Month: February 2012

This morning, Union Pacific (UNP) declared its quarterly dividend of 60 cents per share, maintaining the amount paid to shareholders last quarter. Based on the current stock price, investors can expect a yield of about 2.1% going forward.

This morning Beazer Homes USA (BZH) reported net income of $0.7 million, or diluted earnings per share of $0.01 versus a loss in the first quarter of fiscal 2011 of $48.3 million, or $0.65 per share. Revenue came in at $188.5 million, compared to $109 million in fiscal 2011.

This morning, Bank of America downgraded shares of AK Steel (AKS) from neutral to underperform as rising pension costs could force the company to raise funds in the near future. With the downgrade, Bank of America set a price target of $9 per share.

Shares of Dow Chemical (DOW) were trading lower this morning after the company released its quarterly report. Excluding items, the company reported earnings of 25 cents per share, missing analysts’ estimates of 30 cents.

As Facebook joins the roughly 5,100 public companies trading on major exchanges in the United States, only a week ago shares were swapping hands on a completely different market… the secondary market.

And, for a growing number of investors and institutions, this alternative marketplace is quickly becoming a hot spot to potentially cash in on a number of firms before they go public.

In fact, you might even be eligible to participate… and not even know it.

The Truth About Secondary Markets

According to aonetwork.com, secondary market exchanges serve to facilitate the purchase and sale of illiquid, restricted and alternative assets, such as private company stock and restricted public equity.

Facebook, Zynga (Nasdaq: ZNGA) and LinkedIn (NYSE: LNKD) all sold on secondary market exchanges before they filed to go public.

Today, well-known firms such as Twitter, Bloom Energy, e-Harmony and Foursquare can all be found on these exchanges, as well.

And many other companies, tech start-ups especially, are finding secondary markets as nice alternatives to IPOs.

LinkedIn CEO Jeff Weiner explains, “Historically when companies had established a certain level of performance and maturity, the IPO was a natural next step. The reason for that was to generate liquidity… to get access to currency… capital… and [for] credibility. The secondary market can help check the box for a few of those objectives.”

So, could secondary markets ever replace the IPO?

Not a chance. Private companies aren’t required to disclose their financial information to investors like publicly traded firms. That’s one of the major risks in this market.

But as Reuters points out, “While the amount of information that would-be investors have is surely lower than if there were a formal SEC-registered prospectus, the rise of the internet has made it much easier to do reasonably good due diligence on how much a company might be worth.”

That’s a big reason the amount of capital flowing in the private-share trading business has more than doubled in value, to $7 billion, in just the past two years.

Even more, Congress is looking to pass laws that could push even more liquidity to this market by doubling the amount of shareholders, to 1,000, that private companies are allowed before needing to publicly disclose their finances.

This is very promising news for companies, like SecondMarket and SharesPost, involved in the secondary market…

Introducing SecondMarket and SharesPost

Founded in 2004, SecondMarket offers a number of asset-backed investments – including auction-rate securities, bankruptcy claims, private company stocks and fixed income products. Meanwhile, SharesPost specializes only in the selling of private company stock.

All of the companies mentioned above (Twitter, Bloom Energy, etc.) either trade on SharesPost, SecondMarket, or both. These two companies currently dominate the secondary market space.

The main purpose of these firms is to connect buyers and sellers to trade the various assets they offer. In a way, they are sort of like e-Harmony or LinkedIn, but for investors and institutions.

For example, SecondMarket uses a proprietary matching algorithm to search through its 75,000-customer base and find good matches between buyers with sellers. After a trade is complete, the companies then take a cut of the total transaction, roughly 3%. This business model has made SecondMarket worth about $200 million, according to The Wall Street Journal.

And now a slew of new competitors are catching on…

For example, Crain’s New York Business reports financial services firm Knight Capital Group (NYSE: KCG) just established its own private-share trading business in December. And LiquidNet, an institutional brokerage firm, also entered this space last year.

As I eluded earlier, not all investors are eligible to enter this market. It’s only open to financial institutions and accredited investors. In other words, you need to be a hedge fund, investment bank, or have a net worth of $1 million and an annual income of $200,000, or a joint income of $300,000 with your spouse, to start investing.

