July 9th, 2009 by admin
Humans are all emotional being. We do not always make decisions rationally. Emotion is part of us as investors. Investors might feel better towards stocks at certain point or they might feel that owning stocks are risky and avoid it at all cost.
Investors may also feel attached towards a specific company and continue owning the stock without regards to its fundamental. For example, you might like Google’s search engine so much that you decide to buy the stock at $ 350 without doing any research. You figure that Google’s search engine is so much better that buying the stock will give you profit, right? Wrong. Now, I am not here to bash Google as an investment, but analyzing an investment goes beyond the products and companies. Most investors can identify good companies and products. It is quite easy. You know that a Mercedes is a better car than a Ford or a Civic.
The next question is how much should you pay for a Mercedes or a Civic? This requires us to put aside our emotion for a second and think clearly. Sure, you’d like to have a Mercedes in your life. It is luxurious and have a lot more fancy features than a Civic has. But, that does not mean you should overpay for it. It works similar with stock investing.
Google is a good search engine, probably the best that is ever produced so far. Sure, you probably pay more for Google than other generic search engines. But, please don’t over pay. You invest in Google to profit from it not because you like its products.
So, how do we eliminate emotion from our investing decision? We can’t eliminate it completely but there are certainly tools that might help. One is to calculate the fair value of a common stock that you are investing in. I covered this plenty of times but basically, the fair value of an investment is dependent upon the streams of profit generated by it. In the long run, if company A earns more than company B, then company A will be valued more than company B.
For a company that is growing such as Google, you can incorporate its growth and calculate the fair value with growth. I have talked about this once and you are welcomed to check our commentary section.
I know I don’t exactly give you the best solution to the problem. Emotion is hard to ignore. I am not immune to that. But following your emotion will cost you a lot of money. Just watch those investors that bought during the NASDAQ peak in 2000. Don’t follow the herd and keep your focus on the fair value of your stock. You will do really really well.
July 6th, 2009 by admin
Looking for a serious investment opportunity? You may want to consider buying a small business in the United Kingdom. There are several ways to turn a good profit in small business, but there are some important things to keep in mind if you are looking for an investment opportunity, especially if you are an investor from the United States, Canada, and elsewhere.
Any investment opportunity naturally comes with some risk. Foreign investors will need to calculate an additional variable when figuring up the possible amount of profit margin, loss ,and potential for both, as well as the exchange rate. How well is your currency doing against the British Pound? Be sure to include some “wiggle room” in your budgeting for fluctuations in the exchange rate.
Continue reading ‘Buy a Small Business in the UK’
July 4th, 2009 by admin
If you are concerned about saving money or making money for the future, or both, then you definitely need to consider making an investment in different stocks, mutual funds, and the like to create a well rounded portfolio that will provide you with returns that benefit you and your investment. There are so many benefits of making an investment in a mutual fund or funds and just a few of them are full time management, access to money, diverse investments, and services.
When you invest in mutual funds you are investing in not only funds but full time management of your funds by knowledgeable brokers. These managers you will take care of all of your investments from buying, selling and trading so all you have to do is sit back and watch your investment grow because the mutual fund mangers handle all of the work for you. Also, your mutual fund manager will make the best possible investments for you because the mutual fund companies are always working with analysts to get the most up to date information on companies and the investment world.
When you invest in mutual funds you will also be able to access your money quickly and easily if you need to. In most cases individuals make an investment for a long period of time, however sometimes emergencies develop where you need money quickly. In these instances you will be able to sell all or most of your shares for the market price and get the money immediately. That is good to know.
Also, when you invest in mutual funds your money will be invested in a wide variety of investments which would be nearly impossible for you to do on your own. The reason it is good to have your money invested in hundreds of different of investments is that the ups and downs of the market do not affect you as much and also your risk of loss decreases. So, investing in mutual funds is really a good option for people who want to make the most of their investment and the return on their money.
