FX Island

There is nothing new about offshore to banks, investment funds and other types of financial institution such as forex trading companies and insurance; most of them long ago set up offshore branches in order to service multinational corporations, to facilitate trade, and to provide investment management for high-net-worth individual customers.

Some offshore jurisidictions have developed as centres for particular types of offshore financial service: thus, there are hundreds of banks in the Caymans, and several thousand investment funds in Luxembourg, and British Virgin Islands (BVI).

In recent years, growing financial awareness has created strong demand for offshore financial services among a wider community of customers; this is especially true of offshore investment funds. Even so, offshore financial services have tended to remain the preserve of larger companies or of relatively wealthy and sophisticated individuals – transaction costs are high and information not always easy to come by.
more…

Long-time personal finance columnist Scott Burns writes that by working for four summers starting at age 16, putting the money in a Roth IRA, investing it wisely and waiting until age 67, it’s simple to become a millionaire. That’s the 51-year plan. But what if you’re not that patient – or that young? Lucky for you, there are many ways to hit the million-dollar mark, but the faster you try to get there, the harder it becomes.

$1 Million the Hard Way

Let’s say you want to become a millionaire in five years. If you’re starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you’ll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year. That means taking calculated risks, diversifying and avoiding investment fees like loads and broker commissions. more…

In developing our options research methodology, we have taken many lessons from Warren Buffett, whose philosophies are also a touchstone of our equity research. One way the Oracle of Omaha shares his lessons is through  Berkshire Hathaway’s BRK.B annual letters to shareholders.

In his 2008 letter, Buffett discusses his derivatives positions and the mark-to-market losses on those positions last year. The background discussion of this topic is an excellent read for investors seeking a basic understanding of the involvement of derivatives in the financial crisis.

Most interesting for us as option investors is that, despite his public criticism of derivatives as “financial instruments of mass destruction,” Buffett wrote long-dated put options on many publicly traded indexes. In Berkshire’s 2008 letter, he discusses those positions and his thoughts about options and the Black-Scholes model (the most widely used mathematical model for valuing options). We thought it would be useful to summarize the insights from his letter for our option investors and those who are curious about options. more…

You don’t have to be a daily trader to take advantage of the forex market – every time you travel overseas and exchange your money into a foreign currency, you are participating in the foreign exchange (forex) market. According to the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivative Market Activity conducted by the Bank for International Settlements, the forex market generated $3.2 trillion dollars worth of transactions each day. This makes the forex market the quiet giant of finance, dwarfing over all other capital markets in its world.

Despite this market’s overwhelming size, when it comes to trading currencies, the concepts are simple. Let’s take a look at some of the basic concepts that all forex investors need to understand.

Eight Majors
Unlike the stock market, where investors have thousands of stocks to choose from, in the currency market, you only need to follow eight major economies and then determine which will provide the best undervalued or overvalued opportunities. These following eight countries make up the majority of trade in the currency market:

1. United States
2. Eurozone (the ones to watch are Germany, France, Italy and Spain)
3. Japan
4. United Kingdom
5. Switzerland
6. Canada
7. Australia
8. New Zealand

These economies have the largest and most sophisticated financial markets in the world. By strictly focusing on these eight countries, we can take advantage of earning interest income on the most credit worthy and liquid instruments in the financial markets. more…

So, Bernard Madoff has been sentenced to life plus a century and a quarter in federal prison for destroying the lives of thousands — tens of thousands, hundreds of thousands — of innocent men and women. That’s a good thing, and I think we can assume that he won’t enjoy his prison time a great deal. Many friends of mine from the Nixon days went to prison, and I can tell you that none of them enjoyed it much (although former Nixon aide Chuck Colson did start a prison fellowship that has done great work). But now that Madoff is in prison for good, many questions remain: more…

Thank you, fellow taxpayers, for your generous contributions to the Angelo Mozilo defense fund. Bank of America(BAC Quote) confirmed on Tuesday it is covering the legal fees for the former Countrywide CEO who has been charged with securities fraud and insider trading. BofA, America’s biggest bank, says it is obligated to shell out for Mozilo’s defense as a result of an indemnity clause in place when he ran Countrywide.
The Securities and Exchange Commission filed civil charges against Countrywide’s co-founder last Thursday, alleging he raked in more than $139 million of improper profits by exercising stock options in 2006 and 2007 while the nation’s housing market and Countrywide’s finances were collapsing. more…

It’s being touted as a big win for consumers — but the new credit card legislation that President Obama signed into law Friday hardly means that cardholders can start swiping that plastic worry-free.

In fact, as the new rules kick in (most will go into effect nine months after the president signs the bill, while others will kick in as early as 90 days afterward)  and banks start curtailing the abusive practices this legislation reins in, other practices will likely emerge that can hurt consumers just as badly. “The pendulum may have swung in the wrong direction”, says Dennis Moroney, research director and senior analyst for TowerGroup, a research and advisory-services firm focused exclusively on the financial-services industry. “The banks now have to respond to these changes.”

more…

Being a forex trader is an exhilarating profession where you bounded your daily 24-hour a day life with forex news alert from around the globe five and a half days a week. The forex/currency trading market starts from the East where Tokyo will start trading around 9am Monday their time which is Sunday 7pm in New York and it ends about 4 pm (EST) Friday in New York.

I was once a forex trader expert in the four major currencies operational in a small boutique currency trading company in San Francisco. I still remember the working hours was almost 16 hours per days where you only got few hours of sleep each day. We specialized in private investors’ funds and managing those funds were high in pressure and stress; the reasons are that the private investors will call you anytime to check their forex trading positions and forex account balances. The payout was high but the working hour was dreadful. more…

Hedge fund manager Jeff Matthews, who wrote “A Pilgrimage to Warren Buffett’s Omaha,” actually made the pilgrimage last weekend, along with 35,000 other Berkshire Hathaway investors.

In Matthews’ opinion, the most disconcerting news from the weekend was that the external managers Buffett has hired to manage Berkshire’s money are doing a lousy job. Specifically, Matthews says, they all lost more than 37% on the year — worse than the stock-market average.

The only reason to hire a money manager is to try to beat the market, because otherwise you should just buy an index fund. The fact that Berkshire’s external managers lost money isn’t surprising — everyone got hammered last year. The amount they lost, however, is. more…

by Ben Stein

Recently I found myself on the top floor of One Chase Manhattan Plaza, a huge skyscraper near Wall Street. I was there to hear a panel on financial planning and to receive an award for my writings, including my writing in this space. As I waited and listened to the panel, I was overcome by feelings.

The men and women on the panel were extremely optimistic about the economy. By and large, they were convinced that recovery would start toward the end of this year, that employment would top out at around 10 per cent in 2010 and then slowly move to better levels, that the stock market had a lot of rallying left, and that even housing would soon start to recover. One panelist in particular thought banks and insurers were wildly oversold and believed subprime-backed bonds would soon correct to the upside sharply. more…