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A warrant is a specialized investment tool with its own language; call warrants, in-the-money warrants (a warrant with an exercise price which is below the market price of its underlying security), gearing and premiums are among the terms used. It’s important to understand the main aspects of this vehicle before including it in your portfolio.

A warrant is a derivative, meaning it ‘derives’ its value from its underlying share. This is why the performance of a warrant will always depend on the performance of its underlying share.

A small movement in the price of the mother share can result in a surge or fall in the value of your warrant. Thus, expect this to happen and choose strategies that leverage and profit from this behavior.

Unlike a share, warrants carry an expiry date. The warrant tends to lose its value when it’s close to expiring. Once it expires, it has no value and you lose the capital invested to buy the warrant. Buying and holding, as you would a share, is why 90% of warrant traders lose their capital.

If the underlying share price is above the warrant strike price (the predetermined price that the warrant holder is entitled to purchase or sell in the case of put warrant the underlying security), your call warrant is said to be in-the-money and you can exercise your right to buy the mother share at the strike (lower) price to sell at the market (higher) price.

There are costs involved when buying warrants – transaction costs and the time lag before you receive the underlying share after exercising the warrant. There’re also occasions when a warrant trades at a discount. This incurs when the strike price and the cost to obtain the warrant are less than the price of the underlying share. Even tough this may look like an opportunity to make arbitrage profit, however, the risk of the underlying share price falling during the period between receiving the shares from exercising the warrant and their sale.

The whole process can take up to a month, during which the mother share can move in any direction. Warrants can also trade at a discount if the underlying share has just enjoyed spectacular run in price. Investors should avoid buying these discount warrants if they feel the high price of the mother share is unsustainable.

Warrants are the domain of short run traders. Some analysts recommend a particular trading strategy known as cash extraction. This strategy can be executed if you’re holding a particular share that has appreciated in value. By selling the share and investing some of the Read more…

Investing in a stock is like buying a business. Unfortunately, most investors either don’t understand this principal or are merely looking for quick and easy money. In appraising businesses, there are three main approaches; market, asset and income.

Income Approach

The basic principal for this method is that it uses historical market data. The general theory is that if one can find sufficiently similar companies that have been sold in arm’s length transactions, then those transactions may form a basis for an indication of value for the interest being valued.

The common methods are price-earnings-ratio (PER) and price-to-book ratio (PB). Analysts normally compare these ratios with the industry or its historical figures.

PER = Market price ? Earnings per share (EPS)

If Company M’s PER is ten times against the industry’s fifteen times, Company M is undervalued.

PB = Market price ? Book value per share

If Company M’s PB is 1.5 times against the industry’s 2.0 times, Company M is lowly valued compared to the industry. Generally, if a company’s PB is lower than 1 time, it indicates that the market price is lower than the owner’s cost.

Asset Approach

This approach is called adjusted book value, net asset value or asset accumulation. The book value of the assets and liabilities are adjusted to reflect its fair market value. The asset values are totaled and the total of the liabilities is subtracted to derive the total value of the company. The most common is the revised net asset value (RNAV) where analyst adjusts all its assets and liabilities to market value.

RNAV per share = (Revised assets market value – Revised liabilities value) ? number of shares

Company M is a holding company. Its subsidiary, Company N is also listed on the exchange. The RNAV will use the market value instead of the book value of Company N to determine the overall revised market value of Company M’s assets. The figure will provide a more reflective value for Company M as compared to its historical book value.

Income Approach

The income approach is the most appropriate method for valuing an ongoing company. An investment in any asset is Read more…

Don’t waste your time and energy worrying about the big ones that got away,
invest these two precious commodities to find tomorrow’s winners.

If you are hunting for individual stocks or sectors, begin with an assessment
of what people are going to need more of in coming years and try to find those
companies that are leaders or trying to become leaders in those fields.

Some investors do not wish to mess with their portfolios and just wish to try a
small short-term bet on something and that is perfectly okay (and probably prudent).
The important thing is to distinguish between short-term speculations and long-term
investments, because your objectives with the two will probably be different.

Your long-term investments could probably endure a 20% drop in value if you are
holding them for 10 years or longer. A short-term speculative play with a loss of
10% might be too much of a loss because the idea of these plays is to get in and
out very quickly. And if you take hits of 30-40% it won’t be long before your
speculative capital is gone.

