C4Warrior

I've been puzzling over this question since you posited it, zdo. I figured there was some kind of lesson I was supposed to learn from it, but I must admit that I have no idea what that lesson is. So how about I answer the question to the best of my ability and you point out where I'm wrong or what I'm missing - sound ok? Does the market as a whole create fiat currencies? Well, yeah. It does that all the time in a manner of speaking. Show me two people and some goods and I'll show you a default medium of exchange by the end of the day. Ultimately, the medium of exchange, whether it's cigarettes or snak-paks or whatever, becomes a default medium, traded by people who never actually use the stuff. So yes, in that sense the market does create fiat currencies. When it comes to something like the Euro, we're talking about a pure fiat currency. There was no reason for that currency to exist. It was literally created by a handful of policymakers who wanted a single currency and one of their first acts was to create a central bank as an agent of directed monetary policy, with predictable results. Ok, so if you could evaluate that and tell me where you think I'm wrong I'd be much obliged. Alternatively, if I'm missing the point entirely, you could just tell me what you're on about.

Though I am new here, and hesitant to butt heads with those more experienced than myself, I am a student of economics and I do believe that Germany will bring back the DM, though probably not soon. The problem with the Euro and the EU is that they are both political entities. The market did not create them, nor does it respect them. Having a universal government for a collection of wildly disparate states makes no more sense than having one currency for a collection of wildly disparate economies. The fact of the matter is that they will break apart no matter what anyone does because they are not the same, and there is no centralized solution to their troubles. How does one control a currency that is hyper-inflated in some regions and depressed in others? How does one control economies that are hyperactive in some regions and severely depressed in others? It can't work (yet) because the whole premise is based upon a collectivized wealth system, which is to say a centralized one. That never works because it violates the basic principles of the free market. Worse, it tries to pair the two, with predictable results. Vaclav said it best: "The Third Way is the fastest route to the Third World", and we're seeing that in action right now. Germany will abandon the Euro and the EU eventually because it will be forced to. Everyone is worried about the PIGS today, but France and Britain are on a collision course with disaster as well. It will take even greater austerity measures to return them to solvency once they get in real trouble because they have much more momentum in terms of economic interest and populace. The socialists aren't about to abide that. They'll sink those economies before they ever agree to give up their entitlements. As a proof I offer what is going to happen in Greece over the next few weeks, months, and years. Whether Germany supports or abandons them, we'll see worse riots and possibly even the adoption of a more socialist government that absolutely wrecks the economy. What option is left to a state that is economically ruined and with nothing but a sense of entitlement to push it forwards? On a similarly pessimistic note, the EU could just kick the PIGS out and/or dissolve, with predictable short-term effects. Though this would be a better move in the long term, there would be no real political support for such a move, and even if they did it we'd see a major slump. Europe is going down, one way or the other, and it is only a matter of time before the Germans are forced to abandon this lost cause. The best thing Germany could do now (though they won't) is to simply abandon the EU right now and soak up the market potential that their fellow nation-states are busy suffocating. Sure, the market will tank for a little bit, but it desperately needs to tank and readjust for decades of state meddling that have ruined the price mechanism and the flow of capital in nations around the world. That's my 2 cents, though I'd turn it into a lot more if I traded it against the Euro right now.

