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Orders for Big-Ticket Goods Drop

2007-11-28T06:41:00.000-08:00

WASHINGTON (AP) -- Orders to factories for big-ticket manufactured goods fell in October for a third straight month, the longest stretch of weakness in nearly four years.

The Commerce Department reported that orders for durable goods declined 0.4 percent last month, a weaker showing than expected. The October decline followed even bigger decreases of 1.4 percent in September and 5.3 percent in August, raising worries that the steep plunge in housing is beginning to drag down other sectors of the economy.While economic growth roared ahead at a rate approaching 5 percent in the summer, many economists believe growth has slowed dramatically in the current quarter from the combined blows of the most severe housing slump in more than two decades, a serious credit crunch and rising energy prices.

The government will release its latest look at overall economic activity on Thursday and it is expected to show growth at an annual rate of around 4.9 percent in the July-September quarter. However, growth in the current October-December period is expected to slump to a barely discernible 1.5 percent or even less.

Many economists have raised the odds that the country could fall into an outright recession to as high as 40 percent although they believe that the Federal Reserve, which has already cut interest rates twice since September, will keep reducing rates if economic activity continues to falter.

In remarks Wednesday, Federal Reserve Vice Chairman Donald Kohn said that the Fed's monetary policies needed to be nimble to address current risks.

"The increased (financial market) turbulence of recent weeks partly reversed some of the improvement in market functioning over the late part of September and in October," Kohn said in remarks to the Council on Foreign Relations.

One of the troubling aspects of the report on durable goods was that orders for capital goods excluding aircraft, a category considered a good proxy for business investment, fell by 2.3 percent in October, the biggest decline since a 2.4 percent fall in February.

It had been hoped that business investment would offset part of the slump in housing. However, the October decline, if it continues, could show that businesses are cutting back on their plans to buy new equipment in the face of widening economic problems.

Excluding the volatile transportation category, durable goods orders fell by 0.7 percent in October, the biggest drop since a 1.7 percent fall in August.

ACM Silver Sponsor Forex Expo in Abu-Dhabi

2007-11-22T07:41:00.000-08:00

(MENAFN Press) ACM Advanced Currency Markets SA has once more joined the 2nd Middle East Forex Expo as a Silver Sponsor following its very successful presence in the First event which was concluded in Dubai last month. The 2nd Middle East Forex Expo will be held in Abu-Dhabi this November and will feature ACM as a leader in the world of Forex trading.

Based in Switzerland, and having its Middle East representation office in Dubai, ACM is among the world's largest and most competitive on-line Forex brokers. Today, ACM has second most visited on-line Forex site in the world and is the first online Forex broker to implant in the Middle East. The ACM platform deals in currencies commodities . The site is translated into 15 different languages and ACM is the only online trading platform to offer fully Islamic conditions to its clients.

Siemens Q4 net profit surges on forex gains

2007-11-22T07:38:00.000-08:00

MUMBAI, Nov 22 - Power equipment maker Siemens Ltd on Thursday reported a surge in net profit for the fourth quarter ending September aided by forex gains and profits from the sale of a subsidiary.

The company reported net profit of 3.1 billion rupees on net sales of 21.9 billion rupees, which rose 47 percent from year ago.

During the quarter it booked 1.5 billion rupees in forex gains, while the sale of its Information and Communication segment fetched 524 million rupees, Chief Financial Officer Patrick de Royer told reporters.

In the year to September it got new orders worth 101 billion rupees, most of it netted by its power business. The segment contributed 44 percent to turnover and the industry segment 27 percent.

At the end of September the outstanding order book was worth 94 billion rupees.

"I would like to have a similiar order growth in the current year as well, in order to sustain our growth target," Managing Director J. Schubert said.

In August Siemens AG Chief Executive Peter Loescher had said he aimed to double the sales of the Indian operations in the next three years.

The company plans to enter new sectors and geographies in India. "We will introduce new products and we will continue to participate in large infrastructure projects without compromising on profitability," Schubert said.

Exports contributed to 30 percent of revenues last year and the aim is to exceed that this year, Royer said.

Its German parent will be stepping up sourcing of products and services from India for the regional and global markets. "We are looking at industrial products and there is scope for other areas as well," Schubert said.

In order to add to the bottomline the strategy is to create low-cost products for India. "We need the right products for the local market, with the right features and cost position."

Shares in Siemens closed marginally down at 1,931.75 rupees in a weak Mumbai market.

Denmark to Hold New Referendum on Euro

2007-11-22T07:35:00.000-08:00

COPENHAGEN, Denmark (AP) -- Denmark will hold a referendum on whether to adopt the euro and drop exemptions to closer cooperation with the EU on defense and law enforcement, the prime minister said Thursday.Danish voters rejected the European common currency in a 2000 referendum. The Scandinavian country has also opted out of other key areas of EU cooperation.

Prime Minister Anders Fogh Rasmussen said at a news conference it was time to reassess those exemptions, which Denmark was granted in the early 1990s.

"A lot has changed since," he said. "It is the right time to take a decision."

No date was set for a vote but it would be held during the next four years, said the prime minister, whose center-right government was re-elected last week.

It was not immediately clear whether there would be a separate vote for each of the exemptions.

Danes stunned fellow EU nations in 1992 by rejecting the Maastricht treaty on closer European cooperation.

A year later, Danish voters approved a revised treaty with clauses letting the Scandinavian country stay outside a single currency and banking system and refrain from joining a European defense structure or conform to EU citizenship laws and common law enforcement.

"We have always said that the Danish exemptions are a hindrance for Denmark," said Fogh Rasmussen, Denmark's prime minister since 2001.

He said the referendum would be held after Denmark had ratified the new EU reform treaty, which includes changes in decision-making rules designed to make the union function more effectively. The treaty replaces the failed EU constitution, which was rejected two years ago.

