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Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It's true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Saturday, 24 January 2009
Having A Plan: The Basis Of Success
by Chad Langager (Contact Author Biography)
"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework." Warren E. Buffett (Preface to "The Intelligent Investor" by Benjamin Graham)
Any veteran market player will tell you, it's vital to have a plan of attack. Formulating the plan is not particularly difficult, but sticking to it, especially when all other indicators seem to be against you, can be. This article will show why a plan is crucial, including what can happen without one, what to consider when formulating one as well as the investment vehicle options that best suit you and your needs.
The Benefits
As the "Sage of Omaha" says, if you can grit your teeth and stay the course regardless of popular opinion, prevailing trends or analysts' forecasts, and focus on the long-term goals and objectives of your investment plan, you will create the best circumstances for realizing solid growth for your investments.
Maintain Focus
By their very nature, financial markets are volatile. Throughout the last century, they have seen many ups and downs, caused by inflation, interest rates, new technologies, recessions and business cycles. In the late 1990s, a great bull market pushed the Dow Jones Industrial Average (DJIA) up 300% from the start of the decade. This was a period of low interest rates and inflation and increased usage of computers - all of these fueled economic growth. The period between 2000 and 2002, on the other hand, saw the DJIA drop 38%. It began with the bursting of the internet bubble, which saw a massive sell-off in tech stocks and kept indexes depressed until mid-2001, during which there was a flurry of corporate accounting scandals as well as the September 11th attacks, all contributing to weak market sentiment.
Amid such a fragile and shaky environment, it's crucial for you to keep your emotions in check and stick to your investment plan. By doing so, you maintain a long-term focus and thus assume a more objective view of current price fluctuations. If an investor had let their emotions be their guide near the end of 2002 and sold off all their positions, they'd have missed a 44% rise in the Dow from late-2002 to mid-2005.
Sidestepping the Three Deadly Sins
The three deadly sins in investing play off three major emotions: fear, hope and greed.
Fear has to do with selling too low - when prices plunge, you get alarmed and sell without re-evaluating your position. In such times, it is better to review whether your original reasons (i.e. sound company fundamentals) for investing in the security have changed. The market is fickle and, based on a piece of news or a short-term focus, it can irrationally oversell a stock so its price falls well below its intrinsic value. Selling when the price is low, which causes it to be undervalued, is a bad choice in the long run because the price may recover.
The second emotion is hope, which, if it is your only motivator, can spur you to buy stock based on its price appreciation in the past. Buying on the hope that what has happened in the past will happen in the future is precisely what occurred with internet plays in the late '90s - people bought nearly any tech stock, regardless of its fundamentals. It is important that you look less at the past return and more into the company's fundamentals to evaluate the investment's worth. Basing your investment decisions purely on hope may leave you with an overvalued stock, with which there is a higher chance of loss than gain.
The third emotion is greed. If you are under its influence, you may hold onto a position for too long, hoping for a few extra points. By holding out for that extra point or two, you could end up turning a large gain into a loss. During the internet boom investors who were already achieving double-digit gains held on to their positions hoping the price would inch up a few more points instead of scaling back the investment. Then when prices began to tank, many investors didn't budge and held out in the hopes that their stock would rally. Instead, their once large gains turned into significant losses.
An investment plan that includes both buying and selling criteria helps to manage these three deadly sins of investing. (For further reading, see When Fear And Greed Take Over, The Madness of Crowds and How Investors Often Cause The Market's Problems.)
The Key Components
Determine Your Objectives
The first step in formulating a plan is to figure out what your investment objective is.
Without a goal in mind, it is hard to create an investment strategy that will get you somewhere. Investment objectives often fall into three main categories: safety, income and growth. Safety objectives focus on maintaining the current value of a portfolio. This type of strategy would best fit an investor who cannot tolerate any loss of principal and should avoid the risks inherent in stocks and some of the less secure fixed-income investments.
If the goal is to provide a steady income stream, then your objective would fall into the income category. This is often for investors who are living in retirement and relying on a stream of income. These investors have less need for capital appreciation and tend to be adverse to stock market risks.
Growth objectives focus on increasing the portfolio's value over a long-term time horizon. This type of investment strategy is for relatively younger investors who are focused on capital appreciation. It's important to take into account your age, your investment time frame and how far you are from your investment goal. Objectives should be realistic, taking into account your tolerance for risk.
Risk Tolerance
Most people want to grow their portfolio to increase wealth. But there remains one major consideration - risk. How much, or how little, of it can you take? If you are unable to stomach the constant volatility of the market, your objective is likely to be safety or income focused. However, if you are willing to take on volatile stocks then a growth objective may suit you. Taking on more risk means you are increasing your chances of realizing a loss on investments, as well as creating the opportunity of greater profits. However, it is important to remember that volatile investments don't always make investors money. The risk component of a plan is very important and requires you to be completely honest with yourself about how much potential loss you are willing to take. (For further reading, see Determining Risk And The Risk Pyramid and our tutorial on Risk and Diversification.)
Asset Allocation
Once you know your objectives and risk tolerance, you can start to determine the allocation of the assets in your portfolio. Asset allocation is the dividing up of different types of assets in a portfolio to match the investor's goals and risk tolerance. An example of an asset allocation for a growth-oriented investor could be 20% in bonds 70% in stocks and 10% in cash equivalents.
It is important that your asset allocation is an extension of your objectives and risk tolerance. Safety objectives should comprise the safest fixed-income assets available like money market securities, government bonds and high-quality corporate securities with the highest debt ratings. Income portfolios should focus on safe fixed-income securities, including bonds with lower ratings, which provide higher yields, preferred shares and high-quality dividend-paying stocks. Growth portfolios should have a large focus on common stock, mutual funds or exchange-traded funds (ETFs). It is important to continually review your objectives and risk tolerance and to adjust your portfolio accordingly.
The importance of asset allocation in formulating a plan is that it provides you with guidelines for diversifying your portfolio, allowing you to work towards your objectives with a level of risk that is comfortable for you. (For further reading, see The Importance of Diversification and The Dangers of Over-Diversification, as well as Five Things To Know About Asset Allocation and Asset Allocation Strategies.)
The Choices
Once you formulate a strategy, you need to decide on what types of investments to buy as well as what proportion of each to include in your portfolio. For example if you are growth oriented, you might pick stocks, mutual funds or ETFs that have the potential to outperform the market. If your goal is wealth protection or income generation, you might buy government bonds or invest in bond funds that are professionally managed.
If you want to choose your own stocks it is vital to institute trading rules for both entering and exiting positions. These rules will depend on your plan objectives and investment strategy. One stock trading rule - regardless of your approach - is to use stop-loss orders as protection from downward price movements. While the exact price at which you set your order is your own choice, the general rule of thumb is 10% below the purchase price for long-term investments and 3-5% for shorter-term plays. Here's a reason to use stops to cut your losses: if your investment plummets 50%, it needs to increase 100% to break even again. (For further reading, see Ten Steps To A Winning Trading Plan.)
You may also consider professionally managed products like mutual funds, which give you access to the expertise of professional money managers. If your aim is to increase the value of a portfolio through mutual funds, look for growth funds that focus on capital appreciation. If you're income-orientated, you'll want to choose funds with dividend-paying stocks or bond funds that provide regular income. Again, it is important to ensure that the allocation and risk structure of the fund is aligned with your desired asset mix and risk tolerance.
Other investment choices are index funds and ETFs. The growing popularity of these two passively managed products is largely due to their low fees and tax efficiencies; both have significantly lower management expenses than actively managed funds. These low-cost, well-diversified investments are baskets of stocks that represent an index, a sector or country, and are an excellent way to implement your asset allocation plan.
An investment plan is one of the most vital parts for reaching your goals - it acts as a guide and offers a degree of protection. Whether you want to be a player in the market or build a nest egg, it's crucial to build a plan and adhere to it. By sticking to those defined rules, you'll be more likely to avoid emotional decisions that can derail your portfolio, and keep a calm, cool and objective view even in the most trying of times.
However, if all of the above seems like too tall an order, you might want to engage the services of an investment advisor, who will help you create and stick to a plan that will meet your investment objectives and risk tolerance.
by Chad Langager, (Contact Author Biography)
Chad Langager is the Senior Financial Editor for Investopedia.com. Chad graduated from the University of Alberta Business School with a degree in finance.
Financial crisis: just how big is Britain's toxic debt?
Financial crisis: just how big is Britain's toxic debt?
An army of accountants is combing through the books, trying to establish just how much the toxic assets of the bailed-out banks are actually worth. At stake, says the Government, is the future of Britain's economy.
By Gordon Rayner
Toxic asset: Sir Fred Goodwin of RBS has seen his reputation collapse Photo: REUTERS
Before he was unceremoniously fired as chief executive of Royal Bank of Scotland, Sir Fred Goodwin often said that he had turned the 280-year-old institution into "a sausage machine".
RBS, like other banks, was buying and selling pre-packaged parcels of debt, which started out as mortgages and loans but were put through a corporate mincer and wrapped into packages containing small pieces of hundreds, if not thousands, of loans. Rather like sausages, no one could be entirely sure what was in them – but as long as they paid a decent rate of interest and the bonuses kept flowing, no one cared.
