Archive for September 2nd, 2010

Finding Spectacular Gains From Forex And Shares

Whether you are investing in shares or Forex your main gains will be capital appreciation: The investor in this category is not interested in dividends but in seeing the market price of his stock increase or one currency improving against another.

There are three advantages to this kind of operation. First, if your judgment has been good, you make more money faster than by relying on dividends. For example, the man who buys 100 shares at and sells even at a 10-point profit has ,000 (less commissions) to show for his year’s work. This represents nearly seven years’ worth of dividends from the stock yielding a conventional 5 per cent.

Secondly, if you hold your investment for more than six months, your profit is considered a long-term capital gain, taxable at a maximum 25 per cent rate for many people, a saving over straight-income rates.

Finally, if your stock doesn’t go up as anticipated, there is always the chance that it will at least be a decent income-producer.

This is something of a rationalization, of course. There is no use pretending to be in the capital-appreciation business if a little mess of dividends is all you have to show for your efforts. The more consistent course is to drop the non-producing stock (losses, if any, are tax deductible) and shop around for a winner. This, to be sure, takes guts. There’s nothing like a couple of growth stocks that don’t grow to take the steam out of a capital-appreciation man

On the other hand, the gloriously rising market since World War II has simplified the task of discovering and getting aboard a company with promising prospects. And, as noted, an investor could wait five years for his 10-point gain and still be ahead of the plugger piling up dividends.

Capital appreciation, it should be noted, is an omnibus term covering any change or advance in a company’s position which might be reflected in the market price. It may mean the emergence of a new company in a new industry, the coming of age of a speculative youngster of a decade or two ago, or even new evidence of vitality in an
established veteran.

Recently for instance, the stock of Ampex, Inc., a bright little California company manufacturing top notch equipment for the booming tape-recorder industry, has more than doubled in value.

Dozens of small companies dealing in electronics, precision equipment, and other fruits of current scientific research (Tracerlab, National Research, Beckman Instruments, etc.) are similarly attracting attention and consequent jumps in price.

Somewhat more established and riding crests of speculative interest are such stocks as General Dynamics, builder of atomic submarines and Convair airplanes; Owens-Corning Fiberglas, manufacturer of insulation, filters and textiles, and glass fiber boats, and Bendix Aviation, no infant, but investing heavily in diversification and new-product development. Dow and Minnesota Mining might also be grouped here, although possibly by now they should be included among the older companies Corning Glass, Goodrich, Union Carbide, Westinghouse, National Lead, Minneapolis Honeywell, Eastman Kodak-whose youthful spirit and astonishing technological resources have kept them in the forefront of American industry for years.

All of these examples would qualify as growth stocks, as the kind of investment that would tempt the investor seeking capital appreciation.

But appreciation can also follow from subtle and complicated changes in a company’s structure. In these cases, appreciation may have nothing to do with a new product or even with the company’s prospects within its industry. Rather it is the anticipated result of a merger, a spin-off (distribution of assets), a reorganization, or any one of a number of procedures available to the complex institution known as a corporation.

Talk of a merger between Bethlehem Steel and Youngstown Sheet & Tube made both stocks interesting possibilities. U.S. Foil “B” (American Stock Exchange), representing about 48 per cent control of Reynolds Aluminum; duPont, which is having to divest itself of 63 million shares of General Motors stock; Northern Pacific Railway, which has important oil interests in the booming Williston Basin of North Dakota; El Paso Natural Gas, which has formed a subsidiary, Rare Metals Corp., for uranium exploration and processing; and many others are examples of stocks with potential capital-gains features.

It is not possible to say exactly how or if the gains will be realized. Mergers require an adjustment of the stock prices of the participants which may benefit one or the other; or public interest in the prospects of the combined company may cause the stock to spurt.

An as yet undeveloped asset, such as Northern Pacific’s oil, or Inland Steel’s Steep Rock iron interest in Ontario, might mean an eventual bonanza which would be reflected in stock prices or a capital distribution of cash or stock. Several years back, Andes Copper, an Anaconda subsidiary operating in Chile, made a capital distribution of per share at a time when the stock’s market price was hovering between and .

Most gains on Forex are capital gains, where the currency trader is hoping for an increase in the value of one currency against another. Profits can be spectacular, but it is worth
having good Forex software to prevent large losses.

Investing In Forex Or Shares What Should Your Aim Be?

A question that a lot of investors ask is whether they should aim for capital appreciation or a nice dividend.

