Tim Petersen and his clan have long-term interest in their building in HighPointe Business Park in west Greeley.

They built it in 2012 with expansion and growth in mind. But this summer, Petersen sold it to an investment group out of Denver for $4.9 million.

"I sold it because I felt the market was at the top," said Petersen, the head of the Petersen Development Co., which runs a natural pet food brand, Wild Calling! Pet Foods.

"It was a good time to sell. Northern Colorado is really on fire right now," Petersen said.

Hot real estate buys have been a hallmark of the northern Colorado market for a good three years now. Hundreds of industrial properties, apartment complexes and commercial buildings traded hands in the past year and a half.

Industrial centers remain at a premium, and Kenneth Monfort, grandson of Greeley's iconic cattle rancher and son of Rockies' co-owner Charlie Monfort, was an eager buyer of Petersen's building.

"Industrial is being underserviced in the area," said Monfort, who now lives and works in Denver. "It may be worth saying that groups like ours are looking at potentially building space out there for industrial."

Real estate investment was all but dead in the recession, it's now back in full swing, retail and industrial.

"Savings accounts and bonds are so low, so all the money is coming to real estate because cause you can get a higher rater of return," said Mark Bradley, an agent with Realtec Commercial Real Estate Services in Greeley.

Rich Werner, CEO and president of Upstate Colorado Economic Development said the growth of the region will drive that investment.

"Investors are looking at these numbers and seeing these opportunities and investing accordingly," Werner said.

Bradley and Ron Randel, with Wheeler Management in Greeley, both say they are seeing some interesting investments in fast-food, where buyers are paying high prices to get their long-term investments in hand.

"It comes from people not being able to find good investment income, like retired people who will settle for less return on their money. They don't get that anywhere else but (from) a long-term lease," Randel said.

Prices are pretty inflated, however.

"There's obviously investors that are paying quite a bit of money for investment properties, because there's such a shortage of those," Bradley said.

Petersen said he's found that many outside investors are looking into Weld County because of its growth and because the Denver market is full.

"People would just call me out of the blue wanting to know if I wanted to sell," Petersen said. "I thought, 'This is crazy.' We had so much interest, I thought we'll go out and test the market."

Petersen quickly found it was the right time to sell. This is old hat to him anyway. In 2008, he sold his distribution company. Two years later, he sold a commercial building he owned in east Greeley. By 2012, he was building his building at HighPointe.

Petersen was approached to sell his 40,000-square-foot building a while back and will continue to lease the property for the next seven years. PolyTech, a company that supplies Vestas Blades in Windsor, occupies half the building, and it has a five-year lease.

But this market has Petersen curious.

"I just sold this one, and I don't have any (projects) currently, but we'll sure start looking now," Petersen said.

For many real estate agents, investment buying is par for the course; properties change hands all the time. They don't see any upswings in investment buying, though all commercial real estate is hot.

In his first big venture outside his family's companies, Monfort said investing in Greeley was like coming full circle. His partnership, IH Holdings Eleven, was the official buyer of the Petersen building.

Monfort, who grew up in Eaton, said he hopes to capitalize on real estate development in small, rural towns in northern Colorado and Wyoming, "not the flashy, sexy urban products."

"I would just say the full circle aspect of doing stuff back home in Greeley will always be a priority for me," Monfort said. "I wouldn't have looked at it (the Petersen building) otherwise."

Link:
Big west Greeley investment buy is one of many in Weld - Greeley Tribune

U.S. business investment is catching a second wind after years of wobbly performance.

Companies are ramping up orders for computers, machinery and electrical appliances, a sign businesses are growing more confident in the economic outlook eight years into an economic expansion.

Durable goods orders fell 6.8% in July, but the decline was driven by aircraft orders, which had surged the month before. Stripped of the volatile transportation category, orders were up 0.5% from a month earlier and up 5.6% from a year earlier.

Orders for core capital goods, which exclude aircraft and defense and which many economists use as a proxy for broader business investment, rose 0.4% in July. They were up 3.5% in July from a year earlier. They bottomed in June 2016 and have risen six times in seven months. That pickup in business investment marks the best run since 2010, when the U.S. was coming out of recession.

