InvestMacro Forex News

By JW Jones, OptionsTradingSignals.com

We have recently discussed the importance of routinely considering the value of implied volatility in a historical perspective for each underlying before considering any of the various option positions potentially appropriate for trading a given underlying security, index, or ETF. Failure to consider this data represents a major cause of the failure of otherwise favorable option positions.

That is not the end of the story with implied volatility and understanding “the rest of the story” can give a trader a substantial edge in selecting and designing options trades. It is important to remember that implied volatility is not some vague theoretical value; it is derived from the actual market prices at which options trade.

From a mathematical viewpoint, implied volatility is the number required to be entered in one of the various options pricing models in order to arrive at the current market price of the individual option under consideration.

Since this is a moment-to-moment empirically derived value, it is very dynamic and is reflective of the aggregate traders’ viewpoints of the magnitude of future price variations. Certain reproducible patterns are routinely observed in the variations of this value.

Three recurring patterns are extremely critical to recognize as an options trader. The first is the increase in implied volatility prior to known events that can reasonably be expected to impact price of the underlying. Specific events would include things such as earnings releases and, in the case of biotechnology companies, FDA decisions impacting various devices or drugs.

Knowledgeable options traders routinely anticipate earnings releases and the run up in implied volatility prior to the event. This volatility typically collapses immediately following an earnings release and negatively impacts traders foolhardy enough to have positions consisting of entirely “long premium.”

The second tendency is for implied volatility to revert to its historic mean. Each underlying has a typical range of implied volatility that is reflective of its individual “personality”.  For example, the personality reflected in the implied volatility of XOM is quite different from that of GOOG.

The third pattern is that of seasonality. Implied volatility typically contracts during the summer months as trading volume and large price moves are generally not likely. The only large price fluctuations are likely to participate in the Hampton vacations of Wall Street traders.

None of these three characteristic tendencies is graven in stone, and each is subject to the most expensive five words a trader can utter, “This time it is different.” These are historical tendencies that can be overwhelmed by the specifics of a given situation.

But these personality characteristics of implied volatility are not the main point I want to discuss over the course of my next few articles. The often overlooked characteristic of implied volatility is its usefulness in predicting the magnitude of future price volatility over a variety of time frames.

We first need to do a bit of review of some basic statistical concepts; stay with me, I promise there is a reason to understand this seemingly arcane material. It is necessary to understand the basics of the nuanced language in which the implied volatility speaks. In order to do so, we need to review some fundamental statistical concepts in order to be able to understand what implied volatility is telling us.

Prices of underlying assets can be considered to lie along the path of the familiar “bell shaped curve.” This is familiar to all students of statistics and is variously referred to as a “log normal” distribution or a “Gaussian” distribution of prices.

The curve below represents the theoretical distribution of price of a stock.  Individual prices cluster around the mean and as they become more distant from the mean value, the individual prices occur at an ever decreasing frequency.

As indicated on the legend of the graph, the standard deviation (SD) measures how broad the distribution width is; a small SD reflects a very “tight” distribution width while a large SD reflects a broad distribution width of prices.

The usefulness of being familiar with this pattern is that the implied volatility can easily be converted to the SD for any given stock. The formula is: 1 SD= implied volatility x stock price. This formula gives the annualized standard deviation and can readily be converted to the SD for the period under consideration by the following formula:

Since the Standard Deviation defines the portion of price variation within a given range, the probability of success of a trade that has a broad range of profitability can be easily calculated. In my next missive, we will look at some real world examples of the utility of this calculation.

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Jw Jones

This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.

By Central Bank News
    Some countries and jurisdictions have yet to issue drafts of the Basel III banking regulations and could be facing a significant challenge to meet the deadline of January 1, 2013 for implementing the new global rules, the Basel Committee on Banking Supervision said in an interim report to the Group of 20 leaders.
   
    www.CentralBankNews.info

The economy of Indian subcontinent was as low as the other developing countries and it has come up slowly and steadily as time went by. Being a huge expanse, the Indian population has got varied resources and type of people. The Indian Economy has grown since the time of the Indus valley civilization. The days during the rule of the East India Company had been a serious downturn as the villages grew dependent on the East Indian merchants and had stopped normal farming activities. The raw materials were bought at much cheaper rates than from any other countries and the finished goods were forced down to the people of this continent at an exorbitant rate.

