Friday, December 24, 2010

Investment Strategy - Portfolio Rebalancing Method

The Portfolio Rebalancing Method has shown that over a long period of time (our back test is over 40 years), a portfolio that used the rebalancing method has outperformed passive buy and hold methods by a quite a large margin. Did it outperform in 2010?

Key Points:
* The rebalancing method has outperformed the MSCI World Index in 2009 and year to date (3rd December 2010).
* While rebalancing does not outperform the index every single year, it does enough times over a long time frame that it can significantly outperform the index.

How Rebalancing Has Fared Over The Years

As The Year Comes To A Close, Consider Portfolio Rebalancing
We have a long running back test which we have been maintaining for nearly seven years now. This involves the concept of Rebalancing. The rebalancing method has shown that over a long period of time (our back test is over 40 years), a portfolio that used the rebalancing method has outperformed passive buy and hold methods by a quite a large margin. We have updated the numbers for 2010 year to date, and the backtested rebalanced portfolio has continued to outperform.

Firstly, just a brief recap on the details of rebalancing and the portfolio we used to test rebalancing through the years. Rebalancing involves setting a fixed portfolio allocation from the very start. So, for example, you set an allocation of 35% into US equities, 20% into Asia equities, 30% into Europe equities, and 15% into Japan equities. Then, at the end of a fixed period like a year, markets would have moved differently. So, you then buy or sell which ever portions needed until you have the same exact allocation again. And this exercise continues faithfully each year for as long as the portfolio is in operation.

Basically, what this forces you to do, is to take profit from your best performing sectors/regions, and to invest more into the underperforming regions/sectors that year. It is a mechanical method that disregards what you think of markets. It works on the principle that no single market will ever be best performing all the time through the years, and neither will any single market ever stay down in the dumps every single year. So, as the market cycles go through their rise and falls, the method will eventually result in you buying more of a market when that market is low, and selling some of a market that has gone up sharply. Thus, it ultimately results in an investor buying low and selling high, which is the recipe for a successful portfolio.

We will now go over how we actually implemented this into our back tested portfolio over the last 40 years, and what rebalancing forced us to do in the year 2009, and how it fared. Our portfolio is made up of 7 markets represented by their respective market indices. These were allocated based on the following allocation.

Investment Strategy - Portfolio Rebalancing Method
Portfolio Rebalancing Method

Now that we have explained the concept, we look at 2010 (already in December) and see how this method would have fared. We used an all equity portfolio split along geographical lines - US, Europe, Japan, and the 4 Asia tigers (Singapore, Taiwan, Hong Kong and Korea). We used the indices S&P 500, MSCI Europe, Nikkei 225 index, Hang Seng Index, Straits Times index, Taiwan Weighted index, Kospi index as proxies for the performance of these markets over the time period. Our initial allocation was US: 35%, Europe 30%, Japan 10%, South Korea: 7.5%, Hong Kong: 7.5%, Singapore 7.5%, and Taiwan 7.5%. We then started rebalancing it all the way from the end of year 1970 to 3rd December 2010, a period of 40 years. From an initial portfolio of $10,000 at the start of 1971, the growth of the portfolio based on rebalancing and compared to a similar portfolio based on the MSCI World all the way until 3rd December 2010 is shown in Chart 1.

As you can see, after 40 years, the global portfolio managed using the rebalancing method had grown to $242,697. In comparison, a similar $10,000 portfolio composed of the MSCI World index would have grown to just $59,592. (Both portfolios are in Sing dollars). The difference is significant.

Growth of $10,000 since 1971

As the table shows, the rebalancing method has outperformed the MSCI World index quite handily over the last 40 years. How about over the last few years?

4 Years of Investment Rebalanced Portfolio

The portfolio which used the rebalancing method had outperformed in 2009 as well as year to date. When we looked at some of the actions rebalancing forced us to do in hindsight over the last few years. Here’s some of the highlights.

In 2007, the Asian markets were far and away the best performers amongst the 7 markets, and the worst performers were Japan and US. Rebalancing forced us to take profit from Asian markets and add to US and Japan. In 2008, these two markets on a relative basis (especially Japan) dropped less than the Asian markets. Rebalancing then forced us to take money from US and Japan, and add it back into the 4 Asian markets again. And in 2009, true to form, the 4 Asian markets all vastly outperformed US and Japan. The 2010 is almost at a close, and the rebalanced portfolio is set to outperform the MSCI world index for another year.

