Investing For Beginners – Free Investment Articles and Tutorials

Posts Tagged ‘Risks’

Although global growth is expected to continue in 2012, the economic risks remain high and the volatility should remain high, provides the National Bank.

“The weak link in the global economy is Europe, which would go into a recession low. Industrial production in the euro zone fell 2.7% in September, and trade may have peaked. With an economic horizon blocked for some time, we believe that European stock markets remain volatile, “write Stefane Marion and Marco Lettieri, an economist at National Bank in a note sent to clients.
Read the rest of this entry »

The index-linked bonds seem to be the panacea for all, because their interest is constantly adapting to new market conditions. But the critical feature that you should know.

When it comes to indexing refers to a bond or a government bond that pays its own interests (and possibly the principal at maturity) based on the performance of a simple parameter or financial index such as, for example, the Euribor, or the ‘index of consumer prices. After examining each of the two main types of indexing, we will go in depth on their flaws and potential risks.
Read the rest of this entry »

With a commodity certificate of the investor relies on the performance of a particular commodity at a selfsame buy directly without having to exchange commodities.

Since the direct trading of commodity futures contracts on an investor is hardly accessible, provide raw materials such certificates is the best way to invest in the performance of individual or selected commodities.

There are also various forms of open back-end certificate on individual commodities via index certificates for selected commodity index to leverage certificates to the investor is almost the complete range of certificates.
Read the rest of this entry »

By investing in private equity funds, the investor participates in the equity of young or non-listed companies in need of renovation.

The business principle consists in the acquisition, alteration or the renovation and subsequent re-sale of businesses.

The risk of such investments will depend on the development phase in which the company is well on the skill of fund management in selecting the right company from.

Private equity funds can generate extremely high profits. Should a company which was invested in failure, however, can also be retracted corresponding losses.
Read the rest of this entry »

“Value” means as much as value, substance and safety. The value strategy is an investment strategy that aims to track publicly traded companies that indicate their current values ​​compared to the industry or the overall market to an undervaluation of the title.

Value investors are aiming not on short term speculative profits, but on solid long-term capital gains. This is the true, the so-called “internal” value of a company’s critical. To determine the real value of a company, an analysis of the fundamentals is required. Also necessary is the most precise predictions about the future course of business. An undervaluation of the stock is present, if the current market value (current price multiplied by the number of shares) is less strongly to the inner or true value of a company. Only then will the company get on the buy list.
Read the rest of this entry »

A prospective buyer can fully control their risk through leverage , but the risks of selling futures are not so easily controlled and in principle unlimited. To delineate the known risks to a level that no longer unlimited futures seller must combine its position in futures, options or the underlying asset (stocks, commodities, etc.).

Suppose that the future of Banco Santander trades at 15.10 euros, bringing the contract are nominal 1 1510 euros (15.10 x 1 contract x 100 shares = 1510 euros).
If an investor / trader have of 1,510 euros and buy a futures contract the risk is the same if you buy 100 shares of Santander and is therefore well defined.
But if it does is sell 1 contract your risk becomes unlimited. The nominal value of the contract is the same at the time to sell than when to buy, 1510 euros in this case. The difference is that a stock can drop to 0 (in bankruptcy) as maximum. Therefore, the maximum loss would be 1 contract purchaser of the nominal value of the contract, in this case 1510 euros.
Read the rest of this entry »

The International Monetary Fund (IMF) expects the Canadian economy continues to grow faster than other industrialized countries in 2011, but warns that global risks are becoming more important.

The latest IMF forecasts global slowdown are considering an economic growth of advanced and emerging nations this year. In Canada, the forecast has changed little since last April. The growth amounted to 2.9% this year and estimated at 2.6% for next year. Among the G7 countries, Germany is one that performs best. The expansion, estimated at 3.2% this year, however, should slow to 2% next year.
Read the rest of this entry »

Schroders believes that there is still value in the credit cycle, but believes that the macroeconomic risks will cause a correction, which will create a better entry point (buying opportunity) in two or three months.

“The rally in corporate bonds should continue throughout 2011, but with periodic surges in volatility,” said Wesley Sparks, global head of credit strategies and head of U.S. fixed income at Schroders.

The main risks to corporate debt are the volatility in the euro area due to rising interest rates, credit problems and bank refinancing of its senior debt, with fiscal policy adjustments in the U.S. or geopolitical risks (tensions oil fields or monetary policy in China).
Read the rest of this entry »

Are we facing a scenario of sharply rising inflation or, conversely, we are entering a period of deflation? This question may seem very theoretical, is probably the greatest influence the future profitability of long-term savings. Much has been written, probably because of high budget deficits that generated the crisis in most developed countries on how to protect a portfolio in a high inflation environment. Commodity funds, bond funds linked to inflation or even exposure to equities versus fixed income are often traditional recipes for survival in an environment of high inflation. But few have asked the question of how a scenario of deflation affect your investment portfolio.

And it’s not as far-fetched scenario. In our country, in April for the first time since this statistic is calculated, core inflation (excluding food and energy) recorded a negative growth. Some strategists believe that we could enter a period of widespread price declines if governments withdraw their stimuli, especially at a time when the unemployment rate remains high and the housing market still depressed. In addition, we have for Japan to remind us that a developed economy may fall into a deflationary spiral.
Read the rest of this entry »

Margin investing is speculative and involves high risk. That is why most investors should not buy stocks on margin. But for those who do, NASD Regulation, Inc., has issued important investor guidance about purchasing securities on margin, and the risks involved. Investors should heed this guidance, which is set forth below.

Use of Margin Accounts
A customer who purchases securities may pay for the securities in full or may borrow part of the purchase price from his or her securities firm. If the customer chooses to borrow funds from a firm, the customer will open a margin account with the firm. The portion of the purchase price that the customer must deposit is called “margin” and is the customer’s initial equity in the account. The loan from the firm is secured by the securities that are purchased by the customer. A customer may also enter into a short sale through a margin account, which involves the customer borrowing stock from a firm in order to sell it, hoping that the price will decline. Customers generally use margin to leverage their investments and increase their purchasing power. At the same time, customers who trade securities on margin incur the potential for higher losses.
Read the rest of this entry »