The Bull Hunters Guide

Recently in this blog, we’ve been discussing the importance of diversifying your knowledge of investment opportunities beyond just the stock market, such as last weeks article on Convertible Securities. In doing so, you should be able to make more intelligent decisions about where to put your money, no matter what kind of turn the market takes. In today’s times, this is obviously a very useful skill to have.

Discussing Corporate Bonds

Today we’re going to discuss corporate bonds. Odds are, like most people, you’ve dealt with a bank before in the past. Whether it was to get a mortgage to buy a house, or a loan to purchase a car, you borrowed money from them and then had to pay it back over the course of time by a predetermined date, along with a premium called interest. When you purchase a corporate bond, you’re doing the exact same thing with a corporation, only you’re acting as the lender.

Whatever cash value you purchase the bond for, this cash is then distributed to the corporation so that they can put it to use just as you would a loan. In return, they must repay you on a pre-determined date called the date of “maturity”. But of course, you would need a greater incentive than that to loan your money. Just like you pay interest, the corporate you buy a bond from will then pay you interest at periodic intervals until the bond is paid in full.

Good Continuous Income

Corporate bonds aren’t the greatest way to earn a lot of money in a flash, because even when they offer a decent yield, it tends to be spread out over time. However, this very feature does make them a really good source of continuous investment income. Retirees might take note of this and use corporate bonds to their unique advantage.

If you’re interested in buying corporate bonds, this can easily be done at just about any broker in the game, as well as at many banks. Unlike taking out a loan, you’ll want to buy when the interest rates are at their highest, though.

See you next week for part 6 of Investments.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009

Social Bookmarks:

Last week was the first week in my new Investment Series, and we kicked it off with a post on Closed End Funds.

We’ve spent a lot of time in the Bullhunter blog talking about all the different types of Investment Strategies that every investor should at least know about. The idea behind this is to expand your concept of investing beyond just the stock market, and at the same time, gain a greater understanding of that market by analyzing its competitors and alternatives.

Investing In Collectibles

In this particular entry, we’re going to talk about something of significant interest to many people, which is investing in collectibles. This is something that’s not only potentially profitable, but also a lot of fun for many people because it entails the acquisition of physical objects rather than electronic shares.

Simply put, investing in collectibles is the process of putting your money into the acquisition of some physical goods that are predicted to increase in value over time. Then, at a later date, you’ll be able to sell them for more than you paid for them.

Whether you’re investing in fine art, stamps, or antiques, there is one clear advantage here, which is that the value of these objects will always be tied to inflation. Therefore, unless an object actually depreciates in value, you’ll always be getting, at the very least, a fair price.

Disadvantages Of Collectible Investment

That said, there are a number of disadvantages as well. The most obvious is that you don’t “earn interest” on collectible investments, and you can’t collect dividends on them either. There’s also the matter that you’ll need somewhere to store these physical objects which can be a big expenditure in and of itself. Furthermore, there is always the potential that these items could be damaged by various circumstances, and if this happens, your investments could be totally destroyed.

If you’re going to make an Investment in collectibles, be sure that you know all the risks and benefits that are present. It can be a very rewarding experience, if you know what you’re getting into.

See you next week for part 3 of Investments.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2009

Social Bookmarks:

Lately, we’ve been talking about the Federal Reserve. In particular, we’ve discussed how it’s set up as a governing body, and why knowing about them should be of real interest to each conscientious investor out there. In this entry, however, we’re going to begin to discuss the particular actions that are said to be the duties and obligations of the Federal Reserve. In other words, their very reason for existence.

Balancing the Economy

In the Federal Reserve’s own words, their job is to “promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long term interest rates”. What this means, essentially, is that their main mission is to regulate the banking system itself in order to ensure that the economy remains fair, balanced, and healthy. They prevent interest rates from climbing too quickly or moving too far out of accordance with how much people are actually earning.

