January 2021

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5.Key Trends and Statistics[Original Blog]

Mobile devices have become an integral part of our lives, enabling us to communicate, work, learn, shop, play, and more. As mobile users, we expect fast, convenient, and personalized experiences from the brands we interact with. This means that marketers need to understand the mobile landscape and how it influences consumer behavior, preferences, and expectations. In this section, we will explore some of the key trends and statistics that shape the mobile landscape and what they mean for your mobile marketing strategy and strategic positioning.

Some of the key trends and statistics that you should know are:

1. Mobile penetration and usage are growing rapidly. According to Statista, there were 5.22 billion unique mobile phone users in the world as of January 2021, which is 66.6% of the global population. Moreover, the average time spent on mobile devices per day increased from 3 hours and 14 minutes in 2019 to 3 hours and 54 minutes in 2020, according to eMarketer. This shows that mobile devices are not only widely adopted, but also heavily used by consumers for various purposes.

2. Mobile commerce is booming. Mobile devices are not only used for browsing, but also for buying. According to eMarketer, mobile commerce sales accounted for 53.9% of total e-commerce sales in 2020, and are expected to reach 72.9% by 2024. This means that more than half of online shoppers are using their mobile devices to make purchases, and this trend is likely to continue. Therefore, marketers need to optimize their mobile websites and apps for conversions, as well as provide seamless and secure payment options for mobile users.

3. Mobile search is dominant. Mobile devices are also the preferred way for consumers to search for information, products, and services. According to StatCounter, mobile search accounted for 55.88% of the global search market share in January 2021, compared to 41.35% for desktop and 2.77% for tablet. This means that most of the online traffic and leads are coming from mobile devices, and marketers need to ensure that their websites and content are mobile-friendly and rank well on mobile search engines.

4. Mobile video is popular. Mobile devices are also used for consuming and creating video content, which is one of the most engaging and effective forms of digital marketing. According to Cisco, mobile video traffic accounted for 60% of total mobile data traffic in 2020, and is expected to grow to 79% by 2022. This means that mobile users are watching and sharing more videos on their devices, and marketers need to leverage the power of mobile video to capture their attention and interest.

5. mobile social media is influential. Mobile devices are also the main way for consumers to access and use social media platforms, which are essential for building brand awareness, loyalty, and advocacy. According to DataReportal, there were 4.2 billion active social media users in the world as of January 2021, of which 98.8% accessed social media via mobile devices. This means that mobile users are highly active and engaged on social media, and marketers need to create and distribute relevant and valuable content for their target audiences on mobile social media channels.

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6.Real-Life Examples of Using Analyst Ratings and Consensus Estimates[Original Blog]

One of the most practical ways to use analyst ratings and consensus estimates is to look at real-life examples of how they have influenced the performance and valuation of different stocks. In this section, we will examine some case studies of companies that have been affected by the opinions and forecasts of analysts, both positively and negatively. We will also discuss how investors can use these information sources to make informed decisions about their own portfolio. Here are some of the case studies we will explore:

1. Tesla (TSLA): Tesla is one of the most controversial and polarizing stocks in the market, with a wide range of analyst ratings and estimates. Some analysts are very bullish on the company's prospects, while others are skeptical about its profitability and valuation. For example, in January 2020, the average analyst price target for Tesla was $357, but the actual stock price was $650. By December 2020, the average price target had risen to $396, but the stock price had soared to $705. This shows that Tesla often defies the expectations of analysts and trades at a premium to its fundamentals. Investors who followed the analyst ratings and estimates would have missed out on the huge gains that Tesla delivered in 2020. However, investors who blindly followed the hype and bought Tesla at its peak in January 2021 would have also suffered a significant loss, as the stock price dropped to $563 by March 2021. Therefore, investors need to be careful and do their own research when dealing with Tesla, as analyst ratings and estimates may not reflect the true value or potential of the company.

2. Netflix (NFLX): Netflix is another example of a company that has consistently outperformed the analyst ratings and estimates. The streaming giant has been growing its subscriber base and revenue at a rapid pace, especially during the COVID-19 pandemic, when people stayed at home and consumed more online content. However, analysts have often underestimated the growth and profitability of Netflix, resulting in lower ratings and estimates than the actual results. For instance, in October 2020, the average analyst rating for Netflix was 2.3 (buy), with a price target of $557. The actual stock price was $525. By January 2021, the average rating had improved to 2.1 (buy), with a price target of $586. The actual stock price was $540. However, in the same month, Netflix reported its fourth-quarter earnings, which beat the analyst estimates by a wide margin. The company added 8.5 million new subscribers, bringing its total to 203.7 million, and posted a revenue of $6.64 billion and an earnings per share of $1.19, both exceeding the consensus estimates of $6.63 billion and $1.39, respectively. The stock price surged to $586 after the earnings announcement, validating the bullish outlook of some analysts and surprising the bearish ones. Investors who followed the analyst ratings and estimates would have been more confident and prepared for the earnings surprise, and would have benefited from the stock price appreciation.

3. GameStop (GME): GameStop is a remarkable case study of how analyst ratings and estimates can be completely irrelevant and misleading in some situations. The video game retailer has been struggling for years, facing declining sales, store closures, and competition from online platforms. Analysts have been very bearish on the company, giving it low ratings and estimates, and expecting it to go bankrupt soon. For example, in January 2021, the average analyst rating for GameStop was 3.4 (hold), with a price target of $12. The actual stock price was $18. However, in the same month, a group of retail investors on Reddit's WallStreetBets forum decided to initiate a massive short squeeze on GameStop, buying the stock and driving up its price, while forcing the hedge funds that were betting against it to cover their losses. This resulted in a meteoric rise in the stock price, reaching a peak of $483 on January 28, 2021, an increase of more than 2,500% in a month. Analysts were caught off guard by this unprecedented event, and their ratings and estimates became meaningless and outdated. Investors who followed the analyst ratings and estimates would have missed the opportunity to join the rally or would have sold the stock too early, losing out on the potential profits. However, investors who blindly followed the Reddit hype and bought the stock at its peak would have also suffered a huge loss, as the stock price plummeted to $40 by February 19, 2021, a drop of more than 90%. Therefore, investors need to be aware and cautious of the risks and volatility involved in such situations, and not rely on analyst ratings and estimates, as they may not reflect the reality or rationality of the market.

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7.How much do budget analysts earn and what are the perks and challenges of working as one?[Original Blog]

One of the most important factors that influence the decision to pursue and advance a career as a budget analyst is the salary and benefits that come with the job. Budget analysts are professionals who help organizations plan and manage their finances by preparing budget reports, monitoring spending, and analyzing data. They work in various sectors, such as government, education, health care, and business. In this section, we will explore how much budget analysts earn and what are the perks and challenges of working as one. We will also provide some insights from different perspectives, such as employers, employees, and experts.

1. The average salary of budget analysts in different countries and regions, and how it varies by experience, education, and industry.

2. The benefits that budget analysts enjoy, such as health insurance, retirement plans, paid leave, and bonuses.

3. The challenges that budget analysts face, such as high pressure, tight deadlines, complex regulations, and ethical dilemmas.

4. The skills and qualifications that budget analysts need to succeed, such as analytical, communication, problem-solving, and computer skills, as well as a bachelor's degree or higher in accounting, finance, economics, or a related field.

5. The career opportunities and advancement paths that budget analysts have, such as becoming senior budget analysts, budget managers, financial analysts, or financial managers.

Let's start with the first point: the average salary of budget analysts.

According to the U.S. Bureau of Labor Statistics, the median annual wage for budget analysts in the United States was $76,540 in May 2020, which is higher than the median annual wage for all occupations ($41,950). The lowest 10 percent earned less than $50,230, and the highest 10 percent earned more than $116,300. The top-paying industries for budget analysts were mining, quarrying, and oil and gas extraction ($101,850), professional, scientific, and technical services ($88,160), and management of companies and enterprises ($87,120). The top-paying states for budget analysts were District of Columbia ($103,690), California ($92,510), and Maryland ($91,700).

According to PayScale, the average salary for budget analysts in Canada was C$63,424 in January 2021, which is higher than the average salary for all occupations (C$54,630). The lowest 10 percent earned less than C$44,000, and the highest 10 percent earned more than C$86,000. The top-paying industries for budget analysts were government ($69,000), education ($67,000), and health care ($66,000). The top-paying provinces for budget analysts were Ontario ($66,000), Alberta ($65,000), and British Columbia ($64,000).

