Well, since last Tuesday (October 22) when we issued our missive that one should be prepared for 100-point gains on the Dow for no reason, we at last have our first winner, and just five trading days hence. To boot, it propelled the Dow Industrials to a new all-time closing high (though we had to check because we didn't hear Maria Bartiroma hooting and hollering about it).
Today's close topped the September 18 close of 15,676.94, at the time, the all-time high. Something else interesting about our call from a week ago, which was implicitly a bullish "BUY STOCKS" advisory: the Dow is up about 213 points since then and has closed down on two days, up three, though the down days amounted only to a total of 55 points, while the gains were 268, or an order of magnitude of roughly five times better for the bulls.
If this isn't a sign of an imminent breakout, then nothing is. Since the debt ceiling and government shutdown masqueraded over all the internal financial problems facing the government and kept QE at a solid $85 billion a month without any slowdown even considered for another six months, there could be no more bullish news.
While the tone here at Money Daily is often flip and at times mistaken for an inherent pessimism, we are in the end nothing other than realists, now having come, somewhat reluctantly and late, to the sad realization that nothing in the equity market matters besides the official narrative from sources like the Wall Street Journal, CNBC, Forbes and Bloomberg and the continued loose money policies of the Fed, the latter, naturally, the most important.
Government debt and massive annual deficits ceased to have any meaning with Obama's first term, at the depths of the financial collapse, have since continued to grow, and will continue until they don't. What earth-shattering event it will take to upend the global liquidity spooning through the banks that is happening worldwide is as yet unknown, and the globe may be further from it now than it was just five years ago, the level of rampant money creation having gone from stimulus to necessity in the interim.
In the short term, this means that ordinary things like work, income, taxes and debt have little to no meaning and that getting onto the Federal Reserve's gravy train via the smorgasbord of handouts and/or entitlement programs is a sure path to immediate gratification, though not necessarily riches (though bankers with huge bonuses may beg to differ).
As with all gambling or investing, it's all about knowing who the other players are and what they're holding that is the key to success. With the Fed intent on creating more and more and more debt, ad infinitum (because they truly have no plan for tapering or unwinding their enormous balance sheet), one can either hunker down with real assets like gold or land, or play the paper chase with stocks, bonds, derivatives, options, and the rest.
The paper game has won for the past five years, and, as long as the economy keeps shrinking instead of growing, people, governments and businesses will continue borrowing, spending and defaulting, keeping the Fed busily creating more money in a vicious, non-virtuous cycle.
At some point, the debts will become so large as to be unpayable, and maybe we've already reached that point, so that the Ponzi scheme of unlimited money creation will have to continue and grow, a la Zimbabwe or Weimar Germany.
Fiat currencies have a perfect record, having failed 100% of the time, though this time the fiat is a global phenomenon. There is no currency in the world that is backed by anything but faith, and faith can be shattered any time the central bankers of the world deem necessary.
That, in the end, is the point. They control. We are but slaves on the global plantation, devoid of rights or wealth, with the means to exploit the system in whatever ways we find convenient. It surely won't last forever, and many are absolutely amazed it has lasted this long. Since we are five years into this global liquidity experiment without adequate capital, inflating assets willy-nilly all along the way, the only measures are the forex measures of currencies against the US dollar. When the dollar erodes to a point at which it is no longer maintaining itself as the reserve currency of the planet, the game is up.
Until then, party like its 2013.
Dow 15,680.35, +111.42 (0.72%)
Nasdaq 3,952.34, +12.21 (0.31%)
S&P 500 1,771.95, +9.84 (0.56%)
10-Yr Bond 2.51%, -0.01
NYSE Volume 3,335,803,750
Nasdaq Volume 1,840,704,750
Combined NYSE & NASDAQ Advance - Decline: 3376-2221
Combined NYSE & NASDAQ New highs - New lows: 427-25
WTI crude oil: 98.20, -0.48
Gold: 1,345.50, -6.70
Silver: 22.49, -0.046
Corn: 432.00, +1.25
Showing posts with label Forex. Show all posts
Showing posts with label Forex. Show all posts
Tuesday, October 29, 2013
Sunday, October 30, 2011
Researching Online Brokerages Worth the Effort
While many retail investors have fled from highly volatile equity markets and outflows from equity mutual funds have reached historic proportions (ICI reported that investor holdings in stock mutual funds decreased by 9.5% in September), the ongoing zero interest rate policy of the Federal Reserve has lowered the return on Treasuries and all other fixed asset classes likewise offer returns that barely, if at all, keep pace with inflation.
As stocks made huge moves in October, many retail investors missed out, and it's likely that more will pile into the rally, sensing that the problems stemming from Europe have passed and it's once again safe to invest in stocks. That rationale may or may not prove correct, but, whatever the case, being at least partially invested in stocks is a solid strategy in good times or bad.
