Sizzling Stock Picks

[GreenReeper]

Profiting In A Post-Recession Economy

People will always question what the future economy will look like after it suffers a recession. Though there are different implications with each recession - owing to its causes and the governmental and financial changes that are brought about - the economy will definitely shift and there will emerge new economic practices and trends for industries, consumers and investors.

Following the depths of the 2007-2009 recession theres a new world characterized by:
• Non-existent consumer discretionary spending
• Tighter credit and borrowing standards
• Reduced home ownership
• Increased consumer savings
The above effects will serve to:
• Hold down corporate profit growth
• Restrict employment growth
• Likely reduce future expected market returns
Despite the above, investors have options and opportunities as long as they keep their expectations in line with the expected future outcome. Some wonderful investment opportunities exist for investors in all stages of life.

Industries to Look For
When it comes to investing in the economy defined by the characteristics above, one question should dominate your investment consideration: Does this company make an essential or non-essential product?

When times are tough, people respond with their wallets. Unless folks are given great incentives, they wont buy unless they have to. In that kind of environment, I would favor food companies to retailers, healthcare providers to homebuilders, and defense contractors to automakers. Things like food, medicine and national security are musts in this world. An extra purse or a new car or bigger homes are not. And heres the best part: most of the companies that provide these necessary goods will continue to be around for a long time. (These type of companies are normally grouped in a sector called consumer staples – to learn more see A Guide To Consumer Staples.)
When economies are sour, the stock market tends to punish all companies regardless of what line of business they are in. In other words, a business like a Kraft or Johnson and Johnson that sell essential food and health products all over the world may likely see its shares suffer along with other discretionary businesses like retailers. And you can be comforted by the fact that even in tough times, people still need to buy food and Tylenol. Looking for these types of companies will likely earn you market-beating returns during the several years following a recession, despite an overall sluggish economy.

Despite the temptation, avoid retailers and other companies that make non-discretionary consumer goods. Such companies will likely experience reduced profit margins as they are forced to mark down their products to entice consumers.

Importance of Commodities
Commodities are the most fundamental of human essentials. Things like wheat, corn, oil, zinc, copper and coal. While you might not physically buy some of these commodities, you cant go through a normal day without them. Every time you turn on a light switch or power up your stove, the electricity used is provided by coal or natural gas. Grains are the basic building blocks for all the foods we eat. Oil, besides being refined into gasoline, goes in things like plastic, carpets, soaps and detergents.

Besides being essentials, commodities also have inflationary pricing power. If the government prints massive amounts of money to combat the recession, inflation will likely happen. It might not happen immediately afterwards, but it will rear its ugly head. Commodities, for those reasons are a good place to be.

Fertilizer companies are also great considerations. Fertilizer is the necessary ingredient to boost crop yield - that is, producing more food from the same amount of land. As the global population grows, so will the need to maximize food production. When looking at commodity plays, focus on the larger businesses with the quality assets such as the large integrated oil companies. We will always need oil and the biggest companies have the deepest pocket book to continue providing us with the black gold during various pricing environments. Otherwise look for those companies that are the low cost producers.

International Investment Exposure
To illustrate why investors should also consider diversifying internationally we can take a look at the 2007-2009 recession. Although this was a global economic recession, it didnt affect every country equally. According to J.D. Power Asia-Pacific, as of 2009, it was estimated that there were 820 cars for every 1,000 people in the US. In China, the figure was 34 cars per 1,000. Numbers like this illustrate the potential in countries like China, Brazil and India.

Major international commodity companies are now almost certain to have exposure to the growth in China. Such businesses enable investors to get the exposure without having to invest directly in China. The growth engines for companies like Johnson and Johnson is the fact that billions of people outside the U.S. will need its products.
Conclusion
As long as investors are aware of the likely economic shifts that lie before them in a post-recession environment, the opportunity to make excellent investments is there.

[GreenReeper]

How To Invest When Youre Deep In Debt


Its natural that if you have some money saved or invested, you want to see it grow. There are many factors that can prevent this from happening, but for many people, one of the biggest obstacles is debt. If you have debt to deal with - be it a mortgage, line of credit, student loan orcredit card - fear not, you can still learn how to balance your debt with saving and investing .

Types of Debt
Generally speaking, having debt can make it very difficult for investors to make money. In some cases, investing while in debt is like trying to bail out a sinking ship with a coffee cup. In other words, if you have a debt on your line of credit at 7% interest, the money you are investing will have to make more than 7% to make it more profitable than simply paying down the debt. There are investments that deliver such high returns, but you have to be able to find them knowing you are under the burden of debt.

It is important to briefly distinguish the different kinds of debt here:
1. High-Interest Debt - This is your credit card. High interest is relative, but anything above 10% is a good candidate for this category. Carrying any kind of balance on your credit card or similar high-interest vehicle makes paying it down a priority before starting to invest .
2. Low-Interest Debt - This can be a car loan, a line of credit, or a personal loan from a bank. The interest rates are usually described as prime plus or minus a certain percentage, so there is still some performance pressure from investing with this type of debt. It is, however, much less daunting to make a portfolio that returns 12% than one that has to return 25%.
3. Tax-Deductible Debt - If there is such a thing as good debt, this is it. Tax-deductible debts include mortgages, student loans, business loans, investing loans and all the other loans in which interest paid is returned to you in the form of tax deductions. Because this debt is generally low interest as well, you can easily build a portfolio while paying it down.
The types of debt we will cover in this article are long-term low-interest and tax-decductible debt (like personal loans or mortgage payments). If you dont have high-interest debt or, better yet, all your debts are tax deductible, then read on. If you do have high-interest debt, youll need to pay it off before you begin your investing adventure.
Why Invest?
Debt elimination, particularly of something like a loan that will take long-term capital, robs you of time and money. In the long term, the time (in terms of compounding time of your investment) you lose is worth more to you than the money you actually pay (in terms of the money and interest that you are paying to your lender). You want to give your money as much time as possible to compound. This is one of the reasons to start a portfolio in spite of debt (but not the only one). Your investments may be small, but they will pay off more than investments you would make later in life because these small investments will have more time to mature.
The Plan
Instead of making a traditional portfolio with high and low-risk investments that are adjusted according to your tolerance and age, the idea is to make your loan payments in the place of low-risk and/or fixed-income investments. This means that you will be seeing returns from the lessening of your debt load and interest payments rather than the 4-8% return on a bond or similar investment. The rest of your portfolio should focus on the higher-risk, high-return investments like stocks. If your risk tolerance is very low, the bulk of your investing money will still be going toward loan payments, but there will be a percentage that does make it into the market to produce returns for you. (To learn how to design your portfolio, read A Guide To Portfolio Construction.)

Even if you have a high risk tolerance, you may not be able to put as much as youd like into your investment portfolio because, unlike bonds, loans require a certain amount in monthly payments. Your debt load may force you to create a conservative portfolio in that most of your money is being invested in your loans with only a little going into your high-risk and return investments. As the debt gets smaller, you can adjust your distributions accordingly. (To learn more, check out Rebalance Your Portfolio To Stay On Track.)
Conclusion
You can invest in spite of debt. The important question is whether or not you should. The answer is very personal. There is no denying that there can be benefits from getting your money into the market as soon as possible, but there is no guarantee that your portfolio will perform like it needs to. Such things depend on how adept you become at investing.

The biggest benefit of investing while in debt is psychological (as much of finance is). Paying down long-term debts can be tedious and disheartening if you are not the type of person who puts your shoulder into a task and keeps pushing until it is done. For many people who are servicing debt, it seems like they are struggling to get to the point where their normal financial life - that of saving, investing, etc. - can begin. Debt becomes like a limbo state where things seem to be happening in slow motion. By having even a modest portfolio to distract you from the tedium, you can keep your enthusiasm about your finances from ebbing. Knowing that the sun will come up and being able to see the dawn are very different experiences. For some people, building a portfolio while in debt provides a much needed ray of light.

[Black_NITE]

BarChart Technical Analysis NITE-LYNX $MPPCQ
http://www.barchart.com/technicals/stocks/MPPCQ

[GreenReeper]

5 Ways To Protect Your Portfolio From Volatility

Is it possible to gauge the level of anxiety in the investment markets? Certainly, and The Chicago Board of Exchange Volatility Index (VIX) measures it. The VIX reacts in real time - just as a stock does - and measures the level of volatility in the U.S. markets over the next 30 days. When the VIX is at 30, in the next 30 days the market could move as much as 2.5% in either direction, (30% divided by 12 months equals 2.5%). The VIX has hovered around 30 for the latter part of 2011, indicating that the market is still highly volatile.

Although short-term traders may call periods of high volatility great times to make money, the truth is that traders of all skill levels will face challenges in this market. What can you do to protect your portfolio against the wild stock market swings? Though it may not sound exciting to the average active trader, the best defense is to stick with conservative, boring strategies.



Hedge
Think of hedging as an insurance policy. Lets assume that you own Bank of America stock and it is now in a market decline. One way to hedge would be to purchase a put option, with a strike price below where you purchased the stock. You wont lose money on any move below your strike price. Other hedging options include short selling a stock and purchasing put options on index funds, like popular exchange traded fund SPDR S

[Black_NITE]

NITE-LYNX $GDNEF BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/GDNEF

[Black_NITE]

This link will help thou $ASAGF BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/ASAGF

[GreenReeper]

7 Investing Mistakes And How To Avoid Them
Making mistakes is part of the learning process. However, its all too often that plain old common sense separates a successful investor from a poor one. At the same time, nearly all investors, new or experienced, have fallen astray from common sense and made a mistake or two. Being perfect may be impossible, but knowing some of common investing errors can help deter you from going down the well-traveled, yet rocky, path of losses. Here are some of the most common investing mistakes.

SEE: How To Avoid Common Investing Problems

Using Too Much Margin
Margin is the use of borrowed money to purchase securities. Margin can help you make more money; however, it can also exaggerate your loses - a definite downside.

The absolute worst thing you can do as a new investor is become carried away with what seems like free money - if you use margin and your investment doesnt go your way, you end up with a large debt obligation for nothing. Ask yourself if you would buy stocks with your credit card. Of course you wouldnt. Using margin excessively is essentially the same thing (albeit likely at a lower interest rate).

Additionally, using margin requires you to monitor your positions much more closely because of the exaggerated gains and losses that accompany small movements in price. If you dont have the time or knowledge to keep a close eye on and make decisions about your positions and the positions drop, your brokerage firm will sell your stock to recover any losses you have accrued.

As a new investor, use margin sparingly, if at all. Use it only if you understand all its aspects and dangers. It can force you to sell all your positions at the bottom, the point at which you should be in the market for the big turnaround.

Buying On Unfounded Tips
We think everyone makes this mistake at one point or another in their investing career. You may hear your relatives or friends talking about a stock that they heard will get bought out, have killer earnings or soon release a groundbreaking new product. Even if these things are true, they do not necessarily mean that the stock truly is the next big thing and that you should run to the nearest phone to call your broker.

Other unfounded tips come from investment professionals on TV who often tout a specific stock as though its a must-buy, but really is nothing more than the flavor of the day. These stock tips often dont pan out and go straight down after you buy them. Remember, buying on media tips is often founded on nothing more than a speculative gamble.

Now this isnt to say that you should balk at every stock tip. If one really grabs your attention, the first thing to do is consider the source. The next thing is to do your own homework. Make sure you research, research and research so that you know what you are buying and why. Buying a tech stock with some proprietary technology should be based on whether its the right investment for you, not solely on what some mutual fund manager said on TV.

Next time youre tempted to buy a hot tip, dont do so until youve got all the facts and are comfortable with the company. Ideally, obtain a second opinion from other investors or unbiased financial advisors.

Day Trading
If you insist on becoming an active trader, think twice before day trading. Day trading is a dangerous game and should be attempted only by the most seasoned investors. In addition to investment savvy, a successful day trader needs access to special equipment that is rarely available to the average trader. Did you know that the average day-trading workstation (with software) can cost in the range of $50,000? Youll also need a similar amount of trading money to maintain an efficient day trading strategy.

The need for speed is the main reason you cant start day trading with simply the extra $5,000 in your bank account: online brokers do not have systems fast enough to service the true day trader, so quite literally the difference of pennies per share can make the difference between a profitable and losing trade. In fact, day trading is deemed such a difficult endeavor that most brokerages who offer day trading accounts require investors to take formal trading courses.

Unless you have the expertise, equipment and access to speedy order execution, think twice before day trading. If you arent particularly adept at dealing with risk and stress, there are much better options for an investor looking to build wealth.

Buying Stocks that Appear Cheap
This is a very common mistake, and those who commit it do so by comparing the current share price with the 52-week high of the stock. Many people using this gauge assume that a fallen share price represents a good buy. But the fact that a companys share price happened to be 30% higher last year will not help it earn more money this year. Thats why it pays to analyze why a stock has fallen.

Deteriorating fundamentals, a CEO resignation and increased competition are all possible reasons for the lower stock price - but they are also provide good reasons to suspect that the stock might not increase anytime soon. A company may be worth less now for fundamental reasons. It is important always to have a critical eye since a low share price might be a false buy signal.
Avoid buying stocks that simply look like a bargain. In many instances, there is a strong fundamental reason for a price decline. Do your homework and analyze a stocks outlook before you invest in it. You want to invest in companies which will experience sustained growth in the future.

Underestimating Your Abilities
Some investors tend to believe they can never excel at investing because stock market success is reserved for sophisticated investors. This perception has no truth at all. While any commission-based mutual fund salesmen will probably tell you otherwise, most professional money managers dont make the grade either - the vast majority underperform the broad market. With a little time devoted to learning and research, investors can become well equipped to control their own portfolio and investing decisions - and be profitable. Remember, much of investing is sticking to common sense and rationality.

Besides having the potential to become sufficiently skillful, individual investors do not face the liquidity challenges and overhead costs large institutional investors do. Any small investor with a sound investment strategy has just as good a chance of beating the market, if not better, than the so-called investment gurus.

Never underestimate your abilities or your own potential. That is, dont assume you are unable to successfully participate in the financial markets simply because you have a day job.

