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US budget deficit set to rise to $702 billion

What does 2020 hold for the US stock market?

The US budget deficit this year is set to rise to $702 billion which is a staggering $99 billion increase from the government forecast just two months ago. This is a bitter blow for the Trump government with last year’s deficit coming in at just $585 billion and the deficit for 2018 set to widen as well. While a $99 billion increase in the current budget deficit is staggering, experts believe there will be a $149 billion increase on the forecast for 2018. This figure is set to come in at around $589 billion. So, what is going wrong and how can Donald Trump fix it?

Lower tax revenues to blame for worsening budget deficit

The budget deficit over the next two years will be hit hard by worsening tax revenues which it was hoped would help to improve the US budget in the short term. The fact that tax revenues are struggling to meet targets would suggest that the economy is not growing fast enough and spending plans are yet to be reined in. The Office of Management and Budget has also been extremely dismissive of Donald Trump’s claims that May’s budget would see the US Federal budget balanced within 10 years. Continue reading “US budget deficit set to rise to $702 billion”

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How do markets value stocks?

A Guide to Lending Opportunities

This may seem a rather strange question, how do markets value stocks, but if you sit down and think about it, how does it happen? What is the process and what are the factors taken into consideration when the markets arrive at a share price? If you can understand how markets value stocks and how individual share prices emerge, this will help you in your quest for a long-term career in the investment industry.

Information exchanges

We have touched on this before, but if you assume that stock markets are information exchanges where different views and opinions are inputted, considered and used to value stocks and shares, you are along the right lines. There are obvious many different factors to take into consideration such as company announcements, events going on behind-the-scenes as well as research notes and broker recommendations, but at the end of the day these are just some of the elements used to value stocks and shares. Continue reading “How do markets value stocks?”

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Is Donald Trump really about to start a trade war?

Are markets concerned about the US/Chinese trade war?

As we mentioned yesterday, there are extremely strong rumours that Donald Trump is on the verge of announcing an array of quotas and tariffs for imported steel. In all honesty this has been coming since June and while we await official confirmation the stock market has already reacted. Steel stocks are in short supply at the moment with prices being squeezed higher with potentially more upside in the short to medium term. However, is Donald Trump really about to start a trade war?

Is world trade a level playing field?

Before we look at the pros and cons of a trade war it is worth noting that Donald Trump did mention the protectionism of US businesses and the US workforce when running for president. If, as expected, he does finally deliver tariffs for the steel industry this could well open the floodgates for other areas of the US economy to come under his protectionism umbrella. He has said for many years now that US businesses are not protected enough by the government and seem to be at the beck and call of cheap imports in areas other than steel. Continue reading “Is Donald Trump really about to start a trade war?”

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Is Donald Trump starting his protectionism crusade?

Volume is the key to future stock announcements

Amid signs that Donald Trump is about to implement tariffs on steel imports there is growing relief as well as growing anger about the future. Those who voted Donald Trump into office did so on a US comes first ticket, while those who voted against the controversial president will be up in arms about a potential attack on the free market. So, what can we expect in the future?

Steel tariffs equals protectionism?

The last time that tariffs were placed on imported steel was back in 2002 under the then president George Bush. At the time markets responded negatively to this move but already, even before confirmation, there has been a positive response this time round. One particular stock which is under the spotlight is AK Steel and we await with anticipation the next move from the Trump administration. Continue reading “Is Donald Trump starting his protectionism crusade?”

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It’s not just smaller companies which give impressive returns

Stock markets

Many investors automatically assume that you need to take relatively high risks to beat the markets. There are smaller companies which do surprise on the upside and can create stellar returns but these are few and far between. The reality is that you do not need to take excessive risks when looking to “beat the market” as seen by the performance of the likes of Apple and Amazon since the turn of the year. These are huge companies and not necessarily seen as investments which would deliver well above-average returns.

