If you’re planning to hold a portfolio of blue chip stocks well into retirement, then short-term movements in the market are not likely your biggest worry.
However, if you dabble in the stock market on a day-to-day basis, or if you simply want to know what drives the thinking of other market participants, it can be very beneficial to understand the basics of technical indicators.
Many traders swear by them to help with the timing of their trades or to alert them of trends. But, even for an investor more focused on the underlying fundamentals of companies, learning how these indicators work can provide added conviction on new or existing trades.
Types of Technical Indicators
Today’s infographic comes to us from StocksToTrade.com, and it explores the fundamentals behind 12 of the most commonly-used technical indicators. It differentiates between lagging and leading indicators, and also explains some basic tactics for incorporating these markers into an overall investment strategy.
The infographic differentiates between four different types, including trend, momentum, volatility, and volume indicators.
These technical indicators measure the direction and strength of a trend by comparing prices to an established baseline.
Moving Averages: Used to identify trends and reversals, as well as to set up support and resistance levels.
Parabolic Stop and Reverse (Parabolic SAR): Used to find potential reversals in the market price direction.
Moving Average Convergence Divergence (MACD): Used to reveal changes in the strength, direction, momentum, and duration of a trend in a stock’s price.
These technical indicators may identify the speed of price movement by comparing the current closing price to previous closes.
Stochastic Oscillator: Used to predict price turning points by comparing the closing price to its price range.
Commodity Channel Index (CCI): An oscillator that helps identify price reversals, price extremes, and trend strength.
Relative Strength Index (RSI): Measures recent trading strength, velocity of change in the trend, and magnitude of the move.
These technical indicators measure the rate of price movement, regardless of direction.
Bollinger bands: Measures the “highness” or “lowness” of price, relative to previous trades.
Average True Range: Shows the degree of price volatility.
Standard Deviation: Used to measure expected risk and to determine the significance of certain price movements.
These technical indicators measure the strength of a trend based on volume of shares traded.
Chaikin Oscillator: Monitors the flow of money in and out of the market, which can help determine tops and bottoms.
On-Balance Volume (OBV): Attempts to measure level of accumulation or distribution, by comparing volume to price.
Volume Rate of Change: Highlights increases in volume. These normally happen mostly at market tops, bottoms, or breakouts.
Animation: The 20 Largest State Economies by GDP in the Last 50 Years
This animation shows how the largest state economies by GDP have changed over the last five decades of time, and what such a ranking looks like today.
Animation: The 20 Largest State Economies by GDP
When it comes to understanding the size and scope of the $18 trillion U.S. economy, it’s sometimes easier to consider that it’s the sum of many parts.
Many states already have economies that are comparable to some of the world’s largest countries, giving you a sense of what they might be combined.
And while every state plays a role in the bigger picture, some states such as New York and California have an outsized impact on fueling the country’s overall economic engine.
The State of State Economies
Today’s animation comes to us from SavingSpot, and it covers the size of state economies by GDP going back all the way to 1963.
The video uses inflation-adjusted data from the U.S. Bureau of Economic Analysis, showing how the ranking of top state economies has changed over time as different states have taken advantage of economic booms.
Let’s dive into the data to see how things have changed.
Going Back in Time
The earliest data in the animation comes from 1963, when New York led the pack with a $70.6 billion economy in inflation-adjusted terms.
State Economies by GDP, Inflation-Adjusted Chained $USD (1963)
|Rank||State Economy||GDP, Billions of USD (1963)||Share of U.S. Economy|
|🇺🇸 United States (Total)||$607.0||100.0%|
|#30||District of Columbia||$5.1||0.8%|
California ($67.8 billion), Illinois ($39.5 billion), Pennsylvania ($34.5 billion) and Ohio ($33.3 billion) round out the top five, and together they added up to 40.5% of the national GDP.
The Largest State Economies by GDP Today
Looking at the most recent data from 2017, you can see the ranking changes significantly:
State Economies by GDP, Inflation-Adjusted Chained $USD (2017)
|Rank||State Economy||GDP, Billions of USD (2017)||Share of U.S. Economy|
|🇺🇸 United States (Total)||$18,051||100%|
|#35||District of Columbia||$122||0.7%|
California is the largest economy today – it has a state GDP of $2.6 trillion, which is comparable to the United Kingdom.
