The Basics of Momentum Investing

The Basics of Momentum Investing

Introduction:

Momentum investing is a sharp contrast to typical long-term investing. Specifically, it focuses on short-term volatility, timing peaks and valleys of the security, and relevant market sentiment to generate returns. This type of investing is done with an eye on volatility and far less on underlying fundamentals, long-term trends, dividends, or balance sheet considerations. Here we will go over the basics of momentum investing.

Trading Fees:

Every time someone buys or sells on the market, two variables inevitably increase cost and decrease returns: trading fees and bid-ask spread. Trading fees are specified by the broker that executes a trade and must be taken into consideration when trading securities on momentum. Some brokers reduce or eliminate fees when certain trading or account specifications are met. Those types of discounts can work wonders for overall return from momentum investing since even small fees add up quick when trading momentum.

Bid-Ask Spread:

Bid-ask spreads are another facet of life and, unlike fees, cannot be negotiated. Bid-ask spreads are very narrow for popular and large-volume securities like mega-cap stocks or trusted currencies like the US dollar and the Euro. Obscure securities like nano-cap stocks or currencies issued by financial unstable countries have a much larger bid-ask spread.

Momentum vs. Fees and Spreads:

When trading momentum, an investor has to make a decision based on the following fact: volatility is a friend, and smaller securities can offer incredible volatility and potential for great returns. Is the larger bid-ask spread worth the volatility? Could I generate large enough returns consistently enough to overcome the substantially higher cost basis that comes with large spread? If not, momentum trading should be done extremely cautiously, if at all.

Greed and Fear:

A momentum investor has to be tuned into timing the scope of greed or fear that other large traders have regarding his security of interest. Market psychology is hardly rational in the short term in the sense that price doesn’t always reflect value; hence “overvalued” and “undervalued” parlance among traders. As such, entry and exit points can be anticipated with some success using technical indicators that, to some extent, quantify greed and fear relative to past price, volume, volatility, and other data. Executing trades quickly is critical when trading from the volatility generated by greed or fear.

Summary:

Momentum trading is a strong contrast to the slow-and-steady-wins-the-race approach. It is based on identifying entry and exit points indicated by past experience, technical indicators, and some degree of intuition about market psychology. Though volatility is sometimes perceived to be risky, a momentum investor can only make profits from volatile securities. Otherwise, trading fees and bid-ask spread eat up too much of the profit margin and increase losses past the point of compensating for the risk and expertise it takes to trade on momentum.

 

Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

Why You Should Invest in the Stock Market

Why You Should Invest in the Stock Market

 

A lot of people fear the stock market even though historically it has performed well. In fact, it has always its upward trend. In other words, every bull market was stronger than the bear market or “recession” it had previously experienced. Why are people so hesitant to invest and grow their money? There are really stable investment vehicles that the stock market provides like Roth IRAs and 401k. Overall, people just have to learn to ride the market. In this article, I’m going to be breaking down the top reasons why it’s smart to invest in the stock market. Let’s get started.

1. History:

Like I said earlier, the Dow and S&P 500 have historically been on an uptrend rather than a downtrend. This is due to the fact that every time there has been a recession in the economy, it has been followed by a strong and more powerful growth and expansion period. If all signs are pointing to a recession and a downtrend, just take the money out of your stocks and invest into something that will hold its value like gold or real estate. At the end of the recession, this is the best time to buy as stock prices are at their lowest. All in all, you should get to know the basics of investing before you invest at all. Focus on investing in quality picks that are experiencing growth and that you know the pattern of.

2. Retirement:

Retirement is probably one of the best reasons to invest in the stock market. Unless you operate a very profitable business or some other asset that will give you consistent cash flow when you retire, it’s probably a good idea to invest in the stock market. Like they say, the sooner the better. The sooner you invest, the more time you give your money to compound. The more times your money compounds and the more you add to it throughout the years, the more you will have when retirement comes. Make it a goal to invest a certain amount of money every month into your portfolio. Even if it’s only $100 invested every month, it will make a big difference in the long run. Also, take advantage of retirement accounts like 401ks and Roth IRAs. For a 401k, your employer will match your contributions. As for a Roth IRA, it grows tax-free every single year.

