“I think that our fundamental belief is that for us growth is a way of life and we have to grow at all times.” -Mukesh Ambani

One of the most confusing parts of the stock market are the terms used to describe it. The motion of the stock market is usually defined in terms of bull and bear markets. Many people use these terms and almost no one can define what they mean or where they came from. The motion of the stock market is extremely important in making investment decisions and is a major factor in how well your stocks will perform.

It is important to note that the use of bear and bull are used in two separate ways by investors. The first way in which they are used is to actually define the real motion of the stock market. These technical terms reflect if the stock market is increase or decreasing. However, investors will also use these terms to refer to how they ‘feel’ the stock market is performing. When these terms are used that way, it is not a factual statement but one based on opinion.

Bull Market. A bull market is when the stock market is increasing. This is when stock prices are constantly increasing over an extended period of time. Most financial experts believe that once prices of stocks will rise they will continue to rise and this is an indication of a strong national economy. When a nation’s economy is strong unemployment is usually decreasing and the people who want jobs are working.

This type of condition is named after how the bull attacks it’s victims. Bulls will push their horns up into the air, symbolizing the increase in stock prices. In a bull market investors should buy up stock options they are interested in as the bull market starts and then sell their stocks just before the stock prices being to fall again. Obviously, the tricky part is in predicting when prices will fall. Investors usually make their profits in the bull market.

Bear Market. A bear market refers to when the stock market is decreasing. Stock prices continue to fall over an extended period of time. The national economy, during bear market, slows down and unemployment increases as corporations are forced to reduce their work forces. The term ‘bear’ is used to refer to this condition because of how bears will paw at it’s victims in a downward motion.

This symbolizes the downward motion of the stock market. Investors usually lose money in the bear market. It is suggested that investors, during a bear market, invest in utility stocks which are usually unaffected by changes in in the stock market.

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“If you don’t act now while it’s fresh in your mind, it will probably join the list of things you were always going to do but never quite got around to. Chances are you’ll also miss some opportunities.” -Paul Clitheroe

There are so many choices for investors when it comes to mutual funds. Which is great because investors do not have to settle on investments which almost meet their financial goals and risk levels. They can find a mutual fund that is a customized fit to their investment style. In the northern hemisphere alone, there are over 10,000 mutual funds available that investors can choose between. There are more funds then stocks. Each type of mutual fund has its own level of growth, risk, and rate of return. In addition, each fund has already established investment goals, industries, and investment techniques. There are three basic types of mutual funds – equity funds, fixed income funds, and money market funds.

Money market funds are usually short term investments. Money market funds are similar to Treasury Bills. This is an extremely safe investment and there is almost no risk associated with investment in money markets. This is perfect of the investor who has an aversion to risk. However, remember with little risk come a small rate of return. A good way to balance that is to put a larger sum of money into a money market fund. The rate of return is usually double what a typical savings account would give you.

Income funds offer its investors a regular income usually paid out in the form of monthly dividends. This is why this type of investment is called a fixed income fund. The investment is usually in debt management of the government or large corporations. Most people who invest in income funds are investors who are extremely conservative or people in their retirement years. Income funds have a higher rate of return then money market funds but they do carry more risk with them.

Balance funds offer the investors just the right mix of income, low risk, and appreciation. The goal of this type of fund is to invest in a combination of all types of stocks to achieve a balanced and profitable investment portfolio. Most financial experts suggest that balance funds should be 60% equity and 40% income.

Equity funds are what most people think of when they hear the term mutual fund. This type of investment is long term and the goal is to slowly increase capital over a number of years. As retirement approaches more equity funds allow the investor to draw an income each month from the fund.

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“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” -Peter Lynch

Stocks are influenced by several different factors. One of the most important factors, for many companies, is the time of year. The season will often influence how well a particular company does based on the product or service it sells. In addition, business performance can change as it enters a new part of the yearly business cycle.