Quoted for absolute truth. It's been said already (albeit in market terms), but my take on this situation is that the PIGS are done for. The social structure created by the entitlement state is so pervasive that any political process of reform is doomed by virtue of the sheer self-imposed socio-political machine through which any reform must pass before being translated into real economic results. In short, things are going to get much worse for them before they get better because of the built-in resistance factor to navigating the tumultuous seas of the free market that comes with entitlement. They'll get around it eventually, but the process will be slow and painful, and it is made moreso by these bailouts. So what happens after they adjust to what they laughably consider to be "austerity" measures? My prefered example for this situation is that of East Germany. Even now, more than two decades after the fall of the wall, East Germans are viewed unfavourably by their counterparts in former West Germany and deliver consistently substandard results across all economic sectors. Expect to see everything we've come to expect from peoples and economies that have to be weaned off of crippling state dependence: Slow growth rates, volatile markets rife with illegal activity, and rampant loan defaults - at least for a couple of years at best. Fortunately, trade and commerce are made of India-rubber, and have, in fact, migrated to India for more rubber, amongst other things/places. Emerging export markets stand to gain from the tumult that will inevitably result from Europe's loss, and with more exports comes more PPI and therefore more imports. Germany also stands to gain from dropping the dead-weight ( and they will be forced to, eventually). The short-term consequences of such a move will be significant and cause temporary downturns, but there is nothing produced in the PIGS nations (to include purchasing power) that doesn't have a hundred ready substitutes. The best thing the EU could do is to kick these nations out, with the possible exception of Ireland for reasons I shall not detail unless asked(due to post length) but principal among which is Ireland's come-lately level of economic freedom. That said, I'm a new member here and an even newer member of the investing community. I'm still figuring out how to be a good investor, and frankly, there's a lot of jargon people toss around here that I have to look up on a regular basis, so I can't honestly say that I'm someone to listen to or even consider. However, I'm versed enough in basic economic principles that I feel I can offer a reasonably educated perspective on the macroeconomic situation in Europe and what it means for the investing community in the long-term. I'm aware that there's a certain level of presumption in presenting my view, but I feel strongly that I am correct on the points I have made here, and I have the numbers to back that feeling. Of course, if you feel that I am wrong, in any way, please tell me. I'm here to learn right now, not to teach. Thanks in advance for any support/criticism, - James

Hello Thomas:) Terribly sorry about the accident, mate. I hope it's not too painful these days, but it sounds like you're not letting it keep you down. I'm James and I'm a newbie as well so I don't have any advice to offer other than to say that there is a lot of good info on models here. That said, my approach to equities is working pretty well so far (only been at it live a few days now) but if I find out that my approach is consistently good I'll pass it along for your review. Anyhow, (assuming the other guy deserves it) I hope your suit goes well and nets you the compensation you deserve. If it doesn't, I hope your investing efforts will earn back your legal fees and more for years to come. I wish you good luck and even better attacks of prudence, - James

Hi Lucian, I'm a rookie trader - just broke into the market during the recent slide after months of simulator training, reading, and testing models. All that preparation has taught me just how much I still don't know, and I'm constantly looking for additional perspectives so I'd love to read your blog commentary. If you could kindly pass along the address to me via private message, I'd be obliged. Cheers, - James

I know I clicked the thanks button, but thanks for the heads-up TW. Now that I think about it, I probably would have been somewhat disillusioned if I didn't make my goal. I like your perspective much better. Similarly, I'll take your advice about developing a perspective. Why limit myself before I really know what I'm doing, right?

Hi umfan, Assuming you're in the US and the taxes you are talking about are capital gains taxes, the rates are conveniently listed in wikipedia under US capital gains taxes. You simply need to list your capital gains along with your income level, and you'll be taxed at, probably, 10-15% for those gains. However, wrb has the right idea. You should talk to a tax professional since you're just starting out and your parents (ironically) apparently didn't bother to explain this stuff to you. No worries, my parents didn't explain any of this stuff, either. The tax pro will explain everything to you if you ask. Just make sure you bring all your financial records. It'll cost you, of course, but given that you're only 19 and therefore have an income level that will probably generate a tax refund; you'll only lose $50-$100 out of your refund, as many tax places base their profit on your refund. Your capital gains probably aren't high enough to negate the refund, so I'd recommend asking the tax pro at least once and paying close attention so you can do this stuff by yourself from now on. Sadly, as you get older, taxes only get more confusing, not to mention more unfair. The idea is that the more successful you are, the more children you have, the more productive you are, the more assets you own/produce, in any sense, the more complicated your taxes become. Beyond that, I have no advice to offer other than to say that it should be apparent how counterproductive taxes are to young people like you trying to make a future for themselves. Semper Fi -James

