Monday, July 21, 2008
Gold vs. EUR/USD
For quite some time now you have been hearing from people on TV and radio to invest in gold... They've been saying to invest in gold because out economy is in big trouble and the dollar is dropping in value... What they are saying is true, our economy is in trouble and gold is on the rise, but is gold the best option? For many people yes, but for those of you who would like a chance to make a much higher return the forex may be the better choice... With gold you get a 1:1 leverage but 200:1 with forex... Now why does this matter? Lets say you have only a few thousand to invest with, if you chose gold then $3,000 USD would buy you around 3 ounces of gold, so gold would have to go to $2000 per ounce to double your money... A $3,000 investment in the forex trading the EUR/USD, had you begun in February 2006 the market was around 1.2500 and remained in the trade until January 2008 the EUR/USD was at 1.4500... Trading only a 5% margin of your account with a 200:1 leverage you would have made $6,000 for a total account balance of $9,000... A 300% return in less than 2 years. To do that invested in gold, it would have had to climb to $3,000 per ounce... If gold goes up to $3,000 per ounce then you can bet the dollar is sinking faster than gold is rising... Along with a 200:1 leverage, you will clear a much higher return...
Lower real estate prices
As you have probably noticed we as a country have a little problem with our real estate prices, and for those of you who haven't noticed just turn on the nation news... lower real estate prices have an impact not only on the people who own them and surrounding neighbors bit on the cities and governments as well... In return affect the communities even more... When process drop in value cities collect less taxes from property taxes... property taxes are used for man things such as funding for schools, repayment of municipal bonds, employing police and firemen, etc... Now when these items are poorly funded it impacts the community’s safety, children's learning and even pushes property values even lower... Businesses who would have liked to open a business there will rethink that city as being an option and open elsewhere... So what do these cities have to do? Well, they have two options and usually they do both, either raise taxes or ask the federal government for help... Giving that the value of the dollar is linked directly to our government being able to collect taxes, lower real estate is sinking our dollar even lower...
Impact of foreclosures on the dollar
Every time a foreclosure happens which is now around 1 in every 65 people, governments lose money... They lose money in the form of taxes because when lenders foreclose on homeowners they do not pay the property taxes on that property... Instead they will attempt to sale the property to another buyer whom will begin paying the property taxes again... these lenders are required to file with the county clerks office when they foreclose but they rarely do so the county usually don't find out until it's too late to do anything about it... A city in Ohio has lost so much money in taxes from lender foreclosing and not paying taxes they decided to file suit on these lenders... Many times a homeowner will have to do a short sale or the lender will foreclose and the home for less than what the homeowner owed... The lender just writes this off as a loss to the IRS and it goes as "income" to the homeowner on their 1040... The homeowner obviously unable to pay the additional thousands in income taxes so the IRS allows them to file a hardship form to waive the amount... So the IRS takes the hit from tax collection... and as I’ve already stated the dollar or an country's currency is tied right to that country's ability to collect taxes...
Foreclosures
Right now there are 14mm subprime loans in America... Many of which are (ARMS) adjustable rate mortgage that the interest rate will adjust up in the very near future... Mortgage companies are primarily the ones at fault here for selling these products to financially ignorant clients, in order to make commissions and profits... the reason they chose to use an arm instead of a 15 or 30 year loan is to get the buyers into a higher priced home, a home they had no business buying in the first place... The majority of these buyers could hardly afford to pay their note before the arm adjusts higher, so it's only a matter of time before they foreclose n their home... This is exactly what the lenders want, yes what they want!!! Why you may ask? because of out lovely equities markets allowing lenders to package these notes together and sale them on the open market as mortgage backed securities after selling the note back and forth to other lenders to leave a confusing trail to anyone wishing to look... it is such a profitable thing to do that lenders have even illegally foreclosed on homeowners who have never missed a payment, and many even over paid their mortgage... This is not just a rare occurrence either, after visiting a website www.msfraud.org I noticed this is happening all over the country in mind boggling numbers... These lenders know that no one will believe these foreclosure victims that they have had their home stolen from such a recognized company that the courts won't help these people... Our legal system is not trained to see the difference between companies that stole $50,000 than a bank robber that just walked out the bank with $50,000... There are numerous laws on the books already to protect homeowners but the courts seem to only look at things as they appear to be and not as they are... The media rarely run these stories as they are proven to be instead they run the story only to protect their advertising revenue by the lenders who spend millions at their paper or station... There are many other issues with mortgage servicing fraud and to find out more log onto www.msfraud.org...
