VirtualeMarkets

Markets Up This Week!

2009-10-09T20:32:00.000-07:00

This week ended with all indexes up. Dow 9864.94, S&P500 1071.49, and the Nasdaq closed at 2139.28. Oil closed around $71.77 and the 10yr Treasury move up to 3.38% from around 3.18% earlier this week.

Next week is a big earnings week.

On Tuesday, Intel (INTC) estimates are around $0.27, Johnson & Johnson (JNJ) estimates show $1.13.

Wednesday JP Morgan (JPM) is expected to report $0.49 and Xilinx estimates are for $0.22.

Thursday is a big earnings day for sure. AdvancedMicroDevices (AMD) - $0.42, Baxter (BAX) - $0.97, Citigroup (C) -$0.21, Cypress - $0.06, Google (GOOG) - $5.36, Harley-Davidson (HOG) - $0.21, IBM (IBM) - $2.38 and Nokia (NOK) - $0.18 .

Finally, on Friday General Electric (GE) estmates are for $0.20 and Bank of America (BAC) $0.06

Jim Cramer's speculation stock for this week is Novellus (NVLS) -remember, do your homework!

September-October Markets

2009-10-05T12:21:00.000-07:00

As September ended and October began, Stockmarkets corrected in fear of Q3 earnings which begin on Wednesday(Oct 7, 2009) with our favorite punchbowl poop - Alcoa.
Last week markets ended down for small-cap Value stocks, materials, energy, financials, industrials, REITS, and telecom. Utilities are so near the bottom they were little changed.
The only strength was in consumer staples, tech, healthcare and consumer discretionary, by strength, I mean in comparison with other sectors with larger losses.

Bank of America ( Sym: BAC ) is sighing with relief as Ken Lewis is heading for the door taking potential questions and investigations with him. I think they may have actually set the door to hit him in the ass on the way out. In other words, "Hey - They killed Kenny! You Bastards!".

Markets: Pre Monday Opening Bell

2009-09-21T02:28:00.000-07:00

Last week the S&P closed at 1068.30, Nasdaq at 2132.86, and the Dow closed at 9820.20.
This coming Thursday RIMM reports earnings and will affect how tech stocks end the week, or even the month.
Winners last week were Real Estate, Financials, Basic Materials, Energy and Emerging Markets. Small caps did well also, as did Industrials.
The slowness award goes to technology, which had a pretty good year so far.
Other laggards were Consumer Staples, Telecom, and Healthcare.
Bargain hunters will note that Utilities remain the weakest stocks in this market.

One Year Later at CNBC

2009-09-14T01:21:00.000-07:00

Maria Bartiromo hosted this first in a series of shows on CNBC taking a look at last year's financial meltdown and it's possible causes. She interviewed four guests this Sunday(9pm CST)
starting with Morgan Stanley Chairman and CEO John Mac. Mr. Mac describes a meeting with Secretary Paulson and nine others. Those at the meeting concluded that not bailing out Lehman Bros. would avoid "moral hazard" and should not cause significant problems in the market. Mac readily agrees that this was not the correct thing to do.
Blackrock CEO Larry Fink was Maria's second guest. Mr. Find was and is an advisor to the government regarding financial matters. He describes how the drop in the NAV of the money market fund was a pivotal moment for the markets. This decline in money market NAV was due to the collapse of Lehman Bros. A collapse in the money markets would halt significant amounts of short term credit available to corporations.
Barclay's Bob Diamond helped the British bank acquire the remaining fixed income business from Lehman Bros. and still feels it was a real bargain. This allowed Barclay's to increase their marketshare in the U.S. and worldwide as has been of great benefit to the bank's fixed income business.
Finally, Citi's CEO Vikram Pandit stated that the crises was mostly due to overleveraging by banks and individuals alike. He also expressed some concern about the effects of the shadow banking system.

More about this all month on CNBC.

Crazy 08's Market Conditions Persist

2008-12-30T08:02:00.000-08:00

Bernard Madoff - Madoff W/50 billion in Ponzi scheme
Despite credible allegations dating back to 1999, No one fully investigated Bernard Madoff. Also, one of the SEC regulators married Madoff's niece. All in the family may or may not turn out to be the link to heads at the SEC turning the other way for Madoff and his secretive investment firm. More at wsj.com. A victim of the Madoff scam committed suicide last week after unsuccessfully trying to regain some of the over 1.3 Billion that he had invested with Madoff.
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FROM CNBC/WSJ WEEKLY REPORT W/MARIA BARTIROMO:
Credit Markets remain chilly and LIBOR has gone down some, easing the pain. But the economy is still performing poorly.
Economic advisors know that something is floating in the proverbial pool, but can't be sure if it's just a BabyRuth or a doodie. The Dallas' Federal Reserve Gov. was overheard saying, "We're fairly certain it's going to be a doodie..".

Unemployment is already at 6.7% and growing.
Oil is still below $50 and dropping..
FOMC Meeting Rate Drops from 0 to .25% -------------------------------------------------------
FROM CNBC- RE:FED ACTIONS IN DEC 2008:
JACK BOGLE - "I DON'T HAVE THE SAME LEVEL OF CONFIDENCE THAT ALL IS NOW WELL.." "YOU CAN'T PUSH ON A STRING.."
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OIL CLOSES BELOW $42/BARREL------------------------------------------------------- Summary: 91% of the time, the first 5 days of January predict the restof the year. Jan as a whole is also considered the most bullish month of the year, therefore a down Jan is BEARISH. ------------------------------------------------------- Commodities in 2009:
According to the U.S. Farm Report, enthusiasm for growingcorn in 2009 has dropped dramatically. Soybeans look moreprofitable for 2009.
Fertilizer Prices in 2009
Unfortunately, many farmers and their suppiers are stuckwith various quantities of urea, and various other fertilizer products,at or near peak 2008 prices. These materials will effect operationsand costs in 2009 creating a lag in pricing, or losses for many farms and independant fertilizer dealers. EPA Fertilizer:
There is a consideration from the EPA to charge $87.50 per headof cattle based on the estimated number of farts that will beflatulated in the lifetime of this future steak w/legs. Based on this, shouldn't politicians pay a global warming fee for each word spoken to the public or while in office..
more at http://www.USFarmReport.com
More on these stories at http://www.nytimes.com http://www.cnbc.com http://www.wsj.com http://www.investors.com http://www.reuters.com http://www.USFarmReport.com http://www.agaryshilling.com/insight.html http://www.USFarmReport.com

Markets Monday Nov 3, 2008 September - October Scream Machine

2008-11-03T05:30:00.000-08:00

All through September and October the markets went up and down enough to tire even the most enthusiastic roller coaster fanatic.The Dow did not break 10600 on Oct 31st, this is below a technical trend set in 1982 when the25 year bull market began. This is a very bearish signal to the U.S. markets. Also weighingin on Wall Street is the election, which will finally come to some ending on Tuesday or Wednesdaymorning. The banking system will remain in it's somewhat shaky place, but the creditors suchas Capital One and those like it will suffer an increase in defaults as the consumer pulls in the reins. Unemployment continues to rise and is expected to nearly double by this timenext year. We seem to be looking deflation right in the eye. This is different from anything we haveexperienced since the 1930's. I wasn't there, however. So now I try to figure out what happensto markets and companies when demand drops and so do prices and wages. As consumers put off purchases awaiting a lower price, how many companies can hold out as well. This says littleas to what will happen in export economies and countries dependant on natural resources ascommodities tumble to multi-year lows. Three interesting books on this subject are:
1. The Great Crash of 1929 John Kenneth Galbraith
2. Deflation A. Gary Shilling
3. New Paradigm for Financial Markets The Credit Crisis of 2008 and What it Means - George Soros

Also Check Out Our BookShelves:

