Connect with us

Share Market

The Complete Guide To Investing in the Times of COVID-19

Published

on


Introduction:

Thanks to an intricately integrated world, something as small as a microbe originating in one province of China has the power to engulf everything from the economy to the lives of people and cloud the present, the future, and put our very survival in uncertainty.

Almost everyone in the market including the Harvard Business Review seems to be convinced that the aftermath of the COVID-19 crash would be a V-shaped recovery where growth eventually rebounds- as was the case after the previous pandemic-induced recessions of SARS and Spanish Flu.

However, as long-term investors, we shouldn’t be concerned if it is a V, or W, or U, or L-shaped recovery. What we should be concerned with is identifying businesses that will weather a long-term storm if it turns out that way.

Impact of COVID on businesses

The US benchmark oil futures contract — West Texas Intermediate (WTI) made history in April 2020 for the first time entering negative territory.  Prices had fallen to minus $37 per barrel (made possible due to an extreme glitch in the way oil futures operate) due to the steep fall in demand while the availability remained uncontrolled.

People all over the world are locked down in their homes, to be safe from COVID-19, and factories are shut. Add to this the price war between Saudi Arabia and Russia, the world’s biggest oil producers. The result- an unprecedented fall in oil demand globally—

“so much so that we ran out of space to store it, and ultimately producers and traders had to pay buyers to take it off their hands!”

This, unfortunately, is not just a single industry. The travel & tourism, hospitality, food, and entertainment industries had almost come to a standstill. Consumption other than essential items e.g. consumer staples had fallen. Consumer discretionary hit worse than others. This has also affected commodities.

The manufacturing sector is coming to a halt due to migrant workers returning home to be safe from COVID-19 and the lack of money to stay in the cities. Border lockdowns and shipping restrictions have only furthered the panic.

Governments all over the world have introduced travel restrictions to try to contain the virus. Airlines have cut flights and customers have canceled business trips and holidays.

Impact of COVID-19 on Global Economy

Investors fear the spread of the coronavirus will destroy economic growth and fears of recession loom large. The IMF projects the global economy to contract by 3% in 2020. In a base case scenario, which assumes that the pandemic fades in the second half of 2020, the IMF expects global growth to rise to 5.8% next year. India and China are the only two economies projected to grow in 2020. The IMF expects the Indian economy to grow by 1.9% in 2020, followed by a 7.4% growth in 2021.

However, as we all know, predictions about the economy rarely turn outright and it is more so in this case.

As an excellent article by Mark Lilla, a professor of humanities at Columbia University, which appeared in The New York Times stated, ‘the post-COVID-19 future doesn’t exist. It will exist only after we have made it.’

The IMF’s projections coming true depends on:

  • how effectively all countries can control the pandemic
  • how many people will fall ill in turn depends on
  • how people react to lockdowns and reopening of economies
  • will they be cautious enough
  • are the countries testing enough
  • will reopening of economies also resume the spread of disease and force new lockdowns
  • how soon can we develop a vaccine
  • will the various fiscal and monetary policies by countries world over suffice to offset the economic damage caused by COVID-19

Like Howard Marks said in his memo dated May 11, 2020,

‘if you’ve never experienced something before, you can’t say you know how it’s going to turn out.’ 

Steps taken by Governments

The response of governments all over the world is unprecedented too. Put together, a $10 trillion stimulus has been announced, by governments world over, just in the first two months, which is three times more than the response to the 2008–09 financial crisis. Given the broad global impact of the COVID-19 crisis, few populations, businesses, sectors, or regions have been able to avoid the knock-on economic effects. That means government measures have had to support large parts of the economy in a very short time to maintain financial stability, maintain household economic welfare, and help companies survive the crisis.

But has it worked?

The crisis is far from over, and recent consumer surveys show that spending is not coming back yet. This is somewhat expected. The world’s economic response to date has focused on relief. Further interventions will likely be necessary to revive aggregate demand once economies reopen if consumer and business sentiments do not fully rebound, resulting in muted spending and investment.

Senior economics consultant Neil Irwin summed it up best in a New York Times article on April 16, when he says

‘It would be foolish, amid such uncertainty, to make overly confident predictions about how the world economic order will look in five years or even five months.

It’s however, safe to say that the global economy will be completely different from the one that has prevailed in recent decades. And the companies and countries that can evolve with these changing times will emerge as the new leaders.

India’s economic recovery and opportunities

India has the capability to turnaround the COVID 19 crisis into an opportunity by becoming a manufacturing hub. Many countries including Japan and the USA have indicated that they would be moving their manufacturing operations to other countries from China. Buyers across the globe are looking for other sourcing solutions. These include products ranging from homeware, ceramics, fashion and lifestyle goods, textiles, and engineering goods. As the supply chain remains distorted and disrupted as an effort to contain the spread of the virus, India may enter multiple trade channels as a more feasible supplier for raw materials and manufactured goods. This in turn will bring in substantial foreign investments and provide a much need impetus to the economy.

India can also leverage its competitive advantage in the fields of pharmaceuticals, biotechnology, medical tourism, and information technology. In IT itself, India’s capability and unbeatable competence as an outsourcing hub for both core and non-core operations are standing out amidst the global COVID-19 pandemic. the initiative is a step in the right direction. 

Impact on Stock Markets

The onset of novel coronavirus has led to panic selling episodes and global share market crashes worldwide.

The FTSE, Dow Jones Industrial Average, and the Nikkei have all seen huge falls since the outbreak began on 31 December.

Both the Dow Jones and India’s Nifty index fell by as much as 35%.

UK’s FTSE, Japan’s Nikkei, and the NASDAQ fared better declining by 26%, 24%, and 22%, respectively in the same period.

Brazil’s BVSP BOVESPA was down by 31.6% while France’s CAC 40 was down by 25.8%.

Germany’s DAX was down by 19.9% and MOEX Russia was down by 13.6%.

While most nations are struggling with the fallout initiated by the pandemic, the source of the pandemic – China – has seen the least decline in its benchmark index, the SSE COMPOSITE which declined just 8.8% in the said period.

Thanks to the unprecedented fiscal and monetary stimulus world over, stock markets have bounced back as quickly as they had fallen.

The Nasdaq and Japan’s Nikkei are back to their previous highs. The Dow Jones is down by merely 1.5%. India’s Nifty and UK’s FTSE have recovered too but still remain about 15% down from previous highs.

Now that we’ve seen how the markets reacted, how should you – the investor – react to these changing times? Let’s take a look.

Two things you shouldn’t do now when the stock market is in the red and volatile

Volatility in the stock market due to COVID-19 has affected every person differently depending on their financial situation. As the stock market declines, many of you may be confused and thinking — how to respond at this time?

Here are a few things no to do when the stock market’s being volatile —

  1. Don’t panic sell (but also don’t hesitate to sell when required)

    Shelby MC Davis said

    “Invest for the long haul. Don’t get too greedy, and don’t get too scared.”

    Panic selling is the worst thing to do during this pandemic panic. Instead, you need to reassess your portfolio with a calm mind. Sell out investments in which your previous hypothesis doesn’t hold. Realign your portfolio to make it stronger and in the process, it is okay to sell some stocks at a loss and buy fundamentally stronger companies that are also available at attractive prices. Also, look for the opportunities to put unused cash into the right investment. Look for companies that will perform well irrespective of the time taken for recovery.

