may also be called an iso product curve most typically an isoquant shows combinations of capital and labor and the technological tradeoff between the two how much capital would be required to replace a unit of labor at a certain production point to generate the same output labor is often placed along the x axis of the isoquant graph and capital along the y axis due to the law of diminishing returns the economic theory that predicts that after some optimal level of production capacity is reached adding other factors will actually result in smaller increases in output an isoquant curve usually has a concave shape the exact slope of the isoquant curve on the graph shows the rate at which a given input either labor or capital can be substituted for the other while keeping the same output level for example in the graph below factor k represents capital and factor l stands for labor the curve shows that when a firm moves down from point a to point b and it uses one additional unit of labor the firm can give up four units of capital k and yet remain on the same isoquant at point b if the firm hires another unit of labor and moves from point b to c the firm can reduce its use of capital k by three units but remain on the same isoquant image by julie bang investopedia 2019 | |
what is an internet service provider isp | an internet service provider isp is any company that provides internet access to consumers and businesses the internet is provided through a variety of channels including cable dsl fiber optics dial up and wireless with most isps offering all options most large telecommunication companies such as mobile and cable companies are isps isps make it possible for their customers to surf the web shop online conduct business and connect with family and friends all for a fee isps may also provide other services including email services domain registration web hosting and browser packages an isp may also be referred to as an information service provider a storage service provider an internet network service provider insp or any combination of these three based on the services offered by the company understanding internet service providers isps internet service was originally limited to government agencies and specific university departments the technology was developed to provide access to the general public through the world wide web in the late 1980s initially consumers were able to gain limited access through a few isps america online aol being one of the most recognized names at the time that used dial up connections using a phone line the number of isps increased to several thousand during the mid 1990s and the boom was on as the options for connectivity increased and speeds moved away from slower dial up connections the internet economy was born providers developed more advanced technology allowing customers high speed access via broadband technology through cable and digital subscriber line dsl modems behind all of this was a multilayered web of connections local isps sold access to customers but paid larger isps for their own access these larger isps in turn paid even larger isps for access the trail leads to tier 1 carriers that can reach every network access point without having to pay for access these tier 1 companies own the infrastructure in their region internet service providers provide their customers with access to the internet plain access providers just handle the traffic between the individual and the internet as a whole but there may also be other services bundled in depending on the customer s location and availability some of these services include as of 2023 approximately 95 of u s adults use the internet and 80 of american adults have broadband service at home 1 | |
what are tier 1 internet service providers | consumers and businesses are accustomed to the idea that they should be able to connect to the internet from anywhere whether at home or while sitting in a local coffee shop to deliver connectivity at high speed companies have to invest in expensive infrastructure that includes fiber optic cables because of the high cost of investment tier 1 isps often appear like a monopoly in their regions a specific company may appear to have near total or total control of the market in a particular area in the united states companies may appear to operate in an oligopoly rather than a monopoly where two or more companies work together to achieve market returns this idea is reinforced by the fact that some of the major american isps became so prominent by using the infrastructure that they inherited from the original telecom monopoly that was ma bell current tier 1 isps continue to invest in infrastructure and they may well be the only players in that market until new technologies that don t depend on fiber cables in the ground emerge think the likes of starlink an entity inside spacex founded by elon musk which is developing a low latency broadband internet system that aims to meet the needs of consumers around the globe enabled by a constellation of low earth orbit satellites the ongoing demand for faster speeds and an improved internet experience means that most of the biggest isps have invested heavily in 5g wireless technology others have tried to enter the tier 1 isp market and have met with mixed results alphabet google s parent company ran google fiber as part of its access division as of 2024 google fiber is only available in select cities in 19 states alabama arizona california colorado florida georgia illinois idaho iowa kansas missouri nebraska nevada north carolina south carolina tennessee texas utah and washington 2examples of internet service providersmany of the largest isps are also large telecommunications companies that provide a wide array of services for example in addition to data and broadband internet services at t t provides local and long distance telephone service managed networking telecom equipment and feature film television and gaming production and distribution verizon communications vz is another isp that has a diversified range of services the conglomerate offers local and long distance voice as well as broadband video data center and cloud services and security and managed network services to help low income families and older people handle the cost some isps offer special programs the federal government also opened an emergency broadband benefit ebb program on may 12 2021 to provide help to families to get these services the ebb was replaced by the affordable connectivity program on dec 31 2021 3 | |
is an internet service provider isp the same as a wifi provider | no an internet service provider isp and a wifi provider are two different things the main difference is that an isp provides access to the internet often through cable digital subscriber line dsl fiber or satellite connections isps such as at t or verizon can be wired to a location such as a home or an office building directly by contrast wifi providers allow you to access the internet through a wireless connection with wifi technology a modem delivers internet service and a wireless router connects to the modem the internet is converted into a wireless signal by the modem | |
what are different types of isps | the two main types of isps are cable or dsl however other types exist often in more remote locations cable connections are used by multiple neighbors which can affect the cable access speed telephone service providers offer dsl connections which connect a dsl router to a phone jack or phone cable dial up connections are most often used in rural areas which use a phone connection that is connected to a remote server | |
what are some common isps | among the largest isps in the united states are comcast charter at t and verizon the bottom linean internet service provider isp is usually a large telecommunications company that provides internet and other related services to consumers some isps are the only provider in a specific region while other regions give consumers access to multiple isps consumers typically look for good service and reliable speeds at a fair price point when considering which isp to choose | |
what is an issue | an issue is a process of offering securities in order to raise funds from investors companies may issue bonds or stocks to investors as a method of financing the business the term issue also refers to a series of stocks or bonds that have been offered to the public and typically relates to the set of instruments that were released under one offering understanding issuesthe issuance of securities can take many forms companies may have a new issue in which they release a security for the first time or a seasoned issue in which an established firm offers additional shares in general an issue tends to refer to a particular offering for example if a company sells a group of 10 year bonds to the public that set of bonds will be referred to as a single issue if a company needs capital among its options are selling stocks or issuing bonds in a secondary offering the board of directors votes to issue more shares and increase the number of shares available in the market for trading the proceeds from selling additional shares to the public go directly to the company likewise if a business wants to move existing debt and create new debt at the same time it might decide to issue bonds the company borrows money from investors and repays it with interest the interest is a tax deductible expense that reduces the corporation s cost of borrowing factors in issuing stocks or bondscompanies need to consider business goals when deciding whether to sell stock or to issue bonds issuing stocks or bonds in order to raise capital for projects can have the effect of changing the capital structure of a firm which is comprised of a mix of debt and equity how weighted a company s structure is in either debt or capital determines the cost of capital for the company the cost of issuing debt is the interest rate that the issuing company has to periodically pay its investors and lenders the cost of issuing equity is dividend payments finding a good balance between both types of securities can help a firm avoid paying a high cost of capital money from equity investment doesn t need to be repaid nor do dividends associated with shares need to be paid as interest does with bonds since each issue of stock changes an investor s ownership in the company there is a limit to how much stock a company can issue as dilution becomes a problem however corporations can issue bonds as long as investors are willing to act as lenders because companies can pay bondholders a lower interest rate and retain greater control over funding issuing bonds is less expensive than borrowing from a bank bonds do not change the ownership or operation of a company that is owned while selling stock does record keeping is simpler with bondholders as all bonds with the same issuance earn the same interest rate and have the same maturity date bond offerings are also more flexible than stock issuance stock and bond underwritingcompanies issuing stocks and bonds may use investment banks to facilitate the process for example if a company decides to sell bonds the investment bank determines the value and riskiness of the corporation then determines the prices and finally underwrites and sells the bonds to the public or privately in a so called private placement investment banks might also underwrite stocks or other securities for an initial public offering ipo or secondary public offering book runners may be assigned to larger accounts underwriting involves conducting thorough research and assessing the degree of risk associated with a new issue this check helps to set fair borrowing rates for loans and create a market for securities by accurately pricing investment risk if the risk is deemed too high an underwriter may refuse to participate or will require a higher yield underwriting ensures that the company s ipo will raise the amount of capital needed and provides the underwriters with a premium or profit for their service investors benefit from the vetting process that underwriting provides and the ability it gives them to make an informed investment decision this type of underwriting can involve individual stocks as well as debt securities including government corporate or municipal bonds underwriters or their employers purchase these securities to resell them for a profit either to investors or dealers who sell them to other buyers when more than one underwriter or group of underwriters is involved this is known as an underwriter syndicate | |
issued shares are the subset of authorized shares sold and held by the shareholders of a company whether they are insiders institutional investors or the general public this is detailed in the company s annual report issued shares include the stock a company sells publicly to generate capital and the stock given to insiders as part of their compensation packages thus authorized shares are the total number a company can ever issue or sell and issued shares are the portion of those shares that a company has sold or otherwise placed in the market including shares they hold in their treasury | issued shares also differ from outstanding shares these are the number of shares in the market that are available for purchase by investors but do not include shares the company holds in its treasury issued shares can be contrasted with unissued ones which have been authorized for future offerings but have not yet been issued understanding issued sharesa company issues a share only once after that investors may sell it to another investor on the secondary market when companies buy back their own shares the shares remain listed as issued even though they are not classified as treasury shares because the company may resell them for a small closely held corporation the original owners may hold all the issued shares the number of issued shares is recorded on a company s balance sheet as capital stock or owners equity while the shares outstanding issued shares minus any shares in the treasury are listed on the company s quarterly filings with the securities and exchange commission the number of outstanding shares is also in the capital section of a company s annual report the number of issued and outstanding shares which is used to calculate market capitalization and earnings per share are often the same authorized shares are those a company s founders or board of directors bofd have approved in their corporate filing paperwork issued shares are those the owners have decided to sell in exchange for cash which may be less than the number of shares actually authorized shares issued generate the assets or other value for founding or developing a company for example a company may retain authorized shares to conduct a secondary offering later sometimes called a tender offer or use them for employee stock options issued shares and ownershipownership of a corporation is typically determined by examining who holds the issued shares this includes shares distributed during the company s initial startup phase or through secondary offerings one may consider not only the issued and outstanding shares but also those that could be issued in the future this broader view is captured in the fully diluted calculation which takes into account shares that would be issued if all authorized stock options and convertible securities were exercised another way for ownership to be projected is by measuring the issued and authorized stocks this approach called the working model calculation forecasts potential changes in shareholder positions based on the total number of shares a company may issue along with those already issued it s thus a speculative view of how ownership could evolve if the company fully uses its authorized share capital it s important all board members use the same calculation when making decisions or plans for the business to maintain consistency if a startup issues 10 million shares out of 20 million authorized shares to an owner and the owner s shares are the only ones issued the owner controls 100 of the corporation bofds typically use the fully diluted or working model calculation for planning and projecting for instance if the board believes it may issue two million additional shares to an investor and offers three million shares as stock options to high performing employees it might offer the founders additional stock options so they do not significantly dilute their ownership percentage issued shares vs outstanding sharesissued shares represent all the stock a company has issued outstanding shares meanwhile are the shares circulating in the market owned by investors and available for them to trade often the number of issued and outstanding shares will be the same however there are cases particularly with larger companies where not all the shares issued will be in the hands of investors for example when a company repurchases its shares they are no longer held publicly but kept in the company s treasury instead these shares would then count as issued shares but not as outstanding shares alternatively outstanding shares are issued shares minus any shares in the treasury a publicly traded company s total number of shares outstanding can usually be found on exchange platforms and in the shareholder s equity section of the company balance sheet | |
what is the difference between authorized shares and issued shares | authorized shares are the total number of shares a company can legally issue while issued shares are the number the company has issued to date the number of authorized and issued shares may be the same or different in which case there would be more authorized than issued shares | |
