Monthly Archives: October 2011

Recently, It seems like everyday is the scariest day in the market. Good news or bad news, it seems that the market has a mind of its own. Why not time the market and jump in and out at the most opportune time? Well, maybe because even the best money managers still haven’t figured it out. Here is a list of the top 3 trading days investors wished never happened.

#3.  9/29/08 -6.98% 

This day was the largest point drop in the Dow’s history and kicked off the worst recession since the Great Depression. The collapse of Lehman Brothers, AIG bailout and the end of Washington Mutual led to the 777-point single day decline. This recession is thought to be caused by a burst in the U.S. housing bubble and a markdown of sub-prime mortgage related securities.  Investors are still spooked from this event.

#2. 10/28/29 -12.82%

October 28th 1929 started the longest and deepest depression in history.  The Great Depression had drastic effects on the rich and poor throughout the entire world. Even the Rockefellers and the top banks could not artificial prop up the market after this crash. The market didn’t recover from the 1929 peak until 1954.

#1. 10/19/87 -22.61%

This was the largest percentage decline in the history of the Dow Jones average. The drop of over 500 points caused panic throughout the world markets. Top economist predicted that the years following this drop would be worse than the 1930’s depression. Two days later the Dow gained back 10% and ended 1987 in positive territory.

What are the chances of missing the worst Dow declines in history?  Possibly, the same chances of buying before the best trading days in history. Guessing which direction the market is going may be an impossible task. Some investors may be retiring soon and cannot risk going through another Black Monday. Maybe a simpler solution is to diversify your portfolio with an investment that is uncorrelated with the market.

Happy Halloween from the team at Currensee!

Picture source:

http://marketplace.publicradio.org/display/web/2007/10/19/epstein_commentary/

http://cdn.babble.com/famecrawler/files/2010/10/halloween_pumpkin.jpg

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

The first golden age of globalization that spanned more than four decades from the late nineteenth century onwards, came to a shuddering end on June 28, 1914, when an unknown Serbian, Gavrilo Princip, forged himself a permanent place in history, when he assassinated Archduke Franz Ferdinand, the heir to the Austro-Hungarian throne, in Sarajevo.  The actions of Princip and his ‘Black Hand’ revolutionaries precipitated a war across the European continent that achieved little but the deaths of countless fighting men.

Unfortunately, the so-called ‘war to end all wars’ did not match its billing and, the conditions enshrined in the Treaty of Versailles and, subsequently imposed upon a defeated German nation, virtually ensured another depressing chapter in Europe’s bloody history.  Needless to say, the harsh programme proved self-defeating as, a downtrodden people in their search for leadership amid the chaos, propelled Adolf Hitler and his henchmen to power.  There is no need to expand on their drug-fuelled exploits.

Fast forward to today and the roles have been reversed.  The Germans, under the helmship of Chancellor Angela Merkel, wish to impose their will upon the rest of Europe but, what is demanded is neither achievable nor desirable given the unacceptable social costs.  One need look no further than Greece to see the destruction that is a direct result of the austere policies imposed by the troika and endorsed by Merkel – the outcome, it is fair to say, is a failed economic state.

The demands placed upon Greece were never likely to work and basic arithmetic said as much.  A high marginal propensity to consume that is moving lower as desired savings rates edge higher, combined with a low marginal propensity to import and uncompetitive export base means that the aggressive fiscal consolidation was doomed from the outset.  All told, the medicine prescribed has killed the patient.

The world’s capital markets will move on of course and, investors will almost certainly have Portugal in their sights, as the deep-seated problems in that economy don’t look much better than Greece.  Meanwhile, Ireland has decoupled from its troubled brethren in the euro-zone and not simply because of any public sector achievements but, a return to current account surplus and less dependence on foreign sources for financing.

Be that as it may, the turnaround in the Irish situation is wholly dependent on no recession across the euro-zone from here to infinity.  Non-financial private sector debt as a percentage of GDP accumulated to obscene levels in this country, under the watchful gaze of those who should have known better and, still remains off the charts compared to the rest of the developed world – despite the aggressive deleveraging that has already taken place.

Unfortunately, a European recession is almost certainly written in stone at this juncture.  Dithering by policymakers, who seem incapable of distinguishing between liquidity and solvency crises, has undermined market confidence to such a degree that the resulting financial market stress is almost certain to produce the dreaded double-dip.  More to the point, recent data releases all suggest as much.