3. Returns:

The returns that the stock market has to offer are pretty great. Is it a “get-rich-quick” or “Bitcoin” type of investment that is going to show massive returns over the next few years? Probably not. The only ones who truly make large sums of money are those guys on Wall Street in hedge funds. However, you can make a great deal of money the larger your portfolio is. Like they say, it takes money to make money. 10% earned on 2,000,000 is a heck of a lot more than 10% earned on 20,000. Work ever month to consistently grow your portfolio so that the returns you see are much greater.
Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

5 Excellent Ways To Find Qualified Candidates For Your Business

5 Excellent Ways To Find Qualified Candidates For Your Business

Finding local qualified experts for a job opening in your company can be challenging at times. You need to check relevant sources to find the best candidates for the available positions. Here are effective ways to locate employable applicants in your search.

Job websites:

There are many popular job websites to visit in your candidate search. Monster, Indeed, Craig’s List, and others host hundreds of prospective employees. You can browse resumes and read bios for ideas about suitable candidates. Then contact those you would like to interview.

Social media:

Increasingly, businesses are turning to social media for their recruiting needs. Linked In is a business professional networking website where you can find employed and unemployed professionals to contact about your employment opportunities. In addition, you can use Twitter to tweet to company followers about upcoming job openings so they can alert friends who may be eligible to apply. Facebook is still widely used as a way to promote your business and attract new applicants. Of course, your website can post a job opening with application guidelines. Employees may also be urged to inform friends and social media connections of the job opening or requirements.

Target publications:

Industry-specific publications often provide ad space for job openings, sometimes at low fees. Some are free, depending on the size and type of ad you want to place. Check out publications that target the population from which you want to recruit. For example, there are publications devoted to diversity and others geared toward industry news in general. Further, you can post an ad in the local Chamber of Commerce newsletter or other community publications.

University placement office:

College or university placement offices are ideal locations for posting a job advertisement. New or soon-to-be graduates typically work with placement officials to find jobs suited to their credentials. Graduates post their academic and job-related portfolios with the placement office, which can then be made available to interested employers.

Job fairs:

Also called career fairs, regional events draw hundreds or thousands of local people looking for job information. Reserving a booth or table at these events will expose your job search needs to those who are looking for certain types of work. Taking applications to hand out is recommended. Job fairs are sponsored by universities, chambers of commerce, or other local groups who support the area economy and want to help connect job seekers to relevant positions.

Cast a wide net to resources like these for the best catch of prospective employees. Prepare a job description to inform applicants of company expectations, and have a clear idea of the credentials needed and duties to be assigned. The more succinct this information is, the easier it will be to share with interested job seekers. If you don’t find applicable prospects the first time you visit a website or post on social media, don’t give up. Keep trying until you find the employees your company needs.

Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

How to Become a Genius Entrepreneur

How to Become a Genius Entrepreneur

Knowing how to manage your finances, as well as understanding how to maintain your wealth is the key to becoming a genius entrepreneur. As you search for ways to move forward in your new business, be sure to make it a point to better yourself as a business owner as well. The best entrepreneurs are always evolving along with their companies.

Growing as an Entrepreneur

Keeping your fledgling company alive is no easy task. As passionate as most entrepreneurs are, their passion alone isn’t what will sustain their company. Relying on the wisdom of entrepreneurs that have come before you is a great way to expand your prowess as a business owner. Read on to find out how to become a smarter entrepreneur.

1. Work with a Vision

There’s more to running a company than simply starting a business based on a great idea. The vision that you have for your business will take you from a fledgling startup to company with intense focus and drive. Your vision will specify your company’s goals, as well as your personal goals within the company. In order to ensure your company stays on track, it is a good idea to review your vision every so often and update it as needed.

2. Become More Business Minded

Not all entrepreneurs begin their companies with a background in business. If this is the case for you, you’ll want to make a significant effort to work on thinking more like a businessperson. That means handling your finances responsibly, making a proper business plan, understanding how to bring in and keep new clients, etc.

3. Prepare for Difficulty

The worse thing an entrepreneur can do is to fail to plan for hard times. In life, nothing is promised, except uncertainty. In your business, as in life, there will be times when you experience financial stagnation or even loss. The best strategies for preparing your business for hard times is to develop a plan for the rough times, as well as a way to save money to have a financial cushion.

4. Stay on top of Your Debt

The only debt that your business should care is the kind that will improve your company. Try to avoid overspending on services and products that you can’t afford. As you do spend, be sure to pay off your debts in a timely manner.

