September 7th, 2009
admin
Brokers know that you want researched stocks recommended by experts. That is why you came to them to begin with. Each brokerage house, therefore, has its own experts rating stocks just for you. When brokers rate stocks, on average more than 65 percent are rated buy, less than 35 percent are hold, and less than 1 percent are rated sell. Every broker, therefore, has a long list of buys to show you, several of which are certain to piqué your interest.
Unfortunately, buy ratings have a dual purpose. Buy ratings sell stock to you and they sell services to companies issuing stock and bonds. In 2000, brokers made more than $30 billion dollars helping companies issue stocks and bonds. These stocks and bonds are always given buy ratings. That keeps the client coming back; it may or may not keep you coming back.
Studies show that buy-rated stocks have random returns on average no better than the market. Frequently they serve to prop up stock prices temporarily so insiders can cash out their stock options at a profit before the collapse. Insiders have to act quickly, though. According to a 2001 study by Investors.com, buy ratings on IPOs by the analysts of the underwriting firm lead to losses six months later of greater than 50 percent.
Investors also go to their broker for comfort and support during the markets down periods. Unfortunately, a full-service broker is not a financial counselor or a psychologist, but a salesperson looking for a commission. He will always have a product to sell you in an attempt to ease your discomfort.
Many investors go to full-commission brokers for stock research, investment advice, and financial planning. Today, online discount brokers also provide these services. Unfortunately, most brokerage information is designed to sell more product more often, not to improve your financial position.
Wall Street has always known that buyers are primarily interested in stocks that increase in value. Profiting from declines is un-American. The easiest sell is a stock or fund that has already gone up. You will naturally be more confident that a stock or fund that has gone up will continue to do so. A broker will show you a select list of stocks that have strong momentum. Your overconfidence will hurt you. Studies show that stocks that have good streaks soon revert to the mean. While your broker is sure to know this, he will not disclose it to an optimistic buyer. He also has other sales tools.
While there are a few differences, the structures for conventional small business loan transactions are similar to those of the unguaranteed portions of SBA 7(a) loans. One distinction is the excess spread available. Note, for 7(a) transactions, excess spread from the entire loan is available with only the unguaranteed portion being securitized, where for conventional business loans the entire loan is in the transaction.
Conventional small business loans are also made to “qualifying borrowers,” whereas the eligibility requirement of SBA loans is for borrowers that cannot obtain this financing. Therefore, the quality of conventional small business loans is generally better than SBA loans.
The average loan balance for conventional business loans for the most part will be higher than the SBA due to a lack of SBA limits on loan size. Also recall that SBA loans are typically floaters indexed to the prime rate. Conventional loans tend to be indexed to three-month LIBOR because the investment community prefers LIBOR floating rate bonds. Indexing the underlying collateral to the same index mitigates basis risk. SBA transactions have basis risk; however, the rating agencies take this into consideration when specifying levels of credit enhancement for deals.
Large portions of conventional loans are secured by first liens on real commercial property. Transactions will often consist of pools of loans backed almost completely by real estate collateral. When the loan is not backed by real estate, losses on defaulted loans will typically be higher due to the lack of real estate collateral, which is generally an appreciating asset, versus collateral such as equipment, which is a depreciating asset.
Prepayment penalties for conventional loans tend to be more severe than the SBA. Penalties are set by the lender and will likely start at 5% and step down one percentage point per year for the first five years following disbursements.
SBA transactions are generally more geographically diverse than conventional transactions. Forty-eight states could be represented in an SBA transaction where conventional transactions may contain only eight with around 70% of loan concentration in one state. Small business performance is negatively affected by downturns in economic cycles; the geographic diversity of SBA transactions lessens some of this risk.
Grace
Following graduation or withdrawal from school, Stafford, and Perkins borrowers are granted a period before the repayment of their loan begins. During the grace period, the government continues to pay the interest for subsidized and Perkins loans. For unsubsidized Stafford loans, the interest is still the responsibility of the student, who may request a shorter grace period to avoid additional accrual of interest. Grace periods for Stafford and Perkins loans are typically six and nine months, respectively.
Deferral
A deferral is a postponement of the loan repayment and acts similarly to the grace period. Interest accrues and the government pays it for subsidized and Perkins loans. However, for unsubsidized loans, the borrower is required to pay the interest or have it capitalized. Following are some circumstances in which students may receive deferment:
- Enrollment in postsecondary school at least half time.
- Economic hardship.
- Inability to find full-time employment.
Greater complexity in loan workouts is a result of increased diversity, both in the participants involved in financing companies and in the nature of financial claims. Traditional bilateral banking relationships are being replaced by more transaction-based financing arrangements, including the direct access to investors in the capital markets. As a result, when corporate distress occurs, there is a very wide range of institutions that become involved in support operations. Potentially conflicting objectives from a wide spectrum of financiers, including venture capitalists, credit insurers, institutional and retail bondholders and vulture funds, can be difficult to reconcile. At the same time, the complexity of companies’ legal structures and financial management activities results in a loss of transparency. Considerable effort is required to unravel financing arrangements if such companies encounter difficulties. The process of determining the prioritisation and negotiating strengths of the different claims on a company’s assets is hampered, causing uncertainty among the participants.
September 26th, 2008
admin
The U.S. real estate crisis attracts more circles. Even at the beginning of January, experts expected that between 50 to 100 billion U.S. dollars by banks concerned must be depreciated. In addition to the 50 billion U.S. dollars, which has already been written off.
Now reports that the U.S. credit rating agency S & P with the message word that further loans with a volume of over 500 billion should be examined. In the worst case, this loan volume fully depreciated. The experts from S & P, however, assume that this sum of “only” nearly 265 billion U.S. dollars must be depreciated.
Through this message is likely many investors have become clear that the U.S. real estate crisis, which led to a worldwide credit crunch seems to mutate, long ausgestanden is not. Only when all the banks its portfolio of securities and loans examined, re-assessed and thus endangered by a failure of papers have depreciated, this crisis can be ended. Until the true size of the necessary write-offs are not known, the credit crisis persist. Yet, not all value losses in the books of the banks has been updated.
German investors have therefore been the coming weeks to further adjust fluctuating stock exchanges.
September 26th, 2008
admin
The following websites are currently under our patronage:
September 6th, 2008
admin
Welcome to the loans assistant blog! This site was established with a goal to give all necessary and up-to-date information on subjects dealing with loans and financial issues, for example debt consolidation, mortgage, home foreclosure and credit card fees. Hopefully you will be able to put this information to good use and save or possibly earn some extra money. People who would like to join loans assistant team should contact us by email.