Month: July 2012

Article by Investment U

Sometimes I almost feel sorry for the market timers.

There’s a reason famed money manager Ken Fisher calls the stock market “The Great Humiliator.”

Nobody can know with any certainty what the stock market will do next week, next month, or next year. The sooner you recognize that, the sooner you can start making money in stocks…

I learned this lesson from three world-beaters: Warren Buffett, John Templeton and Peter Lynch.

Going Outside My Research Department…

As a young man starting out in a stock brokerage 27 years ago, I made a startling discovery. The “analysts” at my firm picking stocks for clients weren’t just bad… they were awful. I soon found myself looking for ideas outside my “research department.”

After six months of sheer frustration, I had an epiphany…

If I were going to learn from someone else, why not the best?

Instead of listening to the talking heads at my firm, why shouldn’t I listen to the greatest investors in the world?

As this was the early 80s, it was Warren Buffett, who ran Berkshire Hathaway, Peter Lynch, who managed the Fidelity Magellan Fund, and John Templeton, who headed the Templeton Growth Fund.

These men had very little in common in their investment approaches:

• Buffett was (and is) a value guy.

• Lynch was a growth analyst.

• Templeton was a global markets pioneer.

But they all started from the same premise: They didn’t have a clue what the broad stock market was going to do.

That was fine, because they knew something much more valuable: how to identify companies selling for far less than their intrinsic worth. And when the market recognized that value, they sold them.

11 Lessons From Peter Lynch

For instance, Peter Lynch taught me:

• Behind every stock is a company. Find out what it’s doing.
• Never invest in any idea you can’t illustrate with a crayon.
• Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
• Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
• Time is on your side when you own shares of superior companies.
• Owning stock is like having children. Don’t get involved with more than you can handle.
• When the insiders are buying, it’s a good sign.
• Unless you’re a short seller, it never pays to be pessimistic.
• A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
• Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
• Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

A Valuable Investment Lesson for Any Investor

I know investors who have spent a lifetime (and a fortune) in the stock market and have still not learned this lesson. Or lack the intestinal fortitude to follow it.

Worse, there are a number of gurus out there who are convinced that they have the smarts – or a system – that allows them to get in and out of the market just in the nick of time. Yet you’ll notice that system (ahem) always goes on the fritz just as soon as you start to follow it.

Count yourself a sophisticated investor the day you wake up and say, “Since no one can tell me with any consistency what the economy and the stock market will do, how should I run my portfolio?”

The answer to that question is: a well-defined, battle-tested investment approach that achieves high returns with strictly limited risk.

Of course, everyone in the industry claims that they’re beating the tar out of the market.

Our approach is based on a market-neutral investment philosophy. Our focus is on teaching investors how to seek out the most undervalued opportunities in the market.

As Buffett, Lynch and Templeton famously proved, that’s what actually works.

Good Investing,

Alex

P.S. Peter Lynch often said he found some of his best-performing investments while visiting the mall with his family. Indeed, he noted that, “If you like the store, chances are you’ll love the stock.”

That was definitely the case with a pick I made for The Oxford Club back in April. So far the stock is up 9.8% and I fully expect it to continue its rise in the months ahead. That’s why I’m recommending it in today’s Investment U Plus. For more information on how to access this pick along with our recommendations with each daily issue, click here.

Article by Investment U

Source: ForexYard

Today’s producer price index (PPI) data released by the US Bureau of Labor Statistics brought to light the solid growth in inflation across the United States. Last month’s 0.7% growth was one-upped today with April’s reading coming out at 0.8%, above the forecast 0.6%.

Though US retail sales came out slightly below expectations this past month, the inflationary figures grant support to those arguing for an interest rate hike by the Federal Reserve this quarter. While a tightening of monetary policy is not likely, the continual rise in inflationary pressure could generate an adjustment to outlook portfolios, which will likely help the US dollar regain much of the strength it lost since 2010.

Supporting the USD’s recent surge, moreover, is systemic weakness coming from Europe’s manufacturing and industrial sectors. In line with what forex traders have witnessed in much of Europe these past several weeks, today’s manufacturing reports out of the United Kingdom and industrial production figures from the euro zone all revealed sluggishness.

The impact on the British pound (GBP) and EUR have been felt, with both currencies pulling lower in today’s early sessions against the USD. The dollar has been higher against most of its counterparts due to heightened risk aversion, but also since a significant portion of forex market participants are bailing out of the euro in exchange for safety from the region’s debt woes.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

After quite a bearish trading session yesterday, the USD is continuing to lose support. The EUR/USD is continues its rise above the 1.4000 level, whilst the GBP/USD is trading at the 1.6275 level.

