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Main Topic |
TICN Features |
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Market Review
We referred to September 2008 as Black September. What colour will we use to describe October 2008 as the volatility in the market continued throughout the month and it ended as the worst month in 21 years? The first full trading week of October was a continuation of the last week of September, where we had that big 777 point drop in the market on Monday 28th. September. Then the first Monday of October, not to be outdone, had a drop of 800 points and closed below the 10,000 mark for the first time in four years. The DOW closed that week lower, giving up 1,874.19 points, or 18.2%, to close at 8451.19
That week’s decline was the steepest decline since 1987's 7-day loss of almost 24%.
The volatility continued in the next week beginning on Monday October 12th with the Dow Jones trading up over 936 points or 11.02%, as traders jumped in to get bargains after eight straight days of horrific declines. Again on Thursday 15th October we saw more of the same, as the Dow surged 401.35 points, or 4.68% in a single trading session.
Sandwiched between those two sessions, the Dow plummeted 733.08 points, or 7.87%. The other indexes behaved in a similar fashion.
Then on Friday 24th of October we had the frightening scenario of trading in futures being halted due to extreme drops in the markets leading to fears of a meltdown. But to widespread relief, trading in the stock market resumed as normal when the session opened at its scheduled time. The final week of the month produced a big rise on Tuesday October 28th of 889 points or almost 11% in the Dow.
Traditionally such market movements are triggered by macro economic events occurring either in the USA or worldwide. The concerted action by world central banks acting to reduce interest rates simultaneously around the world led to the euphoric rise of Monday October 12th for example. The announcement of a further cut in US interest rates in the last week of October down to 1.0% also had some effect on the markets. In addition, the first tranche of funds amounting to $125bl were released by the Treasury department to banks to fund their lending, as part of the $700bl rescue package.
However, there has been a continuous stream of poor economic news throughout the month. The American housing market produced more bad figures of falling values, fewer starts, lower sales and applications for building permits, which indicates the future level of activity in the sector, reached its lowest level since 1981. Unemployment figures continued to look poorly. Consumer spending was the worst in 2 years, with retail sales in September falling 1.2%, almost twice the level expected, while business inventories advanced 0.3%, its weakest showing since March when inventories advanced by a fractional 0.2%.
Weekly wages for September slipped by 2.5%, the 12th consecutive month that wages have declined. Industrial production for September plummeted by its fastest rate since 1974, dropping 2.8%, and follows a 1% decrease in August.
U.S. Gross Domestic Product, the broadest barometer of a nation's economic health, shrank at a 0.3 percent annual rate in the July-September quarter. It marked the worst showing for the world's largest economy since it contracted at a 1.4 percent pace in the third quarter of 2001. Consumers reported the most dismal assessments of their current financial situation ever recorded, according to a report from the University of Michigan confidence index at the end of the month. It hit a low of 57.6 down from 70.6 in September. This measure goes back to 1952 and hit its all time low of 51.7 in May 1980. In all that time there has only been four occasions when the index has shown double digit declines and all occurred during times of severe economic dislocation, which was worsened by fear and panic.
One piece of good economic news came in October 2008. The price of a barrel of oil ended the month at less than $65 per barrel. The price of oil has fallen about 55% since peaking at $147 per barrel in mid July. The 35% fall in the price of oil in the month of October alone marks the steepest monthly decline in the 25 year history of the New York Mercantile Exchange Unfortunately however, this latest fall has resulted from fears of a prolonged recession in the US economy.
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| TICN Support Night |
The main speaker at our support night on October 16th 2008 was Owen O'Malley C.E.O. of TICN Ltd. Owen presented the idea of Zero Risk Trades to a very receptive audience of over seventy people. The concept involves finding fundamentally sound rock solid companies and buying them when the opportunity presents itself. However, before buying Owen demonstrated how to look for really cheap insurance on these stocks and by selling a covered call one could collect in more rent than the cost of the insurance. By constructing the trade properly, Ticn members could have a surplus immediately and know that they were going to get out of the trade at a profit regardless of whether the market collapsed or not.
Owen showed not only a theoretical example from the past but also a live example on the night. Then he showed a sequence of trades from a Ticn club, which generated a profit of 30% during a time when the market fell by an equivalent amount.
Owen provided people on the night with a link to a recorded version of the evening so that members could play and replay the recording to ensure that they fully understood the concepts involved before applying them to their own accounts. The link is http://tinyurl.com/4mlqgs
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Although a link is provided for those who were not present at the support evening, people frequently believe that there is a gap in their understanding of what is involved in constructing trades like this. Therefore people are encouraged to get a fuller understanding of this and other such strategies by undertaking the Elite courses where all the elements that make up such a trade are explained in detail.