In addition to all of these benefits, when you use a mutual fund company to make your investments for you then you will also receive additional services. In general, these benefits include automatic reinvestment, transfer of funds electronically, and other services as well.
If you have investments that are not performing as you would like or are considering making some investments, then go ahead and look into investing in mutual funds. You will be amazed at the ease of investing in mutual funds and the potential growth you will see on your investments. However, make sure you use a credible mutual fund company to make your investments for you.
July 3rd, 2009 by admin
The day trader’s ultimate objective is to trade expensive and volatile stocks on the NASDAQ and NYSE markets in in increments of 1,000 shares or more, and profit from the small intra-day price movement. The day trader may make many trades in a single day, holding onto stocks for only a few minutes (or hours), and almost never overnight. Day traders are short-term price speculators. They are not investors, and they are not gamblers.
Day trading is not investing. The day trader’s time frame of analysis is rather short: one day. Their only intent is to exploit the stock’s intra-day price swings or daily price volatility. Unlike stock investors, day traders do not seek long-term value appreciation.
Stock volatility is generally a rule of the market rather than an exception. Most stock prices move up or down in any given day due to a variety of external factors. Even if the market is relatively calm, there are always stocks that are volatile. Day traders seek to identify a stock that has a trend and then go with that trend. “Trend is a friend” is a common motto among day traders. Day traders seek to pick up a relatively small stock movement, 1/8 or more on that stock. If day traders are trading a large block of shares (that is, 1,000 shares per trade), then day traders will profit $125 from a 1/8 price movement. Conversely, if a day trader acquired 1,000 shares and the trader was wrong, which also happens, then the day trader will lose $125 from a 1/8 price movement. Volatility is a double-edged sword.
For expensive stocks that trade for $100 or more, a 1/8 or 12.5 cents movement is such a small relative price change that it happens all the time. Consequently there are plenty of day trading opportunities. It is not common to see a day trader executing many, sometimes as many as 100, trades in a single day. On the other hand, an investor’s time frame is much longer. Investors seek a much larger price movement than 1/8 to earn the desired rate of return. That takes time.
In short, day traders seek to extract an income from intra-day price volatility by trading the stock frequently, while the investors seek a long-term capital appreciation.
July 1st, 2009 by admin
Dubai one of the states in the United Arab Emirates (UAE) seeks today to move abroad from its acceptable oil assurance to a added counterbalanced one based on tourism and services. As a result, its abridgement has developed with added and added tourism resorts advancing up to accommodated this aim. This commodity will account three affidavit why you should advance in the Dubai today.
Firstly, Dubai as mentioned beforehand is acceptable a casework hub and in accurate a banking casework hub, there is traveling to be an access in the amount of adopted professionals who are absorption there to plan and with a top pay and tax chargeless cachet over there, the boilerplate rental yields of backdrop there is aloft the average. Currently the individual allowance flat apartments are accomplishing the best in agreement of rental back the expatriates that plan in Dubai tend to be individual individuals so this would be a abundant absolute acreage investment tip to agenda if you intend to advance in Dubai.
Secondly, the amount of Dubai acreage about to all-embracing standards is still actual low and as a aftereffect the adventitious of a ample basic acknowledgment access is actual high. Coupled with the bullish yield on rentals as mentioned above, the prices of your absolute acreage investment in Dubai will be set to arise in the next few months.
The acumen cited by some absolute acreage professionals is that if US and UK sourced money starts abounding into such properties, the amount of the absolute acreage will ability all-embracing standards and you would accomplish a handsome accumulation from the basic appreciation.
Thirdly, there is currently a Disneyland allure getting congenital there and this would aftereffect in an access in day-tripper visitors to Dubai. If your acreage is amid abreast Disneyland, there is a adventitious that you will be able to hire out your acreage to humans traveling there on holiday. As for problems with rental collections, a lot of absolute acreage companies bifold up as acreage mangers and developers so they will be able to handle a lot of of the transaction collections on your behalf.
