I’ve been thinking about starting a stock market prediction business. Clearly, there is a huge market for timely and accurate information of this type, and just as clearly, predicting the future is much easier than dealing with the realities of whatever is actually happening at the moment. If investors could know what’s going to happen next, they could develop a plan to deal with it in the present. Maybe Wall Street could help me get this new business up and running!

What’s that? Wall Street institutions already spend billions predicting future price movements of the stock market, individual issues & indices, commodities, and hemlines. Really? Is that right also? Economists have been analyzing and charting world economies for decades, showing clearly the repetitive cyclical changes and their upward bias. Funny then, or strange would be more accurate, that the advice generated by the oracles of Wall Street seems to assume that the current environment, good or bad, will be everlasting. Isn’t it this kind of thinking and advising that prolongs the downturns and “bubbles” the advances—in all markets?

If it were true that our favorite pinstriped product pushers can actually predict the future, why would investors do what they do in response to the predictions? Why would financial professionals of every shape and size holler: “sell” at lower prices, and “buy at any price” when market valuations surge upward? Shouldn’t lower prices be the call to the mall? Most Wall Street soothsaying has a short-term focus that dwells upon today’s market conditions; most Wall Street glossies emphasize the long-term nature of investment programs, and encourage investors to apply patience to the program they decide to use for goal achievement. Why is the advice so out of sinc?

The reason for the emphasis confusion is simple: it’s easier to play to the emotion of the moment than it is to look beyond— even though we all know that a directional change will be along eventually. Regardless of the direction, Wall Street advice will always fuel the operative emotion: greed or fear! Wall Street’s retail representatives never go against the grain of the consensus opinion— particularly the one projected to them by their superiors. You cannot obtain independent thinking from a Wall Street salesperson; it doesn’t fill up the “Beemer”.

Here’s some global advice that you will not hear on the street of dreams: Sell into rallies. Buy on bad news. Buy slowly; sell quickly. Always sell too soon. Always buy too soon. And by the way, who do you think is buying and selling the securities you have been told to dump or to hoard?

No self respecting guru would ever refute the basic truths that the market indices, individual issue prices, the economy, and interest rates will continue to move in both directions, unpredictably, forever. Hmmm, this is where you need to focus your attention if you want to get through the investment process with your sanity. You need to expect and plan for directional changes and learn to use them to your advantage. Tranquilizers may be necessary to get you through the first few cycles, but if you have minimized your risk properly, you can actually thrive on the long-term predictability of the markets.

The risk of loss cannot be eliminated. A simple change in a security’s market value is not a loss of principal just as certainly as a change in the market value of your home is not evidence of termite damage. Markets are complicated; emotions about one’s assets are even more so. Cyclical changes in all markets are just as predictable conceptually as knowing approximately where you are within a cycle is knowable actually. The key is to understand what your securities are expected to do within the cyclical framework. Now there’s a knowledge business with no Wall Street practitioners!

Predicting individual stock prices is a totally different ball game that requires a more powerful crystal ball and an array of semi legal and illegal relationships that are unavailable to most investors. There are just too many variables. Prediction is impossible, but probability assessment has enormous potential. Investing in individual issues has to be done differently, with rules, guidelines, and judgment. It has to be done unemotionally and rationally, monitored regularly, and analyzed with performance evaluation tools that are portfolio specific.

This is not nearly as difficult as it sounds, and if you are a shopper, looking for bargains elsewhere in your life, you should have no trouble understanding the workings of the stock market. There are only three decision-making scenarios that investors need to master if they want to predict long-term success for their portfolios.

The “Buy” decision has two important steps: Step one allocates the available investment assets, by purpose, between Equity and Income securities, based on the goals of the investment program. It is done best using The Working Capital Model. Step two establishes strict selection quality measures and diversifies properly within each security class. Investment Grade Value Stocks are the low-risk equity champions; long-term, non-gimmick, managed CEFs produce the best income/diversification mix available in readily tradeable form.