As we all now know, those parcels had been bulked up with sub-prime loans, which became effectively worthless "toxic assets" when the US housing market crashed.
Confirmation yesterday that the bankers' avarice has officially plunged Britain into recession added to the growing bewilderment as to exactly why we are on the hook for almost £1 trillion in bail-outs and guarantees.
No one even knows exactly how many of these toxic assets British banks are holding, and how much more it might cost the taxpayer to get out of this unholy mess – which is why an army of accountants is about to begin the daunting, if not downright impossible, task of tracking down and putting a value on all the debts of all the banks in which the taxpayer has taken a stake.
In effect, to borrow Sir Fred's analogy, the Government-appointed debt hunters will be carrying out the accounting equivalent of dissecting all of those sausages and turning the constituent parts back into pigs. It will be a laborious, thankless task which is likely to take at least six months. But according to the Government, nothing less than the future of Britain's economy depends on it.
The reason all the rescue packages have failed is that no one has yet calculated the full extent of these toxic assets – and nothing spooks the City so much as uncertainty. Lord Myners, the minister organising the hunt, says his sleuths will have to deal with "well over a billion items of individual data for each bank".
The desperate need for some hard and fast facts was underlined on Monday, when the value of banking shares collapsed, despite the announcement of a raft of new measures. Gordon Brown is said to have been taken aback by the City's panicked reaction to RBS's announcement of a £28 billion loss, the largest in British corporate history.
Experts say the losses reveal the markets' fear of more bad news to come. Despite the Government pledging £954 billion so far – or £31,800 per taxpayer – some analysts believe another £200 billion in insurance may be needed to protect the banks fully against future losses. But no one is willing to predict that it won't be more, just as no one can be sure that our children, or even our grandchildren, won't still be paying off the debts the nation is accruing, as this economic black hole swallows a seemingly limitless amount of our money.
In other words, until the number-crunching is done, there is no prospect of an end to the crisis. "The problem is that we don't really know just where these bad assets are, and the banks are not going to 'fess up," explains Peter Spencer, professor of economics at York University. "As things stand, it is a near-bottomless pit, and no one knows how smelly the stuff at the bottom is."
The Prime Minister is pinning his hopes on the Asset Protection Scheme, announced this week, which will assess the exact extent of the toxic assets (currently estimated at £200-350 billion). The theory goes that once the banks know the worst-case scenario, and are insured against it by the taxpayer, they will be able to start lending again.
But the Government-appointed investigators, drawn mainly from Goldman Sachs, Credit Suisse and Deutsche Bank, will be entering uncharted waters when they set up shop in the offices of banks such as RBS. Few people on the planet understand the complexities of such opaque instruments as collateralised debt obligations (the technical term for those minced-up sausages of debt, of which £2 trillion were traded in 2006, £188 billion of it in the UK). In some cases they were dreamed up by real-life rocket scientists, poached by Wall Street from Nasa's labs in California.
Until as recently as 2000, British banks lent only as much money as they held on deposit. But the availability of cheap financing on the money markets enabled banks such as Northern Rock to lend up to seven times the amount in their coffers.
Rather than holding on to people's mortgages, the banks packaged them up with other loans and sold them on to investors, who could repackage and sell them on again and again. Unpicking these bundles of debt may involve tracking down and valuing the assets on which they are based – such as houses or commercial properties, or even part-shares of them.
Nor will the vastly complex, and vastly expensive, hunt be confined to Britain. To pick just one example, RBS acquired 26 other companies during Sir Fred's eight-year reign, leaving it with £250 billion of foreign loans in the more than 50 countries where it has offices. These include Vietnam, Columbia, Uzbekistan and Pakistan, where RBS is the second-largest foreign bank – there are even seven branches in Kazakhstan, all of which are now 70 per cent owned by the British taxpayer.
Many of those loans will be sound, but the investigators must sniff out those that are not. "It will be a very intensive job and we will need to get professional support," one Treasury source says. "It's complicated, but if you didn't have these complicated problems, there wouldn't be a crisis in the first place."
But how could the banks lose control to such an extent?
"Greed is part of the answer," says Vince Cable, the Liberal Democrat Treasury spokesman. "We have had a bonus culture in which profits were the only motivating factor, and bankers were getting enormous bonuses on the back of very highly leveraged deals. It's also the case that even some of the bosses didn't understand the things they were trading in, because they had become so complicated. The banking regulators knew this and should have put a stop to it, but they didn't."
It wasn't just the executives who failed to understand what was going on – the Prime Minister and his team were equally clueless. Treasury officials who began going through the books of RBS when the Government took a majority share last year were horrified at the way the bank had been run, as it borrowed more and more money to fund more ambitious deals, such its share of the £49 billion takeover of Dutch bank ABN-Amro in 2007.
The previously lionised Sir Fred has now been labelled "the world's worst banker", with growing calls for him to be stripped of his knighthood. Although the Financial Services Authority insists that there is no evidence he broke any rules, many investors who have lost money believe he was less than candid about the state of the bank's finances and recklessly overstretched himself in the battle for ABN-Amro.
In America, RBS's subsidiaries are already the subject of two separate investigations. The Securities and Exchange Commission and New York's attorney general are both looking into the exposure of RBS-owned companies to the sub-prime mortgage crisis.
Although he has said he is "angry" with Sir Fred, Mr Brown refused to be drawn this week on what action, if any, should be taken against his former friend, who was a valued adviser during his time as Chancellor.
Nor has anyone at the Treasury offered an estimate of how much it will cost to work out the value of the toxic assets.
Yet many of the country's leading economists believe that there is an alternative to the scheme: to nationalise the entire banking system to restore confidence, and take control of lending once and for all.
George Magnus, chief economic adviser to UBS Investment Bank, and the man credited with being the first to predict the current global recession, says: "There is a danger that a few months down the line further measures will be needed to shore up the banks. It would be cleaner, neater and cheaper just to call a spade a spade and take them into public ownership.
"That would enable the Government to set up a 'bad bank' that could take on these toxic assets and hold on to them for 50 years if necessary, until their value rose and the taxpayer saw a return.
"In the meantime, once the crisis is over, they could refloat the banks, as they did in Sweden in 1992. I just don't understand the hang-up the Government has with nationalisation."
Professor Tim Congdon, a former adviser to the Treasury, agrees. "The idea of having these civil servants poring over the banks' books is barmy. There are much simpler solutions, such as the Government borrowing from the banks to increase the amount of money in the system."
One thing all sides are agreed on is the need for a return to old-fashioned banking, preferably without so much as a rocket scientist – or sausage machine – in sight.
The UK economy: an analysis and some predictions
The Daily Telegraphy's Economics Editor Edmund Conway offers an analysis of the current position of the UK's economy and some predictions for what lies ahead.
By Edmund Conway
Last Updated: 7:36PM GMT 23 Jan 2009
Comments 0 Comment on this article
There are two possible paths the UK economy could take in the coming years. Neither will be pretty; both involve a recession. But whereas one path sees the UK recover from the current slump within around a year, the other foretells a depression that lasts for many years, effectively lopping a major chunk of wealth off the size of the UK economy. No-one can predict with any degree of accuracy which one is more likely, but the dismal gross domestic product figures from the Office for National Statistics yesterday have, sadly, made the latter outcome that bit more likely.
What is relatively simple is to predict the next year for the economy.
As companies' profits continue to shrink, unemployment will climb higher still. The jobless total, which is just below the 2 million mark, will rise towards 3 million by the end of the year, and will probably edge higher still after that. This will ensure that while the recession seems at this moment to be a relatively abstract term for most Britons, by 2010 it will be a very real social issue.
House prices will continue to fall, with 2009 being similarly gloomy for the property market; as values drop many hundreds of thousands more homeowners will find themselves in negative equity, where the value of their home is worth less than their mortgage. This does not matter for those who retain their jobs, but the rise in redundancies means many simply won't have the luxury of remaining in their home until its price rises back above their mortgage.
The big question, however, concerns 2010.
By then, the Bank of England will most likely have cut interest rates to zero and will be actively pumping cash into the economy. By then, such a move will seem less controversial than it does now, since deflation will be the biggest threat - not inflation. But the threat is that the UK becomes trapped in a deflationary spiral, with prices falling faster and faster, and trapping more families in negative equity. Such spirals can be even more dangerous and intractable than bouts of hyperinflation. That, after all, was what happened in the 1930s; that is the depression trap that the UK faces.
The Bank of England believes that it has the power to prevent such an eventuality. The problem is that no central bank has ever successfully warded off a deflationary depression before. Ask Japan: it is still stuck on a depression that has lasted for longer than a decade.
Recession And Depression: They Aren't So Bad
by Chris Seabury (Contact Author Biography)
More From Investopedia
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Recession-Proof Your Portfolio
Recessions and depressions have occurred many times throughout history. To many, they bring fear and uncertainty, but they are actually a natural part of the economic cycle. Unfortunately, there are a lot of myths surrounding market cycles, but in order understand them, we must look beyond these myths. In this article, we'll examine recession and depression, how they work and what they really mean for investors.
What Is a Recession?
