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| 50 of 1510 results found for - "Seymour@imagi-natives.com" | [Quote No.34682] Need Area: Money > Invest
"The solvency ratio [for insurance and pension companies] is the current value of all assets in the pension fund divided by the net present value of future pension liabilities. When the discount [long-term, risk-free U.S. bond yield/interest] rate is lowered, the net present value of future liabilities rises, leading to a lower solvency ratio and so the value of the company is lowered." - Seymour@imagi-natives.com
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| [Quote No.34730] Need Area: Money > Invest
"Technical investing, including charting, is investing based on market psychology which takes into account those buying and selling due to business fundamentals, the so-called 'value' investors, as well as those less well informed herd-following and emotion-driven speculators, in relation to the demand-supply balance of stocks at the time. It is not about owning a share of a business but rather surfing the wave of fickle public opinion and, if understood as such, is more akin to gambling and requires a sophisticated understanding of market behaviour, probabilities, money management and risk minimisation techniques. Both investing styles require expertise, effort and time to be consistently successful." - Seymour@imagi-natives.com
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| [Quote No.34861] Need Area: Money > Invest
"When talking about the bond yield curve, a bearish flattening occurs when the curve tightens with yields generally rising [and prices falling]. Conversely, a bullish flattening occurs when the curve tightens with yields generally falling [and prices rising]." - Seymour@imagi-natives.com
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| [Quote No.34866] Need Area: Money > Invest
"Always be wary for a Judas goat leading gullible investors up a boom market hill to the slaughterhouse of a market crash - whether that goat be a central bank keeping interest rates too low, a politician or public service bureaucrat more concerned about short-term economic goals for party political gain rather than long-term prudential investment advice, or a technical investing advisor ignoring economic and business fundamentals." - Seymour@imagi-natives.com
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| [Quote No.35206] Need Area: Money > Invest
"While everyone seems to intuitively understand the way banks make money [borrow short-term and the lend long-term for the yield difference - therefore the need to sell them when the yield curve inverts and short rates are higher than long rates] insurance companies are often considered a mystery. The following is a very simplified outline of their business model. Insurance companies have an obligation to have liquid funds for claims. Therefore they are big buyers of highly liquid government bonds. They get cash flow from the yields of these bonds and the excess of invested premiums over claims until the statistical claims experience occurs. These funds they hold are called their float. So when interest rates and yields [inflation] are low their earnings from their float invested in bonds are low and their pe's are correspondingly low. As interest rates rise so do their earnings and therefore their pe's, especially if assets needing to be insured are rising in price or the company is growing its market or market share. So when inflation and yields are expected to rise it is often a good time to buy them so long as their reinsurance cover for supernormal losses are good and their premiums reflect true statistical risks." - Seymour@imagi-natives.com
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| [Quote No.35215] Need Area: Money > Invest
"What are some of the best investors like? To answer that let's look at an example of the things they think about throughout a working day and often through their 'free' time... Occasionally in life a very unexpected set of events can occur - a 'black swan' event. [The term comes from the idea that until Western civilisation explored Western Australia, they had never seen or believed there could be black swans, which are abundant there.] This is one reason why people, businesses and even insurance companies often decide it's worth the cost of the regular premiums to insure against a catastrophic financial loss. [In the case of insurance companies they can offload some of their risks of catastrophic liability payments by reinsuring them with super-insurance companies, called reinsurance companies, like Munich Re.] All insurance companies, because they need to be able to get funds easily to pay claims, hold enormous quantities of government bonds, which are highly liquid even in emergencies. Now in March 2011, Japan had a 'black swan' event. It had a massive 9.0-magnitude earthquake, which was accompanied by a tsunami, volcanic eruption and multiple nuclear reactor meltdowns. In fact the loss of life, over ten thousand people, and the expected hundreds of billions of dollars of reinsurance losses were so huge the US government worried that the selling of US Treasuries the Japanese and other insurance companies owned, in order to pay for the claims, would be so large that they would flood the market and the prices of Treasuries would fall - and therefore their yields rise - so much that the government's and Federal Reserve's efforts, with quantitative easing, to reduce Treasury yields and thereby borrowing costs, to stimulate the US economy out of the Great Financial Crisis of 2007-9, would be rendered ineffective and cause a second dip recession. All that money being converted from US dollars to Japanese Yen would drive down the US dollar while all the