Finding Spectacular Gains From Forex And Shares

Whether you are investing in shares or Forex your main gains will be capital appreciation: The investor in this category is not interested in dividends but in seeing the market price of his stock increase or one currency improving against another.

This represents nearly seven years' worth of dividends from the $30 stock yielding a conventional 5 per cent. For example, the man who buys 100 shares at $30 and sells even at a 10-point profit has $1,000 (less commissions) to show for his year 's work. First, if your judgment has been good, you make more money faster than by relying on dividends. There are three advantages to this kind of operation.

Secondly, if you hold your investment for more than six months, your profit is considered a long-term capital gain, taxable at a maximum 25 per cent rate for many people, a saving over straight-income rates.

Finally, if your stock doesn't go up as anticipated, there is always the chance that it will at least be a decent income-producer.

This is something of a rationalization, of course. There is no use pretending to be in the capital-appreciation business if a little mess of dividends is all you have to show for your efforts. The more consistent course is to drop the non-producing stock (losses, if any, are tax deductible) and shop around for a winner. This, to be sure, takes guts. There 's nothing like a couple of growth stocks that don't grow to take the steam out of a capital-appreciation man

On the other hand, the gloriously rising market since World War II has simplified the task of discovering and getting aboard a company with promising prospects. And, as noted, an investor could wait five years for his 10-point gain and still be ahead of the plugger piling up dividends.

Capital appreciation, it should be noted, is an omnibus term covering any change or advance in a company 's position which might be reflected in the market price. It may mean the emergence of a new company in a new industry, the coming of age of a speculative youngster of a decade or two ago, or even new evidence of vitality in an
established veteran.

Recently for instance, the stock of Ampex, Inc., a bright little California company manufacturing top notch equipment for the booming tape-recorder industry, has more than doubled in value.

Dozens of small companies dealing in electronics, precision equipment, and other fruits of current scientific research (Tracerlab, National Research, Beckman Instruments, etc.) are similarly attracting attention and consequent jumps in price.

Somewhat more established and riding crests of speculative interest are such stocks as General Dynamics, builder of atomic submarines and Convair airplanes; Owens-Corning Fiberglas, manufacturer of insulation, filters and textiles, and glass fiber boats, and Bendix Aviation, no infant, but investing heavily in diversification and new-product development. Dow and Minnesota Mining might also be grouped here, although possibly by now they should be included among the older companies Corning Glass, Goodrich, Union Carbide, Westinghouse, National Lead, Minneapolis Honeywell, Eastman Kodak???whose youthful spirit and astonishing technological resources have kept them in the forefront of American industry for years.

All of these examples would qualify as growth stocks, as the kind of investment that would tempt the investor seeking capital appreciation.

But appreciation can also follow from subtle and complicated changes in a company 's structure. In these cases, appreciation may have nothing to do with a new product or even with the company 's prospects within its industry. Rather it is the anticipated result of a merger, a spin-off (distribution of assets), a reorganization, or any one of a number of procedures available to the complex institution known as a corporation.

Talk of a merger between Bethlehem Steel and Youngstown Sheet & Tube made both stocks interesting possibilities. U.S. Foil "B" (American Stock Exchange), representing about 48 per cent control of Reynolds Aluminum; duPont, which is having to divest itself of 63 million shares of General Motors stock; Northern Pacific Railway, which has important oil interests in the booming Williston Basin of North Dakota; El Paso Natural Gas, which has formed a subsidiary, Rare Metals Corp., for uranium exploration and processing; and many others are examples of stocks with potential capital-gains features.

It is not possible to say exactly how or if the gains will be realized. Mergers require an adjustment of the stock prices of the participants which may benefit one or the other; or public interest in the prospects of the combined company may cause the stock to spurt.

An as yet undeveloped asset, such as Northern Pacific 's oil, or Inland Steel 's Steep Rock iron interest in Ontario, might mean an eventual bonanza which would be reflected in stock prices or a capital distribution of cash or stock. Several years back, Andes Copper, an Anaconda subsidiary operating in Chile, made a capital distribution of $6 per share at a time when the stock 's market price was hovering between $12 and $15.

Profits can be spectacular, but it is worth Most gains on Forex are capital gains, where the currency trader is hoping for an increase in the value of one currency against another.
having good Forex software to prevent large losses.

Baby Boomers ? The Future Of The Stock Market

The United States, New Zealand and Canada all experienced Baby Booms at a similar time. Australia was not alone in this phenomenon. Following World War II, Australia?s population grew at record levels. You have no doubt heard of the ?Baby Boomers?, those individuals born between 1943 and 1963.

For this reason, it is important to understand some of the background on this interesting group of people. They have had dramatic effects on society and will substantially impact the way the stock market performs over the next 20 years. The Baby Boomers are an important phenomenon to understand.

As mentioned, the Baby Boom was experienced in various countries around the world. Part of the reason for the ?Boom? was that these countries were immigrant receivers and immigrants tend to be in their 20?s, the prime childbearing years. At its peak in 1957, the US boom hit 3.7 children per family. Canada hit its peak in 1959 with Canadian women averaging 4 offspring each; that was over 479,000 new births that year alone! Australia?s boom was not quite as big as the Canadian or US booms; however, we still have a disproportionate number of people who are today in their 40?s and 50?s. Following the Baby Boom, we had a Baby Bust. Far fewer children were born during the late sixties, leaving Australia with an asymmetrical population graph.

The Baby Bust group, born between 1964 and 1976 are a much smaller group than their predecessors and are commonly referred to as Generation X.

Baby Boomers are a very significant and important group. It is not that, individually, they are any different than any other group who preceded them, it?s just that there are so many of them. Due to their large numbers, Baby Boomers have had a significant impact on our society, making substantial changes as they grew. They have changed the economy, driven housing and other markets and transformed social attitudes and lifestyles.

In Australia and North America today, the fastest growing industries, apart from technology, are financial management, leisure activities and health care. It is very easy to see why. Boomers have been working all their adult lives, usually for someone else. They have raised their children and are now focusing on their retirement. They have had a magnificent time. They have not endured wars, or a depression like their parents and grandparents. They have enjoyed fantastic luxuries such as cars, world holidays and computers. They have been at the forefront of the age of discovery.

Unfortunately, the majority have not prepared themselves financially for their retirements, believing instead that like their parents, they would enjoy a comfortable pension from their employers and/or government. The stark realities are now coming to light. Everybody, especially the Boomers, must take responsibility for their financial futures. Our government will simply not be in a position to provide adequate pension incomes for a growing number of retirees. Today, for every person who is retired, there are four people working, providing income to the government. By 2025, there will be only 2 people working for every retiree. What?s more, the Boomers, as they start to retire, will live longer than any group before them, well into their 70?s and 80?s on average. As a result, it is up to each of us as individuals to take responsibility of our own personal financial planning.

The Australian government has made substantial improvements and preparations for the growing populations. They have introduced a compulsory superannuation scheme which all employers and employees must participate in and which is gradually rising in required contributions, but it will be too little, too late. The key to investment growth is time, a luxury many Boomers no longer possess.

Unfortunately, many members of the public require a much greater return on their investments to adequately improve their financial positions before they retire (if they can ever afford to!). Many people consider these returns appropriate and even good! We often see managed funds, superannuation schemes, bank term deposits and property investments offering such results. Most investment strategies commonly promoted to the public boast returns of 4% to 10% per annum.

Consider this fact, that at a return of 8% per annum, net of tax, an investment of $30,000 would require over 15 years to triple in value, not even considering the effects of inflation.

In future issues we will explore ways of generating high returns and how to self manage your own super.