Here we will look at the best Forex trading strategy, to make big gains with in around 30 minutes a day. Many of the world’s top traders use this method and if you do too, then you will have a timeless way to make big gains - let’s take a look at it in more detail.
Drinks firm Gatorade ends deal with Tiger Woods in the wake of the golfer’s admission of extra-marital affairs.
Any one can learn forex on internet with the help of forex tutorials and materials, which are freely available in online. Some institutes provide free forex materials and you can start learning with that.
Stockpiling anything is about knowing you have a long term durable business with a big protective moat. The 'knowing' part of the equation is what slips by many wanna-be investors.
In Rule #1 I suggested trading a stock with technical signals to avoid the problem, essentially, of 'knowing'. Or rather, not knowing is more accurate. You give away some of the profit and sometimes all of the profit when you use technical signals in exchange for not violating Rule #1 - 'Don't lose money'. You get in with the Big Guys. You get out with the Big Guys. You screw up the 'knowing' and the tools get you clear of the plane wreck. Pretty nice trade off so you can sleep at night.
The problem is, you get cranking on tools in a down market like this one and you get the 'death of a thousand cuts'. You go in on green and right away, mostly because you bought in, the stock price goes down. You get out on red. You wait. It goes up. You get in on Green and it goes down because you bought it again (as you dang well knew it would. "See honey, I told you it would do that.")
In THIS market there is a better way. In fact, if you don't like investing, in all markets there is a better way: Stockpiling.
Payback Time, my new book, is coming out on March 2. Go over to PaybackTime.com and order and I'll hook you up with some cool freebies. What it's about is how to load up the truck, or stockpile, a bigger and bigger bunch of ownership in a few businesses you truly believe in.
And that is the key. You've got to know what you can know and what you can't. So let's get back to <a href=”http://www.google.com/finance?client=ob&q=Nasdaq:GOOG”>Google. What can you know? Lots of stuff. What's more important is what you can't know. You, unless you have a real insight into technology, can't know where this business will be in 20 years. It has a new business model that is just crushing competition everywhere, but is it sustainable? How fast will they grow? Is this Microsoft in 1985? Is this Yahoo in 1999? You've got to know if you're going to load up on Google every time you get a chance. You have to know that this business will be around to support your family in 20 years. And you've got to know what it's worth. And you've got to know if you don't know, or can't know, those things.
I love Google. What an amazing business. But I don't know how to know those things I have to know to stockpile Google. Of course, I can buy it in my risky biz account. Take 10% of your portfolio and have some fun with it on potential awesome long term winners that you just can't know what you have to know about. But I can't see putting 20% to 50% of my net worth in a business that could be gone in ten years because of some new technology revolution.
Yes, it could be a forever huge moat gigantic wonderful business. But personally I can't get enough of a grip on it to say I know it. I'm just not certain. So it (and companies like Garmin, which I also really like) are relegated to the risky side of <a href=”http://www.philtown.typepad.com/phil_towns_blog/phil-town-investing/”>investing, no matter how good they look today.
Now go play,
With this post, I want to try to clarify the Greek fiscal crisis. The problem is that it’s not clear exactly how serious the problem is, because most of the media coverage of the crisis has been directed towards the financial markets’ perception of it, rather than its underlying fundamentals. In the end, I think it’s important to understand both.
The Financial Times published a great timeline that shows perception and reality side-by-side. While there were certainly other important developments that bear in Greece’s fiscal position (in addition to those listed below), you can see that financial markets are basically making their own reality. For example, there was hardly a response to the October announcement that Greece’s budget deficit would be 12.7%, which was 5% higher than earlier estimates. In fact, the markets only became bearish on Greek debt after it the government announced that it would try to bring the debt down to 9.4% through various measures.
Apologists for the markets would be right to wonder why investors should be inclined to believe the government of Greece when it said it could control the budget deficit. Fair enough. Still, one has to wonder why the markets suddenly started worrying about Greece’s fiscal problems, when only a couple months ago, the possibility of a whopping 12.7% budget deficit barely caused investors to blink. Besides, the credit crisis has been raging since 2008, which means the markets have had plenty of time to digest the implications of recession for Greece’s fiscal position.
These days, where is a financial crisis, chances are derivatives are not far removed. As credit default swap spreads (i.e. the cost of insuring against default by Greece on its loan obligations) have risen, so have concerns that this is a bona fide crisis. “It’s like the tail wagging the dog…There is a knock-on effect, as underlying positions begin to seem riskier, triggering risk models and forcing portfolio managers to sell Greek bonds,” said one portfolio manager. From this perspective, it almost looks like this “crisis” is being completely manufactured by speculators for the sake of profit. Summarized another analyst, “It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house.”