In a country as powerful as the United States we should not have these types of problems, but we are and it proves we have a weak infrastructure... Without fixing out court system and punishing white collar crooks for what they do you can watch the impacts it has on our economy and people's moral... That all said, what impact will it have on the dollar?
In a country as powerful as the United States we should not have these types of problems, but we are and it proves we have a weak infrastructure... Without fixing out court system and punishing white collar crooks for what they do you can watch the impacts it has on our economy and people's moral... That all said, what impact will it have on the dollar?
China exporting inflation vs. deflation
It seems like almost every product we buy today is made in China... Because this product is purchased from China, they have become a much wealthier country... China's stock market climbed by an estimate of 92% in 2007... With China's recent growth of their economy their products we buy are costing us more due to costing them more... where as before it was becoming cheaper as their productivity grew, but after a while inflation began to take over... So now China is exporting inflation instead of deflation, meaning that the products we buy from china are costing us more now too... so at some point with shipping cost and companies paying "bribe" money to the Chinese government it will cause American companies to raise their prices to the same level as if it was made right here, but without Americans being paid wages to make it... But these companies have spent billions already in order to make product there so they will not likely return to American made products... This is another cause of inflation in America which will cause the dollar to be worth less.
Friday, January 11, 2008
Profiting With A Falling Dollar
Everywhere you turn there are signs showing the dollar is going down in value. Products our stronger dollar could buy much cheaper are now costing much more. It takes a few more of our greenbacks to buy that same lead painted toy from China, or that barrel of thick goo that we put in our imported cars from Japan as we fill up our tanks and nearly choke on our $4 lattes.
Since our country is no longer able to make decent products anymore, we have no choice but to import them from somewhere. While other economies are flourishing from our purchases they still have to convert our dollars to a local currency.
That being said, most people are suffering from higher priced products yet the rich just keep getting richer. As market conditions change so does the rich investment strategy.
The average person has one investment strategy: invest, hold and pray. The rich see every market change as the time to change investment strategy. When they see oil prices going up, they invest in oil stock; when the dollar drops they buy into the Euro or another currency.
For example: In February 2006 the Euro/Dollar (EUR/USD) was around 1.2400; as of January 2008 it sits around 1.4800. For someone with a standard account with $20,000 invested, a single standard lot of $1,000 in a trade (or 5% of their account margin) with a 100:1 leverage would have made $24,000 in profit, boosting their total account value to $44,000.
A little over 100% return in just 2 years isn't too bad for a single trade. The people with a Certificate of Deposit only earned around 5%, not to mention the high number of folks with mutual funds who took a loss. I wonder how many people lost 15%-25% of their mutual funds. On another note, the higher oil prices go, the farther the dollar sinks against the Canadian dollar. The lower oil prices go, the more the dollar gains on the Canadian dollar. On extreme days I have seen the USD/CAD move by 300 pips in a 24 hour period. That means a 15-30% return in a single day.
To answer the question of what to do with a falling dollar, simply trade against it. Take the time to learn the Forex market because you will lose money as quickly as you make money if you don't.
Since our country is no longer able to make decent products anymore, we have no choice but to import them from somewhere. While other economies are flourishing from our purchases they still have to convert our dollars to a local currency.
That being said, most people are suffering from higher priced products yet the rich just keep getting richer. As market conditions change so does the rich investment strategy.
The average person has one investment strategy: invest, hold and pray. The rich see every market change as the time to change investment strategy. When they see oil prices going up, they invest in oil stock; when the dollar drops they buy into the Euro or another currency.
For example: In February 2006 the Euro/Dollar (EUR/USD) was around 1.2400; as of January 2008 it sits around 1.4800. For someone with a standard account with $20,000 invested, a single standard lot of $1,000 in a trade (or 5% of their account margin) with a 100:1 leverage would have made $24,000 in profit, boosting their total account value to $44,000.
A little over 100% return in just 2 years isn't too bad for a single trade. The people with a Certificate of Deposit only earned around 5%, not to mention the high number of folks with mutual funds who took a loss. I wonder how many people lost 15%-25% of their mutual funds. On another note, the higher oil prices go, the farther the dollar sinks against the Canadian dollar. The lower oil prices go, the more the dollar gains on the Canadian dollar. On extreme days I have seen the USD/CAD move by 300 pips in a 24 hour period. That means a 15-30% return in a single day.
To answer the question of what to do with a falling dollar, simply trade against it. Take the time to learn the Forex market because you will lose money as quickly as you make money if you don't.
