Volatile Range
September 4, 2008
The stock market fell sharply Thu and Fri before and after the employment reports Fri morning. The Nonfarm Payrolls report showed 207,000 net jobs were added in July, which were 27,000 more than the market expected. Also, Hourly Earnings in July rose 0.4%, which was twice what the market expected. There’s a strong inverse relationship between employment and profits, in part, because when employment increases, then productivity falls, which generally lowers profit growth. Moreover, some proportion of additional labor costs tend to come from profit growth when there is little slack in the economy. Furthermore, lower productivity is inflationary, ceritus paribus (all else equal).
Employment is a lagging indicator. The Unemployment Rate is currently 5.0%, which is considered to be the natural rate of unemployment, where there is an optimal balance of labor and leisure. A lower unemployment rate would indicate strain in the labor market, which would drive up wages. So, there is some concern for slowing profit growth and rising inflation, e.g. a wage-price spiral, although there have been signs of disinflation recently. Nonetheless, U.S. monetary policy is still accommodative, and the Federal Reserve will need to remain vigilant to preempt inflation.
Playing With Money - And Making More
September 1, 2008
Ready to start playing with your money? Not interested in complicated businesses or boring bank C.D.’s? Here are some methods that aren’t quite a business because you can do them once, or just whenever you feel like it. Start small and the risk is small.
Loan Sharking
Years ago a friend got a good job when I loaned him $300 to buy the necessary tools. I charged a $6 per week loan fee (don’t call it interest) until he paid in full. That’s more than 100% annual interest, and yes, we’re still friends. Check the laws in your area if you try this, and take collateral. I don’t loanshark any longer, but in my early twenties I loaned as much as $2,000 at a time ($100/month loan fee), and only once was stiffed on a small loan.
Investing In Other’s Expertise
John showed me several car magazines before I understood why an old fiberglass car was a good deal at $2,300. What’s a Corvette? He convinced me to put up the money, and after a new transmission for $900, he sold the 1976 Corvette for $4,300, netting us $1,000. I took half the profit ($500) for putting up the money for the two weeks.
Creating Wealth by Gearing Up
August 30, 2008
Gearing is where you borrow money to invest. As already mentioned, it is best to clear all your debt before looking at investment. However, there will arise situations where the investment is a good one and it is necessary to borrow a small amount to make the deal work. The borrowing may be for property or shares.
Gearing allows you to increase your investment and potentially obtain a higher return. On the downside, however, if the investment does not pay off you stand to lose a lot more. Negative gearing comes about when the interest you are paying on your borrowing is greater than the income from your investment (for example, from a rental property). You can claim the loss or difference against your taxation and write it off as a deduction against other income.
Negative gearing is not necessarily the best investment strategy. Even though you get a tax break it is still costing you money. That is, you may be saving yourself 25 cents in the dollar, but you have to spend one dollar to achieve that.
The Biggest Oil Opportunity in the World ? And How You Can Profit From It
August 28, 2008
Where is the second biggest deposit of oil reserves in the world?
In the oil sands region of Alberta, Canada. Oil sands are a thick, viscid mixture of bitumen, sand, clay, and water. Alberta’s oil sands is comprised of 3 regions with the Athabasca area being the largest and the closest to the surface. Underneath these gooey tar sands lie trillions of barrels of oil.
So then you may ask why have we been so dependent on Mideast oil. Why haven’t we just stayed nearby and relied on Canada? In fact, Canada is the largest supplier of crude and refined oil to the United States, having supplied 2.1 million barrels per day in 2004. But the percentage supplied to the US and other parts of the world is about to grow much larger.
The big difference between oil sands and oil from the desert sands of the middle east is difficulty of extraction. The oil sands process essentially entails extracting bitumen from the sand, and upgrading it to light crude oils. Easier said than done because this is thick stuff and has been expensive to mine and extract. However new technologies are changing the equation and making it much more cost-efficient to mine and extract from the oil sands.
Forex market offers opportunity and information
August 25, 2008
The forex market is what is called an international exchange currency market, where currencies are exchanged on a daily basis. There are five forex market centers around the world ? New York, London, Tokyo, Frankfurt and Zurich. One does not need to be on the trading floor, so to speak to be involved in the forex market. Today, forex trading can be done from home on a computer.
The forex market itself is basically a worldwide connection of traders, who make investment moves based on the price of currencies, or their values relative to other currencies. These traders constantly negotiate prices with other traders resulting in the fluctuation or movement of a currency’s value. The value of a currency on the forex market also corresponds with supply. If there is greater demand for the Euro, let’s say, then there will be less supply of it on the forex market, which means, in time, it will make a Euro more valuable compared to let’s say the dollar. In short, in this forex market situation, one Euro would yield more dollars, subsequently weakening the dollar as well. Analyzing the forex market’s fluctuations allows investors to make predictions on how a currency will move in relation to another currency. They then can make predictions and buy and sell currency accordingly.