Cumulatively, as it has outperformed the MSCI world index frequently, over the long term, the compounded outperformance on just $10,000 over 40 years has thus resulted in a huge difference between the two portfolios.

In conclusion, the rebalancing method has outperformed the MSCI world index in 2009 and year to date (3rd December 2010). While it is not expected to outperform this index every single year, it has managed to do so frequently enough over a long period of time such that the improvement in a portfolio’s gain is quite significant. That is why as we come to the end of the year, investors who are reviewing their portfolio might wish to consider rebalancing if they want a disciplined method that works over the long term.

Source: FundSuperMart
Author : iFAST Research Team

2011 US Market Outlook

* With the consensus expecting 2.8% full-year growth for the US economy in 2010, our earlier estimates (of 3.7% growth) look a tad high.
* Nevertheless, we correctly identified the drivers for economic growth in 2010.
* For 2011, we expect investment to be a less significant contributor, while consumption should be a larger contributor to GDP growth.
* While consumer sentiment remains poor, retail sales have rebounded and the credit cycle appears to be turning, positive indications for US consumption.
* We expect 3% full-year growth in 2011, driven by PCE, and to a lesser extent, gross private domestic investment.
* Following the end of recessions, profit margins usually rebound, and this has been the case following the end of the 2008-2009 recession.
* While the recovery in profit margins has driven earnings growth for 2010, we expect rising revenue in 2011 and 2012 to drive corporate earnings.
* As of 20 December 2010, we think that the US equity market can return in excess of 30% by the end of 2012, and we have thus maintained a 4.0 star “very attractive” rating on the US market.

At the end of 2009, we forecast that the US economy would grow by 3.7% in 2010 (see “US: 2010 growth at 3.7%”), a growth rate far quicker than what the consensus had been expecting at that time. Our faster-than-expected growth rate was predicated on strength in gross domestic private investment, fuelled by inventory restocking, which we highlighted as the key driver of US economic growth. We also expected consumption to be a less important driver of growth, with a weak housing market and difficult job situation expected to weigh on consumer sentiment.

While the Bureau of Economic Analysis will only release data on full-year US GDP growth early in 2011, current consensus estimates are possibly more accurate than at the beginning of the year, and the market now expects 2.8% full-year growth for 2010 (based on Bloomberg consensus estimates as of 21 December 2010, 69 industry experts expect growth of between 2.4% and 2.9%).

Our expectations of investment-driven growth did in fact play out in 2010, with gross private domestic investment currently the largest contributor to US economic growth for the first 3Q 10, exceeding that of consumption or even exports. However, the contribution from gross domestic private investment was still slightly below our forecasts, while strong imports have weighed on overall GDP growth in 2010.

Having led for most of 2010, investment to take a backseat in 2011
While 2010 has been a year of business investment, 2011 could be the year when the US consumer finally begins to exert itself again. For 2011, we still expect a positive contribution from gross private domestic investment, but we believe that the key growth driver for US growth will likely come from personal consumption expenditures. Some experts have previously criticised US growth as “low-quality”, driven mainly by inventory restocking activity. We would argue that the inventory restocking process is a necessary feature of the recent US economic recovery, given how low inventory levels fell to in late 2008 as economic activity almost came to a standstill. After five consecutive quarters of positive inventory restocking (since 3Q 09), we would expect restocking activity to peter out going into 2H 2011, and will be a substantially smaller contributor to GDP in 2011. Business spending has recovered strongly (evidenced by strength in gross private domestic investment, which still continues to see a negative contribution from the residential component), but we think that growth in 2011 will be driven by a revival of the US consumer.

Positive indications from US consumers, credit cycle turning
4Q 10 has already thrown up some indication of the strength in recovery of US consumption. Retail sales numbers have come in strongly, leading the measure almost back to historical highs (even if one excludes automobile sales, see Chart 1). Consumer credit also appears to be turning around, albeit slowly (see Chart 2). US consumers embarked on a deleveraging spree in late 2008, resulting in 23 straight months of credit contraction, the longest on record. The downward trend appears to have turned in late 2010, with September and October 2010 both seeing a small positive monthly gain. While this represents only two data points, the turnaround in trend is encouraging and we believe that the end of the consumer deleveraging cycle may be near.

