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Dollar Cost Averaging
Dollar cost averaging (DCA) is an investment strategy that aims to apply value investing principles to regular investment. The term was first coined by Benjamin Graham in his book ''The Intelligent Investor''. Graham writes that dollar cost averaging "means simply that the practitioner invests in common stocks the same number of dollars each month or each quarter. In this way he buys more shares when the market is low than when it is high, and he is likely to end up with a satisfactory overall price for all his holdings." Dollar cost averaging is also called pound-cost averaging (in the UK), and, irrespective of currency, unit cost averaging, incremental trading, or the cost average effect. It should not be confused with the constant dollar plan, which is a form of rebalancing investments. The technique is so called because of its potential for reducing the average cost of shares bought. As the number of shares that can be bought for a fixed amount of money varies inversely wi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Investment Strategy
In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics and strategies appropriate. Some choices involve a tradeoff between risk and return. Most investors fall somewhere in between, accepting some risk for the expectation of higher returns. Investors frequently pick investments to hedge themselves against inflation. During periods of high inflation investments such as shares tend to perform less well in real terms. Time horizon of investments. Investments such as shares should be invested into with the time frame of a minimum of 5 years in mind. It is recommended in finance a minimum of 6 months to 12 months expenses in a rainy-day current account, giving instant access before investing in riskier investments than an instant access account. It is also recommended no more than 90% of your money ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Value Investing
Value investing is an investment paradigm that involves buying securities that appear underpriced by some form of fundamental analysis. The various forms of value investing derive from the investment philosophy first taught by Benjamin Graham and David Dodd at Columbia Business School in 1928, and subsequently developed in their 1934 text ''Security Analysis''. The early value opportunities identified by Graham and Dodd included stock in public companies trading at discounts to book value or tangible book value, those with high dividend yields, and those having low price-to-earning multiples, or low price-to-book ratios. High-profile proponents of value investing, including Berkshire Hathaway chairman Warren Buffett, have argued that the essence of value investing is buying stocks at less than their intrinsic value. The discount of the market price to the intrinsic value is what Benjamin Graham called the " margin of safety". For the last 25 years, under the influence of Char ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Benjamin Graham
Benjamin Graham (; né Grossbaum; May 9, 1894 – September 21, 1976) was a British-born American economist, professor and investor. He is widely known as the "father of value investing", and wrote two of the founding texts in neoclassical investing: ''Security Analysis'' (1934) with David Dodd, and ''The Intelligent Investor'' (1949). His investment philosophy stressed investor psychology, minimal debt, buy-and-hold investing, fundamental analysis, concentrated diversification, buying within the margin of safety, activist investing, and contrarian mindsets. After graduating from Columbia University at age 20, he started his career on Wall Street, eventually founding the Graham–Newman Partnership. After employing his former student Warren Buffett, he took up teaching positions at his '' alma mater,'' and later at UCLA Anderson School of Management at the University of California, Los Angeles. His work in managerial economics and investing has led to a modern wave of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
The Intelligent Investor
''The Intelligent Investor'' by Benjamin Graham, first published in 1949, is a widely acclaimed book on value investing. The book provides strategies on how to successfully use value investing in the stock market. Historically, the book has been one of the most popular books on investing and Graham’s legacy remains. Background and history ''The Intelligent Investor'' is based on value investing, an investment approach Graham began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd. This sentiment was echoed by other Graham disciples such as Irving Kahn and Walter Schloss. Warren Buffett read the book at age 20 and began using the value investing taught by Graham to build his own investment portfolio. ''The Intelligent Investor'' also marks a significant deviation to stock selection from Graham's earlier works, such as '' Security Analysis''. Which is, instead of extensive analysis on individual company, just apply simple earning criteria ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotland, Wales and Northern Ireland. The United Kingdom includes the island of Great Britain, the north-eastern part of the island of Ireland, and many List of islands of the United Kingdom, smaller islands within the British Isles. Northern Ireland shares Republic of Ireland–United Kingdom border, a land border with the Republic of Ireland; otherwise, the United Kingdom is surrounded by the Atlantic Ocean, the North Sea, the English Channel, the Celtic Sea and the Irish Sea. The total area of the United Kingdom is , with an estimated 2020 population of more than 67 million people. The United Kingdom has evolved from a series of annexations, unions and separations of constituent countries over several hundred years. The Treaty of Union between ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Constant Dollar Plan