Plus, it’s worth mentioning many of these firms have minimum transaction requirements. For instance, SecondMarket has a minimum transaction amount of $100,000. So you need to have a good amount of cash to get involved.

The Bottom Line

Of course, before entering any investment, it’s important to do your homework first and know what you’re getting into. The secondary markets are certainly not for everyone, but it is a very interesting development and is helping reshape the way companies prepare for their IPO.

Good investing,

Mike Kapsch

Article by Investment U

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 2 Feb., 09:15 EST

The WHOLESALE-MARKET gold price slipped 0.5% from a new 8-week high in London Thursday morning, while global stock markets stalled after a 3-day rise and commodities also edged back.

The Euro fell from $1.32 on the forex market for the third time this week after chief finance minister Jean-Claude Juncker said new proposals for stemming the currency zone’s debt crisis – agreed at a summit on Monday – were “largely insufficient”.

The gold price in Euros touched €43,900 per kilo, a level breached only five times during the surge to all-time record highs of summer last year.

Beijing meantime said China’s full-year gold mining output in 2011 – all of which was bought domestically, since exports are banned – hit a record 361 tonnes, a rise of 5.9% on 2010.

China’s 2011 gold imports may have reached 490 tonnes, perhaps twice the 2010 level, according to Credit Suisse.

So far in 2012, imports of Gold Bullion to India – the world’s No.1 consumer – have been “significantly above average” reports UBS strategist Edel Tully, despite last month’s doubling of import duties.

The central bank of Vietnam said today it plans to “mobilize” private gold holdings via “credit institutions” which would effectively replace the private operations banned last year.

“For now, gold may well remain volatile,” says Dirk Wiedmann, head of investments at Rothschild Wealth Management, now running some €12 billion ($15.7bn) in client funds.

“[But] it is increasingly attractive as the only truly hard currency…[Our] large positions in gold seek to preserve and grow the real value of our clients’ wealth.”

“We can’t put $100 trillion of credit in a system-wide mattress,” says Bill Gross, founder and co-manager of the giant Pimco bond-funds group. “But [savers and creditors] can move in that direction by delevering and refusing to extend maturities and duration.”

Because interest rates cannot go down from zero, bond prices have little room to rise, says Gross, and so “Zero-bound money may kill as opposed to create credit.

“It may, as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper.”

January’s sharp rise in global stock markets, however, means that “Strategists at the biggest banks are capitulating on their bearish forecasts,” reports Bloomberg today, citing a sharp reversal in predictions and recommendations after last month’s 7% jump in emerging-economy equities.

“We have been increasing exposure to risk assets over the past six weeks,” says Andrew Cole, director of strategic policy for Baring Asset Management’s £9 billion multi-asset portfolios.

“We see a self-help cycle materialising” thanks to the European Central Bank’s long-term banking loans, Cole tells Investment Week after buying £350m in Italian government bonds.

“Italy is not going to go bust and this is our way of getting exposure to the improved liquidity.”

“We believe that the ‘risk off’ attitude of investors which took hold in the second-half of 2011 is largely over,” agrees Angelos Demaskos, chief investment officer of the £35.6 million Junior Gold Fund ($56m) at Sector Investment Managers in London to Proactive Investors earlier this week.

Anyone who “wanted to sell” junior gold mining stocks has already sold, Demaskos believes, “and there is a very strong possibility they will be re-rated to catch up with the underlying commodity.”

Over the last 12 months, Sector Investment’s Junior Gold Fund has lost 9.0% of its value, according to TrustNet.

The physical gold price has risen 29.7% in British Pound terms.

Silver bullion has risen 11.9% over the last year.

“It’s been a good month” for US silver coin demand, says Michael Kramer of authorized US Mint distributor Manfra, Tordella & Brookes, quoted by Kitco News and pointing to January as the second-strongest monthly sales of silver bullion Eagle coins on record.

Demand was “greatly” helped by the launch of new 2012 coins however, Kramer added., because “People always want the brand-new coins, so January sales are always pretty good.”

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

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.