Chart 1: Retail sales almost back to historical highs
US Retail Sales

Chart 2: Credit cycle turning around
US Consumer Credit

Marginal contribution from PCE in 2010, measure to gain in 2011 as consumer confidence picks up
We do not deny that deep structural problems remain in the US housing market, and it may take years for excess housing inventory to be weeded out. On a more positive note, the job market situation has turned less dire in recent months with nonfarm payrolls surprising on the upside, and we may see more job creation as US corporations hire personnel to man newly-created capacity.

Chart 3: PCE's contribution set to increase
Contributions To US GDP Growth

Despite these troubled areas of the US economy, PCE (personal consumption expenditures) have gained for five straight quarters, in line with the US economic recovery. However, the contribution of the PCE component has been less significant, with the measures contributing between 0.7% and 2% to overall growth (see Chart 3). This suggests a spluttering recovery in US consumption, highlighting an uncertain consumer (the Conference Board Consumer Confidence index still remains at levels consistent with past recessions). Given that confidence remains low at present, there remains much scope for sentiment to improve, which could have a multiplier effect on consumer spending. A large improvement in the job market could be a key driver of consumer sentiment in the medium term, and investors may wish to watch the monthly US nonfarm payroll data as a catalyst for a turnaround in consumer sentiment.

For 2011, we expect 3% full-year GDP growth, driven by PCE (+1.9%) and gross private domestic investment (+1.3%). We expect moderation in export and import growth, and we forecast a 0.7% deduction in 2011 GDP by net exports. Nevertheless, our estimate is still more bullish than the current consensus estimate of 2.6% (based on Bloomberg consensus data, as of 21 December 2010), and should quarter-on-quarter GDP figures surprise on the upside, this may provide some impetus for the stock market’s ascent.
Contributions to Percent Change in Real GDP Growth

With the onset of a recession, demand declines quicker than companies are able to slash operating costs, resulting in a sharp drop in profit margins (see Chart 4). Given the lowered level of demand during a recession, companies operate with excess capacity, resulting in lower profit margins. Many companies then embark on cost-cutting measures to reduce overheads and capacity, so when demand inches up following the end of a recession, profit margins (and profits) can spike due to the lowered cost structure.

Chart 4: Profit margins have rebounded
S&P 500 Profit Margin

While 2010’s strong earnings growth for US companies has largely come from cost-cutting measures undertaken during the recession, consensus estimates are for a record-high level of revenue in 2011 (see Chart 5), with further sales growth in 2012. Current estimates are for revenue growth of 5.9% in 2011 and 6% in 2012, rates which are not overly-optimistic, considering that S&P 500 companies previously grew sales at an average rate of 8.1% a year from 2003 to 2007, following the 2001 recession.

Chart 5: Sales expected to recover
S&P 500 Revenue

The combination of a lowered cost structure as well as rising sales should see US companies easily achieve the estimated 13.6% earnings growth for 2011 and a further 13.2% growth in 2012. Profit margins have already rebounded, and with a further recovery in revenue, profit growth is likely to be healthy next year.

Based on the S&P 500 earnings-per-share estimates for 2011 and 2012, the US market currently trades at just 12.8X 2011 earnings, and looks even more attractive at forward PE ratio of just 11.3X based on 2012 estimated earnings. We think that the US market should be trading at 15X PE by the end of 2012, which translates to an index target of 1648.95 for the S&P 500, representing 32.2% upside (as of 20 December 2010). With an attractive level of upside potential in the US equity market coupled with a positive economic growth outlook, we maintain a 4.0 star “very attractive” rating on US equities.

Source: FundSuperMart.
Author : iFAST Research Team

Dow Jones Continues To Edge Higher On Expanding Bollinger Bands, 24-12-2010

The Dow ended the week on a quiet note (+14 points), as mixed economic data kept investors from jumping in ahead of a long holiday weekend. Week-on-Week, the Dow gained another 0.7%, its fourth straight week of gains.

