How the Stock Market Works – Beginners

The stock market has been proven to be one of the best ways to become a financial success. Modern technology allows us to access the market a lot faster and have the opportunity to gain information about trades, stocks and companies instantly. With all this information, it might seem as if trading stock is easy, but one of the biggest mistakes people make at first is not learning what the stock market is and how it works.

This is the first step to finding out how you can become a stock trader and what it actually means to trade. To understand the basics of the stock market, we need to break it down and make it as simple as possible. Therefore, we’ll use simple examples and keep things on a smaller scale, allowing you as a beginner to understand exactly what the trading process is all about.

What are Stocks?

Stocks are shares of a company that you can own, meaning you’ll own a share of the company. This doesn’t mean you become part of the company or anything, but rather that you are investing your money in the company with the goal that it would become more valuable.

A simple example of this would be buying a piece of cake, it might be a tiny slice, but you own part of that cake. Now to get that slice, you need to be linked to a “store”, which in the trading world is known as a broker that’s available via telephone or the more popular option in today’s internet driven world is a trading website or app.

Why Own Stocks?

Doing your research on companies is important as it provides information about the company, where they’re headed and the future value of the company. The idea is to make money, “buy low, sell high”, meaning your slice of cake has to increase in value before it becomes worth selling.

Therefore, it’s important to research and determine whether the value would increase over time. Of course, it’s completely possible for a much higher price in a few weeks, months or years from now. Perhaps the cake is something new and expected to become very popular within the next few months, or it’s becoming rare, and people are prepared to pay more for it sometime soon.
The fact is, there are many reasons you’d want to purchase part of a company, but at the same time, there are just as many reasons (if not more) why the value of the stock could decrease.

Why Sell Stocks?

Owning a share doesn’t give you anything but an increase or decrease in value, meaning you can’t use the share to pay for your bills or purchase anything. However, you can sell the stock for a profit and use the funds you receive to pay for things or buy into a new company.

There are many reasons to sell a stock, not only relating to the need for funds, but also the future of the stock you own. For example, you’d sell a stock if the value isn’t expected to increase further or you think it might go down due to recent occurrences within the company.

Is Bitcoin Really the Future of Money?

The craze around the most popular cryptocurrency has introduced just about everyone to an entirely new concept for anything from earning through to digital money and even blockchain. Over the last ten years, the currency has shown incredible growth, making just about everyone want to get in on the huge earning potential by mining or by taking advantage of the currency as an investment.

If you follow social media, you would’ve seen some posts about people turning into millions from small investments, even teenagers becoming instant millions by investing money they got from their parents for birthdays.

There’s no doubt about it, the huge increase in value around Bitcoin has made it amazingly popular, especially with the huge price spikes in the last few years. First, it started at less than $0.10 per coin, and by the time most have heard about the coin, it was close to the $20,000 mark, making instant millionaires out of everyone who was brave enough to invest a $100 or more. Not long off to the massive price increase, the coin had a rather serious dip, causing the currency to decrease by more than 50%. However, it still remains well over $5,000, making it the most valuable currency in the world.

As some of you would know, the currency was created to cut out all the middlemen, meaning banks and other financial institutes that control our money and benefit from it. With blockchain technology and a decentralised platform, the Bitcoin system works only with the users involved with it, which is simply the basics of it.

With everything in place, will Bitcoin really become the next international currency?

When we look at the overall state of Bitcoin, we can see that it’s becoming less and less popular with businesses around the world, especially after the major dip in value not so long ago. It’s also important to remember that the value of Bitcoin isn’t regulated, and it can be extremely volatile, making it a difficult currency to work with, especially when it comes to businesses.

Since the major dip in value, more and more businesses that used to accept Bitcoin as a payment option now avoid it, which isn’t just related to the value of the currency, but the scams around it as well. If you keep up with Bitcoin news, you would’ve heard about many different scams, people losing thousands by purchasing fake coins.

For these reasons and many other economical reasons, it’s unlikely that the current state of Bitcoin would become the standard international currency. Sure, there are still many international retailers and online stores accepting Bitcoin, but it’s become harder to use the currency, due to the scammers.

Bitcoin is completely anonymous, allowing scammers to get away with stealing much easier, especially for people who aren’t clued up with hacking and tracking someone down. Even then, Bitcoin scammers aren’t easy to track down, making the currency risky for the everyday user.