The Business in India started to grow when India got Independence and started to work hard to develop the economy to be self-reliant. There came up different policies and plans that helped in the growth of the economy. The main support was from agriculture and then the other side was the industry that was formed for extracting raw materials. Then industry started to grow from the knowledge of manufacturing from the raw materials. The Gross Domestic Product was calculated at 2.3% in the year 1951-52. The current GDP is at 9% as calculated for the year 205-06.

The trade and manufacturing industry came up and then came the foreign investments for liberalised trade and other reforms started to support the economy to flourish. The Indian Economy started to gain momentum as Government came up with new and better ideas and the policies that they introduced helped the economy to be liberalized. The reforms started from this point and the economic growth started with the introduction of trading of the popular brands. The foreign investment in India started and kept on growing at a steady rate. This diverse economy has helped the national and the global economy too.

The current trend shows that there are few Businesses in India that are good for the entrepreneurs and few such businesses are tourism and the automobile business. Indian population love to move around and thus the national spots and few International spots are good for the Indian citizen and there are foreign tourists who visit India to explore its beaches and deserts, mountains and wild life and hill stations and rural villages , all of which have so much to offer to the tourists towards full enjoyment . The industry related to the automobiles and the automobiles parts are a good source of income for the world over and India has got a good chunk of the industry thriving in Indian market.

The textile market has been a strong point for Indian market from the past and as days passed by, the industry has come up with modern style and apparels, textures and colors and new ideas. The other such zones that have opportunity for the Indian Economy are export of software to the foreign countries and the engineering goods for entrepreneurs having rising demands for such products. A few challenges like a huge population, unemployment and poverty are still there to hamper the growth of the economy but as there has been a steady growth in so many sectors, the Indian businesses will keep prospering the economy of the country in the days to come.

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investments.

By TraderVox.com

Tradervox (Dublin) – Despite the poor performance of the Australian dollar in the foreign exchange market, the country’s economy has continued to do well expanding by 4.3 percent in the first quarter. Government reports are also showing that the country added 38,900 jobs in May despite the poor performance of the country during that month.

The Aussie has been affected by the euro area crisis which dampened demand for riskier assets for the currency to drop sharply. However, there has been several technical analysts who have held that the drop was excessive considering fundamentals, and technical indicators. Australia’s Treasurer Wayne Swan is expected to address a conference this week on challenges facing the economy.

Australia’s economy is one of the fastest growing economies among the developed countries; which is driven by resources in the north and west. There has been numerous challenges affecting the economy forcing the Reserve Bank of Australia to cut interest rate by 0.25 percent to spur growth. Australian Prime Minister Julia Gillard will address a two-day Economic Conference to be held in Brisbane starting tomorrow. She is expected to touch on economic progress in the country as well as some of the problems that are facing the nation.

Signs of worsening euro zone debt crisis have already been seen with Spain becoming the fourth country to seek international bailout. Earlier, the announcement had sparked riskier asset demand as investors consider this as a positive step towards solving the debt crisis but this has been limited by the fear that the crisis might be getting a firmer grip on the region’s economy. The Australian dollar has increased by 2.2 percent against the US currency in the last seven days making a 41 percent increase since the 2009. The Economic Forum to be held tomorrow is aimed at enhancing consuming confidence which has dropped considerably in May.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Spanish and Italian government bonds rallied in early Monday trading, as markets were cheered by news that European leaders are ready to extend up to €100 billion of aid to Spain’s beleaguered banking system.

Bond markets, which have become increasingly concerned about Spain’s fragile banks in recent weeks, welcomed the move, and we might also see a relief rally this week.

But according to The Senior Strategist Ib Fredslund Madsen there is still trouble ahead concerning the european debt crisis.

Spain’s banking problems and the run up to The Greek election next Sunday are the dominating themes this week.

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By en.jyskebank.tv

London Gold Market Report
from Ben Traynor
BullionVault
Monday 11 June 2012, 08:30 EDT

SPOT MARKET gold prices dropped back below $1600 an ounce Monday morning in London, having briefly risen above that level in Asian trading, as stocks and the Euro also began the week strongly and US Treasuries fell following news that Spain is to receive a bailout.

Silver prices also jumped as Asian markets opened, before they too traded lower, falling to around $28.70 per ounce ahead of the start of US trading.

Euro gold prices by contrast rallied shortly before US open, climbing to €40,880 per kilo (€1271 per ounce) as the Euro gave back most of its early gains against the Dollar.