  2. Don’t Stop SIPs

    Stopping SIPs because of the fall in the market is a big mistake that retail investors sometimes make. Investors don’t need to stop their Systematic Investment Plan (SIPs) in equity funds when the stock market is in the red. Instead, when the market tumbles, stick to the SIP discipline (provided the selection was correct to start with) because it will help you to achieve their long-term investment goals.

    As Charlie Munger said, “Waiting helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”

    Stopping your SIPs will only defeat the very purpose of starting it and interrupt the compounding benefits of equities.

    A correction is in fact, a time to increase your SIPs.

What should you do

Benjamin Graham said, “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

If you haven’t already listed out your financial goals and planned on how to achieve them, there is no better time to start.

But before that, you need to take care of these essential commitments: 

3 essential things to do before you invest:

Given that companies are hit adversely by the pandemic and the lockdown, it is extremely important that remain in a financially sound position to take on unexpected situations. Before thinking of investing, it is paramount that you put you and your family members first and ensure their lives are secured.

Here’s what you should look at right now in the order of priority:

  1. Health insurance to cover any medical expenses for yourself and family
  2. Life insurance term plan to cover the income you are likely to earn in the future say 20 years (in case of your death or otherwise inability to earn this)
  3. An emergency fund of 6 to 12 months of your expenses in case you are in-between jobs for whatever reasons

The two insurances are expenses while the third is money you put in a Fixed Deposit (in the top 3 banks and no less). The emergency fund is even more essential today, where there are increased chances of job losses and emergency health-related expenditures.

Calculating investable surplus:

The 4th essential thing that follows the above is estimating the money available for investing your investable surplus.

First, check how much investable surplus you generate every month.

From your total monthly income, you subtract your monthly expenses (include the money you have to spend on your life and health insurance).

Some expenses we incur once or twice in the year e.g. vacation, convert this into a monthly amount. Any EMIs will also have to be provided for thus reducing the monthly surplus.

Now to estimate your lumpsum investable surplus. After setting aside your emergency fund, the savings are all an investable surplus. However, if you have any big expenses in the next 5 years you need to set aside money for this, again invest in an FD.

You will see that in the MoneyWorks4me Financial Planning this expense (happening in the next 5 years) is always put in the Debt or fixed income asset. The money that you can invest in Equity is money you don’t require in the next 5+ years and even longer.

Where should you invest?

As a retail investor you should invest in multiple assets for the right reasons:

  1. Equity (stocks and mutual funds) to earn high (well over inflation rate returns but it carries risk
  2. Debt Funds/FD (fixed-income funds): to keep a portion of your money safe and if possible earn returns slightly better than inflation. (not all Debt Funds are low risk, but you need to choose the low risk funds/options when investing. Investing in debt funds with higher risk e.g. credit risks to earn higher returns goes against the very purpose of the allocation to Fixed Income Assets)
  3. Gold – As insurance in times of distress like an earthquake, currency crises, economic risks, or government failures.  

How much to invest in each asset class?

There are certain well established and time-tested rules that govern how much of your surplus you should invest in different asset classes. This is known as asset allocation in investing parlance.

This is determined by your Risk Profile i.e. your ability and willingness to take risks. Your ability to take risk depends on your income, expenses, age, responsibilities, total net worth, etc. Your willingness to take risks is determined by your temperament, how much risk or loss you are able to handle beyond which you are likely to take incorrect decisions out of fear or inability to handle the pain and discomfort.

This requires you to answer a Risk Profiling Questionnaire which then informs you what asset allocation suit you. You will then be assigned to any of the following 3 categories: Conservative, Moderate, and Aggressive with a Debt: Equity allocation of 60:40, 50:50 and 40:60 respectively.

Asset Allocation

Why is asset allocation important, especially in steep market corrections?  

By allocating a portion of your investable surplus to Fixed Income assets popularly known as Debt Funds, Bonds, Fixed Deposits, etc, investors can navigate market corrections and cut losses significantly.

So, if you allocate 1 Cr in a 50:50 ratio to Debt and Equity, a 25% fall in the market (like the current COVID-19 crisis) would probably result in about 12.5% drop in your portfolio; 12.5 lacs on your 1 Cr portfolio. The 50% allocated to Debt would earn you some returns say 6% i.e. 3 lacs on your 50 lacs resulting in you seeing a 9.5 lacs drop in your portfolio.

This will cause you some pain no doubt but not distress or panic (better than losing 25 lakhs if you had invested 100% in equity), thus ensuring you stay invested. And even if you have a goal that needs funding you don’t have to sell your stocks but can fund it from your Debt investment e.g. by breaking an FD. 

How to build your Equity Portfolio?

The objective of your investment in equity is to earn healthy high returns by taking manageable risks. You cannot avoid risk when investing in Equity but by having reasonable returns expectations you manage it at a level where you stay invested. You can build your equity portfolio by investing in:

  1. Direct Stocks
  2. Actively Managed Mutual Funds
  3. Index funds and ETFs

How does one decide the mix Stocks: MF: Index?

There is no model allocation. The mix between Stocks:MF: Index would depend on an individual’s preference. All three have risks as they belong to the equity asset class.

Index funds should be limited as returns are likely to be lower than the MFs/stocks portfolio. The allocation to Stocks: MF will depend on your ability to stomach volatility. The stock portfolio will be more volatile than an MF portfolio and can cause investors to take irrational decisions like not booking losses frequently, the inability to stay invested, etc.

Important tips for investing in the stock market amidst a pandemic

  1. Be diversified:

    One of the best ways to manage risk in your portfolio is to diversify your investments. You can diversify both within and among different asset classes, and within particular asset subclasses. The key lies in building your portfolio with investments that are not correlated to each other. There is no simple answer to how many different investments and the different types you should own to diversify your portfolio broadly enough to manage investment risk. However, talking to a licensed investment professional like MoneyWorks4Me can help.

  2. Invest for the long term:

    Marathon or a sprint, what would you prefer when it comes to making an investment decision? While short-term investments have their perks, long-term investment is the way to go. Long-term investments allow compounding to work the magic on your portfolio. Long term investments also reduce the risks substantially, as equities have proven to have positive ROI over the long term, no matter when you invested. Long term investments also reduce trading expenses and provide tax advantages to capital gains.

  3. Invest in tranches:

    Investing in tranches is an effective strategy in uncertain times like the correction due to COVID 19. It allows you to take advantage of the correction in case the stock market corrects further. At the same time, it saves you from the fear of missing out if the stock markets rise and lend courage to average up your investments.

  4. Invest in quality companies/funds:

    Quality-companies are those that have delivered profitable results even during a tough market and economic conditions. In fact, they are ones that have bounced back at the stock market after the COVID-19 tumble.

    1. Look for a proven track record over 10 years as it usually has at least one tough period.
    2. Only companies with some moat-competitive edge can deliver this performance.
    3. Look at the key ratios and if most of them are good you have found a quality company.

    Sounds complicated? Don’t worry!

    At Moneyworks4me, we have simplified this through a unique colour-coded 10-Year X-ray of companies that would indicate the health of a company with a single glance.