According to Glassdoor, the average salary for budget analysts in the United Kingdom was £36,594 in January 2021, which is higher than the average salary for all occupations (£29,600). The lowest 10 percent earned less than £25,000, and the highest 10 percent earned more than £50,000. The top-paying industries for budget analysts were finance ($46,000), technology ($42,000), and manufacturing ($40,000). The top-paying regions for budget analysts were London ($42,000), South East England ($38,000), and Scotland ($37,000).

According to Indeed, the average salary for budget analysts in Australia was A$92,841 in January 2021, which is higher than the average salary for all occupations (A$82,950). The lowest 10 percent earned less than A$65,000, and the highest 10 percent earned more than A$120,000. The top-paying industries for budget analysts were mining ($105,000), construction ($100,000), and engineering ($98,000). The top-paying states for budget analysts were Western Australia ($100,000), New South Wales ($95,000), and Victoria ($93,000).

These are some of the examples of how much budget analysts earn in different countries and regions, and how it varies by experience, education, and industry. Of course, these are only averages and may not reflect the actual salary of a specific budget analyst in a specific organization. However, they can give a general idea of the earning potential and the market demand for budget analysts.

Now, let's move on to the second point: the benefits that budget analysts enjoy.

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8.Real-Life Examples of Successful Trading with Vortex Indicator[Original Blog]

The Vortex Indicator is a technical analysis tool that was developed by Etienne Botes and Douglas Siepman in 2010. It is used to identify the beginning of a new trend or the continuation of an existing one. The Vortex Indicator consists of two lines: the positive Vortex line (VI+) and the negative Vortex line (VI-). When the VI+ crosses above the VI-, it signals a bullish trend, and when the VI- crosses above the VI+, it signals a bearish trend.

Many traders have found success using the Vortex indicator. In this section, we will explore real-life examples of successful trading using the Vortex Indicator.

1. Trading the S&P 500

One example of successful trading using the Vortex Indicator is trading the S&P 500. The S&P 500 is a stock market index that tracks the performance of 500 large-cap companies listed on US stock exchanges. The Vortex Indicator can be used to identify the beginning of a new trend in the S&P 500.

In January 2021, the VI+ crossed above the VI- in the S&P 500, signaling a bullish trend. Traders who bought into the S&P 500 at this point would have seen significant gains as the index continued to rise throughout the year.

2. Trading Bitcoin

Another example of successful trading using the Vortex Indicator is trading Bitcoin. Bitcoin is a digital currency that is known for its volatility. The Vortex Indicator can be used to identify trends in Bitcoin's price movements.

In December 2020, the VI+ crossed above the VI- in Bitcoin, signaling a bullish trend. Traders who bought Bitcoin at this point would have seen significant gains as the price of Bitcoin continued to rise throughout 2021.

3. Trading Forex

The Vortex Indicator can also be used to trade Forex. Forex is the largest financial market in the world, with trillions of dollars traded daily. The Vortex Indicator can be used to identify trends in forex currency pairs.

In January 2021, the VI+ crossed above the VI- in the eur/USD currency pair, signaling a bullish trend. Traders who bought the eur/USD currency pair at this point would have seen significant gains as the pair continued to rise throughout the year.

4. Trading Options

The Vortex Indicator can also be used to trade options. options are financial derivatives that give traders the right, but not the obligation, to buy or sell an underlying asset at a predetermined price and date. The Vortex Indicator can be used to identify trends in the underlying asset.

In January 2021, the VI+ crossed above the VI- in the stock of a company that produces electric vehicles, signaling a bullish trend. Traders who bought call options on the stock at this point would have seen significant gains as the stock continued to rise throughout the year.

The Vortex Indicator can be a useful tool for traders in a variety of financial markets. By identifying trends in price movements, traders can make informed decisions about when to buy and sell assets. Successful trading using the Vortex Indicator requires careful analysis and a solid understanding of technical analysis principles.

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9.Benefits and Risks[Original Blog]

One of the most intriguing aspects of investing in stocks is the possibility of finding a hidden gem that is trading at a very low price relative to its true value. This is the idea behind exploring the lower bound of the 1/52 week range, which is the lowest price that a stock has reached in the past 52 weeks. The lower bound can indicate a potential bargain, a turnaround opportunity, or a value trap. In this section, we will discuss the benefits and risks of exploring the lower bound, and provide some tips on how to identify and analyze stocks that are near their 52-week lows.

Some of the benefits of exploring the lower bound are:

1. buying low and selling high. This is the basic principle of investing, and it can be very rewarding if done correctly. By buying stocks that are near their 52-week lows, investors can take advantage of the market's inefficiencies and mispricing, and potentially enjoy a large upside when the stock recovers. For example, in March 2020, many stocks plummeted to their 52-week lows due to the COVID-19 pandemic. However, some of them bounced back strongly in the following months, such as Apple, which went from $53.15 to $134.18, or Amazon, which went from $1,626.03 to $3,531.45.

2. finding undervalued stocks. Another benefit of exploring the lower bound is the possibility of finding stocks that are trading below their intrinsic value, which is the present value of their future cash flows. These stocks are considered undervalued, and they offer a margin of safety for investors. To find undervalued stocks, investors can use various valuation methods, such as discounted cash flow analysis, earnings multiples, or book value ratios. For example, in December 2020, Berkshire Hathaway was trading at $347,165 per share, which was below its intrinsic value of $414,858 per share, according to a discounted cash flow analysis by GuruFocus.

3. Capturing dividends and buybacks. A third benefit of exploring the lower bound is the opportunity to capture dividends and buybacks from stocks that are near their 52-week lows. Dividends are payments that companies make to their shareholders, usually on a quarterly basis. Buybacks are when companies repurchase their own shares from the market, which reduces the number of shares outstanding and increases the earnings per share. Both dividends and buybacks can indicate that a company is confident in its future prospects and has strong cash flows. They can also provide a steady income and a cushion for investors in case the stock price drops further. For example, in January 2021, AT&T was trading at $28.76 per share, which was near its 52-week low of $26.08 per share. However, the company paid a quarterly dividend of $0.52 per share, which translated to a dividend yield of 7.22%, and announced a $4 billion buyback program.

Some of the risks of exploring the lower bound are:

1. Catching a falling knife. This is the opposite of buying low and selling high, and it can be very painful for investors. Catching a falling knife means buying a stock that is in a downtrend, hoping that it will rebound, but instead it continues to fall. This can result in large losses and frustration for investors, who may end up holding a worthless stock. To avoid catching a falling knife, investors should look for signs of a reversal, such as a change in fundamentals, a positive catalyst, or a technical breakout. For example, in February 2020, GameStop was trading at $3.25 per share, which was near its 52-week low of $2.57 per share. However, the stock did not reverse, but instead dropped to $2.80 per share in April 2020, before skyrocketing to $483 per share in January 2021, thanks to a massive short squeeze triggered by a Reddit community.

2. Falling into a value trap. This is similar to catching a falling knife, but with a twist. A value trap is a stock that appears to be undervalued, but in reality, it is not. The stock may have a low price-to-earnings ratio, a high dividend yield, or a low book value, but these metrics may be misleading or outdated. The stock may be facing serious challenges, such as declining revenues, shrinking margins, rising debts, or legal troubles, that prevent it from growing or recovering. Investors who fall into a value trap may end up holding a stock that does not appreciate, or worse, loses more value over time. To avoid falling into a value trap, investors should conduct a thorough due diligence, and look beyond the superficial numbers. They should also compare the stock with its peers, and assess its competitive advantage, growth potential, and future outlook. For example, in June 2020, Exxon Mobil was trading at $44.50 per share, which was near its 52-week low of $30.11 per share. The stock had a price-to-earnings ratio of 9.8, a dividend yield of 7.76%, and a book value of $41.69 per share, which made it seem undervalued. However, the stock was facing a severe crisis, as the oil and gas industry was hit hard by the COVID-19 pandemic, the collapse of oil prices, and the rise of renewable energy. The stock did not recover, but instead dropped to $32.62 per share in October 2020, and cut its dividend by 30% in November 2020.

3. Missing out on better opportunities. A final risk of exploring the lower bound is the opportunity cost of investing in stocks that are near their 52-week lows. opportunity cost is the value of the next best alternative that is forgone as a result of making a decision. In other words, it is what investors could have earned if they had invested in a different stock or asset class. Investing in stocks that are near their 52-week lows may limit the potential returns and diversification of investors, as they may miss out on stocks that are near their 52-week highs, or other asset classes that are performing better, such as bonds, commodities, or cryptocurrencies. To avoid missing out on better opportunities, investors should have a balanced and diversified portfolio, and allocate their capital according to their risk tolerance, time horizon, and investment objectives. They should also monitor the market trends and conditions, and adjust their portfolio accordingly. For example, in July 2020, Tesla was trading at $1,394.28 per share, which was near its 52-week high of $1,795.49 per share. The stock had a price-to-earnings ratio of 1,104.9, which made it seem overvalued. However, the stock continued to soar, reaching $2,213.40 per share in August 2020, and $883.09 per share in January 2021, after a 5-for-1 stock split.

