InvestMacro Forex News

By MoneyMorning.com.au

Eleven years ago Warren Buffett’s Berkshire Hathaway underwrote an insurance policy for a US$1 billion game show prize.

In return for underwriting the prize, Berkshire Hathaway received a US$10 million premium.

Despite the risk, the odds of Buffett’s firm having to pay out on the prize were slim, one million to one. In order to win the prize, the contestants had to have the same six-digit number as that selected at random…by a chimpanzee.

It’s no surprise that the contestants didn’t come close to winning this ‘monkey derivative’ as a Bloomberg reporter labelled it (we’ll excuse the reporter’s error in confusing a monkey with a chimp). The billion-dollar prize went unclaimed and Warren Buffett’s Berkshire Hathaway got to keep the US$10 million premium.

Well, despite his reputation as a conservative value investor it seems Buffett’s appetite for risky bets hasn’t diminished. This week Berkshire Hathaway revealed it’s underwriting another billion-dollar bet…

This time the bet appears even safer. In order to claim the prize the winner needs to correctly predict the winning team in all 67 games of the US NCAA college basketball tournament.

The odds of anyone winning are nine quintillion to one (that’s a 9 with 18 zeros!).

It’s not clear how much Berkshire Hathaway will receive in premiums this time. But it’s likely to be in the millions of dollars.

If you’ve got the capital to guarantee a one billion dollar prize pool in return for a few million dollars in premiums on events with an almost impossible chance of occurring, then heck, that’s a good money-spinner.

But these types of opportunistic income streams aren’t available to most investors. Most investors have to rely on more conventional ways to earn an income.

However, if you put your mind to it, there is a way to create an income stream where, like the Buffett bets, the odds are stacked in your favour – and thankfully it doesn’t involve chimps or monkeys…

Retirement Isn’t Just About Saving

Our old buddy Nick Hubble is one of the smartest thinkers we know.

He’s always coming up with intriguing ways for investors to safely save for retirement. But saving for retirement is only half the story.

It’s also important for retirees to earn money in retirement without taking unnecessary risks.

It’s something most people don’t think about. They think that once they’ve saved a bunch of cash during their working lives that’s where things end. But it’s not.

Earning an income in retirement is just as important as earning an income during your working life. Here’s why.

Don’t Sell Your Capital

Think about it this way. If you gave up work today, how would you fund your lifestyle?

If you don’t have an income you’d have to sell your possessions – your home, car, jewellery, furniture, and so on. That would probably get you by for a while. But what would you do after you’ve sold every last thing you own?

You’d have to go back to work. That may be easy to do when you’re in your 30′s, 40′s, or even 50′s. It may not be so easy when you’re in your 60′s, 70′s or 80′s.

The simple fact is that if you have to use your capital, you’re slowly eating away at your income producing assets. And once you’ve sold your capital you can’t earn an income from it.

That’s where Nick’s income strategy enters the frame.

Our view is that investors should have up to half of
their investible assets in stocks. This should be a combination of growth and income stocks.

The rest of your investible assets should be in a combination of cash and gold. The amount you decide to allocate to each of these asset classes is up to you depending on such things as your attitude to risk and your age.

The problem with stocks of course is that sometimes they can fall in value. Falling markets usually happen because company profits fall. When company profits fall it can result in lower dividend payouts, which can mean a lower share price.

If you’re a retiree who depends on dividends for income that can be a problem. If the dividends no longer meet your living expenses you may have to sell shares to make up the difference. Except of course, if the share price has dropped you have to sell your shares at a lower price than you’d like.

That’s a double punch in the teeth, because as we mentioned before, if you sell your capital it means you’re selling an income-producing asset at a knockdown price.

Another Way to Earn Income

That’s where Nick came up with the idea of what he calls a ‘security ladder’.

He explains how it works in a report he’s prepared for Money Morning readers. You can check out the details here.

Simply put, it’s a neat strategy that involves investing in a particular type of security (not shares) that’s almost guaranteed to pay you a return.

In fact, you could even say it’s a ‘government-backed’ guarantee. Of course, that doesn’t have the same cast-iron assurance that it used to have. But where these particular securities are concerned, government backing does count for something.

Frankly, Nick’s ‘security ladder’ strategy is about as good as it gets when it comes to locking in a steady income stream.

Hitting retirement and then working out how to pay for your lifestyle for another 20, 30 or even 40 years after you retire can be a daunting thought. And planning for it isn’t something you should take lightly.

So if there was a way to reduce the worry and invest in a secure and reliable income stream, without having to worry about the ups and downs of the stock market, well, we can’t think of a single person who wouldn’t want that level of income security.

We love stocks as a great way to earn an income. But we also know they can be risky and volatile at times. Nick’s strategy doesn’t replace stocks. It’s a complementary way to achieve a virtually guaranteed income stream during times of stock market volatility.

It’s worth checking out.

Cheers,
Kris+

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By MoneyMorning.com.au

Opening a live Forex account is a big step for beginner traders. Forex markets are a great way to invest, but there is a lot of risk involved, so you need to know you’re ready before you open a live account. Before opening, you should have chosen a platform and traded successfully with a demo account. You need a strong, written trading system, and some capital you can afford to lose. You also need to prepare for the mental pressure of trading with real money.