The “Sell” decision involves setting reasonable targets for profit taking for all securities in the portfolio. Loss taking decisions must not be undertaken out of fear, and must be avoided during severe market downturns. Understanding the forces causing market value shrinkage is important and a highly disciplined hand at the emotion control button is essential. There is no such thing as a good loss of capital.

The “Hold” decision is most common, and it regulates and moderates the process, keeping it less than frantic. Continue to hold onto fundamentally strong equities and income securities that are providing their normal cash flow. Hold weaker positions until the appropriate cycle (market, interest, economy) changes direction, and then consider whether to sell or to buy more.

Wall Street spins reality in whatever manner it can to make most investors unhappy, thus increasing new product sales. Your confusion, fear, greed, impatience, and need for a quick panacea fuels their profit engines, not yours. Learn how to deal unemotionally with Wall Street events and shun the herd mentality… that’ll fix ‘em.

It’s that time of year again - the time when people up and down the country are making resolutions for the year ahead. With so many people likely to be thinking about sorting out their personal finances in 2008, here are some top personal finance resolutions for you to consider from personal finance author and Chartered Financial Planner Martin Bamford.

Work out your budget

It still amazes me how many people I meet with who simply don’t know how much money they spend each month (and what it goes on!). Working out (and sticking to) a monthly budget is all about spending less than you earn. If you achieve this, month on month, you will be in a better financial position at the end of 2008 than you were at the start.

If you reach every pay day with an overdraft or credit card debt to clear from the previous month you are starting the new month on the back foot. Make it your personal finance resolution for 2008 to never spend as much as you earn each month. If you really want to buy something shiny and new but find yourself reaching for that credit card or store card, stop, think - do you really need it now or would you feel much happier if you bought it in a few months time with cash rather than debt?

Get out of the red

If you have short term debt (credit cards, store cards, overdrafts, etc) you will know that debt is a drag. It’s a drag on your ability to save for future objectives. It’s also an emotional drag on your attitude towards money and personal finances. Make clearing your short-term debt a priority before embarking on strategies to save for short-, medium- and long-term plans.

I still meet people with some very funny attitudes towards debt. There are people who prefer to have savings running alongside debt even when they are often getting charged much higher interest rates on the debt than they will ever receive on the savings. Whilst there is a certain comfort factor in knowing you have some savings behind you, it is counterproductive if your short-term debt is holding you back.

Don’t forget that the interest you get on your savings is taxed (10%, 20% or 40% depending on your income tax rate). When you compare your debt and savings interest rates always look at the net (after tax) interest rate you get on your savings to make a fair comparison.

Make a plan.

This ties in closely with your monthly budgeting exercise. When you are working out what you are going to spend your money on each month ensure you prioritise debt over savings. Stop taking on more short-term debt. Mark a debt-freedom day on your calendar and stick to it. Celebrate your personal debt-freedom day; it’s something to be proud of.

Look to the future

Starting a pension is likely to be a big priority for many people in 2008. We recently saw the biggest shake-up of pension rules in many years but this brought a great deal of retirement planning opportunities with it. It is now generally possible to make much larger pension contributions than under the old pre-April 2006 rules. These large pension contributions will still be able to attract tax relief at your highest rate of income tax.

Once you have made contributions to a pension plan you can choose how the money will be invested. Seek professional advice to ensure that your retirement plans are invested in a way that is in line with your attitude towards investment risk, reward and volatility. You can choose from a wide range of investment options within modern personal pensions so there is no need to take unnecessary risk that you feel uncomfortable with.

Pay less Tax

No-one enjoys paying tax but many of us fail to take the simple steps that enable us to pay less tax. Each and every year we waste an average of £132 per taxpayer because we don’t take some simple planning steps and maximise our tax allowances.

There are some very easy tax-saving strategies you can use in 2008 to pay less tax.

