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Dollar Hits New Record Low, Which is Good for Earnings

The dollar’s impact on US corporate earnings continue! Last night, IBM blew away Wall Street when it reported that its 2008 profit will top its previous projections. Interestingly enough more than half of their 11 percent revenue was due to currency fluctuations!

The dollar matters.

The companies that will do the best this earnings season are the ones that are diversified geographically and have more than one line of business. Take PfizerJohnson & Johnson beat the street due to higher sales in the consumer division and on our currency fluctuations (Revenues increased 7.7 percent in the first quarter with currency moves contributing a whopping 5.1 percent to growth). Pfizer would benefit to take a page out of Johnson & Johnson’s book since they were the ones that sold their consumer spending division to J&J in 2006. for example, they spend approximately 1 billion dollars on the launch of any new drug. Their earnings missed expectations, driving the stock down significantly at the open. In contrast,

The further the dollar drops, the more that it will help corporate earnings. The only way for the US economy to recover, is through exports. Yesterday, six companies reported earnings that were either directly or indirectly tied to currency movements.

According to Lisa Twaronite of Marketwatch, “Weak dollar is often-overlooked key to earnings.” And she quotes, your’s truly.

Mutual Funds – Advantages and Disadvantages

Mutual funds are companies that pool money from many investors and invest the money in stocks, bonds, short-term money-market instruments, into other assets or securities, or a combination of each of these investments. They have a fund manager who is responsible for investing the pooled money into specific securities, and they provide the ability for investors to purchase stocks and bonds with much lower trading costs than if they tried to do it on their own.  When you are investing in mutual funds, you are buying shares and you become a shareholder.

Investing in this type of fund provides many advantages over stock investing. These advantages are explained below.

Diversification – This is the number one advantage and allows investors to purchase a large number of stocks.  Mutual fund investing provides you with portfolio diversification and it greatly reduces your risk.

Liquidity – The investor is able to receive money produced from this type of investment in a relatively short period of time. Income generated from stocks and bonds can be difficult to obtain and CD’s offer no liquidity at all. 

Cost – Small amounts of money can be invested at no trading cost.  Investors can also invest at regular intervals and receive the same manager, access and investment, as the wealthy stock brokers since mutual funds are non-discriminatory.

Professional Management – With this type of fund you hire a professional manager who researches and trades the market on a regular basis.  They are fairly inexpensive and they usually have a support staff devoted to them as well.

While there are many advantages, there are also disadvantages as well.  A few disadvantages are explained below.

In the Dark – Investors have a hard time finding out the exact make-up of a fund’s portfolio at any given time. They also cannot influence which securities the fund manager buys and sells or the timing of the trades.

Guaranteed Costs – While there are typically no trading costs, investors must still play sales charges, annual fees, and other expenses despite the performance of the fund. They may also have to pay taxes on any capital gains received even if the fund did not perform well.

Uncertainty in Price – Unlike investing in stocks where you can get real-time pricing information, mutual funds only calculate their NAV (net asset value per share) once a day and this typically takes place after the stock exchange closes. The fund unfortunately may not be calculated until many hours after you have placed your order.

Obviously there is much more information that you should know before you begin to invest in mutual funds. The advantages far out way the disadvantages and almost every successful investor will tell you that you need to invest in mutual funds in order to build a strong portfolio. You may also want to learn about topics such as asset allocation, hedge fund investing, and stock charting.  These are additional investing concepts that may be of interest to you as well.  Happy investing and good luck!