A further downturn in economic activity, before the region even comes close to recovering its pre-recession peak, could well put an end to the European project.  Even before a recession is considered, back-of-the-envelope calculations indicate that Greece will not recoup its lost output for ten years and, both Ireland and Portugal should not expect to see expansion from former glories until the second half of the decade.

Of course, those predictions are predicated upon a ‘softly-softly’ upward trajectory in each individual economy’s fortunes.  It is safe to say that such an approach rarely matches the subsequent reality and, will ultimately prove to be fantasy in the context of an all but certain downturn.

The crux of the matter is not a renewed downturn of itself but, the unacceptably high levels of unemployment to begin with and, particularly among the young.  The latest reading on unemployment rates across the euro-zone is hardly pleasant reading at ten percent but, youth unemployment can be described as nothing less than a social tragedy and, fiscal consolidation programmes across the region as endorsed by Germany, will almost certainly make matters worse.

Digest the numbers but be warned, they are not pretty.  The latest readings show that the highest rate of youth unemployment begins with Spain at 45 percent and, then Greece at 43 percent. Ireland, Portugal and Italy hug closely behind with levels close to 30 percent.  No matter what economic leaning one comes from – left or right – these numbers are unacceptable.

The euro stands at a crossroads but, no matter what is accepted by the yellow-bellied politicians that yield to German demands, nothing can escape the fact that such prescriptions have already delivered one failed economic state.  Be warned, Ms Merkel, Europe’s future may well be decided on the streets.

Previously posted on www.charliefell.com

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Social media guru Brian Solis has published a new book entitled “The End of Business as Normal,” which he discusses in this recent Fast Company article. This article presents the incontrovertible stats and facts that illustrate how social technologies and media have become core to our cultural fabric.

The title of Solis’s new book got me thinking about how social has already created new business models and opportunities and has breathed new life into some older industries.

Financial services companies such as Currensee would not exist and blossom were it not for the power of social networks to meet the need of Forex traders and institutional and retail investors seeking to collaborate and mimic trading strategies. StockTwits is another example of a financial service spawned by social. It’s also helping other Fortune 500 companies ‘get social.’ Meantime, “old-school” financial institutions have been realizing that social media not only augments their services but also provides new opportunities for marketing and customer communications. Check out this story about The Hartford’s recent “Achieve Without Limits” social campaign.

The music industry has been impacted on all fronts by social media. MySpace, an early darling of the social space, has become a destination for bands and singers to directly connect with fans. Facebook has provided another booming platform for artists who are using applications such as RootMusic’s BandPages to promote themselves to fans (RootMusic even drummed up $16 million in recent funding). And the innovation keeps humming – just last week RockCityClub, creator of the world’s first “Social Music Network” for independent music artists and bands, went live. Meantime, Spotify’s integration with Facebook keeps it top of the music social apps.

Another industry completely transformed because of social media is news reporting and publishing. Today, citizen journalists break the news. We turn to Twitter and Facebook as our “ticker.” Journalists themselves tweet second-by-second updates, creating real-time news feeds. NPR’s Andy Carvin’s vanguard coverage and curation of the Arab Spring set the bar for other reporters and news organizations. Mainstays of the media, the Wall Street Journal and The New York Times have also innovated their business models and products to compete for, retain and profit from their socially motivated readers and subscribers. If you’re interested in this topic, it’s worth reading Matthew Ingram’s regular column on GigaOm.

Needless to say, we are in the midst of an incredible social orbit. Social is the new normal, to quote Solis. I agree 100 percent.

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

2 Comments

The foliage is officially adorning the trees here in New England, signaling fall is well underway and the fourth quarter is in full swing. Investors are trying to ride the economic wave before closing their books in a matter of weeks. Here are some headlines we’re reading in preparation for the year-end rally.