    For details read,How to Choose Quality Companies?

  5. Don’t borrow money to invest:

    Borrowing money to invest can be extremely risky and can wipe out your entire capital. One reason for this is that there is no guarantee that your investments will go up soon enough to afford the interest payment. If your investment does go down, you will end up borrowing more money to cover up the losses, in turn paying higher interest, and the vicious cycle continues. The losses also impact you behaviorally, leading you into making suboptimal decisions. Investing in equity is always done with your own money.

  6. Invest using Quality at a Reasonable Price (QaRP) method:

    QaRP is a way of investing most suited for retail stock investors. This method ensures you invest exclusively in quality companies at reasonable prices. This reduces the chances and extent of a fall in your net worth and thereby dramatically increases your chances of staying invested. Wealth is the outcome of staying invested and compounding the growth of your investment.
    There are other ways of investing in stocks – Growth, Value, Quality (at any price), Momentum, Small Cap, etc. However, they demand higher risk-taking ability and higher tolerance to volatility and less than what most of us have. You can invest in these through suitable mutual funds.

  7. Do not forget Smart Asset Allocation:

    Smart Allocation ensures you earn higher than FD returns on the Debt portion of your investment without having to invest in risky debt assets.

    In the conventional asset allocation, your portfolio is rebalanced to the debt-equity ratio dictated by your risk profile. In smart asset allocation, when the market corrects and falls below fair value levels and high-quality stocks are available at attractive discounts the asset allocation is changed to increase equity e.g. from 50:50 for moderate it could go to 40:60. You can move a portion from Liquid funds to Equity. When the market goes back to fair value levels or above you move some money back to Liquid funds by selling some equity and you restore your original asset allocation. If the market goes substantially above fair value then using smart asset allocation can reduce the allocation to equity.

    If you manage this correctly, a major portion of your funds allocated to debt should be invested very safely in FD (Top 3 banks) and Government securities- GILT bonds and the rest parked in a Liquid Fund. With smart asset allocation, you can invest a portion of the Liquid Funds in high-quality stocks or an Index fund or a Blue-chip/large Cap fund when the market offers attractive discounts instead of risky debt funds.

  8. Manage your risks:

    The adage “No Risk, No Gain” is equally significant in today’s time if you are planning to invest in assets. While FDs at State Bank of India may be the safest option, returns on this asset will also be the lowest. Similarly, though equities provide the highest return, they also come with substantial risk and the high volatility is not every investor’s cup of tea. To attain equilibrium between the risk and gain, you must seek the assistance of the domain advisors.

    A fiduciary advisor will assist you to take calculated risks and participate only in those opportunities whose returns compensate well for the risks undertaken.

    To be better prepared to manage your risks, you must be aware of the risks that exist at the stock and portfolio level. Business risk, valuation risk, and liquidity risk are some of the risks that may arise at the stock level. You should be prepared for the risks that are likely to arise at the portfolio level such as asset allocation risk, market cap risk, sector, and stock exposure risk.

With the portfolio manager at MoneyWorks4me, you stand a better chance to identify risks at both portfolio and stock levels in real-time. This will help you to act on the recommended suggestions to reduce risk.

Conclusion:

  1. There are different investment strategies/processes/styles of building an equity portfolio- Growth, Value, Quality (at any price), Quality-at-Reasonable-Price (QaRP), Momentum, Small Cap, etc. None of these work under all market and economic conditions and hence will have their periods of under-performance. The key is to stay invested. 
  2. For your Direct Stocks portfolio, QaRP is most suitable for retail investors. Using this build a portfolio of around 20 stocks. You need a fiduciary advisor with stock research capabilities to guide you in building this portfolio. For details read,Stock Investing Made Simple – A Complete Step-by-Step Guide‘.
  3. For other styles of investing use the Mutual Fund route. Invest in 4/5 funds.
  4. Invest in mutual funds (from among those following the same style) based on relatively better quality, consistency of performance, and lower expense ratio and the one with a higher upside over the next 3 yearsFor details read,How do you select the right Equity Mutual Fund to invest in?

Remember, all this should be done under guidance from a competent advisor. A professional fiduciary adviser can gear your portfolio to achieving the best risk-adjusted returns and help you build wealth even when situations are not optimal such as now.

About MoneyWorks4Me:

MW4M is a one-stop solution for investors, both new and experienced, to track stock easily, manage their portfolio, and a goldmine for expert investment advice. Sign-up to be an MW4ME member.


    1. Join our Telegram Channel:
      Stock Investing
      Mutual Fund Investing

      Join our Telegram Channel:
      Stock Investing
      Mutual Fund Investing

      Need help on Investing? And more….Puchho Befikar

      Kyunki yeh paise ka mamala hai
      Start Chat | Request a Callback | Call 020 6725 8333 | WhatsApp 8055769463

The post The Complete Guide To Investing in the Times of COVID-19 appeared first on Investment Shastra.



Source link

قالب وردپرس

Share Market

Top 10 Companies That Offer Restricted Stock Units

Published

on


Restricted Stock Unit

Restricted stock units (RSUs) are a top perk for employees. Many tech companies that are growth stocks offer this stock-based compensation once an employee joins a company. In many cases, they are an alternative to stock options similar to ETFs.

In this TradingSim article, I will explain what a restricted stock unit is. Throughout this article, I will also explain which stocks can be added to rebalance portfolios and help their trading strategies because they are profitable enough to offer employees the best RSUs.

What are restricted stock units?

When a company hires an employee, at first they may receive the units as part of their compensation. RSUs are grants that are part of stock-based compensation that are equal to the value of a corporation’s common stock. When companies issue the grants, they are based on the value of the company’s stock.

How do RSUs work?

Employers distribute restricted stock units to employees after a vesting period. A vested definition means that an employee will own shares. During a vesting period, a certain amount of time an employee has to work at a company before they receive the shares.

For example, a company can give an employee 2,000 RSUs. If 25% of the RSUs vest each year, after one year, 500 shares will vest. In addition, employees can also receive the shares as cash. Once they vest, an employee can receive sell the shares.

If employees want to donate their RSUs to charity, they can help a good cause- and themselves at tax time. One benefit is that employees can get an itemized deduction that’s equal to the stock’s market value. The second benefit is that employees can avoid capital gains taxes by giving RSU shares to charities.

What are double trigger RSUs?

Double trigger RSUs are another kind of restricted stock unit that employers offer. They are offered by new companies before their IPOs(initial public offerings. Double trigger RSUs are not taxed until they are vested and the companies go public with their IPOs.

Garrett Perez, a CPA, notes that many companies have double trigger restrictive RSUs to protect their workers.

“Most companies who do in fact issue RSUs have this requirement [of double-trigger vesting] as it would be extremely punitive on their employees to have them recognize it as income with essentially no market to sell it in. I’ve never seen a pre-IPO company that does not have the double vesting requirement,” said Perez.

What is a restricted stock unit vested schedule?

Some employers offer RSUs on a graduated vesting schedule. In that case, the units may vest 10% after one year, 20% after two years, and so on.

Vested schedules for restricted stock units vary in three ways. For example, say an employee receives 120 RSU’s in January 2020. In cliff vesting, workers receive 100% of their benefits after a certain amount of time. In a three-year vesting schedule, an employee receives all their shares in January 2023.