When Buying a Stock, Overlooking the Big Picture
For a long-term investor one of the most important - but often overlooked - things to do is qualitative analysis, or to look at the big picture. Fund manager and author Peter Lynch once stated that he found the best investments by looking at his childrens toys and the trends they would take on. Brand name is also very valuable. Think about how almost everyone in the world knows Coke; the financial value of the name alone is therefore measured in the billions of dollars. Whether its about iPods or Big Macs, no one can argue against real life.

So pouring over financial statements or attempting to identify buy and sell opportunities with complex technical analysis may work a great deal of the time, but if the world is changing against your company, sooner or later you will lose. After all, a typewriter company in the late 1980s could have outperformed any company in its industry, but once personal computers started to become commonplace, an investor in typewriters of that era would have done well to assess the bigger picture.

Assessing a company from a qualitative standpoint is as important as looking at the sales and earnings. Qualitative analysis is a strategy that is one of the easiest and most effective for evaluating a potential investment.

Compounding Your Losses by Averaging Down
Far too often investors fail to accept the simple fact that they are human and prone to making mistakes just as the greatest investors do. Whether you made a stock purchase in haste or one of your long-time big earners has suddenly taken a turn for the worse, the best thing you can do is accept it. The worst thing you can do is let your pride take priority over your pocketbook and hold on to a losing investment, or worse yet, buy more shares of the stock since it is much cheaper now.

Remember, a companys future operating performance has nothing to do with what price you happened to buy its shares at. Anytime there is a sharp decrease in your stocks price, try to determine the reasons for the change and assess whether the company is a good investment for the future. If not, do your pocketbook a favor and move your money into a company with better prospects.

Letting your pride get in the way of sound investment decisions is foolish and it can decimate your portfolios value in a short amount of time. Remain rational and act appropriately when you are inevitably confronted with a loss on what seemed like a rosy investment.

The Bottom Line
With the stock markets penchant for producing large gains (and losses) there is no shortage of faulty advice and irrational decisions. As an individual investor , the best thing you can do to pad your portfolio for the long term, is to implement a rational investment strategy you are comfortable with and willing to stick to. If you are looking to make a big win by betting your money on your gut feelings, try the casino. Take pride in your investment decisions and in the long run, your portfolio will grow to reflect the soundness of your actions.

[Black_NITE]

Feast thine eyes upon $ILNS BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/ILNS

[GreenReeper]

How To Invest In Private Companies
The internet has revolutionized the world of retail stock investing by making vast amounts of financial information quickly and easily available to individual investors. And though still in the early stages, the advent of digital information exchange is also making it easier for more individuals to invest in privately-held companies. Just as eBay has put buyers in contact with sellers of collectibles that used to collect dust on attic shelves, today private companies are much more able to seek out buyers of their securities to allow them to raise capital. TUTORIAL: Advanced Financial Statement Analysis

The drawback to vast amounts of information is the difficultly in knowing what to focus on. Below is a comparison of private companies to public ones, overview of private company types and varieties, investment options currently available for interested investors, and a survey of other considerations to make when investing in private companies.

Private Companies versus Public Companies
Overall, it is much easier to invest in a publicly-traded firm. Public companies, especially larger ones, can easily be bought and sold on the stock market and therefore have superior liquidity and a quote market value. Conversely, it can be years before a private firm can again be sold and prices must be negotiated between the seller and buyer.

In addition, public companies must file financial statements with the Securities and Exchange Commission (SEC), making it easy to track how they are doing on a quarterly and annual basis. Private companies are not required to provide any information to the public, so it can be extremely difficult to determine their financial soundness, historical sales and profit trends.

Investing in a public company may seem far superior to investing in a private one, but there are a handful of benefits to not being public. A major criticism of many public firms is that they are overly focused on quarterly results and meeting Wall Street analyst short-term expectations. This can cause them to miss out on long-term value creating opportunities, such as investing in a product that may take years to develop, hurting profits in the near term. Private firms can be better managed for the long term as they are out of Wall Streets reach. An annual report by the World Economic Forum has detailed that productivity increases when a public firm is taken private. They can also create more jobs when run more efficiently and profitably.

Being an owner of a private firm also means sharing more directly in the underlying firms profits. Earnings may grow at a public, firm but they are retained unless paid out as dividends or used to buy back stock. Private firm earnings can be paid directly to the owners. Private owners can also have a larger role in the decision-making process at the firm, especially those with large ownership stakes.

Types of Private Companies
From an investment standpoint, a private company is defined by its stage in development. For instance, when an entrepreneur is first starting a business he or she usually receives funding from a friend or family member on very favorable terms. This stage is referred to as angel investing, while the private company is known as an angel firm. Past the start-up phase is venture capital: investing where a group of more savvy investors comes along and offers growth capital and managerial know-how and other operational assistance. At this stage a firm is seen to have at least some long-term potential.
Past this stage can be mezzanine investing, which consists of equity and debt, the last of which will convert to equity if the private company cant meet its interest payment obligations. Later-stage private investing is simply referred to as private equity and is currently a multi-billion dollar business with many large players.

For investors, the stage of development a private company is in can help define how risky it is as an investment. For instance, approximately 40% of angel investments fail and the risk falls the more developed and profitable a private company becomes. And although the goal of many private firms is to eventually go public and provide liquidity for company founders or other investors, other private business may prefer to stay private given the benefits given above. Family businesses may also prefer privacy and the handing of ownership across generations. These are important matters to become aware of when deciding to invest in a private company. (To learn more, see What Is Private Equity?)

How to Invest in Private Companies
Early-stage private investing offers the most investment opportunities but is also the most risky. As a result, joining an angel investor organization or investment group may be a good idea to make the process easier and potentially spread the investment risks across a wide group of firms. Venture funds also exist and solicit outside partners for investing capital.

As noted above, the internet has quickly become a central source to find these types of organizations, while other websites have sprung up to fill a void and put buyers and sellers of many types of private companies together. Online sources also have made it easier to at least locate basic information on a private firm. This can be done by visiting the companys websites, and reading online blogs and articles that discuss the firm and its industry.

Other resources that can be used include small or private business brokers that specialize in buying and selling these firms. Private equity is also an option, and ironically a number of the largest private equity firms are publicly traded so can be purchased by any investor. A number of mutual funds can also offer at least some exposure to private companies.
Other Considerations
Overall, it is important to reiterate that private companies are illiquid and require very long investing time frames. Most investors will also need an eventual liquidity event to cash out. This includes when the company goes public, buys out private shareholders, or is bought out by a rival or another private equity firm. And just like with any security, private companies need to be valued to determine if they are fairly valued, overvalued or undervalued.

It is also important to note that investing directly in private firms is usually reserved only for wealthy individuals. The motivation is that they can handle the additional illiquidity and risk that goes with private investing. The SEC definition calls these wealthy individuals accredited investor or qualified institutional buyer (QIB) when considering institutions.

The Bottom Line
It is now easier than ever to invest in private companies, but an investor still has to do his or her homework. Investing directly is still not going to be a viable option for most investors, but there are still ways to gain exposure to private firms through more diversified investment vehicles. Overall, an investor definitely has to work harder an overcome more obstacles when investing in a private firm as compared to a public one, but they work can be worth it as there are a number of advantages to be gained by investing in private companies.

[Black_NITE]

$PEFDF BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/PEFDF

[GreenReeper]

Investing During Uncertainty
Every day it seems like the world is getting smaller. If you watch any financial television station or read the newspaper, you are most likely aware of how events in one country seem to have an ever-increasing effect on other countries around the world. We are more interconnected now than at any other time in history. It goes without mention that globalization definitely has its positives, but when threats of financial crisis, war, global recession, trade imbalances, etc, do occur it often leads to talk of moving money to safer investments and increasing government deficits. This rising uncertainty can confuse even the well-informed investor.

Uncertainty
Any time you put money at risk for the chance of profit there is an inherent level of uncertainty. When new threats such as war or recession arise, the level of uncertainty increases significantly as companies can no longer accurately predict their future earnings. As a result,institutional investors will reduce their holdings in stocks considered unsafe and move the funds to other sources like precious metals, government bonds and money-market instruments. This selloff, which occurs as large portfolios reposition themselves, can cause the stock market to depreciate.

Effects of Uncertainty
Uncertainty is the inability to forecast future events; people cant predict the extent of a possible recession, when its going to start/end, how much it will cost, or what companies will be able to make it through unscathed. Most companies normally predict sales and production trends for theinvesting public to follow assuming normal market conditions, but increasing levels of uncertainty can make these numbers significantly inaccurate.
Uncertainty itself can affect the economy on both the micro and macro level; a description of uncertainty on a micro level focuses on the effect on individual companies within an economy faced with the threat of war or recession, whereas the view of uncertainty on a macro level looks at the economy as a whole (To learn more, see Economics Basics.):
• From a company-specific point of view, uncertainty provides a major concern for those that produce consumer goods every day. For example, consumption may fall on the threat of a recession as individuals refrain from purchasing new cars, computers and other non-essentials. This uncertainty may force the companies in certain sectors to lay off some of their employees to combat the impacts of lower sales. The level of uncertainty that surrounds a companys sales also extends into the stock market. Consequently, stock prices of companies that produce non-essential goods sometimes experience a selloff when levels of uncertainty rise. (For more, see The Impact Of Recession On Businesses.)
• On a macro level, uncertainty is magnified if the countries at war are major suppliers or consumers of goods. A good example is a country that supplies a large portion of the worlds oil. Should this country go to war, uncertainty regarding the level of the worlds oil reserves would grow. Because the demand for oil would be high and the supply uncertain, a country unable to produce enough oil within its own borders would be required to ensure that enough oil was stored to cover operations. As a result, the price of oil would increase.
• Another macro-level event that affects companies and investors is the flight of capital and devaluation of exchange rates. When a country faces the threat of war or recession, its economy is considered uncertain. Investors attempt to move their currency away from unstable sources to stable ones; the currency of a country under a threat of war is sold and the currencies from countries without the threat are bought. The average investor probably would not do this, but the large institutional investors and currency futures traders would. These actions translate into a devaluation of exchange rates.
Whats an Investor to Do?
When situations of heightened uncertainty arise, the best defense is to be as well informed as possible. Keep updated by reading the newspaper and researching individual companies. Analyze which sectors have more to gain and lose in a crises and decide on a long-term plan. Times of heightened uncertainty can lead to great opportunities for investors who position themselves to take advantage of it. Some investors might decide to be offensive and search for companies that provide goods or services that will lead to great returns when things turn around. It is difficult to commit capital during uncertain times, but it can often reap huge rewards in the long run. Those who want to mitigate uncertainty and risk might be content leaving their money where it is or perhaps moving it to safer securities.

Regardless of which strategy you decide to take (if any), you cant go wrong over the long term by keeping yourself well informed and getting into a position so that you can take advantage of prices when the things reverse.

[Black_NITE]

$APXG BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/APXG

[GreenReeper]

Gold Or Oil: Which Is The Hotter Investment?

Financial innovators have issued a wide variety of financial instruments over the last decade, giving investors exposure to many asset classes that were unavailable in past years. These instruments include ones leveraged to the price of oil and gold, two of the more popular areas for investors. However, this freedom to invest is not without risk, and those interested in exposure here should research carefully before jumping in. (Gold is a very useful investment during periods of instability and high inflation. Check out Why Gold Matters.)



Gold and Oil Performance
Gold has provided an extraordinary return to buy and hold investors over the last 10 years, with the metal rising in price from under $300 per ounce to the current level of approximately $1,425 per ounce. The return on oil over the last 10 years has also been extraordinary with the price moving from less than $20 per barrel in 2001 to the current level of just under $100 per barrel.

Gold Investing Rationale
Investors have historically purchased gold as a hedge against inflation or as a reaction to a financial or political crisis. Many also invest in gold for protection when a currency is being debased or devalued by a government.

Others believe that there are strong fundamental reasons for the increase in the price of gold, as supply increases have lagged the rising demand from the market. The jewelry industry is the largest user of gold, and has seen an increase in demand for gold jewelry from the emerging economies.

Another reason for gold investing is price momentum or trend investing. As more investors pile into gold, the price keeps going up and this performance gets at10tion in the financial media. This, in turn, motivates others to buy so that they dont miss out. This type of behavior has created bubbles in other financial instruments and markets in the past. (Find out more in The Myth About Market Bubbles.)

Oil Investing Rationale
The fundamental investment case for oil is based on increased demand for energy as China, India and other emerging economies accelerate growth above historical baseline levels. This increased demand is difficult for oil producers to meet in the short and medium term as increased production requires large capital investments in multi-year projects. Some have even predicted that the worlds oil supply has peaked and rising prices for oil are inevitable. (Not sure where oil prices are headed? This theory provides some insight. See Oil As An Asset: Hotellings Theory On Price.)

Modern Innovations
Another reason that might explain the increased price of gold and oil is the ease with which investors can get exposure, as the financial industry has created many securities designed to track the performance of gold and oil.

Many of these instruments trade on the major exchanges and are extremely liquid. Investors can buy an instrument on the long or short side of gold or oil, and can leverage that exposure as well.

The SPDR Gold Trust Exchange Traded Fund (ETF) is the largest and most liquid gold ETF available (NYSE:GLD), with average daily volume of more than 14 million shares over the last three months. The trust held 1,217.3 metric tons of gold as of March 10, 2011. Another liquid ETF is the iShares Gold Trust (NYSE:IAU), which traded an average of 5.5 million shares a day over the last three months.
Looking for penny stocks that skyrocket?
On the oil side, the United States Oil Fund, LP (NYSE:USO) attempts to track the spot price of West Texas Intermediate (WTI) crude and is also liquid, with average daily volume of 14 million shares a day.


Buyer Beware
Bullish investors are passionate about the reasons to own oil and gold, and discount any talk that the strong investment performance in either of these are the result of speculation. Investors that are long these might want to think back to other investments over the last decade, where prognosticators sounded just as convinced that nothing could go wrong. Who can forget back in 1999 and 2000 when the consensus said that paying forty times the markets earnings was the right thing to do?

