Finance and Markets

Happy Anniversary “Lows”

Analyst — Wed, 10 Mar 2010 10:23:33 +0000

Around a year ago, world markets witnessed all time low figures (after global crisis). On March 9, 2009, MSCI all-economy world index exhibited numbers that are rarely seen throughout the world.

In less than 16 months, value of stocks fell by around 60%, which is a considerable fall in any market. This year, however, the stocks rallied back and recovered around 80% till January 2010. And people started becoming optimistic about the fundamentals that drove the market.

With worries about Euro debt, equity markets are definitely not optimistic today, which now questions the recovery of the US economy and futility of several stimulus packages. Post January, we have seen a gradual fall in the market. It seems that MSCI index is going through tough times. Probably it needs few more stimulus packages.

Few experts, on Tuesday, commented about current market instability. From Odey Asset Management, Crispin Odey said, “Having hoped that March of last year might have proved to be the long term bottom for the developed markets, I am now much less sure.”

The recent rise in market is because investors are pumping in millions of dollars believing things will change soon, few believed. It, however, seems that every minute surge in the market was mainly due to millions invested by the government and not investors.

And if stock market represent growth of an economy, what about the unemployment rate? It’s not rising, but it’s not getting any better either. Even export market is being slowly strangled due to strengthening dollar. The situation can be best described as bunch of penguins (few ones that survived the storm) dancing on a piece of ice, which will melt sooner than expected. And we cannot expect much help from other economies as they are quite busy saving their own boats.

However, let’s not be as worrywart as Odey and rejoice that stocks are still 73% higher than they were in March 2009.

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Must Know News for Wall Street Investors

Analyst — Mon, 08 Mar 2010 06:05:40 +0000

Toyota Motors had recently repaired recalled cars that risked flaw of accelerating suddenly. However, the repaired cars have started malfunctioning again, to which Department of Transportation (DoT) has started investigating. DoT officials are generating reports based on consumers’ views and complaints.
Finally, Morgan Stanley finds a buyer for its stake of 34.3% in China based China International Capital Corporation. However, buyer’s identity is not disclosed yet.
General Growth Properties has been given a five-month extension to develop and present a plan to escape bankruptcy
Vikram Pundit of Citibank has returned to Capitol Hill on Thursday. Meanwhile the financial institution still owns $25 billion provided by treasury and 27% stake is still owned by the government.
Hundreds of people had invested and lost all the money in Ponzi scheme introduced by UBS, which was followed by a mass suit. However, UBS won the suit and investors were informed that they aren’t permitted to bring individual lawsuits against the financial institution.
Bank of England, expectedly, maintains its 0.5% bank rate and chooses not to protract the purchase plan of $319 billion.
New rules for the new credit card law. Fed reserves have presented new set of rules to defend credit card users from late payment fees and other penalties. According to the rules proposed by the Fed, issuers may not be able to charge penalties higher than customer’s violation amount; there would be ban on inactivity fees; and late payment fees cannot be charged more than once for a single late payment.
In spite of caustic snowstorms in most of the districts on the East Coast, the economy, according to the recent Beige Book report, has improved. Although there wasn’t any improvement in credit condition, a gradual increase in consumer spending is reported.

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What Exactly is ‘Cloud Computing’?

Analyst — Thu, 04 Mar 2010 07:06:45 +0000

Every individual is talking about the new buzzword, ‘Cloud Computing’, but I wonder if anyone understands it. If you are one of them, fret not, because you will be uttering these words by the end of this post. Let’s have a look at it from the investor’s point of view.

Usually, maintenance cost or overheads are quite huge in IT companies, or that’s what every manager says. However, many harsh measures are taken to keep this cost under control. Some companies prefer rightsizing the number of employees, some buy the software instead of developing them, and few outsource the whole spectrum of operations. Due to these measures, or may be some other reasons, these companies have continued to grow, mainly for two reasons: More work is done by them every year; and managers increase the cost, a counterproductive result.

However, this cloud computing, although saves lots of money and increase the overall productivity, may prove to be quite expensive, if not used appropriately.