401k Investments Business and Finance Cramerica Bookshelf MutualFunds

ETFs May Be Best in Difficult Markets

2008-10-13T14:51:00.000-07:00

ETFs, Funds And Shares: What Are They And What Are Their Benefits?
by: John McElborough

Exchange Traded Funds, better known by many investors as iShares, the brand owned by Barclays Global Investors ('BGI') have been around in the UK since April 2000, with the launch of the iFTSE100 on the London Stock Exchange. From a slow start, by the end of 2005 (the latest figures available), some 125 billion was held in assets under management. Generally, when you look for your share price information, you'll find them grouped in the extra MARK section, where you'll now find some 45 different ETFs on offer. Although they have been around for sometime, let's just remind ourselves how ETFs work. They are listed on the stock exchange, providing the flexibility and trade ability of a share, including the fact that the price is continuously quoted, but that one share can provide instant exposure to an entire Index, giving you the diversification benefits of a fund. ETFs are also a flexible way of achieving cost-effective market exposure. Because the funds are registered in Ireland, there is no stamp duty to be paid on purchases. Management costs are taken from dividends that are accrued by the fund, and any excess income is then distributed to shareholders: unlike unit trusts, there are no initial fees to pay on the original purchase. The price of the fund is always close to the 'Net Asset Value' (NAV) of the underlying investments and will usually have tight spreads, unlike some unit trusts and some investment trusts. Also ETFs will disclose their holdings everyday, whereas traditional funds usually disclose their holdings twice a year. What can I invest in? ETFs offer a wide range of opportunities for investment with varying levels of risk: as at mid-December there were 45 different markets/indices to invest in, ranging from corporate bonds to the Taiwanese market. Starting at the lower end of the risk spectrum there are several corporate bond ETFs, as well as some Gilt-based investments. Moving on to the medium risk level, you can choose from global funds to ones that are more specific to individual regions, such as the US or Asia. There's also the option of investing in individual indices: 'index trackers' are available for the UK's FTSE100 and 250 Indexes, the US S&P 500, or Europe's Euro first 100 & 80, spanning the top European companies. For those wanting a higher level of risk, there are also ETFs which will give you exposure to emerging markets, such as Turkey, Korea, Taiwan and Eastern Europe. ETFs don't offer the same wide variety as unit trusts, but for investing in the countries and sectors they do cover, their charging structure and trade ability make up for this. As such, they provide a good, low cost, easily-traded route into the market, with the flexibility to move up the risk ladder as your experience and capital grows. Finally, if you've an appetite for an even spicier approach, the London Stock Exchange also enables you to invest in commodities, through ETCs (Exchange Traded Commodities). Although like ETFs they are traded in the same way as shares, and are eligible to be held in a PEP or ISA, they do work in a completely different way. Whereas ETFs actually buy the underlying investments, ETC managers don't buy and store tons of wheat and copper, stack-up barrels of oil, or herd livestock into pens. Rather, they buy options on these commodities. As a result, ETCs are classed as more 'complex' investments by the FSA and you'll need to complete a special 'risk notice' confirming you understand the additional risks of investing in them. So take a fresh look at ETFs - you might just find they offer you more than you thought! Funds: take your pick of the best Unit Trusts and Open Ended Investment Companies (OEICs) are investments that let you pool your money with lots of other 'retail' investors. This money is invested on your behalf by a wide range of specialist fund managers, investing in, for example, Government gilts and bonds, commercial property and equities. Investing in funds gives you access to a highly-diversified range of investments at a reasonable cost. You will also have easy access to asset classes and international markets that would otherwise be difficult and expensive to invest in and benefit from the Fund Manager's contacts, knowledge, experience and expertise. Funds come in many shapes and sizes from 'trackers' to specialist or 'themed' funds. An index-tracking fund (often referred to as a 'passively managed fund') aims to match or 'track' the performance of a given market index, such as the FTSE All Share or the FTSE 100. They do this using computer programs to work out how much of each individual company they need to buy and sell to mimic the performance of the Index as a whole. But not all 'tracker funds' match the Index they are tracking that well - so be sure to check their record. An 'actively managed fund' on the other hand employs researchers to study and engage with companies in which they plan to invest, and to keep abreast of the prospects for companies in which they already invest. They'll compare their performance to a 'benchmark' index related to the investment objectives of their fund, with the expectation that the extra work they put into tracking down the 'best' investments will literally pay dividends through higher growth than that of their benchmark. Choosing your funds When you pick your funds, be sure to rate them against other funds that fish in the same waters. Don't expect a 'value' fund and a 'growth' fund to have similar track records. Only by comparing funds with their true peers will you make a good choice. Whilst past performance should not be seen as an indication of future performance, past performance does matter when comparing like with like. Chasing winners however, is as dangerous as day-trading. Not surprisingly, all five of the top-performing funds at the end of 1999 were technology sector funds. Sector funds have a place in many a portfolio, but for the majority of investors they belong at its edges, not at its heart. An individual fund will give you a wider spread of underlying investments: by investing across a number of funds you're better able to smooth out the ups and downs of the market overall. But that won't work if it turns out that your funds hold virtually the same investments. So have a look at each fund report to see their top holdings and make sure you've got a good spread overall. Individual Company shares When it comes to the individual shares part of the investment model, the lowest risk entry point has always been recognised as companies in the FTSE 100. However, you should always bear in mind that the Index evolves over a period of time, changing its overall make-up. Consider, for example, that over the last 6 years technology shares have fallen out of the Index, while mining companies, on the back of booming commodity prices, have dramatically increased their presence. Yet, because of the volatility and cyclical nature of the sector, individual mining groups can't be classed as low risk. Other 'big names' have gone from the Index due to take-over activity - companies like P&O, Abbey National & BAA - all of which have to be replaced. Today, some 80% of the make-up of the overall value of the FTSE100 comes from just 5 sectors - Banking, Mining, Oil & Gas, Pharmaceuticals, and Telecoms (fixed and mobile). So, if you're looking to the Footsie to form the bedrock of your investment in individual shares, where should you start? Companies involved in essential, everyday products and services, such as the water and electricity utilities and broad-based retailers often provide a solid backbone to any share portfolio. You could argue, however, that the classic 'defensive' nature of utilities has recently been undermined by the number of take-overs within the sector. The share prices of the remaining companies have climbed to all-time highs, potentially increasing the level of risk. There is without doubt an appetite for the assured cash flow that utilities provide, and it's fair to say that a growing number of analysts agree it's hard to justify the current prices. Despite this, get your timing right, buying at the right price, and these sectors should still provide a strong base on which to build your individual holdings. To extend your scope, whilst still staying within a lower risk profile, your next ports of call should be into the banks, pharmaceuticals, tobacco and beverages sectors. Move on up to the intermediate, 'medium risk' level, and you've an increasing choice, including the remaining FTSE100 companies, dominated by the mining sector. The majority of shares in the FTSE250 would also fit into this 'medium risk' category. Still relatively large companies, it is these shares that have seen some of the biggest gains over the last 3 years, helping push the 250 Index to record levels in 2006. One noticeable difference between the FTSE250 compared to the FTSE100, is that companies here generally have less international exposure. When it comes to the consideration of risk, you can play this one of two ways: some argue that having the majority of profits coming from the UK provides for less risk, while others (including us) favour having fingers in as many regions as possible. Finally, at the higher end of the risk scale you find smaller companies and AIM quoted shares. These tend to be more volatile and less liquid than their larger cousins, factors that generally lead to wider bid/offer spreads. The AIM market has seen considerable growth over the last 10 years, partly because companies don't have to comply with the same stringent requirements of the main market. Often, private investors don't get a look-in as part of the flotation, having to wait until the shares start trading, so do pick your time and use stop-loss limits - that early flush of success isn't always carried through. One of the fastest growing sub-sectors within AIM is small mining and exploration groups, many of which are based abroad but have chosen to list in the UK. Because their prospects include a significant amount of 'hope' value, such companies will represent the very highest level of risk. Equally classified as higher-risk, though as a result of different factors, are shares in overseas companies. Household names like Volvo, Coca Cola and Johnson & Johnson are big names and big companies. The additional risk they bring for investors comes from the fact that the majority of their earnings are from overseas. So you face the added risk of changes in exchange rates. Over recent months, for example, the fall in the US$ would have had a big impact on the sterling value of dividends from US shares And when the companies you invest in are smaller ones, it's often harder to find reliable research and analysis, harder to track and compare performance, and harder to follow the news that affects the share price. True, most big UK names also trade globally, but as 'home market' companies they are well-researched, much commented upon and regularly feature in the UK business finance pages. That's not to say you shouldn't venture outside these shores - far from it - but you need to do so with your eyes open. That's why we see overseas shares as being more appropriate for investors asthey move up the experience ladder and once they've built a balanced portfolio. And it's also why, in general, we'd advise investing in market trackers and funds before moving into individual overseas shares.
About The Author
The Share Centre http://www.share.com/ offer information and advice on shares and http://www.share.com/webp/share.htm share dealing. Learn about the stock market, research shares and deal shares online.

