Signals Why You Shouldn't Manage Your Friends' Money

Signals Why You Shouldn't Manage Your Friends' Money So you put away some nice returns this year - not too shabby. While you can't be blamed for bragging about good performance, it's not uncommon for friends to want a part of the action. What would you do if a friend asked you to make investments on his or her behalf? In this article we'll show you the highs and lows of investing for others. Taking Advantage of Your Financial Knowledge It's no surprise that your pals might want you to manage a couple of bucks for them. If you're pulling down decent returns and talking about your investing strategies, you've now become the go-to guy (or girl). These days, money talks and people who understand the financial world are getting a lot of respect as young people realize there's more to investing than they once thought. If you have financial knowledge, people who know you might view you as a very valuable commodity - a free money manager. All too often, the person asking you to invest his or her money is the person who knows a little something about investing - just enough to get into trouble. If you're nailing double-digit returns this year, why couldn't you repeat the performance year after year, right? The Problems with Investing for Others You may think that investing for someone else is just a way of helping out a friend, but the thing is, when you start investing for other people, particularly your friends, you enter a world of complications that you might not have foreseen when you started out. Unrealistic Expectations That friend of yours, the one who thinks that your 35% returns this year are going to happen next year as well, might be in for a nasty surprise when your picks make next to nothing. When you invest for friends, you have to deal with unrealistic expectations that can really put a damper on a relationship. If your friends wants you to invest for them, they likely don't understand all of the risks involved with investing, including not quite meeting the investment goals that they may have been projecting. Losing a Friend's Money Not meeting a friend's investing expectations could jeopardize your friendship, but falling short of your friend's projected returns could be a best-case scenario. When things go wrong, making some money is a lot better than losing money, which isn't an abstract concept for anyone who invests actively. When you bring money into a relationship, things can get uncomfortable pretty fast, especially when that money is hemorrhaging out of an investment account. Do you tell the friend to suck it up? Do you repay the person out of your pocket? Do you try to make up the difference with new picks? Really, there probably isn't a good way to deal with losing a friend's money and you should consider this risk before you agree to invest for anyone. Legal Matters Managing a friend's money is a sticky business and if you go through with it you may be breaking the law. Investment professionals must be registered with the Securities and Exchange Commission or have a federal license. They are heavily regulated by the government and by trade organizations like the National Association of Securities Dealers, for the protection of consumers. If you invest for a friend for compensation, you could be breaking laws that are in place to protect investors from people who aren't qualified to have discretionary control over others' accounts. Short End of the Stick Despite the drawbacks, investing for friends isn't always doomed to failure. With skill, smarts and a whole lot of luck, you might rake in the cash. If that's the case, you still have to consider whether or not your friend is taking advantage of you. Helping out a friend is nice, but when that help consists of making significant amounts of money for that person and getting little or nothing in return, you might be suffering from an off-balance relationship. What You Can Do for Friends Now that I've taken the wind out of your sails, and your friend's as well, there are things that you can do to help your friends' investments without burdening yourself with the substantial responsibility of investing someone else's money. One of the best ways to lend a hand is to help teach your friend about investing. Help Them Learn There are a lot of pitfalls out there for new investors. If you're lucky, you've been able to avoid quite a few of them or you learned how you should have gone about avoiding them. The benefit of your experience can be one heck of an asset to pass on to a friend and it won't cost either one of you personally or financially. Therefore, if you want to help your friends, work with them; show them how to analyze a financial statement, how to execute a trade online, how to look up business news, or how to find online resources. Investment Clubs Going farther still, there is a popular way to invest hands-on with friends without taking on the responsibility that an investment advisor would feel for a client - the investment club. The investment club consists of a group of people who vote to decide whether or not to buy or sell their group-owned investments. Investment clubs are great, because they allow a more personal approach with actual investments than just helping someone with investing concepts. These clubs will also give you a vested interest in performance of your friend's portfolio. If you're interested in starting an investment club, there are plenty of resources available, ranging from your broker to the internet. It's important to recognize that an investment club isn't just a couple of people who want to invest together - it's a formal (and legally defined) organization with members who have an equitable claim to their assets. This means you should look into the rules and laws that govern investment clubs where you live before joining or starting one yourself. The Bottom Line Investing for a friend usually isn't worth the amount of trouble it can cause. Money just isn't something you want to bring into a good friendship. In the end, by helping your friends invest on their own, you'll be doing them, and yourself, a much bigger favor.

