Financial Content Syndication

"The Fly On The Wall" is a stock market news site that provides value to its subscribers by filtering the "signal from the noise".

They try to identify the news stories, announcements, etc. that are most likely to affect the stock market today.

They then provide this info along with real-time market information, such as block trades, rumors, and analyst upgrades or downgrades.

Besides being available on all major trading terminals - such as Bloomberg, Reuters, and DTN - "the Fly On The Wall" wants to provide their feed onto other websites through financial content licensing.

Does "American Airlines" Need To Terminate Its Pensions in Bankruptcy?

American Airlines' parent company AMR corp, which is currently in bankruptcy, wants to eliminate its four pension plans, which it says is a "multibillion dollar liability on its balance sheet".

The Pension Benefit Guaranty Corp. disagrees, and says that American can emerge from bankruptcy without terminating its pensions.

They say that American still has $3 billion in cash and Delta, which has higher pension costs, is currently profitable. Also, Continental did not have to terminate any of its pensions during its bankruptcy.

The Pension Benefit Guaranty is the federal agency that takes over pensions when the original companies can no longer run them. Instead of tax money, they are funded by premiums paid by companies with pension plans.

However, the premiums that Congress allows them to charge aren't enough, and they are currently running a $26 billion deficit which, according to a "Chicago Tribune" article, would become $35 billion if they took over AMR's pensions.

Because of this deficit, they would only be able to pay each American Airline pensioner up to $54,000/year. This would short change some retirees, such as pilots.

Kindle Version Of "Stock Trading Riches" Reaches Top 100 Business and Investing Best Seller List

Today, the kindle version of my book Stock Trading Riches reached the top 100 on the Kindle Business and Investing best seller list.

Save Money By Using Coupons

These days, with all the uncertainty in the job market, many families are trying to cut their expenses. A simple way to start is by using coupons whenever you can.

This includes while shopping online, where there are many third party sites that provide coupon codes for major retailers.

For example, at Upromise.com, you can get nordstrom coupons, as well as macy's coupons.

These sites are win-win-win situations:

1. You, the shopper, get a discount.

2. The site (for example, uPromise) gets a commission from any sales.

3. The retailers encourage such sites and the coupon codes because it leads to more traffic to their site.

The coupon sites themselves hope that customers who use their coupon codes decide to do more shopping through them in the future.

To Be A Good Trader Or Investor, You Must Learn To Control Your Emotions

To succeed while trading the stock market, you need to be able to control your emotions. You can't become angry or fearful when you are on a losing streak. Alternatively, you can't become euphoric or greedy when you are winning.

Individual stocks, the stock market itself, and trading systems all run on cycles. They will enter money-making modes some of the time and then, without warning, switch.

The only thing we can predict 100% is that, whatever the current state of the market, it will eventually switch, and then eventually return.

If you jump out of the market when it is down, there is a good chance that you will miss the rebound. Similarly, if the market has been strong for a long time, and has reached fantastic heights, you can't become greedy and buy a lot, because the market may fall.

To keep myself from trading impulsively on emotion (and losing), I developed a simple trading plan that lightens my positions as they reach high levels, and starts scaling in as my positions go down.

As a result, I built up my positions at good prices, and scale out as the market goes higher.

A Little Known Financial Specialization

A financial profession that most people probably have not heard about is an enrolled agent. An enrolled agent is licensed by the IRS, and they are able to represent tax payers (and negotiate on their behalf) with the IRS.

An enrolled agent may or may not be a lawyer or CPA, but they must constantly take classes to keep up with the changes in tax laws. Then they need to study for the enrolled agent cpe exam.

An enrolled agent continuing education is worth earning because it gives a competitive advantage over a regular tax attorney or accountant, who have limited ability for dealing directly with the IRS.

In fact, another obscure group of people are the employees of companies that are IRS certified to train enrolled agents. They must be IRS-accredited and knowledgeable about tax law changes so that they can, in turn, train enrolled agents to be in good standing with the IRS.