1. A Demo Account

Run a profitable demo account for at least a couple of weeks before opening a live account. If you can’t make money with a forex demo account, you won’t make money using a live account. A demo account tests your trading strategies, mental strength and financial management without the risk and expense of a live account. Fixing a mistake on a practice account is as simple as opening a second account. Fixing a mistake on a live account costs real dollars.

2. A Tested Trading System

Your trading system is what makes you money. Without one, you are gambling on the market moving in the right direction. Good traders analyze trades and track results carefully. Write your trading system down on a piece of paper with clear, unambiguous signals for entry and exit points. As you trade your demo account, hold yourself accountable to these signals and record when and why you deviate from them. If you don’t use a system, you will lose money.

3. Capital You Can Afford To Loose

The money you deposit in your Forex account should be money you can afford not to get back. Even the most experienced traders have losing streaks, and so don’t be surprised if you start on one. Many traders have profitable forex systems, but it takes time to build your small initial investment to a large fortune, and trying to get rich quick is as good as throwing your money into a wishing well. If you’re starting off with a small investment, wiping out your account is a very real possibility. Don’t let it leave you in a financial bind.

4. A Risk Management Plan

All investments involve some risk of loss, but forex carries more than most. Successful traders limit their losses if a trade goes against them. In fact, most traders are wrong about half the time, but successful traders are just better at limiting their losses than unsuccessful traders. Without risk management, you are in danger of triggering a margin call when the money leaves your account, taking away any chance you have of making a profit.

5. Mental Strength

Forex success requires tremendous self-discipline. Trading real money is an emotional rollercoaster. You need the presence of mind, mental stability and patience to stay controlled under extreme pressure. It takes a long time to develop this strength, and it should be done with a practice account. After all, if you can’t follow your trading system with a practice account then a live account will only make it worse.

If you have the mental strength, capital and practice, it may be time to open a live account. If you’re struggling with your demo account, spend a little more time practicing before taking the plunge. Opening a trading account before you’re ready is like writing a check to your broker, and you only want to do that after you’ve made some money.

To learn more please visit www.clmforex.com

Disclaimer: Trading of foreign exchange contracts, contracts for difference, derivatives and other investment products which are leveraged, can carry a high level of risk. These products may not be suitable for all investors. It is possible to lose more than your initial investment. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. A Product Disclosure Statement (PDS) is available from the company website www.clmforex.com. Please read and consider the PDS before making any decision to trade Core Liquidity Markets’ products. The risks must be understood prior to trading. Core Liquidity Markets refers to Core Liquidity Markets Pty Ltd. Core Liquidity Markets is an Australian company which is registered with ASIC, ACN 164 994 049. Core Liquidity Markets is an authorized representative of Direct FX Trading Pty Ltd (AFSL) Number 305539, which is the authorizing Licensee and Principal.

Source: Tom Armistead of The Energy Report  (1/23/14)

http://www.theenergyreport.com/pub/na/get-positioned-now-for-the-next-great-natural-gas-switch-ron-muhlenkamp

Cheap natural gas means Americans can buy the equivalent of a barrel of crude for $35. That’s the exciting reality that has Ron Muhlenkamp, founder and portfolio manager of Muhlenkamp & Co. Inc., putting his investment dollars behind the next great fuel switch, this time in the transportation sector. With his fund having finished 2013 with a tidy 34.4% gain, he is now eyeing companies poised to outfit the U.S. transportation sector with all things natural gas, from fuel tanks to motors to filling stations. And let’s not forget the folks who get it out of the ground. As Muhlenkamp tells The Energy Report, we’ve only just begun, so there’s plenty of room to run with well-positioned companies.

The Energy Report: Ron, welcome. You are making a presentation at the Money-Show conference in Orlando in late January. What is the gist of your presentation?

Ron Muhlenkamp: The gist of my presentation is that natural gas has become an energy game changer in the U.S. We are cutting the cost of energy in half. This has already happened for homeowners like me who heat their homes with natural gas. We think the next up to benefit is probably the transportation sector.

TER: What is behind this game change?

RM: The combination of horizontal drilling and fracking has made an awful lot of gas available cheaply. There’s a whole lot of gas that’s now available at $5/thousand cubic feet ($5/Mcf) or less. I live in Western Pennsylvania, and 30 years ago, Ray Mansfield was in the oil and gas drilling business, having retired from the Steelers. He said, Ron, we know where all the gas is in Pennsylvania; it’s just a matter of price. If the price runs up, we will drill more. If the price runs down, we will drill less. Any way you slice it, we are just sitting on an awful lot of it.

Two years ago, we had a warm winter, and the price of gas actually got down to $2/Mcf. You saw an awful lot of electric utilities switch from coal to gas. Literally in a year, what had been 50% of electricity produced by coal went to 35%. The difference was made up with natural gas.

In transportation, the infrastructure to make the switch to natural gas has not been in place. We didn’t have the filling stations or the trucks. Now, the trucks are just becoming available. You can buy pickup trucks from Ford Motor Co. (F:NYSE) and General Motors Co. (GM:NYSE) that run on natural gas. Furthermore, Clean Energy Fuels Corp. (CLNE:NASDAQ) has established natural gas filling stations coast to coast, every 250 miles on five different interstate highways.