Overall, economic news (i.e. weekly jobless claims, November new home sales, December consumer sentiment, November durable orders goods) continues to showcase moderate improvement albeit slight below consensus.

Wall Street will be closed for Christmas tonight.

On Wall Street, in view of the expanding Bollinger bands and rising RSI, the Dow could head higher for the remaining trading sessions in 2010, offsetting the overbought slow stochastics indicators.

Immediate resistance level is 11691 (upper Bollinger band) whilst support levels are 11376 (middle Bollinger band) and 11258 (50-d SMA) points.

Thursday, December 23, 2010

DJIA Shows Expanding Bollinger Bands Bode Well for More Upside. 23-12-2010

Dow Jones ends +26 points to 11559, another fresh 2-year high at 11559 amid optimism on 2011 economic outlook after a strong November existing home sales and a resilient US 3Q2010 GDP of 2.6% (better than earlier Government estimates of 2.5%), albeit slightly below consensus’ 2.9%.

Sentiment was also boosted by financial companies as investor sentiment towards the sector continued to improve following recent deal activity including Toronto-Dominion Bank's Tuesday announcement of a US$6.3bn purchase of the former auto-lending arm of Chrysler and Bank of Montreal's agreement last week to buy a big Midwestern bank in a US$4.1bn share swap.

Oil & gas related stocks were also in demand as crude oil surged to 2-year high at US$90/barrel given that the Energy Department’s weekly inventory report showed a bullish 5.3 million-barrel decline in available U.S. crude supplies.

On Wall Street, in view of the expanding Bollinger bands and rising RSI, the Dow could head higher for the remaining trading sessions in 2010, offsetting the overbought slow stochastics indicators.

Immediate resistance level is 11668 (upper Bollinger band) whilst support levels are 11357 (middle Bollinger band) and 11248 (50-d SMA).

Daily DJIA shows expanding bollinger bands bode well for more upside.

Wednesday, December 22, 2010

Dow Jones industrial average is at its highest since Aug. 29, 2008

The Dow Jones ends +55 points to another 2-year high. Despite persistent concerns on Eurozone debt woes following another possible downgrade on Portugal’s debt rating by Moody’s, the Dow Jones continued its upward trajectory to reach a fresh 2-year high at 11533 points on strengthening economic outlook and optimistic corporate forecasts coupled with M&A deals.

Share prices of Adobe (the top maker of graphic-design programs) and Jabil Circuit (the top electronics manufacturer) rallied following better-than-expected earnings
forecasts whilst bank shares jumped after Canada’s Toronto-Dominion Bank agreed to buy Chrysler Financial Corp.

On Wall Street, in view of the expanding Bollinger bands and rising RSI, the Dow could head higher for the remaining trading sessions in 2010, offsetting the overbought slow stochastics indicators.

Immediate resistance level is 11657 (upper Bollinger band) whilst support levels are 11337 (middle Bollinger band) and 11238 (50-d SMA).

Monday, December 20, 2010

Daily Dow Jones - Upside Bias With Strong Resistance At The Upper Bollinger Band At 11612 level, 20-12-2010

US economy is showing signs of strengthening while the Euro-zones are still grappling with the worsening sovereign debt crisis following Moody's latest downgrade on Ireland's foreign- and local-currency government bond ratings by five notches to Baa1 from Aa2 last Friday.

WoW (Week on Week), the Dow Jones Index up 0.7%, its 3rd straight gains. The Dow declined as much as 48 points intraday after Moody’s downgraded Ireland’s government-bond rating by five notches and said the country had a weak economic outlook. Moody’s also put the credit rating of Greece on review for a possible downgrade.

However, the Dow Jones narrowed the loss to 7 points and end at 11492 points as President Obama signed a tax-cut plan into law and November’s leading economic indicators made its biggest jump in eight months, signaling the recovery should pick up steam early next year.

On Wall Street, strengthening economic data and a bottoming VIX of 16.1 (year low: 15.2) could signal that a lot of bad news has been discounted. Nevertheless, as slow Stochastics are extremely overbought and MACD is heading towards the overbought zone, the Dow is likely to consolidate its recent gains (+4.4% in Dec and +10.2% YTD) in this holiday shortened week (closed on Friday due to Christmas).

