Editors note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

Daniel Needham: Market volatility is one of the most reliable things that you can predict. You don't know what prices are going to do next month, next year. The one thing we know is that prices are going to move around, and what we see is that prices often move around more than fundamentals, more than the underlying cash flows. And that means at times, you'll have these volatile periods where market prices will fall a lot, where stocks' share prices will fall, and maybe even residential property prices will fall. And often people get scared. People feel the pain of losses more than they enjoy the pleasure of gains. One of the most important things is that you don't overreact and sell stocks when they're down or sell shares when they're down. That's the worst thing that people can do. We think that what you want to be able to do is be prepared for the periods of market volatility by buying assets that you think are worth more than the price that you're paying for them.

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The Importance of Staying Invested in Volatile Times - Morningstar.com

If you're anything like most people, you're probably investing heavily in one market.

You may not know it. You may not realize you're investing at all. But chances are, you are and it could be hurting your finances.

That market? Your home market.

We're not just talking your physical property or rental home. Your job, your income even your pension are tethered to the country in which you live and work, which could leave you overexposed to market risks pertaining to that geographical region.

"If you think about it, essentially everything that is everything is in our home market," Dhruv Arora, CEO of Singapore-based digital wealth manager Syfe, told CNBC Make It.

"Our salaries, our jobs, our success, growth is deeply intertwined with our home market's growth," Arora, a former trader, continued.

That can be great during an economic boom. Jobs are plentiful, wages are rising, home prices are appreciating and pension funds are outperforming. But when a downturn hits, the implications can be severe and wide-reaching.

The reality is, you're putting all of your eggs in one basket and in the long-term that's never paid off.

Michele Ferrario

CEO, StashAway

"God forbid something happens in that market, the ramifications would be across all these areas," said Arora.

The tendency to hone in on your home market is not just common, it's inevitable. By taking a job or buying a home in a particular country, you naturally expose yourself to that market.

It's also psychological. You're more likely to invest in something you know better, "like an apartment you can look at or an industry you work in and understand better," explained Michele Ferrario of online wealth manager StashAway.

But that's why it's all the more important to hedge your bets and build in exposure to other markets.

"The reality is, you're putting all of your eggs in one basket and in the long term that's never paid off," said Ferrario.

Institutional investors, who are responsible for things like pension funds, have long advocated global diversification, building portfolios with exposure to a diverse range of assets including equities, bonds, real estate and gold as well as a variety of geographies.

But the rise of online investment platforms have opened up international investment opportunities to regular savers too.

Options such as Robinhood and Betterment in the U.S., Nutmeg in Europe and StashAway and Syfe in Asia can offer new investors access to a wide range of opportunities for as little as a dollar and annual fees of less than 1%.

Elsewhere, more experienced investors can invest in other specific markets and industries by buying exchange-traded funds (ETFs), which track stock market indexes like the S&P 500 and the FTSE 100.

Understanding the assets youre putting your money into has major significance.

Steve Brice

chief investment strategist, Standard Chartered

Before moving into new investment opportunities, however, it's important to familiarize yourself with those assets and the potential risks involved, noted Steve Brice, chief investment strategist at Standard Chartered.

"Understanding the assets you're putting your money into has major significance. People generally have more staying power in assets they understand and are close to," Brice told CNBC Make It.

Investing is often as much about personal risk tolerance as anything and if you're likely to be scared easily or overreact to the unknown it may be sensible to stick with what you know, he said.

"If it encourages you to stay invested, that can be reason enough for a home bias," he continued. "That said, we do believe in diversification."

Don't miss: Experts share their best advice for making your first investment

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Over investing in this market could be a big risk, finance experts say - CNBC

IntelyCare's app allows nursing facilities to instantly request staff and for clinicians to take ... [+] control of their schedule

Nursing technology start-up, IntelyCare has recently announced the completion of their Series B funding round. Totalling $45 million, this large scale investment represents the biggest-ever venture round in Nursing and was led by Endeavour Vision, with participation from Kaiser Permanente Ventures, and Generator Ventures.

