Educational articles

What is the VIX index?

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The VIX index, formally known as the CBOE Volatility Index, is a popular measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. It is often referred to as the “fear gauge” or “fear index” because it tends to rise when investors are fearful or uncertain about the market’s future direction. Here are some key points about the VIX index: Definition The VIX measures market expectations of 30-day volatility for the S&P 500 index, derived …

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What does EPS growth mean?

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EPS growth stands for Earnings Per Share growth. It is a financial metric that measures the increase in a company’s earnings per share (EPS) over time. EPS is calculated by dividing the company’s net income by the number of outstanding shares of its common stock. EPS growth is significant for investors because it indicates how fast a company’s profitability is growing on a per-share basis. A higher EPS growth rate generally suggests that a company is performing well and increasing …

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The disadvantages of dividend stocks

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Investing in dividend stocks is a popular strategy with investors as it provides regular income and is thought of as being less volatile than growth stocks. However, there are also several disadvantages to consider: Lower Growth Potential Dividend-paying companies typically distribute a portion of their earnings to shareholders as dividends. This means they may have less capital available for reinvestment in business expansion or innovation compared to companies that retain all earnings for growth. As a result, dividend stocks may …

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When do small caps outperform large caps?

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We previously wrote about why large caps have outperformed small cap but in this article we discuss the environments where small-cap stocks can outperform large-cap stocks. Early Stages of Economic Recovery Small-cap stocks are often more sensitive to economic cycles and can benefit significantly when the economy starts to recover from a downturn. During this phase: Small-cap companies may experience faster revenue growth as economic activity picks up. They can quickly adapt to changing market conditions and capitalize on new …

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All about market breadth

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Analysing market breadth can provide insights into the overall health and direction of a financial market or specific market index. There are several ways that the study of market breadth can be useful. Indicator of Market Strength: Market breadth measures the number of individual stocks or securities participating in a market move. A strong market rally accompanied by a broad participation (many stocks advancing) indicates widespread confidence and strength in the market. Conversely, if only a few stocks are driving …

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