Another item to consider is that the downside of a bubble bursting is usually much more rapid than the ascent. The Nasdaq Composite index peaked in March 2000 and lost 87% of its value over the next thirty months until it reached the trough in September 2002. However, most of the decline occurred by early 2001, or less than a year. The price of oil fell even quicker in 2008, with the price peaking above $140 per barrel, before crashing down 75% in just five months. (These funds make investing in gold, oil or grain an easier prospect.

The Bottom Line
One of the advantages that we have over previous generations is the ease with which modern investors can invest in a wide range of securities providing exposure to asset classes and areas that used to be out of reach. Investing in gold and oil is now easy and cheap for investors, but not without risk.

[Black_NITE]

For thou convenience $TWTRQ BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/TWTRQ

[GreenReeper]

The Multiple Lives Of A Stock Trader
Whether they are working full- or part-time, traders are likely to experience multiple swings in their careers. Just like the markets they trade , they too will experience uptrends and downtrends in personal profits, and even the odd crash or windfall. But, over the long run, it is the trader who stays vigilant - who knows when to trade actively and when to sit on his hands - who stays in the game over the long run.

The phases a trader cycles through have different characteristics. By understanding the qualities of the market, the systems you are trading and how these might affect your personal profits, you can better adjust and hopefully minimize the effect of declining profits or losses. Psychologically, it can also help to know that almost all traders go through similar experiences, both good and bad. (If volatility and emotion are removed, passive, long-term investing comes out on top. Read Buy-And-Hold Investing Vs. Market Timing.)

The Trader Downtrend
This is very likely where most traders begin their careers. They have capital, they usually have some sort of game plan and they begin trading with full expectations of becoming wealthy from the financial markets. But alas, even though there may be a few early wins, capital often starts to deteriorate. The capital may even completely evaporate. Hopefully, many lessons are learned during this time and it can be viewed as a paid education. A trader can pay the market to learn - unfortunately, many fail to realize what the market is showing them. Instead, they get angry that the market is not going where they think it should go, or they berate themselves so much that they become crippled in making proper market analysis. (Trends are what allow traders and investors to capture profits. Find out whats behind them. Read 4 Factors That Shape Market Trends.)
Experienced traders likely went through this early education as well. Even as experienced traders, they will face times where losses seem to mount or profits are extremely hard to come by. During these times, it is the experienced traders, well, experience, that allows him or her to stay alive in the financial markets. Some do fall, however, and their former profits are distributed back to the markets. Understanding why this phenomenon occurs can help new and experienced traders avoid being wiped out, or as in the case of many, being wiped out again.

When profits are dwindling or losses are mounting, here are a few questions to ask:
• Is my trading plan complete? Does it account for all types of markets (uptrend, downtrend and flat)?
o A plan should account for all types of markets, even if that means the plan states not trading during certain times or conditions.
• Is my trading plan feasible based on current market conditions?
o Certain strategies will not work in certain market conditions. It is important to realize this and minimize trading until conditions become more favorable. A strategy that uses volatility will likely do poorly in dull markets and a breakout strategywill see more false signals in longer term, ranging markets.

• Are my position sizes exposing my capital to undue risk ?
o While risk tolerance varies, the higher the risk per trade, the less likely a trader is to last. Risking no more than 1-2% of capital on a given trade is a good rule of thumb.
• Have I been averaging down?
o There is no reason to add to a losing position. Risk is likely increasing when we average down, and it is increasing on a position that has not shown us what we expected.
• Have I been following my trading plan?
o Everything mentioned above should already be covered in the trading plan. If it is, then all you need to do is follow your plan. Remember why the rules were chosen in the first place, renew your commitment to them and take some time to re-analyze your plan and implement it.
The Trader Uptrend
Hopefully, most trader will get to experience an uptrend in their trading lives; it is the part where profits materialize and increase. In really good times, winning trades seem to come no matter what and the trader feels invincible. These are great times and should be enjoyed while they last. However, while it is easy to get caught up in the emotion of a winning streak, the trader must realize it will end. To maintain your edge, there are a few things to keep in mind and question while this good streak is going.
Why is my plan working so well right now? Can I adapt it to work better in other market conditions?
o It is possible the strategies employed meld well with the current financial climate, but is it possible these strategies could be adapted to other market environments to improve performance during those times as well?
• While good times should be taken advantage of, would an adverse market move wipe out a disproportionate amount of profits?
o During good times it is easy to take on more risk than is necessary. The feeling of invincibility can become a detriment if, when the streak finally ends, it wipes away all or a large portion of former profits. Keep risk in check, even in the good times.
• Are stops and trailing stop orders being used?
o Just because many trades have worked out recently does not mean you should abandon using stops. Always make sure risk is defined before each trade. Trailing stop orders will be beneficial to you if you have large, unrealized profits. By using a trailing stop, you will be able to realize at least some of the unrealized profits should the market turn.

Trade Actively or Sit on Your Hands
Many great traders have said that knowing when not to trade is what separates the winning traders from the losers. During a bull market, anyone can buy stocks and win, but it is the pro who knows when to back off and avoid losing those profits. This takes experience and, as we have learned, even the experienced traders get caught up, make mistakes and go through phases where they experience diminished profits or rising losses.
Thus, as outlined in the questions above, it is important to build a trading plan and trading psychology that uses the good times while not exposing oneself to financial detriment if the market turns, and also only trading when it is prudent to do so. Figuring this out can often be a simple and logical process. As an example, if the market is in an extremely tight range, even a day trader may not enter the market because the profits are too small relative to fees and risk. Therefore, at times it is better to sit on the sidelines and wait for opportunities to arise which allow traders a better chance to make significant profits.

Conclusion
It often appears that traders have many lives; some wipe out multiple accounts before finally getting it, while others experience large swings, never quite reaching the profits they want. Still others lose everything. No matter the case, trading is never a perfectly smooth vocation. By asking yourself pertinent questions and adhering to a well-prepared trading plan, many of the bumps can be avoided. For traders going through tough times, if a solid plan is implemented there is sunshine after the storm.

[Black_NITE]

Behold the $DIAAF BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/DIAAF

[GreenReeper]

Dividend Facts You May Not Know
Money For Nothing is not only the title of a song by Dire Straits in the 80s, but also the feeling many investors get when they receive a dividend. All you have to do is buy shares in the right company and youll receive some of its earnings. How exciting is that? However, despite the advantage, there are several implications involved in the paying and receiving of dividends that the casual investor may not be aware of. This article will explain several of these. But first, lets begin with a short primer.

What Are Dividends?
Dividends are one way in which companies share the wealth generated by running the business. They are usually a cash payment, often drawn from earnings, paid to the investors in a company - the shareholders. These are paid on an annual or, more commonly, a quarterly basis. The companies that pay them are usually more stable and established, not fast growers. Those still in the rapid growth phase of their life cycle tend to retain all the earnings and reinvest them into the business.
Price Implications
When a dividend is paid, several things can happen. The first of these is what happens to the price of the security and various items tied to it. On the ex-dividend date, the stock price is adjusted downward by the amount of the dividend by the exchange on which the stock trades . For most dividends this is usually not observed amidst the up and down movement of a normal days trading. However, this becomes easily apparent on the ex-dividend dates for larger dividends, such as the $3 payment made by Microsoft in the fall of 2004, which caused shares to fall from $29.97 to $27.34.

The reason for the adjustment is that the amount paid out in dividends no longer belongs to the company and this is reflected by a reduction in the companys market cap. Instead, it belongs to the individual shareholders. For those purchasing shares after the ex-dividend date, they no longer have a claim to the dividend, so the exchange adjusts the price downward to reflect this fact.

Historical prices stored on some public websites, such as Yahoo! Finance, also adjust the past prices of the stock downward by the dividend amount. Another price that is usually adjusted downward is the purchase price for limit orders. Because the downward adjustment of the stock price might trigger the limit order, the exchange also adjusts outstanding limit orders . The investor can prevent this if his or her broker permits a do not reduce (DNR) limit order. Note, however, that not all exchanges make this adjustment. The U.S. exchanges do, but the Toronto Stock Exchange, for example, does not

On the other hand, stock option prices are usually not adjusted for ordinary cash dividends unless the dividend amount is 10% or more of the underlying value of the stock.


Implications for Companies
Dividend payments, whether they are cash or stock, reduce retained earnings by the total amount of the dividend. In the case of a cash dividend, the money is transferred to a liability account called dividends payable. This liability is removed when the company actually makes the payment on the dividend payment date, usually a few weeks after the ex-dividend date. For instance, if the dividend was $0.025 per share and there are 100 million shares outstanding, retained earnings will be reduced by $2.5 million and that money eventually makes its way to the shareholders.

In the case of a stock dividend , though, the amount removed from retained earnings is added to the equity account, common stock at par value, and brand new shares are issued to the shareholders. The value of each shares par value does not change. For instance, for a 10% stock dividend where the par value is 25 cents per share and there are 100 million shares outstanding, retained earnings is reduced by $2.5 million, common stock at par value is increased by that amount and the total number of shares outstanding increases to 110 million.

This is different from a stock split, although it looks the same from a shareholders point of view. In a stock split , all the old shares are called in, new shares are issued, and the par value is reduced by the inverse of the ratio of the split. For instance, if instead of a 10% stock dividend, the above company declares an 11-to-10 stock split, the 100 million shares are called in and 110 million new shares are issued, each with a par value of $0.22727. This leaves the common stock at par value accounts total unchanged. The retained earnings account is not reduced either.
Implications for Investors
Cash dividends, the most common sort, are taxed at either the normal tax rate or at a reduced rate of 5% or 15% for U.S. investors. This only applies to dividends paid outside of a tax-advantaged account such as an IRA.
The dividing line between the normal tax rate and the reduced or qualified rate is how long the underlying security has been owned. According to the IRS, to qualify for the reduced rate, an investor has to have owned the stock for 60 consecutive days within the 121-day window centered on the ex-dividend date. Note, however, that the purchase date does not count toward the 60-day total.

Cash dividends do not reduce the basis of the stock.
Capital Gains
Sometimes, especially in the case of a special, large dividend, part of the dividend is actually declared by the company to be a return of capital. In this case, instead of being taxed at the time of distribution, the return of capital is used to reduce the basis of the stock, making for a larger capital gain down the road, assuming the selling price is higher than the basis. For instance, if you buy shares with a basis of $10 each and you get a $1 special dividend, $0.55 of which is return of capital, the taxable dividend is $0.45, the new basis is $9.45 and you will pay capital gains tax on that $0.55 when you sell your shares sometime in the future. (To read more about this, see A Long-Term Mindset Meets Dreaded Capital-Gains Tax.)

There is a situation, though, where return of capital is taxed right away. This happens if the return of capital would reduce the basis below $0.00. For instance, if the basis is $2.50 and you receive $4 as a return of capital, your new basis would be $0 and you would owe capital gain tax on $1.50.

Basis is also adjusted in the case of stock splits and stock dividends. For the investor, these are treated the same way. Taking our 10% stock dividend example, assume that you hold 100 shares of the company with a basis of $11. After the payment of the dividend, you would own 110 shares with a basis of $10. The same would hold true if the company had a 11-to-10 split instead of that stock dividend.

Finally, as with everything else regarding investment record keeping, it is up to the individual investor to track and report things correctly. If you have purchases at different times with different basis amounts, return of capital, stock dividend and stock split basis adjustments must be calculated for each. Qualified holding times must also be accurately tracked and reported by the investor, even if the 1099-DIV form received during tax season states that all paid dividends qualify for the lower tax rate. The IRS allows the company to report dividends as qualified, even if they are not, if the determination of which are qualified and which are not is impractical for the reporting company.

Conclusion
Many investors see dividends as money for nothing, but the implications surrounding paying and receiving dividends can mean a lot of work for both the company and the investor. If you reinvest your dividends through a dividend reinvestment plan (DRIP) or equivalent, the paperwork and tracking of basis can become quite tedious. There is no such thing as a free lunch. As with every other aspect of investing, accurate records are important and it would probably behoove you to use a spreadsheet or similar tool to track such details.

More information can be found in various publications available from the IRS, especially Publication 550.

[Black_NITE]

BarChart Technical Analysis NITE-LYNX $UNGS
http://www.barchart.com/technicals/stocks/UNGS

[GreenReeper]

Choosing A Compatible Broker
Did you hear about Chanko Wireless?

Yeah, I got in at $25.10.

Well I got in at $25.05!

How did you get a better price than I did?

For those of you who dont remember this dialog, it is a snippet from an old Ameritrade (a brokerage) commercial. In the ad, two men bicker because one got into a wireless company for a nickel less than the other. Do you care about a nickel? If you are like the majority of investors, you probably dont. Still, this commercial raises a good point: one of the most important investment decisions you have to make has nothing to do with choosing stocks , bonds or mutual funds. Its about choosing the right broker for your individual needs. Here we look at what to consider.

How Does Choosing a Broker Relate to the Nickel?
First off, we should make it clear that we are not making any comment about Ameritrade. The nickel is important to many investors (primarily traders), but it amounts to only a few dollars if you are buying less than 100 shares. If you arent an active trader, a nickel wont even show up on the chart over the long term. So, worrying about the nickel when choosing a broker matters only for particular types of investors.
Its easy to see, then, that although there may be many good brokerages out there, not all of them are geared to the way you invest. Different investor personalities affect broker selection. The task of making your selection may seem overwhelming at first, but with a little study and some basic guidelines, youll be able to make an informed decision suited to your investing personality and end up with a broker that is right for you.

The Importance of Your Investing Personality
Your investing style is one of the biggest factors to consider when selecting an online broker. To determine your style, you must define your needs. Here are some questions to help you do this:
• Do you need personal advice, or can you do your own homework with research reports?
• How long do you typically hold an investment?
• What is the size of trades you typically make?
• How important is it to have direct access to a real person?
• Is fast and efficient order execution absolutely necessary?
There are four main types of investor personalities. Try to determine what personality you resemble most and ask yourself if your broker is providing the services that match your personality.
Individual Investors
Those classified under this category are also known as retail investors. They dont require any special assistance or advisory services. Individual investors empower themselves by doing their own research, selecting their own stocks and knowing how to place online orders efficiently. The main priorities for the independent investor are fast, consistent trade executions and low commission levels.

