What are the Advantages of Forex Trading?
Forex trading involves the trading of currencies and is the largest trading market in the world. A number of opportunities have arisen in the past few years for more people to get involved in the forex market as it is now possible for people to trade online. Anybody that is considering starting to trade in the forex market should educate themselves about how forex trading works and the strategies that are involved before any money is invested. All investments are risky but this risk can be lessened if detailed research is carried out into the market and how it works. One of the reasons forex trading is becoming so popular is that it has a number of advantages over other types of trading.
24 hour trading
Trading in forex is available 24 hours a day as it does not have a physical location. As long as there are banks and financial institutions open somewhere in the world, trading can take place. Markets are closed at the weekends as with any form of trading, but during the week people can trade at any time they wish. This makes forex trading the ideal market to get started with trading as people are able to fit the time that they spend trading around their current job or other commitments even if this is a time when other markets would be closed.
More flexibility within trades
Two features of Forex trading are orders which allow trades to be made and also the position to be closed if a certain point is reached. These are known as limit orders which end a trade when the desired amount of profit has been achieved, and stop loss orders which close a trade that is going against the trader. While these orders are available on other markets too there importance cannot be ignored as, when these features are properly used, trading is considered to be less risky. This is because trading ends when the required amount of profit has been reached which reduces the risk of this profit being lost on other trades. Stopping trading when things are not going the trader’s way prevents them chasing these losses and potentially losing more money. Forex trading is a very liquid market so there is less risk of a trader being stuck in a trade that they cannot get out of, as the trader is always likely to find a buyer.
The market cannot be controlled
The value of the currency of a particular country at any given time is based on such a large number of factors that it is almost impossible for anyone to gain control of this currency and drive the price up or down. Even governments are unable to fully control the value of their currency. This means that forex trading is one of the fairest markets to trade in and people are unlikely to fall victim to the value of their investment falling dramatically in a short space of time due to the actions of other people.
Low entry level
If a broker is used to trade forex such as Alpha Capital Markets UK Forex brokers, then they will have a minimum amount of money that needs to be invested before a person can begin trading. For the purposes of trading forex, this deposit is likely to be in the hundreds rather than the thousands that are needed to get started with other types of trading.
With the housing market finally looking like it is turning a positive corner, investing in buy-to-let properties could once again be a viable option for those looking to make their future more secure. However, if you are planning to delve into the world of property investment, there are a number of things you should think about and plan.
Research your location before you buy
It’s so important that you are able to think like a local and know the area you are planning to buy in like the back of your hand. Never purchase a property in an area if you are unsure about the type of housing, the kind of people that live there and what kind of amenities might attract people to rent in that particular location. Make sure that you are only buying if other homes in the area are valued at, or have been sold recently at a similar price. If you are concerned, perhaps consider buying your first two or three properties in the town you live in.
Think about your target market
Bringing in the rent can be great, but you need to consider how much you want to make and how much risk you are willing to take. For example, you would make by far the most money from buy-to-let investing by renting your property out to students, as it allows you to let on a per-room basis. However, would you be willing to take the risk of the property being damaged, or upsetting the neighbours? Whilst professional people or couples often make the safest tenants in terms of risk, you may not be achieving the yield you want against your mortgage. Try to weigh up the pros and cons of all of your options before coming to a decision – it may be that you want to try a mix to see what you are comfortable with.
Get your finances in order
Don’t be afraid to start off slow with property investment. Eventually you could find yourself with multiple mortgages to pay, as well as rents coming in from your various tenants, so it’s important to stay on top of your finances. Stay friendly with your bank manager to ensure you can get the best deals on mortgages when considering a new property investment. Also look into bridging loans in the event that a house comes onto the market that is too good a deal to miss. “What is a bridging loan?” I hear you ask. Well, it’s a way of getting the finances in the short term before your mortgage lender finalises the pay-out, and can be very useful in these kinds of situations.
Do you want to be a hands-on landlord?
The last point we want to make is whether you want to be a landlord who deals with the tenants in a hands-on way, i.e. taking the rent payments, checking the property on a regular basis and doing viewings, or whether you want to leave this to a lettings agency. If you have get to the stage where you have multiple properties on your books, you will find that being hands on can take up a lot of your time, to the point where it becomes your full-time job. Leaving it to a lettings agency, whilst coming at a cost to you, would allow you to deal with the business side of things, as well as continuing to make further investments. Again, it is a case of weighing up the pros and cons of both options.
