Warren Buffett ‘s Financial Rules to Live By

March 31, 2011
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Understanding Stock Trading Technical Analysis Tutorial w/ the Zecco Zirens

March 31, 2011

 


EVO Breeding IPO 27% Complete in Two Days

March 31, 2011

EVO Breeding IPO 27% Complete in Two Days

By: Carter Allegrant

SL Capex- (EVO). Yesterday EVO Breeding Company successfully launched is IPO at 2PM SL and managed to attract a lot of interest from a few investors. Today the company has sold out 27% of its total initial public offer and raised 236,344L which shows the motivation of the Second Life community to support strong businesses with an established in-world presence.

EVO plans to use its capital to expands its current product line in addition to acquiring a new sim to showcase the brand through exhibits and expositions. In addition to that they also plan to spend a portion of the money in SL publicity and ads in other web platforms (A bit broad for the prospectus) ad well as buying a new 50’000 server for their growing client base.

The company, based on the information given the prospectus and the official site, seems to be a solid venture to invest your hard earned lindens with and its worth nothing that the projected 100,oooL a month earnings set them in a good starting point for delivering value to investors. Our advice as always however remains do your own research and see if the company accommodates your needs and expectations as an investor.

As the company progresses we will keep you updated of any major events, in the meantime please take a moment to comment and share your views with the rest of our readers about what you think of the company.

Carter Allegrant

SL Business Journal Editor


Capital Exchange Latest News

March 27, 2011

Capital Exchange Latest News: A Clear Review of The Major Events

By: Carter Allegrant

With the end of the week comes a period to review the news of each of the companies listed at Capex and the overall health of the market. The fact that the market has a whole continues to achieve growth and bring new initial public offerings to the floor should give us all a sense of pride and hope for a better future for Second Life investments, perhaps even an opportunity to remember what virtual exchanges once were and wonder if we might be able to get there once more even.  But most importantly we should all focus on the positive energy and the new window of opportunity that opens up before us with a single exchange. Before now the trading community had three main exchanges ( CAPEX, ISE, VSTEX) all of which were responsible for sharing a very small volume of investment which limited growth to a great extent. Now that we have only one exchange all investors can come together under  a single banner to boost the volume and present a strong market for new investors and that accomplishment will without a doubt usher us forward into a new era of securities trading in Second Life.

That said let us review the news of this week.

I. Nestler Investment Corp ( NIC) – Announced today a 75’000L dividend approximate for the month of March which is certainly a sign that Second Life investment is gradually rising. The company also continues to maintain its reputation of been a reliable venture for investors and seems to be a good place to place long term investments.  Price wise the company has remained stable and not experienced any suddenly drops in value , which is always a good sign.

II. Mykos Corporation ( MYK) –  Announced today the opening of Mall/Zyngo Space which really seems to be a sign that the company is further diversifying its sources of revenue and not relaying entirely on the magazine to support itself.  It will be interesting to see how this new project fares, and we will give MYK investors an update later on the traffic as well as a appeal of the location. ( If you wish you may visit the mall at : http://slurl.com/secondlife/Syrah/252/177/39/)

III.  Second Ads ( ADS) – The brain child of Wili Clip announced today its first dividend for shareholders for the month of March. There have not been any details as too the amount of the dividend but the fact that they are offering on their first month is really a good sign. On a separate note I am happy to see that the price of the stock has gradually improved and its now 1% gain from the 27% loss it was experiencing before. This is in my opinion a really solid company which will be interesting to follow throughout the year because of its high potential for growth.

IV. EVO Breeding Company ( EVO)– Is a brand new venture which will start its Initial Public Offering this upcoming Wednesday and seems to be a strong opportunity for the market because it comes with a second life track record of being in business for a while.  I want to encourage all readers to take a look at their prospectus as well as their website and see if its something you want to get in on ( Company Website: http://www.evobreeding.co.nr & Company Prospectus: http://www.slcapex.com/home/story/system/2836)

That is it for this post and I hope all of  you who read this block will choose to leave some comments about your particular views, ideas and concerns regarding this week’s news or any other subject you would like to discuss.  So far I have seen little comments and that is something which am really worried about, so please if you enjoy reading take a moment to let me know you are out there.

