By Adam Shell, USA TODAY
NEW YORK — With the stock market on track for its worst year since 1931, Wall Street strategists are predicting a rebound in 2009.
A review of year-end '09 targets for the Standard & Poor's 500 index by five top market strategists found that nearly all expect double-digit percentage gains, despite another year of sharp swings. The most bullish projections call for a 24% gain from current levels.
Wall Street's gurus, however, were also bullish heading into 2008. While most predicted a stormy first half, none forecast the financial hurricane that engulfed investors. The S&P 500 is down 39.3% in 2008, the worst since a 47.1% drop in 1931, S&P says.
But predicting a rebound may be based on more than hope. Stocks have snapped back sharply after past historic declines. After stocks bottomed out after an 89.2% drop in July 1932, for example, the Dow Jones industrials rallied 93.9% the next two months, Dow Jones Indexes says.
Similarly, the S&P 500 rebounded 25.2% in 1938 after falling 38.6% in 1937, S&P says. After the 2000-02 bear market bottomed, the S&P 500 rebounded 26.4% in 2003.
One caveat: The S&P 500 fell 15.2% in 1932 after its record 1931 decline.
The strategists are betting on:
•An economic recovery. At some point after mid-2009, a rebound should occur, says Thomas Lee, U.S. equity strategist at JPMorgan Chase. But Lee says investors shouldn't rush back into stocks immediately.
He expects a rally early in the year on initial optimism about the bailout plans. Then he expects a pullback because of headwinds such as weak earnings. He says tailwinds such as lower gasoline prices, fiscal stimulus and a stabilization of the housing market will help stocks by year's end.
•Government stimulus plans. "The size of the global policy response to stabilize both the financial system and the growth outlook is virtually unprecedented," writes Abhijit Chakrabortti, strategist at Morgan Stanley.
•A repeat of history. "When this bear market ends, be prepared for a fast and furious partial recovery," S&P's chief investment strategist Sam Stovall writes in his 2009 outlook. Historically, the S&P 500 has recouped, on average, 33% of its bear market losses 40 days after a bottom.
Tuesday, December 30, 2008
Saturday, December 27, 2008
Stick to your plan in a volatile market
Posted: Dec. 27, 2008 7:33 p.m.
Fourth quarter 401(k) statements will be arriving soon like a lump of coal in everyone's stocking.
Falling home prices have kept investors nervous since the fourth quarter of 2007. But when Lehman Brothers filed for bankruptcy protection in September, things went from bad to worse.
What made this stock market drop so painful is that, this time, there's been almost no safe place to put your money. Everything dropped simultaneously. Diversification, meant to lower portfolio volatility, was rendered completely ineffective by panic selling in all asset classes.
In terms of magnitude, it's the third-worst drop in stock market history (-51.9%), if we use Nov. 20 as the bottom. The other two drops that were bigger: Sept. 7, 1929, to June 1, 1932 (-86.2%), and March 6, 1937, to March 31, 1938 (-54.5%). This has driven many 401(k) portfolios down 30% to 40% for the year.
So what's a 401(k) investor to do?
Don't let emotions dictate your investment decisions. Fear is a powerful motivator, but bailing out of the market now is not the answer. Today, stocks and corporate bonds are 30% cheaper, on average, than they were six months ago. Foreign stocks and bonds are even more depressed. While prices may still go lower, it's hard to see how selling long-term assets at some of the most depressed prices in the past 120 years will turn out to be a good idea.
Don't try to time this market. Sure, there's a chance that the market will drop more in 2009, but there's no way of knowing if that will happen or how far it might drop. What we do know is that historically, after a bear market bottom is reached, the bounce back is usually swift and significant. In fact, after 20 bear market bottoms that date back to 1903, the market rebounded an average of 46% over the next twelve months.
Develop a plan. 2008 will be, from this point on, the year financial planners use to illustrate the importance of having a proper saving and investing strategy for retirement. Those who started too late, saved too little or invested too aggressively as they neared retirement now face the reality of having to work longer or accept a lower standard of living.
Stick to your plan. Keep investing during lousy market periods, even if it feels unnatural. While your current asset-allocation strategy was probably no help avoiding a collapse in the value of your 401(k) account, that's not a good reason to abandon it now. It's impossible to know which fund category will bounce back first, so a diversified strategy is still your best approach to recover from this bear market.
Rebalance your portfolio back to your original target allocation between stock and bond funds. Say you had adopted an investment strategy that allocated 80% of your savings to a diversified portfolio of stock funds, and 20% to bond and stable value funds. Because of the beating stock funds have taken this year, your portfolio is probably now closer to 60% stock funds and 40% bond and stable value funds.
Because I believe we're close to the bottom, consider selling some of your bond and stable value funds now and purchasing more shares of stock funds to reallocate your holdings back toward your original target allocation of 80/20. Rebalancing gradually over the next six months will lessen the importance of the timing.
How you respond to this sharp drop in the markets could have a profound effect on how financially secure you are in retirement. History suggests that we are now looking at one of the most opportune times to invest that we've seen in a long time.
Michael J. Francis is president and senior investment consultant of Francis Investment Counsel LLC, a registered investment adviser based in Pewaukee. He can be reached at michael.francis@francisinvco.com.
The information in this article is for informational purposes only. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Francis Investment Counsel does not offer personal tax or legal advice.
Fourth quarter 401(k) statements will be arriving soon like a lump of coal in everyone's stocking.
Falling home prices have kept investors nervous since the fourth quarter of 2007. But when Lehman Brothers filed for bankruptcy protection in September, things went from bad to worse.
What made this stock market drop so painful is that, this time, there's been almost no safe place to put your money. Everything dropped simultaneously. Diversification, meant to lower portfolio volatility, was rendered completely ineffective by panic selling in all asset classes.
In terms of magnitude, it's the third-worst drop in stock market history (-51.9%), if we use Nov. 20 as the bottom. The other two drops that were bigger: Sept. 7, 1929, to June 1, 1932 (-86.2%), and March 6, 1937, to March 31, 1938 (-54.5%). This has driven many 401(k) portfolios down 30% to 40% for the year.
So what's a 401(k) investor to do?
Don't let emotions dictate your investment decisions. Fear is a powerful motivator, but bailing out of the market now is not the answer. Today, stocks and corporate bonds are 30% cheaper, on average, than they were six months ago. Foreign stocks and bonds are even more depressed. While prices may still go lower, it's hard to see how selling long-term assets at some of the most depressed prices in the past 120 years will turn out to be a good idea.
Don't try to time this market. Sure, there's a chance that the market will drop more in 2009, but there's no way of knowing if that will happen or how far it might drop. What we do know is that historically, after a bear market bottom is reached, the bounce back is usually swift and significant. In fact, after 20 bear market bottoms that date back to 1903, the market rebounded an average of 46% over the next twelve months.
Develop a plan. 2008 will be, from this point on, the year financial planners use to illustrate the importance of having a proper saving and investing strategy for retirement. Those who started too late, saved too little or invested too aggressively as they neared retirement now face the reality of having to work longer or accept a lower standard of living.
Stick to your plan. Keep investing during lousy market periods, even if it feels unnatural. While your current asset-allocation strategy was probably no help avoiding a collapse in the value of your 401(k) account, that's not a good reason to abandon it now. It's impossible to know which fund category will bounce back first, so a diversified strategy is still your best approach to recover from this bear market.
Rebalance your portfolio back to your original target allocation between stock and bond funds. Say you had adopted an investment strategy that allocated 80% of your savings to a diversified portfolio of stock funds, and 20% to bond and stable value funds. Because of the beating stock funds have taken this year, your portfolio is probably now closer to 60% stock funds and 40% bond and stable value funds.
Because I believe we're close to the bottom, consider selling some of your bond and stable value funds now and purchasing more shares of stock funds to reallocate your holdings back toward your original target allocation of 80/20. Rebalancing gradually over the next six months will lessen the importance of the timing.
How you respond to this sharp drop in the markets could have a profound effect on how financially secure you are in retirement. History suggests that we are now looking at one of the most opportune times to invest that we've seen in a long time.
Michael J. Francis is president and senior investment consultant of Francis Investment Counsel LLC, a registered investment adviser based in Pewaukee. He can be reached at michael.francis@francisinvco.com.
The information in this article is for informational purposes only. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Francis Investment Counsel does not offer personal tax or legal advice.
Thursday, December 25, 2008
Rebuild retirement savings with 401(k) and smart use of stocks
The bear market and the economic slump have caused most 401(k) retirement savings to have a major meltdown this year.
Not only has the financial mess caused retirement investments to plummet in value, it also has caused a growing number of employers to suspend their 401(k) company match.
But as gloomy as it all seems, you shouldn't spend the winter hiding under your blankets. After you put away your holiday decorations, it's a good time to regroup and learn from this year's pitfalls and mistakes.
Here are some tips for rebuilding your retirement savings in 2009:
Make sure you can sleep at night
FIND MORE STORIES IN: CDs | Enron | Vanguard | Hewitt Associates | Employee Benefit Research Institute | Pamela Hess | Center for Retirement Research | Jack VanDerhei | Christopher Jones | Financial Engines
As difficult as the year was, you may have learned some important things about yourself. You may be far less willing to take risks than you think.
"We've been through one of the most rapid and extreme bear markets in history," says Stephen Utkus, principal at Vanguard's Center for Retirement Research. "And if that wasn't a test of your risk tolerance, I don't know what would be."
If you're still comfortable with your asset allocation, then your risk and return are in a good balance. But if you've lost much sleep this year, you know it's time to reduce your risk and adjust your investment priorities.
Don't panic
After the worst financial crisis since the 1930s, you need to start 2009 by making a candid assessment of your retirement plan, Utkus says. If that means investing less in stocks, fine. Just be aware that you may have to increase your savings over the long term to compensate for the lower returns you'll get from bank CDs and money market funds.
If you shifted money in a panic, however, you might want to reconsider. So far this year, 401(k) trading activity has risen to 6%.
"It's only 6%, but it's very high, relative to other years," says Pamela Hess, director of retirement research for Hewitt Associates. "And there has been a lot of emotional selling."
Not surprisingly, most have moved their money into stable value funds and money market mutual funds. That may seem safe. But if you're planning to get back into stocks, don't think you'll be able to time the market. Most people simply sell low and buy higher.
"They really risk missing the upside," Hess says. "Then they are locking in an inferior return."
Start the year by making sure you have a smart financial strategy — and don't rely on the past when you plan for your future.
"Everyone says, 'The market is going down, therefore I shouldn't invest in equities,' " Utkus says. "You should think about how to be best positioned going forward, as opposed to spending too much time looking out the rearview mirror."
And most planners say that if you have a long-term investment horizon — 20 years or so — you should have most of your assets in stocks.
Diversify
Some plan participants were too aggressive in their investments by investing only in one kind of stock — small-company stocks, for example. When the market collapsed, their retirement savings did, too.
It's even more risky to be too concentrated in company stock, says Christopher Jones, chief investment officer for Financial Engines, which provides advice to 401(k) plan participants.
Even though the Enron debacle should have provided a cautionary tale about investing in company stock, that's still a major problem, Jones says. Many plan participants continue to invest 100% of their 401(k) money in company stock.
"They look at the stock market and say that they've done better in their company stock," he says. "The fallacy, of course, is that it doesn't guarantee anything about the future."
Make sure that you have a well-diversified portfolio that includes broad-based stock funds, such as those that track the S&P 500-stock index.
"Don't confuse bad investment results in the past with a good financial incentive going forward," says Jack VanDerhei, research director of the Employee Benefit Research Institute.
Be mindful of your age
When you're 30, you can put all your money in stocks because you'll have plenty of time to make up for losses. When you're 55, it's much harder to make up those losses. Many employees who are close to retirement are now suffering because they had overly invested in stocks.
But if they'd invested in a target-date fund, they would be in better shape. These funds invest in a mix of stocks, bonds and money funds based on when you plan to retire, and they're managed by professionals who make disciplined investment plans.
Nearly half of 401(k) plan participants who are ages 56 to 65 had portfolios that had at least 20% more in stocks than target funds designed for that age group did, says VanDerhei.
