Ashby Monk

Alistair Darling, Chancellor of the Exchequer, had a rather interesting editorial in the Times today. In it, he makes the case for a reinvigorated City (i.e. financial district). It’s a pretty straightforward argument, which is based on the fact that the UK is absolutely dependent on the competitiveness of London’s financial services industry. However, one comment in particular struck me as rather provocative: he claimed that London manages 50 percent of the world’s SWF assets.

Really? I find this interesting because an October report by International Financial Services London (IFSL) noted that the UK trailed the US in practically all categories of assets under management (conventional funds, hedge funds, pension funds, mutual funds, etc). More significantly, the report decided not to comment on sovereign wealth funds, as it had no reliable data on the global dissemination of assets. Specifically, the report states:

“London is an important centre in the management of sovereign wealth funds assets, although it is difficult to estimate the size of funds managed there due to lack of precise data.”

So, a skeptic could look at Darling’s claim and assume he chose to single out London’s global dominance in SWF management because it could not be substantiated through data!

Nonetheless, let’s give Alistair Darling the benefit of the doubt and assume he actually knows what he is talking about. In this case, why would London have a disproportionately large share of SWF assets under management vis-a-vis the US? I have a couple of guesses:

First, Darling’s calculation may have included the assets that SWFs themselves are managing in London. After all, a number of large funds, including the Kuwait Investment Authority, Brunei Investment Authority, Abu Dhabi Investment Authority, Temasek, GIC and others have offices set up in London. To my knowledge, London has more SWF offices than New York. So, depending on how these offices are tallied up, this could help to explain Darling’s claim.

Second, London may in fact just be a more attractive jurisdiction for SWFs, as it may be perceived to offer more political security than New York. To be sure, US policymakers were much more willing to criticize and scold SWFs in 2007 for a lack of transparency and poor governance practices than were UK policymakers. It’s thus reasonable to assume that this has helped secure London’s place as the SWF hub.

Third, London is closer to the biggest SWFs than is New York. Don’t discount proximity in this equation. My experience is that SWFs require a lot of face time and hand holding, which gives London bankers a leg up on New Yorkers.

I’m sure we could come up with other reasons for this abnormal distribution of SWF assets. However, before we go any further, I’d like to see where Darling got his data.

Anthony Bolton the legendary Fidelity fund manager wrote an exclusive article reviewing the past decade
and making predictions for the next one. His wide ranging piece covers the future of commodities, emerging markets, growth in the West and fund management.

Given the great man’s surprise return to fund management with a China fund, Credencis reproduce below exclusive extracts:-

Emerging markets

The stars of the past decade have been the emerging markets – Asia ex Japan has risen from 5% to 14% and the Rest of the World from 5% to 13% – so that these markets (which include some no longer categorised as ‘emerging’) account for over a quarter of the investible universe today. These shifts have resulted from a combination of currency and share price movements as well as new companies coming to the market and the inclusion in the index of some new markets.

Having an exposure to emerging markets over the past 10 years has been a significant advantage and, given the ongoing impact of the financial crisis on the developed world, I expect the relative growth of the emerging markets to
continue.

Shifting sectors

It’s not just different markets that have waxed and waned but also sectors. In the UK, basic resources, oil and gas between them accounted for just 13% of the market a decade ago – today that has more than doubled, largely at the
expense of healthcare and telecoms. The increased weighting of commodity shares reflects their strong performance
in the last bull market and strong bounce this year. However, I am less optimistic about these sectors looking forward and think the best areas will be companies that can show above average growth in a low growth world. Being in
the right sectors has mattered in the last 10 years and will continue to do so.

But the winners in a bull market are rarely the same as the leaders in the previous cycle.

Impact of the financial crisis

I guess any review of the last 10 years is not complete without some reference to the financial crisis. This was the sixth banking crisis I have experienced in my 38 years in the business and I’m sure it won’t be the last. We are fortunate to have governments in the West who have learnt from the past and acted quickly and decisively to address the situation.
My concern is that, in solving today’s immediate problem, they have saddled some of the world’s leading economies with a longterm cost in the form of interest payments on a much increased level of government debt. I believe that
this will result in lower growth rates in the West than would otherwise have been the case.

How professional fund management will evolve

Looking forward, I would be surprised if the next 10 years were as disappointing as the last 10 for the world’s stock markets as a whole. However, even if they are not, I think investors’ recent experience will lead during the next decade to a blurring of the edges between hedge funds and the traditional longonly world.

The Ucits III framework is already pushing in this direction. As my two successors on the Fidelity Special Situations and Fidelity Global Special Situations funds demonstrate, the fund manager of the future will need to be skilled in being short of shares as well as long.

How to run money

I think that there are three things an investor must do:
• be organised
• focus on the different and unusual
• and know what you are not interested in.

Credencis offer bespoke investment advice in an ever changing financial climate. We are situated near to Derby, Leicester, and Nottingham.

Credencis

“Live for today, Invest for tomorrow”

.

Retire Early. Retire Wealthy.

Somewhere in our US History, a standard retirement age was deemed appropriate. Most likely tied to Social Security eligibility, retirement became an expected part of our careers, with an official initiation date.

But why wait until you are 65? There is nothing miraculous about that number. In fact, if we are honest with ourselves, the truth is that most of us desire to retire much earlier and dream of traveling the world, surfing off of exotic beaches, and experiencing the finer things in life that we have put off. After all, we are talking about our Golden Years right?

That all sounds great, but how does one turn that desire into a reality? If the vision of retiring early and doing the things you always wanted resonated a chord with you, then you probably have what it takes to accomplish your goals. First and foremost is desire. Desire is what gets us out of bed, out the door, and directs our day to day decisions – and ultimately, our lives. If you have the desire, there is nothing you cannot accomplish if you put your mind to it and plan accordingly. Your best days are ahead.

Conventional Is Not For Everyone.

The common misconception that a lot of retirement planners will tackle your early retirement plans in the same way. They will enter your financial information into specific formulas and tell you how it will not work with your current income, etc. Many website retirement calculators will offer to ‘improve’ your plan. What this really means is reducing your dreams into what will work under the conventional methods of retirement planning that have been adopted as normal methods. Pushing the date of your retirement out further, or drastically lowering your retirement income to accomplish the stated goals. That is like going to a car dealership and telling the associate that you are in the market for a sporty convertible. He replies and  says the closest thing he can recommend is a Chevrolet Astro Minivan. Not even close!

Some believe that a million dollars in the bank (or retirement) will accomplish their goals. The hard truth is that unless you have accumulated this sum of money in your late twenties or early thirties, one million may not be enough to retire early. Conventionally, your investment will need time to grow.