If you are a higher rate taxpayer and your spouse is a non-, lower- or basic-rate taxpayer then consider transferring savings into their name. If you have £20,000 in savings in a joint account where one of you is a higher rate taxpayer and the other is a non-taxpayer (assuming a 5% gross interest rate) you can save £200 a year in income tax by switching from a joint account to a savings account in your spouse’s name.

Make sure you use your Individual Savings Account (ISA) allowances for this tax year and the next tax year. You have until April to maximise contributions into an ISA for the 2007/08 tax year. Every adult in the UK can contribute up to £3,000 into a cash mini-ISA (£3,600 from 6th April 2008) and up to £4,000 into a stocks & shares mini ISA each tax-year, or up to £7,000 into a maxi ISA (£7,200 from 6th April 2008). The returns within your ISA are tax-free (with the exception of the 10% tax credit on UK dividend income which can no longer be reclaimed on UK equity income).

Review your mortgage

Now is a good time to consider reviewing your mortgage. If your mortgage is on your lender’s standard variable rate (SVR) you are likely to be able to make a reasonable monthly saving by switching to a more competitive interest rate or product. There are costs associated with re-mortgaging and it makes sense to seek impartial expert advice. This will also save you the time of trawling the high street to locate the best offers. Because mortgages are a dynamic market the rates available are subject to change on a regular basis and some deals will only be available through an independent adviser.

Sort out your financial affairs

If you don’t have a Will, get one. You can write your own Will but there are some major risks involved with this DIY approach. Getting something wrong when writing your own Will could lead to significant legal fees to sort things out after your death. Find a professional to write your Will from the Society of Trust and Estate Practitioners (www.step.org). If you die without a Will, your estate will be distributed according to laws created in 1925. It is no surprise that these laws probably do not reflect modern thinking on inheritance! Don’t risk dying ‘Intestate’.

Whilst we are on this rather morbid subject you should also think about family protection. Run through a number of scenarios. What would happen to your family financially if you were to die? What would happen if you were to suffer a serious illness? What if you suffered an accident or illness and were unable to work for a long-term? Re-run these scenarios but apply them to your spouse as well. The impact of a house person dying or contracting a serious illness can often be as serious (or more so) than if this happens to the main bread-winner.

Check out your existing arrangements to ensure that they remain competitive. The cost of life assurance has generally fallen in the past five years. There are potential savings to be made here. Again, use an independent expert to review the entire market for you and ensure that the cover you are putting in place is suitable for your circumstances and objectives. At the same time make sure that your life assurance is written in trust. Writing these policies in trust can ensure that the proceeds are paid out quickly, to the right person or people and without liability to tax.

Meet with an Independent Financial Adviser

Make 2008 the year that you carry out a comprehensive review of your personal finances and financial objectives with an impartial professional who has access to the tools and knowledge needed to improve your current and future position. Most IFA’s offer a free initial consultation with no obligation they can identify areas that they can help you with and you can grill them about their qualifications, experiences and charges.

Ask lots of questions to ensure that you have found the right IFA for you. Make sure that they hold the appropriate qualifications to deal with your situation. The entry-level qualification for a financial adviser is the Certificate in Financial Planning (also referred to as the Financial Planning Certificate). This level of qualification is really only suitable if you are only seeking basic financial advice. If the advice you require is more complex then look for an adviser who is a Chartered Financial Planner or Certified Financial Planner certificant. These are more stringent tests of knowledge and competence to provide financial advice.

Also, check that the adviser is truly independent. In June 2005 there were a number of changes to the way that the financial services profession works. An adviser can now choose to be tied, multi-tied, whole of market or independent. A whole of market adviser can offer products from every provider but they do not offer the option to pay for their advice with a fee. An Independent Financial Adviser offers a fee charging option and this can sometimes offer greater impartiality that paying for services through commission. In any case, remember that you as the client are paying for financial advice - either through product charges and commissions or an explicit fee. Ensure that you are getting value for money.

Investment clubs can be a fantastic opportunity for kids to learn about investing. As they learn about investments they will develop a better understanding of money.