In conclusion, Dubai represents one of the arising markets area your investment dollar may accomplish a lot more. Spending some time because whether you wish to investment in Dubai acreage may be advantageous if because the abeyant allowances involved.
June 28th, 2009 by admin
Greetings Fellow Forex Traders,
When it comes to trading in any market, Forex currency trading has a huge advantage over other players in trading business. Firstly, the Forex market has the advantage of time freedom. You see in the 4x market one can trade around the clock from Monday through Friday. In the stock market that is simply not possible since the market closes at 4:00. This advantage of time freedom allows those who have not yet earned enough money trading in the 4x market to maintain their day jobs while trading at night. It is also quite plausible to trade in the morning before a person goes to work. Trading the Forex can become an excellent second job for you.
Unlike the stock market, the currency trading market does not require a trader to pay a commission to place a trade. This will come as a welcome sign of relief to those who have grown accustomed to the vast amount of money they must fork over to their brokers which go towards clearing, exchange and government fees. In the 4x market you also do not have to worry about having a large sum of money in your account to sell your currency pairs. This concept of selling as you may already know is commonly called shorting in the equities world. You can buy or sell at will in the currency trading arena.
It is so amazing to be able to participate in this market right now. You can do so from the comfort of your very own home. As long as you have a computer that is connected to the Internet you are in business. You can begin trading with as little as 300 dollars. I will show you how to turn this 300 dollars into some serious money in no time at all. This should be a lot easier to do given the advantages that you know the 4x market has over its competitors.
The Forex market is traded by some of the world’s richest individuals including Bill Gates and Warren Buffett. You now have access to the same opportunities as they do. What is stopping you from getting on the road to financial freedom. You can start now. You do not have to wait. You have already begun the journey by choosing to educate yourself on the pros of the Forex market.
I personally love the fact that you can trade whenever you want to with the Forex. You see, in the stock trading world you are flagged if you are deemed to be a daytrader. In other words if a trader of stocks chooses to trade every day, he or she must have an account balance of 50,000 dollars to do so. There are no such restrictions when it comes to trading the 4x. If you work at night, you may trade in the daytime. If you work during the day, you may trade at night. You simply trade according to the schedule that works best for you.
I want you to think about money for a moment. Who uses it? The whole world does in some form or another. Another advantage that the Forex market has is that there will always be a need for money. You are simply trading one currency for another in the currency market as the 4x is commonly reffered to. The Forex market is not going anywhere. It is here to stay. The only question is then who will be a part of it. We need money to buy the things we use everyday and so do those who live in the other parts of this world.
Another advantage that 4x has over stocks is the advantage of trading focus. Instead of having to choose between over 4,000 stocks you can deal with 4 main currency pairs. Any good business person knows that focusing on too many things is a recipe for financial disaster and this can hold equally true in the stock market. A stock trader also must grapple with the time issue doing research on all those potential stocks presents. It is also much easier to become familiar with 4 things as opposed to 4,000 things. Focus is the name of the game and 4x trading makes it much easier to do so.
The ball is now in your court. Will you take it and make the decision to win with currency trading? 4x is indeed the winner’s game and those who win consistently know how to play it well.
June 27th, 2009 by admin
I was strolling around the Internet and stumbled across a copy of the very first federal income tax return (PDF).
The Sixteenth Amendment imposed a federal income tax on individuals and was ratified by the states on February 3, 1913.
It provides that,
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The effective date of the Amendment was March 1, 1913 making the first income tax return a short-year return for the period March 1, 1913 through December 31, 1913.