Companies under ‘Cloud Computing” can be lumped in three categories

Internal Cloud
Internal computing infrastructure is organized, today, with server farms, which comprise of thousands of individual servers. Servers are owned by the company, even if the management is outsourced. This internal cloud helps the company to maintain its data and keeps from leaking. Such farms were first used by Google (GOOG), Yahoo (YHOO), Ebay (EBAY), and Amazon (AMZN).However, investors should switch their focus on companies that provide software and hardware solutions to develop and maintain these internal clouds. Few major players include HP (HPQ), Cisco (CSCO), Dell (DELL), EMC (EMC), and IBM (IBM) in hardware; and Microsoft (MSFT), Oracle (ORCL), and VmWare (VMW) in software.
External Cloud
Instead of maintaining such a big cloud, few companies finds it beneficial to outsource it. Many companies provide such solutions. However, companies like Google and Amazon have a radical advantage over other minor players as they have better software & hardware combinations and they are quite good at building relationships. These companies provide the requisite machinery to their clients along with the operating system, which is usually chosen by the client.For investors, favorites include HP, Dell, Yahoo, Oracle, Ebay, and IBM.
Software Services
I really don’t know why these companies are known as cloud computing. It doesn’t fit any of the above categories either. These companies provide applications to businesses through web browsers. It is possible that these applications, may be then used to support internal or external clouds, but it’s a different model all together.Here, companies providing software services don’t really need to build or maintain an IT team to run the application. Current leaders in this section are Rightnow Technologies (RNOW), Oracle (ORCL), and Salesforce.com (CRM).

Salesforce is definitely a leader in this business. May be, according to sources, Microsoft might consider entering this business through internal developments or acquisitions. But, as of now, there aren’t any moves indicating such decisions.

Among all the categories of ‘cloud computing’, companies providing software services seem to be a clever investment. Internal cloud too is a decent one; however, I don’t see any reason why one should invest in external clouds. If none of these companies interest you, you can at least use the buzzword.

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15 Practical Money Saving Tips

Analyst — Mon, 01 Mar 2010 06:05:21 +0000

Being frugal isn’t easy. It takes efforts and smartness to save a little amount every month. Here is a list of 15 practical money saving tips for people who intend to save real money.

Don’t wait for an opportunity to invest. Let it operate automatically. Ask your bank to invest a fixed amount every month for 401(k) or other investment plans.
Keep adding money in your saving account. This will earn you good amount as interest every month.
Aviod paying banking fees. Use your bank services for free to pay bills, checks, auto deposits, etc.
Don’t get simple credit cards. Pick the one that offers cash back facility. Over a period of time, you get a good return.
Keep searching for hot deals that can save you some money. Don’t buy any items without proper homework.
Use ceiling fans and table fans instead of air conditioners. They consume much less electricity than the latter.
Replace all tubes and bulbs with CFL bulbs to save energy. This is one of my favorite practical money saving tips.
Drive smoothly and at a constant speed. Of course, you have to slow down at many places. However, try to drive at a normal speed, without much application of brakes.
Plan your major purchases well in advance. Don’t purchase things during peak season.
Go for good quality products. Cheap goods may save some money. But those gains are temporary. Quality goods will last longer and save much money in long run.
Quite contradictory to the previous one in the list of practical money saving tips, buy a generic item wherever possible. By this I mean, don’t go for branded products when a generic one can serve the purpose, but don’t compromise on quality.
Start using coupons and search for stores that offer discount. You can start by visiting online websites like Ebates.
Stop eating out. If it’s not possible, at least try to reduce it. An average American spends a major portion of his income in eating out. Don’t be an average American, be smart, be frugal, cook and eat at home.
Eating leftover isn’t a disgrace. If you cook a dinner tonight and much is left after eating the dinner, take it for lunch tomorrow at your workplace.
Don’t buy DVD’s and books. Borrow them from the nearest library. You don’t really refer your books after you have read it once, so why spend so much unnecessarily?

Yes, I know that some of these practical money saving tips wouldn’t apply to everyone. If so, please ignore them. Applying even few can help you to save a good amount every month. Try it.

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Highlights of Indian Budget 2010

Analyst — Fri, 26 Feb 2010 10:14:29 +0000

Finance Minister of India, Pranab Mukherjee, outlined various plans for 2010. Let’s have a quick look at the highlights of his speech.

