Posts Tagged ‘risk’
Written on February 1st, 2012 by Samanthano shouts
Facebook has gone public today and now has an IPO. An IPO, an initial public offering is a way that private companies go public which reveals the inner workings of the company including financial information. Francis Gaskins, President and Editor of IPODesktop.com describes this process by using a “real estate analogy,” stating that it’s like a house that was once private and not open to the public is now on the open market where all relevant information is disclosed. The company, now open to the public, is “followed by analysts” and monitored by the Securities & Exchange Commission (SEC).
A company must go public when there are more than 501 investors and worth more than $10 million dollars.
A company usually starts trading about eight to twelve weeks later—after announcing it’s IPO.
This company’s information is being offered to attract investors that want to support the company as a shareholder and hopefully make money as the company grows. To invest, you must already have an account with an investment firm. You can then go through the investment firm to make requests to buy or sell investments.
What does this mean to you?
For such a huge and popular company such as Facebook, there is a lot of buzz and interest—it’s considered to be a “hot IPO.” This means that a lot of investors are going to be initially interested which will result in a spike on investing with the company during the first days on the market.
The people that are going to really see an immediate return on investment—and the making of instant millionaires—will be the employees of Facebook that have shares in the company. Other investors that are able to invest larger amounts of money and acquire more stock will also be prevalent. Traditionally, these are the sectors of investors that are able to afford immediate investment and thus experience a greater or more immediate return on investment.
It has been said that Facebook is going to offer a large amount of stocks so that regular people that hope to invest in the company will also have an opportunity. Being that the United States is the only country that does not have laws against a particular criteria of classes of people that may invest, this may be a huge opportunity for even the average investor.
It has been reported that Facebook opened a $5 billion dollar IPO.
The thing is that with Facebook, everyone knows about it and may sink money in for the moment before “spreadsheet” analysis has been generated that shows actual growth. This could mean a lot of changes by next week. Traditionally, low-key and unknown companies are more attractive for investors because they will be able to buy at a low price and sell at a much higher price—this is a time proven strategy.
Experts are advising that investors that purchase on Facebook today should seek to trade sooner than later, and not hold on to the stock for too long. Gaskins stated that within the after-market, the selling point in the weeks after the initial announcement of an IPO, more analysis would become available to make a more strategic decision on investing.
It seems that only time will tell.
Resources:
Associated Press: http://www.ap.org
Yahoo! Finance – Breakout: http://www.finance.yahoo.com
Full Story »
Filed under Investment
Tags:after-market, best money practices, facebook, finances, initial public offering, investment, IPO, IPOs, Market, portfolio, risk, stock market, Stocks
Written on September 15th, 2011 by Samanthano shouts
Have to Provide Plans to Regulators
There are quite a few banks that are now under scrutiny by US “regulators,” due to the recent financial crisis they may have been involved in. This includes the purchase or selling of mortgage-backed securities. Coupled with the housing failure that began, roughly around 2008, a lot of financial institutions have been determined to have crossed the line, and are being dealt with quite seriously. This is by official monitoring institutions and investors. There is a lot of money to pay back and those that may consider themselves as an interested party, want to be sure that these banks will be able to pay.
The Regulator
The Federal Deposit Insurance Corp. (FDIC) has created a unanimously approved rulebook to oversee the proper installation of pay back plans, from these banks. Some of these regulations include “rules [that] require banks with $50 billion or more in assets to submit so-called living wills to the FDIC, the Federal Reserve and the Financial Stability Oversight Council and send revised plans annually,” according to an Associate Press report. These banks would have to include how, and possibly to whom, they may sell off assets: if they are not able to produce enough income to pay back debt owed. The plans have to start pouring in by July 2012. However, smaller banks are being allowed to wait to file their paperwork until 2013, according to the same report.
The report further reveals an intent being made by these regulators. These plans have been designed to hopefully prevent targeted, or other banks, from receiving a government bailout in the future. Instead, regulators have seen it fitting that they be wholly responsible, for any debt they may incur.
The Plans Construct
The plans to be submitted have to be extremely detailed. They must contain every aspect of the banks operation, all revenue producing items or products, and “liabilities.” They must provide details on who and how much they owe. There must also be a “risk” forecast for all of these details. If the regulators choose to make modifications, they will be able to. This includes the immediate selling of assets, or completely scrapping the plan – making the bank start all over again. And if banks should want to modify already approved plans, they must send in a detailed report on these changes, or plans to change, within six weeks.