So if your goals cannot be accomplished conventionally, what is the unconventional method? The simple approach is being open to new ideas. There is a quote, “If you focus on results, you will never change. If you focus on change, you will get results.” In a for-profit business, the only thing that matters is profitability. In that regard, nothing has changed over the years. What has changed over the years is the way in which companies obtain and retain profit. Business is always changing  – retirement planning must also follow suit.

New Methodology. An Unconventional Approach.

If your current retirement portfolio averages 10% per year (based on US Stock Market Average Annual Returns of 8-11%), and your portfolio demands that you do not retire on more than 4-7% per year, will a 3% rate of return sustain your portfolio and hedge against dips and valleys in the economy? What about inflation of 2-3%? As you can see, the buffer quickly becomes a negative return.

Alternatively, as Warren Buffett often touts, securing an investment vehicle is the only model which provides stable cash flow, adjustments for inflation, and concurrently allows one to entertain additional investments without reducing or hindering their principle investment vehicle – despite the risk classification. In other words, taking an active approach to investing rather than a passive approach. Trying to follow stock and market performance – hoping to catch all the news while trying to time the roller coaster – is exactly what the iconic investors do NOT do. They lead the way, and secure businesses in which others invest into while they are safe and secure paid by the companies operating cash flow, while expansion is being funded by all of those who have bought into the conventional method of retirement.

Is this duplicable? You better believe it. It is called a Collaborative Investment Vehicle Strategy (CIVS), and it allows the same strength and benefits as it does to the aforementioned iconic leaders. As the innovator of the CIVS industry, Empower maintains as the leader in developing businesses for investors who want hands off, cash flow vehicles allowing for early retirement. We place you in proven, highly profitable businesses, securing your desired cash flow range, while fulfilling all of the necessary management oversight needed. How is this secure? Simple. Both Empower and the Retiree have vested interests in the profitability and success of every company. Not only is this structure sound, it is the best way to guarantee maximum and long term profitability. It is also a transferable asset that can be passed onto future generations, helping you create the legacy that you desire.

First Step, Identify Your Goals.

The best way to accomplish something is to clearly define it. Take a 30,000 foot view of your current situation, goals, and desires and make it a priority to define exactly what you want to accomplish and by when you want to achieve it. Next, realize that there are hundreds of ways to accomplish something. Conventional methods are not always the best. If they were, then everyone would be as successful as Warren Buffett and Bill Gates or everyone would retire exactly the way they had planned. Ask yourself, “How many people do I know have been able to do what they wanted to when they retired, or retired when they really wanted to?.” If you are honest with yourself, you may be surprised at this reality.

Then again, if your goal is to work until you are 65 and spend your Golden Years in a downsized house, completing cross word puzzles and watching the same Television programs day in and day out, then continue with your current plan. However, if you want to know more and can be open minded, then for you the sky is the limit and your best days are ahead.

Friends we will discuss now as to what are mutual funds before going on to seeing why to invest in mutual funds instead of stock

What is a Mutual Fund?

A mutual fund is an investment that pools money from many investors, and that money is used to invest in stocks, bonds and other securities.

One mutual fund share includes a portion of a share of each stock held in the fund’s portfolio.

The stocks these mutual funds have are very fluid and are used for buying or redeeming and/or selling shares at a net asset value.

Mutual funds posses shares of several companies and receive dividends in lieu of them and the earnings are distributed among the share holders.

Who Decides What a Mutual Fund Invests In?

Mutual fund managers decide what securities to buy or sell guided by the mutual fund’s objectives.

If a mutual fund’s objective is to invest in the energy sector, the manager cannot buy shares in technology stocks.

Fund objectives let you know what to expect now and in the future.

Mutual funds can be either or both of open ended and closed ended investment companies depending on their fund management pattern.

An open-end fund offers to sell its shares (units) continuously to investors either in retail or in bulk without a limit on the number as opposed to a closed-end fund.

Closed end funds have limited number of shares.

Why Invest in Mutual Funds Instead of Stock?

You can invest in both mutual funds and individual stocks, but mutual funds are particularly useful in some cases.

*Diversification: If you do not have a lot of money to invest, creating your own diversified portfolio to spread risk will be difficult.

Diversification is automatic in mutual funds.

*Time : Successful investors take hours every week to analyze their holdings, stock market conditions and to educate themselves further on investing.

Mutual funds are a wise choice for those who lack the time to follow stocks so closely.

* Experience: Consistently investing well takes a few years of experience and learning from mistakes and successes.
If you are not experienced with trading stocks but want returns over and above what a savings account offers, investing in mutual funds is a good way to grow your personal assets.

Stay Tuned for for more Finance Gyan and to have more updates on Industry,Stock Market and Economy, Click Here

]]> http://ffts.wordpress.com/2009/09/14/%e2%80%9cshocking-gender-pay-gap-found-in-uk-finance/ Mon, 14 Sep 2009 19:50:04 +0000 ronakorn http://ffts.wordpress.com/2009/09/14/%e2%80%9cshocking-gender-pay-gap-found-in-uk-finance/

This photo is retrieved September 10, 2009. British women women earned an average of 2,875 pounds ($4,712) a year in performance pay compared to 14,550 pounds for men. Reuters photo.

Women in some of Britain’s leading financial companies receive around 80 percent less in bonus and performance-linked pay than their male colleagues, the country’s equality watchdog said on Monday.

A survey of 50 finance firms found that women earned an average of 2,875 pounds ($4,712) a year in performance pay compared to 14,550 pounds for men, the Equality and Human Rights Commission (EHRC) said.

There was also a 39 percent gap between women and men in annual basic pay, rising to 47 percent when bonuses and other additional payments were added.

“The finance sector has one of the highest overall gender pay gaps in the UK economy,” the commission said.

It said women working full-time in the finance firms surveyed earned 55 percent less annual gross salary than men, compared to a pay gap of 28 percent for the economy generally.

“The financial sector has the potential to play a central role in Britain’s recovery. But it has to address this shocking disparity of rewards,” said EHRC Chairman Trevor Phillips.

The sector’s age profile could be a factor in holding back women, the commission said.

“An unusually high proportion of workers in the sector fall into the 25-39 age group — the age at which women tend to have childcare responsibilities.”

The British Bankers’ Association said big payouts were made to a relatively small number of people and that part of the gender pay gap in finance was due to lifestyle choices made by women.

“In general, women tend to be attracted to areas such as retail banking, fund management, insurance and other functions where people skills are at a premium — these, traditionally, do not attract the higher bonuses,” the BBA said.