The fruit of such priorities and labor is the opportunity to take advantage of the lowest commission rates around. Several brokers like E*Trade and Ameritrade - known as discount brokers - have chosen to target independent investors because this clientele makes up such a large and diverse market.

Reliant Investors
These investors need some hand holding and assistance when selecting a prospective investment. Typically, they require a broker capable of offering individualized advice and assistance. This is especially true for new investors, who may need all the help they can get when starting out.

As you can imagine, extra services equal higher commissions, and as more and more investors become self-sufficient, brokers serving this market segment become fewer and fewer. The ones that do stay around are generally larger companies, such as Charles Schwab and Fidelity. Known as full-service brokers, they provide many of the services necessary for successful investing: that is, not only picking stock, but also tax planning, asset allocation and long-term planning . Additionally, if you are a new investor with a fairly large amount of money, but you arent comfortable investing on your own, you may consider a wrap account. This type of account charges one flat fee, usually quarterly, which covers all administrative, commission and management expenses. The drawback is that wrap accounts usually require minimum investments of between $50,000 and $100,000. (For more on the wrap, see Wrap It Up: The Vocabulary and Benefits of Managed Money.)

Short-Term Investors (Traders)
Short-term traders are not the same as day traders. Depending on the type of security, a short-term position can range from an hour to a few months. For the most part, short-term trading is a practice used primarily by the top financial players. These are the professionals who have devoted time to understanding all aspects of trading and investment and are often trading what are called momentum stocks or momo plays. Traders require access to superior research information, excellent execution skills and most likely the ability to trade in other types of securities, such as derivatives.

With such experience and knowledge, short-term traders require next to no assistance from a broker. Because these investors are attempting to profit from the relatively short-term movements in a securitys price, they are more concerned about getting the best possible fill price than a longer-term investor, but not as concerned as a day trader, as we explain below. Discount online brokers supply the fast order execution, the low commissions and the trading tools that are the biggest concerns of the short-term investor.

Day Traders
These are experienced stock traders who hold positions for a very short time (from minutes to hours) and make numerous trades each day - most trades are entered and closed out intraday.

As a result, day traders value order fulfillment speed and trade execution. So, for them, selecting the right broker is crucial. Day traders are probably the only investors who should worry about whether their broker will help them secure the nickel. Because day traders are self-sufficient and place many trades daily, they can demand exceptionally low commissions - usually no more than a couple of bucks a trade - and top-notch order fulfillment. Because the day trader needs to monitor stock prices constantly, live price quotations are essential to his or her success. The fancy tools for this come at a price, however, as commissions at brokerages with loads of tools will be higher than those at brokerages offering fewer tools. Like short-term investors/traders, day traders basically use online discount brokers to facilitate their trading. Again, speed of order execution, low cost and good tools are important to these types of investors not requiring advice from their broker.

Every successful investor needs to have the right tools for the trade. This begins with choosing the right broker. No broker is perfect for everybody, and a firm that doesnt meet your style isnt necessarily a low-quality company; it may just offer services that dont fit your investment personality. Whether youre concerned about that nickel or your retirement plan, there is a broker out there that is right for you.

[Black_NITE]

Behold the $PNGB BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/PNGB

[GreenReeper]

Key Reasons To Invest In Real Estate
The global economic recession of 2008 is often linked to the United States housing bubble and subprime mortgages. In the aftermath of the recession, there was much negative sentiment over the real estate sector and few were inclined to consider investments into the sector, in a positive sense.



However, real estate investment is simply the purchase of a future income stream from property and quite undeserving of the tarnish to its reputation. Here are some of the key reasons to invest in real estate. (For a complete look back at the mortgage meltdown, check out ourInvestopedia Special Feature – Subprime Mortgages.)

Competitive Risk-Adjusted Returns
Based on data from the National Council of Real Estate Investment Fiduciaries (NCREIF), private market commercial real estate returned an average of 8.4% over the 10-year period from 2000 to 2010. This credible performance was achieved, together with low volatility relative to equities and bonds, for highly competitive risk-adjusted returns.
Critics would argue that the low volatility characteristic of real estate is the result of infrequent real estate transactions. This means that property values are often determined by third-party appraisals, which tend to lag the market. The infrequent transactions and appraisals result in a smoothing of returns, as reported property values underestimate market values in an upturn and overestimate market values in a downturn.

While its true that historic estimates of real estate volatility should be adjusted upward, real time markets are vulnerable to sudden unexpected shocks. A good example of this would be the Flash Crash of May 2010, when $1 trillion in stock market value was erased in just 15 minutes. In an environment where market volatility is an issue and the dynamics of algorithmic trading are murky, the more stable pricing of real estate is attractive. (For more, see Did ETFs Cause The Flash Crash?)
NCREIF U.S. National Property Index Returns

Source: NCREIF, http://www.ncreif.org/property-index-returns.aspx, 14 July 2011



High Tangible Asset Value
Unlike stocks and, to some extent, bonds, an investment in real estate is backed by a high level of brick and mortar. This helps reduce the principal-agent conflict, or the extent to which the interest of the investor is dependent on the integrity and competence of managers and debtors. Even real estate investment trusts (REITs), which are listed real estate securities, often have regulations that mandate a minimum percentage of profits be paid out as dividends.

Attractive and Stable Income Return
A key feature of real estate investment is the significant proportion of total return, accruing from rental income over the long term. Over a 30 year period from 1977 to 2007, close to 80% of total U.S. real estate return was derived from income flows. This helps reduce volatility as investments that rely more on income return, tend to be less volatile than those that rely more on capital value return. (For more, check out Take Advantage Of A Housing Crisis – Rent!)
Real estate is also attractive when compared with more traditional sources of income return. The asset class typically trades at a yield premium to U.S. Treasuries and is especially attractive in an environment where Treasury rates are low.

Portfolio Diversification
Another benefit of investing in real estate is its diversification potential. Real estate has a low, and in some cases, negative, correlation with other major asset classes. This means the addition of real estate to a portfolio of diversified assets can lower portfolio volatility and provide a higher return per unit of risk.

Inflation Hedging
The inflation hedging capability of real estate, stems from the positive relationship between GDP growth and demand for real estate. As economies expand, the demand for real estate drives rents higher and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital, by passing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure, in the form of capital appreciation.

The Drawback: Illiquidity
The main drawback of investing in real estate is illiquidity, or the relative difficulty in converting an asset into cash and cash into an asset. Unlike a stock or bond transaction, which can be completed in seconds, a real estate transaction can take months to close. Even with the help of a broker, simply finding the right counterparty can be a few weeks of work.

That said, advances in financial innovation have presented a solution to the issue of illiquidity, in the form of listed REITs and real estate companies. These provide indirect ownership of real estate assets and are structured as listed corporations. They offer better liquidity and market pricing, but come at the price of higher volatility and lower diversification benefits.

The Bottom Line
Real estate is a distinct asset class that is simple to understand and can enhance the risk and return profile of an investors portfolio. On its own, real estate offers competitive risk-adjusted returns, with less principal-agent conflict and attractive income streams. It can also enhance a portfolio, by lowering volatility through diversification. Though illiquidity can be a concern for some investors, there are ways to gain exposure to real estate, such that illiquidity is reduced, if not brought on-par with that of traditional asset classes.

[Black_NITE]

Behold the $QBII BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/QBII

[GreenReeper]

Introduction To Investment Diversification
Diversification is a familiar term to most investors. In the most general sense, it can be summed up with this phrase: Dont put all of your eggs in one basket. While that sentiment certainly captures the essence of the issue, it provides little guidance on the practical implications of the role diversification plays in an investors portfolio and offers no insight into how a diversified portfolio is actually created. In this article, well provide an overview of diversification and give you some insight into how you can make it work to your advantage.



What Is Diversification?
Taking a closer look at the concept of diversification, the idea is to create a portfolio that includes multiple investments in order to reduce risk. Consider, for example, an investment that consists of only stock issued by a single company. If that companys stock suffers a serious downturn, your portfolio will sustain the full brunt of the decline. By splitting your investment between the stocks from two different companies, you can reduce the potential risk to your portfolio.

Another way to reduce the risk in your portfolio is to include bonds and cash. Because cash is generally used as a short-term reserve, most investors develop an asset allocation strategy for their portfolios based primarily on the use of stocks and bonds. It is never a bad idea to keep a portion of your invested assets in cash or short-term money-market securities. Cash can be used incase of an emergency, and short-term money-market securities can be liquidated instantly incase an investment opportunity arises, or in the event your usual cash requirements spike and you need to sell investments to make payments. Also, keep in mind that asset allocation and diversification are closely linked concepts; a diversified portfolio is created through the process of asset allocation. When creating a portfolio that contains both stocks and bonds, aggressive investors may lean towards a mix of 80% stocks and 20% bonds, while conservative investors may prefer a 20% stocks to 80% bonds mix.

Regardless of whether you are aggressive or conservative, the use of asset allocation to reduce risk through the selection of a balance of stocks and bonds for your portfolio is a more detailed description of how a diversified portfolio is created rather than the simplistic eggs in one basket concept. With this in mind, you will notice that mutual fund portfolios composed of a mix, which includes both stocks and bonds, are referred to as balanced portfolios. The specific balance of stocks and bonds in a given portfolio is designed to create a specific risk-reward ratio that offers the opportunity to achieve a certain rate of return on your investment in exchange for your willingness to accept a certain amount of risk. In general, the more risk you are willing to take, the greater the potential return on your investment.



What Are My Options?
If you are a person of limited means or if you simply prefer uncomplicated investment scenarios, you could choose a single balanced mutual fund and invest all of your assets in the fund. For most investors, this strategy is far too simplistic. While a given mix of investments may be appropriate for a childs college education fund, that mix may not be a good match for long-term goals, such as retirement or estate planning. Likewise, investors with large sums of money often require strategies designed to address more complex needs, such as minimizing capital gains taxes or generating reliable income streams. Furthermore, while investing in a single mutual fund provides diversification among the basic asset classes of stocks, bonds and cash (funds often hold a small amount of cash from which the fees are taken), the opportunities for diversification go far beyond these basic categories.


With stocks, investors can choose a specific style, such as focusing on large, mid or small caps. In each of these areas are stocks categorized as growth or value. Additional choices include domestic and foreign stocks. Foreign stocks also offer sub-categorizations that include both developed and emerging markets. Both foreign and domestic stocks are also available in specific sectors, such as biotechnology and healthcare.

In addition to the variety of equity investment choices, bonds also offer opportunities for diversification. Investors can choose long-term or short-term issues. They can also select high-yield or municipal bonds. Once again, risk tolerance and personal investment requirements will largely dictate investment selection.

While stocks and bonds represent the traditional tools for portfolio construction, a host of alternative investments provide the opportunity for further diversification. Real estate investment trusts, hedge funds, art and other investments provide the opportunity to invest in vehicles that do not necessarily move in tandem with the traditional financial markets. Yet these investments offer another method of portfolio diversification.



Concerns
With so many investments to choose from, it may seem like diversification is an easy objective to achieve, but that sentiment is only partially true. The need to make wise choices still applies to a diversified portfolio. Furthermore, it is possible to over-diversify your portfolio, which will negatively impact your returns. Many financial experts agree that 20 stocks is the optimal number for a diversified equity portfolio. With that in mind, buying 50 individual stocks or four large-cap mutual funds may do more harm than good. Having too many investments in your portfolio doesnt allow any of the investments to have much of an impact, and an over-diversified portfolio (sometimes called diworsification) often begins to behave like an index fund. In the case of holding a few large-cap mutual funds, multiple funds bring the additional risks of overlapping holdings as well as a variety of expenses, such as low balance fees and varying expense ratios, which could have been avoided through a more careful fund selection.
Tools
Investors have many tools to choose from when creating a portfolio. For those lacking time, money or interest in investing, mutual funds provide a convenient option; there is a fund for nearly every taste, style and asset allocation strategy. For those with an interest in individual securities, there are stocks and bonds to meet every need. Sometimes investors may even add rare coins, art, real estate and other off-the-beaten-track investments to their portfolios.

The Bottom Line
Regardless of your means or method, keep in mind that there is no generic diversification model that will meet the needs of every investor. Your personal time horizon, risk tolerance, investment goals, financial means and level of investment experience will play a large role in dictating your investment mix. Start by figuring out the mix of stocks, bonds and cash that will be required to meet your needs. From there, determine exactly which investments to use in completing the mix, substituting traditional assets for alternatives as needed. If you are too overwhelmed by the choices or simply prefer to delegate, there are plenty of financial services professionals available to assist you.

[Black_NITE]

BarChart Technical Analysis NITE-LYNX $ECRY
http://www.barchart.com/technicals/stocks/ECRY

[GreenReeper]

3 Steps To A Profitable ETF Portfolio


Perhaps no vehicle is helping to change the investment landscape more than the exchange-traded fund (ETF). ETFs are baskets of individual securities much like mutual funds with two key differences. First, they can be freely traded like stocks, while mutual fund transactions dont occur until the market closes. Secondly, expense ratios tend to be lower than those of mutual funds because many are passively managed vehicles tied to an underlying index or market sector.



The primary benefit of ETFs is that they can be used to construct entire portfolios that can be traded easily. Also, they are usually well diversified because they are designed to replicate a specific index or sector. (To learn how ETFs are formed, see Introduction To Exchange-Traded Funds and An Inside Look At ETF Construction.)

Building an ETF Portfolio
If you are considering building a portfolio with ETFs, here are some simple guidelines:
1. Determine the Right Allocation. Look at your objective for this portfolio, your return and risk expectations, your time horizon, your distribution needs, your tax and legal situations, your personal situation and how this portfolio fits in with your overall investment strategy to determine your asset allocation. (See Three Simple Steps to Building Long-Term Wealth for a more detailed explanation that incorporates a process recommended by the CFA Institute.)
2. Implement your Strategy. Analyze the available funds and determine which ones will best meet your allocation targets. Phase in your purchases over a period of three to six months.
3. Monitor and assess. Once each year, evaluate your portfolios performance and your allocations in light of your circumstances. (To keep reading about allocation, see Asset Allocation Strategies and Choose Your Own Asset Allocation Adventure.)
We will break down each of these steps in the following sections.