what is the disadvantage of issuing shares | the disadvantages of going public include following extra regulations and disclosure requirements being a publicly traded company can bring extra scrutiny and increase accounting and other costs issuing more shares later also has disadvantages shareholders generally don t like being asked to cough up more money if they don t wish to have their ownership stake diluted rights issues can damage a company s reputation and make investors want to steer clear thus to raise the required funds it s usually necessary to offer the new shares at a notable discount to their current price the bottom linecompanies issue shares to the public to raise money they initially sell a set number of shares to investors and then those same shares can be traded among investors on a secondary market issued shares are those that the founders or bofd have decided to sell in exchange for cash they include the shares held by investors and employees otherwise known as outstanding shares and the shares a company bought from investors and removed from the market otherwise known as treasury stock | |
what is an issuer | an issuer is a legal entity that develops registers and sells securities to finance its operations issuers may be corporations investment trusts or domestic or foreign governments issuers are legally responsible for the obligations of the issue and for reporting financial conditions material developments and any other operational activities as required by the regulations of their jurisdictions understanding issuersissuers most frequently make available the following types of securities common and preferred stocks bonds notes debentures bills and derivatives other issuers aggregate funds from a pool of investors to issue mutual fund shares or exchange traded funds etfs to illustrate the role of an issuer imagine abc corporation sells common shares to the general public on the market to generate capital to finance its business operations this means abc corporation is an issuer and is therefore required to file with regulators such as the securities and exchange commission sec disclosing relevant financial information about the company abc must also meet any legal obligations or regulations in the jurisdiction where it issued the security writers of options are occasionally referred to as issuers of options because they also sell securities on a market a non issuer transaction is one that is not directly or indirectly executed for the benefit of the issuer non issuer transactions refer to any disposition of a security that does not confer a benefit to the issuer company issuers versus investorswhile the entity that creates and sells a bond or another type of security is referred to as an issuer the individual who buys the security is an investor in some cases the investor is also referred to as a lender essentially the investor is lending the issuer funds which are repayable when the bond matures or the stock is sold as a result the issuer is also considered to be a borrower and the investor should carefully examine the borrower s risk of default before buying the security or lending funds to the issuer credit ratings of issuersratings firms such as standard and poor s and moody s create credit ratings for issuers of debt securities just as credit bureaus create credit profiles and scores for individual consumers rather than being expressed as a number like consumer credit scores issuer scores are pegged to letters for example if an entity has a aaa rating it has a history of repaying its debts and boasts a very low rate of default conversely it an entity has a ddd rating it is in default issuers with ratings of bb or below have their bonds labeled as junk indicating that they pose a high risk of default for investors countries also receive credit ratings for example after greece missed billions of dollars of loan repayments its credit rating was downgraded to ccc however after the country implemented reforms cut costs and recapitalized its banks standard and poor s increased its rating to b indicating that the company s bonds are a bit safer | |
what is an issuer identification number iin | the issuer identification number iin on a payment card indicates which bank or other financial institution issued that card and is responsible for it these numbers are found on credit debit and other types of payment cards worldwide issuer identification numbers are sometimes referred to as bank identification numbers bins understanding issuer identification numberscredit card numbers vary in length frequently 15 or 16 digits but sometimes as many as 19 the first six or eight of those digits represent the issuer identification number the very first digit is known as the major industry identifier mii number these numbers were established by the international organization for standardization iso and the international electrotechnical commission in a standard known as iso iec 7812 1the mii indicates which industry the number is associated with for example numbers 3 4 5 and 6 apply to the banking and financial sectors while 1 and 2 apply to the airline industry 7 to the oil industry and so forth for that reason credit and debit cards will begin with either a 3 4 5 or 6 depending on which card processing network such as visa or mastercard they are tied into 2specifically to use some well known cards and card networks as examples visa cards begin with a 4 mastercards with a 2 or a 5 discover cards with a 6 and american express cards with a 3 2the remaining five or seven digits in the iin indicate the bank or other financial institution that issued the card in recent years newly issued iins have consisted of eight digits while earlier ones had six digits this change was made to accommodate the rapidly growing numbers of cards and cardholders 3 for example visa cards issued by chase will have different iins from visas issued by capitol one or wells fargo although they will all begin with a 4 following the iin on the card will be a series of numbers unique to that specific cardholder the very last number known as the check digit or check sum is used to validate the card number and make sure you ve typed it in correctly if you re buying something online through a computation called the luhn algorithm the entire string of numbers which identify the card network the financial institution that issued the card and the individual the card belongs to is often referred to as the primary account number or pan that s how many different number combinations a typical 15 or 16 digit credit card number allows for according to american express a quadrillion is equal to 1 000 trillion or 1 000 000 000 000 000 3the importance of issuer identification numbersissuer identification numbers and the individual account numbers that accompany them allow merchants and others to verify that a card is valid and that the user s account has sufficient funds available to cover the transaction and they make it happen almost instantaneously credit card numbers vs account numbersthe number that s printed on your credit card and your account number with the financial institution that issued it can be two different things as the credit bureau experian points out if your card is lost or stolen then you ll receive a replacement card with new credit card numbers but your account number will remain the same if you don t already know it you should be able to find your account number by consulting your monthly credit card statement 4 | |
what is a cvv code | a cvv code or validation code is a three or four digit number printed on the front or back of credit and debit cards depending on the card issuer it stands for card verification value and is intended to provide an additional level of security the theory is that a thief who obtains your card number might not have the actual card and would be unable to provide the cvv code if asked for it can a store print your credit card number on your receipt under the federal fair and accurate credit transaction act facta merchants must truncate your credit or debit card number on electronically printed receipts showing no more than the last five digits there is no such limit on handwritten or similar receipts they are also prohibited from including your card s expiration date these rules are meant to offer some protection against identity theft 5 | |
what is a virtual credit card number | a virtual credit card number is a number that s different from your regular credit card number but linked to the same account virtual credit cards sometimes called single use cards are often used in online shopping as a way of keeping your main card number from being compromised or stolen | |
do authorized users on a credit card get their own account number | authorized users on another person s credit card account can get a card with their name printed on it but whether the number will be the same depends on the card issuer either way the original account holder should bear in mind that they are responsible for any debts the authorized user racks up with the card the bottom linethe issuer identification number on a credit debit or other payment card shows which financial institution issued that card and what processing network it belongs to the remaining digits except for the last one represent your personal credit card number | |
what are itemized deductions | an itemized deduction is an expense that can be subtracted from your adjusted gross income agi to reduce your taxable income and lower the amount of taxes you owe taxpayers can itemize deductions like mortgage interest charitable gifts and unreimbursed medical expenses or choose to take the standard deduction a fixed dollar amount that varies by filing status understanding itemized deductionsitemized deductions reduce your taxable income and your savings depends on your tax bracket suppose an unmarried single filer with a gross income of 80 000 claims itemized deductions totaling 15 000 subtracting those deductions from gross income yields a taxable income of 65 000 which falls within a 22 marginal tax rate bracket for 2023 and 2024 12itemized deductions are recorded on schedule a of form 1040 3 taxpayers must save all receipts and documentation of expenses reported in case the internal revenue service irs requests them in an audit additional proof can include bank statements insurance bills medical bills and tax receipts from qualified charitable organizations 4tax deductions should not be confused with tax credits which directly reduce your tax bill if you calculate your taxes due as 14 000 and are eligible for a 1 000 tax credit your bill is cut by 1 000 to 13 000 5itemized deduction vs standard deductionthe majority of taxpayers have the option to itemize deductions or claim the standard deduction nonresident aliens must itemize and married individuals who are filing separately each must claim the same type of deduction 6the decision depends on which deduction type garners the lowest tax liability if you file as a single taxpayer or are married and filing separately you will fare better with the standard deduction of 13 850 for 2023 or 14 600 for 2024 if your itemized deductions total less than that amount 12 | |
what can i itemize | the list of expenses that can be itemized is extensive and can include some medical expenses mortgage interest charitable contributions and state and local taxes you can view the list on the irs website taxpayers use schedule a part of irs form 1040 to calculate and list deductions 7schedule a can be downloaded from the irs website you can deduct mortgage interest on a loan of 750 000 or less for a home bought on or after dec 16 2017 and charitable donations of up to 60 of your agi but it depends on the type of contribution and the charity 89you can also deduct qualified unreimbursed medical and dental expenses over 7 5 of agi state and local income or sales taxes plus real estate and personal property taxes up to 10 000 or 5 000 if married filing separately gambling losses and investment interest less than investment income 10111213mortgage interest on the first 750 000 of indebtedness or 1 million if you bought the home before dec 16 2017charitable contributions up to 60 of agimedical and dental expenses over 7 5 of agistate and local income plus either personal property or sales taxes up to irs thresholdgambling losses up to total amount woninvestment interestmortgage interest on loan amounts over 750 000 unless you bought your home before dec 16 2017state and local income sales and personal property taxes beyond irs thresholdunreimbursed employee expensestax preparation expensesnatural disaster losses unless in a federally declared disaster area | |
which expenses can i itemize | you itemize your deductions on schedule a of form 1040 you can generally deduct unreimbursed medical and dental expenses long term care premiums home mortgage interest charitable donations certain taxes casualty and theft losses and some gambling losses 1412who should itemize deductions you have the option to take the standard deduction or itemize your deductions if the value of expenses you can itemize is greater than the standard deduction then it likely makes sense to itemize | |
what are the standard deduction amounts for 2023 and 2024 | for single taxpayers and those who are married but filing separately the standard deduction is 13 850 in 2023 and 14 600 in 2024 for heads of households the standard deduction is 20 800 in 2023 and 21 900 in 2024 for taxpayers who are married and filing jointly the standard deduction is 27 700 in 2023 and 29 200 in 2024 12the bottom linean itemized deduction is an expense that can be subtracted from your adjusted gross income agi to reduce your tax bill taxpayers can itemize deductions or claim the standard deduction that applies to their filing status itemized deductions must be listed on schedule a of form 1040 and may include mortgage interest charitable gifts and unreimbursed medical expenses | |
what is j | the term j refers to a designation for nasdaq listed stocks that specifies that the stock has voting rights the designation appears as the fifth letter following a dot after a stock s four letter ticker symbol it is added to denote a shareholder vote situation the letter j is a temporary suffix that is removed once the shareholder vote situation is resolved other letter designations are used to describe share classes foreign issues preferred issues and a company s financial status understanding jsecurities that trade on stock exchanges are represented by a series of characters usually a set of letters this arrangement is referred to as a ticker symbol it allows individuals and companies to execute trades for these securities traders can recognize the stock exchange on which these companies trade based on the number of letters in the symbol for instance stocks that trade on the new york stock exchange nyse have three letters while those on the nasdaq have four publicly traded stocks also come with suffixes that alert shareholders to specific situations pertinent to the company these suffixes appear as a fifth letter identifier following a dot after a company s ticker symbol the letter j is one of those suffixes this designation identifies public security issues that have voting rights j also reveals that there is more than one issue of a company s common stock for example google offers two classes of stock to the public one is voting shares and the other is non voting the letter j is only added temporarily when there is a shareholder vote situation and is removed when the situation has been resolved common stock with voting rights is considered voting stock the majority of common stock has voting rights voting stock which carries voting rights allows a shareholder to vote during a shareholder vote situation the items that might require a shareholder vote include voting on board of director members or corporate transactions like mergers the exchange removes the designation once the shareholder vote situation is complete since its ticker symbols are comprised of three letters the nyse uses a fourth letter to identify unique instances where the issuance varies from normal conditions j vs other letter designationsthe nasdaq uses a variety of letters which are called fifth letter designations to distinguish stock issuances and the rights that come along with them j is just one of those designations as mentioned above j is a temporary addition to a stock s ticker symbol like j the letter d is also a temporary suffix d represents a new issue noting that it s a corporate reorganization if you see a ticker symbol that has the letter h after a dot it means that the issuance is the second preferred bond of the company the k at the end of a symbol means the stock is non voting the letter e means the company is delinquent with a securities and exchange commission sec filing while c means the company does not meet all requirements for listing on the nasdaq an a or b means it s the company s a or b shares respectively and most of the various other letters deal with being a preferred convertible or rights issuance | |
