Discount Investment Shares, Bonds seem too risky to invest

Shares and bonds of Discount Investment Corp. (DISI) are sliding downwards because investors are questioning that the holding company may struggle to repay debt after an IPO of a subsidiary was pulled by the company.

Discount’s 2.8 billion shekels ($725 million) bonds due  Dec. 2025 got the yield of 4.95 percent and it raised 1.3 percentage point to 7.39 percent, the highest this year. But its stocks plunged 24 percent to 9.50 shekels. This means that they have dropped 62 percent this year. On the other hand, shares of parent IDB Development Corp. dropped to 2.135 shekels, which is 17% down.

The world's largest generic agro-chemicals,Adama Agricultural Solutions Ltd. failed to make agreement with investors on pricing. Then it postponed an initial public offering. Currently, Discount has 40 percent of Adama. However, IDB seems to wait for a successful IPO to inject value into the company and refinance debt. IDB has Argnetine businessman Eduardo Elsztain and Moti Ben-Moshe. After Nochi Dankner failed to bring in investors for the company to repay debt, he stepped down.
Yaniv Pagot, chief strategist for Israel-based Ayalon Group Ltd, said,“The company has enough cash to repay debt comfortably till 2016, but what will happen once that cash ends, from 2017 onwards?”
He added that Discound could have used valuation of Adama as collateral to refinance debta and raise additional funds by selling shares in a secondary offering.

At the end of June, Discount had cash and cash equivalents of 1.86 billion shekels and according to the second-quarter result, it had net debt of 3.4 billion shekels.

Areva had a net loss of 694 million euros ($870 million) in the first half.

After the French nuclear firm suspended its financial targets for 2015 and 2016, Areva SA dropped the most since 1999. Due to delays to a Finnish project and slow demand in japan, the French nuclear reactor maker abandoned financial targets for the next two years. The shares slumped as much as 23 percent.

Areva announced that  it was reviewing both its future goals and mid-term funding plan. However, Areva said both its revenue and profit forecasts for this year would not be affected.

9.96

-0.22 (-2.12%)

Real-time:   5:35PM GMT+1

Areva is owned by French government which has 87%  and it is expected that it would present a new financial outlook for 3 years of it's full result.

With series of warnings in recent months, the firms makes an announcement.A series of warning were there in recent month. It reported a €694m (£555m) loss for the first half of the year in August and said 2014 revenue would fall 10%, more than the 2-5% drop it originally forecast in February.

In October, it also announced new assest sales and capital spending cuts

Following the 2011 nuclear accident in Fukushima, which was triggered by a massive earthquake and tsunami, and the rise in the use of shale gas in the US.

Areva’s 750 million euros of 3.125 % bonds due March 2023 dropped 4.1 cents on the euro to a record 93.1 cents, the biggest drop since the notes were issued on March 12.

The company’s 1 billion euros of 15-year notes sold in September 2009 plunged 5.8 cents to a two-year low of 102.6 cents, the data show.

Areva had a net loss of 694 million euros ($870 million) in the first half.

Areva Data:

U.S. stocks fall as Fed ends 6-year effort to stimulate economy, Facebook down by 6.1%

The unemployment rate is now 5.9%, its lowest mark since QE began. There are over 8.5 million more people employed now than in November 2008, according to the Bureau of Labor Statistics

Federal Reserve confirmed that it will end it's asset-purchase program due to stable growth path of U.S. economy. It caused stocks decline in U.S.  The decision provides a strong base on how much the economy has improved since the recession. This decision ignited a down rate in U.S. stock market.

Facebook dropped 6.1 percent to $75.86, the most since March. 

Facebook Inc. predicted the slowest revenue growth since the first quarter of 2013 and it lost 6.1 percent after that prediction. Facebook dropped 6.1 percent to $75.86, the most since March. The owner of the largest social-media website projected fourth-quarter sales that missed the highest of analyst estimates. Facebook also said spending would increase 50 percent to 70 percent next year as the company hires more and invests in newer products.

The Standard & Poor’s 500 Index (SPX) slipped 0.1 percent to 1,982.30 at 4 p.m. in New York, trimming an earlier slide of 0.8 percent. The Dow Jones Industrial Average lost 31.44 points, or about 0.2 percent, to 16,974.31. About 7.3 million shares traded hands on U.S. exchanges.

"It's in response to the Fed acknowledging the improvement in the economy, the improvement in the labor market and the diminished risks on the inflation side of things," says Greenhaus. Dan Greenhaus is a chief strategist at market research firm BTIG in New York.

S&P 500 down 7.4 percent from an all-time high of 2,011.36 in mid-September through Oct. 15 because of huge concerns that Europe will be going into recession just as Fed bond buying ends. But there is still positive part as well.

