About Edward

Edward has been a member since July 16th 2010, and has created 1318 posts from scratch.

Edward's Bio

Hi, My name is Edward Forsythe, I have a passion for helping people achieve enough passive income through investing in the right vehicles to secure their financial future. I will be sharing with you several financial facts to help you make better decisions investment.

Edward's Websites

This Author's Website is http://prophetmaxprofits.com

Edward's Recent Articles

Your Questions About Economists

Robert asks…

How do economists measure the economic prosperity of a country?

Is it too simplistic to measure the prosperity of a country by its GDP or GDP per capita? Is it that simple? Or is it too complicated to come up with an objective measurement that most economists would agree?

Edward answers:

It uses human development index (HDI) by country. The index includes GDP per capita,education and life expectancy. This index is the most accepted indicator of prosperity so far.

Sandra asks…

What happens to all the good economists after nobody will hire them?

Because it seems like our government only listens to the bad economists. What happens to the good economists that nobody listens to?

Edward answers:

They become bad so people will listen to them or they fade out.

Daniel asks…

Economists: What are the top 10 challenges for the study of economics in this century?

I’m a journalist writing a piece about the discipline of economics and the problems that the academics are trying to solve. As an outsider I’m interested in what are the riddles economists are involved with today.

Edward answers:

There’s five big ones I can give you off the top of my head:

1. The correct macroeconomic policy.
Economists are constantly debating the correct macroeconomic policy. Recently, MIT economist and IMF chief Olivier Blanchard stated that the way we were going about inflation targeting was all wrong. We should actually be aiming for a higher inflation rate – maybe 5% or so – while putting more emphasis on regulation of financial industries. That way, we will have more room to use monetary policy in the future and a better understanding of what financial institutions are up to. He published this in a paper that came out recently, I’ve linked it in the sources

2. Aid vs. Debt
What should be done by rich countries when they try to help poor countries develop? The concept of giving aid to poor countries is being challenged as a failed policy that props up dictators and fosters corruption by economists like Dambisa Moyo. On the other hand, there have been some clear positives achieved, a point of view espoused by others such as Jeffery Sachs. They both have good books – Moyo has Dead Aid and Sachs has the End of Poverty. Both are worth a read.

3. Incentives and behaviour
Contrary to general economic assumption, people are not rational creatures. The study of behavioural economics, and more recently neuroeconomics have recently popped up in an effort to tell what sort of incentives can be used to make people behave in optimal fashions. For instance, someone may prefer A to B, but B might have some behavioural challenge that must be overcome in order for the person to actually get it. Like fear for instance. So how do you get around that?

4. Reconciling Macro and Micro
Some things, as Keyens explained, are good on an individual level but not on an aggregate level. For example, it’s good for a person to save – but if everyone in the economy saves the whole country grinds to a halt. Another example is utility – how can you say an outcome is optimal for a society without having some way to sum up individual utilities? This is a sticking point for economists.

5. Market failures and their remedies
Its pretty well documented why markets fail – either theres an externality, theres an information asymmetry or theres increasing returns to scale. However what the best policy response is has been the subject of debate. Market fundamentalists would say no response is necessary. Keyensians and Neoclassicalists would advocate an intervention. Behaviouralists would advocate a different kind of intervention. An example of a market failure is pollution, which you can see economists debating about pretty constantly.

There are many other problems of course, but those are the biggest ones I can think of. Hope this helps.

Sharon asks…

If economists say the economy is getting better, why is the value of the American dollar still declining?

I recently heard on the radio that economists are saying that the economy is getting better. I am a junior in high school and know little about how they figure those things out. I do however study politics a lot and I have noticed that economists are saying it is getting better. But why then is the dollar still declining in value? It was a powerful currency and now it is next to nothing. I find these statements to be contradictory and I would like to know which is accurate. And why economists are saying these things with evidence that no such thing is happening?

Edward answers:

The value of the dollar is not directly connected to the state of the economy. Currency values fluctuate up and down all the time. The dollar may lose some value against, say, the Euro one day and then gain in value the next.

Also, keep in mind that it isn’t necessarily a bad thing if the dollar’s value declines. Sure, it sucks if you’re going to vacation in Europe, because everything gets more expensive. But when the dollar is lower in value, that means that American goods are cheaper and that foreigners will be able to buy more of our exports. And that’s a very good thing.

The dollar is still a very powerful currency. It is not “next to nothing” as you state. You do not have to worry about the dollar becoming worthless. It is still the world’s reserve currency, for one thing.

Finally, the economists DO have evidence that the ecomony is getting better. The economy has grown for 5 consecutive quarters since the recession ended in the summer of ’09. Consumer confidence has risen. And employers are creating more jobs, just not as quickly as we might want them to do so. Sometimes it takes a while before ordinary people see the effects of the economic improvement (and it doesn’t help that all the cable news networks and advertisers keep saying the economy is terrible). But the economic picture is slowly getting better, as it always does after a recession.

Helen asks…

What key psychological assumptions do economists make in their theory of individual choice?

What key psychological assumptions do economists make in their theory of individual choice?

Economists recognize that people always make the choice with a lower cost.
Economists recognize that humans have difficulty acting rationally, so assume predictable irrationality.
Economists use this underlying psychological foundation: rational self-interest.
Economists recognize that humans are generous by nature, so they assume that people will rarely act only in their own self-interest.