what is a j curve | a j curve is an economic theory which states that under certain assumptions a country s trade deficit will initially worsen after the depreciation of its currency mainly because in the near term higher prices on imports will have a greater impact on total nominal imports than the reduced volume of imports this results in a characteristic letter j shape when the nominal trade balance is charted as a line graph understanding a j curvethe j curve operates under the theory that the trading volumes of imports and exports first only experience microeconomic changes as prices adjust before quantities then as time progresses export volumes begin to dramatically increase due to their more attractive prices to foreign buyers simultaneously domestic consumers purchase less imported products due to their higher costs these parallel actions ultimately shift the trade balance to present an increased surplus or smaller deficit compared to those figures before the devaluation naturally the same economic rationale applies to the opposite scenarios when a country experiences a currency appreciation this would consequently result in an inverted j curve the lag between the devaluation and the response on the curve is mainly due to the effect that even after a nation s currency experiences a depreciation the total value of imports will likely increase however the country s exports remain static until the pre existing trade contracts play out over the long haul large numbers of foreign consumers may bump up their purchases of products that come into their country from the nation with the devalued currency these products now become cheaper relative to domestically produced products other uses of the term j curvej curves demonstrate how private equity funds historically usher in negative returns in their initial post launch years but then start witnessing gains after they find their footing private equity funds may take early losses because investment costs and management fees initially absorb money but as funds mature they begin to manifest previously unrealized gains through events such as mergers and acquisitions m a initial public offerings ipos and leveraged recapitalization broadly speaking any phenomenon that shows an initial paradoxical response to a change followed by a strong response in the expected direction can display a letter j shape when charted as a line graph and thus be referred to as a j curve in medical circles j curves appear in graphs where the x axis measures either one of two possible treatable conditions such as cholesterol levels or blood pressure while the y axis indicates the likelihood of a patient developing cardiovascular disease elsewhere a motor with an oil leak may initially show an increase in oil pressure as the low oil level causes increased friction and heat then a larger decrease in oil pressure as more of the engine s oil leaks out this would appear as a reverse j curve if plotted as a chart of engine oil pressure over time the theory has also featured in political science noted american sociologist james chowning davies incorporated the j curve in models used to explain political revolutions asserting that riots are a subjective response to a sudden reversal in fortunes after a long period of economic growth known as relative deprivation real world example of the j curvelook no further than japan in 2013 for a practical example of the j curve the country s trade balance deteriorated after a sudden depreciation in the yen owing mostly to the fact that the volume of exports and imports took time to respond to price signals in 2013 the usd to yen exchange rate hit 100 for the first time since 2009 and has remained above that level ever since japan s government made major purchases of its currency to help get out of a deflationary state the country s trade deficit swelled to a record 1 3 trillion yen us 12 7 billion on energy imports and a weaker yen 1 | |
what is a j curve | a j curve is a trendline that shows an initial loss immediately followed by a dramatic gain in a chart this pattern of activity would follow the shape of a capital j the j curve effect is often cited in economics to illustrate the way that a country s balance of trade initially worsens following a devaluation of its currency then quickly recovers and finally surpasses its previous performance j curves are observed in other fields including medicine and political science in each case an initial loss is followed by a significant gain to a level that exceeds the starting point investopedia julie bangunderstanding the j curvethe j curve is useful to demonstrate the effects of an event or action over a set period of time put bluntly it shows that things are going to get worse before they get better in economics it is often used to observe the effects of a weaker currency on trade balances the pattern is as follows the devaluation of the nation s currency had an immediate negative effect because of an inevitable lag in satisfying greater demand for the country s products | |
when a country s currency appreciates economists note a reverse j curve may occur the country s exports abruptly become more expensive for importing countries if exports from other countries can fill the demand for a lower price the stronger currency will reduce its export competitiveness local consumers may switch to imports too because they have become more competitive with locally produced goods | the term j curve is used to describe the typical trajectory of investments made by a private equity firm the j curve is a visual representation of the plain fact that sometimes things get worse before they get better private equity firms have a different path to profitability than public companies or the funds that invest in them their portfolios by design are made up of companies that were performing poorly when they were purchased the firm then spends substantial amounts of money retooling the company s operations before spinning it off as a renewed company that means an initial decline in performance followed at least theoretically by a steep improvement in performance | |
what is a reverse j curve | to an economist a reverse j curve may occur when a currency gains in value against the values of the currencies of its competitors that is a short spurt of growth is followed by an sharp downward trend the cause as in a normal j curve trend is the lag between the change in currency value and its full impact on consumer behavior it takes time for suppliers and consumers to switch to cheaper choices and for competitors to take advantage of the new opportunity | |
what is an example of a j curve in medicine | one highly debated example of a j curve in medicine is in research that suggests that there is a j curve effect in the treatment of blood pressure it maintains that blood pressure should be reduced only to a normal point below which it reaches a level that could be dangerous to the patient this unresolved issue has major implications for the medical community given the clear dangers posed by high blood pressure 1 | |
is there a j curve effect in investing | in investing the j curve is cited as the usual trajectory of a private equity investment these deep pocketed investors are willing to put up with initial losses while spending substantial amounts of money to return an ailing company to profitability the j curve if successful is expected to emerge in five to eight years from the purchase of the company 2the bottom linethe j curve effect is most often used in economics to describe the effects of a currency devaluation and in private equity to describe the trajectory of a long term investment it could be relevant in many other instances when used to illustrate an outcome that starts with a negative impact but is quickly followed by a sharply positive impact | |
jack welch was the chair and chief executive of general electric ge from 1981 to 2001 welch dramatically increased the market value of ge from 14 billion to 410 billion he had a reputation as one of the top ceos of all time fortune dubbed him manager of the century in 1999 when welch retired ge awarded him a severance of about 417 million the largest ever at the time welch died on march 1 2020 at the age of 84 from renal failure | investopedia hugo linearly life and educationjohn francis welch jr was born in peabody massachusetts on nov 19 1935 to john and grace welch he graduated from the university of massachusetts amherst with a bachelor s degree he earned his doctorate in engineering from the university of illinois urbana champaign welch began working for ge as a junior engineer in 1960 he rose through the ranks to run the company as chair and chief executive officer ceo between 1981 and 2001 welch threatened to leave the company in his early years of employment on a number of occasions due to bureaucratic inefficiency he worked to eliminate bureaucracy and increase growth as the company s leader notable accomplishmentsjack welch streamlined ge s sprawling businesses during the 1980s he fired unproductive managers and eliminated whole divisions then acquired other companies and drove them to adopt better management models and increase profits for ge he closed factories laid off workers and presented a vision of growing fast in a slow growth economy which was the title of a speech he gave in 1981 soon after he became chair this included cutting fat from what began as a nine level layer of management he also worked to establish an air of informality the aim was to make ge seem as though it were a small company rather than the amalgamated corporation it became during welch s tenure as leader welch s core management belief was that high performing managers could turn around almost any business so ge experimented with everything from television to synthetic diamonds ironically this led to an expansionary phase making ge once again a conglomerate by nature even if it was a more aggressively managed one jack welch who was dubbed manager of the century in 1999 by fortune retired from ge in september 2001 his severance package was estimated to be 417 million this period of massive restructuring earned him the nickname neutron jack because he took out the people while leaving the buildings standing just like a neutron bomb in retirement welch was active as a writer and public speaker in 2005 he penned and published his memoir winning the book focuses on management and business it was co authored by welch s wife suzy it sold more than 10 million copies worldwide according to a 2020 report from the new york times the husband wife duo also co wrote another book called the real life mba published in 2015 the book focuses on business leadership management and career development jack welch joined a business forum created by former president donald trump to provide strategic advice on economic issues welch s leadership remains his greatest legacy he promoted the idea that ge and other companies should lead a particular industry or leave it completely he led the adoption of motorola s six sigma program for increasing productivity in manufacturing applying it to ge as a whole he developed a rank and yank style of dealing with underperforming employees and managers by making clear cuts from staff based on their rankings against other employees and divisions but welch s legacy is somewhat complicated by ge s fate since his departure welch left the company just as the dotcom bubble burst damaging some of ge s expanding business lines his successor jeffrey immelt was forced to exit many businesses that were considered a distraction from ge s major profit centers immelt also presided over a drop in ge shares as the 2007 08 financial crisis hit ge s financial operations the model jack welch left behind was good at squeezing profits from top businesses however it left ge ill equipped to survive outside shocks and grow new businesses and innovations that would carry the company into the future in short ge s success was very much a product of great timing that was difficult to sustain over the long term welch was perhaps the first ceo whose performance was seen mainly through the lens of share performance while investors generally appreciate this view of corporations it led managers to focus on short term performance this short term performance focus can have a long term detrimental impact on the sustainability of a company when taken to an extreme jack welch was married three times in 1959 he married carolyn b osburn the two who had four children divorced in 1987 he married jane beasley in 1989 and divorced her in 2003 he married his third wife suzy wetlaufer in 2004 welch died in 2020 of renal failure | |
why made jack welch a good leader | jack welch was considered a good leader because of his vision of quick growth during times of economic slowdown as chair and ceo of ge he looked for inconsistencies and streamlined the company s businesses he eliminated wasteful divisions and unproductive management personnel he also attempted to remove the formalities of business by creating an informal environment | |
how did jack welch transform ge | jack welch joined ge in 1960 as a junior engineer he worked his way up the corporate ladder and became the company s chair and ceo in 1981 as the leader of ge he made major changes to the company and how it operated using aggressive tactics to achieve short term results he made structural changes to the company including streamlining its businesses and getting rid of entire divisions he also found and fixed inefficiencies like closing down factories and laying off workers in an attempt to increase profitability and productivity | |
what happened to ge after jack welch retired | jack welch retired from his role as chair and ceo of ge in 2001 he was succeeded by jeffrey immelt who called his reign controversial the company s share price dropped significantly during his term as ceo unlike his predecessor the company saw as much as 150 billion wiped out from its market value with immelt at the helm compared to the transformation of 14 billion to 410 billion when welch ran the company the bottom linejack welch was considered a powerhouse in the corporate world taking control of ge in 1981 he transformed the company by focusing on short term gains using very aggressive strategies welch is credited with turning ge into a powerful conglomerate by reducing inefficiencies and making acquisitions under his leadership ge s shareholders saw the company s market value increase welch retired in 2001 and handed the reins to jeffrey immelt although welch died in 2020 his leadership at ge remains his greatest legacy | |
what is a jackpot | a jackpot is a large windfall derived from an act of gambling in finance jackpots refer to large investment returns reaped over a short period of time understanding a jackpotjackpot entered the english lexicon via a 19th century variant of five card draw poker which required a player to declare a hand with a pair of jacks or better in order to open bidding players contributed an ante prior to each deal so a series of hands during which nobody could lay claim to anything better than a pair of tens would increase the size of the pot 1 the meaning broadened throughout the gambling industry generally describing situations in which winnings build over a period of time before paying out such as slot machines or lottery games the use of jackpot as a financial term stems from a more colloquial broadening of its definition to a large and unexpected win for example investors who purchase stock in an initial public offering ipo hit the jackpot if the company they back experiences a dramatic and swift rise in share price allowing the investors to cash out with substantial profit jackpots and their consequencesit s human nature to daydream about winning the lottery backing the right horse or getting in on the ground floor of a hot ipo and those daydreams naturally revolve around what one could do with all that newfound wealth regardless of its origin a financial windfall can generate more challenges than investors might anticipate especially if they do not understand the consequences of receiving a large amount of money at one time those fortunate enough to find themselves newly rolling in cash may find the temptation to go out on a buying spree difficult to resist but their future financial health could depend on resisting it first and foremost jackpots are typically subject to taxes tax treatments vary based upon the origin of the windfall however and not all jackpots pay out the same way for example some lottery payouts offer winners a choice between a lump sum and an annuitized payout that offers periodic payments liquidating a lucrative investment position often means capital gains taxes 23 financial planners and tax advisors can play key roles in helping to ensure windfalls get invested appropriately and that individuals set enough aside to ensure they have enough to pay when tax day rolls around after tax planning financial advisors typically suggest that individuals who have hit the jackpot take it slow with large ticket impulse spending even a large windfall will run out and the amount of time it takes to burn through that cash may not be nearly as long as one might imagine some lottery winners even end up in debt or bankrupt after overextending their borrowing after a big win lastly recipients of a financial jackpot should consider how the new wealth impacts their investment goals strategies and risk tolerance personal financial affairs and one s overall portfolio may need to be re evaluated and realigned to reflect a higher net worth long term investment plan | |
what is the jackson hole economic symposium | the jackson hole economic symposium is an annual symposium sponsored by the federal reserve bank of kansas city since 1978 and held in jackson hole wyo since 1981 every year the symposium focuses on an important economic issue that faces world economies participants include prominent central bankers and finance ministers as well as academic luminaries and leading financial market players from around the world 1the symposium proceedings are closely followed by market participants as unexpected remarks emanating from the heavyweights at the symposium have the potential to affect global stock and currency markets understanding the jackson hole economic symposiumthe jackson hole economic symposium is one of the longest standing central banking conferences in the world the mission of the event is to foster an open discussion attendees are selected based on each year s topic with additional consideration given to create regional diversity among attendees the federal reserve bank of kansas city charges attendees a fee to cover the expenses associated with the symposium about 120 people generally attend a year representing a variety of backgrounds and industries but attendance by participants is limited and select media is also invited this not only helps keep the focus of the symposium on track but also provides it with transparency 2each year the federal reserve bank of kansas city selects a specific topic for the symposium and chooses a pool of attendees based on that topic these experts write and present research related to the symposium s theme the bank posts the papers online along with full transcripts from the event anyone who wishes to view them can do so for free online or get a free printed copy after they are published the topic for the 2023 symposium was structural shifts in the global economy 3 the topic for the 2024 symposium has not yet been announced past topics at the jackson hole economic symposiumwith the rise of tech giants like meta amazon apple and google has the amassed market power of such big companies hurt the broader economy or could it do antitrust authorities need to take firmer action 14in the wake of the global financial crisis central banks worldwide used a variety of tactics to resuscitate their countries economies while the traditional tactic of slashing interest rates to reduce borrowing costs was widely used many central banks also took the more unconventional approach of beefing up their balance sheets by acquiring financial assets such as sovereign agency and corporate bonds and in some instances stocks in large quantities 51a major and ongoing consideration for central bankers is staying ahead of inflation by setting interest rates to prevent disruptive rapid price increases however these days preventing inflation isn t as simple as it used to be the global economy is awash in liquidity normally an ignition source for inflation as more money chases the same quantity of goods leading to ever higher prices 61 | |
