Month: July 2011

The European Central Bank (ECB) increased the Main refinancing operations rate by 25 basis points to 1.50% from 1.25% and increased (+25bps) the Marginal lending facility to 2.25% and Deposit facility to 0.75%.  The Bank said: “The further adjustment of the current accommodative monetary policy stance is warranted in the light of upside risks to price stability. The underlying pace of monetary expansion is continuing to gradually recover, while monetary liquidity remains ample with the potential to accommodate price pressures in the euro area. All in all, it is essential that the recent price developments do not give rise to broad-based inflationary pressures over the medium term.”

By Early To Rise

When I was in my thirties, I was urged to run for political office. I put together a campaign committee of about 12 enthusiastic supporters. And I started to get carried away with the idea of making a difference in my state.

Then I called a politician I had worked with. I asked him if he had any advice. I still remember his words: “Are you financially independent?”

When I told him that I was a long way from financial independence, he said that if I ran for office in my thirties (successfully), I would never be financially independent. I would have a much lower income than I could earn in the private sector. And I would probably worry about money all my life.

That slammed the brakes on my political ambitions. I folded my campaign and went back to work as a business consultant and real estate developer. Eventually, I became a professional speaker.

It has been said, “A butterfly flapping its wings in Peru can start a change in the weather that leads to a typhoon in China.” The application of this idea is that even a casual meeting with an acquaintance can have major long-term effects.

At every stage of your life, there will be someone giving you insights and guidance that can point you in a better direction. At the same time, you can be the person giving insights and guidance that will help others.

How many times has your direction changed because you interacted with another person? Sometimes an observation from someone with more experience can change your destiny.

The Secret has been a bestseller for years. According to the book, “If you visualize and think positive thoughts, you will attract all good things into your life.”

Unfortunately, this idea is misleading. Of course, it is important to think positive thoughts. But that is not enough. You must also take continuous action in the direction of your goals, overcoming resistance, adversity, and temporary failures.

Success is not based on the Law of Attraction. It is based on the Law of Probabilities. This law says that there is a probability that everything can happen. And that you can influence those probabilities by doing more of the things that are likely to lead to your success.

Interacting with others is one of those things.

The salesperson who sees more prospects is going to make more sales than the one who stays in the office and shuffles business cards. The professional who networks with other professionals is going to dramatically increase the probability that he will meet the right person, at the right time, with the right insight or guidance that will lead to a career breakthrough.

Networking is one of the surest ways to improve your chances of meeting the right people.

How do you network? Go to industry events. Join a local entrepreneurs’ group. Attend continuing education workshops in your field. Interview successful people. However you network, you’ll meet people who can help you succeed… faster than you could do it on your own.

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This article appears courtesy of Early To Rise, a free newsletter dedicated to creating wealth and success through inspiration and practical, proven advice. For a complimentary subscription, visit http://www.earlytorise.com.

July 7 (Bloomberg) — Paul Venables, finance director at Hays Plc, the U.K.’s biggest recruitment company, talks about the U.K. and European job markets. He speaks with Owen Thomas and Francine Lacqua on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

I am incensed… After what I’m about to tell you, you will be too. I was so mad after I read about this government cover-up that I wrote my representatives and senators in Congress. I asked them to take a stand against these underhanded actions.

If they don’t, they know what my vote will be in the next election.

I want you to do the same… I’ve provided a link to your senators’ and representatives’ contact information at the bottom of this article.

I don’t have high hopes that our elected official will do anything about this. You see, this cover-up proves what we’ve been saying all along. Government is in bed with Big Business, and their lies and cronyism has cost average Americans billions.

Here’s what happened…

In late 2008, the credit crisis was threatening banks around the world. In December, the Federal Reserve secretly loaned $80 billion to struggling banks through a program called ST OMO, or single-tranche open-market operations.

ST OMO let certain banks bid on loans from the Federal Reserve, and the banks were allowed to use mortgage-backed securities as collateral.

In other words, as Americans across the country were staring down the double-barrel shotgun of the Great Recession and the Housing Crash, banks were getting billions of dollars at absurdly low interest rates… They were able to hide just how broken they were.

Banks like Goldman Sachs (GS:NYSE) and 18 other institutions took out 44 separate loans in December 2008.

Sandy Franks and I wrote about Goldman Sachs in our book Barbarians of Wealth. The company has special relationship with the Federal Reserve and the government. We know that Hank Paulson was CEO of the company before he became the U.S. Treasury Secretary under President George W. Bush. We also know that the three CEOs after Paulson also left Goldman Sachs for government positions.

Up until now, the Federal Reserve refused to tell us about ST OMO. The names of the banks were kept secret.

We now know that some loans were granted with an interest rate of 0.01%. On a $5 billion loan, that’s chump change to a multibillion-dollar bank. Not even Senator Chris Dodd got such a good deal during his Countrywide Financial mortgage scandal!

