equities

Tighter safeguards for investors from Jan 1

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Global Equities raises Google price target to $700


“Google Plus is off to a very strong start, with probably more than 55 million user signups so far. Google may launch many more new Google Plus Service offerings within the next 3 - 6 months,” analyst Trip Chowdhry wrote in a note.The brokerage added that the launch of a new advertisement format called TrueView on Google’s YouTube has helped raise advertisement spending on the popular video-streaming site, which is up 5-10 percent sequentially.“eMarketers we spoke to are spending their search advertisement dollars between 80-85 percent on Google, about 10 percent on Microsoft Bing and Yahoo combined, and the remaining on other search engines,” analyst Chowdhry wrote.The brokerage raised its FY 2011 earnings per share estimate to $36.37 from $35.75, and FY2012 EPS estimate to $47.83 from $45.33 to reflect strength in Google’s core search business, pickup in YouTube, and a strong start to Google Plus.Shares of Mountain View, California-based Google, after rising to $551.33, were trading at $550 on Wednesday on Nasdaq.


The Economy (just don't invest)

            I finally picked up the pile of newspapers in my drawer and looked through them today. Embarrassingly enough, the Washington Post’s business section from 5 October caught my eye – I left it unread for an astonishing nine days. I’m glad I read it though. I got a big win.

            The Post’s business section for that day gives an overview of the 3rd quarter, going over market trends, business activity, and the like. Looking over a rather uninteresting article on the first page, I wandered into an interview with Ron Carson of Carson Wealth Management in Omaha. His firm has been ranked as the best independent financial adviser in the United States by Registered Rep. magazine. Discussing his investment strategy, he said something very important that validates my post The Economy (and other disasters):

 

“… we think we’re probably in a recession right now, and I wouldn’t own any of these assets unless I had them hedged on the other side. Nothing is exempt to a general decline in the market”

 

            Thank you, Mr. Carson. There you have it. Now is not the time to own stocks – even in profitable companies. In fact, the Economist released a graph today that illustrates just how long stocks market returns have been in the negative. With the patchy economy, we’re looking at a few more years of volatility. It’s a real shame – there’s a lot of money sitting around getting dusty. 

$BNZ more volume coming into this unknown ETF. Also look to nibble short, cant see much more upside in nzd/usd

Watch Out!! Low average volume of 33K, so is risky liquidity wise. Volume is picking up however.

Bollard could raise the central bank rate higher sooner than later (before the US does) but I doubt that though. Trend is long and in the short term may be a long trade but longer term you wanna be looking short - see what happens - Watch!

SGX Enhances Safeguards For Retail Investors

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             Five reasons for investors to be encouraged

It’s easy to become overwhelmed by the constant stream of negative news about the state of our country and the world. This feeling also makes it difficult to be confident as an investor.

 

At times likes these, a little perspective might be in order. A good place to start is to remember that smart investing is not dependent on today’s headlines, but about building wealth over a long period of time. With that in mind, here are five important reasons you should feel encouraged about your long-term investments:

 

#1 – A stock market with room to grow

The stock market (as measured by the S&P 500 ─ an unmanaged index of stocks and a benchmark measurement of the broad stock market) has regained much of the ground it lost between 2007 and 2009. In the 12 months ending June 30, 2011, the index generated a total return of more than 30%. Yet halfway through 2011, the index stood 15% below its peak reached nearly four years ago. Historically, the stock market trend has been growth ─ and there seems to be plenty of room for more of that. But even in light of the current bull market cycle, investors should always expect the stock market to fluctuate along the way.

 

#2 – Companies are profiting even in a modest economic recovery

Though the economy is not exactly growing at a sizzling pace, U.S. companies represented in the S&P 500 Index have the potential to generate record profits in 2011. Many firms have found ways to generate products and services in a more productive and cost-efficient fashion, which positions them for additional growth during more prosperous periods.

 

#3 – The “echo boomers” are emerging

An estimated 75 million children of baby boomer parents are now coming of age. They were born between 1979 and 1995 and are already a part of (or will soon be entering) the professional world. As they begin receiving incomes, they will begin buying homes, cars, and other essential (and non-essential) items. They make up the next great consumer class in America.