buying of Japanese Yen would drive the Yen up. For a successful fund manager knowing and working out these kinds of inter-relationships within financial markets and acting on them more quickly than others, allows them to be ahead of the wave of demand or supply from less gifted investors, make the above average investment returns that they are paid so handsomely to achieve for mum and dad superannuation funds and be so respected and sought after for their opinions by the media, economists and governments. In some ways these highly successful fund managers are like three-dimensional, real-time, chess grandmasters or high-stakes professional poker players. Many of them also say that they find the activity so intellectually stimulating and financially rewarding that they were happy to disregard their previous careers and qualifications in disciplines such as nuclear physics, higher mathematics, engineering, medicine, diplomacy, military intelligence, etc. It is also a field where only results matter so that it is possible to find highly intelligent, hard working and curious people with no formal qualifications, so long as they are successful at investing, working next to economics professors and earning more than a brain surgeon, professional athlete, movie star or president of their country." - Seymour@imagi-natives.com
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| [Quote No.35236] Need Area: Money > Invest
"Investors can find investing to be a lot like a long running soap opera - only more important and real, of course! There are new characters that appear with new story-lines and possible dramatic consequences as well as the ongoing well-loved characters and the ne'er do wells. And just like any aficionado of a long-running show it becomes possible for some investors to improve their odds of guessing the limited number of plot-lines and likely surprises, including co-ordinated government fiscal and monetary interventions, and thereby place 'bets' with a higher than average success rate. In fact some super-investors become so good their story-line twists and turns and subsequent timed 'bets' seem to pre-empt even the writers' 'script meetings'!! Therefore being a student of economic history as well as continually staying current with these plots eventually improves any investor's understanding and forecasting performance. And just like any soap opera, different viewers will have been watching for different lengths of time, feel differently about the characters and make different guesses about the story outcomes. " - Seymour@imagi-natives.com
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| [Quote No.35253] Need Area: Money > Invest
"Trading overvalued shares near the top of a bull market can be compared to playing 'pass the parcel' with a hand grenade with the pin out!" - Seymour@imagi-natives.com
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| [Quote No.35288] Need Area: Money > Invest
"As the famous early 20th century Wall Street banker J.P. Morgan said 'The markets will fluctuate'. This can be seen on the price charts but also specifically on the VIX - Volatility Index [sometimes called the market's fear indicator]. And because the market should fluctuate as buyers buy and others sell, if it doesn't fluctuate much then there may be herd behaviour. When it fluctuates a lot there is a battle between bulls and bears. There has developed the following saying to remember what to ponder at these times...When the VIX is low prepare to go; but when the VIX is high prepare to buy." - Seymour@imagi-natives.com
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| [Quote No.35541] Need Area: Money > Invest
"For the cautious, patient, 'get-rich-slowly' investor, debt is a four-letter word. While it increases profits, it also increases losses and therefore they believe correctly that it is too dangerous to use extensively, even with tax deductibility and strong sustainable income coverage from something else, like a highly paid job." - Seymour@imagi-natives.com
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| [Quote No.35572] Need Area: Money > Invest
"An overleveraged/overindebted investor, businessperson or average individual is, as they say, 'a bug in search of a windshield'!" - Seymour@imagi-natives.com
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| [Quote No.35604] Need Area: Money > Invest
"When looking at investor sentiment it is useful to watch the behaviour of defensive sectors of a share market [which have stable incomes rather than discretionary, cyclical incomes - like consumer staples and health care] and defensive currencies [like the US dollar, the Japanese yen and the Swiss franc]. When these sectors rise [along with the price of bonds while the yield therefore falls] investors are getting worried and when they fall they are getting more confident [especially if cyclical stocks and risk currencies like the Aussie dollar AUD which is related to industrial commodities and Dr. Copper rise]. Gold is a special metal that usually rises when fiat currency debasement, fear and inflation threatens." - Seymour@imagi-natives.com
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| [Quote No.35703] Need Area: Money > Invest
"The price movement of copper is often an indication of the future of the global economy because copper is such an important industrial metal, used in so many electrical products. For this reason , the 'red metal' has been called 'Dr. Copper' for its apparent economics doctorate. Therefore Copper is an important indicator to watch for global economic danger and opportunity - 'coppertunity'. " - Seymour@imagi-natives.com
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| [Quote No.35791] Need Area: Money > Invest
