Although market participants are selectively buying stocks on the dip, the holding time is short on fear of market sell-off as market manipulators are using the downgrade news and sovereign debt crisis to move market.
Market will continue to swing on money flow. But it should be range bounded as it will attract buyers at recent bottom level and profit taking will constrain the rise of market. Currently, market support is being tested as market manipulators and hedge funds are attempting to move the market down. However, panic selling from market participants appears to fade away as market approaches recent bottom. And a lot of individual investors are still waiting for the opportunity to replenish the stocks in the portfolio. On the other hand, there is selling pressure from day traders taking profit on rebound.
There is a lot of capital flowing around the globe as well as speculation on financial assets. Household investors are seeing growth in personal wealth while institutional funds are under pressure from customers for return on investment.
Speculators can exploit market turbulence to make profit. Risk mitigation is an important factor to ride on market trend. Despite year end approaching, trading activities drop only slightly on coming holiday.
Last October, buying from individual investors drove market higher until early this year when market manipulators began to sell on market peak. Currently, after the sell-offs from year peak, individual investors are cautiously returning to the equity stock market with speculative buying and selling. There are still a lot of uncertainties that is reflected on the weak confidence of market participants.
The $200 Trillion World: Who Owns All the Wealth?
The wealth of the world -- from all the global stock markets, insurance funds, and families -- comes out to about $200 trillion, according to the McKinsey Global Institute's new report on investors in developing nations.
Households, mostly. U.S. and Western European households own about one-quarter of the world's financial assets, according the rather remarkable chart produced by the authors, which breaks down wealth by type and geography.
Until this decade, the preferences of investors in developed nations have shaped the evolution of global capital markets. Today these investors control 79 percent of the world's nearly $200 trillion in financial assets.
Broadly speaking, investors in developed economies hold highly diversified portfolios, with significant portions in equities. The United States stands out for consistently high equity allocations: currently US households have 42 percent of their non-retirement financial assets in publicly listed shares. Households in Hong Kong have similar shares of their wealth in equities. On average, Western European households placed 29 percent of their financial assets in equities in 2010, with 29 percent in the United Kingdom (down from 45 percent in 2000), 25 percent in France, and 19 percent in Germany.
Among developed nations, Japan stands out for its very low investment in equities. Despite a long tradition of equity investing by individual investors for most of the 20th century, Japanese households now hold less than 10 percent of their assets in equities, down from 30 percent before the 1989-90 crash. Because of low or negative returns over the past two decades, Japanese allocations have never exceeded 18 percent in this period.
A New Way to Access the Pre-IPO Market
This week could mark the busiest for the IPO market since November 2007. As many as 11 companies are expected to go public, including online gaming king Zynga.
This pre-IPO fever has been fueled, in part, by privately held social media phenomenons like Facebook and Twitter. Note Facebook's recently implied $100 billion valuation and it's easy to see why investors are salivating to get a hold of shares. But for the average investor, accumulating shares is virtually impossible until after the IPO.
If all of this seems a little too hot and trendy for your hard earned investment dollars, yet you acknowledge that value exists in being early to the party of discovery for young companies, then the just-listed Keating Pre-IPO Fund (KIPO) may be worth a peak.
While names like Facebook, Zynga, Twitter, and FourSquare are better known in the universe of pre-IPO companies, Keating says they don't offer the value, or upside potential, that is needed to join the 13 other pre-listed companies that have been added to the fund over the past two years. In addition to doing at least $10 million a year in sales as well as plans to go public within 18 months, perhaps the most exclusive barrier to his portfolio is the last, a valuation that will offer "a 2x return", a.k.a. a double.
Keating points out two other aspects of his fund that set it apart from many others. First, they don't use leverage, and second, unlike ETFs or traditional mutual funds, this one is a closed-end fund. Keating says this allows investors to "buy and sell our stock without us having to disturb the underlying portfolio." What that means is they don't have to keep cash on hand and never have to sell something they don't want to in order to raise money to pay investors who cash-out or redeem their shares. Not a small thing in this volatile market.
Banks park more money with ECB
Banks parked euro346.4 billion ($459.0 billion) overnight with the European Central Bank on Monday, reflecting increasing tensions in a banking system shaken by the eurozone debt crisis.
The figure announced Tuesday indicates banks would rather park cash at the ECB rather than lend it to other banks because they do not trust the other banks to pay them back.
The banking system is under stress from fears that eurozone governments will not be able to pay their debts and will default on bonds held by banks. Banks are under pressure from the European Union to find more money to build up their financial cushions.
Bulls Pout as Fed Stands Pat: Stage Set for “More Action” in 2012, Girard Says
U.S. futures are turning lower and the euro fell below its key $1.30 level this morning as markets react to an Italian debt sale and the FOMC's decision to leave monetary policy unchanged at Tuesday's meeting.
"They have set the stage for more action in 2012," Girard says, citing signals from the Fed about publishing its own expectations for the fed funds rate and, more dramatically, setting the stage for another round of QE focused on purchasing mortgage-backed securities.
