What is a Bear Market?

What is a Bear Market?

A Bear Market is a sustained drop in the stock market of at least 20% after a relatively long period at stable or high market values (Bull Market).

Not to be confused with market corrections, which are shorter in duration and usually have depreciation values of less than 20%, Bear Markets tend to be short-lived.

During a Bear Market, investors are often worried that stock prices will continue to fall and many start selling off their shares. This causes prices to drop even further in what amounts to a self-fulfilling prophecy.

Because of the fear most buyers experience during a Bear Market, it is difficult to predict how long it will last. Prices cannot go up until confidence returns and people start buying again.

However, Bear Markets tend to last on average only 6 to 18 months. Large recessions being the exception.

Click here for a chart detailing all Bull and Bear Markets from 1926 to 2017.

Bear Markets can be a good time for investors to buy value stocks at very low prices. Many, however, fear that prices will fall even further and choose to sell rather than buy.

Market volatility is always a cause for concern. But those who make money in stocks know that holding long-term is key. Even if values drop during a Bear Market, a Bull Market is always around the corner and values never stay down for long.



What is the IoT?

What is the IoT?

The term Internet of Things (IoT) was coined in 1999 by Kevin Ashton, co-founder and executive director of the Auto-ID Center at MIT, but the concept had been around for years before that.

IoT refers to the connectivity of any and all electronic devices, including household appliances, medical devices, automated vehicles, etc. to each other and to the internet. Anything you can turn on can potentially be connected to the IoT.

Imagine your alarm clock, coffee pot, shower, all communicating with one another and turning themselves on at the appointed time. You’d never again have to stand at the coffee pot waiting for that cup of joe to finish brewing.

Sounds like Science Fiction, right?

It’s reality. And it’s right around the corner.

The IoT enables devices to collect and share data. The benefits are innumerable. The risks, well, they are still being analyzed. Security is an obvious hurdle. Companies will need some way to ensure that the data collected and shared between devices remains private and secure.

But with advances in AI technology and autonomous vehicles, as well as smart appliances and houses, the tech market is booming.

Companies from a variety of industries are working to bring IoT compatible products to the market in order to increase convenience to consumers.

No doubt the industry will be working hard to ensure that IoT is not only successful but also safe.

Here Dr. John Barrett explains the IoT in a TED talk.


Stock Market 101: The Basics

Stock Market 101: The Basics

Stock is commonly defined as “shares in ownership of a company,” but this definition is vague and not 100% accurate.

As a stockholder, you do not own part of the companies in which you invest. You own shares issued by said companies. The difference is important because it deals with liability and risk. Corporate property is owned by the corporation, not shareholders. This benefits both companies issuing stock and individuals who invest in them.

The benefit of being a shareholder (someone who owns shares in a company) is that you are entitled to a portion of the company’s profits without the risk to your personal assets. The more stock you own in any one company, the more of that company’s profits you are entitled to. As a shareholder, you also have a vote in shareholder meetings, have the right to sell your stock if you choose, and will receive dividends (from companies that pay them).

Learn more about the differences between shares, stocks, and equities.

Why Should I Buy Stock?

Capital Appreciation – this happens when the value of a stock goes up (in other words, the stock is worth more than you paid for it!)

Dividends – some companies pay out a share of their profits on a regular basis (often quarterly). Dividends can be paid in cash, in shares, or in other property.

Influence in the company – shareholders have the right to vote in shareholders’ meetings and can vote on things like the appointment of Board of Directors members.

Why do Companies Issue Stock?

Companies issue stock to raise capital for a variety of reasons, including:

  • Launching new products or services
  • Expanding the company or building new facilities
  • Expanding into new markets or regions
  • Reducing Debt

What Kinds of Stocks are There?

There are two general types of stock, common and preferred.

Common Stock

Common Stock is what most people have in mind when they think of stock. Most stock issued by companies is common stock. If you own common stock, you will receive dividends (if paid) and will have a vote in deciding who governs the board of directors (typically you will have one vote per share owned).

Preferred Stock

Preferred Stock usually does not come with voting rights, but dividends are generally fixed and guaranteed, where dividends paid on common stock can be variable and are not guaranteed. In many instances, companies only pay dividends to those who hold preferred stock.

Both types of stock can be further broken down into the following categories:

    • Growth Stocks – Earnings grow at a faster rate than average and do not typically yield dividends. This is a good option for those looking to maximize capital appreciation.
    • Income Stocks – Yield regular dividends and is the best bet for those who want a steady stream of income from their investment.
    • Value Stocks – With a low PE (price-to-earnings) ratio, these stocks are cheaper to purchase than those with a higher PE ratio. A low PE ratio can indicate trouble for the company, but often is just a reflection of overreaction on the part of investors. People buy value stocks hoping the stock value will rebound.

Click here for more information on the PE ratio

    • Blue-chip Stocks – Shares in large, well-established companies. They typically yield dividends as well as provide steady capital appreciation.

Stocks can also be categorized by the size of the company. Large-cap, Mid-cap and Small-cap stock. Stock in a very small company may be termed “micro-stock.” “Penny-stocks” are the lowest priced stocks. They do not pay dividends, often have very little growth, and are high-risk stocks – but they also have exponential room for growth.

Buying Stocks – Benefits and Risks


  • Greatest potential for growth over the long-term – You will generally see the greatest return on your investment by holding on to stocks long-term (10-15 years). Although some investors prefer to buy and sell stocks on a short-term basis as the market fluctuates.
  • Greatest possibility of return on investment – Stocks tend to yield greater returns on your initial investment than bonds or other types of investments.