Many companies now use target-date funds as the default option for 401(k) automatic enrollment — but that generally involves younger employees, who are newly enrolled. Older plan participants should consider moving their 401(k) money into target-date funds, especially if they don't believe they have the financial acumen to accomplish their asset allocation on their own, VanDerhei says.
Keep saving
Even if the stock market calamity has made you feel frightened and demoralized, you should try to stay in the game, Hess says.
Then you can take advantage of the pretax savings that you have in a 401(k) plan. And if your company offers a matching contribution, you also can take advantage of that.
"You should make sure that you are saving enough to get every last penny of your company matching contribution," Jones says.
Unfortunately, more than 20% of the workers who participate in their plan don't contribute enough to get the full company match, according to Hewitt Associates.
Keep the big picture in mind
A growing number of employers are suspending their company match. That creates worries and resentment among workers, And some are considering dropping their 401(k) plan entirely.
But keep in mind that most companies, unless they go into bankruptcy, will eventually reinstate their matching contribution. And the responsibility for retirement savings was yours, anyway, says Sheryl Garrett, a financial planner in Kansas City, Mo.
"Companies have to cut where they think it inflicts the least amount of pain on their employees and their business," she says. "Cutting into your retirement nest egg temporarily is their way of trying to stay viable and continue giving you a paycheck."
Don't cash out
Younger employers tend to cash out their 401(k) plan when they switch jobs. Big mistake.
For most, if they have $10,000 or less in their plan, it looks like free money, and retirement seems far away, Hess says.
But if a 25-year-old has just $5,000 in a retirement account that earns a 7% average rate of return, it will be worth $74,872 when the worker reaches 65 — even without adding any more money, according to Hewitt.
Take charge
Most people are passive investors, Hess says. It would be great if they took a more active role in their savings.
By Christine Dugas, USA TODAY
In the past, many workers had a pension plan, so 401(k) plans were a supplemental benefit.
"Now, they are our main savings vehicle, and so it's important to have a plan and stick with it," Hess says.
If you need help, you should check out the tools and advice that your employer offers, or talk to a financial planner. But start out the year with a good retirement plan.
"Keep in mind that for most Americans, a 401(k) plan is the bedrock of their retirement saving," Jones says.
"You are responsible for making the investments and for bearing the consequences of the investment risk."
Not only has the financial mess caused retirement investments to plummet in value, it also has caused a growing number of employers to suspend their 401(k) company match.
But as gloomy as it all seems, you shouldn't spend the winter hiding under your blankets. After you put away your holiday decorations, it's a good time to regroup and learn from this year's pitfalls and mistakes.
Here are some tips for rebuilding your retirement savings in 2009:
Make sure you can sleep at night
FIND MORE STORIES IN: CDs | Enron | Vanguard | Hewitt Associates | Employee Benefit Research Institute | Pamela Hess | Center for Retirement Research | Jack VanDerhei | Christopher Jones | Financial Engines
As difficult as the year was, you may have learned some important things about yourself. You may be far less willing to take risks than you think.
"We've been through one of the most rapid and extreme bear markets in history," says Stephen Utkus, principal at Vanguard's Center for Retirement Research. "And if that wasn't a test of your risk tolerance, I don't know what would be."
If you're still comfortable with your asset allocation, then your risk and return are in a good balance. But if you've lost much sleep this year, you know it's time to reduce your risk and adjust your investment priorities.
Don't panic
After the worst financial crisis since the 1930s, you need to start 2009 by making a candid assessment of your retirement plan, Utkus says. If that means investing less in stocks, fine. Just be aware that you may have to increase your savings over the long term to compensate for the lower returns you'll get from bank CDs and money market funds.
If you shifted money in a panic, however, you might want to reconsider. So far this year, 401(k) trading activity has risen to 6%.
"It's only 6%, but it's very high, relative to other years," says Pamela Hess, director of retirement research for Hewitt Associates. "And there has been a lot of emotional selling."
Not surprisingly, most have moved their money into stable value funds and money market mutual funds. That may seem safe. But if you're planning to get back into stocks, don't think you'll be able to time the market. Most people simply sell low and buy higher.
"They really risk missing the upside," Hess says. "Then they are locking in an inferior return."
Start the year by making sure you have a smart financial strategy — and don't rely on the past when you plan for your future.
"Everyone says, 'The market is going down, therefore I shouldn't invest in equities,' " Utkus says. "You should think about how to be best positioned going forward, as opposed to spending too much time looking out the rearview mirror."
And most planners say that if you have a long-term investment horizon — 20 years or so — you should have most of your assets in stocks.
Diversify
Some plan participants were too aggressive in their investments by investing only in one kind of stock — small-company stocks, for example. When the market collapsed, their retirement savings did, too.
It's even more risky to be too concentrated in company stock, says Christopher Jones, chief investment officer for Financial Engines, which provides advice to 401(k) plan participants.
Even though the Enron debacle should have provided a cautionary tale about investing in company stock, that's still a major problem, Jones says. Many plan participants continue to invest 100% of their 401(k) money in company stock.
"They look at the stock market and say that they've done better in their company stock," he says. "The fallacy, of course, is that it doesn't guarantee anything about the future."
Make sure that you have a well-diversified portfolio that includes broad-based stock funds, such as those that track the S&P 500-stock index.
"Don't confuse bad investment results in the past with a good financial incentive going forward," says Jack VanDerhei, research director of the Employee Benefit Research Institute.
Be mindful of your age
When you're 30, you can put all your money in stocks because you'll have plenty of time to make up for losses. When you're 55, it's much harder to make up those losses. Many employees who are close to retirement are now suffering because they had overly invested in stocks.
But if they'd invested in a target-date fund, they would be in better shape. These funds invest in a mix of stocks, bonds and money funds based on when you plan to retire, and they're managed by professionals who make disciplined investment plans.
Nearly half of 401(k) plan participants who are ages 56 to 65 had portfolios that had at least 20% more in stocks than target funds designed for that age group did, says VanDerhei.
Many companies now use target-date funds as the default option for 401(k) automatic enrollment — but that generally involves younger employees, who are newly enrolled. Older plan participants should consider moving their 401(k) money into target-date funds, especially if they don't believe they have the financial acumen to accomplish their asset allocation on their own, VanDerhei says.
Keep saving
Even if the stock market calamity has made you feel frightened and demoralized, you should try to stay in the game, Hess says.
Then you can take advantage of the pretax savings that you have in a 401(k) plan. And if your company offers a matching contribution, you also can take advantage of that.
"You should make sure that you are saving enough to get every last penny of your company matching contribution," Jones says.
Unfortunately, more than 20% of the workers who participate in their plan don't contribute enough to get the full company match, according to Hewitt Associates.
Keep the big picture in mind
A growing number of employers are suspending their company match. That creates worries and resentment among workers, And some are considering dropping their 401(k) plan entirely.
But keep in mind that most companies, unless they go into bankruptcy, will eventually reinstate their matching contribution. And the responsibility for retirement savings was yours, anyway, says Sheryl Garrett, a financial planner in Kansas City, Mo.
"Companies have to cut where they think it inflicts the least amount of pain on their employees and their business," she says. "Cutting into your retirement nest egg temporarily is their way of trying to stay viable and continue giving you a paycheck."
Don't cash out
Younger employers tend to cash out their 401(k) plan when they switch jobs. Big mistake.
For most, if they have $10,000 or less in their plan, it looks like free money, and retirement seems far away, Hess says.
But if a 25-year-old has just $5,000 in a retirement account that earns a 7% average rate of return, it will be worth $74,872 when the worker reaches 65 — even without adding any more money, according to Hewitt.
Take charge
Most people are passive investors, Hess says. It would be great if they took a more active role in their savings.
By Christine Dugas, USA TODAY
In the past, many workers had a pension plan, so 401(k) plans were a supplemental benefit.
"Now, they are our main savings vehicle, and so it's important to have a plan and stick with it," Hess says.
If you need help, you should check out the tools and advice that your employer offers, or talk to a financial planner. But start out the year with a good retirement plan.
"Keep in mind that for most Americans, a 401(k) plan is the bedrock of their retirement saving," Jones says.
"You are responsible for making the investments and for bearing the consequences of the investment risk."
Wednesday, December 24, 2008
You Can Make Money in Any Market
By John Rosevear
December 23, 2008
Do you know what gets me about the recent stock market blowup?
Somebody out there made a bundle off it.
I know, it's hard to believe. Most folks' retirement account balances are way down. Every single stock mutual fund (all 11,579 of them) is down this year, and highfliers from Akamai (Nasdaq: AKAM) to Apple (Nasdaq: AAPL) -- and that's just the beginning of the alphabet -- are way off their recent highs.
But somewhere out there are investors who made money this year. Lots of money, in some cases.
Many are professionals, of course -- hedge fund managers and others with access to sophisticated tools and strategies -- but others are just ordinary individual investors like you and me. Like you and me ... except that they've learned to use tools and strategies we haven't.
Like going short.
The long and short of it
Most mutual funds aren't allowed to short stocks -- to borrow and sell them, in other words, betting that they'll be able to buy the stock back at a lower price and make money on the difference. Many individual investors avoid the practice as well. The risks are high, the upside is limited, and shorting can't be done at all without a margin account, which excludes most retirement accounts.
But sometimes shorting a stock -- or a sector, or an index -- is a prudent investment. Markets go down as well as up, as we've seen recently. Sectors fall out of favor. Companies sometimes appear headed for disaster long before the wider market catches on, as was the case with Lehman Brothers for a while. Bubbles appear, become evident to some, and then pop.
Shorting banks, oil, or other commodities earlier this year would have been an excellent move, and the weaknesses in all three of those areas were visible to some folks at the time. But how many profited? A lot fewer, because shorting is dicey, and, as I mentioned previously, it's a strategy unavailable to most who do their investing via IRA accounts.
But that's changing. New tools allow investors to take short positions without the need for a margin account. These offer great opportunities for the informed -- along with some new risks.
Enter the short ETF
Most investors are familiar with ETFs. Exchange-traded funds track a wide variety of indexes and are traded throughout the day, like stocks. In recent years, companies like ProShares have created families of short ETFs -- investments that go up when the indices they track go down. (And -- this is important -- vice versa.)
The selection has grown rapidly. ProShares alone offers an extensive selection covering all the major U.S. and international indices, sectors from financials to industrials to health care, commodities including gold and crude oil, major currencies, and more.
Be careful of that lever
Many of these are leveraged, or what ProShares calls "UltraShort," so for every 1% move down in the underlying index, the fund is supposed to go up about 2%. They don't track precisely in practice, but close enough to work out well if you're right, and to cost you a bundle if you're wrong (although unlike a true short position you can't lose more than your original investment). Still, tread very carefully with these products.
The lack of precision has been an issue for some short ETFs. While a fund like UltraShort Oil & Gas (NYSE: DUG) is designed to inversely track an index that includes obvious sector heavyweights like Chevron (NYSE: CVX), Schlumberger (NYSE: SLB), and ExxonMobil (NYSE: XOM), the fund's actual holdings are complex derivatives, not short positions in those stocks. The "black box" aspect can be a turnoff for some.
Nonetheless, these ETFs remain useful tools -- not the one fund to carry you to retirement, but a way to take a well-thought-out position on the market, in a sector, or on a currency or commodity. But for once, I'll advise you to think in the short term on these investments. Long is the way to bet long term, as this bear market won't last forever.
Putting it all to work
I've used short ETFs in a small way in the past few months. Most significantly, in the midst of the market crash in early October, I threw a portion of my portfolio's cash position into UltraShort S&P 500 ProShares (NYSE: SDS), which acted as a sort of brake on my portfolio as the declines continued. In that case, the double leverage was exactly what I wanted -- to have a big effect with a relatively small investment.
More recently, I've explored using both long and short ETFs to take longish-term positions on currency movements and sector strengths. The Fool's new $1 million real-money portfolio, Motley Fool Pro, is employing similar strategies using ETFs and short positions together with a core stock portfolio, and I've learned a lot by following its investments.
If you're interested in learning more about Motley Fool Pro and long and short strategies using ETFs, the service will be reopening soon, but for 10 days only. To learn more, and to get your private invitation to join, simply enter your email address in the box below.
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Fool contributor John Rosevear owns shares of Apple. Akamai Technologies is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. The Motley Fool has a disclosure policy.