Mortgage Meltdown

2008-06-09T03:13:00.000-07:00

Understanding the Mortgage Meltdown; What happened and Who's to Blame by: Richard Gandon

People are losing their homes and many more will lose their jobs before the mortgage meltdown works its way through the system. To paraphrase Alan Greenspan's remarks on March 17th, 2008, “The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War. The crisis will leave many casualties.” How many casualties? Experts are predicting that in the next few years, between 15 and 20 million homeowners could have homes worth less than what they owe. Walking away from a bad situation may actually make sense for people who mortgages that are 'upside down' considering the fact that refinancing is out of the question and home equity is nonexistent. It seems quite easy to point fingers at greedy Wall Street titans for causing the sub-prime mortgage crises. They after all, put together the deals that allowed banks to underwrite mortgages and then offload these liabilities to investors. What many fail to realize is that there is no shortage of blame to go around from homeowners buying more home than they could afford to real estate agents looking for more commission dollars. Mortgage brokers and bankers, the banks themselves, ratings agencies such as Moody's and Standard & Poor's, Wall Street, the Fed and last but certainly not least, the Federal Government. Let's start with the homeowners--the people who are now in the process or soon to enter the process, of losing their homes. Some of these people had never before owned a home and as such, may not have been prepared for the costs associated with homeownership. Basic financial literacy is sorely lacking in this country despite there being no shortage of budgeting and tracking programs readily available such as Quicken and Microsoft Money. The lack of financial literacy does not absolve these buyers of their responsibility. Every borrower receives a truth in lending disclosure statement. Here is a portion of what the act covers: The purpose of TILA (Truth In Lending Act) is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling. Much of the subprime mortgage crisis can be traced directly back to variable-rate mortgages. As is clearly stated above, “TILA does not regulate the charge that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumers dwelling.” It also clearly states that TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. One has to wonder whether or not these homeowners: 1. Bothered to read the truth in lending act disclosure at all. 2. Understood what the truth in lending act disclosure meant. 3. Chose to ignore the information printed clearly the truth in lending act disclosure. A number of months ago, just as the subprime mortgage crisis was beginning to unfold, The New York Daily News ran an article about a family in New York City, who had bought a home and were now faced with the prospect of foreclosure. The article was sympathetic to this family, highlighting the fact that they're living the American dream and that this dream was about to come to an end. What I found to be distressing was the fact that clearly visible in the photo that accompanied this sympathetic article was a very expensive flat screen television hanging on the wall. Perhaps I'm naïve, but I can assure you that if I were faced with the prospect of losing my home and having my family put out on the street, there is absolutely no way that I would still have that expensive television hanging on my wall. It would have been one of the first things to be sold and some financial relief would be found by jettisoning what I'm sure was the expensive cable bill. Clearly the public needs easy access to financial literacy courses. Too bad we don't see the need to make this a mandatory course of study in our educational system. Mortgage bankers and brokers have in the last four or five years been raking in cash by the bucket load in the form of commissions paid when mortgages they've originated, close. Many of these people have not needed to do much in the way of prospecting. Instead, their phones have run off the hook as people have jumped on the homeownership and refinancing and take out extra cash bandwagon, despite their ability to pay for their home. No-document loans were readily available without the borrower having to produce documentation that backed up their income. Clearly this practice can and indeed has, lead to substandard loan underwriting processes. Were some of these mortgage bankers and brokers dishonest? Sure. Were all of them dishonest? I think not. To have a massive nationwide conspiracy, where thousands and thousands of people involved in the mortgage banking and mortgage brokering profession got together to create this situation is simply not feasible. Yes, some of the blame does belong with those in the mortgage industry, but they were simply a small cog in the huge machine that created this mess. Let's discuss real estate agents. In 2007, we bought a home, and also sold a home. The agent we used to purchase our home was absolutely fantastic. In our opinion, she went above and beyond to make our deal happen. She answered every phone call, followed up on every concern and was the epitome of professionalism. We consider this individual to be a friend, and we have sent referrals her way that have resulted in her earning additional commissions. We will continue to recommend her to all who ask or mention that they'd like to buy or sell a home in our area. The real estate agent, we used to sell our home, could not have been more different. We got our old home ready to sell prior to closing on our new home. We decided to list it as “For Sale by Owner.” In the event that we didn't sell this home on our own, it was our intention to list it with an agent as soon as we had closed on the purchase our new home. Literally, from the day we put the sign in front of our home and listed it on a “For Sale by Owner” website we were inundated with phone calls from real estate agents. We were told many lies and were constantly harassed; although we had already made it quite clear to every agent who called, and there were more to 60 who did; that we were willing to pay half the commission-the same as they would have received had they sold another agent's listing. We also told every agent that called that we had already lined up an agent to sell our home in the event that we chose to no longer sell it ourselves. Our deadline was the closing date of our new home purchase. We did have an interested buyer who shortly after our closing date decided to keep looking so we listed our home with a local agent so that we could concentrate on getting our new home ready for our moving date at the end of the school year. This agent showed our home a maximum of two times and got an offer which we accepted. We ended up getting $1,000 less than we had wanted in a declining Real Estate market. The agents who had called many times to harass us called our listing agent on a number of occasions and he lied telling them that the house was under contract when in fact it wasn't at that time-clearly a breach of our agent's fiduciary duty. Quite frankly an ethical agent would have continued to show our home until closing in the event that the deal fell through. But wait, there's more. Our agent also acted as the buyer's mortgage broker. At the closing table, we learned that he had signed documents from the buyer stating that he (our agent) represented them and we had signed documents stating that he represented us. We also learned that the buyer had effectively put down approximately 2-3% of the purchase price when financed closing costs were factored into the equation. Their first mortgage had what we thought was a high fixed rate and their second mortgage came with a rate in excess of 8.5%. Because the closing happened in August, literally in the midst of the first wave of the meltdown, if they didn't close on the day they did (August 31st, 2007), Citibank wasn't going to extend their rate. When my wife & I have bought houses in the past, it had always been a very happy day. These people looked absolutely shell-shocked at the closing table. I'm not convinced that they knew just how much their monthly payment was going to be until closing day. We knew down to the penny well in advance having budgeted and planned everything on a spreadsheet. Were these people stupid or just inexperienced and mislead by a greedy combination of real estate agent & mortgage broker? I'm extremely confident that they are intelligent people but inexperienced and taken advantage of by an unscrupulous agent. The banks are also culpable. Prior to bank deregulation, Savings and Loans provided mortgages to home buyers and kept these loans on their books. Non-performing loans had a negative effect on the S&L's profitability which of course caused tighter lending guidelines such as job stability and decent down payments in order for prospective home buyers to be approved for a mortgage. Way back then, a home buyer had to actually save up enough money for a down payment 10 or even 20% before a bank would ever consider underwriting a mortgage. The checks & balances kept banks solvent and borrowers responsible. Although this approach worked, some cried foul stating that the regulated system was racist and discriminatory-and there certainly was some truth to this. Skipping forward to the present, banks made a bundle on mortgages over the past five or six years. For the most part, they