Financial Analysis

2013-10-28T20:18:00.000-07:00

PIGGYBACK CREDIT

When you say the phrase “piggybacking” you immediately think of someone riding on someone else’s back to get to the same destination. The process of piggyback credit scores to improve a credit rating has been going on for a long time (over 40 years to be exact).

The simple definition of piggyback credit is the increasing of someone’s credit score by making that person an authorized user of a credit account in good standing with the credit bureaus. The positive credit history of the piggyback credit account post on the authorized user’s credit report within 30 to 60 days of addition.

Some credit card companies make piggybacking easier than others. American Express allows up to 99 authorized users per card and makes it very easy to put authorized users on an account. Bank of America only allows two or three authorized users per account and will often reject authorized users that are not immediate family members.Credit repair companies began offering a service that allowed people to buy authorized accounts on the credit cards of complete strangers.

Anyone looking to get a temporary boost to his or her credit score can pay money to a credit leasing company, and then the credit leasing company would purchase an authorized account on someone else’s credit card.The individual selling the authorized user account would get a card in the mail for each authorized account that was opened. The one thing that protects the main account holder in this relationship is that the extra card goes to the home address on the account and not the address of the authorized account.The business has become so lucrative that people with good credit are getting credit cards specifically to sell authorized accounts. They maintain a small balance on the card so their credit score remains high, and then sells the account to someone seeking to improve their credit score through a credit leasing company.

When you purchase trade lines from us, we add you as an authorized user to our revolving credit accounts which have years of PERFECT payment history and tremendously low utilization ratios. Each month the creditor reports this history not only for the primary cardholder, but also for the authorized users on the account. This is known as credit ”piggybacking“. Seem to good to be true? It’s not…It’s real, it works and it’s completely legitimate. About 35% of credit reports contain at least one authorized user account, so their presence is not unusual.

NO CREDIT HISTORY?
We Can help! Trade lines are just as effective at establishing new credit as they are for rebuilding poor credit simply because the payment history on our authorized user accounts is based on when the account was originally opened rather then when you were added. Combine that with the added drop in your credit utilization ratio and you can see why credit scores can increase so much by simply adding a positive trade line to your credit report. There is no deception, there is no fraud…these trade lines show up on your credit report. Most importantly, there are no restrictions on who can add you as an authorized user.

What Does Bad Credit Really Cost You?

2013-09-20T11:02:00.000-07:00

What does bad credit really cost you?

The average individual with bad credit has no clue of what effects their credit score nor the effects of having bad credit does in reference to the impact of how much extra they pay in interest rates
According to Credit.com 61 million Americans have sub-prime credit scores between (500- 649)

What is "utilization ratio"?

If you have bad credit more than likely you are unable to obtain credit from prime or even sub-prime lenders. If you are in need of funds then this obviously is a problem, however if you are seeking solely for a way to increase your credit score this could actually play out in your favor with enrollment in our Credit Leasing Program. Given a term called your "utilization ratio" which is defined as the ratio of your credit balances to your credit limits as listed on your credit report. For example if you have a line of credit of $1,000 and you have a balance of $300, then your credit utilization would be 30%. The lower your credit utilization is the better for your credit score.

AskMrCreditCard.com - "Do not charge more than 30% of the available balance on any of your credit cards. Banks like to see a nice record of on-time payments, and several credit cards that are not maxed-out. If you are carrying high balances on your credit cards, then make paying them down under 30% a priority."

AP Los Angeles Business Writer Alex Veiga - "Credit experts say the single best way to improve one's credit score is to make payments on time and keep credit balances at 30 percent or below your total available credit."

Atlanta Journal Constitution - "Pay down your credit so that you don't owe more than 30 percent of the credit limit, and have a 'healthy' mix of credit."

CreditCards.com - "To boost their credit score, a borrower should maintain low credit card balances, with experts recommending that the amount owed should not exceed 30 percent of the individual's credit limits."