To be fair, Greece also played a role in derivatives speculation, and on some level, it was even more nefarious than the speculators. Assisted by Goldman Sachs (who is now betting on Greek default [how un-ironic that is!]), Greece entered into a series of swap agreements last decade, which it used to conceal its true debt burden. “By using an historical exchange rate that didn’t accurately denote the market value of the euro, Goldman effectively advanced Greece a €2.8 billion loan. Under EU accounting rules—which were tightened in 2008—Greece wasn’t obliged to include the loan in overall public debt on its books.” Now that those transactions have been uncovered and the truth is coming to light, financial markets are rightly re-evaluating the risk of further lending to Greece.
There is no question that Greece’s debt problems are serious. As to whether labeling it a crisis is necessary, that depends on your standards. Greece ranks near the top of the list on a variety of individual “debt sustainability” criteria. At 94.6% of GDP, it’s net debt is among the highest in the world. Its projected 2010 budget deficit is also high, though not the highest. Its cost of borrowing is also significantly higher than projected GDP growth, which means that net debt will continue to grow until a budget surplus can be produced. When you average these measures together, it appears that Greece’s debt problems are the most unsustainable of any country in the world. But this is hardly news.
On the other hand, the weighted average of the maturity of Greek debt is 7.7 years, well above average, and plenty of time (relatively) for Greek to sort through this mess and secure new lenders. Towards the latter end, it has hired a former bond trader to head its debt management agency. In order to improve its fiscal position, it has announced a series of austerity measures, including budget cuts, tax increases, wage cuts for public-sector employees, and stricter laws against tax evasion.
At this point, a ratings downgrade looks inevitable, and some analysts think the crisis has already become self-fulfilling. As borrowing costs rise, it only makes it more likely that Greek will default, which causes rates to rise further, and so on. On the other hand, Greek politicians are being forthright about their position (”Greece’s finance minister, George Papaconstantinou, remarked this week: ‘People think we are in a terrible mess. And we are.’ “) and have a plan for rectifying the situation. There is cause for skepticism here, but also for hope. And that goes not just for Greece, but also for the Euro.
US regulators are investigating the role of Wall Street firms in deals that may have allowed Greece to mask its debt woes.
Last week, the Fed raised the discount rate by 25 basis points, to .75%. investors have consistently focused the brunt of their collective monetary attention on the Federal Funds Rate, and the markets (forex included) barely registered a response to the move. Regardless of whether apathy in this particular context was justified, investors who turn a blind eye to changes in Fed monetary policy do so at their own risk
The direct implications for the discount rate (the rate at which depository institutions borrow short-term funds from regional federal reserve banks) hikes are admittedly hazy. Some economists analyzed the move in and of itself as a signal that the Fed wants banks to borrow more from each other, and less from the Fed. Others saw it as a political move, designed to appease both inflation hawks and an angry public that is dismayed over the massive profits that banks have earned from this prolonged period of easy money. If the former are right and the move has an economic basis, then the discount rate will probably have to be hiked at least once or twice more in order to have any kind of measurable impact. If it was indeed political, then another rate hike in the near-term is unlikely.
As I said, investors remain focused on the Federal Funds Rate (the rate at which banks borrow directly from each other) as the crux of the Fed’s monetary power. In this context, the discount rate hike didn’t move the markets because the Fed, itself, cautioned investors from inferring a connection between the discount rate and the federal funds rate. Nonetheless, some analysts posited a connection anyway: “The Fed can talk all day about how the discount rate hike is technical and not a policy move, but the market sees it as a shot across the bow. Not tomorrow, or the next day, but soon, they will be lifting the Fed funds rate target as well as the economy is starting to regain momentum…” Whether this represents the mainstream perception, however, is debatable.
On the one hand, investors have been talking about a (ffr) rate hike for more than six months now. As the above analyst pointed out, the economy is growing (5.7% in the fourth quarter of 2009…not too shabby!), and most other indicators (with the notable exception of housing) are trending upwards. On the other hand, expectations for timing continue to be pushed back (the current consensus – via interest rate futures – is that there is a 70% chance of a 25 bps hike in September). This is due in no small part to the Fed itself, whose “emissaries” are doing their best to dispel the possibility of a near-term hike.
Some samples: San Francisco Federal Reserve Bank President Janet Yellen said the economy “will continue to need ‘extraordinarily low interest rates.’ ” Dennis Lockhart, the president of the Atlanta Federal Reserve Bank, conveyed that, “If his forecast of slow growth proves accurate, Fed monetary policy will have to hold rates low for longer.” Federal Reserve Bank of St. Louis President James Bullard Thursday said “speculation of an imminent hike in the Fed’s target interest rate was ‘overblown,’ calling an increase in the short-term federal funds rate ‘just as far away as it ever was.’ ” There’s not much ambiguity there.
