The Housing Market Crash of 2007 was the worst housing crash in U.S. history. The Housing Market Crash of 2007 was the cause of the financial crisis. This nearly caused the U.S. to experience another depression like the Great Depression. There are a number of things we can look at to determine how the housing bubble occurred and what happened to cause the bubble to collapse.

The Housing Bubble

The housing market experienced modest but steady growth from the period of 1995 to 1999. When the stock market crashed in 2000, there was a shift in dollars going away from the stock market into housing. To further fuel the housing bubble there was plenty of cheap money available for new loans in the wake of the economic recession. The federal reserve and banks praised the housing market for helping to create wealth and provide a secured asset that people could borrow money to help the economy grow. There was a lot of financial innovation at the time which included all sorts of new lending types such as interest adjustable loans, interest only loans and zero down loans. As people saw housing prices going up, they were stepping over each other to buy to get in on the action. Some were flipping homes in an effort to take advantage of market conditions. If you understand fractional banking, you would know that with a 10% reserve requirement, in theory it would means that 10 times that money can be created for each dollar. With 0% down needed to buy new homes, an unlimited supply of money could be created. With each loan, banks would quickly securitize the loan and pass the risk off to someone else. Ratings agencies put AAA ratings on these loans that made them highly desirable to foreign investors and pension funds. The total amount of derivatives held by the financial institutions exploded and the total % cash reserves grew smaller and smaller. In large areas of CA and FL there were multiple years of prices going up 20% per year. Some markets like Las Vegas saw the housing market climb up 40% in just one year. In California, over ½ of the new loans were interest only or negative-amortization. From 2003 to 2007 the amount of subprime loans had increased a whooping 292% from 332 billion to 1.3 trillion.

The Beginning of the Crash

The housing market peaked somewhere in 2006. We were beginning to see some of the early signs of trouble when some types of subprime loans started to go into default. There wasn’t worry at that time since never in history have prices for housing market gone down nationally. Once the credit markets froze in the summer 2007, things began to deteriorate rapidly. Subprime credit stopped completely and interest rates for credit for other types of borrowing including corporate loans as well as consumer loans rose dramatically.

Timeline of Events for 2007

February: Freddie Mac announced that they were no longer buying the most risky subprime.

April: Subprime lender New Century Financial Corporation files for bankruptcy.

June: Bear Stearns announced a loan of 3.2 billion dollars to help bailout one of its funds that invested in collateralized debt obligations (CDOs).

July: The stock market hit a new all-high over 14,000. On July 31, Bear Stearns liquidates two of its mortgage-back security hedge funds

August: A worldwide credit crunch had begun and there were no subprime loans available. Subprime lender American Home Mortgage files for bankruptcy.  This marked the start of the housing market crash

September: The Libor rate rises to its highest level since December of 1998, at 6.8%.

December: The stock market finishes the year at 13,264.

Timeline of Events for 2008

January 11: Bank of America acquired Countrywide financial for 4.1 billion dollars. Countrywide had a total of 1.5 trillion dollars worth of loans.

March 16: Bear Stearns on the verge of bankruptcy signs a merger agreement with J.P. Morgan to sell itself for $2 a share which was fraction of the current trading price.

May 19: The markets had its final day above 13,000 closing at 13028.

September 6: The treasury announced a takeover of both Fannie Mae and Freddie Mac that had over 5 trillion dollars in mortgages.

September 14: Bank of America signs a deal to acquire Merrill Lynch.

September 15: Lehman Brothers files for bankruptcy. The Dow drops 400 points closing at 10,917

September 17: The federal reserves lends $85 billion dollars to American International Group (AIG).

September 18: Fed Chairman Ben Bernanke and Treasury Secretary meet with congress to propose a $700 billion dollar bailout. Bernanke tells congress “If we don’t do this, we may not have an economy on Monday.”

September 26: Federal regulators seize Washington Mutual and then strike a deal to sell most of to J.P. Morgan for 1.9 billion dollars. This represents the largest bank failure in U.S. history.

September 29: Congress votes down the $700 billion bailout plan. That same day Citigroup acquires Wachovia.

