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Trudeau Round 2

When Justin Trudeau announced his campaign for Canadian Liberal Party leader, many old enough to remember, reminisced upon Trudeaumania that swept across this nation in 1968. Although Pierre Trudeau ran such an influential campaign and remains in the hearts’ of many Canadians, Justin has tried to separate himself from his father’s history and actions.

Few are able to meet influential celebrities and politicians from across the world. Justin was able to grow up among these high stature individuals and now has the opportunity to use these experiences to lead an ailing party. It has arguably been 44 years since an even like Trudeaumania has affected Canada, and during a time in which the consumer confidence is low and the economy continues to recover, Canada could greatly benefit from a revitalizing young man.

Justin stated in a Huffington Post article, “our challenge, simply put, is to restore the simple promise to Canadian society.” Justin may be the perfect candidate for Prime Minister, even though he is premature compared to other candidates. Canadian politics needs a new face. During the recent American election, many voters stated they were voting for the least bad candidate. We don’t want this to happen in Canada. Vote Trudeau!

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It’s All About the Money

 

The financial crisis that started in late 2007 started the fall of many economies across the world. Positions were liquidated, mortgages were left unpaid, and jobs were lost. Not only has the downturn affected individuals, it has hurt new, developing companies from receiving financing.

Wade Larson, Co-Founder and Executive Vice-President of UrtheCast came into our lecture to talk about the company’s revolutionary imaging system connection images from space to information on the internet. Wade outlined the UrtheCast’s difficulties of trying to put together a final round of financing. To me it seemed difficult to understand how a company, with innovative imaging technology and access to real estate on the space station, is struggling to fulfill capital requirements.

In a Bloomberg Businessweek article, angel investors reported a 54% decline in investments during this period, stating economic conditions, taxes and regulations that created unfavorable environments for investors. During the US election, the role small businesses play in the economy was continuously focused, on however, the investors themselves are saying there is no incentive to help these companies! Canada and the U.S.A. will need to quickly change regulations and  realize the small businesses are the key to increasing private sectors jobs, and eventually reviving the economy.

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Don’t Get too Close to the Edge

Since the economic downturn in 2008, the U.S. Federal Reserve has been helping the market with stimulus that is injected into the open market each month. More recently, the Federal Reserve and Ben Bernanke have created a monetary policy called quantitative easing. This policy injects money into mortgage backed securities, with QE3 allocating an additional $50 billion per month into MBS.

Now that 2013 is fast approaching, the theory of a Fiscal Cliff is emerging. The start of the new year will mark the reduction in the budget deficit, tax increases and spending cuts. Many economists including Michael Aneiro, a blogger for Barron’s, believes investors are sitting on this cliff unsure of what the actual effects will be. Hedge fund and investment managers have stated to their clients, accounts should be liquidated in order to prepare for the implementations of new policies if President Obama is re-elected.

Not only will this potential cliff have an effect on investments into the financial markets from within the U.S., but it is also believed the cliff will have an impact on the U.S. dollar; therefore, foreign investments have also slowed in the last month. The total effect of the cliff will be anyone’s guess.

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Don’t Kick Them, They Aren’t Down!

Often there is a misconception about the relationship between the status and health of a particular company and its’ share price. Ryan Un in his blog recently noted that as Facebook’s share price has nearly halved since its IPO, the company’s revenue’s have also fallen. This could be farther from the truth. Investors had difficulty valuing Facebook, because simply another company of its size, and in this sector of the market does not exist.  P/E ratios and profit margins are difficult to compare with other technology companies such as Google and Apple, as they are entirely different.

Facebook’s marketing customers have re-evaluated the relationship, and company’s including General Motors dropped Facebook. General Motors has now come back to Facebook to negotiate a new deal. Since the IPO Facebook has actually increased revenue, and better positioned itself to grow in the future. A new mobile app platform has allowed Facebook to tap into mobile advertising revenue. As well, Facebook most recently launched a gift service that allows users to send items to others users. This service allows Facebook to compete with Amazon and others. Facebook does not need to recover, the company has only bettered itself internally since the IPO!

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Small World, Huge Consequences

Questcor Pharmaceuticals Inc. (QCOR) dropped as much as 48% in intraday trading on Wednesday. Health insurance provider Aetna, decided to stop covering Questcor’s Acthar Gel, that makes up all of the company’s revenue. After the dust settled, Questcor revealed Aetna’s coverage of its only drug, accounted for only 5% of its’ overall revenue; however, Questcor lost nearly half of its market capitalization in one day!

Traders in today’s market have the ability to demolish a company in nearly minutes. No longer do investment firms conduct research and create long term positions; instead, a new era of high frequency trading incorporates programs that run algorithms to react to changes in the market and automatically make corresponding trades. The power of this technology has created an unfair playing field for other traders, both professionals and amateurs. Executives from these firms have confirmed that they would like to see the U.S. Securities and Exchange Commission regulate the practice, which as of now is completely unregulated. Until the Commission does something to minimize the effects of high frequency trading, drops of 40% or more in a trading day, may become regularities in the markets of today.

CNBC Jim Cramer: Questcor Has Had An Incredible Run

 

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Success Story Turned Insider Trader


Raj Rajaratnam, the American Dream success story. Working his way up as an immigrant from Sri Lanka, Rajaratnam fought his way into the ruthless finance industry, and eventually became one of America’s most successful hedge fund executives; however, the billionaire soon became caught up in greed. At the forefront of many securities fraud related issues concerning Rajaratnam, leaked information about an investment by Warren Buffet into Goldman Sachs during the peak of the 2008 financial crisis, captured the attention of media across the world.

Working as an analyst during the 1990’s, and eventually making a majority of his wealth during the 2000 technology bubble, Rajaratnam made many connections that would ultimately lead him into the insider trading scandal. During the investigation, phone conversations, text messages and in person meetings were documented by the FBI. Rajaratnam paid handsomely for tips, ranging upwards of two million dollars, but in the end some of his most trusted colleagues including Galleon Group hedge fund partner, Rajat Gupta, testified against him. Rajaratnam was sentenced to eleven years in a federal prison.

The Wall Street Journal Article – Trader Draws Record Sentence: http://online.wsj.com/article/SB10001424052970203914304576627191081876286.html

The entire Rajaratnam story documented in depth by American Greed featured on CNBC: https://www.youtube.com/watch?v=DQCb5hV7idk

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