{{Short description, Stock market investment plan The constant ratio plan was one of the first plans devised when institutions started to invest in the stock market. The plan is often called rebalancing. Another type of plan is called a "variable ratio plan". There are several ways of executing these plans. The simplest is called the Constant Dollar Plan, which has been discussed in various investing books. Description One possible scenario is an investor with $10,000 dollars to invest. He invests half into stocks, and the other half into bonds or a money market fund. If his shares cost $10.00, he invested $5,000.00, so he has 500 shares. Later after a market move, he finds his shares are valued at $3.00 a share, so he has lost 70% of his stock portfolio Portfolio may refer to: Objects * Portfolio (briefcase), a type of briefcase Collections * Portfolio (finance), a collection of assets held by an institution or a private individual * Artist's portfolio, a sample of an a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rebalancing Investments
In finance and investing, rebalancing of investments (or constant mix) is a strategy of bringing a portfolio that has deviated away from one's target asset allocation back into line. This can be implemented by transferring assets, that is, selling investments of an asset class that is overweight and using the money to buy investments in a class that is underweight, but it also applies to adding or removing money from a portfolio, that is, putting new money into an underweight class, or making withdrawals from an overweight class. Rebalancing of investment is a concave trading strategy; as opposed to constant proportion portfolio insurance (CPPI), which has convex payoff characteristic. History Now a commonplace strategy, rebalancing can be traced back to the 1940s and was pioneered by Sir John Templeton, among others. Templeton used an early version of Cyclically adjusted price-to-earnings ratio to estimate valuations for the overall U.S. stock market. Based on the theory that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Timing
Market timing is the strategy of making buying or selling decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis. This is an investment strategy based on the outlook for an aggregate market rather than for a particular financial asset. The efficient-market hypothesis is an assumption that asset prices reflect all available information, meaning that it is theoretically impossible to systematically "beat the market." Approaches Market timing can cause poor performance. After fees, the average "trend follower" does not show skills or abilities compared to benchmarks. "Trend Tracker" reported returns are distorted by survivor bias, selection bias, and fill bias. At the Federal Reserve Bank of St. Louis, YiLi Chien, Senior Economist wrote about return-chasing behavior. The average equity mutual fund investor tends ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Harmonic Mean
In mathematics, the harmonic mean is one of several kinds of average, and in particular, one of the Pythagorean means. It is sometimes appropriate for situations when the average rate is desired. The harmonic mean can be expressed as the reciprocal of the arithmetic mean of the reciprocals of the given set of observations. As a simple example, the harmonic mean of 1, 4, and 4 is : \left(\frac\right)^ = \frac = \frac = 2\,. Definition The harmonic mean ''H'' of the positive real numbers x_1, x_2, \ldots, x_n is defined to be :H = \frac = \frac = \left(\frac\right)^. The third formula in the above equation expresses the harmonic mean as the reciprocal of the arithmetic mean of the reciprocals. From the following formula: :H = \frac. it is more apparent that the harmonic mean is related to the arithmetic and geometric means. It is the reciprocal dual of the arithmetic mean for positive inputs: :1/H(1/x_1 \ldots 1/x_n) = A(x_1 \ldots x_n) The harmonic mean is a Schur-conca ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Arithmetic Mean
In mathematics and statistics, the arithmetic mean ( ) or arithmetic average, or just the '' mean'' or the ''average'' (when the context is clear), is the sum of a collection of numbers divided by the count of numbers in the collection. The collection is often a set of results of an experiment or an observational study, or frequently a set of results from a survey. The term "arithmetic mean" is preferred in some contexts in mathematics and statistics, because it helps distinguish it from other means, such as the geometric mean and the harmonic mean. In addition to mathematics and statistics, the arithmetic mean is used frequently in many diverse fields such as economics, anthropology and history, and it is used in almost every academic field to some extent. For example, per capita income is the arithmetic average income of a nation's population. While the arithmetic mean is often used to report central tendencies, it is not a robust statistic, meaning that it is great ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Windfall Gain
A windfall gain is an unusually high or abundant income, that is sudden and/or unexpected. Types Examples of windfall gains include, but are not limited to: *Gains from demutualization - this example can lead to especially large windfall gains. A study in 1999 into the potential demutualization of the John Lewis Partnership predicted that partners would receive upwards of £100,000 in windfall gains if the company were to be floated on the stock market. *Unexpected inheritance or other large gift from another *Sweepstakes winnings *Winning a lottery or success in another form of gambling *Returns on investments *Proceeds or profit from a large sale *Game show, or other contest winnings *Employment payroll bonus *Natural resources * Foreign aid *Proceeds from an insurance claim *Settlement from a lawsuit *Discoveries from treasure hunting Uses What people do with windfall gains is subject to much debate. While they differ from one account to the next, most economists hypothesize ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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