Computershare FAQ: Is Computershare Safe?

Computershare is one of the biggest sources of inquiries that I receive through my site’s e-mail address. There seems to be a lot of people out there who wonder what Computershare is, and whether Computershare is a safe source to purchase stocks through.

The short answer: Computershare is possibly the most legit source you can choose to purchase stock. When a company goes public through an IPO, or wants to raise capital through an additional offering, it is the issuer and must keep track of who the shareholder base is. As you can imagine, that is a complicated and ever-changing job, and something that most companies have no interest doing.

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Alphabet Stock: High Chance Of Outperforming S&P 500

From a psychological point of view, I find that growth at a reasonable price investing is far more satisfying than deep value investing.

If you overpay for a strong company, you know that the passage of time is your friend. With each earnings report that propels the earnings per share rate ever higher, you get to see the intrinsic value of your ownership position increase in value. It’s fun owning things where the question is: “How much did the profits grow this year?” When the underlying profits are growing quickly, it is easy to dismiss moments when the stock price lags the growth in earnings. If earnings grow by 15% in 2016, and the stock price only advances 5%, there’s no real cause for concern unless you dramatically overpaid at the outset.

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The Long View For Scrooge McDuck Investors

I write this article in mind for those of you who have your wealth primarily concentrated in broad-based index funds, or have created portfolios that are so totally diversified across sectors and industries that you have taken the Scrooge McDuck approach to investing. Instead of focusing on the success of certain companies to deliver returns, you have chosen to rely upon the general growth of economic activity to build wealth.

When events like the financial crisis, the sequester, Brexit, and so on occur, people pause and wonder: What if the post WWII boom in the global stock market was the result of a perfect tailwind consisting of rebuilding, population growth, global trade advancements, and rapid technology advancements that delivered returns far above what can be expected over the coming twenty to fifty years?

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Oil Stock Trading: This Is Going To End Poorly

Last month, the Wall Street Journal put out an article titled “The New Oil Traders: Moms and Millennials” that chronicled the daily experience for stay-at-home moms and people in the 18-35 age range that log into their account each day and make trades on the price of oil.

Assuming it can be done, the transaction and social costs are extremely high: These people are paying $20 per day, sometimes more, to make oil and oil stock trades. Assuming that they are entering and exiting their positions 5 times (e.g. ten fees for a round-trip transaction), then we are talking about a hobby that costs $5,200 per year.

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American Stocks After Brexit

Perhaps it is because I have far more American than British stocks as a reference point when studying the stock market, but I was a little surprised to see that American stocks seemed to offer a good deal in the aftermath of Brexit than many British stocks themselves.

The only British stocks that came down substantially in the aftermath of Brexit were the financial institutions, and they have such difficult to determine intrinsic values that I am not sure any firm conclusions can be drawn regarding their fair value. They have wide latitude to engage in “the rehypothecation of collateral” which involves pledging the assets of customers as collateral for their own activities. At Barclays and Lloyds, you see the same assets getting rehypothecated two, three, four times over, and is a big reason why Barclays fell from $62 to $3 during the financial crisis. Because the financial sector is such a pride of London, it faces less restrictions which can be good during boom times but is disastrous as soon as you enter a recession that goes a few notches deeper than what is foreseeable. Citigroup can’t brag about its general practices compared to too many other institutions, but it can compared to Barclays.

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