Seasonal Stocks. Seasonal stocks refer to companies which offer products and / or services which are in high demand in one season but not in the other season. As their level of demand changes, their value and therefore their stock price increases or decreases.

For example, a company that produces mittens may do really well in the cold winter months but is completely dead in the middle of summer. This means that the majority of it’s profits come from the winter season.

Investing in seasonal stocks can be tricky because it is hard to determine their real rate of growth and what would be your rate of return on an investment in a seasonal company. To know if the company is growing you would have to compare this year’s profits with last year’s profits in the same season.

Non Seasonal Stocks. Companies which have non seasonal stocks are businesses which are not affected by the changing of the weather. They sell goods and profit, evenly, all year through. This type of stock exhibits an inelastic curve demand. A good example of a non seasonal product is shampoo. The purchase of shampoo is not influenced by the weather, holidays, or climate.

Cyclical Stocks. This type of stock belongs to a company which activities are intimately linked with the economy’s natural cycles. These stocks reflect how well the economy is doing which is really a reflection of how consumers feel about the state of their national economy. Luxury cars are a great example of cyclical stocks.

If the economy is doing well and consumers are happy there will an increase in the number of luxury cars sold. If the economy is slowing then their will be a decrease in the number of luxury cars sold because people want to hang on to their money.

Non Cyclical Stocks. Obviously this type of company exhibits features which are no influenced by the movement of the business cycles. Corporations which provide food, medicine, and health care are examples of companies which are not affecting but a declining or increasing economy.

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“I rarely think the market is right. I believe non dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

The term ‘market’ is always thrown around in financial discussions. However, the term can refer to a number of different stock market indexes which cater to different parts of the economic market. These different indexes do not move together and their conditions are influenced by different factors. Understanding the different types of market indexes and knowing some basic information about them is a helpful tool in investing.

Dow Jones Market: The Dow Jones Industrial Average is the most popular market index in the world not to mention the oldest. It contains stock options from around the world including thirty of the world’s biggest corporations. The Dow Jones index is weighted. As the Dow fluctuates and changes it is a good indicator of how the expected earnings and risks of corporations are also changing. The Dow Jones is composed of some fairly influential companies and for that reason a change, good or bad, in the Dow Jones average usually represent the trend that is occurring in the global market.

Nasdaq: The Nasdaq market index is known at the market which trades technology stocks. Over 5,000 technology corporations trade their stocks in the Nasdaq. These companies are not just in the United States but worldwide. In addition to tech stocks the Nasdaq also indexes stock options from financial, industrial, and transportation sectors. Unlike all over markets, the Nasdaq also includes speculative companies. The condition of the Nasdaq market is a good indicator of how the technology market is doing as a whole

S&P 500: Investors will often brag that they have beaten the market. The market they have conquered was probably the S&P 500. The Standard & Poor’s 500 stock index is actually more expansive and more varied then the Dow Jones. It is made up of over 500 of the most commonly invested in stock options in the United States. If you want to know how the economy is doing in the United States just take a look at the condition of the S&P 500 market.

Wilshire 5000: The Wilshire 5000 is a complete market index. It includes a huge number of stocks totaling over 7,000 of the world’s 10,000 stocks that are traded publicly. This market index has stocks from all industries and business sectors. While lesser known then the S&P 500, it is actually a better economic indicator because it indexes many more stocks.

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"Bigger Than McDonald’s? Yes, Bigger Than McDonald’s …"

by: Georges Yared Who has the audacity to say that … even think it? Nobody is bigger than McDonald’s. After all didn’t McDonald’s change the way we Americans eat? Didn’t fast food and drive-thru’s become the norm? Didn’t McDonald’s capture the hearts and therefore, the appetite of every little kid with its Happy Meals and Ronald McDonald character? Didn’t McDonald’s even say that the world was ready for their menu and actually expand around the world? Even in France?!!