The most dominant currency and commodity today are the British Pound and Gold. The GBP showed much strength recently, rising against its major currency pairs yesterday. Now we wait for the GBP/USD to hit 1.6350 today.

Yesterday, Gold made the largest daily gains since July 1st of about $10. The extremely weak Dollar in yesterday’s trading played a large part in pushing-up Gold prices. A weaker USD again today, will lead to much of the same behavior. However, a turn of events may see the recent bullish trend of Gold short-lived.

Leading publications for today:

• British CPI, 08:30 GMT – The Consumer Price Index is a leading inflation indicator that measures the change in the price of goods and services, which are purchased by British consumers. The forecast is 1.8%, meaning the CPI was slightly lower this month than last month’s 2.2%. Such a result may lead to bearishness in the Pound as the British government and the Bank of England (BoE) feel that nearer to 3% is healthier for the Pound and British economy.
• German ZEW Economic Sentiment, 09:00 GMT – A leading measure of economic growth in Germany and the Euro-Zone. It evaluates the level of a diffusion index, which is based on a survey of German analysts and institutional investors. The forecasted result is 48.0, considerably better than the previous 44.8 publication. Such a result could drive up the EUR today due to the result signaling an improvement in the main economy of the Euro-Zone.
• U.S. Core Retail Sales, 12:30 GMT: Three major publications are set to be published simultaneously from the U.S. These include the Core Retail Sales, PPI (Producer Price Index), and Retail Sales. All 3 of these publications provide accurate signals as to the direction of the U.S. economy. If the figures are weaker than expected, then the USD may record another bearish session today.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

USD

The USD has gone increasingly volatile as of late against its major currency pairs. The USD/JPY cross is down for a second day at 96.42. This comes about as the U.S. shows some negative economic data for a second day in a row. Against the EUR, the USD is currently down by 30 pips at 1.3827. Versus the Pound, the USD has recorded ups and downs in the past week, and is down over 150 pips against the GBP at 1.6414. The main reason for the weak USD in recent weeks is due to the U.S. economy showing instability, such as today’s negative U.S. PPI data. The USD’s bearishness is likely to continue into end of week trading, providing that the U.S. economy continues to show mixed signs of economic recovery.

CAD

In the past week the Australian Dollar has recorded very positive results. This comes about as Canada is showing signs that an early economic recovery is very near. This comes about as Canada produced a string of positive economic figures on Monday and today, such as positive Manufacturing Sales and Labor Productivity figures. In turn, Canada’s positive data has led to a bearish CAD in the past week. The CAD has slipped against the USD and EUR since the beginning of last week. This trend is likely to continue if Canada’s economy produces more positive economic news. Thus traders will sell the CAD for higher-yielding assets. Therefore, it is likely that the CAD will go bearish yet again this week, and the USD/CAD rate may reach 1.1400 by Friday.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Central Bank News

By TraderVox.com

Tradervox.com (Dublin) – The Canadian CPI is a significant indicator of inflation in the country. It is a measure of change in the price of services charged to consumers as well as goods. If the reading is higher than the market expectation, the indicator is bullish for the loonie. This report will be released at 1230 hrs GMT in Canada.

The core CPI is different from CPI report since it excludes eight components such as energy and food prices. Currency traders track this index since it is used by the Bank of Canada when making decisions about interest rates. Any change that can be made on the interest rate affects the strength of the loonie in the market. Therefore, traders look at this report to get clues on the decisions that will be taken by the COB.

In June, Core CPI increased by 0.2 percent as the index continued on the positive territory since January. However, investors are forecasting a decline of 0.1 percent this time round as the index remains on the positive. This indicator will show that the Canadian economy continues to be strong despite the global economic slowdown as euro experiences major handles in dealing with debt crisis.

The economy’s strength has helped the loonie to remain strong as crude oil export prices remained stable and even moved higher during the week. The Canadian dollar is expected to close the week at new month’s high against the US dollar. As such, the outlook for the USD/CAD pair continues to be bearish as we go to the weekend. Some of the technical levels that are worth considering include. From top the 1.0245, 1.02, 1.0150, 1.0030, 1 and 0.9950 to the bottom.

The possible scenarios after the report is announced include the pair remaining within range are the Core CPI index remains within market expectation of -0.4 to 0.2 percent. However, if the index is above market expectation 0f 0.3 to 0.6 percent, this could push the pair below one support level; and if well above market expectation, the pair might break down two support levels.

