Taking an MBA or even a CFA level 3 status is not the only thing that defines a trader. A trader, a person who buys stocks, options, futures, or whatever exotic derivative you may think of, and sells it in search of short-term profits. Make no mistake that trading the capital markets require the trader nerves of steel and some gut feel perhaps, but trading is really not for everyone.

Crunching numbers and making quick calculations would be a trader’s main edge in the capital markets. Snap decisions with calculated risks and rewards usually makes the career of the trader aside from the information he holds. Start by loving your numbers and learning how to play with them. So, if you hated calculus during your college, now is the time to find a reason how it can be profitable and not boring.

Emotions play a vital role in a trader’s performance. Trading is, by the way, a healthy balance of greed and fear. Too much of any of those two could really burn you out of the market. Often times, successful traders remove emotions in their positions as emotions hamper their judgement and logic. The main goal of the trader is do more right things than wrong, and not to make the most bucks out of the market.

You don’t have to graduate from any of those Ivy League Universities in order for you to have a guaranteed performance in the market. A trader is defined by his discipline to control emotions and his dedication to do things the right way. Being humble with your achievements also plays a vital role in a trader’s performance. These simple, yet hard to follow traits will; most likely define your trading career.

Most Traders use OPM or Other People’s Money as they call it. A few, trade in their monitors at the comforts of their 5 bedroom homes. Either way, a trader usually relies on reliable information to make profits in his trades. Newswire subscriptions, like Bloomberg and CNBC, is one of their best friends as with these newswires, they could see what is happing in the frontlines.

 Trading maybe is a fun and exciting thing to do but, traders and speculators are often sorted out by one thing. A trader operates like a business: there is a trading system being implemented and followed, while, a speculator is often associated with someone claiming to be a trader but bases his trades like throwing darts at the board.

From an investment strategy standpoint, traditional exchange-traded funds (ETFs) are designed to track indexes. While passive investing is a popular strategy among ETF investors, it isn’t the only strategy.

Passive Investing
ETFs were originally constructed to provide a single security that tracks an index and trades intraday. While the intraday trading capability is certainly a boon to active traders, it is merely a convenience for investors who prefer to buy and hold, which is still a valid and popular strategy - especially if we keep in mind the often-cited statistic that 80% of actively managed mutual funds fail to beat their benchmarks. In sum, ETFs provide a convenient and low-cost way to implement indexing, or passive management.

Active Trading

Despite indexing’s track record, many investors aren’t content to settle for so-called average returns. ETFs provide the perfect tool. By allowing intraday trading, ETFs give these traders an opportunity to track the direction of the market and trade accordingly.
While ETFs are structured to track an index, they could just as easily be designed to track a popular investment manager’s top picks, mirror any existing mutual fund or pursue a particular investment objective. While actively managed ETFs run by professional money managers aren’t available in the United States, they are already on the market in Germany.

Actively managed ETFs have the potential to benefit mutual fund investors and fund managers as well.

Because ETFs trade on a stock exchange, there is the potential for price disparities to develop between the trading price of the ETF shares and the trading price of the underlying securities. If the ETF is trading at a premium to the value of the underlying shares, investors can short the ETF and purchase shares of stock on the open market to cover the position.

With index ETFs, arbitrage keeps the price of the ETF close to the value of the underlying shares. Ideally, those selections are to help investors outperform their ETF’s benchmark index. The investors would then buy the underlying securities and avoid paying the fund’s management expenses. Therefore, such a scenario provides no incentive for money managers to create actively managed ETFs.

Conclusion
Active and passive management are both legitimate and frequently used investment strategies among ETF investors.

There may be times when you feel that your financial advisor is not giving you the advice that’s best for the situation, and so you wonder: Is your financial advisor working for you, or is he doing all this in his own interest? Read on and find out the difference.

To be sure the financial advisors come from different backgrounds, different knowledge and levels of experience. It is only understandable that they may have varied opinions regarding a particular financial dilemma, however, some of their advice can just be downright ugly, and here’s how you can tell whether or not you’re getting good advice.

