Investment Myths And The Forex Markets

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Posted 03 Jan 2009

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell

Nobody gave me a crystal ball for Christmas. Then again it doesn’t take one to predict a lousy 2009. “More of the same” isn’t much of a prediction, is it? It’s more like a status report projected into the future.

I don’t believe in “more of the same.” Either things will get better or worse. The one thing they won’t do is stay the same. Here are six things I think will happen in ‘09.

1. The BRICs (Brazil, Russia, India and China) will have a terrible year. China will compete with the U.S. on who has the bigger government-led infrastructure program. They will also compete on whose is more effective. China’s will be building roads and schools. In addition to roads and infrastructure projects, President- Elect Obama’s will be building wind mills and broadband networks for schools. Both will fail in creating permanent jobs.

2. Iran will save oil. OPEC’s spotty execution in cutting oil output will not stop oil prices from falling further. But Iran’s refusal to stop its nuclear development program will beget serious sanctions from the West, threatening Iran’s oil exports. Oil prices will hit $20 per barrel and then start rising again.

3. Solar stocks (and other alternative energy companies) will spike after Obama gives his first state of the union address at the end of January or early February. Then, when investors realize that the actual legislation is still months away, prices will slink back to their previous low levels.

4. One of the big three auto makers will disappear. Here’s a hint: It won’t be Ford. It will, however, mark the beginning of the auto industry’s recovery.

5. The fourth quarter will cough up earnings reports that manage to disappoint rock-bottom expectations. The Dow will plunge and flirt with the 5,000 mark. Obama’s big stimulus plans will pick the market up before investors realize how horrible the economy must be for Obama to be spending another $1 trillion trying to revive it.

6. Americans fall in love with big cars again.

It’s going to be an interesting year.

Happy New Year,

Andrew Gordon

Posted 30Dec2008

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell

By comparison, the first half of the $700 billion bank bailout money has been handed out. That’s $350 billion, or roughly 20 times the size of the loan to the Detroit 3.

So far, no one has any idea where any of the money went.

If the banks know, they aren’t saying.

The Associated Press contacted 21 banks that received at least $1 billion in bailout money and asked four basic questions:

How much was spent?
What was it spent on?
How much is being held in savings?
What’s the plan for the rest?
The answers were absolutely ridiculous. Here are some of the responses from the AP article:

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

“We’re not providing dollar-in, dollar-out tracking,” said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.

Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion said “We’re choosing not to disclose that,” and later added “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”

Wow. Great use of taxpayer money fellas.

So let me try to understand this: the reason the banks got in the mess they are in is because they placed huge bets on exotic mortgages, ignoring traditional risk models that likely pointed out that such loans would never be repaid.

When the day of reckoning came and loans started defaulting, the banks weren’t really punished for their transgressions; instead they were given money to stay in business. And now we aren’t even asking them to show us where that money has gone.

I’m not implying that the banks shouldn’t have been bailed out. Allowing them to fail would have caused a systemic collapse of the country’s banking and financial industries.

But to give them an actual blank check without any sort of accountability is absolutely criminal. The taxpayers who are footing the bill have absolutely no idea where the money went, or where the next $350 billion is going.

Just like the loans to the automakers, the banks should be forced to provide a gameplan for where the money is being spent. If the banks can’t provide a basic breakdown of where the money was used, they shouldn’t be able to get any more.

I feel a majority of the money should be used to restructure mortgages that are either in default, or in high risk of default. After all, isn’t that what got is in this mess?

If instead of the answers given above, we all deserve to hear “we kept $75 million of the money for the balance sheet, $350 million was spent restructuring 1600 loans, and we plan on using the second part for similar plans” and actually force them to account for the money.

The first $350 billion of your money has likely been completely wasted. Let’s hope the second half gets put to good use.

by Christian Hill
Posted 23Dec2008

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell

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Our economy floats on the whims of the American consumer. When they feel confident about the future, they spend. The more they spend, the better the economy does. This is oddly true even if 80 percent of the spending is on goods from Asia.

Right now the American consumer isn’t feeling so confident and the economy is suffering as a result.

But if we spend more, we go more into debt. We’re already spending more than we make. And the more we go into debt, the more money goes to paying off that debt…

Money the country doesn’t have. Money we as consumers don’t have. Money that should be going into productive assets, not into the hands of our cash-rich lenders in Asia.

We’ve been spending beyond our means for a while. But nobody cared much as the economy was booming and people were profiting from multiple bubbles.

The rich were getting richer. But the middle class was also seemingly enjoying the fruits of an expanding economy – moving into bigger houses and spending more on everything.

But their incomes had become stagnant. It couldn’t last. And it didn’t.

