Blog - Nicholas Fainlight | Business Development Associate, Hartford, CT

Piece of paper with a graph on it sitting on a table, image used for Nicholas Fainlight blog about learning to invest

How to Teach Yourself About Investing

On October 24, 2017

In Finance, Investing, Nicholas Fainlight, Technology

Far too many people are unaware of the basics of investing, even though it’s one of the best ways to build your wealth. Public schools do not teach anything about it and if you go to college, you really only learn about investing if you take business or finance courses. This lack of knowledge leads to people shying away from investing and relying on a steady and reliable source of income. They often view the stock market as a way to simply lose money, especially if they lack basic knowledge about investing. This viewpoint is completely understandable, but not one you should subscribe to. If you know nothing about investing, it’s never too late to learn! Here are some ways you can teach yourself more about investing and get ready to start a portfolio of your own!

Take a look at your finances

The first step you’ll need to take is examining your finances and determining how much money you want to put into investments. If you’re heavily in debt or have no savings, you should take care of those issues before attempting to invest large amounts of money. Get an accurate picture of your finances so you know how much you have available to invest.

Learn the basics

When you first begin looking at everything that goes into the markets and investing, it can feel overwhelming. People spend years trying to learn the secret to investment success. Instead of feeling intimidated by these approaches, simply start by learning the basics of investing. Learn what different terms mean and how creating an investment portfolio works. But, don’t take too long; the sooner you begin investing, the better!

Check out online resources

After you feel like you have a basic understanding of investing, it’s time to start learning about the different approaches people take and cultivate a deeper understanding of the market. A great place to look is online, because there’s a seemingly endless amount of online resources, such as ebooks, blogs, podcasts, and many websites that offer expert advice. Check out the credentials of a source before believing everything you read, but most information on investing can be useful, even to just teach you what not to do.

Find experienced people

You might know someone who’s a financial advisor or who spends a lot of time following the market and knows about investing. These are the people you should talk to. Even if you don’t personally know anyone like this, you can certainly find a forum or website where you can chat with someone who can give you actual advice about investing.

Set your goals

Before you actually start investing, take a bit of time to set your individual goals. How much money do you want to invest? Why are you investing? What return do you hope to see? People invest for different reasons, not simply to generate wealth. Once you’ve decided what your individual goals are, you can start investing.

Start small

As you begin your journey as an investor, remember to first start small. You definitely shouldn’t take your entire savings account and invest in high risk stocks; use a smaller, manageable amount first and invest smart. Research the best types of stocks and start out with moderate risk.

Person holding a phone with a bunch of apps on the screen, image used for Nicholas Fainlight blog on whether or not investing apps are worth it

Are Investing Apps Really Beneficial?

By Nicholas Fainlight

On October 16, 2017

In Finance, Investing, Nicholas Fainlight, Technology

Lately, there’s been a rise of apps offered to help you manage your personal finances. There are various types of apps and options to choose from. Whether you merely want to work on budgeting, keep track of your credit score, or begin investing, you have plenty of apps to check out. However, many people question whether or not these apps are actually worth it, especially investing apps. Is your information secure? Are you wasting money? Will you see any kind of return? I’d like to examine whether or not investing apps actually benefit the user.

The concerns about them

One of the main issues surrounding investment apps is the security of them. When you create an investment portfolio with a recognized bank or investment company, you must go through layers of security every time you want to do anything, even if it’s simply transferring money into an account. With investment apps, it doesn’t seem as though there’s as much security. Many people are also wary of putting their information online, so creating a new account with an app seems like the perfect way to have your account information compromised. While this concern is completely understandable, all of the popular investment apps have layers of cybersecurity, very similar to that of a banking website. Many apps also guarantee insurance for accounts up to a hundred thousand dollars, so if you’re below that number, you’d still be able to recover all of your money.

Another concern is whether or not the apps are worth the cost. Some of them charge high trading fees or have regular monthly fees, which can seem like a waste of money, especially when you’re trying to grow your wealth. The answer to this issue is a little murkier than the last. While you should certainly be investing your money in some way, it’s up to you what app you choose. Research the fees associated with each app and learn what different keywords mean, such as how much the app charges per trade. Decide how much you’ll be planning on investing into these accounts and whether or not regular fees are worth it.

