Most economists talk about where the economy is headed – it’s what they do. But in case you haven’t noticed, many of their predictions are wrong. For example, Ben Bernanke (head of the Federal Reserve) made a prediction in 2007 that the United States was not headed into a recession. He further claimed that the stock and housing markets would be as strong as ever. As we know now, he was wrong.
Bait-and-switch is a term for a scam where a business advertises a great product or service for a low price. When prospective customers attempt to buy the product or service, however, they find out that the product is not available. The business uses this opportunity to try to sell customers a more expensive product instead.
Many different businesses have used these scams to entice customers to buy expensive products and services. As a consumer, you need to know how to identify a bait-and-switch scam and protect yourself from being taken advantage of.
How a Bait-and-Switch Works
Historically, gold has played a major role in the economies of many nations. Although it is no longer a primary form of currency, gold is still a solid, long-term investment and may be a valuable portfolio addition, particularly in a bear market.
Gold was considered a universal currency for hundreds of years. Due to its recognized value worldwide, a gold standard was used as far back as the Byzantine Empire over 1,500 years ago. Until recently, in fact, gold was used as the world reserve currency.
“Cash is king” is an age-old saying often used to explain the failure of both businesses and consumer households. Without the proper amount of cash on hand, both of these entities can run into major trouble, and even be forced into bankruptcy.
Businesses must have cash on hand for various reasons, such as investing in new infrastructure and dealing with unexpected expenses. Moreover, a business’s cash flow is often cited as a key factor in its potential for long-term success. A company may have all the revenue in the world, but without the ability to generate cash, it can easily fail.
Companies will go to great lengths to maintain control of their firms and will discourage a hostile takeover at any cost. One effective strategy that companies employ is called the poison pill. This tactic involves diluting a takeover company’s ownership interest in the company they wish to acquire and making it prohibitively more expensive for them to continue to purchase shares.
Poison pills have been a popular, yet controversial move and their legality has even come into question. Their use can be beneficial or detrimental to shareholders depending on the situation. Sill, a poison pill almost always acts as a strong deterrent to anyone interested in a hostile takeover bid.
In business and in life, you have to work closely with others to build your way to success.
The old axiom, “It’s not what you know, it’s who you know” is only partly true. It’s misleading, because it focuses on simply making contacts.
Creating success in business is really about maintaining relationships, not just having a list of people in your phone list or contacts file.
Benefits of Business Relationships
When an economy is in danger of slipping into a recession or depression, governments can employ a strategy known as quantitative easing (QE).
Quantitative easing is a monetary policy instituted by central banks in an effort to stimulate the local economy. By flooding the economy with a greater money supply, governments hope to maintain artificially low interest rates while providing consumers with extra money to spend more freely, which can sometimes lead to inflation.
What Is Quantitative Easing?
The unemployment rate is a variable that economists routinely use to measure the health of the economy.
However, some people think the federal unemployment rate doesn’t accurately reflect reality. In fact, the real rate of unemployment may actually be much higher than what’s reported.
The state and federal governments calculate unemployment differently. States often measure unemployment by the number of people receiving unemployment benefits. But that, of course, can be misleading since unemployment benefits expire, leaving the unemployed without a way to be measured.
“Golden parachutes” get a lot of press, and they always sound like elite packages for high-level executives. Very few people get them, and very few people know how they work.
Companies usually reserve them for executives at the top of the organization chart, and these contracts establish an agreed-upon compensation package that the employee would immediately receive upon termination. The benefits package usually includes a list of specific terms that explain what the terminated employee will receive.
How a Golden Parachute Works
Bonds are often considered to be fairly safe investments, but their trading prices can endure as much fluctuation and volatility as stocks. As a result, it has become increasingly popular to take advantage of the opportunity to short sell bonds.
But what exactly causes the value of bonds to decrease and how can one go about short selling a specific bond or class of bonds?
Let’s explore these areas in greater depth below.
Why Would You Short Sell a Bond?
Financial derivatives, such as stock options, are complex trading tools that allow investors to create many trading strategies that they would otherwise not be able to execute using primary securities (i.e. stocks and bonds). The practice of using derivatives to develop new strategies is an example of financial engineering and these strategies can be very profitable for investors.
One strategy that has become increasingly popular is known as the “strangle.”
What Is a Strangle Option?