If one is inclined to jump in, the easiest way is to plug right in from the comfort of home or office through one of the many online brokerages available. The range of online brokerage products and services has expanded greatly since the infancy of the internet back in the late 1990s, and it pays to research the various options available.
According to a recent ICI report, households with internet access owning mutual funds is nearly universal, with ninety-one percent of all households owning mutual funds have internet access with ninety-eight percent aged 35-44 connected to the internet from their homes.
Additionally, the report goes on to say that eighty-four percent of mutual fund–owning households with internet access went online for financial purposes, such as to check their bank or investment accounts, obtain investment information, or buy or sell investments, though only nineteen percent used the internet for trading purposes, so there is still plenty of room for more home use of online brokerages.
What any good online brokerage provides in the way of online brokerage products and services starts with a stable and easy-to-use interface, simplifying the process of buying or selling stocks, ETFs or mutual funds. Beyond that, one would be advised to seek a brokerage that does not have maintenance or inactivity fees, offers free dividend reinvestment plans and options trading at a low price per contract.
Other features may include free research tools such as screeners, tracking and historical comparisons, but fees are by far the main differentiator of online brokerages. Many offer packages of free trades for new users, low cost stock trades and the ability to have broker-assisted trades for special circumstances. Fees for mutual fund trading should be minimal to free. For users who wish to trade on margin, rates vary widely and should be investigated thoroughly. The ability to transfer funds without hassle over the internet, to and from a personal checking account should be standard. Low minimum requirements, both for an initial funding and ongoing transfers is also a must.
A number of brokerages have expanded beyond stocks and mutual funds to forex, commodities and bonds, so an astute investor should prepare a list of requirements and priorities before opening any online account.
Stocks inherently have risk, so there's no reason to add to the risk and frustration by choosing an online brokerage that doesn't fulfill all of one's needs.
As stocks made huge moves in October, many retail investors missed out, and it's likely that more will pile into the rally, sensing that the problems stemming from Europe have passed and it's once again safe to invest in stocks. That rationale may or may not prove correct, but, whatever the case, being at least partially invested in stocks is a solid strategy in good times or bad.
If one is inclined to jump in, the easiest way is to plug right in from the comfort of home or office through one of the many online brokerages available. The range of online brokerage products and services has expanded greatly since the infancy of the internet back in the late 1990s, and it pays to research the various options available.
According to a recent ICI report, households with internet access owning mutual funds is nearly universal, with ninety-one percent of all households owning mutual funds have internet access with ninety-eight percent aged 35-44 connected to the internet from their homes.
Additionally, the report goes on to say that eighty-four percent of mutual fund–owning households with internet access went online for financial purposes, such as to check their bank or investment accounts, obtain investment information, or buy or sell investments, though only nineteen percent used the internet for trading purposes, so there is still plenty of room for more home use of online brokerages.
What any good online brokerage provides in the way of online brokerage products and services starts with a stable and easy-to-use interface, simplifying the process of buying or selling stocks, ETFs or mutual funds. Beyond that, one would be advised to seek a brokerage that does not have maintenance or inactivity fees, offers free dividend reinvestment plans and options trading at a low price per contract.
Other features may include free research tools such as screeners, tracking and historical comparisons, but fees are by far the main differentiator of online brokerages. Many offer packages of free trades for new users, low cost stock trades and the ability to have broker-assisted trades for special circumstances. Fees for mutual fund trading should be minimal to free. For users who wish to trade on margin, rates vary widely and should be investigated thoroughly. The ability to transfer funds without hassle over the internet, to and from a personal checking account should be standard. Low minimum requirements, both for an initial funding and ongoing transfers is also a must.
A number of brokerages have expanded beyond stocks and mutual funds to forex, commodities and bonds, so an astute investor should prepare a list of requirements and priorities before opening any online account.
Stocks inherently have risk, so there's no reason to add to the risk and frustration by choosing an online brokerage that doesn't fulfill all of one's needs.
Thursday, September 16, 2010
Wheels Coming Off Global Economy
Today may have been a watershed day for the demise of the global economy. There were any number of troubling events - most of which were completely overlooked by the computers making trades on US markets - that signal a major event could decouple governments from their economies, people from their money, banks from credits, and on and on...
Take, for instance, the activity in the Forex markets, where the Bank of Japan decided to intervene for the first time in six years, to keep the Yen from appreciating. The intervention actually took place on Wednesday, but it's effects will be far-reaching and continual. All currencies are seeking levels at which they can find comfort in trade - cheap imports, value on exports - but, not everybody can have it their way, obviously. These kinds of things lead to crises, political, economic and sometimes military.