First, let's take a look at recessions. There are two definitions of recession:
- one defines a recession as two consecutive quarters of negative economic growth, and
- the second (according to the National Bureau of Economic Research (NBER)) defines a recession as a significant decline in national economic activity that lasts more than just a few months.
How It Works
The growth of our economy rests upon the balance between the production and consumption of goods and services. As the economy grows, so do incomes and consumer spending, which continues the cycle of growth. However, because the world is not perfect, at some point, the economy has to slow. This slow down could be caused by something as simple as an oversupply, where producers manufacture too many goods. When this happens, the demand for those goods will drop. This causes earnings to slow, incomes to drop and the equity markets to fall. (To learn more, read Understanding Supply Side Economics.)
Historical Examples
Since the mid-1850s the U.S. had 32 recessions, and according to the NBER, most have varied in length, with the average recession lasting 10 months. The shortest recession on record lasted six months, from January 1980 to July 1980. Two of the longest recessions lasted for 16 months. These were the recessions of November 1973 to March 1975 and July 1981 to November 1982.
What Is a Depression?
A depression is a severe economic catastrophe in which real gross domestic product (GDP) falls by at least 10%. A depression is much more severe than a recession and the effects of a depression can last for years.
It is known to cause calamities in banking, trade and manufacturing, as well as falling prices, very tight credit, low investment, rising bankruptcies and high unemployment. As such, getting through a depression can be a challenge for consumers and businesses alike, given the overall economic backdrop. (To learn more, read The Importance Of Inflation and GDP.)
How It Works
Depressions occur when a number of factors come together at one time. These factors start off with overproduction and decreasing demand and are followed by fear that develops as businesses and investors panic. The combination of excess supply and fear causes business spending and investments to drop. As the economy starts to slow, unemployment rises and wages drop. These falling wages cause consumers to cut back spending even more, putting additional pressure on unemployment and wages. This begins a cycle in which the purchasing power of consumers is eroded severely making them unable to make their mortgage payments; this forces banks to tighten their lending standards, which eventually leads to bankruptcies.
Historical Examples
Throughout history, there are several examples of depressions. The most well-known is the Great Depression of the 1930s. However, this one title actually covers two depressions that took place during that time. The first depression occurred from August 1929 to March 1933, during which GDP growth declined by 33%. The second depression ran from May 1937 to June 1938, during which GDP growth declined by 18.2%. In addition, the Great Depression was preceded by another economic depression, which occurred from 1893 to 1898. (To learn more, read What Caused The Great Depression?)
What Can We Learn?
Recessions and depressions provide us with both negatives and positives that we can use to gain a greater understanding of how they work and how to survive them.
Negatives of Recessions and Depressions
There are many negative consequences of recessions and depressions. Let's take a look at a few:
1. Rising unemployment
Generally, rising unemployment is a classic sign of both recessions and depressions. As consumers cut their spending, businesses cut payrolls in order to cope with falling earnings. The difference between the two is that the unemployment rate in a recession is less severe than in a depression. As a basic rule, the unemployment rate for a recession is in the 5-11% range; by contrast, the unemployment during the first period of the Great Depression (1929-1933) went from 3% in 1929 to 25% by 1933.
2. Economic downturn
Recessions and depressions create a massive unwinding in the economy. During times of growth, businesses keep increasing supplies to meet consumer, demands, but at some point there will be too much supply in the economy. When this happens, the economy slows as demand drops. Recessions and depressions allow us to clear out the excesses of the economy, but the process can be painful and many suffer during this time.
3. Fear
Recessions and depressions create high amounts of fear. As the economy slows and unemployment rises, many consumers become fearful that things will not improve anytime soon. This fear causes them to cut back on spending, causing the economy to slow even more. (For related reading, see When Fear And Greed Take Over.)
4. Sinking values
Asset values sink in recessions and depressions because earnings slow along with the economy. This causes stock prices to fall because of the slowing earnings and negative outlooks from companies. In turn, these falling prices cause new investments for expansion to slow and can affect the asset values for many people.
Positives of Recessions and Depressions
There are many positives that take place as a result of recessions and depressions. They include:
1. Getting rid of excess
Economic decline allows the economy to clean out the excesses. During this process, inventories drop to more normal levels, allowing the economy to experience long-term growth as demand for products picks back up.
2. Balancing economic growth
Recessions and depressions help keep economic growth balanced. If the economy grew unchecked at an expansionist rate for many years, this could lead to uncontrolled inflation. By having recessions and depressions, consumers are forced to cut back in response to falling wages. These falling wages force prices to drop, creating a situation in which the economy can grow at normal levels without having prices run away.
3. Creating buying opportunities
Tough economic times can create massive buying opportunities in huge asset classes. As the economy runs its course, the markets will readjust to an expanding economy. This provides investors with an opportunity to make money as these low asset prices move back to normal.
4. Changing consumer attitudes
Economic hardship can create a change in the mindset of consumers. As consumers stop trying to live above their means, they are forced to live within the income they have. This generally causes the national savings rate to rise and allows investments in the economy to increase once again. (For related reading, see Stop Keeping Up With the Joneses - They're Broke.)
Clearly, both recessions and depressions have many effects on the overall economy. To survive and thrive in these environments requires that you understand what causes them and how those causes create positive and negative effects on the overall economy.
Some of the positive effects include taking the excesses out of the economy, balancing economic growth, creating buying opportunities in different asset classes and creating changes in consumer attitudes.
The negative effects include rising unemployment, a severe slowing in the economy, the creation of fear and the destruction of asset values.
It is by carefully understanding what recessions and depressions are that we can learn how to spot them - and protect investments from them.
by Chris Seabury, (Contact Author Biography)
Millionaire widow becomes cleaner after losing fortune in Madoff's alleged Ponzi scheme
Millionaire widow becomes cleaner after losing fortune in Madoff's alleged Ponzi scheme
A millionaire widow who lost her fortune to Bernard Madoff's alleged $50 billion Ponzi scheme has turned to cleaning and care work to make ends meet.
By Catherine Elsworth in Los Angeles Last Updated: 5:09PM GMT 23 Jan 2009
But after Mr Madoff's alleged confession that the scheme was 'all just one big lie', a revelation that shook the investment world, Mrs Ebel realised she had nothing Photo: GETTY
Maureen Ebel, 60, of West Chester, Pennsylvania, thought she had $7.3 million invested with the New York financier when he was arrested last month and charged with running a massive hedge fun scam, possibly the largest financial fraud in history.
But after Mr Madoff's alleged confession that the scheme was "all just one big lie", a revelation that shook the investment world, Mrs Ebel realised she had nothing.
She went from an annual income from her investments of 400,000 dollars to worrying about how to pay her next bill and picking up coins in the street.
In less than a week following Madoff's arrest, Mrs Ebel found a job caring for a 93-year-old woman, cleaning her home and ironing.
"This is my fate," the retired nurse, whose doctor husband died in 2000 aged 53, told the Philadelphia Inquirer. "I was married, had a fabulous marriage to a man I loved and worshipped, a physician. We travelled. We had a very fine life. And he's dead. He died, and every penny I had in the world has gone."
Mrs Ebel, one of hundreds if not thousands of investors who together lost tens of billions of dollars in the scheme, has raised some cash by selling off jewellery and a painting and returned thousands of dollars worth of items recently bought on credit cards.
She is now desperately trying to offload her two-bedroom holiday home near West Palm Beach, Florida, and Lexus SUV while calculating that to afford her mortgage, she must return to nursing and take in a lodger.
Mrs Ebel's uncle Leonard, 80, introduced her to Madoff's fund after her husband's death.
"At that time, when he got me into Madoff, he had been a Madoff investor for 25 years," she told the Philadelphia Inquirer. "And now he's a Madoff investor and broke after 30 years."
She initially invested 4.5 million dollars and received detailed monthly statements and a cheque four times a year. She has registered with the FBI as a victim of Madoff's scheme.
Now when she visits Florida she says she feels "like an alien".
"Everyone is going riding their horses and playing tennis, playing golf," Mrs Ebel said. "If there's a nickel on the street, I'm picking it up."
Friday, 23 January 2009
Introduction to Currencies
Introduction to Currencies
Floating Rates Versus Fixed Rates
Basic Concepts For the Currencies Market
What Affects Currency Values?
Fundamental Factors That Affect Currency Values
Why Central Banks and Interest Rates Are so Important
Types of Currency Trading Instruments
Currency ETFs Simplify Trading
Getting Started in Currency Futures
How to Trade Currencies
I'm Ready to Trade. Where Do I Start?
Getting Started In Currencies
Buffett-Style Buy And Hold
Buffett-Style Buy And Hold
Drew Tignanelli, 01.22.09, 03:52 PM EST
Buy good values, hold them until they're fully priced and move along, unless the business keeps improving.
Warren Buffett is not a buy-and-hold investor, so why are you?
The concept of buy and hold is nothing more than a sales pitch that was created by the financial services industry in the last secular bull market preparing for the next secular bear market (what we are currently experiencing). The industry is the only one making money on the buy-and-hold myth. They even use Buffett as the poster boy for this philosophy, but when you read his biography Snowball and study his investment moves, he certainly is not a buy-and-hold investor.
