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    Nfant_De_Mileu

    Building Black Wealth pt2

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    by , 07-23-2010 at 12:12 PM (3817 Views)

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    A successful investor must know these terms because this information will determine if you are a good investor or a great investor. Watch the news and you will definitely hear about this information.

    Ben Bernake - The Chairman of the US Federal Reserve. He sits on the Financial Board that monitors Financial System in the US. Whenever he speaks on the US economy, be sure to know that the stock market will respond.


    Economic Calendar.
    Every month various financial reports are made that details US economic development.

    An Indicator is anything that can be used to predict future financial or economic trends.

    Leading indicator- These types of indicators signal future events.

    Lagging Indicator - A lagging indicator is one that follows an event.

    Housing Starts

    Why Investors Care
    Two words...Ripple Effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as housing starts, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

    Home builders usually don't start a house unless they are fairly confident it will sell upon or before its completion. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises, and income will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture, and landscaping are just a few things new home buyers might spend money on, so the economic "ripple effect" can be substantial especially when you think of it in terms of more than a hundred thousand new households around the country doing this every month.

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    Jobless Claims

    Why Investors Care
    Jobless claims are an easy way to gauge the strength of the job market. The fewer people filing for unemployment benefits, the more have jobs, and that tells investors a great deal about the economy. Nearly every job comes with an income that gives a household spending power. Spending greases the wheels of the economy and keeps it growing, so a stronger job market generates a healthier economy.
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    Retail Sales

    Why Investors Care
    Consumer spending accounts for more than two-thirds of the economy, so if you know what consumers are up to, you'll have a pretty good handle on where the economy is headed. Needless to say, that's a big advantage for investors.
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    Producer Price Index

    Why Investors Care
    The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the consumer price index (CPI). By tracking price pressures in the pipeline, investors can anticipate inflationary consequences in coming months.
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    Consumer Price Index

    Why Investors Care
    The consumer price index is the most widely followed monthly indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact.

    Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets- and your investments.
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    Industrial Production

    Why Investors Care
    Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.
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    International Trade

    Why Investors Care
    Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.
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    Durable goods

    Why Investors Care
    Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. Rising equity prices thrive on growing corporate profits - which in turn stem from healthy economic growth. Healthy economic growth is not necessarily a negative for the bond market, but bond investors are highly sensitive to inflationary pressures. When the economy is growing too quickly and can't meet demand, it can pave the road for inflation. By tracking economic data such durable goods orders, investors will know what the economic backdrop is for these markets and their portfolios.
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    Gross Domestic Product (GDP)

    Why Investors Care
    GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.

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    Comments

    1. edwins's Avatar
      greetings-

      i would not pretend to say that the above info isn't helpful- however, everything we have ever been told by the people who write this stuff has turned out to be false; many have lost 30 -50% of what they had invested...

      so it seems to me that the economy is contracting and knowing the definitions to the above terms will not make me a better investor... almost like having a 4, 6 or 8 year college degree will not get me a job...

      i hate to sound critical- just keeping it real.


      peace be unto you

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    2. Nfant_De_Mileu's Avatar
      Quote Originally Posted by edwins
      greetings-

      i would not pretend to say that the above info isn't helpful- however, everything we have ever been told by the people who write this stuff has turned out to be false; many have lost 30 -50% of what they had invested...

      so it seems to me that the economy is contracting and knowing the definitions to the above terms will not make me a better investor... almost like having a 4, 6 or 8 year college degree will not get me a job...

      i hate to sound critical- just keeping it real.


      peace be unto you
      Edwin, thanks for the honesty, constructive criticism is always welcomed and needed. There is a substantial learning curve when it comes to investing, but it should not scare anyone away. The information I presented is not misleading or exact science, either. Although, when this information is applied with other economic data one can make better assumptions in investing. I hope in the near future more Brothas and Sistahs will understand the importance of financial freedom.

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    3. edwins's Avatar
      greetings-

      i am in total agreement with the concept of 'financial freedom'.
      i am confused as to how it may be achieved.

      i used to work with a gentlemen who tried to convince me to invest in the stock market back in the mid 90's... today, the 'paper industry' only serves the wealthy... everyone who put their money in 'negotiable instruments' has lost nearly everything they once had, including the gentlemen i mentioned.

      what is happening, i think, is this: the middle class is being wiped out, period. the economy is contracting at an alarming rate and the once mighty american producer/worker is now clockin' at wal-mart, servicing the 'service economy'.

      the jobs of the past, now located in china, india and indonesia are now only memories in the minds of americans who once believed in a 'dream'...

      i would sum it all up this way:

      beginning with the sub-saharran and ending with the trans-atlantic slave trade, the nazis distilled rum in newport, rhode island which was taken to the west coast of africa and literally given (poured down the throats) of village heads until they were alcoholic. at this point they were easily manipulated into selling their prisoners of war, indentured servants, their wives and finally their children. next, the 'human cargo' was place on a 'revenue cutter' (slave ship) and sail was set for the americas... the 'human cargo' was put to forced labor producing set commodities as tobacco, indigo, rice, sugar cane and cotton. the cotton was shipped to england where it was turned into textiles by the peasants for shillings (pennies). the textile (fabric) was then shipped off to india where it was exchanged by the merchants for opium (the people of india were dominated by the british and forced into servitude for hundreds of years). the opium was shipped to china where it was forced on the chinese people at gunpoint- this entire process was called- "FREE TRADE"...
      it was said, "a threat to any part of it is a threat to the whole of it"...

      now- when we engage in 'wall street investments' what are we doing...??? do we know where the money goes or who controls it or what people may be exploited by it...??? it seems to me that we are wholly ignorant of the processes in which we engage- not knowing the outcome of our actions or what peoples' misery we contribute to or cause for that matter...

      if one were to go to any trading companies website and search a particular 'cusip' number, one might discover some interesting facts about their so-called 'investments'...

      when you go to court and are convicted of a traffic violation, the judge opens an account in the name of the offender... bid bonds, performance bonds and payment bonds are executed and sold on wall street where they are bundled and resold to 'investors all over the world'. these bonds are sf24, sf25 and sf 26 respectively... incidentally, when black folks are sent to prison, their credit is accessed and bonds are taken out the same way- essentially, a bond is a loan which has a life span for a set period of time. when it matures, they let the brotha out... so the man is being held as collateral for the bond- go figure...

      again- i do not wish to sound critical... but there is much going on here that we are not aware of...

      peace be upon you, my brotha

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    4. Im The Truth's Avatar
      Glad to see this on here!

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