High Frequency Trading and Costs

                       

Among costs, added to the "expense ratios" of mutual fund investors, is the bid-ask spread. A wide spread means the fund must pay significantly more to acquire a stock than it could sell it for.

                       

High- frequency trading has reduced this cost by narrowing the spreads. Wide spreads are seen as inefficiency, with buyers and sellers having difficulty agreeing on a price that accurately reflects what is known about a stock. Narrow spreads mean the market is working better.

                       

Another transaction cost arises from a fund's huge trades; they can drive prices up or down by tipping the balance of supply and demand. High-frequency trading has helped reduce this "market-impact" cost by making it easier to break big trades into many little ones, while  conducting them very quickly,

                       

Trading costs from spreads and market impact have been cut in half over the past decade, From 0.5% of the trade amount for big company stocks to 0.25%. For small stocks, trading costs have dropped from 1% to 0.5%.

                       

Therefore, high-frequency trading isn’t always the villain

the financial media purports it to be.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Successful Investing Basics

Let me repeat the basics of smarter investing, methods that increase odds for success, and eliminate your

need for expensive advisers.

Simplify the complexities of the securities markets

Your strategic plan and its discipline are the answer.

You’ll have to change old habits. Instead::

1) Avoid listening to financial advisory ads that offer only partial information, while selling their particular pitch.

2) Avoid putting up with market noise; plus in-and-out trading ideas galore.

                       

3) Avoid trying to outsmart others, if you  decide to trade securities. Remember that “dud” security you are selling is a “diamond in the rough” by the buyer.

4) Avoid any investment suggestions that do not take your age and family conditions as a primary consideration.   

5) Avoid expensive advisers, other than necessary accountants and lawyers.       

                       

(See the Earl J Weinreb NewsHole® comments and @BusinessNewshole at twitter.)   

       

Currency Transactions With Securities Investing

                                         

Investing overseas is not only for investment diversification, the benefits of growth opportunities are to be gained globally.

                       

Will the dollar be getting stronger or weaker? If the dollar gets weaker or stronger, overseas, investments become more or less valuable,with translated currency.

                       

.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Credit Card Limits

                       

It may be necessary to take down the maximum amount  your credit card permits, but it does not help your credit score.

                       

Do so only in an emergency. It’s nice to know that your credit permits you spending liberties, but don’t let that take you on extreme binges.

                       

Of course, if you don’t use your card at all, or only occasionally, you may be dropped, or the maximum available credit line may be reduced. So, use credit cards intelligently.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

           

A Useless S E C Edict

                     

The Securities and Exchange Commission has ruled that

if your company’s common stock is worth more than $75 million dollars, shareholders are allowed to vote once every three years on whether they like or dislike top management pay scales. But the company does not have to act on the voting results.

                           

With all the problems the SEC has to face today, this is what they deem a big, worthwhile endeavor, worth their regulatory efforts.

                       

But how many stockholders care? (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

House Renting or Buying Options

                                           

A primer for those considering whether to buy or rent a house.

                       

Comparing costs, including that of a mortgage are obvious. What most folks overlook is the actual savings on mortgage and allied deductions.

                       

They forget the amount of the standard deductions they thereby must rescind when they itemize deductions such as mortgages.

The best way to figure the economic advantages of home ownership is to figure taxes both ways-- if you own the home or merely rent.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Managed Mutual Funds or Just Fund Indexes?

                   

Experience and research show that the so-called “best” managed mutual funds in any year are achieved mostly by chance.

                   

In any category of mutual funds, only a small percentage of active managers beat the performance of indexes or un-managed funds.

Furthermore, those who have distinguished performance in any one year, generally cannot repeat their performance the next, or on any consistent basis.

                   

Few managers can outperform indexes over a few years time, and if they do, it is pure luck, not ability.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)