Co-founded by former biotechnologist, registered nurse and a hospital IT manager Chris Caulfield, the mobile app and associate platform hopes to offer a solution to the current nursing crisis within healthcare by disrupting nursing scheduling and leveraging gig economics to close the projected 1 million nurse shortfall by 2030.

Chris Caulfield, cofounder of IntelyCare

When working in biotechnology at Siemens Healthcare, a desire to serve others compelled Caulfield to study nursing and once qualified, he not only became aware of the many logistics issues facing the profession, but had amassed the knowledge through his career to consider practical solutions.

The key issue he wanted to address was nurses becoming stuck after shifts. Given the immense strain on his colleagues, nurses often cancelled just before they were due to work, meaning other full-time staff were unable to be relieved from their post. As a UK-based anaesthetist, I can recall ICU shifts where nurses were sometimes a few minutes late, or occasionally nurses on opposing shifts would trade hours with each other, but Chris described a problem that I was fortunate never to see in a UK hospital setting:

Youre stuck if the next nurse doesnt come to work. Youre literally forced to stay. Were talking hours, double shifts even. In the extreme, Ive seen situations of 24 hours stuck in the facility.

This strain on resources leads to burnout and attrition amongst staff, ultimately limiting patient care. IntelyCares digital solution aims to apply gig economics and advanced data science technology to optimise the existing talent base and close the widening gap between supply and demand.

The software allows nursing facilities to instantly request staff and for clinicians to take control of their schedule, potentially picking up shifts in less than 72 hours, which gives flexibility to nurses booking shifts. An associated machine-learning algorithm also matches prices and people, and based on previous behaviour, Caulfield tells me that it can predict staffing-gaps before they happen, which appears to be solving problems at scale.

Given the growing burden of chronic disease and ageing populations globally, solving issues for the staff addressing this demographic is more pressing than ever and there is a significant role for new technologies. Healthcare has an integral resource often left neglected by new technology: clinicians. Businesses with solutions that save clinicians time and make their lives easier often struggle to demonstrate cash-in-hand savings for providers and other buyers, but Intelycare has grown exponentially since its founding in 2016, consistently doubling its revenue and user-base annually between 2017-19.

Along with a good business model, successful innovation often comes down to timing and Chris notes that a well timed culture of disruption helped him found the company, stating that IntelyCare saw a need at the same time Uber were crushing it. Its perhaps no coincidence then that its software allows nurses to pick up extra shifts in much the same way as Ubers drivers.

As an ex-clinician, myself, that often felt too thinly spread across my patients, its encouraging to see this new funding round aiming to fuel a positive change in workforce management. IntelyCare plans to solve the frustration staff feel towards a rota that can often feel arbitrary and to inflexible leave policies that are, in the extreme, dehumanising.

In March 2019, The Guardian published an article detailing the petty tortures of doctors denied leave, despite, for example, experiencing stillbirth or having a child or partner in intensive care. Outrageous, but not surprising for anyone that has been front-line in the NHS. Whilst this is UK-based and IntelyCares solution is aimed at US institutions, I have no doubt that the same pressures, prerogative and purpose weigh just as heavy on healthcare staff around the globe.

At a time when a modern adage is look after your staff and they will look after your company, solutions like Intelycare could help channel this sentiment to healthcare workers who want to optimise their work-life balance and their ability to care for their patients.

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Healthtech Startup Receives $45million In Biggest Ever Nursing Investment - Forbes

SHANGHAI, March 1, 2020 /PRNewswire/ -- MPM Capital (MPM) and Dana-Farber Cancer Institute have jointly announced on February 26, 2020 the successful closing of the MPM Oncology Innovations Fund (INV) with $100M in capital, and the Dana-Farber Innovations Research Fund (IRF) with more than $26M in pledged donations. 3SBIO, a leading biopharmaceutical company in China, is a limited partner in the INV and has agreed to make donation to the IRF, to support early-stage oncology research at Dana-Farber. The collaboration of INV and IRF is a unique, first of its kind, impact investing collaboration.

