Investing and Stock Trading

Venezuela Has More Oil Than Saudi Arabia

2011-07-26T16:43:00.000-07:00

The Biggest Proven Crude Oil reserves are not in Saudi Arabia, but in Venezuela! I first learned of this in a New York Times Article about Hugo Chavez (Venezuelan President). What I find interesting, is the article was about Mr. Chavez and his recent treatment to remove a large tumor, and towards the end of the article, it is mentioned that OPEC has recently identified Venezuela as the country with the most proven Crude Oil reserves in the World! I would have expected this to be front page news, but somehow, it was tucked inside the newspaper on Page A5! Up until this time, I had always believed that Saudi Arabia had the largest proven reserves, but according to OPEC's figures, Venezuelan reserves are 296.5 Billion Barrels while Saudi Arabia has 264.5 Billion barrels. This information was reported last week in the Organization of Petroleum Exporting Countries (OPEC) annual Statistics report (I linked to the report which I found on OPEC's website, it is a PDF 108 page report). According to an article that was released about a week ago by msnbc about this, the amount of Venezuelan reserves recognized by OPEC, has increased by 40 percent from the end of 2009. Part of the reason for Venezuela surpassing Saudi Arabia, are a result of what the New York Times Called, Huge deposits of heavy crude found in the Orinoco region. I find this report fascinating because that means the western hemisphere has a lot more oil than originally thought!

The relationship between Venezuela and the United States has been at times rocky over the past few years, and this new revelation of Venezuela containing the worlds largest oil reserves, could make the relationship even more interesting. I have always found that the United States seems to tolerate the society in Saudi Arabia which has often been accused of human rights abuses, and systematic repression such as the laws that don't let women drive vehicles, or those that say a woman must be accompanied by a husband or male relative when out in public. The large oil reserves and OPEC contributions that Saudi Arabia makes, seems to keep the pressure off of their government for reforms to a more democratic and free society. This type of pressure has been exerted on other countries by powerful and influential institution such as the United States government. Saudi Arabia seems to get a pass in this category and their large oil supplies seems to be the reason why. It makes me wonder if U.S. Corporations and the U.S. government is now going to cozy up to Mr. Chavez now that they know he is holding a major trump card which now literally would be, the world's leading oil reserves!

Debt Ceiling Debate Goes On

2011-07-25T19:06:00.000-07:00

President Obama Just gave a speech appealing to the American people on putting pressure on their congressional leaders to find a compromise in Washington to find a debt deal that is fair, balanced, and timely. About two minutes after the President's speech, the rebuttal came from Republican speaker of the house, John Boener. As an American, I think John Boener needs to be fired. This guy is a terrible representative and its repulsive to me that he claims to speak for the "American People." It is very obvious that who he is referring to are the wealthy elite and people who donate to his campaign. My immediate thoughts about Obama's speech was that he is absolutely right. The wealthy need to pay their fair share. Closing tax loop holes (for companies that ship job overseas or subsidies to oil and gas companies for example) is something Obama campaigned on when running for President, and it needs to be done! Raising revenues at this stage is absolutely necessary and Obama should not back down on this point. I get the sense that in this country, Billionaires and Millionaires don't have the stature that they once held. After billions of dollars of tax payer money went to bail out large banks and insurance companies, there is a reason the United states is so in debt. Having to borrow an additional 700 billion so the wealthy can have their tax cut extension along with paying for two wars that have become the longest in U.S. history, should not come at the expense of people receiving medicare, and social security checks. After all, retirees paid into these funds for most of their lives, now getting that money is suddenly called "entitlements?" These are NOT entitlements, this is money that is owed to them because it was deducted from their paychecks during their working careers! To cut these programs is nothing short of robbery! I am really hoping the People wake up and realize what is going on here, how they are being manipulated!

Republican Speaker of the House John Boehner's rebuttal would have been appropriate several years ago to denounce invading Iraq, a costly war that has put the country deeper in debt, while enriching private contractors (and shareholders) like Lockheed Martin or Raytheon. Where was the discussions about, "maybe we cant afford this?" Of course they were no where to be found, as John Boehner and his Republican allies heavily voted to invade a country that the U.S. could not pay for. This banking crisis that just passed, had everything to do with lax regulation which was empowered by legislation coming out of Washington that made it possible for loans to be made to just about anybody! Asking the Republicans for their plan to solve this problem reminds me of that old but visual saying, "Its like asking the fox to guard the hen-house!" To decimate the middle class and claim that the way to fix the budget problems is by decimating it even more, is not only irresponsible, its ridiculous. When John talks about "the American People" he is not talking about me. As a matter of fact, he is not talking about anyone I know. So, let me guess who he is talking about....Republican campaign donors.....hmmmm..... We do need cuts in this country, we need to cut the Speaker of the House from his job, this guy is an embarrassment and doesn't even tell the truth.

The First Dow Jones Average

2011-07-24T12:56:00.000-07:00

The first Dow Jones Average has had several name changes over the years. Today it is known as the Dow Jones Transportation Average and is often referred to as the Dow Jones Transports. When it was first created by Charles Dow in 1884, It tracked the combined performance of eleven companies. Because the railroad industry was so large and prominent in the United States at this time, nine of the companies were in the railroad industry. This composition to the Stock Index would change over time as new industries such as the Automobile and Airline Industry groups, sprang up and become important parts of the U.S. Economy. Currently, the Dow Jones Transports contain only four railroad companies (a big change from when it was first introduced!). Other notable companies in the Index today, include Delta Airlines, FedEx Corporation, United Parcel Service (UPS), and Union Pacific Corp.

Investors follow this stock Index because it is considered to be the best overall measure of the transportation sector in the United States. Market Analyst and Economist have observed that when the economy is coming out of a recession, the performance of the Dow Jones Transports will usually outperform the other two Dow Averages, the Dow Jones Industrial Average and the Dow Jones Utility Average. As manufacturing and production increase, shipping, railroad, trucking, and airline companies begin to increase their profits resulting from moving more goods than were moved during recession time. Because of this important attribute, investors closely monitor the performance of the Dow Jones Transports especially during recession times - looking for clues to a growing economy and the signs that the end of a recession is near. To see the charts and stock quotes for each company in the Dow Transports, the Investing for Beginners website has a page titled, Remembering the Rails, the Formation of the First Dow Jones Average. There is also information for how to trade the actual index itself. This is done through a security called an Exchange Traded Fund. Live charts of the performance of the actual Dow Jones Average itself, is also included on the page.

Importance of the Dow Utility Average

2011-07-22T23:25:00.000-07:00

Watching the Dow Jones Utility Average has become an everyday occurrence for me. The important Utility Average was the third Stock Index introduced by the Dow Jones Company. It was first introduced in 1929, and started off as a Utility dominated Index consisting of 18 Companies. This number was changed in 1938 to what it currently stands at today, a total of 15 companies. Most of them belong to the electric utility industry although several of the companies are considered to be "Diversified Utilities." This term is given to a company that belongs to more than one Utility industry. For example, a company may belong to the Natural Gas industry group, and the Electric Utility industry group. Following this Stock Index is important because its performance can often be attributed to investors expectations for future interest rates. Because utility companies often borrow heavily for expansion and operational purposes, profits for these companies are often higher during times of low interest rates. the same is true in reverse, when interest rates are rising, borrowing becomes more expensive and often leads to a decline in profits. For this reason, many investors, economists, and market analysts follow the performance of stocks belonging to large utility companies. The Utility Average makes tracking this sector easier, by combining the performance of 15 of the largest utility companies in the U.S.

I recently created a page on my investing for beginners website titled, the Utility Average where I wrote more about the history and use of this particular Stock Index. On that page you will find a table that lists the names of each company in the Index. I also wrote about how investors could Trade the Dow Jones Utility Average as a single stock throughout the day. This of course is done through an Exchange Traded Fund, or ETF for short. Like most other major indexes, the Utility Average also has an ETF that investor can purchase which tracks the performance of this Dow Average. To make tracking the various companies in the index simple and easy, I embedded live charts for each one of the companies. At the end of each trading day, I visit the Utility Average page myself, to get a sense of how the Average and the companies inside of it, performed for the day.

DJIA or Dow Jones Industrial Average

2011-07-07T00:04:00.000-07:00

When properly analyzed, the Dow Jones Industrial Average, or DJIA for short, helps investors determine the Stock Market's overall direction (known as the trend) and the strength behind it - measured by trading volume. Proper interpretation of these factors assists Stock Traders in identifying proper entry or exit points to purchase or Sell their stock positions. For example, when the Dow Jones Industrial Average has been consistently falling, buying stocks long, would not be advisable. Waiting until the DJIA has started to rise again, gives an investor a much better chance of entering a stock position which is profitable right from the start and will turn into a profit if sold at the right time (before the DJIA begins to fall again). These cycles occur and will continue to occur. The Dow Industrials gives a general measure of not just stock market direction, but of general business and economic conditions as well. For example, a falling DJIA is unlikely to be occur at the same time the economy is booming.

In fact, many investors and economist believe the stock market reveals economic conditions about 6 months in advance. This means a rising market, reflects collective investor optimism of near term improvements of economic conditions. The reverse of course is also true. Falling markets may reflect investor pessimism for improvements in the economy, in the near future. These characteristics gives the DJIA even more value, using it to as a barometer to measure the performance of the general market, and economic conditions. These combined characteristics, makes the Dow Industrial Average a powerful forecasting tool for any investor. Below are the companies in the Dow Industrial Average. The list is sorted in alphabetical order by ticker and includes Sectors and Industry Groups, each company belongs to. I have also created a table and embedded live charts of the Dow Jones Industrial Average on my website as well as live updating charts of the Dow Diamonds, an ETF that is designed to track the movements of this Index.

