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Financial Markets Are Tools That Help Investors Create More Profits

May 19, 2011 By aoonlwlk Leave a Comment

There are a number of varying types of financial markets. These are markets basically used as means to meet an end when it comes to individual and corporate funding needs. Financial markets are a way in which investors and borrowers can meet and trade securities. Individuals and company investors typically sell stocks and bonds in exchange for funding from lenders that will end up receiving a form of interest payments for their investments. There are risks associated with the finance market and it is best to know as much as you can about finance markets before delving into trading securities.

Financial markets help individuals, government institutions and corporations to raise capital. These types of transactions occur within capital markets. Capital markets deal with the sale and trade of stocks and bonds.

Money markets are another form of financial products that are a part of the overall finance market. Money markets are primarily concerned with short-term financing. There are a number of different products that fall under the money market. Money markets facilitate the borrowing and lending practices of institutions and individual investors through a number of different money market products.

When considering the types of financial markets, there are several financial products. Finance markets were established to offer a financial platform where capital funds could be raised. As a result of these finance markets, individuals and corporations are able to borrow funds by selling various forms of financial products. All of these transactions occur in what is called the stock exchange or the stock market.

Many different types of transactions occur in the stock market. It is a very frenetic environment where deals big and small are made everyday. There are a number of different external factors that directly affect what happens in the stock market. It is a very volatile, financial market place. Many investors have found great wealth in the transactions they engaged themselves with in this arena.

There are several governing institutions that look over the transactions that take place in the stock exchange. The Securities and Exchange Commission makes sure all lenders and borrowers are acting within the regulated guidelines and policies. Any infractions will be punished, either by having to pay a hefty fine or more punitive measures that may include jail time.

If you are interested in investing, it would be wise to understand the different types of finance markets. The main purpose of these markets is to raise capital. A company may sell shares of its stock for the purpose of generating new capital to expand its operations. An individual may liquidate some of their shares in order to have enough money to put down on a new home. There are a number of reasons why certain financial transactions take place in the financial market.

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Watch full episode 148 of Keiser Report on Thursday. This time Max Keiser and co-host, Stacy Herbert, report on staging bomb blasts to unravel financial markets while Zimbabwe proposes a gold backed currency. In the second half of the show, Max talks to Gregor Macdonald of Gregor.us about paper versus real as future growth prospects dim on declining energy resources. www.facebook.com/keiserreport

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Financial Markets Are Extremely Complex

May 19, 2011 By aoonlwlk Leave a Comment

Article by Andrew Mathew

1st Financial markets are extremely complex. They are difficult to interpret and predict. And yet, our understanding of it is over-simplified.

2nd Modern investment theory is based on weak assumptions. According to the French mathematician Benoit Mandelbrot, “The market is very, very risky -. A more risky than the standard theory to imagine”

3rd Standard models are not defined or accurately assess risk. Need to evaluate and predict the risk caused by an elegant mathematical equation, which in turn was used to create fancy economic models.

However, current models take a very controlled according to the financial markets. For example, the theory states that the price movement from one moment to another are smooth, when in fact the price developments in the financial markets are volatile. The formula used to measure the risk to ignore the true situation. As a result, pension funds are subject to extreme financial turmoil. “This raises the question: Is your pension fund to take a holistic approach to the risks inherent in financial markets?

4th The standard theory assumes that markets are rational machines, which are the ideal market. This is a world in which the balance of buyers sellers. The basic idea is that financial markets always generate the “right” prices when new information about the property becomes available.

How did this all happen? Well, according to investment theory, people react logically when presented with new information. No emotions attached. This means that buyers and sellers are well-reasoned people who assimilate all available information, transact economically “fair” price. For this work, it is assumed that people have the same goals and it provides some information, they all make the same decisions. It is also assumed that these decisions are made independently of each other, which means that the price reflects the market consensus, and not the opinions of a select few.

5th People who move financial markets. Think of it this way. Market to include thousands of different needs, ideas, investment strategies, tactics, goals, tasks and emotions. As an individual you do not have to change prices or capital growth control.

6th Fundamental and technical analysis of the use of historical data to predict future price movements. Problem: it is impossible to predict what will happen in the future. In addition, the financial markets is fragmented and most pension funds are poorly prepared for surprises.

Except, when scientists find a way to calculate people’s emotions, long-term investors are likely to be followed by a one-size-fits-all “to diversify, invest and hope ‘approach.

7th Gloom and punishment inspires fear. With a hot tip inspires greed friend. Following the advice of others may be detrimental to your bottom line. Basically, you need to change the way you invest and do business.

8th The market will crash again in the future and people will be responsible. When greed gets into the mix, you may have yourself ticking time bomb. 2008 sub-prime crisis shows like this.

