http://www.whyamirich.com/ Articles at Free Website Content from Whyamirich.com en-us http://www.whyamirich.com/finance/mutual-funds/are-you-paying-to-much-for-that-mutual-fund.html http://www.whyamirich.com/finance/mutual-funds/are-you-paying-to-much-for-that-mutual-fund.html Tue, 13 Jul 2010 01:57:32 -0600
Since the fund company had to pay the advisor the commission what they do is increase the MER of the fund by about 0.5% compared to Class A units. This means your return will be 0.5% lower each year compared to if you had bought the Class A fund. When you buy this type of fund you are also locked in for a period of seven years (time frame could vary). If you sell prior to this you have to pay a penalty to the fund company allowing them to recoup the commission they paid to the advisor. Between the locked in period and the higher MER this option is clearly not in the client's best interest.

Just in case if the company falls down in the market, shareholders get the money which is equal to their ownership value. You can invest in individual stocks or closed end funds. It is always better to read in details about the various mutual fund of India before investing money. More importantly you will need to access your own goals and the risks involved. Asset allocation is also very important or else you may find your portfolio to have funds that are all invested in the same thing. A good portfolio will have diversification and will reduce the risk.

"Over the last five years, only 10% of active funds in the International Equity category, 13.9% in the Global Equity category, and 9.2% in the U.S. Equity category have outpaced S&P EPAC LargeMidCap, S&P Developed LargeMidCap and S&P 500 indices respectively." So over the last five years 93.6% of Canadian equity funds, 90.8% of US equity funds, 90% of International equity funds and 86.1% of Global equity funds have underperformed their respective indices.

It is easy to figure out why actively managed investments consistently under-perform with the incredible high Management Expense Ratio (MER) that is charged on actively managed mutual funds in Canada. Having a 2%+ MER compared to an index funds MER of 0.75% or less is a lot to overcome. Overcoming these higher fees becomes an even more difficult task when you look at the holdings of a typical equity fund compared to its index. In most cases the holding are very similar.

It could be really tricky to find the best fund for you. You may like to invest in a fund whose manager thinks exactly the way you do. Important is to get comfortable with the fund manager who understand your needs and accordingly take action. You may also buy an index fund which runs on autopilot. It is always better to read the annual report before investing. Fund manager compares the NAV's of various companies and suggests the best option. Just be careful with high risk portfolios to play safe in the market ]]> http://www.whyamirich.com/finance/mutual-funds/using-moving-average-convergence-divergence-macd.html http://www.whyamirich.com/finance/mutual-funds/using-moving-average-convergence-divergence-macd.html Tue, 30 Jun 2009 04:58:01 -0600
MACD is a lagging indicators and it shows the relationship between two moving averages of recent prices. Most technical indicators are lagging. This means they are slow and they just tell you what just happened after the fact.

Learning technical analysis is essential for you as a currency trader. Technical analysis is based on the premise that past price action can be used to predict the future prices in the currency markets.

There are many chart types used in the technical analysis. Technical analysis helps you to read your charts and analyze them with a number of technical indicators. Using technical indicators is the key to understanding the market behavior.

MACD is calculated by subtracting a slow exponential moving average (EMA) from a fast exponential moving average. Signal line is calculated by the taking the EMA of MACD for a number of bars. The Histogram is the difference between the MACD and its signal line.

MACD is one of the most popular indicators used in currency trading. However, beware that MACD is often misunderstood and misused. Like any other technical indicator you should use it in conjunction with other technical indicators.

Crossovers: A crossover happens when MACD falls below or rises above the signal line. When MACD rises above the signal line from below, it is a bullish signal. It indicates that you should buy. Conversely, when MACD falls from above, it is a bearish signal. It indicates the time to sell.

Divergence: When the price diverges from MACD, it indicates the end of the current trend. Negative Divergence is when the price action is rising and MACD is falling. Both the price action line and the MACD line are diverging. It is an indication of the change in the currency trend. Thats right! The lagging indicator that is supposed to follow the price is predicting future behavior of the prices in the market.

