http://www.articletrader.com/ Articles at ArticleTrader en-us http://www.articletrader.com/finance/investing/is-buying-tax-lien-certificates-still-profitable.html http://www.articletrader.com/finance/investing/is-buying-tax-lien-certificates-still-profitable.html Fri, 18 Nov 2005 00:00:00 -0600 By Joanne Musa, the Tax Lien Lady


I get many e-mails from subscribers to my e-course and newsletter about tax lien investing. What most people want to know is; “Is tax lien investing still profitable, is it something that I can do,” and “how do I get started.” In this article I’d like to address the first question, “Is tax lien investing still profitable?”

It’s true that it’s getting tougher to buy profitable tax lien certificates. Tax lien investing is not the secret of the wealthy any more. This is largely due to supply and demand. There are less tax liens available and more buyers in the market. At some of the tax sales that I have attended in New Jersey there are more bidders than there are liens for sale.

There are fewer liens available for two reasons. First, it is very easy to get a low interest loan these days. Couple that with the increase in the value of real estate in the last 5 years and that gives property owners the incentive and the means to pay their taxes, even if they have to get a loan. With fewer liens available and more investors in the market, tax lien certificates are selling at lower interest rates and/or higher premiums depending on the state. In most states either the interest rate is bid down or the premium is bid up while the interest rate remains constant. New Jersey is rare in that first the interest rate is bid down and then the premium is bid up. Hence in New Jersey tax lien investing is not the highly profitable investment it once was.

Judging from the premiums that institutional and private investors have been paying for tax lien certificates in the last couple of years, I would venture to say that they are seeing an actual return on their investment of 4% or less. This is not very good considering you can probably find a bank right now that will give you 4% on a one year CD. Perhaps as interest rates go up over the next year or two, institutional buyers will get smarter and less desperate for tax lien certificates and stop paying too much for them. In the mean time the best way to find out if tax lien investing is still highly profitable in your state is to attend a couple of tax sales and take note of who is buying and what interest rate liens are bid down to or how much premium is being paid for them. Be sure that you do this before you go out and buy somebody’s high priced program on how to make a lot of money with tax lien investing.

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© 2005 Permission is granted to reprint this article in print or
on your web site so long as the paragraph below is included and
contact information is provided to the email provided.


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Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/investment-strategy-the-investors-creed.html http://www.articletrader.com/finance/investing/investment-strategy-the-investors-creed.html Mon, 06 Mar 2006 00:00:00 -0600

The Stock Market is a dynamic place where investors can consistently make reasonable returns on their capital if they comply with the basic principles of the endeavor AND if they don't measure their progress too frequently with irrelevant measuring devices. The classic investment strategy is so simple and so trite that most investors dismiss it routinely and move on in their search for the holy investment grail(s): a stock market that only rises and a bond market capable of paying higher interest rates at stable or higher prices! Just not going to happen…


This is mythology, not investing. Investors who grasp the realities of these wonderful marketplaces recognize the opportunities and embrace them with an understanding that goes beyond the media hype and side show performance enhancement barkers. Simply put, when investment grade securities rise in price [As they are now, with the DJIA finally putting together a successful attack on the 11,000 barrier], Take Your Profits, because that's the purpose of investing in the stock market! On the flip side (and there has always been a flip side, more commonly dreaded as a "correction"), replenish your portfolio inventory with investment grade securities. Yes, even some that you may have just sold days or weeks ago during the rally. This is much more than an oversimplification; it is a long-term (a year or two is not long term.) strategy that succeeds... cycle, after cycle, after cycle. Sounds an awful lot like Buy Low/Sell High doesn't it? Obviously, Wall Street can't let you know that it is quite so simple!


[Note that Dow Jones 11,000 was last breached during the infancy of this century, and that the last All Time High in this much too widely followed average occurred late in 1999. When the DJIA banner is repositioned on that historical peak of 11,700 or so, it will represent no less than six years of zero growth in this, the most respected, of all Market Indicators! Would the media strip the gold medal from this Stock Market Icon if it knew that during these same years: (1) There have been significantly more stocks rising in price on a daily basis than moving lower. In fact, more than two-thirds of the last 68 months have been positive. (2) Since April 2000, there have been 120 more positive days in NYSE issue breadth than negative days. (3) 250% more NYSE stocks established new high price levels than new lows. (4) We are working on our sixth consecutive year of positive issue breadth!]


So understand that your portfolio statement values will rise and fall throughout time, and rather than rejoice or cry, you should be taking actions that will enhance your "Working Capital" and the ability of your portfolio to accomplish your long term goals and objectives. Through the simple application of a few easy to memorize rules, you can plot a course to an investment portfolio that regularly achieves higher highs and (much more importantly), higher lows! Left to its own devices, like the DJIA for example, an unmanaged portfolio is likely to have long periods of unproductive sideways motion. You can ill afford to travel six years at a break even pace, and it is foolish, even irresponsible, to expect any unmanaged or passively directed approach to be in sync with your personal financial needs.