“Women also often make different choices when it comes to balancing work and home life. The industry employs proportionately quite young people and this too can have an impact on salaries as it clashes with those years when more women than men take time out to look after children.” : manager online

Posted via email from The investment blog on Post

At almost every investor mind a question is generally cropped up: “What is the difference between a ULIP and a Mutual Fund?”

The reason, perhaps for the wide extent of confusion, lies largely in the way ULIPs have been sold by agents. As just another mutual fund.

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning.

As is the case with mutual funds, investors in ULIPs is allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis.

Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few.

Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component.

Mutual Fund is a body corporate that pools the money from individual/corporate investors and invests the same on behalf of the investors /unit holders, in various investment avenues like equity shares, Government securities, Bonds, Call money markets etc., as per the pre-specified objective and distributes the profits earned from such investment.

In India, Mutual Funds are registered with the Securities and Exchange Board of India (SEBI).

ULIPs are a mix of investment and insurance.

But very long term investment, not even medium term.

Insurance companies themselves admit, that if your investment horizon is anything less than 7 years, don’t even consider a ULIP.

Charge structure in a ULIP is vastly different from a mutual fund.

ULIP investors also have the flexibility to alter the premium amounts during the policy’s tenure.

The freedom to modify premium payments at one’s convenience clearly gives ULIP investors an edge over their mutual fund counterparts.

In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India.

Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority.

ULIPs also allow you to switch from debt to equity within the same scheme, at no extra charge.

So if you want to get the benefits of long term investment and risk cover in one single product, ULIP is the product for you.

So it is not an issue, of whether a mutual fund is better or a ULIP. It is about your need.

Both can co-exist in your basket of needs.

So identify your needs with a financial planner and then pick the product suitable for you.

Manufacturing

According to the Institute for Supply Management (Chicago Inc.) its business barometer increased to 50, which has been the highest level since last September, and a reading of 43.4 in July. (The dividing line between contraction and expansion is ‘50′.) Economists that had been surveyed by Bloomberg News had forecast that  the index would rise to 48, according to the median of 53 projections. Estimates ranged from 46 to 52.5 and are expected to be the first sign of expansion measured since January 2008.

Robert Stein,  speaking of the auto makers increased production starting noticeably in the last month said, “…a manufacturing-led recovery… much of this (increase) is probably related to the revival in auto production over the past month or so.”  Stein is a senior economist at First Trust Advisors in Lisle, Illinois. Economists watch the Chicago index for an early reading on the outlook for overall U.S. manufacturing, which makes up about 12 percent of the economy. Factories at General Motors Co. and Chrysler Group LLC are resuming production after exiting bankruptcy proceedings. Also, plants have boosted output to meet demand from the government’s “cash-for-clunkers” trade-in program, which ended Aug. 24.

Durable Goods

Another sign of the improving economy: a big surge in durable goods orders in July. “There’s no question that the nearly 5% jump adds another bright spot to the unfolding picture of an economy easing out of recession. Though it will be a couple of months before third quarter gross domestic product is calculated, marking an end to the recession, it seems likely that this month will be the turning point.” said Jerome Idaszack of The Kiplinger Letter.

Real Estate and Home Sales

Sales of existing homes and now new homes have turned upward including single-family, townhomes, condominiums and co-ops. “The increased 3.6 percent to a seasonally adjusted annual rate¹ of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.” Said Lawrence Yun, NAR chief economist, is hopeful about the gain. “The increase in existing-home sales occurred in all major regions of the country,” he said. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many Realtors® are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”

Summary? We are still in for a roller coaster of 2009 and 2010, but we are gradually improving. Our best days are indeed ahead!

Your best days are ahead,

The Empower Team,

877.45.EMPOWER

Do you need:

Mortgage Services?
Repair my credit?
Get rid of debt?
Reinvest IRA or 401k funds tax-free?
Find high-yield investments?

Does your business need:

Lines of credit?
Venture or angel capital?
Expansion/transition guidance?
Investment management?
Marketing/Branding Initiatives?

Click on the above links and ‘Request More Information’ to learn more about how you and Empower can work together to effectively implement your vision. Success is a choice. It is up to you.

Once again, America is coming out of a very difficult recession. Undoubtedly, we still have a ways to go, but as always, Americans are confident and determined to get there. Putting things in perspective, Federal Reserve Chairman Ben S. Bernanke said the global economy is beginning to rise above the recession after “aggressive” action by central banks and governments.“Economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good,” Bernanke said today in a speech at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming.

When Bernanke was speaking to an audience of central bankers and academics, he warned that the world still confronts “critical” challenges. This warning underscored the Fed’s decision last week to leave interest rates near zero for an “extended period” and to delay the scheduled end to its $300 billion program to buy U.S. Treasuries by about a month.

“Strains persist in many financial markets across the globe, financial institutions face additional significant losses and many businesses and households continue to experience considerable difficulty gaining access to credit,” Bernanke said. Recovery “is likely to be relatively slow at first, with unemployment declining only gradually from high levels.”

While most economists predict the U.S. will return to growth this year, they say the jobless rate is likely to rise beyond 10 percent, restraining consumer spending and casting a cloud over the strength of the recovery. However, that is to be expected as the dust of the financial marketplace settles and balances itself out.

Dips and Valleys Part Of Recovery

The U.S. economy “is still weak and it’s not at all clear that the upturn that we’ve seen recently is the beginning of a sustainable rise,” Harvard University economist Martin Feldstein said in a Bloomberg Television interview in Jackson Hole. “There’s a serious danger that come the end of this year and the beginning of next year we will see it slipping back down again.”

Economists feel the forecast the U.S. economy will expand at a 2.2 percent annual rate in the third quarter, according to a median estimate in an August survey conducted by Bloomberg News. The International Monetary Fund last month predicted the world economy will grow 2.5 percent in 2010 after contracting 1.4 percent this year.

“The worst of the credit crisis probably ended in March and the recession probably ended in the current quarter,” economist David Jones, president of DMJ Advisors LLC in Denver, said today in an interview on Bloomberg Radio.

United States

A 7.2 percent jump in existing U.S. home sales last month, reported today by the National Association of Realtors, added to evidence the housing crisis is easing. Purchases climbed to a 5.24 million annual rate, the most since August 2007. U.S. stocks gained for a fourth day, with the Standard and Poor’s 500 Index rising 1.6 percent at 12:14 p.m. in New York. Benchmark 10-year notes yielded 3.54 percent, up 11 basis points from yesterday. European Central Bank President Jean-Claude Trichet and Bank of Japan Governor Masaaki Shirakawa are scheduled tomorrow to address the conference. The topic of the central bank’s mountainside conference this year is financial stability and macroeconomic policy.