What If You Absolutely Positively Could Not Lose - Would You Play the Stock Market?
August 22, 2008
Seniors on fixed incomes face a unique problem. Where do they invest their savings to get maximum return on investment with limited risk? Some of the traditional places like CDs and Treasury Notes are extremely safe, however the yields tend to be very low. Stocks and Mutual Funds while offering a potential for a higher yield have a risk factor that most seniors find unacceptable.
What if you knew you absolutely positively could not loose, Would you invest in the stock market? Imagine if their was a way that you could enjoy the upside potential of the stock market with absolutely no downside Risk, would you be Interested?
Equity Indexed Annuities may be the Solution you are looking for. Many insurance companies are now offering Equity Indexed Annuities. These annuities allow you to mirror the gains of popular stock market indices like the S&P 500 or the Dow Jones Industrial Average while not loosing any of your investment capital.
In simple terms if the stock market goes up your Annuity also goes up but if the stock market goes down your Annuity does not loose any value. An Equity Indexed Annuity is not an Investment in stocks or Mutual funds instead it is a way the Insurance allow your Investments to mirror the gains of the stock market with no downside risk.
Need To Trade!
August 20, 2008
You don’t HAVE to be trading.
As a novice trader, you’ll often feel the need to trade.
You may be bored or frustrated. Or you just want to try a certain type of trade.
STOP!
Realize that you don’t have to be trading all the time to be successful. In fact not trading is often the very best decision you can make.
The market tells you when to trade. If you feel the urge to place a trade or find yourself chasing a trade, walk away from the computer. Better still; take the opportunity to meet a friend for coffee.
The trades you do when you’re feeling the “need” will usually be lemons - and leave you with a very bitter taste in your mouth!
They will usually not have clear signals, but you’ve convinced yourself they are there. After losing your premium, or much of it, you’ll look back and wonder how you could possibly have entered that trade. It’s happened to all of us, so don’t be too hard on yourself. Just don’t do it again.
The market is going to do what the market is going to do, not what you need or want it to do!
Direcway & Wildblue Set to Square Off this Fall?
August 17, 2008
There is a cat fight brewing between Direcway LLC, Starband and Wildblue Communications for the large number of people in the U.S. who can’t get some type of broadband internet and are willing to pay $50 or more to get better speeds. The combatants are telling investors there are 20-30 million “potential users” out there in rural or underserved America…true, but the historical fact of the matter is that up to now, only 500,000 or so have been willing to pay as much as $50-$100 a month for the “so called” high speed services offered by Direcway, Starband and now Wildblue. What has changed to stir all the press and advertising hubub by the companies? The claim is that both the Wildblue ka band and new Direcway 7000 offerings will finally give consumers a more DSL/Cable-like internet experience…ie lower latency and higher upload speeds. They expect that tens of millions of rural Americans will flock to their doors to pay over $50 per month to be “connected”. To a degree they are right. It has become virtually impossible to funcion as a business without broadband internet and it is more and more difficult as a consumer to do without it. Even retailers (who obviously target consumers) are building sites that are very difficult to navigate unless you have a fast connection to the net. Pictures chew up bandwidth.
Expand Your Pool of Investors for Your Company
August 15, 2008
If you own a company that sells complicated products and you want more investors, consider having topics on your web site that discuss the background needed to understand your products and your company. For example, if your company specializes in producing and researching monoclonal antibodies, post articles discussing exactly what monoclonal antibodies are, how they are produced and what research your company is engaged in. In some cases, it may be a good idea to work with an outside writer, one who can explain the information in layman’s terms.
Provide links to other sites discussing your industry. For example, a pharmaceutical company could provide a link to a web site discussing how clinical trials work. Suggest books to read. For example, a biotechnology company can suggest potential investors read The Biotech Investor: How to Profit from the Coming Boom in Biotechnology by Tom Abate.
Getting Started Investing is Often the Hardest Part
August 13, 2008
There are several reasons people give for not investing their money in things like stocks, bonds, and mutual funds. One reason is that they feel that they don’t have enough money to make a serious investment, but a more common reason that many people have absolutely no idea how to go about getting started investing. In fact, if more people understood the basics of investing and had a cohesive plan for getting started investing, more people would do it.
Let’s assume that the first reason does not apply to you and you do, in fact, have some amount of money that you’d like to invest. How do you get started investing? You could contact a stock or investment broker and discuss the options that would be best for you. Whether you’ll want to do this will depend quite a bit on the amount of money that you have to invest. If it’s a small amount, you may be better off seeking some smaller, safer investment than you would be by jumping directly into the stock market. Some people get started investing by choosing simple accounts with their bank. CD’s and IRAs make good investments, for example, for medium and long term goals. IRA accounts are intended for retirement, while CDs are time deposits that must remain in place for a set amount of time (often anywhere from as little as a week to as long as ten years) while they earn interest.