New York State Senator Charles J. Fuschillo, Jr. - "Limit the use of each of your credit cards to 30% of the card's credit limit. Having too many maxed out cards could lower your score."

WikiAnswers - "Also, if you have a high limit but 30% or less balance owed, that is the strongest for FICO purposes."

Washington Post - "If you are using more than 30 percent of your available credit balance on any one card or on all of them together, you could see a significant drop in your credit score."

How Our Credit Leasing Program helps your credit utilization ratio?

First, we start you off with extending you a non accessible line of credit for a substantial amount (typically $5,000 - $10,000) we keep your credit utilization ratio low by only showing balances below 25% (in this scenario $2,500) on your credit report.
Second, we show a steady and consistent monthly payment towards the balance. After approx 3 months the balance is paid off with a zero balance.
Third, after the balance is paid off we increase the credit limit (which reflects on your credit report).

Paying down your balances can improve your credit score, and the sooner the better. FICO's Score Simulator offers an example in which an individual with a credit score of 600 could raise their score 70 points by simply opening up a line of credit for $5,000. (keep in mind the simulation runs this for an individual with 6 open lines of credit, the impact of someone with only one open line of credit will increase this number much higher.

Keeping Medical Records off of Your Credit Report

2013-09-20T10:47:00.000-07:00

How to Keep Medical Collections Off Your Credit Report

Collections of any sort on your credit report don't look good, and can do long-term damage, but medical collections can be particularly harmful. The possibility of removing them isn't as straight-forward as the debt validation process, for example,

that works so well for credit card collections. Once it's on your report as in collection status, medical debt is probably there to stay for a good seven years, even if you manage to pay it off before then. Bottom line, the best way to keep medical

collections off your credit report is to find a workable way to pay the debt via some sort of compromise with your medical  providers

Can I Negotiate With Hospitals and Doctors on Medical Debts?

Yes, but you want to do so immediately, as soon as the debt is incurred. Contact the billing department and, in as patient   and polite a manner as possible, explain that you would like to resolve the debt but cannot afford to do so at the full billed

amount. Start by asking for a discount, which can prove to be a particularly successful tactic if you are able to offer to pay the full discounted amount immediately, in full. Note, fifty percent of people who ask medical providers for discounts receive them. However, if you are unable to secure a discount, ask for a payment plan, which you are more than likely to receive

When is Medical Debt Turned Over to Collection Agencies?

Typically, hospitals and physician groups turn your debt over to a collection agency 60 to 90 days after the debt is past    due.

How Long Do Medical Debt Collections Stay On My Credit Report?

Medical debt may stay on your credit report for as long as seven years, even after they are paid in full. It is the most common collection item on credit reports, with paid-off listings currently staining the credit of more than three million Americans. What's especially heartbreaking about this statistic is that most of these collection items are for debt not much more than a couple of hundred dollars. New legislation has been introduced that would require credit reporting agencies to remove medical collections within 45 days, if and when the debt is paid in full.

Can I Remove a Medical Collection Listing Via Debt Validation?

While you can certainly try, debt validation rarely works in this case, as collectors keep much better records for medical collections than credit card debt, for example. In other words, collectors likely have all the documentation they need to prove you owe the debt, including the original creditor, debt amount, etc. For this reason, it is imperative that you deal with medical debt before it goes to collections. You will probably be pleasantly surprised at how helpful medical providers can be about working with you for a resolution, which ultimately serves the best interest of all involved.

Common Mistakes that Ruin Your Credit

2013-09-20T10:37:00.003-07:00

We have written numerous articles about how filing bankruptcy can ruin your credit and severely damage your credit score. Declaring bankruptcy is no small feat and we hope there was a lot of thought and planning on your part prior to making that decision. There may be some other financial moves you have made, or are going to make, that at first glance may seem harmless but in the long run can really do a number on your credit. You might not realize the significant fall-out to the following seemingly insignificant financial moves.