When MACD expands dramatically, this happens when the shorter moving average pulls away from the longer moving average. It is an indication that the currency is overbought/ oversold and may return to normal soon.

One thing should be very clear. All the above three cases are important and should not be overlooked. However, none of them are signals for a trade. For example, MACD Divergence is tradable when confirmed by other indicators. If you simply start trading on MACD Divergence, it may not yield a profitable trade.

However, when planned in advance and confirmed by other technical indicators, success is more likely. This is due to the fact that several things are happening at the same time. Each is attracting the same bulls and bears into the trade that you are planning.

When you use MACD, crossovers and dramatic rises are usually easy to spot. Even novices can do that. However, spotting MACD divergence correctly comes after a little practice. ]]> http://www.whyamirich.com/finance/mutual-funds/profit-from-these-mutual-fund-basics.html http://www.whyamirich.com/finance/mutual-funds/profit-from-these-mutual-fund-basics.html Mon, 01 Jun 2009 04:31:49 -0600
There are thousands of mutual funds available, literally more than 10,000 are traded on the market. Together, all mutual funds have succeed in attracting $4 trillion dollars of investments! It's still possible to profit with mutual funds, but you should understand the basics to know how safe they are for you.

Mutual funds have been popular as a result of great returns over part of the last few decades. Up until 2008, these vehicles were thought to provide diversification, safety and solid returns for the long run. They are easy to buy and sell, and have been thought to be less risky than other investments.

As a mutual fund is set up, the fund raises investment cash from investors, then uses that money to invest in stocks, bonds, and other securities that are a proper fit for the objective of the fund. Within the fund there is nearly always than a single individual investment. When the value of those investments goes up, or goes down for that matter, its investors also see a gain or a loss. When a fund pays out a dividend to shareholders, the investors get their fair share too. In addition, you can find that funds are well managed by professional advisors.

Mutual funds are designed as special types of corporations, which are allowed by charter to combine funds receied form investors, and invest that pool os cash for the whole group, based on the defined objectives of the fund. To raise investment capital there is an offering of shares of the fund to be sold to the general public, just as any public company wolud seek to sell stock on the market. Then the funds take the proceeds from selling shares and use it to purchase a variety of investments, such as stocks, bonds, derivatives, or money market instruments.

In exchange for their share purchase, shareholders receive equity positions in the mutual fund. As a result, shareholders then each own a portion of the underlying securities. Generally mutual fund shareholders may freely sell their fund shares on the market at any time, however this iwll be subject to daily changes in the share price and reflecting the performance of the underlying investments in the fund.

It's also true that many investors get their investment ideas based on just a few criteria: the total performance of the fund in the recent past, or through tips from a friend or acquaintance, or by reading magazines or online publications. Even though there is a chance these efforts could result in choosing a good mutual fund, it's still very risky to buy on this basis alone. It's better to have some idea of fund's characteristics, and whether it's a good addition for that particular investor.

Each individual mutual fund has characteristics unique to it, such as its performance history, the philosophy of the management, specific investment objectives and so on. Your choice should be based on how you have designed your overall financial plan, and not just the past performance of the fund. It's best to determine your individual goals first, including your personal financial priorities, what investment resources you have available to invest, and how much risk you are comfortable with. You will also want to include a timeframe for achieving your goals.

Everyone likes to talk about the super star funds, the high fliers that had double digit annual returns, to which everyone flocked with their cash. Today, we are a bit more realistic, and know that what comes up, can easily come down again. So, hopefully, you've learned that the performance of a fund is not the most important metric. Instead, examine the returns in the perspective of the underlying investments, and whether they are good long term investments. Don't forget that past performance is never any guarantee of future results. Start out by looking at other mutual funds on the market which are in categories that match your overall strategy, whether it be bond funds, growth funds, equity income funds, etc.