With a graded vesting schedule, a company gives fewer shares of its stock at an annual rate. If there’s a three-year graded vesting schedule, an employee may receive 30 shares of a stock every January until 2023.

In a cliff/graded vesting hybrid, there is a mixture of the two vesting schedules. A company can issue 40 shares of its stock in January 2020. Then, they may issue 3-4 shares a month until the vesting period is over.

How do RSUs differ from stock options?

Similar to stocks vs. ETFs, RSUs are similar to stock options, but have key differences. In most instances, restricted stock units

  1. don’t expire. They convert into shares after a vesting period. Because of the conversion, they don’t ever have an expiration date.
  2. have the same fair market value during the vesting period.
  3. complete a vesting schedule usually after five years.
  4. are taxed as regular income when they’re vested.

In contrast, stock options

  1. expire 10 years after employees receive them.
  2. tie into the stock price. If a stock price drops below the grant price, the option’s value plummets. When a stock price rises, the stock option’s value jumps as well.
  3. aren’t vested.
  4. are taxed at the time the options are exercised.

What are the advantages of restricted stock units?

In a bear market, restricted stock units can be a safer option for employees. Because stock options are tied to a stock price, a diminished stock price can hurt an employee’s stock options. However, employees take RSUs at a stock’s current market value when they’re vested. At the time the units are vested, they could have a higher value to employees.

What are the disadvantages of RSUs?

Because restricted stock units are different from stock options, they may not reap all the benefits. Since most RSUs vest after five years, many employees may leave their jobs before they enjoy the stock perks. If an employee quits, their former employer forfeits the RSU that remain.

Even if employees stay with a corporation for five years, the value of their RSUs may not be the same after the vesting period. If the stock loses value during an economic downturn, the RSUs may lose value when the employee receives the shares.

How are restricted stock units taxed?

In the year they’re vested, RSUs are taxed as income if an employee keeps the units. If an employee sells the units, capital gains taxes will due at the time of the sale. Restricted stock units aren’t tax-free investment expenses. For example, if an employee vested 20,000 shares of a company’s stock at $20, the value of the RSUs will be $200,000. That amount is treated as taxable income by the IRS.

It’s important to have the RSU vested income set aside to pay taxes because tech companies usually may not pay them themselves. The success of tech companies may ironically mean that they don’t make withdrawals for employees.

Corporations usually withhold state, federal, Social Security, and Medicare taxes on RSU’s. The taxes are usually at a flat rate of 22%.

However, because tech companies are often in high tax brackets, a tech company’s workers often have to pay higher taxes on their RSUs. They would often owe more than what employers would set aside to cover taxes.

Special tax election can collect RSU taxes sooner

If an employee wants to take their taxes out before the restricted stock units vest, they can make a special election. The special Section 83(b) election taxes employees before the RSUs vest. The RSUs are taxed as extra compensation.

If employees keep the restricted stock units for more than a year, the RSUs are taxed at a lower rate as capital gains. However, the units are taxed in the year that employees receive them, even if the stock unit declines in value.

What are the RSU tax withholding methods?

There are four main tax withholding methods for restricted stock units.

  1. In a same-day sale, all of the shares sell on the day they’re vested. The money can be used to pay taxes.
  2. With a cash transfer, money is deposited from an employee’s account to pay taxes.
  3. In the sell-to-cover method, an employee receives shares at the end of the vesting period. An employee’s broker can sell the shares to cover tax expenses. Then, a worker can keep the remaining shares.
  4. With a net share settlement, an employee’s company can retain some of the vested RSUs. The shares are equal to the withholding tax amount. After that, the units that are left can be deposited to a brokerage account.

What is the cost basis for restricted stock units?

Cost Basis

The cost basis for RSUs is the fair market original value of an employee’s shares on the day that the units vest and they receive the shares. That value will likely never change throughout the vesting period of the restricted stock units. The cost basis usually stays the same. It isn’t adjusted to calculate an employee’s tax calculations unless the unit amount is $0.

All of the corporations below offer generous RSUs to employees. These companies are the top corporations that offer restricted stock units to employees.

1. Amazon

Amazon’s stock soars during COVID-19

During the coronavirus pandemic, Amazon’s (NASDAQ:AMZN) stock soared 68% a year after hitting its rock-bottom low. Financial experts like Wedbush analyst Michael Pachter said the e-commerce boom during quarantine will boost Amazon in the long term.

“E-commerce is likely one of the biggest beneficiaries. E-commerce is likely to see a permanent shift away from offline stores,” said Pachter.

FBN Securities analyst Shebly Seyrafi believes that Amazon stock will continue to rise even if another quarantine happens in the U.S.

“To us[FBN Securities], AMZN[Amazon] is the ultimate ‘stay-at-home stock,’” wrote Seyrafi in a note to clients.

Amazon raises wages, but cuts RSUs for hourly workers

Amazon’s RSUs usually vest after four years. They vest on a 5-15-40-40 schedule. That means that after year 1, the restricted stock units vest 5%. Then they vest 15% the second year. In the last two years, they vest at 40%.

During 2018, Amazon eliminated RSUs for its hourly workers. In exchange for raising the wage of hourly workers to $15, Amazon ended RSUs as part of employee benefits. As noted in a company blog post, Amazon restricted stock units will vest this year, and in 2021. The corporation replaced the RSUs with direct stock. An Amazon spokesperson explained the changes.

“The significant increase in hourly cash wages more than compensates for the phase-out of incentive pay and RSUs,” said the spokesperson.

“We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable,” added the spokesperson.

Amazon RSUs help employees buy homes

For salaried employees that still receive RSUs, the units make it easier to buy pricey homes in the company’s home base of Seattle. Diana Bowar, a loan officer at 1st Security Bank, offers restricted unit stock loans to Amazon employees to buy million-dollar homes. Bowar noted that the employees receiving RSUs are more likely to stay in Seattle.

“There’s a need in our backyard. And we’ve seen that people who are getting RSU income and have contracts with Amazon, the likelihood that they’re going to stay in that job making that kind of income is good,” said Bowar.

In 2019, bank lenders usually need employees to show two years of RSU income before they consider restricted stock units as income. Don Zender is branch manager of Evergreen Home Loans and Veterans Lending. He noticed that Amazon employers couldn’t use their RSUs as a down payment on houses.

“But if you start at Amazon, you can’t do that. The biggest hurdle has always been the first couple years,” said Zender.

Many lenders like Evergreen are now open to providing loans to employees with Amazon RSUs.

“Some lenders are starting to say, well, RSUs are not really a one-time thing,” said Steve Geri, a financial adviser at Denny Park Investments in South Lake Union. “They’re a continuing form of compensation in many industries.”

Amazon is a top stock offering restricted stock unit

2. Uber

Uber stock strong as it moves beyond ridesharing

Uber(NASDAQ:UBER) stock recently rose 3% after recent reports it was purchasing food delivery service Postmates. The acquisition would be a welcome addition to Uber’s own food delivery division, Uber Eats. Canaccord Genuity Maria Ripps wrote a note to clients that suggested that Postmates would help Postmates raise Uber’s stock more.

