Tag: portfolio management

Eurobonds and the Federal Reserve

Posted by WFG – August 26, 2011

8/24/2011

TSX – 12,343.81

Dow Jones – 11,320.71

S&P 500 – 1,177.60

Nasdaq – 2,467.69

Gold and Mining

  • Gold took a big hit as their prices continue to fall. Despite the market’s rise, investors were cashing in on the metal as they awaited the Jackson Hole summit. Speculation is mixed on whether the Federal Reserve will signal an extra round of U.S monetary easing.
  • If the Federal Reserve does approve more quantitative easing then the chances are that gold prices will rise. If they don’t, then gold prices will fall. With the uncertainty many have decided to take no risks as gold already hit a peak in early august. Read the rest of this article

Risks of Investing in Bonds

Posted by WFG – August 22, 2011

International Money Pile in Cash and Coins

Image courtesy of epSos.de

Despite their reputation, you still need to understand the risks of investing in bonds. Some suggest that they hold a lower risk than stocks. And though this may be true, it’s important to why this is when investing large amounts of money.

The Lower Risks of Investing in Bonds

To begin with, let’s look at why bonds carry a lower risk than other investments. Read the rest of this article

Warren Buffett Tips

Posted by WFG – August 22, 2011

Warren Buffett with Fisher College of Business Student

Warren Buffett with Fisher College of Business Student - Image Courtesy of Aaron Friedman

When it comes to learning about investing there is nothing better than a few Warren Buffett tips. He has inspired countless investors and become one of the most successful businessmen in the world. With the market in a temperamental state, tips from Warren Buffett are more important now than they have ever been.

Warren Buffett Tips To Start With

When first starting out, Warren Buffet says that there are only four major factors that should be taken into account when investing. Firstly dealing with a business you understand and knowing the industry is a key ingredient. You’ll be able to plan ahead easier if you know the business you’re investing in. The second is an able and trustworthy management. The third is favorable long-term economics and lastly a sensible price tag. If you use all these when making a plan then you’re on your way to a successful investment future.

Following the advice on knowing the company you invest in, Buffett also believes you should know the owners. And they aren’t always run by managers with a flashy resume and a high class degree. Some business owners are smart enough to obtain a degree, have a passion for the industry and love their associates. This, to Buffett, is more important that academic education.

Don’t Always Look For The Next Big Thing

He also suggests that looking for the next best thing isn’t always the best method for investing. If you find a startup company that will make millions, such as Facebook, then you’re Read the rest of this article

Making Penny Stock Scams Work For You

Posted by WFG – August 15, 2011

Many people ask the question, what is a penny stock scam? And it’s important to know if you are trading on the penny stock market. The problem is that many people don’t really know if these scams really are scams. There’s a lot of confusion surrounding the tricks played, but there are ways of making them work for you.

Imagine yourself at home and it’s just another day working with penny stocks. The hope is always there that you’ll get a tip or find that perfect company which will make you a small fortune. You think about this every day and it’s almost faded into a dream. Until one day, you could hear the news from a friend, through an e-mail newsletter or by reading it on a forum, the perfect penny stock. Read the rest of this article

How do You Buy Penny Stocks Online?

Posted by WFG – July 29, 2011

Penny stocks are becoming increasingly popular due to their low prices. They costs less than $5 to either buy or sell and are available online to regular investors through discount brokers. To experienced traders penny stocks aren’t a sensible option, as they don’t bring much in return. But for newcomers to the world of investing they serve as a great starting point. So how do you buy penny stocks online? Read the rest of this article

Tips for Forex Trading

Posted by WFG – July 4, 2011

While many traders look into risk assessment and portfolio management, some areas of the industry need more work. These strategies may help, but in to gain Forex trading success you will need some attributes that are in your subconscious.

Firstly you should treat Forex trading as a business. Lots of people jump into this industry and think they can get rich quickly. These people don’t realize that in this industry it takes time to develop a profit and you need to master the details before pushing yourself. If you treat it as a business then you’ll have more discipline and take a better approach.

Keep things simple. Most traders won’t spend the time to learn the basics of the system and will often make things harder than they need to be. More often than not you can keep things simple and follow the strategies of other people. These are tried and tested, and will often bring you profits and help with risk assessment.

Following from that, it’s also important to not try and change the existing trend. Research how the trend is acting and follow the hypes in the market. This will come with experience but remember to maintain a steady strategy and don’t get too ahead of yourself.

