Understanding the Difference Between Investment Advisors & Investment Managers

People are often confused by the number of different professionals who provide investment advice. There are financial advisors, brokers, investment consultants, wealth managers, financial consultants and financial planners. Given the fact that there is an ever-increasing amount of the nations liquid investable wealth in the hands of these investment professionals, it is important for investors to be knowledgeable about the role of the different persons involved in the investment process. If you add in the fact that people are becoming increasingly concerned about their retirement security, it is entirely possible that investors are going to have much higher expectations of their financial professionals as time goes by.

The Big Investment Lie: What Your Financial Advisor Doesn't Want You to Know by Michael Edesess Reveals the unfortunate truth behind the financial advisory industry that professional investors cannot, and never have been able to, beat market averages.

In order for investors to make an informed choice among the various financial service providers, they should first understand that any firm or individual who receives compensation for providing advice about securities (“investment advice”) is required to register with the SEC (or at the state level) and is regulated under the Investment Advisers Act of 1940. This applies to any firm or individual, such as financial advisors, brokers, investment consultants, wealth managers, financial consultants and financial planners. With that said, here are the main differences between Investment Advisors and Investment Managers.

The Investment Advisor is best defined as a professional who makes decisions about asset allocation, developing the investment strategy, implementing the strategy with appropriate Investment Managers and monitoring the strategy on an ongoing basis.

The role of the Investment Advisor is considered the most important, yet most misunderstood, role in the investment process. The Investment Advisor is a professional who provides comprehensive and continuous investment advice; the operative words being “comprehensive” and “continuous.” Because of the trust and confidence clients put in them, an Investment Advisor is considered a fiduciary.

A fiduciary is a person responsible for managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility. Investment Advisors have a fiduciary duty to clients, which means they must put their clients interests ahead of their own. He or she must recommend the best investment for the client. The compensation of an advisor cannot be dependent upon which products or assets a client ends up investing in. This distinguishes Investment Advisors from those who are product driven, with more of an interest in selling financial products, rather than providing reliable investment advice.

• Types of Investing Risks
  Investing in stocks is a risky business. There are some risks you have some control over and others that you can only guard against. Thoughtful investment selections that meet your goals and risk profile keep individual stock and bond risks at an acceptable level.

The Investment Manager, on the other hand, is responsible for making investment decisions, including buying and selling individual securities (such as individual stocks) for an investment portfolio. Examples include money managers who are responsible for separate accounts and mutual funds.

Although it is possible to serve in both capacities, as an Investment Advisor and as an Investment Manager, it is very difficult to be an expert in both. You should keep this in mind when choosing a financial advisor. In other words, if you follow the time proven maxim of doing what you do best, you could choose an Investment Advisor whose role is to manage the investment process and to delegate the investment decisions about individual stock and bond picks to the Investment Managers.

In summary, the Investment Managers make the decisions about which stocks or bonds to buy and sell. Investment Advisors manage the Investment Managers.

• Creating Cash Flow Formula for Your Investment
  there may be times when you need to generate some cash flow and there are some relatively safe strategies you can use to produce income...

Do you understand the importance of the role of Investment Advisors in helping people manage their wealth? Do you have any questions about the difference between Investment Advisors and Investment Managers?
What is your opinion? Do you believe investors are going to have increasingly higher expectations of their Investment Advisor as a result of their concern about retirement security?

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Mobilizing Savings for Investment

Stock exchange or bourse is a mutual organization which provides facilities for stock brokers and traders, in trading company stocks and other securities, and for the issue of redemption of securities and other financial tools and capital events like the payment of income and dividends.

• Government & Corporate Bonds Investment
  Most people know about the basics of investing in the stock market but many people are puzzled as to what bonds are. In one word a bond is a loan. The loans can be form

The securities traded on a stock exchange include shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there.

Usually there is a central location at least for record keeping, but trade is less linked to such a physical place. Electronic networks run modern markets are, providing them great speed and cost of transactions.

Stock exchange is often called the most important element of a stock market. The Demand and Supply in the stock markets is attracted by number of factors that affect the price of stocks.

Mobilizing savings for investment:
When people draw their savings and invest in shares, it leads to a more balanced allotment of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized to promote business activity that benefits several economic sectors like agriculture, commerce and industry, resulting in a stronger economic growth.