allowed their underwriting criteria to be stretched so far out of alignment that almost anyone could and indeed did, qualify for a mortgage despite their ability to pay. Some folks even applied for and received mortgages for more than the property was worth. Sometimes for as much as 25% more than their property was worth! Under the prior system, 125% mortgages would not have been possible because of course these loans were held on the banks' books and could have led to losses that would have had to have been absorbed directly by the bank. So what went wrong? Under the current system, these loans were sold to the big Wall Street investment firms who repackaged them as collateralized mortgage obligations (CMO's), Mortgage Backed Securities (MBS's) and other similar acronyms. These instruments were then sent to the ratings agencies for their blessing and more importantly a letter rating. Many of these structured finance deals receive AAA ratings-the highest ratings available meaning that in theory, these instruments were least likely to default. How does one create a 'triple A' or AAA rated financial instrument out of sub-prime mortgages? Herein lies the magic. These Asset Backed Securities (ABS) are made up of different tranches or slices, each carrying a different risk and reward level. The first dollar of principle and interest is applied to the securities with the highest rating, and the first dollar of loss is applied to the tranche with the lowest ratings. The lower slices are designed to provide a security blanket that in theory protects the higher-rated securities. The investment banks that package or 'structure' these securities in order to earn fat fees when they sell them to investors are the same entities that pay the ratings agencies to rate these instruments. Clearly the possibility for conflict of interest is present. If investors and not the investment banks that stand to rake in millions in fees were to pay for the rating, the potential for this conflict of interest would be negated. Furthermore, the investment banks have a vested interest in convincing the ratings agencies of the credit worthiness of these securities. So we've already pointed fingers at homeowners, some greedy, many more I suspect, naïve or uninformed, real estate agents-one out of more than 60 in my experience was a gem, mortgage brokers & bankers, banks, Wall Street and ratings agencies so who's left? The Federal Reserve and the Government of course. The Fed as its known is responsible of the country's monetary policy and for supervision and regulation of banks. This is the definition of the Fed's roles in their own words: Monetary Policy The Fed is best known for its role in making and carrying out the country's monetary policy-that is, for influencing money and credit conditions in the economy in order to promote the goals of high employment, sustainable growth, and stable prices. The long-term goal of the Fed's monetary policy is to ensure that money and credit grow sufficiently to encourage non-inflationary economic expansion. The Fed cannot guarantee that our economy will grow at a healthy pace, or that everyone will have a job. The attainment of these goals depends on the decisions of millions of people around the country. Decisions regarding how much to spend and how much to save, how much to invest in acquiring skills and education, how much to spend on new plant and equipment, or how many hours a week to work may be some of them. What the Fed can do, is create an environment that is conducive to healthy economic growth. It does so by pursuing a goal of price stability-that is, by trying to prevent inflation from becoming a problem. Inflation is defined as a sustained increase in prices over a period of time. A stable level of prices is most conducive to maximum sustained output and employment. Also, stable prices encourage saving and, indirectly, capital formation because it prevents the erosion of asset values by unanticipated inflation. Inflation causes many distortions in the market. Inflation: · hurts people with fixed income-when prices rise consumers cannot buy as much as they could previously · discourages savings · reduces economic growth because the economy needs a certain level of savings to finance investments that boost economic growth · makes it harder for businesses to plan-it is difficult to decide how much to produce, because businesses can't predict the demand for their product at the higher prices they will have to charge in order to cover their costs Bank Regulation & Supervision The Fed is one of the several Government agencies that share responsibility for ensuring the safety and soundness of our banking system. The Fed has primary responsibility for supervising bank holding companies, financial holding companies, state-chartered banks that are members of the Federal Reserve System, and the Edge Act and agreement corporations, through which U.S. banking organizations operate abroad. The Fed and other agencies share the responsibility of overseeing the operation of foreign banking organizations in the United States. To insure that the banking system remains competitive and operates in the public interest, the Fed considers applications by banks for mergers or to open new branches. The passage of the Gramm-Leach-Bliley (GLB) Act in November 1999, was the culmination of a multi-decade effort to eliminate many of the restrictions on the activities of banking organizations. Some of the main provisions of the GLB are: · Repeals the existing limitations on the ability of banks to affiliate with securities and insurance firms · Creates a new organizational form that allows banking organizations to carry new powers. This new entity called a "financial holding company," (FHC) and its non-banking subsidiaries are allowed to engage in financial activities such as insurance and securities underwriting The Fed's enlarged role as an umbrella supervisor of FHCs is similar to its role in supervising bank holding companies. The Federal Reserve Banks will supervise and regulate the FHCs while each affiliate is still overseen by its traditional functional regulator. The Fed has to delineate the financial relationship between a bank and other FHC affiliates. Its primary goal is to establish barriers protecting depository institutions from the problems of a failing affiliate. To do this efficiently the Fed has to ensure increased communication, cooperation, and coordination with the many supervisors of the more diversified FHCs. The Fed has access to data on risks across the entire organization, as well as information on the firm's management of those risks. Regulators will be in a position to evaluate and presumably act on risks that threaten the safety and soundness of the insured banks. It would appear that the Fed has failed to curb housing inflation which played a role in this entire debacle then made matters worse and in their efforts or lack there of, to properly supervise banking institutions. Finally the government, a.k.a. Uncle Sam, the big Kahuna 10,000 pound elephant etc. Where do we begin? How about with: 'Where were they?' It now appears that after millions of horses are out of the barn (some horses ran, others were foreclosed upon) the government wants to step in with a bailout to save the rest. While nobody wants to see people lose their homes, the question that must be raised is this: What about all those of us who were responsible? Those of us, who scrimped and saved up a decent down payment, bought less-house than we could afford and who live below our means? Many of us drive older cars and keep them longer. We don't run out and buy the latest and greatest at inflated prices, we watch, wait and budget. When the World Trade Center was attacked, families who decided not to sue received government payouts and we certainly don't begrudge them as I'm sure that given the choice, they'd prefer to still have their loved-ones over the money. The problem, in typical government fashion is that those who were responsible and had insurance policies in place received less than those who were irresponsible and didn't plan ahead. I'm not talking about dishwashers at Windows on the World and blue collar workers; I'm talking about executives, traders and people who should have known better. Now our government, the same government that sat by idly watching as this bubble got bigger and bigger despite many warnings, wants to step in and bailout people who are in danger of losing their homes. There has been no talk about educating people, let's not teach people to fish, rather, let's give them a fish and bail them out once again at the expense of those who are responsible. Clearly, by keeping the majority of the population financially ignorant, there is a lot of money to be made by the poverty industry.
About The Author
Richard Gandon is the Managing Director of The Financial Learning Network, dedicated low-cost online to financial literacy seminars. His 'Understanding the Stock Market" course was made into a CD-ROM and is in use in more that 50,000 classrooms nationwide. Every year since 1998, Richard has teamed up with a fifth grade class in Georgia to teach them about the stock market online. Richard has more than 20 years of financial services industry experience including as a broker, trader, licensing trainer and managed both a sales group and Central Inquiry, a Historical Equity & Index Research group at Standard & Poor's. http://financiallearningnetwork.com/

Nice Bounce!