Germany, Japan

Signs are emerging that growth is resuming in other countries, with Japan, Germany and France all expanding in the second quarter. The Paris-based Organization for Economic Cooperation and Development said Aug. 19 that the economy of its 30 members was flat in the second quarter after contracting 2.1 percent in the previous three months.

Forecast

The IMF may raise its forecast for the global economic rebound, John Lipsky, the fund’s first deputy managing director, said in an interview yesterday in Jackson Hole. A “strong and unprecedented international policy response” averted “the imminent collapse of the global financial system,” Bernanke said. The Fed has “consistently maintained” that the failure of a large, interconnected financial institution would have dire consequences for markets and the economy. “We have therefore spared no effort, within our legal authorities and in appropriate cooperation with other agencies, to avert such a failure,” he said. “The case of the investment bank Lehman Brothers proved exceptionally difficult, however.” The Fed chairman reiterated that Lehman had inadequate collateral to merit a Fed loan “of sufficient size to meet its funding needs.” The government also lacked the authority to inject capital and sustain the firm, he said. Lehman Brothers Holdings Inc. filed for bankruptcy in September.

Concentrated Actions Avoided Much Worse

“Although concerted policy actions avoided much worse outcomes, the financial shocks of September and October nevertheless severely damaged the global economy — starkly illustrating the potential effects of financial stress on real economic activity,” Bernanke said. At last week’s meeting, Fed policy makers extended their program to buy long-term U.S. Treasuries through October, aiming to ensure a “smooth transition in markets.” They also affirmed a pledge to keep interest rates near a record low even as they determined the economy is “leveling out.” Since the collapse of Lehman, the Fed has bought as much as $350 billion of short-term debt issued by companies including General Electric Co. and expanded currency swaps with other central banks to aid financial firms outside the U.S.

Increased Debt Purchases

Bernanke has also led policy makers in a reduction of the benchmark interest rate almost to zero and in the purchase of as much as $1.75 trillion of Treasuries and housing debt. ”As severe as the economic impact has been, however, the outcome could have been decidedly worse,” Bernanke said. “Unlike in the 1930s, when policy was largely passive and political divisions made international economic and financial cooperation difficult, during the past year monetary, fiscal and financial policies around the world have been aggressive and complementary.” Policy makers must now rewrite regulations to reflect lessons from the crisis, and that will prevent “a recurrence of the events of the past two years,” he said.

Bernanke 2nd Term Nomination Well Deserved

President Barack Obama has yet to indicate whether he will nominate Bernanke for a second term as Fed chief after his current term ends Jan. 31. Feldstein endorsed Bernanke for a second term. “He certainly deserves it. He has done a remarkably creative job of dealing with these problems,” Feldstein said. Investors and traders see reappointment as increasingly likely. Yesterday, futures contracts on the Web site Intrade showed a 79 percent chance Bernanke will be tapped for a second term.

Your best days are ahead,

The Empower Team

www.empoweryourbest.com

Do you need:

Mortgage Services?
Repair my credit?
Get rid of debt?
Reinvest IRA or 401k funds tax-free?
Find high-yield investments?

Does your business need:

Lines of credit?
Venture or angel capital?
Expansion/transition guidance?
Investment management?
Marketing/Branding Initiatives?

Click on the above links and ‘Request More Information’ to learn more about how you and Empower can work together to effectively implement your vision. Success is a choice. It is up to you.

2009 First-Time Home Buyer

Tax Credit Fact Sheet

Who is Eligible

•The $8,000 tax credit is available for first-time home buyers only.

• The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

• All U.S. citizens who file taxes are eligible to participate in the program.

Payback Provisions

• The tax credit is a true credit. It does not have to be repaid.

• The only repayment requirement is if the home owner sold the home within three years after the purchase.

Income Limits

• Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000.

• For married couples filing a joint return, the income limit doubles to $150,000.

• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.

• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.

• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.

Effective Dates for the Tax Credit

• First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Tax Credit is Refundable

• A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference.

• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.

• If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).

• Buyers can take the tax credit on their 2008 or 2009 income tax return.

Types of Homes that Qualify for the Tax Credit

• All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

For more details on the tax credit, contact an Empower Representative.

This month the Prime Minister announced a downward revision in the full year credit growth target from 30% to 25%, which would infer a significant contraction from 1H09 when credit growth surpassed 17%, in a strong sign that the Government will be proactive in combating inflationary pressures.

A 4th straight month of monthly price increases combined with rising commodity prices and strong 1H credit growth brings the spectre of inflation back to Vietnam, however, on an average basis it is still improving down to 3.31% YoY. The trade deficit through the first 7 months is estimated at $3.38bn, much lower than 2008 levels but picking up especially when considering that through 1Q09 Vietnam was in surplus.

Combining the above mentioned potential early warning signs with a Fitch Ratings Dong downgrade from BB to BB- at the beginning of July has led to some renewed USD hoarding behaviour putting some mild pressure on the Dong this month. The black market rate is VND18,530/$1, a record high since March 28, 2009, while in the official market rates are largely unchanged at VND17,810/$1. However, the State Bank of Vietnam assured (while not giving a specific number) that in the final week of July they released a flood of US dollar liquidity to banks with shortages in an effort to assuage concerns.

The VN-Index had a largely down and up month in July, finishing at 466.76 or up 4.1%. Some of the above mentioned macro indicators combined with a Government crackdown of improper use of subsidized loans entering into equities were likely responsible for the market bottoming out the month at 412.88 on 20th July, but continued strong performance in global markets combined with ongoing strong earnings reports led to a strong rally in the last week and half of the month.

By end July, first half 2009 results had come out for most listed and large OTC companies. Overall, it is a good earnings season with most companies reporting very encouraging numbers, many even beat investors’ expectations by a long mile. Sectors which have done particularly well are those that serve the domestic market and therefore benefited from Vietnam’s improving economic environment in 1H09. These include Staples Consumers, Utilities, Property, Construction Materials and Auto Components. Companies in these sectors have generally achieved 60% or more of their FY09 profit target in just the first 6 months, with some even fulfilling more than 100%.

Banks have also done very well, with average year-on-year income growth of about 10% despite a narrower interest spread compared to last year. Both deposit growth and credit growth are now at 20-30% year-to-date. Pharmaceuticals companies having benefited from lower material costs finally managed to expand their margin and achieving full year profit target appears very likely. Companies in Energy sector performed in line with their own profit target; however, we would probably see a margin squeeze in 2H09 for drilling service providers as the current rates are 30% lower than those in 1H09. Companies experiencing poor performance in 1H09 were mainly in Aqua-product Exporting, Marine Transportation and Rubber sectors. We would not expect remarkable earnings improvement for these sectors in 2H09.