Westport Innovations Inc. (WPT:TSX; WPRT:NASDAQ) has been producing 9-liter (9L) natural gas engines. Waste Management (WM:NYSE) uses 9L engines on garbage trucks and expects 85–90% of its new trucks to be natural gas-fueled. Westport has just come out with 12L engines, which are used for over-the-road trucks. I don’t expect those engines to get adopted as fast as the utility industry made the switch to natural gas, but there has been a fairly rapid adoption in the waste management industry. I think we’re on the cusp of a major trend.

TER: That fuel switching in the power industry has been going on since 2008. Is it still progressing at the same rate or is it picking up?

RM: It’s pretty much leveled off. In fact, there’s probably a little bit less gas used than when gas was below $3/Mcf. The latest numbers I’ve seen show that we’re running about 37% coal and about 33–34% gas. Going forward, I think coal use will continue to decline, and natural gas use will continue to rise. The big switch is over in utilities, and it will be gradual from here. But we’ve barely begun the transition with transportation fuel.

TER: So the game has changed for the power industry, and the transportation industry is next. What other changes do you foresee in the future?

RM: We will continue to use more natural gas and less crude. Right now, for equal amounts of power, crude oil is priced at about three times the natural gas price in the U.S. That is too wide a spread to ignore, economically.

The Natural Gas – Crude Oil Spread

source: Bloomberg

Incidentally, in Europe, natural gas is still at $12/Mcf. It’s on a par with crude. Most European chemical plants use a crude oil base to make chemicals. U.S. plants use a natural gas base. Natural gas becomes ethane, then ethylene, then polyethylene and then plastic. So producers of plastics or the feedstocks for plastic in the U.S. now have an advantage they didn’t have before.

In Japan, the natural gas price jumped from $12 to $16/Mcf just after the tsunami wiped out the Fukushima nuclear power plant. To ship gas from the U.S. to Japan, the cost of compression, liquefying and decompression is about $6/Mcf. Executives at U.S.-based companies like Dow Chemical Co. (DOW:NYSE) are saying they don’t want the U.S. to export gas because that would drive the price up. But domestic gas consumers already have that $6/Mcf advantage. Meanwhile, in Williston, N.D., the natural gas price is effectively zero. Producers still flare it because they don’t have the pipelines to take it out of the area. So this price advantage will be with us in North America for quite a long time. It’s huge. That’s why we call it a game changer.

TER: So how can investors take advantage of these changes?

RM: Well, any number of ways. We hold some fracking services companies, like Halliburton Co. (HAL:NYSE). We own a couple of drillers, including Rex Energy Corp. (REXX:NASDAQ). And we invest in the people who build natural gas export facilities, such as Fluor Corp. (FLR:NYSE), KBR Inc. (KBR:NYSE)and Chicago Bridge & Iron Co. N.V. (CBI:NYSE).

I already mentioned companies building natural gas-fired engines, including Westport, which makes a kit to modify a common diesel engine. And because natural gas will require new, larger fuel tanks, investing in companies that build natural gas tanks is another way to play it. One of the disadvantages of natural gas versus gasoline or diesel is compressed natural gas takes about three to four times the volume to get the same range. Liquefied natural gas (LNG) takes about two times the volume. Of course, compressed natural gas is stored in pressure tanks, so it takes a pressure tank of larger size. Fuel tank conversions have been almost as expensive as the engine conversions. 3M Co. (MMM:NYSE)has gotten in that business, as has General Electric Co. (GE:NYSE). There’s another outfit called Chart Industries Inc. (GTLS:NGS; GTLS:BSX), which has already run a good bit.

We want a foot in each of these camps because we’re not quite sure who the ultimate winners will turn out to be, but we know what the product lines will have to be. Don’t forget about the companies that own the LNG export facilities—Cheniere Energy Inc.’s (LNG:NYSE.MKT) facility should be up and running in probably 2015, but, again, that stock has run up a good bit, too.

Pipelines will benefit from the switch. One of the biggest pipelines in the country is Kinder Morgan Energy Partners L.P.’s (KMP:NYSE) Rockies Express Pipeline, which stretches from Northern Colorado to Eastern Ohio and ships gas east. Kinder Morgan recently filed to reverse the flow on part of the line. Right now, in Western Pennsylvania, we have a glut of gas. A few months ago, they reversed the flow of the pipeline from the Gulf Coast that used to come up to Western Pennsylvania. There’s a whole lot going on.

TER: After some serious oil train derailments in recent months, pressure is building now to increase pipeline capacity, but there is also pressure on producers to reduce flaring, which is happening on a huge scale in the Bakken Shale. How will the economics and the operations of Bakken producers be affected if they can’t flare and pipeline capacity is not increased?

RM: The Bakken is primarily an oilfield; the gas is a byproduct. We hear a lot about the Keystone XL Pipeline, which is meant to carry oil from the Bakken south. I can’t speak specifically, but if you’re going to lay an oil pipeline from the Bakken, you should lay a gas pipeline alongside it. You can ship oil by rail, but it’s not economic to ship gas by rail. One way or another, the oil will be shipped.