"To control inflation you reduce demand in the economy by raising interest rates. " - Seymour@imagi-natives.com
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| [Quote No.35812] Need Area: Money > Invest
"Silver is called 'the poor man's gold' because it is cheaper per ounce." - Seymour@imagi-natives.com
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| [Quote No.35825] Need Area: Money > Invest
"Yale Professor Robert Shiller is widely celebrated for his Cyclically Adjusted Price Earnings (CAPE) ratio, made popular in his best selling book, 'Irrational Exuberance'. The method uses ten years worth of trailing earnings adjusted for inflation to account for the business cycle. This allows you to use it to determine roughly whether the share market is over or under valued. Other methods include the Tobin Q ratio for business asset replacement, the Fed Model, and the share market's total capitalisation to GDP ratio." - Seymour@imagi-natives.com
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| [Quote No.35844] Need Area: Money > Invest
"When considering inflation and therefore monetary policy and central bank set interest rates to keep inflation within the mandatory band over the cycle, it is best to watch year over year increases/decreases in the CPI Consumer Price Index, both core [excluding food and fuel] and non-core, PPI Producer Price Index, Wage Inflation, Commodity Inflation and Import prices. " - Seymour@imagi-natives.com
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| [Quote No.35936] Need Area: Money > Invest
"The share market, like its participants, is often not rational. Daniel Kahneman won a Nobel Prize in 2002 for his work related to this and his contribution to the economic discipline, Behavioural Economics, which studies this. It includes the study of heuristics and cognitive biases. Heuristics is the study of mental shortcuts that allow people to solve problems and make judgments quickly and efficiently. Cognitive bias is a general term that is used to describe many observer effects in the human mind, some of which can lead to perceptual distortion, inaccurate judgment, or illogical interpretation. It is a phenomenon studied in cognitive science and social psychology. Tversky and Kahneman went on to develop prospect theory as a more realistic alternative to rational choice theory. For those interested Wikipedia.org has some introductory information and even a list of some common cognitive biases. It is not hard to see how they can effect investors. The highly successful investor George Soros has a theory of investing called reflexivity which seems to incorporate a knowledge of some of these cognitive biases as they relate to investing in free markets, especially share markets." - Seymour@imagi-natives.com
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| [Quote No.35971] Need Area: Money > Invest
"There are some investors who become very interested in mining and energy stocks. These companies mine predominantly: the industrial metals -- aluminium (bauxite), cobalt, copper ('red gold'), iron, lead, magnesium, manganese, molybdenum, nickel, tin, zinc; the precious metals, sometimes called the 'money metals' or the non-inflationary/non-fiat currencies -- gold ('yellow gold'), palladium (in the platinum group of metallic elements), platinum ('white gold'- misnamed as real white gold is an alloy of gold which has been decolorized by the addition of palladium.), silver ('poor man's gold'); the energy materials -- both (brown) thermal and (black) coking coal, natural gas, plutonium, (light or heavy, sweet or sour) crude oil ('black gold'), uranium; and miscellaneous materials -- mineral sands, potassium (potash), rare earth elements (REE). Knowing what each is used for can help the investor know when demand is likely to rise or fall within the business cycle and in response to certain news events." - Seymour@imagi-natives.com
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| [Quote No.36090] Need Area: Money > Invest
"When a country's government gets in trouble, for one reason or another, usually related to having too much debt for its GDP, it can take a number of steps to improve its situation. They include reduce spending, create new taxes or increase existing ones, sell/privatize some government asset or service, print money and inflate away its debt, default or restructure its loan payments. Regardless all these will take time and in the hour of need instead of being able to roll over its maturing short and long-term debt it will often find that the hedge funds are shorting its bonds meaning that any new bond issuance will cost more than the country's finances can bear. At these times there is a global organisation called the International Monetary Fund, or the IMF for short, which was set up to use the contributions from its backers, the major industrialised countries, to fund short-term loans. In a way its like going to a family 'friend' for help or a wealthy neighbour for a short-term bridging loan, usually at much lower rates than the country could get from any other market. Usually the IMF wants to give the country some constructive advice to help it be in a better position to go to the market to repay the bridging loan, later after improving issues in the time the bridging loan provided." - Seymour@imagi-natives.com
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| [Quote No.36131] Need Area: Money > Invest
"It should be noted that inflation in the US for the consumer is called Personal Consumption Expenditure - PCE - while in other countries, like Australia, it is called the Consumer Price Index - CPI." - Seymour@imagi-natives.com
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| [Quote No.36162] Need Area: Money > Invest