Keeping a Zero Balance
I know we beat it into your head that you should be paying off your debts, but, paying off a credit card completely every month does not help your credit score - it doesn't hurt it either. When you pay off your card and have a zero balance on this line of credit, it does not factor into your credit utilization ratio. This ratio is the percentage of your credit limit that is being used and factors into 30 percent of your credit score. Here is how to calculate your credit utilization ratio: Locate your credit balance and credit limit on your last billing statement.Divide the credit card balance by the credit card limit. Multiply that number by 100. The lower this number, the better. Leaving a small balance on your card each month will help to increase your credit score. Oddly, your credit score can actually drop when you bring a card balance down to zero.


Keeping a High Balance
Now on the other side of the spectrum, having high balances on your credit cards is not good for your score either. As we

mentioned already, the amount you owe on your accounts determines about 30 percent of your credit score. Lenders

consider those who use a low percentage of their credit, say around 35 percent or less, to be a low credit risk. And being a low credit risk means getting lower interest rates on your loans. Spending 80 to 90 percent of your available credit limit will

negatively affect your credit score. As we saw in the calculations above, having a high credit card balance will equate to having a higher credit utilization ratio which will lower your credit score. Moral of the story, keep you balances low but not at zero.

Negotiate a Lower Annual Percentage Rate
Negotiating a lower annual percentage rate on your credit card may seem like a smart move for cutting expenses and boosting your savings account, but when you do, ensure that your creditor doesn't reduce your credit limit. If that happens, it could affect your credit utilization ratio and lead to a drop in points.

Closing a Credit Card Account
If you've struggled to pay off a card, your initial reaction may be to cut it up and close the account. Resist the urge. Various factors are taken into account when calculating your creditworthiness, and 15 percent of your score is determined by the length of your credit history. By closing an account, especially an older one, you shorten your credit history. The more established accounts you have, the higher your credit score.Credit card companies also look at how much of your available credit you are using, i.e. your credit utilization rate. As we mentioned before, they like to see 35% or less of your credit in use at any one time. Paying off a credit card and leaving it open improves your utilization score, but closing it could do just the opposite.

Applying for New Credit
We are not saying to never apply for new credit, just make sure to do so very gingerly. Every time you apply for a new credit card, car loan, or cell phone plan, someone is going to pull your credit. This credit inquiry constitutes a "hard inquiry" which is likely to ding your credit score. So, if you are looking for a good interest rate, which means you are rate

shopping, make sure every lender you visit is not pulling your credit first. Make your final decision BEFORE having your credit pulled by the lender so that way there will only be one hard inquiry on your credit report. It may seem like maintaining a good credit score is hopeless, but there are ideals you can strive for to achieve a good credit rating. Naturally, some of the above mentioned transactions are easier to avoid than others. By knowing the threat they pose to your credit, you can better understand when these moves really make sense.

To sum it up:

The ideal number of loans or credit lines open is 6 - 21.
The ideal number of credit inquiries is 0-3 in the last 6 months.
When shopping for the best interest rates, have the lender do a
"soft pull" of your credit.

A 5+ year credit history is ideal. The longer the credit line is open,
the better.
5 to 35 percent credit line utilization is ideal. Again, you don't want the
balance to be zero nor do you want to have your credit card maxed out.

How Paying Your Rent Can Boost Your Credit

2013-09-20T10:05:00.002-07:00

How Paying Your Rent Can Boost Your Credit.

Your Credit Can Benefit From On Time Rent Payments Paying your rent on time each month feels good and, of course, saves you the unnecessary expense of late fees. But what if on-time rental payments came with a benefit that went beyond boosting your self-esteem and bank account, and extended to your oh-so-hard-to-penetrate credit score?! Now, thanks to an innovative development from one of the major reporting agencies, paying your rent on time each month may rank at or near the top of your most promising credit repair strategies.

