Investors...like most of us...are in the game of making money. While mutual funds and exchange-traded funds are great options for their diversity (since they’re “baskets” of stocks), there is a downside to them: fees.
Foregone earnings is often used in reference to management fees that come with mutual funds and ETFs. The implication is that if you invest in a fund with high management fees, that’s lost money you could have invested elsewhere...and reaped more interest as a result. Finding low-fee funds is key to minimizing your foregone earnings.
Foregone earnings is also used sometimes in a more general sense, like in situations where money could have been invested earlier (earning interest) than it was. Foregone earnings is the lost money from choosing the non-optimal path...an opportunity cost, you could say. Don’t worry...heels are all wounded over time. Er...time heals all wounds.
Related or Semi-related Video
Finance: What is Over The Counter (OTC)?3 Views
finance a la shmoop what is over the counter or OTC alright buy drugs LVM
non-prescription kind yeah those nyquil tylenol preparation-h well then you buy [Doctor filling out prescription]
them over-the-counter prescription drugs yeah those are different much more
highly inspected regulated structured and stocks work the same way when you
trade over-the-counter you're generally trading within a network of other
dealers all trading stocks think of it like everyone on Facebook had a trading [Facebook posts appear]
account nothing really is supervised door regulated or controlled it's just
the transaction happening among two strangers passing in the night [People walking around with smartphones]
exchanging glances get a fair deal on this trade well on the exchanges Amazon
was offered for fifteen hundred two dollars a share but on the OTC deck
network while it was offered at 1507 maybe you'll have overpaid five bucks a [Amazon share prices appear]
share for Amazon if you buy it here rather than on NASDAQ which is a normal
securities exchange well stocks bonds commodities derivatives they all trade
OTC and also on exchanges so why are there both methods of trading in the
first place well demand if everybody was happy with the trades they made from
9:30 to four New York time well then there wouldn't be a whole lot of demand [Stocks transferring from wall street]
for trading outside of those hours and in other places but there is so there is
an OTC trading accommodates after-hours trading as well which can be a really
big deal when a company announces earnings at 4:30 p.m. New York time and [Newspaper of record earnings for company appears]
the street either loves or hates the numbers that the companies printed the
stock can move a lot in a short period so a lot of investors are happy to be
able to either dump or scarf up positions in whatever calm at 4:32 p.m.
after the numbers have been published not wanting to wait the dozen in change [Clock rapidly ticks forward]
hours until the market opens again in the morning the basic idea behind OTC
trading is that the world of OTC is kind of the wild wild west of stock exchanges
unlike trading on the NYSE where companies have to meet very high
standards to be accepted for trading on the exchange qualify for OTC trading
while companies basically just have to spell their name properly fill out a few [Person signing a document]
forms and feel that belonging thing and even then
well you know there's a lot of flexibility
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