Why does a stock trade for more than the share’s intrinsic value?

If I understand your question correctly, you are asking: "why would anyone pay above book value?"Imagine a fictional world where bank accounts are tradable. All bank accounts in this fictional world are risk-free, and pay a yearly interest of 2%. S

Is there a way to create small but numerous passive incomes?

Yes, there is a way. It´s called investing where you buy stocks, bonds, funds, etc. in the right portion of a company, rental objects, raw materials etc. for your budget and risk appetite.Be warned that passive income is a bit misleading. Make sure you hav

Lost a lot of money. Now what?

I think you are better off coming here then a place like wall street bets, where their advice would be to keep going. Your issue is that you are speculating with very large amounts of money in relationship to your net worth. You can't afford to take those

Should I stop payments on my credit card after a chargeback dispute?

You have no legal basis to stop payment to the Credit Card Company, as even the court already clarified.I understand that for you the money you pay the credit card company is the same money you expect to not get back from the vendor, but legally it's not re

Saving up for an expensive car

The question is how does $16,000/year for 6.5 years fit into your budget. Or to put it another way, what won't you be spending that money on? Housing, food, vacations, retirement fund, investments (though you can invest your car fund in the meantime), building a hef

Selling your leased car before its lease is over

After seeing the debate in the comments about selling a leased vehicle at Carmax, I checked the CarMax site: Do you buy leased cars? Yes! In m

Who buys a weak currency?

Anyone who wants to buy something from Zimbabwe or pay taxes in Zimbabwe will need to buy Zimbabwean dollars. A company in Zimbabwe that pays its workers in Zimbabwean dollars but sells products in US dollars will need to buy them too.Because there is an e

Sibling Disagreement on Property for Mother

She would like for my mother to pay her $500/month (as a tenant)That is the key.has asked me to contribute $250/monthsince she is the one "taking the risk" of owning the property

My company handed me a letter today telling me I owe them money because they overpaid me. What can I do about it?

Ask for documentation proving the amount they say you were overpaid, and ask for time to review their claim.If it is a large amount that they can prove you owe, and if you were staying, then you could ask for the repayment to be spread over multiple pay che

Why should we expect the stock market to continue to generate returns long-term?

Is it a myth that the stock market is guaranteed to go up long-term?No, it is not a myth; it is a generalization. As you say, this is not intended to be taken literally, and nothing is guaranteed.If the argument is "th

Invest money and get 120% back - a site says

This is clearly a scam, and you should stay away from it. Anyone reading this knew that from the title alone - and it seems that you know it too. Don't "test" whether something is a scam by putting your own money in it. That is exactly how these sca

Why "N-year" loans (and other complications)? Why does a loan need so many parameters?

Why isn't the above the business model of a loan?It is the model of some types of loans. It's called a "Line of credit" (LOC). I have two them, one for my business, and one for me personally.

Why is proof of income requested for certain loans but not others?

Why don't you just put your down payment on one of your credit cards?(Note: I'm not actually suggesting that you do this. Please read on.)There are a few reasons why you wouldn't (or couldn't) do this:The interest rates on the cards

Borrowing 100k, paying it to someone and then declaring bankruptcy

This is fraud and could lead to jail time.The vast majority of people cannot obtain such loans without collateral and one would have to have a healthy income and good credit to obtain that kind of loan to purchase something secured by a valuable asset, such

Would any experienced individual balk at the idea of ignoring a 401k plan?

Your question has a built in faulty premise. "ASSUMING a person knows how to use and invest their money wisely"I'd ask if you were wise enough to beat the investments offered in your 401(k) after expenses, and with respect to the potential tax savi

Saving money for the full price of a home while renting vs getting a mortage and buy home now, which is better?

I doubt there is a one size fits all answer to your question but I would like to offer some counter arguments to the idea of not taking a mortgage.Interest rates are currently at historic lows and will most likely continue to be for the next few years,

No credit history. How to improve rating?

Go to your bank/credit union and get a credit card in your name. If they won't give you a card based on your income, then get a secured card. Then use it. Don't pay interest, but use it and pay it off every month. About a year later you can ask them to swit

European banks, low interest rates and "free money" for home owners?

Yes the central bank can make money out of thin air. However that isn't what is happening. For the past 10 years or so countries have been participating in Quantitative Easing (QE). This basically gives regular banks lots of money to allow for the type of behavior y

How would I be taxed by earning credits and selling items bought with them

You simply have a business. You go through a certain procedure.The end result is you have a certain amount of USD, which you have "made" or "achieved" which you did not have previously.You in fact "made" that much USD.