December 23, 2008
Do you know what gets me about the recent stock market blowup?
Somebody out there made a bundle off it.
I know, it's hard to believe. Most folks' retirement account balances are way down. Every single stock mutual fund (all 11,579 of them) is down this year, and highfliers from Akamai (Nasdaq: AKAM) to Apple (Nasdaq: AAPL) -- and that's just the beginning of the alphabet -- are way off their recent highs.
But somewhere out there are investors who made money this year. Lots of money, in some cases.
Many are professionals, of course -- hedge fund managers and others with access to sophisticated tools and strategies -- but others are just ordinary individual investors like you and me. Like you and me ... except that they've learned to use tools and strategies we haven't.
Like going short.
The long and short of it
Most mutual funds aren't allowed to short stocks -- to borrow and sell them, in other words, betting that they'll be able to buy the stock back at a lower price and make money on the difference. Many individual investors avoid the practice as well. The risks are high, the upside is limited, and shorting can't be done at all without a margin account, which excludes most retirement accounts.
But sometimes shorting a stock -- or a sector, or an index -- is a prudent investment. Markets go down as well as up, as we've seen recently. Sectors fall out of favor. Companies sometimes appear headed for disaster long before the wider market catches on, as was the case with Lehman Brothers for a while. Bubbles appear, become evident to some, and then pop.
Shorting banks, oil, or other commodities earlier this year would have been an excellent move, and the weaknesses in all three of those areas were visible to some folks at the time. But how many profited? A lot fewer, because shorting is dicey, and, as I mentioned previously, it's a strategy unavailable to most who do their investing via IRA accounts.
But that's changing. New tools allow investors to take short positions without the need for a margin account. These offer great opportunities for the informed -- along with some new risks.
Enter the short ETF
Most investors are familiar with ETFs. Exchange-traded funds track a wide variety of indexes and are traded throughout the day, like stocks. In recent years, companies like ProShares have created families of short ETFs -- investments that go up when the indices they track go down. (And -- this is important -- vice versa.)
The selection has grown rapidly. ProShares alone offers an extensive selection covering all the major U.S. and international indices, sectors from financials to industrials to health care, commodities including gold and crude oil, major currencies, and more.
Be careful of that lever
Many of these are leveraged, or what ProShares calls "UltraShort," so for every 1% move down in the underlying index, the fund is supposed to go up about 2%. They don't track precisely in practice, but close enough to work out well if you're right, and to cost you a bundle if you're wrong (although unlike a true short position you can't lose more than your original investment). Still, tread very carefully with these products.
The lack of precision has been an issue for some short ETFs. While a fund like UltraShort Oil & Gas (NYSE: DUG) is designed to inversely track an index that includes obvious sector heavyweights like Chevron (NYSE: CVX), Schlumberger (NYSE: SLB), and ExxonMobil (NYSE: XOM), the fund's actual holdings are complex derivatives, not short positions in those stocks. The "black box" aspect can be a turnoff for some.
Nonetheless, these ETFs remain useful tools -- not the one fund to carry you to retirement, but a way to take a well-thought-out position on the market, in a sector, or on a currency or commodity. But for once, I'll advise you to think in the short term on these investments. Long is the way to bet long term, as this bear market won't last forever.
Putting it all to work
I've used short ETFs in a small way in the past few months. Most significantly, in the midst of the market crash in early October, I threw a portion of my portfolio's cash position into UltraShort S&P 500 ProShares (NYSE: SDS), which acted as a sort of brake on my portfolio as the declines continued. In that case, the double leverage was exactly what I wanted -- to have a big effect with a relatively small investment.
More recently, I've explored using both long and short ETFs to take longish-term positions on currency movements and sector strengths. The Fool's new $1 million real-money portfolio, Motley Fool Pro, is employing similar strategies using ETFs and short positions together with a core stock portfolio, and I've learned a lot by following its investments.
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Fool contributor John Rosevear owns shares of Apple. Akamai Technologies is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. The Motley Fool has a disclosure policy.
Sunday, December 21, 2008
Forex Training is a Must For Anyone Serious About Turning a Profit in The Market
Investments & Trading
No matter how well you did in school or what kind of IQ you have, we all need specialized training in certain areas. The forex market is no exception to this. Forex training should be a prerequisite for anyone considering getting serious about trading world currencies for profit.
Is formal training truly necessary? After all, there are plenty of books and online articles on the subject. Wouldn’t it be enough to read them on your own and getting into the market without going through the hassle of official training?
Well, look at it this way. You could read manuals on how to fly a plane, but you probably wouldn’t want to try it for real without getting some hands-on training first in a simulator. By the same token, you shouldn’t jump into buying and selling currencies without getting some training first. You might be able to manage successfully without it, but you’ll be so much better prepared with it.
Forex is a complicated, highly nuanced financial area, and the people who are experts in it are aware that the average person knows almost nothing about it. To help share the wealth of information, the experts have devised a number of training systems on the Internet and elsewhere.
Many forex training systems offer simulators or practice accounts. In these, no real money is involved. It’s pure simulation, giving new traders an up-close-and-personal look at the market without any financial risk. In these demos, you get all the charts, figures and other data you’d get if you were doing it for real. It’s excellent practice for the real thing.
Forex training is seldom free, however. Depending on the type and depth of training, it can be anywhere from $50 to several hundred dollars. How much training you need depends on how serious you are about joining the marketplace. If you truly want to make money buying and selling currencies, it might be wise to get as much training as possible. On the other hand, if you intend to do it as a hobbyist, and if you limit your investments up front to adjust for the learning curve, you might do well enough with just the basic training.
Either way, you owe it to yourself to follow the training lessons carefully. Learn as much as you can from the resources available to you. It will help you turn a profit when you get into trading and help you minimize your financial losses.
Article Writt4en By J. Foley
No matter how well you did in school or what kind of IQ you have, we all need specialized training in certain areas. The forex market is no exception to this. Forex training should be a prerequisite for anyone considering getting serious about trading world currencies for profit.
Is formal training truly necessary? After all, there are plenty of books and online articles on the subject. Wouldn’t it be enough to read them on your own and getting into the market without going through the hassle of official training?
Well, look at it this way. You could read manuals on how to fly a plane, but you probably wouldn’t want to try it for real without getting some hands-on training first in a simulator. By the same token, you shouldn’t jump into buying and selling currencies without getting some training first. You might be able to manage successfully without it, but you’ll be so much better prepared with it.
Forex is a complicated, highly nuanced financial area, and the people who are experts in it are aware that the average person knows almost nothing about it. To help share the wealth of information, the experts have devised a number of training systems on the Internet and elsewhere.
Many forex training systems offer simulators or practice accounts. In these, no real money is involved. It’s pure simulation, giving new traders an up-close-and-personal look at the market without any financial risk. In these demos, you get all the charts, figures and other data you’d get if you were doing it for real. It’s excellent practice for the real thing.
Forex training is seldom free, however. Depending on the type and depth of training, it can be anywhere from $50 to several hundred dollars. How much training you need depends on how serious you are about joining the marketplace. If you truly want to make money buying and selling currencies, it might be wise to get as much training as possible. On the other hand, if you intend to do it as a hobbyist, and if you limit your investments up front to adjust for the learning curve, you might do well enough with just the basic training.
Either way, you owe it to yourself to follow the training lessons carefully. Learn as much as you can from the resources available to you. It will help you turn a profit when you get into trading and help you minimize your financial losses.
Article Writt4en By J. Foley
Thursday, December 18, 2008
Wall Street dips on Morgan woes
Stocks churn - and briefly pull into positive territory - but an afternoon rally doesn't hold, and all three major indexes end the day lower.
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: December 17, 2008: 6:06 PM ET
NEW YORK (CNNMoney.com) -- Stocks ended lower Wednesday as investors tried to shrug off a bigger-than-expected loss from investment bank Morgan Stanley, but an afternoon rally failed to hold traction.
Wall Street took a hit Wednesday in the wake of the severe losses from the nation's second-largest investment bank, but sentiment was still buoyed by the Federal Reserve's rate-cutting announcement Tuesday. At this point in the recession, investors are not easily flustered by yet another loss booked by a financial giant.
The Dow Jones industrial average (INDU) lost 99.8 points, or 1.1%. The broader Standard & Poor's 500 (SPX) index ended down 9 points, or nearly 1%, and the Nasdaq composite (COMP) shed almost 11 points, or 0.7%.
Stocks started the session sharply lower and battled back to positive territory briefly, but in the final hour of the session, stocks gave back all of their earlier gains.
One analyst said that Wednesday's volatility was in line with the market's recent turmoil. "One thing you have to keep in mind is the volatility that we have seen over the past couple months," said Ed Clissold, senior global analyst at Ned Davis Research.
Wall Street's sharp drop at the open was anticipated, given the big gains on Tuesday, when the Dow jumped 360 points, or 4.2%. Even if investors had not been dealing with the news of the massive Morgan losses, stocks would have snapped lower in reaction to the sharp gains on Tuesday, a market observer said.
Harry Clark, chief executive and founder of the Clark Capital Management Group, said the market "is taking bad news in stride these days." While massive financial-sector losses weigh on investor sentiment, Clark said that the market is looking for a recovery.
Clissold echoed the sentiment that the market has been braced for negative news. "When a large financial company reports bad earnings, investors for the most part treat that as what would be expected," Clissold said.
Investors were also still digesting the decision from the Federal Reserve Tuesday to cut the key lending rate to record low levels as it pledged to consider further ways to spur economic activity.
Meanwhile, market breadth was positive. Advancers beat out decliners 3-to-2 on the New York Stock Exchange on volume of 1.34 billion shares. And advancers just beat decliners on the Nasdaq, with a volume of 2.16 billion shares.
Company news: Before markets opened on Wednesday morning, Morgan Stanley (MS, Fortune 500) posted a staggering $2.3 billion loss for the fourth quarter, which was far greater than the $298 million loss that analysts were expecting, according to Thomson Reuters.
The loss was even worse than what analysts were bracing for and was yet another indication that every part of the financial sector has been battered by stock-market volatility and credit-market weakness.
The announcement from Morgan Stanley comes the day after rival Goldman Sachs (GS, Fortune 500) posted a $2.1 billion loss - the company's first since it went public in 1999.
Fed rate cut: Wall Street's pullback Wednesday came on the heels of a rally on Tuesday precipitated by the Federal Reserve cutting its key lending rate to the lowest level on record.
The U.S. central bank lowered its key interest rate to a range of between 0% and 0.25%. The rate cut was the 10th time the central bank has slashed rates in the past 15 months.
The central bank has attempted to juice the economy, which officially fell into recession at the end of 2007, with an aggressive rate-cutting campaign.
However, now that the key lending rate is near zero, the central bank may have to find other ways to spur the slumping economy. In fact, in the Fed's rate-cut statement released on Tuesday, the agency indicated that it would consider purchasing its own long-term Treasurys.
"The Fed has really stepped up," Clark said.
He added that investors have taken comfort in the central bank's moves, as evidenced by Tuesday's rally on Wall Street and improvements in the credit markets.
Another analyst echoed the sentiment. "The Fed has clearly signaled it is going to do whatever is necessary to get the debt markets functioning properly again, which is going to be key for the equity markets," Clissold said. In the long run, Clissold said that a return to health in the credit markets is essential to a broader recovery.
Government debt, currencies: Long-term Treasury prices soared Wednesday, continuing Tuesday's rally that happened in the wake of the Fed's announcement that it would consider buying its own long-term debt.
The goal of the government in stepping in and buying its own debt would be to help the troubled housing market find some footing. Thirty-year mortgages typically move in lockstep with the yield on the benchmark 10-year Treasury note.
Lending rates continued to decline. The overnight Libor rate declined to 0.13% from 0.16% on Tuesday, while the 3-month Libor rate dropped to 1.58% from 1.85%, according to Bloomberg.com. Libor, or the London Interbank Offered Rate, is a daily average of what 16 different banks charge other banks to lend money in London.
The improvements in Libor rates are one indicator of credit-market pressures easing. "They have been coming down for the last two months and they are finally down where they should be," Clark said.
Auto bailout: U.S. automakers are still awaiting news from the Bush administration as to the status of their plea for a $14 billion bridge loan.