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No one can predict the future with certainty, so you cannot really expect your financial advisor not to make mistakes. There is, however, a big difference between a mistake made based on sound judgment and analysis, and one made because of lack of knowledge and carelessness.

There are two common reasons why you’re getting bad investment advice:

• The advisor places his own interest before yours; and
• Your advisor lacks knowledge and fails to observe due diligence.

Bad advice can have both short term and long term consequences. But they all have the same effect overall: loss of money. So, as an investor, you should never fully trust your financial advisor. Yes it’s good to have someone to confide to once in a while, but remember, the final decision is still yours.

Establishing an appropriate asset mix is a dynamic process, and it plays a key role in determining your portfolio’s overall risk and return. As such, your portfolio’s asset mix should reflect your goals at any point in time.

Strategic asset allocation is a method that establishes and adheres to what is a ‘base policy mix’. This is a proportional combination of assets based on expected rates of return for each asset class.

Strategic asset allocation generally implies a buy-and-hold strategy, even as the shift in the values of assets cause a drift from the initially established policy mix. For this reason, you may choose to adopt a constant-weighting approach to asset allocation. With this approach, you continually rebalance your portfolio. For example, if one asset were declining in value, you would purchase more of that asset, and if that asset value should increase, you would sell it.

There are no hard-and-fast rules for the timing of portfolio rebalancing under strategic or constant-weighting asset allocation.

 
Over the long run, a strategic asset allocation strategy may seem relatively rigid.

Tactical asset allocation can be described as a moderately active strategy, since the overall strategic asset mix is returned to when desired short-term profits are achieved.

Another active asset allocation strategy is dynamic asset allocation, with which you constantly adjust the mix of assets as markets rise and fall and the economy strengthens and weakens. With this strategy you sell assets that are declining and purchase assets that are increasing, making dynamic asset allocation the polar opposite of a constant-weighting strategy.

With an insured asset allocation strategy, you establish a base portfolio value under which the portfolio should not be allowed to drop. If, however, the portfolio should ever drop to the base value, you invest in risk-free assets so that the base value becomes fixed.

You can implement an insured asset allocation strategy with a formula approach or a portfolio insurance approach. The formula approach is a graduated strategy: as the portfolio value decreases, you purchase more and more risk-free assets so that when the portfolio reaches its base level, you are entirely invested in risk-free assets.

With integrated asset allocation you consider both your economic expectations and your risk in establishing an asset mix. While all of the above-mentioned strategies take into account expectations for future market returns, not all of the strategies account for investment risk tolerance. Integrated asset allocation is a broader asset allocation strategy, albeit allowing only either dynamic or constant-weighting allocation - obviously, an investor would not wish to implement two strategies that are competing with one another.

Whether an investor chooses a precise asset allocation strategy or a combination of different strategies depends on that investor’s goals, age, market expectations and risk tolerance.

It created an existential crisis for the global economy, leading many to argue that the world had reached its limits of growth and prosperity. We are back to the future, with the question we asked 30 years ago: How can we combine robust economic growth with tight global supplies of such critical commodities as energy, food, and water?

Then as now, the world economy was growing rapidly, around 5% per year, in the lead-up to surging commodities prices. Oil markets turned extremely tight in the early 1970s, not mainly because of the Arab oil boycott following the 1973 war, but because mounting global demand hit a limited supply. Oil prices quadrupled. Food prices also soared, fueled by strong world demand, surging fertilizer prices, and massive climate shocks, especially a powerful El Niño in 1972.

Oil prices have roughly quintupled since 2002, once again the result of strong global demand running into limited global supply. World grain prices have doubled in the past year.

Cheney was Gerald Ford’s chief of staff in 1976, when soaring oil prices helped doom Ford’s reelection campaign.

The first stagflation was overcome at very high cost, including 15 years of slower global growth.

The first episode of stagflation opened a great debate about the global adequacy of primary commodities, especially energy and food. In 1972 the Club of Rome published its manifesto, “Limits to Growth,” which predicted that the global economy would “overshoot” the earth’s natural-resource limits and subsequently collapse.

