How to Calculate the Value of Your U.S. Savings Bonds
November 23, 2008
If you’re like many Americans over the age of 55, you’ve probably had money taken out of your paychecks for years and years in order to purchase U. S. savings bonds. Those bonds are probably sitting in a safe deposit box at your local bank or in a drawer safely tucked away at home. But, while you might know where those bonds are right now, do you have any idea how much they are actually worth?
It seems to be a fact of life that World War II-era Americans purchased U. S. savings bonds for any number of reasons. First, it was the patriotic thing to do. America needed the money to support the war effort and Americans were more than willing to lend their support. Second, it was an excellent way to save for retirement, or for a child’s education, or for any other reason. Third, the interest paid on U. S. savings bonds was competitive and the income taxes were deferred until the bonds were actually cashed in.
For some reason, though, many of the U. S. savings bonds that were sold never did get cashed in until after the owner’s death. Then, a family member would discover them and wonder how much they were actually worth.
Oil and Gasoline Price Uncertainties
November 21, 2008
The Light Crude Continuous Contract hit an all-time high at $70.85 a barrel, while Unleaded Gasoline Futures spiked 50% or $1 a gallon on Tuesday. However, oil closed the week at $67.57 a barrel, while gasoline finished the week up 15%. There’s still uncertainty over the extent of oil and gasoline disruptions in the Gulf, over the next few weeks or months, caused by hurricane Katrina. However, there are many forces keeping a lid on oil and gasoline prices.
The summer driving season ends after Labor Day. President Bush urged Americans to conserve gasoline. Many Americans canceled driving plans for the Labor Day weekend, because of price spikes in retail gasoline. There were thousands of complaints about price gouging at gas stations last week. European governments are shipping oil and refined products to the U.S. The U.S. government opened the Strategic Petroleum Reserve, to oil firms, and suspended restrictions on regional gasoline standards. The strong U.S. economic expansion has been slowing, and may continue to slow in coming months.
Oil and gasoline may have hit short-term tops on Tuesday, while it seems oil stocks had “blow-off” tops (opposite of capitulations) Wednesday and Thursday. Consequently, oil stocks may be in a volatile range over the next few weeks, along with the stock market in general.
The Economys Greatest Depression Downturn Ever Is Now Just A Few Years Away
November 18, 2008
What really controls the economy? Forget interest rates, forget deficits, forget the Fed, forget IRAQ, forget which party is in office. In fact, forget just about everything that permeates the news. The greatest force that has controlled the long-term trend of the economy for at least the last century doesn’t give a fig about any of these side-shows. And just what is this “greatest force” now telling us in 2005? The same thing that it has been telling us for at least the last twenty years - that the onset of a catastrophic depression, unprecedented in history, has been marching silently and steadily towards us, and that it is now just a few years away.
It has long been suggested (and feared) that the 77 million or so US Baby Boomers will tank the economy big-time as they begin to pull their savings out of Wall Street when they start retiring around 2011. Well, first of all there are not 77 million. There are really over 100 million American Baby Boomers because the birth upswing actually began in the late thirties not the, “traditionally” chosen, erroneous, post war year of 1946. This means that whatever problems they might created just got 30% worse, and true earliest Baby Boomer retirement began around 2001. Secondly, the hard evidence of nearly a century shows that people retiring has never been a force in the overall trend of the economy. Let’s get back to basics to see why.
How to Use Annual Report
November 16, 2008
There are many steps in calculating the fair value of a company. However, before we even do that, it is imperative to know how a company earns its profit. Does it do that by selling to consumers? licensing its technology to other companies? or extracting natural resources from the ground?
The sensible way to do it is by reading the company’s annual report. What is an annual report? Annual report is yearly publication by public companies to better inform investor about the company’s line of business. Annual report gives investors a glance of the company’s line of business, financial health as well as management’s strategies for doing business.
Let’s look at CNET Networks Inc. The company trades in the NASDAQ market with symbol: CNET. What does CNET do? I know CNET owns cnet.com. But do you know that it also owns download.com, MP3.com, ZDnet.com and News.com ? How do I know that? Yep, you guess it. CNET’s Annual Report will gives you all that.
Investment Rowing
November 13, 2008
You have rowed a boat at some time haven’t you? Yes, put the oars in the water and pull. Of course, you don’t know where you are going because you are sitting backwards. Every so often you have to turn to look ahead to see if you are pulling in the right direction.
Reminds you of the stock market doesn’t it? You have your money invested and you are pulling hard (working) trying to get to that rainbow where the pot of gold is supposed to be, but you are sitting backwards and you can’t see where you are going.
The stock market is more like one of those Olympic shells with a bunch of people rowing together to the finish line. Unfortunately, in the stock market each person is putting his oar in the water at a different moment and some are even pushing on their oar. What a mess. How is anyone ever going to win if they don’t all pull at the same time? Let me give you a clue. They won’t.
And why won’t they?
