The rules have changed again!!!! Only this time it may be a good thing.
This from our business partner AP News
Government to clarify accounting rules for banks
AP Business Writer (AP:WASHINGTON) Federal regulators on Tuesday clarified accounting rules for banks in a way immediately embraced by the industry, which has been seeking relief that could boost its balance sheets in the financial crisis.46 minutes ago
By MARCY GORDON
The Securities and Exchange Commission and the Financial Accounting Standards Board issued clarifications to the current rules, and said more detailed guidance is coming later this week from the standard-setting FASB.
The banking industry, which has seen its mortgage-backed assets plummet in value, has been pressing the SEC to suspend the so-called “mark-to-market” accounting rules that require banks to value their holdings at current market prices, even if they plan to hold the assets for years. A possible addition to the $700 billion bailout bill being considered by Congress would reaffirm the authority of the SEC to suspend them.
But the head of a policy group backed by the biggest accounting firms warned lawmakers against such a suspension, saying it would hurt the interests of investors and the capital markets.
The principles of mark-to-market accounting “are rooted in the fundamental virtue of transparency and are central to informed market decisions and efficient allocation of capital,” Cynthia Fornelli, executive director of the Center for Audit Quality, wrote in a letter to members of Congress.
The clarification issued Tuesday says that when an active market for a security doesn’t exist, “the use of management estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable.”
The guidance will apply to companies’ financial statements for the just-completed third quarter. It is “intended to provide increased clarity related to the practices that may be used to determine an appropriate fair value in the light of current market conditions,” said James Kroeker, the SEC’s deputy chief accountant.
The arcane accounting rules even intruded into the battle for the White House, with Republican presidential contender John McCain’s campaign lauding the SEC’s release. Democrat Barack Obama’s campaign did not immediately return requests for comment Tuesday evening.
The American Bankers Association also applauded the action, saying the new guidance “will help auditors more accurately price assets that are difficult to value under current market conditions.”
McCain’s campaign said he “is pleased to see that the SEC has finally decided to permit alternative accounting methods to mark-to-market accounting for securities where no active market exists. There is serious concern that these accounting rules are worsening the credit crunch, making it difficult for small businesses to stay afloat and squeezing family budgets.”
This is where the dollar is headed … fasten your seat belts
Hi, this is Adam Hewison. I have just finished creating a video on the dollar index that I am sure you’ll enjoy watching.
The short video quickly shares my through on the dollar and where this market may go. We’ve had a huge success in this market and would like to share with you our ideas on what we think will happen to a dollar when (and if) the bailout is voted into law by Congress.
You do not need any special software,and there is no charge to watch this video.
What happens to the dollar index will have a direct bearing on what happens to the stock market and the economy as a whole.
I’d strongly recommend that if you are concerned about the economy you take a few minutes of your time and watch this video. You will see how you can benefit from the scenario we envision for the future.
MarketClub Members: you can go to the bottom of your homepage above your portfolio and click the Members Videos link to watch this video and avoid the registration page. Please email support@ino.com if you have any issues with the video and our customer service representatives will help you out.
Good luck,
Adam Hewison
President, INO.com
Co-creator, MarketClub
1.4 trillion dollar loss in one day … nice trade.
1.4 trillion dollar loss in one day … nice trade. That is how much money was lost yesterday in the stock market.
But did you know you could have made money yesterday following the Marketclub approach?
Watch this video to see what I mean:
Here’s another video that you may have missed.
Lastly this video says it all: “We’re the government and we are here to help”
That’s it for now, round 2 starts on the opening. Be prepared.
Adam Hewison
President, INO.com
Traders Toolbox: Relative Strength Index (RSI)
MarketClub is known for our “Trade Triangle” technology. However, if you have used other technical analysis indicators previously, you can use a combination of the studies and other techniques in conjunction with the “Trade Triangles” to further confirm trends.
Developed by Welles Wilder, the Relative Strength Index (RSI) addresses the two major flaws of momentum – the need to have a constant band against which to compare price movement and the ability to smooth the ebb and flow of price movement.
Sharp up or down movement 10 days ago (in the case of a 10-day momentum line) can cause pronounced shifts in the momentum line even if the current prices are relatively stable, giving false signals. Also, different commodities may have different “overbought” and “oversold” levels. RSI corrects these concerns by smoothing the movement and by creating a constant range from 0 to 100.
The formula for calculating RSI is as follows: RSI= 100-[100/(1+RS)] where RS= average of the days closing higher during the interval divided by the average of the days closing lower during the interval.
