Financial Markets and the Housing Sector

Unless you’ve been lost on a deserted island over the last 2 years or so, you’ve probably heard about what’s going on in the financial markets out there. The government stepped in and finally approved a bailout bill to take all of the bad debt and non- performing mortgages and paper off of the books for so many banks and companies that drive our economy. And regardless of whether you agree with their plan or not, it was a necessity. It was actually the lesser of the two evils.

I firmly believe that the markets would have “eventually” corrected themselves, but not until after a long drawn out period of recession that was inevitable. Now that they are working on a plan, finally, to make the banks allocate the funds to stimulating the economy, and not paying bonuses to executives, we should start to see some relief over thye next several months. The government is now playing with the idea of a government owned “bad bank” to handle the non performing paper that’s out there.

And Obama will eventually have a tight grip on how these corporations are using government bailout funds. With the bad mortgages taken off of the books, the banks credit rating goes back up, they actually have money in reserves again, they have working capital, and they can actually put mortgage money back into the market place for home buyers and investors. Personally, I think a lot of this bailout money should actually come from money already stashed for some of these exec’s parachute retirement plans and exit packages. And did you hear that they’re still busting companies that received tarp funds for paying huge bonuses?!

How To Spread Bet The Financial Markets

For many years people have enjoyed a flutter on horse racing and other sports by going down to the high street bookies and placing a bet. A lucky few have made a few pounds doing just that.

But for a few years now some people have been betting on the financial markets with spread betting company’s and it is becoming more and more popular. Spread betting has quietly emerged as one of the fastest growing sectors of the entire financial services industry.

The advantages of financial betting

Investor Protectionism and Financial Market Size

A common denominator of market-based financial system like that of United States and U.K and bank-based financial system such as that of Germany or France is investor protection. The United States has a market-based system because its economy is largely dependent on property and financial asset value. Consequently, it has a large stock and bond markets creating a large market which attracts investors and companies from all over the world. This presupposes that the stock market and individuals (that is investors) play a significant critical role in corporate finance and governance as large fraction of individual portfolios is held in the equity market. Moreover, equity financing is practiced in this system.

On the other hand, bank-based systems are characterized by financial assets predominantly being held by financial institutions encompassing banks, mutual funds, insurance companies, pension funds and others. This means direct equity investment is small whilst individual investment is predominantly held in bank deposits, insurance policies, mutual and pension funds e.t.c. Debt financing comes mainly from banks instead of stock markets and so the stock market is comparatively small and less significant in this type of economic system. The fact is that, in market-based financial systems, investors property rights are protected well due to the fact that stocks and bonds markets are significant and form a higher percentage of the GDP. For example in 2003, financial assets was about 327% of GDP for U.S and 306% for U.K which are market-based dominant financial systems compared to 192% in Europe, 267% in Japan which tends to be bank-based dominant systems, an epitome of socialist systems [1}.

The large stock market size in terms of number of listed companies, aggregate market value relative to GDP and initial public offering (IPO) relative to population is a repercussion of the investor confidence and the quality of laws governing the market. Contrarily, inadequate protection rights minimize the integrity and size of the market as seen in the economies with dominant bank-based financial systems. Even in the efficient market-based systems where shareholders and creditors of the market are protected well by laws, political trends and shift in government policy can inhibit the smooth running of these markets. There is the tendency for governments to garner more power and control in terms of enforcement of the laws governing the market in times of deep economic recession.

About Financial Markets and Investing

Across the globe in many nations, you will find financial markets. Some of them may be very large and others may be small with a few participants. A financial market is a place that allows buyers and sellers to trade assets such as stocks, currencies, commodities, or any derivatives that are defined by basic regulations on trading, transparent pricing, costs and fees, and market forces that determine the price of securities that trade. One of the largest and well known markets where investors are trading stocks is the New York stock exchange.

Financial markets are used for various things, from bank loans and mortgages, to shares and stocks. They bring parties together so that they can do business. In the case of stocks, a company who needs to raise capital to expand its business may decide to sell shares to investors. The capital it gets from the sale of its shares can then go towards its expansion. In return, the investor hopes to see an increase in the companies income from the expansion, which should be reflected in the share price, assuming all other aspects of the company are in good order.

When you are stock picking with a view to invest, and have completed a technical analysis of the stock picks, you will look for sellers on the financial markets and purchase the shares at a price that is suitable for you. This is all part of a financial market. Without it, you would find it very hard to find sellers or buyers if you were the one selling. The financial markets makes it easy for participants to come together to trade in one place. When you invest in the stock market today, you need to research the stock market to find out how the mood is from other investors.

The Current State of the Financial Markets

This past week has brought back the feeling of a falling knife. Not a good feeling, especially if you are over invested. The good news is that the markets are probably going to find a bottom soon. The bad news is that no one knows at what price. That is the $1MM question. And by far and away, that is the question that I am hearing most often from friends, family, and readers. So, where will the market find support?

Before we get to the charts and some levels to keep an eye on, let me provide you with 5 pieces of information that carry importance in understanding the summer lead up to the current state of the financial markets:

1) The European sovereign debt situation worsened and became contagious over the summer months. The PIIGS (Portugal, Italy, Ireland, Greece, and Spain) have always been a concern, but it wasn’t until July/August that the markets really hammered the debt of these nations (see: credit default swaps). This, in turn, hit the European equity markets… hard. The anxiety across Europe has grown to a light boil and social mood is only getting worse. Youth unemployment is unacceptably high in many European countries and will have dire consequences down the road if its not dealt with soon. Consumer confidence in Europe (and America) is low and the mood dreary and anxious, to say the least

Classic Methods of Forecasting Financial Markets

There are many methods of forecasting financial markets. The most popular are technical analysis and fundamental analysis. Some traders think that technical analysis is more important than fundamental analysis. Let’s look at this!

Technical analysis is the method of forecasting financial markets which based on past price and volume. There are many trading rules and models based on volume and past price. These are such models as head and shoulders, flags, symmetrical triangles, ascending triangles, descending triangles and others. Traders attributed to the technical analysis indicators and oscillators. Indicators and oscillators are mathematical calculation based on a past price or/and volume.

The difference between indicators and oscillators is that oscillators are bound within a range and indicators are not bound within a range. The most popular indicators are moving average, Bollinger bands, alligator, Ichimoku Kinko Hyo and others. The most popular oscillators are relative strength index (RSI), commodity channel index (CCI), moving average convergence-divergence (MACD), Stochastic and others. If you use this method you can determine entry point in market, level of stop loss and take profit.

Learning More About The Behavior Of Financial Markets

What are financial markets, anyway? The term is confusing because it is used in many different ways. Some people refer to the financial markets simply as markets, others as capital markets, and yet others call it the stock market, despite the fact that this is only one of them.

Essentially, it is a market where mutual interests are fulfilled when investors make a profit and businesses get growth capital. Although, there are numerous financial markets, the most common ones are the stock market, the mutual funds market, the bond market, and the commodity market. The level of calm or volatility in these markets affects the entire economy of the United States.

In talking about what are financial markets, what most people think of is the stock market. Stocks are shares in a corporation that has gone public. A company will sell stocks to the general public in order to raise funds for its own growth. In return, when the company makes a profit, so, too, does the investor. The stock market is what keeps the US economy growing.