Hedge Fund titan Jon Paulson pulled off the greatest trade of all time in 2007, raking in a cool $15 billion in his bet against subprime mortgages - according to the International Business Times who ranked the top ten greatest trades of all-time. Some were brilliant masterminds, others were just plain lucky.
The Top Ten Greatest Trades of All-Time
1. John Paulson’s bet against sub prime mortgages made him $15 billion in 2007
2. Jesse Livermore’s call on the Crash of 1929 (a legendary trader featured in the popular book, Reminiscences of a Stock Operator).
3. John Templeton’s foray into Japan in the 1960s (a true investment pioneer, Templeton foresaw the rise of Japan after World War II and profited hugely from it).
4. George Soros’ breaking of the Bank of England in 1992 (Soros made $1 billion).
6. Andrew Hall’s $100 oil prediction (with oil trading at $30 per barrel in 2003, Hall bet prices would rise to $100 in 5 years; they did and he took home a personal paycheck of $100 million in 2008).
7. David Tepper’s 2009 bet on financials (as the market hit its low in early 2009, Tepper bought financial services stocks & his fund earned $7 billion that year ($4 billion of that went to Tepper).
8. Jim Chanos’ prescient shorts (his sharp analysis led him to predict the demise of Enron, WorldCom, and other firms, and he is known as the best short-seller in the world).
9. Jim Rogers’ early call on commodities (he was bullish on commodities back in the 1990s & has been riding them to great profits ever since).
10. Louis Bacon’s geopolitical play (he correctly predicted that Saddam Hussein would invade Kuwait in 1990 & profited handsomely by going long on oil & shorting stocks, which helped his fund return 86% that year).
Most of these trades were ‘global macro’ plays where huge, concentrated bets were made by analyzing fundamental economic/business conditions. These investors excelled at turning a great observation about the world into a great investing idea. But, while these make the headlines, you never hear about the other investors who made a big call and missed, and ended up out of business.
It’s almost impossible for regular investor folks to make a ‘big score’ like these traders. Rather than trying to throw a touchdown pass on every play and make a big score like these traders, the smarter game plan is to focus on trying to get consistent first downs. Do your homework, watch market/sector developments, don’t chase stocks up or down. Do that, and the score may take care of itself.
Source: International Business Times
If you currently own Bank of America (NYSE: BAC) then you have been a strong supporter of the new direction the bank is going in and have been loving the impressive run the stock has been on, +83% year-to-date, +183% over the past 20 months. Just take a look at both of the BofA charts below and you’ll see why investors have been loving BofA’s recent stock performance. While BofA’s recent rally has been nothing short of stellar, it didn’t come from nothing. It was supported by the fact that fundamentally BofA is a strong company from top to bottom. Overall, there is a lot to like about Bank of America and the new direction the company is going in under the watch of CEO, Brian Moynihan.
Bank of America has clawed its way back from oblivion to the delight of traders and investors alike, who have profited on the stock’s advance. BofA has been a great momentum trade and going forward we expect shares to continue to soar. BofA is a great value play and as you can see, the stock is gradually recovering, climbing back to where they were trading before the financial markets collapsed.
Bank of America’s Past 12-Months Stock Performance: +82.13%
Bank of America’s Past 20-Months Stock Performance: +182.97%
BofA’s Legal Worries & Future Concerns
Some of the biggest concerns investors have when it comes to Bank of America are the bank’s legal woes, pending lawsuits and the potential financial ramifications from these lawsuits. Some speculate that the legal settlements could cost the bank and its shareholders billions of dollars. When it comes to investing, I prefer to look at the fundamentals of a company rather than giving into fear and listening to all the rumors. Right now all these numbers being thrown around are nothing but speculation and in the end BofA will pay a lot less in legal penalties than originally expected. Just examine all of the past legal cases against Bank of America and analyze the amount BofA actually paid out versus what analyst’s originally speculated, it’s consistently been a lot less. Many can attribute this success to the work of CEO Brian Moynihan, who before embarking on a career in banking was a high-powered Boston Lawyer. In all seriousness, this legal onslaught is a battle that the company has been at for several years now, as CEO Brian Moynihan has been systematically knocking lawsuits out of the way slowly, steadily, and one at a time.