To view full report, please click VAM Monthly Newsletter – July 2009

For more information about Vietnam Asset Management Ltd, please visit www.vietnamam.com

Issue 3: July 2009

The endless talk of doom and gloom is now being replaced by that of recovery with the press replacing “Credit Crunch” with a new buzz word “Green Shoots”. As always the UK property market remains tightly in focus and the debate now centres on the shape of the recovery?

In this edition we look at the possible shape of the recovery and strategies to protect the property investor should the market relapse.

Economic Overview
According to David Miles, one of the newest members of the Bank of England (BoE) monetary policy committee, the worst of the recession may be over. The combined actions of interest rate cuts, quantitative easing program (over £105 billion) with increases in government spending and VAT reduction, were likely to have a “substantial” impact on the economy in reviving demand.

Data from various parts of the economy back this point of view. The latest figures from the Purchasing Managers’ Index (PMI) rose from 45.4 to 47, and although any figure below 50 shows contraction, this is the first positive move for 15 months.

The British Chamber of Commerce (BCC) survey of 5,600 businesses hailed that the “worst of the recession is over”. The net balance for domestic sales in the manufacturing sector improved to -37pc in Q2 from -55pc in Q1 and the BCC said it was promising that sales confidence had improved dramatically, rising 40 points from -38pc to +2pc.

Although UK unemployment rose to 2.261 million in the three months to April, it was slightly below economists’ forecasts. It is important to note that the unemployment rate is viewed as a lagging indicator, illustrating economic conditions that have passed. As such we will only see job growth reported once the economy is well into a recovery

The Stock market is an example of a leading indicator and in Q2 2009 the FTSE 100 rose by 7.4% to 4249. Arguably the housing market is another lead indicator so have prices found their level?

Property Market Review
In our last review, we suggested that as property was one of the first sectors to enter recession, it would be one of the first out. The markets fall from grace has been well documented but in short, as credit evaporated, sales volumes fell by 61% leading prices to fall by up to 40%. Today however we now have a situation where affordability levels have been restored to the same levels of Q3 2005.

With interest rates at virtually zero, investors have been attracted to the yields and medium to long term capital returns now generated by property. The attraction is further bolstered by the fact that property as an asset class is something tangible; something that investors can touch and feel.

Estate agents have reported increased levels of demand and because of depleted stock levels, it is not uncommon for a property to have multiple bids or sell for over the asking price. According to Hamptons the current market is even better for sellers than the boom.

The anecdotal evidence is supported by the Nationwide who stated that UK average prices increased by 1.25% in May 2009, which was the third consecutive increase in four months. The recovery appears to be starting in London with the Land Registry reporting that while the UK property market fell by 0.3% in April 2009, London property prices actually increased by 1.4%.

Although prices have stabilised and the market appears to be rising, we do not believe this signals a medium/long term upward trend. One of the key reasons for these “Green Shoots” in the housing market has been the lack of supply as up until now, only forced/distressed sellers have put their properties onto the market. However as sentiment improves forced landlords may be tempted to put their properties onto the market leading to a possible fall in prices.

It is our belief that the market has found its level however will tread water for the next 12-18 months. The medium to long term view is healthy, especially for London which has a greater demand/supply imbalance than the rest of the country.

Is it time to dip your toes into the market?
Since the beginning of the year we have seen the deal flow of deeply discounted property turn from a flood to a trickle, especially in the new build sector. Developers are no longer under the same financial pressure they were under in Q4 2008 and the mantra has changed from “cash flow” to “profit”. Several of the larger developers have sold themajority of their standing stock with the likes of Persimmon, the UK listed house builder, recently announcing they were ready to start working on 50 new sites. However this stock will take time to feed into the market so the short term lack of supply will help protect margins and support prices.

We still believe the market is ripe for investment however investors should proceed with caution. There is a potential risk the market could destabilise if the substantial amounts of repossessed property held by banks are dumped onto the market.

The typical hands off buy-to-let model pursued by individual and institutional investors may not generate the same returns it once did. Therefore to mitigate this risk a thorough analysis of the market is required with a more involved and hands on strategy. To further protect your return it is important to remember that in today’s market profits are made on the buy as well as the sell.

Quick Tips

• Location, Location, Location: Focus on established areas – If your budget can’t stretch then target locations on the fringe which will benefit from the ripple effect.
• Target properties where you can add value, either through refurbishment or redevelopment. You are more likely to find these properties at auction.
• Build a diverse portfolio of property: Mixture of capital growth and yield producing assets.
• Base your offer price on the yield generated to ensure you don’t overpay.

For many investors, especially those overseas pursuing this strategy may be challenging or impossible due to time, financial or knowledge constraints. Structured vehicles such as Funds offer a solution to investors who wish to benefit from the improved returns of this strategy without the day to day headaches of implementing the strategy.In response to demand from clients and investors Walls & Futures will be launching a London residential property fund. For further information please click here.

Finance
The availability of mortgage finance has gradually improved with banks starting to increase the number of competitive mortgage products. Data from the Bank of England (BoE) showed mortgage approvals at a 13 month high at 43,414. However it is still less than half the average monthly level of 95,000 reported by the BoE between 1993 and 2008.

First time buyers have started to return to the market, helped by the increase in the number of lower deposit mortgages, with Lloyds TSB leading the charge with a competitive 95% Loan to value (LTV) at a fixed rate at 4.99% until October 2012. You can save yourself 1.50% on this rate with First Direct however this is reserved for borrowers with a minimum 25% deposit. Nationwide caused an outcry by reintroducing 125% LTV mortgages however it is only available to existing Nationwide clients.

Investors requiring mortgage finance have a selection of new lenders to look at with NatWest and the Post Office topping the best buy tables. Those looking at purchasing new build properties would do well to double check lenders criteria as some treat this segment of the housing market as high risk, preferring to offer higher LTV’s and more attractive rates on older properties.

While tracker rates look attractive, borrowers should look carefully at the spread between the bank base rate and the rate being offered. While the consensus on the direction of interest rates is up, the speed and timing is still up for debate. We would therefore recommend you check the length of the lock in period so as not to get caught out.

Our advice is to shop around for the most suitable product as the cheapest many not be the best so to look very carefully at lenders terms and conditions. Alternatively speak to an experienced mortgage broker.

Lending Table

Source: Moneysupermarket.com & Bank of Scotland

www.wallsandfutures.com

Issue 2 – April 2009

It’s hard to believe that the credit crunch has been with us for almost two years. Property was one of the first sectors to succumb as mortgage finance dried up and confidence began to ebb. With buyers staying away from the market property prices fell. It was not long before the effects of the credit crunch were felt by the rest of the economy.

Walls & Futures asks if property was first in, will it be first out.