Now is the time to think about the next big market plunge because sooner or later
we know it has to hit. Some of the big name growth stocks may seem too high today,
but if they begin to head lower for whatever reason you should begin to consider
at what price level you might wish to enter them and Read more…

Although the junior mining sector began crumbling in May, savvy investor Mike Halvorson, president of Halcorp Capital, still ended up having a very busy summer. Welcome to the world of a substantial investor in mining stocks, who gets in early and then enjoys sizeable profits as, one by one, his companies become takeover targets. ?I?ve been fortunate,? the humble Halvorson told us, ?I?ve gotten associated with top explorationists, the people who do know a quality project.? And because they have credibility, quality projects come to those geologists. Halvorson claims his wealth-building strategy comes from investing in the projects of these credible geologists.

On May 3rd, Glamis Gold acquired Western Silver. ?I recognized the project and the main geologist behind it, Tom Patton,? Halvorson explained. ?I was a director of Western Silver. I didn?t stay associated for the whole run, but I was there for the best part of it.? August has been his busiest month. As a director of NovaGold, Barrick Gold recently announced a hostile takeover of this company, and which is now being disputed. In mid August, Yamana Gold made a bid to take over the shares of Viceroy Exploration, which has proven and probable gold reserves in excess of seven million ounces in Argentina.

So how does someone emulate Mike Halvorson?s success in picking major winners in the mining sector? ?The average investor is going to have a tough time,? he commiserated during our phone conversation. ?If I were an average investor, I would rely on some sort of advisory service, or two or three, to help me pick my stocks.? We both agreed some of the uranium projects weren?t going to make it. ?So many of these uranium projects will never see a shovel to the ground, they will never see anything close to production,? he cautioned.

But many advisory services look out for themselves first, then their subscribers, maybe if at all. He advised us to avoid the self-serving ones. ?I have a long record with a couple of guys that are honest and have good abilities,? Halvorson said. He subscribes to Bob Bishop?s Gold Mining Stock Report. ?I like Bob,? Halvorson told us. ?He covers people. He knows a lot of individuals in the industry. One of the gifts, a guy like Bishop has, is he doesn?t try to fit the same model over every company, like a lot of analysts do. He just tries to figure out whether the stock is going up. What makes Bob Bishop better at picking stocks than most of the guys is that he doesn?t walk around with a model. He walks around with instincts and the ability to judge the people involved. He has a great network to check facts out with.?

?I guess for the average person, if they don?t rely on an advisory service, they should go to the (resource) conferences,? Halvorson recommended. Such conferences occur throughout the year. One resource conference takes place this week in Las Vegas. Another popular resource show will be held later in September in Toronto.

Valuing Uranium Mining Stocks

?The (uranium) companies are so new,? Halvorson said. ?Some of them aren?t really that acquainted with their own assets, let alone the assets of other companies. It?s not like the oil and gas business where you?ve got ? in western Canada, there are a dozen or fifteen blue-chip engineering firms that provide reserve and reservoir evaluations. If you see one of those engineering reports, you can really put a market value on those assets.?

Not so in the uranium business. With uranium assets, Halvorson explained, ?A lot it is historical work, some of them are National Instrument 43-101 and some aren?t.? But he warned that despite the regulatory insistence that companies file independent geological documents confirming their resources, ?You have to be careful if you run out and buy some 43-101 resources.? He added, ?I?m not sure that one would solely base investment decisions on them.?

For example, he described how it might be possible that a company could only solution mine (ISR uranium recovery) the resource. What happens if after doing the tests, the company discovers solution mining won?t work? ?That is something that will concern me,? he told us. ?I think there are an awful lot of projects out there that are being called ?good projects? by companies that have them. And I don?t think these people have a clue as to what is required for solution mining.?

If so, then what should investors be looking for in uranium mining stocks? ?At this stage, I would try to look at undervalued companies because that?s the least risk,? Halvorson advised. ?I don?t think I would look at the market leaders, per se. Companies like Cameco and Denison are awfully pricey. International Uranium is pricey in my opinion.? So where would Halvorson look today? ?I would look at the undervalued ones, the ones that have projects, but for some reason maybe not as much traction in the market,? he suggested. ?I think ultimately the market will recognize those values or they?ll get taken over at premiums.?

Two of Halvorson?s favorites came from his network. ?I originally got involved in Strathmore Minerals because I knew they had some good properties and some very good consultants and contacts in the business,? he explained. ?And, they have David Miller, who really knows the business inside out. Talking to him, I got comfortable with those U.S. assets. So, I literally backed the truck up and bought lots of stock.? Halvorson subsequently became a director of Strathmore Minerals.

