October 7, 2011

Before the Euro there was ECU

The European Currency Unit was the currency unit used in the European Union before the emergence of the European Euro that replaced it.

September 21, 2011

Investing in Currency ETFs

Investing in a Currency ETF gives Investors exposure to the Currency being tracked by the ETF.

September 7, 2011

Russian and German Natural Gas Deal

Natural Gas coming from Russia is now being transported to Germany under the Baltic Sea through the Nord Stream pipeline. A formal ceremony celebrating the success of this deal, will happen sometime in the fall of 2012. The Pipeline had been under construction for for sometime and was finally completed in August 2011. The New York time reported in an article published today, that was titled, Natural Gas Starts Flowing from Russia to Germany, that the Pipeline is 760 miles long and is one of the costliest pieces of underwater infrastructure through all of Europe. Shipping the Natural Gas via an on land Pipeline in Ukraine would be

considered more cost effective than the expenses to build the Under water pipeline which was estimated to have cost 12.4 billion dollars. Locking in high natural gas prices with long-term contracts, German consumers will ultimately face higher utility bills as a result. Disputes between Ukraine and Gazprom, a Russian Utility Company, have led to Russia looking for alternative ways to ship its Natural Gas to Europe. The Underwater Pipeline was said by Russian Prime Minister Vladimir Putin, to provide more energy security for both Russia and Germany, since it was less likely a political dispute between nations would lead to a disruption of supplies as was the case at times between Ukraine and Russia in recent years.

Gaining Exposure to Natural Gas

Natural Gas in Europe has been rising in demand over the past several years. The Prices of this commodity could increase in the future as more people and factories turn to it as a fuel source. More and more vehicles are also showing up on the roads which are natural-gas powered. To gain exposure to Natural Gas without opening a Futures Account, Investors should consider an Investment Product known as an Exchange Traded Fund (ETF). These investment securities track an underlying index or commodity, and the ETF Shares trade on an Exchange just like the Shares of a company. Investors can purchase these shares through a traditional brokerage account such as Scottrade or Etrade Financial. To learn more about the ETF for Natural Gas, I linked to a page on my website Investing for Beginners where more detail is provided, including live updating charts for the ETF itself.

August 24, 2011

Investing in Precious Metal ETFs

Precious Metal ETFs (Exchange Traded Funds) allow investors to gain exposure to the various Precious Metals on the Market. The most popular are Gold ETFs which investors use to profit from either a rise or decline in Gold Prices. The reason I mention that it is possible to profit from a falling Gold Price, is because there is a Gold ETF which is known as an "inverse" ETF. What this basically means is that the Shares of this security - which trades on the New York Stock Exchange - is specifically designed to rise in value when The Gold Spot Price is falling. There is a similar product for Silver that allows investors to profit from a decline in Silver Prices. Of course there are also Silver ETFs which Rise in Value as Silver Prices Rise. Both the Precious Metals, have ETFs associated with them that are considered "Ultra."

This is a reference to basically mean that the stated objective of these particular ETFs is to double the daily return of the metal being tracked. In other words, for the Gold Ultra ETF, when Gold prices rise 3 percent in a single day, the ETF shares will rise by about 6 percent - these type of ETFs are known as Leveraged ETFs. If Gold Prices fall however, the decline in the Value of the Ultra Shares, could fall, but by twice the percentage amount. Because of this, Investing in these Shares can be quite profitable, but come with the added risk of potentially larger losses.

Platinum and Palladium ETFs

The other two popular Precious Metals with ETFs designed to track their price and performance, are Platinum and Palladium. Both of these metals can seem expensive to the average investor if purchasing them on the Open Spot Market. The Platinum ETF however, tracks the Platinum Market Price and trades at about one tenth of the price. For example, if Platinum is trading on the Spot Market at $1,800 per troy ounce, than the ETF that tracks it, will be trading at about $180 per share. This makes it convenient and affordable for investors wanting to gain exposure to the Platinum market, without actually having to buy any of the metal itself! There is also an ETF for Palladium.

This ETF also tracks Palladium Prices but costs about one tenth the price of Palladium being sold on the open market. Today, the Price of Palladium is at $741 per troy ounce, and the ETF shares that track it, are trading at $74.25. To learn more about the ETFs mentioned above including viewing live charts for each one, follow any of the links above. To learn more about Precious Metal ETFs in General, visit the www.investing-for-beginner.org Website which covers Exchange Traded Funds in more detail. Discover the other Market Segments beyond just Precious Metals that ETFs have been created to track. From Market sectors, ETFs for Oil, to the various industry groups, the creation of ETFs now provide investors an opportunity to gain exposure to the different segments of the World Economy.

August 21, 2011

Qaddafi Cornered, Libyan Rebels in Tripoli

It appears that the imminent fall of the Government in Libya headed by Moammar Qaddafi is just days away. Libyan Rebels pushed into the Capital, making their way to the center of Tripoli. It has been reported by several news agencies that the unit assigned to protect Qaddafi had surrendered to the Rebel forces and many have even switched sides in the six month long civil war. Although the Libyan Rebels have often claimed to be hours away from taking the capital, this time it appears that their claims can be backed by the situation on the ground. According to the Associated Press, the rebels claim to be moving into Tripoli and meeting little resistance along the way. It should be noted that the Rebel advance on the ground was coordinated with NATO Air Support, most likely giving the Rebels the decisive advantage in the battle. It was reported Qaddafi's son Seif al-Islam, had been arrested and taken into custody. Seif was thought at one time to be the heir to take the reins of government, after his father's rule.

A defiant Qaddafi was heard in an audio broadcast that was recently released, saying, "How come you allow Tripoli the capital, to be under occupation once again?. The traitors are paving the way for the occupation forces to be deployed in Tripoli." Interviews with Rebels on the ground, revealed that many believed the fall of Tripoli would occur in just hours. Fighting was reported in several neighborhoods all around Tripoli as what was left of the crumbling Qaddafi forces, fought the lighting fast rebel advance. Earlier in the day, a major military base just outside the capital had fallen into rebel hands who claimed they confiscated military hardware that they could use in the push to control Tripoli. Rebels said they were just one and a half miles away from the iconic "Green Square" where supporters of the Qaddafi regime often gathered in defiance, broadcasting images around the world of the Libyan leader's supporters. Capturing this square, would be a significant psychological blow to the government, and may even signal its impending collapse. As news of the Rebel's advance on Tripoli spread, celebration in the streets were seen across Libya.

