Students Of Success

FOREX, the term for the FOReign EXchange market, is an international exchange market where currencies from many different countries are bought and sold. Both long-term hedge investors and short-term investors that seek quick profits use FOREX. Trade reaches between 1 and 1.5 trillion US dollars per day. Needless to say, FOREX is a very lucrative market. Many wonder how to gain the most profits by trading with FOREX. There are a few simple trade practices that can help any trader, either an amateur or a professional make significant profit from FOREX.

The best traders firstly understand the intricacies of FOREX trading. In order to be successful, one must understand how FOREX works. FOREX transactions are not centered in an exchange, unlike the stock market. Many transactions can take place at different times all over the world. This is important to note if one is going to invest in FOREX. In order to trade, one must simply find a trader (there are many around the world, some can even be found online), decide the currency to purchase, sell currency, and make profit. However, if FOREX was this simple, everyone would do it. In reality, most people have to gamble with FOREX because no currency is completely stable, and there is always the risk for losing money.

One of the best FOREX practices, but also the most potential hazardous is marginal trading. Marginal trading is when an investor speculates on currency prices by getting a credit line. This can lead to a vast gain, as well as a potential loss. Because FOREX can be traded without real money, trading with borrowed capital (marginal trading) can be very appealing. Using this techniques, an investor can invest more money without having to deal with as many money transfer costs. Marginal trading also allows bigger positions to be opened with a smaller amount of actual capital. This trading practice is certainly for the short-term investor.

The best long-term practices with FOREX are Technical Analysis and Fundamental Analysis. It is a good idea for small and medium sized investors to invest in technical analysis. Technical Analysis assumes that all information about the market and future fluctuations of a currency can be found in the price chain. In other words, technical analysis involves looking at the past events in the market and assuming that these trends will continue. This is a very good strategy because, quite simply, history has a habit of repeating itself. This is also safer because it entails less guesswork than marginal trading, since the investor assumes that history will continue and therefore makes a safe investment in a strong currency that seems likely to continue a positive trend.

Fundamental Analysis is the process of considering the current situation of the country of the currency. Elements such as a countries economy, political situation, and future must all be taken into account in Fundamental Analysis. Investors then make investments based upon this knowledge. The best investors not only analysis a countries current situation, but the rest of the world’s interpretation of that country. Like any stock market, the value of the commodity is not merely based on exact numbers, but on perceptions of that commodity. If a country is believed to be on a positive path economically, than it’s currency will do well in FOREX.

FOREX can be a potentially lucrative investment. However, the success of FOREX trading depends on the practices and knowledge of the investor. It is important for any investor to analyze the market and determine what exactly he or she wants to achieve in investing. Long-term gains and short-term gains require different strategies. The best investors are always well informed about the market, the world economy and have the best traders available. If one follows these practices, FOREX will certainly prove to be a very rewarding investment.

Diane McDee is a knowledgeable investor and contributes to the Forex Blog ( http://www.forexblog.org ).

Everything is green again today - people are buying but it’s a slow crawl back to profitability. But we’re no where near where we were before.

This is called a dead cat bounce. As soon as we get high enough, people will be planning to sell and that will cause another fall.

Also, investors are cautious. Just watch a good mining stock and see how slowly it is crawling up. What does that tell you?

Plus all the normal data points to increased inflation, higher interest rates and decreased demand…so I think we’re in Bear territory, though it is still possible to make money with volatility.

What is interesting is that all this activity in no way is reflective of how well a company is performing. It’s all macro stuff. A firm could be doing all the right things but it’s share price is going to follow the tide: take Carphone Warehouse…growing, innovative, good management, an ambitious owner, graph tending up..but the daily activity / troughs / peaks all mirror the macro tide.

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Very often when the market is going through fast up and down movements where a big down day is followed by a big up day, it gets confusing as to what exactly to do with some of your stocks. For instance let’s say you buy something today and by the close it is up a few dollars. Do you hang on to it and “hope” that tomorrow brings more? Do you sell it figuring that “a bird in the hand is worth two in the bush?” Well no matter what you have read in your travels through different financial sites, the answer is: There is no good answer. How many times have you been up a few dollars just to see the futures red the next day and you open lower than where you bought? A lot I’d bet. Similarly, how many times have you dumped out with your 3 dollar gain only to see the stock go for 3 more the next day? A lot I’d also venture to guess!