Forex Quest for the golden cross

Forex Quest for the golden cross RELATED QUOTES Symbol Price Change MA 348.79 +0.96 XOM 85.83 -0.94 PFE 21.48 -0.15 K 49.73 -0.26 TRI 27.82 -0.10 By Rodrigo Campos NEW YORK (Reuters) - January has turned out strong for equities with just two trading days to go. If you're afraid to miss the ride, there's still time to jump in. You just might want to wear a neck brace. The new year lured buyers into growth-related sectors, the ones that were more beaten down last year. The economy is getting better, but not dramatically. Earnings are beating expectations, but at a lower rate than in recent quarters. Nothing too bad is coming out of Europe's debt crisis - and nothing good, either - at least not yet. 'No one item is a major positive, but collectively, it's been enough to tilt it towards net buying,' said John Schlitz, chief market technician at Instinet in New York. Still, relatively weak volume and a six-month high hit this week make some doubt that the gains are sustainable. But then there's the golden cross. Many market skeptics take notice when this technical indicator, a holy grail of sorts for many technicians, shows up on the horizon. As early as Monday, the rising 50-day moving average of the S&P 500 could tick above its rising 200-day moving average. This occurrence - known as a golden cross - means the medium-term momentum is increasingly bullish. You have a good chance of making money in the next six months if you put it to work in large-cap stocks. In the last 50 years, according to data compiled by Birinyi Associates, a golden cross on the S&P 500 has augured further gains six months ahead in eight out of 10 times. The average gain has been 6.6 percent. That means the benchmark is on solid footing to not only hold onto the 14 percent advance over the last nine weeks, but to flirt with 1,400, a level it hasn't hit since mid-2008. The gains, as expected, would not be in a straight line. But any weakness could be used by long-term investors as buying opportunities. 'The cross is an intermediate bullish event,' Schlitz said. 'You have to interpret it as constructive, but I caution people to take a bullish stance, if they have a short-term horizon .' GREECE, U.S. PAYROLLS AND MOMENTUM Less than halfway into the earnings season and with Greek debt talks over the weekend, payrolls data next week and the S&P 500 near its highest since July, there's plenty of room for something to go wrong. If that happens, the market could easily give back some of its recent advance. But the benchmark's recent rally and momentum shift allow for a pullback before the technical picture deteriorates. 'We bounced off 1,325, which is resistance. We're testing 1,310, which should be support. We are stuck in that range,' said Ken Polcari, managing director at ICAP Equities in New York. 'If over the weekend, Greece comes out with another big nothing, then you will see further weakness next week,' he said. 'A 1 (percent) or 2 percent pullback isn't out of the question or out of line.' On Friday, the S&P 500 (Chicago Options:^INX - News) and the Nasdaq Composite (Nasdaq:^IXIC - News) closed their fourth consecutive week of gains, while the Dow Jones industrial average (DJI:^DJI - News) dipped and capped three weeks of gains. For the day, the Dow dropped 74.17 points, or 0.58 percent, to close at 12,660.46. The S&P 500 fell 2.10 points, or 0.16 percent, to 1,316.33. But the Nasdaq gained 11.27 points, or 0.40 percent, to end at 2,816.55. For the week, the Dow slipped 0.47 percent, while the S&P 500 inched up 0.07 percent and the Nasdaq jumped 1.07 percent. A DATA-PACKED EARNINGS WEEK Next week is filled with heavy-hitting data on the housing, manufacturing and employment sectors. Personal income and consumption on Monday will be followed by the S&P/Case-Shiller home prices index, consumer confidence and the Chicago PMI - all on Tuesday. Wednesday will bring the Institute for Supply Management index on U.S. manufacturing and the first of three key readings on the labor market - namely, the ADP private-sector employment report. Jobless claims on Thursday will give way on Friday to the U.S. government's non-farm payrolls report. The forecast calls for a net gain of 150,000 jobs in January, according to economists polled by Reuters. Another hectic earnings week will kick into gear with almost a fifth of the S&P 500 components posting quarterly results. Exxon Mobil (NYSE:XOM - News), Amazon (NasdaqGS:AMZN - News), UPS (NYSE:UPS - News), Pfizer (NYSE:PFE - News), Kellogg (NYSE:K - News) and MasterCard (NYSE:MA - News) are among the names most likely to grab the headlines. With almost 200 companies' reports in so far, about 59 percent have beaten earnings expectations - down from about 70 percent in recent quarters. (Reporting by Rodrigo Campos; Additional reporting by Chuck Mikolajczak and Caroline Valetkevitch; Editing by Jan Paschal)