A successful business isn’t built overnight. Every genius entrepreneur started off with just a dream and the desire to see it succeed. With the right know-how, careful financial management, and planning, your business will take off.

Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.

5 Great Industries to Start a Business in Today

5 Great Industries to Start a Business in Today

Numbers Don’t Lie

The decision to launch a start-up in any field is never an easy one, especially when confronted with all the complications of modern technology. However, one proven way to narrow your focus down to businesses that are most likely to succeed is to use a reliable data source like the U.S. Bureau of Labor Statistics (BLS). By studying their data, you can then make a sound judgement about what start-ups will follow future societal trends.

5 Potential Winners

Based on criteria related to BLS facts and figures, the following five areas of industry have real potential to be great business start-ups in the coming years.

1. Healthcare: The healthcare industry is long overdue for major changes in the coming years, mostly due to the uncertain status of Obamacare, and the staggering cost increases for all forms of care. Some of the often neglected areas of healthcare, like serving Medicaid and mentally disabled patients have gotten the keen interest of entrepreneurs and investors alike. They see the abundant opportunities for a start-up to provide quality care to an ever growing section of the populace.

One of the fastest areas of growth in the healthcare industry is in the elderly services field. Contrary to what some policy analysts predict about the future solvency of Medicaid/Medicare, these venerable programs aren’t going away anytime soon, and in fact, will probably be fully funded to appease the politically powerful and growing number of older Americans.

2. Marijuana: The recent Department of Justice decision to overturn Obama-era policy that encouraged the spread of legal marijuana has not dampened the enthusiasm of anyone close to the industry. They know that the marijuana issue draws solid bipartisan support, especially in the 8 states that have fully legalized it’s recreational use. Even though it remains illegal at the federal level, it is unlikely the DOJ will get tangled up in a “states-rights” battle over marijuana.

All this official overreaction actually makes marijuana a good choice for a future start-up. The industry is rapidly moving away from traditional forms of injestion like smoking, and is looking into other less offensive methods such as vaping and chewing gum. Once the drug is de-stigmatized, it can then be marketed as a “wellness product”, with the potential to treat everything from anxiety to libido problems. When you couple this re-branding with a growing acceptance across all ages and income groups, marijuana’s future has never looked brighter.

3. E-commerce: In order to effectively compete against an ever expanding field of businesses, all e-commerce start-ups will have to strive for perfection in all aspects of the customer’s shopping experience. There are several cutting-edge ways to achieve this, including the creation of a virtual in-store experience, and using drones for faster delivery, but if your goal is to stay ahead of the competition, applying Artificial Intelligence (AI) is the way to go. A properly set-up AI system will streamline and optimize the whole sales process from start to finish, quickly and accurately.

4. Information Technology: Of the five start-up possibilities listed here, Information Technology (IT) is effected the most by technological advances. Developing cyber-security systems that can keep pace with these rapidly advancing technologies is one of the hottest trends in IT. All it takes is one massive data breach to compromise even the best protected business. Another area experiencing huge growth is the emergence of a mobile workplace using smartphones and tablets for business interactions. Opportunities abound when you can reach any business associate anywhere around the globe in a matter of seconds. The only caveat to this rosy picture is the distinct possibility the detailed programming and analysis required in this industry will be better performed by automated AI in the future, rather than by humans.

5. Personal Care Services: With Gross Domestic Product (GDP) rates predicted to remain steady at about 2% into the next decade [https://federalreserve.gov/monetarypolicy/], the number of people able to afford personal care services such as wellness therapy and fitness training is expected to increase significantly. The specific area that offers the most potential for a start-up is providing in-home health and personal care to elderly and disabled people. Being able to stay independent and healthy in your own home is a powerful motivator to spend whatever it takes.

The best thing about this field of industry is the Small Business Administration is more apt to approve financing loans for start-ups. The low default rate statistics on these loans is a strong indication of start-up success.

A Solid Foundation

While it may be tempting to try to launch a business based on a completely new and original concept, most successful start-ups began as improvements on existing practices or equipment. Once you find your niche within a trending occupation, and this choice is backed by extensive data analysis, you’ll have a rock-solid foundation for your start-up!

Edward Schinik is the CEO of Yorkville Advisors

Is This The End For Cubicles?

Is This The End For Cubicles?

Cubicles have served as a place of work since approximately 1967. They were thought of as a revolutionary idea of sorts at the time, but that has changed rapidly. Still, even as recently as four years ago some sixty percent of Americans still worked in cubicles. Is it time to re-think this way of getting work done? Some are saying it is a little overdue at this point.