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10.Examples and Case Studies[Original Blog]

In this section, we will explore how the asset quality rating attribute can be applied in practice, using some examples and case studies from different domains and contexts. The asset quality rating attribute is a characteristic and quality that distinguishes and defines the asset quality rating and identity of an asset, such as a loan, a bond, a stock, or a property. The asset quality rating attribute reflects the risk and return profile of the asset, as well as its performance and potential. It also influences the valuation and pricing of the asset, and the decisions and strategies of the investors and managers who deal with the asset.

We will examine the following aspects of the asset quality rating attribute in practice:

1. How the asset quality rating attribute is measured and assessed by different methods and criteria, such as credit ratings, financial ratios, market indicators, and qualitative factors.

2. How the asset quality rating attribute can vary over time and across different scenarios, such as business cycles, economic shocks, regulatory changes, and environmental, social, and governance (ESG) factors.

3. How the asset quality rating attribute can affect the outcomes and impacts of the asset, such as its cash flows, returns, risks, costs, benefits, and externalities.

4. How the asset quality rating attribute can be improved or enhanced by different actions and interventions, such as restructuring, refinancing, diversification, hedging, and innovation.

Let us look at some examples and case studies to illustrate these points.

### Example 1: Asset Quality Rating Attribute of Corporate Bonds

Corporate bonds are debt securities issued by corporations to raise funds from investors. The asset quality rating attribute of corporate bonds is mainly determined by the credit rating of the issuer, which reflects its ability and willingness to repay the principal and interest of the bond. credit rating agencies, such as Standard & Poor's, Moody's, and Fitch, assign credit ratings to corporate issuers based on their financial strength, profitability, leverage, liquidity, cash flow, growth prospects, competitive position, industry outlook, and other factors. The credit ratings range from AAA (highest) to D (lowest), and are divided into two categories: investment grade (BBB- or higher) and speculative grade (BB+ or lower).

The asset quality rating attribute of corporate bonds has the following implications:

- The higher the credit rating of the issuer, the lower the default risk of the bond, and the lower the interest rate or yield that the issuer has to pay to attract investors. Conversely, the lower the credit rating of the issuer, the higher the default risk of the bond, and the higher the interest rate or yield that the issuer has to pay to attract investors. For example, according to the data from the federal Reserve bank of St. Louis, as of January 2021, the average yield of AAA-rated corporate bonds was 1.82%, while the average yield of BB-rated corporate bonds was 4.18%.

- The higher the credit rating of the issuer, the higher the market value or price of the bond, and the lower the volatility or risk of the bond. Conversely, the lower the credit rating of the issuer, the lower the market value or price of the bond, and the higher the volatility or risk of the bond. For example, according to the data from the Bank of America Merrill Lynch, as of January 2021, the average price of AAA-rated corporate bonds was 109.8, while the average price of BB-rated corporate bonds was 103.6. The average standard deviation of monthly returns of AAA-rated corporate bonds was 0.83%, while the average standard deviation of monthly returns of BB-rated corporate bonds was 2.76%.

- The higher the credit rating of the issuer, the more likely the bond is to be included in the major bond indices and funds, and the more accessible and liquid the bond is to the investors. Conversely, the lower the credit rating of the issuer, the less likely the bond is to be included in the major bond indices and funds, and the less accessible and liquid the bond is to the investors. For example, according to the data from Bloomberg, as of January 2021, the Bloomberg Barclays US corporate Bond index, which tracks the performance of the investment grade corporate bond market, had a total market value of $6.6 trillion, while the Bloomberg Barclays US high Yield bond Index, which tracks the performance of the speculative grade corporate bond market, had a total market value of $1.5 trillion.

The asset quality rating attribute of corporate bonds can change over time and across different scenarios, depending on the changes in the credit rating of the issuer, as well as the changes in the market conditions and expectations. For example, during the global financial crisis of 2008-2009, many corporate issuers faced severe liquidity and solvency problems, and their credit ratings were downgraded by the credit rating agencies. This resulted in a sharp decline in the asset quality rating attribute of their bonds, as well as a significant increase in their yields and a significant decrease in their prices. On the other hand, during the COVID-19 pandemic of 2020-2021, many corporate issuers benefited from the unprecedented fiscal and monetary stimulus measures by the governments and central banks, and their credit ratings were upgraded or maintained by the credit rating agencies. This resulted in an improvement in the asset quality rating attribute of their bonds, as well as a significant decrease in their yields and a significant increase in their prices.

The asset quality rating attribute of corporate bonds can be improved or enhanced by different actions and interventions by the issuers, the investors, and the regulators. For example, the issuers can improve their credit ratings by improving their financial performance, reducing their debt levels, increasing their cash reserves, diversifying their revenue sources, enhancing their competitive advantage, and adopting ESG best practices. The investors can enhance their returns and reduce their risks by diversifying their bond portfolios, hedging their interest rate and credit risks, and seeking opportunities in the secondary market. The regulators can support the stability and efficiency of the corporate bond market by providing liquidity and credit facilities, enforcing disclosure and governance standards, and promoting market transparency and access.

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11.Who are they and what do they do?[Original Blog]

Credit rating agencies are organizations that assess the creditworthiness of borrowers, such as governments, corporations, or individuals. They provide ratings that indicate the likelihood of default, or the failure to repay debt obligations. Credit ratings are important for investors, lenders, and regulators, as they help them evaluate the risk and return of different financial instruments and entities. credit ratings also influence the interest rates and terms of borrowing for issuers and borrowers.

There are many credit rating agencies in the world, but the three most influential and widely used ones are Standard & Poor's (S&P), Moody's, and Fitch Ratings. These three agencies are often referred to as the Big Three, and they dominate the global market for credit ratings. According to a report by the international Monetary fund (IMF) in 2010, the Big Three accounted for more than 90% of the global market share of credit ratings. Here are some facts and features about each of these agencies:

1. Standard & Poor's (S&P): S&P is the oldest and largest credit rating agency, founded in 1860 by Henry Varnum Poor. It is headquartered in New York City, and has offices in 26 countries. S&P provides ratings for sovereigns, corporations, financial institutions, insurance companies, municipal bonds, structured finance products, and more. S&P uses a letter-based scale to assign ratings, ranging from AAA (the highest) to D (the lowest). S&P also uses modifiers (+ or -) to indicate the relative position within a rating category. For example, AA+ is one notch higher than AA, and one notch lower than AAA. S&P also provides outlooks (positive, negative, or stable) and credit watches (positive, negative, or developing) to indicate the potential direction of a rating change in the future. An example of a rating by S&P is AA+/Stable/A-1+ for the United States of America, as of January 2021.

2. Moody's: Moody's is the second-largest credit rating agency, founded in 1909 by John Moody. It is also headquartered in New York City, and has offices in 40 countries. Moody's provides ratings for sovereigns, corporations, financial institutions, insurance companies, municipal bonds, structured finance products, and more. Moody's uses a similar letter-based scale to S&P, but with some differences. Moody's uses Aaa (the highest) to C (the lowest) as the main rating categories, and adds numerical modifiers (1, 2, or 3) to indicate the relative position within a category. For example, Aa1 is one notch higher than Aa2, and one notch lower than Aaa. Moody's also uses outlooks and reviews (positive, negative, or stable) to indicate the potential direction of a rating change in the future. An example of a rating by Moody's is Aaa/Stable/P-1 for Canada, as of January 2021.

3. Fitch Ratings: Fitch Ratings is the third-largest credit rating agency, founded in 1913 by John Knowles Fitch. It is jointly owned by Hearst Corporation and FIMALAC, a French holding company. It is headquartered in New York City and London, and has offices in 30 countries. Fitch provides ratings for sovereigns, corporations, financial institutions, insurance companies, municipal bonds, structured finance products, and more. Fitch uses a similar letter-based scale to S&P and Moody's, but with some differences. Fitch uses AAA (the highest) to D (the lowest) as the main rating categories, and adds modifiers (+ or -) to indicate the relative position within a category. For example, AA+ is one notch higher than AA, and one notch lower than AAA. Fitch also uses outlooks and watches (positive, negative, stable, or evolving) to indicate the potential direction of a rating change in the future. An example of a rating by Fitch is AAA/Stable/F1+ for Germany, as of January 2021.

