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A Day To Remember: The Great Wall Falls

Posted by rantaboutit on February 28, 2007

Everyone knows that the market goes through a correction every once a while. The problem is not everyone knows when. Stocks slumped Tuesday 27th Feb on worries about economic growth at home and abroad especially China.
What Happened
The Dow dropped 416.02 points equivalent to 3.29%, its biggest one-day point loss in nearly 5 & 1/2 years. The S&P 500 tumbled about 3.5 % and the Nasdaq skidded 3.9 %.

What Caused It
  • Chinese market dropped 9 % on concerns that the government was looking to crack down on market speculation that has driven chinese stocks to record highs. There are were also rumors that China is going to impose a high capital gain tax on stock investments. Other Asian markets slumped in tandem. European shares also tumbled.
  • Former Federal Reserve Chairman Alan Greenspan said that U.S. economy might slip into a recession by the end of the year.
  • Economic indicators showed the biggest monthly drop in new orders for nondefense durable goods, items meant to last 3 years or more.
  • Reports indicated that the median price of an existing home fell 3.1 % in January from a year earlier, giving investors more reasons to worry about the housing slowdown hurting the economy.
  • Increased violence in Iraq and Afghanistan also alarmed Wall Street.
  • The Dow and S&P 500 have each risen 12 % in the past 6 months while the Nasdaq is up 17 %.

Few of the big guns in the tech sector like Google (GOOG) lost 3.5 %, Yahoo (YHOO) lost 3.64 %, Microsoft (MSFT) lost 4.13 % and eBay (EBAY) lost 4.25 %. Chinese stocks got burned badly with CDC Corp (CHINA) losing 11.4 %, Telestone (TSTC) losing 13.97 % and Fuwei Films (FFHL) losing 11.53%.

Those who shorted the Dow (DXD) and Nasdaq (QID) had a smile on their face. Both were up 4.21 % and 4.81 % respectively.

Conclusion: Analysts believe that nothing has changed fundamentally and investors do not need to worry about a bear market. Consumer spending has held up relatively well. The company profits/earnings has been positive. Analysts also believe that this sell-off could give the Feds a reason to lower interest rates which would evidently boost earnings.

Recommendation: Commodities also took a hit and are now trading at a bargain. Alot of stocks are trading at a cheaper prices. For those investors that stayed away from the market, have a question in their mind for sure. Is this a good time to buy? Maybe, maybe not. The point is nobody knows. History shows that after a huge correction, the market trades lightly the next day indicating cautious investors. Any substancial upswing would not occur until day after tomorrow.

(Source: CNN Money)

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Posted in Asia, China, Investor, Stock Market News, Traders | Leave a Comment »

ETF: Something for those Lazy Investors

Posted by rantaboutit on February 19, 2007

Lets face it. Stocks is not for everyone. Alot of research has to be done before you indulge yourself into buying a stock. You need to go over the fundamental and the technical analysis. What is the EPS, P/E, PEG, Market Cap, Dividend, ROC, MACD…the list is end. Obviously you dont have to be a rocket scientist to buy stocks, but without the research it would be pure gambling.

What if i told you, there is another option for those investors who would love to make some money in the stock market but at the same time do not want to spend time analyzing stocks ? If you are that person, Exchange-traded funds (ETFs) may be right for you. ETFs also hold an advantage over mutual funds. Interesting isnt it. Read on…

What Is an ETF?
Think of an ETF as a mutual fund that trades like a stock thus experiencing price changes throughout the day as it is bought and sold. You can short sell them or buy them on margin as well. ETF tracks an index, a commodity or an index fund.

ETFs offer diversification, high trading flexibility, low expense ratio and tax efficiency in a flexible investment. An ETF does not have its net asset value (NAV) calculated every day like a mutual fund does. When buying and selling ETFs, you have to pay the same commission to your broker that you’d pay on any regular order.

Varieties of ETFs
The first exchange-traded fund was the S&P 500 index fund. There are hundreds of ETFs trading on the open market ranging from sector-specific, country-specific and broad-market indexes. You can pretty much find an ETF for just about any kind of sector of the market.