August 18, 2011

Standard and Poor's Under Investigation

The U.S. Justice Department is now investigating the Standard and Poor's rating agency for improperly rating dozens of Mortgage Backed Securities with very high ratings, after many of those investment turned out to be worthless. I find the timing interesting because it seems like Americans in general are aware of the idea that the rating agencies contributed to the Recession that started in 2008. By giving many of these investment securities a top rating, many investors were duped into purchasing them, and insurance companies into insuring them. When the value of these securities imploded, many were left holding worthless bonds. Why is it now that the Justice Department seems to be making a public case that an investigation is being conducting against the agency? Well of course, I think the answer seems to be pretty apparent: The U.S. is not happy with the recent Downgrade of the nation's debt

and has decided to strike back at the rating agency. Although I welcome the Departments inquiry into the ratings handed out that contributed to the crisis, it should have been conducted whether the Nation was downgraded or not! According to the NY Times article Justice Inquiry is Said to Focus on S&P Ratings, the Justice Department began the investigation before the Nations triple AAA credit rating was lowered to AA+. If that were true, this is the first time I've heard about it and I read several newspapers each day! This seems like a clear case of getting some revenge if you ask me for my first response to this story.

Were S&P Ratings Driven by Profit?

In the investigation itself, Justice Department officials are focusing on times when analyst working for the company wanted to rate specific mortgage bonds lower, only to be ruled over by other S&P managers. Standard and Poor's made huge profits during the recent boom years (2002-2006) handing out the highest possible ratings on bonds that were backed by pooled mortgage loans, making them appear more valuable than they turned out to be. Many companies and countries (excluding the U.S.) pay the rating agency to provide ratings for a variety of securities. Follow the link to view the Different Levels of the Standard and Poor's Ratings.

It really makes me wonder if the U.S. paid for ratings, whether they still would have been downgraded! It was reported before the recent crisis, some banks paid Standard and Poor's up to $100,000 to get a rating from them. Obviously this seems like a clear example of a conflict of interest! Paying to get your rating most likely meant your securities being rated were going get favorable treatment. I would like to point out that this is not the first time rating agencies in general, have been accused of improper behavior that heavily contributed to a recession or even a market crash. The famous Stock Trader named Jesse Livermore, gave a statement to the Newspapers in 1929 to defend himself against accusers who were directly blaming him for causing the 1929 Market Crash. He said, "It is very foolish to think that an individual or combination of individuals could artificially bring about a decline in the stock market in a country so large and prosperous as the United States, What happened during the last few weeks is the inevitable result of a long period of continuous rank manipulation of many stock issues causing their prices to rise many times above their actual worth, based on real earnings and yield returns."

August 16, 2011

Gold ETF - Gaining Exposure to Gold Prices

Gaining exposure to the Gold Market without having to actually pay the price per troy ounce, which was $1,740 last time I checked, has never been easier. The answer is through purchases of Investment securities known as Commodity ETFs or Exchange Traded Funds. Some of these ETFs sell shares which can be bought and sold on a stock Exchange, such as the NYSE Arca, and derive their value from Gold owned by the issuer. The beauty of these investments is that they can range in price from one tenth the price of gold, to one one hundredth the price of gold. In other words, if Gold is trading at $1,740 per troy ounce, there is a Gold ETF that trades at $174.00 per share and another ETF that is $17.40 per share. To see which ETFs these are, and view live updating charts of the four different Gold backed ETFs I follow, visit my Gold ETF to learn more.

There is one Gold ETF in particular on the page that I linked to above, that rather than tracking the price of Gold, it tracks the Market Vectors Gold Miners Index. This is a Stock Index comprised of 30 mining companies. When Gold mining companies appear to be generally rising, These share may be a suitable option for investors who want to profit from the rise, since the ETF is designed to track the performance and replicate the direction of that particular Index, this is another way to gain exposure to the Gold Market for investors not willing to purchase gold at its current market prices. There is also an ETF which I cover that is designed to double the returns and backed by Gold. For example, If the price of Gold goes up by 10 percent, the investment returns of these shares will be about 20 percent. While there is a risk in larger losses, it comes with the incentive of the potential for larger gains! These type of securities are known as Leveraged ETFs and provide a larger risk/reward investment return. In other words, make sure you are as right as possible on the future direction of Gold prices, be clear on the risks, and this investment could pay off a magnified return as a result.

August 9, 2011

Dow Jones Averages and their Use

I have spent the last several weeks studying Charles Dow, the Dow Jones Company, and the creation, calculation, and importance of the various Averages created. The three Averages in particular that I have been focusing on in my research, are the Dow Jones Industrial Average, Dow Jones Transportation Average, and the Dow Jones Utility Average. These are indices that investors follow to gauge market direction and performance. Charles Dow, who is one of the co-founders of the company and the driving force behind the creation of the Dow Jones Averages, was a brilliant technical analyst who realized that it was possible to track the general stock market if done in an intelligent, systematic manner

Before the Dow Jones Industrial Average was introduced to the world in 1896, investors did not really have a definitive method for measuring the stock market's general performance. For example, if an investors portfolio went up 7% in a year, it was hard to determine whether that was a decent, great, or exceptional return. With the absence of a benchmark to measure performance against, investors found it difficult to compare their performance to the stock market in general. What Charles Dow and the Dow Jones Company gave to the world, was a new way to interpret the movements of the market, and provide an orderly way to measure investment returns. Before the creation of the Dow Jones Averages, there had not been a clear and systematic approach for identifying and measuring the movements of the stock market and determining its general direction.