To make matters worse, human-made climate change is now adding enormous risks to global food production.

Today the world emits roughly 30 billion tons from those sources.

Our global resource binds are much tighter now than in the 1970s, because the world economy is that much larger, the resource constraints are tighter, and quick fixes are harder to find. In 1974 the world population was four billion, and total world income was around $23 trillion (in today’s dollars adjusted for purchasing power). The same annual growth rate of the world economy, say 4% per annum, requires vastly more natural resources - energy, water, and arable land - than in the 1970s and poses much larger risks for the world’s climate and ecosystems.

The more pressing limits will be in resources and a safe climate. It took 15 tumultuous years to overcome the limits on energy and food after 1973.

We need to adopt coherent national and global technology policies to address critical needs in energy, food, water, and climate change.

There is certainly no shortage of promising ideas, merely a lack of federal commitment to support their timely development, demonstration, and diffusion.

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Have you ever wondered, while looking at your portfolio, how things could have been a whole lot better if only you could turn back time? We’ve all made mistakes; even great investors made big mistakes at one time or another; no one is exempt.

However, there are measures you can take to somehow insure success in your endeavors. So, what then is the average investor’s biggest blunder? Surprisingly, the answer lies in a very simple situation, and that is the investor picked the right company but bought it at the wrong price. If the price isn’t right, then you’re in for a very long slow ride.

Take a look at some prominent companies; most likely you’d see the company’s earning potential is already included with the price. And so, you’re not only paying for the actual value of the stock, but also its earning potential. What happens if the returns didn’t materialize? Well, since you invested your money in a well-positioned company, you’d probably still be earning, but it won’t at all be exciting.

We are a home to some of the world’s most innovative, prominent and promising companies. However, by the time you’ve spotted a company’s potential, you’re often too late to get a piece of the cake at the right price. By this time bright forecasts and perhaps not so exaggerated claims about how fantastic the company is have already been included in the price. Most of these companies, no matter how solid they seem to be, can be found still struggling to live up to these claims!

To illustrate this point, if you invested in Microsoft between the years 1992 and 2000, you’re likely to have already multiplied your investment some 24 times. However, in the years 2000 to 2008, you’ve probably also seen that shares have fallen by greater than 46%, despite the fact that during the same period company earnings surged almost 60%.

So, the formula for success is simply buying the right company at the right price.

So how exactly are you gonna do that? You have two options: you can either look for emerging companies that you know will become a winner in the long run, or you can wait until bargain prices are offered by solid, well-established companies. Nobody ever said this would be easy, but this is most certainly the only way to go if you’re looking for really huge returns - which is why you’ve invested your money in the first place, right?

Good luck, and happy investing.

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Looking at your life 30, 40, or 50 years from now, you can hardly be sure of what’s really in store for you. You may have some idea of what it’s gonna be, but you can’t really be certain about retirement. What are you going to do when your hard earned assets have lost their value in time? This dilemma is not solely caused by market downturns or other problems such as the Social Security System.

The culprit that we’re referring to here is no other than inflation. Yes, inflation is much larger than you think. It can ruin everything you’ve worked hard for, if you’re not prepared.

Well, for starters, let us examine what inflation can do. Inflation can wreck havoc on the value of your property or wealth for that matter - little by little, year in and year out. Surely as the Earth revolves around the sun, prices will continue to rise; as time goes by, what money you have will afford you less and less.

However, you need to understand that the Consumer Price Index, being the usual gauge of domestic inflation actually warps the whole picture of inflation and its real impact. In the United States, the level of inflation is really not that far from the 7% level the rest of the world is experiencing.

If you’re the type of investor who prefers to play it safe, you will most likely invest in bonds just to escape the chaotic situation in the market. You might even put your money in Treasury Inflation-Protected Securities, but still, as inflation worsens, you will find your money leaking out each year at an alarming pace.

Unfortunately, in investment, there is such a thing as being too safe. If you put your hard earned cash in “safe” money-making securities, by the time you’re about to retire, you may find that you’ve lost the value of your investment, at a rate faster than what you thought can be the worst thing that can happen to your money.