Introduction to Market Capitalizations For Stocks

A stock's market capitalization (market cap) is computed by multiplying the stock price by the number of shares outstanding. So, if a stock's price was $50 and there were 10 million shares, the stock's market cap would be $500 million.

Stocks can be separated into 4 groups, according to their market capitalization:

1. micro caps - below $300 million

2. small caps - between $300 million and $1 billion

3. mid caps - between $1 billion and $5 billion

4. large caps - over $5 billion

I talk in more detail about market cap analysis in my book Stock Trading Riches because it's important for investors to allocate their portfolios among all market caps to provide diversification, avoid cyclical returns, and take advantage of "regression to the mean" (e.g. one market cap segment outperforms another, but then they converge).
Market cap is calculated by multiplying the number of shares outstanding by the share price. For example, if stock ABC issued 6 million shares, and the price of each share is $6, then ABC has a market capitalization of $36 million.

In general, micro caps are new companies that are just hitting their stride. Small caps tend to have their infrastructure in place and are in growth mode. Mid caps are big regional or national companies. Large caps tend to be established multinational corporations.

Stocks within each market cap share important characteristics in the areas such as growth rate, risk, dividends, visibility, and international exposure.

Monex Provides Merchant Services to Small Businesses

Small businesses collectively employ more people than large corporations. However, individually, they lack the pricing power of big corporations. As a result, corporations have a lot of advantages that small companies can't access.

One example is merchant card services - including credit card processing services and POS systems (point of sale). Corporations normally get the best service, at the lowest prices. Meanwhile, very small businesses, if they can even qualify, get charged more for accepting credit cards from their customers. As a result these small businesses are at a disadvantage.

However, for Canadian businesses, there is a company Call Monex that levels the playing field by trying to bundle the best services at reasonable prices.

Besides providing value in reliability at the front end (collecting payment through credit cards), Monex also provides good services on the back side, like 24/7 reporting.

For point of sale devices, Monex lets you choose a device to fit your existing phone service or, avoid phone lines, and use long range wireless data transmission. This option is great for selling at trade shows or flea markets.

It's good to read about how leading edge technology is now being democratized, and is available to even the smallest businesses - which I think will be the fastest source of new jobs in the future.

For Many, Trading Dreams Turn Into Frustrations

Many people get interested in trading after hearing about rich hedge fund managers, or getting a slick sales brochure from a "trading guru" trying to sell his latest system.

They see the well-chosen examples from the sales literature, understand how the system works, and then day-dream about the fortune they will make.

Then, they start trading and either under-perform the markets (if involved with un-leveraged stocks / funds), or else lose a substantial portion of their principal (through futures and options).

I know this, because it also happened to me. When I first started trading, I read all the gurus' literature, and decided that making a living from trading would be easy. I started day dreaming about what I would spend the money on.

Of course, I since learned that it's not that easy to get rich quick trading.

On the other hand, many frustrated would-be traders then completely quit trading and investing. This is a mistake because everyone needs some exposure to stocks and the stock market - otherwise your retirement savings will suffer "losses" through not keeping up with inflation.

I found the middle-ground between aggressive and conservative investing: I created the Stock Trading Riches system.

Computers on Wall Street aren't Just About Trading: How Computer Science Helps Investment Banking

Most software companies that I know of on Wall Street provide trading and back-office support. But, I recently heard about one software company that specializes in the needs of the investment banking side.

This company, Merrill DataSite, protects financial and investment banking data and allows secured sharing of this data among, bankers, lawyers, merger advisors, etc.

The sharing is transparent with their product Merrill Datasite for M&A deals, so the different parties involved can concentrate on their individual tasks, and don't have to spend a lot of time and effort trying to access the data.

In a time-sensitive deal, the parties can't afford to be hung up on technical or communication glitches.

At the same time, while a party is working on their part of the deal, they can have the peace of mind that only authorized people will be able to access the data.

In addition to securing / sharing data, Merrill also, through translation company division, provides business translation services.