As can be imagined, when an investor is able to take a position in the market and know that the potential loss has been reduced to a minimum and or even to zero, the boost to the investor’s confidence is incredible and makes it easy to be relaxed regardless of market conditions. |
| Advance notice for 2009 |
Darlene Nelson was one of the popular speakers who appeared at our recent international seminar in Belgium. Darlene will be appearing exclusively in her own right at a seminar in the Glenroyal Hotel, Maynooth on April 24th to 26th. 2009. She will be teaching people how to trade the QQQQs which track the performance of the Nasdaq and how to trade using Leaps to leverage part of one’s portfolio.
The event is limited to the first 50 people who book, so early booking is advisable |
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-- CLICK HERE TO VIEW FULL SIZE GRAPH --
After all the volatility, the Dow closed out on the month of October at 9325.01, a decline of just over 14%, its worst month in 21 years, whilst the Nasdaq closed at 1720.91 which is down almost 18% and the S + P 500 closed down almost 17% at 968.75.
TICN stocks
The Dow declined by 14% in October. However, of the Ticn 88 stocks, the following six stocks increased during the month. ESI +8.3%. RLRN +5.0%, DLTR +4.6%, SCMR +3.4, CTXS +2%, ORLY +1.3% Another 16 of the TICN list fell by less than 10% over the course of the month while a further 13 stocks fell by less than the fall in the stock market as measured by the Dow.
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| TICN Members Support Webshop |
Testimonials |
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We have developed a series of Support and Educational Webshops that will save members both time and money.
These are live interactive sessions that you can receive from your home or office. |
| "The TICN organisation
is both professional and innovative with a
unique education
concept to successfully
investing in
shares. I highly
recommend their
seminars and support
as part of the ACCA
CPD credits process. As a full-time
accountant I
find the education and
support I have
received through TICN
very beneficial both
professionally and
privately in relation to
investing in the stock markets". |
| Gerry Quinn - Accountant,
Chairman Starchasers Investment Club
Sligo. |
| "I attended the TICN
MMCP Investment
seminar and have
made more money in
the last 5 months than
I have in my previous
5 years experience just
applying what was
taught to me by TICN." |
John Moylan,
Moylan Financial Services
Tipperary. |
| In my first year of
trading I made 62%
profit using the TICN
strategies and I expect
to do better in the
coming year due to the
advanced courses done
with TICN. I can now
make more money in
the market than I ever
could as a PAYE
worker." |
Pat Lynch,
Cork. |
| "After completing
the MMCP in April,
and paper trading in
May, I started with
$5,000 in June and
by December I had
turned my
investment into
$10,000 using the
TICN strategies as
taught to me at the
MMCP seminar." |
| Ian McKibbon,
Lisburn. |
| I really do believe
you have a great
organization - good
people, very
focused, very
straight forward and
democratic. I'm 50
this year and I can
honestly say its the
best decision I ever
made to get myself
educated in
investing... I should
have done it years
ago." |
John Daly,
Journalist - Cork |
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Our Support Webshops provide excellent explanations and examples all in a flexible & dynamic format that will truly meet your needs. And best of all you can attend for FREE!!
The increasingly popular Harvest Investor web shop held on a Tuesday evening at 8.00 p.m. increases the number of web shops available to members on a weekly basis. Like all web shops this can be heard on playback for up to 48 hours, provided that members register for the web shop before it starts. Such long access provides members with un-rivalled support in their trading and investing activities.
This web shop concentrates on analyzing the fundamentals of a stock and complements the material covered in the ever-popular Sunday and Wednesday evening web shops. |
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| November Upcoming Events |
Did you Know? |
MMCP and Elite courses
MMCP seminars will be held in the following locations throughout the month of November;
The Springhill Court Hotel, Kilkenny from Friday to Sunday November 7th - 9th
The Galway Bay Hotel, Galway from Friday to Sunday January 23rd - 25th 2009
The Blarney Woolen Mills Hotel, Cork from Friday to Sunday November 21st- - 23rd
The Glenroyal Hotel, Maynooth, from Friday to Sunday November 28th- 30th.
ELITE courses
We will be holding our final set of Elite courses over the final two weekends of November.
Elite 1
This course will be held in the Glenroyal Hotel, Maynooth on Saturday and Sunday November 22nd and 23rd. Online Trading and Charts and Graphs will take place on Saturday 22nd with Covered Calls and Puts on Sunday 23rd.
Elite 2
This course will be held in the Glenroyal Hotel, Maynooth on Saturday and Sunday November 29th and 30th. Candlesticks and Leaps will be on Saturday 29th with Credit Spreads and Debit Spreads on Sunday 30th.
Prices for all our courses are expected to increase for 2009. Make sure to take advantage of our current prices by getting your booking in as soon as possible, even if you are not certain of the dates on which you can do your course.
To reserve your place contact Robbie Hughes at robbie.hughes@ticnireland.ie or on 086 1989518.
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TICN provides FREE
webshops for people
who wish to learn more about TICN,
investment clubs
and the
Stockmarket!