Fogh Rasmussen's Liberal-Conservative coalition won the Nov. 13 snap election with support from its nationalist ally, the Danish People's Party, and a smaller centrist group.

Denmark, a country of 5.4 million people, has held five referendums on EU-related issues since it joined the bloc in 1973.

In the latest one, on Sept. 28, 2000, Danes voted 53.1 percent to 46.9 percent against replacing the Danish krone with the euro. Recent opinion polls have shown a narrow majority of Danes now favor switching to the euro.

Oil Prices Rise Above $94 a Barrel By Pablo Gorondi, Associated Press Writer

2007-11-16T05:15:00.000-08:00

Oil prices rose Friday amid expectations that global crude supplies will remain tight despite a U.S. oil inventory report that showed a surprising increase in domestic crude stockpiles.

Light, sweet crude for December delivery on the New York Mercantile Exchange rose 70 cents to $94.13 a barrel in electronic trading by midday in Europe. The contract expires at the end of Friday. It fell 66 cents on Thursday.In London, January Brent crude futures gained 56 cents to $90.79 a barrel on the ICE Futures exchange.

"The outlook for pricing remains strong based on tight supply-demand fundamentals," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "Because of growth in developing countries, global oil demand growth is going to continue at a good pace."

A U.S. government report said Thursday that crude oil inventories rose by 2.8 million barrels last week. Analysts surveyed by Dow Jones Newswires, on average, had expected a decline of 300,000 barrels.

The higher inventories were "largely the result of a 830,000 barrel per day increase in imports," said Vienna's PVM Oil Associates.of crude imports showed no "no strong impact from the Mexican weather disruptions" of weeks past.

The U.S. Energy Information Administration's report also said gasoline supplies rose by 700,000 barrels while inventories of distillates, which include heating oil and diesel fuel, fell by 2 million barrels.

Nymex heating oil futures rose 2.39 cents to $2.5826 a gallon while gasoline prices added 0.98 cent to $2.3460 a gallon. Natural gas futures gained 6 cents to $7.760 per 1,000 cubic feet.

Crude prices have been volatile this week, falling more than $3 on Tuesday and rising more than $2 on Wednesday after hitting a record of $98.62 a barrel last week. But some analysts say tight supplies and increasing demand will continue to drive prices higher.

"What's really supportive of strong pricing is that global demand growth is still exceeding supply growth, and that has eaten into the commercial inventories of consuming nations," Shum said.

Currently, oil producers are turning out about 85 million barrels a day, while the U.S. Department of Energy says consumption is between 85 million and 86 million barrels a day.

The Organization of Petroleum Exporting Countries has been under pressure to ease the supply tightness, with U.S. Energy Secretary Samuel Bodman saying earlier this week that he asked OPEC to increase production.

OPEC Secretary General Abdalla Salem el-Badri was quoted as saying in a report Thursday that the group was ready to increase oil production "if that will contribute to lower the (crude) price."

The cartel also reduced its forecast for fourth-quarter demand for oil, saying it would rise 1.97 percent, down from expectations of a 2.1 percent increase a month ago. The revision was due in part to the effect high prices are having on demand.

"Late winter in North America along with the high price of transport fuels appears to be reducing regional oil consumption in the fourth quarter, leading to a downward revision of (100,000) barrels a day for that quarter," OPEC said in its monthly oil market report.

Shum noted that prices were also held up by the limits of OPEC's spare capacity, which left little cover for any supply disruptions, such as the oil pipeline attack in Nigeria reported Thursday that's expected to reduce production by 50,000 barrels a day. The pipeline feeds one of Royal Dutch Shell PLC's two main oil export terminals in the nation's south.

Oil prices could quickly approach $100 a barrel again if a future inventory report shows an unexpected decline in supplies, if new conflict develops in the Middle East or another oil producing region or if there's a late season hurricane or prolonged cold snap in the U.S.

Associated Press writer Gillian Wong in Singapore contributed to this report.

Asian Markets Fall Sharply By Chisaki Watanabe, Associated Press Writer

2007-11-12T02:13:00.000-08:00

TOKYO (AP) -- Asian markets fell sharply Monday as traders took their cues from Wall Street, where shares dropped Friday amid renewed concerns about U.S. mortgage problems.

Hong Kong's benchmark index declined as much as 4.6 percent, while Japan's main index lost as much as 3.8 percent and South Korea's Kospi fell as much as 4.5 percent."Basically, the supbrime loan issue still drags on, and there is no prospect of what can end the problem," said Shinichi Ichikawa, chief strategist at Credit Suisse.

"As for the U.S. economy, the risk of recession is increasing toward the next year," which, combined with higher oil prices, prompts players to sell the dollar, he said.

On Friday, the Dow Jones industrial average fell 1.7 percent after major banks warned of further losses in their debt portfolios, raising investor concerns that the credit market slump shows no sign of abating.

Japanese traders on Monday sold exporter issues on a strengthening yen, which is at its highest levels against the dollar since May 2006.

Automaker Honda fell 3.58 percent and rival Toyota shed 2.76 percent. Sony dropped 2.61 percent.

At the close, Japan's benchmark Nikkei 225 index was at 15,197.09 points, down 2.48 percent. It dipped as low as 14,998.51 points during the session, its first time below 15,000 since July 2006.

Meanwhile, Hong Kong's Hang Seng Index was down 3.7 percent at 27,724.07 in afternoon trade after dropping to as low as 27,468.00 during the early session.

Bank HSBC shed 3.2 percent to HK$136.50 on subprime exposure woes.

Chinese financial shares also were lower after China's central bank raised the reserve requirement for banks by 50 basis points to 13.5 percent at the weekend.

Bank of China was down 3.46 percent at HK$4.47. China Construction Bank fell 3.95 percent to HK$7.54.