October 1: The Senate passes the $700 billion bailout bill.

October 3: The house passes the $700 billion bailout plan and the president signs it into law.

October 6: The fed announces that it will provide $900 billion in short-term loans to banks. The Dow closes below 10,000.

October 7: The fed announced that it will lend around 1.3 trillion dollars directly to companies outside the banking sector.

October 10: The Dow closes at 8451, the stock market has had its worst week ever losing 22% over the past 8 trading days or 8.4 trillion dollars from the market highs in 2007.

October 14: The Treasury taps $250 billion of the bailout fund and uses the money to shore up the nations top banks.

December 31: There were over 3 million foreclosures by this year. Florida, Arizona and California had rates of 4% with Nevada at 7.3%

The aftermath

Even though the financial crisis was resolved by start of 2009 the housing market continued to decline throughout 2009. There were over 3 million foreclosure filings for 2009. Unemployment rose to over 10% and the housing market crash created the worst recession since the early 1980’s. By the 4th quarter of 2009 the U.S. has experienced significant GDP growth and corporate earnings had increased by over 100%. The Unemployment Rate had stabilized towards the end of 2009. By 2010 housing prices still haven’t gone up and we are still working through a surplus of housing inventory.

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The Beginning

Before money as in coins or notes as we use now had come into use, people followed the barter system. It is in fact the earliest form used by people to buy or sell any thing. So you must be wondering as to what exactly is this system? Well the basic concept of barter is extremely simple. The people during those times bought a particular thing in exchange of his personal goods or sold it following the same system.

So what exactly did they use to buy or sell a particular good that they wanted to have for themselves? The most popular form of barter that was used was livestock. Ox, cows, goats are some of the popular livestock that had been used under this system. Then as agriculture developed and became popular, the crops were used by the people as barter. The other form that was practiced was exchanging of raw materials for manufactured items. The raw materials in this question are minerals, grains etc and the manufactured goods are items like pottery, glassware, fish-hooks, harpoons etc.

Introduction of Coins

The next piece of item that came into use as a medium of buying or selling products is shells. This system was first introduced in China around the year 1200 B.C. Cowry shells started to be used and this system continued for a long time. Throughout the history of paper money, cowry shells continued to be in practice until the middle of the present century.

Around 1000 B.C, with the finishing of the Stone Age, the use of metals as a form of currency became prevalent. These metals even in the form of knives and spades were used as a form of currency in some parts of the world. The Chinese coins that were made of base metals had a very interesting structure. They had holes in between. That was done so that the coins could be chained together.

The earliest real form of coins can however be traced back to 500B.C when silver coins came into use. They were very similar to what we understand by coins today. They had impregnations of gods and goddesses, emperors and kings on their body. They were first used in Turkey; Lydia as it was called during those times. Gradually these coins were adopted across the world. The difference these coins had with the Chinese coins was that these coins were not made from base metals. Instead valuable metals like gold, silver, and bronze were used to make them.

First Currency

The next form of currency that was used is leather currency. It has been discovered that around the year 118 B.C banknotes in China were made from leather such as white deerskin. This is believed to be just the starting of paper money. 9th century A.D to 15th Century A.D is the time span between which the paper currency came to be used in China. A massive inflation in the amount of currency was observed during this period. But this didn’t last longer and by year 1455, this practice came to an end.

The next form of exchange medium that has been recorded in the history of paper money is the potlatch. The use of potlatch means exchanging of gifts at various traditional rituals, banquets or dances that were organized by any specific clan or community. This was observed around the year 1500 by the North American Indians. These are the same people who used beads of clam shells in the form of strings in the form of money around the year 1535. These strings came to be known as wampum.

Gold as Currency

In the year 1816 England created a revolution by introducing gold as a medium of currency. The currency was measured in ounces of gold. The United States too adopted this medium otherwise known as the “gold standard” by the year 1900. This medium was believed to keep a check on inflation of currency. In 1933 during the great depression the U.S put an end to gold standard.