Benefits of investing apps

One of the greatest benefits of investing apps is how most of them are designed for beginners to use. Many people do not have the first clue about investing and the best practices for it, so these apps have been designed with this issue in mind. Most investing apps are relatively simple to use once you take some time to play around with them. Some even offer blogs and other tips to help you with investment decisions. Still others offer you direct assistance from a financial advisor.

Another great benefit of investment apps is that you can open an account with relatively small amounts of money. You can start investing spare change or a few dollars and grow your portfolio. For younger investors, this feature is great, especially since many traditional investment companies require you to have a minimum of a few thousand dollars to invest upfront.

How to make them work for you

Finally, if you decide you do want to get into the world of investing and an app on your phone is the best option for you, there are ways to make sure you make the most of it. The best thing you can do is take your time and research the various apps. Check out blogs that focus on investing, financial advice, and financial apps to see what expert opinions are on the different apps and decide which one best fits your needs.

Nicholas Fainlight- Face Recognition Technology

All About Face Recognition Technology

By Nicholas Fainlight

On October 13, 2017

In Finance

How We Pay

The ways that individuals have paid for items and services has changed greatly over the years. At one time, different cultures would do trade for services or items. Now the majority of countries use currency or credit cards in order to make payment. Many credit cards have evolved to include a chip that is supposed to make credit card purchases more secure. In China, they are rolling out a completely new way to make payments.

Face Recognition Technology

Face recognition technology is taking purchasing to a different level. It is a technology that promises to replace credit cards, passwords, and identification. In China, there is a new app that has rolled out, and it is being used by 120 million people. This is an app that allows individuals to transfer money using a facial recognition technology. This technology enables an individual to leave their currency and cards at home. All they have to do is use their smile, and they can make a purchase. This application is called AliBaba Auto Pay Experts. This face recognition technology is sure to become popular in the Western world as well because it is highly accurate.

How Does Face Recognition Work

Face recognition is a technology that has been around for years, but it has greatly improved. Face recognition is precise, and it uses advanced technology to identify the special features on a person’s face. This technology has been shown to be more precise than voice recognition. This is a technology that can identify faces in different lighting and at different angles. There are some financial institutions in China that have gone as far as using face recognition to give out loans.

What Companies Are Interested In Face Recognition

Companies such as Google, Amazon, Facebook, and Apple are interested in face recognition technology. These companies could use this face recognition technology to learn about their customers interest, hobbies and preferences. Also, this technology can enable social media sites to tag an individual’s face on their friend’s photos.

Face Recognition And You

Face recognition could bring huge benefits to consumers all around the world. With the huge amount of theft that occurs currently, an individual can feel secure in knowing that he or she has nothing on their person that can be taken away. Face recognition is definitely the way of the future.

Do Natural Disasters Affect Stocks?

By Nicholas Fainlight

On October 2, 2017

In Finance

A natural disaster such as a hurricane or earthquake can create devastating consequences for any human or home that stands in its way. Buildings are crumpled, water damage from flooding wreaks havoc and what was once a community becomes an area requiring total repair. However, this wreckage does not always indicate that a disruption will also take place in the stock market. While there may be short-term fluctuations in the price of oil and insurance stocks, the long-term health of the stock market is dependent on other factors as well.

Looking To The Past

To understand how natural disasters affect the stock market, it’s best to look at the past and see how it fared after the occurrence of major hurricanes. One example of a major natural disaster that caused widescale destruction was when Hurricane Katrina passed through Alabama, New Orleans and other areas near the Atlantic Ocean. This 2005 event created $108 billion in damages — still the costliest on record. Yet, the stock market continued to head higher and shake off the devastation. How could this be?

What Drives Markets Higher?

While the devastation from a natural disaster does cause a considerable amount of monetary damage, the spectrum of events that occur after the damage has taken place must be examined. In the short term, there will be price fluctuations related to equipment or buildings that have been taken out. However, the United States stock market seems to shake off disasters and continue its steady price movement upwards. This could be due to other economic factors that are already in place such as low inflation, declining unemployment or policy from the Federal Reserve.

Outcome of Hurricanes Harvey and Irma

Hurricane Harvey passed through Texas in late August 2017 with wind speeds reaching 130 miles per hour. One week later, the state of Florida was hit by Hurricane Irma — a Category 4 hurricane. Both of these monsters destroyed anything that stood in their path. Yet, near the end of September, the S&P 500 was reaching new highs. One must consider the rebuilding and investment that will need to be done to create new communities. These factors may be part of the reason for the continued gains seen in the stark market as well as other economic factors that are already in place.