Kevin Muir Alerts We only a Few Steps Away from Dot-Con Stupidity

We not at the “2000 levels of stupidity yet, but we are getting really close according to Kevin Muir. Business Week recently published that Muir said that darling of the bubble days, Sun was priced way beyond perfection, it was priced so far beyond it that is was head-shakenly-stupid. In 2009 after the stock reached $64, McNealy predicted that the stock would drop down below single digits before it was bought at -0.25% by Oracle for a sum of $7.4 billion. So, the big question is, will there be an overheating period for the stock market like it was back in the heydays of the dot-com days, and on this Muir says it is not time to sound the alarm although that day is moving closer.

Muir said that it is not near 2000 yet although he needs to acknowledge the numbers that never lies and by looking at the metric, we are but a few tricks away from matching the stupidity of the Dot-Con days.

Kevin Muir is a market strategist at East West Investment Management

Muir revealed in the April publication of Business week that the quote he loves the most is that of Scott McNealy on the Bubble and Regulation, he feels it shows how absurd the SUN Microsystems was evaluated at the high of the Dot-Con bubble, it was the time when trading was all about the system beasts.

The computers were the best in power, compared to the behemoths, Windows PCs were nothing they were toys. The SUN microsystem everyone believed would rule the world, the company priced for perfection was that of Scotty Mc Nealy, or as Muir now puts it, it was priced so far beyond perfection that it was nothing but stupid and insane.

Twenty-Eight Trades at Fifteen Time Revenue

He brings up Scott’s tweet as a reminder at just how absurd valuations were at the time. Twenty-nine stocks at the time traded above ten times their revenue during the dot-com mania, today Facebook is one of the 28 that traded at more than fifteen-time revenue, and that is actually over 50% above what the Sun Micro did during its peak.

What is ironic is that Facebook today resides at the old headquarters of the Sun. Muir says he can’t say that the social media giant will follow the same path but what he can acknowledge is that tons of investors will at some point in the future. Jesse Felder agrees with Muir and says that the stock market, today is as stupid and crazy as it was during the peak of the Dot-Com mania.

Will Google Refuse Advertising?

There is quite a bit of pressure on Google from MPs, UK Music and FA to refuse Viagogo advertising, so the big question is if the giant would consider accepting cash. Viagogo pays cash to have their ticket website at the highest search ranking, and several MPs, the trade body of UK Music and even a signed letter by the Football Association, is part of the urge directed at Google.

Paid advertising is how Google makes money and where this comes in is easier to explain by going back to where it all started. The letter recently sent to the senior executives of Google was first shown to the Guardian who shared that Viagogo’s notoriety in Google search rankings guides consumers to purchase theatre tickets, sports and music tickets that could be invalid. The signatories also included concerns that some of the fans were directed to the site, it’s a common channel for vendors to resell tickets with a massive markup and this takes place even while there are still tickets available elsewhere.

Google is known for their strict rules especially when it comes to search engine optimisation and may be in breach of its own set of rules and guidelines, which strictly demand that businesses who purchase prominence in Google search results via pay-per-click AdWords service must comply with all local and international laws. The letter mentions that legal proceeding must be brought against Google as the worlds most trusted brand for accepting cash in promoting the least trusted of them all. To Google obviously, Viagogo is a valuable client who spends considerable amounts on yearly paid advertising, and on the other side, Google has a responsibility to protect consumers.

Viagogo Facing Criticism

Viagogo, a UK website has also faced a load of criticism for its contentious business practices, it originates 75% of its site traffic from referrals via the search engine according to SimilaWeb data analysis. Sharon Hodgson, Labour MP, was one of the signatories of the letter explained that she heard numerous times from customers who were distressed by Viagogo. They were guided to the website due to its prominent position as they placed by Google as their too search. It is wrong that such a website as Google, who are trusted by thousands of online consumers direct these online clients to the most untrustworthy site on the web. Google’s main objective should be to protect consumers and to take all the necessary action to guarantee their safety, and many are looking forward to working with Google to correct this in the near future.

Only a few months ago, actually, it was in February of 2018 a new certification system was launched by Google, a system for ticket resellers with the objective to offer consumers a clearer form of information. What the signers of the letter now makes clear is that Google needs to ban the use of AdWords from Viagogo, it enables companies to leapfrog to the top, to enjoy top results from searches and it is all possible in exchange for a fee, the fee is a paid for link every time a searcher clicks on it. All eyes on now on Google and how it will handle the situation.

Say No to Timeshares

For the amateur traveler, the idea of having a timeshare is exciting and new. You are promised great prices for accommodation at top rated resorts every time you go on vacation, as well as a gift for just listening to the pitch. If you are smart, you would sit through the pitch, take your gift and head in the opposite direction. If you want to be fair and yet even smarter, walk away from anyone who offers you anything for free, there is usually a catch that you don’t want to be a part of.