With all the legal worries soon to be behind them, investors should now be focusing on the many great prospects Bank of America currently has going for them. The two biggest factors that make Bank of America successful are their ability to innovate their products to attract new customers while cutting costs and also their ability to produce strong sales numbers.
BofA’s Impressive Sales Growth
A strong indicator for past and future success for Bank of America has been their impressive sales growth. BofA has increased their sales growth across all segments of their business. In their 2Q earnings report, BofA’s five main operating segments all posted impressive growth rates and earnings. Compare the two figures below to see just how substantial BofA’s sales growth has been:
2nd Quarter of 2013: $1.4 Billion
2nd Quarter of 2012: $184 Million
Bank of America’s 2013 2nd Quarter net income ballooned to $1.4 billion vs $184 million prior year driven by higher net interest and non-interest income. BofA’s net income multiplied 7.6 times in one year, a very impressive figure and a strong indicator for continued future success. What was more impressive was the factthat it was a balanced performance with BofA seeing all five segments of their business improve:
- Retail Banking: Despite banking center consolidation and cost reduction, BofA saw a significant increase on the retail side in deposits, new accounts, plus credit/debit card usage.
- Mortgage/Loans: Real estate services managed to come in with $1 billion in revenue and marks a great improvement over last year’s -$186 million.
- Wealth Management: Revenues in investment management literally skyrocketed 10-fold to $4.5 billion with net income increasing 261% to $758 million. The segment now has a 17% net income-margin.
- Global Investment Banking: Global banking revenues increased to $4.1 billion up from $231 million in the same period last year driven by investment banking activity and loan origination. Global banking now has a 31% net income-margin and is highly profitable.
- Equity Trading: Global markets revenue, driven by equity revenue came in at $4.2 billion and profits at $959 million.
Sales are what drive Bank of America as a company and to see this kind of growth across all segments of their business is very impressive and a bullish indicator for future success.
BofA’s Ability to Innovate
Innovation has always been something that has distinguished Bank of America as a company and made them stand out from their competitors. BofA’s ability to innovate new products, making the lives of their customers easier while cutting costs has been a winning strategy. The newest innovation will be BofA’s ‘Teller Assist‘ ATM machines that will allow customers to do the following:
- Cash checks for the exact amount, including receiving change.
- Receive cash withdrawals in a variety of denominations ($1, $5, $20 & $100).
- Deposit checks with cash back.
- Split a deposit into two or more accounts.
- Make loan or credit card payments.
Bank of America has consistently been making strides to go automated in its entirety, in terms of banking; similar to the way tons of food stores now have implemented self-scan devices for checkout. The more machines in place, the more automation, the fewer tellers needed, the less the bank spends. This has been an initiative that the bank has been working on for the past few years, and I believe that this forward looking “automation innovation” is going to yield the bank tangible results in terms of cost cutting and general efficiency in the future. Katy Knox, Retail Banking and Distribution Executive at Bank of America says it perfectly in the following quote:
“We know that customers want to bank on their schedule – not ours – so we are constantly looking at how to deliver more convenient banking options to them. This technology gives customers easy, convenient access to ATM banking services with the added option of having a personal interaction and the support of a teller available at the push of a button.”
In one new innovation, Bank of America will be simplifying the lives of their customers while cutting costs and saving money in the long-run. It’s a win-win if you ask me and it’s innovations like the Teller Assist ATMs that will lead BofA to prosperity.
BofA’s Stock is Significantly Undervalued
When it comes to valuation, BofA is significantly undervalued compared to its peers as it has a book value discount of 28% and a forward P/E of 10.5. Bank of America trades at the largest discount to book value while Goldman Sachs (NYSE: GS) and Wells Fargo (NYSE: WFC) already manage to trade at a premium. Even though Bank of America had a great Q2 with an EPS estimate beat of 28%, its valuation continues to lack its peers. While the P/B industry average stands at 1.1, Bank of America is comparatively cheap with a near 30% discount from book value and near 10% earnings yield providing investors with a significant margin of safety.
What to Expect from BofA’s 3Q Earnings?
Bank of America surprised everyone with their 2Q earnings, reporting a 70% increase in profits, primarily through cost cutting measures. Overall revenues grew 3.5% however BofA’s stock price and valuation still lag compares to its immediate peers. While reducing uncertainty with respect to book value credibility and legal risks, Bank of America’s valuation remains low and attractive. I also expect that Brian Moynihan will be a man of his word and Bank of America will step up its shareholder remuneration policy with an estimated annualized dividend yield of 2-3% in 2014/15.
