5 Tips for Investing in the Retail Sector

5 Tips for Investing in the Retail Sector

With the rise of e-commerce giants like Amazon and eBay, some people believe that local retail is fading. According to the U.S. Census Bureau, however, retailers experienced 0.6 percent higher sales in March 2018 than the month prior. The retail sector isn’t fading but, rather, changing. You can capitalize on this trend by investing in the right retail companies.

#1) Research Retailers before Investing:

The golden rule of investing is to research and familiarize yourself with the company beforehand. In other words, don’t invest in a retail company with which you aren’t familiar. Just because you own a product sold by the company doesn’t necessarily make you qualified for investing. You should research the company to identify its goals, strengths and weaknesses. Only then can you make a sound decision regarding an investment.

#2) Resilient Retailers:

Some retail companies are more resilient than others, and focusing your investments on these companies can increase your chances of financial success. Dollar stores like Dollar General and Dollar Tree are resilient to market changes that can otherwise affect a retailer’s sales and profits. Membership-based warehouse retailers like Costco, BJ’s Wholesale and Sam’s Club are also known to weather bad market conditions.

#3) Omni-Channel Marketing:

Retailers that embrace an omni-channel marketing strategy will attract more customers and generate higher profits than their counterparts with a linear marketing strategy. Omni-channel marketing refers to the use of multiple mediums to promote a business and its products or services. Walmart, for example, has positioned itself as a key player in the retail sector, partly by promoting its products on multiple channels. In addition to direct mail ads and billboard signs, the retailing giant uses email, search advertising, social media and other digital channels.

#4) Look beyond Profits:

While profits is arguably the most important key performance indicator (KPI) of a retail company’s success, you should analyze other metrics when deciding whether to invest in a retailer. If a company is planning to open dozens of new locations, for example, this may dilute its earnings. So, look beyond profits and consider the company’s long-term strategy.

#5) Logistics:

Finally, consider a retail company’s operational logistics. If a company has a dated, inefficient logistics stream, customers will have to wait longer to receive their products. Not only does this hurt the retailer’s reputation, but it can also sales volume and profits. Some retailers have restructured their logistics to overcome these challenges. The grocery retailer Kroger recently launched the ClickList program, allowing customers to order groceries online and pick them up without ever leaving their vehicle.

Don’t let your portfolio take a hit because of bad investments. Follow these five tips to choose the right retail companies in which to invest.

 

Yorkville Advisors, LLC is a privately owned hedge fund sponsor that also provides specialty financing solutions to its clients.

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Financial Benefits of Investing Your Tax Refund

Financial Benefits of Investing Your Tax Refund

It is definitely a good day for your morale and for your wallet – tax refund day. You may not want to hear this right now, but if you put off a bit of immediate gratification, you now have the leverage that you need to create even more leverage for yourself in a few months! Let’s take a look at some of the financial benefits of investing your tax refund.

Money now, more money later:

Good investments have the advantage of moving off of something we call “compounded interest.” This may seem like a difficult financial term. It is not. It simply means that money makes more money for you if you leave it alone and let it grow. Einstein himself said that compound interest was one of the most incredible phenomena in the universe, and this is a man who studied the universe in its entirety! If you do not know about the wonders of compound interest, make yourself aware of just how much money you can have for yourself in the future if you give up just a little bit today.

Investing is saving:

Another reason to invest money is that it gives you an excuse not to spend it. Investing means that you have money that you can go to in an emergency, even if you have that money in an investment that is not completely liquid. It is much better then turning your entire financial world upside down by taking out a loan or going into debt through a credit card.

In short, if you are investing, then you are protecting yourself from the day to day things that can happen to you unexpectedly. You can also think about it this way – every day that you stay out of a medical emergency is a day that you allow yourself to make more money with your investment capital.

Money to lend:

If you have money in investments, then you have money that you can lend or leverage for loans yourself. The richest people in the world take out loans just like you do. However, they have money in the bank that can cover those loans if everything goes wrong. If you are going to be rich, then you need to incorporate the same kind of financial strategy in the way that you operate.

If you have money to invest, then you also have money to lend to people that can put you on the other side of the debt equation. You do not have to spend your life in debt to others – you can actually become the bank in certain instances.

 

Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor.

Why Investing in Penny Stocks is Never Profitable

Why Investing in Penny Stocks is Never Profitable

The lure of cheap stocks offering high rewards often appeals to many inexperienced investors who want to quickly generate high returns. However, cheap stocks, also known as penny stocks, are extremely volatile and sometimes dangerous. Penny stocks have been known to wipe out many new investors’ entire portfolio. Here is a closer look at penny stocks and why they are almost never profitable.

What is a Penny Stock?

Investors refer to penny stocks as companies whose share price trades below $1.00. The SEC considers companies that trade below $5.00 as penny stocks. These companies typically have no market capitalization and no profits. Companies with such a low share price normally trade on the over-the-counter stock markets and on the pink sheets. These stocks can go days without any market activity and no trading volume. Often times these stocks have very wide bid/ask spreads and no liquidity. The most successful investors almost always stay away from such volatile stocks.