Determine the Right Allocation
If you are knowledgeable in investments, you may be able to handle this yourself. If not, seek competent financial counsel. In determining the right allocation, consider the following:
1. What is your objective (purpose) for the portfolio (e.g., retirement versus saving for a childs college tuition)?
2. What are your risk/return objectives?
3. What is your time horizon? The longer it is, the more risk you can take.
4. What are your distribution needs for the portfolio? If you have income needs, you will have to add fixed-income ETFs and/or equity ETFs that pay higher dividends.
5. Do you have any legal or tax issues that will have an impact on allocation?
6. How does this portfolio fit in with your overall plans and unique situation? It is important to know how this portfolio ties in with your other investments and how much of your net worth will be invested in this portfolio.
Finally, consider some data on market returns. Research by Eugene Fama and Kenneth French resulted in the formation of the three-factor model in evaluating market returns. The three-factor model says the following:
1. Market risk explains part of a stocks return. (This indicates that because equities have more market risk than bonds, equities should generally outperform bonds over time).
2. Value stocks outperform growth stocks over time because they are inherently more risky.
3. Small cap stocks outperform large cap stocks over time because they have more undiversifiable risk than their large cap counterparts.
Therefore, investors with a higher risk tolerance can and should allocate a significant portion of their portfolios to smaller cap, value-oriented equities.

Remember that more than 90% of a portfolios return is determined by allocation rather than security selection and timing. Do not try to time the market. Research continually has shown that timing the market is not a winning strategy. (To read more about this subject, see our Financial Concepts tutorial.)

Once you have determined the right allocation for you, you are ready to implement your strategy.

Implement Your Strategy
The beauty of ETFs is that you can select an ETF for each sector or index in which you want exposure.

Once you know the basics, you are ready to select your ETFs. In making your selections, look for products that:
1. Most closely meet your allocation needs for each sector or index
2. Have the most favorable expense ratios
There are a number of product offerings. Following are links to the American Stock Exchange, which has more than 200 listed ETFs, as well as some of the largest ETF managers:

American Stock Exchange:
Managers:
1. Claymore: Offers ETFs designed to provide the investment performance delivered by specialized investment indexes.
2. First Trust: Offers ETFs benchmarked against a number of styles, sectors and special situations.
3. iShares: Owned by Barclays. Offerings across every major domestic index and sector, including fixed income, as well as international ETFs.
4. Powershares: Style, industry, commodity currency specialty access and broad-market ETFs, including the QQQQ (formerly the QQQ).
5. Pro Shares: Uses derivatives, short (selling the asset) and long (buying the asset) index ETFs, including leveraged index ETFs.
6. Rydex: ETFs that seek to capture the performance of equal weighted and segmented indexes and sectors.
7. State Street Global Advisors: Standard and Poors Depositary Receipts (SPDRs), specific sector and index ETFs (including fixed income) and the Streettracks ETFs, as well as tools to help build a portfolio.
8. Van Eck Global: Market Vector brand of ETFs based on special market sectors and countries.
9. Vanguard: Domestic and international index ETFs that cover a range of market segments, investment styles, sectors and industries including bond the bond market.
10. Wisdom Tree: Index ETFs with a fundamental approach toward dividends and core earnings.
The next step is execution. ETFs trade during market hours, so any broker can execute your trades. More often than not, it is prudent to phase in new purchases. Data from The Stock Traders Almanac show that, generally, the equity markets are strongest from November to April and weakest from May to October, which means you may choose to speed up your phase-in time during strong periods and slow it down during weaker months.



Monitor and Assess Your Portfolio
• At least once a year, check the performance of your portfolio. For most investors, depending on their tax circumstances, the ideal time to do this is at the beginning or end of the calendar year. Compare each ETFs performance to that of its benchmark index. Any difference, called tracking error, should be low. If it is not, you may need to replace that fund with one that will invest truer to its stated style.
• Balance your ETF weightings for any imbalances that may have occurred due to market fluctuations. Do not overtrade. A once-annual rebalancing is recommended for most portfolios.
• Do not be deterred by market fluctuations. Stay true to your original allocations. Certain styles will stay out of favor for a while, while others will log abnormally high returns for extended periods.
• Assess your portfolio in light of changes in your circumstances. Keep a long-term perspective. Your allocation will change over time as your circumstances change.
Conclusion
Remember, there are three steps to successfully building a portfolio with ETFs. One, determine the right allocation for you. Two, implement your strategy. And three, monitor and assess your portfolio in the context of your situation. If you follow these steps, you should be able to build a portfolio of ETFs that meets its intended objective.

[Black_NITE]

NITE-LYNX $DATA BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/DATA

[GreenReeper]

Finding The Right Trading Coach
If you have ever thought about getting a trading coach or trading program, or bought a book about trading, this topic may have crossed your mind. If the coach knows so much about trading, why is he or she teaching others? This is an interesting question and relates to the old adage: Those that cant ... teach. Meaning those who were unsuccessful at an endeavor move to the teaching realm to coach others. Many people dont like the idea that a trader who cant make big money should be teaching others. But does your coachs personal success really matter? In other words, is a full-time trader in a better position to help you than someone who no longer trades or has never traded? When we break down the pros and cons you may realize you werent giving some people the credibility they deserve, and were possibly giving too much credit to others. (For general investment information refer to Top 10 Commandments Of Investing.) Arguments for Both Sides
A coach who is a trader will claim to have definite advantage over someone who doesnt trade. This may be true if the coach has the track record to back this claim up, but just because a person is successful at trading does not mean he or she can effectively relay that skill to someone else.
On the other hand, a coach who no longer trades can still provide great benefit if he or she is an effective teacher . A non-trader coach may have been successful as a trader in the past, but has chosen to give up trading. The reasons for this are numerous: some traders prefer coaching to trading, have found trading too stressful, want to help others or have already succeeded and want a new challenge, to list but a few potential reasons. However, it may also be that the trader has failed miserably. At first it may seem that this person would not be a good coach, but this is not necessarily true; we can learn a lot from other peoples failures. In addition, even though someone was unable not implement a certain system themselves due to lack of discipline, psychological or physiological reasons, this does not mean that a different person cant be successful using the same method.

Both sides can likely agree on the fact that in order to coach someone else, a teacher needs to have experience in what students will go through. Essentially, coaches must have market experience in some form or another. The coach needs to know what hurdles students will have to go over, and be able to help them navigate through those obstacles. This does not mean they need to have traded personally, but they will at least have to have been in an environment where they witnessed others trading. Observation can be a great teacher that can lead to the teaching of others.

A Deeper Look
On both sides of the argument there are examples of traders being great and horrible coaches, as well as coaches who no longer trade (or never did) that are fantastic. Think for a moment about a sport. The athletes who play professional sports are the best athletes in the world, and yet they are often coached by someone who has inferior skill. This is OK, because the coach is there to help hone another persons skills. Just because coaches dont have the qualities of a peak performance athlete does not mean they cant pick out and elevate those qualities in others. On the flip side, we have had some amazing talents who could not and cannot effectively pass on whatever it was that made them great athletes.

When we look at trading, or investing , much worth is placed in those who dont actually trade the markets professionally. Market analysts gauge the market using varying tools and methods and relay that information to others. While many analysts may not be traders, some are often very accurate in their market analysis. Having a birds eye view of the unfolding situation allows them to make predictions without an investment in the outcome. These insights are helpful to many traders, even though the information comes from someone who may have never placed a trade.
Never having placed a trade does pose a problem for the trader. The market is constantly moving, and while an analyst may be able to anticipate the direction and magnitude of a move, the gyrations along the way can have the power to wipe a trader out if he or she executes a move at the wrong time. In this case, a student trader would benefit from having the information constructed into something tradeable by a trading coach.

How to Find a Good Coach
With arguments on both sides, there is no hard-and-fast rule when it comes to which is better. The bottom line is whether someone gets you the knowledge and skills that you want. If the coach is teaching you in a way you understand and you feel you are getting your moneys worth, that is what counts.

Trading and coaching is a business. Coaches need to recruit students - this is how they make money . Therefore, sales pitches abound across media sources. When seeking to improve your trading, this can be overwhelming. That said, you can often narrow your search down quite quickly by following a few simple guidelines.

1. Dont Focus on a Coachs Personal Results
Dont worry about whether a potential coach was a trader, is a trader or what his or her personal track record is. Personal trading results dont matter; what matters is how a given coachs students are doing. Look for reviews by students about a coach or training program , and if possible contact a few students directly to ask them about their experience.
2. Avoid Getting Emotional
Sales pages are meant for the hard sell. Therefore, sift through sales pages with an analytical mind, not an emotional one. Is there any substantiation to an advertisers claims? People who know the markets know that no one is right all the time, so skip past coaches and programs that promise outlandish results.

3. Consider Your Personality and Style
If you have some experience already, look for someone who meshes with your personality and style. Do you understand the language the coach uses? Does his or her method seem simple and easy to understand? Complex methods can be hard to implement and may not be easily passed from one person to another. Also, if you cant understand what someone else is saying when you are first introduced to their work, it is likely only going to get harder to understand down the road.

Conclusion
Good information, coaching and training programs can be found, but in order to hit on the best possible program, traders need to do some research. This includes finding reviews of any product or service being considered, and touching base with those companies or individuals to see what they have to offer. We can also discard any offers that promise outlandish results or are hard to understand. Trading can be difficult, but learning about it should be much easier - especially if you take the time to seek out the best possible sources.

[GreenReeper]

How To Be A Stock Trader In 2012

If one of your New Years resolutions is to take control of your finances and put some of your savings to work, you might be considering using the stock market to do that. 2011 proved to be a tough year for even the bestinstitutional investor and individual traders had an equally tough time navigating markets that saw a large amount of violent swings, both to the upside and the downside.



If youre planning to enter the markets as a new trader this year, here are a few tips to consider as you put your money to work. (For related reading, see 4 Common Active Trading Strategies.)

Dont Trade for Real … Yet
Before you put your hard-earned money to work, spend some time trading fake money. Many brokerages and sites like Yahoo! Finance offer virtual or paper trading accounts that allow you to get a hands-on feel for how the markets work. Just like any new skill, you probably wont do very well with your first attempts. Use virtual funds to see if your investing decisions could potentially earn you money. Once you see that youre having success, put a small amount of real money to work. Continue to use your virtual account to test new strategies. Even the pros use virtual accounts to test the waters. (Use the Investopedia Stock Simulator to trade a virtual account, risk free!)

Learn How to Research
Its easy to make the mistake of relying on somebody elses research for investing decisions. There are two problems with this. First, somebody elses risk tolerance, investment objective and account size arent the same as yours. The trade may be right for them, but not for you. Second, they may tell you when to get into the trade but they likely wont tell you when to get out.

There are plenty of good resources that teach you how to research before you buy. Read books, talk to other traders and read company balance sheets, listen to conference calls and work to gain a real understanding of the markets. You can learn to excel at any endeavor through experience and study. Becoming a great money manager requires the same commitment. (To learn more, see Investing Books It Pays To Read.)

Say No to the Seminars
Every big city has an endless supply of weekend-long thousand dollar or more seminars that guarantee to make you the next great trader. Dont be fooled. They may have some good information, but if becoming a high-performing, profitable trader could happen over a weekend, everybody would do it. There are better ways to spend your money.

Dont Try to Win
Weve learned that in order to get ahead in this world, we have to be better than our competition. That isnt true in investing. If youre new to the markets, you arent going to beat the professionals. Even the professionals dont always beat other professionals. There are an exceedingly small amount of professional investors who have a consistent track record of beating others in the market. Aim to invest your money in products that tend to perform in line or slightly better than the market. Later, as you gain more investing experience, you can try your hand at some of the riskier trades.(For more information, read Measuring And Managing Investment Risk.)

Dont Make Money, Manage Risk
The professionals know that if you manage risk correctly, making money will naturally follow. Having a portfolio that includes a good supply of companies with a track record of success and that pay a healthy dividend, is good risk management. Only investing in products you truly understand, without looking to get rich quick, is the mark of a mature investor. You arent going to strike it rich by capturing short-term gains, so dont take the unnecessary risk of trying.

The Bottom Line
2012 promises to be another year of tough-to-navigate markets for even the best traders. Dont try to score the big win. Instead, use 2012 to be conservative with your money as you learn the complicated art of trading stocks.

[Black_NITE]

For thou convenience $ANDI BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/ANDI

[GreenReeper]

5 Ways To Invest $5,000

In this economy, $5,000 may feel like a lot more money than it did just a few years ago. There are numerous ways that you may find yourself with an extra $5,000: a bonus at work, inheritance, an extra contract job that you werent expecting or a tax refund. Maybe you have it now or youre expecting it soon, but regardless of the time frame, what are you expecting to do with the money? Here are a few ideas that may help.



Pay off Credit Cards
If your household has credit card debt, you have, on average, $15,956 worth. Almost one third of that debt could be wiped out with that $5,000. If your credit card interest rate is average, you are paying 13% ,or $650 each year, to hold that balance. That $5,000 could reduce the interest youre building up by $54 a month. How long was it going to take you to save $5,000 for the sole purpose of paying your credit card debt? If it was two years, you just saved $1,300 making the return on your $5,000 - 26% over two years or 13% per year. Any investor would be very happy with that figure. Although its not necessarily fun, the best return youll get on your money is to service your debt.

High Quality Stocks
Investing in high quality, dividend paying stocks for a long period of time has shown to be a very safe investment. Because its nearly impossible to pick the few correct stocks that will perform better than the overall market, look at an index mutual fund or exchange traded fund (ETF) that tracks the total stock market.

Historic returns for the stock market over the past 50 years have averaged around 10%, making this a good investment, but not nearly as good as paying down debt.

Education
The cost of a college education has risen 130% in the last 20 years, according to USA Today. If you have a two-year old child now, the cost to send your child to college in 16 years will be $95,000, if he or she chooses a college in the state where you are a resident. If your child chooses a private university, the cost rises to as high $340,000, if college inflation rates stay as they are for another 16 years.

The best way to save for college is to use a 529 plan. These tax advantaged college savings accounts are similar to 401(k) plans where you contribute a certain amount into the plan, the money is invested into funds of your choice and you withdraw those funds when the child reaches college age.



