Guest contribution provided by Forex Traders

Major global economic trends have been at work reshaping international commerce, redistributing wealth on an enormous scale, and shifting the manufacturing base of the world from predominantly Western countries to Asia over the past few decades.  The rise of emerging economies is now moving at a quickened pace after years of off shoring activities by companies in the West.  Economists are projecting these trends to continue to 2030, establishing a new world order of economic strength, and that the road will be “rocky” with currency exchange rates being the ultimate “battleground” going forward.

Investment fund managers have not overlooked the success in Asia and other emerging regions, for that matter.  While “best practice” for overseas investments may have once been in the fifteen percent range for allocations, fund managers across the globe have raised this criteria to encompass as much as 35% of a managed portfolio.  Capital will always seek higher returns, and, with real GDP growth doubling and trebling similar rates in advanced economies, the obvious response has been to shift investment allocations to where the potential for return is highest.

How will this scenario play out in future?  The Global Research division of Standard Chartered PLC, a leading international bank with over 90% of its profits derived from Asia, recently published their research last November in a lengthy paper entitled “The Super-Cycle Report”.  Expanding upon previous groundwork prepared by the IMF, their economists extended prevailing trends out to the year 2030.  In their vision, global GDP will grow from US$62 trillion to over US$300 trillion, exemplified by volatility and instability as the world transitions to a new world order.

The projected outcome is depicted in the table below:

According to their forecast, China will take over the top spot by 2020 and speed beyond the United States thereafter.  India, which is outside the Top Ten today and below Canada, will assume the third position, followed by Brazil and Indonesia.  Emerging countries with high populations and low labor costs are portrayed as the “victors” in the global competitive trade wars that lie ahead.

Gerald Lyons, the lead economist for the bank, commented during a Bloomberg interview that, “We believe that the world is in a ‘super-cycle’ of sustained high growth.  The scale of change over the next 20 years will be enormous.”  Not all will be easy for the China economy, however, since it “is ‘unbalanced’ and faces considerable risks, including a widening of imbalances, asset bubbles, over-capacity and rising bad loans which could lead to a serious decline.”

The report emphasizes that currencies will be the focal point for international tensions as these significant changes sweep the globe.  Currency risk and hedging strategies will take center stage as anticipated volatility and permanent shifts in value grip the forex market.  The concerns for Canada will be two-fold.  The Canadian Dollar has long been correlated with the price of oil.  So goes oil, so goes the “Loonie”.  The emerging markets of the world are deficient in energy and raw material resources, such that the demand for Canadian oil reserves can only increase.

The second concern is a result of the first.  The Canadian Dollar will naturally strengthen versus the greenback, thereby suggesting that investments in U.S. Dollar-based securities and most other overseas locales will depreciate over the decades ahead due to currency issues alone.  Hedging strategies will become the new art form for pension managers to emulate on a grand scale.  This long-term trend of an appreciating national currency is already evident in recent data presented in the diagram below:

The five currencies depicted above constitute nearly 100% of Canada’s trade related currency risk exposure, with the United States commanding an 80% share today.  The overall trend has been one of appreciation over the past year, except for the Yen, but current events will likely change this story as well.  The Chinese Renminbi is currently “pegged” to a basket of global currencies, but at some point during the next few years, pressure will mount for the currency to float.  Economists expect the Renminbi to appreciate at least 33% to the greenback when all is said and done.

China is already sitting on over US$2 trillion of foreign currency reserves.  Managers of these reserves will never sell these certificates of deposit in the open market for fear of destroying current price support levels, but the trend has been to re-invest these funds in valued commodities for future use.  Headline news have often focused on how the Chinese energy shopping spree has taken residence in Alberta and British Columbia near Canadian oil and gas reserves.

Going forward, these trends are likely to continue.  Timing will be everything.  Hedging, however, is a complex exercise, best left to professionals experienced in the craft.  The time to acquire these resources is now.

