Help Bankruptcy Blog

With global markets increasingly open to investors, and electronic media capable of providing up-to-the minute reports on what’s happening around the world, investors appetites are being meet with a steady stream of information. The performances of 16 of the worlds major global stock exchanges are reported daily in the wall street journal.

The daily numbers on a particular exchange have meaning only in relation to what has happened on the exchange in the past. Take for example, the Nikkei index only reports what happened in that market; it is unrelated to Frankfurt’s, Paris’s, and Singapore’s. the worldwide stock market performance can be compared by looking at the percentage change. Political and economic situations here at home have a major influence on stock performance, despite what’s happening in the world at large.

Financial analysts tend to evaluate overseas markets from a top down perspective, focusing on a country’s or a regions financial environment rather than the prospects of individual companies. Among the factors that make a country’s stock look attractive to investors are the underlying strength and stability of economy, the value of its currency and its current interest rate.

Growing economies, strengthening currencies and flat or falling interest rates are good indicators of economic growth. Countries with currencies that are week, with high interest rates, and economies that are in recession don’t tend to attract equity investors. The Wall Street Journal regularly tracks foreign markets in comparison with the Dow Jones Industrial Average.

Some of the most actively traded stocks on foreign exchanges are listed in the Foreign Markets column daily. Their closing prices and previous close are listed in local currency. many of the corporations whose stocks are listed in their home country’s exchanges are also traded on U.S. exchanges or over-the-counter as ADRs or as U.S. subsidiary companies.

Since foreign market prices are quoted in different currencies and the markets are influenced by different forces, there’s no easy formula to compare the yields on international investments. However the stock market performances around the globe are increasingly interrelated, so that a boom or bust in one market will affect what happens in all of the markets.

The value of a bond is determined by the interest that it pay along with the state of the economy. A bonds interest rate will never change even though other interest rates do. If the bond happens to be paying more interest than is available elsewhere, investors are willing to pay more to own it. If the bond is paying less the reverse happens. Interest rates and bond prices fluctuate like two sides of a seesaw. When interest rates drop, the value of a bond usually goes up. When rates climb the value of an existing bond usually drops. Several factors such as a bonds yield and return will affect whether or not a bond turns out to be a good investment.

If a bond investor buys a bond at par, and then holds it to maturity. The longer the maturity of the bond, the greater the risk that at some point inflation will rise dramatically and reduce the value of the dollar that the investor is repaid. If a bond pay more than the rate of inflation, the investor will come out a head. However many bonds, particularly those that have a maturity of five or more years, aren’t held by one investor from the date of issue to the date of maturity. Investors will trade bonds in the secondary market. In the secondary market the prices of the bonds will fluctuate according to the interest that the bond pays, the degree of certainty of repayment and the overall economic conditions, especially the rate off inflation, which influences interest rates.

Yield is the amount of money that you will actually earn on a bond. If you purchase a ten year bond for $1,000.00 dollars that is paying 6% interest, and then you hold on to it until it matures, you will have earned $60.00 dollars, for ten years at the same interest rate. However if you purchase a bond in the secondary market, after the date of issue, the bonds yield might not be the same as its interest rate. This happens because the interest rate stays the same, but the price that you pay may vary, changing the yield.

Most bond charts express current yield as a percentage. Investors use the yield to compare the relative value of bonds. The return is what you make on the investment when the par value of the bond, and profit or loss from trading it, and the yield are computed.

Traders who experience poor results do so usually because they either use a flawed trading system, or don’t use one at all. Other factors that can contribute to poor results include risky assumptions, shoddy risk management, lack of organisation, and ineffective management tools.

The bottom line is that successful trading is system based, and the biggest challenge for most traders is keeping track of the numbers.

Most professional traders use portfolio management software programs. The leading such software used in Australia is called MAUS StockMarket Plus. It provides the facility for traders to not only enter and track their stock investments, but also their managed funds, warrants, options, and CFD’s.

It then allows you to generate comprehensive reports which will assist you in identifying whether there is any flaw with the logic in the system you are following, whether that system is viable for your given market, and therefore will help you to decide whether to continue to trade with it.

The success or failure of a trading strategy rest both on the trader’s capability to see the big picture and as well as the fine detail in the numbers that are necessary for him to make trading decisions.

Making use of a high end Portfolio Management Program reduces the chance of you making bad decisions based upon greed, fear, lack of organisation, or a poor trading system.

Further information on the two leading portfolio management software solutions in use in Australia is available from the Stock Market Tools page on the FinanciallyFree.com.au website.

Meanwhile the jury is still out on how well Fidelity Mutual Funds recent advertisements involving Paul McCartney will be received, its becoming a fact of life for advertisers to hit baby boomers with memories of days gone by. Many years ago, Cadillac featured Led Zepplin songs in a bid to not only seem “cooler”, but to appeal to the largest demographic in America.

Various larger investment firms such as Oppenheimer or American Funds have not jumped on the fame sales pitch band wagon yet. The truth is, there is no direct evidence that baby boomers or any demographic responds positively to pitches by celebrities. Nike and Michael Jordan, U2 and iPod are 2 recent examples of big names lending their names behind well known products. However, there has been no clear increase in sales as a result of this merger of names. So while both enjoy the publicity the endorsements provide, neither really turns out to be the big winner.

Its not lost on a baby boomer that they are well past their youth when they hear music from their past. However, do you think they would head to their local Cadillac dealership just because the car maker brought out the Led? Or, do you think people decided to select Fidelity given Paul’s ad reminding them they need to save for retirement? Not likely.

One of the messes many people find themselves in today in managing personal finance is the tyranny brought about by the flood of so called subprime mortgage loans made to home buyers in 2004 and subsequent years. These loans were made to people who otherwise would not qualify by reason of poor credit or insufficient income for more conventional borrowing.

Among the most aggravated problems are those presented by negative amortization mortgages. These are loans that appeared to offer an opportunity to get into a home with attractively low monthly payments to begin with. They were pushed, in many cases, by predatory lenders.

Recently, I spoke with friends who confided in me that their monthly payment of about $2,500 was about to increase to over $6,000. Much of the equity in their home had been eaten up by the negative amortization, since the housing market in their area had slumped. Desperate, they were able to obtain a 10 year interest only loan to refinance increasing their monthly payment to about $4,000.

They were fortunate. Many who are facing this delemma are actually at risk of foreclosure or bankruptcy. Of course, the new bankruptcy laws do not make this option as simple as it once was.

In the first quarter of 2007, one out of every 41 subprime loans went into foreclosure and one in six were delinquent. This is staggering, but not surprising given the example experienced by my friend. It’s likely that this trend will get worse.

We hope you have derived something useful in reading about Home Equity .