Tag Archive: Investing


Gold Investments Today

Filed Under: buying coins by Don Weststein — Comments Off
January 19, 2011
When thinking of a way to invest, gold is always a good idea. Gold investing can be complicated, but listed below are a few of the ways to invest without the risk of investing in a gold future or gold ETF.

Gold mutual fund is one way to invest in gold; this is when money is pooled from many investors, into bonds, stocks, or assets. An individual manages the fund and invests the money according to specific objectives, trying to make the most capital gain. This kind of investment allows an investor to diversify his portfolio while using a small amount of capital.

Mutual funds tend to follow the general trend of the gold stock market, but usually over perform when gold is high and underperform when the price of gold drops. Thus a gold mutual fund can be a little risky, but also when gold is doing well it can produce more capital than investing in just stocks. A mutual fund, since managed by a single individual, allows an investor to work with the stock market without working with a team of financial advisors.

Investors make money in a mutual fund through dividend payments, interest, increased net assets, and capital gain distribution. The fund subtracts any losses and distributes the remaining money to the investors. Not all gold mutual funds invest only in the gold sector, so research should be done prior to an investment. To be remembered are expenses with transactions, and cash-out fees.

Another way to invest in gold that is far less complicated is buying gold bullion. Gold bullion comes in the form of bars and coins, bullion can be purchased for the price of gold plus what it cost to refine, fabricate, and ship the item. Thus gold coins are usually marked up one percent over market price. This makes them an unwise investment for short term capital gain, gold coins should be purchased for security, and a hedge against inflation.

Gold coins or bars can be purchased from the U.S. mint or any countries mint. They are available in fractions and multiples of one troy ounce and have at least a purity of 0.900 percent. Gold coins are an investment because in a financial crisis when currency is worth nothing but paper, gold will still have all it’s value. Thus with gold on hand an investor has a form of money, that can be traded for goods and services.

Listed above are two ways to invest in gold, a gold mutual fund which can be a little risky but can pay out, and investing in gold coins for security. No matter what investment always research investment options before purchasing.

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Option Trading Terminology

Filed Under: algorithmic trading by Don Weststein — Comments Off
December 2, 2010

Perhaps the most difficult aspect of understanding options is the terminology that is used. It can be quite confusing to the uneducated investor. There are, fortunately, only a few things that every investor needs to know before they can begin using basic option techniques, such as writing covered calls.

A call option is in essence a contract. It is a legally binding agreement between a willing seller and a willing buyer. The seller simply agrees to sell a set number of shares to the buyer at a certain price some time in the future in exchange for financial compensation (known as premiums) today. The second the trade is executed this premium income is deposited into the seller’s account and can be used for whatever the seller deems appropriate.

When determining what call contract to sell an investor needs to carefully consider a few things. Perhaps the most important determination that the seller needs to make is the price at which they will agree to sell their stock. This price, known as the strike price, is the basis of all options trades. When an investor sells a call with a strike price that is above the current market price he or she is said to be selling an out-of-the-money call. If, however, the strike price of the option is below the current market price this call is known as an in-the-money option.

The next thing an investor needs to carefully consider is when they want the option to expire. Determining the expiration date is also a crucial step in ensuring a profitable trade. In the United States, all option contracts expire the Saturday following the third Friday of the month. If that Friday happens to be a holiday then the expiration is said to have occur on Friday. If the investor is selling covered calls primarily for the income it produces they may want to consider selling near-month calls. If, however, the investors wishes to maintain control of their stocks for a while selling calls with expiration dates a few months in the future may be the best.

The premiums that are paid to the seller are based upon a plethora of factors, including overall market sentiment, the proximity of the strike price to the current market price, and the amount of time until the option expires.  When a savvy investor combines these three factors properly selling covered calls can be an extremely profitable options trading strategy.

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Stock Market Reports | PMI

Filed Under: Stocks by Don Weststein — Comments Off
October 4, 2010

The PMI is also known as the Purchasing Managers Index.  It is released monthly by the Institute of Supply Management in it’s monthly ISM Report on Business.  The PMI is one of the most significant market reports and economic indicators that affect the investment strategy of Wall Street and main street investors.

Purchasing Managers Index Survey

This is one of the most important economic indicators for the US economy.  It’s really stock market 101 to understand the PMI and why it is important.  It is closely tied to how the manufacturing sector is doing.

The report is done through a survey of 400 purchasing managers around the country to find out their economic sentiments.  They are asked to answer a simple, ‘better’, ‘same’ or ‘worse’ on several key areas of their industry.

They are asked about new orders, inventories, production levels, employment levels and supplier deliveries.  Each category is differently weighted within the final index.

PMI Numbers and What They Mean

Then their answers are compared to the overall answers to these questions from the month prior.  So if the PMI is at 50, there is no change in sentiment.  If it is above 50, it is a positive sign that things are picking up.  If it is below 50, they feel worse off than the month before.

All of these numbers are relative to the month before.  If the PMI number in the previous month was 58, but this month it is 53, investors see that as a sign of potential weakness in the economy.  But if the prior month was at 36 and this month it is at 40, there might be a rally in the stock market seeing that there might be signs of a recovery.

Historically, the PMI is has been pretty accurate in predicting an economic expansion and contraction.  They are really the first lines of defence.  If there is an expansion and recovery coming, purchasing managers will be one of the first to know.  The same is true is if there is a contraction coming.

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Why Algorithmic Trading is the Way to Go

Filed Under: algorithmic trading by Don Weststein — Comments Off
May 12, 2010

People now trust the wonders of algorithms in buying and selling stocks. Algorithmic charting software helps you to make sound decisions before opening and closing stock deals.

This system is based on advanced mathematical models that help you to calculate the possible risks and potentials of the market trends. There will be no need to analyze the future behavior of the stock market since algorithmic trading will provide you accurate info to help you in your predictions. Also, the data it provides can be easily understood.

The system’s formulas are based on past market data that are then updated using the real info. If you try to develop your own market formula, it will take so much time from you since you will have to update it regularly over weeks or months. Using the algorithm system will ease you from this hassle.

Two questions meant to be answered by this system are: first, when is the right time to trade and second, what is the best way to trade. In knowing when to trade, you must take a closer look at the ups and downs of the stock market. Changes in the shifts of the market will give you possible opportunities to grow. The second question is having a better understanding on how to place and manage your stock deals to make the best out of your potential profit.

Though the potentials of algorithms are clear, still a lot of traders (buyers and brokers) are reluctant of using it even with simple automated stock trading software. They are scared of the possibility that with its increase of popularity, people will not need people anymore; they will just rely on computers to help them.

These people are against the use of algorithms, saying there are flaws in these systems’ ability to predict market patterns. But algorithmic trading is useful in making sound decisions. If you do not want to be threatened of a sure capital lost, this advanced system is a big help. Even huge institutional investors who trade daily in large value use this technique.

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