Per a recent article in the WSJ, the average solar module prices have come down from $3.95 per watt in 2008 to $0.65 per watt recently. That is a dramatic decline as the industry has gone through a full demand/supply cycle, since we started looking at this space in 2006/2007.
Tuesday’s finish was the 30th record close this year for the index, which has gained 8.2% in 2014 through the end of trade on Tuesday. The Dow industrials hit an intraday record of 17153.80 on Tuesday but failed to hold a record through the close.
The rally through 2000 marks the S&P’s third major upswing since the late 1990s. The index first breached the 1000 mark on Feb. 2, 1998, and ran as high as 1527 in March of 2000 only to break back below 1000 briefly in September of 2001 and again in June of 2002. The post tech-bubble bull market, which saw the S&P push above 1560 in October 2007, was halted by the onset of the financial crisis. That bear market knocked the index down through 1000 in October 2008 to a multi-year closing low of 676.53 on March 9, 2009.
With the latest milestone in the rear-view mirror, some investors are wondering how much further stocks can go.
(Source: WSJ)
Novartis and Google are working together to develop a smart contact lens designed to monitor blood-glucose levels while also correcting vision. Currently individuals have to rely on a finger prick test to monitor blood-glucose levels. The smart lens method is more accurate and less invasive. The lens is equipped with a tiny sensor that will analyze the amount of glucose in tears and then relay this information through an antenna. It also has the ability to wirelessly transmit the information to an app on a mobile device. Tears also contain a biomarker, lacryglobin, for breast, colon, lung, prostate, and ovarian cancers. Measuring the lacryglobin levels could help to monitor patients in remission. Ultimately, this type of technology could help individuals better manage their own health and prevent disease through early detection.
(Source: WSJ)
Aug. 4, 2014
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help investors identify potentially fraudulent unregistered offerings.
Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption to registration is available. If the offering is not registered, it is often called a private placement or unregistered offering. Generally speaking, unregistered offerings are not subject to some of the laws and regulations that are designed to protect investors, such as disclosure requirements that apply to registered offerings. Many companies engage in legitimate unregistered offerings to raise funds from investors. Fraudsters, however, may also use unregistered offerings to conduct investment scams.
If you are presented with an opportunity to invest in an unregistered offering, in addition to thoroughly researching an investment—and the investment professional selling it—you should be on the lookout for these common signs of potential fraud when you are thinking about investing in an unregistered offering.
Promises of high returns, with little or no risk, are classic warning signs of fraud. Every investment carries some degree of risk, and the potential for greater returns comes with greater risk. You should be skeptical of any investment that is said to have no risks.
Unregistered persons who sell securities perpetrate many of the securities frauds that target retail investors. Always check whether the person offering to sell you an investment is registered and properly licensed, even if you know him or her personally. An investment professional’s registration, background and qualifications are available through the Investment Adviser Public Disclosure website and FINRA’sBrokerCheck.
Scam artists often pitch an investment as a “once-in-a-lifetime” offer to create a false sense of urgency. Resist the pressure to invest quickly and take the time you need to investigate thoroughly before sending money or signing any agreements. Any reputable investment professional or promoter will let investors take their time to do research and will not pressure for an immediate decision.
Avoid an investment if the salesperson will not provide you with anything in writing. A legitimate private offering will usually be described in a private placement memorandum, orPPM. Similarly, sloppy offering documents that contain typographical, spelling, or other errors can be a red flag that the investment could be a scam.
The federal securities laws limit many private securities offerings to accredited investors. Be highly suspicious of anyone who offers you private investment opportunities without asking about your net worth or income.
Accredited investor. An individual is considered an accredited investor, if he or she:
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Be cautious if no one besides the salesperson appears to be involved in the deal. Usually, brokerage firms, accountants, law firms, or other third parties are involved in a private offering. Similarly, be cautious if you are told not to contact someone who is supposedly involved with the investment.
A company may establish a mailing address within a state in which it has no legitimate operations in a fraudulent attempt to qualify for an exemption from registration. If the company’s corporate address is a mail drop and you are unable to verify that the company has any actual operating presence (such as a headquarters building, plant or other physical operations) within the same state, be wary.
Any company, including limited liability companies and limited partnerships, seeking your investment should be listed as active or in good standing in the state where it was incorporated or formed. Every company must file and pay annual taxes in order to maintain its good standing. Each state, usually under the offices of its Secretary of State, maintains a publicly accessible online database of its companies. You should be wary if the company you are being asked to invest in can’t be found in the records of the state it claims to have been formed in or if it’s not listed as active or in good standing.
