New Research – Over 50s Perform Best in Financial Markets

A new five year study of financial trading shows that the over 50s are by far the most successful, profitable traders and investors: a full 40% more profitable than their 20-something counterparts, ending the myth that risk and results are the stuff of youth. The research – conducted by financial trading coach and author Vince Stanzione of www.fintrader.net – studied the trading of 1000 UK individuals between October 2004 and October 2009, covering bull and bear markets and the volatile 2008/9 markets.

Stanzione identified 1000 of his students and clients and divided them into three age groups: 18-30, 30-50 and 50+, with equal numbers in each group. He then analysed their performance and returns over the last five years to see which achieved the most return on capital.

Stanzione says: “I’ve long believed that, in the markets, results come from wisdom, not the hot-headedness of youth. But, even so, I was surprised to see just how well the ‘silver surfer’ traders fared: the over 50s performed 25% better than the 30-50 group and a staggering 40% better than the 18-30s, who were the least successful of the groups.”

Time spent trading was a factor for all three groups. The 18-30s and over 50s spent more time on their portfolios, which may be because the 30-50 group had greater work and family commitments elsewhere. But clearly the over 50s had much greater productivity.

Risk insights also came to light from the research. Stanzione continues: “Another myth that the research busted was that older people are less willing to take risks. The 50+ traders took higher risks for higher returns than the 30-50 group, with a strong appetite for commodities and commodity companies: gold, crude oil and silver featured highly in their portfolios.”

The secret to the difference between youth and age lay in discipline, says Stanzione: “The 18-30s tended to break trading rules and failed to follow systems through. Maybe they had poor attention spans as they would often close out winning trades too soon. Older traders kept better records and managed their money better.”

A further myth busted was of internet familiarity. The 18-30s made great use of internet information, charts and chat rooms but so did the over-50s (more than the 30-50s), becoming extremely web savvy and using a wide range of online tools.

Stanzione, himself a successful trader, coach and author of several works – including ‘Making Money From Financial Spread Trading’ – has seen a sharp surge in ‘silver surfer’ students in recent months: “Older investors are sick of earning 1% a year and being sucked dry by high management costs for poor advice. In increasing numbers, they’re now learning to trade markets themselves, and doing it very well.”

But one theme which is common to all groups is “total distrust of financial advisors and professionals. Clients want to be in control of their own money and investment decisions. The use of Exchange Traded Funds with lower management costs and higher flexibility has ballooned in the last two years and I predict this trend will continue.”

Investors and potential traders who wish to learn more about trading financial markets and to get a free copy of 10 top trading tips from a trading veteran should visit www.fintrader.net .

Notes for editors

About Vince Stanzione
Vince Stanzione is a self-made multi-millionaire based in Europe. Beginning aged 16 at Nat West Foreign Exchange in London, he quickly made his mark and then left to form his own company, since when he has been involved in mobile communications, premium rate telephony, interactive gaming, publishing and television and financial trading. He currently lives most of the year between Spain and Monaco and trades his own funds, mainly in currencies and commodities. He also teaches a small number of students and produced the best-selling course on Financial Spread Betting.

Vince Stanzione is the author of “How to Stop Existing & Start Living”, is the Spread Betting Expert for Growth Company Investor and writes monthly columns for The City Magazine, Canary Wharf and Vicinitee Magazine.

Summary of research results

The research analysed five years’ trading results of 1000 UK individuals split evenly into three age-based groups: 18-30, 30-50 and 50+, with the highest age being over 80. The five years ended in October 09 and therefore covered bull and bear markets, the banking collapse of 2008 and the volatile 2008/9 markets.

18-30 group

• Tended to trade often with many day trades
• Highly dependent on internet, charts and chat rooms.
• Tended to break trading rules the most, had a poor discipline at following systems and often closed out winning trades too soon

With large swings in account balances and trading results, this group did the least well of the three. It also traded more Penny shares (under $5 for US and under 50p for UK) and leveraged FX which suggests a striving for quick results with a smaller trading bank than the older groups.