Edward answers:

“Economists use this underlying psychological foundation: rational self-interest.”

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Your Questions About Day Trading Options

Donna asks…

Trading Index Call Options?

I bought an IShares Canada Index Call Option and would like to know if anyone has traded these with good results? Mine is EWCFN June ’07 Call Strike prce $28.00 IT IS AT THE MONEY. Do Index Options tend to have UPWARD trends? It would seem to me this would be good for a CALL option on one of these? Thanks

Edward answers:

There’s 2 portions to an option. One is the intrinsic value the other is the time value. Since it is at the money, there is no intrinsic value to it. What you paid for is completely the time value of the option.

I don’t know what you pay for the option. But for argument sake, you paid $1 for it. A June 07 option will expire on the third Friday of June. Time is working against you.

If on that day, the stock closes at $28, then your option will expire and you will lose your $1 (intrinsic value stays at 0, time value becomes 0). If the stock closes below $28, you still will lose your $1 b/c you can buy the same stock on the open market for less money. The stock has to close above $29 for you to make money. If it is b/n $28 to $29, then that will be your intrinsic value but you paid $1 for the privelege, so you will have a limited lost.

From now till the expiration date, the intrinsic value will fluctuate with the stock price almost dollar for dollar if it is in the money. Your time value will decrease as the days goes by. So it’s your call what that intrinsic value will be. That will determine whether you want to hold the option or to sell the option back before the expiration date.

Donald asks…

CBOE Weekly Options?? How do they work?

I know how to trade regular Call/Put options. What are Weekly options? How are they different from reg. options? They have to be up/down volatile if they have week expirations. Explain the expiration? Thanks

Edward answers:

<<>>

In general, Weeklys have the same contract specifications as standard options, except for the time to expiration, and offer the same continuous, two-sided quotes as standard options. As of March 24, 2006, CBOE offers four Weeklys classes:

SPX Weeklys: One-week, European-style options on the S&P 500 index with Friday A.M. Settlement (last day of trading is a Thursday).
XSP (Mini-SPX) Weeklys: A smaller sized (1/10th) version of SPX Weeklys traded on the CBOE Hybrid Trading System.
OEX Weeklys: One-week, American-style options on the S&P 100 index with Friday P.M. Settlement (last day of trading is a Friday).
XEO Weeklys: A European-style version of OEX Weeklys.
New series are listed each Friday and expire the following Friday, except that no new Weeklys are listed that would expire during the expiration week for standard options (the third Friday of each month). In other words, we do not list new Weeklys on the 2nd Friday of a month and do not trade Weeklys during the following, standard expiration week until Friday of that week.

Ticker symbols for Weeklys differ from traditional options contract symbols, with letters identifying the Weekly cycle. For example, the symbol for SPX Weeklys for the first week of the month is JXA, the symbol for the second week is JXB, etc.).

<<>>

They are shorter term.

There is only one weekly expiration trading at any time.

There are few underlying issues which have weekly options.

<<>>

I agree that near the money weekly options will have a large gamma risk.

<<>>

WEEKLYS SHORT-TERM MINI-SPX INDEX OPTIONS

Exercise Style:
European. Short-term Mini-SPX Index options generally may be exercised only on its expiration date.

Last Trading Day:
Trading in short-term Mini-SPX Index options will ordinarily cease on the business day (usually a Thursday) before the date on which the options expire.

Expiration Date:
The Friday following the Friday of the listing of the options.

Settlement of Option Exercise:
Short-term Mini-SPX Index options are AM-settled. The exercise-settlement value, XSR, is calculated using the opening reported sales price in the primary market of each component stock on the expiration date. If the exercise-settlement value is not available or the normal settlement procedure cannot be utilized due to a trading disruption or other unusual circumstance, the settlement value will be determined in accordance with the rules and bylaws of the Options Clearing Corporation. The exercise-settlement amount is equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by $100. Exercise will result in delivery of cash on the business day following expiration.

WEEKLYS SHORT-TERM EUROPEAN S&P 100 INDEX OPTIONS (XEO)

Exercise Style:
European. XEO options generally may be exercised only on the last business day before expiration.

Last Trading Day:
Trading in short-term S&P 100 Index options ordinarily cease on the business day (usually a Friday) that the options expire.

Expiration Date:
The Friday following the Friday of the listing of the options.

Settlement of Option Exercise:
Short-term Standard & Poor’s 100 index options are PM-settled. The exercise-settlement value, OEX, is calculated using the last (closing) reported sales price in the primary market of each component stock on the last business day (the expiration date) or on the day the exercise notice is properly submitted if exercised before expiration. If the exercise-settlement value is not available or the normal settlement procedure cannot be utilized due to a trading disruption or other unusual circumstance, the settlement value will be determined in accordance with the rules and bylaws of the Options Clearing Corporation. The exercise-settlement amount is equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by $100. Exercise will result in delivery of cash on the business day following expiration.

WEEKLYS SHORT-TERM S&P 500 INDEX OPTIONS

Exercise Style:
European. Short-term S&P 500 Index options generally may be exercised only on its expiration date.

Last Trading Day:
Trading in short-term S&P 500 Index options will ordinarily cease on the business day (usually a Thursday) before the date on which the options expire.

