A company with previously issued securities that are no longer quoted or traded on formal exchanges such as the NYSE. Shares in these companies are available in the over-the-counter market, but they trade in very low volumes, if at all. Taobiz explains Unquoted Public Company One reason for such companies is the fact that a private firm cannot have more than 50 shareholders. By remaining unquoted, the firm's owners can operate the business in a similar nature to a private company, avoiding federal and exchange regulations. Unquoted public companies can also result from a company being delisted. Because the shares of these companies are not quoted and are rarely traded, they are often illiquid and difficult to price. Usually analysts will value unquoted shares by using comparables or price multiples.
A category of stocks for utilities such as gas and power. The utilities sector contains companies such as electric, gas and water firms and integrated providers. Taobiz explains Utilities Sector Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
A transaction occurring at a price above the previous transaction. In order for an uptick to occur, a transaction price must be followed by an increased transaction price. This term is commonly used in reference to stocks, but it can also be extended to commodities and other securities. Taobiz explains Uptick For example, suppose stock ABC previously traded at $10. If its next trade occurred at a price above $10, ABC would be on an uptick.
A stock that tends to trade at a lower price relative to it's fundamentals (i.e. dividends, earnings, sales, etc.) and thus considered undervalued by a value investor. Common characteristics of such stocks include a high dividend yield, low price-to-book ratio and/or low price-to-earnings ratio. Taobiz explains Value Stock A value investor believes that the market isn't always efficient and that it's possible to find companies trading for less than they are worth. An easy way to attempt to find value stocks is to use the "Dogs of the Dow" investing strategy - buying of the 10 highest dividend-yielding stocks on the Dow Jones at the beginning of each year and adjusting it every year thereafter.
An adjustment made to a stock’s price to reflect the number of outstanding stock shares, or shares of stock that have been issued and are currently held by investors. A value change allows the group of stocks to be equally weighted and, therefore, more easily evaluated. Since the number of shares held by investors changes daily, this number can be updated daily to reflect the changes. Taobiz explains Value Change A value change adjustment is intended to equally weight the stocks that are included in a group. Value change can be used in a variety of settings and describes a type of calculation used to compare and evaluate investment instruments by taking the number of shares held by investors into consideration .
An investing strategy that works like dollar cost averaging (DCA) in terms of steady monthly contributions, but differs in its approach to the amount of each monthly contribution. In value averaging, the investor sets a target growth rate or amount on his or her asset base or portfolio each month, and then adjusts the next month's contribution according to the relative gain or shortfall made on the original asset base. Taobiz explains Value Averaging For example, suppose that an account has a value of $2,000 and the goal is for the portfolio to increase by $200 every month. If, in a month's time, the assets have grown to $2,024, the investor will fund the account with $176 ($200 - $24) worth of assets. In the following month, the goal would be to have account holdings of $2,400. This pattern continues to be repeated in the following month. The main goal of value averaging is to acquire more shares when prices are falling and fewer shares when prices are rising. This happens in dollar cost averaging as well, but the effect is less pronounced. Several independent studies have shown that over multiyear periods, value averaging can produce slightly superior returns to dollar-cost averaging, although both will closely resemble market returns over the same period. The biggest potential pitfall with value averaging is that as an investor's asset base grows, the ability to fund shortfalls can become too large to keep up with. This is especially noteworthy in retirement plans, where an investor might not even have the potential to fund a shortfall given limits on annual contributions. One way around this problem is to allocate a portion of assets to a fixed-income fund or funds, then rotate money in and out of equity holdings as dictated by the monthly targeted return. This way, instead of allocating cash in the form of new funding, cash can be raised in the fixed income portion and allocated in higher amounts to equity holdings as needed.
A technique used to estimate the probability of portfolio losses based on the statistical analysis of historical price trends and volatilities. Taobiz explains Value at Risk - VaR VaR is commonly used by banks, security firms and companies that are involved in trading energy and other commodities. VaR is able to measure risk while it happens and is an important consideration when firms make trading or hedging decisions.
A form of fundamental analysis that looks to compare the valuation of one security to another, to a group of securities or within its own historical context. Valuation analysis is done to evaluate the potential merits of an investment or to objectively assess the value of a business or asset. Valuation analysis is one of the core duties of a fundamental investor, as valuations (along with cash flows) are typically the most important drivers of asset prices over the long term. Taobiz explains Valuation Analysis Valuation analysis should answer the simple, yet vital, question of, "What is something worth?" The analysis is then based on either current projections or projections of the future. While investors can agree on a metric like the current price-to-earnings ratio (P/E ratio), how to interpret a given valuation can and will differ among those same investors. Many types of valuation methods are used, involving several sets of metrics. For equities, the most common valuation metric to use is the P/E ratio, although other valuation metrics include: Price/Earnings, Price/Book Value, Price/Sales, Enterprise Value/EBIDTA, Economic Value Added and Discounted Cash Flow.
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