History of stock exchanges:
In 12th century France, the courratiers de change were concerned with managing the debts of agricultural communities on behalf of the banks and these men also traded in debts. These men were the first brokers. In the middle of the 13th century, Venetian bankers traded in government securities. In 1351, the Venetian Government outlawed spreading rumors about lowering the price of government funds. Because of this rumor people in Pisa, Verona, Genoa and Florence also started trading in government securities which was possible because there were independent city states ruled by a council of powerful citizens during the 14th century.

Raising capital for businesses:
The Stock Exchange helps current and newly-formed companies raise capital for building and expanding their business through selling shares to the investing public.

Creating investment opportunities for small investors:
The Stock Exchange provides opportunity for small investors like the big investors to own shares of the same or different companies.

Government capital-raising for development projects:
Governments at various levels may decide to borrow money for financing infrastructure projects like sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds are raised through the Stock Exchange where public buy them, thus loaning money to the government. The issuance of such municipal bonds can prevent the need to directly tax the citizens in order to finance development, although by securing such bonds with the full faith and credit of the government instead of with collateral, the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature.

Listing requirements:
Listing requirements are the set of conditions forced by any given stock exchange upon companies that want to be listed on that exchange.

Requirements by stock exchange:
For companies to have their stock and shares listed at the stock exchange have to meet certain requirements of the exchange. But requirements vary in different exchanges.

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Investment Guide in Startup Companies

The person who wants to invest in start-up companies wants to invest in the future. He’s different from the widow or orphan who invests in bonds or utilities, the retiree who invests for dividends, or the gold bug who invests in mining companies. But due to the nature of the start-up company, he has the most in common with the latter: both want to find the hidden value where others see only barren ground.

Startup companies are usually small companies and usually new companies. They are unproven, frequently having little money and less market share. Often they are started on a shoestring and a dream, a song and a prayer--but you want to find them before they become a household name.

The ABCs of IPOs: Investment Strategies and Tactics for New Issue Securities by Robert Anthony Chechile Explains the factors that can signal whether an offering will be successful by describing: Typical IPO market price behavior, as illustrated by various IPO offerings Securities regulations and the environment that necessitated their enactment Different securities markets, including the stock exchange and the multi-tiered, over-the-counter markets The underwriting process and the information required in the prospectus Evaluation techniques, including how to read a financial report and also how to determine a security’s intrinsic value How to allocate investment capital to avoid gambler’s remorse Selection guidelines for IPOs, limited partnerships, and convertibles

There is a world of difference between investing in startup companies and investing in the stock market, and the main difference lies in where your money goes. When you buy a stock in the stock market, your money usually goes to another individual: the person who owned the stock before you. But when you invest in a startup, you're investing directly into the company, buying newly issued stock that no one has owned before. So to invest in startups, you've got to find companies that are issuing stock directly into the market to raise money.

The first place to look is your full-service broker, and if you don’t have one, it’s time to get one. You don’t have to do all your trades with him, but you must have a relationship with a broker who brings these companies to market. Why? It’s simple: your broker provides a service to the company by selling newly-issued stock to their own customers through a private placement, and you can’t get in on a private placement unless you are a customer.

But since hundreds of companies go public every year, you can’t be in on all of them. So how do you choose which ones you want to be in on? Your choices will be limited, at least at first, by those companies that work through your broker, but you should tell your broker what kinds of deals you’re interested in. Let him know what you want.

Do you like exploration stocks? Biotech? Oil and Gas? Talk to your broker, let him know that you’re interested, and find out what he offers, and pay your commissions. It’s been said that it takes money to make money, and your broker needs to make money from you before he’ll make money for you.

But your broker is only half the equation. You also need to become an expert in whatever it is you want to invest in. You need to understand the business, because only in knowing what the company is trying to accomplish can you determine whether an investment is right for you. You must rely on your broker for access, but it's best to rely on your own research to decide if a company is worthy of your investment.

But when all that’s said and done, you’re still paying retail. Yes, you’re first in line, but you’re still paying close to market prices for stock. Maybe it will go up--maybe not. But isn’t there a better way to get in on startups than hoping your broker brings you a winner? Yes, there is, and that way is by already being on the inside when it goes public.

I mentioned above that startups often have no money and no market. That means they often need accounting services, websites, distribution channels. Once you’ve found a company that may go public in the future, you may have an opportunity to invest in the next Microsoft by receiving stock for your services, not your money.

