Sunday, 15 February 2015

The more corrupt a country is the better the returns its equity markets offer, new data indicate

Corruption: doing the dirt

But look at the numbers. Since 2000, the 14 big stock markets for countries with “poor” governance, as ranked by Transparency, have enjoyed an average annual return of 11 per cent. Other markets ranged between 5 and 8 per cent. This suggests that corruption is a risk factor, and just as investors get a risk premium for investing in small or cheap companies, maybe they also get one for corrupt countries.

In the 1990s, academics discovered that companies with poor governance traded at a discount. A decade later, after big investors such as Calpers forced reforms through, the discount was gone. Is something similar happening in emerging markets?

It might, but remember that investors can shake up a company because they own it. It is far harder for them to force change in a country. Investors must trust in support from voters, activists and politicians.

The mania for “Brics” investing has now run its course. Those who would hope to harvest the corruption premium over the next 15 years must be sure to buy at deep discounts.


Penny Stocks

The idea behind trading penny stocks is to recognize a good deal and approach it with a strategy. 

For first time traders and those who aren't knowledgeable about the industry trends, learning about the basics is the right first step for making profit. 

To get an idea of all the important aspects of trading penny stocks, the infographic below shows you how most successful traders create their strategies. It defines some basic concepts in this business, explains potential risks and educates you on how to make winning choices. 

Here, the crucial thing is to set some rules and realistic expectations before you start looking for a way to achieve your goals. Additionally, the infographic includes several most important rules penny stock traders should live by in order to always be satisfied with their achievements and be able to keep going further. 

Therefore, the infographic visually represents all the major steps to succeeding in this promising field.

Penny Stocks 101 #infographic

Quote for the day

“As a speculator you must embrace disorder and chaos.” -  Louis Bacon