These are the main credit rating agencies and what they do. However, there are also other credit rating agencies that operate in specific regions or sectors, such as DBRS Morningstar (Canada), Japan Credit Rating Agency (JCR) (Japan), China Chengxin International Credit Rating (CCXI) (China), CRISIL (India), Egan-Jones Ratings Company (EJR) (USA), and Kroll bond Rating agency (KBRA) (USA). These agencies may have different methodologies, criteria, and scales for assigning ratings, and may sometimes diverge from the ratings of the Big Three. Therefore, it is important for investors, lenders, and regulators to understand the differences and nuances of each credit rating agency and their ratings.

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12.Strategies and Risks to be Aware of[Original Blog]

Investing in SPACs: Strategies and Risks to be Aware of

SPACs, or special purpose acquisition companies, are entities that raise money from investors through an initial public offering (IPO) with the sole purpose of acquiring a private company and taking it public. SPACs have become a popular alternative to traditional IPOs, as they offer faster and easier access to the public markets, lower costs and fees, and more flexibility and control for the target company. However, investing in SPACs also involves significant risks and challenges that investors should be aware of before jumping on the bandwagon. In this section, we will discuss some of the strategies and risks that SPAC investors should consider, and provide some examples of successful and unsuccessful SPAC deals.

Some of the strategies that SPAC investors can use to increase their chances of success are:

1. Research the SPAC sponsors and management team. The quality and reputation of the SPAC sponsors and management team are crucial factors that determine the success of the SPAC deal. Investors should look for sponsors and managers who have relevant industry expertise, track record of creating value, and alignment of interests with shareholders. For example, Chamath Palihapitiya, a prominent SPAC sponsor, has successfully taken several companies public through SPACs, such as Virgin Galactic, Opendoor, and Clover Health, by leveraging his experience and network in the technology sector.

2. Analyze the target company and the merger terms. Once the SPAC announces its target company, investors should conduct a thorough due diligence on the target company and the merger terms. Investors should evaluate the target company's business model, growth potential, competitive advantage, valuation, and financial performance. Investors should also pay attention to the merger terms, such as the share exchange ratio, the amount of cash and debt involved, the post-merger ownership structure, and the potential earn-outs and escrow arrangements. For example, DraftKings, a leading online sports betting and gaming company, went public through a SPAC merger with Diamond Eagle Acquisition Corp. in 2020. The merger terms were favorable for both parties, as DraftKings received $3.3 billion in cash and debt financing, and Diamond Eagle shareholders received 40% of the combined company.

3. Monitor the market sentiment and the SPAC lifecycle. SPACs are subject to market sentiment and volatility, as they depend on the approval and participation of shareholders and regulators. Investors should monitor the market reaction and the SPAC lifecycle, which consists of four stages: IPO, target announcement, merger completion, and post-merger trading. Investors should be prepared to adjust their positions and exit strategies according to the market conditions and the SPAC performance. For example, QuantumScape, a battery technology company, went public through a SPAC merger with Kensington Capital Acquisition Corp. in 2020. The SPAC stock soared after the target announcement and the merger completion, reaching a peak of $132.73 per share in December 2020. However, the stock plunged after the company faced lawsuits and skepticism over its technology, dropping to $23.96 per share as of January 2021.

Some of the risks that SPAC investors should be aware of are:

- Lack of transparency and disclosure. SPACs are subject to less regulatory scrutiny and disclosure requirements than traditional IPOs, as they are considered blank-check companies that have no operating history or assets. This means that investors have limited information and visibility into the SPAC's target company, merger terms, and financial projections. SPACs may also use aggressive and optimistic assumptions and projections to justify their valuations and attract investors. For example, Nikola, an electric truck maker, went public through a SPAC merger with VectoIQ Acquisition Corp. in 2020. The SPAC stock surged after the merger, reaching a high of $93.99 per share in June 2020. However, the stock collapsed after the company faced allegations of fraud and deception, dropping to $18.03 per share as of January 2021.

- Dilution and redemption. SPACs typically issue units that consist of one common share and one warrant or fraction of a warrant, which gives the holder the right to buy more shares at a fixed price in the future. SPACs also allow shareholders to redeem their shares for cash at the time of the merger, regardless of the share price. These features create significant dilution and redemption risks for SPAC investors, as they reduce the value and ownership of the existing shares. For example, MultiPlan, a healthcare services provider, went public through a SPAC merger with Churchill Capital Corp III in 2020. The SPAC stock plummeted after the merger, reaching a low of $6.12 per share in November 2020. One of the reasons for the decline was the high level of dilution and redemption, as the SPAC issued 133 million warrants and 259 million shares, and 33% of the shareholders redeemed their shares for cash.

- Opportunity cost and liquidity risk. SPACs have a limited time frame to complete a merger, usually within two years of the IPO. If the SPAC fails to find a suitable target or obtain shareholder approval, it has to return the money to the investors and liquidate. This means that investors have to lock up their capital for a long period of time, without knowing the outcome or the return of the SPAC deal. Investors also face liquidity risk, as SPACs may have low trading volume and high bid-ask spreads, making it difficult to buy or sell the shares at a fair price. For example, Gores Holdings IV, a SPAC that raised $425 million in 2020, has not announced a target company as of January 2021, and its stock has been trading below its IPO price of $10 per share, with an average daily volume of less than 500,000 shares.

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13.Trends, challenges, and opportunities[Original Blog]

The current state of the refinancing market is a topic of interest for many homeowners, lenders, and investors. Refinancing is the process of replacing an existing mortgage with a new one, usually with better terms and lower interest rates. Refinancing can help borrowers save money, reduce their monthly payments, shorten their loan term, or access their home equity. However, refinancing also involves costs, risks, and trade-offs that need to be carefully weighed. In this section, we will explore some of the trends, challenges, and opportunities that shape the refinancing market in 2024. We will look at the factors that influence refinancing demand and supply, the benefits and drawbacks of refinancing, and the best practices for refinancing in different scenarios. Here are some of the main points we will cover:

1. Trends: The refinancing market has been influenced by several macroeconomic and industry trends in the past few years. Some of the key trends are:

- The COVID-19 pandemic and its aftermath have had a significant impact on the refinancing market. The pandemic caused a sharp decline in economic activity, income, and consumer confidence, which reduced the demand for refinancing. However, the pandemic also prompted the Federal Reserve to lower the federal funds rate to near zero and launch several quantitative easing programs, which pushed down the mortgage interest rates to historic lows, which increased the incentive for refinancing. According to the mortgage Bankers association (MBA), the refinance index, which measures the volume of refinance applications, reached a peak of 4,253.8 in March 2020, the highest level since April 2009. The refinance share of mortgage activity also reached a peak of 76.5% in March 2020, the highest level since 2013.

- The housing market has also experienced a strong recovery from the pandemic-induced slump. The demand for housing has been driven by low interest rates, limited inventory, changing consumer preferences, and demographic shifts. According to the National Association of Realtors (NAR), the median existing-home price rose by 13.4% year-over-year in December 2020, the highest annual growth rate since 2013. The S&P CoreLogic Case-Shiller U.S. National Home Price Index also increased by 10.4% year-over-year in December 2020, the highest annual growth rate since 2014. The rising home prices have increased the home equity for many homeowners, which can be tapped through cash-out refinancing. According to the Freddie Mac Quarterly Refinance Statistics, the cash-out refinance volume reached $152.7 billion in the third quarter of 2020, the highest level since the second quarter of 2007. The cash-out refinance share of total refinance originations also increased to 42% in the third quarter of 2020, the highest level since the first quarter of 2018.

- The mortgage industry has also undergone some changes and innovations in response to the refinancing market dynamics. Some of the key changes are:

- The adoption of digital technologies has accelerated in the mortgage industry, as lenders and borrowers have adapted to the social distancing and remote working norms. According to the ICE Mortgage Technology Origination Insight Report, the share of purchase and refinance loans closed using digital platforms increased from 61% in January 2020 to 81% in December 2020. The use of digital technologies has improved the efficiency, speed, and convenience of the refinancing process, as well as reduced the costs and errors. Some of the digital technologies that have been widely used in the refinancing market include online applications, e-signatures, e-closings, automated underwriting, and cloud computing.

- The entry of non-bank lenders has increased the competition and diversity in the refinancing market. Non-bank lenders are financial institutions that do not have a banking license and rely on alternative sources of funding, such as wholesale markets, securitization, and private investors. Non-bank lenders have been able to offer more flexible and customized refinancing products and services, especially to niche segments such as low-income, minority, and self-employed borrowers. According to the Urban institute Housing finance Policy Center, the market share of non-bank lenders in the refinance originations increased from 37% in 2013 to 64% in 2019. Some of the leading non-bank lenders in the refinancing market include Quicken Loans, United Wholesale Mortgage, LoanDepot, and Freedom Mortgage.

