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Currency Research

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How Stock Market Works - Monkeys and Goats

Found these two fables to explain the stock market to be pretty helpful.

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Where Does Money Come From?

Permit me to issue and control the money of the nation, and I care not who makes the laws.
~ Mayer Anselm Rothschild, Banker

I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
~ Thomas Jefferson

Where does money come from? - As best I can tell, money is literally created from debt. So when a bank is established, it makes a deposit into a Federal reserve bank. The amount they deposit determines how much money the bank can (initially) loan. So if a bank puts $10,000 into the Federal reserve, they can loan something like 10 times that, or $100,000. In other words, the act of depositing into Federal reserve gives them the right to loan $100,000. Where does the extra $90,000 come from?

That's the sleight of hand that no one talks about.

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America Needs a Financial Diet - by Will Marre

Will Marre
Will Marre

Financial Diet by Will Marre - Will Marre believes most American households need to get on a financial diet. A typical American household spends 140% of what it earns, which means a typical household borrows money to support its spending. Obviously, we need to spend less than we earn. It takes discipline and, very likely, investing in yourself -- your main income engine. Borrowing for school (instead of for that HD Plasma TV) makes sense, because that investment in education will likely lead to higher income. Money borrowed for the TV will not. Thinking like that is "production" based because you're invest your money in the production engine--YOU!

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Currency Trading Research

OANDA FXTrade - Introduction to Currency Exchange and the FX Market
Good overview of currency trading.
OANDA FXTrade - Currency Trading, Forex Trading, Online Currency Trading, Forex

I'm worried that the devaluing dollar/inflation will deplete the value of my savings and retirement. So I want to hedge the currency risk with long term currency options (if such a thing exists). Basically, I'm looking for a form of currency insurance. Options may fit the bill.

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LEAPS - Long-term Equity AnticiPation Securities

Symbol Directory - Index Options & LEAPS
LEAPS: Options for the Long Term

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Exchange Traded Funds (ETF) - Research

I'm looking for ways to avoid expenses associated with index mutual funds and found Exchange Traded Funds (ETFs). Notes below.

ETF Strategies - ETFs offer an array of investing opportunities - they can be optioned, shorted, hedged, and bundled. Still, most individual investors should stick to a few simple ETF strategies.

ETFs can be sold short, even on a downtick. (Thanks to a regulation many feel is out-of-date, regular stocks cannot be shorted if the last trade price is lower than the next-to-last trade price.)

Alternative to Money Market fund is a short-duration bond ETFs. These investments often pay double or triple money-market yields. However, don't blow your gains on brokerage fees. Although some money market funds make investors pay early withdrawal penalties, brokerage fees to sell your bond ETFs could run even higher. But if you're just looking for something less risky than stocks yet still fairly secure and are willing to commit for a while, you might appreciate their higher returns.

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Nassim Nicholas Taleb - Investment Advice

In Fooled by Randomness, Nassim Nicholas Taleb teases us with the idea that we can take advantage of black swan events in our life and in our investments. I say tease because he's very short (pardon pun) on specifics in my reading. I want to try to flesh out the ideas as best I can.

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Fooled by Randomness - by Nassim Nicholas Taleb

Fooled by Randomness by Nassim Taleb - Nassim Nicholas Taleb has written a mind-blowing book! Totally contrarian and terrifically clear in explaining the fallacies followed by journalist, investors, traders and, sadly, many scientists.

Example: Failing to notice the difference between probability and expectation, famous commodity trader/investor Jim Rogers made this astounding statement.

"I don't buy options....90 percent of all long options lost money." ~ Jim Rogers

Rogers confused probability with expectation.

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PEG Ratio - Price/Earnings to Growth

What does PEG mean? A PEG ratio is used to determine a stock's value while taking into account earnings growth. The calculation is as follows:

PEG is a widely used indicator of a stock's potential value. It is favored by many over the price/earnings ratio because it also accounts for growth. Similar to the P/E ratio, a lower PEG means that the stock is more undervalued.

Keep in mind that the numbers used are projected numbers and, therefore, less accurate. Also, there are many variations using earnings from different time periods (i.e. one year vs five year). Be sure to know the exact definition your source is using.

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Jim Cramer's Mad Money - Stock Worksheet

Jim Cramer's Mad Money
Watch TV, Get Rich

Jim Cramer Mad Money Stock Worksheet - It's embarrassing to admit, but I really get a kick out of Jim Cramer. While he's totally nuts on his CNBC TV show, Mad Money, he was much saner on his Real Money radio program. Unfortunately, the radio program is no longer on the air, though archives exist. In its place is a very good video on demand program where Cramer is interviewed by a columnist from his own TheStreet.com. Very insightful stuff with a reasonable delivery.

But about Cramer's Stock Worksheet in Jim Cramer's Mad Money: Watch TV, Get Rich. The book is short (less than 230 pages) and perhaps the best part is the Stock Worksheet, which outlines his approach to researching stocks -- or as he likes to refer to it, The Homework.

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Suze Orman Will and Trust Kit

Suze Orman Will and Trust Kit - Here's a good intro to will, estate and trust law. Still should have a lawyer review your documents to be safe. I found it very easy to go through and understand. She has a lawyer narrate much of the text and provides excellent summaries of the main points to consider when putting together a will and living trust.

Includes all necessary forms, and seems to perform online updates. For a relatively simple estate, I think the Suze Orman Will and Trust Kit is a winner.

Suze Orman Will & Trust Kit (CD-ROM)
*NEW Suze Orman Will & Trust Kit Online Version (CD-ROM)

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Jeremy Siegel's "Noisy Market" Hypothesis

Below is Siegel's article, Noisy Market Hypothesis. I've highlighted many of the important points I found. Hope to discuss further.

The 'Noisy Market' Hypothesis


Although the price-weighted Dow Jones Industrial Average approached its all-time high in early May, the large capitalization-weighted indexes—such as the S&P 500 or the Russell 3000—in which most investors hold their "indexed" investments are still substantially below their tech-bloated peaks reached in March 2000. Those of us who have linked our portfolio returns to these popular indexes wonder whether there is a better way to capture the market's return without enduring the wild swings that characterized the last bubble.

Don't get me wrong. Capitalization-weighted indexation has been one of the great innovations in the last quarter-century. It has allowed millions of investors to capture the return on the market at a very small cost, and has outperformed most actively managed mutual funds. The $5 trillion invested in portfolios tracking cap-weighted indexes speaks to its popularity.

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