Learning from experience may also see you come across untrusted sources. The Forex market is largely unregulated and it’s wise to be cautious of the advice you receive. Be wary of the helpers that say too much as most respected traders keep quiet.

Selling Stocks from Your Investment Portfolio

Posted by WFG – July 4, 2011

If you’ve built an investment portfolio over a long period of time, selling the assets can be a tough task no matter where you are in your career. There are two human emotions that make the decision harder, and these are fear of regret and greed. But the ability to control these makes a better trader.

When profits rise most investors don’t want to sell, because they could lose out on the chances of it going further. This is much the same as falling prices, and traders cautious of selling due to a rebound. So when should you sell the stocks in your investment portfolio? You could try opportunity cost sell.

This is when you constantly monitor the condition of your stocks. Use research and analysis on both your investment portfolio, and future additions. When a new stock has been found to be performing better than a stock already in the portfolio, you replace the stock, maintaining an even balance.

There is also the strategy of valuation-level selling. This is when a trader has a specific target that the price will reach. When it reaches this price the trader will sell, no matter what is happening on the market. It helps with keeping portfolio management in order, though it can sometimes be tricky when there’s the potential to make more money.

For more information on selling stocks contact the Winflow Financial Group.

Evolution and the World of Finance

Posted by WFG – June 30, 2011

The finance sector theories can be closely linked with those of us on the outside looking in. We might not suffer from market risk or risk reduction in connection with investments, but we still use management plans to asses our finances. But the world of investment can also be looked at as adapting much like an evolutionary system.

To begin with both could be looked at as having genes. In biology these genes are passed down from generation to generation, similar to storing information. Whereas a finance company will store specific knowledge in files, passing it down to future traders so they stay in-line with the company style and strategy. This will help portfolio management and professionalism against future risk.

Where a species mutates to suit the environment, so does a successful company. For example, if you don’t take to the new technology, such as the internet, you’ll be left behind. After only a short amount of time you will be out of the picture and struggling to fight your way back against the other companies who adapted well.

There will also be the survival of the fittest. There will always be companies that want more than others. And if a particular sector has become too overcrowded, some will lose their finances and fade away. This is much the same as evolution, where living things would fight for their position in society, or be pushed aside by others.

We have today, a natural selection of companies that continue to evolve and outwit their competitors. But we can also look back on financial history and see that it  not only causes institutional mutation, but is also directly effected by it.

Personality Traps

Posted by WFG – June 30, 2011

Some of the issues linked with risk and the financial industry are tough to avoid, risk aversion being a prime example. But while many build their investment portfolio and trade on profitable stocks, try to understand what makes some people less likely to succeed. Here are some of the traps which a high percentage of human beings fall in to.

  • Availability Bias – This is when someone bases their decisions on information that is readily available in our minds. Rather than searching for the data we really need.
  • Hindsight Bias – The common saying is that ‘hindsight is a wonderful thing’. But many people attach higher probabilities to events, only after they have happened.
  • The Problem of Induction – The problem being that we formulate rules, based on insufficient information.
  • Bystander Apathy – Bystander apathy leads us to lose our individual qualities, when in a larger group.
  • Contamination Effects – If we let irrelevant information influence our decision we will be making a mistake, which are labeled Contamination Effects.
  • Confirmation Bias – We have all been in a position where we want to back up our own argument. But it might be better if we were looking for evidence against our theory. If you fail to do so it’s called Conformation Bias.

These are just some of the issues that investors will need to deal with if they want to be successful. But these traps of human psychology are with everyone, not just traders. And despite trying our hardest, they may always creep back when you let your guard down.

Finding the Right Discount Broker

Posted by WFG – June 27, 2011

So you have read up about the market and decided you want to create your own investment portfolio. The only problem is that you can’t do this without a broker. For the cheapest solution you’ll need to head to a discount broker who will leave you to control the decisions and portfolio management.

To begin with you’ll need to look into cost. You will be given the chance to make trades, but how much will you have to pay? One of the general rules is that trading cost should exceed 1% so one of the first things to do is look at the schedule of fees, and look for any hidden finances. Compare websites and make sure you read over your investment plan so it fits.

If you choose to use a discount broker you’ll be completing all your own trading online. This means little interaction with professionals. But each website will have customer service, and a good one will make the difference with the websites. Be sure to check reviews online from respected opinions on how well the discount brokers treat their clients.

Be sure to check what variety the discount broker gives you. Do they allow you to invest in mutual funds, bonds etc? Or is it just shares? The more variety you have the more chances of a diversified investment portfolio.