It is extremely important to have investments. Without some money set aside for retirement, you will never be able to enjoy your golden years. Social Security will likely be depleted within the next 30 or 40 years, so you should not be depending upon the U.S. Government to take care of you when you retire. Besides, Social Security does not even pay enough to help senior citizens live comfortably. So, you need to invest your money wisely, perhaps aggressively, in order to grow your portfolio to a level that will adequately support you after you retire, and you need to start while you are still young.
You need to ask yourself the following question when deciding in what you are going to invest: What is your investment risk tolerance? Answering this question will enable you to develop your entire investment strategy. Are you going to put all of your money into variable securities, like stocks? Are you going to balance your portfolio with a mix of stocks and fixed-income securities (like certificates of deposit or other money market instruments, etc.)? Should you buy bonds? Should you invest in an annuity?
Answering these questions can be difficult and time-consuming, but necessary nonetheless. When evaluating your risk tolerance, you should first consider what type of person you are. If you like to take risks, then invest accordingly. If you hate to take chances, then play it safe. Also, you need to assess what your long-term goals are. Do you want to make a lot of money, or just enough to retire on? Do you have kids that you will one day want to send to college or provide other financial support to?
We will now set forth an appropriate investment strategy for each different risk tolerance, beginning with high-risk tolerance. If you are not afraid of losing money and do not have any kids or other responsibilities weighing you down, then you might consider putting together a very aggressive portfolio. In this case, you should have a portfolio that consists of mostly equities (stocks). The stocks you select should be companies that have the potential to grow tremendously. The higher the risk, the higher the potential reward. Though you should still keep some of your money invested in blue-chip companies with stable finances, you should put a great deal of your money in new companies, hedge funds, and perhaps junk bonds. You should consult with a financial advisor when looking for the right hedge funds or junk bonds in which to invest.
What if you have a medium risk tolerance? Well, for those of you that fall in the middle, the answer is simple. You should have a balanced portfolio. You need to have a mix of stocks, bonds, and fixed-income securities. You may want to set aside a very small amount of money for speculative investments such as the aforementioned hedge funds, penny stocks, or perhaps derivatives, but most of your money should be allocated towards a mix of stable small-cap, mid-cap, and large-cap stocks, government and corporate bonds, and fixed-income securities.
Finally, for those of you who are extremely risk averse, you need to compose a portfolio that consists of mostly high-yield government bonds and certain money market instruments that pay a decent interest rate. You should also invest in corporate bonds issued by companies with a high credit rating, and stocks of companies that consistently pay dividends (dividend income will help to offset any losses in the share price of the stock).
I hope this information will assist you in making your investment decisions. Formulate a plan to set aside a certain percentage of your income for investing on an annual basis and start while you are still young. The earlier you begin, the more money you can potentially make down the road. Using your risk tolerance, select a portfolio that meets your needs, and you should do fine
by Jim Pretin
Friday, December 15, 2006
Understand Fundamental Analysis to Succesfully Trade the Forex Market
Fundamental analysis is considered to be the opposite of technical analysis, and both are used in the Forex market. Fundamental analysis considers the intrinsic value of an investment when making a decision as to its future activity. There are some who feel that this is an excellent method of making decisions in the Stock market as a lot of data can be gathered and studied concerning the value of a Company. But, they ask, how can a Nation have an intrinsic value?
The answer is fairly simple. The economy of a country goes through a basic business cycle, and there are a lot of indicators available to the investor to measure where a particular economy is at any given time. The analysis would involve matching the stage of the cycle with its impact on the value of its currency. The normal economic cycle consists of periods of inflation and deflation with peaks and troughs in between. Certain indicators such as the GDP, CPI, and current prime interest rates can give a good idea of the stage of the economy at any given time.
Each of these indicators would tend to impact currency valuation in different ways, and sometimes would even vary from country to country. In the United States, rising interest rates are normally associated with currency deflation, for example, and it is factors such as this that are the heart of fundamental analysis. This analysis can become quite detailed, but the focus remains on the country and its economy. Every factor that impacts the country and its economy can play a role in the value of the currency, and understanding these factors are the tools the fundamental analyzers uses to guide their investment strategy.
by John Chen
The answer is fairly simple. The economy of a country goes through a basic business cycle, and there are a lot of indicators available to the investor to measure where a particular economy is at any given time. The analysis would involve matching the stage of the cycle with its impact on the value of its currency. The normal economic cycle consists of periods of inflation and deflation with peaks and troughs in between. Certain indicators such as the GDP, CPI, and current prime interest rates can give a good idea of the stage of the economy at any given time.
Each of these indicators would tend to impact currency valuation in different ways, and sometimes would even vary from country to country. In the United States, rising interest rates are normally associated with currency deflation, for example, and it is factors such as this that are the heart of fundamental analysis. This analysis can become quite detailed, but the focus remains on the country and its economy. Every factor that impacts the country and its economy can play a role in the value of the currency, and understanding these factors are the tools the fundamental analyzers uses to guide their investment strategy.
by John Chen
The 6 Best Times Of The Day To Trade A Stock
1. Post-opening buying: Let's say a stock rises 5 percent or more during the opening and there's no news about it. Typically, the stock will fall off after 30 minutes of trading. Why? Market makers may be trying to open the stock at an artificially high price to sell off excess inventory they've acquired the day before. However, if the stock doesn't fall after 30 minutes of trading, it's liable to continue rising for the rest of the day. Tactic: Buy at 1/16 above the day's high after the opening. Set a stop at 1/16 below the day's low.
2. Post-opening selling: The opposite of the above strategy. When a stock opens lower on no news, it could be that sell orders from nervous investors have piled up since the close of trading the day' before. Sometimes market makers open the stock artificially low, to draw in more panic sellers. This allows them to accumulate shares, because market makers as a rule buy on price declines and sell on price increases. After 30 minutes, the stock usually recovers in price and normal trading begins. The market makers profit by selling the inventory they've accumulated at the lower price. However, if the stock continues to drift lower after 30 minutes, chances are it'll decline more during the course of the day. Tactic: Sell short at 1/16 below the low of the day; set a stop at 1/16 above the day's high.