Here are a few other interesting things I noted about the seminal 1040:
- The Internal Revenue Service was then called The Internal Revenue Bureau
- The failure to file penalty was fixed at an amount from $20 to $1,000
- A taxpayer needed to complete only 8 lines to determine his tax liability
- The tax rate on the first $20,000 was 1% (according to the U.S. Inflation Calculator $20,000 in 1913 is the rough equivalent of $432,000 today)
- The top marginal rate, for people who made more than $500,000 a year was 6% ($500,000 in 1913 dollars = $10,800,000 today)
We may not be happy about the passage of the 16th amendment, but don’t those tax rates look refreshing?
Here’s a recap of some other cool (and not so cool) stuff that happened back in 1913:
June 27th, 2009 by admin
We simply must bring this debate to a conclusion for I can no longer bear the encomiums.
When a miraculously talented blogger like Joe Kristan opens a rebuttal to one of your blog posts by telling the world how “fine” and “excellent” you are, you’d better learn to pucker.
Of course I did call Joe a “highly regarded” blogger, but that was only because it’s true.
Because someone has to start the shutting-up (it rarely happens naturally, especially with bloggers), I hereby declare this post to be my last word on the subject of tax preparer licensing, but even as I do so I know that I am probably lying.
In a prior post I made the argument that we should regulate unlicensed tax preparers to level the playing field between them and already regulated preparers (CPAs, Lawyers and IRS Enrolled Agents).
Joe took exception to this and responded in a blog post titled Level Playing Fields?
The playing fields are bumpy already. While lawyers have to keep up a certain level of CPE and so on, that can be gamed. One of the most popular schools for lawyers in Iowa is the year-end bar association tax school held at the Marriot. It is popular because it provides lots of CLE in December, when the lawyers are running up against their deadline. It is also popular because it is broadcast closed-circuit in the hotel, so the lawyers can get their CLE without ever leaving their rooms. So the lawyers can do client work, or party, or sleep in, and still get their CLE. Most lawyers take their CPE seriously, but it would be astounding if everyone did. If lawyers can game CPE so easily, how hard could it be for a much larger cohort of licensed preparers?
I am offended.
I would never lounge in a hotel room to get my CPE training. I always sit at the back of the classroom with a hot cup of Java and the Sports page.
Joe, of course, is correct when he says that some already regulated lawyers and CPAs don’t take their CPE requirements seriously and merely go through the motions in order to get the credits.
But is this enough to throw the baby out with the dingy bath water?
One could just as easily argue (I am not) that we should beef up the current regulatory scheme to ensure that people stop gaming it rather than ditch it altogether.
If we ditched all of the regulatory schemes that some people “gamed,” we’d have no government at all because all are to some extent gamed.
(That wasn’t an applause line, Joe.)
I think Joe is saying that he opposes regulation and licensing not as a concept, but because he believes it doesn’t work and that government is incapable of making it work.
(If I have mistated Joe’s position here I have no doubt he will correct me forthwith in yet another blog post prefaced by a declaration of my abject wonderfulness.)
The truth is it’s hard to argue with him on this (I’ll find a way) because I am a long-time believer that in most things the mega-bureaucracy is inefficient and wasteful.
But because I oppose big government doesn’t mean I propose no government. There are some things government must do and I think this is one of them.
In the 20 plus years of my practice, both as a CPA and a tax attorney, I have had hundreds of clients hire me to fix problems caused by unlicensed tax preparers.
Some of these unlicensed preparers intentionally manufactured fake job expenses or fake Schedule “C” expenses. Others even more egregiously concocted entire schemes like the infamous Slavery Reparations Credit.
Again, I am not suggesting a complex regulatory regime but, rather, a simple system (Joe says the ones that start simple end up complex), where the government knows who the tax preparers are and the tax preparers know (or at least suspect) that Big Brother is watching them.
Is that such a big deal?
June 27th, 2009 by admin
John Hinderaker of the mighty Power Line blog cites a new Rasmussen survey that finds that,
Just 17% of Americans say the government is more likely to spend its money wisely and carefully than a private business, according to a new Rasmussen Reports national telephone survey.