So what can you provide for a company in exchange for very cheap stock? Do you have an office they can rent? Can you sell their products in your store or office? Can you provide tax or accounting help? If it’s a mining company, can you take a week to go to the mine and help clear timber? Can you simply answer the phone? Ask yourself what you can offer the company (remember, a true startup probably needs everything) and provide it in exchange for stock.

A company can’t go public until a lot of work is completed first. All the accounting and taxes and distribution and assembly, all the work that turns an idea into a company must be done by someone, and those people often get paid in shares of that company. And difference in return between buying stock and earning stock can be phenomenal.

So how do you find these companies? You start by looking in your own backyard. Do you know someone with an idea but no follow through? Helping him understand what a public offering can mean for the company and for his pocketbook can bring you a long way to the inside. Find out what he needs and help organize it. Put up some money to increase production. That way you can buy a part of the next Microsoft while it’s still micro.

Talk to your broker about little companies that may, someday, go public. Then get on the phone and see how you can help.

Do you know anyone who has taken a small company public? People don’t generally do just one, and chances are he knows people who are doing it, companies that are planning for the eventuality of an IPO. Get in, get your hands dirty. Network. Offer value to companies, and they will reciprocate.

A true startup can take years from the idea phase (and you’ve got to understand and believe in the idea or you won’t stick it out), to the day it goes public to fanfare and ticker-tape. Being on the inside for years can help you accumulate a lot of very cheap stock. Then when it does go public, you’ll already be a winner.

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Exploring Online International Investments

Learn what you are investing in. Approve it & Buy it

Millions of dollars, everyday, ride upon the success or failure of an agreement. Large industrial and corporate investments and purchases rely on banking endorsements such as Letters Of Credit to commit funds before they are spent, but such financial instruments are not cost effective in a smaller deal, which is the caliber of many online investment offers. Also, an LC assumes that the seller can afford to tie up his product until a buyer on the other side of the planet can accept delivery, so what do we do?

We have an importer that has a local market he has been dealing with for years and an exporter that has $35000 of high demand units that he has to move. On the surface this sounds like a no brainer but, the importer does not know if the units are real and the exporter does not know the importer's creditworthiness nor can seller justify to his Finance VP floating his units to sea for a month before they find out if the buyer is for real.

I recently concluded an overseas sales agreement to the point where my buyer accepted our price and terms, which explicitly called for the importer to pay upfront and take possession of our products in the United States. At that point it was our importer's move; we had even sent him some free samples that cost us almost as much in shipping as product. His response was to inform us that his country had a Bureau of Standards that required a registration fee of our product. By now I knew what I was dealing with, but played along for one more round of em's, explaining that my original sales pro-forma clearly specified buyer taking his goods on an American dock and that there was no stretching of any imagination that could construe that any overseas institution had any business with us at all, but to look for the local buyer, who is bringing the products into the country, for any product registration or taxes, etc. My would-be importer then profusely apologized about the oversight of forgetting to mention their Bureau of Standards upfront and assured me that this was routine and necessary practice. I did not know whether to be disappointed or angry with someone who hoped me stupid enough to pay taxes to a foreign country on something I sold in the US. I terminated negotiations at this point with the experience inspiring this article.

What was just described here is a classic variation of what has become an international trade scam of epidemic proportions. As of 1996 this scam was producing $5 Billion in profits to the third world nation it usually originates from, being that country’s third to fifth largest industry, I have heard. It is called the Advance Fee Fraud or the 419 Fraud, from the fact that it violates criminal code 419 of that country’s laws.

The Scam operates as follows: the target receives an unsolicited fax, email, or letter often concerning Nigeria or another African nation containing either a money laundering or other illegal proposal OR you may receive a Legal and Legitimate business proposal by normal means. Common variations on the Scam include "over-invoiced" or "double invoiced" oil or other supply and service contracts where your Bad Guys want to get the overage out of Nigeria; crude oil and other commodity deals; a "bequest" left you in a will; "money cleaning" where your Bad Guy has a lot of currency that needs to be "chemically cleaned" before it can be used and he needs the cost of the chemicals; "spoof banks" where there is supposedly money in your name already on deposit; "paying" for a purchase with a check larger than the amount required and asking for change to be advanced; fake lottery 419; and ordering items and commodities off "trading" sites on the web and then cheating the seller. The variations of Advance Fee Fraud (419) are very creative and virtually endless.