Where then should you place your money?

What you should do is look into stocks that are swinging into the right direction, such as stocks that are closely tied to the developing economies of China, India Brazil, and Russia. This can involve investing in companies that are foreign commodities-based as well as foreign banks.

The wise investor must always be prepared to take advantage of the opportunities offered by international growth.

This just goes to show that in order to be able to curb the effects inflation you must have foreign holdings. Aside from the benefits of a diversified portfolio, there’s an even greater benefit - the promising returns of foreign stocks.

Here are some quick tips for you if you’re thinking of hiring a financial planner. You must take them into consideration before you hire one, or you could be in danger of not getting the best you can, or worse.

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Make sure they’re competent

You have to ensure that your planner has the right credentials. Refer to an earlier article of mine which shows you what a Certified Financial Planner is.

Just Investing is not enough

Remember that you want someone who can advise you on a range of financial topics including insurance and mortgage payments. Planning doesn’t end with just investments.

Know how your planner is making his or her money

You need to know how much of a vested interest a planner has in recommending a particular product. If he is getting a cut out of whatever he sells to you be wary of his advice, as it is unlikely to be dispassionate.

Check and see how well he gets to know you

You don’t want someone who is looking to push their own agenda onto you. What your planner feels are the right life goals may not be what you think are the right life goals. For example, if he feels that you need to start saving for your kids college fund, and doesn’t take your word for it that you don’t ever plan to have kids, reject him. You’re hiring him so that he can advise you on how to reach your goals, not so that he can decide your goals for you.

If you’re a typical married person, chances are that your estimates on the state of your partner’s finances will be way off. The results of a study conducted in 2003 show that over 35% of people are unable to accurately pinpoint when their spouses were planning their retirement. The situation was the same when they were asked to assess their spouse’s net worth.

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But this is rather understandable. As a married man, I know that finances can be a touchy topic. Specially if the marriage takes place late in life, there is an awful lot already going on before the couples tie the knot. Some financial details are just embarrassing, and sometimes, querying about them looks like a threat to the other person’s independence.

But apart from maintaining a healthy relationship, there are more hard economic reasons why you should keep yourself informed about what your spouse is upto. The main reason is that without that data, you will be in tailspin when your partner is missing. Either they has passed away or (God forbid) you are going through a divorce, you need to know what is what so that you don’t make a major mistake in the first case, or significantly lose out in the second.

Important things to know are your partner’s various sources of income, not just the salary, but bonuses and commissions, their investments, Insurance schemes, and their debt status. Any of these can have a significant impact on your own financial decisions, and after all, you do want to make the best ones right?

The United States Ethanol Industry benefits mainly from federal subsidies, tariffs, and production mandates. Oil refiners get a credit of 51 cents per gallon of ethanol blended with gasoline. The typical blend is 90% gasoline/10% ethanol. Due to a federal dictate, more than half the gasoline sold in the U.S. now contains ethanol, which accounts for 7% of total gasoline consumption. There is also a 54-cents-a-gallon tax on imported ethanol. The government mandates that 9 billion gallons of ethanol be used this year, rising to 10.5 billion in 2009 and 15 billion by 2015.

Critics make a valid point that ethanol producing companies are only surviving because of strong backers in the Capitol Hill. Ethanol is also widely criticized as a wasteful and inefficient way to fuel automobiles.

Oil refiners are blending ethanol on their gasoline because it makes economic sense. Ethanol now costs $2.50 per gallon — or about $2.00 a gallon to refiners after the federal subsidy. The wholesale price of gasoline is above $3.30 a gallon.

This means that refiners save about $1.30 per gallon by using ethanol rather than pure gasoline. The savings per gallon of a 90/10 blend of gas and ethanol relative to pure gasoline is about 13 cents (10% of the $1.30 differential between ethanol and gasoline). Much of that gets passed on to consumers.

Ethanol may be controversial, but it has powerful friends in Washington and is helping millions of cash-strapped Americans save money on gasoline. This suggests that the ethanol industry is here to stay.