Thanks,

Carter Allegrant

SL Business Journal Editor

 

 


Trader Education Programs Essential for Market Growth

March 21, 2011

Trader Education Programs Essential for Market Growth

By: Carter Allegrant

Throughout the years an area that has remained entirely unexplored by the investment community has certainly been trader education. A great majority of exchange users have left the second life investment scene because they simply did not understand how achieve a decent profit through the trading of virtual securities.  It is the lack of knowledge some people have which keeps us from growing as a community and jeopardizes the sucess of the market as a whole. This issue is not to be blamed on the exchanges that have existed in SL nor in the Chief Executive Officers or traders but rather the market as a whole.  There is currently an untapped amount of potential investors that could really use a push in order to get going  and they do have some options such as asking the exchange staff for help, but the truth is it is unreasonable to expect exchanges alone to bear the burden of educating investors when in reality we should all try our best.

An example of a disadvantage caused by the lack of knowledge can be clearly seen in the first day of trading of Second Ads were the company went down 17% percent in value because some shareholders sold at a loss. Now some may say that is because they needed to free up some of their capital but they should’t have invested in the first place if they weren’t ready to make a commitment to the company. When I decide to sell at a loss I know I am hurting the company, investors, and the market as a whole and that is because I have some experience trading. Imagine those users who have just opened a new account and really have no idea of the negative implications for them and community as whole when they trade inefficiently.

In order to help fix the probleam there needs to be a higher amount of initiave on part of the community and a desire to spend time helping other people learn about trading and enjoy it. That can be done through seminars, small intro courses, videos or through incentives such as trading fee discounts to those users who show they have helped others learn and understand our virtual platform but it needs to be prioritized in order for us to see a continuing growth in the markets. I want to invite you the reader to leave some comments and or suggestions of what you think  about the probleam, wether you agree there is one or if not why so, and how it could be solved.

Hope to hear from you,

Carter Allegrant

SL Business Journal Editor.

P.S( I am currently working on developing a SL Documentary on Second Life as a business and investment platform which is intended to help promote learning as well as publicity to our community, if you would be interested in helping out or participating please feel free to contact me in-world.)


Due Diligence On Dividends

March 10, 2011

By Stephan Abraham

( All Rights Reserved To The Author & Investopedia, http://www.investopedia.com/articles/basics/11/due-dilligence-on-dividends.asp)

Many beginning investors do not understand what a dividend is, as it relates to an investment, particularly an individual stock or mutual fund. A dividend is simply a payment to shareholders, typically of a publicly traded company. A dividend payment is a payout of portion of a company’s profit to eligible stockholders.

However, not all companies pay a dividend. Usually, the board of directors determines if a dividend is desirable for their particular company based upon various financial and economic factors. Dividends are commonly paid in the form of cash distributions to the shareholders on a monthly, quarterly or yearly basis. Shareholders of any given stock must meet certain requirements before receiving a dividend payout, or distribution. You must be a “shareholder of record” on or subsequent to a particular date designated by the company’s board of directors in order to qualify for the dividend payout. Stocks are sometimes referred to as trading “ex-dividend“, which simply means that they are trading on that particular day without dividend eligibility. If you buy and sell stock on its ex-dividend date, you will not receive the most current dividend payout. Now that you have a basic definition of what a dividend is and how it is distributed, let’s focus in more detail on what more you need to understand before making your investment decision. (Learn more in Investment Valuation Ratios: Dividend Yield.)

How Dividends Are Calculated
It may be counterintuitive, but as a stock’s price increases, its dividend yield actually decreases. Many novice investors may incorrectly assume that a higher stock price correlates to a higher dividend yield. Let’s delve into how dividend yield is calculated, so we can grasp this inverse relationship.

Dividends are normally paid on a per-share basis. If you own 100 shares of the ABC Corporation, the 100 shares is your basis for dividend distribution. Assume for the moment that ABC Corporation was purchased at $100/share, which implies a $10,000 total investment. Profits at the ABC Corporation were unusually high so the board of directors agrees to pay its shareholder $10 per share annually in the form of a cash dividend. So, as an owner of ABC Corporation for a year, your continued investment in ABC Corp should give us $1,000 in dividend dollars. The annual yield is the total dividend amount ($1,000) divided by the cost of the stock ($10,000) which gives us in percentage terms, 10%. If the 100 shares ABC Corporation was purchased at $200 per share, the yield would drop to 5%, since 100 shares now costs $20,000 OR your original $10,000 only gets you 50 shares, instead of 100. As illustrated above, if the price of the stock moves higher, then dividend yield drops and vice versa.

