Archive for September, 2007

Stock Market - Stock Trader

Have you ever heard the story of ‘Tortoise and Rabbit’? Yes, that’s the same principal to be followed in the stock market. Being fast in the starting takes you to nowhere because it takes time to understand any of the stock trading knowledge. The stocks world is the most unreliable and speculative world.
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Us Stock Market - Us Stock Market - Investment Opportunities

The US stock market has a long history dotted with a lot of ups and downs. The stock market is made up of two exchanges - the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations system (NASDAQ).
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Stock - Fundamental Guide To Safe And Profitable Trading

Many seek to succeed in stock and option trading. But the majority loses in their endeavor to reach the success. The game doesn’t seem as easy as it might look like. If you ever started trading and got confused of when to place order, when to take profit, how to protect your equity and you toiled with anxiety and hesitation in making decision, then you have come to the right site.
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Good Penny Stocks - Defining The Best Penny Stocks

You’ve heard of penny stocks, but the mere name of them scares you, simply because of its speculative sound. Yet you know that many people claim to have made absurd profits in the penny stock market. But before you decide to get involved in penny stock trading, you need to become educated in all the penny stock terminology, so that your definition of the best penny stocks matches that of those who trade them for a living.

Different Methods of Rolling Over Retirement Accounts

“Rollover” is the term used to describe the tax-free, penalty-free transfer of funds from one tax shelter plan to another. Plans that can be rolled over include 401(k), IRAs in their various flavors, 403 plans, and 457 plans. For example, an employee may change jobs so naturally the funds can rollover from the first employer’s 401(k) plan to the new employer’s 401(k) plan without any taxes or penalties. The same employee changing jobs can also elect to rollover all or part of the 401(k) funds into an IRA account. Employees usually take advantage of rolling over tax shelter funds when changing jobs but also can do so once they reach retirement age as defined by the plan.

When an employee does change jobs, a decision must be made quickly on how to handle the retirement funds. IRS laws mandate this decision must be made within 60 days or else the funds received from the retirement account will be treated as taxable income. If the new employer does not offer a 401(k) plan or mandates a length of employed time before qualifying for the plan, the employee should deposit the funds in an IRA account during this transitional period to avoid any taxes. Sometimes the funds may be able to remain in the 401(k) plan of the former employer, it is obviously important to understand these guidelines thoroughly when changing jobs.

Generally, all rollovers must be deposited into retirement accounts in the same way they were distributed from the previous account, cash must be cash, stock must be stock, etc. If amounts are not rolled over they are considered to be taxable income. Rollover can occur either directly or indirectly. A direct rollover is handled directly between the 401(k) custodians or from the employee’s 401(k) to the employees IRA. In a direct rollover the employee never actually handles any funds. With an indirect rollover, the account holder actually receives a distribution of cash or assets from the retirement account and then deposits the funds in another retirement account within 60 days to avoid tax consequences.

Finance - Stock Trading Systems - The Lexicon

Charts are visual representations of stock prices over time, and you can familiarize yourself with them in the financial pages of your local news paper. Think back to algebra, and plotting curves the vertical axis is the price, and the horizontal axis is time, usually in days or weeks. Make sure, when comparing graphs, that the vertical axis is the same for multiple stocks. Sparkline graphs are a recent innovation and give you an instant visual impact on a wide range of numbers over time.
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Contribution Limits to Tax Shelters and 401k Loan Limits

This post is meant to serve as a reference for contribution limits to the various tax shelters. Below are the yearly contribution limits for each type of account.

  • IRAs: in 2007 the limit is $4,000 – this rises to $5,000 in 2008 and increases yearly by $500 in the following years. This limit can be reached by a onetime contribution, or by consecutive contributions throughout the tax year. Employees over the age of 50 can make yearly contributions of $5,000 in 2007 and $6,000 in 2008 with the same $500 increment in following years.
  • 401k: in 2007 the limit is $15,500, this rises to $16,000 in 2008. Employees over the age of 50 can make additional “catch-up” contributions amounting to an additional $5,000. Additional limits may be imposed by your employer, typically at 10% of your annual salary.
  • 403b: same as 401k limits with the same incentives offered at age 50 and above. 403b plans are essentially 401k plans offered by non-profit organizations.
  • 457: same as 401k and 403b limits with the same incentives offered at age 50 and above. 457 plans are essentially 401k plans offered by governmental employers or non-church tax-exempt organizations.
  • Keogh: also the same contribution limits with the same age incentives as 401k, 403b, and 457 plans. Keogh plans are constructed for the self-employed or unincorporated firms.
  • SEP IRA: determined as 20% of total net income and limited to $45,000 in 2007, with subsequent contribution limits raised according to a cost-of-living increase. SEP IRAs are constructed specifically for sole proprietorships and small business owners, just as Keogh plans are.