TICN are currently
forming investment
clubs Nationwide.
TICN members can
complete the remaining
8 modules of the 'Elite
Investor' program with
a saving of 40% off
retail prices.
TICN Members can
repeat all training
modules for a NOMINAL
admin/facilities fee!!
We Provide a 100%
Moneyback guarantee
on MMCP seminars.
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| TICN Ireland - www.ticnireland.ie |
What we Do!
We teach people &
business how to
invest in shares
successfully.
How do we do that?
We educate members
through our seminars
and support them
through our
investment clubs
using the latest
communication
technology.
We teach people & businesses
how to:
1. Identify safe &
solid companies with
strong growth
prospects.
2. Choose the right
time to buy and more
importantly the right
time to sell.
3. Use proven
Strategies to
generate a monthly
income.
4. Invest directly
on-line with the
markets, saving time
& money efficiently.
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Education Centre - Return on Capital and PE Ratio |
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Return on Capital and PE ratio
Ticn members constantly speak of the 4 x 4 companies, which they invest in. This is short hand for companies, which are fundamentally sound and are available to buy in the market at a good price. There is a very detailed analysis and screening process involved in the proprietary Ticn 4 x 4 system, which finds such 4 x 4 companies. However, people often ask is there a quick indicator, which might identify such companies in the first instance.
Whilst Ticn believes that there is absolutely no substitute for the detailed analysis provided by the system, it is possible to look at a primary indicator of performance like the Return on Capital, which may indicate, whether or not a company is worth considering for further analysis.
This Return on Capital measure is frequently used to evaluate management performance as it looks at the return earned by management on all the money entrusted to it. The capital in question refers to all the money invested by both shareholders and lenders in the business. Shareholders provide capital to companies by buying their shares directly from the company itself at, for example, an Initial Public Offering or IPO. They could also buy shares through a subsequent rights issue. In addition, as profits are earned, which belong to these shareholders, they are invested in the business by company management instead of paying these profits out as dividends. This money invested directly and indirectly by the shareholders is referred to as the equity in the firm.
In addition, management will, from time to time, raise further funds by borrowing from banks. These loans, combined with the equity from the shareholders, is the capital in the firm. Good management teams will be able to put this money to work effectively in the firm. The effectiveness with which they employ such funds is evaluated by looking at the return earned by management on the money invested. If we compare the return earned by the firm with the total money invested in the firm and calculate it as a percentage, we get the Return on Total Capital for the firm.
This is a very quick way of evaluating management’s ability to use the money entrusted to it. A figure in excess of 10% p.a. is a minimum requirement. The greater the Return on Capital figure, the better it is. Ideally, company management would be increasing the return they are earning on their capital from one year to the next. This is difficult to do indefinitely, therefore it is to be expected at least that the Return on Capital is stable if it is not rising. A company, which has a stable or increasing Return on Capital, greater than that earned by their competitors is obviously a company with good quality management and therefore likely to be fundamentally sound.
However, it is not enough that a company should be fundamentally sound to be a good investment. It must also be well priced. This means that the price to be paid for a share in the company must provide the opportunity for investors to make a profit by buying the shares and holding them while they rise. Part of the beauty of the 4 x 4 system is that it provides a framework for judging whether or not the current price is one at which the reward for investing in the firm exceeds the risk attached to doing so.
A simple general indicator often used by investors to see if it is a good time to invest into a firm, is to look at the Price Earnings Ratio (PER) for the company. The PER is calculated by dividing the Market price for one company share by the Earnings per share produced by the company. When the PER is calculated, an investor can see what multiple of earnings needs to be paid to own a slice of the firm. The higher the PER, the greater the multiple, whilst the lower the PER, the lower the multiple of earnings that has to be paid.
A company is regarded as being at a good time to buy it if it is trading at a low PER, as investors have only to pay a low multiple of the firm’s earnings to own a share in the company.
Many investors however, believe that the PER is not sophisticated enough for this decision so other calculations have been developed to help in this area. One of the refinements on the PER is to calculate the PEG ratio.
The PEG ratio is the PER compared to the Earnings Growth rate in the firm. If the PER is 20 and the earnings are growing at a rate of 20% per annum, then the PEG ratio would be 20 divided by 20 giving a PEG ratio of 1. If the earnings were growing at an annual rate of 20% but the PER was only 10 then the PEG ratio would be 0.5. In this case therefore, the lower the PEG ratio the better the opportunity involved in buying a share in the company. The current price is a low multiple of the current earnings, which are in fact growing at a great rate. This produces a low PEG ratio and suggests that it is a good time to invest in the company.
In conclusion, if a company is earning a high Return on the Total capital invested in it, then it is, on the face of it, a good company. If it is also trading at a low Price Earnings ratio or a low PEG ratio, then it might be a good time to buy. A combination of these to measures may indicate that this share would bear the closer scrutiny provided by the very detailed Ticn 4 x 4 analysis.
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