At some point, the victim is asked to pay up front an Advance Fee of some sort, be it an "Advance Fee", "Transfer Tax", "Performance Bond", or to extend credit, grant COD privileges, send back "change" on an overage cashier's check or money order, whatever. If the victim pays the Fee, there are often many "Complications" which require still more advance payments until the victim either quits, runs out of money, or both. If the victim extends credit on a given transaction etc. he may also pay such fees ("nerfund" etc.), and also stiffed for the Goods or Service with NO Effective Recourse. The Nigerian Scam is, according to published reports, the Third to Fifth largest industry in Nigeria. It is the 419 Coalition view that, in effect, the elites from which successive Governments of Nigeria have been drawn ARE the Scammers - therefore, victims have little recourse in this matter. Monies stolen by 419 operations are almost Never Recovered from Nigeria.

The 5 rules for doing business with Nigeria:

• NEVER pay anything up front for ANY reason.
• NEVER extend credit for ANY reason.
• NEVER do ANYTHING until their check clears.
• NEVER expect ANY help from the Nigerian Government.
• NEVER rely on YOUR Government to bail you out. *1

Enough about playing hardball. There are plenty of mistakes you can make when both buyer and seller have the best of intentions. Let's return to our importer that has a local market he has been dealing with for years and an exporter that has $35,000 of high demand units that he has to move. There are two ways, short of expensive banking instrumentation such as LC's, that first met buyer and seller can both feel safe and conduct their entire transaction in a reasonable amount of time.

First, buyer deposits purchase price in an escrow account with an appropriate institution that both he and seller trust, seller ships and then collects his money.

Second, buyer flies to seller, inspects and approves units, pays seller and takes possession of units.

The entire matter is the simple fact of ensuring that when one pays, one gets. After subsequent transactions occur, trust accumulates and perhaps credit is warranted. Now, what happens to you, as a buyer investing in units that you now own, and the delivery is hurricane blown onto some rocks and your units destroyed. I am sure that you had the foresight to have negotiated with seller to deliver them to you insured against damage. Two other ways of protecting yourself against that type of loss, which was not intentional but a natural disaster, are to either insure your goods yourself, or take possession of your shipment from a local port to you. If an international investment involves real estate, the basic rules are the same.

This has always been the case in international trade for thousands of years, the difference that we in the 21st century deal with is instantaneous, relatively free electronic mail that exposes the legitimate investor to petty criminals and well meaning novices. If you know what you are doing, you are safe from the former and a worthy teacher to the latter.

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Start your Day Trade Research

The investment firm commercials are frequently run on financial and news channels, and the life of a day-trader appears to be an attractive one. You’ve made up your mind to give it a try and commit yourself to learning all that you must in order to be successful. A great place to start is to become familiar with the most commonly used terms you will encounter on a daily, perhaps hourly, basis.

Beginner's Guide to Day Trading Online by Toni Turner Mastering the markets, including: Decimalization of stock prices New trading products such as E-minis Exchange Traded Funds (ETFs) Precision entries & exits, etc...

Since traders use hundreds of market-specific terms and phrases, with more being frequently introduced, we will cover the more basic and broadly used. First, we will define ‘the market’. When this term is used, it is a generic reference to the exchanges where stocks and bonds are traded, such as the New York Stock Exchange, American Stock Exchange, and the NASDAQ, much like any other market.

As you begin looking at specific stocks to purchase, you will become acquainted with price/earnings ratios, commonly referred to as the P/E. This simple equation compares the price of the stock with the company’s earnings per share. This term describes a ratio you will surely make frequent use of as a stock trader.

You settle on a few stocks that look attractive to you. If you are looking at the stock’s symbol in the newspaper, there will be listed the bid price and the ask price. There are typically a few pennies separating the two numbers, which is referred to as the spread. The ask price is what a trader will sell his stock for and the bid price is what a trader will be willing to purchase a stock for.