Yes, Buffett started buying Geico in 1950 and owns the whole company today. Yes, he has owned The Washington Post (nyse: WPO - news - people ) for 30-plus years. He also owned Freddie Mac (nyse: FRE - news - people ) and sold it after 15 years. He has owned Petro China (nyse: PTR - news - people ) and sold it after three years. He even owned Hospital Corp. of America and sold it in less than a year.
The truth is that Warren is a risk manager and buys what he believes is a good value. Value can arise from income, assets, economic expectations, company expectations or intrinsic values. He wants to own a good company run by good people and buy it for a good price. He then constantly monitors his thesis for owning the property and will sell when he admits his assessment was wrong, the situation has changed or the value has been extravagantly realized. Sometimes that happens in a few days, a few weeks, a few years or a few decades, and he has not been investing long enough to say if it would be a few centuries.
Risk, in fact, is wrongly assessed as the volatility of an asset. The emerging markets are assumed risky, because the past trading range can be up or down double digits. When China declines as it did in 2008 by 65%, I would suggest that there is less risk today in China's market than in the U.S. market, which went down only 38% in 2008. American investors have a false belief that our markets are more developed and therefore less risky, but I would say due to our economic and demographic landscape the general U.S. market is riskier, especially considering the significant discount difference that took place in 2008. As a shopper I would not be attracted to a DVD player marked down 30% as compared to the latest iPhone 3G marked down 60%. This is in essence what is happening in the mature U.S. vs. the upcoming China.
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Risk is about the price you pay and what you get for that price. If I know what I own for the price I paid, then the daily price other investors are willing to pay is irrelevant. The flip side of buying a solid asset at a good price is selling that solid asset at an irrational price. It may also mean selling an asset when the economic conditions have shifted, reducing future value.
Risk managers focus on not losing money and not on making money (although you have to wonder what at all they were doing at the big Wall Street firms these past few years). The most ridiculous concept young people have learned is, "I am young so it is OK if my account goes down 50%, because I have time for it to come back." A young Buffett would consider that foolish. Buy a great asset at a great price so that it is less likely to go down, but if it does you know for sure it will come back. If you buy a mediocre asset at a bad price, it may never come back, or it may take many years for it to recover. This defines the average American investor trying diligently to be a long-term buy-and-hold investor, but after 10 years of losing money their patience is running thin. American markets are currently mediocre assets at a fair price but certainly not a cheap price.
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It is true you cannot time the market, but you can tell in general when the risk reward ratio is not in your favor. You can also tell where the price decline of a good long-term asset is reflecting value and lower risk due to the price decline. Great examples of these value opportunities today are the Asian tigers and commodity companies. If you buy into these ideas, then make sure you understand why so that you can be ready to sell in the future when new investors and economic shifts have consumed the opportunity.
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The sell decision is the key of a great investor, more so than the buy decision. Buffett knew it was time to unload Freddie Mac because things changed. He also knew that Geico was still a great company after 50 years.
Many professional and amateur investors want a simple investment concept that takes minimal effort, but great investing takes work and requires an understanding of some concepts that are worth learning.
It's important to have a good understanding of economics and how governmental policy, currency movements, tax policy, interest rates and monetary policy impact the risk of a country's market for stocks and bonds. You also need to understand the drivers of investment values and where market prices stand in relation.
Also keep in mind that market movements are both rational and irrational. The market you see daily is the inefficient market that is irrational, emotional and psychologically driven by investors overcome with greed and fear. The invisible, efficient market is driven by smart investors who seek value and buy assets priced right for a solid risk-reward opportunity. This efficiency can take days, weeks, months or years to be realized.
You need to be a risk manager like Buffett.
Drew Tignanelli is president of The Financial Consulate, a financial advisory firm in Hunt Valley, Md.
My comment: Buy, hold and selective selling
Falling Pound Raises Fears of Stagnation
By JULIA WERDIGIER and NELSON D. SCHWARTZ
Published: January 21, 2009
LONDON — An island nation that bulked up on debt and lived beyond its means. A plunging currency. And a financial system edging toward nationalization.
A Tumbling Currency
CNBC Video: Trichet Hints at Further Euro Rate Cut
When Governments Take Over Industries in Trouble (January 22, 2009)
Times Topics: Credit Crisis -- The Essentials
With the pound at a multidecade low and British banks requiring ever-larger injections of taxpayer cash, it is no wonder that observers have started to refer to London as "Reykjavik-on-Thames."
While that judgment seems exaggerated, there are uncomfortable parallels between Iceland's recent financial downfall and Britain's trajectory. Equally important, news that widening bank losses in Britain have necessitated another round of government life support provides a stark example to the United States.
Washington's attempts to stabilize financial institutions have failed so far, as well. And now the Obama administration, along with the rest of the world, could watch Britain to see what a bank nationalization might look like, and what it might suggest for American banks.
Ordinary Britons have a more basic worry. After relishing the boom that transformed the drab United Kingdom into Cool Britannia, they fear that the disheartening economic stagnation of the 1970s might return.
The pound, a symbol of British independence from the Continent that is revered nearly as much as the queen, is now down nearly 29 percent against the dollar from a year ago.
There has been a steady drumbeat of gloomy economic news for months, but the mood in Britain has darkened starkly in recent days.
On Monday, Royal Bank of Scotland warned that its 2008 losses could hit £28 billion, or $38 billion, even as Prime Minister Gordon Brown announced a second bailout package for the troubled banking sector worth tens of billions of pounds. Ultimately, the British rescue effort could cost at least £350 billion, with some estimates ranging far higher.
But in contrast to last autumn, when Mr. Brown's first bailout plan was highly praised, this package has been greeted with anxiety. While few question the need for a quick response, the sheer scale of the borrowing being discussed, as well as the existing debt levels among corporations and consumers alike, alarms many analysts and economists.
"I fully back what the government is doing, but there is a risk of being Iceland on the Thames," said Will Hutton, an economic expert who is executive vice chairman of the Work Foundation, a nonprofit research firm. "And the more sterling falls, the greater our liabilities in terms of what we owe."
The pound fell to $1.3618 on Wednesday, its lowest level against the dollar since September 1985, before recovering to $1.3922.
Even more than their American counterparts, borrowers in Britain turned to local banks to fuel a real estate boom that was as much a national pastime as a rational decision about what to buy. Household debt as a percentage of disposable income hit 177 percent in 2007, compared with 141 percent in the United States.
Now, with both housing prices dropping and institutions like the Royal Bank of Scotland buckling, the British economic outlook looks even bleaker than the landscape in the United States and the euro zone, the countries that use the euro.
The British economy is expected to shrink by 2.9 percent this year, compared with a 2.6 percent drop in the euro zone and a 2.1 percent contraction in the United States, according to Gilles Moëc, senior economist with the Bank of America in London.
To make matters worse, Mr. Moëc said, Britain is facing a wave of deficit spending, as tax receipts fall and the costs of unemployment benefits and other services rise. He predicts the budget deficit will equal 9.4 percent of gross domestic product in 2009, compared with 4.9 percent in the euro zone and 8.4 percent in the United States.
"It's scary," he said. "It reminds me of what you could find in southern Europe 15 years ago, during the worst years in Italy or Greece."
British stocks have followed the pound lower in recent days as well. The benchmark FTSE index has fallen 2.1 percent this week, led by a plunge in the shares of many leading banks.
The government already controls a majority share in Royal Bank of Scotland, but the prospect of a full nationalization of the bank has alarmed investors, and shares of RBS have plunged 64 percent in the last three days. The prospect of nationalization haunts other troubled banks as well — Barclays is down 33 percent and Lloyds Banking Group is off 54 percent.
As in Iceland, banks, real estate and other financial services boomed in London in recent years, even as other swaths of the economy withered. In recent years, this sector has been responsible for about half of total job growth in Britain even though it accounts for only about 30 percent of the economy, according to Peter Dixon, economist for Britain at Commerzbank in London.
Consumers were also lulled into taking on more and more debt by the unusually steady economic expansion Britain enjoyed until last year, Mr. Dixon said. Growth averaged 2.7 percent annually over the last decade. "The last 10 years were phenomenally stable, with volatility at its lowest point since the 19th century," he said.
But that prosperity camouflaged a steadily weakening manufacturing base, unlike in Germany, where the industrial sector is a relative counterweight to the outsize problems of financial firms.
For all the debt weighing down British banks, though, Iceland's situation was far worse before the government was forced to nationalize the banking sector last fall as the krona collapsed.
British bank assets total about 4.5 times the country's gross domestic product, but in Iceland they were 10 times as large as the G.D.P., Mr. Hutton said.
That does not mean there is not a price to pay for Britons even now. The pound has plunged before and each time is remembered as a humiliating experience that scarred the nation.
In 1976, the government was forced to approach the International Monetary Fund for help after the pound dropped below $2 for the first time. In 1992, the pound dropped out of the European exchange rate mechanism as interest rates hit 15 percent and Britain was in a recession.
A weak pound also weighs on the psyche of the British, most of whom are reducing spending while watching a flood of euro- and dollar-rich tourists hunt for bargains in their shops.
Jeremy Stretch, senior currency strategist at Rabobank in London, said Britons might learn that a weak pound can be helpful.
A weaker pound would make British exporters more competitive, for example, thus reducing Britain's dependence on the City, as London's financial district is known, for future growth.