what was the focus for the jackson hole economic symposium in 2023 | the topic for the 2023 jackson hole economic policy symposium was structural shifts in the global economy speakers included jerome powell chair of the federal reserve christine lagarde president of the european central bank ben broadbent deputy governor of the bank of england and kazuo ueda governor of the bank of japan topics that were discussed included structural changes in the financial markets and the conduct of monetary policy and structural constraints on growth 3 | |
what happens at the jackson hole economic symposium | the jackson hole economic policy symposium is an annual gathering of individuals to discuss central banking policies the symposium brings together people from across the economic financial and governmental fields to discuss the most pressing matters facing global economics who attends the jackson hole economic symposium prominent members from the government academia economics and the financial markets attend the jackson hole symposium this includes heads of global central banks managers of financial institutions and professors from respectable universities such as harvard and stanford the bottom lineeach year the federal reserve of kansas city hosts the jackson hole economic symposium bringing together economists financial market participants academics u s government representatives and media to discuss central banking policy issues each year the symposium has a specific topic it discusses seeking to discuss and improve long term policies that are of concern to all parties involved 2 | |
what is the indonesia stock exchange idx | the indonesia stock exchange idx handles securities transactions in the country of indonesia the primary goal of the idx is to provide the infrastructure to enable orderly fair and efficient trading of securities 1 the idx saw a record number of investors in 2021 and has 713 company listings as of 2020 2understanding the indonesia stock exchange idx the indonesia stock exchange idx was created by the merger of the jakarta stock exchange jsx and the surabaya stock exchange ssx the jsx was indonesia s first stock exchange founded in 1912 for the interest of the dutch east india company the jakarta stock exchange was closed during parts of world wars i and ii when it reopened in 1952 the only exchanged security was the indonesian government bond the exchange became inactive from 1956 1977 and despite being reactivated in 1977 trading activity continued to be slow with only a few dozen companies listed 3regulatory changes that were enacted between 1988 and 1992 improved trading activity the exchange introduced its automatic trading system in 1995 and began to implement remote trading in 2002 in 2007 the jakarta stock exchange merged with the surabaya stock exchange to form the indonesia stock exchange in may of 2018 the exchange updated its trading system and created a new data center 3emerging markets like indonesia have their own set of additional risks for investors emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced economies such as the united states europe and japan but emerging markets do typically have a physical financial infrastructure including banks a stock exchange and a unified currency indonesia stock exchange developmentsthe idx has strived to become a credible and acknowledged world class stock exchange in its annual report of 2020 the key achievements for the idx included the following 2in 2020 idx succeeded in boosting the number and participation of investors which set a new record for the history of the stock exchange the idx saw an increase in quantity and quality of listed companies including recording the largest number of company listings in asean 2 the association of southeast asian nations asean is a group of 10 nations in southeast asia that collaborate to promote economic and cultural growth besides indonesia some of the other asean countries include malaysia the philippines singapore and thailand 4the total number of listed companies stands at 713 at the end of 2020 the exchange continues to expand by adding 47 new exchange traded funds etfs and 51 new securities also new corporate bonds and reits or real estate investment trusts have been added reits pool investors money to invest in commercial properties and collect the rent 2in 2020 the exchange saw a 73 increase in the number of daily active investors from 2019 and reached a market capitalization of rp 6 970 trillion 490 billion by 2021 2 | |
james h clark is a successful serial entrepreneur and computer scientist perhaps best known for co founding netscape with marc andreessen in 1994 netscape navigator was the market leader in web browsers in the early days of the internet becoming the dominant browser in terms of usage share in the 1990s | netscape was eventually purchased by america online aol in 1998 making clark a billionaire 1 clark started netscape with a 4 1 million investment and exited the company with a 1 2 billion payout investopedia alison czinkotaearly life and educationjames h clark was born in plainview texas on march 23 1944 to blue collar working parents when clark was a small child his parents divorced and he and his siblings lived with their mother james rebelled as a youth misbehaving in school this led to many disciplinary actions including suspension ultimately he dropped out of high school and joined the navy 2 while there clark ran a side business making loans to other sailors he later returned to continue his formal education beginning with taking classes at tulane university s university college although he didn t have a high school degree he was eventually admitted to the university of new orleans where he earned his bachelor s and a master s degree in physics clark eventually earned a ph d in computer science from the university of utah clark went on to become an associate professor of electrical engineering at stanford university and a major benefactor of the james h clark center the location of the bioscience research program at stanford 3notable accomplishmentsin 1991 clark founded silicon graphics sgi a company that produced high quality visual effects for film and 3 d images for engineers silicon graphics counted george lucas lucasfilm and steven spielberg among its customers and had become a global leader in the production of hollywood movie visual effects and 3 d imaging in 1994 he left the company and sold his shares soon after leaving sgi james clark along with marc andreessen founded netscape a tech company that introduced the navigator graphical interface web browser one of the most popular web browsers of the 1990s navigator once commanded more than 70 of the market but met its demise when it tried to compete with microsoft s internet explorer 4 microsoft included internet explorer for free with its windows operating system making it the browser of choice because it was not free to use navigator ultimately lost market share the end of netscape navigator was central to microsoft s antitrust trial the result of which was a ruling that stated that microsoft s bundling of internet explorer ie with the windows operating system was a monopolistic business practice in 1998 aol purchased netscape for 4 2 billion inaugurating clark into the billionaire s club 5clark also founded healtheon which later merged with webmd and he was the original investor and chair of the digital photo sharing website shutterfly founded in 1999 6wealth and philanthropywhile jim clark is best known as the co founder of netscape he has since multiplied his wealth through timely tech investments in companies such as meta apple x formerly twitter and palantir his latest startup is a venture called commandscape an app that controls everything from a building s alarms and cameras to its lighting and thermostat as of 2023 forbes estimates that clark s net worth is more than 3 billion making him one of the wealthiest men in america 7an ocean lover his yachts include the 300 foot sailing yacht athena and the 100 foot racing sailboat comanche he is also a well known philanthropist contributing mainly to institutions of higher education such as stanford university and tulane university personal lifeclark has been married four times the divorce from his third wife of 15 years nancy rutter a forbes journalist is reported to have cost him 125 million in cash and assets in the settlement 8 he married kristy hinze a former swimsuit model in 2009 clark has two daughters with kristy hinze dylan vivienne and harper hazelle | |
how much did james clark make from netscape | james clark received a 1 2 billion settlement for the sale of netscape to aol in 1998 9 | |
how many companies has james h clark founded | james clark first founded silicon graphics a computer hardware and software company in 1982 after selling his stake in the company nearly a decade later clark co founded netscape a computer services company responsible for the widely popular web browser navigator in 1996 clark founded healthscape later healtheon a company that streamlines and automates healthcare transactions 4 | |
what did james clark invent | while working as a stanford associate professor clark and some of his graduate students created the geometry engine computer chip which instantly processed 3 d images 4the bottom linejim clark is an american businessman behind the launch and success of several silicon valley companies most notably he is credited with co founding netscape which propelled him to billionaire status he also developed the commandscape app which controls and manages home and business devices such as alarms and thermostats clark s investment portfolio and philanthropic ventures are as impressive as his business portfolio if history is an indicator of things to come we will see another scape development from jim clark | |
james m buchanan jr was an american economist who earned the nobel prize in economics in 1986 for his contribution to public choice theory which uses economics to analyze the behavior of voters and public officials | he is the author of several books including what should economists do the limits of liberty and the calculus of consent with gordon tullock james m buchanan jr died on jan 9 2013 investopedia julie bangearly life and educationjames m buchanan jr was born oct 3 1919 in murfreesboro tenn he earned a bachelor s degree at middle tennessee state college in 1940 and a ph d from the university of chicago in 1948 from 1956 to 1968 buchanan served as a professor at the university of virginia where he founded the thomas jefferson center for studies in political economy he taught at ucla and virginia tech from 1968 to 1983 before moving to george mason university where he retired with emeritus status 1public choice theoryin 1962 along with fellow economist gordon tullock james m buchanan jr wrote the calculus of consent which presents the basic principles of public choice theory the book is regarded as a reference to the discipline of public choice in political science and economics 1the public choice theory applies economics to political decision making and defies the conventional beliefs that politicians act in the best interest of their constituents it evaluates how incentives and personal gain shape politicians choices buchanan s insights into human nature and political outcomes provide an understanding of the perks that motivate political actors and allow for more accurate predictions of political decisions 2in 1986 buchanan was awarded the nobel prize in economics for his development of the contractual and constitutional bases for the theory of economic and political decision making 3the center for public choice at george mason university builds on the groundbreaking economic and political science theories for which buchanan was awarded the nobel prize as a research program public choice extends the tools of economics to analyze the behavior of voters candidates legislators bureaucrats and judges created in 1957 at the university of virginia the center was initially called the thomas jefferson center for studies in political economy in 1969 the center moved to virginia tech and in 1983 to george mason university where it operates today 4 | |
what areas of economics influenced james m buchanan jr | buchanan explored several different economic schools of thought including libertarianism and free market thinking | |
what is the difference between public choice theory and social choice theory | public choice theory is closely related to social choice theory both of these schools of thought are classified under the study of public economics however the social choice theory is a mathematical approach to the combined variables of individual interests included in public choice theory and how those interests affect voter behavior | |
what leadership positions did james m buchanan jr hold | buchanan served as a member of the board of advisors of the independent institute a member and former president of the mont pelerin society and a distinguished senior fellow of the cato institute 5the bottom linejames m buchanan jr pioneered the economic theory of public choice and challenged the notion that politicians act solely on behalf of their constituents and concluded that self interest and incentives are often motivators for civil servants and elected officials | |
james tobin was a neo keynesian economist who received the 1981 nobel prize in economics for his research on the financial system and its impact on inflation and employment | he is known for pioneering the tobin tax a levy on foreign exchange transactions to reduce currency speculation tobin is the author of several books including essays in economics and money credit and capital james tobin died on march 11 2002 investopedia alex dos diazearly life and educationjames tobin was born on march 5 1918 in champaign ilinois he earned both a bachelor s and master s degree from harvard university after his graduation in 1940 tobin began his career at the office of price administration and civilian supply in washington d c during world war ii he served in the united states navy 1tobin returned to harvard to earn a ph d in economics in 1947 and joined the faculty at yale university in 1950 until his retirement in 1988 public serviceapplying the study of economics to real world problems guided james tobin s work throughout his career and he once noted economics has always been a policy oriented subject unless it is applied to the urgent policy issues of the day it will become a sterile exercise without use or interest 1in 1961 president kennedy invited james tobin to serve as one of three economists on his council of economic advisers the group aided the executive branch on economic policy issues and published the 1962 economic report a statement of stabilization and growth policies known as the new economics 2in addition to his work with the kennedy administration tobin served as an academic consultant to the board of governors of the federal reserve and the u s treasury department portfolio selection theoryjames tobin received the nobel prize in economics in 1981 for his analysis of financial markets and their relations to expenditure decisions employment production and prices 2his portfolio selection theory defines how financial markets influence the investment decisions of households and businesses based on weighted risks and expected rates of return tobin emphasized that these microeconomic decisions made within a home or business influence macroeconomic aggregates such as overall consumption employment and inflation the tobin taxjames tobin developed the tobin tax in response to the collapse of the bretton woods agreement in 1971 volatile floating currency exchange rates replaced fixed currency exchange rates once based on the u s dollar s link to a gold standard as money moved quickly in an environment of varying rates tobin proposed to reduce this volatility with a small tax levied on every transaction of exchange from one currency to another this tax would discourage short term currency speculation and cushion the effect of such speculation on small developing economies which could not compete with large financial institutions the tobin tax was not formally implemented or used until after james tobin s death in 2002 and tobin s original purpose of halting currency speculation has been eclipsed by ideas of using the tax to raise revenue for economic and social development internationally 3 | |
what is tobin s q ratio | the tobin s q ratio was developed in 1966 by nicholas kaldor an economist and popularized by james tobin while he was a professor at yale university tobin s q ratio defines the value of a company as its total asset value divided by its market value | |