9th High-risk strategy is necessary to return again. It is difficult to predict future returns on financial markets and their expected returns may not materialize. Known high-risk strategy is more likely.

10th Retirement planning, as it is today is not effective way to create wealth. The evidence suggests that only 1% of people will no longer be working with the same standard of living they had prior to retirement.

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Cameroon: Reporters and Bankers Explore Financial Markets

May 16, 2011 By aoonlwlk Leave a Comment

The poor reporting of financial news in the country’s media organs, including newspapers, radio and television, web blogs and web sites, further creates confusion in the minds of Investors. The market has quickly slipped into a vicious cycle of inadequate performance, misunderstanding by key actors, and poor or malignant news coverage.

In order to trigger a reversal of the trend, a two-day workshop (Thursday 03 and Friday 04 February 2011) was organized at the GICAM headquarters in Douala, attended bankers and other financial experts, as well as journalists whose editors presented as reporters of financial news. To the members of the Financial Markets Commission of Cameroon, it is imperative for all the stake holders to understand that both primary and secondary financial markets are functional in Cameroon, such markets may still be considered to be in the embryonic stage, but there is a great potential for growth given that at all levels, they are well-structured and highly regulated.

Resource persons, included Professor Kamdem David, Dean of the Faculty Economics and Management of the University of Dschang; Mr. Sanda Oumarou, an Economist and Cameroon’s former Minister of Post and Telecommunications; Mr. Elung Paul Che, former General Manager of the Cameroon Treasury; Madam Adiaba Jacqueline, Director of Markets at the Douala Stock Exchange DSX; Mr. Emeke Iweriebor, General Manager of the United Bank for Africa UBA: Dr Banga Ntolo Louis, Assistant GM of Société Générale de Banques au Cameroun SGBC; and Mr. Mathieu Mandeng, General Manager of Standard Chartered Bank; among other professionals from the world of Banking and Finance.

In the twinkle of an eye, the participants were bombarded with tonnes of information on financial markets, definitions, structures, instruments, actors, and operations. The notion of investment banking within a context dominated by commercial banks was highlighted, and participants particularly the journalists could now understand why the Cameroon government has to issue bonds and borrow money from the public even when the banks are suffocating under what has been termed “excess liquidity”. The simple truth is that short-term funds cannot be used to finance long-term investments.

Besides the primary markets dominated by investment bankers, the participants also understood that structures like the Douala Stock Exchange DSX operate mainly in the secondary markets where they create a continuous market for the exchange of bonds and stocks, as well as determine securities prices through the buying and selling of orders. The co-habitation of two stock exchange markets within the CEMAC Sub Region in Douala and Libreville remained an intriguing issue. The difference between a stock exchange and the financial markets was succinctly established with the Financial Markets Commission of Cameroon described as a “gendarme” given its regulatory role while two other key players in Cameroon’s financial markets are the “Caisse Autonome d’Amortissement” and the “Banque de Réglement” which is the SGBC bank.

At the end of the training, participants went away with the understanding that for a country like Cameroon to become an emergent economy by 2035 the financial markets must play a key role in mobilizing funds and financing long-term investments. News reporters versed with financial issues equally have to generate more output in terms of packaging information in such a way that investors can rely on media publications for financial news. More reporters have to be trained and many more bankers and financial experts have to be seen communicating and commenting on issues relevant to the general public.

 

 

Ano-Ebie Snowsel was born in Yaounde, Cameroon. His current interests are in the Social Sciences and Management. He was educated at Government Secondary School Buea, Government High School Mbengwi and The University of Buea. After training as a Broadcast Journalist at The Cameroon Radio and Television, CRTV Training Centre in Yaounde, Snowsel Ano-Ebie worked at the Commercial FM Station in Douala for ten years and served as a News Editor and Programmes Supervisor.


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Different Types Of Financial Markets – Get To Know Them

May 16, 2011 By aoonlwlk Leave a Comment

There are several different types of financial markets. Financial markets are tools that allow people to buy and sell securities or commodities and other financial tools. Investors typically trade and sell the various forms of financial instruments through what is called the stock market. They also have the ability to trade between buyers and sellers. The trading can be done both domestically or internationally according to fair market pricing.

Capital markets are different types of financial markets that deal with the trade of certain types of bonds and stocks. Capital markets can either relate to newly issued bonds and stocks. Or it may handle trades of pre-existing bonds and stocks. This market is typically referred to as either the bond or stock market. The bond market oversees financing regarding the issuance of various types of bonds. And the stock market does the same but for stock issues.

Other vital markets include money markets. Money markets are components of the financial markets. This type of market concerns itself with short-term borrowing and lending practices of securities with a maturation date of one year or less. Various instruments are traded in money markets such as treasury bills, commercial paper, certificates of deposit and several other financial instruments. Money markets essentially facilitate short term debt and capital financing.