"Firstly though there is a very useful indicator that is helpful to understanding how the various asset class values are interrelated around the world. In investment circles this study of the interconnections between markets is called 'intermarket analysis'. The indicator is called FRODOR. It is an indicator of global liquidity which is used to measure the rate of change in the quantity [i.e money supply - MZM, M0, M1, M2, M3, M4 -please note and refer to how loan growth, especially through the fractional reserve banking system effects and multiplies the growth of the money supply, especially the liquidity - M1 of a country and its economy] of the official global/world reserve currency, the US dollar, which is particularly important because it is used to denominate most international trades of commodities/basic goods, like food, oil and minerals including the industrial and precious metals. Most countries therefore keep a good portion of their foreign reserves in US dollars and then store it as US sovereign debt/bonds which are very quick and easy to liquidate when they are ready to use the funds, even in great times of global economic difficulty, which is part of their great appeal. Also those countries trying to sell exports to the very large US market buy US bonds and sell their own currency in order to try to keep their own currency pegged to the US dollar so their prices don't become uncompetitive, so they regularly buy and hold US bonds. The more the more they are selling to the US. The US benefits by having many countries willing to buy their sovereign debt at yield lower than they otherwise would be able to sell them for. It's a little like vendor financing where the manufactures outside the US finance the US government and banks to lend to the US consumer and business so they can buy the goods they export to the US. [As they have exchanged the US dollars used to pay their exporters for their own currency in order not to flood their market with increased money supply and create unwanted inflation they often sterilise/remove this new money supply in their economy by selling bonds to their citizens, banks, insurance companies, etc.] The economist Ed Yardeni developed the measure called FRODOR, for Foreign Official Dollar Reserves held by central banks around the world, to be a LEI - leading economic indicator along with the other LEI's -for example the OECD's LEI for all OECD countries, the US Conference Board LEI's for selected countries, ECRI's WLI for the US - for people to follow. But why follow it? The reason most people follow it is that statistically it has correlations to most asset markets and therefore helps investors anticipate market behaviour through the business cycle as well as prepare for booms and busts. It is positively correlated to - moves in same direction as - : gold, commodities -soft and hard - especially copper, non AAA bonds so corporate bonds, real estate, share markets - especially Asian share markets, inflation and GDP in general. It has negative correlations to - moves in opposite direction to - : credit spreads -which characteristically widen when more risk is perceived, and the US Dollar - which is considered a defensive risk-off currency that people buy and drive up in price when they think there is more risk around in the global economy. The USD itself is inclined to move with US interest rates as higher rates from the Federal Reserve are designed to slow down the economy especially inflation through reducing the money supply base and thereby credit growth and consumer consumption and business investment, which should contract the US trade deficit as there is less buying which should in turn mean that the many emerging markets - especially in Asia - that manufacture and export to the US require less raw commodities as selling and making less, so the price of commodities falls and thereby inflation around the globe falls as the global economy slows with the US economy, which explains why investors watch the US so closely. This is why they say, 'If America sneezes the rest of the world catches a cold.'" - Seymour@imagi-natives.com
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| [Quote No.36175] Need Area: Money > Invest
"There are risk on (boom) and risk off (bust) investment assets. For example global currencies. Risk on currencies, for example, include the commodity currencies of the Australian Dollar (AUD) in the Asia Pacific and the Canadian Dollar (CAD) in the Americas. Risk off currencies, for example, include the Swiss Franc (CHF) in Europe, the United States Dollar (USD) in the Americas and the Japanese Yen (JPY) in the Asia Pacific. One way to measure the greed (risk on/boom)or fear (risk off/bust) sentiment of the market is by watching the actual behaviour of the market participants, voting with their money, rather than say being contrarian with sentiment indexes or volatility indexes like the VIX. Set up charts that compare the relative performance of the risk on and risk off trades. For example, the cyclical risk on sectors of the share market, for example consumer discretionary, resources and banking, graphed against the risk off defensive sectors of health care and utilities. This will show when the share market sentiment is changing from risk off to risk on and vice versa. The same can be done with the risk on - AUD and CAD - and risk off - CHF, USD and JPY - currencies. This can be done for bonds - risk on high yield 'junk' company bonds and risk off - AAA sovereign bonds in the bond market and it can even be done with commodities, although it is less decisive, - risk on - copper and oil and risk off gold and precious metals." - Seymour@imagi-natives.com
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| [Quote No.36311] Need Area: Money > Invest