Studying the Tape In Stock Trading

2011-07-05T18:46:00.000-07:00

Buying and Selling Stocks and operating in the stock market, takes skill and proper timing. One of the most revealing clues and strategies I use, is following the tape. let me give some Example of the Time-Stamp (“The Tape”) That I follow and how it helps me determine when to buy or sell a stock. When I watch stock, I begin following the tape of those that I’m interested in. They show the last Execution price, date and time, and Number of shares. These orders are what make up the charts themselves. I rarely follow charts anymore, because the tape is much more revealing. For example, if an institutional buyer, hedge fund, or big investor is taking a big position in a stock (or selling a big position) they won’t do it all in one day. Usually they do it in the course of a couple of days or even weeks. This is because they don’t want to raise the price on themselves buying all at once or vice versa. I watch orders coming across the tape, and they give me a clearer picture (than a chart) about what’s happening with that company’s stock. The orders of 100, 200, 300’s are usually the public buying. When orders come across that are in lots of 5,000, 10,000, 20,000 and anything larger, that is a strong clue that a big investor is taking up (or selling off) a position. When I see this, I watch VERY carefully and make notes to myself on a notepad. Watching the tape helps me decide what to buy or sell and helps me with timing (when to get in and when to get out).

Learning from the Best Investors

I first learned about studying the Tape from studying the life and career of famous Wall Street Trader, Jesse Livermore. He was famous for Reading the Tape which basically meant that he watched the Time and Sales of each company that he followed. This graphic is an example of a Time Sale of Alcoa and Ford Motors. There are three columns, execution price, number of shares sold (middle) a time the execution was made (left column). The green means the price was higher or the same as the the last execution price, whereas the red means the execution price was lower than the previous one. When institutional buying occurs, big orders can be seen coming across the Tape (the time stamp) and likewise when they are selling. In this example, it looks like investors are buying up Ford and selling Alcoa. The keen investor learns what is happening, watching the orders that appear. Jesse Livermore always said that it is not what investors say that he's interested in (like rumors or opinions), but what they actually DO! This, meant watching the buying and selling and interpreting the execution of orders. Did investors just say they liked a stock or were they actually buying it - this is what Livermore wanted to know. Eventually, he perfected this skill and it ended up making him rich!

ETF Survey by State Street Global Advisors

2011-06-13T12:10:00.000-07:00

State Street Global Advisors which is the Investment Management arm of State Street Corporation and Knowledge@Wharton, the online business journal of The Wharton School at the University of Pennsylvania, conducted a joint study in 2008 to research the impact Exchange Traded Funds had on the Financial advisory industry - What are ETFs? As part of the study, a survey sponsored by State Street and SPDR University - State Street's online educational resource - was conducted that included 840 Investment Professionals. In the survey 67% identified Exchange Traded Funds as the most innovative investment vehicles of the past two decades, and 60 percent reporting that ETFs had fundamentally changed the way investment portfolios were put together. Anthony Rochte, a Senior Managing Director of State Street Global Advisor at the time the survey was conducted, in an article by businesswire.com titled, ETFs changing the Way Advisors Do Business, According to State Street and Wharton Study, was quoted as saying, “By incorporating exchange-traded products into sector rotation, core-satellite, tax management, and portfolio completion strategies, advisors are simultaneously managing costs and risk, which helps underscore their value proposition and strengthen relationships with clients.” When the Investment Professionals involved in the survey were asked about the greatest potential growth area for ETFs, 43 percent thought 401(k) retirement plans while 27 percent of the respondents cited actively managed ETFs.

Asked what the most appealing characteristics of ETFs were, the top five reasons given, ranked in order:
1) Low Cost
2) Liquidity
3) Intraday Trading
4) Tax Efficiency
5) Investment Style Purity

When asked what they thought the greatest disadvantage to ETFs were, 69 percent of the survey respondents cited the "unknown or untested indexes and/or portfolio methodologies" or the "overwhelming number of ETF choices."

Additional revelations from this ETF study / survey included:

A majority of financial advisors (76 percent) identified themselves as light-to-moderate users, indicating that less than 50 percent of their portfolios utilize ETFs
4 percent report they do not use the instruments at all.
Nearly 60 percent of respondents knew what exchange traded notes (ETNs)
29 percent said they plan to increase their use of ETNs in the future
Only 31 percent of advisors are currently using inverse ETFs - these allow investors to bet against a market index.
Nearly 40 percent reported they plan to increase their use of inverse ETFs in the future

More About SPDR® University

SPDR University is a FREE online educational resource designed to provide investment professionals with the education and training in order to stay ahead of the market and be precisely in turn with their clients. Log on to SPDR University to access rich Downloadable educational client-ready materials, webcasts, interactive presentations, audiocasts, research papers and more. To register, go to www.spdru.com today and start earning CE credits anytime, from anywhere. To register, visit the SPDR University website at www.spdru.com. If you aren't an Investment Professional, the website is still useful because it offers rich information that can be accessed without having to register.

SiteBuild It - User Friendly Website Builder

2011-06-08T13:05:00.000-07:00

SiteBuild It! for Website Hosting and creation, is my recommendation for everyone looking to Build a Website that looks great and generates income. With this easy to use service, Building a website has never been easier! Upload your own HTML pages or use the Block by Block builder available when choosing SiteBuild It! (SBI) to Power your website. Some of the benefits I enjoy from using SBI! included the step by step guide that arrives as soon as your order. It is a quality education as well because once you get through it, the realization of the possibilities that exist with the internet and starting an online business are exciting and inspiring at the same time. The Guide is known as the SBI Action Guide, truly inspiring as you learn how to build a highly visited website, turning it into an income generating venture, through creating content about a subject you love. SiteBuild It! provides Stats on your visitors, is search engine friendly, and Gives you the tools you need to succeed. Website Hosting, a resource rich SBI forum, networking opportunities, and an ongoing relationship with the SBI! team has been a pleasurable experience and only a few of the reasons I use it. Customer service is exceptional and always timely and SBI! staff is invested in the success of their clients. I appreciate their good attitude over there: YOUR SUCCESS IS THEIR SUCCESS - Gotta love that!

These helpful and inspiring experiences made me a satisfied customer allowing me to confidently share with others that building something that is yours, even if you're not a website designer, is possible with SBI and the Satisfaction and Empowerment that comes with earning an income online and the flexibility to choose your own hours, is a wonderful benefit that comes with working from home. Getting to research the subjects you are most interested in, and turning it into content for your website, is liberating. Many people around the world have quit their full time jobs to maintain their SiteBuild It! websites. Click on the Video below to get a short introduction and learn more about SBI. Here is a link to a page on my site with more Case Studies and SBI Success Stories I found interesting. The cases are of real people who have turned their websites into their full time small business. I included the links to the sites, built using SiteBuild It!

The SiteBuild It 90 Day Guarantee

So what are you waiting for? If you're like me, you know that the subject you are most passionate about, will likely remain with you for a lifetime. Why not share it with others, enlighten our world by sharing what you are Passionate about, and monetize your site to generate income! When you order SiteBuild It!, a 90 Day Free Satisfaction & Success trial comes with it. Give it a shot, you might love it! SiteBuild It is so confident its clients will love it, that the free Satisfaction & Success trial means you will get a full refund if after 90 days you are not Satisfied with SBI! Let me tell you though, that after building my Investing Website and watching the income generate from it, I see why the folks at SBI are so confident and can extend that offer. If I'm satisfied, I'm betting all their clients around the world are as well! What do you have to lose? You have the whole world to gain, so begin today, Build a Website of your choice and start that small business!

Peter Thiel Foundation - 20 Under 20

2011-05-30T15:05:00.000-07:00

The Peter Thiel Foundation run by Investor Peter Thiel, is doing a good thing for society and their vision inspires me that other billionaires and people and groups of substantial wealth will come to their senses, and do the same. The founder of PayPal, Mr. Thiel made his fortune as a venture capitalist, investing in internet companies that would grow to become giants; An early investment in Facebook serves as the best example I can think of, but now he is investing through a program in his foundation. Mr. Thiel is an investor at heart. He invests in the future of a nation and a vision of opportunity that springs forth ingenuity and invention from bright young minds. Through his non-profit, Those chosen to participate in the program will be funded by grants of $100,000 and will get mentors and access to an extensive network of those of those inside the Technology Industry. Rather than spending 4 to 8 years in school, Mr. Thiel is giving America's young adults opportunities to experience the world in new ways. The Thiel Foundation reported they received 400 applications and had selected 24 individuals to extend invitation the the nonprofit initiative is sponsoring, which asks college students under the age of 20, to drop out of college and join the program. I applaud Mr. Thiel as not only an investor in young peoples futures, but also a visionary when it comes to the power that can be realized by cultivating brilliant minds, and having the belief that they can accomplish anything if given a serious fighting chance and nurturing environment. View the Winners and what they plan to do for the next two years as part of the program.

In many ways, Mr. Thiel and his 20 under 20 Program reminds me of what Adam Smith wrote about in the 1776 Economic Classic, the Wealth of Nations. In it, the father of modern capitalism (Adam Smith) studies universities and in particular, wanted to learn if it really took 6 to 8 years to learn a trade (earn a degree). His research took him to the Ancient World and his reading dove into Egyptian, Greek, and Roman literature. In studying the social model and how universities fit into the system as a whole, he studied the Ancient relationships between Master and Apprentice. What he discovered was that an apprentice would have to work under a "master" for 7 years before becoming Masters themselves. The "Master" Status now allowed that individual to take jobs as professors or business leaders in their communities. As an apprentice, the pay was lousy and debt was often incurred, but after those seven years, they could expect to one day take on apprentices for themselves who they could also pay lousy, while raking in more of the income generated by the work done by the apprentice. Adam Smith wondered how it could possibly take 7 years to learn to become a good professor, or an officer in a business, or in a trade company.