30 – 50 group

• Performed better than 18-30s but less well than over 50s
• Least dependency on the internet, of the three groups
• Followed trading systems but less open to learning new skills or trading new products.
• Traded less than the 18-30s and slightly less than the over 50s, which could be related to lack of time.

Overall this group made money and beat the average index fund, trading a mix of products including FX, shares and commodities.

50+ group

• Performed by far the best, making more profit per £1,000 invested: around 40% higher returns than 18-30s and 25% higher than 30-50s
• Had become very internet literate in recent years, using many online tools and research, possibly helped by having more free time
• Traded less than 18-30s but a little more than 30-50s
• Kept the best records and used good money management

This group was open to taking higher risks than the 30-50 group and was not content with low risk/low returns. It had a strong appetite for trading/investing in commodities and commodities based companies, gold, crude oil and silver featuring highly in trading portfolios.

Website: www.fintrader.net

Why Most Financial Spread Betting Customers Don’t Make Money

Here is a clip from Making Money From Financial Spread Trading. To find out more and order the full package please go to www.thefintrader.net

Backing your judgement Financial Spread Betting

Backing your judgement

Spread bets are not necessarily for the long term, and neither are they really investments. However, they can be used effectively within an investment strategy, for example by hedging your portfolio exposure through betting on shares or indices that are falling in value.

Spread betting on sport is a high-profile activity, but reports suggest that companies offering the service now make more money from financial spread betting.

However, care needs to be taken when using spread betting. Although there are potential tax and investment advantages, you can also suffer unlimited losses.

Understanding the basics

You can bet on whether investments will rise or fall in value. The more they rise or fall, the more money you make or lose. You can bet on a wide range of investments, including shares, indices, currencies and commodities, such as gold or oil. This can provide diversification away from your existing portfolio without holding the actual investments, as you are betting on their price movement.

Say you want to bet on the FTSE 100. If it is currently trading at 6500, a company will quote you a bid (selling) and offer (buying) price. This spread may be 6490 to 6501. If you think the FTSE 100 will rise, you can buy the index at £10 a point. If the FTSE 100 does rise to 6535, you will make £340 (6535 – 6501 = 34 points).

But if the index fell to 6461 then you would lose £400. And you would lose more if the index continued to fall.

A range of options

There are different ways in which you can spread bet. Peter Murphy, director of IG Index, says you can make a daily bet that is closed at the end of that day. You can then contact the spread betting company to roll the bet over to the next day or establish an automatic roll-over until you close the bet.

Rolling over a bet incurs an overnight charge, and if you do it continually, the charges mount up and can eat into any gains. You can also set up bets for longer time periods, the maximum quoted period usually being one year.

You can close your bets at any time before they expire, as well as partially closing them – taking some of the profits the bet has accrued but retaining the bet.

Spread betting firms do not charge commission, but make money from the bid-offer spread. The prices of shares and indices are based on futures markets, which reflect the price of the underlying market plus some adjustments. These adjustments, which are called the ‘fair value’, include an interest charge minus dividends due over the period of the bet.

The spread on the quotes you are given on indices and shares will, therefore, be wider the longer the time period of the bet. Murphy says the spreads are typically around two points on daily bets, six points on quarterly bets and ten points on a yearly bet. This means you have to make a profit of at least ten points to generate a gain on a 12-month bet, but he argues that the FTSE 100 frequently moves up or down by at least 60 or 70 points in just one day.

Rules of the game

Experienced trader Vince Stanzione says there are two main factors that limit the degree of spreads, including the fact that customers can arbitrage between spread betting firms. ‘Customers can go long one provider and short another provider if they have different prices.’ He adds that ‘Firms are also competing with each other and, therefore, they will not let their spreads widen too far.’

So you should check the prices being offered and how these compare to the underlying share prices and indices. You can also take out a ‘good till cancelled’ bet, which is left open until you cancel it.

There are measures available to manage the risks in spread betting. Firms will provide demo accounts for spread betting, so you can try it out without committing any money. Once you start betting, you can use stop-losses – indeed, some firms insist on new customers operating stop-losses. These enable you to nominate the lowest point to which you are willing for an index or share price to fall or the level of losses you will accept.