Finance
Q1 of 2009 saw The Bank of England reducing the base rate from 1.5% to 0.5%, the lowest level since the bank was founded in 1694. This has been followed by “Quantitative Easing” where central banks have introduced liquidity to the economy through the purchase of illiquid assets from commercial banks in order to thaw the frozen credit markets.

A recent Bank of England survey suggested that the supply of credit to both homebuyers and businesses had began to improve. Their figures showed that mortgage approvals have increased to just under 38,000 in March, up 19% on February and 39% higher than November 2008.

In turn the number of new competitive mortgage products coming to market has increased, enabling first time buyers to take advantage of lower prices through lower rates and higher loan to values (LTV’s) of up to 90%. The credit thaw is also spreading to buy to let mortgages with investors achieving up to 85% LTV’s at competitive rates. The best deals are reserved for buyers with larger deposits with rates from as little as 2.99%.

Lending Table

Source: Moneysupermarket.com & Charcol.co.uk

Supply
There is a myth permeating the market that House builders the length and breadth of the UK are walking the fine line of corporate implosion. In practice this is very much an urban myth. Without question it has been extreme trading conditions for all House builders in the last eighteen months however the announcement last week from Taylor Wimpey that it has reached agreement on a debt deal market the last of the major listed PLC’s to secure their short to mid-term position, in Taylor Wimpey’s case through until 2012.

From ongoing conversations we are having it is evident that several of the listed House builders have regions that have performed in excess of target in securing reservations and sales through Quarter 1 2009. This has clearly further relieved pressures on standing stock that there were at the end of 2008, further assisted by high volume sales to Housing Associations and huge levels of interest in the Government HomeBuy Scheme and House builders own in house shared equity programs, Barratt Homes announcing last week that in Q1 they alone received 20,000 enquiries to purchase on the HomeBuy Scheme.

Working concurrently to this is a situation of reduced completion levels and huge drop of in forward build meaning that there is very little inventory of standing stock to carry forward into Q2. Every major listed House builder has laid of high numbers of staff and associated contractors over the past year meaning that a lot of departments, especially those functions servicing construction, are running on skeleton staff and now proportionally as busy as they have ever been working on a “just in time” program to meet strategically allocated completions.

Carrying this forward to the market we have seen availability of standing stock in the North West, North East and East Midlands which is a situation created most likely from lack of higher loan to value mortgage funding on new build property nationwide but accentuated in these lower income demographic areas. Contrast that with the South East where there is very little standing stock at all prevalent in the market.

This pincer situation in our opinion is leading to a slow and subtle shift in the market. Less stock being completed and sold reduced supply while steady sales, all be they at lower levels, have in the main removed the pressure building on unsold units that developers have alleviated through price competition and reductions and sales as described above.

This contraction perhaps marks the new norm for the medium term through 2009. The correction in the housing sector was so sudden and unpredicted that it was impossible for these huge building heavy weights to react fast enough to bring their house in order and has taken almost twelve months for them to get themselves into a position of partial stability but now that they are there this will be the trend for the remainder of the year perhaps.

Are we out?
According to data from Halifax the average price of UK house price fell by 19.9% during 2008 with the most recent data from the Land Registry showing a fall of 16.5% over the last 12 months. Several reports from city firms have gone further to suggest the market will fall 40% from peak to trough.

If the consensus is that house prices were overvalued and a correction was overdue, is there a case to suggest that the market has overcorrected.

Data from Nationwide indicated that house prices increased by 0.9% in February, while this was contradicted the Halifax showing a 1.9% fall, The Royal Institution of Chartered Surveyors said the number of new enquires rose for the fifth month in a row.

At the resent Allsop residential auction, 85% of the listed property was sold on an unconditional basis. What was of more interest was that distressed lots represented 48% of the catalogue, down from 80% in the final quarter of 2008.

The stock market also appears to have taken note. While the FTSE 100 has fallen by 2% since the beginning of 2009, the top seven listed property developers increased by an average of 90%.

House Builder	Stock Ticker	3 month low	Current Price*	% Change
Taylor Wimpey	TW.L	14p	52p	271%
Barratt	BDEV.L	66p	159p	141%
Redrow	RDW.L	122p	209p	58%
Persimmon	PSN.L	270p	390p	45%
Bellway	BWY.L	530p	767p	45%
Bovis	BVS.L	350p	477p	36%
Berkeley Group	BKG.L	760p	1002p	32%

*As of 16/04/09

While we are not predicting that property prices will rocket just yet, we are of the opinion that that prices have stablised.

Currently London is generating yields of between 5.5%-6.5% depending on the specific location and type of property being acquired. In other parts of the country you can expect to achieve between 7%-10%. At these levels we are seeing investors move out of cash they have been sitting on and into property.

While keeping the cash in their pockets will have served them well, they are well aware that with the global economic stimulus packages starting to take effect, it will not be long before the inflation takes hold.

It is no longer a case of whether the property market will recover but a matter of when. As the first in, it appears it will be the first out.

www.wallsandfutures.com

Issue 1: January 2009

There were several historic events in 2008 including the Beijing Olympics and the election of Barak Obama as US president. They were all overshadowed by the “credit crunch” which ravaged global investment markets.

The FTSE 100 fell by 33% and along with it the pension pots of millions of investors. It seemed for a moment that keeping your cash under the mattress was safer than in the bank as some of the big names went bust. According to the Halifax, UK property prices fell by an average of 19.96% from its peak in 2007. Capital Economics believe the market will continue to fall to as much as 25% by 2010. However, opinion is divided as the National Housing Federation predicts that the market will rise by 50% over the next four years.

So who do you believe? The best approach is to look at the market fundamentals, and those key drivers and trends to try and predict which way the market will move over the coming 5 years.

According to the Barker Report, the governments’ most detailed report on the UK housing crisis, pre credit crunch the UK had an annual shortfall of circa 150,000 homes. This shortfall has been exacerbated by all house builders mothballing or postponing the building of new developments. With an ageing population and an increase in single occupier households the supply of housing in the UK will continue to decrease.

Indications from estate agents and property portals such as Rightmove.co.uk suggest that the level of applicants registering is up while the number of properties for sale has fallen. With the government’s recent move to introduce liquidity to the finance system will get banks lending once again and therefore breathe life into the property market. The Housing Minster, Margaret Beckett caused a row for disclosing that the government is now worried about the next housing boom. Some may look at this as spin, changes on the ground suggest that the UK market may come back quicker than most expect.

It is important to point out at this juncture that property is a medium to long term investment not a get rich quick scheme. Property offers capital growth and a yield which if your leverage is structured correctly can generate a healthy return.