The RSI indicator is plotted on a vertical scale of 0 to 100. The general rule of thumb is overbought levels are at 70% and oversold levels are at 30%. When the reading of the indicator surpasses 70, an overbought conditions exists. An oversold condition exists with readings below 30.
Similar to momentum, a trader should look for bullish and bearish divergences to occur when trading with RSI. A 14-day interval is commonly used, but personal fine-tuning and experimentation always is needed.
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You can learn more about the Relative Strength Index by visiting INO TV.
The 700 billion dollar blame game is just beginning
“Saturday Seminars” - Cycles & Oscillators
You will leave Walter’s workshop with a working knowledge of how to combine cycles and oscillators to identify cycle tops and bottoms as they occur plus five specific oscillator/cycle combinations that you can immediately apply to the markets - weekly, daily and intra-day. The workshop is presented in two sections.
CYCLES - In the first part of his workshop, Walt will explain the four dominant cycles and discuss techniques to find these cycles in the market. The development and use of timing bands and Fibonacci ratios will be examined to determine the timing of the cycles and specific techniques will be illustrated for determining the future price levels of cycle tops and bottoms.
OSCILLATORS - Several techniques will be presented to improve the performance of oscillators, often turning a mediocre one into a powerhouse. Walter will explain how to combine oscillators with cycles to identify tops and bottoms as they are occurring, and will show specific oscillator cycle combinations to identify cycle tops and bottoms mechanically.
PDF Workbook
Walter Bressert has been using market cycles to trade stocks and commodities since the 1970s when his HAL Commodity Cycles was one of the most widely known advisory services focusing on cycles.
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Saturday Seminars are just a taste of the power of INO TV. The web’s only online video and audio library for trading education. So watch four videos in our free version of INO TV click here.
Trader’s Blog Contest Winner…
Congratulations to Michael P. of Ontario, Canada for winning the first ever Trader’s Blog contest. You will receive your iPod touch courtesy of MarketClub.com and INO.com shortly. Thanks for everyone who participated. It was fun to read those could-a, would-a, should-a moments… now it’s time to make them happen.
We asked visitors to write about a trade that they wish they would have entered. Here is what Michael wrote:
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“One of the best Canadian stocks to play the Canadian Oil Sands is Canadian Oil Sands Trust…COS.UN on the TSX. Around October 2006, rumors started swirling around in the Canadian press that the Canadian Federal government was going to tax all the Income trusts like a corporation, thus any owner of Income trusts would pay double taxes. Well on Oct 31st..Halloween..after market close, they confirmed these rumors. When the market opened on Nov. 1st, COS.UN plunged to a low of $24.32, over 20% in one day. It scared everybody including me because I owned 1300 units. I wish I had taken the contrary view that day and bought more. I would have realized a gain of over 100% in a little over a year, not to mention the 50% increase in the dividend payout since that time!!!”
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We plan to have many more contests, so stayed tuned and keep interacting with us and again congrats to Michael.
Fasten your seat belts …
Gold up. Equities down.
Congress fiddles while the markets ( fill in the blank)
Check out our poll, looks like our readers got it right again.
Adam
Traders Whiteboard … learn and earn from a pro
One of the things I have always enjoyed, is sharing what I know with others. I have to thank my parents for teaching me the joy of sharing.
So it is in their memory, that I am excited to share with you, what I hope will be an informative, interesting and helpful series of trading lessons via our newly created … Traders Whiteboard.
Participating in the Traders Whiteboard experience will teach you everything you need to know to become a successful trader.
In every Traders Whiteboard video I explain in detail how to use many of the same trading tools that are in use today by some of the worlds top hedge fund traders.
You are probably wondering much all of this is going to cost? The truth is, the service is free, and there are no catches.
You can credit my parents for that.
There’s no registration required or needed to experience the Traders Whiteboard videos.
Your journey towards greater trading knowledge begins right here.
Sincerely,
Adam Hewison,
President INO.com
About Adam Hewison
Adam Hewison is a former floor trader and past member of several major exchanges, including the International Monetary Market (IMM) a division of the Chicago Mercantile Exchange in Chicago, Index and Options Market(IOM) Chicago, New York Futures Exchange (NYFE) and The London Financial Futures Exchange (LIFFE). Adam is the author of “Right on the Money, The Definitive Guide to Forecasting Foreign Exchange Rates” and numerous other financial ebooks and web videos. His latest project with partner Dave Maher is INO TV. This newly created service is dedicated to educating traders through streaming video seminars. The new website can be viewed here.