Occupy Wall Street continues to remain in the spotlight as movements spread across the globe. For the demonstrations to spur change, organizers say participants’ voices must echo worldwide, and they need to secure support from fellow citizens—even those not taking to the streets. After Occupy marked its first-month anniversary Oct. 17, activists say nearly 55 percent of Americans support the movement. Also seeking support on a grand stage is Europe. The region’s financial leaders are busy preparing for their financial summit this week, and one of the top agenda items is discussing revamped strategies to save Greece from its debt. Before Europe sits at the round table, top U.S. financial experts are acknowledging lessons they’ve learned from this crisis. Speaking in Boston Oct. 18, Federal Reserve Chairman Ben Bernanke said the Fed may revise approaches about monetary policy in the future, including making communication and guidance more transparent. While the global economic crisis has inked a multitude of negative headlines, there are ways to offset market volatility by investing in alternative funds. As many investors know, alternative investments help diversify portfolios, mitigate risk and elevate returns. Stronger-than-expected U.S. retail numbers last week offered a glimmer of optimism that investing can end on a high note for 2011, easing thoughts of the U.S. heading into another recession. Investors are certainly keeping their eye on the prize, hoping to balance their portfolios in the black by year’s end.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Diversification, of course, is about taking positions in markets or securities which have low or negative correlations to reduce total portfolio risk. Basically, you're looking to have positions which aren't likely to all trade in the same direction.

Diversification has been a major talking point in recent years among money managers and academic researchers. This is because of the way the major financial markets have all been highly correlated during times of crisis – as witnessed by the so-called "risk-on" and "risk-off" trading patterns we've see in the markets.

This chart shows a rolling 12-week correlation of returns comparing the S&P 500 with four major markets (GLD = gold ETF, TLT = US long-term Treasury ETF, HQD = US high grade corporate bond ETF). A reading above zero is a positive correlation, meaning the markets move in the same direction. A reading below zero is a negative correlation, indicating markets that move in opposite directions. The more the reading moves toward 1 (-1), the more the return of the two markets match (are the inverse of) each other.

As you can see, the correlations do change over time – quite considerably and quite rapidly in some cases. Those quick changes, often coming all at the same time across markets, are often the function of extremes in market psychology, one way or another.

Is there a way to avoid these dangerous swings? I think there just might be, by taking diversification to the next level. That means going beyond just allocating funds among different markets. It's diversifying among trading strategies as one can do with the Trade Leaders program. That level of diversification, done properly, can make the market allocation just about irrelevant. My analysis shows that this can produce very low cross-market correlations. Watch this blog for fore information about how low it can go.

2 Comments

As we’ve said before, we’re all invested in the currency market in one way or another. But it wasn’t all that long ago that investment access to the currency market was limited to sophisticated high-net-worth individuals, for the most part. Technological developments and market innovations, however, have opened the market up to just about anyone who wants to take part these days. It’s not as risky as they say – and here are five ways that you can participate. And don’t forget to check out the free e-book “The Smarties’ Guide to Alternative Investing in the Foreign Exchange Market” for more practical wisdom.

1. Investing in Cash Currencies

The simplest form of foreign exchange investing is swapping your home currency (e.g. dollars) for some other. This allows you to benefit from the gains that other currency might make against your own. For example, if you think the dollar is too highly valued against the British pound you could exchange your dollars for pounds, eventually converting back when you think the two currencies are more properly valued. Your profit would be the amount of appreciation the pound experienced in dollar terms.

This sort of “cash” currency investing can easily be done by going to the bank and exchanging your dollars for the other currency of your liking. There are foreign and multi-currency accounts available as well so you don’t have to actually hold pounds or euros or yen in actual cash and can potentially allow for investment in foreign securities. The one thing to keep an eye on, though, is the exchange rate spreads. They are often much wider than market rates when doing small retail transactions of this sort.

2. Currency Investment Vehicles

If you don’t want to worry about the details of currency exchanges and accounts there are other options. The ones that get the most press are currency exchange traded funds and notes (ETFs and ETNs), which trade like stocks. For example, Rydex has a collection of ETFs that invest directly in specific currencies and pay interest based on the rate of the currency in question. There are also mutual funds doing the same thing. Since these are registered securities they are generally eligible for inclusion in retirement and other institutional types of accounts.

As is always the case with these types of vehicles, however, you need to know the specifics. Some of these instruments are single currency, while others are blends. Some aren’t just currency holdings, but actually have managed strategies involved. Make sure you get what you’re after. Also, remember to account for transaction costs when considering these sorts of securities. Recall from the earlier table that ETFs are subject to both commissions and market spreads. Plus, there are fund management fees for both ETFs and mutual funds.