Paper Currency

Early forms of paper money were based on the gold standard in that each bill was backed by the government to be redeemed for a certain amount of gold or silver. Fiat money replaced representative money in which money has its value based solely on supply and demand. The advantage of a fiat monetary system is that there are no restrictions on how much money that can created. This flexibility can help economies get out of recession through rapid growth in money supply though too much money supply can lead to inflation.

Summary

At present still there are countries that decide upon the value of their currency considering the price of gold. Other countries and financial institution try to keep a check on the inflation in their own way. The change of currencies continues till date. And the newest form of currency that we know is “digital cash” or electronic money if simply put. This can be exchanged over the web for the convenience of people.

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Types of Risk

Within your portfolio there are 2 different types of risk, systematic risk and unsystematic risk.  Systematic risk are things that are out of your control such as interest rates, foreign exchange, credit, country, political and market risk.  So for example in the event of a 50% market crash, odds are no matter how diversified you are in stocks, your stocks will likely drop as a result. Unsystematic risk effects a single company such as if company goes bankrupt, accounting fraud or the employees go on strike.

Diversification in Stocks

There are different ways to diversify in stocks.  One way to diversify is to own a large number of individual stocks.  Though if you own say 20 banking stocks, you could be at risk if banks in general should experience a large drop in earnings or go out of favor.  So rather than owning a single sector, to get diversification you would need to own many sectors of the market.   You can also blend different types of stock such as large to small cap stocks and also different styles of stocks such as value, dividend and growth stocks.  You can also have a part of your investment in world markets such as emerging markets.  A popular way to diversify in stocks is to own a stock index such as the DJIA or the S&P 500.

Unfortunately, too much diversification isn’t good for you. You don’t need to hold hundreds of securities to be properly diversified. Nobel Prize winner William F. Sharpe published on article in 1972 on the effect of diversification on nonmarket risk.(“Risk, Market Sensitivity and Diversification,” Financial Analysts Journal, January/February 1972, pp. 74-79.)

The graph shows that the number of stocks held does reduce your risk however this reduction becomes negligible once the portfolio reaches 25 or 30 securities, spread across several sectors.

Diversification for your Portfolio

Diversification for your Portfolio is buying different investment types to makeup your portfolio.  There are 2 basic classes of investments, which are cash and assets.  Cash pays a fixed interest rate yet is vulnerable to inflation risks.  Assets posse deflation risks in a weak economic environment and may or may not pay any fixed income.  A traditional portfolio is made up of cash, bonds and stocks.  Nontraditional portfolios can consist of things outside the stock market such as commodities, real estate, private equity and even collectibles.

Is your goal to preserve money, generate income or get high returns?  If you are a conservative investor, you probably want at least ½ of your portfolio in cash and if you an aggressive investor than you will want more than ½ of your investments in assets.  You will need to rebalance your portfolio over time as some parts of portfolio go up and down in value.

Summary

So while diversification is a good money management, it can however reduce your gains if one particular stock would happen to skyrocket.  While taking high risk can yield great rewards for a small time period, people that take high risks will often end up far behind the person with a steady plan in the long run.

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George Soros net worth

Biography

George Soros was born in Budapest, Hungary on August 12, 1930. He was Jewish born through the time when Nazi Germany took military control over Hungary. With an original last name of Schwartz, the family changed their last name to Soros in 1936. Soros survived the Nazi invasion and the Battle of Budapest and he first traded currencies in 1945-1946, along with jewelry, during the period of Hungarian hyperinflation.

He then immigrated to England in 1947 where he attended the London School of Economics and eventually graduated in 1952. He then immigrated to New York City in 1956 and worked as an arbitrage trader with F.M. Mayer between 1956-1959. From there, he worked as an analyst with Wertheim and Company from 1959-1963. From 1963 to 1973 he worked for Arnhold and S. Bleichroeder. He attained the position of Vice-President only to realize that he was a much better investor than a philosopher or executive. He convinced his employer to establish an offshore investment fund for him to run and wishes came true in 1967, when the company founded First Eagle; then again, in 1969, when they founded a second fund, Double Eagle Hedge Fund. Regulations limited Soros’ ability to invest the way that he wanted, so in 1973 he quit his job to start his own private investment company, later became known as Quantum Fund, which was actually founded in 1970 with Jim Rogers. He then retired in 1980.

