On 13th June Alpesh Patel wrote an article for Msn Money about how to handle the FTSE when it is on a rollercoaster ride. According o Patel the only way is PPP: Plan, Prepare and protect. He says that if you risk too little on each trade the returns will be too low to overcome transaction costs, small losses and overheads (quote feeds, electricity, rent, costs of books and so on). While studying finance it is often taught “High Risks High Returns” but one bad trade can put you in dangerous waters. Traders use different formulae to work out how much money they should put on any trade. Gibbons Burke provides one such useful formula. (more…)
November 10, 2007
Recession on the Way
Recently the government Bonds have found there way to the main headlines John Stepek says in his 25th June’s article “Why a recession is on the cards” for MSN Money. Although things have stabilised somewhat now, the yield on a 10-year gilt (UK government bond) last week hit a seven-year high of nearly 5.5%, while in the US, the yield on a 10-year Treasury (US government bond) also shot up.
Roger Bootle of Capital Economics said in The Telegraph, “It may seem esoteric to you, but the yield on government bonds is the foundation on which all asset values rest.” Hence, if you can get a yield of say 5.5% by lending your money to the UK or US governments (which are regarded as virtually risk-free), then anything riskier (which is just about anything) needs to offer a better return than that. Thus for yields to rise, prices have to fall. (more…)
Everlast Bought by Mike Ashley
The June 29, 2007 edition of Telegraph explains how Sports Direct, the retailer that own Sports World chain and the Lillywhites store in the UK has purchased Everlast, the well-known American boxing glove manufacturer, for 84 million pounds.
Sports Direct, being in financial trouble, hopes that this move will help them break into the lucrative
Dave Forsey, chief executive of Sports Direct, said: “The Sports Direct board is confident that this acquisition will benefit our wholesale, licensing and retail businesses, while providing us with a significant stepping stone into the important
FSA Announces New Plans for IFA Structure
Mark Atherton wrote an interesting article in the June 27, 2007 edition of Times Online. In it he explained that the Financial Services Authority (FSA) announced plans for a massive shake-up of the financial industry. Critics say that it still has not gone far enough.
In its Retail Distribution Review, the FSA has put forward plans which, were drawn up the industry itself, designed to make the actual cost of financial advice much more clear and distinguish it from the cost of financial products.
It is proposing a tiered structure for financial advice with advisers falling into the category of one of the tiers. The advisers on the top tier would be able to advise on anything from savings accounts to investment trusts. A second tier would include those who could give primary, simple advice at a lower cost such as banks, insurers, some existing financial advisers. (more…)
Property Prices on the Rise Again
An article in the June 28, 2007 edition of Daily Mail, showed how property prices have increased 1% in the month of June.
Nationwide stated that property values were raised by 1.1% during that same time. This was more than double the rate of increase seen the month before.
The typical home in the UK is now valued at approximately 184,000 pounds, more than 18,000 pounds higher than last year during the same time. From this it can be concluded that houses are rising in value at approximately 50 pounds per day.
The resilience of the housing market will put further pressure on the Bank of England’s Monetary Policy Committee to raise the base rate next week. On Tuesday, Sir John Grieve, deputy governor of the Bank of England, gave a clear indication that rates would rise because of the increase in borrowing to fund huge massive private equity buy-outs in the City. (more…)
Hedge Funds on the Rise
According to an article written by Magnus Grimond on 23rd June for The Times the Financial Services Authority (FSA) is thinking of authorizing funds to the hedge funds. This would allow the hedge funds to be sold to the
Getting an Interest Free Loan
This June 26th Corin Vestey wrote an article for EveryInvestor.co.uk about “How to get yourself an interest free loan today”. The article is related to, as the title states, ways of getting loans without having to pay any interest on it.
The first and the most easy way to do so may be the credit cards. Some of the best credit card deals will lend you money on a balance transfer for 13 months at 0% and for new purchases for 12 months at 0%. If you already have debts racking up, say, on a store card which is costing you 29.9% APR interest or on a standard credit card which is costing you 16.9% APR then transferring your balance to one of the new 0% offers makes seriously good financial sense. (more…)
APR Credit Card
On 25th June moneyextra.com published an article by Emma Lunn under the name “The 59.9% APR Credit Cards?” Emma says that recently she got an offer of credit card from Vanquis. They were offering a huge APR of 39.9%, or 59.9% on the “classic” option. If you wanted to withdraw cash on the card the interest rate would be 46.19%. Interest would be charged from the date of the transaction, although you could qualify for the standard 56 days interest-free after you had paid off two or more consecutive statement balances in full and on time.
Minimum repayments were 3% of the balance or £10 (whichever is greater) on the “gold” option, or 5% of the balance or £5 on the “classic” option. It was further explained that on an interest rate of 39.9% for a purchase of £250 on the card, paying just the minimum each month you would pay £78 interest in the first year, £60 in the second year and take a total of six years and two months to clear the balance. (more…)
Council Tax Bills Seeing Huge Increases
A story in the June 23, 2007 edition of Yahoo Finance stated that Council tax has risen by almost three times the rate of inflation over the past ten years. Research from
Over the same period, average earnings have only increased by 51% while retail price inflation has risen by 31%.
The average