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Merger Could Take NYSE Out of American Control

“A German company is in high-level talks to acquire the New York Stock Exchange, Wall Street’s most recognizable institution.  According to reports published in both the German and American financial press, Deutsche Borse, a Frankfurt-based stock exchange is seeking to take a 60 percent ownership interest in the NYSE.  The merger would create the world’s largest financial exchange.

News of the deal sent both NYSE and Deutsche Borse stock soaring Thursday.”

Bloomberg Supports Merger Deal Between NYSE, Germans

“Mayor Michael Bloomberg said Thursday he thinks the propsed merger of the iconic New York Stock Exchange with Frankfurt’s Deutsche Boerse would be “the right thing for New York City.”

His comments come a day after the parent companies of the New York Stock Exchange and Deutsche Boerse said they were in “advanced talks” to combine operations — a deal that would create the world’s largest financial exchange.”

Frankfurt, New York stock exchanges mull mega-merger

“Investors were left with bated breath Wednesday after Deutsche Börse and NYSE Euronext said they were in “advanced discussions” to merge into the world’s biggest stock exchange operater by revenues and profits.

“This transaction creates a group that is both a world leader in derivatives and risk management and the premier global venue for capital raising,” the firms said in a joint statement.

“The global capital markets would benefit from the creation of the most efficient, transparent and well-regulated markets for issuers and clients around the world.”

Related articles

• Deutsche Börse Steals LSE’s Thunder (online.wsj.com)
• NYSE Euronext and Deutsche Börse plan monster merger (independent.co.uk)
• NYSE-Deutsche Börse Merger: What to Call the Combined Company? (blogs.wsj.com)

Germans are not happy a day after the European Central Bank moved to support Eurozone nations, like Greece, who are deep in debt.

“The credibility of the European Central Bank is on the line following a decision to intervene in financial markets under a eurozone rescue plan. ECB president Jean-Claude Trichet claims he had no other option.” (from DW-World.de)

“Trichet has been under fire ever since eurozone finance ministers agreed over the weekend to launch an unprecedented aid package worth 750 billion euros ($1 trillion). The scheme is designed to rescue the euro as the effects of the Greek fiscal crisis spill over into other indebted nations in the eurozone. In a nutshell, it allows the ECB to buy government bonds issued by eurozone nations in financial trouble.”

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Related articles by Zemanta

• “Trichet “Bluff” Called as ECB Joins Quantitative Easing, Bails Out Eurozone Banks” and related posts (rosemanblog.sovereignsociety.com)
• Trichet: ECB remains fiercely, totally independent (sfgate.com)

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A mutual fund is a diverse holding of stocks that are managed on behalf of the investors that buy into the fund. A mutual fund allows an investor to take advantage of a diversified portfolio without having to invest a large sum of money.

What is the advantage of a diversified portfolio? It offers protection against rapid market losses of any one particular stock. If a portfolio is spread across 20 stocks, if any one of those shares quickly loses value the effect is less than if the portfolio consisted of that one stock by itself.

When investing it is always a good idea to diversify. The problem for small investors is that they often don’t have the funds to buy a variety of stocks. Mutual funds allow small investors to benefit from diversification with a small amount of money.

Besides shares, mutual funds can be made up of a variety of holdings including bonds and money market instruments. A mutual fund is actually a company and investors that buy into a fund are buying shares of that company. Shares in a mutual fund are bought directly from the fund itself or brokers acting on behalf of the fund. Shares can be redeemed by selling them back to the fund.

Some funds are managed by investment professionals who decide which securities to include in the fund. Non-managed funds are also available. They are usually based on an index such as the Dow Jones Industrial Average. The fund simply duplicates the holdings of the index it is based on so that if the Dow Jones (for example) rises by 5% the mutual fund based on that index also rises by the same amount. Non-managed funds often perform very well – sometimes better than managed funds.

