Posts Tagged ‘long-term interest rates’
As an individual investor, at a certain point, you really need to wonder whether the market is rigged, or, at the very least, if we stand a chance against the big players in the market.
Here are some startling examples…
The Goldman Sachs Group, Inc. (NYSE/GS) is the fifth largest U.S. bank measured by assets. Just like individual investors buy and sell stocks, options, currencies and other securities, Goldman has a trading division. In fact, Goldman makes half of its revenue from trading.
In the first quarter of 2011, Goldman traders lost money on only one day of trading. There were 62 trading days in the first quarter and Goldman lost money on only one of those days. You can say they had a 98% success rate at trading.
How can Goldman have such a success rate at trading? Well, they are not alone. Morgan Stanley (NYSE/MS) only lost money on three trading days in the first quarter of 2011. And the profits are staggering. Morgan Stanley made more than $100 million per day trading on 10 days in first quarter. Goldman generated $100 million on half of the 62 trading days in the first quarter of 2011.
Hence, when reading the SEC filings that reveal these mind-boggling numbers, a small investor like me can’t get away from the question: “How can we ever compete and win against the traders at these institutions?”
First, we need to understand that these traders are playing with big money; their risk is well over $100 million daily. They get in a position, they get out. As individual investors, we cannot move that quickly. … Read More
A company would have been bankrupt years ago if it was run like the U.S. government. Why do I say that? Because companies cannot go on forever just borrowing money while losing money on operations! But that is exactly what our governments do.
What has conservatives like me
If there is one investment to avoid in 2011, it will be bonds. Why? Simply because interest rates are headed higher in 2011.
No, we won’t see a spike in short-term interest rates. The Fed will not let that happen. But the Fed cannot control long-term interest rates.
As we enter the last two weeks of January, it looks like we could see positive gains in the month. This is important as historically what happens in January helps to influence and foreshadow how stocks behave going forward. A positive January can point to gains and it’s the opposite when the month is down. But, unlike how 2009 ended, technology is lagging both the DOW and S&P 500. On the plus side, small-cap stocks are faring well, up nearly two percent so far in two weeks.
I’d like to spend this column going over a few mid-cap companies that I really like. Three in particular stand out as solid, long-term wealth-creators for investors, in my opinion.
Long-time readers of this column will know of my affinity for investment themes. Two investment themes that I like very much are the eye care business and the pet care business. No matter what happens to the economy, people still need to feed and vaccinate their pets, and everyone needs to be able to see correctly.
I’ve always had an affinity for VCA Antech (NASDAQ/WOOF). This company operates the largest network of freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country. Based in Los Angeles, the company operates as Veterinary Centers of America Inc., offering a full range of medical and surgical services for small and companion animals. The company’s veterinary diagnostic laboratory network serves all 50 states, providing sophisticated testing and consulting services to other small veterinarians.
Another favorite is Luxottica Group (NYSE/LUX). This Italian company operates nearly 5,500 optical retail stores mainly in North America and the Asia-Pacific region, selling premium eye glasses brands. The company’s brands include”Ray-Ban, Vogue, Persol, Arnette and REVO and licenses Bvlgari, Chanel, Donna Karan, Prada, Ralph Lauren, and Versace. Retail distribution is done through the company’s own subsidiaries that include LensCrafters Inc., Sunglass Hut International Inc., and O.P.S.M. Group Limited.
Finally, another mid-cap company that’s proven itself as a solid wealth creator is Daktronics Inc. (NASDAQ/DAKT). This company is in the business of manufacturing and installing display screens. The company makes everything from large, computer- programmed scoreboards that are installed in large … Read More
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