( And during a Global Economic Meltdown, they seem to be running for the hills! )

The Federal Reserve also acts as a bank that other banks can make the use of. Just as you make use of your local bank, odds are that your local bank then makes use of the Federal Reserve in order to conduct the exact same type of business: making withdrawals, making deposits, and sometimes even taking out loans.

United States Treasury Account

Another distinguishing feature is that they also act as a bank to the government itself. The United States Treasury has an account with the Federal Reserve for the business of handling money transfers such as income from taxes, or making necessary government payments. In addition, the Federal Reserve also handles the issuing and redemption of government securities such as savings bonds and other such securities that you might be familiar with as an investor.

In addition, they issue all of the paper and coin currency that most of us make use of every single day. As you can see, if it’s related to the management and transfer of money, the Federal Reserve has their hand in it at some point along the process.

Next time, we’re going to discuss one of the Federal Reserve’s most important functions: the regulation of monetary policy.

See you next week for part 4 of Federal Reserve.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

Social Bookmarks:

As we mentioned last time, we’re going to talk about the various kinds of scams that you might run into the world of investing; scams designed to separate you from your hard earned cash with false promises. The internet has given the people who perpetrate these scams a new lease on life by providing them with the anonymity needed to operate in secret and the technological means to target a much wider number of people than ever before.

However, just because the technology has advanced, the basic scams themselves are still fairly old. That’s the one thing that we have going for us when it comes to spotting investment scams: there are really only a few basic types of scam out there, and they just tend to get repeated over and over. Here are the most frequently seen:

The Pyramid Scheme

This is a scheme wherein money is solicited from investors in order to pay off previous investors who are now expecting to receive a return. Of course, such a scheme will eventually implode when the money coming in from new investors is insufficient to cover what is owed to the old investors.

Pump and Dump

This is a practical wherein a group of people purchase a stock, almost at random. They buy a large number of shares, and then they go about recommending that stock to as many as they can, usually thousands of other investors. When those people buy the stock, there is a sudden spike in the value of the stock. The duped investors will lose when the spike is followed by the inevitable fall, but those in the know will sell their holdings during the high point of the stock, thus making off with lots of profit.

In general, one should also beware of trades that take place in off shore accounts, because this is usually done to avoid operating in the jurisdiction of local law enforcement. They almost always are looking to hide something.

Next time, we’ll begin to take a look at some of the schemes in greater detail, beginning with the bulletin board scheme.

See you next week for part 3 of Investment Scams.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

Social Bookmarks:

Over the last several entries in this blog, our topic of focus has been short selling. We’ve covered what short selling is, when it might be useful to you as an investor, how to conduct the transaction. We also discussed what risks are involved in the trade, and the lengths that some individuals go to in order to use short selling in a dastardly and destructive manner that goes a long way towards earning it a terrible reputation. In this entry, we’re going to do a brief review of what we’ve discussed in order to put a capstone on the short selling subject once and for all before we move on to a new topic next time.

Summing Up Short Selling

To reiterate, short selling is when one investor sells shares that he or she does not actually own, on the agreement that he or she will actually buy the shares at a later date. They make money on the transaction if the value of the stock falls in the interim, enabling them to buy it at a lower price than they sold it for. Of course, when the shorted share actually increases in value, the short seller loses money.

That means that short selling is a very high-risk transaction. On the one hand, the value of a stock can’t go below zero, so the amount that you stand to earn is limited, but there is no ceiling to how high the value of the stock can rise, so the amount you could lose on the transaction is theoretically limitless.

Many people consider short selling to be a dishonest or unethical approach to investing because of the necessity of “voting against the home team” that comes with it. Despite the criticisms, however, short selling is definitely here to stay, so it pays to know all that you can about it. In doing so, you can add it to your stable of strategies and use it in a responsible way that brings value to your portfolio.

Thank you for joining me for Short Selling you next time when we begin an all new discussion.

See you next week for part 1 of Investment Scams.

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2008

Social Bookmarks: