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what are net tangible assets | the term net tangible assets refers to the total physical assets of a company minus all intangible assets and liabilities in other words net tangible assets focus on physical assets such as property plant and equipment pp e as well as inventories and cash instruments physical assets are anything that is listed on a company s balance sheet while intangible assets are those without a physical form a company s net tangible assets can help it secure financing and determine how much risk it carries investopedia zoe hansenunderstanding net tangible assetsas noted above net tangible assets are any physical assets less intangible assets and liabilities in order to calculate this a company takes the fair market value fmv of its tangible assets and subtracts the fair market value of its liabilities remember that physical assets refer to anything that can be touched and can be found listed on a company s balance sheet such as intangible assets on the other hand are those that have no tangible form such as trademarks goodwill patents and copyrights liabilities of course refer to any debts the company owes whether that s current or non current including accounts payable long term debt and other similar obligations for example if a company has total assets of 1 million total liabilities of 100 000 and intangible goodwill of 100 000 its net tangible asset amount is 800 000 this is derived by subtracting 200 000 the sum of both liabilities and goodwill from the value of the company s total assets of 1 million the value of a company s net tangible assets may also be referred to as its net asset value nav or book value this value is important to a company as it provides a window into how much risk it carries notably its liquidity and solvency it can also be used to help it access financing to meet its future goals advantages and disadvantages of net tangible assetsthis measurement of a company s tangible assets is important because it allows a firm s management team to analyze its asset position without including obsolete or difficult to value intangible assets a company s return on assets roa for example is often more accurate when net tangible assets are used in the calculation the usefulness of deriving net tangible assets however varies across industries medical device manufacturers for example have high levels of valuable intangible assets this means it s important to look at a company s price to book p b value and compare it against similar companies to gauge performance companies can assess asset position without including intangible assetsusefulness can vary across industries especially those with higher intangible asset valuesnet tangible assets vs net tangible assets per sharesome companies use their net tangible assets per share value in lieu of the net tangible assets measurement to calculate a company s net tangible asset per share of common stock divide its net tangible assets figure by the number of outstanding common shares if a company has net tangible assets of 1 million and 500 000 shares outstanding its net tangible asset value per share is 2 this value is useful when conducting a comparative analysis of companies within an industry auto manufacturers for example may have high net tangible assets per share while a software company with a high level of intangible assets may have a much lower number per share it is therefore important to use this measure only when analyzing companies within the same industry real world examples of net tangible assetslet us look at some actual data for amazon and meta and calculate the net tangible assets for each using their annual 10 k filings | |
what is net unrealized appreciation | some companies offer the benefit of employees owning stock in the employer company the idea is that this creates an ownership mentality in the employees even if they own a very small percentage of total shares the net unrealized appreciation nua is the difference in value between the average cost basis of shares of employer stock and the current market value of the shares the nua is important if you are distributing highly appreciated employer stock from your tax deferred employer sponsored retirement plan such as a 401 k understanding net unrealized appreciation nua typically distributions from tax deferred retirement accounts are treated as ordinary income at the time of distribution ordinary income is taxed at a higher rate than long term capital gains to remedy this issue the internal revenue service irs offers an election for the nua of employer stock to be taxed at the more favorable capital gains rate 1 the nua election is only available when the stock is placed into a tax deferred account such as a 401 k or traditional ira and is only applicable to the stock of the company for which you are or were employed roth iras do not qualify for nua because they are not tax deferred and brokerage accounts do not qualify for nua because they are generally already subject to the capital gains tax advantages and disadvantages of net unrealized appreciation nua distributing stock out of a 401 k will have different effects on nua funds per irs rules and regulations while the irs will tax the majority of a 401 k portfolio at its market value as ordinary income shares of the employer stock will only be taxed as ordinary income on the cost basis the cost basis is the original value of the employer stock this means that any additional value gained since the stock was initially purchased is not taxed as ordinary income and it will instead be taxed as capital gains upon selling the company stock the nua will be subject to the capital gains tax which may be dramatically lower than your current income tax rate however the downside is that ordinary income tax must be paid on the cost basis of the employer stock immediately the trade off is that ordinary income taxes would not have been due until you sold the shares in the future years or decades from now because of this trade off it is best to only distribute the lowest cost basis shares under the nua rules to optimize the tax consequences requirements for net unrealized appreciationthere are additional requirements that must be met as part of the nua rules within one year you must distribute the entirety of the vested balance held in the plan including all assets from all of the accounts sponsored by the same employer certain qualifying events must also be met you must have either separated from the company reached the minimum retirement age for distribution suffered an injury resulting in total disability or you must have died | |
what is net volume | net volume is a technical indicator calculated by subtracting a security s uptick volume by its downtick volume over a specified period of time unlike standard volume the indicator differentiates whether the market sentiment is leaning bullish or bearish net volume is typically plotted below the price chart with bars for each period indicating the net volume reading for that period understanding net volumenet volume is used by traders to assess market sentiment beyond the use of standard volume positive net volume suggests that a security is experiencing a bullish upswing while negative net volume suggests that a security is experiencing a bearish downswing for example suppose that a thinly traded stock experienced five downward trades at 200 shares a piece moving down a total of five percent and one upward trade at 10 000 shares moving the stock up three percent the stock may have closed two percent lower but the net volume would have been a positive 9 000 suggesting that the momentum has really been bullish under the surface here s an example of a chart showing net volume many traders use net volume in conjunction with other forms of technical analysis including technical indicators and chart patterns when looking for potential opportunities for instance traders might determine that a stock broke out from a key resistance level and then look at net volume to determine how much buying pressure is behind the move and if there s enough momentum moving forward comparing net volumenet volume is similar to many other momentum indicators that look at volume along with various other factors unlike these other indicators net volume looks exclusively at volume over a single timeframe for example net volume is similar to the money flow index in that both technical indicators measure market interest in a given security but the mfi uses both price and volume to measure buying and selling pressure rather than just looking at volume net volume is also similar to on balance volume in that both technical indicators look at volume changes but obv adds up volume on up days and down days over time rather than looking at a single period other indicators like the relative strength index look at the magnitude of gains or losses to provide insights many traders tend to use more complex momentum indicators than net volume when analyzing opportunities but it may still play a role in certain cases where the trader needs to only look at a single period | |
what is net worth | net worth is the value of assets an individual or corporation owns minus the liabilities they owe it s an important metric to gauge a company s health providing a useful snapshot of its current financial position the term net worth is used in the financial world to qualify certain individuals for particular investment strategies or financial products such as hedge funds structured products or other complex or alternative investments net worth is sometimes referred to as net wealth it s also become a fixation of popular culture with lists ranking the people with the highest net worth as well as the net worth of various celebrities investopedia joules garcia | |
how to calculate net worth | net worth is calculated by subtracting all liabilities from all assets an asset is anything owned that has monetary value liabilities are obligations that deplete resources they include loans accounts payable ap and mortgages net worth can be described as either positive or negative positive net worth means that assets exceed liabilities negative net worth indicates that liabilities exceed assets positive and increasing net worth indicates good financial health decreasing net worth is cause for concern because it might signal a decrease in assets relative to liabilities the best way to improve net worth is to either reduce liabilities while assets stay constant or rise or increase assets while liabilities either stay constant or fall net worth can be applied to individuals companies sectors and even countries net worth in businessnet worth is known as book value or shareholders equity in business the balance sheet is also known as a net worth statement the value of a company s equity equals the difference between the value of total assets and total liabilities the values on a company s balance sheet highlight historical costs or book values rather than current market values lenders scrutinize a business s net worth to determine whether it s financially healthy a creditor might not be too confident in a company s ability to repay its loans if total liabilities exceed total assets a consistently profitable company will register a rising net worth or book value provided that these earnings aren t fully distributed to shareholders as dividends a rising book value will often be accompanied by an increase in the value of a public company s stock price net worth in personal financean individual s net worth is the value that s left after subtracting liabilities from assets liabilities include debts like mortgages credit card balances student loans and car loans liabilities can also include obligations such as bills and taxes that must be paid an individual s assets can include checking and savings account balances the value of securities such as stocks or bonds real property value and the market value of an automobile the net worth is whatever s left after selling all assets and paying off personal debt people with substantial net worth are known as high net worth individuals hnwi they form the prime market for wealth managers and investment counselors investors with net worths of at least 1 million either alone or together with their spouse and excluding their primary residences are accredited investors in the eyes of the securities and exchange commission sec they re permitted to invest in unregistered securities offerings the value of personal net worth includes the current market value of assets and current debt costs example of net worthconsider a couple with the following assets liabilities include the couple s net worth would therefore be calculated like this assume that the couple s financial position changes five years later the residence value is 225 000 the investment portfolio is 120 000 savings total 20 000 and automobile and other assets are valued at 15 000 their mortgage loan balance is 80 000 and the car loan is 0 because it was paid off their net worth five years later would be the couple s net worth has gone up by 35 000 despite the decrease in the value of their residence and car these declines were more than offset by an increase in assets by adding the investment portfolio and savings as well as a drop in liabilities owed negative net wortha negative net worth results if total debt is more than total assets their net worth will be negative if the sum of an individual s credit card bills utility bills outstanding mortgage payments auto loan bills and student loans is higher than the total value of their cash and investments negative net worth is a sign that an individual or family needs to focus its energy on debt reduction a tough budget the use of debt reduction strategies such as the debt snowball or debt avalanche and perhaps negotiation of some debts with creditors can sometimes help people climb out of a negative net worth hole and start building up their resources a negative net worth isn t uncommon early in life student loans mean that even the most careful with money young people can start out owing more than they own family responsibilities or an unexpected illness can also push people into the red filing for bankruptcy protection to eliminate some of the debt and prevent creditors from trying to collect on it might be the most appropriate solution when nothing else has worked some liabilities can t be discharged however they include child support alimony taxes and often student loans and many types of bankruptcy will stay on an individual s credit report for 10 years 1 | |
what is a good net worth | determining a good net worth will vary for every individual according to their life circumstances financial needs and lifestyle the median net worth of a family in the u s is 192 900 according to 2023 data from the federal reserve 2 | |
how do i calculate my net worth | subtract your total liabilities from your total assets your total assets will include your investments savings cash deposits and any equity that you have in a home car or other similar assets total liabilities would include any debt such as student loans and credit card debt | |
how many people in america are considered high net worth | the united states had the most hnwis in the world with more than 7 35 million in 2022 4the bottom linenet worth is a good way of understanding the true wealth of an individual or business looking only at someone s assets can be misleading because this is often offset by some amount of debt and liabilities net worth can be increased by increasing assets while reducing debts and other liabilities | |
what is netback | netback is a summary of all costs associated with bringing one unit of oil to the marketplace and the revenues from the sale of all the products generated from that same unit it s expressed as gross profit per barrel netback is calculated by taking the revenues from the oil less all costs associated with getting the oil to a market including transportation royalties and production costs price royalties production transportation netbackthis term is only used in reference to oil producers and their associated production activities understanding netbacknetback per barrel is determined by removing the costs of production from the average realized price resulting in a net profit per barrel amount these costs include importing transportation marketing production and refining costs and royalty fees producers with higher netback prices reflect a more operationally efficient oil company because they re receiving higher profits than their competitors from the materials produced netback strengths and weaknessesit bears noting that netback is not a generally accepted accounting principles gaap equation the formula presented here is a standard but various companies might calculate netback somewhat differently to some extent this can result in a less than perfect comparison between companies although growth or falling prices can still be an indicator of an oil company s fiscal health conversely the formula does not consider operating or other types of fluctuating costs so it is a measure of efficiency netback investment analysisnetback prices can be used to compare one oil producer to another the oil producer with the higher netback price is effectively more profitable than the one with the lesser netback amount although netback demonstrates variances in profitability it doesn t indicate the reason for the variance differences in netback pricing can be caused by variations in production techniques such as whether the company is participating in land based or offshore operations as well as with different locales varying regulations between nations can cause discrepancies in overall cost from one producer to the next any challenges posed by the political instability within a region can present unique issues regarding transportation or general safety changes in netback prices attributed to a single company over time can also demonstrate whether production is becoming more or less cost effective if a selected oil company s netback price has been increasing over time it might be indicative of future success within the industry while a company showing falling netback prices might be a cause for concern for investors real world exampleit might cost an oil producer 125 to convert one barrel of light crude oil into heating oil gasoline diesel and petrochemical byproducts it owes royalties of 25 and it will cost 100 to transport the oil to the buyer the netback would be 75 assuming a sales price of 325 325 less 125 less 25 less 100 this figure allows exploration and production e p firms to compare the producer s costs with those of its competitors it also allows for more efficient planning regarding which products a company should focus on producing | |
what is netting | netting entails offsetting the value of multiple positions or payments due to be exchanged between two or more parties it can be used to determine which party is owed remuneration in a multiparty agreement netting is a general concept that has a number of more specific uses including in the financial markets | |
how netting works | netting is a method of reducing risks in financial contracts by combining or aggregating multiple financial obligations to arrive at a net obligation amount netting is used to reduce settlement credit and other financial risks between two or more parties netting is often used in trading where an investor can offset a position in one security or currency with another position either in the same security or a different one the goal of netting is to offset losses in one position with gains in another for example if an investor is short 40 shares of a security and long 100 shares of the same security the position is net long 60 shares netting is also used when a company files for bankruptcy whereby the parties tend to net the balances owed to each other this is also called a set off clause or set off law in other words a company doing business with a defaulting company may offset any money they owe the defaulting company with money that s owed them the remainder represents the total amount owed by them or to them which can be used in bankruptcy proceedings companies can also use netting to simplify third party invoices ultimately reducing multiple invoices into a single one for example several divisions in a large transport corporation purchase paper supplies from a single supplier but the paper supplier also uses the same transport company to ship its products to others by netting how much each party owes the other a single invoice can be created for the company that has the outstanding bill this technique can also be used when transferring funds between subsidiaries netting saves a great deal of time by eliminating the need to process multiple transactions reducing the number of transactions down to one types of nettinghere are the top four ways netting is used close out netting happens after default which is when a party fails to make principal and interest payments transactions between the two parties are netted to arrive at a single amount for one party to pay the other in close out netting the existing contracts are terminated and an aggregate terminal value is calculated and paid as one lump sum also known as payment netting settlement netting aggregates the amount due among parties and nets the cash flows into one payment in other words only the net difference in the aggregate amounts is delivered or exchanged by the party with the net owed obligation typically a payment netting agreement must be in place before the settlement date otherwise each of the individual payments would be due to and from all parties involved novation netting cancels offsetting swaps and replaces them with new obligations in other words if two companies have obligations due to each other on the same value date or settlement date the net amount is calculated however instead of simply sending the net difference to the party owed novation netting cancels the contracts and books a new one for the net or aggregate amount the new aggregate contract under novation netting makes it distinctly different from payment netting which does not book a new contract instead the net aggregate amount is exchanged multilateral netting is netting that involves more than two parties in this case a clearinghouse or central exchange is often used multilateral netting can also occur within one company with multiple subsidiaries if the subs owe payments to each other for various amounts they can each send their payments to a central corporate entity or netting center the main office would net the invoices and the various currencies from the subsidiaries and make the net payment to the parties that are owed multilateral netting involves pooling the funds from two or more parties so that a more simplified invoicing and payment process can be achieved benefits of nettingnetting saves companies a great deal of time and costs by eliminating the need to process a large number of transactions per month and reducing the transactions necessary down to one payment for banks transferring across borders it limits the number of foreign exchange transactions as the number of flows decreases with netting in foreign exchange companies or banks can consolidate the number of currencies and foreign exchange deals intro larger trades reaping the benefits of improved pricing when companies have more organized time frames and predictability in settlements they can more accurately forecast their cash flows example of nettingnetting is very common in the swap markets for example assume two parties enter into a swap agreement on a particular security whereby they both owe money to each other at the end of the swap period the following is due this netting process occurs on a wide variety of swaps but there is one type of swap where netting does not occur with currency swaps since the notional amounts are in different currencies the notional amounts are exchanged in their respective currencies and all payments due are exchanged in full between two parties no netting occurs | |
what is the network effect | the network effect is a phenomenon whereby increased numbers of people or participants improve the value of a good or service the internet is an example of the network effect initially there were few users on the internet since it was of little value to anyone outside of the military and some research scientists however as more users gained access to the internet they produced more content information and services the development and improvement of websites attracted more users to connect and do business with each other as the internet experienced increases in traffic it offered more value leading to a network effect investopedia yurle villegas | |
how the network effect works | the network effect can lead to an improved experience as more people participate it can also encourage new participants as they look to benefit from the network network effects can be found throughout social media for example as more users post content such as links and media on x formerly twitter the more useful the platform becomes to the public the network effect has created exponential growth rates for networking platforms such as facebook youtube and instagram 345multiple network effects have occurred when individuals join social media platforms as more users join and participate companies looking to advertise their products and services rush to join these sites to capitalize on the trend the increase in advertisers leads to more revenue for social media websites as a result the sites evolve and are able to offer more services to the consumer history of the network effectthe network effect concept originated in the early 20th century with the advent of the telephone theodore vail the first post patent president of bell telephone used the network effect to argue why bell telephone should have a monopoly on telephone networks later robert metcalfe the creator of ethernet helped to popularize the idea by introducing metcalfe s law which states that the value of a telecommunications network is proportional to the square of the number of connected users of the system today the network effect has everyday real world applications and value as evidenced by social media companies like meta x and linkedin typically the more people with accounts on their social media sites the more valuable both the product is to its users and the company is to shareholders network effect vs network externalityalthough similar network effect and network externality have distinct differences network externality is an economics term that refers to how the demand for a product is dependent on the demand of others buying that product in other words the buying patterns of consumers are influenced by others purchasing a product for example if you see a lot of cars in a restaurant s parking lot you might assume the restaurant has good food as a result you give it a try since all of those people can t be wrong trends in fashion also influence the buying patterns of consumers clothes routinely go in and out of style based primarily on copycat buying and selling patterns of consumers positive network externalities can lead to a network effect if a lot of your friends are on facebook you might join hoping to connect with them which is a positive externality if after you join you post quality content and that leads to many people enjoying the experience it ll boost engagement and create a network effect the internet is a notable example of the network effect the escalation of users has lead to more websites and engagement as well as companies offering products and services | |
how the network effect builds businesses | the network effects that exist on the internet often benefit a variety of services for hire apps and websites as more professionals such as dog walkers tutors or electricians list their services online more customers rely on those online directories e commerce sites such as etsy and ebay grew in popularity as more sellers joined those marketplaces and sold their products to consumers who embraced online shopping 12the network effect also played a role in the advance of ridesharing services companies such as uber and lyft evolved and grew through the support of participants who signed up and expanded the companies reach across cities and states as more drivers became part of uber and lyft the two brands gained in market value | |
how to use the network effect to your advantage | leveraging the network effect can help grow a business if you understand the principles that drive the network effect you can take advantage of them to increase demand for your product once the effect takes place your users effectively act as salesmen spreading news of the product far and wide by word of mouth in markets where there are network effects businesses will often compete to be the first on the scene so that they can take advantage of this phenomenon for example have you ever been handed an item for free on the street from an unheard of business this is a tactic that is used to increase interest in the product so that people will buy it and spread word of it around then as demand for the product grows prices increase and people become willing to pay more the more people who use your product the more value your product has some of the leading fastest growing companies such as meta apple and airbnb achieved success because of the network effect 367network effect and pricingif your business is in a market that s subject to the network effect you may price your products differently when the business begins than you do when the network effect takes hold as a business grows due to the network effect it often makes sense to increase prices as demand for the product grows businesses will often price their products at the highest price possible without going higher than a customer is willing to pay for the product in order to maximize profits however starting at a lower price or in some cases giving the product away for free as mentioned above and then increasing the price of the product as the network effect occurs will result in a larger user base advantages and disadvantages of the network effectthe chief hurdle for any company that seeks to benefit from the network effect is gaining traction or attracting enough users initially so that the network effect can take hold the number of users required for a significant network effect is called the critical mass after critical mass is attained the good or service attracts additional new users because of the utility or benefits to the consumer in this way the prospect of the network effect helps companies strive to become self sustaining another positive impact of the network effect is that it encourages entrepreneurs and creators of intellectual property to pursue more efficient and unique products to present to the public but there s a flip side if too many people use a good or service congestion can occur take the internet for example having too many users on the same network service can slow the speed of the network decreasing the benefit for users providers of goods and services that use a network effect must ensure that capacity can be increased sufficiently to accommodate all users another potential pitfall of the network effect is that once a company achieves and maintains critical mass it may begin to become less efficient and innovative because it knows it has a solid consumer base encourages entrepreneurs and creators of intellectual property to pursue more unique and efficient productsprovides benefit to users from an increasingly valuable servicestresses the importance of reaching critical masscongestion can occur if too many people use the networkcompanies must ensure that capacity is sufficient to accommodate all users which can be costlycompanies may become less innovative after critical mass is achieved | |
what does the network effect mean | the network effect refers to the concept that the value of a product or service increases when the number of people who use that product or service increases | |
what are examples of the network effect | social media networks such as facebook and x are great examples of the network effect 38 the value of these websites increases as more people sign up for accounts on the site | |
what is a network effects platform | platforms that operate on the network effect include the internet mobile phone and landline networks as well as social media websites | |
what are positive network effects | a product or service exhibits a positive network effect when the value of the product or service increases as the number of users increases the bottom lineas the internet one of the most prominent demonstrations of the network effect becomes a bigger part of our lives it will become increasingly important both for producers and consumers to have a firm grasp of the network effect and its benefits most businesses can use the internet to take advantage of the network effect in one way or another and reap the benefits of growth in their business however the network effect doesn t only take place online so taking advantage of it in all forms can help drive more users to a business | |
what is network marketing | network marketing is a business model that depends on person to person sales by independent representatives often working from home a network marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales there are many reputable network marketing operations but some have been denounced as pyramid schemes the latter may focus less on sales to consumers than on recruitment of salespeople who may be required to pay upfront for expensive starter kits | |
how network marketing works | network marketing is known by a variety of names including multilevel marketing mlm cellular marketing affiliate marketing consumer direct marketing referral marketing or home based business franchising companies that follow the network marketing model often create tiers of salespeople that is salespeople are encouraged to recruit their own networks of salespeople the creators of a new tier or upline earn commission on their own sales and on sales made by the people in the tier they created the downline in time a new tier can sprout yet another tier which contributes more commission to the person in the top tier as well as the middle tier thus the earnings of salespeople depend on recruitment as well as product sales those who got in early and are in a top tier make the most the fcc advises that that single tier network marketing operations tend to be more reputable than multi tier schemes 1advantages and disadvantages of network marketingthere is some stigma attached to the networking marketing business especially those with multiple tiers which can be characterized as pyramid schemes that is the salespeople in the top tier can make impressive amounts of money on commissions from the tiers below them the people on the lower tiers will earn much less the company makes money by selling expensive starter kits to new recruits the appeal of network marketing is that an individual with a lot of energy and good sales skills can create a profitable business with a modest investment a good rule of thumb according to the federal trade commission ftc is that an operation that ensures compensation which is based on actual sales to real customers tends to be more reputable than multi tier schemes in which people make money based on the number of distributors they recruit 1special considerationsanyone considering joining a network marketing operation should do their research before making a decision consider these questions | |
is network marketing a pyramid scheme | while network and multi level marketing programs have been accused of being pyramid schemes there are some important differences while those who are able to recruit more members into the program are often able to enjoy greater residual commissions network marketing is a legitimate and legal business structure that offers real products and services sold to customers will i make money by joining a network marketing program it is certainly possible although not probable some people do enjoy great success at network marketing largely due to their ability to recruit more members to the network there are two main revenue sources selling products and commissions from sales made by team members downline the more people there are downline from you the more money you will accrue the larger the team you can recruit the more money you can make most people who join legitimate network marketing programs make little or no money people may actually lose money some may become involved in an illegal pyramid scheme and not realize that they have joined a fraudulent venture and can lose everything they invest do your research and ask around before diving in | |
what are some examples of network marketing programs | several mlm programs exist such as tupperware avon products rodan fields amway herbalife mary kay among several others | |
what is the top grossing network marketing program | amway consistently tops the list top selling brands for amway are nutrilite vitamin mineral and dietary supplements artistry skincare and color cosmetics espring water treatment systems and xs energy drinks all sold exclusively by independent amway business owners in 2021 it brought in 8 9 billion in revenue 2 | |
what is networking | networking is the exchange of information and ideas among people with a common profession or special interest often in an informal social setting professionals use networking to expand their circles of acquaintances find out about job opportunities in their fields and increase their awareness of news and developments in their fields networking is one of the main benefits of joining a professional organization or attending a trade fair or convention however networking most often occurs spontaneously when two or more like minded professionals cross paths | |
how networking works | people generally join networking groups based on a single common point of interest that all members share the most obvious is a professional affiliation such as stockbrokers or social workers many find effective networking opportunities in a college alumni group a church or synagogue social group or a private club for professionals the best networking opportunities may occur at trade shows seminars and conferences which attract a large crowd of like minded individuals networking helps a professional keep up with current events in the field and develop relationships that may boost future business or employment prospects needless to say it also provides opportunities to help other people find jobs make connections and catch up on the news business owners network to develop relationships with people and companies they may do business with in the future these connections help them establish rapport and trust among people in their communities successful business networking involves regularly following up with contacts to exchange valuable information that may not be readily available outside the network business owners and entrepreneurs often join their local chamber of commerce to promote their business interests and help others in their communities do the same online networkingprofessional networking platforms such as linkedin provide an online location for people to engage with other professionals join groups post blogs and share information and of course they provide a place to post a resume search for jobs or identify job candidates these days a business to business b2b customer pipeline can be developed almost entirely through the use of a social networking site online networking forums allow professionals to demonstrate their knowledge and connect with like minded people linkedin is the largest professional network but there are many others 1 some cater to particular subsets of people such as black business women online others such as meetup try to combine online networking real world networking and video conferences the term computer networking refers to linking multiple devices to share information and software resources in an immediate way special considerationsgiven the growing number of networking opportunities available to people looking to start or advance their careers it s important to take some time to explore your options before committing to a specific networking group while it s tempting for a new business owner or someone looking for a dream job to join as many networks as possible a better strategy is to target your time and efforts toward those groups that best fit your needs and interests many networking organizations will host special meet and greet events for prospective members once you join a networking group it s important to become a contributing member rather than just using the association to further their own goals people who use networking effectively look to offer something of value to other group members networking can help you identify opportunities for collaboration strategic joint ventures partnerships and new areas to expand your business | |