Since the end of the Second World War the UK property market has doubled in value on average every ten years. For investors who bought at the bottom of the property cycle they have seen their assets perform even better, either through luck or careful selection.

While picking the bottom of any market is extremely difficult at the best of times, the key is to find a solid asset that is undervalued, in a growth area that generates healthy cash flow. For a limited time investors can purchase some fantastic assets at between 20%-40% below market value depending on their location. At these prices yields can be as high as 10%.

We are seeing several groups of investors taking cash from under their mattresses and investing. First are experienced investors who are taking advantage of current market conditions. Secondly we are seeing investors from the Middle East and expats from around the world who are not only purchasing undervalued property but are also magnifying their returns by taking advantage of Sterling’s current weakness.

It is widely believed that in life, timing is everything. At Walls & Futures we believe the time is right to move back into UK property however investors must proceed with caution, a level head and sensible gearing in order to deliver lasting returns.

http://www.wallsandfutures.com

It has been said that nothing quite matches the convenience of business credit cards. When you are looking for a good alternative to cash, checks, and personal credit cards, it is probably a business credit card you want. With credit-when-you-need-it convenience, savings and discounts on purchases, and extremely helpful reporting facilities, business credit cards can be a good tool in your financial management tool kit.

You will find it easier to get a business credit card than to open a business line of credit. For this reason, business credit cards can do a lot to help you ease your cash requirements even as you are still gearing up with office supplies and equipment. It can never be repeated too often: use business credit cards with caution and afford it the same respect you would afford any other business line of credit!
The ability to borrow money, whether from a business line of credit or from business credit cards, is something that you need for your business. Like business credit cards, the line of credit is a revolving credit, and both charge interest only on the balances that are left outstanding. The credit limit on business credit cards may be lower than on lines of credit, but both do have a predetermined ceiling. There are however a few differences between these two forms of business credit:

Cost
Business credit cards generally have higher annual percentage rates and lower credit limits, than lines of credit. When it comes to cost-effectiveness therefore, the commercial lines of credit will beat business credit cards anytime.
However, if you manage business credit cards wisely, you can maximize the 21 to 25 days grace period or float on purchases. When the statement comes and you pay off the entire balance, you will actually avoid paying any interest. The crux of the matter is that you get a 25-day interest free loan! Not bad?and only from business credit cards.

Convenience
Business credit cards may lose on cost, but they are miles ahead when it comes to convenience. If your checking account is running low and you need to buy some supplies, you no longer have to call the bank to transfer funds from your credit line. You could easily charge the whole transaction to your business credit card, get out of the store and back to running your business. Business credit cards also offer you the convenience of easy bookkeeping and quick cost analysis.
What?s more, business credit cards are heavily loaded with perks like frequent flyer miles, purchase protection and warranty extensions, discounts and cash backs on hotel stays, car rentals, gas purchases, and more. These business credit card incentives can be valuable to a business, not only for the sake of convenience but also for the cost savings that you get.
Business credit cards and lines of credit are two financial tools that you can use together. Business credit cards are perfect for very short-term borrowings ? we?re talking 30 days at the most. You should pay off the bulk of the balance when it falls due, to save on interest. You may want to carry 20% of the balance forward to the next month to make your business credit card issuer happy, otherwise they?re never going to earn any interest income from your business credit card account.
Lines of credit are perfect for larger purchases, particularly those that would exceed your business credit card limit, as well as for reserve funds when cash flow becomes irregular over a period. Lines of credit help you to shore up your working capital, such as payroll, paying off merchant credit and payables, or settling the quarterly taxes.
If you need help with the capital outlay of your business, let Empower help. From PreVenture Programs (before Venture Capital) to expansion capital for your business, there is a perfectly tailored program for your business.

Your best days are ahead,

Blake Robbins
877.45.EMPOWER

www.empoweryourbest.com

Does your Business need:

Venture Capital?
Angel Capital?
Funding?
Growth Consulting?
Business Lines of Credit?
A great High Yield Investment?

Click on the above links and ‘Request More Information.’ Learn more about how you and Empower can work together to effectively implement your vision. Success is a choice. It is up to you.

South African financial services firm Sanlam expects to start mutual fund operations in India by February next year and hopes to break-even in three to five years, a top executive said on Tuesday.

The firm, which has joined hands with Indian broking firm SMC Global for asset management and wealth management businesses,  has received an in-principal approval from the market regulator and is currently hiring a fund management team.

“Unless something goes strangely wrong, we are hoping to get operational round about Feb. 1,” said Sanjeev Gupta, chief executive of Sanlam’s emerging market investment unit.

The firm, South Africa’s second-biggest insurer, will join the likes of

Italian bank UniCredit’s arm – Pioneer Global,

South Korea’s Mirae Asset,

France’s Axa and Japan’s Shinsei

These have started operations in India’s fiercely competitive fund industry over the last two years.

The market will become even tougher for fund managers, and particularly hostile to small and new players, as a ban on entry fees charged by mutual funds — to be imposed from Aug. 1 — slows growth and raises distribution costs.

The firm is not hopeful of making money in the initial years as it spends on building brand and strengthening distribution.

“Anytime between the third and the fifth year we feel we will probably turn the tide,” Gupta said.

To start with, the firm plans to tap offshore clients to invest in India-dedicated funds and leverage 1,800 offices of its local partner SMC to attract domestic investors.

Vietnam’s GDP is estimated to have grown by 3.9% in 1H09, meaning in 2Q09 GDP growth rallied to 4.5% up from 3.1% in 1Q09. The resilient growth story continues to be driven by industrial production, renewed momentum in construction, and consumer driven categories. The data suggests the 4.5-5% GDP growth rate consensus prediction for Vietnam in 2009 is on track.

Monthly inflation was again positive in June up 0.55%, but on a YoY basis has dropped to just 3.94%. The trade deficit for 1H09 is estimated at US$2.1 bn, equalling 14.7% in the same period last year with export growth down 10.1% and import growth down 34.1%. Vietnam has received capital inflows of roughly US$8 bn in 1H09 from FDI and ODA disbursement and overseas remittances keeping the balance of payments in a healthy position for the time being.

However, FDI which is a major driver in the Vietnam growth story is slowing down, with commitments in 1H09 estimated at US$8.87 bn down 77.4% on year and also on pace to fall below 2007 levels. The local USD/VND exchange rate remains virtually unchanged.

The VN-Index was up 8.9% in June to 448.29, but corrected strongly down 12.5% from a June 9th peak of 512.46. In June the average daily traded value on the VN-Index surpassed the US$100 ml mark reaching US$108.3 ml per day, roughly 12 times the average daily traded value in February ’09. In other market news, the much awaited and delayed launch of the UpCom market occurred on June 24th with 10 OTC companies listed for the trial run which will run through July. It is expected the market will bring greater liquidity and transparency to the OTC market in Vietnam.