There are downsides to mutual funds. There are usually fees that must be paid no matter how the fund performs, and the individual investor has no say in which securities can be included in the fund. Also, the actual value of a mutual fund share is not known with the same precision as stocks on the stock market. 

Mutual funds are often a better choice for the small investor than either stocks or bonds. They offer the diversity that provides cushion against sudden stock market movements and usually provide a greater return than bonds. Of course, mutual funds can also lose value, especially in the short term, so short term investors may be better off with bonds which offer a set rate of return.

There are three main types of mutual funds: money market funds, bond funds and share funds. Money market funds offer the lowest risk – they consist solely of high quality investments such as those issued by the US government and blue chip corporations. Money market funds have rarely lost money, but they pay a low rate of return.

Bond funds aim to produce higher yields than money market funds and therefore carry a correspondingly higher risk. All the risks that are associated with bonds – company bankruptcy, falling interest rates – also apply to bond funds.

stock funds usually have the greatest potential for profitable investment but also carry the greatest risk. The risk is more for short-term holders of mutual funds – shares have traditionally outperformed other investment instruments in the long run.

There are different types of stock funds including ‘growth funds’ that attempt to maximize capital gain and ‘income funds’ that concentrate on stocks that pay regular dividends.

Mutual funds are an ideal investment for those with limited funds or investment experience. Choosing the right fund is a decision on how much risk you are willing to take against your expected return on your investment.

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The share market is a reliable indicator of the actual value of companies which issue stock. Values of stocks are based on verifiable financial data such as sales figures, assets and growth. This reliability makes the stock market a good choice for long term investing – well-run companies should continue to grow and provide dividends for their stockholders.

The stock market also provides opportunities for short-term investors. Market skittishness can cause prices to fluctuate quite rapidly and investor psychology can cause prices to fall or rise – even if there is no financial basis for these variations.

How does this happen? News reports, government announcements about the economy, and even rumors can cause investors to become nervous or to suspect that a company will increase in value. When the price starts to fall or rise, other investors will jump on the bandwagon, causing an even faster acceleration in price. Eventually the market will correct itself, but for savvy short-term investors who watch the market closely, these price changes can offer opportunities for profitable trading. 

Short term traders are divided into 3 categories: Position Traders, Swing Traders, and Day Traders.

Position Traders

Position trading is the longest term trading style of the three. stocks could be held for a relatively long period of time compared with the other trading styles. Position traders expect to hold on to their stocks for anywhere from 5 days to 3 or 6 months. Position traders are watching for fundamental changes in value of a share. This information can be gleaned from financial reports and industry analyses. Position trading does not require a great deal of time. An examination of daily reports is enough to plan trading strategies. This type of trading is ideal for those who invest in the share market to supplement their income. The time needed to study the stock market can be as little as 30 minutes a day and can be done after regular work hours.

Swing Traders

Swing traders hold shares for shorter periods than position traders – generally from one to five days. The swing trader is looking for changes in the market that are driven more by emotion than fundamental value. This type of trading requires more time than position trading but the payback is often greater. Swing traders usually spend about 2 hours a day researching stocks and executing orders. They need to be able to identify trends and pick out trading opportunities. They usually rely on daily and intraday charts to plot stock movements.

Day Traders

Day trading is commonly thought of as the most risky way to play the share market. This may be true if the trader is uneducated, but those who know what they are doing know how to limit their risk and maximize their profit potential. Day trading refers to buying and selling stock in very short periods of time – less than a day but often as short as a few minutes. Day traders rely on information that can influence price moves and have to plot when to get in and out of a position. Day traders need to be rational and analytical. Emotional buyers will quickly lose money in this type of trading. Because of the close attention needed to market conditions, day trading is a full-time profession.

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Whereas stocks give investors part ownership of a company, bonds are loans made by investors to corporations or governments. Rather than benefiting from company profits the way that stock holders do, bond holders receive a fixed rate of return – a percentage of the bond’s original offering price. The return is called the ‘coupon rate’. Bonds have a maturity date at which time the principal amount is returned. Bonds can be issued for any period of time – some take up to 30 years to mature.