60 percent of the S&P 500 companies have surpassed revenue projections and 80% have beaten the estimated earnings.

GlaxoSmithKline's shares rose 4% after its third-quarter results slides it's way beyond expectation and announces to return an additional £4billion to shareholders by a special share scheme. GSK is one of the world's biggest drug manufacturer and now it is on rise. The UK pharmaceuticals giant published a pre-tax profit of £548m till the end of September for three months. It is way more below than £1.4 billion a year ago. Even then,the results beat analyst forecasts.

U.S. Steel (X) advanced 5.1 percent to $40.08. Company reported more than estimated earning with the help of the quadrupling of flat-rolled steel sales.earnings.

Political Unrest and shares prices in US

A Malaysia Airline Flight 17- a Boeing 777 crashed in Ukraine border near Russia, on Thursday. Israel began a ground invasion into the Gaza strip. This caused  decline in US shares. Investors have lost the confidence after these political unrest.

The S&P 500 plunged 23.45 points or 1.18%, to 1,958.12,
The Nasdaq index dropped 62.52 points or 1.41% to 4,363.45.

Closing back below the symbolic threshold of 17,000, the Dow Jones index fell 161.39 points, or 0.94%, to 6,976.81

Earlier in the day of new US and European Union sanctions on Russia, such new has made impact in US share market.
Such uncertainty and tension, along with the Israel's invasion into Gaza, investors are attracted to invest in assets like gold and US treasury bonds. Gold futures jumped $17.10, or 1.3%, to $1,316.90 an ounce on strong demand.

What type of person you are? Bond holder or Stock Holder?

There is various differences between Stocks and Bonds, but both are used for capital formation.

Diffen is also clear about the various dimensions we can find distinct about these two. 

In this post we are discussing about what kind of person you are and what should you be holding. 

Characteristics of Bond holder:

1.  They are not interested in trading bond after holding it. They might sell sometimes but not like the way stocks holders do.

2.  Bond holders wait for interest.

3.  They own the bond of public sector authorities, credit institutions, companies and supranational institutions.

4.  They are attracted by the constant return they will get in regular time interval.

5.  They avoid the risk as much as they can. They don't want to worry about the stock price they hold.

6.  The inflation worries bond holder.

7.  Interest rate affects the opportunity loss.

8. They are committed for long time. And it's really a long time.

Characteristics of Stock holder:

1. Most of them are always the traders and rest don't care, they simply hold. More than that, they are owners of the company. They own certain portion of the company whose stock they hold.
2. Interest rate, inflation and maturity periods are least considered by a stock trader. These things does not force the stock traders to hold or sell his stocks.
3. They have their own rules for playing in stock market.
4. Stock holders do not settle for certain amount of money for regular interval of time.
5. They seek opportunity in loses. They lose sometimes and they gain sometimes but they don't depend on certain amount for stability.
6. They diversify and they are always up to date.

What most people do?

They invest in both. They invest in bond as well as share. They choose to invest in highest paying bond and they learn when to sell. This is used for minimizing the risk.

Decided which type of people you are after reading the characteristics? Please feel free to express.

Stocks Vs Bond, Which is more profitable?

Question: Are both of them, Stocks and Bond, risk free?
Answer: No

Most of the time while we are trading stocks, we think if we are going to make profit out of it or not. This is the world of stock. A direct link between risk and stock is attached. Something goes wrong, the price changes and it increases risk. Something goes right again price changes. Nobody is certain in the world of stock market. The only thing that is certain is "Change". Some people like it and some hate change. But it's inevitable.

Type of stocks:
1.Preference stock
 2.Common stock

Bond comes with the promise of safe investment. They promise the holder certain rate of return that is paid by the issuer. But, in this uncertain world, who promises the better future of the company that issues bond? Who knows if it's not going to collapse? Nobody. So, it may give certain payment in regular interval and par value after certain time, but only if the company sustain till then.

Types of bond:
 1.Government Bond
 2.Corporate Bond

Stocks pay dividend right?
Yes, it does and it depends on the general meeting of the company. Sometimes dividend is paid and sometimes it's not.

Bond pay interest twice a year.
Also, the bond holders are the in high priority if the company is bankrupt.

Stocks are sold in the stocks market. Sometimes they are sold far more higher value than expected. A simple stock purchased at $100 could be sold at $500 and $400 profit could be easily realized. It happens with bond too but bonds are not traded in such high valuation state. This means, if a investor is willing to take risk then, bonds are much safer than stocks, where as stocks are best options to take opportunity.

Which one is more profitable then?
It depends on what is the need, safe investment or high risk investment and greater return. Combination of them could be a great portfolio.