General Motors (GM, Fortune 500) and Chrysler LLC have warned that they are within weeks of running out of cash. After the Senate failed to approve a bailout package for the automakers, the Bush administration said it would consider tapping the $700 billion bailout fund Congress approved for the banks and Wall Street.
Meanwhile, the auto finance firm GMAC doubled the amount of capital it has raised, moving it closer to qualifying for much-needed federal funds. If GMAC can obtain enough funds to qualify as a bank, then it could obtain funds as a part of the $700 billion bailout bill.
Oil: Oil settled for the day down $3.54 to $40.06 a barrel, a 4 1/2-year low, after OPEC announced it will cut oil production by 2.2 million barrels a day as of Jan. 1 to boost oil prices. Crude oil prices have slid from record highs as the global economic recession has chipped away at demand for energy.
Oil prices have fallen nearly $100 a barrel since the record highs reached over the summer, and the cartel hopes that the production limit will stabilize oil prices.
The new production cut comes on top of a 2 million-barrels-a-day cut that was previously announced, bringing production levels down by 4.2 million barrels per day from September levels.
Other markets: In currency markets, the dollar fell to a 13-year low versus the yen and also weakened against the euro. The greenback rose slightly against the British pound.
COMEX gold for February was up $25.80 to $868.50 an ounce.
Gas prices rose Wednesday after breaking an 86-day streak of declines over the weekend, according to a daily survey of gas station credit-card swipes. The price of regular unleaded rose $0.6 cents to a national average of $1.667 a gallon from $1.661 on Tuesday, according to motorist group AAA. To top of page
First Published: December 17, 2008: 10:35 AM ET
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: December 17, 2008: 6:06 PM ET
NEW YORK (CNNMoney.com) -- Stocks ended lower Wednesday as investors tried to shrug off a bigger-than-expected loss from investment bank Morgan Stanley, but an afternoon rally failed to hold traction.
Wall Street took a hit Wednesday in the wake of the severe losses from the nation's second-largest investment bank, but sentiment was still buoyed by the Federal Reserve's rate-cutting announcement Tuesday. At this point in the recession, investors are not easily flustered by yet another loss booked by a financial giant.
The Dow Jones industrial average (INDU) lost 99.8 points, or 1.1%. The broader Standard & Poor's 500 (SPX) index ended down 9 points, or nearly 1%, and the Nasdaq composite (COMP) shed almost 11 points, or 0.7%.
Stocks started the session sharply lower and battled back to positive territory briefly, but in the final hour of the session, stocks gave back all of their earlier gains.
One analyst said that Wednesday's volatility was in line with the market's recent turmoil. "One thing you have to keep in mind is the volatility that we have seen over the past couple months," said Ed Clissold, senior global analyst at Ned Davis Research.
Wall Street's sharp drop at the open was anticipated, given the big gains on Tuesday, when the Dow jumped 360 points, or 4.2%. Even if investors had not been dealing with the news of the massive Morgan losses, stocks would have snapped lower in reaction to the sharp gains on Tuesday, a market observer said.
Harry Clark, chief executive and founder of the Clark Capital Management Group, said the market "is taking bad news in stride these days." While massive financial-sector losses weigh on investor sentiment, Clark said that the market is looking for a recovery.
Clissold echoed the sentiment that the market has been braced for negative news. "When a large financial company reports bad earnings, investors for the most part treat that as what would be expected," Clissold said.
Investors were also still digesting the decision from the Federal Reserve Tuesday to cut the key lending rate to record low levels as it pledged to consider further ways to spur economic activity.
Meanwhile, market breadth was positive. Advancers beat out decliners 3-to-2 on the New York Stock Exchange on volume of 1.34 billion shares. And advancers just beat decliners on the Nasdaq, with a volume of 2.16 billion shares.
Company news: Before markets opened on Wednesday morning, Morgan Stanley (MS, Fortune 500) posted a staggering $2.3 billion loss for the fourth quarter, which was far greater than the $298 million loss that analysts were expecting, according to Thomson Reuters.
The loss was even worse than what analysts were bracing for and was yet another indication that every part of the financial sector has been battered by stock-market volatility and credit-market weakness.
The announcement from Morgan Stanley comes the day after rival Goldman Sachs (GS, Fortune 500) posted a $2.1 billion loss - the company's first since it went public in 1999.
Fed rate cut: Wall Street's pullback Wednesday came on the heels of a rally on Tuesday precipitated by the Federal Reserve cutting its key lending rate to the lowest level on record.
The U.S. central bank lowered its key interest rate to a range of between 0% and 0.25%. The rate cut was the 10th time the central bank has slashed rates in the past 15 months.
The central bank has attempted to juice the economy, which officially fell into recession at the end of 2007, with an aggressive rate-cutting campaign.
However, now that the key lending rate is near zero, the central bank may have to find other ways to spur the slumping economy. In fact, in the Fed's rate-cut statement released on Tuesday, the agency indicated that it would consider purchasing its own long-term Treasurys.
"The Fed has really stepped up," Clark said.
He added that investors have taken comfort in the central bank's moves, as evidenced by Tuesday's rally on Wall Street and improvements in the credit markets.
Another analyst echoed the sentiment. "The Fed has clearly signaled it is going to do whatever is necessary to get the debt markets functioning properly again, which is going to be key for the equity markets," Clissold said. In the long run, Clissold said that a return to health in the credit markets is essential to a broader recovery.
Government debt, currencies: Long-term Treasury prices soared Wednesday, continuing Tuesday's rally that happened in the wake of the Fed's announcement that it would consider buying its own long-term debt.
The goal of the government in stepping in and buying its own debt would be to help the troubled housing market find some footing. Thirty-year mortgages typically move in lockstep with the yield on the benchmark 10-year Treasury note.
Lending rates continued to decline. The overnight Libor rate declined to 0.13% from 0.16% on Tuesday, while the 3-month Libor rate dropped to 1.58% from 1.85%, according to Bloomberg.com. Libor, or the London Interbank Offered Rate, is a daily average of what 16 different banks charge other banks to lend money in London.
The improvements in Libor rates are one indicator of credit-market pressures easing. "They have been coming down for the last two months and they are finally down where they should be," Clark said.
Auto bailout: U.S. automakers are still awaiting news from the Bush administration as to the status of their plea for a $14 billion bridge loan.
General Motors (GM, Fortune 500) and Chrysler LLC have warned that they are within weeks of running out of cash. After the Senate failed to approve a bailout package for the automakers, the Bush administration said it would consider tapping the $700 billion bailout fund Congress approved for the banks and Wall Street.
Meanwhile, the auto finance firm GMAC doubled the amount of capital it has raised, moving it closer to qualifying for much-needed federal funds. If GMAC can obtain enough funds to qualify as a bank, then it could obtain funds as a part of the $700 billion bailout bill.
Oil: Oil settled for the day down $3.54 to $40.06 a barrel, a 4 1/2-year low, after OPEC announced it will cut oil production by 2.2 million barrels a day as of Jan. 1 to boost oil prices. Crude oil prices have slid from record highs as the global economic recession has chipped away at demand for energy.
Oil prices have fallen nearly $100 a barrel since the record highs reached over the summer, and the cartel hopes that the production limit will stabilize oil prices.
The new production cut comes on top of a 2 million-barrels-a-day cut that was previously announced, bringing production levels down by 4.2 million barrels per day from September levels.
Other markets: In currency markets, the dollar fell to a 13-year low versus the yen and also weakened against the euro. The greenback rose slightly against the British pound.
COMEX gold for February was up $25.80 to $868.50 an ounce.
Gas prices rose Wednesday after breaking an 86-day streak of declines over the weekend, according to a daily survey of gas station credit-card swipes. The price of regular unleaded rose $0.6 cents to a national average of $1.667 a gallon from $1.661 on Tuesday, according to motorist group AAA. To top of page
First Published: December 17, 2008: 10:35 AM ET
Tuesday, December 16, 2008
Advantages of Using Online Forex Trading
Investments & Trading
If you want to invest in Forex then you need to know the advantages of using online Forex trading.
Earlier people had difficulty in investing Forex trading because during these days only large financial institutions were allowed to invest in Forex. There was no space for the small traders.
But due to invention of computers the doors for small investors opened and they were given a chance to invest in forex market. This type of trading is called online trading.
There are many sites that offer the facility for online trade. You can also take the benefit of stock trading. These websites are operated by forex trading companies. These companies have experts that would proper guidelines for forex trading. If you are a beginner then these experts would provide you necessary guidelines about the investment. It would assist you about the ways that are used for forex trading.
There are some sites that provide the facility for trading starter kits. But this facility would be provided only if you open an account with this site. They would provide you an opportunity to learn the different types of trading courses that would help you to earn huge profits in short duration of time. Some sites would provide simulators that help to simulate the procedure of trading in forex. They would treat you as new born babies and they would try to teach you the basic steps of forex trading.
Forex trading is open for 24hours a day. The professional forex brokers would take care of your account. They would help you to keep keen watch on the market. They would provide you assurance about the investment that you have made, also give you assurance that you have invested at the right place at the right time. Thus you can say that they would provide you necessary security.
You would not have any difficulty in operating the forex market. You would not face any problem in accessing the data and to analysis the online forex sites. They would keep on updating the data and the price of the stocks. If you want to contact your brokers then the sites have forums or online chat that can be used for contacting the authorized person. It is considered to be the fastest and the easiest method to contact the forex broker that can provide their guidelines whenever you are in need.
These sites would help you to analyze the current data. You can examine this data from your house. You don’t need to visit your broker to collect the information about the data.
If you want to collect the information about the forex then you can explore yourself. There are many websites that would provide you the necessary details about the forex market. Thus you would not have any difficulty in collecting the necessary information about forex trading. These sites would help you to select the best trader. You can select these traders by making comparison between different traders.
Article Written By J. Foley
If you want to invest in Forex then you need to know the advantages of using online Forex trading.
Earlier people had difficulty in investing Forex trading because during these days only large financial institutions were allowed to invest in Forex. There was no space for the small traders.
But due to invention of computers the doors for small investors opened and they were given a chance to invest in forex market. This type of trading is called online trading.
There are many sites that offer the facility for online trade. You can also take the benefit of stock trading. These websites are operated by forex trading companies. These companies have experts that would proper guidelines for forex trading. If you are a beginner then these experts would provide you necessary guidelines about the investment. It would assist you about the ways that are used for forex trading.
There are some sites that provide the facility for trading starter kits. But this facility would be provided only if you open an account with this site. They would provide you an opportunity to learn the different types of trading courses that would help you to earn huge profits in short duration of time. Some sites would provide simulators that help to simulate the procedure of trading in forex. They would treat you as new born babies and they would try to teach you the basic steps of forex trading.
Forex trading is open for 24hours a day. The professional forex brokers would take care of your account. They would help you to keep keen watch on the market. They would provide you assurance about the investment that you have made, also give you assurance that you have invested at the right place at the right time. Thus you can say that they would provide you necessary security.
You would not have any difficulty in operating the forex market. You would not face any problem in accessing the data and to analysis the online forex sites. They would keep on updating the data and the price of the stocks. If you want to contact your brokers then the sites have forums or online chat that can be used for contacting the authorized person. It is considered to be the fastest and the easiest method to contact the forex broker that can provide their guidelines whenever you are in need.
These sites would help you to analyze the current data. You can examine this data from your house. You don’t need to visit your broker to collect the information about the data.
If you want to collect the information about the forex then you can explore yourself. There are many websites that would provide you the necessary details about the forex market. Thus you would not have any difficulty in collecting the necessary information about forex trading. These sites would help you to select the best trader. You can select these traders by making comparison between different traders.
Article Written By J. Foley
Fed cuts rates to record low range of zero to 0.25%
Fed cuts rates to record low range of zero to 0.25%
Senior Federal Reserve official outlines scope of new programs
By Greg Robb, MarketWatch
Last update: 5:02 p.m. EST Dec. 16, 2008
Comments: 1380
WASHINGTON (MarketWatch) -- The Federal Reserve pulled out all the stops in its campaign to save the U.S. economy Tuesday, slashing interest rates to just above zero and promising to try an array of new economic measures to stimulate spending.
