Manic, much?

No, you are not. I know a lot of people who do this.

Suppose the spot price of the S&P 500 is $1000 and the 1 year futures price is $1100. Is the notional amount here $250 x $1000 or is it $250 x $1100?

Also, is the required margin based on the first quantity or second quantity?

Neither. the required margin is based on a number of factors including the volatility of the instrument. The CME website publishes required margins - your broker may impose higher margin requirements than the CME minimum.

Forget the margin for a second, the notional value is based on one or the other of those, right? Which one?

Notional value is based on the contract price, not the spot value of the index.

Just a quick question, any help would be appreciated:
I'm learning about long term investing, and was wondering why a good company that is increasing its book value, would ever be trading below book value?

In particular, I was looking at citi and BP. I know that BP stock is hurt from the crashing oil prices, and citi from the financial crisis, but why below book value? Does that mean that there is a chance that people think the companies could go bankrupt / not recover?

Any info that I'm missing would be great, I'm really new to this. Thanks.

There are a ton of reasons for a name to trade below book value. Here are a few.

1. Book value is not always calculated accurately. I don't mean that companies lie about it, but that they may price certain assets differently than the market might actually pay for them. Two examples:
- You're a big bank like citi, and you hypothetically have a lot of exposure to security A, which is quoted at say $10B in book value, that's the number included in the calculation. But lets say they go to try and liquidate that $10B, and due to the market being illiquid it could realistically only get $5B if sold immediately. Citi's book value would thus be worth a lesser amount to the market.
- You're a big energy firm like BP, and you hypothetically have a lot of oil assets in Brazil that are worth $10B in book value under normal conditions. But lets say they just had a presidential election, and the woman who got re-elected is very bad for energy companies and business in general (this actually just happened, see the ticker PBR if you want to see what that looks like). Investors decide BP will only get $5B for these assets, even they are worth $10B on paper.

2. Book value by itself could be an entirely irrelevant metric based on a number of circumstances. For example, a bank could have a book value of $100B, but maybe it played a large and negative role during some of kind financial crisis event, and now investors think there's a good probability they will be on the hook for $20B in settlement costs, causing their book value to trade at $80B. Or perhaps they're a major energy company that owns a huge number of assets in timbiktu that requires oil to be priced at $80/barrel else their investor expectation is to lose a lot of money. So those assets are now priced to generate negative cash flows, and thus command a lower total book value.

Another example of this could be a software company that manages an app and a network of drivers to schedule pick-ups and drop-offs in a bunch of major cities globally. Perhaps that company just raised money at a $50B valuation. There's almost no chance that it's book value is worth $50B, and nor could the company itself just say "our offices are worth $1B, we don't own any vehicles, we acquired a few companies so we have $2B in goodwill, we'll just say that our app is worth $47B in book value to make up the difference".

3. For a common stock shareholder, the book value may not actually derive the value gained in a liquidation. Another example, (they're easier for this) an energy company has $100B in book value. Of this number, $20B of their highest quality assets have a special financing arrangement securing just assets in the event of a bankruptcy.While this number stays on the top level of the firm's book value, in a bankruptcy the stockholders have no rights to that and are left with the remaining $80B of lower quality assets, that may not even be worth that.

Book value is almost worthless for the sake of finding value unless you are researching it in depth to find out if there is real value there. Best of luck.

awesome, thanks for taking the time to write such a detailed explanation

How much money does a website site make per ad view using the platform Selectable Media?

I had a question about building a discounted cash flow model to try to valuate a stock, if anyone's got a few minutes to help:

I read a couple books recently, one was by morningstar, and they walk through the process of building a discounted cash flow model. I took the steps and made an excel spreadsheet with it, so i can enter the numbers and try to get the intrinsic value. In the book they show the last 10 years of a stocks "free cash flow", and it's very linear. They can easily estimate that it's growing at about 10% and everything runs smooth. However, when I started looking into companies, the only one with somewhat predictable free cash flow, was Apple.

Here are Exxon Mobile's, past 10 years of free cash flow, for example:
28,565, 34,299, 33,824, 36,615, 40,407, 5,947, 21,542, 24,370, 21,899, 11,245

It seems kind of impossible to guess what the cash flow will be next year, or what the rate of growth will be. And a small % change in the rate of growth that I guess changes the "intrinsic value" number that the spreadsheet spits out by a lot.