Murphy points out that you can also nominate an upward price at which you want the bet to be stopped so you can take your profits.

With a traditional, automated stop-loss, if the share price or value of the index falls very quickly, there is a risk that your bet will be closed at a much lower price.

A guaranteed stop-loss, however, acts as an insurance policy. But there are wider spreads within this approach to pay for this guarantee. This means you will have to generate a higher return before making a gain. Nevertheless, guaranteed stop-loss points are very useful if you are risk averse or do not have the time to continually monitor your bet.

Vince Stanzione warns investors not to make the stop-loss point too close to the current trading price, due to normal price fluctuations: ‘You may get home and find the index has risen 200 points but you have not benefited as your stop-loss point was reached in the morning.’

In the margin

The advantages of spread betting can enhance your investment strategy. For example, you may want to diversify your investments but do not have sufficient spare capital. With spread betting, you bet ‘on margin’. This means you do not have to find all the money up front for a bet.

For example, if you want to buy 1,000 shares at £42 each, it would cost you £42,000. With spread betting, you can bet £100 a point, for example, that the price will rise or fall. Typically, you just need to put a deposit down to cover your bets. You can start spread betting with small amounts of money that may not be possible when investing in shares.

You can use spread betting to hedge existing investments. Say you think the banking stocks in your portfolio may fall in value in the short term. Rather than sell the shares and trigger a tax charge, you can bet on their prices falling and thus protect your exposure to this sector.

You could use contracts for difference (see p. 5-6) to benefit from falling share prices. But any profit from spread betting is free of capital gains tax (CGT). And you are not subject to the 0.5 per cent stamp duty that applies to buying shares.

But there is a downside. If options are used to hedge a portfolio, the cost of this hedge can be used to offset the tax on gains from the equities they were being used to hedge. The costs of using spread betting to hedge a portfolio, however, cannot be used to offset any CGT liability.

A sideways look

You can also bet on indices or share prices moving sideways within a specified trading range or on the degree of volatility to be suffered by indices. Plus it provides diversification by providing access to investments, such as currencies, that you may not normally hold in your portfolio.

Financial advisers are, however, cautious about spread betting. Patrick Connolly of Towry Law says clients have to separate it from their investment portfolios: ‘Spread betting is just gambling – it is different from investing. With spread betting, you are trying to predict daily movements in indices and shares, rather than investing money for the long term.’

Spread betting offers the opportunity to make money from rising or falling share prices. But read all the terms and conditions and ensure you understand the full risk before making a bet. After all, the losses can be unlimited.

The principles of spread betting

Experienced trader Vince Stanzione sets out ten key rules to follow if you want to make profitable use of spread betting:

1. You can make money in all market conditions
2. Start small and build up
3. Diversify
4. Know your personality and trading style
5. Money management is the key to survival
6. Cut your losses and let winners run
7. Treat financial spread trading as a business
8. Don’t get carried away by technology
9. The crowd (and the media) are normally wrong
10. Don’t feel you must trade all the time.

Vince Stanzione has produced a home study course to teach private investors how to benefit from trading financial spread bets and fixed odds, priced £347. For details, visit www.fintrader.net

“Stock Market Rally on Borrowed Time” Warns Multi-Millionaire Trader

Critical Insight on Where to Invest and How to Protect Assets Offered (MMD Newswire) August 12, 2009 – - Multi-millionaire trader, Vince Stanzione, predicts a lot more doom before the next boom.

This veteran trader is warning stock market investors that the worst is yet to come and now is the time to start getting out of stocks not in. His proprietary trading model calls for a fall of at least 20% in the S&P 500 within the next 4weeks and for a sharp up move in the US Dollar and T Bonds.

“The markets and property markets are heading lower, much lower. Unemployment is going up 20%+, and living standards will
not return to the 2007 levels for at least 20 years, if ever. Recent moves up in the stock market are nothing more than manufactured short term gains,” warns Vince Stanzione. He continues, “I have no desire to scare people or give false hope; I trade as I see it and share my information. I am not the most conventional trader, as I’m not afraid to bet against the crowd. I
have an eye for spotting the next big trends.”