Five simple concepts of Asset Allocation, Investment Strategy, and Psychology are summed up quite nicely in what I call "The Investor's Creed":

(1) My intention is to be fully invested in accordance with my planned equity/fixed income asset allocation. (2) On the other hand, every security I own is for sale, and every security I own generates some form of cash flow that cannot be reinvested immediately. (3) I am happy when my cash position is nearly 0% because all of my money is then working as hard as it possibly can to meet my objectives. (4) But, I am ecstatic when my cash position approaches 100% because that means I’ve sold everything at a profit, and that I am in a position to (5) take advantage of any new investment opportunities (that fit my guidelines) as soon as I become aware of them.


If you are managing your portfolio properly, your cash position has been rising lately, as you take profits on the securities you purchased when prices were falling just a few months ago… and (this is a big and) you could well be chock full of cash well before the market blows the whistle on its advance! Yes, if you are going about the investment process properly, you will be swimming in cash at about the same time Wall Street discovers the rally and starts encouraging people to weight their portfolios more heavily into stocks; the number of IPOs coming to market starts to rise exponentially; morning drive radio DJ's start to laugh about their stock market successes; and all of your friends start to talk about their new investment guru or the 30% gains in their growth Mutual Funds. What are you doing in cash!


This is what I call "smart" cash, because it represents realized profits, interest, and dividends that are just catching a breather on the bench after a scoring drive. As the gains compound at money market rates, the disciplined coach looks for sure signs of investor greed in the market place: fixed income prices fall as speculators abandon their long term goals and reach for the new investment stars that are sure to propel equity prices ever higher, boring investment grade equities fall in price as well because it now clear [for the scadieighth (sic) time] that the market will never fall again… particularly NASDAQ, which could double and still not be where it was six years ago. And the beat goes on, cycle after cycle, generation after generation. What do you think; will today's coaches be any smarter than those of the late nineties? Have they learned that it is the very strength of a rising market that proves to be its greatest weakness!


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Steve Selengut Professional Investment Manager since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy" http://www.sancoservices.com http://www.valuestockbuylistprogram.com

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/an-investors-view-of-the-fair-tax-a-resolution.html http://www.articletrader.com/finance/investing/an-investors-view-of-the-fair-tax-a-resolution.html Mon, 13 Mar 2006 00:00:00 -0600

All of us aspire to some degree of economic security and none of us would be so critical of the wealthy if we had a shot at joining their ranks. One side of the legislative mouth encourages savings and investment while the other treats it with totally "unearned" disrespect. One wealthy political party wants us to hate anyone with indoor plumbing while the other (wealthier) one spends most of its time trying to protect its diminishing turf and powerful cronies. All levels of government view businesses small and large as their all-purpose Reserve Accounts and, as a result, both prices and taxes suffer from a terminal case of "downward stickiness". Not surprisingly, in a DC crowded with 10,000 combative fiefdoms, nowhere can a PhD in dot connecting be found. We can change this!


It is likely that most of you are more familiar with the controversial Fair Tax Legislation than I am, but what I have found most shocking is just how thoroughly The Act's refreshingly new ideas have been swept under the congressional carpet. Neither political party really wants to change the sacred IRC, and why are our media heroes keeping their heads in the sand on this one? Let's squeeze some meaningful change out of the next administration. From an Investor's point of view, implementation of just three elements of the Fair Tax would be an outstanding starting point, even without the more sweeping changes that the Bill addresses.


[The Fair Tax Act of 2003 was authored by Representative John Lindner and co-sponsored by 54 others. Its purpose is: To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.]


Now this is pretty heady stuff, for sure, but every bit as easy to implement as real Social Security reform would be. The three changes reviewed briefly below would be an excellent Phase One.


1) Eliminate the Corporate Income Tax, and all other nuisance fees and taxes that businesses must pay just for existing. Whatever any business is charged in fees, taxes, and mandatory assessments is translated into higher prices for goods and services… and at more than a 1/1 ratio. Governments need to look at businesses as employers and wealth generators, not as rateables. Lower expenses should result in lower prices and higher profits, and this would be comparatively easy to monitor for compliance.


Corporations would have more incentive to control their general expenses if such savings would actually make it to a bottom line that could be used to grow the business, compensate owners, and reward employees. More, higher paid, employees and more spendable (untaxed) corporate dividends are good for the economy. How many billions in lobbyist fees would be removed from corporate pricing formulae? With no income taxes or mandated charges to fork over, corporations could focus on growth and innovation. Investors would own more viable companies, selling more competitive products, to a more affluent population. Additionally, fewer jobs would be exported, more foreign companies would invest in the US of A, and GNP would rise at a faster pace. Rising profits would increase dividend payouts, stock repurchases, debt retirement, and employment opportunities.


2) Eliminate the Capital Gains Tax: I've often referred to taxes (or tax avoidance decisions) as one of two "Tails" that "Wag the Investment Dog". Every year, millions of people go out of their way (with professional encouragement) to lose money on perfectly good securities. Those who take profits too soon are punished severely and those whose behavior is tax-wise may severely damage their investment portfolios' future. Although it is clear that the Capital Gains Tax was originally designed to pick the pockets of those terrible folk wealthy enough to play the stock market for profit, it now inflicts considerable pain on all of us… particularly those who foolishly subscribe to the archaic Buy 'n Hold investment (mismanagement) strategy. Times have changed, and the average investor is now a pretty average guy indeed, willing to build a future if Uncle will let him.