Conspicuous consumption has retreated under mountains of debt and growing doubt about the future.

Several forces are at work, not the least of which has been the economy’s inability over the last three-and-a-half decades to appreciably reward households with growing income.

Annual Growth Rate of Real Income Across the Family Income Distribution: 1947 to 1973 versus 1973 to 2005

Source: U.S. Census Bureau, Historical Income Tables, Tables F-2, F-3 and F-6. Downloaded from http://www.census.gov/hhes/www/income/histinc/ incfamdet
on Feb. 26, 2008

The 50′s and 60′s brought great economic growth to the country. But it also benefitted Americans across the entire spectrum of economic classes – from the very poor to the very rich. The slowest-growing group back then? It was the top five percent. Their income grew by 2.3 percent – about a third slower than how the poorest fifth of the population fared.

From 1973 to 2005, the top five percent maintained the income growth rate they had managed in the previous couple of decades. Problem is, the other income groups fell way behind – led by the poorest income group whose income didn’t grow at all in real money terms.

The middle income group also saw a real slowdown in income growth from annual rates approaching three percent to rates of 0.4-1 percent.

This clash of trends – stagnant income verses rising medical, education and housing expenses – should have ended the economic good times far before it did. It lasted this long because…

• The women. They entered the work force in increasing numbers beginning in the 70′s. It took a double-income family to maintain the lifestyle that a single-income family had so recently been able to afford.
• Deflation from imports. Very cheap gas from the Middle East (thanks to an undisciplined OPEC) and cheap goods from Asia (thanks to low wages that must have had Karl Marx rolling over in his grave) kept things affordable in the 80′s and 90′s.
• Credit card nation. Before there were credit cards, there were lay-away plans. If you couldn’t afford it, the store would take it off the shelves and “lay it away” until you saved up the money. Credit cards let people buy what they couldn’t afford. It also established a consumer mindset about cash which facilitated the housing boom, bubble and then crash.
• The housing equity windfall. Americans, especially the middle class, avoided facing their diminished status brought on by decades of underwhelming income growth by turning their houses into cash machines. Easy credit greased the way. Thank you, Alan.

It is a great irony that as the U.S. grew into the undisputed richest and most powerful country in the world, its middle class turned into an endangered species.

The prerogatives of a middle-class lifestyle are a nice home and car, medical care, and education for your children. This is not greed. This is the American Dream. The best thing about it is that supposedly you don’t have to be rich. A ticket into the middle class is all you need.

That dream is now drowning in debt.

Spending beyond your means isn’t some freakish trait of the American middle class. It scares the hell out of the Europeans or Chinese. The notion that American households don’t mind debt is preposterous.

Have you ever had a conversation with somebody who said, “Sure, I’m buried in credit card debt and under water with my mortgage but I don’t mind. I’m going to continue to spend to my heart’s content.”

It’s precisely because the middle class is deeply worried about its debt (and the economy) that they have substantially reduced spending. And it’s going to stay that way until the value of the houses they live in and the incomes they make start to go up again.

Politicians of both political parties have turned a blind eye to the fate of the American middle class for too long. It’s time the government steps up to the plate.

They should do so because the fate of American retailers relies on reviving the middle class. Except for low-end retailers like Mickie D’s, Wal-Mart and the super stores, the entire sector is suffering mightily from the wanton disabling of the American Middle Class.

Then there’s this: the American Dream will die if they don’t do something and do it sooner rather than later.

Harvard political scientist Samuel Huntingdon wrote: “Critics say that America is a lie because its reality falls so far short of its ideals. America is not a lie, it is a disappointment. And it can be a disappointment only because it is also a hope.”

As oil continues its dizzying fall, cheap energy and gas will allow Americans to spend more on other things. But oil companies aren’t happy and are reacting in different ways.

Some, like ExxonMobil, are continuing their spending plans. For ExxonMobil, that would be a tidy $25-30 billion a year. Most of the other oil majors are cutting back – especially on spending in higher cost and/or non-conventional oil development initiatives.

Having just enjoyed another quarter of record or near-record breaking profits, these companies certainly have the money to spend. Oil companies may not be as vulnerable to the economic crisis and credit crunch as car manufacturers, but the good ol’ days are rapidly coming to a close.

Oil for the year is still averaging over $100 a barrel. So on the surface, oil companies are doing fine. But dig a little deeper, and some cracks begin to show. Until recently they’ve been fighting rising costs. Costs of raw materials like steel and cement have now fallen back to earth. But labor and drilling remain stubbornly high.

