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A Look At The World Of Economics

Jan 21

Posted by admin in Finance, Stocks Mutual Funds

The subject of economics is one of the most important, but it is also one of the least understood. It has been said that getting a roomful of economists to agree on anything is an exercise in futility, and this has led many people to assume that the world of economics is too difficult for the lay person to understand.

While the world of economics can be intimidating and difficult to understand, simple economics as it applies to real people is quite a bit more straightforward. After all, when you set a family budget for the month, you are engaging in economics. When you shop around for the best price on that plasma TV or laptop computer, you are engaging in economics. When you study the stock market to choose the best mutual fund, you are using economics to guide your decision making.

Fortunately for all of us, it is not necessary to hold a masters degree in economics in order to make sound economic decisions. A careful study of the market around you and a good understanding of the business world you are in can be your guide when it comes to economics. Starting with a business you know can be a good way to make sound economic and investment decisions, and a great way to start building your financial future.

Learning how to save and invest has always been important, but it is perhaps more important today than ever before. There is no doubt that the economic landscape has been changing, Those traditional defined benefit pension plans that protected our parents are fast disappearing, and today every worker needs to have a good understanding of economics and the stock market in order to effectively invest his or her 401(k) to save for retirement. It is important to begin a comprehensive economics savings plan as soon as possible, since time can help savings grow and accumulate for the future.

Many people think that the study of world economies is a dry and boring pursuit, but in fact this is not the case. The world of economics affects all aspects of our daily lives, from how much we pay for a gallon of gas to how much we pay for that morning cup of coffee. Learning how the economies of the world work can have a great affect on your own economy, so it makes sense to learn at least a little bit about this seemingly esoteric science.

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How To Sell Your Home in a Down Economy

Jan 4

Posted by admin in Real Estate

Okay, so, the economy’s down and you’re feeling down because of it. You had planned on putting your home up for sale by now. You’re discouraged, though, because on your street alone you see three other homes for sale. How can you compete, you wonder, with so many other homes on the market? Don’t lose heart, you’re about to learn how. Stand Out. The challenge you have ahead of you is how to make your home stand out from the rest. The way you do that may not be in the way you think, though.

Before you contact a realtor to put your home up for sale, there are several things you’re going to have to take care of. The first is to sit back and take a breather. Now, grab a tablet and a pen.

You’re going to need to walk through your home from one end to the other. Your mission is to make note of every little thing that needs to be repaired or completed. You need to note absolutely everything. Only note projects you’ve started or items that are in obvious need of repair. Do not note anything that you would like to get done on the home, but never started.

Organize your list according to room. After you’ve walked through each room of your home, walk outside and take more notes. What about your yard? Are there any bare spots you need to fix, plants that are dying or dead, stones or yard bricks out of place? How about the exterior of your home? Any repairs needed there? Also, the color. Is it neutral, or did you paint it that bright blue to match the color of your spouse’s eyes?

Make note of it all
Next, you’ll need to make a plan as to how you’re going to get it all done. Assess how much time you think all of it will take, and make a schedule as to what days and times you’ll commit to work on it. Set goals as to when you want to have each room finished. Set a final goal for the date you want to have the house ready for market.

Get your spouse and children involved in the project. You can create some memories. Your family will always remember how you all worked together to get that home sold. Ask extended family and friends to help out, if you need it. Try to keep on task and complete your repairs by your due dates. You’ll be glad you did.

All repairs are finally done and everything’s checked off your list? Then, there’s one more thing you need to consider. Once you contact a realtor, you’ll be provided an estimate as to how much your home is worth in the market. Want to be an aggressive seller? List it for a percentage less than the market value of your home. Use the percentages as follows:
- Up to $150,000 = 10%
- $150k to $500k = 8%
- $500k to $1m = 5%
- $1m and up = 2%

You have to keep in mind that new home listings get the largest viewing audience. If you don’t price it right going into the listing, you’ll miss out on major opportunities to sell your home to the right audience. Your home will get less viewing after it’s been on the market after a few weeks. Even if you lower the price several weeks after you’ve listed it, the home has lost some significant value and luster in the eyes of the buyer. You probably won’t get what you’re asking for. Some other considerations you might include are incentives for an agent to sell your home, or incentives for a buyer to buy your home. Offer to pay half of the closing costs.

Now that you’ve given it much thought and decided on a competitive sale price, it’s time to call your realtor. Interview several in your area before you decide on one. Call the actual realtor office and find out who the top sellers are. These people are the ones you want listing your home. Find the right realtor, and have your home listed for sale.

You are now equipped and empowered to put your home on the market and watch it sell itself. If you follow through with all that’s needed, you’ll be hugely successful in the sale of your home.

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China Syndrome

Aug 24

Posted by admin in Finance, Investing, Stocks Mutual Funds

There has been great condemnation recently because China has been selling its goods on the world market at prices below what other countries, especially the U.S., can produce. It has been called exporting deflation.

The major reason for these extremely low prices has been their labor costs which I am told are about $100 per month for ordinary factory workers. Even factories in Mexico are being closed and shipped to China because of the labor differential. These extremes in production costs are literally putting many, many companies out of business. When you look at the labels in almost any store you will note the product is made in some Asian country. As far as you, the consumer, is concerned you are buying a product at a good value. Political considerations aside there is no question this has been beneficial to retail buyers.

Is there any reason China should act otherwise? No, they are acting like any businessman. Yes, I realize it is a country, but countries do the same as businesses just on a larger scale.