While one would think that major hurricanes or other natural disasters would cause the stock market to fall — that’s not the case — the stock market has continued to rise after these devastating events.

How The World’s Stock Markets Have Evolved Over Time

By Nicholas Fainlight

On October 2, 2017

In Finance

Stock markets are one of the most important parts of the global economy. Stock markets are an important part of economic growth. The origins of the stock market can be traced back to France, where residents used a system that managed debts while serving the best interests of the banks. In Italy, bankers started trading government securities. The actual beginning of the stock market occurred in Belgium and the Netherlands. Antwerp, Belgium is recognized as having the World’s first organized stock market system. However, during this time period, debt was being regularly traded instead of shares of a company.

East India Company

The East India Company is considered the first publicly traded company in the World. Investors realized that going all in was not a long term beneficial strategy. They started buying shares in other companies so that investments would be less risky. Over the next few years, many European countries started using the system. Investors traded ideas in coffee shops. However, due to a lack of regulation, the early days of the stock market were very unorganized.

New York Stock Exchange

The New York Stock Exchange was considered a breakthrough. Soon the NYSE established itself as the center of US trade. Thanks to a void of any real competition, the NYSE thrived.

Today’s Climate

Almost every country in the World has their own stock market. Over a trillion dollars are traded on stock markets throughout the World every day. NASDAQ has moved the stock markets into the future. NASDAQ was created by the Financial Industry Regulatory Authority and The National Association of Securities Dealers. NASDAQ is unique because instead of relying on a physical location, all of the trading is performed electronically on a network of computers. NASDAQ has influenced a new era of innovation and expansion.

Looking Ahead To The Future

Stock markets are an important part of the World’s economy. Analysts feel that we will continue to see mergers among different stock markets. There is even an outside chance of a single global stock market. The recent natural disasters that have occurred have also challenged the stock market. While Hurricane Harvey has caused lots of damage, the stock markets have shown growth in these damaged areas. This is another example of how the stock market is relatively immune to the impact of natural disasters. Investors are aware of the economic growth that will take place in the aftermath of these disasters because there will be a lot of jobs created through rebuilding the damaged areas.

Nicholas Fainlight: Blockchain for Businesses

Blockchain for Businesses: How Major Businesses Utilize Blockchain

By Nicholas Fainlight

On June 5, 2017

In Finance

Blockchain technology is becoming mainstream. In early 2016, more than 40 major financial institutions were experimenting with blockchain, as reported by Wall Street. What does this mean? And how can blockchain help businesses work more effectively?

To answer this, we first have to understand what blockchain is. In the past, transactions of wealth or property have always had to go through a third party middleman. For example, if you were to send someone money over the Internet, that money would be processed through your bank. But with blockchain, such transactions are possible without an intermediary. In addition to transferring money, blockchains can transfer online representations of other types of property.

Blockchain is still a relatively new concept, but if it is utilized widely enough, it can have many benefits. Here are a few:

More certainty in transactions

Transferring through a third party allows a certain amount of trust. If you are being paid for a product, for example, you need to trust that the payee has the necessary funds in their bank account. With blockchain, this is not an issue, because the transaction is immediate.

Records movement of assets

Businesses that deal in supply chains can see a detailed record of how assets move through those chains. Blockchain transactions are stamped with a time, date, and location. Companies can use this information to keep track of expenditures and profit, as well as verify the legitimacy of their product. For example, Walmart has been using blockchain to track certain food items. This allows it to ensure that the food is coming from where it is supposed to be coming from—increasing food safety.

Simplifying the stock exchange

Currently, exchanging stocks requires the verification of multiple parties, with no transparency between them. Blockchain can simplify this process, by providing a secure, accessible, and permanent way for transfers to be made over the Internet.

On a slightly smaller scale, crowdfunding sites suffer some of the same transparency issues as the stock exchange, and also stand to benefit from blockchain.

Voting

Sites such as Boardroom and BitShares allow people to vote in an easy, fair way using blockchain. These elections benefit from blockchain’s immediacy and transparency. Currently, blockchain is only in use for small-scale decision-making, within companies or other such organizations, but if it becomes widespread enough, it could present a promising new way to vote in governmental elections as well.