Immediate resistance level is 11612 (upper Bollinger band)whilst support levels are 11299 (middle Bollinger band) and 11217 (50-d SMA).

Daily Dow Shows Upside Bias With Strong Resistance At The Upper Bollinger Band At 11612 level.

Saturday, December 18, 2010

Live Forex Quotes, Where to Find?

For investors who trade Forex, live forex quotes are extremely important. Though they are primarily used for informational purposes, they do provide some indication of the actual market price, which a trader may use it to make deals. Live forex quotes always include two currencies. The price of one currency will be stated in terms of the other. This is because forex trading occurs in two currency pairs.

It’s a good idea for traders to conduct their trading through platforms that offer live forex trading quotes. Today, it’s not difficult to find a live forex trading platform. More and more banking, financial institutions and online trading brokers like AVAFX are beginning to offer this type of live trading platform in order to stay competitive and retain their investors.

Another good place to receive live forex trading quotes is via software designed especially for that purpose. This is an excellent way to keep abreast of price changes made in the forex market in real time. Having this information on hand or being able to easily access it, is extremely important because such information is a necessity to make good trading decisions and minimize investment risks. In order to trade forex profitably, a trader must have their information in real time, and live forex quotes play a major role in this profitable trading decisions.

A good forex trading platform or software program is able to provide traders the most up-to-date quotes. Live or real time quotes are the best. A live forex quotes will give forex traders the information that they need to make investment decisions. Live Forex quotes can be very useful. However, they aren’t necessarily so on their own. It is very important that forex traders know how to use some other chart analysis tools or software programs that can help them make good investment decisions, and provide them some information on market trend and direction to justify when to trade. These forex charting systems or software programs should be used in conjunction with live forex quotes, so that forex traders can gather sufficient trading signals or indications on when to enter or exit the forex market.

An experienced forex trader normally used to have their own investment style and strategies to do trading. However, their trading decisions cannot leave the supports of these forex charting and analysis tools or software. SMA (simple moving average), MACD (Moving Average Convergence Divergence), RSI (Relative Strength Index), BB (Bollinger Bands), and Stochastic Oscillator, are just some of those common names that can be found in the forex charting and analysis tools or software, just to name few of them.

Live forex trading quotes can be found pretty easily especially through online forex brokers. They are readily available to provide various trading platforms. Some Forex trading software programs are good as well because they can retrieve and then post prices simultaneously within seconds, which relatively closed to real-time. When looking for live Forex quotes, it is important to look for quotes that can be updated constantly and automatically in real time because live quotes are the only reference that traders use to make wise investment decisions.

Friday, December 17, 2010

Daily Dow Shows Strong Resistance At The Upper Bollinger Band Around 11600, 17-12-2010

The Dow closed 42 points higher at 11499, a fresh 52-week high, amid better-than expected reports on weekly jobless claims, December Philly Fed manufacturing data and November housing starts.

Sentiment was also boosted by higher profit forecast by economic bellwether FedEx, overshadowing the European debt woes following a possible downgrade on Spain’s debt rating.

After the closing bell, shares of Oracle and Research In Motion rose after releasing their upbeat quarterly results.

On Wall Street, strengthening economic data and a low VIX around 17 could signal that a lot of bad news has been discounted. In our view, this will drive the Dow Jones towards our envisaged technical resistance levels of 11700. Immediate support levels are 11000-11200 points. Strong resistance at the upper bollinger band around 11600 level.

Thursday, December 16, 2010

Dow Jones Shows Strong Resistance At The Upper Bollinger Band, 16-12-2010

After rising to a new high of 11519 (+43 points) intraday, the Dow Jones fell 19 points to end at 11457 on profit taking, as investors fretted over euro-zone finances after Moody's Investors Service said it may downgrade its ratings on Spanish
government debt.

However, better-than-expected reports on industrial production and empire state index coupled with tame CPI numbers helped to offset the decline.

Meanwhile, an US$858bn package of tax breaks and an unemployment-insurance extension sailed through the Senate yesterday. Investors are now looking for Congress to extend the Bush-era tax cuts.

On Wall Street, strengthening economic data and a low VIX around 18 could signal that a lot of bad news has been discounted. In our view, this will drive the Dow towards our envisaged technical resistance levels of 11700. Immediate support levels are 11000-11200 points.