When you have decided to purchase a specific stock, you will start by placing an order. There are several types of orders, including a market order, a limit order, and a stop order. A market order is made when you wish to purchase a stock at the price at which it is currently trading, as quickly as it can be executed. A limit order is made when you want to buy or sell a stock at a specific price. For example, if you want to buy Wally’s Widgets at ten dollars per share even though it is trading at twelve dollars per share, you can put in a buy limit order at ten, which will be executed only when the stock falls to ten dollars per share or below. Conversely, if you own Wally’s Widgets stock, which is trading at ten dollars per share and you want to sell it, but not for less than twelve dollars per share, you can put in a sell limit. The limit order will only be executed if the stock rises to twelve dollars or more. Limit orders typically have a slightly higher commission fee attached.

We’ve discussed just a few of the terms you will encounter on a daily, if not more frequent, basis as a trader. The stock market is continually changing, offering new products and new systems within which to trade. It is worth the effort to keep abreast of these changes and the new terminology associated with them.

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Investing in Socially & Environmentally Responsible Stocks

Investing with your conscience rather than against it may be a good idea. How can you fully enjoy profits from a company that pollutes, subjects animals to painful testing or lure teens to smoke if you're morally opposed to its practices? On the other hand, charity has a time and a place - and this isn't it. You invest money to earn a decent return, otherwise you might as well keep it in your mattress. So how do you strike a sensible balance between sound investment and doing your part in making the world a better place?

Start with a gut check. Are there any industries that are out right off the bat? Tobacco? Fast food? Guns? Write them down and try to identify specific companies to avoid. Then run through your checklist before executing any trades. This will prevent temporary greed and general forgetfulness to cause buyers remorse later on.

Next, use the Internet to do some basic homework. Many companies have multiple branches, some of which are perfectly acceptable to you while others may be objectionable. For example, Altria, formerly Philip Morris, controls half the US tobacco market but is also deeply involved in the food industry through its subsidiaries. In other words, you'll need to take a good look under the hood to identify the members of your 'black list'.

With the bad guys out of the way, it's time to focus on the good guys. Which companies are really living up to your standards as being 'socially responsible'? Remember, glitzy ads mean very little, so it's time to hit the Internet again. Fortunately, there are tons of helpful sites out there that help make your job a lot easier. Do a search for 'socially responsible stocks' in Google and you'll get dozens of reputable sources served on a platter.

But here's the caveat; just because a company strives to be a good citizen doesn't automatically mean it's a good investment. While some are as good for your wallet as they are for the environment, others stink to high heavens. What you're looking for is a company run by experienced managers, producing good products, with a solid balance sheet and with good growth potential. In other words, use the same criteria you would use for any other stock.

If individual stock picking is not your thing, you may want to go with a mutual fund. With these, all you do is cut a check and let the fund manager take it from there. But make sure to read the prospectus carefully so that you're on the same page as the fund manager when it comes to deciding what's socially responsible and what isn't. Some examples of such fund companies are Domini, PAX World, Citizens Trust and Green Century.

Last but not least, don't forget to keep an eye on the 'regular' stock market. Companies change course due to necessity, new management philosophies, pressure from consumer groups and whatnot. That can make a previously so-so company right on target for your socially responsible portfolio even though the watchdogs have not yet caught wind of it. If you're lucky, you'll catch a good thing in the early stages before the fruits of the changes have come into effect from both a financial and environmental perspective. But remember: Dealing with virtuous stock doesn't prevent you from losing your shirt if you make the wrong call. Don't invest the rent money.

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Tips on How to pick the winning stocks

Investment can be one of the ways to be rich... Here investment mean picking the right stock.

Given below are some tips to help one pick the winning stocks:

Stock Research Report or Company Report Get the Revenue figure. What you want to know, is whether it has steady growth evidenced by sales figure on an upward climb. Understanding more about the Cost of Goods Sold figure. This tells you more about the costs of all materials and expenses incurred in making the product. Rental in keeping stocks is not accounted.

Financial Ratios' The few favourite ratios :