Business investment is now rising at a faster rate than overall economic growth for the first time since late 2014, evidence of momentum in an eight-year-old economic expansion that has been restrained by slow productivity growth which is sometimes the result of underinvestment. U.S. business investment rose at a 5.2% pace during the second quarter, following a 7.2% increase in the first quarter.

"Business equipment investment is on track to post another big gain in the third quarter," said Michael Pearce, U.S. economist at Capital Economics, in a note to clients.

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The rise in spending comes after particularly weak investment from 2014 to 2016, resulting from a confluence of factors including weak global demand and falling energy prices. Now, with the unemployment rate hovering near a 16-year low, businesses are likely incentivized to shift from spending on labor -- which was relatively inexpensive for many years during the expansion -- to capital.

Outside of a rebound in the oil-and-gas sector, solid fundamentals -- including strong manufacturing activity -- are further propelling companies to pour money into technology, research and development and new buildings.

Target Corp. executives noted in a second-quarter earnings call earlier this month that the company had increased spending in a rollout of hundreds of remodeled stores.

"The remodels, where they will really help us...is our ability to optimize that backroom more efficiently to drive more productivity as we ship from the store," said Chief Operating Officer John J. Mulligan in a call with analysts.

Manufacturing data has signaled a positive growth trajectory for the overall economy. U.S. factory activity expanded for the 11th consecutive month in July, according to the Institute for Supply Management.

The Business Roundtable's gauge of chief executive plans for capital spending and hiring and projections for sales over the next six months reached its highest level in three years in the second quarter.

Jeff McGahey, general manager at Harry's Saw Shop in Augusta, Ga., said the power-equipment company moved into a 17,000-square-foot facility in February 2016 after outgrowing its previous location. The move, which tripled the size of Harry's showroom, has been a boon to business.

Mr. McGahey said the business is buoyed by customers' appreciation for hands-on demonstrations. "Everything has grown," Mr. McGahey said. "As growth calls, you have to grow with it or else go home."

Of course, not all companies are boosting their capital investments, and many retailers are re-evaluating their investment strategies in light of a shift to digital selling. Foot Locker Inc. plans to reduce next year's capital spending, and J.C. Penney Co. closed 127 stores in the latest quarter, joining competitors such as Macy's Inc. and Sears Holdings Corp., in a move to cut costs.

Martin Richenhagen, chief executive of farm-equipment maker AGCO Corp., said the company doesn't plan to build new factories in the coming two or three years, but is looking to ramp up investment in research and development.

"We kept investment stable at around $315 million during the last three years, and this year we might maybe invest about 10% more than in previous years," Mr. Richenhagen said.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

August 25, 2017 12:48 ET (16:48 GMT)

Read more:
Business Investment Gains Renewed Momentum -- Update - Fox Business

A big question also looms over the $80 billion in pending Chinese outbound deals, some of which don't comply with new regulations on the kinds of acquisitions allowed. Real estate, for instance, is now on a restricted list of sectors along with entertainment, sports, and film studios. But property investments represent the biggest proportion of pending deals, accounting for 38 percent, according to Dealogic data.

If those fall apart, that's not positive news for the global real estate industry. "It takes out a class of buyers that could potentially buy at higher prices," Tal said.

China's overseas direct property investment has already fallen 82 percent in the first half of 2017. Analysts forecast the downward trend will continue, leading to a "material slowdown," with transaction volume and prices expected to come under pressure, according to a Morgan Stanley report.

It's not all bearish news. Going forward, "some of the money that would have been deployed offshore could now be deployed onshore, and that could be a positive for the Chinese market," said Nicholas Holt, head of Asia Pacific research at real estate consultancy Knight Frank.

But here's the catch: China's domestic property market is historically volatile, and trying to control the real estate bubble has long vexed authorities. So that's yet another way Beijing's crackdown on overseas investment could lead to unintended consequences.

The government's curbs have dramatically slowed outbound deals from China. They're down 40 percent in the first six months of the year to $74 billion. But experts anticipate the tide to eventually turn as Chinese companies keep looking for ways to invest abroad.

"There's been such a relaxation after the whole world was awash with Chinese money in these deals ... [but] there is still a lot money sitting in China, and Asia in general, looking for diversification," Tal said.

"The reasons to get the money out are still there when there's a lot of money that needs to move, it finds a way."