You should be very careful when you receive an unsolicited – meaning you did not ask for it – investment offer. Whether from a total stranger or from a friend, trusted co-worker, or even family member, always consider the motivation of the person offering the investment. Fraudsters often exploit the trust and friendship that exist in groups of people who have something in common, sometimes called affinity fraud. You should be especially suspicious if you are told to keep the investment opportunity confidential or a secret.
To appear legitimate, fraudsters may represent that they have had a successful career in the relevant industry when nothing could be further from the truth. Don’t just take the promoter’s word on his or her background. Try to independently verify any claims, including by asking for references or conducting a simple Internet search. On the other hand, even if the promoter is truthful about his or her background, if the promoter appears to lack relevant experience, consider this a red flag as well.
What You Can Do to Help Protect Yourself
Checking the background of an investment professional is easy and free. Details on an investment professional’s background, qualifications and disciplinary record, if any, are available through the Investment Adviser Public Disclosure website and FINRA’sBrokerCheck. If you have any questions on checking the background of an investment professional, call the SEC’s toll-free investor assistance line at (800) 732-0330. You also should search the Internet for the investment professional’s name and past business experience. Don’t be afraid to ask questions about what you find.
There are a wide variety of investments. Make sure you understand the level of risk involved and think about whether the investment is suitable for your personal investing goals, time horizons and risk tolerance. Investment pitches that are vague about who is involved in the transaction or where the money is going could be a red flag. Salespeople may try to explain away this lack of specificity by stating that the details are too technical or complex for non-experts to understand. If a promoter is unable to provide answers to the questions you ask, you should take that as a warning sign. If you can’t understand it, consider carefully whether the investment is right for you.
Research shows that con-artists are experts at the art of persuasion, often using a variety of influence tactics tailored to the vulnerabilities of their victims. Common tactics includephantom riches (dangling the prospect of wealth, enticing you with something you want but can’t have), source credibility (trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience), social consensus (leading you to believe that other savvy investors have already invested), reciprocity (offering to do a small favor for you in return for a big favor), and scarcity (creating a false sense of urgency by claiming limited supply).
Unbiased resources are available to help you make informed investing decisions. Whether checking the background of an investment professional, researching an investment, or learning about new products or scams, unbiased information can be a significant advantage for investing wisely. A good starting point for this information is the SEC’s Investor.govwebsite.
Additional Resources Available on SEC.gov
For basic investment guidance, see our publication, Ask Questions.
For guidance on choosing an investment professional, review our Investor Bulletin, Top Tips for Selecting a Financial Professional.
To learn more about unregistered securities offerings, read:
Contact the SEC
If you have questions about checking the license or registration status of an individual or firm, submit a question to the SEC or call the SEC’s toll-free investor assistance line at (800) 732-0330 (dial 1-202-551-6551 if calling from outside of the United States).
Report a problem concerning your investments or report possible securities fraud to the SEC.
Stay Informed
Q2 productivity increased at a 2.5%; annual rate, almost one point higher than expected. But last quarter’s productivity was revised downward by 1.3%. to minus 4.5%, the lowest in 33 years. Could it have been all those businesses that were open but not selling anything because of the terrible weather last winter? The worrisome part of the release is that the rebound in Q2 was puny: 2.5% is just 3 tenths above the post-World War II average. In fact productivity growth over the last 3 years has fallen to 0.8%, the lowest since the early 1990s. That, more than anything explains the stagnant wages and real income of workers. The reasons for this decline are not clear: it could be due to greater regulation, more part-time workers with lower productivity, the lack of skills that new workers bring to the workforce, or broader factors such as the lack of technological breakthroughs that increase output. In the past lulls in productivity have been followed by rebounds.
If jobs continue to grow this could portend the onset of wage inflation. Something that we need to watch very closely.
(Source: WisdomTree, Jeremy J. Siegel)
Following are some questions I suggest asking a potential financial adviser or wealth manager before deciding if you feel they have earned the right to talk to you about your money:
What are the financial consequences of cancelling your program and selling out of the investments I have made with you–a
re there any lockup periods, surrender charges, withdrawal penalties, account closing fees or any restrictions to move my account at any time?
Statistically it’s true that on average, over the long term, May through September has been comparatively weak. That’s because the months of May and September have been weak. June, July and August, on average, have been good months. However, any given year can prove to be an exception to the long-term averages.