Insider Trading?

In 2002, a French Court ruled that Soros performed “insider trading” from a 1989 deal where he bought a number of shares in a French Bank, one year after he was approached to join in on a takeover attempt on the same bank. He was fined $2.3 million, which was the exact amount that he had made throughout this business transaction. Soros maintains his innocence, as he states that the takeover was public knowledge.

Famous For:

1. Soros is known for being that man that single handedly broke the Bank of England in one day of trading where is profited a reported $2billion from one trade, where he risked $10 billion of his own money on shorting the British pound. Needless to say, he was right.
2. Running the Quantum Fund. While George Soros was at the helm, the Quantum fund generated an annual return of over 30%.
3. He was considered to be the “trigger” behind the Asian Financial Crisis of 1997, where he had a bet against the Thai baht.

Investment Style

George Soros invests typically in bonds and currencies and this area is where he has made his money. Soros’ investment style tends to lean towards being a master at translating economic trends into highly leveraged trades. He could be considered a short term speculator. His investing style tends to be hard to copy as he stated he just gets a feeling of when “to get out in the front and make a killing.” He believes that investors move in herds, and he would tend to follow suit, until the opportunity was right for the taking. He also believes that investors drive the fluctuations of the markets and that the markets are chaotic because of this.

Famous Quotes

1. “A full and fair discussion is essential to democracy.”
2. “An open society is a society which allows its members the greatest possible degree of freedom in pursuing their interests compatible with the interests of others.”
3. “Bush’s war in Iraq has done untold damage to the United States. It has impaired our military power and undermined the morale of our armed forces. Our troops were trained to project overwhelming power. They were not trained for occupation duties.”
4. “I chose America as my home because I value freedom and democracy, civil liberties and an open society.”
5. “I give away something up to $500 million a year throughout the world promoting Open Society. My foundations support people in the country who care about an open society. It’s their work that I’m supporting. So it’s not me doing it.”
6. “Markets are constantly in a state of uncertainty and flux and money is make by discounting the obvious and betting on the unexpected.”
7. “The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”

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What is a Balance Sheet?

So what exactly is a Balance Sheet? The balance sheets can give an investor a vivid idea about the company. These three segments are basically the assets of the company, its liabilities and the equity of the shareholders. All these are summarized and stated in a balance sheet. The basic formula that a balance sheet has to follow is that the assets should be a sum of the liabilities and the shareholder’s equity. Assets are those means through which the company operates its business transactions. And the assets are supported by the liabilities and the equities.

So why the summary sheet that follows this formula is called a balance sheet? Well that is because whatever asset a company owns is paid for with the help of the liabilities and the equity of the shareholders. Now there are separate accounts for all the three segments that have been mentioned. Under the assets segment the cash, inventory and the property of the company is mentioned. On the liability side of the balance sheet accounts of accounts that are to be paid or any long term debts that the company in under. The balance sheets of different companies or business will vary accordingly.

There can be certain internal purpose which might compel a company to produce its balance sheet. It’s up to the management of the company to choose on which date and in what way would they like to produce the balance sheet. But a balance sheet to be prepared after the last day of a financial year stating the transactions of the company over that particular year.

Asset Types

There are two types of assets; one is called the currents assets and the other the non-current assets. The current assets are those which do not have a very long span. It might be a year or less. The current assets are easily converted to cash. The current assets are inclusive of cash and cash equivalents, inventory and accounts receivable. The safest of the current assets are the cash equivalents. The non-current assets on the other hand are difficult to turn into cash. They are inclusive of the tangible and intangible assets. By tangible assets we mean computers, machinery, land and buildings. And intangible assets imply goodwill, patent or copyright. The potential of the non tangible assets should never be undermined.

Type of Liabilities

The liabilities too are of two different types. The two types of liabilities are namely current and long term liabilities. The current liabilities are to be cleared within a year’s time, whereas the long-term liabilities can be cleared after a period of one year. By shareholder’s equity we mean the initial amount of money that has been invested in any particular business. If the total earnings of a company over a year’s time are reinvested in the company again, in the balance sheet that is shown in the account of the shareholder’s equity.