How Can Paying My Rent On Time Help My Credit? In the past, only negative rental histories were reported to the three major credit reporting bureaus Experian, Trans-Union and Equifax. However, Experian recently changed the game, now calculating rental histories into its credit scores. So if you pay your rent on time, and that payment is reported as such by your property manager or landlord, your credit score benefits.

How Does Experian Collect Rental Histories? Experian acquired RentBureau, another credit reporting agency that reports specifically on the history of rental payments. These rental histories are now used in calculating Experian credit scores.

Do All Property Managers and Landlords Report On-Time Payments to RentBureau? Unfortunately, no they don't. While there are more than 8 million renters listed in the RentBureau database, that represents just a fraction of renters nationwide. In fact, nearly 100 million Americans rent, leaving lots of room for the growth of this promising means of helping people improve their credit scores.

How Do I Know If My Property Manager or Landlord Reports to RentBureau? Ask. And if they don't, point out that the benefits are threefold It's a great way to reward good tenants. It may help deter chronically-late paying renters who know their history will now affect at least one of their credit scores. It's a great way to gain access to a database of renters that can prove invaluable in weeding out prospective renters.

What Are the Benefits For Property Managers and Landlords to Report to RentBureau? In addition to rewarding the dependable tenants who deserve credit for on time payments, property managers and landlords who report to RentBureau also reap the benefits of having access to its extensive database of renters. In other words, it's a great way for them to screen prospective renters.

Volume

2009-05-28T15:00:00.001-07:00

Volume, which is another factor for a person to analyze and be aware of prior to future stock purchases. People tend to think in the herd mentality; therefore, if a move occurs with heavy volume (i.e. heavy trading taking place whether it is up or down) this would serve as a clue that it (i.e. the herd) knows something or thinks something is about to occur, or has just occurred. Paying attention to volume lets you confirm your stock trading decision on whether you should be buying or whether you should be watching and waiting for further decline in price in the security you are looking to purchase. It should be noted that there are two types of volume: positive volume and negative volume. Also keep in mind that the names are misleading. According to tradingsolutions.com, the Negative Volume Index is based on the theory that informed investors are trading on days of lower volume, while the uninformed crowd is participating on days of higher volume. This theory coincides with the Positive Volume Index, which tracks changes on higher volume days. The positive Volume Index follows the “less informed” crowd, and the Negative Volume Index follows the "smart money" crowd. Keep in mind that these two indicators are not completely polar indices. Just because the Negative Volume Index is up, does not mean the Positive Volume Index will be down; they are just designed to theoretically track dissimilar segments of the trading community.

The question might arise, “How do I use this information to make money?” According to tradingsolutions.com, The Negative Volume Index is typically compared against a one-year exponential moving average of its value. When the index increases above the Exponential Moving Average (EMA), informed investors have typically been buying this security, indicating the prices should continue to increase. When the index decreases below this value, informed investors have typically been selling, indicating a possible decline. Therefore, when studying a chart of a particular stock, if the Negative Volume Index rises above the one year Exponential Moving Average (EMA), this would be considered a buy signal opportunity; case in point, “smart money” has just entered the arena and “less informed” money chases “smart money”, possibly leading the way for an increase in stock value. One does not have to take my word for it. According to Norman G. Fosback, in "Stock Market Logic" based on back-testing against broad-market indices, a bull market (optimistic stock rally) was in progress during an upward crossing of the Negative Volume Index with the Exponential Moving Average (EMA) 96% of the time. Magee states, “The fundamental premise of technical analysis is that it is possible to identify and predict the continuations and turning points in market trends, to evaluate relative strength or weakness in the market, and to profit from the application of that analysis” (pg.4).