Some 529 plans allow you to purchase years of college at todays rates for use when the child reaches college age, but most plans now invest the money without guaranteeing future results. That same $5,000 is a great start to put in a plan like this, and although the returns will average less than the overall stock market , the plan is one of the best ways to save for future college expenses.

Bond ETFs
An ETF is a basket of investment products packaged into one fund. They often come with low fees, yet offer the safety of a diverse portfolio. Some of these ETFs hold bonds, which are historically safer than stocks. Some bond ETFs have dividends of 7% or more and, barring any large investment market event, those dividends are quite safe, because of the hundreds or even thousands of bonds held in these funds. If you choose to invest in Bond ETFs, you may need to ask for help from a trust financial adviser.
Start a Small Business
If your debts are paid, you dont have children or youre well on your way to having your kids college education paid for, consider starting a small business. To get your business off of the ground, $5,000 may not go very far, but some service-type businesses have very little startup costs. Before committing the money to a small business , make sure to carefully weigh the time and financial commitment that will come with this type of endeavor.

Forecasting the annual return is nearly impossible due to the many variables that come with starting a business, but even more important, this might jump-start your dream of becoming an entrepreneur.

The Bottom Line
Even if it isnt $5,000, before deciding how to utilize a larger sum of money that found its way into your bank account, think more long term. Sure, you could purchase the big TV that youve wanted for a long time but is that the best decision to make for years to come?

[Black_NITE]

NITE-LYNX $NDBE BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/NDBE

[Black_NITE]

Behold the $MTLK BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/MTLK

[GreenReeper]

Whats The Minimum I Need To Retire?
Can I retire with $1 million dollars? Of course you can. Truth be told, you might be able to retire with much less. Then again, you might not be able to retire with $1 million or $2 million or perhaps even $10 million. It all depends on your personal situation. On thing is sure: you want to make sure your golden years are golden, not merely a struggle for existence. (To learn more read, 10 Steps To Retire A Millionaire.)

Most advisors and financial professionals have been able to boil it down to one number, also known as the holy grail of retirement analysis: the amazing 4% sustainable withdrawal rate. Essentially, this is the amount you can withdraw through thick and thin and still expect your portfolio to last at least 30 years, if not longer. This will determine how long your retirement savings will last, and will help you determine how much money you need for the retirement you want.

So, I Can Retire With $1 Million?
If you are 65 with $1 million, you can expect your portfolio of properly diversified investments to provide $40,000 per year (in todays dollars ) until you are 95. Add that to your Social Security income and you should be bringing in roughly $70,000 a year.
Now, if this isnt enough for you to maintain the lifestyle you want, you have come to your unfortunate answer rather quickly: no, you cannot retire with $1 million.

Now wait a minute, you say, what about my spouse, who is also getting Social Security? What if Im 75, not 65? What if I want to die broke? What if Im getting a government pension and benefits? What if Im planning to retire in Costa Rica? There are many what ifs, but the math is still the math: If you plan on needing a lot more than $40,000 from you retirement nest egg, then the probability of a successful retirement on $1 million is not good.

Projecting Future Expenses
There are a lot of books and articles that discuss longevity risks, sequence of returns, healthcare costs and debt. But knowing how much you need to retire still boils down to projecting your future expenses until the day you die. Ideally, that yearly figure will add up to less than 4% of your nest egg.

So a $1 million dollar portfolio should give you, at most, $40,000 to budget. If you are forced to take out more than $40,000 adjusted for time during your retirement, you are tempting fate and relying on luck to get you by. So, if you want at least $40,000 per year, $1 million is really the least amount of money - the bare minimum - you should have before you launch into retirement.

Retirement planning means maximizing your lifestyle while maintaining a high probability of being able to maintain that lifestyle until the day you die. So scraping together a bare minimum nest egg is like an explorer heading into the jungle for a week with just enough supplies. What if something happens? Why not take extra? As a result, for the vast majority of people, $1 million is not enough if you want a high probability of a great retirement .

Three Types Of Retirees
Typically, we see three categories of people trying to decide if they are ready to retire:
1. Of course you can retire! Live it up and enjoy! If you are at least in your 70s with reasonable expenses, then there is a good chance you and your $1 million fall in this category.
2. The probability for your retirement looks good. Just dont go crazy and buy a Porsche. If you are at least 62 and have always lived a frugal lifestyle, then you and your $1 million are likely going to fall in this category.
3. Lets redefine retirement for you. This is just about everyone else - including early retirees with $1 million living frugally and 70-year-olds with $1 million spending lavishly.
Early retirement , meaning before Social Security and Medicare kick in, with only $1 million is extremely risky. You leave yourself with so few options if things go terribly wrong. Sure, you can go to Costa Rica and eat fish tacos every day. But what if you want to move back to the U.S. someday? What if you want to change? Having more money set aside will provide you with more flexibility and increase the likelihood of continued financial independence to do what you want within reason until the day you die. If you are forced to stay in Costa Rica or get a job, then you didnt make a good decision and plan.

So, once you have your $1 million, concentrate on what you can control - or at least affect. You cant control when you die but you can affect your health costs by doing your best to stay healthy until you qualify for Medicare. You cant control investment returns but you can affect the range of returns. You cant control inflation but you can affect your fixed costs and your variable costs.

Spending and Expenses
A few quick bits on expenses and spending. To a certain extent, retirement planning is the art of accurately matching future income with expenses. People seem to ignore certain expenses. For example, family vacations and a grandchilds wedding gift count the same as dental surgery and car repairs in retirement planning, but people neither include these enjoyable expenses when they are projecting their costs nor do they recognize how hard it is to cut them - try telling one child that you cant help with his wedding after paying for your other childrens weddings!

Conclusion
As a general rule, people who try to determine the minimum amount of retirement savings are usually the least likely to retire. Just getting by isnt a good way to start 30 years of unemployment and diminishing employability. If something unexpected happens, what are your options? Re-enter the work force, change your lifestyle or get more aggressive with your investments? Most people try the latter and pray. Some get lucky, but most dont. This is the equivalent of doubling down in black jack.
If you want to retire with $1 million dollars, it is going to come down to a combination of 1) how you define retirement, 2) your personal inventory of everything in your life: assets, debts, medical, family, etc. and 3) what the future holds. Remember, stuff happens in life. Do you really want to start this 30 year adventure with the bare minimum? Retirement is like most good things, it is much better to be overprepared than to wing it. You can you retire with $1 million dollars, but its better to be safe than sorry – shoot for $2 million!

[Black_NITE]

Behold the $IVFH BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/IVFH

[GreenReeper]

An Introduction To Shareholder Activism

Share and Share Alike
The power of followership cannot be overrated. A hackneyed phrase, strength in numbers can and has been used to desired effect by shareholders for their benefit. The shareholders themselves can also be large institutions, such as public employee retirement systems. The recent results for say-on-pay at various annual general meetings are but one example. Management misdeeds and corporate fraud in the early and late 2000s led to the passage of Sarbanes-Oxley (2002) and Dodd-Frank (2010) legislation that has empowered shareholders to some degree. Here is an overview of the mechanics of shareholder voting and its true motivation.

SEE: Proxy Voting Gives Fund Shareholders A Say

Activists Toolkit
Shareholder activism is expressed through the proxy statement. More than mere ballots describing a particular issue to a shareowner requesting him or her to take action, proxy statements are assets as the decisions that they ask stockholders to make impact the value of their company. Voting on these matters is akin to taking a decision on a referendum at the ballot box on the merits (or lack thereof) of a political candidate. Investors need to do their homework, rather than merely rubberstamping managements recommendations. Once they have done so, they have the choice of completing the card accompanying the proxy statement and mailing it in or attending the annual general meeting to vote the shares in person. The latter option may be preferable if issues to be discussed are particularly important.
In this way, the shareholder is able to ask questions, the answers to which may inform his ultimate decision. While management often files the proxy statement, outside parties may do so as well. The latters interest may differ from management. Investors should note that whereas public companies are required to file an annual proxy statement, investment companies, by contrast, only do so when a specific issue needs to be put before the shareholders.

SEE: Knowing Your Rights As A Shareholder

Requisite disclosures are part of every proxy statement, varying by the issue at hand:
• Types of voting shares must be disclosed and the control accorded to each share class, along with disclosure of ownership by management and individuals with greater than 5% of outstanding shares.
• The independent public accountant must be disclosed, fees paid for audit services, and records kept of any disputes and whether firm representatives will attend the AGM. The investor should look for any sign that independence and objectivity on the part of the auditor is somehow compromised.
A summary of typical proxy proposals and their required disclosures:
Issue Required Disclosure
Election of Company Directors Names, ages, tenure, role(s) in the company, business relationships with the company, meetings that the board held in the past twelve months.
Remuneration A clear description of who gets paid what for their respective roles (e.g.(non) employee directors)
Executive Compensation Plan features, eligible persons, funding links to service (e.g defined benefit plan), prices, expiry dates, strike prices of warrants, rights or options, which do (not) require shareholder approval, tax consequences to the company/recipient.
Capital Structure Title, amount of securities to be issued or modified, fee for the transaction and anticipated use of funds; financial statements with managements discussion of financial condition.
Corporate Actions (mergers, acquisitions, spinoffs, etc.) Transaction details, financials of acquirer and acquired companies, discussion of effects of the corporate action, financials.
Property Acquisition or Disposition Type and location, fee paid or received, including basis therefore, name and address of seller or buyer.
Restatement of Financial Accounts The type of restatement and when effective, rationale for restatement and date anticipated resultant effect on company accounts.
Investment Advisory and Fee Changes A table with current and anticipated fees (e.g advisory, transfer, custody)
Distribution Fee Changes The 12b-1 fee rate, to whom the fee may be paid and the payment amounts to those affiliated with the fund or advisor.
Investments Permitted/Strategy A clear description of the change in permissible investments or strategy.
Investors should look for potential conflicts of interest. Are the interests of management sufficiently aligned with those of shareholders?

Shareholder activism is an outgrowth of corporate governance. Company directors are supposed to mind the store. If they do not, it is the responsibility of shareholders to step forward, weigh the merits of proposals and vote accordingly.

SEE: Putting Management Under The Microscope

In Whose Interest?
Traditionally a tool for exacting changes in the public company to benefit shareholders, shareholder activism is not without its critics who contend that certain interest groups stand behind the aegis of corporate democracy to advance (an) agenda(s) that might not necessarily benefit the shareholder, such as the pursuit of public policy initiatives and legislative or regulatory agendas. Socially responsible investment funds (SRI) may have a reform-minded, rather than profit-maximizing goal (e.g. environmental issues, human rights, practices that accord with religious beliefs, such as Christian values and Islamic finance).

The number of shareholder proposals is a function of a companys industry. Energy and mineral companies with the ability to harm the environment would, ceteris paribus, come in for greater criticism than technology groups. At issue in the maelstrom of shareholder activism is whether certain proposals advanced properly fall within the remit of a shareholder vote. Might they not be better resolved at the ballot box? A practice referred to as interest-group capture uses the share vote where the legislation might be a preferable alternative. Some examples of this are proposals on corporate political spending and the Taft-Hartley plans share votes to obtain concessions from management.

The Bottom Line
When evaluating any proposal, the investor needs to ask the right questions. What does the proposal ask him or her to evaluate, who is putting forth the proposal and, ultimately, whom does it serve? The answers to these questions will determine who truly benefits from such proposals.

[Black_NITE]

NITE-LYNX $CALVF BarChart Technical Analysis
http://www.barchart.com/technicals/stocks/CALVF

[GreenReeper]

What Is Money?
Everyone uses money . We all want it, work for it and think about it. If you dont know what money is, you are not like most humans. However, the task of defining what money is, where it comes from and what its worth belongs to those who dedicate themselves to the discipline ofeconomics. While the creation and growth of money seems somewhat intangible, money is the way we get the things we need and want. Here we look at the multifaceted characteristics of money. (Get A Short-Term Advantage In The Money Market. This investment vehicle is often the perfect stop-gap measure for growing your money.)

What is Money?
Before the development of a medium of exchange, people would barter to obtain the goods and services they needed. This is basically how it worked: two individuals each possessing a commodity the other wanted or needed would enter into an agreement to trade their goods.

This early form of barter, however, does not provide the transferability and divisibility that makes trading efficient. For instance, if you have cows but need bananas, you must find someone who not only has bananas but also the desire for meat. What if you find someone who has the need for meat but no bananas and can only offer you bunnies? To get your meat, he or she must find someone who has bananas and wants bunnies .
The lack of transferability of bartering for goods, as you can see, is tiring, confusing and inefficient. But that is not where the problems end: even if you find someone with whom to trade meat for bananas, you may not think a bunch of them is worth a whole cow. You would then have to devise a way to divide your cow (a messy business) and determine how many bananas you are willing to take for certain parts of your cow. (It can be hard to talk about money with your children, especially when times are tough. Talking About Money When Times Are Tough has some tips to make it easy.)

To solve these problems came commodity money, which is a kind of currency based on the value of an underlying commodity. Colonialists, for example, used beaver pelts and dried corn as currency for transactions. These kinds ofcommodities were chosen for a number of reasons. They were widely desired and therefore valuable, but they were also durable, portable and easily stored.

Another example of commodity money is the U.S. currency before 1971, which was backed by gold. Foreign governments were able to take their U.S. currency and exchange it for gold with the U.S. Federal Reserve. If we think about this relationship between money and gold, we can gain some insight into how money gains its value: like the beaver pelts and dried corn, gold is valuable purely because people want it.

It is not necessarily useful - after all, you cant eat it, and it wont keep you warm at night, but the majority of people think it is beautiful, and they know others think it is beautiful. Gold is something you can safely believe is valuable. Before 1971, gold therefore served as a physical token of what is valuable based on peoples perception. You dont need an MBA to learn how to save money and invest in your future.
Impressions Create Everything
The second type of money is fiat money, which does away with the need to represent a physical commodity and takes on its worth the same way gold did: by means of peoples perception and faith. Fiat money was introduced because gold is a scarce resource and economies growing quickly couldnt always mine enough gold to back their money requirement. For a booming economy, the need for gold to give money value is extremely inefficient, especially when, as we already established, value is really created through peoples perception.
Fiat money, then becomes the token of peoples apprehension of worth - the basis for why money is created. An economy that is growing is apparently doing a good job of producing other things that are valuable to itself and to other economies. Generally, the stronger the economy, the stronger its money will be perceived (and sought after) and vice versa. But, remember, this perception, although abstract, must somehow be backed by how well the economy can produce concrete things and services that people want.

