When the market goes up or down, it doesn't always happen evenly. Some companies and entire industries can do well when the rest of the market is falling, and some can do poorly when everything seems to be going well.
Source: 401kcalculator.org via flickr.
In order to make sure you're protected no matter what the market does, make sure your portfolio is well diversified. But what exactly does that mean and why is it so important? How much exposure to one stock or to one sector is too much?
The importance of diversification
Diversification is important because different stocks and industries react in different ways to economic and market conditions.
For example, the S&P 500 has gained about 180% since hitting bottom in March 2009.
However, the difference between sectors is substantial. Some sectors, such as industrials (XLI on the chart below) and financials (XLF), have outperformed the S&P, while energy (XLE) and consumer staples (XLP), among others, have underperformed.
5 Best Diversified Bank Stocks To Invest In 2015: BioAmber Inc (BIOA)
BioAmber Inc. (BioAmber), incorporated on October 15, 2008, is a chemical company. The Company manufactures its bio-succinic acid in a facility using a commercial scale 350,000 liter fermenter in Pomacle, France. During the year ended December 31, 2011, the Company produced 487,000 pounds, or 221 metric tons, of bio-succinic acid at this facility. Succinic acid is used to manufacture a range of products used every day, including plastics, food additives and personal care products, and can also be used as a building block for a range of derivative chemicals. The Company produces and sells bio-succinic acid using its process for petroleum-derived succinic acid. It also has additional bio-based products under development with partners including bio-succinic acid derivatives, such as BDO, and applications of bio-succinic acid, such as plasticizers, polyurethanes and de-icing solutions. During 2011, the Company created a wholly owned subsidiary, BioAmber International, S.a.r.l.
The Company develops bio-succinic acid for a range of markets, such as personal care products and food additives, plasticizers, polyurethanes, resins and coatings. The applications for bio-succinic acid include plasticizers, polyurethanes, personal care products, de-icing solutions, resins and coatings, food additives, lubricants and other products. Plasticizers are organic esters that are primarily used to make flexible polyvinyl chloride. Adipic acid is used in polyester polyols, which are used to make polyurethanes. Polyurethanes are used in, among other things, soles for footwear, molded foams for automotive applications, such as car seats and arm rests, and non-foam applications such as coatings, adhesives and sealants. Other applications of bio-succinic acid that are developed and tested by potential customers, which include anti-freeze solutions, solvents, water treatment chemicals and effervescence agents such laundry tablets and bath salts.
The Company competes with Gadiv Petrochemical Industries ! Ltd., Mitsubishi Chemical, DSM, Anqing Hexing Chemical Co Ltd, Anhui Sunsing Chemicals Co., Ltd., Genomatica, Inc., Myriant Corporation and Roquette Freres S.A.
Advisors' Opinion:- [By Markus Aarnio]
BioAmber (BIOA) is a sustainable chemicals company. Its proprietary technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstock into chemicals for use in a wide variety of everyday products including plastics, resins, food additives and personal care products.
10 Best Electric Utility Stocks To Own Right Now: Genesee & Wyoming Inc. (GWR)
Genesee & Wyoming Inc. owns and operates short line and regional freight railroads, and provides railcar switching services in the United States, Canada, Australia, the Netherlands, and Belgium. The company?s railroads transport various commodities, including coal and coke; pulp and paper; metals commodities; minerals and stone commodities; lumber and forest products; farm and food products; chemicals and plastics; petroleum products; autos and auto parts; metallic ores; and intermodal commodities. It operates 63 railroads with approximately 7,400 miles of owned and leased track; and approximately 1,400 additional miles under track access arrangements. The company also offers rail services at 17 ports in North America and Europe. In addition, it provides car repair services, car hire and rental services, demurrage and storage, crewing services, and track access services, as well as sells diesel fuel to other rail operators. The company was founded in 1899 and is headquarte red in Greenwich, Connecticut.