TER: Bill Powers, the independent analyst and author of “Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth,” says gas prices are going to rise steadily to as much as $6/million British thermal units ($6/MMBtu) because U.S. gas production has peaked and now is now flat or declining. Do you agree with that?

RM: Our production of gas has not peaked and is not declining. We are using fewer rigs drilling for gas, but each well, particularly if you drill horizontally instead of just vertically, is producing so much more gas. Production is not declining and isn’t likely to for at least a decade. At current rates, we can drill in Pennsylvania for another 50 years. Yes, you drill the best wells first but also, over time, you get a little bit better at timing this stuff. I’d be very surprised if the price in the next decade gets over $5/Mcf for any extended period of time because there’s an awful lot of gas that’s very profitable at that price. I’m willing to make that bet with Bill Powers. But even $6/Mcf gas would equate to $55/bbl crude, which is still a huge spread and wouldn’t negate my general argument.

TER: What’s your forecast for gas prices in 2014?

RM: My forecast is $4/Mcf, give or take $1. We just had a big cold snap on the East Coast. What used to happen is any time you had a cold winter, the price of gas jumped. For instance, in 2005, when crude was selling about $50/barrel ($50/bbl), gas began the year at about $7/Mcf, which was on par with crude, but in the wintertime, it doubled and ran up to $14/Mcf. The recent cold snap took gas all the way up to ~$4.20/Mcf. Gas is going to be in that range for a long time.

TER: Your advice to investors in natural gas is to get exposure to exploration and production companies, service companies and even LNG plant constructors. What about the LNG plant owners, the pipelines and the railroads?

RM: The pipelines will do well. They’ve already been bid up. The railroads will benefit from oil and gas, but they’re getting hurt because coal tonnage is way down, CSX Corp. (CSX:NYSE) just reported. So for the railroads, it’s going to be a wash. They’ll haul less coal and more oil. The railroads won’t haul gas. How much oil they haul is an open question. We’re about to tighten restrictions on how tank cars are built.

TER: What did well in the Muhlenkamp Fund last year?

RM: The fund was up 34.4%. We did very well in biotech stocks. We did very well in financial stocks. We also did well in some energy stocks. Airlines did well for us. Incidentally, airlines benefit big time from cheaper energy, as you know. So it’s fairly diverse.

TER: How are you adjusting your portfolio this year?

RM: Not too much has changed. We’re no longer finding many good companies that are cheap. So we’re monitoring and adjusting a little bit around the edges. We do think banks have further to go. We think the economy will grow somewhere between 2.5–3% this year. We’ve owned no bonds for the past couple of years, but with the Treasuries now, the interest rates on the longer end are high enough so that savers can get a little bit of return.

TER: I was surprised to see a really sharp drop in November for Fuel Systems Solutions Inc. (FSYS:NYSE). Why did that happen?

RM: Fuel Systems makes conversion kits for cars to burn compressed natural gas. In places like Pakistan, 40% of the cars run on natural gas; this is not new technology. A number of its customers decided to make these kits in-house. Fuel Systems is a small position of ours, but, yes, it got hit in Q4/13 when it announced that a number of its customers decided to produce their own kits. One of the nice things about this is there’s no new technology involved. We’ve been using natural gas as a power source for generations. What has changed is the amount that’s available reliably at a cheap price.

TER: There was another sharp drop in Clean Energy Fuels in October. What happened there?

RM: Clean Energy, so far, doesn’t make a profit because it has been shelling out all the money to build all these filling stations. It’s just taking a little longer than people expected. The stock is compelling at these levels. A number of these companies ran. Westport doubled, and we took some profits. It’s now back down, and we should do a Buy rerating. There is volatility in this stuff, but the economics are undeniable. We still managed a 34.4% gain this year, which isn’t bad.

Clean Energy has signed a joint venture with Pilot Flying J to build natural gas fueling stations at Flying J truck stops coast to coast. Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE) is doing a similar thing in concert with another truck stop operator. For instance, the Port of Long Beach, Calif., passed a rule several years ago that the trucks on the port need to burn natural gas. The Port of Hamburg, Germany, has contracted to put a natural gas-fired power unit on a barge so that when cruise ships come into the harbor, instead of running their own power off their diesel engines and generators, they’ll use this barge to supply power to the cruise ship because natural gas exhaust is cleaner than diesel exhaust.

TER: A couple of other companies had surprising drops— Rex Energy and Westport Innovations. Rex rose all year until October or November, when it suddenly dropped. Westport also dropped suddenly. You had a wild ride in your portfolio, didn’t you?

RM: We bought Rex at $13/share, and it went to $22 or $23, and it’s now $19. I can live with that. The dips give you a chance to load up again. That volatility is why we have a diversified portfolio. That’s why you don’t just bet on three stocks.

As an investor, most of the time what you’re looking for is to find a difference between perception and reality. Today, we have two realities: One is the price of crude oil, and the other is the price of natural gas. So it’s literally an arbitrage if you can buy energy either at the equivalent of $100/bbl or at a third of that. Four-dollar gas is equivalent in energy content to about $35/bbl crude. So I can buy my energy either at $100/bbl or $35/bbl. Economics says that spread is too wide. It won’t necessarily close, but it sure as heck will narrow a good bit. For instance, I own no conventional oil companies. I think the price of oil will be coming down.