Mr. Stretch also said that Britain's current economic problems were different from the 1970s and 1990s because it was far from alone this time around.
"The salvation of the pound is that its problem is not a pound-specific problem," he said. "At the moment, we're looking the ugliest. But if you sell the pound, what will you buy?"
Julia Werdigier reported from London and Nelson D. Schwartz from Paris.
U.K. Pound Serves as Omen for Dollar
U.K. Pound Serves as Omen for Dollar
The U.S. and the U.K. face very similar predicaments, from a deepening recession to a damaged financial system. Both are orchestrating massive bank bailouts and attempting to assist struggling homeowners. Both are ramping up government spending even as they rely on financing from overseas investors. And both countries have central banks that have slashed interest rates and opened the door to unconventional ways of stimulating the economy.
Yet their currencies have headed in opposite directions. On Wednesday, the British pound tumbled to a 23-year low against the dollar, briefly buying just $1.362, down from over $2 only six months ago. The pound also hit a new all-time low versus the Japanese yen. It got a minor boost in late afternoon trading, following a report that finance ministers from major industrialized nations will discuss the currency's weakness when they meet next month.
By contrast, the dollar managed to strengthen against a host of currencies as the financial crisis intensified last fall. It has also surged ahead in recent days, particularly versus the pound and the euro.
Unlike the pound, the dollar is being buttressed by its unique status as the world's reserve currency and the vehicle for transactions in U.S. financial markets, including Treasury bonds. That means investors often seek out the dollar as fears rise, sometimes in spite of their concerns about the U.S. economy.
"The dollar is still benefiting by default" as investors run from riskier bets, says Lisa Scott-Smith of Millennium Global Investments, a London currency manager. "The pound isn't a natural reserve currency in the way that the dollar would be."
The euro also has flagged in recent weeks, as concerns have risen over the creditworthiness of some of the more indebted countries that use the currency. But it has suffered less than the pound, a sign that investors may be gravitating toward the largest, most highly traded currencies as nearly all economies stumble.
Meanwhile, there's little light ahead for the beleaguered pound, say some currency experts. The economic news is "horrendous," says Neil Mellor, a London-based currency strategist at the Bank of New York Mellon. "There is very good reason for panic at the moment."
In one worrisome sign, investors not only dumped the pound earlier this week, but also shed U.K. stocks and government bonds, sending their yields up. Such a combination, if sustained, would raise the fear that investors are exiting from a host of U.K. assets, creating a vicious cycle that is difficult to arrest.
That's also the scenario that some worry might await the dollar and U.S. bond yields, should appetite from overseas investors wane.
These days, policy makers are inclined to let their currencies weaken "until such a time as other asset markets flag that enough is enough," says Alan Ruskin, chief international strategist at RBS Greenwich Capital. Given that the moves in British government bond yields aren't yet extreme by recent standards, "I don't think we've quite reached that point in the U.K."
In a note on Wednesday, Goldman Sachs analysts pointed out that recent moves in the pound and U.K. bond yields were more typical for emerging markets with weak fundamentals. However, they added, the analogy isn't justified over the long term. Indeed, the firm recommended that investors buy the pound as well as U.K. bonds.
While the dollar continues to benefit from its unique position in financial markets for now, it is far from clear that the resilience will last. "Right now the market is beating up on the pound, but at some point it will look for something else to pick on," says Paul Mackel, a currency strategist at HSBC in London.
The fact that the Federal Reserve stands ready to use a host of unconventional measures to flood the economy with liquidity in an effort to stimulate growth "could hurt the dollar quite badly" later this year, he says.
Write to Joanna Slater at firstname.lastname@example.com
What does "bank nationalization" mean?
Turmoil at Bank of America and others may spur government takeovers.
What if Uncle Sam Takes Over Your Bank?
By JANE J. KIM and HEIDI MOORE
Could your bank turn into the Bank of the U.S.A.?
Such a dramatic step could make it easier for some bank customers to get a loan. And customers with deposits will still be protected by federal insurance, just as they are today. Still, consumers could see more branch closings, more standardization across bank products and a deterioration in customer service. Common and preferred shareholders, meanwhile, will likely get wiped out in a bank nationalization.
With all of the problems that banks are now facing, here is a primer on bank collapses and the impact of possible bank nationalization.
A nationalized bank is owned and run by the government. The shocks of the credit crisis last fall spurred lawmakers to seminationalize the banking sector; nearly 314 institutions have already signed over some of their shares and other securities to the Treasury in return for $350 billion in government TARP funds. The government could now go a step further by taking complete ownership of certain troubled banks.
Crisis Q&A: What "Bank Nationalization" Means For You
The Wallet
What Morgan Stanley and Smith Barney Brokerage Customers Need to Know
What Citi Customers Need to Know
What Wachovia Customers Need to Know
Lowdown on You and the FDIC Proposal
Why nationalize banks?
It makes sense only if banks are in danger of failing. In Western countries, nationalization is largely used as an emergency method to prop up banks during tough times. It is typically used to lend to small and medium-sized businesses and restructure burdensome loans to consumers.
What will happen to my account if my bank is nationalized?
There should be very little change to consumers' bank accounts and insurance-protection levels if their bank is nationalized. The Federal Deposit Insurance Corp., which insures deposits for up to $250,000, will continue to cover all FDIC-insured institutions, regardless of who the owner is.
And even though an increasing number of banks are failing, the FDIC -- which is backed by the full faith and credit of the U.S. government -- can't run out of money because of its ability to borrow from the Treasury.
What a government takeover of banks could mean for consumers:
- FDIC insurance would still cover any accounts currently covered.
- Banks would likely make more loans and halt foreclosures, but also offer fewer new products.
- Banks would likely reduce the number of branches and cut back customer service.
Nationalized banks are more likely to loosen the lending spigots. Banks would start making loans that they wouldn't otherwise make today, such as to borrowers with less-than-stellar credit.
Homeowners at nationalized banks should also benefit since the government is likely to halt any foreclosure proceedings, says Greg McBride, senior financial analyst at Bankrate.com. "Uncle Sam is not going to want to put anybody out of their house," he says.
Government-owned banks could offer basic credit cards with low rates that would appeal to less-creditworthy customers who regularly use cards to borrow. But such cards are less likely to come with costly rewards programs, such as those that earn frequent-flier miles, says Dave Kaytes, managing director at Novantas.
How will private-banking and brokerage-account customers be affected?
That depends on whether the government takes a short- or long-term view. If it intends to be a long-term owner, then it will probably sell off the brokerage, investment-banking and other auxiliary operations as nonessential to the core banking business. If, however, the government sees its step as a short-term fix to shore up the system temporarily, then it may hang on to such operations.
What other products and services might be affected?
If the government takes over a bank, management will be under even more pressure to cut costs. Expect more branch closings and poorer customer service. "Think of the bank as the DMV of the future, run by government employees who have little upward mobility," says Mr. Kaytes.
"I think we can expect that over time, the nationalized banks will be less open to innovation and new product development, more conservative in their approaches, and more constrained in their actions and subject to tighter scrutiny," says Jim Eckenrode, banking and payments research executive at TowerGroup.
What are the disadvantages of bank nationalization?
In the U.S., the biggest problem for the government would be the sheer impracticality and expense of taking over all 8,000 banks -- or even the 314 institutions that described themselves as "banks" in order to receive government aid.
Write to Jane J. Kim at email@example.com and Heidi Moore at firstname.lastname@example.com
Roubini warns US banking system effectively insolvent
Roubini warns US banking system effectively insolvent
Losses in the US financial system may reach $3.6 trillion (£2.6 trillion) before the credit crisis is over, suggesting the country's banks are "effectively insolvent", according to the man who predicted the current economic meltdown.
By James Quinn, Wall Street CorrespondentLast Updated: 6:26PM GMT 20 Jan 2009
Roubini warns US banking system effectively insolvent
Professor Nouriel Roubini said half of the estimated losses would come from banks and broker-dealers, placing further pressures on an already heavily-laden system.
"It means the US banking system is effectively insolvent because it starts with a capital of $1,400bn. This is a systemic banking crisis," he said.
To date, global losses and write-downs as a result of the crisis, which was triggered by the collapse of the US sub-prime mortgage sector, total about $1 trillion.
The New York University professor's comments were in part responsible for pushing banking shares lower on Tuesday. Citigroup fell 11pc and Bank of America lost 15pc.
Banks were also impacted by news of heavy losses at institutional money manager State Street's commercial paper and investment arm, sending its' shares down as much as 50pc, its worst one-day slump in 24 years.
Speaking in Dubai, Professor Roubini said: "The problems of Citi, Bank of America and others suggest the system is bankrupt. In Europe, it's the same thing."
His warning comes just a day after the UK's second phase in its own banking bail-out, and after Bank of America, Merrill Lynch and Citi last week reported almost $26bn of fourth-quarter losses.
"We have got a crippled financial sector, not only in the US but across the globe," said Keith Wirtz, chief investment officer of Fifth Third Asset Management.
Pound falls to lowest level against the dollar since 1985
Pound falls to lowest level against the dollar since 1985
The pound fell to its lowest level against the dollar since 1985 last night amid growing fears that the Government will have to nationalise high-street banks.
