Archive for April, 2014

In a move that has caused more than a bit of unease among many investors, insiders at some of the hottest private and publicly traded Internet companies got rid of substantial personal stock stakes before the March slump began. Many believe that this reveals a lack of confidence in their stock prices and see it as an opportunistic move that, while not particularly illegal, borders on unethical.

“Individuals selling before going public is always a bad sign,” said Mr Sebastian Thomas, a portfolio manager at Allianz Global Investors. “If you believe in the business, why would you take out money at what is presumably a lower valuation in the private market?”

Executives and directors at many large tech companies have been steadily selling shares due to the fact that the lockups which prevented insider sales after their 2012 IPOs has expired.

In the last six weeks shares of these “software as a service” companies have fallen upwards of 45% from their peak.

“It was a great deal for them – they took advantage of a big run-up,” said one tech investor.

Some corporate insiders actually had no discretion over the timing of these transactions as many of the sales were made through prearranged stock trading plans. The fact that the tech stock slump wiped out most of the gains made during the last six months also left share prices at about the level they were selling for during much of the past year.

One of the biggest sellers was the  chief executive of Amazon, Jeff Bezos, who saw his total  sales rise to over $1 billion in the last six months after raising $351 million in February. That’s more than three times the amount he raised in 2013 but, since then, the shares of Amazon have fallen back 11%.

The C00 of Facebook, Sheryl Sandberg, sold over half of her stake in that company’s IPO a little less than two years ago, something that benefited greatly from the steady rise in Facebook’s stock since about the middle of the previous year. Her disposals however began when Facebook’s stock was still at $21.08 because of a prearranged plan in place, meaning that a majority of those sales were made when Facebook’s stock price was well below its $58.33 peak price.

Research firm PrivCo reported that approximately 11% of fundraising rounds for private companies last year had at least some selling by insiders, in comparison to 6% from three years ago.

PrivCo’s Sam Hamedah said that  “The old adage in Silicon Valley? used to be that founders didn’t get to cash out until all investors got to cash out, “ adding that “Fierce competition among venture capitalists to back the hottest companies has made them more willing to countenance insider sales.”

Backers of King Digital Entertainment were among some of the tech insiders to take money out of their company before it went public. King Digital is the maker of the extremely popular Candy Crash Saga game and, before their company went public, $504 million in dividends were paid out to them. Recently shares of their company ended at 22% below that initial IPO price from March.

“It’s a yellow flag with regard to what’s really going on with the company,” said Thomas. “It makes you worry what they are trying to sell to investors.”

Currency Trading: The Basics

Foreign exchange trading has risen dramatically in terms of popularity in recent years. This is due to the huge rewards that can be reaped from the trade of currencies and the democratic nature of the trading. With the right knowledge and some targeted practice, anyone can get involved in the forex market. If you’re considering taking up currency trading in a serious way, it’s important to be aware of the basics before you commit yourself and invest your capital.

What is Forex Trading?

Forex trading involves making trades on the foreign exchange market. The value of currencies is constantly fluctuating, and you can profit from the moment of these currencies. The forex market is the largest financial market currently in operation and trades at a volume of $3.2 trillion on an average day. There are so many buyers and sellers that transaction prices are kept manageable and the market operates 24 hours a day. At any given time around the world, there will be a trade taking place, with the exception of between Friday and Sunday evenings. Currency is traded in lots of various sizes. A ‘micro lot’ is 1,000 units of a particular currency, a ‘mini lot’ is 10,000 units, and a ‘standard lot’ is 100,000 units of your base currency.

The Benefits of Forex Trading

There are many reasons why forex trading is currently so popular, including the fact that almost anyone can get involved as long as they have the correct information and have practiced sufficiently with a demo account. The 24 hour nature of currency trading means that you can be completely in control of when and how to trade. Some traders like to do so on leverage, but this can be risky. Only attempt leverage trading if you know what you’re doing. Forex is inherently accessible and you don’t need a great deal of capital to get started, but it’s important to remember that money is easily lost, so don’t invest anything you can’t afford to lose.

How Does the Trading Work?

Forex trading involves buying one currency and selling another simultaneously. Currencies are always quoted in pairs and the exchange rate is the purchase price between the two currencies. There are many factors that impact on the value of different currencies. One of the biggest is the notion of supply and demand. When more dollars are required, the value of the dollar increases. When there are too many dollars in circulation, the price drops accordingly.

Getting Started

Before you start trading, it’s important to read up on the currency market and make sure you understand the basics of foreign exchange trading. Open a demo account for free with a forex broker and use this opportunity to practice making trades before you invest any real capital. There are plenty of online tools designed to help traders, including currency charts from companies like Currencies Direct. Always keep the potential risks in mind, and if in doubt, seek the services of an independent financial advisor.

UK job seekers received some unexpected good in recent times, as the national unemployment fell to just 7.2% in March. Subsequently, the number of citizens claiming benefits has also fallen considerably, which has prompted leading government officials to forecast an increasingly bright economic future.