how can i network efficiently | take the time to explore your options before committing to a specific networking group target your time and effort to the group that best fits your needs and interests remember networking is a process of give and take don t just jump in when you re looking for a job be generous about sharing tips recommendations and insights that benefit others in the group | |
why is networking useful | networking helps a professional keep up with current events in the field it develops relationships that may lead to business or employment prospects at its best it achieves this in a relaxed social environment | |
what is online networking | sites such as linkedin provide a platform for people to engage with other professionals join groups post blogs and share information and of course they provide a place to post a resume that will be seen by prospective employers online networking forums allow professionals to share their knowledge and connect with like minded people the bottom lineyou don t have to be an extrovert to create a social network you just need an interest in sharing information and ideas among people in your profession over time you ll find that it expands the circle of people that you can rely on to help you professionally and that you can help in turn | |
what is a neural network | a neural network is a series of algorithms that endeavors to recognize underlying relationships in a set of data through a process that mimics the way the human brain operates in this sense neural networks refer to systems of neurons either organic or artificial in nature neural networks can adapt to changing input so the network generates the best possible result without needing to redesign the output criteria the concept of neural networks which has its roots in artificial intelligence is swiftly gaining popularity in the development of trading systems understanding neural networksneural networks in the world of finance assist in the development of such processes as time series forecasting algorithmic trading securities classification credit risk modeling and constructing proprietary indicators and price derivatives a neural network works similarly to the human brain s neural network a neuron in a neural network is a mathematical function that collects and classifies information according to a specific architecture the network bears a strong resemblance to statistical methods such as curve fitting and regression analysis a neural network contains layers of interconnected nodes each node is a known as perceptron and is similar to a multiple linear regression the perceptron feeds the signal produced by a multiple linear regression into an activation function that may be nonlinear 1history of neural networksthough the concept of integrated machines that can think has existed for centuries there have been the largest strides in neural networks in the past 100 years in 1943 warren mcculloch and walter pitts from the university of illinois and the university of chicago published a logical calculus of the ideas immanent in nervous activity the research analyzed how the brain could produce complex patterns and could be simplified down to a binary logic structure with only true false connections 2frank rosenblatt from the cornell aeronautical labratory was credited with the development of perceptron in 1958 his research introduced weights to mccolloch s and pitt s work and rosenblatt leveraged his work to demonstrate how a computer could use neural networks to detect imagines and make inferences 3even though there was a dry spell of research largely due to a dry spell in funding during the 1970 s paul werbos is often credited with the primary contribution during this time in his phd thesis 4 then jon hopfield presented hopfield net a paper on recurrent neural networks in 1982 in addition the concept of backpropagation resurfaced and many researchers began to understand its potential for neural nets 5most recently more specific neural network projects are being generated for direct purposes for example deep blue developed by ibm conquered the chess world by pushing the ability of computers to handle complex calculations 6 though publicly known for beating the world chess champion these types of machines are also leveraged to discover new medicine identify financial market trend analysis and perform massive scientific calculations recent analysis from the los alamos national library allows analysts to compare different neural networks the paper is considered an important part in moving towards characterizing the behavior of robust neural networks 7multi layered perceptronin a multi layered perceptron mlp perceptrons are arranged in interconnected layers the input layer collects input patterns the output layer has classifications or output signals to which input patterns may map for instance the patterns may comprise a list of quantities for technical indicators about a security potential outputs could be buy hold or sell hidden layers fine tune the input weightings until the neural network s margin of error is minimal it is hypothesized that hidden layers extrapolate salient features in the input data that have predictive power regarding the outputs this describes feature extraction which accomplishes a utility similar to statistical techniques such as principal component analysis 89types of neural networksfeed forward neural networks are one of the more simple types of neural networks it conveys information in one direction through input nodes this information continues to be processed in this single direction until it reaches the output mode feed forward neural networks may have hidden layers for functionality and this type of most often used for facial recognition technologies 1011a more complex type of neural network recurrent neural networks take the output of a processing node and transmit the information back into the network this results in theoretical learning and improvement of the network each node stores historical processes and these historical processes are reused in the future during processing this becomes especially critical for networks in which the prediction is incorrect the system will attempt to learn why the correct outcome occurred and adjust accordingly this type of neural network is often used in text to speech applications 12convolutional neural networks also called convnets or cnns have several layers in which data is sorted into categories these networks have an input layer an output layer and a hidden multitude of convolutional layers in between the layers create feature maps that record areas of an image that are broken down further until they generate valuable outputs these layers can be pooled or entirely connected and these networks are especially beneficial for image recognition applications 13deconvolutional neural networks simply work in reverse of convolutional neural networks the application of the network is to detect items that might have been recognized as important under a convolutional neural network these items would likely have been discarded during the convolutional neural network execution process this type of neural network is also widely used for image analysis or processing 14modular neural networks contain several networks that work independently from one another these networks do not interact with each other during an analysis process instead these processes are done to allow complex elaborate computing processes to be done more efficiently similar to other modular industries such as modular real estate the goal of the network independence is to have each module responsible for a particular part of an overall bigger picture 15application of neural networksneural networks are broadly used with applications for financial operations enterprise planning trading business analytics and product maintenance neural networks have also gained widespread adoption in business applications such as forecasting and marketing research solutions fraud detection and risk assessment a neural network evaluates price data and unearths opportunities for making trade decisions based on the data analysis the networks can distinguish subtle nonlinear interdependencies and patterns other methods of technical analysis cannot according to research the accuracy of neural networks in making price predictions for stocks differs some models predict the correct stock prices 50 to 60 of the time still others have posited that a 10 improvement in efficiency is all an investor can ask for from a neural network 16specific to finance neural networks can process hundreds of thousands of bits of transaction data this can translate to a better understanding of trading volume trading range correlation between assets or setting volatility expectations for certain investments as a human may not be able to efficiently pour through years of data sometimes collected down second intervals neural networks can be designed to spot trends analyze outcomes and predict future asset class value movements there will always be data sets and task classes that a better analyzed by using previously developed algorithms it is not so much the algorithm that matters it is the well prepared input data on the targeted indicator that ultimately determines the level of success of a neural network advantages and disadvantages of neural networksneutral networks that can work continuously and are more efficient than humans or simpler analytical models neural networks can also be programmed to learn from prior outputs to determine future outcomes based on the similarity to prior inputs neural networks that leverage cloud of online services also have the benefit of risk mitigation compared to systems that rely on local technology hardware in addition neural networks can often perform multiple tasks simultaneously or at least distribute tasks to be performed by modular networks at the same time last neural networks are continually being expanded into new applications while early theoretical neural networks were very limited to its applicability into different fields neural networks today are leveraged in medicine science finance agriculture or security though neutral networks may rely on online platforms there is still a hardware component that is required to create the neural network this creates a physical risk of the network that relies on complex systems set up requirements and potential physical maintenance though the complexity of neural networks is a strength this may mean it takes months if not longer to develop a specific algorithm for a specific task in addition it may be difficult to spot any errors or deficiencies in the process especially if the results are estimates or theoretical ranges neural networks may also be difficult to audit some neural network processes may feel like a black box where input is entered networks perform complicated processes and output is reported it may also be difficult for individuals to analyze weaknesses within the calculation or learning process of the network if the network lacks general transparency on how a model learns upon prior activity can often work more efficiently and for longer than humanscan be programmed to learn from prior outcomes to strive to make smarter future calculationsoften leverage online services that reduce but do not eliminate systematic risk | |
are continually being expanded in new fields with more difficult problems | still rely on hardware that may require labor and expertise to maintainmay take long periods of time to develop the code and algorithmsmay be difficult to assess errors or adaptions to the assumptions if the system is self learning but lacks transparencyusually report an estimated range or estimated amount that may not actualize | |
what are the components of a neural network | there are three main components an input later a processing layer and an output layer the inputs may be weighted based on various criteria within the processing layer which is hidden from view there are nodes and connections between these nodes meant to be analogous to the neurons and synapses in an animal brain 1 | |
what is a deep neural network | also known as a deep learning network a deep neural network at its most basic is one that involves two or more processing layers deep neural networks rely on machine learning networks that continually evolve by compared estimated outcomes to actual results then modifying future projections 17 | |
what are the 3 components of a neural network | all neural networks have three main components first the input is the data entered into the network that is to be analyzed second the processing layer utilizes the data and prior knowledge of similar data sets to formulate an expected outcome that outcome is the third component and this third component is the desired end product from the analysis 1the bottom lineneural networks are complex integrated systems that can perform analytics much deeper and faster than human capability there are different types of neural networks often best suited for different purposes and target outputs in finance neural networks are used to analyze transaction history understand asset movement and predict financial market outcomes | |
what is neutral | neutral describes a position taken in a market that is neither bullish nor bearish in other words it is insensitive to the direction of the market s price if an investor has a neutral opinion believing that a security or index will neither increase nor decrease in value in the near future they can undertake an option strategy that may profit despite the lack of movement in the underlying security neutral market trading strategies enable investors to make money when an underlying security does not move in price or stays within a tight range of prices this can be achieved using a variety of methods such as going long and short in similar stocks and using options or other derivatives positions understanding neutral | |
when a security s price goes up and down by small increments over time it is said to be moving sideways when a price moves sideways the underlying security is thus in a neutral trend moving neither up nor down over time a neutral trend can occur after a sustained increase or decrease in price when the price begins hitting levels of resistance or support and there is a period of consolidation these trends can continue for days weeks or even months | traders can take advantage of neutral trends through appropriate strategies that often involve the use of short selling or derivatives contracts if somebody longs shares on the weighted components of an index or index etf and then goes short on that index or etf they have created a position that is neutral since when the price of the index goes up so too will the prices of the components in an offsetting manner an investor may believe that there are certain structural inefficiencies between the basket of stocks that make up the index and the index itself that can be taken advantage of for instance in one neutral strategy called a dispersion trade a trader can bet that half of the index components will rise in a trading day and the other half drop but the index itself does not move much as a result a neutral trading strategy can also be employed by simultaneously taking a long position in one company and a short position in a second company that is very similar or a direct competitor in order to take advantage of perceived mispricing so if coca cola and pepsico have a high correlation in the movements of their respective stock prices and then pepsi s stock suddenly surges while coke does not a trader may short pepsi and go long coca cola betting that their existing price spread relationship will be restored this is known as a pairs trade long short market neutral hedge funds make use of these strategies and often use as their benchmark the risk free rate of return because they do not worry about the direction of the market neutral trading strategiesneutral strategies can be constructed using derivatives such as options contracts these strategies can be complicated and are unsuitable for inexperienced investors advantages of disadvantages of neutral strategiespotentially profiting off stocks and other financial instruments that have remained relatively stable in price gives options investors more opportunities because many financial instruments go through long periods of staying neutral options traders have more chances for generating returns in addition options investors may profit off three outcomes not just one increasing their odds of earning profits rewards aren t however limitless as the maximum amount of potential profit is fixed upon the trade s execution in contrast options traders utilizing a strictly controlled return on investment roi mandate can calculate maximum profit from the start making income more predictable however because all strategies require two or more transactions the investor pays more in commissions | |