The Mechanics of Dividends
The real question one has to ask is whether dividend-paying stocks make a good overall investment. Dividends are derived from a company’s profits, so it is fair to assume that in most cases, dividends are generally a sign of financial health. From an investment strategy perspective, buying established companies with a history of good dividends adds stability to a portfolio. Your $10,000 investment in ABC Corporation, if held for one year, will be worth $11,000, assuming the stock price after one year is unchanged. Moreover, if ABC Corporation is trading at $90 share a year after you purchased for $100 a share, your total investment after receiving dividends is still break even ($9,000 stock value + $1,000 in dividends).

This is the appeal to buying stocks with dividends: it helps cushion declines in the actual stock prices, but also presents an opportunity for stock price appreciation coupled with a steady stream of income that is dividends.

This is why many investing legends such as John Bogle, Warren Buffett and Benjamin Graham all espouse the virtues of buying stocks that pay a dividend as a critical part of the “investment” return of an asset. (Discover the issues that complicate these payouts for investors Dividend Facts You May Not Know.)

Risks to Dividends
During the financial meltdown in 2008-2009, all of the major banks either slashed or eliminated their dividend payouts. These companies were known for consistent, stable dividend payouts each quarter for literally hundreds of years. Despite their storied history, the dividend was cut.

In other words, dividends are not guaranteed, and are subject to macroeconomic as well as company-specific risks. Another potential downside to investing in dividend-paying stocks is that companies that pay dividends are not usually high growth leaders. There are few exceptions, but high-growth companies usually do not pay dividends to its shareholders even if they have significantly outperformed over the vast majority of all stocks over the last five years. Growth companies tend to spend more dollars on research and development, capital expansion, retaining talented employees and/or mergers and acquisitions.

For these companies, all earnings are considered retained earnings, and are reinvested back into the company instead of rewarding loyal shareholders. It is equally important to beware of companies with extraordinarily high yields.

As we have learned, if a company’s stock price continues to decline, its yield goes up. Many rookie investors get teased into purchasing a stock just on the basis of a potential juicy dividend. There is no specific rule of thumb in relation to how much is too much in terms of a dividend payout.

The average dividend yield on the S&P500 companies that pay a dividend historically fluctuates somewhere between 2-5%, depending on market conditions. In general, it pays to do your homework on stocks yielding more than 8% to find out what is truly going on with the company. Doing this due diligence will help you decipher those companies that are truly in financial shambles from those that are temporarily out of favor and therefore present a good investment value proposition. (Explore arguments for and against company dividend policy, and learn how companies determine how much to pay out. Read How And Why Do Companies Pay Dividends?)

Conclusion
Dividends are really a discretionary distribution which a company’s board of directors gives its current shareholders. It is typically a cash payout to investors at least once a year, but sometimes quarterly. Stocks and mutual funds that distribute dividends are likely on sound financial ground, but not always. Investors, however, should be aware of extremely high yields, since there is an inverse relationship between stock price and dividend yield and the distribution might not be sustainable. Also, stocks that pay dividends typically provide stability to a portfolio, but do not usually outperform high quality growth stocks. (Understanding the dates of the dividend payout process can be tricky. We clear up the confusion, in Dissecting Declarations, Ex-Dividends And Record Dates.)


Clarification Regarding the Blue Diamond Virtual Reit Article.

March 9, 2011

Dear SL Business Readers,

After thinking about a few opinions I got from the ” Future of BDVR ” article I think I should clarify a few things. First off I would like to say that I really believe Blue Diamond Virtual Reit has something wonderful brand wise since it has managed to run for so long without closing down and transition from one CEO to another several times. I am really interested in the company because I have worked there in the past and it saddens me to see it not reach its full potential. This however doesn’t mean I have no trust in Alain Delpiaz or Kafka Frugel both of which have shown commitment towards the company but rather that I think some things could be done to improve performance and I wanted to give the shareholders a current outlook of the state of the company.

The article wasn’t meant as a personal attack on management but rather a “this is where are now, what can be done to move forward”. It is very critical because I believe problems need to be accurately put on the table in order to deal with them but that’s not something bad or intended to bring down those who run it.

I hope my stance is well expressed,

Carter Allegrant

SL Business Journal Editor