Meanwhile, Florida and Georgia are two states that did not crack the top 10 back in the 1960s, while Texas jumped up to become the second largest state economy. It’s actually not a coincidence that all of these states are in the southern half of the country, as air conditioning has played a surprisingly pivotal role in shaping modern America.
In fact, the share of the nation’s population living in the Sunbelt rose from 28% in 1950 to 40% in 2000, and this increase in population has coincided with economic growth in many of the states that used to be a sweaty mess.
A Final Look
Here is a final animated version of the top 10 largest states by GDP, also provided by SavingSpot:
Where the World’s Banks Make the Most Money
Last year, the global banking industry cashed in an impressive $1.36 trillion in profits. Here’s where they made their money, and how it breaks down.
Where the World’s Banks Make the Most Money
Profits in banking have been steadily on the rise since the financial crisis.
Just last year, the global banking industry cashed in an impressive $1.36 trillion in after-tax profits — the highest total in the sector seen in the last 20 years.
What are the drivers behind revenue and profits in the financial services sector, and where do the biggest opportunities exist in the future?
Following the Money
Today’s infographic comes to us from McKinsey & Company, and it leverages proprietary insights from their Panorama database.
Using data stemming from more than 60 countries, we’ve broken down historical banking profits by region, while also visualizing key ratios that help demonstrate why specific countries are more profitable for the industry.
Finally, we’ve also looked at the particular geographic regions that may present the biggest opportunities in the future, and why they are relevant today.
Banking Profits, by Region
Before we look at what’s driving banking profits, let’s start with a breakdown of annual after-tax profits by region over time.
Banking Profit by Year and Region ($B)
|Rest of World||$196||$243||$265||$285||$309||$327||$348||$361||$387||$421|
In 2018, the United States accounted for $403 billion of after-tax profits in the banking sector — however, China sits in a very close second place, raking in $333 billion.
What’s Under the Hood?
While there’s no doubt that financial services can be profitable in almost any corner of the globe, what is less obvious is where this profit actually comes from.
The truth is that banking can vary greatly depending on location — and what drives value for banks in one country may be completely different from what drives value in another.
Let’s look at data and ratios from four very different places to get a sense of how financial services markets can vary.
|Country||RARC/GDP||Loans Penetration/GDP||Margins (RBRC/Total Loans)||Risk Cost Margin|
1. RARC / GDP (Revenues After Risk Costs / GDP)
This ratio shows compares a country’s banking revenues to overall economic production, giving a sense of how important banking is to the economy. Using this, you can see that banking is far more important to Singapore’s economy than others in the table.
2. Loans Penetration / GDP
Loans penetration can be further broken up into retail loans and wholesale loans. The difference can be immediately seen when looking at data on China and the United States:
|Country||Retail Loans||Wholesale Loans||Loan Penetration (Total)|
In America, banks make loans primarily to the retail sector. In China, there’s a higher penetration on a wholesale basis — usually loans being made to corporations or other such entities.
3. Margins (Revenues Before Risk Costs / Total Loans)
Margins made on lending is one way for bankers to gauge the potential of a market, and as you can see above, margins in the United States and China are both at (or above) the global average. Meanwhile, for comparison, Finland has margins that are closer to half of the global average.
4. Risk Cost Margin (Risk Cost / Total Loans)
Not surprisingly, China still holds higher risk cost margins than the global average. On the flipside, established markets like Singapore, Finland, and the U.S. all have risk margins below the global average.
Future Opportunities in Banking
While this data is useful at breaking down existing markets, it can also help to give us a sense of future opportunities as well.
Here are some of the geographic markets that have the potential to grow into key financial services markets in the future:
- Sub-Saharan Africa
Despite having 16x the population of South Africa, the rest of Sub-Saharan Africa still generates fewer banking profits. With lower loan penetration rates and RARC/GDP ratios, there is significant potential to be found throughout the continent.
- India and Indonesia
Compared to similar economies in Asia, both India and Indonesia present an interesting banking opportunity because of their high margins and low loan penetration rates.
While China has a high overall loan penetration rate, the retail loan category still holds much potential given the country’s population and growing middle class.
A Changing Landscape in Banking
As banks shift focus to face new market challenges, the next chapter of banking may be even more interesting than the last.
Add in the high stakes around digital transformation, aging populations, and new service opportunities, and the distance between winners and losers could lengthen even more.
Where will the money in banking be in the future?
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