Through INV, MPM intends to create and invest in early-stage companies developing innovative therapeutic technologies in oncology. MPM expects 50% of the capital from INV to be invested in new companies generated from Dana-Farber research. As part of the collaboration, MPM, through INV, has the right of first offer to license certain Dana-Farber technologies that have been identified for commercialization.

"With innovative new funding structures, such as the collaboration between MPM and Dana-Farber, we believe we can expand and accelerate important research efforts while putting in place a path for developing this research into novel therapeutics. We are honored to partner with one of the world's leading cancer research centers to execute on this strategy and, having partnered before to bring groundbreaking science to patients, we are excited to continue working with our esteemed colleagues at Dana-Farber to advance the search for cancer cures," said Ansbert Gadicke, co-founder and Managing Director at MPM Capital.

"We are thrilled to have partnered with MPM on this innovative venture philanthropy model. We have generated substantial philanthropic support for exciting areas of cancer research at Dana-Farber, and MPM will support the creation of biotech companies that seek to bring new and advanced treatments to our patients," said Laurie H. Glimcher, MD, President and Chief Executive Officer of Dana-Farber.

"3SBIO is pleased to invest in MPM's INV as a limited partner and to make donation to IRF to support Dana-Farber, a top cancer research and treatment center in the world. We are looking forward to this collaboration to develop many promising oncology therapies that address the unmet medical needs of cancer patients," said Dr. Jing Lou, Chairman and CEO of 3SBIO.

MPM's partnership with Dana-Farber comes as biotechnology venture investors seek access to the most-promising academic discoveries and as medical institutes pursue new ways to fund research and propel their innovations into the market.

About 3SBIO 3SBIO is a fully-integrated biotechnology company in China with market-leading biopharmaceutical franchises in oncology, auto-immune diseases, nephrology, metabolic diseases and dermatology. 3SBIO is focusing on building an innovative product pipeline, currently with over 30 product candidates under development. 3SBIO's manufacturing capabilities include recombinant proteins, monoclonal antibodies and chemically-synthesized molecules. 3SBIO has research and production centers in Shenyang, Shanghai, Hangzhou, Shenzhen and Como, Italy. Please visit http://www.3sbio.com for additional information.

About Dana-Farber Cancer Institute Dana-Farber Cancer Institute is one of the world's leading centers of cancer research and treatment. It is ranked in the top 5 of U.S. News and World Report's Best Hospitals for both adult and pediatric cancer care. Dana-Farber's mission is to reduce the burden of cancer through scientific inquiry, clinical care, education, community engagement, and advocacy. They provide the latest in cancer for adults through Dana-Farber/Brigham and Women's Cancer Care and for children through Dana-Farber/Boston Children's Cancer and Blood Disorders Center. Dana-Farber is dedicated to a unique and equal balance between cancer research and care, translating the results of discovery into new treatments for patients locally and around the world.

About MPM Capital MPM Capital is a healthcare investment firm with over two decades of experience founding and investing in life-sciences companies that seek to translate scientific innovations into cures for major diseases. With its experienced and dedicated team of investment professionals, entrepreneurs, and advisors, MPM strives to power novel medical breakthroughs that transform patients' lives. For more information visit http://www.mpmcapital.com.

View original content:http://www.prnewswire.com/news-releases/3sbio-makes-investment-in-mpms-100m-oncology-innovations-fund-and-donation-to-dana-farber-cancer-research-301014013.html

SOURCE 3SBio Inc.

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3SBIO makes investment in MPM's $100M Oncology Innovations Fund and donation to Dana-Farber cancer research - BioSpace

For the third time in just over a week, some customers had troubles with access to their investment accounts and some of these locked-out investors shared their fury on Twitter.

Fidelity Investments, TD Ameritrade AMTD, +3.41% and Vanguard were responding to customers on the social media site Friday morning. Complaints included lack of access to their online accounts, as well as problems trading investments. Others said they could not see their account balances.

The technical difficulties come only days after financial firms including Fidelity, TD Ameritrade and Charles Schwab, experienced similar issues, and a little more than a week after Fidelity customers were stressing about seeing their 401(k) plans had no money in them (it was a glitch, the company says).