In Seoul, the Korea Composite Stock Price Index, or Kospi, fell 67 points, or 3.4 percent, to close at 1,923.42 in afternoon trading. The index had declined as much as 4.5 percent earlier.

Steelmaker Posco fell 4.1 percent to 562,000 won. Hyundai Heavy Industries Co., the world's biggest shipbuilder, fell 4.1 percent to 481,000 won. Samsung Electronics Co., South Korea's largest corporation, declined 2.2 percent to 528,000 won.

In Tokyo currencies, the dollar was trading at 110.34 yen at 2:50 p.m. Monday, down from 111.07 yen late Friday in New York. The euro fell to $1.4634 from $1.4673.

Stocks Fall on More Credit Writedowns By Joe Bel Bruno, AP Business Writer

2007-11-09T07:20:00.000-08:00

NEW YORK (AP) -- Wall Street extended its slide in early trading Friday after Wachovia Corp. warned it will take quarterly loan losses, raising investor concern the credit slump shows no sign of abating.The nation's fourth-largest bank said in a filing with the Securities and Exchange Commission that credit market volatility could cause a $1.1 billion writedown for October alone. The problem stems from its asset-backed securities, such as collateralized debt obligations, that have lost value on sinking investor demand.

Investors also were rattled by speculation that Barclays PLC was about to announce a $10 billion writedown. Though the British bank denied the rumors, it demonstrated that Wall Street continues to worry that the summer's credit turmoil shows no signs of abating, and has a broader impact globally.

Further worries about the continuing credit market slump kept investors on edge a day after Federal Reserve Chairman Ben Bernanke said he expect the economy to "slow noticeably" this quarter. His comments added to the week's declines -- contributing to a slide this week on concerns about continuing credit woes, a weakening dollar and rising oil prices.

He also said the greenback's problems "may have some effect on import prices" -- which was confirmed Friday in new government data. The Commerce Department reported U.S. import prices soared last month at their fastest pace since early last year while export prices jumped at more than a decade high.

The Dow Jones industrials fell 144.37, or 1.09 percent, to 13,121.92 in the first hour of trading.

The Standard & Poor's 500 index was off 19.26, or 1.31 percent, at 1,455.51, while the Nasdaq composite index tumbled 54.91, or 2.04 percent, to 2,641.09.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.25 percent from 4.27 percent late Thursday. Meanwhile, both gold and the dollar were lower.

Light, sweet crude oil fell 30 cents to $95.16 a barrel on the New York Mercantile Exchange.

Investors were also uneasy about tech stocks after Qualcomm Inc., the nation's second-biggest maker of chips that run mobile phones, predicted that heightened competition and legal troubles will cause 2008 results to fall 4 percent to 7 percent below Wall Street projections.

Qualcom fell $2.45, or 6.2 percent, to $37.31.

Wireless high-speed Internet provider Clearwire Corp. and Sprint Nextel Corp. announced before the bell they scrapped an agreement to jointly build a nationwide WiFi network. Clearwire also reported its third-quarter loss widened more than expected. Clearwire plunged $4.03, or 22.3 percent, to $14, while Sprint shed 19 cents to $16.35.

Merck & Co. said it will pay $4.85 billion to settle thousands of lawsuits over its painkiller Vioxx -- a move considered to be the biggest drug settlement ever. The offer was finalized early Friday as Merck and the plaintiffs met with three of the four judges overseeing the claims. Merck rose $1.70 to $56.49.

Walt Disney & Co. shares fell 60 cents to $33.03 after the entertainment company said late Thursday fiscal fourth-quarter profit rose 12 percent, driven by sports network ESPN and turnout at its U.S. theme parks. However, executives remain concerned about a Hollywood writers strike that began this week.

Overseas, Japan's Nikkei stock average closed down 1.19 percent and Hong Kong's Hang Seng index rose 0.08 percent. In afternoon trading, Britain's FTSE 100 fell 0.66 percent, Germany's DAX index rose 0.50 percent, and France's CAC-40 shed 0.96 percent.

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Oil Prices Stall in Climb Toward $100 By John Wilen, AP Business Writer

2007-11-07T08:29:00.000-08:00

NEW YORK (AP) -- Oil prices stalled in their climb toward $100 a barrel Wednesday after a government report said oil inventories fell less than expected last week while refinery utilization remained flat.Light, sweet crude for December delivery rose 19 cents to $96.89 a barrel on the New York Mercantile Exchange, but alternated between gains and losses. Before the report's release, prices rose as high as $98.62, a new record.

December gasoline futures rose 0.35 cents to $2.4385 a gallon on the Nymex, but December heating oil futures fell 0.1 cent to $2.6068 a gallon. December natural gas futures fell 17.3 cents to $7.69 per 1,000 cubic feet.

In London, December Brent crude rose $1.36 to $94.62 a barrel, supported by severe weather in the North Sea, which has shut down several oil platforms.

At the pump, meanwhile, the national average price of a gallon of gas rose 1.9 cents overnight to $3.043, according to AAA and the Oil Price Information Service. Prices are up nearly 29 cents since mid-October and are 85 cents higher than a year ago.

The EIA reported Wednesday that crude supplies fell by 800,000 barrels during the week ended Nov. 2, half the 1.6 million barrel decline analysts surveyed by Dow Jones Newswires, on average, had expected. A larger than expected drop would most certainly have propelled oil past $100 a barrel for the first time.

Supplies at the much-watched Nymex delivery terminal in Cushing, Okla., fell by 1.7 million barrels last week.

Refinery utilization remained flat at 86.2 percent of capacity. Analysts had expected an increase of 0.8 percentage point.