I was a victim of this earlier this year when I went to the Bahamas on vacation for only 3 days and 2 nights. There I was, relaxing on the beach with my cousin on the first day, and approached by a man who was selling tonnes of services. He offered us a free breakfast and dinner, all we had to do was show up at a resort. We spent close to three hours just sitting and talking to someone before we got our breakfast, only to realize they were trying to sell us a timeshare package. Imagine how annoyed we were to waste half the day and our time was already limited. They didn’t even want us to leave, we had to fight our way to get out of there. If someone offers you something like this, be aware, it may be someone who is pitching timeshares and you don’t want to waste your vacation listening to what they have to offer, no matter how good the free gift may seem.

Timeshares are pitched as a dream vacation and a once in a lifetime opportunity that you don’t want to miss. While the majority of offers are legitimate and you do have genuine deals, in the long run, you would realize that owning a timeshare is not worth it and by the time you get back home from your vacation, it would be too late to stop the transaction. A timeshare allows you to use property for a certain part of the year, and the length depends on how much shares you own. So, for instance, if you own 2 shares out of 52, then you can stay at the property for 2 weeks in the year (a year has 52 sometimes 53 weeks). Whoever is selling you the timeshare may inform you of the cost to purchase the share but they may fail to tell you about all the other fees and charges or they may have a clause in the contract where fees are subject to change.

Usually, with timeshares, you are charged a yearly maintenance fee, property tax, utilities and other fees. Sometimes you may think it is affordable because you pay an initial deposit and maybe a small monthly fee. However, did you consider the hidden costs such as airfare travel to get to the resort every year? It also limits where you spend your vacation and you may have to book your slot months in advance. What if you decide to cancel your vacation or visit a different country? You would still be stuck paying for your share year after year. Trust me, you would rather use that money on an exotic vacation somewhere else. If you do sit through one of these pitches, never give them your credit card information.

The Low-Down on Crude Oil

The Low-Down on Crude Oil

The Low-Down on Crude Oil

Crude Oil prices are controlled by the Organization of Petroleum Exporting Countries (OPEC), also referred to as the oil cartel, made up of 15 oil producing countries, collaboratively controlling 80% of the world’s proven oil reserves and 61% of its exports. The organisation was originally founded by Iraq, Iran, Kuwait, Saudi Arabia and Venezuela who each signed an agreement in 1960 to unify petroleum policies and stabilize the oil market, ensuring that consumers are constantly supplied and producers have a steady and fair return on investments.

Crude oil is refined to make jet fuel and gasoline which accounts for 96% of the world’s transportation. When the price of crude oil is high, the price of natural gas is also high which is used to fuel 73% of residential and commercial production. Higher prices mean higher fuel costs and an increase in inflation since food prices are also determined by transportation costs.

On the opposite end though, low crude oil prices can destabilize countries that heavily depend on exporting their crude oil production, incurring large budget deficits and high unemployment rates.Once income from crude oil, also known as petrodollars, are flowing, it can boost government expenditure and generate investments, thus stabilizing the economy and creating a positive flow in equity markets and oil stocks, globally.

All things being equal, the cheaper the production, the cheaper the price to consumers. Technically, this is not the case with crude oil. While production can cost as low as $10 a barrel, there is the added cost of refining it and distribution is also a factor. For instance, in the United States, refineries operate at 62% and since the great depression of 2009, there are 9 less refineries today, accounting for the decrease in oil distribution.

The demand for oil will be high for the foreseeable future and high oil prices mean increased employment. Lowering oil prices would be unconventional, even causing countries like the United States to suffer in terms of growth. The price of oil today is at $73 per barrel and it is forecasted to increase over the next few years. In 2008, it crossed over $100 a barrel but fell to an all-time low in January of 2009 to $59 a barrel. It picked up again in 2011 but it was cut by almost 50% in 2015 when US increased production of shale oil, the alternative to crude oil.

This fluctuation of oil prices should put oil producing countries into perspective, and more research and development should be done on alternative forms and renewable energy. Oil reserves are non-renewable and are being depleted at increasingly fast rates. Finding other forms of income to keep economies stable are imperative to developing nations. High rates of unemployment lead to increased crime rates and an increase in poverty. The price of crude oil affects everyone, individuals and nations alike, but the higher the price of a barrel, the better it is for growth and development of a country, which will trickle down to benefit its citizens.