The lack of access and trouble trading also comes during a stressful week for investors. The Dow Jones Industrial Average DJIA, +5.09% was off 3.7% on Friday, and the S&P 500 SPX, +4.60% was down 3.4%. The Nasdaq Composite Index COMP, +4.49% fell 2.8%. All three benchmark stock indexes are near correction territory, which is when an investment declines between 10% and 20% from a recent peak.

See: Coronavirus fears are clobbering the stock market is it doing the same to your retirement?

Vanguard is experiencing higher-than-normal phone and web traffic given the steep declines in the global stock markets, a spokeswoman said. The company had a two-minute web outage earlier in the morning, and clients reported slow response times to log in. We are working to correct the reported connectivity issues, and thank clients for their patience at this time, she said.

TD Ameritrade said client trades were and are being processed as usual but the company did experience slowness in reporting trade confirmations because of heavy trade volumes, a spokeswoman said. The issue has been resolved. A Fidelity spokesman said the company had a minor issue lasting a few minutes and impacting a small number of companies, but it had been resolved.

The coronavirus is partly to blame for the deep dips in the stock market, with investors worrying about what the impact of the spreading of the disease will have on global supply chains and economics.

Fidelity was responding to customers saying the site had experienced technical issues early in the morning, but the platforms were running smoothly now. TD Ameritrade said mobile app updates may have been to blame and to restart or update the service.

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Investment firms face customer fury over tech glitches during one of the most stressful market weeks in recent history - MarketWatch

So, you have some money to put to work in the market. Where do you start?

The first thing to do is make sure you're not investing any money in stocks that you might need in five years. While history has proven that stocks are incredible wealth-building tools, anything can happen in the short term.

Now, let's look at some investment options for where you can invest $500.

Image source: Getty Images.

We'll get to individual stock ideas in the next section, but first, a word about index fund investing.

Investing in a low-cost index fund like the Vanguard S&P 500 ETF (NYSEMKT:VOO) is a good option if you don't care about going for big returns. It gives you instant diversification across household-name companies, and while you won't strike it rich in the next 10 years, it will multiply your initial investment over a lifetime. Even Warren Buffett's Berkshire Hathaway invested in a few index funds recently.

If you maintain a minimum holding period of 10 years, you have a high chance of seeing a return on your investment. Recent market history serves as a good example.

The chart shows the return of the S&P 500 index from Dec. 31, 2007, through today. If you had decided to start investing at the end of 2007, you would have seen the value of your investment fall roughly 50% over the next year as the 2008 financial crisis reared its ugly head. But if you hung in there, your investment would currently be up about 130% excluding dividends.You would have even more money if you had taken advantage of the lower prices and added more shares at the bottom.

^SPX data by YCharts.

I personally like to stick with individual stocks, because it's more fun and offers greater rewards. The right growth stocks can trounce the returns of an index fund -- which has returned an annualized return of about 10% over decades. And the good news is that you don't have to be the next Warren Buffett to be successful.

Peter Lynch generated phenomenal returns over a 13-year stint managing Fidelity Magellan in the 1980s, and he always advocated buying shares of companies that you are familiar with. His mantra was "invest in what you know."

There's a lot of wisdom behind this advice, because by investing in brands that you're familiar with, you probably already have intuitive insights about what makes the business tick that a number-cruncher on Wall Street hasn't figured out.

Do you exercise a lot or notice more people wearing sneakers? If so, then you might want to buy shares of lululemon athletica (NASDAQ:LULU) or Nike (NYSE:NKE). These stocks have been great performers for investors.The athletic apparel industry is expected to continue growing over the long term, and the great thing about Lululemon and Nike is that these businesses are innovating and delivering the e-commerce shopping experience that so many consumers are demanding these days.

Many people head to the salt mines every morning needing a fancy coffee from Starbucks (NASDAQ:SBUX). The popular coffee chain has had its ups and downs, but it continues to look like a solid investment.Starbucks has a great opportunity to expand in China and still sees opportunity for expansion at home domestically.