Out of the 124 financial institutions being targeted, approximately 21% are American. The remaining are foreign subsidiaries.
Regulators will possess the power “to seize and dismantle banks that threaten the broader financial system,” according to the same report (AP). And if they come to believe that a financial institution may possibly head down that same road – they will be able to make them submit financial plans too.
It would be very interesting to see how well this will go and how this will affect economic recovery – in the long run. It seems as though this is what should have been going on all along: at least to a certain extent. The financial reporting makes enough logical sense to have always been a necessary factor in place. However, it is the element of forcing a “living will” situation on these financial institutions that will give this operation more teeth.
Resources:
Associate Press: http://www.ap.org
Yahoo! News: http://www.finance.yahoo.com
Written on September 13th, 2011 by Samanthano shouts
Another Growing Trend
The Banking conglomerate is cutting approximately “30,000 jobs” over the next few years. It is estimated that this will save them billions of dollars, according to a report in the Associated Press. CEO, Brian Moynihan stated that the bank has made some significant changes over the past two years. According to the report, the Bank of America has new goals and is setting a new direction for the company – it wants to become a smaller (and possibly more manageable) bank. The bank has already “eliminated 6,000 jobs,” before the announcement, according to the report.
New Executive Team
There has certainly been a change on who is running the show at the Bank of America, as top executives have left the bank, leaving their duties to the “Commercial Banking Chief” and “Investment Banking Head,” according to the article. They will both be answering to the CEO in their new positions. There has been no official word on the exact reasons why the former executives are leaving.
Stocks Going Up
As a seemingly direct result of this restructuring, Bank of America stocks have gone up a bit on Monday.
Why The Change?
There is a lot of speculation – of course the first thing that may come to mind is all of the trouble the bank has had to face recently. According to further reports (AP), the bank has lost “value” over the past few months due to the eventual fall out of “poorly written mortgages,” it purchased. This is a direct result of the bank’s acquisition of mortgages from Countrywide Financial Corp., three years ago, according to the report. They also purchased Merrill Lynch a year after the Countrywide purchases. This was during the big bursting of the housing bubble, as I am sure you can recall. This set a downward spiral into place for the bank. Now, all three lenders are being sued by, “investors and regulators,” as a result of the failing value of those mortgages (acquired), according to the report.
Further reports note that the Bank of America has the highest amount owed, out of the other 16 banks currently being sued for “mortgage-backed security sales,” at over $55 billion dollars. The bank has paid back a little more than $12 billion so far according to those same reports. Experts believe that settlements may be offered very soon with regulators; however, no mention of the same with “investors,” according to the reports.
What This Means to You
If you are an investor, it seems that you are already in line, or will have to get into line for your remedy. Customers or other consumers may expect the usual occurrence when large companies diminish staff: customer care failings, possible fee hikes, service changes, or longer waiting periods for proper service overall. Of course this is only speculation right now. On the other hand, things may improve after the transitional period is over. That is a very real possibility as well.
There are currently no reports of any of the other banks being scrutinized, cutting large amounts of staff or restructuring their line of executives or other departments.
Resources:
Associated Press: http://www.ap.org
Yahoo! News: http://www.news.yahoo.com
Written on September 12th, 2011 by Samanthano shouts
How Things Are Looking Right Now
Stocks went down today, as the fear of a real financial collapse in Europe overwhelms investors, according to an article in the Associated Press today. It seems that Greece is the frontrunner of their worries right now. And any country that has is holding any bonds for Greece right now, like France, may get dragged down with poor credit ratings in the mix up. This could assure a gloomy outlook for the European banks for quite some time. This is creating yet another reason for American Economists to worry – as a collapse in Europe may cause further economic trouble for the US.
Is Anyone Doing Well?
The only rises noted today were in technology, education publications, and a Casino resort. Bank of America was noted in the report as having a small rise that is believed to be due to an announcement of restructuring to combat costs.
Up and Down
Some experts have noted that the market is changing so rapidly that the best thing to do may just be nothing at all. However, with no reconciliation in site, it seems to be quite challenging to just sit still and watch.