Any help or guidance would be greatly appreciated.

Also, follow up question: Does anyone have any tips/incite on valuating a growth stock as undervalued or overvalued?

Therein lies the problem: from a theoretical standpoint, the value of a stock is the net present value of all future dividends.

Where can I look for historical bond pricing? My discount broker is a **** and won't send me old bulletins

https://www.quora.com/Where-can-I-ge...and-yield-data

Nope, not dividends. From a theoretical standpoint dividends don't matter actually.

Yes, I'm pretty sure dividends is correct. That is how earnings are distributed to shareholders. Earnings is too broad - it is (future) shareholder equity that is the basis of the share price.

The theoretical price of a stock is the present value of a perpetuity that pays the stock's dividends.

I'm curious to hear some stories from people who quit poker (professionally) and pursued other careers. I'll make a new thread, but just want to check if anyone knows if this topic has already been discussed (or any thread where people discuss career and/or degree suggestions)

When unemployed, as I sometimes find myself I often sell etfs or index funds. On Vanguard, the bid ask spread after hours is large but market trades on Vanguard are never executed until business hours.

So, my question is can this spread hurt me in the milliseconds after the market opens when my trade is placed? In theory this spread should nearly vanish back to the normal and then my trade is executed and all is fine.

Obv I could wait until market is open but just want to make sure in practice this all checks out as well.

Shoot I guess no one knows on that.

I am testing by selling one stock and noting the current bid and ask. Unfortunately I think when it sells I will only know the bid so I will won't know for sure.

This has probably been answered a million times, but I would like to ask.

This year I'm looking at opening a taxed account for investing. I already have an IRA. I want to try to take more action by putting my money towards some of the companies I find. I was hesitant to buy anything in my IRA since I'm more defensive with the money in there. I'm thinking at least with a taxed account I can write it off on my taxes if I end up with a loss.

I'm mainly going to be looking at individual stocks and prefer to keep costs as low as possible.

So far I'm seeing OptionsHouse, TradeMonster, and InteractiveBrokers. Any specific one over the other? Online reviews seem to be generally mixed so I'm not sure if there is any that are more reputable with low costs.

In regards to how you should be investing a taxable vs non taxable account, the knife cuts both ways. If you take more risk for more return in the IRA, those added gains won't get taxed which is nice.

As for which platform to trade on, I will tell you that the best one is Interactive Brokers. It has very low margin fees that are closer to what you'd get as a professional as opposed to the retail 8% crap offered elsewhere. It also has the lowest trading fees I've seen anywhere for standard equities and options, sometimes even offering rebates depending on how you execute and fill your orders. However, they are basically a bare bones platform for experienced traders. You won't get your hand held by them, and they won't having all kinds of research reports at your disposal, nor reviews/recommendations for ETFs or mutual funds, etc. Best of luck.

You're right about the tax. I guess I've just gotten more defensive in my IRA because I don't want to lose that money. All of my investments over the last 5-6 years have come from other people's ideas. Now, I want to go after my own ideas as a couple companies I found in 2014, but didn't invest in went up between 45-100%. In 2014, my IRA return was around 15% so I feel like I did pretty well.

In looking at Interactive Brokers, I'm seeing their minimum is $10,000. I don't think I'm going to start with that much. I also don't think I would generate the commissions that would get me to a $0 activity fee, although I guess they subtract the difference.

Any thoughts on that or the next best recommended? I'm just ballparking the numbers.

If it's just basic investing that you're doing you could try https://www.robinhood.com/

I posted a thread on this site a while back, but it is essentially a bare bones brokerage that has $0 trade commissions and no account minimum. Beyond that, if you're trading/investing with such a small balance, just don't trade often at all if you go with a broker that charges normal trading fees. It really doesn't matter what broker you use at that point, just pick one you're comfortable with.

I signed up for the early access so I'll keep an eye on it. I used Scottrade back in 2003 when I first started investing. I've also tried Ameritrade. But since then there have been new brokers popping up left and right.

I guess it wouldn't be bad to have something that offers a few different investments. I've never put a cent into options so I would be interested in learning about them and maybe trying it sometime.

I've also never directly invested in corporate bonds or the others so I would like to learn how to do that as well.