More here:
China may be crippling some of its largest companies with a crackdown on investment - CNBC

Happy Friday, MarketWatchers! The weekend is here. Start with these top stories in personal finance.

Check your internal logic: A lawyer and instructor in business ethics looks at whether the ethical right to protest without career-ending consequences is the same in both cases.

On the surface, the changes to the document might seem straightforward. But as with many things in life, theres always the chance of slip between cup and lip.

If financial advisers arent careful when comparing managers for their clients, they can inadvertently end up comparing apples to oranges.

You dont have to break the bank to stay abroad.

Four of them are in the NFL.

Google is rolling out a feature this week that helps test for the mood disorder.

How many tweets will Trump send that day? Will McGregor throw a kick? People outside the U.S. can place their bets.

For starters, any income you receive is taxable.

An Italian-made liqueur is getting plenty of buzz.

Treasury Secretary Steven Mnuchin says hes hopeful about getting a tax-code overhaul done by the end of this year after flatly stating he was wrong about finishing a deal by August.

Durable-goods orders dropped 6.8% in July, the biggest drop in almost three years, the government reported Friday.

The Dodd-Frank law and regulations put in place since the financial crisis have made the financial system substantially safer, Federal Reserve Chairwoman Janet Yellen said Friday in a ringing defense of the rules now under fire from President Donald Trump and J.P. Morgan CEO Jamie Dimon.

President Donald Trump fired back at Sen. Bob Corker for questioning his competence for office, said John Kelly is doing a fantastic job as chief of staff and again pressed Senate Republicans to get rid of the filibuster for legislation.

A pair of governorsone Democrat, one Republicanis reportedly mulling teaming up in 2020 for a White House bid on a unity ticket.

Former White House chief strategist Steve Bannon isnt any less of a controversial figure now that hes on the outside of the Trump administration.

Havent subscribed yet to MarketWatchs daily personal finance newsletter? Sign up here.

Read the rest here:
Why measuring investment performance is tricky and 5 ways to live abroad for free - MarketWatch

Aug. 25, 2017 12:59 p.m. ET

Reallocating a greater portion of the approximately $400 million J.C. Penney Co. JCP 2.12% spends on capital expenditures to technology efforts would help trim costs and boost sales, according to Jeffrey Davis, the retailers new finance chief.

Our vision [is] to evolve this organization, either through human resources mining the data or other tools, to be much more nimble than in the past, said Mr. Davis in an interview with CFO Journal this week.

Mr. Davis joined J.C. Penney last month following the departure of Edward Record, who took the CFO job at Hudsons Bay Co. HBC 14.16% Mr. Davis was previously finance chief at Darden Restaurants DRI 1.58% and finance chief of the U.S. division of Wal-Mart Stores Inc. WMT 0.37%

Mr. Davis said he and Chief Executive Marvin Ellison came to the 114-year-old business from companies with more data-rich environments. Mr. Ellison joined the retailer from Home Depot Inc. HD 0.94% in November 2014 and had spent five years at Target Corp. TGT 1.48%

Having seen what you can do if you have more timely information being provided, new technology can improve business decision-making at the retailer, he said.

Mr. Davis plans to continue J.C. Penneys debt-reduction efforts, with the aim of reducing the companys ratio of debt to adjusted earnings before interest, tax, depreciation and amortization to around three times. That figure stood at nearly 4 for 2016, with net debt at $3.95 billion and adjusted EBITDA at $1 billion, according to data from FactSet.

I would not look to change our financial policies or capital structure, he said.

J.C. Penney hasnt paid a dividend since 2013. The retailer has for years struggled to revive falling sales and quarterly losses.

Youre not going to see us issuing a dividend anytime soon, Mr. Davis.

J.C. Penney reported a second-quarter loss of $62 million, compared with a loss of $56 million in the same period of 2016. Same-store sales fell 1.3% in the second quarter, a slower decline than the 3.5% drop in the first quarter.

Mr. Davis also wants to lower selling, general and administrative expenses which are, as a share of sales, at the higher end when compared with competitors. Part of that effort would include refining how employee resources are used across the companys merchandise and operating systems, he said.

The aim is to allow our existing resources and processes to be more efficient and provide a higher level of service to customers, Mr. Davis said.

