Trading for Profit

I am excited. I recently attended a one day trading workshop in London which provided me with a strategy for spread-betting on the Dow Jones, Gold, and the USD: GBP FX market.

It relies on Tramlines, Fibonacci retracements and Elliot Waves. Now, these may all sound very complicated terms but they are in fact very simple. Please google them if you would like to learn a bit more.

It will take some down to hone my skills but I am prepared to invest the time. I have been doing some maths and I think it will serve as a way of potentially achieving a 25% quarterly return. This is therefore an excellent way for me to build up my funds prior to investing in cash flowing assets to provide my income for financial independence.

Trading and spread-betting is all very new to me but I am about to start putting my first trades on. If I can keep my emotions under control, trade exactly as per my strategy with discipline I’m hoping I will turn a profit.

I will keep you updated as to progress and may even provide insights into some of the trades I have put on.

As ever, I am very happy to try out different investment strategies to get me closer to my goal. If it doesn’t work out, I will be able to cross it off the list and try something different. Experimenting is the way forward and this is the attitude you need to have too if you want to be successful on your path to financial independence.

Inflation vs Deflation

This is the hot debate in the investment community.

Deflation would favour fixed income investments and cash. Inflation would favour commodities, precious metals and resource related stocks.

For the UK I think inflation will be the problem. Our deficit as a % of GDP is one of the highest in the world, and even if the Conservative government push through all these spending cuts our deficit as a % of GDP will still be on a very unsustainable path. For the Eurozone I think deflation will be more of a problem because of the lack of any quantitative easing and the Eurozone’s inflexible exchange rate.

Compared to the size of our money supply the UK’s quantitative easing program was massive, larger than that of the US in relative terms. This only spells one thing, inflation.

There are few options remaining in order to solve this mess for the UK- we could default on our debt, we could inflate our debt away or we could depreciate our currency so that our debt commitments are worth less to foreign holders. I think we will see a combination of inflation along with a depreciating currency which means we will be importing inflation too!

To protect yourself from weakening sterling it would be wise to put some money in strong currencies- these include Norwegian Krone, Swiss Francs and the Australian Dollar. Exposure could be gained through foreign currency denominated accounts with high street banks, ETF’s, foreign denominated assets or simply holding foreign cash.

 

When to invest in Real Estate

There is a lot of talk about when is a good time to invest in real estate.

The actual answer is anytime is a good time to invest. When the market is tanking, as a buyer you can negotiate fantastic discounts, 25%-30% off market value is what you should be aiming for. On the other hand, when the property market is rising you get the benefit of rising prices.

As it stands the property market in the UK is being artificially held up through the rock bottom interest rates. I think it will be surprising for how long the Bank of England maintain rates at this low level because they know any rise will knock the UK’s economic recovery. Ultimately though, the outlook for UK property is poor and at some point I think there will have to be some further declines. Whether these declines will be in real terms or nominal terms we will have to see.