October 2016
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Pros and Cons of Shorting Stocks

Stock Market Short StrategySelling a stock short is a bet that the price of the stock will decline. It is the opposite of a long position, which involves investing in a company in the hopes the price of the stock will increase.

How to Short a Stock

In a short position, the investor borrows the stock and immediately sells it. The proceeds from the sales are deposited into the investment account. The position is closed when the investor buys back the same stock (known as covering a short).

If the stock has declined since the sale, the investor makes a profit on the difference, less commissions. The goal is to sell high, and buy low.

Positives of Selling a Stock Short

Although historically the general trend is for stock prices to increase, prices do fluctuate, and shorting can be used to make money when a stock is overpriced from too fast an increase or if the company itself is not competitive or is in a declining business.

In a larger portfolio of long investments, shorting can be a hedge against a large drop in the stock market.

Because the stock is borrowed and sold, cash is received, not disbursed, in the transaction. Cash needs to be in the account to meet margin requirements, but that cash can still be used to purchase other investments (up to the margin requirement) or will earn income in an interest bearing account.

Some accounts earn interest on the funds received from the sale of the short stock as well. Consult your broker for information on whether this applies to your account.

Negatives of Short Selling

Because the price of a stock can potentially go to infinity, the possible loss on a short position is unlimited. In real world terms, a position can be closed before an infinite loss will occur, and will be closed if margin requirements are exceeded.

The maximum gain on any short is 100%. The price of a stock cannot go lower than zero. There are no five or 10-baggers in shorting.

As a borrower of the stock, the investor is responsible for paying for any dividends that are due while shorting the stock. The amount will generally be deducted from the investor's account.

Not all stocks can be shorted. A broker must have the stock in its position to allow the investor to borrow the stock, and restrictions are also placed on some stocks with smaller available numbers of shares (float position).

The broker can mandate the closure of a short position at the current market price. If this occurs in large numbers, a "short squeeze" develops, which is a large price increase in a heavily shorted stock over a short time frame.

Is Shorting Stocks a Good Idea?

Shorting can be an effective way to add diversification to a portfolio. Investors need to take steps to limit losses by monitoring positions closely.

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is it worth you investing in stocks and shares

What is a stock or a share?

A share (also called an equity or equity stock) in a company is exactly that: a share in the ownership of the company. With that comes a share of the profits and the risk that you will lose your money if the company goes bust.

Almost all companies have limited liability. This means that if you own a share and the company does go bankrupt your liability (i.e. what you owe to the creditors) is limited to the paid up value of your shares. That means that if you own share in a company that goes bust you will not lose your house because of that!

Generally shares pay a dividend to investor which is share of the companies profits. Not all companies pay dividends but instead hope to reward investors by increasing the price of the shares over time (this is called capital growth). Check the dividend policy of any company you are thinking of investing in.

Find out more about the basics of shares in this article.

Public and Private companies stocks and shares

For a lot of companies the shares are not widely available. They might only be owned by one or two people and are only sold very rarely. These are called private companies.

Other companies have their shares traded on stock exchanges (also known as stock markets) such as the New York Stock Exchange or the London Stock Exchange. In order to be listed on these markets the companies will usually have to follow a set of stricter rules than a private company. These companies are known as public or listed companies.

It is relatively easy to trade in listed companies - your stock broker can trade them for you. It is much complicated to buy and sell private company shares - this is generally left to private equity funds and wealthy individuals who can afford specialist advice.

Investing in stocks and shares - advantages and disadvantages

The advantages on investing in shares include:

1. Capital growth - generally the price of stocks and shares goes up on average over time so your portfolio will be worth more in the future

2. Higher returns that bonds or cash deposits on average - because equities (stocks and shares) go up and down in value more than bonds or cash deposits the market pays a higher return to "compensate" you for this on average. This does not guarantee that you will always have a higher return in shares compared to bonds!

3. Some protection against inflation - if there is inflation corporate profits should increase in cash terms at least (ignoring inflation) so dividends and share prices should go up. However there is no direct link to inflation so the protection is not perfect.

4. Ownership and influence over companies - you may have a say via the company AGM in the company policies and get a vote on shareholder issues. This will generally only apply if you own stocks directly. If you have invested in a mutual fund or a managed fund or other collective vehicle you can always lobby your investment manager to vote according to your views but they will have thousands of people invested in their fund - so your opinion may not carry too much weight.

The disadvantages of investing in equities (stocks and shares) include

1. The risk that the company will become bankrupt and your shares in that company will be worthless. This is why diversification is important - see below.

2. The risk that the price of your shares will fall when you want to sell them so that you get back less than you paid for them.

3. There often high charges for managed funds and mutual funds which invest in equities. Shop around to make sure you get a good deal.

4. Returns are unknown so it can be hard to plan you finances in advance.

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Scams :: Internet scams; how to identify such cons

In today's information overload era, internet is considered as the most significant tool for gathering data. However technological advancements and increase in the number of web users have trigged the spread of internet scams. According to internet scam statistics, more and more scams are reported every day. There are different types of internet scams that dominate the web world and many innocent web users are falling prey to it.