With Forex this question does not arise as capital gain is the main objective.

A fat dividend and a high yield which persuades investors that the stock has been undervalued may well create a small stampede that boosts the price and thereby reduces the yield to more conventional levels.

It is also conceivable, however, that one could wait a discouragingly long time for Bethlehem and Youngstown to merge (the Government has frowned on the idea) or for Northern Pacific to make more from oil than from railroading.

The big problem of the capital-appreciation man is that he is dealing in forecasts and predictions-and on a larger scale than his brother who simply wants to figure the chances that General Foods will continue its dividend.

There are indicators which make the task something more than guesswork, but it is difficult nonetheless. Corporation directors are notoriously close-mouthed about any action affecting the fundamental structure of their company; it is most unlikely that the average investor can inform himself and act fast enough to gain an edge in this area of capital gains.

As for growth prospects, the field is wide open. But whether to pick an Ampex, a General Dynamics, or an Eastman Kodak is a puzzlement.

Every large and successful company today was once small, and investors who got aboard during the rise profited handsomely. But which of the hundreds of small electronics firms will be the General Electric of tomorrow-and which will go by the boards, as did so many promising automobile companies a generation ago? (Anybody got a closing price on Pierce Arrow?) And what, considering the amazing versatility of our ever-growing large corporations, is Mighty Atom Instruments, Inc., likely to do that Westinghouse can’t do better? Even assuming you have picked a winner, have you picked it early enough?

The prices of many so-called growth stocks today already reflect the optimism of buyers, possibly beyond the ability of the companies to earn as anticipated.

Remember, too, that in the rising market we have enjoyed for so many years, the real gain lies not in picking a merely successful company-the woods have been full of them-? but one which outruns the market.

It has been done, and can be done again. A bold investor who has studied the market closely can pick up a temporarily depressed or unpopular stock at a good price and reap the benefits of a subsequent rise. Or he may, in fact, sniff out the company due for a banner year.

But for the new investor, even the try for capital appreciation is best done on a long-term basis. Satisfy yourself that your stock is not overpriced, then buy and give it a chance to develop.

Safety of Principal: Essentially, this means bonds. The investor who is willing to forego a lively profit in the form of dividends or capital appreciation can be interested only in conserving the funds he has invested. This, customarily, is done by purchasing bonds which are a debt of the issuing company, not a stake in its earnings.

Bonds held to maturity will return their face amount to the holder. And bond interest must be paid along the way whether this leaves anything for the stockholders or not. Interest is paid at a fixed rate for a stated period of years; the rate usually is between 2.5 and 4.5 per cent, depending on the difficulty or ease of obtaining money at the time of issuance. Once it nits the market, however, an attractive bond, like a good stock, is frequently bid up to the point where the return is considerably less than if it had been bought at par.

Municipal bonds, issued by towns and cities to finance schools, sewage systems, water lines, and the like; state bonds issued to finance a variety of requirements; and public authority obligations, usually involved in the construction and operation of toll highways or bridges, are a category primarily of interest to the wealthy investor seeking tax relief. “Municipals,” as all three are loosely called, are tax-exempt. For the man in the 50 per cent bracket this means as much income from a bond yielding 3 per cent as from stocks earning 6.

Still and all, the new investor interested in bonds will by all odds do best by purchasing United States Savings Bonds, Categories E or F. They are the safest security anyone can buy. They are noncallable; they are not subject to the flue-tuations of other securities and other markets. (Corporate bonds are inclined to slump when stock prices are cheap and yields high, inclined to become expensive when stocks are high and yields begin to approach the levels customarily offered by bonds).

Another point: corporate bonds are usually issued in ,000 denominations, which places a significant holding beyond the reach of any but the wealthy or institutional investor.

If you are a Forex investor remember that as you are trying for a capital gain, this can Be risky and good Forex software will help you reduce risks.

The Secret Of Shares And Forex Clubs That Can Help You Succeed

By pooling your investment you will have more protection when your investment depreciates and you stand to gain more when it appreciates.

One of the secrets of pooled investment is that you will also gain a significant amount of knowledge. This will help to steer you on your way to success.

Most clubs are less than three years old, and that nine out of ten have a portfolio valued at less than ,000.

No concerted organizational or promotional effort One of the astonishing developments in stock ownership in the past 10 years has been the wildfire spread of investment clubs throughout the nation.