TER: So what companies in your portfolio look most promising?

RM: If you really want to get me excited, we can talk about natural gas, which we’ve been talking about. We could talk about biotechnology, which is exciting but I don’t understand it as well. We can talk about U.S. manufacturing, but that’s basically based on cheaper energy. I just bought more Rex. At these prices, I’m buying Westport. I just bought Chicago Bridge. I just bought KBR.

TER: What is your main motivation in buying these companies? Is it just the stock price or is there something about the management of the company or the technology?

RM: We’re in the investment business. What we rely on is good companies, and we look to buy them when they’re selling cheaply. Our first measure of how well a company is run is we start with return on shareholder equity. So we like companies that are at least above average in return on shareholder equity. I cannot yet say that about Clean Energy, but we do think Clean Energy is at the forefront of something that’s needed for this transition. We’re always looking for good companies. Then the question is whether you can buy them at a decent price.

My phrase is: I want to buy Pontiacs and Buicks when they go on sale. I don’t want a Yugo at any price. I would like to buy Cadillacs, but they don’t go on sale very often. But if I can get Buicks when they’re on sale, I’ll make good money for my clientele. We think that the companies we have are at least Buicks. If we can get them at Chevy prices, that’s when we buy them. I will not pay an unlimited amount for any company.

I’ve never seen a company that was so good it didn’t matter what you paid for the stock. To us, value is a good company at a cheap price. Some people bottom fish. They look to see when they can steal companies, and there are times when you can make money that way. But at that point it’s not often a very good business, and there aren’t too many well-run companies at bargain basement prices. So it’s very unusual for us to buy a weak company or a weak industry.

TER: Ron, this has been a good conversation. I appreciate your time, and good luck with your Money-Show presentation.

RM: Thanks; it’ll be fun.

Ron Muhlenkamp is the founder and portfolio manager of Muhlenkamp & Co. Inc., established in 1977 to manage private accounts for individuals and institutions. In 1988, the company launched a no-load mutual fund as an investment vehicle for all investors, large or small. Muhlenkamp is an award-winning investment manager, frequent guest of the media, and featured speaker at investment shows nationwide. His work since 1968 has been focused on extensive studies of investment management philosophies, both fundamental and technical. As a result of this research, he developed a proprietary method of evaluating both equity and fixed-income securities, which continues to be employed by Muhlenkamp & Co. In addition to publishing his quarterly newsletter, Muhlenkamp Memorandum, he is the author of “Ron’s Road to Wealth: Insights for the Curious Investor.” Muhlenkamp received a Bachelor of Science degree in engineering from M.I.T. in 1966, and a Master of Business Administration degree from the Harvard Business School in 1968. He holds a Chartered Financial Analyst (CFA) designation.

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DISCLOSURE:
1) Tom Armistead conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family owns shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: Royal Dutch Shell Plc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Ron Muhlenkamp: I or my family own shares of the following companies mentioned in this interview: General Motors Co., Clean Energy Fuels Corp., Westport Innovations Inc., Halliburton Co., Rex Energy Corp., KBR Inc., Chicago Bridge & Iron Co. N.V. and General Electric. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
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By Jan de Wit

It is often suggested that with your extra capital you should make a long term investment in stocks and shares. Investing this way allows you to gain profit upon your capital, steadily over time. It will always be more than a bank interest would offer you, but putting your money into stocks and shares can be a risky business, and while you may win big, you could also lose all of your original investment. Day trading diggers from long term trading as it is lower risk.

Beginners Day Trading

Day trading is a lower risk form of trading, as you will not be leaving your money within the market over night. This means, that you will not risk your stocks and shares plummeting before you are able to trade again. With the development of the internet, and new regulations for ‘retail traders’ – day traders who are not part of banks and investment firms – you now have the possibility to make a significant sum of money by day trading.

Knowing that to make the most of my money, I would need to find out more about day trading, I took to the internet and began to search for coaching. It did not take long to find a series of courses which offered to teach the basics of day training. By using a little of my own money to train, I could trade for myself in the future, and watch my own money increase.

Day trading coaches are available online, usually with an interactive programme. You can undergo lessons online, will have access to help forums, and a coach who can advise you. Some also offer a demo account so you can practice before actually using your own money in the financial market. Having this ability will minimise your losses.

The other option, is finding a day trading coach who will invest your money for you. If you cannot spare the time to learn about day trading, or do not find watching the financial market enjoyable, then you can hire a day trading coach, who will use your money to trade for you. With this system, those who are new to day trading, will be able to gain a higher profit, as the coaches are experienced, where they are not.

Day trading is the practice of buying and selling commodities over the course of one day to take into account fluctuations of prices over the course of trading. It can be practiced in all commodity markets, despite the fact it is most commonly associated with the trade of shares, and scrap metal is no exception to that. Generally speaking, the theory behind day trading is that by buying stocks early in the day and selling when prices start to rise, the trader can turn a quick profit and repeat the formula over and over again. But how exactly do you go about day trading in scrap metal, and how easy is it to realise a profit overall?