How to get started

The first step is to find a kid-friendly investment club. Browse investment club websites to determine if there are special sections devoted to teaching children or teens about investing. Speak with your neighbors, friends and colleagues to find out if they know of any investment clubs for kids. If you can’t find a suitable club you can start your own. Consider getting together with other parents to start an investment club for kids.

Choosing a portfolio

One of the hardest things with any investment club is deciding on the specific investments to make. Children have less money to work with than adults so it is important to stick to stocks that are well within their budget. What is most fun for kids is to choose stocks from companies they are familiar with. Think about clothing, food, computer, game software or other companies they use products from.

Learning about stocks

Before deciding on what stocks to invest, teach your kids to learn more about the companies they are considering. Children can learn more about a company from its website, by reading its annual report or by looking at its daily stock reports and trends.

Finding money to invest in stocks

Children can start by saving their allowance to invest in stocks. Open a savings account at a local bank so they can easily make periodic deposits. Teach children to save part of the money they receive as birthday or Christmas gifts. Older children can be paid extra for completing additional chores around the house. When children are old enough to work outside the home encourage them to take on a part-time job. Parents can help children by setting up a matching program where parents will match the investment amount the child has.

Keeping track of investments

Choose an investment club that offers interactive charts and reports. This will allow you and your child to record and keep track of their investments. Set aside a certain day of the week to spend an hour looking at how the stocks are doing. Make sure to stay on top of the investments and sell stocks when necessary. Follow the market trends using the newspaper or Internet to determine how you think the chosen stocks will perform. Teach children to make a connection between current events and stock trends.

How would you like to have easy access to any transactions you have made in the last month at your fingertips at all times? For many people online personal finance programs have made this dream come true, and now, by using online personal finance software it is possible. With the world becoming busier than ever you can’t expect it to just stop in order for you to do a few banking errands. The use of online personal finance programs have skyrocketed after they were advertised to be able to do so many things. Here is a quick overview of all of the things that you can do when you sign up for online personal financing.

Once you make an account with an online personal finance system, which is a simple five minute procedure, you can begin tracking all if your financial decisions. One of the things that makes online personal finance stand out is the fact that with the information that you input into the system you receive updates and notifications about your accounts. You will be notified through an alert via e-mail or text message to alert you when you are about to overdraw your account, bounced checks, or any type of transactions done within your account. There are great innovative ideas when it comes to alerting you about withdrawals, whenever there is a withdrawal from your account a notification will come up telling you where the transaction took place and for how much. Besides that, if the transaction was done at an ATM, instead of just adding in the withdrawal fee to the amount taken out the fee will be put in separately in order to make things as clear for you as possible. Also, through online financing you will be notified weekly, or monthly if you choose, of where your spending takes place. This is a great indicator when you are working with a budget because it will help you determine where you can lower your spending in order to save more money.

Another huge benefit of online personal finance programs is when there is a huge change in the stock market or somewhere where you have money invested; the program will immediately notify you so that you can make the best decision possible following the change. This can be very helpful to anyone who has money invested in the stock market or if they are planning on investing. Even if you are just a news junkie this can be a great application, you can enter the stocks that you are interested in knowing about and receive updates whenever they change. The best part about this is that online financing is almost completely secure, many online personal financing companies use the same type of secure banking as your daily bank. This means all of your information is stored safely and securely.

These countries are often less regulated than the host country and are hence preferred by offshore investors. Offshore investment gives greater freedom to the investor and has the potential for much greater return on investments. Since there is a wide portfolio of investments on offer offshore investment companies play a vital role in conducting these affairs.

Offshore investments can be made in the form of hedge funds, offshore investment funds, overseas mutual funds, offshore investment bonds, offshore unit trusts, offshore property funds etc.

An offshore investment offers a high level of privacy and is sometimes is looked at suspiciously as offering a channel for investing illegally acquired wealth. However offshore investments shield legitimate, affluent individuals from the financial pressures and constraints faced by them in their home country.

