Daily Financial Blog Updates
Daily Financial Blog UpdatesApril 7, 2012
This post is basically a collection of various comments or questions posted in various financial sites or blogs. If you feel you would like to comment or add your input please feel free to do so. We welcome all forms of feedback.
Q: Oil Stocks and Derivatives: Shane from New York is saying that he’s having a hard time understanding what derivatives mean in relation to oil stocks. Can you please explain how it works?
A. Think of it as a deal or in financial terms a “contract”. You believe the price of a certain stock will go up for example, so you would sit tight or hold on the underlying asset until it expires. If your right, it means your “on the money” when the contract expires. This is true for oil, gold, or any type of futures or commodities.
Q: Anonymous Blog Comment on Facebook Stocks: Without Zynga their portfolio would be significantly less attractive – what does this mean to investors?
A: Zynga specifically and gaming in general have a very high engagement ratio and the member value which is the highest. The way it is measured is by daily average users (DAU) and monthly average users (MAU). Some of the newer gaming developers like Playtika which was recently bought out by Caesers Entertainment for a cool 10 Million Dollars have demonstrated tremendous growth consistently – this is particularly true for Slotomania which has an active community of over 6 million users. Truth to be told – gambling and Facebook go very well together due to the ability of these apps to monetize.
Q: Gordon believes binary options trading need to be regulated so the government can look out for peoples welfare.
A: I wouldn’t want the government interfering in where or how I spend my hard earned money. This is true for anything I do online – the less government intervention the better.
Q. Kevin, a day trader from Ohio, understands intuitively the importance of gold in an investment portfolio, but he never really fathomed the whole concept of commodities trading, futures, and how to mitigate risk on trades.
A. A lot of traders don’t quite grasp why gold is so very much important to the economy, particularly during a high VIX. I mean, they all heard of Fort Knox, and how gold is a valued commodity, but they still don’t understand how this works from an economic level.
Gold’s value is unrelated to any specific currency. Exactly the opposite is true, currencies are valued according to how gold is performing in the markets. This is the only commodity out there that has this type of “personality” and why I do so love to trade gold online. I almost always add gold and crude (specifically sweet Texas) to my portfolio and hold on to these stocks – preferably long on HAL, CVX, and XOM if I can. John