Advisors' Opinion:- [By Holly LaFon]
Another area that is intriguing to us is the North American energy sector which looks to have a number of interesting catalysts currently. While the energy sector is at present only a modest overweight in the portfolios, we have been encouraged by several trends taking place for a number of years. These positive developments are also having an impact that goes far beyond the energy sector itself. Many believe that the U.S. will become energy independent and possibly a net exporter of natural gas and oil (currently restricted by law) in the next decade. This opinion is based primarily on the development of new drilling techniques (i.e. horizontal drilling, and high pressure fracking) that have enabled companies to access oil and natural gas reserves in shale formations that were previously not economically viable. The ability to tap into this acreage is a game-changer in our view and is already having a tremendous impact on the economy. Employment rates in these mostly rural areas surrounding the shale basins are very high and companies thus find hiring extremely competitive. Strong labor markets tend to create strong local economies. Oil States International (OIS) has been able to capitalize on this trend by providing housing and other services to oil service workers that are in demand in the area. CST Brands (CST) operates gas stations in Texas, but it is increasingly looking to broaden its product offering beyond fuel. Rail companies like Union Pacific (UNP), Canadian Pacific (CP), Kansas City Southern (KSU) and Genesee and Wyoming (GWR) have also benefited substantially. Given that shale areas are rural and often lacking infrastructure, substantial investment must be made to support drilling and production activities. Without pipelines in place, railroads have been the primary takeaway mechanism for moving production to the various clusters of refining capacity around the United States. In order to serve this demand, massive investment in railcars has been nee
10 Best Electric Utility Stocks To Own Right Now: Dime Community Bancshares Inc.(DCOM)
Dime Community Bancshares, Inc. operates as the holding company for The Dime Savings Bank of Williamsburgh that provides financial services and loans primarily for multifamily housing. The company accepts various deposit products, including savings accounts, certificates of deposit, money market accounts, interest bearing checking accounts, and non-interest bearing checking accounts. Its loan products comprise multifamily residential mortgage loans, commercial real estate loans, one- to four-family residential mortgage loans, construction and land acquisition loans, and consumer loans. In addition, the company, through its other subsidiaries, involves in the management and ownership of real estate; the sale of non-FDIC insured investment products; and investing in multifamily residential, one to four-family, and commercial real estate loans. As of January 26, 2012, it operated 26 branches located throughout Brooklyn, Queens, the Bronx, and Nassau County, New York. The comp any was founded in 1864 and is headquartered in Brooklyn, New York.
Advisors' Opinion:- [By Tim Melvin]
I always find it very interesting to see what long-term investors are selling in a given quarter. Kahn Brothers lightened up on many financials that have shot up and now trade above book value. The firm sold out of Flushing Financial (FFIC), TCF Financial (TCB) and Dime Community Bank (DCOM). Khan apparently shares my views on the large-cap drug stocks, easing up on both Pfizer (PFE) and Bristol Meyers (BMY) over the summer. Khan Brothers also sold the last of the Travelers shares (TRV) it has owned since 2008 at more than twice the purchase price.
10 Best Electric Utility Stocks To Own Right Now: Cavium Networks Inc.(CAVM)
Cavium, Inc. designs, develops, and markets semiconductor processors for intelligent and secure networks. Its semiconductor products enable customers to develop networking, wireless, storage, and electronic equipment that are application-aware and content-aware, and process voice, video, and data traffic. The company?s products also include a suite of embedded security protocols, which enable unified threat management (UTM), secure connectivity, network perimeter protection, deep packet inspection, network virtualization, broadband gateways, third generation/fourth generation (3G/4G) wireless infrastructure, storage systems, wireless high-definition multimedia interface (HDMI) cable replacement, and embedded video applications. Its products are used in networking equipment, such as routers, switches, content-aware switches, UTM and other security appliances, application-aware gateways, voice/video/data gateways, wireless local area network, 3G/4G Wimax/Long Term Evolution access, aggregation and gateway devices, storage networking equipment, servers and intelligent network interface cards, Internet protocol surveillance systems, digital video recorders, wireless HDMI cable replacement systems, and video conferencing systems; and connected home and office equipment, such as print servers, wireless routers, and broadband gateways. In addition, the company offers embedded Linux operating system, related development tools, support, and professional services. It sells its products directly or through contract manufacturing organizations and distributors to the providers of networking, wireless, storage, and consumer electronic equipment; and to original design manufacturers and contract electronics manufacturers primarily in the United States, China, Taiwan, Japan, and Malaysia. The company was formerly known as Cavium Networks, Inc. and changed its name to Cavium, Inc. in June 2011. Cavium, Inc. was founded in 2000 and is headquartered in San Jo se, California.
Advisors' Opinion:- [By Ben Levisohn]
Krishna and Krauklis note that Buffalo Wild Wings, Nextera Energy (NEP), Rexnord Corp (RXN), and The Advisory Board (ABCO) should benefit from recent acquisitions that should boost revenue growth, while�Buffalo Wild Wings and Cavium (CAVM) should see improvements thanks to the adoption of new technology that will help boost margins. Terex, The Advisory Board, and�Rexnord should get a boost from cost cutting, Krishna and Krauklis say.
10 Best Electric Utility Stocks To Own Right Now: Saes Getters SpA (SG&A)
SAES Getters SpA is an Italy-based company primarily engaged in the production of getters and metal dispensers. The Company structures its business into three main units: Industrial Applications, which includes getters and metal dispensers used in light sources and electron vacuum devices, getters for microelectronic and micromechanical systems, pumps for vacuum systems, getters for solar collectors, products for thermal insulation, and gas purifier systems; Shape Memory Alloys, which includes shape memory alloy semi-finished products, components and devices for medical and industrial applications, and Information Displays, which includes getters and metal dispensers for liquid crystal displays, and barium getters for cathode ray tubes. Additionally, through the Business Development Unit, the Company produces dryers and getters for organic light-emitting diode (OLED), sealants for solar panels and energy storage getter devices. Advisors' Opinion:- [By Jason Rivera]
To help facilitate this destruction of value has been that Koss has bought back a lot of its shares as the company has been overvalued. The below quote is from its most recent annual report.