A Government that bemoans the population's low savings and investment rates has only itself to blame, and Wall Street Institutions are happy to exacerbate the problem with their own financial pandemic of products, strategies, and tax deferral/avoidance schemes. Fair Tax advocates estimate that Billions of Dollars, Hours, and Antacids could be allocated more productively every year, just from eliminating this portion of the tax form preparation process… not to mention the trees.


3) Eliminate taxation on all forms of investment and Retirement income: Dividends, Interest, Rents, Royalties, Social Security, Pension, IRA, 401(k), etc. It just makes abundant sense, doesn't it? Without taxation, interest rates, rents, and professional's fees, just to name a few, could fall. Personal disposable income would rise and a much larger number of retirees would be able to live comfortably. Isn't this what periodic IRC tinkering is all about? Wouldn't it be cool if all of those different IRAs and self directed plans could be combined and relabeled: "My Untouchable Retirement Plan"? We would all save more and spend more if we had more to deal with.


No one expects a hundred million taxpayers to agree 100% on the final plan. I have problems with taxing education and health care spending, for example, and there is no doubt that displaced IRS bureaucrats will populate new compliance entities that monitor corporate operations. And most would agree that three separate sales taxes would be unacceptable. But real win/win/win change is in sight. We just need a positive leader with some…


Here's my proposed 2006 (and beyond) Voting Resolution for anyone with even the smallest start-up IRA account: "I promise to never, ever, cast my vote for any incumbent, at any level of government and from any political party, that has not clearly demonstrated that the repeal and replacement of the existing IRC is at the very top of his or her political agenda." It's time to reinvent this wheel!


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Steve Selengut http://www.sancoservices.com http://www.valuestockbuylistprogram.com Professional Portfolio Management since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/introduction-to-forex-trading.html http://www.articletrader.com/finance/investing/introduction-to-forex-trading.html Sat, 18 Mar 2006 00:00:00 -0600
If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.

The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.

The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.

It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.

The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.

The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.



THE MAIN ‘PLAYERS' IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.

Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.

Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.

Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.

Large commercial and investment banks are the ‘price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.

Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.

Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.



WHAT CURRENCIES TO TRADE IN THE FOREX MARKET

You can trade any country's currency by exchanging it to another country's currency, however the list below are the ones that are the most popular and are usually made available by most online brokers for you to trade.

AUD (A$): Australian Dollar a.k.a. ‘Aussie' or ‘Oz'

CAD (Can$): Canadian Dollar

CHF (SwF):Switzerland Franc a.k.a ‘Swissi'

DKK (Dkr): Denmark Krone

EUR (€): European Dollar a.k.a ‘Euro'

GBP (£) : Great Britain Pound a.k.a ‘ Sterling ' or ‘Cable'

HKD (HK$ ): Hong Kong Dollar

JPY (¥): Japanese Yen

MXN (Mex$): Mexican Peso

NOK (NKr): Norway Krone

NZD (NZ$): New Zealand Dollar a.k.a ‘Kiwi'

PLN (z dashed l): Poland Zloty

SAR (SRls): Saudi Arabia Riyal

SEK (kr or Sk): Sweden Krona

SGD (S$): Singapore Dollar

THB (Bht or Bt): Thailand Bhat

USD ($): United States Dollar

ZAR (R): South Africa Rand


CURRENCY PAIRS

To trade the currencies above, you need to trade currency pairs. Think of these currency pairs as your trading instruments – instruments that you can buy or sell. Listed below are the most popular currency pairs that people trade:

1. AUD/JPY: Australian Dollar – Japanese Yen

2. AUD/USD: Australian Dollar – US Dollar

3. EUR/CHF: European Dollar – Switzerland Frank

4. EUR/GBP: European Dollar – Great Britain Pound

5. EUR/USD: European Dollar – US Dollar

6. EUR/JPY: European Dollar – Japanese Yen

7. GBP/CHF: Great Britain Pound – Switzerland Frank

8. GBP/USD: Great Britain Pound – US Dollar

9. USD/CAD: US Dollar – Canadian Dollar

10. USD/CHF: US Dollar – Switzerland Frank

The currencies on the left can be exchanged for the currencies on the right.

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This is an excerpt, modified from the book: The Part-Time Currency Trader, featuring examples of how to trade these currency pairs.

- END OF ARTICLE -

Please include the paragraph below if you are republishing this article online or in print.

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Marquez Comelab is the author of the book: The Part-Time Currency Trader . It is a guide for men and women interested in trading currencies in the forex market. Discusses analysis, tools, indicators, trading systems, strategies, discipline and psychology. See: http://marquezcomelab.com. His other articles are also published at http://thefreedomtochoose.com.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/the-trading-teacher.html http://www.articletrader.com/finance/investing/the-trading-teacher.html Thu, 30 Mar 2006 00:00:00 -0600
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When I studied the principles of investing in university, I was taught that the price of a share reflected the value of the company. With fundamental analysis, there are many methods on how one can analyse the financial statements of companies to find out whether a share is a good or a bad investment. You can conduct horizontal and vertical analyses on standardised financial statements, which are just fancy terms for comparing numbers. You can calculate certain financial ratios to get a better understanding of a company’s liquidity, working capital management, its ability to remain in business over the long term, and its profitability.