2. Challenges: The refinancing market also faces some challenges and uncertainties that may affect its performance and outlook. Some of the key challenges are:

- The volatility of interest rates is a major factor that affects the refinancing market. Interest rates are influenced by various economic and financial conditions, such as inflation, growth, fiscal and monetary policies, and market expectations. interest rates can change rapidly and unpredictably, which can affect the availability and affordability of refinancing options. For example, in January 2021, the average 30-year fixed mortgage rate rose by 18 basis points from 2.68% to 2.86%, the largest monthly increase since October 2018, according to the Freddie Mac Primary Mortgage Market Survey. The rise in interest rates was driven by the optimism about the COVID-19 vaccine rollout and the fiscal stimulus package, which boosted the inflation and growth expectations. The increase in interest rates reduced the number of borrowers who could benefit from refinancing, as well as increased the costs and risks of refinancing. According to the Black Knight Mortgage Monitor Report, the number of high-quality refinance candidates, defined as those who could save at least 0.75% on their interest rate by refinancing, dropped by 2.7 million from 19.4 million in December 2020 to 16.7 million in January 2021, the lowest level since July 2020.

- The regulatory and policy changes are another factor that affects the refinancing market. Regulatory and policy changes can have both positive and negative impacts on the refinancing market, depending on their objectives and implications. For example, in August 2020, the federal Housing Finance agency (FHFA) announced a new 0.5% adverse market refinance fee for fannie Mae and Freddie mac loans, which was intended to cover the losses and risks associated with the pandemic. The fee was initially scheduled to take effect in September 2020, but was later delayed to December 2020 after facing backlash from the industry and lawmakers. The fee increased the costs and reduced the savings of refinancing for many borrowers, especially those with large loan balances. According to the MBA, the fee would add an average of $1,400 to the cost of refinancing a $300,000 loan. On the other hand, in January 2021, the FHFA announced a new refinance option for low-income borrowers with fannie Mae and freddie Mac loans, which was intended to help them reduce their interest rate and monthly payment. The option would offer a reduced interest rate, a waiver of the adverse market refinance fee, and a possible appraisal credit. The option would be available to borrowers with incomes at or below 80% of the area median income, who have not missed a payment in the past six months, and who have a loan-to-value ratio of 97% or less. According to the FHFA, the option would save eligible borrowers an average of $100 to $250 per month.

3. Opportunities: The refinancing market also offers some opportunities and potential for growth and improvement. Some of the key opportunities are:

- The expansion of refinancing options is an opportunity for the refinancing market to reach more borrowers and meet their diverse needs and preferences. Refinancing options can be expanded by offering more product features, such as adjustable-rate mortgages, interest-only payments, balloon payments, negative amortization, or biweekly payments. Refinancing options can also be expanded by targeting more borrower segments, such as first-time homebuyers, veterans, seniors, or green homeowners. For example, the fha Streamline refinance is a refinancing option for borrowers with FHA loans, which offers a simplified and expedited process, with no income verification, credit check, or appraisal required. The VA interest Rate reduction Refinance Loan (IRRRL) is a refinancing option for borrowers with VA loans, which offers a lower interest rate, no out-of-pocket costs, and no appraisal or credit underwriting required. The Home Affordable Refinance Program (HARP) was a refinancing option for borrowers with underwater mortgages, which offered a lower interest rate, a reduced loan-to-value ratio, and a streamlined process. The program expired in December 2018, but was replaced by the High LTV Refinance Option for Fannie Mae loans and the Enhanced Relief Refinance Mortgage for Freddie Mac loans, which offer similar benefits.

- The improvement of refinancing efficiency is an opportunity for the refinancing market to reduce the time, cost, and hassle of the refinancing process. Refinancing efficiency can be improved by leveraging more data, technology, and automation, as well as streamlining the documentation, verification, and closing procedures. For example, the Fannie Mae RefiNow and the Freddie Mac Refi Possible are refinancing options that use automated income and asset verification, as well as automated collateral evaluation, to eliminate the need for manual documentation and appraisal. The Rocket Mortgage by Quicken Loans is a digital platform that allows borrowers to apply for and complete the refinancing process online, using a smartphone or a computer.

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14.Understanding the Stock Markets Performance in January[Original Blog]

January is traditionally known as a bellwether month for the stock market and is often an indicator for the year ahead. The 'January Barometer' is the theory that the performance of the stock market in January can predict the direction of the market for the rest of the year. Hence, investors and analysts keep a close eye on the market movements in January to understand the direction of the market for the year ahead. In 2021, the market saw a mixed performance in January. While the S&P 500 and Nasdaq Composite ended the month with modest gains of 1.9% and 1.4%, respectively, the dow Jones Industrial average recorded a loss of 2%.

1. The January Barometer theory suggests that if the markets perform well in January, it will continue to do so for the rest of the year, and vice versa. However, there are also several counter-arguments to this theory. For instance, many analysts believe that the January Barometer is not a reliable indicator of the market's performance for the rest of the year. They argue that the sample size is too small to be statistically significant, and there are too many variables that can impact the market's performance.

2. Another perspective on the market's performance in January is to look at the underlying trends and factors driving the market movements. For example, one of the factors contributing to the mixed performance in January 2021 could be the ongoing COVID-19 pandemic and the slow rollout of vaccines. This uncertainty could have caused investors to be cautious and led to the Dow jones Industrial average ending the month in the red.

3. Additionally, market movements in January can also be influenced by sector-specific factors. For instance, the technology sector has been a major driver of the market's gains in recent years, and any positive or negative news for tech companies can impact the overall market performance. In January 2021, the technology sector witnessed a mixed performance, with some tech giants like Apple and Amazon recording gains, while others like Facebook and Alphabet recording losses.

The January Barometer theory is just one of the many ways to understand the stock market's performance in January. While it can provide some insights into the market's direction for the year ahead, it is not a foolproof indicator. Investors and analysts should look at the underlying trends, factors, and sector-specific developments to get a more holistic view of the market's performance in January and beyond.

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15.Historical Performance of Small-Cap Stocks During the January Effect[Original Blog]

The January Effect is a well-known phenomenon among investors and traders alike, where small-cap stocks tend to outperform large-cap stocks during the first month of the year. Over the years, this trend has become more pronounced, with some investors attributing it to year-end tax-loss harvesting and portfolio rebalancing. However, it is crucial to note that historical performance is not a guarantee of future results, and investors should exercise caution when considering small-cap stocks as part of their investment strategy.

Here are some insights on the historical performance of small-cap stocks during the January effect:

1. Small-cap stocks tend to have higher volatility than large-cap stocks, which can lead to significant price swings during the first month of the year. This volatility can be both a blessing and a curse for investors, as it can lead to significant gains but also substantial losses.

2. The January Effect is not a universal phenomenon, and not all small-cap stocks will outperform during this time. Investors should focus on companies with strong fundamentals, such as stable earnings growth, manageable debt levels, and strong competitive positions.

3. While the January Effect may be more pronounced in some years than others, it is essential to remember that it is only one factor to consider when investing in small-cap stocks. Investors should also consider other factors such as industry trends, company management, and macroeconomic conditions.

4. Examples of small-cap stocks that have historically performed well during the January Effect include Clean Energy Fuels Corp. (CLNE), which saw a 38% increase in January 2021, and GameStop Corp. (GME), which saw a 1,625% increase in January 2021, driven by a retail trading frenzy.

While the January Effect may provide opportunities for investors in small-cap stocks, it is essential to remember that historical performance is not a guarantee of future results. Investors should conduct thorough research and consider a variety of factors before making investment decisions.

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16.Investing the Proceeds for a Brighter Future[Original Blog]

One of the most important decisions that you will have to make after selling your land for future is how to invest the proceeds wisely. Investing the proceeds for a brighter future means choosing the best options that will help you achieve your financial goals, protect your wealth, and create a positive impact on the world. There are many factors that you need to consider when investing the proceeds, such as your risk tolerance, time horizon, income needs, tax implications, and personal values. In this section, we will explore some of the possible ways that you can invest the proceeds for a brighter future, and the pros and cons of each option.