The central bank's Federal Open Market Committee established a target range for the federal funds rate of zero to 0.25%, effectively cutting its key rate for overnight lending to banks by between 0.75% and 1%.
Rates would need to be kept low "for some time," the central bank said.
'The Fed will employ all available tools to promote the resumption of sustainable economic growth.'
— Federal Reserve
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the funds rate has "hit rock bottom."
U.S. stocks leaped after the decision, with the Dow Jones Industrial Average closing up 359 points. Read Market Snapshot.
A senior Fed official told reporters that the Fed has switched tactics and will now focus on aiding credit.
The Fed has already targeted a few debt classes for assistance. The senior officials said that other classes, including below triple-AAA quality debt, may be purchased.
The official said the program was not quantitative easing as practiced by Japan in the 1990s.
While Japan simply wanted to increase the quantity of money, the Fed wants to focus on the asset side of the balance sheet.
The moves are just about as aggressive as the central bank could be on monetary policy.
The Fed gave clear signals that it has moved on to other measures beyond setting interest rates in its fight to keep the economy rolling.
Josh Shapiro, chief economist at MFR Inc., said the Fed is "petrified" about the economic outlook.
But the senior Fed official said that economists at the central bank generally are in agreement with Wall Street economists about the duration and depth of the recession.
After two quarters of very weak growth, the economy should start a slow recovery after mid-year, the official said.
The Fed statement said that inflation should continue to moderate in coming months.
The senior Fed official said that deflation, or a general price decline, was not a major risk at the moment, but that price data would be watched carefully.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth," the central bank pledged in its policy statement.
Going into next year, the focus of the Fed's policy will be to support financial markets and stimulate the economy "through open market operations and other measures that sustain the size of the Fed's balance sheet at a high level."
So the key will be the quantity of money in the system, not the price.
The Fed's balance sheet has risen to $2.25 trillion over the past two months from $850 billion and has made promises to spend about a $1 trillion more.
The Fed is using the money to ease strains in the market for the debt of Fannie Mae and Freddie Mac and mortgage-backed securities issued by these GSEs.
These purchases may be expanded, the Fed said.
"The FOMC is also evaluating the potential benefits of purchasing longer-term Treasury securities," the Fed said.
Some economists have questioned the necessity of buying longer-term Treasury securities, with the prices already low.
By February, the Fed is also going to begin buying credit card debt and student loans. This template could be expanded. Under this plan, the Treasury is assuming the risk of loss while the Fed is making the purchases.
Economists applauded this laser-beam approach.
Adding "$100 billion here and $100 there strategically injected into the right places" can have a big impact, said Steve Stanley, chief economist at RBS Greenwich Capital.
Other markets are clearly on the Fed's radar screen.
"The Fed will continue to consider ways of using its balance sheet to further support credit markets and economic activity," the statement said.
The senior official said that lower quality assets could be purchased.
The Fed's moves followed some of the worst economic data in decades reported in the past few days, including monthly consumer sales numbers that fell the most since 1932.
The vote to lower the fed funds rate was unanimous. End of Story
Greg Robb is a senior reporter for MarketWatch in Washington.
Senior Federal Reserve official outlines scope of new programs
By Greg Robb, MarketWatch
Last update: 5:02 p.m. EST Dec. 16, 2008
Comments: 1380
WASHINGTON (MarketWatch) -- The Federal Reserve pulled out all the stops in its campaign to save the U.S. economy Tuesday, slashing interest rates to just above zero and promising to try an array of new economic measures to stimulate spending.
The central bank's Federal Open Market Committee established a target range for the federal funds rate of zero to 0.25%, effectively cutting its key rate for overnight lending to banks by between 0.75% and 1%.
Rates would need to be kept low "for some time," the central bank said.
'The Fed will employ all available tools to promote the resumption of sustainable economic growth.'
— Federal Reserve
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the funds rate has "hit rock bottom."
U.S. stocks leaped after the decision, with the Dow Jones Industrial Average closing up 359 points. Read Market Snapshot.
A senior Fed official told reporters that the Fed has switched tactics and will now focus on aiding credit.
The Fed has already targeted a few debt classes for assistance. The senior officials said that other classes, including below triple-AAA quality debt, may be purchased.
The official said the program was not quantitative easing as practiced by Japan in the 1990s.
While Japan simply wanted to increase the quantity of money, the Fed wants to focus on the asset side of the balance sheet.
The moves are just about as aggressive as the central bank could be on monetary policy.
The Fed gave clear signals that it has moved on to other measures beyond setting interest rates in its fight to keep the economy rolling.
Josh Shapiro, chief economist at MFR Inc., said the Fed is "petrified" about the economic outlook.
But the senior Fed official said that economists at the central bank generally are in agreement with Wall Street economists about the duration and depth of the recession.
After two quarters of very weak growth, the economy should start a slow recovery after mid-year, the official said.
The Fed statement said that inflation should continue to moderate in coming months.
The senior Fed official said that deflation, or a general price decline, was not a major risk at the moment, but that price data would be watched carefully.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth," the central bank pledged in its policy statement.
Going into next year, the focus of the Fed's policy will be to support financial markets and stimulate the economy "through open market operations and other measures that sustain the size of the Fed's balance sheet at a high level."
So the key will be the quantity of money in the system, not the price.
The Fed's balance sheet has risen to $2.25 trillion over the past two months from $850 billion and has made promises to spend about a $1 trillion more.
The Fed is using the money to ease strains in the market for the debt of Fannie Mae and Freddie Mac and mortgage-backed securities issued by these GSEs.
These purchases may be expanded, the Fed said.
"The FOMC is also evaluating the potential benefits of purchasing longer-term Treasury securities," the Fed said.
Some economists have questioned the necessity of buying longer-term Treasury securities, with the prices already low.
By February, the Fed is also going to begin buying credit card debt and student loans. This template could be expanded. Under this plan, the Treasury is assuming the risk of loss while the Fed is making the purchases.
Economists applauded this laser-beam approach.
Adding "$100 billion here and $100 there strategically injected into the right places" can have a big impact, said Steve Stanley, chief economist at RBS Greenwich Capital.
Other markets are clearly on the Fed's radar screen.
"The Fed will continue to consider ways of using its balance sheet to further support credit markets and economic activity," the statement said.
The senior official said that lower quality assets could be purchased.
The Fed's moves followed some of the worst economic data in decades reported in the past few days, including monthly consumer sales numbers that fell the most since 1932.
The vote to lower the fed funds rate was unanimous. End of Story
Greg Robb is a senior reporter for MarketWatch in Washington.
Monday, November 17, 2008
When it Comes to Smart Investing, All World News is Forex News
Investments & Trading
Forex traders know one of the advantages of their field is that the forex market is open 24 hours a day, five and a half days a week. But a 24-hour marketplace means there’s forex news coming in constantly, too. With so much information coming from so many markets literally at all hours of the day, it can be hard to keep up with all the news available to you.
But at the same time, an informed trader is a successful trader. To make informed decisions on when to buy and sell currencies, you’ll have to keep an eye on all the news you can get your hands on. Many Web sites make it relatively easy for you by corralling the forex news into one place, often dividing it into subcategories for easy navigating. Any forex trader, whether new or experienced, should find a news source he likes and check it often.
Many of these forex news sites also offer commentary and analysis, beyond just a simple ticking off of the latest rates. Here you’ll find experts talking about the issues involved and perhaps offering insights beyond what you would have come up with on your own. Some news sites charge a registration fee for access to all their materials, but it can be worth it in the long run.
Aside from running 24 hours a day, another reason there is constantly a stream of forex news is that so many factors can influence a currency’s strength. Natural disasters, government actions and other things -- both foreseeable and not foreseeable -- can cause a nation’s currency to go up or down in relative value. An experienced trader will look at all this news and know how to predict what effect it will have.
Often, forex news isn’t labeled as such. Any economic news at all can affect the forex market; a sharp-eyed trader is on the lookout constantly for news that might impact his trading. In other words, a good trader will have to be an expert on world affairs, monitoring political, social and other developments in other countries. All of this, combined with the more specific forex news dealing with the details of exchange rates and so forth, gives you the information you need to be successful at currency trading.
Article Written By J. Foley
Forex traders know one of the advantages of their field is that the forex market is open 24 hours a day, five and a half days a week. But a 24-hour marketplace means there’s forex news coming in constantly, too. With so much information coming from so many markets literally at all hours of the day, it can be hard to keep up with all the news available to you.
But at the same time, an informed trader is a successful trader. To make informed decisions on when to buy and sell currencies, you’ll have to keep an eye on all the news you can get your hands on. Many Web sites make it relatively easy for you by corralling the forex news into one place, often dividing it into subcategories for easy navigating. Any forex trader, whether new or experienced, should find a news source he likes and check it often.
Many of these forex news sites also offer commentary and analysis, beyond just a simple ticking off of the latest rates. Here you’ll find experts talking about the issues involved and perhaps offering insights beyond what you would have come up with on your own. Some news sites charge a registration fee for access to all their materials, but it can be worth it in the long run.
Aside from running 24 hours a day, another reason there is constantly a stream of forex news is that so many factors can influence a currency’s strength. Natural disasters, government actions and other things -- both foreseeable and not foreseeable -- can cause a nation’s currency to go up or down in relative value. An experienced trader will look at all this news and know how to predict what effect it will have.
Often, forex news isn’t labeled as such. Any economic news at all can affect the forex market; a sharp-eyed trader is on the lookout constantly for news that might impact his trading. In other words, a good trader will have to be an expert on world affairs, monitoring political, social and other developments in other countries. All of this, combined with the more specific forex news dealing with the details of exchange rates and so forth, gives you the information you need to be successful at currency trading.
Article Written By J. Foley
Thursday, October 16, 2008
Possible Future of Stock Exchanges
Investments & Trading
Possible Future of Stock Exchanges By J. Foley
With the electronic age firmly entrenched and the Internet and basic computer usage a fact of life, many people are taking a look at how computers are changing the workplace. Where most elementary schools may have had one or two computers in an entire school, some schools now have a laptop for every student. And while the average workplace use to have slow and clunky terminals, they have now been replaced with lightning fast machines capable of running a dozen complex programs at once.
One workplace that has been somewhat shielded by this evolution is the floor of the New York Stock Exchange. Some consider this to be highly ironic, since the floor of the exchange is where the shares in the very computer companies that seem like they are taking over the world are traded.
The recent expulsion of Richard Grasso as head of the NYSE was seen as an ominous move by many specialists who work at the exchange. Grasso, while far from an ideal leader, was famous for trying to keep the individual traders employed when they could most likely be replaced by a newly designed computer system.
With the appointment of new exchange boss John Thain, a possible revamping of the entire trading system is expected, but how many jobs will it cost and what will it look like?
A major sign of impending change happened in April of 2005 when a company called Archipelago Holding merged with the New York Stock Exchange and the two became a publicly traded company. Archipelago is an electronic trading network, and it’s thought by many who work on the floor of the NYSE that this merger is the final nail in the coffin for the hundreds of people who carry on the tradition of floor selling that has been going on for over 200 years.
The possible evolution of the NYSE may not even be up to those that run it. As other markets across the world in places like Hong Kong, Frankfurt and London upgrade their trading methods and begin to phase out trading by people in favour of computers, an upgrade may become necessary to just keep up. Since the computer can process trades significantly faster than a human, the NYSE may have to do away with the traditional floor trader just so that the exchange remains competitive and relevant.
While the constant sea of change is inevitable, the future of the floor trader at the NYSE looks bleak. It is not known if there will still need to be traders to input the trades into the computers or if that phase of the trade will somehow be automated, as well. The only thing that is known for sure is that change will continue to happen and unless we learn to anticipate it, those that don’t will be left behind.
Article Written By J. Foley
Possible Future of Stock Exchanges By J. Foley
With the electronic age firmly entrenched and the Internet and basic computer usage a fact of life, many people are taking a look at how computers are changing the workplace. Where most elementary schools may have had one or two computers in an entire school, some schools now have a laptop for every student. And while the average workplace use to have slow and clunky terminals, they have now been replaced with lightning fast machines capable of running a dozen complex programs at once.