Bonds always carry the risk that the principal amount may not be paid back. Companies with higher credit worthiness are more likely to be safe investments but their coupon rate will be lower than companies with lower credit ratings. Credit ratings are provided by firms such as Standard and Poor and Moody’s Investor Service. Credit ratings range from a high AAA to a low D.

US government bonds are considered to be the safest type of bonds. Blue chip corporations (those with established performance records that span over many decades) are also very safe bond investments. Smaller corporations have a greater risk of defaulting on their bonds, but bond-holders are preferential creditors and will get compensated before share holders in the event that the business goes bankrupt.

Bonds can be bought and sold on the open market. Their value fluctuates according to the level of interest rates in the general economy. For example, if you hold a $1000 bond that pays 5% per year in interest you can sell the bond at higher than face value as long as interest rates are below 5%. If they rise above 5%, your bond can still be sold but usually at less than face value. This is because investors are able to get a higher interest rate than what your bond pays so in order to offset the difference your bond has to be sold at a lower cost.

Most bonds are traded in the Over-The-Counter (OTC) market which is made up of banks and security firms. Some corporate bonds are also listed on share exchanges and may be bought through stock brokers. New issues of bonds are usually sold in $5000 increments while bonds bought and sold after the initial issues are quoted in increments of $100. A bond that is listed at 96 is selling for $96 per $100 face value.

Stocks or Bonds

When deciding whether to invest in stocks or bonds, the risks versus the potentials have to be weighed. stocks have much greater potential to increase in value but they are also more subject to market fluctuations. Investment grade bonds (those with a rating of BBB or better) carry less risk but offer a relatively low yield.

Most investors agree that for the short term, bonds offer greater security and return. The situation changes, however, when time spans of longer than 10 years are considered. The share market has consistently outperformed bond investments by a large factor. This is because companies continue to increase in value and any short term fluctuations in the share market are smoothed out over time.

Bonds still have their place in most portfolios, however. They provide a stable investment which helps to cushion against stock market fluctuation. A mixture of investments including stocks from various industries, bonds and other fixed-income investments is the way to provide maximum growth while securing your investment funds for the future.

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With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.

The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity.

Take a just a minute to consider the basics of this highly profitable business.

To understand Bulk REO investing is to understand the foreclosure process.

A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. Following a period of time determined by the lender, formal foreclosure proceedings begin. From that time through public auction is called ‘preforeclosure’.

To complete the foreclosure process, the property is auction to the public. The lender regains ownership of the property if there are no buyers at auction. This property is then considered to be ‘Real Estate Owned’ by the lender, also known as an ‘REO’ property.

Typically, lenders list their REO properties with local real estate agents in hopes of selling the property to a retail buyer who will pay full price. But more and more, lenders are selling their REO properties for a greatly reduced price. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.

There is huge profit potential in these REO packages for qualified real estate investors. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Sal Buscemi of Dandrew Partners, a hedge fund in New York.

When you think of real estate investing, a number of things may come to mind. If you are already familiar with real estate investing you may think of short sales, bulk reo investing and virtual real estate investing or you may think of it in terms of real estate portfolios and real estate retirement plans. You likely also are wondering how these things factor into real estate investors’ roles in the current economy.

You will need to know a lot about real estate investing. Knowing the basics of real estate investing education is a good way to get the most out of every lesson. Whether your target is short sales, bulk reo sales, virtual real estate or improving real estate investor abilities, you need to know some real estate investing basics. Review these three real estate investing basics that even some experts don’t yet know:

1. You will always end up with a positive yield when you invest in real estate investing education. Every good real estate deal represents thousands of dollars in potential wealth. Getting the wealth is the key to your success. Knowing more about real estate betters your odds of success when you do a real estate deal. Implementation of your small educational investments yields big results.