A Look at Earlier Civilizations

What Adam Smith discovered in studying the organizational structure of Society in various cultures from Ancient Rome to Scotland in the 17th century, was that it did not take this long to learn a trade efficiently. He claimed that vigorous round the clock study of a subject of interest. Studying day and night, he proposed that a subject such as management, or being a university professor, could be learned to a high level in 2 to 2 1/2 years. His study next went to why such a long time for something like an apprentice to become a master, or a student to get a Masters Degree or Doctors a PhD. What he discovered in the various cultures he studied, was a strong relationship that existed with local business leaders and the political class. For example, in 17th century Scotland, politicians limited the number of apprentices a master could have at one time in particular trades. This essentially was regulating how many "masters" were going to be on the market. If Masters were limited to 2 apprentices, than they'd have to wait 7 years (after their apprentices served their time) before they could take on any more. The reason Adam Smith concluded, was for the purpose of regulating prices. Keeping prices high, meant the business class could reap the fortunes caused by policies meant to stifle competition. If Adam Smith was right, and round the clock study for 2 to 2 1/2 years was enough time to become proficient in a field, than Mr. Thiel wants to tap into that unserved young minds shining with potential that need to be cultivated. He is betting they can excel in life both by doing what they truly want to do, and what they are truly capable of. The current traditional educational system is important, but is it the best way to tap talented, determined minds?

Facebook, the Social Media Giant claiming over 1/2 billion users world wide, was created by college dropout Mark Zuckerberg. He has become a billionaire before the age of 26 making the choice to drop out of college to start a company. Two other dropouts, Microsoft founders Bill Gates and Paul Allen; both are Billionaires as well! There are many self-taught people now and in history including some very famous ones. Abraham Lincoln, Andrew Jackson, and Harry Truman, all were U.S. Presidents but they also have something else in common, none went to college. They must have learned their trade and studied it well to rise to the top of their careers. I don't think the 2 years the program runs is any coincidence. I correlate the time frame with Adam Smith's assessment described in the paragraph above. The $100,000 funding, mentoring, and access to networks gives these guys a good shot. Good luck to them! They can revolutionize education the way Mr. Thiel is attempting.

Martha Stewart Living Might be for Sale

2011-05-27T18:48:00.000-07:00

The Martha Stewart Living company may by looking for potential buyers. It was reported in the Newspaper that Martha Stewart had recently approached Allan D. Schwartz. Allan is the former CEO of Bear Sterns and is now an executive at Guggenheim Partners. Ms. Stewart was meeting with Mr. Schwartz to discuss a possible partnership between his company and Blackstone, for the acquisition of her company. Martha Stewart first found the company in 1996 and as of May 2011, owns about half of the company's stock, which includes 90% of the voting shares. Essentially, any deal particularly of this size, has to have her approval. Martha turns 70 next month (August 2011) , the same time, shes is expected to join the Board of Martha Stewart Living. In August, expires the 5 year ban of serving as an officer or director on a publicly traded company. This is the expiration time of the 5 year ban which was imposed after she did prison time for lying federal investigators conducting an investigation in an inside trading case. Even though Ms. Stewart was convicted in March 2004, the ban imposed on her by the SEC, took effect August 2006 which means it is set to expire next month.

Joining the Board once the ban expires, will allow her to take a more active role once again in the company. In the five years that Martha has been off the board, the company's stock has dropped 70% (as of May 25th 2011). There has been high turnover of executives at the company over the past several years. As a matter fact, just yesterday, the company announced that it had appointed Linda Gersh as President and Chief Operating Officer, although they also said that she is not expected to assume the role for 12 to 20 months. Ms. Gersh is the Co-founder of Oxygen Media, a cable channel aimed at female audiences. The top company post has been vacant for the last three years! The last person to hold the position was Susan M. Lyne who left the company to take a position with a fast growing online retailing company, The Gilt Group. Explaining why the top position had gone unfilled, yesterday Charles Koppleman, (Chairman of the Board) said that the position had been left open for Martha Stewart "if and when she decides to return." Wow, that one caught me by surprise. This is a large publicly traded company and that is the best answer Mr. Koppleman could give? Martha has recently made it clear she has no intention of taking the top spot. When asked about it, she recounted her busy schedule, her many public appearances, and basically said, as the "face" of this company, she has plenty to keep her busy already. I noticed today, that Ms. Stewart keeps a blog. Thought that was super cool discovery. I've linked here to the official Martha Stewart blog if you are interested in checking it out, or even following it.

Possible Martha Stewart Living Deals

Potential deals might include "carving up" Martha Stewart Living's assets. Spinning off its magazine and television segments and selling those to interested media companies, and selling its highly coveted brand to a licensing company could be a couple ways a deal could get done. Getting a good price on those assets, could potentially become a challenge. For example, over the years, advertising Revenues have declined, and profits have as well. The television show, the Martha Stewart Show, was removed from NBC from syndication, and ended up on the Cable's Hallmark channel. The company is trying some innovative approaches to generating more revenues however. Creating Digital Apps are a space that Martha Stewart Living has recently been exploring in. In fact, one of the iPhone apps they released called Egg Dyeing 101, became a top seller. As the company continues to find ways to grow and work on increasing revenues again, Martha has been looking for potential buyers. It will be interesting to see what happens with this company, although my sneaking suspicion is that it will undergo a vast transformation, be taken private, and may not trade publicly again for some time. That is my view, but time will tell exactly what happens with this company. I know it must be frustrating for Martha to come back, and have watched revenues and profits slide, while she sat on the sidelines, banned from taking a direct role in the company, until it expires in August 2008. From what I have seen in the news, Martha is proactively looking to steer the ship, but appears to navigating it to the world of acquisitions. The company's market capitalization today, is $250 Million.

6 month self updating chart of Martha Stewart Living Stock Price

Russian Search Engine Yandex Goes Public

2011-05-24T18:15:00.000-07:00

Russian search engine company Yandex reported earlier this week that their IPO offering price would start at $25 per share, after saying it would be priced between $20-22 a couple weeks ago. The increase starting price reflects the general optimism for demand of this companies stock when they go public (which was today, Tuesday, May 24th, 2011). Priced at $25 per share, values the company at $8 billion dollars. Yandex plans to raise $1.3 Billion through this IPO by selling 52.2 million shares. Leading underwriters for today's IPO include financial giants in the world of finance with names like Goldman Sachs, Morgan Stanley, and Deutsche Bank. In IPO agreements with the underwriters and the company, the underwriters have the added option of selling 5.2 million additional shares. Investors sent the stock up today, as it closed at $38.84 on the Yandex first day of trading. Many are watching to see if there is a sort of "Silicon Valley" phenomenon happening in Russia and whether technology and internet giants will be born from it. So far, Yandex going public, seems to be a step in that direction. It was just a few months ago that I remember the Russian President, Mr. Medvedev coming to the State I live in (California) and meeting with executives and engineers in Silicon Valley. I'm wondering if he took back some of what he learned to grow Russia's market share in mobile search also.

Dominating Russian Search Market

From what I've read researching this company, Yandex is widely accepted as the largest and most popular search engine operating in Russia. The New York Times reported that 64% of Russian Search Engine Traffic, was generated by Yandex. This dominates that market, making Google's market share there, pale in comparison. Yandex is growing and much the same way Google has worked hard to enter search engine markets globally in countries around the world, such as their move into South Korea consumer Mobile Markets I Blogged about, Yandex may look to do the same in the near future. Raising capital through today's IPO, will allow them to expand and focus on research and development. I would not be surprised if Yandex evolves and emerges into a competitive global search engine. I have a personal story about Yandex that reflects my thinking in that assessment:

When I started blogging in December 2010, I noticed from my website stats that one of my visitors came from a "Yandex" referring link. I had no idea what Yandex was nor had I heard the name. When I Googled it and went to the Yandex website, I could tell that it was a search engine, but I could not read it because it was in Russian (although now I see it display mostly English when I go to it - I like the new look). I found it interesting that someone in Russia had reached my blog through a search engine in Russia (that was not Google.ru). I continued blogging new posts, and ever once in a while I could see that a visitor was entering my blogs URL into Yandex, and the results Yandex were providing, allowed them to select my blog, and follow it. By the way, if you are that reader, thank you for reading this blog! I appreciate it. Who knew you'd be part of my blog post today but with Yandex listing on the Nasdaq today, It is a great contribution to my story because it explains where I first heard of it in the first place (before it started showing up recently in the newspapers). This meant that Yandex, the Russian Search Engine Company, had found me before I found it. Yandex successfully indexed some of my blog pages before Bing or Yahoo did! I find that remarkable considering the fact, they are located in Russia and not as well known as Yahoo or Bing (not yet anyway). This could potentially mean, the search engine company has figured out how to crawl the web, and if they can get their algorithms and revenue models streamlined, they have a bright future, especially if they incorporate that strategy and focus on Research and Development in figuring out how to enter markets and expand market share in areas of mobile consumer markets, where smart phone use and ownership continues to feed expansion and growth of this consumer market.

Yandex Stock Soars on IPO

I think this company could really become a household name in the future. Yandex stock rose 55% on their opening day, and may continue to rise. The impressive performance after being listed for the first time on Nasdaq today, I think signals that Investors have high hopes for this company and its future. There are some who have called Yandex the Google of Russia. The way their stock price soared today, Yandex may actually become the envy of other smaller search engine companies, who may also attempt to engineer successful public listing of their companies stock in the Stock Market. I plan to keep an eye on not only this company, but the movements of its stock price over time. I'll blog about it if I see anything worth writing about regarding this new publicly traded Internet Giant.