Some of the possible ways that you can invest the proceeds for a brighter future are:

1. Stocks: Stocks are shares of ownership in a company that trade on a stock exchange. Stocks can offer high returns in the long term, but they also come with high risks and volatility. You can invest in stocks directly, or through mutual funds, exchange-traded funds (ETFs), or robo-advisors. Investing in stocks can help you benefit from the growth of the economy, the innovation of the companies, and the dividends that they pay. However, investing in stocks also requires you to do your research, diversify your portfolio, and be prepared for market fluctuations and crashes. For example, if you invested $100,000 in the S&P 500 index in January 2020, you would have seen your investment drop to $66,000 in March 2020, due to the COVID-19 pandemic, but then recover to $132,000 in January 2021, due to the vaccine optimism and stimulus measures.

2. Bonds: Bonds are debt instruments that pay a fixed amount of interest over a fixed period of time. Bonds can offer steady income and lower risks than stocks, but they also offer lower returns and are subject to interest rate risk and inflation risk. You can invest in bonds directly, or through mutual funds, ETFs, or robo-advisors. Investing in bonds can help you preserve your capital, generate regular income, and diversify your portfolio. However, investing in bonds also requires you to be aware of the credit quality, maturity, and yield of the bonds, and the impact of changing interest rates and inflation on their value. For example, if you invested $100,000 in a 10-year US treasury bond with a 2% coupon rate in January 2020, you would have received $2,000 in interest every year, but you would have also seen your bond price drop to $92,000 in January 2021, due to the rise in interest rates from 1.8% to 1.1%.

3. real estate: Real estate is physical property that can be used for residential, commercial, or industrial purposes. Real estate can offer high returns, tax benefits, and inflation protection, but it also comes with high costs, illiquidity, and management hassles. You can invest in real estate directly, or through real estate investment trusts (REITs), crowdfunding platforms, or robo-advisors. investing in real estate can help you leverage your capital, enjoy rental income and capital appreciation, and take advantage of tax deductions and depreciation. However, investing in real estate also requires you to deal with maintenance, repairs, vacancies, tenants, taxes, insurance, and legal issues. For example, if you invested $100,000 in a rental property in January 2020, you would have earned $12,000 in rental income and $8,000 in capital appreciation in 2020, but you would have also spent $10,000 on expenses and $15,000 on taxes and depreciation.

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17.How holding can expose you to market volatility, opportunity costs, and emotional stress?[Original Blog]

Holding is a popular strategy among cryptocurrency investors who believe that the value of their assets will increase over time. However, holding is not without risks, and it may not be the best option for everyone. In this section, we will explore some of the potential drawbacks of holding and how they can affect your financial goals and well-being. Some of the risks of holding are:

1. Market volatility: Cryptocurrencies are known for their high price fluctuations, which can result in significant losses or gains in a short period of time. Holding means that you are exposed to these market movements, and you may not be able to react quickly enough to sell or buy when the price is favorable. For example, if you bought Bitcoin at its peak of $64,863 in April 2021 and held it until December 2023, you would have lost more than 50% of your investment, as the price dropped to $30,000. On the other hand, if you sold your Bitcoin in April 2021 and bought it back in December 2023, you would have doubled your money.

2. Opportunity costs: Holding also means that you are missing out on other potential opportunities to grow your wealth, such as investing in other assets, diversifying your portfolio, or earning interest or rewards from lending or staking your cryptocurrencies. For example, if you held Ethereum since January 2021, you would have gained about 300% by December 2023, as the price increased from $730 to $2,900. However, if you invested your Ethereum in a decentralized finance (DeFi) platform, such as Compound, you could have earned an additional 10% annual interest on your deposit, as well as governance tokens that appreciate in value.

3. Emotional stress: Holding can also take a toll on your mental health, as you may experience anxiety, fear, or regret from watching the price of your cryptocurrencies fluctuate. Holding can also lead to overconfidence, greed, or attachment, which can cloud your judgment and prevent you from making rational decisions. For example, if you held Dogecoin since January 2021, you would have witnessed a meteoric rise of over 10,000% by May 2021, as the price soared from $0.004 to $0.43. However, you may have also felt tempted to hold on for even higher returns, or to avoid selling out of loyalty or pride. This could have resulted in losing most of your gains, as the price plummeted to $0.16 by December 2023.

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18.Real-Life Examples of Successful Breakout Trades with Donchian Channels[Original Blog]

One of the most powerful applications of Donchian channels is to identify and trade breakout signals. A breakout occurs when the price of an asset moves beyond a certain level or range, indicating a change in trend or momentum. Breakouts can be triggered by various factors, such as news events, technical indicators, chart patterns, or market sentiment. Breakouts can also be classified into different types, such as continuation, reversal, or false breakouts, depending on the direction and validity of the price movement.

In this section, we will look at some real-life examples of successful breakout trades using Donchian channels. We will analyze the market conditions, the entry and exit points, the risk-reward ratio, and the performance of the trades. We will also compare the results of using Donchian channels with other popular breakout indicators, such as Bollinger bands, Keltner channels, and Average True Range (ATR). We will use historical data from various markets, such as stocks, forex, commodities, and cryptocurrencies, to illustrate the versatility and effectiveness of Donchian channels in different settings.

Here are some of the examples we will cover:

1. Apple Inc. (AAPL) Stock - Continuation Breakout in October 2020. Apple is one of the most widely traded and followed stocks in the world, and it often exhibits strong trends and volatility. In October 2020, Apple broke out of a consolidation range that lasted for about two months, and resumed its uptrend that started in March 2020. Using a 20-period Donchian channel, we can see that the upper band acted as a resistance level for the price, while the lower band acted as a support level. The breakout occurred on October 12, 2020, when the price closed above the upper band at $124.40. A long position could have been entered at this point, with a stop-loss placed below the lower band at $103.10. The trade would have been profitable, as the price continued to rise and reached a new all-time high of $137.98 on December 28, 2020. The trade could have been closed at this point, or trailed with a trailing stop based on the lower band. The trade would have yielded a profit of $13.58 per share, or 10.91%, with a risk-reward ratio of 1:3.76. In comparison, using a 20-period Bollinger band with a 2-standard deviation would have resulted in a later entry at $125.28 on October 13, 2020, and a lower profit of $12.70 per share, or 10.14%, with a risk-reward ratio of 1:3.52. Using a 20-period Keltner channel with a 2-ATR would have resulted in a similar entry at $125.11 on October 13, 2020, and a similar profit of $12.87 per share, or 10.29%, with a risk-reward ratio of 1:3.55. Using a 20-period ATR with a 2-multiple would have resulted in a much earlier entry at $119.02 on September 28, 2020, but also a much larger stop-loss at $98.58. The trade would have yielded a profit of $18.96 per share, or 15.93%, with a risk-reward ratio of 1:4.18, but also a higher risk of being stopped out during the consolidation period.

2. EUR/USD Forex Pair - Reversal Breakout in January 2021. EUR/USD is the most traded and liquid currency pair in the forex market, and it often reflects the economic and political conditions of the Eurozone and the United States. In January 2021, EUR/USD broke out of a downtrend that lasted for about three months, and reversed its direction to the upside. Using a 20-period Donchian channel, we can see that the lower band acted as a resistance level for the price, while the upper band acted as a support level. The breakout occurred on January 6, 2021, when the price closed above the lower band at 1.2335. A long position could have been entered at this point, with a stop-loss placed below the previous low at 1.2190. The trade would have been profitable, as the price continued to rise and reached a new multi-year high of 1.2349 on January 6, 2021. The trade could have been closed at this point, or trailed with a trailing stop based on the previous low. The trade would have yielded a profit of 114 pips, or 0.92%, with a risk-reward ratio of 1:2.28. In comparison, using a 20-period Bollinger band with a 2-standard deviation would have resulted in a later entry at 1.2358 on January 6, 2021, and a lower profit of 91 pips, or 0.74%, with a risk-reward ratio of 1:1.82. Using a 20-period Keltner channel with a 2-ATR would have resulted in a similar entry at 1.2356 on January 6, 2021, and a similar profit of 93 pips, or 0.75%, with a risk-reward ratio of 1:1.86. Using a 20-period ATR with a 2-multiple would have resulted in a much earlier entry at 1.2274 on January 4, 2021, but also a much larger stop-loss at 1.2078. The trade would have yielded a profit of 175 pips, or 1.43%, with a risk-reward ratio of 1:3.50, but also a higher risk of being stopped out during the downtrend.