Strategies to earmark money for large expenses

Open multiple savings accounts, each with a different "goal" (emergency fund, vacation, etc). Pros: easier to see where all the money is going, and it's clear when you take money from one to fund another. Cons: it's a extra work to administer and

Deposit a cheque in an alternative name into a personal bank account (Australia)

You don't have much choice other than to open an account in your business name, then do a money transfer, as @DJClayworth says. You will not be able to get your bank to open an account in a business name, be able to use a trading na

Transfer Money from My Overseas Account

The safest, quickest and cheapest option would be to do a wire transfer from your HK account to an account in a US bank. You can contact HSBC and ask them if it would be cheaper if the US bank account is at HSBC as well, but I doubt it would be a significant saving.

Types of brokers for differing uses

TradeStation offers a complex platform for active advanced traders who want to design and test custom trading strategies. Just a guess but I have a gut feeling that is not what you need at this point.I think that your priority should be a broker that off

Time value of money confusion

Time value of money is that if you have money now you can invest it in say a savings account and it will be more at the end.If you are going to earn say $105 in a years time you don't have the money to use now.How can you get to use he money now. One w

What should I invest in other than pension or real estate

If you have access to the stock market, a low-cost index fund is almost always a good bet. These reduce your risk over buying individual stocks, while matching the market in general. And all without requiring any real knowledge or ongoing attention. (Low-cost is imp

Can someone clear your bank account if they have your name, expiry date, and 16 digit card number but don't have the CVC?

What does a credit card have to do with clearing your bank account? Credit cards have fraud protection insurance and depending on country and the credit card itself you risk could be close to ZERO.In the US there is usually a $50 limit to unwarranted use o

Is there any difference between a 2 for 1 stock split and a 100% stock dividend?

A stock dividend means that you receive additional shares in the company instead of cash and they are not taxed until the shares are sold.Like stock splits, stock dividends dilute share price. They do not increase shareholder wealth or market capitalizatio

How can I calculate how much tax I will pay

Assuming the rules for 2011You will pay 4.2% of your income up to $106,800 in Social Security taxes (one year reduction, this is normally 6.2%)You will pay 1.45% of your income for medicare taxes on all earnings.For federal and state incom

Investing in real estate when the stock market is high, investing in stocks when it's low?

The price of real estate reacts to both demand for property and the rate of inflation and rate of income growth. Mortgage rates generally move as treasury rates move. See this paragraph:As we mentioned, intermediate term bonds and long-

What more can I do to improve my credit score?

Even without seeing your score or other detail, the obvious thing you are lacking is time.Five years isn't very long. High credit scores take a lot of history. It isn't just what is in your history that counts, but also how long

How long to wait after getting a mortgage to increase my credit limit?

I'm not sure what raising your credit limit would do to your score in the short term. I don't think it's a clear win, though. Your percent utilization will go down (more available credit for the same amount of debt) but your available credit will also go up, which

What's the difference between a high yield dividend stock vs a growth stock?

I think Fidelity has a very nice introduction to Growth vs Value investing that may give you the background you need. People love to put

Getting started in stock with one special field of activity

I don't think investing in only one industry, which you may know well, is very wise. You may want to invest in that industry but you should not restrict yourself from investing solely in that industry. There are many times when your chosen industry may not

What's the difference between Market Cap and NAV?

At any given moment, one can tally the numbers used for NAV. It's math, and little more.The Market Cap, which as you understand is a result of share value. Share value (stock price) is what the market will pay today for the shares. It's not only based on NAV today,

Why don't forced buy-ins of short sold stock happen much more frequently?

Nobody is going to short sell stocks through a lender that forces people to buy in as soon as it is getting good for them. For the lenders to sell their positions they need buyers on the other side. For a large brokerage that means they s

How to move money between U.S and non-U.S bank accounts?

I have taken to using the service TransferWise. I have found them to be faster and cheaper and easier than using SWIFT, given the US Banking's... antiquated system of doing things.I've mad

How can I calculate total return of stock with partial sale?

If you just want to know total return, either as dollars or a percentage, just add up the total amount spent on buys and compare this to current value plus money received on sales. In this case, you spent (310 x $3.15 + $19.95) + (277 x $3.54 + $19.95). So your tota

Still have mortgage on old house to be torn down- want to build new house

You're effectively looking for a mortgage for a new self-build house. At the beginning, you should be able to get a mortgage based on the value of the land only. They may be willing to lend more as the build progresses.Try to find a company that specializ

What to do with monthly income I don't immediately need?

I'm not sure there are any low-risk options that would keep pace with inflation. However, a certificate of deposit (CD) would be a better option than a savings account, since you don't need ready access to the money.With a savings account, you have a low in

Best way to save up for a house

On a 3-4 year timeline you probably don't want to expose your money to much if any risk, as a downturn could decimate your pile and take a long while to recover. Current CD rates are in the 2.25-2.8% range, I'd probably buy a 36 month CD with any savings no

Definition of compound interest

Is this example indeed inconsistent with his definition, or am I missing something?It sounds like you have an 8.08% APY (annual percentage yield), not 8.08% APR (annual percentage rate). With APY they have already tak

Any suggestions for low risk retirement investment with a return better than CDs?