Gasoline inventories fell by 800,000 barrels last week, countering analyst expectations for an increase of 200,000 barrels. Inventories of distillates, which include heating oil and diesel fuel, rose by 100,000 barrels last week. Analysts had expected a decline of 500,000 barrels.

Imports of crude oil rose by an average of 275,000 barrels a day last week to 9.7 million barrels a day. Gasoline imports rose by 107,000 barrels last week to an average of 1.1 million barrels a day.

Demand for gasoline rose slightly last week, by about 12,000 barrels, the EIA said. Over the last four weeks, demand is up about 0.8 percent over the same period last year.

Stocks Pull Back As Dollar Stumbles By Tim Paradis, AP Business Writer

2007-11-07T08:27:00.000-08:00

NEW YORK (AP) -- Stocks fell sharply and bonds jumped Wednesday after the dollar sank further amid speculation that China will seek to diversify some of its foreign currency stockpiles beyond the greenback. The Dow Jones industrial average at times fell more than 150 points.Unease about the dollar dogged stock markets worldwide and in the U.S. comes a day after stocks continued their recent zigzagging to finish with sizable gains.

The 13-nation euro hit a fresh record against the dollar -- rising to $1.4729 -- before falling back. The dollar fell not only against the euro but in Asia following a report that a senior Chinese political figure said China should diversify its $1.43-trillion foreign exchange reserves into the euro and other strong currencies.

The euro's rally put it well above the $1.4554 the currency bought late Tuesday in New York. The previous record high, also set Tuesday, was $1.4571.

The swooning dollar for a time sent oil above $98 per barrel and also pushed gold higher.

In midmorning trading, the Dow fell 155.58, or 1.14 percent, to 13,505.36. On Tuesday, the Dow gained about 117 points as some investors looked to snap up bargains despite overhanging concerns about the banking industry's exposure to bad debt.

Broader stock indicators also pulled back Wednesday. The Standard & Poor's 500 index fell 19.41, or 1.28 percent, to 1,500.86, and the Nasdaq composite index fell 33.47, or 1.18 percent, to 2,791.71.

Government bonds jumped as the dollar sank. The yield on the 10-year Treasury note, which moves opposite the price, fell to 4.35 percent from 4.37 percent late Tuesday.

Light, sweet crude rose 89 cents to $97.59 on the New York Mercantile Exchange. Investors awaited a weekly goverment read on domestic inventories due Wednesday morning.

December gold surged $16.10 to $839.50 an ounce on the Nymex.

Economic data arriving Wednesday appeared to offer some upbeat news, although investors remained concerned about the faltering dollar and rising prices for oil and gold. The Labor Department reported that worker productivity surged at an annual rate of 4.9 percent in the summer, the fastest pace in four years, while wage pressures eased.

Figures on U.S. wholesale inventories showed a greater-than-expected increase in September but that demand also held up.

Some corporate news didn't offer Wall Street much reason for cheering. General Motors Corp. reported a $39 billion loss for the third quarter due to an accounting shift. The company warned late Tuesday it would book a $38.6 billion noncash charge largely related to establishing a valuation allowance. A valuation allowance is taken when the future benefit of the deferred tax assets is less likely to be realized.

GM's loss came to $68.85 per share, compared with a loss of $147 million, or 26 cents per share, in the third quarter a year earlier. The stock fell $1.32, or 3.7 percent, to $34.84.

In other corporate news, media conglomerate Time Warner Inc. posted a 53 percent decline in its third-quarter earnings from a year earlier when results benefited from tax and investment gains. Results from the parent of HBO, Warner Bros., Time Warner Cable and Time magazine were in line with estimates of analysts polled by Thomson Financial. The stock rose 10 cents to $18.43.

Foster Wheeler Ltd. rose $11.21, or 8.3 percent, to $146.52 after the provider of engineering and construction services said growth abroad helped boost quarterly profits 70 percent.

Fluor Corp., an engineering-services company, posted third-quarter profits and revenue that fell short of Wall Street's expectations amid an absence of lucrative goverment contracts that boosted results a year earlier. The stock fell $5.63, or 3.7 percent, to $148.19.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where volume came to 360.2 million shares.

The Russell 2000 index of smaller companies fell 13.40, or 1.67 percent, to 788.37.

Overseas, Japan's Nikkei stock average closed down 0.94 percent. In afternoon trading, Britain's FTSE 100 fell 0.92 percent, Germany's DAX index fell 0.06 percent, and France's CAC-40 fell 0.53 percent.

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Mutual Funds Are for Losers by Jay MacDonald

2007-11-06T07:06:00.000-08:00

If Wall Street were a Hans Christian Anderson fairy tale, Phil Town would be the little boy pointing and laughing at the emperor's new clothes, or lack thereof.

By turns a Vietnam Green Beret, Grand Canyon river guide and spiritual seeker of enlightenment, Town's life on the fringes of society changed when he saved a raft from treacherous rapids on the Colorado River. One of the thankful survivors was a successful San Diego investor who, in turn, volunteered to save Town's financial future by teaching him the ropes of investing.

Blending Zen with Wall Street, Town's anyone-can-do-this advice, in his best-seller "Rule #1," amounts to: Don't lose money, find great companies, know their worth and acquire them at 50 percent off. Beyond that, he says the traditional advice -- invest in mutual funds, diversify, buy and hold -- is strictly for losers.

Let's cut to the chase: What's wrong with mutual funds?

First, if you intend to stay ignorant about investing, if you don't intend to get the education to tell a good business from a not-very-good business, you're going to have to give your money to somebody and let them invest it. In that case, the bad choice of the choices is mutual funds. They're going to take nearly a percentage point a year and they're not going to deliver anything that an index fund doesn't deliver. So just go and get an index stock fund. Buy SPDRs or Diamonds (Dow Jones ETFs) or the Nasdaq and be done with it. Then you won't have all these management fees and you're going to (earn) the index for sure, which is the best you can do in a mutual fund over any 20-year period of time anyway. So you might as well do an index.