One specific initiative involves using information mined from shoppersin stores and onlineto improve the J.C. Penney experience and ultimately be much more exact around pricing, particularly at different times of the year, he said.

Right now we do that more through brute force, he said.

New technology investments could help J.C. Penney turn the corner, said Oliver Chen, senior equity analyst covering retail at Cowen & Co.

Technology is critical to helping retailers get the right items at the right place at the right time, and can reduce markdowns, he said.

It should be the top priority in retail at large because technology can manifest in better inventory management, and increased supply-chain speed, Mr. Chen said. If you dont invest in technology, youre hurting your future chances of success.

And while J.C. Penney isnt on the cutting edge, that could help the retailer avoid the pitfalls suffered by some of its competitors, Mr. Chen said.

Since theyre a second-mover in technology in some ways, they can understand the mistakes of others and try to turn it to their advantage, he said.

Investing in ways to blend the in-store and online customer experience is of particular interest to Mr. Davis, who admits to having more apparel options online.

Im 65 and 195 pounds, so sometimes its a little hard for me to find what Im looking for in the store.

Write to Tatyana Shumsky at tatyana.shumsky@wsj.com

Go here to read the rest:
JC Penney Sees Solutions in Greater Tech Investment - Wall Street Journal (subscription)

The new issue

The total gross proceeds from the new issue are $42.5 million. You can find some relevant information about the new baby bond in the table below.

Source: Author's spreadsheet

Stellus Capital Investment Corporation 5.750% Notes due 2022 (NYSE:SCA) pay a fixed interest at a rate of 5.75%. The new baby bond carries no S&P rating and is callable as of 09/15/2019, maturing on 09/15/2022. SCA has started trading close to par and has 5.82% YTM and 5.92% YTC. The interest paid by this baby bond issued by SCM is NOT eligible for the preferential 15% to 20% tax rate. The new issue hasn't started trading yet and we don't know its temporary symbol ticker. This results in "qualified equivalent" YTM and YTC at a rate of 4.87% and 4.96% respectively.

From Quantumonline.com

Stellus Capital Investment Corp. is an exchange-traded closed-end fund or a closed-end ETF that is officially described as a closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940.

The Stellus Capital Investment Corp. seeks to maximize the total return to its stockholders in the form of current income and capital appreciation.

The Fund invests primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA) through first lien, second lien, unitranche and mezzanine debt financing, often with a corresponding equity investment.

Stellus Capital Management serves as investment adviser to the fund.

Source: Cefdata.com

SCM has one outstanding bond: Stellus Capital Investment Corp 6.50% Notes due 4/30/2019 (NYSE:SCQ). The company uses the proceeds from SCA offering to redeem SCQ. In the table below, there is some information about the issue that SCM is redeeming.

Source: Author's spreadsheet

With this refinancing, SCM is saving themselves 0.75% on yearly basis.

Source: Author's spreadsheet

The image contains all baby bonds and preferred stocks issued in the Asset Management sector (according to Finviz.com) by their nominal yield.

The next chart contains all baby bonds that pay fixed interest and have less than 10 years to maturity.

Source: Author's spreadsheet

BDCs

Source: Author's spreadsheet

This chart contains all baby bonds and preferred stocks, issued by Business Development Companies by price and nominal yield.

Nothing out of the ordinary.

This is an informational article about the new baby bond SCA. With this articles, we want to pay attention to all new preferred stocks and baby bonds, and they are a good guide of what to expect from your income portfolio.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Go here to read the rest:
Stellus Capital Investment: This 5.75% Baby Bond Started Trading On NYSE - Seeking Alpha

Investment in old, rare and exclusive bottles of whisky is booming, according to analysts.

In the U.K. alone, the value of collectable bottles of Scotch sold at auction broke a record high of 11.18 million ($14.34 million) in the first half of 2017 a rise of 94 percent from the first half of 2016 according to a report published Friday.

Whisky brokerage and investment experts at valuation firm Rare Whiskey 101 said that the number of bottles of single malt Scotch whisky sold at auction shot up by almost 50 percent since the first half of the previous year.

"The market is in good health, the bulls remain in firm control. Supply is increasing significantly but increasing demand continues to push prices higher for the right bottles," Andy Simpson, broker and consultant at Rare Whisky 101, told CNBC via email on Friday.