The Dow Jones Averages Explained

2011-05-22T21:56:00.000-07:00

The Dow Jones Averages were the focus of recent pages I've written, designed, and added to my Investing website. I wanted to explore the formation of the Dow Jones Company, and the creation, calculation, and importance of the various Dow Averages the company created. The three in particular that I have been focusing on in my research are the Dow Jones Industrial Average, Dow Jones Transportation Average, and Dow Jones Utility Average. These are indexes that investors follow to gauge market direction and performance. Charles Dow, who is one of the co-founders of the company and co-creator of the Dow Jones Indexes, was a brilliant technical analyst that realized, tracking the market could be done if approached properly. Before the Dow Jones Industrial Average was introduced to the world in 1885, investors did not have a sure way of measuring market performance. For example, if their portfolio went up 7% in a year, was that good, great, exceptional? It was difficult to know with the absence of some sort of benchmark. What Charles Dow and the Dow Jones Company gave to the world, was a way to interpret information that before appeared to be chaos with seemingly no system in place to quantify or make sense out of Stock Market movements.

The release of the Indexes, allowed investors to compare their own performance to the performance of the index they were tracking. If the Dow Jones Industrial Average was up 10% in a year, and an investor's portfolio was up 15% in the same time frame, they could now assess their performance based on how the broader market did (as measured by an index). Charles told investors that they could identify the longer direction of market trends by analyzing a chart of the Dow Jones Industrial Average, the Dow Rail Average and observing market volume to get a sense of the underlying strength of any existing trend. Although this seems like elementary now to many investors, it was revolutionary in The early days of the Dow Indexes. I think Charles Dow was a visionary. His work to create a system in which the Stock Market could be measured, and used as a benchmark for an investor to compare their own portfolio against. The Dow Jones Company was also the founders and publishers of the Wall Street Journal. This allowed Charles Dow to write in the editorial columns and share with the newspaper's readers, his views and methods for measuring the market, and forecasting its future direction.

President Obama Speaks to AIPAC

2011-05-22T15:59:00.000-07:00

The American Israel Public Affairs Committee (AIPAC) was in a news story I saw while surfing channels earlier today. In particular, the coverage was of a talk President Barack Obama gave today to the AIPAC, a self described Pro-Israel lobbying group. President Obama spoke to an audience, defending his previous days press conference in which Mr. Obama before the cameras, made mention of returning to Pre-1967 Israel-Palestinian borders with mutual land swap agreements that would need to be worked out by those involved, as a starting point for moving peace plans forward between Palestinians and Israelis. Prime Minister Natanyahu forcefully disagreed with Mr. Obama's remarks calling the plan not possible and stating that a return to those borders would make his nation indefensible. In his talk to the AIPAC, Mr. Obama reiterated the "land swap" part of the deal he'd proposed, meant the 1967 borders were obviously going to be adjusted with any deal reached. The audience members applauded loudly as he spoke, and I thought about where I stood on the issue. That spurred me to jot some ideas down that turned into a couple pages. Might as well share them here for others to weight in on, and share their assessment, experiences, or opinion.

United States and Israel Disagree

Before going to in depth, I was not satisfied with the Israeli prime Minister saying the plan was not possible because the borders were "indefensible." I wanted him to elaborate on what this meant. Israel has one of the most highly advanced military's on earth, I find it hard to believe their borders would become indefensible if proper arrangements (agreed land-swaps) were incorporated into a plan that used the 1967 borders as a starting point. The world knows how important Israel is in these global times. Their system of government, all though far from perfect, does seem to address the needs of its own people. I commend that and find it honorable. What I see at times however is a stubborn hard stance on issues of peace on Israel's part that seem to prevent the process from moving forward. Continued building of settlements in East Jerusalem which is located in areas the Palestinians are calling for to be included in a future Palestinian state, I think speaks for itself. The Naval blockade into Gaza has done more damage to the Palestinian people, as lack of materials, jobs, capital, continues the hardships on the average citizen there. Israel in my opinion should not be surprised that Hamas and the Palestinian government have agreed to join forces and unite their governments. It surprises me that Egypt was the country that brokered this historic agreement between the two sides, but Egypt is undergoing a revolution, so the political landscape has changed. The Palestinians uniting however, was predictable in my mind. What Israel does not accept, is a government that is comprised of Hamas party members. To prove their point, Israel recently withheld tax money they collect on behalf of the Palestinian government in the sum of over $90 million dollars. This of course angered the government as Palestinians accused Israel of being obstructionist to progress and a lasting peace. Israel argued that Hamas does not accept their existence and has sworn in the past to Israel's destruction, therefor Israel cannot possibly negotiate with any government that includes Hamas. Below is a map of the Pre-1967 Israeli - Palestinian borders:

Where I see the point of both sides, I also believe both sides are preventing the peace process from moving forward. If a statehood for Palestinians is reached, then a lasting peace is suppose to be part of the agreement. In other words, the fighting it can be argued, is directly related to the lack of a current Palestinian State with recognized international statehood. I believe with such a state, that Israel would live with peace and security, not fearing rocket attacks or bombs against Israeli civilians. Palestinians and Arab nations in turn, would acknowledged what is a powerful, highly advanced, and important nation on earth, the country of Israel. If the Palestinians or Arab countries continued their illicit activities that includes targeting civilians with rockets or attacks, than the international community has to come in and say, wait, the Palestinian state was suppose to bring peace, and the fact its not, means the international community is compelled to act, using the international courts to bring justice to the enemies of peace.

What I think the real problem is, is that both sides don't really trust each other. The Israelis don't believe Hamas when they say attacks will stop, as Hamas actively pursue government positions and posts which provides it more resources and power, than currently held. It's possible in Israel's eyes that Hamas will always advocate its destruction whether publicly or privately, and has now adjusted and changed their tactics in order to accomplish these ends. The possibility Hamas is uniting their government, may be so they can get closer to Israeli cities in the future, and this may be a legitimate security risk for the Israeli government. The Palestinians on the other hand, see Israel as the aggressor, with much more sophisticated weaponry in their arsenals that they employ when hunting down Palestinian militants. Civilian deaths from these Israeli attacks also occur and cause deep pain and grief to Palestinian families that are touched by it, the same way Israeli families mourn the death of their innocent members at the hands of rocket attacks or suicide bombers. As both governments, militaries, strategists, and security apparatus of each side, continue to highly distrust one another, a foundation for peace will not be stable. I understand Israel is suspicious of Hamas and its intentions, but I also realize that establishing the country of Israel, meant displacing many who called the country "Palestine" and had made it their homes. Palestinians were forcefully removed from their homelands, and I can understand their dismay at what has occurred. Both sides have wronged each other, this to me is crystal clear. It's time to start acting like grown ups and work out their differences through peaceful dialogue and diplomacy. It is my belief, that the entire world, is counting on it. Israelis want security and recognition, and Palestinians want a life of dignity, respect, and self perseverance that has been non-existent in their societies since losing their Palestinian State in 1948 to the creation of Israel. It is obvious peace has to come with compromises from both sides. Here's a Times article on the current Israeli - Palestinian situation

Nursing Homes and Health Coverage

2011-05-16T08:15:00.000-07:00

American nursing homes and home care agencies were the focus on the front page today, of an article I saw in the New York Times. It was disappointing to learn the fact that most American Nursing Homes and Home Care Agencies were not providing health insurance to their workers. If that wasn't bad enough, it was revealed that many of these workers are paid so low that Health Insurance plans offered for individuals, was too expensive for them to obtain on their meager pay. According to this article today, of the workers providing hands-on care to nursing home residents, 1 of 4 employees has no health coverage whatsoever. For those providing care to people with needs, at their homes, only 1 out of every 3 has coverage. I see this as a paradox of sorts when I thought about it. In America, there are estimated to be 90-100 million people belonging to the baby boomer generation. This generation represents the population increase that is due to a rising birth rate several years directly following the end of World War 2. Soldiers around the world returned home after the end of the war, and began settling down and raising families. This generation is now beginning to retire. As a matter fact, they will be retiring in mass over the coming years, as they cross 65 years of age. Many of these Americans need special care. It is common that the older you get, the slower and eventually, weaker you become. Having a set of Americans dedicated to caring for our aging population, is not only a job, its a social responsibility. Just like an infant can't care and protect for itself, there will be many elderly people in the same situation. We should not terrify them that a society with morals and family values as is so often proclaimed, will forget about them and the people who step forward willing to serve their unique and individual needs, will be forced to find higher paying jobs just to keep up with the rising costs of food, gas, and basic materials. As costs rise, so should salaries and benefits!

Pay Healthcare Workers DECENT!

I use to hear people say, "America is the place where all your dreams can come true." Although I still believe this to be true, I think American can do a better job of not making that dream feel so out of reach for millions of Americans. I salute full heartedly those who work in healthcare and in particular, to help and provide for some of the most fragile citizens who need it most, the elderly. Workers should be paid enough to not only buy their own health insurance, but to also expect that this industry will be protected, meaning salaries will rise with inflation. When you get paid $500 every week, but over time that $500 buys you less and less things because of rising prices, than you aren't really getting paid that amount anymore. That $500 is not as valuable because it does not buy you as much, therefore in a sense, you are actually getting paid less. America needs to wake up and start taking care of not only it's elderly, but also its workers. We have way to large of a segment of the population who are becoming seniors all at once, to play around with this issue. Bold action needs to be taken and this issue must be addressed with intelligence, compassion, and the desire to do better and live in a fairer, kinder world. America is falling behind on this issue while the problem continues to advance forward. There will be a head on collision, I'm just hoping the problem is met with prudence, rather than incompetence. At this point in time, I have my fingers crossed.