Another Halvorson favors is Kilgore Minerals. ?With Kilgore, it is because Norm Burmeister had such a good track record with Silver Standard and Bull Run,? Halvorson said. ?Norm is the kind of guy who has a great appreciation for an economic play. I got involved with Kilgore fairly early on and was semi-responsible for the stock moving out of the 30 – 50 cent range. Norm has a huge gold property. We both laughed about Kilgore?s major downside, and he added, ?There?s a company that if it was aggressively promoted, would probably be trading at maybe three times where it?s at. Their gold property is probably worth what Read more…

Today there are several methods of investing available to every customer. Investing in stocks is just one of them. Stocks give you an ownership interest in the company which is issuing or selling the stocks. Stocks are also known as equities. There is no fixed or objective value to a stock. A stock is only of as much value as the person holding it perceives it to be. While investing in stocks is a very lucrative, there is also a lot of risk involved in investing in stocks. With the advent of technology, it has become all the more easier to buy stocks online, and you don?t even need to be an expert to know how to buy stocks online. Buying stocks online is relatively easy once you have researched well the stocks you are interested.

The basic steps to accomplish this process are as follows:

1) Educate yourself by researching fully about the stocks you are interested in before purchasing them. Information about stocks can be found on the Internet on several websites.

2) You might want to hire an online broker who will help you determine which stocks to buy. It is often a good idea to let a broker buy the stocks for you based on what your requirements are. Many broker firms will request you to fill up an application first. Such forms are also available online itself. However, an online brokerage account is convenient Read more…

Are you always looking for that rock solid, amazing profitable investment to provide financial security for you and your familys future?

If you have just answered yes, then read this article and you will be amazed by this once in a lifetime opportunity to invest in unbelievably cheap property in the last affordable country in Europe left outside of the European Union.

Bulgaria is the last gem in the European crown and is at this moment the last affordable country in Europe for purchasing amazingly cheap Bulgarian properties.The Bulgarian property market has shown signs of up to 200% growth in the last five years powered by the increasing confidence in the country?s future prospects. The Bulgarian stock market has also tripled over the past two years in anticipation of its EU membership in January 2007.

A recent overseas property investment programme followed English investors in Bulgaria, the programme mainly centred on a gentleman who bought propertys for ?5,000, spent an average of ?10,000 renovating and sold on all his propertys for an average of ?25,000 profit in less than six months. He bought his first property on a credit card and now has sold five additional properties with ?125,000 profit in less than one year.

?5,000 gets you a medium sized house which could provide a home for a family of four with an average of 500 square meters of land attached. This price is usually reflected in the requirement for some renovation work but for a shrewd investor, these properties can be renovated to an excellent standard by the ever cheap bulgarian building labour force readily available throughout the country for the price of a brand new small car.

Like all countrys and property investment, prices are influenced by their location, so the closer to the Bulgarian Black Sea costal area where most Europeans and Bulgarians flock to in their thousands for a holiday destination, you will have to pay more for a similar property than you would find potentially further inland.

I myself, have recently returned from a property investment vacation to Bulgaria where i purchased an off plan, two bedroom sea view apartment with sea facing balcony and fully fitted kitchen and bathroom of my own choice for an amazing price of ?19,000. I think you will agree that ?19,000 for a brand new two bedroom apartment less then five minutes walk from the beach and facing towards the black sea coast is not something you come across everyday in your life. The location of this property is what almost guarantees me a potential 500% plus profit margin in less than five years.

As an investment opportunity, there were many factors which made me decide that an apartment purchase was for me which was based on the following:

Buying off plan from a professional construction company offers you the security you may not get with purchasing a house which needs renovation work.

I dont have to deal with the language barriers in finding and arranging a trustworthy, reputable builder for renovation work. I dont have to arrange surveyors or deal with planning control restrictions,remembering that i do not live in Bulgaria or even speak their language which can prove to be a headache.

An off plan investment offers you also a three stage payment scheme, so even if you dont have all the funds available at this time, as long as you can make the first payment of ?6,500 in the first two months, then this offers you another average time scale of about an additional four months before the next 30% is due to be paid.

Solicitors Setting up fees are low as you do not have to set up a limited company to own the land like you would if you were to purchase a house under current Bulgarian law, this can cost any where between ?600 – ?800.

A brand new build apartment offers the rental oppurtunity of 12% rental yield return a year for the owner. If i keep my property for just over eight years then the apartment pays for itself leaving me with a very large nest egg for my future of a predicted ?100,000.

Bulgaria is due to join the EU in January 2007 along with Romania. Every country who has been undeveloped who has joined the European Union has always become more attractive to foreign investment almost immediately. The indications already are that Bulgaria will be taken out of being a small Read more…

It is important to understand the difference between fundamental analysis and technical analysis. A quick explanation of the difference among the two types of analysis is: fundamental analysis focuses on the company and economic events while technical analysis focuses primarily on price action and market behavior.