A 50-year-old single malt brand, Macallan, was the most expensive Scotch sold in the first half of the year, selling for 65,210 ($83,656) up from a previous high for the brand of 17,000 ($21,808) in 2015.

Follow this link:
Why alternative investment in rare whisky is booming - CNBC.com - CNBC

Penny Singleton, left, and Arthur Lake, from 1947's Blondie's Holiday."

CHAPEL HILL, N.C. (MarketWatch)Not all methods for calculating investment performance are created equal. Thats important to point out because many of us otherwise think that performance is a simple, straightforward fact.

In fact, however, there are numerous ways of calculating performance that reach dramatically different conclusions. While each method can be factually correct, they can also be highly misleading. And if financial advisers arent careful when comparing managers for their clients, they can inadvertently end up comparing apples to oranges if those managers calculate their returns in different ways.

To illustrate this, consider the contrasting returns of the Value Line Arithmetic and Value Line Geometric indexes, both calculated by the well-known research institution Value Line Inc. Both indexes include the same 1,700 widely-followed U.S. stocks, and both give equal weight to each stock each day. Neither includes dividends.

Yet their returns over the last 20 years could hardly be more divergent. As illustrated in the accompanying chart, the Value Line Arithmetic index has gained 563% since August 1997 while the Value Line Geometric index has gained just 17%. (On an annualized basis, this is the difference between 9.9% and 0.8%.)

Why such a big difference? Their names provide the clue: The Arithmetic index is based on the return of the average stock (the arithmetic average) while the Geometric index uses the return of the median stock (the geometric average).

Value Line details this on its website, further explaining that the daily percentage price change of the Value Line Arithmetic Index will[in virtually all circumstances] be higher than the Value Line Geometric IndexThe greater the market volatility, the larger the spread between the geometric and arithmetic averages becomes.

This isnt a criticism of Value Line. The firm is well aware of the differences between the indexes, and would be the first to say that both indexes have their plusses and minuses.

My point here is that unscrupulous or unsuspecting advisers can draw hugely different conclusions depending on which index they use as their performance benchmark. Big as it is, the contrast between the two Value Line indexes is just the tip of the iceberg when it comes to the divergent stories you can tell using different performance methodologies.

Below are some common ways in which unsuspecting or unscrupulous advisers can tell highly misleading stories even when their actual performance calculations are factually correct:

Overlooking the asymmetry between gains and losses. To overcome a percentage loss of any size, it takes an even bigger percentage gain. A 50% loss, for example, requires a subsequent 100% gain to break-even.

Its therefore possible for a losing strategy to accurately report that the average gain of its recommended stocks nevertheless has been positive. You therefore should be skeptical of any performance claim of the form the average gain of our recommendations is X%.

Ignoring the impact of unequal portfolio allocations. Hardly any responsible adviser would allocate as much to a stock option as to a broadly-diversified stock index fund. But when performance is reported as a simple average of all recommendations, the implicit assumption is that there was an equal amount allocated to both.

Once again, you should be skeptical of performance claims reported as simple averages.

Misuse of annualization. Any gains turned in over periods of less than a year can be made to look huge by annualizing them. Consider an option that doubles over a months timea gain that, in and of itself, is hardly unusual. On an annualized basis, however, its return becomes an eye-popping 409,500%.

An adviser who takes that gain into account when calculating his average can make it appear as though he made money even when all other of his recommendations lost money.

Path dependency. It makes a big difference to how much money you make whether your gains occur before your losses, or after. This is also known as sequence risk, and since I devoted a column to it earlier this year I wont belabor the point here.

Suffice it to say that unsuspecting or unscrupulous advisers can paint false pictures by glossing over this dependency or risk.

The best way to report performance, in my opinion: How much money is made by an actual portfolio over the long term expressed as a percentage change.

While it might seem Draconian, I advise investors to ignore advisers with track records shorter than 15 year. The unfortunate reality is that over shorter periods there is a too-high probability that market-beating performance was due to luck rather than skill.

Such an approach neatly sidesteps the issues involved with each of the pitfalls identified above. And, when reported this way, the performance is closest to what your individual performance would have been if youd following that adviser in the real world.

Perhaps not surprisingly, many advisers choose not to report their performance this way. Though they may have legitimate reasons for doing so, that doesnt mean you have to take their performance claims at face value.