3. Foreign Bond and Stock Funds

A less direct way of playing the currency market is doing so through mutual funds, ETFs, and other vehicles that invest in foreign securities. These sorts of investments have inherent exchange rate exposure because your money is converted into the currency of the country (or countries) in which you are investing. To get an idea of how much impact currency valuations can have on investment performance, take a look at this chart comparing the S&P 500 with the German DAX, with the latter expressed in dollar terms.

German DAX index performance in US Dollar terms compared to the S&P 500. Source: Google Finance

It is worth noting that the DAX did not meaningfully break the 2000 peak in 2007 of its own accord. It’s the impact of the weaker dollar against the euro which produces that higher 2007 peak in the chart above. It should be noted if you’re thinking about investing in foreign stocks via mutual funds, that some hedge that exchange rate exposure. As noted above, you need to make sure to check the specifics before putting your money down.

4. Forex Brokers

Playing the foreign exchange market via a broker has become very popular in the last decade. Where ETFs and the other trading vehicles tend to be more general currency plays, brokers allow traders and investors to play specific currency exchange rates through pairs. For example, through a broker you can trade the euro-dollar exchange rate. Moreover, you can trade the rates between currencies that are not your own. For example, as US trader could play the Canadian dollar-Japanese yen exchange rate. This can all be done in cash currency transactions, of course, but trading through a broker is faster thanks to online access, more flexible, and generally cheaper because of lower spreads.

It is in this broker-based trading where the reputation for serious risk has come into Forex, though, thanks to the readily available access to high leverage. Trading in this way is very similar to trading in the futures markets in terms of transacting in contracts for delivery rather than direct currency exchange, and in dealing with leverage and margin. As such, it’s not as simple and straightforward as cash market investing. It does, however, allow you the opportunity to play a wider array of exchange rates than just those against the dollar. It also opens up the opportunity to apply leverage to take somewhat larger risks if that suits your objectives.

5. The Carry Trade

The carry trade is something that gets talked about in the markets at different points. Basically, this is borrowing money in one currency, exchanging it for another one, and investing the proceeds. The idea is to borrow a low interest rate currency and put it into a currency where the rates of return are higher. The objective is to make the spread between what you pay on the borrowed funds and what you earn on the other end of the position.

For example, an investor could borrow Japanese yen because Japanese interest rates are very low. Rates in Australia are significantly higher, so those yen could be swapped into Australian dollars and invested in short-term fixed income securities. If the rate to borrow the yen is 0.5% and the rate paid by the Aussie dollar investment is 3.0% you make the 2.5% difference.

Of course at some point you’ll have to convert your dollars back to yen to pay off that loan. That means you have exposure to the exchange rate between the two currencies (AUD/JPY). If that rate goes against you it could more than wipe out what you make on the rate spread.

It’s that old saying: There’s no free lunch.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

1 Comment

I started reading a new book on my daily commute this week. It's titled Laughing at Wall Street, and presumably will detail how the author was able to make big money in the markets. I haven't reached that far yet, so I'm not sure how things are going to unfold (I'll do a full book review when I'm done). I'm pretty sure the focus is going to be on the stock market, but the stuff I've just been reading presents an interesting idea for forex traders as well.

Shortcomings in account funding
One of the problems many new traders have is funding their accounts to the level where trading actually seems worthwhile and doesn't just take on the aspect of a Vegas weekend ("I don't mind losing it all. It's not that much money."). Or, looking at things from a more negative – but unfortunately all too common – perspective, re-funding an account that's suffered a major drawdown as a result of poor trading is required.

And even for traders with "sufficient" funding for trading purposes, it's usually the case that more would be better. After all, the more money you have, the more money you can make. We can even bring funding a Trade Leaders program account into this discussion.

Saving your way to a bigger trading account
The author of the book has what I think is potentially a very useful way to add funds to his trading account. Basically, he sends the money he saves on expenses to his broker.

Let me share an example.

The author wanted to buy a new HDTV for his house. The model he wanted was priced at $2000. Instead of buying it right away, though, he held off for a while until the price had dropped to $1600. The $400 he saved on the television went into his trading account.