  1. If you are interested in the healthcare sector, Vanguard’s Health Care Viper VHT would be worth looking into.
  2. If you would like exposure to the emerging market, then take a look at iShare MSCI Emerging Market Index EEM. Similarly if you are interested in any country’s index, like say Brazil, you can follow the iShare MSCI Brazil Index EWZ
  3. If you’d like exposure to the internet infrastructure sector, then maybe Internet Infrastructure HOLDRS IIH might be for you.

Below you will find a closer look at some of the more popular ETFs:

Nasdaq-100 Index Tracking Stock (QQQQ)
As the name suggests, this EFT consists of the 100 largest and most actively traded non-financial stocks on the Nasdaq. QQQQ offers broad exposure to the tech sector. Because it curbs the risk that comes with investing in individual stocks, the QQQQ is a great way to invest in the long-term prospects of the technology industry.

SPDRs – Spiders
Imagine trying to buy all 500 stocks in the S&P 500. How crazy that would be ? SPDRs allow individual investors to own the index’s stocks in a cost-effective manner. You can trade the S&P Index 500 (SPY) on the AMEX. Another nice feature of SPDRs is that they divide various sectors of the S&P 500 stocks and sell them as separate ETFs. Here is the list of ETFs for various sectors.

The energy sector SPDR index XLE invests in industries, such as energy equipment and services, and oil and gas services, among others. The technology sector SPDR index XLK invests in industries, such as communications equipment, computers and peripherals, electronic equipment and instruments, telecommunication services, semiconductor equipment and products, information services, Internet software and services and software, office electronics.

iShares
iShares is Barclay’s brand of ETFs. Barclay has put out a number of technology-oriented iShares that follow Goldman Sachs’s technology indexes trading on the AMEX.

Vipers
VIPERs are Vanguard’s brand of EFTs. Vanguard also offers ETFs for many different areas of the market including the financial, healthcare and utilities sectors.

Diamonds
Diamonds Trust DIA tracks the Dow Jones Industrial Average. The fund is structured as a unit investment trust.

Conclusion:
A great reason to consider ETFs is that they simplify index and sector investing in a way that is easy to understand. If you feel a sector is going to do well in the near future, go buy it. If however, you think that a sector is going to slump, go short it.

The combination of diversification, low cost, tax efficient and the flexibility that ETFs offer, makes them attractive trading options. They are easy to understand and easy to use, and they are gaining in popularity at such a rapid pace that some experts anticipate that they will one day surpass the popularity of mutual funds. If ETFs haven’t found a place in your portfolio yet, there is a pretty good chance that they will in the future.

You can also view a small video explaining ETFs.

To be continued…

Related Posts:

  1. If only you knew when !!!
  2. Should we trust these analyst ?
  3. Few interesting number…
  4. Which sector are you in ??

(Source: Investopedia)

Posted in Exchange Trade Funds, Investor, Sector, Trading | Leave a Comment »

Why I love Israel !!

Posted by rantaboutit on February 7, 2007

According to Wikipedia.org

Israel is the most industrially and economically developed country in the Middle East. It has a technologically advanced market economy. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past twenty years. Israel is largely self-sufficient in food production. Diamonds, high technology, military equipment, software, pharmaceuticals, fine chemicals, and agricultural products are leading exports. According to World Bank, Israel has the best regulations for businesses and strongest protections of property rights in the Middle East.

The more i read about Israel, the more i am interested in investing there. For those who share the same interest i recommend to keep an eye on few Israeli companies that have market capital in billions of dollar and excellent growth.

  1. Teva Pharmaceutical Industries TEVA
  2. Elbit Medical Imaging EMITF
  3. Check Point Software Technologies CHKP
  4. Partner Communications Company PTNR
  5. Nice Systems NICE
You can find the complete list of Israeli companies listed on Nasdaq…here

I would love to hear from my readers about their thoughts on investing in Israel and the growth of Israel and also which companies if any do they follow and invest in.

Posted in Investment, Investor | Leave a Comment »