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BEAR MARKET

Definition

A bear market is when stocks see a 20 percent decline or more from a recent high.   

Why It's Important

The S&P 500 officially hit bear market status on Monday, dropping 20 percent from its 52-week high. Historically, these periods last about 13 months on average.  So, with that being said, brace yourself for more blood shed in the markets.  The good news is if you have been eyeing a stock for a while, this period may be the perfect time to buy, buy, buy!  If you are worried about losing money in your retirement and you have decades left before it's time to retire, you will be fine!  Usually, the market bounces back and when it does, it typically goes higher than it previously did.  Sit back and enjoy the ride!

Bear Market is mot to be confused with Bull Market, they are different types of markets.


P.S. This is the last Wednesday Word of the Week for the year.  It is also the last one in my stock market series! ...

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PENNY STOCKS

Definition

Penny stocks are stocks that are trading below $5.00 a share. They are highly volatile. 

Why It's Important

Investor beware!  Penny stocks have the potential to make investors a lot of money they also expose investors to a lot of risk.  They key to penny stocks is volume.  Making $0.10 on a single stock does not seem like a lot but when you multiply it by hundreds or even thousands, it adds up!  On the other side, losing $0.10 on a single stock does not seem like much until you multiply by hundreds or thousands.  With that said, be aware of what you are getting into when dabbling in these types of companies and trades.  Happy trading!

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I AM BACK

Uncategorized Dec 16, 2018

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Has it really been three months since my last post?  Man, time flies!  I had to step away because my final semester got really crazy.  I felt like I was on the verge of failing and I kept thinking to myself, I did not come 2 years to not graduate on time.  Well, the good news is... I PASSED!  So, although it was hard for me to step away from the baby I built up over the past year, it was worth it!  I am now officially an MBA, and I am so proud of myself for it.  The next question is what next?  What do you do with a newly minted MBA?  When I started my graduate school journey, I was in a different mind space.  I wanted to work my way up the corporate ladder and become a VP of HR.  Now, HR is no longer my focus, and I don't really have the desire to work for anyone else in corporate America.  So, now what?

 

I tossed a few ideas around like continuing on to get my Ph.D. so I can be a college professor.  I feel...

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MARGIN

Definition

Margin is when brokers (Charles Schwab, TD Ameritrade, etc.) lend money to investors to make trades (think of credit) so they can leverage their assets to make more money.

Why It's Important

Investor beware!  Although using a margin account has the ability to make you more money, it is very risky.  If you are trading on margin and the investments drop, you still owe that money to the brokerage.  In addition, brokers can initiate a "margin call" where they demand some, if not all, of the money they lent to you right then and there.  They can immediately sell your assets for the debt.  It is best to just use a cash account especially if you are a new investor. 

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DIVIDEND YIELD

Definition

The dividend yield represents the ratio between the stock price paid and the dividend paid. A stock trading at $100 per share, with a dividend that amounts to $5 per year, you would divide the $5 by $100 and turn it into a percentage. In this case, the yield would be 5%.


Why It's Important

You will typically find the dividend yield for a stock when trying to research whether it is a good investment.  Remember, not all stocks pay dividends!  The example below is from Yahoo Finance.  The current dividend yield for GE is 0.50%.  This is extremely low as GE has been having a tough year.  In order for companies to pay dividends, they have to be doing well enough to distribute extra funds.  Always look at the financial statements before you dive into an investment. (Remember, the higher the dividend the better but the statements must also show positive signs) 

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ARBITRAGE

Definition

Arbitrage is the simultaneous purchase and sell of an asset to profit from the imbalance in price.  Using this strategy, takes advantage of price inefficiencies in the market.

Why It's Important

Arbitrage opportunities provide a way to collect high returns with little to no cost to you.  This is how it works:

Let's say a stock is trading on the NYSE (New York Stock Exchange) for $50 a share.  Simultaneously, the same exact stock is trading on the SSE (Shanghai Stock Exchange) at $50.30 per share.  An arbitrage opportunity exists because you can buy on NYSE and turn around and sell on SSE making a profit of $0.30 a share.   

or

You buy a big name stock (like Apple, Alphabet, or Amazon).  In order to create an arbitrage opportunity, you short the S&P 500 Index (SPY).  This way if the stock gains, you win but also if the stock goes down you win.  Big name stocks weigh very heavily on the market and if the stock goes down the...

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THE POWER OF BUDGETING

Uncategorized Sep 30, 2018

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If you have been keeping up with my finance blog, you know I love to budget! It gives you a sense of control when it comes to your money. I believe in doing a zero-based budget. This means your income will always equal your expenses. With this type of budgeting, you are telling your money where to go every month. I want to give you a recent example of how budgeting frees you instead of constricts you.

I have a line item on my budget for clothing. If you know me, you know I rarely use it. I am always wearing things out until I have to give it up. This month I had a coupon for DSW, and I was like I really do need some new shoes. Me being that cheap person that I am, I didn't want to buy any because I hate spending money! Then it dawned on me, Tiffany you budget for clothing every month, use it! So, I was able to buy new shoes, guilt-free. It didn't slow down my debt payoff or put me in the position to sacrifice something else. It was already in my budget! I wanted to tell...

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ANOTHER SETBACK!

Uncategorized Sep 27, 2018

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A couple of weeks ago, I came outside to yet another flat tire.  What the heck?!  It seemed like every week a tire was going flat on my car.  I knew when I bought the car I would have to get new tires (that was one aspect I used to negotiate the price down), but I didn't think it would be this soon.  I made my seemingly weekly trip to the gas station to fill up again, and I was on my way.  Of course, that wasn't the end of it... 

After a few hours, I'm ready to leave my location and go to a lunch meeting with a friend.  I get in my car to pull out, and I noticed my car wobbling and noise coming from the tire.  I pull back in and get out to inspect.  Low and behold, the tire is completely flat!  So, now I'm stranded.  Of course, I got rid of AAA a few years ago as I deemed it a waste of money for my situation.  Now, I needed it!  My brain started twirling trying to think of how I was going to get anywhere forget the...

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SELLING SHORT

Definition

Selling short aka short selling is when an investor thinks a stock will go down so they "short it". Essentially, the investor borrows shares of stock or another asset he or she doesn't own, sells it, pockets the money with the promise to replace the property someday, and hopes the asset declines in price so it can be repurchased at a lower cost, the differential becoming the profit.  They make money on a dip!

Why It's Important

During the financial crisis of 2008, short sellers were making money in the market while everyone else was losing.  A great movie that details what happened is "The Big Short".  Be careful when short selling because if it's not done right, it could bankrupt you!  Keep in mind that you are borrowing shares so if the stock goes up you will be in debt to the broker you borrowed from.

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MY FIRST PODCAST : GUEST APPEARANCE

Uncategorized Sep 20, 2018

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I am so excited! I was able to get my feet wet with podcasting by being featured on a fellow bloggers podcast.  It was so fun to get interviewed and we had a really great conversation about timeshares and home-ownership.  Take a listen:

For all episode notes and to subscribe, check out Danielle's site at https://podcast.thoughtcard.com/episode-4/

As a side note: We used the Longhorn Steakhouse gift card mentioned in the interview a few days ago for a date night.  Yummm!!

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