2. You can succeed in real estate investing regardless of the state of the economy. Lots of people believe that real estate success is only possible in a booming economy. Actually a poor economy is not a bad economy for real estate investors. You can often find properties to buy at deep discounts. Additionally, you may find deals that would not exist in a booming economy. In fact, real estate investing can turn the tide for a poor economy. When an economy is less than thriving, short sales, bulk reo sales and virtual real estate can prosper. You can save yourself and others from major financial woes if you know how to do these deals.

3. A lot of money is not vital to your success as a real estate investor. You can succeed in real estate investing no matter how much money you have. There are lots of deals that you can use other people’s money to do. Private lenders will lend you their money if they think you are a good investment. A person who is a solid investment knows as much as possible about real estate investing. This will help you show private lenders that you are a good investment if they do not know about real estate investing themselves.

You can generate lots of wealth by real estate investing. You can create income regardless of the economy. You can create success for yourself using knowledge of real estate investing, short sales, bulk reo sales and virtual real estate. Knowing the basics of real estate investing will help you succeed as a real estate investor.

If you just graduated from college you probably are thinking about how to repay student loans. These types of loans are among the most pervasive types of debt. They create real and lasting issues for many people. Remember, large student loan debt can affect your credit score even if you pay on time. You might not be able to buy a house or a car.

But there are some simple ways to repay student loans. Some might require you to make some lifestyle changes. Some may only need small change or substitutions. The work will be worth it though. It is possible you could repay student loans in just a few years. You will save yourself a great deal of interest and stress.

Here are 3 methods that you can use to repay student loans ahead of schedule:

* You might pay extra - You do not have to pay the minimum payment. Payments over the minimum cut into your loan balance. This can decrease interest right away.

* Rearrange your budget - Take a good look at your budget. Spot areas that are money spent on non-essentials. This could be a regular expenditure like eating out. Direct that money toward your student loan. Make the association a direct one. If you spend 50 dollars a month on pizza, then start paying 50 dollars extra on your student loans when you give up pizza.

* You might want to look into loan consolidation - This can be a great way to save. Having a lower monthly payment will help you pay over on your principle more easily. However, look out for closing fees. These fees can make the entire consolidation process too expensive.

All three of these methods can help you repay student loans faster than you anticipated. If you work hard you might only have a few years left to pay. If you repay student loans early you will get to enjoy a new sense of control in your life.

In this day and age, beauty really does matter and beauty often denotes health. The same thoughts can be applied to the gums. If you want beautiful gums, then they will obviously need to be healthy. How do you know if your gums are healthy? Well, really, that does not require a scientist – You should confirm with your dentist but here are the basics: You can determine this by examining them yourself. When you look at your gums in the mirror, do they look pink and not inflamed? Are your teeth clean and visually healthy? Do you make sure you get the plaque off of them every day? If so, then chances are, you have healthy gums. Here are some signs of unhealthy gums to watch out for.

Catching gum disease at an early stage is a great idea. At an early stage of gum disease, you will have tender, red and swollen gums. When you brush them with a toothbrush or floss them, they will bleed easily. You see, healthy gums never bleed when you regularly floss and brush them. At this stage, a Hydro Floss might be helpful to you.

Generally speaking, gingivitis is not painful, so you may not notice any symptoms are present, which means you will not often catch it early for treatment. If you do not get this disease treated, then it is only going to progress forward. With gum disease often comes bad breath, try aktiv k-12  to defeat that.

When you have advanced gum disease, you may have bad breath no matter what you do. You could even end up losing your teeth. You may also have gums pulling away or receding from your teeth. Appropriate dental care is always important. 

Scott Wells recommends the book: What You Should Know about Gum Disease for those seeking more information on this topic. ISBN: 978-0981485508

Disclaimer: If you have or think you might have gum disease or any other health problem, please visit your doctor or periodontist for advice, diagnosis and treatment. This article is for information purposes only and does not intend to provide advice, diagnosis or treatment for any health condition.