Expiration Date:
The Friday following the Friday of the listing of the options.

Settlement of Option Exercise:
Short-term Standard & Poor’s 500 index options are AM-settled. The exercise-settlement value, SET, is calculated using the opening reported sales price in the primary market of each component stock on the expiration date. If the exercise-settlement value is not available or the normal settlement procedure cannot be utilized due to a trading disruption or other unusual circumstance, the settlement value will be determined in accordance with the rules and bylaws of the Options Clearing Corporation. The exercise-settlement amount is equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by $100. Exercise will result in delivery of cash on the business day following expiration.

WEEKLYS SHORT-TERM S&P 100 INDEX OPTIONS

Exercise Style:
American. Short-term S&P 100 Index options generally may be exercised on any business day before the expiration date.

Last Trading Day:
Trading in short-term S&P 100 Index options ordinarily cease on the business day (usually a Friday) that the options expire.

Expiration Date:
The Friday following the Friday of the listing of the options.

Settlement of Option Exercise:
Short-term Standard & Poor’s 100 index options are PM-settled. The exercise-settlement value, OEX, is calculated using the last (closing) reported sales price in the primary market of each component stock on the last business day (the expiration date) or on the day the exercise notice is properly submitted if exercised before expiration. If the exercise-settlement value is not available or the normal settlement procedure cannot be utilized due to a trading disruption or other unusual circumstance, the settlement value will be determined in accordance with the rules and bylaws of the Options Clearing Corporation. The exercise-settlement amount is equal to the difference between the exercise-settlement value and the exercise price of the option, multiplied by $100. Exercise will result in delivery of cash on the business day following the day the exercise notice is properly submitted.

Paul asks…

Future and Options trading?

How to do trading in future and options?

Can any one please let me know about it….

Thanks in advance…

Edward answers:

Not sure about futures but options do require that you learn the lingo and understand the basics. To learn the basics takes about 3 weeks of study about 2 hrs a day. Essentially options give rights and create obligations. The seller of the option has the obligation and the buyer has the right. Sounds like the buyer is the guy with the power, well yes ,but the seller is the one that usually makes the profit. There are only two options, calls and puts, but in that they can be bought and sold and combined in various ways gives the option trader many ways to profit. Basically the call when bought gives you the right to buy at a certain price in a certain time frame and the put when bought gives you the right to sell in a certain time at a certain price.

I suggest you look at theis sight for further information.

Http://blog.mdwoptions.com/options_for_rookies/archives.html

Mark asks…

Rules of options in day trading?

I’m a bit confused over the stock vs options issue. The way I understand, if you buy a stock at a certain price, an option can be sold at any time as long as the price goes up, right? And if the price goes down by the time the option expires, you lose all your $$$?

How long is the expiration date? Do you have to set a limit or maximum for stock increase, or can you sell at any time as long as it goes above the buy price? Can cash accounts buy and sell options during the day, or do you have to wait 3 effing days like normal stock purchases?

Edward answers:

Calls and puts – fast trading
http://www.youtube.com/watch?v=UT6Y4OZ_Ejc

Nancy asks…

How to calculate IV of a certain option?

Hi, I’m getting interestead in trading options especially volatility trading.
First thing I did was go to the following site to find out what is the IVs of target options.

http://www.cboe.com/framed/IVolframed.aspx?content=http%3a%2f%2fcboe.ivolatility.com%2foptions.j%3fcontract%3d3DC053BE-EF5A-49FB-AE5A-9A15E39DFE96&sectionName=SEC_TRADING_TOOLS&title=CBOE%20-%20IVolatility%20Services

Take STP for example, you can see the chart of IV and HV.
Immediately after seeing this chart, I got this question: Why is there only ONE IV line in the chart since there are many strike prices and expiration days for STP?

What exactly does this IV in the chart mean? Is it the IV of the ATM option with the closest expiration day?

Thank you for all who helped me:)

Edward answers:

The implied volatility is always for the underlying, not the option.

Read a few books, you’ve got a long way to go before you start trading. McMillan is the options guru. Get a free trial to an options trading program, and all the Greeks and volatility measurements will be calculated for you. You don’t have time to calculate and trade. That’s what a trading platform does for you.

Ignore the pompous azz that thinks theory and big words of false intelligence will make him money. He’s so confused over theories and terms that don’t apply to reality, he couldn’t make a market call if he had to. He ain’t about to stick his neck out and put his money where his mouth is and show us a result; too busy pounding his chest, looking down his nose, and stuttering over conflicting theory is his game. Sounds pretty important though, doesn’t he? Just like the TV idiots. Most of what is taught today at university and through the “experts” in the media is just wrong, or more than half of those “experts” could beat a monkey throwing a dart. Puffed up wise guys, full of themselves, no better than a monkey.

These “experts” get pissed when shown that their high-fallutin’ “opinion” is no better than an ignorant bastard. They are so invested in their ivory tower bubble of opinion, they have to accept it or they would be face to face with the truth they’ve sold their soul and fell for inapplicable theory, hook line and sinker. So invested, how could they possibly question their own world they created for themselves inside a bubble that applies only inside the bubble? It destabilizes validity in circular logic, but so repeated and paid for so dearly it has to be important, right? But read the answer by the “expert” again: nothing helpful, nothing that applies, zero conclusions, ensconced in hundred dollar words and circular logic. At least try to apply all of that knowledge to something specific, something usable, something applicable in reality, something actionable, something the common man can use and engage the markets with. School is out. Now it’s time to make a profit and stop running circles around the idea of how smart you are. You’re only proving your own judgmentalist mediocrity, showing you can’t see outside the theory bubble or outside your own importance.