Stochastics

2009-05-28T14:56:00.000-07:00

Stochastic, according to Magee, is “the relating of the closing price to the range in prices for a prior time period, usually 21 days.” Magee goes on further to say that the idea of stochastic is based on the observation or belief that in rising markets, closing prices have a tendency to cluster near the top of the range, and the reverse being true in down trending markets as well; in sinking markets, closing prices tend to cluster near the bottom. The 21- day stochastic relates today’s close to the price range from the previous 21- day period. The price range is the difference between the highest price and the lowest price. Stochastic is expressed as a percentage, and the point is plotted on a scale from 0 to 100. Above 80% is considered as overbought, and below 20% is believed to be oversold (95).

Moving Average Convergence Divergence (MACD)

2009-05-28T14:51:00.000-07:00

MACD which stands for Moving Average Convergence/ Divergence is a tool designed to help an investor follow the trend of a stock’s price. Before we get into the technicals of MACD, one must first understand the convergence and divergence aspect of the tool.
First, convergence relates to a particular thing coming together, or joining; divergence refers to a particular thing separating and going in opposite directions. Understanding this theory is the key to successfully and effectively using the tool.
According to online trading concepts.com (2007) this tool is made up of three components: 1.) MACD, which is the 12-period exponential moving average (EMA) minus the 26-period EMA; 2.) MACD signal line which is a 9-period EMA of the MACD; 3.) MACD histogram which is the MACD minus the MACD Signal Line. You can virtually disregard all of this if you are not a big mathematician and do not comprehend the statistics involved; however this is a powerful tool and it helps the investor confirm the trend and momentum of the market, whether up or down, of a particular stock. This provides the buyer or seller an opportunity to confirm his or her decision with accuracy and confidence.

In the chart above, the two lines are the 12- day exponential moving average (EMA) and the 26- day exponential moving average. In this instance, the black solid line is the 12- day moving average and the black dotted line is the 26- day moving average. This tool works exactly the same as the simple moving average; when the short- term line crosses up over (convergence) the long- term line and begins to breakaway (divergence), that is an indication that the underlying stock will move upward in price, and vice versa, when the short- term line crosses down over (convergence) the long- term line and begins a breakaway pattern (divergence) this would indicate that the stock will be moving downward in price. The 0 line is the number to watch on the MACD because it serves as a change in direction or trend indicator. If the 12- day and 26- day exponential moving averages cross above the 0 line and the price of the stock is moving up, this implies that the trend is strong. Therefore, more buyers may be moving into the stock. If the 12- day and 26- day moving averages cross below the 0 line and the stock is trading up, or sideways this would indicate that momentum is moving towards the downside. Therefore, there are more sellers, signifying that the stock will be moving downward in price.

Relative Strength Index

2009-05-28T14:35:00.000-07:00

Relative Strength Index, or RSI, is a tool used to measure current price strength in relation to previous prices. Investopedia.com insists that this tool helps determine an overbought, or oversold position, as well as serving as warning signals of potential price reversals, helping an investor to formulate buy and sell signals of a stock. There are two important numbers in relation to RSI: 30 and 70. The number 30 serves as a buy signal; when the RSI crosses below this number, an investor must consider buying because the stock has been oversold. The number 70 serves as a sell signal; when the RSI crosses above this number an investor must consider selling because the stock has been overbought.