“Gold seems to be primarily tracking one trend, namely the trend in the US Dollar,” says a note from Citi.

“If an event in Europe causes the US Dollar to weaken, gold is likely to rise. If it causes the US Dollar to strengthen, gold will likely fall.”

The Eurogroup of single currency finance ministers confirmed Saturday that Spain will ask to borrow up to €100 billion to fund restructuring of its banking sector, ahead of forthcoming stress tests of Spanish financial institutions.

In return, a Eurogroup statement said, Spain should focus on “specific reforms targeting the financial sector”. There was, however, no mention of fiscal reforms as a condition of lending, in contrast with the bailouts of Greece, Ireland and Portugal.

“The Eurogroup notes that Spain has already implemented significant fiscal and labor market reforms,” the statement said.

“This is pre-emptive action,” said Olli Rehn, European commissioner for economic and monetary affairs, speaking on Sunday.

“This is a very clear signal to the markets, to the public, that the Eurozone is ready to take determined action.”

Yields on 10-Year Spanish government bonds however remained above 6% Monday morning, rising above 6.2% after an initial drop.

“The burden of recapitalizing insolvent banks or loss-making acquisitions of solvent banks will fall on Spanish citizens,” says Karl Whelan, economist at University College Dublin.

“This weekend’s announcement may well end up shutting Spain out of the sovereign bond market.”

Spanish banks have suffered as a result of loans to Spain’s property market going bad, and may need to put aside up to €155 billion to cover losses, according to an estimate from analysts at Credit Suisse, who add that a further €94 billion in losses may stem from non-property lending.

“We also know that the Spanish regions are going to need a lot more funding than has been assumed,” adds Helen Haworth, London-based head of European interest rate strategy at Credit Suisse.

“There is still no buyer of Spanish debt beyond the domestic investor base, which is basically the Spanish banks.”

“The key is to look at the reaction of investors and see if capital flight stops,” adds Jose Carlos Diez, economist at research firm Intermoney in Madrid.

“If the process doesn’t stop, there will be more funding problems and what we will see is a bailout that is starting small become a big one.”

Spain’s central bank revealed last month that €97 billion left the country in the first three months of the year.

Elsewhere in Europe, yields on 10-Year Italian government bonds breached 6% Monday morning, higher than where they ended last week.

“The scrutiny of Italy is high and certainly will not dissipate after the deal with Spain,” says Nicola Marinelli, portfolio manager at Glendevon King Asset Management in London.

“This bailout does not mean that Italy will be under attack, but it means that investors will pay attention to every bit of information before deciding to buy or to sell Italian bonds.”

Both Spain and Italy are guarantors for the lending capacity of the European Financial Stability Facility and European Stability Mechanism, the bailout funds that will fund the Spanish bank rescue package.

Ahead of this weekend’s elections, two of Greece’s left-of-center parties, Pasok and Democratic Left, have proposed plans that would form the basis of a unity government, reportedly borrowing heavily from the policies of the Coalition of the Radical Left (Syriza).

Syriza, which has expressed opposition to Greece’s bailout deal, and the pro-bailout New Democracy party are the two parties currently leading in the polls.

Over in China, gold investment demand could rise by more than 10% this year, according to a senior figure at the Industrial and Commercial Bank of China.

“Investors here want to hold part of their assets in gold to hedge for the risks, especially now that the financial crisis has evolved into a sovereign crisis,” says Zheng Zhiguang, general manager at ICBC’s precious metals department.

“It’s necessary for individual, institutional or even government investors to hold gold when the value of money is decreasing at a time of possible quantitative easing or excessive money-printing practices.”

ICBC announced last month that it aims to become Asia’s first market maker in London’s gold market.

Chinese consumer price inflation meantime eased to 3.0% last month – down from 3.4% a month earlier, according to official data published Saturday. Last year, China’s official CPI inflation hit a 2011 high of 6.5% in July.

In New York meantime, the difference between bullish and bearish gold futures and options contracts held by traders on the Comex exchange – the so-called speculative net long – rose 2.8% in the week ended last Tuesday, figures published late Friday by the Commodity Futures Trading Commission show.

The spec net long rose above a notional equivalent of 400 tonnes of gold bullion for the first time since the start of May, after gold prices rallied above $1600 an ounce the previous Friday.