what is the neutrality of money | the neutrality of money also called neutral money is an economic theory stating that changes in the money supply only affect nominal variables and not real variables in other words the theory says that the amount of money printed by central banks can impact prices and wages but not the output or structure of the economy modern versions of the theory accept that changes in the money supply might affect output or unemployment levels in the short run however many of today s economists believe that neutrality is assumed in the long run after money circulates throughout the economy understanding the neutrality of moneythe neutrality of money theory is based on the idea that money is a neutral factor that has no real effect on economic equilibrium printing more money cannot change the fundamental nature of the economy even if it drives up demand and leads to an increase in the prices of goods services and wages according to the theory all markets for all goods clear continuously relative prices adjust flexibly and always toward equilibrium changes in the supply of money do not appear to change the underlying conditions in the economy new money neither creates nor destroys machines it does not introduce new trading partners it does not affect existing knowledge and skill as a result aggregate supply should remain constant not every economist agrees with this way of thinking and those who do generally believe that the neutrality of money theory is only truly applicable over the long term in fact the assumption of long run money neutrality underlies almost all macroeconomic theory mathematical economists rely on this classical dichotomy to predict the effects of economic policy an example of the neutrality of money can be seen if a macroeconomist is studying the monetary policy of a central bank such as the federal reserve fed when the fed engages in open market operations the macroeconomist does not assume that changes in the money supply will change future capital equipment employment levels or real wealth in long run equilibrium those factors will remain constant this gives the economist a much more stable set of predictive parameters neutrality of money historyconceptually money neutrality grew out of the cambridge tradition in economics between 1750 and 1870 the earliest version posited that the level of money could not affect output or employment even in the short run because the aggregate supply curve is presumed to be vertical a change in the price level does not alter the aggregate output adherents believed shifts in the money supply affect all goods and services proportionately and nearly simultaneously however many of the classical economists rejected this notion and believed short term factors such as price stickiness or depressed business confidence were sources of non neutrality the phrase neutrality of money was coined by austrian economist friedrich a hayek in 1931 originally hayek defined it as a market rate of interest at which malinvestments poorly allocated business investments according to austrian business cycle theory did not occur and did not produce business cycles later neoclassical and neo keynesian economists adopted the phrase and applied it to their general equilibrium framework giving it its current meaning neutrality of money vs superneutrality of moneythere is an even stronger version of the neutrality of money postulate the superneutrality of money superneutrality further assumes that changes in the rate of money supply growth do not affect economic output money growth has no impact on real variables except for real money balances this theory disregards short run frictions and is pertinent to an economy accustomed to a constant money growth rate criticism of the neutrality of moneythe neutrality of money theory has attracted criticism from some quarters many notable economists rejected the concept in both the short and long run including john maynard keynes ludwig von mises and paul davidson the post keynesian school and austrian school of economics also dismiss it several econometric studies suggest that variations in the money supply affect relative prices over long periods of time the primary argument states that as the money supply increases the value of money decreases eventually as the increased supply of money spreads throughout the economy the prices of goods and services will increase in order to reach a point of equilibrium by counteracting the increase of the money supply critics also argue that an increase in the supply of money impacts consumption and production because an increase in the supply of money increases prices this increase in price alters how individuals and businesses interact with the economy | |
what is long run money neutrality | long run money neutrality refers to the belief that changes in the money supply have no real effects over a long span of time but not necessarily in the short term this idea is rooted in the fact that changes in money supply such as those caused by monetary policy immediately impact the economy in many ways including employment levels output and debt among others | |
what is non neutrality of money | the non neutrality of money is the inverse of the neutrality of money theory under the idea that money is not neutral an economist would argue that changes in money supply do in fact impact the structure of the economy in significant and lasting ways | |
what is price stickiness | price stickiness is one of the primary factors that economists cite to argue that money is not neutral the term refers to situations in which nominal prices are resistant to change even when shifts in the economy suggest that doing so would be optimal the bottom linethe money neutrality theory posits that changes in money supply do not affect the overall economy rather the impact of such changes is limited to the realm of prices for goods and services and wages for labor not productivity or the fundamental nature of the economy some economists agree that neutrality plays out over the long run but not on shorter timescales while others reject the theory altogether | |
what was the new deal | the new deal was a comprehensive and broad set of government directed projects introduced by president franklin delano roosevelt in an attempt to help the united states economy emerge from the great depression it launched in the early 1930s and was designed to bolster the united states economy reduce unemployment provide a social safety net and instill confidence in the government s ability to protect its citizens understanding the new dealthe stock market crash of 1929 began on october 24 a day known as black thursday it brought a period of roaring growth to a sudden halt 1 companies and banks across the united states started failing and the unemployment rate skyrocketed to an almost 200 increase by 1930 23president franklin roosevelt launched the new deal after taking office in 1933 it consisted of a variety of government funded programs aimed at getting people back to work as well as legislation and executive orders that propped up farmers and stimulated business activity 4the new deal engendered controversy by introducing a number of radical reforms and increasing the government s role in guiding the economy several of its programs were ultimately declared unconstitutional by the u s supreme court including two major pillars the national recovery administration nra which set working conditions minimum wages and maximum hours while guaranteeing the right of labor to bargain collectively and the agricultural adjustment administration aaa which intended to stabilize farm prices 56public opinion was for the new deal though and as a result in february of 1937 roosevelt tried to increase the number of supreme court justices in order to prevent future programs from being shuttered 7 though he failed in this court packing attempt he succeeded in his objective in may 1937 the supreme court declared the social security act to be constitutional by a five to four vote after one of its justices changed his anti new deal stance no other new deal program was ever again judicially invalidated by the court 8the new deal was enacted in two parts the first in 1933 and the second in 1935 9history of the new dealthe new deal is often broken into two segments the first new deal was launched in 1933 during the initial two years of the roosevelt presidency in addition to the nra and aaa it consisted of measures to stabilize the banking system emergency banking act ensure bank deposit security banking act of 1933 known as the glass steagall act and increase confidence in the stock market securities act of 1933 the second new deal in 1935 introduced perhaps the program s greatest and most enduring legacy government sponsored retirement plans in the form of social security it also increased government employment works progress administration and minimum wages fair labor standards act 10was the new deal a success historians credit the new deal with some success in reviving the country s fortunes the economy did slowly recover during the 1930s confidence was restored to the banking system through federal deposit insurance working conditions were improved and labor unions strengthened the hand of workers it was world war ii however that ultimately provided the impetus to get america fully back to work the unprecedented spending worldwide on ships arms and planes propelled the country into full employment a feat that the new deal programs despite their best efforts were unable to achieve on their own | |
what are new indications | new indications is a term pharmaceutical companies use to refer to new evidence signifying that there may be new applications for an existing drug or procedure this type of news is closely followed by investors who can access such findings through the press releases issued on companies investor relations pages | |
how new indications work | new indications are an early sign that a particular drug or procedure may be worth investing in further for example a company that has already obtained regulatory approval for a particular drug would report new indications if their research suggests that additional applications for that drug might be possible new indications are therefore viewed as a positive development by most investors because they could signify additional revenue generating opportunities for a company s existing drugs in the united states companies must go through a rigorous and lengthy process in order to bring new drugs to the market the food and drug administration fda oversees the development and approval of new drugs through their new drug application nda process the process routinely takes years to complete with some stretching over a decade despite this lengthy process only about 30 of new applicants have their ndas approved 1although repurposing an existing drug can lead to reduced research and development r d costs there are nevertheless major costs involved in obtaining final fda approval for such repurposed drugs nevertheless because these drugs have already passed through the fda s nda process many companies view them as a less risky investment as compared to developing new drugs from scratch for these reasons one of the most efficient ways for pharmaceutical companies to expand into new markets would be to find new or expanded applications for products that have already received fda approval in fact some companies specialize in repurposing already approved drugs in an effort to reach the commercialization of new medicines more quickly real world example of a new indicationnew indications often appear in news releases for medical treatments and pharmaceutical companies when referring to drugs or equipment involved for example on aug 16 2018 the fda released a new indication approval for the drug opdivo nivolumab which treats cancers such as advanced melanoma advanced renal cell carcinoma and advanced squamous cell carcinoma of the head and neck 23 | |
what is the new economy | new economy is a buzzword to describe new high growth industries that are on the cutting edge of technology and are believed to be the driving force of economic growth and productivity a new economy was first declared in the late 1990s as hi tech tools particularly the internet and increasingly powerful computers made their way into the consumer and business marketplace the new economy was seen as a shift from a manufacturing and commodity based economy to one that used technology to create new products and services at a rate that the traditional manufacturing economy could not match understanding the new economythe idea that a new economy had arrived was part of the hysteria surrounding the tech bubble of the late 1990s and early 2000s the new economy was variously heralded as the knowledge economy the data economy the ecommerce economy and so on unfortunately for the long term health of the new economy arising in the 90s investors and financial institutions bid up technology sector stock prices to unprecedented highs without fully considering the fundamentals the excitement around the tech sector did more harm than good and the rate at which these firms were pushed to become the next microsoft likely destroyed many potentially good business ideas in the pursuit of great ones 1although the tech bubble has long since burst many of the remaining firms like google alphabet amazon and meta formerly facebook remain very innovative and at the forefront of technology now the new economy is often used to describe different aspects of the technology sector beyond simple internet presence and functionality since the tech boom of the 90s we ve seen the growth of many new and exciting subsectors in tech these include the sharing economy the streaming economy the gig economy cloud computing big data and artificial intelligence as of 2024 the companies involved in tech particularly alphabet amazon meta microsoft and apple have overtaken most companies in the world in terms of market cap 2 | |
are we in the new economy | the question ever since the bursting of the tech bubble is of course whether or not the new economy is here or still on the horizon certainly the traditional manufacturing economy is being increasingly automated using innovations coming out of the tech sector of course we still buy and sell products but the service economy enabled by technology is becoming an ever growing part of the global economy so we are definitely living in an economy that is qualitatively different from the one in the 1980s less people are employed in direct manufacturing and many of us are more anxious of being replaced by a machine than the old fear of having our job outsourced to a nation with a cheaper cost structure now that the new economy appears to be here many people are not as confident that it was the one they wanted after all new economy and the restructuring of capitalismalthough the term new economy developed as an investment buzzword around the promise of early internet companies to change the world the term has also been associated with calls to redesign the global economic system the demand for a new economy in term of a total redesign of global capitalism has been put forth by people who see this as a necessary step to meet social and environmental goals in this context a new economy is one that focuses less on driving profits to shareholders through management and more on good corporate citizenship positive community impacts and distributing asset ownership differently a complete overhaul of capitalism is quite challenging given the entrenched interests although some investors have found ways to work within the system with esg investing this approach rewards companies that act in ways that are more socially and environmentally beneficial even if doing so limits bottom line profits the impact of this movement is just starting to be felt in the publicly traded market and has yet to reach private equity and the more aggressive corners of finance while the new economy in the technology sense was largely welcomed and is just now being regretted by those who were negatively impacted a new economy in terms of restructuring our capitalist system around social environmental and sustainability goals has faced stiff resistance this resistance against change within the system has slowed progress and encouraged more people particularly younger people bearing the brunt of economic inequality and longer term externalities in calling for the whole economic system to be changed | |
what is a new fund offer nfo | a new fund offer nfo is the first subscription offering for any new fund offered by an investment company a new fund offer occurs when a fund is launched allowing the firm to raise capital for purchasing securities mutual funds are one of the most common new fund offerings marketed by an investment company the initial purchasing offer for a new fund varies by the fund s structuring understanding new fund offers nfos a new fund offer is similar to an initial public offering ipo both represent attempts to raise capital to further operations new fund offers can be accompanied by aggressive marketing campaigns created to entice investors to purchase units in the fund new fund offers often have the potential for significant gains after beginning to trade publicly types of new fund offersmutual funds are the most common type of new fund offering new fund offerings can be for open end or closed end mutual funds new exchange traded funds are also first offered through a new fund offering below are details on how to invest in a few of the market s common types of new fund offerings in a new fund offer an open end fund will announce new shares for purchase on a specified launch day open end funds do not limit their number of shares these funds can be bought and sold from a brokerage firm on their initial launch date and thereafter the shares do not trade on an exchange and are managed by the fund company and or fund company affiliates open end mutual funds report net asset values daily after the market s close fund companies can launch new fund offers for new strategies or add additional share classes to existing strategies closed end new fund offers are often some of the most highly marketed new fund issuances since closed end funds only issue a specified number of shares during their new fund offer closed end funds trade on an exchange with daily price quotes throughout the day investors can buy closed end funds on their launch date through a brokerage firm new exchange traded funds etfs are also launched through a new fund offer an exchange traded fund is a type of investment fund that can be publicly traded on the stock market most etfs track an index and can be bought and sold throughout the trading day making them easy investments to manage generally they come with lower expense ratios because many are passively managed launches and alertsoften new fund offers are not widely publicized making them challenging to identify companies must register a new fund offering with the securities and exchange commission sec offering one method of tracking investors seeking information on new fund offers prior to their launch date may also receive alerts from their brokerage firm news outlets and news aggregators are also good sources of information on new fund offers sources such as the closed end fund center provide details on new fund offers companies will also issue press releases on new fund offers in 2023 total net assets in u s mutual funds were 25 5 trillion and 8 1 trillion in etfs advantages and disadvantages of an nfoinvesting in a new mutual fund may seem like an exciting way to diversify your portfolio however there are some concerns you should know about before doing so for example many investment companies launch a new fund when the market is rich and investors are hungry to get in on the latest new industry or sector of the economy however just because a certain technology or industry is booming now does not mean it will remain popular in the future furthermore a new fund offer often comes with a higher expense ratio than normal another big risk of investing in an nfo is also one of the most obvious the fund has no track record of success or failure while some bullish investors may look at this as an opportunity for large profits there is also a serious risk in investing in a fund whose performance you cannot track access to emerging sector of the economyprovides ability to diversify portfoliolarge upsidepotentially larger expense ratioemerging technology or industry the fund tracks may be overvaluedunproven track record | |
what is the meaning of nfo | a new fund offer or nfo is the first offering of an open end closed end or exchange traded fund to investors by an investment company | |
is it good to invest in an nfo | while investing in an nfo may present an opportunity for large profits investors should be wary of investing their money into a fund with no proven track record of success | |
how do i choose an nfo | investors can research new launches of funds either by monitoring various investment companies press releases or by checking nfo related news aggregator sites such as the closed end fund center | |