President Obama's healthcare legislation is suppose to address this by making coverage options that are more affordable then the current ones that exist. This might address providing coverage, but the low pay of American workers proving services to the elderly, must be cracked opened and examined. I mean, is it me or is it ludicrous to have given the wealthy large tax breaks recently that's going to take $700 billion dollars to finance (borrow so essentially it becomes part of the deficit), yet when it comes to something like the well-being of our seniors and the people who care for them in nursing facilities or that provide home-care, America would rather cut from this sector then enrich it and make it better. I watch as that sector continues to inch and claw its way forward. just for survival. Instead of enriching the bank accounts of a selected few with these borderline corrupt political policies which at times sound like outright lies (such as suggesting the economy will grow if we borrow and give it to the rich!). We should instead as a nation, focus on enriching the lives of our most vulnerable and most important segment of the population, the seniors who have carried the world on their backs for the next generation, me, us. They deserve better and the brave and heartful people who serve them, definitely deserve better. I hope America gets this one right, because we are going to be facing a catastrophic failure of how we care for nearly 1/3 of America's population who have started retiring in droves. America will have to face this reality and if it is not well prepared to meet this challenge head on, I think seniors lives are at risk and America's reputation as a compassionate and giving society able to care for its members.

Trading Stocks in Upward Trends

2011-05-11T14:07:00.000-07:00

Trading Stocks in Markets Trending up has been my favorite time to go long on a position. As I was watching the markets today (which generally fell) I thought of an analogy between nature and a discovery I had while trading stocks. I wanted to make sure I captured it in a blog posts so others (including myself) could read it at some future date. In the beginning, nearly 8 years ago, I read books on investing, and did not have any success in the market even with what I thought the books were recommending. It would be much later that I would realize the best and usually most important things I learned about trading the markets, was in actual trading. You can read a book about how to play basketball, or how to golf, but until you get out there and make your mistakes (that are great opportunities to learn and grow from)find your sweet spots, and establish your own systems and preferred approaches, you won't truly understand the game. A book on Teaching basketball may not explain properly how decision and emotions can effect a players performance directly. Just like an investing book might not tell you about the different ways the markets are manipulated, but being in the field long enough, proves to you this happens on many occasions, and with the advent of computer high speed trading, will only continue to find new ways to transform and disguise itself.

Ok, back to the analogy I had today that I mentioned above. I have watched the markets long enough to recognize stock prices in general have many of the same properties as moving water. For example, in a market that is strongly rising, signals that investors are entering the market, putting their money to work, and ultimately sending prices higher. In other words, A flow of money into the stock market, raises stock price values (more investors are betting on those companies, giving them more value) So if you put in a Market buy order, and the execution price ends up being higher than when you placed the order, I've learned this is a good thing! You want to catch the current of money that is pushing stocks higher. In this regards, I thought of a flowing current of water like a stream, flowing in one direction, with me standing on one side with a stone in hand. That stone symbolized my desire to buy a stock and throwing it in, represents that I made a Stock Purchase. The moving stream represents the rising stock market. When I cast my stone into the water, the current should immediately pick it up and carry it forward. In a stock buy execution, you enter a buy order, but your execution price is higher because that stock is rising. I remember trying to get the best price for a stock in my younger trading days. If the stock was going down, I thought I could get a bargain and buy it while it fell in value. BIG MISTAKE, This has lost me money, and regularly enough to help me learn and change this habit. I highly recommend out of advise and personal experience, do not buy a stock when its going down!! That's like throwing your stone into the moving stream of water that is moving in reverse, and saying, "Hopefully it will change direction." I learned that hope is a distraction and not enough to make a good move. You have to be precise, tactful, and even clever. If you want the current to carry your stone forward, you must wait until it's moving in the right direction. In other words, if you want to buy a stock - believing its price will go up, You have a much better chance that it actually rises if the "current" of money flowing into the market, is strong, moving the stock market in the right direction.

A Little Insurance for Rising Stocks

I use to miss opportunities all the time waiting for a stock to drop in price so I could buy it. Many of those same stocks never fell to the price I was waiting for, but instead ended up taking off in upward directions. Remember if the stream is moving forward, don't try to throw your rock behind it, so it will pass by you as its carried by the stream, just throw it in, and watch the current immediately pick it up and propel it forward. Wen I place market orders, I am pleased when I see the actual execution price is a little bit higher than when I placed the order. To me, experience has shown me, this is a good sign, this means your stock is already moving down stream. I know it seems counter intuitive, believe me, I know. My thinking about investing and stock trading has grown exponentially, much of it through personal experience. I remember when that would have sounded counter intuitive to me too, but that was before I really started trading a lot. I have documented my trades, my thoughts, ideas, and so forth into journals that I can study from later. Some of my best ideas have come from reading these notes and records weeks or months after I've written them. One things is clear to me from looking at my documentation over the years: Look for the long moves, the rises that move 20 to 40%. Buying a stock because you think it will go up fast in a couple days, in my opinion is dangerous, and not worth the risk. Find a stock that you believe can rise a good amount in several months. I have found for me personally, this approach tends to deliver more favorable outcomes. Worrying about small fluctuations or trying to catch fast rises, is misleading and very difficult. It can also take you away from the study of what's important, such as which industries are rising or leading markets higher and which companies you should be watching. I have begun organizing and sharing much of my documentation on a new website about investing that I'm working on. I continue to add to it everyday. Take a look!

Discoveries in Stock Trading

2011-05-05T16:33:00.001-07:00

Never Trade when you have had a lack of sleep. When you exit or enter a position, and it goes against you, your ability to recall your research, and observation and study of market conditions, become highly impaired and your awareness and focus time is diminished. Of higher importance in making this point, lack of sleep when trading the stock market impairs your ability to properly analyze your emotions. If you buy a stock believing it will go up, and shortly after you buy, it immediately goes down, It is much easier to think clearly having enough sleep when you have to face a decision and analyze several factors quickly, and as accurately as possible for the best outcome in a given situation. It's not easy to think fast and through emotion - confusion, shock, dismay, or anger when your brain is not functioning at near full, or preferably full capacity. The Trading Legend Jesse Livermore wrote about this very subject. I have chosen my favorite quotes of his related to the Health and Trading the Stock Market. What you have to observe and interpret include things like, what are the major index levels, what is another company's stock in the same industry doing, what are the volume levels - is the decline because investors are generally selling at the same time, or is it because the market is in a reaction after a strong rise. It takes strong thinking to recognize what's happening in the Stock Market. Often the true reason for a heavy rise or fall in the Stock Market, doesn't come out until weeks later. A Stock Trader always has to consider this possibility as well, and act upon instinct and experience for making Trading decisions, under these circumstances time and time again. Sleeping enough helps the thinking process stay sharp for stock trading.

Sleep and Stock Market Success

I have known about this rule for many years now. I remember staying up until 1:00am every night reading headlines, watching the Asian Markets or the European markets (Europe's Markets open 12am if you're in California). I would stream Bloomberg news from the internet and listen, watch, research, and document my ideas and potential leads for what stock to pick or what industry to focus on. I would then go to sleep for about 5 hours, wake up at 5:30, start reading the Wall Street Journal and New York Times (I loved that they delivered the paper as early as 4:30am) looking for potential leads or companies that I could watch throughout the day, looking to see how or if it reacted to news, what volume levels would be like trying to quantify if at all possible, the added attention a news story or article in the paper could exert on that stock's trading volume for that day or even that week. Livermore who I mention above, also had plenty to say on Newspapers. As a stock market operator who worked in secrecy, he would later reveal how he used newspapers in relation to his Stock trading skills. read about how this extraordinary Stock Trading Master Used Newspapers in relation to trading the Stock Market. Each morning as the market, opened, I felt well prepared for the trading day....or so I thought. I was right about a lot of things I thought the market would do, but I was also wrong on a lot of things I thought it would do. When I made profitable trades, I was content, but that was not how it was in the beginning! Feeling like you're prepared and then losing money in your trades can be discouraging. I learned that having enough sleep was part of being prepared, something I wasn't doing and was making me unprepared to trade in the Stock Market. I do know now!

When I made unprofitable trades, I was confused, and unhappy with myself. What I came to realize was, I was a bit sleep deprived, and although well informed on market events, news, analyst views and so forth, I was not getting enough sleep! This effected my Trading, when the market went against a trade I made early on, I would hold on and just watch it fall, not sure what to do. I remember even telling myself, it will rebound, it will be back up by the end of the week. Well, most times it wasn't and I lost much more by holding on too long. It was a long learning process but let me just say this, When I started going to bed earlier and sleeping more, I felt more refreshed trading or observing the market. My thoughts came to me easily. My observations had the capacity to push my mind in to analytical mode without the panic or confusion. My recall of all my reading, studying, and past trading experiences, were right at my finger tips. I could use them to make better decisions. If a stock was going against me, and I did my mental calculations and saw I had chosen wrong, this stock was going to fall... then unlike before, I would Immediately sell! This Market has pit falls! it is difficult sometimes to spot them and may take a trained eye, but it is even more difficult if you haven't rested your mind and body. Your memory recall, intellectual faculties, power to analyze, ability to make decisions that may be counter to popular thinking or even your own emotions, and your overall awareness and attention level are very powerful tools in your arsenal. You want to make sure that they stay sharpened and well maintained so when they are called upon, they will perform to the best of their ability. The human mind is the greatest of all tool, and must be taken care of too. Healthy food and plenty of sleep are important!

Overpaying for Shares in the Market

2011-05-01T21:04:00.000-07:00

The notion that common stocks with a strong record of earnings and sales growth reported nearly if not every quarter, will continue to rise and lead the stock markets higher may be absolutely right in a general assessment and view. However, this does not change the reality that investors can pay in full or even overpay for a stock position in a certain company. When an investor is considering taking a position in a company's stock, he or she expects that the current prosperity and future prosperity of the company, will carry the stock price higher as well. This could prove to be true, except many investors enter at a time when the future prosperity expected in that particular company has become apparent to many investors, and is already reflected in the stock price. Recognizing that a stock's price and its calculated future increases in value may not be fully reflected in the price, is the art and skill that have made investors past and present, very wealthy individuals. Spotting a stock price that's deflated when it can be higher, requires research, wit, intellect, and lots of detective work identifying and monitoring it.

