What is the January Effect? The January Effect is known to be a seasonal increase in stock prices throughout the month of January. The increase in demand for stocks is often preceded by a decrease in price during the month of December, often due to tax-loss harvesting. An alternative reason for the rise in demand…
What is a Qualified Dividend? A qualified dividend is a dividend that is taxed at the long-term capital gains rate rather than the ordinary income rate. Criteria for a Dividend to be “Qualified” Criteria for a dividend to be taxed at the long-term capital gains rate: 1. The dividend must be paid by a United…
What is a Hikkake Pattern? A hikkake pattern, simply known as a hikkake, is a candlestick pattern used by traders to identify a short-term trend in a stock price. The hikkake pattern was developed by Daniel L. Chelser, a Chartered Market Technician (CMT). Understanding the Hikkake Pattern Hikkake is a Japanese word that means to…
What is the January Barometer? The January Barometer is the idea that the investment performance of the S&P 500 in the month of January is representative of the predicted performance of the entire year. For example, if the month of January yields positive momentum, it is said that the remainder of the year will rise…
Who is James Tobin? Born on March 5, 1918, James Tobin is an American economist who was awarded the Nobel Prize for his work and analysis of financial markets and how they relate to production, prices, expenditure decisions and budgeting, and employment. Mr. Tobin focused on Keynesian economics, and his most prominent work was on…
What is the Experience Curve? Introduced by the Boston Consulting Group, Experience Curve is a concept that states that there is a consistent relationship between the cumulative production quantity of a company and the cost of production. The concept implies that the more experienced a company is in manufacturing a specific product, the lower its…
What are Fixed Costs? Fixed costs are a type of expense or cost that remains unchanged with an increase or decrease in the volume of goods or services sold. They are often time-related, such as interest or rents paid per month, and are often referred to as overhead costs. They are important to attaining more…
What is Forward Price? Forward price refers to the predetermined and agreed upon price of an underlying asset in a forward contract. It is also known as the forward rate. A forward contract refers to an agreement between parties to buy or sell an underlying asset on an agreed-upon date and price. The underlying asset…
What is Reverse Cash and Carry Arbitrage? Reverse cash and carry arbitrage is the inverse of the cash and carry arbitrage commodity trading strategy. Like cash and carry arbitrage, it is a market-neutral strategy that seeks to take advantage of market inefficiencies between a commodity’s spot price and its future price. In the reverse cash…