I too am disgusted with pompous fools, intelligent people, but not enough common sense to come in out of the rain, or leave their theory bubble and accomplish something for a change other than chasing their own tail and repeating over and over the same pompous garbage and hogwash theory that doesn’t apply in the real world. As a blanket statement within a question so popular here, where was it that you worked? Lehman Brothers full of smart guys that went bankrupt? What you think you know, doesn’t work, or in more plain and simple terms, doesn’t make money. Or continue in the present vein, memorize a thousand more big words. It’s all about making a profit with an actionable strategy–a plan of specifics that apply to something real, not what you think you know in theory. Please, just go away and think of something relevant to say.

Edit: Nobody likes being falsely accused. Your ignorance does not constitute another person’s error. Never did. Just because you don’t understand the argument, or can’t see outside your self-made bubble of theory, does not mean that the argument is fallacious. It only means you lack the mental capacity to understand the argument, especially when you have no specifics or details; you have no valid claim. Name-calling is childish and only reflects on you, not me; missed your mark again. Imagine that. Looks like a pattern.

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Your Questions About Wayne Company Batman

Carol asks…

Batman fans, I need your opinion?

Batman 3 is going to be Christopher Nolan’s final Batman film as he is finishing the trilogy. Which leaves us to a reboot in a few years.

I’m writing a reboot.

It deals with a Bruce Wayne, who is trying to protect his alter-ego, he pretends he is drinking hard drinks (but it’s really ginger-ale) to impress his rich friends, he acts like a playboy, while also trying to have a relationship with newspaper editor Vicki Vale. A young and arrogant playboy from a rival company begins to threaten Bruce Wayne, his name is Edward Nigma. Soon, Batman begins to lose control of the criminals, as the crimes get more complex and increasingly violent, Batman can’t stop this raging criminal. The criminal is The Riddler, but as Bruce searches for his identity, he discovers that his rival and arrogant Edward Nigma, is actually an Arkham patient, ever since he left Arkham, his therapist has been missing in action, her name…. Harley Quinn…

I know it sounds cheesy, but i’m adding some very bleak moments and mixing it with goofy moments, it’s like a combination of Tim Burton/Christopher Nolan’s Batman films. It has more characters and plot, but i’m just giving away the overall synopis. It actually has a huge character twist at the end too.

Edward answers:

If you have Harley Quinn in it you must also have the Joker because she was his therapist and side-kick. I have the perfect actor picked out to replace Heath Ledger as the Joker. I don’t know his name but he’s the guy from the first season of the show Dexter who played Dexter’s psycho killer brother known as the Ice-truck killer. I kinda like the idea of Edward Nigma being a business competitor of Bruce Wayne. I thought that if Harley Quinn was the Joker’s shrink while he’s locked up she could fall for him and join him in crime and also give him a make-over and clean up his look a bit and help him escape. Then maybe the Joker and Riddler could join forces. Personally I’d forget both the Joker and the Riddler and make Cat Woman the main villian and love interest if there’s only going to be one more Christopher Nolan Batman movie.

Susan asks…

Iron Man vs Batman?

Since both Iron Man (Marvel) and Batman (DC) movie are release this year, do you ever reliase they have something common
Both Tony stark and Bruce wayne are billionaire and have industrial corp established under their name. Tony stark have established his company “Stark Indusries”. Bruce wayne have continue to run company started by his father “Wayne corp”
Both does not have any supernatural powers or abilities, they build their own armour and weapons. Bruce wayne makes the weapons from his gears that his have or some supply by Lucius Fox. Tony stark can make weapons from any unused craps/junks.
Both refers as part timer of the team. Iron Man also like “work alone’, doesn’t like part of the Avengers. Batman known as the part-timer of Justice League, also doesn’t like to be part of the JLA.
Both are highly capable thinkers, but IQ is a relative measure, not an absolute one. Batman is universally hailed as the smartest man in D.C. Comics, with Lex Luthor his only real competition. Iron Man, by contrast, is at least the fifth or sixth smartest character in the Marvel universe, with Richards, Victor Von Doom, Bruce Banner and Hank Pym all believed to be more intelligent.
Batman: Spurred to be a crime-fighter after witnessing his parents’ death, Bruce Wayne is motivated by guilt and hatred to clean up the streets of Gotham.
Iron Man: Tony Stark becomes Iron Man after being captured and held as a prisoner of war. A true hero, he selflessly and altruistically decides to better mankind through his technology

Batman: The perfect human specimen, Batman has spent years training himself into peak physical condition. He is proficient in all forms of fighting and a master of martial arts.
Iron Man: Stark’s strength comes from his superpower armor, which houses the world’s best weapons systems. In addition, the suit grants him preternatural strength and endurance and enables him to fly.
Verdict: In hand-to-hand combat, it’s no contest. Stark’s armor is so powerful, it might very well swing the entire contest in his favor.