"Asset allocation: In periods of deflation or very low inflation it is best to have cash and government bonds - which as interest rates fall will mean that the price of your fixed interest bonds will rise. As deflation makes paying back loans harder with time as the real value of the loans increases with time best to avoid corporate bonds and shares. Some gold can be helpful as low interest rates mean people aren't missing out on big rates as neither gold nor bonds pay good rates in deflation. If the country tries to instigate inflation with 'money printing', sometimes called quantitative easing or debt monetization, that should dilute and devalue the currency as the money supply is increased as velocity falls. If it is US dollars - as done in 2009 -2011 - then in US dollars gold will rise so good to have some. But if not in US need to consider your currency in relation to the US Dollar, the global reserve currency which denominates gold. When inflation is not too low or not too high shares are good to have. When inflation gets too high or you get hyperinflation, companies again have difficulties with costs and so shares and company bonds should be avoided. Inflation linked government bonds are good as is gold which rises quickly in these times." - Seymour@imagi-natives.com
Refer [http://moneywatch.bnet.com/investing/blog/investment-insights/beyond-gold-inflation-protection-for-your-portfolio/1076/ ]
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| [Quote No.36444] Need Area: Money > Invest
"The stock market usually cycles between being great for several years [boom-feast] and then being bad for a year or so [bust-famine]." - Seymour@imagi-natives.com
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| [Quote No.36458] Need Area: Money > Invest
"A crisis of unemployment and underemployment in an economy can be the result of a 'structural' mismatch between skills and jobs or due to a lack of sufficient demand in an economy. Diagnosing the problem accurately dictates the correct policy response from retraining initiatives to stimulating demand with fiscal and monetary policy, etc." - Seymour@imagi-natives.com
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| [Quote No.36460] Need Area: Money > Invest
"Hyman P. Minsky was an economist famous for his 'financial instability hypothesis' and 'Minsky Moments' in an economy. Some of his key ideas include: --the natural inclination of complex, capitalist economies toward instability; --Booms and busts as unavoidable results of high-risk lending practices; --'Speculative finance' significantly effects investment and asset prices; --Government has a role in bolstering consumption during times of high unemployment; and the need for strong central bank oversight of banks. He wrote a number of books about his ideas that with the Great Financial Crisis of 2007-9 became much more popular as economists tried to understand what happened and not only how to fix it but also how to avoid it happening again." - Seymour@imagi-natives.com
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| [Quote No.36504] Need Area: Money > Invest
"Not considering the economy when considering investing in a company's shares is the same as not considering the forest, when considering buying a tree in that forest. The part of the forest just over the hill and with the wind blowing your way may be on fire. So remember this even when value investors repeat the great investor, Peter Lynch's famous quote, 'If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes'. In fact, it is vital to go the extra mile and learn economics, as well as fundamental value analysis, and then you yourself will also be able to understand the economy and its business cycles that the company you are considering is a part of. That way you are making your decision from the bottom up and the top down. It doubles your chances of buying a good company at the right time. If you then also learn and apply inter-market and technical analysis you really start to improve your odds, which is the name of the game in investing well and profiting over the short and long run." - Seymour@imagi-natives.com
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| [Quote No.36570] Need Area: Money > Invest
"When considering the trend of the official US unemployment rate, it is important to also consider the trend of the work-force participation rate as this allows you to judge the number of ‘discouraged’ long-term unemployed workers who are not included in the official statistics and therefore the likely direction of consumer confidence and spending and therefore the economy in general." - Seymour@imagi-natives.com
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| [Quote No.36574] Need Area: Money > Invest
"Warren Buffet is known for his advice to only buy what you know and stay away from what you don't understand." - Seymour@imagi-natives.com
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| [Quote No.36575] Need Area: Money > Invest
"Peter Lynch is known for his advice to rather buy the best company in the worst sector than the worst company in the best sector." - Seymour@imagi-natives.com
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| [Quote No.36576] Need Area: Money > Invest
"Rob Arnott is known for showing that asset allocation has historically been more important than individual stock selection." - Seymour@imagi-natives.com
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| [Quote No.36577] Need Area: Money > Invest
"Peter Schiff is known for his recommending foreign dividend paying companies as one of the best way to bet on rising foreign currencies." - Seymour@imagi-natives.com
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| [Quote No.36986] Need Area: Money > Invest