Well, this seems like as good a place to get started as any. I guess I'll use The Negotiator's template (thx;)) and hopefully some of you can point out any weaknesses in my position/strategy. Any advice would be appreciated, and please don't hold back. If I'm an idiot, I'd rather know it so I can fix the problem rather than feel all warm and fuzzy. Thanks in advance for any help. 1-Why. I'm a disabled vet with a reliable dual-income that I have almost no use for. I have no children or wife, nor do I want them. I live a very spartan lifestyle, and have no desire to change it, and as such I have roughly 80% of my after-tax income just piling up. However, I do have two baby sisters that I'd like to leave a nice portfolio for, preferably with some solid DRIPs in there. Ultimately, I'd like to generate enough capital that they will have a decent dividend supplement to their income and/or a metric ton of solid equity in solid industries. For the record, I also intend to teach them about the benefits of wise investment, y'know, once I learn how to do it. 2-Commitment. I work nights and am up for most of the US trading day. Even better, I love sitting in front of a computer or two and just reading everything I can find with relation to economics, politics, business, and science. I am prepared to devote at least 6 consecutive hours per day to this, and more on the weekends, which for me are Monday and Tuesday. I am also prepared to devote years to this effort, and I am very, very patient. 3-Timeframe and method. I don't know exactly how to qualify what trading style I have. I guess I could be called a long-term momentum trader, mixed with some technical style and a readiness to scalp financials when I know that there will be a general upswing in investing. I would very much like to become an adept bear trader, as I can always see a bear market coming, but I suck at shorting. It's the timing of it that I can't seem to nail down. My timeframe is roughly two decades, with a goal of roughly 500% ROI, at least. 4-Account/investment size. $18,000 in intial investment with $1200- $2000 in additional capital per month. 5-Money management. I think I need some help with this one. As I said, I'm in this for the long haul with solid firms (like railroads or indispensible commodities) so temporary setbacks don't really concern me. Where I'm falling down is in obtaining the necessary data to differentiate a temporary setback with a major debt crisis within a firm. I don't know where the best place to look is, and most of the websites I find charge a premium for statements. I know this is a total noob question and I could probably develop an answer myself if I spent the time and really thought about it, but asking you guys is much easier and offers a broader perspective. Where's the best place to obtain a wide range of reported data? 6-Product. Equities, preferably those which are tied directly to macroeconomic trends. Por ejemplo, the success of logistics industries, such as railroads or parcel service or freight trucks is directly tied to the amount of economic activity in the nation. Besides being indispensible industries, their business volume represents raw materials already exploited or products already made, which will take days, weeks, or months to deliver to retailers, which will in turn serve to indicate the future success or failure of resource exploitation or product manufacturing within a particular sector, and there is opportunity to profit from investing in every step of that process with the benefit of virtual foresight. The other thing I like about this particular strategy is that so much of it can be predicted by what the governments of various nations do today. Good old solid, predictable, stupid governments. They loudly announce to the world whatever good they intend to do, boosting short-term invesment in the industry concerned, and then almost invariably end up screwing the pooch and creating the opposite of the intended effect. For instance, if the US government announced tomorrow that it would hedge us against the fallout of a European collapse by subsidizing US producers of finished products like, say, luxury automobiles, it would generate an immediate boost in US auto stocks followed by a slump as the reality of the fact that the demand for US autos hasn't really changed. By the time it finally does change, the companies concerned will have grown to accomodate the subsidies into their business model, and the end product remains an expensive US auto that nobody outside the US buys. Cue explosion of foreign auto market, along with the accompanying import quotas, which themselves can be useful in shorting when the legislation takes effect. That's an oversimplification, but you get the idea. Or am I just a fool? 7-Broker. Undecided. This is another noob question, but which brokerage offers the best service for long-term traders? I'd prefer one that charges only a per-trade fee, as I won't be making many trades. I'm willing to pay a bit more (like, $5 extra) per trade if the customer service is good, but there must be no load on the trade itself. With my current simulator portfolio, I'd like a broker that charges no more than $13 per trade. Any more than that becomes a burden with my shorter-term orders. 