Vince Stanzione is Available for Interview
Vince Stanzione will share his amazing insight into the next big trends as well as explaining how to protect assets against future economic downturns. Vince has extensive experience giving TV, radio and print interviews. His views on the financial markets are interesting because they are edgy and go against conventional opinions.

His track record and past predictions have been lightning accurate in numerous markets including copper, grains, crude oil, gold, the British Pound, the Euro and treasury bonds. Both betting up and down has led him to a personal fortune in the millions so when he speaks traders all over the world listen.

to find out more go to www.fintrader.net

Retired Before Your Time? and Need Supplemental Income

If you have retired and are looking for an excellent income working from home then Trading Financial Markets could be on of the best options for you

NO Experience

How would you like THIS job description?

No Job (that’s a great Job description in itself)

NO Office

NO Staff

No Products

No Selling

No Overheads

NO TAX!!! (on financial spread betting)

Spend Most of the Year Holidaying or travelling the world.

No age discrimination, in fact over 50’s have been proven to make excellent Financial Traders.

To learn more about a new carrer in Trading Financial Markets please click here www.fintrader.net

Have investors learned Nothing?

Have investors learned Nothing?

A well know quote by George Santayana comes to mind to describe the current stockmarket mood and it is “Those who do not learn from history are doomed to repeat it”

I have never seen sentiment go from so bearish in March to so bullish in just a few months, these really are interesting times. Whilst more than happy enough to trade along with this ride I still remain of the view that this is a rally in a bear market and not the start of some great big new bull market. The liquidity and money that has been “introduced” by the Federal Reserve and central banks together with the 0 interest rate for savers is worrying to say the least.

The same banks that where taking high risks which caused them to be bailout are doing the same again. Investors both professional institutions and amateur (is there much difference?)  that were on the verge of jumping under a bus back in March are now chasing higher risk stocks, junk bonds, risky credit products and standing in line to buy new equity raised by banks.

I warn all readers to proceed with caution, this is not the return of 2006/2007 the Fed does not have the ability to cut rates, homeowners do not have rising equity in their homes and access to unlimited credit and the current US administration is extremely unpredictable.

For now I will take it day by day but as we get closer to September I have no doubts that my account will be very much on the short side and moving in to lower risk defensive trades rather than chasing the high risk stocks.  Whilst many are seeing “green shoots” I am seeing great opportunities to start shorting stocks again but it’s not time yet.

What I see at the moment is fund managers that have been left behind are playing catch up with the market so they are investing now, better late than never. Many of the funds that have been sitting in cash and were looking clever are now not looking that smart, so their investors and managers are telling then to get out and start buying, everyone is making money around you and your sitting in cash!

I think you know how this story is likely to end and this is how I expect to make my next killing in the rest of 2009.

To learn more about making money from Financial markets going up,down or even sideways go to www.fintrader.net

About Vince Stanzione

Vince Stanzione is a self made multi-millionaire based in Europe. Started at a junior at the age of 16 for Nat West Foreign Exchange in London he worked his way up in before leaving to start up his company. He has been involved in various companies including mobile communications, premium rate telephony, Interactive gaming, publishing and television and financial trading. He now lives most of the year between Spain and Monaco and trades his own funds mainly in currencies and commodities. As well as trading he also teaches a small number of students and produced the best selling course on Financial Spread Betting. He is also the author of “How to Stop Existing & Start Living” To find out more go to http://www.fintrader.net

Inside Business Radio Vince Stanzione Interview

Vince Stanzione was recently interviewed by Neil Bentley for Inside Business Radio where he shares his secrets and tips on trading financial markets and how he got started.

Click here to listen:

http://www.insidebusinessradio.com/

Alternative trading strategies

What Investment Magazine

9 June 2009

Jenny Lowe shows how a range of derivative-based instruments can improve your trading strategies.

Falling share prices around the world can make anyone think twice about their financial plans. But while the dramatic price swings may have scared some investors, others have taken heed of Warren Buffett’s advice and are being ‘greedy when others are fearful’.