Edward answers:

What is better??
IRON or BAT??

Charles asks…

battle of the billionaires BATMAN vs IRON MAN?

I was watching Iron man with a friend of mine, and he said he cant wait for the next one to come out. I told him like it matters now that disney bough marvel and it still wont beat dark knight in money and fame for comic movies. So he replied with well iron man could whoop Bruce’s butt any day. And so i ask who would win if for some reason Iron man fights Batman, if the tech from starks industries is put up against the tech of Wayne corp, being they used their companies tools but their own brains to build their suits. Head to head who would take it if you wish to get into detail with the answer please do.

FYI : i think batman would take it not going to explain why cause i am asking the question lol.

Edward answers:

Iron Man wins, as he already HAS the suit. Wayne Industries are significant years behind Stark and even if they get a suit, Bruce is still playing catch-up to Tony

Laura asks…

is this a good idea for a gotham city plot or what?

hey can you guys give me feedback on the “pilot” story of the show i’m making which is called “gotham city” ? the show focuses on the ordinary lives of citizens of gotham, the rich poor and ordinary, as they deal with psycho maniacs and of course, batman.

ok here’s the plot :))))))))))))))))))))))))))))))))

as jessie armstrong, a 15 year old girl living in an apartment building with her two sisters and mother, heads off to school with her best friend, lance simpson, they witness a fight. after talking about how batman is attracted to crime at night, lance, who is obsessed with batman, decides he will fake a crime that looks real, (beating up a dummy in an alley,) and batman will come. jessie, who is very overprotective of people, tries to persuade him not to do that, because it’s too dangerous in the streets of gotham, especially at night. lance is seemingly convinced. later that night, lance, unbeknownst to jessie, commits his “crime” and is met by a shadowy bat figure…. meanwhile, jessie’s college age older sister, samantha, is interning at arkham asylum. while training with a psychiatrist, the calender man comes for his weekly therapy session. the psychiatrist tells samantha that if a paitent starts going a little over the edge, slap him real hard to get his attention back. samantha tells this to jessie, and jessie thinks it’s inhumane. she disagrees with how samantha and her mother, (who’s a pschologist at arkham) treat the prisoners, and gets in a fight with them. down in the poor area of gotham, kate staplin, who is a hard-working teenager trying to support her family with hermother, sees her lazy, drug-doing twin sister lindsay run in with their kid brother, tommy, who is shot by a stray bullet in a gang fight, and the shot could be fatal. also, johnathan innux, head of innux inc. (computer company,) gets a meeting with oswald cobblepot. oswald wants to help Innux and his company get more endorsement and to become more successful, in exchange for 40% of the sales of the company. Innux refuses, and oswald tells him that “he’ll be sorry.) meanwhile, Innux’s daughter, elizabeth, an airhead spoiled brat who was told by her mother’s brother (a corrupt cop) that batman is a bad person, speaks badly about batman publicly during a fundraiser thrown by bruce wayne, and therefore she is now very unpopular.

^^ well that’s how the first episode’s gonna run. tell me what you think?

Edward answers:

I think a show based in Gotham city that focuses on just average people in the city, rather than only on Batman and his villains could be a pretty interesting show! They could still have Batman/Bruce Wayne character in it, but make him less prominent than the other characters in the cast. But sadly I’m sure that it wouldn’t ever happen, still an interesting idea!

Mandy asks…

Im new to DC comics and i dont know where to start?!?!?

I am all new to comics in general, I have no idea where to start I know that bruce wayne is dead and now dick grayson is batman but i dont know where or how he died!! please help me !! i wanna read crisis on infinite earths,infinite crisis, final crisis or batman battle for the cow but I cant do that if i dont know anything!! I have the DC comics encyclpedia !! does that help!!
what are your suggestions
P.S.: Im a big batman and hal jordan fan and im not very intersted in MARVEL or any other comics companies!
thank you!
Im only intersted in DC comics !!
and please give me names or issues numbers. because Im buying comics online cuz its almost impossible to find comics in my country!! all I could find is batman,superman,FF,spiderman,cap america,action comics and some archie and dark horse comics

Edward answers:

Well, I’d start with the classics, go from the very first stories then make your way to the last.
A lot of the newer comic books are a little weird these days (eg clones or half sibling… That sorta crap)… The plot just gets more and more complicated, so i’d start at the times when things were more simpler.
I love marvel, but the Flash got me interested in DC. Batman is cool. What doesn’t he have in that utility belt?

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Your Questions About How To Invest

Charles asks…

Help with investing?

I’m in college and know very little about investing (stock market, mutual funds, ect.). I would like to start investing early to have a secure future. Any advice in how to start investing and what I should invest in would be helpful.

Edward answers:

Great, start learning the basics of fundamentals and technical analysis so you will be more informed in your investments. You can find all the basic info you need to learn on websites for free.
This site should give you a good start.

Http://finance.yahoo.com/education

If your current/future employer offers an employee 401k plan. Invest up to the matching % of your employers contribution. If plan offers an election to invest in a money market fund you may want to invest in it until you learn more. Next invest in a Roth IRA up to the max allowed(yearly). If you then have more money to invest, go back to your 401k plan and invest the max allowed(yearly). So after you do all the above and want to invest more you should be able to decide how. Only invest money that you can afford to lose. Making some quick money is nice but if you lose it, it gets right ugly.