3. Playing the spread: This one's really simple. Buy at 1/16 above the bid. Sell at 1/16 below the ask. The strategy works best with non-volatile stocks where the spread is at least 3/8 of a point. When successful, you make a quarter point per trade, or $250 on 1,000 shares. You can also short the spread by selling short at 1/16 below the ask and covering at 1/16 above the bid. Problem is, it's not always possible to get in and out at these levels. Market makers may easily spot what you're doing and adjust prices so they blow you out. Often day traders try this tactic several times during the day before they succeed.
4. Grinding: Another relatively simple tactic. Follow the message threads at, for instance, Silicon Investor for a particular stock. When everyone is screaming that the stock is going to make a move, jump in with the mob. Be content with an 1/8 or 1/4 point. Then get out before the rush.
5. Fading the market: With this contrarian strategy, you buy into weakness and sell into strength. That is, you buy stocks with small percentage declines relative to the market. You're hoping they'll gain when the market reverses. Hold off buying until the stock trades above its opening. Reason: Previous buyers of the stock will sell to prevent loss, thus driving the price down in the short term.
6. Shop the final hour: Stocks often ease off their highs of the day during the last hour of trading. Why? Because day traders and market makers seek to exit their positions and lock in profits. A price downturn often occurs during the last hour of trading as many seek to exit their positions. This downward momentum can create some lucrative short-selling opportunities.
by Larry Potter
2. Post-opening selling: The opposite of the above strategy. When a stock opens lower on no news, it could be that sell orders from nervous investors have piled up since the close of trading the day' before. Sometimes market makers open the stock artificially low, to draw in more panic sellers. This allows them to accumulate shares, because market makers as a rule buy on price declines and sell on price increases. After 30 minutes, the stock usually recovers in price and normal trading begins. The market makers profit by selling the inventory they've accumulated at the lower price. However, if the stock continues to drift lower after 30 minutes, chances are it'll decline more during the course of the day. Tactic: Sell short at 1/16 below the low of the day; set a stop at 1/16 above the day's high.
3. Playing the spread: This one's really simple. Buy at 1/16 above the bid. Sell at 1/16 below the ask. The strategy works best with non-volatile stocks where the spread is at least 3/8 of a point. When successful, you make a quarter point per trade, or $250 on 1,000 shares. You can also short the spread by selling short at 1/16 below the ask and covering at 1/16 above the bid. Problem is, it's not always possible to get in and out at these levels. Market makers may easily spot what you're doing and adjust prices so they blow you out. Often day traders try this tactic several times during the day before they succeed.
4. Grinding: Another relatively simple tactic. Follow the message threads at, for instance, Silicon Investor for a particular stock. When everyone is screaming that the stock is going to make a move, jump in with the mob. Be content with an 1/8 or 1/4 point. Then get out before the rush.
5. Fading the market: With this contrarian strategy, you buy into weakness and sell into strength. That is, you buy stocks with small percentage declines relative to the market. You're hoping they'll gain when the market reverses. Hold off buying until the stock trades above its opening. Reason: Previous buyers of the stock will sell to prevent loss, thus driving the price down in the short term.
6. Shop the final hour: Stocks often ease off their highs of the day during the last hour of trading. Why? Because day traders and market makers seek to exit their positions and lock in profits. A price downturn often occurs during the last hour of trading as many seek to exit their positions. This downward momentum can create some lucrative short-selling opportunities.
by Larry Potter
Currency Trading The Foreign Exchange (Forex) Market
Trading, in general, is a great "business" opportunity. But why is currency trading the forex market the greatest of them all.
Did you know that the forex (foreign exchange) market is 30 times larger then all other US markets combined.
Did you know that trillions of dollars are traded on the forex. And, no, it's not all traded by huge banks making huge trades and huge currency exchanges.
Truth is a great deal of currency trading is done by speculators, which is how the majority of small investors are defined. You wait for a good opportunity to present itself and you jump into the forex market.
Forex trading, like all other trading, is about timing and money management. However, trading currency on the foreign exchange does come with some very unique characteristics.
No slippage on your stop orders, guaranteed fills regardless of the size of your orders, 24 hour trading 5 days a week. These are all amazing benefits not offered by any other market in the world.
This is why so many traders are drawn to the forex. The recognize that by using the same skills they are learning to trade equities, or futures, or bonds, they can be trading the forex and make an exponentially greater amount of money.
Now, it is not suggested that you drop everything that you are doing and go invest every dollar you have in a market that is new to you. You should, of course, educate yourself and make certain that all the proper steps are taken to ensure your success.
Only you can determine when you are ready to take the plunge into forex trading with real money. Until then, trade a demo account, eliminate all risk and build your skills.
You're probably thinking that demo accounts are worthless since they don't mimic live trading very accurately, but in the case of currency trading the forex, you would be wrong.
The demo accounts mimic live foreign exchange trading perfectly. There is no trade that you will get on a demo account that you wouldn't get on a live account. So there really is no reason to make any live trades until you can consistently make money trading a demo account.
This is a lesson that you will be thankful for 3 months from now. After going through your second or third $10,000 demo account, you will realize how valuable this advice really is.
So, take your time, get educated and join the world of successful currency traders. The foreign exchange (forex) market is waiting for you.
by Eddie Yakubovich
Did you know that the forex (foreign exchange) market is 30 times larger then all other US markets combined.
Did you know that trillions of dollars are traded on the forex. And, no, it's not all traded by huge banks making huge trades and huge currency exchanges.
Truth is a great deal of currency trading is done by speculators, which is how the majority of small investors are defined. You wait for a good opportunity to present itself and you jump into the forex market.
Forex trading, like all other trading, is about timing and money management. However, trading currency on the foreign exchange does come with some very unique characteristics.