I expect BofA to once again beat the analyst’s expectations reporting strong 3Q earnings. BofA has been making strategic cuts to reduce overall costs while increasing revenues & strengthening the core parts of their business. Merrill Lynch continues to be BofA’s most profitable division & expect Merrill’s profits to continue to increase going forward as the two companies become more integrated with one another. Overall, BofA is a great long-term investment and a strong BUY for investors. Those who currently own the stock, simply hold onto your shares and over time watch them grow!
Conclusion: What to Expect from BofA Long-Term?
Investors need to look past the newspaper headlines and short-term outrage against Bank of America and instead analyze the core parts of BofA’s business. Bank of America combines a market-leading, deposit-strong banking franchise with impressive sales and earnings growth, declining/encouraging delinquency and loss trends, and a low valuation. Dividends and share buybacks can further add fantasy to the stock. Under Moynihan’s ‘Project New BAC’, BofA has been able to leave its legal troubles behind and focus on fundamentals and cost cutting. Going forward the company is going to remain a lean and clean sales machine for investors.
Innovation continues to be a strength of BofA as consistently they have been able to innovate their consumer bankingproducts to attract the highest number of customers and in return deposits. Over 50% of Americans currently has some form of relationship with Bank of America whether it’s a checking/savings accounts, credit card, mortgage, auto loan, investments, you name it.
As the economy improves, Bank of America should profit from higher consumer spending and an increased transaction business with a strong possibility to outperform EPS estimates. Fueled by its innovation, future steady dividend and the recovering housing market, I recommend investors to buy BAC. My 12-month price target for Bank of America is $24 per share, a yield of +65%.
Binary options are becoming an increasingly popular form of trading in the financial markets. They offer a way to trade a wide variety of assets across multiple markets and offer greater reward in a shorter period of time to regular investments. For investors looking to profit off binary options the key is to find a great Binary options broker. 24option is not only one of the top ranking brokers worldwide but it also is our personal favorite binary options broker.
Established in mid-2010 and headquartered out of London, 24option specializes in trade with options based on multiple investment instruments allowing inroads in several markets at once. 24option’s known for offering its customers a wide variety of underlying assets and types of options to operate. There are also a number of advantages that make 24option one of the top brokers for binary options traders.
So why trade binary options? Without getting into too much detail, we have listed 7 of the great advantages/benefits to trading binary options:
1. Limited Risk
2. High Rewards and Fast Returns
3. Simple Trading
4. Low Investment
5. Wide Range of Internationally Traded Assets
6. Trade on Any Market Condition
7. Trade Anywhere, Any Time
On top of these many advantages, traders who use 24option’s platform are more equipped to succeed and generate large profits. 24option is a proven system that has produced great results since it was first established and in addition they offer users a plethora of great amenities.
In our opinion, 24option is by far the best binary options broke out there and if you read all the reviews you can learn why. Read more at 24option review to find out why they are the best of breed broker when it comes to binary options. Not only does 24option offer a great product with top-ranked customer service but 24option is one of the few services that offers users free demos. Everyone make sure to take advantage of this great innovative service and traders read more at 24option review to find out how to profit off binary options!
While U.S. social media stocks like Facebook (NASDAQ: FB), Groupon (NASDAQ: GRPN), and Zynga (NASDAQ: ZNGA) have struggled to live up the hype; China’s Tencent Holdings (0700.HK & OTC: TCEHY) on the other hand has been thriving despite a weak Chinese economy.
Who & What is Tencent?
Tencent is a Chinese investment holding company whose subsidiaries provide everything from mass media, entertainment, Internet, gaming and mobile phone services to China’s population of 1.35 billion people. They are China’s largest Internet Company and the 3rd largest tech company in the world, behind Google & Amazon. The Internet has become one of China’s leading industries and as a result an ultra-competitive market as new companies are being established daily as everyone is trying to capitalize off the new trends and growing user base. While many companies have been experiencing growing pains, Tencent has continued to dominate the market thanks to their diversified mix of businesses.
Tencent’s 3 Top Services
- QQ, China’s largest instant-messaging service with over 850 million users.
- QQ Games, a massive, youth-oriented, multiplayer gaming network.