According to Pranab, India’s first challenge is to arrive again at 9% GDP growth rate as soon as possible. Internal development of the country highly overlooked, and hence, the finance minister wants to deepen and broaden the agenda.

He sees signs of improvement in domestic investment and foreign investors are being active again. However, he thinks it’s too early to say that the worst is gone. Hence, the country’s economy can be depended on the stimulus package, if things seem wavering again.

A major concern, however, the country faces is the oil price. Due to its inability to get domestic prices down to world level, India has to import around 75% of its total oil consumption, which is definitely not a good sign. Therefore, as an immediate act, the Indian government will set up a group of experts, who would advice the country on petrol consumption and trade decisions.

In the financial year 2010-11, India plans to:

Raise the limit of non founder holdings in a company
Provide better flexibility to India Infrastructure Finance Co. Ltd.
Ask states to minimize holdups of infrastructural projects
Allocate five billion rupees for the Mumbai Flood Plan
Expand liquefied Natural Gas Infra
Increase the funds allocated to National Highway development by 23%
Achieve agricultural credit amount of 3.25 trillion rupees
Provide additional 1% subsidy to farmers who payback the loans as scheduled
Provide 10 billion rupees more for irrigation than it was decided in interim budget
Extend agriculture debt waiver by further 6 months
Offer subsidies to farmers directly
Continue providing financial assistance to exports in seven sectors till the end of financial year 2009-10
Provide relief to exporters affected by global recession
Provide 40 billion rupees to promote lending to small firms
Allocate 1 billion rupees to initiate banking services in un-banked areas
Promote rural jobs programme by apportioning 391 billion rupees, which is 144% more than it was in 2008-09
Allocate 59% more funds than it was in 2009-10 for rural roads scheme
Raise 45% of money allocated to Bharat Nirman Infrastructure Programme
Assign 20 billion rupees to rural housing under National Housing Bank
Allocate 70 billion rupees for electrification scheme in rural areas
Establish 1 power loom cluster and 2 handloom clusters

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Is Random Browser Really Random?

Analyst — Thu, 25 Feb 2010 07:02:00 +0000

After a bitter debate, the European antitrust administrators and Microsoft Corporation (MSFT) agreed to provide a ballet screen that will give European population an opportunity to download and use any internet browser, all of them Microsoft Internet Explorer’s rivals. The gang of rivals ready to compete includes Safari (AAPL), Google Chrome (GOOG), Opera and Firefox.

The page will contain, by next week, links to download any of the available browsers. However, the order of list will change every time the user refreshes the page. According to the antitrust administrators of Europe, this is probably the best way to make people aware about the other available browsers. The static page browserchoice.eu runs Javascript, which keeps of track of jumbled lists and automatically rearranges itself.

Microsoft isn’t definitely doing itself any favor. In fact, this ballet page seems to offer an advantage to Google Chrome. Out of every four hits, the list displays Chrome more than once on the extreme left corner, which is nothing but the first choice. Besides, more than 50% of the results put Internet Explorer on the extreme right corner, which is probably preferred last.

However, it is quite inappropriate to say that there’s a conspiracy involved. Maybe tens of thousands of results – and reports based on them – are just not enough to arrive at a conclusion. Also, according to DSL.sk, the option on the extreme left may not necessarily be assumed as the best browser. In fact, humans generally prefer the one that’s available in the center. And after using all of them, people will certainly make their own conclusions and choices.

But flaws are more consistent than the results. The randomness tested on IE6, IE7, and IE8 showed results favoring Google Chrome and constantly put IE on the extreme right corner. But when this test was conducted on Firefox, results revealed quite different story. So, the theory adopted by DSL.sk to generate random results can still be questioned.

Meanwhile, DSL.sk team is constantly working uninterruptedly and changing the code to ensure unbiased results. And they are pretty sure they will be successful before it goes live.

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Technical Movement of the Market Wouldn’t Last Long

Analyst — Tue, 23 Feb 2010 11:36:37 +0000

The cyclic nature of our market, bullish and bearish, is currently replaced, or rather pulled, by other sources it seems. Essentially dominated by fundamentals, the market is now run by technicals.

The market is not reacting to any astonishing news, good or bad, and is operating independently. This is nothing but an outcome of technicians-run-market. It is like a boat sailing on the sea, ignoring the signals of the radar. And obviously, this trend wouldn’t last long.

