Anyone investing within another put off aside from gold ingots, PM's?
PM's meaning precious metals.Answers: alcohol related stocks.
when the reduction goes into the crapper this year alot of inhabitants are going to be turning to a cheap and legal mode to drown their troubles.
with the discount predicted to be going into a full reccesion this year and lasting for 5 years, alcohol stocks are going to be skyrocketing surrounded by price.
Yeah, I am buying put options . Plus am also into
take on market exchange traded funds- these short the indexes. Those are working, too. Some of the inverse
ETFs in fact try to duplicate 2x the market move. Some of the
stock symbols for the tolerate ETF's are: MZZ, QID, SDS, DOG, DUG ( That's for falling oil and gas). There are also a few that do one and the same for the BRIC and European markets.Also, special ones for shorting tangible estate, consumer staples, etc.There are plenty of them. You buy ETF's the same channel you buy stocks. It is considered a long position, even though you are shorting the market. Go to the Rydex and Proshares websites, and you can seize a list of investment strategies to brand name money in this very bad environment. One caution though, this stuff is volatile.
I suggest that you bid your broker and tell him/her that you want to be cleared for option. Go on line and research how they work. You will own to learn nearly puts, calls, straddles, selling option, etc. Don't invest real money for awhile. Paper trade. You can't basically buy options--you have to be cleared for them, first. The ETF's are an easier route to go- if you have a stock statement, you can jump right within.
You stand to lose a finite sum of money in any option play should it go against you, and you are importantly leveraged, so it is worth the learning curve. For instance, right to be heard you own some shares of ATT. It has fall alot. So,you buynsome puts ( short options) and they go up, allowing you to control your risk and stay surrounded by the market fairly than get stopped out near a loss. It is a very appropriate tool for damage control, as all right as an investment opportunity by itself. Good luck.
Historically, gold and silver profess a price ratio of 16 to 1. For example, if gold is $160, silver will be $10.
Currently, the ratio is at 55 to 1.
A great website that explains this is:
www.low-cost-stock-recommendations.com
I purchased one of their recommendation for $10 5 weeks ago, and it has raise in good point 15%.
I think if you be in motion to this website and click on the "Precious Metals" Button...you will get some productive info.
Good Luck
How Much longer will the market drop and is now a good time to buy if not how low will it go?
Answers: There are some outstanding bets right now for the long term investor. Most blue chips can be had at a great price. If you can hold on to them for another 18 months or so the cycle should be complete. As far as a put, I am betting that Airbus and BMW have peaked and will go down when the next round of layoffs is announced. Gold should remain strong for the next 12 months as a hedge against inflation, but could sink as much as $100.00 an ounce by next June. Historically, when the USD comes back gold will drop like a sack of potatoes and that presents some great opportunities to buy. The US dollar is also a good buy in my book right now.
Most economists see this market cycle continuing through the next quarter. The US will have a new president in January of 2009 and the market should respond positively. However, I believe that it will take some time, at least until June of 2009 to see real market recovery.
There should be some solid opportunities in real estate over the next 18 months as prices decline. If you want a good model do some research into the Savings and Loan collapse in the late 1980's. There will most likely be some changes in hedge funds and that is a good thing in my opinion.
I like Boeing, Disney, IBM, Apple, Honeywell, etc. The major banks have already written down most of the bad paper so I see some bargains there in BOA and JPM Chase.
Now is probably not a good time. There is a lot of speculation that the market will improve again after the election, hopefully it will.
However, I'm a little worried that we are looking at a long-term decline, depression and possible collapse even. (In which case maybe it is important to make decisions and purchases now, planning ahead). This is in anticipation for the decline of oil production, which is happening in this decade and one way or another will at least greatly affect our economy, read about it here: http://www.lifeaftertheoilcrash.net/
Only a crystal ball will tell the answer..
There is an old expression..Keep your powder dry, which means save your cash until there is a DEFINITE upward bias in the market before committing any new funds.
Why take a risk? It's better to miss a few points on the upside than to give a lot of points on the downside.
Too many unknowns (politics, oil, sub prime, elections, etc) to be investing new money right now..
Give it 6 months or more and wait for the trend to change.
The trend is your friend !!
How Much longer will the market drop?
No one knows the answer to this part of your Q.
If the way your account is set-up AND your broker will allow it, you can go short. OR you can buy Put options OR do Covered Calls.
PROPERLY learning and PROPERLY using any of these strategies - and others - could add money to your account.
Thanks for asking your Q! I hope I could help give you other alternatives.
VTY,
Ron Berue
Yes, that is my real last name!
Stocks in general have really gone down too far too fast and are due for a decent bounce, especially with the FED coming up to bat at the end of the month with a 50 bpt cut.