- WeChat, a free mobile social-network that allows users to send photos, videos, and voice messages to their friends, walkie-talkie style.
Tencent is China’s Facebook, Twitter, eBay, Yahoo, Google, Zynga, and Tumblr all rolled into one. What makes Tencent stand out from their competitors is the fact they can offer their users, advertisers, and application developers access to everything from a single platform.
One of the Greatest Growth Stocks of the Past Decade
Tencent’s dominance has resulted in their stock more than doubling over the past three years. Tencent has been one of the greatest growth stocks of the decade, appreciating +392% in the past five years along with a ridiculous +7,595.89% since their IPO in 04’. Tencent’s competitors are not experiencing the same success as many are struggling, held back by the uncertainties surrounding the health of the Chinese Economy.
Baidu (NASDAQ: BIDU), one of China’s Internet Giants and a competitor of Tencent, is down over -13% the past year compared to Tencent’s +39% yield over the past year. Same thing happened during 1Q earnings, many Chinese companies fell flat falling short of analyst’s expectations. Tencent on the other hand, reported better than expected 1st Quarter earnings beating analyst expectations sending shares up +31% since April.
Short-Term Expectations, What to Expect in 2013?
Many investors want to know whether Tencent’s great run will ever end? My outlook is this, the 2nd half of 2013 could cause some challenges for Tencent due to volatility in the months ahead. Tencent has seen an overall slowdown in their gaming business, which is expected to continue as long as the Chinese economy continues to struggle. Add to that the fact that Tencent’s two most recent ventures, e-commerce and mobile are not expected to start generating revenue until at least 2014. For most companies, these problems would be a blessing but for Tencent’s ridiculous growth to continue they will need to find a way to supplement the lost revenue through its other services.
Long-Term Expectations, What to Expect Over the Next 5 Years?
Tencent’s dominance should grow stronger in the next several years as they plan to capitalize off China’s rapidly growing mobile and ecommerce markets. If there is one thing Tencent knows how to do, it’s turn their users into profits as seen in their strong 2013 profit margins of 28.93%.
Originally founded as an instant-messaging platform in 1998. Much like Facebook, Tencent grew very quickly recruiting a high volume of new users. Tencent was surprised that having lots of users didn’t automatically translate into profits so the company changed their business model building on their large user base and creating an online-gaming presence. Tencent has since then expanded into many different online services the two most popular are QQ, +850 million users, and WeChat, +300 million users in two years. Tencent’s ability to attract users and in turn profit of them is a major reason analysts are very bullish about Tencent’s long-term prospects.
Tencent’s Huge Opportunity With China’s Growing Mobile Market
Tencent currently trades at a premium valuation, something they’ve earned thanks to their years of dominance. Tencent’s dominance in China’s online market can be attributed to their efficient operations, strong senior management and their ability to continue to release new innovative services. Tencent’s growth can be directly attributed to their efficient and effective investing producing a ROE of 35.38% and ROA of 13.90%. Its numbers like those than show why Tencent’s senior management have been the driving force behind the company’s success. Tencent’s CEO, Ma Huateng, deserves a lot of the credit. A recurring candidate for Barron’s World Best CEO, Huateng is described as very patient and careful executor, often planting seeds and experimenting before jumping in.
This explains why Tencent often takes its time to develop new brands, making sure that the right infrastructure is in place to allow the new venture to truly succeed. Quality control is a huge part of Tencent’s business development strategy. They always like to make sure that their new brands are fully developed and well tested before they release it to the public. Tencent’s reasoning is that most people will only give an app, game, online service, or new social media platform one shot and if a user experiences any technical difficulties or bugs in the software, the likelihood of them becoming a long-time user greatly diminishes.
Tencent’s Establishing a Foothold in China’s Growing Mobile Market
This strategy can be seen with Tencent entering China’s mobile market. Establishing a foothold in China’s growing mobile gaming market is a huge opportunity and one they want to build the right way, not the quick one.
Executives cautioned that it was still early days for e-commerce and mobile gaming, stressing that focusing on the quality of the user experience is the key to long-term success. They also wanted to curb expectations and not let analysts call these ventures a bust for failing to produce profits, when Tencent doesn’t expect them to become a factor in the company’s revenue strategy until at least 2014 maybe 2015. Executives are really excited about the prospects of the company’s shift into mobile gaming saying that they have the right infrastructure in place to link its applications like mobile QQ and Weixin to mobile-gaming, as well as filling the pipeline with “high quality games.”