Investors and the Dow Benchmarks

The creation of the Dow Averages, allowed investors to compare their own investing performance, to the performance of the index they were tracking. If the Dow Jones Industrial Average was up 10% in a year, and an investor's portfolio was up 15% in the same time frame, the investor could now assess their performance based on how the broader market did (as measured by the Average). Charles told investors that they could identify the longer term direction of the Stock Market by analyzing a chart of the Dow Jones Industrial Average, the Dow Rail Average (now called the Dow Jones Transportation Average) and observing the market's volume (how many shares traded hands in a single trading day) to get a sense of the underlying strength behind an existing trend.

Although this seems like elementary now to many investors, it was revolutionary in The early days of the Dow Averages. They are still used to this day for the same purpose they were initially created for, to gauge and measure the general performance of the stock markets. To see a list of companies that belong to each one of the Dow Jones Averages, follow the links above. They will take you to the Investing for Beginners website where I dedicated a section of my website to providing more detail about the Dow Averages mentioned in this blog post. You will also find self updating charts and stock quotes for each company.

August 8, 2011

Standard and Poors Gave US Early Warning

The United States lost its triple AAA credit rating a couple days ago from Standard and Poor's Rating Agency. This obviously had an impact on the Stock Market today, as can be seen by the 635 point drop of the Dow Jones Industrial Average. Although Treasury Secretary Tim Geithner and U.S. President Barack Obama both criticized the Rating Agency for their decision, I think Standard and Poor's gave the United States plenty of warning ahead of time, to prevent a downgrade. For example, On April 18, 2011, I blogged about a warning given to the U.S. by Standard and Poor's that the U.S. needed to proactively deal with the deficit to maintain the top credit rating. This was nearly four months ago and the U.S. waited literally to the last minute to raise the debt ceiling and allow the government the power to borrow in the financial markets to meet its debt obligations. This was not only poor judgement, but poor leadership from both parties. This issue should have been dealt with in a timely manner.

Instead, leaders from both parties wanted to play politics, and try to score political points for their hardened stances. The American people were not fooled. As a matter fact, a poll released the other day, showed that the U.S. congress had an 82% disapproval rating, which was the highest on record since the poll was first conducted back in 1977! The same poll showed that the majority of the the American people felt the debt ceiling debate was not about doing what's right for the country, but purely about trying to gain political advantages. I am happy the American people are finally waking up! It's taken long enough!! This not only costs the United States its stellar Credit rating, it spooked the markets, and as a result, millions of dollars in wealth have disappeared in the Stock Market, resulting from a broad fall in stock prices. Although I do think it sounds funny to say the U.S. needs to take on more debt to pay its debt, there is a time and a place for that debate, and these politicians obviously chose the wrong time to have it!

Rather than conducting two Wars that have become insanely expensive, or what the treasury secretary called a mistake - a 700 billion dollar tax break for the rich (that the U.S. needs to borrow to do), America should be making wiser choices in the first place. Hopefully this is a lesson to all of us, that if our leaders can't get the job done, than they should no longer be the leaders! There is too much at stake right now, and the American people need to take their responsibility as citizens seriously, and vote in people who remember their role - public servants! This means finding ways to create jobs, moving in a direction that gets the economy moving again, and knowing the right time and place to have specific debates that help rather than harm the people and the image of the United States.

London Rioters Hit the Streets

The London riots that have been going on for the past three days, should send a loud clear message to governments around the world. When enough people are fed up and feel desperate, they will turn to desperate measures. Although I personally condemn the looting and rioting in London that has occurred recently, I am at the same time, sympathetic to those who take to the streets, angered that their needs are not being listened to and their struggle is not being sufficiently addressed. I don't think it is any coincidence that the riots are happening after the largest demonstration in Israeli History over the weekend, with 270,000 people coming out into the streets to demand better pay, and fairer living conditions.

There has also been mass demonstrations in Chile recently with the masses demanding better education, social justice, equal opportunity. Around the world, it appears that the younger generation, between the ages of 20 to 45 years old, realize how they have been lied to. They are no longer accepting the statement "the rich are getting richer while the poor are getting poorer" as just simply "that's just the way it is." They are organizing, and in the case of London, they are fighting back! Their built-up frustration is turning to visible anger, and this will spread further across the planet, if not properly and proactively handled. I can't help but think that if the Rich were in the same predicament, they would react the same way. The income equality is a ticking time bomb waiting to happen, and what we are seeing recently, maybe the fuse being pulled! I am following closely what is happening in London and will blog more if any new developments occur.

July 27, 2011

Stock Trading Virtual Practice Account
Cash Prizes Awarded to Top Performers

A free virtual stock trading account is given by a pretty cool website that provides an opportunity to practice trading the Stock Markets. The site is called Wall Street Survivor and linked to here. You can sign up for free, without even having to use your real name. Once you have signed up, your Virtual Account start with funds of $100,000 with the ability to have $200,000 when using the full margin amount, that is allowed. During the trading day, You can place trades that include, buying, selling, short-selling, to try and get the best possible returns. What is especially cool, is that prizes are given for the best performing virtual accounts in one week and one month time frames. For example, if your portfolio has the best return (percentage gain) in a week, the prize is $100. If it has the best performance in a one month period, the prize is $500.

I thought this was pretty cool, and I signed up for a virtual account yesterday. There are a couple of things I would mention for those who want to try this out. When you first sign up, you will be asked whether you want to receive notices from the Wall Street Survivor. I read in some reviews for Wall Street Survivor it was wise to uncheck those boxes otherwise you could get more emails than you really want. I made sure to do this when I signed up. The other thing I would mention, is there are ads placed throughout the website, but you don't need to click on them, unless you are interested in seeing one of course. I am not, so I tend to ignore them, because the virtual trading account is where all my energy and focus is on. I want to test my own skills and try to win that first place!