In April of 1995, the Board of Directors approved a stock repurchase program authorizing the Company to purchase from time to time up to $2,000,000 of its common stock for its own account. Subsequently, the Board of Directors periodically has approved increases in the stock repurchase program. As of June 30, 2012, the most recently approved increase was for additional purchases of $2,000,000, which occurred in October of 2006, for an aggregate maximum of $45,500,000, of which $43,360,247 had been expended through June 30, 2012 . No purchases were made during the year ended June 30, 2012. The Company intends to effect all stock purchases either on the open market or through privately negotiated transactions and intends to finance all stock purchases through its own cash flow or by borrowing for such purchases.As you can see from this page, most of KOSS' margins have dropped substantially since 2007. Especially of note is its operating margin, ROE and ROIC. Book value per share, cash flow per share, revenue and working capital have all dropped substantially as well. Normally when I have evaluated companies' cost of goods sold rising is what has caused the above metrics to drop, but that has stayed relatively stable over the years at KOSS. The culprit in this case is selling, general and administrative (SG&A) related expenses expressed below as a percentage of its sales. The following numbers were taken from Morningstar:
10 Best Electric Utility Stocks To Own Right Now: DigitalGlobe Inc (DGI)
DigitalGlobe, Inc. provides commercial earth imagery products and information services worldwide. It collects imagery products and services through its QuickBird, WorldView-1, and WorldView-2 satellites, as well as aerial and satellite imagery from third party suppliers. The company offers a range of online and offline distribution options, including desktop software applications; Web services, which provide direct online access to the company�s image library; file transfer protocol; physical media, such as CD, DVD, and hard drive; and direct access program that facilitates certain customers to task and download data from its WorldView-1 and WorldView-2 satellites. Its imagery products and services support various uses, including defense, intelligence and homeland security, mapping and analysis, environmental monitoring, oil and gas exploration, and infrastructure management. DigitalGlobe, Inc. serves defense contractors; civil government agencies; providers of location-b ased services; and various companies in energy, telecommunications, utility, forestry, mining, financial services, environmental, and agricultural industries through direct and indirect channels. The company was formerly known as EarthWatch, Incorporated and changed its name to DigitalGlobe, Inc. in August 2002. DigitalGlobe, Inc. was founded in 1993 and is headquartered in Longmont, Colorado. DigitalGlobe, Inc. operates as a subsidiary of Morgan Stanley & Co. LLC.
Advisors' Opinion:- [By James Miller Phd]
The company has a current ratio of 13.05% which is higher than the one registered by Charter Communications Inc. (CHTR), Digital Globe Inc. (DGI), EchoStar Corp (SATS), Gilat Satellite Networks Ltd. (GILT) and Intelsat SA (I).
- [By Seth Jayson]
DigitalGlobe (NYSE: DGI ) reported earnings on May 7. Here are the numbers you need to know.
The 10-second takeaway
For the quarter ended March 31 (Q1), DigitalGlobe missed estimates on revenues and beat expectations on earnings per share. - [By Garrett Cook]
Telecommunications services shares dropped about 0.48 percent in trading on Friday. Top decliners in the sector included DigitalGlobe (NYSE: DGI), down 5.7 percent, and NQ Mobile (NYSE: NQ), off 3.8 percent.
10 Best Electric Utility Stocks To Own Right Now: Abu Dhabi Islamic Bank Egypt SAE (ADIB)
Abu Dhabi Islamic Bank Egypt SAE, formerly National Bank for Development (NBD), is an Egypt-based public shareholding company engaged in the provision of retail, corporate and investment banking services through a network of 69 branches located across Egypt. The Bank�� products and services are structured into four segments: the Personal banking segment includes current and saving account, investment account, club finance, charitable accounts and sukuk, among others; the Microfinance segment includes microfinance program; the Wholesale banking segment includes corporate banking, financial institutions and trade, cash management and corporate finance, and the Treasury segment includes foreign exchange, sharia-compliant products and market analysis/updates. In January 2014, the Company sold 11,619,575 shares representing 77.46% stake in National Company for Glass and Crystal�� share capital to Abu Dhabi Islamic Financial Investments Holding. Advisors' Opinion:- [By Gregor Stuart Hunter]
Tirad Mahmoud, the chief executive of Abu Dhabi Islamic Bank (ADIB), has warned of "irrational exuberance" in the UAE's corporate lending market, saying companies are seeking to lower borrowing costs by so much that banks may no longer find it appealing to lend.
- [By reports.droy]
Soon after the U.S. settlement was announced last week, SCB said that it was interested in exiting the SME business in the UAE as part of a broader effort to solidify its strategic focus. Recently in April, Barclays, its competitor, has sold its retail banking operations in the UAE to the Abu Dhabi Islamic Bank (ADIB), a deal by which the UAE bank acquired 11,000 customers.
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