Alternative trading strategies, such as financial spread betting and using contracts for difference (CFDs) and covered warrants, enable investors to access a wide range of markets. By using such techniques and products, the investor can adopt a range of strategies, and hedge or speculate on a growing number of markets and asset classes, including indices, commodities, foreign exchange and equities, to name but a few.

Using leverage
It is fair to say that the days of leveraged trading being reserved for the use of institutional investors are long gone. There are, of course, critics of the use of instruments such as spread betting and CFDs. They argue that there is something wrong with a product that does not involve investment in the underlying share, believing it to be more of a gamble than an investment. But supporters of spread betting point to the flexibility that it offers investors by allowing them to go short or long of a particular asset and to gain exposure to a wide range of assets and markets.

Financial spread betting was first introduced into the UK in 1974, when IG Index was created to enable investors to trade the price of gold without incurring hefty premiums through the exchange controls applied if the metal itself was bought.

Having originally been used almost exclusively by City professionals, institutional investors and other ‘high-rollers’, spread betting is now beginning to reach even the smallest investors and is being used effectively as a hedging tool against falling markets.

Taking control of your portfolio
Albert Maasland, head of Saxo Bank’s London office, observes, ‘Over the past
12 months, we have seen more and more individuals taking responsibility for part of their investment activities. I think a lot of people traditionally passed money to third parties to manage on their behalf and have been disappointed with the returns.’

Like any other financial instrument, spread betting has its own particular advantages and disadvantages. The proceeds, if you have made a profit, are free of capital gains tax (CGT), you can gear your potential profit, there is the option of making money by going short and you have access to a number of different markets, including foreign exchange deals.

On the other hand, unless the investor places a guaranteed stop-loss with the bet, you can incur very large losses should markets move against your position. Placing a stop-loss means that the bet automatically closes when losses hit a certain specified level.

So, for example, say you want to bet on the FTSE 100, which is currently trading at 4,450. You are given a spread of 4,440 to 4,451. Now, if you believe that the FTSE 100 will end the day higher than 4,451 you would place an ‘up’ or ‘buy’ bet and place a certain amount, say £5, per point. If you are right, and the FTSE 100 rises to 4,500, you would make a profit of £245 (4,500 minus 4,451 = 49 points). However, should the market fall to 4,430 you would have lost £105 (4,451 minus 4,430 = 21 points).

Limiting the downside
But there are ways to limit the losses and allow you to get a good night’s sleep. Joshua Raymond, market strategist at City Index, explains, ‘There are several risk management tools available to traders to reduce their losses, one of which is the guaranteed stop-loss. This is the most popular tool, and it allows investors to place an automatic order so that if the market goes against them, the system will automatically close up the position.

‘So, for example, if I had bought at 180p and I want to make sure that I only lose if
the market goes down to 150p, I can put a stop-loss in at that level and be safe in the knowledge that if the market goes against me my loss will be limited.’

Having put something in place to protect your losses, you can also do this to lock in gains, with a tool that is referred to as a ‘limit to order’. Raymond continues, ‘Obviously, investors are not going to be able to be at their computer for the entire time, so there
is the option to set a profit target and the system will then automatically close out the trade when that profit is reached. The aim is to give investors as much flexibility as they need to manage their trades without being worried or having to be at their computer
the whole time.’

There are many similarities between financial spread betting and CFDs, as neither attract stamp duty and both offer a method of investment that is based on derivatives.
But unlike CFDs, an investor using financial spread betting does not have to pay any commission. This is because financial spread betting firms swallow the commission by charging a slightly wider bid-offer spread than is the actual market quote.

However, investors should not be put off CFDs by the prospect of having to pay a commission fee because they are actually very low, typically in the range of 0.1 per cent to 0.25 per cent. Any gains from CFD trading may also be subject to capital gains tax, whereas this does not apply to the proceeds of spread betting.

At the margins
CFDs allow investors to take long or short positions, and, unlike futures contracts, have no fixed expiry date, standardised contract or contract size. Trades are conducted on a leveraged basis, with margins typically ranging from one to 30 per cent of the notional value for CFDs on leading equities.