In reality, it is only “safe” to hang on to a position when the overall market is in a full blown trend. But as we know those have not been coming very often. So just what can we do about daily ups and downs? Well one thing is you can do is base some of your judgement on “support levels” and that will certainly help. For instance if you bought XYZ for 100 and it went to 104 for you. If 100 was a recent support, you could feel fairly safe that at worst it should only come back to that support. But if it does, that wipes out your profit doesn’t it? Yup.

The next logical thing of course is to put in your “trailing stop” where you
would maybe put in a stop order to sell it if it goes down to, say 102. That
will help, but again, if the next day the overall market is in a pout, it may
open lower than that. That isn’t very attractive either.

I have found over the years that one way to keep yourself in the play without
giving up all your “potential” is the “taking of half” concept. The idea isn’t very profound, it is just one that has helped me over the years. The idea is simply this: At the end of a day, if you are up nicely on a position, sell half of it at the close. Remember folks, I am talking about a choppy market where you really don’t have much clue as to whether the market can still keep going or if it was a one day move.

So lets look at our example above. If we bought XYZ at 100 and it went to 104, let’s say we had 500 shares. If we sell half of
it, that is 250 X 4 dollars per share profit = $1,000 profit. But, we still own 250 shares. So if XYZ goes up another couple dollars the next day, we just made another 500 dollars. At that point we could sell another half and lock in that profit, or “let it ride” so to speak. But the best part of the idea is this, you never get cheated out of a profit.

Let’s say on day one XYZ goes from 100 to 104 and you sell your half. (250) shares. That got us a 1K dollar profit. But let’s say the next day XYZ doesn’t go up, but instead opens at 102 and heads straight down. We can sell out at our original price of 100 and our profit is still secure. We could even let it fall past our original buy point by a little bit if we still had faith in the stock, and we still wouldn’t be in a “losing position”. (don’t forget we still have a one thousand dollar profit, so we “could” let XYZ fall down to 96 before the entire trade becomes a loser)

Even when the overall market is going through all kinds of up and down contortions, there are stocks that are heading up. If you happen to be lucky enough to be in one of them, try using the principle of “selling half” near the end of the day and you will have already “locked in” a guaranteed profit. If the market goes up the next day, you are still in the play, if it heads down, you can sell out your other half and still have a tidy profit on your hands. I find this works really well whether you are doing 200 share trades or 1000 share trades, stocks or options. When times are tough, give this a shot, you won’t be disappointed!

For more tips:

http://lb.bcentral.com/ex/manage/subscriberprefs?customerid=12826

One day back in 1985, I received an unexpected phone call at my office from a man named Gordon Carl (not his real name – but whose real name I’ll never forget). The thing that initially struck me the most about the polished Mr. Carl was his heavy New York accent, like something you might hear in a gangster movie. The purpose of his call: to offer me a “great deal” in rare coins. As a result of that conversation, I agreed to purchase five 1943 Walking Liberty half dollars Mr. Carl described as MS-65 specimens. Furthermore, he guaranteed that his firm would buy the coins back from me at any time of my choosing, paying 5% less than the “Grey Sheet” bid price. As an unmarried “yuppie” (now there’s a word you don’t hear much anymore), I calculated that I could afford the $1375 required to make the purchase. Perhaps more than anything, greed clouded my judgment, and like a fool, I trusted Mr. Carl and dropped a check in the mail the next day.

Later in 1985, Mr. Carl’s company changed names. Rather than interpreting this as a flashing red warning signal, I eagerly sought to add more coins to my portfolio. Being a gregarious sort of fellow, I attempted to establish a friendly rapport with Mr. Carl and his associates. Looking back after all these years, what has irritated me perhaps more than anything is how this shyster must have smirked every time he heard my voice, for what a gullible, willing dupe I was.

