|
|
|
"Bankers' Banks"- The Role of Central Banks in Banking Crises
Central banks are relatively new inventions. An American President (Andrew Jackson) even cancelled its country's central bank in the nineteenth century because he did not think that it was very important. But things have changed since....
How to Make Big Profits with Currency Trading Systems
How to Make Big Profits with Currency Trading Systems
Currency trading systems have become more popular than ever in recent years.
Here we will look at the advantages of currency trading systems and how to pick one that's right for you.
Trend...
The Key To Protecting Your Money
Have you ever experienced a major paradigm shift? You know, the
kind where you think you already know something about
something...
But suddenly, you learn something new about that 'something'
that changes your whole perspective and outlook...
What is a Forex Market Maker?
The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment’s notice. Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that.
...
Why Demo FX Account Performance Is Often Better Than Real Account Performance
Over the past several years, the popularity of online currency trading has grown substantially. Each day, online FX brokerage firms attract new investors - each of them lining up with a glint in their eye, lured in by promises of easy money. ...
|
|
| |
|
|
|
|
|
|
Return on Investment Guidelines
Return On Investment Guidelines
By William Cate
July 2004
[http://home.earthlink.net/~beowulfinvestments/]
[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
Investment reward should be a function of speculation risk. The investor's goal should be to have a reward that is a multiple of his risk.
Breakeven ROI For Startup Companies
If an angel investor is considering financing a local startup company, he needs a sevenfold Return on Investment (ROI) to breakeven. The simple reason is the U.S. Small Business Administration will tell anyone that only 15% of startup local companies succeed.
Thus, 7 X 15 = 105%, just over the breakeven point for his original investment. In my way of looking at investment, those are dreadful odds.
If a venture capitalist is considering financing a high tech startup company, he needs one hundredfold Return on Investment to breakeven. Only one High Tech startup company in one hundred makes money. Those odds are far worse.
Yet in the past five years, hundreds of billions of investment dollars have been washed away investing in such companies. And it's not only been the funds of the Venture Capitalists, but the additional billions of the small capital investors who then bought into the media and stock hype of these useless, non-productive companies when they went public.
Breakeven ROI for Investors Playing the OTCBB Market
Over 98% of OTCBB companies fail within five years. If you are a small capital investor and invest in one of these public companies, you need to eventually sell your shares for forty nine times what you paid for them to breakeven.
If you are a conservative investor and realize that inflation must eventually destroy the U.S. Dollar and thus you invest in Junior Resource Companies (mining, natural gas, minerals) trading in the US or Canada, you need to eventually sell your shares for two thousand times what you paid for them to breakeven. Here's why.
A Winning/Losing Investment
The success rate of mining exploration companies is about one in every two thousand. Among the best performing mining exploration stocks of the 1990s was Bre-X. Adjusted for splits, it climbed to US$240/share. Had you paid less than ten cents a share for this stock, it would have been a breakeven or potentially profitable investment.
However, no matter what you paid, an investment in Bre-X proved to be a losing investment, because the company was a clever stock swindle. The conclusion is that anyone who invested in Bre-X shares for more than ten cents was making a losing bet.
Do As They Do
As a wise old British Investment Advisor, Harry Hone, observed to me in 1980: If the US Dollar and British Pound are about to become worthless, why are all the hard currency gurus so anxious to take paper currency for their invaluable gold?
His point was simple. Do what people do, not what they say. And, I've learned over the years that fads and promotions are never good investments. They can be good speculations IF you enjoy speculating and can afford the losses. There will be many of them.
Inflation and Taxes Are Factors
Annual inflation reduces your buying power. In recent years, the U.S. Government reports a 3% annual inflation rate. The business community doubles it, so that it
better reflects the actual rise in living costs. Many investments are taxed, so you must adjust the inflation rate by the tax rate to find the breakeven point of any investment.
To breakeven on a US$100 taxable investment, you must earn US$10 in interest. State and Federal income taxes reduce your profit to US$6 for the year. The US$106 will buy the same amount of goods and services, as did the US$100 a year earlier. That will be an actual breakeven, not a profitable investment.
Many limited-risk cash investments do not meet the breakeven test. U.S. Passbook Bank Account interest rates are a prime example of an annual losing investment strategy against inflation and taxes.
Cash is a Position and a Good Measure of Risk/Reward
What you can earn with limited risk cash investments is a good guide to what ROI you should expect from high-risk investments. Here are a few current examples of limited risk cash positions.
1. Cash invested in a 401k Retirement Plan. It's in mutual funds operated by a major U.S. Insurance Company. The ROI is subject to deferred taxes. Current annual ROI is 22%
2. U.S. Dollar accounts in European Banks are paying between 11% and 15%. All these banks survived the 1929 Crash and, later, the 10,000+ bank failures of 1932.
3. Short selling OTCBB stocks has paid about a 32% tax free ROI for the past decade. With a 98+% failure rate of OTCBB companies, there is less than a 2% risk of failure in such short sales. And there are ways to mitigate that risk to well under 2% risk. The potential reward is 100% and usually takes less than three years to achieve. However, you do need a significant cash reserve position to begin this investment game.