• P/E (Price to Earnings Ratio) , EPS (Earnings Per Share) and ROE (Return on Equity) This ratio reveals about the value of a stock. The price of a stock divided by the earning per share is called the p/e ratio. Every stock has a trailing p/e and a forward p/e. The trailing p/e uses earnings from the past 1 year while the forward p/e uses next year's projected earnings. Compare the current p/e with its historic p/e during its last 3 years. Try to "aim" for a stock with low p/e. If the p/e is high, its risky as it is more difficult to meet the high earning expectations of its shareholders. Companies with low p/e ratios usually operate in slow growth industries. Also mature companies with low p/e often pay dividends while high p/e ratios usually does not.
• EPS : This ratio reveals the growth of the stock. It takes what the company earned and divides it by the number of outstanding stock shares. This ratio is usually reported at the end of the year. But realise that this figure can be manipulated due to market pressure. Of course, the bigger this ratio is, the better.
• ROE: Some people consider this to be the "it" to measure the stock's success. This ratio shows you the rate of return to shareholders by dividing the net income by the total shareholders' equity. Big is good. Anything above 20 percent is good for me... 3. Sector Outlook A few things must be enquired before compiling a list of stock possiblities a) Does the company produce high end services/ products? b) Does the company management have experienced/ qualified personnels in the industry they are in? (For me personally, I believe that in highly specialised fields, higher value added performance is obtained from people who are "skilled specialist" : That explains why Google is superb in the things they do ) c) Is the stock reasonably priced? d) What about comparisons with the other stocks? e) Does a company have patents to keep potential rivals at bay? There you are.. good luck!

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Researching a Company for Investment

Maybe you heard about a hot new company from a friend of a friend, or you saw a news segment featuring a promising new invention, or maybe you’ve been impressed with a familiar brand’s recent marketing campaign. You know there’s money to be made in investing, but how do you know if a company is really doing well and if it’s worth risking your hard-earned dollars? With a few point-and-clicks and some simple arithmetic, you can answer these questions for yourself.

Once you know what you’re looking for, researching companies can be very easy. Your first stop should be at the prospective company’s own Web site. As you study the site, ask yourself some key questions: What does the company do? How do they make money? Who are the current and potential customers? Is the demand for their products or services likely to grow in the long-term? Who is their competition? Do you like the “personality” of the company? At this point, if you’re turned off or otherwise unimpressed, you probably don’t want to invest there. On the other hand, if you’re liking the big picture, move in for a closer inspection.

In many cases, you won’t need to go much further than a click or two to get to the company’s latest annual or quarterly report. If the financials are not found on their Web site, you can contact their investor relations department directly and ask for a packet to be sent to you. You could also utilize the online database, Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), maintained by the U.S. Securities and Exchange Commission, or visit your local library for information sources.

Once you find it, read the latest report from beginning to end. Some parts of the report may be boring or even confusing, but much of this information is valuable to a current or potential investor. For example, you will find out about the company’s most recent problems and how they were solved. You will also learn about potential challenges and, more important, how management plans to overcome them. You will start to develop a picture of the company’s self-analysis, management style, and overall health.

After digesting the narrative sections, find a calculator and a pencil and dive into the tables. Much of the company’s financial health can be found in three documents: the balance sheet, the income statement, and the cash flow statement. If you’re not familiar with financial documents, take some time to absorb the jargon and the figures. Don’t let the numbers intimidate you; they are there to inform you. Following are just a few of the key elements to examine, as well as some calculations to help you further scrutinize the numbers.

The balance sheet tells you how much money the company owns, owes, and has left over for the stockholders. Seeing a lot of liquid assets here tells you that the company can grow the business and pay down debts--good signs of a healthy company. Next, you want to look at the company’s short- and long-term financial obligations, or liabilities. Specifically, check to see if the current assets (the ones that could be quickly liquidated) are enough to pay off the current liabilities.

Regarding debt: many investors prefer to invest in growing companies that have little or no long-term debt, the theory being that today’s borrowing puts tomorrow’s opportunities at risk. A simple debt calculation, total assets divided by shareholders’ equity, gives you the financial leverage ratio. A leverage ratio of 1 means that the company has no debt; 9 indicates high debt. Many experts recommend that you avoid companies with leverage ratios above 5.

Next, check for low accounts receivable (AR). Although businesses typically negotiate payment arrangements, raise an eyebrow if a company is allowing more generous terms of payment. This indicates a softness in the demand of the company’s product. To determine AR using a quarterly report, for example, divide the sales figure by the accounts receivable figure. Then divide that number by 90 days. Ideally, a company will operate with less than 30 days of outstanding AR.

The income statement summarizes revenues and expenses for a fixed period of time. The first thing you want to see here is high revenue growth. This is an obvious indication that people want what the company is selling. Look for successful smaller companies to show double-digit growth from year to year whereas huge companies may show only modest gains.

