The investment objective for a moderately conservative portfolio of securities or mutual funds that provides high dividend and annuity payments to satisfy an investor's steady income requirements. Taobiz explains Current Income Current income portfolios are often created for individuals in their retirement years because steady income is needed for living expenses. Income garnered from a current income fund is derived from bond interest payments, dividends and annuity payments. A current income portfolio is moderately conservative, as it often contains a large percentage of fixed-income securities, in addition to other assets such as blue-chip stocks and annuities. A current income portfolio can also include mutual funds within the same asset categories and strategies, such as a government bond fund and a dividend fund.
Exchange-traded funds (ETFs) invested in a single currency or basket of currencies. Currency ETFs aim to replicate movements in currency in the foreign exchange market by holding currencies either directly or through currency-denominated short-term debt instruments. Watch: Understanding ETF Taobiz explains Currency ETF Currency ETFs are widely used by investors who wish to gain exposure to the foreign exchange market and would prefer not to enter the futures or forex markets. With the growing popularity of ETFs, investors have found it very easy and relatively inexpensive to trade currency ETFs in order to take advantage of fluctuations between currencies. Currency ETFs can be purchased to track most international currencies including the U.S. and Canadian dollars, the Euro, British pound and Japanese yen.
The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is represented by block trades facilitated away from the central exchanges. Also referred to as the "upstairs market", or "dark liquidity", or just "dark pool." Taobiz explains Dark Pool Liquidity The dark pool gets its name because details of these trades are concealed from the public, clouding the transactions like murky water. Some traders that use a strategy based on liquidity feel that dark pool liquidity should be publicized, in order to make trading more "fair" for all parties involved.
A stock that rises quickly when economic growth is strong and falls rapidly when growth is slowing down. Taobiz explains Cyclical Stock An example is the automobile market: as economic growth slows, consumers have less money to spend on new cars. Non-cyclical stocks would be in industries such as healthcare, where the demand for goods and services is constant.
The risk of business cycles or other economic cycles adversely affecting the returns of an investment, an asset class or an individual company’s profits. Cyclical risks exist because the broad economy has been shown to move in cycles – periods of peak performance followed by a downturn, then a trough of low activity. Between the peak and trough of a business or other economic cycle, investments may fall in value to reflect the uncertainty surrounding future returns as compared with the recent past. Cyclical risk can also be tied to inflationary risks, as some investors consider inflation to be cyclical in nature. Taobiz explains Cyclical Risk Cyclical risk does not typically have a tangible measure, but instead is reflected in the prices or valuations of assets that are deemed to have higher or lower cyclical risks than the market. For example, certain stocks are considered cyclical because company net earnings tend to rise and fall with the business cycle and may be volatile from peak to trough. These stocks will typically sell off (fall in price) when the economy first shows signs of a slowdown, and therefore earnings valuations will fall compared to the broad market. Conversely, cyclical stocks will typically rise faster than the broad market when the economy is coming out of the trough period of the business cycle, as these stocks are now seen as able to grow earnings faster in the near future. Cyclical risk of inflation can be somewhat mitigated by purchasing inflation-protected securities or through the use of derivatives.
A slang term used to describe when a board of directors declares an additional dividend in addition to the regular distribution. The additional dividend can be in the form of cash, stock or property. Taobiz explains Cutting A Melon The board of directors (BOD) is responsible for deciding how it will share the company's earnings with shareholders in the form of dividends. In most cases, dividends are issued in accordance to a set policy and are paid on preset schedule, such as annually or quarterly. The BOD is cutting a melon when the company has earned additional income, this is the melon and distributes a portion of it to shareholders. The bigger the melon, the sweeter it tastes to investors!
Annual income (interest or dividends) divided by the current price of the security. This measure looks at the current price of a bond instead of its face value and represents the return an investor would expect if he or she purchased the bond and held it for a year. This measure is not an accurate reflection of the actual return that an investor will receive in all cases because bond and stock prices are constantly changing due to market factors. Also referred to as "bond yield", or "dividend yield" for stocks. Taobiz explains Current Yield For example, if a bond is priced at $95.75 and has an annual coupon of $5.10, the current yield of the bond is 5.33%. If the bond is a 10-year bond with nine years remaining and you were only planning to hold it for one year, you would receive the $5.10, but your actual return would depend on the bond's price when you sold it. If, during this period, interest rates rose and the price of your bond fell to $87.34, your actual return for the period would be -3.5% (-$3.31/$95.75) because although you gained $5.10 in dividends, your capital loss was $8.41.
The use of an algorithm to remove noise from a data set, allowing important patterns to stand out. Data smoothing can be done in a variety of different ways, including random, random walk, moving average, simple exponential, linear exponential and seasonal exponential smoothing. Data smoothing can be used to help predict trends, such as trends in securities prices. Taobiz explains Data Smoothing The random walk model is commonly used to describe the behavior of financial instruments such as stocks. Some investors believe that there is no relationship between past movement in a security’s price and its future movement. Random walk smoothing assumes that future data points will equal the last available data point plus a random variable. Technical and fundamental analysts disagree with this idea; they believe future movements can be extrapolated by examining past trends.
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