4. California Real Estate has shown a consistent 20% annual appreciation for the past several years. When you put 20% down on a property, your annual ROI is 100%.
The GVIC ROI
The Global Village Investment Club (GVIC) risk is less than that of OTCBB short selling. If you assume the GVIC member's profit is taken in 5.5 years, the ROI is 100%/year.
Risk/Reward
You can usually determine the risk of any investment by knowing the failure rate of firms in that industry. Conservative investments like municipal bonds have low annual failure rates. Speculative Investments, like commodities and futures trading, have high failure rates. Once you know the risk, you must adjust the reward by inflation and taxes to find the breakeven point for the investment.
Many conservative investments are bad investments. Most high-risk investments are bad investments. If more investors viewed ROI as a favorable Risk/Reward ratio, there would be fewer wealthy people dying broke. And, there would be far fewer middle income people making terrible "bets" on the stock markets.
To contact the author: Visit the Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit the Global Village Investment Club Website:
[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
About the Author
He has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
|
|
|
|
|
| Currency Trading, Forex Trading, Forex, Online Currency Trading |
| Offers 24 hour online currency trading for institutions and professional traders. |
| www.fxcm.com |
|
| OANDA FXGame - Currency Trading Demo Platform |
| You can start playing the currency trading market with real market conditions ... The platform was created with the goal of making currency trading ... |
| fxgame.oanda.com |
|
| Forex | Forex Trading | Forex Minis | Online Currency Trading |
| FOREX.com - THE site for forex trading. 24hr commission-free currency trading w/ real time execution and guaranteed fills. Forex mini accounts from $250, ... |
| www.forex.com |
|
| Currency Trading News, Forex Trading News, FX News, Forex News |
| Currency Trading News, Forex Trading News, FX News, Forex News - Daily FX. |
| www.dailyfx.com |
|
| Currencies - Currency Converter & Latest Rates at CNNMoney.com |
| Dec 6 1:18pm ET †, US $, UK £, Japan ¥, Euro €. US $, 0.5079, 115.05, 0.7517. UK £, 1.969, 226.50, 1.4798. Japan ¥, 0.008692, 0.004415, 0.006533 ... |
| money.cnn.com |
|
| FOREX Advisory |
| The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with ... |
| www.cftc.gov |
|
| Forex Trading: Online Currency Trading from Global Forex Trading |
| Global Forex Trading is the premier online foreign currency trading firm and a primary market maker. To learn more about forex trading, visit GFTForex.com. |
| www.gftforex.com |
|
| Amazon.com: Foreign Currency Trading: From the Fundamentals to the ... |
| Amazon.com: Foreign Currency Trading: From the Fundamentals to the Fine Points: Books: Russell Wasendorf by Russell Wasendorf. |
| www.amazon.com |
|
| Forex, Online Currency Trading, FX, Foreign Exchange | ACM Forex |
| Forex Trading with The Forex Broker. ACM offers online currency trading, commission-free, tax-free, lowest forex spreads on the market, guaranteed fills, ... |
| www.ac-markets.com |
|
| OANDA FXTrade - Currency Trading, Forex Trading, Online Currency ... |
| Currency Trading with FXTrade, leader in online currency trading, provides real-time execution, free forex charts and quotes, and 24 hour forex trading. |
| https: |
|
| Forex-Day-Trading.com - Currency Trading with FREE Training |
| Learn how to day trade currencies with our free training. Try a free forex trading demo for 30 days. |
| www.forex-day-trading.com |
|
| Forex Online Currency Trading: Welcome to Global Forex |
| Global Forex offers online currency forex trading at inter-bank FOREX rates. Try our FREE online forex demo trading system. |
| www.globalforex.com |
|
| Forex trading - Realtime Forex online currency trading |
| Realtime Forex offers commission-free online currency trading on live foreign exchange prices. Realtime Forex’s currency trading service also includes free ... |
| www.realtimeforex.com |
|
| Forex Blog |
| Forex news blog with daily commentary. Has a good beginner's article. |
| www.forexblog.org |
|
| Common Questions About Currency Trading |
| Whether you're puzzled by pips or curious about carry trades, your queries are answered here. |
| www.investopedia.com |
|
| OANDA FXTrade - Currency Trading Basics |
| Currency Trading Basics. Exchange Rates and Spreads: ... In currency trading, these codes are often used to express which specific currencies make up a ... |
| fxtrade.oanda.com |
|
| Currency trading, free forex charts, news and analysis |
| Online currency trading with technical analysis, charts and forex news. |
| www.gfforex.com |
|
| Finance - Currency-Trading Ezine Articles |
| EzineArticles.com allows ezine or email list publishers to upload or download free expert content that can be used within email newsletters or websites. |
| ezinearticles.com |
|
| MGFOREX |
| MG Financial Group - Forex, FX, Online Forex Trading. |
| www.mgforex.com |
|
| DirectoryM - Debt Settlement Solutions |
| Simply provide your contact details and describe your needs to receive a free consultation from business or personal debt service providers. |
| www.directorym.com |
|
|