No slippage on your stop orders, guaranteed fills regardless of the size of your orders, 24 hour trading 5 days a week. These are all amazing benefits not offered by any other market in the world.
This is why so many traders are drawn to the forex. The recognize that by using the same skills they are learning to trade equities, or futures, or bonds, they can be trading the forex and make an exponentially greater amount of money.
Now, it is not suggested that you drop everything that you are doing and go invest every dollar you have in a market that is new to you. You should, of course, educate yourself and make certain that all the proper steps are taken to ensure your success.
Only you can determine when you are ready to take the plunge into forex trading with real money. Until then, trade a demo account, eliminate all risk and build your skills.
You're probably thinking that demo accounts are worthless since they don't mimic live trading very accurately, but in the case of currency trading the forex, you would be wrong.
The demo accounts mimic live foreign exchange trading perfectly. There is no trade that you will get on a demo account that you wouldn't get on a live account. So there really is no reason to make any live trades until you can consistently make money trading a demo account.
This is a lesson that you will be thankful for 3 months from now. After going through your second or third $10,000 demo account, you will realize how valuable this advice really is.
So, take your time, get educated and join the world of successful currency traders. The foreign exchange (forex) market is waiting for you.
by Eddie Yakubovich
Investment Advice: Follow these Tips to become a Successful Trader
Many people trade in stock market with high level of knowledge to analyze the market movements. But they don't earn much return, why? Because, they can't control themselves; In other words, they don't know how to control their emotions.
If you learn these tips and use them truly, you'd be more successful than before.
#1- Set a Goal in your mind
I believe this rule is very important for doing each work, not only trading. When you set a clear goal in your mind, your subconscious starts automatically working to achieve that goal. But consider that your goal must be realistic and attainable. For example at first, try to earn $1000 each month then when achieve that, increase your goal.
#2- Losing Trades are Part of Trading
It is important to keep in your mind that losing trades are part of trading. You should learn to feel comfortable when take a loss. However, you should try to get out of losing trades on time; I mean that you have to exit of losing trades not very soon and not very late.
#3- Use Stop Orders
Using stop orders are a must. When you use them, you control and manage your losses. Many people don't use stop orders, they say:"when we use stop order the market will hit our stop order and then immediately the direction of market changes". This is not an acceptable reason, because the market may be going down and you lose a lot of money.
People who don't use stop orders, aren't sure about their prediction and don't want to accept that they may make mistake.
#4- Take the Profit
When you got a decent profit, take your profit. A good way is to lock your stop order in profit. This is called trailing stop orders. Also trailing stop orders is a good way to prevent losses, in this way when got some profits, trail your stop order to the same price where you got in the market.
#5- Be Patient
Many traders when lose money in a trade, tend to get the money back immediately in next trade, But this puts them in a bad situation and likely causes them make another wrong decision. After a losing trade, don't decide immediately to get back the money. Review your wrong trade and try to find your mistake.
#6- Make your own Rules
Write a list of rules that must to follow them. Loser people trade without any rules. So, write a list of your rules and stick to apply them. Review the rules always, and try to keep them in mind. In bad situations, take a look at the rules and consider whether the rules need to be improved or you forget to use one of them.
by Mostafa Soleimanzadeh
If you learn these tips and use them truly, you'd be more successful than before.
#1- Set a Goal in your mind
I believe this rule is very important for doing each work, not only trading. When you set a clear goal in your mind, your subconscious starts automatically working to achieve that goal. But consider that your goal must be realistic and attainable. For example at first, try to earn $1000 each month then when achieve that, increase your goal.
#2- Losing Trades are Part of Trading
It is important to keep in your mind that losing trades are part of trading. You should learn to feel comfortable when take a loss. However, you should try to get out of losing trades on time; I mean that you have to exit of losing trades not very soon and not very late.
#3- Use Stop Orders
Using stop orders are a must. When you use them, you control and manage your losses. Many people don't use stop orders, they say:"when we use stop order the market will hit our stop order and then immediately the direction of market changes". This is not an acceptable reason, because the market may be going down and you lose a lot of money.
People who don't use stop orders, aren't sure about their prediction and don't want to accept that they may make mistake.
#4- Take the Profit
When you got a decent profit, take your profit. A good way is to lock your stop order in profit. This is called trailing stop orders. Also trailing stop orders is a good way to prevent losses, in this way when got some profits, trail your stop order to the same price where you got in the market.
#5- Be Patient
Many traders when lose money in a trade, tend to get the money back immediately in next trade, But this puts them in a bad situation and likely causes them make another wrong decision. After a losing trade, don't decide immediately to get back the money. Review your wrong trade and try to find your mistake.
#6- Make your own Rules
Write a list of rules that must to follow them. Loser people trade without any rules. So, write a list of your rules and stick to apply them. Review the rules always, and try to keep them in mind. In bad situations, take a look at the rules and consider whether the rules need to be improved or you forget to use one of them.
by Mostafa Soleimanzadeh
8 Steps for Business Screening for Value Investing Approach
8 Steps for Business Screening for Value Investing Approach
1) Consistent historical sales & profits growth (minimum 10% yoy for profits, 5% year on year for sales) - Use the Share Investment Guide or Annual Reports for this screen.
2) Consistent high Return on Equity (> 15%, min 10%) - Use the Share Investment Guide or Annual Reports for this screen.
3) Net cash position or low debt ( less than a single year net operating cash flow) - Use the Annual reports. Check 1 year's operating cash flow vs total debt.
4) Business model is easy to understand. Read through the Annual reports and ensure that the business model can be understood from our perspective.
5) Management has integrity and is open, honest and fair towards minority shareholders. Ensure that observable actions are above board, and preferably get in contact with top management for a sense. Does not take any actions that only favour the top management(eg.Getting an excessive salary as compared to peers in the industry)
6) Management displays intelligent asset allocation behaviour. The profits and cash obtained are intelligently ploughed back into the business. Some examples would include avoiding expensive acquisitions to expand, a sound dividend policy that allows cash for shareholders and enough for expansion.