Simple Moving Average

2009-05-28T14:32:00.000-07:00

An explanation of a Simple Moving Average (SMA) according to stockcharts.com is an average formed by computing the average (mean) price of a security over a specified number of periods. While it is possible to create moving averages from the Open, the High, and the Low data points, most moving averages are created using the closing price. For example; a 5-day simple moving average is calculated by adding the closing prices for the last 5 days of trading and dividing the total by 5.
Day 1 = $10 closing price + Day 2 = $11 closing price + Day 3 = $12 closing price + Day 4 = $13 closing price + Day 5 = $14 closing price = 60
(60 / 5) = $12
The calculation is repeated for each price bar on the chart. The averages are then joined to form a smooth curving line -- the moving average line. Continuing our example, if the next closing price in the average is $15, then this new period would be added and the oldest day, which is $10, would be dropped. The new 5-day simple moving average would be calculated as follows:
Day 1 = $11 closing price + Day 2 = $12 closing price + Day 3 = $13 closing price + Day 4 = $14 closing price + Day 5 = $15 closing price = 65
(65 / 5) = $13
Over the last 2 days, the simple moving average moved from $12 to $13. As new days are added, the old days will be subtracted and the moving average will continue to move over time. The simplest way to use this information would be to buy shares of a company when the price crossed above its moving average, and to sell shares when the price fell below its moving average. Along with this strategy using more than one simple moving average at a time allows you to recognize momentum in a stocks trend in price. Using the chart below, when the (15 day) simple moving average crosses above the (50 day) simple moving average, that would be classified as a buy signal because short term momentum is outpacing the long term momentum, equating to more people being optimistic about the short term fundamentals and/or technicals of this company’s stock.

Bollinger Bands

2009-05-28T13:15:00.000-07:00

Online Trading Concepts suggests that Bollinger Bands consist of three main components, which are in the form of bands, or lines; the upper band, the lower band, and the middle band, also known as the moving average. Playing the bands is used as a buying and selling method. Stock prices tend to move in a pattern, in contrast to the Bollinger bands. When a stock trades above the upper Bollinger band, it is considered to be overbought, and when a stock trades below the lower Bollinger band it is said to be oversold. Simply put, when a stock moves above its upper Bollinger band, one should think about selling the underlining stock, and vice versa. When a stock moves below its lower Bollinger band, one should think about buying the underlining stock.

Dissapointed GM shareholders heading for the exit.

2009-05-12T15:10:00.000-07:00

If you have been tracking General Motors Company (GM) at all through recent weeks it seems as if despite all of the bad news shareholders have been holding on in hopes of a turn around. That hope was crushed today with GM shares hitting a new 76 year low. $1.15 a share was the price the company closed at today, equating to a 20% drop in the company's shares today alone. With bankruptcy fears at all time highs, even insiders of the company have resumed heavy selling of their shares in the company in hopes of departing with at least something. I was doing some research when I stumbled upon an article in Yahoo stating that the company is trying to issue 62 billion new shares, 100 times more than the 611 million now offered publicly. Then the question came to mind... What kind of effect will this have on shareholder equity? Well, according to Professor of Economics Gary Moon three words come to mind "dillution of ownership".

Inevitably speaking GM will eventually be bought out (bailed out) by the taxpayers, money will be exchanged for equity in GM and the previous shareholders will be left with pennies on the dollar. An idea that surfaces should be what will happen after the restructuring of the company occurs. According to Moon a reverse stock split will be in order and not until then should an investor be thinking of owning shares of General Motors.

Wells Fargo up 31%

2009-01-28T15:00:00.000-08:00

If you were following my recent article on differences between standard bank accounts and individual stock ownership and followed my thesis of getting in on Wells Fargo at a stock price of $15 a share, your pockets would be quite happy with you right now.

First recommended on January 7, 2009 to buy in when wells hit on, or above $15 a share.

It reached that mark friday January 23, 2009 at $15.10 a share.

Since then the stock has traded sideways, up until today climbing over 30% on Washington's proposed stimulus package ending the day at $21.19.

Some say take profits, I would say... let it ride, bank stocks still have more upside momentum on their side with the chance for more liquid cash in the markets.

Trim your positions around the $27-$29 range.