You should analyze the track record of a fund beyond just the recent several months, to see the fund's management syle and performance over time. By keeping these mutual fund basics in mind when you look for investments, you'll begin to create a sound investment foundation. ]]> http://www.whyamirich.com/finance/mutual-funds/economic-factors-that-move-the-forex-markets-in-the-short-term.html http://www.whyamirich.com/finance/mutual-funds/economic-factors-that-move-the-forex-markets-in-the-short-term.html Sun, 24 May 2009 05:07:58 -0600
US Dollar is the most important currency in the global economy. More than 90% of currency trades are done in US Dollar. In most of the currency trades, US Dollar is either the base currency or the counter currency.

For success in forex trading, choice of the right currency pair to trade is very important. US Dollar is the most important currency and most probably you will be also trading US Dollar as a forex trader most of the time. You should know that the release of certain economic data has significant and lasting impact on US Dollar.

You should know as a forex trader that currency markets reaction to the release of different economic data with time also changes. Some years back, US GDP figures used to be important for US Dollar but dont have much impact in recent years.

EUR/USD is the most liquid pair in the forex markets. The release of Nonfarm Payrolls (NFP) on the first Friday of every month is the most volatile day for this pair and other pairs involving USD as a base or counter currency.

Similarly, the release of US housing sales number every month has become very significant for USD in the recent years. Previously, forex markets used to give more importance to US Trade Balance.

If you depend on range trading as a trading strategy, you should avoid the day NFP data is released for trading. This is a highly volatile and jittery day for the forex market.

However, if you are a breakout trader, the knowledge of which economic data is expected to be released can help you in determining the size and confidence of the trade.

In short, knowing what economic indicators move the forex markets most is very important for you as a trader. It is important for you to understand which data the market deems important at any point in time.

You should also understand which economic data causes knee jerk reaction in the currency markets and which pieces of economic data will have lasting reaction in the currency markets. ]]> http://www.whyamirich.com/finance/mutual-funds/the-glorious-past-of-mutual-funds.html http://www.whyamirich.com/finance/mutual-funds/the-glorious-past-of-mutual-funds.html Thu, 07 May 2009 03:56:50 -0600
For those who are just beginning to invest their hard-earned money, investing in mutual funds is the best option to take because you won't have to make decisions which can alter the potential returns of your outlay. Investing in mutual funds is a good way to get a feel of things before plunging in the industry. And since mutual funds are considered as low risk investments, you need not worry about your money because it is safely spread over different investment options.

In order to understand mutual funds better, we need to take a brief look at its past and see its development throughout the years. Historians are divided as to the real beginnings of the mutual fund concept. Some believe that it was King William I who came up with the idea when he launched his closed-end investment companies in the Netherlands in 1822. Other historians though believed that it was a Dutch merchant named Adriaan van Ketwich who came up with the idea in 1774.

Because of the significance of the idea, countries like France and Great Britain took notice of it. Soon afterwards, the United States also acknowledged how profitable the mutual fund industry is. During 1907, a fund called the Alexander Fund was established and paved the way for the modern mutual fund. Ever since then, changes were implemented to include semi-annual issues and withdrawal on demand.

In the year 1924, another fund known as the Massachusetts Investors Trust was created which simultaneously signified the beginning of the modern mutual fund. In a year's time, the fund accumulated an asset base of $400,000.00 with 200 shareholders. Four years after its establishment, the Fund offered its shares to the public. At the same time, another fund named as the Wellington Fund was formed and was the first one to include stocks and bonds as investment options. This heightened the demand for stocks and likewise increased its prices. Thus, the year 1928 was considered to be one of the most illustrious years in the mutual fund history.

From its peak in 1928, an unexpected stock market crash was experienced the following year. Wall Street experienced its worst crash ever and the values of stock decreased. In the same manner, the demand for goods also declined rapidly leading to the Great Depression. But despite this disaster, something turn out positively such that the government finally took notice of the mutual fund industry and subsequently passed governing laws to protect the investors.