what is the tobin project | founded in 2005 the tobin project is an independent non profit research organization based on the work of james tobin and pioneering research on pressing problems of the 21st century focusing on institutions of democracy government and markets economic inequality and national security 4 | |
what is the baumol tobin model | the theory developed by william baumol and james tobin studies the tradeoff between the value of the liquidity provided by holding cash versus the value of the interest lost by keeping money liquid the bottom linejames tobin was an american economist who received the 1981 nobel prize in economics he pioneered the tobin tax the study of portfolio selection theory and has influenced theories in economics including the baumol tobin model and the tobin q | |
jan tinbergen was a dutch economist who won the first nobel memorial prize in economics in 1969 which he shared with ragnar frisch for their work in the development and application of dynamic models for analyzing economic processes tinbergen was one of the first economists to apply math to economics and is considered a pioneer in the economics field as well as in econometrics | early life and educationborn in the hague in the netherlands in 1903 tinbergen attended the university of leyden and defended his ph d thesis in 1929 on minimum problems in physics and economics a thesis that allowed him to engage a cross disciplinary approach to his further research in mathematics physics economics and politics 12he joined the netherlands central bureau of statistics performing research on new business cycles a position in government that he held until 1945 during that period he also became a professor of mathematics and statistics at the university of amsterdam and at the netherlands school of economics during that time from 1936 to 1938 tinbergen was also a consultant to the league of nations filling positions in government and education simultaneously 12in 1945 he became the first director of the netherlands central planning bureau he left this position in 1955 to focus on education and spent a year at harvard university he also served as an economic consultant to a host of developing nations including the united arab republic turkey and venezuela 2jan tinbergen died where he was born the hague in 1994 3notable accomplishmentstinbergen is most noted for his contributions to econometrics and macroeconomic modeling tinbergen helped develop the theory of underlying econometrics and the use of statistics to test economic theories an innovator in macro econometric modeling tinbergen developed multi equation models of national economies that were a precursor to today s computer driven economic forecasts some of tinbergen s most important works include statistical testing of business cycles 1938 econometrics 1942 and income distribution 1975 he produced the first comprehensive macro econometric models originally for the netherlands and then for the united kingdom and the united states his macro econometric models focused on business cycles and economic development tinbergen viewed the goal of macroeconomic policy as maximizing social welfare subject to the constraints of technology resources and political feasibility from his models he also developed guidelines and recommendations for applying econometrics to policymaking understanding these types of models can help policymakers aim for economic targets that are related to the policy instruments they control this includes the identification of targets and instruments known as the tinbergen rule this is the idea that governments must use multiple policy instruments if they want to impact multiple policy targets if policymakers have certain targets they wish to reach they must have an equal number of instruments that they control in order to effectively direct policy towards the targets throughout his career tinbergen was also interested in the issues of income distribution in an economy and the phrase tinbergen norm arose from a theory he pursued in which a larger than five to one gap between the lowest income and the highest income will lead to serious social conflict | |
what is the tinbergen model | the tinbergen model is an education plan that stresses the importance of the value of policy variables in the specific plan the tinbergen model stands in contrast to the manpower requirements model which stresses forecasting certain values for the plan year | |
what did jan tinbergen do | jan tinbergen was a dutch economist who won the nobel prize in economic sciences his contributions of dynamic models to economic processes greatly expanded the understanding of economic policy as a tool who coined the term econometrics the norwegian economist ragnar frisch is considered to have coined the term econometrics his work focused on developing mathematical formulas to use in economics his use of the term econometrics refers to using statistics to describe economic systems 4the bottom linejan tinbergen won the nobel prize in economics sciences due to his development of dynamic models that help with the economic process he had a varied career working for the government as a professor and economic consultant around the globe his work on economic policy has helped economists aim for targets with the use of specific economic tools | |
what is the january barometer | the term january barometer refers to the belief held by some traders that the investment performance of the s p 500 index in january can predict its performance for the rest of the year for example proponents of this view believe that if the s p 500 rises between jan 1 and jan 31 this will foretell a positive result for the remainder of the year similarly it holds that if the market fares poorly in january it will likely perform poorly thereafter as well understanding the january barometerthe idea of the january barometer was first devised by yale hirsch creator of the stock trader s almanac in 1972 however it is still used by some traders to this day traders who believe in this hypothesis may use it to try and time the market that is they may invest in the market only in the years when the barometer predicts that the market will rise and stay out of the market when the barometer forecasts a market pullback proponents of this view will cite data showing that the january barometer has registered only 11 errors between 1950 and 2021 giving the indicator an accuracy ratio of 84 5 1 however this phenomenon may be largely illusory after all from 1945 to 2021 u s equity markets generated a positive annual return roughly 70 of the time 2 therefore the january barometer could just be a secondary effect of the general tendency of u s equities to creep higher each year rather than a special phenomenon that can be used to improve one s market timing critics of the january barometer theory will point out that similar phenomena have not been consistently found outside of the united states and therefore that it may be a temporary anomaly specific to u s equity markets the january barometer may have a self reinforcing character if u s investors react to a strong january by investing more heavily in stocks then this itself might cause prices to rise if true this could explain why the correlation between january and annual market returns is more prevalent in the u s than in other regions where the january barometer theory is less well known real world example of the january barometerin recent years the january barometer has had mixed results in 2022 the s p 500 declined by more than 5 in january and ended in a 20 loss in 2021 the s p 500 declined by 1 1 in january but went on to gain just under 27 on the year the results in 2020 were more ambiguous with the s p 500 losing 0 16 in january only to go on to a 16 rally throughout the remainder of the year in 2019 the s p 500 climbed by 7 87 in january and finished the year up 28 9 2 | |
what is the santa claus rally | similar to the january barometer the santa claus rally was coined in 1972 by yale hirsch author of the stock trader s almanac the santa claus rally looks for a rally during a six session stretch beginning with the first session after christmas and ending early in the new year 3 | |
what is a sentiment indicator | a sentiment indicator is designed to provide insight on how a group feels about the market or economy economists and investors are always on the lookout for signals of what could occur in the markets or larger economy over the months ahead the general idea is that market performance will often move in line with public sentiment some analysts also believe that recent performance could be used as a gauge for how a group of investors is feeling and would therefore expect the performance to continue | |
what is seasonality | seasonality refers to the predictable changes that occur over the course of a year to an economy or business it is not uncommon for certain times of the year to result in a drastic change in sales for companies within certain sectors for example holiday spending is often a major driver of full year revenue growth for companies within the retail sector the bottom linethe january barometer has demonstrated its staying power as a concept since it was first introduced more than 50 years ago the statistical debate about whether the indicator is truly a good predictor of the performance of the s p 500 index will likely continue for decades regardless the start of a new year always presents traders with a fresh opportunity to forecast what could happen over the months ahead and it doesn t take much of a stretch to expect that indicators such as the january barometer will continue being part of that discussion | |
the january effect is the name given to the belief in a seasonal increase in stock prices in the first month of each year people have generally attributed a supposed rally each january to the rise in buying that follows the price drop that typically happens each december however data for this phenomenon over the last several decades has proven elusive | some argue that at the end of each year investors tend to sell off securities at a loss to offset their capital gains and lower their tax bills prompting a sell off after the new year they repurchase the stocks creating a greater demand for a range of shares in the market leading to the january effect 12 another explanation for the phenomenon is that investors use year end cash bonuses to buy investments the following month while this market anomaly has been identified in the past the january effect has disappeared in recent years if it ever existed and studies of previous eras have shown it correlated less with lower prices in december than with continuing bullishness during the last months of the previous year 1 in short the evidence doesn t seem to match the explanations understanding the january effectinvestment banker sidney wachtel is said to have first noticed the january effect in 1942 3 like all calendar related effects the hypothesis suggests that the markets are inefficient since efficient markets would naturally make this effect disappear our own look back at the spdr s p 500 etf spy since its 1993 inception makes one wonder how the term ever came to be used of the 30 years since there have been 17 winning january months 57 and 13 losing january months 43 making the odds of a gain slightly higher than the flip of a coin 42 further from the start of the 2009 market rally through january 2023 january months showed seven positive vs seven losing months a 50 50 split given the strong rally since 2009 one might rightly expect a more pronounced number of january winners but this has not been the case the first month of the year turns out not to be a particularly compelling trading month out of the year with middling performance at best historically according to data cited by nasdaq it s been in positive territory but ranks eighth out of the 12 months over the last 20 years 2the efficient market hypothesis argues that share prices reflect all the information that is available to the market based on the theory since all market participants have access to the same information outperforming the market through stock selection or market timing is not practical the efficient market hypothesis is an argument against seasonal phenomena like the january effect january effect explanationsbesides tax loss harvesting with post new year repurchases and investors putting cash bonuses into the market another explanation for the january effect has to do with investor psychology some investors argue that january is the best month to begin an investment program or that many are following through on a new year s resolution to begin investing for the future 3others have posited that mutual fund managers buy the stocks of top performers at the end of the year and get rid of losing assets for the sake of appearances in their year end reports an activity known as window dressing this is unlikely however since trading would primarily affect large caps and the effect when found has been seen as greater in small caps 5year end sell offs could attract buyers interested in the lower prices knowing that the dips are not based on company fundamentals on a wide enough scale this could drive prices higher in january 6rebecca walser named by investopedia as a top advisor for 2023 is skeptical that the theory has statistical validity but she adds if there s anything to it she would attribute it much more to human psychology than tax loss harvesting or mutual fund window dressing studies on the january effectstudies on the january effect generally back walser s view the effect has long been one of the wider known market anomalies so it s no surprise that it s given rise to a wealth of studies a look back should give us some humility when citing truisms about the market like the dumping of stocks in december leads to a bullish market in january that have become outdated or might have been misidentified by previous researchers in the first place for example as we ve seen it s never been clear that sell offs in december led to purchases in january since the better traded january months correlate to better december trading months not those that had massive sell offs 2 my theory is that markets are inefficient enough to observe a january effect but i attribute it much more to human psychology than tax loss harvesting or mutual fund window dressing rebecca walser financial advisor on the january effectuntil the early 2000s most researchers accepted the january effect as an empirical fact focusing less on proving its existence and more on understanding its nuances such as its precise timing and varying degrees of impact over time were there parts of the month that packed the biggest punch 7 was there more or less of a january effect over time 7 given this acceptance some scholars began to explore whether the market was inherently riskier in january hypothesizing that the higher returns were a reward for those willing to invest during this period 8 others became interested in correlations between the january effect and any positive returns for the rest of the year alternatively some used the known fact of the january effect to prove a december effect which then gave rise to a whole other set of studies 910 still more moved beyond tax harvesting and traditional stock market explanations bringing the research into controlled laboratory settings to uncover the supposed underlying behavioral drivers at work in the effect 3 others responded to some saying the data for the effect was hard to discern by arguing that perhaps a broader january effect lacked evidence it could be detected in small caps or specific markets 511amid all this work and the yearly publication of evergreen articles on the effect in media outlets starved for content during the holidays leading into the new year separate groups of researchers raised a critical point they suggested that what was perceived as the january effect might have been merely statistical noise the result of overfitting and data mining to find effects that were not real market phenomena thus challenging the foundational assumptions of previous studies 12criticisms of the january effectjanuary effect skeptics have primarily focused on the lack of recent data showing its continuing impact problems identifying its causes and how it s become moot given the evolution of financial markets let s take these in turn | |
what is behavioral finance | behavioral finance combines psychological theories with conventional economics and finance to explain why people make irrational financial decisions 15 it challenges the traditional assumption that investors should be rational and markets are ultimately efficient instead behavioral finance suggests that various cognitive biases emotions and other psychological factors can significantly influence investor behavior and market outcomes the field examines how these factors can lead to anomalies in financial markets and the january effect has long been seized upon as an example that deviates from logical profit maximizing behavior can you make money exploiting the january effect unlikely even if the january effect were real it s probably not and markets were to rise uncharacteristically each january the fact that people may try to exploit this would undermine its appearance for example in anticipation of higher prices in january some would move in december to pick up certain assets but that demand itself would lessen the price changes between before and after the new year | |
what other months are said to have effects | besides the supposed january effect there are other monthly phenomena said to be observed in the stock market although they are less prominent for instance the sell in may and go away strategy is based on the supposed historical underperformance of stocks in the period from may to october 6 another is the december effect where stock prices often increase in december possibly due to tax related trading holiday spending or investor optimism in addition the october effect was once said to be a real market anomaly since investors were said to fear market declines that month partly because of historical market crashes in 1929 and 1987 one month does consistently stick out september over 10 and 20 year time frames as well as the period going back to 1950 it has been consistently the worst month for trading 16 | |