Reading a Balance Sheet

So how to read a balance sheet? The balance sheets are divided into two sections. The left hand sides of the balance sheets have the accounts of the assets and the right hand side summarizes the accounts of the liabilities and the shareholder’s equity. A balance sheet should have the value of the assets equaling to the combined value of the liabilities and the shareholder’s equity. The organization of a balance sheet is a very important aspect. The right hand side of the balance sheet that is the liabilities and the shareholder’s equity section is organized taking into consideration how current is the account. The main way to understand and analyze a balance sheet is with the help of analyzing the financial ratio.

Benefits of Understanding a Balance Sheet

In what ways will you benefit if you can develop a better understanding of a balance sheet? It can help new investors a better understanding of about how a company’s financial position is at a particular time. To understand it even better you must study the balance sheet in combination with various other financial statements of the company. Also you might compare it with the previous balance sheets to understand the progression of a company. While reading a balance sheet you must look at some factors. You should look at the shareholder’s fund and the net current assets. Bring into consideration the figure of the total current assets and the fixed assets of the company. Also go through the accounting policies of the company.

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Background

Donald Trump was born on June 14th, 1996 in New York and had four brothers and sisters. Donald Trump is now a billionaire who constructed giant feats ranging from skyscrapers, to golf courses, and even to Casinos and hotels. He’s been in job positions from investing stock, running companies, and even staring on a television show. Most of his money has come from building huge projects as a real estate tycoon. When he first started, he worked with his father for five years. He says, “My father was my mentor, and I learned a tremendous amount about every aspect of the construction industry from him.” After he learned as much as he could from his father, he moved on to become a real estate investor. On most of the businesses he has, he has giant “T”s written as a trademark of sort, mainly to show it’s his.

On a personal level, he’s been married three times and has 5 children. He married his first wife, Ivana Trump, in 1977 then divorced in 1992. He and his second wife, Marla Maples, got married 1993 and divorced in 1999. He and Melania Trump got married in 2005 and are still together. He has three children with his first wife and one child with each of his other wives.

Investment Styles

His main style of investing is in land; he’s a real estate tycoon. He bought land, and then he constructed giant properties such as golf courses and casinos on the land. Out of all the buildings Donald Trump made, Trump Tower was his biggest accomplishment. He always kept prices high even when others started to lower theirs. One of the very possible reasons he’s so rich and famous is because he thinks big. A sum of his quote is, why think at all if you’re not thinking big. If you think about Trump Tower, gold courses, and casinos, they all have one thing in common; they’re all huge.

Accomplishments

His biggest accomplishment, Trump Tower, had luxurious hotels as well as shops and stores inside of it. He’s also brought up casinos as well as resorts. His name is in the name of most of the casinos and hotels he’s turned into metaphorical gold mines. Donald Trump also owned the Trump Taj Mahal hotel that opened in 1990; that was the largest hotel in the world.

The Apprentice, aired in 2004, was also a giant success by Donald Trump; it was a reality show that had a great amount of viewers. Donald Trump even has a star on the Hollywood Walk of Fame. He created the Trump University in 2005. It teaches mainly about real estate as well as being a successful entrepreneur. In addition to the all of the other things, he’s also written few business books that teach how to be a successful business man. Because he has had many bankruptcies but stayed above water, people trust his ideas and always find him to be one of the best businessmen out there.

Failures

In Donald Trump’s life, He’s called for bankruptcy multiple times. In fact, his casino went into bankruptcy twice. He solved this problem by becoming a partial owner of the casino. By doing this, he could pay the debt back slower at lower rates. He didn’t personally get involved when the going got tough, that way he wouldn’t need to file bankruptcy. Donald Trump’s casino resorts as well as hotels also went into bankruptcy a few years later. His idea was to give some more stocks to partial owners, so when the prices went up, they’d have more power in the company; in exchange in this deal, he wanted some of the debts of the casinos and hotels forgiven.