Finding the “Next Big Thing”

It is not uncommon for investors to scour through countless penny stocks hoping to find the next Apple or Google. The lure of getting a “piece of the action” can lead investors into a dangerous game that puts their portfolios at risk. The chances of finding the “next big thing” in penny stock listings are the equivalent of finding a needle in a haystack. Most finance experts agree that researching penny stocks for the next Amazon is a waste of time, and investors should use that time to learn how to invest in the stocks of companies trading on the major market averages.

Little to No Liquidity:

Most penny stocks have little to no liquidity, which makes them very difficult to trade. Many inexperienced investors might think they are getting a deal when they buy a company’s stock for $.10 or less per share. However, when it is time to sell those shares, those investors might have a hard time finding buyers. Additionally, companies with little liquidity are targets of stock manipulators who like to “pump and dump” those shares.

For example, fraudulent brokerage houses or traders will pump up the stock with the false promise of some major breakthrough while simultaneously buying a significant amount of shares, which then causes the price of the stock to rise. Once the stock reaches a certain price, those same brokers or traders will then sell their shares of stock at huge profits while regular investors are stuck with worthless stock.

Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor that was founded in 2001.

3 Smart Ways to Invest $10,000 in 2018

 

 

 

3 Smart Ways To Invest $10,000 In 2018

Making your money work for you is by far the best way to set yourself up for financial stability in the future and build your wealth over time. Contrary to popular belief, though, you don’t need immense amounts of money to start investing successfully. In reality, investing an amount less than you would pay for a new car can produce considerable returns down the line. Here are three of the best ways you can invest a nest egg of $10,000 in 2018 to help improve your financial life.

Try Peer-to-peer lending:

If you’ve ever had a simple savings account, you’ve put money into a pool of capital that is used by banks to make loans. As you may have noticed, though, interest rates on savings accounts have dropped so low as to be almost negligible. Luckily, there’s still a way for you to profit off of the interest paid on personal loans. Peer-to-peer lending is a model under which individual lenders use online platforms to make loans to pre-qualified borrowers. Lenders can fund small portions of the requested loan, with some platforms allowing amounts as low as $25 per loan. Once the loan is made, the borrower pays it back gradually with an interest rate based on his or her credit profile. Though returns vary by the interest and default rates, many investors have successfully produced yields of 8 percent or more using peer-to-peer lending. Because the loans are repaid gradually with monthly payments, peer-to-peer lending is a great investment in terms of producing reliable liquid cash flow.

Bulk up Your IRA:

For the average investor saving for retirement, few vehicles are as useful as an IRA, or individual retirement account. These accounts allow you to deduct your contributions from your taxes or, in the case of a Roth IRA, pay tax on your contributions but pay no taxes when you withdraw the money. At the moment, the annual IRA contribution limit stands at $5,500, meaning that $10,000 would allow you to make the maximum contribution in 2018 and nearly the maximum in 2019. If investing toward retirement is your goal, using your money to enlarge your IRA is an excellent idea.

Try Fundrise’s eREIT:

With $10,000 to invest, you likely won’t be able to get into traditional real estate investing. Financial innovation, however, has caught up with the property market and allowed average, retail-level investors to put money into large commercial property developments. Fundrise, the company responsible for this innovation, has created a product known as an eREIT, or electronic real estate investment trust. Fundrise investors can put amounts as low as $500 into its eREIT, which is then used to partially fund medium-sized commercial real estate investments. The interest paid on the funding is used to produce the return to investors, which has ranged from 8-12 percent over the past few years. If you want to get into real estate investing and don’t mind trying out a new financial product, Fundrise’s eREIT may be a good option for you.

These are just some of the great ways to invest amounts of up to $10,000 in 2018 and beyond. Before making any investment, always make sure to consider whether or not it is in line with your personal financial goals and risk comfort level. Even if an investment is good on paper, it may not be the best one for you if it doesn’t conform to your individual appetites as an investor.

 

Yorkville Advisors, LLC is a privately owned hedge fund sponsor.

A Guide to Investing in Coops

 

A Guide to Investing in Coops

Real estate continues to get more expensive in many cities and urban areas. For many people residing in these areas, it can be a difficult task to find affordable housing. As the cost of living continues to rise, many people are looking at cooperatives as an alternative option. However, you should be aware that purchasing a cooperative is very different from owning or purchasing other types of housing.

Purchasing A Coop:

In order to determine if purchasing a coop is the right decision over purchasing a house or condo, you must do some research on your finances, as well as different coop policies. You have to be sure that you are making a safe investment. If your finances are not in order, you may lose your property.

Differences:

Owning a coop allows you to purchase shares in a company. You are not actually owning real estate like you would if you were buying a house or a condo. The company owns the property and you would have the right to stay in the property based on the total number of shares that you have in the company. The company has the majority of the power and they would be able to set the terms that you must abide by while you are staying at the property.

