The Risks of Investing in Foreign Currency

The following is a guest post by Jason Haze.

Investing in foreign currency can seem like one of the risk-free ways of investing, but this is not really the case. There are certain risks that come with this type of business. Ignoring these risk may leave you losing your way so it’s best to learn a thing or two about the currency trading. There are a number of things that can be done to reduce the risk but some dangers will still be there. Many people have lost some money by going in not knowing the risks they were exposing themselves to.

What are the risks of investing in foreign currency?

Politics plays a role

If you think politics doesn’t touch every pore of our lives, you might want to think again. Even investing in foreign currency is influenced by politics. Why? Just like any international investment, the currency value bears some correlation to the internal conditions of a given nation. This is why it is always important to learn the political, economic, and institutional setting in which a given currency trades.

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Are You Protecting Your Credit Rating?

The following is a guest post by Derek Fisher

The cost of living is high enough when financially sound, but consumers with damaged credit pay a premium for insurance, financing, and credit card privileges. Taking an active role preserving your credit rating is the only way to reduce the cost of borrowing and sidestep the unreasonable cost of bad credit. All too often, however, consumers sit idle until they need a loan, and then seem surprised to find their rating in disrepair. Use these proactive steps to protect and preserve a favorable credit score – or you’ll ultimately pay the price, in the form of higher rates.

Pay Timely – Without Exception

A late payment is one of the fastest ways to adversely impact your credit score. That’s right – even one late remittance can haunt you, as creditors have the right to report these inconsistencies to credit bureaus. In practice, many lenders extend courtesies to their clients, giving them the benefit of the doubt, when payment difficulties arise. In these cases, your bank or credit card company may be willing to overlook a single late payment. Press your luck, however, and a pattern of late bill payments will undoubtedly end-up on your credit record. Depending upon the severity and frequency of the insufficiencies, failing to pay timely can have lasting impacts, which will cost you money, over time.

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The Changing Landscape of the Energy Sector

Energy. Simply put, we cannot live without it. We use energy in different forms for different purposes. We need energy for transportation, industrial use, residential & commercial usage and electric power. This may come from various sources such as petroleum, natural gas, coal, renewables, nuclear energy etc. While each source goes up and down depending on the supply and demand and other market dynamics, we are on the verge of starting to see a shift in policy and a push towards cleaner fuel sources as we realize the effects of climate change. The recent Climate Change Conference in Paris is seeing renewed pledges for a push towards renewables and a continued shunning of dirty fuel sources such as coal. This article delves into the changing landscape of the energy sector.

The Changing Landscape of the Energy Sector

We have gone through some amazing fast-paced changes over the past few decades. After living on resources such as wood, steam, coal etc for thousands of years, we discovered oil (& gas) and went through a golden age of petroleum-based energy through the 19th and 20th century. With the availability of cheap oil came the freedom of cheap/affordable and fast transportation, which was also beneficial for industrial packaging companies. Even to this day, petroleum remains the defacto source of energy for transportation.

We derive energy from various sources and use them for various applications, as mentioned in the introduction above. In fact, we can see a criss-cross of sources and economic sector usages from the image below – which indicates the usage in USA and presented by the US Energy Information Administration (EIA).


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My Thoughts on Kinder Morgan

Kinder Morgan has been a core holding for a lot of dividend growth investors and I have received a lot of questions from readers about my thoughts on the company and the future prospects.

Kinder Morgan has had a spectacular fall from its peak from $44.71/share in Apr 2015 to $15.82 today (Nov 07 2015). In a way, this shouldn’t have come as a shock – Kinder Morgan has been on a debt binge (just like a lot of other companies out there – so look out for similar outcomes in other companies!) and is now close to $43B in long term debt fueling its growth and investments. The recent ratings downgrade from Moody’s with a negative outlook was a wakeup call for a lot of investors and traders have jumped in to short the stock.

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Corporate Taxes

Earlier this week, one of the largest acquisition and biggest-ever instance of corporate inversion was announced when Pfizer Inc (PFE) agreed to acquire Allergan Plc (AGN) for $160B. This has been painted by the politicians and the media as a way of avoiding corporate taxes, but one has to wonder what is really causing companies to take such steps to begin with. For some background, the deal announced between Pfizer and Allergan will result in Pfizer’s corporate headquarters moved to Ireland and will eventually save shareholders anywhere between 8% and 10% in taxes. The company does not really lose any business or marketshare in the US by doing this and simply reduces its taxes by taking this step. This move raises a few eyebrows since a Dow Jones Index-listed stock is now relocating.

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