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Macroeconomics of credit industry

admin — Wed, 21 Oct 2009 11:09:04 +0000

After analyzing industry life cycles and the competitive environment of industries the macroeconomic environment has to be incorporated in the industry analysis process. For this purpose the focus will be on business cycles and the cyclicality of industries.

Corporate profits hava a long history as a percentage of GDP across several economic cycles. Corporate profits tend to fall long before the economy goes through a recession. Corporate profits usually reach their bottom towards the end of a recession. They start to rebound with rising economic activity. During the last expansion, which was one of the longest and that stretched through the 1990s, corporate profits started to deteriorate already in 1998. Sharply rising equity valuations, a focus on shareholder value and an undisciplined build-up of leverage induced a decline in profits when the earnings growth trend reversed. Every business cycle will be different from past cycles so the task is to identify evolving trends in order to make reliable projections about future performance.

Foreign and emerging market stocks

admin — Tue, 25 Aug 2009 18:15:43 +0000

You can buy stock in developed countries such as Germany and the United States. Many emerging markets such as Venezuela and Thailand also have stock markets. You can buy their stocks individually on the U.S. markets or through a foreign brokerage account. You can also buy U.S. mutual funds that specialize in foreign and emerging stocks. There are also CEFs and ETFs that own non-U.S. stocks.

Non-U.S. stocks have all the emotional content of U.S. stocks. Herd psychosis, powerlessness, issues with brokers and mutual funds, overconfidence, and all the rest are common in foreign investing. Foreign stocks also have additional traps we rarely encounter with local companies.Foreign stocks are bought and sold in foreign currencies. Foreign companies make profits and losses in foreign currencies. Because you spend U.S. dollars, foreign stock prices must be translated into U.S. dollars before you can determine if you have any gains or losses. This adds volatility to foreign stock prices. If the Euro sinks by 15 percent and your German auto stock declines in Euros by 15 percent, you lose 30 percent in dollars. If the Euro rises by 15 percent and the auto stock rises by 15 percent, you gain 30 percent in dollars. A similar U.S. auto stock would only swing up and down 15 percent.

Loan Cancellation and Forgiveness

admin — Mon, 13 Apr 2009 23:07:54 +0000

It’s your responsibility as a borrower to repay the total amount of your loan, plus any interest that has accrued. However, there are some programs that allow your student loan debt to be forgiven.

TeacherLoanForgiveness (TLF) Program. All or a portion of your Stafford loan debt may be forgiven if you’re eligible for TLF. You must have received a Federal Stafford loan after October 1, 1998, teach certain high-demand subjects for five consecutive complete years, and meet all other participation re¬quirements. For more information about TLF, visit www.ogslp.org.

Disability. Your student loan debt may be conditionally discharged and later canceled if you become totally and permanently disabled. The appropriate documentation verifying your permanent and total disability must be certified by your doctor and accepted by your loan holder. If your loans are conditionally discharged, they’ll be permanently assigned to the U.S. Department of Education for a three-year period,
beginning on the date your doctor certifies the discharge application, before your debt is completely canceled.