Mobile gaming is a much larger market than traditional gaming and for Tencent that means it’s a much more lucrative opportunity as well. The differences between the two are that mobile gamers range between ages 18 to 60 versus traditional gamers range between ages 18 to 24. This opens up a whole new group of people that Tencent can market their single platform services to. Over 80% of China’s population of 1.36 billion is expected to be using the Internet by 2025. Adding to this, it’s reported that Mobile phones have become the top devise for accessing the Internet in China and over 60% of mobile users purchase mobile products on a monthly basis. So as you can see, there is a huge untapped market that Tencent has yet to capitalize from. Currently gaming makes up half of Tencent’s revenue. If they are successful in tapping into the mobile gaming market then this number should rise substantially.
Tencent’s Strong Long-Term Prospects
Tencent is a well-run company with a solid balance sheet, over HK$25 billion in net cash, and a strong array of popular, revenue producing services. With a current 0.30% dividend, executives have said that they plan to both increase the dividend and continue to buybacks shares to return cash to shareholders. Investors looking to capitalize on both emerging markets and the technology sector should look no further than Tencent. They are clear the leader in a rapidly growing sector and they hold many great long-term prospects that I believe will allow them to continue to dominate the Chinese market. Continued development of both mobile and ecommerce services will make Tencent the only company that can offer its users and advertisers a single platform to fulfill all their online needs.
Tencent’s 12-Month Price Target
The consensus among analysts is that Tencent will continue to outperform its competitors, as they expect earnings to grow 22% in 2014 to over HK$25 billion (HK$13.55 a share) on HK$95 billion in sales. I also believe Tencent will beat its competitors and as a result I expect Tencent’s stock to continue to rise to $375 over the next 12-months, an annual yield of 25%.
Hope everyone had a great week and are enjoying an even better 4th of July weekend! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. Like always, if you have any investment questions or need advice on a specific stock, Stocks on Wall Street is always here for you so feel free to Contact Us at anytime. We always love to hear from our readers so please shoot us an email. Also let us know what you think about the articles below and your thoughts on the market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.
Is Warren Buffett More Myth Than Legend? (Marketwatch)
Celebrity Economists Make Waves (At Work)
An Open Letter To The Idiot Nation (StoneKettle)
Are we having fun yet? On the banks’ barely believable behaviour (London Review of Books)
Gladwell: The Gift of Doubt (New Yorker)
In Connecticut, a struggle to launch Obamacare (WaPo)
Basel Examines Banks’ Diverging Views of Risk-Weighted Assets (Bloomberg)
Thoughts on the future of finance blogging (FT Alphaville)
Finance blogging is not for the faint of heart (Abnormal Returns)
The Fed’s magic jobs number (Fortune)
Gold – Has the ‘Narrative’ Failed? (Acting Man)
Elizabeth Warren Tackles Wall Street (The Nation)
Why doesn’t Apple enable sustainable businesses on the app store? (Stratechery)
The Answer is a Click Away: The Internet Era’s Great Placebo Effect (Medium)
4 Steps to Viral, Or How to Create Infographics That Blow up the Web (visual.ly)
Pandora Paid Over $1,300 for 1 Million Plays, Not $16.89 (The Understatement)
Pandora and Royalties (Pandora)
The Immortal Life of the Enron E-mails (MIT Technology Review)
Morsi repeated McCain’s error: Ignore the economy (MarketWatch)
Egypt Interim Leader Inherits Troubled Legacy From Mursi (Bloomberg)
The Economics of Eating Out (priceonomics)
Mankiw, Kaplan, CEO Pay and the Defense of the 1 Percent (Economic Policy Institute)
Lockdown: Why Google Killed RSS Reader (Marco)
Surprise! Inflation is too low almost everywhere on earth (Wonkblog)
Do budget deficits cause inflation? (Mainly Macro)
Hope everyone’s had a great week so far and are excited for an even better weekend! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. Like always, if you have any investment questions or need advice on a specific stock, Stocks on Wall Street is always here for you so feel free to Contact Us at anytime. We always love to hear from our readers so please shoot us an email. Also let us know what you think about the articles below and your thoughts on the market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.