Many employees choose to take out loans against their 401k plans. It has been estimated that about 20% of employees eligible for a plan loan have one. Generally, these loans are limited to 50% of the amount in the 401k account or at $50,000, whichever is the lesser amount. Loans are generally repaid through payroll deductions in monthly installments over a 5 year period, except in the case of a loan for a home mortgage when the loan can be extended over a longer period.

Stock Research - Making Outsized Returns In The Stock Market - Using The Dow Theory

The Dow Theory
Charles H. Dow
Robert Rhea
E. George Schaefer
Richard Russell
The Dow Theory Today
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Globally Registered Shares

Globally registered shares, or global shares, are stocks listed in multiple markets worldwide. They maintain the same class of stock, regardless of the market where they are issued. They are denominated on the exchanges in the local currency, including any dividends to be paid. All shareholder records are kept in the foreign locale also. By issuing stocks in this manner, companies are able to provide shareholders around the globe with equal equity rights and are able to work around foreign ownership regulations.

As mentioned, global shares benefit investors facing restrictions in their holdings of foreign shares. By purchasing global shares of a foreign company listed on a local exchange, the investor is able to avoid any restrictions to foreign stock ownership since the foreign stock is issued locally. Issuing in local currency eliminates any currency conversion fees. Global shares were first issued by Daimler Chrysler in November 1998 in 21 markets and their ability to gain equity in foreign markets has encouraged other companies to issue their own global shares. Celanese AG issued global shares in 1999 and UBS followed suit in 2000. Still, the global share concept remains on the cutting edge of investment development and is likely to become more popular in the future as more companies seek to expand globally.

Global shares also provide opportunities for the firms they represent. By having large amounts of equity in a foreign market a firm can seek to acquire foreign firms through stock swaps. Elimination of currency conversion also provides issuers increased liquidity and higher trading volume. Also, when a company trades its stock around the globe, the trading day never stops but remains in fluid motion.

iShares and Exchange-Traded-Funds

Barclay’s Global Investors pioneered the exchange-traded fund (ETF) business with its iShares brand. iShares is a security fund that tracks a bond or a market index and is listed on the American Stock Exchange (AMEX), and the New York Stock Exchange (NYSE), and the Toronto Stock Exchange (TSX) in North America, and on other European and Asian stock exchanges.

iShares, and other ETFs such as Standard & Poor’s Depository Receipts (SPDRs), are directly linked to the indices they track. ETFs are security certificates of ownership on the index, sector, bond, or commodity they are modeled to represent. These baskets are held by a custodial financial institution for safekeeping and double-checking for accuracy, who then return the ETF shares to the middleman, known as a market maker or specialist. Baskets are large chunks of stock – anywhere from 10,000 to 50,000 shares. This market specialist can then sell the representative ETF shares to investors. Investors then can openly buy and sell the ETF shares on the market. If an investor were to acquire enough iShares to represent a complete iShares basket of the S&P 500 index, for example, that basket could be redeemed for all 500 companies in the S&P 500.

All of these ETF transactions are tracked through the Depository Trust Clearing Corporation, just like all other stocks are. ETF shares are directly tied to their underlying asset value, so it’s quite simple to determine if the ETF share is undervalued or selling at a premium. With the creation of these kinds of securities, investors now have the option to trade a security with fund-like qualities with all the features of stock trading like short selling, limit orders, stop-loss orders, and margin buying. This is impossible or meaningless with a mutual fund. Also, the ETFs can be traded throughout the trading day and not only at the end of the day as is the case with mutual funds.

ETFs are easily traded but are complicated in their structure.  Here is an excellent video from Nick Perry of Schaeffer’s Investment Research.