Investors need to realize something that I read early on but didn't fully comprehend until building hours of market trading under my belt. When a large company grows, companies that have been around for awhile and are well established, it is much harder to record rapid growth than a newer up and coming company. Investors need to acknowledge both for mid-size companies (the SP400 Mid-cap Stock Index defines Mid-cap as a company with a market capitalization somewhere between 2 and 10 Billion dollars) and also for large size companies (ones with market capitalization over $10 Billion) rapid growth can not continue forever. When large companies have experienced great expansions over the decades of being in business, that growth pace inevitably becomes harder and harder to achieve. I believe it's for this reason that when I watch my list of pre-selected stocks and also the performance in the trading day of the Three major U.S. Stock Indices: the Dow Jones Industrial Average, Nasdaq, and S&P500 Index, that I notice reoccurring patterns that have become predictable over time. The Nasdaq performance throughout a trading day, always seems to indicate what the Dow Jones and SP500 indices are going do. The Mid cap SP 400 index always seems to follow what the other major exchanges are doing. I have noticed recently however that for the year, the Mid Cap index is up 23% vs the Dow Jones Indusrial Average gain of 14%. I am actively looking and researching companies in the mid cap size because I know there are good possibilities for growth at this level for a company and could also mean a rising stock price.

Nasdaq Leads Dow Jones and SP 500

Generally rising markets, sends the Nasdaq higher than the other two exchanges at the end of that trading day. The reverse is also true. If the General market direction is down, the Nasdaq will typically fall by more than the other two Stock Indexes. On days however, when I see the Dow Jones trading in the green (a level above the previous day's closing level) and the Nasdaq trading in the rad (below the closing level of the previous day), I have observed that about 80% of the time, if the Nasdaq stays in the red, the Dow and SP500 will end up closing the day in the red as well. I have observed that the same is true in the reverse situation. If throughout the day I see the Dow in the red and the Nasdaq in the Green, 90% of the time, the Dow pulls up and ends the day in positive territory (in the green). This is not something you can find in books. I didn't, the way I learned this was sitting in front of my trading screen day in and day out until patterns began to emerge. As I observe these patterns, I realize they become useful tools to forecast future movements both in an individual stock, and in stock market levels in general in the U.S. and Globally.

The Early Years of Jesse Livermore

2011-04-30T11:51:00.000-07:00

Jesse Livermore is someone who has caught my attention and transformed it into fascination. He was born in the 1870's in Massachusetts. He attended school until the age of 14 when his father demanded he work the farm rather than continue with his education. This disappointed the young Jesse Livermore who had found a deep interest in numbers, math, writing, and reading books that weren't available at home. His father had dropped out of high school and worked on a small farm. He expected his son to contribute to the farm work and dedicate his life to being a farmer. Jesse had different ideas for his future. Bitter from being pulled from school experience which had opened his mind on subjects beyond the farm, Jesse wanted to escape the iron grip of his father and the destined future living as a farmer all of his life, as his father had done. Deciding the only way to escape both realities, he conspired with his mother, that he would run away, and catch a ride into town where he could start a new life for himself, and not be condemned to a future that was already chosen, without his consent. Giving him $5.00, his mother kept their secret and Livermore indeed, crept out and headed towards the road. He eventually caught a ride into town. Away from the farm, young livermore could pursue his love of numbers, love of reading, and could enjoy a new found freedom.

Livermore Finds Work as a Chalk Boy

Jesse rolled in to town and as it so happens, he walks into the office of Pain Weber. Just looking around, he sees young men writing numbers across a chalk board while another set of men watched the boards and called out orders. This environment fascinated livermore and after asking a couple questions, he soon realized the numbers on the board were prices of stocks as they were being bought and sold on the stock market. One of the "chalk boys" as they were called then, was out sick and the manager of the place, asked a wandering livermore, if he thought he could fill in. The rest is history as they say! Livermore's love of numbers and fascination with the city life he was now experiencing, took the offer and wrote the stock market quotes of a company assigned to him, on the chalk board as another young man in the office, called out the stock quotes. Livermore was intrigued. He had a good sense for numbers and wrote the quotes so flawlessly, he was hired as a new Chalk boy for the office. The small salary was enough for him to rent a room a few blocks away from the Pain Weber office. Every morning, he would arrive to the office before everyone else. Sometime he waited outside at 6a.m. waiting for the others to arrive and open the office. He started reading multiple newspapers and developed a keen sense for what was happening in the stock market, in business, in the economy, in global trade, in finance, and many other subjects that gave him new and fresh perspectives on how the world operated. I have tried this approach, disciplining myself to read multiple newspapers every single day. I have done this for the past 8 years, and I want to say, IT WORKS! I see why this guy was so interested in newspapers now! One of the main and most important things I came to learn is that the news is distributed to the masses. This means people are getting the same general information. What is most important however, is how that information is interpreted! It takes time to learn, but if you're a newspaper reader and stock trader, I'm sure you know what I mean. Often stories and market activity appear at odds to the untrained eye.

Stock Market Repeating Patterns

Anyways, back to Livermore, Each day as he wrote the stock quotes on the board for the investors and spectators who would call out buy and sell orders when certain quotes were drawn, Livermore began to notice some repeated patterns. They included the patterns occurring in the the stock quotes he was writing on the chalk board. He began to notice and carefully observe the fluctuations in price movements. He watched how those price movements moved in conjunction with other stocks,or another company in the same industry. He watched the fluctuations occur as news events were reported in the office. He noticed there were patterns at those times too. The second and possibly most important observation that Jesse Livermore had was the reaction of the people themselves. From the other Chalk Boys, to the Manager of the office, to the men watching quotes, trying to decide whether to buy or sell stocks. They all reacted in predictable manners when certain events occurred. He noticed for example that when stock prices pulled back after a strong rise, men in the office would rush to sell their positions not wanting to lose their profits. As they sold, the price of a stock went down a little more but then start to rise again. He would watch the frenzy like excitement in the office as those same investors who just sold a stock, now jumped back in with excitement as it rose. Livermore noticed that emotions were high and seemed to guide investors decisions not only in that office, but surely around the country. He calculated that human emotion collectively could be predicted to have certain impacts on the prices of stocks. If bad news came out, investors quickly sold a stock, only to often watch it rise past the level they sold it at a few weeks later. He would watch the bewilderment and even the confusion the men exhibited in the office as they reacted to stock price fluctuations. in the market when certain conditions were met. He would go on to explain in his later years that his desire to work alone and trade his own account, was so he could focus on his own ideas, thoughts, emotions, without the distraction of investors who were excited, nervous, and the various other emotions the stock market can invoke in traders. The exhilaration that comes from testing your ideas on the market is amazing. Being right as a result of your work and trading execution, is a very rewarding feeling. The ability to repeat it with high probability, is even more rewarding.

A Numbers Game Becomes Profitable

Jesse began keeping a notebook that he carried with him. It was filled with stock quotes that he had seen or written earlier in the day. When he arrived to his room after a days work, he carefully went over his notebook, studying the patterns that he had seen in the office. He began making trades in his notebook that weren't real, but practice to put his intuition and theory of patterns to the test. Surely he thought, if the market had patterns just like he observed, than its movements could be predicted with good accuracy for the specialist trained to see such a thing. As the story goes, Livermore would use his experience and knowledge on movements, and make fortunes in the stock market with that knowledge. A self made, self taught, man whose life went from poverty stricken, to one of the wealthiest in the country in his day. He worked from a numerical basis only, saying charts were confusing and misleading. I had no idea what that meant until I forcefully trained myself (painfully in the beginning) to watch stock prices not on charts but only on time stamps that show a buy or sale, the share amount, the company, and the time the transaction was made. From an online broker, this is an option in your screen that you watch stock prices from. It's called Time Stamp or something to that effect. What you realize is the chart is an after shot. Whats on the printed time stamp list is real trades, letting you get a better sense of what directions stocks are going and how powerful that direction is. Charts show that after its already happened. I see why charts can be confusing! I use them but as a secondary measure, Watching actual trades on a list is much easier, and much more revealing! Another reason I like this Livermore guy! He got me off using mostly charts, and taught me how to see and interpret where the real action is! I prefer following stock prices on a numerical base now.

My Stock Sale: Real-Estate Company CBG

2011-04-29T13:17:00.000-07:00

I recently sold CB Richard Ellis Group Inc. whose stock ticker is CBG, earlier this week after I noticed a couple days before the CBG earnings release, the stock prices seemed to be falling on heavy volume. There was a day this week where the markets were generally up as measured by the Dow Jones Industrial Average, Nasdaq, and S&P500, but CBG seemed to be falling. I immediately took this as a Strong Sell signal, and I sold. I had been holding this company since December 13th when I got in at $20.31 per share. It recently reached over $29.50 but began to pull back. I sold on Tuesday, April 26th 2011 at $28.51 per share, rise of 40.4% in four months! I do want to mention, I had been watching and studying this stock and its price movements for nearly 3 months prior to me Buying it. On Wednesday of this week, CBG Released their quarterly earnings and the Earning Per Share came in one cent short of analyst expectations. The Stock has been falling since. To see a broader chart with more info on CBG provided by the New York Stock Exchange - EuroNext website, visit CBG Stock Market Chart.