I applied these concepts when I started trading the stock market. Soon I found that if I wanted to trade shares in a timeframe of less than three months, decisions based on these analyses were not useful. I did not want to buy shares only to receive dividends. I wanted to trade for capital gains.

I was dissatisfied with my knowledge, the tools and the methods that I had to trade the markets. With my desire to trade a timeframe shorter than three months and my strengthening belief that emotions greatly impact on trading, I began to search for different approaches to buying and selling shares.

I went back to one of my textbooks in university. I wanted to know how else I could analyse the markets. From the passage I read, I learned that one can analyse the markets in one of two ways: fundamental analysis and technical analysis.

I bumped into a newspaper ad one day for a trading seminar. While reading through the ad I saw the words: technical analysis. An expert trader was going to speak on the exact topic I was interested in learning. It was a free seminar and everybody was welcome to come along. So I called a friend of mine and I asked if he would be interested in attending this trading seminar. He was.

The seminar was organised by a business selling trading courses: courses to instruct people on how to trade the share market. When we arrived, we were led into a small room. There were about thirty people. The spokesman was apparently a veteran trader who wrote two books on trading. Let’s call him Bauer for the purpose of this article. Bauer had a very strong presence. He was a huge, tall man with a clean-shaven head.

I was on the front row seat trying to listen and understand every word this man said. It was his teachings that planted the seeds of how I eventually grew as a trader over the years. Many times, I heard his voice in my head, reminding me of the lessons I learnt from his books and the lessons I learnt from him that day. I will try to enumerate the lessons I learnt from this man to help you the way they helped me.

This man had my attention from the very beginning. “The share market is a game where people try to steal money from other people. That is the objective of the game and it is legal”, he began. I wondered what the professionals in Wall Street would have thought about that statement if they heard it. I smiled. I liked him already.

He continued: “If you are going to join this game, you are essentially given permission to steal money from other people and in exchange, you are okay with them stealing your money also. Some of the brightest people in the world will be playing with you. Therefore, if you are going to war and fight an army with real weapons, you better make sure you do not go there with a plastic gun.”

He said that people rush to the markets to lose their money. It sounded laughable but I guess it was the only conclusion one can draw from the fact that most people begin trading without sufficiently preparing and educating themselves. Of course, most of us do not put on a trade with the hope of losing our money; however, that is what we are effectively doing when we trade without adequate preparation.

“They just cannot wait to lose their money. They do not bother learning about the market first. They think it is easy. Most people know that they need training before they can fly a plane or perform surgery, but I do not know why they think it is easy to make money trading”, he exclaimed. He was quite emotional about it.

“Trading is hard”, he declared. Only about 5% of people know how to trade profitably. And so the probability of finding someone else who knows what they are doing is very, very small. “Do not rely solely on the advice of your brokers, your fund managers or whoever else. Your best hope for success is to educate yourself. The sooner you do that, the better off you’ll be.”

“When it comes to buying and selling shares, there is no such thing as investing. What people normally refer to as investing means long-term trading to me”. When people hold on to their investments for five or more years with the intention to sell later, then all they are effectively doing is trading…just with a longer time frame.

“Do not buy shares solely for the dividend payments. They offer you measly rewards”, he said. “Do trade only with the purpose of making money from capital gains. Buy low, sell high and that’s how you should make your profit.”

At the time, I was juggling between the concepts of short-term trading or investing for the long-term. I did not know whether I was taking the right approach by attempting to make short-term profits. He made his stance on the matter strongly.

He asked us if we knew what drove prices up or down. Remembering what my lecturer said in university, I responded, “the price moves up and down close to the intrinsic value of the share”.

He turned his attention to me and asked, “What share are you trading?”

“XYZ (I changed the name for the purpose of this article)”, I replied quite happily. Perhaps I could squeeze a tip or two from him about the stock.

“Do you know what the intrinsic value of XYZ Company is”, he asked.

I nodded my head sideways and muttered, “no”.

“I’ll tell you what the value of XYZ is… it is zero!” He barked.

I was taken aback by his response. Zero? Then what are we paying money for when we buy a share? I thought. Then he clarified himself.

“Price is only a perception – it is people’s perception of what they think the value of the share price is”.

“The key to success in trading is psychology”, he continued. Psychology? I thought. How did psychology get involved in this? “The stock market is like an opinion poll. It is a measure of what people think is going to happen. If they think the price will go up, you will see an upward movement on the chart because there are more buyers so the sellers increase their price because some of these buyers are willing to buy at higher prices”, he explained.

He then used an example to explain a typical trader’s behaviour when he trades without a system. As he explained it, I recognised my own behaviour in his demonstration.

This was all a revelation for me. When I was buying and selling shares I wondered what type of people were on the other side of the trade because collectively, they were pretty smart. Now I know. It was people like Bauer who were on the other side of those transactions, doing the exact opposite of what I was doing, using similar methods like the ones he was using. They were looking at the share market with a philosophy and an approach that were completely alien to me. Traders like him were making all the money and traders like me were losing.