According to the records, Goldman Sachs got $15 billion from the Fed’s secret program… the largest sum given through ST OMO.

It makes me sick… and angry.

What else are these guys hiding? How many of our hard-earned tax dollars have been invested in shams and lies?

I don’t mean to sound overdramatic, but these are the same guys that helped create the housing crisis. Goldman Sachs created subprime mortgage securities and sold them by the billions. But the company never told anybody that it was secretly betting against those same investments.

This is the same Federal Reserve that’s pumping up our government debt by the trillions with is printing press and bond buying programs.

Something has to be done.

(By the way, don’t forget to sign up for Smart Investing Daily and let me and fellow editor Jared Levy simplify the market for you with our easy-to-understand articles.)

As promised in the beginning of this article, here are two links to your representatives’ and senators’ contact information.

Write to them and tell them you don’t approve of how the Federal Reserve secretly handed out $80 billion in cheap loans.

Find your representatives here.

Find your senators here.

But there’s something else you can do, too.

You can come to our Money Crisis Survival Summit and learn how to protect yourself from the government and shady Big Business. These guys have already “stolen” 20% of your wealth with their self-serving policies and backdoor deals.

But the truth of the matter is, things are going to get much worse.

And it’s not just our retirement nest eggs that are in jeopardy… it’s our economic existence. Financial systems as we know them now could be forever changed in the coming money crisis. We’re seeing riots in Greece over $113 billion in spending cuts.

What do you think will happen if the U.S. can’t pay its debts?

We owe trillions of dollars to countries around the world. From China to Brazil to Germany, the noose is tightening. Germany’s been über-reluctant to lend a couple billion to bail out Greece. Think they’ll be likely to forgive $221 billion?

This crisis is coming, and our Money Crisis Survival Summit will offer you specific ways to protect your wealth, and will help you find pockets of prosperity to take advantage of.

We’ve just started sending out invitations to this Survival Summit. You probably received one on Monday. But in case you missed it, I’m attaching the invitation here. I urge you to read it in full. You should at least know what you’re up against.

I hope to see you there.

Editors Note: I was just handed the latest attendance figures for this year’s summit in Las Vegas… It is already our biggest event yet. It is proof investors are scared of what lies ahead.

At this point, there is no doubt we will run out of room and will have to turn attendees away. If you want to join us, don’t hesitate. The remaining spots will sell out soon. To learn more, follow the link.

Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.

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July 7 (Bloomberg) — David Owen, managing director at Jefferies International, discusses the outlook for European Central Bank monetary policy. Owen, speaking with Owen Thomas and Linzie Janis on Bloomberg Television’s “Countdown,” also talks about Moody’s Investors Service’s downgrade of Portugal’s credit rating and Bank of England monetary policy.

The European Central Bank (ECB) announced this afternoon that short-term interest rates, known as the Minimum Bid Rate, have been raised to 1.50%; a high not seen since early 2009. The news bodes well for the euro zone, as tightening monetary policy should help lift the region’s currency values and keep its industries competitive globally.

The timing of the rate adjustment comes alongside forecasts of accelerating inflationary growth and similar monetary policy adjustments in Sweden, China and possibly New Zealand next week. Such rate adjustments speak to a sense of economic growth not felt in years, but the coincidental timing alongside ratings downgrades, slumps in manufacturing, bullish inflationary figures, and housing price growth seem to signal much more.

We now appear to be entering a period of internal reassessment. Growth is visible, sure; but consumers are still leery, ratings agencies are upset with inaction on several fronts by policymakers, debt contagion looms, and the financial and political structures that brought about the initial crash of our system are still in place, only mildly adjusted.

This is not a song of pessimism; merely an acknowledgement that growth for the next few months, if not years, will likely be marred by forecasts and assessments made by analysts reluctant to accept that anything has really changed. The question is, Has it?

Read more forex trading news on our forex blog.

July 7 (Bloomberg) — Lu Ting, China economist at Bank of America-Merrill Lynch in Hong Kong, talks about the nation’s economy and central bank monetary policy. China yesterday raised benchmark interest rates for the third time this year, adding to efforts to cool the world’s fastest-growing economy after inflation accelerated to the quickest pace since 2008. Lu speaks with Rishaad Salamat, John Dawson and Phillip Yin on Bloomberg Television’s “Asia Edge” (Source: Bloomberg)

Automatic Data Processing, Inc. released its assessment of job growth in the private sector of the United States. The numbers were released far greater than what many analysts had expected, indicating a boom in private employment growth across a nation befuddled by structural employment deficits.

Fear that Congress will fail to lift the debt ceiling, sending the nation into a potential second collapse, has several economists worried that businesses will be reluctant to hire. Forecasts for this month’s employment data were still for a near-doubling of last month’s reading, but the surprise jump to 157,000 new jobs added in the private sector gave a moment of pause for pessimists who doubted America’s resurgence would happen so quickly.

Read more forex trading news on our forex blog.

