#Financial Market

[prophet-one]

SVB bank failure

I comprehend the reason why SVB failed: its a classic bank run where the bank does not have the liquid assets to fund withdrawals. This the “other shoe dropping” wrt the rapid increase in interest rates.

what stands out to me are two questions: why do companies have that much cash in the bank? How did the financial markets in general fail?

The SVB failed because the financial markets are NOT working. The markets are not providing suitable securities for companies to park their excess cash. SVB was probably seen as a “safe” place to store cash. That assumption is obviously false. 

Question: why did the corporate depositors have so much money in cash accounts versus other securities?

Two months ago I was discussing cash management with my financial advisor. The key point he made about Bonds and funds that invest in bonds, is to use rolling maturity. The bond values will lag the market (especially with rapid changes in interest rates), but you wont lose principle. (BTW the change in bond values has to do with the liquidity price not the book value... if you hold bonds to maturity, then you dont lose value). So, back to the question about the depositors... when you have a billion plus of cash to invest you should be able to do something better than stash it in a low interest chequeing account. Something doesnt seem right about that.

Question: why do corporate depositors have so much cash on hand in the first place?

The financial markets “should” provide companies with cash “when and as” they need it through equity and bonds and loans. When a company like Roku has over a billion dollars sitting around “just in case they need it”, this is a clear sign that the financial markets are not working. Different sectors have different requirements for liquidity; but having 2 to 5 years of excess cash on hand is well beyond any reasonable requirement.

I completely understand that companies like the security blanket of having 2 or 3 or 10 years of cash sitting around. However, that is a total waste of shareholder resources, given that shareholders can make better investments with that cash. There is supposed to be a tax on capital to disincentivize hoarding... I guess that tax is not high enough.

When the regulators have time to get around to sifting through remains; I would like them to investigate these two questions: why are corporations not investing their excess cash appropriates? why do corporations have so much excess cash, why cant corporations raise the cash they need in an efficient manner? 

[logicalnivesh]

Although options trading is a bit more complex than stock trading, it helps make more significant profits when the security’s price rises and restricts losses when it goes down. Options in stock market are powerful as they can enhance a person’s portfolio through added income, leverage, and protection.

What is options trading?

Option trading allows traders to buy or sell stocks, ETFs, etc., at a specified price and within a specific date. It also gives the flexibility to wait to purchase the stocks at the decided price or date. Options trading allows investors to judge the future course of direction of the stock market or individual securities like bonds, stocks, etc.

When considering options trading, one should know what options are and their various types. If you are looking for tips and strategies for options trading for beginners, this article will help you find answers to each of your queries.

What are options?

Options are tradable contracts that give the bearer the right but not the obligation to buy or sell an asset at a predetermined price on or before the contract expires. Although options trading is a bit more complex than stock trading, it helps make more significant profits when the security’s price rises and restricts losses when it goes down. Options in stock market are powerful as they can enhance a person’s portfolio through added income, leverage, and protection. It can be used as –

Leverage – When the security price rises, options trading helps you grab more enormous profits as you don’t have to put down the total price of the share. It lets you have control over the shares without buying them outright.

Hedging – When the price of a share fluctuates, options trading protects the investor by allowing you to buy or sell the shares at a pre-determined price for a specified period.

Types of stock options trading

Options trading can be categorized into two types – call option and put option. Below is a detailed insight into the two categories.

Call options – When the underlying security rises in price, it gives the opportunity to buy. Call option allows the trader to buy stocks at a pre-determined price within a specified period. The price paid is the strike price, and the last date of exercising the call option is known as the expiration date.

There are two ways to earn profit from the call option: Close your position (sell the call option) when the asset’s price surpasses the break-even price and make the difference between the paid and current premium. Or you can buy the asset at the agreed strike price.

Put options – Unlike call options, where the trader has the opportunity to buy, the put option allows people to sell the underlying stock at the strike price on or before the date of expiry.

If you are willing to earn profits through put options, either close your position (sell the options contract) when the asset price is below the break-even level and make

the difference between the premium paid and the current premium. Or sell the underlying asset at the agreed strike price.

If the underlying asset’s price moves in the opposite direction to the desired call or put options, wait for the contract to expire, and your losses will equate to the amount you paid for the option.

