investment
An investment is an asset or property acquired to generate income or gain appreciation. Appreciation is the increase in the value of an asset over time. It requires the outlay of a resource today, like time, effort, and money, for a greater payoff in the future or for generating a profit.
An investment involves using capital in the present to increase an asset’s value over time.
Investments may include bonds, stocks, real estate, or alternative investments.
Investments can be diversified to reduce risk, though this may reduce the amount of earning potential.
In business contexts, investments are financial; however, consider how some people spend time to make higher incomes in the future (i.e. invest in a college education).
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The p/e ratio—the ratio of a stock’s price per share to its earnings per share—is an extremely crude way to measure investment value. It’s a mistake to buy a stock just because it has a low p/e. At times, it can also be a mistake to stay out of a stock just because of a high p/e. In either case, of course, you need to look more closely and try to figure out why the p/e is high or low. Only then can you begin to make an informed decision. Some investors zero in on low-p/e stocks—price under 10.0 times earnings, say. They make some great buys that way, but this rule can also lure them into investment minefields. Often, stocks have low p/e’s because informed investors recognize their earnings are highly uncertain or headed way down. Buying these stocks is never a bargain when the bad news is not yet widely known. When the bad news hits the front pages because the company’s earnings have collapsed, however, that can be a good time to buy. At that time the p/e is way up, because the “e” is much lower....
Forensic Accounting ETF, $30.34, symbol FLAG on Nasdaq (Shares outstanding: 250,000; Market cap: $7.6 million; www.flagetf.com), is a recently launched exchange traded fund that uses its own “five step” approach to rank each company in the S&P 500 index....
HOME CAPITAL GROUP INC. (Toronto symbol HCG; www.homecapital.com) gets 90% of its revenue by making residential mortgage loans to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. These clients include recent immigrants with limited credit histories, and self-employed individuals....
SNC-LAVALIN GROUP INC., $42.59, Toronto symbol SNC, fell 5% this week after it cut its 2013 earnings outlook, mainly due to one-time losses on certain fixed-priced engineering contracts it signed between 2010 and 2012. The nature of these deals, which include hospitals, roads and unspecified projects in North Africa, prevents SNC from passing along unexpected cost increases to its clients. The company also expects that a previously announced reorganization of its European operations will cost an extra $75 million. At the same time, weak prices for gold and other commodities have slowed construction of new mining projects. As a result, SNC will probably earn $10 million to $50 million in 2013. That’s a big drop from its earlier prediction of $220 million to $235 million....
BROADRIDGE FINANCIAL SOLUTIONS $32.80 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 119.1 million; Market cap: $3.9 billion; Dividend yield: 2.6%) continues to hit all-time highs, but we think the stock still has room to rise.
Broadridge serves the investment industry in three main areas: investor communications, securities processing and transaction clearing....
Broadridge serves the investment industry in three main areas: investor communications, securities processing and transaction clearing....
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....
When making investment decisions in light of media reports of a development like the U.S. government shutdown and default threat, you need to consider the interests and viewpoint of the people involved—the journalists and the politicians. Journalists compete against each other to get high-profile assignments like this. After winning approval to cover a story, they have an incentive to dramatize it. They want their stories in the headlines. They want to attract a growing following of readers and viewers. They naturally carry their speculation to its logical conclusion. They want the public to imagine the worst possible outcome, rather than focus on the likeliest outcome, which is apt to be less interesting. The politicians involved have a more direct incentive to play up the drama. They rely on donations to finance their next election campaign. They want the media to talk about the importance of their struggles, and the dire outcomes that are likely if they fail. This is apt to spur more campaign donations from the voters and special interests who support them....