Intervention. Now don't let that big word scare you. The talking heads on TV have been discussing it all week because the major banks of the world are going to "prop up" the Euro.
What the heck is the "euro"? This is a currency just like the British Pound, the French Franc and the German Duetschmark, but it supercedes those currencies and is supposed to ultimately replace them as the money of all the European countries. It is another layer on top of the currency of each country. It was introduced in January 1999 and has been sinking ever since.
It was supposed to stabilize the European currencies, but all the underlying currencies have been going down in relation to the US Dollar. When the tide goes out the boat goes down. The tide is the various currencies and the boat is the Euro.
Everything must be converted to Euros. Oil is world-priced in U.S. dollars so it takes many more Euros now than it did early this year. This principle applies to everything that is bought abroad by European countries. Why do we care? Politics.
Let's make this simple. Take your neighborhood and use the housing market as an example. Ever had a "soft" market for home values in your area? Of course you have. Everyone has. So the local real estate boards decide the way to keep prices from going down is to buy houses as they come on the market at the current prices even though the real values continue to slip lower. What happens? Immediately prices strengthen, but slowly they start to weaken again and finally the real estate boards run out of money and suddenly when the artificial buying ceases the market collapses to a lower price than where they started their "intervention". Brilliant strategy!
As I have said in my book an economist is the last person you want to consult about what is going to happen in the real market. Most of them don't know the price of a loaf of bread and quart of milk. They will quote you econometric formulas until they are blue in the face and no two of them will agree on anything.
Until the underlying economies of the European countries strengthen with good sound economic principles, primarily laissez-faire, you will not see a long-term positive effect on the Euro.
If you aren't confused you by now, don't worry about it because none of us peons can get these geniuses to use good common sense.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
al@mutualfundstrategy.com; 1-888-345-7870
In November of 2000 when the NASDAQ was trading at... Read More
Where is the beef? Or maybe it should be where... Read More
Before they go over the cliff to their destruction these... Read More
I go to the Money Show every year to visit... Read More
It's about time someone spoke the truth concerning outsourcing. The... Read More
Every broker and financial planner will tell you that you... Read More
Sometimes the best way of lowering exposure to risk is... Read More
As I have said many times before in this column... Read More
We all know the expression, "My country, right or wrong",... Read More
The Winter Games for the Olympics are coming up soon... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
I would like to share with the reader an article... Read More
Two weeks ago I wrote about what the Securities and... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
The thinking process of the brain relating to the... Read More
Ever notice how behavior in one area of life can... Read More
Wall Street's watchword has always been diversification, but what does... Read More
An investor can find and research the best stock on... Read More
One of the basic laws of physics is that a... Read More
If you are a baby boomer, time is not on... Read More
Humpty Dumpty had a great fall and all the King's... Read More
Very few people, even professionals, have heard of the Dalbar... Read More
You'd have had to be living on a desert island... Read More
The gleam and bright lights of Wall Street lure in... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
If you've ever flipped on the television to CNN Financial... Read More
Everyone who invests in the stock market wants to be... Read More
There are many good penny stock investments available, which could... Read More
In 1960 an engineer working for a watch company in... Read More
The stock market has been in an up trend for... Read More
A stock market index is a statistical measure of changes... Read More
What a great statement!I just heard someone use it in... Read More
Wall Street has been preaching for years and years to... Read More
Mutual funds by definition are a mixed bag of stocks,... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
When purchasing mutual funds we are cautioned to read the... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
Sometime in the third quarter of 1997, someone told me... Read More
04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More
The broker told me not to sell because the mutual... Read More
1. Do not spread your money too thin.My friend has... Read More
Over the past few months, several investment professionals have brought... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
Ever done any whitewater rafting or canoeing? Long periods of... Read More
In November of 2000 when the NASDAQ was trading at... Read More
We all know the expression, "My country, right or wrong",... Read More
You may have wondered why your mutual funds have been... Read More
Before they go over the cliff to their destruction these... Read More
Duck! No I don't mean a quack, quack. I meant... Read More
Are you one of those many people who dread reading... Read More
The bear market that showed up at the end of... Read More
When you become interested in a stock or mutual fund... Read More
You probably know the story of Sherlock Holmes and the... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
When you stand on the ocean shore and watch the... Read More
Whenever I see mutual fund comparisons in the trade publications... Read More
Do you have a nest egg? You know, a place... Read More
Time to look back2004 is over, now we are in... Read More
This is the continuing story of our two imaginary traders,... Read More
What the heck am I talking about?It is often said... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
If you have not back tested your trading system, you... Read More
"If you don't know where you are going, any road... Read More
Refuse is a serious issue in any society, about as... Read More
What does it take to be a stock trader? It... Read More
I mean it when I say that. While plastic silverware... Read More
Stocks & Mutual Fund |