Book Review of Start Day Trading Now by Michael Sincere

 By Kamilah Powell

Want to be a millionaire now?  Well, day trading may not be the best way to go about it.  The general concept of day trading  is that in the morning, you dump a bit of money in the stock market and BOOM, by day’s close you’ve made thousands.  While this may be the case in some very few circumstances, it is definitely not the norm.  Start Day Trading Now is a quick and easy guide that will guide an individual through the basics of what day trading actually is and how to go about it in a responsible manner in which you learn to mange your risks.

For a beginner or someone who simply doesn’t know anything about trading, this book is a must.  It starts with the opening chapter titled, “What is day trading?”.  It goes through what day trading actually is and not what some websites or traders claim it is.   From there it jumps straight into the in’s and out’s of how to day trade from scratch from the perspesctive of a true beginner.  Sincere goes on to explain how to better manage your risk as a day trader and explains that a real day trader will lose money on a regular basis.  He even adds a cute chapter about a true character Hal (not his real name), who as a beginner makes several very common errors in trading, but realizes his mistakes and in the end becomes a successful trader.  He goes on to list lessons to be learned form “Hal’s” mistakes.  My two favorites and, in my opinion, the most important are lesson number 12, “Learn how to trade without emotion,” and lesson number 15, “Prepare in advance before placing your first trade. Practice trading.”

From how to find the right brokerage firm to reading charts, this book is the right tool for someone who may be thinking about getting into the business.  In his book, Sincere provides a glossary of terms that defines all those special acronyms and terms that are used in the trade.  He also provides a section of resources for novice traders with a list of books and websites to reference.  This book is certainly a great start for a beginner trader, however after reading it, you will absolutely need to do a bit more research on trends and more precise chart reading skills and information.  In his final chapter Sincere himself states that after reading the book, “You may continue learning and researching and take my advice to practice trade before committing real money into the market.  Or you may open up your first trading account.  Either way, one of my goals was to prepare you emotionally for a tough battle.”  I will say, that after reading the book you will know whether or not day trading is right for you.

Value Investing Focus of January 17 Economic Perspectives

Janet Lowe, author of The Triumph of Value Investing: Smart Money Tactics for the Postrecession Era, is the guest on the January 17 edition of Economic Perspectives on KAZI 88.7 FM, 5:30 p.m. – 6 p.m.  In addition, EP will also have the latest segment of Young Money Today which will feature tips for financial success in 2011 from Nikki Green’s interview of Gail Cunningham with the National Foundation for Credit Counseling.  Listen live online at kazifm.org.  To listen to an exclusive preview of the interview with Janet Lowe click here: Janet Lowe Defines Value Investing.

Nikki Green

After the financial chaos and panic of the last few years, investors are looking to rebuild confidence and learn from the mistakes that led to the crash. In The Triumph of Value Investing, Janet Lowe urges readers to return to the basic principles of value investing as taught by the legendary Benjamin Graham, which remain just as relevant today. These lessons can help readers maneuver sanely through any type of economic turmoil and even benefit from further disruptions.

Lowe also includes interviews with leading value investors such as Warren Buffett, William O’Neil, and Charles Brandes, and analyzes dozens of U.S. and foreign stocks. She walks investors through the steps necessary to apply the principles that define value investing, with special emphasis on investing in biotech, high-technology, and foreign companies.

Whether readers are familiar with value investing or are just discovering it, they will find plenty of fresh information in The Triumph of Value Investing, which covers the latest concepts and players in the market.

As Lowe writes, “It is always healthy to check up on the validity of your own thinking. Considering the market breakdowns of the past decade and the confusion and discouragement many individual investors have suffered, this is an excellent time to restudy Benjamin Graham’s concepts of value investing and learn how to apply them to a whole range of new challenges.”

SEC Proposes New Rules to Protect Investors in Securitization Market

On April 7 the Securities and Exchange Commission proposed rules that would revise the disclosure, reporting and offering process for asset-backed securities (ABS) to better protect investors in the securitization market.

The proposed rules are intended to provide investors with more detailed and current information about ABS and more time to make their investment decisions. The proposed rules also seek to better align the interests of issuers and investors by creating a retention or “skin in the game” requirement for certain public offerings of ABS.

“The rules we are proposing stem from lessons learned during the financial crisis,” said SEC Chairman Mary L. Schapiro. “These rules if adopted would revise the regulatory regime for asset-backed securities in order to better protect investors.”