You're also a doubting Thomas when it comes to a balanced portfolio, right?

We're going to separate the world into two groups of people: those who are ignorant and are going to remain so about investing -- and they have to do mutual funds, what other choice do they have? -- and those who are going to learn what the best investors in the world have known for 100 years, which is just the basic fundamentals of what a great company looks like and what it's worth. When you know that it's a great company and you know what it's worth, then you'll know if it's on sale. You buy it on sale and you're off and running.

When you can buy Johnson & Johnson on sale, buy it. You're done. You don't need a mutual fund when you can buy Johnson & Johnson on sale; it's been around 120 years, it's going to be around another 120 years. That's not hard. That's all I want to tell people -- it's not hard. You don't need to buy lots of things, you can buy just one good stock and you'll be in good shape.

Surely you're not advocating that people put all their money in one stock? It may have worked for you, but are you saying this is a smart investment strategy?

For getting started, the key thing is to find one good one. Then, as you get better and better at it, you can pull more and more money out of mutual funds and maybe end up with four or five really good companies you like in four or five different areas of the market.

What about the argument for diversification? Shouldn't investors protect themselves from market volatility by diversifying among a few dozen companies?

One of my favorite Warren Buffett quotes is, "Diversification is a protection against ignorance." It's not meant to be mean, but if you don't know the difference between a wonderful business that is on sale and a bad business that isn't, you must diversify. That's your only logical choice. If you can't tell the difference between things, then you have to spread your money out across a lot of things. But when you can tell the difference, then diversification hurts your portfolio performance.

If I were to coach a novice investor, I would say first, let's diversify by getting rid of all your mutual funds and get SPY (or SPDR -- an exchange-traded fund that mimics the S&P 500). Wonderful stock, no fees. Yay, we just saved ourselves about 1 percent to 2 percent a year. The second step, buy one really good solid business; buy a Johnson & Johnson on sale, a Merck on sale, Coca-Cola on sale. Something that has been around for 100 years and is going to be around another 100 years. Then you've basically locked in, for that portion of your portfolio, a 12 percent to 15 percent return. Then add a really cool business that might be the next Apple; go for one of those because they're fun. Put $1,000 in and hope for seven doubles in the next five years.

Explain how you can tell when a stock is a screaming buy.

Here's what a screaming buy is, bottom line: a great business that is for sale at a substantial reduction to its value. You can't just have a company that is at a substantial discount to its value because if it's not a great company, it's real hard to say what that value actually is. The things that make a really great business investment boil down to the fact that you can say with a great deal of certainty that this is a durable business and that it will grow at at least a certain minimum amount per year. Otherwise, you don't know how to give it a value short of saying its liquidation value is this. Of course, no really valid business is going to sell for its liquidation value. Another of my favorite Warren Buffett quotes is, "It is much better to buy a wonderful company at a fair price than a fair company at a wonderful price." If you have the choice between a screaming deal or a screaming great company, you tend to lean toward the screaming great company, particularly as novice investors.

Give an example of some companies that you bought that you thought were good buys.

OK. I loved Cognizant Technology Solutions, Whole Foods, Garmin, recently Apple. Cognizant Technologies has been a screaming deal for a long, long time and it's constantly on sale. It's a fabulous company. Garmin is a fabulous company that goes from being at retail price down to being on sale on a fairly regular basis. These are examples of companies that had the qualities we look for.

When did you start investing seriously?

In about 1980, I started up and was very fortunate to get in on some early stage investments that were good. I did a lot of different kinds of investing, everything from private to public businesses, and I caught one that just took off, just exploded. That, plus some other things that I did right, turned into about $1 million in about five years, and that allowed me to just quit.

Then I quit. That was it; I had all the money I needed. I went off to Iowa and raised my kids in a little private school. I did some basic investing out there, bought some land and subdivided it and sold it off, just to get places to live that I wanted to live in. The investing stopped. I loved pursuing enlightenment or consciousness. I was still chasing the rainbow. I wrote a couple of screenplays with a friend of mine that were horrible. I studied acting for a couple years. I was just sort of wandering and meditating and hanging out with my kids. Then I got divorced and suddenly a million dollars started to look like not so much money anymore, so that's when I started cranking it back up in about 1989 or 1990.

Your meditation seems to have led to a Zen-like approach to looking at stocks by removing the barrier of what stock is, and instead establishing a relationship with the companies in which you're investing.

That's a great way to say it, man. For me, it's very much about making friends. I would not make a very good hedge fund manager, probably. I would probably not be any good at managing other people's money. So the money becomes a very personal thing to me. It's my vote for how the world should be, and I do want a personal relationship with these businesses. I get really involved. I've been on the boards of companies. I want to know that the people I'm working with are really honest and really passionate people who are going to run my company really well. I buy one share of stock and that's my company.

You're not a big fan of stock analysts. Why not?

You listen in on these conference calls and the questions that are getting asked by the analysts are down in the forest so deep, they're asking questions about the color of that tree's leaf. And I kind of want to know what the forest is up to. Are you really going to tell me if the forest is on fire? I love people like John Mackey at Whole Foods who just come right out and tell you the whole forest is on fire.

Can you buy stock in a company that you philosophically oppose?

No. I think you've really got to put your money where your mouth is. The people out there pontificating about the values of the environmental movement, who have mutual funds that own all of these companies that they're calling the bad guys, are hypocrites. Every Friday, they put their 401(k) money into the company that they're trying to stop! It's like, what are you doing? I can't do that. That doesn't work for me.

Stocks Bounce Back After Pullback By Tim Paradis, AP Business Writer

2007-11-06T07:03:00.000-08:00

NEW YORK (AP) -- Stocks rebounded early Tuesday as global stock markets came back from a widespread pullback brought on by renewed concerns about credit.