Reports of European Economists suggesting that Greece declare bankruptcy has had some mixed reviews among experts. Some authorities have noted that bankruptcy is the best solution for Greece right now, while others have noted it is simply not possible for them to do at all. And yet others have noted that Greece will inevitably recover and does not need to take drastic solutions, according to the AP report. With all of this being said, Greece is still looking forward to a “bailout” from a “multibillion bailout fund.” However, European officials are not “convinced” that Greece is actually meeting the mark on depleting their debt: with the current agreements they may have to do so, according to the report. In defense, Greece has noted that they will have extra revenue by raising “property taxes,” over the next 24 months, according to the report. This is probably what is adding to the confusion and is creating a global uproar as well. Serious concerns are growing in the US as it is believed that a detrimental trickle affect is bound to occur here if any European country “defaults,” or loses its credit standing. This is a lot to think about.
Juergen Stark’s pending departure is definitely one of the reasons for today’s changes in the market, according to the report. He announced his resignation last week.
Expectations
There still seem to be a lot of conflicting expectations. The combination of an unsure European financial system – including the resignation of a top European banking executive – and the currently weak US economy are making things very unbalanced right now. The market is certainly on a roller coaster ride because of it all. This is a time for extremely skilled investors to make a move, or not do anything at all.
Predictions are flying through the wind, and where they will actually land is not very easy to tell. However, a sudden division in authority or leadership is never a good sign. Systems that are simply out of control will be challenging to harness, and not at all if attempted too late.
Resources:
Associated Press: http://www.ap.org
The New York Times: http://www.nytimes.com
Yahoo!News: http://www.news.yahoo.com
Written on September 10th, 2011 by Samanthano shouts
Linked With Resignation of European Executive
America has been feeling the pinch of rising oil and gas costs in recent months. Political embargos or work stoppage with oil rich countries have served as a catalyst for this trend. For the first time, in a long time, oil prices are down and we can expect to get bit of a break. The reason why may surprise you.
Resignation Domination
Juergen Stark, a top Economist at the European Central Bank, has handed in his resignation according to a report by the Associated Press: Stark will be finishing out his term early. This news has inspired the price of oil to go down as doubts about Europe’s debt crisis increases. Although Stark’s exit has been noted in the article for “personal reasons,” it is believed that there may be a connection to a growing divide among European officials. These ideas seem to have taken to the wind and traveling far enough to make people fear that this change may be an indication of Europe becoming overwhelmed – furthering financial demise in Europe. If European officials cannot agree on what to do about their own issues, the world becomes very nervous and a global chain reaction begins.
How Low
It has also been reported that oil is down by 2%: approximately $.30 cents in New York and $1.30 in the UK.
Reasons for Concern
Europe is a huge consumer of oil. Without a stable European debt recovery plan in place, a trend of low usage will manifest itself. There will be no real way to know if Europe will be able to afford the same supply of oil – or other merchandise, for that matter. This will have a direct effect on the price and distribution of oil, as well as on how Europeans travel. Changes in this behavior could certainly be detrimental to American tourism.
The prices went down due to an anticipated lack of demand, according to experts. This includes heating oil as well. However, it has been reported that the U.S. supply of oil has decreased dramatically because of an increase in demand, recently. Of course this has to be related to the recent storms as well. These were a hindrance to transporting oil, as well as causing a spike in demand, for that particular time. It seems that more oil is on the way from Libya, after a stoppage of over 200 days. However, the amount being sent is hardly enough to keep American consumers satisfied for long, unfortunately.
What Else is Being Affected?
What else is not being affected is probably a better question. As it stands, stocks have been going down and the Dow fell to a significant low at close on Friday as a result. Experts have stated that they expect for stocks to fall even further – possibly pushing America into a deeper recession.
This news is quite startling. According to the experts, Stark’s separation is being seen by some as a telltale sign of worse days to come.
Hope in Sight
If Obama’s job plan actually takes flight, there may be a chance for a trickle effect recovery. Many economists are on his side and believe his bill makes perfect sense and truly will work. It is now up to congress to bring the bill into being. This will pump new life into the American economy. It is believed that this opportunity for rejuvenation will be a promising start for all of us.