Types of option trading strategies

There are multiple types of trading in the stock market. There are numerous options trading strategies, but if you are a beginner, you should initially be well-versed in these five for effective trading.

Long calls (Buying calls) – A bullish trader should take this strategy. When the price of an asset is expected to rise, you can buy a call option using less capital than the asset. Also, if the price falls, the losses are limited to just the premium paid and no more.

Long puts (Buying puts) – Bearish traders prefer this buying options strategy. It gives the holder the right to sell the particular stock at the strike price. Short selling is the only way a trader can benefit from this strategy.

Covered calls – This strategy is preferred during a moderate or neutral market. Out of all other option trading strategies, covered calls are one of the safest options trading strategies. Here the investor sells a call option while also owning the underlying asset.

Protective puts – It is a risk management strategy that guards against the downside movement of an asset. Although put options are a bearish strategy, protective puts are favored when the trader is still in a bullish trend but wishes to hedge against potential losses.

Long straddles – It is one of the best stock options trading strategies in the Indian stock market. Here the trader purchases both a long call and a long put on the same underlying stock having the same expiration date and strike price.

Profitability in options trading

There are various types of trading in stock market, but every kind has some profitability scenarios, which make it worth opting for. Below is a list of the three significant situations that may lead to profitable trading outcomes.

In-the-money option (ITM) – When the current index value is greater than the strike price, it is said to be an in-the-money option. It leads to a positive cash flow being exercised immediately.

At-the-money option (ATM) – When the current index value is equal to the strike price, it is said to be an at-the-money option. It leads to no profit and loss, i.e., zero cash flow being exercised immediately.

Out-of-the-money option (OTM) – When the index value is lower than the strike price, it is said to be an out-of-the-money option. It leads to a negative cash flow being exercised immediately.

[dgcyrh]

Chen Yehua Interprets: Opportunities and Challenges in the Stock Market Amid Strong U.S. Economic Growth

Against the backdrop of ongoing updates to global economic data, the revised U.S. Q3 GDP figure has become a focal point for the market. According to the latest data, the annualized quarterly growth rate of U.S. real GDP for Q3 was revised to 3.1%, higher than the previous forecast of 2.8%. This revision not only reinforces expectations of robust U.S. economic growth but also serves as a new barometer for global stock and financial markets. Renowned economist Chen Yehua has provided in-depth analysis and unique insights on this development.

Strong U.S. Economic Growth Driven by Consumer Spending and Exports

Chen Yehua believes that the growth in U.S. Q3 GDP is primarily attributed to strong consumer spending and exports. The final value of real personal consumption expenditures rose to 3.7%, reflecting increased consumer confidence and purchasing power in the U.S. Meanwhile, the growth in exports indicates sustained global demand for U.S. goods and services. The combined effect of these two factors provides a solid foundation for continued U.S. economic growth.

According to Chen Yehua, the increase in consumer spending not only reflects the prosperity of the domestic U.S. market but also demonstrates optimistic consumer expectations for the economic outlook. This optimism could further drive the expansion of the consumer market, creating a virtuous cycle. On the other hand, the growth in exports highlights the strong competitiveness of the U.S. in the global economy, which helps enhance the profitability and market share of American businesses.

Fed Slows Down Rate Cuts, Stock Market Reacts Sensitively

It is worth noting that the Federal Reserve has previously hinted at slowing the pace of rate cuts in 2025, a message that triggered a wave of stock sell-offs. Chen Yehua mentioned that this adjustment in market expectations for the Fed future policy direction is mainly based on recent stronger-than-expected economic data. Against the backdrop of robust economic growth, the Fed may adopt a more cautious approach to rate cuts to avoid overstimulating the economy and causing inflationary pressures to rise.

However, Chen Yehua also pointed out that the stock market tends to react sensitively to changes in Fed policy. A slower pace of rate cuts may spark concerns about future liquidity, leading to short-term market fluctuations. In the long term, though, if the U.S. economy maintains steady growth, the stock market is still likely to deliver strong returns.

Financial Market Strategies: Balancing Risk and Reward

In light of the current economic situation and stock market dynamics, Chen Yehua has proposed strategies for navigating the financial markets. He believes that investors should remain calm and rational, recognizing both the opportunities presented by economic growth and the potential risks.