what is the january barometer | the january barometer also called the other january effect is a folk theory of the stock market claiming that the returns in january will predict the stock market s overall performance for that year thus a strong january would predict a strong bull market and a down january would augur a bear market actual evidence for this effect is scant 17the bottom linethe january effect is a market theory suggesting that january often has consistent gains though the evidence for it has been elusive in recent decades despite this market commentators frequently cite it to explain any positive performance in january they often link january s buying activity to post year end tax loss sales however the relevance of this rationale has greatly diminished over time as more investors shift to tax sheltered plans like 401 k s traders are advised to approach the january effect skeptically and focus on the prevailing market conditions as the year turns rather than relying on this increasingly questionable market lore | |
what was the japan association of securities dealers automated quotation jasdaq | the japan association of securities dealers automated quotation jasdaq was an automated stock exchange based in japan that focused on emerging venture companies originally an independent stock exchange it was merged into the tokyo stock exchange in 2013 and phased out in 2022 like the nasdaq exchange it was a fully electronic trading platform | |
how the jasdaq worked | the precursor to the jasdaq was an over the counter stock trading platform created by the japan securities dealers association in 1963 in 1991 this system was converted to an electronic market and rebranded as the jasdaq securities exchange in 2004 this transition was pivotal for the jasdaq as it marked its formal recognition as a stock exchange before 2004 the jasdaq facilitated otc trades but did not hold a formal stock exchange license from the government 1companies had to meet several criteria to list on a stock exchange in japan including a minimum number of shareholders market capitalization net assets and years of operation because of its focus on early and venture stage businesses jasdaq s listing requirements were more lenient than the tse which hosted more established businesses the jasdaq formed part of a robust ecosystem of stock exchanges operating in japan which include the osaka exchange ose the nagoya stock exchange the sapporo securities exchange and the fukuoka stock exchange closure of the jasdaqas has been true in many countries japan s stock exchanges have undergone a series of consolidations the ose acquired the jasdaq in 2008 1 in 2013 the ose and tokyo stock exchange tse merged to form the japan exchange group 2 the jpx is the world s fifth largest exchange as of 2023 behind the new york stock exchange nasdaq euronext and the shanghai stock exchange 3within the jpx there were four sections the tse first section the tse second section the jasdaq and the mothers exchange however these four sections were consolidated when the tse was restructured into three sections the prime market the standard market and the growth market as the components of the jasdaq were folded into the new sections the jasdaq stopped trading on april 4 2022 4 | |
what was the jasdaq top20 | the jasdaq top20 was an index comprised of the top 20 stocks listed on the jasdaq exchange based on factors like market capitalization net profit and dividends it was discontinued with the closure of the jasdaq on april 4 2022 45 | |
how many companies are listed on the tokyo stock exchange | as of february 2024 there were 3 930 listed companies on the tokyo stock exchange 6 they have a combined market capitalization of 977 trillion yen 6 6 trillion 7 | |
how do you trade japanese stocks | in order to trade stocks on japanese stock exchanges a trader must be able to demonstrate that they are a japanese citizen or permanent resident however foreigners may be able to trade shares in japanese companies through an online broker if they are listed on an american depositary receipt the bottom linethe jasdaq was an electronic stock exchange with a focus on venture backed companies similar to the nasdaq originally an independent exchange it was merged into the tokyo stock exchange and consolidated with other marketplaces in 2022 | |
what is the japan credit rating agency jcr | the japan credit rating agency jcr is a japanese financial services company that provides credit ratings on the corporate debt of japanese companies and foreign bond issuers the entity also publishes a variety of financial and economic information and serves as a guide for counterparty credit risk understanding the japan credit rating agency jcr the japan credit rating agency jcr is one of japan s key bond rating agencies and rates the vast majority of japanese corporate debt including asset backed securities it provides a number of services including rating debt securities of all types as well as publishing financial market economic and industry research and providing data as a service jcr was founded in april 1985 1the jcr has witnessed many financial crises since it was founded in 1985 including the japanese real estate bubble the asian financial crisis the 2007 08 financial crisis the european sovereign debt crisis and the east japan tsunami and considers itself to be an expert in credit risk analysis over the years jcr has been expanding its global network building relationships with many different countries and building alliances with different organizations such as the association of credit rating agencies in asia acraa vis in pakistan care ratings in india hr ratings in mexico and marc in malaysia 2responsibilities of the japan credit rating agency jcr jcr provides rating guidance for over 60 of approximately 1 000 publicly rated issuers in japan in addition jcr provides rating coverage for over 70 of the financial industry in japan and is also dominant in the medical and educational sectors 1jcr has responded to globalization and bond issuers and investors demand for international rating agencies its ratings are used in major overseas markets like the u s europe turkey hong kong indonesia and thailand and it has assigned credit ratings for more than 200 foreign issuers the jcr was officially registered in the u s as a nationally recognized statistical rating organization in 2007 and was certified in the european union in 2011 341some of the additional services that jcr provides for its clients include networking private credit assessment credit risk estimation modeling green and social financial evaluation seminars and training economy and industry information and research and knowledge sharing the company also provides details on all of its rating methodologies detailing its processes and policy on its website it breaks down its rating methodologies into five different groups which are corporates financial institutions the public sector structured finance and sovereigns and supranationals 5japan credit rating agency jcr rating scalesjcr has two rating scales that it uses to rate debt issuances a long term rating scale and a short term rating scale the long term rating scale is similar to that of the rating scales used by western credit rating agencies such as s p and moody s the long term rating scale ranges from aaa to d with aaa signifying the highest level of quality and d signifying default for the rating symbols between aa and b a plus or minus may be attached to indicate the issuers standing within that rating 6jcr s short term rating scale ranges from j 1 to j 3 and below that there are two more ratings nj and d d in this instance also indicate default whereas j 1 is the highest level of quality 6 | |
what is a japan etf | a japan etf is an exchange traded fund etf that invests the majority of its assets in japanese assets that trade on local stock exchanges these etfs are diversified investments that have a low initial investment requirement and management costs just like company stock japan etfs trade on stock exchanges they provide investors access to the japanese economy through currency equity and fixed income markets investors can choose from more than a dozen options that trade on u s stock exchanges | |
how japan etfs work | investing in foreign stock markets was something only sophisticated traders could ever hope to achieve in the past but average investors have been able to get into the market giving them the chance to profit from the global shifts in capital this movement of money has a lot to do with the advance of exchange traded funds etfs pool assets from investors who have similar goals they are listed on exchanges and trade throughout the day just like ordinary stocks they strive to replicate the performance of a broad equity market specific sector or trend by mirroring the holdings of a designated index this is a hypothetical portfolio of securities representing a particular market or a segment of it japan etfs provide international investors with an easy way to gain exposure to the country without buying individual stocks and placing all their eggs in one basket these vehicles are managed passively around a broad underlying index such as the msci japan index whose constituents cover approximately 85 of the free float adjusted market capitalization in the country investors can choose from 20 japan etfs that trade on u s stock exchanges as of jnuary 2024 together they hold combined assets of about 31 billion these etfs track eight major indices on japan s stock market this is in addition to those that track small and mid cap investment strategies and currencies special considerationsjapan is an advanced economy with a large equity market that means there are plenty of etfs to choose from including more exotic ones that focus exclusively on the country s smaller up and coming companies dividends or value stocks as with several of the larger more liquid etfs some japan etfs can be sold short and are even accessible through listed options having said that many investors underestimate the effects that currency fluctuations can have on total returns if the u s dollar rises in value against the japanese yen jpy then an unhedged etf will suffer currency losses that can offset any gains in the underlying japanese stock market during periods of dollar strength many investors found currency risk undesirable paving the way for a rise in a category of etfs that hedge out currency risk their goal is to give investors a return closer to the local currency returns of a country s major stock market indexes the performance of a japan etf may not correlate to the performance of the underlying index when it s measured in u s dollars the changing exchange rate between the yen and the dollar should also taken into consideration advantages and disadvantages of japan etfsthere s no doubt that investing in japan etfs allows investors to diversify their holdings and get into a new market but there are other benefits to trading shares in these investments similarly there are downsides to adding these vehicles to an investment portfolio we ve listed some of the key pros and cons associated with japan etfs below japan has the third largest economy in the world by nominal gdp and is the home to many world leading industrial and tech giants the country s leading position in the world economy makes it a desirable destination for retail investors worldwide the japan exchange group which owns the tokyo stock exchange tse is a large and progressive stock exchange in the asia pacific this makes the country a frequent source of investor focus and attention japan etfs allow for a single diversified investment in the country while also making a bet on the strength of the yen versus the dollar japan has a fair number of economic issues including decades of deflation an aging population and high levels of debt japan s market is also more limited than others notably the u s etf market both in size and variety this difference could be attributable to the fee structure for the asian market in general in the u s the trend has been toward a fee only fiduciary model for many investments in asia on the other hand many investment products continue to be sold by agents on commission provide access to a large and progressive marketopen investors up to japanese companies which have competitive edgegive investors access to major companies and brands | |
have access to a smaller market size and variety | asia focused etfs tend to be commission basedexample of a japan etfthe ishares msci japan etf ewj is perhaps the best known etf in this category the fund aims to produce investment results that correspond to the msci japan index using a market capitalization weighted method in other words a company s representation is based on its size ishares japan etf and the msci japan index are very similar ensuring little tracking error both are led by toyota tm which accounts for over 5 of total assets as of january 2024 consisting mainly of industrials consumer discretionary financials and technology stocks | |
what is the biggest japan etf | the largest japan etf is the ishares msci japan etf ewj with 14 6 billion in assets under management as of january 2024 the fund invests in 225 leading japanese companies with the goal of tracking the msci japan index | |
what are japan s biggest industries | japan is one of the world s leading exporters of manufactured goods the country is the world s second largest exporter of automobiles and also produces significant quantities of machinery and electronic equipment was abenomics a success abenomics refers to the economic policies of shinzo abe who led japan as prime minister between 2006 and 2007 and again between 2012 and 2020 abe steadily introduced a series of shareholder friendly reforms encouraging japan inc to stop hoarding cash and increase dividends and stock repurchases he also targeted negative interest rates a controversial policy designed to stimulate spending and depreciate the yen since japanese companies are big exporters a devalued currency gives them a competitive edge the bottom linea japan etf invests in a basket of japanese equities allowing international investors to gain exposure to one of the world s largest manufacturing economies like other etfs japan etfs provide diversified exposure to a broad cross section of the country s economy without relying on the success of any one company however international etfs also come with some extra risks | |
what is japan inc | japan inc is a descriptor for that country s modern highly centralized economic system and development strategy of export led growth in a sense japan since the 1980s has been defined by a corporate culture of capitalism and export profits despite its rapid growth of corporatism the country experienced prolonged periods of economic stagnation with low gdp growth and low interest rates the basics of japan inc japan inc gained notoriety in the 1980s when western perception was that the alliance of japan s government bureaucrats and corporations established and implemented unfair trade policies however japan s prolonged 1990s recession diminished the reputation and power of japan inc since then japan has undergone major changes that made the japan inc stereotype less prominent in the country s business culture a primary feature of japan inc was the key role of japan s trade ministry which guided japan s development in the postwar years in a strategy of export led growth known as the japanese miracle this growth was due to american investment immediately after the war and government regulation of the economy the japanese government restricted imports and promoted exports at the same time as the bank of japan boj undertook aggressive lending to companies to stimulate private investment close collaboration between corporate executives and government officials enabled the government to create winners another major characteristic of japan inc was institutionalized business alliances among companies known as keiretsu which dominated japan s economic activity the japanese miracle created japan inc and lasted until the 1991 japanese financial crisis japan inc to japan in crisisjapan produced the second largest gross national product gnp after the united states in the 1970s and by the late 1980s ranked first in gnp per capita worldwide in the early 1990s its economy stalled causing what is known as japan s lost decade it was largely due to speculation during a boom cycle record low interest rates ignited the stock market and real estate speculation which inflated valuations in the 1980s the government unsuccessfully attempted to stimulate the economy through public works projects and the boj was slow to intervene which may have instigated the crisis japan s finance ministry finally raised interest rates to stem speculation which caused a stock market crash and debt crisis when borrowers defaulted on debt backed by speculative assets this caused a banking crisis that led to consolidation and government bailouts during the lost decade the economy stagnated amid low growth and deflation with the stock markets near record lows and the property market remaining below pre boom levels amid the crisis japanese consumers saved more and spent less which reduced aggregate demand and produced deflation consumers further conserved money resulting in a deflationary spiral the country s aging population along with japan s hesitance to raise the retirement age and increase taxes together with unrealistic monetary policy also were blamed for the lost decade | |