“The sharp increase was largely the result of speculative longs being added, with a slight decrease in speculative shorts also contributing to the overall improvement,” says Standard Bank commodity strategist Marc Ground.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox (Dublin) – The euro advanced against most major peers after governments in the region agreed to offer bailout loan to Spain. Spain is the third largest economy in the region and it has encountered its greatest debt crisis since the monetary union was established. It 10-year bond yield has been high touching 6.5 percent in April only 0.5 percent less than the 7 percent reached by Greece, Ireland, and Portugal before they requested for bailout. Spain has been looking for support in recapitalizing some of its banks that have experienced debt crisis.

After European governments agreed to support Spain, the euro rose to two-weeks high against the dollar, decreasing the demand for safe haven currencies leading to dollar and yen weakening. Spain requested for $126 billion in aid to help its banking system making it the fourth country in the euro area to ask for such international bailout. According to Imre Speizer, investors have been wondering what will happen to Spain looking for any sign on how long it will drag; however, the decision by EU governments is an indication that they are committed to solving problems in the region which is encouraging for the euro. Speizer, who is a Currency Strategist in Auckland, added that Spanish bailout is bullish for the euro since it shows lawmakers’ willingness to act.

The 17-nation bloc currency increased by most in two weeks reaching $1.2671, the highest since May 23 before retreating 0.9 percent to $1.2631. It climbed 1.1 percent against the yen to trade at 100.59. The US dollar had added 0.2 percent against the yen to exchange at 79.64 yen. With these positive reports from euro area, analysts are saying that the euro might climb to $1.2786 as Spain concerns ease. This will boost risk appetite in the market hence we are bound to see some movement in commodity related currencies.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Source: ForexYard

The euro fell against several of its main currency rivals on Friday, following another Spanish credit rating downgrade and the news that the country will require a bailout to help its ailing banking sector. After falling over 130 pips during the first part of the day, reaching as low as 1.2434, the EUR/USD was able to stage a slight upward correction to finish out the week at 1.2514. This week, news out of Spain, particularly with regards to the size and scope of the bailout package it needs, has the potential to create heavy market volatility. Additionally, traders can anticipate significant euro movement as investors digest the latest news out of Greece, which is scheduled to hold elections next Sunday.

Economic News

USD – Dollar Benefits from Spanish Credit Downgrade

The US dollar saw upward movement on Friday, as investors shifted their funds to the safe-haven currency following another Spanish credit rating downgrade earlier in the week. The GBP/USD fell over 100 pips during Asian trading, reaching as low as 1.5402 during early morning trading before correcting itself to finish out the week at 1.5472. Against the AUD, the dollar was able to start the day off by gaining close to 90 pips. That being said, the aussie was able to climb back during the European session, eventually recouping all of its earlier losses. The AUD/USD closed the week at 0.9914.

Turning to this week, dollar traders will want to pay attention to several potentially significant economic indicators. On Wednesday, the Retail Sales, Core Retail Sales and PPI figures could cause the USD to fall vs. the JPY if the figures come in below their forecasted levels. Later in the week, the Unemployment Claims and Core CPI figures, followed by the Prelim UoM Consumer Sentiment may lead to market volatility if they do not come in as expected. Should any of the figures disappoint, it could lead to further worries regarding the US economic recovery and whether the Fed is planning to initiate a new round of quantitative easing.

EUR – New Spanish Bailout May Lead to Further EUR Losses

The euro saw a mixed session on Friday, as news that Spain’s credit rating was downgraded caused investors to shift their funds away from the common-currency. Against the JPY, the euro fell as low as 98.51 during the overnight session before staging a slight correction to close the week at 99.46. Against the AUD, the euro fell over 100 pips, reaching as low as 1.2582. The EUR/AUD ended up finishing out the week at 1.2617.

This week, euro traders will want to continue monitoring any developments out of Spain, specifically in reference to the bailout package it needs. Any indication that the banking troubles the country is currently facing are bigger than originally thought could lead to heavy euro losses. Additionally, with Greece getting ready to hold a much anticipated election next Sunday, traders can anticipate news out of the country to generate market volatility. Any signs that anti-austerity political parties could emerge victorious may lead to additional losses for the common-currency.

Gold – Gold Finishes the Week below $1600

Gold saw downward movement throughout Friday’s trading session, following gains made by the US dollar due to concerns about Spanish debt. Typically, the price of gold moves down when the USD is strong, as the precious metal becomes more expensive for international buyers. Gold dropped as low as $1544.44 an ounce before staging a slight upward correction to finish out the week at $1593.13.