Aon Insurance's Move to London: An Example of How Shareholder's Votes Aren't Always Simple Decisions

A month or so ago, Aon Corp. (one of the world's largest insurance brokers) announced that they would move their headquarters from Chicago to London. Even though only a few jobs would be affected, it was considered a blow to Chicago's prestige as an international financial capital.

Aon's board said the decision was made to lower their corporate tax rate and allow them to access $300 million of cash they have outside of the U.S. They made it seem like a simple, cut-and-dry issue.

On the eve of the shareholder vote, however, they had to comply with SEC regulations, and disclose the risks of the move:

1. Some shareholders might get taxed during the switch from a U.S. to U.K. company.

2. The IRS might fight the U.S. to U.K. switch. If Aon lost, the projected cost savings may not occur.

3. The litigation might take so long that, if Aon lost and the U.S. to U.K. move was undone, it might be too late for investors to file an amended 2012 tax return to claim a refund of the taxes from risk #1.

4. Shareholders like companies to buy back stock, but English companies face more restrictions than Delaware corporations for stock buy-backs. For example, they may have to get 75% of shareholders to vote in favor of it.

5. They may not be allowed to continue to pay their dividend until they built up "distributable reserves".

6. Finally, there is the risk that Aon may get removed from the S&P 500.

Lockerixchange: Example of a Niche Business

As a regular subject in my blog, I like to describe on-line businesses that successfully focus on interesting niches. I believe that the key to success for a small business (both online and off) is to specialize in one area where you can be an expert - and command a higher value.

Today, I'm writing about Lockerixchange, which specializes in selling commercial lockers.

Regular commercial, websites which sell hundreds of different products, are a dime a dozen. Their product offerings are generic, and they provide no value-added service. Thus, all they can compete on is price, and they basically make nickels and dimes from their sales.

Lockerixchange doesn't bother with selling everything. Instead, they focus on being the specialist for those businesses or schools that need lockers.

Thus, Lockerixchange isn't competing as a commodity business. Instead, they have positioned themselves as value-added experts in the field of employee and school lockers. Lockers are all that they do and, thus, they carry the widest selection of products in this category, and have a lot of value-added knowledge to assist their customers.

The Fuggerei - Really Long, Long Term Investing

The Wall Street Journal had an interesting article about people living in the Fuggerei - a Roman Catholic housing settlement for the poor in Augsberg, Germany. People who live here still pay the same rent that was set when the Fuggerei was first opened - in 1520!  Then, the rent was 1 Rhein Guilder a year and 3 daily prayers for the well being of the Fugger banking family (make up your own jokes about "Fugg"ing bankers ;-) ). Today, the equivalent to 1 Rhein Guilder/year is 0.88 euros ($1.23) per year. The founder of the Fuggerei was Jakob Fugger "The Rich": Jakob the Rich was Wall Street long before it existed. He minted coins for the Vatican, bankrolled the Holy Roman Empire and helped steer Europe's spice trade in the early 16th century to become one of the wealthiest and most powerful financiers in history. He left more than seven tons of gold to his successors -- and a good deed. Much of the Fugger business empire crumbled over the next 150 years, battered by wars and soured credits. But the walled Fuggerei, with its picturesque lanes and seven gates in the heart of this onetime European banking capital, still stands. The Fuggerei is a good testament to the power of long term investing - even at conservative rates of return. In the late 17th century, after losing money in riskier investments, the bulk of the trust was invested conservatively - in old forest holdings.  Since then, over the last 200 years, the trust has never lost money.  The returns have ranged from 0.5% - 2%.

Online Accounting Now Available for Small Businesses

Technology keeps driving down the costs of running a small business.

We mostly hear about free and low cost internet tools that help with marketing and sales. Now, however, the same efficiencies are reaching back office functions, such as business bookkeeping.

For example, I recently heard about a company called Outright.com that offers online accounting and bookkeeping software for small businesses.

This dramatically saves time and money for their customers.

First of all, the most basic version is free.