One workplace that has been somewhat shielded by this evolution is the floor of the New York Stock Exchange. Some consider this to be highly ironic, since the floor of the exchange is where the shares in the very computer companies that seem like they are taking over the world are traded.
The recent expulsion of Richard Grasso as head of the NYSE was seen as an ominous move by many specialists who work at the exchange. Grasso, while far from an ideal leader, was famous for trying to keep the individual traders employed when they could most likely be replaced by a newly designed computer system.
With the appointment of new exchange boss John Thain, a possible revamping of the entire trading system is expected, but how many jobs will it cost and what will it look like?
A major sign of impending change happened in April of 2005 when a company called Archipelago Holding merged with the New York Stock Exchange and the two became a publicly traded company. Archipelago is an electronic trading network, and it’s thought by many who work on the floor of the NYSE that this merger is the final nail in the coffin for the hundreds of people who carry on the tradition of floor selling that has been going on for over 200 years.
The possible evolution of the NYSE may not even be up to those that run it. As other markets across the world in places like Hong Kong, Frankfurt and London upgrade their trading methods and begin to phase out trading by people in favour of computers, an upgrade may become necessary to just keep up. Since the computer can process trades significantly faster than a human, the NYSE may have to do away with the traditional floor trader just so that the exchange remains competitive and relevant.
While the constant sea of change is inevitable, the future of the floor trader at the NYSE looks bleak. It is not known if there will still need to be traders to input the trades into the computers or if that phase of the trade will somehow be automated, as well. The only thing that is known for sure is that change will continue to happen and unless we learn to anticipate it, those that don’t will be left behind.
Article Written By J. Foley
Monday, August 11, 2008
Let A Professional Do All The Work For You With A Managed Forex Account
Investments & Trading
Let A Professional Do All The Work For You With A Managed Forex Account By J. Foley
No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.
The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.
Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.
Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.
As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.
Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?
Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.
Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.
Article Written By J. Foley
Let A Professional Do All The Work For You With A Managed Forex Account By J. Foley
No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.
The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.
Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.
Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.
As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.
Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?
Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.
Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.
Article Written By J. Foley
Thursday, July 31, 2008
Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns
Investments & Trading
Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns By J. Foley
You would be forgiven in thinking that with all the professional managers, funds and resources.at their disposal that investment funds would win head over heels against the smaller investor like you and I. In fact this is not at all the case – smaller investors have several advantages over the big funds and have every chance of beating their returns on investments. Here’s why:
The individual investor does not have to invest millions and so they can invest in small caps (tiny growth companies) that have the potential to grow many times over. These stocks are typically far too illiquid for funds to enter.
The smaller investor can get in and out of a stock with the simple click of a mouse or a phone call (and get roughly the same sale price per share). The larger funds have to gradually sell their holdings in a company (they may have millions of shares to offload – not an easy or quick thing to achieve).
Individual investors can effectively trade positions for small gains – something that larger funds simply do not have the ability to do.
On top of this, the internet has more or less facilitated the smaller investor to have access to the same information at the same time as the big city fund managers. Arguably, the individual investor also has the added advantage of speed – a fund manager may have to get approval in order to buy into a company (not a case for the individual investor) and cannot take advantage of special situations (such as buying on breaking news and so on).
Remember however, if you really want to become a “professional investor” – one who is savvy enough to beat the market and essentially make a living from investments then you need to learn as much as you can about how the market works, how to analyse companies, the part psychology plays in driving markets and how to create an investment/trading system that’s right for you. Even the masters of investing such as Warren Buffet and Jim Slater all started from scratch. Warren Buffet once did not know what the PE of a company meant. Jim Slater once did now know how to read the balance sheet of a company. They educated themselves and discovered how to pick stocks that have excellent potential – you could be doing the same. The first step to investment is to invest in yourself and your education. To offer an overused yet apt phrase – KNOWLEDGE IS POWER!
Article Written By J. Foley
Why The Smaller Investor Has Advantages Over Huge Multinational Funds When It Comes To Scooping Up Higher Investment Returns By J. Foley
You would be forgiven in thinking that with all the professional managers, funds and resources.at their disposal that investment funds would win head over heels against the smaller investor like you and I. In fact this is not at all the case – smaller investors have several advantages over the big funds and have every chance of beating their returns on investments. Here’s why:
The individual investor does not have to invest millions and so they can invest in small caps (tiny growth companies) that have the potential to grow many times over. These stocks are typically far too illiquid for funds to enter.
The smaller investor can get in and out of a stock with the simple click of a mouse or a phone call (and get roughly the same sale price per share). The larger funds have to gradually sell their holdings in a company (they may have millions of shares to offload – not an easy or quick thing to achieve).
Individual investors can effectively trade positions for small gains – something that larger funds simply do not have the ability to do.
On top of this, the internet has more or less facilitated the smaller investor to have access to the same information at the same time as the big city fund managers. Arguably, the individual investor also has the added advantage of speed – a fund manager may have to get approval in order to buy into a company (not a case for the individual investor) and cannot take advantage of special situations (such as buying on breaking news and so on).
Remember however, if you really want to become a “professional investor” – one who is savvy enough to beat the market and essentially make a living from investments then you need to learn as much as you can about how the market works, how to analyse companies, the part psychology plays in driving markets and how to create an investment/trading system that’s right for you. Even the masters of investing such as Warren Buffet and Jim Slater all started from scratch. Warren Buffet once did not know what the PE of a company meant. Jim Slater once did now know how to read the balance sheet of a company. They educated themselves and discovered how to pick stocks that have excellent potential – you could be doing the same. The first step to investment is to invest in yourself and your education. To offer an overused yet apt phrase – KNOWLEDGE IS POWER!
Article Written By J. Foley
Friday, June 20, 2008
Mutual Funds:Tax and Distributions
Investments & Trading
Mutual Funds:Tax and Distributions By J. Foley
Most investors would agree that mutual funds are a great way to help create a nest egg, save for retirement or for your kids’ college education. There are, however, an entire series of taxes that are levied against investments of all kinds, including mutual fund investments. While they may not always seem fair, they are a fact of life and the more you know about all the various forms of taxes, the better prepared you’ll be to deal with them.
While there are fees associated with some mutual funds when you open the account, and taxes for capital gains as the money appreciates within the mutual fund, there are also a series of taxes associated with the distribution of earnings from the mutual fund back to you. These distributions can take on several different forms, such as capital gains, income dividends and interest. A mutual fund is legally obligated to give out all of the investors income and the money that the fund made. But what exactly is an income dividend?
Income dividends usually include dividends, capital gains and interest that is earned by the mutual fund company minus the expenses and fees are taken out. The distribution associated with capital gains is usually made once per year to the shareholders. These capital gains come from a year of good performance by the mutual fund. When a mutual fund company pays out dividends to their shareholders, the NAV or net asset value of your mutual fund will go down, but you can also take that dividend pay out and buy more shares if you’re happy with the performance.
There are ways to help avoid the tax liability of reinvesting your dividends back into your mutual fund. Most distributions done by mutual fund companies is done near the end of the year. If you don’t want to spend the payout on Christmas presents, you can reinvest the money, but you should do it after the record date. This will help you avoid extra tax liability on your dividends.
Paying taxes on your distribution is a pain. But if your mutual fund is performing well, a small tax on your earning won’t hurt so bad. This is another reason why intelligent, well managed investing is so important. Not only do you have to worry about your fund going up and down in price, but also tax liability. That’s why it pays to invest wisely and use a disciplined approach.
Article Written By J. Foley
Mutual Funds:Tax and Distributions By J. Foley
Most investors would agree that mutual funds are a great way to help create a nest egg, save for retirement or for your kids’ college education. There are, however, an entire series of taxes that are levied against investments of all kinds, including mutual fund investments. While they may not always seem fair, they are a fact of life and the more you know about all the various forms of taxes, the better prepared you’ll be to deal with them.
While there are fees associated with some mutual funds when you open the account, and taxes for capital gains as the money appreciates within the mutual fund, there are also a series of taxes associated with the distribution of earnings from the mutual fund back to you. These distributions can take on several different forms, such as capital gains, income dividends and interest. A mutual fund is legally obligated to give out all of the investors income and the money that the fund made. But what exactly is an income dividend?
Income dividends usually include dividends, capital gains and interest that is earned by the mutual fund company minus the expenses and fees are taken out. The distribution associated with capital gains is usually made once per year to the shareholders. These capital gains come from a year of good performance by the mutual fund. When a mutual fund company pays out dividends to their shareholders, the NAV or net asset value of your mutual fund will go down, but you can also take that dividend pay out and buy more shares if you’re happy with the performance.
There are ways to help avoid the tax liability of reinvesting your dividends back into your mutual fund. Most distributions done by mutual fund companies is done near the end of the year. If you don’t want to spend the payout on Christmas presents, you can reinvest the money, but you should do it after the record date. This will help you avoid extra tax liability on your dividends.
Paying taxes on your distribution is a pain. But if your mutual fund is performing well, a small tax on your earning won’t hurt so bad. This is another reason why intelligent, well managed investing is so important. Not only do you have to worry about your fund going up and down in price, but also tax liability. That’s why it pays to invest wisely and use a disciplined approach.
Article Written By J. Foley
Monday, May 19, 2008
What is Automatic Investing?
Investments & Trading
What is Automatic Investing? By J. Foley
For many, the idea of investing in mutual funds, stocks and bonds is appealing, but it all seems too complicated. Too much jargon, too much danger, too much hassle. Thankfully, the companies that run mutual funds know this and have come up with a way for new investors who may not have a big wad of cash to invest right off the bat.
It’s called automatic investing and it is highly recommended for those new to mutual funds and for those that want to invest but don’t have a lot of up-front funds.
Automatic investing is done through a mutual fund company, and what happens is, you sign up to purchase a set amount of funds either every month or every few months (usually quarterly). You buy a bit at a time, whatever you feel you can afford, and your shares are managed by the mutual fund company. It is a great way to watch a nest egg form from money you didn’t even know you had.
A great part about automatic investing is that most mutual fund companies are so excited to get new investors in, they will waive most if not all transaction and investment fees for those that are signing up for automatic investing. They understand you may not have a lot of extra cash to throw away on fees and they want you to get your feet wet with mutual funds.
Maybe the best part about automatic investing is that it is a very disciplined form of investing. Instead of opening up an E-Trade account and investing from your home computer, an investment expert at the mutual fund company that you invest in will handle your shares and in this case, it is probably best to let the experts handle it. It’s extremely tempting to chase mutual funds when investing yourself. You hear the latest news about funds that may be surging and its tempting to take your money and jump on the hottest fund, but disciplined, long-term investing is a much more beneficial way to go.
Whichever company you choose to use for automatic investing will supply you with a prospectus that will outline all of the fees that may or may not be associated with your account. This is key since you’ll need to know what any possible cost might be for things like early withdrawals.
For many, automatic investing takes the guesswork and the fear out of mutual fund investing by allowing a large amount of money to build up over time. Contact a mutual fund company to see if automatic investing is right for you!
Article Written By J. Foley
Curious About The First Commercially Available Stock Trading “Robot” Which Earns $346.77 Per Week (Managing $1000 Capital
What is Automatic Investing? By J. Foley
For many, the idea of investing in mutual funds, stocks and bonds is appealing, but it all seems too complicated. Too much jargon, too much danger, too much hassle. Thankfully, the companies that run mutual funds know this and have come up with a way for new investors who may not have a big wad of cash to invest right off the bat.
It’s called automatic investing and it is highly recommended for those new to mutual funds and for those that want to invest but don’t have a lot of up-front funds.
Automatic investing is done through a mutual fund company, and what happens is, you sign up to purchase a set amount of funds either every month or every few months (usually quarterly). You buy a bit at a time, whatever you feel you can afford, and your shares are managed by the mutual fund company. It is a great way to watch a nest egg form from money you didn’t even know you had.
A great part about automatic investing is that most mutual fund companies are so excited to get new investors in, they will waive most if not all transaction and investment fees for those that are signing up for automatic investing. They understand you may not have a lot of extra cash to throw away on fees and they want you to get your feet wet with mutual funds.