And production in existing fields is declining faster than expected. For example, oil is flowing from the North Sea at a clip of 1.7 million barrels per day. By 2030, it’ll drop to only 500,000 barrels. Production from existing fields in Alaska, Russia and Mexico are also suffering faster-than-expected declines.

A new report from the International Energy Agency says that oil companies will have to spend $360 billion per year just to keep this rate of decline at 6-7 percent over the next two decades. Otherwise, rates will climb over nine percent.

That’s a lot of money to spend on a losing battle. All that spending won’t reverse rates. It will just slow down falling production.

The same agency noted that oil output outside of OPEC countries has plateaued already. And it will begin to drop in a few years.

There will be individual companies in the West that will be increasing production – especially companies working the smaller oil plays. But the future for the bigger oil companies and for western oil companies as a group is grim.

With each passing quarter, their ability as a whole to maintain production levels will come under increasing pressure. Raising production is simply off the table. Ain’t gonna happen.

It would seem that Obama’s unfriendly stance toward oil companies (like plans to tax windfall profits) is particularly backward-looking. Oil companies are in a heap of trouble. Oil companies haven’t figured out how to counteract declining prices combined with declining production.

What can they do? They could follow Royal Dutch Shell and put more money into developing non-conventional oil resources, like the vast reserves of oil sand in Canada. Shell, along with Suncor, Petro Canada, Imperial Oil and a half-a-dozen other companies are delaying new projects or cutting back on their spending in Canada, though.

The problem? Some of these oil companies swear it’s more a concern over rising costs than the falling price of oil. But c’mon. The Canadian oil sands are a big money-maker when oil was at $145 a barrel. It would be a profitable operation even with oil at $100.  

But at $65? Or $55? That’s cutting it far too close for comfort.

Here’s the kicker, though. Any increase of oil production will have to come from OPEC countries. Countries in the West – including the U.S., of course – will be more dependent than ever on OPEC to satisfy their oil thirst.

And there’s not a thing an Obama presidency can do about it.

Even if he pushes hard on energy conservation and using more alternative energy resources, it’s not going to change the fact that availability of our most important fuel will depend on OPEC countries making timely decisions on raising output.

Over the long run, moving away from oil is a good move. But there’s only one thing that will keep the price of oil down in the short run and that’s a deep and prolonged global recession. Once countries like China and India (where most of the growth in oil demand will come from) start to bounce back, the price of oil will begin a long climb up.

And given that oil companies in the meantime will be making much less money and, as a result, spending much less money on developing new production, a new round of oil shortages will develop…

That is, unless OPEC countries raise production enough to keep prices low. And that’s a non-starter if I ever saw one.

So expect oil to climb to new heights after a 2-3 year pause that has just begun. It’ll easily pass the previous high of $147 reached this July. It should hit $200 and could go higher.

The big oil companies in the West will benefit greatly, even if their production is flat-to-falling. And those big bets that companies like Suncor, Nexen, Opti Canada, and Petro Canada have made in the Canadian oil sands will be looking a lot better.

You may want to keep in mind that among the super-majors, the company with a big lead in non-conventional oil development is Royal Dutch Shell. It’s not the best-looking super-major now. But by the time Obama is campaigning for a second term, that could well change.

By Andrew Gordon 

Posted 11 Nov 2008

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Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Oil prices have dropped 55 percent from their peak in July and they could go lower. That’s what you want, isn’t it? Cheaper gas and cheaper heating fuel allows you to spend more on things you really need – like your kids’ education or appliances.

Oil cost over $147 just three months ago. Now it is under $70. How low can oil go? How low should you want oil to go?

It should go much lower but don’t be too quick to rejoice. If prices fall further, the vast oil sands of Canada would become uneconomical. The tens of billions of barrels of oil lying under the deep waters of Brazil and elsewhere would cost too much to produce.

Oil first went down on weakening demand in the U.S. Then when it became apparent that de-coupling was a load of crap and our economic problems had spread to Europe, oil went down even more. Those were the first two legs. We have one more major leg to go.

Oil should fall another $10-20 per barrel as the global slowdown infects the fastest growing countries in the world. Those are countries in the developing world – countries like China, India, Brazil and Argentina. They’ve just begun to grapple with much slower economic growth.

In response oil producers are cutting back production. When they met last week in Vienna in an emergency session, they decided to cut back crude output by 1.5 million barrels per day. But I doubt that OPEC can put a floor under the price of oil. They failed to do it in the 1990′s. Too many OPEC countries didn’t like the idea of seeing shrinking revenues go down even further from lower production.

Will it be different this time around? Venezuela is a big spender. So is Iran. And then you have non-OPEC countries like Russia that are desperate to put more cash in their coffers. How long can they play this game? A few months won’t be a problem. But the global economic crisis will last longer than a few months … at which point we’re sure to start seeing cracks in OPEC’s united front.