Mary Shapiro

Asset-backed securities are created by buying and bundling loans — such as residential mortgage loans, commercial loans or student loans — and creating securities backed by those assets, which are then sold to investors. Often, a bundle of loans is divided into separate securities with different levels of risk and returns. Payments on the loans are distributed to the holders of the lower-risk, lower-interest securities first, and then to the holders of the higher-risk securities.

Most public offerings of ABS are conducted through expedited SEC procedures known as “shelf offerings.” ABS offerings also are sold as private placements which are exempt from SEC registration. ABS private placements are typically sold to large institutional investors known as qualified purchasers (QIBs).

Public comments on the proposed rules should be received by the Commission within 90 days after its publication in the Federal Register.  To read the proposal click here.  To submit comments on the proposal click here.

Building a Financial Future Focus of KAZI Book Review January 31

Charles Farrell, author of Your Financial Ratios: 8 Essential Tools for Financial Success and Security, is the Sunday,  January 31 guest on KAZI Book Review 4, 12;30 p.m. – 1 p.m. central time on KAZI 88.7 FM.  You can listen live online at kazifm.org.

What You Will Find In This Book

IF YOU ARE IN YOUR 20s OR 30s
Your Money Ratios will tell you how to get started and what you need to do over the next 35 years to stay on track.

IF YOU ARE IN YOUR 40s
You can benchmark your own financial circumstances against the ratios and see how you are doing with respect to your savings, debt, investments and insurance. You have plenty of time to make adjustments if necessary and plot out your path to retirement.

IF YOU ARE IN YOUR 50s
The formula will provide you with a realistic assessment of your ability to retire. It will help you make the important decisions about how to allocate your financial resources over the next 10 to 15 years, and how to put on the final push for retirement.

Farrell is an investment adviser with Northstar Investment Advisors, which has more than $300 million assets under management. His column, “Retirement Roadmap,” appears on the CBS Moneywatch site, and his research is frequently cited in The Wall Street Journal, Smart Money, the Chicago Tribune, and many other consumer and professional media outlets.

African Americans and Hispanics Have Lower Participation Rates in 401(k)Plans

The following was provided by the press office of Ariel Investments and Hewitt Associates.

Significant differences can be found across race and ethnicity in the way U.S. employees save and invest in their 401(k) plans, according to 401(k) Plans in Living Color: A Study of 401(k) Savings Disparities Across Racial and Ethnic Groups — The Ariel/Hewitt Study. This pioneering report — the largest, most comprehensive examination of 401(k) saving and investing behaviors of African-American, Hispanic, Asian and white employees — found that regardless of age or income, African-American and Hispanic workers have lower participation rates and contribute less to their 401(k) plans than their white and Asian counterparts. As a result, their 401(k) account balances are negatively impacted and chances for a comfortable retirement significantly compromised.

The Ariel/Hewitt Study analyzed 401(k) information for nearly 3 million employees across 57 large, primarily FORTUNE 500 companies in the U.S. It was conducted by the Ariel Education Initiative, the nonprofit affiliate of Ariel Investments, and Hewitt Associates, a global human resources consulting and outsourcing company. The Chicago Urban League, the Joint Center for Political and Economic Studies, the National Council of La Raza, the National Urban League, and The Raben Group also participated. The study was funded with a grant from The Rockefeller Foundation.

In response to the study, Mellody Hobson, president of Ariel Investments, remarked, “401(k) plans are now the primary way Americans save for their golden years. Most are unaware there are significant savings disparities in 401(k) plans across racial and ethnic groups. This study reveals important differences that must be addressed if retirement security is to be a reality for all Americans.

Mellody Hobson

The results of the study show that African-American and Hispanic workers are less likely than their Asian and white counterparts to participate in their 401(k) plans. Two-thirds (66 percent) of African-American employees and 65 percent of Hispanic employees participate in their company’s defined contribution plans, compared to 77 percent of white workers and 76 percent of Asian workers. Even after adjusting for factors such as age and income, the disparity remains.
Additionally, African-Americans and Hispanics contribute to their 401(k) plans at much lower levels than their white or Asian counterparts. Among those who save, white employees contributed 7.9 percent of income, compared to Hispanic and African-American workers, who contributed 6.3 percent and 6.0 percent, respectively. At 9.4 percent, Asian workers had the highest contribution rate of all groups.

Not surprisingly, lower participation and contribution rates lead to smaller average account balances for African-American and Hispanic workers. The Ariel/Hewitt study illustrates this point dramatically. For example, employees who earn between $30,000 and $59,999 show a significant difference in 401(k) account balances: African-Americans ($21,224), Hispanics ($22,017), Asians ($32,590), and whites ($35,551). This disparity exists even at higher pay levels. For instance, African-American employees who earn $120,000 or more have saved $154,902 in their 401(k) plans compared to $223,408 for white workers in the same pay range. While other factors influence account balances, the variation exists even after these adjustments.

