The following hilarious spoof is courtesy of David Fuller’s Fullermoney newsletter (with thanks to Investment Postcards too):
Dear investor, we’d like to take this opportunity to update you on the recent performance of our hedge fund, Short-Term Capital Mismanagement LLP.
As you know, market selection for the entire fund is guided by a proprietary investing tool we like to call “a dartboard”. Once the asset classes are decided, individual security selections are generated by digitizing our unique hexagonal cuboid models. Unfortunately, it transpires that our hexagonal cuboids are not as unique as we thought. Hundreds of other hedge funds possess identical dice. The technical term for this is a “crowded trade”. You may also see it referred to as “climbing on a bandwagon already headed for the wall”.
I dislike paying taxes as much as the next guy. But instead of complaining I’ve put my money in investments that give me tax breaks like real estate and oil drilling programs.
However, some people hate paying so much that they’re willing to live below the poverty level just to avoid “qualifying” for taxes. Here’s a war protester that refuses to pay for the Iraq war and has decided to live on less than $12,000 a year.
Here’s a parody from Saturday Night Live which explains why so many of us have trouble staying out of debt.
Seriously, most people get into debt because they buy stuff they can’t afford and most likely don’t need. According to The Millionaire Next Door, most millionaires live within their means without getting sucked into the consumer-lifestyle trap. And they pay for most of their purchases with cash too (or they pay off their credit cards in full every month).
But you must have heard about the hedge funds that invested in collateralized debt obligations on subprime residential mortgage-backed securities and are now worthless, mortgage companies like Novistar and American Home Mortgage going bust, home-builders like Beazer Homes (BZH) and WCI Communities Inc (WCI) rumored to be on the verge of bankrupcy, the widespread drop in home prices and a huge spike in the number of foreclosures.
With all this negative sentiment, I bet you’re wondering if it’s a good idea to invest in real estate?
The past few weeks have certainly been pretty volatile in the stock market. After hitting new highs for the past several months, all the market indices plummeted on July 17th. Its now mid-August and the markets have dropped significantly since then. Not only the US stock markets, but markets all over the world have dropped in unison. Last Thursday (August 16th) saw a retest of the lows created earlier in the year. On that day mutual funds recorded outflows of $19.9 Billion dollars as nervous investors pulled the plug on their investments. As mutual fund managers have to give money back to their investors, they often need to liquidate their positions at the worst time. The bad stocks have dropped the most, so in order to raise the most capital, the sometimes sell the good stocks that have appreciated a lot. This caused huge drop in almost every asset class.
The past week has seen a dramatic drop in the global stock markets. It first happened in the US and then spread to global markets. It seems to have been started when Bear Stearns announced that 2 of its Asset-backed Hedge Funds where completely worthless.
The two bankrupt funds, the Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. and the Bear Stearns High-Grad Structured Credit Strategies Enhanced Leverage Master Fund Ltd. had bet heavily on subprime loans. (Funnily enough, these sub-prime Collateralized Debt Obligations or CDOs had received AAA ratings from credit-rating companies like Moodys). Most of the investors had no clue what the Hedge Funds were investing in. In fact, the names are rather complicated and misleading too. (Note that investors broke Warren Buffett’s rule of investing: If you can’t explain what a company does to a six year old, you shouldn’t invest in it).
Value stocks typically return a dividend between 2.5% to 10% depending on the industry they’re in and the prevailing market conditions. Growth stocks typically do not provide a dividend, and if they do its usually less then 2.5%. They usually retain their earnings for future growth. Many stock analysts and investors believe that returning money to shareholders means that the management is running out of ideas on how to grow the business and avoid dividend paying stocks like the plague! Personally I’m partial towards dividend-paying stocks. I especially like the Canadian Income Funds that invest in Oil and Gas.
The last time I wrote a post about investing in Canadian Royalty Trusts was a few months ago. Since then the price of Canroys has increased and the yields have dropped. If you missed that opportunity to invest, you might have been put off by the lower yields.
However, today’s 200 point drop in the Dow Jones Industrial average has provided another a good opportunity to buy them. Its also a good opportunity to invest new money into them.
One of my wife’s childhood friends asked me a very profound question. “You know a bit about investing, don’t you? So what’s asset allocation?”. The friend is pretty smart. She went to school for several years and became a pharmacist and can rattle off various diseases, symptoms, drugs and side-effects which I find quite entertaining (somehow my wife doesn’t share my enthusiasm for “Stump the Pharmacist”). But she doesn’t know anything about investing (or much about anything money-related for that matter).
If you’re like me, you enjoy reading facts and figures about various countries. While sitting down to do this may sound rather monotonous, the Economist.com has a rather novel way of feeding you this information in small doses. Its offering a free screen saver that provides all this data with a graphical rotating globe.
The Economist Screensaver is a treasure trove of fascinating data on 66 of the world’s major economies. Drawing on the 2007 edition of the bestselling “Pocket World in Figures”, it presents facts and figures on population, demographics, the economy, society, health and education around the world. The screensaver also features a ticker displaying the headlines of new articles published on Economist.com, as well as some of the witty one-liners used in The Economist ’s renowned advertising campaigns.
mortgage refinance - mortgage lender provides discounted mortgage refinance rates, fha refinancing for bad credit, home equity loans & 2nd mortgages
Car needs repair? Need to make an important trip? Get a payday loan . A $500 payday loan is for people who want to manage their expenses before their expenses manage them.