Secondly, small businesses using their service don't have to deal with installation, hardware, and operating system requirements. They will always have access to the latest versions and patches.

Finally, they can depend on Outright.com for security, backups, etc. which would consume a lot of their limited time - letting them concentrate on their actual business.

Who Really Benefits From Hedge Funds? - Review of Simon Lack's "The Hedge Fund Mirage"

The wealth of top hedge fund managers is the stuff of legend, but how about their clients - the "sophisticated" investors such as pension funds and wealthy individuals?

As Wall Street veteran Simon Lack says in his new book The Hedge Fund Mirage, "Who can name even one hedge fund investor whose fortune is based on the hedge funds he successfully picked?"

According to Lack, only a handful of superstar hedge fund managers made most of the industry's profits. As a broad investment class, he finds hedge funds to have been a terrible place to keep your money:

"If all the money that's ever been invested in hedge funds had been put in Treasury bills instead, the results would have been twice as good."

An even more shocking conclusion from the book is about the fees that hedge funds collect - which really kill any hope of a good return.

After crunching the data, Lack found that, from 1998 - 2010, investors made $70 billion, while hedge funds pocketed $379 billion in fees!

In conclusion, Lack feels that the fault doesn't lie with the hedge fund managers, but with the "sophisticated investors".

I agree, because one thing I have found during my almost 20 years of trading experience is that, in finance, people believe the complex and exotic is superior. They feel sophisticated and intelligent when, at cocktail parties, they can brag about investing in sexy things like hedge funds.

Every time I tried to trade sophisticated, leveraged instruments like futures or options or on margin, I underperformed or lost money. Instead, when I switched to trading plain old stocks using the Stock Trading Riches formula - which is simple, dull, and boring - I started doing very well.

How to Profit From the Complex U.S. Tax Code

The U.S. Tax Code is way too complex. It would help businesses, productivity, and job creation in the United States if Congress would ever get serious about simplifying it, and getting rid of uncertainty.

In the meantime, you can profit of this complexity if you have an interest and aptitude for number crunching, financial data, and organization. Companies and individuals always need help with taxation.

There is an educational website called FastForwardAcademy.com that specializes in providing enrolled agent courses to help prepare individuals for careers in tax preparation.

They provide study guides, practice tests, and other study material for passing the enrolled agent examination to become IRS certified.

Even people already working as accountants and tax professionals are willing to study for and pass the ea exam
because the enrolled agent certification gives them a competitive advantage.

Ground Hog Day, Stock Trading, and Probability

Today is Ground Hog Day, and ABC News had an article on Punxsutawney Phil (the famous groundhog from Pennsvlvania).

The legend is that, if the groundhog sees his shadow, then winter will be 6 weeks longer. If it is cloudy, and he doesn't see his shadow, then spring will arrive early.

The ABC New article states that "It turns out the ultimate prognosticator- and his copycat counterparts- are wrong more often than they are right."

It then also states that "An analysis by the National Climatic Data Center found there is no correlation between Phil's predictions and the actual weather."

What's interesting is that, technically, these 2 statements contradict themselves. Being "wrong more often than right" is not the same as "no correlation" - and this has implications for developing a trading system.

If you develop a system for predicting the weather or for trading stocks, if your system does terribly, then you haven't failed. You would simply reverse the interpretation.

The worst thing that can happen when testing a trading system is not losing all your money - it's getting random results.

For example, if you tested a system of buying stocks on the first Tuesday of the month and selling 3 days later (this is a made up example), and you lost money 84% of the time, then this might not be a failure.

Why? Because this means you could short stocks on the first Tuesday of the month, and buy to cover 3 days later - which would win 84% of the time. (Of course, you would have to confirm that the total amount of money made on the winning trades exceeds the total amount lost over the 16% of the time where the rule failed).

The result you would not want would be to find that the rule broke even and gave no meaningful advantage. This would mean that, no matter which side you took, you would not expect to make enough to cover your trading costs (commissions, slippage, etc.)