7) Industry Sector supports doubling of sales & profits every 5 years. Sector is able to allow the business to double sales & Profits every 5 years. Look out for rising industries that may replace the sector based on a different paradigm.
8) Business has a sustainable competitive advantage. Examples of Competitive advantage: The business should either be top 1 or 2 in its particular industrial niche. It could also have a great brand. It can also be consistently the most cost effective in its industry.
Valuations for businesses
1) PEG Ratio (<>0.8). This would mean one is acquiring a business that is very cash rich and that the valuation is supported by the cash in the company's vaults.
4) Consistent Net Dividend Yield (> 10%). This would mean that the business is very likely a cash generation machine.
by Ken Chee
1) Consistent historical sales & profits growth (minimum 10% yoy for profits, 5% year on year for sales) - Use the Share Investment Guide or Annual Reports for this screen.
2) Consistent high Return on Equity (> 15%, min 10%) - Use the Share Investment Guide or Annual Reports for this screen.
3) Net cash position or low debt ( less than a single year net operating cash flow) - Use the Annual reports. Check 1 year's operating cash flow vs total debt.
4) Business model is easy to understand. Read through the Annual reports and ensure that the business model can be understood from our perspective.
5) Management has integrity and is open, honest and fair towards minority shareholders. Ensure that observable actions are above board, and preferably get in contact with top management for a sense. Does not take any actions that only favour the top management(eg.Getting an excessive salary as compared to peers in the industry)
6) Management displays intelligent asset allocation behaviour. The profits and cash obtained are intelligently ploughed back into the business. Some examples would include avoiding expensive acquisitions to expand, a sound dividend policy that allows cash for shareholders and enough for expansion.
7) Industry Sector supports doubling of sales & profits every 5 years. Sector is able to allow the business to double sales & Profits every 5 years. Look out for rising industries that may replace the sector based on a different paradigm.
8) Business has a sustainable competitive advantage. Examples of Competitive advantage: The business should either be top 1 or 2 in its particular industrial niche. It could also have a great brand. It can also be consistently the most cost effective in its industry.
Valuations for businesses
1) PEG Ratio (<>0.8). This would mean one is acquiring a business that is very cash rich and that the valuation is supported by the cash in the company's vaults.
4) Consistent Net Dividend Yield (> 10%). This would mean that the business is very likely a cash generation machine.
by Ken Chee
Sunday, December 10, 2006
Explaining the Money Market
The Money Market is the financial market for short-term borrowing and lending, usually up to a time span of thirteen months. This contrasts with the capital market for longer-term funds that feature within the Market.
This is the place where banks lend to and borrow from each other, short-term financial instruments, for instance certificates of deposit or enter into agreements, repurchase agreements are taken place.
It provides short to medium term liquidity aspect element within the global financial system. Money Market derivatives include forward rate agreements and short-term interest rate futures.
The Market is a subsection of the fixed income market. We usually think of the term fixed income as being synonymous to bonds. In reality, a bond is just one sort of fixed income security.
The difference between the Money Market and the bond market is that the money market specializes in very short-term debt securities that is debts that mature in less than one year time span. Money investments can also be termed as the cash investments because of their short maturities.
Money Market securities are essentially IOUs issued by governments, financial institutions and large corporations. These instruments are very liquid and are considered unusually safe. As they are extremely conservative, Money Market securities offer significantly lower returns than most other securities.
Comparing the Money Market with the Stock market
The major difference between the Money Market and the stock market is that most Money Market securities trade in very high denominations. This, in turn restricts access for the individual investor.
Furthermore, the Money Market is also a dealer market, which means that firms buy and sell securities in their own accounts, at their own risk. Comparing this to the stock market where a broker receives commission to act as an agent, while the investor takes the risk of holding the stock.
Another characteristic of a dealer market is the lack of a central trading floor or exchange. Deals are transacted over the phone or through the use of electronic systems.
These accounts and funds pool together the assets of thousands of investors in order to buy the securities on their behalf. However, some Money Market instruments like the Treasury bills can be purchased directly and if you fail to acquire that, they can be acquired through other large financial institutions with direct access to these types of markets.
Understanding the Money Market better
There are tons of different instruments within the markets that are offering various returns at various risks, which is an aspect element within the sections that take a look at the major Money Market instruments.
Also a better-known place for large institutions and government to manage their short-term cash needs is the Money Market. However, individual investors have access to the market through a variety of different securities.
These types of markets specialize in debt securities that mostly mature in less than one year. These securities are very liquid, and are considered very safe and as a result, they often offer a lower return than other securities. The easiest way for consumers to gain access to the Money Market is through a mutual fund.
Some terms that are used in the this markets are the T-bills, which are short-term government securities that mature in one year or less from their issue date and are considered to be one of the leading safest investments - they do not provide a fantastic return.
Another term that is used in the Money Market is a certificate of deposit, which is a time deposit with a bank. Annual percentage yield takes into account compound interest, annual percentage rate does not.
Certificate Deposits are safe, but the returns aren't wonderful, and your money is tied up for the length of the deposit. Commercial paper is an unsecured, short-term loan issued by a corporation. In the Money Market returns are higher than T-bills because of the higher default risk.
The banker's acceptances are negotiable time draft for financing transactions in goods. They are new in international trade and are commonly only available to individuals through the funds.
The Eurodollars are U.S. dollar-denominated deposit at banks outside of the United States. The average Eurodollar deposit is very large and the only way for consumers to invest in this market is indirectly through a Money Market fund.
Hence, we can now understand that a Money Market can surely make a difference in the financial matters of a country.
by William Smith
This is the place where banks lend to and borrow from each other, short-term financial instruments, for instance certificates of deposit or enter into agreements, repurchase agreements are taken place.