You may also think about ETF’s instead of mutual funds, stocks. And options.

Http://finance.yahoo.com/etf

Try what you learn on demo sites. They can be a very fun but educational way to learn from mistakes. If you pick 75% right with play money then you might be ready to start slowly investing.

Http://simulator.investopedia.com/

http://simulator.zacks.com/

http://www.fxcm.com/open-free-100k.jsp

http://www.alpari-idc.com/en/metatrader4…

Or just google for more.

Have fun while learning the basics and planning your financial future. Also while learning how to keep every dollar in your pocket instead of the tax man’s pocket. Each dollar saved compounds interest on top of interest, and will add up over the years. Do your best to buy things when they are not high and overpriced. And review your accounts at least twice a year. Timing your entry and exits can help protect from losing profits accrued.

I use Lightning Strikes Trading System for trading in any time frame and it works on forex, stocks, bonds, etf’s, mutual funds, etc… They have 3 free training sessions a week and you don’t have to buy the software to join in the live chat and text. You can even watch some recorded past live sessions. Here are some past charts that I used.

Http://f1.grp.yahoofs.com/v1/MB16R0zjjaZ…

Http://f1.grp.yahoofs.com/v1/MB16RxjOUQt…

There are 7 indicators (2 short, 2 medium, and 3 long term) and if volume is reported another one is added (on balance volume). Plus whatever time-frame is used the 2 green horizontal lines are the support and resistance for that time frame. So when indicators are all touching the bottom price is at or very, very near support. At top is at or very, very near resistance. Which helps my entry/exits and risk/reward ratio.

Http://f1.grp.yahoofs.com/v1/MB16R9Wv-wt…

Http://f1.grp.yahoofs.com/v1/MB16R9wSKdV…

Http://f1.grp.yahoofs.com/v1/QCt6R2fYIj6…

Http://f1.grp.yahoofs.com/v1/QCt6R3R0VQe…

If you can not view charts above I can email them.

Here are my favorite sites.

Http://stockcharts.com/

Has basically all you need from fundamental to technical terms. Plus stock screens, charts, public chart lists, and much more useful info.

Https://www.fidelity.com/

Has good learning resources.

Http://moneycentral.msn.com/home.asp

In addition to yahoo finance.

Http://www.reuters.com/

For news and more.

Http://www.marketwatch.com/default.aspx

For news and more.

Http://www.valueprime.com/index.php

For rating stock risk/reward ratio and reports.

Http://www.barchart.com/

For investing in more than stocks.

Http://www.investopedia.com/

For more great learning tools.

Http://www.lightninglive.com/

For best software timing your entry/exits any time frame for day traders and long term investors.

Others worth exploring.

Http://www.equis.com/

http://www.stockta.com/

http://www.secform4.com/

Best Wishes,
Burt Whitley

Sandra asks…

explain what value investing is please?

what is value investing

Edward answers:

Stocks can broadly be classified into two groups–growth stocks and value stocks. Value investing is investing in stocks or perhaps other assets that are considered to be selling below what they should be selling for. Of course what the should be selling for is a matter of divided opinion. Value indicators as they relate to stocks include price/book, price/sales, price/earnings, dividend rate, and PEG ratio (price/earnings/expected growth rate), debt/equity, and many more besides. They lower all of these indicators other than dividend rate the more of a perceived value a stock is. A higher dividend rate is an indicator of a better value stock.

Here are a couple of examples to illustrate the point of a value stock vs a growth stock.

ACAS: price/book = 1.12 (Recently it was below 1.00
price/sales = 5.80 (actually high relative to other companies)
price/earnings = 9.56 relatively low about 2/3 the average
dividend rate = 11% extremely high
PEG ratio = 1.4 about average
debt/equity = 0.749 not great but not bad either.

Now for a stock that by no figment of the imagination could be considered a value investment

FSLR: price/book = 15.8
price/sales = 34.4
price/earnings = 107
dividend rate = 0
PEG ratio = 1.62 perhaps this is why the stock is selling at such a high ratio to the other indicators
debt/equity = 0.099

Robert asks…

Do I have enough to invest?

I have $10,000 in my savings account and I want to invest it. Is this a substantial amount to invest? Or should I keep it for a rainy day? Any advice?
yeah, I was also going to ask how wise it is to invest now. I figured probablly not very. It actually already is in CDs. my bad. the $10,000 is in a CD. so for now its better to keep it in a CD? With inflation? It seems like I’d still be losing. And if I do invest inthe stock market now, because it is SO bad now, won’t I get REALLY good returns in a few years?
I have no debt. By “rainy day” I meant if suddenly I was out of a job, and had to scrounge for money etc. Like a very dire situation. Otherwise, I have enough to pay for car bills, etc etc etc.
Thank you so much for everyone’s answers. It’s really helping me alot.

I am 21 years old, I live with roommates, I’m a full-time student. I’m a pretty responsible spender so I have no debt. I have enough to see me through for about the next 6-8 months and I have low but steady income. The $10,000 I want to invest in currently in a CD and I don’t want it lose value with inflation.