Online Trading Course

Online Trading Course in Forex Trading

Many people are interested in trading forex these days due to the advent of the internet. This has made forex trading more available to a wider population that it previously did not reach. The only problem now is finding the time to take an online trading course that equips you with the knowledge and tools to trade successfully in the forex markets. New investors must understand that the forex markets are very technical and contain an array of processes, concepts, and terms that you must understand. The great thing about taking a course online is that you can learn at your own pace and many courses are free if you are just leaning the basics. They are numerous websites that offer an online trading course for free for new forex traders.  In addition to online classes there are also many free seminars that are also available online. Just like taking a trading course online, you can also attend a virtual online seminar at either no cost or at a cheaper rate than if you were to attend a seminar in person. Not only is education important when learning fx trading, you must also practice repeatedly.  You can learn everything about online forex trading, but until you practice you cannot get a complete picture of the process.  In addition to taking an online trading course, you should also set up a demo account.  These demo accounts provide a great opportunity for new traders to learn how to trade forex, without the risk of losing real money.  Many websites offer a demo account to new investors so that they can practice their forex trading strategy with no risk of money lost. They are purely for practice. When you are looking for an online trading course that will provide you with useful tools and the knowledge necessary to trade successfully, you must look for the following:1)  Real Time Profit Records – Before you purchase any type of forex education course, you must ask for these records. If they will not provide these records to you it may be because they do not have confidence in their own system or they haven’t used the system yet themselves. If that is the case, then move on.   Unfortunately, this does happen a lot when dealing with online trading. 2)  If the course is free, why are they offering it for free?  Is there a catch? If you take this free course, are you then obligated to enroll in their trading site?3)  Once you begin reading a book about trading forex, does it feel like the author is promoting only one particular forex trading system, in a very pushy sort of way?Many people these days are referencing free articles and advice provided in investor blogs, and they are joining online forums instead of taking a free online trading course. This way they are provided with the best advice when it comes to finding a suitable course to learn about forex signals, rather than researching endlessly on the internet on their own. If you are serous about investing in the forex market, then you must build your trading skills and knowledge through various seminars, workshops, video tutorials, by taking an online trading course as discussed in this article, and through reading recommended books. Learn to implement technical analysis into your trades, learn how to use the technical indicators and practice first through the use of a demo account. In doing this, you will greatly increase your chance at success when trading on a forex exchange.


Learning Online Investing

Learning Online Investing via the Internet

If you are interested in learning online investing there are a lot of steps to take to ensure success.  There are various items that you will need including, a computer and internet connection, money to invest, and lastly you will need an online broker. These are just the basics to creating online investments. You also need to understand the rules of investing, investment psychology as it relates to greed and fear, and economics and how if affects the stock market.  You should also know that online investing follows the 80/20 rule which states that 80% of traders lose money, while only 20% actually make money.   Don’t let that scare you away, however, because with the proper training and education available on the internet these days, the average Joe can make millions investing online

Online stock trading has changed the dynamics of the stock market however there are still those traders who prefer to stick with the traditional broker.  They may have little time and see it more as a hobby, or they may not have as much knowledge of the stock market as online traders.  Those that spend time learning online investing know that they can obtain real life quotes and they know that they have much more control over trading when doing it online. These stock traders believe that there is no one who cares more about your financial well-being than yourself, so they prefer to do it alone or perhaps through the use of an online discount broker. For those who prefer to do it alone, the importance of learning online investing cannot be stressed enough.

Financial planning in general can be quite complicated, but fortunately now there are so many tools available online. These tools include calculators, online worksheets and many other resources for learning online investing.  The first thing you must do once you are ready to begin investing is to analyze your current financial position. You must find out how much you typically spend. Do you need to cut-back?  Do you have a budget?  You must practice successful money management, before you can even begin to trade stock, or invest your money by other means. You must also decide on your financial objectives. What are your plans for home ownership, cars, starting a family?  You must develop a workable plan that can assist you in meeting those objectives. Lastly, you must build your financial base so that you can start to accumulate wealth.  This includes building a strong portfolio that is well diversified to offer you protection in your new investments.

Whether you are looking to learn stock trading as a hobby, or if you are working to build on your retirement investment, learning online investing is vital to your success. There are still those stock brokers and investment advisors who can assist you if need be, but just be sure that you do your own homework and don’t rely solely on the opinions of your broker.

No Load Mutual Funds

What are No Load Mutual Funds?

In order to understand what it means to invest in no load mutual funds, you must first understand what it means to invest in loaded mutual funds.  Loaded mutual funds are funds that carry a sales load which is commission paid to investment brokers typically ranging anywhere from four to eight percent.  Mutual fund investing of this type generally means that you pay the sales fee up front, on the back-end, or there is an annual fee associated with it. No load mutual funds do not contain any type of commission or sales charge because the shares are distributed directly to the investment company, rather than going through a secondary party. The reason for this is that there is no transaction cost to purchase this type of mutual fund and therefore all of the money invested is working for the investor. The justification provided for loaded mutual funds is that the investors are compensating a sales intermediary, such as an investment advisor, or a financial planner for his or her time and expertise in the selection of an appropriate fund. Investors seek out no load mutual funds instead of loaded mutual funds because they believe that they will outperform the higher priced funds over time because the fees won’t eat away at the overall net return on investment.  The shares for this type of fund are purchased directly from a mutual fund company or indirectly though a mutual fund supermarket.  True no load mutual funds contain absolutely no fees, whereas a supermarket no load fund may contain a very small fee referred to as the 12b-1. This 12b-1 fee can be 0.25% to 1.0% of its assets, and is also known as the cost of distribution. It is still however, considered a no load fund and will lead to better investing and diversification of your investment portfolio. Words of wisdom regarding no load mutual funds consist of a few known facts that investors should realize before investing money in mutual funds. For instance, for every high-performing loaded mutual fund, there is a similar no load fund or low load mutual fund that can be purchased at a cheaper price. When investing in mutual funds, no load funds consistently outperform loaded funds after you take into consideration final calculations, and a load does not go towards any type of incentive for the fund manager to perform better.