which is the best nfo to invest in | of course there is no surefire method to predict with complete certainty a fund s success particularly a brand new one however investors should look for a lower expense ratio and monitor the performance of the other funds offered by the investment company before investing in an nfo the bottom lineinvestment managers are often offering new investment funds these funds focus on new aspects of investing or an area of the market that was not covered before in doing so they offer a first subscription to bring on new investors this is a new fund offer and occurs when a fund is launched while investing in a new fund offering can seem like a good opportunity it can also be risky because the fund has not yet been proven and does not have an established track record for investors to make a clear investment decision | |
what is new growth theory | the new growth theory is an economic concept positing that humans desires and unlimited wants foster ever increasing productivity and economic growth it argues that real gross domestic product gdp per person will perpetually increase because of people s pursuit of profits understanding new growth theorythe new growth theory offered a fresh take on what engineers economic prosperity it emphasizes the importance of entrepreneurship knowledge innovation and technology challenging the view of exogenous growth in neoclassical economics that economic progress is determined by external uncontrollable forces 1competition squeezes profit so people have to constantly seek better ways to do things or invent new products in order to maximize profitability this concept is one of the central tenets of the new growth theory 2the theory argues that innovation and new technologies do not occur simply by random chance rather it depends on the number of people seeking out new innovations or technologies and how hard they are looking for them people also have control over their knowledge capital what to study how hard to study etc if the profit incentive is great enough people will choose to grow human capital and look harder for new innovations a significant aspect of the new growth theory is the idea that knowledge is treated as an asset for growth that is not subject to finite restrictions or diminishing returns like other assets such as capital or real estate knowledge is an intangible quality rather than physical and can be a resource grown within an organization or industry 1new growth theory exampleunder the new growth theory nurturing innovation internally is one of the reasons for organizations to invest in human capital by creating opportunities and making resources available within an organization the expectation is that individuals will be encouraged to develop new concepts and technology for the consumer market for example a large enterprise might allow part of its staff to work on independent internal projects that may develop into new innovations or companies in some ways the enterprise lets them function like startups being incubated inside the organization the desire of the employees to launch a new innovation is spurred by the possibility of generating more profits for themselves and the enterprise this can be especially true in the united states as commerce is increasingly driven by service type companies software and app development may take place within companies following the new growth theory achieving such knowledge driven growth requires a sustained investment in human capital this can create an environment for skilled professionals to have an opportunity to not only fulfill their primary jobs but also explore the creation of new services that can be of benefit and use to the broader public special considerationsnew growth theorists believe that companies generally undervalue the usefulness of knowledge and as a result argue that it is mainly up to governments to invest in human capital governments are encouraged to facilitate access to better education as well as provide support and incentives for private sector research and development r d 3 | |
what are new home sales | new home sales also known as new residential sales is an economic indicator published monthly by the u s census bureau that measures sales of newly built homes 1 understanding new home salesnew home sales is monitored closely by investors because it is viewed as a lagging indicator of real estate market demand and therefore a factor impacting mortgage rates it is driven by factors such as household income unemployment and interest rates the u s census bureau publishes two versions of the new home sales measure the seasonally adjusted figure and a non adjusted figure the adjusted figure which adjusts for seasonal factors such as the weather is shown as an annual total while the non adjusted figure is shown as a monthly total these figures are given for different regions and for the country as a whole 2 new home sales data and other internal metrics such as the absorption rate are closely monitored by market participants as changes can be predictive of broader movements in the economy such as the onset of a recession or the beginning of an economic recovery the data for the new home sales measure is compiled by conducting interviews with home builders and by looking at data from the u s census bureau s survey of construction specifically it uses data regarding building permits issued for new construction projects a new home is included in the measure if a deposit was paid for the purchase of that home or if a contract to purchase the home was signed within or following the year of its construction 3 the seasonally adjusted figures are intended to remove the effect of factors such as seasonal weather or the overall business cycle the idea behind seasonal adjustments is to give market participants a clearer sense of the underlying demand for new homes independent from other factors affecting the economy to help maintain data quality ongoing revisions are made and published as new data becomes available given the vast amount of transactions occurring throughout the economy the census bureau relies on statistical techniques and sampling methodologies to estimate new home sales data from a small portion of total transactions as with any statistical method these procedures create a modest margin of error which is included with the monthly reports new home sales data interpretationfinancial publications report on new home sales data and often provide interpretations of that data for readers following market news for example the wall street journal reported in july 2019 that purchases of single family homes increased by 7 relative to the previous month a good sign following two months of declining sales 4in interpreting these results the journal quoted experts who attributed the positive results to increased demand for lower cost starter homes which they attributed to low unemployment growing household incomes and low interest rates | |
what are new indications | new indications is a term pharmaceutical companies use to refer to new evidence signifying that there may be new applications for an existing drug or procedure this type of news is closely followed by investors who can access such findings through the press releases issued on companies investor relations pages | |
how new indications work | new indications are an early sign that a particular drug or procedure may be worth investing in further for example a company that has already obtained regulatory approval for a particular drug would report new indications if their research suggests that additional applications for that drug might be possible new indications are therefore viewed as a positive development by most investors because they could signify additional revenue generating opportunities for a company s existing drugs in the united states companies must go through a rigorous and lengthy process in order to bring new drugs to the market the food and drug administration fda oversees the development and approval of new drugs through their new drug application nda process the process routinely takes years to complete with some stretching over a decade despite this lengthy process only about 30 of new applicants have their ndas approved 1although repurposing an existing drug can lead to reduced research and development r d costs there are nevertheless major costs involved in obtaining final fda approval for such repurposed drugs nevertheless because these drugs have already passed through the fda s nda process many companies view them as a less risky investment as compared to developing new drugs from scratch for these reasons one of the most efficient ways for pharmaceutical companies to expand into new markets would be to find new or expanded applications for products that have already received fda approval in fact some companies specialize in repurposing already approved drugs in an effort to reach the commercialization of new medicines more quickly real world example of a new indicationnew indications often appear in news releases for medical treatments and pharmaceutical companies when referring to drugs or equipment involved for example on aug 16 2018 the fda released a new indication approval for the drug opdivo nivolumab which treats cancers such as advanced melanoma advanced renal cell carcinoma and advanced squamous cell carcinoma of the head and neck 23 | |
what is a new issue | a new issue refers to a stock or bond offering that is made for the first time most new issues come from privately held companies that become public presenting investors with new opportunities the typical route for a new issue via a stock offering is known as an initial public offering ipo where a company s stock is offered to the public through various exchanges such as the new york stock exchange nyse or nasdaq for the first time new issues of bonds work the same way both forms of new issues are intended to raise capital for the issuing company a new issue may be contrasted with a seasoned issue understanding a new issuea new issue is conducted as a means of raising capital for a company firms have two main choices issuing debt i e borrowing or issuing equity in the form of stock i e selling a portion of the company regardless of which route they take they will be making a new issue when those securities are offered for sale governments will also create new issues of sovereign debt in the form of treasury securities in order to raise funds for government operations using the debt route i e issuing bonds the new issue will be scrutinized based on the creditworthiness of the issuer to repay its obligations and its overall financial strength if the firm is a startup with no revenue issuing bonds may be an option that is not readily available there is a risk of hype around a new issue sometimes causing a company s shares to surge after its ipo and then only plummet after the hype has worn off investors need to be careful when investing in new issues however the stock route may still be available if they are able to convince investors that the company has long term potential this is where venture capital vc and private equity firms may become involved helping the company to develop and thrive in exchange for ownership in the new firm if successful the company may then seek to make a new issue through an ipo and go public companies that are already public may originate another new issue later on via a secondary offering example of a new issuesay a new it company has developed a program to make cash exchanges easily available worldwide it has been successful in both generating revenues and garnering interest from the venture capital community to grow however it believes it needs more capital approximately 30 million which it doesn t have on hand as such it needs to raise this capital through external sources the company engages with investment banks to see what their shares could be worth on the open market and the banks underwriters indicate that 19 per share would be a fair ipo price valuing the company at just under 100 million the company s board of directors agrees to list shares of the company and they file for an ipo to release a number of shares worth half the total valuation so 50 million with the new issue the company raises capital and becomes listed on a stock exchange where its shares are freely tradeable the new issue resulted in the company raising 50 million slightly more than the 30 million they estimated that they needed for growth because the company did not list all of its shares it still has retained a significant portion of ownership | |
what is new keynesian economics | new keynesian economics is a modern macroeconomic school of thought that evolved from classical keynesian economics this revised theory differs from classical keynesian thinking in terms of how quickly prices and wages adjust new keynesian advocates maintain that prices and wages are sticky meaning they adjust more slowly to short term economic fluctuations this in turn explains such economic factors as involuntary unemployment and the impact of federal monetary policies understanding new keynesian economicsbritish economist john maynard keynes idea in the aftermath of the great depression that increased government expenditures and lower taxes can stimulate demand and pull the global economy out of a downturn became the dominant way of thinking for much of the 20th century that slowly began to change in 1978 when after keynesian macroeconomics was published in the paper new classical economists robert lucas and thomas sargent pointed out that the stagflation experienced during the 1970s was incompatible with traditional keynesian models lucas sargent and others sought to build on keynes original theory by adding microeconomic foundations to it the two major areas of microeconomics that may significantly impact the macroeconomy they said are price and wage rigidity these concepts intertwine with social theory negating the pure theoretical models of classical keynesianism new keynesian economics became the dominant force in academic macroeconomics from the 1990s through to the financial crisis of 2008 the new keynesian theory attempted to address among other things the sluggish behavior of prices and its cause and how market failures could be triggered by inefficiencies and might justify government intervention the benefits of government intervention remain a flashpoint for debate new keynesian economists made a case for expansionary monetary policy arguing that deficit spending encourages saving rather than increasing demand or economic growth criticism of new keynesian economicsnew keynesian economics was criticized in some quarters for failing to see the great recession coming and for not accurately accounting for the period of secular stagnation that followed it the main issue of this economic doctrine is explaining why changes in aggregate price levels are sticky under new classical macroeconomics competitive price taking companies make choices on how much output to produce and not at what price while in new keynesian economics monopolistically competitive companies set their prices and accept the level of sales as a constraint from a new keynesian economics point of view two main arguments try to answer why aggregate prices fail to imitate the nominal gross national product gnp evolution principally under both approaches to macroeconomics it is assumed economic agents households and companies have rational expectations however new keynesian economics maintains that rational expectations become distorted as market failure arises from asymmetric information and imperfect competition as economic agents can t have a full scope of the economic reality their information will be limited there will be little reason to believe that other agents will change their prices and as a result they will keep their expectations unchanged as such expectations are a crucial element of price determination as they remain unaltered so will price which leads to price rigidity | |
what is new paradigm | in investing a new paradigm is a revolutionary new concept or way of doing things that replaces old beliefs and ways of doing things understanding new paradigmnew paradigms are rooted in the idea of paradigm shifts in which technology or new findings completely change the way people think about or interact with a subject investors can watch new paradigms unfold before their eyes as they track companies that are on the frontier of innovation a stock may soar based on its revolutionary way of doing things new paradigms may stem from a political or economic event a new finding in academia new technology or innovation a new business or business leader or another important occurrence new paradigm ideas are so revolutionary that many people believe how we think and act going forward will fundamentally change investors need to be aware though that not all new paradigms pan out while companies like amazon amzn which anticipated the demand for internet shopping and capitalized on it saw great success not all companies do the pharmaceutical sector is filled with companies on the verge of making world changing discoveries yet many treatments never leave the developmental stage their stocks may or may not pop higher on speculative demand only to fall right back to where they started or lower investors who bet on the companies that really do start a new paradigm or capitalize on one can make a lot of money over the long run but finding these companies isn t easy these companies are often highly speculative have negative earnings and are misunderstood in their early stages it is only during later stages once the price of the stock has moved up significantly that most investors acknowledge the paradigm shift and start to jump on this can create a lot of volatility making it hard for investors to stick with new paradigm stocks for the long haul amazon is a case in point between 1997 and 2009 amazon stock had seven drops of 60 or more and the stock dropped by 95 between 2000 and 2001 after its initial public offering ipo the stock dropped by 46 before rallying off its lows of 1 50 per share some early investors may have profited handsomely but would have likely been shaken out by the many severe drops well before the stock price eclipsed 3 500 in 2020 1while amazon thrived coming out of the dotcom bubble which was based on the new paradigm of the internet many of the other internet stocks did not it took many years for dotcoms to reclaim price levels achieve in 2000 even amazon didn t definitively move above its year 2000 high until 2009 1new paradigms don t always initially succeed many dotcom companies went bankrupt after the dotcom bubble for example and those that survived did so at significantly lower stock prices new paradigms are often followed by a reckoning because investors overestimate how much will change they drive up valuations too high and the prices fall significantly after reality sets in ultimately companies have to produce profits to justify high stock prices if the companies can t generate profits no matter how novel their idea or product investors will eventually grow weary and abandon the stock new paradigm examplesthe term new paradigm became a widely used phrase in the 1990s as marketing firms and businesses began to use the term for almost any new product or campaign it was notably used during the dotcom boom years at times it seemed that anything and everything involved with the internet was described as a new paradigm or a paradigm shift the years in the late 1990s were characterized by high flying tech stocks that eventually crashed from 1995 to 2000 the technology dominated nasdaq index rose from below 1 000 points to more than 5 000 points 2 technology companies became a new paradigm for investors and analysts as their products and modes of thinking had the ability to fundamentally change the way that businesses operated and grew the internet certainly did change things but investors initially valued the companies too high their real value at the time was considerably lower than the peak prices to which investors drove these companies the great recession also provided a new paradigm for many investors as the notion of rooting out and supporting more sustainable investments came into the limelight it became important to some investors and asset managers to consider environmental social and governance esg factors when investing as became evident with the housing bubble and crisis complex financial instruments like mortgage backed securities without sound underlying assets proved disastrous | |