Generally it can be said that most of these scams have their starting sources in Nigeria. So if you are getting a mail with a Nigerian or African address offering some perks, it is better to simply ignore it. It has been reported that one such scam email has been prevailing over the internet for many years and had looted many internet users. This is how it works. You would be getting an email from a person who would address himself as a close relative, wife or even an official of a Nigerian tyrant. The scam email would say a sad story about how the dictator had deposited millions of dollars in a savings account and that the account cannot be accessed now. Then it would ask you to help them in getting the inaccessible amount along with a reward if you are willing to help. The help they want is monetary and you would be asked to give few thousand dollars to access their account. And once you are convinced and gives the money, they would just vanish in the web. No reply or any other correspondence would come from them.

Even though this story seems to be a bit ridiculous and hard to believe, thousands of people have fell for this scammer. They have lost major parts of their wealth too. Yet another type of email scams is the financial scams. Many fraudsters fool people by promising very high return on their investment. The offer would be something like get double the invested money within a month or two. Plus they would assure you that the money is not at all at risk since it is not invested in stock market or mutual funds. Thus the money is said to be safe. But once you have deposited, you would not even get a single penny back, forget returns.

Then there is one more category of popular scammers in internet. It is the credit card scam. In that scams, the people with lower credit score would be offered credit cards and loans at very low interest rates. Since people with lower scores usually are not offered such privileges, they easily fall for it. People would pay all types of costs like administration and security deposit for getting the loans. Thus they would be cheated. Then there are many other scammers like marketing scams which would ask you to buy a product and earn millions from it.

There is only one best way to avoid internet scams. Try not to read the emails sent by these types of internet scams. Even if you read try not to reply. Remember not to give off any of your personal information like password, bank account or credit card number.

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Careers :: Top 5 Investment Banker Interview Questions

Investment banking maybe the most challenging corporate position because it requires knowledge of how companies operate in a wide range of industries as well as in-depth technical and financial knowledge. Very few people succeed in this position and those that do can expect one of the highest salaries in the industry. If you want to become an investment banker, be prepared to answer these top 5 investment banker interview questions.

1) Are you licensed? Every investment banker is required to be licensed to do business in each state.. If you are not licensed then you will not be able to find a job working in that state. There are different licenses for selling securities, mutual funds, variable annuities and insurance. Employers will be looking for applicants having the licenses that are required for the position.

2) What is your experience? Many companies prefer to work with investment bankers that have several years of experience. This will allow the banker to have experience in both up and down markets and be able to provide appropriate advice. Your employment history will be judged on the breadth and depth of experience that you have and the quality of the companies for which you have worked.

3) What did the DOW close at yesterday? What is the current price of the company's stock? All companies will ask some type of technical question. The question may differ but this gives you an idea of what type of technical question you might expect. This question judges how well the applicant is aware of current events and the company with which they are interviewing. Applicants who are able to answer these questions stand out from the crowd by showing they have current market knowledge and have done the appropriate research on the company.

4) What are your greatest strengths and weaknesses? Everyone has strengths and weaknesses. A successful answer to this question is to pick a weakness and highlight it in a manner that is can be viewed as a positive by the company. You can mention that you are overly organized. Many companies prefer employees who are organized so this negative could be turned into a positive.

5) Do you have any questions for us? Every applicant will be asked this question and you should be prepared to ask several pointed and challenging questions. This allows you to show your knowledge of the company as well as the market. You can ask questions about recent news articles about the company, why the company sells a certain product or why they do not sell into an untapped market. This is your time to differentiate you from the other applicants so be well prepared in the questions you are to ask.

Everyone who submits their resume for a job position hopes their resume will get them invited for an interview. The success of the first interview determines whether or not you have any chance to get hired by that company. Do not arrive at a scheduled interview for an investment banker position without being prepared to answer these common questions.

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Sega Zone: Sonic Resurrection?

Mario and Sonic at the Olympic Games was the first of these and was followed shortly afterwards with the eagerly anticipated release of Mario and Sonic at the Olympic Winter Games. Now there is a third incarnation in Mario and Sonic at the London 2012 Olympic games, so the large question is when will we get to see them join forces in a classic 3D platform game. Perhaps the not too long ago announced Nintendo Wii U console will be the 1st to push the boundaries of the old, bitter rivalry after again. Sega did have the ideal console by far, but that doesn't necessarily imply a victory if the other people have the best library and own total territories. It was then that Sega decided to ditch the dying Master Program in favor of something that would genuinely pack a punch, the Sega Mega Drive, or Genesis in North America. The Genesis came out in 1989 in America, and it genuinely was what Sega required. The profit motive for the artists is that they use the income to offset the charges incurred while producing the video. You Tube became a favorable destination for artists where they could upload the song with the solution placement. The primary benefit here is that the brand develops a higher retention price in the minds of people when artists execute at concerts.

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