It’s Not Just the Fed, It’s China, Too (Moneybeat)
7 charts that tell the Fed not to taper QE3 (MarketWatch)
Gold Takes a Plunge Below $1,300 (WSJ)
The Conflict Between Managing Funds and Selling Funds (Bronte Capital)
Decline and fall: how American society unravelled (theguardian)
Can Others See When You View Them on LinkedIn? (Full Contact)
The Trouble With Kickstarter (WSJ)
Finance blogger wisdom: summer reading (Abnormal Returns)
Parsing the Fed: How the Statement Changed (Real Time Economics)
New China billionaires blowing massive bubbles (MarketWatch)
Gold is now only back to where it was in September 2010 (Moneybeat)
The Second Great Depression (Foreign Affairs)
Congress is wildly unpopular. Should anyone actually care? (Wonkblog)
Why Monopolies Make Spying Easy (New Yorker)
Bernanke’s Bond-Buying Paradox for Markets (WSJ)
Crossed signals over Fed’s stimulus efforts (Washington Post)
Financial Sector Thinks It’s About Ready To Ruin World Again (Onion)
Stocks on Wall Street readers know that we’ve been bullish on Vietnam. Bloomberg agrees with our outlook. TheBloomberg Markets, November 2012 list of the most promising Frontier markets for investors ranked Vietnam as #1. United Arab Emirates as #2 – a market we also think has strong growth potential.
It’s no secret that growth in the U.S. and Europe over the next decade will be outpaced by the BRIC’s and emerging markets. Adventurous investors looking for even more attractive growth potential should also consider Frontier markets. Frontier markets tend to be smaller than emerging markets. Shares of frontier companies are also harder to trade than those of emerging countries.
We like Frontier markets that are moving to Emerging Markets. Developed capital markets are key to becoming an emerging market. So, we’re most interested in economies where the stock market is developing and companies are beginning to get access to capital. Also, it’s worth noting that weakness in China tends to get picked up by Frontier Markets. Sectors that show the most promise in Frontier markets are technology, energy, consumer discretionary and industrials that benefit from infrastructure improvements.
Vietnam fits the bill on all counts. It has enjoyed a strong and consistent average GDP growth of 7.2% annually since 2000 and projected cumulative GDP growth from 2012-2016 is 31.4%.
The main ETF tracking Vietnam is the Market Vectors Vietnam ETF (VNM) sank 47% in 2011 and was one of the worst performers in the entire emerging world which fell by an average of 21% in 2011. These horrible losses were largely due to runaway inflation. The huge drop however opened up a great buying opportunity, as result back in November 2012, we recommended investors to buy shares of VNM as we believed VNM was capable of producing huge gains.
VNM has performed just how we expected as shares are up +38% over the past 7 months. Investors who have a high-risk tolerance may want to consider making a play on this Vietnam ETF. Make sure to checkout Stocks on Wall Street this week to read our detailed report on Vietnam’s long-term investment outlook.
There is no meaningful difference between the schemes adopted by Bernie Madoff and our Social Security system. Madoff did to his investors what the government has been doing to wage earners for over 60 years with Social Security.
Why did Bernie Madoff go to prison? He persuaded people to invest with him, but he didn’t invest their money. As Madoff built his portfolio over time, he simply took the money from the new investors to pay off the old investors. Eventually, there were too many old investors and not enough money from new investors coming in to keep the payments going. Madoff’s scam was finally debunked; he went to jail and became one of the most hated men in America.
Soooo…. there is fundamentally no difference between Social Security and Bernie Madoff’s scam – except that one was operated by a private individual who is now in jail and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions. Here’s a nifty little chart with a side-by-side comparison.
|BERNIE MADOFF||SOCIAL SECURITY|
|Takes money from investors with promise money will be invested & made available to them later.||Takes money from wage earners with promise money will be invested in a “Trust Fund” & made available later.|
|Instead of investing money Madoff spends it on yachts & nice homes in the Hamptons.||Instead of depositing money in a Trust Fund, politicians use it for general spending & vote buying.|
|When the time comes to pay investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors.||When benefits for older investors become due the politicians pay them with money taken from younger & newer wage earners to pay the geezers.|
|When Madoff’s scheme is revealed, all hell breaks loose. New investors won’t give him more cash.||When Social Security runs out of money, they simply force taxpayers to send them some more.|
|Bernie Madoff is in jail.||Politicians remain in Washington.|
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