Therefore, CFDs are essentially a form of margin trading. The advantage of trading on margin is that it can give you a much greater interest in the underlying investment. For example, if you think a share is going to rise, and you have £1,000 to invest, you could buy stock of that amount. If you guess right, and the shares rise by, say, 20 per cent, you have made £200, minus dealing charges.

If, however, instead of buying shares with that £1,000, you open a CFD, you could gain 20 or 30 times more exposure to the upside, giving profits of £4,000 to £6,000, depending on the margin set by the CFD provider. But, you must realise that you also risk magnifying losses twenty- or thirtyfold if you get it wrong and the price of the underlying share moves against you.

CFDs linked to many FTSE 100 shares trade at margins of five or ten per cent. Therefore, rather than using your investment to buy 100 per cent of a block of stock, you effectively put down five per cent and buy a contract to buy or sell a further 95 per cent of a much larger holding.

‘Let’s say you want to buy £10,000 worth of a stock, which will cost you £10,000,’ explains Saxo bank’s Albert Maasland. ‘With a margin product, which CFDs and spread betting both are, you will only have to put up a percentage of the total value of that stock. So let’s say that’s ten per cent. If the stock is trading at £1 and you want to buy 10,000 units, you will have to put up just £100, as opposed to £10,000 if you went down the shares route.’

CFDs and pensions
An added benefit of CFD trading is that it is possible to invest in them within a pension, which makes them tax free. However, only a small number of companies providing self-invested personal pension (SIPP) wrappers will accept CFDs, and those that do have strict scrutiny and monitoring requirements before allowing an investor to proceed.

CMC Markets, for example, offers investors with a SIPP the option to invest, with limited risk, in CFDs as part of their pension portfolio. The CMC Markets Trader SIPP Account comes with SIPP-specific design features, including a ‘no-slip price guarantee’. This means that any stop order will always be executed at the price an investor requests,
and under absolutely no circumstances can an account ever go into deficit.

‘We offer a watertight account guarantee that those investing in CFDs within a SIPP with CMC Markets will not go into deficit no matter how much markets move against them, and they will not see calls made on their other investments within their pension portfolio,’ enthuses Andrew Jones, head of SIPPs at CMC Markets.

Seeking cover
Of course, if all of this sounds too much of a gamble, there is the alternative of trading through covered warrants. These are derivatives issued by financial institutions
that give the holder the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a specified price on or before a predetermined date in the future.

Covered warrants offer investors an opportunity to make significant profits, and
the gearing means that they are potentially more rewarding than ordinary share dealing. However, as with both spread betting and CFDs, this also means that the risks and potential losses are greater – although they do offer protection on the downside.

Similar to CFDs, covered warrants provide an investor with the same level of exposure as buying ordinary shares but at a fraction of the cost of the underlying asset. Also similar to CFDs, investors using covered warrants don’t have to pay stamp duty, but are subject to capital gains tax.

Vince Stanzione, an active trader in these instruments who runs the www.fintrader.net website, explains, ‘Covered warrants are issued and backed by the issuer, which is normally a major financial institution, the main ones being SG Warrants
and RBS Markets.

‘The investor buys and sells the covered warrant via a stockbroker, either by phone
or online anytime during normal market hours, and each warrant has a bid and offer price just like an ordinary share. Covered warrants are listed on the London Stock Exchange and each warrant has a unique ticker code.’

Puts and calls
There are two types of covered warrants, a put and a call, and you will normally have a selection of expiry dates and strike prices. A put warrant is bought if you think the price of the underlying asset is going to go down. So, for example, if you are looking to invest in gold and you think the price will fall, you buy a put warrant and as the price of gold goes down the put warrant becomes more valuable.

Stanzione clarifies, ‘When looking at a warrant, as well as puts and calls you will see a selection of strike prices, such as 700, 800, 900 and 1000. You will also see different expiration dates, such as June 2009, September 2009 and March 2010.

‘The more time a covered warrant has until expiration then the more the warrant will cost. Also, the further out of the money the strike price is, the more volatile and speculative the covered warrant is.’

However, with covered warrants, the good news is that the worst that can happen is that a covered warrant expires at zero, so you cannot lose more than the price you paid for your warrant plus your dealing commission. You can also sell the warrant before expiry to a bank at profit or a loss.

