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A Guide to Relative Valuation

What is ‘relative valuation’?

Relative valuation is the notion of comparing the price of a company to the market value of similar companies.

To do this we need to use relevant multiples (P/E, EV/SALES, EV/EBITDA, etc.).

The multiples used in a relative valuation model must be a relevant proxy for a company’s value. For example, we cannot compare the average age of employees of different companies to determine their value, that would make no sense. We need to use metrics that are directly associated with a company’s intrinsic value, such as: sales, market cap, net income, and many others. Also, the companies we are comparing MUST BE RELATED in terms of industry and business operations.

For example, you cannot compare CloudMD or WELL Health Technologies to a cannabis company or a gold mining company. That is the same as comparing apples to oranges and your analysis would be useless…CLICK for complete article

5 Things To Do With $1,000 Right Now

If you’ve got an extra $1,000 by some miracle, or perhaps thanks to COVID stimulus holdovers, it may not seem like much, but there’s no reason it can’t be the seedling of your first investment portfolio.

Perhaps if you’ve got serious debt to pay down, it’s better to do that first, but if not, there are plenty of places to park $1,000 that will make it grow rather than collecting dust in a savings account, or worse yet, under the euphemistic mattress.

And since zero-fee trading platform Robinhood descended on the Earth to democratize trading for the little people, retail investing–even when you don’t know what you’re doing–is all the rage.

The markets started to tank in March because of the COVID-19 pandemic but has also created an army of young investors that started investing out of boredom due to stay-at-home and lockdowns.

All major online stock trading platforms have seen a surge in demand in recent months, leading to a major spike in new accounts in the first quarter. Many of the new users are young or even first-time investors with over half of them aged 34 or younger. In fact, online brokers saw new accounts grow as much as 170% in the first quarter.

Recent studies show that 29% of wealthy investors are under the age of 50 and control 37% of investable assets. So, why not you?

That $1,000 you have right now could grow into years of great future financial choices.

Here are some tips for the best ways to invest $1,000 right now:

#1 Micro-Investing

A cool grand is not too shabby if you want to start with micro-investing. With new apps (such as Robinhood) on the market, you can even start investing with as little as $5. Squirreling away even $5 a week, for instance, creates a savings/investing habit and you won’t even miss the cash.

And if you want the ease of stock trading with diversification benefits of mutual funds, you should take a look at micro-investing apps that allow you to invest in exchange-traded funds (ETFs)–entire “baskets” of stocks centered around various themes….CLICK for complete article

These 3 Major Companies Are Changing Their Office Plans; What Could This Mean For Investors?

Over the last several months, we’ve seen a variety of companies change their plans, and we’ve written a lot about how the work-from-home movement may change real estate investing, as well as the forecast for office REITs. Many companies are planning for a future that looks a lot different than it did a year ago. Here are three notable examples. Click for complete article.

“Burn It Down” Nihilism Is Harmful Too

These are genuinely fascinating times to be an investor. Markets seem to be going through a generational phase shift, and not necessarily for the best. I see a culture that is leading itself away from prosperity and towards the abyss, and I’m helpless to stop it. My emotions run the gamut watching events unfold, oscillating between indifference and unbridled rage. I can end up in a dark place. “Just burn it all down!” I think at times. It turns out that I’m not alone, though frankly, I wish I were. While my nihilistic outbursts seem justified, they’re just as harmful as the culture I’m repudiating.

In my last article, I postulated how the ideology of postmodernism permeates financial markets. I see it manifesting as heavy-handed regulations, endless interventions, and a neurotic obsession with markets’ continual rise. Here, I will comment on the reaction to this, which I see as nihilism. To be sure, I believe postmodernism’s influence on markets is negative, so I’m sympathetic to this opposing view. However, the perceived antidote may be just as dangerous as the poison…CLICK for complete article

Shoulda Coulda Woulda

  • In April of 1997 Apple was near bankruptcy and shares traded as low as $0.49.
  • On August 2, 2018 it became the first company to be valued at $1 trillion.
  • At $467.55 a share Apple now valued at $2 trillion.