By the early 1990s, Donald Trump had owed billions of dollars, and most people thought that he was done for. Since he was able to keep a positive attitude and not accept defeat, he eventually got back to being one of the best businessmen around Also, by continuing to go on and by not giving up, he was put in the Guinness Book of World Records as having the biggest financial turnaround in history. He says his financial failures happened, because he has simply lost focus.

Famous Quotes

1. “I like thinking big. If you’re going to be thinking anything, you might as well think big”

2. “If you’re interested in ‘balancing’ work and pleasure, stop trying to balance them. Instead make your work more pleasurable”

3. “Sometimes by losing a battle you find a new way to win the war”

4. ”Sometimes your best investments are the ones you don’t make”

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During the 20th century the stock market returned an average of 10.4% a year.  Just $1,000 invested in 1900 would be worth over $19.8 million by the end of 1999.  At 15% average return per year, it only takes 30 years to turn $15,000 to $1 million.

Stock Market History of Returns

Over the stock market history corporate earnings have gone up an average of 7% per year and the inflation history of the markets shows that inflation has averaged around 4% per year.  The % weights of sectors has changed a lot from 1900 to 2000.  For example back in 1900, railroads made up over 60% of the stock market yet make up only .2% today.  More than 60% of American’s lived in rural areas in 1900 and by 1990 that number had dropped to less than 25% according to the U.S. census.

What we have done is compiled data that shows the price change and dividend distribution to come up with the total market return.

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Charles R. Schwab

Background

Charles.R.Schwab was born in Sacramento, California in 1937. His childhood was spent in struggling with a learning disorder called Dyslexia. Not many people knew about this problem at that time. Charles Schwab came to know about it only at the age of 44, when it was deciphered that his son too was a Dyslexic. His first job was to sell walnuts, eggs and chicken and this enabled him to learn a lot about finances and profitable business concepts. Charles excelled in Maths and Science which helped him to secure admission in Stanford University in 1955. Charles Schwab possessed strong conceptual abilities. He used to solve complicated business problems very easily. His aptitude for Economics and Business earned him a B.A. in Economics in 1959 and soon after he attained his MBA from the Stanford Graduate School of Business in 1961.

In the year 1963, Charles Schwab along with his two partners launched an Investment advisory Newsletter named – “The Investment Indicator”. Within just a couple of years “The Investment Indicator” managed over 3,000 subscribers. In 1973, Schwab borrowed $100,000 from his Uncle and set-up a brokerage firm in San Franscisco called “The Commander Corp”. The Firm became the country’s first discount Brokerage Firm, “Charles Schwab & Co, Inc” in 1974. He opened a branch of the company in Seattle, Washington in 1977. In 1979, Schwab invested in BETA mainframe system and became a pioneer in “E-Commerce” This method of automated transaction and record-keeping brought immense success to the firm.

By 1983 his company had registered half a million customers. In 1984, he launched three new online products and the firm graduated from half a million to one million customers by 1985. In 1992, the Charles Schwab Corporation introduced a No-Transaction Fee Service which revolutionized the world of Online Investment. Charles also opened Call Centers at Phoenix and in Miami for Latin American Investors. The assets of his company saw an astonishing 47% rise in just one year and reached $100 billion mark. In 1997, Charles Schwab Europe came into existence with subsidiaries in Hong-Kong and Candy Islands. In 1999, Schwab entered the world of Television with his commercials. Charles Schwab entered new Millennium with “Charles Schwab Australia Private Ltd. He returned to his position as CEO of the Charles Schwab Corporation and held it from 2004 to 2008. Now he is the chairman of Charles Schwab Bank and Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios.

Style of Investment

Charles Schwab was honored with the title “King of Online Brokers” by Forbes Magazine in 1997. It was the testimony of the growing popularity of Schwab’s style of investment. He is an Icon for the people who want to become successful investors. Schwab is of the opinion that “Stock Market should be Accessible to Everyone”. Schwab’s style of Investing is complied in “Schwab Investment Doctrine”

According to Schwab, there are three steps based on ten fundamental Principles to help an investor to achieve better results –

Create a Plan

1. One should have an investment plan that is realistic and actionable, as it is crucial to meet goals – Charles Schwab said that an investor should make a simple plan which states the goals, in terms of money. One must consider all his assets and identify the amount of risk one can take.