Investing advice that you should also consider is this. If a loaded mutual fund is held over a long period of time, the effect of the load is not diminished as quickly as you would think, if paid up front.  It is interesting to note that if you selected a no load mutual fund, that money paid (as if it were a loaded mutual fund) would have been compounding over the whole time period. In fact studies have shown that no loaded mutual funds significantly and consistently (as stated above) outperform loaded funds.Successful investors realize that to build a strong portfolio, mutual fund investing is a must.  It is up to each investor, however to determine the type of mutual fund that they will invest in to achieve portfolio diversification. While loaded mutual funds can still provide a great return, each investor will ultimately need to decide whether the services provided by these loaded funds are valuable enough to justify giving up the higher returns of no load mutual funds.

Top Mutual Funds

Find the Top Mutual Funds

Finding top mutual funds to add to your investment portfolio can be a complicated process and may not necessarily be the same for every investor. When investors speak of top mutual funds, they are referring to those mutual funds that have weathered the market well and are consistently making money.  Before deciding which funds are the best for you it is important to understand your investment objectives and also to determine the risk level that you are comfortable with. For example, if you are older and are looking to begin retirement investing, you may want to invest in a fund that is lower in performance, but that is safe.  If you are very young and have more time to weather the ups and downs of the markets, you might look to invest in a fund that has a higher risk, but that is highly aggressive in terms of its performance.  In this article we will discuss key elements necessary to finding the top mutual funds that will work for you.

The first step is mentioned above and it refers to knowing your investment goals and objectives. The second step is to utilize the services of financial professionals such as investment advisors or investment brokers. Take advantage as well of some of the online rating systems that can give you a snap-shot of a mutual fund’s performance and the fees associated with that fund.  It is also important to utilize reputable mutual fund companies.  You can ensure this by researching various companies and through working with a financial planner who has experience with many different types of mutual fund investment companies. Another important piece to investing in top mutual funds is also to understand the performance of each fund that you choose to invest in. Mutual fund investing requires that you research prospective funds that have performed in line with your expectations, keeping in mind that past performance is not necessarily indicative of future performance.

It is also important to understand the tax implications when investing in mutual funds. It is different from investing in stock in that when you own stock, you are required to pay taxes each year on any dividends or interest that you receive even if you choose to reinvest. Top mutual funds only require you to pay taxes after you sell your shares, and only if you made money on the shares. It is important to note, however that you will owe income tax on dividends in the year that you receive them and you may also be required to pay taxes on the fund’s capital gains for the year. The tax implications are a bit confusing so it is very important that you have a clear understanding before you become a shareholder and begin to invest in this type of fund.

Each investor must also understand the fees associated with investing in top mutual funds.  The fees included are due when you initially invest in the fund, and each year following as you continue to invest. Additional fees typically include transactional fees, such as buying or selling shares, and if you move your money within the same fund group. Basically, whenever you make a change to your account, you will most likely be charged. Each investor must be sure that they understand all of the fees upfront to prevent any surprises when you receive your first statement.  You can also check out money market mutual funds as well if you interested in learning more about your choices.

Whether you are looking to build your retirement investment or to gain portfolio diversification, mutual funds are great option to look into to. Finding the top mutual funds will take time and patience, but taking the time to invest wisely will ensure that you are protecting your future and that your money is taken care of.