I shook my head in disbelief that other people saw things the way they did. I felt excited knowing that there was another alternative, another approach in analysing the markets.

“What you need, is to develop your own trading system.” He exclaimed to everybody in the entire room. “Without a trading system, you will fail. I guarantee you. This trading system must be something that is suited for you and you only. Even if I give you my trading system I am certain that you will fail to make money, because my system is not designed for you. It is designed for me. That is why you need to learn how to use the tools and acquire the skills needed to be a trader”.

I accepted his advice without fully understanding this concept of matching a trading system to suit the trader’s own personality. It lingered in my mind for a long time. The wisdom of his advice became apparent to me as I slowly learnt more about the nature of trading.

Bauer diverted our attention to the charts on the screen projected from his laptop. All I saw were lines, curves, rectangular boxes and more squiggly lines. The tools of a professional trader: I thought. I was being shown the tools that my market ‘adversaries’ have been using to ‘clobber’ me with all this time. My heart was beating faster than usual. I was in awe. I wanted those tools.

I asked Bauer what program he used to analyse the markets. He told me. I also asked him how many indicators he used. I had read enough about technical analysis by that time to know that technical analysts use indicators to analyse share prices. There are many indicators to choose from so I wanted to know how many of those are used by professional traders. He started counting his fingers. ‘Seven’, he said.

I think many people there had not really read up on technical analysis but I had done my homework and by that time, I was pretty much the only person in dialog with him, asking him questions. I wanted to gain as much knowledge and wisdom he was willing to give me.

Then I heard one of the most important lessons I’ve learnt which minimised my losses during my early years of trading: “Trade so small that it is almost a waste of your time. Assume the next trade is going to be the first out of a thousand trades you are going to be making in your life. Even though your profits are smaller, your losses are smaller too. There is no need to rush. Do not worry about getting rich too quickly.”

He was suggesting that novices like me should trade using small position sizes. That means to buy small number of shares at the start. I was intrigued. I did not know a person should trade that ‘small’.

Eventually, the seminar ended. I grabbed the booklets and brochures given out by some of the staff. In one of these brochures was the name of the program he uses. They were selling the software with the courses they were offering. I could not afford the entire package but I knew I had to buy the same charting software Bauer used. I decided to learn as much as I could about how to use charts and graphs to analyse the market. I needed to develop my own trading system.

As for my friend, he said he had a car loan to take care of first. He would look into trading shares later when he had a little more money to set aside.

A couple of days later, I got a call from the organiser of the seminar, telling me that based from the questions I had been asking that night, I was the type of person that would most benefit from their education package. Bauer was asked to demonstrate the need for trading education because he traded the markets. In the process, he was selling the courses well. Bauer seemed knowledgeable and experienced. He has enlightened me and probably several other people in that room about how much there was to learn. I was sold. I just could not afford the courses at the time but I wanted them so badly that I asked the sales person on the other end of the line if I could work for them in exchange for the course.

I did not get to do the course but I bought the software from a different distributor at a cheaper price. I also bought the two books Bauer wrote. I figured that I could acquire the skills and wisdom through self-education. I learnt a lot from those two books and from using the software. Having that opportunity to attend that seminar was a ‘gift from the heavens’, as far as I was concerned. Wherever you are, Bauer, I thank you. You – and others like you -- have made me recognize the value of passing on knowledge and experience for others to follow.


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About The Author: After years of learning, the student becomes a teacher. Marquez Comelab wrote the book: The Part-Time Currency Trader to help others in a way he feels he had been helped. He discusses trading analysis, tools, indicators, systems, strategies, discipline and trading psychology. See: http://www.marquezcomelab.com. His other articles are also published at http://www.thefreedomtochoose.com along with other helpful articles.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/be-cautious-when-studying-mutual-fund-ratings.html http://www.articletrader.com/finance/investing/be-cautious-when-studying-mutual-fund-ratings.html Thu, 06 Apr 2006 00:00:00 -0500
Wherever you look, you will find various rating systems on mutual funds, each of which uses a different approach. All of them are designed to weed through the thousands of funds to get to the best ones. But is there really such a thing? Does a high rating really mean a fund will do better in the future? Many people seem to think so. A recent study showed that Morningstar, North America's most recognized rating system for funds, has a tremendous influence on fund sales. If Morningstar gives a five-star rating, those funds typically enjoy increased sales as a result.

While ranking providers are careful to warn investors that their ratings don't foretell the future, the star system is, unfortunately, used by some investors as if they were reading Consumer Reports to purchase a new drill. Supporters of the ranking approach argue that there's no subjective component to the star rating. It isn't determined by an analyst's review, and can't change simply because the service dislikes the fund's manager or its investment strategy. And that's good.

Performance will vary. Fund performance often falls off and risk levels rise during the subsequent three years after a fund is given an initial five-star Morningstar rating, suggests another recent study by Matthew Morey, a professor at Pace University. One reason for this is that after receiving a five-star rating the size of the fund grows dramatically, which then makes the fund unwieldy to manage, he suggests. Since Morey's study was completed, Morningstar also has changed the way it doles out top rankings to make them more precise. One of the biggest problems with all rating systems is that they are not necessarily predictive in nature. This means they're not really set up to tell you whether certain funds will necessarily do better in the future. For the most part, the ratings indicate how much you might have made and how much aggravation you faced in the process.

