Archive for June 2009

Oil Price Spikes

June 30, 2009

Oil prices are up again on a number of factors, including fears for supplies after Nigerian militia attacks.  Oil companies shut various fields in the region near the attacks causing oil and Futures traders to jump on the commodity.

So, the question remains – what exactly is the deal with oil?  The International Energy Agency are in their most recent report saying that demand is set to rise by a decreased percentage from the last report.  Then over in the US they are talking of a rise in fuel demand, and over in Iraq there are large tenders for oil and gas contracts happening live on TV!

At the start of this year, oil was down to just over $30 a barrel.  Slowly it rose, and ever more optimism has begun to spread over the price – forecasts being raised on what the price will be by the end of the year – $70?  $75?  Over $80?

When the price reached $69 at the start of the quarter already, the forecast really looked good.  If it was this high now, what would happen next?  Then it fell more than expected and suddenly we didn’t seem so sure.  Now it is back up to over $70.  But the likelhood that it will be hiked up to as much as last year is unlikely.

So what gives?  And what do we want?  A return to some kind of even steam is the best situation and it looks like there’s a possibility this could happen.

Oil basics.  Sometimes its good to get back to them in a market where there is so much speculation.

On the financial news front – Bernie Madoff got his 150 years.  That well and truly is the rest of his life behind bars – and just where said bars will be is not yet decided.  Some are speculating that he will be sent to a medium to high security jail, and not a nice easygoing camp for white collar criminals.  Either way, the saga that has gripped us for some time now has had its ending.  For the victims, it continues.

Sentencing Today for Madoff

June 29, 2009

A few hours to go and Bernard Madoff will know what lies in store for him.  Sentencing for the disgraced former investment manager is due to take place today and the case has certainly been worthy of a finance soap opera…

Over $50 billion is the amount to which Madoff fooled hundreds of private and corporate investors, which range from small-time to Hollywood stars to banks to even charities.  What they all didn’t realise is that the investment scheme in which they put their money (and trust) was in actual fact a Ponzi scheme.  New investors were being paid with funds from existing investors rather than profit.  Apparently nobody noticed until the financial downturn and recession took hold – investors tried to withdraw funds and found there was not enough to cover them.

Madoff set up Bernad L Madoff Securities, his investment company, after a time as head of Nasdaq.  With a career that began at the age of 22, Madoff was a trusted and respected figure on Wall Street.  Many wealthy and high-profile investors placed their money in his hands, but also ‘regular’ families.

Victims and prosecutors are asking for 150 years for the fraudster, his lawyer for 12.  Either way, it looks as though the 71-year-old financier is facing the rest of his life behind bars.

While his was a very unique case, it is always wise to remain pro-active with regards to investment.  Even if a company is well known, make sure you find out as much as you can before investing or hiring a manager.

Share Dealing for Long Term Returns

June 19, 2009

Ok, so it isn’t the latest way to trade or invest, but give it a chance: share dealing.  One of the best ways to invest and yet in recent times often pushed aside for the more snazzy forms of investment trading, such as CFDs and Spread Betting.

They key to share dealing is that you have to be prepared to be in it for the long run.  If you want quick, speedy, high-risk trading then look to the world of Forex and CFDs, but if you want to slowly build up a wide portfolio and higher likelihood of good returns, think shares.

The strategy you want to work on is up to you and your investment manager.  Either you are prepared to give this plenty of time and attention, or you let the investment manager do the work – this depends on how much you are willing to pay.

The point is, while CFDs can be really exciting and adrenalin-producing, shares offer a long-term investment that may be more sensible and is less reliant on the market fluctuation.  Of course, share values go up and down as well but this is less the focal point than on derivatives trading.

Consider it.  Weigh up how much you are willing to invest, how much effort you personally want to put in, and what you think the best strategy is.  Now find a good broker!

Sainsbury’s to Sell Shares and Bonds

June 17, 2009

Shareholders at Sainsbury’s will be studying their share values closely today as the supermarket giant announced plans to sell GBP 445 million in shares and bonds in order to raise funds.  The supermarket plans to expand and grown further and faster this year.

But while the news made share values drop by 4.5 per cent this morning, is it really worth worrying?  After all, Sainsbury’s overtook Tesco this year with a rise in like-for-like sales to 7.8 per cent.  Tesco rose by just 4.3 per cent.

Shares trading will certainly be interesting in the wake of Sainsbury’s decision, though their CEO Justin King is certainly enjoying the ride.  After all, he has managed to buck the recession by introducing price cuts on 7,000 products and poaching customers from former number 1 Tesco.

Learn to Trade the Financial Markets

June 16, 2009

Investment trading is no longer an exclusive marketplace for suited City traders and investment bankers. You and I can take part! In fact, almost anyone can! Ok, so we have much to consider but it doesn’t require a massive budget and swathes of cash to start investing in a global market. And it doesn’t have to involve leafing around the FT pretending we know what the endless lists actually mean.

All you need is to consider some basics:

1. How much can you afford to invest?

2. How much can you afford to lose?

3. What markets interest you – currency, general shares, Futures, Metals?

4. What kind of trade interests you – shares dealing, Forex, Spread Betting, CFDs?

Once you start finding out about these markets and trade types, it becomes so interesting. They are all exciting, constantly changing and allow for huge returns. But careful: make sure you do some basic research before jumping in. And then choose a decent broker. A good broker will make you aware of the risks but it is not their job to look after you or take responsibility for your poor choices or a massive loss!

You stand to make a really healthy increase in your overall wealth levels if you are a successful trader. If you want to test out the markets, all good traders offer ‘demo’ accounts, which allow you to trade with virtual funds. There’s no better way to find out what kind of trader you are.

BRIC – Emerging Market Economies

June 16, 2009

Combined they cover 25 per cent of the world’s land mass and have 40 per cent of the world’s population.  Their total GDP is in the trillions.  Who are they?  Why, BRIC of course!

BRIC – an acronym coined by US investment bank Goldman Sachs in 2001 – is used to describe Brazil Russia India and China, the four main emerging market economies.  Today, they meet in Russia.  Their influence over the rest of the world has grown since the downturn and they are calling for greater recognition overall.

There was even talk of calling for an alternative global reserve currency – this was overturned by the Kremlin and subsequently drove the value of the remaining reserve currency (the US dollar)up.

Nevertheless, financial markets and US politicians were unsettled.  What if large dollar asset holders were to go elsewhere?

It is hard to imagine an alternative would actually be considered now, but it is true that as the power and influence of the emerging market increases, so does the importance of them as asset holders.