When you see shoes like these, you probably think of their consumersas, well, women! But Christian Louboutin, the iconic Parisian basedcobbler known for its lipstick red soles and sky high heels onpractically every celebrity under the sun is starting to market to-get this- men! That’s right, Christian Louboutin opened its firstmen’s store in Paris’s Galerie Véro-Dodat last August, which includeseverything for the stylish man from shoes to bags to accessories.

The rise of commodities may not be a fad.

Instead, it may be a product of social behavior and theory. I present to you the premise of the “commodity supercycle.”

The concept is more than vague investor intuition; its theory is based on the work of twentieth-century economists who studied the result of demographic shifts in populations. These shifts resulted in specific effects regarding the demand for basic commodities.

Economist Simon Kuznets, the 1971 Nobel Prize winner, did research on emerging markets that led him to discover that 20-year cycles arise in countries with policies to expand infrastructure – which generates a substantial increase in the demand for resources. He uses the United States in the 1950s as an example with the creation of President Eisenhower’s U.S. interstate highway system. This same cycle has been seen in the past decade in China, India, Brazil, Russia and other emerging markets.

A Growing World Population

On average, these emerging markets are increasing infrastructure spending at about 10% annually as population growth and desire for improved standards of living are fulfilled. A growing world population coupled with finite raw materials will equal higher commodity prices. The impact of the commodity supercycle on gold is a tendency for gold, precious metals and other tangible assets, such as rare coins, to rise as the demand for commodities rises. Gold is up from $250 in 2000 to over $1,700 currently. Silver was $4 in 2000. Need I say more?

Now, how do we apply this to the markets? We know that equities move in cycles. If in one decade, equities crash, the next decade stocks boom. Commodities also move in long-term bull and bear cycles. But we must take into account that the long-term cyclical movements often contain short-term cyclical movements.

Only Half the Way Through

These cycles can be traced back to the eighteenth century. The average bull run has lasted over 20 years, with average cumulative gains of 293%. The secular bull market of the mid-1960s to the early 1980s was followed by a bear market that ended when the latest upswing began in 2001. Generally, commodity supercycles last 20 to 25 years.

According to renowned global commodities analyst and investor Jim Rogers, the current supercycle began in 2000. This means that we’re only halfway through this latest bull market.

The commodities supercycle has become an essential gauge for investors as commodities, especially gold, have turned out to be a natural hedge against a weak dollar and high inflation. Therefore, commodities investment has become a major turning point for several countries, banks, investors and the everyday individual.

People have found a number of reasons to consider an investment in commodities or commodity-based equities, be it through an actively managed natural resources fund or a passive vehicle like an index fund or exchange-traded fund. If prices for fuel or other commodities rise, one way to hedge against the impact of that price increase is to invest in those commodities.

So to some, there is a method behind the madness – and it has social science behind it.

Good Investing,

Jason Jenkins

Article by Investment U

In this article we will see how the Average Directional Index (ADX) and Moving averages may indicate that we can take a trading position and Relative Strength Index (RSI) and MACD crossover to indicate the entry/exit point.

In Forex trading the volatility in general is quite high and the trends can change very dynamically. Uptrend to sideways move to downtrend to uptrend may take place even during one life cycle of a trade. Of course we are not talking about trades where we enter and close within hours.

Combining selected technical indicators comes in handy is such dynamically changing markets.

It is always better to combine the chosen technical indicators for the trading decisions. While we talk about combining we are not talking about selecting similar indicators to cross check on each other.

Before we take our trading decisions, we need to analyze the Trend situation:

– Is it a strong trend?
– Is the trend becoming stronger?
– Is the trend becoming weaker?
– Is the market running sideways without a clear trend
– It has been a trend but a reversal may be on the way
– A break out from the sideways movement is probable

Trend identification is one of the important starting points before taking a position.

How to identify the trend:

ADX: ADX above 25 and rising
EMA (for uptrend): The prices closing above Moving Average (say 5 to 20 periods for short term trading and 20 to 60 periods for medium term trades). So the price action is above the moving average line and we have a rising moving average line. And this shows a uptrend. ADX being the same if price action was below the MA line and if the moving average line was dropping then it would have indicated a downtrend.

Now once we identify the trend situation we need to decide on the entry and possible exit. Apart from entry we also need to think about stop-loss levels and targets for taking profit. Let’s start with entry point.