Combining risk and return. For example, one five-star fund might post moderate return scores, but incredibly low risk scores. Another five-star fund might have much higher-risk scores, but its return score could be strong enough to help it still rank in the top 10% of the pack.

In some cases, in fact, it's not even the same fund to begin with. Remember, after a management change, the rating stays with the fund, not the portfolio manager. Therefore, a fund's rating might be based almost entirely on the track record of a manager who is no longer with the fund.

Understand how the ratings were developed. Too many people put emphasis on the results without knowing how the results were achieved. If you are going to use ratings, take the time to understand how they were developed and what they really mean. It is not the destination but the journey that counts.

Past performance is no guarantee of the future. You have probably heard this disclaimer a thousand times before, but it is really important to understand. Most rating systems have little to no predictive element in them. It's natural to think that the best performer of the past will be the best performer in the future. Unfortunately, it's not that simple. Just think about it; if it were that easy, investors would just continue to buy last year's winners knowing that they will be this year's winners. And that seldom works.

Ratings are a very important element in trying to distinguish between good and bad funds. Good research, however, goes far beyond just looking for five stars or an A+. When evaluating funds, look at the quantitative, measurable characteristics of a fund: returns up against the benchmark, costs, risks, taxes and manager tenure. Use rating systems as part of your research, but remember: just because the analysts give them top marks, it does not mean they will be the best investment in the future, and doesn’t it mean that they'll be the best investment for you in particular. Take the time to understand how the ratings were achieved. This will be the first step to educating yourself about funds.

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About the Author: Seguin & Associates Financial Services Ltd. is a financial planning service located in Windsor, Ontario. They are dedicated to the delivery of professional retirement planning, estate planning, tax planning and life insurance.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/do-you-have-a-back-up-plan.html http://www.articletrader.com/finance/investing/do-you-have-a-back-up-plan.html Tue, 11 Apr 2006 00:00:00 -0500
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I know a woman in her sixties. She worked for a company for a little more than a decade as an administration and office assistant for a staff of one hundred sales people, who loved her dearly. She always made sure all the faxes got to their desks; the stationery stock was full and each staff member had what he needed.

Beyond her job description, she was like a mother to all of them: making sure the toilets got cleaned, old food was removed from the fridge and decorating the entire floor which the department occupied. She worked hard and never complained. She was always smiling, friendly and polite.

She felt good about being a ‘mother’ to all the people who entered and left that department. She was comfortable with her position. No-one else could do the things she did. And she did them better than anyone else in the building.

One day, she went to work as usual. After doing her morning chores, she was invited to the office, where she was told her services were no longer needed. The company was undergoing certain cost-cutting measures in every department and unfortunately, her role would have to be sacrificed. She was then asked to leave the building as soon as possible. She was assured, however, that before having made the decision, every attempt had been made to find a position for her somewhere within the company.

She has financial obligations to fulfil and she still hasn’t saved enough for her retirement. She still has credit to pay off and she was saving for a trip overseas, something she never got around to doing in her younger years. She wanted to save up to establish a book-selling business. Suddenly, she would have to re-evaluate her plans. Losing a job and nearing retirement age, she will have to relinquish some of the things she had dreamt for herself.

I am sure you have heard hundreds of similar stories like these. Just five months before writing this article, I had already read about companies cutting costs by laying off jobs. Their main reason is to remain competitive, so they would not have to raise the prices they charge to their customers. Companies are outsourcing jobs overseas because the labour costs in other countries are relatively cheap compared to the local currency and sometimes because of significant skills or technological advantages. Other businesses lessen staff when sales drop and they can no longer sustain to pay the same number of people they have on their payroll. No organisation – not even a big, established business – is immune from the need to become leaner in an ever-increasingly competitive market environment.

In the past, most people believed the companies or the governments – whom they work for – could guarantee them a job for life. Nowadays, I think more and more people are becoming increasingly aware that expecting to have a job-for-life is unrealistic. It is a dire predicament to be working everyday, taking care of someone else’s business and realising that at the end of one’s career, years of service do not guarantee one’s well-being. Because of this, I believe that people are now looking to improve their chances of having enough funds to meet their needs and wants after retirement.

I think there is a dawning awareness that the ultimate responsibility for one’s own well-being lies within each individual. People are beginning to understand that their boss or the company they work for does not have an obligation nor the ability to ensure that they are taken care of when they finish working for them.

According to an article written by John Roskam*, based on a forthcoming Institute of Public Affairs (IPA) Backgrounder on self-employment and the self-reliant society, the trend to self-employment will speed up in coming decades. Five reasons explain this change:

1. Our societies will continue to develop knowledge-intensive and service industries.
2. Jobs of the future need more education; however, better educated workers might opt to work for themselves instead.
3. Older workers are more comfortable with being self-employed than the younger workers, which might indicate individuals would prefer to work for themselves as they grow older.
4. Individuals want more control and flexibility over their working arrangements and self-employment allows for this.
5. Individuals are more willing to assume responsibility for the decisions that affect their lives and their families.

