Trading is a relatively recent phenomenon made possible by the technology of communication networks and the development of the paper stock ticker. Details of stock transactions – stock symbols, the number of shares, and prices – were collected and transmitted on paper strips to machines located in brokerage offices across the country. Specialized employees using their memory, paper and pencil notes, and analytical skills would “read” the tapes and place orders to buy or sell stocks on behalf of their employer firms.
Risk and reward are inextricably intertwined, and therefore, risk is inherent in all financial instruments. As a consequence, wise investors seek to minimize risk as much as possible without diluting the potential rewards. Warren Buffett, a recognized stock market investor, reportedly explained his investment philosophy to a group of Wharton Business School students in 2003: “I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out.”
Reducing all of the variables affecting a stock investment is difficult, especially the following hidden risks.
According to projections by the Congressional Budget Office (CBO), America will continue to spend more than it receives in revenues from 2016 to 2026, and perhaps beyond. The budget deficit is projected to be slightly below 3% of gross domestic product (GDP) through 2018, then rise to 4.9% by 2026.
If the CBO projections are accurate, the federal debt will grow another $9.4 trillion by the end of the 10-year period, with potentially dire consequences for the country. According to the authors of the report, “The likelihood of a fiscal crisis in the United States would increase. There would be a greater risk that investors would be unwilling to finance the government’s borrowing needs unless they were compensated with very high interest rates; if that happened, interest rates on the federal debt would rise suddenly and sharply.”
Once upon a time, preferred stocks were a popular investment with companies and investors. Combining elements of debt and equity, preferred stock was an ideal issue for businesses that lacked the physical assets to collateralize debt or could not attract common stock buyers.
In order to appeal to new investors, companies sweetened the pot by issuing a new security – preferred stock – that had less risk and a greater certainty of income than common stock. If a company falters and requires liquidation, the debt holders are paid in full first, followed by payment to the preferred stock holders in an amount equal to the liquidation value of the preferred stock (established at the time of the initial offering). Common stock shareholders then receive any cash remaining. Preferred shareholders receive full payment of their investment before common shareholders receive any payment. Similarly, preferred shareholders receive dividends before any common stock dividends are paid.
The debate about free trade versus protective tariffs (taxes) has raged for centuries. However, it has become especially virulent as industrialized countries lose an increasing amount of jobs to emerging nations. Free traders, worried about the possibility of new tariffs to protect native industries, predict a trade apocalypse. Reported by TIME, Robert Zoellick, president of the World Bank, claimed, “If we start to trigger a round of protectionism, as you saw in the 1930s, it could deepen the world crisis.”
In early 2004, 32-year-old Englishman Ashley Revell sold everything he owned – furniture, clothes, car, golf clubs, and his old cricket bat – to raise almost £76,840, or the equivalent of approximately $140,617 in U.S. currency (per the average 2004 exchange rate). On April 11, 2004, Revell walked up to a Las Vegas roulette table and placed his entire fortune on the color red.
According to Professor Nolan McCarty of Princeton University, it seems that political rancor today has reached heights not seen since Reconstruction after the Civil War. A Stanford University report found that Americans have become increasingly polarized along political party lines, primarily due to “political candidates relying on negative campaigning and partisan news sources serving up vitriolic commentary.” As a consequence, the report concluded that the level of political animus in the American public exceeds racial hostility.
Have you ever dreamed of owning a vacation home in Pebble Beach, California or a mountain château in Aspen, Colorado? Rather than fighting security lines at the airport, perhaps your dream is to drive up to your plane and go wherever you want, whenever you want.
Pleasures once thought to be enjoyed only by the very rich – vacation homes, aircraft, and yachts – are possible for more people today. While the expense of ownership always exceeds the cost of renting a luxury residence for a limited period, the benefits of having one’s place – familiarity and convenience – can outweigh financial considerations. The best thing about owning an asset is that it is always there when you want to use it.
Open frontiers, freedom to live one’s life without restrictions, and the romance of living in harmony with nature have long been part of the American psyche. Authors and filmmakers have captured the desire to live independently and rely solely on one’s abilities for centuries.
- Henry David Thoreau, a 19th century poet, writer, and naturalist, explained the fascination with a simple life in his 1854 book “Walden“: “I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.”
British Prime Minister David Cameron announced a new police/intelligence agency on December 10, 2014, to monitor the “Dark Web,” as reported by The Independent. According to Cameron, “The dark net is the next side of the problem, where pedophiles and perverts are sharing images, not using the normal parts of the Internet we all use.”
Independent web consultant Mark Stockley concurs, claiming in Naked Security that the dark web “attracts people who want to engage in things like robbery, sex trafficking, arms trafficking, terrorism and distributing child pornography.” In the International Business Times, writers Charles Paladin and Jeff Stone claim electronic goods, contract killers, guns, passports, fake IDs, and hackers for hire are readily available on the dark web, in addition to illegal drugs and child pornography.