At a minimum, you should carefully analyze how a managers performance numbers are calculated to insure that youre comparing apples to oranges.

While it is no doubt frustrating that we cant simply rely on performance numbers to tell a complete and accurate story, we cant. We unfortunately have no other choice but to adopt a trust but verify attitude toward any and all performance claims.

For more information, including descriptions of the Hulbert Sentiment Indices, go to The Hulbert Financial Digest or email mark@hulbertratings.com.

See the original post:
Why measuring investment performance is trickier than you think - MarketWatch

Whisky might not be the most conventional buying opportunity but for this investor, it's a commodity worth investing in.

Rupert Patrick, CEO of whisky trading website WhiskyInvestDirect, said that investing in Scotch whisky is a long-term investment comparable to buying gold.

Patrick's business is part of the BullionVault group, which enables investors to trade gold, platinum and silver online.

"BullionVault's software translates very easily to scotch whisky," he told CNBC's "Street Signs".

"If you think about a gold bar sitting in a vault, and then switch that image for piles and piles of Scotch whisky sitting in barrels for 10-15 years sometimes you've got an asset which is investable to retail investors through very clever technology."

Rare, sought-after whisky brands have climbed 34.6 percent in the last 12 months, according to the Rare Whiskey Icon 100 Index.

Patrick's firm buys the spirit as a commodity directly from distillers, to then make a return on the investment at a later point.

"We buy new, so it's come off distilled into the cask beautifully, (and) it stays in their warehouse," Patrick said.

See the original post here:
Whisky could be just as sound an investment opportunity as gold - CNBC

To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future, for example, investment on durable good such as real estate for service industry and factory for manufacturing product development, which are two common types for micro-economic output in modern economy. Investment on Research and Development occurs mainly on the innovation of consumer products.

In financial market, the benefit from investment is called a return. The return may consist of capital gain or investment income, including dividends, interest, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns. The historic return comprises the actual capital gain (or loss) or income (or both) over a period of time.

Investment generally results in acquiring an asset, also called an investment. If the asset is available at a price worth investing, it is normally expected either to generate income, or to appreciate in value, so that it can be sold at a higher price (or both).

Investors generally expect higher returns from riskier investments. Financial assets range from low-risk, low-return investments, such as high-grade government bonds, to those with higher risk and higher expected commensurate reward, such as emerging markets stock investments.

Investors, particularly novices, are often advised to adopt an investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.

Investment differs from arbitrage, in which profit is generated without investing capital or bearing risk.

An investor may bear a risk of loss of some or all of their capital invested, whereas in saving (such as in a bank deposit) the risk of loss in nominal value is normally remote. (Note that if the currency of a savings account differs from the account holder's home currency, then there is the risk that the exchange rate between the two currencies will move unfavorably, so that the value in the account holder's home currency of the savings account decreases.)

Speculation involves a level of risk which is greater than most investors would generally consider justified by the expected return. An alternative characterization of speculation is its short-term, opportunistic nature.

Investors famous for their success include Warren Buffett. In March 2013 Forbes magazine, Warren Buffett ranked number 2 in their Forbes 400 list.[1] Buffett has advised in numerous articles and interviews that a good investment strategy is long term and choosing the right assets to invest in requires due diligence.

Edward O. Thorp was a highly successful hedge fund manager in the 1970s and 1980s who spoke of a similar approach.[2]

The investment principles of both of these investors have points in common with the Kelly criterion for money management.[3] Numerous interactive calculators which use the Kelly criterion can be found online.[4]

Investments are often made indirectly through intermediary financial institutions. These intermediaries include pension funds, banks, and insurance companies. They may pool money received from a number of individual end investors into funds such as investment trusts, unit trusts, SICAVs, etc. to make large scale investments. Each individual investor holds an indirect or direct claim on the assets purchased, subject to charges levied by the intermediary, which may be large and varied.

Approaches to investment sometimes referred to in marketing of collective investments include dollar cost averaging and market timing.