2008-05-19T02:53:00.000-07:00

With oil trading above $125 a barrel, the stock markets have given us a nice bounce from the Winter '08 lows. Volume remains light and profit taking is becoming temping as the summer heat sets in.
Last week the markets toyed with the 200 day moving averages, watch for better trading volume if you wish to remain bullish. On Tuesday the Senate voted to stop buying oil for the strategic oil reserve until the price falls below $75 a barrel. The other good news came on Monday when RIM introduced the 'Bold', which is expected to compete in the iPhone market as well as now offering 3G, a first for the Blackberry.

Stock Markets - Skidding Along the Bottom..

2008-01-14T05:15:00.000-08:00

Uncertainty, the markets' kryptonite, has left institutions and traders with little choice but to run for safety. Three events seem to be driving the fear. Trouble in Pakistan, Nigeria as well as rhetoric re: Iran, an upcoming election here in the U.S., and finally the Fed regarding interest rates and a reduction, if and when.
Unless the data begins to prove otherwise, most of this is just dark clouds over the market with a little help from the media. The only real damage, so far, is in housing and financials involved in subprime loans. "So Far.." is the issue here. Whenever there are dark clouds in the sky, it is unlikely that a weatherman would suggest that it will likely not rain. However, as you know, sometimes it doesn't.
Holding tight to equities and reducing margin debt seems prudent, as always. Why sell at the bottom only to kick yourself later on. The best values are currently apprearing in the areas of small cap value and large cap growth stocks. Cross your fingers and wait for the bell to ring!

Markets Finally Hit a Bottom

2007-12-18T10:20:00.000-08:00

After the EU injected 500Billion into the markets the markets appear to have settled on a bottom. Short sellers are attempting to break the market, but buyers are stepping in. Volume is thin.

The Fed is holding a meeting today to discuss mortgage regulations as a way to avoid more of this current debt crisis or similar from occuring in the future.

Goldman Sachs beat earnings but warned the November was it's worst month in their history as a firm.

Another Way to Play Precious Metals: Gold and Silver Coins

2007-12-18T06:52:00.000-08:00

Do You Need A New Hobby? Start Collecting Rare Coins. by: Perry Corman
Rare coins are one of the remaining investments which can be accumulated with privacy and transported easily. Coins are classic appreciating assets with a history of long-term price increases. Old and rare coins are worth far more than face value (the value on their surface) - and more than just their metal composition - as collectibles. Rare coins are a hobby, as are they a good investment. Rare coins are the most liquid of all collecting hobbies. Silver and gold coins are fast becoming a new American icon because they give investors economic stability, profit potential AND privacy. You may shop 24/7 for rare coins, gold coins, silver coins, 2007 bullion gold coins, gold coins and more at http://www.coinsale.org/ among other places. If at any time our paper money is threatened, rare coins can protect wealth much like an investment in gold bullion. You can buy with confidence from several coin dealers. The heaviest coin to be minted is the 1000Mohur, a gold coin weighed almost 12 kilograms. Buying rare coins for own profit has been a good choice for investors for many years. Buying rare gold coins can be done from coin dealers, special auctions such as http://www.coinsale.org/ (http://www.coinsale.org/). By the year 2015, experts believe that there will be some 140,000,000 coin collectors/investors, an increase of over 3 times that of today's buyers. Some collectors have made a lot of money buying and selling rare coins, others have lost fortunes. For instance, there are no reporting requirements for the buying or selling coins, so your own privacy can be easily protected. Rare coins stand out as a great investment compared to other collectible items, especially for someone looking to diversify their investment portfolios into the world of collectibles for the first time. As for other collectible items, nothing performs as well as rare coins when it comes to pure investing: coins are virtually indestructible, they are easy to store, easy to insure, and rare coins are portable commodities that can be easily converted into liquid assets. Unlike paintings, sports memorabilia, or other forms of collectible items, the old coin market is characterized by well-established standards for deciding the quality of any given coin and a stock market like infrastructure for ensuring the liquidity of the investment. Rare coins are totally immune from bankruptcy and virtually immune from dilution. Coins are not only good investments, they can be fun too. Rare Coins are trading at half of their market highs of the late eighties. Rare coins are very interesting because their rarity makes them both precious and fascinating. Thousands of rare coins are regularly bought and sold sight-unseen on an electronic numismatic exchange and auctions, like http://www.coinsale.org/.
About The Author
Perry Corman is a curious soul, researcher and author. He has a wide range of interests, ranging from politics to astronomy. If you have an interest in rare coins, take a look at http://www.coinsale.org/ (http://www.coinsale/.

Also See Our Virtual Directory for Collecting

Markets for Dec 10

2007-12-10T06:42:00.000-08:00

Last week the November jobs number was UP 94,000, unemployment was steady at 4.7% and Merrill-Lynch downgraded Capital One and American Express. This morning, UBS announced a $10B subprime writedown which shook early futures trading.
It appears that the markets expect at least a 50bp cut tommorrow, and if it is less, look out below! With housing in steady decline, banks and financials and even retail in steady decline, the Fed would have to have a heart two sizes too small to cut only 25bp.

Volatile Markets Cause Concern

2007-11-19T01:16:00.000-08:00

Wall Street has been on quite a roller coaster ride since falling from July highs on concerns relating to the financial industry. In particular, mortgages and the instruments used to support the risks involved in lending. Mortgage lenders have already written off around one hundred billion dollars and the estimated total damage is around 2 trillion. If energy falls over the next few weeks, then the markets could slide by for the winter. Also, the Fed meeting on Decembre 11th could bring good cheer in the form of a rate cut.

Dear Santa,

I have been good all year. I would like a 50 basis point cut this year but would not

cry if 25 basis points arrived under my tree. Also, you might want to cut any margin debt in case of a possible downturn! As usual, I will leave a 6 1/2 oz Coke and a Snicker bar for your enjoyment.

Currency Markets Sell Dollar

2007-11-07T05:42:00.000-08:00

China and The Dollar
This morning a report regarding the dollar reversed markets like a kick in the groin. An old Chinese communist hardliner stated in a report that investing in weak currencies would be avoided in the future. There is still debate over would-a, could-a, or should-a, but the futuresare suggesting that would-a is in the current analogy, i.e., the weak dollar would possibly be avoided or even sold(AAAGH!). Currency markets are still reeling..

Fed says Bah Humbug

2007-11-05T00:49:00.000-08:00

The Fed only gave us 25BP for Christmas this year? Well, H-E double-toothpicks dammit, I guess that will have to do for now. The dollar is at an historic low and the mortgage crisis still contains a lot of mystery meat in the form of writedowns. While claiming that no more rate reductions are necessary, the Fed still has room to move if the wall street natives get out of control. The good news is that unemployment remains a healthy 4.7% and worldwide growth appears strong, for now. This week should be interesting as the markets around the world adjust with the usual orderly chaos. I'm ready to go, ring that bell!

Feel free to sing along: "All I want for Christmas is two rate cuts.."