The answers to all the above questions are yes. McDonald’s set the table (pardon the pun) to the way we view and eat fast food.Their success fostered major competitors like Burger King, Wendy’s and Sonic. But McDonald’s is still McDonald’s. They have tried to be hip and cool by actually offering salads, but do you really go to a McDonald’s to eat a salad? The movie " Super Size Me" did not do anything for their image either, but yet McDonald’s still marches on.

McDonald’s went public in 1965 and a $2,250 investment back then would be worth nearly $2 million today.What a great success story; 31,000 units spread out over 119 countires. It is truly one great American export. The brand name alone is in the world’s top 10 most recognizable and worth untold billions of dollars.

So, who is going to be bigger than McDonald’s? The answer is Starbucks.

Starbucks went public in 1992 and has already captured a market capitalization value of $24 billion. McDonald’s with a 27 year head start has a current market capitalization of $45 billion.( Market capitalization is all outstanding stock shares times the current market price) Starbucks has already in place 11,500 units, and the story is just beginning. I believe Starbucks will hit the magical $100 billion market capitalization long before McDonald’s does.

Starbucks, headquartered in beautiful Seattle, Washington dominates and will continue to dominate the high end, premium coffee business. Coupled with superb daily choices of the featured "coffee of the day", Starbucks has several different coffee concoctions and cold drinks as well. They also offer freshly baked items every morning. Okay, so far it is impressive…but you said they would be bigger than McDonald’s…so what gives?

Starbucks is just beginning to offer warm breakfast sandwiches, available in only about 600 units, and lunch sandwiches, now available in 60% of their units. The additional annual revenues from breakfast and lunch sandwiches will be $60,000 per store. They are rolling it out system wide, but in typical Starbucks fashion; one store at a time and do it to perfection. The "extra" $60,000 per unit when the roll out is complete will add up to $600 million in additional revenues for the company. Not bad for a few sandwiches!!

Music CD’s and movies in a DVD format have begun to find a happy home in Starbucks’ stores. They could become the biggest seller of CD’s in the nation and a major player in movie sales. Starbucks offers unique CD’s, such as the Best of Ella Fitzgerald, the Best of Nat King Cole, and the like. These are titles we don’t rush out to buy at our local Target stores or any other retailer. These are impulse buys, and the quality of the offerings is of the highest caliber. Movie DVD’s are now rolling out system wide as well. The selling space required is minimal and the margins are quite high.

All Starbucks stores offer wireless internet connectivity which is a strong competitive feature. They also offer their customers the "Starbucks card", whereby a customer buys $25 worth of credit, and charges their coffee and other Starbucks items against the card. Once the $25 is spent, customers re-up for another $25 of credit. The whole process takes about 60 seconds to sell and customers love the convenience and the ease of use. Starbucks is also testing a drive-thru window system where appropriate. The early results are stunning as the sales generated from the drive-thru concept are almost entirely incremental.

Starbucks has room for 17,000 units in the Unites Dtates and another 18,000-20,000 units in the rest of the world. They will own and dominate the Chinese market. Starbucks is rolling out stores and by the end of the decade will have 6,000+ units in China alone!! Their revenue and earnings growth gas been consistently above 30% per year. As Starbucks will generate total revenues this year of about $8.2 billion and $9.8 billion next year, their growth rate has slowed to the low 20’s%, but sustainable for the next 4-6 years. Starbucks will earn $.76 per share in calander 2006, and $.90 per share in 2007, strong and consistent earnings growth.

Starbucks has entered our vocabulary like Kleenex or iPod. I hear so often people saying "let’s go get a Starbucks", not a cup of coffee, but a Starbucks. They have arrived!! They will become bigger than McDonald’s, especially for their shareholders.