Opened a Virtual Trading Account

When I started Trading in the virtual account today, I was glad to see how easy it was to perform the various Trading Actions and how the virtual account does all the calculations for you based on what trading decisions are made. It is also possible to practice using a virtual account to trade options. My absolute favorite thing so far about the experience was that you can see where you rank with all the other traders by selecting "see my ranking." Based on your performance, you will see what place you rank among the virtual traders participating. I was shorting stocks today in this account since the markets were generally trending down and when I checked my ranking, it said 636 of 6,500. I guess this meant there are about 6,500 traders participating!

I like the incentives of trying to rank in the top 3 because of the cash prizes that are awarded. I will admit however, that for new investors, this site is a great learning and practicing opportunity, and to win the top prize means you are up against some pretty good competitors that you need to outperform. Although this was my first day, ranking 636 is still a ways away from 1st, 2nd, or 3rd place but the winners are awarded after a week AND a month for best performance. I found it competitive, challenging, and fun. If you don't rank well, keep practicing and it can help you rank higher, while developing skills for trading in the Stock Markets.

July 26, 2011

Venezuela Has More Oil Than Saudi Arabia

The Biggest Proven Crude Oil reserves are not in Saudi Arabia, but in Venezuela! I first learned of this in a New York Times Article about Hugo Chavez (Venezuelan President). What I find interesting, is the article was about Mr. Chavez and his recent treatment to remove a large tumor, and towards the end of the article, it is mentioned that OPEC has recently identified Venezuela as the country with the most proven Crude Oil reserves in the World! I would have expected this to be front page news, but somehow, it was tucked inside the newspaper on Page A5! Up until this time, I had always believed that Saudi Arabia had the largest proven reserves, but according to OPEC's figures, Venezuelan reserves are 296.5 Billion Barrels while Saudi Arabia has 264.5 Billion barrels. This information was reported last week in the Organization of Petroleum Exporting Countries (OPEC) annual Statistics report (I linked to the report which I found on OPEC's website, it is a PDF 108 page report).

According to an article that was released about a week ago by msnbc about this, the amount of Venezuelan reserves recognized by OPEC, has increased by 40 percent from the end of 2009. Part of the reason for Venezuela surpassing Saudi Arabia, are a result of what the New York Times Called, Huge deposits of heavy crude found in the Orinoco region. I find this report fascinating because that means the western hemisphere has a lot more oil than originally thought!

Now a Change in U.S. Relations?

The relationship between Venezuela and the United States has been at times rocky over the past few years, and this new revelation of Venezuela containing the worlds largest oil reserves, could make the relationship even more interesting. I have always found that the United States seems to tolerate the society in Saudi Arabia which has often been accused of human rights abuses, and systematic repression such as the laws that don't let women drive vehicles, or those that say a woman must be accompanied by a husband or male relative when going out in public spaces.

The large oil reserves and OPEC contributions that Saudi Arabia makes, seems to keep the pressure off of their government for reforms to a more democratic and free society. This type of pressure has been exerted on other countries by powerful and influential institutions such as the United States government. Saudi Arabia seems to get a pass in this category and their large oil supplies seems to be the reason why. It makes me wonder if U.S. Corporations and the U.S. government is now going to cozy up to Mr. Chavez now that they know he is holding a major trump card which literally translates to, holding the world's largest oil reserves! I read the newspapers everyday and this story seems to have been marginalized. I haven't seen many articles written about it, but I have a feeling we will be hearing more about it in the very near future.

July 25, 2011

Debt Ceiling Debate Goes On

President Obama Just gave a speech appealing to the American people on putting pressure on their congressional leaders to find a compromise in Washington to find a debt deal that is fair, balanced, and timely. About two minutes after the President's speech, the rebuttal came from Republican speaker of the house, John Boener. As an American, I think John Boener needs to be fired. This guy is a terrible representative and its repulsive to me that he claims to speak for the "American People." It is very obvious that who he is referring to are the wealthy elite and people who donate to his campaign. My immediate thoughts about Obama's speech was that he is absolutely right. The wealthy need to pay their fair share.

Closing tax loop holes (for companies that ship job overseas or subsidies to oil and gas companies for example) is something Obama campaigned on when running for President, and it needs to be done! Raising revenues at this stage is absolutely necessary and Obama should not back down on this point. I get the sense that in this country, Billionaires and Millionaires don't have the stature that they once held. After billions of dollars of tax payer money went to bail out large banks and insurance companies, there is a reason the United states is so in debt. Having to borrow an additional 700 billion so the wealthy can have their tax cut extension along with paying for two wars that have become the longest in U.S. history, should not come at the expense of people receiving medicare, and social security checks. After all, retirees paid into these funds for most of their lives, now getting that money is suddenly called "entitlements?" These are NOT entitlements, this is money that is owed to them because it was deducted from their paychecks during their working careers! To cut these programs is nothing short of robbery! I'm hoping People in America wake up and realize how they are being played.

Republican Speaker of the House John Boehner's rebuttal would have been appropriate several years ago to denounce invading Iraq, a costly war that has put the country deeper in debt, while enriching private contractors (and shareholders) like Lockheed Martin or Raytheon. Where was the discussions about, "maybe we cant afford this?" Of course they were no where to be found, as John Boehner and his Republican allies heavily voted to invade a country that the U.S. could not pay for. This banking crisis that just passed, had everything to do with lax regulation which was empowered by legislation coming out of Washington that made it possible for loans to be made to just about anybody! Asking the Republicans for their plan to solve this problem reminds me of that old but visual saying, "Its like asking the fox to guard the hen-house!" To decimate the middle class and claim that the way to fix the budget problems is by decimating it even more, is not only irresponsible, its ridiculous. When John talks about "the American People" he is not talking about me. As a matter of fact, he is not talking about anyone I know. So, let me guess who he is talking about....Republican campaign donors.....hmmmm..... We do need cuts in this country, we need to cut the Speaker of the House from his job, and replace him with a more competent leader.