Types of Retirement Funds

2007-11-03T04:12:00.000-07:00

Different Types of Retirement Accounts by: Sarah Russell
Recently, we touched on the importance of investing early in your career. However, as you learn more about investing, you’ll notice that there are several different types of retirement accounts – from 401K accounts to Keogh accounts, and from Roth IRAs to standard IRAs. Each type of account has different rules, regulations and tax implications. It’s important to learn more about each one to choose the best one for you. 401K Retirement Account A 401K plan (named after a section of the 1978 U.S. Tax Code) is a plan offered by employers that allows you to automatically deduct a portion of your income before taxes are taken out and deposit it into a retirement account. You’ll still have to pay taxes on the money when you withdraw it after retirement, but, in theory, you should be in a lower tax bracket after retirement, so you’ll save money on the taxes. If your company offers a 401K plan (not all employers do), they may also offer a matching benefit for your contributions. This is the free money we talked about in the previous article and you should definitely take advantage of it if it’s offered. But be sure your 401K plan allows you to control how your money is invested. Some employers invest their 401K plan money heavily in their own company stock, which can be a problem if your company hits an unexpected financial crisis. Keogh Retirement Accounts Similar to a 401K, a Keogh retirement account is a tax-deferred retirement plan for self employed people. Some advantages to Keogh plans are that contributions are deducted from your gross income and your contribution limits may be higher than with other retirement accounts. As with the 401K account, you can defer the tax from your contributions until the money is withdrawn after retirement. Another option for self employed people is a SEP IRA which has less complex filing administrative paperwork and allows even higher contributions. If you’re running your own business, you’re probably already in contact with a tax attorney who can help you figure out the best way to invest for your retirement. Individual Retirement Arrangement (IRA) By definition, an IRA is "a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes." You may be eligible to set up an IRA through your employer or through a private financial institution. Like the 401K plan, IRAs operate on the principal that your tax bracket will be lower after retirement, saving you money on taxes in the long run. And you are in it for the long run, since most IRAs have penalties for withdrawing money before you’re 59 ½ years old. When you contribute to an IRA, you’ll be eligible to deduct all or part of your contribution on your taxes, but you are bound by contribution limits. In 2006, the maximum amount you can contribute to a standard IRAs was $4,000. If you’re interested in setting up an IRA account, read the IRS’s Publication 590 “Individual Retirement Arrangements” for all the nitty-gritty details. Roth IRAs Roth IRAs are a relatively new creation with a few distinct benefits over standard IRAs. Although you can’t defer taxes on the money originally invested in a Roth IRA, all the income earned by the investments in a Roth account is tax free when it is withdrawn. Another benefit is that you are not required to take distributions beginning at age 70 1/2 as with other accounts, so if you don't need the money to live on, it can continue growing and earning for you tax free. Also, a Roth IRA makes it easier to take early withdrawals without penalties in some cases, compared to other retirement accounts. This article is intended to provide a very brief overview of some of the different types of retirement accounts available. As you prepare to begin investing, you’ll obviously want to dig deeper and find out more about the types of accounts that interest you. The IRS website and a financial planner can be terrific assets in planning your investment strategy and helping you navigate the sometimes tricky set-up processes involved in retirement investing.
About The Author
This article was published by Sarah Russell on Smart Young Money – a collection of money management resources for teens and young adults. For great information on using credit, managing debt and more for young people, visit http://www.smartyoungmoney.com/.

Company Stock Buybacks

2007-11-03T04:09:00.001-07:00

It's A Bullish Signal When A Company Buys Back It’s Own Shares! by: Ricky Schmidt
Dear Fellow Investor. Shareholders and investors of two blue-chip companies were treated to good news on Monday July 9, 2007, that carries potentially bullish long-term consequences. First, Johnson & Johnson announced the repurchase of up to $10 billion of its common stock.Then ConocoPhillips announced the repurchase of a $15 billion share buyback programme, representing an increase of $13 billion above the $2 billion that remained in a previous buyback program. But why is a buyback programme a positive sign for investors? Why would a repurchase carry such bullish potential? One explanation is in terms of simple supply and demand: Repurchases reduce the supply of a company's outstanding stock, which should increase the price of those shares that remain. Another explanation is that companies that repurchase their shares are so confident about their future prospects that they are willing to commit corporate resources to buying them. This is worth paying attention to, since a company's executives and Board of Directors have access to insider information that the rest of us do not. Like such, repurchase programs are analogous to corporate insiders purchasing their companies' shares for their own accounts. Both signal confidence in the company's future prospects which again is a bullish signal. In a nutshell: When a company reduces the amount of shares outstanding by declaring a stock buy back program, each of the shares becomes more valuable and represents a greater percentage of equity in the company. So when putting together your portfolio, you could seek out strong and solid companies that engage in these sorts of pro-shareholder practices and hold on to them as long as the fundamentals remain sound. One of the best examples is the Washington Post, which at one time was only $5 to $10 a share. It has traded as high as $650 already. That what I call long-term value! But be aware! Even though buy backs can be huge sources of long-term profit for investors, they are actually harmful if a company pays more for its stock than it is worth. In an overpriced market, it would be foolish for management to purchase equity at all, even in itself. Instead, the company should put the money into assets that can be easily converted back into cash. This way, when the market swung the other way and is trading below its true value, shares of the company can be bought back up at a discount, ensuring current shareholders receive maximum benefit. Remember, even the best investment in the world isn't a good investment if you pay too much for it. Yours in Successful Trading Ricky Schmidt
About The Author
Ricky Schmidt's website http://www.stockbreakthroughs.com/ was created out of frustration in trying to decode books, magazines and newsletters on the subject, which are supposed to be for beginners but are not because they’re too difficult to understand. Too many “Big Words” and too much intelligent sounding grammar is used which is not very useful.

Forex Terms

2007-11-03T04:07:00.000-07:00

Currency Exchange Terms Every Forex Trader Should KnowF by: Andrew Daigle
Before jumping into the forex market, you need to arm yourself with some terminology that will be used in any course or software on this subject. The following set of terms were put together with the idea of providing the novice forex trader with the fundamental concepts of the forex trading business. While they sound technical, most are easy to understand and apply. Let us begin with the instruments that are traded in the forex markets. Currencies are traded in pairs so the instrument will always be in this double denomination. The reason for this is simple; the basis of forex currency trading is to exchange one currency for another. So if the pair is the Euro and the US Dollar, and the forex trader is taking a long position or buying the Euro in hopes that it will appreciate, effectively the trader is also selling US Dollars to buy the Euros. The most widely traded pairs are the Great Britain Pound and the US Dollar (indicated as GBP/USD), the Euro and the US Dollar (the EUR/USD pair), the Aussie Dollar and the US Dollar (AUD/USD pair), the USD and the Japanese Yen (USD/JPY pair), and the Canadian Dollar and the USD (USD/CAD pair). These pairs account for well over 80% of the total volume of the trading in the forex market. The advantage to trading in these currency pairs is that they are highly liquid and allow the investor to convert their portfolio to cash very quickly to realize a profit. In every pair, the first currency is called the base currency, over which the second one is countered to imply the price of the pair, or commonly referred to as the "cross currency". The second is therefore called the quote currency and the pair price is recorded in terms of the units of the quote currency required to buy one unit of the base currency. Thus, assuming the price of the GBP/USD pair is 1.5, this implies that 1.5 USD will buy 1 GBP. Every pair is quoted in terms of a bid ask spread. The bid price is the rate at which your forex broker bids to buy the currency at, while the ask price is the rate the forex broker is asking to sell the currency to the forex trader. The bid price will always be less than the ask price and the forex trader will buy at the ask price and sell at the bid price. The bid ask price will be quoted as: GBP/USD 1.532/5, meaning the bid price is 1.532 and the ask price is 1.535. A pip price interest point), as it is commonly called, is the smallest incremental change a currency pair will experience, for instance, a change in the GBP/USD price from 1.532 to 1.542 is a change of 10 pips. A trading margin is a deposit which is a minimum amount or a small percentage of your traded amount that you have to put up. The remaining amount is supplied by your broker. This amount can vary from 1% to 0.25%, also referred to as 100:1 and 400:1. Most often, forex brokers will offer 100:1 or 200:1 to most clients. This is risky but enables the trader to leverage a large amount that he or she would not otherwise have access to. Finally, a margin call can happen when the forex trader allows the balance in the trading account to go below the margin deposit percentage agreed upon with the forex broker. The broker will automatically sell your long positions or buy your short positions and clear the entire trading account, returning the margin amount to the trader to protect the trader from losing more money than they have.
About The Author
Andrew Daigle is the owner, creator and author of many successful websites including a free forex training website called ForexBoost at http://www.forexboost.com/ and CashCurve at http://www.cashcurve.com/ to learn about other online business opportunities.