Maybe the best part about automatic investing is that it is a very disciplined form of investing. Instead of opening up an E-Trade account and investing from your home computer, an investment expert at the mutual fund company that you invest in will handle your shares and in this case, it is probably best to let the experts handle it. It’s extremely tempting to chase mutual funds when investing yourself. You hear the latest news about funds that may be surging and its tempting to take your money and jump on the hottest fund, but disciplined, long-term investing is a much more beneficial way to go.
Whichever company you choose to use for automatic investing will supply you with a prospectus that will outline all of the fees that may or may not be associated with your account. This is key since you’ll need to know what any possible cost might be for things like early withdrawals.
For many, automatic investing takes the guesswork and the fear out of mutual fund investing by allowing a large amount of money to build up over time. Contact a mutual fund company to see if automatic investing is right for you!
Article Written By J. Foley
Curious About The First Commercially Available Stock Trading “Robot” Which Earns $346.77 Per Week (Managing $1000 Capital
Wednesday, April 23, 2008
Finding a Forex Broker in a Crowded Marketplace
investments & trading
Finding a Forex Broker in a Crowded Marketplace By J. Foley
So you want to get involved in the foreign exchange market, or forex. You’re itching to trade one currency for another and make some profit. But you can’t just barge into Citigroup of Merrill Lynch and start throwing euros and yen around. To participate, you need a forex broker.
The preeminent forex broker for day traders (i.e., average Joes) is Advanced Currency Markets, or ACM. To many people, the Swiss company, founded in 2002, is synonymous with “forex broker,” trading about $70 billion a month.
There are dozens of other brokers, though, who service day traders. It’s done almost exclusively online, and in fact ordinary citizens rarely got involved with forex trading at all until the computer boom of the 1980s, and then exponentially more with the advent of the Internet in the 1990s. Since then, forex brokers have proliferated.
As you might expect, levels of reliability and competence vary from one broker to another. The Internet is rife with unsavory types seeking to take advantage of suckers, so you would do well to investigate thoroughly any broker you’re planning to use. Does their Web site look professional and reassuring, or is it riddled with dead links and spelling errors? Google the broker to see if they’ve been mentioned in news articles. Ask about their track record. And above all, avoid anyone who promises things that sound too good to be true, or who downplay the financial risk involved in forex trading.
Look for a broker that seems to genuinely want your business. Does the firm have customer service representatives available? Is there a phone number you can call to speak to a live person? The Web site should explain things clearly. If the site is full of language that seems designed to go over your head, look for a different broker.
If you set up an account with an online forex broker, it will work like this. First, you must apply for an account, which most brokers allow you to do online. This is to verify your identity and the validity of your bank accounts and financial records. Some brokers also require you to download their forex trading software, while others let you use whatever software you prefer. You will also have to transfer a minimum deposit to your account with your new broker. The minimum can be anywhere from $100 to $2,500.
Ideally, the broker you choose should offer service and support when you need it but should mostly simply stay out of the way and let you conduct your business. If you can find a forex broker who is professional and helpful, your experience in the forex market should be full of smooth sailing.
Article Written By J. Foley
Finding a Forex Broker in a Crowded Marketplace By J. Foley
So you want to get involved in the foreign exchange market, or forex. You’re itching to trade one currency for another and make some profit. But you can’t just barge into Citigroup of Merrill Lynch and start throwing euros and yen around. To participate, you need a forex broker.
The preeminent forex broker for day traders (i.e., average Joes) is Advanced Currency Markets, or ACM. To many people, the Swiss company, founded in 2002, is synonymous with “forex broker,” trading about $70 billion a month.
There are dozens of other brokers, though, who service day traders. It’s done almost exclusively online, and in fact ordinary citizens rarely got involved with forex trading at all until the computer boom of the 1980s, and then exponentially more with the advent of the Internet in the 1990s. Since then, forex brokers have proliferated.
As you might expect, levels of reliability and competence vary from one broker to another. The Internet is rife with unsavory types seeking to take advantage of suckers, so you would do well to investigate thoroughly any broker you’re planning to use. Does their Web site look professional and reassuring, or is it riddled with dead links and spelling errors? Google the broker to see if they’ve been mentioned in news articles. Ask about their track record. And above all, avoid anyone who promises things that sound too good to be true, or who downplay the financial risk involved in forex trading.
Look for a broker that seems to genuinely want your business. Does the firm have customer service representatives available? Is there a phone number you can call to speak to a live person? The Web site should explain things clearly. If the site is full of language that seems designed to go over your head, look for a different broker.
If you set up an account with an online forex broker, it will work like this. First, you must apply for an account, which most brokers allow you to do online. This is to verify your identity and the validity of your bank accounts and financial records. Some brokers also require you to download their forex trading software, while others let you use whatever software you prefer. You will also have to transfer a minimum deposit to your account with your new broker. The minimum can be anywhere from $100 to $2,500.
Ideally, the broker you choose should offer service and support when you need it but should mostly simply stay out of the way and let you conduct your business. If you can find a forex broker who is professional and helpful, your experience in the forex market should be full of smooth sailing.
Article Written By J. Foley
Monday, April 07, 2008
Online Forex Forums Connect Traders Around The World
Investments& Trading
Online Forex Forums Connect Traders Around The World By J. Foley
Most forex trading is done online, with investors looking at forex charts, considering trends, and making decisions. There’s very little interaction, even via the Internet, with other human beings. That’s one of the reasons that many traders also spend time in forex forums, chatting with other investors and sharing tips.
There are dozens of forex-related forums and message boards on the Internet. Some are tied to brokerage firms, while others are just freestanding forums on forex-related sites. Since the market is active 24 hours a day, you can usually count on the forums being busy at all hours too.
As mentioned, one of the reasons for visiting forex forums is simply psychological: Humans like to interact with other humans, especially when their day jobs require them to be alone with a computer for hours at a stretch.
Furthermore, there are a lot of emotions involved in trading. It’s real money, after all, and often large amounts of it. Online forums give traders a place to discuss the psychological effects of long-term trading, how it can become addictive and nerve-racking, and what impact it has on everyday life. You could think of message boards as being a sort of support group for traders, or the equivalent of the office water cooler.
Forex forums have more practical uses, too, of course. Traders find the tips and strategies offered by their fellow traders to be invaluable. Forums are often rife with people more seasoned and experienced than the average person, which benefits the newcomers. And many experienced traders enjoy visiting the forums because it gives them a chance to share their wisdom with others.
Forex forums are also useful for gauging the general mood of the marketplace. The charts and rates give you the cold, hard facts. But many times making a decision to buy or sell comes from the gut, based not just on the numbers but on how the market FEELS. The forums are a place to see what other traders are thinking right now. Do they feel optimistic? Pessimistic? Are things looking up? Are they discouraged? All of this information can be taken into account when considering a trade.
ForexFactory.com and ForexForum.net are two very popular, widely visited message boards. There are dozens of others out there, too. All forex forums give traders a chance to connect with their colleagues and to learn from one another.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
Online Forex Forums Connect Traders Around The World By J. Foley
Most forex trading is done online, with investors looking at forex charts, considering trends, and making decisions. There’s very little interaction, even via the Internet, with other human beings. That’s one of the reasons that many traders also spend time in forex forums, chatting with other investors and sharing tips.
There are dozens of forex-related forums and message boards on the Internet. Some are tied to brokerage firms, while others are just freestanding forums on forex-related sites. Since the market is active 24 hours a day, you can usually count on the forums being busy at all hours too.
As mentioned, one of the reasons for visiting forex forums is simply psychological: Humans like to interact with other humans, especially when their day jobs require them to be alone with a computer for hours at a stretch.
Furthermore, there are a lot of emotions involved in trading. It’s real money, after all, and often large amounts of it. Online forums give traders a place to discuss the psychological effects of long-term trading, how it can become addictive and nerve-racking, and what impact it has on everyday life. You could think of message boards as being a sort of support group for traders, or the equivalent of the office water cooler.
Forex forums have more practical uses, too, of course. Traders find the tips and strategies offered by their fellow traders to be invaluable. Forums are often rife with people more seasoned and experienced than the average person, which benefits the newcomers. And many experienced traders enjoy visiting the forums because it gives them a chance to share their wisdom with others.
Forex forums are also useful for gauging the general mood of the marketplace. The charts and rates give you the cold, hard facts. But many times making a decision to buy or sell comes from the gut, based not just on the numbers but on how the market FEELS. The forums are a place to see what other traders are thinking right now. Do they feel optimistic? Pessimistic? Are things looking up? Are they discouraged? All of this information can be taken into account when considering a trade.
ForexFactory.com and ForexForum.net are two very popular, widely visited message boards. There are dozens of others out there, too. All forex forums give traders a chance to connect with their colleagues and to learn from one another.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
Sunday, March 16, 2008
The Stock Market Correction Of 1987
Investments & Trading
The Stock Market Correction Of 1987 By J. Foley
The events of October 19, 1987, at the time, were looked upon as a full-fledged stock market crash. In retrospect, no depression or even a recession was sparked by this dramatic fall in prices, but the event is historic nonetheless. One of the aspects that makes it so memorable is the fact that to this day, no one really knows what caused it. There are many different theories as to the reason of the correction, but its all speculation.
The ’87 correction, known now as Black Monday was the first ever global stock market crash. The final numbers are staggering, with the Hong Kong stock exchange losing over 45 percent of its value, the Australian stock market losing almost 42 percent of its value, the UK lost over 26 percent, while the New York Stock Exchange lost 22.6 percent.
The October 1987 fall ended up being the second biggest single day percentage drop in the history of the stock market. The biggest one day decline happened in 1914 when the Dow Jones lost just over 24 percent. This drop was attributed to the fact that the market had been closed for four months due to World War I prior to that day. The biggest point loss in history was the first day of trading after the attacks of September 11th, when the Dow lost over 680 points.
Starting in mid-August of that year, the Dow began to correct itself. A series of 100+ point drops plagued the market over the next two months, but the drops were always followed by recoveries. Even days before the October 19 drop, there had been a major dip, and the next day, stocks were back up. It wasn’t until the Black Monday collapse that stocks went down and stayed there.
Possible causes for the crash are usually broken down into a few different categories, including market psychology, illiquidity, overvaluation and program trading. Other possible causes for the correction are attributed to a major storm in the UK which happened on the previous Friday. The storm did not allow traders in the UK to finish their days work and this caused many in the US and around the world (especially in Hong Kong where the crash first started to happen) to sell.
While time has shown the events of October 1987 weren’t quite as bad as some had feared, dramatic market corrections are a part of investing and while they can be terrifying when they happen, they shouldn’t take a savvy investor by surprise.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
The Stock Market Correction Of 1987 By J. Foley
The events of October 19, 1987, at the time, were looked upon as a full-fledged stock market crash. In retrospect, no depression or even a recession was sparked by this dramatic fall in prices, but the event is historic nonetheless. One of the aspects that makes it so memorable is the fact that to this day, no one really knows what caused it. There are many different theories as to the reason of the correction, but its all speculation.
The ’87 correction, known now as Black Monday was the first ever global stock market crash. The final numbers are staggering, with the Hong Kong stock exchange losing over 45 percent of its value, the Australian stock market losing almost 42 percent of its value, the UK lost over 26 percent, while the New York Stock Exchange lost 22.6 percent.
The October 1987 fall ended up being the second biggest single day percentage drop in the history of the stock market. The biggest one day decline happened in 1914 when the Dow Jones lost just over 24 percent. This drop was attributed to the fact that the market had been closed for four months due to World War I prior to that day. The biggest point loss in history was the first day of trading after the attacks of September 11th, when the Dow lost over 680 points.
Starting in mid-August of that year, the Dow began to correct itself. A series of 100+ point drops plagued the market over the next two months, but the drops were always followed by recoveries. Even days before the October 19 drop, there had been a major dip, and the next day, stocks were back up. It wasn’t until the Black Monday collapse that stocks went down and stayed there.
Possible causes for the crash are usually broken down into a few different categories, including market psychology, illiquidity, overvaluation and program trading. Other possible causes for the correction are attributed to a major storm in the UK which happened on the previous Friday. The storm did not allow traders in the UK to finish their days work and this caused many in the US and around the world (especially in Hong Kong where the crash first started to happen) to sell.
While time has shown the events of October 1987 weren’t quite as bad as some had feared, dramatic market corrections are a part of investing and while they can be terrifying when they happen, they shouldn’t take a savvy investor by surprise.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
Tuesday, February 26, 2008
Want To Learn Forex ?