The Code of Hammurabi (around 1700 BC) provided a legal framework for investment, establishing a means for the pledge of collateral by codifying debtor and creditor rights in regard to pledged land. Punishments for breaking financial obligations were not as severe as those for crimes involving injury or death.[5]

In the early 1900s purchasers of stocks, bonds, and other securities were described in media, academia, and commerce as speculators. By the 1950s, the term investment had come to denote the more conservative end of the securities spectrum, while speculation was applied by financial brokers and their advertising agencies to higher risk securities much in vogue at that time. Since the last half of the 20th century, the terms speculation and speculator have specifically referred to higher risk ventures.

A value investor buys assets that they believe to be undervalued (and sells overvalued ones). To identify undervalued securities, a value investor uses analysis of the financial reports of the issuer to evaluate the security. Value investors employ accounting ratios, such as earnings per share and sales growth, to identify securities trading at prices below their worth.

Warren Buffett and Benjamin Graham are notable examples of value investors. Graham and Dodd's seminal work Security Analysis was written in the wake of the Wall Street Crash of 1929. [6]

The price to earnings ratio (P/E), or earnings multiple, is a particularly significant and recognized fundamental ratio, with a function of dividing the share price of stock, by its earnings per share. This will provide the value representing the sum investors are prepared to expend for each dollar of company earnings. This ratio is an important aspect, due to its capacity as measurement for the comparison of valuations of various companies. A stock with a lower P/E ratio will cost less per share, than one with a higher P/E, taking into account the same level of financial performance; therefore, it essentially means a low P/E is the preferred option.[7]

An instance, in which the price to earnings ratio has a lesser significance, is when companies in different industries are compared. An example; although, it is reasonable for a telecommunications stock to show a P/E in the low teens; in the case of hi-tech stock, a P/E in the 40s range, is not unusual. When making comparisons the P/E ratio can give you a refined view of a particular stock valuation.

For investors paying for each dollar of a company's earnings, the P/E ratio is a significant indicator, but the price-to-book ratio (P/B) is also a reliable indication of how much investors are willing to spend on each dollar of company assets. In the process of the P/B ratio, the share price of a stock is divided by its net assets; any intangibles, such as goodwill, are not taken into account. It is a crucial factor of the price-to-book ratio, due to it indicating the actual payment for tangible assets and not the more difficult valuation, of intangibles. Accordingly, the P/B could be considered a comparatively, conservative metric.

Free cash flow measures the cash a company generates which is available to its debt and equity investors, after allowing for reinvestment in working capital and capital expenditure. High and rising free cash flow therefore tend to make a company more attractive to investors.

The debt-to-equity ratio is an indicator of capital structure. A high proportion of debt, reflected in a high debt-to-equity ratio, tends to make a company's earnings, free cash flow, and ultimately the returns to its investors, more risky or volatile. Investors compare a company's debt-to-equity ratio with those of other companies in the same industry, and examine trends in debt-to-equity ratios and free cash flow.

A popular valuation metric is Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA), with application for example to valuing unlisted companies and mergers and acquisitions.[8]

For an attractive investment, for example a company competing in a high growth industry, an investor might expect a significant acquisition premium above book value or current market value, which values the company at several times the most recent EBITDA. A private equity fund for example may buy a target company for a multiple of its historical or forecasted EBITDA, perhaps as much as 6 or 8 times.

In certain cases, an EBITDA may be sacrificed by a company, in order for the pursuance of future growth; a strategy frequently used by corporate giants, such as, Amazon, Google and Microsoft, among others. This is a business decision that can impact negatively on buyout offers, founded on EBITDA and can be the cause of many negotiations, failing. It may be recognized as a valuation breach, with many investors maintaining that sellers are too demanding, while buyers are regarded as failing to realize the long-term potential of, expenditure or acquisitions.

The amount to pay in taxes for long term investments, investments that span over a year long term, and short term investments such as those that are below a year are different. The long term investments range from Zero to twenty percent for capital gains and they are regulated by what tax bracket you are in for income taxes. For the zero to fifteen percent income tax bracket you could qualify for the zero percent long-term capital gains rate. The next bracket is the fifteen to twenty percent income tax bracket where you are set at fifteen percent capital gains tax for long term investments. The next bracket is between twenty and 39.6 percent and that leads to a twenty percent capital gains tax however with these numbers you should add 3.8 percent for the health care surtax. The short term capital gains tax is also related to your total taxable income and is taxed at the same rate as your income and ranges from ten to 39.6 percent.[9]

Types of financial investments include:

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Investment - Wikipedia