Foreign Currency in the Forex Markets

Forex is short for foreign currency exchange and it is very liquid and is the world’s biggest market for trading foreign currency. The forex market has been around since 1971 where large companies and a few very wealthy investors were only able to practice forex trading. With the advent of the internet, however now anyone with access to the internet and a meager amount of money can participate. When identifying foreign currencies you will see them with a three letter code, where the first two letters stand for the country and the last letter identifies the nation it represents. There are currently seven major currencies on the forex that are the most heavily traded. These include the U.S. Dollar (USD), Euros (EUR), Japanese Yen (JPY), UK Pounds (GBP), Swiss Francs (CHF), Canadian Dollars (CAD), and the Australian Dollars (AUD).  There are many advantages to fx trading. Below is a list of advantages as seen by most forex traders. 1)  The forex market is open 24 hours, 7 days a week around the clock, which is not the case when trading stock. You can also trade from just about anywhere as long as you have either a computer with high speed internet, or access to a phone.2)  Forex traders can be profitable in any conditions when foreign currency trading whereas when playing the stock market, stock prices must rise in order to make a profit.  Forex trading can make a profit no matter how the economy is doing. 3)  Investing in stock and other types of investments typically require and investor to set aside a large sum of money.  When trading currency, you can use as little as $300.00 to set up a small account that will let you trade in amounts of 10,000 units. 4)  Forex currency trading can be done using borrowed capital. This means that you don’t need hundreds of thousands of liquid assets to trade currency in large numbers. You can practice margin trading where a small amount of your own capital can be used to leverage a large chunk of borrowed assets, which can then be invested. 5)  Forex trading also does not require you to pay commissions to a stock broker.  The dealers in forex trading instead receive part of the spread between the buying and selling price of a foreign currency. This is generally a fraction of a percent so it is a very small amount per trade.6)  Unlike the stock market, it is close to impossible for any individual or company to manipulate the forex market due to the volume of trading that takes place each day.  As you can see there are many advantages to trading foreign currency that are missing when trading in the stock market. Forex markets have different regulations and terminology but the same overall principals apply.  You must stick to your trading plan, and perform technical analysis. If you are interested in learning how to conduct currencies trading, check into online resources and be sure to read a lot books about forex currency trading for beginners.


Over the Counter Stocks

There is a bilateral contract signed by two parties regarding how a particular trade is to be settled in future, when you deal in over the counter stocks. The reason for these type of stocks to be ‘unlisted’ is usually because the company is small and is unable to meet the listing requirements of the other significant stock exchanges. Because there is no regulatory body or organization, such as the SEC to oversee the securities industry, trading in over the counter stocks involves a high risk, as well. The stocks that trade through a dealer network instead of centralized exchange, and are traded by broker-dealers who collaborate directly with one another, either on the computer or on the phone, are also known as the over the counter stocks. It is a very rare occurrence when these type of shares are able to move from "pink sheets" or over the counter (OTC) to the NASDAQ or other major exchanges like the American Stock Exchange or The New York Stock Exchange. The OTC Bulletin Board stocks are either penny stocks or they are stocks that hold bad credit records, this makes it crucial that you be extremely cautious, and that you know what you are doing, when you are trading over the counter stocks.

In United States, OTC Bulletin Board is used for trading over the counter stocks. The OTCBB is an established service (started in 1990) that is regulated, reliable, and works in real time for those interested in getting the very latest information on stock quotes, sales, and which equity security firm is handling the most business. OTC securities, which generally don’t trade on a formal exchange, are also known as Bonds. Investment banks trade mostly in these financial instruments which create markets for specific issues. Investors should call the bank that makes the market in that bond, and they should get the quote if he is interested in bond investing.

Do remember to discuss penny stocks while you also discuss over the counter stocks. penny stock investing is attractive and popular because the possibilities seem endless; you don’t have to invest as much with them as you do with other stocks and the return can be both quick and lucrative. It is very risky to buy penny stocks because the price of these over the counter stocks can plummet considerably due to the potential value of the companies that are listed in OCTBB, which are also known as "pink sheets." Such companies have very limited financial history which makes it difficult to assess their actual value. Another reason it that some of the companies are exceptionally new and are extremely close to going bankrupt.  If you are really keen on trading in over the counter stocks, then make sure that at least those that you are trading are making an honest effort to move from OCTBB to major stocks like NYSE. You can certainly make some good return on investment with these type of stocks, but you must always remember that they are high risk stocks.

Trading and investing in over the counter stocks can bring huge rewards. However, even though you are only trading pennies, you should remember that there is still a huge risk of losing big money, while trading in over the counter stocks.

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