Dow Jones shows strong resistance at the uppper bollinger band.


Wednesday, December 15, 2010

Dow Jones Intraday Chart Shows Strong Uptrend Line, 15/12/2010

Wall Street market maintain positive outlook following the Fed’s decision to keep the fed fund rate at 0.25%, which was in-line with market expectations. The Dow Jones closed slightly higher to 11,477 point.

As such, we expect the Dow and the S&P 500 to continue their bullish momentum, and to set new highs for the year. At this time, investors are maintaining their positive view of the market and awaiting the US Senate’s decision to extend Bush-era income tax cuts.

The next key economic indicators to watch out for are the December MBA Mortgage Applications (November: -0.9% yoy), and the November industrial production index (consensus: +0.3% yoy; Oct:0.0% yoy).

Dow Jones Intraday Chart Shows Strong Uptrend Line.

Source: Bloomberg

Tuesday, December 14, 2010

Dow Jones Remains in Bullish Mode, 14/12/2010

US equities continue to be bullish with the S&P 500 index rising 0.6% to 1,240 points, a two-year high. The Dow Jones also rose 0.4% to close at 11,410 points, propelled by a 3.4% rise in General Electric.

The market is clearly counting on the economic recovery of the US, but economic data remains mixed for now. November Advance Retail Sales will be released tomorrow and is expected to weaken from 1.2% year-on- year to 0.6% year-on-year.

Crucially, the Fed Funds Rate will also be announced tomorrow; economists are expecting the Fed to continue holding the rate at an historic low of 25bps.

We continue to be positive on US equities, but keep a wary eye on the economic data this week as any major disappointments would trigger swift profit-taking and exert downward pressure on the Dow and the S&P 500.

US equities remain in bullish mode, S&P 500 hits new 2-year high

Source: Bloomberg

Monday, December 13, 2010

US 10-Year Treasuries Yield Has Been Steadily Rising

Wall Street still stuck in consolidation mode, but we see bullish signals in the making. In the absence of fresh leads, the Dow Jones closed 2pts lower at 11,370points.

However, we see signs of rising risk appetite in the US market. US govvies yields have been steadily rising since early October and the 10-year yield now stands at 3.20%. In addition, gold is retreating off its recent high of US$1,431/ounce, while the VIX index is now down to a low of 17.25.

We interpret the above as signs of rising investor confidence in the US, and thus re-iterate our bullish view on the Dow Jone Industrial Average. We are expecting the Dow to seriously re-test this year’s high of 11,452 points.

We also believe that US equities have a positive outlook in the near-term, giving that leading indicators are pointing to rising risk appetite.

US 10-Year Treasuries Yield Has Been Steadily Rising.
US 10-Year Treasuries Yield 13-12-2010

Gold has been showing signs of recent weakness
Gold Chart 13-12-2010

The VIX index has been steady declining since July 2010
VIX index 13-12-2010

Source: Bloomberg

Friday, December 10, 2010

How Can I Build My Credit Score From 400?

Bad credit score has made us in a very inconvenient position when we need to apply for a loan. Especially when the credit score is less than 600. A lower credit score gives us lesser financial options and lesser favorable credit offers. Therefore, if we are already have a bad credit score, we would have to take some action to build and improve our credit score. There is certainly no way to boost our credit score instantly. However, gradual improvement is possible, regardless of our credit history. We will get the credit score that we desire with patience, time and tenacity.

Let’s go to the main topic, How can I build my credit score from 400? First, get a secured card. If you are a student, you may easily qualify for it. A secured card is the type of card where you put a security deposit and your credit limit is equal to the deposit amount. Most people can get this sort of card as long as the credit score does not rock bottom like less than 400. Use this secured card to rebuild your credit score. Give yourself about 2 years and focus on the payment history. Maintain a good payment history by paying off all your bills on-time every month.

The credit score is basically relates to your 12 months credit expenses activities. Normally, the credit score may fluctuates around 5% to 10% every month. If you are continuously employed for at least 18 to 24 months, and maintain at least $500 in your saving account, you should be able to convert your secured card into a secured credit card. Most banks should be able to set it up for you. As a reminder, you are using this secured credit card to build your credit score. Use it for minor expenses like gas or fuel, and other small purchases. Always pay the balance in the following month on-time. Most importantly, you must ensure that this payment history is report to the credit bureau.