what is a japanese government bond jgb | a japanese government bond jgb is a bond issued by the government of japan the government pays interest on the bond until the maturity date at the maturity date the full price of the bond is returned to the bondholder japanese government bonds play a key role in the financial securities market in japan understanding japanese government bonds jgbs japanese government bonds jgbs have various maturities ranging from 2 years to 40 years fixed coupon payments are determined at the time of issuance and are paid on a semi annual basis until the security matures 1there are four kinds of japanese government bonds jgbs 2special considerationsa decline in liquidity in the jgb market has been observed in recent years due to the aggressive monetary actions of the central bank the bank of japan boj in 2013 the bank of japan began buying up billions of dollars of japanese government bonds flooding the economy with cash in an effort to propel the country s low annual inflation rate toward its 2 target to keep the yield on ten year jgbs close to zero a rise in the yield of these bonds triggers a buy action from the boj 3as of 2020 the central bank owns over 48 of japanese government bonds 4 there is an inverse relationship between interest rates and bond prices which are dictated by supply and demand in the markets heavy buying of jgbs increases the demand for the bonds which leads to an increase in the price of the bonds the price increase forces down the bond yield an essential element of the central bank s ultra loose yield curve control ycc policy which was designed to help increase the profits that japanese banks could earn from lending money the bank of japan implemented the yield curve control in 2016 in an effort to keep the yield on its ten year jgb at zero and to steepen the yield curve the yield curve steepens when the spread between short term interest rates which are negative in japan and long term rates increase 3 the wider spread in interest rates creates opportunities to arbitrage profits which is advantageous for banks in japan in 2021 the bank of japan reduced its bond buying and began announcing purchases on a quarterly rather than a monthly schedule reportedly this happened because the policy of aggressively targeting 0 yields had led to stagnant trading in the bond market by reducing intervention in the bond market the bank hoped to encourage more active trading 5japanese government bonds jgbs vs u s treasuriesjapanese government bonds jgbs are very much like u s treasury securities they are fully backed by the japanese government making them a very popular investment among low risk investors and a useful investment among high risk investors as a way to balance the risk factor of their portfolios like u s savings bonds they have high levels of credit and liquidity which further adds to their popularity furthermore the price and yield at which jgbs trade is used as a benchmark against which other riskier debt in the country is valued | |
what is the jarrow turnbull model | the jarrow turnbull model is one of the first reduced form models for pricing credit risk developed by robert jarrow and stuart turnbull the model utilizes multi factor and dynamic analysis of interest rates to calculate the probability of default understanding the jarrow turnbull modeldetermining credit risk the possibility of a loss resulting from a borrower s failure to repay a loan or meet contractual obligations is a highly advanced field involving both complex math and high octane computing various models exist to help financial institutions get a better grip on whether a firm may fail to meet its financial obligations or not previously it was common to use tools that examine default risk mainly by looking at a company s capital structure the jarrow turnbull model introduced in 1995 offered a new way to measure the likelihood of default by factoring in the impact of fluctuating interest rates otherwise known as the cost of borrowing as well 1jarrow and turnbull s model shows how credit investments would perform under different interest rates structural models vs reduced form modelsreduced form models are one of two approaches to credit risk modeling the other being structural structural models assume that the modeler has complete knowledge of a company s assets and liabilities leading to a predictable default time structural models often called merton models after the nobel laureate academic robert c merton are single period models that derive their probability of default from the random variations in the unobservable value of a firm s assets under this model default risks occurring at the maturing date if at that stage the value of a company s assets fall below its outstanding debt 2merton s structural credit model was first offered by quantitative credit analysis tools provider kmv llc which was acquired by moody s investors service in 2002 in the early 1990s reduced form models on the other hand take the view that the modeler is in the dark about the company s financial condition these models treat defaulting as an unexpected event that can be governed by a multitude of different factors going on in the market because structural models are rather sensitive to the many assumptions underlying their design jarrow concluded that for pricing and hedging reduced form models are the preferred methodology special considerationsmost banks and credit rating agencies use a combination of structural and reduced form models as well as proprietary variants to assess credit risk structural models offer the built in advantage of offering a link between the credit quality of a firm and the firm s economic and financial conditions established in merton s model meanwhile the jarrow turnbull reduced form models utilize some of the same information but account for certain market parameters as well as knowledge of a firm s financial condition at a point in time | |
jean baptiste say was a french classical liberal economist and scholar born in lyon say had a distinguished career he served on a government finance committee under napoleon and taught political economy at several schools in france his law of markets is a classical economic theory that states that production is the source of demand according to say s law the ability to demand something is financed by supplying a different good | investopedia alison czinkotaearly life and educationjean baptiste say also known as j b say was born on jan 5 1767 in lyon france he went to school in lyon before moving to london to study business say returned to france in 1787 and lived in paris with his family 1he found work as a secretary in a paris based insurance company run by etienne claviere a politician and financier of the french revolution this was where he first came across adam smith s an inquiry into the nature and causes of the wealth of nations say was heavily influenced by smith s work and using the connections he made through claviere became a journalist in 1799 say became a member of the tribunate a kind of economic institute which operated under the french government 1 emperor napoleon bonaparte who disliked say s ideas removed say from his post with the institute a few years later say managed to open a cotton spinning mill in 1807 and six years later he sold the business he joined the conservatory of arts and crafts as a chair of industrial economy between 1817 and 1830 he was also a professor at the coll ge de france where he taught political economy say remained at the latter school in his position until he died in 1832 2notable accomplishmentssay was heavily influenced by adam smith and the economic theories he laid out in his 1776 book wealth of nations he was a big proponent of smith s free market theories promoting his laissez faire philosophies and helping to popularize them in france through his academic work and teaching say also expressed the belief that a falling price level could be a positive occurrence if it resulted from productivity gains rather than from deflation say is known for his formulation of say s law of markets or his theory of markets according to the law a buyer must first produce something of value to sell to obtain purchasing power this implies that the effective demand in an economy is the result of previous acts of production as a result there can never be a sustained general oversupply of goods in an economy because producing economic goods is what creates general demand for goods 3say s law does not claim that there can never be imbalances in supply and demand for specific goods but he believed that they tend toward balances as prices adjust and that this process of price adjustment is also critical to balancing the general demand and supply of all goods 4say s economist contemporaries included james mill jeremy bentham and david ricardo published worksjean baptiste say wrote about money and banking and shared his views of taxation as burdensome he s best known for his book titled a treatise on political economy which was published in 1803 4in addition to his famous treatise his other published works include the two volume complete course in practical political economy which was published in 1852 and a collection of his correspondence with fellow economist thomas malthus titled letters to mr malthus this publication discussed and debated his critics theories of economic growth legacysay s law of markets lives on in modern neoclassical economic models which argue that if prices are flexible enough for all markets to clear then the economy will tend toward stability while it implies that the economy is in a sense self regulating so that production is ultimately the source of demand the law has been misinterpreted and frequently taken to mean that supply creates its own demand say was a supporter of free trade and competition and championed fewer restrictions on businesses contemporary economists john maynard keynes and thomas malthus criticized say s law later economists point to keynes as partly or chiefly responsible for the confusion over say s law characterizing keynes s restatement of the law as a straw man that misrepresents say s law in order to further keynes s arguments at the expense of classical economics say s works appearing in english translations found an admiring audience in american founding fathers thomas jefferson and james madison with whom he actively corresponded jefferson was so impressed by say that he encouraged him to move to virginia 5say is credited by robert l formaini in the federal reserve bank of dallas s economic insights publication as among the first economists to discuss entrepreneurship and notions of utility describing entrepreneurs as helpful in meeting human wants 6say co founded the escp europe in 1819 it was considered the first business school in the world 7personal lifejean baptiste say spent some time in the french military where he served in a volunteer battalion in 1793 he married julie gourdel deloches this allowed him to avoid mandatory conscription in the military the couple had two children horace emile say and adrienne say 7say s wife died in 1830 say died on nov 15 1832 he is buried in p re lachaise in paris 8who was jean baptiste say jean baptiste say was a french classical liberal economist born in 1767 say worked in the french government under napoleon who later let him go and as a professor of political economy at various schools in france say was influenced by adam smith who is considered the father of modern economics he used his position to teach smith s beliefs and theories in france his own theories including the law of markets are commonly studied even today say s theory of markets states that society must generate income before people can purchase any goods and services he was also a proponent of competition free trade and lifting restraints on business | |
what type of economy influenced jean baptiste say | jean baptiste say was heavily influenced by the economic theories laid out by adam smith in his book the wealth of nations he believed in smith s free market and laissez faire economic theories say spent a great deal of time and effort highlighting these subjects in his own educational and professional pursuits | |
what is say s law of markets | say s law of markets is a classical economic theory that states that individuals need to produce and generate income in order to purchase goods and services according to say demand occurs before any production takes place not because of the income generated this law addresses how individuals create wealth along with how economic activity works the bottom linejean baptiste say was a french classical liberal economist who left a lasting mark on the world with his academic and professional pursuits say who once worked under napoleon was moved by the work of adam smith who is considered the father of modern economics say taught political economy in france until his death and also wrote several books but his law of markets which highlights the relationship between income and supply and demand is probably what he s best known for leaving behind | |
what is jekyll and hyde | the phrase jekyll and hyde employs a literary reference to describe a stock market that appears to have a split personality mixing good and bad character traits jekyll represents the good in a market it is benign predictable and conducive to trading gains hyde is a bad character who is volatile unstable unpredictable and generally dangerous to investors because the stock market is susceptible to the full range of human emotions jekyll and hyde make frequent appearances on wall street understanding jekyll and hydein robert louis stevenson s the strange case of dr jekyll and mr hyde dr jekyll a decent and congenial scientist unleashes his dark side mr hyde through unwise experimentation on himself in a laboratory although jekyll and hyde have contradictory natures they are one and the same person the embodiment of good and evil in one man is at times paralleled in the stock market a calm and predictable market can suddenly and inexplicably be torn apart by a frenzy of negativity like the characters in stevenson s novel market participants and observers are left baffled about this strange behavior and at a loss to explain its underlying causes an economist would say that strange market behavior is at odds with the efficient market hypothesis which maintains that the price of any stock at any given time will always be the same as its fair market value because it will be based on all of the information then available a relatively new field of theory behavioral finance attempts to explain how rational decision making or a lack of it contributes to manic swings in a market collective human behavior connected to greed and fear causes bubbles to form and then suddenly pop the jekyll and hyde syndrome might illustrate an aspect of behavioral finance | |
what is the jensen s measure | jensen s measure is a risk adjusted performance measure that represents the average return on an investment above or below that predicted by the capital asset pricing model capm put simply it measures an investment s abnormal or excess returns compared to its estimated returns jensen s measure can used to determine returns for any asset including stocks and bonds as well as entire financial portfolios it takes into account the beta and the average market return of the portfolio or the investment formula and calculation of jensen s measureassuming the capm is correct jensen s measure is calculated using the following four variables | |
where | calculating this metric using the formula above can result in one of three possible outcomes jensen s measure is also commonly referred to as jensen s alpha understanding jensen s measurejensen s measure was developed by economist michael jensen in 1968 as a way to calculate investment returns while taking risk into account 1 as noted above jensen s measure is a financial performance metric that adjusts for risk investors and investment professionals can use the formula above to calculate the excess returns of an investment or portfolio s expected returns the expected returns are measured using the capm this is a model that is used to calculate an investment s expected rate of return investors and investment professionals can determine whether the price of an asset such as a stock bond or other security conforms to its expected return by factoring in things like risk and the time value of money tvm jensen s measure can also be used to accurately analyze the performance of an investment manager to do so an investor must look at the overall return of a portfolio in addition to the risk of that portfolio the goal is to see if the investment s return compensates for the risk it takes for example if two mutual funds both have a 12 return a rational investor should prefer the less risky fund jensen s measure is one of the ways to determine if a portfolio is earning the proper return for its level of risk if the value is positive then the portfolio is earning excess returns in other words a positive value for jensen s alpha means a fund manager beats the market with their stock picking skills criticism of jensen s measurecritics of jensen s measure generally believe in the efficient market hypothesis emh which was invented by eugene fama emh is a theory that suggests that an asset s price trades at its fair value and accounts for all variables including risk as such people who follow emh believe that investors can consistently beat the market as such critics argue that any portfolio manager s excess returns derive from luck or random chance rather than skill because the market already prices in all available information it is said to be efficient and accurately priced further supporting the theory is the fact that many active managers fail to beat the market any more than those who invest money in passive index funds example of jensen s measurehere s a hypothetical example to show how jensen s measure works let s assume that a mutual fund s realized return was 15 last year the appropriate market index for this fund returned 12 the beta of the fund versus that same index is 1 2 and the risk free rate is 3 the fund s alpha is calculated as given a beta of 1 2 the mutual fund is expected to be riskier than the index as such it is expected to earn more a positive alpha in this example shows that the mutual fund manager earned more than enough return to be compensated for the risk taken over the year if the mutual fund only returned 13 the calculated alpha would be 0 8 with a negative alpha the mutual fund manager would not have earned enough return given the amount of risk they were taking | |