Suppose you and I each own a hamburger franchise. I have a McDonalds and you have a Berger King across the street. We each sell our hamburgers for 99 cents. The competition is equal. You also own a huge cattle ranch and slaughter house/packing plant as well as a large bakery and you want to increase your retail food business so you pass along the savings you make from the meat production and bakery to the burger stand. You reduce the price to 75 cents and now make a profit of 20 cents per burger whereas I only make 10 cents and must sell it for 99 cents. When someone wants a hamburger where do you think they will go?

I can scream all I want about how unfair this is, but so what. He is not selling at a loss and even if I lower my price I can\’t go low enough to make a profit. I eventually will lose all my customers to him and will go out of business. Is that fair? Sorry, but fair doesn\’t count. That\’s business.

China is selling hamburgers (whatever) cheap, but they are of equal quality. Consumers want both quality and price (value) and don\’t care where it comes from. Countries are complaining that they are selling \”too cheap\”. No they are not because they are making a reasonable profit. One of their production tools (cheap labor) is so good that businesses from all over the world are moving there to take advantage of it. If they don\’t they will be out of business. You can\’t blame them.

Over the next 10 to 20 years China can become the world\’s leading country because of their economic development. They don\’t have the overhead (translation – central government, entitlement programs, lawyers, labor unions, etc.) we do so they will be able to keep costs down. Eventually (many years) their central government will slowly evolve toward giving more to their people, but it is going to be decades. In the meantime, learn to speak Chinese.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy
It!\” has helped thousands of people make money
and keep their profits with his simple 2-step
method. Read the first chapter at
http://www.mutualfundmagic.com
and discover why he\’s the man that Wall Street
does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

Writen By : Al Thomas

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Oversea Americans May See Higher Taxes

Jul 26

Posted by admin in Taxes

Many Americans working overseas may experience higher tax bills under the new law signed by President Bush. In some cases, overseas taxpayers could face tens of thousands of more dollars in taxes.

Those most affected will likely be those living in high cost areas, such as Hong Kong and Singapore. Those whose companies don\’t help cover the additional tax burdens of living abroad may suffer the highest increases. For companies with special relief packages for taxes, the additional costs could mean that fewer workers will be working abroad.

Under the old law, Americans working overseas could exclude up to $80,000 of foreign-earned income for 2006. Under the new law, the figure rises to $82,400. But the rate after that level is now higher than before. The new law also reduces the amount of housing costs that can be excluded or deducted.

The provision is expected to raise an estimated $2.1 billion in revenue over the next 10 years.

It is unclear how companies will react to the new law. The additional tax burden is expected to \”significantly affect the cost\” of overseas assignment, according to an Ernest

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Trading The News: Non-Farm Payrolls, November 3rd 2006

Mar 14

Posted by admin in Currency Trading

First, the Figures

If you cast your minds back to last month (or take a look at our account of the October 2006 report) you will remember that the headline figure was much worse than expected. However, monthly revisions to the data from August, a better than expected unemployment rate and annual Non-Farm Payroll revisions (very few were aware of these annual revisions) overshadowed the headline data. To be honest this is fairly rare because the headline figures generally take centre stage but it was a good example of why traders should pay attention to all data releases and be aware of any potential conflicts that may arise. For example, strong revisions to previous data conflicted with September?s poor headline figure.

After hearing that it is fairly rare for the headline figure to be ?out-influenced? you may be surprised to read that the same occurred with the November report. We had further revisions to the August data from 188K to 230K. There was also a revision to September?s data; the extremely low figure of 51K was revised up to 148K. The unemployment rate was a further surprise coming in at 4.4%, a five year low! This positive data was enough to offset the disappointing headline figure of 92K versus expectations of 125K.

Price Action

By all accounts the price action caused by the November report was very similar to what we saw last month. As you would expect the headline figure is released a fraction of a second before any of the revisions, this caused a rapid spike higher in the EURUSD rate. This spike reached a high of 1.2792 and reversed immediately. Revisions and better than expected unemployment data became the focus causing the dollar to rally to a low against the Euro of 1.2682.
Picture: http://www.passion-trading.com/Articles.TradingTheNews.NonFarmPayrollsNov2006.htm

Some Simple Economics

Why does positive employment data influence the foreign exchange market the way it does? Basically individuals with jobs have a greater amount of disposable income than those who are unemployed. If the unemployment rate falls it means that more people have disposable income to spend on consumer products and services. This creates an increase in demand that causes inflationary pressure on prices. At the same time companies expand their operations to meet the increase in demand but they now have a smaller pool of labour to choose from. This means that it costs more to hire and train the right staff, again causing inflationary pressure. The FOMC attempt to control inflation and keep it at a healthy rate so the US economy does not boom only to burn itself out and head into a crippling recession. To control inflation the fed uses interest rates. If inflationary pressure increases beyond the Fed?s threshold then they will raise interest rates thus making the dollar more attractive. At the time of writing the FOMC isn?t expected to raise interest rates further until mid 2007. However with encouraging employment data and the basic economic understanding that it will cause inflation you can see why there was such a strong demand for dollars post Non-Farm Payrolls.

David Thorpe is a senior contributor for http://www.passion-trading.com a free educational resource centre for traders and investors. The goal of the site is to stimulate the minds of its users, enabling them to achieve a greater understanding the art of trading, thus helping them to become more profitable.

Writen By : David Thorpe

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