For more information, please visit www.stoplosingmoneytoday.com

Georges Yared has been in the investment industry since 1979. He worked at Dean Witter Reynolds (now, Morgan Stanley) from 1979-1992. He worked with over 5,000 individual investors in his capacity as broker, manager, Regional mamager, President and CEO of Dean Witter Canada. From 1992- 2006, Georges was a senior partner at two investment banking, research boutique firms, Wessels, Arnold and Henderson and ThinkEquity Partners. Georges was in charge of International sales and advised European portfolio managers on the US stock investments. Georges has authored two books, " Stop Losing Money Today…The Art and Science of Investing" and coming in late November " Baby Boomer Investing…Where do we go from here?" For more information please refer to the website www.stoplosingmoneytoday.com

“When buying shares, ask yourself, would you buy the whole company?” -Rene Rivkin

Stock and stock options are terms which are commonly used interchangeably. However, they are two completely different types of investments. The term stock refers a piece of the company purchased by an investor with a small investment.

A stock option is an investment which allows you the ability to buy company stock and then sell it at a set price in a set amount of time. When dealing with stock options there is always a buyer and always seller. As an investor sells stock options, he creating security for the company and the investor. Trading or investing in stocks is often referred to as gambling. Many people believe success in the stock market is based just as much on luck as on solid research.

The value of a stock options is referred to as a premium. The investor that is purchasing the stock option does not risk more then the original value of the stock option. Even if the market goes up or down the premium on the stock option remains the same. If the market increases this is great for the investors, but bad for the options sellers.

This is why stock options offer unrestrictive profits. It is really the seller of the option that shoulders all the risk. If the seller is unable to find an investor to buy the options then he must shoulder the cost of those options, himself. While the investor can only lose the original investment the sellers’ lose can be far greater.

There are two types of stock options. They are American stock options and European stock options. American options can be bought and sold during any time between when the seller purchased the options and the termination date. However, European options can only be bought and sold on the date of the expiration.

Most casual investors will only trade stocks and not stock options. Trading stock options requires a great deal more knowledge and money upfront. In addition, stock options carry a great deal more risk then stock trading and should not be attempted by investors who have small or even moderately sized capital to invest. Selling options is usually part of a larger financial plan that was established by the seller. Stock option trading needs to be balanced by low risk investments which have a stable rate of return.

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Making Money

If you talk to ten investors, you will get ten different answers as to how they value a stock. Some will value a stock by cash flows, some use dividends, some use earnings, still others have complicated mathematical formulas. This is the beauty of the market. No matter how much science we use to value a stock, the bottom line is that human beings value a stock. The market price of one share is the aggregate of what everyone in the market sees as the value of the stock.

If the market were a science, no one would make any money. Computers would run a bunch of numbers and the markets would never present a buying opportunity. People buy and sell stocks every day. No matter how automated we make the market, humans are behind all of the decisions. We are emotional, irrational beings. If you understand this and keep it in the back of your mind when investing, the ups and downs of the market make much more sense. Using this knowledge, you become a better investor.

How Do I Use This?

Here is a simple example. We had been following a small retail clothing chain. They sell high end mens clothing (suits) which is a relatively timeless, universal product. Suits don’t go out of style in a couple of months like teen apparel. The stock took a huge hit when they reported a mediocre quarter. Earnings were OK, but analysts were concerned about the inventory level. We knew that inventory didn’t matter much for this company because suits will sell next season. We bought some shares. We made a 44% profit in 17 weeks.

What Happened?

The earnings conference call got a little heated between the analysts and the CEO. Analysts peppered the CEO with questions about inventory levels. He calmly explained that this wasn’t a teen retailer. Inventory levels weren’t much of a concern because the fashions could still be sold at a later date. But the analysts refused to give up on the questions about inventory levels. The CEO then lost his cool and said that "we are wasting every one’s time" by continuing to talk about the inventory levels. The CEO was right, but the analysts punished the stock that day. They came out with scathing reports about the company and said the CEO was losing control. The stock dropped 27% in one day. And they didn’t even have a bad quarter! Now that’s a buying opportunity!

The point here is that the numbers meant nothing to the performance of the stock. The human beings behind the stock made it move. The numbers were fine, the company was growing quickly and efficiently. They just had high inventory levels. A little research and understanding how the market operates was much more important than any math you could do.