But that's probably not going to get too many people worked up. Maybe the thought of foreclosures on the rise might suffice. The banks are apparently trying to manage the foreclosure process, in other words, slowing it down so that they don't create a glut of homes on the market and cause prices to fall even further.
It's a gamble that isn't likely to work out, however. Prices do what they're supposed to do. Mismanaged properties sell for less. Homes which were overpriced to begin with will find their correct level. Despite what the bankers holding most of the mortgages (Bank of America) believe, Americans are smarter than they think, and with an economy suffering from 20% real unemployment, keeping prices suspended artificially is probably more wishful thinking than prudent planning.
The real estate market has gone through this before, as in the past two years the flood of foreclosures was partially stemmed by various government programs and tax bribes, modifications and work-outs. Home prices fell precipitously, nevertheless. So, as with anything having to do with banks these days, we offer a hearty, "good luck with that!"
How about thinking ahead a bit, like how much you'll be taking in every month when you're retired? The news there isn't very rosy either. Here's a report that offers the sobering conclusion that at the end of 2008 (hey, that was almost two years ago!), public pension funds were experiencing a shortfall of anywhere between $1 Trillion and $4.4 TRILLION! That's a lot of money that people are unlikely to be receiving in their "golden years."
But, that's just the start of it. Of the more than 1700 publicly-traded companies which operate pension plans for employees almost all of them are seriously underfunded. "The assets of corporate pensions relative to their deficits, known as the funded ratio, fell to 70.1% in August..." says a report by the Milliman 100 Pension Funding Index.
And that's without even looking at Social Security or Medicare, both systems hopelessly bankrupt and already bleeding red ink. When baby-boomers begin retiring in droves in the next two to five years, the systems will be beyond repair and likely need major modifications, such as no COLA, raised retirement ages and lower benefits. (Ed. Note: Being 56 myself, this doesn't make me necessarily happy, though my choice to not pay into any kind of pension plan and avoid SS tax at all costs now seems a prudent maneuver.)
OK, had enough? How about chewing on an arcane document of the American Monetary Institute from 2004, delivered by Director Stephen Zarlenga to the British House of Lords, which outlines, among other things, how government issuing money (not the Federal Reserve, a private bank), without the backing of gold or silver, has been the most fruitful.
This shoots major holes in the argument that "gold is money," and a true store of value and all the other clap-trap that have made gold the most speculative, over-priced commodity on the planet. As I and some non-gold-infused friends like to say, "you can't eat a gold bar and you can't buy a candy bar with it", or, "try buying a loaf of bread with a Kruggerand. Ypu've have better luck buying the whole bakery."
So much for the bad news. There was some good news, somewhere, but nobody seemed able to locate it. Nonetheless, the computers trading US stocks (You do know that 70% of all trades are executed without human involvement, don't you?) managed to issue forth another split decision, with the Dow and NASDAQ up, but the S&P and NYSE down, that, in itself, troubling. market divergence is almost always a telling sign that a correction isn't far off. Making matters more complex and compelling, trading volumes were down to absurdly low levels once again, running at a rate 30% below last year.
Dow 10,594.83, +22.10 (0.21%)
NASDAQ 2,303.25, +1.93 (0.08%)
S&P 500 1,124.66, -0.41 (0.04%)
NYSE Composite 7,169.48, -10.31 (0.14%)
In opposition to the benign headline numbers, declining issues pounded advancers, 3419-2260. The number of new highs to new lows remained static and statistically insignificant, at 308-48.
NASDAQ Volume 1,703,297,625
NYSE Volume 3,354,712,000
Crude oil futures were slammed down $1.45, to $74.57, but gold made another all-time high, at $1,271.90. up $5.20. Silver kept climbing in stride, up 20 cents, to $20.74.
Now, if there's anything we should have learned from first, the tech bubble of the late 90s and second, the housing bubble of the 2000s, that when the object of the bubble is advertised heavily on TV - remember Pets.com? How about 125% home equiy loans? - it's usually safe to say the asset is overpriced and due for a fall. It happened with tech stocks. It happened with houses, so it's probably going to happen with gold (and probably silver) because of the rampant number of ads telling us to buy gold, cash in our gold and get gold or cash in some manner. It's a mania, pure and simple. Gold and silver have increased in value by 400% or more over the past decade. When will it end? Nobody really knows, but buying at these nosebleed levels is the stuff of fools. Real estate looks much better, especially if you're assigned to the basic tenet of all investing, "buy low, sell high."