Do you binge-watch TV shows? Then adding shares of Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS) is a no-brainer. Netflix has 167 million subscribers but is still adding new ones at a rapid clip. Disney+ just launched last fall but already has 28.6 million subscribers. Plus, with Disney, you get a piece of Disney World and ESPN, where theme parks and media networks bring in about $50 billion in revenue every year for the House of Mouse.

You can put $500 in one stock or several stocks with fractional shares. Several brokers are introducing the ability to buy fractional shares right now, including the Robinhood app and Square's Cash app, but traditional brokers like Charles Schwab are expected to launch fractional trading soon.

Consider investing in the stocks mentioned above, and then next month try to add more money to your brokerage account and keep buying stocks. The key to successful investing is to ignore the short-term noise, consistently buy promising growth stocks, and let time do its thing.

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Where to Invest $500 Right Now - The Motley Fool

An investment company is a company that invests pooled assets in securities. Some of the biggest financial services companies are investment companies. Major players them include Vanguard, Fidelity and Charles Schwab. Heres how these companies operate and how they can work for you.

Investment Company Defined

Mutual funds are the most common and familiar type of investment company. Like other types of investment companies, mutual funds collect money from investors. Then invest the combined capital into securities.

The securities owned by a mutual fund or other investment company are its portfolio. When an investor buys a share of an investment company, it represents part ownership of the portfolio.

If the values of the securities that make up the portfolio increase, so does the value of the shares held by investors. If the portfolio generates income through dividend or interest payments, investors receive a portion of that income.

Shares of investment companies such as mutual funds are part of most investment portfolios. That includes individual brokerage accounts as well as retirement accounts such as IRAs and company-sponsored 401(k) plans.

Some of the biggest financial services companies are investment companies. Major players among investment companies include Vanguard, Fidelity and Charles Schwab. The biggest investment companies oversee portfolios with assets worth trillions of dollars.

Investment Company Features

Investment companies offer investors a number of benefits compared to investing alone. For one thing, by combining funds from many individuals, investment companies are able to hire professional managers to select the securities to purchase.

Also, investment companies created a large quantity of money from pooled individual investments. As a result, investment companies can invest in many more companies and types of investments than the individuals could on their own. A single investment company may purchase stocks, bonds and other types of securities issued by hundreds or even thousands of companies in many different industries. This level of diversification helps reduce risk significantly.

The Securities and Exchange Commission (SEC) regulates and defines investment companies under the federal Investment Company Act of 1940. They are also subject to the federal securities acts passed in 1933 and 1934. These rules require, among other things, significant disclosure of the terms investors are agreeing to and the claims the investment company is making.

Most investment companies also provide other services in addition to investment management. Added services include holding securities as custodians for investors, keeping records, handling accounting, managing taxes and seeing to legal requirements.

Investment Company Types

In addition to mutual funds, the Investment Company Act of 1940 recognizes two other types of investment companies. These are closed-end funds and unit investment trusts. Here are differences among these three:

Under these three headings, there are many varieties of investment companies. These types include stock funds, bond funds, hybrid funds, money market funds, target funds and index funds.

Hedge funds are another investment vehicle that pools funds from many investors. However, with fewer than 100 investors, hedge funds fall short of the investment company designation under the 1940 act. That means, among other things that they dont have the same disclosure requirements.

The Bottom Line

Story continues

Investment companies are the most popular way for people to invest in the securities markets. They include mutual funds, closed-end funds and UITs. Regulations governing investment companies protect investors from misleading information and fraud. And by pooling their assets, investors get the benefits of diversification and professional management.

Investment Tips

Photo credit: iStock.com/seb_ra, iStock.com/Drazen_, iStock.com/skynesher

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What is an Investment Company? - Yahoo Finance

125 Greenwich Street (Credit: 125 Greenwich, iStock)

A SoftBank-owned investment firm has purchased the defaulted mortgage on the troubled luxury condo tower 125 Greenwich Street.

Fortress Investment Group bought the mortgage for about $230 million from the investment firm BH3, according to the Wall Street Journal. BH3 had been moving to foreclose on the 88-story project, which is under construction but nearly complete. Fortress will have the right to continue the foreclosure lawsuit if it chooses.