There are many other types of financial markets such as; derivatives, foreign exchange, insurance and commodity markets. The purpose of all financial markets is to provide some form of fund raising. It is through these various financial markets that those in need of borrowing funds can find those that are willing to lend funds. These types of financial transaction take place in stock exchange. It is in stock exchange where investors can buy and sell shares of stock from other companies.

The entire foundation of the various types of financial markets is based on a system to borrowing and lending. Those seeking funding can be individuals, corporations, the government and other institutions. There are many reasons these various types of borrowers seek funding. When companies sell shares of their stock, they may be in need of additional capital to meet their expansion needs. Various government entities utilize municipal bonds to raise funds for various projects including improving city infrastructure. There are many reasons for funding across all the different forms of borrowers.

Lenders in the Financial Market are actually the investors. Investors will purchase various forms of financial products which will end up converting into capital for the borrower. There are many different ways these transactions occur. One typical way is when a company issues shares of stock from their company. This is a quick way for companies that are valued in the market place, to make quick cash.

The different types of financial markets are in existence for the purpose of raising capital. As with any institution, there are advantages and disadvantages inherent in the system. It is important to be well informed about the various financial tools before you employ them for your use.

Do you want to really make profits with forex? Make sure you get fresh updates ahead of everybody else here: Forex News

Also, you need to know how to read and analyze the trading market well. Learn Currency Trading News


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Financial Markets and Interest Rate

May 16, 2011 By aoonlwlk Leave a Comment

Article by Thomas

Financial market and institutions concentrate on the ways in which money is loaned and borrowed and the organizations that create and deal with money. Financial market is a market for the exchange of capital and credit, including the money markets and the capital markets. Financial market is also a mechanism for facilitating the issuance of securities. Financial markets provide the system for issuing stocks, bonds, and other securities. The existence of financial markets and institutions greatly reduces the number of individuals with whom a user of funds must transact business. The financial markets and institutions comprising the financial system provide an efficient means of bringing together savers and users of funds. Users issue securities in the financial markets in exchange for funds. Savers provide the funds in exchange for the securities. Financial institutions collect funds from savers, giving them claims on future cash flows. These institutions, in turn, provide the funds to users. Institutions provide funds to financial markets by purchasing securities. Financial markets play a very important role in modern economy. According to the former British Prime Minister William Gladstone. “Finance is, as it were, the stomach of the country, from which all the other organs take their tone.” Financial markets are places and facilities that companies and governments use to issue securities in exchange for funds. In modern economy they serve four major functions: 1) to transfer funds from savers to users, 2) to provide liquidity, 3) to serve as a system of signals and incentives, and 4) to furnish a target for financial managers. Interest rates rise and fall with the Federal funds rates. The government can control economy in a variety of ways, but the most common method is through the actions of the Federal Reserve Board (the Fed). The major task of the Federal Reserve authorities is to manage the money supply in accordance with the needs of economy as a whole. The Fed determines the amount of money circulating in the economy. The Fed can reduce–or tighten–the money supply by raising interest rates. When interest rates go up, consumer spending decreases, and prices level off or go down. Federal Reserve open market operations that control the money supply take place in the money market. When the Fed buys U.S. Treasury bills, it bids up the price and bids down the yield. When it sells Treasury bills, it drives down the price and drives up the yield. Its activities cause interest rates to change. The Fed cannon simultaneously stabilize both the money supply and the interest rate. In 1980s the fed focused its policy mainly on controlling the rate of growth of the money supply, letting markets determine interest rates accordingly. But in view of recent innovations in the financial industry the Fed has turned to targeting the interest rate rather than the money supply. The goal is to peg the interest rate at the level appropriate for the state of the economy. In 1991, aiming to increase aggregate demand to lift the economy from recession, the Fed sharply reduced the federal funds rate. Interest rates in general rise and fall with the Federal funds rate. In 1994 the Fed tried to increase interest rates. The level of and changes in interest rates are crucial to price changes of individual bonds and stock prices. It depends on the real rate of interest–the expected change in purchasing power necessary to induce investors to postpone consumption. Stock prices are very sensitive to changes in interest rates. It is very important to understand the basic factors that influence interest rates. Stock prices move inversely with interest rates. An increase in interest rates creates a decrease in the stock prices. The effect of a given change in interest rates on the stock prices depends on the level of interest rates at the time the rate changes. The capital gain caused by a given fall in rates is greater than the capital loss caused by an increase in rates of the same size. Real rate of interest is not so important to changes of stock prices as inflation, but still there is an important relationship between interest rates and stock returns. The consequent steep decline in the interest rates over the past five years has worsened the plight of savers, particularly the pensioners heavily dependent on interest income.

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