Amazon

The Amazon share price started 2017 around the $750 level, recently touched $1,000 a share and is now standing at $996.47. This is a company which was for many years ridiculed by researchers, no profit, continuous investment in research and development and trying to crack a market which many believed wasn’t even there. However, if we fast forward a decade Amazon is now the leading light in the online retail market, looking to crack the fresh food market and finally concluded a deal with Nike to sell their products online. The shares are up around $250 since the turn of the year which equates to a return of 33%. Continue reading “It’s not just smaller companies which give impressive returns”

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First Tesla Model 3 rolls off the production line

Tesla shares surge

The first Tesla Model 3 has rolled off the production line with Tesla CEO Elon Musk there to take ownership. This is a significant step in the company’s long-term development because at $35,000 this is classed as a “mass-market car”. In effect the company is making the jump from luxury electric car manufacture to a mass-market producer. So, what does the future hold for Tesla?

Tesla Model 3 in demand

When Tesla unveiled plans for the Tesla Model 3 some months ago the company invited those interested to put down a $1000 deposit on their vehicle. Demand was astounding to say the least with Tesla taking around $500 million in deposits, far more than the company was ever expecting. While some of these deposits may have been cancelled there is no doubt that demand for this vehicle already runs into the hundreds of thousands. Continue reading “First Tesla Model 3 rolls off the production line”

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Why is investment in technology shares so popular?

Snapchat, you live by the sword you die by the sword

When stock markets are riding high on the crest of a wave more often than not it will be the technology sector which is leading the way. Investors feel a renewed confidence for the future, consumers have money in their pockets and everything seems rosy in the garden. We all know that investor sentiment can turn very quickly but why are technology companies so popular with investors?

Something different

The term technology says many things to many different people but the reality is it is either something very different we have never seen before or something today which has been improved upon. We all know what the banks do, we all know what the retailers do but investing in technology takes you into the world of the unknown and “something different”. In this world you can value a company on any multiple of earnings that you see fit, assuming the company even makes a profit, well at least in your own mind. Continue reading “Why is investment in technology shares so popular?”

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3 tips to successful stock market investment

Why constant stock-market gambles never pay off

Stock market investment is more popular than it ever has been whether direct investment or through collective funds. Many people see their stock market investments as their pension fund of the future and while looking to protect their funds in the longer term they are often prone to high-risk investments in the early days. So, what are the best five tips to successful stock market investment?

Do not overextend your finances

They always say never invest money that you can’t afford to lose or you might require at short notice. This is perhaps the best piece of advice you will ever receive because investing should be seen as a long-term activity not short-term speculative investment. There may be times when you see a short-term gain, and there is no harm in taking a gain, but once you move towards the short-term speculative area of investment you are potentially looking at high risk/high rewards. Even if you initially invest on a long-term basis but find that you need the money it would be more than likely the wrong time to sell your shares. Put the money aside, invest on a long-term basis and forget about it. Continue reading “3 tips to successful stock market investment”

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Should you specialise in a specific sector?

Stock markets crashing, or a dose of reality?

As eager investors look for the next big moneyspinner it is sometimes easy to forget the most valuable commodity of all, experience. The ability to take stock of a situation, review the figures in a cold hard manner and then take the appropriate investment action (or non-action) is priceless. One way in which you can focus your attention and your expertise going forward is to specialise in a specific sector. This may be technology, telecoms, banks or some other area of the stock market. So, what are the benefits of specialising in a specific area?

Trends repeat themselves

If you specialise in a specific area you will notice the emergence of trends, share price reaction to certain news and perhaps the run-up in a share price before results are announced. Many of these occurrences will be repeated in other sectors so while you may be specialising in one sector, a company in another sector may catch your eye because of a movement in the share price that you have seen before. Sometimes investors with a short-term outlook can easily forget that trends repeat themselves on a regular basis and this type of knowledge is extremely valuable. Continue reading “Should you specialise in a specific sector?”

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Should you take notice of old style investors?

Should you take notice of old style investors?

Over the years we have seen some major shifts in the way funds are invested, investment strategies and the instruments available. You may be forgiven for thinking that because the investment world changes the experience of old style investors can be cast aside. Besides from the fact that trends in all walks of life are cyclical and return at some point in the future, experience of investment markets is earned by grafting and not something which can be bought.

Been there, seen it and bought the T-shirt

If the experience of old style investors was to be cast aside, deemed worthless by investors today, why are the likes of Warren Buffett so rich? He manages to integrate his past experience with the latest markets trends and comes up with transactions which continue to increase his wealth. He also has his followers, many of whom are relatively new to the investment industry and looking for a guru on which to base their future investment strategies. Continue reading “Should you take notice of old style investors?”