Important Information To Know:

The company should give you some financial statements to look over, so that you can tell if the financials are consistent on a yearly basis. Pay close attention to the company’s balance sheet and statement of equity. Poor financial records could be a strong indicator that the company is draining funds to avoid increasing the costs that shareholders would have to pay to continue staying in the coop. Make sure that the financial statements have been audited by a Certified Public Accountant. Without the numbers being audited, there is no real way to determine if the numbers are valid or not.

Check to see if the coop has an emergency fund. There should be money set aside to deal with issues such as a basement leak or problems with the HVAC system. Make sure that the principal on the mortgage is being paid. In some cases, the company may prefer not to own the property. You may be required to refinance the mortgage. Be sure to check any small additional notes that are listed on the financial records. The notes should go into detail about certain aspects of the financial statements.

 

Yorkville Advisors, LLC is a privately owned hedge fund sponsor.

3 Investing Biases You Should Avoid

3 Investing Biases You Should Avoid

Investing is a rewarding but challenging part of modern life. Investors have to navigate a wealth of false information, relevant facts, and trends that may or may not point to stock price development. They also have to contend with a number of biases that tend to hold them back as they choose between stocks, bonds, and other investment vehicles. Here are three common biases and a few ways to avoid them.

Confirmation Bias:

This bias involves the desire for people to seek out information that will confirm their original beliefs. People have the inherent belief in their own reasoning and investment skills. Their beliefs will then guide future decisions and research. These people need to be more careful about how they research and make decisions. Checking their own decisions with those of a stock broker or certified financial planner will help them break the bubble of confirmation bias and make them smarter, more flexible investors.

Regret Aversion:

This bias refers to the fear people have of repeating decisions that did not work for them in the past. It is particularly relevant for investors who lose a massive amount of money in a stock market crash or correction. These investors vividly remember their losses and are sometimes reluctant to make the same decisions again. However, this regret aversion can turn from mere prudence into a bias that holds an investor back. While specific stocks may lose all of their value, the market itself has always rebounded from its losses. This potential for recovery means that investors should follow a plan and reevaluate their holdings once a year no matter how much they have lost. They do not need to worry about the potential for the next crash. Instead, they need to worry about how much money they will lose if they continue their trend of regret aversion.

Hot Hand Fallacy:

This fallacy is the belief that prior success guarantees future results. Individuals falling for this fallacy believe that they have a “hot hand” because their earlier predictions had been correct. This fallacy leads investors to place an undue amount of trust into their decision-making and that of others such as mutual fund investors. In fact, past performance is not indicative of future results. Past successes may be the product of either sound investing or sheer luck. They should not dissuade an individual from seeking out more information or other opinions that help them craft their investing approach.

Traders have to deal with a multitude of different biases on a daily basis. They may seem impossible to manage and handle effectively. However, research and strategies are critical for any successful investor. Investors must be able to pick a well-researched investing approach and then stick with that approach for a pre-determined period of time. Investing the right way helps minimize losses or missed opportunities that come from trusting in biases.

 

Yorkville Advisors are a global investment provider. 

A Guide to the Perfect Investment Strategy

A Guide to the Perfect Investment Strategy

If you ask five investors what the perfect investment strategy is, you will get five different answers. However, these five investors are likely closer to each other than they would like to admit. There are concepts that relate to all of these investors. Putting these concepts together will give you the strategy that you are looking for.

Strategize Through Diversification:

There is no single investment that is going to save your life. You need to have a diverse portfolio of investments if you are looking to profit in all markets. The market will go up, down, sideways and many more complex formations. Diversify in order to make sure that you are okay in all markets.

Stick to Your Strengths:

Although you need to have a diverse portfolio, you do not need to spread the diversity outside of your core competencies. The greatest investors in the world have diversified portfolios, but they may not look diversified to the naked eye. For instance, Warren Buffett does not invest in technology. This is true even though the tech industry has experienced a great deal of profitability in the past few years. Why does Warren Buffett stay out of the tech industry? He does not understand it. If he does not understand it, then he does not add it to his diverse portfolio.

Do Not Follow the Crowd:

The old Warren Buffett strategy still works – you buy when everyone else is selling, and you sell when everyone else is buying. In the short-term, the market is based on a great deal of emotion. However, the long-term tends to balance this emotion out. The fundamentals of investments become much more important as time moves on. You can capitalize on the short-term emotion to get more assets in the long term so that you can profit without spending a great deal of money.

Have a Plan to Get Out When You Get In:

You make your money when you buy investments, not when you sell them. How? You have a plan to get out before you ever get in. This is a very important investment strategy that everyone should pay attention to. If you do not know how much profit that you want to take from a particular investment, then you need to sit down with a paper and pencil until you do. Work out exactly what will be the prophet at which you get out of the business. By the same token, you should also sit down and calculate how much of a loss you are willing to take before you get out.

The strategies above will ensure that you have the best investment portfolio for any market. You cannot determine the movements of the market, but you can’t protect yourself against them. Profits take care of themselves. All that you need to do is follow the tips above and keep your eye on the market so that you can take advantage of anything that you see happening within your core competencies.

 

 

Yorkville Advisors, LLC is a privately owned hedge fund sponsor.