Investments & Trading
Want To Learn Forex ? By J. Foley
It isn’t hard to learn forex, but it does take time and dedication. The principles involved are fairly easy from a mathematical standpoint, and the basic way that the system works is straightforward enough once it’s been explained to you. But the details and nuances of the market can make it daunting.
The first step as you set out to learn forex should be to do some basic reading on how the foreign exchange market works. The foreign exchange Wikipedia article is good basic reading, and there are plenty of Web sites that offer overviews to help you learn the fundamentals.
Plenty of books have been written on the topic, some of which will help you and some of which just want your money. Try the public library first: Books are free, and if they’re in the library, they were probably published by legitimate publishing houses with legitimate editors and researchers. The information will be more reliable than something you get from a Web site where a guy wants you to buy his e-book.
After that, you have a number of options, all of which will help in different ways. You can make your choice depending on what your own learning process is usually like, whether you’re a visual learner or prefer written instruction, for example.
There are many forex seminars held in major cities, sometimes for free. In these, experienced traders offer tips and strategies to new traders trying to learn forex for the first time.
There are also online courses available, which you can take at your own pace over the course of several weeks. These almost always cost money, and the quality varies. (Remember, you usually get what you pay for.) Some of these courses come from brokers who want you to learn the system so you can start trading with their companies, so it’s in their own best interest to train you well.
You should also consider a demo account, which can help you practice through a realistic simulation of currency trading. You get the full experience of trading without any of the financial risk.
Many firms also offer mini forex accounts, which are real accounts with real money, only with much smaller amounts. For example, instead of a minimum starting investment of $1,000, the minimum might be only $100. This lets you learn forex through actual hands-on practice, but with a risk that is much smaller than usual. You can quickly see if you’re cut out for trading or if it’s just not in your constitution to handle the emotional roller coaster.
Once you learn, forex can be fun and exciting, not to mention financially lucrative. It is necessary to learn, though, and not just jump in blindly.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
Want To Learn Forex ? By J. Foley
It isn’t hard to learn forex, but it does take time and dedication. The principles involved are fairly easy from a mathematical standpoint, and the basic way that the system works is straightforward enough once it’s been explained to you. But the details and nuances of the market can make it daunting.
The first step as you set out to learn forex should be to do some basic reading on how the foreign exchange market works. The foreign exchange Wikipedia article is good basic reading, and there are plenty of Web sites that offer overviews to help you learn the fundamentals.
Plenty of books have been written on the topic, some of which will help you and some of which just want your money. Try the public library first: Books are free, and if they’re in the library, they were probably published by legitimate publishing houses with legitimate editors and researchers. The information will be more reliable than something you get from a Web site where a guy wants you to buy his e-book.
After that, you have a number of options, all of which will help in different ways. You can make your choice depending on what your own learning process is usually like, whether you’re a visual learner or prefer written instruction, for example.
There are many forex seminars held in major cities, sometimes for free. In these, experienced traders offer tips and strategies to new traders trying to learn forex for the first time.
There are also online courses available, which you can take at your own pace over the course of several weeks. These almost always cost money, and the quality varies. (Remember, you usually get what you pay for.) Some of these courses come from brokers who want you to learn the system so you can start trading with their companies, so it’s in their own best interest to train you well.
You should also consider a demo account, which can help you practice through a realistic simulation of currency trading. You get the full experience of trading without any of the financial risk.
Many firms also offer mini forex accounts, which are real accounts with real money, only with much smaller amounts. For example, instead of a minimum starting investment of $1,000, the minimum might be only $100. This lets you learn forex through actual hands-on practice, but with a risk that is much smaller than usual. You can quickly see if you’re cut out for trading or if it’s just not in your constitution to handle the emotional roller coaster.
Once you learn, forex can be fun and exciting, not to mention financially lucrative. It is necessary to learn, though, and not just jump in blindly.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
Saturday, February 09, 2008
The Buttonwood Agreement – The Forerunner To The NYSE
Investments & Trading
The Buttonwood Agreement – The forerunner to the NYSE By J. Foley
When we think of the current New York Stock Exchange, images come to mind of the Big Board, ticker tape and incredible amounts of stress. But it didn’t always use to be that way. There was a time when a group of men met under a shady tree in the spring to found what would become one of the most powerful and well known exchanges in the world.
The story of the Buttonwood Agreement actually goes back even further than 1792. Two years earlier, then Secretary of the Treasury Alexander Hamilton (pre-duel) issued a then staggering amount of $80 million in war bonds to help pay for the rising costs of the Revolutionary War. It would be these bonds that would play a key role in the founding of the Buttonwood Agreement.
A major reason for the founding of the Buttonwood Agreement was that securities trading in New York City at that time was a bit disorganized. Auctioneers would deal in commodity trading, land speculation and foreign currency exchange, but the Buttonwood Agreement sought to organize and streamline the trading so that it could be done in one place.
Two years later, on May 17, 1792, a group of 24 prominent New York City business men met outside of 68 Wall Street in lower Manhattan and put together the Buttonwood Agreement. With a simple two-sentence contract, they formed the New York Stock & Exchange Board and the first securities to be traded were those very war bonds that Alexander Hamilton had issued two years prior. The first company to be listed on the new exchange was the bank of New York. The original home for the new stock & exchange board would be the Tontine Coffee House, which was owned by Hugh Smith, one of the 24 founding members. Other founding members included well known New York business men such as Charles McEvers Jr, John Bush, Alexander Zuntz and Ephraim Hart.
In 1817, the adopted name of the New York Stock & Exchange Board was formally adopted, as well as a comprehensive constitution and bylaws, and later in 1863, this name was shortened to the name we know today, the New York Stock Exchange.
It’s amazing to consider that the billions of dollars that trade hands every day on the floor of the New York Stock Exchange started as a group of business men looking to organize colonial American commodity trading under a tree. But it’s true, and their legacy is felt every single day and it will continue to be felt for as long as the NYSE stands.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
The Buttonwood Agreement – The forerunner to the NYSE By J. Foley
When we think of the current New York Stock Exchange, images come to mind of the Big Board, ticker tape and incredible amounts of stress. But it didn’t always use to be that way. There was a time when a group of men met under a shady tree in the spring to found what would become one of the most powerful and well known exchanges in the world.
The story of the Buttonwood Agreement actually goes back even further than 1792. Two years earlier, then Secretary of the Treasury Alexander Hamilton (pre-duel) issued a then staggering amount of $80 million in war bonds to help pay for the rising costs of the Revolutionary War. It would be these bonds that would play a key role in the founding of the Buttonwood Agreement.
A major reason for the founding of the Buttonwood Agreement was that securities trading in New York City at that time was a bit disorganized. Auctioneers would deal in commodity trading, land speculation and foreign currency exchange, but the Buttonwood Agreement sought to organize and streamline the trading so that it could be done in one place.
Two years later, on May 17, 1792, a group of 24 prominent New York City business men met outside of 68 Wall Street in lower Manhattan and put together the Buttonwood Agreement. With a simple two-sentence contract, they formed the New York Stock & Exchange Board and the first securities to be traded were those very war bonds that Alexander Hamilton had issued two years prior. The first company to be listed on the new exchange was the bank of New York. The original home for the new stock & exchange board would be the Tontine Coffee House, which was owned by Hugh Smith, one of the 24 founding members. Other founding members included well known New York business men such as Charles McEvers Jr, John Bush, Alexander Zuntz and Ephraim Hart.
In 1817, the adopted name of the New York Stock & Exchange Board was formally adopted, as well as a comprehensive constitution and bylaws, and later in 1863, this name was shortened to the name we know today, the New York Stock Exchange.
It’s amazing to consider that the billions of dollars that trade hands every day on the floor of the New York Stock Exchange started as a group of business men looking to organize colonial American commodity trading under a tree. But it’s true, and their legacy is felt every single day and it will continue to be felt for as long as the NYSE stands.
Learn How To Trade Nasdaq, Nyse Or Any Other Volatile Stock Market!
Article Written By J. Foley
Friday, February 01, 2008
A Good Forex trading Strategy Can Mean The Difference Between Failure And Success
Investment & Trading
A Good Forex trading Strategy Can Mean The Difference Between Failure And Success By J. Foley
No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.
The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.
Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.
Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.
As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.
Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?
Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.
Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.
Article Written By J. Foley
A Good Forex trading Strategy Can Mean The Difference Between Failure And Success By J. Foley
No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.
The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.
Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.
Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.
As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.
Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?
Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.
Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.
Article Written By J. Foley
Friday, January 04, 2008
Securities Exchange Commission
Investments & Trading
Securities Exchange Commission By J. Foley
The United States Securites and Exchange Commission was founded in 1934 in response to the great stock market crash of 1929. Congress created the SEC in the hopes that it would serve as an independent and non-partisan agency that would help regulate the dealing of securities in the USA. Thanks to the crash of 1929, Congress also enacted many new securities laws that the SEC was created to enforce.
The main job of the SEC is to enforce a series of laws, most of them enacted from 1933-1940 that help protect investors of securities and the economy as a whole. Congress has given the SEC the right to bring civil cases against companies that they feel have committed a series of crimes, such as insider trading, fraud, or companies that have given false information. The SEC also works hand-in-hand with local police, the FBI or the CIA in pursuing criminal charges when the proper laws have been broken.
One of the ways that the SEC gathers information about various companies so that it can see if any of them have broken the law is be requiring that publicly held companies submit reports four times a year and then an annual report, as well, showing their financial numbers. The companies also file reports with the SEC that outline how the business did that year and how it expects to do in the future.
These reports are absolutely vital to investors when trying to figure out which company to invest in. The capital markets are notorious for upheaval and these reports are essential for investors who are trying to figure out which companies are safe to invest in and which ones aren’t.
The SEC allows anyone to read these reports and they are available via an online system to read at any time. The SEX also uses this same system so that individual investors may file complaints against a company that they feel might be breaking the law. This allows every day citizens the chance to call attention to a possibly crooked company.
A recent pop culture reference to the SEC came from the now-defunct television show Arrested Development, when the pilot episode featured the SEC boarding a yacht to confiscate documents related to the Bluth family business.
The SEC is a vital government agency that helps companies walk the straight and narrow and helps individual investors make educated decisions about the right companies to invest in. If you’re thinking about investing in the capitals market, a visit to the SEC online system is an absolute must.
Article Written By J. Foley
Securities Exchange Commission By J. Foley
The United States Securites and Exchange Commission was founded in 1934 in response to the great stock market crash of 1929. Congress created the SEC in the hopes that it would serve as an independent and non-partisan agency that would help regulate the dealing of securities in the USA. Thanks to the crash of 1929, Congress also enacted many new securities laws that the SEC was created to enforce.
The main job of the SEC is to enforce a series of laws, most of them enacted from 1933-1940 that help protect investors of securities and the economy as a whole. Congress has given the SEC the right to bring civil cases against companies that they feel have committed a series of crimes, such as insider trading, fraud, or companies that have given false information. The SEC also works hand-in-hand with local police, the FBI or the CIA in pursuing criminal charges when the proper laws have been broken.
One of the ways that the SEC gathers information about various companies so that it can see if any of them have broken the law is be requiring that publicly held companies submit reports four times a year and then an annual report, as well, showing their financial numbers. The companies also file reports with the SEC that outline how the business did that year and how it expects to do in the future.
These reports are absolutely vital to investors when trying to figure out which company to invest in. The capital markets are notorious for upheaval and these reports are essential for investors who are trying to figure out which companies are safe to invest in and which ones aren’t.
The SEC allows anyone to read these reports and they are available via an online system to read at any time. The SEX also uses this same system so that individual investors may file complaints against a company that they feel might be breaking the law. This allows every day citizens the chance to call attention to a possibly crooked company.
A recent pop culture reference to the SEC came from the now-defunct television show Arrested Development, when the pilot episode featured the SEC boarding a yacht to confiscate documents related to the Bluth family business.
The SEC is a vital government agency that helps companies walk the straight and narrow and helps individual investors make educated decisions about the right companies to invest in. If you’re thinking about investing in the capitals market, a visit to the SEC online system is an absolute must.
Article Written By J. Foley
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