does jensen s alpha mean the same as jensen s measure | yes the terms jensen s alpha and jensen s measure are used to describe the same concept it is a financial performance metric for an investment or financial portfolio compared to the overall market while factoring in risk | |
what does alpha mean in finance | the term alpha is a measure of performance it is used to describe a financial security s ability to outperform or beat the market investment returns are commonly compared to a benchmark or market index as such an investment s alpha refers to the excess returns relative to the returns of the benchmark or market index investors and investment professionals always prefer high alpha because it indicates higher excess returns compared to the benchmark | |
what s the difference between alpha and beta | alpha and beta are two different financial performance metrics for asset returns and prices respectively alpha is used to describe whether and how well an asset or other financial security can outperform the market beta on the other hand indicates how volatile a financial security s price is compared to the overall market the bottom lineinvesting comes with both risks and rewards while you may not be able to guarantee the outcome several tools can help you along the way like jensen s measure this is a performance metric that can help you determine any excess returns for an investment compared to its expected returns while factoring in risk keep in mind that this isn t a foolproof method so you should do your due diligence whenever you make any financial decisions | |
who is jerome kerviel | jerome kerviel was a junior level derivatives trader for french securities firm soci t g n rale he was charged with losing more than 4 9 billion in company assets by conducting a series of unauthorized and false trades between 2006 and early 2008 when company managers discovered that kerviel had conducted tens of billions of euros worth of unauthorized trades they rushed to close out the open positions most of which were specialized equity arbitrage trades and contain the extent of the fraud several of the trades were closed out with heavy losses due to a falling market at the time of sale understanding jerome kervieljerome kerviel was born on jan 11 1977 growing up in pont l abby brittany france kerviel completed a bachelor s degree at the university of nantes in 1999 and then a master s in finance at the university of lyon in 2000 4jerome kerviel joined soci t g n rale in the summer of 2000 at the age of 23 his first position at the company was in the compliance department but in 2005 he moved to a junior trader job working with derivatives kerviel s role was to capitalize on pricing discrepancies between equity derivatives and the market price of stocks upon which the derivatives were based 4understanding derivativesderivatives are investment instruments that derive their value from another asset such as the price of corn a stock or an index there are many different kinds of derivatives such as futures options and swaps to limit risk in derivative trades a long derivative position is generally offset with a similar short position for example if a trader purchased euro stock market futures hoping the market would go up typically this bet would be offset by shorting u s stock futures to profit if markets decline as european and u s stocks tend to move in a similar fashion kerviel began making only one side of these bets kerviel and unauthorized tradeswith several years experience in soci t g n rale s back office kerviel was well versed in the company s policies for approving and regulating trading among its brokers he took advantage of this knowledge in late 2006 and early 2008 to offset his one sided bets with the opposite position that did not actually exist by creating fake trades in the system s computers and logs so the trades were not flagged by the bank s oversight systems initially these trades were profitable with so much early success kerviel feared the bank would discover the false transactions to conceal the activity he began creating losing trades intentionally to generate losses to offset his early gains managerial staff at soci t g n rale uncovered unauthorized trading activity in january 2008 and took steps to unwind the positions created by kerviel when the dust settled kerviel s losses were estimated at 4 9 billion kerviel maintains that his bosses knew about his fraudulent trades but intentionally looked the other way as he was making profits for the bank an appeals court in versailles sided with kerviel in 2016 and stated in a judgment that it was not occasional negligence but managerial choices that ensured kerviel could get away with his criminal acts 1special considerationsthere are conflicting accounts about kerviel s talents as a trader and student professors at his alma mater the university of lyon are reported to have said that he was a student just like any other 5 the former governor of the bank of france described kerviel as a computer genius but colleagues claim that he was not a star trader within their ranks 6notably kerviel is not believed to have profited personally from his reckless trading though he now falls into the infamous group of rogue traders that have collectively lost their employers billions of dollars through risky and unauthorized trading activity while kerviel s case was being considered he made a pilgrimage on foot to rome from paris to meet the pope together they discussed the problems of capitalism kerviel was convicted of breach of trust and other charges in the french court in 2010 he was sentenced to at least three years in prison and ordered to pay restitution of 4 9 billion 1 he served five months in prison in 2014 before being released 3 his fine amount was also reduced to 1 million in 2016 2jerome kerviel faqsa rogue trader is one who trades on behalf of others clients or a company and does so in a reckless manner often flouting company policy and risk management procedures the actions a rogue trader takes are usually on a speculative basis involving high risk securities and significant amounts of capital jerome kerviel does not have a positive net worth after his sentence he owed 4 9 billion but this amount was cut to 1 million in 2016 therefore he has a negative net worth of approximately 1 million euros 7jerome kerviel is currently working as an it consultant at lemaire consultants 8yes soci t g n rale is still in business it is a global financial firm with offices all over the world it is headquartered in paris the company has extensive retail banking services along with sales and trading and investment banking the bottom linejerome kerviel was a trader for the french investment bank soci t g n rale where he made rogue trades using derivatives his trades resulted in losses of 4 9 billion for the bank he was sentenced to three years in prison serving only five months and was ordered to pay fines totaling 4 9 billion but that was later reduced to 1 million | |
who is jerry a hausman | jerry a hausman is an economics professor and director of the mit telecommunications economics research program1 dr hausman s research has focused on applied microeconomics econometrics differentiated products telecommunications taxation energy aging and the environment investopedia julie banglife and careerborn in west virginia in 1946 he first joined mit in 1973 as an assistant professor dr hausman holds a ph d from oxford university where he was a marshall scholar he has earned numerous awards honors and fellowships including the john bates clark award and the frisch medal dr hausman is widely published and has been an associate or advisory editor for numerous economics journals 2proving that a cerebral economist of his magnitude can be deployed behind the scenes in business dr hausman has been a consultant for retailers including starbucks kellogg s anheuser busch tesco s and home depot in 2018 he was hired as a scientific advisor by teikametrics3 a retail optimization platform rop for sellers on amazon and other marketplaces there is an opportunity to help millions of sellers using data and econometrics to help them make better decisions on pricing advertising and inventory selection the technology we are building at teikametrics is helping retailers and brands compete in this dynamic new retail economy this is the future of retail hausman said in a statement having an advisor like dr hausman to apply advanced data science techniques within the amazon ecosystem should only make the online juggernaut even more formidable contributionshausman has written numerous research articles in theoretical and applied econometrics4 he is most well known for his work in developing the durbin wu hausman test and has also done extensive research on the telecommunications industry and on the estimation of price indexes this well known statistical test shows the extent to which statistical models correspond to the data under study known as the durbin wu hausman test it is a test for endogeneity in an econometric model and is helpful for statisticians in determining whether a model will ultimately be effective in calculating p values basically the bottom line for statistical significance or non significance hausman is a recognized expert in the economics of the telecommunications industry his applied research in this area has ranges from the effects of taxation and regulation in the industry to the welfare benefits to consumers of innovation in cellular telephones and networks for example his work on telecom taxation has demonstrated that taxes on wireless services can impose a far greater burden on the economy than the revenue they raise for governments5 hausman s recent work has also included a focus on price indexes such as the consumer price index cpi and the benefits to consumers that result from lower prices through large discount retailers his research indicates that failing to properly account for the lower prices offered by retailers such as walmart supercenters the resulting changes in shopping patterns as consumers take advantage of the lower prices and the improvement in the quality of differentiated products and services offered by these outlets all introduce substantial upward bias into the cpi | |
what is the jesse h jones graduate school of business | the term jesse h jones graduate school of business refers to rice university s graduate school of business founded in 1974 and located in houston the school offers graduate and doctorate programs as well as various dual degree and executive education initiatives 1 the school is well known for its small class sizes and well respected master of business administration mba program it is consistently ranked among the 30 best mbas in the united states by leading publications such as businessweek u s news and the financial times 2 understanding the jesse h jones graduate school of businessthe jesse h jones graduate school of business was established in 1974 at rice university in houston thanks in part to a major gift from businessman and philanthropist jesse holman jones 3 it is now commonly referred to as the jones graduate school of business or rice business school the school s mission is to foster principled innovative thought leaders in global communities 4 according to the school there are about 1 100 students registered for the 2020 2021 winter session in its mba and ph d programs including the the school s faculty a total of 144 has expertise in areas like finance accounting entrepreneurship operations management and the energy sector 5 unlike many other business schools which maintain distributed research centers in several different buildings this school is housed in a single building located in the heart of houston this concentrated architecture helps maintain an intimate atmosphere with an average class size of just 40 students the school s faculty and staff remain highly accessible to students the jesse h jones graduate school of business s full time mba program was rated as the 26th best program in the united states by forbes 6 u s news ranked it in the 25th spot a tie with georgetown university s mcdonough school of business 7the median gmat score for the class of 2020 was 710 6 special considerationsthe school s full time mba cohort for the class of 2020 included representation from 17 nationalities of whom over 30 were female 8 according to the school s website there were about 7 500 active alumni around the world representing 54 different countries about 6 800 of these individuals are located in the united states 4 with an annual tuition of roughly 60 000 individuals who graduated with an mba from the school saw an average starting salary of nearly 125 000 in 2019 of which over 92 received their offers within three months of graduation these grads are generally employed in the financial services energy and technology sectors top employers included jp morgan jpm exxonmobil xom and sysco syy 9 | |
jesse l livermore was a noted stock trader at the turn of the 20th century despite his lack of formal education he began his career at age 14 regarded as a wall street legend livermore has influenced generations of stock and commodity traders | livermore is the author of how to trade stocks and my life in wall street and how i made three fortunes in the stock market jesse l livermore died by suicide on nov 28 1940 1investopedia alison czinkotaearly life and educationjesse l livermore was born on july 26 1877 in shrewsbury massachusetts raised in poverty livermore attended only elementary school at age 14 he joined paine webber co in boston as a board boy livermore copied share prices onto a blackboard from the ticker tape recordings from the stock exchange the stock traderin his book jesse livermore boy plunger the man who sold america short in 1929 tom rubython describes livermore as the man who made the most money in a single day and the man who lost the most money in a single day between 1900 and 1940 jesse livermore made and lost three fortunes livermore bought and held during bull markets and sold when market momentum shifted his strategy was uncanny when considering that companies did not publish financial statistics or conduct fundamental analyses livermore s first trade at the age of 15 gleaned a profit of 3 12 by age 16 he had quit his job at paine webber co and began trading on his own at the time trades were often conducted at bucket shops where customers gambled on stock prices often using high degrees of leverage when banned from boston s bucket shops because of his consistent success livermore moved to new york city 1the bear of wall streetjesse l livermore garnered credit on wall street for predicting market drops earning the nickname the bear of wall street 2 his two noted trades occurred during the panic of 1907 and at the start of the great depression as a market bubble expanded in 1906 livermore followed the long trend until instinct advised him otherwise in a famous trade livermore shorted union pacific stock and netted a 300 000 profit two days later when an earthquake struck san francisco the market plunged in 1907 and livermore followed the advice of j p morgan and bought while others sold traders followed suit and livermore is credited with aiding an early recovery in the market 3in 1929 livermore was well positioned in the stock market but looked for the first signs of weakness as another market bubble loomed in several small trades livermore sold his long positions by probing short bets into the market in doing so he lost close to 250 000 livermore however continued to build a short position and on black tuesday oct 29 1929 livermore reportedly made 100 million on his great depression short 3according to reports livermore s peak wealth would equate to 1 5 billion today he traded freely and unregulated until the launch of the securities and exchange commission sec in 1934 which marked the beginning of the end for livermore 4 by 1940 livermore was bankrupt who did jesse l livermore influence noting livermore s experiences chronicled in the book reminiscences of a stock operator by edwin lefevre william j o neil the founder of investor s business daily wrote in my 45 years of experience in this business i have only found 10 or 12 books that were of any real value and reminiscences is one of them today many in the market know jesse livermore from the pseudonymous twitter account of the same name where the strategies of jesse livermore are discussed and advised | |
how did the white house affect jesse l livermore s trading | in the unregulated market livermore cornered the cotton market after world war i he used brokers worldwide to build positions in cotton and within 18 months he owned most of the cotton in the united states president woodrow wilson petitioned livermore to sell his strong position which he did to evade harming the u s economy 5 | |
how did j p morgan influence jesse l livermore | during the panic of 1907 livermore made 1 million on short positions in one day when the renowned banker j p morgan urged him to close his shorts for the good of the country livermore did livermore would then net an additional 3 million on the market rebound the bottom linejesse l livermore s rise from board boy to wall street legend remains a lesson to investors today his experiences are a historical record of unregulated stock trading in the early 20th century | |
what is a jewelry floater | a jewelry floater is a type of supplemental insurance designed to protect precious jewelry it is often purchased alongside other forms of insurance such as homeowners insurance or renters insurance although these types of insurance policies generally include some coverage for jewelry jewelry floaters can expand this coverage making them more suitable for valuable items |
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