In addition to this trend, more and more people are now seeking to gain greater control over their financial assets.

What we can all learn from this article is the idea that we do not have to rely on our employers to be there for us when we desperately need them to pay us our periodic paycheques at the end of our working days. There are alternatives and, while we still can, I believe we owe it to ourselves and our families to have a back-up plan and look at every single opportunity available. The question for you is this: Do you have a back-up plan?

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About The Author: Marquez Comelab is the author of the book: The Part-Time Currency Trader. He believes that trading and investing are skills people should learn while they are still young so when they grow old, they do not have to rely too much on their pension. See: http://www.marquezcomelab.com.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/why-do-we-need-to-invest.html http://www.articletrader.com/finance/investing/why-do-we-need-to-invest.html Thu, 13 Apr 2006 00:00:00 -0500
We can no longer rely on the government to hand out an aged pension once we retire. We cannot take for granted that at the end of our working life we will be taken care of financially.

The world population is ageing, due to the baby boomer generation, and within 30 years there will be so many retired people, compared to the number of working age people, that it will be economically impossible for the government to afford to provide any reasonable source of monetary assistance for the elderly.

The government has realised this, and that is why they introduced the compulsory employer paid superannuation scheme and are even now beginning to give financial incentives to Self-Funded retirees.

Most of us have never sat down and even considered the ramifications of why the compulsory super was introduced and for many of us it is a matter of too little too late. Even for the young women in our society – who have a full working life ahead of them, they still cannot rest assured of a comfortable retirement.

Why is this? It is because that unfortunately even with contributions at the current level of less than 10%, someone on an average wage who works continually for 30 years, is still going to find themselves trying to survive on an income equivalent to less than $20,000,00 per annum in today’s dollars.

You will notice that I said continually working for 30 years. This is another reason why women are particularly disadvantaged. Firstly because they often have to take up to ten years leave from the workforce to raise children, secondly because women in general earn less than their male counterparts and thirdly because an enormous proportion of the women in Australia, for example, will never have received any superannuation contributions, prior to the compulsory superannuation being introduced, and will therefore not have had contributions made over their entire working life so far, giving them even less to fall back on by the time they retire.

Many women may previously not have thought of lack of superannuation contributions as being a problem, as their husbands may have been contributing to super since they first began work. Unfortunately though with the high number of divorces in this country, it is unwise to rely on the fact that your partner’s superannuation will be there for you in your retirement years and even if a large proportion is awarded in a settlement – that it will be sufficient to sustain a comfortable retirement for any length of time.

All of these factors are why women now more than ever, need to begin taking action to build up a source of ongoing income, that will grow to such an extent, as to be able to provide a secure and happy future for themselves and their children.

It needs to be a source of income that is unrelated to physical work…that is an income that is generated from income producing assets – and not from our personal efforts.
One of the best sources of creating this ongoing income stream is to begin building an investment property portfolio, also aptly paraphrased as bricks and mortar.

We need to start investing in income producing assets now, so that they will have time to grow and develop so that we will be financially independent for our retirement years.

The most important concept to grasp in relation to building wealth for retirement and for creating finances that can be directed toward charities, or helping out your family is that of Compound interest.

In mathematical terms 72 divided by Compound Interest Rate of Return = Years for Money to Double in Value.

Therefore if you have $1,000.00 invested at 10% interest, then the number of years that it will take for your money to double to $2,000.00 is 7.2. It will quadruple in 14.4 years and be worth 8 times as much in just over 21 years.

If your money is invested at 7% interest, then it will take approximately ten years to double in value. If it is invested at 5% it will double in just over fourteen years.

The two most important aspects of compounding are one: rate and two: time. The higher the rate and the longer the time something is left to compound, the greater the final result will be. This is why the sooner we start investing, the better.


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Debra Lohrere is the author of several books on property investment, creating financial security, goal setting and the power of compounding. Please visit her homepage http://www.debra.lohrere.com/home.shtml or storefront at http://www.lulu.com/DebraLohrere

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/taking-control-of-your-finances.html http://www.articletrader.com/finance/investing/taking-control-of-your-finances.html Thu, 13 Apr 2006 00:00:00 -0500
Now before you start to think….”well I don’t have any excess left…if I was earning more money….then I would have some free”. Let me dispel this myth…and tell you that it is a known and excepted fact that the amount of money that people earn has little if any bearing on whether or not they have an excess left to invest. The only way to create an excess it to spend less than you earn, instead of spending all that you earn.

Even doctors and lawyers, who earn well over $100,000.00 per year, often end up at retirement with little more Net Worth than factory or office workers.

Net Worth is calculated by deducting the value of all the liabilities or loans you have from the income-producing assets owned to give you the net value of your income-producing assets.

Why aren’t high-income earners retiring wealthy? Why don’t they end up with a greater Net Worth than someone on a low income? It is quite simple. Human nature seems to dictate that whatever anyone earns….they spend….some even spend more than they earn and charge it on their credit card.

The higher your income grows…the more you spend and the only way to get out of this cycle is to realise that it is happening, and make a concerted effort to reverse this habit….and to begin reducing your expenditures so that you can free up money to invest.