With the laws in place, trading in the stock market began to peak again with the renewed trust of the investors in the system. In fact, by the end of the 60's, close to 300 funds were established with assets amounting to $48 billion. This started the reign of a lucrative mutual fund industry.

Today, it continues to be the leading investment option of investors. The mutual fund industry withstood the changes of time and economy throughout the years, emerging stronger every time. This is one reason why people are investing in mutual funds because they know that it can stand the test of time with a big potential to grow even more. ]]> http://www.whyamirich.com/finance/mutual-funds/is-day-trading-for-you.html http://www.whyamirich.com/finance/mutual-funds/is-day-trading-for-you.html Tue, 05 May 2009 03:29:00 -0600
Make one thing clear from the very start day trading is not a hobby. Day trading is a job full time or part time but nonetheless its a job. Take it this way if you want to try day trading.

In order to be successful at day trading, think of it as owning a small business. Think that you are the boss and you call the shots.

Every days successes and failures are only due to you. You are responsible. So, if you want to be independent and control your destiny than day trading is for you.

Day trading only requires a computer, a good internet connection and an account with a brokerage firm to start with. In day trading you need to understand how to use software to develop and refine your trading strategies. If you are comfortable in understanding and learning technology, day trading is for you.

If you have always been fascinated with the financial markets and how they move than day trading maybe for you. Markets are amazing. If you enjoy watching CNBC than day trading is for you.

But, if you have never opened a brokerage account, never purchased stocks or invested in mutual funds than day trading is not for you. You do need prior investing experience to succeed with day trading.

Day trading can result in loss. If you can understand and learn trading systems, strategies and money management principles than day trading is for you.

If you are decisive, persistent and can afford to commit to your trading than day trading is for you. Day traders are usually strong personalities.

Day trading can be stressful. Day trading needs a good support system in order to maintain emotional stability when markets gyrate with news events that no one can foresee beforehand. Markets can be ruthless. You need to be psychologically strong to be a successful day trader. Forex is best for day traders. ]]> http://www.whyamirich.com/finance/mutual-funds/the-essentials-of-technical-analysis-part-ii.html http://www.whyamirich.com/finance/mutual-funds/the-essentials-of-technical-analysis-part-ii.html Thu, 23 Apr 2009 04:49:04 -0600
The time frame used for forming a chart depends on the compression of the data: intraday, daily, weekly, monthly, quarterly, or annual data. Traders usually concentrate on charts made up of daily and intraday data to forecast shorterm price movements.

The shorter the time frame and the less compressed data is, the more detail that is available. While long on detail, short term charts can be volatile and contain a lot of noise. Large sudden price movements, wide high-low ranges and price gaps can effect volatility, which can distort the overall picture. Long term charts care good for analyzing the large picture to get a broad perspective of the historical price action. Once the general picture is analyzed, a daily chart can be used to zoom in on the last few months. Four of the most popular methods of displaying price data are by the following charts: line bar, candlestick, and point & figure. The line chart is one of the simplest charts. It is formed by plotting one price point, usually the close. For that matter, I don't favor them because I personally consider the open, low, and high to be as important as the close in technical analysis. However, at times, only closing data are available for certain indices, thinly traded stocks and intraday prices. Bar charts are perhaps the most popular charting method. The high, low, and close are required to form the price plot for each period of a bar chart. The high and low are represented by the top and bottom of the vertical bar and the close is the short horizontal line crossing the vertical bar. On a daily chart, each bar represents the high, low, and close for a particular day. Weekly charts would have a bar for each week based on Friday's close and the high and low for that week. Bar charts can be effective for displaying a large amount of data.