If you want to avoid investment decisions based on emotions, then set up a plan to diversify your investments and adjust them regularly to keep them in balance.
Its easy to say buy bonds if a recession is imminent, but bonds have absolutely been on a bullish tear lately and should not be overweighted...they can just as easily retrace. Keep your balance and good luck!
Oh man, I wish I knew when the exact bottom was, I'd quit my day job and stay home and trade all day!
However, I'm not nearly that good, so I'll tell you what I have been doing. I raised some cash late in 2007, and made a list of a bunch of companies I'd like to own if they went down a lot. In the last week or two, I just now put small positions on in KDN and LAYN, which I believe can go much higher if I have the balls to hang onto them for the next year or two. If we continue to see declines, I may put some more cash to work as well, possibly in FTEK or GEX maybe. FCX and AAPL have come down nicely too, I've had my eye on those as well. But don't put all your money to work at once, try to gradually buy more stock on the way down.
Ask yourself a simple question. Did you do your homework on XYZ company? Was it a good buy at $10?
Well, today its $5. Did it run out of goods to sell? Did all the coal/oil/wheat/whatever get stolen overnight? Was there a scandal, bookkeeping error?
If nothing serious has changed except the stock's price, its time to back up the truck and load up, assuming you can hold long enough for XYZ to return to "normal". I love to buy things when they're half-off.
NPV Valuation Question?
I have be working on this question for hours, and still cannot integer out the right answer. I greatly appreciate any support.Here is the question:
... The churchyard project will provide a net currency inflow of 50,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 6 percent per year forever. And the CF0 = -780,000.
a) requires a 13% return, should this burial ground business started?
b) the company is somewhat unsure about the assumption of a 6 percent growth rate contained by its cash flows. at what constant growth rate would the company basically break even if it still required a 13 percent return on investment?
Thanks in mortgage.
Answers: (a) No. Because the NPV would be $714,285.70 which is less than the initial CFO of $780,000. That is to influence, the money is better spent on other project(s) given the 13% financial hurdle
(b) At least 6.60% (rounded) growth rate.
Here's how you solve for this problem (this is really close to an equities problem)
To solve for (a) involving the NPV, you need to know adjectives the cash flows. The problem you are facing is that the currency flows grow at 6.0% indefinitely. The trick here is to use dividend growth model to calculate the unbounded but growing cash flows (also call the terminal value) and the formula is Dividend(N) times (1 + growth rate) all divided by (required rate of return minus the growth rate).
So the first change flow CF(1) is 50,000 and the future convenience at CF(1) of all the remaining lolly flow aka the terminal value is [50,000 * (1 + growth rate)] / (.13 - .06). The terminal convenience is then (53,000 / .07) or 754,142.90.
Now you know adjectives the cash flows, which is 804,142.90 (the sum of CF(1) and the Terminal Value or the sum of 50,000 plus 754,142.90), you discount it by 13% to capture $714,285.70 (or 804,142.90 / 1.13). And since this value is smaller amount than the original $780,000, you do not invest surrounded by the project.
To solve for (b), you have a problem because you realize the answer depends on the growth rate assumption. This growth rate assumption affects both the numerator and the denominator of the dividend growth model in writ to determine the terminal value at CF(1) of adjectives the remaining cash flows. That is to enunciate, if you increase the growth rate, then the numerator will be superior than 53,000 and the denominator is less than 7%. You can solve for it alegrabically or do what I did and plug within a few numbers until the NPV exceeds $780,000, which is 6.60% rounded (you might get something resembling 6.5898% if you want to be more accurate). You can solve for alegrabically because your growth rate is the only unknown, i.e. it is immense enough such that the present utility of discounted cash flows exceed the initial 780,000 investment.
Here are the two traps you necessitate to look out for when solving these problems.
Do be afraid of cash flows that are indefinite. You know from a consol bond (a bond that pays a fixed rate of interest indefinitely) its good point is the annual coupon divided by the required discount rate or 50,000 / 0.13 or 384,615.40. So if the cash flows of the project is 50,000 respectively year indefinitely, you can solve that. In this case, in that was a growth rate involved so you have to adjust for that.
The second trap is understanding the terminal effectiveness or the future efficacy of all remaining dosh flows is at the end of CF(1) because it represents at CF(1) the discounted merit of all these growing currency flows. However, you still need to discount it stern to time 0 or CF(0) to do the proper analysis. That is why CF(1) has two dosh flows, the initial cash flow of 50,000 and the terminal significance and both of these values must be discounted back. So yes, you are discounting the adjectives, but growing cash flows twice -- the first time to merit it at one point in time due to the formula, which is at CF(1), and the second time to the present, which is at CF(0).