That is why simply printing new money will not create wealth for a country. Money is created by a kind of a perpetual interaction between concrete things, our intangible desire for them, and our abstract faith in what has value: money is valuable because we want it, but we want it only because it can get us a desired product or service.

How is it Measured?
Sure, money is the $10 bill you lent to your friend the other day and dont expect back anytime soon. But exactly how much money is out there and what forms does it take? Economists and investors ask this question everyday to see whether there is inflation or deflation. To make money more discernible for measurement purposes, they have separated it into three categories:
• M1 – This category of money includes all physical denominations of coins and currency, demand deposits, which are checking accounts and NOW accounts, and travelers checks. This category of money is the narrowest of the three and can be better visualized as the money used to make payments.
• M2 – With broader criteria, this category adds all the money found in M1 to all time-related deposits, savings deposits, and non-institutional money-market funds. This category represents money that can be readily transferred into cash.
• M3 – The broadest class of money, M3 combines all money found in the M2 definition and adds to it all large time deposits, institutional money-market funds , short-term repurchase agreements, along with other larger liquid assets.

By adding these three categories together, we arrive at a countrys money supply, or total amount of money within an economy.

How Money is Created
Now that weve discussed why and how money, a representation of perceived value, is created in the economy, we need to touch on how the central bank (the Federal Reserve in the U.S.) can manipulate the money supply.

Among other things, a central bank has the ability to influence the level of a countrys money supply. Lets look at a simplified example of how this is done. If it wants to increase the amount of money in circulation, the central bank can, of course, simply print it, but as we learned, the physical bills are only a small part of the money supply.

Another way for the central bank to increase the money supply is to buy government fixed-income securities in the market. When the central bank buys these government securities, it puts money in the hands of the public. How does a central bank such as the Federal Reserve pay for this? As strange as it sounds, they simply create the money out of thin air and transfer it to those people selling the securities! To shrink the money supply, the central bank does the opposite and sells government securities. The money with which the buyer pays the central bank is essentially taken out of circulation. Keep in mind that we are generalizing in this example to keep things simple.

Conclusion
Remember, as long as people have faith in the currency, a central bank can issue more of it. But if the Fed issues too much money, the value will go down, as with anything that has a higher supply than demand. So even though technically it can create money out of thin air, the central bank cannot simply print money as it wants.

[Black_NITE]

This link will help thou $MRVKF BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/MRVKF

[GreenReeper]

Warren Buffetts Bear Market Maneuvers
In times of economic decline, many investors ask themselves, What strategies does the Oracle of Omaha employ to keep Berkshire Hathaway on target? The answer is that the esteemed Warren Buffett, the most successful known investor of all time, rarely changes his long-term value investment strategy and regards down markets as an opportunity to buy good companies at reasonable prices. In this article, we will cover the Buffett investment philosophy and stock-selection criteria with specific emphasis on their application in a down market and a slowing economy. (For more on Warren Buffett and his current holdings, sign up for our Coattail Investor newsletter.)

The Buffett Investment Philosophy
Buffett has a set of definitive assumptions about what constitutes a good investment. These focus on the quality of the business rather than the short-term or near-future share price or market moves. He takes a long-term, large scale, business value-based investment approach that concentrates on good fundamentals and intrinsic business value, rather than the share price. (For further reading, see Warren Buffett: The Road To Riches and What Is Warren Buffetts Investing Style?)
Buffett looks for businesses with a durable competitive advantage. What he means by this is that the company has a market position, market share, branding or other long-lasting edge over its competitors that either prevents easy access by competitors or controls a scarce raw-material source. (For more insight, see Competitive Advantage Counts, 3 Secrets Of Successful Companies and Economic Moats Keep Competitors At Bay.)

Buffett employs a selective contrarian investment strategy: using his investment criteria to identify and select good companies, he can then make large investments (millions of shares) when the market and the share price are depressed and when other investors may be selling.

In addition, he assumes the following points to be true:
• The global economy is complex and unpredictable.
• The economy and the stock market do not move in sync.
• The market discount mechanism moves instantly to incorporate news into the share price.
• The returns of long-term equities cannot be matched anywhere else.
Buffett Investment Activity
Berkshire Hathaway investment industries over the years have included:
• Insurance
• Soft drinks
• Private jet aircraft
• Chocolates
• Shoes
• Jewelry
• Publishing
• Furniture
• Steel
• Energy
• Home building
The industries listed above vary widely, so what are the common criteria used to separate the good investments from the bad?

Buffett Investment Criteria
Berkshire Hathaway relies on an extensive research-and-analysis team that goes through reams of data to guide their investment decisions . While all the details of the specific techniques used are not made public, the following 10 requirements are all common among Berkshire Hathaway investments:
1. The candidate company has to be in a good and growing economy or industry.
2. It must enjoy a consumer monopoly or have a loyalty-commanding brand.
3. It cannot be vulnerable to competition from anyone with abundant resources.
4. Its earnings have to be on an upward trend with good and consistent profit margins.
5. The company must enjoy a low debt/equity ratio or a high earnings/debt ratio.
6. It must have high and consistent returns on invested capital.
7. The company must have a history of retaining earnings for growth.
8. It cannot have high maintenance costs of operations, high capital expenditure or investment cash flow.
9. The company must demonstrate a history of reinvesting earnings in good business opportunities, and its management needs a good track record of profiting from these investments.
10. The company must be free to adjust prices for inflation.
The Buffett Investment Strategy
Buffett makes concentrated purchases. In a downturn, he buys millions of shares of solid businesses at reasonable prices. Buffett does not buy tech shares because he doesnt understand their business or industry; during the dotcom boom, he avoided investing in tech companies because he felt they hadnt been around long enough to provide sufficient performance history for his purposes.

And even in a bear market , although Buffett had billions of dollars in cash to make investments, in his 2009 letter to Berkshire Hathaway shareholders, he declared that cash held beyond the bottom would be eroded by inflation in the recovery.

Buffett deals only with large companies because he needs to make massive investments to garner the returns required to post excellent results for the huge size to which his company, Berkshire Hathaway, has grown. (To learn about the disadvantage of being confined to blue chip stocks , read Why Warren Buffett Envies You.)

Buffetts selective contrarian style in a bear market includes making some large investments in blue chip stocks when their stock price is very low. And Buffett might get an even better deal than the average investor: His ability to supply billions of dollars in cash infusion investments earns him special conditions and opportunities not available to others. His investments often are in a class of secured stock with its dividends assured and future stock warrants available at below-market prices.

Conclusion
Buffetts strategy for coping with a down market is to approach it as an opportunity to buy good companies at reasonable prices. Buffett has developed an investment model that has worked for him and the Berkshire Hathaway shareholders over a long period of time. His investment strategy is long term and selective, incorporating a stringent set of requirements prior to an investment decision being made. Buffett also benefits from a huge cash war chest that can be used to buy millions of shares at a time, providing an ever-ready opportunity to earn huge returns.

[Black_NITE]

Feast thine eyes upon $XTGR BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/XTGR

[GreenReeper]

5 Economic Effects Of Country Liberalization
August 24 2011| Filed Under » Economics, Economy, International Markets, Investing Basics, Investment
When a nation becomes liberalized, the economic effects can be profound for the country and for investors. Economic liberalization refers to a country opening up to the rest of the world with regards to trade, regulations, taxation and other areas that generally affect business in the country. As a general rule, you can determine to what degree a country is liberalized economically by how easy it is to invest and do business in the country. All developed countries (First World) have already gone through this liberalization process, so the focus in this article is more on the developing and emerging countries. TUTORIAL:Economic Indicators To Know

Removing Barriers to International Investing
Investing in emerging market countries can sometimes be an impossible task if the country youre investing in has several barriers to entry. These barriers can include tax laws, foreign investment restrictions, legal issues and accounting regulations that can make it difficult or impossible to gain access to the country. The economic liberalization process begins by relaxing these barriers and relinquishing some control over the direction of the economy to the private sector. This often involves some form of deregulation and a privatization of companies. (For related reading, seeThe Risks Of Investing In Emerging Markets.)

Unrestricted Flow of Capital
The primary goals of economic liberalization are the free flow of capital between nations and the efficient allocation of resources and competitive advantages. This is usually done by reducing protectionist policies such as tariffs, trade laws and other trade barriers. One of the main effects of this increased flow of capital into the country is that it makes it cheaper for companies to access capital from investors. A lower cost of capital allows companies to undertake profitable projects that they may not have been able to with a higher cost of capital pre-liberalization, leading to higher growth rates.

We saw this type of growth scenario unfold in China in the late 1970s as the Chinese government set on a path of significant economic reform. With a massive amount of resources (both human and natural), they believed the country was not growing and prospering to its full potential. Thus, to try to spark faster economic growth, China began major economic reforms that included encouraging private ownership of businesses and property, relaxing international trade and foreign investment restrictions, and relaxing state control over many aspects of the economy. Subsequently, over the next several decades, China averaged a phenomenal real GDP growth rate of over 10%.

Stock Market Performance
In general, when a country becomes liberalized, the stock market values also rise. Fund managers and investors are always on the lookout for new opportunities for profit, and so a whole country that becomes available to be invested in will tend to cause a surge of capital to flow in. The situation is similar in nature to the anticipation and flow of money into an initial public offering (IPO). A private company that was previously unavailable to an investor that suddenly becomes available typically causes a similar valuation and cash flow pattern. However, like an IPO, the initial enthusiasm also eventually dies down and returns become more normal and more in line with fundamentals.
Political Risks Reduced
In addition, liberalization reduces the political risks to investors. For the government to continue to attract more foreign investment, other areas beyond the ones mentioned earlier have to be strengthened as well. These are areas that support and foster a willingness to do business in the country such as a strong legal foundation to settle disputes, fair and enforceable contract laws, property laws, and others that allow businesses and investors to operate with confidence. Also, government bureaucracy is a common target area to be streamlined and improved in the liberalization process. All these changes together lower the political risks for investors, and this lower level of risk is also part of the reason the stock market in the liberalized country rises once the barriers are gone.

Diversification for Investors
Investors can also benefit by being able to invest a portion of their portfolio into a diversifying asset class. In general, the correlation between developed countries such as the United States and undeveloped or emerging countries is relatively low. Although the overall risk of the emerging country by itself may be higher than average, adding a low correlation asset to your portfolio can reduce your portfolios overall risk profile. (For more, see Does Investing Internationally Really Offer Diversification?)

However, a distinction should be made that although the correlation may be low, when a country becomes liberalized, the correlation may actually rise over time. This happens because the country becomes more integrated with the rest of the world and has become more sensitive to events that happen outside the country. A high degree of integration can also lead to increased contagion risk – which is the risk that crises that occur in different countries cause crises in the domestic country.

A prime example of this is the European Union (EU) and its unprecedented economic and political union. The countries in the EU are so integrated with regard to monetary policy and laws that a crisis in one country has a high probability of spreading to other countries in the EU. This is exactly what happened in the financial crisis that started in 2008-2009. Weaker countries within the EU (such as Greece) began to develop severe financial problems that quickly spread to other EU members. In this instance, investing in several different EU member countries would not have provided much of a diversification benefit as the high level of economic integration in the EU had increased correlations and increased contagion risks to the investor.
The Bottom Line
Economic liberalization is generally thought of as a beneficial and desirable process for emerging and developing countries. The underlying goal is to have unrestricted capital flowing into and out of the country in order to boost growth and efficiencies within the home country. The effects following liberalization are what should interest investors as it can provide new opportunities for diversification and profit.

[Black_NITE]

BarChart Technical Analysis NITE-LYNX $SHKZ
http://www.barchart.com/technicals/stocks/SHKZ

[GreenReeper]

The Most Profitable Investing Trends Right Now

The stock market has been very volatile the last few years. While volatility brings risk, but it also brings opportunities for large gains if you are able to spot the right trends early. Here are some of the most profitable investing trends right now. (Growing a small sum poses big challenges. Find out why and learn what you can do about it. Check out Start Investing With Only $1000.)



1. Cloud Computing
A big trend in computing is offloading your local computing and data storage needs into the cloud. Ultimately, the cloud computing movement sees individual computers becoming primarily web terminals used to connect to powerful servers hosting our personal and business data, as well as web-based applications.

There are very few good pure-play companies in cloud computing. Amongst publicly-traded names, one of the leaders in cloud computing is Amazon (AMZN) with its EC2 virtual computing environments. Google (GOOG) is also a major player in the field with its web-based Google Docs service, as well as its Google Apps for Business line. Microsoft (MSFT) is also in the game with its Business Productivity Suite and its Office 365 offering.

2. Tablet PCs
Almost every major computer maker is debuting new tablet computers this year. The tablet segment is expected to grow quickly over the next few years, with one research firm projecting a growth from approximately 4 million units sold in 2010 to 57 million units being sold in 2015. A clear leader in the field is Apple (AAPL), with over 75% of the worldwide market share. In addition, Apples Ipad 2 is expected to start shipping soon.

Another perspective is that Googles Android-based systems may be where the real growth is. In the fourth quarter of 2010, Android-based systems went from 2.3% market share to nearly 21.6%. Unfortunately there is not a good pure-play on Android tablets, since major computer makers sell a wide variety of systems. Investors may want to look into the profit-boosting potential of Dells (DELL) new tablet or HPs (HPQ) TouchSmart series of tablets. Another idea would be to look into Intel (INTC) which makes the processors powering most non-Apple tablets.

3. Solar/Alternative Energy
Alternative sources of energy are gaining in popularity, but as an investor, you have to be careful where you put your money. For example, the Market Vectors Global Alternative Energy ETF (GEX) has delivered a negative-50% return since its inception in 2007. The alternative energy sector includes a lot of yet-unproven technologies and small early-stage firms, which presents a high risk for investors. You may want to be more selective and pick out some of the better individual firms. First Solar, Inc. (FSLR) is one of the biggest names, with a $13 billion market cap; it is up nearly 5000% since 2007. (Setting goals is the first step in determining which investment vehicles are right for you.