Following setbacks earlier this week, the Australian dollar (AUD) now appears to have climbed back to regain much of its weekly losses. The release of employment data from the Australian Bureau of Statistics this morning signaled growth in the nation’s jobs sector, spurning a retracement by the Aussie.

Adding over 23,000 jobs in June, the employment sector of the Australian economy looks to be making strides. The data could not have been better timed as several analysts have begun to question the value of the AUD in times of high risk appetite. News affecting the country positively still correlates to strong upward movements in its currency, a clear sign of risk association. Any additional bullish indicators from Australia could help lift the currency further in the days ahead.

Read more forex trading news on our forex blog.

By Carla Pasternak, DividendOpportunities.com

On average, they’re yielding 7.5%. That’s over three times the yield of the S&P 500. Try getting that amount from a money market or savings account.

But that’s not the half of it. In tandem with those high yields, the capital gains have been great too. Twenty-nine of the thirty securities are showing positive returns. The best performer has gained +104.6%, yet still yields 5.3%.

This isn’t the performance of some secret index or an exclusive hedge-fund’s holdings. It’s what is currently happening within the portfolios of my High-Yield Investing advisory.

What’s the secret to that sort of performance? How can you build a similar portfolio for yourself? Don’t get me wrong — I do an enormous amount of research and watch my holdings and the market like a hawk. But much of the good fortune comes from sticking to a few simple rules that you can use as well.

Over the years, these rules have proven their value in bull and bear markets. The techniques are not complicated. Anyone can follow them and potentially get the same results. So as a little holiday gift to my fellow income investors, I wanted to share with you the four basic rules I follow to build my winning High-Yield Investing portfolios. I’m confident these tips can work for you as well:

Rule #1: Look for High Yields Off the Beaten Path

To find exceptional returns and yields, I frequently venture off the beaten path. Some of the best yields I’ve found have come from assets classes few investors know about. A case in point is Canadian REITs. These REITs delivered exceptional yields this year (some as high as 12%), but many stateside investors have never heard of them.

Other lesser-known securities I look at are exchange-traded bonds, master limited partnerships and income deposit securities. All of these usually yield more than typical common stocks. In addition, they can also be less volatile and hold up better during market downturns.

If you’re not familiar with these securities don’t fret. I have — and will continue to — cover them within Dividend Opportunities. (To read more about Canadian REITs, see my recent article on the topic by clicking here.)

Rule #2: Consider Alternatives to Common Stocks

It is a well-known fact that the vast majority of common stocks simply don’t yield much. The S&P 500’s average yield is only 2.0%.

So when I can’t find the income I want from common stocks I like, I look elsewhere. My first stop is often preferred shares of the same company, which almost always yield more. Say you wanted to invest in General Electric (NYSE: GE). The common shares of General Electric (NYSE: GE) currently yield 3.0%, but you can find preferred shares of GE yielding upwards of 7.0%. You still benefit from the underlying company’s backing, but with a much higher yield.

Similarly, many companies offer exchange-traded bonds. While you don’t get actual ownership of the business as you would with common stock, you will earn a much higher yield and have your principal backed by the underlying company.

Rule #3: Look for Securities Trading Below Par Value

Some of my highest returns have come from buying bonds when they trade below par value. Par value is simply the face value assigned to a stock or bond on the date it was issued. Most exchange-traded bonds (which you can buy just like a share of stock) have a par value of $25 per note.

But sometimes — most recently during the recent market panic — investors indiscriminately dump these bonds, pushing their prices down. By purchasing the bonds at a discount to par, you lock in great opportunities for capital gains in addition to higher-than-normal yields.

A case in point was Delphi Financial Group 8% Senior Notes (which have since been called). I purchased the notes in July 2009 for $19.27 — a -23% discount to par value. During the 16 months I held, I collected $3.00 per note in interest payments while the shares rose to their $25 par value. In total, the notes returned over +45%.

Rule #4: Sell When It’s Time

This rule may seem the most obvious, but it is also the most difficult to follow.

Like everyone else, I hate to admit I was wrong about an investment. But I find it even harder to watch losses mount as a pick falls further. That’s why I’m not afraid to take a loss. I swallowed my pride and closed out several positions for losses during the bear market, and I’m glad I did. Continuing to hold these would have greatly reduced returns on my portfolio.

It may sound like a cliche, but knowing when to sell is just as important as knowing when to buy. A wise investor knows when to cut losses and move on to the next opportunity. If the security in question is falling with the market, I may not be worried. However, if changes in the company’s operations mean it could see rocky times ahead, I don’t want a part of it.

[Note: The rules I’ve shared above should help guide you to higher yields and better returns — they’ve certainly done well for my High-Yield Investing subscribers. I hope you can put them to good use in the coming year. And if you’d like to learn more about High-Yield Investing, including how to access my full portfolios, click here.]

Good Investing!

Carla Pasternak’s Dividend Opportunities