Next, you can go to a jewelry store and purchase an inexpensive (less than $200) item on credit. Be up front about why you are doing it. With the credit you do have, you should be approved. Verify that they are a credit reporting business, not a "Mom and Pop" outfit.

If you are following the above journey, with every time on-time payment for about a year of time, you can then go to a major department store and apply for a store credit card. You may qualify for it. Again, as a reminder, you are using this store credit card to build your credit score. Use this card for few months (at least 6 months) by practicing a good on time payment history. After that, you can apply for a secured VISA credit card with $500 limit. With your good on time payment historical record, that bank may convert the secured VISA credit card into the normal credit card within another year. In fact, you can find out with the bank and discover credit card that has lots of rewards and privileges that they can offer to you. Remember, always maintain good on-time payment activities and you will notice that you are continuously improving your credit score from bad credit.

The above is my personal experience. And I hope it can help people who are seeking ways to build and improve their credit score from bad credit. How can I build my credit score from 400? Overall, it is just about maintaining an on-time payment attitude. Building a credit score takes time, patience, and tenacity.

Note: Contacting debt collectors about old debts on your credit report can be a tricky move to make. Remember, only do this if you have money saved up to offer up front settlements for less. Debt collectors don’t like small payments with installment, paying the debt this way will not reactivate closed accounts and give you good credit.

Monday, December 6, 2010

Daily DJIA Comments, 06/12/2010

In Wall Street, the Dow jumped 0.9% or 107 points to 11362, the 2nd straight day with assurances of support from the European Central Bank helping ease investor concerns over the region’s debt while upbeat U.S. reports on chain stores sales and October pending home sales lifted investor optimism. Sentiment was also boosted by Spain’s PM statement that it does not intend to tap the European Union fund.

These reports overshadowed a slightly worse than expected report on jobless claims and worries about the geopolitical tensions in Korean peninsula.

The traditional year-end window dressing activities, expectations of improving key US job data report tonight and ECB’s effort in curbing the European sovereign debt
crisis are envisaged to temper the geopolitical risks concern in Korean peninsula temporary, provided no further military intrusions happen. Investors’ sentiment turn firmer amid easing market's uncertainties and this has encouraged rising appetite for equities, especially on key blue chip stocks and lower liners.

Daily Dow Jones is likely to retest the year-to-date high of around 11500 zones amid a positive breakout above the overhead resistance and improving technical readings.
Source: StocksChart

Sunday, December 5, 2010

Why We Have Bad Credit?

Credit report, as its name suggested, is a report that contains all the necessary information that would be required to give someone a credit line. A credit report, is then used as a basic guideline to determine a person's credit score or credit rating. A person's credit report is very important for financial lenders when it comes to loan application. With a credit report, the lenders are able to know:

1) How reliable is a person doing his loan repayment?
2) How many loan is a person currently holding?
3) How large is a person's total loan at current stage?
4) What is the person's credit score or rating?
5) How many defaulted repayment so far in the loan tenure?
6) Any bankruptcy or illegal act record?
7) Etc...

Check your Credit Score - Fast, Free & Easy at

In today's raising expenses, many people are having bad credit simply because they cannot make their loan repayments on time. Sometimes, unexpected issues strike in our life and influence or cut off our income streams. That makes our normal loan repayment becomes more difficult or impossible to continue paying off our loan repayment especially those with many loans in hand. Once this unfavorable things happened, life becomes difficult and eventually makes ourselves fall into bad credit rating group.

Getting a loan is not so difficult, they are many financial institutions or lenders that are willing to offer loan to applicants who have average credit score. Sometimes, even applicants with poor or bad credit score can still manage to get a loan approved too. Therefore, it is advisable that we should control ourselves from taking any further loan if our ability to do repayment, or our loan over income ratio is more than 1/3.

If we are holding a bad credit and wish to step out from the bad credit group, we should discipline ourselves by having a proper financial management. Say no more to take further loan if our loan to income ratio is more than 1/3. If there is no choice and taking an additional loan is a necessity. Then, please remember that, a person with bad credit score will get a loan with a higher interest rate. Do more surveys in the market and try to look for lower interest rate financial lenders.