4. Streaming Movies
Watching streaming movies and television shows on demand is quickly catching on as a preferred method of media delivery. The old style physical rental chains, like Blockbuster, are fast disappearing from the competitive landscape.
The leader in streaming movies is Netflix (NFLX), which is up approximately 700% over the past five years. New investors may wish to exercise caution, however, since Netflix is currently trading at relatively high valuation levels, and several major companies seem to be eyeing an entrance into the market. The most interesting new entrant to the space is Amazon. Amazon launched its new streaming video service on February 22, 2011 which makes approximately 5,000 titles available on demand for free to Amazon Prime members.



5. Lithium
Commodities as an asset class have seen a tremendous run-up in price over the last several years. One of the more compelling long-term commodity stories is lithium, where increased demand is expected for the metal for use in batteries. Lithium batteries are used in electric cars, so if plug-in electric vehicles catch on, that may be a very large new source of demand.

If you are looking for a broad exposure to lithium, you may be interested in the Global X Lithium ETF (LIT) which is up 30% since its inception in 2010. One of the major individual names in lithium is the Chemical and Mining Company of Chile (SQM) which is up about 350% over the last five years.

The Bottom Line
These investing trends have been very profitable for investors who got in early. If you are considering investing now, conduct careful research to make sure you arent buying in at overvalued levels. Another approach would be to analyze these trends, identify common themes, and try to spot a new trend in the early stages.

[Black_NITE]

Feast thine eyes upon $GDSI BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/GDSI

[GreenReeper]

10 Risks That Every Stock Faces
There are many sector specific and even company specific risks in investing. In this article, however, we will look at some universal risks that every stock faces, regardless of its business.





Commodity Price Risk
Commodity price risk is simply the risk of a swing in commodity prices affecting the business. Companies that sell commodities benefit when prices go up, but suffer when they drop. Companies that use commodities as inputs see the opposite effect. However, even companies that have nothing to do with commodities, face commodities risk. As commodity prices climb, consumers tend to rein in spending, and this affects the whole economy, including the service economy. (For related reading, see Commodity Prices And Currency Movements.)

Headline Risk
Headline risk is the risk that stories in the media will hurt a companys business. With the endless torrent of news washing over the world, no company is safe from headline risk. For example, news of the Fukushima nuclear crisis, in 2011, punished stocks with any related business, from uranium miners to U.S. utilities with nuclear power in their grid. One bit of bad news can lead to a market backlash against a specific company or an entire sector, often both. Larger scale bad news - such as the debt crisis in some eurozone nations in 2010 and 2011 - can punish entire economies, let alone stocks, and have a palpable effect on the global economy.

Rating Risk
Rating risk occurs whenever a business is given a number to either achieve or maintain. Every business has a very important number as far as its credit rating goes. The credit rating directly affects the price a business will pay for financing. However, publicly traded companies have another number that matters as much as, if not more than, the credit rating. That number is the analysts rating. Any changes to the analysts rating on a stock seem to have an outsized psychological impact on the market. These shifts in ratings, whether negative or positive, often cause swings far larger than is justified by the events that led the analysts to adjust their ratings. (For related reading, see What Is A Corporate Credit Rating?)

Obsolescence Risk
Obsolescence risk is the risk that a companys business is going the way of the dinosaur. Very, very few businesses live to be 100, and none of those reach that ripe age by keeping to the same business processes they started with. The biggest obsolescence risk is that someone may find a way to make a similar product at a cheaper price. With global competition becoming increasingly technology savvy and the knowledge gap shrinking, obsolescence risk will likely increase over time.

Detection Risk
Detection risk is the risk that the auditor, compliance program, regulator or other authority will fail to find the bodies buried in the backyard until it is too late. Whether its the companys management skimming money out of the company, improperly stated earnings or any other type of financial shenanigans, the market reckoning will come when the news surfaces. With detection risk, the damage to the companys reputation may be difficult to repair – and its even possible that the company will never recover if the financial fraud was widespread (Enron, Bre-X, ZZZZ Best, Crazy Eddies and so on). (For related reading, see Detecting Financial Statement Fraud.)

Legislative Risk
Legislative risk refers to the tentative relationship between government and business. Specifically, its the risk that government actions will constrain a corporation or industry, thereby adversely affecting an investors holdings in that company or industry. The actual risk can be realized in a number of ways - an antitrust suit, new regulations or standards, specific taxes and so on. The legislative risk varies in degree according to industry, but every industry has some.
Our last pick jumped 2100% - Join free!
In theory, the government acts as cartilage to keep the interests of businesses and the public from grinding on each other. The government steps in when business is endangering the public and seems unwilling to regulate itself. In practice, the government tends to over-legislate. Legislation increases the public image of the importance of the government, as well as providing the individual congressmen with publicity. These powerful incentives lead to a lot more legislative risk than is truly necessary.

Inflationary Risk and Interest Rate Risk
These two risks can operate separately or in tandem. Interest rate risk, in this context, simply refers to the problems that a rising interest rate causes for businesses that need financing. As their costs go up due to interest rates, its harder for them to stay in business. If this climb in rates is occurring in a time of inflation, and rising rates are a common way to fight inflation, then a company could potentially see its financing costs climb as the value of the dollars its bringing in decreases. Although this double trap is less of an issue for companies that can pass higher costs forward, inflation also has a dampening effect on the consumer. A rise in interest rates and inflation combined with a weak consumer can lead to a weaker economy, and, in some cases, stagflation. (Learn which tools you need to manage the risk that comes with changing rates. For more, see Managing Interest Rate Risk.)

Model Risk
Model risk is the risk that the assumptions underlying economic and business models, within the economy, are wrong. When models get out of whack, the businesses that depend on those models being right get hurt. This starts a domino effect where those companies struggle or fail, and, in turn, hurt the companies depending on them and so on. The mortgage crisis of 2008-2009 was a perfect example of what happens when models, in this case a risk exposure model, are not giving a true representation of what they are supposed to be measuring.
The Bottom Line
There is no such thing as a risk-free stock or business. Although every stock faces these universal risks and additional risks specific to their business, the rewards of investing can still far outweigh them. As an investor, the best thing you can do is to know the risks before you buy in, and perhaps keep a bottle of whiskey and a stress ball nearby during periods of market turmoil.

[Black_NITE]

Behold the $MMAB BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/MMAB

[GreenReeper]

Institutional Knowledge/Research
In spite of regulations meant to level the playing field between individuals and institutions (such as Reg FD, which outlines a companys disclosure responsibilities), institutions often employ teams of seasoned industry analysts. These trained experts typically have many contacts throughout the supply chain and tend to have more frequent contact with a given companys management team than the average individual investor. (Read more about the role of Reg FD in Defining Illegal Insider Trading.)

Not surprisingly, this gives the institutional analysts a far better idea of what is going on at a company or within a given industry. In fact, it is almost impossible for the individual to ever gain the upper hand when it comes to such knowledge.
This relative lack of knowledge about future earnings potential, opportunities for growth, competitive forces, etc. can adversely impact investment results. In fact, a lack of knowledge is another major reason why many individual investors tend to underperform mutual funds over time. (You can piece together your own analysis if you have the right information. Read Do-It-Yourself Analyst Predictions to find out how.)

This is compounded by the fact that analysts can sit and wait for new information ,while the average Joe has to work and attend to other matters. This creates a lag time for individual investors, which can prevent them from getting in or out of investments at the best possible moment.

Keeping Tabs on Institutions Is Tough
Even if an individual has enough money to adequately diversify him- or herself, the willingness to hold positions for an extended period of time and the ability to accurately track and research multiple companies, it is difficult to copy the actions of most institutions.

Why? Because, unlike Berkshire Hathaway, many mutual funds buy and sell stocks with great vigor throughout a given quarter.
In fact, take T. Rowe Price as an example. According to the companys website, its Capital Opportunity Fund (which invests primarily in domestic securities) has a turnover rate of 63.5 as of July 31, 2008. Thats big. This makes positions like these are hard to mimic because even if you had access to databases that track institutional holdings the information is usually updated on a quarterly basis.

What happens in between? Frankly, those looking to mimic the institutions portfolio are left guessing, which is an extremely risky strategy, particularly in a volatile market. (Learn some ways you can keep track of institutional investment activities in Keeping An Eye On The Activities Of Insiders And Institutions.)

Trading Costs Can Be Huge, and Treatment May Vary
By definition, institutions such as mutual funds have more money to invest than the average retail investor. Perhaps not surprisingly, the fact that these funds have so much money and conduct so many trades throughout the year causes retail brokers who service these accounts to fawn over them.

Funds often receive favorable treatment. In fact, its not uncommon for some funds to be charged a penny (or in some cases a fraction of a penny) per share to sell or purchase a large block of stock – whereas individual investors will typically pay 5-10 cents per share.

In addition, even though there are rules to prevent this (and time and sales stamps that prove when certain trade tickets were entered), institutions often see their trades pushed ahead of those of retail investors. This allows them to realize more favorable entry and exit points. (ReadPatience Is A Traders Virtue and A Look At Exit Strategies for a discussion of setting entry and exit points.)

In short, the odds are that the individual, regardless of his or her wealth, will never be able to garner such preferential treatment. Therefore, even if the individual was able to match an institution in terms of holdings and diversification, the institution would probably spend fewer dollars on trades throughout the year, making its investment performance, on a net basis, better overall.
Bottom Line
While it may sound good in theory to attempt to mimic the investment style and profile of a successful institution, it is often much harder (if not impossible) to do so in practice. Institutional investors have resources and opportunities that the individual investor cannot hope to match. Retail investors may benefit more, in the long run, from an investment strategy more suited to their means.

[Black_NITE]

For thou convenience $RNDR BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/RNDR

[GreenReeper]

Rational Ignorance And Your Money

Ignorance is regarded as rational when the cost of information and finding out exceeds the benefits. This is especially true in situations where it would be a waste of time to learn about the particular issue. A classic example of this would be in general elections, where one vote really does not count much. Clearly, however, if everyone thinks this way, there is a problem, but the fact remains that rather than poring over election promises and campaigns for hours, you would do better to invest the time learning more about and managing your portfolio of assets.

The Two Faces of Investor Ignorance
In the world of money, with its countless traps, endless alternatives, conflicts of interest and shady dealers, ignorance is probably less rational than in any other context. However, investors have to contend with two associated problems, which I would term inevitable ignorance and induced ignorance.

Inevitable Ignorance
Inevitable ignorance arises because it is just not possible to know everything about your investments. Clearly, the amount known varies very substantially between investors, due to huge disparities in experience, education, the amount of time people are able and willing to devote to their money, and so on.

However, everyone is ignorant about some aspects of their own investments and of the industry. For instance, nobody knows all there is to know about every company on the New York Stock Exchange, let alone those in France, China, Brazil and the rest of the world, developed, developing and in between. Not to mention, who could possibly know about the management and future prospects of all those thousands of funds out there, ranging from equities, to bonds, to futures and options, to alternative investments and CDs? (Consider yourself a beginner? Need to brush up on the basics? Start with Why You Should Understand The Stock Market.)

Induced Ignorance
Sadly, the wheeler and dealers of the industry are fully aware of this and therefore create ignorance quite deliberately in order to sell things that people would not buy if they were fully informed. It is well documented in the marketing literature that people take advantage of rational ignorance by increasing the complexity of a decision.

The rogues in the investment industry exploit both rational and irrational ignorance by ensuring that products are either so numerous and/or available in so many combinations and permutations that buyers are overwhelmed and find it too much trouble to make an informed decision; they just take their chances and, at worst, way too much risk.

To be fair, some of this complexity is inherent to the products and markets themselves; there are a lot of people selling a lot of things that are not particularly easy to understand. People often dont like having to think and worry about money, so they leave it to others who do not always behave ethically, and who themselves may be ignorant. In the case below, we have a combination of the above factors leading to continued ignorance. (For an additional on dishonesty in the market, check out The Rise Of The Rogue Trader.)

An Information Brochure for Certificates
Precisely because of widespread financial ignorance, advisors and brokers in Germany are obliged to provide a certain type of brochure with certificates and other investments. These are along the lines of what you get with medicine, and the documents are termed just that, Beipakzettel (package brochure). Similar to what you get with pills, information is to be provided on the risks and opportunities, as well as cost and taxation implications.
A study performed in Sept. 2011, however, revealed that this measure does not help much. For starters, there are no guidelines as to who is to provide the brochures, so it usually ends up being the seller.

For the study, a tabloid newspaper article, which is generally considered very understandable, was compared to the financial product brochures for bonus or caped-bonus certificates; they were found to be barely comprehensible. The long, unfamiliar words, complex sentences and clumsy grammar left readers totally perplexed. The literature for the major banks tested varied, but overall the results were extremely poor.

Part of the problem, explained one consultant, was that the providers found themselves in a quandary. On the one hand, they had to provide sufficient information in three pages to convey the relevant issues. On the other hand, they wanted to ensure they were covered legally. This resulted in legalese formulations designed to be legally watertight, but which severely reduced the readability and comprehensibility.

The moral of the story is that even well-intentioned efforts to reduce rational investment ignorance,¬ by making it easy and rational to be informed, can easily fail. So what does this say about bad-faith attempts to sell lousy investments through a smoke screen?

The Bottom Line
In this context, the regulators really do have an important role to play, but it needs to be done better than in the above case. Banks have to resolve the legally watertight vs. readability trade-off. Somehow, they need to get the message across clearly, but without opening themselves up to legal problems.

As always, investors must find out as much as they can, including who to trust, but they also need to understand and accept the limits of what they and others can and do know, and act accordingly. It is certainly advisable to buy only what you understand or trust, but as implied above, eliminating everything you dont understand fully, may mean burying your cash in the garden, which is not a great investment either.

[Black_NITE]

For thou convenience $STEV BarChart Technical Analysis NITE-LYNX
http://www.barchart.com/technicals/stocks/STEV