3. Gold (XAU/USD) Commodity - False Breakout in February 2021. Gold is one of the most popular and widely traded commodities in the world, and it often serves as a safe-haven asset and a hedge against inflation and currency devaluation. In February 2021, gold broke out of a downtrend that lasted for about six months, but failed to sustain the momentum and fell back into the range. Using a 20-period Donchian channel, we can see that the lower band acted as a resistance level for the price, while the upper band acted as a support level. The breakout occurred on February 3, 2021, when the price closed above the lower band at $1845.80. A long position could have been entered at this point, with a stop-loss placed below the previous low at $1784.60. The trade would have been unprofitable, as the price reversed and closed below the lower band at $1818.40 on February 4, 2021. The trade could have been closed at this point, or trailed with a trailing stop based on the previous low. The trade would have resulted in a loss of $27.40 per ounce, or 1.48%, with a risk-reward ratio of 1:-0.61. In comparison, using a 20-period Bollinger band with a 2-standard deviation would have resulted in a similar entry at $1846.10 on February 3, 2021, and a similar loss of $27.70 per ounce, or 1.50%, with a risk-reward ratio of 1:-0.62. Using a 20-period Keltner channel with a 2-ATR would have resulted in a later entry at $1858.50 on February 4, 2021, and a larger loss of $40.10 per ounce, or 2.16%, with a risk-reward ratio of 1:-0.89. Using a 20-period ATR with a 2-multiple would have resulted in a much earlier entry at $1810.20 on January 29, 2021, but also a much smaller stop-loss at $1793.00. The trade would have resulted in a loss of $8.20 per ounce, or 0.45%, with a risk-reward ratio of 1:-0.25, but also a lower probability of catching the breakout.

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19.How are credit default swaps valued and what factors affect their price and spread?[Original Blog]

One of the most important aspects of credit default swaps (CDS) is how they are priced and valued. The price of a CDS reflects the probability of default of the underlying entity, as well as the market conditions and the demand and supply of the contract. The price of a CDS is usually expressed as a percentage of the notional amount of the contract, which is the amount that would be paid by the protection seller to the protection buyer in case of a credit event. This percentage is also known as the CDS spread, which represents the annual premium that the protection buyer pays to the protection seller. In this section, we will explore how CDS spreads are determined and what factors influence them. We will also look at some examples of how CDS spreads change over time and across different entities.

Some of the factors that affect the pricing and valuation of CDS are:

1. The credit quality of the underlying entity. The higher the credit risk of the entity, the higher the CDS spread. This is because the protection buyer is willing to pay more to hedge against the possibility of default, and the protection seller is demanding more compensation for taking on the risk. For example, the CDS spread of a sovereign entity such as the United States, which has a very low default probability, is much lower than the CDS spread of a corporate entity such as Tesla, which has a higher default probability.

2. The market interest rates. The CDS spread is inversely related to the market interest rates. This is because the CDS spread represents the difference between the risk-free rate and the risky rate of the underlying entity. When the market interest rates increase, the risk-free rate increases, which reduces the CDS spread. Conversely, when the market interest rates decrease, the risk-free rate decreases, which increases the CDS spread. For example, the CDS spread of the United States decreased from 14 basis points in January 2020 to 8 basis points in January 2021, as the market interest rates declined due to the COVID-19 pandemic.

3. The liquidity of the CDS market. The CDS spread is also affected by the liquidity of the CDS market, which is the ease and speed of buying and selling CDS contracts. The more liquid the market, the lower the CDS spread, as the transaction costs and the bid-ask spread are lower. The less liquid the market, the higher the CDS spread, as the transaction costs and the bid-ask spread are higher. For example, the CDS spread of Argentina increased from 2,000 basis points in February 2020 to 4,000 basis points in March 2020, as the CDS market became illiquid due to the political and economic turmoil in the country.

4. The correlation among the underlying entities. The CDS spread is also influenced by the correlation among the underlying entities, which is the degree to which their credit risks move together. The higher the correlation, the lower the CDS spread, as the protection seller can diversify the risk by selling protection on multiple entities. The lower the correlation, the higher the CDS spread, as the protection seller faces more concentrated risk by selling protection on a single entity. For example, the CDS spread of the European Union decreased from 50 basis points in January 2020 to 30 basis points in January 2021, as the correlation among the member states increased due to the coordinated response to the COVID-19 pandemic.

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20.Understanding the Relationship[Original Blog]

When a company engages in business activities, it is essential to understand the relationship between trade payables and trade receivables. Trade payables are the amount a company owes to its suppliers for goods and services purchased on credit, while trade receivables are the amount owed to the company by its customers for goods and services sold on credit. The relationship between the two is vital as it affects a company's cash flow, working capital, and overall financial health.

1. Matching Principle: One way to understand the relationship between trade payables and trade receivables is through the matching principle. The matching principle requires a company to match its expenses with its revenues in the same accounting period. For example, if a company purchased goods on credit in December 2020 and sold them in January 2021, the cost of those goods should be recognized in December 2020. If the company recognizes the cost of the goods in January 2021, it will overstate its profit, which will affect the accuracy of its financial statements.

2. Cash Flow: Trade payables and trade receivables affect a company's cash flow. If a company has a higher amount of trade payables than trade receivables, it may indicate that the company is paying its suppliers faster than it is collecting payments from its customers. This could lead to a cash flow problem, which could affect the company's ability to pay its bills and invest in its business.

3. Working Capital: Trade payables and trade receivables also affect a company's working capital. Working capital is the amount of cash a company has available to fund its day-to-day operations. If a company has a high amount of trade payables and a low amount of trade receivables, it may indicate that the company is not managing its working capital efficiently. Conversely, if a company has a low amount of trade payables and a high amount of trade receivables, it may indicate that the company is managing its working capital efficiently.

4. Examples: For example, if a company has trade payables of $100,000 and trade receivables of $50,000, it may indicate that the company is not managing its working capital efficiently. On the other hand, if a company has trade payables of $50,000 and trade receivables of $100,000, it may indicate that the company is managing its working capital efficiently.

Understanding the relationship between trade payables and trade receivables is crucial for a company's financial health. It affects a company's cash flow, working capital, and overall profitability. By managing its trade payables and trade receivables efficiently, a company can improve its financial performance and achieve long-term success.

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21.Why Mobile Marketing Matters More Than Ever?[Original Blog]

Mobile marketing is the practice of reaching and engaging your target audience through their mobile devices, such as smartphones and tablets. Mobile marketing can include various channels and strategies, such as mobile websites, mobile apps, mobile advertising, mobile email, mobile social media, mobile messaging, and mobile commerce. Mobile marketing is not just a subset of digital marketing, but a distinct and powerful way of connecting with your customers and prospects in the smartphone era.

Why does mobile marketing matter more than ever? Here are some reasons:

1. Mobile devices are ubiquitous and personal. According to Statista, there were 5.22 billion unique mobile phone users in the world as of January 2021, which is 66.6% of the global population. Mobile devices are not only widely used, but also highly personal, as they store our contacts, photos, preferences, location, and other sensitive data. This means that mobile marketing can offer a more personalized and relevant experience to your audience, as well as a higher level of trust and loyalty.

2. Mobile devices are the primary source of internet access and online activity. According to We Are Social, 91% of the global internet users aged 16 to 64 accessed the internet via mobile devices in the past month as of January 2021. Moreover, mobile devices accounted for 54.8% of the global web traffic, 80.6% of the global social media users, and 53.3% of the global online purchases in the same period. This means that mobile marketing can help you reach and engage your audience where they spend most of their time and money online, as well as optimize your multichannel campaigns for mobile platforms and devices.

3. Mobile devices are the gateway to the offline world and the future of technology. Mobile devices are not only used for online activities, but also for offline interactions, such as scanning QR codes, making contactless payments, using augmented reality, and connecting with smart devices. Mobile devices are also the driving force behind the emerging technologies, such as 5G, artificial intelligence, voice assistants, and wearable devices. This means that mobile marketing can help you bridge the gap between the online and offline worlds, as well as leverage the latest innovations and trends in technology.

My undergraduate studies at Brown and graduate degrees from Harvard prepared me for a multifaceted career as an actor, entrepreneur and philanthropist.

Hill Harper

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22.The Risks and Rewards of Investing in Cult Stocks Driven by Social Media[Original Blog]

The risks and Rewards of investing in Cult Stocks Driven by Social Media

investing in cult stocks driven by social media can be both rewarding and risky. On one hand, social media has the power to create a cult following for a particular stock, which can lead to significant gains for investors. On the other hand, the volatility of these stocks can lead to substantial losses, especially for those who invest without proper research. In this section, we will explore the risks and rewards associated with investing in cult stocks driven by social media.

1. Rewards of Investing in Cult Stocks Driven by Social Media

The potential rewards of investing in cult stocks driven by social media are significant. Social media platforms like Reddit, Twitter, and Stocktwits have become increasingly popular among retail investors looking for investment opportunities. These platforms can create a buzz around a particular stock, driving up its price and attracting more investors. This can lead to significant gains for early investors who get in on the ground floor.