what is the new york board of trade nybot | founded in 1870 the new york board of trade nybot is a commodity futures exchange located in new york in 2006 it became part of the intercontinental exchange ice 12for much of its history the nybot facilitated commodities trading using human traders in large trading floors or pits today the vast majority of this trading is conducted through computers understanding the new york board of trade nybot the nybot is focused on physical commodities such as coffee cotton and cocoa by allowing these commodities to be traded indirectly using futures contracts institutions such as the nybot allow the producers and buyers of these commodities to lock in prices ahead of time in order to protect against unforeseen volatility or production shortages with standardized futures contracts companies dependent on these commodities can buy them at predetermined prices for later delivery weeks months or even years in the future in doing so they can be more certain of the cost of their raw materials regardless of how the spot prices of those commodities may fluctuate in the interim period the chicago mercantile exchange cme plays a similar role facilitating futures trading in commodities such as livestock metals and crude oil | |
when the nybot was founded in 1870 trading was conducted exclusively by humans often working on large and loud trading floors in 1997 the nybot acquired the coffee sugar and cocoa exchange csce increasing their foothold in the commodity trading marketplace this combined entity was then purchased by the ice in 2006 12 | real world example of the new york board of trade nybot a few years after the ice acquired the nybot the traditional trading floors were closed off so that all trades would be executed electronically today the ice operates as an entirely electronic exchange enabling near instant transactions among market participants throughout the world this move toward digitization has also corresponded with a vast increase in the size of the commodities trading markets themselves as its name suggests the ice is a truly international marketplace in which traders can transact in commodities ranging from electricity and jet fuel to derivative products based on interest rates currency values and various other underlying assets | |
what is the new york mercantile exchange nymex | the new york mercantile exchange nymex is the world s largest physical commodity futures exchange and is today part of the chicago mercantile exchange group cme group which is the world s leading and most diverse derivatives marketplace cme group consists of four exchanges chicago mercantile exchange cme chicago board of trade cbot nymex and the commodity exchange inc comex each exchange lists a wide range of futures products commodities and global benchmarks across major asset classes understanding the new york mercantile exchange nymex an early version of nymex started in 1872 when a group of dairy merchants founded the butter and cheese exchange of new york in 1994 nymex merged with comex to become the largest physical commodity exchange at that time by 2008 nymex was not able to commercially survive on its own in the wake of the global financial crisis and merged with the cme group of chicago the merger brought a list of energy precious metal and agricultural products to the cme group of exchanges futures and options on energy precious metals and agricultural commodities are sometimes used to speculate but are also tools for companies farmers and other industries that want to manage risk by hedging positions the ease with which these instruments are traded on the exchanges is vital to creating protective positions hedges and gauging futures prices making nymex an important part of the trading and hedging worlds daily exchange volume of the cme group is around 30 million contracts with nymex making up about 10 of that amount because of the physical commodities that are traded on that exchange much larger volumes are traded in interest rate futures options and forward contracts that trade on the chicago board of trade cbot nymex is regulated by the commodity futures trading commission cftc which is an independent agency of the united states government tasked with the promotion of competitive and efficient futures markets as well as the protection of investors against manipulation abusive trade practices and fraud limitations of the nymexnymex is an open outcry trading platform where traders meet to haggle and agree on a market price for a commodity given that stock and commodity trading predates the invention of the telegraph the telephone or the computer by hundreds of years it is fairly obvious that face to face human trading and trading pits were the standard way of doing business for a long time today however open outcry trading is on the decline and the number of trading pits has dwindled nymex has increasingly introduced electronic trading systems since 2006 in fact given the cost benefits of the electronic systems and investor preference for fast order execution a substantial percentage of the world s exchanges have already converted to electronic networks at this point the united states is more or less alone in maintaining open outcry exchanges | |
what gets traded on the ny mercantile exchange | trading on the nymex includes a wide variety of trading options such as oil futures metals futures energy futures and other commodities like agricultural products and others unlike other market types nymex doesn t trade in options or equities | |
what is a mercantile exchange | the dictionary definition of a mercantile exchange is a market for trading commodities 1these types of markets are legal entities that determine and enforce rules for trading standardized commodity contracts and related investment products these types of markets trade trillions of dollars per day and are done almost entirely by electronic trading | |
what is the difference between cme and cbot | cme is the chicago mercantile exchange and trades similarly to the nymex that is to say that it trades in commodities and futures and includes energy metals etc cbot is the chicago board of trade and while it is now under the cme umbrella before the merger in 2006 the cbot used vastly different rules regulations trading engines and traded with different offerings the bottom linethe new york mercantile exchange is one of four exchanges owned and managed by the cme group the exchange deals with trades centered around commodities and futures nymex specializes in energy precious metals and agricultural commodities | |
what is the new york stock exchange nyse | the new york stock exchange nyse is a stock exchange located in new york city that is the largest equities based exchange in the world based on the total market capitalization of its listed securities formerly run as a private organization the nyse became a public entity on march 8 2006 following the acquisition of electronic trading exchange archipelago 1 in 2007 a merger with euronext the largest stock exchange in europe led to the creation of nyse euronext which was later acquired by intercontinental exchange inc ice the current parent of the new york stock exchange 2understanding the new york stock exchange nyse located on wall street in new york city the new york stock exchange also known as the big board consists of one trading floor for equities and another for the nyse american options exchange the main building located at 18 broad st and the one at 11 wall st were both designated historical landmarks in 1978 3the nyse relied for many years on floor trading only using the open outcry system many nyse trades have transitioned to electronic systems relying mainly on designated market makers to conduct both the physical and automated auctions quotes offered by dmms are on par with what floor traders and other market participants offer currently the nyse is open for trading monday through friday from 9 30 a m to 4 00 p m et the stock exchange is closed on certain u s holidays when these fall on a saturday the nyse is sometimes closed the preceding friday when holidays fall on a sunday the nyse may be closed the following monday 4the nyse is the world s largest stock exchange by total market capitalization of listed companies which is estimated to be 24 6 trillion as of mid 2022 5the nyse s opening and closing bellsthe opening and closing bells of the exchange mark the beginning and end of the trading day the opening bell is rung at 9 30 a m et and the closing bell is rung at 4 00 p m et closing trading for the day but trading days did not always begin and end with a bell the original signal was actually a gavel during the late 1800s the nyse changed the gavel to a gong the bell became the official signal for the exchange in 1903 when the nyse moved to 18 broad st 6prior to 1995 the exchange s floor managers rang the bells but the nyse began inviting company executives to ring the opening and closing bells on a regular basis which later became a daily event the executives are from companies listed on the exchange who sometimes coordinate their appearances with marketing events such as the launch of a new product or innovation or a merger or acquisition sometimes other public figures such as athletes and celebrities ring the bell some of the more notable figures to ring it include singer actor liza minnelli olympic medalist michael phelps and rapper snoop dogg in july 2013 united nations secretary ban ki moon rang the closing bell to mark the nyse joining the u n sustainable stock exchanges initiative 7the new york stock exchange passed the milestone of one million shares traded in a single day in 1888 by 2022 more than five billion shares were changing hands on the nyse during a normal business day 8history of the nysethe new york stock exchange dates back to may 17 1792 on that day 24 stockbrokers from new york city signed the buttonwood agreement at 68 wall st the new york stock exchange kicked off with five securities which included three government bonds and two bank stocks 9thanks to the nyse s head start as the major u s stock exchange many of the oldest publicly traded companies are on the exchange consolidated edison ed is the longest listed nyse stock joining in 1824 as the new york gas light company 10 along with american stocks foreign based corporations can also list their shares on the nyse if they adhere to certain listing standards 11a series of mergers has given the new york stock exchange its massive size and global presence the company started as nyse before merging with the euronext and adding the american stock exchange 12 nyse euronext was purchased in an 11 billion deal by the intercontinental exchange ice in 2013 13 the following year euronext emerged from ice via an initial public offering ipo but ice retained ownership of the nyse 14a few notable dates in the nyse s historywho owns the new york stock exchange the nyse was acquired by the intercontinental exchange ice group in 2013 13 | |
where is the oldest stock exchange in the world | the amsterdam stock exchange aex in the netherlands is the oldest stock exchange established in 1602 by the dutch east india company today the amsterdam exchange is owned by euronext | |
what is the largest stock exchange in the world | the new york stock exchange nyse remains the largest stock exchange in the world in terms of the market capitalization of the companies listed on it the nasdaq ranked second followed by the shanghai stock exchange and the euronext the bottom linethe new york stock exchange nyse is the oldest and most influential securities exchange in the united states and is the largest stock exchange in the world by total listed company market cap with humble beginnings under a buttonwood tree in manhattan the nyse is now a landmark that epitomizes wall street today the nyse lists the most important publicly traded american companies and is still seen as the premier venue for stock trading | |
what is a newly industrialized country nic | a newly industrialized country nic is a term used by political scientists and economists to describe a country whose level of economic development ranks it somewhere between developing and highly developed classifications these countries have moved away from an agriculture based economy and into a more industrialized urban economy experts also know them as newly industrializing economies or advanced developing countries understanding newly industrialized countryin the 1970s and 1980s examples of newly industrialized countries included hong kong south korea singapore and taiwan examples in the late 2000s included south africa mexico brazil china india malaysia the philippines thailand and turkey economists and political scientists sometimes disagree over the classification of these countries hong kong singapore south korea and taiwan are nics collectively known as the four asian tigers a nic is part of a socioeconomic class that has recently made advances in industrialization greater economic stability within the nation accompanies this economic shift although this process of stabilization may be incomplete or in a stage of infancy transition signs from third world to newly industrialized countrya primary indication of a country s transition to a nic is substantial growth in the gross domestic product gdp even if it falls behind developed nations often increases in average income and the standard of living are markers of the transition from a developing country to a nic government structures are usually more stable with lower levels of corruption and less violent shifts of power between officials though the changes are significant outpacing those of similar developing nations they often lack the standards set by most developed countries relations between nics and highly developed nationsdeveloped countries may see opportunities in the growing stability of a newly industrialized country these opportunities could lead to additional outsourcing by companies to facilities within nics these movements may lower labor costs for outsourcing companies with less risk compared to outsourcing to less stable nations while this can increase the strength of the labor force within the nic complications can occur with the increased demand because the government may not have fully established laws and regulations in surrounding industries real world examplesince there is no exact qualification or definition for a nic the list of existing nics is open to some debate based on the shift among economies from agricultural development to more industrial pursuits and recent improvements in average standards of living economies that experts typically include as nics are china specifically hong kong india singapore taiwan and turkey others may include brazil mexico south africa and thailand in a 2014 united nations report called the world economic situations and prospects states that all nations are categorized into one of three classifications for analytical reasons these categories are developed economies economies in transition and developing economies | |
what is a news trader | a news trader is a trader or investor who makes decisions based on news announcements breaking news economic reports and other reported events can have a short lived effect on the price action of stocks bonds and other securities news traders try to profit by taking advantage of market sentiment leading up to the release of important news and or trading on the market s response to the news after the fact understanding news traderthe adage buy the rumor sell the news recognizes that rumors have one effect on a security s price and news can have the opposite effect for this reason news traders focus on trading in the time leading up to the news or immediately after when the market is still reacting to the news these periods are characterized by a high amount of volatility that creates an opportunity to profit news traders try to profit from the timing or likely content of scheduled news announcements for the most part when the news is scheduled as with earnings releases or federal reserve meetings news trading is more about playing the odds on the likely significance of the announcement in fact the federal reserve has tried to soften the market impact of its proclamations by foreshadowing every major policy decision well in advance but even these policy signals have become tradable events | |
when the news is a surprise to everyone as in a natural disaster or black swan event news traders try to position themselves to profit sometimes this means playing the volatility or making a call on the immediate directional impact of the news on current price trends | in most cases news traders are a type of day trader since they generally open and close trades in the same day news traders tools and strategiesnews traders leverage many different strategies with a focus on market psychology and historical data traders may look at historical data for example such as past earnings reports to predict how upcoming news like an upcoming earnings report is likely to affect prices by becoming familiar with specific markets news traders can make educated guesses as to whether a security will increase or decrease in price following a news report news traders can also set up queries and alerts to gather breaking news and correlate it with changes in the price action on a chart if certain criteria are met the news trader will then enter a bullish or bearish position depending on the trading strategy as news is timely and usually short term in impact the opportunity to profit only exists for as long as the news is fresh a popular strategy used by news traders is known as fading which involves trading in the opposite direction of the prevailing trend as enthusiasm wears off a stock might open sharply higher for example after a positive earnings announcement during pre market hours news traders might watch for this optimism to reach a high and then short sell the stock intraday as optimism wears off the stock might still be trading sharply higher compared to the prior day but the traders may have profited from the difference between the highs and lows of the day | |
what is the nex | nex is a separate board on the tsx venture stock exchange that provides a unique trading forum for listed companies that no longer meet the tsx venture s ongoing listing standards the nex is designed for companies that have low levels of business activity or have ceased to carry on active business it benefits such companies by giving their stocks a degree of liquidity and providing visibility that may attract potential acquirers or investors 1 these companies are identified by an h or k extension to their trading symbols 2 | |
