Pontiac Summit

Archive for the ‘Investing’ Category

I read this in the WSJ this morning:

Next spring, Fine Living Network, a cable channel created in 2002 at the height of America’s infatuation with affluent living, is slated to be phased out. In its place, Scripps Networks Interactive Inc. will launch the Cooking Channel.

Gone will be “I Want That!” celebrating diamond-encrusted sinks, and “Dream Drives,” showcasing America’s richest zip codes. Instead, viewers will see shows focusing on instructional cooking at home.

“It’s not so much [that we have] a different audience but an audience that’s acting different,” said John Lansing, president of Scripps Networks Interactive. “Their value system is shifting from aspiring to material wealth to aspiring to a life better lived.”

Now if they’d only do the same thing with Extreme Makeover – Home Edition!

Anyway, I welcome the ‘getting-back-to-basics’ lifestyle. Materialism brought to the masses is usually not a good thing because people start wanting things regardless of whether or not they can actually afford them. I think that’s what we saw with the housing crisis. Builders kept building bigger, fancier, more expensive houses and people kept having to stretch themselves a little further to be able to afford them.

Now I’m reading reports that builders are scaling back in their designs. They are cutting out square footage and taking out some of the amenities in order to make the homes more affordable.

Now if we could only start manufacturing more products here in the U.S.A…

I listened in on a Roth IRA Converstion conference call with a Charles Schwab representative this morning. Schwab.com offers a pretty nice resource for Roth IRAs.

In 15 days an opportunity will become available that will allow people at all income levels to convert a non-deductible IRA to a Roth IRA. Previously, that option was only available to those with modified AGIs of less than $100,000.

As the host of the conference call mentioned, there are definitely some things to think about before making the conversion:

1. Will you be in the same or higher tax bracket in the future when you begin making withdrawals? Of course none of us know what tax rates will be like in the future but I would have to say that they will be HIGHER. Factor in required minimum distributions (RMDs) from taxable plans (there are no RMDs with a Roth IRA) and you might be moved to a higher income tax bracket.

2. Do you have a long time-horizon? The longer the time horizon, the better. You have to factor in the opportunity cost of paying taxes now in order to receive tax-free income in the future.

3. Can you pay the tax on the conversion from sources outside the IRA? You’ll receive little benefit if you have to pull money out of the IRA to pay the income taxes on the conversion.

4. How will the conversion affect your AMT (if you’re subject to the AMT)? A good tax program like TurboTax or Tax Cut will help you walk through those scenarios.

5. Would you use the Roth as an opportunity to pass on assets to your heirs? If this is the case, then other issues may not be of importance to you.

One other thing that is significant about 2010 is that if you make the conversion in 2010, you’ll have the opportunity to have the conversion amount added to your income in equal amounts over the 2011 and 2012 tax years. For instance, say you convert an IRA to Roth IRA and the taxable amount is $50,000. You will be able to have $25,000 added to your income in 2011 and 2012. Of course, something to keep in mind is whether or not you’ll be in a higher tax bracket in those years and whether or not the conversion amount will throw you into a higher bracket.

Lot’s of stuff to consider.

If you have any questions, feel free to leave a comment. I’ll see if I can get the Schwab rep to answer them for you. In the meantime, check out Schwab’s Roth resource. Another helpful resource is IRS Publication 590 (PDF).

Forex is a trading ‘method’ also known as FX or and foreign market exchange. Those involved in the foreign exchange markets are some of the largest companies and banks from around the world, trading in currencies from various countries to create a balance as some are going to gain money and others are going to lose money. The basics of forex are similar to that of the stock market found in any country, but on a much larger, grand scale, that involves people, currencies and trades from around the world, in just about any country.

Different currency rates happen and change every day. What the value of the dollar may be one day could be higher or lower the next. The trading on the forex market is one that you have to watch closely or if you are investing huge amounts of money, you could lose large amounts of money. The main trading areas for forex, happens in Tokyo, in London and in New York, but there are also many other locations around the world where forex trading does take place.

The most heavily traded currencies are those that include (in no particular order) the Australian dollar, the Swiss franc, the British pound sterling, the Japanese yen, the Eurozone eruo, and the United States dollar. You can trade any one currency against another and you can trade from that currency to another currency to build up additional money and interest daily.