"The Maastricht Treaty, that was instrumental for laying down prudent fiscal guidelines for countries wishing to join the European Union, stated that: 1- government's spending deficit should not be any more than 3% higher than GDP - or else government debt will grow faster than the long run growth of the country's economy which over history around the developed world has averaged 3%; and 2- government debt to GDP should not go above 60% - because studies have shown the optimal effective tax rate in a country is around 20-25% of GDP - so that at a debt-to-GDP rate of 60% that is effectively about 3 times the country's income and that is about the same rule that banks have found over history is the top safe and sustainable rate of debt to income to lend to individuals and businesses. Rogoff and Reinhart studies have shown that at 90% of GDP a country's maximum potential growth rate is slowed by about 1% which when the average growth rate is 3% is about 33% of the potential growth rate, making debt repayment even more difficult and therefore the sovereign debt less creditworthy and more risky and thereby requiring still higher interest rates for the market to accept the risks of default and lend to the government...which means more taxes go to just service debt and citizen's living standards decline, etc, etc. These two criteria investors and voters should keep in mind when judging a government's or political party's fiscal policies as well as reputable, rather than big, credit rating agencies' sovereign budget and debt ratings or else they may live to regret their investment decisions and political votes." - Seymour@imagi-natives.com
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| [Quote No.37415] Need Area: Money > Invest
"The yield curve is important for 1)banks -that borrow short and lend long thereby making the difference as gross profit, and for 2) insurance-annuity-pension-superannuation companies that use the return on longer dated government bonds to meet their pension disbursement obligations." - Seymour@imagi-natives.com
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| [Quote No.37419] Need Area: Money > Invest
"When considering government bonds - i.e. sovereign debt - it is important to consider the Debt-to-GDP percent. It is also important to consider the Deficit-to-GDP percent which describes the speed at which the nominal debt is growing if all else, including tax rates and GDP, is kept the same. The next thing to consider is the Interest Cost-to-GDP, because if that is higher than GDP growth, even if there is no deficit spending, then the debt burden will grow in relation to GDP as well as nominally making things worse and therefore a sovereign default or 'restructure' possibly required. Now if GDP falls as in a recession all of these ratios become even worse and the measures to improve them like growing GDP through productivity or just inflation from 'money printing' and/or currency devaluation, or raising taxes and reducing spending, become much more problematic and also suggest a sovereign debt default is likely. All these ratios should be considered in relation to all the economic possibilities, before investing in sovereign bonds and in forming alternative, emergency planned responses should anything go wrong." - Seymour@imagi-natives.com
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| [Quote No.37580] Need Area: Money > Invest
"In a credit crunch when banks are restricting loans in order to rebuild damaged balance sheets small and medium-sized companies are particularly vulnerable because they lack the cash and collateral needed for a larger bank overdraft or investment loan and unlike the bigger companies they also lack the ability to issue bonds with investment bankers' help. This is perhaps a justifiable argument for some government or other support until credit flows return to near normal with competition for the limited funds and strict rules to not induce moral hazard - creating reckless behaviour from the appearance of privatising profits but socialising losses - and not allowing crony capitalistic exploitation of taxpayers' funds." - Seymour@imagi-natives.com
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| [Quote No.37586] Need Area: Money > Invest
"What does a government do when it has gotten into a debt position where it is facing insurmountable debt and needs time to arrange higher taxes, faster real GDP growth, an orderly default or inflation to reduce the dangerous - greater than 90% - debt to GDP ratio? One way is like any spendthrift with too many credit cards. They move debt that is near or over its limit from one credit card to a new one with a higher credit limit and lower interest. Therefore a government doesn't effectively pay off its maturing bonds but rolls them over into new short-term or long-term bonds like the US Fed did with 'Operation Twists' in 1961 and 2011 and the Eurozone did with the 2011 European Financial Stabilisation Facility." - Seymour@imagi-natives.com
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| [Quote No.37660] Need Area: Money > Invest
"The typical business cycle growth ends when some kind of shock (usually monetary - interest rate rises - due to excessive credit, inflation and low productivity) delivers a blow to demand. The result is that producers find themselves suddenly overstocked with inventory and they cancel orders. Businesses along the supply chain start to furlough or fire workers to maintain margins. This, in turn, delivers a further blow to demand and a negative feedback loop forms that leads to recession. This is called the inventory cycle." - Seymour@imagi-natives.com
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| [Quote No.37879] Need Area: Money > Invest