8-Platform. Oops. I kind of explained my platform already. To elaborate, my platform at the moment consists of waiting for the Euro-debt crisis to raise it's ugly head again (and it will, because their "solution" is garbage) and then capitalize on undervalued financials and largely-unaffected US logistics industries, along with anything else I can find. I am concerned that I may not get another opportunity to buy before the 2012 elections if the Tea-Party or the Republicans in general get a stronger hold on the Congress, which will indubitably result in at least a significant market uptrend as fears of taxation and regulation dissipate. Then again, if the Dems somehow pull off a victory (and they may well), it's going to put the economy and the dollar (unless the Euro and the Yuan somehow drop the ball again) in the crapper for another two years at least, which presents a lot of opportunity in equities but casts doubt on the long-term prospects of US investments in an increasingly global market. 9-News source. I simply look at as many online news sources as possible and use my common sense. Rarely is the truth ever conveniently encapsulated in one source. 10-Computer. I have $3,500 set aside for a top-of-the-line iMac and a nice desk and chair with which to utilize it. The thing I like about Macs is that I can run two operating systems on one machine with duplicate files, so the failure of one (and it's always Windows) doesn't mean a loss of data. Supposedly, this is possible on a PC as well, though I don't know how to do it and I have a bad history of motherboard faults in PCs, from which no number of operating systems will save you. I'm sure this offends some PC disciples, and I'm sorry (and I am sincere about that) for the fact that I'm such an idiot that I can't figure out what seems to you to be a superior GUI, but not all of us have the time or the will to learn what makes an OS tick. We just want it to work and not destroy itself all the time or require extensive registry repair or careful use. Tell you what, if you don't give me any crap about my inability to repair an OS, I won't give you any crap about your inability to fix a toaster or a gun or a house or a car or anything like that. We just have different areas of interest, peace? 11-Internet Connection. Again, I need help. I'm currently located at the ass-end of the Earth (Glendive,MT) and about to move to a different part of the ass-end of the Earth (Aberdeen, SD). As far as I'm aware, Aberdeen has mostly cable internet connections junctioned with fiber-optics. Therefore, my connection speed is going to be dictated by the amount of traffic at the junction box. In itself, this isn't a problem because I'm not a day-trader, but I'd still like to know which brokerage offers the best deal on real-time updates. I'm still willing to pay a small premium for this. Suggestions? This concludes my initial wannabe trader post. To reiterate, I'd really appreciate whatever you guys have to say about this general outlay of my investing premise. However convinced I may sound, the fact is that I'm basing most of my investment strategy upon an education that is not tailored towards investments, but rather towards economic trends as viewed by a particular economic philosophy. I've found that it works in simulations, but what I know about the technical aspects of the market itself could fit into a small pamphlet with very large print. Thanks again, -James

Hello, traders. Nice lab you got here. I'm James and though I've been a student of economics and the political sciences for years, my first love was always the military. I spent 8 years in the USMC, for which I received some cool scars and a VA disability pension, courtesy of an incendiary IED. I now intend to use some of that money to develop a nice portfolio to leave to my baby sisters in a couple of decades and maybe make a little profit for myself as well in the process. Now, I've been watching the markets, particularly equities, for a couple of years now and saving everything I could for my opening buy-in. I've also been studying market history as it correlates to economic theory intently and using trade simulators, and I think I've got a decent feel for the equities market and the indices. However, that's a far cry from actually jumping in and doing well. For all I know I'm a complete idiot with a confirmation bias. Also, I'm not sure which online brokerage to use, though I am in the process of rectifying that problem. So here's me, here to listen, here to learn, and probably ask a lot of dumb questions to make sure I don't mess up my little endeavor. Apologies in advance. Thanks for the opportunity to join your community, -James