Credit Card History

2007-11-03T04:05:00.001-07:00

The History of Credit Cards by: Shahid Khan
Credit Cards Replacing Paper Money A credit card is a small piece of rectangular plastic that is no thicker than a sheet of paper, though it cannot be folded. Initially credit cards were metal tokens in the shape of coins, then they changed to metal plates to celluloid then fiber and now plastic with perhaps a photo of the holder and a magnetic strip on the reverse containing security information such as a personal identification number enabling the card to be used at money dispensing machines (ATM’s) and merchant establishments. What is meant by ‘Credit’? Credit is the system of buying some produce or service without having to pay for it at the time of the transaction. The payment is made at a pre-determined later date with the addition of a fee to the bill amount. This is like loaning someone money to buy something without actually giving them the cash but instead giving them the product they want to buy. So, the system of credit is not new to humanity in fact, it is as old as civilization itself or perhaps even older. The entrepreneurs of the inhuman kind have been proclaimed responsible for identifying human needs and wants as a rollicking business, and so they invented the credit card system. Though, disputed by many, The Diners Club is credited to be the ones to invent the credit card in 1950. When Were Credit Cards Invented? In contradiction to the theory that ‘The Diners Club’ started the credit card system, the Encyclopedia Britannica records the origin of credit cards www.onlinecreditcardsinfo.com in the United States as far back as the 1920’s. During this time firms such as oil companies and hotel chains started issuing credit cards to their regular and valued customers who were free to use their services and pay them at a later date. These cards were only useful for purchasing goods and services from the companies and establishments that issued the card. However, references to credit cards have been found as early as 1890 in Europe. It was only in the late 1930’s that companies started accepting each other’s credit cards and this is when things began to get complicated for accountants. Computers Promoted The Use Of Credit Cards In the beginning there were no computers to record the credit card transactions and the process of verifying the credit balance of the card was done manually through a regularly updated credit card directory, much like a telephone directory. This system was time consuming and tedious and provided many loop holes for credit card fraud. Today, with computerization, the use of a credit card is instantaneous. All one needs to do is to ‘swipe’ the card through a slot machine and the amount entered. If there is adequate balance in the account of the holder the transaction is completed and the customer billed a month later. Usually credit cards allow for a 50 day credit free period. If the outstanding bill is paid during this time the customer does not have to pay any interest on the transactions, else there is a whopping 2.9% charge per month on the bill amount. Who Issues Credit Cards? Banks and financial institutions are the main issuers and promoters of credit cards. The invention of the first bank-issued credit card is credited to John Biggins of the Flatbush National Bank of Brooklyn in New York. This was the year 1946 and Biggins did not know at the time that he had hit upon an idea that would take the world of credit by storm in times to come. From this first credit card called “Charge-It” many cards have flooded the market such as the all famous “American Express” credit card and the Diners credit card. The Bank of America issued the BankAmericard in 1958. This card is now known as the “VISA” card. Around the same time the popular MasterCard came into being. These are the two prevailing cards being used today. The era of plastic money had begun.
About The Author
Shahid Khan, I am a web promotion Expert for Shade Sails visit our website http://www.shadeit.net/ and for Business Credit Card visit our website http://www.CreditCardsMadeSimple.info/

Commodities and Trading

2007-11-03T04:02:00.000-07:00

Commodity Boom by: Kevin Tatem
"I tell you pal, we are going into a new age"... G Gekko circa 1987 There is no doubt in our minds that the world is in the midst of a resources boom that will last for decades to come. This boom has taken the world economy and in particular the resources sector by surprise, with commodity producers battling to keep up with soaring demand for raw materials. We believe there are some simple but fundamentally sound reasons for the sustainability of the current resources bull market. Quite simply, they relate to the laws of supply and demand. When we cast our eyes across the broad resources market, we see a scarily familiar pattern emerging for nearly all commodities. This involves market conditions of strongly rising demand, combined simultaneously with relatively few new commodity supply sources on the horizon. We emphasise that this applies across the board, but an examination of several key commodities provide excellent case studies. In our view, the best examples are gold and oil. To begin with, let us turn our attention to gold. We believe it is fair to say that resource company management has become a lot more conservative over the last few decades. There are far less risk-takers now, a mindset likely molded by many years of poorly performing commodity prices. Certainly in the gold sector, the key theme became the acquisition of ounces and production, rather than exploration. It was cheaper to buy ounces in the ground than to go out and find them, particularly when gold was trading at just US$270 per ounce in 2001. Consequently, the gold industry throughout the 1980s & 1990s became reliant on mergers & acquisitions for growth. This was a low-risk strategy in the short-term and popular with shareholders and management alike. However, this strategy had unfortunate longer-term consequences and the chickens are now well and truly coming home to roost. Firstly, the slashing of exploration budgets in favour of acquisitions led to a dramatic drop-off in the rate of new discoveries. Hence, the production line of new mines has been disrupted. And when China came along and led the surge in commodity demand that we see today, the problems were exacerbated. The result is that gold production from the traditional 'big three' producers - the USA, South Africa and Australia - is in decline. Essentially, the gold industry is a mature industry in crisis. Quite simply, there are few major world-class mines on the drawing board for the next decade. So the resource sector is paying the penalty for decades of underinvestment in exploration spending: what we like to refer to as resource sector 'R & D.' An examination of the oil sector decade paints a similar picture. Essentially, it was easier and cheaper to acquire barrels than to explore for them. Again, this seemed like a sensible strategy at the time, particularly when crude prices plunged to US$10 a barrel in 1997 in the wake of the Asian economic crisis. But the consequences for the oil industry are significantly worse than those presented by the gold sector as oil is the lifeblood of the world economy. Once again, the chickens are now coming home to roost. The world's major fields are maturing rapidly and there is an increasing reliance on smaller fields to plug the gap. A decade of under-investment in the exploration for new fields has meant that oil prices have surged more than six-fold during that time. And because it takes years to find, develop and successfully produce from a world-class oilfield, there are no easy fixes. Sensible investors are aware of this, which is why oil prices are heading towards US$100 a barrel within the next few years. When one also throws in other factors such as the question marks over Middle East reserves, the fact that OPEC's share of world oil production is set to increase and that production from big fields is declining by 16 on last year. Looking at the broad sector once again, the simple laws of supply and demand that usually apply in resource markets do not seem relevant at the moment. The laws typically dictate that when prices rise due to strong demand, new sources of supply are attracted to the market, and hence prices will ease. Scarily, the scenario that is playing out before us will ultimately see record commodity prices pretty much across the board, but with stagnant or declining production in many instances. There is a scarcity of new projects in the wings, but even some of those projects ready for development are being shelved due to high development costs. So even in an environment of record prices it is difficult to bring new projects onto the market. What hope is there if prices soften? And is the Chinese juggernaut likely to stop any time soon? The answer is no. The world is experiencing a once-in-a-century boom via China. The country is undergoing unparalleled industrialisation, with an enormous rural migration to cities. In turn, this is providing the low-cost labour that is driving China's industrial development. China has experienced ten-fold growth since the 1970s and over the past decade has averaged 9 over the past four years, the fastest pace since it gained independence and second only to China. It is forecast to average growth of 8 to 13 to 22, energy stocks are up 118, and key commodities copper and oil are up five-fold and three-fold respectively. So far this year there have been some key commodities that have outperformed and are very much in favour with investors and speculators alike. These include uranium, nickel, copper, platinum, iron ore and silver. By comparison, commodities like gold, oil, coal and zinc have relatively underperformed. With our unrelenting focus on finding value, particularly amongst those commodities that are somewhat out of favour with mainstream investors, we believe there are some bargains to be found. As a result, we believe commodities such as gold, oil, coal and zinc will play catch up and we favour investment in companies exposed to these commodities. We firmly believe in not following the herd! IMPORTANT: This message, together with the Fat Prophets website (www.fatprophets.com.au) and all its contents have been prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the Fat Prophets website. Performance is hypothetical and based on recommendations made in the Fat Prophets report. The table is updated monthly. Transaction costs have not been taken into account. Past performance is not a reliable guide to future performance, and investors should be aware that returns can be negative. For a full explanation of the performance calculation methodology, please www.fatprophets.com.au
About The Author
Kevin Tatem Fat Prophets are leading independant stock market advisors whose independance in fincancial markets is derived from the fact that we do not execute share transactions or provide investment banking services. http://www.fatprophets.com.au/

