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Posts Tagged ‘money-market’

There are some speculations, but some analysts said that commodity stocks are the next huge thing in the money market. Maybe not as of this moment but by being patient and buying it now, you may not yet feel any rising, but in the next 6, 9 or 12 months things will surely step up.

As you well know, sell-off has been in a free fall now for commodity stocks. If you will buy now for less the price and just buckle up and accept the pain of the losses in the following months, you may understand what these financial analysts are saying. Things will really pull off, and when it do, you will surely see the return of investment.

Actually, growing demand for commodities in rising economies like China, India, Brazil and the Middle East are still going up.

The demand for commodities on developed countries are in declined now and their economies are slowing down.

The problem now is with the supply and not with the demand. The issue on the global capital crisis that lead to problem in lending has dried up for smaller players. Yes, indeed these companies like the ones from the oil industry need capital to fuel them up in supplying the countries demand, and without these supplies, demand will not sufficed.

Also, one issue now is the falling oil prices. And this will really hurt the production and exploration of oil companies because it will not be profitable for them to continue producing if they will only sell it half the price than it should be.

The current crisis will surely make the supply and demand gap grow tremendously.

If you will just analyze this, if you will buy these commodity stocks now, time will come when the demand will rise again in the developed countries together with the current demand on developing countries, and with the very tight supplies now because of limited capital for production, there will be big returns in these stocks.

The real test here is if you can stand from the storm. The return of the investment is for long term, maybe 1 or 2 years from now. It’s just a matter of time, and you’ll need to have lots of patience to weather things down.

And if you agree with me, this is the right statement from Warren Buffet for what is happening now, “buy fear and sell greed”.

Just like what I post in the headline, G-7 financial leaders guarantee to take all necessary steps to unfreeze credit and money markets to prevent a global financial meltdown since the Great Depression in the 1930s.

Germany and France endorsed the plan of the United States to buy equity stakes in a very broad variety of banks and financial institutions.

The Dow Jones industrial average plummeted within 1,000 points before closing last week. On Friday, investors’ loss came almost to $100 billion.

Panic is the cause of this turmoil, the Financial Times reported this last week. Many investors panicked and sell that prompted the crash in the stock market last week.

The unstable swing in the stock market this past two weeks reminded us a lot like what happen in October 1929 when the Dow Jones industrial average gyrate sharply on October 23, Wednesday, and then came to a free fall the next day and it became known as “Black Thursday”.

The next day, a banker tried to save the day by buying shares in steel, and everyone thinks that this will help start the rebuilding of the market; however, the following week, seems to be much nastier than before because there seems to be no one interested to buy anymore and everyone were selling.

The index crashed by 13 percent and after that, the market took a beating again for another 12 percent. By early November, 50 percent was lost in the stock market’s value and many Americans saw their wealth slowly disappeared.

And what will you expect for the normal employees to experience? Of course, layoffs, millions were laid offs. Jobless Americans roam the streets. They all expect a dole out from the government to weather those times. If not only for those brave and cunning businessmen and entrepreneurs that tried to succeed, it might last much longer than expected.

Let’s all hope that history will not repeat itself because we don’t want another great depression to be felt by everyone now, because it is really terrible and awful to be in this state of life again.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…

The usual saying is that investors should create or focus on their assets and have little debt as possible. Many individuals are now learning that to build net worth through books, seminars and financial gurus that taught, “Managing what you owe” is as important as “Managing what you own.” Therefore, your home-financing strategy should be a key component of your financial plan to ultimately help you build your net worth and get out of the rat race.

Did you know that your mortgage is one of the largest financial transactions you will ever make? That’s why it is important to select the mortgage program that not only meets your home-financing needs, but that also has a potentially positive impact on your financial plan.

As I see it and I think many of you will disapprove this, 15- and 30-year fixed-rate mortgages are not the best choice in today’s financial environment. The appropriate integration of home financing strategies into your financial plan can actually turn your mortgage into an asset. The right mortgage can help you reduce interest expense, maximize potential tax deductions and avoid disrupting a well-planned investment strategy to help your net worth.

What’s the Advantage of Early Paying Off your Mortgage?

Early paying off a mortgage is often more of an emotional goal rather than a sound financial strategy. Paying down principal early may be financially correct for those who are heavily invested in short-term investments, such as certificates of deposit and money-market funds, if the mortgage interest rate is greater than the return on such investments.

Compare your mortgage interest rate with the rate of return of an investment portfolio. Continue making standard monthly mortgage payments when your investment return rate is higher than your mortgage interest rate.

Pay off your mortgage early when your investment return rate is lower than your mortgage interest rate. However, since mortgage financing is generally one of the least costly sources of funds available, mortgage prepayment may not be financially correct for long-term, active investors. Always compare investment earnings with the interest paid on borrowed funds, and keep in mind that earnings on most investments are taxable, while mortgage interest is generally tax-deductible.

There are now mortgages that allow you to pay only the interest portion for a period of time. A disciplined investor can take advantage of these programs to:

• Maximize potential tax deductions.
• Invest or use the payment savings for other more financially intelligent purposes.
• Lower monthly payments.