Grey Prisons

Work can feel like prison to some people. Those who do not like their job but continue to work there for the paycheck can feel particularly oppressed by the cubicle. It is ironic in a way since these were originally set up as a way to give employees a sense of having their own little space that they could individualize. Instead, cubicles became very uniform and almost feel as individual as the orange jumpsuits are in prisons.

Oxford Studies Back Up People’s Feelings

It is not as though there is just a vocal minority out there who are complaining about cubicles. The reality is, there are a lot of people who feel truly oppressed by the setup at their place of business. They want their employers to at least some alternative forms of putting people into the same workplace.

A lot of people feel that they are being crammed into a workplace like pigs to the slaughter. Millennials in particular have found this kind of workspace uninviting and unappealing. Many of them would rather telecommute to work than deal with this. That is why an increasing portion of the workforce is doing just that.

No Substitute For Activity

You could switch out cubicles for offices or even open office floor plans and still have some of the same problems that you have with cubicles. You see, the problem is not so much the cubicles themselves, but the isolating feeling that any office can bring about.

Many offices do not have enough in the way of physical activity for their employees. Human beings are not designed to sit in one place for eight or more hours a day doing very little. We are much more dynamic creatures than that. We need a place where we can get up and move around from time to time.

Make Movement A Priority

We could all stand to get up and move around at least a little in our daily lives. We could certainly feel better about ourselves and our lives if we just had the opportunity to stretch our legs a little and get active. This is why many more workplaces are trying to push towards this direction.

Wellness programs at work are a big thing now. They are a great recruitment tool. They also serve the purpose of boosting morale and lowering healthcare costs.

It is high time that we re-think the way that the office is laid out. It probably is time to retire the cubicle farms of yesterday. At the same time, we probably should phase out some of other layouts that we have tried as well that do not favor activity.

Edward Schinik is the CEO of Yorkville Advisors

3 Tips for Building a Feedback-Friends Company Culture

3 Tips for Building a Feedback-Friends Company Culture

Workplace culture is becoming more important than ever, with the advent of the internet and an increasing number of remote positions and opportunities available around the world. Whether you are managing a company or if you own your own business, knowing how to build a feedback-friendly company culture is a way to boost the morale of employees while allowing you to maximize productivity and input at all times.

Set the Tone When Sharing and Accepting Feedback

In order to create a company culture that is truly inviting and welcoming of feedback, it is important to set the tone regarding feedback from the company leader or manager. As the boss of others, you hold the responsibility of sharing the importance of giving and receiving feedback while also showing employees how it is best to react to any form of criticism. Allowing feedback, input, and criticism helps to put employees at ease if they are thinking of sharing their own opinion or providing insight regarding any task or manner at hand in the office.

Regular Feedback is Essential

Offering up feedback on a regular and consistent basis is extremely important when you want to cultivate a feedback-friendly company culture in the workplace. While it is important to provide feedback to employees, it is equally as important to listen to feedback and to encourage it from others as well.

Encouraging your employees to share feedback and their thoughts on any issues or problems they encounter each day is an ideal way to maintain proper communication with all staff and teams. When you are open to feedback and show positive responses to it, other employees and those working with you are likely to feel encouraged and welcome to provide their own input and thoughts on the matter. Negative reactions to input and criticism can keep employees from truly voicing their opinions or adding any value to conversations.

Team-Building Exercises and Workshops

When you host weekly meetings or gatherings, consider implementing both team-building exercises as well as workshops to help those who work for you to become more familiar and comfortable with sharing feedback and their own opinions. Praising employees and staff for contributions and feedback is optimal when developing your own feedback-friendly work culture environment.

Workshops such as worksheets and team-building exercises help your employees to feel more comfortable and at ease when communicating with other co-workers while providing them with a voice of their own in your company. When employees feel as if they have a real say in the future direction of a company, they are much more likely to retain a sense of pride when working and moving forward with their tasks each day.

Allowing your workplace to have a feedback-friendly atmosphere is extremely welcoming for employees who prefer feeling comfortable while having a voice in the workplace. The more actively involved you become when sharing and listening to feedback, the easier it is to maintain a sense of comfort and security from other employees who are interested in sharing their ideas, critiques, and opinions.

Edward Schinik is the CEO of Yorkville Advisors