Day Trading Rules

Before even considering getting involved in day trading you need to think about what you want to achieve and how want to get there. Are you looking to make a living out of day trading? It’s possible, but it will probably take time for you to learn the ropes, and it would certainly be unwise to give up your day job before you’ve got a proven track record of making money from your trade. Looking to make a bit of money on the side? Probably a more likely starting point for the beginner investor, and significantly more achievable initially than a full time goal. Secondly you need to consider how you want to go about trading ? whether you want to learn as you go the various tips and techniques for improving profitability, or whether you’re prepared to dedicate time and effort to learning what goes on first in theory before putting your money on the line. Either way is just as practical, yet it may be better to ensure you know what you’re doing first off if you’re not prepared to lose any money.

One of the most critical considerations that beginner investors overlook is portfolio diversification. Nine times out of ten, the beginner will invest all his day’s money in one material in the hope of making a profit ? sort of ?all or bust? thinking. However, by spreading your investment across a number of different metals you can spread the risk associated with losses on one type of metal, and increase the likelihood of a profit overall from your day’s trading in scrap metal. That’s the importance of diversification ? don’t put all your eggs in one basket.

Day trading can be an exciting a fun hobby, yet it can also be a very profitable one if you take the time to find out what you need to know and learn from the rookie mistakes you will inevitably make. Don’t set your sights too high initially ? just be prepared to get in there and turn a profit, with a view to building up some trading capital for making serious money later down the line with your scrap metal trading endeavours to supplement your current income or provide a steady revenue stream from full time or part time trading.

More information can be found here:

• Day Trading Strategies – Part 1
• Day Trading Strategies – Part 2
• Day Trading Strategies – Part 3

About Jan de Wit

Jan de Wit is your forex and binary options blogger, bringing the best free tips, tools, ebook and more to his subscribers at his site.

By CentralBankNews.info

by Mitchell Clark, B. Comm.

The Dow Jones Transportation Average is still very close to its all-time high, and so are countless component companies. The airlines, in particular, have been very strong in a classic bull market breakout performance. Many of these stocks have roughly doubled over the last 12 months.

Commensurate with continued strength in the Russell 2000 index of small-cap stocks and year-to-date outperformance of the NASDAQ Composite, this is still a very positive environment for equities. The NASDAQ Biotechnology Index continues to soar.

While strength in transportation stocks is a leading indicator for the U.S. economy, so is price strength in small-caps. Smaller companies are more exposed to the domestic economy, and while it’s too early for many of these companies to report fourth-quarter earnings, the Russell 2000 has outperformed the Dow Jones industrials and the S&P 500 over the last five years, confirming the primary upward trend.

Instead of an actual correction in stocks, we’ve only experienced price consolidation; the latest being in blue chips since December.

This is very much a market in need of a pronounced price correction, if only to realign expectations with current earnings outlooks. Fourth-quarter numbers, so far, are mostly showing limited outperformance, and those companies that have beat consensus are still, for the most part, just confirming existing guidance, not raising it. If this is a secular bull market, it’s time for a break.

A meaningful price correction in stocks would be a very healthy development for the longer-term trend. Corporations are in excellent financial shape, and the short-term cost of money is cheap and certain.

In order for this market to turn in a meaningful way, a major catalyst must occur to change investor sentiment. There is mostly certainty from the Federal Reserve this year regarding short-term interest rates and quantitative easing (QE) tapering. The absence of the recent budget deal could have been a major catalyst, but policymakers chose to avoid another showdown.

The sovereign debt crisis in Europe is not over, but it is being dealt with and for the time being, capital markets aren’t worried. There’s always the potential for a major derivative trend going bad or a negative geopolitical event cropping up, but these can’t be predicted.

What’s left in terms of a market-changing catalyst is the performance of corporations themselves and the valuation the market is willing to attribute to earnings. Stocks were overbought in the fourth quarter of 2013, and the trading action is looking tired.

In this market, there is not a lot of new action to take. Countless stocks including those with the best prospects for growth this year are fully—if not expensively—valued.

The best action to take now is to reevaluate your portfolio risk and make a wish list of those stocks you’d like to own if they were more attractively priced. (See “Stock Market Focus to Shift in 2014.”)

Current fundamentals still favor equities, and the market will bid outperformance, but I wouldn’t chase anything in this market. Any extra cash would be worth sitting on in anticipation of a well-deserved stock market correction, so keep that wish list handy.

This article Stock Market: Where the Real Risk Is in 2014… was originally posted at Profit Confidential.

by Michael Lombardi, MBA

I have said it many times: central banks will be the major drivers of gold bullion prices going forward. Countries like China and Russia will need more of the yellow metal, because they simply don’t have enough in their reserves compared to the United States, France, Germany, or Italy (the four central banks with the biggest gold bullion reserves).

A news story that ran last week in the Shanghai Daily said the People’s Bank of China is expected to announce it has more than doubled its gold bullion reserves—from 1,054 tons to 2,710 tons. The article explained that China’s central bank bought about the same amount of gold in 2013 that it did during the years from 2009 through to 2011 combined! (Source: Shanghai Daily, January 17, 2014.)

