Personal Investing Advice

What Does a Futures Broker Do?

Futures are also sometimes called commodities. They are traded on the stock exchange in the form of agreements made by the buyer to purchase a commodity at some date in the future for today’s price. The buyer is assuming that the price of the commodity will be higher on that future date, meaning that their purchase will be below market, and if then sold on that date, he will make an immediate profit. Futures brokers execute the buy and sell orders placed by clients.

Futures are not the same thing as options. As the name implies, options are instruments that give the client the option to purchase at a predetermined price. Futures, on the other hand, are obligations, and the buyer must fulfill that obligation. His broker may liquidate his position prior to that date, if the client so desires, by selling the client’s position to someone else. If the client chooses to hold his investment, the broker will finalize the trade.

A futures broker may or may not have a seat on the trading floor. If he does not, he will utilize the services of the broker in his firm who does have a seat. Information received from the futures broker will be executed by his co-worker who is licensed to trade “in the pit” on the stock exchange.

A discount futures broker will execute the orders received from a client. Few discount brokers include any other services for the client, at least without a separate fee. Those who use a discount broker will seldom have access to any market research or advice that is tailored to the client’s situation. Instead, most discount brokers merely buy or sell what is requested.

You can trade with a futures broker online or at a traditional brokerage firm. Typically, the online traders will charge lower fees, but their support services may be more limited. It would be beneficial for those considering the use of an online se Read the rest of this entry »

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What is a Securities Broker?

What most people refer to as a stock broker is basically a securities broker. The broker works with clients, which may be individuals, pension funds, or other institutions to buy and sell stocks, mutual funds, and bonds. For his services, the securities broker receives a commission based on the amount of the transaction.

A full service securities broker will work with clients to determine how much they have available to invest and what their goals and needs are. He will usually recommend certain stocks, but get the approval of the client before purchasing them.

Securities brokers are often involved in the IPO, or initial public offering, of a new company or one that has heretofore been privately held. The Securities and Exchange Commission has very strict guidelines for stock that is to be sold to the general public, and the services of a securities broker is often of great benefit in these cases.

When searching for a securities broker, prospective clients should make sure that they are registered with the Financial Industry Regulatory Authority, also known as FINRA. The firm for which they work must also be registered, and the broker must have worked there for a minimum of 4 months as well as pass the Series 7 exam, or the General Securities Registered Representative Exam. Many individual states also require further licensing, such as the Uniform Securities Exam.

Securities brokers who work for a traditional brokerage firm are typically compensated by commission. In the past, some unscrupulous brokers have increased their earnings by “flipping” stocks, or buying and selling more frequently than is needed. Those who work for online discount brokerage firms are usually compensated on a flat salary basis, regardless of the activity in their clients’ portfolios.

A securities broker may specialize in one aspect of investi Read the rest of this entry »

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Avoid Losing Money on Slow Investments

One investment that dragged us down was the rice trading. I cited in my previous article about lumber trading, this time we dropped off our business in rice trading like a hot potato.

Like wood, rice also take so much space, time, money and effort. Aside from being the number one favorite of rats and ants, the quality of rice easily deteriorates if it is exposed, more so when it gets wet.

For every pound of rice, we get only like 15 to 20 cents, but like wood, it does not bring your money’s worth. You also get to meet problems in the shipment because it would take a number of laborers to bring the hundreds of sacks from the boat to the cargo truck. Like what I’ve shared on the lumber business, you can’t also compete with big businessmen as they buy in volumes for their warehouses. And some outlets that you have already contacted would negotiate for terms which would slow down your next shipment if you only have just enough capital for the business. You may ask when we get into it? I believe on the saying that strike while the iron is hot but before the iron gets hotter, you better quit before your capital goes down the drain.

We also went into networking of rice, we made some few thousands because we had recruits who contributed to the growth of the team, but eventually, the company folded up because the supply was low and demand was high, the quality of rice was also not maintained properly during the first few months of operations as it was harvest time. It was summer when the company opened but come rainy season, the supply dwindled so the quality of rice also deteriorated. To be fair also to the company and to the networkers, but as they saying goes, some good things never last.

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Investing For the Rest of Us - Charting a Course For the Future

As the dust settles from the Wall Street meltdown of 2008, the average investor needs to chart a course that threads its way through future growth and perils. Simply relying on the old investment adages may not be the wisest course. Here’s some things to think about.

(1) Wall Street is not your friend. At this point, it should come as no surprise that the goal on Wall Street is to make money for Wall Street, rather than giving investment advice that the average investor can actually benefit from. Washington makes a lot of noise about reform, but don’t hold your breath about anything happening. We have gone through two major Wall Street screw ups since 2000 that cost most individual investors a good chunk of their portfolios. First was the attempt to convince everyone that there was a “new math” on how to value companies that had some relationship to the internet and, after that didn’t exactly work out, Wall Street moved to use the environment of easy money to package high risk real estate mortgages that fell apart when real estate values started to decline. Even though most investors never owned internet stocks or CDO’s, the collapse of these products helped drive down the stock market in general. To thrive, Wall Street must continue to find and distribute economic “hot spot” products. A good bet in the future might be derivatives created from “cap and trade.” After all, trading air seems ready made for the street.

(2) Take a new look at “asset allocation.” Although asset allocation models do not ensure a profit or protect against a loss, they have become the standard of investment models for many investors. The theory itself is over 50 years old. The world has changed since Dwight Eisenhower was in the White House. Thanks to a developing global economy, asset class correlations are becoming more similar and this increases volatility i Read the rest of this entry »

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