Secondly, for those with bad credit, try to use debit cards instead of credit cards. People who use credit card may have experience that, the credit card bills snowball to become a shocking huge amount at the end of the month. Consequently, paying off this shocking huge amount of credit cards bills with interest may not be that easy when we did not realize that we had over spent our money. If we are using debit cards to spend money, this so called "shocking card bills" will not happen.

Thirdly, it may be advisable for people with bad credit score to consider consolidate all the debts. This will help to proper manage the loan repayment without having to worry so much on different loans repayment date especially those with many loans. Debts consolidation is good because it helps us to manage or improve our credit rating by reducing the chances of missing any one of our loan repayment every month.

What’s Your Credit Score?

Lastly, we should always keep ourselves an updated credit report. Understand the importance of our credit report and know the way how to retain a good credit score will lead us to a proper financial management. Also, people with good credit rating will stand a better chance of getting a loan application approved. Moreover, a loan offered with a better interest rate. Therefore, don't hold a bad credit score anymore, do somethings to improve your credit today!

Why Do Lenders Use FICO Credit Scores?

Why wouldn't they; it's the best shot at getting to know a person's potential to pay back on time. Lenders do so to get an impartial footage on a client's FICO credit report as it lets them form their payback policies accordingly.

More or less, a FICO or any other credit score is an official stamp, by which lenders judge you on regular basis. No one wants a high degree of risk or liability at hands, that's why a good credit score enhances the ability of getting a job, subscription based plans, decent mortgage deals, tenancy potentials and medical insurance perks.

You, along your family, are affected by credit reports. No questions asked. If a person has been honoring those debts through on time and FULL payments, there's a minimum possibility of negative entry occurrence in the FICO report. However, failing to comply with any sort of payment modules is an open invitation to a hornet's nest.

Why is it important to safeguard my credit information?
Take it this way, if you have been hooked to a legit Report program, you'll be in better shape to maintain a healthy report. For instance, a 760 - 799 score means that you have 600 to 1 probabilities of falling behind on your due payments. This factor can also be translated in mortgage terms.

Let's say, there is a mortgage deal with $100,000 lump sum value. In this case, a slight 1% interest rate on paybacks would mean that a person is liable to cough up an additional $23,400 over the entire time period of the loan. Mortgage dealer normally "convince" clients on this much amount, through $65 additional monthly payments.

Your best bet is to get 3 free credit scores report on firsthand basis. Why? Because Lenders, especially mortgage officers like to tap into credit reports from 3 major financial institutes. There are online websites that guarantee a safe way of getting report copies without asking for credit card numbers or any other sensitive information. The process is cost effective and normally doesn't take that much of a time as compared to official sources.

What does a lender judge my credit score against?
Your "would-be" lender, car and medical insurer, employer, landlord and any other organization will judge your credit report against;

* Delayed payments
* Bankruptcy records (if any)
* Duration of negative entries and the total number of inquiries
* Total amount of owed payments and interest rate on them
* Other services that you're currently hooked to
* Number of open credit accounts

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Wednesday, December 1, 2010

Dow Jones Comment, 01/12/2010

The Dow soars 250 points, or 2.3% to 11256 points amid positive data. The bullish performance was driven by upbeat economic reports, including a strong 93k gain in ADP employment, better than expected auto sales and a resilient November ISM.

The rally gained momentum after Goldman Sachs upgraded their forecasts on US 2011 GDP growth to 2.7% from 1.9% after the Fed’s Beige book revealed economic conditions showed the nation's gradual recovery continued in October and November.

On the other hand, European markets were generally higher as speculation increased that the ECB may signal this week its willingness to step up efforts to curb the spread of the region’s debt crisis and the U.S. would back increasing the size of the EU’s rescue pool through the commitment of more money from the IMF.

Positive expectations of improving key US job data report this Friday and ECB’s effort in curbing the European sovereign debt crisis are envisaged to temper the
geopolitical risks concern in Korean peninsula temporary, provided no further military intrusions happen.

Daily Dow Jones signals a breakout above the overhead resistance will spur further upside.
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