Confused?? This problem is tricky surrounded by the beginning but once you take to mean how to value any set of currency flows, it gets easiers and you can use the skills to significance an equity, which never matures. Unbeknowst to you, you be really valuating an equity.
Good luck.
[EDIT: To confuzed -- I have some fruitless news; it's possible the answers are wrong for a) NPV = -22,222.22 and b) 7.67%. When within doubt, I try to see if the cash flows be paid surrounded by advance versus contained by arrears and did not match the answer.
Then I replacated the CF's on Excel (using the NPV function) next to your new set of numbers and Excel get a NPV of -$68.92 while my approach gets -78.57 for sector (a). For the B/E constant growth, using the 7.67% default answer, Excel give -15.87 and my approach gets -18.09. Note contained by Excel, I grew the dividends to over 6000 periods, but the answer converges to -15.87 after around 200 dividends; the reason it converges is that change flow way out near in the adjectives only affects the NPV by a small amount, especially when the discount rate is 14%.
Again, you can tryout this yourself, by starting with 10 dividends, afterwards 100 dividends, then 200 dividends...while growing the dividends by the growth rate. By just about about 200 dividends, you will hold a good thought of the true NPV).
Here's my answer and how I arrived at it:
the initial investment is 780k [a/k/a CFzero]
a constant 13% return on that would require annual income of 101,400 [13% of 780k]
the first year's actual projected income is 50,000
so there is a shortage contained by the first year of 51,400
**
suppose you borrowed all the money at 13% from an outside carnival with the theory that you will make up the shortage surrounded by the early years by borrowing however more and then repay the total somewhen contained by the future when the necropolis is very profitable indeed.
what would the 1st year's borrowing and 2nd year look similar to?
after the first year, you'd borrow 51,400 more at 13% to pay on the inspired 780k.
in the second year, your income would dance up 6% from the earlier 50k ... this is an increase of 3,000
however, the added borrowing of 51,400 requires a 13% return also, which is 6682 ... or twice plus the amount by which your income go up.
thus, you'd borrow 51,400 + 6682 - 3000 in the 2nd year or 55,082 within all. this is an increase of 3682 from the prior year.
**
the 3rd year, your income would be 53,000 plus 6% for an increase of 3180
you would involve to repay 13% on the original 780k, plus 13% on the 51,400, plus 13% on the 55082 ... a total of 115,242.66 -- which is an increase of 7160.66 contained by more repayments from the prior year.
thus your borrowing in the 3rd year increases by 7160.66 minus the 3180 increase contained by revenue or 3980.34
**
the net annual borrowings required to manufacture the 13% payment are INCREASING.
it follows that 6% income growth is NOT ENOUGH to form this project worthwhile as the income growth will NEVER catch up to the added borrowing required to payment the lender his 13% per year.
**
in the first year, you have to borrow an added 51,400 to make the 13% return.
the added interest cost on this [at 13%] is 6682.
to of late stay even -- borrowing another 51400 each year -- you'd enjoy to have an income growth rate of 6682/50,000 or 13.364%
and that's newly to keep borrowing another 51,400 per year forever [digging the hole deeper at a constant rate]
**
so, surrounded by order to breed the project profitable, your income growth rate has to be greater than this, or your initial annual income have to be much higher than 50,000.
**
tangible life injection here --- I do not know of any Real Estate developer contained by reality who would even look at a project for smaller quantity than 30% IRR and usually more like 40%.
this project is a non-starter. it isn't anywhere in the vicinity close.
**
let us palm off an arbitrary maximum life of seven years for the project -- if, after 7 years, the project is not clearing 13% brass per year, we won't do it.
13% cash return on a 780k investment is 101,400 per year. if the initial dosh flow is 50,000 and you have 7 years to grow it to an acceptible even, the required growth rate is 10.63 percent {this is the 7th root of the quotient of 101.4/50.}
this would NOT give you a project beside an overall 13% return, merely one that, after 7 years would be worth the original 780k. you'd not hold covered the shortfalls in years 1 thru 6 and so the project wouldn't be worth doing.
**
Reality time again: slightly frankly, death rates contained by an ordinary population are notably predictable. this allows you to very closely estimate the constraint for graves. you are not going to increase cash flows within a cemetery project more than 10% per year forever contained by any realistic graveyard situation unless other competing cemeteries enjoy run out of room and you are one of the few facilities near space remaining.
And it won't last forever. That's plain silly.
**
you've have all the time I can afford on this
inconsiderate, i'd guess the last portion as follows:
the 1st year shortfall is 51,400 in income. this is 6.59% of the artistic 780k borrowed. so I'd add the 6.59% to the 13% required and thus estimate the required annual growth rate of income to engineer this project attractive at 13% [a false number as pointed out above] to be 19.59% or 19.6% rounded.
GL with explaining your conclusions contained by class