 

#4 – Capitalism is a worldwide phenomenon

Free markets are more widespread than ever before. Many of us grew up in a time when the U.S. and only a few other countries were capitalist centers. Now it is prevalent in places we wouldn’t have dreamed of a generation ago ─ including China, Russia and most of Eastern Europe. This trend is creating a burgeoning global middle class, and real consumers are emerging by the millions in many new markets, some with extremely large populations. This creates huge business opportunities for companies that are well positioned to capitalize on them. Growth is alive and well in many of these newly developing free markets as well as in established markets across the world.

 

#5 – The pessimists have been wrong

Investing in stocks means believing in the potential of businesses for years to come. Although pessimists in the current market call these “unprecedented times,” the same assumption was incorrectly made at other times throughout history. After a rough decade for stocks in the 1970s, one magazine ran a cover story on “the death of equities” that was followed by two decades of record returns for stocks. In the midst of the Great Depression, many questioned whether capitalism was still viable, but in the decades to follow America emerged as the world’s strongest economic power. There will always be doomsday pessimists. But while problems exist, our history shows countless examples of companies that uncovered innovative solutions to problems confronting consumers, businesses and society that allowed these firms to thrive. That process leads to new jobs, more economic prosperity and better returns for investors.

 

As an investor, consider whether the current market challenges are a roadblock that will prevent investment success, or the foundation of new opportunities for future profits. If history is any guide, investors who can afford to ride through short-term market swings will have the potential to realize future profitability.

The Investment Paradox

Ever wondered what is the most effective way to make investments in equity markets or mutual funds? When I decided that I wanted to create an investment portfolio, I spent a decent amount of time researching on the internet, speaking to people and reading popular investment magazines and books. It would have been foolish to put money on something without actually understanding what it entails, the pitfalls and the rewards, the dos and the don'ts. I had seen markets surge forward and knew of people who made a bundle of money. I had seen the markets tumble to new depths and the same people lost money and it was more than a bundle. What is the best way to invest money in the markets and at the same time protect yourself from the volatility that comes with the territory?

One of the strategies that appealed the most to me was to have a systematic investment plan. The basic premise behind systematic investment plan (SIP) is to allocate a fixed amount of money every month and invest it. Stock markets are cyclical in nature. There will be months when the stocks are trading high and there will months when they are trading low. By investing systematically every month you are effectively averaging out the cost of your investments, reducing your risks in a volatile market and increasing your gains. There are other advantages to consider, you will avoid having to make lump sum investments. When the money is going out of your pocket (or bank) in small amounts, it doesn’t hurt. The bottom line is that to think big in investments, start by thinking small.

Now it’s time to discuss the paradox. Systematic investments are nothing new. They have been around for many years now and many people have benefitted from it. The odd thing about these investments is that whenever the market falls, people stop their monthly debits. The flow of monies into the funds reduces alarmingly. At the same time people try to liquidate their investments putting redemption pressures on the fund itself. The point that perplexes me so much is that when equities crash, it’s precisely the time to continue with the monthly investments because you are buying stocks are much lower valuations.

Take the example of ELSS equity funds in India. March 2008, saw an inflow of 1317 crores in ELSS funds (approx. 263 million dollars @ 50 rupees a dollar). Subsequently the markets crashed like never before. April 2009, saw an inflow of 93 crores (approx. 18 million dollars). What that means is that while the markets crashed more and more people stopped investing in the market. Monthly inflows were not even 10% of when the market was at its highest.

That sounds logical doesn’t it? Why invest in equity markets when the value of your investments is going to fall and not grow? Flawed thinking in my opinion.

If you have invested in equities in 2007 and the early part of 2008, then you have purchased them at a higher value (compared to what transpired later on). If you stopped your investments at that time then you have deprived yourself of buying the same equities at a much lower price. Think of it another way, would you buy your favourite brand of jeans if it was on sale for 70% off? So why wouldn’t you apply similar thinking to your favourite equity which over a period of time will go back to its original price if not more. Not investing when the markets are down actually makes it very difficult for you to recover investments made when the valuations are high.