Oil Stocks open mixed; jobs report comes in weak

Oil Stocks open mixed; jobs report comes in weak FILE - In this Jan. 10, 2012 photo, a pair of specialists study a screen as they work on the floor of the New York Stock Exchange. Strong bond auctions in Italy and Spain dramatically drove down their borrowing costs and lifted stocks Thursday, Jan. 12, 2012, providing a reprieve from Europe's relentless debt crisis. (AP Photo/Richard Drew, File) FILE - In this Jan. 10, 2012 photo, a pair of specialists study a screen as they work on the floor of the New York Stock Exchange. Strong bond auctions in Italy and Spain dramatically drove down their borrowing costs and lifted stocks Thursday, Jan. 12, 2012, providing a reprieve from Europe's relentless debt crisis. (AP Photo/Richard Drew, File) NEW YORK (AP) -- Stocks are opening mixed after an increase in unemployment claims dampened optimism about strong bond auctions in Italy and Spain. The Dow Jones industrial average is off 13 points at 12,436 in the opening minutes of trading Thursday. The S&P 500 index is down less than a point at 1,292. Nasdaq composite fell a point to 2,709. The Labor Department said applications for weekly unemployment benefits spiked last week, mostly because companies let go of thousands of holiday hires. Retail sales barely rose in December, but the 8 percent gain in 2011 is the largest percentage increase since 1999. Most markets in Europe are higher after strong bond auctions in Italy and Spain.

Oil Netflix shares rise on investor optimism

Oil NEW YORK (AP) -- Shares of Netflix Inc. rose Friday on expectations that its shares will get a boost from the upcoming release of its fourth-quarter results. THE SPARK: Netflix shares have risen more than 40 percent in just the past week, prompting investors to wonder just how high they can go. But B. Riley & Co. backed its 'Buy' rating for Los Gatos, Calif.-based Netflix, saying that investors should hold on to their shares until after the company's fourth-quarter conference call on Jan. 25, when it's expected to update its outlook for the year. THE BIG PICTURE: Netflix shares took a beating and subscribers fled after the company said in July that it would increase U.S. prices by as much as 60 percent. Things only got worse two months later when Netflix said it would spin off its DVD-by-mail rental service into a separate website called Qwikster. It scrapped that idea in October. Since peaking in mid-July, Netflix shares have lost about 70 percent of their value. THE ANALYSIS: Analysts for B. Riley noted that Netflix shares are rapidly approaching the firm's $100 price target and said the company will probably post quarterly losses through at least the first half of the year. But they also said that Netflix's customer base appears to be stabilizing, which should reassure investors that the company is holding its own against the competition. 'We continue to believe that Netflix offers consumers the greatest content variety versus price relationship of the various choices,' the analysts wrote in a note to investors. 'And with the surprisingly positive announcement early last week that Netflix streamed more than 2 billion hours of movie and TV show content in the fourth quarter, we believe this is more likely to be the case than not.' In addition, the company should eventually get a boost from the expansion of its steaming services into new international markets. THE SHARES: Up $2.32, or 2.5 percent, to $94.47 in afternoon trading.