The developers Howard Lorbers New Valley, Davide Bizzis Bizzi & Partners, the Carlton Group and China Cindat defaulted on the loan as the market for high-end apartments in New York began to weaken. A group of lenders including United Overseas Bank filed to foreclose on the project last year, but BH3 ended up buying the loan for about $125 million in July.

Manhattan is dealing with a glut of luxury condos thanks to a surge in new construction, which has given investors an opportunity to bail developers out at high interest rates, purchase defaulted loans or take over projects that are not doing well for low prices.

BH3 co-founder Daniel Lebensohn told the Journal he would not expect Fortress to slow down the foreclosure process on the tower. [WSJ] Eddie Small

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Fortress buys debt on troubled 125 Greenwich - The Real Deal

Strong population growth combined with rapid urbanisation support the case for investing in Africa, says Paul Boynton, CEO of Old Mutual Alternative Investments (OMAI). The continents large natural resource endowment is another one. But there are more, according to Boynton. Over the next decades, the growth opportunity within Africa must be as strong as anywhere else.

Given Africas under-developed public markets, there is a case for investing in infrastructure and private equity, those on which OMAI focuses.

OMAI is part of Old Mutuals Wealth and Investments, a key division of the financial services group. The firm offers both funds and segregated accounts with a pan-African focus. Half of the investors within its pan-African funds are international.

Growing the international client base is among the companys strategic priorities, which is why OMAI hired a London-based professional, Clodagh Bourke, who will focus on that task. Bourke joined from Barings, where she was a director in its alternative investments business.

There cannot be many firms with such a deep presence across African private markets. OMAIs infrastructure arm, African Infrastructure Investment Managers (AIIM), has invested for two decades. It was established in 2000 as a 50/50 joint venture between Old Mutual and Macquarie, but Old Mutual took full control in 2015. AIIMs investments include transport, energy and telecommunications.

In private equity, OMAIs buyout and growth capital fund, which is focused on Southern Africa, is currently launching its fifth vintage. The firm also manages private equity fund-of-funds portfolios, investing either globally or pan-African.

OMAI is also an impact investor. Although focused on South Africa, Boynton says it is looking to take its impact capabilities to East Africa. The firm manages an affordable housing fund, has funded alternative mortgage providers and a retirement accommodation programme.

European infrastructure investors lamenting the lack of domestic opportunities might ponder the potential that Africa offers. According to the African Development Bank, Africa needs investment of $130bn (120bn) to $170bn per year to close its infrastructure gap, but governments and supernational agencies can only cover about half of that. The rest has to come from the private sector.

Boynton says: If you consider the Nigerian power grid, for instance, it is one tenth the capacity of the South African grid, and Nigeria has nearly 200m people, compared with South Africas 60m. Often power in Nigeria is generated by diesel generators, at four times the cost of on-grid power. There is an opportunity to build utility-scale power plants and hook them up to the grid, reducing the cost of industrial and residential use by 75%.

At a political level, one recent event plays in investors favour. The agreement establishing the African Continental Free Trade Area (AfCFTA) came into force in May 2019, providing the framework for reduced trade friction. Intra-African trade is in the mid-teens [as a percentage of total African trade], much lower than intra-European trade for instance. There is a big opportunity to build continental value chains and promote trade, and this is also dependent on infrastructure and logistics, says Boynton.

Investment in private equity stands to benefit from the African consumer, but the viable investment opportunities will have a pan-African focus, according to Boynton. There is appetite from multinationals to make strategic acquisitions with a pan-African footprint. They see that Africa could become a large source of consumer demand over the next decades and they want to participate in that.

We have invested in businesses that have the ability and the potential to develop across Africa and helped them execute that strategy. As an example, we have invested in a glass bottle business that has opened a plant in Ethiopia, a country of 80m people, growing at nearly 10%. Historically, all glass bottles were imported, until this business opened a plant in the country. Now they are looking to expand in Kenya and West Africa. Before we invested, they did not have a pan-African presence.