July 24, 2011

The First Dow Jones Average

The first Dow Jones Average has had several name changes over the years. Today it is known as the Dow Jones Transportation Average and is often referred to as the Dow Jones Transports. When it was first created by Charles Dow in 1884, It tracked the combined performance of eleven companies. Because the railroad industry was so large and prominent in the United States at this time, nine of the companies were in the railroad industry. This composition to the Stock Index would change over time as new industries such as the Automobile and Airline Industry groups, sprang up and become important parts of the U.S. Economy. Currently, the Dow Jones Transports contain only four railroad companies (a big change from when it was first introduced!). Other notable companies in the Index today, include Delta Airlines, FedEx Corporation, United Parcel Service (UPS), and Union Pacific Corp.

Investors follow this stock Index because it is considered to be the best overall measure of the transportation sector in the United States. Market Analyst and Economist have observed that when the economy is coming out of a recession, the performance of the Dow Jones Transports will usually outperform the other two Dow Averages, the Dow Jones Industrial Average and the Dow Jones Utility Average. As manufacturing and production increase, shipping, railroad, trucking, and airline companies begin to increase their profits resulting from moving more goods than were moved during recession time. Because of this important attribute, investors closely monitor the performance of the Dow Jones Transports especially during recession times - looking for clues to a growing economy and the signs that the end of a recession is near. To see the charts and stock quotes for each company in the Dow Transports, the Investing for Beginners website has a page titled, Remembering the Rails, the Formation of the First Dow Jones Average. There is also information for how to trade the actual index itself. This is done through a security called an Exchange Traded Fund. Live charts of the performance of the actual Dow Jones Average itself, is also included on the page.

July 22, 2011

Importance of the Dow Utility Average

Watching the Dow Jones Utility Average has become an everyday occurrence for me. The important Utility Average was the third Stock Index introduced by the Dow Jones Company. It was first introduced in 1929, and started off as a Utility dominated Index consisting of 18 Companies. This number was changed in 1938 to what it currently stands at today, a total of 15 companies. Most of them belong to the electric utility industry although several of the companies are considered to be "Diversified Utilities." This term is given to a company that belongs to more than one Utility industry. For example, a company may belong to the Natural Gas industry group, and the Electric Utility industry group. Following this Stock Index is important because its performance can often be attributed to investors expectations for future interest rates. Because utility companies often borrow heavily for expansion and operational purposes, profits for these companies are often higher during times of low interest rates. the same is true in reverse, when interest rates are rising, borrowing becomes more expensive and often leads to a decline in profits. For this reason, many investors, economists, and market analysts follow the performance of stocks belonging to large utility companies. The Utility Average makes tracking this sector easier, by combining the performance of 15 of the largest utility companies in the U.S.

I recently created a page on my investing for beginners website titled, the Utility Average where I wrote more about the history and use of this particular Stock Index. On that page you will find a table that lists the names of each company in the Index. I also wrote about how investors could Trade the Dow Jones Utility Average as a single stock throughout the day. This of course is done through an Exchange Traded Fund, or ETF for short. Like most other major indexes, the Utility Average also has an ETF that investor can purchase which tracks the performance of this Dow Average. To make tracking the various companies in the index simple and easy, I embedded live charts for each one of the companies. At the end of each trading day, I visit the Utility Average page myself, to get a sense of how the Average and the companies inside of it, performed for the day.

July 7, 2011

DJIA or Dow Jones Industrial Average

When properly analyzed, the Dow Jones Industrial Average, or DJIA for short, helps investors determine the Stock Market's overall direction (known as the trend) and the strength behind it - measured by trading volume. Proper interpretation of these factors assists Stock Traders in identifying proper entry or exit points to purchase or Sell their stock positions. For example, when the Dow Jones Industrial Average has been consistently falling, buying stocks long, would not be advisable. Waiting until the DJIA has started to rise again, gives an investor a much better chance of entering a stock position which is profitable right from the start and will turn into a profit if sold at the right time (before the DJIA begins to fall again). These cycles occur and will continue to occur. The Dow Industrials gives a general measure of not just stock market direction, but of general business and economic conditions as well. For example, a falling DJIA is unlikely to be occur at the same time the economy is booming.

In fact, many investors and economist believe the stock market reveals economic conditions about 6 months in advance. This means a rising market, reflects collective investor optimism of near term improvements of economic conditions. The reverse of course is also true. Falling markets may reflect investor pessimism for improvements in the economy, in the near future. These characteristics gives the DJIA even more value, using it to as a barometer to measure the performance of the general market, and economic conditions. These combined characteristics, makes the Dow Industrial Average a powerful forecasting tool for any investor. Below are the companies in the Dow Industrial Average. The list is sorted in alphabetical order by ticker and includes Sectors and Industry Groups, each company belongs to. I have also created a table and embedded live charts of the Dow Jones Industrial Average on my website as well as live updating charts of the Dow Diamonds, an ETF that is designed to track the movements of this Index.

July 5, 2011

Studying the Tape In Stock Trading

Buying and Selling Stocks and operating in the stock market, takes skill and proper timing. One of the most revealing clues and strategies I use, is following the tape. let me give some Example of the Time-Stamp (“The Tape”) That I follow and how it helps me determine when to buy or sell a stock. When I watch stock, I begin following the tape of those that I’m interested in. They show the last Execution price, date and time, and Number of shares. These orders are what make up the charts themselves. I rarely follow charts anymore, because the tape is much more revealing. For example, if an institutional buyer, hedge fund, or big investor is taking a big position in a stock (or selling a big position) they won’t do it all in one day. Usually they do it in the course of a couple of days or even weeks. This is because they don’t want to raise the price on themselves buying all at once or vice versa. I watch orders coming across the tape, and they give me a clearer picture (than a chart) about what’s happening with that company’s stock. The orders of 100, 200, 300’s are usually the public buying. When orders come across that are in lots of 5,000, 10,000, 20,000 and anything larger, that is a strong clue that a big investor is taking up (or selling off) a position. When I see this, I watch VERY carefully and make notes to myself on a notepad. Watching the tape helps me decide what to buy or sell and helps me with timing (when to get in and when to get out).