Resources:
Associated Press: http://www.ap.org
Canadian Press: http://www.thecanadianpress.com
Yahoo! News: http://www.ca.finance.yahoo.com
Full Story »
Filed under Banking, Currency, Income, Investment
Tags:debt, economy, employment, European Central Bank, European Debt Crisis, finances, jobs, Juergen Stark, money, risk
Written on September 4th, 2011 by Samanthano shouts
What You Should Know
There has been a lot of talk lately regarding the ratings of financial institutions. Standard & Poor’s financial recent rating statement regarding the U.S. has really put the world in a spin about the American debt crisis. The thing is what does all of this really mean for the average American?
Standard & Poor’s, Moody’s, Fitch, A.M. Best
These are the four main U.S. entities that specialize in rating financial institutions. What they do is to figure out how well a financial institution or other such entity’s credit rating is by using similar standards as done for individuals seeking credit. This includes calculating how much debt has accumulated, the time frame of this accumulation, the ability to meet the payment schedule, and the frequency of requests for credit, just to name a few bits of the criteria. This helps to determine if these institutions are worthy enough for investment. These ratings can make or break an institution’s capability to borrow: which is an extremely important aspect in big business. This will determine how far an entity may be able to expand or grow. Without the ability for growth and expansion a potential borrower will surely be stifled and soon shrivel to competitors. And recovery from such a perilous fall may take a very long time.
These four rating powers inspect and report on the credit ratings of institutions such as banks, not for profit organizations, federal and state financial institutions including governmental entities.
Foreign Matters
S&P created an international ripple effect reaction to their announcement, downgrading the American financial status from AAA to AA, in August. This is the first time in the history of S&P that they have given the U.S. such a rating. This has had an upsetting impact on the way people are conducing their business ar0und the world as well as giving way to very public criticism against the U.S. Countries such as China have immediately brought up questions about the stability of the U.S. dollar continuing to be used as an international “reserve” dollar. However, S&P is the only one of the American agencies that has marked the U.S. with a downgrade, so far. Fitch and Moody’s still have the U.S. under the highest rating for their standards.
Meanwhile other regions like Australia have been showing their strength in having a stronger credit rating. They are currently being seen as having one of the strongest economies right now, with stable credit activity.
What this means for the average American
The average American will feel the effect of the downgraded American credit rating if any part of their income is supplemented with foreign funding. A lowered credit rating could mean that the U.S. will have less financial resources to borrow from to use as a reserve to support particular American programs such as government retirement benefit programs, as well as other social specific programs. The U.S. has also been using foreign money to supplement military functions including war efforts in recent history.
Only time will really be able to tell what is going to happen next. For right now a primary task at hand will be to improve job growth and reducing the U.S. debt crisis. This combination will be a sure road to economic recovery and the rebuilding of the American financial status.
Resources:
CNN: http://www.cnn.com
EHow Money: http://www.ehow.com
Maps of World – Finance: http://www.finance.mapofworld.com
Written on August 26th, 2011 by credit2meno shouts
As the saying goes, you never want to place all of your eggs into one basic. With the economy being what it is these days, that includes your investments. In fact, if you haven’t diversified your portfolio, you are setting yourself up to lose money. Diversification means you have your funds in a variety of different investments instead of large chunks of it in just one or two investments.
When you diversify your portfolio, you are really increasing your chances of making money. There is a good chance that some of those investments will be profitable. At the same time, diversifying reduces your risk of losing money. Over the course of time, your profits should be more than your losses.
If the market is really tough, diversifying will help you to minimize the loss that you experience. Remember, investing can be risky so you want to really think about the level of risks you have out there too. If you aren’t going to retire for 20 or more years, then it is fine to have riskier investments.
However, if your retirement is less than 10 years away, you will want to become more conservative with your efforts. It makes sense to protect the funds have so that you don’t lose them. Perhaps you can allocate a small percentage of your investment funds into higher risk investments. Then if they make money, you have added a large sum to your retirement. If they don’t, you didn’t lose so much money that you are now worried about retirement.
If you will be retiring in five years or less, you want to invest in entities that are very low risk. That way you can continue to earn some interest on your nest egg. It may not be a lot of earnings at once, but it can definitely add up. You don’t want to be thinking you will have plenty of money for retirement and then discover you really don’t.
If you aren’t sure how to go about diversifying your portfolio, you will find plenty of help online. You can also talk to a financial planner as they can help you to get it all set up. Don’t wait until you are in a stressful situation with your finances. The market is simply too unpredictable at this point in time.