Using candlesticks, 200 data points can take up a lot of room and look cluttered. Line charts show less clutter, but do not offer as much detail (no high-low range). The individual bars that make up the bar chart are relatively skinny, which allows users the ability to fit more bars before the chart gets cluttered. If you're not interested in the opening price, bar charts are an ideal method for analyzing the close relative to the high and low. In addition, bar charts that include the open will tend to get cluttered quicker. If you're interested in the opening price, candlestick charts probably offer a better alternative. The beauty of Point & Figure charts is their simplicity. Little or no price movement is deemed irrelevant and therefore not duplicated on the chart. Only price movements that exceed specified levels are recorded. This focus on price movement makes it easier to identify support and resistance levels, bullish breakouts and bearish breakdowns. Contrary to this methodology, Point & Figure charts are based solely on price movement and do not take time into consideration. The topic on candlestick charting is broad and beyond the scope of this article. This method of charting originated in Japan over 300 years ago, and have become quite popular in recent years. For a candlestick chart, the open, high, low, and close are all required. A daily candlestick is based on the open price, the intraday high and low, and the close. A weekly candlestick is based on Monday's open, the weekly high-low range, and Friday's close.

Trendlines:

Trendlines are an important tool in technical analysis for both trend identification and confirmation. The general rule in technical analysis is that it takes two points to draw a trendline and the third point confirms the validity. An up trendline is formed by connecting two of more low points. The second low must be higher than the first for the line to have a positive slope.

Up trendlines act as support and indicate that net-demand (demand less supply) is increasing even as the price rises. A downtrend is formed by connecting two or more high points. The second high must be lower than the first for the line to have a negative slope. Down trendlines act as a resistance and indicate that net-supply is increasing even as the price declines. ]]> http://www.whyamirich.com/finance/mutual-funds/seagate-is-a-strong-buy.html http://www.whyamirich.com/finance/mutual-funds/seagate-is-a-strong-buy.html Tue, 21 Apr 2009 12:30:10 -0600
As a result, the company expects unit shipments in the quarter of 39 million, with a total market of 110 million to 112 million units. STX's unit demand for 2.5-inch and 3.5-inch ATA drives was better than planned; the company also said it gained significant share in those areas. That said, the company now expects to post revenue for its 3rd fiscal quarter ended April 3 of 2.1 billion-- which ios ahead of its previous forecast of 1.6 billion to 2 billion.

On the other hand, the company said the market for enterprise class products fell about 20% sequentially. However, skeptics should realize that all major enterprise companies (emc, ntap, etc) have all been hit by the economy. They all have announced bad numbers, layoffs, etc,. The only thing they did the last quarter was to burn off inventory. Customers are not canceling orders, they are simply deferring their orders. Otherwise, there is a huge pentup demand for storage that will soon explode; When it does, STX will be rewarded significantly. The scenario occurring right now, is a pentup demand for capacity, not speed. Hence, customers are not clamoring for ssd's, they want capacity (hard drives).

Aside from improved fundamentals, the technical view is also bullish for STX. Shorterm, intermediate-term, and longterm views all indicate a "buy". The 5.80 is a solid support level for STX. The shares have closed above the pivatol point of 6.85-- a very healthy sign. If we can breach through the resistance of 7.80 on heavy volume, more capital will flow into the stock.

Other bullish indicators are the following:

A. 20, 50, and 100 Moving Day Average versus Price.

B. 20-50 Oscillator Band, 20-100 Oscillator Band, 50-100 Oscillator Band

C. 20, 50, and 100 MACD Oscillator

Based on the above technical and quantitative indicators, I recommend the following strategy for new entries.

Assuming the shares open at 6.88 on Monday, the May strike 6 at 1.10/contract look attractive. If you write these calls against the underlying shares, you will be granted .43/contract. That is 430 dollars per 1000 underlying shares. the May strike 7 are also offering .50/contract. But only write those calls if you feel the overall market will continue to hold its rally. Otherwise, the strike 6 might be a better hedge.