Yes, I hear the stories of how gold prices are being manipulated. But how long can the manipulation—if it really does exist—go on in light of such aggressive gold buying from central banks like China’s?

In 2013, the Bundesbank, the central bank of Germany, said it would like to bring half of its gold bullion stored at the central bank of France and the U.S. Federal Reserve back to Germany. This amounts to 674 tons. But Germany was told it would take seven years to get the gold back to Germany!

In 2013, only 37 tons of the gold bullion came back to the Bundesbank: five tons came from the Federal Reserve and the rest came from France. (Source: Kitco News, January 20, 2014.) So where’s the gold? If the Bundesbank is bringing back only five percent of its gold each year, it’s going to take 20 years for the country to get back its 674 tons of gold bullion…forget the seven years promised!

Why can’t Germany get its gold back? Do Western central banks really have any gold left in their reserves or have they sold it all? And why is China, now the world’s second-largest economy, buying so much gold? These are questions that lead me to one conclusion: gold prices should be a lot higher than they are today.

Dear reader, the majority of “stuff” I read from analysts and economists these days says the 12-year run in gold bullion is over…the U.S. economy is getting better and gold has no reason to go back up. Hogwash, I say.

After a 12-year bull market in gold prices, the correction came in 2013. The depth of the correction caught many gold investors by surprise. And many investors have given up on gold’s future. It’s at that point, when the speculators have left the market, that a correction in an upward-moving market completes itself and the bull resumes. I’ve seen it happen countless times…it’s exactly what’s happening with the 12-year-old bull market in gold bullion.

A massive price shock is coming to the gold market…and it will be on the upside.

This article Massive Shock Coming to the Gold Market Soon? Was originally posted at Profit Confidential.

By George Leong, B. Comm.

The more this stock market rises, the more we are seeing the bears emerging from the woods, talking about how a nasty stock market correction is on the horizon.

In my opinion, based on the last few years, we could see the stock market correct about five percent or so. A sell-off could also be much more if triggered by a major event, such as really bad earnings or an increase in the rate of tapering by the Federal Reserve.

But while I do feel the stock market is vulnerable, I also believe stocks will advance higher this year, as long as the economy and jobs market continue to improve. (Read “Could This Bull Market Last a Decade—Or Longer?”)

Of course, there are also the bears out there who are becoming increasingly agitated with every passing day and every new record set by the S&P 500 and Dow Jones Industrial Average.

It’s not that these short-sellers are wrong. In fact, many of the companies these bearish investors decide to short are indeed bad companies that don’t deserve to partake in the overall bullish bias in the stock market. The problem faced by these short-sellers, which I have also faced in my trading, is their inability to fight the upside momentum that has encased this bullish stock market.

Look at the horrible downward move by the ProShares Short S&P500 (NYSEArca/SH) exchange-traded fund (ETF) in the chart below.

            Chart courtesy of www.StockCharts.com

Just when you think the stock market should be headed downward, nothing happens or we see a rally following a small down day. That’s the way it was in 2013.

I was listening to an interview by Brad Lamensdorf, co-manager of AdvisorShares Ranger Equity Bear ETF (NYSEArca/HDGE), and what I heard was much of the same that I’ve been saying about the stock market for some time. Regardless of some poor underlying metrics, stocks have headed higher. (Source: Lewitinn, L., “Here are four reasons to be short the market: Portfolio manager,” Talking Numbers, Yahoo! Finance web site, January 21, 2014.)

You can kind of hear the frustration in Lamensdorf’s voice as he discusses the reasons why he is bearish on the stock market and expects a nasty correction this year. Essentially, Lamensdorf is suggesting a stock market correction is on the horizon due to four negative metrics—bullish sentiment polls, aggressive insider selling, high margin debt, and low credit spreads.

Now, I agree these are valid reasons why the stock market should be set for a major adjustment, but the same variables were present in 2013. If you shorted last year, the result would’ve been horrible, as you would’ve not only missed out on the gains, but you would’ve also suffered major losses when you had to scramble to short cover.

So while I do feel a correction is due, I don’t believe you should be shorting due to the high risk of losses. Rather, I would suggest playing a downside correction via more manageable risk-oriented put options on ETFs, stocks, key stock indices, or sectors.

This article 2014: The Year of the Short Seller? Was originally posted at Profit Confidential.

by George Leong, B. Comm.

When it comes to love, we often hear the phrase, “Beauty is in the eye of the beholder.” Well, the same could be said for the stock market.

Many investors look for the companies that deliver consistent results and satisfy the number-crunchers on Wall Street. While I belong to that group, I also take alternative views and search for companies that are the so-called dogs of the stock market. However, as our theme suggests, choosing in the stock market based only on a company’s outer appearance doesn’t always produce the best outcome.

Think about it this way: Why always select the stocks that are in favor by the stock market? Often, you may be the last to the dance, so you end up chasing stocks that have already made major stock market moves—the upside is limited.