Fundamentals include earnings report, dividends, sales, inventories, profit margins, P/E ratio, market share, etc….

Technical analysis include chart patterns, % change, new highs/lows, breakouts, etc…

In this thread I will be explaining some of the important information for fundamental analysis. While the TRIN, TICK, PC ratio, premium, tape,etc… all give clues about the health of the market, fundamentals provides us information on the health of the company and its sector.

Let’s go over a few key data.

1. Market capitalization: number of shares outstanding x share price

This data gives us an idea of the company size. Companies are classified according to its size: small-cap, mid-cap, and large-cap.

2. EPS: Net income or earnings of the company / number of shares outstanding

This data shows us the profitability of a company.

3. P/E Ratio: Last trade price / earnings per share

One of the most important piece of information to determine whether a company is overvalued or undervalued. Useful number to compare the P/E ratio to other companies. A high P/E ration indicates an overvalued company. A low P/E ration indicates a undervalue company. It is important to compare the company you are analyzing to different companies in the same sector.

Other fundamental tools: revenue, price-to-sales, R

Mini Cash ISAs are a form of saving account in the United Kingdom. They allow people on low incomes to make savings that are tax-free. This means that any profit that the ISAs accrue is theirs to keep, and the tax man gets none of it.

Mini Cash ISAs operate in a similar fashion to regular savings account plus the benefits mentioned above, so setting one up is a relatively simple process and most banks in the high street offer mini cash ISAs for anyone over 18.

Here is an example of how mini cash ISAs can work for the average person. If ?1,000 was invested in 1986, over the space of 20 years this figure would of rose to ?7,817, which is a healthy amount I?m sure anyone would agree. Sure if the money was invested in stocks then that amount could be more, but stocks carry a huge risk where as ISAs have none.

Since mini cash ISAs work in the same way as a regular savings account, you can put money in to them at any time. You could pay in a regular monthly fee or simply put any money spare in the account whenever you feel you have enough money to Read more…

When I was growing up, I enjoyed playing Monopoly and particularly enjoyed handling the bank. At one point in my career, I worked for a bank. But until recently, I never thought in terms of being the bank. That all changed when I discovered Person-to-person (P2P) Lending on an eBay-like website where people (”borrowers”) post a request for an unsecured loan of up to $25,000 at a maximum interest rate they’re willing to pay. Then other people, like me (”lenders”), place bids in a reverse Dutch auction, for the amount and rate they’re willing to lend, usually for a piece of the loan (at least $50).

On one site, borrowers provide their annual income so a debt to income ratio can be determined and displayed. A credit check is run and a borrower’s credit grade is also determined and displayed. The site has over 1,200 loans listed currently. They range from $5,000 at 4.75% interest for home remodeling (1 bid) to $3,000 at 29% interest to consolidate credit card debt (12 bids).

Lenders create a link to their bank account, transfer funds to the auction site, and begin placing bids. When a fully-funded listing ends, a single loan is created from bids with the lowest rates. The site automates much of the operation for the lender including withdrawing monthly payments from the borrower’s bank account and distributing them proportionately to the lenders’ accounts.

Not every loan request will get fully funded, but those that do Read more…

When it comes to researching different investments, technical indicators are a great place to start. Today, officials and private traders use technical indicators in their technical analysis to understand trends and behavior in the financial markets.

When considering technical indicators, it is important to understand that technical indicators are derived by using a set of specific data (usually security price). In doing so, one can get a feel for any patterns and trends that may arise, that will ultimately help him to make smart investment choices. Technical indicators are determined using various formulas, and the formula changes depending on the nature of the indicator.

So, why would you want to use technical indicators? Well, technical indicators are a good way to help analyze price actions from different perspectives, and depending on the level of complexity of the formula, you can end up with different ways to look at these price actions.

Types of Technical Indicators

As previously mentioned, there are a few different types of technical indicators. The basic one, called a moving average, involves a simple formula that analyzes the average price of a security or commodity over a period of time, and when isolating time periods, it is much easier to spot different trends. Other types of indicators belong to four major groups, as follows:
Momentum indicators ? Stochastic oscillator, Commodity channel index, RSI, Chande momentum oscillator (CMO) and more.
Volatility indicators ? Bollinger bands, projection oscillator, average true range, Trading bands (envelope) and more.
Trend indicators ? MACD, parabolic SAR, linear regression, Forecast oscillator and more.
Volume related indicators ? Ease of movement, OBV, Demand index, Chaikin money flow and more.

What?s the benefit?

So, what?s the benefit of using technical indicators? While they by no means represent a complete analysis, they can offer you an opportunity to find areas that are worth closer study based on indication of trends. You Read more…