GOLD DUE FOR A BOUNCE

2009-01-26T09:52:00.000-08:00

Looking for save haven for your hard earned bucks? Now a days is not an easy task. One must measure and balance the risk vs the reward, my potential profit with my potential loss. Gold which has normally been a safe haven for investors in times of rising inflation, and high unemployment has barely budged in the wake of the recent government bailouts taking place in the financial sector. The government printing, and devaluing the dollar by the minute will only lead to high inflation down the road. What does this mean for you? Your purchasing power will be significantly impaired, too many dollars chasing fewer goods will lead to higher prices. Especially in commodities such as oil, and gold! Don't wind up like the summer of 2008 when gas prices were at $4 a barrel, and you could only hope for some relief at the pump, this time around, hedge against that situation and stock up on Gold, and Oil as a bet that prices will rise in the near term.

Todays closing price for gold is $908.80 per ounce according to www.bloomberg.com

Check out this video which supports my thesis:

http://www.ino.com/info/280/CD3564/&dp=0&l=0&campaignid=3

Bad Management leading to the Destruction of Good Companies

2009-01-17T19:40:00.000-08:00

How does the largest bank in the world lose their entire market share? Going from number one, to among the ranks of Fannie Mae, and Freddie Mac, trading at $3 a share now, but soon to be in the dollar and CENTS collum. According to Dillan Ridigan from CNBC, Bad Management is the contributing cause.

So the saying remains true, the bigger they are the harder they fall, so what does that mean for the rest of the financial firms? Which companies are safe to invest in, and which ones are not. If the largest bank in the world goes under wouldn't one hold into account that other financial companies will follow in their footsteps, or at least be trading near Citi's stock price. WFC, BAC, JPM, PNC, where will these guys stand amid a further deterioration, and eroding of global economies. Citi (C) once trading at $26.40 a share at the beginning of 2008, to now struggling to hold on to $3.50 a share.

In my opinion some of these financial companies by mid year will be joining the ranks of AIG the worlds largest insurer, who received Government funds, and is now trading at $1.42 a share, and has not touched the $2 mark since December 3 2008.... despite the markets strong comeback rally's. Keep in mind this downward move occured rather quickly, so if you snooze you lose. AIG's stock went from $22.76 on September 8, 2008 to $2.05 a share September 17, 2008. 9 DAYS!! Bank stocks have been down big the past 5!!! Stay tuned...

Standard Bank Accounts compared to Individual Stock Ownership!

2009-01-07T15:35:00.000-08:00

Have you checked with your bank lately and asked what is the going rate for depositing your cash in an interest bearing account? I have, on a money market I was quoted 0.05% with a minimum balance of $3500, and on a regular savings account I was quoted 0.05% as well. Take that same initial $3500 and times it by 0.05 and you get $175 worth of interest, add that to your initial deposit, and you have a total of $3675 annually. Not Bad...Save comfortable, and low management knowledge... correct?

Let's say for instance you wanted to invest in an individual stock for the purposes of matching, if not surpassing your yield of 0.05 from the bank. Remember when investing in stocks solely for dividend yields one must be extremely sure that the company will pay those dividends to its shareholders. Looking for the well established names/household names, because you know these companies are here for the long run. Using the same scenario as above, If I were to take that same amount of money and purchase shares of stock from say Wells Fargo offering a Dividend Yield 1.36 or 4.8% annually. The closing price today for a share of wells fargo stock is $25.96, divide the $3500 you have to spend by the share price, and you will recieve 134.82 shares of stock. Wells Fargo's dividend per share is $1.36 times that by the number of shares you have (134.82)= $183.36, add that to your initial deposit, and you have a total of $3683.36 based on the stock staying at this exact price for a year. A whooping $8 more annually which includes more risk, and time for maintenance.

Share prices fluctuate on a daily basis and giving the recent economic turmoil for the coming year, and the diminished ability for banks to secure cash, keep current assets from rapidly losing value, and their diminshed ability to lend money to distressed companies in need, I would say Wells Fargo will be declining in price. Taking a look at historical trends in the stock

June 7, 2008 $23.75 a share

Sept 15, 2008 $39.80 a share

Nov 17, 2008 $21.76 a share

January 6, 2009 $25.96 a share

The last time Wells Fargo was below $20 a share was May 1999. Ten years ago...