Now, you may not have a big ticket purchase like that in your plans, but you can certainly look at your budget and see where you can trim and what purchases you can defer to get a lower price. Most of us have indulgences we can cut back on to save money. They may not be large amounts individually, but when taken together over time it can add up, especially if you can then compound the money through successful trading.

The trick the author uses to encourage thriftiness in his own part is to not think in terms of what the saving is today, but what the will be down the line. He expects to turn every dollar added to his trading account today into $100 down the line. That may seem aggressive, but you get the point.

Don't just throw money at your trading, though
As much as this saving-to-invest idea may be a worthwhile one to held grow the funds in your trading account, you don't want to just throw good money after bad. If you're still in the developmental phase of your trading, and haven't yet established consistently positive performance, you should be trading as small an account as you can get away with trading. No sense losing more money than you must at the time when you're most likely to see negative performance. By all means, use the savings trick (or perhaps something similar) to grow a trading stake, but put it aside until your trading performance warrants the extra funding.

We’ve been keeping track of the Occupy Wall Street movement, and here’s our take on the headlines that have been occupying our eyes this past week:

A good way to shuffle in last weekend – stocks on Wall Street increased after an Oct. 14 report showing U.S. retail spending increased in September at the fastest rate in months. That good news also translated into positive outlooks for the European markets with analysts stating that fears of a debt crisis are waning, settling markets that have been volatile since August. #OccupyWallStreet continued buzzing especially as the protests reached their one-month anniversary. Despite some mediation in the U.S. last week at Zuccotti Park in Lower Manhattan, the movement has spread overseas with protestors in Tokyo and Sydney joining London and taking to the streets. While the global economy remains in question, there’s no doubt the markets have behaved in a Jekyll-and-Hyde fashion. As a result, investors are turning to alternative investments, like hedge funds, offset the uncertainties of a volatile stock market. This past week, hedge funds posted more than 3 percent for the fourth time in 2011. For investors who are braving the stock market, some financial experts recommend keeping historical perspectives, reducing margins for errors, average costs and reconsidering risk and reward consumption. In Forex news, the Commodities Futures Trading Commission released August 2011 financial data showing total U.S. Forex deposits were up $19 million.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Far too many investors continue to stubbornly cling to the belief that the recent economic slowdown is simply a typical mid-cycle pause and, that a self-sustaining expansion is set to take-off any day now.  The view is naïve and fails to recognise that the financial crisis marked a once-in-a-generation breakdown in the prevailing economic model.  It is time to get used to the reality that the age of financialisation is at an end.

In this regard, it is important to take a step back in time to appreciate the dynamics that characterised the development of the American economy from the early-1980s to the present day.

An important shift in power from labor to capital began more than three decades ago, as growing frustration with the stagflation of the 1970s, precipitated a welcome sea change in economic ideology.

The resulting transformation from ‘big’ to ‘small’ government undermined union power and contributed to increased labor market flexibility, while greater shareholder activism led to a renewed focus on value creation and returns on equity.  The process gathered pace through the 1990s and into the new millennium, as the twin forces of rapid technological change and globalization, via increased trade flows and greater capital market integration, sparked a further reduction in labor’s bargaining power.

The shift in power to the owners of capital triggered a structural upturn in corporate profitability, as the labor share of output accounted for by employees’ compensa­tion, dropped by roughly five percentage points from its 1947/82 average to less than 61 per cent by the middle of the first decade of the new millennium.

The owners of debt and equity securities benefitted handsomely, as high returns on capital contributed to significant price appreciation, while interest income alongside dividend payments and share repurchases, provided an important boost to income.  Indeed, the share of total income captured by the top five per cent of the income distribution jumped from 22 per cent in 1983 to 34 per cent in 2007.

The large increase in income inequality however, brought with it greater financial fragility, as the typical American household had no option but to borrow in order to keep pace with rising living standards, as measured by real GDP per capita.

To appreciate this development, it is important to recognise that while productivity is the primary determinant of a nation’s standard of living, real hourly compensation measures workers’ purchasing power.  In this regard, the diminished power of labor meant that increases in real hourly compensation failed to keep pace with accelerating productivity growth over the past three decades and, the compensation-productivity gap became ever more pronounced as the period unfolded.