The problem I see with most investors is that they think of today or think about the next 6 months which is short sighted when you want to create wealth in an asset class such as equity. In order to be truly profitable when buying equities, I think requires a waiting period of at least 5 years or more. If your investment horizon is much shorter then you should look for alternate asset classes that can give you guaranteed but lower returns.

The last two months have seen an incredible growth in the Indian equity markets. The Sensex jumped from below 8,000 points to over 15,000 since the beginning of March 2009. Guess what, now that the markets are going back up, everyone is investing again. People tend to invest on higher valuations than lower. Strange, don’t you think?

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Analysis: Equities recast as "new bonds" after tough decade


Despite their billing as attractive long-term investment, world stocks have had a rough ride in the past decade.This year alone they lost 26 percent at one point after hitting a 3-year high in May, and over the last 10 years the total return on equities is 26 percentage points less than on bonds on a rolling basis, Reuters data shows.Fund managers have increasingly moved to low-yielding bonds, but they cannot afford to invest everything in fixed income and cash if they are to retain some sort of diversification.As a result, many are looking at dividend yields on stocks, some of which fetch 7 or 8 percent, as a sustainable source of income that bears fruit if you hold on to shares in the medium term to ride through a volatile period on stock markets.Dividend strategy has been popular for some time, but focusing mainly on the yield perspective of stocks may help give the underperforming asset class a new place in investment portfolios and potentially shield the market from the ebb of risk-on, risk-off flows.“Investors are looking at equities more as a dividend-paying play than a capital growth story. This is a particularly attractive strategy for pension funds for a longer-term horizon,” said Alan Higgins, head of investment strategy in the UK at private bank Coutts.“We have become more defensive, focusing on high-yielding equities. High-yielding equities tend to be very defensive."Coutts’ strategy involves underweighting equities and overweighting bonds, but it likes high-dividend stocks such as Vodafone, Royal Dutch Shell and Glaxo SmithKline, whose dividend yields are above 5 percent.The MSCI developed world dividend yield stands at 3.1 percent, much higher than core government bond yields from the likes of the United States, Germany or Britain.Higgins said income strategy is more attractive for investors with a 10-year plus investment horizon."On a 3-5 year horizon, while it is still attractive, the advantage from income approach is more marginal when you shorten your time horizon. This is a strategy recommended for an investment horizon of 10 years plus,” he said.According to Credit Suisse, companies including Pfizer, Kraft Foods, Philip Morris and Merck have credit default swaps below government’s and dividend yields above risk-free rates.GROWTH AND RETURNSThe prospect of slower global economic growth in the next few years argues against strong capital appreciation in stocks, whose returns are closely correlated with world output.The IMF said in its latest forecast that it expects the global economy to grow 4 percent in 2011 and 2012 compared with 5.1 percent in 2010. Advanced economies are expected to expand an unimpressive 1.9 percent this year.“In the … past 20 years or so, investing in equities was mostly about finding high growth companies. Now we think steady cash flow – often evidenced by high dividend rates – is a better way to find value in equities,” said Kevin Lecocq, chief investment officer at Deutsche Bank Private Wealth Management.“In developed markets, equities are becoming more like a cash cow, back to where we started: What can they return to shareholders? In the lower growth environment which we are in now you want profit returned to shareholders."Deutsche PWM recommends that investors "shorten duration” in equities, or move away from cyclicals and look at high-dividend stocks. The focus on the equity income stream allows investors to earn money in the shorter term than waiting for capital growth to come back.The growing trend of treating equities almost like a bond may also be attractive for those who want to keep exposure in emerging and frontier markets, many of which have underperformed their developed counterparts this year.Qatar’s stock market, for example, previously one of the best-performing frontier markets, has fallen 4.5 percent this year. But its expected dividend yield stands at 4.3-5.4 percent, the highest in the Gulf region after Oman, with some companies paying as much as 6-7 percent.“Dividend payment is becoming very important, and a high yield play is already there in Qatar,” said Sandeep Nanda, fund manager of Qatar Investment Fund PLC, which is 10 percent owned by the Qatari sovereign wealth fund.“It’s a sustainable dividend growth story.”