By Robert Winnett
Last Updated: 8:08PM GMT 21 Jan 2009
Pound falls to lowest level against the dollar since 1985
One pound now buys less than $1.37 - compared to more than $2 last summer - after international currency speculators moved in to profit from concerns over the British economy.
One pound now buys less than $1.37 - compared to more than $2 last summer - after international currency speculators moved in to profit from concerns over the British economy.
Experts predict it is likely to fall to $1.30 or below in the next few days.
Sterling also fell sharply against the Euro and reached a record low against the Japanese yen.
The falls have come following sharp reductions in the share values of major high-street banks such as Barclays, Lloyds and Royal Bank of Scotland (RBS).
This has led to fears that several banks may have to be nationalised which could have devastating effects on the public finances. The assets of RBS and Lloyds Banking Group are in excess of the total value of the British economy and experts believe that billions of pounds of their debts may never be repaid.
Mervyn King, the Governor of the Bank of England, has also indicated that more money may effectively have to be printed in the next few months to kick-start the British economy. Analysts at Barclays predicted yesterday that interest rates will soon be cut to zero percent.
Jim Rogers, a former partner of George Soros, the speculator who made $1 billion from the collapse of sterling on black Wednesday in September 1992, yesterday stepped up his attack on the British economy.
He said that the City of London was now "finished" and that the UK had nothing to offer once North Sea oil reserves ran out. "It's simple, the UK has nothing to sell," he said.
Another currency speculator added that "the UK is imploding" last night.
Government ministers have repeatedly refused to comment on the reduction in the value of the pound. However, the French finance minister yesterday called on the Bank of England to intervene.
Christine Lagarde, the French finance minister, said: "The Bank of England does what it can, but its monetary policy, its rate management isn't very efficient in providing more support for the British currency. I believe it's in its interests to support it a little more."
However, one of the world's biggest investment banks said that the fall in the value of the pound had been "overplayed". Goldman Sachs said it was "bullish" on the pound and said it believed the "picture in the UK is not as poor as many people try to portray."
:: How the exchange rate affects shoppers:
An 8GB Ipod Nano priced $149, set a British shopper back £76.18 one year ago, but now costs them £108.22.
A pair of men's Abercrombie & Fitch jeans priced $79.50, set a British shopper back £40.65 one year ago, but now costs them £57.74.
A double room at the Waldorf Astoria Hotel in New York priced $259, set a British holidaymaker back £132.43 one year ago, but now costs them £188.12.
A one-day adult ski pass in Aspen priced $96, set a British holidaymaker back £49.08 one year ago, but now costs them £69.73.
A one-day admission ticket to Universal Studios Hollywood priced $67, set a British tourist back £34.26 one year ago, but now costs them £48.66.
Note: Calculated using exchange rates for 21/01/08: £1 = $1.9558; 21/01/09: £1 = $1.3768
UK banking system so close to collapse
Mervyn King, Governor of the Bank of England, certainly wasn't pulling his punches in Leeds last night. In a blunt speech Mr King uttered the "R-word", warning that "it now seems likely that the UK economy is entering a recession".
By Richard FletcherLast Updated: 8:40AM BST 22 Oct 2008
If that wasn't bad enough, the Governor provided a rare insight into the worst-case scenarios that the BoE has grappled with in recent weeks. "Not since the beginning of the First World War has our banking system been so close to collapse," he said.
The speech topped a day of gloomy economic news that included a dire industrial trends survey from the CBI which showed that even if the financial markets are returning to normal, the downturn in the real economy has a lot further to run. Meanwhile, Capital Economics predicted house prices could drop by 35pc, which, if correct, would be the biggest fall ever recorded.
It seems our only hope is that this is a short, sharp recession.
Unfortunately, I even have bad news on that front: the Governor ruled out a "quickie" recession last night, warning that it would be "long, slow haul" before the economy returns to normal.
Arcadia's debt beats Debenhams' £1bn
The Bank of England Governor may be gloomy but Sir Philip Green laid on a Champagne breakfast for 125 loyal lieutenants yesterday at the Arcadia headquarters just off Oxford Street. As his senior team tucked into eggs Benedict and bacon (or yoghurt and orange juice for the more health-conscious) Sir Philip unveiled Arcadia's full-year results and presented a jeroboam of Champagne to the heads of the fashion group's brands.
Given the carnage on the high street, the billionaire retailer can be rightly proud of the results announced by Arcadia yesterday: a 0.6pc fall in sales and 6.1pc fall in operating profit.
A sterling performance by Topshop finally laid to rest the suggestion that it was former brand director Jane Shepherdson who drove its phenomenal success. Meanwhile, Yasmin Yusuf's success in reviving Miss Selfridge may leave beleaguered M&S shareholders asking why they didn't hold on to their former creative director of womenswear.
A short stroll down Oxford Street at Debenhams' headquarters, Rob Templeman, the department store chain's chief executive, was taking the red pen to its dividend – which he slashed from 6.3p a share to 3p a share.
Both Debenhams and Arcadia are stealing market share from a battered M&S. Like Arcadia, Debenhams' 0.9pc fall in like-for-like sales is a (relatively) good performance in the current market.
But no matter how impressive Templeman's performance, the market has become obsessed by the level of debt in the Debenhams business. With almost identical sales, Sir Philip is servicing £695m of debt at Arcadia, while at Debenhams Templeman is having to juggle just shy of £1bn (a hangover from the leveraged buy-out of the retailer by a private equity group in late 2003).
Yesterday, Templeman laid out his plans to reduce the burden: cutting costs, reining back capital expenditure and asking shareholders to take what is left of the dividend in shares rather than cash.
Templeman has a record of delivering: but slashing the group's debt will take years, not months. And all the time Sir Philip is busy plotting – eyeing up retail brands including those owned by troubled Icelandic investor Baugur. Not only do his two businesses – Arcadia and Bhs – have relatively conservative borrowings, we can safely assume that Sir Philip still has a large chunk of the £1.2bn dividend he paid himself in 2005.
Its may only be a short stroll down Oxford Street from Arcadia to Debenhams but the two retailers are worlds apart in an environment where cash is king.
Evolution bags a banking bargain
Sir Philip is not the only entrepreneur who has been rummaging around the wreckage that is now Iceland.
Alex Snow, chief executive of Evolution, appears to have bagged a bargain by buying Singer & Friedlander Investment Management from the administrator to failed Icelandic bank Kaupthing.
Evolution has paid just a "few million pounds" for the business, which manages £1.5bn on behalf of 4,000 private clients. In better times, the fund management arm would have sold for closer to £30m (valued on the basis of 3pc of funds under management).
If Evolution's investment management business – Williams de Broë – can retain the Singer & Friedlander clients, the funds under management will grow by 50pc on the back of the deal.
Until the onset of the credit crunch, Snow had been under pressure from activist shareholders to return the pile of cash the group was sitting on – pressure he largely resisted. Having done so, he is now putting his £150m war chest to good use.
There are opportunities in this dire economic times.


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::REVIEW:: Sephora Gift Card!
Happy birthday to meee! This was my first ever gift card from Sephora so I was pretty pumped when I got this!! The gift cards you can purchase have values from $25- $250 and they never expire! I got the $25 gift card and it came in this sweet box with a compact mirror! The […]Read More

subset: commoncrawl


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The Astounding Bryce Canyon in Utah
The beautiful and amazing Bryce Canyon is a must-visit tourist spot in Bryce Canyon National Park, Utah. If you are visiting the state on business trip or on vacation, then make sure to visit this astounding Bryce canyon, mules and deer graze the wooded plateau, the alpine surroundings is home for several species of birds and animals. The natural beauty of Bryce Canyon is awestruck as the wind and water over millions of years of thaws and freezes have engraved into the upland eternal fields of the Nation Park's unique red-rock pillars, which is also known as hoodoos are the best feature of the Bryce Canyon National park. This natural Amphitheater of the Park allows visitor discover its beauty and authentic formations.
Photo Credit: Mark Smith on flickr
Bryce Canyon – The Natural Geological Structures
1. The outstanding geological formation and grand colors are the finest features of Bryce Canyon National Park that makes millions of visitors visit the place and drench their thirst in its beauty.
2. The elevated hoodoos, natural bridges, narrow fins offer the hikers a lifetime thrilling experiences.
3. The BCNP (Bryce Canyon National Park) has biking and hiking trails where you can enjoy any level from plain and simple level to the most exciting and challenging level of hiking.
4. The most adventurous visitors can enjoy the multi-day package that comes with horseback ride or they can have an enchanting night hike experience with bright starry and moon-lit sky.
5. The astounding landscape of the Bryce Canyon National Park is definitely the visitors' favorite.
6. Hikers must be very careful and look out for bristlecone pine trees, these trees are considered as the oldest trees globally, some of the trees are over 5,000 years old that you can find in this National Park
The gorgeous fins and hoodoos are formed with rainwater leaking into splits in the rock. During cold winter nights the water freezes and the splits in the rock expands. the narrow, deep walls are known as 'fins' are formed by melting snow and rain running down the slope from Bryce's rim. Gradually the fins get holes which are called as a window, and when these windows grow bigger they break and create the fantastic hoodoos that all visitors globally are enjoying today.