Cryptocurrency 10 years after Bitcoin

Cryptocurrency 10 years after Bitcoin

Cryptocurrency 10 years after BitcoinThe value of money is controlled by the Central Bank, you can physically see it and hold it and you can exchange it for services and commodities. Even though you can also send and receive it digitally, the fact remains that it is physical currency. Bitcoin, originally meant to be a peer-to-peer electronic cash system to prevent double spending, and not currency per say, was launched in late 2008, early 2009, by its inventor Satoshi Nakamoto, though not his real name. Bitcoin is not controlled by any entity or server, it does not have a physical form so you cannot hold it or see it, but it can be exchanged for goods and services digitally. It is digital currency and it is the world’s first form of cryptocurrency.

The turn of the 21st century brought the new age of digitalizing every aspect you can think of, seeking new ways to become untraceable. Cryptocurrency created just that. An anonymous way to transact business, virtually untraceable in most cases due to its uncrackable code, and secure enough that it may be the new future for money. The blockchain technology used for cryptocurrency transactions is basically a digital ledger which cannot be hacked, has no single point of failure and it is completely transparent. The question is, how is blockchain so secure in a world where hacking is becoming an increasingly popular career choice for most, bringing down entire economies at times?

Blockchain technology uses cryptography keys which creates your digital signature in the form of a private key that identifies with you, allowing you to digitally sign and authorize transactions, as well as a public key which does not give away your identity, only pointing the person you are conducting the transaction with to the address of your wallet where your cryptocurrency is stored, to be used for completing the transaction. Of course, if anyone has access to both your keys, then they can access all your digital assets, so private keys are meant to be kept safely.  Once a transaction is completed, it is added to the digital ledger of the blockchain and includes a digital signature, a public key, a unique ID and a timestamp. The public key is always random and it changes each time you do a transaction, making your identity virtually untraceable.

Transacting currency digitally is becoming progressively popular where persons now pay bills directly from their bank accounts, purchase commodities and transfer funds, all in the digital realm. With cryptocurrency, there is no middle man, that is, the banks. You are responsible for your own assets and you transact business with the person directly, albeit, without knowing who exactly you are transacting with. Nevertheless, blockchain technology would reduce costs and boost efficiency dramatically, and may even be the answer to reducing global poverty. All transactions are recorded and cannot be duplicated or changed since it is broadcasted to every node, thus lowering the rate of cyber-fraud and hacking. A cashless society is emerging and it all started from the Bitcoin invention a decade ago.

Bartering System to Cryptocurrency

Bartering System to Cryptocurrency

Bartering System to CryptocurrencyTrading first existed as bartering, where goods were exchanged for other commodities, with no significant value equivalence, merely for purposes of exchanging based on need. For instance, if I was a farmer and wanted to eat fish, I would visit a fisherman and exchange some of my provisions for some of his fish. Then man started mining metals. Metals were considered valuable due to its scarcity and was first traded in its raw form.

Eventually, in the third millennium BC, gold and silver were traded as currency and by the 7th century, the first mint was built in Turkey, to produce coins. Other nations followed suit and by the 10th century China began printing paper money causing inflation to skyrocket, and by the 15th century, paper money was abolished during the Ming dynasty. By the 16th to the 17th century, shells were minted as currency but by the 17th century, bank notes started to become the new way to trade, causing bankruptcy in addition to inflation.

The first banking systems were the temples that existed in the 18th century BC. Preciousmetals were stored in the temples because temples represented a sacred place and it meant to deter thieves from stealing. Throughout the 19th and the 20th centuries, money existed as gold and silver coins. When governments took over the banking responsibilities, paper money was used and coins were manufactured from other metals such as copper. The value of the paper money was determined by the Government and eventually, banking institutions started forming.

Banks looked for more innovative ways to carry around currency and eventually, checks were created. Customers could write large sums of money on these paper forms which acted as a promissory note for the exchange of money at banks. Then came the electronic age. Customers would be able to access their monetary assets held at the banks, via electronic machines that operated 24/7 once they had an access card. Telebanking also became famous whereby consumers can transfer funds, pay bills and find out the balance of their accounts, all through a telephone.Soon enough, Internet banking and online transactions became possible. Money could be transferred digitally to anywhere in the world but you could still physically withdraw money from your bank accounts.

In 2008 to 2009, the world’s first digital currency was created and called Bitcoin. This digital money could not be seen physically and could only be transferred via the Internet. Its value then was $0 but today it is worth over $6800 and growing. Bitcoin gave rise to cryptocurrency, known as the digital gold. There are more than 10 types of cryptocurrencies existing today, Bitcoin of course, being the most valuable. Unlike regular currency, banking systems do not exist for cryptocurrency, yet it is secure and maybe more valuable, created out of code and using blockchain technology.

Cryptocurrency would change the future of money which is constantly being devalued every day. The currency is still new but it is steadily gaining popularity and value. Sometime in the future, we may have a 100% paperless currency.

