Blackberry Plummets; Noodles Soars

        On June 28, Blackberry reported a disappointing quarterly statement: a net loss of $84 million. This was much lower than most Wall Street expectations, which expected the stock to turn out a gain in its first full quarter with BB10 on the market. This news sent the stock plummeting nearly 30% in premarket hours, but it paired off those losses by 5% after the market opening. Sadly for Blackberry, their reports have let down many large institutional holders. With a volume of over 100 million shares today (triple the daily average), the stock was one of the largest movers on the Nasdaq.
        First, this indicates that the BB10 devices might not be doing as well as everyone had hoped. Because the company didn't provide the details in the number of BB10 devices sold, we can only assume they aren't fairing well or there has been a drop in the number of BB7 devices sold. Even though the revenue has increased this quarter in relation to the same quarter last year, they still were not able to turn a profit despite cost cutting measures. In the previous quarter, Blackberry had a surprise profit which may mean that the company's profit margin isn't as high on the new hardware.
        CEO Thorsten Heins has indicated that Blackberry will not make new Playbook tablets running on the new operating system, but will continue to manufacture old ones. This may be a smart move on their part considering the company entered the tablet market too late, resulting in a $500 million loss in previous years. Another piece of news that may scare away investors is the fact that the company also expects a loss in the next quarter. The new line of soon-to-be-released cheaper devices may help the company stay afloat temporarily, but the future of Blackberry doesn't look bright.

        On a cheerier note, Noodles and Co. soared nearly 100% in its stock market debut. The company runs a chain of restaurants, many of which are franchised. However, most of the company's revenue comes from the 300 or so company owned restaurants. With its current balance sheet and growth rate, this company's stock has the potential to rise into the hundreds. Its executive board has also proven successful, many of which have worked high up in companies such as McDonalds and Chipotle.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.

Debt

        There are many reasons a company takes on debt: to fund new projects, to issue a dividend, to make investments, etc. What is Debt? Debt is money that a company borrows from an outside source. For the most part, having a lot of debt is a bad thing. However, many investment companies have a lot of it anyway. This is due to the fact that their investments take time to develop and don't always pay off. It isn't always something you need to worry about.
        Debt isn't usually repaid all at once. Like a mortgage, it can be paid off in small increments over time. However, with time comes higher interest rates. Having a large amount off debt for a long period of time may mean that the company has to pay much, much more than it borrowed in the first place! This is why you usually want to choose stocks where the cash balance slightly evens out the debt.
        In addition, debt can significantly decrease how much a company is valued to other investors. When companies are bought, their debt is factored into the equation so their value may be less. If you consider this on the stock market, the market cap of a company may seem smaller than its enterprise value due to this factor and the amount of cash it has. On the other hand, sometimes debt is important to the continued growth of a company.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.

Stock: BBRY

        Blackberry, formerly known as Research In Motion, is a company that designs and manufactures phones running on it's Blackberry operating system. It made a powerful debut in the 1990's, quickly revolutionizing mobile email in a way that attracted enterprises across the globe. Known for its impeccable security, the company's stock reached a peak of $140 in 2008. With the crash of the US stock market and the cannibalization of its market share by other powerhouses such as Apple, Google, and Samsung, Blackberry's stock plummeted down to about $6 over the course of four years. Even though delays in the launch of it's BB10 operating system caused Blackberry to lose its dominance over other smartphones, its stock is still up an impressive 100% from its bottoming out in 2012.
        First, let's take a look at Blackberry's market share over the years. In the late 1990's, its revolutionary operating system gave it close to 100% dominance over all of the other phone companies. One of the most attractive parts of the system was the mobile e-mail system. This allowed the company to quickly gain footing in large companies, because it was the first "smartphone" of its day. However, as the mobile world advanced in the 2000's, Blackberry failed to follow. Touch screens, led by Apple, quickly took over the smartphone market. Blackberry took too long to follow this trend, and as shown by some of the previous touch screen phones it produced, it couldn't recapture market appeal. Yet its renowned security system still allowed it to hold on to a large portion of the smartphone market.
        In earlier years, Blackberry was the only phone that received clearance for use at the Pentagon. Now, with technologies quickly advancing, Samsung and Apple have also gained approval by the United States Department of Defense. This is a huge loss for Blackberry considering it used to be the sole company utilized by the Pentagon for its mobile division. Also, reports leaked by Edward Snowden reveal that certain European agencies have hacked into the Blackberry operating system, scaring off many of its loyal customers. The delay in the launch of its BB10 operating system also resulted in huge losses for the company. Now, with only a 3% share in the global smartphone market, Blackberry's future rests on how well its new BB10 phones perform.
        The Blackberry 10 operating system has many upsides, such as Blackberry Hub which allows users to see messages with the swipe of a finger. However, the lack of apps in relation to all of the other operating systems poses a huge problem for Blackberry. The release of its Z10 and Q10 smartphones was meant to help Blackberry regain some market share, but the results of their launches is yet to be seen. Emerging markets offer the highest growth opportunity for the company, but these two phones are relatively high priced. Another phone, the Q5, is to be released later this year. It is targeted at the younger demographic and is much cheaper than its predecessors. Currently, Blackberry is one of the only companies that produces phones with QWERTY keyboards, which should allow it to recapture much of the keyboard fans.