It provides short to medium term liquidity aspect element within the global financial system. Money Market derivatives include forward rate agreements and short-term interest rate futures.
The Market is a subsection of the fixed income market. We usually think of the term fixed income as being synonymous to bonds. In reality, a bond is just one sort of fixed income security.
The difference between the Money Market and the bond market is that the money market specializes in very short-term debt securities that is debts that mature in less than one year time span. Money investments can also be termed as the cash investments because of their short maturities.
Money Market securities are essentially IOUs issued by governments, financial institutions and large corporations. These instruments are very liquid and are considered unusually safe. As they are extremely conservative, Money Market securities offer significantly lower returns than most other securities.
Comparing the Money Market with the Stock market
The major difference between the Money Market and the stock market is that most Money Market securities trade in very high denominations. This, in turn restricts access for the individual investor.
Furthermore, the Money Market is also a dealer market, which means that firms buy and sell securities in their own accounts, at their own risk. Comparing this to the stock market where a broker receives commission to act as an agent, while the investor takes the risk of holding the stock.
Another characteristic of a dealer market is the lack of a central trading floor or exchange. Deals are transacted over the phone or through the use of electronic systems.
These accounts and funds pool together the assets of thousands of investors in order to buy the securities on their behalf. However, some Money Market instruments like the Treasury bills can be purchased directly and if you fail to acquire that, they can be acquired through other large financial institutions with direct access to these types of markets.
Understanding the Money Market better
There are tons of different instruments within the markets that are offering various returns at various risks, which is an aspect element within the sections that take a look at the major Money Market instruments.
Also a better-known place for large institutions and government to manage their short-term cash needs is the Money Market. However, individual investors have access to the market through a variety of different securities.
These types of markets specialize in debt securities that mostly mature in less than one year. These securities are very liquid, and are considered very safe and as a result, they often offer a lower return than other securities. The easiest way for consumers to gain access to the Money Market is through a mutual fund.
Some terms that are used in the this markets are the T-bills, which are short-term government securities that mature in one year or less from their issue date and are considered to be one of the leading safest investments - they do not provide a fantastic return.
Another term that is used in the Money Market is a certificate of deposit, which is a time deposit with a bank. Annual percentage yield takes into account compound interest, annual percentage rate does not.
Certificate Deposits are safe, but the returns aren't wonderful, and your money is tied up for the length of the deposit. Commercial paper is an unsecured, short-term loan issued by a corporation. In the Money Market returns are higher than T-bills because of the higher default risk.
The banker's acceptances are negotiable time draft for financing transactions in goods. They are new in international trade and are commonly only available to individuals through the funds.
The Eurodollars are U.S. dollar-denominated deposit at banks outside of the United States. The average Eurodollar deposit is very large and the only way for consumers to invest in this market is indirectly through a Money Market fund.
Hence, we can now understand that a Money Market can surely make a difference in the financial matters of a country.
by William Smith
Explaining Penny Stocks
Penny Stocks are amongst the most uncertain and unpredictable investments you can easily make in today's financial markets. With appropriate decision management techniques, nevertheless, you can easily gain the benefits of the enormous percentage swings these explosive stocks have to offer, without putting your entire investment account at risk.
Of course, inexperienced Penny Stocks traders obtain burnt every single day investing in stocks, but where does all that cash go then? Well, the answer can be quite simple as in Smart money, Hedge Funds, market Making Firms, and believe it or not, even consumers just like you!
Penny Stocks mostly have market caps under $500M and are considered extremely speculative, particularly those that trade on low volumes over the counter. The Securities and Exchange Commission warns that, Penny Stocks may trade infrequently, which means that it may be difficult to sell Penny Stocks shares once you own them.
Because it may be difficult to find quotations for certain stocks, they may be impossible to accurately price. Investors in the field of Penny Stocks should be prepared for the possibility that they may lose their whole investment.
Many Wall Street firms simply do not feel that it is very necessary to dispel the myths floating around about stocks. Instead, they would rather exploit these misconceptions for their own benefit. For this reason, the information super highway that allows many individual investors to make their own knowledgeable and unprejudiced decisions remain strictly compromised when it comes to Penny Stocks.
Thousands of Penny Stocks see more active trading each day than 1000's of stocks listed in the local newspaper, but for some reason they never make it to the presses.
Mercifully, there is now an actively pursuing positive change for low priced equity traders by the diffusion of timely Micro Cap Stock market Analysis, Unbiased Coverage for individual stocks, and immediate access to the same information that has been available to Blue Chip market timers for years.
Well! In addition to offering the webs most sought after online information sheet for Real Micro Cap Stocks, Penny Stocks Daily also offers the free daily analysis of the Over the Counter Bulletin Board and Pink Sheets Markets, Penny Stocks under $1.00 listed on the glorious NASDAQ, AMEX and more.
By subsequent followings of these broad liquidity and price statistics on a day-to-day basis, one can gain a better feel of the overall markets, and therefore make better trading decisions.
Now, you have the new Dow Jones Industrial Average to detect market strength and weakness in Blue Chip Stocks, also you can easily know if you or someone you know are being a contraire or a trend follower in the under followed markets for stocks.
Well with studies you simply will not find out anything elsewhere. Also, be sure to review out the wide array of informative and tutorial articles on everything from Micro Cap Basics and Risk Management to strategies and ideas that you may not have thought of.
Eventually, for Penny Stocks be sure to review the extensive Frequently Asked Questions areas no matter where and it is most important to understand if you are in your investing decision-makings.
How to understand how liquid Penny Stocks are?
In the world of stocks, to know how many shares there may be beneficial is necessary and always keeping that in mind is critical. Here, do not screen for stocks that are potentially being sold short, but know that short sellers are certain buyers at some point or the other, and are a natural part of any monetary instrument.
Here to watch out for, are a huge percentage of the company shares being sold short, which would potentially raise the notion of unprotected short selling. This is when dishonest investors can sell shares on the splendid open market that cannot even exist aspect element within the Penny Stocks market.