“Postmates should continue to benefit from restaurant selection and strong positions in key markets. However, as the fourth-largest player in the US market, we also see it as a potential consolidation target,” wrote Ripps in the recent client note.

Uber benefits from being rideshare leader

The ridesharing giant has benefitted from being a rideshare leader. Uber CEO Dara Khosrowshahi noted that the company has an advantage over competitor Lyft because of its global reach and diversified businesses under the Uber umbrella.

“We[Uber] are structurally set up more efficiently and more optimally than anyone else to move to profitability. This environment is perfect for us,” said Khosrowshahi.

Uber established restricted stock units in beginning

When Uber first went public in 2019, it detailed in its IPO filing how it would distribute its RSUs.

Uber is a top tech stock that offers RSUs

“As we transition to become a publicly-traded company, we expect that the mix of service- and performance-based components of our equity compensation will shift,” said Uber.

To help us achieve our objectives of rewarding our executive officers for their experience and performance and motivating them to achieve our long-term strategic goals following this offering, we anticipate that performance-based vesting conditions applicable to RSUs granted to our executive officers will become more prevalent,” added Uber.

Uber employees see downside to RSUs

While Uber’s IPO has been successful, there was an unexpected tax burden to its employees. When the IPO launched, Uber recorded its shares at $45. The company tied the restricted stock unit settlement to its IPO launch in 2019. Uber was optimistic that the stock would rise and give a bigger payoff to employees.

In a letter to employees in May 2019, Uber hoped that the move would “mitigate the risk that the company could be responsible for paying a significantly higher amount in taxes if the stock price increases meaningfully after the IPO.

However, the opposite happened. Uber stock dropped to $23. Because the stock fell, employees have to pay extra taxes on capital losses. If the stock had gone up, Uber and its employees would have had to pay less tax in the long run. Employees at the time noted how the extra tax bill shocked them at the time.

“Word started dripping out to say, ‘Hey, I actually owe quite a bit of money to the government. There was a bit of panic and a lot of anxiety’,” said the former employee.

Uber’s RSU is cautionary tale for employees

While Uber offers generous benefits to employees like RSUs, at first, they weren’t implemented with the best advantages to employees. Barbara Baksa, director of the National Association of Stock Plan Professionals, noted that Uber thought its RSUs would rise as its stock was supposed to grow.

“If you think that you’re going to IPO and the stock price is going to continue to accelerate and in six months that stock is going to be worth a lot more, then it would definitely be to the employees’ advantage to have the tax withholding done at the IPO because it would reduce their tax liability and start their capital gains earlier,” said Baska.

Parkworth Wealth Management principal Bruce Barton said that Uber and other tech companies have untraditional ways to compensate employees. Restricted stock units are part of a new compensation package.

“We’re talking about large private companies that got very large, very fast and had to adopt this nontypical way to compensate employees. They’re still experimenting,” said Barton.

Uber offers generous RSUs, but employees must be aware of the possible tax responsibilities they may have when they receive them.

3. Apple

Apple stock rises during COVID-19

The tech giant’s stock skyrocketed by 46%, during the nationwide shutdown. Credit Suisse analyst Matthew Cabral raised his price target on Apple stock because the company’s App revenue grew 35% over the last few months.

“Despite a slow start, increased screen time amid widespread ‘stay at home’ measures is now translating into a rapid acceleration in App Store revenue,” wrote Cabral in a note to clients.

“We’re[Credit Suisse] encouraged by building App Store momentum, both as evidence of Apple’s ability to increasingly monetize its nearly 1 billion iPhone user base and in support of multiple expansion for the stock as the mix shifts to higher-quality, more recurring revenue,” added Cabral.

Apple stock

Evercore ISI analyst Amit Daryanani also expects Apple stock to rise as customers buy more Apple Watches and other devices.

“We expect wearables and services to sustain double digit growth driven by uptick in [average revenue per user] and better monetization of the install base,”  said Daryanani.

Daryanani also expects Apple stock to outperform as the corporation recently announced that it would make its own chips in-house.

“It is encouraging that Apple continues to demonstrate its leading chip design capabilities as in-housing semi design remains key to product margin expansion,” noted Daryanani.

Apple’s restricted stock units expanded to many employees

Apple (NASDAQ:AAPL) has a generous restricted stock unit package for employees. The RSUs were implemented by CEO Tim Cook in 2018.

The tech company revealed that it will offer $2500 in restricted stock units to some employees. Cook explained the RSU compensation in an email.

“To show our support for our team and our confidence in Apple’s future, we’ll be issuing a grant of $2,500 in restricted stock units to all individual contributors and management up to and including Senior Managers worldwide. Both full-time and part-time employees across all aspects of Apple’s business are eligible,” said Cook.

While many employees received many RSUs, Cook benefitted the most from restricted stock units. When he reached the five-year mark of leading Apple, he gained 700,000 RSUs as part of a whopping $100 million bonus compensation deal.

Apple RSUs can be beneficial to part-time and full-time employees if they stay with the company for the long haul.

4. Verizon

Verizon(NYSE:VZ) offers substantial restricted stock units to employees. The phone company’s early adoption of 5G technology and high-paying dividend make the stock attractive to Goldman Sachs analysts. The analysts rate Verizon as a buy.

“We add Buy-rated VZ to the Conviction List as we see the stock offering investors the most attractive combination of total return and risk owing to its stable wireless business, well-covered dividend (4.6% yield) and strong balance sheet,” noted the analysts.

Verizon stock

“We believe Verizon’s financial performance will not be materially impacted by a short-term economic shock. This is because a large majority Verizon’s revenues come from selling wireless connectivity services to consumers and businesses in the US,” added Goldman Sachs.

Verizon’s restricted stock units help employees

Verizon’s” Stock Together” program gives RSUs to its employees. Verizon RSUs have a three-year vesting period. On a graded vesting schedule, workers receive one-third of the units on the anniversaries of the date they started with Verizon. In order to receive the RSUs, an employee has to stay through the entire vesting period. If an employee leaves before the vesting period is over, an employee can get the RSUs depending on the reason they left.

In the Verizon RSU program, the amount awarded to employees depends on certain factors. Verizon gives the restricted stock units after dividing the employee’s fixed dollar amount by Verizon’s stock price at the end of the vesting date.

If an employee’s award amount is $3,000 and Verizon’s stock price on the vesting date is $50, the equation is 3,000/50. In that equation, 3,000/50=60. So, a Verizon employee will receive 60 RSUs at the end of each vesting date.

5. Bank of America

Despite the difficulty banks had during the recession, Bank of America (NYSE:BAC) still had a strong Q1 2020. The bank’s CEO, Brian Moynihan, touted the company’s $22.8 billion revenue.

Bank of America stock

“Our results reflect the strength of our balance sheet, the diversity of our earnings, and the resilience of our teammates to serve clients around the world. Despite increasing our loan loss reserves, we earned $4 billion this quarter’,” said Moynihan.

Bank of America offers large RSU bonuses to employees

During the bull market of 2019, the Bank of America gave 200 to 500 restricted stock units to part-time and full-time employees. The RSUs are for employees that earn between $100,000-$350,000 a year. In this graded vesting period, employees are given the RSUs over four years at the same annual time. Moynihan wrote in a company email about how he wanted the RSUs to lead to employee retention.