Next, determine the gross profit by subtracting the cost of goods sold (COGS) from the total sales. (This figure may be spelled out for you in the document.) Divide the gross profit by revenues to get the gross profit margin. Compare this number with your company’s competitors to see who is benefiting by using the industry’s best practices, and also compare it to the company’s own previous years’ profit margins. If the company is becoming more efficient, and therefore more profitable, the margins will show increases.

For some industries, you can learn a lot from the research and development (R&D) figure. A high-tech company, for example, should be spending increasing amounts of resources on R&D. Divide the R&D figure by total revenue to get a percentage of sales. Look for this number to at least hold steady if not increase. If it decreases from year to year, the company is spending its money elsewhere--not a good sign for a business dependent on being the first and/or the best at developing an emerging technology.

For retail and manufacturing companies, inventory is a very important factor. Inventory turnover is found by dividing the cost of goods sold by average inventory. This indicates how long the company “sits” on the product before selling it. The higher the number, the more the stuff is moving out the door. Track this number from year to year to determine if the company is trending in the right direction. Again, for the sake of perspective, do the same calculation with a competitor’s figures to see if your company is performing better than its peers.

Last, the cash flow statement details (as you might expect) how cash flows in from the operations or from sales of stocks and bonds, and how it flows out to invest in growth. Most investors want to see that the company can operate the business with the cash on hand, meaning the company won’t need to finance in order to cover its spending. Look for a positive number (not one in brackets) on the “net cash provided by operating expenses” line.

Please keep in mind that investing methodologies vary. What might be considered “good” numbers for one business could be dreadful for another. As stated in a few of the previous examples, your time would be well-spent by comparing the financial data of similarly sized companies in the same industry. The clearer understanding of the marketplace will give you excellent perspective.

As you might expect, the suggestions here do not imply a no-fail approach to investing. Use your personal base of knowledge about various industries and your common sense as you continue to read about different investment theories. Beyond your initial research, keep current on the company’s progress. Read their press releases, pay attention to the news, and be aware of market changes that could affect the company. Above all, enjoy the empowerment (and the financial reward, of course) that comes from making decisions based on your own research.

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Forex Markets & Its Trading Characteristics

There are a number of reasons why FOREX trading is such a great way of entering the capital markets. Among them we can find it’s easy accessibility thanks to the use of the internet, the fact that currency trading is all commission-free and also the low transaction costs involved.

Thirty Days of FOREX Trading: Trades, Tactics, and Techniques by Raghee Horner The foreign exchange (forex) market is one of the most dynamic markets in the world. Its flexibility and 24-hour accessibility offer traders tremendous profit-making opportunities. But it takes more than a firm understanding of the tools and techniques of this discipline to make the most of your time in the forex market. What it really takes is the guidance of someone who has participated, and prevailed, in this type of fast-paced environment. In Thirty Days of Forex Trading, Raghee Horner—one of today's top forex traders and a master teacher of trading systems—shares her experiences in this field, by chronicling one full month of trading real money...

There is one important characteristic about Forex that makes it what it is. This important characteristic is that there is not a single unified foreign exchange market in the world. Instead of this, due to the over-the-counter nature of currency markets, there exists a number of interconnected marketplaces, where many different currency instruments are traded. What this implies is that there is not a single dollar rate in the world, but different rates, depending on what bank or market maker you are asking a quotation to. In practice these rates are often very close as you can easily find on the web.

As a piece of general knowledge you must learn that the main forex trading centers are placed in New York, London, and Tokyo, but this doesn’t mean they are the only ones; there are other banks throughout the world that also participate. For example, as the Asian trading session ends, the European trading centers open, then the US session, and then the Asian centers open again. This kind of “continuos” market has the advantage that traders can react to news immediately, instead of waiting for the markets to open.

There are many factors that can influence the exchange rate of a particular currency. These rate fluctuations are usually caused by changes in inflation, GDP growth, interest rates, budget and trade deficits or surpluses, and other macroeconomic conditions of the country emitting the particular currency. Also major news that are released publicly can affect the prices of currencies; so many people have access to the same news at the same time that they can shake a currency price really hard.

According to a specialized study, the most heavily traded products on the spot market are: EUR/USD - 28 %, USD/JPY - 18 %, GBP/USD - 14 % and the US currency was involved in 89% of transactions, followed by the euro (37%), the yen (20%) and sterling (17%).

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