Recognizing Bearish Signs in the Stock Market
A bear market can be described as when there is a downward trend in the overall activity of the stock market. There are so many activities that go on in the stock market and when there is a continuous fall in prices of a stock over a time, we can rightly say that the market is bearish. Immediately the bear market sets in, there is a change in the trend of the market. There is a sudden collapse in the prices of stock in the stock market. Automatically, the market changes from a bullish market to a bearish market. The bear market if fully understood, could be a very good period for a wise and intelligent trader to make fortune in the stock market. One can always predict, well before any event, that a stock market crash is going to happen. There are certain events which happen prior to the crash, which can actually assist us to predict when the market is about to be bearish. The events that can enable us recognize a stock market fall is as follows:
WHEN MARKET IS OVERBOUGHT
This is a situation where there are so many investments into the stock market by people over a particular time. Stocks start to lose value. Read more
Financial Crisis Understanding From the Ground Up (Part 4)
The current financial crisis
The public have a common understanding that the subprime mortgage crisis has leaded to a far more serious consequence, so called ‘the financial crisis’ recently. To be exact, It has been going on for seven months. But how will that be happened? This is the question. The subprime load crisis is relatively simple to understand. People bought homes they couldn’t afford, and now they are falling behind on their home loans. This has caused the loss of related financial institutions.
However, the amount of loss is not the major cause of the financial crisis. US government has already announced to take over Fannie Mae, Freddie Mac and AIG, and have injected the capital over that amount into the market. Besides, the majority of homeowners are still doing just fine. The conventional mortgage market is still healthy. So, how is it that a mess concentrated in one part of the mortgage business: the subprime loans, has frozen up the whole credit markets in United States? How would that crisis caused such a big impact to the stock market, causing the collapse of Bear Sterns, Lehman brothers, etc, and left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression in 1923? Read more
Financial Crisis Understanding From the Ground Up (Part 2)
What is the relationship between the Federal Reserve and banks
Firstly, here is the quote of definition from the Federal Reserve homepage:
“What is the Federal Reserve System?
The Federal Reserve System, often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role has evolved and expanded.”
What are the Federal Reserve’s responsibilities?
Today, the Federal Reserve’s responsibilities fall into four general areas:
* conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices
* supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers Read more
What Does the AIG Bailout Mean
On Sunday, September 14, the government drew a line in the sand on Lehman Brothers. After orchestrating a bailout of Bear Stearns by JP Morgan (with tens of billions in guarantees) the precedent was set – investment firms in trouble could simply go to the feds. The moral hazard, a term that is suddenly in vogue now when it should have been in vogue in 2005 and 2006, the bailout created was beginning to affect investor thinking. Without risk of failure reckless behavior is encouraged, and the actions of a few managers on Wall Street will be paid for by taxpayers.
So the line was drawn with Lehman. No bailout. It was the right move to restore the natural order of economics.
Two days later the government erased its line in the sand and gave an unbelievable $85 billion in emergency loans to AIG. What happened?
Fear is the answer. In response to the Lehman bankruptcy stock markets in the US and all over the world tanked. The sell-off was the most severe since 2001. But the stock market fear was not the fear the Fed was really worried about with AIG. Read more
Credit Crunch – Not a Credit Freeze
photo credit: the_toe_stubber
First of all, it’s a credit crunch not a credit freeze!
Sure, banks are more cautious about their lending, but when were they not? The reality is that the majority of banks are lending, and to remain profitable they will continue to lend to small business owners. Those that understand the situation are acting now!
“Buy low, sell high”
With the current economic low, it is the best time to get financing at a low rate, with lower-than-ever requirements. Big banks like Citi and HSBC are making their decisions based on business credit scores, not personal fico’s.
Personal guarantee is a promise made by an entrepreneur to personally repay company debts if the business defaults. It is a way for banks to protect themselves, while reflecting the seriousness of the business owner to repay debts. Without a personal guarantee, they are thought to not believe in their business and are high risk. Small business owners don’t want to provide a personal guarantee if possible. Even if they are diligent about repaying debts, some unforeseen catastrophe may happen preventing a loan payment. Then the bank seizes personal assets. Read more
How Does the Government Offer Grants to People
photo credit: brndnprkns
Do you want to know about the government grants? Here, let’s talk about it.
Step1
Most government grants are not available year round, therefore,a grant seeker must apply when a particular grant program is announced by a government agency. When funds are made available, the agency places an announcement in the Federal Register, which is published each weekday. Federal grant announcements are also published on agency websites, many of which now allow grant seekers to submit grant applications electronically. In addition, those in search of grant funds can check out the government’s Catalog of Federal Domestic Assistance for more information on specific grants.
Step2 Read more
2nd Bailout Plan of $40 Billion Plan to Help You Refinance
The Federal Government is working on $40 billion plan to help homeowners refinance their mortgage and avoid foreclosure.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that the government can do more to help homeowners to avoid foreclosure.
“Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards,” Bair said. The FDIC is working “closely and creatively” with the Treasury Department on such a plan, she said.
First bailout package of $250 billion allows government buy preferred shares directly from banks in return for injected capital. Nine of the largest U.S banks were signed into $125 billion capital infusion. Read more
Financial Crisis Understanding From the Ground Up (Part 1)
What is going on to the global financial market? This probably is the question being asked most frequently in the mean time. I am not an economist. But I do really concern about the current financial crisis and the economy like the other people. I want to understand the current situation. I want to see the complete picture. Therefore, I try to understand and analysis the whole event in a simplified way, and prepare to express my idea in laymen text.
Let’s start thinking from the ground up
In the society, reasonably, trades among people are negotiated by the participants as a fair exchange of goods and services. However, it is not easy to match the same values of different goods and services every time. Therefore, money appeared. What is money? It is a recognized medium of exchange, agreed by all the participants. In other words, it is an IOU or a credit for the seller and a debt for the buyer. For example, A sells goods in the market. When B comes to buy the goods from A, B gives an IOU to A as an exchange. With that IOU, A can buy goods back from B or other parties with the equal value. The IOU is the money. It gives people a flexible way in trading. Read more
Financial Economic Crisis & Bailout Bill – What to Expect 2008
There is no doubt the US is in a great economical financial crisis, probably the worst since the ‘Great Depression’. But one can’t help but ask; just how bad are things going to get? And exactly who is going to feel the worst of this crisis?
The sure thing you can bet on is that taxes are going to go up and the financial burden of this bailout will be felt nationwide. It will be felt not only by the banks themselves (nationwide), but their infrastructures and communities as well. Even the auto loan industry and credit card companies are at risk as well as insurance companies, as individuals drop existing policies and refused to take on new ones.
About 9.8 million people or 7% of the American workforce are employed in the financial, real estate, and the insurance sectors and they have an even larger spending potential. Read more
The Stock Market Collapse of 2008 – Why the World Has Not Ended
The weekend party conversation filled itself with the speech of the Armageddon. More than one person told me in no uncertain terms that the world was coming to an end. My answer to friends, clients and family includes three facts. One, we’ve been here before. Two, great American companies still sell stuff to people. Three, cash cannot stay cash for long. Let me explain.
First, we’ve seen this all before and the world is still here. Calm down. In fact, in my experience as an investment advisor two important dates remind me to stay cool. In October 1987 I sat in my office wondering if the world was falling off a cliff. The market fell 22% in one day. This would be today’s equivalent of a one day drop of 2300 points! But, exactly one year later on Oct. 19, 1988 the market was up 23%!
More recently, also in October, but this time in 2002, Read more
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