This is noticeably not good for everyone those who are involved in stocks, and the SEC and congress are beginning to take steps towards combating this activity.
Nobody can guarantee the accuracy of the number of shares outstanding that are posted, and in many of the cases, companies can also issue shares in a way that is quite intangible, and there is an admittance that there will often be more issued, especially when the stock price goes up in dealing with Penny Stocks.
Never forget that the company is not selling these shares directly to the public, but is rather, issuing them to different corporations and persons for representing some sort of service or purchase, and they in turn can sell them to the open market dealing in Penny Stocks.
by William Smith
Of course, inexperienced Penny Stocks traders obtain burnt every single day investing in stocks, but where does all that cash go then? Well, the answer can be quite simple as in Smart money, Hedge Funds, market Making Firms, and believe it or not, even consumers just like you!
Penny Stocks mostly have market caps under $500M and are considered extremely speculative, particularly those that trade on low volumes over the counter. The Securities and Exchange Commission warns that, Penny Stocks may trade infrequently, which means that it may be difficult to sell Penny Stocks shares once you own them.
Because it may be difficult to find quotations for certain stocks, they may be impossible to accurately price. Investors in the field of Penny Stocks should be prepared for the possibility that they may lose their whole investment.
Many Wall Street firms simply do not feel that it is very necessary to dispel the myths floating around about stocks. Instead, they would rather exploit these misconceptions for their own benefit. For this reason, the information super highway that allows many individual investors to make their own knowledgeable and unprejudiced decisions remain strictly compromised when it comes to Penny Stocks.
Thousands of Penny Stocks see more active trading each day than 1000's of stocks listed in the local newspaper, but for some reason they never make it to the presses.
Mercifully, there is now an actively pursuing positive change for low priced equity traders by the diffusion of timely Micro Cap Stock market Analysis, Unbiased Coverage for individual stocks, and immediate access to the same information that has been available to Blue Chip market timers for years.
Well! In addition to offering the webs most sought after online information sheet for Real Micro Cap Stocks, Penny Stocks Daily also offers the free daily analysis of the Over the Counter Bulletin Board and Pink Sheets Markets, Penny Stocks under $1.00 listed on the glorious NASDAQ, AMEX and more.
By subsequent followings of these broad liquidity and price statistics on a day-to-day basis, one can gain a better feel of the overall markets, and therefore make better trading decisions.
Now, you have the new Dow Jones Industrial Average to detect market strength and weakness in Blue Chip Stocks, also you can easily know if you or someone you know are being a contraire or a trend follower in the under followed markets for stocks.
Well with studies you simply will not find out anything elsewhere. Also, be sure to review out the wide array of informative and tutorial articles on everything from Micro Cap Basics and Risk Management to strategies and ideas that you may not have thought of.
Eventually, for Penny Stocks be sure to review the extensive Frequently Asked Questions areas no matter where and it is most important to understand if you are in your investing decision-makings.
How to understand how liquid Penny Stocks are?
In the world of stocks, to know how many shares there may be beneficial is necessary and always keeping that in mind is critical. Here, do not screen for stocks that are potentially being sold short, but know that short sellers are certain buyers at some point or the other, and are a natural part of any monetary instrument.
Here to watch out for, are a huge percentage of the company shares being sold short, which would potentially raise the notion of unprotected short selling. This is when dishonest investors can sell shares on the splendid open market that cannot even exist aspect element within the Penny Stocks market.
This is noticeably not good for everyone those who are involved in stocks, and the SEC and congress are beginning to take steps towards combating this activity.
Nobody can guarantee the accuracy of the number of shares outstanding that are posted, and in many of the cases, companies can also issue shares in a way that is quite intangible, and there is an admittance that there will often be more issued, especially when the stock price goes up in dealing with Penny Stocks.
Never forget that the company is not selling these shares directly to the public, but is rather, issuing them to different corporations and persons for representing some sort of service or purchase, and they in turn can sell them to the open market dealing in Penny Stocks.
by William Smith
Wall Street: Where Money Grows
When working, I listen to Bloomberg Television. Commentators and guests banter about the stock market, the Federal Reserve, interest rates, corporate stock, and national news. The day changes, the news is similar, but never trumpery.
As interesting as daily stock market news is to me, I often wonder if market reports matter when most investors are too busy and distracted to pay attention. Investors stay-tuned for the closing market averages; if the market is up, all is right with the world. If the market is down, "I'm in it for the long haul." If the market cascades unexpectedly, investors second-guess investment decisions.
"Buy! says the Bull" "Sell!", says the Bear. Who is Right? Stock and bond trading is a tug-of-war between the Bears and the Bulls (similar to the Democrats and the Republicans): one group sees what's right, the other group sees what's wrong. Both are opportunists.
If too many become Bulls, the suspicious Bears salivate; when the Bear corrals the Bull, the Bulls know their time is near. Bear traders see the glass half-empty; bull traders see the glass half-full. Together, they make a "market" where stocks, bonds, mutual funds, options, commodities, and derivatives are traded. The Bull and the Bear each get it right, but seldom at the same time; that's how markets are made.
"Securities markets are a fast-moving, glamorous, complex, multi-billion-dollar business." The largest located in New York, London, and Tokyo and and the emerging markets located in Sao Paulo, Karachi, and Jakarta, and they all have a history.
In the 13th century, a small group of investors issued 96 shares of the Bazacle Milling Company in Toulouse, France. Trading paper for grain did not catch French imagination (or anyone's) until the 18th century and the beginning of the Industrial Revolution.
