They say money makes the world go
’round. Yet with the recent collapse of Wall Street’s securitization business
came the end of a largely unregulated, credit creating machine equipped with an
infinite multiplier. Gone is capacity once possessed by investment banks, hedge
funds and private equity firms to essentially create money out of thin air.
Indeed, this capacity had been largely encouraged by Federal Reserve Chairman
Alan Greenspan immediately following his appointment just weeks prior to the
stock market crash of October 1987. Wall Street’s securitization business
became a formal means by which the financial economy was almost effortlessly
able to expand up until 2007. Securities once possessing a full measure of
“money-ness” (not unlike a dollar bill) facilitated the financial
economy’s unchecked growth until those securities tied to sub-prime mortgages
became “toxic” — unable to be traded at any price.
The now dysfunctional credit
creating machine which once was Wall Street’s securitization business — itself
having been principally powered via City of London connected offshore financial
centers (through OTC derivatives) — over the course of recent decades helped
both build and mask all manner of financial and economic imbalances. With its
seizure a huge, capital sucking hole has been blown into the global financial
system, requiring all manner of extraordinary support. Truth is, however, these
support arrangements do little more than buy time in which deep, long-delayed
structural adjustments might be made. Sadly, though, practically nothing in
this effort is being done. Rather, an attempt at perpetuating unsustainable
global dependencies built up by the now-defunct credit creating machine are
instead being promoted. In effect Wall Street’s deep-seeded troubles are being
put off for another day. Furthermore, the fundamental problem the global
financial system faces is being made only all the more vexing — and ultimately
insurmountable — now that … » Read more
Stock market is a very
interesting concept and it can also give you a high rate of returns. However,
investing in the stock market can be risky at the same time and if you are not
careful, you can incur huge losses. First of all before going all out and
investing in the stock market, understand what kind of an investor are you.
There are usually three types of
investors, namely low risk taker, high risk taker and medium risk takers.
Depending on the type of investor you are, you should choose where to put your
If you are the kind of person who
does not like to take any risks in life, then probably the stock market is not
the correct place for you. You should keep your investments low and also take a
step by step approach towards your investment. You should also get enrolled
with a stock broker who can guide you. Again, you should make a careful choice
about your stock broker.
For medium risk takers, they can
buy a combination of mutual funds and individual stocks and build their
portfolio. There are several options for them as they can be flexible and deal
with little bit of losses. However, you should keep your investment mid range
and should not get overwhelmed when you are making good money. That is the
biggest risk with this kind of investor. When the stocks are doing very well,
they tend to go over boards with their investments and this strategy of
investing can actually backfire.
A high risk taker is used to
risks and they also tend to know the stock markets well. They seldom need
advice. They know that taking big risks can reap large returns or large losses
and they are prepared for them.… » Read more
in mutual fund’s schemes can be done in two ways. The first way is investing
the whole amount at once i.e. lump sum. The second way is to start a systematic
investment plan (SIP). Both ways are very different from each other. Lump sum
route involves making an investment in mutual fund scheme in a single instalment
while SIP involves investing in fixed instalments throughout the year either on
monthly, quarterly or half yearly basis. In this article, we will understand
which way of investing is good for you i.e. lump sum vs. SIP.
us first learn about which type of investment will give you higher returns.
Lump Sum vs. SIP: Which Type
of Investment Will Give You Higher Returns
stock market condition determines which investment type is better between lump
sum and SIP. When the market is in bullish mode or an uptrend, lump sum
investment can be considered good, but in the bearish or falling market, SIP
will give you better returns in comparison to lump sum investment.
sum and SIP investments both have their advantages but overall SIP investment
is considered better than the lump sum. In this section of the article, we
shall learn the advantages of SIP over lump sum investment.
Advantages of SIP Over Lump
investments can create good wealth for you because of compounding effect. This
is because in SIP you earn returns on the already made returns on your
investment. The returns remain invested in the SIP and they keep growing if
held for long term horizon.
It is not possible for anyone to time the market correctly. In such a scenario, SIP is the best option to go for. This is because in lump sum investment you buy the mutual fund… » Read more