Preholiday Trading
November 11, 2008
The Light Crude Continuous Contract closed at $66.13 a barrel Friday, after hitting an all-time high at $67.95 a barrel earlier in the day. A week from Monday is Labor Day, which marks the end of the summer driving season. Consequently, I believe, oil hit a short-term top Friday or will top next week.
Recent economic data show persistently high oil prices, along with higher interest rates, are slowing U.S. economic growth. Durable Goods Orders fell about 5% last month, and Walmart announced sales will be lower than expected. However, business inventories are lean. A slower economy will lower demand for oil.
The SPX daily chart below shows an orderly pullback in August. Currently, SPX is oversold enough to bounce into the Labor Day holiday. Major support is around 1,200, i.e. the 200 day MA, and Price-by-Volume bar. There are several major resistance levels working together to create strong resistance, i.e. the 10, 20, and 50 day MAs, the Parabolic SAR sell signal (red dots), and the Price-by-Volume bar, all between 1,220 and 1,225.
The Benefits of Laddering Your CD Investments
November 9, 2008
If you’ve decided to stock some money away in a certificate of deposit, why not reap the highest benefit over time by laddering your CD investments? What’s a CD latter? I’m glad you asked.
A CD ladder is made up by purchasing several CD’s at one time with different maturity dates. One example of a CD ladder is to have maturity dates of one year, two year, three year, four year, and a five year CD. These five investments make up the rungs of your CD ladder with one certificate maturing every year for the next five years.
For example, let’s say you had $10,000.00 to invest. You would buy 5 CD’s for $2,000 each with each one invested for one year more than the first. So you’d have a $2,000 CD maturing in one year, another in two years, and so on up to the last one which matures in five years. Every year for the next five years one of your CD matures and earns you interest on your $2000 principal.
Sell Discipline for Investors: Importance and Execution
November 6, 2008
Investors usually don’t have an aversion to buying an asset. The real gut wrenching decision is when - and if - to sell. What most don’t realize (or don’t want to realize) is the overwhelming importance of the sell decision. Let’s explore the reasons why and the techniques that can calm a seller’s nerves.
Finding reasons not to sell an asset is as easy as finding a reason to avoid a root canal. Have you ever heard (or told yourself), "I can’t sell now, it’s too low!" or, "The analyst at XYZ brokerage says the price is going through the roof!" or, "I don’t want to pay the capital gains tax!"
Let’s look at each of these "justifications" in the context of their impact on an investment portfolio and techniques to avoid having to come up with them:
"I can’t sell now, it’s too low!"
If an asset’s price has fallen dramatically, there is usually a fundamental problem. Often, that fundamental problem then becomes a technical problem. In other words, as market participants see dramatic declines in price charts, panic sets in and the "heard" starts to chase the price down even more (reference the NASDAQ Index from February of 2000 to September of 2002). Once an asset has been trampled, it is extremely difficult and time consuming to resuscitate.
Can Your Annuity Do This?
November 3, 2008
Okay, so I can tell you I have sat in front of countless numbers of people who have made mistakes when purchasing and owning annuities. And I have visited people who wish they never got involved in an annuity. And I have seen people who say that their annuity is their worst nightmare…So what is it that makes the annuity such a bad thing for some people and such a great vehicle for others??? Well I am about to tell you…and it all goes back to the annuity owners biggest MISTAKE. Yes, not mistakes but mistake.
Let me explain to you. Most annuity and insurance agents out there have what is called their “best product.” IT is the product that can supposedly solve every investment need for any investor. And they make it sound so good that when someone is shopping for annuities, they ask the salesperson, “what is the best annuity?” and this is the biggest mistake. For all you know, the best annuity to the salesperson may be the one that pays the best commission to him. This question gets more people in trouble than any other question in the investment world…”What is the best ____________ (annuity, stock, mutual fund, etc)? Like I say all the time, there is no best investment because everyone’s needs are different. Each investment has it’s own benefits which have to be matched to an investor’s needs.
Introduction To FOREX
November 1, 2008
The Foreign Exchange Market, better known as FOREX, is a worldwide market for buying and selling currencies. It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day, and American stock markets exchange about $100 billion a day.
The Foreign Exchange Market was established in 1971 when fixed currency exchanges were abolished. Currencies became valued at ‘floating’ rates determined by supply and demand. The FOREX grew steadily throughout the 1970’s, but with the technological advances of the 80’s FOREX expanded from trading levels of $70 billion a day to the current level of $1.5 trillion.
Who Trades in FOREX?
The FOREX is made up of about 5,000 trading institutions such as international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency. There is no centralized location of FOREX; major trading centers are located in New York, Tokyo, London, Hong Kong, Singapore, Paris, and Frankfurt. All trading is done by telephone or Internet. Businesses use the market to buy and sell their products in other countries, but most of the activity on the FOREX is from currency traders who use it to generate profits from small movements in the market.