Big names on Wall Street such as Citigroup Inc. and Merrill Lynch & Co. have stirred gloom on Wall Street of late by taking or warning of big write-downs on debt tied to faltering mortgages. The uncertainty about U.S. credit problems has spread to other markets as well.Citi and Merrill, among others, have been bombarded by securities they hold that are tied to subprime loans, those made to borrowers with poor credit. A sharp pullback in housing prices has tripped up borrowers and sent mortgages defaults higher. That soured debt has come back to haunt banks.

While investors appeared willing to look past some unease about subprime debt on Tuesday, concern about inflation persists, with gold prices surging past $800. Gold has in recent sessions moved above the psychological benchmark; before its recent movement it hadn't traded above $800 since 1980.

In the first hour of trading, the Dow Jones industrial average rose 40.81, or 0.30 percent, to 13,584.21 after falling 51 points in an erratic session Monday.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 7.11, or 0.47 percent, to 1,509.28, and the Nasdaq composite index rose 11.23, or 0.40 percent, to 2,806.41.

Bonds fell. The yield on the 10-year Treasury note, which moves opposite the price, rose to 4.37 percent from 4.34 percent late Monday. The dollar reached yet another record low against the euro Tuesday. The 13-nation currency rose to a high of $1.4569 in mid-afternoon trading before falling back slightly.

Light, sweet crude jumped $1.94 to $95.92 per barrel in premarket trading on the New York Mercantile Exchange.

In addition, Fed Chairman Ben Bernanke is scheduled to speak in San Antonio Tuesday afternoon. As always, investors will be watching for any clues about policymaker's reading of the economy. They're particularly anxious after the Fed indicated last week it might stop lowering rates. Investors are also awaiting his scheduled testimony Thursday before Congress' Joint Economic Committee.

Tech stocks could benefit from investor enthusiasm over Chinese e-commerce portal Alibaba.com. The stock nearly tripled in its debut on the Hong Kong stock market Tuesday. Some analysts dismissed the run-up as the work of speculators, however. The company, in which Yahoo Inc. is an investor, allows companies in China and overseas to trade with one another online. Alibaba raised $1.5 billion through its global offering of a 17 percent stake -- the biggest IPO by a Chinese Internet company. Yahoo fell 69 cents, or 2.2 percent, to $30.67.

With no major economic news due Tuesday, investors will be focused on corporate results.

Agricultural processor Archer Daniels Midland Co. said its fiscal first-quarter profit rose 9 percent as improved results at its oilseeds processing business offset higher corn prices. ADM rose $2.67, or 7.7 percent, to $37.19.

Molson Coors Brewing Co., one of the world's largest brewers, fell $1.09 to $55.49 after reporting its third-quarter earnings fell because of a charge for closing a Canadian brewery and weather in Britain that cut into sales.

Beazer Homes USA Inc. said it plans to book a charge in the fourth quarter and suspend its dividend to help cut costs. The homebuilder rose 2 cents to $9.54.

First Solar Inc. jumped $16.44, or 11.1 percent, to $164.54 after the solar-cell maker signed a long-term module supply agreement with a unit of Babcock & Brown and Ecostream Switzerland GmbH that is expected to generate sales of about $1 billion.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 132.6 million shares.

The Russell 2000 index of smaller companies rose 2.92, or 0.37 percent, to 793.35.

Overseas, Japan's Nikkei stock average closed down 1.62 percent, while Hong Kong's Hang Seng index rose 1.71 percent a day after falling 5 percent. Britain's FTSE 100 rose 0.66 percent, Germany's DAX index rose 0.55 percent, and France's CAC-40 rose 0.68 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

US Jobs Fails to Support Dollar by Korman Tam

2007-11-04T07:34:00.000-08:00

Markets shrugged off a sharply higher than expected October US non-farm payrolls report, battering the dollar to fresh lows against the euro at 1.4528 and the sterling just beneath the 2.09-level. Lingering jitters over credit conditions in the US continue to plague the greenback.

The October labor report revealed robust growth in non-farm payrolls, sharply exceeding market expectations by twofold at 166k compared with a downwardly revised September reading of 96k. The unemployment rate remained unchanged at 4.7%, while hourly wages increased by 0.3%. Durable goods orders for September were unchanged from the previous month posting another 1.7% decline, while the ex-transports reading improved by 0.4%. Factory orders gained by 0.2% in September compared with a 3.3% drop a month prior.

The dollar initially rallied off the strong jobs data but quickly relinquished its strength as traders bought up the majors on the dip – reaffirming heavily bearish dollar sentiment. Renewing concerns about liquidity conditions were new Fed injections today that resulted in the Fed’s largest infusion of funds since September 2001. The Fed announced repurchases totaling $41 billion, exceeding the $38 billion injected at the height of the credit crunch panic in August.Euro Hits New High

The euro holds onto its gains above the 1.45-level slightly beneath its all-time high against the dollar at 1.4528. Traders will look ahead to next week’s ECB monetary policy meeting, in which change is expected. However, markets will closely scrutinize commentary from ECB President Trichet to determine whether another rate hike will be signaled. With recent inflation in the Eurozone ticking higher, we look for the ECB to maintain its current tightening cycle and hint at the possibility of a 25-basis point rate hike before year-end to 4.25%.

EURUSD will encounter interim resistance at 1.4530, followed by 1.4570 and 1.46. Subsequent ceilings will emerge at 1.4650 and 1.47. On the downside, support begins at 1.4480, backed by 1.4440 and 1.44. Additional floors will emerge at 1.4360, followed by 1.4320 and 1.43.GBP Flirts with 2.09

The sterling reached another multi-decade high just beneath the 2.09-level in the Friday session as traders positioned for additional Fed rate cuts while the BoE is seen remaining on hold given recent buoyant UK economic data. The Bank of England deliberate policy and announces its decision next Thursday, with no change is expected.