* The 1700's brought innovation and advancement: 1712 - Thomas Newcomen patents the atmospheric steam engine. * 1756 - John Smeaton invents hydraulic cement. * 1769 - Nicolas Cugnot invents the motorised carriage. * 1775 - Alexander Cummings invents the flush toilet (thank God). * 1778 - Oliver Pollock, a New Orleans businessman, creates the $ symbol * 1798 - Income tax introduced by British parliament (but of course)
New York Stock Exchange investors started "ringing the trading bell" in 1790. A 12 foot high wooden stockade separated that "trading floor" from the British and the Indians. On May 12th, two years later, 24 traders and merchants met under a Buttonwood tree at 68 Wall Street to sign the "Buttonwood Agreement" that empowered them to trade securities for commission. Their agreement is the first of many for the NYSE.
Essentially, stock market entrepreneurs sold paper in place of commodities. Trading cows, land, or lumber became too cumbersome. Further, selling a companies "paper" raises capital for the company, and gives ownership to the investor. Farmers harvest the grain, "listed " companies process and investors hope they do it right so they can shop for groceries.
The French voiced what every investor sometimes feels: if you cannot hold it in your hand, ownership is risky, while local farmers did not like big city highfalutin ideas. Holding a tangible object may be at the root of all risk concerns. Don't make a promise, take me to the store so I can have "it".
On Friday afternoons, I would visit my 82 year-old grandfather. Grampa would sit in his sun porch while I asked him questions about his youth. He owned a lumberyard and believed in tangible goods. I was working for Merrill Lynch at the time, and we always talked about the stock market. One day he said, "The stock market is filled with thieves and hoodlums. It is not as safe and predictable as real estate."
On his first point, I could not agree; on Grampa's second point, I would agree that many folks have more value in their real estate (home) than their stock market portfolio. However, real estate prices are contracting, and the stock market is up today. Further proof you should own a little of both because it's all about asset allocation.
by A Raymond Randall
As interesting as daily stock market news is to me, I often wonder if market reports matter when most investors are too busy and distracted to pay attention. Investors stay-tuned for the closing market averages; if the market is up, all is right with the world. If the market is down, "I'm in it for the long haul." If the market cascades unexpectedly, investors second-guess investment decisions.
"Buy! says the Bull" "Sell!", says the Bear. Who is Right? Stock and bond trading is a tug-of-war between the Bears and the Bulls (similar to the Democrats and the Republicans): one group sees what's right, the other group sees what's wrong. Both are opportunists.
If too many become Bulls, the suspicious Bears salivate; when the Bear corrals the Bull, the Bulls know their time is near. Bear traders see the glass half-empty; bull traders see the glass half-full. Together, they make a "market" where stocks, bonds, mutual funds, options, commodities, and derivatives are traded. The Bull and the Bear each get it right, but seldom at the same time; that's how markets are made.
"Securities markets are a fast-moving, glamorous, complex, multi-billion-dollar business." The largest located in New York, London, and Tokyo and and the emerging markets located in Sao Paulo, Karachi, and Jakarta, and they all have a history.
In the 13th century, a small group of investors issued 96 shares of the Bazacle Milling Company in Toulouse, France. Trading paper for grain did not catch French imagination (or anyone's) until the 18th century and the beginning of the Industrial Revolution.
* The 1700's brought innovation and advancement: 1712 - Thomas Newcomen patents the atmospheric steam engine. * 1756 - John Smeaton invents hydraulic cement. * 1769 - Nicolas Cugnot invents the motorised carriage. * 1775 - Alexander Cummings invents the flush toilet (thank God). * 1778 - Oliver Pollock, a New Orleans businessman, creates the $ symbol * 1798 - Income tax introduced by British parliament (but of course)
New York Stock Exchange investors started "ringing the trading bell" in 1790. A 12 foot high wooden stockade separated that "trading floor" from the British and the Indians. On May 12th, two years later, 24 traders and merchants met under a Buttonwood tree at 68 Wall Street to sign the "Buttonwood Agreement" that empowered them to trade securities for commission. Their agreement is the first of many for the NYSE.
Essentially, stock market entrepreneurs sold paper in place of commodities. Trading cows, land, or lumber became too cumbersome. Further, selling a companies "paper" raises capital for the company, and gives ownership to the investor. Farmers harvest the grain, "listed " companies process and investors hope they do it right so they can shop for groceries.
The French voiced what every investor sometimes feels: if you cannot hold it in your hand, ownership is risky, while local farmers did not like big city highfalutin ideas. Holding a tangible object may be at the root of all risk concerns. Don't make a promise, take me to the store so I can have "it".
On Friday afternoons, I would visit my 82 year-old grandfather. Grampa would sit in his sun porch while I asked him questions about his youth. He owned a lumberyard and believed in tangible goods. I was working for Merrill Lynch at the time, and we always talked about the stock market. One day he said, "The stock market is filled with thieves and hoodlums. It is not as safe and predictable as real estate."
On his first point, I could not agree; on Grampa's second point, I would agree that many folks have more value in their real estate (home) than their stock market portfolio. However, real estate prices are contracting, and the stock market is up today. Further proof you should own a little of both because it's all about asset allocation.
by A Raymond Randall
Welcome To The World Of Investment
The word Investment is very commonly used nowadays. But to understand it accurately you should know that Investment is an act or contract that obtains or increases enduring economic links with an existing institution or one that has to be formed.
Everyone knows that in todays era Investment is important. But, how do you know the correct Investment moves that could be right for your personal needs and goals.
The concept of Investment
A good Investment can be a well-coordinated suit and sports jacket for some or may be buying a piece of land or may mean anything to any person. But Investment is a term with several closely related meanings in finance and economics, related to saving or deferring consumption.
An asset is typically purchased, or similarly a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word Investment means the action of putting something in to somewhere else.
The most important exception for the purpose of investment is the acquisition of interest in land, which is governed by both statutory and customary law. The judiciary that comprises both the lower courts and the superior court.
The major difference within the use of the term investment in economics and finance is that economists are known usually as referring to a real Investment. Case in point a machine or a house but financial economists typically refer to a financial asset money that is put into a bank or the market which can then be new to buy a real asset.
The world of Investment can seem to be mind-boggling for a beginning investor and the amount of information required to be consumed can appear daunting. So how does one decide what kind of security to invest in?