Ten dollars a barrel? Sounds good. But it would not only signify an ineffectual oil cartel. It would also mean that the world is in a long and deep recession. And it would be setting up the biggest oil shortage yet once economies start turning around.

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Types of bonds:

Anticipation Note
These are short term bonds issued in anticipation of a future revenue source. The interest rates on these bridge bonds are usually higher than longer-term bond instruments.

General Obligation
This type of bond usually requires voter approval. The revenue does not come from a dedicated source but rather general receipts acquired by the community.

Certificates of Participation
These financial instruments use the leasing of real property or physical assets as collateral for the loan.

Mini/Baby
These bonds are used when there are smaller capital requirements, generally less than $1,000 per instrument. Administrative fees are a larger percentage of the instrument due to the small face value.
Revenue
The debt service is paid by revenue generated by the project being financed or other non-property tax source. This is the vast majority of bonds issued for municipal infrastructure.

What is a Mini-Bond?
Mini-bonds are general obligation bonds.

There are two types of Mini-Bonds:

A. Capital Appreciation Bonds

A Capital Appreciation Bond is a bond on which the purchaser receives no interest payments between the time it is purchased and its maturity date. Instead, the interest compounds semiannually and is payable at maturity. Capital Appreciation Bonds may be purchased in $200 increments.

B. Current Interest Bearing Bonds

A Current Interest Bearing Bond is a bond on which interest is paid each six months until maturity. Current Interest Bearing Bonds may be purchased in $500 increments.

For more research and news on bonds you could read blogsite www.ezycash.tk
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“Gold dropped from $915 to $859 on Friday. That’s not supposed to happen while the market is crashing. What’s going on?

It’s not that gold has lost its luster. But institutional investors were forced to sell gold on Friday to meet margin calls.

If equity and hard assets continue to lose value anywhere near the rate of last week, margin liquidation will continue. And gold could go down even more.

But make no mistake about it. With the market crashing and dozens of governments printing money like there’s no tomorrow, investors want to be in gold.

Before the sell-off on Friday, the price of gold was up more than 20 percent following Lehman’s collapse.

The demand for physical gold this month has surged to what one trader calls “unprecedented” levels. The U.S. Mint has doubled its gold-coin production but it hasn’t been enough.

Gold dealers have had to turn away customers wanting to buy coins and bars.

But it’s the physical demand (for jewelry) that ultimately decides the price of gold. Jewelry demand accounts for 60 percent of total gold demand and it’s down so far this year.

Will it pick up? The world’s biggest gold consumer is India and Diwali – the festival of lights –begins October 28th. Gold sales usually surge with the approach of this festival.

Then there’s this: Gold production today is lower than it was in 2000.

Gold is rarer than ever. The markets are going to hell. It’s gold’s time.

By Andrew Gordon”

Posted 14 oct 2008

Look out for gold investment you just might get a good deal when it dips.

Good luck in your trade

Ezycash

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This is true simply because of the unpredictability of the market. The lack of an accurate prediction tool and the lack of a consistent trend for any stock only compounds the problem.

The greatest myth about being successful in trading is the need for the investor to be able to predict the stock market’s movements. People incorrectly assume that stocks bounce around the range forever and therefore they must be able to predict a trend in the movement in order buy stocks during their lowest value and sell them at their highest peaks.

This is grossly incorrect.

The best way to make money in the stock market is to avoid approaches that rely on stock market predictions.

If you look at it, a conscious action of predicting the market is no better than buying a stock and holding on to it for a long period.

The reason behind this is because there is simply no way to predict stock performance. There is no person who can accurately predict stock movement consistently, all of the time.

An analyst may be able to predict a stock’s performance in the immediate future but rarely in the long term. The analyst may predict next quarter’s performance, or even for the entire year. But it is statistically impossible to predict stock movement correctly quarter after quarter, year after year.

A good way to do trading is to formulate your own strategy. Consider the following:

* Take time to do a careful evaluation of the history of a stock’s performance. * Keep up with the latest news and stock market reports * Study the structure of successful mutual funds to see how their investment strategy is done. You can choose these funds to choose the best they are composed of and build your own portfolio from them. * It is best to invest in a stock that has good dividend and growth. * Invest in stocks that have a history of progressive gain. * Evaluate the type of sector your company deals with.

Again, there is no specific and proven strategy that consistently reaps profit for any investor. Stocks are volatile and any strategy that proves reliable today may prove entirely worthless tomorrow.

The best way is to study several stocks and consider them as long-term investments. These may take you longer before you post any profit, but it beats putting all of your eggs in one basket.

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