About Forex Trading

2007-11-03T03:59:00.000-07:00

Forex: The Keep It Simple Stupid Guide by: Jim Wilson
A wonderful way to diversify your investment portfolio is to learn forex trading. Many new investors have discovered the world of foreign exchange trading to be an exciting new challenge. One that is filled with rewards that are beyond what they were achieving as stock traders. Currency forex trading is a great way to branch out into new investments. Experience a completely new world of investing by stepping outside of the chaotic domestic economy. The unique thing about the forex market is that it never closes, if you feel like trading at 2am it's not a problem. Unlike with other markets, such as the stock exchange, you can continue dealing with the currency trading market without worries over it closing at the end of the day. Websites give you 24-hour access to monitor what has been happening in the world currency markets at anytime. Through these sites you are able to learn all the basics about the market. The websites will include tools and tips to guide you through the beginning steps of trading. This is a clear advantage because you can hone your trading skills before laying down your own money in the market. When you think of it, the forex firms are training you to become skilled at trading for free by providing guidance, demos and news at no additonal cost. In a short while you will start feeling confident in trading and investing in forex. It only takes about $300 to start getting some good returns. Learning forex does not require that you have a degree in economics or that you study the markets for years. The forex trading websites have made it easier for you to become successful. Forex brokers will give you access to the market for your currency trading. Just like stock brokers, they can provide you accurate information and advice on how to deal with Forex trading strategies. Advice includes all the aspects of the Forex trading market which extends to research approaches and technical analysis to improve the member�s trading performance. Naturally, because this market has apparently been providing a great return on investment, large financial institutions have been proactively monopolizing the market. However, with the trading firms, small-time individuals also have the opportunity to earn money through Forex trading brokers. As I mentioned earlier, the online firms have been providing powerful website tools to become familiar with the whole idea of the currency market. Your choice of Forex trading broker will largely depend on your need in the trading market. Many brokerage sites will provide trading simulators and expert advice as well as research and analysis designed for first time traders. Furthermore, these websites typically provide experienced online Forex traders who offer in-depth advice to forex traders of all levels. All of these tools are available to beginners to try out. You really can earn money by taking the time to learn forex trading. The availability of investment simulators and 24-hour customer support enables new investors to learn quickly. Not only can you be trading in no time, you will also be showing a tidy profit. Start researching forex trading. You might be shocked to see how many large companies are involved.
About The Author
Jim Wilson gives you more free information at Alternative Investing Try The Forex Market. Search other helpful articles at- Alternative Investing Try The Forex Market Articles. Click here http://www.forexminitrading.com/

Fed Meeting and Interest Rates

2007-10-30T15:21:00.001-07:00

As this busy and volitile earning season begins winding down, the news this coming week is of course, Q3 GDP and the Fed meeting. The Fed will likely lower rates by 50 basis points this week as insurance against the still ongoing mortgage debt crisis. Technology, Materials and Energy seem to be the leading sectors as Q4 heads through November which will likely level off in December. Many fear recession as others fear inflation. A possible theory is that we are in reverse-stagflation. Housing is in a depression, yet, we are printing money as fast as ever. This is a delicate balance, a restrictive money policy would surely bring on a recession or worse, printing too much cash will devalue the dollar. So, basically, how low can the dollar go before it breaks down? Finally, until the housing bubble is finished fizzing out and bottoms, we can't slow the dollar decline without adding the considerable risk of instigating a depression.

If You Must Day Trade..

2007-09-26T03:50:00.000-07:00

Time of Day To Day Trade by: Larry Swing
Day traders are a special breed of animals from the investors and swing or position traders. To them, there is a routine throughout the day they notice and take advantage of them. Each segment of the trading hours has special meaning. When it comes trading, these traders know when they are at their best and when they will not make a dime. Floor traders are the best at knowing the routine of the market. The same human nature shows up in the everyday life. Humans love routine, even the people who are never do the same things twice or abhor normalcy and ordinary, they do have their own routine in another aspect of their life. So even in trading, the stocks and exchanges show their similarities day after day, even in a chaotic world in financial markets, there are subtleties that help these traders profit from the markets. Here are some of the known facts about markets in general: 1. Volume - Most of the participation are around the opening and the closing hours of the day's session, especially on days where there are economic or company news pending. The more important the economic news, the more the volume, such as Federal Reserve meetings. Volume and volatility increases exponentially. 2. Price - There are certain prices where traders will participate in large numbers such as new highs or new lows. These areas come to be support or resistance, driving more traders into the fray. When these prices are near, expect this action to become routine. 3. Time - Different times of the trading hours bring different types of volatility and traders. Opening and closings see many day traders entering and exiting the markets while half way in the session will see less day traders as lunch time brings quiet time. The day is usually divided into 60 minute increments (hence the popular use of the 60-minute charts by day and swing traders). These time slots mark an important routine of the day. For example, the first 60 minutes show high volume with many emotional buying and selling to due market imbalance caused by news before the market opening. The second 60-minutes usually see the volume decreasing. This time slot also determines the direction of the market for the dayÃ¢''either continuing the direction set by the first 60 minutes or reversing the direction. The last hour also give clues to the following day. But due to news interrupting overnight momentum, it's more difficult to use it as an indicator. 4. Day of the week - Depending on the day of the week where swing traders may initiate their positions at the beginning of the week and exit at the end of the week. For others, watching the beginning of the week to see the tone of the markets that may play out the rest of the week. In doing so, the day traders may observe and trade according the week. Mondays tends to be low in volume as the weekend slowly fades bringing traders back to their work. Wednesdays tend to find the tone for the rest of the week with a trending day. Fridays tend to reverse on the entire week's direction. Many swing and day traders will usually exit their positions, taking profits made from the week's gains. 5. Month - The beginning and end of the month provides more volatility than in between. Why? Accounting purposes, perhaps, where institutions maneuver their assets. There is tendency for volume to appear greater at the first few days of the month as well as the last few days of the month with more conviction in the direction. September and October lately have become the turning point of the markets, changing directions, especially from downtrend to uptrend. The crashes in recent history have taken place in these two months and tend to be the lows of the year. 6. Season - In general, the summer provides the least liquidity due to people in general going on vacation. During the rest of the year, there healthy volume sustains the trend. During the fall just up until Christmas will see a rise in volume and bullish trends. These are routines that should not be taken lightly. They do exist and finding them can be a long arduous process. Once found, the trader will have an edge in profiting from the inefficiency of the markets.
About The Author
Larry Swing is the President of the popular day and swing trading site http://www.mrswing.com a place where you can find free daily articles and videos covering education, market analysis and picks from Larry and other well known traders in the industry.

Markets remain up after fed hike

2007-09-24T05:37:00.000-07:00

Commoditites like gold and silver are spiking up on a weaker dollar. One U.S. dollar is now worth one Canadian dollar..I guess I can spend all that Canadian change that I have accumulated over the years.
Reports this week:
On Tuesday Sep 25, at 10:00 AM, Consumer Confidence for September. On Tuesday Sep 25, at 10:00 AM, Existing Home Sales for August.
..in other news, O.J. futures are down..especially if you're O.J. Simpson!
More Stock information available at Yahoo Finance.