For example, GameStop, a video game retailer, saw its stock price surge from $20 to over $400 in January 2021, driven by a group of retail investors on Reddit. Those who invested early in the stock saw massive gains, with some investors reportedly making millions of dollars. Similarly, Tesla, a cult stock in its own right, has been driven up by social media buzz and now has a market capitalization of over $600 billion.

2. Risks of Investing in Cult Stocks Driven by Social Media

While the potential rewards of investing in cult stocks driven by social media are significant, so are the risks. These stocks are often highly volatile, with prices fluctuating wildly based on social media sentiment. This volatility can lead to significant losses for investors who invest without proper research or who get caught up in the hype.

For example, after GameStop's stock price peaked in January 2021, it quickly crashed back down to earth, losing over 90% of its value in just a few weeks. Investors who bought in at the peak of the frenzy saw their investments wiped out. Similarly, Nikola, an electric truck manufacturer, saw its stock price soar on the back of social media hype, only to crash back down to earth after allegations of fraud.

3. Best Practices for Investing in Cult Stocks Driven by Social Media

Investing in cult stocks driven by social media can be rewarding, but it requires careful consideration and research. Here are some best practices to follow:

- Do your research: Before investing in any stock, do your due diligence. Read up on the company's financials, management team, and competitive landscape. Don't rely solely on social media sentiment to make your investment decisions.

- Diversify your portfolio: Don't put all your eggs in one basket. Invest in a variety of stocks across different sectors to reduce your risk.

- Have a plan: Set clear investment goals and a plan for achieving them. Don't get caught up in the hype and make impulsive investment decisions.

- Be prepared to cut your losses: If a stock isn't performing as expected, be prepared to sell and cut your losses. Don't hold on to a stock just because of social media hype.

Investing in cult stocks driven by social media can be both rewarding and risky. While the potential gains can be significant, the volatility of these stocks means that investors need to do their due diligence and follow best practices to minimize their risk. By doing so, investors can capitalize on the power of social media to make informed investment decisions and potentially reap significant rewards.

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23.The Impact of Short Squeeze on Stock Prices[Original Blog]

Short squeezes can have a significant impact on stock prices, and it is essential to understand how they work and what they mean for investors. When a short squeeze occurs, short sellers are forced to buy shares of the stock they bet against, driving up the price of the stock. This sudden increase in demand can lead to a cascade of buying activity, which further drives up the price of the stock. The impact of a short squeeze on stock prices can be significant, and it is critical for investors to keep an eye on short interest levels to anticipate the potential for a short squeeze.

Here are some key insights on the impact of short squeezes on stock prices:

1. Short squeezes can result in significant price increases: When a short squeeze occurs, it can result in a rapid increase in the price of the stock. For example, in January 2021, shares of GameStop rose by over 1,600% in just a few weeks due to a short squeeze.

2. Short squeezes can hurt short sellers: Short squeezes can lead to significant losses for short sellers who are betting against the stock. If the price of the stock rises too high, short sellers may be forced to buy shares at a much higher price than they sold them, resulting in substantial losses.

3. Short squeezes can cause volatility: Short squeezes can cause significant volatility in the stock market, as traders and investors try to anticipate which stocks are most likely to experience a short squeeze. This can lead to significant price swings, which can be challenging to predict.

4. Short squeezes can be triggered by social media: Short squeezes can be triggered by social media activity, as was the case with GameStop in January 2021. social media platforms like Reddit can be used to coordinate buying activity, which can drive up the price of the stock and trigger a short squeeze.

5. Short squeezes can be difficult to predict: Short squeezes can be challenging to predict, as they can be triggered by a variety of factors, including social media activity, changes in short interest levels, and unexpected news events. As a result, investors must stay vigilant and be prepared to react quickly if a short squeeze does occur.

Short squeezes can have a significant impact on stock prices, and investors must be aware of the potential for a short squeeze when investing in the stock market. By keeping an eye on short interest levels and staying informed about social media activity and other market events, investors can be better equipped to anticipate and respond to short squeezes.

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24.Real-World Examples of Successful Call Ratio Backspread Trades[Original Blog]

Call Ratio Backspread is a powerful options trading strategy that can be used to profit from a bullish market outlook. While the strategy is not without its risks, it has been used successfully by traders around the world to generate substantial profits. In this section, we will take a closer look at some real-world examples of successful Call Ratio Backspread trades.

1. Netflix: In September 2019, Netflix's stock price was trading at around $270 per share. A trader who was bullish on the stock decided to execute a Call Ratio Backspread by buying 100 call options with a strike price of $280 and selling 200 call options with a strike price of $300. The trader's net debit for the trade was $2,000. As it turned out, the trader's bullish prediction was correct, and Netflix's stock price rose to $310 per share. The trader was able to make a profit of $18,000 on the trade, a return of 800%.

2. Tesla: In June 2020, Tesla's stock price was trading at around $900 per share. A trader who was bullish on the stock executed a Call Ratio Backspread by buying 100 call options with a strike price of $920 and selling 200 call options with a strike price of $960. The trader's net debit for the trade was $17,000. Tesla's stock price continued to rise, and by August 2020, it had reached $1,500 per share. The trader was able to make a profit of $133,000 on the trade, a return of 782%.

3. Amazon: In November 2020, Amazon's stock price was trading at around $3,200 per share. A trader who was bullish on the stock executed a Call Ratio Backspread by buying 100 call options with a strike price of $3,200 and selling 200 call options with a strike price of $3,400. The trader's net debit for the trade was $23,000. Amazon's stock price continued to rise, and by January 2021, it had reached $3,800 per share. The trader was able to make a profit of $197,000 on the trade, a return of 858%.

4. Apple: In January 2021, Apple's stock price was trading at around $135 per share. A trader who was bullish on the stock executed a Call Ratio Backspread by buying 100 call options with a strike price of $140 and selling 200 call options with a strike price of $150. The trader's net debit for the trade was $4,000. Apple's stock price continued to rise, and by February 2021, it had reached $145 per share. The trader was able to make a profit of $16,000 on the trade, a return of 400%.

The Call Ratio Backspread strategy can be a profitable way to take advantage of a bullish market outlook. However, it is important to note that the strategy is not without risks, and traders should always be aware of the potential downsides before executing any trades.

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25.Successful Token Burning Initiatives[Original Blog]

One of the most common and effective ways to increase the value of a cryptocurrency is to reduce its supply. This is known as token burning, which is the process of permanently removing a certain amount of tokens from circulation. Token burning can be done for various reasons, such as rewarding loyal users, creating deflationary pressure, or improving the governance of a project. In this section, we will look at some of the successful token burning initiatives that have been implemented by different projects in the crypto space. We will analyze how they have benefited from burning their tokens and what challenges they have faced along the way.

Some of the case studies of successful token burning initiatives are:

1. Binance Coin (BNB): Binance Coin is the native token of Binance, the world's largest cryptocurrency exchange by trading volume. Binance has committed to burn 100 million BNB, which is half of the total supply, over time. The amount of BNB to be burned every quarter is based on the trading volume on the exchange. Binance has already burned more than 16 million BNB as of January 2021, which is equivalent to over $600 million at current prices. Binance claims that by reducing the supply of BNB, it can increase its scarcity and demand, and thus its value. BNB has been one of the best-performing cryptocurrencies in the past year, reaching an all-time high of over $40 in January 2021.

2. Maker (MKR): Maker is the governance token of MakerDAO, a decentralized platform that allows users to borrow stablecoins called DAI by locking up collateral. Maker holders can vote on various parameters of the system, such as the stability fee, the collateral ratio, and the risk parameters. Maker also has a token burning mechanism, which is triggered when the system generates surplus fees from the borrowers. These fees are used to buy back and burn MKR from the open market, reducing the supply and increasing the value of the remaining tokens. Maker has burned over 28,000 MKR as of February 2021, which is equivalent to over $40 million at current prices. Maker is one of the most influential projects in the decentralized finance (DeFi) space, with over $5 billion worth of collateral locked in its platform.

3. VeChain (VET): VeChain is a blockchain platform that focuses on supply chain management and business processes. VeChain uses a dual-token system, where VET is the main token that represents the value of the network, and VTHO is the gas token that is used to pay for transactions and smart contracts. VeChain has a token burning mechanism, where a portion of the VTHO used in each transaction is burned, reducing the supply and creating deflationary pressure. VeChain also allows users to stake their VET and generate VTHO over time, creating an incentive to hold the token. VeChain has burned over 6 billion VTHO as of February 2021, which is equivalent to over $3 million at current prices. VeChain has partnered with several enterprises, such as Walmart, BMW, and DNV GL, to provide blockchain solutions for various industries.

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