As far as entry point is concerned we can use various crossover methods like cross over of MACD with MACD signal line or shorter period SMA (simple moving average)or EMA (exponential moving average) crossover with longer period of the corresponding moving average line. But lets bring in RSI (Relative Strength Index) here. RSI indicates overbought (hence probable selling levels) and oversold (hence probable buying levels). But will overbought and oversold indications work when the trend is very strong? Well the answer would be “Not”. But if we apply RSI with the knowledge of the trend as mentioned above then we may be able to take better decisions.

So let’s see how to combine technical indicators. We are talking about combining the indicators which we have mentioned above i.e. ADX, Moving Averages and RSI.

Lets consider the following scenarios:

– Strong trend
– Trend becoming stronger
– Trend becoming weaker
– Market is running sideways
– A reversal may be on the way
– A break out from the sideways movement is probable

1) Strong trend:

ADX is above 30 and rising further. Price action is continuously over 20 periods EMA and EMA line is rising.

The above indicates a strong uptrend. We can not wait for oversold and overbought signals from oscillators such as RSI in strong trends as the price can be in overbought area for long in strong uptrend and vice versa.  So how to go about entering the market in such situation?

1) Entry: Buy when RSI (Relative Strength Index) goes to the range of 68/71.

2) Exit: Exit the buy position i.e. take profit when ADX stops rising and/or RSI drops below 50 and/or price action closes below the 20 days EMA. The take-profit targets mentioned are indicative as the exit depends on market situation/volatility and the decisions need to be dynamic. In strong trends it is advisable to use trailing stop-losses and rising take-profit levels.

3) Stop-Loss: As mentioned above its is better to use trailing stop-losses. Stop-losses levels even with trailing levels would depend upon the volatility. if the price movement is quite volatile then the stop-loss margins would be wide. We may decide to put a stop loss a few pips below the previous candle’s low. We can also use SAR (stop and reverse) indicator to indicate the stop-loss levels. As mentioned if the market is very volatile then the stop-loss margin has to be more otherwise even if upward movement continues, the narrow stop-loss margin may close the position with a loss.  .

2) Trend getting stronger:
(lets consider an uptrend)

ADX is above 25 and rising. Price is closing over 20 periods EMA and EMA line is rising. This gives an indication that its an uptrend and the trend may become stronger.

1) Entry: Buy when RSI (Relative Strength Index) goes below 50 mark.

2) Exit: Exit or take profit when ADX stops rising and/or RSI goes below 40/42 and/or price action closes below the 14 days EMA. The take-profit targets mentioned are indicative as the exit also depends on various factors and market situation/volatility and the decisions need to be dynamic.

3) Stop-Loss orders: Use trailing stop-losses. Stop-losses would depend upon the volatility. if the price action is very volatile then the stop-loss would be wide. It could be a few pips below the previous candle’s low. As mentioned if the market is very volatile then the stop-loss margin should not be very close to the entry level otherwise even if upward movement continues, the narrow stop-loss margin can close the position with a loss, if price takes some corrective action. Stop loss could be a few pips below the previous candle’s low. As mentioned in above example we can use SAR to indicate the stop-loss levels.

3) Trend getting weaker:

ADX is above 25 but not rising. The 20-period EMA is getting flatter.

1) Entry: Buy when RSI (Relative Strength Index) goes below 50.
2) Exit: Exit or take profit price closes below 14-period EMA. The take-profit targets mentioned are indicative as the exit also depends on various factors and market situation and volatility and the decisions need to be dynamic.
3) Stop-Loss orders: Use trailing stop-losses. Stop-losses would depend upon the volatility. if the price movement is quite volatile then the stop-loss would be wide. It could be a few pips below the previous candle’s low.

In the above examples we have considered an uptrend. During the downtrend we can take short-positions when the EMA line is dropping down and price action remains below EMA, which is opposite to uptrend. ADX readings should remain same as above example because ADX reading only indicates the strength of the trend but not the direction. And we can take short-position when RSI (Relative Strength Index) moves over 50 mark. You may please also check other forex technical analysis indicators at ForexAbode.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.