        Another problem with Blackberry is the fact that there is a large decline in its quarterly revenue, sometimes even an operating loss! This means that Blackberry isn't even at the point of breaking even. From a long term point of view, this is a terrible situation. But for all short-sellers of the company, it may actually be a good thing. The state of the company results in lower sales and earnings expectations from Wall Street, which the launch of the Z10 and Q10 might allow the company to beat. There is an expected 3 million or so device sales, and the company would actually be turning in a profit if it surpassed this value by a couple hundred thousand. Due to the volatility of the stock, if the company were to beat earnings in the coming quarter on June 28, the stock could shoot up as much as 10% in a single day!
        On the other hand, if Blackberry misses expectations, it may cause large institutional holders to drop all their holdings in the company. The stock is currently on a downward path, so this is a very likely possibility. However, the company has managed to stockade a $2.65 billion with no debt, which might allow the company to survive a couple quarters, even with an operating loss. There have also been takeover rumors by companies such as IBM. Having Blackberry operating as a subsidiary would greatly expand their presence in enterprise services, offering more connectivity between devices. At the moment, these are merely rumors.
        In the last few months, the debate over Blackberry's future has sparked extreme comments and rumors from both sides of the argument. The high volatility of the stock provides extreme risks to any who dare to invest. However, a single earnings beat could provide a large upside to the company. With their quarterly earnings approaching on Friday, June 28, investors should watch for their stock to either jump or plummet. It might be best to wait until after the earnings report is given, to decide whether the new operating system will sink or swim. Do not enter into Blackberry without a thorough evaluation and solid decision.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk. This is not a suggestion to buy or sell BBRY. -->

Indices & ETFs

Indices are an important part of investing. They provide insight into the general health of a conglomerate of stocks. The larger indices can even be an indicator of the health of a whole sector, or, in rare cases, the entire market. While they cannot be traded directly, trading ETFs (exchange traded funds) can be quite lucrative, as well as being simpler to trade than stocks. This is because indices are a collection of stocks, replacing the need to do research on multiple stocks with a summarization of all of them. Besides streamlining     the investing process, because buying indices gives you ownership of shares of all the companies in the index, they can buffer losses. If one company drops, you will lose less money if you had invested in an index than if you had invested in the company directly. Also, if you cannot obtain accurate or conclusive information on a single company (which creates a risk of losing money due to the stock failing), ETFs are a better option due in a future post, but ETFs are basically less risky than stocks due to the invested money being spread out compared to stocks. They are good for sectors whose stocks are not very dispersed (meaning that the chance for growth, and therefore profit, is lower), and when you cannot obtain accurate information on a stock and want to minimize the risk of losing money.

Basically, an index is an average of multiple data points. In our case, these data points are stock prices. Indices provide a quick way to observe the performance of multiple stocks, and can be used as a barometer to measure the health of entire sectors and markets. Indices are the average of multiple stocks, so one stock will not have a large, overall effect on the index. There will only be a large change in an index when multiple stocks move in a similar fashion, indicating that there is a large event occurring. Stocks can be affected by isolated events such as earning reports for a company, but indices usually only change substantially when there is a large, far-reaching event, such as a shortage of a certain material or trade embargo. 

Indices can be distinguished by whether or not they are weighted. Some indices, such as the Dow Jones Industrial Average, are weighted. That means that different companies have a smaller or larger effect on the index. For example, if IBM (which is weighted at around 10%, making it the heaviest company in the index), fell 5%, it would have a much larger effect than if Alcoa (0.41%), moved down by the same amount, Some indices are unweighted, which means that every company, regardless of size, has an equal share of the index. This is an important fact to consider when looking at indices and ETFs.