In addition to participation and contribution rates, The Ariel/Hewitt study examined three other factors that can further impact an employee’s 401(k) plan balance — equity exposure, loans and withdrawals.

The findings revealed that African-American workers are less likely than Hispanics, whites and Asians to invest in equities. African-Americans had two-thirds (66 percent) of their 401(k) assets invested in the stock market. By comparison, whites and Asians had 72 percent and 73 percent, respectively, of their 401(k) plan assets invested in equities. Hispanics had 70 percent of their assets invested in equities. These findings are compelling because the stock market has historically outperformed all other investment options over the long term. It is generally understood among investment experts that employees with long-term time horizons should have a significant amount of their assets invested in equities.

Barbara Hogg

African-Americans are also more likely than the study population overall to have a loan and are more than twice as likely to take a hardship withdrawal from their 401(k) plans. Nearly two of every five African-American workers and almost a third of Hispanic workers borrowed from their retirement accounts compared to just one in five white workers. By contrast, Asian workers were the least likely to take a loan against their 401(k) plans, with less than one in five doing so. “These statistics are troubling because loans and withdrawals jeopardize long-term financial security to satisfy immediate needs. The impact is heightened during an economic downturn, when unemployment rises and withdrawals and loan defaults increase. We now realize this risk is magnified for African-American and Hispanic workers based on the results of our study,” said Barbara Hogg, principal at Hewitt Associates and co-leader of The Ariel/Hewitt Study.

“Without a significant effort to improve savings and investing behaviors, African-American and Hispanic workers are in danger of retiring into poverty,” states Hobson.

The Ariel/Hewitt Study outlines five decisive recommendations for policymakers and employers. These recommendations include:

• Encouraging employers to voluntarily collect and report 401(k) plan data by race and ethnicity. Knowledge is power, and collecting and reporting data about 401(k) plan participants would enable employers to know and manage where gaps exist among their workers.

• Modifying loan requirements to decrease the likelihood of default. Extending the amount of time a terminating employee has to pay off a loan may improve overall retirement savings, particularly during challenging economic times such as these. Other options could include allowing loan repayments after termination or exploring new options for allowing loans to roll over from one employer to another.

• Mandating financial education at all levels in both private and public schools to boost financial literacy. A financial literacy curriculum would provide generations of future employees a comprehensive understanding of both the mechanics and importance of sound money management, saving and investing.

• Designing 401(k) plans in a way that benefits a broad, diverse employee base. Features like automatic enrollment with high default contribution rates and periodic contribution increases can go a long way, effectively driving strong, robust participation across all demographics.

• Communicating and educating employees in a way that helps them make wise choices. Creating user-friendly and easily understood communication enables workers to learn more about how to effectively manage and grow their savings. This communication should incorporate different cultural perspectives that resonate with diverse groups of employees.

“By taking immediate action, employers, government and employees can make a big impact in helping all Americans achieve a comfortable standard of living in their retirement years,” concludes Hogg.

CEO of Online Brokerage Firm to Provide Investing Tips on Economic Perspectives

Dan Greenshields, President and CEO of Sharebuilder, an online brokerage firm, will provide tips to help investors minimize risk and maximize gain on the March 16 edition of Economic Perspectives.  Sharebuilder is the 6^th largest online brokerage firm with over $2 billion in assets.  Online brokers have seen record numbers of new customers recently as investors have looked for ways to cut brokerage costs.

Dan Greenshields

Some of the tips recommended by Greenshields include:

• Earn rewards, avoid instant gratification
• Set-up automatic savings
• Make investing a way of life
• Do your research, then diversify

Greenshields also serves as President and Chief Investment Officer of ShareBuilder Advisors LLC and has been with them over 8 years, During this time he served as the Company’s CFO and member of the Executive Management Team securing venture financing, driving M&A activity, managing daily market risk and launching the ShareBuilder 401(k) product.

 

Greeenshields joined ShareBuilder in 2000 as an Executive Officer and CFO; Dan served as a member of the Board of Directors of ShareBuilder Corporation prior to joining full time as an employee. Prior to ShareBuilder Dan worked for the investment and insurance group of GE Capital Services, now known as Genworth Financial. As Vice President, Business Development for GE Capital, he specialized in corporate finance, portfolio risk management, strategic investing and merger and acquisitions.