Given that the portents for long-term economic growth remain unclear, however, there is still much to be done to ensure that the UK and its residents achieve prosperity. This is especially true in the case of younger job seekers, as youth unemployment remains uncomfortably high despite showcasing tangible signs of improvement.

Taking Control of your Destiny: 3 ways to Improve your Employment Prospects

 

The recent figures at least provide hope for unemployed British citizens, however, and provide a platform from which they can assume control of their job search and seek out viable employment opportunities. Falling unemployment also provides job hunters with motivation to improve their own appeal as candidates for work, which in turn can give them a critical edge in the market place. Consider the following: –

 

  • Target Relevant Skills and Qualifications: The pace of advancement and evolution is more rapid than ever, which means that it is crucial for job seekers to refresh their industry relevant skills. Those who are registered as unemployed my even qualify for funding to complete specific industry courses, especially if it improves their chances of landing long term employment. So be sure to research your area of experience and expertise, and seek out any requisite qualifications as a matter of urgency.

 

  • Broaden your Search for Short Term Work: Temporary work can provide significant financial relief while you are unemployed, so long as you are willing to broaden your search and engage with new or unfamiliar industries. To do this, you may also need to enhance your appeal among a wider range of employers, so be sure to emphasis any transferable experience that you have in the work place. It may also be wise to obtain a free credit check, as having a reputable score will qualify you to work in entry level financial roles.

 

  • Seek out Voluntary Work: Employers often hire individuals based primarily on their attitude, work ethic and defining characteristics, so it is crucial that you sell these through your application, resume and direct communication. Using your time productively while unemployed is of pivotal importance, as it distinguishes you as an organized individual who is committed to find work. You can highlight this by balancing your job search with periods of voluntary work, and subsequently use your up to date resume as a representation of your tenacity and time management skills.

In Summary

 

These steps should help you to find work, even as the level of competition continues to rise in the existing labour market. All that remains is for job seekers to retain control of their finances while they are unemployed, as this means that they do not encounter debt prior to accepting a new position. So while there is nothing wrong with applying for short-term personal loan from a reputable provider, you must take care to ensure that you are able to repay this within the specified time frame.

When it comes to owning mutual funds, nearly half of the households in the United States own them today, according to the Investment Company Institute. Their “2013 Investment Company Fact Book” found that most of these families have their employers to thank, as 72% of households that have invested their money in them have done so through a sponsored retirement program from their employer.

Indeed, one of the mainstays of retirement these days are mutual funds and there is a steadily growing number of funds to choose from.  While waiting back in 1940 there were less than 70 mutual funds to choose from, today there are nearly 7600. Not all of them are available through employer sponsored plans of course, but still there are many options available to employees. The trick is simply knowing which ones give the best returns, something that takes a little bit of research on homework.

If that’s what you’d like to do, you could do worse than taking advice from the CEO of Huber Capital Management, Joe Huber.  For over five years he’s been managing to the number one –ranked mutual funds, including Huber Capital Small Cap Value Fund and Huber Capital Equity Income Fund.

In fact, his investment firm received the strongest performing funds award, the Lipper Industry Award, for the third year in a row this year.

Recently Huber was talking with Tyler Matheson from CNBC  and said that there have been two main schools of thought for the last 80 years when it comes to investing; fundamental analysis and technical analysis. He said that his firm takes a completely different approach by including one more key factor, the psychology of the stock market.

This is an idea that emerged in the late 1960s and became known as “behavioral finance”. The research of two cognitive psychologists, Amos Tversky and Daniel Kahneman, focus on how people make decisions when faced with risky or uncertain situations. Since those early days of behavioral finance study, the theories have become much more elaborate.

Robert Shiller, the Nobel prize-winning economics professor, pointed out in his book “Irrational Exuberance” that market bubbles are often unintentionally amplified by the media.  He said the reason this happens is that news organizations concentrate on things that are already grabbing viewer’s attention.

An example of how the theory of behavioral finance works was offered by Huber when he talked about how uranium prices, at a multi-decade low, are only there due to the negative media brought about in the wake of the Fukushima nuclear plant disaster in Japan in 2011.

The perception that the public has, due to the disaster, doesn’t correlate with how nuclear power and uranium prices will likely be in the future he explained, because “the fact of the matter is that China, South Korea and India haven’t slowed down.” Huber also noted that even the Japanese government has recently expressed the desire to grow nuclear power in the future, something that the average consumer doesn’t realize.

Unfortunately, trends like these emerge because of what are known in behavioral finance circles as “decision flaws”. All consumers, indeed all humans, make these mistakes according to Huber, because most people tend to give too much weight to any recent data that they happened to see on television or in the news.

One of those assumptions, which keeps people from investing their money in nuclear power, is the assumption that the Fukushima disaster would bring it to a complete halt. And it’s by bucking these trends, and not making these assumptions, that Huber has done so well.

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