2. One should understand his plan and follow it and adjust it perfectly when circumstances change in life like job, marriage etc.

Put into Action -
3. Saving and spending rates have the greatest impact on success – According to Schwab, Saving and spending the amount of money is the most important factor in achieving success at the end of the day.

4. Diversification is the second most important factor for success – There is a lost of risk involved in investing which can be reduced with the help of diversification. There should be Diversification in Asset classes that combines small to mid cap to large cap US Securities, bonds and cash. There should be Diversification in Asset classes to reduce the risk of concentrations in any one market sector, individual company or country. Equity Styles should be diversified by holding both value and growth equity securities to reduce the risks associated with strategies that perform better or worse in certain markets.

5. The right asset allocation (the percentage of stocks, bonds and cash in a portfolio) should be selected. One should be able to stick with it – According to Schwab, an investor’s goal should be reflected in the plan, his risk taking ability and the time frame. One must stick to it even in loss. The most important thing is that one should not try to time the market for it needs great sense of timing and if an investor changes his asset allocation plan on the basis of time then it could be a disaster.

6. Choosing professionally managed investments can be a better way to invest as most investors do not have the time to manage their investments.

7. Acting now generally beats waiting – Schwab opines that an investor should not wait for buying and selling as it would only culminate in a Loss.

Stay on Track –
8. Periodical check-ups keep a portfolio healthy – According to Schwab, an investor should keep evaluating his assets regularly to avoid any threat of a crisis.

9. Progress toward goals is more important than short-term performance – Schwab thinks that one must concentrate on the long term achievements rather being satisfied with short term performance.

10. Use the right benchmarks to evaluate performance – Schwab is of the opinion that no single benchmark would be enough to evaluate the performance. Benchmarks must reflect your style of investing.

The skillfulness of Charles Schwab can be measured from the fact that he ranks highest in overall investor satisfaction with a score of 796 on a scale of 1,000 points. Charles Schwab Corporation has received great reviews from their customers in every style of investing like offline, online, active traders and all other types of investing. No wonder the Schwab Corporation serves over eight million investors and looks after more than $800 billion in Assets.

Charles R. Schwab: A true Champion

The word “Champion” is the perfect word to describe Charles Schwab as a person. It takes immense courage, guts and ability to defeat the learning disorder called Dyslexia and move on to become a genius and an Investment Idol of millions. But as Schwab says, success is about overcoming rejections, “I quickly learned that if I kept at it and plowed right through the rejections I would eventually get somebody to buy my wares.”

Charles Schwab struggled with reading and writing but successfully overcame it to publish his first book “How To Be Your Own Stockbroker” in 1985. His second book “Charles Schwab’s Guide to Financial Independence” in 1998 and third “You’re Fifty – Now What?” in 2002 are Bestsellers. This is really an incredible achievement.
But Charles is an interesting personality also. He polished his reading skills with comic books such as “Moby Dick”. His recent favorite book is on-tape “Undaunted Courage” a history of Lewis and Clark Expedition by Stephen Ambrose.
He has been the captain of the High School golf team of Santa Barbara, California. Charles Schwab idolizes Ronald Reagan, former President of U.S.A.

When Charles Schwab talks everyone listens, even the President. President George W. Bush was so much impressed by his skills that Bush appointed him on the “President’s Advisory Council on Financial Literacy” on January 22, 2008. His Alma Mater Stanford also acknowledged his brilliance and named its new Center for Business students in the honor of Schwab as its benefactor. Here Schwab is also on the Board of Trustees. The year 2000, saw Schwab launching “Women Investing Now” a program to impart knowledge about investing to women and another program “Schwab Learning” for children suffering with Dyslexia.