The best way to do this, is to try the 10/90 plan. This plan simply means that as soon as you receive your pay….you put aside 10% of it for investment….and then use the other 90% to live off of. Put aside the 10%, and then pay all the bills and do the grocery shopping….and then after that whatever is left over you can spend.

Most people do it the wrong way around…they pay the bills, do the shopping and spend what is left over, never leaving any left to save or invest. By taking the investment money out first you will alleviate the temptation to spend it.

The road to wealth is not determined by how much you earn, but by how you utilise the income you have and how much you save and invest.

You need to take control of your finances. One of the best ways to start having more control over your money is to find out where it has all been going, and then amend your spending habits to allow you to live within the 10/90 plan.

If you write down a list of your monthly net income, then in another column write down a list of the essential items that you have to spend money on. You should be able to work out an average for telephone, gas, electricity, insurances and rates, from your previous bills. Work out an average of how much is spent on grocery shopping and petrol. If there are any other necessary utilities include them as well. Then deduct the second column from the first – and this will give you the maximum potential savings for each month.

It can be quite startling how high this figure can be and make you wonder where all the extra money went.

Another good learning experience is to simply write down for a fortnight every dollar spent and write next to it what it was for. You will soon find that there are a lot of unnecessary expenses, often caused by impulse buying, where you have spent money on items that you neither needed or really wanted, and could easily have gone without.

When you can begin to recognise these areas, and start to consider whether or not you are spending your money wisely, before you hand it over, then you will be beginning to take control over your money and are well on the way to embarking on your investment journey, which will enable you to have a financially secure future for you and your children.


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Debra Lohrere is the author of several books on property investment, creating financial security, goal setting and the power of compounding. Please visit her homepage http://www.debra.lohrere.com/home.shtml or storefront at http://www.lulu.com/DebraLohrere

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/building-financial-security-steps-4-6.html http://www.articletrader.com/finance/investing/building-financial-security-steps-4-6.html Thu, 13 Apr 2006 00:00:00 -0500 Most self made, successful business people and investors have achieved their success by planning to do so.

They have set goals for themselves and achieved them. They invest time in reading and learning about wealth creation and are happy to learn from other people’s mistakes and experiences, as well as their own. They set goals, and realise that they will be far better able to achieve them if they familiarise themselves with the ways in which other people acted and the things that others have done to succeed. Wealthy people create wealth by carefully utilising the income that they have available to them to their best advantage. They know that working harder and longer hours is not the way to achieve financial freedom, instead they have to utilise what they have, and make it grow.

Having a goal enables you to focus your energies on devising ways to achieve it. When someone makes a decision and begins focusing on achieving a specific goal (and even better in a specific period of time), the powerful subconscious mind goes to work and begins playing with ideas and developing strategies of various ways to bring about the successful completion of the goal.

When you set yourself a goal both your conscious and subconscious start working on it and begin to develop an action plan. You will begin asking yourself questions about what needs to be done to enable you to reach your goal. Many find themselves coming up with amazing ideas and solutions to problems or obstacles that have been in the way of achieving their goal. The subconscious is an extremely powerful tool. The more often you remind yourself of your goal, the more your mind will work on ways for you to achieve it. Some people find answers come to them when they are asleep and dreaming.

Have you ever noticed that there is no correlation between being wealthy and having a high IQ or a university degree? If there were, every doctor and university graduate would be wealthy, and as statistics show, most of them end up in the same situation as 95% of the population.

Setting Goals helps you to focus your energy on developing workable strategies. Setting long term goals helps you look at the big picture. Once you can see the big picture, you can develop small sub goals. Sub goals are small simple goals that can be followed one step at a time. When you progressively achieve your sub goals, you will get closer and closer to your major goals. Goals are simply plans to succeed. It is said that if you “Fail to plan, then you plan to fail”. Goals help you keep motivated. Progressively achieving your goals can lead to a wonderful feeling of fulfilment.

5. Learn how to Budget.
Budgeting does not have to be tedious. All you need to do is to work out:
What your incomings are. What your regular outgoings are and then make sure that all of your other expenditure is less than the amount remaining. This will allow you to start saving and investing. Budgeting puts you in control of your finances.

6. Learn about investing – in particular about property investing.
Learn to research the property market, so that you will be able to purchase properties that will not only give a good rental yield, but they will also return the best capital growth possible. Read investment books. Read auto-biographies of successful people. Speak to people who have succeeded in doing what it is that you want to do. The more you learn, the easier it will be to recognise a good investment.

Find out about Negative, Neutral and Positive gearing – and why gearing is an invaluable tool, which will enable you to build up a wealth base in accelerated time, compared to if you only invested your own hard earned dollars.

Once you have educated yourself and understand why investing in property is such a powerful tool, you will be able to embark on the road to financial security.

In Australia, and many other countries less than 5% of the population reach retirement able to support themselves, without government or family assistance. If you want to be one of them, then now is the best time to start striving toward financial security.


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Debra Lohrere is the author of several books on property investment, creating financial security, goal setting and the power of compounding. Please visit her homepage http://www.debra.lohrere.com/home.shtml or storefront at http://www.lulu.com/DebraLohrere

Source: http://www.articletrader.com ]]>