Lauren Hua

What are the different sectors of the market and what do they mean?

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The Australian stock market is broken down into separate sectors developed by the GICS (Global Industrial Classification). This sector classification is important for portfolio management purposes as it can show investors where they may be overweight or underweight. 1.Energy This sector involves companies that are involved in producing energy. It contains oil, gas, and renewable energy companies which are in exploration and development. This sector also includes utility companies providing power to households. Energy stocks usually perform well in high …

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5 misconceptions about the stock market

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There are some inaccurate myths in the share market which can misinform the investor. Below are a list of five common myths which are false concepts about the share market. 1.You can’t go wrong with a fundamentally sound stock Stocks which are fundamentally strong can also fall in share price. Although the financial ratios may indicate there is nothing wrong with the company, the share market needs to believe that as well. If the sentiment of a stock in the …

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Income investors should invest in growth stocks, not income stocks

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At Fairmont Equities, we conduct dozens of free portfolio reviews every year for investors looking to improve their returns. There are a range of reasons as to why a portfolio does not live up to an investor’s expectations. One of the common problems we see over again is an over reliance on shares with a high yield. Often an investor chooses high yielding stocks because they are investing via an SMSF, even though they are still in accumulation phase. They …

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What is a DRP?

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The share market is full of jargon which may not be familiar to the new investor. A term which is used frequently is DRP. This acronym means “Dividend Reinvestment Plan”. In this article we discuss the reasons why investors may want to take it up, and the potential downsides. Definition of dividend reinvestment plan Companies can pay their dividends to entitled stock holders through stock as opposed to cash. Some companies may offer DRP shares at a discount to market …

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What is an arbitrage strategy?

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Arbitrage is a strategy which traders and fund managers use to take advantage of price imbalances in different markets. In this article we discuss what this strategy involves and different types of arbitrage strategies. What is the definition of arbitrage? The simple explanation of arbitrage is buying an asset where the price is lower and selling the asset where the price is higher in a different market. Traders who want to exploit price discrepancies between two markets can use this …

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