Learning from the Best Investors

I first learned about studying the Tape from studying the life and career of famous Wall Street Trader, Jesse Livermore. He was famous for Reading the Tape which basically meant that he watched the Time and Sales of each company that he followed. This graphic is an example of a Time Sale of Alcoa and Ford Motors. There are three columns, execution price, number of shares sold (middle) a time the execution was made (left column). The green means the price was higher or the same as the the last execution price, whereas the red means the execution price was lower than the previous one. When institutional buying occurs, big orders can be seen coming across the Tape (the time stamp) and likewise when they are selling. In this example, it looks like investors are buying up Ford and selling Alcoa. The keen investor learns what is happening, watching the orders that appear. Jesse Livermore always said that it is not what investors say that he's interested in (like rumors or opinions), but what they actually DO! This, meant watching the buying and selling and interpreting the execution of orders. Did investors just say they liked a stock or were they actually buying it - this is what Livermore wanted to know. Eventually, he perfected this skill and it ended up making him rich!

June 13, 2011

ETF Survey by State Street Global Advisors

State Street Global Advisors which is the Investment Management arm of State Street Corporation and Knowledge@Wharton, the online business journal of The Wharton School at the University of Pennsylvania, conducted a joint study in 2008 to research the impact Exchange Traded Funds had on the Financial advisory industry - What are ETFs? As part of the study, a survey sponsored by State Street and SPDR University - State Street's online educational resource - was conducted that included 840 Investment Professionals. In the survey 67% identified Exchange Traded Funds as the most innovative investment vehicles of the past two decades, and 60 percent reporting that ETFs had fundamentally changed the way investment portfolios were put together. Anthony Rochte, a Senior Managing Director of State Street Global Advisor at the time the survey was conducted, in an article by businesswire.com titled, ETFs changing the Way Advisors Do Business, According to State Street and Wharton Study, was quoted as saying, “By incorporating exchange-traded products into sector rotation, core-satellite, tax management, and portfolio completion strategies, advisors are simultaneously managing costs and risk, which helps underscore their value proposition and strengthen relationships with clients.” When the Investment Professionals involved in the survey were asked about the greatest potential growth area for ETFs, 43 percent thought 401(k) retirement plans while 27 percent of the respondents cited actively managed ETFs.

Asked what the most appealing characteristics of ETFs were, the top five reasons given, ranked in order:
1) Low Cost
2) Liquidity
3) Intraday Trading
4) Tax Efficiency
5) Investment Style Purity

When asked what they thought the greatest disadvantage to ETFs were, 69 percent of the survey respondents cited the "unknown or untested indexes and/or portfolio methodologies" or the "overwhelming number of ETF choices."

Additional revelations from this ETF study / survey included:

  • A majority of financial advisors (76 percent) identified themselves as light-to-moderate users, indicating that less than 50 percent of their portfolios utilize ETFs
  • 4 percent report they do not use the instruments at all.
  • Nearly 60 percent of respondents knew what exchange traded notes (ETNs)
  • 29 percent said they plan to increase their use of ETNs in the future
  • Only 31 percent of advisors are currently using inverse ETFs - these allow investors to bet against a market index.
  • Nearly 40 percent reported they plan to increase their use of inverse ETFs in the future

More About SPDR® University

SPDR University is a FREE online educational resource designed to provide investment professionals with the education and training in order to stay ahead of the market and be precisely in turn with their clients. Log on to SPDR University to access rich Downloadable educational client-ready materials, webcasts, interactive presentations, audiocasts, research papers and more. To register, go to www.spdru.com today and start earning CE credits anytime, from anywhere. To register, visit the SPDR University website at www.spdru.com. If you aren't an Investment Professional, the website is still useful because it offers rich information that can be accessed without having to register.

June 8, 2011

SiteBuild It - User Friendly Website Builder

SBI Video Tour!SiteBuild It! for Website Hosting and creation, is my recommendation for everyone looking to Build a Website that looks great and generates income. With this easy to use service, Building a website has never been easier! Upload your own HTML pages or use the Block by Block builder available when choosing SiteBuild It! (SBI) to Power your website. Some of the benefits I enjoy from using SBI! included the step by step guide that arrives as soon as your order. It is a quality education as well because once you get through it, the realization of the possibilities that exist with the internet and starting an online business are exciting and inspiring at the same time. The Guide is known as the SBI Action Guide, truly inspiring as you learn how to build a highly visited website, turning it into an income generating venture, through creating content about a subject you love. SiteBuild It! provides Stats on your visitors, is search engine friendly, and Gives you the tools you need to succeed. Website Hosting, a resource rich SBI forum, networking opportunities, and an ongoing relationship with the SBI! team has been a pleasurable experience and only a few of the reasons I use it. Customer service is exceptional and always timely and SBI! staff is invested in the success of their clients. I appreciate their good attitude over there: YOUR SUCCESS IS THEIR SUCCESS - Gotta love that!

These helpful and inspiring experiences made me a satisfied customer allowing me to confidently share with others that building something that is yours, even if you're not a website designer, is possible with SBI and the Satisfaction and Empowerment that comes with earning an income online and the flexibility to choose your own hours, is a wonderful benefit that comes with working from home. Getting to research the subjects you are most interested in, and turning it into content for your website, is liberating. Many people around the world have quit their full time jobs to maintain their SiteBuild It! websites. Click on the Video below to get a short introduction and learn more about SBI. Here is a link to a page on my site with more Case Studies and SBI Success Stories I found interesting. The cases are of real people who have turned their websites into their full time small business. I included the links to the sites, built using SiteBuild It!

The SiteBuild It 90 Day Guarantee

So what are you waiting for? If you're like me, you know that the subject you are most passionate about, will likely remain with you for a lifetime. Why not share it with others, enlighten our world by sharing what you are Passionate about, and monetize your site to generate income! When you order SiteBuild It!, a 90 Day Free Satisfaction & Success trial comes with it. Give it a shot, you might love it! SiteBuild It is so confident its clients will love it, that the free Satisfaction & Success trial means you will get a full refund if after 90 days you are not Satisfied with SBI! Let me tell you though, that after building my Investing Website and watching the income generate from it, I see why the folks at SBI are so confident and can extend that offer. If I'm satisfied, I'm betting all their clients around the world are as well! What do you have to lose? You have the whole world to gain, so begin today, Build a Website of your choice and start that small business!

