Hello from a Singapore hotel room!
I'm writing this having finished a Stock Market Workshop with my top Forex trader, Avi.
This week I'm asking - what are you going to do with your money?
I don't normally watch the news as many of you know, but this week has been very interesting so I thought I would tune in and catch up.
Obama's office have been very busy this week. First of all they pass what is being hailed as the most radical financial reforms since the Depression in the 30's. Part of these reforms is the Volker rule - named after a recent Federal Reserve Chairman Paul Volker (left). It controls Proprietary Trading, where banks can no longer make bets on financial markets with their own money, and are restricted to no more than 3% of their capital being invested in speculative business such as hedge funds.
This is, according to the US Congress, designed to stop a repeat of the 2008 collapse and ensure that the consumer is protected ie that individuals' taxes are not used by governments again to support troubled big business. So that 'people don't pay out for Wall Street's errors'. In addition banks must increase their capital held against loans to protect bad debt. This will be good news for Tax Liens investors, now the US are getting their act together.
I read recently a quote from an economist which went something like this...
"If you put young men control of obscene amounts of money, turn a blind eye to the drink and drugs, and pay them well for taking high risks, why are you not surprised when things go wrong?".
Traders in the city are a portrayed as a certain stereotype young, arrogant, irresponsible party-animals (inset images of striped shirts, red braces, champagne, lapdancers, and you get the picture). They are in charge of the big money. When you think about it - If you met a person like that, would you give them your money to invest? mmmm.
As China is rubbing its hands and about to throw the biggest party ever, America is sulking. It has been downgraded by Standard & Poors the financial rating agency from AAA to AA+. In a nutshell, its more expensive now for them to borrow money, and they were downgraded despite increasing their debt limit from $14.3 to $16.7 TRILLION. Big Sulk.
Do you know what a trillion dollars looks like? Let's get this into perspective. The first picture below is a MILLION dollars ($100 bills). That seems quite small, doesn't it. Then look at a trillion. Breathtaking.
If that wasn't enough this week - the Central European bank is jumping up and down about the 'global market turmoil' and are meeting as I write to come up with ways to calm the markets. This week has seen big falls in stocks and panic headlines in the news. The FTSE100 is at its lowest all year, 10% down. When you think about how much money that's £164 billion lost.
A billion dollars in $100 bills looks like this:-
There is speculation that Italy and maybe even Spain, will follow other European countries (Greece, Republic Of Ireland, Portugal) and ask for a financial bail out. The Euro as a currency is looking very wobbly indeed.
What does this mean for mere mortals in UK and our money and lives?
It means reduced pension funds, higher insurance premiums, and less returns if you have a stocks and shares ISA that is managed by an organisation.
Is this the much awaited 'double dip' - throwing us deeper into recession?
This is so depressing....... SO S T O P!
Here's the GOOD NEWS!
I have been saying for years that everyone should be fully responsible for their money. To learn to be a savvy investor, and take control. This is even more relevant today.
You can chose the tabloids fear based approach (I don't recommend that) or you can decide to do it your way, get educated and get back in the driving seat.Get a sound financial education and make your money work for you. Seriously.
If you are trading, you should be selling short and taking advantage of the volatility of the market. (If you don't know what I am talking about - get in touch and we can help you at Investment Mastery).
It's also a good time for a resourceful businesses if you are prepared to work for it. There are many companies out there that are doing very well indeed - and its a good time to start a new business because its cheaper to set up - and you can negotiate like crazy for the things you need.
Now I know why I don't read the news - I would be poor and miserable and totally out of control. So, I suggest you find some good news and start reading that. I certainly will!
So it's back on a plane heading for Malaysia for another workshop. And I'm planning the next Trading and Investing One Day event - I promise I will pack it with sound information that will help people to be successful in their financial endeavours. That day will be in September.
And graduates - I'll see you all at the next Members Meeting on Sunday 11th September - please remember to bring your trading diaries and questions with you. Keep an eye out on the forums for details
of the speaker and the NEW VENUE TBA.
Until then
Marcus
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