Retire Rich: Why the Fed's rate cut should scare you

2007-11-04T07:33:00.000-08:00

By Janice Revell, Money Magazine senior writer If you're saving for a retirement decades away, Thursday's big drop in the stock market shouldn't worry you too much.

But something did happen this week that you can't afford to ignore: the Federal Reserve's rate cut.

The Fed's actions could very well be ushering in a new era of inflation - and that is horrible news for your retirement portfolio.

When you save for retirement, you're saving for a lifetime supply of food, shelter and golf fees. Over time, the prices for these things only go one way: up.

The risk is that the value of the investments you're now stockpiling to pay for them may not increase at the same pace - leaving you with only enough money to pay for nine holes' worth of green fees.

With its rate cut this week, the Fed has made it clear that staving off recession is more important than reining in inflation.

But while the typical recession has lasted 18 months on average (not including the Great Depression), inflation can dog your finances for a long, long time.

Our last inflationary cycle stretched out for almost 20 years, from the mid-1960s to the early 1980s.

I'm not saying that the Fed's quarter-point rate cut is going to turn America into Argentina overnight. But you'd be wise to start taking steps to guard against the possible uptick in inflation.

Don't be too conservative

When the stock market gets especially volatile (as it is right now) there's a natural temptation to flee into conservative investments like government bonds. That's understandable - you have to be able to sleep at night.

But the risk of loss is only one of the two big risks you face. The other is the risk of inflation - and it can be just as damaging.

To see why, consider that the average rate of return on the 10-year Treasury bond has historically outpaced inflation by only about one-and-a half percentage points.

Right now, for instance, the 10-year Treasury is yielding about 4.4%, while the inflation rate is running at 2.8%.

Sure, a Treasury bond is a safe investment if you hold it to maturity. But unless you've already racked up more money than you can possibly spend, that yield will not even get you close to the stash you'll need to live on in retirement.

So to protect your portfolio simultaneously against both the risk of loss and inflation, you must be diversified.

Bonds, for instance, frequently move up when stock prices are heading south, dampening your risk of loss. But at the same time, bonds, more than any other type of investment, can get hammered by rising inflation.

Think back to the early 1980s, when inflation was running at around 10%. At the time, even ultra-safe US Treasuries were sporting double-digit yields, which certainly looked tempting. But to entice new bond investors, the government had to keep ratcheting up the interest rates they offered on new bond issues. That made the prices on existing bonds plummet (since the interest they paid was less attractive) and bond investors took big losses.

Over the longer run, common stocks have done a much better job of protecting investors from high inflation, since their returns are generally about four to five percentage points higher than high-quality bonds. But of course, stocks can crash in the short-term.

Real estate investments, such as REITS or real estate funds, typically perform the best of all types of investments during times of high inflation. But like stocks, they also carry a significant risk of short-term loss.

Add all of this up and it means that you've got to have a smattering of all asset classes. Ideally, your portfolio will hold a mix of small- and large-cap U.S. stocks, a smattering of international stocks, some REITs and some bonds.

The exact investment mix that is right for you will depend on several factors including how much time you have until retirement, the degree of risk you're comfortable taking, and other sources of retirement income you might have.

Roughly speaking, though, the targets for your retirement asset allocation might look like the following:

At 30, you might aim for 75% stocks, 10% REITs and the rest in bonds.

At 45, you'd shift to 70% in stocks/REITs, and at 60, you'd reduce your stock/REIT allocation to 60% of the portfolio (Corrected).

Even if you're already retired, you'll want to keep some exposure to regular stocks and real estate to give your portfolio a chance to generate enough income to keep pace with inflation.

I certainly can't predict the future, and neither can anyone else. One thing I do know, however, is that inflation now presents more of a threat to your retirement portfolio than it has in a long, long time.

Follow the strategies above and you'll be well on your way to handling anything the economy dishes out.

Forex Money Management

2007-11-01T16:26:00.000-07:00

Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is.

It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade.

There are different money management strategies. They all aim at preserving your balance from high risk exposure.

First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.

If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$

It's important to understand what's meant by core equity since your money management will depend on this equity.

We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts.

Money management strategy

Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or 2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your risk up to 3%

1% risk of a 100,000$ account = 1,000$

You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.

If you are a short term trader and you place your stop loss 50 pips below/above your entry point .
50 pips = 1,000$
1 pips = 20$

The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage,your trade size will be 200,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 10,000$ = 10% of your balance.

If you are a long term trader and you place your stop loss 200 pips below/above your entry point.
200 pips = 1,000$
1 pip = 5$

The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your trade size will be 50,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 2,500$ = 2.5% of your balance.

This's just an example. Your trading balance and leverage provided by your broker may differ from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident that his next trade will be winning and he may add more money to this trade. This's how you can blow up your account in a short time! A disciplined trader should never let his emotions and greed control his decisions.

Diversification

Trading one currnecy pair will generate few entry signals. It would be better to diversify your trades between several currencies. If you have 100,000$ balance and you have open position with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you should calculate 1% risk of your core equity not of your starting balance!. Itmeans that the second trade risk should never be more than 900$. If you want to enter a 3rd position and your core equity is 80,000$ then the risk per 3rd trade should not exceed 800$

It's important that you diversify your prders between currencies that have low correlation.

For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then your risk is 6% since the trades will tend to end in same direction.

If you want to trade both EUR/USD and GBP/USD and your standard position size from your money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$ GBP/USD. In this way,you will be risking 0.5% on each position.

The Martingale and anti-martingale strategy

It's very important to understand these 2 strategies.