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May 30, 2011

Peter Thiel Foundation - 20 Under 20

The Peter Thiel Foundation run by Investor Peter Thiel, is doing a good thing for society and their vision inspires me that other billionaires and people and groups of substantial wealth will come to their senses, and do the same. The founder of PayPal, Mr. Thiel made his fortune as a venture capitalist, investing in internet companies that would grow to become giants; An early investment in Facebook serves as the best example I can think of, but now he is investing through a program in his foundation. Mr. Thiel is an investor at heart. He invests in the future of a nation and a vision of opportunity that springs forth ingenuity and invention from bright young minds. Through his non-profit, Those chosen to participate in the program will be funded by grants of $100,000 and will get mentors and access to an extensive network of those of those inside the Technology Industry. Rather than spending 4 to 8 years in school, Mr. Thiel is giving America's young adults opportunities to experience the world in new ways. The Thiel Foundation reported they received 400 applications and had selected 24 individuals to extend invitation the the nonprofit initiative is sponsoring, which asks college students under the age of 20, to drop out of college and join the program. I applaud Mr. Thiel as not only an investor in young peoples futures, but also a visionary when it comes to the power that can be realized by cultivating brilliant minds, and having the belief that they can accomplish anything if given a serious fighting chance and nurturing environment. View the Winners and what they plan to do for the next two years as part of the program.

In many ways, Mr. Thiel and his 20 under 20 Program reminds me of what Adam Smith wrote about in the 1776 Economic Classic, the Wealth of Nations. In it, the father of modern capitalism (Adam Smith) studies universities and in particular, wanted to learn if it really took 6 to 8 years to learn a trade (earn a degree). His research took him to the Ancient World and his reading dove into Egyptian, Greek, and Roman literature. In studying the social model and how universities fit into the system as a whole, he studied the Ancient relationships between Master and Apprentice. What he discovered was that an apprentice would have to work under a "master" for 7 years before becoming Masters themselves. The "Master" Status now allowed that individual to take jobs as professors or business leaders in their communities. As an apprentice, the pay was lousy and debt was often incurred, but after those seven years, they could expect to one day take on apprentices for themselves who they could also pay lousy, while raking in more of the income generated by the work done by the apprentice. Adam Smith wondered how it could possibly take 7 years to learn to become a good professor, or an officer in a business, or in a trade company.

A Look at Earlier Civilizations

What Adam Smith discovered in studying the organizational structure of Society in various cultures from Ancient Rome to Scotland in the 17th century, was that it did not take this long to learn a trade efficiently. He claimed that vigorous round the clock study of a subject of interest. Studying day and night, he proposed that a subject such as management, or being a university professor, could be learned to a high level in 2 to 2 1/2 years. His study next went to why such a long time for something like an apprentice to become a master, or a student to get a Masters Degree or Doctors a PhD. What he discovered in the various cultures he studied, was a strong relationship that existed with local business leaders and the political class. For example, in 17th century Scotland, politicians limited the number of apprentices a master could have at one time in particular trades. This essentially was regulating how many "masters" were going to be on the market. If Masters were limited to 2 apprentices, than they'd have to wait 7 years (after their apprentices served their time) before they could take on any more. The reason Adam Smith concluded, was for the purpose of regulating prices. Keeping prices high, meant the business class could reap the fortunes caused by policies meant to stifle competition. If Adam Smith was right, and round the clock study for 2 to 2 1/2 years was enough time to become proficient in a field, than Mr. Thiel wants to tap into that unserved young minds shining with potential that need to be cultivated. He is betting they can excel in life both by doing what they truly want to do, and what they are truly capable of. The current traditional educational system is important, but is it the best way to tap talented, determined minds?

Facebook, the Social Media Giant claiming over 1/2 billion users world wide, was created by college dropout Mark Zuckerberg. He has become a billionaire before the age of 26 making the choice to drop out of college to start a company. Two other dropouts, Microsoft founders Bill Gates and Paul Allen; both are Billionaires as well! There are many self-taught people now and in history including some very famous ones. Abraham Lincoln, Andrew Jackson, and Harry Truman, all were U.S. Presidents but they also have something else in common, none went to college. They must have learned their trade and studied it well to rise to the top of their careers. I don't think the 2 years the program runs is any coincidence. I correlate the time frame with Adam Smith's assessment described in the paragraph above. The $100,000 funding, mentoring, and access to networks gives these guys a good shot. Good luck to them! They can revolutionize education the way Mr. Thiel is attempting.

May 27, 2011

Martha Stewart Living Might be for Sale

The Martha Stewart Living company may by looking for potential buyers. It was reported in the Newspaper that Martha Stewart had recently approached Allan D. Schwartz. Allan is the former CEO of Bear Sterns and is now an executive at Guggenheim Partners. Ms. Stewart was meeting with Mr. Schwartz to discuss a possible partnership between his company and Blackstone, for the acquisition of her company. Martha Stewart first found the company in 1996 and as of May 2011, owns about half of the company's stock, which includes 90% of the voting shares. Essentially, any deal particularly of this size, has to have her approval. Martha turns 70 next month (August 2011) , the same time, shes is expected to join the Board of Martha Stewart Living. In August, expires the 5 year ban of serving as an officer or director on a publicly traded company. This is the expiration time of the 5 year ban which was imposed after she did prison time for lying federal investigators conducting an investigation in an inside trading case. Even though Ms. Stewart was convicted in March 2004, the ban imposed on her by the SEC, took effect August 2006 which means it is set to expire next month.