Like Beijing, Capital Gains Can Be Confusing
With all the recent market action I decided to contact Ryan Gibson, from Traders Accounting, Inc., to help explain a bit about how the IRS taxes capital gains. Ryan has always been my “go to” guy when it comes to explaining and UNDERSTANDING the world of accounting and taxes for trading. Please be sure and visit his site for more helpful information, Traders Accounting, Inc.
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It’s a good thing China made its debut on the world stage by hosting the 2008 Summer Olympics and not, say, a spelling bee. After all, athletes speak a universal language: run faster, jump higher, throw farther or score more points than your opponents and you’ll bring home the gold, and possibly a Wheaties contract.
But try to order dinner in Beijing? Now that’s tricky. Centuries of cultural isolation have limited China’s exposure to the rest of the world until now, which is all part of the excitement of this year’s momentous Summer Games.
Tricky also might best describe how the IRS taxes capital gains. While it may not be as indecipherable as a Beijing Chinese menu, tax treatment of capital gains and losses are far from a one-size-fits-all proposition, but depends instead on how those capital gains or losses were realized.
Not-so-simple Capital Gains/Losses
First, a short primer on capital gains. For tax purposes, all assets fall into two categories: capital and non-capital. Generally speaking, capital assets are things we acquire for personal use or investment: our home, furnishings, vehicles and other valuables such as jewelry and collectables. By contrast, non-capital assets, as the term implies, tend to be impersonal: sales to customers, accounts receivable, business supplies, hedging transactions and property used for business.
The distinction becomes clear at tax time, when capital assets are subject to capital gains and loss rules. Sales of non-capital assets, however, are taxed as ordinary income, and so fall outside this discussion. A Traders Accounting professional can be invaluable in clarifying your capital gains position and minimizing your tax exposure.
When a capital asset is sold, it either makes money (gain) or loses it (loss), based on what is called adjusted basis. Basis is the price you paid for the asset. Adjusted basis is your basis plus such additions as selling expenses or home improvements, and minus deductions for such things as depreciation or casualty loss.
If you held the asset for a year or less, it is considered a short-term capital gain or loss; if you held it for longer, it is considered a long-term capital gain or loss.
Here’s where it gets trickier. Losses you incur on the sale of some capital assets, including personal items such as your home, furnishings and vehicles, cannot be deducted on your tax return. Similarly, gains from the sale of personal capital assets may be taxable.
Capital Gains Scenarios
Let’s look at three typical gain/loss scenarios to see how they would be taxed under the capital gains/loss rules:
1. Short-term gains and losses: In this situation, you would combine your short-term gains and losses to produce a net short-term total. A total gain is taxed as ordinary income, but a loss can be deducted up to $3,000 on your return. If your loss exceeds $3,000, it can be carried over to the following year as a short-term loss.
2. Long-term gains and losses: Combine long-term gains and losses to arrive at a net long-term total. A total gain is taxed at the 15% maximum capital gains rate. A long-term loss is deductible up to the $3,000 cap and can be carried over to the following year as a long-term loss.
3. Short- and long-term gains and losses: First, combine short-term gains and losses to produce a net short-term total. Next, combine long-term gains and losses to produce a net long-term total. Now combine the two net totals. If the result is a gain, each type of gain is taxed at its applicable rate (see above). If it’s a loss, it is deductible up to the $3,000 cap. If your loss exceeds $3,000, deduct your short-term loss first and carry over the long-term portion.
Mixed Doubles: Short- and Long-Term Gains/Losses
So what happens when you end the year with a mix of short- and long-term gains and losses? Here’s how the IRS taxes the four possible scenarios:
·Short-term gain exceeds long-term loss: The short-term gain is taxed as ordinary income.
·Short-term loss exceeds long-term gain: Deduct the short-term loss to the $3,000 cap and carry over the balance.
·Long-term gain exceeds short-term loss: Deduct the long-term loss to $3,000 and carry over the balance. The net gain is taxed at the long-term rate.
·Long-term loss exceeds short-term gain: Deduct the long-term loss to $3,000 and carry over the balance.
If your broker charges you to conduct trades, don’t forget to subtract his or her fees from your gain. And be sure to read carefully the Form 1099 you receive from your broker. Some brokers record gross gains and losses, meaning they haven’t subtracted their expenses, while others record net gains and losses, meaning they’ve already done the adjustment for you. Always use net gains and losses when preparing your tax return.
If you have any questions or need some advice please visit my site Traders Accounting, Inc.
Ryan Gibson, AZCLDP
Traders Accounting, Inc.