This week, gold traders will want to pay attention to a batch of US indicators and how they affect the dollar. Any bullish movement the greenback has against riskier currencies like the euro and Australian dollar could cause gold to extend its downward trend.

Crude Oil – Demand Worries Causes Oil to Turn Bearish

The price of oil fell on Friday, following an increase in investor concerns regarding global demand for the commodity. Additionally, following last Thursday’s speech from Fed Chairman Bernanke the US dollar strengthened, making the cost of crude more expensive for international buyers. Oil finished out the week at $84.10 a barrel.

Turning to this week, events in the euro-zone may influence the direction oil takes. Should investors continue to shift their funds to safe-haven assets as a result of economic and political worries out of Spain and Greece, oil could extend its bearish trend. At the same time, any indications that pro-austerity political parties in Greece may emerge victorious in the upcoming election could result in risk taking in the marketplace. Oil could recoup some of its recent losses in such a case.

Technical News

EUR/USD

Technical indicators on the weekly chart show that this pair is currently range trading, meaning that no defined long-term trend can be predicted at this time. That being said, the daily chart’s Williams Percent Range has crossed over into overbought territory. Traders may want to open short positions, as downward movement could be seen in the near future.

GBP/USD

A bullish cross has formed on the weekly chart’s Slow Stochastic, indicating that this pair could see upward movement in the coming days. In addition, the Bollinger Bands on the daily chart are beginning to narrow, meaning that a price shift could occur in the near future. Opening long positions may be the wise choice.

USD/JPY

While a bullish cross appears to be forming on the weekly chart’s Slow Stochastic, most other long-term indicators show that this pair is in neutral territory. Traders may want to take a wait and see approach, as a clearer trend is likely to present itself in the near future.

USD/CHF

Technical indicators are providing mixed signals for this pair. While the Williams Percent Range on the daily chart is in oversold territory, the weekly chart’s Slow Stochastic has formed a bearish cross. Traders will want to use a wait and see strategy for this pair.

The Wild Card

GBP/AUD

A bullish cross on the daily chart’s Slow Stochastic indicates an upward correction may occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which is currently just above the -90 level. This may be a good time for forex traders to open long positions ahead of possible bullish movement.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Article by Investment U

The JOBS Act could be a goldmine for investors who have been locked out of the secretive world of private placements.

“Overall, new businesses account for almost every new job created in America. For start-ups and small businesses, this bill is a game changer. Because of this bill, start-ups and small businesses will have access to a bigger pool of investors.”

– President Barack Obama on the JOBS Act, March 27

Titles of popular legislation are invariably misleading. Take for example “The Corporate and Auditing Accountability and Responsibility Act of 2001.” Known as Sarbanes-Oxley, the law has proven to be onerous for publicly-traded companies, leading to many companies going private, and IPOs drying up in the United States.

In response, Congress recently passed and the President signed (on March 27) the “Jumpstart Our Business Start-ups” Act, or the JOBS Act. I don’t know if it will create any jobs, but it could be a goldmine for investors who have previously been locked out of the secretive world of “private placements,” also known as “founders stocks” offered to company insiders and wealthy “accredited” millionaires.

I’ve invested in dozens of “private placements” over the years. These are investments in the early stages of a start-up company that may be years away from going public. Like tax shelters, they are speculative, and most of the time, I’ve lost money. But in a few cases, I’ve made out spectacularly well, making 20 or 30 times my money (what Peter Lynch calls a “ten-bagger”).

The JOBS Act allows small investors to get a piece of the action previously restricted to wealthy investors. Under the new “crowdfunding” rules, private companies can even advertise online to potential investors. Private firms can avoid onerous regulations and registration requirements of the Securities & Exchange Commission until the number of shareholders reaches 2,000 (the previous limit was 500).  And individual investors can invest up to $10,000 without proving they are “accredited” high net worth investors.

Where to look for private placements?

One way is to invest directly. We’re holding a 3-hour session at FreedomFest, July 11-14 at Bally’s in Las Vegas on “Special Situations in Private Placements,” where specialists Lou Petrossi, Ralph Williams, and Ron Holland, among others, will spell out the spectacular opportunities and risks associated with private equity investments, and some specific deals now available.

