Bad Credit

The motley madman | Nvdaily

Ask the fool

Secured credit cards

Q: What is a secured credit card?

– KD, Garden City, Idaho

A: If you are having difficulty getting a credit card approved, it could be due to a bad credit history or maybe no credit history. However, you’re not unlucky: you can apply for a “secure” credit card instead.

Secured credit cards require their cardholders to fund a cash account, which acts as a security deposit and functions as a credit limit. If you deposited $ 1,000, you can bill up to that amount, pay the bill when it is due, and then start billing again, up to that amount. Secured credit cards can help you build a good credit history, potentially helping you qualify for a regular credit card.

Q: Is a company with a lot of cash on its balance sheet a good thing?

– OS, Franklin, Tennessee

A: It can be good or bad. Lots of cash on hand means the business can take advantage of opportunities that arise, such as buying another business. Some companies also store cash so that they can cover taxes owed if and when they bring home the profits generated abroad. The excess cash can be used to reward shareholders by spending it on dividends or buying back shares. (However, it’s usually only worth repurchasing stocks when they’re undervalued.)

However, a lot of the money lying around – especially when interest rates are low – is not put to productive use, so many companies try not to keep too much on hand. If they need more money at some point, they assume they can borrow it or issue more shares.

School of fools

Learn from Seth Klarman

Seth Klarman is a well-respected investor, whose long-out-of-print 1991 book, “Margin of Safety: Risk-averse value investment strategies for the thinking Investor,” often sells for over a thousand dollars online. Klarman’s ideas can help us be better investors. Here are some nuggets that are widely attributed to him:

– “If you remember that stocks aren’t pieces of paper that spin around all the time – they’re fractional interests in companies – it all makes sense.”

Many investors forget or never learn that stocks of reputable companies are not lottery tickets that can go up or down, but actual stakes in real companies. In the long run, shareholders will literally be part of the growth or failure of the business.

– “I can buy this thing for a huge fraction of what it’s worth. What am I worried about if it goes down a bit more?”

Savvy investors should not bother once they decide that a stock is worth enough to buy. Waiting for a slightly better price may mean losing the right price in front of you.

– “Almost every financial explosion is due to leverage.”

Just as debt (like credit cards) can ruin your financial life, borrowing money just to invest in stocks can also end in disaster.

– “Value investors need to be patient and disciplined, but what I really think is don’t be greedy.”

You don’t have to buy all the stocks that go up.

– “The biggest advantage an investor can have is a long-term focus.”

On the opposite end of the spectrum of investors with long-term prospects are day traders, who often hold various stocks for just a few days – or hours. It is very risky and often leads to ruin. But even investors who buy great stocks and sell them after a year or two for a gain can leave a lot of money on the table. Consider holding onto performing stocks for many years to come, as long as they keep you confident.

My dumbest investment

Feet dragged on loss of stock

My dumbest investment was wasting a large amount of money on a losing title, mainly because I couldn’t decide to throw it away. I tend to hang on to losers for too long, thinking they will come back. Unfortunately, I have many more investment mistakes to choose from. I currently own 15 different stocks that are losing money – losing more than the full value of my house!

But I’m thankful for some things – that we have the money to be able to invest enough that we can lose that much, and that our winners far, far outweigh our losers. I am also grateful that the Motley Fool was recommended to me by a colleague almost a quarter of a century ago. – Rob S., online

The Fool responds: We are glad that you have followed us for so long, and we look forward to serving you well for another 25 years.

Deciding when to sell can be a difficult decision. Ideally, you’ll follow your holdings throughout the year, reading their news and financial reports at least quarterly. This can help minimize negative surprises, as you might see trouble coming. When a stock has fallen significantly, take the time to dig to determine if the business is facing temporary or lasting problems. It’s often best to hang on to headwinds in the short term, but long term challenges can be a cause of selling.

Stupid anecdotes

Name this company

My roots go back to 1869, when two fellows started a canning business in Camden, New Jersey. In 1895, I launched my first pot of ready-to-eat soup, Beefsteak Tomato. In 1897, I invented condensed soup, which allowed for more compact packaging and made soup more affordable. I won a bronze medal for excellence at the Universal Exhibition in Paris in 1900, and it remains on my cans today. My brands include Cape Cod, Goldfish, Kettle Brand, Lance, Milano, Pace, Pacific Foods, Pepperidge Farm, Prego, Snyder’s of Hanover, Swanson and V8. I now raise over $ 8 billion a year. Who am I?

Answer to questions from last week

My roots go back to a hospital set up in the Mojave Desert to treat workers who built the Colorado River aqueduct during the Great Depression. In 1957, one of my hospitals was the first to provide employer sponsored health care. Today, I am both a leading healthcare provider and not-for-profit healthcare plan, serving approximately 12.5 million members. Half of my name refers to my clinical care and the other half to my health plan. With 39 hospitals and 730 doctor’s offices in my system, I employ over 200,000 people, most recently 23,597 doctors and 63,847 nurses. Who am I? (Answer: Kaiser Permanente)

The motley fool

In the clouds

Microsoft (Nasdaq: MSFT) is responsible for powering more than a billion computers and devices worldwide through its Windows operating system. Recently, the company has diversified, with forays into games and more.

It may come as a surprise that Microsoft’s biggest company is cloud computing, which accounted for over $ 60 billion in revenue in fiscal 2021, or over 35% of the company’s total. Microsoft’s Azure platform is service-oriented to business and is currently used by 95% of Fortune 500 companies. It offers cloud infrastructure, artificial intelligence, data analytics, and security, and the list goes on. ‘lengthen.

Microsoft’s cloud segment is surpassing its overall growth, underscoring companies’ appetite for cloud-based services, which will drive growth in the future.

Investors who buy Microsoft shares for exposure to cloud computing also get the dominant Office 365 software business, not to mention the Xbox console gaming platform and the Surface line of tablets and laptops. , which are full-fledged multibillion dollar companies. The stock also pays a dividend which has been increased by an average of 10% per year over the past five years.

Long-term investors interested in cloud computing should take a closer look at Microsoft. (Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of Motley Fool. The Motley Fool owns shares and recommends Microsoft.)