Signals Comments from G20 finance chiefs meeting in Mexico

Signals Comments from G20 finance chiefs meeting in Mexico MEXICO CITY (Reuters) - Following are comments from policymakers attending the meeting of Group of 20 finance ministers and central bankers in Mexico City on Saturday. U.S. TREASURY SECRETARY TIMOTHY GEITHNER 'I think it's important to give Europe's leaders credit for what they have accomplished ... and put in place in terms of the architecture of a credible response in the last four months.' 'They have had a big impact in reducing the downside risks to growth ... though it's important not to rest on that progress.' 'I hope that we're going to see, and I expect we will see, continued efforts by the Europeans ... to put in place a stronger, more credible firewall.' CANADIAN FINANCE MINISTER JIM FLAHERTY 'I do want to encourage Germany to take that leadership role very seriously and come up with an overall euro zone plan.' 'I think that what I'd like to see in the communique is language that indicates that the real question is, when will we see the euro zone plan. And that discussions about other countries through the IMF supporting the euro zone plan should await the answer to the first question.' 'I don't think we're ever going to be able from the outside to impose a deadline on the euro zone. That's up to them.' GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE 'It does not make any economic sense to follow the calls for proposals which would be mutualizing the interest risk in the euro zone, nor in pumping money into rescue funds, nor in starting up the ECB printing press.' 'I am worried the overriding problems ... have not been tackled sufficiently. We have to be more daring when it comes to these large and fundamental challenges.' 'You know that Greece is a special and unique case...The main difficulty is a serious lack of competitiveness.' JAPANESE FINANCE MINISTER JUN AZUMI 'I'd like to see how Europe will make concrete efforts and then discuss how we can contribute.' 'I said that I expect debate on strengthening of the IMF lending capacity will progress on condition that the problem of Europe's debt crisis is put to an end by the G20 meeting in Washington in April.' 'The present firewall involves strengthening of EFSF and increase of upper cap on ESM. But I said (at G20) that they should be further strengthened.' 'The economy is somewhat picking up in the world as a whole, including Japan, and (we) want to put an end to the Europe crisis in the early spring and to accelerate the global economic growth.' BRAZILIAN FINANCE MINISTER GUIDO MANTEGA 'Emerging countries will only help under two conditions; first that they strengthen their firewall and second for the IMF (quota) reform be implemented.' 'I see most countries sharing a similar opinion that the Europeans have to strengthen their firewall.' JAY COLLINS, SENIOR CITIGROUP EXECUTIVE 'The lack of a firewall decision coming out of Europe takes a toll, speed matters.' 'Speed and urgency is critical.' BANK OF JAPAN GOVERNOR MASAAKI SHIRAKAWA 'Heightening geographical risks and some bright movements in advanced economies after the New Year are factors behind the underlying crude oil price hikes. Of course, monetary easing has been continuing but I don't see it as a major factor for driving up crude oil prices. Generally speaking, we'll closely watch effects and side-effects of monetary easing.' MARK CARNEY, BANK OF CANADA GOVERNOR AND CHAIRMAN OF THE FINANCIAL STABILITY BOARD 'We are cursed with living in extraordinary times. There are two critical challenges that are really facing policymakers at the moment. Restoring growth and stability in Europe. There's been quite appropriately tremendous attention paid to that. But at the same time, just doing that will not be enough.' 'We need to rebuild strong, sustainable, balanced growth in the global economy.' 'One of the issues in these G20 meetings has been that the issue of the moment has often, not surprisingly, crowded out this fundamental medium-term issue.' 'For emerging markets, the weak growth prospects and large accommodative monetary policies in the G3 (major advanced economies) tends to push capital flow towards them, exacerbating concerns about sudden stops and potentially causing a reaction in terms of capital controls.' 'Some emerging markets are reluctant to abandon exchange rate strategies which have served them so well in the past, and so there's a vicious circle here.' BANK OF ITALY GOVERNOR IGNAZIO VISCO 'During the G20 meeting we will discuss the outlook for the global economy and we will probably talk about the developments on the oil markets. Tensions are growing.' 'We have to be vigilant regarding oil.' 'At the moment we don't see the need for a new LTRO by the ECB, but we will have to see the whole effects of the second one (on February 29) before taking a decision.' 'Italy has made remarkable progress on the budget side, now it has to work on growth, even Europe should insist on growth.' OECD SECRETARY-GENERAL ANGEL GURRIA 'The Greek bailout was not a deal, it was an ordeal ... the problem was it came too late.' 'I don't know if Greece's debt target of 120 percent of GDP will be enough -- that will depend on whether Greece delivers on its policies.' 'We have run out of monetary policy room ... we have run out of fiscal room in most countries, some have a little fiscal room now.' 'The ECB's LTRO (long term refinancing operation) is no substitute for a European firewall.' 'It's already six months to a year late... We need a massive European firewall now.' (Compiled by Kieran Murray)