what is next in first out nifo | next in first out nifo is a method of valuing inventory where the cost of an item is based upon its replacement cost rather than its original cost the next in first out form of valuation does not conform to generally accepted accounting principles gaap 1 this is because nifo is said to violate the cost principle accounting concept which states that goods and services should be recorded at original cost not present market value understanding next in first out nifo some companies use next in first out when inflation is a factor companies will set a selling price on a replacement cost basis and use this method as a way to price the items it sells although nifo doesn t conform to gaap many economists and business managers prefer the economic rationale behind the method as a cost flow assumption technique by stating that the cost assigned to a product is the cost required to replace it nifo can offer a more practical valuation method businesses will actually see during normal operations for example the traditional methods of last in first out lifo and first in first out fifo can become distorted during inflationary periods using accounting methods based on these principles during inflationary environments can mislead business managers hence many businesses will use nifo for internal purposes during these periods and report results using lifo or fifo on their audited financial statements example of next in first out nifo suppose a company sells a toy widget for 100 the original cost of the widget was 47 which would result in a reported profit of 53 at the time of the sale the replacement cost of the widget was 63 if the company were to charge 63 for the cost of goods sold under the nifo concept the reported profit would decline to 37 | |
what and who is next of kin | next of kin refers to a person s closest living relative s individuals who count as next of kin include those with a blood relation such as children or those with legal standing such as spouses or adopted children a person s next of kin often takes precedence over others in inheritance cases especially when a will isn t established understanding next of kinnext of kin refers to individuals who share a relationship through blood marriage or adoption this relationship helps establish who would receive a portion of a person s estate by the laws of descent and distribution if there is no will 1 in this context the next of kin is the spouse inheritance rights use the next of kin relationship for anyone who dies without a will and has no spouse or children 2 surviving individuals may also have responsibilities during and after their relative s life for example the next of kin may need to make medical decisions if the person becomes incapacitated or take responsibility for their funeral arrangements and financial affairs after their relative dies a legally and properly executed will that covers inheritable property usually takes precedence over next of kin inheritance rights if the deceased person left no will their estate passes to a surviving spouse in nearly all states 3 if the couple is divorced postnuptial agreements may terminate or alter these rights if a surviving spouse remarries it generally does not affect their inheritance rights in the absence of a surviving spouse the person who is next of kin inherits the estate the line of inheritance begins with direct offspring starting with their children then their grandchildren followed by any great grandchildren and so on the legal status of stepchildren and adopted children varies by jurisdiction if the deceased had no offspring the line of inheritance moves upward to their parents if the parents are no longer alive collateral heirs brothers sisters nieces and nephews are next in line investopedia sydney saporitojurisdiction over next of kinthe specifics of determining next of kin and inheritance vary by jurisdiction matters involving inheritance in certain countries such as the united kingdom are handled in accordance with various succession laws in other countries next of kin laws are in place for settling the estates of people who die intestate 45in the united states the right of a relative to inherit or receive property by inheritance exists through the operation of state laws and legislative action state law establishes next of kin relationships and inheritance priorities 2identifying a next of kin is less important at least legally if the person who died the decedent left a will or was married the legislature of a state has plenary power or complete authority over the distribution of property within the state borders the deceased s estate becomes state property if no legal heir is identified | |
what if someone dies in one state and owns assets in another with personal property the law of the state where the decedent resides generally supersedes the laws of other states | insurance and retirement plansthe recipient s of proceeds from a decedent s life insurance policy or their retirement accounts such as 401 k s and individual retirement accounts ira are designated in a different way than other bequeathable assets the funds from these instruments typically go to the beneficiaries listed by the decedent on these policies or the accounts themselves even if the decedent designated different people in a will 6next of kin status is irrelevant unless the decedent was married and lived in a community property state if so by law the surviving spouse is entitled to an equal portion of any funds earned or accrued during the marriage unless the spouse had signed a waiver if the spouse is also deceased and there are no living listed beneficiaries those assets may flow to the deceased s next of kin depending on state law 7certain other rules apply to individuals who inherit retirement plan assets those rules have been modified following the passage of the setting every community up for retirement enhancement secure act under the new law ira beneficiaries must cash out their inherited retirement account within 10 years there are certain exceptions such as for people who are chronically ill or disabled and children under the age of 18 8establishing someone s next of kin is also important for law enforcement medical officials and other authorities when they need to make notifications about an individual s death health or well being next of kin responsibilitiesbeing designated as someone s next of kin carries significant legal responsibilities one of the primary responsibilities of next of kin is to make decisions on behalf of the individual in case they become unable to make decisions for themselves this could come up prior to that person s death whether due to illness injury or incapacitation the next of kin can play a role in making serious healthcare decisions for the individual this responsibility is particularly important when the individual is unable to communicate their wishes take a situation where someone is in a coma the next of kin may be called upon to provide consent for medical treatments or end of life decisions the next of kin may also have legal responsibilities and authority they may be tasked with handling the individual s assets paying bills and managing investments this responsibility becomes much more prominent when there is no will next of kin vs power of attorneynext of kin and power of attorney are two distinct legal concepts that confer different roles for an individual next of kin typically serves as a default designation when there is no formal legal document specifying decision making authority on the other hand a power of attorney is a legal document that grants one person authority to act on someone else s behalf the powers granted in a power of attorney can vary widely depending on the terms of the document they often include managing financial affairs making healthcare decisions and conducting legal transactions note that the power of attorney documentation may be for specific actions being next of kin may designate a more broad less defined set of responsibilities another key difference between next of kin and power of attorney is the level of control and authority each confers being next of kin does not necessarily grant decision making authority you usually don t get this kind of power unless it s explicitly stated by law a power of attorney on the other hand does grant explicit legal authority it s a more formalized enforceable way of designating responsibilities | |
why is determining next of kin important | establishing the next of kin relationship is important because it determines inheritance rights when a person dies without a will and there are no surviving relatives such as a spouse or children a person s next of kin may also have certain responsibilities during and after a person s life such as making medical decisions making funeral arrangements and assuming control of financial affairs | |
how is next of kin determined | determining the next of kin and inheritance varies by jurisdiction in the united kingdom inheritance matters are handled as per succession laws 5 in other countries the laws about next of kin help settle the estates of people who die intestate 4 the right of someone to inherit or receive property in the u s by inheritance exists by way of state laws and legislative action 2will next of kin automatically get life insurance and ira benefits in most cases the next of kin status doesn t matter this means that the proceeds from life insurance policies and retirement accounts are transferred to the beneficiaries named by a decedent even if the decedent designates different people in their will 6this changes if the decedent is married and lives in a community property state in this case the surviving spouse is legally entitled to an equal portion of any funds earned or accrued during the marriage unless the spouse signs a waiver 97the bottom linenext of kin refers to a person s closest living relative such as children or a spouse in estate planning next of kin is important in that next of kin typically takes precedence over any other individuals for an inheritance usually when a will does not exist each country and sometimes different jurisdictions within the country have different inheritance rights most often the spouse inherits the estate if there is no spouse then it is usually the children if there are no children the next of kin relationship continues to find the closest living relative | |
what is nexus | nexus is a government sponsored trusted travelers program that allows pre screened u s and canadian citizens to expedite border crossings 1 u s and canadian citizens using nexus experience expedited border crossings into the united states and canada with less immigration and customs questioning nexus is valid for air land and sea travel and a nexus id can be used instead of a passport nexus also helps the u s customs and border protection cbp and the canada border services agency cbsa reduce travel risks by increasing the number of known safe travelers understanding nexusnexus members experience more efficient border crossings between the united states and canada through dedicated lanes airport kiosks and land and sea border checkpoints nexus members do not have to remove their shoes belts or light outerwear for airport security screenings and can keep their laptops and 3 1 1 compliant bag of liquids in their carry on bags nexus members can use the global entry and transportation security administration tsa precheck traveler programs without applying separately to each global entry members can use the nexus program to cross the border from canada into the united states without becoming nexus members however expedited crossing from the united states into canada requires nexus membership nexus applicants must pay a 50 fee usd or cnd rising to a 120 fee as of october 1 2024 2 all applicants must submit to a background check and a personal interview 3 if approved by both the united states and canadian governments applicants receive a nexus id card with their photo and radio frequency identification document rfid functionality the card is valid for slightly more than five years and can be renewed following the same procedure as outlined above the date of expiration is calculated from the next birthdate after the cardholder s last interview nexus participants can also have their irises scanned as an alternative form of identification at border crossings nexus is open to u s citizens lawful permanent u s residents canadian citizens and lawful permanent residents of canada individuals with a criminal history customs violations or immigration violations or who do not meet the criteria for admission to the united states or canada may not be approved for nexus either country can deny an individual s application but both must approve it you may not be eligible for participation in the nexus program if you | |
how much does nexus cost | currently applicants have to pay 50 for access to nexus however as of october 1 2024 the cost will be going up to 120 the government has announced | |
is nexus only for u s citizens | no the nexus program is for both u s and canadian citizens facilitating easier travel between the two countries | |
how long is nexus membership valid for | nexus membership is valid for five years provided that the member continues to comply with program requirements the bottom linenexus is a government sponsored program that enables pre screened american and canadian citizens to travel more freely between countries than those who haven t been screened those who have been pre screened can cross the u s canada border without a passport | |
what is the nifty fifty | the nifty fifty was a group of 50 large cap stocks on the new york stock exchange that were most favored by institutional investors in the 1960s and 1970s investment in these top 50 stocks similar to blue chip stocks of today is said to have propelled the american economy to its bull market of the 1970s companies in this group were usually characterized by consistent earnings growth and high p e ratios understanding the nifty fiftythe nifty fifty stocks got their notoriety in the bull markets of the 1960s and early 1970s they became known as one decision stocks because investors were told by individuals such as university of pennsylvania professor jeremy siegel that they could buy and hold them forever that wasn t always the case though no one comprehensive list exists of the nifty fifty examples of some of these stocks include general electric ge coca cola ko and ibm ibm however part of this list included companies that have been troubled in the last decade such as xerox and polaroid the nifty fifty should not be confused with the cnx nifty 50 the latter is an indian stock exchange index that covers 13 sectors of the nation s economy nifty fifty stocks and price to earnings p e ratioshistorically nifty fifty stocks were favored in part due to their high price to earnings or p e ratios p e ratios compare a stock s current market value price to its earnings per share earnings are the company s net profits which the ceo and investor relations team announce each quarter on the company s earnings conference call the p e ratio indicates the dollar amount an investor should invest in a company to receive one dollar of that company s earnings the p e is thus sometimes referred to as the price multiple today high p e ratios such as with many technology companies i e tesla s tsla forward p e of 1 076 can indicate volatility and a lack of stability if the company s price is significantly higher than its actual concrete earnings this imbalance could suggest investors have over hyped the company if the company fails to generate profits investors who have purchased the stock at a high valuation could see their holdings decline if the market catches on and prices drop accordingly nifty fifty and today s blue chip stockstoday s blue chip stocks in several ways resemble the nifty fifty stocks of prior decades blue chip stocks are nationally recognized well established and financially sound companies such as coca cola disney pepsico wal mart general electric ibm and mcdonald s dominant in their respective industries many of these names overlap with those in the nifty fifty blue chip stocks represent highly reputable brands and have survived multiple downturns in the economy over the years investors with a low risk profile i e more conservative or potentially older investors nearing retirement and looking for stability often place their assets in blue chip stocks these are excellent options for capital preservation steady dividend payments provide a stream of income if the investor does not have a salary and also protects the portfolio against inflation | |
what is the nigerian letter scam | the nigerian letter scam also known as advance fee fraud or 419 fraud is a scheme in which a sender requests help facilitating the illegal transfer of money the letter may be sent by mail fax or email the most common method the author is typically a self proclaimed government or military official bank officer or business executive who explains they need access to a foreign account to transfer money out of nigeria in exchange the sender offers the recipient a commission sometimes up to several million dollars depending on the perceived gullibility of the target the scammers then request money to pay for some of the costs associated with the transfer such as taxes legal fees and bribes to government officials if the scammers are successful in receiving money they will either disappear immediately or try to get more money with claims of additional transfer problems | |
how a nigerian letter scam works | this specific type of scam is generally referred to as a nigerian letter scam because of its prevalence in that country particularly during the 1990s section 419 of the nigerian criminal code makes this type of fraud illegal however this scam is not limited to nigeria and is also perpetrated by various organizations in countries around the world the origins of this scam are widely debated with some suggesting it started in nigeria during the 1970s while others suggest its origins go back hundreds of years to other confidence scams such as the spanish prisoner scam 1special considerationsthe nigerian letter scam was initially conducted by phone fax and traditional mail the proliferation of email provided a new route for the nigeran scam warning signs that a message might be a scam include mention of a u s currency account in a foreign country and the promise of substantial compensation for little effort as well as typos grammatical errors and unusual syntax | |
what the scammers are looking for | nigerian letter scammers hope the commissions they offer will be enticing enough to compel recipients to risk sending thousands of dollars to a stranger the scammer may say the transfer is needed because the government is trying to freeze or confiscate their accounts or that the money is otherwise hostage to war corruption or political unrest the person might say they desperately need your bank account number to transfer the money for safekeeping of course when it comes to this type of request remember that if anything sounds too good to be true it usually is nigerian letter scams continue to exist because it only takes a handful of people out of hundreds of thousands of attempts to be fooled to make it worth the scammers time and effort | |
how to avoid the nigerian letter or 419 fraud | the u s federal bureau of investigation fbi recommends the following tips for avoiding this type of fraud 2though many people recognize these and other types of scams remember that criminals only have to find a few gullible people to make their time worthwhile if you know anyone who may be vulnerable to fraud for example your aging parents be sure to explain how scams work and how they can be avoided | |
what is the nigerian romance scam | in a romance scam which is a type of catfishing a criminal adopts a fake online identity to gain a victim s trust and affection the scammer uses the guise of a romantic relationship to manipulate and or steal from the victim the criminal may propose marriage and make plans to meet in person but that never happens eventually the scammer asks for money 3 according to a study from tech and cybersecurity company techshielder nigeria is the second most notorious country worldwide for romance scams behind only the philippines 4 | |
what is an advance fee scam | an advance fee scam happens when a victim pays money to a fraudster who has promised something of greater value in return such as a gift contract loan or investment the victim of course receives little or nothing even if they cooperate with the scammer s demands 5 the nigerian letter scam is an example of an advance fee scam because the victim is promised a cut of a large sum of money in exchange for providing banking details and making upfront payments | |