"Some of the important indicators to watch in the real estate industry to gauge demand and future prices are: auction clearance rates, number of listings, the time properties are on the market, the average sale prices, rental vacancy rates, rental yields, loan approval rates, building commencements, demographics, employment, interest rates, loan to valuation ratios, non-performing loans [in arrears], foreclosures, etc." - Seymour@imagi-natives.com
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| [Quote No.38542] Need Area: Money > Invest
"There are as many ways to invest in shares as there are people. Which style a person chooses depends on their desires, beliefs, personalities, risk tolerances and the time they have available. The methods range from passive dollar cost averaging into index funds to long-term value investing to technical chart trading. Searching the internet using those terms will give a basic understanding of each and many further areas to follow up. I would however recommend investors start their life long education with a few books: for value investing with Benjamin Graham's 'The Intelligent Investor' and for technical chart trading with Stan Weinstein's 'Secrets For Profiting In Bull And Bear Markets', Dr Alexander Elder's 'Trading For A Living', Michael J. Parson's 'Channel Surfing', Martin J. Pring's 'Technician's Guide To Day And Swing Trading', John Murphy's 'Technical Analysis Of The Financial Markets' and 'Van Tharp's Definitive Guide To Position Sizing'." - Seymour@imagi-natives.com
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| [Quote No.38549] Need Area: Money > Invest
"In share investing over the long-term and short-term trading there are two basic methods. Those based on fundamental business facts and those based on technical charts of share price movements. Regardless of which you prefer it is always worthwhile to remember the only thing that is fundamental about share markets, where you are rewarded or not for taking risk, is that everything in the future is uncertain and unknown." - Seymour@imagi-natives.com
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| [Quote No.38550] Need Area: Money > Invest
"There are investors who hold stocks for dividends and long-term capital gains and then there are active traders who try to profit from short-term price movements. They come in many types, from the day trader, sometimes called a 'scalper', who buys and sells within the same day to the 'Swing' trader who holds stocks from overnight to up to a few months." - Seymour@imagi-natives.com
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| [Quote No.38581] Need Area: Money > Invest
"In trying to end a recession, following a sharemarket 'bust' of more than a 20 percent fall, besides fiscal policy - government spending including grants and subsidies for stimulus, tax policy - what things and rates government taxes including depreciation rates for business investment, etc. and when they expire, monetary policy - interest rates (and how that along with perhaps some central bank intervention to support through buying or weaken by selling effects currency exchange rates and therefore import and export companies as well as imported inflation or deflation), liquidity injections, bank reserve requirements and collateral rules - are used to encourage domestic private spending especially real estate and government and business capital investment (capex-capital expenditure, including maintenance as well as investment, or opex-operational expenditure). The latter business investing is incentivised as the recessionary low prices for materials and labour not only offers good prospects for an enticing return on capital as they are buying low, with the likelihood of selling higher later for a healthy capital gain for them, but the government's stimulatory higher depreciation rates mean the companies earnings for the next year will often be very good as their taxes for each dollar of profit will fall due to the higher depreciation rates, stabilising or even improving margins, if not sales and other revenues yet. Share investors see this, along with the greater labour productivity, and anticipating better profits and better year on year comparisons, if not improving at least not falling or falling as quickly, buy back into the share market while short sellers cover their shorts so the market rises, usually at least 20 percent, before the economy's recession is over. In time and with hopefully greater profits from better productivity and now greater productive capacity, inventories run down during the recession are rebuilt for the expected recovering sales demand, employment increases, write downs are reduced and the recession ends. Slowly government's yearly fiscal deficits and Debt to Gross Domestic Product improve as transfer payments for things like unemployment insurance and trade deficits fall and tax receipts rise with GDP and inflation. This spurs the currency exchange rates to rise and continue rising as interest rates rise to control inflation, unemployment, deficits and GDP by limiting eligible demand and influencing export and import competing industries. Eventually inflation (or an economic shock, including bond yields rising quickly or too high due to rising risks including excessive personal or government debt levels, natural disasters, etc.) usually seen first by share investors who then sell their shares driving the share market down thereby reducing people's net wealth, their feelings of prosperity, job security and confidence to spend, requires the government to slow the economy and the opposite of these stimulatory policies and methods are used. If done skillfully and with luck a slowdown is achieved without an economy-wide recession in GDP and vast increases in unemployment and bankruptcies. This is called a 'soft landing'. Many times however a small recession results. But this is considered less damaging over the long-term than doing nothing and the country eventually having an even more severe recession, perhaps even a depression, due to imbalances, including high-risk loans on questionable valuations, where the sharemarket or some other asset class 'overheats' sometimes called a 'crack-up boom', in the economy becoming severe, and in private, business and government, speculative and unsustainable practices, rather than productive and durable ones, becoming too widespread. Many of the above things are monitored and reported by economists and government bodies. Economists group them into leading economic indicators that change before the economy does, coincident indicators and lagging indicators." - Seymour@imagi-natives.com