In 1989, I decided it was time to cash in my coins, so I called Mr. Carl. Not surprisingly, the company was operating under yet another name. I couldn’t get through to Mr. Carl, but ended up talking to his brother, Maurice, with whom I had never spoken. I informed him that I wanted to liquidate my Walking Liberty half dollars in accordance with the buy-back policy under which I had purchased them. Much to my disgust, he coldly declined, indicating his organization was not affiliated with those earlier companies, and was under no obligation whatsoever. In fact, he insinuated that he had never even heard of these outfits before, despite the fact that his brother, Gordon, factored prominently in these businesses. At that moment, the fog was finally lifted from my eyes: I had been scammed! Not knowing what else to do, I politely said goodbye, and hung up. I sat there, staring at the phone for what seemed like an eternity, in stunned disbelief.

Several days later, I took my 1943 Walkers to a local coin dealer, the first step in submitting them to a third party grading service. I didn’t expect them to grade out as MS-65, but if they came back as MS-60 or MS-63, I could at least begin there to cut my losses. The dealer studied a couple of the coins closely under magnification, and then sadly declared the coins were damaged due to improper cleaning. He advised me not to have them professionally graded, because the cost of grading probably exceeded the value of the coins. With few options left, I put the tainted Walkers in storage, vowing never to repeat this experience.

Let’s now flash forward to the present time. Normally, I don’t like antagonizing myself, so it was with some reluctance that I fired up the computer to play the game “What If?” That is, what if I had spent my $1375 with a reputable dealer in 1985 to purchase Walking Liberty half dollars? What kind of value increases would I be enjoying today had I been smarter back then? To answer this question, I first retrieved the historic value trend tables I researched in late 2005 for Walking Liberty half dollars. For each date, mintmark, and condition, I noted their values in 1985, and placed them next to their corresponding values in 2005, for a “before and after” comparison. In all, there were about 450 such comparisons. Next, I calculated an annual compounded percentage return rate for each data pair, and sorted them from highest to lowest. I then listed the top 20 for closer examination:

Date………..Condition……..1985 Value……..2005 Value……..Annual ROR

1917-D Obv….MS-65……….…..$3000……………..$27500………….…..11.13%
1921-S…………F-12……….…….$30.00……..…….…..$250………….…..10.62%
1919-D…….…..MS-65…………$15000…………..$115000……….…….10.19%
1917-S Obv….MS-65……………$5250……….…….$35000………………..9.45%
1918-S…………MS-65……………$3000………..……$17500………………..8.76%
1916-S…….…..VG-8………..…..$30.00………….……..$150…………….…..7.97%
1917-S Rev…. MS-65……….…..$3500……………..$17500………………..7.97%
1921-S…….…..VF-20………….…..$200…………..…..$1000…………..…..7.97%
1921-S…….…..XF-40…………….$1000…………..…..$5000………….…..7.97%
1921-S…….…..MS-65……..…..$22500…………..$110000…………..…..7.85%
1918-D…….…..F-12………………..$8.50……………..$40.00…………..…..7.65%
1918-D…….…..MS-65……………$5500…………….$25000…………..…..7.48%
1921-S…………VG-8…………….$17.50………….…..$75.00…………..…..7.18%
1921-D…….…..MS-65……….…..$6500………..…..$27500…………..…..7.11%
1916-D…….…..VG-8………..…..$12.50………………$50.00…………..…..6.82%
1938-D…….…..F-12……………..$25.00………………….$100…………..…..6.82%
1938-D…………VG-8………..…..$20.00………….…..$80.00…………..…..6.82%
1920-S…………MS-65……….…..$3750……………..$15000………………..6.82%
1917-D Rev….VF-20……….…..$45.00…………….…..$175…………..…..6.68%
1938-D…………VF-20……….…..$32.50…………….…..$125………..……..6.62%

The Walker with the best return since 1985 is the 1917-D (MM on Obverse) in MS-65 condition. At $3000, it was well beyond the $1375 available to me to spend on numismatics in 1985, as were all nine MS-65 coins appearing on the above Top 20 list. However, the remainder of the Top 20 represented coins in circulated grades, and all were within my price range. Had I directed my hard-earned cash toward the purchase of a legitimate example of each of these coins, I would have spent $1421, just barely above what I forked over to Mr. Carl. Today, those same Walking Liberty halves are cumulatively worth more than $7000. In pure financial terms, this increase computes to an annual compounded return rate of nearly 8.00%. If only I had known then…

Take note that all 11 of the Walkers that I wish I had added to my collection in 1985 are recognized as key and semi-key dates in the Walking Liberty half dollar series. The fact that they are for well-circulated specimens (typically not the object of affection for promoters and speculators) suggests that what has propelled these coins to ever-increasing heights over the years is fueled by consistent collector demand. We can expect to see similar patterns in the future. If I were to conduct this same study in the year 2025, comparing retail values then to what they were in the year 2005, the Top 20 would probably strongly resemble the Top 20 in 2005.