However, such market behavior is affecting investor’s profit. People generally buy before good news and expect good returns. Or inversely, they sell before a bad news is publicly declared to reduce their loss. But they get nothing more than being deceived. Hence, here are few things that you can do when such situation prevails.

Focus on your long term goals

Changing your goals with every uncertain movement in the market would be foolishness. The current market situation is being run by technicians and it can be trusted. However, don’t change your long term goals and sell out all your holdings. This behavior, or any other behavior except fundamental, wouldn’t last long.
Get ready for a sling

The prevailing market condition wouldn’t last long. However, when it resumes its fundamental behavior, it is sure to ascend with good news and plummet with a hint of bad news. Hence, get ready for a sling because the market won’t react like it does these days, or rather it will start reacting.
Don’t trust

Don’t make hasty decisions depending on the interviews broadcasted on CNN because, like I mentioned, the current trend is a game sponsored by technicians. Maybe the interviewee is one of them. Instead, it’s advisable to read research reports provided by independent financial research firms.

Since January 2010, we are witnessing an absurd trend, which certainly isn’t its original movement. Switching your goals at this time would be an unwise decision. It’s is advisable to resist any reaction and wait for market to adopt its original method.

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15 Simple Ways for Saving Money on Food

Analyst — Mon, 15 Feb 2010 12:17:32 +0000

Among all other expenses, food is the most flexible one. We can save enormous amount by using few simple tips.

It’s wise to stock basic stuff in bulk. This will save considerable amount of money. However, don’t try to stock perishable goods.
Keep a track of stores that offer great benefits to customers through discounts and coupons.
Keep a track of food stuffs that you regularly buy in small quantities. Get them in large quantities whenever possible.
Don’t forget that for additional discount you can use a manufacturer’s coupon along with store coupon.
Consider grocery shopping as a business deal. Next time you go the nearby grocery store, try to maximize your profit. Don’t forget to have a goal.
Don’t shop daily. Do it twice a month or once in a week.
Don’t go for food shopping when you are tired, hungry, stressed, or depressed. Plan your shopping when you are most excited and happy. You attitude makes a huge difference.
Don’t buy breads. Purchase a bread machine. No, it isn’t costly. Most people ignore it because they don’t really have time to prepare bread. Moreover, homemade bread is better than outside bread for your health.
Another smart way of saving money is by adopting a habit of baking potatoes every time it’s possible. Later, put the potatoes in fridge. Whenever you have omelet dinner or quick breakfast, these brown potatoes goes very well.
If you are a cookie lover, this tip is especially for you. If you know how to make cookies, bake them in large quantity and freeze them. Again, it’s not important to bake the whole batter, you can freeze it. Later, when you need it, thaw and bake.
Much of our money is wasted when food is wasted. Take measures to reduce food wastage. Eat fruits before they decompose, or make fruit juice and store it. Have a habit of inspecting your food regularly.
Make use of leftovers. You will be surprised to know that you can save a lot by using leftovers. Or use it the other way round. Make excessive food, which can last for at least another day.
Don’t spend much time in any grocery store. Get in the store, buy required products, check your list, and go home. The more you stay, the more you will purchase. Remember, we are saving money?
Whenever you go to a grocery store, keep an eye on the advertisements and cash registers for special discounts and offers. You will save some money next time.
Before you go out to shop, don’t forget to check the local newspaper for today’s offer and discounts.

These are very commonsensical ways for saving money on food. However, we tend to avoid these things while shopping. Again, make sure you don’t affect your health just to save few dollars. After all, health is wealth.

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Why Apple May be Strongly Bearish

Analyst — Thu, 11 Feb 2010 07:06:33 +0000

Although Apple (AAPL) is launching extremely interesting products, most of them useful for every individual, the stock seems to be on the verge of violating the upward movement. AAPL is almost ready to hit the 52 week low mark. No, I ain’t a pessimist. The products, especially iPad, are very useful but they can defy the law of market. In the next few months, we will definitely see a plunge in the stock price. And there are many reasons that compel me to say this.