“This stock award…will further align the role these teammates play with our continued performance and our shareholders’ objectives,” wrote Moynihan.

Even though the Bank of America is struggling during the global recession, there is still a strong RSU program for employees.

6. Microsoft

Microsoft (NYSE:MSFT) essentially pioneered the restricted stock unit program for workers. Bill Gates spoke about why he thought RSUs were better options for its employees.

“The fact is that the variation in the value of an option is just too great. I can imagine an employee going home at night and considering two wildly different possibilities with his compensation program. Either he can buy six summer homes or no summer homes. Either he can send his kids to college 50 times, or no times,” said Gates.

Microsoft stock

“The variation is huge; much greater than most employees have an appetite for. And so as soon as they saw that options could go both ways, we proposed an economic equivalent. So what we do now is give shares, not options,” added Gates.

Microsoft stock struggles after closing physical stores

While Microsoft stock rose 45% after physically closing stores, the company’s stock dipped 2% after permanently closing the stores. Despite the slight decline, Microsoft Corporate Vice President David Porter said the closures signal a more cloud-based system to help customers.

“It is a new day for how Microsoft Store team members will serve all customers,” said Porter. “We are energized about the opportunity to innovate in how we engage with all customers, maximize our talent for greatest impact, and most importantly help our valued customers achieve more,” said Porter.

Microsoft restricted stock unit vesting schedule

Despite the drop in Microsoft stock, the Microsoft RSUs are still significant. The restricted stock units are granted every August . After three months, new RSUs are vested five percent over five years. Employees with older grants have them vested 10% every six months in the five year vesting period.

Microsoft’s restricted unit stock system has long been a benefit to its workers.

7. Starbucks

Analysts bullish on Starbucks after stock rise

Starbucks’ growth potential in the next quarter has garnered the attention of financial experts. The investment firm Ensemble Capital, says the coffee company’s stock is a buy. Ensemble Capital is bullish on Starbucks even though many stores were closed during the COVID-19 pandemic. Ensemble Capital believes Starbucks stock can rebound once the economy re-opens this summer.

“Starbucks, which nearly tagged $100 a share over the summer as investors finally realized that the company could return to solid levels of same store sales growth, backed off earlier in the quarter before another strong quarter of same store sales growth in both the US and China reminded investors just how dominant this company actually is,” wrote Ensemble Capital.

RSU’s from Starbucks pay off quickly

Starbucks’ RSU’s are very generous. The coffee giant’s Bean Stock program gives restricted stock units to employees. CEO Howard Schultz increased the benefit in 2016. He touted the plan in a statement.

“Every day, I strive to build the kind of company that my father never had a chance to work for, one that not only cares for its people but gives them opportunities to be their best selves,” wrote Schultz in his statement.

The RSU’s vest over a two-year period. In the graded schedule, 50% of the units vest a year after an employee starts working for the coffee company. After the second anniversary of a worker’s tenure, the other 50% of the restricted stock units vest.

If an employee leaves before all the units vest, all the vested RSUs are for the employees to keep. When there are unvested restricted stock units, they are forfeited once a worker leaves the corporation.

Starbucks stock

Starbucks’ RSUs pay off for employees in a shorter period of time than other corporations. Schultz has created a restricted stock unit system that greatly helps its employees.

8. IBM

The tech company IBM( NYSE: IBM) saw its stock rise as it bought the tech company Red Hat. Red Hat’s sales increased 18% from a year earlier after the acquisition. Victoria Greene, an analyst with G Squared Private Wealth, rates IBM stock a buy. She praises the company’s focus on cloud-based technology.

“IBM’s AI is leaps and bounds ahead of competitors since they have invested heavily in it for 10 years,” said Greene.

IBM’s restricted stock units benefit employees and CEO

Because of IBM’s strong stock, the corporation’s employees receive restricted stock units over a four-year vesting schedule. The RSUs vest at 25% each year on a graded schedule. The tech company’s CEO, Arvind Krishna, gets a similar deal to his employees. IBM detailed its RSU vesting period.

IBM stock

“RSUs will vest 25% on June 8, 2021, 2022, 2023 and 2024, provided Krishna is an active IBM employee on these dates ( unless certain requirements are met to be eligible for continued vesting. PSUs will be adjusted based on performance and will be paid out in February 2023,” noted IBM in its SEC (Securities and Exchange Commission) filings.

IBM’s graded vesting period enables employees and its CEO to reap many benefits from its compensation package.

9. Facebook

Facebook stock tumbles on ad boycott

A free speech debate is affecting Facebook stock. Facebook stock fell slightly after many companies are refusing to place ads on the social media company’s site to protest a Facebook policy. Facebook won’t take down controversial posts that are considered hate speech or misleading political ads by the companies.

The corporation pledged that it was trying to weed out misinformation on the site.

“We invest billions of dollars each year to keep our community safe and continuously work with outside experts to review and update our policies. We know we have more work to do,” said a Facebook spokesperson.

Despite the controversy, Rohit Kulkarni, executive director at MKM Partners says that the ad boycott of companies like Proctor & Gamble won’t greatly affect Facebook stock.

Facebook stock

“Procter & Gamble is the largest advertiser in the world, but we think it accounts for less than 0.50% of FB’s revenues,” said Kulkarni.

Kulkarni agrees with Wall Street’s projections for 7% Q3 2020 growth.

“We believe near-term[Wall] Street estimates are reasonable and that there is upside potential given ad market recovery,” said Kulkarni.

Facebook RSUs helpful to workers

Despite the negative publicity, Facebook’s restricted stock units are beneficial to its employees. In Facebook’s RSU vesting period, the units vest on a quarterly schedule. In the graded vesting period, the employees vest 6.25% every three months. After vesting 25% a year, the RSU’s are fully vested after four years.

10. Intel

After the news that the aforementioned Apple was dropping Intel as a chip maker for its devices, Intel stock dropped. Despite the severance of their relationship, Intel took the partnership ending well.

“Apple is a customer across several areas of business, and we will continue to support them. Intel remains focused on delivering the most advanced PC experiences and a wide range of technology choices that redefine computing,” said Intel in a statement.

Despite the decline, some financial analysts want investors to buy the dip. Goldman Sachs rates Intel as a buy. The analysts say that more use of devices during the nationwide quarantine helped Intel.

“Despite the headwinds related to Covid-19, we are maintaining our estimates as we believe there are multiple near-term positive developments (i.e., potential strength/resilience in the high-end client CPU[ computer processing unit] and server CPU markets given a growing number of people working/studying from home) that could largely offset the headwinds (i.e., weaker consumption and enterprise spending),” wrote the analysts in a note.

Intel RSUs help employees even when they retire

The chipmaker’s restricted stock unit program is generous to employees. Intel RSUs distribute on a graded vested schedule. The restricted stock units vest at 25% over four years.

If retirees have unvested RSUs at the time of their retirement, they receive one extra year of vesting. That occurs for every five years of employment with Intel.

Intel’s restricted stock units are beneficial to workers even at the ends of their careers.

Restricted stock units a pivotal part of employee compensation

Corporations offer RSUs as a way to reward and retain employees. While it may not seem relevant to investors, they are connected. If a stock performs well, they can offer more benefits to employees and investors. With TradingSim charts and analysis, investors can find the best stocks that pay the best restricted stock units to its employees.