There are countless indices, ranging from ones that track a small group of stocks to massive ones that are cornerstones of the entire global market. Some examples are listed below

Dow Jones Industrial Average - Comprised of 30 leading stocks, this index is one of the most important. This index includes giants like Microsoft, IBM, Pfizer, etc. that are important in the global economy. As a result, this index is very closely watched. (Symbol: DJI)

Nasdaq Composite - An index comprised of all the stocks listed on the Nasdaq market. With over 3,000 companies included, this is one of the largest, and most important, indices. (Symbol: IXIC)

S&P 500 - An index comprised of the 500 leading U.S companies, based on market capitalization.  It is considered to be a very accurate representation of the U.S economy. (Symbol: GSPC)

Russell 3000 - A massive index comprised of the leading 3,000 U.S companies based on market capitalization. This index represents 98% of the investible U.S market. There are several alternative indices that include sections of this index, such as the Russell 2000 (one of the most commonly watched). 

(Symbol: RUA) (Symbol for Russell 2000: RUT).

Indices are a valuable indicator of the market's performance, and can bring profit through ETFs. Learning to use them to your advantage is an important investing skill.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.

Your Stock Picks

Before you begin to invest, you always want to evaluate a company you plan on investing in. It isn't always easy for beginners due to all of the new information that needs to be processed. We here at StockQuests want to make sure that your investing career is as smooth as possible. To do that, we can help you evaluate any stock picks you have. Whether you actually plan on investing in that company, or you just want another opinion, we can help. Just leave a comment below or send us an email at leelinvestments@gmail.com.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.

Influences

        The stock market is effected by a plethora of influences. Some of these include economic news, job reports, earnings releases, analyst outlooks, and major world events. These things can often cause drastic changes in entire pattern of the market.
        Earning reports most often effect the stock that is related to the company. For example, if an oil company misses earning estimates, its stock (which might normally fluctuate around 1% a day) could drop by 10%. This is due to fears that the company isn't doing as well as everyone thinks. Stocks with smaller market caps tend to move jump or plunge at extreme percentages, as opposed to multibillion dollar companies that are much more stable. These smaller cap stocks can sometimes double, even triple their values in a single day!
        However, certain earning reports can influence the curve of the entire market. If a company such as Amazon reports poor earnings, it may indicate that consumers are holding back spending. Often times, these sorts of earning reports will only drag down one sector, or group of stocks. For example, the retail sector and the Nasdaq might be influenced by such a report.
        The entire stock market is effected by not only the performance of companies, but also by other economic influences. Job reports come out every month, and are a strong indicator of how well the overall economy of a country is doing. This tends to only effect the stock market of that specific company. Federal news also has the same effect, like whenever Ben Bernake provides updates on federal stimulus program.
        Sometimes, a stock reports a breakthrough in development, or releases a new product. These often cause investors to increase their earning outlooks and view the company as having more potential. Other times, a company might report a large order of their product. These all change the company's path. Investors are attracted to such things.
        One of the largest influences on a stock, however, is the volume and the investors themselves. Warren Buffett is a powerhouse in the economic world. Whenever he announces positions in a stock, that stock might shoot up 10%! People follow investors they trust, so their presence on a board of a company will have a positive effect. On the other hand, certain investors my decrease their holdings, or dump their shares of a company for no specific reason. This will send the stock plummeting.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.

OTC Markets: Part One

--> OTC markets are an important part of investing. Investing within these markets can bring massive profits, or devastating losses. In this article, we will explain what they are and how they work. In the next article, we will go more in-depth and explain OTC "market tiers", as well as compare OTC markets to others.

OTC (over-the-counter) trades are trades conducted directly between two parties, the seller (company) and the buyer (you). Unlike normal stocks, there is no middle-man to facilitate the trade; you do it yourself. These stocks are not listed on formal exchanges such as the NYSE and NASDAQ. Instead, they are traded over phone or the Internet by dealers. OTC markets exist to streamline the exchange process. Basically, OTC stocks are stocks that do not trade on formal stock exchanges.

Companies will offer OTC stocks for a variety of reasons. One reason is that the company is not large enough to trade on formal exchanges such as the NASDAQ. There are virtually no requirements to offer an OTC stock and be on OTC markets, while formal exchanges are more selective. This means that most OTC stocks have a great deal of room to grow, and could potentially make you a lot of money. However, because companies with OTC stocks are usually quite small, it is possible for them to go bankrupt, becoming worthless and causing you to lose money.

Another, more negative, reason for companies to offer OTC stocks is that the company may not have submitted the correct filings, which your company must have to have its stock traded on major markets. This can indicate financial trouble, or even a scandal. These can lead the stock in question to drop extremely quickly and cause huge losses.

OTC markets are much more volatile than more established markets such as the NYSE. As such, they could earn you more money in the long run. However, they are very dangerous and you should not take investing in them lightly. Tread with caution. In our next article, we will go more in-depth and explore OTCs further.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.