Currently blockchain hasn’t entirely caught on yet. Its novelty means that many companies are suspicious of it security. Some firms also worry that it will disrupt their current business models, precisely because of the way it eliminates the middleman. However, blockchain is still very early in its existence, and many of its potential applications haven’t been invented yet. So it’s a safe bet that, sometime in the future, blockchain will be a standard means of exchange for companies, and perhaps, for the world at large.

Futures Trading Part 4: Stops and Rolls

By Nicholas Fainlight

On February 24, 2017

In Finance

If you’ve stuck it out this long, I commend you. Just kidding- hopefully you’ve enjoyed my four-part series on futures trading! If you stumbled upon this blog by chance and don’t know what I’m talking about, TURN BACK NOW. Not actually- but if you want a full understanding of futures trading, I suggest you start from the beginning with Futures Trading 101. This is the fourth and final section of my series on futures trading. We just looked at the risk associated with futures trading and the considerations you should make before investing in a contract, so now we’ll take a look at stops and rolls.

Stops and rolls kind of reminds me of the stop, drop and roll fire safety technique kids are taught in elementary school. The kind I’m talking about are a little different, but they’re also a safety tactic, as they go along with risk management.

Stop orders (stops for short) are a tool that investors can use to practice risk management in futures trading. They are a way for traders to buy or sell at a set price in order to limit losses and secure gains. The idea of a stop order, according to financial analysts Richard Illczyszyn, is to take the emotion of the trade by helping you set forth a plan of how much you’re willing to lose and how much you hope to gain. Stop orders allow you to back out of a trade at a set level and cut your losses to avoid substantial loss of money. In addition to having a set level at which to back out in mind, traders can also place physical stop loss orders when entering a trade that will automatically terminate the contract if the level you choose fails. It’s important to note, Investopedia states, that stop orders are not failsafe: in volatile markets, they could fail to execute at your desired level, causing you to lose more than intended.

Another movement in futures trading is rolls. Just as the basic meaning of stop orders is obvious, rolls are just what they sound like. Futures contracts have set expiration dates, so when you reach the end of your contract, you have a decision to make: do you want to close out or roll over into another expiration date? If you decide to close your position, you have the option to sell the futures you own or purchase the ones that you’re short. If you let your position roll over, then you need to close your current position and open a new one with a new contract with a longer expiration date, allowing your trade more time to succeed.

Anthony Grisanti, founder and president of GRZ Energy, advises giving yourself plenty of time (at least two weeks) to formulate a strategy if you decide to roll over your position. “That way, you can take stock of the market dynamics and not feel rushed as you manage your positions,” he says.

It’s also important to realize that there will sometimes be a roll cost associated with rolling your position to a further date, which is a normal consequence of rolling a position, as multiple variables such as market conditions, storage costs, interest rates, and dividends can cause the value of a contract to increase. A roll cost is simply the price of maintaining one’s position in a later month.

Well, this is where I leave you. I hope that I’ve provided you a strong foundation from which to continue your study of futures trading. My guide is by no means exhaustive, so I encourage you to explore other resources in your quest for trading knowledge.

Futures Trading Part 3: Risk

By Nicholas Fainlight

On February 23, 2017

In Finance

If this is your first time tuning in, then you’ll probably want to check out my first two blogs in this futures trading series first, where I cover a basic introduction to futures trading and leverage. I’ve had an interest in futures trading for about as long as I’ve had an interest in finance- which is to say, it’s been awhile. It’s a tricky area of the stock market to explain to anyone because it is both a part of and separate from the overall stock market. Long story short, futures contracts have set expiration dates and stocks do not. But there’s a lot more to it than that, so I broke my explanation of futures trading into four sections covering key concepts. This is lesson three of four, covering risk.

Risk: you know what it is in general terms, but do you know how it relates to futures contracts? Unless you study the stock market as I do, probably not, but I’ll do my best to explain. Essentially, investing in futures contracts can be risky business. Managing risk is an important consideration for stock investment; however, unlike with traditional trading, with futures trading you can stand to lose more money than you put in. Therefore, you should have a full understanding of risk capital before trading in futures.