do nigerian letter scams originate in nigeria | not necessarily of the nigerian letter scam criminals who could be traced 71 lived in the united states nigeria accounted for the next highest portion at 8 6if you believe you have been a victim you can file a complaint with the criminal investigative division of the u s secret service office of homeland security u s citizens or residents should label the correspondence no financial loss for your database or loss depending upon your circumstance and additional information about nigerian fraud scams can be found on the fbi s website | |
what is a night depository | a night depository is a secured bank drop box where accountholders usually small business owners or employees can deposit their daily cash checks and credit card slips outside of normal banking hours usually between 9 am and 5 pm the bank will collect the deposits and credit them to the client s account on the following business day night depository explainedalthough they may seem a little quaint if not downright obsolete in our increasingly cashless mobile pay society night depositories do still serve a purpose many small businesses and service providers still deal mainly in cash and checks night depositories provide additional security for these merchants since it frees them from keeping money at their business location overnight where it might be vulnerable to theft automated teller machines atms can serve this purpose too but they limit the physical amount of paper one can deposit at a time and of course they don t accept coins if the client has a large bundle of bills or checks the night depository is often more practical businesses need a commercial or business account to use a bank s overnight deposit facility generally after a client opens an account the bank will give them a key to open the secured drop box on the exterior of the building at that branch the bank will also require that checks cash credit and debit card receipts be placed in a special lockable zippered bag along with deposit slips a manager or specially trained commercial teller collects the bag from the depository the next business day the contract between the merchant and the bank called the night depository agreement determines who opens the bag and counts its contents normally clients can dictate that the bag be unopened until they are present at the bank of course this delays the posting of the funds to the account but it speeds the resolution of any accounting errors and prevents disputes if a client doesn t opt to be present the bank opens the bag and processes the night deposit during its next business day in accordance with federal deposit insurance corporation regulations banks often require that you pay a monthly fee for night depository services real world example of a night depositorycommercial banks that cater to small business emphasize their night depository services first international bank trust a self described community bank located located across north dakota central minnesota and the greater phoenix az area advertises its night depository service on its website night deposits are available 24 hours a day seven days a week at most first international bank trust locations it proclaims liberty bank which has locations in new orleans kansas city detroit along with smaller cities in mississippi alabama and illinois also touts the low annual fee for its night deposit services at many locations you can securely drop off checks and cash for deposit anytime day or night when the bank reopens your deposit will be processed and you ll be sent a receipt the next business day | |
what is the nikkei | the nikkei is short for japan s nikkei 225 stock average the leading and most respected index of japanese stocks it is a price weighted index composed of japan s top 225 blue chip companies traded on the tokyo stock exchange the nikkei is equivalent to the dow jones industrial average djia index in the united states understanding the nikkeiformerly called the nikkei dow jones stock average from 1975 to 1985 it is now named after the nihon keizai shimbun or japan economic newspaper commonly known as nikkei which sponsors the calculation of the index the index has been calculated since september 1950 retroactive to may 1949 among the best known companies included in the nikkei index are canon incorporated sony corporation and toyota motor corporation it is the oldest stock index in asia the nikkei was established as part of the rebuilding and industrialization of japan in the aftermath of the second world war constituent stocks are ranked by share price rather than by market capitalization as is common in most indexes valuations are denominated in japanese yen the composition of the nikkei is reviewed every september and any needed changes take place in october according to the nikkei 225 stock average fact sheet the nikkei 225 is calculated every 5 seconds while the tokyo stock exchange is open the tokyo stock exchange and the nikkei indexthe tokyo stock exchange tse was established in 1878 initially the tse was founded as a marketplace for the exchange of bonds the government had issued to samurai in addition to government bonds the tse also acted as an exchange for gold and silver currencies by the 1920s the tse grew to include stock trading in 1943 during the second world war the japanese government combined the tse with five others to form a single japanese stock exchange that exchange was closed down in aug 1945 toward the end of the war the tokyo stock exchange re opened on may 16 1949 under the aegis of the securities exchange act japan experienced a major asset bubble in the late 1980s when the government used fiscal and monetary stimuli to counteract a recession caused by the japanese yen s 50 appreciation during the first part of the decade stock prices and land values tripled between 1985 and 1989 at the height of the bubble the tse accounted for 60 of global stock market capitalization the bubble burst in 1990 and the value of the nikkei index fell by one third that year in oct 2008 the nikkei traded below 7 000 this was a decline of more than 80 from its dec 1989 high it subsequently rebounded between june 2012 and june 2015 with the help of economic stimulus from the japanese government and the bank of japan but the index was still nearly 50 below the 1989 high topix vs nikkeithe tokyo price index frequently referred to as topix is another widely followed index on the tokyo stock exchange while the nikkei is an index of 225 selected stocks from the tse the topix is an index that includes all the stocks in the tse the nikkei is price weighted which means the index is an average of the share prices of all the companies listed because each company s stock is weighted by its price per share the nikkei tends to be influenced by high priced stocks such as technology stocks topix on the other hand uses the capitalization weighted method for all the stocks in the tse s first section topix is affected by stocks with large market valuations such as financials special considerationsit is not possible to directly purchase an index but there are several exchange traded funds etfs whose components correlate to the nikkei etfs that track the nikkei and trade on the tokyo stock exchange include blackrock s ishares nikkei 225 and nomura asset management nikkei 225 exchange traded fund the maxis nikkei 225 index etf is a dollar denominated fund that trades on the new york stock exchange | |
what is a ninja loan | a ninja loan is a slang term for a loan extended to a borrower with little or no attempt by the lender to verify the applicant s ability to repay it stands for no income no job and no assets whereas most lenders require loan applicants to provide evidence of a stable stream of income or sufficient collateral a ninja loan ignores that verification process 1ninja loans were more common prior to the 2008 financial crisis in the aftermath of the crisis the u s government issued new regulations to improve standard lending practices across the credit market which included tightening the requirements for granting loans 2 at this point ninja loans are rare if not extinct | |
how a ninja loan works | financial institutions that offered ninja loans base their decision on a borrower s credit score with no verification of income or assets such as through income tax returns pay stubs or bank and brokerage statements borrowers must have a credit score over a certain threshold to qualify since ninja loans are generally provided through subprime lenders however their credit score requirements may be lower than those of mainstream lenders such as major banks ninja loans are structured with varying terms some may offer an attractively low initial interest rate that increases over time borrowers are required to repay the debt according to a scheduled time frame failing to make those payments can cause the lender to take legal action to collect the debt resulting in a drop in the borrower s credit score and ability to obtain other loans in the future risks of ninja loansbecause ninja loans require so little paperwork compared to for example traditional home mortgages or business loans an application is processed quickly their speedy delivery makes them appealing to some borrowers particularly those who lack the customary documentation or don t wish to produce it the loans can however be very risky for the lender because ninja loans require no evidence of collateral they are not secured by any assets that a lender could seize if the borrower defaults on the loan ninja loans are also risky for the borrower unfettered as they are by the traditionally conservative bank underwriting practices that often keep both sides out of trouble borrowers may be encouraged to take out larger loans than they can reasonably expect to repay particularly if they focus on a low introductory interest rate that will rise in the future ninja loans can be extremely risky for borrowers and lenders alike ninja loans and the financial crisisafter a high level of loan defaults helped trigger the 2008 financial crisis and a crash in real estate values in many parts of the country the government imposed stricter rules on lenders making loans more highly regulated than before with mortgage loans seeing the greatest impact 2the 2010 dodd frank wall street reform and consumer protection act created new standards for lending and loan applications the new rules largely did away with ninja loans requiring lenders to obtain more comprehensive information about prospective borrowers including their credit scores and documented evidence of their employment and other income sources the proliferation of ninja loans was a contributing factor in the 2007 2008 financial crisis and housing bubble one research paper estimated that such loans accounted for 100 billion or 20 of total losses tallied during the crisis 3 | |
are ninja loans still available | ninja loans have largely ceased to exist in the united states due to tighter lending standards put in place after the 2008 financial crisis | |
why did banks offer ninja loans | prior to the financial crisis banks became greedy in profiting from writing home loans ninja loans were originally designed for borrowers who had difficulty producing the necessary paperwork to verify their income and assets such as prior tax returns because they derived their income from untraditional sources where such documentation is unavailable e g tips or a personal business lenders often extended these loans to borrowers based purely on their credit scores without any further documentation of the individual s ability to make payments | |
what are other terms for ninja loans | ninja loans no income no job no assets are a category of low no documentation low no doc loan also known as liar loans the bottom linepopular in the early to mid 2000s ninja loans which required no proof of employment income or assets were partly responsible for the housing bubble and subsequent collapse coinciding with the 2007 2008 financial crisis and the ensuing great recession since that time new regulations have largely stamped out this practice | |
what is the nixon shock | the nixon shock refers to the aftereffect of a set of economic policies announced by president richard m nixon in 1971 most notably the policies eventually led to the collapse of the bretton woods system of fixed exchange rates that took effect after world war ii understanding the nixon shockthe nixon shock followed president nixon s televised new economic policy address to the nation on august 15 1971 the crux of the speech was that the u s would turn its attention to domestic issues in the post vietnam war era nixon outlined three main goals 12nixon cited tax cuts and a 90 day hold on prices and wages as the best options for boosting the job market and tamping down inflation as for speculative behavior toward the u s dollar usd nixon supported suspending the dollar s convertibility into gold in addition nixon proposed an additional 10 tax on all imports that were subject to duties similar to the strategy of suspending dollar convertibility the levy was intended to encourage the u s primary trading partners to raise the value of their currencies 1the bretton woods system was developed during an international conference held at bretton woods new hampshire in 1944 it involved the external values of foreign currencies fixed to the u s dollar these values were expressed in gold at a price determined by congress in 1958 foreign currencies became convertible into gold 3however a global dollar surplus imperiled the system in the 1960s at the time the u s did not have enough gold to cover the volume of dollars circulating throughout the world that led to an overvaluation of the dollar 4the government attempted to shore up the dollar as well as the bretton woods system with the kennedy and johnson administrations trying to deter foreign investment limit foreign lending and reform international monetary policy however their efforts were largely unsuccessful 4anxiety eventually crept into the foreign exchange market with traders abroad fearful of an eventual dollar devaluation as a result they began selling usd in greater amounts and more frequently after several runs on the dollar nixon sought a new economic course for the country nixon s speech was not received as well internationally as it was in the u s many in the international community interpreted nixon s plan as a unilateral act in response the group of ten g 10 industrialized democracies decided on new exchange rates that centered on a devalued dollar in what became known as the smithsonian agreement that plan went into effect in december 1971 but it proved unsuccessful beginning in february 1973 speculative market pressure caused the usd to devalue and led to a series of exchange parities amid still heavy pressure on the dollar in march of that year the g 10 implemented a strategy that called for six european members to tie their currencies together and jointly float them against the dollar that decision essentially brought an end to the fixed exchange rate system established by the bretton woods agreement 4the bretton woods agreement created two major institutions that have stood the test of time the international monetary fund and the world bank aftereffects of nixon shockinitially nixon s economic policies were widely praised as a political success today however their long term benefits are a matter of scholarly debate first the policies were the primary catalyst for the stagflation of the 1970s they also led to the instability of floating currencies as the u s dollar sank by a third during the 1970s over the past 40 years the u s dollar has been anything but stable with several periods of severe volatility from 1985 to 1995 for example the u s dollar value index lost as much as 34 after quickly recovering it fell sharply again from 2002 to mid 2011 5nixon also promised that his move would prevent costly recessions over the past few decades however the u s has suffered severe recessions including the great recession of december 2007 to june 2009 advantages and disadvantagesthe nixon administration s 1971 economic policy actions have provided advantages as well as disadvantages today we live in a world of mostly free floating market traded currencies this system has its benefits especially when facilitating radical monetary policy actions such as quantitative easing qe central banks have a greater degree of control over their nations money and the management of variables such as interest rates overall money supply and velocity on the other hand nixon s move also created uncertainties and led to a massive financial market based on hedging the risks created by currency uncertainty the financial crisis of 2007 2008 in particular proved that central bank control is no guaranteed defense against severe recessions many decades after the nixon shock economists are still debating the merits of this remarkable policy shift and its eventual ramifications government backed money is generally more stable than commodity based currencycentral banks have more flexibility to protect their economies from severe busts of the business cycleactions to protect gold reserves that triggered economic volatility are no longer necessaryled to stagflation of the 1970ssevere recessions and u s dollar volatility still occur under the watch of central banksgold provided a self regulating effect on the economy and currency while the nixon shock empowered the government to manipulate variables | |
what was the gold standard and how did it work | the gold standard is a monetary system in which the value of a country s currency is based on a fixed quantity of gold in practice central banks made sure that domestic currency paper money was easily convertible into gold at a specific fixed price gold coins also circulated as domestic currency alongside other metal coins and notes | |
when and why did nixon end the gold standard | president richard nixon closed the gold window in 1971 in order to address the country s inflation problem and to discourage foreign governments from redeeming more and more dollars for gold | |
what is fiat money | fiat money is government issued money that isn t backed by a physical commodity such as gold or silver instead it is backed by the government that issued it | |
what would happen if we returned to the gold standard | some economists argue that if we returned to the gold standard prices would actually destabilize leading to episodes of severe deflation and inflation moreover in the event of a financial crisis the government would have little flexibility to either avert or limit the potential damage the bottom linenixon shock refers to the aftermath of president richard nixon s august 1971 announcement of major economic policy changes that his administration intended to implement to improve the country s balance of payments prevent inflation and lower unemployment economists still argue about the merits of the actions taken as well as their ill effects | |
what is a no documentation no doc mortgage | a no documentation no doc mortgage is a loan to buy property that doesn t require income verification from the borrower this type of loan now virtually illegal is instead approved on a declaration that confirms the borrower can afford the loan payments no doc mortgages were commonly given to those whose incomes aren t easily verified so they are higher risk borrowers largely unregulated these loans were mainly based on the resale potential of the secured property and the repayment structure of the mortgage learn more about how no doc mortgages work and about the lending standards today |
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