The bottom line is that any stock is worth what others are willing to pay for it. Earnings don’t matter. Assets don’t matter. All the math in the world doesn’t fully explain the movements of the market. The only thing that matters is how people feel about a company. If they feel good about a company, the stock will receive a premium price. If people feel bad about the company, the stock will be traded at a discount. Your task as an investor is to take advantage of people’s feelings in the market and turn them into profits!

Christopher T Yeager is an investment and banking industry professional. He has almost a decade of experience in the market as a representative and an individual investor. He is also the President and CEO of http://www.safelywealthy.com. He personally monitors the message boards of his site so his members get professional opinions on their stock ideas before they buy or sell. He also publishes the SafelyWealthy.com Stock Tip of the Week. In this Free newsletter, Yeager picks a stock that he thinks will move higher in the coming weeks and suggests it to his subscribers.

“We have to shift our emphasis from economic efficiency and materialism towards a sustainable quality of life and to healing of our society, of our people and our ecological systems.” -Janet Holmes a Court

Investing can have a dark side. There are plenty of shady business ventures which may not be legally but are definitely not moral. There are people out there who believe that to get ahead in business, investing, and life you have to do unpleasant things.

However, there are plenty of ways to make a profit, and be successful in business without losing who you are and adhering strictly or you ethics. If you are concerned about the ethics behind investment ventures there are many websites which list out and offer researched based no just on corporate success but also on their moral compass.

Believe it or not there are socially responsible mutual funds out there. These type of mutual funds belong to companies which make it a point to be socially, morally, and environmentally responsible their actions and the actions of their employees. Many of these companies also contribute a great deal of money to their community and socially important issues. There are several things you can do, as a socially responsible investor, to make sure the stocks you are investing in belong to a socially responsible corporation.

There are fund managers that have the sole responsibility of seeking out and create good mutual funds which are both profitable and socially responsible. They only let corporations into their mutual funds if they exhibit certain behaviors which adhere to the goals of the fund and the demands of the investors.

For example, if a mutual fund has a goal to be environmentally friendly, it will seek out corporations which follow all the environmental laws, rules, and are active in environment preservation. They would exclude companies which test on animals or support nuclear power.

For example, funds with a strong sensitivity towards issues of environmental concern will specifically pick stocks in companies who go beyond fulfilling environmental requirements, but the fund will most likely invest also in companies whose practices reflect other concerns, such as animal testing or nuclear power.

Shareholder activism is something that is taken very seriously. Not only do these people invest in these corporations but make a point to get personally involved. Investors will try to persuade companies to behave in a socially responsible way through letters, suggestions, policy meetings, proposal, and using voting rights.

The power of shareholder activism lies in the number of being that are invested in making a change. A couple of people are just seen as a nuisance. If you have ten thousand people, real investors, who are pressuring a company to change it’s policies – things will get done.

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When UK Chancellor of the Exchequer Harold Macmillan announced the introduction of Premium Bonds in his budget on April 17th 1956, first reactions were unfavourable. The church condemned the proposed draw and opposition chancellor Harold Wilson dubbed it a “squalid raffle” that would lead to “national demoralisation”. But 1950s Britain was ready for a bit of luck. After the hardships endured in World War II, many saw the opportunity to invest in the chance to win dividends of up to £1,000 in the monthly prize draw as a welcome distraction from the daily grind.

Officially launched on November 1st 1956 by the National Savings Committee, the first Premium Bond was bought by the then Lord Major of London, Sir Cuthbert Ackroyd. Other dignitaries followed suit across the UK. Although some continued to protest against the plans, often on religious grounds, the Post Office soon reported queues of hopeful investors patiently waiting to buy their £1 Bonds.

The first draw took place on June 2nd 1957 and was started by the Postmaster General, Ernest Marples. The winning numbers were generated by the purpose built Electronic Random Number Indicator Equipment (ERNIE) and the first winner announced after 15 minutes. Even though it took a further ten days for the machine to select the rest of the winning numbers, the Bonds proved an instant hit and sales took off. People viewed them as an opportunity for a bit of harmless fun and Premium Bonds soon became a popular way to gift an investment to new born babies.