To view full report, please click VAM Monthly Newsletter – June 2009

For more information about Vietnam Asset Management Ltd, please visit www.vietnamam.com

For the first time, I am releasing the performance of one of the main unleveraged accounts I am managing. This performance doesn’t include any leverage and the graph is scaled to an initial equity of 100,000. The management started around 4 months back, 25th of March to be precise.

Technically, the profit shown here is the bare minimum, “open-for-audit-if-you-want-it”, type of profit. Includes friction and all the costs  a real trading account will face. But in its reality the real profits are slightly more than this. The extra component comes from a few option trades I have taken to run a side speculation via one of the other systems I designed recently. Quite notable was the option trade on June 8th, where I loaded up 4400-4500 puts, quite heavily, to see their price shoot through the roofs, 10 days later. Also involves a few duds, like the one I am currently in, where I loaded up 4400 calls, at 150, but still couldnt show a very encouraging trade[ as I am writing, it tanked from around 250 to 139ish levels in 2 hours straight, Nifty falls 4%]

The Profit Curve

Till date, the return shown is 37%[since March].

Quite some time back, I posted an article here, with this title, “Developing a Trading System”. It discussed on the psychological implications of trading a system. It never asked about the profitability[as in hard $] of a system, but instead asked some hard questions about its drawdowns, losing streak and average MAE. That post is more of an end stage question rather than a first step method.

This time, I am concentrating on something which comes right in the first steps. How do you really go about  fiddling with an idea to the first steps of investigating it seriously? And what next?

Before, I begin, I would like to reiterate an analogy. There is a striking similarity between markets and ecosystem. The trading systems being hunters, chasing limited $$$ for survival. If that is so, which animal should a trading system represent? Elephant[Fundamental Investing, might be, not sure, slow,regal,patient and huge]? Jaguar?

The issue is, your trading system can  be any one of them, yet in the situation of meteoric catastrophe, most of them would be wiped out. Save one.
The Cockroach.

A cockroach can survive even a nuclear holocaust, its cretin shells robust enough to save it from most of the catastrophes, man made or natural. Their hardiness, can keep them alive without food or water upto a month, and can survive on limited resources like glue off a postage stamp, the sebum left in a fingerprint.

The final idea is this, you want your trading system to be as hardy as the cockroach, surviving and treading a wide range of markets and market situation well enough, so that any change, catastrophic or gradual doesn’t do any harm to its tradeability.

And this forms the crux of the post. You have got an idea, say,  a simple day trading trend following idea, like go long when the price shoots above the previous day high, with stop as that bar’s low and short when the price shoots below the previous day low and with stop as that bar’s high. Once you get the idea and you code it, the first temptation is to check if its profitable, how much it is, etc etc etc.
Well not yet. Don’t do that, now. Instead what is suggestible is run the vary same strategy over a wide range of price series. Not all will be profitable, right now. Some will be, some will be not. But that’s okay, its a good idea to keep the profitable to non profitable markets ratio somewhere between 40% to as high as 60%.

Yet, look for the risk adjusted returns in all the markets in the sample set. None should stick out, individually. What effectively we are looking for is not a specialised animal but a ever flexible, hardy, strategy to deliver the returns. Why? Because specialisation is the mother of death!

When one day, the underlying fundamentals change as for sure they will, you will be gasping for a hardy, flexible strategy[a la Swiss Knife] and not a lean, mean, high specialised hack saw blade.The idea being,when one of the profiting markets turn mellow, we can “hope” that one of the earlier non profiting markets pick up and return some of the lost luster and sheen.

We often make decisions based on how much dollars is being returned. Thats a wrong move. You should be instead looking for a homogeniety in the results. A band of acceptability with none of them, sticking out.Probably some might give upside returns of 1.5-2σ away from the average. There is nothing to be really emphatic about. Your system will soon mean revert, and that part where you will try to lock in profits, will be handled by the money management part. For example strategies like Exposure Reduction, Staying Out of the Market, Equity Curve Trading etc etc.Because all we have in our hand is to reduce our drawdowns and manage our risks.

Till the next time,
Trade Well,
Soham

I had a discussion with a colleague about this economy. Naturally, we are usually optimistic about everything and try to see the value of unique situations. Somehow we ventured down the road to the topic of credit.

“Everybody’s credit has suffered this year.” Seemed to be the general theme of our conversation. “Everyone needs a fresh start once and a while.”  We have both known people personally that have been financially responsible for years with credit ratings ranging in the high 700’s and even low 800’s. These people were – and are – financially literate and responsible but have gone through very difficult changes as of late. Unfortunately, the credit bureaus  aren’t interested in financial literacy or tough circumstances, only payment schedules and account balances. Some would argue that there are credit repair services, but these services can take time.

So what would a Credit Reset really do for people? Would they benefit? Could it create more problems, or alleviate existing problems? How could (or would it) benefit the entire economy? These are the questions that rattled around in our brains.

Throughout history, ‘financial resets’ have happened over and over again. We are all experiencing one now. The banking industry is going through a complete overhaul, and a natural cleansing of the market place is happening. This is not a bad thing. It is a very necessary chain of events that will always happen. History does repeat itself.

The main question may be this: If there is in fact a Credit Reset, will it improve borrowers performance on the notes taken? I believe the answer is yes. With a little no. But more yes. Some people have lost their jobs, some have managed their money poorly. Some have been taken advantage of by difficult to understand lending programs that over promise and under deliver with exorbitant amounts of hidden fees and hidden agendas. However, the majority of people may have placed themselves into those positions by their own greed, or poor decisions – or both. The banks cannot be blamed for everything. Sometimes we all have to look in the mirror.

Would a Credit Reset soften the blow of personal liability and responsibility and create undisciplined American adults when it comes to financial management? The banks got a bailout, did they learn their lesson? Was the bailout entirely for the banks, or was it for the security of all the Americans that entrust those institutions to manage and care for their investments? The banks are required to show positive ‘stress tests’, to show strategy and strength. Are these current difficult times consumers personal ‘stress tests’?  How much more can the average American take?

Conclusion? Uhh… … …”Yes” – I mean “No” I mean-!?

Your best days are ahead,

Blake Robbins
brobbins@empoweryourbest.com
877.45.EMPOWER
www.empoweryourbest.com

Does your Business need:

Venture Capital?
Angel Capital?
Funding?
Growth Consulting?
Business Lines of Credit?
A great High Yield Investment?

Click on the above links and ‘Request More Information.’ Learn more about how you and Empower can work together to effectively implement your vision. Success is a choice. It is up to you.