Take, for instance, the activity in the Forex markets, where the Bank of Japan decided to intervene for the first time in six years, to keep the Yen from appreciating. The intervention actually took place on Wednesday, but it's effects will be far-reaching and continual. All currencies are seeking levels at which they can find comfort in trade - cheap imports, value on exports - but, not everybody can have it their way, obviously. These kinds of things lead to crises, political, economic and sometimes military.
But that's probably not going to get too many people worked up. Maybe the thought of foreclosures on the rise might suffice. The banks are apparently trying to manage the foreclosure process, in other words, slowing it down so that they don't create a glut of homes on the market and cause prices to fall even further.
It's a gamble that isn't likely to work out, however. Prices do what they're supposed to do. Mismanaged properties sell for less. Homes which were overpriced to begin with will find their correct level. Despite what the bankers holding most of the mortgages (Bank of America) believe, Americans are smarter than they think, and with an economy suffering from 20% real unemployment, keeping prices suspended artificially is probably more wishful thinking than prudent planning.
The real estate market has gone through this before, as in the past two years the flood of foreclosures was partially stemmed by various government programs and tax bribes, modifications and work-outs. Home prices fell precipitously, nevertheless. So, as with anything having to do with banks these days, we offer a hearty, "good luck with that!"
How about thinking ahead a bit, like how much you'll be taking in every month when you're retired? The news there isn't very rosy either. Here's a report that offers the sobering conclusion that at the end of 2008 (hey, that was almost two years ago!), public pension funds were experiencing a shortfall of anywhere between $1 Trillion and $4.4 TRILLION! That's a lot of money that people are unlikely to be receiving in their "golden years."
But, that's just the start of it. Of the more than 1700 publicly-traded companies which operate pension plans for employees almost all of them are seriously underfunded. "The assets of corporate pensions relative to their deficits, known as the funded ratio, fell to 70.1% in August..." says a report by the Milliman 100 Pension Funding Index.
And that's without even looking at Social Security or Medicare, both systems hopelessly bankrupt and already bleeding red ink. When baby-boomers begin retiring in droves in the next two to five years, the systems will be beyond repair and likely need major modifications, such as no COLA, raised retirement ages and lower benefits. (Ed. Note: Being 56 myself, this doesn't make me necessarily happy, though my choice to not pay into any kind of pension plan and avoid SS tax at all costs now seems a prudent maneuver.)
OK, had enough? How about chewing on an arcane document of the American Monetary Institute from 2004, delivered by Director Stephen Zarlenga to the British House of Lords, which outlines, among other things, how government issuing money (not the Federal Reserve, a private bank), without the backing of gold or silver, has been the most fruitful.
This shoots major holes in the argument that "gold is money," and a true store of value and all the other clap-trap that have made gold the most speculative, over-priced commodity on the planet. As I and some non-gold-infused friends like to say, "you can't eat a gold bar and you can't buy a candy bar with it", or, "try buying a loaf of bread with a Kruggerand. Ypu've have better luck buying the whole bakery."
So much for the bad news. There was some good news, somewhere, but nobody seemed able to locate it. Nonetheless, the computers trading US stocks (You do know that 70% of all trades are executed without human involvement, don't you?) managed to issue forth another split decision, with the Dow and NASDAQ up, but the S&P and NYSE down, that, in itself, troubling. market divergence is almost always a telling sign that a correction isn't far off. Making matters more complex and compelling, trading volumes were down to absurdly low levels once again, running at a rate 30% below last year.
Dow 10,594.83, +22.10 (0.21%)
NASDAQ 2,303.25, +1.93 (0.08%)
S&P 500 1,124.66, -0.41 (0.04%)
NYSE Composite 7,169.48, -10.31 (0.14%)
In opposition to the benign headline numbers, declining issues pounded advancers, 3419-2260. The number of new highs to new lows remained static and statistically insignificant, at 308-48.
NASDAQ Volume 1,703,297,625
NYSE Volume 3,354,712,000
Crude oil futures were slammed down $1.45, to $74.57, but gold made another all-time high, at $1,271.90. up $5.20. Silver kept climbing in stride, up 20 cents, to $20.74.
Now, if there's anything we should have learned from first, the tech bubble of the late 90s and second, the housing bubble of the 2000s, that when the object of the bubble is advertised heavily on TV - remember Pets.com? How about 125% home equiy loans? - it's usually safe to say the asset is overpriced and due for a fall. It happened with tech stocks. It happened with houses, so it's probably going to happen with gold (and probably silver) because of the rampant number of ads telling us to buy gold, cash in our gold and get gold or cash in some manner. It's a mania, pure and simple. Gold and silver have increased in value by 400% or more over the past decade. When will it end? Nobody really knows, but buying at these nosebleed levels is the stuff of fools. Real estate looks much better, especially if you're assigned to the basic tenet of all investing, "buy low, sell high."
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