Risk capital is defined as the funds that traders can afford to lose. According to Rich Ilczyszyn, CEO and founder of iiTRADER.com, “You should not be trading futures with money reserved for necessities, such as housing, food, transportation.” Instead, you should consult an experienced broker to help you develop and assess your risk profile, and determine the right asset classes.

To know what you’re getting yourself into and avoid trading with risk capital, there are several considerations that should factor into your decisions before trading in futures. First, do your research and go with an experienced brokerage firm. Commission rates, margin requirements, level of executions, types of trade, software and user interface, and customer service are all important considerations. Also consider the level of service you require. If you’re more of a do-it-yourself person, then you may want to save yourself some money and go with a discount broker for lower commissions and fees. However, if you’ve never traded in futures before (or any stocks) then a full-service broker may be for you, as they will provide a higher level of service and advice for a slightly higher cost.

Your next considerations should be the category and type of futures that you want to trade. There are various categories involved in the futures market, which Investopedia suggests thinking of as industries. The individual contracts within these categories can be compared to stocks. For instance, agriculture energy, equity index, currency futures (FX), interest rates, and metals are all categories and there are contracts within those categories. As a general rule of thumb, you should stick to what you know when deciding which market categories and instruments you will trade. If you have a background in agriculture, for example, then you might want to trade in that category since you already have an understanding of the market.

There are also different types of trades to consider. At the most basic level, you can either buy or sell futures contracts, but there are different trading techniques employed by futures traders, starting with basic trades whereby the trader makes a wager that the price difference between investment and futures will fluctuate, and encompassing spread trades (a wager that the price difference between two futures contracts will change) and hedging (where a trader sells a futures contract to protect against a stock market decline).

My explanation of risk management in futures trading is by no means exhaustive, but hopefully it makes you realize that there are a lot of important considerations that go into futures trading and encourages you to do your research before committing to a contract.

Futures Trading Part 2: Leverage

By Nicholas Fainlight

On January 27, 2017

In Finance

I promised I would give you a four-part series on futures trading, and I always deliver on my promises. So ta-da, here it is for those of you who have an interest in the stockmarket like I do. In my first post about futures trading, I gave a general introduction to this area of the stock market, where I described what futures contracts are and how they work. As a refresher, a futures contract is a standardized forward contract between a buyer and a seller in which the delivery and payment of the asset occur at a future point in time. Because futures are functions of underlying assets, they are derivative products, meaning they derive their value from the price movements of the various assets they pertain to.

Leverage is a key concept of futures trading, and anyone looking to get into this field should have a thorough understanding of it. According to Rich Ilczyszyn, CEO and founder of iiTrader.com, “Leverage allows traders to make a large investment in a commodity using a comparatively small amount of capital.”

So, an investor that is interested in buying or selling a futures contract does not need to pay for the whole contract upfront; rather, they can make a small investment to stake a claim in the commodity. Investopedia gives an example to demonstrate this principle at work in the stock market: Say you have a contract valued at $350,000. This value of the contract, which trades on the CME, is derived from the level of the S&P 500; it is $250 times this level. If the S&P is at 1400, the value of the futures contract is $250 X 1400, which comes to $350,000. A person looking to initiate a trade on this contract does not need to pay the $350,000 upfront, however; they only need to post an initial margin of $21,875 (according to current CME exchange margin requirements).

Now, where leverage comes in: if the level of the S&P 500 happens to increase, then the value of the contract also goes up, and the investor makes a profit. In the example given, if the S&P rises to 1500, then the contract increases its value to $375,000, and the investor makes a $25,000 profit off their initial investment.

The investor also has a chance of losing money if the S&P falls and being hit with a margin call, requiring them to deposit more funds into their account to bring the balance back up, so risk is involved. Nevertheless, the chance of making such a large profit with a relatively small investment (leverage) is what makes futures trading so appealing.

Next time, I’ll go into more detail on the risk involved with futures trading.

Futures Trading 101-Part 1: What is Futures Trading?

By Nicholas Fainlight

On December 12, 2016

In Finance

I recently published a blog post covering an introduction to the topic of futures trading, one of my personal favorite areas of finance. This is going to be part of a four-part series focused on the following:

Intro: What is futures trading?
Leverage
Risk
Stops and rolls/conclusion

For the original post, please follow the link here. The rest of this series will be published on this new blog dedicated to macroeconomic trends.