Tuesday, December 11, 2007
Dumbing Down America
Over the last several years main stream media has been fooling Americans into believing investments like CD's, money market accounts and 401ks are the best they could ever hope for. They have convinced people that a 5% CD or a 12% mutual fund is the best percentage rate available. Every once in a while the media runs a story about a "lucky" or "genius" investor who made a fortune with commodities, currency, or stocks and bonds. The media wants you to believe those people were special.
Guess what? Most of those people are just like you and I. Average, ordinary people who believed they could make more and became a student of the markets. What's more is there are countless individuals making huge profits trading the markets. Most of these people have little or no college education; they just studied the market they traded.
By attending trading events throughout the country I've met an astounding amount of people who have made over 100% a year and many that have even made 1,000% a year. I've even met a trader who made over 25,000% in three years.
Yet the media never talks about the high number of successful traders; they choose to focus you in on just the unsuccessful traders.
The successful ones are always "lucky" or "genius", suggesting profit in the markets is near impossible for the average Jane and the average Joe.
So, what about hedge funds and mutual funds?
The SEC has made it illegal for a hedge fund to speak about their fund to anyone who is not an accredited investor. So, all the media ever talks about is the small figure of hedge funds that lose money overall. This only keeps investors in the dark, unable to scope both sides of the story. In reality only five percent of hedge funds lose money, meanwhile over 40% of mutual funds lose money.
Mutual funds have only one direction they can trade the market: up. Hedge funds on the other hand can profit from the market moving down or upward. The media makes people believe the market is a scary place. What an eye-opener it was for me to find out the real success people have had with trading.
The Forex Markets
Europeans have been trading currency for over 200 years. Yet America was just deregulated in 1997 for speculators despite the fact that American banks have been trading currency in since the 1970's.
Did you know countless Fortune 500 companies make more money in Forex than the business that made them household names? Take a look at the financial statements available on their websites. Why is trading currency good enough for them but not for the "average" people like you and I? Because it cuts into their pocketbooks.
If you knew where to get 5% every month instead of 5% every year, do you think you would put your money with them? No, of course not!
You as an individual have the ability right now to make 5% profit every month in the market. You have to take the time to learn how and which markets the biggest profits are in. It takes time to learn but it's worth it. If you're unable or unwilling to spend the time to invest in your knowledge then investing mainstream is your best option.
I think it's safe to say most of you are like myself. Why invest your money gaining 5% annually when much better is readily available?
Guess what? Most of those people are just like you and I. Average, ordinary people who believed they could make more and became a student of the markets. What's more is there are countless individuals making huge profits trading the markets. Most of these people have little or no college education; they just studied the market they traded.
By attending trading events throughout the country I've met an astounding amount of people who have made over 100% a year and many that have even made 1,000% a year. I've even met a trader who made over 25,000% in three years.
Yet the media never talks about the high number of successful traders; they choose to focus you in on just the unsuccessful traders.
The successful ones are always "lucky" or "genius", suggesting profit in the markets is near impossible for the average Jane and the average Joe.
So, what about hedge funds and mutual funds?
The SEC has made it illegal for a hedge fund to speak about their fund to anyone who is not an accredited investor. So, all the media ever talks about is the small figure of hedge funds that lose money overall. This only keeps investors in the dark, unable to scope both sides of the story. In reality only five percent of hedge funds lose money, meanwhile over 40% of mutual funds lose money.
Mutual funds have only one direction they can trade the market: up. Hedge funds on the other hand can profit from the market moving down or upward. The media makes people believe the market is a scary place. What an eye-opener it was for me to find out the real success people have had with trading.
The Forex Markets
Europeans have been trading currency for over 200 years. Yet America was just deregulated in 1997 for speculators despite the fact that American banks have been trading currency in since the 1970's.
Did you know countless Fortune 500 companies make more money in Forex than the business that made them household names? Take a look at the financial statements available on their websites. Why is trading currency good enough for them but not for the "average" people like you and I? Because it cuts into their pocketbooks.
If you knew where to get 5% every month instead of 5% every year, do you think you would put your money with them? No, of course not!
You as an individual have the ability right now to make 5% profit every month in the market. You have to take the time to learn how and which markets the biggest profits are in. It takes time to learn but it's worth it. If you're unable or unwilling to spend the time to invest in your knowledge then investing mainstream is your best option.
I think it's safe to say most of you are like myself. Why invest your money gaining 5% annually when much better is readily available?
Subscribe to:
Posts (Atom)