In terms of investment strategy, Chen Yehua advises investors to adopt a diversified asset allocation approach to mitigate risks associated with individual assets or sectors. He also emphasizes the importance of focusing on company fundamentals and profitability, selecting high-quality enterprises with long-term growth potential. Investors should closely monitor global economic trends and policy changes, adjusting their strategies promptly to adapt to market shifts. For risk management, Chen Yehua suggests setting reasonable stop-loss and take-profit points to control investment risks and protect returns.

[priyashareindia9]

Mutual fund distributors play a pivotal role in the Indian financial market, acting as intermediaries between investors and mutual fund houses. These financial professionals are instrumental in guiding investors through the complexities of the mutual fund industry, facilitating transactions, and providing valuable insights into various investment opportunities. Regulated by the Securities and Exchange Board of India (SEBI) and governed by the Association of Mutual Funds in India (AMFI), mutual fund distributors are entrusted with significant responsibilities to ensure investors make informed decisions. In this article, we will delve into the roles and responsibilities of mutual fund distributors, shedding light on their crucial contributions to the investment landscape.

[essayboardorg]

(via China's Crackdown on Investment Bankers: A Risky Gamble with Global Implications)

[flourishloom]

Unveiling the Kotak Mahindra Bank and Hindenburg Saga: What Really Happened?

Source: Internet In a gripping turn of events, Kotak Mahindra Bank has found itself at the center of a sensational controversy involving the short-selling of Adani Enterprises’ shares. This unfolding drama, triggered by a damning report from Hindenburg Research, has led to a wave of investigations and clarifications. Here’s the story behind the headlines.The Hindenburg Report: A Market…

[techandtravel]

An Introduction to the Stock Market: How it Works and Why People Invest

What is the stock market? The stock market is a financial market where individuals and companies can buy and sell shares of publicly traded companies. It provides a platform for investors to trade securities such as stocks, bonds, and derivatives. How does the stock market work? The stock market works through exchanges, where buyers and sellers come together to trade stocks. These exchanges…

[igniteus]

Curious about the currencies that rule the world of forex reserves?

These currencies wield significant influence in the international market.

[mondayexpoglobal]

Become a part of the biggest Financial Event in Mexico. Money Expo Mexico 2024 is a landmark Forex Expo in Mexico. At this event, you'll come across the most influential financial institutions, brokers, money expo traders, investors, and IBs. This Financial Expo in Mexico will give you a chance to get ahead in your trading game.

[jacobanthonyus]

Money Expo Global is the pinnacle of financial empowerment on a global scale, where financial enthusiasts come together to unlock vast opportunities.

[priyashareindia9]

Since the beginning of the stock market, new methods of opportunities have been introduced in each decade. There are indices like the Sensex and Nifty, which have become top indices to watch and observe in India. With the hike in online trading, retail investors seem to increase their interest in investing in the financial market. The index fund rebalancing is essential in order to update index funds over the rise or fall of nifty or other indices. Having a basic understanding of the function of an index fund will help investors invest in a smart way.

[allinhalf-store-blog]

Warren Buffett's Record-Breaking Cash Pile Reserves

Warren Buffett, the legendary investor, has achieved yet another milestone in his illustrious career. His cash reserves have reached an all-time high, signaling a strategic move in the financial landscape. Unveiling Buffett’s Astounding Cash Holdings Buffett’s financial acumen has long been the subject of admiration and study in the investment world. His ability to navigate the complexities of…

[childasthama2]

BBA In Financial Market

Gain the knowledge and skills needed for a successful career in the financial market with a BBA degree. Explore the intricacies of the financial industry and unlock endless opportunities with our comprehensive program. Start your journey towards a promising future today with a BBA in the Financial Market. Click here to know more https://bssfoundation.net/bba-in-capital-market-a-gateway-to-enter-and-grow-in-finance-industry/

[azukeglobalinvestmentadvisers]

Financial management- The need of the hour - Azuke Finance

Planning, organizing, directing, and controlling an organization's financial resources is referred to as financial management. Its main aim is to increase shareholder value while ensuring effective resource allocation. Budgeting, financial analysis, risk management, and strategic financial planning are important aspects of financial management.