In fact offshore investments managed by offshore investment companies are completely legal and are regulated by the jurisdictions of those countries where investments are made.

Investors who live away from their home country, those who want to maintain their financial privacy and those who want to protect their assets legally usually opt for offshore investments.

Other reasons for offshore investments are benefits from a reduction in taxes, opportunity to remain discrete in financial affairs (due to family arrangements), and to expand investments beyond the investor’s current jurisdiction, to achieve a better return on investment.

Offshore investment companies with their years of investment experience gained by working in offshore jurisdictions help both corporate and individual investors to protect their assets through market savvy investments, thereby enabling investors to attain maximum return on their overseas investments.

Offshore investments shields investments from capital gain taxation and augments assets through a confidential and secure investment that is not governed by the rules and regulations of the home country.

It is very essential to choose the right offshore investment service provider to ensure that good advice is being obtained and more crucially an excellent ROI is achieved. Offshore investment companies work closely with their clients so as to get a detailed understanding about their investment and financial objectives, which enables them to give the best possible offshore advice.

Offshore investment companies prepare well constructed balanced portfolio of investments for their investors so as to ensure success. They update the investment portfolio because financial markets adjust according to world economies and are prone to internal and currency fluctuations. They make assessments on investments after every six months along with a full financial analysis once every 12 months. This is essential to maintain the growth of the investment portfolio.

Investing offshore can be a very attractive option to an investor who wants to explore and invest in markets outside the home country by acquiring overseas private investments. The common perception that offshore investments can be very risky does not hold any truth. In fact offshore financial centers rely heavily on offshore capital and as such are very concerned about maintaining their reputations.

There are few men who can speak with confidence about their investment portfolios. Besides, out of thousands of stocks which ones are the winners? Thats not an easy question to answer as many investors have discovered. Yes you could just follow the popular stocks but thats not where the real money is. You could just copy your friends portfolios but who is to say they know what theyre doing? Here is an overview of how your portfolio should be structured. Keep in mind that everyone has a different risk tolerance and so you can make adjustments where necessary. We will speak in generic terms here and give percentile ranges instead of exact recommendations. This way you can make your own decision according to your particular situation.

To start with, if you know nothing about investing then you need to take the time to learn first. That or just jump into some mutual funds and have someone manage the allocations for you. There is no reason to take unnecessary risks at this point. It is only an unnecessary risk if you lack the proper knowledge.

Large Caps. Now there are many investing consultant types who will tell you to put a large percentage in large cap stocks. I say, unless you are big on dividends, which can be a nice constancy, you should only put a small portion of your portfolio in large caps. The reason I recommend this is because these stocks have already seen their glory days. They are wonderful companies but the potential for them to double your money is quite small. So I would recommend a 10% to 20% allocation here depending on your long term goals. Looking for slow less risky growth? Then lean on the latter end of that percentile recommendation.

Mid Caps. I believe that mid cap stocks in reality should take the place of the typical large cap recommendations. Why? Because these companies have experienced growth but still have a decent amount of potential to bring great profits. Safe with great potential, sounds like a winner to me. So Im going to recommend a 20% to 30% allocation here depending on your risk tolerance and long term goals.

Small Caps. These companies have huge potential if you follow trustworthy recommendations and stick with them. We are not talking about short holds here. We are talking about finding a super star small cap company and sticking with it until it becomes a large cap stock. I would recommend a 30% to 40% allocation here.

Micro Caps. This is a personal favorite but I am willing to take the risks. Micro caps are often called penny stocks and dont trade on the normal stock exchanges. Keep in mind that penny stocks are only for those with a big tolerance for risk. If you are uncomfortable with losing money then you should steer clear of this investment all together and use this allocation in other parts of your portfolio. There is a big risk of losing money but a huge potential for big gains not found else where. I would recommend a 10% to 25% allocation depending on your risk tolerance and goals.