What became of the 1943 Walking Liberty half dollars Mr. Carl suckered me into buying? Well, I still have them, squirreled away in a bank deposit box. I haven’t even looked at them in a decade or so. As I was writing the final words of this article, it finally dawned on me to ask one more question: how would my investment have performed had these been bona-fide MS-65 specimens? Taking the same body of data used to derive the Top 20 above, I started thumbing down the list… going down, down, and down some more. Finally, I came across the 1943 in MS-65 condition, on line 419. The annual rate of return of this coin since 1985 is a dismal -2.13%. That’s a NEGATIVE 2.13%. Ironically, even had Mr. Carl been an honest businessman, it still would have been a lousy investment for me.

There are two lessons to be learned here: (1) If interested in seeing your coins increase substantially in value in the years ahead, purchase coins that have already demonstrated a long record of consistent price advancements, which usually are the key and semi-key dates for a given series, and (2) Deal only with reputable people.

So what ever happened to the slimy Mr. Carl and his band of thieves? Well, perhaps there is some justice in this world, after all. In late 1989, about the time I discovered I was being victimized, the United States Postal Inspection Service began an undercover sting operation of the company. Apparently, I wasn’t the only unhappy customer, but my losses were minimal compared to the sums bilked out of others. In February, 1991, postal agents stormed the “boiler room” outfit, executing a federal search warrant based on a complaint involving the alleged fraudulent selling of coins through the mail. Mr. Carl and others were arrested and led away in handcuffs.

Postal authorities publicized that anyone with grievances against the company was encouraged to contact them, to help bolster their case against the defendants. Since I kept meticulous records, I had no trouble assembling incriminating documents and forwarded everything to the Inspector’s office, tied together by my personal story. I never heard exactly how the case was resolved, but it seems almost certain these crooked telemarketers got what they deserved. As for me, I won a small measure of satisfaction, knowing that I provided evidence to help expose them. Now, if I could just figure out what to do with those defiled 1943 Walkers…

Daniel J. Goevert is the webmaster of US Coin Values
Advisor, specializing in coin value trends and listing bullish US coins. The site also includes detailed coin collecting advice and an illustrated history of the US Mint.

As I mentioned in my last message, if the support line of your mutual fund or your stock is broken, beware! This is a very clear signal you should be hedging your position, and perhaps consider selling a portion (or maybe even the entire) position. Breaking the support line is the ultimate sign that supply is now clearly in command. Your principal is now at risk.

Too much supply, and not enough demand, will bring lower prices. That is not my theory.

That is an economic law.

Summer 2003: Krispy Kreme is on the cover of a major financial magazine as “the hottest brand in America” and the only Krispy Kreme store in New Jersey opened. People had lined up overnight to buy their doughnuts at this store! But sell signals began to appear.

Do you remember the very first time the company missed their quarterly earnings forecast? They explained it away on the “low-carb diet” fad!

By the time the real story broke the next year, about some very real accounting issues, the stock had already been sliced in half.

The support line had been broken back in March 2004, at 34. This week, as they closed the New Jersey shop and carried away all the signs and equipment, the stock is just $6.00.

Maybe this is too dramatic an example.

Take a look at a big blue chip, widely held stock. Merck broke through it’s support line in August 2003 at $52. Since then, it has dropped to the mid 20’s. It now flirts with $30.

Regarding Merck, keep in mind that Vioxx was withdrawn in September 2004. But the stock broke support a year earlier in August, 2003. How did the market know? Maybe it did, maybe it didn’t. But by the time the Vioxx story broke, in late summer 2004, supply was firmly in control. No demand whatsoever to prop it up. The stock dropped even further, from $44 to the mid 30’s on the Vioxx withdrawal.