To learm more abot Financial Spread Trading and Fixed Odds Beting go to www.fintrader.net

Making Money with Betonmarkets Fixed Odds

Fixed Odds financial betting offers a range of ways to back different markets, which I see as a financial toolbox, you just need to select the right tool for what the particular market you wish to back is doing.

Fixed Odds betting has some big advantages over financial Spread Betting especially for those starting with smaller accounts. With Spread Betting you’re paid by the number of points you are correct by, with Fixed Odds you can make a large return with the market moving just a few points in your favour. Another massive advantage of Fixed Odds over Spread Bets is that you don’t need to worry about using Stops.

Apart from One Touch bets, with Fixed Odds you are buying time, similar to an option, so your bet could be wrong for days or weeks yet by the time expiration comes you can still end up in the money and win. Many traders have the right view on the market but their timing tends to be out and they are stopped out when using a spread bet, only to see their trade move in their predicted direction. By using a Fixed Odd bet this takes away the worries of day to day price spikes.  to learn more go to www.thefinancialtrader.net/dt

No one stays at Number 1 for every

Vince Stanzione believes that twenty years from now the US and European economies will no longer be the world leaders

When I started as a trading junior back in 1985, one of the first sayings I learnt from my boss was, ‘when America sneezes, the world catches a cold’ and that has remained true to date. We have all witnessed how quickly a financial cold that started in the US has spread around the world.

Looking ten or 20 years ahead though, do you really think the same saying will stand? I don’t, and while the US and Europe will still be important economies they will not be the leaders.

Somehow, the hope is that the US can fix its financial problems quickly and return to glory, but I hate to tell you, Mr Obama, your country has had its best years.

The new dominant market, whether you like it or not, is China and other Far East regions. Also, Brazil is in good shape. I am not a big follower of the Indian market, but this region also has growth prospects.

This is not just a bear market in US and European shares, it’s a re-adjustment to the reality that these markets are not the leaders anymore and the financial system is near bankruptcy. The idea that the Dow Jones, FTSE100 or S&P500 is going to make some miraculous recovery is just wishful thinking.

Hilary Clinton’s recent visit to China to reinforce relationships seemed more like a charity request than an official visit. The US thinks that China needs to keep buying treasury bills; it does not – the US needs China more than it needs the US. And the worse the economy becomes, the less likely it becomes that China will support the US.

China will look after its own people, economy and banks, moving money back home wherever possible. At some stage, I think the US treasury market will go into serious bear territory.

The strongest banks in the world are all based in the Far East. You don’t hear about Bank of China, Industrial & Commerce Bank of China or China Construction Bank needing a bail-out. HSBC, while slightly bruised, is still a quality bank and did not need any government assistance.

While the US and Europe will get bear market rallies, there will be no resumption of a bull market for years and even if it does return, you are better off having your money in other markets. The only US or European companies you need to invest in are those with a strong link to growth regions.

Buying into China
Look at the China 25 Exchange Traded Fund FXI (US listed) and FXC (UK listed). This is made up of 25 of the largest tradable companies. The ETF is very heavily weighted to financials but these are the banks and insurance companies I don’t mind owning. We also have China Mobile, Petro China and China Shenhua Energy to name a few.

While down, the China 25 has held up far better than the US or UK markets and will continue to do so. This index has stayed above November lows. I don’t suggest you put your life savings into this, but rather invest every month or so and build a position. I also like Brazil and this can be traded via the Lyxor Brazil ETF.

Major oil companies
With oil back at $45 a barrel and with the crowd bearish on oil prices I have to say that buying quality oil companies has to be a good move. Some oil majors to look at include BP, Petro China, Exxon Mobil, Chevron, Petroleo Brasilerio, Total Sa and Statoil Hydro. I see oil prices averaging over $60 as we move into the second half of 2009 and this will be good for the above mentioned companies.

Vince Stanzione has produced a home study course to teach private investors how to benefit from trading financial spread bets and fixed odds priced at £347.

For more information, please visit www.fintrader.net