Disclosure: The author owns STX in his portfolio. ]]> http://www.whyamirich.com/finance/mutual-funds/stocks-basics-202-what-does-investing-on-stocks-mean.html http://www.whyamirich.com/finance/mutual-funds/stocks-basics-202-what-does-investing-on-stocks-mean.html Sun, 19 Apr 2009 09:43:25 -0600
What does investing on stocks mean and how is it different from investing your money in the bank? Investing on stocks is when you buy a share or a stock from a publicly listed company. This action will make you part-owner of that company and enjoy exclusive privileges such as voting rights. Your money or capital will have the freedom to increase when the company enjoys higher profits at a given time. However, you may also lose a certain percentage or your money may have the possibility of not earning anything if the company suffers losses.

Investing in banks offers your money with maximum security but alongside this is your money may experience lower to no returns because of the taxes involved and market inflation rates. The argument is always on this presentation: banks to maximum security but lower to no returns, stocks to greater risks but higher percentage returns. It all boils down to the type of investor you are, whether you are open to risks or you are more comfortable knowing that your money is secured although you dont make it (your money) work for you.

Investing in stocks follow the simple rule that the more money you invest the higher the risks you may experience, that is why a lot of people are thinking twice on this kind of investment. If youre a beginner and would like to try your hand at stocks, it is advisable for you to start investing with an amount you are most comfortable in losing (if ever it happens).

If you have plans on investing in stocks it is advisable for young people to start now when they will have a lot of time to recover than start later (a few years before retirement), although there is another argument in here which I will discuss later. ]]> http://www.whyamirich.com/finance/mutual-funds/a-brief-look-at-the-past-of-mutual-funds.html http://www.whyamirich.com/finance/mutual-funds/a-brief-look-at-the-past-of-mutual-funds.html Sun, 19 Apr 2009 06:57:01 -0600
Investing in a mutual fund is a good way to start testing the waters. Unlike stocks and bonds where you have to learn the ins and outs before becoming really adept with it, with mutual funds all you have to do is wait for your money to grow. The fund manager will be the one responsible for spreading the funds assets over a diverse portfolio of stocks to minimize the overall risk.

To understand mutual funds better, it is necessary that we take a look at how it has developed over the years. Historians believe that the Netherlands is the official birthplace of the mutual fund, crediting King William I when he launched his closed-end investment companies in 1822. Others say, however, that it was a Dutch merchant named Adriaan van Ketwich who was responsible for creating the idea of a mutual fund in 1774.

Nevertheless, the idea was so great that France and Great Britain acknowledged it. Soon enough, the United States followed suit. But the mutual funds of the past are very much different from what it is today. It was only during 1907, with the creation of the Alexander Fund, that the modern mutual fund began to take shape. Since then, additional changes have been included in the general concept including withdrawals on demand and semi-annual issues.

It was only when the Massachusetts Investors Trust was established that the modern mutual fund came into existence in 1924. And about a year later, the Trust has grown to acquire almost $400,000.00 in assets with 200 shareholders. By 1928, the fund went public. In the same year, the Wellington Fund was established and was the first one to include stocks and bonds in their investments. Because of this, the value of stocks increased rapidly making 1928 one of the best years in the history of mutual funds.

Then the unexpected happened, the worst stock market crash hit Wall Street in 1929. The value of stocks declined immediately and there was little demand for goods which lead to the Great Depression. But something positive came out of this crash, finally, the government took notice of the mutual fund industry. They then passed laws which govern the industry to protect its investors from deceit.

With these laws enacted, the investors slowly renewed their confidence in the stock market which made the mutual fund industry flourish again. The rest they say is history. From the 60s to the 90s mutual funds continue to catch the publics attention. But this is just the beginning.

Today, the mutual fund industry has gained recognition from the different countries all over the world as more people realize its benefits. And with so much to gain, the mutual fund industry will continue to become a popular investment vehicle for investors in the years to come. ]]>