A New York Stock Exchange survey indicates that there are at least 20,000 clubs in existence, with a total membership of more than 277,000 people-and that more are forming, at a phenomenal rate, every day. The market value of the clubs’ holdings tops 0 million and they are pouring million of new investment into the market each month.

All this is the more remarkable when it is considered has created these clubs. They have sprung up spontaneously as the realization has spread that here is a device enabling people of modest means to educate themselves about investment and to acquire stock in an orderly, consistent, and intelligent manner.

In outline, a club’s members meet regularly, contribute funds equally, study investment possibilities carefully, and agree jointly on shares to be purchased or sold. The unique features of this procedure are, first, that by responsible group effort the members can learn the complexities of investment and, second, that by aggregating funds they can acquire stock with individual contributions even smaller than the Monthly Investment Plan minimum.

Most clubs are composed of neighbourhood friends or business associates. Sometimes they are employees of the same firm, sometimes members of a fraternal or religious group. The majority of clubs have all-male memberships, although some 3,800 include women, and something over 2,000 are exclusively for the ladies.

A group of policemen form the New York’s Finest Investment Club. A group of Maine business¬men, who have been long-time hunting companions, are now stalking profits as the Katahdin Investors Club. Some avid bridge players have become the Bridge Investors Club; the Johns-Manville Club is made up of J-M employees. Essentially, these alignments assure a pleasant social atmosphere and economic compatibility, so that everyone can contribute equally to the club’s program without strain.

The average club membership is 15, a few number 20. Many clubs start with six or eight, and grow as interest is aroused. Experience indicates that 12 to 15 members are best able to conduct the business of the club. Beyond that number, things get somewhat bulky and unmanageable.

It can be extremely helpful to have a lawyer, accountant, and/or banker among the members. This is not always possible, and many clubs are operating successfully without them, but if they are not members, they should be within hailing distance to give professional advice on legal and tax matters, where necessary.

Clubs should also establish an account with a brokerage and get to know the customer’s representative who is handling it. He can be a source of much useful information on the new and unfamiliar field the club is entering.

Many brokerage houses are happy to have representatives attend occasional club meetings to explain brokerage and market operations, security analysis, and economic trends.

With membership established, the club’s next step is to agree on objectives and procedures: How often shall it meet? How much shall each member contribute? How should stocks be selected? What should be done with dividends?

Clubs ordinarily meet once a month. Meeting less frequently than that slows activity to an unsatisfactory pace, more frequently places a greater demand on the members’ time than the funds involved warrant.

The usual investment is per person per month, although this depends entirely on the group’s level of income. Some clubs set the ante as high as 0 per month. Less than , of course, does not give the club much capital to work with, and will probably make progress seem discouragingly slow. More than makes it possible for a member to set up an individual MIP, and at 0 an investor could deal directly with a broker from time to time. In these latter instances, however, diversification would be harder to achieve and, of course, the burden of stock selection would be on the individual rather than decided by the shared wisdom of the group. It appears that most individuals find the club experience a good training ground in investment and that, after they learn their way around, some 40 per cent of them feel well enough oriented to open personal accounts.

Investments of to a month for groups of 10 to 15 people mean a fund of from 0 to 0, not an overwhelming amount, but enough to buy 10-share blocks at 30 or 5-share units at 60. The average club investment is about 0 a month.

Whatever the amount, most clubs feel that it is absolutely essential that all members invest equally. If individuals are allowed to have two or more memberships, or to invest twice or three times as much as the others, it will also be necessary to give them two or three votes in club affairs, thus unbalancing the share-and-share-alike mutuality which is basic to successful operation of this kind of organization. Twice as much money is not automatically a guarantee of twice as much good sense when the votes on investment are cast.

In selecting stocks for investment, procedures are as various as the ingenuity of the club permits. Some clubs start by accumulating shares of the company the members work for, or a company active in the area whose personnel and operations are known to the club.

Other clubs undertake a study of a different industry each month and then, perhaps, appoint a committee of several members to report on companies within the industry. Some clubs arrange visits to company headquarters, or branches, in their vicinity. They inspect oil fields, mines, mills, and manufacturing facilities. All of this, of course, is rudimentary, but it is the beginning of understanding and evaluation.

For the rest, it depends on the club’s objectives. Like you, it must decide whether to try for growth, dividends, or stability, whether it is in for a quick profit or for long term appreciation.

There are some Forex investment clubs that you can join by searching the internet that help to pool investors money.

It is well worth using Forex software to help you perform well when you trade on the Forex.