The early morning and the late evening is the best time to visit Bryce Canyon, you can witness the gorgeous orange pink sandstones changes its color and transforms its shadow, color, and light. If you get a chance visit the Bryce canyon on a fool moon day to experience the unforgettable moments.
The highest elevation of Bryce Canyon offers the winter sports opportunity for skiers; this is something that is totally unexpected in this desert State.


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Car rental in Canada is often very expensive. But at the same time they are also the best way to commute when touring through the country and its magnificent destinations. Toronto car rentals says that when you are travelling within the city you can use buses, or trains or touring company buses. But if that is not a feasible option you can always rent a car for your business trip. Here are a few tips to ensure you get a rental car in Canada and possibly at an affordable price.
- Book a Fly- drive offer
These are the best when cash is an issue, also you can book such packages a long time ago, that often helps with the cost. Other factors that affect the price are the type of vehicle, its size and also at what time of the year you are booking it. So contact car rentals Scarborough and book your car beforehand.
- Documents and Eligibility
First and foremost you have to be of at least 21 years old and must have driving experience of at least a year. A valid license and an International permit for it are also required unless you are English or French. Your passport, your return tickets, credit card are all the necessary documents you need to bring. The license and credit card holder must be the same person.
- Types of Cars
You can get both small cars, that are economic and compact and also luxury cars, even pickup trucks are available. car rentals Scarborough can bring you all of the above mentioned vehicles. Even cars with seatbelts for babies are available but must be ordered beforehand.
- All-wheel and 4WD cars
These two cars are similar in ways. The essential difference between the two lies in the fact that in 4WD cars you can choose to operate two-wheel drive which you won't find in AWD. Again in the all-wheel one you cannot lock the differential lying between the rear and front axels.
- Fuelling
Toronto car rentals inform that cars mostly use diesel or gasoline that is unleaded. You will leave with a full tank and gas charges are applied. The prices are higher here than in the U.S. The driving distance in Canada is longer than in the states. The gas stations are self-service and open 24 hours. Rural gas stations close early, usually by 6 in the evening.
- Driving in Winter
If you are travelling in winter be prepared for extreme weather. And your cars will not come with winter tyres so make sure you request for them specifically.
- Animals
There are often reports of animals strolling in the middle of the streets. Bears, moose are very common in the country and can cause accidents. But thankfully there are road signs to direct you and make sure you look for these signs so you can drive slow and keep you eye on the road.
So keep these few things in mind when renting cars in Canada. There are a number of agencies and companies to ask for including Scarborough car rentals. So book your car and have a safe and happy trip.


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Holy Family Primary School recognise the importance of preparing children positively for life in modern Britain. We teach our pupils the fundamental British Values of democracy, the rule of law, individual liberty, mutual respect and tolerance of those with different faiths and beliefs. We do this through our school ethos, a broad and balanced curriculum and Spiritual, Moral, Social and Cultural development. Please look at our photo page to see what our children have been doing.
To read our British Values Policy, please click here.
"Schools should encourage respect for democracy and support for participation in the democratic processes including respect for the basis on which the law is made."
At the start of each school year, pupils vote for their school council class representatives. The school council meet regularly to discuss issues in school.
Children learn about democracy through mock elections and debates. Our Wigan MP, Lisa Nandy spoke to the children about her life as an MP.
The Rule of Law
"An appreciation that living under the rule of law protects individual citizens and is essential for their well being and safety."
Children are taught the reason behind laws that govern us and the consequences when laws are broken. We have regular visits from our local PCSO and police officers who remind children of the rule of law and staying safe.
Children learn about rules through The Ten Commandments and create their own school rules.
Individual Liberty
"Encourage children to accept responsibility for their behaviour and understand how they can contribute positively to society."
Children are encouraged to understand and make safe choices. This is reinforced through worship delivered by the children and through class assemblies.
The Wigan Life Education Caravan regularly visits school, teaching children about leading a healthy lifestyle, friendships and all aspects of Personal, Social and Health Education.
Mutual Respect
"Encourage respect for other people."
Children learn how their behaviour can affect their own right and the rights of others. Our school community treat each other with respect and welcome others to our school.
We operate a buddy system whereby our older children look after the younger ones, teach them how to follow our rules and help them make friends.
As a school, we have supported MacMillan, Save the Children, CAFOD and other charities and sponsored children at an orphanage in Kenya.
Each year, we participate in Anti-Bullying Week where all of these messages are reinforced.
Tolerance of those with different faiths and beliefs
"Enable children to acquire an appreciation of and respect for their own and other cultures."
Our children learn about different faiths in the curriculum. We teach our children about the beliefs and faiths people have and how we should respect each other for this.


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Hands on with the OPPO R11
OPPO has become a dominant force in the smartphone game in their home market of China and has even seen steady and impressive growth in countries like India. The company is hoping to continue this with their latest smartphone offering that features an increased focus on providing an excellent camera experience. What does this device bring to the table? We find out, as we go hands on with the OPPO R11!
In terms of design, the R11 retains the design language of its predecessor, with it featuring a full metal unibody construction and what OPPO calls the "arc curve" design, where the back of the phone is curved on all sides. With a metal body, there is always the risk of the phone being too slippery, but this curved back lets the phone sit very comfortably in the hand, and the curves along the sides make the phone easier to grip as well.
New in the design though is the Antenna 2.0 technology that OPPO is leveraging to reduce the number of antenna lines from three to two, while still being able to maintain functionality as expected with the use of a 4G signal enhancer and 2×2 MIMO Wi-Fi. The antenna lines have also been colored to look the same as the rest of the device body, and they seem to meld seamlessly into phone and not stand out, making for a beautiful-looking smartphone.
As far as the specifications are concerned, the OPPO R11 comes with a 5.5-inch AMOLED display with Full HD resolution, a Qualcomm Snapdragon 660 processor backed by 4 GB of RAM, 64 GB of built-in storage (that is further expandable via microSD up to an additional 256 GB), and a 3,000 mAh battery. OPPO also unveiled a Plus edition of the R11 that bumps up the display size to 6 inches, increases the RAM to 6 GB, and features a larger 4,000 mAh battery.
The most notable aspect about the OPPO R11 is the camera setup though. The device comes with a 20 MP + 16 MP dual camera setup, with the 16 MP unit featuring 2x zoom, which means that you will now able to zoom without much loss in quality. OPPO was also proud to share the fact that they worked closely with Qualcomm to develop a customized imaging processor, with the key takeaway being that the R11 will be able to process images quickly, despite the high resolution capture.
Camera samples
There is also a slew of software features that OPPO has added in to further enhance the camera experience, which should translate to great looking images. In the short time that we were able to spend with the device, the rear camera setup does seem to perform well. Up front is a 20 MP shooter too, that allows for some high quality selfies and also takes advantage of software features to create a great looking self-portrait.
On the software side of things, we get the latest Color OS 3.1 based on Android 7.1 Nougat, and with the latest version of their custom OS, OPPO seems to be focusing on getting the smaller details right. For example, the software includes a payment protection mode, Wi-Fi security check, and cool features like OPPO Share, which allows for fast lossless file transfers.
However, it is very clear that this version of the software is intended solely for the Chinese market, with China-exclusive features and interesting UI changes that include having all the notification toggles in a separate control center view, instead of having them be a part of the notification dropdown. We'll have to wait and see if these changes make their way over to the international variant as well, if and when the R11 is released in other markets.
So there you have it for this quick look at the OPPO R11! The R11 looks to be a very promising mid-range smartphone, with what should be a great camera experience being its biggest USP. While the R11's camera-first concept is certainly exciting, unfortunately, it is unclear if the R11 will ever make to markets other than China. Of course, many are claiming the R11 is the blueprint for the upcoming OnePlus 5, which looks very similar but with some upgraded internals.


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7 Brilliant Life Hacks You Can Only Learn In Therapy
Everyone loves a good life hack — especially when it seems like something you can only learn in therapy — because therapists have a way of helping you come at daily problems from a slightly different angle. Whether it's a tip that can make your relationships healthier, advice that can help you reach your goals, or wise words to improve how you feel each day, these little pearl drops of wisdom can feel invaluable.
And yes, you can pick them up right here on the internet. But it never hurts to go to actual therapy, either. "If someone is feeling 'stuck' in their day-to-day life or in their relationships, this might be a good time to seek help," therapist Heidi McBain, MA, LMFT, LPC, RPT tells Bustle. "Also, therapy can be helpful after a major life change ... as it's a safe place for people to grieve the losses in their lives."
There's no shame in popping into a therapist's office, reaching out to a life coach, or even calling a wise friend or family member to pick their brains and ask for support and advice. If you're having a problem — no matter what kind — there's likely a way to fix it, navigate it, or deal with it. Depending on what you need to hear in life, you might find one of these life hacks helpful. And if not, don't hesitate to reach out to a therapist for real.
1. How To Check In With Yourself
One thing therapists teach their patients is how to "check in" with themselves by doing a full body scan. "Simply taking a few minutes to find a comfortable position, breathe slowly and steadily, and take some time starting at your head and working your way down your body noticing how your body feels," is all you have to do, Kailee Place, LPC, owner of Shifting Tides Therapeutic Solutions, tells Bustle.