*** CBG 6 Month self-updating Chart ***

Patience in Stock Trading is Key

In stock trading, Patience is everything! Wait to get in at the right moment. Because its possible to buy a good stock at the wrong time, or even a bad stock at a good time, (don't teach that on financial network CNBC) making sure you enter and exit is so very important! I noticed this stock was in a leading industry and for months, I watched both the stock and the industry. When I believed it was going to rise and rise quickly, I got in. I have embedded a 6 month chart of CBG here. Notice the December month and how the stock just took off. In trading, you almost have to see what is going to happen, then act on it. As you can see, hard work studying this move paid off, as a nice rise in a short amount of time, was my objective with this company. When I bought, I'd just started my website: Investing for Beginners When I took a position in this stock. I want to stress, that getting out as strategically as you got in is as important as ever in my opinion. When you get in a stock, you should have an expectation for how high it could rise. For me personally, I want a 10 point move out of a stock. If I buy and don't think I'll get it, I'll sell and go to cash while I scope my next moves. As I look, CBG right now is trading at $26.71 and had dropped as low as $26.45 (3 days after I sold my CBG position at $28.51). I must admit, although I'm tempted to get back into this stock if it begins rising on heavy volume, my intuition and past trading experience, tells me to take my 40% return with a satisfied smile, now go look for another company to start tracking, and an economy awaits to be evaluated! This also takes patience as it can be tedious and a time consuming, constant effort process it seems. But just like a Wise Trader named Jesse Livermore once said, Patience is Key. I learned to respect it and now experience benefit of its meaning.

Microsoft Stock Price Falls After Earnings

2011-04-29T12:52:00.000-07:00

In earnings announcements, releases, or updates - check for revenue levels (growth or declines in hard numbers and percentage terms compared to previous year, previous quarter, or same quarter in a year ago period) in core product or services i.e. Microsoft Reported Earnings on which revealed revenue had declined from its core operating system software. Reasons could include the strong emergence of the ipad and similar tablet computer devices. Because Microsoft was slow to enter or compete in these markets, many people are now using computing devices that don't run on Microsoft operating systems or Microsoft's networks. This could indicate that peoples preference for connecting to the internet and using computers, evolve from PC's and laptops, to these new futuristic like tablet devices that can do many of the same things. Microsoft in my opinion has to respond somehow.

With consumer interest expanding and sales of these Tablet Computers increasing, Microsoft may be missing out on this emerging market. The Tablet Computers don't run on Microsoft software and as more people switch from laptops to tablets, Microsoft may be getting left of this rapidly growing market. Microsoft software is not run on these devices and while more and more people leave their computers and laptops behind for a tablet computer, the effect could weight on Microsoft Core Revenue growth number for sometime. In my mind, the advent of Cloud computing has really contributed to the success of the computer tablet as a preferred way to access the internet.

Cloud Computing and Microsoft

Now without the need of built in software programs or many other files, Cloud Computing allows access to these type of things using the internet to access them on a remote server. This allows the light, sleek mobility and sharp look of the ipad or other tablet computers which can allow a user to simply access all their files and programs using cloud computing. Someone could log in to their works systems from home with an internet connection. Microsoft can still lease their software to companies that run servers and then lease space to users who can then access Microsoft's products. However, it is my feeling that Microsoft did not have an effective strategy or counter strategy to deal with the emergence of cloud computing and computer tablets. Although I credit them for battling Google with the launch of the search engine Bing, Microsoft should have had their attention more focused on Mobile Search, Cloud Computing, Social Networking, and even video. As more and more people begin to use the internet for the very first time, the services that rule like Sales Force's Customer Relations Management software (basically an interactive database) or EMC Corporation. efforts in the cloud computing field, The future I believe will be ruled by internet giants and makes me wonder if Microsoft days of glory have passed. I associate the revenue in core business that fell, as a correlation to what its stock price has done or even its co-founder, Bill Gates.

Bill Gates Dumps Microsoft Stock

In November of 2010, I started noticing in the newspaper's business section in a column that lists large stock sells by an insider or corporate officer, That Bill Gates was dumping his Microsoft stock. Each day I checked this section of the paper, and sure enough Bill Gates continued to sell block after block, day after day of his Microsoft Stock. I must tell you, I don't pay much attention to what the insiders are doing. Most of these guys or ladies are professionals in their fields, not experts in investing. If they knew investing so well, they would run a hedge fund of something of that nature. That being said, they do have information or insights working for a company, but that doesn't necessarily mean the actions of the market are going to line up exactly with what they think will happen by deciding to buy or sell the stock of their own company. Anyways, back to the point... This selling by Bill Gates pretty much on a daily basis, went on to February 2011. This entire period, I watched Microsoft Stock price go from between $24 to $27 per share. The fact that I was watching and trading in other stocks, some of which went up over 60% during the same time, made me realize Microsoft stock at this point in time, is a dud. I don't see it going over $28 a share by the end of the year. It is currently trading at $25.62 per share. Although the increase I predict is minimal, there are many many better choices in stocks to make if you are looking for a better. I see Microsoft as falling behind in the internet / cloud computing era, losing ground to some might competitors like Apple, Google, or Facebook on various fronts. The way I see it, Bill Gates may have known this back in November 2010 when I first noticed that he was unloading big portions of his Microsoft holdings. Not only that, his heavy selling kept the price down. That's why it hasn't climbed. As Mr. Gates heavy selling of Microsoft stock undoubtedly, put downward pressure on the stock price, those still holding, had to deal with the effects of a stock that didn't really move. Investors shouldn't pay attention to insiders, but when its the second richest man in the world dumping stock of the company he founded, I think an exception can be made!

**Self Updating 90 day chart of Microsoft Corporation**

U.S. Economic Engine Slows in 1st Quarter

2011-04-29T10:43:00.000-07:00

The U.S. Economy ended 2010 with a strong quarter. In the 4th quarter of last year, the economy expanded at a 3.1% rate. For the first quarter of 2011, that expansion rate dramatically slowed and according to the United States Department of Labor in a report they released yesterday that was titled: Productivity and Costs, 4th Quarter and Annual Averages 2010, Revised. The U.S. output for the 1st quarter of this year (which covers the January through March period) expanded at just a 1.8% rate. This is another example of how analyst can totally blow their estimates. At the beginning of this year, they were predicting a 4% GDP expansion rate for the first quarter. Obviously they are now giving new estimates, citing the middle east turmoil, steadily rising oil and gas prices, and rising commodity prices, analyst are now rushing to change their forecast and have the public forget about their last one. Kind of like the weather when the weather man says dress warm, its going to rain, only to have it become a nice sunny day. Yet, we are suppose to listen again to the next forecast!

Wheat Futures Continue to Climb

When I checked the commodity levels in the NY times yesterday, Wheat was at $8.41 per bushel. Keep in mind, countries around the world that included Jordan, Egypt, India and others experienced rioting in 2008 when Wheat was just over $9 per bushel. The rioting was largely attributed to rising food prices that was led by Wheat. In many of these countries, where the majority of the population is poor, a rise in food prices could be the matter of survival, leading to a feeling of organization to protest the exorbitant prices. I'm watching Wheat prices carefully; the high in a 52 week period reached $9.50 per bushel, and the current prices are steadily marching towards that direction. I've seen them climbing the past few weeks.

One exception in Commodity prices that I've generally observed recently is the falling prices prices of sugar futures. Interestingly enough, as I've watched other major commodity staples rising, Sugar has actually been declining. In the past few weeks, I've watched the price of sugar futures go from $28 to $23 per pound. To follow Sugar Prices or see other Commodity performance and charts, I visit www.indexmundi.com Obviously, oil continues to make production more expensive, as the cost of transporting goods or operating machinery has also risen in price. The added costs to run farm equipment and to ship goods, has become more expensive over the past several months, but for some odd reason, sugar continues to fall. The New York Times Business section reserves a portion of their newspaper for reporting on commodity prices. While I've watched most rise, it has been very interesting to simultaneously, watch sugar fall. I will keep a close eye on this situation for any further developments and will blog what I see in a future post.

Global Oil Prices March Higher

With the growing middle classes of China and other countries around the world, the increase global demand for oil and speculation of inflation across the board, has all contributed to the rise in oil prices. Consumers and businesses will have less discretionary income, since more will go to pay for oil related costs. On the other-side however, as the U.S. economy slowly improves, more people will go back to work, and more cars will be driven I personally have followed oil prices for the past 7 years. From what I see, these prices which currently stand at $112 per barrel, won't be going down anytime soon. As summer approaches and people begin to travel and take vacations, the added demand may send gas prices and oil prices up even higher. I learned not to be mislead by news reports or Analysts predictions. As a matter fact, here is a post I did on Goldman Sachs a couple weeks ago where they were publicly advising their clients to sell oil, saying short term prices would be going down. I completely disagreed and was somewhat outraged, as I felt Goldman Sachs was trying to pull a fast one on the public (Not like that has ever happened before right?) Here's a link to that particular post: Goldman Sachs Bearish on Oil, Yeah Right! I don't believe that for a second.

One could also look at the drop in home prices that continues to weight both on the market, and on consumer sentiment. Winter blizzards across the Midwest that have occurred in the past couple of months, shut many businesses temporarily, and even halted construction projects. The effect of this included a slow of investment dollars into non-residential construction projects, things like retail shops or business offices. This should cause prices in non-residential structures continue to fall as the added inventory means more competition to sell these building. With added competition, there will be sellers who drop their prices to appear more attractive to buyers. If others follow suite, prices will decline as a whole, much like what has already been happening in the U.S. real estate market. I've watched the 30 year fixed interest rate each day, and recently saw it currently stands at 4.77&. This is slightly higher than before, and indicates that loans for Mortgages may be going up. As more loans are demanded, the Interest rate goes up, since this means the lender can charge more for the loan and most likely get it (from increased demand for loans. I keep a close eye on many things in the market, but commodity prices, oil prices, unemployment situation, mortgage rates, lending rates, and stock market levels are some of the areas I focus closely on day in and day out. From what I can tell, the rest of this year should show expansion in GDP, but any unforeseen events like massive tornadoes or uprisings could quickly change that.