Joining the Board once the ban expires, will allow her to take a more active role once again in the company. In the five years that Martha has been off the board, the company's stock has dropped 70% (as of May 25th 2011). There has been high turnover of executives at the company over the past several years. As a matter fact, just yesterday, the company announced that it had appointed Linda Gersh as President and Chief Operating Officer, although they also said that she is not expected to assume the role for 12 to 20 months. Ms. Gersh is the Co-founder of Oxygen Media, a cable channel aimed at female audiences. The top company post has been vacant for the last three years! The last person to hold the position was Susan M. Lyne who left the company to take a position with a fast growing online retailing company, The Gilt Group. Explaining why the top position had gone unfilled, yesterday Charles Koppleman, (Chairman of the Board) said that the position had been left open for Martha Stewart "if and when she decides to return." Wow, that one caught me by surprise. This is a large publicly traded company and that is the best answer Mr. Koppleman could give? Martha has recently made it clear she has no intention of taking the top spot. When asked about it, she recounted her busy schedule, her many public appearances, and basically said, as the "face" of this company, she has plenty to keep her busy already. I noticed today, that Ms. Stewart keeps a blog. Thought that was super cool discovery. I've linked here to the official Martha Stewart blog if you are interested in checking it out, or even following it.

Possible Martha Stewart Living Deals

Potential deals might include "carving up" Martha Stewart Living's assets. Spinning off its magazine and television segments and selling those to interested media companies, and selling its highly coveted brand to a licensing company could be a couple ways a deal could get done. Getting a good price on those assets, could potentially become a challenge. For example, over the years, advertising Revenues have declined, and profits have as well. The television show, the Martha Stewart Show, was removed from NBC from syndication, and ended up on the Cable's Hallmark channel. The company is trying some innovative approaches to generating more revenues however. Creating Digital Apps are a space that Martha Stewart Living has recently been exploring in. In fact, one of the iPhone apps they released called Egg Dyeing 101, became a top seller. As the company continues to find ways to grow and work on increasing revenues again, Martha has been looking for potential buyers. It will be interesting to see what happens with this company, although my sneaking suspicion is that it will undergo a vast transformation, be taken private, and may not trade publicly again for some time. That is my view, but time will tell exactly what happens with this company. I know it must be frustrating for Martha to come back, and have watched revenues and profits slide, while she sat on the sidelines, banned from taking a direct role in the company, until it expires in August 2008. From what I have seen in the news, Martha is proactively looking to steer the ship, but appears to navigating it to the world of acquisitions. The company's market capitalization today, is $250 Million.

6 month self updating chart of Martha Stewart Living Stock Price

May 24, 2011

Russian Search Engine Yandex Goes Public

Russian search engine company Yandex reported earlier this week that their IPO offering price would start at $25 per share, after saying it would be priced between $20-22 a couple weeks ago. The increase starting price reflects the general optimism for demand of this companies stock when they go public (which was today, Tuesday, May 24th, 2011). Priced at $25 per share, values the company at $8 billion dollars. Yandex plans to raise $1.3 Billion through this IPO by selling 52.2 million shares. Leading underwriters for today's IPO include financial giants in the world of finance with names like Goldman Sachs, Morgan Stanley, and Deutsche Bank. In IPO agreements with the underwriters and the company, the underwriters have the added option of selling 5.2 million additional shares. Investors sent the stock up today, as it closed at $38.84 on the Yandex first day of trading. Many are watching to see if there is a sort of "Silicon Valley" phenomenon happening in Russia and whether technology and internet giants will be born from it. So far, Yandex going public, seems to be a step in that direction. It was just a few months ago that I remember the Russian President, Mr. Medvedev coming to the State I live in (California) and meeting with executives and engineers in Silicon Valley. I'm wondering if he took back some of what he learned to grow Russia's market share in mobile search also.

Dominating Russian Search Market

From what I've read researching this company, Yandex is widely accepted as the largest and most popular search engine operating in Russia. The New York Times reported that 64% of Russian Search Engine Traffic, was generated by Yandex. This dominates that market, making Google's market share there, pale in comparison. Yandex is growing and much the same way Google has worked hard to enter search engine markets globally in countries around the world, such as their move into South Korea consumer Mobile Markets I Blogged about, Yandex may look to do the same in the near future. Raising capital through today's IPO, will allow them to expand and focus on research and development. I would not be surprised if Yandex evolves and emerges into a competitive global search engine. I have a personal story about Yandex that reflects my thinking in that assessment:

When I started blogging in December 2010, I noticed from my website stats that one of my visitors came from a "Yandex" referring link. I had no idea what Yandex was nor had I heard the name. When I Googled it and went to the Yandex website, I could tell that it was a search engine, but I could not read it because it was in Russian (although now I see it display mostly English when I go to it - I like the new look). I found it interesting that someone in Russia had reached my blog through a search engine in Russia (that was not Google.ru). I continued blogging new posts, and ever once in a while I could see that a visitor was entering my blogs URL into Yandex, and the results Yandex were providing, allowed them to select my blog, and follow it. By the way, if you are that reader, thank you for reading this blog! I appreciate it. Who knew you'd be part of my blog post today but with Yandex listing on the Nasdaq today, It is a great contribution to my story because it explains where I first heard of it in the first place (before it started showing up recently in the newspapers). This meant that Yandex, the Russian Search Engine Company, had found me before I found it. Yandex successfully indexed some of my blog pages before Bing or Yahoo did! I find that remarkable considering the fact, they are located in Russia and not as well known as Yahoo or Bing (not yet anyway). This could potentially mean, the search engine company has figured out how to crawl the web, and if they can get their algorithms and revenue models streamlined, they have a bright future, especially if they incorporate that strategy and focus on Research and Development in figuring out how to enter markets and expand market share in areas of mobile consumer markets, where smart phone use and ownership continues to feed expansion and growth of this consumer market.

Yandex Stock Soars on IPO

I think this company could really become a household name in the future. Yandex stock rose 55% on their opening day, and may continue to rise. The impressive performance after being listed for the first time on Nasdaq today, I think signals that Investors have high hopes for this company and its future. There are some who have called Yandex the Google of Russia. The way their stock price soared today, Yandex may actually become the envy of other smaller search engine companies, who may also attempt to engineer successful public listing of their companies stock in the Stock Market. I plan to keep an eye on not only this company, but the movements of its stock price over time. I'll blog about it if I see anything worth writing about regarding this new publicly traded Internet Giant.