(Source: Standard and Poor’s, data through May 1, 2014. The Leuthold Group, with permission)
Since there are a variety of market factors that can affect the price of an option in some way, assuming all other factors remain unchanged, we can use these pricing models to calculate the Greeks and determine the impact of each factor when its value changes. For example, if we know that an option typically moves less than the underlying stock, we can use Delta to determine how much it is expected to move when the stock moves $1. If we know that an option loses value over time, we can use Theta to approximate how much value it loses each day.
Following are Greek definitions:
Delta: The hedge ratio
Delta measures how much an option’s price is expected to change per $1 change in the price of the underlying security or index. For example, a Delta of 0.40 means that the option’s price will theoretically move $0.40 for every $1 move in the price of the underlying stock or index.
Call options
Put options
You also might think of Delta, as the percent chance (or probability) that a given option will expire in the money.
You also might think of Delta, as the number of shares of the underlying stock, the option behaves like.
Gamma measures the rate of change in an option’s Delta per $1 change in the price of the underlying stock. Since a Delta is only good for a given moment in time, Gamma tells you how much the option’s Delta should change as the price of the underlying stock or index increases or decreases. If you remember high school physics class, you can think of Delta as speed and Gamma as acceleration.
The relationship between Delta and Gamma:
Theta measures the change in the price of an option for a one-day decrease in its time to expiration. Simply put, Theta tells you how much the price of an option should decrease as the option nears expiration.
Time-value erosion
Source: Schwab Center for Financial Research.
Vega measures the rate of change in an option’s price per 1% change in the implied volatility of the underlying stock. While Vega is not a real Greek letter, it is intended to tell you how much an option’s price should move when the volatility of the underlying security or index increases or decreases.
More about Vega:
Rho measures the expected change in an option’s price per 1% change in interest rates. It tells you how much the price of an option should rise or fall if the “risk-free” (U.S. Treasury-bill)* interest rate increases or decreases.
More about Rho:
You can see the effects of Rho by considering a hypothetical stock that’s trading exactly at its strike price.
Armed with Greeks, an options trader can make more informed decisions about which options to trade, and when to trade them. Consider some of the things Greeks may help you do:
Though not actually a Greek, implied volatility is closely related. The implied volatility of an option is the theoretical volatility based on the option’s quoted price. The implied volatility of a stock is an estimate of how its price may change going forward. In other words, implied volatility is the estimated volatility of a stock that is implied by the prices of the options on that stock. Key points to remember:
Since it’s difficult on your own to estimate how volatile a stock really is, you can watch the implied volatility to know what volatility assumption the market makers are using in determining their quoted bid and ask prices.
It seems like a fairly simple question, but the answer is complex. There’s a lot of number crunching that goes into determining an option’s price. Most options market makers use some variation of what’s known as a theoretical options pricing model.
By far, the best-known pricing model is the Black-Scholes model. After more than three years of research, university scholars Fisher Black and Myron Scholes published their model back in 1973, only a month after the Chicago Board Options Exchange (CBOE) began trading standardized options. While options traders initially scoffed at their ideas, this breakthrough was so ahead of its time that it took a quarter century to be fully appreciated. Though Fisher Black died in 1975, Myron Scholes along with Robert Merton, a colleague of theirs who helped improve the formula, were awarded the Nobel Prize in Economics for their model in 1997.
While the original model was groundbreaking, it had a few limitations because it was designed for European style options and it did not take into consideration, the dividend yield of the underlying stock. There are now many variations, which have improved upon the original model, including:
Each model estimates what an option is worth by considering the following six factors:
(Source: Original article from Schwab was repurposed for this Blog post)
Is the growth in the number of solo businesses a good sign for the economy?
The number of U.S. businesses without paid employees—mostly self-employed individuals with unincorporated businesses—rose 1.1% to 22.74 million in 2012, the latest data available, according to a new report by Census this week. “Non-employer” businesses have increased nearly 7% since dipping to 21.35 million in 2008, the first full year of the 2007-2009 recession.
The new Census data jibe with reports from the Labor Department that suggest self-employment took a hit during the recession but has since come back slightly.
Overall, the readings could be a sign that some Americans are feeling more confident about their ability to launch businesses as the economy gradually recovers from the recession. But it could also point to the persistent difficulty many face in landing full-time jobs.
(Source: Wall Street Journal)