South Korean Search Engines vs. Google

2011-04-19T22:54:00.000-07:00

South Korean Search Engine Companies recently filed complaints against Google claiming the Android that often comes preloaded on a phone, has Google as the default search engine and makes for uncompetitive practices in the growing mobile search market. NHN Corporation is the owner of the largest South Korean search engine, Naver. The second largest is Daum. Both companies asked the South Korean Trade Commission to Investigate whether Google intentionally offered their Android Operating System free to phone manufacturers, in order to reach the South Korean consumers directly when they buy phones with Google already installed as the search engine. The South Korean Search Market is competitive, especially with a growing base of smart phone users moving into the future.

Worldwide, Google's Android is expected to become the preferred Operating System on most Smart Phones. In South Korea, about 2/3 of all Smart Phones sold in 2010, were running on Google's Android OS . Combined, Naver and Daum control more than 70% of the mobile internet search market in South Korea. Part of the complaint was that Google was blocking installations of selecting a different search engine for your phone if it was Android equipped. The newspaper ran a story about this the other day and said it was proven that switching the search engine on an Android ran phone was possible. Nevertheless, the South Korean Search Engine giants do not want to yield market share to Google or any other competitor.

South Korean Mobile Search Market

The reality that more and more people are buying smart phones or trading their old cells in to get one, means that in South Korea, the Mobile Search market is expected to expand rapidly. Ad revenue from Mobile Search should grow, and a battle is on for Search Engine users who may be using it more from their phone than ever before. The numbers are staggering for the mobile phone growth. Looking at South Korea in 2009, the country had 800,000 Smart Phone Registered users. Now, the number is higher than 10 million with many analyst predicting that it will reach 20 million smart phone users by the end of this year. Whatever the number, one thing is clear, smart phones are on the rise, and competitive markets for mobile ad revenue are emerging in places beyond the United States where it use to to be Bing and Google who were the big competitors. They still are of course, but Google has more than just Bing on its mind in regards to its competition, it is looking to increase market share around the world. South Korean Companies undoubtedly will look to do the same.

Short Android Introduction Video

As I was researching Android after reading about they complaints from the two South Korean Search Engine companies, I came across this interesting video. Nick Sears is one of the co-founders of Android, he is the first person speaking in the video. It's short but just like its title, it is a very brief introduction into Android. Although I can see the South Korean company's point, I don't think Google is responsible for breaking any laws or conducting improper strategies to gain market share. Its like accusing Microsoft of having a monopoly on computers, since many come with the Microsoft windows preloaded. I think South Korea will have to find a way to remain competitive, much in the same way Google has been able to enter markets around the world. The Mobile Search Market is growing and growing fast!

Social Media - Online Communties

2011-04-19T19:33:00.000-07:00

I remember several years ago, before Social Media really became a wide spread phenomenon - I didn't recognize its importance right away. Many people I knew were using Friendster or Myspace at that time. The sensation of instantly sharing with friends or followers, ideas, web discoveries, your own personal websites, photos, shared calendars that could send invites to your groups, was pretty remarkable. I now take it for granted, but I credit those early adapters who were using it before it got big and attracted millions of users across the planet. From this back drop, I watched the emergence of Facebook. I didn't join in the early days, but I watched carefully as others did. Many had Friendster or MySpace accounts, and opened I carefully observed the emergence and evolution of Facebook. Although I was not an early adapter, I watched as my friends, family, and colleagues opened Facebook accounts. One of my buddy's makes music videos and posts them online. They usually go somewhat viral attracting up to 8,000 views a month from YouTube alone. On his MySpace page, he has over 3 million profile views, and a butt load of friends. I asked him how he did it, and his reply was an early adapter of MySpace and when it got big, many people added him as friends to their social networks, increasing his access to be viewed by the friends of the new friends. That combined with the natural occurrence of search engines as a method to search for internet sites by content type has helped him get such a large following. He was a new adapter to Facebook after I introduced it to him about a year and a half ago. He was reluctant and did not want to switch (I could hardly blame him, his profile views were in the millions over four five years). Now however, he focuses his time staying in contact with his friends and new fans on Facebook, as well as sharing his music. Although he maintains both accounts, I only see him on Facebook when we are hanging out. Social Media has grown his list as it has for many, but it has also connected people with each other who did not have that option before.

The freedom of sharing your creativity or interest with others creates online communities the same way it creates them offline. The connectedness social media brings, is exactly what makes it "social" and the ability to print and write your ideas (in most countries anyway) means media has opened its definition to include more than just large media corporations. Social Media lets the online community share and essentially become producers of media in their own right, by sharing and the possibility to reach millions. Out of this environment emerged Facebook, Youtube, Twitter and others. Companies that organized the capacity into a tangible usable medium. Angel and Venture Investing These Social Media companies continues to allow them to expand their reach and add memberships, across the world. The question is will Social Media continue to grow into the future? Some Investors are betting the answer is a definite, "YES."

For example, recently the Investment firm, T. Rowe Price Funds, has invested in social media and related internet companies. The firm has $482 Billion in assets under management, and although it makes the $500 million they've invested in social media already, they can always invest more. Recent filings for example, shows the firm has invested $71.8 Million with Zynga - maker of games such as Farmville on Facebook - and $86.6 Million in Groupon. Here is an Article I found about the Investment Firm's Facebook Stake disclosed recenlty. T.Rowe Price's investments in Social media and related companies, is reported to be spread over more than a dozen of the firm's funds. As access to the internet continues to expand around the world, Investing in Social Media may end up being a wise investment after all. As participation on Social Media sites grow, so will the Ad revenue generated. This may very well attract even more investment dollars to the Social Media sphere, allowing them to grow and constantly enhance the social media experience. I've watched over the years, valuations of some of these companies, keep going up. Twitter and Facebook are valued at their highest ever. a few weeks ago, the NY Times reported Twitter had a valuation of $4.1 Billion.

Massive Shorting Denied by Goldman Sachs

2011-04-19T13:55:00.000-07:00

A 650 page report titled, Wall Street and the Financial Crisis: Anatomy of a Financial Collapse was published last week by the Senate Permanent Subcommittee on Investigations. Many in the Senate including Senator Carl Levin from Michigan, believe Goldman Sachs saw the impending economic and market collapse, as early as 2005-2006, and positioned themselves accordingly, essentially betting against the market values of outstanding debt that was backed by mortgages. The CEO of Goldman, Lloyd Blankfein, denied last year in a hearing that Goldman had a massive short position, particularly on housing. I see this issue resurfacing, it will be interesting watching the latest developments and any further investigations.

Goldman Sachs CEO Faces Inquiry

Many believe large firms like Goldman Sachs were not only over leveraged with too much risks on their balance sheets, but that the severity of the 2008-2009 market drop was partly do to Goldman Sachs Shorting the Stock Market, while also betting against bonds that were backed by mortgages, sub prime mortgages in many instances. Senator Levin is now considering sending the matter to the Justice Department, as he's convinced Goldman Sachs misled not just investors, but the committee set up to investigate the market collapse. By having a huge short position, when things went bad, stocks would fall and fall hard. This is exactly what they did from 2008 to 2009. Goldman is accused of profiting heavily from this and using their influence to dodge committee questions or further investigations. The New York Times reported Mr. Blankfield had told a close friend, he was thinking of retiring, saying he was exhausted from leading the firm; and may step down soon.

As speculation of a succession plan began circulating, Goldman Sachs appears to be once again in the hot seat with the feds. William D. Cohan is the Author of the new book, "Money and Power - How Goldman Sachs came to rule the world." I haven't personally read it yet, but added it to my books to read. I'm curious as to how Goldman's rise is portrayed, whether accurately or biased. Ordered today, will blog about it later after I've read it. I'm currently reading another book written about Goldman Sachs that is entitled, Chasing Goldman Sachs by Suzanne McGee. So far, it is very interesting. I know that many bankers appeared to have taken too much risk and consequently were bailed out by Tax payer dollars. Now that some of that risk taking is coming to light, we are getting a glimpse into the world that Goldman Sachs influences through its standing as one of the largest investment firms in the world. The way its reputation seems to be getting tarnished, could put downward pressure on the company's share price in the near term while the recession and anger at bankers is clearly visible not just in the U.S. but around the world, similar to sentiment for years after the Great Depression.

United States Government Debt Outlook

2011-04-19T13:52:00.001-07:00

Global preference to the dollar has helped America secure a stellar Credit Rating from rating agencies including Standard and Poor's and Moodys. As the world largest economy, the U.S. has long had an economic engine that provides trust and security when investors buy its government issued debt. Something happened yesterday however that has brought question to America's debt sustainability. Can the U.S. government pay interest on outstanding treasuries notes and treasury bills. On Monday, one of the major rating firms in the world - Standard & Poor's - lowered its outlook on the united states rating to negative. This does not mean the U.S. has lost or been downgraded from its actual rating of AAA, but it's the first time since Standard & Poor's started issuing outlooks for countries in 1989, that its outlook for the U.S. was something other than "stable." The three U.S. major indexes which are the Dow, Nasdaq, S&P 500, were all down more than 1% after the news was announced. Here's an Editorial from the NY Times About it: Good Advice from S&P.

Treasury yields - the interest the U.S. government pays on its debts - spiked on the announcement. The U.S. has more than $9 Trillion outstanding in government debt to the public. When the Treasury Yield goes up like that, it means the interest payments that are going to be made towards paying the United States National Debt, increase. This effectively increases the debt burden because interest payments to debt holders cost the government more money to pay. Since interest rates are so extremely low right now, whether its the 30 year mortgage rate of 4.87 or the 60 month car loan of 5.97 (I remember when this was 6.17 several months ago) rates in the short to midterm, will eventually go up. This increases the debt the government pays out or issues because it becomes more expensive for them to borrow. Good economic policy in which the economy is once again firing on all cylinders, is what is needed here in my opinion. The U.S. would have to borrow less if its tax receipts and economy were strong and showing promise of sustainability, bringing investors off the sidelines. Of course more money in the Treasury, means the ability to pay off debt, preventing a potential downgrade in near future. The U.S. must focus on Economic growth and tax reform right now.