I would buy wells fargo on a range of $19-$21 a share and hold it purely for the dividend, keep in mind the dividend yield will rise in the event a stock goes down in price. Here is an example, taking that same $3500 investment, and dividing it by $21 gives you 166.67 shares. Just to be on the safe, hypothetical side using the current dividend yield of 1.36 x 166.67 shares you arrive at $226.67, add that to your initial investment and you have grossed $3726.67. That is $51.76 more annually than a standard bank account, but there is potential for an upswing, and more money in your pocket if the stock price goes up.

My advice is if you have $3500 in cash and are wondering what to do with it, I would say stay on the sidelines for now, and if Wells Fargo goes to $15-$20 a share after it releases earnings January 28, 2009 I would buy in and let that spectacular dividend pay you a hefty return on your money.

Directly out of the OPEC Monthly Oil Market Report

2008-12-30T00:51:00.000-08:00

The mild boost to US growth from the current fiscal stimulus package may be short-lived as the housing sector recession drags on and labour markets weaken further, dampening consumer spending growth. Economic recovery is seen to take hold only in the second half of 2009. Overall, US growth next year at 1.6% is still well below potential. Euro-zone growth will show a more marked slowdown next year as tighter money and slowing export growth take their toll. Similarly growth in Japan is expected to remain lacklustre in 2009.

Emerging market economies remain resilient, but the need to tackle rising inflationary pressures, fed by escalating food and
commodity prices as well as strong domestic demand and credit growth, has led to tighter monetary policies. China’s economic growth is not expected to decelerate significantly until the latter part of 2008, but the rate of expansion may slow to 9.2% in 2009, 1.5% below the average for 2003-2007. Above-target inflation may lead to further monetary tightening after the Olympics, at a time when economic activity is expected to moderate.

There is some concern about India’s economic growth in
2009 as it faces not only the highest inflation levels in a decade despite several attempts at monetary tightening but also a worsening current account deficit due to an escalating import bill.
Latin America will also see a slowdown in growth in 2009 from the strong rates expected this year due to higher interest rates.

"Ponzi" Schemes

2008-12-14T22:25:00.000-08:00

It has been in the news day in, and day out, but what exactly is a ponzi scheme?

According to the (SEC) Securities Exchange Committee....

Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.

Decades later, the Ponzi scheme continues to work on the "rob-Peter-to-pay-Paul" principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses. For more information, please read pyramid schemes in our Fast Answers databank.

http://www.sec.gov/answers/ponzi.htm

Target Profit Margin

2008-11-22T09:31:00.000-08:00

Ever wonder how many times you had to do something to make x amount of dollars? Check out this formula it is called target profit margin and it allows you to calculate the amount of money you want to make based on a residual time period. Implement this formula to any situation, or project you are involved in.
Before I get to that we need to discuss and familiarize ourselves with three key terms, target profit, fixed costs, and unit contribution margin. Target profit is the amount of money overall you want to make. Fixed costs are the costs that you will incur even if production is not occuring. Unit contribution margin is the difference between the price you paid for the item minus the price you intend to sale the item for (speaking in terms of one unit) the formula should look like this

Fixed Costs + Target Profit / Unit Contribution Margin

The answer you get once done with completion of this equation represents the amount of times a person must do this transaction.

Warren, Reeve, Financial and Managerial Accounting: 2007, Mason OH

Know Your Sectors

2008-11-19T16:38:00.000-08:00

Steps to take for your Investment moves in my opinion are to know the 9 Financial Sectors.

Study these for a general understanding of the stock market sectors.

Know which sector your stock belongs to, and/or your mutual fund, and keep an ear, and eye open for news on that particular sector.

Any slight move in the sector, means a move in your stock, and depending on what side of the train you are on can determine whether you make money, or lose it!

http://biz.yahoo.com/ic/ind_index.html