So what is putting off investors from African private markets? Boynton says: Unfortunately, private equity returns over the last decade have been quite pedestrian, given the perceived risk premium that investors feel they should be receiving. I would argue, however, that risk in Africa is perceived to be a lot higher than it actually is.

At the same time, the size of funds that have been raised is generally small. Very few have exceeded $1bn in size, which might be too small for large European institutional investors. I think that is changing, too.

Despite the higher risk premium, real or perceived, the discipline of investing in African private markets is the same as for other markets, according to Boynton. He says: When investing in infrastructure, we have to assess the jurisdictional risk of investing in each country. Even within a country, we might find areas where we are happy to invest and those where we are not. In certain areas, we might also look at taking out insurance on things like expropriation or inability to expatriate capital.

But at the end of the day, the process is not different. You need to assess all the risks, from the credibility of the operator to the quality of the developers balance sheet.

A presence on the ground gives OMAI credibility. We have investment professionals in offices in key cities including Abidjan, Lagos, Nairobi as well as Cape Town and Johannesburg. This is important not just for risk assessment, but also mitigation.

If investors are concerned with environmental, social and governance (ESG) issues, they need to know that it is not new to Africa, thanks to the historical involvement of development finance institutions in infrastructure and private equity, Boynton points out. OMAI has developed an ESG strategy linked to the UNs Sustainable Development Goals (SDGs).

We have selected 12 SDGs on which we believe we can make adifference. As part of those, we have identified 90 different potential metrics that can be measured, fromwater consumption to carbon avoidance. That allows us to make longitudinal as well as cross-sectional comparisons.

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Strategically speaking: Old Mutual Alternative Investment | Interviews | IPE - IPE.com

Today well evaluate International Business Machines Corporation (NYSE:IBM) to determine whether it could have potential as an investment idea. To be precise, well consider its Return On Capital Employed (ROCE), as that will inform our view of the quality of the business.

First, well go over how we calculate ROCE. Second, well look at its ROCE compared to similar companies. Last but not least, well look at what impact its current liabilities have on its ROCE.

ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Generally speaking a higher ROCE is better. In brief, it is a useful tool, but it is not without drawbacks. Renowned investment researcher Michael Mauboussin has suggested that a high ROCE can indicate that one dollar invested in the company generates value of more than one dollar.

The formula for calculating the return on capital employed is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) (Total Assets Current Liabilities)

Or for International Business Machines:

0.094 = US$11b (US$152b US$38b) (Based on the trailing twelve months to December 2019.)

Therefore, International Business Machines has an ROCE of 9.4%.

Check out our latest analysis for International Business Machines

ROCE is commonly used for comparing the performance of similar businesses. Using our data, International Business Machiness ROCE appears to be around the 12% average of the IT industry. Setting aside the industry comparison for now, International Business Machiness ROCE is mediocre in absolute terms, considering the risk of investing in stocks versus the safety of a bank account. It is possible that there are more rewarding investments out there.

International Business Machiness current ROCE of 9.4% is lower than 3 years ago, when the company reported a 17% ROCE. Therefore we wonder if the company is facing new headwinds. The image below shows how International Business Machiness ROCE compares to its industry, and you can click it to see more detail on its past growth.

It is important to remember that ROCE shows past performance, and is not necessarily predictive. Companies in cyclical industries can be difficult to understand using ROCE, as returns typically look high during boom times, and low during busts. ROCE is only a point-in-time measure. Future performance is what matters, and you can see analyst predictions in our free report on analyst forecasts for the company.

Current liabilities are short term bills and invoices that need to be paid in 12 months or less. Due to the way ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To counter this, investors can check if a company has high current liabilities relative to total assets.

International Business Machines has current liabilities of US$38b and total assets of US$152b. As a result, its current liabilities are equal to approximately 25% of its total assets. This very reasonable level of current liabilities would not boost the ROCE by much.

With that in mind, were not overly impressed with International Business Machiness ROCE, so it may not be the most appealing prospect. You might be able to find a better investment than International Business Machines. If you want a selection of possible winners, check out this free list of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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What We Think Of International Business Machines Corporations (NYSE:IBM) Investment Potential - Simply Wall St