The Fed is "leaning toward providing more accommodation," she says.
On Tuesday, the market leaned back on the Fed, expressing its disappointment and impatience.
Gold Sheds 'Can't Lose' Status: Now, No One Wants It
In just three months, gold has gone from the trade that works in every kind of market to the trade that doesn't work in any market.
"Gold was a safe haven, a hedge and a speculative trade all at the same time," said Michael Murphy, CEO of Rosecliff Capital, a hedge fund. "Long gold has been a winning trade for years. We expect the selloff in gold to gain momentum into 2012. Traders are finding better hedges, better safe havens, and better speculative commodity plays than long gold."
To be sure, gold has always been a volatile trade that can turn on a dime. Unlike a stock, there are no earnings behind the metal. It's only worth as much as what the next guy will pay for it. That dynamic has been skewed by the ETF and other retail money flowing into the trade this year, say long-term gold bulls.
"Bull markets climb a wall of worry," said Peter Schiff, CEO of Euro Pacific Capital "These sharp drops shake out the speculators and keep other would-be buyers on the sidelines. Once the weak longs are cleared out, the trip to $2,000 and beyond will resume unencumbered by excess baggage."
Investors falling out of love with hedge funds
Deep cracks are starting to show in the love affair between hedge funds and their investors, after another year of paltry returns on expensive investments leaves many feeling cheated and close to bailing out.
Hedge funds, which made money both in 2001's tumbling markets and 2003's rally, have been caught out this year by whipsawing markets and high volatility amid the euro zone's prolonged and deepening debt crisis.
Equity funds -- which often rely on fundamental stock analysis -- have been particularly hurt, while macro funds, which bet on stocks, bonds, currencies and commodities, have also left some investors disappointed.
A review of hedge fund performance compiled by HSBC seen by Reuters shows huge variance of more than 80 percentage points across the industry during 2011.
While the Paulson Advantage Plus fund was seen the worst performer this year, the Renaissance Institutional equities fund had advanced 32 percent by December 9.
Despite the humble returns, clients faced with volatile equity markets and meager returns on cash and government bonds markets aren't pulling out wholesale from hedge funds because they do not know where to re-allocate to.
Frustrated With Stocks? Here’s How to Profit From Pessimism
If you're frustrated with today's jittery financial markets, you're certainly not alone. Unfortunately there are no quick fixes to resolve the issues fueling the market's ups and downs --namely the European debt crisis, a shaky global economy, and U.S. political gridlock.
Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs
In the war of rhetoric that has developed in Washington as both sides blame each other for our economic mess, one argument has been repeated so often that many people now regard it as fact:
Rich people create the jobs.
Specifically, entrepreneurs and investors, when incented by low taxes, build companies and create millions of jobs.
Now, there have long been many problems with this argument starting with
1.Taxes on rich people (capital gains and income) are, relative to history, low, so raising them would only begin to bring them back in line with prior prosperous periods, and
2.Dozens of rich entrepreneurs have already gone on record confirming that a modest hike in capital gains and income taxes would not have the slightest impact on their desire to create companies and jobs, given that tax rates are historically low.
So this argument, which many people regard as fact, is already flawed.
But now a super-rich and super-successful American has explained the most important reason the theory is absurd, while calling for higher taxes on himself and people like him.
The most important reason the theory that "rich people create the jobs" is absurd, argues Nick Hanauer, the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion, is that rich people do not create jobs, even if they found and build companies that eventually employ thousands of people.What creates the jobs, Hanauer astutely observes, is a healthy economic ecosystem surrounding the company, which starts with the company's customers.
The company's customers buy the company's products, which, in turn, creates the need for the employees to produce, sell, and service those products. If those customers go broke, the demand for the company's products will collapse. And the jobs will disappear, regardless of what the entrepreneur does.
(Or, to put it even more simply, it's like saying that a seed creates a tree. The seed does not create the tree. The seed starts the tree. But what creates the tree is the combination of the DNA in the seed and the soil, sunshine, water, atmosphere, nutrients, and other factors that nurture it. Plant the seed in an inhospitable environment, and it won't create anything. It will die.)
"Angry Birds" maker eyes Hong Kong IPO
The company which created "Angry Birds," the world's most popular computer game, is considering a stock market flotation in Hong Kong, joining the many foreign firms who have gone public there.
"In Asia there are growing markets -- the people and the money," Peter Vesterbacka, marketing chief of Finnish company Rovio, told Reuters.
Other large global firms to have gone public on the Hong Kong exchange include fashion house Prada, luggage maker Samsonite and cosmetics maker L'Occitane.
Companies benefit from access to high liquidity from Chinese pension funds and retail investors and the bourse offers higher valuations in some sectors.
"Angry Birds," in which players use a slingshot to attack pigs who steal the birds' eggs, has stayed top game since it was launched for Apple's iPhone in 2009.
Rovio was founded in 2003 after three students including Niklas Hed -- CEO Mikael Hed's cousin and now Rovio's COO -- won a game-development competition sponsored by Finnish mobile phone maker Nokia Oyj and Hewlett-Packard CO.
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