What’s FreedomFest all about? Everything! Watch this 3- minute video:

The Oxford Club (Alex Green, Karim Rahemtulla, Marc Lichtenfeld, Steve McDonald) is hosting a one-day conference at FreedomFest.  I’ll be there, along with Senator Rand Paul, Steve Moore, Judge Andrew Napolitano, Steve Forbes, John Mackey, Rick Rule, and Keith Fitz-Gerald (as Keith says, “FreedomFest is the conference even speakers like to attend”).

To see what all the excitement is all about, go to www.freedomfest.com/oxfordclub, or give Tami Holland a call toll-free 1-866-266-5101.

Vegas is a good place to attend an intensive workshop on private placement because investing $10 grand in a private equity deal is not unlike a roll of dice.

A more conservative approach is to invest in a publicly-traded private equity fund on Wall Street. I’ve provided one such fund for Investment U Plus subscribers today. It’s a venture capital fund that invests in over 100 private companies and often takes equity positions in expectation they will be bought out or go public. Plus, it pays a 9% annual dividend to boot.

You have your choice. Be a speculative hare or a conservative tortoise. Take a gamble and win big in an individual private placement…or buy a private equity fund on Wall Street and make steady long-term dividends and capital gains.

I recommend both. Buy today’s Investment U Plus pick and come to FreedomFest! It’s a potential win-win.

Good Investing, AEIOU,

Mark Skousen

Article by Investment U

Article by Investment U

Motif Investing allows people to buy investment ideas and themes, including the most "liked" brands on Facebook (Nasdaq: FB), which rose 20% over the past year.

I don’t get to say it often, but the investing herd was spot on last month.

From Main St. to Wall Street, the resounding majority of people everywhere said they weren’t going to invest a dime in the Facebook (Nasdaq: FB) IPO.

And it’s a good thing most people didn’t.

Because after hitting a high of $45 on May 18th, shares have fallen as much as 42%.

Yet even though buying into Facebook’s IPO would’ve been a huge mistake by today’s standards, the darling of social media just may have a use for investors after all.

Turning Facebook “Likes” into Profits

I’ve had a Facebook page for a year and a half now.

And, yes, I comment and click “like” on things I find interesting or funny. But don’t give me a hard time about it.

Online news provider, VentureBeat, reports 845 million users give out 2.7 billion “likes” and comments every day.

It’s an incredible amount of information.

And a new online trading service that just launched Monday has figured out a way to profit from this mountain of data.

It’s called Motif Investing.

But it’s not exactly just another E*Trade or Scottrade.

Investing in the Power of an Idea

Motif Investing allows people to buy into investment ideas and themes (hence the name “motif”).

They do this by packaging ideas into collections of 20 to 30 stocks and selling them to investors for $9.95, or about the same price as a single-stock trade on E*Trade.

For example, Motif’s “Faceboook” portfolio represents the top 20 most “liked” Facebook brands. In 2011, the number of “likes” for these companies nearly doubled. Who knows, maybe it’s not really related that much, but Motif’s “Lots of Likes” motif is up 20% over the past year.

There are also 50 other motifs to choose from. And that number is sure to grow.

Some of my favorites include how to play the rise in income inequality, preparing for the housing recovery in the U.S., and cashing in on soaring internet usage on mobile phones.

Motif gets even better too. It allows you to personally customize each of the portfolios to fit your investment needs or preferences.

So if there’s a stock you don’t like, you don’t have to pray some mutual fund or ETF manger will eventually get rid of it. At any time, you can sell a stock for a one-time processing fee of $4.95. You can also change the weighting of any stock in the portfolios as well.

These are pretty revolutionary features for the online brokerage industry if you think about it. Can you imagine actually having full control over a mutual fund or ETF? You can become your own Peter Lynch…

Forbes says, “What’s compelling is it actually mimics what many of the best macro hedge fund managers do.”

It’s true. Motif just puts the power in the hands of individual investor.

All of these features has attracted some pretty powerful people to the service too.

Ex-Merrill Lynch boss Sallie Krawcheck is backing the company. There are former Microsoft (Nasdaq: MSFT) executives on board.  The longest serving chairman of the SEC, Arthur Levitt Jr., is also backing Motif to name a few.

I can’t say whether or not Motif represents the next era of investing. But I do like where it’s going. And I think, as more investors catch on, Motif could have a significant impact on the future of the online brokerage industry.

Good Investing,

Mike Kapsch

Article by Investment U