Doing a full body scan can help you acknowledge any areas of discomfort and tension, and help you ease your stress. "We often don't notice until the end of the day or even the end of the week how much stress and tension we're holding onto," Place says. "Taking a moment to scan brings some awareness to these areas and allows for some stretching or relaxing."
2. How To Stay Cool During Disagreements
The thing to keep in mind when you're arguing with someone is that "it is truly impossible to change how someone else feels and acts, and it is continually disappointing and frustrating to try," clinical neuropsychologist Dr. Katie S. Davis tells Bustle. The only thing you can do, is "change your own behavioral and emotional [response]."
Take a toxic interaction you might have with a parent, for example. "If I am reactive to disagreements with and criticism from my mom, I may find myself defending myself or engaging in an argument to prove why I am correct," Dr. Davis says. "This only serves to escalate the situation: my mom digs in her heels, and I get even more frustrated, angry, defensive, and argumentative."
But it doesn't have to be that way. "Therapy has taught me to change the interaction by changing my own behavior rather than by trying to force my mom to see my point," Dr. Davis says. "Now, I acknowledge her point of view, and then I simply remove myself from the conversation. Since she doesn't get a reaction from me, she has generally stopped initiating those sorts of conversations." Genius, right?
3. How To Protect Yourself
If you're a giving, caring person, you probably find yourself caught up in the everyday dramas of your friends and family, as you try to help them navigate the rough patches and feel better. But at what cost?
If you find that others are dragging you down, do what therapists suggest and learn how to protect yourself. "Removing [yourself] from other people's stresses and conflicts [can make your life] a lot more streamlined and easy," Dr. Davis says. "It gives [you] more time to fix the things that [you] can control and that are actually important to [you], which [can make you] feel more competent and successful."
4. How To "Reframe"
"When someone is struggling with a situation they are frustrated with or upset about, I suggest they write down at least three reframing statements," psychotherapist Karen M. Carlucci, LCSW tells Bustle. "For example, if someone did not get the new job they were hoping for and is overwhelmed with disappointment, written statements such as, 'It's not the worst thing in the world I didn't get that job' or 'I am open to learning from this experience' can shift the negative, self-punishing thinking to a more positive, optimistic mindset."
This is a technique used in cognitive behavioral therapy, and it can really help make your life feel more positive. After writing these statements down, you can then "read [them] when the negative thoughts return," Carlucci says. "I recommend they read them when they wake up and before going to bed."
5. How To Fake It Till You Make It
If you aren't feeling it in life right now, life coaches and therapists often suggest people try the ol' "fake it till you make it" trick. "In my practice, I say this at least 10 times a day," psychiatrist Jenys Allende, MD tells Bustle. "For example, I commonly hear, 'I have no energy' and ask, 'OK, so what would a person with energy do?'" And whatever your answer is — do that.
It may feel strange at first, but stick with it until you stop feeling like it's forced. Feeling nervous? Act confident. Feeling tired? Act energized. "Fake it, then repeat," Allende says. "Pretty soon you will find that faking it is not as hard, and then you will find that you are actually enjoying this."
6. How To Get Through An Anxious Moment
Ever notice how anxiety can overwhelm your brain, and make you assume the worst? Believe it or not, when that happens, it can actually be helpful to go with it and allow yourself to "imagine the worst possible outcome and then design a response plan," Carlucci says. "This allows [you] to feel prepared."
While it may sound counterproductive, it's a trick therapists teach anxious clients that can actually help them get through super stressful moments, and come out the other side.
7. How To Have Gratitude
If you need a little pick-me-up, nothing beats sitting down and making time for some gratitude — either by making a list, writing a letter, or simply thinking about all the good things you've got goin' for you.
"Gratitude is a proven pathway to happiness," Raffi Bilek, LCSW-C, director of the Baltimore Therapy Center, tells Bustle. "It is a key feature in the positive psychology literature and many therapeutic approaches make use of it."
But therapists often suggest patients direct that gratitude outward. "One expression of this practice is to write a letter to someone who made a difference in your life about what they did for you and how it impacted you, and then to go read it to them," Bilek says. "It can be a high school teacher, a favorite aunt — anyone who impacted you positively. People who have done this report that they got even more out of this than the person they read it to."
Little "hacks" like these can help you turn a bad day around, have better relationships, and even reach your goals. But if you feel like you need to hear it from the source, go ahead and see a therapist IRL. They'll have even more life hacks, and ones that you can apply to your specific problems.


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The use of holistic aromatherapy for medical purposes predates to as early as 4,000 BC, but the term aromatherapy has only been in use since the '20s started by French chemist, Rene Maurice Gattefosse. The term was brought about as Gattefosse discovered by accident that lavender oil helped to relieve pain while assisting slight burns in healing. For centuries, aromatherapy has been used as a great alternative to medicine in many European countries, coming to the U.S. during the '30s and '40s gaining a great reputation. During the '60s in the United States, however, the great scientific and technological advances promoted a drop in the use of holistic aromatherapy, but returned as a common practice in the '70s. Since, it has been used to treat various conditions, while alleviating stress and uplifting the mind, body, and spirit.
What is Aromatherapy?
Holistic aromatherapy is the use of essential oils in steam and salve in order to invoke various results in the human body. There are many aromatic plants from which these essential oils are derived including:
• Lavender
• Rose
• Orange
• Geranium
There are thousands of other plants that are used to extract the essential oil which is 100% pure and natural. The parts of the plants that are used to extract these oils include:
• Bark
• Leaves
• Buds
• Resin
• Berries
There are also several other sources for the essential oils within these plants, most times extracted through a steam distillation process. Aromatherapy will consist of using these oils in a combination or individually in various forms such as:
• Incense
• Steam
• Mist
• Salve
The essential oils' aromas are then absorbed by the body through the nasal passages or skin, promoting better health, a stronger mind, and renewed vigor, uplifting the spirit and offering the ease of pain and stress. Aromatherapy is a very subtle therapy technique, yet provides a very powerful result that is completely natural, noninvasive, and safe is used appropriately. Holistic aromatherapy is recognized as a form of alternative medicine with several schools and treatment centers currently existing and emerging within Europe and the U.S. as well as many other areas.
Who Should Provide Holistic Aromatherapy?
Only professionals should provide holistic aromatherapy, with many schools throughout Europe and the U.S. certifying aromatherapists and teaching the appropriate procedures. There are many people that think anyone can provide this type of therapy, however, it is seen as a sort of chemistry and should be treated as a science. There are specific oils that must not be used in specific ways, some that can be toxic when used in a specific way or concentration, and others that can be toxic when used in combination with others. Only trained aromatherapists know the appropriate processes and procedures, thus, should be the only person you go to for holistic aromatherapy.
Common Uses
There are many common uses for holistic therapy both in the various European countries and within the U.S. These uses can include:
• Back compress
• Foot soak
• Rough hands scrub
• Sinus relief
• Essence connection massage oil
These oils are used in many different ways through massage, application to a specific part of the skin, use in distilled waters, inhalation through incense smoke, steamed mist, or vaporizer. There are several other uses as well for essential oil holistic aromatherapy including the invoking of labor and the easing of headaches.
Holistic aromatherapy is a strong alternative medicine that has been widely accepted for many uses. From providing an excellent soak to relieve pain and inflammation to an essence to improve the effects of massage, to even treating sinus issues and relieving the symptoms of a cold, there are several uses for aromatherapy and a great many essential oils that are utilized to provide the maximum effect of the aromatherapy. Only through proper use is aromatherapy ideal, offering a natural measure to relieve many conditions.


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Wednesday, August 09, 2006
Days Off
Wild Flowers in the bunny shed
It was a beautiful day yesterday; breezy and sunny, with a sudden summer shower that gave me a chance to curl up on the couch with Lily and read for a time. I sheared my lovely Autumn Joy, to her relief, and was able to move her to a cage of her own after selling several rabbits on Monday. Her babies are all reserved, except for the little lynx that I'm keeping for myself, because she had an ear collapse.
This summer has been hard on bunny ears. It's called summer ear by some but often the ears drop and just don't come back up. I've had some pop right back and some stay down the last couple of years, but it has been warmer than normal. The little lynx dropped an ear so she's staying; I don't intend to breed her. I also have a magnificient young pure German buck with an ear that fell; he's staying, too. The dropped ears don't seem to bother the rabbits; it just gives them a dorky appearance!
Hay Bale Maze
I cleaned bunny trays yesterday, walked the dogs and played with them and just generally had a 'day off' from the computer. Checked emails and that's about it. I watched sister-in-law Sue and nephew Hunter working hard all day, though. They're putting up a kid's hay bale maze for the fall season. Hunter designed it; you can't really tell well from this picture but it's a tractor. Very well done, with the path winding through the wheels and lots of dead ends!
Quiet evening, with a book at my elbow and crocheting, while Lily napped at my feet and TJ gnawed his chew toy nearby. This morning I plunged back into busyness; updating the bunny sale page with the few bunnies that are left for sale and hauling more books to the shop for cataloging. Today will be another day off, though; I'm running away to play with favorite cousin.
Posted by Leslie Shelor at 9:31 AM
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