Archives for July 2014

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Real Life Affects Asset Prices

Political environments have a direct impact upon the financial markets. The effect can be more severe than others–depending upon the instance–but politics go hand in hand with the economy, and understanding this relationship can only lead you to making more money down the road.

Trading TimesLet’s look at a recent example so that we may see just how these two separate facets of life interact with each other. You’ve probably heard in the news about the Malaysian airline being gunned down over Ukraine. The threat of a war in this area has negatively influenced assets all throughout Europe. The European stock markets have dropped over the last week or so, and assets considered to be safer to Europeans have gotten stronger. Gold, the Japanese yen, and government bonds have all risen in popularity over this time. But because the Pro-Russian separatists have recently handed over the black box of the plane that was shot down–a signal of cooperation between different political beliefs in the area–the European stocks on Tuesday went up in rebound fashion. [Read more…]

Prepping for a Downturn in the Market

Recently, a team of U.S. regulators warned major banks about a potential for an increase in the amount of defaults on home equity loans. If you remember correctly, this is one of the big things that happened right before the recession that began in 2008. Housing markets crashed, largely because of the fact that loans were being made that were not being paid back. Before, the loans were not being paid partially because of the fact that the practices in which the loans were made were less than reputable. Tighter restrictions have been made since then, but borrowers are still seeming to have difficulty making payments.

It might be tough to understand at first. The stock market is doing better than ever right now, so why are there so many economic problems at the individual level? [Read more…]