If you are looking at overseas investment properties you want the best possible return on your money and this means choosing the country you invest in carefully.

There is one golden rule and it’s used in every other form of investment market to make money and should be used as the first rule when buying overseas investment property.

Do it and you will increase the odds of making money on your investment.

Let’s define the rule and examine it in more detail.

Buy a Trend In Motion

What do we mean by this in terms of overseas investment property?

Quite simply it means buy a market that has a track record of growth in property prices and the trend is well supported by investment.

Buying a market with potential

For example, many people buy overseas investment properties in markets that may take off (property is at its cheapest and upside at its highest) there are new ones all the time Nicaragua, Romania etc But upside is only at its highest if they do take off and most don’t!

By all means be a pioneer if you want the highest rewards in theory but that’s theory not practice. Sure, pioneers made money but most got killed by arrows.

Buying a market on potential alone and your view that it may go up is a mugs game and in most cases will lead to losses.

Buying an established market

If you buy an established market you will have missed the initial rise in property prices but that doesn’t mean there won’t be more to come, chances are there will!

Fact is once a market takes off it sucks in money by its very nature as investors have confidence to invest.

What you are looking for in buying overseas investment property is low downside risk and lots of upside. An established market that has just taken off will give you that.

If you do the above your risk will be low and your rewards will be high.

There are several so called well established markets around the world that will return you 100% per annum with low downside risk.

Investing in overseas property can yield big returns without huge risks and you don’t need to be a pioneer to make them.

For example Costa Rica has been booming for 10 years but many investors are still doubling or tripling their money in just a year or two! so play best risk to reward to make money on overseas investment property.

how would personal finance on a personal level affect the US economy?

If you own a property which you are planning to sell, be sure to consult a tax advisor or get informed about tax law before doing so. Many real estate agents also know the subtleties of property selling and taxation. Several small points can make the difference between having to pay capital gains tax or not.

Capital gains is something that not many of us worry about because we only have the one home which is often only sold in order to buy another property. Usually the next property will cost more money and will be a like-kind property so the question of capital gains tax never arises.

However, until now, there has been a little known tax clause which had taxed the most unsuspecting of people with capital gains. These people are newly widowed women, who suddenly find that they will now be taxed as a single woman. On top of losing a spouse, they also had to worry about losing a large chunk of their assets in the form of money from the sale of their family home.

When a home is sold, it has usually been the property of joint owners (most commonly husband and wife) and each owner is allowed to claim $250,000. This means that, for tax purposes, the average couple can exclude up to $500,000 of gain - provided that they have used the house as a principal residence for a cumulative two of the previous five years.

In most cases, being able to ‘write off’ a $500,000 profit margin means most of us are not concerned with capital gains tax.

But what happens when a spouse suddenly dies? The capital gains or the profit allowed on the sale of the house is now only one person’s allowance of $250,000. If you and your husband were married in the 1940s and lived all your life in the same house, then death of one of the spouses would incur heavy taxes on the sale of the property.

The IRS has just stepped in to change this situation, but with all the mortgage rate controversy, it has slipped by almost unnoticed.

Until now, the only way to qualify for the full $500,000 capital gains allowance was to sell your home in the same year in which your spouse died. In other words, it would be the last year that you could file a tax return as a married person, so it would be the last year that any taxation could be applied to the married -deceased- spouse.

Apart from the shock of losing a spouse and thinking about selling your home all in the same time period - what happens if your spouse dies in November? You have one month to get your act together!

Theoretically, most husbands or wives inherit their spouse’s share of the property at what is called a ’stepped-up’ tax basis, but now that the IRS has introduced new legislation for the spousal death situation, everyone can breathe more easily.

The new change in the law, introduced at the end of 2007, now gives surviving spouses a full two years to claim the “double” allowance of $500,00 on capital gains, even though, by law, they are now single.

I think that schools should teach personal finance because it is something we ALL use. I have never used Beolulf or any lituarture read in school. Maybe no one told me why it is so improtant.