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| [Quote No.38701] Need Area: Money > Invest
"Like company bonds, sovereign bonds can be good investments. But like any investment the return of your money is more important than the return on your money. Therefore this risk side of the risk reward ratio needs to be weighed carefully, in particular debt and income, just like when a bank considers lending to a person or a business. So when considering the very important net Debt to GDP of countries it is important to be aware of whether the debt is dangerously high - for example above 90 percent of GDP (See 'This Time Is Different: Eight Centuries of Financial Folly' by Reinhart and Rogoff)
- and then whether it is mainly private or government and whether the debt is internally or externally owed. If debt is held by non-residents it is worse because it means that the governments do not receive tax revenue on the interest paid, nor do the interest payment itself remain in the country. Also external debt denominated in another currency, ie dollars, produces an 'inverted balance sheet' where the value of liabilities is positively correlated with the value of assets, so that the debt burden and servicing costs decline in good times and rise in bad times, in relation to the currency exchange rate differential. All of these things effect the interest rates and sovereign bond yields of the country as well as the likelihood of sovereign default. Should the Debt to GDP be above 90% and the interest rates higher than sustainable GDP growth levels for the country the Debt to GDP level should be expected to grow each year, especially the portion of external debt denominated in another currency, therefore necessitating a debt default and restructure to a more sustainable level. Bonds which face this likelihood, if bought at all, need to be bought well below their face value and well below the expected devalation 'haircut', even if Credit Default Swaps are bought as it is not unknown for legislation around these to be circunvented by desperate governments, banks and the international community to avoid a deflationary credit crisis (refer Greece 2010)." - Seymour@imagi-natives.com
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| [Quote No.38707] Need Area: Money > Invest
"When demand is weak due to high interest rates or over-indebtedness reducing access to credit, often along side increased competition for the few remaining consumers, manufacturers have to absorb rises in the costs of material commodities and labour resulting in falling margins, earnings, growth and share prices. This often happens at the top of a share market boom before the inevitable bust and recession." - Seymour@imagi-natives.com
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| [Quote No.40482] Need Area: Money > Invest
"When investing, it is important to continuously get as much up-to-date, useful information as possible or else you are behaving like someone driving fast on a highway using only their sense of smell for direction." - Seymour@imagi-natives.com
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| [Quote No.41134] Need Area: Money > Invest
"Higher oil prices are a tax on business and consumers. This usually creates higher inflation, and therefore often higher short-term interest rates, with a lag of about 4-6 months, just when people have fewer disposable dollars, so consumer spending falls, reducing manufacturing orders and production, and eventually retail and manufacturing employment and GDP resulting in falling share markets and economic recession." - Seymour@imagi-natives.com
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| [Quote No.41139] Need Area: Money > Invest
"Anyone who says they know what any market or company share price will do is mistaken. It is natural to develop a reasoned position regarding direction but understand that even if you are right that doesn't mean your timing will be right. One of the advantages of technical, chart trading is that the trader appreciates their limitations and thereby stays humble and just follows where the market is going for as long as there is a profitable trend or swing trade. Combined with value investing's 'waiting till the company's shares are undervalued', increases the trader's margin of safety and probably the percentage of winning trades over time. That is not to say that stop losses are not necessary. They are. The major danger then comes from a string of small losses for example from being 'whipsawed' in and out of positions." - Seymour@imagi-natives.com
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| [Quote No.43218] Need Area: Money > Invest
"It's not unusual to think of a market bust and recession as a 'hang-over' from an economy that has over-indulged in the 'intoxicant' of debt. If that is true then the interest rate is like a the 'minimum drinking age'. Set the interest rate too low and there is bound to be trouble ahead." - Seymour@imagi-natives.com
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