Oil Gold & Copper Trends Are Still Higher: Holmes

Oil If you told me yesterday that the largest bank in the U.S. was going to report lackluster earnings results, and Standard & Poor's was going to take its credit rating clever to Europe, but the markets would largely shrug it off - I probably would have politely told said 'you're crazy!' Welcome to reality; it all happened today. And the little market that could clearly thinks it can still test higher levels and isn't going to let some silly headlines derail it. While JP Morgan (JPM), the big banks (^BKX), and the Euro are getting whacked today, it doesn't change the strategy of money managers like Frank Holmes, the CEO & CIO of US Global Investors, who says the crisis du jour has no bearing on the long term opportunities. 'I am a big believer that you buy gold on down days,' this transplanted Torontonian tells us from his new home in Texas. He believes this year could be 'one of those odd years' that the dollar and commodity prices rise together. And much as Holmes likes gold, he loves the gold miners (GDX) even more, largely because they got sold off alongside other stocks last year while the precious metal they produce rose 10%. 'I think the really big opportunity right now is gold stocks,' he says pointing to their relative price compared to spot gold, as well as their historically low price-to-book ratios, and in some cases dividend yields too. Among the names he likes and owns now are Yamana (AUY), RandGold Resources (GOLD), and lesser-known Franco Nevada (FNV) --which Holmes says pays a monthly dividend. As for the metal itself, Holmes is unmoved by the most recent developments and has had no change in his belief that 'anytime you have inflation running at 3% and you're getting 0.1% in a money market fund, it's always better to own gold.' He is similarly undaunted and unchanged in his conviction about copper and belief that China will successfully engineer a soft landing. He's staying long copper because of the country's plans to build 24,000 miles of high speed rail, and he likes the recent uptick in the JP Morgan Global Purchasing Managers Index, which signaled expansion for the first time in almost a year. 'I think copper will go higher,' he states. 'Just like oil can easily have supply restricted, you have seen copper restricted.' Related Quotes: JPM 35.92 -0.93 -2.52% ^BKX 43.44 -0.17 -0.39% XLF 13.81 -0.11 -0.75% EURUSD=X 1.268 -0.0029 -0.23% FXE 126.33 -1.43 -1.12% ^STOXX50E 2,338.01 -7.84 -0.33% FEZ 29.06 -0.57 -1.92% GCF12.CMX 1,632.40 -14.90 (-0.90%) GLD 159.26 -1.12 -0.70% IAU 15.97 -0.11 -0.68% GDX 54.05 -0.67 -1.22% AUY 15.68 -0.12 -0.76% GOLD 108.83 -2.03 -1.83% FNV 39.90 -0.40 -0.99% FXI 36.74 -0.10 -0.27% HGF12.CMX 3.597 -0.05 (-1.29%) COPX 13.91 -0.12 -0.86% CU 31.45 -0.33 -1.04%

Forex Citigroup cut investment bank bonuses by 30 percent: report

Forex Citigroup cut investment bank bonuses by 30 percent: report (Reuters) - Citigroup (NYSE:C - News) has cut bonuses for its investment banking division by about 30 percent on average, Bloomberg said, citing a person briefed on the matter. Some businesses within the securities and banking unit had bonuses reduced by as much as 70 percent, Bloomberg reported. Citigroup was not immediately available for comment. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Steve Orlofsky)