Edward answers:

Before you start investing you should have an emergency fund. Aside from that $10,000 is definitely enough to start investing. I’d suggest finding a good mutual fund family (T. Rowe Price is my favorite), open up a money market, pick 3 or 4 mutual funds you want to invest in and then SLOWLY over time transfer money into those funds from your money market fund. That way, if the market does continue to tank you won’t have all your money invested at the higher prices. Good luck.

Paul asks…

Money to invest ….?

If you had $350 a month to invest what would you invest in?

Edward answers:

$350 a month is a great amount to start with. Heck i started two years ago dripping Exxon mobil at $50, Aqua america at $50 a month for a whopping $100 per month. You can buy them direct, without a broker, from http://www.equiserve.com/

95% of the people in the US can’t afford $350 a month.

Before you invest:
1 Pay Off all credit cards and debts (not your mortgage)
2 put at least 3 months (better would be 6 months) net wages in to a high interest savings account like www.emigrantdirect.com at 5.05% currently

then investing your $350 a month:

I would go for a fund likeVTI Vanguard Total Stock Market Index Fund that emulates the total stock market with no load(fees) maybe $200 in to it

Then a little more risk and more return in something like EFA iShares MSCI EAFE Index Fund, it’s a europe-asia index find. $150 in to that.

There are lots of options just watch the load on the funds, you are already taking a $4 or $8 hit every month.

I’d do it through an online discount site like share builder, www.sharebuilder.com investing in two funds like this will cost $4 per investment per month so $8 bucks on top of your $350 if you do both or only $4 if you alternate between each, each month.

Sandy asks…

Re-invest or not to re-invest ?

I have had a small Fixed Rate ISA for 2 years which is now maturing. I have the opportunity to re-invest at a Fixed rate for a further 12 months or have it transferred into a Cash ISA with variable interest.
As I am a Senior Citizen, I obviously want to do whichever is advantageous for me. Any advice would be appreciated.
yes I do pay tax

Edward answers:

Denis……….Investing at the moment is returning little or NO money of any value. Well done you for having invested into ISA….but look at your profit…even tax free….bet you did not achieve more than “5 over last 2 tears…….in effect….lost money…….You do not say how much you have invested, but you say it is small…let us say £2,000

My advice………buy premium bonds…you cannot loose money…and you might win a monthly prize of £50 – £1 Mill……. Takes you 3 weeks to get your money out…..Good deal mate… All the Best

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Your Questions About Investment Returns 2010

Ruth asks…

Why does a decrease in the real interest rate lead to an increase in the desired level of capital formation?

Why does a decrease in the real interest rate lead to an increase in the desired level of capital formation?

10 pts thanks!

Edward answers:

Have you thought about this at all?

It doesn’t always. That’s why the economy is such bad shape. The Fed has reduced the real interest rates as far as it possibly can, yet we are still not seeing significant investment.

Http://economistsview.typepad.com/economistsview/2010/07/credit-continues-to-fall.html

On the other hand, in general, if I have a project that I expect to return 10% a year on my investment and the real interest rate is only 1%, then making the investment is a good idea. But if the real interest rate is 10%, I’m better off putting my money in the bank where I get the same return for much lower risk.

Http://en.wikipedia.org/wiki/Rate_of_return

On the other hand, if there are no good investments, it doesn’t matter what the interest rates are.

Laura asks…

Do you miss the prominence of the territorial system?

BQ: Do you think the territorial system will ever regain some notoriety? And if it does will it be controlled by the NWA?

Edward answers:

Yes because Wrestling Territories trained the Wrestlers that WWE Fans raved about during the 1960’s, 1970’s, 1980’s, 1990’s, 2000’s and 2010’s. Many of those same Territories had Wrestling Shows that were syndicated in local markets during The 1980’s and I used to be able to watch Mid-South Wrestling/The Universal Wrestling Federation (UWF), Th eAmerican Wrestling Association (AWA), World Class Championship Wrestling (WCCW), Jim Crockett Promotions National Wrestling Alliance (NWA), Memphis Wrestling, The World Wrestling Federation, Powerful Women of Wrestling (POWW) and Gorgeous Ladies of Wrestling (GLOW).

No, people who have millions of dollars in working capital these days are not trying to spend millions of dollars on renting arena’s hiring Ring Crwws, Production Crewa, Wrestlers, Referees, etc. Before they see any Return on Investment.

Charles asks…

Why couldn’t fiscal policy unable to help the United Sates achieve full employment output?

Here’s the fact to use a context; this is the situation the United States economy is in:

espite record Government Spending and Tax Cuts, the United States has not recovered from the Great Recession of 2011 as unemployment remains historically high at 9.1% while GDP is expanding too slowly at +1.0%.

Edward answers:

You’d better get your fact straight.

Fiscal policy could help the U.S. Achieve full employment.

Http://gulzar05.blogspot.com/2010/05/more-on-impact-of-fiscal-stimulus.html

Tax cuts are not very effective for stimulus, but investment in infrastructure, extending unemployment benefits, etc. Is.