Considering the point, would you choose stocks, bonds or some combination of investments? Or could you invest in mutual funds? How do you choose a particular fund, stock or bond? How do you assess the risk to your money? Well! Seems confusing right.
Undoubtedly, the most commonly new Investment service is buying and selling stocks. Since only licensed brokers are allowed to trade stocks, an individual who wants to buy or sell a stock is required to work through a broker.
Individual brokers work for financial services companies known as brokerage houses. In general for Investment purposes, there are two main types of brokerages, the most commonly known full service broker and the more recently developed discount broker.
Since prices of things are rising, doesn't it make sense to enjoy now rather than save and consume later when we will obtain less for the same money?
Yes, if we are going to keep money under the carpet.
No, if we are going to do proper Investment and the rate of interest is higher than inflation rate. So if inflation is 5% and we obtain 8% return, the money successfully grows 3%. Hence a year later, we will enjoy more than what we would enjoy in most cases, if you or someone that understands and has expert knowledge spent now.
This is the concept of delayed gratification a type of Investment thought of for the future. Usually taxes are the biggest expense. But you could also watch out for loads in mutual funds, any fee you pay to your Investment advisor, subscription to Investment magazines, demat your Investment account charges.
In most cases, if you or someone that understands and has expert knowledge are investing one lakh a year and its most important to understand if you are paying 5000 as a fee to your advisor and its much more important to understand if you are successfully paying 5% entry load, your chances of this portfolio beating a well diversified AAP, compliant portfolio over the long term is almost nil.
What could you prefer: Rs 10,000 right now or Rs 10,000 five years from now?
Common sense tells us that we could take Rs 10,000 today because we know that there is a sure time value of money. The Rs 10,000 received now provides us with a better chance to put it to work immediately and earn a sure return on it.
A single rupee today is worth more than a single rupee Investment a few years down the line. Given this, households that have surplus funds highlight within the form of savings want to have Investment in those funds so that the value of the funds over the years does not go down.
There are various forms of Investment at the availability of people. These include real assets like a house, an auto, a television, or financial assets like stocks in companies, bonds, units of funds, et cetera.
Traditionally, term deposits in banks, post office savings schemes, bonds and common stocks are the most accessible forms of Investment available to the investors. Term deposits, post office savings schemes and bonds give a fixed return over a period of time.
Investors would usually want their Investment in an asset, which gives them maximum return on their Investment. However, life is not as simple as that. Different assets come with different risk profiles. So choose correctly.
by William Smith
Everyone knows that in todays era Investment is important. But, how do you know the correct Investment moves that could be right for your personal needs and goals.
The concept of Investment
A good Investment can be a well-coordinated suit and sports jacket for some or may be buying a piece of land or may mean anything to any person. But Investment is a term with several closely related meanings in finance and economics, related to saving or deferring consumption.
An asset is typically purchased, or similarly a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word Investment means the action of putting something in to somewhere else.
The most important exception for the purpose of investment is the acquisition of interest in land, which is governed by both statutory and customary law. The judiciary that comprises both the lower courts and the superior court.
The major difference within the use of the term investment in economics and finance is that economists are known usually as referring to a real Investment. Case in point a machine or a house but financial economists typically refer to a financial asset money that is put into a bank or the market which can then be new to buy a real asset.
The world of Investment can seem to be mind-boggling for a beginning investor and the amount of information required to be consumed can appear daunting. So how does one decide what kind of security to invest in?
Considering the point, would you choose stocks, bonds or some combination of investments? Or could you invest in mutual funds? How do you choose a particular fund, stock or bond? How do you assess the risk to your money? Well! Seems confusing right.
Undoubtedly, the most commonly new Investment service is buying and selling stocks. Since only licensed brokers are allowed to trade stocks, an individual who wants to buy or sell a stock is required to work through a broker.
Individual brokers work for financial services companies known as brokerage houses. In general for Investment purposes, there are two main types of brokerages, the most commonly known full service broker and the more recently developed discount broker.
Since prices of things are rising, doesn't it make sense to enjoy now rather than save and consume later when we will obtain less for the same money?
Yes, if we are going to keep money under the carpet.
No, if we are going to do proper Investment and the rate of interest is higher than inflation rate. So if inflation is 5% and we obtain 8% return, the money successfully grows 3%. Hence a year later, we will enjoy more than what we would enjoy in most cases, if you or someone that understands and has expert knowledge spent now.
This is the concept of delayed gratification a type of Investment thought of for the future. Usually taxes are the biggest expense. But you could also watch out for loads in mutual funds, any fee you pay to your Investment advisor, subscription to Investment magazines, demat your Investment account charges.
In most cases, if you or someone that understands and has expert knowledge are investing one lakh a year and its most important to understand if you are paying 5000 as a fee to your advisor and its much more important to understand if you are successfully paying 5% entry load, your chances of this portfolio beating a well diversified AAP, compliant portfolio over the long term is almost nil.
What could you prefer: Rs 10,000 right now or Rs 10,000 five years from now?
Common sense tells us that we could take Rs 10,000 today because we know that there is a sure time value of money. The Rs 10,000 received now provides us with a better chance to put it to work immediately and earn a sure return on it.
A single rupee today is worth more than a single rupee Investment a few years down the line. Given this, households that have surplus funds highlight within the form of savings want to have Investment in those funds so that the value of the funds over the years does not go down.
There are various forms of Investment at the availability of people. These include real assets like a house, an auto, a television, or financial assets like stocks in companies, bonds, units of funds, et cetera.
Traditionally, term deposits in banks, post office savings schemes, bonds and common stocks are the most accessible forms of Investment available to the investors. Term deposits, post office savings schemes and bonds give a fixed return over a period of time.
Investors would usually want their Investment in an asset, which gives them maximum return on their Investment. However, life is not as simple as that. Different assets come with different risk profiles. So choose correctly.
by William Smith
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