Air Transportation Prices Derailed

Air Transportation Prices Derailed

Air Transportation Prices Derailed

Air travel is increasingly becoming more and more expensive with less and less perks. Have you ever noticed that the taxes and fees cost twice as much as the actual cost of air transportation? Look at your travel receipt and you would know what I am talking about. It seems very unfair, right? What about the decline of the all-inclusive seat, that is, a free meal and 2 pieces of checked luggage included? Not long ago, you would be given an allowance for 2 pieces of 70 pounds each, luggage allowance. Present day, you are limited to 50 pounds, if flying economy class, and you may even have to pay for each checked luggage. Granted, 70 pounds may be too heavy to lift for the average person, but packing a suitcase with only 50 pounds can be hurtful when you take that long awaited vacation only to realize you can’t return home with the entire souvenir store in tow.

Fuel prices, competition, demand and supply are the four major factors that influenced these changes, with the first two factors accounting for the most damage theoretically. Every time a price fluctuates higher, airlines pass on the bill to consumers. Many articles will tell you that airline companies barely make any profit and some airlines use this fact to cram in more seats, destroying what little elbow room you once enjoyed before. The truth of the matter is, some airlines have indeed gone bankrupt while others have been merged, causing a lack of competition and incentive to gain sales. With two, sometimes three major airlines in a developed country and millions of consumers flying every day, airlines can charge as much as they please because options are limited to us, as customers.

Let’s put the fees into perspective. To fly a plane, you need to have fuel so you have the cost of fuel, you also need at least 2 to 3 pilots depending on the size of the plane and the length of your journey. Air stewards are also a must and for long haul travel and international flights, you would have food, drinks and snacks onboard. You would also have personnel working in varying positions, such as administration, IT, accounting, baggage handlers, mechanics and customer service representatives. Then you have the fees and taxes that are mandatory such as security, transportation tax, customs fees, immigration fees, international tax, facility fee or basically parking fee for using the airport, to name a few. Each fee may seem minimal when looked at it individually, but if you really sit and add them up together, they amount to a lot more than you would have bargained for.

Prices for air transportation would no longer be as low as before, only fluctuating based on the load factor, that is, amount of person needed to fill the plane. Airlines would lower prices to fill planes but this only happens when both demand and load factor are low. Knowing when to get cheap airfare is rather difficult but you may strike luck if you are flexible when you travel. In reality, business travellers and leisure travellers are the two types of customers that cause prices to fluctuate.



5 Ways to Improve Your Finances

It is never easy achieving financial goals and are ones that do not happen overnight. Improving your finances takes dedication, control and understanding the steps you need to take to avoid spending on things that are recreational or not needed. However, there are some steps that you can take to do just that and here are five of them.

1. Make Savings Automated

Many times it can be difficult to put money away for savings when you live from paycheck to paycheck. However, you can save if you make saving money a priority, as it can make you live with the money you do have. Automated savings can help you, as by setting up transfers that are automated you can set aside an amount that will be taken out every paycheck you get. There are even automated savings applications such as Digit that can make the process easier. Automated bill payments are also a good idea in order to make sure you pay on time and keep a healthy credit score.

2. Lose Recurring Expenses

One of the easier things you can do to improve your finances is rid yourself of recurring monthly expenses. Look at things such as your cable bill, cell phone bill, streaming service, even a gym membership you do not use often. Look into lowing cost plans for such thing as cable and cell phone serviced and get rid of monthly subscriptions you do not really need. Look at recurring expenses and what you can do without and they will add up when you ditch them and help you save more money.

3. Maybe a New Bank is in the Cards

Banks often charge hefty fees, especially when you do not use your banks ATM and for overdrafts. Look at the fees that are associated with your bank account and stack them up against what others will charge. Checking fees with different banks can help you find the one that has the lowest fees and if you do have them incurred it will not cost you an arm and a leg.

4. Insurance Issues

Many times people look for the best insurance and then after purchasing a policy, does not matter what it is for, they forget about it. Insurance rates will change and if you shop around you can find a better price for what you need covered. You can also save some money if you raise the deductible as well or getting rid of coverage levels. In this case you may have to pay a little bit more for coverage, but if you have a very clean driving record and no problems with your home in homeowner’s insurance in the long-run you can save a significant amount of money.

5. Declutter

This can be the easiest thing to do to save money, as getting rid of items you don’t use can help you out. You can sell items online and for things that need upkeep you can get rid of that cost as well. From clothing to old video games to CD’s and toys decluttering what you have will not only save money, but you can make some as well. On top of that your significant other will likely be a happy camper with a little decluttering.