Sixty-two percent (62%) say a private business is more likely to spend its money carefully. . . .
That’s consistent with many other findings, such as the 76 percent who believe it is likely that a large amount of the government’s “stimulus” money will be wasted, or the 74 percent who believe their economic judgment is better than that of Congress.
John then raises the obvious question: If such a large segment of Americans believe in smaller government and lower taxes, why then are so many of them voting for Democrats who don’t?
So, what I want to know is, how on earth can you hold these views and still vote for Democrats? What can such people be thinking?
It’s true, of course, that most people hold inconsistent ideas in their minds and can swing one way or another depending on the particular appeal that is made. But still: how can we have a population that trusts private enterprises to spend money more wisely than government by a 62-17 percent margin, and still elect Congressmen who vote for a disgraceful bill like Waxman-Markey, and who may, before long, enact socialized medicine?
It’s a mystery.
Maybe we’ll start calling these folks Log Cabin Democrats.
I found this comment to Hinderaker’s post written by Christian Dean particularly interesting.
I think this falls on the emotion side . . . Most people aren’t programmed to think logically through any issue, and go based on how it feels. Or more importantly, how they want to be perceived to feel. Arguments like “healthcare reform will provide benefits to the poor and uninsured” and “gay rights is the new civil rights” and on and on resonate with people who don’t want to be bothered to think things through. A lot of the herd mentality on these issues is more about fitting in with what the group perceives to be the “right” side, no matter how wrong the ides are. Everyone has to fit in and be cool, right?
June 26th, 2009 by admin
The United States Supreme Court has refused to hear a case brought by Capital One Bank against the state of Massachusetts disputing the imposition against it of a credit card and banking services tax totalling nearly $2 million.
Here’s Glenn Shapiro of TaxNews.Com:
The US Supreme Court stated in a decision issued on June 21 that it would not hear an appeal by Capital One Bank against a Massachusetts revenue authority decision to tax the company based on the amount of business it conducted in the state, regardless of the fact that the company had no ‘physical presence.’
Capital One had attempted to argued that because it didn’t have a physical presence in the state, it was entitled to dispute a $1.76m tax bill for providing credit card services and an additional $159,000 charge for the provision of banking services within the state’s borders. However, the Massachusetts Supreme Court found that the company nevertheless had a “substantial nexus” in the state, and that this could be used as the basis for taxation.
“By issuing credit cards with the ‘Capital One’ logo to Massachusetts customers, the Capital banks essentially were guaranteeing payment to merchants of the amounts charged by those customers, if approved,” said the US Supreme Court.
“The Capital banks bore the risk of a cardholder’s non-payment. In the event of such non-payment, the Capital banks worked with collection agencies and Massachusetts attorneys to collect delinquent accounts, which included the filing of civil actions on behalf of the Capital banks in Massachusetts courts,” the decision said.
Toys R US subsidiary Geoffrey, Inc., was also challenging the tax law.
We have recently written about the aggressive attempts of state governments to recover lost revenue by expanding their taxing authority to businesses that do not have a physical presence within their borders. (See E-Commerce Sales Tax Unworkable Critics Charge and State Governments Are On the Prowl For New Sources of Revenue: Watch Out for New Internet Sales Tax Law.)
This case might very well signal the beginning of the end of the physical presence test which would open the door for states to tax internet businesses that are not physically located within their borders.
And that, my friends, is going to be earth-shattering.
Shapiro reported further that,
The Securities Industry and Financial Markets Association (SIFMA) said that the Supreme Court’s decision not to hear the Capital One case was “disappointing” and part of a “disturbing trend” by state taxing authorities and legislatures to impose taxes on out-of-state businesses based on in-state marketing activities “without providing clarity or certainty as to whether and to what extent operations will create a tax liability in various states.”
“Without a bright-line test, investment will be discouraged, litigation costs will rise, and compliance burdens for institutions will increase,” SIFMA cautioned.