  • Markets fluctuate. While they tend to stabilize and improve over time, there is no guarantee, and it is possible to lose all or part of your investment.
  • If you choose to sell a stock when it is down, you could lose money and miss out on the return if that stock recovers and/or rebounds.

Your risk can be minimized by maintaining a diverse portfolio (investing in multiple stocks and a variety of types of stock) and by holding on to stocks long-term.
Tips for diversifying your portfolio

How to Buy and Sell Stock

There are a variety of ways you can engage with the market, including:

  • Direct Stock Plans – Companies sometimes buy and sell stock directly, without the use of a broker. Often this stock is only available to employees or current shareholders. Companies usually buy/sell stock directly at certain times and prices and can require minimum purchase amounts.
  • Dividend Reinvestment Plans – Allow you to reinvest monies paid as dividends back into the company. This option lets you grow your investment without adding any additional capital.
  • Discount or Full-Service Broker – A broker will buy and sell stock for you, on your behalf. They are paid a fee called a commission for this service.
  • Stock Funds – Mutual funds or retirement plans that invest primarily in stocks. Offered by investment companies and often purchased through a broker.


5 Tips to Diversify Your Portfolio

5 Tips to Diversify Your Portfolio

Buying stock is the best way to earn large returns on your investments. But there are no guarantees. The best way to protect your investment and increase your odds of yielding good returns is by having a diversified portfolio.

Here are 5 tips to help protect your assets:

1. Don’t put all your eggs in one basket! – The number one rule is to buy stock in a variety of different companies and in different industries. This way if one company, or if an entire industry, suffers a setback, your other investments can compensate for any losses.

2. Spread the wealth even further – Diversify even further by investing in some low-risk stocks (like blue-chips) for slow, steady growth and some mid to high-risk stocks (like growth-stocks or penny-stocks) for the possibility of faster or more exponential growth.

3. Determine your needs and goals – Are you a young person with plenty of time to recoup losses, or an older couple hoping to supplement your retirement income? Do you need stocks which pay regular dividends or do you prefer stocks with higher capital appreciation? This is another area you can diversify. If you are able, invest in both dividend-paying and high-growth stocks. You can always reinvest your dividends if you don’t need them.

4. Reevaluate your investments over time – In today’s age of technology, the financial market is constantly changing. New industries pop up seemingly overnight. While it’s good to have some capital safely in “tried and true” markets, you don’t want to miss out on the next big thing either.

5. Non-stock options – while the stock market can provide high returns, even with sufficiently diverse stock, the market can be risky. Investing in bonds and other cash options ensures true diversity.


What is P/E Ratio?

What is P/E Ratio?

The P/E ratio (price-earnings ratio), also called the price multiple or the earnings multiple, is the amount of money you earn for every $1 you invest. To determine the PE ratio, divide the current market price of the stock by its EPS (earnings per share). You can also find the PE ratio listed on most financial portals and stock-market research sites.

Knowing a stock’s PE ratio can help you determine its growth potential.

A low PE ratio indicates room for growth. Many investors see it as a sign that the stock is undervalued or that the company is doing better than expected. Buying stock with a low PE ratio is an opportunity to buy cheap stock with the potential for significant growth.

A high PE ratio may indicate trouble as it means you are paying more for a smaller return. But it can also be a sign that investors are expecting higher returns in the future.

Like any metric investors use to determine whether a stock is worth buying, relying solely on the PE ratio has its drawbacks. Because it is based on the current market price, it can be affected by temporary changes in a stock’s value. If stock prices rise or fall temporarily due to market conditions or changes within the company, the PE ratio will change. Looking at the PE ratio over time can help mitigate this risk.

It is also crucial to compare any stock’s PE ratio to that of its peers. PE ratios vary greatly depending on the industry. Manufacturing and textile companies, for example, tend to have lower PE ratios than technology companies.

Companies which are currently losing money will not have a PE ratio.

Overall the PE ratio is a useful tool for determining stock value and potential. But like any metric, it should be only one of the factors you consider when looking at investing.


Stocks, Shares, Equities…What’s the Difference?

Stocks, Shares, Equities…What’s the Difference?

For many beginning investors, tackling the terminology of the financial market can be daunting. Terms like “stocks,” “shares,” and “equities” are everywhere, but what do they really mean?


Stock is a general term used to indicate a partial ownership in a publicly traded company. When you buy stock, you are investing in a company and are entitled to a share of the profits. How much stock you own in any one company is determined by how many shares you hold. If you purchase shares, you own stock.


Shares refer to the amount of stock you own in any one company. If you buy say 50 shares in company XYZ, you are a shareholder with 50 shares. If you buy 1 share, you are a shareholder with 1 share. You own stock in the company regardless of how many shares make up that stock.


Equities are sometimes referred to in the same way as stocks, and many investors use the terms interchangeably. For example, you might hear someone say they own equities in a company when they are referring to stock (or shares). Other times equity refers to a type of ownership in a company that is not publicly traded (and therefore does not issue stock). In these cases equity refers to the portion of the company owned. In other words, if you invest directly in a company, as say a partner, you own equity in that company.

Owning stock (one or more shares) means that, if the company is profitable, you have equity in that company. Having equity in a company, however, does not mean you have to own stock. You may also hear the stock market referred to as the equity market and stocks as equity instruments. The main thing to remember is that equity is basically the net value of something. So if you have more money than you owe, you have equity. This applies to stock as well. If the company is profitable, they will have equity, and if you own shares, you own a portion of that equity.