On the other hand, if the index is below market expectation the pair might push upwards with a possibility of breaking one resistance level before the week closes. However, more resistance levels might be broken if the index is well below market expectation.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
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By Central Bank News

London Gold Market Report
from Ben Traynor
BullionVault
Friday 20 July 2012, 07:00 EDT

THE U.S. DOLLAR gold price hovered above $1580 an ounce during Friday morning trading in London – in line with where it has spent the last two weeks – while stocks and commodities ticked lower and US Treasuries gained, as market attention returned to the European debt crisis, currently focused on Spain.

The silver price dipped to $27.07 per ounce, though it too remained firmly within its range for the last fortnight.

Based on Friday afternoon London Fix prices, the gold price has alternated between up and down weeks since the week ended 11 May. A gold fix below $1595.50 per ounce this afternoon would see this pattern extended for a tenth week.

“The [daily trading] range is contracting these days,” says Standard Bank’s Yuichi Ikemizu, head of commodity trading, Japan.

“I don’t see much encouragement for people to have a big position.”

“Daily momentum is flat,” agrees Tim Riddell, head of global markets research, Asia, at ANZ Bank
“Gold appears to have lost its glimmer…as it languishes in the lower reaches of a $1555-$1635 range. The near-term inability to regain levels above $1600 will keep the bias towards retesting the base of this range.”

For both Dollar and Sterling investors, the gold price is at the same level it was two months ago.
In New York, the volume of gold held to back SPDR Gold Trust (GLD) shares fell to a six-month low yesterday, falling nine tonnes to just over 1257 tonnes.

Over in Europe, Germany’s Bundestag yesterday voted in favor of Spain’s banking bailout – which would see the Spanish government borrow up to €100 billion to finance banking sector restructuring. The aid may in time be converted so it takes the form of direct loans to banks, subject to conditions such as the creation of a single European banking supervisor. The vote passed by 473 votes to 97.

“Any problems in the Spanish banking sector are a problem for the financial stability of the Eurozone,” said German finance minister Wolfgang Schaeuble ahead of the vote.

“Spain is the fourth biggest economy in the Eurozone,” added Andrea Nahles, deputy leader of the main opposition party the Social Democrats.

“A couple of its banks need to be stabilized. If we don’t do it, the country that suffers most is Germany, so it is in Germany’s interests to help Spain.”

Finland’s parliament meantime voted 109 votes to 73 in favor of the bailout on Friday.

Spain’s parliament meantime voted in favor of a €65 billion austerity package on Thursday. The vote, which was not attended by prime minister Mariano Rajoy, was passed with 180 votes out of 350 seats, newswire Bloomberg reports, suggesting no opposition members supported the package.

Yields on 10-Year Spanish government bonds remained above 7% this morning, having risen back above that level yesterday for the third time in just over a month.

“[Spain’s government] can’t survive for long with this sort of pressure,” reckons Jose Carlos Diez, chief economist at brokerage Intermoney in Madrid.

“There is still more fear than anger on the streets but the demonstrations are increasing and as unemployment increases, it will get worse.”

“They are wrecking the future of a generation,” said actor Javier Bardem, quoted by Spanish newspaper El Pais as he attended a demonstration in the Spanish capital.

“It’s an injustice to take responsibility away from the banking industry and attack the unemployed, the sick and the poor.”

German producer price inflation meantime fell to 1.6% last month, its lowest level since May 2010.
On the currency markets, the Euro ticked lower against the Dollar. Since this time last year, the Euro has fallen around 15% against the Dollar, while the Euro Gold price has risen by a similar amount.

“At first sight, this should boost output,” says a note from UBS.

“But the exchange rate response is simply part of the bigger, well-known picture of economic stress in the common currency region…although the weaker currency will help the troubled economies rebalance [towards more exports], the weakness is not a trigger for [economic growth] forecast revisions.”

UBS also notes that the European Central Bank has expanded the size of its balance sheet much faster than the Federal Reserve over the past 12 months, “simply because the eurozone economy and its banks remain troubled”.

The ECB cut its main policy interest rate to a new record low of 0.75% earlier this month, while on the same day China also cut rates and the Bank of England announced more quantitative easing.
“The apparent dependency on central bank support for an ailing global economy highlights its chronic weakness,” says the latest economic commentary from the World Gold Council.

“This challenging environment tends to be conducive to gold investment.”

Here in the UK, government borrowing last month was larger than forecast at just over £12 billion, official figures published Friday show.

“It is clear that the recession is leading to a worsening of the UK’s underlying fiscal position,” says London-based ING economist James Knightley.