-Martingale rule = increasing your risk when losing !

This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc

This strategy assumes that after 4 or 5 losing trades,your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example,if a trader started with a abalance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase ths size of his position 4 times to recover his loss. If he lose,his balance will be 2,000$!! He will never recover from 2,000$ to his startiing balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.

-Anti-martingale rule = increase your risk when winning& decrease your risk when losing

It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$

Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$

High return strategy

This strategy is for traders looking for higher return and still preserving their starting balance.

According to your money management rules,you should be risking 1% of you balance. If you start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year,your balance is 15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential profit by risking more from this profit while restricting your initial balance risk to 1%. For example,you can calcualte your trade in the following pattern:

1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)

In this way,you will have more potential for higher returns and on the same time you are still risking 1% of your initial deposit.

Disclaimer: Trading any financial market involves risk. This course and the website www.fxmaster.net and its contents is neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this course are for general information purposes only. The information provided in this course is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country. We reserve the right to change these terms and conditions without notice.

Introduction Forex

2007-10-27T05:24:00.000-07:00

The 1971 abandonment of the Bretton Woods Accord and the subsequent unwinding of the system of fixed exchange rates gave rise to the foreign exchange market as we know it today.

Forex refers to the foreign exchange market, where brokerage firms and banks are connected over an electronic network that allows them to convert the currencies of countries around the globe.

The forex market is the largest and most liquid financial market in the world. The daily dollar volume of currencies traded in the currency market exceeds $1.9 trillion, many times larger than the combined volume of all U.S. equities and futures markets.

While forex trading used to be executed exclusively between government central banks and commercial and investment banks, trading forex has become increasingly accessible to private investors thanks to the PC and internet.

The most commonly traded currencies are the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. The FX market runs 24-hour hours a day, 5 days a week with continuous access to global dealers. Trading is not centralized on a physical location or an exchange, as with the stock and futures markets.

Foreign Exchange is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

For example, you would execute a trade when you expect the currency you are buying to increase relative to the one you are selling. If the currency you are buying increases in value, you must sell the other currency to close the position and take a profit. The first currency in the pair is called the base currency and the second is called the counter or quote currency. Usually the US currency is the base currency and quotes are given in $1 USD per counter currency, e.g. USD/JPY. The exceptions are the British Pound, the Euro and the Australian Dollar.

Understanding forex quotes: 1 unit of the base curreny = the exchange rate in the quote currency. Eg if EUR/USD is trading at 1.2762, 1 Euro will buy you 1.2762 Dollars.

Understanding contract size in forex trading: The contract size is normally a lot of 100,000. This means per standard contract you are controling 100,000 units of the base currency. For this contract size, each pip (the smallest price increment) is worth $10. Many firms offer mini accounts now where you can trade units of 10,000, where the pip value is $1.

Trading the Forex market allows very low margin requirements relative to other markets.

Learn How To Read Forex Quote

2007-10-26T18:15:00.000-07:00

Forex is an abbreviated name for "foreign exchange." The Forex market is a non-stop cash market where the currencies of nations are bought and sold, typically via brokers. For example, you buy Euros, paying with U.S. Dollars, or you sell Euros for Japanese Yen.The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes often result from economic and political factors, such as the price of oil or political unrest. To better understand how the exchange rate can affect the value of your Forex investment, this article shows you how to read a Forex quote.Forex quotes are always expressed in pairs. In the following example, your "pair" of currencies are the U.S. Dollar (USD) and the Euro (EUR). The Forex quote, USD/EUR = 265.50, means that one U.S. dollar is equal to 265.50 Euros. The currency to the left of the / (USD in this case) is referred to as base currency and its value is always 1. The currency to the right of the / (EUR in this case) is referred to as the counter currency. In this example, one USD can buy 265.50 EUR, since it is the stronger of the two currencies.Because the U.S. dollar is regarded as the central currency of the Forex market, it is always treated as the base currency in any Forex quote where it is one of the pairs. Incidentally, the U.S. Dollar is involved in nearly 90% of all Forex transactions.In this example, your "pair" of currencies are the Japanese Yen (JPY) and the Euro (EUR). The Forex quote, JPY/EUR= 175.10, means that one Japanese Yen is equal to 175.10 Euros. The currency to the left of the / (JPY in this case) is referred to as base currency and its value is 1. The currency to the right of the / (EUR in this case) is referred to as the counter currency. In this example, one JPY can buy 175.10 EUR, since it is the stronger of the two currencies.The goal of any Forex trading system is to profit from foreign currency movements. This requires adequate training in basic Forex principles, such as performing a Technical Analysis, using Forex charts and Stop/Loss tools, and keeping up-to-date with economic and political events. In a sense, Forex training never ends.

About Forex

2007-10-24T16:20:00.000-07:00

The Forex market is a cash inter-bank or inter-dealer market established in 1971 when floating exchange rates began to materialize. Today, the exchange of currency has expanded from trading floors to home computers. The simplest definition of foreign exchange is the changing of one currency to another, and, unlike the stock market, one may earn profits whether buying or selling within the currency exchange. In comparison to the daily trading volume averages of $300 billion in the U.S. Treasury Bond market and the less than $10 billion exchanged in the U.S. stock markets, the Forex market is huge. Currently there is often an average of 3.5 trillion levels exchanged daily.

The most important foreign exchange activity is the spot business between the dollar and the four major currencies (Euro, British Pound, Swiss Franc and Japanese Yen). Activity within the market is created by six main groups: central banks, commercial banks, other financial institutions, corporate customers, brokers and independent currency traders who have established home-based businesses.

Forex is not a "market" in the traditional sense. There is no centralized location for trading activity as there is in currency futures. Trading occurs over the telephone and through computer terminals at thousands of established locations, as well as within home-based trading businesses worldwide.