The market in which apple is operating is crammed with competitors and it’s tougher than ever to derive maximum revenue. iTunes is a convenient way to purchase MP3. However, the same business model has been adopted by many companies, which is quijte similar to the Apple ones. Moreover, the content, music that is, isn’t Apple’s production. You will get the same content all over the web.

Though iPhone is an incredibly adorable phone, competitors of Apple have come up with similar models with improved functions and applications. You can get the same look and feel in models introduced by Nokia (NOK), HTC, Samsung (SSNLF.PK), etc. Google too have introduced the new NexusOne mobile phone, which has an open source operating system Android. With increasing competition, similar or better features, Apple’s iPhone is losing value rapidly.

So, the only thing that’s driving Apple is their desktops. They are known for their superior quality, convenience, high performance, better usability especially while using media tools like movie making, photo re-editing, music editing, etc. Though there are many other players in this market, no other company is able to reach this level of superiority. So, we can say that Apple is still a leader in desktop market.

However, there are certain things that will snatch this privilege as well from Apple. Firstly, it competitors have managed to steal the applications, performance abilities, look, feel, etc., from Apple in other sectors, they will definitely introduce desktops similar to those of Apple. Secondly, the recent market shows a considerable fall in revenue of PC makers. And this is a great concern for all those who have invested huge sum in such stocks.

Here is another observation that supports my view quite efficiently. Technically, the AAPL stock experienced considerable growth from March 2009 to January 2009 (good news for investors). However, there wasn’t any proportional increase in sales volume of Apple’s products, which is definitely a great concern for investors. This is an indication that very soon the market laws will compel the prices to plunge.

Recently there was a raise in sales volume because Apple was all over the media due to the introduction of its new iPad. However, this happens every time Apple introduces a product.

Bottom line for investors:
If you learn about the introduction of any new product quite similar to iPad or its desktops, sell the stocks.

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Forex Basics – Selecting a Broker

Analyst — Mon, 08 Feb 2010 07:38:47 +0000

My inbox is full with emails of investors asking about Forex trading, its working, its strategies; in short, the basics. Hence, I decided to post few articles that can be quite informative and helpful for beginners.

Initially, when investors know about Forex market, they are quite excited to trade in. However, it’s important to realize that this market is very intricate and can take away your shirt. Hence, learning is most significant aspect before investing even a penny in Foreign Exchange market.

You will have to hire a broking service to invest money in Forex. But don’t fret because there are numerous brokers waiting for you to approach them. However, you need to conduct some research before selecting any of them.

Spreads

The commission a broker gets is based on spreads. Alright, let’s first learn what spread is. The difference between buying and selling price of any currency ant any given time is known as spread. More spread means you pay more commission to a broker. Hence, it’s always wise to hire a broker charges less on the spread.

The Quality of Financial Institution

Forex market it the most liquid market in the world. Hence, it essentially involves high volume of money. So, almost every broker is associated with some of the big financial institutions like banks or other lending firms. Therefore, it becomes quite important to check the quality of firms the broker is associated with it, its reputation, and its financial standing. Also, ensure that the broker is associated with FCM and CTFC. Do not hire any broker that is not registered with Futures Commission Merchant or the Commodities Futures Trading Commission.

Capability of the Broker

Every trading market permits investors to use various methods and techniques of trading. A good broker is the one who offers many types and vast variety of techniques. An ideal broker should be able to research and analyze data, study charts, and seek support from various trading systems. Here is the bottom line – An investor doesn’t know much about the Forex market. This conundrum should be effectively solved be a broker.

Leverage Options

The financial ability of every individual differs widely. Hence, not everyone is able to invest huge amount into the market. The broker must make sure that a person with low investment should be offered high leverage options. Hence, this helps the investor to earn and trade much more than he actually invests. However, he wouldn’t know about this option unless the broker assists him. And a person with high investment capacity should ask for such leverage options, in order to check the credibility and knowledge of the broker.

Types of Accounts

Akin to all other trading markets, Forex market too has many options of accounts to choose from. But these types would be known to the investor if the broker is well-versed with it. A small investor starting with around $300 must go for a mini trading account. To get a standard account, you must start with a minimum trading capital of $2000. And if you intend to invest huge money in the market, you must opt for a premium account. Each account offers different leveraging options and quality of service. The higher the better.

These factors essentially affect your trading style and earning capacity. Hence, know them thoroughly.

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