Analysts also continue to look for clues as to when the Fed will begin to reverse its quantitative easing program. “Bernanke said such steps could be taken ‘when the time comes.’ Given the weakness of the economy, Bernanke signaled that that time was still a long way off.” This kind of procrastination is not being met well, and there is concern that “<a href=”http://www.heritage.org/Research/economy/bg2371.cfm”>the Fed will misjudge the situation and wait too long to tighten monetary conditions.” In the end, this is perceived as more of an inflation issue, and it is of secondary importance to interest rate policy for the capital markets.
Forex traders, however, would be wise to focus on both aspects; inflation erodes the Dollar over the long-term, while higher interest rates make it more attractive in the short-term. For the time being, both remain low. In the not-too-distant future, either inflation and/or interest rates must rise. If/when the markets get over their sudden fixation on the debt crisis (a long-term issue) in Europe, they will return their attention to the Fed, probably just in time for the start of some big changes.
Last week, the Fed raised the discount rate by 25 basis points, to .75%. investors have consistently focused the brunt of their collective monetary attention on the Federal Funds Rate, and the markets (forex included) barely registered a response to the move. Regardless of whether apathy in this particular context was justified, investors who turn a blind eye to changes in Fed monetary policy do so at their own risk
The direct implications for the discount rate (the rate at which depository institutions borrow short-term funds from regional federal reserve banks) hikes are admittedly hazy. Some economists analyzed the move in and of itself as a signal that the Fed wants banks to borrow more from each other, and less from the Fed. Others saw it as a political move, designed to appease both inflation hawks and an angry public that is dismayed over the massive profits that banks have earned from this prolonged period of easy money. If the former are right and the move has an economic basis, then the discount rate will probably have to be hiked at least once or twice more in order to have any kind of measurable impact. If it was indeed political, then another rate hike in the near-term is unlikely.
As I said, investors remain focused on the Federal Funds Rate (the rate at which banks borrow directly from each other) as the crux of the Fed’s monetary power. In this context, the discount rate hike didn’t move the markets because the Fed, itself, cautioned investors from inferring a connection between the discount rate and the federal funds rate. Nonetheless, some analysts posited a connection anyway: “The Fed can talk all day about how the discount rate hike is technical and not a policy move, but the market sees it as a shot across the bow. Not tomorrow, or the next day, but soon, they will be lifting the Fed funds rate target as well as the economy is starting to regain momentum…” Whether this represents the mainstream perception, however, is debatable.
On the one hand, investors have been talking about a (ffr) rate hike for more than six months now. As the above analyst pointed out, the economy is growing (5.7% in the fourth quarter of 2009…not too shabby!), and most other indicators (with the notable exception of housing) are trending upwards. On the other hand, expectations for timing continue to be pushed back (the current consensus – via interest rate futures – is that there is a 70% chance of a 25 bps hike in September). This is due in no small part to the Fed itself, whose “emissaries” are doing their best to dispel the possibility of a near-term hike.
Some samples: San Francisco Federal Reserve Bank President Janet Yellen said the economy “will continue to need ‘extraordinarily low interest rates.’ ” Dennis Lockhart, the president of the Atlanta Federal Reserve Bank, conveyed that, “If his forecast of slow growth proves accurate, Fed monetary policy will have to hold rates low for longer.” Federal Reserve Bank of St. Louis President James Bullard Thursday said “speculation of an imminent hike in the Fed’s target interest rate was ‘overblown,’ calling an increase in the short-term federal funds rate ‘just as far away as it ever was.’ ” There’s not much ambiguity there.
Analysts also continue to look for clues as to when the Fed will begin to reverse its quantitative easing program. “Bernanke said such steps could be taken ‘when the time comes.’ Given the weakness of the economy, Bernanke signaled that that time was still a long way off.” This kind of procrastination is not being met well, and there is concern that “<a href=”http://www.heritage.org/Research/economy/bg2371.cfm”>the Fed will misjudge the situation and wait too long to tighten monetary conditions.” In the end, this is perceived as more of an inflation issue, and it is of secondary importance to interest rate policy for the capital markets.
Forex traders, however, would be wise to focus on both aspects; inflation erodes the Dollar over the long-term, while higher interest rates make it more attractive in the short-term. For the time being, both remain low. In the not-too-distant future, either inflation and/or interest rates must rise. If/when the markets get over their sudden fixation on the debt crisis (a long-term issue) in Europe, they will return their attention to the Fed, probably just in time for the start of some big changes.
Toyota’s boss apologises in the US safety problems that led to deaths and the worldwide recall of 8.5m vehicles.