The areas where forex trading is taking place will open and close, and the next will open and close. This is seen also in the stock exchanges from around the world, as different time zones are processing order and trading during different time frames. The results of any forex trading in one country could have results and differences in what happens in additional forex markets as the countries take turns opening and closing with the time zones. Exchange rates are going to vary from forex trade to forex trade, and if you are a broker, or if you are learning about the forex markets you want to know what the rates are on a given day before making any trades.

The stock market Is generally based on products, prices, and other factors within businesses that will change the price of stocks. If someone knows what is going to happened before the general public, it is often known as inside trading, using business secrets to buy stocks and make money – which by the way is illegal. There is very little, if any at all inside information in the forex trading markets. The monetary trades, buys and sells are all a part of the forex market but very little is based on business secrets, but more on the value of the economy, the currency and such of a country at that time.

Every currency that is traded on the forex market does have a three letter code associated with that currency so there is no misunderstanding about which currency or which country one is investing with at the time. The eruo is the EUR and the US dollar is known as the USD. The British pound is the GBP and the Japanese yen is known as the JPY. If you are interested in contacting a broker and becoming involved in the forex markets you can find many online where you can review the company information and transactions before processing and becoming involved in the forex markets.

Many people are looking at getting into day trading, and start with studying the Stock Market, and the different stock exchanges.  What many don’t realize is that there are different markets and financial instruments that one can profit from.  One market that has recently become available to the public to trade is the Foreign Currency Exchange, the FOREX.

The foreign exchange market is the largest financial market in the world.  It trades upwards of 2.5 trillion dollars per day, which is approximately 1000 times the volume of the New York Stock Exchange.  Quite easily, the foreign exchange market dwarfs the stock market of any country.

So, where is the foreign currency market?  Well, unlike the stock exchanges of the world.  The foreign currency market is a virtual market that is connected by the internet, phones, and fax.  

The advantage of having a worldwide currency market is that it is open 24 hours a day, 5 days a week.  Living in the USA, one could trade 24 hours per day Sunday 5pm to Friday 4pm EST.  One can only trade stocks during normal market hours, so for those that have jobs during the day, the FOREX market is much more accessible as trading can be done at night or early in the morning before going to work.

Other benefits of the foreign currency exchange include:

1.    High Leverage: Currency brokers usually give their traders 100:1 leverage, meaning that if there is $1000.00 in ones account, they will let one control $100,000.00, which allows currency traders to reap large gains from relatively small price movements in the market.

2.    High Liquidity: Because the currency market is the largest market in the world with huge daily volumes, one is always able to get in and out of trades as liquidity is never an issue.

3.    Stops are always honored: Except in extremely volatile markets, which is rare, limits and stops are always honored.  Because of the market’s liquidity and 24 hour continuous trading periods, dangerous trading gaps are eliminated altogether. Orders are executed very quickly, without slippage.  In the stock market, it is much more frequent that stops get skipped over as stock prices plummet, but in the FOREX, one can be much more confident that the stops are honored.

4.    Entry orders are instant: There is no lag time in placing an order.  Orders are processed instantly at the current market price, or the price at which you set the order to enter the market in the future.

5.    No Commissions: There are no commissions in currency trading, the broker just takes a small difference between the bid price and the ask price as its fee for the transaction.

As currency markets are some of the most volatile markets, many fundamental variables such as weather, and war affect the price of the currency, however, since there is no one apparent reason much of the time for price movement, the fundamentals get discounted and one can use an almost purely technical approach to trading.  This is why the FOREX is considered one of the most predictable trending markets that follows technical analysis methods more than any other market.

As one can see, there are many great benefits to using the FOREX as a highly profitable financial instrument.  One can trade from home in their spare time, but first it is important to get a solid education in learning specific FX trading methods.  Before trading in a live account, it is important to first get educated using books, or online courses.  There are many courses online selling for upwards of $3000.00, but it is not necessary to spend that kind of money to get a good education.  Usually the expensive courses come with DVD’s and other expensive items that raise the price.  Much of the time one can find a course for under $500 that teaches the exact same content for much less money.

Wishing You Success in Trading