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…)
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
September 10, 2007
Invest Income
On 5th June Financial News published a guide written by Richard Evans for those who wish to earn income from there savings. According to the article there could be the following sources: Shares, Equity income Funds, Bonds, Cash.
Good profitable companies usually pay there shareholders ( also called stockholders) twice a year dividends from there earnings once they have meet there expenses and made investment necessary for future. Unless things go badly wrong, these payments are usually fairly predictable, and often rise from one year to the next. If you pick the right shares, (more…)
August 27, 2007
Summer Action Thriller
On Tuesday 29th May Funds Centre published an article by Sarah Modlock under the title “Sell in May and Go away?” but what does this statement really mean? It is an old adage ‘Sell in May and go away; don’t come back ’till St Leger’s Day’ which prompts investors to sell their stock in spring when the market is expected (by some) to dip for the summer. Saint Leger lived about 1400 years ago and lots of incredibly nasty things happened to him as part of his martyrdom.
His feast day is 2 October and it is from this point in the year that the custom says you should begin to invest again. In the
Sectors On Fire
On Friday June 22 William MacNamara and Michael Hunter reported on Financial Times that by
The financial sector was facing a worrisome situation when the Barclays share fell 0.9% to 722p. The Schroders was hardest hit losing 1.7% to ?13.29 and RBS fell 1.25 per cent to 633p.
The retail sector after a week of selling following tepid trading updates from Tesco and J Sainsbury left the sector looking undervalued. This forced the investors back into the game. by
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June 30, 2007
The Conservatives Are Considering Dropping Duty On Share Dealing
Apparently large city investors do not pay duty as they use contracts for differences of avoid the taxes. George Orbourne said he was “looking with great interest” as reported by the financial mail “at abolishing the levy”. This levy raises nearly £3bn each year, but has been stated as it is unfair to the smaller trader.
Making a level playing field for the small trader would surely make dealing in the stock market a more attractive option and possible increase the market value of some shares, where high values are help by smaller private investors.