The post Top 10 Companies That Offer Restricted Stock Units appeared first on – Tradingsim.



Source link

قالب وردپرس

Continue Reading

Share Market

Trading Mindset: How to Get It Right (and the Biggest Mistakes to Avoid)

Published

on


Finding success in the stock market is so much more than learning patterns. You need to have the right trading mindset.

Don’t get me wrong, patterns are essential and important. In fact, I think anyone can learn my penny stock patterns that present themselves every day in the stock market … As long as they put in the time…

You gotta practice. If you want a risk-free way to learn, you can do that on the StocksToTrade platform and paper trade. Or if you’re ready to start with real money, you can trade small.

And as you start your trading career, it’s imperative that you work to develop the right trading mindset.

Your mindset is the foundation for every trade and your entire trading career. It’s something that you have to hone and refine all the time. I know that personally from trading for 20+ years. If I don’t check my mindset, I run the risk of overtrading.

That’s exactly why I’m dedicating this post to the trading mindset. Because the wrong approach to the markets can lead to loss of confidence, chasing trades, and even blown-up accounts.

Let’s get to it!

What Is the Trading Mindset?

© 2020 Millionaire Media, LLC

The trading mindset is really a set of rules for how you’ll conduct yourself as a trader and in the markets. And you can actually apply it to a lot of other aspects of life — not just trading.

During my two decades of experience in trading penny stocks, I’ve learned key facets of the trading mindset. That’s what I base my trading rules on. My top students know just how important it is to follow these rules to become self-sufficient in the markets.

So let’s break down the rules that go into the right trading mindset … and the biggest mistakes you should avoid as a trader.

Let’s start with my #1 rule…

Cut Losses Quickly

When it comes to trading penny stocks, this is the most important thing both new and veteran traders focus on.

My newest six-figure students like Matthew Monaco, Jack Kellogg, and Kyle Williams swear by this rule.* It’s a big part of what’s helped them to grow their accounts. It’s not just how you win — it’s also how you manage your losses.

You have to cut losses quickly because penny stocks are volatile. They can make rapid gains and lose them just as fast. Too many newbie traders think these crap penny stocks will be the next Amazon or Netflix. But that’s just not the case.

A lot of these companies dilute their stock to raise money for execs and insiders. That’s what we call toxic financing. It’s a big reason you don’t hold a penny stock position and hope for the best.

Learn the patterns and how to trade them. When a trade doesn’t go as you expect, get out.

When I trade, I keep my losses small and let my winners run — even if it’s only 20%–30%. Which brings me to my next key rule…

Learn to Take Singles

Too many traders want every trade to be a 100%+ home run. We’ve seen some astounding moves in the wild pandemic market … but that’s not typical. And even Wall Street aims for about 8%–10% per year.

This rule goes back to cutting losses quickly. Once, I lost over $500K in one trade because I didn’t cut losses. You can read about that in my free book,An American Hedge Fund.”

After learning that lesson the hard way, I shifted my strategy to trade more conservatively. And if you’re managing your risk, those singles add up over time. That’s how you build a small account, and exactly what I teach in my Trading Challenge.

Here’s what you don’t do…

Hold and Hope

Holding and hoping is one of the biggest mistakes I see new traders make. It’s nothing new. A new hot sector pops up, and suddenly ‘gurus’ lure uneducated newbies into stocks that ultimately fail.

Most penny stocks won’t become large-cap stocks. Don’t look at these trades as investments…

That’s the wrong trading mindset. Maybe a few of these sketchy will become real companies one day. But I don’t like those odds, and I’m not that patient. I’d rather take my quick singles trades and let them add up.

I teach my Challenge students to do the same. Let’s look at an example of how I trade with the right tools and the trading mindset…

Artificial Intelligence Technology Solutions Inc. (OTCPK: AITX)

I took this trade because it’s a former runner with coronavirus-related news. I got in the trade early at $0.023 per share thanks to the StocksToTrade Breaking News add-on. Check out the chart:

AITX stock chart
AITX chart: 5-day, 1-minute candles — courtesy of StocksToTrade.com

I ended up selling at $0.032 per share for a $1,600 gain, which you can check out on Profit.ly.*

This was a 39% gain, which is bigger than my average. But I waited for the right setup, then I took my single and got out.

You don’t need to aim for 100% or more for winning trades. Again, trades like this add up over time. I’m up over $5.5 million in trading profits over my past 20 years of trading.* And I didn’t do it through holding and hoping.*

(*My results, along with the results of my top students are far from typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication under our belts. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)

Notice I mentioned former runners? This is exactly why you need to…

Study the Past

History repeats. I often say I’m just a glorified history teacher. I’ve been trading the same patterns for over 20+ years in the market. It’s not exactly the same — I have to adapt to what the market is giving me right now.

But too many traders think studying the past is a waste of time. Then they ask me how I know about former runners or how to spot my favorite patterns again and again.

You have to prepare. If you study what stocks moved in past pandemics like Ebola or SARS, you’d know to watch a lot of stocks that spiked in the current pandemic. I broke some of those down in this post.

There’s not just one thing you can focus on in the markets. You have to learn it all. That’s how you…

Work to Become a Self-Sufficient Trader

All the watchlists and alerts I send out to subscribers aren’t to get them to blindly follow my picks. In reality, the stocks in the penny stock niche can move so fast that by the time I send out the alert, it’s too late.

So why do I send them? To teach the process. I want you to understand why I picked those stocks. It’s another opportunity for you to study. What was the catalyst, the volume? How high did the spike run? Was it a short squeeze — and how can you tell?

My top Challenge students are self-sufficient traders. They learned my rules and strategies and then made them their own. Some even out trade me. Like Tim Grittani, arguably the best trader ever.

Start your learning process — sign up for my no-cost weekly watchlist here.

There’s something you have to always remember…

Discipline Is Key

You can learn all the right rules and strategies, but if you don’t stay focused and disciplined with the right trading mindset … you’re putting your trading career in jeopardy.

This another lesson I’ve learned the hard way. It’s why I trade like I’m a retired trader. A setup has to be so good, I’d feel awful for missing it.

That mindset helps me to not overtrade. Not gonna lie, it’s hard in this wild market. There are SO many hot plays. The volatility is insane. And I’m thrilled that all my wins will help someone in need since I donate all my profits to charity and causes like my Yemen fundraiser.

watchlist banner

Get smart tips for navigating this volatile market — and any future volatility. I put together this no-cost two-hour video lesson to help you get through it. Get access to “The Volatility Survival Guide” here.

But the market won’t be like this forever. It’s bound to slow down. So overtrading now can mess with your mindset. You risk learning the wrong lessons and losing more when the market slows down.

I’d rather see students make a few good trades per week than take a bunch of subpar trades. That’s especially true if you trade with a small account. If you use a cash account and aren’t limited by the PDT rule, it can be easy to take more speculative plays rather than waiting for a great pattern.

Don’t do it! And in this niche, always…

Expect the Worse

If you expect the worse out of these companies, you’ll never be disappointed.

Don’t believe the hype you see on Twitter. This is where the new promoters are. They love to tout these stocks. You can’t fall for it. Don’t fall in love with stocks — trade them and move on.