Hey, Merck is a fine company with GREAT fundamentals. The stock has struggled for lots of reasons. All of which is unimportant.

Remember, Wall Street is a huge voting machine. Crowds are often wiser than individuals and their opinions. So stocks like Merck can have terrific fundamentals…and yet their stock can be sliced in half.

And we can see it, LIVE, when stocks break the support line.

From my perspective, as your advisor, I have a tough job. I’ll call you, seemingly out of the blue, and tell you we need to get defensive with (or maybe even sell) company XYZ’s stock.

It could be a stock you’ve owned for years. It might be the single biggest investment you hold. Maybe you inherited the stock from your parents, or perhaps you even worked there, or know someone who works there.

Regardless, when a stock breaks through the support line,
it is a major red flag and should not be ignored.

We often don’t know the reason for the decline, and may not know for some time. There may not even be a news story about it. But we know that supply has taken over and lower prices often follow. And since it is my job to protect what you’ve worked hard to get, we sometimes have to make tough decisions. Without all the answers. If we waited for the news with stocks like Krispy Kreme and Merck, we’d be in serious trouble.

Thomas P. Mullooly, President of Mullooly Asset Management, LLC (http://www.mullooly.net) has spent over twenty years in the investment industry, as a broker and as an investment advisor. Feel free to contact us to check out the relative strength of your portfolio by sending an email to tom@mullooly.net or visiting http://www.mullooly.net/403b-plan.html or sign up to receive the market report and tips on how you can soundly invest your money at http://www.mullooly.net.

It’s always wise to have an idea of what type of property you’re
looking for when considering an investment and this article
outlines 8 of the different factors to consider when researching
specific locations.

1. Infrastructure

It’s important to consider a town’s infrastructure when looking
for an investment property, especially in terms of what future
investment is to be made in that area.

Local Authorities and Councils will have an annual budget for
both the maintenance of current infrastructure and also for the
construction of new infrastructure projects. Finding out how
much the annual budget is and future investment will give you an
idea of how proactive the authority is in attracting new
residents, extra funding and business opportunities.

Most councils will be happy to provide most of the information
and a lot of it will appear on their websites. Also look at the
websites of local big businesses to get information on their
future plans which will attract investment and create new jobs
in the area.

2. Proximity to Amenities

In most cases, the main purpose in buying an investment property
is to attract tenants who will pay a weekly or monthly rent.

It’s important to know what type of tenants you are looking to
attract and so any potential investment property will need to be
close to the amenities required by the tenants. A city worker
will want to rent a property close to shops and transport
whereas a farmer will have different requirements.

Most properties in close proximity to the town will rent fairly
easily compared to those which are a 15 minute drive outside of
the town. Properties close to the town will also attract tenants
who don’t have their own transport.

So it’s best to know what your tenants requirements will be
before you purchase.

3. Local Employers

It will always be easier to find tenants in towns where there
are large employers in the vicinity. These include factories,
large shopping malls, hospitals and universities.

With hospitals, many of the employees may be employed on a
temporary basis and so owning or buying their own property in
the area may not be a choice for them and renting is the easier
option. Also, in the case of universities, a lot of the students
will come from out of town and so renting is again the best
option. This offers them more flexibility however it also means
that your investment property could be vacant during certain
months of the year and may switch tenants on a regular basis.

Again, be sure to research the future plans of these employers.
If a major employer is due to shutdown or relocate in the near
future then there will be a glut of empty properties with
landlords doing whatever they can to fill them including
drastically reducing the rent.

4. Geographic Location

This will determine both the type of tenant you get and also how
easy your investment property will be to rent out.

Holiday properties near the ski fields will command a higher
rent than a property in the city however it may only rent out
for a few weeks per year. A beach house will also be in the same
position. Again, it’s important to understand the type of
tenants in the area, what they are looking for, how much they
are willing to spend, etc.

A beach house may command a high rent but may only attract
retirees who are willing to pay top dollar and so this narrows
the number of potential tenants. Properties closer to cities and
amenities will likely attract a higher number of tenants willing
to pay a lower weekly rent.

5. Demographics

Spend time understanding the demographics of the areas
population and you will have a better idea of the type of tenant
you can expect.