Charles Schwab has five children. Now he lives with his wife in California and they both are dedicated towards Philanthropy. According to a report in an issue of the 2001 “Mother Jones” magazine, Schwab and his wife ranked 73rd among all Republican campaign contributors in the 1998 elections, with $393,500 in donations. They are working towards the rehabilitation of dyslexic children through the “Charles and Helen Schwab Foundation”.
Charles Schwab continues to inspire us. His stupendous success is an example of his never-say-die attitude. He is a Hero not only for aspiring investors but for the world all over.

Famous Quotes

1. “Don’t limit investing to the financial world. Invest something of yourself, and you will be richly rewarded.”

2. “A man can succeed at almost anything for which he has unlimited enthusiasm”.

3. “The man who does not work for the love of work but only for money is not likely to neither make money nor find much fun in life.”

4. “The way to get things done is to stimulate competition. I do not mean in a sordid, money-getting way, but in the desire to excel.”

5. “I consider my ability to arouse enthusiasm among men the greatest asset I possess. The way to develop the best that is in a man is by appreciation and encouragement”

6. “I have yet to find the man, however exalted his station, who did not do better work and put forth greater effort under a spirit of approval than under a spirit of criticism.”

7. “I quickly learned that if I kept at it and plowed right through the rejections I would eventually get somebody to buy my wares.”

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Understanding Market Data

Earlier the stock quotes used to appear on ticker tapes through the telegraph. But now they appear on the newspapers and on the internet. You can however still see the ticker tape form on television where the stock quotes are flashed across the bottom of the screen of a particular finance related channel. The ticker tape like displays can also be observed outside big financial institutions.

So how do you find a quote? You have to decide upon a particular company that looks promising to you and whose part you want to be. You can go to any finance website and type the name of the company and get the quotes. You can also look for the financial channels as earlier mentioned. You must first know the Ticker Symbol of the specific company you are looking at. Stocks are basically identified with the help of their respective ticker symbols and are listed on financial newspapers or websites likewise. The stocks that are traded on the most of the US exchange have their ticker abbreviations ranging from one to four letters.

Trading Terms

Now when you are into investing and stocks, you must be well accustomed to certain terms. The next thing you want to know is the Last Trade. It refers to the last value at which that particular stock was sold. The last trade is generally reported 15minutes after the real floor the stock exchange. The Trade Time refers to the time at which the last price or Last Trade was reported. By the term change we understand the variance in the closing price that was reported last day and the current value of the stock. If the change price is followed with an upward arrow, that means the price has increased by that particular amount and if it is followed by a downward arrow that definitely means that there has been depreciation in the value of the stocks. The term net charge is also used by some quotes. The term Previous close is the last price at which the stock market closed down a day before. And the term Open implies that value at which the stock opened on that particular day you are considering.

The next thing you should know to understand the market data and the stock quotes in the Bid and Ask. This price implies the dealings that are taking place on the stock market on that day. The highest price that the traders are willing to pay for a particular stock is known as the Bid Price. On the other hand the lowest price that the stock traders are offering as the selling price of a particular stock. The trade will take place only after both the buyer and the seller have reached a mutual decision regarding the price of a particular stock. Another very important term a new investor must be acquainted with is the 1y Est or the 1 Year target estimate. This states the potential price of a particular share one year from that time of calculation. It is usually decided by the market analysts. This helps the investors to understand the potential of a share before investing in it.

The minimum and the maximum price at which a particular stock has been traded in a single day is the Day’s Range for that day. The newspaper quotes state these under the separate headings of “Low” and “High”. Just like the 1y Est is important to develop a better understanding of a particular stock, the 52wk Range too helps the investor to develop some idea about the stock. It is the minimum and maximum price at which the stock in consideration had been traded in the previous year. A wide range in this price implies either heavy profit or heavy loss.

The total shares that got traded in a particular day are termed as volume and the total shares that gets traded on an average daily the Avg Vol. This is usually recorded based on the dealings of the past three months. Other important terms include the Market Capitalization which implies the total value of a company in dollars. The Price/Earning or the P/E ratio helps to understand the earning a shock can bring. The EPS is the earnings per share of a particular stock calculated over the previous quarter. And the Dividend and Yield helps the investor know how much dividends the shareholders earned from a particular stock.

To know these well is extremely crucial for new investors so that they can make the right investment choices for themselves.

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