As Premium Bonds established a place in British culture, a surprise celebrity emerged from their success – ERNIE. The machine that generates the lucky numbers each month was conceived by talented Post Office engineer Tommy Flowers whose Colossus computer had been instrumental in the code-breaking work at Bletchley Park during the war. Soon after the first draw of 1957, ERNIE’s fan mail poured in from Bond holders hoping to turn their luck and coach parties arrived in Blackpool to view the van-sized machine. As the number of investors grew and technology improved, ERNIE needed a face lift with new models appearing in 1973 and 1988. Finally, ERNIE Mark 4 came into operation in 2004 and reduced the draw time from 10 days to two and a half hours. After every draw, ERNIE’s numbers are independently checked by top government mathematicians to verify their random nature, countering any claims of foul play.

Today, Premium Bonds are more popular than ever, thanks partly to the introduction of a tax free £1 million jackpot in April 1994 and their favourable odds compared to the National Lottery. By September 2004, 23 million investors had joined in a 24,000 to 1 chance of winning a prize although statistical analysis of previous results shows that certain factors might better your outcome. If you are called Hannah or live in Bolton you have the highest probability of winning the big prize and you should always take care to buy your Bonds on a Wednesday.

While smaller prizes are sent in the post, each month the £1 million jackpot winner receives a special visit from “Agent Million”. Dispatched from the National Savings and Investment Headquarters in Blackpool, this mystery lady has the wonderful job of delivering the good news in person. As she puts it, “I think it’s a fantastic job, to go out every month driving along thinking I’m going to make a big difference to someone and put a smile on their face at the end of the day.” Her identity is a closely guarded secret and if you want her to come knocking on your door, it may be worth checking your records. Over the years, more than 38,000 people have failed to claim prize money totalling £2.7 million and all because they forgot to give ERNIE their new address.

For more information about investing in Premium Bonds visit the National Savings and Investments website http://www.nsandi.com

Louise Dop is a successful freelance writer and technical author. Her ebook, The Writer’s Secret Weapon, brings together a collection of the best free online resources for writers and gives an insight into the writing life. With over 50 direct links to resources, this straightforward guide will show you the real-life tips and tricks that – armed with an Internet connection and basic computer literacy – you can try for yourself right away.

“After losing everything, I went on a quest to find out how money really works, how I could get control of it, and how I could have confidence in handling it.” -Dave Ramsey

Leverage can be defined as the utilization of tools which can increase the rate of return on any investment. By increasing the rate of return, the investor has a higher profit potential. However, with the potential for a higher rate of return there is also greater risk. An example of this form of leverage is using a financial margin.

Leverage can also be produced through the use of options, futures, and other financial tools. It also refers to a companies debt which was acquired to pay for it’s assets. A corporation which has a ton of time and very little equity is an example of high leverage.

For example, if a company was created with an original investment of $10 million dollars from people investing in it, then the company has $10 million dollars in equity. This is the money that will be used to run the business.

However, a company can also use that equity to borrow money against. For example, it may receive a $30 million dollar loan based on the $10 million dollar initial investment. This is then used to create any for more value for the investor. However, if the business defaults on it’s debts or goes out of business, investors will lose all their profits as well as their original investment.

A common place example of leverage is taking out a mortgage on a house. You make a down payment with the cash you have on hand and then use leverage to finance the rest of the house.

When the mortgage is completely paid off then you can keep whatever profit was made on the sale of the house. Another example of leverage is when an investor has a little bit of money to invest and borrows the rest from a broker. If the stocks that are being invested in increase in price, the investor can sell for profit, pay off the broker and keep the rest for himself.

Working with leverage is a high risk game and should not be entered into lightly. If you default on your home mortgage, even once the lending company can take away your house even if you have met your monthly obligations for years. The major disadvantage to using leverage in the stock market is that you can lose much more then just your original investment.

Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

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