I like looking at distressed companies that are facing some hurdles but have enough upside potential to make these stocks a worthwhile trade in the stock market. These plays are often referred to as contrarian investments—companies that are out of favor but have enough potential to demand a closer look in the stock market. In this case, you are often buying a company at a low valuation and price, as the stock market has turned against them.

I like these contrarian situations, as the potential upside is significant if these companies can turn around their operations.

In the past, I have highlighted opportunities such as Groupon, Inc. (NASDAQ/GRPN) and Facebook, Inc. (NASDAQ/FB)—both of which made spectacular gains thereafter. (Read “Why Macy’s Is Such a ‘Good’ Retail Play.”)

Nokia Corporation (NYSE/NOK) was another contrarian pick that I thought had excellent upside potential in the stock market after declining to the $3.00-per-share level. Since then, the stock has more than doubled.

The key to contrarian investing is to look for companies that have solid businesses or are in the midst of a strategic change that could turn the company’s fortune around. Of course, you need to be aware of the associated risk, as many of these companies may fail to reverse course. J. C. Penney Company, Inc. (NYSE/JCP), for example, is facing debt and growth issues in the retail sector. This company was an icon in American retail for more than 100 years, but now, it could be headed for bankruptcy. I’m not a buyer here, as the risk far outweighs the reward in my assessment.

In the auto segment, two contrarian picks investors may consider include General Motors Company (NYSE/GM) and Ford Motor Company (NYSE/F).

Back in 2008, following the subprime credit crisis, I also liked the big banks after they plummeted to as low as $1.00 a share for Citigroup Inc. (NYSE/C).

A small restaurant stock that is currently out of favor with the stock market but may be worth a look for the contrarian investor looking for a big upside trade may be Ruby Tuesday, Inc. (NYSE/RT). Hovering around $6.00, the company is working hard to turn things around and if it’s successful, Ruby Tuesday could regain its luster in the stock market.

This article The Company I Like Among the “Out-of-Favor” Stocks was originally posted at Profit Confidential.

Article by Investazor.com

Thursday is a busy day at the office with one of the most iconic three brands on earth reporting their financial earnings: Microsoft, McDonald’s and Starbucks.

I will start with McDonald’s, its logo being probably the most recognizable on the globe and happens to be the largest global chain of fast food restaurants. Based on the company’s recent evolution, McDonald’s remains a safe instrument for investing in the long term, presenting some stagnancy over the last year, up only 5% in the last twelve months. The same picture we find if we look at the quarterly earnings history for the most recent four quarters, which is consistency. Whether the EPS was better or worse than the consensus forecast, the surprise was too small to make a difference in the shares price.

McDonald’s is expected to report EPS of $1.39 on revenues of $7.11 billion for the last quarter of 2013 and in my opinion we don’t have big chances to see anything special from McDonald’s this quarter either. Let’s now take a look at the technical analysis.

Since March, McDonald’s shares were in a descending channel, being traded for the moment at $95. A negative surprise would easily take the price around the support zone at $94, which if it will be broken, could send the price even lower at $91.11, the corresponding quotation for the 61.8 Fibonacci level. A better than forecast EPS would be such a big surprise for the markets that the upward movement generated by it could drive the price towards the resistance level at $99.

The next big brand in line is Microsoft that was going through a corporate reorganization last year and now is looking for the next CEO, expected to be announced within the next few months. Looking back a year ago, earnings are expected to decline, with the average analyst estimate of $0.68 per share down from $0.75 per share in the same period last year. Last quarter, Microsoft beat earnings estimates by nearly 15%, and another beat could be in the cards if analysts are being too pessimistic.

But, analysts are quite optimistic on Microsoft and they are expecting revenue for the quarter to grow with an average of $23.68 billion, up 10.4% from the same quarter last year. The release and the success of the Xbox One is one of the key drivers that analysts think it will help to grow the revenues.

The bullish sentiment is backed up by the technical analysis with an Inverted Head&Shoulders looming on the horizon. But, this kind of H&S is a rare one because is a continuation pattern, the textbook definition for H&S being a reversal one. So, some strong revenue numbers and an EPS slightly above the consensus could put the price in the position of challenging the resistance line at $37.60. Then, a close above this area can give the shares the boost needed to retest the high from $39.

The last, but not the least is Starbucks, one of the biggest and well known coffee retailers on the planet with over 20,000 stores in 62 countries worldwide.  Over the past year, its stock soared to all-time highs and has made it one of the most talked about businesses on Wall Street.

In a turn of events, Starbucks has started 2014 on the wrong foot, being down 6% for the year. Goldman Sachs wrote that it was concerned about slowing same-store sales in the U.S. and downgraded the coffee company from “strong buy” to “buy”. Goldman’s price target dropped to $86 from $91. The coffee company is expected to report EPS of $0.69 on revenues of $4.30 billion, which is in line the management view that said it expects first-quarter earnings to be in the range of $0.67 to $0.69.

The chart doesn’t look too good, with a Head & Shoulders already confirmed and going towards the pattern price target. So, any number which will be in disagreement with the market consensus can be the right pretext to easily drive the price on the recent descending trend to the $69 level or even lower, hitting $65 per share.

The post Busy Day At The Office With Microsoft, McDonald’s And Starbucks Reporting appeared first on investazor.com.