When I started in the markets, I was a young guy looking to make money in the markets. I had to learn to trade the hard way — through trial and error. Along the way, I had some big wins … and losses. I didn’t have a trading mentor.

There was no one willing to share what they knew about this industry.

That’s why I started teaching. I want to help dedicated students become self-sufficient traders. You can’t do that unless you really understand this industry.

People love to hate on penny stocks, but they don’t understand how to play the game. They don’t understand how to slowly build a small account. So here’s my last tip on how to get into the right trading mindset…

Build Your Knowledge Account

The best part? You can choose your level of commitment based on what works for you.

Start with my FREE online guide to penny stocks.

You can follow me on Twitter and on my YouTube channel. I release new trading articles and videos all the time.

You can get my student Jamil’s book “The Complete Penny Stock Course” to get a thorough overview of all my core lessons.

supernova placement

You can join Pennystocking Silver for access to over 6,000 video lessons and more.

And when you’re ready for the ultimate trading commitment, you can apply for my Trading Challenge. That’s where all my top students started. It includes access to the best chat room and trading community, live webinars, DVDs, and so much more.

It’s not easy. It’s taken all my top students years of hard work and studying to hit their market stride. But if you’re in the Challenge, you can trade right alongside them.

Think you have the discipline to make it in the Trading Challenge? Apply today and find out.

The Trading Mindset Conclusion

At the end of the day, there’s no single right way to trade.

What matters is your right trading mindset. Without discipline, it’s near impossible to make it in trading or to grow and protect your account. You gotta follow rules like cutting losses quickly and taking those singles.

You have to study every day.

If you’re serious about learning how to trade penny stocks, apply to my Trading Challenge.

What’s your biggest trading mindset issue? Let me know in the comments below!

The post Trading Mindset: How to Get It Right (and the Biggest Mistakes to Avoid) appeared first on Timothy Sykes.



Source link

قالب وردپرس

Continue Reading

Share Market

Your Pre Market Brief for 07/09/2020

Published

on



Pre Market Brief for Thursday July 9th 2020

You can subscribe to the daily 4:00 AM Pre Market Brief on The Twitter Link Here . Alerts in the tweets will direct you to the daily 4:00 AM Pre Market Brief in this sub.

Updated as of 7:01 AM EST

———————————————–

Stock Futures:

  • Premarket Trading
  • Stock futures add to gains in late trading, after Nasdaq hits record high
  • Stock futures steady after Nasdaq clinches new record

Wednesday 07/08/2020 News and Markets Recap:

Thursday July 9th 2020 Economic Calendar (All times are in EST)

News Heading into Thursday July 9th 2020:

  • Weekly Jobless Claims total 1.314 million, vs 1.39 million estimate
  • Stocks making the biggest moves premarket: Walgreens, Square, Carnival, Six Flags, Alibaba & more
  • Ping Identity (PING) Announces Upsize and Pricing of Follow-on Offering of Common Stock by Selling Shareholders
  • Optinose (OPTN) Announces XHANCE Co-Promotion Agreement with Kaléo
  • FDA Approves Oral Therapy for Myelodysplastic Syndromes, CMML
  • Daily on Energy: Why the largest producer of zero-carbon electricity hasn’t set a 2050 goal
  • Coronavirus demand destruction cuts U.S. LNG exports to 13-month low
  • Nanoviricides Commences Underwritten Public Offering of Common Stock
  • Circle K owner may sell gas stations amid concerns over Speedway deal
  • Ares Capital Corporation (ARCC) Prices Public Offering of $750.0 Million 3.875% Unsecured Notes Due 2026
  • Qualigen Therapeutics, Inc. Announces $8 Million Registered Direct Offering Priced At-The-Market Under Nasdaq Rules
  • United Airlines sending layoff warnings to nearly half of its US employees
  • Bed Bath and Beyond Earnings: BBBY Stock Falls 10% on Poor Q1 Performance
  • Alcoa (AA) launches private debt offering
  • AnaptysBio (ANAB) Announces Orphan Drug Designation of Imsidolimab For Treatment of Generalized Pustular Psoriasis
  • Havertys Reports Sales for Second Quarter (Much Lower than Analyst Expectations)
  • Weatherford signs four-year contract with ENI S.P.A OTCPK:WFTLF
  • Zymeworks Snags $187 Million Deal With Merck & Co., Inc. to Discover Multi-Pronged Antibodies
  • Veritone Improves Revenue and Non-GAAP Net Loss Guidance for the Second Quarter of 2020
  • Turning Point Brands (TPB) Announces Pricing of Secondary Offering of Two Million Shares of Common Stock by its Significant Stockholders
  • Otonomy Announces (OTIC) Proposed Public Offering
  • 1-Airbus H1 (EADSY) deliveries hit 16-yr low despite June bounce
  • Energy Transfer Vows to Keep Pipeline Open After Court Order
  • Gilead begins testing inhalable form of remdesivir for COVID-19
  • Total TOT secures $15.8 billion in funding for Mozambique gas project: FNB
  • Melvin Capital Management LP Reports 5.8% Passive Stake In Avis Budget Group
  • Google Scrapped Cloud Initiative in China, Other Markets
  • Ealixir (BUDT) Announces Reverse Stock Split and New Trading Symbol
  • New Mexico fines Denver-based firm $5.3M for air pollution
  • Will likely Amazon Or Netflix Buy A Movie Theater Chain?
  • Jobless claims: Another 1.38 million Americans expected to have filed for unemployment benefits
  • United eyes mass layoffs as coronavirus creates 'worst crisis' in airline history
  • Tesla stock is a gigantic bubble on the verge of exploding: strategist
  • 'Scary Number of retail companies are facing bankruptcy amid the coronavirus pandemic
  • NanoViricides Prices $10.0 Million Underwritten Public Offering of Common Stock
  • Burger King UK to shed up to 1,600 jobs
  • Pressure mounts on Johnson and Johnson to halt global talc sales
  • Bed Bath and Beyond to close 200 stores over 2 years as sales fall almost 50% during pandemic
  • Tesla 'very close' to level 5 autonomous driving technology, Musk says
  • Mylan and Fujifilm Kyowa Kirin Biologics Announce U.S. FDA Approval of Hulio® (adalimumab-fkjp)
  • Hexo’s stock soars, after first medical cannabis sales outside of Canada
  • HealthEquity Announces Pricing of Public Offering of Common Stock
  • FDA Grants Priority Review to Merck’s Supplemental Biologics License Application for KEYTRUDA® (pembrolizumab) for Second-Line Treatment of Patients With Relapsed or Refractory Classical Hodgkin Lymphoma

Upcoming Earnings:

Commodities:

COVID-19 Stats and News:

Macro Considerations:

Most Recent SEC Filings

Other

———————————————–

Morning Research and Trading Prep Tool Kit

Other Useful Resources:

The Ultimate Quick Resource For the Amateur Trader.

Subscribe to This Brief and the daily 4:00 AM Pre Market Brief on The Twitter Link Here . Alerts in the tweets will direct you to the daily brief in this sub

submitted by /u/Cicero1982
[comments]



Source link

قالب وردپرس

Continue Reading

Trending