“[This] raises more question marks over the effectiveness of the government’s austerity measures.”

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

Higher yielding assets like the Australian dollar saw significant gains during the European session yesterday after several positive global indicators led to risk taking in the marketplace. In addition, the ongoing tensions between Iran and the West resulted in crude oil extending its recent bullish run. As we close out the week, traders will want to continue monitoring developments out of the euro-zone. Pessimism in the EU economic recovery prevented the euro from benefitting from risk taking yesterday. Any further negative developments in the region today could result in the common-currency dropping further.

Economic News

USD – Dollar Remains Bearish Following US News

The US dollar took losses against several of its main currency rivals yesterday, as negative US economic indicators led to further doubts regarding the strength of the American economic recovery. The greenback fell to an 11-week low against the Australian dollar following the release of a higher than forecasted US Unemployment Claims figure. The AUD/USD reached as high as 1.0442 before staging a slight downward correction and stabilizing at the 1.0420 level. Against the Japanese yen, the dollar fell to a six-week low at 78.42 after the unemployment statistic was released.

As markets prepare to close for the week, traders will want to note that a lack of significant US news means that dollar movement is likely to be a result of announcements out of the euro-zone. Any additional negative developments with regards to the euro-zone debt crisis could result in risk aversion in the marketplace, in which case the dollar may recoup some of its recent losses against the aussie and yen. That being said, with investor confidence in the US economy still low, the greenback has the potential to take additional losses today.

EUR – Euro Hits Fresh Record Low vs. AUD

The euro extended its recent downward trend against the Australian dollar yesterday, as positive Australian data combined with pessimism in the EU economic recovery weighed down on the common currency. The EUR/AUD fell close to 60 pips during the European session, to reach a record low at 1.1739. The euro also saw bearish movement against the safe-haven Japanese yen throughout the day yesterday. The EUR/JPY tumbled close to 70 pips, eventually hitting 96.11 during the afternoon session.

Today, traders will want to continue monitoring developments out of the euro-zone. The euro has become extremely sensitive to comments from EU leaders regarding the current debt crisis in the region. Any negative announcements today may cause the euro to extend its recent downward trend before markets close for the week. That being said, any positive global indicators could result in risk taking in the marketplace, in which case the euro may see moderate gains.

Gold – Gold Sees Moderate Gains amid Risk Taking

The price of gold saw a mild upward correction during European trading yesterday, as positive global economic indicators led to risk taking in the marketplace. After gaining close to $14 to peak at $1591.44, the precious metal staged a mild downward correction before stabilizing at the $1585 level.

Turning to today, analysts are warning that given the current pessimism among investors regarding the euro-zone economic recovery, gold may have a hard time maintaining its bullish trend. Any negative comments from euro-zone leaders today regarding the region’s debt crisis could have a negatively affect gold before markets close for the week.

Crude Oil – Dispute with Iran Leads to Gains for Crude Oil

The price of crude oil advanced as high as $92 a barrel yesterday as supply side concerns due to the ongoing conflict with Iran, combined with an increase in crude demand in the US, caused investors to buy into the commodity. Overall, crude was up well over $1 a barrel during European trading.

As markets get ready to close for the weekend, oil traders will want to continue monitoring developments with regards to the ongoing dispute over Iran’s nuclear program. Any signs of escalation in the conflict may result in the price of oil moving up further today.

Technical News

EUR/USD

The Williams Percent Range on the weekly chart has fallen into oversold territory, indicating that this pair could see an upward correction in the near future. Additionally, the daily chart’s MACD/OsMA appears to be forming a bullish cross. This may be a good time to open long positions.

GBP/USD

Most long-term technical indicators place this pair in neutral territory, meaning that no defined trend can be established at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

USD/JPY

The daily chart’s Slow Stochastic has formed a bullish cross, indicating that this pair could see an upward correction in the near future. Furthermore, the Williams Percent Range on the same chart has dropped into the oversold zone. Opening long positions may be the wise choice for this pair.

USD/CHF

The Relative Strength Index on the weekly chart is approaching overbought territory, indicating that this pair could see a downward correction in the coming days. Furthermore, the daily chart’s Williams Percent Range has crossed above the -20 level. Traders may want to open short positions for this pair.

The Wild Card

Crude Oil

The daily chart’s Williams Percent Range has drifted into overbought territory, indicating that a downward correction could occur in the near future. This theory is supported by the Slow Stochastic on the same chart, which appears to be forming a bearish cross. Going short may be the wise choice for forex traders.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.