Http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_whats_a_dollar_o.html

http://www.nytimes.com/2008/12/01/business/economy/01stimulus.html

The stimulus package that Congress did pass did have a significant effect:

http://www.economy.com/mark-zandi/documents/JEC-Fiscal-Stimulus-102909.pdf

http://www.upi.com/Business_News/2009/11/21/Economists-Stimulus-package-helped/UPI-82811258815643/

http://delong.typepad.com/sdj/2011/02/did-the-stimulus-stimulate-real-time-estimates-of-the-effects-of-the-american-readjustment-and-recovery-act.html

But it was very clear even when it was passed that it was fat too small to return the economy to full employment –

http://krugman.blogs.nytimes.com/2009/01/06/stimulus-arithmetic-wonkish-but-important/

http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/stimulus-what-stimulus.html

it was barely enough to prevent falling into a second Great Depression:

http://www.voxeu.org/index.php?q=node/3421

It may be politically impossible, but a nice large stimulus now would definitely help.
Http://andolfatto.blogspot.com/2011/11/negative-real-interest-rates.html

John asks…

Why do democrats think Obama was an amazing president?

Is it because of killing Bin Laden and that General Motors is alive? Also there was no major economic improvement (which I believe is most important. ) So why?

Also, who are you voting for and why?
You call debt economic improvement?…

Edward answers:

Because he’s done a great Job cleaning up Dubya’s mess, without help from Congress. And there has been economic improvement, what rock have you hiding under the last 4 years?

Obama administration’s accomplishments:
1.The first bill President Obama signed was the Lilly Ledbetter Fair Pay Act
2.His Recovery Act supported millions of jobs and helped to stave off a second Great Depression.
3.He pushed for and won middle class tax cuts that benefited every American worker, and saved the typical family $3,600 in taxes over the last four years.
4.President Obama rescued the auto industry, and now GM and Chrysler are healthier than they’ve ever been.
5.He doubled funding for Pell Grants, helping to make college more affordable for nearly 10 million families.
6.His student loan reform ended billions in subsidies to banks serving as middlemen and reinvested those savings directly in students.
7.The President established the American Opportunity Tax Credit, worth up to $10,000 over four years of college.
8.His Race to the Top Initiative helped spur nearly every state to raise academic standards.
9.His tax cuts, social-welfare programs, and economic policies lifted nearly 7 million Americans above the federal poverty line in 2010.
10.President Obama has signed 18 tax cuts for small businesses since taking office.
11.We’ve seen 5.2 million new private sector jobs over the last 31 months.
12.The unemployment rate is at the lowest level since President Obama took office.
13.Health care reform—passed after decades of failed attempts by every previous president—provides affordable health coverage to every American and will lower premiums by an average of $2,000 per family by 2019.
14.Obamacare expanded access to lifesaving preventive care such as cancer screenings and immunizations with no out-of-pocket costs for 54 million Americans.
15.Obamacare ends insurance discrimination against the 129 million Americans with pre-existing conditions.
16.Because of Obamacare, over 3 million more young adults have health insurance today than would if the new law hadn’t passed.
17.The parents of over 17 million children with pre-existing conditions no longer have to worry that their children will be denied coverage.
18.President Obama has ordered the overhaul of federal government regulations to make them smarter, practical, and more efficient.
19.His historic investments in clean energy have helped more than double the amount of electricity we obtain from wind and solar sources and helped increase biofuel production to its highest level in history.
20.President Obama is doubling fuel efficiency standards
21.President Obama has taken unprecedented action to address climate change,
22.He has taken historic action to protect our environment
23.President Obama fought for and won landmark Wall Street reform that reins in the abuses that led to the financial crisis and ends the era of taxpayer bailouts and “too big to fail.”
24.Wall Street reform created the Consumer Financial Protection Bureau, the nation’s first federal agency focused solely on consumer financial protection.
25.As part of President Obama’s commitment to transparency, the White House has posted its visitor records online for the first time ever.
26.President Obama’s all-of-the-above approach to energy has helped cut the United States’ dependence on foreign oil to its lowest level in 20 years.
27.President Obama responsibly ended the war in Iraq.
28.He announced a plan to end the war in Afghanistan .
29.President Obama sent the largest security assistance package to Israel in history
30.President Obama rallied the international community to implement the toughest sanctions on Iran in history.
31.Through the President’s historic increases in Veterans Affairs funding, he has expanded and improved healthcare and job training access for our returning veterans.
32.President Obama negotiated the New START Treaty with Russia to reduce the number of nuclear weapons in both countries.
33.He has affirmed his personal support of marriage equality,
34.He fought for and won the repeal of “Don’t Ask, Don’t Tell”,
35.When Congress failed to fix our broken immigration system, his administration did everything in its power to improve it..
36.Oh, and he gave the order to send troops in after Osama Bin Laden—and has decimated al Qaeda’s senior leadership.

David asks…

Is now a good time to reallocate my 401k?

I’m 27 and my 401k is at about a moderate risk, although I’d like to reallocate to aggressive funds. Is now a bad time to reasses future contributions or should I wait until the market is better?
I don’t want to contribute more, just want to move my focus towards almost all aggressive stock.
I really just want to know whether I should make the changes now or wait until the economy has picked back up, or is all of that irrelevant?

Edward answers:

You of course are asking opinions. My opinion is that one should avoid aggressive funds. Those who had aggressive 401k allocations in 1999 may never get back to their original investment. That statement is not exactly correct because they did continue contributing during the intervening years.

But here are a couple of examples:

Fidelity Aggressive Growth 10 yr return 1.78%. Wait until 2010 when they publish the 10 yr return. It will be negative.

Fidelity Value Fund 10 yr return 9.51%.

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