CDs and money market funds are secure investments that preserve principal. If you want a better yield, you have to take on some risk.You stated that you don't trust the stock market at your age and probably won't live long enough to recover losses from a

Does revenue for a company matter when evaluating stocks?

If we accept all of your assumptions (profits are constant, revenues cannot be grown), then these stocks seem very little like stocks and very much like perpetual bonds.And under those assumptions, it probably doesn't matter that their revenues are very dif

Closing a futures position

Assuming these are standardized and regulated contracts, the short answer is yes. In your example, Trader A is short while Trader B is long. If Trader B wants to exit his long position, he merely enters a "sell to close" order with his broker.Trader B nev

Calculator for fixed mortgage overpayment plus regular payment

Happy to share my personal spreadsheet for this purpose. Go here:Mortgage overpayment comparison sheet (.xlsx) on Scribd- download

Is it better to buy put options or buy an inverse leveraged ETF?

You don't have to think it is going down, it is currently trending down as on a weekly chart there are lower lows and lower highs. Until there is a higher low with confirmation of a higher high, the downtrend will continue. The instrument you use to profit

As an investing novice, what to do with my money?

I'd keep the risk inside the well-funded retirement accounts. Outside those accounts, I'd save to have a proper emergency fund, not based on today's expenses, but on expenses post house. The rest, I'd save toward the downpayment. 20% down, with a reserve for the spe

What is a "retail revolving account," and does it improve my credit score?

In the other question, the OP had posted a screenshot (circa 2010) from Transunion with suggestions on how to improve the OP's credit score. One of these suggestions was to obtain "retail revolving accounts

If a stock is in a bull market, is setting a stop limit a good way to protect myself from a crash or bear market?

The normal sequence is to set a stop-limit below the current value, and move it up in line with any increases. You lock-in the gains. Forget about 'buying low, selling high'. Everyone wants to do that. By definition for every winner there is a loser. You cannot tim

Social Security for surviving spouse

Let me preface this by saying that tax law changes occur periodically so I have no clue what the current law offers in regard to your question.

double entry bookkeeping loan to myself

Gnucash is an accounting tool, and accounting-wise the concept of a "loan to myself" doesn't really make any sense. A loan in accounting-speak is either a liability (if it's money you owe somebody else) or an asset (if it's money that somebody else owes you). Gnucas

Indexes like S&P 500 vs simply tracking earnings?

Because most of the growth in an index fund is not due to dividends paid by the stocks it holds, but by the increase in the price of the stocks. That increase has no obvious, direct relationship to corporate earnings or to dividends paid. There are plenty of stock

If I invest in securities denominated in a foreign currency, should I hedge my currency risk?

Like most other investment decisions - it depends.Specifically in this case it depends upon your view of the FX (Foreign Exchange) market over the next few years, and how sensitive you are to losses.As you correctly note, a hedge has a cost, so it

What is a good price to "Roll" a Covered Call?

There is no reason to roll an option if the current market value is lower than the strike sold. Out-of-the-money strikes (as is the $12 strike) are all time value which is decaying constantly and that is to our advantage. If share price remains below the strike, the

How to transfer money to an account on Cyprus as quick as possible?

I can only imagine the regulatory difficulty you're going through, and for that I empathize.First, bankers everywhere mostly do not know if a bank policy is due to regulation or internal rules. Other banks may be more flexible, but only the most reputable

Ready to invest but I'm overwhelmed with the number of brokers and services

My solution, since I was only interested in mutual funds, was to bypass brokers entirely and open an account directly with the firm which runs the funds I was interested in, and directly purchase and redeem shares of no-load funds through them. No transaction fee, n

Optimal Asset Allocation

Generally a diversified portfolio will give you a better overall return --a couple of factors that may address what you are looking at -1) Correlation - The correlation between your two funds is still very high -- it's partially a function of how global eco

Value investing

As an aside, why does it seem to be difficult to get a conclusive answer to this question?I'm going to start by trying to answer this question and I think the answer here will help answer the other questions. Here is a incomple

Money market account for emergency savings

Depends on how urgent your need for the emergency savings might be. If the money market account allows you to get your money in the same amount of time as the savings account then there is no real downside, but if the account takes a few days for you to access and y

How do I avoid excessive fees when I get paid in CHF and need EUR?

TransferWise would be worth checking out. For some currencies they let you have a 'local' (in your case CH) account and then can do the transfer/exchange when you like but at more like market mid-rate and the fees are low. I have no pecuniary interest. It has simply