The increase in workers’ purchasing power lagged productivity growth at a rate of less than one-quarter of a percentage point per annum from 1947 to 1979 but, the gap began to widen as the power shift gathered momentum.  Growth in real hourly compensation trailed improving productivity by three-quarters of a percentage point per annum through the 1980s and 1990s and, the annualised gap widened to almost one-and-half percentage points during the economic expansion that peaked at the end of 2007.

The shortfall in employee compensation relative to national output could have led to oversupply and a fall in corporate profitability but, the savings of high-income earners alongside foreign capital was channelled to households via the financial sector to fill the shortfall in effective demand.

The result of this financialisation process however, was a surge in household indebtedness.  As the share of total income captured by high-earning households jumped by twelve percentage points between 1983 and 2007 to the highest level since 1928, household debt-to-GDP increased from less than 50 per cent to near 100 per cent.

A tipping point was bound to be reached sooner or later and, that moment duly arrived as the subprime segment of the residential mortgage market began to unravel.  The result was the deepest economic downturn since the 1930s, from which the economy has yet to recover.  Indeed, the damage unleashed upon the employment market has seen the labor share of output fall to a new low of less than 58 per cent, which means that the all-too necessary deleveraging of household balance sheets will be difficult to accomplish, while a self-sustaining recovery is likely to remain elusive.

The diehard bulls on Wall Street applaud the recent surge in corporate profitability since the recession’s end but, fail to recognise that this development has served only to exaggerate further, the move away from labor towards capital.  Indeed, workers’ purchasing power has lagged productivity gains at such an extraordinary rate during the recovery so far, such that the aggregate compensation share of the increase in national income amounts to just one per cent versus an almost one-third share at a similar point during the previous four economic recoveries.  Meanwhile, the corporate profits share has jumped from less than 30 per cent to almost 90 per cent.

The bottom line is that corporate profits are improving at the expense of effective consumer demand, which is inevitably self-defeating.  It is instructive to note that the increase in total private wages in real terms over the ten years to the end of 2010 has fallen well short of any ten-year period since the Second World War and, has even failed to match the disappointing increase from 1929 to 1939.  For now, consumer demand is being buoyed by government transfer payments rather than incremental borrowing but, it’s plain to see that current trends are not sustainable.

Investors should dismiss commentary that views the current recovery through the narrow prism of previous post-war cycles.  There is nothing typical about the current economic climate.  Overleveraged household balance sheets combined with stagnant compensation virtually assures subdued growth for years.

Previously posted on www.charliefell.com

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Social media accounts for 22.5 percent of the time Americans spend online, according to a recent Nielsen report covered by The New York Times. It’s no surprise that Facebook topped the lists of social sites where we spend the most time. But when looking for guidance and advice about where to place your hard-earned dollars, maybe it makes better “cents” to tune into the investment decisions others are making. The following services seem like good places for sourcing and sharing investment advice with some nifty social tools. Interestingly, several of them leverage the practice of mimicry, or auto trading. This is one of the hottest trends in social investing - whether you are trading stocks, currency or other funds - allowing investors of all levels to leverage the success of select, experienced traders.

SocialPicks – A community for stock market investors to share investment ideas, exchange market research and track peers’ investment performance. The service also tracks picks by financial “gurus” such as Warren Buffett, professional analysts and financial bloggers so you can see how well your investment perform compared to them.

Covestor – Using this service, you can track what more than 180 proven investors are doing with their own money, choose whom to follow and mirror their trades.

E*Trade – Maybe best known for its baby commercials, the company introduced its Online Investment Community a few months ago, creating a social platform that lets participants tap into the collective knowledge of other E*TRADE customers and validate their investment strategies.

If you’ve been playing your cards right, then maybe a social network exclusively for the wealthy is for you? Affluence.org is an exclusive online social network for the affluent and influential. Its aim is to form a socially conscious, elite and exclusive community that helps wealthy, influential and affluent people make life better for both themselves and others. If you want to be part of the club, you need to have a net worth of more than $1 million or an income of $200,000 a year.

And, if you are looking to “pay it forward” by “giving back,” you should also check out Fundly, a social fundraising site that helps causes accept donations from donors and gain new ones via Facebook, Twitter, LinkedIn and other social channels.

What other social networking resources have you come across during your investment journey?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.