Find out the populations’ average salary, the different age
brackets, percentage of those married and single and the
percentage of the population that rent.

The demographic information will show if the town’s population
has been growing or declining over the past number of years and
therefore if an investment is a safe bet. It will give you an
idea of the earning capacity of tenants and how much rent you
can expect.

It may also show movements of parts of the population to new
parts of the same area due to factory closures, increase in
crime etc.

6. Property Median Prices

Historical property prices will be a good indicator to the
fluctuations in property values in the area over time.

A property may look like a bargain at first glance but with a
little research you may discover that the same or similar
properties changed hands previously for a lot more money. There
may be a simple explanation for this such as a vendor wanting a
quick sale but it may also reflect a dive in the local property
market for various reasons.

Median prices will give an indication of what you can expect to
pay for the different types of properties (no. of beds, land
size, etc) in the area and the figures may also show the number
of recent sales. The historical figures will also give a pattern
of historical growth or decline in the area over time and this
could be used to indicate a property’s future value.

7. Occupancy/Vacancy Rates

Each area will have a certain percentage of rental properties
tenanted (occupied) and the remainder without tenants (vacant).
Towns with a high vacancy rate (normally deemed to be more than
4%) will make it possibly harder to find tenants to fill your
rental property as it shows a lot of competition for too few
renters.

Too few renters will also mean that landlords will have to be
more creative in attracting tenants and may need to reduce the
rent and offer other incentives to entice renters.

Areas with high employment and a strong outlook for the future
are likely to have a higher occupancy rate and this may even
cause competition amongst renters, allowing landlords to set
higher rents.

8. Property Managers

Finding a trustworthy property manager is important if you will
not be looking after the property yourself in terms of finding
tenants and collecting the weekly or monthly rent.

Good property managers will communicate regularly, carry out
periodic property inspections, arrange repairs and, most
importantly, regularly deposit the rent (minus expenses) to your
bank account.

There are also many other duties a property manager can carry
out and it’s important to question those managers in the
potential area to find one or more likely candidates that are
going to take care of your investment.

Find out how many rental properties they manage, how long
they’ve been in business and ay other questions you deem
necessary until you find one you are happy with.

In closing, the above points are only guides for you to learn
more about an area before you make an investment. There may be
more factors you’ll need to consider depending on your situation
but if you research the above you naturally increase the amount
of knowledge you have about the area. And the more knowledge you
have will reduce the risk of a potentially poor investment.

We have all heard the advantages of investing in a mutual fund
over trying to pick individual stocks. First of all mutual funds
hire professional analysts that are market experts and devout
many hours of study to the various stocks. Unless you want to
devout a large portion of your free time to the study of the
financial reports, you probably won’t have as much information
to make a decision as a mutual fund manager.

Then there is the well documented advantage of diversification.
Risk is reduced by holding several non correlated investments.
Put simply, some go up, some go down and combined, the return
levels off the fluctuations, or risk.

Finally, a mutual fund offers smaller investors a chance to
invest in small increments rather than having to save a large
chunk of cash to purchase 100 shares of stock.

Given the above advantages, it’s no wonder that mutual funds
have become a very popular form of investing. Now there are
thousands of mutual funds to choose from, so how does one make a
selection? Here are a few tips:

1. Do not be seduced to jump on the recently performing best
fund. It may seem like the safe and rational thing to do, but
like individual stocks, you want to buy low and sell high, not
buy high and pray for more growth. 2. Even good funds may not be
able to overcome the force of the overall market. You should be
looking for funds that can exceed the broad market without
increasing risk. Each fund has certain risk parameters that it
is required to follow. Read the prospectus closely to understand
what these are. 3. Limit the number of funds that you own.
Unless you are trying to simply achieve the same returns as the
broad market, diversifying into many mutual funds will not
reduce your risk or increase your return by much. 4. Funds that
become too popular and too big tend to slip in performance.
There are several reasons for this.

Find more valuable mutual fund resources at
www.best-mutual-fund.info

One final point to keep in mind is that the type of fund will
totally depend on your investment objectives. There are certain
funds that are designed for your objectives be they retirement,
income, growth, funding the kids college, etc.